Fisker Inc./DE false 0001720990 0001720990 2020-10-29 2020-10-29 0001720990 dei:FormerAddressMember 2020-10-29 2020-10-29 0001720990 us-gaap:CommonClassAMember 2020-10-29 2020-10-29 0001720990 us-gaap:WarrantMember 2020-10-29 2020-10-29

 

 

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): November 4, 2020 (October 29, 2020)

 

 

FISKER INC.

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-38625   82-3100340

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

1888 Rosecrans Avenue

Manhattan Beach, California 90266

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (833) 434-7537

Spartan Energy Acquisition Corp.

9 West 57th Street

43rd Floor

New York, NY 10019

(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 obligation 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))

 

Title of each class

  

Trading

Symbol

  

Name of each exchange

on which registered

Class A Common Stock, par value of $0.00001 per share    FSR    The New York Stock Exchange
Warrants, each exercisable for one share of Class A Common Stock for $11.50 per share    FSR WS    The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company 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  ☒

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 October 29, 2020 (the “Closing Date”), Fisker Inc., a Delaware corporation (f/k/a Spartan Energy Acquisition Corp.) (the “Company”), consummated the previously announced transaction (the “Business Combination”) pursuant to that certain Business Combination Agreement and Plan of Reorganization, dated July 10, 2020 (the “Business Combination Agreement”), by and among the Company, Spartan Merger Sub Inc. (“Merger Sub”), a wholly owned subsidiary of the Company, and Fisker Holdings Inc. (f/k/a Fisker Inc.) (“Legacy Fisker”).

As a result of the Business Combination and the other transactions contemplated by the Business Combination Agreement, Merger Sub merged with and into Legacy Fisker, with Legacy Fisker surviving the merger as a wholly owned subsidiary of the Company (the “Merger Transaction”).

In connection with the consummation of the Business Combination (the “Closing”), the registrant changed its name from Spartan Energy Acquisition Corp. to Fisker Inc.

Certain terms used in this Current Report on Form 8-K have the same meaning as set forth in the Company’s definitive proxy statement filed with the Securities and Exchange Commission (the “Commission”) on October 5, 2020, as supplemented by the supplement to the definitive proxy statement filed with the Commission on October 15, 2020 (such proxy statement, as supplement, the “Proxy Statement”).

Item 2.01 of this Current Report on Form 8-K discusses the Closing and various other transactions contemplated by the Business Combination Agreement, and is incorporated herein by reference.

 

Item 1.01

Entry Into A Material Definitive Agreement.

Sponsor Agreement

In connection with the execution of the Business Combination Agreement, on July 10, 2020, Spartan Energy Acquisition Sponsor LLC (the “Sponsor”) entered into a Sponsor Agreement with the Company pursuant to which the Sponsor immediately prior to the Effective Time, automatically and irrevocably surrendered and forfeited to the Company, for no consideration and as a contribution to the capital of the Company, 441,176 shares of Class B Common Stock, par value of $0.0001 per share, of the Company (the “Sponsor Shares”), whereupon the Sponsor Shares were canceled.

The foregoing description of the Sponsor Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Sponsor Agreement, a copy of which is attached hereto as Exhibit 10.1 and is incorporated herein by reference.

Amended and Restated Registration Rights Agreement

In connection with the Closing, the Company, the Sponsor, Magna certain persons and entities holding securities of the Company (the “Initial Holders”) and certain stockholders of Legacy Fisker (the “New Holders” and together with the Initial Holders and Magna, the “Reg Rights Holders”) entered into an Amended and Restated Registration Rights Agreement, dated as of October 29, 2020 (the “Amended and Restated Registration Rights Agreement”). Under the Amended and Restated Registration Rights Agreement, the Company is obligated within 30 calendar days after the Closing, to file a registration statement with the Commission to register the resale of up to approximately 202.9 million shares of the Company’s Class A Common Stock held by the Initial Holders, certain of the New Holders and Magna (the “Founders Registration Statement”). The Company agreed to use its reasonable best efforts to have the Founders Registration Statement become effective as soon as reasonably practicable after the filing thereof. Additionally, the Company agreed that, as soon as reasonably practicable after it is eligible to register the Reg Rights Holders’ securities on a registration statement on Form S-3, it will file a registration statement registering the resale of certain securities

 

2


held by or issuable to the New Holders that were not included on the Founders Registration Statement (the “New Holders Registration Statement”) and the Company will use its reasonable best efforts to have the New Holders Registration Statement become effective as soon as reasonably practicable after the filing thereof. In certain circumstances, the Reg Rights Holders can demand up to three underwritten offerings and will be entitled to customary piggyback registration rights.

The foregoing description of the Amended and Restated Registration Rights Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Amended and Restated Registration Rights Agreement, a copy of which is attached hereto as Exhibit 10.2 and is incorporated herein by reference.

Lock-Up Agreements

In connection with the Closing, certain investors in Legacy Fisker entered into agreements (the “Lock-Up Agreements”) pursuant to which they agreed, subject to certain customary exceptions, not to (a) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder, any shares of Class A Common Stock or any shares of Class B Common Stock held by them immediately after the Effective Time, including any shares of Class A Common Stock issuable upon conversion of such shares of Class B Common Stock, or any shares of Common Stock issuable upon the exercise of options to purchase shares of Common Stock held by them immediately after the Effective Time (“Lock-Up Shares”), (b) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of such Lock-Up Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (c) publicly announce any intention to effect any transaction specified in clause (a) or (b) (the actions specified in clauses (a) through (c), collectively, “Transfer”) for 180 days after the Closing Date. Thereafter, until the 18 month anniversary of the Closing Date, subject to certain customary exceptions, each of Henrik Fisker and Dr. Geeta Gupta will also agree not to Transfer more than the lesser of (a) such number of Lock-Up Shares resulting in gross proceeds to him or her of $25,000,000 and (b) 10% of the Lock-Up Shares. Thereafter, until the two year anniversary of the Closing Date, subject to certain customary exceptions, each of Henrik Fisker and Dr. Geeta Gupta will also agree not to Transfer more than the number of Lock-Up Shares that, together with any amounts Transferred pursuant to the immediately preceding sentence, would constitute 80% of the Lock-Up Shares.

The foregoing description of the Lock-Up Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Lock-Up Agreement, a copy of which is attached hereto as Exhibit 10.3 and is incorporated herein by reference.

PIPE Financing

In connection with the execution of the Business Combination Agreement, on July 10, 2020, the Company entered into separate Subscription Agreements with a number of subscribers, pursuant to which the subscribers agreed to purchase, and the Company agreed to sell to the subscribers, an aggregate of 50,000,000 PIPE Shares for a purchase price of $10.00 per share and an aggregate purchase price of $500 million in a private placement.

The closing of the sale of the PIPE Shares pursuant to the Subscription Agreements is contingent upon, among other customary closing conditions, the concurrent consummation of the Business Combination. The purpose of the PIPE Financing is to raise additional capital for use by the combined company following the Closing.

Further, under the Subscription Agreements, the Company is required to file a registration statement within 30 days after the Closing to register the resale of the PIPE Shares, and the Company will use its commercially reasonable efforts to have the PIPE Resale Registration Statement declared effective as soon as practicable after the filing thereof.

The foregoing description of the Subscription Agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of Subscription Agreement, a copy of which is attached hereto as Exhibit 10.4 and is incorporated herein by reference.

 

3


Indemnification Agreements

In connection with the Closing, 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.

The foregoing description of the indemnification agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of indemnification agreement, a copy of which is attached hereto as Exhibit 10.5 and is 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. The material terms and conditions of the Business Combination Agreement are described in the Proxy Statement in the section titled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement,” which is incorporated herein by reference.

The Business Combination Agreement and the Business Combination was approved by the Company’s stockholders at a special meeting of the Company’s stockholders held on October 28, 2020 (the “Special Meeting”). On October 29, 2020, the parties to the Business Combination Agreement consummated the Merger Transaction.

At the Special Meeting, holders of 2,004,297 shares of the Company’s Class A Common Stock sold in its initial public offering (“public shares”) exercised their right to redeem those shares for cash at a price of approximately $10.40 per share, for an aggregate of approximately $20.8 million. The per share redemption price of $10.00 for public stockholders electing redemption was paid out of the Company’s Trust Account, which after taking into account the redemption, had a balance immediately prior to the Closing of approximately $569.1 million.

Immediately after giving effect to the Merger Transaction (including as a result of the redemptions described above, the conversion of all 13,358,824 outstanding Founder Shares into shares of Class A Common Stock on a one-for-one basis and the issuance of an additional 50,000,000 shares of Class A Common Stock in the PIPE Financing as described in Item 3.02 below), there were 277,258,103 shares of Common Stock, including 144,903,975 shares of Class A Common Stock and 132,354,128 shares of Class B Common Stock, issued and outstanding and warrants to purchase 47,234,454 shares of Class A Common Stock of the Company issued and outstanding (including the Magna Warrants (as defined below)). Upon the Closing, the Company’s Class A Common Stock and public warrants began trading on the New York Stock Exchange (“NYSE”) under the symbols “FSR” and “FSR WS,” respectively, and the Company’s public units automatically separated into their component securities and, as a result, no longer trade as a separate security and were delisted from the NYSE.

FORM 10 INFORMATION

Item 2.01(f) of Form 8-K states that if the predecessor registrant was a shell company, as the Company was immediately before the Merger Transaction, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, the Company is providing the information below that would be included in a Form 10 if we were to file a Form 10. Please note that the information provided below relates to the Company after the Company’s acquisition of Legacy Fisker in connection with the consummation of the Merger Transaction, unless otherwise specifically indicated or the context otherwise requires.

Forward-Looking Statements

This Current Report on Form 8-K, or some of the information incorporated herein by reference, contains statements that are forward-looking and as such are not historical facts. These forward-looking statements include, without limitation, statements regarding future financial performance, business strategies, expansion plans, future results of

 

4


operations, estimated revenues, losses, projected costs, prospects, plans and objectives of management. These forward-looking statements are based on the Company’s management’s current expectations, estimates, projections and beliefs, as well as a number of assumptions concerning future events, and are not guarantees of performance. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Current Report on Form 8-K, words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “continue,” “project” or the negative of such terms or other similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this Current Report on Form 8-K and in any document incorporated by reference in this Report may include, for example, statements about:

 

   

the Company’s ability to maintain the listing of its Class A Common Stock on the NYSE following the Business Combination;

 

   

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 Business Combination;

 

   

the Company’s ability to enter into binding contracts with OEMs or tier-one suppliers in order to execute on its business plan;

 

   

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

 

   

that the Company has identified a material weakness in its internal control over financial reporting which, if not corrected, could affect the reliability of the Company’s consolidated financial statements;

 

   

the Company’s expansion plans and opportunities;

 

   

the Company’s expectations regarding future expenditures;

 

   

the Company’s ability to raise capital in the future;

 

   

the Company’s ability to attract and retain qualified employees and key personnel;

 

   

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

 

   

changes in applicable laws or regulations;

 

   

the outcome of any known and unknown litigation and regulatory proceedings;

 

   

the possibility that COVID-19 may adversely affect the results of operations, financial position and cash flows of the Company; and

 

   

other factors detailed under the section titled “Risk Factors” of the Proxy Statement and incorporated herein by reference.

The forward-looking statements contained in this Current Report on Form 8-K and in any document incorporated by reference are based on current expectations and beliefs concerning future developments and their potential effects on the Company. There can be no assurance that future developments affecting the Company will be those that the Company has anticipated. These forward-looking statements involve a number of risks, uncertainties, some of which are beyond the Company’s control, or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described in the Proxy Statement in the section titled “Risk Factors,” which is incorporated herein by reference. Should one or more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. 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 undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.

Business

The business of the Company is described in the Proxy Statement in the section entitled “Information About Fisker” beginning on page 173 of the Proxy Statement, and that information is incorporated herein by reference.

 

5


Strategic Collaborations

Magna

On October 14, 2020, Fisker and Spartan entered into a cooperation agreement with Magna setting forth certain terms for the development of a full electric vehicle (the “Cooperation Agreement”). The Cooperation Agreement sets out the main terms and conditions of the upcoming operational phase agreements (the “Operational Phase Agreements”) that will extend from the Cooperation Agreement and other agreements with Magna that are expected to be entered into by and between Fisker and Magna (or its affiliates). The upcoming Operational Phase Agreements referenced in the Cooperation Agreement relate to various platform and manufacturing agreements. The Cooperation Agreement provides that the Company would issue to Magna warrants to purchase Class A Common Stock in an amount equal to six percent (6%) of the capital stock of the Company on a fully diluted basis (which means for these purposes, after giving effect to the deemed conversion or exercise of all options, warrants and other convertible securities of the Company outstanding on the issuance date; provided, however, that the “public warrants” sold as part of the units issued by Spartan in its initial public offering which closed on August 14, 2018 shall not be deemed to be exercised for these purposes) after giving effect to the Merger and issuance of the warrants to purchase such shares to Magna, with an exercise price of $0.01 per share of (the “Magna Warrants”). On October 29, 2020, the Company issued to Magna 19,474,454 Magna Warrants. The Magna Warrants are subject to vesting as follows:

 

Milestones

   Percentage of
Warrants
that Vest
Upon
Achievement
 

(i) Achievement of the “preliminary production specification” gateway as set forth in the Development Agreement; (ii) entering into the Platform Agreement; and (iii) entering into the Initial Manufacturing Agreement

     33.3

(i) Achievement of the “target agreement” gateway as set forth in the Development Agreement and (ii) entering into the Detailed Manufacturing Agreement, which will contain terms and conditions agreed to in the Initial Manufacturing

     33.3

Start of pre-serial production

     33.4

Additionally, the shares of Class A Common Stock underlying the Magna Warrants are entitled to registration rights under the Amended and Restated Registration Rights Agreement and Magna entered into a Lock-Up Agreement on the same terms as the other investors in Fisker.

The Cooperation Agreement, and all rights and obligations of the parties thereunder, shall terminate upon any termination of the Business Combination Agreement. Fisker and Magna have not entered into a binding definitive agreement for manufacturing of Fisker’s vehicles and there is no guarantee that such a binding definitive agreement will be reached.

The foregoing description of the Cooperation Agreement does not purport to be complete and is qualified in its entirety by reference to the full text of the Cooperation Agreement, a copy of which is attached hereto as Exhibit 10.6 and is incorporated herein by reference.

Properties

In November 2020, Fisker moved its corporate headquarters from Torrance, California to Manhattan Beach, California, where Fisker occupies 72,649 square feet of space which it uses for an automobile design studio and general office purposes for its management, technology, product design, sales and marketing, finance, legal, human resources, general administrative and information technology teams. The lease term commenced on November 1, 2020 and will terminate on May 1, 2026. The Company has an option to extend the lease for an additional five years. The Company may be obligated to pay amounts in addition to the base rent in the form of an operating expense adjustment, contingent upon the Company’s operations reaching certain operating expenses thresholds.

 

6


The Company entered into a sublease agreement for 5,533 square feet of office and research and development space in San Francisco, California. The term of the sublease commenced on October 2, 2020 and will expire on March 31, 2024. The sublease does not expressly allow for renewal of the lease term.

The Company believes its existing facilities are adequate for its current requirements. The Company also believes it will be able to obtain additional or alternative space at other locations at commercially reasonable terms to support its continuing expansion.

The foregoing description of the sublease and lease agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of agreements, copies of which are attached hereto as Exhibits 10.7 and 10.8 and are incorporated herein by reference.

Risk Factors

The risks associated with the Company’s business and operations and the Business Combination are described in the Proxy Statement in the section titled “Risk Factors” beginning on page 32 of the Proxy Statement, and are incorporated herein by reference.

Financial Information

Selected Historical Financial Information

The selected historical consolidated financial and operating data for the nine months ended September 30, 2019 and 2020 and the years ended December 31, 2018 and 2019, and the selected consolidated balance sheet as of September 30, 2020, and December 31, 2018 and 2019 for Legacy Fisker are set forth herein as Exhibit 99.1 and is incorporated herein by reference.

Unaudited Consolidated Financial Statements

The unaudited consolidated financial statements as of and for the nine months ended September 30, 2020 of Legacy Fisker set forth in Exhibit 99.2 hereto have been prepared in accordance with U.S. generally accepted accounting principles and pursuant to the regulations of the Commission. 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 Fisker’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 Fisker as of and for the years ended December 31, 2018 and 2019, and the related notes included in the Proxy Statement and the section titled “Managements 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 nine months ended September 30, 2020 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.

 

7


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 Fisker prior to the Business Combination is included in the Proxy Statement in the section titled “Managements Discussion and Analysis of Financial Condition and Results of Operations of Fisker” beginning on page 160 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 nine months ended September 30, 2020 is set forth below.

The following discussion and analysis provides information that Fisker’s management believes is relevant to an assessment and understanding of Fisker’s consolidated results of operations and financial condition. The discussion should be read together with “Selected Historical Consolidated Financial and Operating Data of Fisker” and the historical audited annual consolidated financial statements as of and for the years ended December 31, 2019 and 2018 and unaudited interim condensed consolidated financial statements as of September 30, 2020 and the nine-month periods ended September 30, 2020 and 2019, and the related respective notes thereto, included elsewhere in this Form 8-K or included in the proxy statement incorporated herein by reference. The discussion and analysis should also be read together with Fisker’s unaudited pro forma financial information for the year ended December 31, 2019 and the nine months ended September 30, 2020. See “Unaudited Pro Forma Condensed Combined Financial Information.” This discussion may contain forward-looking statements based upon current expectations that involve risks and uncertainties. Fisker’s actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Risk Factors” elsewhere in this Form 8-K or included in the proxy statement incorporated herein by reference. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Fisker” to “Fisker” and “the Company” refer to the business and operations of Legacy Fisker and its consolidated subsidiaries prior to the Business Combination and to Fisker and its consolidated subsidiaries, following the consummation of the Business Combination.

Overview

Fisker is building a technology-enabled, asset-light automotive business model that it believes will be among the first of its kind and aligned with the future state of the automotive industry. This involves a focus on vehicle development, customer experience, sales and service to change the personal mobility experience through technological innovation, ease of use and flexibility. The Company combines the legendary design and engineering expertise of Henrik Fisker — the visionary behind the iconic BMW Z8 sports car and the famed Aston Martin DB9 and V8 Vantage — to develop high quality electric vehicles with strong emotional appeal by engaging the consumer’s senses through the overall experience of Fisker vehicles. Central to Fisker’s business model is the Fisker Flexible Platform Agnostic Design (“FF-PAD”), a proprietary process that allows the development and design of a vehicle to be adapted to any given electric vehicle (“EV”) platform in the specific segment size. The process focuses on selecting industry leading vehicle specifications and adapting the design to crucial hard points on a third-party supplied EV platform and outsourced manufacturing to reduce development cost and time to market. Fisker believes it is well-positioned through its global premium EV brand, its renowned design capabilities and sustainability focus.

The Fisker Ocean is targeting a large and rapidly expanding “premium with volume” segment (meaning a premium automaker producing more than 100,000 units of a single model such as the BMW 3 Series or Tesla Model 3) of the electric SUV market. Fisker expects to begin production of the Ocean as early as the fourth quarter of 2022 and, through November 1, 2020, the Company has received over 9,100 paid reservations for the Ocean, including a fleet order of 300 cars placed by Viggo HQ ApS, a Danish ride-hailing company that provides 100% of their services via zero-emission vehicles (“Viggo”). The Fisker Ocean, a five-passenger vehicle with potentially a 250- to over 300-mile range and state-of-the-art autonomous driving capabilities, will be differentiated in the marketplace by its innovative and timeless design and a re-imagined customer experience delivered through an advanced software-based user interface. The Fisker Ocean is designed for a high degree of sustainability, using recycled rubber, eco-suede interior trim made from recycled polyester, and carpeting from fishing nets and plastic bottles recycled from ocean waste, among many other sustainable features. The optional features for the Ocean, including California Mode (patent pending), a solar photovoltaic roof and augmented reality “Head-up” display, resulted in the Fisker Ocean prototype being the most awarded new automobile at CES 2020 by Time, Newsweek, Business Insider, CNET and others.

 

8


Fisker believes its innovative business model, including “E-Mobility-as-a-Service” (“EMaaS”), will revolutionize how consumers view personal transportation and car ownership. Over time, Fisker plans to combine a customer-focused experience with flexible leasing options, affordable monthly payments and no fixed lease terms. Through an innovative platform sharing partnership strategy, Fisker believes that it will be able to significantly reduce the capital intensity typically associated with developing and manufacturing vehicles, while maintaining flexibility and optionality in component sourcing and manufacturing due to Fisker’s FF-PAD proprietary process. Through Fisker’s FF-PAD proprietary process, Fisker will partner with one or more industry-leading original equipment manufacturers (“OEMs”) and/or tier-one automotive suppliers for platform sharing and access to procurement networks, while focusing on key differentiators in innovative design, software and user interface. Fisker envisions a go-to-market strategy with both web- and app-based digital sales, loan financing approvals, leasing, and service management, with limited reliance on traditional brick-and-mortar “sales-and-service” dealer networks. Fisker believes that this customer-focused approach will drive revenue, user satisfaction and higher margins than competitors.

The Business Combination

Fisker entered into a business combination agreement and plan of reorganization (the “Business Combination Agreement”) with Spartan Energy Acquisition Corp. (“Spartan”) on July 10, 2020. Pursuant to the Business Combination Agreement, and assuming a favorable vote of Spartan’s stockholders, Spartan Merger Sub Inc. (“Merger Sub”), a newly formed subsidiary of Spartan, will be merged with and into Fisker (the “Business Combination”). Upon consummation of the Business Combination, the separate corporate existence of Merger Sub shall cease, Fisker will survive and become a wholly-owned subsidiary of Spartan (“Fisker”).

The Business Combination is anticipated to be accounted for as a reverse recapitalization. Fisker will be deemed the accounting predecessor and the combined entity will be the successor SEC registrant, meaning that Fisker’s financial statements for previous periods will be disclosed in the registrant’s future periodic reports filed with the SEC. Under this method of accounting, Spartan 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 expected to be an estimated net increase in cash (as compared to Fisker’s consolidated balance sheet at September 30, 2020) of $974 million, after stockholder redemptions, and including $500 million in gross proceeds from the private investment in public equity (“PIPE”) by Spartan. Total transaction costs are estimated at approximately $79 million. See “Unaudited Pro Forma Condensed Combined Financial Information.” In addition, immediately prior to the effective time of the Business Combination, Fisker caused the outstanding principal and accrued but unpaid interest due on its outstanding convertible notes, which amounted to approximately $10.9 million, and convertible equity security totaling $79 million, adjusted for changes in fair value, as of September 30, 2020, to be automatically converted into a number of shares of Fisker’s Class A Common Stock, and such converted convertible notes are no longer outstanding and ceased to exist at the effective time of the Business Combination. See “Managements Discussion and Analysis of Financial Condition and Results of Operations of Fisker—Liquidity and Capital Resources—Debt.”

As a result of the Business Combination, Fisker is the successor to an SEC-registered and New York Stock Exchange-listed company, which requires Fisker to hire additional personnel and implement procedures and processes to address public company regulatory requirements and customary practices. Fisker expects to incur additional annual expenses as a public company for, among other things, directors’ and officers’ liability insurance, director fees, internal audit function, and additional internal and external accounting, legal, and administrative resources, including increased personnel costs, audit and other professional service fees. While we expect to incur significant general and administrative expenses, Fisker will closely monitor its expenditures and take actions designed to improve our processes and manage our cash effectively to facilitate scalability for the design and manufacturing teams.

 

9


Key Trends, Opportunities and Uncertainties

Fisker is a pre-revenue company and believes that its future performance and success depends to a substantial extent on the ability to capitalize on the following opportunities, which in turn is subject to significant risks and challenges, including those discussed below and in the section of the Proxy Statement titled “Risk Factors,” which is incorporated herein by reference.

Partnering with Industry-Leading OEMs and/or Tier-One Automotive Suppliers 

On October 14, 2020, Fisker and Spartan entered into a Cooperation Agreement with Magna International Inc. (“Magna”) setting forth certain terms for the development of a full electric vehicle (the “Cooperation Agreement”). The Cooperation Agreement sets out the main terms and conditions of the upcoming operational phase agreements (the “Operational Phase Agreements”) that will extend from the Cooperation Agreement and other agreements with Magna (or its affiliates) that are expected to be entered into by and between Fisker and Magna (or its affiliates). The upcoming Operational Phase Agreements referenced in the Cooperation Agreement relate to various platform and manufacturing agreements.

Fisker is currently in negotiations with Magna and several other industry-leading OEMs and tier-one automotive suppliers for platform sharing, component sourcing and manufacturing. This allows Fisker to focus on vehicle design, strong brand affiliation and a differentiated customer experience. Fisker intends to leverage one or more EV platforms to accelerate its time to market, reduce vehicle development costs and gain access to an established global supply chain of batteries and other components.

Fisker believes that its business model will reduce the considerable execution risk typically associated with new car companies. Through such platform sharing, component sourcing and manufacturing partnerships, Fisker believes it will be able to accelerate its time to market and reduce vehicle development costs. Fisker intends to meet timing, cost and quality expectations while optimally matching its cost structure with its projected production ramp by leveraging such partnerships and trained workforces. Remaining hardware agnostic allows for selection of partners, components, and manufacturing decisions to be based on both timeline and cost advantages and enables Fisker to focus on delivering truly innovative design features, a superior customer experience, and a leading user interface that leverages sophisticated software and other technology advancements.

