united states

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of earliest event reported): June 3, 2020

 

Nikola Corporation

 

(Exact name of registrant as specified in its charter)

 

Delaware
(State or Other Jurisdiction of
Incorporation)
001-38495
(Commission File Number)
82-4151153
(I.R.S. Employer
Identification No.)

 

4141 E Broadway Road
Phoenix, AZ
85040
(Address of principal executive offices) (Zip Code)

 

(480) 666-1038

(Registrant’s telephone number,
including area code)

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class Trading symbol(s)  Name of each exchange on which registered
Common Stock, $0.0001 par value per share NKLA The Nasdaq Stock Market LLC
Warrants, each exercisable for one share of Common Stock at an exercise price of $11.50 per share NKLAW The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b–2 of the Securities Exchange Act of 1934 (§240.12b–2 of this chapter).

Emerging growth company x

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. £

 

 

 

 

 

 

INTRODUCTORY NOTE

 

 

Due to the large number of events reported under the specified items of Form 8-K, this Current Report on Form 8-K is being filed in two parts. An amendment to this Form 8-K is being submitted for filing on the same date to include additional matters under Items 5.03 and 5.05 of Form 8-K.

 

On June 3, 2020 (the “Closing Date”), Nikola Corporation, a Delaware corporation (f/k/a VectoIQ Acquisition Corp. (“VectoIQ”)) (the “Company”), consummated the previously announced merger pursuant to that certain Business Combination Agreement, dated March 2, 2020 (the “Business Combination Agreement”), by and among the VectoIQ, VCTIQ Merger Sub Corp., a wholly-owned subsidiary of VectoIQ incorporated in the State of Delaware (“Merger Sub”), and Nikola Subsidiary Corporation, a Delaware corporation (f/k/a Nikola Corporation) (“Legacy Nikola”).

 

Pursuant to the terms of the Business Combination Agreement, a business combination between the Company and Legacy Nikola was effected through the merger of Merger Sub with and into Legacy Nikola, with Legacy Nikola surviving as the surviving company and as a wholly-owned subsidiary of VectoIQ (the “Merger” and, collectively with the other transactions described in the Business Combination Agreement, the “Business Combination”). On the Closing Date, the registrant changed its name from VectoIQ Acquisition Corp. to Nikola Corporation.

 

Immediately prior to the effective time of the Merger (the “Effective Time”), each share of Legacy Nikola preferred stock that was issued and outstanding was automatically converted into a share of Legacy Nikola common stock, par value $0.00001 per share (“Legacy Nikola Common Stock”), such that each converted share of Legacy Nikola preferred stock was no longer outstanding and ceased to exist, and each holder of Legacy Nikola preferred stock thereafter ceased to have any rights with respect to such securities. At the Effective Time, the holders of Legacy Nikola Common Stock received 1.901 shares (the “Exchange Ratio”) of the Company’s common stock, $0.0001 par value per share (the “Common Stock”), for each share of Legacy Nikola Common Stock.

 

Each Legacy Nikola option that was outstanding immediately prior to the Effective Time, whether vested or unvested, was converted into an option to purchase a number of shares of Common Stock (such option, an “Exchanged Option”) equal to the product (rounded down to the nearest whole number) of (i) the number of shares of Legacy Nikola Common Stock subject to such Legacy Nikola option immediately prior to the Effective Time and (ii) the Exchange Ratio, at an exercise price per share (rounded up to the nearest whole cent) equal to (A) the exercise price per share of such Legacy Nikola option immediately prior to the Effective Time, divided by (B) the Exchange Ratio. Except as specifically provided in the Business Combination Agreement, following the Effective Time, each Exchanged Option continued to be governed by the same terms and conditions (including vesting and exercisability terms) as were applicable to the corresponding former Legacy Nikola option immediately prior to the Effective Time.

 

A description of the Business Combination and the terms of the Business Combination Agreement are included in the proxy statement/prospectus/information statement filed with the Securities and Exchange Commission (the “SEC”) on May 8, 2020 (the “Proxy Statement”) in the sections entitled “The Business Combination” beginning on page 80 and “The Business Combination Agreement” beginning on page 95 of the Proxy Statement.

 

On June 3, 2020, a number of purchasers (each, a “Subscriber”) purchased from the Company an aggregate of 52,500,000 shares of Common Stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $525.0 million, pursuant to separate subscription agreements (each, a “Subscription Agreement”) entered into effective as of March 2, 2020. Pursuant to the Subscription Agreements, the Company gave certain registration rights to the Subscribers with respect to the PIPE Shares. The sale of PIPE Shares was consummated concurrently with the closing of the Business Combination (the “Closing”).

 

A description of the Subscription Agreements is included in the Proxy Statement in the section entitled “Certain Agreements Related to the Business Combination—Subscription Agreements” on page 110 of the Proxy Statement.

 

The foregoing descriptions of each of the Business Combination Agreement and the Subscription Agreements is a summary only and is qualified in their entirety by the full text of the Business Combination Agreement, a copy of which is attached hereto as Exhibit 2.1, and the Subscription Agreements, copies of which are attached hereto as Exhibit 10.l and Exhibit 10.2, and are incorporated herein by reference.

 

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Item 1.01 Entry into a Material Definitive Agreement.

 

Registration Rights and Lock-Up Agreement

 

In connection with the transactions contemplated by the Business Combination Agreement (the “Transactions”), on June 3, 2020, the Company, certain persons and entities holding founder shares and private units of the Company and certain stockholders of Legacy Nikola entered into a Registration Rights and Lock-Up Agreement (the “Registration Rights and Lock-Up Agreement”). The terms of the Registration Rights and Lock-Up Agreement are described in the Proxy Statement in the section entitled “Certain Agreements Related to the Business Combination—Registration Rights and Lock-Up Agreement” on page 109 of the Proxy Statement. In accordance with the terms of the Registration Rights and Lock-Up Agreement, on the Closing Date, 7,000,000 shares of Legacy Nikola Common Stock held by M&M Residual, LLC were redeemed at a purchase price of $10.00 per share (the “M&M Redemption”). Pursuant to the terms of the Registration Rights and Lock-Up Agreement, M&M Residual, LLC and T&M Residual, LLC will be permitted to sell or otherwise transfer up to $70.0 million of Common Stock commencing 180 days after the Closing Date.

 

The foregoing description of the Registration Rights and Lock-Up Agreement is qualified in its entirety by the full text of the Registration Rights and Lock-Up Agreement, a copy of which was attached as Exhibit A to the Business Combination Agreement and is attached hereto as Exhibit 2.1 and incorporated herein by reference.

 

Lock-Up Agreements

 

In connection with the Transactions, on June 3, 2020, the Company and certain stockholders of Legacy Nikola and executives of the Company (the “Legacy Holders”) entered into a Lock-Up Agreement (each, a “Lock-Up Agreement”). The terms of the Lock-Up Agreements provide for the Common Stock held by the Legacy Holders to be locked-up for a period of 180 days after the Closing Date, subject to certain exceptions, with certain stockholders being allowed to sell a certain number shares after 30 days and 90 days, respectively.

 

The foregoing description of the Lock-Up Agreements is qualified in its entirety by the full text of the Lock-Up Agreements, copies of which are attached hereto as Exhibit 4.5 and Exhibit 4.6, and are incorporated herein by reference.

 

Indemnification Agreements

 

In connection with the Transactions, on June 3, 2020, the Company entered into indemnification agreements with each of its directors and executive officers. These indemnification agreements provide the directors and executive officers with contractual rights to indemnification and advancement for certain expenses, including attorneys’ fees, judgments, fines and settlement amounts incurred by a director or executive officer in any action or proceeding arising out of their services as one of the Company’s directors or executive officers or as a director or executive officer of any other company or enterprise to which the person provides services at the Company’s request.

 

The foregoing description of the indemnification agreements is qualified in its entirety by the full text of the form of indemnification agreement, which is attached hereto as Exhibit 10.3 and incorporated herein by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets.

 

The disclosure set forth in the “Introductory Note” above is incorporated by reference into this Item 2.01.

 

At a special meeting of stockholders held on June 2, 2020 in lieu of the 2020 annual meeting of stockholders of the Company (the “Special Meeting”), the Company’s stockholders approved the Business Combination. The Business Combination was completed on June 3, 2020.

 

In connection with the Closing, (a) 1,499,700 shares of Legacy Nikola Series B preferred stock held by Nimbus Holdings LLC were repurchased by Legacy Nikola at a purchase price of $16.67 per share, immediately prior to the Effective Time and (b) the M&M Redemption occurred, immediately following the Effective Time.

 

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As of the Closing Date and following the completion of the Business Combination, including the M&M Redemption, the Company had the following outstanding securities:

 

· approximately 360,904,478 shares of Common Stock; and

 

· approximately 23,890,000 warrants, each exercisable for one share of Common Stock at a price of $11.50 per share (the “Warrants”).

 

FORM 10 INFORMATION

 

Prior to the Closing, the Company was a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) with no operations, formed as a vehicle to effect a business combination with one or more operating businesses. After the Closing, the Company became a holding company whose only assets consist of equity interests in Legacy Nikola.

 

Cautionary Note Regarding Forward-Looking Statements

 

The Company makes forward-looking statements in this Current Report on Form 8-K and in documents incorporated herein by reference. All statements, other than statements of present or historical fact included in or incorporated by reference in this Current Report on Form 8-K, regarding the Company’s future financial performance, as well as the Company’s strategy, future operations, financial position, estimated revenues, and losses, projected costs, prospects, plans and objectives of management are forward-looking statements. When used in this Current Report on Form 8-K, the words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on management’s current expectations, assumptions, hopes, beliefs, intentions and strategies regarding future events and are based on currently available information as to the outcome and timing of future events. The Company cautions you that these forward-looking statements are subject to all of the risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company, incident to its business.

 

These forward-looking statements are based on information available as of the date of this Current Report on Form 8-K, and current expectations, forecasts and assumptions, and involve a number of risks and uncertainties. Accordingly, forward-looking statements in this Current Report on Form 8-K and in any document incorporated herein by reference should not be relied upon as representing the Company’s views as of any subsequent date, and the Company does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

 

As a result of a number of known and unknown risks and uncertainties, the Company’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:

 

· the Company’s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition and the ability of the Company to grow and manage growth profitably following the Closing;

 

· costs related to the Business Combination;

 

· changes in applicable laws or regulations;

 

· the outcome of any legal proceedings against the Company ;

 

· the effect of the COVID-19 pandemic on the Company’s business;

 

· the ability of the Company to execute its business model, including market acceptance of its planned products and services;

 

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· the Company’s ability to raise capital;

 

· the possibility that the Company may be adversely affected by other economic, business, and/or competitive factors; and

 

· other risks and uncertainties set forth in the Proxy Statement in the section entitled “Risk Factors” beginning on page 32 of the Proxy Statement, which is incorporated herein by reference.

 

Business and Properties

 

The business and properties of VectoIQ and Legacy Nikola prior to the Business Combination are described in the Proxy Statement in the sections entitled “Information About VectoIQ” beginning on page 198 and “Information About Nikola” beginning on page 141 of the Proxy Statement, which are incorporated herein by reference.

 

Legacy Nikola previously partnered with Ryder for truck distribution and maintenance. On May 29, 2020, Legacy Nikola and Ryder announced that they had mutually agreed to terminate their exclusive partnership with respect to the Company’s hydrogen electric semi-trucks.

 

Risk Factors

 

The risks associated with the Company’s business are described in the Proxy Statement in the section entitled “Risk Factors” beginning on page 32 of the Proxy Statement, which is incorporated herein by reference.

 

Selected Historical Financial Information

 

The selected historical consolidated financial information and other data for the years ended December 31, 2017, 2018 and 2019, and the selected consolidated balance sheet and other data as of December 31, 2018 and 2019 for Legacy Nikola are included in the Proxy Statement in the section entitled “Selected Historical Consolidated Financial Information of Nikola” beginning on page 25 of the Proxy Statement, which is incorporated herein by reference.

 

Unaudited Consolidated Financial Statements

 

The unaudited consolidated financial statements as of and for the three months ended March 31, 2020 of Legacy Nikola set forth in Exhibit 99.1 hereto have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the regulations of the SEC. The unaudited financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of Legacy Nikola’s financial position, results of operations and cash flows for the periods indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year.

 

These unaudited consolidated financial statements should be read in conjunction with the historical audited consolidated financial statements of Legacy Nikola as of and for the year ended December 31, 2019 and the related notes included in the Proxy Statement, the section entitled “Nikola’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 173 of the Proxy Statement and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included herein.

 

Unaudited Pro Forma Condensed Consolidated Combined Financial Information

 

The unaudited pro forma condensed combined financial information of the Company as of and for the year ended December 31, 2019 is included in the Proxy Statement in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 64 of the Proxy Statement, which is incorporated herein by reference.

 

The unaudited pro forma condensed combined financial information of the Company as of and for the three months ended March 31, 2020 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

 

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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 Legacy Nikola prior to the Business Combination is included in the Proxy Statement in the section entitled “Nikola’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 173 of the Proxy Statement, which is incorporated herein by reference.

 

Management’s discussion and analysis of the financial condition and results of operation of the Company as of and for the three months ended March 31, 2020 is set forth below.

 

The following discussion and analysis provides information which the Company’s management believes is relevant to an assessment and understanding of the Company’s consolidated results of operations and financial condition. The discussion should be read together with the consolidated financial statements and related notes and unaudited pro forma condensed financial information that are included elsewhere or incorporated by reference in this Current Report on Form 8-K. The discussion and analysis should also be read together with the Company’s audited consolidated financial statements and notes thereto included in the Company’s 2019 annual financial statements included in the Proxy Statement. This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. The Company’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the Proxy Statement in the section entitledRisk Factors” beginning on page 32 of the Proxy Statement, or in other parts of this Current Report on Form 8-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “the Company” is intended to mean the business and operations of the Company and its consolidated subsidiaries.

 

Overview

 

The Company is a vertically integrated zero emissions transportation systems provider that designs and manufactures state of the art battery electric and hydrogen electric vehicles, electric vehicle drivetrains, energy storage systems, and hydrogen fueling stations. To date, the Company has been primarily focused on delivering zero emission class 8 semi-trucks to the commercial transportation sector in the U.S. and in Europe. The Company’s core product offering includes battery electric and hydrogen fuel cell electric trucks and hydrogen fuel.

 

The Company operates in three business units: Truck, Energy and Powersports. The Truck business unit is developing and commercializing battery-electric vehicle (“BEV”) and hydrogen fuel cell electric vehicle (“FCEV”) class 8 trucks that provide environmentally friendly, cost-effective solutions to the short haul and long-haul trucking sector. The Energy business unit is developing and constructing a network of hydrogen fueling stations to meet hydrogen fuel demand for FCEV customers. The Powersports business unit is developing electric vehicle solutions for military and outdoor recreational applications.

 

In 2019, Legacy Nikola partnered with Iveco S.p.A (“Iveco”), a subsidiary of CNH Industrial N.V. (“CNHI”), a leading European industrial vehicle manufacturing company. Together, the Company and Iveco are jointly developing cab over BEV and FCEV trucks for sale in the European market, which will be manufactured through a 50/50 owned joint venture in Europe. In April 2020, Legacy Nikola and Iveco entered into a series of agreements which established the joint venture, Nikola Iveco Europe B.V. The joint venture with Iveco provides the Company with the manufacturing infrastructure to build BEV trucks for the North American market prior to the completion of the Company’s planned greenfield manufacturing facility in Coolidge, Arizona. The operations of the joint venture are expected to commence in the third quarter of fiscal 2020.

 

The Company plans to begin construction on its greenfield manufacturing facility in late 2020, and Iveco will contribute technical engineering and production support. Phase 1 of the greenfield manufacturing facility will be completed by the end of 2021, and the Company expects to start BEV production at the facility in 2022 and FCEV production in 2023.

 

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To date, Legacy Nikola has financed its operations primarily through private placements of redeemable convertible preferred stock. From the date of its incorporation through March 31, 2020, Legacy Nikola has raised aggregate gross proceeds of approximately $435.1 million from the issuance of redeemable convertible preferred stock, both for cash and in-kind contributions of services and intellectual property. Legacy Nikola incurred a net loss of $33.2 million and used $22.0 million in cash to fund its operations during the three months ended March 31, 2020.

 

The Company expects both its capital and operating expenditures will increase significantly in connection with its ongoing activities, as the Company:

 

· constructs manufacturing facilities and purchases related equipment;

 

· commercializes its heavy-duty trucks and other products;

 

· develops hydrogen fueling stations;

 

· continues to invest in its technology;

 

· increases its investment in marketing and advertising, sales, and distribution infrastructure for the Company’s products and services;

 

· maintains and improves its operational, financial and management information systems;

 

· hires additional personnel;

 

· obtains, maintains, expands, and protects its intellectual property portfolio; and

 

· operates as a public company.

 

Comparability of Financial Information

 

The Company’s results of operations and statements of assets and liabilities may not be comparable between periods as a result of the Business Combination.

 

Business Combination and Public Company Costs

 

The disclosure set forth in the “Introductory Note” above with respect to the completion of the Business Combination is incorporated by reference into this Item 2.01.

 

Following the Closing, Legacy Nikola will be deemed the accounting predecessor of the Merger and the Company will be the successor registrant for SEC purposes, meaning that Legacy Nikola’s financial statements for previous periods will be disclosed in the Company’s future periodic reports filed with the SEC.

 

The Merger is accounted for as a reverse recapitalization. Under this method of accounting, VectoIQ will be treated as the acquired company for financial statement reporting purposes. The most significant change in the successor’s future reported financial position and results are an increase in cash and cash equivalents (as compared to Legacy Nikola’s consolidated balance sheet at March 31, 2020) of approximately $628 million through the date of this filing as a result of the Merger and net proceeds from Series D convertible preferred stock, offset by payments for operations. Total non-recurring transaction costs are approximately $52.3 million, of which Legacy Nikola incurred approximately $6.6 million. In addition, stock options issued by Legacy Nikola’s Chief Executive Officer to certain employees were accelerated upon the Closing, which is a non-recurring expense of approximately $3.8 million for the three months ended June 30, 2020. The underlying Legacy Nikola Common Stock of these stock options are owned by Legacy Nikola’s Chief Executive Officer and are considered to be issued by the Company for accounting purposes. In addition, certain stock options vesting periods were accelerated due to the Merger and Legacy Nikola recorded an additional $8.1 million of expense during the three months ended June 30, 2020. The unaudited pro forma condensed combined financial information of the Company as of and for the three months ended March 31, 2020 is set forth in Exhibit 99.2 hereto.

 

As a consequence of the Merger, Legacy Nikola is the successor to the Company, an SEC registered and Nasdaq listed company, which will require Legacy Nikola to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. Legacy Nikola expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees and additional internal and external accounting and legal and administrative resources, including increased audit and legal fees.

 

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Key Factors Affecting Operating Results

 

The Company believes that its performance and future success depend on several factors that present significant opportunities for the Company but also pose risks and challenges, including those set forth in the Proxy Statement in the section entitledRisk Factors” beginning on page 32 of the Proxy Statement.

 

Commercial Launch of Nikola heavy duty trucks and other products

 

The Company expects to derive revenue from its BEV trucks in 2021 and FCEV trucks in 2023. Prior to commercialization, the Company must complete modification or construction of required manufacturing facilities, purchase and integrate related equipment and software, and achieve several research and development milestones. As a result, the Company will require substantial additional capital to develop its products and services and fund operations for the foreseeable future. Until the Company can generate sufficient revenue from product sales and hydrogen FCEV leases, it expects to finance its operations through a combination of existing cash on hand as a result of the Business Combination and PIPE, secondary public offerings, debt financings, collaborations, and licensing arrangements. The amount and timing of the Company’s future funding requirements will depend on many factors, including the pace and results of the Company’s development efforts. Any delays in the successful completion of the Company’s manufacturing facility will impact the Company’s ability to generate revenue.

 

Customer Demand

 

While not yet commercially available, the Company has received significant interest from potential customers. Going forward, the Company expects the size of its committed backlog to be an important indicator of its future performance.

 

Basis of Presentation

 

Currently, the Company conducts business through one operating segment. All long-lived assets are maintained in, and all losses are attributable to, the United States of America. A description of the Company’s operating segment is included in the Proxy Statement in the section entitled “Nikola Management’s Discussion and Analysis of Financial Condition and Results of Operations— Basis of Presentation” on page 175 of the Proxy Statement.

 

Components of Results of Operations

 

Revenues

 

To date, Legacy Nikola has primarily generated revenues from services related to solar installation projects that are completed in one year or less. Solar installation projects are expected to be discontinued.

 

Following the anticipated introduction of the Company’s products to the market, the Company expects the significant majority of its revenue to be derived from direct sales of BEV trucks starting in 2021 and from the bundled leases of FCEV trucks beginning in 2023. The Company’s bundled lease offering is inclusive of the cost of the truck, hydrogen fuel and regularly scheduled maintenance. The Company expects the bundled leases to qualify for the “sales type lease” accounting under GAAP, with the sale of the truck recognized upon the transfer of the title, and hydrogen fuel and maintenance revenues recognized over time as they are being provided to the customer.

 

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Cost of Revenues

 

To date, Legacy Nikola’s cost of revenues has included materials, labor, and other direct costs related to solar installation projects.

 

Once the Company has reached commercial production, cost of revenues will include direct parts, material and labor costs, manufacturing overhead, including amortized tooling costs and depreciation of the Company’s greenfield manufacturing facility, depreciation of the Company’s hydrogen fueling stations, cost of hydrogen production, shipping and logistics costs and reserves for estimated warranty expenses.

 

Research and Development Expense

 

Research and development expenses consist primarily of costs incurred for the discovery and development of the Company’s vehicles, which include:

 

· Fees paid to third parties such as consultants and contractors for outside development;

 

· Expenses related to materials, supplies and third-party services;

 

· Personnel related expenses, including salaries, benefits, and stock-based compensation expense, for personnel in the Company’s engineering and research functions;

 

· Depreciation for prototyping equipment and research and development facilities.

 

During the three months ended March 31, 2020, Legacy Nikola’s research and development expenses were primarily incurred in the development of the BEV and FCEV trucks.

 

As a part of its in-kind investment into the Company, Iveco is providing the Company with $100.0 million in advisory services (based on pre negotiated hourly rates), including project coordination, drawings, documentation support, engineering support, vehicle integration, and product validation support. Those services are expected to be consumed primarily in 2020 and 2021 and will be recorded as research and development expense until the Company reaches commercial production.

 

The Company expects its research and development costs to increase for the foreseeable future as it continues to invest in research and develop activities to achieve its technology and product roadmap goals.

 

Selling, General, and Administrative Expense

 

Selling, general, and administrative expenses consist of personnel related expenses for the Company’s corporate, executive, finance, and other administrative functions, expenses for outside professional services, including legal, audit and accounting services, as well as expenses for facilities, depreciation, amortization, travel, and marketing costs. Personnel related expenses consist of salaries, benefits, and stock-based compensation.

 

The Company expects its selling, general, and administrative expenses to increase for the foreseeable future as the Company scales headcount with the growth of its business, and as a result of operating as a public company, including compliance with the rules and regulations of the SEC, legal, audit, additional insurance expenses, investor relations activities, and other administrative and professional services.

 

Interest Income (Expense), net

 

Interest income (expense) consists primarily of interest received or earned on the Company’s cash and cash equivalents balances. Interest expense consists of interest paid on the Company’s equipment term loan and financing lease.

 

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Loss on Forward Contract Liability

 

The loss on forward contract liability includes losses from the remeasurement of Legacy Nikola’s Series D redeemable convertible preferred share forward contract liability. In April 2020, Legacy Nikola fulfilled the forward contract liability and, therefore, subsequent to June 30, 2020, there will not be any impact from the remeasurement of the forward contract liability.

 

Other Income, net

 

Other income consists primarily of other miscellaneous non-operating items, such as government grants, subsidies, and merchandising.

 

Income Tax Expense

 

The Company’s income tax provision consists of an estimate for U.S. federal and state income taxes based on enacted rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in deferred tax assets and liabilities, and changes in the tax law. Due to cumulative losses, the Company maintains a valuation allowance against its U.S. and state deferred tax assets. Cash paid for income taxes, net of refunds during the three months ended March 31, 2020 and 2019 was not material.

 

Results of Operations

 

Comparison of Three Months Ended March 31, 2020 to Three Months Ended March 31, 2019

 

The following table sets forth Legacy Nikola’s historical operating results for the periods indicated:

 

    Three Months Ended March 31,     $     %  
    2020     2019     Change     Change  
    (dollar amounts in thousands)  
Revenues   $ 58     $ 124     $ (66 )   (53.2 )%
Cost of revenues     43       62       (19 )     (30.6 )
Gross profit     15       62       (47 )     (75.8 )
Operating expenses:                                
Research and development     24,053       23,397       656       2.8  
Selling, general, and administrative     7,978       6,501       1,477       22.7  
Total operating expenses     32,031       29,898       2,133       7.1  
Loss from operations     (32,016 )     (29,836 )     (2,180 )     (7.3 )
Other income (expense):                                
Interest income, net     64       333       (269 )     (80.8 )
Loss on Series A redeemable convertible preferred stock warrant liability           (593 )     593       NM  
Loss on forward contract liability     (1,324 )           (1,324 )     NM  
Other income, net     114       1       113       NM  
Loss before income taxes     (33,162 )     (30,095 )     (3,067 )     (10.2 )
Income tax expense     1       2       (1 )     NM  
Net loss     (33,163 )     (30,097 )     (3,066 )     (10.2 )
Net loss per share to common stockholders, basic and diluted   $ (0.55 )   $ (0.50 )   $ (0.05 )   NM  
Weighted-average shares used to compute net loss per share to common stockholders, basic and diluted     60,167,749       60,166,667       1,082       NM  

 

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Revenues

 

Legacy Nikola’s total revenue decreased by $66 thousand or 53.2% from $124 thousand during the three months ended March 31, 2019 to $58 thousand during the three months ended March 31, 2020. The decrease in revenue was related to a decrease in solar installation services.

 

Cost of Revenues

 

Legacy Nikola’s cost of revenues decreased by $19 thousand or 30.6% from $62 thousand during the three months ended March 31, 2019 to $43 thousand during the three months ended March 31, 2020, due to a decrease in related revenues.

 

Research and Development

 

Legacy Nikola’s research and development expenses increased by $0.7 million or 2.8% from $23.4 million during the three months ended March 31, 2019 to $24.1 million during the three months ended March 31, 2020. This increase was primarily from higher personnel costs driven by increased engineering headcount, and depreciation costs primarily driven by the depreciation of the new HQ facility. This was primarily offset from lower spend on purchased components due to preparation for Nikola World in 2019.

 

Selling, General, and Administrative

 

Legacy Nikola’s selling, general, and administrative expenses increased by $1.5 million or 22.7% from $6.5 million during the three months ended March 31, 2019 to $8.0 million during the three months ended March 31, 2020. The increase was primarily related to higher personnel expenses driven by growth in headcount and higher general corporate expenses, including depreciation of the Company’s new headquarters in Phoenix, Arizona. This was partially offset by a decrease in marketing costs from Nikola World in 2019.

 

Interest Income, net

 

Legacy Nikola’s interest income, net decreased by $0.2 million or 80.5%, from $0.3 million during the three months ended March 31, 2019 to $0.1 million during the three months ended March 31, 2020. The decrease is primarily due to increased interest expense from Legacy Nikola’s financing lease and a decrease in average cash and cash equivalents balance, offset by a higher interest rate earned on deposits.

 

Loss on Forward Contract Liability

 

Legacy Nikola’s loss on Series D redeemable convertible preferred stock forward contract liability represents the recognized loss from a $1.3 million change in fair value as of March 31, 2020.

 

Other Income, net

 

Legacy Nikola’s other income, net increased by $0.1 million, from $1 thousand during the three months ended March 31, 2019 to $0.1 million during the three months ended March 31, 2020. The increase was primarily related to subcontracting work performed on government contracts.

 

Income Tax Expense

 

Legacy Nikola’s income tax expense was immaterial for the three months Ended March 31, 2020 and 2019. Legacy Nikola has accumulated net operating losses at the federal and state level and maintain a full valuation allowance against Legacy Nikola’s net deferred taxes.

 

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Non-GAAP Financial Measures

 

In addition to Legacy Nikola’s results determined in accordance with GAAP, the Company believes the following non-GAAP measure is useful in evaluating its operational performance. The Company uses the following non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. The Company believes that non-GAAP financial information, when taken collectively, may be helpful to investors in assessing its operating performance.

 

EBITDA and Adjusted EBITDA

 

“EBITDA” is defined as net loss before other non-operating expense or income, income tax expense or benefit, and depreciation and amortization. “Adjusted EBITDA” is defined as EBITDA adjusted for stock-based compensation and other special items determined by management. Adjusted EBITDA is intended as a supplemental measure of its performance that is neither required by, nor presented in accordance with, GAAP. The Company believes that the use of EBITDA and Adjusted EBITDA provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing the Company’s financial measures with those of comparable companies, which may present similar non GAAP financial measures to investors. However, you should be aware that when evaluating EBITDA and Adjusted EBITDA the Company may incur future expenses similar to those excluded when calculating these measures. In addition, the Company’s presentation of these measures should not be construed as an inference that the Company’s future results will be unaffected by unusual or non-recurring items. The Company’s computation of Adjusted EBITDA may not be comparable to other similarly titled measures computed by other companies, because all companies may not calculate Adjusted EBITDA in the same fashion.

 

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. The Company compensates for these limitations by relying primarily on the Company’s GAAP results and using EBITDA and Adjusted EBITDA on a supplemental basis. You should review the reconciliation of net loss to EBITDA and Adjusted EBITDA below and not rely on any single financial measure to evaluate the Company’s business.

 

The following table reconciles net loss to EBITDA and Adjusted EBITDA for the three months ended March 31, 2020 and 2019:

 

    Three Months Ended March 31,  
    2020     2019  
    (in thousands)  
Net loss   $ (33,163 )   $ (30,097 )
Interest income, net     (64 )     (333 )
Income tax expense     1       2  
Depreciation and amortization     1,351       196  
EBITDA     (31,875 )     (30,232 )
Stock-based compensation     1,313       1,153  
Loss on Series A redeemable convertible preferred stock warrant liability           593  
Loss on forward contract liability     1,324        
Adjusted EBITDA   $ (29,238 )   $ (28,486 )

 

Liquidity and Capital Resources

 

Since inception, Legacy Nikola has financed its operations primarily from the sales of redeemable convertible preferred stock. As of March 31, 2020, Legacy Nikola’s principal sources of liquidity were Legacy Nikola’s cash and cash equivalents in the amount of $75.5 million, which are primarily invested in money market funds.

 

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Short-Term Liquidity Requirements

 

As of the date of this Current Report on From 8-K, Legacy Nikola has yet to generate any material revenues from its business operations. As of March 31, 2020, Legacy Nikola’s current assets were $101.2 million consisting primarily of cash and restricted cash of $79.6 million, and Legacy Nikola’s current liabilities were $30.5 million primarily comprised of accrued expenses, accounts payables and a $4.1 million equipment term note.

 

In connection with the June 3, 2020 Business Combination and PIPE transactions The Company raised gross proceeds of $763.2 million, incurring $52.3 million in transaction fees, for net proceeds of $710.9 million. Net proceeds excludes payments for redemptions of M&M Residual for $70.0 million and repurchase of Nimbus Series B convertible redeemable preferred shares for $25.0 million.

 

As a result of these transactions, as of June 3, 2020 the Company had a cash and cash equivalents balance of approximately $729.4 million. The Company believes this will be sufficient to continue to execute its business strategy over the next twelve to eighteen month period by (i) completing the development and industrialization of the Nikola Tre BEV truck, (ii) completing phase one construction of the greenfield manufacturing facility, (iii) completing the construction of a pilot commercial hydrogen station and (iv) hiring of personnel.

 

However, actual results could vary materially and negatively as a result of a number of factors, including:

 

· the costs of building Phase 1 of the Company’s greenfield manufacturing facility and equipment;

 

· the timing and the costs involved in bringing the Company’s vehicles to market, mainly the Nikola Tre BEV truck;

 

· the Company’s ability to manage the costs of manufacturing the Nikola Tre BEV trucks;

 

· the scope, progress, results, costs, timing and outcomes of the Company’s research and development for its fuel cell trucks;

 

· the costs of maintaining, expanding and protecting the Company’s intellectual property portfolio, including potential litigation costs and liabilities;

 

· revenues received from sales of the Nikola Tre BEV trucks in 2021;

 

· the costs of additional general and administrative personnel, including accounting and finance, legal and human resources, as a result of becoming a public company;

 

· the Company’s ability to collect revenues; and

 

· other risks discussed in the Proxy Statement in the section entitled “Risk Factors” beginning on page 32 of the Proxy Statement.

 

Long-Term Liquidity Requirements

 

The capital raised in the Business Combination will not be sufficient to cover forecasted capital needs and operating expenditures in fiscal year 2022 through fiscal year 2024. Until the Company can generate sufficient revenue from BEV truck sales and FCEV leases to cover operating expenses, working capital and capital expenditures, the Company expect to fund cash needs through a combination of equity and debt financing, including lease securitizations. If the Company raises funds by issuing equity securities, dilution to stockholders may result. Any equity securities issued may also provide for rights, preferences or privileges senior to those of holders of Common Stock. If the Company raises funds by issuing debt securities, these debt securities would have rights, preferences and privileges senior to those of holders Common Stock. The terms of debt securities or borrowings could impose significant restrictions on the Company’s operations. The credit market and financial services industry have in the past, and may in the future, experience periods of upheaval that could impact the availability and cost of equity and debt financing.

 

If adequate funds are not available, The Company will need to curb its expansion plans or limit the Company’s research and development activities, which would have a material adverse impact on the Company’s business prospects and results of operations.

 

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The following table provides a summary of cash flow data (in thousands):

 

    Three Months Ended March 31,  
    2020     2019  
    (in thousands)  
Net cash used in operating activities   $ (22,047 )   $ (32,162 )
Net cash used in investing activities     (1,439 )     (9,863 )
Net cash provided by financing activities     13,301        

 

Cash Flows from Operating Activities

 

Legacy Nikola’s cash flows from operating activities are significantly affected by the growth of Legacy Nikola’s business primarily related to research and development and selling, general, and administrative activities. Legacy Nikola’s operating cash flows are also affected by Legacy Nikola’s working capital needs to support growth in personnel related expenditures and fluctuations in accounts payable and other current assets and liabilities.

 

Legacy Nikola’s net cash used in operating activities was $22.0 million for the three months ended March 31, 2020. The most significant component of Legacy Nikola’s cash used during this period was a net loss of $33.2 million, which included non-cash expenses of $6.7 million for in-kind services, $1.4 million related to depreciation and amortization, $1.3 million related to stock based compensation, and a loss of $1.3 million related to the change in fair value of Legacy Nikola’s Series D redeemable convertible preferred stock forward contract liability, and net cash inflows of $0.4 million from changes in operating assets and liabilities.

 

Legacy Nikola’s cash used in operating activities was $32.2 million for the three months ended March 31, 2019. The largest component of Legacy Nikola’s cash used during this period was a net loss of $30.1 million, which included non-cash charges of $1.2 million related to stock based compensation, loss of $0.6 million related to the change in fair value of Legacy Nikola’s Series A redeemable convertible preferred stock warrant liability, and $0.2 million related to depreciation and amortization expense, and net cash outflows of $4.0 million from changes in operating assets and liabilities primarily driven by a decrease in accounts payable

 

Cash Flows from Investing Activities

 

Legacy Nikola continues to experience negative cash flows from investing activities as it expands Legacy Nikola’s business and builds its infrastructure. Cash flows from investing activities primarily relate to capital expenditures to support the Company’s growth. Legacy Nikola net cash used in investing activities is expected to continue to increase substantially as the Company builds out and tools the North American truck manufacturing facility in Coolidge, Arizona and develop the network of hydrogen fueling stations.

 

Legacy Nikola net cash used in investing activities was $1.4 million for the three months ended March 31, 2020, which was due to purchases and deposits on capital equipment for research and development testing equipment and software purchases.

 

Legacy Nikola net cash used in investing activities was $9.9 million for the three months ended March 31, 2019, which was primarily due to purchases and deposits on capital equipment of $5.8 million and $4.0 million related to the construction of the Company’s headquarters.

 

Cash Flows from Financing Activities

 

Through March 31, 2020, Legacy Nikola raised aggregate gross proceeds of approximately $435.1 million, of which $355.1 million was in the form of cash, from sales of redeemable convertible preferred stock. Additionally, in April 2020, Legacy Nikola received cash of $50.0 million in connection with the issuance of its Series D redeemable convertible preferred stock.

 

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Legacy Nikola’s net cash provided by financing activities was $13.3 million for the three months ended March 31, 2020, which was primarily due to proceeds from the issuance of Series D redeemable convertible preferred stock of $13.0 million and proceeds from tenant allowances for the construction of the Company’s headquarters of $0.9 million, offset by payments made for future stock issuance costs of $0.4 million and Legacy Nikola’s financing lease of $0.2 million.

 

Legacy Nikola has no cash financing activities for the three months ended March 31, 2019.

 

Contractual Obligations and Commitments

 

For the three months ended March 31, 2020, there have been no material changes to Legacy Nikola’s significant contractual obligations as previously disclosed in the Proxy Statement.

 

Waitlist and Reservations

 

Potential FCEV customers may reserve slots in the Company’s future production schedule by submitting a reservation request on Company’s website. No deposit is required to be paid by the customer. The Company stopped soliciting FCEV reservations in fiscal 2019 in order to focus on large corporate dedicated customers. The Company considers the reservation list as an indication of potential demand rather than a product backlog for pending vehicle sales, as customers have not made firm commitments to order and take deliveries of vehicles and may cancel such reservations at any time. As the Company nears commercial production in 2023, the Company expects to convert existing FCEV reservations into binding orders.

 

As of March 31, 2020, Legacy Nikola had approximately 14,000 reservations for its FCEV trucks.

 

The Company only accepts binding orders on its BEV trucks, which are negotiated on a case by case basis.

 

Off Balance Sheet Arrangements

 

Since the date of Legacy Nikola’s incorporation, Legacy Nikola has not engaged in any off balance sheet arrangements, as defined in the rules and regulations of the SEC.

 

Critical Accounting Policies and Estimates

 

The Company’s discussion and analysis of its financial condition and results of operations are based upon the Company’s financial statements, which have been prepared in accordance with GAAP. These principles require the Company to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. The Company’s most significant estimates and judgments involve valuation of the Company’s stock-based compensation, including the fair value of common stock, the valuation of warrant liabilities, the valuation of the redeemable convertible preferred stock tranche liability and estimates related to the Company’s build-to-suit lease. Management bases its estimates on historical experience and on various other assumptions believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates.

 

There have been no substantial changes to these estimates, or the policies related to them during the three months ended March 30, 2020. A full discussion of these estimates and policies is included in the Proxy Statement in the section entitled “Nikola’s Management’s Discussion and Analysis of Financial Condition and Results of Operations” beginning on page 173 of the Proxy Statement, which is incorporated herein by reference.

 

Emerging Growth Company Status

 

The Company is an emerging growth company (“EGC”), as defined in the JOBS Act. The JOBS Act permits companies with EGC status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until they would apply to private companies. The Company has elected to use this extended transition period to enable it to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company’s financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.

 

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In addition, the Company intends to rely on the other exemptions and reduced reporting requirements provided by the JOBS Act. Subject to certain conditions set forth in the JOBS Act, if, as an EGC, the Company intends to rely on such exemptions, the Company is not required to, among other things: (i) provide an auditor’s attestation report on its system of internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes Oxley Act; (ii) provide all of the compensation disclosure that may be required of non-emerging growth public companies under the Dodd Frank Wall Street Reform and Consumer Protection Act; (iii) comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis); and (iv) disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the Chief Executive Officer’s compensation to median employee compensation.

 

The Company will remain an EGC under the JOBS Act until the earliest of (i) the last day of the Company’s first fiscal year following the fifth anniversary of the first sale of VectoIQ’s common stock in its initial public offering, (ii) the last date of the Company’s fiscal year in which it has total annual gross revenue of at least $1.07 billion, (iii) the date on which the Company is deemed to be a “large accelerated filer” under the rules of the SEC with at least $700.0 million of outstanding securities held by non-affiliates, or (iv) the date on which the Company has issued more than $1.0 billion in non-convertible debt securities during the previous three years. The Company expects this to occur during fiscal 2020.

 

Recent Accounting Pronouncements

 

Note 2 to the Company’s unaudited consolidated financial statements and notes thereto, set forth in Exhibit 99.1 hereto, provides more information about recent accounting pronouncements, the timing of their adoption, and the Company’s assessment, to the extent the Company has made one, of their potential impact on the Company’s financial condition and its results of operations and is incorporated herein by reference.

 

Directors and Executive Officers

 

Information with respect to the Company’s directors and executive officers after the Closing is set forth in the Proxy Statement in the sections entitled “Management After the Business Combination” beginning on page 222 and “Nikola’s Executive Compensation” beginning on page 169 of the Proxy Statement, which are incorporated herein by reference.

 

Directors

 

Effective as of the Effective Time, in connection with the Business Combination, the size of the board of directors of the Company (the “Board”) was increased from five members to nine members. Effective as of the Effective Time, Sooyean Jin (a.k.a. Sophia Jin), Michael L. Mansuetti, Gerrit A. Marx, Trevor R. Milton, Mark A. Russell, Lonnie R. Stalsberg, DeWitt C. Thompson, V and Jeffrey W. Ubben were appointed to serve as directors of the Company. Each of Robert Gendelman, Richard Lynch, Victoria McInnis and Sarah Hallac resigned as directors of the Company effective as of the Effective Time. Stephen J. Girsky continues to serve as a director of the Company. Messrs. Girsky, Mansuetti and Thompson were appointed to serve as Class I directors, with terms expiring at the Company’s 2021 annual meeting of stockholders; Ms. Jin and Messrs. Stalsberg and Ubben were appointed to serve as Class II directors, with terms expiring at the Company’s 2022 annual meeting of stockholders; and Messrs. Marx, Milton and Russell were appointed to serve as Class III directors, with terms expiring at the Company’s 2023 annual meeting of stockholders. Biographical information for these individuals is set forth in the Proxy Statement in the section entitled “Management After the Business Combination” beginning on page 222 of the Proxy Statement, which is incorporated herein by reference.

 

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Independence of Directors

 

The Board has determined that each the directors of the Company other than Messrs. Milton and Russell qualify as independent directors, as defined under the listing rules of The Nasdaq Stock Market LLC (the “Nasdaq listing rules”), and that the Board consists of a majority of “independent directors,” as defined under the rules of the SEC and Nasdaq listing rules relating to director independence requirements.

 

Committees of the Board of Directors

 

Effective as of as of the Effective Time, the standing committees of the Board consist of an audit committee (the “Audit Committee”), a compensation committee (the “Compensation Committee”) and a nominating and corporate governance committee (the “Nominating Committee”). Each of the committees reports to the Board.

 

Effective as of the Effective Time, the Board appointed Mr. Girsky, Ms. Jin and Mr. Mansuetti to serve on the Audit Committee, with Mr. Girsky as chair of the Audit Committee. The Board appointed Messrs. Marx, Thompson and Stalsberg to serve on the Compensation Committee, with Mr. Marx as chair of the Compensation Committee. The Board appointed Messrs. Ubben, Girsky and Marx to serve on the Nominating Committee, with Mr. Ubben as chair of the Nominating Committee.

 

Executive Officers

 

Effective as of the Effective Time, in connection with the Business Combination, the Board appointed Trevor R. Milton to serve as Executive Chairman, Mark A. Russell to serve as President and Chief Executive Officer, Kim J. Brady to serve as Chief Financial Officer, Joseph R. Pike to serve as Chief Human Resources Officer, and Britton M. Worthen to serve as Chief Legal Officer and Secretary of the Company. Each of Stephen J. Girsky, Steve Shindler and Mary Chan resigned as the President and Chief Executive Officer, Chief Financial Officer and Chief Operating Officer, respectively, effective as of the Effective Time. Biographical information for the new executive officers are set forth in the Proxy Statement in the section entitled “Management After the Business Combination” beginning on page 222 of the Proxy Statement, which is incorporated herein by reference.

 

Director Compensation

 

The Board designed the Company’s non-employee director compensation program to reward directors for their contributions to the Company’s success, align the director compensation program with stockholder interests and the Company’s executive compensation program, and provide competitive compensation necessary to attract and retain high quality non-employee directors. The Board expects to review director compensation periodically to ensure that director compensation remains competitive such that the Company is able to recruit and retain qualified directors.

 

Under the non-employee director compensation program, the Company will reward directors entirely in the form of stock-based compensation, consisting of (i) for each non-employee director, an annual grant of a restricted stock unit award (“RSUs”) under the Nikola Corporation 2020 Stock Incentive Plan (the “2020 Plan”) for shares of Common Stock having a grant date fair market value of $200,000, to vest in full on the first anniversary of such grant date, subject to continued service through such vesting date and (ii) for the chair of each of the committees, an annual grant of RSUs with a value of $10,000, to vest in full on the first anniversary of such grant date, subject to continued service through such vesting date.

 

The initial grant of such RSUs will be subject to approval by the Board as soon as practicable following the effective registration of the securities under the 2020 Plan on a Registration Statement on Form S-8. The calculation of the number of shares subject to the initial RSUs will be based upon an assumed value on the date of grant of $10.00 per share, and the RSUs will vest in full on the first anniversary of the Closing Date, subject to continued service through such vesting date.

 

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Subject to Board approval as soon as practicable following the effective registration of the securities under the 2020 Plan on a Registration Statement on Form S-8, subsequent grants of RSUs under the non-employee director compensation program will be automatically granted, on the next business day following the annual meeting of stockholders of the Company, commencing with the annual meeting of stockholders of the Company to be held in 2021. The calculation of the number of shares subject to such annual RSU grant will be based upon the average closing stock price of Common Stock over the 21-trading days prior to the grant date.

 

Compensation under the director compensation program will be subject to the annual limits on non-employee director compensation set forth in the 2020 Plan. 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 2020 Plan) to the extent outstanding at such time, subject to continued service through the closing of such change in control.

 

The Company’s policy is to reimburse directors for reasonable and necessary out-of-pocket expenses incurred in attending board and committee meetings or performing other services in their capacities as directors. The Company does not provide tax gross-up payments to members of the Board.

 

Executive Compensation

 

On the Closing Date, the Company entered into individual amended and restated employment agreements with its executive officers, Trevor R. Milton, Mark A. Russell, Kim J. Brady, Joseph R. Pike and Britton M. Worthen, which superseded their existing employment agreements. Details of the employment agreements are outlined below.

 

Agreement with Trevor R. Milton

 

On June 3, 2020, Trevor R. Milton entered into an amended and restated employment agreement with the Company to serve as Executive Chairman of the Board. Mr. Milton’s employment will continue until terminated in accordance with the terms of the employment agreement. Pursuant to the employment agreement, Mr. Milton’s annual base salary is $1. Mr. Milton’s employment agreement provides that he is eligible to participate in the Company’s health and welfare benefit plans maintained for the benefit of Company employees. Mr. Milton has declined to participate in any annual cash bonus program provided by the Company, without regard to his eligibility for any such program. Subject to Board approval, Mr. Milton is eligible to receive an annual time-vested stock award consisting of RSUs for shares of Common Stock having a value on the date of grant of not less than $6,000,000 (based on an assumed stock value of $10.00 per share for the initial grant), subject to continued employment during a three-year cliff vesting schedule, and a performance-based stock award consisting of 4,859,000 RSUs which can be earned upon the achievement of pre-established share price milestones, subject to continued employment during a performance period that ends on the third anniversary of the Closing Date. Mr. Milton’s employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.

 

Pursuant to the employment agreement, in the event of an Involuntary Termination (as defined in the agreement) of Mr. Milton’s employment, the Company will engage Mr. Milton as a non-employee consultant for the period commencing on the termination date and ending on the second anniversary of the termination date. As consideration for his consulting services, the Company will pay Mr. Milton $10.0 million on each of the first and second anniversaries of the termination date. In the event of such Involuntary Termination and subject to Mr. Milton’s delivery of an effective release of claims and ongoing compliance with certain post-termination restrictive covenants, including a two-year non-compete and non-solicit covenants and a mutual non-disparagement covenant, all of Mr. Milton’s unvested equity awards, including his performance-based stock award, will accelerate in full (and the post-termination exercise period for unexercised stock options will be extended until the earlier of (i) three years following his termination date or (ii) the remaining term of each such stock option), and Mr. Milton will be entitled to a lump sum cash payment equal to 18 months of COBRA benefits coverage, less applicable withholding taxes.

 

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Agreement with Mark A. Russell

 

On June 3, 2020, Mark A. Russell entered into an amended and restated employment agreement with the Company to serve as President and Chief Executive Officer. Mr. Russell’s employment will continue until terminated in accordance with the terms of the employment agreement. Pursuant to the employment agreement, Mr. Russell’s annual base salary is $1. Mr. Russell’s employment agreement provides that he is eligible to participate in the Company’s health and welfare benefit plans maintained for the benefit of Company employees. Mr. Russell has declined to participate in any annual cash bonus program provided by the Company, without regard to his eligibility for any such program. Subject to Board approval, Mr. Russell is eligible to receive an annual time-vested stock award consisting of RSUs for shares of Common Stock having a value on the date of grant of not less than $6,000,000 (based on an assumed stock value of $10.00 per share for the initial grant), subject to continued employment during a three-year cliff vesting schedule, and a performance-based stock award consisting of 4,859,000 RSUs which can be earned upon the achievement of pre-established share price milestones, subject to continued employment during a performance period that ends on the third anniversary of the Closing Date. As of the Effective Time, all unvested stock options then held by Mr. Russell vested in full. Mr. Russell’s employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.

Pursuant to the employment agreement, in the event of an Involuntary Termination (as defined in the agreement) of Mr. Russell’s employment and subject to Mr. Russell’s delivery of an effective release of claims and ongoing compliance with certain post-termination restrictive covenants, including a two-year non-compete and non-solicit covenants and a non-disparagement covenant, Mr. Russell will be entitled to receive: (1) a lump sum cash payment in an amount equal to $2,600,000, less applicable withholding taxes; (2) a lump sum cash payment equal to 18 months of COBRA benefits coverage, less applicable withholding taxes; (3) the acceleration in full of all unvested equity and equity-based awards, other than Mr. Russell’s performance-based award (and the post-termination exercise period for unexercised stock options will be extended to three years following his termination date); and (4) following certification by the Board, Mr. Russell’s performance-based stock award will vest in an amount based upon the achievement of the share price milestones prior to his termination date, pro-rated for the length of his employment during the performance period.

 

Agreement with Kim J. Brady

 

On June 3, 2020, Kim J. Brady entered into an amended and restated employment agreement with the Company to serve as Chief Financial Officer. Mr. Brady’s employment will continue until terminated in accordance with the terms of the employment agreement. Pursuant to the employment agreement, Mr. Brady’s annual base salary is $1. Mr. Brady’s employment agreement provides that he is eligible to participate in the Company’s health and welfare benefit plans maintained for the benefit of Company employees. Mr. Brady has declined to participate in any annual cash bonus program provided by the Company, without regard to his eligibility for any such program. Subject to Board approval, Mr. Brady is eligible to receive an annual time-vested stock award consisting of RSUs for shares of Common Stock having a value on the date of grant of not less than $3,200,000 (based on an assumed stock value of $10.00 per share for the initial grant), subject to continued employment during a three-year cliff vesting schedule, and a performance-based stock award consisting of 2,591,000 RSUs which can be earned upon the achievement of pre-established share price milestones, subject to continued employment during a performance period that ends on the third anniversary of the Closing Date. As of the Effective Time, all unvested stock options then held by Mr. Brady vested in full. Mr. Brady’s employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.

 

Pursuant to the employment agreement, in the event of an Involuntary Termination (as defined in the agreement) of Mr. Brady’s employment and subject to Mr. Brady’s delivery of an effective release of claims and ongoing compliance with certain post-termination restrictive covenants, including a two-year non-compete and non-solicit covenants and a non-disparagement covenant, Mr. Brady will be entitled to receive: (1) a lump sum cash payment in an amount equal to $1,050,000, less applicable withholding taxes; (2) a lump sum cash payment equal to 18 months of COBRA benefits coverage, less applicable withholding taxes; (3) the acceleration in full of all unvested equity and equity-based awards, other than Mr. Brady’s performance-based award (and the post-termination exercise period for unexercised stock options will be extended to three years following his termination date); and (4) following certification by the Board, Mr. Brady’s performance-based stock award will vest in an amount based upon the achievement of the share price milestones prior to his termination date, pro-rated for the length of his employment during the performance period.

 

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Agreement with Joseph R. Pike

 

On June 3, 2020, Joseph R. Pike entered into an amended and restated employment agreement with the Company to serve as Chief Human Resources Officer. Mr. Pike’s employment will continue until terminated in accordance with the terms of the employment agreement. Pursuant to the employment agreement, Mr. Pike’s annual base salary is $1. Mr. Pike’s employment agreement provides that he is eligible to participate in the Company’s health and welfare benefit plans maintained for the benefit of Company employees. Mr. Pike has declined to participate in any annual cash bonus program provided by the Company, without regard to his eligibility for any such program. Subject to Board approval, Mr. Pike is eligible to receive an annual time-vested stock award consisting of RSUs for shares of Common Stock having a value on the date of grant of not less than $2,000,000 (based on an assumed stock value of $10.00 per share for the initial grant), subject to continued employment during a three-year cliff vesting schedule, and a performance-based stock award consisting of 1,619,000 RSUs which can be earned upon the achievement of pre-established share price milestones, subject to continued employment during a performance period that ends on the third anniversary of the Closing Date. As of the Effective Time, all unvested stock options then held by Mr. Pike vested in full. Mr. Pike’s employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.

 

Pursuant to the employment agreement, in the event of an Involuntary Termination (as defined in the agreement) of Mr. Pike’s employment and subject to Mr. Pike’s delivery of an effective release of claims and ongoing compliance with certain post-termination restrictive covenants, including a two-year non-compete and non-solicit covenants and a non-disparagement covenant, Mr. Pike will be entitled to receive: (1) a lump sum cash payment in an amount equal to $945,000, less applicable withholding taxes; (2) a lump sum cash payment equal to 18 months of COBRA benefits coverage, less applicable withholding taxes; (3) the acceleration in full of all unvested equity and equity-based awards, other than Mr. Pike’s performance-based award (and the post-termination exercise period for unexercised stock options will be extended to three years following his termination date); and (4) following certification by the Board, Mr. Pike’s performance-based stock award will vest in an amount based upon the achievement of the share price milestones prior to his termination date, pro-rated for the length of his employment during the performance period.

 

Agreement with Britton M. Worthen

 

On June 3, 2020, Britton M. Worthen entered into an amended and restated employment agreement with the Company to serve as Chief Legal Officer. Mr. Worthen’s employment will continue until terminated in accordance with the terms of the employment agreement. Pursuant to the employment agreement, Mr. Worthen’s annual base salary is $1. Mr. Worthen’s employment agreement provides that he is eligible to participate in the Company’s health and welfare benefit plans maintained for the benefit of Company employees. Mr. Worthen has declined to participate in any annual cash bonus program provided by the Company, without regard to his eligibility for any such program. Subject to Board approval, Mr. Worthen is eligible to receive an annual time-vested stock award consisting of RSUs for shares of Common Stock having a value on the date of grant of not less than $3,000,000 (based on an assumed stock value of $10.00 per share for the initial grant), subject to continued employment during a three-year cliff vesting schedule, and a performance-based stock award consisting of 2,428,000 RSUs which can be earned upon the achievement of pre-established share price milestones, subject to continued employment during a performance period that ends on the third anniversary of the Closing Date. As of the Effective Time, all unvested stock options then held by Mr. Worthen vested in full. Mr. Worthen’s employment agreement contains customary confidentiality, non-solicitation and intellectual property assignment provisions.

 

Pursuant to the employment agreement, in the event of an Involuntary Termination (as defined in the agreement) of Mr. Worthen’s employment and subject to Mr. Worthen’s delivery of an effective release of claims and ongoing compliance with certain post-termination restrictive covenants, including a two-year non-compete and non-solicit covenants and a non-disparagement covenant, Mr. Worthen will be entitled to receive: (1) a lump sum cash payment in an amount equal to $1,050,000, less applicable withholding taxes; (2) a lump sum cash payment equal to 18 months of COBRA benefits coverage, less applicable withholding taxes; (3) the acceleration in full of all unvested equity and equity-based awards, other than Mr. Worthen’s performance-based award (and the post-termination exercise period for unexercised stock options will be extended to three years following his termination date); and (4) following certification by the Board, Mr. Worthen’s performance-based stock award will vest in an amount based upon the achievement of the share price milestones prior to his termination date, pro-rated for the length of his employment during the performance period.

 

  19  

 

 

The foregoing descriptions of each of the employment agreements with Messrs. Milton, Russell, Brady, Pike and Worthen is a summary only and is qualified in their entirety by the full text of the employment agreements, copies of which are attached hereto as Exhibit 10.12, Exhibit 10.13, Exhibit 10.14, Exhibit 10.15 and Exhibit 10.16, respectively, and are incorporated herein by reference.

 

Security Ownership of Certain Beneficial Owners and Management

 

The following table sets forth information known to the Company regarding the beneficial ownership of the Common Stock as of June 3, 2020, after giving effect to the Closing and the M&M Redemption, by:

 

· each person who is known by the Company to be the beneficial owner of more than five percent (5%) of the outstanding shares of the Common Stock;

 

· each current named executive officer and director of the Company; and

 

· all current executive officers and directors of the Company, 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.

 

The beneficial ownership percentages set forth in the table below are based on approximately 360,904,478 shares of Common Stock issued and outstanding as of June 3, 2020 and do not take into account the issuance of any shares of Common Stock upon the exercise of warrants to purchase up to approximately 23,890,000 shares of Common Stock that remain outstanding.