Fisker continues to negotiate a potential relationship with several other industry-leading OEMs and tier-one automotive suppliers. Fisker intends to enter into agreements covering supply, engineering services (including tooling), and vehicle assembly, among other matters. Further, while Fisker has entered into the Collaboration Agreement with Magna, Fisker is strongly incentivized to promptly conclude negotiations with Magna and other OEM’s and tier-one automotive suppliers to meet its commercialization timeline. If Fisker is unable to enter into definitive operational agreements with Magna or other OEM’s agreements or if Fisker is only able to do so on terms that are unfavorable to it, there is no assurance that commercialization will occur within the anticipated timeframe or at costs consistent with production plans. Extended negotiation of the specific project-related agreements, the sourcing of components or labor at higher than anticipated cost, or any delays in sourcing suppliers of sustainable parts may delay Fisker’s commercialization plans or require it to change the anticipated pricing of its vehicles. Such delays could be caused by a variety of factors, some of which may be out of Fisker’s control. For example, the outbreak of the COVID-19 pandemic has severely restricted international travel, which may make it more difficult for Fisker to conclude agreements with partners outside the United States. See the section of the Proxy Statement entitled “Risk Factors— Risks Related to Fisker Fisker faces risks related to health epidemics, including the recent COVID-19 pandemic, which could have a material adverse effect on our business and results of operations,” for more information. Unanticipated events, delays in negotiations by third parties and any required changes in Fisker’s current business plans could materially and adversely affect its business, margins and cash flows.

Market Trends and Competition 

Fisker anticipates robust demand for the Fisker Ocean, based on its award-winning design, its unique sustainability features, the management team’s experience and know-how and, in particular, the growing acceptance of and demand for EVs as a substitute for gasoline-fueled vehicles. According to Bloomberg’s Electric Vehicle Outlook 2020, the global EV fleet is expected to increase at an estimated cumulative annual growth rate of approximately 26%, from

 

10


less than 20 million vehicles in 2020 to more than 120 million by 2030, driven by worldwide governmental and private initiatives for growth. The EV market is highly competitive and Fisker believes the market will be broken down into three primary consumer segments: the white space segment, the value segment, and the conservative premium segment. See the section of the Proxy Statement entitled “Information About Fisker—Sales - Go to Market Strategy” for more information. Fisker expects to sell approximately 50% of its vehicles within the white space segment, appealing to customers who want to be part of the new EV movement and value sustainability and environmental, social, and governance (“ESG”) initiatives. Fisker believes that it will be well positioned to be the primary alternative to Tesla in this segment with the Ocean priced around the base price of the Model 3 and Model Y. While Fisker will compete with other EV startups, many of them are moving into the higher luxury priced segments due to the lack of volume pricing of components that Fisker expects to obtain through platform sharing partnerships with industry-leading OEMs and/or tier-one automotive suppliers. To expand market share and attract customers from competitors, Fisker must continue to innovate and convert successful research and development efforts into differentiated products, including new EV models.

Fisker is also working to quantify the sustainability advancements and claims that the Fisker brand would produce the most sustainable vehicles in the world, which it believes will be an increasingly important differentiator among a growing subset of consumers. In Fisker’s pursuit of these objectives, it will be in competition with substantially larger and better capitalized vehicle manufacturers. While Fisker believes that the low-capital-intensity platform sharing partnership strategy, together with direct-to-customer commercialization, provides the Company with an advantage relative to traditional and other established auto manufacturers, Fisker’s better capitalized competitors may seek to undercut the pricing or compete directly with Fisker’s designs by replicating their features. In addition, while Fisker believes that its strong management team forms the necessary backbone to execute on its strategy, the Company expects to compete for talent, as Fisker’s future growth will depend on hiring qualified and experienced personnel to operate all aspects of the business as it prepares to launch commercial operations.

Commercialization

Fisker currently anticipates commencing production of the Fisker Ocean in the fourth quarter of 2022, with initial customer deliveries in late 2022 at the earliest. Production commencement is dependent upon Fisker entering into definitive platform sharing agreements with one or more industry-leading OEMs and/or tier-one automotive suppliers. Failure to enter into these agreements timely could result in being unable to begin production in the timeframe anticipated. Through November 1, 2020, Fisker has received over 9,100 paid reservations, including a fleet order of 300 cars placed by Viggo, and over 40,000 indications of interest through the Flexee app (meaning the Flexee App has been downloaded and the potential purchaser has provided a contact phone number), reflecting the significant public interest in the Fisker Ocean.

Fisker plans to initially market its vehicles through its direct-to-consumer sales model, leveraging its proprietary Flexee app, which will serve as a one-stop-shop for all components of its EMaaS business model. Over time, Fisker plans to develop Fisker Experience Centers in select cities in North America and Europe, which will enable prospective customers to experience Fisker vehicles through test drives and virtual and augmented reality. Fisker also intends to enter, in each launch market, into third-party service partnerships with credible vehicle service organizations with established service facilities, operations and technicians. These companies’ services will be integrated into and booked via the Flexee app in order to create a hassle-free, app-based service experience for Fisker’s customers delivered at home, at work, or with a pick-up and delivery service booked online. For North America, as an example, Fisker has entered into a non-exclusive Memorandum of Understanding with Manheim related to fleet management services. Fisker will continue to seek opportunities to build the service partnership model.

Over time, Fisker aims to transform the EV sales model through the flexible lease model, under which customers will be able to utilize a vehicle on a month-to-month basis at an anticipated cost of $379 per month for the base model, with the ability to terminate the lease or upgrade their vehicle at any time. Development of a fleet of high value, sustainable EVs will allow Fisker to offer these flexible lease options to capture more customers. Fisker intends to require a non-refundable up-front payment of $3,000 under the flexible lease model, which the Company believes will reduce its cash flow risk and incentivize customers to keep their vehicles for a period of time. Assuming an eight-year expected vehicle life, Fisker anticipates that, over time, it will acquire a substantial fleet of used EVs available for sale or further flexible lease by Fisker, which it believes will enhance its ability to maintain its premium brand and pricing.

 

11


Fisker believes its digital, direct-to-consumer sales model reflects today’s changing consumer preferences and is less capital intensive and expensive than the traditional automotive sales models. Fisker’s commercialization strategy is, however, relatively novel for the car industry, which has historically relied on extensive advertising and marketing, as well as relationships with physical car dealership networks. Should Fisker’s assumptions about the commercialization of its vehicles prove overly optimistic or if the Company is unable to develop, obtain or maintain the direct-to-consumer marketing or service technology upon which its prospective customer base would rely, Fisker may incur delays to its ability to commercialize the Fisker Ocean. This may also lead Fisker to make changes in its commercialization plans, which could result in unanticipated marketing delays or cost overruns, which could in turn adversely impact margins and cash flows or require Fisker to change its pricing. Further, to the extent that Fisker doesn’t generate the margins it expects upon commercialization of the Fisker Ocean, Fisker may be required to raise additional debt or equity capital, which may not be available or may only be available on terms that are onerous to Fisker and its stockholders.

Regulatory Landscape

Fisker operates in an industry that is subject to and benefits from environmental regulations, which have generally become more stringent over time, particularly across developed markets. Regulations in Fisker’s target markets include economic incentives to purchasers of EVs, tax credits for EV manufacturers, and economic penalties that may apply to a car manufacturer based on its fleet-wide emissions ratings. See the section of the Proxy Statement entitled “Information about Fisker—Government Regulation and Credits” for more information. For example, a federal tax credit of $7,500 may be available to U.S. purchasers of Fisker vehicles, which would bring the effective estimated purchase price of the base Fisker Ocean model to approximately $30,000. Further, the registration and sale of Zero Emission Vehicles (“ZEVs”) in California will earn Fisker ZEV credits, which it may be able to sell to other OEMs or tier-one automotive suppliers seeking to access the state’s market. Several other U.S. states have adopted similar standards. In the European Union, where European car manufacturers are penalized for excessive fleet-wide emissions on the one hand and incentivized to produce low emission vehicles on the other, Fisker believes it will have the opportunity to monetize the ZEV technology through fleet emissions pooling arrangements with car manufacturers that may not otherwise meet their CO2 emissions targets. While Fisker expects environmental regulations to provide a tailwind to its growth, it is possible for certain regulations to result in margin pressures. For example, regulations that effectively impose EV production quotas on auto manufacturers may lead to an oversupply of EVs, which in turn could promote price decreases. As a pure play EV company, Fisker’s margins could be particularly and adversely impacted by such regulatory developments. Trade restrictions and tariffs, while historically minimal between the European Union and the United States where most of Fisker’s production and sales are expected, are subject to unknown and unpredictable change that could impact Fisker’s ability to meet projected sales or margins.

Basis of Presentation

Fisker currently conducts its business through one operating segment. As a pre-revenue company with no commercial operations, Fisker’s activities to date have been limited and were conducted primarily in the United States and its historical results are reported under U.S. GAAP and in U.S. dollars. Upon commencement of commercial operations, Fisker expects to expand its global operations substantially, including in the USA and the European Union, and as a result Fisker expects its future results to be sensitive to foreign currency transaction and translation risks and other financial risks that are not reflected in its historical financial statements. As a result, Fisker expects that the financial results it reports for periods after it begins commercial operations will not be comparable to the financial results included in this Form 8-K or those included in the Proxy Statement incorporated herein by reference.

Components of Results of Operations

Fisker is an early stage company and its historical results may not be indicative of its future results for reasons that may be difficult to anticipate. Accordingly, the drivers of Fisker’s future financial results, as well as the components of such results, may not be comparable to Fisker’s historical or projected results of operations.

 

12


Revenues

Fisker has not begun commercial operations and currently does not generate any revenue. Once Fisker commences production and commercialization of its vehicles, it expects that the significant majority of its revenue will be initially derived from direct sales of Fisker Ocean SUVs and, subsequently, from flexible leases of its vehicles.

Cost of Goods Sold

To date, Fisker has not recorded cost of goods sold, as it has not recorded commercial revenue. Once Fisker commences the commercial production and sale of its vehicles, it expects cost of goods sold to include mainly vehicle components and parts, including batteries, direct labor costs, amortized tooling costs, and reserves for estimated warranty expenses.

General and Administrative Expense

General and administrative expenses consist mainly of personnel-related expenses for Fisker’s executive and other administrative functions and expenses for outside professional services, including legal, accounting and other advisory services.

Fisker is rapidly expanding its personnel headcount, in anticipation of ramping up for commercial operations and becoming a public company upon the consummation of the Business Combination. Accordingly, in addition to the non-recurring transaction costs discussed above, Fisker expects its general and administrative expenses to increase significantly in the near term and for the foreseeable future. Upon commencement of commercial operations, Fisker also expects general and administrative expenses to include facilities, marketing and advertising costs.

Research and Development Expense

To date, Fisker’s research and development expenses have consisted primarily of external engineering services in connection with the design of the Fisker Ocean model and development of the first prototype. As Fisker ramps up for commercial operations, it anticipates that research and development expenses will increase for the foreseeable future as the Company expands its hiring of engineers and designers and continues to invest in new vehicle model design and development of technology.

Income Tax Expense / Benefit

Fisker’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. Fisker maintains a valuation allowance against the recognized amount of its U.S. and state net deferred tax assets because Fisker believes the recoverability of the tax assets is not more likely than not.

Results of Operations

Comparison of the Nine Months Ended September 30, 2020 to the Nine Months Ended September 30, 2019

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

 

     Nine Months Ended September 30,                
     2020      2019      $ Change      % Change  
     (dollar amounts in thousands)  

Operating costs and expenses:

           

General and administrative

   $ 8,056      $ 2,882      $ 5,174        179.5

Research and development

     3,963        4,943        (980      (19.8 )% 
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating costs and expenses

     12,019        7,825        4,194        53.6
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (12,019      (7,825      (4,194      53.6

 

13


     Nine Months Ended September 30,                
     2020      2019      $ Change      % Change  
     (dollar amounts in thousands)  

Other income (expense):

           

Other income

     15        —          15        n.m.  

Interest income

     13        7        6        n.m.  

Interest expense

     (1,326      (20      (1,306      n.m.  

Change in fair value of embedded derivatives

     (406      (9      (397      n.m.  

Change in fair value of convertible equity security

     (29,003      —          (29,003      n.m.  

Foreign currency gain (loss)

     122        (15      137        n.m.  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other income (expense)

     (30,585      (37      (30,548      n.m.  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss

   $ (42,604    $ (7,862    $ (34,742      441.9
  

 

 

    

 

 

    

 

 

    

 

 

 

 

n.m. = not meaningful.

General and Administrative

General and administrative expenses increased by $5.2 million or 179.5% from $2.9 million in the first nine months of 2019 to $8.1 million in the first nine months of 2020, primarily due a $4.2 million increase in professional fees, mainly success fees related to the issuance of our convertible equity security in July 2020.

Research and Development

Research and development expenses decreased by $0.9 million or 19.8% from $4.9 million through the first nine months of 2019 to $4.0 million through the first nine months of 2020. The decrease primarily reflected lower outside engineering costs due to IDG’s development of the demonstrator vehicle, which reduced expense by $1.8 million through the first nine months of 2020. Fisker’s arrangement with IDG terminated in September 2020 and, as a result, Fisker does not anticipate future reductions in research and development expenses.

Other Income

Other income increased by a nominal amount in the first nine months of 2020 from nil in the first nine months of 2019.

Interest Income

Interest income increased a nominal amount from the first nine months of 2019 to the first nine months of 2020.

Interest Expense

Interest expense was $1.3 million through the first nine months of 2020 and nominal in the first nine months of 2019, reflecting the issuance of convertible bridge notes, starting in the second half of 2019 through the first nine months of 2020.

Change in Fair Value of Embedded Derivatives

The change in fair value of embedded derivatives amounted to $0.4 million in the first nine months of 2020 compared to a nominal amount in the same nine-month period of 2019, reflecting the change in value of the embedded derivative relating to Fisker’s convertible bridge notes.

Change in Fair Value of Convertible Equity Security

The change in fair value of the convertible equity security, which was issued in July 2020, amounted to $29.0 million in the first nine months of 2020, reflecting the change in value of Class A Common Stock to be issued to the holder of the convertible equity security in the event of the consummation of the Business Combination.

 

14


Foreign Currency Gain (Loss)

Fisker recorded a foreign currency gain of $0.1 million in the first nine months of 2020 as compared to a nominal loss in the first nine months of 2019.

Net Loss

Net loss was $42.6 million in the first nine months of 2020, an increase of $34.7 million or 441.9% from $7.9 million in the first nine months of 2019, for the reasons discussed above.

Comparison of the Fiscal Year Ended December 31, 2019 to the Fiscal Year Ended December 31, 2018

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

 

     Years Ended December 31,                
     2019      2018      $ Change      % Change  
     (dollar amounts in thousands)  

Operating costs and expenses:

           

General and administrative

   $ 3,626      $ 1,476      $ 2,150        145.7

Research and development

     6,962        1,939        5,023        259.1
  

 

 

    

 

 

    

 

 

    

 

 

 

Total operating costs and expenses

     10,588        3,415        7,173        210.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Loss from operations

     (10,588      (3,415      (7,173      210.0

Other income (expense):

           

Other income (expense)

     1        (21      22        n.m.  

Interest income

     9        7        2        28.6

Interest expense

     (178      (2      (176      n.m.  

Change in fair value of embedded derivatives

     (80      —          (80      n.m.  

Foreign currency loss

     (42      (1      (41      n.m.  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total other expense

     (290      (17      (273      n.m.  
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss

     (10,878      (3,432      (7,446      217.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Deemed dividend attributable to preferred stock

     —          (1,222      1,222        100.0
  

 

 

    

 

 

    

 

 

    

 

 

 

Net loss attributable to common stockholders

   $ (10,878    $ (4,654    $ (6,224      133.7
  

 

 

    

 

 

    

 

 

    

 

 

 

 

n.m. = not meaningful.

General and Administrative

General and administrative expenses increased by $2.1 million or 145.7% from $1.5 million in 2018 to $3.6 million in the 2019, reflecting an increase in legal expenses of approximately $1.7 million due to general professional legal services and litigation expense and a one-time charge of $0.8 million for the settlement of a legal matter in the 2019 period.

Research and Development

Research and development expenses increased by approximately $5.0 million or 259.1% from $1.9 million in 2018 to $7.0 million in 2019, reflecting mainly a ramp-up in external engineering consulting in connection with the Fisker Ocean prototype design of approximately $4.4 million and an increase of internal research and development personal costs of approximately $0.6 million.

Other Income (Expense)

Other income (expense) increased from a nominal expense position in 2018 to a nominal income position in 2019.

 

15


Interest Income

Interest income increased a nominal amount from fiscal year 2018 to fiscal year 2019.

Interest Expense

Interest expense increased from nearly nil in 2018 to $0.2 million in 2019, reflecting the issuance of convertible bridge notes, as discussed above.

Change in Fair Value of Embedded Derivatives

The change in fair value of embedded derivatives was $0.1 million in 2019 (compared to nil in 2018), reflecting the change in value of the embedded derivative relating to Fisker’s convertible bridge notes.

Foreign Currency Loss

Foreign currency loss increased a nominal amount from fiscal year 2018 to fiscal year 2019.

Net Loss

Net loss was $10.9 million in 2019, an increase of $7.5 million from $3.4 million in 2018, for the reasons discussed above.

In 2018, Fisker also recorded a deemed dividend attributable to preferred stock in the amount of $1.2 million, resulting in net loss attributable to common stockholders of $4.7 million in that year. Fisker did not have a comparable impact in 2019.

Liquidity and Capital Resources

As of the date of this Form 8-K, Fisker has yet to generate any revenue from its business operations. To date, Fisker has funded its capital expenditure and working capital requirements through equity and debt capital, as further discussed below. Fisker’s ability to successfully commence commercial operations and expand its business will depend on many factors, including its working capital needs, the availability of equity or debt financing and, over time, its ability to generate cash flows from operations.

As of September 30, 2020, Fisker’s cash and cash equivalents amounted to $45.0 million and its long-term debt amounted to $10.9 million. On a pro forma basis, upon stockholder approval and consummation of the Business Combination, Fisker’s cash and cash equivalents amount to approximately $1,018 million at September 30, 2020, after redemptions by Spartan stockholders.

Fisker expects its capital expenditures and working capital requirements to increase substantially in the near future, as it seeks to produce the Fisker Ocean EV model, develop its customer support and marketing infrastructure and expand its research and development efforts. Fisker believes that its cash on hand following the consummation of the Business Combination, including the net proceeds from Spartan’s cash in trust, and the PIPE will be sufficient to meet its working capital and capital expenditure requirements for a period of at least twelve months from the date of this Form 8-K and sufficient to fund its operations until it commences production of the Fisker Ocean, assuming Fisker is able to do so as currently contemplated. Fisker may, however, need additional cash resources due to changed business conditions or other developments, including unanticipated delays in negotiations with OEMs and tier-one automotive suppliers or other suppliers, supply chain challenges, disruptions due to COVID-19, competitive pressures, and regulatory developments, among other developments. To the extent that Fisker’s current resources are insufficient to satisfy its cash requirements, Fisker may need to seek additional equity or debt financing. If the financing is not available, or if the terms of financing are less desirable than Fisker expects, Fisker may be forced to decrease its level of investment in product development or scale back its operations, which could have an adverse impact on its business and financial prospects. See Note 1 to the audited consolidated financial statements included elsewhere in this Form 8-K.

 

16


Going Concern

As of September 30, 2020, the Company evaluated whether there were any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months. Since inception, the Company has incurred significant losses of approximately $60.5 million. The Company expects to continue to incur significant operating losses for the foreseeable future. As of September 30, 2020, the Company had approximately $45.0 million in cash and cash equivalents. The Company has historically funded its operations primarily through the sale of convertible debt and equity securities. However, given the anticipated cash received from the Business Combination and timing of expenditure assumptions, the Company currently expects that its cash will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months.

Debt

Fisker had $10.0 million of principal in convertible bridge notes outstanding on September 30, 2020. The convertible bridge notes are due July 29, 2021, with simple interest rate of 5% per annum. In June 2020, Fisker amended the terms of its convertible bridge notes to provide that a transaction with a Special Purpose Acquisition Corporation (“SPAC”), which includes the Business Combination, prior to repayment or conversion in full of the notes, would result, immediately prior to such SPAC transaction, in the automatic conversion of the outstanding principal and any accrued but unpaid interest under the convertible bridge notes into shares of Legacy Fisker’s Class A Common Stock (or, at the election of the Company, directly into proceeds paid to the holders of Legacy Fisker’s Class A Common Stock in connection with such SPAC transaction) at a price per share that is 75% of the price per share of Legacy Fisker’s Class A Common Stock paid in such SPAC transaction. Immediately prior to the Close, the outstanding principal and any accrued but unpaid interest under the convertible bridge notes were converted into 1,361,268 shares of Class A Common Stock.

Cash Flows

The following table provides a summary of Fisker’s cash flow data for the periods indicated:

 

     Nine Months Ended September 30,      Years Ended December 31,  
     2020      2019      2019      2018  
     (dollar amounts in thousands)  

Net cash used in operating activities

   $ (7,941    $ (4,911    $ (7,260    $ (3,417

Net cash used in investing activities

     (224      (14      (14      (48

Net cash provided by financing activities

     51,283        1,089        3,586        7,614  

Cash Flows used in Operating Activities

Fisker’s cash flows used in operating activities to date have been primarily comprised of costs related to research and development, payroll and other general and administrative activities. As Fisker continues to ramp up hiring ahead of starting commercial operations, Fisker expects its cash used in operating activities to increase significantly before it starts to generate any material cash flows from its business.

Net cash used in operating activities was $7.9 million in the nine months ended September 30, 2020, an increase from $4.9 million net cash used in the nine months ended September 30, 2019.

Net cash used in operating activities was $7.3 million in 2019, up from $3.4 million in 2018.

Cash Flows used in Investing Activities

Fisker’s cash flows from investing activities, to date, have been comprised mainly of purchases of property and equipment and have not been material. Fisker expects these costs to increase substantially in the near future as it ramps up activity ahead of commencing commercial operations.

Fisker had $0.2 million of investing cash flow activity in the nine months ended September 30, 2020 compared to a nominal amount of cash used in the nine months ended September 30, 2019. Net cash used in investing activities were also nominal for the years ended 2019 and 2018.

 

17


Cash Flows from Financing Activities

Through September 30, 2020, Fisker has financed its operations primarily through the sale of equity securities, and, to a lesser extent, convertible notes.

Net cash from financing activities was $51.3 million in the first nine months of 2020, reflecting mainly the issuance of $46.5 million in convertible equity securities, net of payments of $3.5 million to advisors, and $1.1 million in the comparative period of 2019. Net cash from financing activities was $3.6 million in 2019, reflecting mainly proceeds from the issuance of convertible notes. Net cash from financing activities was $7.6 million in 2018, mainly reflecting net proceeds from the issuance of equity securities.

Contractual Obligations and Commitments

The following table summarizes Fisker’s contractual obligations and other commitments for cash expenditures as of September 30, 2020, and the years in which these obligations are due:

 

     Payments Due by Period  
     Total      Less than
1 Year
     1-3 Years      3-5 Years      More than
5 years
 
     (Dollar amounts in thousands)  

Contractual Obligations:

              

Convertible bridge notes(1)

   $ 10,015      $ 10,015    $ —        $ —      $ —  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total

   $ 10,015      $ 10,015    $ —        $ —      $ —  

 

(1)

Amounts do not include interest, which accrues at a simple interest rate of 5% per annum, payable upon demand following maturity or at the time of conversion, whichever is earlier.

As of September 30, 2020, Fisker leased its headquarters space in the Los Angeles area under a single lease classified as an operating lease expiring on December 31, 2020. Subsequent to September 30, 2020, the Company executed two new leases for office space in the cities of Manhattan Beach and San Francisco, California over initial lease terms ranging from 42 months to 66 months.

Off-Balance Sheet Arrangements

Fisker is not a party to any off-balance sheet arrangements, as defined under SEC rules.

Critical Accounting Policies and Estimates

Fisker’s financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”). In the preparation of these financial statements, Fisker is required to use judgment in making estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported expenses incurred during the reporting periods. Fisker considers an accounting judgment, estimate or assumption to be critical when (1) the estimate or assumption is complex in nature or requires a high degree of judgment and (2) the use of different judgments, estimates and assumptions could have a material impact on the consolidated financial statements.

Fisker’s significant accounting policies are described in Note 2 to its audited consolidated financial statements included elsewhere in this Form 8-K. Because Fisker is a pre-revenue company without commercial operations, management believes it does not currently have any critical accounting policies or estimates. Management believes that the accounting policies most likely to become critical in the near future are those described below.

 

18


Stock-Based Compensation and Common Stock Valuation

Fisker recognizes the cost of share-based awards granted to employees and directors based on the estimated grant-date fair value of the awards. Cost is recognized on a straight-line basis over the service period, which is generally the vesting period of the award. Fisker reverses previously recognized costs for unvested options in the period that forfeitures occur. Fisker determines the fair value of stock options using the Black-Scholes option pricing model, which is impacted by the following assumptions:

 

   

Expected Term—Fisker uses the simplified method when calculating the expected term due to insufficient historical exercise data.

 

   

Expected Volatility—As Fisker’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 Fisker has never paid any cash dividends on 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.

Common Stock Valuations

Prior to the Business Combination, the grant date fair value of Fisker common stock was determined by the Board of Directors with the assistance of management and a third-party valuation specialist. Given its pre-revenue stage of development, management utilized that an Option Pricing Model (“OPM”) as the most appropriate method for allocating enterprise value to determine the estimated fair value of the Common Stock. Application of the OPM involves the use of estimates, judgment, and assumptions that are highly complex and subjective, such as those regarding Fisker’s expected future revenue, expenses, and cash flows, discount rates, market multiples, the selection of comparable companies, and the probability of future events. Now that Fisker’s stock is publicly traded, the Board of Directors intends to determine the fair value of Fisker common stock based on the closing market price on or around the date of grant.

Valuation of the Convertible Equity Security

Fisker measures convertible equity security at fair value based on significant inputs not observable in the market, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The valuation of the convertible equity security uses assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assesses these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. The fair value of the convertible equity security represents the fair value of the potential common stock to be issued to the holder of the convertible equity security in the event of the Business Combination. The significant unobservable input used in the fair value measurement of the Company’s convertible equity security is the probability of the Company’s closing of the Business Combination, which would trigger conversion of the convertible equity security. The Company assessed the probability of completing the Business Combination at 85% and the probability of not completing the Business Combination at 15%. Based on that assessment, the Company calculated the weighted fair value of the shares at approximately $79.0 million at September 30, 2020.

Emerging Growth Company Status

Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can choose not to take advantage of the extended transition period and comply with the requirements that apply to non-emerging growth companies, and any such election to not take advantage of the extended transition period is irrevocable.

Spartan is an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, and has elected to take advantage of the benefits of the extended transition period for new or revised financial accounting standards. Following the consummation of the Business Combination, Fisker expects to remain an emerging growth company at least through the end of the 2020 fiscal year and Fisker expects to continue to take advantage of the benefits of the extended transition period, although it may decide to early adopt such new or revised accounting

 

19


standards to the extent permitted by such standards. This may make it difficult or impossible to compare Fisker’s financial results with the financial results of another public company that is either not an emerging growth company or is an emerging growth company that has chosen not to take advantage of the extended transition period exemptions because of the potential differences in accounting standards used.

Recent Accounting Pronouncements

See Note 2 to the audited consolidated financial statements included elsewhere in this Form 8-K or in the proxy statement incorporated herein by reference for more information about recent accounting pronouncements, the timing of their adoption, and Fisker’s assessment, to the extent it has made one, of their potential impact on Fisker’s financial condition and its results of operations and cash flows.

Quantitative and Qualitative Disclosures About Market Risk

Fisker has not, to date, been exposed to material market risks given its early stage of operations. Upon commencing commercial operations, Fisker expects to be exposed to foreign currency translation and transaction risks and potentially other market risks, including those related to interest rates or valuation of financial instruments, among others.

Foreign Currency Risk

Fisker’s functional currency is the U.S. dollar, while certain of Fisker’s current and future subsidiaries are expected to have functional currencies in Euro and British pound sterling, reflecting their principal operating markets. Once Fisker commences commercial operations, it expects to be exposed to both currency transaction and translation risk. For example, Fisker expects its contracts with OEMs and/or tier-one automotive suppliers to be transacted in Euro or other foreign currencies. In addition, Fisker expects that certain of its subsidiaries will have functional currencies other than the U.S. dollar, meaning that such subsidiaries’ results of operations will be periodically translated into U.S. dollars in Fisker’s consolidated financial statements, which may result in revenue and earnings volatility from period to period in response to exchange rates fluctuations. To date, Fisker has not had material exposure to foreign currency fluctuations and has not hedged such exposure, although it may do so in the future.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information regarding the beneficial ownership of shares of Common Stock of the Company upon the Closing by:

 

   

each person known by the Company to be the beneficial owner of more than 5% of the Common Stock of the Company upon the Closing;

 

   

each of the Company’s executive officers and directors; and

 

   

all executive officers and directors of the Company as a group upon the Closing.

Beneficial ownership is determined according to the rules of the Commission, 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. In computing the number of shares of Common Stock beneficially owned by a person and the percentage ownership, the Company deemed outstanding shares of its Common Stock subject to options and warrants held by that person that are currently exercisable or exercisable within 60 days of the Closing Date. The Company did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.

The percentage ownership of Common Stock is based on 277,258,103 shares of Common Stock outstanding, comprised of 144,903,975 shares of Class A Common Stock and 132,354,128 shares of Class B Common Stock outstanding as of the Closing Date.

 

20


Unless otherwise indicated and subject to applicable community property laws, the Company believes that all persons named in the table have sole voting and investment power with respect to all shares of Common Stock of the Company beneficially owned by them.

Unless otherwise indicated below, the address of each beneficial owner listed in the table below is c/o Fisker Inc., 1888 Rosecrans Avenue, Manhattan Beach, California 90266.

 

Name and Address of Beneficial Owners

   Number of shares of
Class A Common

Stock
             %              Number of shares of
Class B Common

Stock
             %              % of Total
Voting Power **
 

Five Percent Holders

              

Magna International Inc.(1)

     19,474,454        6.6        —            —          —    

Current Directors and Named Executive Officers

              

Henrik Fisker(2)

     8,391,743        2.9        66,177,064        50.0        45.4  

Dr. Geeta Gupta(3)

     8,432,486        3.0        66,177,064        50.0        45.4  

Wendy J. Greuel(4)

     1,981        *        —          —          —    

Mark E. Hickson(5)

     1,415        *        —          —          —    

William R. McDermott(6)

     849        *        —          —          —    

Roderick K. Randall(7)

     3,510,633        1.3        —          —          —    

Nadine I. Watt(8)

     368,671        *        —          —          —    

All Directors and Executive Officers as a Group

    (8 Individuals)

     20,721,359        7.3        132,354,128        100.0        90.8  

 

*

Less than one percent.

**

Percentage of total voting power represents voting power with respect to all shares of Class A Common Stock and Class B Common Stock, as a single class. Each share of Class B Common Stock is entitled to ten votes per share and each share of Class A Common Stock is entitled to one vote per share. For more information about the voting rights of Common Stock, see the section titled “Description of Securities” in the Proxy Statement.

(1)

Consists of warrants to purchase 19, 474,454 shares of Class A Common Stock. The business address for this securityholder is 337 Magna Drive, Aurora, Ontario, L4G 7K1, Canada.

(2)

Consists of (i) 66,177,064 shares of Class B Common Stock, (ii) 50% of the 941,518 shares (470,759 shares) of Class A Common Stock held by HF Holdco, LLC, and (iii) 7,920,984 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days after the Closing Date. Mr. Fisker, a member of the Board of Directors serves as a Member of HF Holdco, LLC and as such, has shared voting and dispositive power with respect to the shares held by HF Holdco, LLC. and may be deemed to beneficially own the shares of Common Stock held by HF Holdco, LLC.

(3)

Consists of (i) 66,177,064 shares of Class B Common Stock, (ii) 50% of the 941,518 shares (470,759 shares) of Class A Common Stock held by HF Holdco, LLC, and (iii) 7,961,727 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days after the Closing Date. Dr. Gupta, a member of the Board of Directors serves as a Member of HF Holdco, LLC and as such, has shared voting and dispositive power with respect to the shares held by HF Holdco, LLC. and may be deemed to beneficially own the shares of Common Stock held by HF Holdco, LLC.

(4)

Represents shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days after the Closing Date.

(5)

Represents shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days after the Closing Date.

(6)

Represents shares of Class A Common Stock issuable upon the exercise of options exercisable within 60 days after the Closing Date.

(7)

Consists of (i) 1,829,662 shares of Class A Common Stock, (ii) 108,105 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days after the Closing Date, (iii) 1,543,275 shares of Class A Common Stock held by the Randall Group’s Series Fisker, and (iv) 29,591 shares of Class A Common Stock held by the Randall Group’s Fisker Series C. Mr. Roderick Randall, a member of the Board of Directors, is the Managing Director of the Randall Group’s Series Fisker and Fisker Series C (the “Randall Group”). As Managing Director of the Randall Group, Mr. Randall has voting and dispositive power with respect to the shares held by the Randall Group and he may be deemed to beneficially own the shares of common stock held by the Randall Group.

(8)

Consists of (i) 366,690 shares of Class A Common Stock held by the Nadine Watt Jameson Family Trust, of which Ms. Watt is the trustee, and (ii) 1,981 shares of Class A Common Stock issuable upon the exercise of stock options exercisable within 60 days after the Closing Date. Ms. Watt is the sole trustee of the Nadine Watt Jameson Family Trust and holds sole voting and dispositive power with respect to the shares held of record by Nadine Watt Jameson Family Trust.

 

21


Directors and Executive Officers

Information with respect to the Company’s directors and executive officers after the Closing are described in the Proxy Statement in the section titled “Management After the Business Combination” beginning on page 219 and that information is incorporated herein by reference.

Board Composition

As previously disclosed, at the Special Meeting, on October 28, 2020, Henrik Fisker, Dr. Geeta Gupta, Wendy J. Greuel, Mark E. Hickson, William R. McDermott, Roderick K. Randall and Nadine I. Watt were elected by the Company’s stockholders to serve as directors effective immediately upon the Closing.

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 to twelve members, and Henrik Fisker, Dr. Geeta Gupta, Wendy J. Greuel, Mark E. Hickson, William R. McDermott, Roderick K. Randall and Nadine I. Watt were appointed to fill the vacancies on the Board and serve as directors of the Company. Upon the Closing, Geoffrey Strong, John J. MacWilliams, Robert C. Reeves, John M. Stice and Jan C. Wilson resigned as directors of the Company and the size of the Board was decreased from twelve members to seven.

In addition, Wendy J. Greuel and Roderick K. Randall were appointed to serve as Class I directors, with terms expiring at the Company’s first annual meeting of stockholders following the Closing; Dr. Geeta Gupta, William R. McDermott and Nadine I. Watt were appointed to serve as Class II directors, with terms expiring at the Company’s second annual meeting of stockholders following the Closing; and Henrik Fisker and Mark E. Hickson were appointed to serve as Class III directors, with terms expiring at the Company’s third annual meeting of stockholders following the Closing. Biographical information for these individuals is set forth in the Proxy Statement in the section titled “Management After the Business Combination” which information is incorporated herein by reference.

Director Independence

The Board has determined that Wendy J. Greuel, Mark E. Hickson, William R. McDermott, Roderick K. Randall and Nadine I. Watt are independent as defined under the listing standards of NYSE.

Committees of the Board of Directors

Effective upon the Closing, the standing committees of the Board consist of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee.

Upon the Closing, the Board appointed Wendy J. Greuel, Mark E. Hickson and William R. McDermott to serve on the Audit Committee, with Ms. Greuel as chairperson. The Board appointed Nadine I. Watt and Roderick K. Randall to serve on the Compensation Committee, with Ms. Watt as chairperson. The Board appointed Mark E. Hickson to serve on the Nominating and Corporate Governance Committee, with Mr. Hickson as chairperson.

Executive Officers

Effective as of the Closing, each of Geoffrey Strong and James Crossen, resigned as the Chief Executive Officer and Chief Financial Officer and Chief Accounting Officer of the Company, respectively. Effective as of the Closing, the Board appointed Henrik Fisker to serve as Chairman of the Board, President and Chief Executive Officer, Dr. Geeta Gupta to serve as Chief Financial Officer and Dr. Burkhard J. Huhnke to serve as Chief Technology Officer. Biographical information for these individuals is set forth in the Proxy Statement in the section titled “Management After the Business Combination” which information is incorporated herein by reference.

 

22


Director Compensation

The Board adopted an Outside Director Compensation Policy (the “Policy”), effective as of the consummation of the Business Combination, which Policy sets forth the terms upon which non-employee directors will be compensated for their service on the Board. Under the terms of the Policy, each non-employee director will receive an annual cash retainer of $50,000 and the lead independent director (if applicable) will receive an additional annual cash retainer of $25,000. The chairpersons of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee will receive additional annual cash retainers of $25,000, $18,000 and $10,000, respectively. Other members of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee will receive additional annual cash retainers of $10,000, $7,500 and $5,000, respectively.

Under the terms of the Policy, (a) on the date of each annual meeting of the Company, each continuing non-employee director will also receive a grant of restricted stock units having a value of $200,000, vesting in equal quarterly installments over the 12-month period following the grant date, and (b) on the date any non-employee director is newly elected or appointed, such person will receive a grant of restricted stock units having a value of $200,000, pro-rated based on the number full months that are expected to lapse between such appointment date and the next annual meeting of the Company and vesting in equal installments on each full quarterly anniversary from the Company’s last annual meeting that are expected to lapse between the director’s election or appointment and the next annual meeting, subject in each case to such director’s continued service as a member of the Board through each applicable vesting date. Restricted stock units granted under the Policy will automatically vest on a change in control of the Company during the director’s service period. Under the terms of the Policy, non-employee directors may elect to convert all or a portion of their annual cash retainer for Board service (not including any annual retainer that a director may receive for serving as lead director (if applicable) and not including any annual retainers for committee service) into restricted stock units or to convert all or a portion of their restricted stock units into cash, as more fully set forth in the terms of the Policy.

The foregoing description of the Outside Director Compensation Policy does not purport to be complete and is qualified in its entirety by reference to the full text of the Outside Director Compensation Policy, a copy of which is attached hereto as Exhibit 10. 9 and is incorporated herein by reference.

Executive Compensation

In October 2020, the Board adopted the Executive Incentive Bonus Plan, or Bonus Plan, effective as of the consummation of the Business Combination. The purpose of the Bonus Plan is to motivate and reward eligible officers and employees for their contributions toward the achievement of certain performance goals.

Administration. The Bonus Plan will be administered by the Compensation Committee, which shall have the discretionary authority to interpret the provisions of the Bonus Plan, including all decisions on eligibility to participate, the establishment of performance goals, the number of awards payable under the plan, and the payment of awards. The Compensation Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Bonus Plan to one or more directors and/or officers of the Company.

Performance criteria. The Compensation Committee may establish cash bonus targets and corporate performance metrics for a specific performance period or fiscal year pursuant to the Bonus Plan. Corporate performance goals may be based on one or more of the following criteria, as determined by the Compensation Committee and any adjustments thereto established by the Compensation Committee: (i) sales or non-sales revenue; (ii) return on revenues; (iii) operating income; (iv) income or earnings including operating income; (v) income or earnings before or after taxes, interest, depreciation, and/or amortization; (vi) income or earnings from continuing operations; (vii) net income; (viii) pre-tax income or after-tax income; (ix) net income excluding amortization of intangible assets, depreciation, and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (x) raising of financing or fundraising; (xi) project financing; (xii) revenue backlog; (xiii) gross margin; (xiv) operating margin or profit margin; (xv) capital expenditures, cost targets, reductions, and savings and expense management; (xvi) return on assets (gross or net), return on investment, return on capital, or return on stockholder equity; (xvii) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (xviii) performance warranty and/or guarantee claims; (xix) stock price or total stockholder return; (xx) earnings or book value per share (basic or diluted); (xxi) economic value created; (xxii) pre-tax profit or after-tax profit; (xxiii) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share, completion of strategic agreements such as licenses, funded collaborations, joint ventures acquisitions, and the like, geographic business expansion, objective customer satisfaction or information technology goals, or intellectual property asset metrics; (xxiv) objective goals relating to divestitures, joint ventures, mergers, acquisitions, and similar transactions; (xxv) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction

 

23


scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, or completion of critical staff training initiatives; (xxvi) objective goals relating to projects, including project completion, timing and/or achievement of milestones, project budget, or technical progress against work plans; (xxvii) key regulatory objectives or milestones; and (xxviii) enterprise resource planning.

However, awards issued to participants may take into account other factors (including subjective factors). Performance goals may differ from participant to participant, performance period to performance period, and from award to award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, any increase (or decrease) over the passage of time and/or any measurement against other companies or financial or business or stock index metrics particular to the Company), (iii) on a per share and/or share per capita basis, (iv) against the Company’s performance as a whole or against any of the Company’s affiliate(s), or a particular segment(s), a business unit(s) or a product(s) of the Company or individual project company, (v) on a pre-tax or after-tax basis, and/or (vi) using an actual foreign exchange rate or on a foreign exchange neutral basis.

Service requirement. Unless otherwise determined by the Compensation Committee, a participant must be actively employed and in good standing with the Company on the date the award is paid. The Compensation Committee may make exceptions to this requirement in the case of retirement, death or disability, an unqualified leave of absence or under other circumstances, as determined by the Compensation Committee in its sole discretion.

Amendment or Termination. The Compensation Committee may terminate the Bonus Plan at any time, provided such termination shall not affect the payment of any awards accrued under the Bonus Plan prior to the date of the termination. The Compensation Committee may, at any time, or from time to time, amend or suspend and, if suspended, reinstate, the Bonus Plan in whole or in part.

The foregoing description of the Executive Incentive Bonus Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Executive Incentive Bonus Plan, a copy of which is attached hereto as Exhibit 10. 10 and is incorporated herein by reference.

Severance Agreements

In September 2020, the Legacy Fisker compensation committee approved severance benefits for Mr. Fisker and Dr. Gupta after reviewing certain market data provided by the independent consulting firm, Compensia, and taking into account the historically low cash compensation paid to Mr. Fisker and Dr. Gupta. The Company entered into severance agreements with Mr. Fisker and Dr. Gupta setting forth these severance benefits.

Henrik Fisker. Pursuant to the severance agreement entered into with Mr. Fisker, if Fisker terminates Mr. Fisker’s employment without cause or Mr. Fisker resigns for good reason, Mr. Fisker will be entitled to receive a cash payment equal to $9,682,000, plus the amount equal to 24 months of COBRA premium payments, in each case, less applicable withholding taxes and subject to, among other things, executing a general release of claims in favor of the Company and complying with the terms of his confidentiality agreement.

Dr. Geeta Gupta. Pursuant to the severance agreement entered into with Dr. Gupta, if Fisker terminates Dr. Gupta’s employment without cause or Dr. Gupta resigns for good reason, Dr. Gupta will be entitled to receive a cash payment equal to $4,597,500, plus the amount equal to 24 months of COBRA premium payments, in each case, less applicable withholding taxes and subject to, among other things, executing a general release of claims in favor of the Company and complying with the terms of her confidentiality agreement.

The foregoing description of the executive severance agreements does not purport to be complete and is qualified in its entirety by reference to the full text of the form of executive severance agreement, a copy of which is attached hereto as Exhibit 10.11 and is incorporated herein by reference.

 

24


Certain Relationships and Related Transactions

This section should be read in conjunction with the information included in the Proxy Statement in the section titled “Certain Relationships and Related Party Transactions” beginning on page 244 of the Proxy Statement, which is incorporated herein by reference.

The following includes a summary of transactions since January 1, 2017, to which Legacy Fisker has been a participant in which the amount involved exceeded or will exceed $120,000, and in which any of the Company’s directors, executive officers or beneficial owners of more than 5% of the Company’s capital stock or any member of the immediate family of any of the foregoing persons had or will have a direct or indirect material interest, other than equity and other compensation, termination, change in control and other arrangements, which are described in this Current Report on Form 8-K under the section titled “Executive Compensation.” Described below are certain other transactions with the Company’s directors, executive officers and stockholders.

Equity Financings

Series A Preferred Stock

Between January 1, 2017 and March 2018, Legacy Fisker sold an aggregate of 291,033 shares (pre-business combination) of its Series A Preferred Stock at a purchase price of $7.48 per share (prior to the stock split) representing 2,910,330 shares post stock split to accredited investors for an aggregate purchase price of approximately $2.1 million. Each share of Series A Preferred Stock was exchanged for such number of shares of Class A Common Stock at an exchange ratio of 2.7162 in connection with the consummation of the Business Combination, as provided in the Business Combination Agreement.

The following table summarizes issuances of the Series A Preferred Stock to members of the Board and holders of more than 5% of the Company’s capital stock.

 

Name of Stockholder(1)

   No. of Shares
(Series A)*
   Aggregate
Purchase Price
 

Roderick Randall(2)

   668,440    $ 499,993.12  

Series Fisker, a separate series of The Randall Group, LLC(2)

   568,170    $ 424,991.16  

Nadine I. Watt Jameson Family Trust(3)

   135,000    $ 100,980.00  

HF Holdco LLC(4)

   334,220    $ 249,996.56  

 

*

All share numbers are pre-business combination.

(1)

Additional details regarding these stockholders and their equity holdings are described in the Proxy Statement in the section titled “Beneficial Ownership of Securities.”

(2)

Mr. Roderick Randall, a member of the Board, is the Series Manager of Series Fisker, a separate series of The Randall Group, LLC.

(3)

Ms. Nadine Watt, a member of the Board, is the Trustee of Nadine I. Watt Jameson Family Trust.

(4)

Mr. Henrik Fisker and Dr. Geeta Gupta — directors and officers of the Company and holders of greater than 5% of the Company’s capital stock — are each a Member of HF Holdco LLC.

Convertible Notes

From July 2019 through July 3, 2020, Legacy Fisker entered into a Convertible Note Purchase Agreement pursuant to which it issued $9,546,434.00 and €400,000 in aggregate principal amounts of convertible promissory notes, which are referred to as the Convertible Notes. The Convertible Notes accrued interest at a rate of 5% per year.

 

25


The following table summarizes the Convertible Notes purchased by members of the Company’s Board and holders of more than 5% of the Company’s capital stock.

 

Name of Stockholder(1)

   Convertible Notes
Principal Amount and
Interest($)
     Shares of Class A
Common Stock
 

Roderick Randall(2)

   $ 106,273.97        14,031  

The Randall Group Fisker Series C(2)

   $ 224,098.63        29,588  

Henrik Fisker* and Geeta Gupta* and affiliated entities(3)

   $ 255,239.73        33,072  

 

*

Owners of more than 5% of the Company’s capital stock.

(1)

Additional details regarding these stockholders and their equity holdings are described in the Proxy Statement in the section titled “Beneficial Ownership of Securities.”

(2)

Mr. Randall, a member of the Board, is the Managing Director of the Randall Group Fisker Series C. Pursuant to a letter agreement dated July 29 2019, entered into in connection with the Convertible Note Purchase Agreement, Mr. Randall was granted the right to receive a base model Fisker electric SUV.

(3)

Mr. Fisker and Dr. Gupta are each a Member of HF Holdco LLC. On May 29, 2020, the Company entered into the Convertible Note Purchase Agreement with HF Holdco LLC, whereby the Convertible Note was issued to HF Holdco LLC in the principal amount of $250,000, in satisfaction of advances made by Mr. Fisker and Dr. Gupta in connection with the formation of the Company.

Roderick Randall, a member of the Board, provides certain services to the Company pursuant to a consulting agreement entered into with the Company dated May 1, 2017. In connection with the consulting agreement, Mr. Randall received an option grant to purchase 58,820 shares (pre-business combination) of Class A Common Stock. Mr. Randall also received an option grant to purchase 25,000 and 5,000 shares (pre-business combination) of Class A Common Stock on June 22, 2020.

Private Warrants (Magna International Inc.)

On October 14, 2020, the Company and Spartan entered into a Cooperation Agreement with Magna which provides that the Company would issue to Magna (or to an affiliate of Magna) warrants to purchase Class A Common Stock in an amount equal to six percent (6%) of the Company’s capital stock on a fully diluted basis. On October 29, 2020, the Company issued Magna 19,474,454 Magna Warrants. The Magna Warrants are subject to vesting upon the achievement of certain milestones as set forth in the Cooperation Agreement. Additionally, the shares of Class A Common Stock underlying the Magna Warrants are entitled to registration rights under the Amended and Restated Registration Rights Agreement and Magna entered into a lock-up agreement on the same terms as the other investors in the Company.

Private Placement

On October 29, 2020, a number of purchasers purchased from the Company an aggregate of 50,000,000 shares of Class A Common Stock for a purchase price of $10.00 per share and an aggregate purchase price of $500 million (the “PIPE Financing”). The PIPE Financing was consummated concurrently with the Closing.

Amended and Restated Investors’ Rights Agreement

In April 2018, the Company entered into an amended and restated investors’ rights agreement (the “Investors’ Rights Agreement”) with certain holders of the Company’s capital stock including certain directors, officers and 5% holders of the Company’s capital stock. The Investors’ Rights Agreement terminated in accordance with its terms at the closing of the Business Combination.

Other transactions

Indemnification agreements and directors’ and officers’ liability insurance

The Company entered into indemnification agreements with each of the Company’s directors and executive officers as of the Closing. The indemnification agreements and the Company’s bylaws require the Company to indemnify its directors and officers to the fullest extent permitted by Delaware law, including indemnification of expenses such as attorneys’ fees, judgments, penalties, fines and settlement amounts incurred by the director or executive officer in any

 

26


action or proceeding, including any action or proceeding by or in right of the Company, arising out of the person’s services as a director or executive officer. The Company has obtained an insurance policy that insures its directors and officers against certain liabilities, including liabilities arising under applicable securities laws. For more information regarding these indemnification agreements, see the section titled “Management After the Business Combination—Limitation on Liability and Indemnification of Directors and Officers in the Proxy Statement.

Executive compensation

The Company has granted stock options and other equity awards to the Company’s executive officers and certain of its directors that provide for change in control benefits. For a description of these options and equity awards, see the sections titled “—Executive Compensation” and “Executive Compensation—Fisker” in the Proxy Statement.