 

Unless otherwise noted in the footnotes to the following table, and subject to applicable community property laws, the persons and entities named in the table have sole voting and investment power with respect to their beneficially owned common stock and preferred stock.

Name and Address of Beneficial Owner   Number of Shares of
Common Stock
Beneficially Owned
    Percentage of
Outstanding
Common Stock
%
 
Directors and Named Executive Officers:                
Trevor R. Milton(1)(2)(3)     91,602,734       25.4  
Mark A. Russell(3)(4)     49,774,487       13.5  
Kim J. Brady(5)     10,275,414       2.8  
Stephen J. Girsky(6)     1,754,354       0.4  
Sophia Jin(7)            
Michael L. Mansuetti(8)            
Gerrit A. Marx(9)            
Lon Stalsberg(10)            
DeWitt C. Thompson, V(11)     21,593,927       6.0  
Jeffrey W. Ubben(12)     20,362,024       5.6  
Directors and Executive Officers as a Group (12 Individuals)(13)     200,194,063       52.0  
                 
Five Percent Holders:                
M&M Residual, LLC(1)     91,602,734       25.4  
T&M Residual, LLC(3)     39,876,497       11.0  
Iveco S.p.A.(14)     25,661,448       7.1  
Nimbus Holdings LLC(15)     23,081,451       6.4  
Green Nikola Holdings, LLC(16)     22,130,385       6.1  
WI Ventures, LLC(17)     19,048,020       5.3  

 

 

 

  20  

 

 

(1) Consists of 91,602,734 shares held by M&M Residual, LLC, which includes 3,158,949 shares subject to options held by certain employees pursuant to the Founder’s Stock Option Plan (as defined in the Proxy Statement). M&M Residual, LLC is wholly-owned by Trevor A. Milton. Mr. Milton has sole voting and dispositive power over shares held by M&M Residual, LLC. Reflects the transfer of 1,266,102 shares of Legacy Nikola Common Stock to VA Spring NM, LLC (“VA Spring”), which occurred on May 18, 2020 and the transfer of 315,624 shares of Legacy Nikola Common Stock to VA Spring, which occurred on May 28, 2020. Also reflects the redemption of 7,000,000 shares of Legacy Nikola Common Stock at a purchase price of $10.00 per share, which occurred on June 3, 2020 immediately following the Effective Time. The business address of this stockholder is 4141 E Broadway Road, Phoenix, AZ 85040.

 

(2) Does not include shares held by T&M Residual, LLC.

 

(3) T&M Residual, LLC is owned by Trevor R. Milton and Mark A. Russell. Mr. Russell is the manager of T&M Residual, LLC, and has sole dispositive power over the shares held by T&M Residual, LLC. Mr. Milton has sole voting power over the shares held by T&M Residual, LLC. Reflects the transfer of 14,109,607 shares of Legacy Nikola Common Stock from T&M Residual, LLC to M&M Residual, LLC, which occurred on June 2, 2020. The business address of this stockholder is 4141 E Broadway Road, Phoenix, AZ 85040.

 

(4) Consists of (i) 1,054,691 shares held by Mr. Russell, (ii) 39,876,497 shares held by T&M Residual, LLC and (iii) exercisable options of Mr. Russell to purchase 8,843,299 shares vesting within 60 days of June 3, 2020. Reflects the transfer of 200,000 shares of Legacy Nikola Common Stock to VA Spring, which occurred on May 18, 2020.

 

(5) Includes exercisable options to purchase 10,275,414 shares vesting within 60 days of June 3, 2020. Reflects the transfer of 200,000 shares of Legacy Nikola Common Stock to VA Spring, which occurred on May 18, 2020.

 

(6) Consists of (i) 11,449 shares and 1,441 shares underlying Warrants owned directly by Mr. Girsky and (ii) 1,561,459 shares and 180,005 shares underlying Warrants owned, as of June 3, 2020, by VectoIQ Holdings, LLC (“Sponsor”). Mr. Girsky is the manager of Sponsor and, as such, may be deemed to beneficially own all of the 4,586,132 shares and 525,909 shares underlying Warrants owned directly by Sponsor as of June 3, 2020. Mr. Girsky disclaims beneficial ownership securities held by Sponsor except to the extent of his pecuniary interest therein (as described in clause (ii) of this footnote). The business address of this stockholder is 1354 Flagler Drive, Mamaroneck, New York 10543.

 

(7) Does not include shares held by Green Nikola Holdings LLC. Ms. Jin is affiliated with Green Nikola Holdings LLC but has no voting or dispositive power over the shares held by Green Nikola Holdings LLC.

 

(8) Does not include shares held by Nimbus Holdings LLC. Mr. Mansuetti is affiliated with Nimbus Holdings LLC but has no voting or dispositive power over the shares held by Nimbus Holdings LLC.

 

(9) Does not include shares held by Iveco. Mr. Marx is affiliated with Iveco S.p.A. but has no voting or dispositive power over the shares held by Iveco.

 

(10) Does not include 918,816 shares held by H2M NFund LLC. Mr. Stalsberg has an interest in H2M NFund LLC, but has no voting or dispositive power over these shares.

 

(11) Consists of (i) 5,674,485 shares held by Thompson Nikola, LLC, (ii) 3,520,370 shares held by Thompson Nikola II, LLC, and (iii) 12,399,072 shares held by Legend Capital Partners, each of which Mr. Thompson has sole voting and dispositive power with respect to. As President of Thompson Nikola, LLC, Thompson Nikola II, LLC, and Legend Capital Partners, Mr. Thompson may be deemed to indirectly beneficially own shares held by such entities and disclaims beneficial ownership of such shares except to the extent of his pecuniary interest therein. The business address of this stockholder is 1245 Bridgestone Blvd., LaVergne, TN 37086.

 

(12) Consists of (i) 8,686,587 shares held by VA Spring and (ii) 6,675,437 shares beneficially owned by ValueAct Spring Master Fund, L.P., and reflects ValueAct Spring Master Fund, L.P.’s purchase of 5,000,000 shares at a price of $10.00 per share, pursuant to a private placement, which occurred on June 3, 2020. As managing member of VA Spring NM, LLC, Mr. Ubben may be deemed to indirectly beneficially own shares held by VA Spring. Shares held by ValueAct Spring Master Fund, L.P. may be deemed to be indirectly beneficially owned by (i) VA Partners I, LLC as General Partner of ValueAct Spring Master Fund, L.P., (ii) ValueAct Capital Management, L.P. as the manager of ValueAct Spring Master Fund, L.P., (iii) ValueAct Capital Management, LLC as General Partner of ValueAct Capital Management, L.P., (iv) ValueAct Holdings, L.P. as the majority owner of the membership interests of VA Partners I, LLC, (v) ValueAct Holdings II, L.P. as the sole owner of the membership interests of ValueAct Capital Management, LLC and as the majority owner of the limited partnership interests of ValueAct Capital Management, L.P., and (vi) ValueAct Holdings GP, LLC as General Partner of ValueAct Holdings, L.P. and ValueAct Holdings II, L.P. Mr. Ubben disclaims beneficial ownerships of securities held by VA Spring and ValueAct Spring Master Fund, L.P., except to the extent of his pecuniary interest therein. The business address of this stockholder is One Letterman Drive, Building D, Fourth Floor, San Francisco, CA 94129.

 

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(13) Consists of (i) 175,881,025 shares beneficially owned by the Company’s current executive officers and directors, which include 489,636 shares held by M&M Residual, LLC that are subject to options held by certain executive officers pursuant to the Founder’s Stock Option Plan (as defined in the Proxy Statement), (ii) exercisable options to purchase 24,131,592 shares vesting within 60 days of June 3, 2020, and (iii) 181,446 shares underlying Warrants that become exercisable 30 days after the Closing Date. Reflects the transfer of an aggregate of 1,900,578 shares of Legacy Nikola Common Stock held by executive officers to VA Spring, which occurred on May 18, 2020 and May 28, 2020.

 

(14) Iveco is a wholly-owned subsidiary of CNHI. The business address of this stockholder is 25 St. James’ Street, London, SW1A 1HA, United Kingdom.

 

(15) Reflects the repurchase of 1,499,700 shares of Legacy Nikola Series B preferred stock at a purchase price of $16.67 per share, which occurred immediately prior to the Effective Time. Nimbus Holdings LLC is 100% owned by Robert Bosch LLC. Robert Bosch LLC is 100% owned by Robert Bosch North America Corporation. Robert Bosch North America Corporation is 100% owned by Robert Bosch GmbH. Robert Bosch Industrietreuhand KG (equivalent to an LP) has a 92% voting interest in Robert Bosch GmbH (CEO: Volkmar Denner). Robert Bosch Industrietreuhand KG has two general partners: Franz Fehrenbach and Wolfgang Malchow who share voting and investment power. The business address of the stockholder is 38000 Hills Tech Drive, Farmington Hills, MI 48331.

 

(16) Green Nikola Holdings LLC has two members, Hanwha General Chemical USA Corp. and Hanwha Energy USA Holdings Corp., which also share voting and investment power over the shares. The business address of this stockholder is 300 Frank W. Burr. Blvd., Suite 52, Teaneck, NJ 07666.

 

(17) WI Ventures, LLC is a wholly-owned subsidiary of Worthington Steel of Michigan, Inc., which is a wholly-owned subsidiary of Worthington Industries, Inc. The business address of this stockholder is 200 West Old Wilson Bridge Road, Columbus, OH 43085.

 

Certain Relationships and Related Transactions

 

The certain relationships and related party transactions of the Company are described in the Proxy Statement in the section entitled “Certain Nikola Relationships and Related Person Transactions” beginning on page 190 of the Proxy Statement, which is incorporated herein by reference.

 

Legal Proceedings

 

Information about legal proceedings is set forth in the Proxy Statement in the section entitled “Information About Nikola—Legal Proceedings” on page 168 of the Proxy Statement, which is incorporated herein by reference.

 

Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

 

Market Information and Holders

 

The information set forth in the section entitled “Price Range of Securities and Dividends” on page 248 of the Proxy Statement is incorporated herein by reference. Additional information regarding holders of the Company’s securities is set forth in the section entitled “Description of Registrant’s Securities to be Registered” below.

 

The Common Stock, the Warrants and VectoIQ units (consisting of one share of Common Stock and one Warrant, the “Units”) were historically quoted on The Nasdaq Capital Market under the symbols “VTIQ”, “VTIQW” and “VTIQU,” respectively. At the Effective Time, the Units automatically separated into the component securities and, as a result, no longer trade as a separate security. On June 4, 2020, the Common Stock and Warrants began trading on The Nasdaq Global Select Market under the new trading symbols “NKLA” and “NKLAW,” respectively.

 

As of the Closing Date and following the completion of the Business Combination, including the M&M Redemption, the Company had approximately 360,904,478 shares of the Common Stock issued and outstanding held of record by 81 holders, and approximately 23,890,000 Warrants outstanding held of record by 9 holders.

 

Dividends

 

The Company has not paid any cash dividends on the Common Stock to date. The Company may retain future earnings, if any, for future operations, expansion and debt repayment and has no current plans to pay cash dividends for the foreseeable future. Any decision to declare and pay dividends in the future will be made at the discretion of the Board and will depend on, among other things, the Company’s results of operations, financial condition, cash requirements, contractual restrictions and other factors that the Board may deem relevant. In addition, the Company’s ability to pay dividends may be limited by covenants of any existing and future outstanding indebtedness the Company or its subsidiaries incur. The Company does not anticipate declaring any cash dividends to holders of the Common Stock in the foreseeable future.

 

  22  

 

 

Description of Registrant’s Securities to be Registered

 

Common Stock

 

A description of the Common Stock is included in the Proxy Statement in the section entitled “Description of VectoIQ’s Securities—Authorized and Outstanding Stock” beginning on page 231 of the Proxy Statement, which is incorporated herein by reference.

 

Warrants

 

A description of the Company’s warrants is included in the Proxy Statement in the section entitled “Description of VectoIQ’s Securities—Warrants” beginning on page 234 of the Proxy Statement, which is incorporated herein by reference.

 

Indemnification of Directors and Officers

 

Information about indemnification of the Company’s directors and officers is set forth in the Proxy Statement in the section entitled “Management After the Business Combination—Limitation on Liability and Indemnification of Directors and Officers” beginning on page 229 of the Proxy Statement, which is incorporated herein by reference. The disclosure set forth in Item 1.01 of this Current Report on Form 8-K under the section entitled “Indemnification Agreements” is incorporated by reference into this Item 2.01.

 

Financial Statements and Supplementary Data

 

The information set forth in Item 9.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

The disclosure set forth in the “Introductory Note” above is incorporated by reference into this Item 3.02

 

The securities issued in connection with the Subscription Agreements have not been registered under the Securities Act of 1933 (the “Securities Act”) in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder.

 

Item 3.03 Material Modification to Rights of Security Holders.

 

The information set forth in Item 5.03 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 4.01 Changes in Registrant’s Certifying Accountant.

 

On June 3, 2020, the Board approved the engagement of Ernst & Young LLP (“EY”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ending December 31, 2020. EY served as the independent registered public accounting firm of Legacy Nikola prior to the Business Combination. Accordingly, RSM US LLP (“RSM”), the Company’s independent registered public accounting firm prior to the Business Combination, was informed that it would be replaced by EY as the Company’s independent registered public accounting firm following completion of the Company’s audit for the year ended December 31, 2019, which consists only of the accounts of the pre-business combination special purpose acquisition company.

 

RSM’s report on the Company’s balance sheets as of December 31, 2019 and 2018, the related statements of operations, stockholders’ equity and cash flows for the year ended December 31, 2019 and for the period from January 23, 2018 (inception) to December 31, 2018, and the related notes to the financial statements (collectively, the “financial statements”) did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.

 

  23  

 

 

During the period from January 23, 2018 (inception) to December 31, 2019 and the subsequent period through March 31, 2020, there were no: (i) disagreements with RSM on any matter of accounting principles or practices, financial statement disclosures or audited scope or procedures, which disagreements if not resolved to RSM’s satisfaction would have caused RSM to make reference to the subject matter of the disagreement in connection with its report or (ii) reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

 

During the period from January 23, 2018 (inception) to December 31, 2018, and the interim period through March 31, 2020, the Company did not consult EY with respect to either (i) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company by EY that EY concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was either the subject of a disagreement, as that term is described in Item 304(a)(1)(iv) of Regulation S-K under the Exchange Act and the related instructions to Item 304 of Regulation S-K under the Exchange Act, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K under the Exchange Act.

 

The Company has provided RSM with a copy of the disclosures made by the Company in response to this Item 4.01 and has requested that RSM furnish the Company with a letter addressed to the SEC stating whether it agrees with the statements made by the registrant in response to this Item 304(a) and, if not, stating the respects in which it does not agree. A letter from RSM is attached hereto as Exhibit 16.1.

 

Item 5.01 Changes in Control of the Registrant.

 

The information set forth in the section entitled “Introductory Note” and in the section entitled “Security Ownership of Certain Beneficial Owners and Management” in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

The information set forth in the sections entitled “Directors and Executive Officers” and “Certain Relationships and Related Transactions” in Item 2.01 of this Current Report on Form 8-K is incorporated herein by reference.

 

Nikola Corporation 2020 Stock Incentive Award Plan

 

At the Special Meeting, the stockholders of the Company considered and approved the 2020 Plan. The 2020 Plan was previously approved, subject to stockholder approval, by the Board on May 6, 2020. The 2020 Plan became effective immediately upon the Closing.

 

A description of the 2020 Plan is included in the Proxy Statement in the section entitled “Proposal No. 4—The Stock Incentive Plan Proposal” beginning on page 128 of the Proxy Statement, which is incorporated herein by reference. The foregoing description of the 2020 Plan is qualified in its entirety by the full text of the 2020 Plan and the Forms of Stock Option Agreement, Notice of Exercise, Stock Option Grant Notice, Restricted Stock Unit Agreement, and Restricted Stock Agreement under the 2020 Plan, which are attached hereto as Exhibit 10.4 and Exhibit 10.5, respectively, and incorporated herein by reference.

 

  24  

 

 

Nikola Corporation 2020 Employee Stock Purchase Plan

 

At the Special Meeting, the stockholders of the Company considered and approved the Nikola Corporation 2020 Employee Stock Purchase Plan (the “2020 ESPP”). The 2020 ESPP was previously approved, subject to stockholder approval, by the Board on May 6, 2020. The 2020 ESPP became effective immediately upon the Closing.

 

A description of the 2020 ESPP is included in the Proxy Statement in the section entitled “Proposal No. 6—The Employee Stock Purchase Plan Proposal” beginning on page 136 of the Proxy Statement, which is incorporated herein by reference. The foregoing description of the 2020 ESPP is qualified in its entirety by the full text of the 2020 ESPP, which is attached hereto as Exhibit 10.6 and incorporated herein by reference.

  

Item 5.06 Change in Shell Company Status.

 

As a result of the Merger, which fulfilled the definition of a business combination as required by the Amended and Restated Certificate of Incorporation of the Company, as in effect immediately prior to the Closing, the Company ceased to be a shell company (as defined in Rule 12b-2 of the Exchange Act) as of the Closing. A description of the Business Combination and the terms of the Business Combination Agreement are included in the Proxy Statement in the sections entitled “The Business Combination” beginning on page 80 and “The Business Combination Agreement” beginning on page 95 of the Proxy Statement, which are incorporated herein by reference.

 

Item 9.01 Financial Statements and Exhibits.

 

(a) Financial Statements of Businesses Acquired.

 

The historical audited consolidated financial statements of Legacy Nikola as of and for the year ended December 31, 2019 and the related notes are included in the Proxy Statement beginning on page F-2 of the Proxy Statement and are incorporated herein by reference.

 

The unaudited consolidated financial statements of the Company as of and for the three months ended March 31, 2020 are set forth in Exhibit 99.1 hereto and are incorporated herein by reference.

 

(b) Pro Forma Financial Information.

 

The unaudited pro forma condensed combined financial information of the Company for the year ended December 31, 2019 are included in the Proxy Statement in the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” beginning on page 64 of the Proxy Statement is incorporated herein by reference.

 

The unaudited pro forma condensed combined financial information of the Company as of and for the three months ended March 31, 2020 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

 

  25  

 

 

(d) Exhibits.

 

Exhibit
No.
  Description
2.1+   Business Combination Agreement by and among VectoIQ Acquisition Corp., VCTIQ Merger Sub Corp., and Nikola Corporation, dated March 2, 2020 (incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed on March 3, 2020).
     
3.1   Second Amended and Restated Certificate of Incorporation of the Company.
     
3.2   Amended and Restated Bylaws of the Company.
     
4.1   Form of Common Stock Certificate of the Company.
     
4.2   Form of Warrant of the Company.
     
4.3   Warrant Agreement by and between the Company and Continental Stock Transfer & Trust Company, dated May 15, 2018 (incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed on May 21, 2018).
     
4.4   Registration Rights and Lock-Up Agreement by and among VectoIQ Acquisition Corp. and certain stockholders of VectoIQ Acquisition Corp., dated June 3, 2020 (included as Exhibit A to Exhibit 2.1).
     
4.5   Form of Lock-Up Agreement by and between the Company and certain stockholders, dated June 3, 2020.
     
4.6   Lock-Up Agreement by and between the Company and WI Ventures LLC, dated June 3, 2020.
     
10.1   Form of Subscription Agreement by and between the Company and certain purchasers, dated March 2, 2020 (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed on March 3, 2020).
     
10.2   Form of Subscription Agreement by and between the Company and entities affiliated with Fidelity Management & Research Company, dated June 3, 2020.
     
10.3#   Form of Indemnification Agreement by and between the Company and its directors and officers.
     
10.4#   Nikola Corporation 2020 Stock Incentive Plan.
     
10.5#   Forms of Stock Option Agreement, Notice of Exercise, Stock Option Grant Notice, Restricted Stock Unit Agreement, and Restricted Stock Agreement under the Nikola Corporation 2020 Stock Incentive Plan (incorporated by reference to Exhibit 10.4 to the S-4).
     
10.6#   Nikola Corporation 2020 Employee Stock Purchase Plan.
     
10.7#   Employment Agreement by and between Nikola Corporation and Trevor R. Milton, dated July 13, 2016 (incorporated by reference to Exhibit 10.7 to the Company’s Registration Statement on Form S-4 (File No. 333-237179) (as amended, the “S-4”)).
     
10.8#   Offer Letter from Nikola Corporation to Mark A. Russell, dated February 8, 2019 (incorporated by reference to Exhibit 10.8 to the S-4).
     
10.9#   Offer Letter from Nikola Corporation to Kim J. Brady, dated October 17, 2017 (incorporated by reference to Exhibit 10.9 to the S-4).
     
10.10#   Offer Letter from Nikola Corporation to Joseph R. Pike, dated January 1, 2018 (incorporated by reference to Exhibit 10.10 to the S-4).
     
10.11#   Offer Letter from Nikola Corporation to Britton M. Worthen, dated March 26, 2019 (incorporated by reference to Exhibit 10.11 to the S-4).
     
10.12#   Executive Employment Agreement by and between the Company and Trevor R. Milton, dated June 3, 2020.
     
10.13#   Executive Employment Agreement by and between the Company and Mark A. Russell, dated June 3, 2020.
     
10.14#   Executive Employment Agreement by and between the Company and Kim J. Brady, dated June 3, 2020.
     
10.15#   Executive Employment Agreement by and between the Company and Joseph R. Pike, dated June 3, 2020.
     
10.16#   Executive Employment Agreement by and between the Company and Britton M. Worthen, dated June 3, 2020.
     
10.17#   Nikola Corporation 2017 Stock Option Plan, dated July 10, 2017 (incorporated by reference to Exhibit 10.6 to the S-4).

 

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Exhibit
No.
  Description
10.18#   Redemption Agreement by and between the Company and M&M Residual, LLC, dated June 3, 2020.
     
10.19   Lease Agreement by and between DARED 90 LLC and Nikola Corporation, dated February 13, 2018 (incorporated by reference to Exhibit 10.12 to the S-4).
     
10.20*   Master Industrial Agreement by and among Nikola Corporation, CNH Industrial N.V. and Iveco S.p.A., dated September 3, 2019, as amended by Amendment to Master Industrial Agreement, dated December 26, 2019, Second Amendment to Master Industrial Agreement, dated January 31, 2020, and Third Amendment to Master Industrial Agreement, dated February 28, 2020 (incorporated by reference to Exhibit 10.13 to the S-4).
     
10.21*   Amended and Restated European Alliance Agreement by and between Nikola Corporation, Iveco S.p.A., and solely with respect to Sections 9.5 and 16.18, CNH Industrial N.V., dated February 28, 2020 (incorporated by reference to Exhibit 10.14 to the S-4).
     
10.22*   Commercial Letter by and among VectoIQ Acquisition Corp., Nikola Corporation and Nimbus Holdings LLC, dated March 2, 2020 (incorporated by reference to Exhibit 10.15 to Form S-4).
     
10.23*   Master Agreement by and between Anheuser-Busch, LLC and Nikola Corporation (formerly Nikola Motor Company, LLC), dated February 22, 2018 (incorporated by reference to Exhibit 10.16 to the S-4).
     
10.24   Commercial Framework Agreement by and between Nikola Corporation and Green Nikola Holdings LLC, dated November 9, 2018 (incorporated by reference to Exhibit 10.17 to the S-4).
     
10.25*   Supply Agreement by and between Nel ASA and Nikola Corporation (formerly Nikola Motor Company, LLC), dated June 28, 2018 (incorporated by reference to Exhibit 10.18 to the S-4).
     
10.26*   European Supply Agreement by and among Nikola Iveco Europe B.V., IVECO S.p.A. and Nikola Corporation, dated April 9, 2020 (incorporated by reference to Exhibit 10.23 to the S-4).
     
10.27*   North American Supply Agreement by and among Nikola Iveco Europe B.V., Nikola Corporation, and solely with respect to Sections 2, 4.2, 4.8 and 6.2.2, Iveco S.p.A., dated April 9, 2020 (incorporated by reference to Exhibit 10.24 to the S-4).
     
10.28*   Technical Assistance Service Agreement by and between Nikola Corporation and Iveco S.p.A., dated April 9, 2020 (incorporated by reference to Exhibit 10.25 to the S-4).
     
10.29*   S-Way Platform and Product Sharing Contract by and between Nikola Corporation and Iveco S.p.A., dated April 9, 2020 (incorporated by reference to Exhibit 10.26 to Form S-4).
     
10.30*   Nikola Technology Licence Agreement by and among Nikola Iveco Europe B.V., Nikola Corporation, and solely with respect to Sections 4.3, 4.4, 4.5 and 4.6, Iveco S.p.A., dated April 9, 2020 (incorporated by reference to Exhibit 10.27 to the S-4).
     
10.31*   Iveco Technology Licence Agreement by and among Nikola Iveco Europe B.V., Iveco S.p.A., and solely with respect to Sections 4.3, 4.4, 4.5, and 4.6, Nikola Corporation, dated April 9, 2020 (incorporated by reference to Exhibit 10.28 to the S-4).
     
16.1   Letter from RSM US LLP to the SEC, dated June 5, 2020.
     
99.1   Unaudited consolidated financial statements of the Company as of and for the three months ended March 31, 2020.
     
99.2   Unaudited pro forma condensed consolidated combined financial information of the Company as of and for the three months ended March 31, 2020.

 

+ The schedules and exhibits to this agreement have been omitted pursuant to Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the SEC upon request.

 

# Indicates management contract or compensatory plan or arrangement.

 

* Portions of this exhibit have been omitted in accordance with Item 601 of Regulation S-K.

 

  27  

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: June 8, 2020

 

                                                   NIKOLA CORPORATION
     
  By: /s/ Mark A. Russell
    Mark A. Russell
    President and Chief Executive Officer

 

 

 

Exhibit 3.1

 

SECOND AMENDED AND RESTATED

 

CERTIFICATE OF INCORPORATION

 

OF

 

VECTOIQ ACQUISITION CORP.

 

June 3, 2020

 

VectoIQ Acquisition Corp., a corporation organized and existing under the laws of the State of Delaware, DOES HEREBY CERTIFY AS FOLLOWS:

 

1.         The name of the Corporation is “VectoIQ Acquisition Corp.”. The original certificate of incorporation of the corporation was filed with the Secretary of State of the State of Delaware on January 23, 2018 (the “Original Certificate”).

 

2.         The Original Certificate was amended and restated on May 15, 2018 (the “First Amended and Restated Certificate of Incorporation”).

 

3.         This Second Amended and Restated Certificate of Incorporation (this “Second Amended and Restated Certificate”), which both amends and restates the provisions of the First Amended and Restated Certificate of Incorporation, was duly adopted in accordance with Sections 228, 242 and 245 of the General Corporation Law of the State of Delaware.

 

4.         This Second Amended and Restated Certificate shall become effective on the date of filing with the Secretary of State of the State of Delaware.

 

5.         Pursuant to Sections 242 and 245 of the General Corporation Law of the State of Delaware, the text of the First Amended and Restated Certificate is hereby amended and restated in its entirety to read as follows:

 

ARTICLE I

 

The name of the Corporation is Nikola Corporation (the “Corporation”).

 

ARTICLE II

 

The address of the registered office of the Corporation in Delaware is 16192 Coastal Highway, Lewes, DE 19958, County of Sussex, and the name of its registered agent at that address is Harvard Business Services, Inc.

 

ARTICLE III

 

The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (the “DGCL).

 

 

 

ARTICLE IV

 

A.         Classes of Stock.  The total number of shares of all classes of capital stock that the Corporation shall have authority to issue is seven hundred fifty million (750,000,000), of which six hundred million (600,000,000) shares shall be Common Stock, $0.0001 par value per share (the “Common Stock), and of which one hundred fifty million (150,000,000) shares shall be Preferred Stock, $0.0001 par value per share (the “Preferred Stock”). The number of authorized shares of Common Stock or Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the then outstanding shares of Common Stock, without a vote of the holders of the Preferred Stock, or of any series thereof, unless a vote of any such Preferred Stock holders is required pursuant to the provisions established by the Board of Directors of the Corporation (the “Board of Directors”) in the resolution or resolutions providing for the issue of such Preferred Stock, and if such holders of such Preferred Stock are so entitled to vote thereon, then, except as may otherwise be set forth in the certificate of incorporation of the Corporation, the only stockholder approval required shall be the affirmative vote of a majority of the voting power of the Common Stock and the Preferred Stock so entitled to vote, voting together as a single class.

 

B.         Preferred Stock. The Preferred Stock may be issued from time to time in one or more series, as determined by the Board of Directors. The Board of Directors is expressly authorized to provide for the issue, in one or more series, of all or any of the remaining shares of Preferred Stock and, in the resolution or resolutions providing for such issue, to establish for each such series the number of its shares, the voting powers, full or limited, of the shares of such series, or that such shares shall have no voting powers, and the designations, preferences and relative, participating, optional or other special rights of the shares of such series, and the qualifications, limitations or restrictions thereof. The Board of Directors is also expressly authorized (unless forbidden in the resolution or resolutions providing for such issue) to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any series subsequent to the issuance of shares of that series. In case the number of shares of any such series shall be so decreased, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series.

 

C.         Common Stock.

 

1.                  Relative Rights of Preferred Stock and Common Stock. All preferences, voting powers, relative, participating, optional or other special rights and privileges, and qualifications, limitations, or restrictions of the Common Stock are expressly made subject and subordinate to those that may be fixed with respect to any shares of the Preferred Stock.

 

2.                  Voting Rights. Except as otherwise required by law or the certificate of incorporation of the Corporation, each holder of Common Stock shall have one vote in respect of

each share of stock held by such holder of record on the books of the Corporation for the election of directors and on all matters submitted to a vote of stockholders of the Corporation.

 

2

 

 

3.                  Dividends. Subject to the preferential rights of the Preferred Stock, the holders of shares of Common Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of the assets of the Corporation which are by law available therefor, dividends payable either in cash, in property or in shares of capital stock.

 

4.                  Dissolution, Liquidation or Winding Up. In the event of any dissolution, liquidation or winding up of the affairs of the Corporation, after distribution in full of the preferential amounts, if any, to be distributed to the holders of shares of the Preferred Stock, holders of Common Stock shall be entitled, unless otherwise provided by law or the certificate of incorporation of the Corporation, to receive all of the remaining assets of the Corporation of whatever kind available for distribution to stockholders ratably in proportion to the number of shares of Common Stock held by them respectively.

 

ARTICLE V

 

In furtherance and not in limitation of the powers conferred by the laws of the State of Delaware:

 

A.        The Board of Directors is expressly authorized to adopt, amend or repeal the bylaws of the Corporation, without any action on the part of the stockholders, by the vote of at least a majority of the directors of the Corporation then in office. In addition to any vote of the holders of any class or series of stock of the Corporation required by law or the certificate of incorporation of the Corporation, the bylaws may also be adopted, amended or repealed by the affirmative vote of the holders of at least a majority of the voting power of the shares of the capital stock of the Corporation entitled to vote in the election of directors, voting as one class.

 

B.        Elections of directors need not be by written ballot unless the bylaws of the Corporation shall so provide.

 

C.         The books of the Corporation may be kept at such place within or without the State of Delaware as the bylaws of the Corporation may provide or as may be designated from time to time by the Board of Directors.

 

ARTICLE VI

 

A.        The business and affairs of the Corporation shall be managed by a Board of Directors. The authorized number of directors of the Corporation shall be fixed in the manner provided in the bylaws of the Corporation. Other than for those directors elected by the holders of any series of Preferred Stock, which shall be as provided for or fixed pursuant to the provisions of Article IV, Paragraph B hereof, each director shall serve until his or her successor shall be duly elected and qualified or until his or her earlier resignation, removal from office, death or incapacity.

 

3

 

 

B.         Subject to the rights of the holders of any series of Preferred Stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director. If there are no directors in office, then an election of directors may be held in the manner provided by statute. Directors chosen pursuant to any of the foregoing provisions shall hold office until their successors are duly elected and qualified or until their earlier resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, or by the certificate of incorporation or the bylaws of the corporation, may exercise the powers of the full Board of Directors until the vacancy is filled.

 

ARTICLE VII

 

A.        No action required or permitted to be taken at any annual or special meeting of the stockholders may be taken without a meeting and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied.

 

B.         Special meetings of the stockholders of the Corporation may be called by such persons as provided in the bylaws of the Corporation.

 

C.        Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner and to the extent provided in the bylaws of the Corporation.

 

D.        Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Corporation, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Corporation to the Corporation or the Corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL, or (iv) any action asserting a claim governed by the internal affairs doctrine. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the Corporation shall be deemed to have notice of and consented to the provisions of this Article VII, Paragraph D.

 

ARTICLE VIII

 

A.       Limitation on Liability. To the fullest extent permitted by the DGCL, as the same exists or as may hereafter be amended (including, but not limited to Section 102(b)(7) of the DGCL), a director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. If the DGCL hereafter is amended to further eliminate or limit the liability of directors, then the liability of a director of the Corporation, in addition to the limitation on personal liability provided herein, shall be limited to the fullest extent permitted by the amended DGCL. Any repeal or modification of this paragraph by the stockholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such repeal or modification.

 

4

 

 

B.         Indemnification. Each person who is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation or of a partnership, joint venture, trust, employee benefit plan or other enterprise (including the heirs, executors, administrators or estate of such person), shall be indemnified and advanced expenses by the Corporation, in accordance with the bylaws of the Corporation, to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said law permitted the Corporation to provide prior to such amendment), or any other applicable laws as presently or hereinafter in effect. The right to indemnification and advancement of expenses hereunder shall not be exclusive of any other right that any person may have or hereafter acquire under any statute, provision of the certificate of incorporation or bylaws of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise.

 

C.         Insurance. The Corporation may, to the fullest extent permitted by law, purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any expense, liability or loss incurred by such person in any such capacity or arising out of such person’s status as such, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

 

D.        Repeal and Modification. Any repeal or modification of the foregoing provisions of this Article VIII shall not adversely affect any right or protection existing hereunder immediately prior to such repeal or modification.

 

ARTICLE IX

 

The affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to amend in any respect or repeal this Article IX, Paragraph A of Article V, or Articles VI, VII or VIII.

 

[remainder of page intentionally left blank]

 

5

 

 

IN WITNESS WHEREOF, the VectoIQ Acquisition Corp. has caused this certificate to be signed by its President and Chief Executive Officer this 3rd day of June, 2020.

 

  VECTOIQ ACQUISITION CORP.
   
  By: /s/ Mark A. Russell
    Mark A. Russell
  President and Chief Executive Officer

 

[Signature Page to Second Amended and Restated Certificate of Incorporation]

 

 

 

 

Exhibit 3.2

 

AMENDED AND RESTATED

 

B Y L A W S

 

OF

 

NIKOLA CORPORATION

 

(a Delaware corporation)

 

 

 

 

TABLE OF CONTENTS

 

Page

 

ARTICLE 1 Offices 1
1.1 Registered Office 1
1.2 Other Offices 1
ARTICLE 2 Meeting of Stockholders 1
2.1 Place of Meeting 1
2.2 Annual Meeting 1
2.3 Special Meetings 3
2.4 Notice of Meetings 3
2.5 List of Stockholders 3
2.6 Organization and Conduct of Business 3
2.7 Quorum 4
2.8 Adjournments 4
2.9 Voting Rights 4
2.10 Majority Vote 4
2.11 Record Date for Stockholder Notice and Voting 4
2.12 Proxies 5
2.13 Inspectors of Election 5
2.14 No Action Without a Meeting 5
ARTICLE 3 Directors 5
3.1  Number, Election, Tenure and Qualifications 5
3.2  Director Nominations 6
3.3 Enlargement and Vacancies 7
3.4 Resignation and Removal 7
3.5 Powers 7
3.6 Chairman of the Board 7
3.7 Place of Meetings 8
3.8 Regular Meetings 8
3.9 Special Meetings 8
3.10 Quorum, Action at Meeting, Adjournments 8
3.11 Action Without Meeting 8
3.12 Telephone Meetings 8
3.13 Committees 9
3.14 Fees and Compensation of Directors 9
ARTICLE 4 Officers 9
4.1 Officers Designated 9
4.2 Election 9
4.3 Tenure 9
4.4 The Executive Chairman of the Board 10
4.5 The Chief Executive Officer 10

 

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TABLE OF CONTENTS

(continued)

 

4.6 The President 10
4.7 The Vice President 10
4.8 The Secretary 11
4.9 The Assistant Secretary 11
4.10 The Chief Financial Officer 11
4.11 The Treasurer and Assistant Treasurers 11
4.12 Bond 11
4.13 Delegation of Authority 11
ARTICLE 5 Notices 12
5.1 Delivery 12
5.2  Waiver of Notice 12
ARTICLE 6 Indemnification and Insurance 12
6.1 Indemnification of Officers and Directors 12
6.2 Indemnification of Others 13
6.3 Advance Payment 13
6.4 Right of Indemnitee to Bring Suit 14
6.5 Non-Exclusivity and Survival of Rights; Amendments 14
6.6 Insurance 14
6.7 Reliance 15
6.8 Severability 15
ARTICLE 7 Capital Stock 15
7.1 Certificates for Shares 15
7.2 Signatures on Certificates 15
7.3 Transfer of Stock 16
7.4 Registered Stockholders 16
7.5 Lost, Stolen or Destroyed Certificates 16
ARTICLE 8 General Provisions 16
8.1 Dividends 16
8.2 Checks 16
8.3 Corporate Seal 17
8.4 Execution of Corporate Contracts and Instruments 17
8.5  Representation of Shares of Other Corporations 17
ARTICLE 9 Forum for Adjudication of Disputes 17
ARTICLE 10 Amendments 18

 

-ii-

 

 

AMENDED AND RESTATED

 

B Y L A W S

 

OF

 

NIKOLA CORPORATION

 

(a Delaware corporation)

 

ARTICLE 1

 

Offices

 

1.1              Registered Office. The registered office of Nikola Corporation shall be set forth in the certificate of incorporation of the corporation.

 

1.2              Other Offices. The corporation may also have offices at such other places, either within or without the State of Delaware, as the board of directors of the corporation (the “Board of Directors”) may from time to time designate, or the business of the corporation may require.

 

ARTICLE 2

 

Meeting of Stockholders

 

2.1              Place of Meeting. Meetings of stockholders may be held at such place, either within or without the State of Delaware, as may be designated by or in the manner provided in these bylaws, or, if not so designated, at the principal executive offices of the corporation. The Board of Directors may, in its sole discretion, (a) determine that a meeting of stockholders shall not be held at any place, but may instead be held solely by means of remote communication, or (b) permit participation by stockholders at such meeting, by means of remote communication as authorized by Section 211(a)(2) of the Delaware General Corporation Law (the “DGCL”).

 

2.2              Annual Meeting.

 

(a)               Annual meetings of stockholders shall be held each year at such date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting. At each such annual meeting, the stockholders shall elect by a plurality vote the number of directors equal to the number of directors of the class whose term expires at such meeting (or, if fewer, the number of directors properly nominated and qualified for election) to hold office until the third succeeding annual meeting of stockholders after their election. The stockholders shall also transact such other business as may properly be brought before the meeting. Except as otherwise restricted by the certificate of incorporation of the corporation or applicable law, the Board of Directors may postpone, reschedule or cancel any annual meeting of stockholders.

 

 

 

 

(b)               To be properly brought before the annual meeting, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder of record. A motion related to business proposed to be brought before any stockholders’ meeting may be made by any stockholder entitled to vote if the business proposed is otherwise proper to be brought before the meeting. However, any such stockholder may propose business to be brought before a meeting only if such stockholder has given timely notice to the Secretary of the corporation in proper written form of the stockholder’s intent to propose such business. To be timely, the stockholder’s notice must be delivered by a nationally recognized courier service or mailed by first class United States mail, postage or delivery charges prepaid, and received at the principal executive offices of the corporation addressed to the attention of the Secretary of the corporation not more than one hundred twenty (120) days nor less than ninety (90) days in advance of the anniversary of the date of the corporation’s proxy statement provided in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date that is more than thirty (30) days before or after the anniversary date of the previous year’s annual meeting, notice by the stockholder must be received by the Secretary of the corporation not later than the close of business on the later of (x) the ninetieth (90th) day prior to such annual meeting and (y) the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. For the purposes of these bylaws, “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or a comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. A stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting: (i) a brief description of the business desired to be brought before the annual meeting, the text of the proposal or business (including the text of any resolutions proposed for consideration and in the event that such business includes a proposal to amend the bylaws of the corporation, the language of the proposed amendment), and the reasons for conducting such business at the annual meeting; (ii) the name and record address of the stockholder proposing such business and the beneficial owner, if any, on whose behalf the proposal is made; (iii) the class, series and number of shares of the corporation that are owned beneficially and of record by the stockholder and such beneficial owner; (iv) any material interest of the stockholder in such business; and (v) any other information that is required to be provided by the stockholder pursuant to Section 14 of the Securities Exchange Act of 1934 and the rules and regulations promulgated thereunder (collectively, the “1934 Act”) in such stockholder’s capacity as a proponent of a stockholder proposal.

 

Notwithstanding anything in these bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Section; provided, however, that nothing in this Section shall be deemed to preclude discussion by any stockholder of any business properly brought before the annual meeting.

 

The Chairman of the Board (or such other person presiding at the meeting in accordance with these bylaws) shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Section, and if he or she should so determine, he or she shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted.

 

-2-

 

 

2.3              Special Meetings. Special meetings of the stockholders may be called for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, by (a) the Secretary only at the request of the Chairman of the Board, (b) the Executive Chairman of the Board, (c) by a resolution duly adopted by the affirmative vote of a majority of the Board of Directors or (d) by affirmative vote of the stockholders owning not less than twenty-five percent (25%) of the issued and outstanding stock of the corporation; provided that the Board of Directors approves such stockholder request for a special meeting. Such request shall state the purpose or purposes of the proposed meeting. Business transacted at any special meeting shall be limited to the matters relating to the purpose or purposes stated in the notice of meeting. Except as otherwise restricted by the certificate of incorporation or applicable law, the Board of Directors may postpone, reschedule or cancel any special meeting of stockholders.

 

2.4              Notice of Meetings. Except as otherwise provided by law, the certificate of incorporation or these bylaws, written notice of each meeting of stockholders, annual or special, stating the place, if any, date and time of the meeting, the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and, in the case of a special meeting, the purpose or purposes for which such special meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the meeting.

 

2.5              List of Stockholders. The officer in charge of the stock ledger of the corporation or the transfer agent shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, for a period of at least ten (10) days prior to the meeting, (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the corporation. If the meeting is to be held at a place, then the list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. If the meeting is to be held solely by means of remote communication, then the list shall also be open to the examination of any stockholder during the whole time of the meeting on a reasonably accessible electronic network, and the information required to gain access to such list shall be provided with the notice of the meeting.

 

2.6              Organization and Conduct of Business. The Chairman of the Board or, in his or her absence, the Executive Chairman of the Board of the corporation or, in their absence, such person as the Board of Directors may have designated or, in the absence of such a person, such person as may be chosen by the holders of a majority of the shares entitled to vote who are present, in person or by proxy, shall call to order any meeting of the stockholders and act as chairman of the meeting. In the absence of the Secretary of the corporation, the secretary of the meeting shall be such person as the chairman of the meeting appoints.

 

The chairman of any meeting of stockholders shall determine the order of business and the procedure at the meeting, including such regulation of the manner of voting and the conduct of discussion as seems to him or her in order.

 

-3-

 

 

2.7              Quorum. Except where otherwise provided by law or the certificate of incorporation of the corporation or these bylaws, the holders of a majority of the voting power of the capital stock issued and outstanding and entitled to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of the stockholders.

 

2.8              Adjournments. If a quorum is not present or represented at any meeting of stockholders, a majority of the stockholders present in person or represented by proxy at the meeting and entitled to vote, though less than a quorum, or by any officer entitled to preside at such meeting, shall be entitled to adjourn such meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. When a meeting is adjourned to another place, date or time, notice need not be given of the adjourned meeting if the place, date and time thereof are announced at the meeting at which the adjournment is taken; provided, however, that if the date of any adjourned meeting is more than thirty (30) days after the date for which the meeting was originally noticed, or if a new record date is fixed for the adjourned meeting, written notice of the place, if any, date, time and means of remote communications, if any, of the adjourned meeting shall be given in conformity herewith. At any adjourned meeting, any business may be transacted that might have been transacted at the original meeting.

 

2.9              Voting Rights. Unless otherwise provided in the DGCL, certificate of incorporation of the corporation, each stockholder shall at every meeting of the stockholders be entitled to one vote for each share of the capital stock having voting power held by such stockholder. No holder of shares of the corporation’s common stock shall have the right to cumulative votes.

 

2.10            Majority Vote. When a quorum is present at any meeting, the vote of the holders of a majority of the voting power of the capital stock and entitled to vote present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of an applicable statute or of the certificate of incorporation of the corporation or of these bylaws, a different vote is required in which case such express provision shall govern and control the decision of such question.

 

2.11            Record Date for Stockholder Notice and Voting. For purposes of determining the stockholders entitled to notice of, or to vote at, any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any right in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty (60) days nor less than ten (10) days before the date of any such meeting nor more than sixty (60) days before any other action to which the record date relates. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. If the Board of Directors does not so fix a record date, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the business day next preceding the day on which notice is given or, if notice is waived, at the close of business on the business day next preceding the day on which the meeting is held. The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating to such purpose.

 

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2.12          Proxies. Each stockholder entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy, but no such proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. All proxies must be filed with the Secretary of the corporation at the beginning of each meeting in order to be counted in any vote at the meeting. Subject to the limitation set forth in the last clause of the first sentence of this Section 2.12, a duly executed proxy that does not state that it is irrevocable shall continue in full force and effect unless (a) revoked by the person executing it, before the vote pursuant to that proxy, by a writing delivered to the corporation stating that the proxy is revoked or by a subsequent proxy executed by, or attendance at the meeting and voting in person by, the person executing the proxy, or (b) written notice of the death or incapacity of the maker of that proxy is received by the corporation before the vote pursuant to that proxy is counted.

 

2.13            Inspectors of Election. The corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors of election to act at the meeting and make a written report thereof. The corporation may designate one or more persons to act as alternate inspectors to replace any inspector who fails to act. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of his or her duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of his or her ability.

 

2.14           No Action Without a Meeting. No action shall be taken by the stockholders except at an annual or special meeting of stockholders called and noticed in the manner required by these bylaws. The stockholders may not in any circumstance take action by written consent.

 

ARTICLE 3

 

Directors

 

3.1              Number, Election, Tenure and Qualifications. The number of directors that shall constitute the entire Board of Directors shall be fixed from time to time by resolution adopted by a majority of the directors of the corporation then in office. No decrease in the number of authorized directors shall have the effect of removing any director before that director’s term of office expires.

 

The Board of Directors shall be divided into three classes, each class to serve for a term of three (3) years and to be as nearly equal in number as possible. Class I shall be comprised of directors who shall serve until the first annual meeting of stockholders following the effective date of these bylaws. Class II shall be comprised of directors who shall serve until the second annual meeting of stockholders following the effective date of these bylaws. Class III shall be comprised of directors who shall serve until the third annual meeting of stockholders following the effective date of these bylaws. The Board of Directors is authorized, upon the initial effectiveness of the classification of the Board of Directors, to assign members of the Board of Directors already in office among the various classes.

 

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Notwithstanding the immediately preceding paragraph, commencing with the 2030 annual meeting of stockholders, the classification of the Board of Directors shall cease, and all directors shall be elected for terms expiring at the next succeeding annual meeting of stockholders.

 

3.2              Director Nominations. At each annual meeting of the stockholders, directors shall be elected for that class of directors whose terms are then expiring, except as otherwise provided in Section 3.3, and each director so elected shall hold office until such director’s successor is duly elected and qualified or until such director’s earlier resignation, removal, death or incapacity.

 

Subject to the rights of holders of any class or series of stock having a preference over the common stock as to dividends or upon liquidation, nominations of persons for election to the Board of Directors must be (a) made by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (b) made by any stockholder of record of the corporation entitled to vote for the election of directors at the applicable meeting who complies with the notice procedures set forth in this Section 3.2. Directors need not be stockholders. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the corporation. To be timely, a stockholder’s notice shall be delivered by a nationally recognized courier service or mailed by first class United States mail, postage or delivery charges prepaid, and received at the principal executive offices of the corporation addressed to the attention of the Secretary of the corporation (i) in the case of an annual meeting of stockholders, not more than one hundred twenty (120) days nor less than ninety (90) days in advance of the anniversary of the date of the corporation’s proxy statement provided in connection with the previous year’s annual meeting of stockholders; provided, however, that in the event that no annual meeting was held in the previous year or the annual meeting is called for a date more than thirty (30) days before or after the anniversary date of the previous year’s annual meeting, notice by the stockholder must be received by the Secretary of the corporation not later than the close of business on the later of (A) the ninetieth (90th) day prior to such annual meeting and (B) the tenth (10th) day following the day on which public announcement of the date of such meeting is first made, and (ii) in the case of a special meeting of stockholders called for the purpose of electing directors, not later than the close of business on the tenth (10th) day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made. Such stockholder’s notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class, series and number of shares of capital stock of the corporation that are owned beneficially by the person, (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to Section 14 of the 1934 Act and the rules and regulations promulgated thereunder and (v) the nominee’s written consent to serve, if elected, and (b) as to the stockholder giving the notice, (i) the name and record address of the stockholder, (ii) the class, series and number of shares of capital stock of the corporation that are owned beneficially by the stockholder, and (iii) a description of all arrangements or understandings between such stockholder and each person the stockholder proposes for election or re-election as a director pursuant to which such proposed nomination is being made. The corporation may require any proposed nominee to furnish such other information as may reasonably be required by the corporation to determine the eligibility of such proposed nominee to serve as a director of the corporation. No person shall be eligible for election as a director of the corporation unless nominated in accordance with the procedures set forth herein.

 

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In connection with any annual meeting of the stockholders (or, if and as applicable, any special meeting of the stockholders), the Chairman of the Board (or such other person presiding at such meeting in accordance with these bylaws) may, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he or she should so determine, he or she shall so declare to the meeting and the defective nomination shall be disregarded.

 

3.3              Enlargement and Vacancies. Except as otherwise provided by the certificate of incorporation, subject to the rights of the holders of any series of preferred stock then outstanding, newly created directorships resulting from any increase in the authorized number of directors or any vacancies in the Board of Directors resulting from death, resignation, retirement, disqualification, removal from office or other cause shall be filled solely by a majority vote of the directors then in office, although less than a quorum, or by a sole remaining director. If there are no directors in office, then an election of directors may be held in the manner provided by statute. Directors chosen pursuant to any of the foregoing provisions shall hold office until the next annual election at which the term of the class to which he or she has been elected expires and until such director’s successor is duly elected and qualified or until such director’s earlier resignation or removal. In the event of a vacancy in the Board of Directors, the remaining directors, except as otherwise provided by law, or by the certificate of incorporation or the bylaws of the corporation, may exercise the powers of the full board until the vacancy is filled.

 

3.4              Resignation and Removal. Any director may resign at any time upon written notice to the corporation at its principal place of business addressed to the attention of the Chief Executive Officer, the Secretary, the Chairman of the Board or the Chair of the Nominating and Corporate Governance Committee of the Board of Directors, who shall in turn notify the full Board of Directors (although failure to provide such notification to the full Board of Directors shall not impact the effectiveness of such resignation). Such resignation shall be effective upon receipt of such notice by one of the individuals designated above unless the notice specifies such resignation to be effective at some other time or upon the happening of some other event. Any director or the entire Board of Directors may be removed, but only for cause, by the holders of not less than a majority of the voting power of the capital stock issued and outstanding then entitled to vote at an election of directors.

 

 

3.5              Powers. The business of the corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation of the corporation or by these bylaws directed or required to be exercised or done by the stockholders.

 

3.6              Chairman of the Board. The directors shall elect a Chairman of the Board (who may be designated Executive Chairman of the Board if serving as an employee of the corporation) and may elect a Vice Chair of the Board, each to hold such office until their successor is elected and qualified or until their earlier resignation or removal. In the absence or disability of the Chairman of the Board, the Vice Chair of the Board, if one has been elected, or another director designated by the Board of Directors, shall perform the duties and exercise the powers of the Chairman of the Board. The Chairman of the Board of the corporation shall if present preside at all meetings of the stockholders and the Board of Directors and shall have such other duties as may be vested in the Chairman of the Board by the Board of Directors. The Vice Chair of the Board of the corporation shall have such duties as may be vested in the Vice Chair of the Board by the Board of Directors.

 

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3.7              Place of Meetings. The Board of Directors may hold meetings, both regular and special, either within or without the State of Delaware.

 

3.8              Regular Meetings. Regular meetings of the Board of Directors may be held without notice at such time and place as may be determined from time to time by the Board of Directors; provided, however, that any director who is absent when such a determination is made shall be given prompt notice of such determination.

 

3.9              Special Meetings. Special meetings of the Board of Directors may be called by the Chairman of the Board, the Executive Chairman of the Board, or by the written request of a majority of the directors then in office. Notice of the time and place, if any, of special meetings shall be delivered personally or by telephone to each director, or sent by first-class mail or commercial delivery service, facsimile transmission, or by electronic mail or other electronic means, charges prepaid, sent to such director’s business or home address as they appear upon the records of the corporation. In case such notice is mailed, it shall be deposited in the United States mail at least three (3) days prior to the time of holding of the meeting. In case such notice is delivered personally or by telephone or by commercial delivery service, facsimile transmission, or electronic mail or other electronic means, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. A notice or waiver of notice of a meeting of the Board of Directors need not specify the purposes of the meeting.

 

3.10           Quorum, Action at Meeting, Adjournments. At all meetings of the Board of Directors, a majority of directors then in office, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by law, as it presently exists or may hereafter be amended, or by the bylaws of the corporation. If a quorum shall not be present at any meeting of the Board of Directors, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

 

3.11          Action Without Meeting. Unless otherwise restricted by the certificate of incorporation of the corporation or these bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and the writing or writings or electronic transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee.

 

3.12          Telephone Meetings. Unless otherwise restricted by the certificate of incorporation of the corporation or these bylaws, any member of the Board of Directors or any committee thereof may participate in a meeting of the Board of Directors or of any committee, as the case may be, by means of conference telephone or by any form of communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting.

 

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3.13           Committees. The Board of Directors may, by resolution, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not the member or members present constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all of the lawfully delegated powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Each committee shall keep regular minutes of its meetings and make such reports to the Board of Directors as the Board of Directors may request or the charter of such committee may then require. Except as the Board of Directors may otherwise determine, any committee may make rules for the conduct of its business, but unless otherwise provided by the directors or in such rules, its business shall be conducted as nearly as possible in the same manner as is provided in these bylaws for the conduct of its business by the Board of Directors.

 

3.14           Fees and Compensation of Directors. The Board of Directors shall have the authority to fix the compensation of directors.

 

ARTICLE 4

 

Officers

 

4.1              Officers Designated. The officers of the corporation shall be chosen by the Board of Directors and shall be an Executive Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Chief Financial Officer. The Board of Directors may also choose a Treasurer, one or more Vice Presidents, and one or more assistant Secretaries or assistant Treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation of the corporation or these bylaws otherwise provide.

 

4.2              Election. The Board of Directors shall choose an Executive Chairman of the Board, a Chief Executive Officer, a President, a Secretary and a Chief Financial Officer. Other officers may be appointed by the Board of Directors or may be appointed by the Executive Chairman of the Board pursuant to a delegation of authority from the Board of Directors.

 

4.3              Tenure. Each officer of the corporation shall hold office until such officer’s successor is appointed and qualified, unless a different term is specified in the vote choosing or appointing such officer, or until such officer’s earlier death, resignation, removal or incapacity. Any officer appointed by the Board of Directors or by the Executive Chairman of the Board may be removed with or without cause at any time by the affirmative vote of a majority of the Board of Directors or a committee duly authorized to do so. Any vacancy occurring in any office of the corporation may be filled by the Board of Directors, at its discretion. Any officer may resign by delivering such officer’s written resignation to the corporation at its principal place of business to the attention of the Chief Executive Officer or the Secretary. Such resignation shall be effective upon receipt unless it is specified to be effective at some other time or upon the happening of some other event.

 

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4.4              The Executive Chairman of the Board. The Executive Chairman of the Board shall preside at all meetings of the stockholders and at all meetings of the Board of Directors, and shall have general and active management of the business of the corporation. The Executive Chairman of the Board shall have general charge and supervision of the business of the corporation subject to the direction of the Board. The Executive Chairman of the Board shall also have supervisory powers over the Chief Executive Officer, and shall have all other powers commonly incident to such position or which are or from time to time may be delegated to him or her by the Board of Directors, or which are or may at any time be authorized or required by law.

 

 

4.5              The Chief Executive Officer. The Chief Executive Officer shall report to the Executive Chairman of the Board and, subject to the supervisory powers of the Executive Chairman of the Board, shall perform such other duties and have such other powers as may from time to time be prescribed for such person by the Board of Directors, the Executive Chairman of the Board or these bylaws. He or she shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Executive Chairman of the Board or the Board of Directors to some other officer or agent of the corporation.

 

4.6              The President. The President shall, in the event there is no Chief Executive Officer or in the absence of the Chief Executive Officer or in the event of his or her disability, perform the duties of the Chief Executive Officer, and when so acting, shall have the powers of and be subject to all the restrictions upon the Chief Executive Officer. The President shall perform such other duties and have such other powers as may from time to time be prescribed for such person by the Board of Directors, the Executive Chairman of the Board, the Chief Executive Officer or these bylaws.

 

4.7              The Vice President. The Vice President, if any (or in the event there be more than one, the Vice Presidents in the order designated by the directors, or in the absence of any designation, in the order of their election), shall, in the absence of the President or in the event of his or her disability or refusal to act, perform the duties of the President, and when so acting, shall have the powers of and be subject to all the restrictions upon the President. The Vice President(s) shall perform such other duties and have such other powers as may from time to time be prescribed for them by the Board of Directors, the Chief Executive Officer, the President or these bylaws.

 

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4.8              The Secretary. The Secretary shall attend all meetings of the Board of Directors and the stockholders and record all votes and the proceedings of the meetings in a book to be kept for that purpose and shall perform like duties for the standing committees, when required. The Secretary shall give, or cause to be given, notice of all meetings of stockholders and special meetings of the Board of Directors, and shall perform such other duties as may from time to time be prescribed by the Board of Directors, the Chairman of the Board or the Chief Executive Officer, under whose supervision he or she shall act. The Secretary shall sign such instruments on behalf of the corporation as the Secretary may be authorized to sign by the Board of Directors or by law and shall countersign, attest and affix the corporate seal to all certificates and instruments where such countersigning or such sealing and attesting are necessary to their true and proper execution. The Secretary shall keep, or cause to be kept, at the principal executive office or at the office of the corporation’s transfer agent or registrar, as determined by resolution of the Board of Directors, a share register, or a duplicate share register, showing the names of all stockholders and their addresses, the number and classes of shares held by each, the number and date of certificates issued for the same and the number and date of cancellation of every certificate surrendered for cancellation.

 

4.9              The Assistant Secretary. The Assistant Secretary, or if there be more than one, any Assistant Secretaries in the order designated by the Board of Directors (or in the absence of any designation, in the order of their election) shall assist the Secretary in the performance of his or her duties and, in the absence of the Secretary or in the event of his or her inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as may from time to time be prescribed by the Board of Directors.

 

4.10          The Chief Financial Officer. The Chief Financial Officer shall be the principal financial officer in charge of the general accounting books, accounting and cost records and forms. The Chief Financial Officer may also serve as the principal accounting officer and shall perform such other duties and have other powers as may from time to time be prescribed by the Board of Directors or the Chief Executive Officer.

 

4.11          The Treasurer and Assistant Treasurers. The Treasurer (if one is appointed) shall have such duties as may be specified by the Chief Financial Officer to assist the Chief Financial Officer in the performance of his or her duties and to perform such other duties and have other powers as may from time to time be prescribed by the Board of Directors or the Chief Executive Officer. It shall be the duty of any Assistant Treasurers to assist the Treasurer in the performance of his or her duties and to perform such other duties and have other powers as may from time to time be prescribed by the Board of Directors or the Chief Executive Officer.

 

4.12           Bond. If required by the Board of Directors, any officer shall give the corporation a bond in such sum and with such surety or sureties and upon such terms and conditions as shall be satisfactory to the Board of Directors, including without limitation a bond for the faithful performance of the duties of such officer’s office and for the restoration to the corporation of all books, papers, vouchers, money and other property of whatever kind in such officer’s possession or under such officer’s control and belonging to the corporation.

 

4.13           Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officers or agents, notwithstanding any provision hereof.

 

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ARTICLE 5

 

Notices

 

5.1              Delivery. Whenever, under the provisions of law, or of the certificate of incorporation of the corporation or these bylaws, written notice is required to be given to any director or stockholder, such notice may be given by mail, addressed to such director or stockholder, at such person’s address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail or delivered to a nationally recognized courier service. Unless written notice by mail is required by law, written notice may also be given by commercial delivery service, facsimile transmission, electronic means or similar means addressed to such director or stockholder at such person’s address as it appears on the records of the corporation, in which case such notice shall be deemed to be given when delivered into the control of the persons charged with effecting such transmission, the transmission charge to be paid by the corporation or the person sending such notice and not by the addressee. Oral notice or other in-hand delivery, in person or by telephone, shall be deemed given at the time it is actually given.

 

5.2              Waiver of Notice. Whenever any notice is required to be given under the provisions of law or of the certificate of incorporation of the corporation or of these bylaws, a written waiver, signed by the person entitled to notice, or a waiver by electronic transmission by the person entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the stockholders, directors or members of a committee of directors need be specified in any written waiver of notice or any waiver by electronic transmission unless so required by the certificate of incorporation or these bylaws.

 

ARTICLE 6

 

Indemnification and Insurance

 

6.1              Indemnification of Officers and Directors. Each person who was or is made a party or is threatened to be made a party to or is involved (including, without limitation, as a witness) in any actual or threatened action, suit or proceeding, whether civil, criminal, administrative or investigative (hereinafter a “proceeding”), by reason of the fact that he or she or a person of whom he or she is the legal representative is or was a director or officer of the corporation (or any predecessor), or is or was serving at the request of the corporation (or any predecessor) as a director, officer, employee or agent of another corporation or of a partnership, limited liability company, joint venture, trust, employee benefit plan sponsored or maintained by the corporation, or other enterprise (or any predecessors of such entities) (hereinafter an “Indemnitee”), shall be indemnified and held harmless by the corporation to the fullest extent authorized by the DGCL, as the same exists or may hereafter be amended, including, but not limited to, Section 102(b)(7) of the DGCL (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment), or by other applicable law as then in effect, against all expense, liability and loss (including attorneys’ fees and related disbursements, judgments, fines, excise taxes or penalties under the Employee Retirement Income Security Act of 1974, as amended from time to time, penalties and amounts paid or to be paid in settlement) actually and reasonably incurred or suffered by such Indemnitee in connection therewith. Each person who is or was serving as a director, officer, employee or agent of a subsidiary of the corporation shall be deemed to be serving, or have served, at the request of the corporation. The right to indemnification conferred in this Section 6.1 shall be a contract right.

 

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Any indemnification (but not advancement of expenses) under this Article 6 (unless ordered by a court) shall be made by the corporation only as authorized in the specific case upon a determination that indemnification of the director or officer is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the DGCL, as the same exists or hereafter may be amended (but, in the case of any such amendment, only to the extent that such amendment permits the corporation to provide broader indemnification rights than said law permitted the corporation to provide prior to such amendment). Such determination shall be made with respect to a person who is a director or officer at the time of such determination (a) by a majority vote of the directors who are not or were not parties to the proceeding in respect of which indemnification is being sought by Indemnitee (the “Disinterested Directors”), even though less than a quorum, (b) by a committee of Disinterested Directors designated by a majority vote of the Disinterested Directors, even though less than a quorum, (c) if there are no such Disinterested Directors, or if the Disinterested Directors so direct, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, or (d) by the stockholders.

 

6.2              Indemnification of Others. This Article 6 does not limit the right of the corporation, to the extent and in the manner permitted by law, to indemnify and to advance expenses to persons other than those persons identified in Section 6.1 when and as authorized by the Board or by the action of a committee of the Board or designated officers of the corporation established by or designated in resolutions approved by the Board; provided, however, that the payment of expenses incurred by such a person in advance of the final disposition of the proceeding shall be made only upon receipt by the corporation of a written undertaking by such person to repay all amounts so advanced if it shall ultimately be determined that such person is not entitled to be indemnified under this Article 6 or otherwise.

 

6.3              Advance Payment. The right to indemnification under this Article 6 shall include the right to be paid by the corporation the expenses incurred in defending any such proceeding in advance of its final disposition, such advances to be paid by the corporation within thirty (30) days after the receipt by the corporation of a statement or statements from the claimant requesting such advance or advances from time to time; provided, however, that if the DGCL requires, the payment of such expenses incurred by a director or officer in his or her capacity as a director or officer (and not in any other capacity in which service was or is rendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of a proceeding, shall be made only upon delivery to the corporation of an undertaking by or on behalf of such director or officer to repay all amounts so advanced if it shall ultimately be determined that such director or officer is not entitled to be indemnified under Section 6.1 or otherwise.

 

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Notwithstanding the foregoing, unless such right is acquired other than pursuant to this Article 6, no advance shall be made by the corporation to an officer of the corporation (except by reason of the fact that such officer is or was a director of the corporation, in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (a) by the Board of Directors by a majority vote of the Disinterested Directors, even though less than a quorum, or (b) by a committee of Disinterested Directors designated by majority vote of the Disinterested Directors, even though less than a quorum, or (c) if there are no Disinterested Directors or the Disinterested Directors so direct, by independent legal counsel in a written opinion to the Board of Directors, a copy of which shall be delivered to the claimant, that the facts known to the decision-making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the corporation.

 

6.4              Right of Indemnitee to Bring Suit. If a claim for indemnification (following final disposition of such proceeding) or advancement of expenses under this Article 6 is not paid in full by the corporation within sixty (60) days after a written claim has been received by the corporation, except in the case of a claim for an advancement of expenses, in which case the applicable period shall be twenty (20) days, the Indemnitee may at any time thereafter bring suit against the corporation to recover the unpaid amount of the claim. If successful in whole or in part in any such suit, or in a suit brought by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be paid also the expense of prosecuting or defending such suit to the fullest extent permitted by law. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or by the corporation to recover an advancement of expenses pursuant to the terms of an undertaking, the burden of proving that the Indemnitee is not entitled to be indemnified, or to such advancement of expenses, under this Article or otherwise shall be on the corporation.

 

6.5              Non-Exclusivity and Survival of Rights; Amendments. The right to indemnification and the payment of expenses incurred in defending a proceeding in advance of its final disposition conferred in this Article 6 shall not be deemed exclusive of any other right which any person may have or hereafter acquire under any statute, provision of the certificate of incorporation of the corporation, bylaws, agreement, vote of stockholders or Disinterested Directors or otherwise, and shall continue as to a person who has ceased to be a director, officer, employee or agent of the corporation and shall inure to the benefit of the heirs, executors and administrators of such a person. Any repeal or modification of the provisions of this Article 6 shall not in any way diminish or adversely affect the rights of any director, officer, employee or agent of the corporation hereunder in respect of any occurrence or matter arising prior to any such repeal or modification.

 

6.6              Insurance. The corporation may purchase and maintain insurance on its own behalf and on behalf of any person who is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust, employee benefit plan or other enterprise against any expense, liability or loss asserted against such person and incurred by such person in any such capacity, or arising out of such person’s status as such, whether or not the corporation would have the power to indemnify such person against such expenses, liability or loss under the DGCL.

 

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6.7              Reliance. Persons who after the date of the adoption of this provision become or remain directors or officers of the corporation shall be conclusively presumed to have relied on the rights to indemnity, advance of expenses and other rights contained in this Article 6 in entering into or continuing such service. The rights to indemnification and to the advance of expenses conferred in this Article 6 shall apply to claims made against an Indemnitee arising out of acts or omissions that occurred or occur both prior and subsequent to the adoption hereof.

 

6.8              Severability. If any word, clause, provision or provisions of this Article 6 shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity, legality and enforceability of the remaining provisions of this Article 6 (including, without limitation, each portion of any section or paragraph of this Article 6 containing any such provision held to be invalid, illegal or unenforceable, that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby; and (b) to the fullest extent possible, the provisions of this Article 6 (including, without limitation, each such portion of any section or paragraph of this Article 6 containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested by the provision held invalid, illegal or unenforceable.

 

ARTICLE 7

 

Capital Stock

 

7.1              Certificates for Shares. The shares of the corporation shall be (i) represented by certificates or (ii) uncertificated and evidenced by a book-entry system maintained by or through the corporation’s transfer agent or registrar. Certificates shall be signed by, or in the name of the corporation by, the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and by the Chief Financial Officer, the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation. Certificates may be issued for partly paid shares and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefor, and the amount paid thereon shall be specified.

 

 

Within a reasonable time after the issuance or transfer of uncertificated stock, the corporation shall send or cause to be sent to the registered owner thereof a written notice containing the information required by the DGCL or a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences and/or rights.

 

7.2              Signatures on Certificates. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

 

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7.3              Transfer of Stock. Upon surrender to the corporation or the transfer agent of the corporation of a certificate of shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, and proper evidence of compliance of other conditions to rightful transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. Upon receipt of proper transfer instructions and proper evidence of compliance of other conditions to rightful transfer from the registered owner of uncertificated shares, such uncertificated shares shall be canceled and issuance of new equivalent uncertificated shares or certificated shares shall be made to the person entitled thereto and the transaction shall be recorded upon the books of the corporation.

 

7.4              Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

 

7.5              Lost, Stolen or Destroyed Certificates. The corporation may direct that a new certificate or certificates be issued to replace any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed and on such terms and conditions as the corporation may require. When authorizing the issue of a new certificate or certificates, the corporation may, in its discretion and as a condition precedent to the issuance thereof, require the owner of the lost, stolen or destroyed certificate or certificates, or his or her legal representative, to advertise the same in such manner as it shall require, to indemnify the corporation in such manner as it may require, and/or to give the corporation a bond or other adequate security in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed.

 

ARTICLE 8

 

General Provisions

 

8.1              Dividends. Dividends upon the capital stock of the corporation, subject to any restrictions contained in the DGCL or the provisions of the certificate of incorporation of the corporation, if any, may be declared by the Board of Directors at any regular or special meeting or by unanimous written consent. Dividends may be paid in cash, in property or in shares of capital stock, subject to the provisions of the certificate of incorporation of the corporation.

 

8.2              Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

 

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8.3              Corporate Seal. The Board of Directors may, by resolution, adopt a corporate seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the word “Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced. The seal may be altered from time to time by the Board of Directors.

 

 

8.4              Execution of Corporate Contracts and Instruments. The Board of Directors, except as otherwise provided in these bylaws, may authorize any officer or officers, or agent or agents, to enter into any contract or execute any instrument in the name of and on behalf of the corporation; such authority may be general or confined to specific instances. Unless so authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount.

 

8.5              Representation of Shares of Other Corporations. The Chief Executive Officer, the President or any Vice President, the Chief Financial Officer or the Treasurer or any Assistant Treasurer, or the Secretary or any Assistant Secretary of the corporation is authorized to vote, represent and exercise on behalf of the corporation all rights incident to any and all shares of any corporation or corporations or similar ownership interests of other business entities standing in the name of the corporation. The authority herein granted to said officers to vote or represent on behalf of the corporation any and all shares or similar ownership interests held by the corporation in any other corporation or corporations or other business entities may be exercised either by such officers in person or by any other person authorized so to do by proxy or power of attorney duly executed by said officers.

 

ARTICLE 9

 

Forum for Adjudication of Disputes

 

9.1              Exclusive Forum; Delaware Chancery Court. To the fullest extent permitted by law, and unless the corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if that court lacks subject matter jurisdiction, another federal or state court situated in the State of Delaware), shall be the sole and exclusive forum for (a) any derivative action or proceeding brought in the name or right of the corporation or on its behalf, (b) any action asserting a claim for breach of any fiduciary duty owed by any director, officer, employee or agent of the corporation to the corporation or the corporation’s stockholders, (c) any action arising or asserting a claim arising pursuant to any provision of the DGCL or any provision of the certificate of incorporation or these bylaws or (d) any action asserting a claim governed by the internal affairs doctrine, including, without limitation, any action to interpret, apply, enforce or determine the validity of the certificate of incorporation or these bylaws. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Section 9.1.9.2 Exclusive Forum; Federal District Courts. Unless the corporation consents in writing to the selection of an alternative forum, the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause of action under the Securities Act of 1933 and the Securities Exchange Act of 1934. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to the provisions of this Section 9.2.

 

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ARTICLE 10

 

Amendments

 

Subject to the laws of the State of Delaware, the Board of Directors is expressly authorized to adopt, amend or repeal the bylaws of the corporation, without any action on the part of the stockholders, by the vote of at least a majority of the directors of the corporation then in office. In addition to any vote of the holders of any class or series of stock of the corporation required by the DGCL or the certificate of incorporation of the corporation, the bylaws may also be adopted, amended or repealed by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of the shares of the capital stock of the corporation entitled to vote in the election of directors, voting as one class.

 

-18-

 

 

CERTIFICATE OF SECRETARY

 

I, the undersigned, hereby certify:

 

(i)                 that I am a duly elected, acting and qualified Secretary of Nikola Corporation, a Delaware corporation; and

 

(ii)              that the foregoing Bylaws, comprising 18 pages, constitute the Bylaws of such corporation as duly adopted by the board of directors of such corporation on June 3, 2020, which Bylaws became effective June 3, 2020.

 

IN WITNESS WHEREOF, I have hereunto subscribed my name as of the 3rd day of June, 2020.

 

  /s/ Britton M. Worthen
  Britton M. Worthen, Secretary

 

 

 

Exhibit 4.1

 

SEE REVERSE FOR IMPORTANT NOTICE REGARDING OWNERSHIP AND TRANSFER RESTRICTIONS AND CERTAIN OTHER INFORMATION INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE COMMON STOCK CUSIP654110 10 5 SEE REVERSE FOR CERTAIN DEFINITIONS SPECIMEN FULLY PAID AND NON-ASSESSABLE SHARES OF THE COMMON STOCK, $0.0001 PAR VALUE, OF Nikola CorporatioN, transferable on the books of the Company in Person or by duly authorized attorney, upon surrender of this Certificate properly endorsed. This Certificate and the shares represented hereby, are issued and shall be held subject to all of the provisions of the Certificate of Incorporation, as amended, and the Bylaws, as amended, of the Company (copies of which are on file with the Company and with the Transfer Agent), to all of which each holder, by acceptance hereof, assents. This Certificate is not valid unless countersigned and registered by the Transfer Agent and Registrar. WITNESS the facsimile signatures of its duly authorized officers. 2020 PRESIDENT and CHIEF EXECUTIVE OFFICER SECRETARY 0000001

 

JT TEN Shares of the common stock represented by this Certificate and do hereby irrevocably constitutes and appoint Attorney, to transfer the said stock on the books of the within-named Company with full power of substitution in the premises.

 

 

 

Exhibit 4.2

 

[Form of Warrant Certificate]

[FACE]

Number

Warrants

THIS WARRANT SHALL BE VOID IF NOT EXERCISED PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

NIKOLA CORPORATION

Incorporated Under the Laws of the State of Delaware

 

CUSIP ____________

 

Warrant Certificate

 

This Warrant Certificate certifies that                 , or registered assigns, is the registered holder of            redeemable warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to purchase shares of common stock, $0.0001 par value per share (“Common Stock”), of Nikola Corporation, a Delaware corporation (the “Company”).  Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable shares of Common Stock asset forth below, at the exercise price (the “Exercise Price”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to below, subject to the conditions set forth here in and in the Warrant Agreement.  Defined terms used in this Warrant Certificate but not defined here in shall have the meanings given to them in the Warrant Agreement.

 

Each whole Warrant is initially exercisable for one fully paid and non-assessable share of Common Stock.  No fractional shares of Common Stock will be issued upon exercise of any Warrant.  If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder.  The number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

The initial Exercise Price per share of Common Stock for any Warrant is equal to $11.50 per share.  The Exercise Price is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

Subject to the conditions set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the end of such Exercise Period, such Warrants shall become void.  The Warrants may be redeemed, subject to certain conditions, as set forth in the Warrant Agreement.

 

Reference is hereby made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes have the same effect as though fully set forth at this place.

 

This Warrant Certificate shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

 

1 

 

 

This Warrant Certificate shall be governed by and construed in accordance with the internal laws of the State of New York.

 

  NIKOLA CORPORATION
   
  By:  
  Name:  
  Title:  
   
  CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
   
  By:                  
  Name:  
  Title:  

 

 

 

 

[Form of Warrant Certificate]

[Reverse]

 

The Warrants evidenced by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive                          shares of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of May 15, 2018 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders” or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants.  A copy of the Warrant Agreement may be obtained by the holder hereof upon written request to the Company.  Defined terms used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised at any time during the Exercise Period set forth in the Warrant Agreement.  The holder of Warrants evidenced by this Warrant Certificate may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise” as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent.  In the event that upon any exercise of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.

 

Notwithstanding anything else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.

 

The Warrant Agreement provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the face hereof may, subject to certain conditions, be adjusted.  If, upon exercise of a Warrant, the holder thereof would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.

 

Warrant Certificates, when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentation for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge imposed in connection therewith.

 

The Company and the Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary.  Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.

 

 

 

 

Exhibit 4.5

 

LOCK-UP AGREEMENT

 

This Lock-Up Agreement (this “Agreement”) is made and entered into as of June 3, 2020 (the “Effective Date”) by and among Nikola Corporation, a Delaware corporation f/k/a VectoIQ Acquisition Corp. (the “Company”) and the person or entity identified under the heading “Holder” on the signature page hereto (the “Holder”). Any capitalized term used but not defined herein will have the meaning ascribed to such term in the Business Combination Agreement (as defined below).

 

RECITALS

 

WHEREAS, the Company, VCTIQ Merger Sub Corp., a Delaware corporation and Nikola Subsidiary Corporation, a Delaware corporation f/k/a Nikola Corporation (“Nikola”), are party to that certain Business Combination Agreement dated as of March 2, 2020 (the “Business Combination Agreement”), pursuant to which, on the Effective Date, Merger Sub is merging (the “Merger”) with and into Nikola, with Nikola surviving the Merger as a wholly owned subsidiary of the Company;

 

WHEREAS, the Holder is receiving shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), on or about the date hereof, pursuant to the Business Combination Agreement in exchange for shares of Nikola held by the Holder (the “Prior Nikola Shares”);

 

WHEREAS, the Holder has previously entered into (a) that certain Fourth Amended and Restated Stockholder Agreement by and between Nikola and the other parties listed therein, dated September 30, 2019 (the “Stockholder Agreement”) and/or (b) one or more option agreements issued under Nikola’s 2017 Stock Option Plan (the “Option Agreements”);

 

WHEREAS, the Stockholder Agreement and each of the Option Agreements contained certain sale and transfer restrictions on Prior Nikola Shares for a period of 180 days following an initial public offering of Nikola’s common stock or, in the case of the Option Agreements, such other period of time as may be determined by the board of directors of Nikola (the “Original Lock-Up Restrictions”); and

 

WHEREAS, the Company and Holder desire to enter into this Agreement to provide for restrictions on the sale or transfer of the Common Stock received in the Merger that are similar to the Original Lock-Up Restrictions that applied to Prior Nikola Shares held by Holder;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

 

 

 

 

ARTICLE I

LOCK-UP

 

Section 1.1      Lock-Up. Except as permitted by Section 1.2, for a period of 180 days from the Effective Date (the “Lock-up Period”), the Holder shall not Transfer (as defined below) any shares of Common Stock beneficially owned or owned of record by such Holder. As

used herein “Transfer” shall mean to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any interest owned by a person or any interest (including a beneficial interest) in, or the ownership, control or possession of, any interest owned by a person.

 

Section 1.2      Exceptions.      The provisions of Section 1.1 shall not apply to:

 

1.2.1      transactions relating to shares of Common Stock acquired in open market transactions;

 

1.2.2      Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock as a bona fide gift;

 

1.2.3      Transfers of shares of Common Stock to a trust, or other entity formed for estate planning purposes for the primary benefit of the spouse, domestic partner, parent, sibling, child or grandchild of the Holder or any other person with whom the Holder has a relationship by blood, marriage or adoption not more remote than first cousin;

 

1.2.4      Transfers by will or intestate succession upon the death of the Holder;

 

1.2.5      the Transfer of shares of Common Stock pursuant to a qualified domestic order or in connection with a divorce settlement;

 

1.2.6      if the Holder is a corporation, partnership (whether general, limited or otherwise), limited liability company, trust or other business entity, (i) Transfers to another corporation, partnership, limited liability company, trust or other business entity that controls, is controlled by or is under common control or management with the Holder, (ii) distributions of shares of Common Stock to partners, limited liability company members or stockholders of the Holder;

 

1.2.7      Transfers to the Company’s officers, directors or their affiliates;

 

1.2.8      pledges of shares of Common Stock as security or collateral in connection with any borrowing or the incurrence of any indebtedness by any Holder (provided such borrowing or incurrence of indebtedness is secured by a portfolio of assets or equity interests issued by multiple issuers);

 

1.2.9      pursuant to a bona fide third-party tender offer, merger, stock sale, recapitalization, consolidation or other transaction involving a Change in Control (as defined below) of the Company, provided that in the event that such tender offer, merger, recapitalization, consolidation or other such transaction is not completed, the Common Stock subject to this Agreement shall remain subject to this Agreement; “Change in Control” means the transfer (whether by tender offer, merger, stock purchase, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold more than 50% of outstanding voting securities of the Company (or surviving entity) or would otherwise have the power to control the board of directors of the Company or to direct the operations of the Company; and

 

2 

 

 

1.2.10      the establishment of a trading plan pursuant to Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as it may be amended from time to time, provided that such plan does not provide for the transfer of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock during the Lock-Up Period.

 

provided, that in the case of any Transfer or distribution pursuant to Sections 1.2.2 through 1.2.7, each donee, distributee or other transferee shall agree in writing, in form and substance reasonably satisfactory to the Company, to be bound by the provisions of this Agreement.

 

ARTICLE II
GENERAL PROVISIONS

 

Section 2.1      Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties as to the matters covered herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case, written or oral, of any and every nature with respect thereto.

 

Section 2.2      Assignment; No Third-Party Beneficiaries. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and the permitted assigns of the applicable holder of Common Stock or of any assignee of the applicable holder of Common Stock. No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement).

 

Section 2.3      Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart and such counterparts may be delivered by the parties hereto via facsimile or electronic transmission.

 

Section 2.4      Amendment; Waiver. This Agreement may be amended or modified, and any provision hereof may be waived, in whole or in part, at any time pursuant to an agreement in writing executed by the Company and the Holder.

 

Section 2.5      Severability. In the event that any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.

 

3 

 

 

Section 2.6      Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All legal actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware Chancery Court; provided, that if jurisdiction is not then available in the Delaware Chancery Court, then any such legal action may be brought in any federal court located in the State of Delaware or any other Delaware state court.

 

Section 2.7      Specific Performance. Each party acknowledges and agrees that the other parties hereto would be irreparably harmed and would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed by such first party in accordance with their specific terms or were otherwise breached by such first party. Accordingly, each party agrees that the other parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such parties are entitled at law or in equity.

 

(Next Page is Signature Page)

 

4 

 

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

 

 

 

  COMPANY:
   
  NIKOLA CORPORATION
   
   
  By:  
  Name:    Mark A. Russell
  Title: President and Chief Executive Officer
   
  Address for Notice: 4141 E. Broadway Rd. Phoenix AZ 85040

 

 

 

IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

 

     
  HOLDER:
     
  Name:     
     
  By:
  Name:
    Title:

 

 

  Address for Notice:  
      
  Telephone No.:  
     
  Facsimile No.:  
  Email Address:  

 

 

 

 

Exhibit 4.6

 

LOCK-UP AGREEMENT

 

This Lock-Up Agreement (this “Agreement”) is made and entered into as of June 3, 2020 (the “Effective Date”) by and among Nikola Corporation, a Delaware corporation f/k/a VectoIQ Acquisition Corp. (the “Company”) and WI Ventures LLC, an Ohio limited liability company (the “Holder”). Any capitalized term used but not defined herein will have the meaning ascribed to such term in the Business Combination Agreement (as defined below).

 

RECITALS

 

WHEREAS, the Company, VCTIQ Merger Sub Corp., a Delaware corporation and Nikola Subsidiary Corporation, a Delaware corporation f/k/a Nikola Corporation (“Nikola”), are party to that certain Business Combination Agreement dated as of March 2, 2020 (the “Business Combination Agreement”), pursuant to which, on the Effective Date, Merger Sub is merging (the “Merger”) with and into Nikola, with Nikola surviving the Merger as a wholly owned subsidiary of the Company;

 

WHEREAS, the Holder is receiving 19,048, 020 shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), on or about the date hereof, pursuant to the Business Combination Agreement in exchange for shares of Nikola held by the Holder (the “Prior Nikola Shares”); and

 

WHEREAS, the Company and the Holder desire to enter into this Agreement to provide for restrictions on the sale or transfer of the Common Stock received in the Merger;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, the parties agree as follows:

 

ARTICLE I LOCK-UP

 

Section 1.1    Lock-Up. Except as permitted by Section 1.2, for a period of 180 days from the Effective Date (the “Lock-up Period”), the Holder shall not Transfer (as defined below) any shares of Common Stock beneficially owned or owned of record by the Holder. As used herein “Transfer” shall mean to, directly or indirectly, sell, transfer, assign, pledge, encumber, hypothecate or similarly dispose of, either voluntarily or involuntarily, or to enter into any contract, option or other arrangement or understanding with respect to the sale, transfer, assignment, pledge, encumbrance, hypothecation or similar disposition of, any interest owned by a person or any interest (including a beneficial interest) in, or the ownership, control or possession of, any interest owned by a person.

 

 

 

Section 1.2    Exceptions.      The provisions of Section 1.1 shall not apply to:

 

1.2.1 Transfers of up to 5,000,000 shares of Common Stock in the aggregate occurring on or after the date that is thirty (30) days after the Effective Date;
     
1.2.2 In addition to the Transfers described in subsection 1.2.1 above, Transfers of up to 7,000,000 shares of Common Stock in the aggregate occurring on or after the earlier of (a) the date that is ninety (90) days after the Effective Date and (b) the effective date of the registration statement to be filed by the Company with the Securities and Exchange Commission (the “SEC”) to register the resale of the PIPE Shares (as that term is defined in the Proxy Statement, Prospectus and Information Statement filed by the Company with the SEC on May 8, 2020 pursuant to SEC Rule 424(b)(3)).
     
1.2.3 transactions relating to shares of Common Stock acquired in open market transactions;

 

1.2.4 Transfers of shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock as a bona fide gift;

 

1.2.5 Transfers of shares of Common Stock to a trust, or other entity formed for estate planning purposes for the primary benefit of the spouse, domestic partner, parent, sibling, child or grandchild of the Holder or any other person with whom the Holder has a relationship by blood, marriage or adoption not more remote than first cousin;

 

1.2.6 Transfers by will or intestate succession upon the death of the Holder;

 

1.2.7 the Transfer of shares of Common Stock pursuant to a qualified domestic order or in connection with a divorce settlement;

 

1.2.8 if the Holder is a corporation, partnership (whether general, limited or otherwise), limited liability company, trust or other business entity, (i) Transfers to another corporation, partnership, limited liability company, trust or other business entity that controls, is controlled by or is under common control or management with the Holder, (ii) distributions of shares of Common Stock to partners, limited liability company members or stockholders of the Holder;

 

1.2.9 Transfers to the Company’s officers, directors or their affiliates;

 

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1.2.10 pledges of shares of Common Stock as security or collateral in connection with any borrowing or the incurrence of any indebtedness by any Holder (provided such borrowing or incurrence of indebtedness is secured by a portfolio of assets or equity interests issued by multiple issuers);

 

1.2.11 pursuant to a bona fide third-party tender offer, merger, stock sale, recapitalization, consolidation or other transaction involving a Change in Control (as defined below) of the Company, provided that in the event that such tender offer, merger, recapitalization, consolidation or other such transaction is not completed, the Common Stock subject to this Agreement shall remain subject to this Agreement; “Change in Control” means the transfer (whether by tender offer, merger, stock purchase, consolidation or other similar transaction), in one transaction or a series of related transactions, to a person or group of affiliated persons of the Company’s voting securities if, after such transfer, such person or group of affiliated persons would hold more than 50% of outstanding voting securities of the Company (or surviving entity) or would otherwise have the power to control the board of directors of the Company or to direct the operations of the Company; and

 

1.2.12 the establishment of a trading plan pursuant to Rule 10b5-1 promulgated under the Securities Exchange Act of 1934, as it may be amended from time to time, provided that such plan does not provide for the transfer of Common Stock or any securities convertible into or exercisable or exchangeable for Common Stock during the Lock-Up Period.

 

provided, that in the case of any Transfer or distribution pursuant to Sections 1.2.4 through 1.2.9, each donee, distributee or other transferee shall agree in writing, in form and substance reasonably satisfactory to the Company, to be bound by the provisions of this Agreement.

 

ARTICLE II

REGISTRATION RIGHTS

 

Section 2.1.   Registration Rights. The Company shall afford the Holder the same registration rights provided to the “New Holders” under that certain Registration Rights and Lock-Up Agreement to be entered into by the Company with certain persons and entities in connection with the Closing provided for in the Business Combination Agreement.

 

ARTICLE III GENERAL PROVISIONS

 

Section 3.1    Entire Agreement. This Agreement constitutes the entire understanding and agreement between the parties as to the matters covered herein and supersedes and replaces any prior understanding, agreement or statement of intent, in each case, written or oral, of any and every nature with respect thereto.

 

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Section 3.2    Assignment; No Third-Party Beneficiaries. This Agreement and the rights, duties and obligations of the Company hereunder may not be assigned or delegated by the Company in whole or in part. This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and the permitted assigns of the applicable holder of Common Stock or of any assignee of the applicable holder of Common Stock. No assignment by any party hereto of such party’s rights, duties and obligations hereunder shall be binding upon or obligate the Company unless and until the Company shall have received (i) written notice of such assignment and (ii) the written agreement of the assignee, in a form reasonably satisfactory to the Company, to be bound by the terms and provisions of this Agreement (which may be accomplished by an addendum or certificate of joinder to this Agreement).

 

Section 3.3    Counterparts. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart and such counterparts may be delivered by the parties hereto via facsimile or electronic transmission.

 

Section 3.4    Amendment; Waiver. This Agreement may be amended or modified, and any provision hereof may be waived, in whole or in part, at any time pursuant to an agreement in writing executed by the Company and the Holder.

 

Section 3.5   Severability. In the event that any provision of this Agreement or the application thereof becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto.

 

Section 3.6    Governing Law; Venue. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed in that State. All legal actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any Delaware Chancery Court; provided, that if jurisdiction is not then available in the Delaware Chancery Court, then any such legal action may be brought in any federal court located in the State of Delaware or any other Delaware state court.

 

Section 3.7    Specific Performance. Each party acknowledges and agrees that the other parties hereto would be irreparably harmed and would not have any adequate remedy at law in the event that any of the provisions of this Agreement were not performed by such first party in accordance with their specific terms or were otherwise breached by such first party. Accordingly, each party agrees that the other parties hereto shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement, this being in addition to any other remedy to which such parties are entitled at law or in equity.

 

(Next Page is Signature Page)

 

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IN WITNESS WHEREOF, each of the parties has executed this Agreement as of the date first written above.

 

  COMPANY:
   
  NIKOLA CORPORATION
   
  By: /s/ Britton M. Worthen
  Name: Britton M. Worthen
  Title: Chief Legal Officer
   
  Address for Notice:
   
  4141 E Broadway Rd, Phoenix, Az 85040
   
  HOLDER:
   
  WI VENTURES LLC
   
  By: /s/ Joseph Hayek
  Name: Joseph Hayek
  Title: Vice President
   
  Address for Notice:
   
  WI Ventures LLC
  200 Old Wilson Bridge Road
  Columbus, Ohio 43085
  Attention:

 

 

 

Exhibit 10.2

 

SUBSCRIPTION AGREEMENT

 

VectoIQ Acquisition Corp. 

1354 Flagler Drive 

Mamaroneck, NY 10543

 

Ladies and Gentlemen:

 

In connection with the proposed business combination (the “Transaction”) between VectoIQ Acquisition Corp., a Delaware corporation (the “Company”), and Nikola Corporation, a Delaware corporation (“Nikola”), the undersigned desires to subscribe for and purchase from the Company, and the Company desires to sell to the undersigned, that number of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), set forth on the signature page hereof for a purchase price of $10.00 per share (the “Per Share Price” and the aggregate of such Per Share Price for all Shares subscribed for by the undersigned being referred to herein as the “Purchase Price”), on the terms and subject to the conditions contained herein. In connection with the Transaction, certain other “accredited investors” (as defined in rule 501 under the Securities Act of 1933, as amended (the “Securities Act”)) have entered into separate subscription agreements with the Company (the “Other Subscription Agreements”), pursuant to which such investors have, together with the undersigned pursuant to this Subscription Agreement, agreed to purchase an aggregate of 52,500,000 shares of Common Stock at the Per Share Price (each such investor, including the undersigned, a “Subscriber” and together, the “Subscribers”). In connection therewith, the undersigned and the Company agree as follows:

 

1.            Subscription. Subject to the immediately succeeding paragraph, the undersigned hereby irrevocably subscribes for and agrees to purchase from the Company such number of shares of Common Stock as is set forth on the signature page of this Subscription Agreement on the terms and subject to the conditions provided for herein (the “Shares”). The undersigned understands and agrees that the Company reserves the right to accept or reject the undersigned’s subscription for the Shares for any reason or for no reason, in whole or in part, at any time prior to its acceptance by the Company, and the same shall be deemed to be accepted by the Company only when this Subscription Agreement is signed by a duly authorized person by or on behalf of the Company; the Company may do so in counterpart form. In the event of rejection of the entire subscription by the Company or the termination of this subscription in accordance with the terms hereof, the undersigned’s payment hereunder will be returned promptly to the undersigned along with this Subscription Agreement, and this Subscription Agreement shall have no force or effect.

 

 

 

 

2.            Closing. The closing of the sale of the Shares contemplated hereby (the “Subscription Closing”) is contingent upon the substantially concurrent consummation of the Transaction (the “Transaction Closing”). The Subscription Closing shall occur on the date of, and immediately prior to, the consummation of the Transaction (the “Transaction Closing Date”). Not less than five (5) business days prior to the scheduled Transaction Closing Date, the Company shall provide written notice to the undersigned (the “Closing Notice”) (i) of such scheduled Transaction Closing Date, and (ii) that the Company reasonably expects all conditions to the closing of the Transaction to be satisfied or waived. On the Transaction Closing Date, the Company shall deliver to the undersigned (i) the Shares in book-entry form, or, if required by the undersigned, certificated form, free and clear of any liens or other restrictions whatsoever (other than those arising under state or federal securities laws or as set forth herein), in the name of the undersigned (or its nominee in accordance with its delivery instructions) or to a custodian designated by the undersigned, as applicable, and (ii) a copy of the records of the Company’s transfer agent showing the undersigned (or such nominee or custodian) as the owner of the Shares on and as of the Transaction Closing Date. Upon delivery of the Shares to the undersigned (or its nominee or custodian, if applicable), the undersigned shall deliver to the Company the Purchase Price for the Shares by wire transfer of U.S. dollars in immediately available funds to the account specified by the Company in the Closing Notice. If the Transaction Closing does not occur on the same day as the Subscription Closing, the Company shall promptly (but not later than one (1) business day thereafter (or two (2) business days thereafter if the Company reasonably believes the Transaction Closing will occur within two (2) business days after the Transaction Closing Date identified in the Closing Notice)) return the Purchase Price to the undersigned by wire transfer of U.S. dollars in immediately available funds to the account specified by the undersigned, and any book-entries and, if applicable, certificated shares, shall be deemed cancelled (and, in the case of certificated shares, the undersigned shall promptly return such certificates to the Company or, as directed by the Company, to the Company’s representative or agent). At the request of the Company, the Subscription Closing, including the issuance of Shares to the undersigned, shall occur on the business day immediately preceding the Transaction Closing Date, notwithstanding that the conditions set forth in Section 3(c) of this Subscription Agreement have not yet been satisfied or waived, but with the expectation of such conditions being satisfied or waived on the Transaction Closing Date. In the event such conditions are not so satisfied or waived or the Transaction Closing does not occur on the Transaction Closing Date, the Company shall promptly (but not later than one (1) business day thereafter (or two (2) business days thereafter if the Company reasonably believes the Transaction Closing will occur within two (2) business days after the Transaction Closing Date identified in the Closing Notice) return the Purchase Price to the undersigned by wire transfer of U.S. dollars in immediately available funds to the account specified by Subscriber, and any book-entries and, if applicable, certificated shares shall be deemed cancelled (and, in the case of certificated shares, the undersigned shall promptly return such certificates to the Company or, as directed by the Company, to the Company’s representative or agent). If this Subscription Agreement terminates following the delivery by the undersigned of the Purchase Price for the Shares, the Company shall promptly (but not later than one (1) business day thereafter) return the Purchase Price to the undersigned.

 

3.            Closing Conditions.

 

a.            The obligations of the Company to consummate the transactions contemplated hereunder are subject to the conditions that, at the Subscription Closing:

 

i. all representations and warranties of the undersigned contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect (as defined herein), which representations and warranties shall be true in all respects) at and as of the Subscription Closing, and consummation of the Subscription Closing shall constitute a reaffirmation by the undersigned of each of the representations, warranties and agreements of such party contained in this Subscription Agreement as of the Subscription Closing, but in each case without giving effect to consummation of the Transaction; and

 

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ii. the undersigned shall have performed or complied in all material respects with all agreements and covenants required by this Subscription Agreement.

 

b.            The obligations of the undersigned to consummate the transactions contemplated hereunder are subject to the conditions that, at the Subscription Closing:

 

i. all representations and warranties of the Company contained in this Subscription Agreement shall be true and correct in all material respects (other than representations and warranties that are qualified as to materiality or Material Adverse Effect (as defined herein), which representations and warranties shall be true in all respects) at and as of the Subscription Closing, and consummation of the Subscription Closing shall constitute a reaffirmation by the Company of each of the representations, warranties and agreements of such party contained in this Subscription Agreement as of the Subscription Closing, but in each case without giving effect to consummation of the Transaction;

 

ii. the Company shall have performed or complied in all material respects with all agreements and covenants required by this Subscription Agreement; and

 

iii. the terms of the Transaction Agreement (as defined below) shall not have been amended in a manner that is materially adverse to the undersigned as a shareholder of the Company, including, without limitation, any amendment or waiver of any material representation or covenant of the Company relating to the financial position or outstanding indebtedness of the Company.

 

c.            The obligations of each of the Company and the undersigned to consummate the transactions contemplated hereunder are subject to the conditions that, at the Subscription Closing:

 

i. no governmental authority shall have enacted, issued, promulgated, enforced or entered any judgment, order, law, rule or regulation (whether temporary, preliminary or permanent) which is then in effect and has the effect of making consummation of the transactions contemplated hereby illegal or otherwise restraining or prohibiting consummation of the transactions contemplated hereby, and no governmental authority shall have instituted or threatened in writing a proceeding seeking to impose any such restraint or prohibition; and

 

ii. all conditions precedent to the closing of the Transaction, including the approval of the Company’s stockholders, shall have been satisfied or waived (other than those conditions which, by their nature, are to be satisfied at the closing of the Transaction).

 

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4.            Further Assurances. At the Subscription Closing, the parties hereto shall execute and deliver such additional documents and take such additional actions as the parties reasonably may deem to be practical and necessary in order to consummate the subscription as contemplated by this Subscription Agreement.

 

5.            Company Representations and Warranties. The Company represents and warrants to the undersigned that:

 

a.            The Company has been duly incorporated, is validly existing and is in good standing under the laws of the State of Delaware, with corporate power and authority to own, lease and operate its properties and conduct its business as presently conducted.

 

b.            The Shares have been duly authorized and, when issued and delivered to the undersigned against full payment therefor in accordance with the terms of this Subscription Agreement, the Shares will be validly issued, fully paid and non-assessable and will not have been issued in violation of or subject to any preemptive or similar rights created under the Company’s Amended and Restated Certificate of Incorporation or under the laws of the State of Delaware.

 

c.            The Shares are not, and following the Transaction Closing and the Subscription Closing will not be, subject to any Transfer Restriction. The term “Transfer Restriction” means any condition to or restriction on the ability of the undersigned to pledge, sell, assign or otherwise transfer the Shares under any organizational document, policy or agreement of, by or with the Company, but excluding the restrictions on transfer described in paragraph 6(c) of this Subscription Agreement with respect to the status of the Shares as “restricted securities” pending their registration for resale under the Securities Act of 1933, as amended (the “Securities Act”) in accordance with the terms of this Subscription Agreement.

 

d.            This Subscription Agreement has been duly authorized, executed and delivered by the Company and is enforceable in accordance with its terms, except as may be limited or otherwise affected by (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or other laws relating to or affecting the rights of creditors generally, and (ii) principles of equity, whether considered at law or equity.

 

e.            The issuance and sale of the Shares and the compliance by the Company with all of the provisions of this Subscription Agreement and the consummation of the transactions herein will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, or result in the creation or imposition of any lien, charge or encumbrance upon any of the property or assets of the Company or any of its subsidiaries pursuant to the terms of (i) any indenture, mortgage, deed of trust, loan agreement, lease, license or other agreement or instrument to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound or to which any of the property or assets of the Company is subject, which would have a material adverse effect on the business, properties, financial condition, stockholders’ equity or results of operations of the Company (a “Material Adverse Effect”) or materially affect the validity of the Shares or the legal authority of the Company to comply in all material respects with the terms of this Subscription Agreement; (ii) result in any violation of the provisions of the organizational documents of the Company; or (iii) result in any violation of any statute or any judgment, order, rule or regulation of any court or governmental agency or body, domestic or foreign, having jurisdiction over the Company or any of its properties that would have a Material Adverse Effect or materially affect the validity of the Shares or the legal authority of the Company to comply with this Subscription Agreement.

 

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f.            The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority, self-regulatory organization (including The Nasdaq Stock Market (“Nasdaq”)) or other person in connection with the execution, delivery and performance of this Subscription Agreement (including, without limitation, the issuance of the Shares), other than (i) filings with the Securities and Exchange Commission (the “Commission”), (ii) filings required by applicable state securities laws, (iii) filings required by Nasdaq, including with respect to obtaining shareholder approval, (vi) filings required to consummate the Transaction as provided under the definitive documents relating to the Transaction, and (vii) where the failure of which to obtain would not be reasonably likely to have a Material Adverse Effect or have a material adverse effect on the Company’s ability to consummate the transactions contemplated hereby, including the issuance and sale of the Shares.

 

g.            The Company has not received any written communication from a governmental entity that alleges that the Company is not in compliance with or is in default or violation of any applicable law, except where such non-compliance, default or violation would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect.

 

h.            The issued and outstanding shares of Common Stock of the Company are registered pursuant to Section 12(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and are listed for trading on Nasdaq under the symbol “VTIQ” (it being understood that the trading symbol will be changed in connection with the Transaction Closing). Except as disclosed in the Company’s filings with the Commission, there is no suit, action, proceeding or investigation pending or, to the knowledge of the Company, threatened against the Company by Nasdaq or the Commission, respectively, to prohibit or terminate the listing of the Company’s Common Stock on Nasdaq or to deregister the Common Stock under the Exchange Act. The Company has taken no action that is designed to terminate the registration of the Common Stock under the Exchange Act.

 

i.            Assuming the accuracy of the undersigned’s representations and warranties set forth in Section 6 of this Subscription Agreement, no registration under the Securities Act is required for the offer and sale of the Shares by the Company to the undersigned.

 

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j.            A copy of each form, report, statement, schedule, prospectus, proxy, registration statement and other document, if any, filed by the Company with the Commission since its initial registration of the Common Stock under the Exchange Act (the “SEC Documents”) is available to the undersigned via the Commission’s EDGAR system. None of the SEC Documents contained, when filed or, if amended, as of the date of such amendment with respect to those disclosures that are amended, any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, that with respect to the information about the Company’s affiliates contained in the Schedule 14A and related proxy materials (or other SEC document) to be filed by the Company the representation and warranty in this sentence is made to the Company’s knowledge. The Company has timely filed each report, statement, schedule, prospectus, and registration statement that the Company was required to file with the Commission since its initial registration of the Common Stock under the Exchange Act. There are no material outstanding or unresolved comments in comment letters from the staff of the Division of Corporation Finance (the “Staff”) of the Commission with respect to any of the SEC Documents.

 

k.            Except for such matters as have not had and would not be reasonably likely to have, individually or in the aggregate, a Material Adverse Effect, there is no (i) action, suit, claim or other proceeding, in each case by or before any governmental authority pending, or, to the knowledge of the Company, threatened against the Company or (ii) judgment, decree, injunction, ruling or order of any governmental entity or arbitrator outstanding against the Company.

 

l.            Other than the Other Subscription Agreements, the Company has not entered into any side letter or similar agreement with any Subscriber in connection with such Subscriber’s direct or indirect investment in the Company or with or any other investor, and such Other Subscription Agreements have not been amended in any material respect following the date of this Subscription Agreement and reflect the same Per Share Purchase Price and terms that are no more favorable to such Subscriber thereunder than the terms of this Subscription Agreement. The Company has not agreed and will not agree to issue any warrants to any person in connection with the Transaction.

 

6.            Subscriber Representations and Warranties. The undersigned represents and warrants to the Company that:

 

a.            The undersigned is (i) a “qualified institutional buyer” (as defined under the Securities Act) or (ii) an institutional “accredited investor” (within the meaning of Rule 501(a) under the Securities Act), in each case, satisfying the requirements set forth on Schedule A, and is acquiring the Shares only for his, her or its own account and not for the account of others, and not on behalf of any other account or person or with a view to, or for offer or sale in connection with, any distribution thereof in violation of the Securities Act (and shall provide the requested information on Schedule A following the signature page hereto). Accordingly, the undersigned understands that the offering of the Shares meets the exemptions from filing under FINRA Rule 5123(b)(1)(C) or (J). The undersigned is not an entity formed for the specific purpose of acquiring the Shares.

 

b.            The undersigned (i) is an institutional account as defined in FINRA Rule 4512(c), (ii) is a sophisticated investor, experienced in investing in private equity transactions and capable of evaluating investment risks independently, both in general and with regard to all transactions and investment strategies involving a security or securities and (iii) has exercised independent judgment in evaluating its participation in the purchase of the Shares. Accordingly, the undersigned understands that the offering meets (x) the exemptions from filing under FINRA Rule 5123(b)(1)(A) and (y) the institutional customer exemption under FINRA Rule 2111(b).

 

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c.            The undersigned understands that the Shares are being offered in a transaction not involving any public offering within the meaning of the Securities Act and that the Shares have not been registered under the Securities Act. The undersigned understands that the Shares may not be resold, transferred, pledged or otherwise disposed of by the undersigned absent an effective registration statement under the Securities Act except (i) to the Company or a subsidiary thereof, (ii) to non-U.S. persons pursuant to offers and sales that occur outside the United States within the meaning of Regulation S under the Securities Act or (iii) pursuant to another applicable exemption from the registration requirements of the Securities Act, and in each of cases (i) and (iii) in accordance with any applicable securities laws of the states and other jurisdictions of the United States, and that any certificates or book-entry positions representing the Shares shall contain a legend to such effect. The undersigned acknowledges that the Shares will not be eligible for resale pursuant to Rule 144A promulgated under the Securities Act. The undersigned understands and agrees that the Shares will be subject to the foregoing transfer restrictions and, as a result of these transfer restrictions, the undersigned may not be able to readily resell the Shares and may be required to bear the financial risk of an investment in the Shares for an indefinite period of time. The undersigned understands that it has been advised to consult legal counsel prior to making any offer, resale, pledge or transfer of any of the Shares.

 

d.            The undersigned understands and agrees that the undersigned is purchasing Shares directly from the Company. The undersigned further acknowledges that there have been no representations, warranties, covenants and agreements made to the undersigned by the Company, its officers or directors, or any other party to the Transaction or person or entity, expressly or by implication, other than those representations, warranties, covenants and agreements included in this Subscription Agreement.

 

e.            Either (i) the undersigned is not a Benefit Plan Investor as contemplated by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), or (ii) the undersigned’s acquisition and holding of the Shares will not constitute or result in a non-exempt prohibited transaction under Section 406 of ERISA, Section 4975 of the Internal Revenue Code of 1986, as amended, or any applicable similar law.

 

f.            The undersigned acknowledges and agrees that the undersigned has received and has had an adequate opportunity to review, such financial and other information as the undersigned deems necessary in order to make an investment decision with respect to the Shares and made its own assessment and is satisfied concerning the relevant tax and other economic considerations relevant to the undersigned’s investment in the Shares. Without limiting the generality of the foregoing, the undersigned acknowledges that it has reviewed the documents provided to the undersigned by the Company. The undersigned represents and agrees that the undersigned and the undersigned’s professional advisor(s), if any, have had the full opportunity to ask such questions, receive such answers and obtain such information as the undersigned and such undersigned’s professional advisor(s), if any, have deemed necessary to make an investment decision with respect to the Shares. The undersigned further acknowledges that the information provided to the undersigned is preliminary and subject to change, and that any changes to such information, including, without limitation, any changes based on updated information or changes in terms of the Transaction, shall in no way affect the undersigned’s obligation to purchase the Shares hereunder.

 

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g.            The undersigned became aware of this offering of the Shares solely by means of direct contact between the undersigned and the Company or a representative of the Company, and the Shares were offered to the undersigned solely by direct contact between the undersigned and the Company or a representative of the Company. The undersigned did not become aware of this offering of the Shares, nor were the Shares offered to the undersigned, by any other means. The undersigned acknowledges that the Company represents and warrants that the Shares (i) were not offered by any form of general solicitation or general advertising and (ii) are not being offered in a manner involving a public offering under, or in a distribution in violation of, the Securities Act, or any state securities laws.

 

h.            The undersigned acknowledges that it is aware that there are substantial risks incident to the purchase and ownership of the Shares. The undersigned is able to fend for himself, herself or itself in the transactions completed herein, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of an investment in the Shares and has the ability to bear the economic risks of such investment in the Shares and can afford a complete loss of such investment. The undersigned has sought such accounting, legal and tax advice as the undersigned has considered necessary to make an informed investment decision.

 

i.            Alone, or together with any professional advisor(s), the undersigned has adequately analyzed and fully considered the risks of an investment in the Shares and determined that the Shares are a suitable investment for the undersigned and that the undersigned is able at this time and in the foreseeable future to bear the economic risk of a total loss of the undersigned’s investment in the Company. The undersigned acknowledges specifically that a possibility of total loss exists.

 

j.            In making its decision to purchase the Shares, the undersigned has relied solely upon independent investigation made by the undersigned and the representations, warranties and covenants contained herein. Without limiting the generality of the foregoing, the undersigned has not relied on any statements or other information provided by the Placement Agents (as defined below) concerning the Company or the Shares or the offer and sale of the Shares.

 

k.            The undersigned understands and agrees that no federal or state agency has passed upon or endorsed the merits of the offering of the Shares or made any findings or determination as to the fairness of this investment.

 

l.            The undersigned has been duly formed or incorporated and is validly existing in good standing under the laws of its jurisdiction of incorporation or formation.

 

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m.            The execution, delivery and performance by the undersigned of this Subscription Agreement are within the powers of the undersigned, have been duly authorized and will not constitute or result in a breach or default under or conflict with any order, ruling or regulation of any court or other tribunal or of any governmental commission or agency, or any agreement or other undertaking, to which the undersigned is a party or by which the undersigned is bound, and, if the undersigned is not an individual, will not violate any provisions of the undersigned’s charter documents, including, without limitation, its incorporation or formation papers, bylaws, indenture of trust or partnership or operating agreement, as may be applicable. The signature on this Subscription Agreement is genuine, and the signatory, if the undersigned is an individual, has legal competence and capacity to execute the same or, if the undersigned is not an individual, the signatory has been duly authorized to execute the same, and this Subscription Agreement constitutes a legal, valid and binding obligation of the undersigned, enforceable against the undersigned in accordance with its terms.

 

n.            Neither the due diligence investigation conducted by the undersigned in connection with making its decision to acquire the Shares nor any representations and warranties made by the undersigned herein shall modify, amend or affect the undersigned’s right to rely on the truth, accuracy and completeness of the Company’s representations and warranties contained herein.

 

o.            The undersigned is not (i) a person or entity named on the List of Specially Designated Nationals and Blocked Persons administered by the U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) or in any Executive Order issued by the President of the United States and administered by OFAC (“OFAC List”), or a person or entity prohibited by any OFAC sanctions program, (ii) a Designated National as defined in the Cuban Assets Control Regulations, 31 C.F.R. Part 515, or (iii) a non-U.S. shell bank or providing banking services indirectly to a non-U.S. shell bank (collectively, a “Prohibited Investor”). The undersigned agrees to provide law enforcement agencies, if requested thereby, such records as required by applicable law, provided that the undersigned is permitted to do so under applicable law. If the undersigned is a financial institution subject to the Bank Secrecy Act (31 U.S.C. Section 5311 et seq.) (the “BSA”), as amended by the USA PATRIOT Act of 2001 (the “PATRIOT Act”), and its implementing regulations (collectively, the “BSA/PATRIOT Act”), the undersigned maintains policies and procedures reasonably designed to comply with applicable obligations under the BSA/PATRIOT Act.  To the extent required, it maintains policies and procedures reasonably designed for the screening of its investors against the OFAC sanctions programs, including the OFAC List. To the extent required, it maintains policies and procedures reasonably designed to ensure that the funds held by the undersigned and used to purchase the Shares were legally derived.

 

p.            No disclosure or offering document has been prepared by Morgan Stanley & Co. LLC or Cowen and Company, LLC (collectively, the “Placement Agents”) or any of their respective affiliates in connection with the offer and sale of the Shares.

 

q.            The Placement Agents and their respective directors, officers, employees, representatives and controlling persons have made no independent investigation with respect to the Company or the Shares or the accuracy, completeness or adequacy of any information supplied to the undersigned by the Company.

 

r.            In connection with the issue and purchase of the Shares, the Placement Agents have not acted as the undersigned’s financial advisor or fiduciary.

 

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s.            If the undersigned is a resident of Canada, the undersigned hereby declares, represents, warrants and agrees as set forth in the attached Schedule B.

 

7.            Registration Rights.

 

a.            In the event that the Shares are not registered in connection with the consummation of the Transaction, the Company agrees that, within forty-five (45) calendar days after the consummation of the Transaction (the “Filing Deadline”), the Company will file with the Commission (at the Company’s sole cost and expense) a registration statement (the “Registration Statement”) registering such resale, and the Company shall use its commercially reasonable efforts to have the Registration Statement declared effective as soon as practicable after the filing thereof, but no later than the 60th calendar day (or 120th calendar day if the Commission notifies the Company that it will “review” the Registration Statement) following the Filing Deadline (such date, the “Effectiveness Date”); provided, however, that the Company’s obligations to include the Shares in the Registration Statement are contingent upon the undersigned furnishing in writing to the Company such information regarding the undersigned, the securities of the Company held by the undersigned and the intended method of disposition of the Shares as shall be reasonably requested by the Company to effect the registration of the Shares, and shall execute such documents in connection with such registration as the Company may reasonably request that are customary of a selling stockholder in similar situations. The Company will use its commercially reasonable efforts to maintain the continuous effectiveness of the Registration Statement until the earliest of (i) the date on which the Shares may be resold without volume or manner of sale limitations pursuant to Rule 144 promulgated under the Securities Act, (ii) the date on which such Shares have actually been sold and (iii) the date which is two years after the Subscription Closing. For purposes of clarification, any failure by the Company to file the Registration Statement by the Filing Deadline or to effect such Registration Statement by the Effectiveness Date shall not otherwise relieve the Company of its obligations to file or effect the Registration Statement set forth in this Section 7.