Policies and procedures for related party transactions

The Audit Committee Charter became effective upon the Closing of the Business Combination. The Audit Committee Charter states that the Audit Committee is responsible for reviewing and approving in advance any related party transaction. The Board adopted a written related person transaction policy setting forth the policies and procedures for the review and approval or ratification of related person transactions by the Audit Committee.

Pursuant to the policy, all of the Company’s directors, officers and employees will be required to report to the Audit Committee prior to entering into any transaction, arrangement or relationship, or any series of similar transactions, arrangements or relationships in which the Company is to be a participant, the amount involved exceeds $120,000 and a related person had or will have a direct or indirect material interest, including purchases of goods or services by or from the related person or entities in which the related person has a material interest, indebtedness, guarantees of indebtedness and employment by the Company of a related person.

The Company believes that the Company has executed all of the transactions described herein on terms no less favorable to the Company than the Company could have obtained from unaffiliated third parties. It is the Company’s intention to ensure that all future transactions between the Company and its officers, directors and principal stockholders and their affiliates, are approved by the Audit Committee, and are on terms no less favorable to the Company than those that the Company could obtain from unaffiliated third parties.

Legal Proceedings

Reference is made to the disclosure regarding legal proceedings of the Company in the section of the Proxy Statement titled “Information About Fisker—Legal Proceedings” and is incorporated herein by reference.

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

Prior to the Closing, the Company’s publicly traded Class A Common Stock, public warrants and units were listed on NYSE under the symbols “SPAQ,” “SPAQ WS” and “SPAQ.U,” respectively. Upon the Closing, the Class A Common Stock and public warrants were listed on NYSE under the symbols “FSR” and “FSR WS,” respectively. The Company’s publicly traded units automatically separated into their component securities upon the Closing and, as a result, no longer trade as a separate security and were delisted from NYSE.

The Company has not paid any cash dividends on shares of its Class A Common Stock to date. The payment of any cash dividends in the future will be dependent upon the Company’s revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends will be within the discretion of the Board.

Recent Sales of Unregistered Securities

Reference is made to the disclosure set forth under Item 3.02 of this Current Report on Form 8-K concerning the issuance and sale by the Company of certain unregistered securities, which is incorporated herein by reference.

 

27


Description of Registrant’s Securities

The description of the Company’s securities is contained in the Proxy Statement in the section titled “Description of Securities” beginning on page 227 and 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 titled “Management After the Business Combination—Limitations on Liability and Indemnification of Directors and Officers” which information is incorporated herein by reference. The disclosure set forth in Item 1.01 of this Current Report on Form 8-K under the section titled “Indemnification Agreements” is incorporated by herein by reference.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

The information set forth under Item 4.01 of this Current Report on Form 8-K is incorporated herein by reference.

Financial Statements and Exhibits

The information set forth under 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 issuance of Class A Common Stock upon automatic conversion of Class B Common Stock at the Closing has not been registered under the Securities Act in reliance on the exemption from registration provided by Section 3(a)(9) of the Securities Act.

The securities issued in connection with the Business Combination Agreement have not been registered under the Securities Act in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act.

As previously disclosed, in connection with the execution of the Business Combination Agreement, the Company entered into subscription agreements, each dated July 10, 2020 (the “Subscription Agreements”), with certain investors pursuant to which the investors agreed to purchase 50,000,000 shares of Class A Common Stock in a private placement for an aggregate purchase price of $500 million (the “PIPE Financing”). The PIPE Financing was consummated concurrently with the Closing. The shares of Class A Common Stock issued in the PIPE Financing have not been registered under 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.

On October 29, 2020, the Company issued the Magna Warrants exercisable for up to 19,474,454 shares of the Company’s Class A Common Stock, subject to adjustment, in a private placement pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) of the Securities Act. The Magna Warrants were issued pursuant to the Cooperation Agreement entered into by the Company and Magna, the holder of the Magna Warrants (the “Holder”), dated October 15, 2020. The Company has relied on the exemption from registration under the Securities Act based in part on representations made by the Holder in the agreement pursuant to which the Warrants were issued that it is an “accredited investor” as defined in Rule 501 under the Securities Act and that the Magna Warrants are being acquired for investment purposes and not with a view to or for sale in connection with any distribution thereof in violation of any federal or state securities laws.

 

28


The Magna Warrants are subject to vesting as follows:

 

Milestones

   Percentage of
Warrants that
Vest Upon
Achievement
 

(i) Achievement of the “preliminary production specification” gateway as set forth in the Development Agreement; (ii) entering into the Platform Agreement; and (iii) entering into the Initial Manufacturing Agreement

     33.3

(i) Achievement of the “target agreement” gateway as set forth in the Development Agreement and (ii) entering into the Detailed Manufacturing Agreement, which will contain terms and conditions agreed to in the Initial Manufacturing

     33.3

Start of pre-serial production

     33.4

The exercise price for the Magna Warrants is $0.01 per share of Class A Common Stock. The Magna Warrants will vest in full upon a change of control of the Company. Once vested, the Magna Warrants may be exercised at the election of the Holder, in whole but not in part, by the tender to the Company of a notice of exercise. The Warrants will expire on October 29, 2030.

 

Item 3.03

Material Modification to Rights of Security Holders.

The disclosure set forth under 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 October 29, 2020, the Audit Committee of the Board approved the engagement of Deloitte & Touche LLP (“Deloitte”) as the Company’s independent registered public accounting firm to audit the Company’s consolidated financial statements for the year ended December 31, 2020. Deloitte served as the independent registered public accounting firm of Legacy Fisker prior to the Business Combination. Accordingly, WithumSmith+Brown, PC (“WithumSmith”), the Company’s independent registered public accounting firm prior to the Business Combination, was informed that it would be replaced by Deloitte as the Company’s independent registered public accounting firm following the completion of WithumSmith’s review of the quarter ended September 30, 2020, which consists only of the accounts of the pre-Business Combination special purpose acquisition company. This decision was approved by the Board.

The report of WithumSmith, independent registered public accounting firm, dated March 12, 2020, on the Company’s financial statements as of December 31, 2019, and for the period from October 13, 2017 (inception) through December 31, 2019, did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainties, audit scope or accounting principles other than the Company’s ability to continue as a going concern due to the Company’s obligation to either complete a business combination by the close of business on August 14, 2020, or cease all operations except for the purpose of winding down and liquidating.

During the period of WithumSmith’s engagement by the Company, during the period from October 13, 2017 (inception) to December 31, 2019, and the subsequent period through October 28, 2020, there were no disagreements with WithumSmith on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of WithumSmith, would have caused it to make a reference to the subject matter of the disagreement in connection with its report covering such period. In addition, no “reportable events,” as defined in Item 304(a)(1)(v) of Regulation S-K, occurred within the period of WithumSmith’s engagement and the subsequent interim period preceding WithumSmith’s dismissal.

During the period from October 13, 2017 (inception) through December 31, 2019, and the subsequent interim period preceding the engagement of Deloitte, neither the Company nor anyone on the Company’s behalf consulted with Deloitte regarding (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 Deloitte that Deloitte 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, or a reportable event, as that term is defined in Item 304(a)(1)(v) of Regulation S-K.

 

29


The Company provided WithumSmith with a copy of the foregoing disclosures prior to the filing of this Current Report on Form 8-K and requested that WithumSmith furnish a letter addressed to the Commission stating, which is attached hereto as Exhibit 16.1, stating whether it agrees with such disclosures, and, if not, stating the respects in which is does not agree.

 

Item 5.01.

Changes in Control of Registrant.

The disclosure set forth in the “Introductory Note” above and 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 disclosure set forth in Item 2.01 of this Current Report on Form 8-K under the sections titled “Directors and Executive Officers,” “Director Compensation” and “Executive Compensation” is incorporated by herein by reference.

2020 Equity Incentive Plan

As previously disclosed, at the Special Meeting, on October 28, 2020, the stockholders of the Company considered and approved the 2020 Equity Incentive Plan. The 2020 Equity Incentive Plan was previously approved, subject to stockholder approval, by the Board on October 4, 2020. The 2020 Equity Incentive Plan became effective immediately upon the Closing.

A description of the 2020 Equity Incentive Plan is included in the Proxy Statement in the section titled “Proposal No. 6—The 2020 Plan Proposal” which is incorporated herein by reference. The foregoing description of the 2020 Equity Incentive Plan does not purport to be complete and is qualified in its entirety by the full text of the 2020 Equity Incentive Plan and the related forms of award agreements under the 2020 Equity Incentive Plan, which are attached hereto as Exhibit 10.12 and incorporated herein by reference.

2020 Employee Stock Purchase Plan

As previously disclosed, at the Special Meeting, on October 28, 2020, the stockholders of the Company considered and approved the 2020 Employee Stock Purchase Plan. The 2020 Employee Stock Purchase Plan was previously approved, subject to stockholder approval, by the Board on October 4, 2020. The 2020 Employee Stock Purchase Plan became effective immediately upon the Closing.

A description of the 2020 Employee Stock Purchase Plan is included in the Proxy Statement in the section titled “Proposal No. 7—The ESPP Proposal” which is incorporated herein by reference. The foregoing description of the ESPP does not purport to be complete and is qualified in its entirety by the full text of the 2020 Employee Stock Purchase Plan, which is attached hereto as Exhibit 10. 13 and incorporated herein by reference.

 

Item 5.06.

Change in Shell Company Status.

As a result of the Business Combination, 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 upon the Closing. A description of the Business Combination and the terms of the Business Combination Agreement are included in the Proxy Statement in the section titled “Proposal No. 1—The Business Combination Proposal—The Business Combination Agreement” which is incorporated herein by reference.

 

30


Item 9.01

Financial Statements and Exhibits.

 

(a)

Financial statements of businesses acquired.

The consolidated financial statements of Legacy Fisker as of and for the years ended December 31, 2019 and 2018 included in the Proxy Statement beginning on page F-56 are incorporated herein by reference.

The unaudited condensed consolidated financial statements of Legacy Fisker for the nine months ended September 30, 2020 and 2019 is set forth in Exhibit 99.2 hereto and is incorporated herein by reference.

 

(b)

Pro forma financial information.

The unaudited pro forma condensed combined financial information of the Company as of and for the nine months ended September 30, 2020 is set forth in Exhibit 99.3 hereto and is incorporated herein by reference.

 

(c)

List of Exhibits.

 

Exhibit
No.

  

Description

    2.1*

   Business Combination Agreement and Plan of Reorganization, dated as of July 10, 2020, by and among Spartan Energy Acquisition Corp., Spartan Merger Sub and Fisker Inc (incorporated by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 13, 2020.

    3.1

   Second Amended and Restated Certificate of Incorporation of the Company.

    3.2

   Amended and Restated By-Laws of the Company.

    4.1

   Specimen Class A Common Stock Certificate (incorporated by reference to Exhibit 4.2 to the Company’s Registration Statement on Form S-1/A (Registration No. 333-226274), filed with the Securities and Exchange Commission on July 27, 2018).

    4.2

   Specimen Warrant Certificate (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statement on Form S-1/A (Registration No. 333-226274), filed with the Securities and Exchange Commission on July 27, 2018).

    4.3

   Warrant Agreement, dated August 9, 2018, between Continental Stock Transfer & Trust Company and Spartan Energy Acquisition Corp. (incorporated by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on August 14, 2018).

    4.4

   Warrants to Purchase Shares of Class A Common Stock issued to Magna International Inc. dated October 29, 2020.

  10.1

   Sponsor Agreement, dated July 10, 2020 by and between Spartan Energy Acquisition Corp. and Spartan Energy Acquisition Sponsor LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 13, 2020).

  10.2

   Amended and Restated Registration Rights Agreement, dated as of October 29, 2020, by and among the Company, Spartan Energy Acquisition Sponsor LLC and certain other parties.

  10.3

   Form of Lock-Up Agreement.

  10.4

   Form of Subscription Agreement (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on July 13, 2020).

  10.5

   Form of Indemnification Agreement.

  10.6*

   Cooperation Agreement by and among the Company, Magna International Inc., and Spartan Energy Acquisition Corp. dated as of October 14, 2020 (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on October 15, 2020).

  10.7*

   Sublease Agreement by and between Cosmo Co., USA, and the Company, dated as of September 21, 2020.

  10.8

   Lease Agreement by and between Continental 830 Nash LLC and the Company, dated as of October 2, 2020.

  10.9†

   Fisker Inc. Outside Director Compensation Policy.

 

31


  10.10†

   Fisker Inc. Executive Incentive Bonus Plan.

  10.11†

   Fisker Inc. Form of Executive Severance Agreement.

  10.12†

   Fisker Inc. 2020 Equity Incentive Plan and related forms of award agreements.

  10.13†

   Fisker Inc. 2020 Employee Stock Purchase Plan.

  10.14†

   Fisker Inc. 2016 Equity Incentive Plan, as amended, and related form of option agreement.

  16.1

   Letter to the Securities and Exchange Commission from WithumSmith+Brown, PC, dated November 4, 2020.

  21.1

   List of Subsidiaries.

  99.1

   Selected historical financial data of Fisker Inc. for the nine months ended September 30, 2019 and 2020, and the years ended December 31, 2018 and 2019.

  99.2

   Unaudited condensed consolidated financial statements of Fisker Inc., for the nine months ended September 30, 2020.

  99.3

   Unaudited pro forma condensed consolidated combined financial information of Fisker Inc., for the nine months ended September 30, 2020.

  104

   Cover Page Interactive Data File (formatted as Inline XBRL).

 

*

The schedules to this Exhibit have been omitted in accordance with Regulation S-K Item 601(b)(2). The Company agrees to furnish supplementally a copy of any omitted schedule to the Securities and Exchange Commission upon its request.

Indicates a management contract or compensatory plan, contract or arrangement.

 

32


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.

 

    Fisker Inc.
Date: November 4, 2020     By:  

/s/ Henrik Fisker

    Name:   Henrik Fisker
    Title:   President and Chief Executive Officer

Exhibit 3.1

SECOND AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF

SPARTAN ENERGY ACQUISITION CORP.

Spartan Energy Acquisition Corp., a corporation organized and existing under the laws of the State of Delaware, does hereby certify as follows:

A. The name of this corporation is Spartan Energy Acquisition Corp. Its original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on October 13, 2017 under the name Nike Energy Acquisition Corp.

B. This Second Amended and Restated Certificate of Incorporation (this “Restated Certificate of Incorporation”) was duly adopted by the Board of Directors of this corporation and by the stockholders in accordance with Sections 242 and 245 of the General Corporation Law of the State of Delaware.

C. The text of the Amended and Restated Certificate of Incorporation of this corporation is hereby amended and restated in its entirety to read as follows:

ARTICLE I

The name of this corporation is Fisker Inc. (the “Corporation”).

ARTICLE II

The address of the Corporation’s registered office in the State of Delaware is 1209 Orange Street, Wilmington, New Castle County, Delaware 19801. The name of its registered agent at such address is National Registered Agents, Inc.

ARTICLE III

The nature of the business or purposes to be conducted or promoted by the Corporation is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of the State of Delaware (the “General Corporation Law”).

ARTICLE IV

Section 1. Total Authorized

1.1 The total number of shares of all classes of stock that the Corporation has authority to issue is 915,000,000 shares, consisting of three classes: 750,000,000 shares of Class A Common Stock, $0.00001 par value per share (“Class A Common Stock”), 150,000,000 shares of Class B Common Stock, $0.00001 par value per share (“Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”) and 15,000,000 shares of Preferred Stock, $0.00001 par value per share (“Preferred Stock”).


1.2 The number of authorized shares of Class A Common Stock or Class B Common Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of capital stock representing a majority of the voting power of all the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, and no vote of the holders of the Class A Common Stock or Class B Common Stock voting separately as a class shall be required therefor.

Section 2. Preferred Stock

2.1 The Corporation’s Board of Directors (the “Board”) is authorized, subject to any limitations prescribed by the law of the State of Delaware, by resolution or resolutions adopted from time to time, to provide for the issuance of shares of Preferred Stock in one or more series, and, by filing a certificate of designation pursuant to the applicable law of the State of Delaware (the “Certificate of Designation”), to establish from time to time the number of shares to be included in each such series, to fix the designation, vesting, powers (including voting powers), preferences and relative, participating, optional or other rights (and the qualifications, limitations or restrictions thereof) of the shares of each such series and to increase (but not above the total number of authorized shares of the class) or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series. The number of authorized shares of Preferred Stock may also 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 voting power of all the then-outstanding shares of capital stock of the Corporation entitled to vote thereon, without a separate vote of the holders of the Preferred Stock or any series thereof, irrespective of the provisions of Section 242(b)(2) of the General Corporation Law, unless a vote of any such holders is required pursuant to the terms of any Certificate of Designation designating a series of Preferred Stock.

2.2 Except as otherwise expressly provided in any Certificate of Designation designating any series of Preferred Stock pursuant to the foregoing provisions of this Article IV, (i) any new series of Preferred Stock may be designated, fixed and determined as provided herein by the Board without approval of the holders of Common Stock or the holders of Preferred Stock, or any series thereof, and (ii) any such new series may have powers, preferences and rights, including, without limitation, voting rights, dividend rights, liquidation rights, redemption rights and conversion rights, senior to, junior to or pari passu with the rights of the Common Stock, the Preferred Stock or any future class or series of Preferred Stock or Common Stock.

Section 3. Rights of Class A Common Stock and Class B Common Stock

3.1 Except as otherwise provided in this Restated Certificate of Incorporation or required by applicable law, shares of Class A Common Stock and Class B Common Stock shall have the same rights and powers, rank equally (including as to dividends and distributions, and upon any liquidation, dissolution or winding up of the Corporation), share ratably and be identical in all respects and as to all matters.

 

- 2 -


3.2 Except as otherwise expressly provided by this Restated Certificate of Incorporation or as provided by law, the holders of shares of Class A Common Stock and Class B Common Stock shall (a) at all times vote together as a single class on all matters (including the election of directors) submitted to a vote of the stockholders of the Corporation, (b) be entitled to notice of any stockholders’ meeting in accordance with the Bylaws of the Corporation (the “Bylaws”) and (c) be entitled to vote upon such matters and in such manner as may be provided by applicable law; provided, however, that, except as otherwise required by law, holders of shares of Class A Common Stock and Class B Common Stock shall not be entitled to vote on any amendment to this Restated Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon pursuant to this Restated Certificate of Incorporation (including any Certificate of Designation relating to any series of Preferred Stock). Except as otherwise expressly provided herein or required by applicable law, each holder of Class A Common Stock shall have the right to one (1) vote per share of Class A Common Stock held of record by such holder and each holder of Class B Common Stock shall have the right to ten (10) votes per share of Class B Common Stock held of record by such holder.

3.3 Shares of Class A Common Stock and Class B Common Stock shall be treated equally, identically and ratably, on a per share basis, with respect to any dividends or distributions as may be declared and paid from time to time by the Board out of any assets of the Corporation legally available therefor; provided, however, that in the event a dividend is paid in the form of shares of Class A Common Stock or Class B Common Stock (or rights to acquire such shares), then holders of Class A Common Stock shall receive shares of Class A Common Stock (or rights to acquire such shares, as the case may be) and holders of Class B Common Stock shall receive shares of Class B Common Stock (or rights to acquire such shares, as the case may be), with holders of shares of Class A Common Stock and Class B Common Stock receiving, on a per share basis, an identical number of shares of Class A Common Stock or Class B Common Stock, as applicable. Notwithstanding the foregoing, the Board may pay or make a disparate dividend or distribution per share of Class A Common Stock or Class B Common Stock (whether in the amount of such dividend or distribution payable per share, the form in which such dividend or distribution is payable, the timing of the payment, or otherwise) if such disparate dividend or distribution is approved in advance by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class A Common Stock and the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class B Common Stock, each voting separately as a class.

3.4 Shares of Class A Common Stock or Class B Common Stock may not be subdivided, combined or reclassified unless the shares of the other class are concurrently therewith proportionately subdivided, combined or reclassified in a manner that maintains the same proportionate equity ownership between the holders of the outstanding Class A Common Stock and Class B Common Stock on the record date for such subdivision, combination or reclassification; provided, however, that shares of one such class may be subdivided, combined or reclassified in a different or disproportionate manner if such subdivision, combination or reclassification is approved in advance by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class A Common Stock and the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class B Common Stock, each voting separately as a class.

 

- 3 -


3.5 Subject to any preferential or other rights of any holders of Preferred Stock then outstanding, upon the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, holders of Class A Common Stock and Class B Common Stock will be entitled to receive ratably all assets of the Corporation available for distribution to its stockholders unless disparate or different treatment of the shares of each such class with respect to distributions upon any such liquidation, dissolution or winding up is approved in advance by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class A Common Stock and the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class B Common Stock, each voting separately as a class.

3.6 In the case of any distribution or payment in respect of the shares of Class A Common Stock or Class B Common Stock upon the merger or consolidation of the Corporation with or into any other entity, or in the case of any other transaction having an effect on stockholders substantially similar to that resulting from a merger or consolidation, such distribution or payment shall be made ratably on a per share basis among the holders of the Class A Common Stock and Class B Common Stock as a single class; provided, however, that shares of one such class may receive different or disproportionate distributions or payments in connection with such merger, consolidation or other transaction if (i) the only difference in the per share distribution to the holders of the Class A Common Stock and Class B Common Stock is that any securities distributed to the holder of a share Class B Common Stock have ten (10) times the voting power of any securities distributed to the holder of a share of Class A Common Stock, or (ii) such merger, consolidation or other transaction is approved by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class A Common Stock and the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of Class B Common Stock, each voting separately as a class.

ARTICLE V

Section 1. Each share of Class B Common Stock shall be convertible into one (1) fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof at any time upon written notice to the Corporation. Before any holder of Class B Common Stock shall be entitled to convert any of such holder’s shares of such Class B Common Stock into shares of Class A Common Stock, such holder shall deliver an instruction, duly signed and authenticated in accordance with any procedures set forth in the Bylaws or any policies of the Corporation then in effect, at the principal corporate office of the Corporation or of any transfer agent for the Class B Common Stock, and shall give written notice to the Corporation at its principal corporate office of such holder’s election to convert the same and shall state therein the name or names in which the shares of Class A Common Stock issuable on conversion thereof are to be registered on the books of the Corporation. The Corporation shall, as soon as practicable thereafter, register on the Corporation’s books ownership of the number of shares of Class A Common Stock to which such record holder of Class B Common Stock, or to which the nominee or nominees of such record holder, shall be entitled as aforesaid. Such conversion shall be deemed to have occurred immediately prior to the close of business on the date such notice of the election to convert is received by the Corporation, and the person or persons entitled to receive the shares of Class A Common Stock issuable upon such conversion shall be treated for all purposes as the record holder or holders of such shares of Class A Common Stock as of such date.

 

- 4 -


Section 2. Each share of Class B Common Stock shall automatically, without further action by the Corporation or the holder thereof, be converted into one (1) fully paid and nonassessable share of Class A Common Stock immediately prior to the close of business on the earliest of (i) the later of (a) ten (10) years from the Effectiveness Date (as defined below) and (b) the date that is one (1) year after the Separation Date (as defined below) of the last to Separate (as defined below) of the Founders (as defined below); and (ii) the date that is one (1) year after the death or Permanent Disability (as defined below) of the last to die or become Disabled (as defined below) of the Founders; and (iii) the date specified by the affirmative vote of the holders of Class B Common Stock representing not less than two-thirds (2/3) of the voting power of the outstanding shares of Class B Common Stock, voting separately as a single class (each of the events referred to in (i), (ii) and (iii) are referred to herein as an “Automatic Conversion”). The Corporation shall provide notice of the Automatic Conversion of shares of Class B Common Stock pursuant to this Section 2 of Article V to record holders of such shares of Class B Common Stock as soon as practicable following the Automatic Conversion. Such notice shall be provided by any means then permitted by the General Corporation Law; provided, however, that no failure to give such notice nor any defect therein shall affect the validity of the Automatic Conversion. Upon and after the Automatic Conversion, the person registered on the Corporation’s books as the record holder of the shares of Class B Common Stock so converted immediately prior to the Automatic Conversion shall be registered on the Corporation’s books as the record holder of the shares of Class A Common Stock issued upon Automatic Conversion of such shares of Class B Common Stock, without further action on the part of the record holder thereof. Immediately upon the effectiveness of the Automatic Conversion, the rights of the holders of shares of Class B Common Stock as such shall cease, and the holders shall be treated for all purposes as having become the record holder or holders of such shares of Class A Common Stock into which such shares of Class B Common Stock were converted.

Section 3. Each share of Class B Common Stock shall automatically, without further action by the Corporation or the holder thereof, be converted into one (1) fully paid and nonassessable share of Class A Common Stock, upon the occurrence of a Transfer (as defined below), other than a Permitted Transfer (as defined below), of such share of Class B Common Stock.

Section 4. Each share of Class B Common Stock held of record by a natural person, or by such person’s Permitted Transferees, shall automatically, without any further action by the Corporation or the holder thereof, convert into one share of Class A Common Stock upon the death or Permanent Disability of such holder; provided, however, that upon the death or Permanent Disability of the first to die or become Disabled of the Founders, subject to the other provisions of Section 2 of this Article V, the shares of Class B Common Stock held by such Founder prior to his or her death or Permanent Disability shall not convert into shares of Class A Common Stock unless the other Founder or a Permitted Trust, Permitted IRA, Permitted Entity or Permitted Foundation of such other Founder does not have (whether by operation of law or pursuant to transfer agreements to be provided by the Corporation) voting and

 

- 5 -


dispositive power with respect to such shares from and after such death or Permanent Disability; provided, further, that upon the death or Permanent Disability of the last to die or become Disabled of the Founders, the shares of Class B Common Stock held by such Founder shall automatically, without any further action by the Corporation or the holder thereof, convert into one share of Class A Common Stock in accordance with Section 2 of this Article V.