 

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b.            The Company further agrees that, in the event that (i) the Registration Statement is not filed with the Commission on or prior to the Filing Deadline, (ii) the Registration Statement has not been declared effective by the Commission by the Effectiveness Date, (iii) after such Registration Statement is declared effective by the Commission, (A) such Registration Statement ceases for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Shares for which it is required to be effective or (B) a Subscriber is not permitted to utilize the Registration Statement to resell its Shares (in each case of (A) and (B), (x) other than within the time period(s) permitted by this Agreement and (y) excluding by reason of a post-effective amendment required in connection with the Company’s filing of an amendment thereto (a “Special Grace Period”), which Special Grace Period shall not be treated as a Registration Default (as defined below)), or (iv) after the date six months following the Transaction Closing Date, and only in the event the Registration Statement is not effective or available to sell all of the Shares, the Company fails to file with the Commission any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) (or Rule 144(i)(2), if applicable), as a result of which the Subscribers who are not affiliates are unable to sell their Shares without restriction under Rule 144 (or any successor thereto) (each such event referred to in clauses (i) through (iv), a “Registration Default” and, for purposes of such clauses, the date on which such Registration Default occurs, a “Default Date”), then in addition to any other rights such Subscriber may have hereunder or under applicable law, on each such Default Date and on each monthly anniversary of each such Default Date (if the applicable Registration Default shall not have been cured by such date) until the applicable Registration Default is cured, the Company shall pay to each Subscriber an amount in cash, as partial liquidated damages and not as a penalty (“Liquidated Damages”), equal to 0.5% of the aggregate Purchase Price paid by the Subscriber pursuant to this Subscription Agreement for any Shares held by the Subscriber on the Default Date; provided, however, that if such Subscriber fails to provide the Company with any information requested by the Company that is required to be provided in such Registration Statement with respect to such Subscriber as set forth herein, then, for purposes of this Section 7, the Filing Date or Effectiveness Date, as applicable, for a Registration Statement with respect to such Subscriber shall be extended until two (2) Business Days following the date of receipt by the Company of such required information from such Subscriber; and in no event shall the Company be required hereunder to pay to such Subscriber pursuant to this Subscription Agreement an aggregate amount that exceeds 5.0% of the aggregate Purchase Price paid by such Subscriber for its Shares. The Liquidated Damages pursuant to the terms hereof shall apply on a daily pro-rata basis for any portion of a month prior to the cure of a Registration Default, except in the case of the first Default Date. The Company shall deliver the cash payment to such Subscriber with respect to any Liquidated Damages by the fifth Business Day after the date payable. If the Company fails to pay said cash payment to such Subscriber in full by the fifth Business Day after the date payable, the Company will pay interest thereon at a rate of 5.0% per annum (or such lesser maximum amount that is permitted to be paid by applicable law, and calculated on the basis of a year consisting of 360 days) to such Subscriber, accruing daily from the date such Liquidated Damages are due until such amounts, plus all such interest thereon, are paid in full. Notwithstanding the foregoing, nothing shall preclude any Subscriber from pursuing or obtaining any available remedies at law, specific performance or other equitable relief with respect to this Section 7 in accordance with applicable law. The parties agree that notwithstanding anything to the contrary herein, no Liquidated Damages shall be payable to any Subscriber with respect to any period during which all of such Subscriber’s Shares may be sold by such Subscriber without volume or manner of sale restrictions under Rule 144 and the Company is in compliance with the current public information requirements under Rule 144(c)(1) (or Rule 144(i)(2), if applicable).

 

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c.            Notwithstanding anything to the contrary in this Subscription Agreement, the Company shall be entitled to delay or postpone the effectiveness of the Registration Statement, and from time to time to require any Subscriber not to sell under the Registration Statement or to suspend the effectiveness thereof, if the negotiation or consummation of a transaction by the Company or its subsidiaries is pending or an event has occurred, which negotiation, consummation or event, the Company’s board of directors reasonably believes, upon the advice of legal counsel, would require additional disclosure by the Company in the Registration Statement of material information that the Company has a bona fide business purpose for keeping confidential and the non-disclosure of which in the Registration Statement would be expected, in the reasonable determination of the Company’s board of directors, upon the advice of legal counsel, to cause the Registration Statement to fail to comply with applicable disclosure requirements (each such circumstance, a “Suspension Event”); provided, however, that the Company may not delay or suspend the Registration Statement on more than two occasions or for more than sixty (60) consecutive calendar days, or more than ninety (90) total calendar days, in each case during any twelve-month period. Upon receipt of any written notice from the Company of the happening of any Suspension Event (which notice shall not contain material non-public information) during the period that the Registration Statement is effective or if as a result of a Suspension Event the Registration Statement or related prospectus contains any untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made (in the case of the prospectus) not misleading, each Subscriber agrees that (i) it will immediately discontinue offers and sales of the Shares under the Registration Statement (excluding, for the avoidance of doubt, sales conducted pursuant to Rule 144) until such Subscriber receives copies of a supplemental or amended prospectus (which the Company agrees to promptly prepare) that corrects the misstatement(s) or omission(s) referred to above and receives notice that any post-effective amendment has become effective or unless otherwise notified by the Company that it may resume such offers and sales, and (ii) it will maintain the confidentiality of any information included in such written notice delivered by the Company unless otherwise required by law or subpoena. If so directed by the Company, each Subscriber will deliver to the Company or, in such Subscriber’s sole discretion destroy, all copies of the prospectus covering the Shares in such Subscriber’s possession; provided, however, that this obligation to deliver or destroy all copies of the prospectus covering the Shares shall not apply (i) to the extent such Subscriber is required to retain a copy of such prospectus (a) in order to comply with applicable legal, regulatory, self-regulatory or professional requirements or (b) in accordance with a bona fide pre-existing document retention policy or (ii) to copies stored electronically on archival servers as a result of automatic data back-up.

 

d.            The Company shall, notwithstanding any termination of this Subscription Agreement, indemnify, defend and hold harmless each Subscriber (to the extent a seller under the Registration Statement), the officers, directors and agents of each of them, and each person who controls such Subscriber (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of or are based upon (i) any untrue or alleged untrue statement of a material fact contained in the Registration Statement, any prospectus included in the Registration Statement or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, or (ii) any violation or alleged violation by the Company of the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder, in connection with the performance of its obligations under this Section 7, except to the extent, but only to the extent, that such untrue statements, alleged untrue statements, omissions or alleged omissions are based upon information regarding such Subscriber furnished in writing to the Company by such Subscriber expressly for use therein or such Subscriber has omitted a material fact from such information or otherwise violated the Securities Act, Exchange Act or any state securities law or any rule or regulation thereunder; provided, however, that the indemnification contained in this Section 7 shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld, conditioned or delayed), nor shall the Company be liable for any Losses to the extent they arise out of or are based upon a violation which occurs (A) in reliance upon and in conformity with written information furnished by a Subscriber, (B) in connection with any failure of such person to deliver or cause to be delivered a prospectus made available by the Company in a timely manner, (C) as a result of offers or sales effected by or on behalf of any person by means of a freewriting prospectus (as defined in Rule 405) that was not authorized in writing by the Company, or (D) in connection with any offers or sales effected by or on behalf of a Subscriber in violation of Section 7(c) hereof. The Company shall notify such Subscriber promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 7 of which the Company is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Shares by such Subscriber.

 

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e.            Each Subscriber shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, and each person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus included in the Registration Statement, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading to the extent, but only to the extent, that such untrue statements or omissions are based upon information regarding such Subscriber furnished in writing to the Company by such Subscriber expressly for use therein; provided, however, that the indemnification contained in this Section 7 shall not apply to amounts paid in settlement of any Losses if such settlement is effected without the consent of such Subscriber (which consent shall not be unreasonably withheld, conditioned or delayed). In no event shall the liability of any Subscriber be greater in amount than the dollar amount of the net proceeds received by such Subscriber upon the sale of the Shares giving rise to such indemnification obligation. Each Subscriber shall notify the Company promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Section 7 of which such Subscriber is aware. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an indemnified party and shall survive the transfer of the Shares by such Subscriber.

 

8.            Termination. This Subscription Agreement shall terminate and be void and of no further force and effect, and all rights and obligations of the parties hereunder shall terminate without any further liability on the part of any party in respect thereof, upon the earliest to occur of (a) such time as the Company notifies the undersigned in writing, or publicly discloses, that it does not intend to consummate the Transaction, (b) following the execution of a definitive agreement among the Company and Nikola with respect to the Transaction (a “Transaction Agreement”), such date and time as such Transaction Agreement is terminated in accordance with its terms without the Transaction being consummated, (c) upon the mutual written agreement of each of the parties hereto to terminate this Subscription Agreement, (d) if any of the conditions to the Subscription Closing set forth in Section 3 of this Subscription Agreement are not satisfied or waived on or prior to the Subscription Closing and, as a result thereof, the transactions contemplated by this Subscription Agreement are not consummated at the Subscription Closing, (e) if the consummation of the Transaction shall not have occurred by the earlier of (x) the 10th business day after the anticipated Transaction Closing Date specified in the Closing Notice, or (y) July 31, 2020 or (h) if following the execution of the Transaction Agreement and prior to the consummation of the Transaction, the aggregate amount of valid and enforceable subscriptions by the Subscribers (including any such amounts that have been actually funded) is less than $500.0 million; provided that nothing herein will relieve any party from liability for any willful breach hereof prior to the time of termination, and each party will be entitled to any remedies at law or in equity to recover losses, liabilities or damages arising from such breach. The Company shall promptly notify the undersigned of the termination of the Transaction Agreement after the termination of such agreement.

 

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9.            Trust Account Waiver. The undersigned acknowledges that the Company is a blank check company with the powers and privileges to effect a merger, asset acquisition, reorganization or similar business combination involving the Company and one or more businesses or assets. The undersigned further acknowledges that, as described in the Company’s prospectus relating to its initial public offering dated May 15, 2018 (the “Prospectus”) available at www.sec.gov, substantially all of the Company’s assets consist of the cash proceeds of the Company’s initial public offering and private placements of its securities, and substantially all of those proceeds have been deposited in a trust account (the “Trust Account”) for the benefit of the Company, its public stockholders and the underwriters of the Company’s initial public offering. For and in consideration of the Company entering into this Subscription Agreement, the receipt and sufficiency of which are hereby acknowledged, the undersigned hereby irrevocably waives any and all right, title and interest, or any claim of any kind it has or may have in the future, in or to any monies held in the Trust Account, and agrees not to seek recourse against the Trust Account, in each case, as a result of, or arising out of, this Subscription Agreement; provided that nothing in this Section 9 shall be deemed to limit the undersigned’s right, title, interest or claim to the Trust Account by virtue of the undersigned’s record or beneficial ownership of Common Stock of the Company acquired by any means other than pursuant to this Subscription Agreement.

 

10.            Miscellaneous.

 

a.            The Company shall, no later than 9:00 a.m., New York City time, on the first (1st) business day immediately following the date of this Subscription Agreement, issue one or more press releases or file with the Commission a Current Report on Form 8-K (collectively, the “Disclosure Document”) disclosing all material terms of the transactions contemplated hereby, the Transaction and any other material, nonpublic information that the Company has provided to the undersigned at any time prior to the filing of the Disclosure Document. From and after the issuance of the Disclosure Document, the undersigned shall not be in possession of any material, non-public information received from the Company or any of its officers, directors or employees. Notwithstanding anything in this Subscription Agreement to the contrary, each party hereto acknowledges and agrees that without the prior written consent of the other party hereto it will not publicly make reference to such other party or any of its affiliates (i) in connection with the Transaction or this Subscription Agreement (provided that the undersigned may disclose its entry into this Subscription Agreement and the Purchase Price) or (ii) in any promotional materials, media, or similar circumstances, except, in each case, as required by law or regulation or at the request of the Staff of the Commission or regulatory agency or under the regulations of Nasdaq, including, in the case of the Company (a) as required by the federal securities law in connection with the Registration Statement, (b) the filing of this Subscription Agreement (or a form of this Subscription Agreement) with the Commission and (c) the filing of the Registration Statement on Form S-4 and Schedule 14A and related materials to be filed by the Company with respect to the Transaction.

 

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b.            Neither this Subscription Agreement nor any rights that may accrue to the undersigned hereunder (other than the Shares acquired hereunder, if any) may be transferred or assigned.

 

c.            The Company may request from the undersigned such additional information as the Company may deem necessary to evaluate the eligibility of the undersigned to acquire the Shares, and the undersigned shall provide such information as may reasonably be requested, to the extent readily available and to the extent consistent with its internal policies and procedures.

 

d.            The undersigned acknowledges that the Company and the Placement Agents (pursuant to the ultimate sentence of this paragraph) and Nikola will rely on the acknowledgments, understandings, agreements, representations and warranties contained in this Subscription Agreement. Prior to the Subscription Closing, the undersigned agrees to promptly notify the Company if any of the acknowledgments, understandings, agreements, representations and warranties set forth herein are no longer accurate. The undersigned agrees that each purchase by the undersigned of Shares from the Company will constitute a reaffirmation of the acknowledgments, understandings, agreements, representations and warranties herein (as modified by any such notice) by the undersigned as of the time of such purchase. The undersigned further acknowledges and agrees that the Placement Agents are third-party beneficiaries of the representations and warranties of the undersigned contained in Sections 6(a), 6(b), 6(c), 6(f), 6(h), 6(p), 6(q) and 6(r) of this Subscription Agreement.

 

e.            The Company is entitled to rely upon this Subscription Agreement and is irrevocably authorized to produce this Subscription Agreement or a copy hereof when required by law, regulatory authority or Nasdaq to do so in any administrative or legal proceeding or official inquiry with respect to the matters covered hereby.

 

f.            Except if required by law or Nasdaq, without the prior written consent of the undersigned, the Company shall not, and shall cause its representatives, including the Placement Agents and their respective representatives, not to, disclose the existence of this Subscription Agreement or any negotiations related hereto, or to use the name of the undersigned or any information provided by the undersigned in connection herewith in or for the purpose of any marketing activities or materials or for any similar or related purpose.

 

g.            All the agreements, representations and warranties made by each party hereto in this Subscription Agreement shall survive the Subscription Closing.

 

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h.            This Subscription Agreement may not be modified, waived or terminated except by an instrument in writing, signed by the party against whom enforcement of such modification, waiver, or termination is sought.

 

i.            This Subscription Agreement constitutes the entire agreement, and supersedes all other prior agreements, understandings, representations and warranties, both written and oral, among the parties, with respect to the subject matter hereof. Except as otherwise expressly set forth in subsection (d) of this Section 11, this Subscription Agreement shall not confer any rights or remedies upon any person other than the parties hereto, and their respective successor and assigns.

 

j.            Except as otherwise provided herein, this Subscription Agreement shall be binding upon, and inure to the benefit of the parties hereto and their heirs, executors, administrators, successors, legal representatives, and permitted assigns, and the agreements, representations, warranties, covenants and acknowledgments contained herein shall be deemed to be made by, and be binding upon, such heirs, executors, administrators, successors, legal representatives and permitted assigns.

 

k.            If any provision of this Subscription Agreement shall be invalid, illegal or unenforceable, the validity, legality or enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby and shall continue in full force and effect.

 

l.            This Subscription Agreement may be executed in one or more counterparts (including by facsimile or electronic mail or in .pdf) and by different parties in separate counterparts, with the same effect as if all parties hereto had signed the same document. All counterparts so executed and delivered shall be construed together and shall constitute one and the same agreement.

 

m.            The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Subscription Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Subscription Agreement and to enforce specifically the terms and provisions of this Subscription Agreement, this being in addition to any other remedy to which such party is entitled at law, in equity, in contract, in tort or otherwise.

 

n.            THIS SUBSCRIPTION AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAWS THAT WOULD OTHERWISE REQUIRE THE APPLICATION OF THE LAW OF ANY OTHER STATE. EACH PARTY HERETO HEREBY WAIVES ANY RIGHT TO A JURY TRIAL IN CONNECTION WITH ANY LITIGATION PURSUANT TO THIS SUBSCRIPTION AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY.

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, the undersigned has executed or caused this Subscription Agreement to be executed by its duly authorized representative as of the date set forth below.

 

Name of Investor:   State/Country of Formation or Domicile:
     
By:    
Name:    
Title:    
     
Name in which shares are to be registered (if different):   Date: _______________, 2020

Investor’s EIN:    
     
Business Address-Street:   Mailing Address-Street (if different):
     
City, State, Zip:   City, State, Zip:
     
Attn: __________________   Attn:                                         
     
Telephone No.:   Telephone No.:
Facsimile No.:   Facsimile No.:
     
Number of Shares subscribed for:    
     
Aggregate Subscription Amount: $   Price Per Share: $10.00

 

You must pay the Subscription Amount by wire transfer of United States dollars in immediately available funds to the account specified by the Company in the Closing Notice. To the extent the offering is oversubscribed, the number of Shares received may be less than the number of Shares subscribed for.

 

 

 

IN WITNESS WHEREOF, VectoIQ Acquisition Corp. has accepted this Subscription Agreement as of the date set forth below.

 

  VECTOIQ ACQUISITION CORP.
   
  By:  
 
  Name:  
 
  Title:  

 

Date: ____________, 2020

 

 

Exhibit 10.3

 

INDEMNIFICATION AGREEMENT

 

This Indemnification Agreement (the “Agreement”), dated as of _____________, between Nikola Corporation, a Delaware corporation (the “Company”), and __________ (“Indemnitee”).

 

W I T N E S S E T H:

 

WHEREAS, Indemnitee is either a member of the Board of Directors of the Company (the “Board of Directors”) or an officer of the Company, or both, and in such capacity or capacities, or otherwise as an Agent (as hereinafter defined) of the Company, is performing a valuable service for the Company;

 

WHEREAS, the Company is aware that competent and experienced persons are increasingly reluctant to serve as directors or officers of corporations or other business entities unless they are protected by comprehensive indemnification and liability insurance, due to increased exposure to litigation costs and risks resulting from their service to such corporations, and because the exposure frequently bears no reasonable relationship to the compensation of such directors and officers;

 

WHEREAS, the Board of Directors has concluded that, to retain and attract talented and experienced individuals to serve or continue to serve as officers or directors of the Company or as an Agent, and to encourage such individuals to take the business risks necessary for the success of the Company, it is necessary for the Company contractually to indemnify directors, officers and Agents and to assume for itself to the fullest extent permitted by law expenses and damages in connection with claims against such officers, directors and Agents in connection with their service to the Company;

 

WHEREAS, Section 145 of the General Corporation Law of the State of Delaware (the “DGCL”), under which the Company is organized, empowers the Company to indemnify by agreement its officers, directors, employees and agents, and persons who serve, at the request of the Company, as directors, officers, employees or agents of other corporations or enterprises, and expressly provides that the indemnification provided by the DGCL is not exclusive;

 

WHEREAS, the Company desires and has requested Indemnitee to serve or continue to serve as a director, officer or Agent of the Company free from undue concern for claims for damages arising out of or related to such services to the Company;

 

WHEREAS, Indemnitee is willing to serve, continue to serve and to take on additional service for or on behalf of the Company on the condition that he or she be indemnified as herein provided;

 

WHEREAS, it is intended that Indemnitee shall be paid promptly by the Company all amounts necessary to effectuate in full the indemnity provided herein; and

 

WHEREAS, certain defined terms are set forth in Section 17 below:

 

 

 

 

NOW, THEREFORE, in consideration of the premises and the covenants in this Agreement, and of Indemnitee serving or continuing to serve the Company as an Agent and intending to be legally bound hereby, the parties hereto agree as follows:

 

1.            Services by Indemnitee. Indemnitee agrees to serve or continue to serve (a) as a director or an officer of the Company, or both, so long as Indemnitee is duly appointed or elected and qualified, and until such time as Indemnitee resigns or fails to stand for election or is removed from Indemnitee’s position in each case in accordance with the applicable provisions of the Certificate of Incorporation and Bylaws of the Company, or (b) otherwise as an Agent of the Company. Indemnitee may from time to time also perform other services at the request or for the convenience of, or otherwise benefiting the Company or any subsidiary of the Company. Indemnitee may at any time and for any reason resign or be removed from such position (subject to any other contractual obligation or other obligation imposed by operation of law), in which event the Company shall have no obligation under this Agreement to continue Indemnitee in any such position.

 

2.            Indemnification of Indemnitee. Subject to the limitations set forth herein and particularly in Section 6 hereof, the Company hereby agrees to indemnify Indemnitee as follows:

 

(a)            The Company shall, with respect to any Proceeding (as hereinafter defined), indemnify Indemnitee to the fullest extent permitted by applicable law or as such law may from time to time be amended (but, in the case of any such amendment, only to the extent such amendment permits the Company to provide broader indemnification rights than the law permitted the Company to provide before such amendment). The right to indemnification conferred herein shall be presumed to have been relied upon by Indemnitee in serving or continuing to serve the Company as an Agent and shall be enforceable as a contract right. Without in any way diminishing the scope of the indemnification provided by this Section 2(a), the rights of indemnification of Indemnitee shall include but shall not be limited to those rights hereinafter set forth.

 

(b)          The Company shall indemnify Indemnitee if Indemnitee is or was a party or is threatened to be made a party to any Proceeding (other than an action by or in the right of the Company) by reason of the fact that Indemnitee is or was an Agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as an Agent of another corporation, partnership, joint venture, trust or other enterprise, against Expenses (as hereinafter defined) or Liabilities (as hereinafter defined), actually and reasonably incurred by Indemnitee in connection with such Proceeding if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

 

(c)          The Company shall indemnify Indemnitee if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company or any subsidiary of the Company to procure a judgment in its favor by reason of the fact that Indemnitee is or was an Agent of the Company, or any subsidiary of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as an Agent of another corporation, partnership, joint venture, trust or other enterprise, against (i) Expenses and (ii) to the fullest extent permitted by law, Liabilities if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, except with respect to both clauses (i) and (ii) hereof, no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been adjudged to be liable to the Company unless and only to the extent that the Court of Chancery of the State of Delaware or the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery of the State of Delaware or such other court shall deem proper.

 

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3.            Advancement of Expenses. All reasonable Expenses incurred by or on behalf of Indemnitee (including costs of enforcement of this Agreement) shall be advanced from time to time by the Company to Indemnitee within thirty (30) days after the receipt by the Company of a written request for an advance of Expenses, whether prior to or after final disposition of a Proceeding (except to the extent that there has been a Final Adverse Determination (as hereinafter defined) that Indemnitee is not entitled to be indemnified for such Expenses), including without limitation any Proceeding brought by or in the right of the Company. The written request for an advancement of any and all Expenses under this paragraph shall contain reasonable detail of the Expenses incurred by Indemnitee. In the event that such written request shall be accompanied by an affidavit of counsel to Indemnitee to the effect that such counsel has reviewed such Expenses and that such Expenses are reasonable in such counsel’s view, then such expenses shall be deemed reasonable in the absence of clear and convincing evidence to the contrary. By execution of this Agreement, Indemnitee shall be deemed to have made whatever undertaking as may be required by law at the time of any advancement of Expenses with respect to repayment to the Company of such Expenses. In the event that the Company shall breach its obligation to advance Expenses under this Section 3, the parties hereto agree that Indemnitee’s remedies available at law would not be adequate and that Indemnitee would be entitled to specific performance.

 

4.            Presumptions and Effect of Certain Proceedings. Upon making a request for indemnification, Indemnitee shall be presumed to be entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption in reaching any contrary determination. The termination of any Proceeding by judgment, order, settlement, arbitration award or conviction, or upon a plea of nolo contendere or its equivalent shall not affect this presumption or, except as determined by a judgment or other final adjudication adverse to Indemnitee, establish a presumption regarding any factual matter relevant to determining Indemnitee’s rights to indemnification hereunder. If the person or persons so empowered to make a determination pursuant to Section 5 hereof shall have failed to make the requested determination within the period provided for in Section 5 hereof, a determination that Indemnitee is entitled to indemnification shall be deemed to have been made.

 

5.            Procedure for Determination of Entitlement to Indemnification.

 

(a)          Whenever Indemnitee believes that Indemnitee is entitled to indemnification pursuant to this Agreement, Indemnitee shall submit a written request for indemnification to the Company. Any request for indemnification shall include sufficient documentation or information reasonably available to Indemnitee for the determination of entitlement to indemnification. In any event, Indemnitee shall submit Indemnitee’s claim for indemnification within a reasonable time, not to exceed five (5) years after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere or its equivalent, or final determination, whichever is the later date for which Indemnitee requests indemnification. The Secretary or other appropriate officer shall, promptly upon receipt of Indemnitee’s request for indemnification, advise the Board of Directors in writing that Indemnitee has made such request. Determination of Indemnitee’s entitlement to indemnification shall be made not later than sixty (60) days after the Company’s receipt of Indemnitee’s written request for such indemnification. If it is so determined that Indemnitee is entitled to indemnification, and Indemnitee has already paid the Liabilities, reimbursement to Indemnitee shall be made within ten (10) days after such determination; otherwise, the Company shall pay the Liabilities on behalf of Indemnitee if and when Indemnitee becomes legally obligated to make payment.

 

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(b)          The Company shall be entitled to select the forum in which Indemnitee’s entitlement to indemnification will be heard; provided, however, that if there is a Change in Control of the Company, Independent Legal Counsel (as hereinafter defined) shall determine whether Indemnitee is entitled to indemnification. The forum shall be any one of the following:

 

(i)            a majority vote of Disinterested Directors (as hereinafter defined), even though less than a quorum; or

 

(ii)           if there are no Disinterested Directors, or if the Disinterested Directors so direct, by Independent Legal Counsel, whose determination shall be made in a written opinion.

 

6.            Specific Limitations on Indemnification. Notwithstanding anything in this Agreement to the contrary, the Company shall not be obligated under this Agreement to make any payment to Indemnitee with respect to any Proceeding (and Indemnitee hereby waives and relinquishes any right under this Agreement, the Certificate of Incorporation, the Bylaws or otherwise to be indemnified and held harmless or to receive any advancement of Expenses):

 

(a)          To the extent that payment is actually made to Indemnitee under any insurance policy, or is made to Indemnitee by the Company or an affiliate otherwise than pursuant to this Agreement. Notwithstanding the availability of such insurance, Indemnitee also may claim indemnification from the Company pursuant to this Agreement by assigning to the Company any claims under such insurance to the extent Indemnitee is paid by the Company;

 

(b)          Provided there has been no Change in Control, for Liabilities in connection with Proceedings settled without the Company’s consent, which consent, however, shall not be unreasonably withheld;

 

(c)           For an accounting of profits made from the purchase or sale by Indemnitee of securities of the Company within the meaning of section 16(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or similar provisions of any state statutory or common law;

 

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(d)          To the extent it would be otherwise prohibited by law; or

 

 

(e)          In connection with a Proceeding commenced by Indemnitee (other than a Proceeding commenced by Indemnitee to enforce Indemnitee’s rights under this Agreement) unless the commencement of such Proceeding was authorized by the Board of Directors.

 

7.            Fees and Expenses of Independent Legal Counsel. The Company agrees to pay the reasonable fees and expenses of Independent Legal Counsel should such Independent Legal Counsel be retained to make a determination of Indemnitee’s entitlement to indemnification pursuant to Section 5(b) of this Agreement, and to fully indemnify such Independent Legal Counsel against any and all expenses and losses incurred by any of them arising out of or relating to this Agreement or their engagement pursuant hereto.

 

8.            Remedies of Indemnitee.

 

(a)           In the event that (i) a determination pursuant to Section 5 hereof is made that Indemnitee is not entitled to indemnification, (ii) advances of Expenses are not made pursuant to this Agreement, (iii) payment has not been timely made following a determination of entitlement to indemnification pursuant to this Agreement, or (iv) Indemnitee otherwise seeks enforcement of this Agreement, Indemnitee shall be entitled to a final adjudication in the Court of Chancery of the State of Delaware of the remedy sought. Alternatively, unless court approval is required by law for the indemnification sought by Indemnitee, Indemnitee at Indemnitee’s option may seek an award in arbitration to be conducted by a single arbitrator in accordance with JAMS’ Comprehensive Arbitration Rules and Procedures then in effect, which award is to be made within ninety (90) days following the filing of the demand for arbitration. The Company shall not oppose Indemnitee’s right to seek any such adjudication or arbitration award. In any such proceeding or arbitration Indemnitee shall be presumed to be entitled to indemnification and advancement of Expenses under this Agreement and the Company shall have the burden of proof to overcome that presumption.

 

(b)          In the event that a determination that Indemnitee is not entitled to indemnification, in whole or in part, has been made pursuant to Section 5 hereof, the decision in the judicial proceeding or arbitration provided in paragraph (a) of this Section 8 shall be made de novo and Indemnitee shall not be prejudiced by reason of a determination that Indemnitee is not entitled to indemnification.

 

(c)           If a determination that Indemnitee is entitled to indemnification has been made pursuant to Section 5 hereof, or is deemed to have been made pursuant to Section 4 hereof or otherwise pursuant to the terms of this Agreement, the Company shall be bound by such determination.

 

(d)          The Company shall be precluded from asserting that the procedures and presumptions of this Agreement are not valid, binding and enforceable. The Company shall stipulate in any such court or before any such arbitrator that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

 

(e)           Expenses reasonably incurred by Indemnitee in connection with Indemnitee’s request for indemnification under, seeking enforcement of or to recover damages for breach of this Agreement shall be advanced by the Company when and as incurred by Indemnitee irrespective of any Final Adverse Determination that Indemnitee is not entitled to indemnification.

 

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9.            Contribution. To the fullest extent permissible under applicable law, if the indemnification provided for in this Agreement is unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee, whether for judgments, fines, penalties, excise taxes, amounts paid or to be paid in settlement and/or for Expenses, in connection with any claim relating to an indemnifiable event under this Agreement, in such proportion as is deemed fair and reasonable in light of all of the circumstances of such Proceeding in order to reflect (i) the relative benefits received by the Company and Indemnitee as a result of the event(s) and/or transaction(s) giving cause to such Proceeding; and/or (ii) the relative fault of the Company (and its directors, officers, employees and agents) and Indemnitee in connection with such event(s) and/or transaction(s).

 

10.          Maintenance of Insurance. The Company represents that it presently has in place certain directors’ and officers’ liability insurance policies covering its directors and officers. Subject only to the provisions within this Section 10, the Company agrees that so long as Indemnitee shall have consented to serve or shall continue to serve as a director or officer of the Company, or both, or as an Agent of the Company, and thereafter so long as Indemnitee shall be subject to any possible Proceeding (such periods being hereinafter sometimes referred to as the “Indemnification Period”), the Company will use all reasonable efforts to maintain in effect for the benefit of Indemnitee one or more valid, binding and enforceable policies of directors’ and officers’ liability insurance from established and reputable insurers, providing, in all material respects, coverage both in scope and amount which are substantially similar to that presently provided or, following the Company’s initial public offering, than that provided as of the time of such initial public offering to the extent such insurance coverage is reasonably available in the commercial market for directors’ and officers’ liability insurance.

 

Anything in this Agreement to the contrary notwithstanding, to the extent that and for so long as the Company shall choose to continue to maintain any policies of directors’ and officers’ liability insurance during the Indemnification Period, the Company shall maintain similar and equivalent insurance for the benefit of Indemnitee during the Indemnification Period (unless such insurance shall be less favorable to Indemnitee than the Company’s existing policies) to the extent such insurance coverage is reasonably available in the commercial market for directors’ and officers’ liability insurance.

 

11.           Modification, Waiver, Termination and Cancellation. No supplement, modification, termination, cancellation or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto. No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar), nor shall such waiver constitute a continuing waiver.

 

12.          Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.

 

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13.          Notice by Indemnitee and Defense of Claim. Indemnitee shall promptly notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any matter, whether civil, criminal, administrative or investigative that may result in the right to indemnification or the advancement of Expenses, but the omission so to notify the Company will not relieve it from any liability that it may have to Indemnitee if such omission does not prejudice the Company’s rights. If such omission does prejudice the Company’s rights, the Company will be relieved from liability only to the extent of such prejudice. Notwithstanding the foregoing, such omission will not relieve the Company from any liability that it may have to Indemnitee other than under this Agreement. With respect to any Proceeding as to which Indemnitee notifies the Company of the commencement thereof:

 

(a)          The Company will be entitled to participate therein at its own expense; and

 

(b)          The Company jointly with any other indemnifying party similarly notified will be entitled to assume the defense thereof, with counsel reasonably satisfactory to Indemnitee; provided, however, that the Company shall not be entitled to assume the defense of any Proceeding if there has been a Change in Control or if Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee with respect to such Proceeding. After notice from the Company to Indemnitee of its election to assume the defense thereof, the Company will not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense thereof, other than reasonable costs of investigation or as otherwise provided below. Indemnitee shall have the right to employ Indemnitee’s own counsel in such Proceeding, but the fees and expenses of such counsel incurred after notice from the Company of its assumption of the defense thereof shall be at the expense of Indemnitee unless:

 

(i)            the employment of counsel by Indemnitee has been authorized by the Company;

 

(ii)           Indemnitee shall have reasonably concluded that counsel engaged by the Company may not adequately represent Indemnitee due to, among other things, actual or potential differing interests; or

 

(iii)          the Company shall not in fact have employed counsel to assume the defense in such Proceeding or shall not in fact have assumed such defense and been acting in connection therewith with reasonable diligence; in each of which cases the fees and expenses of such counsel shall be at the expense of the Company.

 

(c)          The Company shall not settle any Proceeding in which Indemnitee is or could have been a party without Indemnitee’s written consent unless such settlement solely involves the payment of money and includes a complete and unconditional release of the Indemnitee from all liability on any claims that are the subject matter of such Proceeding; provided, however, that Indemnitee will not unreasonably withhold his or her consent to any proposed settlement.

 

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14.          Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(a)           If to Indemnitee, to the address set forth below Indemnitee’s signature on the signature page hereof.

 

(b)          If to the Company, to:

 

Nikola Corporation

4141 E Broadway Road

Phoenix, AZ 85040

Attention: Chief Legal Officer

 

or to such other address as may have been furnished to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

15.          Nonexclusivity. The rights of Indemnitee hereunder shall not be deemed exclusive of any other rights to which Indemnitee may be entitled under applicable law, the Company’s Certificate of Incorporation or Bylaws, or any agreements, vote of stockholders, resolution of the Board of Directors or otherwise, and to the extent that during the Indemnification Period the rights of the then existing directors and officers are more favorable to such directors or officers than the rights currently provided to Indemnitee thereunder or under this Agreement, Indemnitee shall be entitled to the full benefits of such more favorable rights.

 

16.          Indemnification and Advancement Rights Primary. The Company hereby acknowledges that Indemnitee has or may have certain rights to indemnification, advancement of expenses and/or insurance provided by one or more parties other than the Company or an affiliate of the Company (collectively, the “Secondary Indemnitors”). The Company hereby acknowledges and the Company and Indemnitee hereby agree that: (i) the Company is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Secondary Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary); (ii) the Company shall be required to advance the full amount of expenses incurred by Indemnitee and shall be liable for the full amount of all expenses, judgments, penalties, fines and amounts paid in settlement to the extent legally permitted and as required by the terms of this Agreement and the Certificate of Incorporation and/or Bylaws of the Company (or any other agreement between the Company and Indemnitee), without regard to any rights Indemnitee may have against the Secondary Indemnitors; and (iii) the Company irrevocably waives, relinquishes and releases the Secondary Indemnitors from any and all claims against the Secondary Indemnitors that the Company may have for contribution, subrogation or any other recovery of any kind in respect thereof. The Company further agrees that no advancement or payment by the Secondary Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing and the Secondary Indemnitors shall have a right of contribution and/or subrogation to the extent of such advancement or payment to all of the rights of recovery of Indemnitee against the Company. The Company and Indemnitee agree that the Secondary Indemnitors are express third party beneficiaries of the terms of this provision.

 

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17.          Certain Definitions.

 

(a)          Agent” shall mean any person who is or was, or who has consented to serve as, a director, officer, employee, agent, fiduciary, joint venturer, partner, manager or other official of the Company or a subsidiary or an affiliate of the Company, or any other entity (including without limitation, an employee benefit plan), in each case either at the request of, for the convenience of, or otherwise to benefit the Company or a subsidiary of the Company. Any person who is or was serving as a director, officer, employee or agent of the Company or a subsidiary of the Company shall be deemed to be serving, or have served, at the request of the Company.

 

(b)          Change in Control” shall mean the occurrence, after the Company’s initial public offering, of any of the following:

 

(i)            Both (A) any “person” (as defined below) becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least twenty percent (20%) of the total voting power represented by the Company’s then outstanding voting securities and (B) the beneficial ownership by such person of securities representing such percentage is not approved by a majority of the “Continuing Directors” (as defined below);

 

(ii)           Any “person” is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing at least fifty percent (50%) of the total voting power represented by the Company’s then outstanding voting securities;

 

(iii)          A change in the composition of the Board of Directors occurs, as a result of which fewer than two-thirds of the incumbent directors are directors (the “Continuing Directors”) who either (A) had been directors of the Company on the “look-back date” (as defined below) (the “Original Directors”) or (B) were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority in the aggregate of the Original Directors who were still in office at the time of the election or nomination and directors whose election or nomination was previously so approved;

 

(iv)          The stockholders of the Company approve a merger or consolidation of the Company with any other Company, if such merger or consolidation would result in the voting securities of the Company outstanding immediately prior thereto representing (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or less of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

 

(v)           The stockholders of the Company approve (A) a plan of complete liquidation of the Company or (B) an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets.

 

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For purposes of Subsections (i) and (ii) above, the term “person” shall have the same meaning as when used in sections 13(d) and 14(d) of the Exchange Act, but shall exclude (x) a trustee or other fiduciary holding securities under an employee benefit plan of the Company or of a parent or subsidiary of the Company or (y) a Company owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the common stock of the Company.

 

For purposes of Subsection (iii) above, the term “look-back date” shall mean the later of (x) the date first written above in the preamble to this Agreement or (y) the date 24 months prior to the date of the event that may constitute a “Change in Control.”

 

Any other provision of this Section 17(b) notwithstanding, the term “Change in Control” shall not include a transaction, if undertaken at the election of the Company, the result of which is to sell all or substantially all of the assets of the Company to another corporation (the “Surviving Company”); provided that the Surviving Company is owned directly or indirectly by the stockholders of the Company immediately following such transaction in substantially the same proportions as their ownership of the Company’s common stock immediately preceding such transaction; and provided, further, that the Surviving Company expressly assumes this Agreement.

 

(c)          Disinterested Director” shall mean a director of the Company who is not or was not a party to the Proceeding in respect of which indemnification is being sought by Indemnitee.

 

(d)          Expenses” shall include all direct and indirect costs (including, without limitation, attorneys’ fees, retainers, court costs, transcripts, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, all other disbursements or out-of-pocket expenses and reasonable compensation for time spent by Indemnitee for which Indemnitee is otherwise not compensated by the Company or any third party) actually and reasonably incurred in connection with either the investigation, defense, settlement or appeal of a Proceeding or establishing or enforcing a right to indemnification under this Agreement, applicable law or otherwise.

 

(e)          Final Adverse Determination” shall mean that a determination that Indemnitee is not entitled to indemnification shall have been made pursuant to Section 5 hereof and either (1) a final adjudication in the courts of the State of Delaware from which there is no further right of appeal or decision of an arbitrator pursuant to Section 8(a) hereof shall have denied Indemnitee’s right to indemnification hereunder, or (2) Indemnitee shall have failed to file a complaint in a Delaware court or seek an arbitrator’s award pursuant to Section 8(a) for a period of one hundred twenty (120) days after the determination made pursuant to Section 5 hereof.

 

(f)           Independent Legal Counsel” shall mean a law firm or a member of a firm selected by the Company and approved by Indemnitee (which approval shall not be unreasonably withheld) or, if there has been a Change in Control, selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld), that neither is presently nor in the past five (5) years has been retained to represent: (i) the Company or any of its subsidiaries or affiliates, or Indemnitee or any company of which Indemnitee was or is a director, officer, employee or agent, or any subsidiary or affiliate of such a corporation, in any material matter, or (ii) any other party to the Proceeding giving rise to a claim for indemnification hereunder. Notwithstanding the foregoing, the term “Independent Legal Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s right to indemnification under this Agreement.

 

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(g)          Liabilities” shall mean liabilities of any type whatsoever including, but not limited to, any judgments, fines, Employee Retirement Income Security Act excise taxes and penalties, penalties and amounts paid in settlement (including all interest assessments and other charges paid or payable in connection with or in respect of such judgments, fines, penalties or amounts paid in settlement) of any Proceeding.

 

(h)          Proceeding” shall mean any threatened, pending or completed action, claim, suit, arbitration, alternate dispute resolution mechanism, investigation, administrative hearing or any other proceeding whether civil, criminal, administrative or investigative, in which Indemnitee was, is or will be involved as a party, as a witness or otherwise, that is associated with Indemnitee’s being an Agent of the Company.

 

18.          Binding Effect; Duration and Scope of Agreement. This Agreement shall be binding upon the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), spouses, heirs and personal and legal representatives. This Agreement shall be deemed to be effective as of the commencement date of Indemnitee’s service as an officer or director of the Company and shall continue in effect during the Indemnification Period, regardless of whether Indemnitee continues to serve as an Agent.

 

19.          Severability. If any provision or provisions of this Agreement (or any portion thereof) shall be held to be invalid, illegal or unenforceable for any reason whatsoever:

 

(a)           the validity, legality and enforceability of the remaining provisions of this Agreement shall not in any way be affected or impaired thereby; and

 

(b)          to the fullest extent legally possible, the provisions of this Agreement shall be construed so as to give effect to the intent of any provision held invalid, illegal or unenforceable.

 

20.          Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, as applied to contracts between Delaware residents entered into and to be performed entirely within the State of Delaware, without regard to conflict of laws rules.

 

21.          Consent to Jurisdiction. Except with respect to any arbitration commenced by Indemnitee pursuant to Section 8 of this Agreement, the Company and Indemnitee each irrevocably consent to the jurisdiction of the courts of the State of Delaware for all purposes in connection with any action or proceeding that arises out of or relates to this Agreement and agree that any action instituted under this Agreement shall be brought only in the state courts of the State of Delaware.

 

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22.          Entire Agreement. This Agreement represents the entire agreement between the parties hereto, and there are no other agreements, contracts or understandings between the parties hereto with respect to the subject matter of this Agreement, except as specifically referred to herein or as provided in Section 15 hereof.

 

23.          Counterparts. This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.

 

[Signature Page Follows]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by a duly authorized officer and Indemnitee has executed this Agreement as of the date first above written.

 

  NIKOLA CORPORATION,
  a Delaware corporation
   
  By:                                                                                                                                 
  Name:                                                                                                                               
  Title:                                                                                                                                    
   
  INDEMNITEE
   
  By:                                                                                                                                   
  Printed name:                                                                                                                 
   
  Address:                                                                                                                        
                                                                                                                                            

 

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Exhibit 10.4

 

NIKOLA CORPORATION

2020 STOCK INCENTIVE PLAN

(Adopted by the Board of Directors on May 6, 2020)

(Approved by the Stockholders on June 2, 2020)

(Effective on June 3, 2020)  

 

 

 

 

  TABLE OF CONTENTS  
     
SECTION 1. ESTABLISHMENT AND PURPOSE              1
   
SECTION 2. DEFINITIONS                      1
   
(a) “Affiliate” 1
(b) “Award” 1
(c) Award Agreement” 1
(d) “Board of Directors” or “Board” 1
(e) “Cash-Based Award” 1
(f) Change in Control” 1
(g) “Code” 2
(h) Committee” 2
(i) “Company” 2
(j) “Consultant” 2
(k) “Disability” 2
(l) “Employee” 2
(m) “Exchange Act” 2
(n) “Exercise Price” 2
(o) “Fair Market Value” 3
(p) “ISO” 3
(q) “Nonstatutory Option” or “NSO” 3
(r) “Option” 3
(s) “Outside Director” 3
(t) Parent” 3
(u) “Participant” 3
(v) “Plan” 3
(w) “Purchase Price” 3
(x) “Restricted Share” 3
(y) SAR” 3
(z) “Section 409A” 3
(aa) “Securities Act” 3
(bb) “Service” 3
(cc) “Share” 3
(dd) “Stock” 4
(ee) “Stock Unit” 4
(ff) “Subsidiary”                        4

 

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SECTION 3. ADMINISTRATION                    4
   
(a) Committee Composition                       4
(b) Committee Appointment                    4
(c) Committee Procedures                    4
(d) Committee Responsibilities                      4
     
SECTION 4. ELIGIBILITY                      5
   
(a) General Rule                           5
(b) Ten-Percent Stockholders                   5
(c) Attribution Rules                      6
(d) Outstanding Stock                         6
     
SECTION 5. STOCK SUBJECT TO PLAN                    6
   
(a) Basic Limitation                          6
(b) Additional Shares                      6
(c) Substitution and Assumption of Awards              7
(d) Grants to Outside Directors                  7
     
SECTION 6. RESTRICTED SHARES                      7
   
(a) Restricted Share Award Agreement                   7
(b) Payment for Awards                     7
(c) Vesting                             7
(d) Voting and Dividend Rights                  7
(e) Restrictions on Transfer of Shares                7
     
SECTION 7. TERMS AND CONDITIONS OF OPTIONS           8
   
(a) Stock Option Award Agreement                    8
(b) Number of Shares                         8
(c) Exercise Price                        8
(d) Withholding Taxes                         8
(e) Exercisability and Term                    8
(f) Exercise of Options                     8
(g) Effect of Change in Control                  9
(h) No Rights as a Stockholder                      9
(i) Modification, Extension and Renewal of Options              9
(j) Restrictions on Transfer of Shares                9

 

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SECTION 8. PAYMENT FOR SHARES                      9
   
(a) General Rule                           9
(b) Surrender of Stock                         9
(c) Services Rendered                         9
(d) Cashless Exercise                      9
(e) Exercise/Pledge                          9
(f) Net Exercise                            10
(g) Promissory Note                          10
(h) Other Forms of Payment                    10
(i) Limitations under Applicable Law                10
     
SECTION 9. STOCK APPRECIATION RIGHTS                  10
   
(a) SAR Award Agreement                       10
(b) Number of Shares                         10
(c) Exercise Price                        10
(d) Exercisability and Term                    10
(e) Effect of Change in Control                  10
(f) Exercise of SARs                      11
(g) Modification, Extension or Assumption of SARs              11
     
SECTION 10. STOCK UNITS                     11
   
(a) Stock Unit Award Agreement                     11
(b) Payment for Awards                     11
(c) Vesting Conditions                         11
(d) Voting and Dividend Rights                  11
(e) Form and Time of Settlement of Stock Units            11
(f) Death of Participant                     12
(g) Creditors’ Rights                      12
     
SECTION 11. CASH-BASED AWARDS                  12
   
SECTION 12. ADJUSTMENT OF SHARES                 12
   
(a) Adjustments                        12
(b) Dissolution or Liquidation                       12
(c) Reorganizations                          12
(d) Reservation of Rights                        13

 

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SECTION 13. DEFERRAL OF AWARDS                  13
   
(a) Committee Powers                         13
(b) General Rules                       14
     
SECTION 14. AWARDS UNDER OTHER PLANS              14
   
SECTION 15. PAYMENT OF DIRECTOR’S FEES IN SECURITIES       14
   
(a) Effective Date                       14
(b) Elections to Receive NSOs, SARs, Restricted Shares or Stock Units       14
(c) Number and Terms of NSOs, SARs, Restricted Shares or Stock Units   14
     
SECTION 16. LEGAL AND REGULATORY REQUIREMENTS         14
   
SECTION 17. TAXES                            15
   
(a) Withholding Taxes                         15
(b) Share Withholding                         15
(c) Section 409A                           15
     
SECTION 18. TRANSFERABILITY                    15
   
SECTION 19. PERFORMANCE BASED AWARDS                 15
   
SECTION 20. RECOUPMENT                     15
   
SECTION 21. NO EMPLOYMENT RIGHTS                16
   
SECTION 22. DURATION AND AMENDMENTS              16
   
(a)  Term of the Plan                      16
(b) Right to Amend the Plan                   16
(c) Effect of Termination                        16
     
SECTION 23. AWARDS TO NON-U.S. PARTICIPANTS            16
   
SECTION 24. GOVERNING LAW                       16
   
SECTION 25. SUCCESSORS AND ASSIGNS                   16
   
SECTION 26. EXECUTION                      17

 

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NIKOLA CORPORATION

 

2020 STOCK INCENTIVE PLAN

 

SECTION 1. ESTABLISHMENT AND PURPOSE.

 

The Plan was adopted by the Board of Directors on May 6, 2020 and is effective on June 3, 2020 (the “Effective Date”). The Plan’s purpose is to attract, retain, incent and reward top talent through stock ownership to improve operating and financial performance and strengthen the mutuality of interest between eligible service providers and stockholders.

 

SECTION 2. DEFINITIONS.

 

(a)      “Affiliate” means any entity other than a Subsidiary, if the Company and/or one or more Subsidiaries own not less than 50% of such entity.

 

(b)     “Award” means any award of an Option, a SAR, a Restricted Share, a Stock Unit or a Cash-Based Award under the Plan.

 

(c)      “Award Agreement” means the agreement between the Company and the recipient of an Award which contains the terms, conditions and restrictions pertaining to such Award.

 

(d)     “Board of Directors” or “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(e)     “Cash-Based Award” means an Award that entitles the Participant to receive a cash-denominated payment.

 

(f)     “Change in Control” means the occurrence of any of the following events:

 

(i) A change in the composition of the Board of Directors occurs, as a result of which fewer than one-half of the incumbent directors are directors who either:

 

(A) Had been directors of the Company on the “look-back date” (as defined below) (the “original directors”); or

 

(B) Were elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the aggregate of the original directors who were still in office at the time of the election or nomination and the directors whose election or nomination was previously so approved (the “continuing directors”);

 

provided, however, that for this purpose, the “original directors” and “continuing directors” shall not include any individual whose initial assumption of office occurred as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents, by or on behalf of a person other than the Board;

 

(ii) Any “person” (as defined below) who by the acquisition or aggregation of securities, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 50% or more of the combined voting power of the Company’s then outstanding securities ordinarily (and apart from rights accruing under special circumstances) having the right to vote at elections of directors (the “Base Capital Stock”); except that any change in the relative beneficial ownership of the Company’s securities by any person resulting solely from a reduction in the aggregate number of outstanding shares of Base Capital Stock, and any decrease thereafter in such person’s ownership of securities, shall be disregarded until such person increases in any manner, directly or indirectly, such person’s beneficial ownership of any securities of the Company;

 

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(iii) The consummation of a merger or consolidation of the Company or a Subsidiary of the Company with or into another entity or any other corporate reorganization, if persons who were not stockholders of the Company immediately prior to such merger, consolidation or other reorganization own immediately after such merger, consolidation or other reorganization 50% or more of the voting power of the outstanding securities of each of (A) the Company (or its successor) and (B) any direct or indirect parent corporation of the Company (or its successor); or

 

(iv) The sale, transfer or other disposition of all or substantially all of the Company’s assets.

 

For purposes of subsection (f)(i) above, the term “look-back” date means the later of (1) the Effective Date and (2) the date that is 24 months prior to the date of the event that may constitute a Change in Control.

 

For purposes of subsection (f)(ii) above, the term “person” shall have the same meaning as when used in Sections 13(d) and 14(d) of the Exchange Act, but shall exclude (1) a trustee or other fiduciary holding securities under an employee benefit plan maintained by the Company or a Parent or Subsidiary and (2) a corporation owned directly or indirectly by the stockholders of the Company in substantially the same proportions as their ownership of the Stock.

 

Any other provision of this Section 2(f) notwithstanding, a transaction shall not constitute a Change in Control if its sole purpose is to change the state of the Company’s incorporation or to create a holding company that will be owned in substantially the same proportions by the persons who held the Company’s securities immediately before such transaction, and a Change in Control shall not be deemed to occur if the Company files a registration statement with the United States Securities and Exchange Commission in connection with an initial or secondary public offering of securities or debt of the Company to the public.

 

(g)     “Code” means the United States Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.

 

(h)     “Committee” means the Compensation Committee as designated by the Board of Directors, which is authorized to administer the Plan, as described in Section 3 hereof.

 

(i)       “Company” means Nikola Corporation, a Delaware corporation.

 

(j)       “Consultant” means an individual who is a consultant or advisor and who provides bona fide services to the Company, a Parent, a Subsidiary or an Affiliate as an independent contractor (not including service as a member of the Board of Directors) or a member of the board of directors of a Parent or a Subsidiary, in each case who is not an Employee.

 

(k)       “Disability” means any permanent and total disability as defined by Section 22(e)(3) of the Code.

 

(l)       “Employee” means any individual who is a common-law employee of the Company, a Parent, a Subsidiary or an Affiliate.

 

(m)    “Exchange Act” means the United States Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

 

(n)     “Exercise Price” means, in the case of an Option, the amount for which one Share may be purchased upon exercise of such Option, as specified in the applicable Stock Option Agreement. “Exercise Price” means, in the case of a SAR, an amount, as specified in the applicable SAR Award Agreement, which is subtracted from the Fair Market Value of one Share in determining the amount payable upon exercise of such SAR.

 

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(o)       “Fair Market Value” with respect to a Share, means the market price of one Share, determined by the Committee as follows:

 

(i) If the Stock was traded over-the-counter on the date in question, then the Fair Market Value shall be equal to the last transaction price quoted for such date by the OTC Bulletin Board or, if not so quoted, shall be equal to the mean between the last reported representative bid and asked prices quoted for such date by the principal automated inter-dealer quotation system on which the Stock is quoted or, if the Stock is not quoted on any such system, by the Pink Quote system;

 

(ii) If the Stock was traded on any established stock exchange (such as the New York Stock Exchange, The Nasdaq Global Market or The Nasdaq Global Select Market) or national market system on the date in question, then the Fair Market Value shall be equal to the closing price reported for such date by the applicable exchange or system; or

 

(iii) If none of the foregoing provisions is applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

In all cases, the determination of Fair Market Value by the Committee shall be conclusive and binding on all persons.

 

(p)       “ISO” means an employee incentive stock option described in Section 422 of the Code.

 

(q)       “‘Nonstatutory Option” or “NSO” means an employee stock option that is not an ISO.

 

(r)       “Option” means an ISO or Nonstatutory Option granted under the Plan and entitling the holder to purchase Shares.

 

(s)      “Outside Director” means a member of the Board of Directors who is not a common-law employee of, or paid consultant to, the Company, a Parent or a Subsidiary.

 

(t)       “Parent” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company, if each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. A corporation that attains the status of a Parent on a date after the adoption of the Plan shall be a Parent commencing as of such date.

 

(u)        “Participant” means a person who holds an Award.

 

(v)       “Plan” means this 2020 Stock Incentive Plan of Nikola Corporation, as amended from time to

 

time.

 

(w)       “Predecessor Plan” means the 2017 Stock Option Plan of Nikola Corporation, as amended.

 

(x)       “Purchase Price” means the consideration for which one Share may be acquired under the Plan (other than upon exercise of an Option), as specified by the Committee.

 

(y)       “Restricted Share” means a Share awarded under the Plan.

 

(z)       “SAR” means a stock appreciation right granted under the Plan.

 

(aa)   “Section 409A” means Section 409A of the Code.

 

(bb)  “Securities Act” means the United States Securities Act of 1933, as amended, the rules and regulations promulgated thereunder,

 

(cc)   “Service” means service as an Employee, Consultant or Outside Director, subject to such further limitations as may be set forth in the Plan or the applicable Award Agreement. Service does not terminate when an Employee goes on a bona fide leave of absence, that was approved by the Company in writing, if the terms of the leave provide for continued Service crediting, or when continued Service crediting is required by applicable law. However, for purposes of determining whether an Option is entitled to ISO status, an Employee’s employment will be treated as terminating three months after such Employee went on leave, unless such Employee’s right to return to active work is guaranteed by law or by a contract. Service terminates in any event when the approved leave ends, unless such Employee immediately returns to active work. The Company determines which leaves of absence count toward Service, and when Service terminates for all purposes under the Plan.

 

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(dd) “Share” means one share of Stock, as adjusted in accordance with Section 12 (if applicable).

 

(ee) “Stock” means the Common Stock, par value $0.0001 per share, of the Company.

 

(ff)    “Stock Unit” means a bookkeeping entry representing the Company’s obligation to deliver one Share (or distribute cash) on a future date in accordance with the provisions of a Stock Unit Award Agreement.

 

(gg)  “Subsidiary” means any corporation, if the Company and/or one or more other Subsidiaries own not less than 50% of the total combined voting power of all classes of outstanding stock of such corporation. A corporation that attains the status of a Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

SECTION 3. ADMINISTRATION.

 

(a)        Committee Composition. The Plan shall be administered by a Committee appointed by the Board, or by the Board acting as the Committee. The Committee shall consist of two or more directors of the Company. In addition, to the extent required by the Board, the composition of the Committee shall satisfy such requirements as the Securities and Exchange Commission may establish for administrators acting under plans intended to qualify for exemption under Rule 16b-3 (or its successor) under the Exchange Act.

 

(b)       Committee Appointment. The Board may also appoint one or more separate committees of the Board, each composed of one or more directors of the Company who need not satisfy the requirements of Section 3(a), who may administer the Plan, may grant Awards under the Plan and may determine all terms of such grants, in each case with respect to all Employees, Consultants and Outside Directors (except such as may be on such committee), provided that such committee or committees may perform these functions only with respect to Employees who are not considered officers or directors of the Company under Section 16 of the Exchange Act. Within the limitations of the preceding sentence, any reference in the Plan to the Committee shall include such committee or committees appointed pursuant to the preceding sentence. To the extent permitted by applicable laws, the Board of Directors may also authorize one or more officers of the Company to designate Employees, other than officers under Section 16 of the Exchange Act, to receive Awards and/or to determine the number of such Awards to be received by such persons; provided, however, that the Board of Directors shall specify the total number of Awards that such officers may so award.

 

(c)       Committee Procedures. The Board of Directors shall designate one of the members of the Committee as chairman. The Committee may hold meetings at such times and places as it shall determine. The acts of a majority of the Committee members present at meetings at which a quorum exists, or acts reduced to or approved in writing (including via email) by all Committee members, shall be valid acts of the Committee.

 

(d)        Committee Responsibilities. Subject to the provisions of the Plan, the Committee shall have full authority and discretion to take the following actions:

 

(i) To interpret the Plan and to apply its provisions;

 

(ii) To adopt, amend or rescind rules, procedures and forms relating to the Plan;

 

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(iii) To adopt, amend or terminate sub-plans established for the purpose of satisfying applicable foreign laws including qualifying for preferred tax treatment under applicable foreign tax laws;

 

(iv) To authorize any person to execute, on behalf of the Company, any instrument required to carry out the purposes of the Plan;

 

(v) To determine when Awards are to be granted under the Plan;

 

(vi) To select the Participants to whom Awards are to be granted;

 

(vii) To determine the type of Award and number of Shares or amount of cash to be made subject to each Award;

 

(viii) To prescribe the terms and conditions of each Award, including (without limitation) the Exercise Price and Purchase Price, and the vesting or duration of the Award (including accelerating the vesting of Awards, either at the time of the Award or thereafter, without the consent of the Participant), to determine whether an Option is to be classified as an ISO or as a Nonstatutory Option, and to specify the provisions of the agreement relating to such Award;

 

(ix) To amend any outstanding Award Agreement, subject to applicable legal restrictions and to the consent of the Participant if the Participant’s rights or obligations would be materially impaired;

 

(x) To prescribe the consideration for the grant of each Award or other right under the Plan and to determine the sufficiency of such consideration;

 

(xi) To determine the disposition of each Award or other right under the Plan in the event of a Participant’s divorce or dissolution of marriage;

 

(xii) To determine whether Awards under the Plan will be granted in replacement of other grants under an incentive or other compensation plan of an acquired business;

 

(xiii) To correct any defect, supply any omission, or reconcile any inconsistency in the Plan or any Award Agreement;

 

(xiv) To establish or verify the extent of satisfaction of any performance goals or other conditions applicable to the grant, issuance, exercisability, vesting and/or ability to retain any Award; and

 

(xv) To take any other actions deemed necessary or advisable for the administration of the Plan.

 

Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate, except that the Committee may not delegate its authority with regard to the selection for participation of or the granting of Awards under the Plan to persons subject to Section 16 of the Exchange Act. All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan or any Award under the Plan.

 

 

SECTION 4. ELIGIBILITY.

 

(a)        General Rule. Only Employees, Consultants and Outside Directors shall be eligible for the grant of Awards. Only common-law employees of the Company, a Parent or a Subsidiary shall be eligible for the grant of ISOs.

 

(b)       Ten-Percent Stockholders. An Employee who owns more than 10% of the total combined voting power of all classes of outstanding stock of the Company, a Parent or Subsidiary shall not be eligible for the grant of an ISO unless such grant satisfies the requirements of Section 422(c)(5) of the Code.

 

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(c)       Attribution Rules. For purposes of Section 4(b) above, in determining stock ownership, an Employee shall be deemed to own the stock owned, directly or indirectly, by or for such Employee’s brothers, sisters, spouse, ancestors and lineal descendants. Stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust shall be deemed to be owned proportionately by or for its stockholders, partners or beneficiaries.

 

(d)        Outstanding Stock. For purposes of Section 4(b) above, “outstanding stock” shall include all stock actually issued and outstanding immediately after the grant. “Outstanding stock” shall not include shares authorized for issuance under outstanding options held by the Employee or by any other person.

 

SECTION 5. STOCK SUBJECT TO PLAN.

 

(a)       Basic Limitation. Shares offered under the Plan shall be authorized but unissued Shares or treasury Shares. The aggregate number of Shares authorized for issuance as Awards under the Plan shall not exceed the sum of (x) twenty million (20,000,000) Shares, plus (y) the sum of the number of Shares subject to outstanding awards under the Predecessor Plan on the Effective Date that are subsequently forfeited or terminated for any reason before being exercised or settled, plus the number of Shares subject to vesting restrictions under the Predecessor Plan on the Effective Date that are subsequently forfeited, plus the number of reserved Shares not issued or subject to outstanding grants under the Predecessor Plan on the Effective Date, plus (z) an annual increase on the first day of each fiscal year, for a period of not more than 10 years, beginning on January 1, 2021, and ending on (and including) January 1, 2030, in an amount equal to (i) two and one half percent (2.5)% of the outstanding Shares on the last day of the immediately preceding fiscal year or (ii) such lesser amount (including zero) that the Committee determines for purposes of the annual increase for that fiscal year. Notwithstanding the foregoing, the number of Shares that may be delivered in the aggregate pursuant to the exercise of ISOs granted under the Plan shall not exceed twenty million (20,000,000) Shares plus, to the extent allowable under Section 422 of the Code, any Shares that become available for issuance under the Plan pursuant to Section 5(c). The limitations of this Section 5(a) shall be subject to adjustment pursuant to Section 12. The number of Shares that are subject to Awards outstanding at any time under the Plan shall not exceed the number of Shares which then remain available for issuance under the Plan. The Company shall at all times reserve and keep available sufficient Shares to satisfy the requirements of the Plan.

 

(b)       Additional Shares. If Restricted Shares are forfeited, then such Shares shall again become available for Awards under the Plan. If Stock Units, Options or SARs are forfeited or terminate for any reason before being exercised or settled, then the corresponding Shares shall again become available for Awards under the Plan. If Stock Units are settled, then only the number of Shares (if any) actually issued in settlement of such Stock Units shall reduce the number available in Section 5(a) and the balance (including any Shares withheld to satisfy tax withholding obligations) shall again become available for Awards under the Plan. The full number of Options exercised shall be counted against the number of Shares available for Awards under the Plan, regardless of the number of Shares actually issued upon exercise of such Options. The full number of SARs settled shall be counted against the number of Shares available for Awards under the Plan, regardless of the number of Shares actually issued in settlement of such SARs. Any Shares withheld to satisfy the tax withholding obligation pursuant to any Award of Options or SARs shall not be added to the Shares available for Awards under the Plan. Notwithstanding the foregoing provisions of this Section 5(b), Shares that have actually been issued shall not again become available for Awards under the Plan, except for Restricted Shares that are forfeited and do not become vested.

 

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(c)       Substitution and Assumption of Awards. The Committee may make Awards under the Plan by assumption, substitution or replacement of stock options, stock appreciation rights, stock units or similar awards granted by another entity (including a Parent or Subsidiary), if such assumption, substitution or replacement is in connection with an asset acquisition, stock acquisition, merger, consolidation or similar transaction involving the Company (and/or its Parent or Subsidiary) and such other entity (and/or its affiliate). The terms of such assumed, substituted or replaced Awards shall be as the Committee, in its discretion, determines is appropriate, notwithstanding limitations on Awards in the Plan. Any such substitute or assumed Awards shall not count against the Share limitation set forth in Section 5(a) (nor shall Shares subject to such Awards be added to the Shares available for Awards under the Plan as provided in Section 5(b) above), except that Shares acquired by exercise of substitute ISOs will count against the maximum number of Shares that may be issued pursuant to the exercise of ISOs under the Plan.

 

(d)       Grants to Outside Directors. The grant date fair value of all Awards (as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, or any successor thereto) granted under the Plan to any Outside Director as compensation for services as an Outside Director during any twelve (12)-month period may not exceed $750,000, provided that any Award granted to an Outside Director in lieu of a cash retainer pursuant to Section 15(b) will be excluded from such limit.

 

SECTION 6. RESTRICTED SHARES.

 

(a)        Restricted Share Award Agreement. Each grant of Restricted Shares under the Plan shall be evidenced by a Restricted Share Award Agreement between the Participant and the Company. Such Restricted Shares shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Restricted Share Award Agreements entered into under the Plan need not be identical.

 

(b)       Payment for Awards. Restricted Shares may be sold or awarded under the Plan for such consideration as the Committee may determine, including (without limitation) cash, cash equivalents, full-recourse promissory notes, past services and future services.

 

(c)       Vesting. Each Award of Restricted Shares may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Restricted Share Award Agreement. A Restricted Share Award Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability or retirement or other events. The Committee may determine, at the time of granting Restricted Shares or thereafter, that all or part of such Restricted Shares shall become vested in the event that a Change in Control occurs with respect to the Company.

 

(d)        Voting and Dividend Rights. A holder of Restricted Shares awarded under the Plan shall have the same voting, dividend and other rights as the Company’s other stockholders, except that in the case of any unvested Restricted Shares, the holder shall not be entitled to any dividends or other distributions paid or distributed by the Company in respect of outstanding Shares. Notwithstanding the foregoing, at the Committee’s discretion, the holder of unvested Restricted Shares may be credited with such dividends and other distributions, provided that such dividends and other distributions shall be paid or distributed to the holder only if, when and to the extent such unvested Restricted Shares vest. The value of dividends and other distributions payable or distributable with respect to any unvested Restricted Shares that do not vest shall be forfeited. For the avoidance of doubt, other than with respect to the right to receive dividends and other distributions, the holders of unvested Restricted Shares shall have the same voting rights and other rights as the Company’s other stockholders in respect of such unvested Restricted Shares.

 

(e)        Restrictions on Transfer of Shares. Restricted Shares shall be subject to such rights of repurchase, rights of first refusal or other restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Restricted Share Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

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SECTION 7. TERMS AND CONDITIONS OF OPTIONS.

 

(a)        Stock Option Award Agreement. Each grant of an Option under the Plan shall be evidenced by a Stock Option Award Agreement between the Participant and the Company. Such Option shall be subject to all applicable terms and conditions of the Plan and may be subject to any other terms and conditions which are not inconsistent with the Plan and which the Committee deems appropriate for inclusion in a Stock Option Award Agreement. The Stock Option Award Agreement shall specify whether the Option is an ISO or an NSO. The provisions of the various Stock Option Award Agreements entered into under the Plan need not be identical.

 

(b)       Number of Shares. Each Stock Option Award Agreement shall specify the number of Shares that are subject to the Option and shall provide for the adjustment of such number in accordance with Section 12.

 

(c)       Exercise Price. Each Stock Option Award Agreement shall specify the Exercise Price. The Exercise Price of an ISO shall not be less than 100% of the Fair Market Value of a Share on the date of grant, except as otherwise provided in 4(b), and the Exercise Price of an NSO shall not be less than 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, Options may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 7(c), the Exercise Price under any Option shall be determined by the Committee in its sole discretion. The Exercise Price shall be payable in one of the forms described in Section 8.

 

(d)        Withholding Taxes. As a condition to the exercise of an Option, the Participant shall make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with such exercise. The Participant shall also make such arrangements as the Committee may require for the satisfaction of any federal, state, local or foreign withholding tax obligations that may arise in connection with the disposition of Shares acquired by exercising an Option.

 

(e)        Exercisability and Term. Each Stock Option Award Agreement shall specify the date when all or any installment of the Option is to become exercisable. The Stock Option Award Agreement shall also specify the term of the Option; provided that the term of an ISO shall in no event exceed 10 years from the date of grant (five years for ISOs granted to Employees described in Section 4(b)). A Stock Option Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, Disability, or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. Options may be awarded in combination with SARs, and such an Award may provide that the Options will not be exercisable unless the related SARs are forfeited. Subject to the foregoing in this Section 7(e), the Committee in its sole discretion shall determine when all or any installment of an Option is to become exercisable and when an Option is to expire.

 

(f)        Exercise of Options. Each Stock Option Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s Service with the Company and its Subsidiaries, and the right to exercise the Option of any executors or administrators of the Participant’s estate or any person who has acquired such Option(s) directly from the Participant by bequest or inheritance. Such provisions shall be determined in the sole discretion of the Committee, need not be uniform among all Options issued pursuant to the Plan, and may reflect distinctions based on the reasons for termination of Service.

 

 

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(g)       Effect of Change in Control. The Committee may determine, at the time of granting an Option or thereafter, that such Option shall become exercisable as to all or part of the Shares subject to such Option in the event that a Change in Control occurs with respect to the Company.

 

(h)        No Rights as a Stockholder. A Participant shall have no rights as a stockholder with respect to any Shares covered by his Option until the date of the issuance of a stock certificate for such Shares. No adjustments shall be made, except as provided in Section 12.

 

(i)       Modification, Extension and Renewal of Options. Within the limitations of the Plan, the Committee may modify, extend or renew outstanding options or may accept the cancellation of outstanding options (to the extent not previously exercised), whether or not granted hereunder, in return for the grant of new Options for the same or a different number of Shares and at the same or a different Exercise Price, or in return for the grant of a different Award for the same or a different number of Shares or for cash; provided, however, that other than in connection with an adjustment of Awards pursuant to Section 12, the Committee may not modify outstanding Options to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding Options in return for cash or the grant of new Awards when the Exercise Price is greater than the Fair Market Value of the Shares covered by such Options, unless such action has been approved by the Company’s stockholders. The foregoing notwithstanding, no modification of an Option shall, without the consent of the Optionee, materially impair his or her rights or obligations under such Option.

 

(j)       Restrictions on Transfer of Shares. Any Shares issued upon exercise of an Option shall be subject to such special forfeiture conditions, rights of repurchase, rights of first refusal and other transfer restrictions as the Committee may determine. Such restrictions shall be set forth in the applicable Stock Option Award Agreement and shall apply in addition to any general restrictions that may apply to all holders of Shares.

 

SECTION 8. PAYMENT FOR SHARES.

 

(a)        General Rule. The entire Exercise Price or Purchase Price of Shares issued under the Plan shall be payable in lawful money of the United States of America at the time when such Shares are purchased, except as provided in Section 8(b) through Section 8(h) below.

 

(b)       Surrender of Stock. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by surrendering, or attesting to the ownership of, Shares which have already been owned by the Participant or his or her representative. Such Shares shall be valued at their Fair Market Value on the date when the new Shares are purchased under the Plan. The Participant shall not surrender, or attest to the ownership of, Shares in payment of the Exercise Price if such action would cause the Company to recognize compensation expense (or additional compensation expense) with respect to the Option for financial reporting purposes.

 

(c)       Services Rendered. At the discretion of the Committee, Shares may be awarded under the Plan in consideration of services rendered to the Company or a Subsidiary. If Shares are awarded without the payment of a Purchase Price in cash, the Committee shall make a determination (at the time of the Award) of the value of the services rendered by the Participant and the sufficiency of the consideration to meet the requirements of Section 6(b).

 

(d)        Cashless Exercise. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of the aggregate Exercise Price.

 

(e)        Exercise/Pledge. To the extent that a Stock Option Award Agreement so provides, payment may be made all or in part by delivery (on a form prescribed by the Committee) of an irrevocable direction to a securities broker or lender to pledge Shares, as security for a loan, and to deliver all or part of the loan proceeds to the Company in payment of the aggregate Exercise Price.

 

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(f)        Net Exercise. To the extent that a Stock Option Award Agreement so provides, by a “net exercise” arrangement pursuant to which the number of Shares issuable upon exercise of the Option shall be reduced by the largest whole number of Shares having an aggregate Fair Market Value that does not exceed the aggregate Exercise Price (plus tax withholdings, if applicable) and any remaining balance of the aggregate Exercise Price (and/or applicable tax withholdings) not satisfied by such reduction in the number of whole Shares to be issued shall be paid by the Participant in cash or any other form of payment permitted under the Stock Option Agreement.

 

(g)       Promissory Note. To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made all or in part by delivering (on a form prescribed by the Company) a full-recourse promissory note.

 

(h)        Other Forms of Payment. To the extent that a Stock Option Award Agreement or Restricted Share Award Agreement so provides, payment may be made in any other form that is consistent with applicable laws, regulations and rules.

 

(i)       Limitations under Applicable Law. Notwithstanding anything herein or in a Stock Option Award Agreement or Restricted Share Award Agreement to the contrary, payment may not be made in any form that is unlawful, as determined by the Committee in its sole discretion.

 

SECTION 9. STOCK APPRECIATION RIGHTS.

 

(a)        SAR Award Agreement. Each grant of a SAR under the Plan shall be evidenced by a SAR Award Agreement between the Participant and the Company. Such SAR shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various SAR Award Agreements entered into under the Plan need not be identical.

 

(b)       Number of Shares. Each SAR Award Agreement shall specify the number of Shares to which the SAR pertains and shall provide for the adjustment of such number in accordance with Section 12.

 

(c)       Exercise Price. Each SAR Award Agreement shall specify the Exercise Price. The Exercise Price of a SAR shall not be less than 100% of the Fair Market Value of a Share on the date of grant. Notwithstanding the foregoing, SARs may be granted with an Exercise Price of less than 100% of the Fair Market Value per Share on the date of grant pursuant to a transaction described in, and in a manner consistent with, Section 424(a) of the Code. Subject to the foregoing in this Section 9(c), the Exercise Price under any SAR shall be determined by the Committee in its sole discretion.

 

(d)        Exercisability and Term. Each SAR Award Agreement shall specify the date when all or any installment of the SAR is to become exercisable. The SAR Award Agreement shall also specify the term of the SAR. A SAR Award Agreement may provide for accelerated exercisability in the event of the Participant’s death, Disability or retirement or other events and may provide for expiration prior to the end of its term in the event of the termination of the Participant’s Service. SARs may be awarded in combination with Options, and such an Award may provide that the SARs will not be exercisable unless the related Options are forfeited. A SAR may be included in an ISO only at the time of grant but may be included in an NSO at the time of grant or thereafter. A SAR granted under the Plan may provide that it will be exercisable only in the event of a Change in Control.

 

(e)        Effect of Change in Control. The Committee may determine, at the time of granting a SAR or thereafter, that such SAR shall become fully exercisable as to all Common Shares subject to such SAR in the event that a Change in Control occurs with respect to the Company.

 

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(f)        Exercise of SARs. Upon exercise of a SAR, the Participant (or any person having the right to exercise the SAR after his or her death) shall receive from the Company (i) Shares, (ii) cash or (iii) a combination of Shares and cash, as the Committee shall determine. The amount of cash and/or the Fair Market Value of Shares received upon exercise of SARs shall, in the aggregate, be equal to the amount by which the Fair Market Value (on the date of surrender) of the Shares subject to the SARs exceeds the Exercise Price.

 

(g)       Modification, Extension or Assumption of SARs. Within the limitations of the Plan, the Committee may modify, extend or assume outstanding SARs or may accept the cancellation of outstanding SARs (whether granted by the Company or by another issuer) in return for the grant of new SARs for the same or a different number of shares and at the same or a different exercise price, or in return for the grant of a different Award for the same or a different number of Shares or cash; provided, however, that other than in connection with an adjustment of Awards pursuant to Section 12, the Committee may not modify outstanding SARs to lower the Exercise Price nor may the Committee assume or accept the cancellation of outstanding SARs in return for cash or the grant of new Awards when the Exercise Price is greater than the Fair Market Value of the Shares covered by such SARs, unless such action has been approved by the Company’s stockholders. The foregoing notwithstanding, no modification of a SAR shall, without the consent of the holder, materially impair his or her rights or obligations under such SAR.

 

SECTION 10. STOCK UNITS.

 

(a)        Stock Unit Award Agreement. Each grant of Stock Units under the Plan shall be evidenced by a Stock Unit Award Agreement between the Participant and the Company. Such Stock Units shall be subject to all applicable terms of the Plan and may be subject to any other terms that are not inconsistent with the Plan. The provisions of the various Stock Unit Award Agreements entered into under the Plan need not be identical.

 

(b)       Payment for Awards. To the extent that an Award is granted in the form of Stock Units, no cash consideration shall be required of the Award recipients.

 

(c)       Vesting Conditions. Each Award of Stock Units may or may not be subject to vesting. Vesting shall occur, in full or in installments, upon satisfaction of the conditions specified in the Stock Unit Award Agreement. A Stock Unit Award Agreement may provide for accelerated vesting in the event of the Participant’s death, Disability or retirement or other events. The Committee may determine, at the time of granting Stock Units or thereafter, that all or part of such Stock Units shall become vested in the event that a Change in Control occurs with respect to the Company.

 

(d)        Voting and Dividend Rights. The holders of Stock Units shall have no voting rights. Prior to settlement or forfeiture, any Stock Unit awarded under the Plan may, at the Committee’s discretion, carry with it a right to dividend equivalents. Such right entitles the holder to be credited with an amount equal to all cash dividends paid on one Share while the Stock Unit is outstanding. Dividend equivalents may be converted into additional Stock Units. Settlement of dividend equivalents may be made in the form of cash, in the form of Shares, or in a combination of both. Dividend equivalents shall not be distributed prior to settlement of the Stock Unit to which the dividend equivalents pertain. Prior to distribution, any dividend equivalents shall be subject to the same conditions and restrictions (including without limitation, any forfeiture conditions) as the Stock Units to which they attach. The value of dividend equivalents payable or distributable with respect to any unvested Stock Units that do not vest shall be forfeited.

 

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(e)        Form and Time of Settlement of Stock Units. Settlement of vested Stock Units may be made in the form of (i) cash, (ii) Shares or (iii) any combination of both, as determined by the Committee. The actual number of Stock Units eligible for settlement may be larger or smaller than the number included in the original Award, based on predetermined performance factors. Methods of converting Stock Units into cash may include (without limitation) a method based on the average Fair Market Value of Shares over a series of trading days. A Stock Unit Award Agreement may provide that vested Stock Units may be settled in a lump sum or in installments. A Stock Unit Award Agreement may provide that the distribution may occur or commence when all vesting conditions applicable to the Stock Units have been satisfied or have lapsed, or it may be deferred to any later date, subject to compliance with Section 409A. The amount of a deferred distribution may be increased by an interest factor or by dividend equivalents. Until an Award of Stock Units is settled, the number of such Stock Units shall be subject to adjustment pursuant to Section 12.

 

(f)        Death of Participant. Any Stock Unit Award that becomes payable after the Participant’s death shall be distributed to the Participant’s beneficiary or beneficiaries. Each recipient of a Stock Unit Award under the Plan shall designate one or more beneficiaries for this purpose by filing the prescribed form with the Company. A beneficiary designation may be changed by filing the prescribed form with the Company at any time before the Participant’s death. If no beneficiary was designated or if no designated beneficiary survives the Participant, then any Stock Units Award that becomes payable after the Participant’s death shall be distributed to the Participant’s estate.

 

(g)       Creditors’ Rights. A holder of Stock Units shall have no rights other than those of a general creditor of the Company. Stock Units represent an unfunded and unsecured obligation of the Company, subject to the terms and conditions of the applicable Stock Unit Award Agreement.

 

SECTION 11. CASH-BASED AWARDS

 

The Committee may, in its sole discretion, grant Cash-Based Awards to any Participant in such number or amount and upon such terms, and subject to such conditions, as the Committee shall determine at the time of grant and specify in an applicable Award Agreement. The Committee shall determine the maximum duration of the Cash-Based Award, the amount of cash which may be payable pursuant to the Cash-Based Award, the conditions upon which the Cash-Based Award shall become vested or payable, and such other provisions as the Committee shall determine. Each Cash-Based Award shall specify a cash-denominated payment amount, formula or payment ranges as determined by the Committee. Payment, if any, with respect to a Cash-Based Award shall be made in accordance with the terms of the Award and may be made in cash or in Shares, as the Committee determines.

 

SECTION 12. ADJUSTMENT OF SHARES.

 

(a)        Adjustments. In the event of a subdivision of the outstanding Stock, a declaration of a dividend payable in Shares, a declaration of a dividend payable in a form other than Shares in an amount that has a material effect on the price of Shares, a combination or consolidation of the outstanding Stock (by reclassification or otherwise) into a lesser number of Shares, a recapitalization, a spin-off or a similar occurrence, the Committee shall make appropriate and equitable adjustments in:

 

(i) The number of Shares available for future Awards and the limitations set forth under Section 5;

 

(ii) The number of Shares covered by each outstanding Award; and

 

(iii) The Exercise Price under each outstanding Option and SAR.

 

(b)       Dissolution or Liquidation. To the extent not previously exercised or settled, Options, SARs and Stock Units shall terminate immediately prior to the dissolution or liquidation of the Company.

 

(c)       Reorganizations. In the event that the Company is a party to a merger or other reorganization, outstanding Awards shall be subject to the agreement of merger or reorganization. Subject to compliance with Section 409A, such agreement shall provide for:

 

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(i) The continuation of the outstanding Awards by the Company, if the Company is a surviving corporation;

 

(ii) The assumption of the outstanding Awards by the surviving corporation or its parent or subsidiary;

 

(iii) The substitution by the surviving corporation or its parent or subsidiary of its own awards for the outstanding Awards;

 

(iv) Immediate vesting, exercisability or settlement of outstanding Awards followed by the cancellation of such Awards upon or immediately prior to the effectiveness of such transaction; or

 

(v) Settlement of the intrinsic value of the outstanding Awards (whether or not then vested or exercisable) in cash or cash equivalents or equity (including cash or equity subject to deferred vesting and delivery consistent with the vesting restrictions applicable to such Awards or the underlying Shares) followed by the cancellation of such Awards (and, for the avoidance of doubt, if as of the date of the occurrence of the transaction the Committee determines in good faith that no amount would have been attained upon the exercise of such Award or realization of the Participant’s rights, then such Award may be terminated by the Company without payment); in each case without the Participant’s consent. Any acceleration of payment of an amount that is subject to Section 409A will be delayed, if necessary, until the earliest time that such payment would be permissible under Section 409A without triggering any additional taxes applicable under Section 409A.

 

The Company will have no obligation to treat all Awards, all Awards held by a Participant, or all Awards of the same type, similarly.

 

(d) Reservation of Rights. Except as provided in this Section 12, a Participant shall have no rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend or any other increase or decrease in the number of shares of stock of any class. Any issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or Exercise Price of Shares subject to an Award. The grant of an Award pursuant to the Plan shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes of its capital or business structure, to merge or consolidate or to dissolve, liquidate, sell or transfer all or any part of its business or assets. In the event of any change affecting the Shares or the Exercise Price of Shares subject to an Award, including a merger or other reorganization, for reasons of administrative convenience, the Company in its sole discretion may refuse to permit the exercise of any Award during a period of up to 30 days prior to the occurrence of such event. 

 

SECTION 13. DEFERRAL OF AWARDS.

 

(a)       Committee Powers. Subject to compliance with Section 409A, the Committee (in its sole discretion) may permit or require a Participant to:

 

(i) Have cash that otherwise would be paid to such Participant as a result of the exercise of a SAR or the settlement of Stock Units credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books;

 

(ii) Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR converted into an equal number of Stock Units; or

 

(iii) Have Shares that otherwise would be delivered to such Participant as a result of the exercise of an Option or SAR or the settlement of Stock Units converted into amounts credited to a deferred compensation account established for such Participant by the Committee as an entry on the Company’s books. Such amounts shall be determined by reference to the Fair Market Value of such Shares as of the date when they otherwise would have been delivered to such Participant.

 

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(b)       General Rules. A deferred compensation account established under this Section 13 may be credited with interest or other forms of investment return, as determined by the Committee. A Participant for whom such an account is established shall have no rights other than those of a general creditor of the Company. Such an account shall represent an unfunded and unsecured obligation of the Company and shall be subject to the terms and conditions of the applicable agreement between such Participant and the Company. If the deferral or conversion of Awards is permitted or required, the Committee (in its sole discretion) may establish rules, procedures and forms pertaining to such Awards, including (without limitation) the settlement of deferred compensation accounts established under this Section 13.

 

SECTION 14. AWARDS UNDER OTHER PLANS.

 

The Company may grant awards under other plans or programs. Such awards may be settled in the form of Shares issued under the Plan. Such Shares shall be treated for all purposes under the Plan like Shares issued in settlement of Stock Units and shall, when issued, reduce the number of Shares available under Section 5.

 

SECTION 15. PAYMENT OF DIRECTOR’S FEES IN SECURITIES.

 

(a)        Effective Date. No provision of this Section 15 shall be effective unless and until the Board has determined to implement such provision.

 

(b)       Elections to Receive NSOs, SARs, Restricted Shares or Stock Units. An Outside Director may elect to receive his or her annual retainer payments and/or meeting fees from the Company in the form of cash, NSOs, SARs, Restricted Shares or Stock Units, or a combination thereof, as determined by the Board. Alternatively, the Board may mandate payment in any of such alternative forms. Such NSOs, SARs, Restricted Shares and Stock Units shall be issued under the Plan. An election under this Section 15 shall be filed with the Company on the prescribed form.

 

(c)       Number and Terms of NSOs, SARs, Restricted Shares or Stock Units. The number of NSOs, SARs, Restricted Shares or Stock Units to be granted to Outside Directors in lieu of annual retainers and meeting fees that would otherwise be paid in cash shall be calculated in a manner determined by the Board. The terms of such NSOs, SARs, Restricted Shares or Stock Units shall also be determined by the Board.

 

SECTION 16. LEGAL AND REGULATORY REQUIREMENTS.

 

Shares shall not be issued under the Plan unless the issuance and delivery of such Shares complies with (or is exempt from) all applicable requirements of law, including (without limitation) the United States Securities Act, state securities laws and regulations and the regulations of any stock exchange on which the Company’s securities may then be listed, and the Company has obtained the approval or favorable ruling from any governmental agency which the Company determines is necessary or advisable. The Company shall not be liable to a Participant or other persons as to: (a) the non-issuance or sale of Shares as to which the Company has not obtained from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares under the Plan; and (b) any tax consequences expected, but not realized, by any Participant or other person due to the receipt, exercise or settlement of any Award granted under the Plan.

 

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SECTION 17. TAXES.

 

(a)        Withholding Taxes. To the extent required by applicable federal, state, local or foreign law, a Participant or his or her successor shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise in connection with the Plan. The Company shall not be required to issue any Shares or make any cash payment under the Plan until such obligations are satisfied.

 

(b)       Share Withholding. The Committee may permit a Participant to satisfy all or part of his or her withholding or income tax obligations by having the Company withhold all or a portion of any Shares that otherwise would be issued to him or her or by surrendering all or a portion of any Shares that he or she previously acquired. Such Shares shall be valued at their Fair Market Value on the date when taxes otherwise would be withheld in cash. In no event may a Participant have Shares withheld that would otherwise be issued to him or her in excess of the number necessary to satisfy the maximum legally required tax withholding.

 

(c)       Section 409A. Each Award that provides for “nonqualified deferred compensation” within the meaning of Section 409A shall be subject to such additional rules and requirements as specified by the Committee from time to time in order to comply with Section 409A. If any amount under such an Award is payable upon a “separation from service” (within the meaning of Section 409A) to a Participant who is then considered a “specified employee” (within the meaning of Section 409A), then no such payment shall be made prior to the date that is the earlier of (i) six months and one day after the Participant’s separation from service, or (ii) the Participant’s death, but only to the extent such delay is necessary to prevent such payment from being subject to interest, penalties and/or additional tax imposed pursuant to Section 409A. In addition, the settlement of any such Award may not be accelerated except to the extent permitted by Section 409A.

 

 

SECTION 18. TRANSFERABILITY.

 

Unless the agreement evidencing an Award (or an amendment thereto authorized by the Committee) expressly provides otherwise, no Award granted under the Plan, nor any interest in such Award, may be sold, assigned, conveyed, gifted, pledged, hypothecated or otherwise transferred in any manner (prior to the vesting and lapse of any and all restrictions applicable to Shares issued under such Award), other than by will or the laws of descent and distribution; provided, however, that an ISO may be transferred or assigned only to the extent consistent with Section 422 of the Code. Any purported assignment, transfer or encumbrance in violation of this Section 18 shall be void and unenforceable against the Company.

 

 

SECTION 19. PERFORMANCE BASED AWARDS.

 

The number of Shares or other benefits granted, issued, retainable and/or vested under an Award may be made subject to the attainment of performance goals. The Committee may utilize any performance criteria selected by it in its sole discretion to establish performance goals.

 

SECTION 20. RECOUPMENT.

 

In the event that the Company is required to prepare restated financial results owing to an executive officer’s intentional misconduct or grossly negligent conduct, the Board (or a designated committee) shall have the authority, to the extent permitted by applicable law, to require reimbursement or forfeiture to the Company of the amount of bonus or incentive compensation (whether cash-based or equity-based) such executive officer received during the three fiscal years preceding the year the restatement is determined to be required, to the extent that such bonus or incentive compensation exceeds what the officer would have received based on an applicable restated performance measure or target. The Company will recoup incentive-based compensation from executive officers to the extent required under the Dodd-Frank Wall Street Reform and Consumer Protection Act and any rules, regulations and listing standards that may be issued under that act. Any right of recoupment under this provision will be in addition to, and not in lieu of, any other rights of recoupment that may be available to the Company.

 

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SECTION 21. NO EMPLOYMENT RIGHTS.

 

No provision of the Plan, nor any Award granted under the Plan, shall be construed to give any person any right to become, to be treated as, or to remain an Employee or Consultant. The Company and its Subsidiaries reserve the right to terminate any person’s Service at any time and for any reason, with or without notice.

 

SECTION 22. DURATION AND AMENDMENTS.

 

(a)        Term of the Plan. The Plan, as set forth herein, shall come into existence on the date of its adoption by the Board of Directors; provided, however, that no Award may be granted hereunder prior to the Effective Date. The Board of Directors may suspend or terminate the Plan at any time. No ISOs may be granted after the tenth anniversary of the earlier of (i) the date the Plan is adopted by the Board of Directors, or (ii) the date the Plan is approved the stockholders of the Company.

 

(b)       Right to Amend the Plan. The Board of Directors may amend the Plan at any time and from time to time. Rights and obligations under any Award granted before amendment of the Plan shall not be materially impaired by such amendment, except with consent of the Participant. An amendment of the Plan shall be subject to the approval of the Company’s stockholders only to the extent required by applicable laws, regulations or rules.

 

(c)       Effect of Termination. No Awards shall be granted under the Plan after the termination thereof. The termination of the Plan shall not affect Awards previously granted under the Plan.

 

SECTION 23. AWARDS TO NON-U.S. PARTICIPANTS.

 

Awards may be granted to Participants who are non-United States nationals or employed or providing services outside the United States, or both, on such terms and conditions different from those applicable to Awards to Participants who are employed or providing services in the United States as may, in the judgment of the Committee, be necessary or desirable to recognize differences in local law, tax policy or custom. The Committee also may impose conditions on the exercise, vesting or settlement of Awards in order to minimize the Company’s obligation with respect to tax equalization for Participants on assignments outside their home country.

 

SECTION 24. GOVERNING LAW.

 

The Plan and each Award Agreement shall be governed by the laws of the State of Delaware, without application of the conflicts of law principles thereof.

 

SECTION 25. SUCCESSORS AND ASSIGNS.

 

The terms of the Plan shall be binding upon and inure to the benefit of the Company and any successor entity, including any successor entity contemplated by Section 12(c).

 

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SECTION 26. EXECUTION.

 

To record the adoption of the Plan by the Board of Directors, the Company has caused its authorized officer to execute the same.

 

  NIKOLA CORPORATION
   
   
  By: /s/ Mark A. Russell
    Name: Mark A. Russell
    Title: President and Chief Executive Officer

 

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Exhibit 10.6

 

NIKOLA CORPORATION

2020 EMPLOYEE STOCK PURCHASE PLAN

(Adopted by the Board of Directors on May 6, 2020)

(Approved by the Stockholders on June 2, 2020)

(Effective on June 3, 2020)

 

 

 

Table of Contents

 

    Page
SECTION 1 Purpose Of The Plan 1
     
SECTION 2 Definitions 1
     
(a) “Board” 1
(b) “Code” 1
(c) “Committee” 1
(d) “Company” 1
(e) “Compensation” 1
(f) “Corporate Reorganization” 1
(g) “Eligible Employee” 1
(h) “Exchange Act” 1
(i) “Fair Market Value” 1
(j) “Offering” 2
(k) “Offering Date” 2
(l) “Offering Period” 2
(m) “Participant” 2
(n) “Participating Company” 2
(o) “Plan” 2
(p) “Plan Account” 2
(q) “Purchase Date” 2
(r) “Purchase Period” 2
(s) “Purchase Price” 2
(t) “Stock” 2
(u) “Subsidiary” 2
     
SECTION 3 Administration Of The Plan 2
     
(a) Administrative Powers and Responsibilities 2
(b) International Administration 3
     
SECTION 4 Enrollment And Participation 3
     
(a) Offering Periods 3
(b) Enrollment 4
(c) Duration of Participation 4
     
SECTION 5 Employee Contributions 4
     
(a) Frequency of Payroll Deductions 4
(b) Amount of Payroll Deductions 4
(c) Changing Withholding Rate 4
(d) Discontinuing Payroll Deductions 4
     
SECTION 6 Withdrawal From The Plan 4
     
(a) Withdrawal 4
(b) Renrollment After Withdrawal 5
     
SECTION 7 Change In Employment Status 5
     
(a) Termination of Employment 5
(b) Leave of Absence 5
(c) Death 5
     
SECTION 8 Plan Accounts and Purchase Of Shares 5
     
(a) Plan Accounts 5
(b) Purchase Price 5
(c) Number of Shares Purchased 5
(d) Available Shares Insufficient 6
(e) Issuance of Stock 6
(f) Unused Cash Balances 6
(g) Stockholder Approval 6

 

 

SECTION 9 Limitations On Stock Ownership 6
     
(a) Five Percent Limit 6
(b) Dollar Limit 6
     
SECTION 10 Rights Not Transferable 7
     
SECTION 11 No Rights As An Employee 7
     
SECTION 12 No Rights As A Stockholder 7
     
SECTION 13 Securities Law Requirements 7
     
SECTION 14 Stock Offered Under The Plan 7
     
(a) Authorized Shares 7
(b) Antidilution Adjustments 7
(c) Reorganizations 7
     
SECTION 15 Amendment Or Discontinuance 8
     
SECTION 16 Execution 8

 

 

 

 

NIKOLA CORPORATION

 

2020 EMPLOYEE STOCK PURCHASE PLAN

 

SECTION 1 Purpose Of The Plan.

 

The Plan was adopted by the Board of Directors on May 6, 2020 and is effective on June 3, 2020 (the “Effective Date”). The purpose of the Plan is to provide a broad-based employee benefit to attract the services of new employees, to retain the services of existing employees, and to provide incentives for such individuals to exert maximum efforts toward our success by purchasing Stock from the Company on favorable terms and to pay for such purchases through payroll deductions. The Plan is intended to qualify under section 423 of the Code.

 

SECTION 2 Definitions.

 

(a)       “Board” means the Board of Directors of the Company, as constituted from time to time.

 

(b)       “Code” means the Internal Revenue Code of 1986, as amended.

 

(c)       “Committee” means the Compensation Committee of the Board or such other committee, comprised exclusively of one or more directors of the Company, as may be appointed by the Board from time to time to administer the Plan.

 

(d)       “Company” means Nikola Corporation, a Delaware corporation.

 

(e)       “Compensation” means, unless provided otherwise by the Committee in the terms and conditions of an Offering, base salary and wages paid in cash to a Participant by a Participating Company, without reduction for any pre-tax contributions made by the Participant under sections 401(k) or 125 of the Code. “Compensation” shall, unless provided otherwise by the Committee in the terms and conditions of an Offering, exclude variable compensation (including commissions, bonuses, incentive compensation, overtime pay and shift premiums), all non-cash items, moving or relocation allowances, cost-of-living equalization payments, car allowances, tuition reimbursements, imputed income attributable to cars or life insurance, severance pay, fringe benefits, contributions or benefits received under employee benefit plans, income attributable to the exercise of stock options, and similar items. The Committee shall determine whether a particular item is included in Compensation.

 

(f)       “Corporate Reorganization” means:

 

(i)       The consummation of a merger or consolidation of the Company with or into another entity, or any other corporate reorganization; or

 

(ii)       The sale, transfer or other disposition of all or substantially all of the Company’s assets or the complete liquidation or dissolution of the Company.

 

(g)       “Eligible Employee” means any employee of a Participating Company whose customary employment is for more than five months per calendar year and for more than 20 hours per week.

 

The foregoing notwithstanding, an individual shall not be considered an Eligible Employee if his or her participation in the Plan is prohibited by the law of any country which has jurisdiction over him or her.

 

(h)       “Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

(i)       “Fair Market Value” means the fair market value of a share of Stock, determined as follows:

 

(i)       If Stock was traded on any established national securities exchange including the New York Stock Exchange or The Nasdaq Stock Market on the date in question, then the Fair Market Value shall be equal to the closing price as quoted on such exchange (or the exchange with the greatest volume of trading in the Stock) on such date as reported in the Wall Street Journal or such other source as the Committee deems reliable; or

 

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(ii)       If the foregoing provision is not applicable, then the Fair Market Value shall be determined by the Committee in good faith on such basis as it deems appropriate.

 

For any date that is not a Trading Day, the Fair Market Value of a share of Stock for such date shall be determined by using the closing sale price for the immediately preceding Trading Day. Determination of the Fair Market Value pursuant to the foregoing provisions shall be conclusive and binding on all persons.

 

(j)       “Offering” means the grant of options to purchase shares of Stock under the Plan to Eligible Employees.

 

(k)       “Offering Date” means the first day of an Offering.

 

(l)       “Offering Period” means a period with respect to which the right to purchase Stock may be granted under the Plan, as determined pursuant to Section 4(a).

 

(m)       “Participant” means an Eligible Employee who elects to participate in the Plan, as provided in Section 4(b).

 

(n)       “Participating Company” means (i) the Company and (ii) each present or future Subsidiary designated by the Committee as a Participating Company.

 

(o)       “Plan” means this Nikola Corporation 2020 Employee Stock Purchase Plan, as it may be amended from time to time.

 

(p)       “Plan Account” means the account established for each Participant pursuant to Section 8(a).

 

(q)       “Purchase Date” means one or more dates during an Offering on which shares of Stock may be purchased pursuant to the terms of the Offering.

 

(r)       “Purchase Period” means one or more successive periods during an Offering, beginning on the Offering Date or on the day after a Purchase Date, and ending on the next succeeding Purchase Date.

 

(s)       “Purchase Price” means the price at which Participants may purchase shares of Stock under the Plan, as determined pursuant to Section 8(b).

 

(t)       “Stock” means the Common Stock of the Company.

 

(u)       “Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company, if each of the corporations other than the last corporation in the unbroken chain owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

 

(r)       “Trading Day” means a day on which the national stock exchange on which the Stock is traded is open for trading.

 

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SECTION 3 Administration Of The Plan.

 

(a) Administrative Powers and Responsibilities. The Plan shall be administered by the Committee. The Committee shall have full power and authority, subject to the provisions of the Plan, to promulgate such rules and regulations as it deems necessary for the proper administration of the Plan, to interpret the provisions and supervise the administration of the Plan, and to take all action in connection therewith or in relation thereto as it deems necessary or advisable. Any decision reduced to writing and signed by all of the members of the Committee shall be fully effective as if it had been made at a meeting duly held. The Committee’s determinations under the Plan, unless otherwise determined by the Board, shall be final and binding on all persons. The Company shall pay all expenses incurred in the administration of the Plan. No member of the Committee shall be personally liable for any action, determination, or interpretation made in good faith with respect to the Plan, and all members of the Committee shall be fully indemnified by the Company with respect to any such action, determination or interpretation. The Committee may adopt such rules, guidelines and forms as it deems appropriate to implement the Plan. Subject to the requirements of applicable law, the Committee may designate persons other than members of the Committee to carry out its responsibilities and may prescribe such conditions and limitations as it may deem appropriate. All decisions, interpretations and other actions of the Committee shall be final and binding on all Participants and all persons deriving their rights from a Participant. No member of the Committee shall be liable for any action that he has taken or has failed to take in good faith with respect to the Plan. Notwithstanding anything to the contrary in the Plan, the Board may, in its sole discretion, at any time and from time to time, resolve to administer the Plan. In such event, the Board shall have all of the authority and responsibility granted to the Committee herein.

 

(b) International Administration. The Committee may establish sub-plans (which need not qualify under section 423 of the Code) and initiate separate Offerings through such sub-plans for the purpose of (i) facilitating participation in the Plan by non-U.S. employees in compliance with foreign laws and regulations without affecting the qualification of the remainder of the Plan under section 423 of the Code or (ii) qualifying the Plan for preferred tax treatment under foreign tax laws (which sub-plans, at the Committee’s discretion, may provide for allocations of the authorized shares reserved for issue under the Plan as set forth in Section 14(a)). The rules, guidelines and forms of such sub-plans (or the Offerings thereunder) may take precedence over other provisions of the Plan, with the exception of Section 4(a)(i), Section 5(b), Section 8(b) and Section 14(a), but unless otherwise superseded by the terms of such sub-plan, the provisions of the Plan shall govern the operation of such sub-plan. Alternatively and in order to comply with the laws of a foreign jurisdiction, the Committee shall have the power, in its discretion, to grant options in an Offering to citizens or residents of a non-U.S. jurisdiction (without regard to whether they are also citizens of the United States or resident aliens) that provide terms which are less favorable than the terms of options granted under the same Offering to employees resident in the United States, subject to compliance with section 423 of the Code.

 

SECTION 4 Enrollment And Participation.

 

(a) Offering Periods. While the Plan is in effect, the Committee may from time to time grant options to purchase shares of Stock pursuant to the Plan to Eligible Employees during a specified Offering Period. Each such Offering shall be in such form and shall contain such terms and conditions as the Committee shall determine, subject to compliance with the terms and conditions of the Plan (which may be incorporated by reference) and the requirements of section 423 of the Code, including the requirement that all Eligible Employees have the same rights and privileges. The Committee shall specify prior to the commencement of each Offering (i) the period during which the Offering shall be effective, which may not exceed 27 months from the Offering Date and may include one or more successive Purchase Periods within the Offering, (ii) the Purchase Dates and Purchase Price for shares of Stock which may be purchased pursuant to the Offering, and (iii) if applicable, any limits on the number of shares purchasable by a Participant, or by all Participants in the aggregate, during any Offering Period or, if applicable, Purchase Period, in each case consistent with the limitations of the Plan. The Committee shall have the discretion to provide for the automatic termination of an Offering following any Purchase Date on which the Fair Market Value of a share of Stock is equal to or less than the Fair Market Value of a share of Stock on the Offering Date, and for the Participants in the terminated Offering to be automatically re-enrolled in a new Offering that commences immediately after such Purchase Date. The terms and conditions of each Offering need not be identical, and shall be deemed incorporated by reference and made a part of the Plan.

 

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(b) Enrollment. Any individual who, on the day preceding the first day of an Offering Period, qualifies as an Eligible Employee may elect to become a Participant in the Plan for such Offering Period by completing the enrollment process prescribed and communicated for this purposes from time to time by the Company to Eligible Employees.

 

(c) Duration of Participation. Once enrolled in the Plan, a Participant shall continue to participate in the Plan until he or she ceases to be an Eligible Employee or withdraws from the Plan under Section 6(a). A Participant who withdrew from the Plan under Section 6(a) may again become a Participant, if he or she then is an Eligible Employee, by following the procedure described in Subsection (b) above. A Participant whose employee contributions were discontinued automatically under Section 9(b) shall automatically resume participation at the beginning of the earliest Offering Period ending in the next calendar year, if he or she then is an Eligible Employee. When a Participant reaches the end of an Offering Period but his or her participation is to continue, then such Participant shall automatically be re-enrolled for the Offering Period that commences immediately after the end of the prior Offering Period.

 

SECTION 5 Employee Contributions.

 

(a) Frequency of Payroll Deductions. A Participant may purchase shares of Stock under the Plan solely by means of payroll deductions; provided, however, that to the extent provided in the terms and conditions of an Offering, a Participant may also make contributions through payment by cash or check prior to one or more Purchase Dates during the Offering. Payroll deductions, subject to the provisions of Subsection (b) below or as otherwise provided under the terms and conditions of an Offering, shall occur on each payday during participation in the Plan.

 

(b) Amount of Payroll Deductions. An Eligible Employee shall designate during the enrollment process the portion of his or her Compensation that he or she elects to have withheld for the purchase of Stock. Such portion shall be a whole percentage of the Eligible Employee’s Compensation, but not less than 1% nor more than 15% (or such lower rate of Compensation specified as the limit in the terms and conditions of the applicable Offering).

 

(c) Changing Withholding Rate. Unless otherwise provided under the terms and conditions of an Offering, a Participant may not increase the rate of payroll withholding during the Offering Period, but may discontinue or decrease the rate of payroll withholding during the Offering Period to a whole percentage of his or her Compensation in accordance with such procedures and subject to such limitations as the Company may establish for all Participants. A Participant may also increase or decrease the rate of payroll withholding effective for a new Offering Period by submitting an authorization to change the payroll deduction rate pursuant to the process prescribed by the Company from time to time. The new withholding rate shall be a whole percentage of the Eligible Employee’s Compensation consistent with Subsection (b) above.

 

(d) Discontinuing Payroll Deductions. If a Participant wishes to discontinue employee contributions entirely, he or she may do so by withdrawing from the Plan pursuant to Section 6(a). In addition, employee contributions may be discontinued automatically pursuant to Section 9(b).

 

SECTION 6 Withdrawal From The Plan.

 

(a) Withdrawal. A Participant may elect to withdraw from the Plan by giving notice pursuant to the process prescribed and communicated by the Company from time to time. Such withdrawal may be elected at any time before the last day of an Offering Period, except as otherwise provided in the Offering. In addition, if payment by cash or check is permitted under the terms and conditions of an Offering, Participants may be deemed to withdraw from the Plan by declining or failing to remit timely payment to the Company for the shares of Stock. As soon as reasonably practicable thereafter, payroll deductions shall cease and the entire amount credited to the Participant’s Plan Account shall be refunded to him or her in cash, without interest. No partial withdrawals shall be permitted.

 

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(b) Re-enrollment After Withdrawal. A former Participant who has withdrawn from the Plan shall not be a Participant until he or she re-enrolls in the Plan under Section 4(b). Re-enrollment may be effective only at the commencement of an Offering Period.

 

SECTION 7 Change In Employment Status.

 

(a) Termination of Employment. Termination of employment as an Eligible Employee for any reason, including death, shall be treated as an automatic withdrawal from the Plan under Section 6(a). A transfer from one Participating Company to another shall not be treated as a termination of employment.

 

(b) Leave of Absence. For purposes of the Plan, employment shall not be deemed to terminate when the Participant goes on a military leave, a sick leave or another bona fide leave of absence, if the leave was approved by the Company in writing. Employment, however, shall be deemed to terminate three months after the Participant goes on a leave, unless a contract or statute guarantees his or her right to return to work. Employment shall be deemed to terminate in any event when the approved leave ends, unless the Participant immediately returns to work.

 

(c) Death. In the event of the Participant’s death, the amount credited to his or her Plan Account shall be paid to the Participant’s estate.

 

SECTION 8 Plan Accounts and Purchase Of Shares.

 

(a) Plan Accounts. The Company shall maintain a Plan Account on its books in the name of each Participant. Whenever an amount is deducted from the Participant’s Compensation under the Plan, such amount shall be credited to the Participant’s Plan Account. Amounts credited to Plan Accounts shall not be trust funds and may be commingled with the Company’s general assets and applied to general corporate purposes. No interest shall be credited to Plan Accounts.

 

(b) Purchase Price. The Purchase Price for each share of Stock purchased during an Offering Period shall be the lesser of:

 

(i)       85% of the Fair Market Value of such share on the Purchase Date; or

 

(ii)       85% of the Fair Market Value of such share on the Offering Date.

 

The Committee may specify for an alternate Purchase Price amount or formula in the terms and conditions of an Offering, but in no event may such amount or formula result in a Purchase Price less than that calculated pursuant to the immediately preceding formula.

 

(c) Number of Shares Purchased. As of each Purchase Date, each Participant shall be deemed to have elected to purchase the number of shares of Stock calculated in accordance with this Subsection (c), unless the Participant has previously elected to withdraw from the Plan in accordance with Section 6(a). The amount then in the Participant’s Plan Account shall be divided by the Purchase Price, and the number of shares that results shall be purchased from the Company with the funds in the Participant’s Plan Account. Unless provided otherwise by the Committee prior to commencement of an Offering, the maximum number of shares of Stock which may be purchased by an individual Participant during such Offering is two thousand five hundred (2,500) shares. The foregoing notwithstanding, no Participant shall purchase more than such number of shares of Stock as may be determined by the Committee with respect to the Offering Period, or Purchase Period, if applicable, nor more than the amounts of Stock set forth in Sections 9(b) and 14(a). For each Offering Period and, if applicable, Purchase Period, the Committee shall have the authority to establish additional limits on the number of shares purchasable by all Participants in the aggregate.

 

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(d) Available Shares Insufficient. In the event that the aggregate number of shares that all Participants elect to purchase during an Offering Period exceeds the maximum number of shares remaining available for issuance under Section 14(a), or which may be purchased pursuant to any additional aggregate limits imposed by the Committee, then the number of shares to which each Participant is entitled shall be determined by multiplying the number of shares available for issuance by a fraction, the numerator of which is the number of shares that such Participant has elected to purchase and the denominator of which is the number of shares that all Participants have elected to purchase.

 

(e) Issuance of Stock. Certificates representing the shares of Stock purchased by a Participant under the Plan shall be issued to him or her as soon as reasonably practicable after the applicable Purchase Date, except that the Company may determine that such shares shall be held for each Participant’s benefit by a broker designated by the Company. Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship or as community property.

 

(f) Unused Cash Balances. An amount remaining in the Participant’s Plan Account that represents the Purchase Price for any fractional share shall be carried over in the Participant’s Plan Account to the next Offering Period or refunded to the Participant in cash at the end of the Offering Period, without interest, if his or her participation is not continued. Any amount remaining in the Participant’s Plan Account that represents the Purchase Price for whole shares that could not be purchased by reason of Subsection (c) or (d) above, Section 9(b) or Section 14(a) shall be refunded to the Participant in cash, without interest.

 

(g) Stockholder Approval. The Plan shall be submitted to the stockholders of the Company for their approval within twelve (12) months after the date the Plan is adopted by the Board. Any other provision of the Plan notwithstanding, no shares of Stock shall be purchased under the Plan unless and until the Company’s stockholders have approved the adoption of the Plan.

 

SECTION 9 Limitations On Stock Ownership.

 

(a) Five Percent Limit. Any other provision of the Plan notwithstanding, no Participant shall be granted a right to purchase Stock under the Plan if such Participant, immediately after his or her election to purchase such Stock, would own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or any parent or Subsidiary of the Company. For purposes of this Subsection (a), the following rules shall apply:

 

(i)       Ownership of stock shall be determined after applying the attribution rules of section 424(d) of the Code;

 

(ii)       Each Participant shall be deemed to own any stock that he or she has a right or option to purchase under this or any other plan; and

 

(iii)       Each Participant shall be deemed to have the right to purchase up to the maximum number of shares of Stock that may be purchased by a Participant under this Plan under the individual limit specified pursuant to Section 8(c) with respect to each Offering Period.

 

(b) Dollar Limit. Any other provision of the Plan notwithstanding, no Participant shall accrue the right to purchase Stock at a rate which exceeds $25,000 of Fair Market Value of such Stock per calendar year (under this Plan and all other employee stock purchase plans of the Company or any parent or Subsidiary of the Company), determined in accordance with the provisions of section 423(b)(8) of the Code and applicable Treasury Regulations promulgated thereunder.

 

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For purposes of this Subsection (b), the Fair Market Value of Stock shall be determined as of the beginning of the Offering Period in which such Stock is purchased. Employee stock purchase plans not described in section 423 of the Code shall be disregarded. If a Participant is precluded by this Subsection (b) from purchasing additional Stock under the Plan, then his or her employee contributions shall automatically be discontinued and shall resume at the beginning of the earliest Offering Period ending in the next calendar year (if he or she then is an Eligible Employee).

 

SECTION 10 Rights Not Transferable. The rights of any Participant under the Plan, or any Participant’s interest in any Stock or moneys to which he or she may be entitled under the Plan, shall not be transferable by voluntary or involuntary assignment or by operation of law, or in any other manner other than by the laws of descent and distribution. If a Participant in any manner attempts to transfer, assign or otherwise encumber his or her rights or interest under the Plan, other than by the laws of descent and distribution, then such act shall be treated as an election by the Participant to withdraw from the Plan under Section 6(a).

 

SECTION 11 No Rights As An Employee. Nothing in the Plan or in any right granted under the Plan shall confer upon the Participant any right to continue in the employ of a Participating Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Participating Companies or of the Participant, which rights are hereby expressly reserved by each, to terminate his or her employment at any time and for any reason, with or without cause.

 

SECTION 12 No Rights As A Stockholder. A Participant shall have no rights as a stockholder with respect to any shares of Stock that he or she may have a right to purchase under the Plan until such shares have been purchased on the applicable Purchase Date.

 

SECTION 13 Securities Law Requirements. Shares of Stock shall not be issued under the Plan unless the issuance and delivery of such shares comply with (or are exempt from) all applicable requirements of law, including (without limitation) the Securities Act of 1933, as amended, the rules and regulations promulgated thereunder, state securities laws and regulations, and the regulations of any stock exchange or other securities market on which the Company’s securities may then be traded.

 

SECTION 14 Stock Offered Under The Plan.

 

(a) Authorized Shares. The maximum aggregate number of shares of Stock available for purchase under the Plan is four million (4,000,000) shares plus an annual increase to be added on the first day of each of the Company’s fiscal years for a period of up to ten years, beginning with the fiscal year that begins January 1, 2021, equal to the lesser of (i) one percent (1%) of the outstanding shares of Stock on such date or (ii) a lesser amount determined by the Committee or Board. The aggregate number of shares available for purchase under the Plan (and the limit in clause ii to the annual increase thereto) shall at all times be subject to adjustment pursuant to Section 14(b).