Section 5. The Corporation may, from time to time, establish such policies and procedures, not in violation of applicable law or this Restated Certificate of Incorporation or the Bylaws, relating to the administration of the conversion of shares of the Class B Common Stock into shares of Class A Common Stock as it may deem necessary or advisable. If the Corporation has reason to believe that a Transfer that is not a Permitted Transfer has occurred, the Corporation may request that the purported transferor furnish affidavits or other evidence to the Corporation as it reasonably deems necessary to determine whether a Transfer that is not a Permitted Transfer has occurred, and if such transferor does not within ten (10) days after the date of such request furnish sufficient (as determined in good faith by the Board) evidence to the Corporation (in the manner provided in the request) to enable the Corporation to determine that no such Transfer has occurred, any such shares of Class B Common Stock, to the extent not previously converted, shall be automatically converted into shares of Class A Common Stock and such conversion shall thereupon be registered on the books and records of the Corporation. In connection with any action of stockholders taken at a meeting, the stock ledger of the Corporation shall be presumptive evidence as to who are the stockholders entitled to vote in person or by proxy at any meeting of stockholders and the classes of shares held by each such stockholder and the number of shares of each class held by such stockholder.

Section 6. Definitions.

6.1 “Convertible Security” shall mean any evidences of indebtedness, shares or other securities (other than shares of Class B Common Stock) convertible into or exchangeable for Class A Common Stock or Class B Common Stock, either directly or indirectly.

6.2 “Effectiveness Date” shall mean the date of the filing of this Restated Certificate of Incorporation.

6.3 “Founder” shall mean either Henrik Fisker or Dr. Geeta Gupta.

6.4 “Option” shall mean rights, options, restricted stock units or warrants to subscribe for, purchase or otherwise acquire Class A Common Stock, Class B Common Stock or any Convertible Security.

6.5 “Parent” of an entity shall mean any entity that directly or indirectly owns or controls a majority of the voting power of the voting securities of such entity.

6.6 “Permitted IRA” shall mean an Individual Retirement Account, as defined in Section 408(a) of the Internal Revenue Code (the “Code”), or a pension, profit sharing, stock bonus or other type of plan or trust of which a Qualified Stockholder is a participant or beneficiary and which satisfies the requirements for qualification under Section 401 of the Code; provided that in each case such Qualified Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held in such account, plan or trust.

 

- 6 -


6.7 “Permanent Disability” or “Disabled” shall mean a permanent and total disability such that the natural person is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which would reasonably be expected to result in death within twelve (12) months or which has lasted or would reasonably be expected to last for a continuous period of not less than twelve (12) months as determined by a licensed medical practitioner.

6.8 “Permitted Entity” shall mean with respect to a Qualified Stockholder: (i) a corporation in which such Qualified Stockholder directly, or indirectly through one or more Permitted Entities, owns shares with sufficient Voting Control in the corporation, or otherwise has legally enforceable rights, such that the Qualified Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such corporation; (ii) a partnership in which such Qualified Stockholder directly, or indirectly through one or more Permitted Entities, owns partnership interests with sufficient Voting Control in the partnership, or otherwise has legally enforceable rights, such that the Qualified Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such partnership; or (iii) a limited liability company in which such Qualified Stockholder directly, or indirectly through one or more Permitted Entities, owns membership interests with sufficient Voting Control in the limited liability company, or otherwise has legally enforceable rights, such that the Qualified Stockholder retains sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such limited liability company.

6.9 “Permitted Foundation” shall mean with respect to a Qualified Stockholder: (i) a trust or private non-operating organization that is tax-exempt under Section 501(c)(3) of the Code so long as such Qualified Stockholder has dispositive power and Voting Control with respect to the shares of Class B Common Stock held by such trust or organization and the Transfer to such trust does not involve any payment of cash, securities, property or other consideration (other than an interest in such trust or organization) to such Qualified Stockholder.

6.10 “Permitted Transfer” shall mean, and be restricted to, any Transfer of a share of Class B Common Stock: (i) by a Qualified Stockholder to (A) any Permitted Trust of such Qualified Stockholder, (B) any Permitted IRA of such Qualified Stockholder, (C) any Permitted Entity of such Qualified Stockholder, and (D) any Permitted Foundation of such Qualified Stockholder; or (ii) by a Permitted Trust, Permitted IRA, Permitted Entity or Permitted Foundation of a Qualified Stockholder to (A) such Qualified Stockholder, or (B) any other Permitted Entity of such Qualified Stockholder.

6.11 “Permitted Transferee” shall mean a transferee of shares of Class B Common Stock received in a Permitted Transfer.

 

- 7 -


6.12 “Permitted Trust” shall mean with respect to a Qualified Stockholder: (i) a trust for the benefit of such Qualified Stockholder and for the benefit of no other person so long as the Transfer to such trust does not involve any payment of cash, securities, property or other consideration (other than an interest in such trust) to such Qualified Stockholder; (ii) a trust for the benefit of such Qualified Stockholder and/or persons other than such Qualified Stockholder so long as such Qualified Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust and the Transfer to such trust does not involve any payment of cash, securities, property or other consideration (other than an interest in such trust) to such Qualified Stockholder; or (iii) a trust under the terms of which such Qualified Stockholder has retained a “qualified interest” within the meaning of §2702(b)(1) of the Code or a reversionary interest so long as such Qualified Stockholder has sole dispositive power and exclusive Voting Control with respect to the shares of Class B Common Stock held by such trust.

6.13 “Qualified Stockholder” shall mean: (i) the record holder of a share of Class B Common Stock as of the Effectiveness Date; (ii) the initial registered holder of any shares of Class B Common Stock that are originally issued by the Corporation after the Effectiveness Date pursuant to the exercise or conversion of any Option or Convertible Security that, in each case, was outstanding as of the Effectiveness Date; (iii) each natural person who, prior to the Effectiveness Date, Transferred shares of capital stock of the Corporation to a Permitted Trust, Permitted IRA, Permitted Entity or Permitted Foundation that is or becomes a Qualified Stockholder; (iv) each natural person who Transferred shares of, or equity awards for, Class B Common Stock (including any Option exercisable or Convertible Security exchangeable for or convertible into shares of Class B Common Stock) to a Permitted Trust, Permitted IRA, Permitted Entity or Permitted Foundation that is or becomes a Qualified Stockholder; and (v) a Permitted Transferee.

6.14 “Separation Date” or “Separate” shall mean, with respect to a Founder, the date that both of the following conditions are met: (1) a Founder no longer serves as an “executive officer” (within the meaning of Rule 3b-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) of the Corporation and (2) the Founder no longer serves as a member of the Board.

6.15 “Transfer” of a share of Class B Common Stock shall mean any sale, assignment, transfer, conveyance, hypothecation or other transfer or disposition of such share or any legal or beneficial interest in such share, whether or not for value and whether voluntary or involuntary or by operation of law, including, without limitation, a transfer of a share of Class B Common Stock to a broker or other nominee (regardless of whether there is a corresponding change in beneficial ownership), or the transfer of, or entering into a binding agreement with respect to, Voting Control over such share by proxy or otherwise; provided, however, that the following shall not be considered a “Transfer” within the meaning of this Section 6 of Article V:

(i) the granting of a revocable proxy to officers or directors of the Corporation at the request of the Board in connection with actions to be taken at an annual or special meeting of stockholders;

 

- 8 -


(ii) entering into a voting trust, agreement or arrangement (with or without granting a proxy) solely with stockholders who are holders of Class B Common Stock that (A) is disclosed either in a Schedule 13D filed with the Securities and Exchange Commission or in writing to the Secretary of the Corporation, (B) either has a term not exceeding one (1) year or is terminable by the holder of the shares subject thereto at any time and (C) does not involve any payment of cash, securities, property or other consideration to the holder of the shares subject thereto other than the mutual promise to vote shares in a designated manner;

(iii) entering into a voting trust, agreement or arrangement (with or without granting a proxy) pursuant to a written agreement to which the Corporation is a party;

(iv) the pledge of shares of Class B Common Stock by a stockholder that creates a mere security interest in such shares pursuant to a bona fide loan or indebtedness transaction for so long as such stockholder continues to exercise Voting Control over such pledged shares; provided, however, that a foreclosure on such shares or other similar action by the pledgee shall constitute a Transfer unless such foreclosure or similar action qualifies as a Permitted Transfer;

(v) the fact that, as of the Effectiveness Date or at any time after the Effectiveness Date, the spouse of any holder of Class B Common Stock possesses or obtains an interest in such holder’s shares of Class B Common Stock arising solely by reason of the application of the community property laws of any jurisdiction, so long as no other event or circumstance shall exist or have occurred that constitutes a Transfer of such shares of Class B Common Stock (including a Transfer by operation of law pursuant to a qualified domestic order or in connection with a divorce settlement or any other court order); or

(vi) in connection with a merger or consolidation of the Corporation with or into any other entity, or in the case of any other transaction having an effect on stockholders substantially similar to that resulting from a merger or consolidation, that has been approved by the Board, the entering into a support, voting, tender or similar agreement or arrangement (in each case, with or without the grant of a proxy) that has also been approved by the Board.

A Transfer shall also be deemed to have occurred with respect to a share of Class B Common Stock beneficially held by (i) an entity that is a Permitted Trust, Permitted IRA, Permitted Entity or Permitted Foundation, if there occurs any act or circumstance that causes such entity to no longer be a Permitted Trust, Permitted IRA, Permitted Entity or Permitted Foundation or if there occurs a Transfer on a cumulative basis, from and after the Effectiveness Date, of a majority of the voting power of the voting securities of such entity or any direct or indirect Parent of such entity, other than a Transfer to parties that are, as of the Effectiveness Date, holders of voting securities of any such entity or Parent of such entity, or (ii) an entity that is a Qualified Stockholder, if there occurs a Transfer on a cumulative basis, from and after the Effectiveness Date, of a majority of the voting power of the voting securities of such entity or any direct or indirect Parent of such entity, other than a Transfer to parties that are, as of the Effectiveness Date, holders of voting securities of any such entity or Parent of such entity.

6.16 “Voting Control” shall mean, with respect to a share of Class B Common Stock, the power (whether exclusive or shared) to vote or direct the voting of such share by proxy, voting agreement or otherwise.

 

- 9 -


Section 7. In the event any shares of Class B Common Stock are converted into shares of Class A Common Stock pursuant to this Article V, the shares of Class B Common Stock so converted shall be retired and shall not be reissued by the Corporation.

Section 8. Notwithstanding anything to the contrary in Sections 1, 2, 3 or 4 of this Article V, if the date on which any share of Class B Common Stock is converted into Class A Common Stock pursuant to the provisions of Sections 1, 2, 3 or 4 of this Article V occurs after the record date for the determination of the holders of Class B Common Stock entitled to receive any dividend or distribution to be paid on the shares of Class B Common Stock, the holder of such shares of Class B Common Stock as of such record date will be entitled to receive such dividend or distribution on such payment date; provided, that, notwithstanding any other provision of this Restated Certificate of Incorporation, to the extent that any such dividend or distribution is payable in shares of Class B Common Stock, such dividend or distribution shall be deemed to have been declared, and shall be payable in, shares of Class A Common Stock and no shares of Class B Common Stock shall be issued in payment thereof.

Section 9. The Corporation shall at all times reserve and keep available, out of its authorized and unissued shares of Class A Common Stock, solely for the purpose of effecting conversions of shares of Class B Common Stock into Class A Common Stock, such number of duly authorized shares of Class A Common Stock as shall from time to time be sufficient to effect the conversion of all then-outstanding shares of Class B Common Stock. If at any time the number of authorized and unissued shares of Class A Common Stock shall not be sufficient to effect the conversion of all then-outstanding shares of Class B Common Stock, the Corporation shall promptly take such corporate action as may be necessary to increase its authorized but unissued shares of Class A Common Stock to such number of shares as shall be sufficient for such purpose, including, without limitation, obtaining the requisite stockholder approval of any necessary amendment to this Restated Certificate of Incorporation. All shares of Class A Common Stock which are so issuable shall, when issued, be duly and validly issued, fully paid and non-assessable shares. The Corporation shall take all such action as may be necessary to ensure that all such shares of Class A Common Stock may be so issued without violation of any applicable law or regulation.

ARTICLE VI

Section 1. The business and affairs of the Corporation shall be managed by or under the direction of the Board, except as otherwise provided by law. In addition to the powers and authority expressly conferred upon them by statute or by this Restated Certificate of Incorporation or the Bylaws, the directors are hereby empowered to exercise all such powers and do all such acts and things as may be exercised or done by the Corporation.

Section 2. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, the total number of directors constituting the Whole Board shall be fixed from time to time exclusively by resolution adopted by a majority of the Whole Board. For purposes of this Restated Certificate of Incorporation, the term “Whole Board” shall mean the total number of authorized directors whether or not there exist any vacancies in previously authorized directorships.

 

- 10 -


Section 3. Subject to the special rights of the holders of any series of Preferred Stock to elect directors, the directors shall be divided, with respect to the time for which they severally hold office, into three classes designated as Class I, Class II and Class III, respectively (the “Classified Board”). The Board is authorized to assign members of the Board already in office to such classes of the Classified Board, which assignments shall become effective at the same time the Classified Board becomes effective. Directors shall be assigned to each class in accordance with a resolution or resolutions adopted by the Board, with the number of directors in each class to be divided as nearly equal as reasonably possible. The initial term of office of the Class I directors shall expire at the Corporation’s first annual meeting of stockholders following the Effectiveness Date, the initial term of office of the Class II directors shall expire at the Corporation’s second annual meeting of stockholders following the Effectiveness Date and the initial term of office of the Class III directors shall expire at the Corporation’s third annual meeting of stockholders following the Effectiveness Date. At each annual meeting of stockholders following the Effectiveness Date, directors elected to succeed those directors of the class whose terms then expire shall be elected for a term of office to expire at the third succeeding annual meeting of stockholders after their election. In the event of any increase or decrease in the authorized number of directors (a) each director then serving as such shall nevertheless continue as a director of the class of which the director is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the three classes of directors so as to ensure that no one class has more than one director more than any other class.

Section 4. Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. Any director may resign at any time upon notice to the Corporation given in writing or by any electronic transmission permitted by the Bylaws. Subject to the special rights of the holders of any series of Preferred Stock, no director may be removed from the Board except for cause and only by the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of the then-outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors voting together as a single class. In the event of any increase or decrease in the authorized number of directors, (a) each director then serving as such shall nevertheless continue as a director of the class of which the director is a member and (b) the newly created or eliminated directorships resulting from such increase or decrease shall be apportioned by the Board among the classes of directors so as to ensure that no one class has more than one director more than any other class. To the extent possible, consistent with the foregoing rule, any newly created directorships shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated directorships shall be subtracted from those classes whose terms of office are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board. No decrease in the authorized number of directors constituting the Board shall shorten the term of any incumbent director.

 

- 11 -


Section 5. Subject to the special rights of the holders of any series of Preferred Stock to elect directors, any vacancy occurring in the Board for any cause, and any newly created directorship resulting from any increase in the authorized number of directors, shall, unless (a) the Board determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders or (b) as otherwise provided by law, be filled only by the affirmative vote of a majority of the directors then in office, even if less than a quorum, or by a sole remaining director, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for a term expiring at the annual meeting of stockholders at which the term of office of the class to which the director has been assigned expires or until such director’s successor shall have been duly elected and qualified, or until such director’s earlier death, resignation, disqualification or removal. No decrease in the authorized number of directors shall shorten the term of any incumbent director.

Section 6. Election of directors need not be by written ballot unless the Bylaws shall so provide.

ARTICLE VII

Section 1. To the fullest extent permitted by law, no director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Without limiting the effect of the preceding sentence, if the General Corporation Law is hereafter amended to authorize the further elimination or limitation of the liability of a director, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law, as so amended.

Section 2. Neither any amendment nor repeal of this Article VII, nor the adoption of any provision of this Restated Certificate of Incorporation inconsistent with this Article VII, shall eliminate, reduce or otherwise adversely affect any limitation on the personal liability of a director of the Corporation existing at the time of such amendment, repeal or adoption of such an inconsistent provision.

ARTICLE VIII

The Board shall have the power to adopt, amend or repeal the Bylaws. Any adoption, amendment or repeal of the Bylaws by the Board shall require the approval of a majority of the Whole Board. The stockholders shall also have power to adopt, amend or repeal the Bylaws; provided, however, that, notwithstanding any other provision of this Restated Certificate of Incorporation (including any Certificate of Designation) or any provision of law that might otherwise permit a lesser or no vote, but in addition to any vote of the holders of any class or series of stock of the Corporation required by applicable law or by this Restated Certificate of Incorporation (including any Preferred Stock issued pursuant to any Certificate of Designation), the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding 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 adopt, amend or repeal any provision of the Bylaws; provided, further, that if two-thirds (2/3) of the Whole Board has approved such adoption, amendment or repeal of any provisions of the Bylaws, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding 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 adopt, amend or repeal any provision of the Bylaws.

 

- 12 -


ARTICLE IX

Section 1. Subject to the rights of any series of Preferred Stock then outstanding, any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of stockholders of the Corporation and may not be effected by any consent in writing by such stockholders.

Section 2. Special meetings of stockholders of the Corporation may be called only by the Chairperson of the Board, the Chief Executive Officer or the Board acting pursuant to a resolution adopted by a majority of the Whole Board, and may not be called by any other person or persons. Only such business shall be considered at a special meeting of stockholders as shall have been stated in the notice for such meeting.

Section 3. 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.

ARTICLE X

Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (i) any derivative action or proceeding brought on behalf of the Corporation; (ii) any action or proceeding asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the Corporation or any stockholder to the Corporation or the Corporation’s stockholders; (iii) any action or proceeding asserting a claim against the Corporation or any current or former director, officer or other employee of the Corporation or any stockholder in such stockholder’s capacity as such arising out of or pursuant to any provision of the General Corporation Law, this Restated Certificate or the Bylaws of the Corporation (as each may be amended from time to time); (iv) any action or proceeding to interpret, apply, enforce or determine the validity of this Restated Certificate or the Bylaws of the Corporation (including any right, obligation or remedy thereunder); (v) any action or proceeding as to which the General Corporation Law confers jurisdiction to the Court of Chancery of the State of Delaware; and (vi) any action asserting a claim against the Corporation or any director, officer or other employee of the Corporation or any stockholder, governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This Article X shall not apply to suits brought to enforce a duty or liability created by the Securities Act of 1933, as amended, or the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

Unless the Corporation consents in writing to the selection of an alternative forum, to the fullest extent permitted by law, the federal district courts of the United States of America shall be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act of 1933, as amended.

 

- 13 -


Any person or entity holding, owning or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and to have consented to the provisions of this Article X.

ARTICLE XI

If any provision of this Restated Certificate of Incorporation shall be held to be invalid, illegal or unenforceable, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of this Restated Certificate of Incorporation (including without limitation, all portions of any section of this Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable, that are not themselves invalid, illegal or unenforceable) shall remain in full force and effect.

ARTICLE XII

Section 1. The Corporation reserves the right to amend or repeal any provision contained in this Restated Certificate of Incorporation in the manner prescribed by the laws of the State of Delaware and all rights conferred upon stockholders are granted subject to this reservation; provided, however, that, notwithstanding any other provision of this Restated Certificate of Incorporation (including any Certificate of Designation) or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Restated Certificate of Incorporation (including any Certificate of Designation), and subject to Sections 1 and 2.1 of Article IV, the affirmative vote of the holders of at least two-thirds (2/3) of the voting power of all of the then-outstanding 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 or repeal or adopt any provision inconsistent with Sections 1.2 and 2 of Article IV, or Article V, Article VI, Article VI, Article VIII, Article IX, Article X, Article XI, or Section 1 of this Article XII (the “Specified Provisions”); provided, further, that if two-thirds (2/3) of the Whole Board has approved such amendment or repeal of, or any provision inconsistent with, the Specified Provisions, then only the affirmative vote of the holders of at least a majority of the voting power of all of the then-outstanding 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 or repeal, or adopt any provision inconsistent with, the Specified Provisions.

Section 2. Notwithstanding any other provision of this Restated Certificate of Incorporation (including any Certificate of Designation) or any provision of law that might otherwise permit a lesser vote or no vote, but in addition to any vote of the holders of any class or series of the stock of the Corporation required by law or by this Restated Certificate of Incorporation (including any Certificate of Designation), the affirmative vote of the holders of Class A Common Stock representing at least seventy-five percent (75%) of the voting power of the then-outstanding shares of Class A Common Stock, voting separately as a single class, and the affirmative vote of the holders of Class B Common Stock representing at least seventy-five percent (75%) of the voting power of the then-outstanding shares of Class B Common Stock, each voting separately as single classes, shall be required to amend or repeal, or to adopt any provision inconsistent with, Section 3 of Article IV or this Section 2 of Article XII.

* * *

 

- 14 -


IN WITNESS WHEREOF, Spartan Energy Acquisition Corp. has caused this Restated Certificate of Incorporation to be signed by its duly authorized officer on this 29th day of October, 2020.

 

/s/ Henrik Fisker

Henrik Fisker
Chief Executive Officer

 

- 15 -

Exhibit 3.2

FISKER INC.

(a Delaware corporation)

RESTATED BYLAWS

As Adopted October 29, 2020 and

As Effective October 29, 2020

 


TABLE OF CONTENTS

 

         Page  

ARTICLE I STOCKHOLDERS

     1  

1.1

  Annual Meetings      1  

1.2

  Special Meetings      1  

1.3

  Notice of Meetings      1  

1.4

  Adjournments      2  

1.5

  Quorum      2  

1.6

  Organization      2  

1.7

  Voting; Proxies      3  

1.8

  Fixing Date for Determination of Stockholders of Record      3  

1.9

  List of Stockholders Entitled to Vote      4  

1.10

  Inspectors of Elections      4  

1.11

  Notice of Stockholder Business; Nominations      5  

ARTICLE II BOARD OF DIRECTORS

     12  

2.1

  Number; Qualifications      12  

2.2

  Election; Resignation; Removal; Vacancies      12  

2.3

  Regular Meetings      13  

2.4

  Special Meetings      13  

2.5

  Remote Meetings Permitted      13  

2.6

  Quorum; Vote Required for Action      13  

2.7

  Organization      14  

2.8

  Unanimous Action by Directors in Lieu of a Meeting      14  

2.9

  Powers      14  

2.10

  Compensation of Directors      14  

2.11

  Confidentiality      14  

ARTICLE III COMMITTEES

     15  

3.1

  Committees      15  

3.2

  Committee Rules      15  

ARTICLE IV OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR

     15  

4.1

  Generally      15  

4.2

  Chief Executive Officer      16  

4.3

  Chairperson of the Board      16  

 

-i-


TABLE OF CONTENTS

(continued)

 

         Page  

4.4

  Lead Independent Director      17  

4.5

  President      17  

4.6

  Chief Financial Officer      17  

4.7

  Treasurer      17  

4.8

  Vice President      17  

4.9

  Secretary      18  

4.10

  Delegation of Authority      18  

4.11

  Removal      18  

ARTICLE V STOCK

     18  

5.1

  Certificates; Uncertificated Shares      18  

5.2

  Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares      19  

5.3

  Other Regulations      19  

ARTICLE VI INDEMNIFICATION

     19  

6.1

  Indemnification of Officers and Directors      19  

6.2

  Advance of Expenses      20  

6.3

  Non-Exclusivity of Rights      20  

6.4

  Indemnification Contracts      20  

6.5

  Right of Indemnitee to Bring Suit      20  

6.6

  Nature of Rights      21  

6.7

  Insurance      21  

ARTICLE VII NOTICES

     21  

7.1

  Notice      21  

7.2

  Waiver of Notice      22  

ARTICLE VIII INTERESTED DIRECTORS

     23  

8.1

  Interested Directors      23  

8.2

  Quorum      23  

ARTICLE IX MISCELLANEOUS

     23  

9.1

  Fiscal Year      23  

9.2

  Seal      23  

9.3

  Form of Records      23  

 

-ii-


TABLE OF CONTENTS

(continued)

 

         Page

9.4

  Reliance Upon Books and Records    24

9.5

  Certificate of Incorporation Governs    24

9.6

  Severability    24

9.7

  Time Periods    24
ARTICLE X AMENDMENT    24

 

 

-iii-


FISKER INC.

(a Delaware corporation)

RESTATED BYLAWS

As Adopted October 29, 2020 and

As Effective October 29, 2020

ARTICLE I

STOCKHOLDERS

1.1 Annual Meetings.

An annual meeting of stockholders shall be held for the election of directors at such date and time as the Board of Directors (the “Board”) of Fisker Inc. (the “Corporation”) shall each year fix. The meeting may be held either at a place, within or without the State of Delaware as permitted by the Delaware General Corporation Law (the “DGCL”), or by means of remote communication as the Board in its sole discretion may determine. Any proper business may be transacted at the annual meeting.

1.2 Special Meetings.

Special meetings of stockholders for any purpose or purposes shall be called in the manner set forth in the Second Amended and Restated Certificate of Incorporation of the Corporation (as the same may be amended and/or restated from time to time, the “Certificate of Incorporation”). The special meeting may be held either at a place, within or without the State of Delaware, or by means of remote communication as the Board in its sole discretion may determine. Business transacted at any special meeting of stockholders shall be limited to matters relating to the purpose or purposes stated in the notice of the meeting.