 

(b) Antidilution Adjustments. The aggregate number of shares of Stock offered under the Plan, the individual and aggregate Participant share limitations described in Section 8(c) and the price of shares that any Participant has elected to purchase shall be adjusted proportionately by the Committee in the event of any change in the number of issued shares of Stock (or issuance of shares other than Common Stock) by reason of any forward or reverse share split, subdivision or consolidation, or share dividend or bonus issue, recapitalization, reclassification, merger, amalgamation, consolidation, split-up, spin-off, reorganization, combination, exchange of shares of Stock, the issuance of warrants or other rights to purchase shares of Stock or other securities, or any other change in corporate structure or in the event of any extraordinary distribution (whether in the form of cash, shares of Stock, other securities or other property).

 

(c) Reorganizations. Any other provision of the Plan notwithstanding, in the event of a Corporate Reorganization in which the Plan is not assumed by the surviving corporation or its parent corporation pursuant to the applicable plan of merger or consolidation, the Offering Period then in progress shall terminate immediately prior to the effective time of such Corporate Reorganization and either shares shall be purchased pursuant to Section 8 or, if so determined by the Board or Committee, all amounts in all Participant Accounts shall be refunded pursuant to Section 15 without any purchase of shares. The Plan shall in no event be construed to restrict in any way the Company’s right to undertake a dissolution, liquidation, merger, consolidation or other reorganization.

 

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SECTION 15 Amendment Or Discontinuance.

 

The Board or Committee shall have the right to amend, suspend or terminate the Plan at any time and without notice. Upon any such amendment, suspension or termination of the Plan during an Offering Period, the Board or Committee may in its discretion determine that the applicable Offering shall immediately terminate and that all amounts in the Participant Accounts shall be carried forward into a payroll deduction account for each Participant under a successor plan, if any, or promptly refunded to each Participant. Except as provided in Section 14, any increase in the aggregate number of shares of Stock to be issued under the Plan shall be subject to approval by a vote of the stockholders of the Company. In addition, any other amendment of the Plan shall be subject to approval by a vote of the stockholders of the Company to the extent required by an applicable law or regulation. This Plan shall continue until the earlier to occur of (a) termination of this Plan pursuant to this Section 15 or (b) issuance of all of the shares of Stock reserved for issuance under this Plan.

 

SECTION 16 Execution.

 

To record the adoption of the Plan by the Board, the Company has caused its authorized officer to execute the same.

 

  NIKOLA CORPORATION
   
  By: /s/ Mark A. Russell
    Name: Mark A. Russell
    Title: President and Chief Executive Officer

 

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Exhibit 10.12

 

 

 

June 3, 2020

 

Trevor Milton

 

Re:         Executive Employment Arrangement

 

Dear Trevor:

 

This Agreement will amend and restate your existing Employment Agreement with Nikola Corporation (the “Company”), dated as of July 13, 2016, effective as of the close of the business combination contemplated by the Business Combination Agreement, dated as of March 2, 2020 (the “Merger Agreement”) by and among VectoIQ Acquisition Corp., VCTIQ Merger Sub Corp., and the Company (the “Effective Date”). On behalf of the Company, I am pleased to offer you the position of Executive Chairman of the Board of Nikola Corporation.

 

You will report to the Company’s Board of Directors (the “Board”) and your responsibilities will include such employment duties as are usual and customary for this position including presiding over all meetings of the Company’s stockholders and at all meetings of its Board. The Executive Chairman shall also have supervisory powers over and management authority for the Company’s Chief Executive Officer (“CEO”), and shall have all other powers commonly incident to such position or which are from time to time delegated to him by the Board. At the Company’s request, you shall serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing, consistent with expectations for your position.

 

The terms of your employment are as follows:

 

Employment Period. Your employment shall continue indefinitely until terminated in accordance with the terms of this Agreement. Notwithstanding the foregoing, your employment is terminable at will by the Company or by you at any time (for any reason or for no reason), subject to the termination provisions of this Agreement.

 

Annual Salary. You have indicated your interest in declining any salary in excess of $1 per year, without regard to Arizona’s minimum wage. Accordingly, for purposes of this Agreement and due to your request, your annual salary will be $1, paid bi-weekly less payroll deductions and all required withholdings. Your signature on this Agreement confirms your election.

 

 

 

 

Annual Bonus. You have indicated your interest in declining participation in any annual cash bonus program provided by the Company, without regard to your eligibility in any such program. Your signature on this Agreement confirms your election.

 

Stock Awards. You will be eligible to receive stock awards under the Company’s equity incentive plan as in effect from time to time (the “Plan”). Subject to Board approval, you will be granted an annual time-vested stock award (a “Time-Vested Award”) and a performance-based stock award (a “Performance Award”) as soon as administratively practicable following the Effective Date and the effective registration of the securities under the Plan on Form S-8 (the “Grant Date”). The Company shall file the Form S-8 for the Plan with the Securities and Exchange Commission no later than sixty-five (65) days following the Effective Date. These awards are designed to reward you for significantly increasing the value of the Company’s stock over time.

 

Each Time-Vested Award that you are eligible to receive will consist of restricted stock units for shares of the Company’s common stock having a value on the Grant Date of not less than $6,000,000. These awards provide immediate and ongoing retention value over time, with the vesting restrictions on the underlying shares lapsing on the third anniversary of their respective dates of grant (or, in the case of your first Time-Vested Award, the third anniversary of the Effective Date) subject to your continued employment. The number of shares associated with the first Time-Vested Award will be determined based upon a stock price of $10.00 as contemplated per the Merger Agreement. Subsequent Time-Vested Awards would be granted annually, typically concurrent with stock awards to other employees in the first quarter, with the number of shares determined based upon the Company’s closing stock price on the date of grant.

 

The Performance Award will consist of 4,859,000 restricted stock units that can be earned upon the achievement of pre-established “stretch” share of stock price milestones described in the table below and your continued employment through the third anniversary of the Effective Date. Each share of stock price milestone represents an incremental increase of $6 billion in the market capitalization of the Company and unlocks a tranche of the total shares granted. This tiered performance structure ensures shareholders receive an incremental return on their investment prior to you earning the associated incremental shares. Any and all shares that are earned upon the achievement (defined as the Company’s share of stock price trading at or above the milestone for at least 20 consecutive trading days) of the three stock price milestones during the period beginning on the date the Resale Shelf Registration Statement (as defined in Exhibit A to the Merger Agreement, and which registration statement is required to be filed within 45 days of the Effective Date) is declared effective by the SEC and ending on the third anniversary of the Effective Date (the “Performance Period”) will be delivered, free of vesting restrictions, following certification by the Board within 30 days following the final day of the Performance Period.

 

The general structure of the Performance Award is illustrated below, assuming a stock price of $10.00 on the grant date. The specific share price milestones will be approved on the date of grant and included in the associated award document.

 

Share Price Milestone     Market Capitalization at Price   Incremental Performance
Shares Earned at Share
Price Milestone
 
  Below $25.00     Below $10 billion     0  
$25.00     $10 billion     1,069,000  
$40.00     $16 billion     1,603,000  
  $55.00 or Above     $22+ billion     2,187,000  

 

In the event of a Change in Control (as defined in the Plan), the achievement of share of stock price milestones under your Performance Award will be based on the Company’s performance through the closing of such Change in Control. The amount of the Performance Award that would have been earned based on this measurement will be converted to time-vested restricted stock units immediately prior to such Change in Control (the “Converted Awards”). If the Converted Awards are assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof), all vesting restrictions applicable to the Converted Awards will lapse on the earlier of (i) the final day of the Performance Period subject to your continued employment with the successor corporation (or a parent or subsidiary thereof) through such date, at which time such Converted Awards will be settled, and (ii) subject to your compliance with the Severance Conditions (as defined below), the date of your Involuntary Termination of employment with the successor corporation (or a parent or subsidiary thereof). All Time-Vested Awards and Converted Awards that are not assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof) will fully vest and will be settled immediately prior to the consummation of such Change in Control.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

The terms and conditions of each Time-Vested Award and the Performance Award will be set forth in separate award agreements in forms prescribed by the Company (each, an “Award Agreement”), and all shares underlying the respective awards will contain the right to receive dividend equivalents, if any, subject to the same vesting conditions as the shares underlying the stock awards. The stock awards shall be governed in all respects by the terms and conditions of the Plan and the applicable Award Agreement.

 

Benefits. You (and your spouse and/or eligible dependents to the extent provided in the applicable plans and programs) are eligible to participate in and be covered under the health, welfare and financial benefit plans and programs maintained by the Company for the benefit of its employees, pursuant to the terms of such plans, on the same terms and conditions as those applicable to similarly situated executives. Detailed descriptions of the Company’s benefit plans are available and will be provided to you upon request. Your eligibility to receive such benefits will be subject in each case to the generally applicable terms and conditions for the benefits in question and to the determinations of any person or committee administering such benefits. The Company may modify or terminate any benefits plan or program from time to time in its sole discretion.

 

Expenses. You are entitled to receive prompt reimbursement for all reasonable business expenses incurred in connection with the performance of your duties in accordance with the policies, practices and procedures of the Company. Such reimbursements will be made no later than March 15th of the year following the year in which such expenses were incurred, subject to your submission of receipts and documentation in accordance with the Company’s policies and procedures.

 

Vacation. You are entitled to paid vacation in accordance with the policies, practices and procedures of the Company.

 

Indemnification/Legal Fees. The Company agrees that you will be entitled to the same indemnification rights as the Company grants to other directors of the Company to the fullest extent permitted by Delaware corporate law. The Company will maintain a directors and officers liability policy covering you with coverage comparable or equal to that provided to other directors and officers of the Company. In the event of any dispute over your entitlement to payments or benefits hereunder, the Company shall advance you an amount equal to your monthly legal fees incurred in connection with such dispute until there is a final non-appealable decision by a court that you are not entitled to such payment or benefit.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

Termination of Employment. In the event of an Involuntary Termination of your employment at any time:

 

· You will enter into a Separation and Consulting Agreement which will provide that, effective as of the date of your termination of employment (the “Termination Date”), your status as an employee of the Company shall terminate and the Company shall engage you as a non-employee consultant for the period commencing on the Termination Date and ending on the second anniversary of the Termination Date (the “Consulting Period”). As a consultant, you shall provide services to the Company as assigned by the Board, working from your office located at your residence unless reasonably requested by the Company to travel or appear at the Company’s offices at such times as mutually agreeable to you and the Company. As consideration for services rendered and/or your continuing agreement to remain available for assignments on an “on-call” basis, the Company shall pay you $10 million on each of the first and second anniversaries of the Termination Date. During the Consulting Period you shall be an independent contractor with respect to the Company and there shall not be implied any relationship of employer-employee, partnership or joint venture. You shall not be entitled to participate in any employee benefit plans or other benefits or conditions of employment available to the employees of the Company, except as may be elected pursuant to COBRA.

 

· Subject to (i) your execution of a general release of claims in favor of the Company in substantially the form attached as Exhibit A (the “Release”) and with customary carve outs for continued indemnification, rights to enforce the Release and mutual non-disparagement, (ii) your non-revocation of the Release and it becoming effective within sixty (60) days following your Termination Date, and (iii) your faithful observance of the terms of such Release (such conditions, the “Severance Conditions”), you shall be entitled to the following severance benefits (the “Severance Benefits”):

 

o Equity and Equity-Based Awards. All outstanding restricted stock awards, stock options, and restricted stock units, including all restricted stock units subject to your Performance Award and all Converted Awards, as applicable, will immediately vest in full. Unexercised stock options will remain exercisable for earlier of (i) three years following your Termination Date or (ii) remaining option term. The settlement of the restricted stock units subject to your Performance Award (other than Converted Awards) that are subject to accelerated vesting pursuant to this provision will occur on the later of (i) the final day of the Performance Period (or if earlier, the closing of a Change in Control) or (ii) the effective date of the Release, in all cases subject to compliance with Section 409A of the Code. The settlement of all Converted Awards will occur on the effective date of the Release, subject to compliance with Section 409A of the Code.

 

o Benefits Continuation. The Company will pay to you a cash lump sum equal in value to 18 months of COBRA benefits coverage, less applicable withholding, on the effective date of the Release.

 

For the avoidance of doubt, if you independently and unilaterally decide to end your employment at the Company without Good Reason, or if you are terminated for Cause, or if your employment is terminated due to your Death or Disability, you will not be entitled to enter into the Separation and Consulting Agreement or receive any Severance Benefits.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice, subject to the consulting and other benefits described herein. Your employment at-will status can only be modified in a written agreement signed by you and by an authorized officer of the Company.

 

Section 409A. Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including any Severance Benefits, stock awards, consulting payments or other benefits payable due to termination, shall be paid to you during the six-month period following termination if the Company determines that paying such amounts would be a prohibited distribution under Section 409A of the Code. If the payment of any such amounts is so delayed, then on the first day of the seventh month following termination (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution) the Company shall pay to you a lump-sum amount equal to the cumulative amount that would have otherwise been payable during such period. In addition, to the extent required in order to comply with Section 409A, you shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payment of such amounts due pursuant to your termination shall be due until you would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each such amount which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A. If the period during which you have discretion to execute or revoke the Release straddles two calendar years, then the Company will make the payment of amounts that are subject to Section 409A and contingent on the effectiveness of such Release starting in the second of such years regardless of which year you actually deliver the Release. You may not, directly or indirectly, designate the calendar year of payment of any amounts subject to Section 409A.

 

The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance therewith

 

Work Product. As a condition of employment, you will be expected to abide by Company rules and policies and sign and comply with the Employee Proprietary Information and Inventions Assignment Agreement (PIIA), attached as Exhibit B to this Agreement, which prohibits unauthorized use or disclosure of Company proprietary information.

 

Confidentiality. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. You represent that you have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. You represent further that you have the ability to perform the essential functions of your job with or without reasonable accommodations.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

This Agreement, together with its attached exhibits, forms the complete and exclusive statement of your employment agreement with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. Changes in your employment terms, other than those changes expressly reserved to the Company’s discretion in this Agreement, require a written modification signed by an authorized officer of the Company and by you.

 

Successors/Assigns. The Company shall assign this Agreement to any successor to all or substantially all of the business and assets of the Company and the Company shall require successor to expressly assume and agree to in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

Governing Law. The terms of this Agreement and the resolution of any dispute as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, your employment with the Company (or termination thereof) or any other relationship between you and the Company (a “Dispute”) will be governed by the laws of the State of Arizona, without giving effect to the principles of conflict of laws. To the extent not subject to arbitration as described below, you and the Company consent to the exclusive jurisdiction of, and venue in, the state courts in State of Arizona (or in the event of exclusive federal jurisdiction, the courts of the District of Arizona in connection with any Dispute or any claim related to any Dispute).

 

Except as prohibited by law, you agree that any Dispute between you and the Company (or between you and any officer, director, employee or affiliates of the Company, each of whom is hereby designated a third party beneficiary of this Agreement regarding arbitration) will be resolved through binding arbitration in Maricopa County, Arizona under the rules of the American Arbitration Association and the Arbitration Rules set forth in Arizona Rules of Civil Procedure. Nothing in this arbitration provision is intended to limit any right you may have to file a charge with or obtain relief from the National Labor Relations Board or any other state or federal agency. You agree that such arbitration shall be conducted on an individual basis only, not a class, collective or representative basis, and hereby waive any right to bring class-wide, collective or representative claims before any arbitrator or in any forum. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

Please sign and date this Agreement if you wish to accept employment at the Company under the terms described above and return it, along with the signed PIIA, to joe.pike@nikolamotor.com. For the purposes of this Agreement and the PIIA, a facsimile or electronic signature shall serve as an original.

 

Certain Definitions. Defined terms in this Agreement are as follows:

 

Involuntary Termination. Involuntary Termination shall mean a termination of employment by the Company without Cause or by you with Good Reason.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

Good Reason. Good Reason shall mean a resignation by the employee as a result of (i) an adverse change in title, authorities, duties or responsibilities that diminishes employee's position; (ii) a change in the employee's reporting relationship such that he is no longer reporting to the Company's Board or that the supervisory powers over and management authority for the Company’s CEO ceases; (iii) a material reduction in the employee's base salary; (iv) a material breach by the Company of any of its obligations under this Agreement or any other written agreement between the Company and the employee; or (v) any failure to nominate or elect employee as Executive Chairman and director of the Company. A resignation for Good Reason will not be deemed to have occurred unless employee gives the Company written notice of the condition within ninety (90) days after the condition comes into existence and the Company fails to remedy the condition within thirty (30) days after receiving your written notice and employee resigns within thirty (30) days thereafter.

 

Cause. Cause shall mean any of the following as determined by a two-thirds majority of the Company’s Board (excluding the employee): (i) employee's willful and intentional failure to follow the lawful instructions of the Company's Board consistent with employee's title following written notice of any alleged failure and 30 days to cure such failure; (ii) employee's willful and intentional violation of any written Company policy that has been provided to the employee that results in material and demonstrable harm to the Company; (iii) employee's commission of any act of fraud, embezzlement or any other misconduct that has caused or is reasonably expected to result in material and demonstrable injury to the Company; (iv) employee's willful and intentional breach of any of his obligations under any written agreement or covenant with the Company; or (v) employee willfully and intentionally acts in any way that materially and demonstrably harms the Company's reputation. The Company may not terminate employee for Cause unless: (i) no fewer than 30 days prior to the date of termination, the Company provides employee with written notice (the “Notice of Consideration”) of its intent to consider termination of employee’s employment with the Company for Cause, including a detailed description of the specific reasons which form the basis for such consideration; (ii) after providing the Notice of Consideration, the Board may, by an affirmative vote of a two-thirds of its members (excluding the employee), suspend the employee with pay until a final determination of whether “Cause” exists; (iii) on a date designated in the Notice of Consideration, which shall be at least 30 days following the date the Notice of Consideration was provided, the employee shall have the opportunity to appear before the Board, with his own legal counsel to present arguments and evidence on employee’s behalf; and (iv) following the presentation to the Board as provided for in clause (iii) or the employee’s failure to appear before the Board at the time and place set forth in the Notice of Consideration, the employee may be terminated by the Board only if two-thirds of its members (excluding the employee), determines that the actions or inactions of the employee set forth in the Notice of Consideration occurred, that such actions constitute Cause and that the employee’s employment should be terminated for Cause. Cause shall not include any one or more of the following: (i) bad judgment, (ii) negligence, (iii) any act or omission that employee believed in good faith to have been in or not opposed to the interest of the Company or (iv) any act or omission of which any member of the Board who is not a party to such act or omission has had actual knowledge for at least three (3) months.

 

[Remainder of Page Intentionally Left Blank]

 

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

I am delighted to confirm the terms of this offer to you on behalf of the Company. We look forward to your favorable reply and to building a successful Company together.

 

Sincerely,  
 
Nikola Corporation    
   
   
By: /s/ Mark Russell  
   
Name: Mark Russell  
   
Its: CEO  

 

 

Accepted:

 

/s/ Trevor Milton   June 3, 2020
Trevor Milton   Date
     

 

 

Attachments:     Exhibit A – Form Severance Agreement and Release

 

    Exhibit B – Employee Proprietary Information and Inventions Assignment Agreement

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

EXHIBIT A

 


Severance Agreement and Release

 

I. Release of Claims. In exchange for receipt of the severance benefits (the “Severance Benefits”) described in <insert name>’s (“Executive”) Employment Agreement dated [ ], 2020 (the “Employment Agreement”), Executive hereby releases and discharges and covenants not to sue Nikola Corporation (the “Company”), its subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Executive signs this release, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based awards and/or dividend equivalents thereon, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this release, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or any other federal, state or local law, regulation, constitution, ordinance or common law (collectively, the “Claims”). Notwithstanding the above, however, Executive is not releasing (1) any claims that cannot be waived under applicable state or federal law, (2) rights Executive may have to indemnification (including, without limitation, under the Executive’s indemnification agreement with the Company, the Company’s by-laws, the Company’s D&O insurance and otherwise), (3) vested rights or benefits under Executive’s 401k or other plans, or (4) Executive’s workers’ compensation rights and, provided further, that nothing in this Agreement shall prevent Executive from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or Department of Labor. In addition, nothing in this release shall prevent Executive from challenging its validity in a legal or administrative proceeding.

 

II. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this release, Executive is waiving any and all rights or claims that Executive may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this release. Executive further expressly acknowledges and agrees that:

 

A. In return for this release, the Executive will receive consideration beyond that which Executive was already entitled to receive before entering into this Release;

 

B. Executive is hereby advised in writing by this release to consult with an attorney before signing this release;

 

C. Executive was given a copy of this release on [____________] and informed that Executive had twenty-one (21) days within which to consider the release and that if Executive executes this release prior to the expiration of such 21-day period, Executive acknowledges that Executive will have done so voluntarily and knowing that Executive is waiving Executive’s right to have 21 days to consider this release;

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

D. Nothing in this release prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and

 

E. Executive was informed that Executive has seven (7) days following the date of execution of this release in which to revoke it, and this release will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period.

 

III. Company Release of Executive. Company, on its own behalf and on behalf of its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively), hereby releases Executive from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Company signs this release; provided, however, that such release shall not include claims for fraud, securities laws violations or intentional criminal acts.

 

IV. Extension of Restrictive Covenants. In exchange for receipt of the Severance Benefits described in the Employment Agreement, the duration of the restrictive covenants included in Section 4(g) (Nonsolicitation of Employees/Contractors), Section 4(h) (No Hire), Section 4(i) (Nonsolicitation of Customers) and Section 4(j) (Noncompete Provision) of Executive’s Employee Proprietary Information and Inventions Assignment Agreement (“PIIA”) will increase from one (1) year to two (2) years following the date of Executive’s termination of employment.

 

V. Non-Disparagement. Executive will refrain from making any defamatory or disparaging statements about the Company, its board of directors, officers, management, practices, procedures, or business operations to any person or entity. Nothing in this paragraph shall prohibit Executive from providing truthful information in response to a subpoena or other legal or regulatory process. The foregoing requirement under this paragraph will not apply to any statements that Executive makes in response to any defamatory or disparaging statements made by the Company (in its formal public statements), its executive officers and/or its directors regarding Executive or Executive’s performance as an employee of the Company so long as Executive’s statements are, in the reasonable, good faith judgment of Executive, true and extend no further than addressing such statements by the Company.

 

VI. Forfeiture of Severance Benefits. Executive acknowledges and agrees that any material breach of this Agreement, the Employment Agreement, or the PIIA, including any of the restrictive covenants set forth therein, shall entitle the Company immediately to recover and/or cease providing the Severance Benefits, except as provided by law. All other provisions of this Agreement, the Employment Agreement, and the PIIA shall remain in full force and effect.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

VII. Waiver of Unknown Claims. Executive and Company understand and agree that the claims released above include not only claims presently known to Executive and Company, but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the released claims described herein. Executive and Company understand that they may hereafter discover facts different from what they now believe to be true, which if known, could have materially affected their decisions to execute this release, but Executive and Company nevertheless hereby waive any claims or rights based on different or additional facts.

 

“EXECUTIVE”   “COMPANY”
     
    NIKOLA CORPORATION

 

 

  By:  
<Name>    
  Name:  
Date:      
  Title:  
   
    Date:  

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Exhibit 10.13

 

 

June 3, 2020

 

Mark Russell

 

Re: Executive Employment Arrangement

 

Dear Mark:

 

This Agreement will amend and restate your existing Employment Offer Letter with Nikola Corporation (the “Company”), dated as of February 8, 2019, effective as of the close of the business combination contemplated by the Business Combination Agreement, dated as of March 2, 2020 (the “Merger Agreement”) by and among VectoIQ Acquisition Corp., VCTIQ Merger Sub Corp., and the Company (the “Effective Date”). On behalf of the Company, I am pleased to offer you the position of Chief Executive Officer of Nikola Corporation.

 

You will report to the Company’s Board of Directors (the “Board”) and your responsibilities will include, but are not limited to, such employment duties as are usual and customary for this position and which are commensurate with the duties, authorities and responsibilities of persons in similar capacities in similar sized companies. At the Company’s request, you shall serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing, consistent with expectations for your position.

 

During your employment with the Company, you will also serve as a “non-independent” member of the Company’s Board.

 

The terms of your employment are as follows:

 

Employment Period. Your employment shall continue indefinitely until terminated in accordance with the terms of this Agreement. Notwithstanding the foregoing, your employment is terminable at will by the Company or by you at any time (for any reason or for no reason), subject to the termination provisions of this Agreement.

 

Annual Salary. You have indicated your interest in declining any salary in excess of $1 per year, without regard to Arizona’s minimum wage. Accordingly, for purposes of this Agreement and due to your request, your annual salary will be $1, paid bi-weekly less payroll deductions and all required withholdings. Your signature on this Agreement confirms your election.

 

Annual Bonus. You have indicated your interest in declining participation in any annual cash bonus program provided by the Company, without regard to your eligibility in any such program. Your signature on this Agreement confirms your election.

 

 

 

Stock Awards. You will be eligible to receive stock awards under the Company’s equity incentive plan as in effect from time to time (the “Plan”). Subject to Board approval, you will be granted an annual time-vested stock award (a “Time-Vested Award”) and a performance-based stock award (a “Performance Award”) as soon as administratively practicable following the Effective Date and the effective registration of the securities under the Plan on Form S-8. These awards are designed to reward you for significantly increasing the value of the Company’s stock over time.

 

Each Time-Vested Award that you are eligible to receive will consist of restricted stock units for shares of the Company’s common stock having a value on the date of grant of not less than $6,000,000. These awards provide immediate and ongoing retention value over time, with the vesting restrictions on the underlying shares lapsing on the third anniversary of their respective dates of grant (or, in the case of your first Time-Vested Award, the third anniversary of the Effective Date) subject to your continued employment. The number of shares associated with the first Time-Vested Award will be determined based upon a stock price of $10.00 as contemplated per the Merger Agreement. Subsequent Time-Vested Awards would be granted annually, typically concurrent with stock awards to other employees in the first quarter, with the number of shares determined based upon the Company’s closing stock price on the date of grant.

 

The Performance Award will consist of 4,859,000 restricted stock units that can be earned upon the achievement of pre-established “stretch” stock price milestones described in the table below and your continued employment through the third anniversary of the Effective Date. Each stock price milestone represents an incremental increase of $6 billion in the market capitalization of the Company and unlocks a tranche of the total shares granted. This tiered performance structure ensures shareholders receive an incremental return on their investment prior to you earning the associated incremental shares. Any and all shares that are earned upon the achievement (defined as the Company’s stock price trading at or above the milestone for at least 20 consecutive trading days) of the three stock price milestones during the period beginning on the date the Resale Shelf Registration Statement (as defined in Exhibit A to the Merger Agreement, and which registration statement is required to be filed within 45 days of the Effective Date) is declared effective by the SEC and ending on the third anniversary of the Effective Date (the “Performance Period”) will be delivered, free of vesting restrictions, following certification by the Board within 30 days following the final day of the Performance Period.

 

The general structure of the Performance Award is illustrated below, assuming a stock price of $10.00 on the grant date. The specific share price milestones will be approved on the date of grant and included in the associated award document.

 

Share Price Milestone   Market Capitalization at Price   Incremental Performance Shares Earned at Share Price Milestone  
Below $25.00   Below $10 billion     0  
$25.00   $10 billion     1,069,000  
$40.00   $16 billion     1,603,000  
$55.00 or Above   $22+ billion     2,187,000  

 

In the event of a Change in Control (as defined in the Plan), the achievement of share price milestones under your Performance Award will be based on the Company’s performance through the closing of such Change in Control. The amount of the Performance Award that would have been earned based on this measurement will be converted to time-vested restricted stock units immediately prior to such Change in Control (the “Converted Awards”). If the Converted Awards are assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof), all vesting restrictions applicable to the Converted Awards will lapse on the earlier of (i) the final day of the Performance Period subject to your continued employment with the successor corporation (or a parent or subsidiary thereof) through such date, at which time such Converted Awards will be settled, and (ii) subject to your compliance with the Severance Conditions (as defined below), the date of your Involuntary Termination of employment with the successor corporation (or a parent or subsidiary thereof). All Time-Vested Awards and Converted Awards that are not assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof) will fully vest and will be settled immediately prior to the consummation of such Change in Control.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

The terms and conditions of each Time-Vested Award and the Performance Award will be set forth in separate award agreements in forms prescribed by the Company (each, an “Award Agreement”), and all shares underlying the respective awards will contain the right to receive dividend equivalents, if any, subject to the same vesting conditions as the shares underlying the stock awards. The stock awards shall be governed in all respects by the terms and conditions of the Plan and the applicable Award Agreement.

 

Stock Option Awards. On the Effective Date, all unvested stock option awards that you hold at such time will fully vest.

 

Benefits. You (and your spouse and/or eligible dependents to the extent provided in the applicable plans and programs) are eligible to participate in and be covered under the health, welfare and financial benefit plans and programs maintained by the Company for the benefit of its employees, pursuant to the terms of such plans, on the same terms and conditions as those applicable to similarly situated executives. Detailed descriptions of the Company’s benefit plans are available and will be provided to you upon request. Your eligibility to receive such benefits will be subject in each case to the generally applicable terms and conditions for the benefits in question and to the determinations of any person or committee administering such benefits. The Company may modify or terminate any benefits plan or program from time to time in its sole discretion.

 

Expenses. You are entitled to receive prompt reimbursement for all reasonable business expenses incurred in connection with the performance of your duties in accordance with the policies, practices and procedures of the Company.

 

Vacation. You are entitled to paid vacation in accordance with the policies, practices and procedures of the Company.

 

Indemnification/Legal Fees. The Company agrees that you will be entitled to the same indemnification rights as the Company grants to other directors of the Company, as in effect from time to time. The Company will maintain a directors and officers liability policy covering you with coverage comparable or equal to that provided to other directors of the Company. In the event of any dispute over your entitlement to payments or benefits hereunder, the Company shall advance you an amount equal to your monthly legal fees incurred in connection with such dispute until there is a final non-appealable decision by a court that you are not entitled to such payment or benefit.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Termination of Employment. In the event of an Involuntary Termination of your employment at any time, and subject to (i) your execution of a general release of claims in favor of the Company in substantially the form attached as Exhibit A (the “Release”), (ii) your non-revocation of the Release and it becoming effective within sixty (60) days following the date of your termination of employment (the “Termination Date”), and (iii) your faithful observance of the terms of such Release (such conditions, the “Severance Conditions”), then you shall be entitled to the following severance benefits (the “Severance Benefits”):

 

· Severance Payment. The Company will pay you a cash lump sum in an amount equal to $2,600,000, less applicable withholding.

 

· Stock Awards.

 

o Restricted Stock, Restricted Stock Units and Stock Options. All outstanding restricted stock awards, restricted stock units (other than the Performance Award but including the Converted Awards) and stock options will immediately vest in full. Unexercised stock options will remain exercisable for three years following your Termination Date.

 

o Performance Award. Following certification by the Board within 30 days following your Termination Date, the Performance Award will vest in an amount based upon the stock price milestones achieved prior to your Termination Date, pro-rated for the amount of time that you remained employed during the Performance Period.

 

· Benefits Continuation. The Company will pay to you a cash lump sum equal in value to 18 months of COBRA benefits coverage, less applicable withholding.

 

The cash Severance Benefits will be paid on the first regular payroll date following the date that your Release becomes effective, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

For the avoidance of doubt, if you independently and unilaterally decide to end your employment at the Company without Good Reason, or if you are terminated for Cause, or if your employment is terminated due to your Death or Disability, you will not be entitled to receive any Severance Benefits.

 

You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice. Your employment at-will status can only be modified in a written agreement signed by you and by an authorized officer of the Company.

 

Upon your termination of employment for any reason, you agree to resign as a member of the Board, and from any other positions you may then hold with the Company or any of its subsidiaries or affiliates, and that you will execute such documents and take such other action, if any, as may be requested by the Company to give effect to any such resignation.

 

Section 409A. Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including any Severance Benefits, stock awards, consulting payments or other benefits payable due to termination, shall be paid to you during the six-month period following termination if the Company determines that paying such amounts would be a prohibited distribution under Section 409A. If the payment of any such amounts is so delayed, then on the first day of the seventh month following termination (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution) the Company shall pay to you a lump-sum amount equal to the cumulative amount that would have otherwise been payable during such period. In addition, to the extent required in order to comply with Section 409A, you shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payment of such amounts due pursuant to your termination shall be due until you would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each such amount which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A. If the period during which you have discretion to execute or revoke the Release straddles two calendar years, then the Company will make the payment of amounts that are subject to Section 409A and contingent on the effectiveness of such Release starting in the second of such years regardless of which year you actually deliver the Release. You may not, directly or indirectly, designate the calendar year of payment of any amounts subject to Section 409A. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance therewith.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Work Product. As a condition of employment, you will be expected to abide by Company rules and policies and comply with the Employee Proprietary Information and Inventions Assignment Agreement (PIIA), which prohibits unauthorized use or disclosure of Company proprietary information. A copy of the PIIA that you previously signed is attached hereto as Exhibit B.

 

Confidentiality. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. You represent that you have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. You represent further that you have the ability to perform the essential functions of your job with or without reasonable accommodations.

 

This Agreement, together with its attached exhibits, forms the complete and exclusive statement of your employment agreement with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. Changes in your employment terms, other than those changes expressly reserved to the Company’s discretion in this Agreement, require a written modification signed by an authorized officer of the Company and by you.

 

Successors/Assigns. The Company shall assign this Agreement to any successor to all or substantially all of the business and assets of the Company and the Company shall require successor to expressly assume and agree to in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Governing Law. The terms of this Agreement and the resolution of any dispute as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, your employment with the Company (or termination thereof) or any other relationship between you and the Company (a “Dispute”) will be governed by the laws of the State of Arizona, without giving effect to the principles of conflict of laws. To the extent not subject to arbitration as described below, you and the Company consent to the exclusive jurisdiction of, and venue in, the state courts in State of Arizona (or in the event of exclusive federal jurisdiction, the courts of the District of Arizona in connection with any Dispute or any claim related to any Dispute).

 

Except as prohibited by law, you agree that any Dispute between you and the Company (or between you and any officer, director, employee or affiliates of the Company, each of whom is hereby designated a third party beneficiary of this Agreement regarding arbitration) will be resolved through binding arbitration in Maricopa County, Arizona under the rules of the American Arbitration Association and the Arbitration Rules set forth in Arizona Rules of Civil Procedure. Nothing in this arbitration provision is intended to limit any right you may have to file a charge with or obtain relief from the National Labor Relations Board or any other state or federal agency. You agree that such arbitration shall be conducted on an individual basis only, not a class, collective or representative basis, and hereby waive any right to bring class-wide, collective or representative claims before any arbitrator or in any forum. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

Please sign and date this Agreement if you wish to continue employment at the Company under the terms described above and return it to joe.pike@nikolamotor.com. For the purposes of this Agreement, a facsimile or electronic signature shall serve as an original.

 

Certain Definitions. Defined terms in this Agreement are as follows:

 

Involuntary Termination. Involuntary Termination shall mean a termination of employment by the Company without Cause or by you with Good Reason.

 

Good Reason. Good Reason shall mean a resignation by the employee as a result of (i) an adverse change in title, authorities or responsibilities that diminishes employee's position; (ii) a change in the employee's reporting relationship such that he is no longer reporting to the Company's Board; (iii) a material reduction in the employee's base salary; or (iv) a material breach by the Company of any of its obligations under this Agreement or any other written agreement between the Company and the employee. A resignation for Good Reason will not be deemed to have occurred unless employee gives the Company written notice of the condition within ninety (90) days after the condition comes into existence and the Company fails to remedy the condition within thirty (30) days after receiving your written notice.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Cause. Cause shall mean any of the following: (i) employee's repeated failure to follow the lawful instructions of the Company's Board consistent with employee's title following written notice of any alleged failure and 15 days to cure such failure; (ii) employee's material violation of any written Company policy that has been provided to the employee; (iii) employee's commission of any act of fraud, embezzlement or any other material misconduct that has caused or is reasonably expected to result in injury to the Company; (iv) employee's unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the employee owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (v) employee's material breach of any of employee’s material obligations under any written agreement or covenant with the Company.

 

 

[Remainder of Page Intentionally Left Blank]

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

I am delighted to confirm the terms of this Agreement to you on behalf of the Company. We look forward to your favorable reply and to building a successful Company together.

 

Sincerely,

 

Nikola Corporation

 

By: /s/ Trevor Milton  
 
Name: Trevor Milton
 
Its: Executive Chairman

 

Accepted:

 

/s/ Mark Russell    6/3/2020  
Mark Russell       Date  

 

 

Attachments: Exhibit A – Form Severance Agreement and Release

Exhibit B – Employee Proprietary Information and Inventions Assignment Agreement

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

EXHIBIT A

  


Severance Agreement and Release

 

I. Release of Claims. In exchange for receipt of the severance benefits (the “Severance Benefits”) described in <insert name>’s (“Executive”) Employment Agreement dated [ ], 2020 (the “Employment Agreement”), Executive hereby releases and discharges and covenants not to sue Nikola Corporation (the “Company”), its subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Executive signs this release, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based awards and/or dividend equivalents thereon, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this release, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or any other federal, state or local law, regulation, constitution, ordinance or common law (collectively, the “Claims”). Notwithstanding the above, however, Executive is not releasing (1) any claims that cannot be waived under applicable state or federal law, (2) rights Executive may have to indemnification (including, without limitation, under the Executive’s indemnification agreement with the Company, the Company’s by-laws, the Company’s D&O insurance and otherwise), (3) vested rights or benefits under Executive’s 401k or other plans, or (4) Executive’s workers’ compensation rights and, provided further, that nothing in this Agreement shall prevent Executive from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or Department of Labor. In addition, nothing in this release shall prevent Executive from challenging its validity in a legal or administrative proceeding.

 

II. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this release, Executive is waiving any and all rights or claims that Executive may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this release. Executive further expressly acknowledges and agrees that:

 

A. In return for this release, the Executive will receive consideration beyond that which Executive was already entitled to receive before entering into this Release;

 

B. Executive is hereby advised in writing by this release to consult with an attorney before signing this release;

 

C. Executive was given a copy of this release on [____________] and informed that Executive had twenty-one (21) days within which to consider the release and that if Executive executes this release prior to the expiration of such 21-day period, Executive acknowledges that Executive will have done so voluntarily and knowing that Executive is waiving Executive’s right to have 21 days to consider this release;

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

D. Nothing in this release prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and

 

E. Executive was informed that Executive has seven (7) days following the date of execution of this release in which to revoke it, and this release will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period.

 

III. Company Release of Executive. Company, on its own behalf and on behalf of its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively), hereby releases Executive from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Company signs this release; provided, however, that such release shall not include claims for fraud, securities laws violations or intentional criminal acts.

 

IV. Extension of Restrictive Covenants. In exchange for receipt of the Severance Benefits described in the Employment Agreement, the duration of the restrictive covenants included in Section 4(g) (Nonsolicitation of Employees/Contractors), Section 4(h) (No Hire), Section 4(i) (Nonsolicitation of Customers) and Section 4(j) (Noncompete Provision) of Executive’s Employee Proprietary Information and Inventions Assignment Agreement (“PIIA”) will increase from one (1) year to two (2) years following the date of Executive’s termination of employment.

 

V. Non-Disparagement. Executive will refrain from making any defamatory or disparaging statements about the Company, its board of directors, officers, management, practices, procedures, or business operations to any person or entity. Nothing in this paragraph shall prohibit Executive from providing truthful information in response to a subpoena or other legal or regulatory process. The foregoing requirement under this paragraph will not apply to any statements that Executive makes in response to any defamatory or disparaging statements made by the Company (in its formal public statements), its executive officers and/or its directors regarding Executive or Executive’s performance as an employee of the Company so long as Executive’s statements are, in the reasonable, good faith judgment of Executive, true and extend no further than addressing such statements by the Company.

 

VI. Forfeiture of Severance Benefits. Executive acknowledges and agrees that any material breach of this Agreement, the Employment Agreement, or the PIIA, including any of the restrictive covenants set forth therein, shall entitle the Company immediately to recover and/or cease providing the Severance Benefits, except as provided by law. All other provisions of this Agreement, the Employment Agreement, and the PIIA shall remain in full force and effect.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

VII. Waiver of Unknown Claims. Executive and Company understand and agree that the claims released above include not only claims presently known to Executive and Company, but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the released claims described herein. Executive and Company understand that they may hereafter discover facts different from what they now believe to be true, which if known, could have materially affected their decisions to execute this release, but Executive and Company nevertheless hereby waive any claims or rights based on different or additional facts.

 

“EXECUTIVE”    “COMPANY”
     
    NIKOLA CORPORATION

 

        By:    
<Name>    
    Name:    
Date:            
    Title:    
    Date:    

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

 

 

 Exhibit 10.14

 

June 3, 2020

 

Kim Brady

 

Re:      Executive Employment Arrangement

 

Dear Kim:

 

This Agreement will amend and restate your existing Employment Offer Letter with Nikola Corporation (the “Company”), dated as of February 8, 2019, effective as of the close of the business combination contemplated by the Business Combination Agreement, dated as of March 2, 2020 (the “Merger Agreement”) by and among VectoIQ Acquisition Corp., VCTIQ Merger Sub Corp., and the Company (the “Effective Date”).

 

You will continue in your current position as the Company’s Chief Financial Officer and will continue to report to the Company’s Chief Executive Officer. Your responsibilities will include, but are not limited to, such employment duties as are usual and customary for this position and which are commensurate with the duties, authorities and responsibilities of persons in similar capacities in similar sized companies. At the Company’s request, you shall serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing, consistent with expectations for your position.

 

The terms of your employment are as follows:

 

Employment Period. Your employment shall continue indefinitely until terminated in accordance with the terms of this Agreement. Notwithstanding the foregoing, your employment is terminable at will by the Company or by you at any time (for any reason or for no reason), subject to the termination provisions of this Agreement.

 

Annual Salary. You have indicated your interest in declining any salary in excess of $1 per year, without regard to Arizona’s minimum wage. Accordingly, for purposes of this Agreement and due to your request, your annual salary will be $1, paid bi-weekly less payroll deductions and all required withholdings. Your signature on this Agreement confirms your election.

 

Annual Bonus. You have indicated your interest in declining participation in any annual cash bonus program provided by the Company, without regard to your eligibility in any such program. Your signature on this Agreement confirms your election.

 

 

 

Stock Awards. You will be eligible to receive stock awards under the Company’s equity incentive plan as in effect from time to time (the “Plan”). Subject to approval by the Company’s Board of Directors (the “Board”), you will be granted an annual time-vested stock award (a “Time-Vested Award”) and a performance-based stock award (a “Performance Award”) as soon as administratively practicable following the Effective Date and the effective registration of the securities under the Plan on Form S-8. These awards are designed to reward you for significantly increasing the value of the Company’s stock over time.

 

Each Time-Vested Award that you are eligible to receive will consist of restricted stock units for shares of the Company’s common stock having a value on the date of grant of not less than $3,200,000. These awards provide immediate and ongoing retention value over time, with the vesting restrictions on the underlying shares lapsing on the third anniversary of their respective dates of grant (or, in the case of your first Time-Vested Award, the third anniversary of the Effective Date) subject to your continued employment. The number of shares associated with the first Time-Vested Award will be determined based upon a stock price of $10.00 as contemplated per the Merger Agreement. Subsequent Time-Vested Awards would be granted annually, typically concurrent with stock awards to other employees in the first quarter, with the number of shares determined based upon the Company’s closing stock price on the date of grant.

 

The Performance Award will consist of 2,591,000 restricted stock units that can be earned upon the achievement of pre-established “stretch” stock price milestones described in the table below and your continued employment through the third anniversary of the Effective Date. Each stock price milestone represents an incremental increase of $6 billion in the market capitalization of the Company and unlocks a tranche of the total shares granted. This tiered performance structure ensures shareholders receive an incremental return on their investment prior to you earning the associated incremental shares. Any and all shares that are earned upon the achievement (defined as the Company’s stock price trading at or above the milestone for at least 20 consecutive trading days) of the three stock price milestones during the period beginning on the date the Resale Shelf Registration Statement (as defined in Exhibit A to the Merger Agreement, and which registration statement is required to be filed within 45 days of the Effective Date) is declared effective by the SEC and ending on the third anniversary of the Effective Date (the “Performance Period”) will be delivered, free of vesting restrictions, following certification by the Board within 30 days following the final day of the Performance Period.

 

The general structure of the Performance Award is illustrated below, assuming a stock price of $10.00 on the grant date. The specific share price milestones will be approved on the date of grant and included in the associated award document.

 

Share Price Milestone   Market Capitalization at Price   Incremental Performance
Shares Earned at Share
Price Milestone
Below $25.00   Below $10 billion   0
$25.00   $10 billion   570,000
$40.00   $16 billion   855,000
$55.00 or Above   $22+ billion   1,166,000

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

In the event of a Change in Control (as defined in the Plan), the achievement of share price milestones under your Performance Award will be based on the Company’s performance through the closing of such Change in Control. The amount of the Performance Award that would have been earned based on this measurement will be converted to time-vested restricted stock units immediately prior to such Change in Control (the “Converted Awards”). If the Converted Awards are assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof), all vesting restrictions applicable to the Converted Awards will lapse on the earlier of (i) the final day of the Performance Period subject to your continued employment with the successor corporation (or a parent or subsidiary thereof) through such date, at which time such Converted Awards will be settled, and (ii) subject to your compliance with the Severance Conditions (as defined below), the date of your Involuntary Termination of employment with the successor corporation (or a parent or subsidiary thereof). All Time-Vested Awards and Converted Awards that are not assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof) will fully vest and will be settled immediately prior to the consummation of such Change in Control.

 

The terms and conditions of each Time-Vested Award and the Performance Award will be set forth in separate award agreements in forms prescribed by the Company (each, an “Award Agreement”), and all shares underlying the respective awards will contain the right to receive dividend equivalents, if any, subject to the same vesting conditions as the shares underlying the stock awards. The stock awards shall be governed in all respects by the terms and conditions of the Plan and the applicable Award Agreement.

 

Stock Option Awards. On the Effective Date, all unvested stock option awards that you hold at such time will fully vest.

 

Benefits. You (and your spouse and/or eligible dependents to the extent provided in the applicable plans and programs) are eligible to participate in and be covered under the health, welfare and financial benefit plans and programs maintained by the Company for the benefit of its employees, pursuant to the terms of such plans, on the same terms and conditions as those applicable to similarly situated executives. Detailed descriptions of the Company’s benefit plans are available and will be provided to you upon request. Your eligibility to receive such benefits will be subject in each case to the generally applicable terms and conditions for the benefits in question and to the determinations of any person or committee administering such benefits. The Company may modify or terminate any benefits plan or program from time to time in its sole discretion.

 

Expenses. You are entitled to receive prompt reimbursement for all reasonable business expenses incurred in connection with the performance of your duties in accordance with the policies, practices and procedures of the Company.

 

Vacation. You are entitled to paid vacation in accordance with the policies, practices and procedures of the Company.

 

Indemnification/Legal Fees. The Company agrees that you will be entitled to the same indemnification rights as the Company grants to other officers of the Company, as in effect from time to time. The Company will maintain a directors and officers liability policy covering you with coverage comparable or equal to that provided to other officers of the Company. In the event of any dispute over your entitlement to payments or benefits hereunder, the Company shall advance you an amount equal to your monthly legal fees incurred in connection with such dispute until there is a final non-appealable decision by a court that you are not entitled to such payment or benefit.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

Termination of Employment. In the event of an Involuntary Termination of your employment at any time, and subject to (i) your execution of a general release of claims in favor of the Company in substantially the form attached as Exhibit A (the “Release”), (ii) your non-revocation of the Release and it becoming effective within sixty (60) days following the date of your termination of employment (the “Termination Date”), and (iii) your faithful observance of the terms of such Release (such conditions, the “Severance Conditions”), then you shall be entitled to the following severance benefits (the “Severance Benefits”):

 

· Severance Payment. The Company will pay you a cash lump sum in an amount equal to $1,050,000, less applicable withholding.

 

· Stock Awards.

 

o Restricted Stock, Restricted Stock Units and Stock Options. All outstanding restricted stock awards, restricted stock units (other than the Performance Award but including the Converted Awards) and stock options will immediately vest in full. Unexercised stock options will remain exercisable for three years following your Termination Date.

 

o Performance Award. Following certification by the Board within 30 days following your Termination Date, the Performance Award will vest in an amount based upon the stock price milestones achieved prior to your Termination Date, pro-rated for the amount of time that you remained employed during the Performance Period.

 

· Benefits Continuation. The Company will pay to you a cash lump sum equal in value to 18 months of COBRA benefits coverage, less applicable withholding.

 

The cash Severance Benefits will be paid on the first regular payroll date following the date that your Release becomes effective, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

For the avoidance of doubt, if you independently and unilaterally decide to end your employment at the Company without Good Reason, or if you are terminated for Cause, or if your employment is terminated due to your Death or Disability, you will not be entitled to receive any Severance Benefits.

 

You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice. Your employment at-will status can only be modified in a written agreement signed by you and by an authorized officer of the Company.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

Section 409A. Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including any Severance Benefits, stock awards, consulting payments or other benefits payable due to termination, shall be paid to you during the six-month period following termination if the Company determines that paying such amounts would be a prohibited distribution under Section 409A. If the payment of any such amounts is so delayed, then on the first day of the seventh month following termination (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution) the Company shall pay to you a lump-sum amount equal to the cumulative amount that would have otherwise been payable during such period. In addition, to the extent required in order to comply with Section 409A, you shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payment of such amounts due pursuant to your termination shall be due until you would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each such amount which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A. If the period during which you have discretion to execute or revoke the Release straddles two calendar years, then the Company will make the payment of amounts that are subject to Section 409A and contingent on the effectiveness of such Release starting in the second of such years regardless of which year you actually deliver the Release. You may not, directly or indirectly, designate the calendar year of payment of any amounts subject to Section 409A. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance therewith.

 

Work Product. As a condition of employment, you will be expected to abide by Company rules and policies and comply with the Employee Proprietary Information and Inventions Assignment Agreement (PIIA), which prohibits unauthorized use or disclosure of Company proprietary information. A copy of the PIIA that you previously signed is attached hereto as Exhibit B.

 

Confidentiality. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. You represent that you have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. You represent further that you have the ability to perform the essential functions of your job with or without reasonable accommodations.

 

This Agreement, together with its attached exhibits, forms the complete and exclusive statement of your employment agreement with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. Changes in your employment terms, other than those changes expressly reserved to the Company’s discretion in this Agreement, require a written modification signed by an authorized officer of the Company and by you.

 

Successors/Assigns. The Company shall assign this Agreement to any successor to all or substantially all of the business and assets of the Company and the Company shall require successor to expressly assume and agree to in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

Governing Law. The terms of this Agreement and the resolution of any dispute as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, your employment with the Company (or termination thereof) or any other relationship between you and the Company (a “Dispute”) will be governed by the laws of the State of Arizona, without giving effect to the principles of conflict of laws. To the extent not subject to arbitration as described below, you and the Company consent to the exclusive jurisdiction of, and venue in, the state courts in State of Arizona (or in the event of exclusive federal jurisdiction, the courts of the District of Arizona in connection with any Dispute or any claim related to any Dispute).

 

Except as prohibited by law, you agree that any Dispute between you and the Company (or between you and any officer, director, employee or affiliates of the Company, each of whom is hereby designated a third party beneficiary of this Agreement regarding arbitration) will be resolved through binding arbitration in Maricopa County, Arizona under the rules of the American Arbitration Association and the Arbitration Rules set forth in Arizona Rules of Civil Procedure. Nothing in this arbitration provision is intended to limit any right you may have to file a charge with or obtain relief from the National Labor Relations Board or any other state or federal agency. You agree that such arbitration shall be conducted on an individual basis only, not a class, collective or representative basis, and hereby waive any right to bring class-wide, collective or representative claims before any arbitrator or in any forum. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

Please sign and date this Agreement if you wish to continue employment at the Company under the terms described above and return it to joe.pike@nikolamotor.com. For the purposes of this Agreement, a facsimile or electronic signature shall serve as an original.

 

Certain Definitions. Defined terms in this Agreement are as follows:

 

Involuntary Termination. Involuntary Termination shall mean a termination of employment by the Company without Cause or by you with Good Reason.

 

Good Reason. Good Reason shall mean a resignation by the employee as a result of (i) an adverse change in title, authorities or responsibilities that diminishes employee's position; (ii) a change in the employee's reporting relationship such that he is no longer reporting to the Company's Chief Executive Officer; (iii) a material reduction in the employee's base salary; or (iv) a material breach by the Company of any of its obligations under this Agreement or any other written agreement between the Company and the employee. A resignation for Good Reason will not be deemed to have occurred unless employee gives the Company written notice of the condition within ninety (90) days after the condition comes into existence and the Company fails to remedy the condition within thirty (30) days after receiving your written notice.

 

Cause. Cause shall mean any of the following: (i) employee's repeated failure to follow the lawful instructions of the Company's Chief Executive Officer consistent with employee's title following written notice of any alleged failure and 15 days to cure such failure; (ii) employee's material violation of any written Company policy that has been provided to the employee; (iii) employee's commission of any act of fraud, embezzlement or any other material misconduct that has caused or is reasonably expected to result in injury to the Company; (iv) employee's unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the employee owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (v) employee's material breach of any of employee’s material obligations under any written agreement or covenant with the Company.

 

[Remainder of Page Intentionally Left Blank]

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

I am delighted to confirm the terms of this Agreement to you on behalf of the Company. We look forward to your favorable reply and to building a successful Company together.

 

Sincerely,

 

Nikola Corporation
 
By: /s/ Mark Russell  
 
Name: Mark Russell
 
Its: CEO
 
Accepted:

 

/s/ Kim Brady    6/4/2020
Kim Brady    Date

 

Attachments:      Exhibit A – Form Severance Agreement and Release 

Exhibit B – Employee Proprietary Information and Inventions Assignment Agreement

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

EXHIBIT A

 

Severance Agreement and Release

 

I. Release of Claims. In exchange for receipt of the severance benefits (the “Severance Benefits”) described in <insert name>’s (“Executive”) Employment Agreement dated [ ], 2020 (the “Employment Agreement”), Executive hereby releases and discharges and covenants not to sue Nikola Corporation (the “Company”), its subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Executive signs this release, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based awards and/or dividend equivalents thereon, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this release, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or any other federal, state or local law, regulation, constitution, ordinance or common law (collectively, the “Claims”). Notwithstanding the above, however, Executive is not releasing (1) any claims that cannot be waived under applicable state or federal law, (2) rights Executive may have to indemnification (including, without limitation, under the Executive’s indemnification agreement with the Company, the Company’s by-laws, the Company’s D&O insurance and otherwise), (3) vested rights or benefits under Executive’s 401k or other plans, or (4) Executive’s workers’ compensation rights and, provided further, that nothing in this Agreement shall prevent Executive from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or Department of Labor. In addition, nothing in this release shall prevent Executive from challenging its validity in a legal or administrative proceeding.

 

II. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this release, Executive is waiving any and all rights or claims that Executive may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this release. Executive further expressly acknowledges and agrees that:

 

A. In return for this release, the Executive will receive consideration beyond that which Executive was already entitled to receive before entering into this Release;

 

B. Executive is hereby advised in writing by this release to consult with an attorney before signing this release;

 

C. Executive was given a copy of this release on [____________] and informed that Executive had twenty-one (21) days within which to consider the release and that if Executive executes this release prior to the expiration of such 21-day period, Executive acknowledges that Executive will have done so voluntarily and knowing that Executive is waiving Executive’s right to have 21 days to consider this release;

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

D. Nothing in this release prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and

 

E. Executive was informed that Executive has seven (7) days following the date of execution of this release in which to revoke it, and this release will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period.

 

III. Company Release of Executive. Company, on its own behalf and on behalf of its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively), hereby releases Executive from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Company signs this release; provided, however, that such release shall not include claims for fraud, securities laws violations or intentional criminal acts.

 

IV. Extension of Restrictive Covenants. In exchange for receipt of the Severance Benefits described in the Employment Agreement, the duration of the restrictive covenants included in Section 4(g) (Nonsolicitation of Employees/Contractors), Section 4(h) (No Hire), Section 4(i) (Nonsolicitation of Customers) and Section 4(j) (Noncompete Provision) of Executive’s Employee Proprietary Information and Inventions Assignment Agreement (“PIIA”) will increase from one (1) year to two (2) years following the date of Executive’s termination of employment.

 

V. Non-Disparagement. Executive will refrain from making any defamatory or disparaging statements about the Company, its board of directors, officers, management, practices, procedures, or business operations to any person or entity. Nothing in this paragraph shall prohibit Executive from providing truthful information in response to a subpoena or other legal or regulatory process. The foregoing requirement under this paragraph will not apply to any statements that Executive makes in response to any defamatory or disparaging statements made by the Company (in its formal public statements), its executive officers and/or its directors regarding Executive or Executive’s performance as an employee of the Company so long as Executive’s statements are, in the reasonable, good faith judgment of Executive, true and extend no further than addressing such statements by the Company.

 

VI. Forfeiture of Severance Benefits. Executive acknowledges and agrees that any material breach of this Agreement, the Employment Agreement, or the PIIA, including any of the restrictive covenants set forth therein, shall entitle the Company immediately to recover and/or cease providing the Severance Benefits, except as provided by law. All other provisions of this Agreement, the Employment Agreement, and the PIIA shall remain in full force and effect.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

VII. Waiver of Unknown Claims. Executive and Company understand and agree that the claims released above include not only claims presently known to Executive and Company, but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the released claims described herein. Executive and Company understand that they may hereafter discover facts different from what they now believe to be true, which if known, could have materially affected their decisions to execute this release, but Executive and Company nevertheless hereby waive any claims or rights based on different or additional facts.