1.3 Notice of Meetings.

Notice of all meetings of stockholders shall be given in writing or by electronic transmission in the manner provided by applicable law (including, without limitation, as set forth in Section 7.1.1 of these Bylaws) stating the date, time and place, if any, of the meeting, the means of remote communication, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at such meeting, and the record date for determining the stockholders entitled to vote at the meeting. In the case of a special meeting, such notice shall also set forth the purpose or purposes for which the meeting is called. Unless otherwise required by applicable law or the Certificate of Incorporation, notice of any meeting of stockholders shall be given not less than ten (10), nor more than sixty (60), days before the date of the meeting to each stockholder of record entitled to vote at such meeting.


1.4 Adjournments.

The chairperson of the meeting shall have the power to adjourn the meeting to another time, date and place (if any). Any meeting of stockholders, annual or special, may be adjourned from time to time, and notice need not be given of any such adjourned meeting if the time, date and place (if any) thereof and the means of remote communication (if any) by which stockholders and proxy holders may be deemed to be present in person and vote at such adjourned meeting are announced at the meeting at which the adjournment is taken; provided, however, that if the adjournment is for more than thirty (30) days, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. At the adjourned meeting, the Corporation may transact any business that might have been transacted at the original meeting. To the fullest extent permitted by law, the Board may postpone, reschedule or cancel any previously scheduled special or annual meeting of stockholders before it is to be held, regardless of whether any notice or public disclosure with respect to any such meeting has been sent or made pursuant to Section 1.3 hereof or otherwise, in which case notice shall be provided to the stockholders of the new date, time and place, if any, of the meeting as provided in Section 1.3 above.

1.5 Quorum.

Except as otherwise provided by applicable law, the Certificate of Incorporation or these Bylaws, at each meeting of stockholders the holders of a majority of the voting power of the shares of stock issued and outstanding and entitled to vote at the meeting, present in person or represented by proxy, shall constitute a quorum for the transaction of business; provided, however, that where a separate vote by a class or classes or series of stock is required by applicable law or the Certificate of Incorporation, the holders of a majority of the voting power of the shares of such class or classes or series of the stock issued and outstanding and entitled to vote on such matter, present in person or represented by proxy at the meeting, shall constitute a quorum entitled to take action with respect to the vote on such matter. If a quorum shall fail to attend any meeting, the chairperson of the meeting or, if directed to be voted on by the chairperson of the meeting, the holders of a majority of the voting power of the shares entitled to vote who are present in person or represented by proxy at the meeting may adjourn the meeting. Shares of the Corporation’s stock belonging to the Corporation (or to another corporation, if a majority of the shares entitled to vote in the election of directors of such other corporation are held, directly or indirectly, by the Corporation), shall neither be entitled to vote nor be counted for quorum purposes; provided, however, that the foregoing shall not limit the right of the Corporation or any other corporation to vote any shares of the Corporation’s stock held by it in a fiduciary capacity and to count such shares for purposes of determining a quorum. A quorum, once established at a meeting, shall not be broken by the withdrawal of enough votes to leave less than a quorum.

1.6 Organization.

Meetings of stockholders shall be presided over by (a) such person as the Board may designate, or (b) in such person’s absence, the Chairperson of the Board, or (c) in such person’s absence, the Lead Independent Director, or, (d) in such person’s absence, the Chief Executive Officer of the Corporation, or (e) in such person’s absence, the President of the Corporation, or

 

2


(f) in the absence of such person, by a Vice President. Such person shall be chairperson of the meeting and, subject to Section 1.10 of these Bylaws, 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 such person to be in order. The Secretary of the Corporation shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

1.7 Voting; Proxies.

Each stockholder of record entitled to vote at a meeting of stockholders may authorize another person or persons to act for such stockholder by proxy. Such a proxy may be prepared, transmitted and delivered in any manner permitted by applicable law. Except as may be required in the Certificate of Incorporation, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors. Unless otherwise provided by applicable law, rule or regulation applicable to the Corporation or its securities, the rules or regulations of any stock exchange applicable to the Corporation, the Certificate of Incorporation or these Bylaws, every matter other than the election of directors shall be decided by the affirmative vote of the holders of a majority of the voting power of the shares of stock entitled to vote on such matter that are present in person or represented by proxy at the meeting and are voted for or against the matter (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the case of each class or series, the holders of a majority of the voting power of the shares of stock of that class or series present in person or represented by proxy at the meeting voting for or against such matter).

1.8 Fixing Date for Determination of Stockholders of Record.

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board, and which record date shall, unless otherwise required by law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board, 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 day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. 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 may fix a new record date for determination of stockholders entitled to notice of or to vote at the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board may fix, in advance, a record date, which shall not precede the date upon which the resolution fixing the record date is adopted by the Board and which shall not be more than sixty (60) days prior to such action. If no such record date is fixed by the Board, then the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board adopts the resolution relating thereto.

 

3


1.9 List of Stockholders Entitled to Vote.

The Secretary shall prepare, at least ten (10) days before every meeting of stockholders, a complete list of stockholders entitled to vote at the meeting (provided, however, if the record date for determining the stockholders entitled to vote is less than ten (10) days before the date of the meeting, the list shall reflect the stockholders entitled to vote as of the tenth (10th) day before the meeting date), 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 as permitted by applicable law (provided that the information required to gain access to the 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 held at a location where stockholders may attend in person, 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 at the meeting. If the meeting is held solely by means of remote communication, then the list shall 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 access the list shall be provided with the notice of the meeting. Except as otherwise provided by law, the list shall presumptively determine the identity of the stockholders entitled to vote at the meeting and the number of shares held by each of them.

1.10 Inspectors of Elections.

1.10.1 Applicability. Unless otherwise required by the Certificate of Incorporation or by the DGCL, the following provisions of this Section 1.10 shall apply only if and when the Corporation has a class of voting stock that is: (a) listed on a national securities exchange; (b) authorized for quotation on an interdealer quotation system of a registered national securities association; or (c) held of record by more than two thousand (2,000) stockholders. In all other cases, observance of the provisions of this Section 1.10 shall be optional, and at the discretion of the Board.

1.10.2 Appointment. 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 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.

1.10.3 Inspector’s Oath. Each inspector of election, before entering upon the discharge of such inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector’s ability.

1.10.4 Duties of Inspectors. At a meeting of stockholders, the inspectors of election shall (a) ascertain the number of shares outstanding and the voting power of each share, (b) determine the shares represented at a meeting and the validity of proxies and ballots, (c) count all votes and ballots, (d) determine and retain for a reasonable period of time a record

 

4


of the disposition of any challenges made to any determination by the inspectors, and (e) certify their determination of the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist the inspectors in the performance of the duties of the inspectors.

1.10.5 Opening and Closing of Polls. The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced by the chairperson of the meeting at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery of the State of Delaware, upon application by a stockholder, shall determine otherwise.

1.10.6 Determinations. In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in connection with proxies pursuant to Section 211(a)(2)b.(i) of the DGCL, or in accordance with Sections 211(e) or 212(c)(2) of the DGCL, ballots and the regular books and records of the Corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification of their determinations pursuant to this Section 1.10 shall specify the precise information considered by them, including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors’ belief that such information is accurate and reliable.

1.11 Notice of Stockholder Business; Nominations.

1.11.1 Annual Meeting of Stockholders.

(a) Nominations of persons for election to the Board and the proposal of other business to be considered by the stockholders may be made at an annual meeting of stockholders only: (i) pursuant to the Corporation’s notice of such meeting (or any supplement thereto), (ii) by or at the direction of the Board or any committee thereof or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving of the notice provided for in this Section 1.11 (the “Record Stockholder”), who is entitled to vote at such meeting and who complies with the notice and other procedures set forth in this Section 1.11 in all applicable respects. For the avoidance of doubt, the foregoing clause (iii) shall be the exclusive means for a stockholder to make nominations or propose business (other than business included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended (such act, and the rules and regulations promulgated thereunder, the “Exchange Act”)), at an annual meeting of stockholders, and such stockholder must fully comply with the notice and other procedures set forth in this Section 1.11 to make such nominations or propose business before an annual meeting.

 

5


(b) For nominations or other business to be properly brought before an annual meeting by a Record Stockholder pursuant to Section 1.11.1(a) of these Bylaws:

(i) the Record Stockholder must have given timely notice thereof in writing to the Secretary of the Corporation and provide any updates or supplements to such notice at the times and in the forms required by this Section 1.11;

(ii) such other business (other than the nomination of persons for election to the Board) must otherwise be a proper matter for stockholder action;

(iii) if the Proposing Person (as defined below) has provided the Corporation with a Solicitation Notice (as defined below), such Proposing Person must, in the case of a proposal other than the nomination of persons for election to the Board, have delivered a proxy statement and form of proxy to holders of at least the percentage of the Corporation’s voting shares required under applicable law to carry any such proposal, or, in the case of a nomination or nominations, have delivered a proxy statement and form of proxy to holders of a percentage of the Corporation’s voting shares reasonably believed by such Proposing Person to be sufficient to elect the nominee or nominees proposed to be nominated by such Record Stockholder, and must, in either case, have included in such materials the Solicitation Notice; and

(iv) if no Solicitation Notice relating thereto has been timely provided pursuant to this Section 1.11, the Proposing Person proposing such business or nomination must not have solicited a number of proxies sufficient to have required the delivery of such a Solicitation Notice under this Section 1.11.

To be timely, a Record Stockholder’s notice must be delivered to the Secretary at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred and twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that in the event that no annual meeting was held during the preceding year or the date of the annual meeting is more than thirty (30) days before, or more than sixty (60) days after, such anniversary date, notice by the Record Stockholder to be timely must be so delivered (A) no earlier than the close of business on the one hundred and twentieth (120th) day prior to such annual meeting and (B) no later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the close of business on the tenth (10th) day following the day on which Public Announcement (as defined below) of the date of such meeting is first made by the Corporation. In no event shall an adjournment or postponement of an annual meeting for which notice has been given commence a new time period (or extend any time period) for providing the Record Stockholder’s notice. Such Record Stockholder’s notice shall set forth:

(x) as to each person whom the Record Stockholder proposes to nominate for election or reelection as a director:

(i) the name, age, business address and residence address of such person;

(ii) the principal occupation or employment of such nominee;

 

6


(iii) the class, series and number of any shares of stock of the Corporation that are beneficially owned or owned of record by such person or any Associated Person (as defined in Section 1.11.3(c));

(iv) the date or dates such shares were acquired and the investment intent of such acquisition;

(v) all other information relating to such person that would be required to be disclosed in solicitations of proxies for election of directors in an election contest (even if an election contest is not involved), or would be otherwise required, in each case pursuant to and in accordance with Section 14(a) (or any successor provision) under the Exchange Act and the rules and regulations thereunder (including such person’s written consent to being named in the proxy statement as a nominee, to the public disclosure of information regarding or related to such person provided to the Corporation by such person or otherwise pursuant to this Section 1.11 and to serving as a director if elected); and

(vi) whether such person meets the independence requirements of the stock exchange upon which the Corporation’s Class A Common Stock is primarily traded.

(y) as to any other business that the Record Stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the 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, the text of the proposed amendment), the reasons for conducting such business at the meeting and any material interest in such business of such Proposing Person, including any anticipated benefit to any Proposing Person therefrom; and

(z) as to the Proposing Person giving the notice:

(i) the current name and address of such Proposing Person, including, if applicable, their name and address as they appear on the Corporation’s stock ledger, if different;

(ii) the class or series and number of shares of stock of the Corporation that are directly or indirectly owned of record or beneficially owned by such Proposing Person, including any shares of any class or series of the Corporation as to which such Proposing Person has a right to acquire beneficial ownership at any time in the future;

(iii) whether and the extent to which any derivative interest in the Corporation’s equity securities (including without limitation any option, warrant, convertible security, stock appreciation right, or similar right with an exercise or conversion privilege or a settlement payment or mechanism at a price related to any class or series of shares of the Corporation or with a value derived in whole or in part from the value of any class or series of shares of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of shares of the Corporation or otherwise, and any cash-settled equity swap, total return swap, synthetic equity position or similar derivative arrangement, as well as any rights to dividends on the shares of any class or series of shares of the Corporation that are separated or separable from the underlying shares of the Corporation) or any short

 

7


interest in any security of the Corporation (for purposes of this Bylaw a person shall be deemed to have a short interest in a security if such person directly or indirectly, through any contract, arrangement, understanding, relationship or otherwise, has the opportunity to profit or share in any profit derived from any increase or decrease in the value of the subject security, including through performance-related fees) is held directly or indirectly by or for the benefit of such Proposing Person, including without limitation whether and the extent to which any ongoing hedging or other transaction or series of transactions has been entered into by or on behalf of, or any other agreement, arrangement or understanding (including without limitation any short position or any borrowing or lending of shares) has been made, the effect or intent of which is to mitigate loss to or manage risk or benefit of share price changes for, or to increase or decrease the voting power of, such Proposing Person with respect to any share of stock of the Corporation;

(iv) any other material relationship between such Proposing Person, on the one hand, and the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation, on the other hand;

(v) any direct or indirect material interest in any material contract or agreement with the Corporation, any affiliate of the Corporation or any principal competitor of the Corporation (including, in any such case, any employment agreement, collective bargaining agreement or consulting agreement);

(vi) any other information relating to such Proposing Person that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies or consents by such Proposing Person in support of the business proposed to be brought before the meeting pursuant to Section 14(a) (or any successor provision) under the Exchange Act and the rules and regulations thereunder (the disclosures to be made pursuant to the foregoing clauses (iv) through (vi) are referred to as “Disclosable Interests”). For purposes hereof “Disclosable Interests” shall not include any information with respect to the ordinary course business activities of any broker, dealer, commercial bank, trust company or other nominee who is a Proposing Person solely as a result of being the stockholder directed to prepare and submit the notice required by these Bylaws on behalf of a beneficial owner;

(vii) such Proposing Person’s written consent to the public disclosure of information provided to the Corporation pursuant to this Section 1.11;

(viii) a complete written description of any agreement, arrangement or understanding (whether oral or in writing) (including any knowledge that another person or entity is Acting in Concert (as defined in Section 1.11.3(c)) with such Proposing Person) between or among such Proposing Person, any of its respective affiliates or associates and any other person Acting in Concert with any of the foregoing persons;

(ix) as to each person whom such Proposing Person proposes to nominate for election or re-election as a director, any agreement, arrangement or understanding of such person with any other person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director known to such Proposing Person after reasonable inquiry;

 

8


(x) a representation that the Record Stockholder is a holder of record of stock of the Corporation entitled to vote at such meeting and intends to appear in person or by proxy at the meeting to propose such business or nomination;

(xi) a representation whether such Proposing Person intends (or is part of a group that intends) to deliver a proxy statement or form of proxy to holders of, in the case of a proposal, at least the percentage of the Corporation’s voting shares required under applicable law to carry the proposal or, in the case of a nomination or nominations, a sufficient number of holders of the Corporation’s voting shares to elect such nominee or nominees (an affirmative statement of such intent being a “Solicitation Notice”); and

(xii) any proxy, contract, arrangement, or relationship pursuant to which the Proposing Person has a right to vote, directly or indirectly, any shares of any security of the Corporation.

A stockholder providing written notice required by this Section 1.11 will update and supplement such notice in writing, if necessary, so that the information provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for the meeting and (ii) the close of business on the fifth (5th) business day prior to the meeting and, in the event of any adjournment or postponement thereof, the close of business on the fifth (5th) business day prior to such adjourned or postponed meeting. In the case of an update and supplement pursuant to clause (i) of the foregoing sentence, such update and supplement will be received by the Secretary of the Corporation at the principal executive office of the Corporation not later than five (5) business days after the record date for the meeting, and in the case of an update and supplement pursuant to clause (ii) of the foregoing sentence, such update and supplement will be received by the Secretary of the Corporation at the principal executive office of the Corporation not later than two (2) business days prior to the date for the meeting, and, in the event of any adjournment or postponement thereof, two (2) business days prior to such adjourned or postponed meeting.

(c) Notwithstanding anything in the second sentence of Section 1.11.1(b) of these Bylaws to the contrary, in the event that the number of directors to be elected to the Board is increased and there is no Public Announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board at least ninety (90) days prior to the first anniversary of the preceding year’s annual meeting (or, if the annual meeting is held more than thirty (30) days before or sixty (60) days after such anniversary date, at least ninety (90) days prior to such annual meeting), a stockholder’s notice required by this Section 1.11 shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be delivered to the Secretary of the Corporation at the principal executive office of the Corporation no later than the close of business on the tenth (10th) day following the day on which such Public Announcement is first made by the Corporation.

(d) Notwithstanding anything in Section 1.11 or any other provision of the Bylaws to the contrary, any person who has been determined by a majority of the Whole Board to have violated Section 2.11 of these Bylaws or a Board Confidentiality Policy (as defined below) while serving as a director of the Corporation in the preceding five (5) years shall be ineligible to be nominated or serve as a member of the Board, absent a prior waiver for such nomination or service approved by two-thirds of the Whole Board.

 

9


1.11.2 Special Meetings of Stockholders. Only such business shall be conducted at a special meeting of stockholders as shall have been brought before the meeting pursuant to the Corporation’s notice of such meeting. Nominations of persons for election to the Board may be made at a special meeting of stockholders at which directors are to be elected pursuant to the Corporation’s notice of such meeting (a) by or at the direction of the Board or any committee thereof or (b) provided that the Board has determined that directors shall be elected at such meeting, by any stockholder of the Corporation who is a stockholder of record at the time of giving of notice of the special meeting, who shall be entitled to vote at the meeting and who complies with the notice and other procedures set forth in this Section 1.11 in all applicable respects. In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board, any such stockholder may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if the stockholder’s notice required by Section 1.11.1(b) of these Bylaws shall be delivered to the Secretary of the Corporation at the principal executive offices of the Corporation (i) no earlier than the one hundred twentieth (120th) day prior to such special meeting and (ii) no later than the close of business on the later of the ninetieth (90th) day prior to such special meeting or the tenth (10th) day following the day on which Public Announcement is first made of the date of the special meeting and of the nominees proposed by the Board to be elected at such meeting.

1.11.3 General.

(a) Only such persons who are nominated in accordance with the procedures set forth in this Section 1.11 shall be eligible to be elected at a meeting of stockholders and serve as directors and only such business shall be conducted at a meeting of stockholders as shall have been brought before the meeting in accordance with the procedures set forth in this Section 1.11. Except as otherwise provided by law or these Bylaws, the chairperson of the meeting shall have the power and duty to determine whether a nomination or any other business proposed to be brought before the meeting was made or proposed, as the case may be, in accordance with the procedures set forth in this Section 1.11 and, if any proposed nomination or business is not in compliance herewith, to declare that such defective proposal or nomination shall be disregarded. Notwithstanding the foregoing provisions of this Section 1.11, unless otherwise required by law, if the stockholder (or a Qualified Representative of the stockholder (as defined below)) does not appear at the annual or special meeting of stockholders of the Corporation to present a nomination or proposed business, such nomination shall be disregarded and such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

(b) Notwithstanding the foregoing provisions of this Section 1.11, a stockholder shall also comply with all applicable requirements of the Exchange Act and the rules and regulations thereunder with respect to the matters set forth herein. Nothing in this Section 1.11 shall be deemed to affect any rights of (a) stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the Exchange Act or (b) the holders of any series of Preferred Stock to elect directors pursuant to any applicable provisions of the Certificate of Incorporation.

 

10


(c) For purposes of this Section 1.11 the following definitions shall apply:

(A) a person shall be deemed to be “Acting in Concert” with another person if such person knowingly acts (whether or not pursuant to an express agreement, arrangement or understanding) in concert with, or toward a common goal relating to the management, governance or control of the Corporation in substantial parallel with, such other person where (1) each person is conscious of the other person’s conduct or intent and this awareness is an element in their decision-making processes and (2) at least one additional factor suggests that such persons intend to act in concert or in substantial parallel, which such additional factors may include, without limitation, exchanging information (whether publicly or privately), attending meetings, conducting discussions or making or soliciting invitations to act in concert or in substantial parallel; provided, that a person shall not be deemed to be Acting in Concert with any other person solely as a result of the solicitation or receipt of revocable proxies or consents from such other person in response to a solicitation made pursuant to, and in accordance with, Section 14(a) (or any successor provision) of the Exchange Act by way of a proxy or consent solicitation statement filed on Schedule 14A. A person Acting in Concert with another person shall be deemed to be Acting in Concert with any third party who is also Acting in Concert with such other person;

(B) “Associated Person” shall mean with respect to any subject stockholder or other person (including any proposed nominee) (1) any person directly or indirectly controlling, controlled by or under common control with such stockholder or other person, (2) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such stockholder or other person, (3) any associate (as defined in Rule 405 under the Securities Act of 1933, as amended), of such stockholder or other person, and (4) any person directly or indirectly controlling, controlled by or under common control or Acting in Concert with any such Associated Person;

(C) “Proposing Person” shall mean (1) the stockholder providing the notice of business proposed to be brought before an annual meeting or nomination of persons for election to the Board at a stockholder meeting, (2) the beneficial owner or beneficial owners, if different, on whose behalf the notice of business proposed to be brought before the annual meeting or nomination of persons for election to the Board at a stockholder meeting is made, and (3) any Associated Person on whose behalf the notice of business proposed to be brought before the annual meeting or nomination of persons for election to the Board at a stockholder meeting is made;

 

11


(D) “Public Announcement” shall mean disclosure in a press release reported by a national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act; and

(E) to be considered a “Qualified Representative” of a stockholder, a person must be a duly authorized officer, manager or partner of such stockholder or must be authorized by a writing executed by such stockholder or an electronic transmission delivered by such stockholder to act for such stockholder as a proxy at the meeting of stockholders and such person must produce such writing or electronic transmission, or a reliable reproduction thereof, at the annual meeting; provided, however, that if the stockholder is (1) a general or limited partnership, any general partner or person who functions as a general partner of the general or limited partnership or who controls the general or limited partnership shall be deemed a Qualified Representative, (2) a corporation or a limited liability company, any officer or person who functions as the substantial equivalent of an officer of the corporation or limited liability company or any officer, director, general partner or person who functions as an officer, director or general partner of any entity ultimately in control of the corporation or limited liability company shall be deemed a Qualified Representative or (z) a trust, any trustee of such trust shall be deemed a Qualified Representative. The Secretary of the Corporation, or any other person who shall be appointed to serve as secretary of the meeting, may require, on behalf of the Corporation, reasonable and appropriate documentation to verify the status of a person purporting to be a “Qualified Representative” for purposes hereof.

ARTICLE II

BOARD OF DIRECTORS

2.1 Number; Qualifications.

The total number of directors constituting the Board (the “Whole Board”) shall be fixed from time to time in the manner set forth in the Certificate of Incorporation. No decrease in the authorized number of directors constituting the Whole Board shall shorten the term of any incumbent director. Directors need not be stockholders of the Corporation.

2.2 Election; Resignation; Removal; Vacancies.

Election of directors need not be by written ballot. Unless otherwise provided by the Certificate of Incorporation and subject to the special rights of holders of any series of Preferred Stock to elect directors, the Board shall be divided into three classes, designated as Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the Whole Board. Each director shall hold office until the annual meeting at which such director’s term expires and until such director’s successor is elected and qualified or until such director’s earlier

 

12


death, resignation, disqualification or removal. Any director may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer, or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at a later time or upon the happening of an event. Subject to the special rights of holders of any series of Preferred Stock to elect directors, directors may be removed only as provided by the Certificate of Incorporation and applicable law. All vacancies occurring in the Board and any newly created directorships resulting from any increase in the authorized number of directors shall be filled in the manner set forth in the Certificate of Incorporation.

2.3 Regular Meetings.

Regular meetings of the Board may be held at such places, within or without the State of Delaware, and at such times as the Board may from time to time determine. Notice of regular meetings need not be given if the date, times and places thereof are fixed by resolution of the Board.

2.4 Special Meetings.

Special meetings of the Board may be called by the Chairperson of the Board, the Chief Executive Officer, the Lead Independent Director or at least two (2) members of the Board then in office and may be held at any time, date or place, within or without the State of Delaware, as the person or persons calling the meeting shall fix. Notice of the time, date and place of such meeting shall be given, orally, in writing or by electronic transmission (including electronic mail), by the person or persons calling the meeting to all directors at least four (4) days before the meeting if the notice is mailed, or at least twenty-four (24) hours before the meeting if such notice is given by telephone, hand delivery, telegram, telex, mailgram, facsimile, electronic mail or other means of electronic transmission. Unless otherwise indicated in the notice, any and all business may be transacted at a special meeting.

2.5 Remote Meetings Permitted.

Members of the Board, or any committee of the Board, may participate in a meeting of the Board or such committee by means of conference telephone or other remote communications by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to conference telephone or other remote communications shall constitute presence in person at such meeting.

2.6 Quorum; Vote Required for Action.

At all meetings of the Board, a majority of the Whole Board shall constitute a quorum for the transaction of business. If a quorum shall fail to attend any meeting, a majority of those present may adjourn the meeting to another place, date or time without further notice thereof. Except as otherwise provided herein or in the Certificate of Incorporation, or required by law, the vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board.