 

“EXECUTIVE” “COMPANY”

 

  NIKOLA CORPORATION

 

                                                                                                             By:

<Name>

 

  Name:  
     
Date:                                                                                           
     
  Title:  
 
  Date:  
 

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 Exhibit 10.15

 

 

 

June 3, 2020

 

Joseph Pike

 

Re:       Executive Employment Arrangement

 

Dear Joe:

 

This Agreement will amend and restate your existing Employment Offer Letter with Nikola Corporation (the “Company”), dated as of January 1, 2018, effective as of the close of the business combination contemplated by the Business Combination Agreement, dated as of March 2, 2020 (the “Merger Agreement”) by and among VectoIQ Acquisition Corp., VCTIQ Merger Sub Corp., and the Company (the “Effective Date”).

 

You will continue in your current position as the Company’s Chief Human Resources Officer and will continue to report to the Company’s Chief Executive Officer. Your responsibilities include, but are not limited to, such employment duties as are usual and customary for this position and which are commensurate with the duties, authorities and responsibilities of persons in similar capacities in similar sized companies. At the Company’s request, you shall serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing, consistent with expectations for your position.

 

The terms of your employment are as follows:

 

Employment Period. Your employment shall continue indefinitely until terminated in accordance with the terms of this Agreement. Notwithstanding the foregoing, your employment is terminable at will by the Company or by you at any time (for any reason or for no reason), subject to the termination provisions of this Agreement.

 

Annual Salary. You have indicated your interest in declining any salary in excess of $1 per year, without regard to Arizona’s minimum wage. Accordingly, for purposes of this Agreement and due to your request, your annual salary will be $1, paid bi-weekly less payroll deductions and all required withholdings. Your signature on this Agreement confirms your election.

 

Annual Bonus. You have indicated your interest in declining participation in any annual cash bonus program provided by the Company, without regard to your eligibility in any such program. Your signature on this Agreement confirms your election.

 

Stock Awards. You will be eligible to receive stock awards under the Company’s equity incentive plan as in effect from time to time (the “Plan”). Subject to approval by the Company’s Board of Directors (the “Board”), you will be granted an annual time-vested stock award (a “Time-Vested Award”) and a performance-based stock award (a “Performance Award”) as soon as administratively practicable following the Effective Date and the effective registration of the securities under the Plan on Form S-8. These awards are designed to reward you for significantly increasing the value of the Company’s stock over time.

 

 

 

 

Each Time-Vested Award that you are eligible to receive will consist of restricted stock units for shares of the Company’s common stock having a value on the date of grant of not less than $2,000,000. These awards provide immediate and ongoing retention value over time, with the vesting restrictions on the underlying shares lapsing on the third anniversary of their respective dates of grant (or, in the case of your first Time-Vested Award, the third anniversary of the Effective Date) subject to your continued employment. The number of shares associated with the first Time-Vested Award will be determined based upon a stock price of $10.00 as contemplated per the Merger Agreement. Subsequent Time-Vested Awards would be granted annually, typically concurrent with stock awards to other employees in the first quarter, with the number of shares determined based upon the Company’s closing stock price on the date of grant.

 

The Performance Award will consist of 1,619,000 restricted stock units that can be earned upon the achievement of pre-established “stretch” stock price milestones described in the table below and your continued employment through the third anniversary of the Effective Date. Each stock price milestone represents an incremental increase of $6 billion in the market capitalization of the Company and unlocks a tranche of the total shares granted. This tiered performance structure ensures shareholders receive an incremental return on their investment prior to you earning the associated incremental shares. Any and all shares that are earned upon the achievement (defined as the Company’s stock price trading at or above the milestone for at least 20 consecutive trading days) of the three stock price milestones during the period beginning on the date the Resale Shelf Registration Statement (as defined in Exhibit A to the Merger Agreement, and which registration statement is required to be filed within 45 days of the Effective Date) is declared effective by the SEC and ending on the third anniversary of the Effective Date (the “Performance Period”) will be delivered, free of vesting restrictions, following certification by the Board within 30 days following the final day of the Performance Period.

 

The general structure of the Performance Award is illustrated below, assuming a stock price of $10.00 on the grant date. The specific share price milestones will be approved on the date of grant and included in the associated award document.

 

Share Price Milestone     Market Capitalization at Price   Incremental Performance
Shares Earned at Share
Price Milestone
 
  Below $25.00     Below $10 billion     0  
$25.00     $10 billion     356,000  
$40.00     $16 billion     534,000  
  $55.00 or Above     $22+ billion     729,000  

 

In the event of a Change in Control (as defined in the Plan), the achievement of share price milestones under your Performance Award will be based on the Company’s performance through the closing of such Change in Control. The amount of the Performance Award that would have been earned based on this measurement will be converted to time-vested restricted stock units immediately prior to such Change in Control (the “Converted Awards”). If the Converted Awards are assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof), all vesting restrictions applicable to the Converted Awards will lapse on the earlier of (i) the final day of the Performance Period subject to your continued employment with the successor corporation (or a parent or subsidiary thereof) through such date, at which time such Converted Awards will be settled, and (ii) subject to your compliance with the Severance Conditions (as defined below), the date of your Involuntary Termination of employment with the successor corporation (or a parent or subsidiary thereof). All Time-Vested Awards and Converted Awards that are not assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof) will fully vest and will be settled immediately prior to the consummation of such Change in Control.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

The terms and conditions of each Time-Vested Award and the Performance Award will be set forth in separate award agreements in forms prescribed by the Company (each, an “Award Agreement”), and all shares underlying the respective awards will contain the right to receive dividend equivalents, if any, subject to the same vesting conditions as the shares underlying the stock awards. The stock awards shall be governed in all respects by the terms and conditions of the Plan and the applicable Award Agreement.

 

Stock Option Awards. On the Effective Date, all unvested stock option awards that you hold at such time will fully vest.

 

Benefits. You (and your spouse and/or eligible dependents to the extent provided in the applicable plans and programs) are eligible to participate in and be covered under the health, welfare and financial benefit plans and programs maintained by the Company for the benefit of its employees, pursuant to the terms of such plans, on the same terms and conditions as those applicable to similarly situated executives. Detailed descriptions of the Company’s benefit plans are available and will be provided to you upon request. Your eligibility to receive such benefits will be subject in each case to the generally applicable terms and conditions for the benefits in question and to the determinations of any person or committee administering such benefits. The Company may modify or terminate any benefits plan or program from time to time in its sole discretion.

 

Expenses. You are entitled to receive prompt reimbursement for all reasonable business expenses incurred in connection with the performance of your duties in accordance with the policies, practices and procedures of the Company.

 

Vacation. You are entitled to paid vacation in accordance with the policies, practices and procedures of the Company.

 

Indemnification/Legal Fees. The Company agrees that you will be entitled to the same indemnification rights as the Company grants to other officers of the Company, as in effect from time to time. The Company will maintain a directors and officers liability policy covering you with coverage comparable or equal to that provided to other officers of the Company. In the event of any dispute over your entitlement to payments or benefits hereunder, the Company shall advance you an amount equal to your monthly legal fees incurred in connection with such dispute until there is a final non-appealable decision by a court that you are not entitled to such payment or benefit.

 

Termination of Employment. In the event of an Involuntary Termination of your employment at any time, and subject to (i) your execution of a general release of claims in favor of the Company in substantially the form attached as Exhibit A (the “Release”), (ii) your non-revocation of the Release and it becoming effective within sixty (60) days following the date of your termination of employment (the “Termination Date”), and (iii) your faithful observance of the terms of such Release (such conditions, the “Severance Conditions”), then you shall be entitled to the following severance benefits (the “Severance Benefits”):

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

· Severance Payment. The Company will pay you a cash lump sum in an amount equal to $945,000, less applicable withholding.

 

· Stock Awards.

 

o Restricted Stock, Restricted Stock Units and Stock Options. All outstanding restricted stock awards, restricted stock units (other than the Performance Award but including the Converted Awards) and stock options will immediately vest in full. Unexercised stock options will remain exercisable for three years following your Termination Date.

 

o Performance Award. Following certification by the Board within 30 days following your Termination Date, the Performance Award will vest in an amount based upon the stock price milestones achieved prior to your Termination Date, pro-rated for the amount of time that you remained employed during the Performance Period.

 

· Benefits Continuation. The Company will pay to you a cash lump sum equal in value to 18 months of COBRA benefits coverage, less applicable withholding.

 

The cash Severance Benefits will be paid on the first regular payroll date following the date that your Release becomes effective, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

For the avoidance of doubt, if you independently and unilaterally decide to end your employment at the Company without Good Reason, or if you are terminated for Cause, or if your employment is terminated due to your Death or Disability, you will not be entitled to receive any Severance Benefits.

 

You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice. Your employment at-will status can only be modified in a written agreement signed by you and by an authorized officer of the Company.

 

Section 409A. Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including any Severance Benefits, stock awards, consulting payments or other benefits payable due to termination, shall be paid to you during the six-month period following termination if the Company determines that paying such amounts would be a prohibited distribution under Section 409A. If the payment of any such amounts is so delayed, then on the first day of the seventh month following termination (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution) the Company shall pay to you a lump-sum amount equal to the cumulative amount that would have otherwise been payable during such period. In addition, to the extent required in order to comply with Section 409A, you shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payment of such amounts due pursuant to your termination shall be due until you would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each such amount which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A. If the period during which you have discretion to execute or revoke the Release straddles two calendar years, then the Company will make the payment of amounts that are subject to Section 409A and contingent on the effectiveness of such Release starting in the second of such years regardless of which year you actually deliver the Release. You may not, directly or indirectly, designate the calendar year of payment of any amounts subject to Section 409A. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance therewith

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

Work Product. As a condition of employment, you will be expected to abide by Company rules and policies and comply with the Employee Proprietary Information and Inventions Assignment Agreement (PIIA), which prohibits unauthorized use or disclosure of Company proprietary information. A copy of the PIIA that you previously signed is attached hereto as Exhibit B.

 

Confidentiality. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. You represent that you have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. You represent further that you have the ability to perform the essential functions of your job with or without reasonable accommodations.

 

This Agreement, together with its attached exhibits, forms the complete and exclusive statement of your employment agreement with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. Changes in your employment terms, other than those changes expressly reserved to the Company’s discretion in this Agreement, require a written modification signed by an authorized officer of the Company and by you.

 

Successors/Assigns. The Company shall assign this Agreement to any successor to all or substantially all of the business and assets of the Company and the Company shall require successor to expressly assume and agree to in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

Governing Law. The terms of this Agreement and the resolution of any dispute as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, your employment with the Company (or termination thereof) or any other relationship between you and the Company (a “Dispute”) will be governed by the laws of the State of Arizona, without giving effect to the principles of conflict of laws. To the extent not subject to arbitration as described below, you and the Company consent to the exclusive jurisdiction of, and venue in, the state courts in State of Arizona (or in the event of exclusive federal jurisdiction, the courts of the District of Arizona in connection with any Dispute or any claim related to any Dispute).

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

Except as prohibited by law, you agree that any Dispute between you and the Company (or between you and any officer, director, employee or affiliates of the Company, each of whom is hereby designated a third party beneficiary of this Agreement regarding arbitration) will be resolved through binding arbitration in Maricopa County, Arizona under the rules of the American Arbitration Association and the Arbitration Rules set forth in Arizona Rules of Civil Procedure. Nothing in this arbitration provision is intended to limit any right you may have to file a charge with or obtain relief from the National Labor Relations Board or any other state or federal agency. You agree that such arbitration shall be conducted on an individual basis only, not a class, collective or representative basis, and hereby waive any right to bring class-wide, collective or representative claims before any arbitrator or in any forum. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

Please sign and date this Agreement if you wish to continue employment at the Company under the terms described above and return it to britton.worthen@nikolamotor.com. For the purposes of this Agreement, a facsimile or electronic signature shall serve as an original.

 

Certain Definitions. Defined terms in this Agreement are as follows:

 

Involuntary Termination. Involuntary Termination shall mean a termination of employment by the Company without Cause or by you with Good Reason.

 

Good Reason. Good Reason shall mean a resignation by the employee as a result of (i) an adverse change in title, authorities or responsibilities that diminishes employee's position; (ii) a change in the employee's reporting relationship such that he is no longer reporting to the Company's Chief Executive Officer; (iii) a material reduction in the employee's base salary; or (iv) a material breach by the Company of any of its obligations under this Agreement or any other written agreement between the Company and the employee. A resignation for Good Reason will not be deemed to have occurred unless employee gives the Company written notice of the condition within ninety (90) days after the condition comes into existence and the Company fails to remedy the condition within thirty (30) days after receiving your written notice.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

  

 

 

  

Cause. Cause shall mean any of the following: (i) employee's repeated failure to follow the lawful instructions of the Company's Chief Executive Officer consistent with employee's title following written notice of any alleged failure and 15 days to cure such failure; (ii) employee's material violation of any written Company policy that has been provided to the employee; (iii) employee's commission of any act of fraud, embezzlement or any other material misconduct that has caused or is reasonably expected to result in injury to the Company; (iv) employee's unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the employee owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (v) employee's material breach of any of employee’s material obligations under any written agreement or covenant with the Company.

 

[Remainder of Page Intentionally Left Blank]

 

 

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

I am delighted to confirm the terms of this Agreement to you on behalf of the Company. We look forward to your favorable reply and to building a successful Company together.

 

Sincerely,  
   
Nikola Corporation  

 

By: /s/ Mark Russell  
   
Name: Mark Russell  
   
Its: CEO  

 

 

Accepted:  

 

/s/ Joseph Pike   6/3/2020
Joseph Pike   Date

 

Attachments:     Exhibit A – Form Severance Agreement and Release

 

     Exhibit B – Employee Proprietary Information and Inventions Assignment Agreement

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

EXHIBIT A

 


Severance Agreement and Release

 

I. Release of Claims. In exchange for receipt of the severance benefits (the “Severance Benefits”) described in <insert name>’s (“Executive”) Employment Agreement dated [ ], 2020 (the “Employment Agreement”), Executive hereby releases and discharges and covenants not to sue Nikola Corporation (the “Company”), its subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Executive signs this release, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based awards and/or dividend equivalents thereon, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this release, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or any other federal, state or local law, regulation, constitution, ordinance or common law (collectively, the “Claims”). Notwithstanding the above, however, Executive is not releasing (1) any claims that cannot be waived under applicable state or federal law, (2) rights Executive may have to indemnification (including, without limitation, under the Executive’s indemnification agreement with the Company, the Company’s by-laws, the Company’s D&O insurance and otherwise), (3) vested rights or benefits under Executive’s 401k or other plans, or (4) Executive’s workers’ compensation rights and, provided further, that nothing in this Agreement shall prevent Executive from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or Department of Labor. In addition, nothing in this release shall prevent Executive from challenging its validity in a legal or administrative proceeding.

 

II. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this release, Executive is waiving any and all rights or claims that Executive may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this release. Executive further expressly acknowledges and agrees that:

 

A. In return for this release, the Executive will receive consideration beyond that which Executive was already entitled to receive before entering into this Release;

 

B. Executive is hereby advised in writing by this release to consult with an attorney before signing this release;

 

C. Executive was given a copy of this release on [____________] and informed that Executive had twenty-one (21) days within which to consider the release and that if Executive executes this release prior to the expiration of such 21-day period, Executive acknowledges that Executive will have done so voluntarily and knowing that Executive is waiving Executive’s right to have 21 days to consider this release;

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

D. Nothing in this release prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and

 

E. Executive was informed that Executive has seven (7) days following the date of execution of this release in which to revoke it, and this release will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period.

 

III. Company Release of Executive. Company, on its own behalf and on behalf of its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively), hereby releases Executive from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Company signs this release; provided, however, that such release shall not include claims for fraud, securities laws violations or intentional criminal acts.

 

IV. Extension of Restrictive Covenants. In exchange for receipt of the Severance Benefits described in the Employment Agreement, the duration of the restrictive covenants included in Section 4(g) (Nonsolicitation of Employees/Contractors), Section 4(h) (No Hire), Section 4(i) (Nonsolicitation of Customers) and Section 4(j) (Noncompete Provision) of Executive’s Employee Proprietary Information and Inventions Assignment Agreement (“PIIA”) will increase from one (1) year to two (2) years following the date of Executive’s termination of employment.

 

V. Non-Disparagement. Executive will refrain from making any defamatory or disparaging statements about the Company, its board of directors, officers, management, practices, procedures, or business operations to any person or entity. Nothing in this paragraph shall prohibit Executive from providing truthful information in response to a subpoena or other legal or regulatory process. The foregoing requirement under this paragraph will not apply to any statements that Executive makes in response to any defamatory or disparaging statements made by the Company (in its formal public statements), its executive officers and/or its directors regarding Executive or Executive’s performance as an employee of the Company so long as Executive’s statements are, in the reasonable, good faith judgment of Executive, true and extend no further than addressing such statements by the Company.

 

VI. Forfeiture of Severance Benefits. Executive acknowledges and agrees that any material breach of this Agreement, the Employment Agreement, or the PIIA, including any of the restrictive covenants set forth therein, shall entitle the Company immediately to recover and/or cease providing the Severance Benefits, except as provided by law. All other provisions of this Agreement, the Employment Agreement, and the PIIA shall remain in full force and effect.

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

 

VII. Waiver of Unknown Claims. Executive and Company understand and agree that the claims released above include not only claims presently known to Executive and Company, but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the released claims described herein. Executive and Company understand that they may hereafter discover facts different from what they now believe to be true, which if known, could have materially affected their decisions to execute this release, but Executive and Company nevertheless hereby waive any claims or rights based on different or additional facts.

 

“EXECUTIVE”   “COMPANY”
     
    NIKOLA CORPORATION

 

     
    By:  
<Name>        
       
    Name:
       
Date:        
    Title:
       
    Date:

 

  www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Exhibit 10.16

 

 

June 3, 2020

 

Britton Worthen

 

Re: Executive Employment Arrangement

 

Dear Britton:

 

This Agreement will amend and restate your existing Employment Offer Letter with Nikola Corporation (the “Company”), dated as of March 26, 2019, effective as of the close of the business combination contemplated by the Business Combination Agreement, dated as of March 2, 2020 (the “Merger Agreement”) by and among VectoIQ Acquisition Corp., VCTIQ Merger Sub Corp., and the Company (the “Effective Date”).

 

You will continue in your current position as the Company’s Chief Legal Officer and will continue to report to the Company’s Chief Executive Officer. Your responsibilities include, but are not limited to, such employment duties as are usual and customary for this position and which are commensurate with the duties, authorities and responsibilities of persons in similar capacities in similar sized companies. At the Company’s request, you shall serve the Company and/or its subsidiaries and affiliates in other capacities in addition to the foregoing, consistent with expectations for your position.

 

The terms of your employment are as follows:

 

Employment Period. Your employment shall continue indefinitely until terminated in accordance with the terms of this Agreement. Notwithstanding the foregoing, your employment is terminable at will by the Company or by you at any time (for any reason or for no reason), subject to the termination provisions of this Agreement.

 

Annual Salary. You have indicated your interest in declining any salary in excess of $1 per year, without regard to Arizona’s minimum wage. Accordingly, for purposes of this Agreement and due to your request, your annual salary will be $1, paid bi-weekly less payroll deductions and all required withholdings. Your signature on this Agreement confirms your election.

 

Annual Bonus. You have indicated your interest in declining participation in any annual cash bonus program provided by the Company, without regard to your eligibility in any such program. Your signature on this Agreement confirms your election.

 

 

 

Stock Awards. You will be eligible to receive stock awards under the Company’s equity incentive plan as in effect from time to time (the “Plan”). Subject to approval by the Company’s Board of Directors (the “Board”), you will be granted an annual time-vested stock award (a “Time-Vested Award”) and a performance-based stock award (a “Performance Award”) as soon as administratively practicable following the Effective Date and the effective registration of the securities under the Plan on Form S-8. These awards are designed to reward you for significantly increasing the value of the Company’s stock over time.

 

Each Time-Vested Award that you are eligible to receive will consist of restricted stock units for shares of the Company’s common stock having a value on the date of grant of not less than $3,000,000. These awards provide immediate and ongoing retention value over time, with the vesting restrictions on the underlying shares lapsing on the third anniversary of their respective dates of grant (or, in the case of your first Time-Vested Award, the third anniversary of the Effective Date) subject to your continued employment. The number of shares associated with the first Time-Vested Award will be determined based upon a stock price of $10.00 as contemplated per the Merger Agreement. Subsequent Time-Vested Awards would be granted annually, typically concurrent with stock awards to other employees in the first quarter, with the number of shares determined based upon the Company’s closing stock price on the date of grant.

 

The Performance Award will consist of 2,428,000 restricted stock units that can be earned upon the achievement of pre-established “stretch” stock price milestones described in the table below and your continued employment through the third anniversary of the Effective Date. Each stock price milestone represents an incremental increase of $6 billion in the market capitalization of the Company and unlocks a tranche of the total shares granted. This tiered performance structure ensures shareholders receive an incremental return on their investment prior to you earning the associated incremental shares. Any and all shares that are earned upon the achievement (defined as the Company’s stock price trading at or above the milestone for at least 20 consecutive trading days) of the three stock price milestones during the period beginning on the date the Resale Shelf Registration Statement (as defined in Exhibit A to the Merger Agreement, and which registration statement is required to be filed within 45 days of the Effective Date) is declared effective by the SEC and ending on the third anniversary of the Effective Date (the “Performance Period”) will be delivered, free of vesting restrictions, following certification by the Board within 30 days following the final day of the Performance Period.

 

The general structure of the Performance Award is illustrated below, assuming a stock price of $10.00 on the grant date. The specific share price milestones will be approved on the date of grant and included in the associated award document.

 

Share Price Milestone   Market Capitalization at Price  

Incremental Performance

Shares Earned at

Share Price Milestone

 
Below $25.00   Below $10 billion     0  
$25.00   $10 billion     534,000  
$40.00   $16 billion     801,000  
$55.00 or Above   $22+ billion     1,093,000  

 

In the event of a Change in Control (as defined in the Plan), the achievement of share price milestones under your Performance Award will be based on the Company’s performance through the closing of such Change in Control. The amount of the Performance Award that would have been earned based on this measurement will be converted to time-vested restricted stock units immediately prior to such Change in Control (the “Converted Awards”). If the Converted Awards are assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof), all vesting restrictions applicable to the Converted Awards will lapse on the earlier of (i) the final day of the Performance Period subject to your continued employment with the successor corporation (or a parent or subsidiary thereof) through such date, at which time such Converted Awards will be settled, and (ii) subject to your compliance with the Severance Conditions (as defined below), the date of your Involuntary Termination of employment with the successor corporation (or a parent or subsidiary thereof). All Time-Vested Awards and Converted Awards that are not assumed, substituted or otherwise continued by the successor corporation (or a parent or subsidiary thereof) will fully vest and will be settled immediately prior to the consummation of such Change in Control.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

The terms and conditions of each Time-Vested Award and the Performance Award will be set forth in separate award agreements in forms prescribed by the Company (each, an “Award Agreement”), and all shares underlying the respective awards will contain the right to receive dividend equivalents, if any, subject to the same vesting conditions as the shares underlying the stock awards. The stock awards shall be governed in all respects by the terms and conditions of the Plan and the applicable Award Agreement.

 

Stock Option Awards. On the Effective Date, all unvested stock option awards that you hold at such time will fully vest.

 

Benefits. You (and your spouse and/or eligible dependents to the extent provided in the applicable plans and programs) are eligible to participate in and be covered under the health, welfare and financial benefit plans and programs maintained by the Company for the benefit of its employees, pursuant to the terms of such plans, on the same terms and conditions as those applicable to similarly situated executives. Detailed descriptions of the Company’s benefit plans are available and will be provided to you upon request. Your eligibility to receive such benefits will be subject in each case to the generally applicable terms and conditions for the benefits in question and to the determinations of any person or committee administering such benefits. The Company may modify or terminate any benefits plan or program from time to time in its sole discretion.

 

Expenses. You are entitled to receive prompt reimbursement for all reasonable business expenses incurred in connection with the performance of your duties in accordance with the policies, practices and procedures of the Company.

 

Vacation. You are entitled to paid vacation in accordance with the policies, practices and procedures of the Company.

 

Indemnification/Legal Fees. The Company agrees that you will be entitled to the same indemnification rights as the Company grants to other officers of the Company, as in effect from time to time. The Company will maintain a directors and officers liability policy covering you with coverage comparable or equal to that provided to other officers of the Company. In the event of any dispute over your entitlement to payments or benefits hereunder, the Company shall advance you an amount equal to your monthly legal fees incurred in connection with such dispute until there is a final non-appealable decision by a court that you are not entitled to such payment or benefit.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Termination of Employment. In the event of an Involuntary Termination of your employment at any time, and subject to (i) your execution of a general release of claims in favor of the Company in substantially the form attached as Exhibit A (the “Release”), (ii) your non-revocation of the Release and it becoming effective within sixty (60) days following the date of your termination of employment (the “Termination Date”), and (iii) your faithful observance of the terms of such Release (such conditions, the “Severance Conditions”), then you shall be entitled to the following severance benefits (the “Severance Benefits”):

 

· Severance Payment. The Company will pay you a cash lump sum in an amount equal to $1,050,000, less applicable withholding.

 

· Stock Awards.

 

o Restricted Stock, Restricted Stock Units and Stock Options. All outstanding restricted stock awards, restricted stock units (other than the Performance Award but including the Converted Awards) and stock options will immediately vest in full. Unexercised stock options will remain exercisable for three years following your Termination Date.

 

o Performance Award. Following certification by the Board within 30 days following your Termination Date, the Performance Award will vest in an amount based upon the stock price milestones achieved prior to your Termination Date, pro-rated for the amount of time that you remained employed during the Performance Period.

 

· Benefits Continuation. The Company will pay to you a cash lump sum equal in value to 18 months of COBRA benefits coverage, less applicable withholding.

 

The cash Severance Benefits will be paid on the first regular payroll date following the date that your Release becomes effective, subject to compliance with Section 409A of the Internal Revenue Code of 1986, as amended (“Section 409A”).

 

For the avoidance of doubt, if you independently and unilaterally decide to end your employment at the Company without Good Reason, or if you are terminated for Cause, or if your employment is terminated due to your Death or Disability, you will not be entitled to receive any Severance Benefits.

 

You may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time, with or without cause or advance notice. Your employment at-will status can only be modified in a written agreement signed by you and by an authorized officer of the Company.

 

Section 409A. Notwithstanding anything to the contrary in this Agreement, no compensation or benefits, including any Severance Benefits, stock awards, consulting payments or other benefits payable due to termination, shall be paid to you during the six-month period following termination if the Company determines that paying such amounts would be a prohibited distribution under Section 409A. If the payment of any such amounts is so delayed, then on the first day of the seventh month following termination (or such earlier date upon which such amount can be paid under Section 409A without resulting in a prohibited distribution) the Company shall pay to you a lump-sum amount equal to the cumulative amount that would have otherwise been payable during such period. In addition, to the extent required in order to comply with Section 409A, you shall not be considered to have terminated employment with the Company for purposes of this Agreement and no payment of such amounts due pursuant to your termination shall be due until you would be considered to have incurred a “separation from service” from the Company within the meaning of Section 409A. Each such amount which constitutes deferred compensation subject to Section 409A shall be construed as a separate identified payment for purposes of Section 409A. If the period during which you have discretion to execute or revoke the Release straddles two calendar years, then the Company will make the payment of amounts that are subject to Section 409A and contingent on the effectiveness of such Release starting in the second of such years regardless of which year you actually deliver the Release. You may not, directly or indirectly, designate the calendar year of payment of any amounts subject to Section 409A. The intent of the parties is that the payments and benefits under this Agreement comply with or be exempt from Section 409A and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from or in compliance therewith.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Work Product. As a condition of employment, you will be expected to abide by Company rules and policies and comply with the Employee Proprietary Information and Inventions Assignment Agreement (PIIA), which prohibits unauthorized use or disclosure of Company proprietary information. A copy of the PIIA that you previously signed is attached hereto as Exhibit B.

 

Confidentiality. In your work for the Company, you will be expected not to use or disclose any confidential information, including trade secrets, of any former employer or other person to whom you have an obligation of confidentiality. Rather, you will be expected to use only that information which is generally known and used by persons with training and experience comparable to your own, which is common knowledge in the industry or otherwise legally in the public domain, or which is otherwise provided or developed by the Company.

 

You agree that you will not bring onto Company premises any unpublished documents or property belonging to any former employer or other person to whom you have an obligation of confidentiality. You represent that you have disclosed to the Company any contract you have signed that may restrict your activities on behalf of the Company. You represent further that you have the ability to perform the essential functions of your job with or without reasonable accommodations.

 

This Agreement, together with its attached exhibits, forms the complete and exclusive statement of your employment agreement with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone, whether oral or written. Changes in your employment terms, other than those changes expressly reserved to the Company’s discretion in this Agreement, require a written modification signed by an authorized officer of the Company and by you.

 

Successors/Assigns. The Company shall assign this Agreement to any successor to all or substantially all of the business and assets of the Company and the Company shall require successor to expressly assume and agree to in the same manner and to the same extent that the Company would be required to perform it if no such succession had taken place.

 

Governing Law. The terms of this Agreement and the resolution of any dispute as to the meaning, effect, performance or validity of this Agreement or arising out of, related to, or in any way connected with, this Agreement, your employment with the Company (or termination thereof) or any other relationship between you and the Company (a “Dispute”) will be governed by the laws of the State of Arizona, without giving effect to the principles of conflict of laws. To the extent not subject to arbitration as described below, you and the Company consent to the exclusive jurisdiction of, and venue in, the state courts in State of Arizona (or in the event of exclusive federal jurisdiction, the courts of the District of Arizona in connection with any Dispute or any claim related to any Dispute).

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Except as prohibited by law, you agree that any Dispute between you and the Company (or between you and any officer, director, employee or affiliates of the Company, each of whom is hereby designated a third party beneficiary of this Agreement regarding arbitration) will be resolved through binding arbitration in Maricopa County, Arizona under the rules of the American Arbitration Association and the Arbitration Rules set forth in Arizona Rules of Civil Procedure. Nothing in this arbitration provision is intended to limit any right you may have to file a charge with or obtain relief from the National Labor Relations Board or any other state or federal agency. You agree that such arbitration shall be conducted on an individual basis only, not a class, collective or representative basis, and hereby waive any right to bring class-wide, collective or representative claims before any arbitrator or in any forum. THE PARTIES UNDERSTAND THAT BY AGREEING TO ARBITRATE DISPUTES THEY ARE WAIVING ANY RIGHT THEY MIGHT OTHERWISE HAVE TO A JURY TRIAL. This arbitration provision is not intended to modify or limit substantive rights or the remedies available to the parties, including the right to seek interim relief, such as injunction or attachment, through judicial process, which shall not be deemed a waiver of the right to demand and obtain arbitration.

 

Please sign and date this Agreement if you wish to continue employment at the Company under the terms described above and return it to joe.pike@nikolamotor.com. For the purposes of this Agreement, a facsimile or electronic signature shall serve as an original.

 

Certain Definitions. Defined terms in this Agreement are as follows:

 

Involuntary Termination. Involuntary Termination shall mean a termination of employment by the Company without Cause or by you with Good Reason.

 

Good Reason. Good Reason shall mean a resignation by the employee as a result of (i) an adverse change in title, authorities or responsibilities that diminishes employee's position; (ii) a change in the employee's reporting relationship such that he is no longer reporting to the Company's Chief Executive Officer; (iii) a material reduction in the employee's base salary; or (iv) a material breach by the Company of any of its obligations under this Agreement or any other written agreement between the Company and the employee. A resignation for Good Reason will not be deemed to have occurred unless employee gives the Company written notice of the condition within ninety (90) days after the condition comes into existence and the Company fails to remedy the condition within thirty (30) days after receiving your written notice.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

Cause. Cause shall mean any of the following: (i) employee's repeated failure to follow the lawful instructions of the Company's Chief Executive Officer consistent with employee's title following written notice of any alleged failure and 15 days to cure such failure; (ii) employee's material violation of any written Company policy that has been provided to the employee; (iii) employee's commission of any act of fraud, embezzlement or any other material misconduct that has caused or is reasonably expected to result in injury to the Company; (iv) employee's unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the employee owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (v) employee's material breach of any of employee’s material obligations under any written agreement or covenant with the Company.

 

[Remainder of Page Intentionally Left Blank]

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

I am delighted to confirm the terms of this Agreement to you on behalf of the Company. We look forward to your favorable reply and to building a successful Company together.

 

Sincerely,

 

Nikola Corporation

 

By: /s/ Mark Russell    
 
Name: Mark Russell  
 
Its: CEO  

 

Accepted:

 

/s/ Britton Worthen    6/3/2020  
Britton Worthen   Date

 

Attachments: Exhibit A – Form Severance Agreement and Release

Exhibit B – Employee Proprietary Information and Inventions Assignment Agreement

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

EXHIBIT A

 


Severance Agreement and Release

 

I. Release of Claims. In exchange for receipt of the severance benefits (the “Severance Benefits”) described in <insert name>’s (“Executive”) Employment Agreement dated [ ], 2020 (the “Employment Agreement”), Executive hereby releases and discharges and covenants not to sue Nikola Corporation (the “Company”), its subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively, “Releasees”), from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Executive signs this release, including without limiting the generality of the foregoing, any claim for severance pay, profit sharing, bonus or similar benefit, equity-based awards and/or dividend equivalents thereon, pension, retirement, life insurance, health or medical insurance or any other fringe benefit, or disability, or any other claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected resulting from any act or omission by or on the part of Releasees committed or omitted prior to the date of this release, including, without limiting the generality of the foregoing, any claim under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, or any other federal, state or local law, regulation, constitution, ordinance or common law (collectively, the “Claims”). Notwithstanding the above, however, Executive is not releasing (1) any claims that cannot be waived under applicable state or federal law, (2) rights Executive may have to indemnification (including, without limitation, under the Executive’s indemnification agreement with the Company, the Company’s by-laws, the Company’s D&O insurance and otherwise), (3) vested rights or benefits under Executive’s 401k or other plans, or (4) Executive’s workers’ compensation rights and, provided further, that nothing in this Agreement shall prevent Executive from filing, cooperating with, or participating in any proceeding before the Equal Employment Opportunity Commission or Department of Labor. In addition, nothing in this release shall prevent Executive from challenging its validity in a legal or administrative proceeding.

 

II. ADEA Waiver. Executive expressly acknowledges and agrees that by entering into this release, Executive is waiving any and all rights or claims that Executive may have arising under the Age Discrimination in Employment Act of 1967, as amended (“ADEA”), which have arisen on or before the date of execution of this release. Executive further expressly acknowledges and agrees that:

 

A. In return for this release, the Executive will receive consideration beyond that which Executive was already entitled to receive before entering into this Release;

 

B. Executive is hereby advised in writing by this release to consult with an attorney before signing this release;

 

C. Executive was given a copy of this release on [____________] and informed that Executive had twenty-one (21) days within which to consider the release and that if Executive executes this release prior to the expiration of such 21-day period, Executive acknowledges that Executive will have done so voluntarily and knowing that Executive is waiving Executive’s right to have 21 days to consider this release;

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

D. Nothing in this release prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties or costs from doing so, unless specifically authorized by federal law; and

 

E. Executive was informed that Executive has seven (7) days following the date of execution of this release in which to revoke it, and this release will become null and void if Executive elects revocation during that time. Any revocation must be in writing and must be received by the Company during the seven-day revocation period.

 

III. Company Release of Executive. Company, on its own behalf and on behalf of its divisions, subsidiaries, parents, or affiliated corporations, past and present, and each of them, as well as each of its and their assignees, successors, directors, officers, stockholders, partners, representatives, insurers, attorneys, agents or employees, past or present, or any of them (individually and collectively), hereby releases Executive from and with respect to any and all claims, agreements, obligations, demands and causes of action, known or unknown, suspected or unsuspected, arising out of or in any way connected with events, acts, conduct, or omissions occurring at any time prior to and including the date Company signs this release; provided, however, that such release shall not include claims for fraud, securities laws violations or intentional criminal acts.

 

IV. Extension of Restrictive Covenants. In exchange for receipt of the Severance Benefits described in the Employment Agreement, the duration of the restrictive covenants included in Section 4(g) (Nonsolicitation of Employees/Contractors), Section 4(h) (No Hire), Section 4(i) (Nonsolicitation of Customers) and Section 4(j) (Noncompete Provision) of Executive’s Employee Proprietary Information and Inventions Assignment Agreement (“PIIA”) will increase from one (1) year to two (2) years following the date of Executive’s termination of employment.

 

V. Non-Disparagement. Executive will refrain from making any defamatory or disparaging statements about the Company, its board of directors, officers, management, practices, procedures, or business operations to any person or entity. Nothing in this paragraph shall prohibit Executive from providing truthful information in response to a subpoena or other legal or regulatory process. The foregoing requirement under this paragraph will not apply to any statements that Executive makes in response to any defamatory or disparaging statements made by the Company (in its formal public statements), its executive officers and/or its directors regarding Executive or Executive’s performance as an employee of the Company so long as Executive’s statements are, in the reasonable, good faith judgment of Executive, true and extend no further than addressing such statements by the Company.

 

VI. Forfeiture of Severance Benefits. Executive acknowledges and agrees that any material breach of this Agreement, the Employment Agreement, or the PIIA, including any of the restrictive covenants set forth therein, shall entitle the Company immediately to recover and/or cease providing the Severance Benefits, except as provided by law. All other provisions of this Agreement, the Employment Agreement, and the PIIA shall remain in full force and effect.

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

 

VII. Waiver of Unknown Claims. Executive and Company understand and agree that the claims released above include not only claims presently known to Executive and Company, but also include all unknown or unanticipated claims, rights, demands, actions, obligations, liabilities, and causes of action of every kind and character that would otherwise come within the scope of the released claims described herein. Executive and Company understand that they may hereafter discover facts different from what they now believe to be true, which if known, could have materially affected their decisions to execute this release, but Executive and Company nevertheless hereby waive any claims or rights based on different or additional facts.

 

  “EXECUTIVE”      “COMPANY”
         
        NIKOLA CORPORATION

 

      By:  
<Name>  
  Name:  
Date:      
  Title:  
   
  Date:  

 

    www.nikolamotor.com | 4141 E Broadway Rd | Phoenix | AZ | 85040

 

 

Exhibit 10.18

 

REDEMPTION AGREEMENT

 

THIS REDEMPTION AGREEMENT (this “Agreement”) is made effective as of June 3, 2020, by and among Nikola Corporation, a Delaware corporation (f/k/a VectoIQ Acquisition Corp. (“VectoIQ”)) (the “Company”), and M&M Residual, LLC, a Nevada limited liability company (“Holder”).

 

RECITALS

 

WHEREAS, the Company entered into that certain Business Combination Agreement, dated March 2, 2020 (the “Business Combination Agreement”), by and among VectoIQ, VCTIQ Merger Sub Corp., a wholly-owned subsidiary of VectoIQ incorporated in the State of Delaware, and Nikola Subsidiary Corporation, a Delaware corporation (f/k/a Nikola Corporation “Nikola”);

 

WHEREAS, at the Effective Time under the Business Combination Agreement (as such term is defined therein) Holder is entitled to receive shares of common stock, par value $0.0001 per share, of the Company (the “Common Stock”) in exchange for the shares of capital stock of Original Nikola held by Holder, and pursuant to Section 7.19 of the Business Combination Agreement, 7,000,000 shares out of the total shares issuable to Holder at the Effective Time (the “Redemption Shares”) shall be redeemed by the Company immediately following, and subject to, the Effective Time, at a purchase price of $10.00 per share; and

 

WHEREAS, Holder desires to assign, convey, deliver, grant, sell and transfer the Redemption Shares to the Company for the Redemption Price (as defined below), pursuant to the Business Combination Agreement.

 

NOW, THEREFORE, in consideration of these premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

1.            Redemption of Stock.

 

1.1            Redemption. Holder hereby agrees to assign, convey, deliver, grant, sell and transfer to the Company at the Closing (as defined below), and the Company hereby agrees to accept, receive and redeem from Holder at the Closing, all of such Holder’s right, title and interest of every nature in and to the Redemption Shares, for the aggregate redemption price of Seventy Million Dollars ($70,000,000) (the “Redemption Price”).

 

2.            Closing; Delivery.

 

2.1            Closing. The closing of the redemption of the Redemption Shares (the “Closing”) shall take place remotely via the exchange of documents and signatures immediately after and subject to the Effective Time (as defined in the Business Combination Agreement).

 

2.2            Deliveries. At the Closing, the Company shall deliver to Holder the Redemption Price for the Redemption Shares by wire transfer of immediately available funds to a bank account designated by Holder.

 

 

 

 

3.            Representations and Warranties of Holder. Holder solely with respect to itself and the Redemption Shares, hereby represents and warrants to the Company that the following representations are true and correct as of the date of the Closing.

 

3.1            Authorization. Holder has full capacity, power and authority to enter into this Agreement and to transfer the Redemption Shares under this Agreement, and Holder is not obligated to transfer the Redemption Shares to any other person or entity. This Agreement, when executed and delivered by Holder and the other parties hereto, will constitute the valid and legally binding obligation of Holder, enforceable in accordance with its terms. Holder, if other than a natural person, has been duly organized and is validly existing in good standing under the laws of the jurisdiction of its organization as the type of entity it purports to be.

 

3.2            Compliance with Other Instruments. The execution, delivery and performance by Holder of this Agreement and the performance of Holder of its obligations hereunder will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, a default under any instrument, judgment, order, writ, decree, contract or agreement to which Holder is a party or to which Holder or the Redemption Shares is otherwise subject.

 

3.3            Ownership of Stock. Holder is the sole beneficial and record owner of, and has good and marketable title to, the Redemption Shares, free and clear of any and all liens, security interests, claims or other encumbrances. Holder has full capacity, power and authority to assign, convey, deliver, grant, sell and transfer absolute ownership of the Redemption Shares to the Company, and upon delivery of the Certificates at the Closing, the Company will obtain good and marketable title to the Redemption Shares, free and clear of any and all liens, security interests, claims or other encumbrances.

 

3.4            Sophisticated Holder. Holder (a) is a sophisticated individual familiar with transactions similar to those contemplated by this Agreement, (b) has adequate information concerning the business and financial condition of the Company to make an informed decision regarding the sale of the Redemption Shares, (c) has been afforded the opportunity to ask questions of and request information from, and has received satisfactory answers and information from, the Company and its representatives with respect to the Company and its business, operations, assets, liabilities, prospects and financial condition as Holder deemed necessary to evaluate the merits and risks of the sale of the Redemption Shares hereunder, and (d) has independently and without reliance upon the Company, and based on such information and advice of business, financial, legal, tax and other advisors as Holder has deemed appropriate, made its own analysis and decision to enter into this Agreement.

 

4.            Representations, Warranties and Covenants of the Company. The Company hereby represents and warrants to each Holder that the following representations are true and correct as of the date of the Closing and covenants as follows:

 

4.1            Organization, Good Standing and Corporate Power. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as presently conducted and as proposed to be conducted.

 

2

 

 

4.2            Authorization. All corporate action required to be taken by the Company’s Board of Directors and stockholders in order to authorize the Company to enter into this Agreement, and to redeem the Redemption Shares at the Closing, has been taken or will be taken prior to the Closing. This Agreement, when executed and delivered by the Company, will constitute the valid and legally binding obligation of the Company, enforceable against the Company in accordance with its terms.

 

4.3            Compliance with Other Instruments. The execution, delivery and performance by the Company of this Agreement and the redemption of the Redemption Shares will not result in any violation or be in conflict with or constitute, with or without the passage of time and giving of notice, a default under any instrument, judgment, order, writ, decree, contract or agreement to which the Company is a party or to which the Company or the Redemption Shares is otherwise subject.

 

5.            Survival of Covenants and Warranties; Indemnification.

 

5.1            Unless otherwise set forth in this Agreement, the covenants, representations and warranties of the parties contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of either party.

 

5.2            Each party hereby agrees to hold harmless and indemnify the other party and such other party’s administrators, affiliates, agents, beneficiaries, directors, employees, executors, heirs, legatees, officers, stockholders, other representatives, successors and permitted assigns, as applicable, against any and all claims arising out of, relating to and/or resulting from any breach of or default under any of the representations, warranties, covenants and other agreements of the indemnifying party set forth in this Agreement.

 

6.            Miscellaneous.

 

6.1            Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. Each Holder may not assign, whether voluntarily or by operation of law, any of its rights and obligations under this Agreement, except with the prior written consent of the Company.

 

6.2            Governing Law. This Agreement shall be governed by the internal law of the State of Delaware.

 

6.3            Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.

 

3

 

 

6.4            Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

 

6.5            Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (a) personal delivery to the party to be notified, (b) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective parties at their address as set forth on the signature page, or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Subsection 6.5. All notices and other communications shall be sent to the addresses set forth on the signature pages attached hereto.

 

6.6            Amendments and Waivers. Any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and Holder.

 

6.7            Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

 

6.8            Entire Agreement. This Agreement (including the Exhibits hereto), constitutes the full and entire understanding and agreement between the parties with respect to the subject matter hereof, and any other written or oral agreements relating to the subject matter hereof existing between the parties are expressly canceled.

 

(Remainder of Page Intentionally Left Blank)

 

4

 

 

IN WITNESS WHEREOF, the undersigned have executed this Redemption Agreement as of the date first written above.

 

  COMPANY:
   
  NIKOLA CORPORATION
   
   
  By: /s/ Mark A. Russell
  Name: Mark A. Russell
  Title: President and Chief Executive Officer

 

(Signature Page to Redemption Agreement)

 

 

 

IN WITNESS WHEREOF, the undersigned have executed this Redemption Agreement as of the date first written above.

 

  HOLDER:
   
  M&M RESIDUAL, LLC
   
   
  By: /s/ Trevor R. Milton
  Name: Trevor R. Milton
  Title: Member

 

(Signature Page to Redemption Agreement)

 

 

 

EXHIBIT A

 

STOCK

 

Series of Stock Number of Shares Price Per Share Total Price
Common Stock 7,000,000 $10.00 $70,000,000
Total 7,000,000 $10.00 $70,000,000

 

 

 

Exhibit 16.1

 

June 5, 2020

 

Securities and Exchange Commission

Washington, D.C. 20549

 

Commissioners:

 

We have read Nikola Corporation’s statements included under Item 4.01 of its Form 8-K, which we understand will be filed on June 8, 2020 and we agree with such statements concerning our firm.

 

/s/ RSM US LLP

 

 

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nikola Corporation

 

Consolidated Financial Statements

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NIKOLA CORPORATION

CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

TABLE OF CONTENTS

 

  Page
   
Consolidated Balance Sheets 2
   
Consolidated Statements of Operations 3
   
Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders’ Deficit 4
   
Consolidated Statements of Cash Flows 5
   
Notes to Consolidated Financial Statements 6

 

1

 

 

NIKOLA CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

 

    March 31,     December 31,  
    2020     2019  
    (Unaudited)        
Assets                
Current assets                
Cash and cash equivalents   $ 75,515     $ 85,688  
Restricted cash     4,132        
Accounts receivable, net     447       770  
Prepaid in-kind services     13,269        
Prepaid expenses and other current assets     7,842       4,423  
Total current assets     101,205       90,881  
Restricted cash and cash equivalents           4,144  
Long-term deposits     14,540       13,223  
Property and equipment, net     54,436       53,378  
Intangible assets, net     62,497       62,513  
Goodwill     5,238       5,238  
Other assets     54       53  
Total assets   $ 237,970     $ 229,430  
Liabilities, redeemable convertible preferred stock and stockholders’ deficit                
Current liabilities                
Accounts payable     7,783       4,499  
Accounts payable due to related parties     285       614  
Accrued expenses and other current liabilities     16,253       10,942  
Accrued expenses due to related parties     791       483  
Forward contract liability     1,324        
Term note - current     4,100        
Total current liabilities     30,536       16,538  
Term note           4,100  
Other long-term liabilities     12,024       12,212  
Deferred tax liabilities, net     1,073       1,072  
Total liabilities     43,633       33,922  
Commitments and contingencies (Note 10)                
Redeemable convertible preferred stock, $0.00001 par value, 129,651,920 shares authorized, 84,095,913 and 82,297,742 shares issued and outstanding as of March 31, 2020 and December 31, 2019 and aggregate liquidation preference of $429,972 and $396,670 as of March 31, 2020 and December 31, 2019     414,664       383,987  
Stockholders’ deficit                
Common stock, $0.00001 par value, 237,000,000 shares authorized, 60,167,980 and 60,167,334 shares issued and outstanding as of March 31, 2020 and December 31, 2019, respectively     1       1  
Additional paid-in capital     1,315        
Accumulated deficit     (221,643 )     (188,480 )
Total stockholders’ deficit     (220,327 )     (188,479 )
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit   $ 237,970     $ 229,430  

 

See accompanying notes to consolidated financial statements.

 

2

 

 

NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

 

    Three Months Ended March 31,  
    2020     2019  
Revenues   $ 58     $ 124  
Cost of revenues     43       62  
Gross profit     15       62  
Operating expenses:                
Research and development     24,053       23,397  
Selling, general, and administrative     7,978       6,501  
Total operating expenses     32,031       29,898  
Loss from operations     (32,016 )     (29,836 )
Other income (expense):                
Interest income, net     64       333  
Loss on Series A redeemable convertible preferred stock warrant liability           (593 )
Loss on forward contract liability     (1,324 )      
Other income, net     114       1  
Loss before income taxes     (33,162 )     (30,095 )
Income tax expense     1       2  
Net loss   $ (33,163 )   $ (30,097 )
Net loss per share to common stockholders, basic and diluted   $ (0.55 )   $ (0.50 )
Weighted-average shares used to compute net loss per share to common stockholders, basic and diluted     60,167,749       60,166,667  

 

See accompanying notes to consolidated financial statements.

 

3

 

 

NIKOLA CORPORATION

CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT

(In thousands, except share data)

(Unaudited)

 

    Three Months Ended March 31, 2020  
    Redeemable Convertible Preferred Stock     Common Stock     Additional Paid-in     Accumulated     Total Stockholders’  
    Shares     Amount     Shares     Amount     Capital     Deficit     (Deficit)  
Balance as of December 31, 2019     82,297,742     $ 383,987       60,167,334     $ 1     $     $ (188,480 )   $ (188,479 )
Issuance of Series D redeemable convertible preferred stock, net of $2,651 issuance costs     718,257       10,677                                
Issuance of Series D redeemable convertible preferred stock for in-kind contribution     1,079,914       20,000                                
Exercise of stock options                 646             2             2  
Stock-based compensation                             1,313             1,313  
Net loss                                   (33,163 )     (33,163 )
Balance as of March 31, 2020     84,095,913       414,664       60,167,980     $ 1       1,315       (221,643 )     (220,327 )

 

    Three Months Ended March 31, 2019  
    Redeemable Convertible Preferred Stock     Common Stock     Additional Paid-in     Accumulated     Total Stockholders’  
    Shares     Amount     Shares     Amount     Capital     Deficit     (Deficit)  
Balance as of December 31, 2018     76,817,224       278,062       60,166,667       1       6,742       (98,565 )     (91,822 )
Stock-based compensation                             1,153             1,153  
Cumulative effect of ASU 2018-07 adoption                             162       (162 )      
Net loss                                   (30,097 )     (30,097 )
Balance as of March 31, 2019     76,817,224     $ 278,062       60,167,667     $ 1     $ 8,057     $ (128,824 )   $ (120,766 )

 

See accompanying notes to consolidated financial statements.

 

4

 

 

NIKOLA CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

    Three Months Ended March 31,  
    2020     2019  
Cash flows from operating activities                
Net loss   $ (33,163 )   $ (30,097 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization     1,351       196  
Stock-based compensation     1,313       1,153  
Revaluation of Series A redeemable convertible preferred stock warrant liability           593  
Deferred income taxes     1       2  
Non-cash in-kind services provided by related party     6,731        
Loss on forward contract liability     1,324        
Changes in operating assets and liabilities:                
Accounts receivable, net     323       (55 )
Prepaid expenses and other current assets     236       (386 )
Accounts payable and accrued expenses and other current liabilities     (133 )     1,261  
Accounts payable due to related parties     (329 )     (8,704 )
Accrued expenses due to related parties     308       3,875  
Other long-term liabilities     (9 )      
Net cash used in operating activities     (22,047 )     (32,162 )
Cash flows from investing activities                
Purchases of property and equipment     (1,371 )     (4,032 )
Deposits for property and equipment     (68 )     (1,791 )
Cash paid towards build-to-suit lease           (4,040 )
Net cash used in investing activities     (1,439 )     (9,863 )
Cash flows from financing activities                
Proceeds from issuance of Series D redeemable convertible preferred stock, net of issuance costs paid     12,963        
Issuance costs paid for Business Combination and PIPE financing     (394 )      
Proceeds from the exercise of stock options     2        
Proceeds from landlord of finance lease     889        
Payments to landlord for finance lease     (159 )      
Net cash provided by financing activities     13,301        
Net decrease in cash and cash equivalents and restricted cash     (10,185 )     (42,025 )
Cash and cash equivalents, including restricted cash, beginning of period     89,832       173,956  
Cash and cash equivalents, including restricted cash, end of period   $ 79,647     $ 131,931  
Supplementary cash flow disclosures:                
Cash paid for interest   $ 216     $ 33  
Cash interest received   $ 310     $  
Supplementary disclosures for noncash investing and financing activities:                
Accrued purchases and deposits of property and equipment   $ 3,584     $ 8,457  
Accrued Series D redeemable convertible preferred stock issuance costs   $ 6,868     $  
Non-cash prepaid in-kind services provided by related party in exchange for Series D redeemable convertible preferred stock   $ 13,269     $  
Accrued Business Combination and PIPE issuance costs   $ 4,263     $  

 

See accompanying notes to consolidated financial statements.

 

5

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

1. basis of presentation

 

(a) Basis of Presentation

 

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”). The unaudited financial information reflects, in the opinion of management, all adjustments, consisting of normal recurring adjustments, considered necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods indicated. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the historical audited consolidated financial statements of the Company as of and for the year ended December 31, 2019 and notes thereto included in the VectoIQ Acquisition Corp.’s (“VectoIQ”) proxy statement/prospectus/information statement dated May 8, 2020, filed with the SEC pursuant to Rule 424(b)(3) under the Securities Act of 1933.

 

Unless the context otherwise requires, references in this Exhibit 99.1 to the "Company" and "Nikola" refers to Nikola Subsidiary Corporation (f/k/a Nikola Corporation). The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated.

 

All dollar amounts are in thousands, unless otherwise noted. Share and per share amounts are presented on a post-conversion basis for all periods presented, unless otherwise specified.

 

(b) Funding Risks and Going Concern

 

As an early stage growth company, Nikola’s ability to access capital is critical. Management plans to raise additional capital through a combination of public equity, debt financings, strategic alliances, and licensing arrangements.

 

Additional stock financing may not be available on favorable terms and could be dilutive to current stockholders. Debt financing, if available, may involve restrictive covenants and dilutive financing instruments.

 

The Company’s ability to access capital when needed is not assured and, if capital is not available to the Company when and in the amounts needed, the Company could be required to delay, scale back, or abandon some or all of its development programs and other operations, which could materially harm the Company’s business, financial condition and results of operations.

 

These financial statements have been prepared by management in accordance with GAAP and this basis assumes that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. These financial statements do not include any adjustments that may result from the outcome of this uncertainty.

 

As of the date of this report, the Company’s existing cash resources and existing borrowing availability are sufficient to support planned operations for the next 12 months. As a result, management believes that its existing financial resources are sufficient to continue operating activities for at least one year past the issuance date of the financial statements.

 

2. Summary of Significant Accounting Policies

 

(a) Comprehensive Loss

 

Comprehensive loss includes all changes in equity during a period from non-owner sources. Through March 31, 2020, there are no components of comprehensive loss which are not included in net loss; therefore, a separate statement of comprehensive loss has not been presented. The Company does not have any foreign currency translation adjustments as a component of other comprehensive loss through March 31, 2020, as the functional currency of all subsidiaries is the U.S. Dollar.

 

6

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

(b) Concentration of Credit Risk

 


Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents and accounts receivable. The Company’s cash is placed with high-credit-quality financial institutions and issuers, and at times exceed federally insured limits. The Company limits its concentration of risk in cash equivalents by diversifying its investments among a variety of industries and issuers. The Company has not experienced any credit loss relating to its cash equivalents.

 

(c) Concentration of Supplier Risk

 

The Company is not currently in the production stage and generally utilizes suppliers for outside development and engineering support. The Company does not consider any of their supplies to be critical to their research and development activities and does not believe that there is any significant supplier concentration risk during the periods ended March 31, 2020 and 2019.

 

(d) Cash, Cash Equivalents and Restricted Cash and Cash Equivalents

 


The Company considers all highly liquid investments purchased with a remaining maturity of three months or less to be cash equivalents. Additionally, the Company considers investments in money market funds with a floating net asset value to be cash equivalents. As of March 31, 2020 and December 31, 2019, the Company had
$75.5 million and $85.7 million of cash and cash equivalents, which included cash equivalents of $73.0 million of highly liquid investments at March 31, 2020 and December 31, 2019.

 

As of March 31, 2020 and December 31, 2019, the Company had $4.1 million in an escrow account related to the securitization of the term loan. See Note 6 “Debt” for additional information on the Company’s term loan.

 

The reconciliation of cash and cash equivalents and restricted cash and cash equivalents to amounts presented in the consolidated statements of cash flows are as follows:

 

    As of  
    March 31, 2020     December 31, 2019  
    (in thousands)  
Cash and cash equivalents   $ 75,515     $ 85,688  
Restricted cash – current     4,132        
Restricted cash and cash equivalents – non-current           4,144  
Cash, cash equivalents and restricted cash and cash equivalents   $ 79,647     $ 89,832  

 

(e) Prepaid In-kind Services

 

The Company issues CNH Industrial N.V. (“CNHI”) shares of Series D redeemable convertible preferred stock in exchange for in-kind technical assistance services. When shares are issued, the Company records prepaid in-kind services and amortizes the amount as services are received in research and development costs in the consolidated statement of operations.