 

13


2.7 Organization.

Meetings of the Board shall be presided over by (a) the Chairperson of the Board, or (b) in such person’s absence, the Lead Independent Director, or (c) in such person’s absence, by the Chief Executive Officer, or (d) in such person’s absence, by a chairperson chosen by the Board at the meeting. The Secretary shall act as secretary of the meeting, but in such person’s absence the chairperson of the meeting may appoint any person to act as secretary of the meeting.

2.8 Unanimous Action by Directors in Lieu of a Meeting.

Any action required or permitted to be taken at any meeting of the Board, or of any committee thereof, may be taken without a meeting if all members of the Board or such 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 or committee, as applicable. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form.

2.9 Powers.

Except as otherwise provided by the Certificate of Incorporation or the DGCL, the business and affairs of the Corporation shall be managed by or under the direction of the Board.

2.10 Compensation of Directors.

Members of the Board, as such, may receive, pursuant to a resolution of the Board, fees and other compensation for their services as directors, including without limitation their services as members of committees of the Board.

2.11 Confidentiality.

Each director shall maintain the confidentiality of, and shall not share with any third party person or entity (including third parties that originally sponsored, nominated or designated such director (the “Sponsoring Party”)), any non-public information learned in their capacities as directors, including communications among Board members in their capacities as directors. The Board may adopt a board confidentiality policy further implementing and interpreting this bylaw (a “Board Confidentiality Policy”). All directors are required to comply with this bylaw and any such Board Confidentiality Policy unless such director or the Sponsoring Party for such director has entered into a specific written agreement with the Corporation, in either case as approved by the Board, providing otherwise with respect to such confidential information.

 

14


ARTICLE III

COMMITTEES

3.1 Committees.

The Board may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board 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 the committee, the member or members thereof present at any meeting of such committee who are not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the Board to act at the meeting in place of any such absent or disqualified member. Any such committee, to the extent provided in a resolution of the Board, shall have and may exercise all the powers and authority of the Board 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 that may require it, but no such committee shall have the power or authority in reference to the following matters: (a) approving, adopting or recommending to the stockholders any action or matter (other than the election or removal of members of the Board) expressly required by the DGCL to be submitted to stockholders for approval or (b) adopting, amending or repealing any bylaw of the Corporation.

3.2 Committee Rules.

Each committee shall keep records of its proceedings and make such reports as the Board may from time to time request. Unless the Board otherwise provides, each committee designated by the Board may make, alter and repeal rules for the conduct of its business. In the absence of such rules, each committee shall conduct its business in the same manner as the Board conducts its business pursuant to Article II of these Bylaws. Except as otherwise provided in the Certificate of Incorporation, these Bylaws or the resolution of the Board designating the committee, any committee may create one or more subcommittees, each subcommittee to consist of one or more members of the committee, and may delegate to any such subcommittee any or all of the powers and authority of the committee.

ARTICLE IV

OFFICERS; CHAIRPERSON; LEAD INDEPENDENT DIRECTOR

4.1 Generally.

The officers of the Corporation shall consist of a Chief Executive Officer (who may be the Chairperson of the Board or the President), a President, a Secretary and a Treasurer and may consist of such other officers, including, without limitation, a Chief Financial Officer and one or more Vice Presidents, as may from time to time be appointed by the Board. All officers shall be elected by the Board; provided, however, that the Board may empower the Chief Executive Officer of the Corporation to appoint any officer other than the Chief Executive Officer, the President, the Chief Financial Officer or the Treasurer. Except as otherwise provided by law, by

 

15


the Certificate of Incorporation or these Bylaws, each officer shall hold office until such officer’s successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal. Any number of offices may be held by the same person. Any officer may resign by delivering a resignation in writing or by electronic transmission to the Corporation at its principal office or to the Chairperson of the Board, the Chief Executive Officer or the Secretary. Such resignation shall be effective upon delivery unless it is specified to be effective at some later time or upon the happening of some later event. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise may be filled by the Board and the Board may, in its discretion, leave unfilled, for such period as it may determine, any offices. Each such successor shall hold office for the unexpired term of such officer’s predecessor and until a successor is duly elected and qualified or until such officer’s earlier resignation, death, disqualification or removal.

4.2 Chief Executive Officer.

Subject to the control of the Board and such supervisory powers, if any, as may be given by the Board, the powers and duties of the Chief Executive Officer of the Corporation are:

(a) to act as the general manager and, subject to the control of the Board, to have general supervision, direction and control of the business and affairs of the Corporation;

(b) subject to Article I, Section 1.6 of these Bylaws, to preside at all meetings of the stockholders;

(c) subject to Article I, Section 1.2 of these Bylaws, to call special meetings of the stockholders to be held at such times and, subject to the limitations prescribed by law or by these Bylaws, at such places as the Chief Executive Officer shall deem proper;

(d) to affix the signature of the Corporation to all deeds, conveyances, mortgages, guarantees, leases, obligations, bonds, certificates and other papers and instruments in writing which have been authorized by the Board or which, in the judgment of the Chief Executive Officer, should be executed on behalf of the Corporation; and

(e) to sign certificates for shares of stock of the Corporation (if any); and, subject to the direction of the Board, to have general charge of the property of the Corporation and to supervise and control all officers, agents and employees of the Corporation.

The person holding the office of President shall be the Chief Executive Officer of the Corporation unless the Board shall designate another officer to be the Chief Executive Officer.

4.3 Chairperson of the Board.

Subject to the provisions of Section 2.7 of these Bylaws, the Chairperson of the Board shall have the power to preside at all meetings of the Board and shall have such other powers and duties as provided in these Bylaws and as the Board may from time to time prescribe.

 

16


4.4 Lead Independent Director.

The Board may, in its discretion, elect a lead independent director from among its members that are Independent Directors (as defined below) (such director, the “Lead Independent Director”). The Lead Independent Director shall preside at all meetings at which the Chairperson of the Board is not present and shall exercise such other powers and duties as may from time to time be assigned to such person by the Board or as prescribed by these Bylaws. For purposes of these Bylaws, “Independent Director” has the meaning ascribed to such term under the rules of the exchange upon which the Corporation’s Class A Common Stock is primarily traded.

4.5 President.

The person holding the office of Chief Executive Officer shall be the President of the Corporation unless the Board shall have designated one individual as the President and a different individual as the Chief Executive Officer of the Corporation. Subject to the provisions of these Bylaws and to the direction of the Board, and subject to the supervisory powers of the Chief Executive Officer (if the Chief Executive Officer is an officer other than the President), and subject to such supervisory powers and authority as may be given by the Board to the Chairperson of the Board, and/or to any other officer, the President shall have the responsibility for the general management and control of the business and affairs of the Corporation and the general supervision and direction of all of the officers, employees and agents of the Corporation (other than the Chief Executive Officer, if the Chief Executive Officer is an officer other than the President) and shall perform all duties and have all powers that are commonly incident to the office of President or that are delegated to the President by the Board.

4.6 Chief Financial Officer.

The person holding the office of Chief Financial Officer shall be the Treasurer of the Corporation unless the Board shall have designated another officer as the Treasurer of the Corporation. Subject to the direction of the Board and the Chief Executive Officer, the Chief Financial Officer shall perform all duties and have all powers that are commonly incident to the office of Chief Financial Officer, or as the Board may from time to time prescribe.

4.7 Treasurer.

The person holding the office of Treasurer shall have custody of all monies and securities of the Corporation. The Treasurer shall make such disbursements of the funds of the Corporation as are authorized and shall render from time to time an account of all such transactions. The Treasurer shall also perform such other duties and have such other powers as are commonly incident to the office of Treasurer, or as the Board or the Chief Executive Officer may from time to time prescribe.

4.8 Vice President.

Each Vice President shall have all such powers and duties as are commonly incident to the office of Vice President or that are delegated to such Vice President by the Board or the Chief Executive Officer. A Vice President may be designated by the Board to perform the duties and exercise the powers of the Chief Executive Officer or President in the event of the Chief Executive Officer’s or President’s absence or disability.

 

17


4.9 Secretary.

The Secretary shall issue or cause to be issued all authorized notices for, and shall keep, or cause to be kept, minutes of all meetings of the stockholders and the Board. The Secretary shall have charge of the corporate minute books and similar records and shall perform such other duties and have such other powers as are commonly incident to the office of Secretary, or as the Board or the Chief Executive Officer may from time to time prescribe.

4.10 Delegation of Authority.

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

4.11 Removal.

Any officer of the Corporation shall serve at the pleasure of the Board and may be removed at any time, with or without cause, by the Board; provided, that if the Board has empowered the Chief Executive Officer to appoint any officer of the Corporation, then such officer may also be removed by the Chief Executive Officer. Such removal shall be without prejudice to the contractual rights of such officer, if any, with the Corporation.

ARTICLE V

STOCK

5.1 Certificates; Uncertificated Shares.

The shares of capital stock of the Corporation shall be uncertificated shares; provided, however, that the resolution of the Board that the shares of capital stock of the Corporation shall be uncertificated shares shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation (or the transfer agent or registrar, as the case may be). Notwithstanding the foregoing, the Board may provide by resolution or resolutions that some or all of any or all classes or series of its stock shall be certificated shares. Every holder of stock represented by certificates shall be entitled to have a certificate signed by, or in the name of the Corporation, by the Chairperson or Vice-Chairperson of the Board, the Chief Executive Officer or the President or a Vice President, and by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary, of the Corporation, representing the number of shares registered in certificate form. Any or all of the signatures on the 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 such person were an officer, transfer agent or registrar at the date of issue.

 

18


5.2 Lost, Stolen or Destroyed Stock Certificates; Issuance of New Certificates or Uncertificated Shares.

The Corporation may issue a new certificate of stock or uncertificated shares in the place of any certificate previously issued by it, 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 the Corporation may require the owner of the lost, stolen or destroyed certificate, or such owner’s legal representative, to agree to indemnify the Corporation and/or to give the Corporation a bond sufficient to indemnify it, against any claim that may be made against it on account of the alleged loss, theft or destruction of any such certificate or the issuance of such new certificate or uncertificated shares.

5.3 Other Regulations.

Subject to applicable law, the Certificate of Incorporation and these Bylaws, the issue, transfer, conversion and registration of shares represented by certificates and of uncertificated shares shall be governed by such other regulations as the Board may establish.

ARTICLE VI

INDEMNIFICATION

6.1 Indemnification of Officers and Directors.

Each person who was or is made a party to, or is threatened to be made a party to, or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, legislative or any other type whatsoever (a “Proceeding”), by reason of the fact that such person (or a person of whom such person is the legal representative), is or was a director or officer of the Corporation or, while serving as a director or officer of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans (for purposes of this Article VI, an “Indemnitee”), shall be indemnified and held harmless by the Corporation to the fullest extent permitted 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 such law permitted the Corporation to provide prior to such amendment), against all expenses, liability and loss (including attorneys’ fees, judgments, fines, ERISA excise taxes and penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such Indemnitee in connection therewith, provided such Indemnitee acted in good faith and in a manner that the Indemnitee reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or Proceeding, had no reasonable cause to believe the Indemnitee’s conduct was unlawful. Such indemnification shall continue as to an Indemnitee who has ceased to be a director or officer of the Corporation and shall inure to the benefit of such Indemnitees’ heirs, executors and administrators. Notwithstanding the foregoing, subject to Section 6.5 of these Bylaws, the Corporation shall indemnify any such Indemnitee seeking indemnity in connection with a Proceeding (or part thereof) initiated by such Indemnitee only if such Proceeding (or part thereof) was authorized by the Board or such indemnification is authorized by an agreement approved by the Board.

 

19


6.2 Advance of Expenses.

Except as otherwise provided in a written indemnification contract between the Corporation and an Indemnitee, the Corporation shall pay all expenses (including attorneys’ fees) incurred by an Indemnitee in defending any Proceeding in advance of its final disposition; provided, however, that if the DGCL then so requires, the advancement of such expenses shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such Indemnitee, to repay such amounts if it shall ultimately be determined that such Indemnitee is not entitled to be indemnified under this Article VI or otherwise.

6.3 Non-Exclusivity of Rights.

The rights conferred on any person in this Article VI shall not be exclusive of any other right that such person may have or hereafter acquire under any statute, provision of the Certificate of Incorporation, Bylaws, agreement, vote or consent of stockholders or disinterested directors, or otherwise. Additionally, nothing in this Article VI shall limit the ability of the Corporation, in its discretion, to indemnify or advance expenses to persons whom the Corporation is not obligated to indemnify or advance expenses pursuant to this Article VI.

6.4 Indemnification Contracts.

The Board is authorized to cause the Corporation to enter into indemnification contracts with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee, agent or trustee of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing indemnification or advancement rights to such person. Such rights may be greater than those provided in this Article VI.

6.5 Right of Indemnitee to Bring Suit.

The following shall apply to the extent not in conflict with any indemnification contract provided for in Section 6.4 of these Bylaws.

6.5.1 Right to Bring Suit. If a claim under Section 6.1 or 6.2 of these Bylaws 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, to the fullest extent permitted by law, the expense of prosecuting or defending such suit. In any suit brought by the Indemnitee to enforce a right to indemnification hereunder (but not in a suit brought by the Indemnitee to enforce a right to an advancement of expenses) it shall be a defense that the Indemnitee has not met any applicable standard of conduct which makes it permissible under the DGCL (or other applicable law) for the Corporation to indemnify the Indemnitee for the amount claimed.

 

20


6.5.2 Effect of Determination. Neither the absence of a determination prior to the commencement of such suit that indemnification of the Indemnitee is proper in the circumstances because the Indemnitee has met the applicable standard of conduct set forth in applicable law, nor an actual determination that the Indemnitee has not met such applicable standard of conduct, shall create a presumption that the Indemnitee has not met the applicable standard of conduct or, in the case of such a suit brought by the Indemnitee, be a defense to such suit.

6.5.3 Burden of Proof. In any suit brought by the Indemnitee to enforce a right to indemnification or to an advancement of expenses hereunder, or brought 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 VI, or otherwise, shall be on the Corporation.

6.6 Nature of Rights.

The rights conferred upon Indemnitees in this Article VI shall be contract rights and such rights shall continue as to an Indemnitee who has ceased to be a director, officer or trustee and shall inure to the benefit of the Indemnitee’s heirs, executors and administrators. Any amendment, repeal or modification of any provision of this Article VI that adversely affects any right of an Indemnitee or an Indemnitee’s successors shall be prospective only, and shall not adversely affect any right or protection conferred on a person pursuant to this Article VI with respect to any Proceeding involving any occurrence or alleged occurrence of any action or omission to act that took place prior to such amendment, repeal or modification.

6.7 Insurance.

The Corporation may purchase and maintain insurance, at its expense, to protect itself and any director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise against any expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the DGCL.

ARTICLE VII

NOTICES

7.1 Notice.

7.1.1 Form and Delivery. Except as otherwise specifically required in these Bylaws (including, without limitation, Section 7.1.2 of these Bylaws) or by applicable law, all notices required to be given pursuant to these Bylaws shall be in writing and may (a) in every instance in connection with any delivery to a member of the Board, be effectively given by hand delivery (including use of a delivery service), by depositing such notice in the mail, postage prepaid, or by sending such notice by overnight express courier, facsimile, electronic mail or

 

21


other form of electronic transmission and (b) be effectively delivered to a stockholder when given by hand delivery, by depositing such notice in the mail, postage prepaid or, if specifically consented to by the stockholder as described in Section 7.1.2 of these Bylaws, by sending such notice by facsimile, electronic mail or other form of electronic transmission. Any such notice shall be addressed to the person to whom notice is to be given at such person’s address as it appears on the records of the Corporation. The notice shall be deemed given: (a) in the case of hand delivery, when received by the person to whom notice is to be given or by any person accepting such notice on behalf of such person; (b) in the case of delivery by mail, upon deposit in the mail; (c) in the case of delivery by overnight express courier, when dispatched; and (d) in the case of delivery via facsimile, electronic mail or other form of electronic transmission, at the time provided in Section 7.1.2 of these Bylaws.

7.1.2 Electronic Transmission. Without limiting the manner by which notice otherwise may be given effectively to stockholders, any notice to stockholders given by the Corporation under any provision of the DGCL, the Certificate of Incorporation, or these Bylaws shall be effective if given by a form of electronic transmission consented to by the stockholder to whom the notice is given in accordance with Section 232 of the DGCL. Any such consent shall be revocable by the stockholder by written notice to the Corporation. Any such consent shall be deemed revoked if (a) the Corporation is unable to deliver by electronic transmission two consecutive notices given by the Corporation in accordance with such consent and (b) such inability becomes known to the Secretary or an Assistant Secretary of the Corporation or to the transfer agent, or other person responsible for the giving of notice; provided, however, that the inadvertent failure to treat such inability as a revocation shall not invalidate any meeting or other action. Notice given pursuant to this Section 7.1.2 shall be deemed given: (i) if by facsimile telecommunication, when directed to a number at which the stockholder has consented to receive notice; (ii) if by electronic mail, when directed to an electronic mail address at which the stockholder has consented to receive notice; (iii) if by a posting on an electronic network together with separate notice to the stockholder of such specific posting, upon the later of such posting and the giving of such separate notice; and (iv) if by any other form of electronic transmission, when directed to the stockholder.

7.1.3 Affidavit of Giving Notice. An affidavit of the Secretary or an Assistant Secretary or of the transfer agent or other agent of the Corporation that the notice has been given in writing or by a form of electronic transmission shall, in the absence of fraud, be prima facie evidence of the facts stated therein.

7.2 Waiver of Notice.

Whenever notice is required to be given under any provision of the DGCL, the Certificate of Incorporation or these Bylaws, a written waiver of notice, signed by the person entitled to notice, or waiver by electronic transmission by such person, 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 waiver of notice.

 

22


ARTICLE VIII

INTERESTED DIRECTORS

8.1 Interested Directors.

No contract or transaction between the Corporation and one or more of its members of the Board or officers, or between the Corporation and any other corporation, partnership, association or other organization in which one or more of its directors or officers are members of the board of directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board or committee thereof that authorizes the contract or transaction, or solely because such director’s or officer’s votes are counted for such purpose, if: (a) the material facts as to such director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board or the committee, and the Board or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; (b) the material facts as to such director’s or officer’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board, a committee thereof, or the stockholders.

8.2 Quorum.

Interested directors may be counted in determining the presence of a quorum at a meeting of the Board or of a committee which authorizes the contract or transaction.

ARTICLE IX

MISCELLANEOUS

9.1 Fiscal Year.

The fiscal year of the Corporation shall be determined by resolution of the Board.

9.2 Seal.

The Board may provide for a corporate seal, which may have the name of the Corporation inscribed thereon and shall otherwise be in such form as may be approved from time to time by the Board.

9.3 Form of Records.

Any records maintained by the Corporation in the regular course of its business, including its stock ledger, books of account and minute books, may be kept on or by means of, or be in the form of any other information storage device or method, electronic or otherwise, provided, that the records so kept can be converted into clearly legible paper form within a reasonable time. The Corporation shall so convert any records so kept upon the request of any person entitled to inspect such records pursuant to any provision of the DGCL.

 

23


9.4 Reliance Upon Books and Records.

A member of the Board, or a member of any committee designated by the Board shall, in the performance of such person’s duties, be fully protected in relying in good faith upon the books and records of the Corporation and upon such information, opinions, reports or statements presented to the Corporation by any of the Corporation’s officers or employees, or committees of the Board, or by any other person as to matters the member reasonably believes are within such other person’s professional or expert competence and who has been selected with reasonable care by or on behalf of the Corporation.

9.5 Certificate of Incorporation Governs.

In the event of any conflict between the provisions of the Certificate of Incorporation and Bylaws, the provisions of the Certificate of Incorporation shall govern.

9.6 Severability.

If any provision of these Bylaws shall be held to be invalid, illegal, unenforceable or in conflict with the provisions of the Certificate of Incorporation, then such provision shall nonetheless be enforced to the maximum extent possible consistent with such holding and the remaining provisions of these Bylaws (including without limitation, all portions of any section of these Bylaws containing any such provision held to be invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation, that are not themselves invalid, illegal, unenforceable or in conflict with the Certificate of Incorporation) shall remain in full force and effect.

9.7 Time Periods.

In applying any provision of these Bylaws which requires that an act be done or not be done a specified number of days prior to an event or that an act be done during a period of a specified number of days prior to an event, calendar days shall be used, the day of the doing of the act shall be excluded, and the day of the event shall be included.

ARTICLE X

AMENDMENT

Notwithstanding any other provision of these Bylaws, any alteration, amendment or repeal of these Bylaws, and any adoption of new Bylaws, shall require the approval of the Board or the stockholders of the Corporation as expressly provided in the Certificate of Incorporation.

 

24


CERTIFICATION OF RESTATED BYLAWS

OF

FISKER INC.

(a Delaware corporation)

I, Geeta Gupta-Fisker, certify that I am Secretary of Fisker Inc., a Delaware corporation (the “Corporation”), that I am duly authorized to make and deliver this certification and that the attached Bylaws are a true and complete copy of the Restated Bylaws of the Corporation in effect as of the date of this certificate.

 

Dated: October 29, 2020

/s/ Geeta Gupta-Fisker

Geeta Gupta-Fisker

Chief Financial Officer

Exhibit 4.4

THESE WARRANTS AND THE UNDERLYING SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM OR IN A TRANSACTION NOT SUBJECT THERETO. SUBJECT TO THE TERMS HEREOF, THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE ISSUER THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS.

WARRANTS TO PURCHASE SHARES

of

FISKER INC.

Dated as of October 29, 2020 (the “Issuance Date”)

Void after the date specified in Section 9

 

No. W-1       19,474,454 Warrants to Purchase 19,474,454 Shares of Class A Common Stock (subject to adjustment)

THIS CERTIFIES THAT, for value received, Magna Inernational Inc. (“MAGNA”) (the “Holder”) is entitled, subject to the provisions and upon the terms and conditions set forth herein, to purchase from Fisker Inc. (“Fisker”), up to 19,474,454 shares (subject to adjustment pursuant hereto) of Fisker’s Class A Common Stock, $0.00001 par value per share (each a “Share”), at such times and at the prices per Share set forth in Section 1. The term “Warrants” as used herein shall include these 19,474,454 Warrants and any warrants delivered in substitution or exchange herefor as provided herein. The term “Underlying Shares” as used herein shall mean the gross number of Shares issuable upon exercise of these Warrants, subject to adjustment pursuant to the terms hereof. These Warrants are issued in connection with the transactions described in the Cooperation Agreement dated as of October 14, 2020, between Fisker and MAGNA (the “Cooperation Agreement”).

The following is a statement of the rights of the Holder and the conditions to which these Warrants are subject, and to which Holder, by acceptance of these Warrants, agrees:

1. Number and Price of Underlying Shares; Exercise Period.

(a) Number of Underlying Shares. The Holder shall have the right to purchase up to 19,474,454 Shares (subject to adjustment pursuant hereto), with each Warrant representing the right to purchase one Share, subject to the vesting provisions set forth in Section 1(b), the provisions of Section 3, and any other adjustment provided for herein.

(b) Vesting of Warrants. These Warrants shall vest and may be exercised based on the achievement of milestones (each, a “Milestone Target”) during the Exercise Period as set forth in the table below:


Milestone

       

Percentage of
Warrants that Vest

(i) Achievement of the “preliminary product specification” gateway as set forth in the Development Agreement; (ii) Entering into the Platform Agreement; and (iii) Entering into the Initial Manufacturing Agreement       33.3%
(i) Achievement of the “target agreement” gateway as set forth in the Development Agreement and (ii) Entering into the Detailed Manufacturing Agreement       33.3%
Start of pre-serial production       33.4%

For the avoidance of doubt, once a Milestone Target has been achieved, the percentage of Shares subject to such Milestone Target shall be fully vested for the remainder of the Exercise Period. Notwithstanding the foregoing vesting schedule, upon a Change of Control, 100% of the Warrants shall immediately vest. In addition, upon the termination of the Cooperation Agreement for any reason no further Warrants shall vest.

(c) Exercise Price. The exercise price for each of the Warrants shall be $0.01 per Warrant (subject to adjustment pursuant hereto) (the “Exercise Price”).

(d) Exercise Period. These Warrants shall be exercisable, solely to the extent vested, in whole or in part, at any time prior to the Expiration Date (the “Exercise Period”).

2. Definitions. For purposes of these Warrants:

Act” means the Securities Act of 1933, as amended.

Affiliate” means as to any Person, any other Person that directly, or indirectly through one or more intermediaries, Controls, or is Controlled by, or is under common Control with, such Person.

Business Day” shall mean a day other than a Saturday, Sunday or national holiday.

Change of Control” means the occurrence of any of the following:

(i) the sale, lease or transfer (other than by way of merger or consolidation), in one or a series of related transactions, of all or substantially all the assets of Fisker and its Affiliates, taken as a whole, to any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision) other than to Fisker or its Affiliates; or

(ii) the acquisition by any Person or group (within the meaning of Section 13(d)(3) or Section 14(d)(2) of the Exchange Act, or any successor provision), including any group acting for the purpose of acquiring, holding or disposing of securities (within the meaning of Rule 13d-5(b)(1) under the Exchange Act), in a single transaction or in a related series of transactions, by way of merger, consolidation, amalgamation or other business combination or purchase of beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act, or any successor provision), of more than 50% of the total voting power of the Voting Stock of Fisker, in each case, other than an acquisition where the holders of the Voting Stock of Fisker as of immediately prior to such acquisition hold 50% or more of the Voting Stock of the ultimate parent of Fisker or successor thereto immediately after such acquisition (provided no holder of the voting stock of Fisker as of immediately prior to such acquisition owns, directly or indirectly, more than 50% of the voting power of the Voting Stock of Fisker immediately after such acquisition).