 

(f) Fair Value of Financial Instruments

 

7

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

The carrying value and fair value of the Company’s financial instruments are as follows:

 

    As of March 31, 2020  
    (in thousands)  
    Level 1     Level 2     Level 3     Total  
Assets                        
Cash equivalents – money market   $ 73,010                 $ 73,010  
Restricted cash equivalents – money market     4,132                   4,132  
Liabilities                                
Forward contract liability                 1,324       1,324  

 

    As of December 31, 2019  
    (in thousands)  
    Level 1     Level 2     Level 3     Total  
Assets                                
Cash equivalents – money market   $ 73,005                 $ 73,005  
Restricted cash equivalents – money market     4,144                   4,144  

 

In September 2019, the Company entered into an agreement that required the Company to issue and the investor to purchase Series D redeemable convertible preferred stock at a fixed price in April 2020 (the “Forward Contract Liability”), which was accounted for as a liability. The liability was remeasured as of March 31, 2020 and the change in fair value was recognized in other income (expense) on the consolidated statements of operations. The Company settled the liability in April 2020 with the issuance of Series D redeemable convertible preferred stock. The change in fair value of the Forward Contract Liability was as follows:

 

    (in thousands)  
Estimated fair value at December 31, 2019      
Change in fair value     1,324  
Estimated fair value at March 31, 2020   $ 1,324  

 

In determining the fair value of the Forward Contract Liability, estimates and assumptions impacting fair value included the estimated future value of the Company’s Series D redeemable convertible preferred stock, discount rates and estimated time to liquidity. The following reflects the significant quantitative inputs used:

 

    As of  
    March 31, 2020     December 31, 2019  
Estimated future value of Series D redeemable convertible preferred stock   $ 19.01     $ 18.52  
Discount rate     0.05 %     1.56 %
Time to liquidity (years)     0.03       0.3  

 

(g) Redeemable Convertible Preferred Stock

 

The Company records shares of redeemable convertible preferred stock at their respective fair values on the dates of issuance, net of issuance costs. The redeemable convertible preferred stock is recorded outside of stockholders’ deficit on the consolidated balance sheets because the shares contain liquidation features that are not solely within the Company’s control. The Company has elected not to adjust the carrying values of the redeemable convertible preferred stock to the liquidation preferences of such shares because of the uncertainty of whether or when such an event would occur. Subsequent adjustments to increase the carrying values to the liquidation preferences will be made only when it becomes probable that such a liquidation event will occur.

 

8

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

On June 3, 2020, the Company and VectoIQ consummated the merger contemplated by that certain Business Combination Agreement, dated March 2, 2020, by and among the VectoIQ, and VCTIQ Merger Sub Corp., a wholly-owned subsidiary of VectoIQ incorporated in the State of Delaware (the “Business Combination”), with Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ. Immediately before the closing of the Business Combination, all shares of outstanding redeemable convertible preferred stock of the Company converted into shares of common stock of the Company (see Note 12 “Subsequent Events”).

 

(h) Recent Accounting Pronouncements

 

As an emerging growth company (“EGC”), the Jumpstart Our Business Startups Act of 2012, as amended (“JOBS Act”), allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are applicable to private companies. The Company elected to use this extended transition period under the JOBS Act until such time the Company is no longer considered to be an EGC. The adoption dates discussed below reflect this election. Upon completion of the Business Combination in June 2020 (see Note 12 “Subsequent Events”), the Company expects to no longer qualify as an EGC and will revise the adoption dates accordingly in subsequent filings.

 

In February 2016, the FASB issued Accounting Standard Update (“ASU”) 2016-02, Leases (Topic 842), to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018, ASU 2018-10, Codification Improvements to Topic 842, Leases, was issued to provide more detailed guidance and additional clarification for implementing ASU 2016-02. Furthermore, in July 2018, the FASB issued ASU 2018-11, Leases (Topic 842): Targeted Improvements, which provides an optional transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These new leasing standards are effective for the Company beginning January 1, 2021, with early adoption permitted. The Company is currently evaluating the effect of the adoption of this guidance on the consolidated financial statements.

 

In June 2016, the FASB issued ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses of Financial Instruments, which, together with subsequent amendments, amends the requirement on the measurement and recognition of expected credit losses for financial assets held. ASU 2016-13 is effective for the Company beginning January 1, 2023, with early adoption permitted. The Company is currently in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a material impact on the consolidated financial statements.

 

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which is intended to simplify various aspects related to accounting for income taxes. The pronouncement is effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. ASU 2019-12 is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company is currently in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a material impact on the consolidated financial statements.

 

In January 2020, the FASB issued ASU No. 2020-01, Investments – Equity Securities (Topic 321), Investments - Equity Method and Joint Ventures (Topic 323), and Derivative and Hedging (Topic 815), which addresses accounting for the transition into and out of the equity method and provides clarification of the interaction of rules for equity securities, the equity method of accounting, and forward contracts and purchase options on certain types of securities. ASU 2020-01 is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company is currently in the process of evaluating the effects of this pronouncement on the Company’s financial statements and does not expect it to have a material impact on the consolidated financial statements.

 

9

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

3. Balance Sheet Components

 

Prepaid Expenses and Other Current Assets

 

Prepaid expenses and other current assets consisted of the following at March 31, 2020 and December 31, 2019, respectively:

 

    As of  
    March 31, 2020     December 31, 2019  
    (in thousands)  
Deferred stock issuance costs   $ 4,656     $  
Materials and supplies     1,859       1,872  
Other current assets     1,327       2,551  
Total prepaid expenses and other current assets   $ 7,842     $ 4,423  

 

Deferred stock issuance costs consist of specific incremental expenses directly attributable to the Business Combination and related PIPE investment. These expenses will offset proceeds received from the transactions in the second quarter of 2020.

 

Property and Equipment

 

Property and equipment consisted of the following at March 31, 2020 and December 31, 2019, respectively:

 

    As of  
    March 31, 2020     December 31, 2019  
    (in thousands)  
Machinery and equipment   $ 13,653     $ 13,483  
Furniture and fixtures     1,404       1,228  
Leasehold improvements     1,421       1,437  
Software     2,575       1,909  
Building     33,248       33,248  
Construction-in-progress     5,567       4,264  
Other     1,404       1,309  
Property and equipment, gross     59,272       56,878  
Less: accumulated depreciation and amortization     (4,836 )     (3,500 )
Total property and equipment, net   $ 54,436     $ 53,378  

 

Depreciation expense for the three months ended March 31, 2020 and 2019 was $1.3 million and $0.2 million, respectively.

 

10

 

 

 

NIKOLA CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(UNAUDITED)

 

Accrued Expenses and Other Current Liabilities

 

Accrued expenses and other current liabilities consisted of the following at March 31, 2020 and December 31, 2019, respectively:

 

    As of  
    March 31, 2020     December 31, 2019  
    (in thousands)  
Accrued payroll and payroll related expenses   $ 1,007     $ 1,385  
Accrued stock issuance costs     10,761       4,695  
Accrued outsourced engineering services     2,461       2,722  
Other accrued expenses     1,341       1,480  
Current portion of lease financing liability     683       660  
Total accrued expenses and other current liabilities   $ 16,253     $ 10,942  

 

4. intangible assets, net

 

The gross carrying amount and accumulated amortization of separately identifiable intangible assets are as follows:

 

    As of March 31, 2020  
    Gross Carrying
Amount
    Accumulated
Amortization
    Net Carrying
Amount
 
    (in thousands)  
In-process R&D   $ 12,110     $     $ 12,110  
Trademarks     394       (79 )     315  
Licenses     50,150       (78 )     50,072  
Total intangible assets   $ 62,654     $ (157 )   $ 62,497  

 

    As of December 31, 2019  
    Gross Carrying
Amount
    Accumulated
Amortization
    Net Carrying
Amount
 
    (in thousands)  
In-process R&D   $ 12,110     $     $ 12,110  
Trademarks     394       (71 )     323  
Licenses     50,150       (70 )     50,080  
Total intangible assets   $ 62,654     $ (141 )   $ 62,513  

 

Amortization expense for the three months ended March 31, 2020 and 2019 was immaterial.

 

5. Related partY transactions

 

Related Party License and Service Agreements

 

In September 2019, the Company entered into a Master Industrial Agreement (“CNHI Services Agreement”) and S-WAY Platform and Product Sharing Agreement (“CNHI License Agreement”) with CNHI and Iveco S.p.A (“Iveco”), in conjunction with the Company’s Series D redeemable convertible preferred stock offering. Under these agreements, the Company will issue CNHI and Iveco 13,498,921 shares of Series D redeemable convertible preferred stock in exchange for a license valued at $50.0 million, $100.0 million in-kind services and $100.0 million in cash. CNHI is a related party to the Company as CNHI is represented by a member on the Company’s board of directors. In February 2020, the Company and CNHI amended the Series D Purchase Agreement for future sales and issuances of Series D redeemable convertible preferred stock to CNHI and its affiliates. The Company will issue CNHI and its affiliates the remaining previously committed shares of Series D redeemable convertible preferred stock in exchange for cash and in-kind service contributions by the second quarter of 2020.

 

11

 

 

NIKOLA CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(UNAUDITED)

 

During the three months ended March 31, 2020, the Company issued 1,079,914 shares of Series D redeemable convertible preferred stock to Iveco in exchange for $20.0 million in-kind services, with $6.7 million of in-kind services recognized in research and development on the consolidated statements of operations and $13.3 million of prepaid in-kind services recognized on the consolidated balance sheets.

 

Related Party Aircraft Charter Agreement

 

In 2019, the Company entered into an aircraft charter arrangement with the Company’s Chief Executive Officer (the “CEO”) to reimburse the CEO for the flight hours incurred for Company use on his personal aircraft. These flight hours are related to business travel by the CEO and other members of the executive team to business meetings and trade conferences, as well as the CEO’s commute between the Company’s headquarters in Phoenix, Arizona and the CEO’s residence in Utah. During the three months ended March 31, 2020 and 2019 the Company reimbursed $0.2 million and zero, respectively, to the CEO for the use of the CEO’s aircraft. As of March 31, 2020 and December 31, 2019 the Company had $0.2 million and $0.03 million, respectively, outstanding in accounts payable and accrued expenses to the CEO for the use of the CEO’s aircraft.

 

Related Party Revenue and Accounts Receivable

 

During the three months ended March 31, 2020 and 2019 the Company recorded revenues of $47 thousand and $24 thousand, respectively, for the provision of solar installation services to the CEO. As of March 31, 2020 and December 31, 2019, the Company had $30 thousand and $51 thousand, respectively, outstanding in accounts receivable related to solar installation services from the CEO. Subsequent to March 31, 2020 the receivable was paid and there are no outstanding receivables remaining from the CEO.

 

Related Party Research and Development and Accounts Payable

 

During the three months ended March 31, 2020 and 2019, the Company recorded research and development expenses of $0.9 million and $5.1 million, respectively, from a related party. As of March 31, 2020, the Company had $0.3 million of accounts payable due to related parties and $0.8 million of accrued expenses due to related parties. As of December 31, 2019, the Company had $0.6 million of accounts payable due to related parties and $0.5 million of accrued expenses due to related parties. Accounts payable and accrued expenses with related parties primarily consists of outside development and other research and development expenses.

 

Related Party Stock Options

 

In December 2018, the CEO issued 3,158,949 performance-based stock options to recognize the performance and contribution of specific employees. The underlying common stock of these option awards are owned by the CEO and are considered to be issued by the Company for accounting purposes. These performance-based stock options vest based on the Company’s achievement of a liquidation event, such as a private sale or an initial public offering on a U.S. stock exchange. The weighted average grant date fair value of the performance-based stock options was $1.19 for the year ended December 31, 2018. As of March 31, 2020, these option awards have not vested and the unrecognized stock-based compensation expense related to these option awards is $3.8 million. Stock-based compensation expense of $3.8 million will be recognized upon close of the Business Combination with VectoIQ and subsequent public listing of the Company in the second quarter of 2020.

 

12

 

 

NIKOLA CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENT 

(UNAUDITED)

 

Related Party Stock Repurchase

 

In September 2019, in contemplation of Nikola’s proposed Series D financing round, Nikola entered into an amendment of the Nimbus Redemption Letter Agreement with Nimbus Holdings LLC (“Nimbus”) (the “Amendment”). Pursuant to the terms of the Amendment and the Series B preferred stock repurchase agreement, Nikola agreed to repurchase 1,880,984 shares of Series B preferred stock held by Nimbus, at the share price of $16.67 which is equal to 90% of the share price in the Series D financing round of $18.52 per share. The number of shares to be repurchased exceeded five percent (5%) of the contemplated Series D round of financing. This was negotiated by Nikola in order to reduce the total number of shares of Series B preferred stock held by Nimbus, to such an extent that Nimbus would no longer be entitled to elect a member of the Company’s board of directors as a result of Nimbus’ Series B preferred stock holdings. The repurchase was completed in October 2019, for an aggregate repurchase amount of $31.4 million. The Amendment also provided Nimbus with additional redemption rights based on various capital raise thresholds, none of which were met as of December 31, 2019.

 

In March 2020, Nikola entered into an additional letter agreement with Nimbus in which Nimbus agreed to terminate the Nimbus Redemption Letter Agreement. Concurrently, Nikola entered into an agreement with Nimbus, whereby Nikola agreed to repurchase an additional 1,499,700 shares of Series B preferred shares from Nimbus at a share price of $16.67 for an aggregate repurchase price of $25.0 million. The parties agreed that the repurchase price constituted the price that Nimbus would otherwise be entitled to under the Nimbus Redemption Letter Agreement. The number of shares to be repurchased was negotiated by Nikola and Nimbus as a mechanism to compensate Nimbus for agreeing to relinquish its previous redemption rights granted in the Nimbus Redemption Letter Agreement. The repurchase occurred in conjunction with the Business Combination during the second quarter of 2020.

 

6. DEBT

 

Term Note

 

Debt consisted of a term note for $4.1 million as of March 31, 2020 and December 31, 2019.

 

In January 2018, the Company entered into a term note with JP Morgan Chase where the Company borrowed $4.1 million to fund equipment purchases. The term note accrues interest at 2.43% per annum and is payable on or before January 31, 2019. The term note is secured by restricted cash.

 

In February 2019, the Company amended the term note to extend its term by one year and increased the interest rate to 3.00% per annum. In February 2020, the Company amended the term note to extend its term for one year, to January 31, 2021. The term note accrues interest at a rate equal to the LIBOR rate for the applicable interest period multiplied by the statutory reserve rate as determined by the Federal Reserve Board. The term loan has a financial covenant that requires the Company to maintain a minimum amount of liquidity with the bank. As of March 31, 2020, the Company was in compliance with the financial covenant.

 

7. CAPITAL STRUCTURE

 

Shares Authorized and Outstanding

 

As of March 31, 2020 the Company had authorized a total of 366,651,920 shares for issuance with 237,000,000 shares designated as common shares and 129,651,920 shares designated as preferred shares.

 

Redeemable Convertible Preferred Stock

 

In January and March 2020, the Company raised $13.4 million through the issuance of 718,257 Series D redeemable convertible preferred stock at an $18.56 per share average, incurring $2.7 million of issuance costs. As such, the Company received aggregate net proceeds of $10.7 million. As of March 31, 2020, $2.2 million of the issuance costs is included in accrued liabilities on the consolidated balance sheet. The Company also issued an additional 1,079,914 shares of Series D redeemable convertible preferred stock for in-kind services valued at $20.0 million during the three months ended March 31, 2020.

 

13

 

 

NIKOLA CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(UNAUDITED)

 

The following table summarizes the shares authorized, issued, and outstanding, price per share, net carrying value, and liquidation preference of the redeemable convertible preferred stock of the Company as of March 31, 2020:

 

    Shares
Authorized
    Shares
Issued and
Outstanding
    Price per
Share
    Net
Carrying
Value
    Liquidation
Preference
 
          (in thousands, except share and per share data)  
Series AA     10,020,000       10,020,000     $ 0.05     $ 501     $ 526  
Series BB     29,980,000       29,980,000       0.05       1,499       1,574  
Series A     5,606,671       5,606,671       3.00       16,774       17,661  
Series B     4,904,050       4,904,050       7.73       37,908       37,908  
Series C     25,145,519       25,145,519       8.59       209,000       216,000  
Series D     53,995,680       8,439,673       18.52       148,982       156,303  
Total convertible preferred stock     129,651,920       84,095,913             $ 414,664     $ 429,972  

 

The following table summarizes the shares authorized, issued, and outstanding, price per share, net carrying value, and liquidation preference of the redeemable convertible preferred stock of the Company as of December 31, 2019:

 

    Shares
Authorized
    Shares
Issued and
Outstanding
    Price per
Share
    Net
Carrying
Value
    Liquidation
Preference
 
    (in thousands, except share and per share data)  
Series AA     10,020,000       10,020,000     $ 0.05     $ 501     $ 526  
Series BB     29,980,000       29,980,000       0.05       1,499       1,574  
Series A     5,606,671       5,606,671       3.00       16,774       17,661  
Series B     4,904,050       4,904,050       7.73       37,908       37,908  
Series C     25,145,519       25,145,519       8.59       209,000       216,000  
Series D     53,995,680       6,641,502       18.52       118,305       123,001  
Total convertible preferred stock     129,651,920       82,297,742             $ 383,987     $ 396,670  

 


There have been no changes to various rights, privileges, and preferences to the holders of redeemable convertible preferred shares for the three months ended March 31, 2020.

 

In conjunction with the Business Combination in June 2020, all shares of outstanding redeemable convertible preferred stock were converted into shares of common stock. See Note 12 “Subsequent Events” for further details on the transaction and share conversion.

 

8. Stock-Based Compensation Expense

 

Stock Option Plan

 

The Nikola Corporation 2017 Stock Option Plan (the “2017 Plan”) provides for the grant of incentive and nonqualified options to purchase the Company’s common stock to select officers, key employees, directors, and consultants. Options are granted at a price not less than the fair market value on the date of grant and generally become exercisable between one and four years after the date of grant. Options generally expire ten years from the date of grant.

 

14

 

 

NIKOLA CORPORATION 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

(UNAUDITED)

 

Common Stock Valuation

 

The fair value of the common stock that underlies the stock options is determined by the board of directors based upon information available at the time of grant. Because there is no public market for the common stock, the Company’s board of directors determined the fair value of the Company’s common stock based on periodic valuation studies from an independent third-party valuation firm.

 

In performing its valuation analysis, the valuation firm engaged in discussions with management, evaluated key milestone achievements, analyzed historical and forecasted financial statements and reviewed corporate documents. In addition, these valuation studies were based on a number of assumptions, including industry, general economic, market and other conditions that could reasonably be evaluated at the time of the valuation.

 

Stock Option Valuation

 

The Company utilizes the Black-Scholes option pricing model for estimating the fair value of options granted, which requires the input of highly subjective assumptions.

 

The Company calculates the fair value of each option grant on the grant date using the following assumptions:

 

Expected Term - The Company uses the simplified method when calculating expected term due to insufficient historical exercise data.

 

Expected Volatility - As the Company’s shares are not actively traded, the volatility is based on a benchmark of comparable companies within the automotive and energy storage industries.

 

Expected Dividend Yield - The dividend rate used is zero as the Company does not have a history of paying dividends on its common stock and does not anticipate doing so in the foreseeable future.

 

Risk-Free Interest Rate - The interest rates used are based on the implied yield available on U.S. Treasury zero-coupon issues with an equivalent remaining term equal to the expected life of the award.

 

    As of  
    March 31, 2020     December 31, 2019  
Exercise price   $ 6.81       $2.00 – $6.81  
Risk-free interest rate     0.93% - 1.70%       1.44% – 2.65%  
Expected term (in years)     5.3 – 6.3       5.0 – 6.3  
Expected dividend yield            
Expected volatility     83.6% - 84.8%       70.0% – 85.1%  

 

The following table presents the impact of stock-based compensation expense on the consolidated statements of operations for the three months ended March 31, 2020 and 2019:

 

    Three Months Ended March 31,  
    2020     2019  
Research and development   $ 359     $ 150  
Selling, general, and administrative     954       1,003  
Total stock-based compensation expense   $ 1,313     $ 1,153  

 

The unrecognized compensation cost of stock options as of March 31, 2020 was $12.8 million, which is expected to be recognized over the weighted average remaining service period of 3.2 years. As of March 31, 2020, there were 12,215,598 shares available for future issuance under the 2017 Plan. In connection with the Business Combination, certain stock options vesting period was accelerated and the Company recorded an additional $8.1 million of expense during the second quarter of 2020.

 

15

 

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Performance Based Stock Options

 

As of March 31, 2020 and December 31, 2019 the outstanding performance-based options (“PSUs”) issued by the Company were 2,710,934. No PSUs were granted in during the three months ended March 31, 2020. The 2,710,934 PSUs outstanding as of March 31, 2020 have a vesting condition based on the achievement of specified amounts of equity capital raised by the Company subsequent to the grant date. The performance-based provision was achieved for all of the outstanding performance-based award and the Company began recognizing expense related to these PSUs in 2018.

 

The 2,710,934 PSUs outstanding as of March 31, 2020 does not include PSUs issued by a related party. See Note 5, “Related Party Transactions” for additional information regarding the related party PSUs.

 

Stock Option Activity

 

Changes in stock options are as follows:

 

    Options     Weighted
Average
Exercise Price
Per share
    Weighted Average
Remaining Contractual Term
(Years)
    Aggregate
Intrinsic
Value
 
                      (in thousands)  
Outstanding at December 31, 2019     21,048,742     $ 2.06       8.78     $ 99,999  
Granted     597,258     $ 6.81                  
Exercised     646     $ 3.85                  
Cancelled     32,929     $ 3.59                  
Outstanding at March 31, 2020     21,612,425     $ 2.19       8.65     $ 349,714  
Vested and exercisable as of March 31, 2020     18,377,394     $ 2.02       8.62     $ 300,470  

 

The weighted-average grant date fair value of stock options issued for the three months ended March 31, 2020 were $4.80. There were 646 stock options exercised during the three months ended March 31, 2020 and the total intrinsic value of stock options exercised is immaterial.

 

Related Party Performance-based Stock Options Activity

 

In December 2018, the CEO issued 3,158,949 PSUs to certain employees. The weighted average exercise price per share was $2.00 and the weighted-average grant date fair value of these PSUs was $1.19. There were no PSUs issued by the CEO in the periods ended March 31, 2020 and December 31, 2019. As of March 31, 2020, the weighted average remaining contractual term of these PSUs is 8.75 years and the aggregate intrinsic value of these PSUs is $51.7 million. There were no PSUs vested or exercised as of March 31, 2020. All PSUs vested in conjunction with the Business Combination in June 2020.

 

9. INCOME TAXES

 

To calculate the interim tax provision, at the end of each interim period the Company estimates the annual effective tax rate and applies that to its ordinary quarterly earnings. The effect of changes in the enacted tax laws or rates is recognized in the interim period in which the change occurs. The computation of the annual estimated effective tax rate at each interim period requires certain estimates and judgments including, but not limited to, the expected operating income for the year, projections of the proportion of income earned and taxed in foreign jurisdictions, permanent differences between book and tax amounts, and the likelihood of recovering deferred tax assets generated in the current year. The accounting estimates used to compute the provision for income taxes may change as new events occur, additional information is obtained, or the tax environment changes.

 

16

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Income tax expense was $1 thousand and $2 thousand for the three months ended March 31, 2020 and 2019, respectively. The effective income tax rate was nil for three months ended March 31, 2020 and 2019. The Company’s effective tax rate differs from the U.S. statutory rate primarily due to a full valuation allowance against its net deferred tax assets where it is more likely than not that some or all of the deferred tax assets will not be realized.

 

10. COMMITMENTS AND CONTINGENCIES

 

Legal Proceedings

 

The Company is subject to legal and regulatory actions that arise from time to time in the ordinary course of business. The assessment as to whether a loss is probable or reasonably possible, and as to whether such loss or a range of such loss is estimable, often involves significant judgment about future events. In the opinion of management, there was not at least a reasonable possibility the Company may have incurred a material loss with respect to loss contingencies for asserted legal and other claims. However, the outcome of litigation is inherently uncertain. There is no material pending or threatened litigation against the Company that remains outstanding as of March 31, 2020.

 

Commitments and Contingencies on Land Conveyance

 

In February 2019, the Company was conveyed 430 acres of land in Mesa, Arizona by Pinal Land Holdings, LLC (“PLH”). The purpose of the land conveyance was to incentivize the Company to locate their manufacturing facility in Mesa and provide additional jobs to the region. The Company is required to commence construction of the manufacturing facility within two years of February 2019 (the “Manufacturing Facility Commencement Deadline”), and is required to complete construction of their manufacturing facility within five years of February 2019 (the “Manufacturing Facility Deadline”).

 

Upon the earlier of the Manufacturing Facility Commencement Deadline or the commencement of construction, the Company will deposit $4.0 million in escrow to PLH. The amount in escrow will be returned to the Company upon completion of construction.

 

If the Company fails to achieve the Manufacturing Facility Commencement Deadline, the Company has the option to extend the deadline for one year by providing written notice to PLH and paying PLH $0.5 million. In the event the Company fails to achieve extended deadline, PLH is entitled to either the $4.0 million security deposit, or to purchase the 430 acres of land from the Company at a price equal to out of pocket costs and expenses incurred by the Company prior to the Manufacturing Facility Commencement Deadline.

 

If the Company fails to achieve the Manufacturing Facility Deadline, the Company may extend the completion deadline by paying PLH $0.2 million per month, until construction is completed. The extension of the Manufacturing Facility Deadline beyond two years will require express written consent of PLH. If the Company does not exercise the Monthly Payment Option, fails to make timely payments on the Monthly Payment Option, or fails to complete construction by the extended Manufacturing Facility Deadline, PLH is entitled to either the $4.0 million security deposit or may reacquire the land and property at the appraised value to be determined by independent appraisers selected by the Company and PLH.

 

Contingent Fee for Advisory Services

 

In January 2020, the Company entered into an agreement to obtain advisory services for the potential Business Combination. The fee for the services is contingent upon completion of the Business Combination. The Company considered the likelihood of the Business Combination consummating as probable and has accrued $3.0 million as of March 31, 2020.

 

17

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

Contingent Fee for Marketing Services

 

In February 2020, the Company entered into an agreement with a consultant for the marketing of battery-electric vehicle (“BEV”) / hydrogen fuel cell electric vehicle (“FCEV”) hybrid pickup truck. Under the agreement, should the Company accept reservation fees from prospective customers to purchase one or more pickup trucks, for every $100 in reservation fees, the Company will issue 10 shares of common stock to the consultant for up to a maximum of 2,000,000 shares. The Company also agreed to reimburse the consultant up to $5.0 million in marketing costs. As of March 31, 2020 the Company has not started accepting reservation fees for the FCEV/BEV hybrid pickup truck.

 

11. Net LOSS PER SHARE

 

The following table sets forth the computation of the basic and diluted net loss per share attributable to common stockholders for the three months ended March 31, 2020 and 2019.

 

    Three Months Ended March 31,  
    2020     2019  
    (in thousands, except share and per share data)  
Numerator:                
Net loss   $ (33,163 )   $ (30,097 )
Denominator:                
Weighted average shares outstanding, basic and diluted     60,167,749       60,166,667  
Net loss per share to common stockholder, basic and diluted   $ (0.55 )   $ (0.50 )

 

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share for all periods as the inclusion of all potential common shares outstanding would have been anti-dilutive.

 

The following weighted-average outstanding common stock equivalents were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented because including them would have been anti-dilutive.

 

    Three Months Ended March 31,  
    2020     2019  
Series AA redeemable convertible preferred stock     10,020,000       10,020,000  
Series BB redeemable convertible preferred stock     29,980,000       29,980,000  
Series A redeemable convertible preferred stock     5,606,672       4,888,671  
Series B redeemable convertible preferred stock     4,904,050       6,785,034  
Series C redeemable convertible preferred stock     25,145,520       25,145,519  
Series D redeemable convertible preferred stock     7,203,860        
Stock options, including performance stock options     15,904,649        
Total     98,764,751       76,817,224  

 

18

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

12. SUBSEQUENT EVENTS

 

Business Combination and Share Conversion

 

On June 3, 2020, the Company and VectoIQ consummated the merger contemplated by the business combination agreement, with Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ. Immediately prior to the closing of the Business Combination, all shares of outstanding redeemable convertible preferred stock were automatically converted into an aggregate of 89.2 million shares of Legacy Nikola common stock. Upon consummation of the Business Combination each share of Legacy Nikola common stock issued and outstanding was canceled and converted into the right to receive the number of shares of common stock (the “Per Share Merger Consideration”) equal to the exchange ratio of 1.901 (the “Exchange Ratio”).

 

Upon the Closing of the Business Combination, Nikola’s certificate of incorporation was amended and restated to increase the total number of authorized shares of all classes of capital stock to 750 million, of which 600 million shares shall be Common Stock, $0.0001 par value per share, and of which 150 million shares shall be Preferred Stock, $0.0001 par value per share.

 

In connection with the execution of the Business Combination, VectoIQ entered into separate subscription agreements (each, a “Subscription Agreement”) with a number of investors (each a “Subscriber”), pursuant to which the Subscribers agreed to purchase, and VectoIQ agreed to sell to the Subscribers, an aggregate of 52,500,000 shares of common stock (the “PIPE Shares”), for a purchase price of $10.00 per share and an aggregate purchase price of $525.0 million, in the PIPE. The PIPE investment closed simultaneously with the consummation of the Business Combination.

 

The gross proceeds from the Business Combination and PIPE Shares totaled $763.2 million, incurring $52.3 million in transaction fees, for net proceeds of $710.9 million. Net proceeds excludes payments for redemptions of M&M Residual for $70.0 million and repurchase of Nimbus Series B convertible redeemable preferred shares for $25.0 million.

 

The Business Combination will be accounted for as a reverse merger in accordance with U.S. GAAP. Under this method of accounting, VectoIQ will be treated as the “acquired” company for financial reporting purposes. This determination was primarily based on Nikola shareholders having a majority of the voting power of the combined company, Nikola comprising the ongoing operations of the combined entity, Nikola comprising a majority of the governing body of the combined company, and Nikola’s senior management comprising the senior management of the combined company. Accordingly, for accounting purposes, the Business Combination will be treated as the equivalent of Nikola issuing stock for the net assets of VectoIQ, accompanied by a recapitalization. The net assets of VectoIQ will be stated at historical cost, with no goodwill or other intangible assets recorded.

 

Joint Venture

 

In April 2020, the Company and Iveco entered into a series of agreements which established a joint venture in Europe, Nikola Iveco Europe B.V. The operations expected to be performed by the joint venture consist of the development and manufacturing of the BEV and FCEV trucks for the European market, as well as for the North American market while Nikola’s greenfield manufacturing facility in Coolidge, Arizona is being completed. The operations of the joint venture are expected to commence in the third quarter of fiscal 2020.

 

The agreements provide for a 50/50 ownership of the joint venture and a 50/50 allocation of the joint venture’s production volumes and profits between Nikola and Iveco. Both parties are entitled to appoint an equal number of board members to the board of Nikola Iveco Europe B.V. Pursuant to the terms of the agreements, the Company and Iveco each contributed intellectual property licenses to their respective technology, and agreed to contribute approximately $8.0 million in cash for a 50.0% interest in Nikola Iveco Europe B.V. The intellectual property licenses contributed to the joint venture by Nikola are related to intellectual property related to Nikola-developed BEV and FCEV technology for the use in the European market. Iveco contributed to the joint venture a license for the S-WAY technology for use in the European market.

 

The Company is in the process of evaluating the joint venture under ASC Topic 810-10, Consolidations. The Company will complete the analysis and plans to disclose the accounting for the joint venture in its financial statements for the quarter ending June 30, 2020.

 

Borrowings

 

In April 2020, the Company entered into a Note with JP Morgan Chase under the Small Business Administration Paycheck Protection Program established under Section 1102 of the Coronavirus Aid, Relief and Economic Security (CARES) Act, pursuant to which the Company borrowed $4.1 million. The Note accrues interest at rate of 0.98% per annum and matures in 24 months.

 

19

 

 

NIKOLA CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

 

On April 30, 2020, the Company returned the $4.1 million in proceeds from the Note to JP Morgan Chase, originally obtained under the Small Business Administration Paycheck Protection Program.

 

Series D Issuance

 

In April 2020, the Company fulfilled the Forward Contract Liability and issued CNHI, a related party, 2,699,784 shares of Series D redeemable convertible preferred stock at a price of $18.52 resulting in gross proceeds of $50.0 million. In June 2020, the Company issued CNHI 3,887,658 shares of Series D redeemable convertible preferred stock for $72.0 million of prepaid in-kind services.

 

20

 

 

Exhibit 99.2

 

UNAUDITED PRO FORMA

CONDENSED COMBINED FINANCIAL INFORMATION

 

Defined terms included below shall have the same meaning as terms defined and included elsewhere in the Current Report on Form 8-K (the “Form 8-K”) filed with the Securities and Exchange Commission (the “SEC”) on June 8, 2020. Unless the context otherwise requires, the “Company” refers to Nikola Corporation (“Nikola”) (f/k/a VectoIQ Acquisition Corp.) and its subsidiaries after the Closing, and VectoIQ Acquisition Corp.(“VectoIQ”) prior to the Closing.

 

The following unaudited pro forma condensed combined financial statements of VectoIQ present the combination of the financial information of VectoIQ and Legacy Nikola adjusted to give effect to the Business Combination and related transactions. The following unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2020 combines the historical balance sheet of VectoIQ and the historical balance sheet of Legacy Nikola on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on March 31, 2020. The unaudited pro forma condensed combined statements of operations for the three months ended March 31, 2020 and the year ended December 31, 2019 combine the historical statements of operations of VectoIQ and Legacy Nikola for such periods on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on January 1, 2019, the beginning of the earliest period presented:

 

· the merger of Legacy Nikola with and into Merger Sub, a wholly owned subsidiary of VectoIQ, with Legacy Nikola surviving the merger as a wholly-owned subsidiary of VectoIQ;

 

· the issuance and sale of 52,500,000 shares of Common Stock for a purchase price of $10.00 per share and an aggregate purchase price of $525 million in the PIPE pursuant to the Subscription Agreements;

 

· the issuance of 2,699,784 shares of Legacy Nikola’s Series D redeemable convertible preferred stock in exchange for $50.0 million in cash pursuant to the amended Series D Preferred Stock Purchase Agreement and 3,887,657 shares of Nikola’s Series D redeemable convertible preferred stock in exchange for $72.0 million in-kind services provided by CNHI/Iveco under the Master Industrial Agreement (the “CNHI Services Agreement”);

 

· the repurchase of 1,499,700 shares of Legacy Nikola’s Series B redeemable convertible preferred stock at the price of $16.67 per share for an aggregate purchase price of $25.0 million pursuant to a Series B preferred stock repurchase agreement (the “Repurchase Agreement” ) with Nimbus Holdings LLC (“Nimbus” );

 

· the exercise of 935,345 Legacy Nikola stock options; and

 

· the redemption of 7,000,000 shares of Common Stock from M&M Residual, LLC at a purchase price of $10.00 per share.

 

The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial statements to give pro forma effect to events that are: (i) directly attributable to the Business Combination; (ii) factually supportable; and (iii) with respect to the statement of operations, expected to have a continuing impact on VectoIQ's results following the completion of the Business Combination.

 

The unaudited pro forma condensed combined financial statements have been developed from and should be read in conjunction with:

 

the accompanying notes to the unaudited pro forma condensed combined financial statements;

 

the (i) historical condensed unaudited financial statements of VectoIQ as of and for the three months ended March 31, 2020 and (ii) historical audited financial statements of VectoIQ as of and for the year ended December 31, 2019 and the related notes, each of which is incorporated by reference;

 

 

 

 

the (i) historical condensed unaudited financial statements of Legacy Nikola as of and for the three months ended March 31, 2020, which is attached as an exhibit to this filing and incorporated by reference and (ii) historical audited financial statements of Legacy Nikola as of and for the year ended December 31, 2019 and the related notes, which is incorporated by reference; and

 

other information relating to VectoIQ and Legacy Nikola contained in the Proxy Statement, including the Business Combination Agreement and the description of certain terms thereof set forth in the section entitled “The Business Combination.”

 

Pursuant to VectoIQ’s existing amended and restated certificate of incorporation, Public Stockholders (as defined in the Proxy Statement) were offered the opportunity to redeem, upon the closing of the Business Combination, shares of VectoIQ Common Stock then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the Closing) in the Trust Account (as defined in the Proxy Statement). The unaudited condensed combined pro forma financial statements reflect actual redemption of 2,702 shares of VectoIQ Common Stock at $10.37 per share.

 

Notwithstanding the legal form of the Business Combination pursuant to the Business Combination Agreement, the Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, VectoIQ is treated as the acquired company and Nikola is treated as the acquirer for financial statement reporting purposes. Legacy Nikola has been determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

Legacy Nikola’s existing shareholders have the greatest voting interest in the combined entity with over 77% voting interest;

 

the largest minority voting shareholder of the combined entity is an existing shareholder of Legacy Nikola;

 

Legacy Nikola’s directors represent eight of the nine board seats for the combined company’s board of directors;

 

Legacy Nikola’s existing shareholders have the ability to control decisions regarding election and removal of directors and officers of the combined entity’s executive board of directors; and

 

Legacy Nikola’s senior management is the senior management of the combined company.

 

Assumptions and estimates underlying the unaudited pro forma adjustments set forth in the unaudited pro forma condensed combined financial statements are described in the accompanying notes. The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and are not necessarily indicative of the operating results and financial position that would have been achieved had the Business Combination occurred on the dates indicated. Further, the unaudited pro forma condensed combined financial statements do not purport to project the future operating results or financial position of VectoIQ following the completion of the Business Combination. The unaudited pro forma adjustments represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed.

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF MARCH 31, 2020

(in thousands)

 

    As of March 31, 2020           As of March 31,
2020
 
    VectoIQ
Acquisition
Corp
(Historical)
    Nikola
Corporation
(Historical)
      Pro Forma
Adjustments
      Pro Forma
Combined
 
ASSETS                        
Current assets:                                
Cash and cash equivalents   $ 1,150     $ 75,515     $ 668,266 (A)   $ 744,931  
Restricted cash     -       4,132       -       4,132  
Accounts receivable, net     -       447       -       447  
Prepaid in-kind services     -       13,269       72,000 (B)     85,269  
Prepaid expenses and other current assets     7       7,842       (4,656 )(E)     3,193  
Total current assets     1,157       101,205       735,610       837,972  
                                 
Cash held in Trust Account     238,378       -       (238,378 )(G)     -  
Investments held in Trust account     -       -       -       -  
Restricted cash and cash equivalents     -       -       -       -  
Long-term deposits     -       14,540       -       14,540  
Property and equipment, net     -       54,436       -       54,436  
Intangible assets, net     -       62,497       -       62,497  
Goodwill     -       5,238       -       5,238  
Other assets     -       54       -       54  
Total Assets   $ 239,535     $ 237,970     $ 497,232     $ 974,737  
                                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                                
                                 
Current liabilities:                                
Accounts payable     139       7,783       (369 )(E)     7,553  
Accounts payable due to related parties     -       285       -       285  
Accrued expenses and other current liabilities     -       16,253       (3,923 )(J)     12,330  
Accrued expenses due to related parties     -       791       -       791  
Accrued liabilities     80       -       -       80  
Accrued income tax payable     695       -       -       695  
Note Payable     422       -       (422 )(L)     -  
Forward contract liability     -       1,324       (1,324 )(B)     -  
Term note - current     -       4,100       -       4,100  
Total current liabilities     1,336       30,536       (6,038 )     25,834  
                                 
Term note     -       -       -       -  
Other long-term liabilities     -       12,024       -       12,024  
Deferred tax liabilities, net     -       1,073       -       1,073  
Total liabilities     1,336       43,633       (6,038 )     38,931  
                                 
Commitments and contingencies                                
Redeemable convertible preferred stock - subject to possible redemption     -       414,664       (414,664 )(M)     -  
Common shares subject to possible redemption     233,199       -       (233,199 )(N)     -  
                                 
Stockholders’ equity (deficit):                                
Common Stock     1       -       35 (O)     36  
Legacy Nikola Common Stock     -       1       (1 )(Q)     -  
Additional paid-in capital     4,999       1,315       1,166,653 (R)     1,172,967  
Accumulated deficit     -       (221,643 )     (15,554 )(V)     (237,197 )
Total stockholders’ equity (deficit)     5,000       (220,327 )     1,151,133       935,806  
                                 
Total liabilities and stockholders’ equity (deficit)   $ 239,535     $ 237,970     $ 497,232     $ 974,737  

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2020

(in thousands, except share and per share data)

 

    Three Months Ended March 31, 2020             Three Months
Ended March
31, 2020
 
    VectoIQ
Acquisition Corp
(Historical)
    Nikola Corporation
(Historical)
    Pro Forma
Adjustments
      Pro Forma
Combined
 
Revenues   $ -     $ 58     $ -         $ 58  
                                     
Costs and expenses:                                    
Cost of goods sold     -       43       -           43  
Operating expenses                                    
Research and development     -       24,053       -           24,053  
Selling, general, and administrative     699       7,978       1,653    (AA)       10,330  
Total costs and expenses     699       32,074       1,653           34,426  
                                     
Loss from operations     (699 )     (32,016 )     (1,653 )         (34,368 )
                                     
Other income (expense)                                    
Investment income in Trust account     759       -       (759 )  (DD)       -  
Interest income     -       64       -           64  
Loss on forward contract liability     -       (1,324 )     1,324    (EE)       -  
Other income, net     -       114       -           114  
Loss before income taxes     60       (33,162 )     (1,088 )         (34,190 )
                                     
Income tax expense     185       1       (228 )  (GG)       (42 )
                                     
Net income (loss)   $ (125 )   $ (33,163 )   $ (860 )       $ (34,148 )
Weighted average shares outstanding of common stock     29,640,000                           360,904,478  
Basic and diluted net income (loss) per share   $ (0.00 )                       $ (0.09 )

 

 

 

 

UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED DECEMBER 31, 2019

(in thousands, except share and per share data)

 

    Year Ended December 31, 2019               Year Ended on
December 31, 2019
 
    VectoIQ Acquisition
Corp
(Historical)
    Nikola
Corporation
(Historical)
    Pro Forma
Adjustments
        Pro Forma Combined  
Revenues   $ -     $ 482     $ -         $ 482  
                                     
Costs and expenses:                                    
Cost of goods sold     -       271       -           271  
Operating expenses                                    
Research and development     -       67,514       -           67,514  
Selling, general, and administrative     910       20,692       6,613   (AA)       28,215  
Total costs and expenses     910       88,477       6,613           96,000  
                                     
Loss from operations     (910 )     (87,995 )     (6,613 )         (95,518 )
                                     
Other income (expense)                                    
Investment income in Trust account     5,033       -       (5,033 ) (DD)       -  
Interest income     -       1,456       -           1,456  
Loss on Series A redeemdable convertible preferred stock warrant liability     -       (3,339 )     3,339   (FF)       -  
Other income, net     -       1,373       -           1,373  
Loss before income taxes     4,123       (88,505 )     (8,307 )         (92,689 )
                                     
Income tax expense     1,392       151       (1,744 ) (GG)       (201 )
                                     
Net income (loss)     2,731       (88,656 )     (6,563 )         (92,488 )
Premium paid on repurchase of redeemable convertible preferred stock     -       (16,816 )     16,816   (HH)       -  
Net income (loss) attributable to common stockholders   $ 2,731     $ (105,472 )   $ 10,253         $ (92,488 )
Weighted average shares outstanding of common stock     29,640,000                           360,904,478  
Basic and diluted net income (loss) per share   $ 0.09                         $ (0.26 )

 

 

 

 

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

 

1. Basis of Presentation

 

The Business Combination is accounted for as a reverse recapitalization, with no goodwill or other intangible assets recorded, in accordance with GAAP. Under this method of accounting, VectoIQ is treated as the “acquired” company for financial reporting purposes. Accordingly, for accounting purposes, the Business Combination is treated as the equivalent of Legacy Nikola issuing stock for the net assets of VectoIQ, accompanied by a recapitalization. The net assets of VectoIQ are stated at historical cost, with no goodwill or other intangible assets recorded.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2020 gives pro forma effect to the Business Combination as if it had been consummated on March 31, 2020. The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 and for the three months ended March 31, 2020 give pro forma effect to the Business Combination as if it had been consummated on January 1, 2019.

 

The unaudited pro forma condensed combined balance sheet as of March 31, 2020 has been prepared using, and should be read in conjunction with, the following:

 

VectoIQ’s unaudited balance sheet as of March 31, 2020 and the related notes, which is incorporated by reference; and

 

Legacy Nikola’s unaudited balance sheet as of March 31, 2020 and the related notes, which is attached as an exhibit to this filing and incorporated by reference.

 

The unaudited pro forma condensed combined statement of operations for the three months ended March 31, 2020 has been prepared using, and should be read in conjunction with, the following:

 

VectoIQ’s unaudited statement of operations for the three months ended March 31, 2020 and the related notes, which is incorporated by reference; and

 

Legacy Nikola’s unaudited statement of operations for the three months ended March 31, 2020 and the related notes, which is attached as an exhibit to this filing and incorporated by reference.

 

The unaudited pro forma condensed combined statement of operations for the year ended December 31, 2019 has been prepared using, and should be read in conjunction with, the following:

 

VectoIQ’s audited statement of operations for the year ended December 31, 2019 and the related notes, which is incorporated by reference ; and

 

Legacy Nikola’s audited statement of operations for the year ended December 31, 2019 and the related notes, which is incorporated by reference.

 

Management has made significant estimates and assumptions in its determination of the pro forma adjustments. As the unaudited pro forma condensed combined financial information has been prepared based on these preliminary estimates, the final amounts recorded may differ materially from the information presented.

 

The unaudited pro forma condensed combined financial information does not give effect to any anticipated synergies, operating efficiencies, tax savings or cost savings that may be associated with the Business Combination. The pro forma adjustments reflecting the consummation of the Business Combination are based on certain currently available information and certain assumptions and methodologies that management believes are reasonable under the circumstances. The unaudited condensed pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all of the significant effects of the Business Combination based on information available to management at the time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.

 

 

 

 

The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of the post-combination company. They should be read in conjunction with the historical financial statements and notes thereto of VectoIQ and Legacy Nikola.

 

2. Adjustments to Unaudited Pro Forma Condensed Combined Financial Information

 

The unaudited pro forma condensed combined financial information has been prepared to illustrate the effect of the Business Combination and has been prepared for informational purposes only. The historical financial statements have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to events that are (1) directly attributable to the Business Combination, (2) factually supportable, and (3) with respect to the statements of operations, expected to have a continuing impact on the results of the post-combination company. VectoIQ and Legacy Nikola have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

 

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

 

The adjustments included in the unaudited pro forma condensed combined balance sheet as of March 31, 2020 are as follows:

 

(A) Represents pro forma adjustments to the cash balance to reflect the following:

 

    (in thousands)  
Proceeds from amended Series D Preferred Stock Purchase Agreement     50,000 (B)
Repurchase of Series B preferred stock     (25,000 )(C)
Proceeds from exercise of Legacy Nikola stock options     1,871 (D)
Payment of transaction fees for Legacy Nikola     (6,234 )(E)
Payment of transaction fees and underwriting fees for VectoIQ     (45,269 )(F)
Reclassification of cash and investments held in Trust Account     238,378 (G)
Proceeds from Subscription Agreements     525,000 (H)
Redemption of Common Stock from M&M Residual, LLC     (70,000 )(I)
Settlement of accrued expenses related to Administrative Support Agreement     (30 )(K)
Settlement of VectoIQ related party loan     (422 )(L)
Redemptions of Common Stock by public shareholders     (28 )(W)
      668,266 (A)

 

(B) Reflects the issuance of an additional 2,699,784 and 3,887,657 Series D redeemable convertible preferred stock in exchange for $50.0 million and $72.0 million in-kind services provided by CNHI and Iveco pursuant to the amended Series D Preferred Stock Purchase Agreement, including the settlement of the $1.3 million forward contract liability.

 

(C) Reflects the repurchase of 1,499,700 Series B redeemable convertible preferred stock at the price of $16.67 per share for an aggregate purchase price of $25.0 million pursuant to the Series B Preferred Stock Repurchase Agreement.

 

 

 

 

(D) Reflects the proceeds of approximately $1.8 million for the exercise of 935,345 Legacy Nikola stock options.

 

(E) Represents transaction costs of approximately $6.6 million incurred by Nikola in consummating the Business Combination. Of the amount, approximately $0.4 million in cash, $4.7 million in prepaid expenses and other current assets, $3.9 million in accrued expenses and other current liabilities, and $0.4 million in accounts payable related to transaction costs were previously incurred and recorded as of March 31, 2020. These costs are not included in the unaudited pro forma condensed combined statement of operations as they are deemed to not have a continuing impact on the results of the post-combination company.

 

(F) Represents transaction costs and underwriting costs of approximately $45.3 million incurred by VectoIQ in consummating the Business Combination. Of the amount, approximately $0.4 million was previously incurred as of March 31, 2020. These costs are not included in the unaudited pro forma condensed combined statement of operations as they are deemed to not have a continuing impact on the results of the post-combination company.

 

(G) Reflects the reclassification of $238.4 million of cash and investments held in the Trust Account that becomes available following the Business Combination.

 

(H) Reflects the net proceeds of $525.0 million from the issuance and sale of 52,500,000 shares of Common Stock at $10.00 per share in a private placement pursuant to the Subscription Agreements.

 

(I) Reflects share redemption of 7,000,000 shares of Common Stock from M&M Residual, LLC at a purchase price of $10.00 per share.

 

(J) Represents pro forma adjustments to accrued expenses and other current liabilities to reflect the following:

 

    (in thousands)  
Settlement of transaction fees for Legacy Nikola     (3,113 )(E)
Settlement of accrued expenses pursuant to Administrative Support Agreement     (30 )(K)
      (3,143 )(J)

 

 

(K) Reflects the settlement of accrued expenses pursuant to the Administrative Support Agreement with VectoIQ’s Sponsor, which will terminate upon consummation of the Business Combination.

 

(L) Reflects the settlement of VectoIQ's related party loans upon consummation of the merger.

 

(M) Reflects the conversion of Legacy Nikola Preferred Stock into Legacy Nikola Common Stock.

 

(N) Reflects the reclassification of $233.2 million of Common Stock subject to possible redemption to permanent equity.

 

(O) Represents pro forma adjustments to Common Stock balance to reflect the following:

 

    (in thousands)  
Issuance of Common Stock from Subscription Agreements     5 (H)
Redemption of Common Stock from M&M Residual, LLC     (1 )(I)
Reclassification of Common Stock subject to redemption     2 (N)
Recapitalization of Legacy Nikola Common Stock to Common Stock     29 (P)
Redemptions of Common Stock by public shareholders     (W)
      35 (O)

 

 

 

 

(P) Represents recapitalization of Legacy Nikola Common Stock to Common Stock.

 

(Q) Represents pro forma adjustments to Legacy Nikola Common Stock balance to reflect the following:

 

    (in thousands)  
Conversion of Legacy Nikola Preferred Stock to Legacy Nikola Common Stock     1 (M)
Recapitalization of Legacy Nikola Common Stock to Common Stock     (2 )(P)
      (1 )(Q)

 

(R) Represents pro forma adjustments to additional paid-in capital balance to reflect the following:

 

    (in thousands)  
Issuance of Series D preferred stock pursuant to amended Series D Preferred Stock Purchase Agreement     123,324 (B)
Repurchase of Series B preferred stock     (25,000 )(C)
Exercise of Legacy Nikola stock options     1,871 (D)
Payment of transaction fees for Legacy Nikola     (5,940 )(E)
Payment of transaction fees and underwriting fees for VectoIQ     (45,269 )(G)
Issuance of Common Stock from Subscription Agreements     524,995 (H)
Redemption of Common Stock from M&M Residual, LLC     (69,999 )(I)
Conversion of Legacy Nikola Preferred Stock to Legacy Nikola Common Stock     414,663 (M)
Reclassification of Common Stock subject to redemption     233,197 (N)
Recapitalization of Legacy Nikola Common Stock and Common Stock     (27 )(P)
Acceleration of vesting of Legacy Nikola stock options     8,079 (S)
Stock compensation expense for non-employee director compensation program     1,400 (T)
Settlement of stock options pursuant to the Founder Stock Option Plan     5,387 (U)
Redemptions of Common Stock by Public Shareholders     (28 )(W)
      1.166,653 (R)

 

(S) Represents the amount of compensation cost related to the acceleration of the vesting for certain existing stock options granted.

 

  (T) Represents the stock compensation expense that will be recognized for the non-employee director compensation program. These costs are not included in the unaudited pro forma condensed combined statement of operations as the RSUs granted to non-employee directors vest in full on the first anniversay of the grant date. As such, they are deemed to not have a continuing impact on the results of the post-combination company.

 

(U) Reflects the settlement of stock options pursuant to the Founder Stock Option Plan upon consummation of the Business Combination.

 

(V) Represents pro forma adjustments to Accumulated Deficit balance to reflect the following:

 

    (in thousands)  
Payment of estimated transaction fees for Legacy Nikola     (688 )(E)
Acceleration of vesting of Legacy Nikola stock options     (8,079 )(S)
Stock compensation expense for non-employee director compensation program     (1,400 )(T)
Settlement of stock options pursuant to the Founder Stock Option Plan     (5,387 )(U)
      (15,554 )(V)

 

 

 

 

(W) Represents actual redemption of 2,702 shares of Common Stock for approximately $0.03 million allocated to common stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of $10.37 per share. Common Stock not redeemed were rolled over into the combined company's Common Stock.

 

Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations

 

The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and the three months ended March 31, 2020 are as follows:

 

(AA) Represents pro forma adjustment to selling, general, and administrative expenses to reflect the following:

 

    Three Months          
    Ended March 31,     Year ended    
    2020     December 31, 2019    
    (in thousands)    
Stock-based compensation expense related to amended and restated employment agreements     1,683       6,733   (BB)
Elimination of VectoIQ's historical office space and general administrative services     (30 )     (120 ) (CC)
      1,653       6,613   (AA)

 

(BB) Effective as of the Closing Date, the Company entered into individual amended and restatement employment agreements with certain executive officers. Subject to Board approval, the executive officers are eligible to receive time-vested stock awards consisting of RSUs for shares of Common Stock having a value on the date of grant of not less than a fixed amount based on the assumed stock value of $10.00 per share, subject to continued employment during a three-year cliff vesting schedule. A sensitivity analysis was performed to quantify the impact of a hypothetical increase of 10% on the potential grant date stock value compared to the assumed stock value of $10.00. A 10% increase in stock value would lead to the recognition of an additional $0.2 million and $0.7 million in stock-based compensation expense for the three months ended March 31, 2020, and the year ended December 31, 2019, respectively.

 

(CC) Represents pro forma adjustment to eliminate historical expenses related to VectoIQ’s office space and general administrative services, which will terminate upon consummation of the merger.

 

(DD) Represents pro forma adjustment to eliminate investment income related to the investment held in the Trust Account.

 

(EE) Reflects the elimination of the loss on the forward contract liability. The Company settled the liability in April 2020 with the issuance of Series D redeemable convertible preferred stock, which ceased to exist upon the conversion into Common Stock.

 

(FF) Reflects the elimination of the loss on Series A redeemable convertible preferred stock warrant liability. As of March 31, 2020, all of the warrants were exercised into Series A redeemable convertible preferred stock, which ceased to exist upon the conversion into Common Stock.

 

(GG) Reflects income tax effect of pro forma adjustments using the estimated statutory tax rate of 21%.

 

(HH) Reflects the elimination of the premium paid on repurchase of redeemable convertible preferred stock, which ceased to exist upon the conversion into Common Stock.

 

3. Loss per Share

 

Represents the net loss per share calculated using the historical weighted average shares outstanding, and the issuance of additional shares in connection with the Business Combination, assuming the shares were outstanding since January 1, 2019. As the Business Combination is being reflected as if it had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net loss per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented.

 

 

 

 

    Three Months
Ended March 31,
2020
    Year ended
December 31,
2019
 
Pro forma net loss (in thousands)   $ (34,148 )     (92,488 )
Weighted average shares outstanding—basic and diluted     360,904,478       360,904,478  
Net loss per share—basic and diluted (1)   $ (0.09 )     (0.26 )
                 
Weighted average shares outstanding—basic and diluted                
VectoIQ Public Stockholders     22,983,872       22,983,872  
Holders of VectoIQ Founder Shares     6,640,000       6,640,000  
PIPE Investors     52,500,000       52,500,000  
Legacy Nikola stockholders (2) (3)     278,780,606       278,780,606  
      360,904,478       360,904,478  

 

(1) For the purposes of calculating diluted earnings per share, it was assumed that all outstanding VectoIQ Warrants sold in the IPO and the private placement are exchanged for VectoIQ Common Stock. However, since this results in anti-dilution, the effect of such exchange was not included in calculation of diluted loss per share.

 

(2) The pro forma shares attributable to Legacy Nikola Stockholders is calculated by applying the exchange ratio of 1.901 to the historical Legacy Nikola Common and Preferred Stock that was exchanged in the Business Combination, including additional shares that were issued and repurchased subsequent to the historical financial statements of Legacy Nikola, as follows:

 

Ÿ historical Legacy Nikola Common Stock of 60.2 million shares as of March 31, 2020,

 

Ÿ historical Legacy  Nikola Preferred Stock of 84.1 million shares as of March 31, 2020,

 

Ÿ the issuance of additional Series D redeemable preferred stock of 6.6 million shares as described in note 2(B),

 

Ÿ the exercise of 0.9 million Legacy Nikola grantee stock options as described in note 2(D), less

 

Ÿ the repurchase of Series B redeemable preferred stock of 1.5 million shares as described in note 2(C).

 

Pro forma shares attributable to Legacy Nikola stockholder was further adjusted for the redemption of 7.0 million shares of VectoIQ Common Stock from M&M Residual, LLC as described in note 2(I).

 

(3) The pro forma basic and diluted shares of Legacy Nikola stockholders exclude 41.1 million of unexercised employee stock options, as these are not deemed a participating security and their effect is antidilutive.