 

2


Control (and its derivatives)” means, with respect to any Person, the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting securities (or other ownership interest), as trustee or executor, by contract or otherwise.

Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

Expiration Date” shall have such meaning as set forth in Section 8.

Person” means any individual, partnership, joint venture, limited liability company, corporation, trust or other entity, any national or state government or any agency or political subdivision thereof, and the heirs, executors, administrators, legal representatives, successors and assigns of such Person where the context so requires.

SEC” means the Securities and Exchange Commission.

Securities” means these Warrants and the Shares issued upon exercise of these Warrants.

Transfer” means (i) any direct or indirect sale, lease, assignment, encumbrance, disposition or other transfer (by operation of law or otherwise), either voluntary or involuntary, or entry into any contract, option or other arrangement or understanding with respect to any sale, lease, assignment, encumbrance, disposition or other transfer (by operation of law or otherwise), of these Warrants or (ii) to enter into any derivative instrument, swap or any other contract, agreement, transaction or series of transactions that hedges or transfers, in whole or in part, directly or indirectly, the economic consequence of ownership of these Warrants, whether any such derivative instrument, swap, contract, agreement, transaction or series of transactions is to be settled by delivery of securities, in cash or otherwise.

Voting Stock” of any Person as of any date means the capital stock of such Person that is at the time entitled to vote in the election of the Board of Directors of such Person.

3. Exercise of the Warrants.

(a) Exercise.

(i) Notice of Exercise. The purchase rights represented by these Warrants may be exercised at the election of the Holder, in whole or in part, in accordance with Section 1, by the tender to Fisker pursuant to Section 13(e) hereof of a notice of exercise substantially in the form of Appendix 1 (the “Notice of Exercise”) duly completed and executed by or on behalf of the Holder, together with the surrender of these Warrants. Such Notice of Exercise may only be delivered and shall only be valid if (i) these Warrants have vested in accordance with Section 1(b) and (ii) the Expiration Date has not occurred prior to the Exercise Date. Holder shall not be required to perform any obligations other than as set forth in this Section 3(a)(i) to exercise any Warrants.

As used herein, “Exercise Date” means the date a properly completed and executed Notice of Exercise, together with these Warrants, are surrendered for exercise as provided in this Section 3(a). On the Exercise Date, Fisker will calculate the Net Payment Amount of the exercised Warrants. In the event that the Net Payment Amount on the Exercise Date is zero or less than zero, then these exercised Warrants shall be automatically canceled and be of no further force and effect, and no payment shall be due in respect of such cancellation. If the Holder does not exercise these Warrants in their entirety, Holder shall be entitled to receive from Fisker, on the date that the Net Payment Amount is delivered, new Warrants of like tenor in substantially identical form for the purchase of that number of Warrants equal to the difference between the number of Warrants provided for herein and the number of exercised Warrants.

 

3


(ii) Net Payment Amount. The Net Payment Amount means a dollar value computed using the following formula:

 

X   

=

  

Y × (A - B)

Where:      
X   

=

  

The Net Payment Amount

Y   

=

  

The number of vested Warrants that are being exercised

A   

=

  

The closing price of a Share on the Trading Day immediately prior to the Exercise Date

B   

=

  

The Exercise Price

(iii) Trading Day. As used herein, “Trading Day” means any day on which trading in the Shares generally occurs on the principal national securities exchange on which the Shares is then listed.

(b) Net Share or Other Settlement. Fisker shall satisfy all or any portion of the Net Payment Amount by delivery of a number of Shares equal to (A) the dollar amount of the Net Payment Amount to be settled with Shares divided by (B) the closing price of a Share on the Trading Day immediately prior the Exercise Date. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of the rights under these Warrants. In lieu of any fractional share which the Holder would otherwise receive pursuant to this Section 3(b), Fisker shall make a cash payment equal to the closing price of a Share on the Trading Day immediately prior the Exercise Date multiplied by such fraction.

(c) Shares Issuance. The rights under these Warrants shall be deemed to have been exercised and any Shares to be issued upon such exercise shall be deemed to have been issued immediately prior to the close of business on the relevant Exercise Date, and the person entitled to receive the Shares issued upon such exercise shall be treated for all purposes as the holder of record of such Shares as of the close of business on such date.

(d) Reservation of Shares. During the term the rights under these Warrants are exercisable, Fisker agrees to take all action necessary to reserve and keep available from its authorized and unissued Shares for the purpose of effecting the exercise of these Warrants such number of shares as shall from time to time be sufficient to effect the exercise in full of the rights under these Warrants; and if at any time the number of authorized but unissued Shares shall not be sufficient for purposes of the exercise of these Warrants in accordance with its terms, without limitation of such other remedies as may be available to the Holder, Fisker agrees to take such corporate action as may, in the opinion of counsel, be necessary to increase its authorized and unissued Shares to a number of shares as shall be sufficient for such purposes. Fisker represents and warrants that all Shares that may be issued upon the exercise of these Warrants will, when issued in accordance with the terms hereof, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder and free of all taxes, liens and charges with respect to the issue thereof.

(e) Delivery of Net Payment Amount. Subject to applicable tax withholding, Fisker will deliver the Shares (or other consideration contemplated by Section 3(b)) due upon exercise of these Warrants promptly but in no event later than the third (3rd) Business Day after the Exercise Date. Any Shares to be delivered upon exercise hereof will be delivered in accordance with the instructions provided by the Holder in book-entry form, if then permitted by the rules of the Depositary Trust Company, otherwise in certificated form, subject to the terms hereof. Notwithstanding anything in these Warrants to the contrary, if the Shares issued upon exercise of these Warrants are delivered in book-entry form, any reference in these Warrants to any certificate evidencing such Shares shall be deemed to be a reference to the book entry for such Shares.

(f) Certain Expenses. Each of Fisker and the Holder shall pay all of its expenses in connection with the negotiation and exercise of these Warrants or the issue or delivery of the Net Payment Amount. Any expenses incurred in connection with the transfer of these Warrants if Fisker consents to such Transfer or such Transfer is otherwise permitted in accordance with Section 5 below shall be borne by the Holder. Any taxes incurred in connection with the exercise of these Warrants shall be borne by the Holder.

 

4


4. Replacement of the Warrants. Subject to the receipt of evidence reasonably satisfactory to Fisker of the loss, theft, destruction or mutilation of these Warrants and, in the case of loss, theft or destruction, on delivery of an indemnity agreement reasonably satisfactory in form and substance to Fisker or, in the case of mutilation, on surrender and cancellation of these Warrants, Fisker, at the expense of the Holder (to the extent any out-of-pocket expenses have arisen in connection therewith), shall promptly execute and deliver, in lieu of these Warrants, a new warrant identical to these Warrants.

5. Restrictions on Transfer of the Warrants. Other than to one or more of its Affiliates, the Holder may not Transfer these Warrants without the prior written approval of Fisker. Any attempt to Transfer these Warrants by the Holder without such prior written approval of Fisker shall be void.

6. Compliance with Securities Laws. By acceptance of these Warrants, the Holder agrees to comply with the following:

(a) The Holder, by acceptance hereof, acknowledges that these Warrants and any Shares that may be issued upon exercise hereof are being acquired solely for the Holder’s own account, and not as a nominee for any other party, and for investment, and that the Holder will not offer, sell or otherwise dispose of these Warrants or any Shares that may be issued upon exercise hereof except pursuant to an effective registration statement, or an exemption from registration, under the Act and any applicable state securities laws.

(b) Except as provided in paragraph (c) below, these Warrants and all certificates representing Shares issued upon exercise hereof shall be stamped or imprinted with a legend in substantially the following form:

THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR AN EXEMPTION FROM REGISTRATION THEREUNDER.

(c) The restrictions imposed by this Section 6 upon the Transfer of these Warrants and any Shares issued upon exercise hereof shall terminate (A) when such securities shall have been effectively registered under the Act and sold by the holder thereof in accordance with such registration or sold under and pursuant to Rule 144 promulgated under the Act, (B) if any Shares are delivered pursuant to Section 3(b), one year from the Issuance Date or (C) upon Fisker’s receipt of an opinion of counsel, in form and substance reasonably satisfactory to Fisker, addressed to Fisker to the effect that such restrictions are no longer required to ensure compliance with the Act. Whenever such restrictions shall cease and terminate as to any such securities, the holder thereof shall be entitled to receive from Fisker (or its transfer agent and registrar), without expense (other than applicable transfer taxes, if any), new Warrants (or, in the case of Shares issued upon exercise of these Warrants already represented by stock certificates, new stock certificates or book entry shares) of like tenor not bearing the applicable legend required by paragraph (b) above relating to the Act and applicable state securities laws.

(d) Instructions Regarding Transfer Restrictions. The Holder consents to Fisker making a notation on its records and giving instructions to any transfer agent in order to implement the restrictions on transfer established in Section 5 and this Section 6.

7. Adjustments. Subject to the expiration of these Warrants pursuant to Section 8, the number and kind of shares purchasable hereunder and the Exercise Price therefor are subject to adjustment from time to time, as follows (provided, that, if more than one subsection of this Section is applicable to a single event, the subsection that produces the largest adjustment shall be applied, and no single event shall cause an adjustment under more than one subsection of this Section to the extent of any resulting duplication):

 

5


(a) Share Dividends; Subdivisions and Combinations. In case Fisker shall (i) pay a dividend on its Shares in Shares, (ii) subdivide its outstanding Shares or (iii) combine its outstanding Shares into a smaller number of shares, then, in such an event, the Exercise Price in effect immediately prior thereto shall be adjusted proportionately so that the adjusted Exercise Price will bear the same relation to the Exercise Price in effect immediately prior to any such event as the total number of Shares outstanding immediately prior to any such event shall bear to the total number of Shares outstanding immediately after such event. An adjustment made pursuant to this subsection (a), (A) shall become effective retroactively immediately after the record date in the case of a share dividend or (B) shall become effective immediately after the effective date in the case of a subdivision or combination. The Exercise Price, as so adjusted, shall be readjusted in the same manner upon the happening of any successive event or events described herein. Upon each adjustment of the Exercise Price pursuant to this subsection (a), the number of Underlying Shares shall be adjusted to the number of Shares, calculated to the nearest one hundredth of a share, obtained by multiplying the number of Underlying Shares immediately prior to such adjustment upon the exercise of these Warrants by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the new Exercise Price.

(b) Reorganizations. If at any time there shall be any reorganization, recapitalization, merger or consolidation (a “Reorganization”) involving Fisker (other than as otherwise provided for herein) in which the Shares are converted into or exchanged for securities, cash or other property, then, as a part of such Reorganization, lawful provision shall be made so that the Net Payment Amount that may be received upon exercise of the Warrants shall be equivalent to the dollar value of the consideration to which a holder of a number of Shares equal to the number of Underlying Shares would have been entitled to receive in such Reorganization minus the Exercise Price (and subject to the limitation in Section 3(a)(iii)), as determined in good faith by the Board of Directors of Fisker or its successor. Fisker or its successor in such Reorganization shall have the right to satisfy any exercise after any such Reorganization, pursuant to Section 3(b) by delivery of any shares, other securities or other property in the proportion received by other holders of Shares pursuant to such Reorganization. Notwithstanding the foregoing, in the event that in any Reorganization, the consideration payable consists of Shares of the successor that are listed on a national or international stock exchange, then the successor in such Reorganization may elect to assume these Warrants such that the Underlying Shares are such Shares of the successor, and adjust the number of the Underlying Shares and the Exercise Price proportionately such that the net value of these Warrants immediately after the Reorganization is equivalent to the net value of these Warrants immediately prior to such Reorganization (as determined in good faith by the Board of Directors of such successor) (and taking into account Section 3(a)(iii)). In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of Fisker or the successor) shall be made in the application of the provisions of these Warrants with respect to the rights and interests of the Holder after such Reorganization.

(c) Reclassification. In case of any reclassification of the Shares (other than a change in par value of the Shares), the Underlying Shares after such reclassification shall be adjusted based upon the number of shares of stock or other securities to which a holder of the number of Shares equal to the number of Underlying Shares at the time of such reclassification would have been entitled to receive upon such reclassification, as determined in good faith by the Board of Directors of Fisker or its successor (provided that the exercise of these Warrants shall always be subject to the provisions of Section 3 hereof). The subdivision or combination of Shares at any time outstanding into a greater or lesser number of shares of Shares shall not be deemed to be a reclassification of the Shares of Fisker for the purposes of this subsection (c). In any such case, appropriate adjustment (as determined in good faith by the Board of Directors of Fisker) shall be made in the application of the provisions of these Warrants with respect to the rights and interests of the Holder after such reclassification, to the end that the provisions hereof shall thereafter be applicable, as nearly as may be, in relation to any shares of stock or other securities thereafter deliverable upon the exercise hereof.

(d) Notice of Adjustment. Whenever the Exercise Price is adjusted as herein provided, Fisker shall compute the adjusted Exercise Price in accordance with subsection (a) above and shall prepare a certificate signed by its principal financial officer or principal accounting officer setting forth the adjusted Exercise Price and showing in reasonable detail the method of such adjustment and the fact requiring the adjustment and upon which such calculation is based, and such certificate shall forthwith be forwarded to the Holder.

 

6


(e) Adjustments to Private Placement Warrants and Public Warrants. Notwithstanding anything to the contrary herein, the Holder will be entitled to the benefit of any adjustment on a most favored nation basis relative to the terms provided or applied to any holders of warrants (i) issued by Spartan to its sponsor in a private placement (the Private Placement Warrants”) simultaneously with the closing of Spartan’s initial public offering of units, on August 14, 2018 (the “IPO”) or (ii) sold as part of the units in the IPO (whether they were purchased in the IPO or thereafter in the open market) (the “Public Warrants”), so that the terms of this Section 7 will have terms no less favorable to the Holder than the terms of any outstading Private Placement Warrants and Public Warrants are to the holders thereof, as if the adjustment provisions in Section 4 of such Private Placement Warrants and Public Warrants were set forth herein, mutatis mutandis, and made by Fisker with reference to and for the purposes hereof.

8. Expiration of the Warrants. These Warrants shall expire and terminate and shall no longer be exercisable as of 5:00 p.m., Pacific time, on October 29, 2030 (such date, the “Expiration Date”). Nothing in this Section 8 shall limit any remedies of any party under the Cooperation Agreement in accordance with the terms, and subject to the limitations, thereof.

9. No Rights as a Stockholder. Nothing contained herein shall entitle the Holder to any rights as a stockholder of Fisker or to be deemed the holder of any securities that may at any time be issuable on the exercise of the rights hereunder for any purpose nor shall anything contained herein be construed to confer upon the Holder, as such, any right to vote for the election of directors or upon any matter submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issuance of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance or otherwise) or to receive notice of meetings, or to receive dividends or subscription rights or any other rights of a stockholder of Fisker, as such, in each case, until such time as, and to the extent, the Holder is deemed to be the holder of record of Shares issued upon exercise of these Warrants pursuant to Section 3(c).

10. Representations, Warranties and Covenants of Fisker. Fisker represents, warrants and covenants to the Holder as follows:

(a) Organization, Good Standing and Corporate Power. Fisker is a company duly organized, validly existing and in good standing under the laws of Delaware. Fisker has all requisite corporate power and authority to execute, deliver and perform its obligations under these Warrants.

(b) Authorization. All corporate action on the part of Fisker (including, without limitation, its Board of Directors, officers and stockholders) necessary to authorize the execution, delivery and performance of these Warrants by Fisker has been taken. These Warrants constitutes the valid and legally binding obligations of Fisker, enforceable against Fisker in accordance with its terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, or other laws of general application relating to or affecting the enforcement of creditors’ rights generally and (ii) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

(c) Valid Issuance of Shares. The Underlying Shares have been duly reserved for issuance and, upon issuance in accordance with the terms of these Warrants, any Shares issued upon exercise of these Warrants will be duly authorized, validly issued, fully paid and nonassessable and issued free and clear of any lien, charge, security interest, pledge, or similar encumbrance. The offer, sale and issuance of these Warrants is not, and the offer, sale and issuance of any Shares upon exercise of these Warrants will not be, subject to and will not give rise to any preemptive rights or rights of first refusal with respect thereto. Subject to the accuracy of the Holder’s representations in Section 11, the offer, sale and issuance of these Warrants is, and the offer, sale and issuance of any Shares upon exercise of these Warrants will be, in compliance with all applicable federal and state securities laws.

(d) Governmental Consents and Filings. With the exception of any required filing of a Current Report on Form 8-K under the Exchange Act, no consent, approval, order, waiver, exemption or authorization of, registration, declaration, filing or qualification with, certification, notice, application or report to, any governmental authority, self-regulatory organization (including the New York Stock Exchange or any other applicable national securities exchanges) or any other third party is required on the part of Fisker in connection with the execution and delivery of these Warrants or the offer, sale, and issuance of these Warrants or the issuance of any Shares upon exercise hereof.

 

7


(e) Compliance with Laws and Other Instruments. The execution, delivery and performance of these Warrants by Fisker and the offer, sale and issuance of these Warrants and the issuance of any Shares upon exercise hereof do not and will not conflict with, result in a violation of or default under (with or without the passage of time and/or the giving of notice), or give rise to a right of termination, cancellation or acceleration of any obligation or to a loss of a material benefit under, (1) any provisions of Fisker’s Certificate of Incorporation or bylaws, (2) any instrument, judgment, order, writ or decree of any court or governmental authority applicable to Fisker or any of its subsidiaries or (3) any note, indenture, mortgage, lease, agreement, instrument or other contract to which Fisker or any of its subsidiaries is a party or by which Fisker or any of its subsidiaries is bound, except in the case of clauses (2) and (3) for such violations or defaults as would not, individually or in the aggregate, have a Material Adverse Effect. As used in these Warrants, a “Material Adverse Effect” means a material adverse effect on the business, assets, liabilities, financial condition, property, results of operations or prospects of Fisker and its subsidiaries taken as a whole.

11. Representations and Warranties of the Holder. By acceptance of these Warrants, the Holder represents and warrants to Fisker as follows as of the Issuance Date and as of the Exercise Date:

(a) No Registration. The Holder understands that the Securities have not been, and will not be, registered under the Act by reason of a specific exemption from the registration provisions of the Act, the availability of which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of the Holder’s representations as expressed herein or otherwise made pursuant hereto.

(b) Investment Intent. The Holder is acquiring the Securities for investment for its own account, not as a nominee or agent, and not with a view to, or for resale in connection with, any distribution thereof. The Holder has no present intention of selling, granting any participation in or otherwise distributing the Securities, nor does it have any contract, undertaking, agreement or arrangement for the same.

(c) Investment Experience. The Holder has substantial experience in evaluating and investing in private placement transactions of securities in companies similar to Fisker and has such knowledge and experience in financial or business matters so that it is capable of evaluating the merits and risks of its investment in Fisker and protecting its own interests.

(d) Speculative Nature of Investment. The Holder understands and acknowledges that its investment in the Securities is highly speculative and involves substantial risks and the value of these Securities and the Underlying Shares will depend on Fisker’s overall financial performance.

(e) Access to Information. The Holder has had an opportunity to ask questions of officers of Fisker, which questions were answered to its satisfaction. The Holder believes that it has received all the information that it considers necessary or appropriate for deciding whether to acquire the Securities. The Holder understands that any such discussions, as well as any information issued by Fisker, were intended to describe certain aspects of Fisker’s business and prospects, but were not necessarily a thorough or exhaustive description. The Holder acknowledges that any business plans prepared by Fisker have been, and continue to be, subject to change and that any projections included in such business plans or otherwise are necessarily speculative in nature, and it can be expected that some or all of the assumptions underlying the projections will not materialize or will vary significantly from actual results.

(f) Accredited Investor. The Holder is an “accredited investor” within the meaning of Regulation D, Rule 501(a), promulgated by the Securities and Exchange Commission and agrees to submit to Fisker such further assurances of such status as may be reasonably requested by Fisker. The Holder has furnished or made available any and all information requested by Fisker or otherwise necessary to satisfy any applicable verification requirements as to “accredited investor” status. Any such information is true, correct, timely and complete.

(g) Residency. Holder’s principal place of business is in Ontario, Canada.

 

8


(h) Restrictions on Resales. The Holder acknowledges that the Securities must be held indefinitely unless subsequently registered under the Act or an exemption from such registration is available or resold in a transaction that is not subject to the Act. The Holder is aware of the provisions of Rule 144 promulgated under the Act, which permit resale of shares purchased in a private placement subject to the satisfaction of certain conditions, which may include, among other things: if applicable, the availability of certain current public information about Fisker and the resale occurring not less than a specified period after a party has purchased and paid for the security to be sold. The Holder acknowledges and understands that Fisker may not be satisfying the current public information requirement of Rule 144 at the time the Holder wishes to sell the Securities and that, in such event, the Holder may be precluded from selling the Securities under Rule 144 even if the other applicable requirements of Rule 144 have been satisfied.

(i) Brokers and Finders. The Holder has not engaged any brokers, finders or agents in connection with the Securities, and Fisker has not incurred nor will incur, directly or indirectly, as a result of any action taken by the Holder, any liability for brokerage or finders’ fees or agents’ commissions or any similar charges in connection with the Securities.

(j) Legal Counsel. The Holder has had the opportunity to review these Warrants, the exhibits attached hereto and any other documents contemplated hereby and the transactions contemplated by these Warrants with its own legal counsel. The Holder is not relying on any statements or representations of Fisker or its agents for legal advice with respect to this investment or the transactions contemplated by these Warrants, except as otherwise expressly set forth herein.

(k) Tax Advisors. The Holder has reviewed with its own tax advisors the U.S. federal, state and local and non-U.S. tax consequences of this investment and the transactions contemplated by these Warrants. With respect to such matters, except as otherwise expressly set forth herein, the Holder relies solely on any such advisors and not on any statements or representations of Fisker or any of its agents, written or oral. The Holder understands that it (and not Fisker) shall be responsible for its own tax liability that may arise as a result of this investment and the transactions contemplated by these Warrants.

12. Miscellaneous.

(a) Further Assurances. Fisker will not, by amendment of its certificate of incorporation or through reorganization, consolidation, merger, dissolution, sale of assets or any other voluntary action, intentionally avoid or seek to avoid the observance or performance of any of the terms of these Warrants, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be reasonably necessary or appropriate in order to protect the rights of the Holder of these Warrants against impairment. Fisker will take all such commercially reasonable action as may be necessary to assure that any Shares may be issued as provided herein without violation of any applicable law or regulation, or of any requirements of any national securities exchange upon which the Shares may be listed.

(b) Amendments. Except as expressly provided herein (including, without limitation, Section 3(c) and Sections 8(a) through (d)), neither these Warrants nor any term hereof may be amended or waived other than by a written instrument referencing these Warrants and signed by Fisker and the Holder.

(c) Waivers. No waiver of any single breach or default shall be deemed a waiver of any other breach or default theretofore or thereafter occurring.

(d) Survival. The provisions of Section 6 shall survive any exercise of these Warrants solely with respect to any Shares issued upon such exercise.

(e) Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be mailed by registered or certified mail, postage prepaid, sent by electronic mail or otherwise delivered by hand, messenger or courier service addressed:

 

9


(i) if to the Holder, to the Holder at the Holder’s address or electronic mail address as shown on the signature page hereto, as may be updated in accordance with the provisions hereof, with a copy (which shall not constitute notice) to 337 Magna Drive, Aurora, Ontario, L4G 7K1, Canada, Attention: Jason Wolkove, email:                         ; or

(ii) if to Fisker, to the attention of the Chief Financial Officer of Fisker at Fisker’s address or electronic mail address as shown on the signature page hereto, or at such other current address or electronic mail address as Fisker shall have furnished to the Holder, with a copy (which shall not constitute notice) to Orrick, Herrington & Sutcliffe LLP, 51 West 52nd Street, New York, NY 10019, Attention: Albert Vanderlaan and Mitch Zuklie, email:                         .

Each such notice or other communication shall for all purposes of these Warrants be treated as effective or having been given (i) if delivered by hand, messenger or courier service, when delivered (or if sent via a nationally-recognized overnight courier service, freight prepaid, specifying next-business-day delivery, one Business Day after deposit with the courier), (ii) if sent via mail, at the earlier of its receipt or five Business Days after the same has been deposited in a regularly-maintained receptacle for the deposit of the United States mail, addressed and mailed as aforesaid, or (iii) if sent by electronic mail, when sent (unless the sender receives a failure to deliver or other similar error message) if received prior to 5 p.m. on a business day in the place of receipt, otherwise on the next succeeding business day in the place of receipt.

(f) Governing Law. These Warrants and all actions arising out of or in connection with these Warrants shall be governed by and construed in accordance with the laws of the State of New York, without regard to the conflicts of law provisions of New York, or of any other state, that would apply the laws of any other jurisdiction.

(g) Dispute Resolution. Any dispute, controversy or claim arising out of or relating to the Warrants or the breach, termination, enforcement, interpretation or validity thereof, including determination of the scope or applicability of this agreement to arbitrate, shall be determined by arbitration in New York, New York before three arbitrators. Within 15 days after the commencement of arbitration, each party shall select one person to act as arbitrator, and the two so selected shall select a third arbitrator within 30 days of the commencement of the arbitration. If the arbitrators selected by the parties are unable or fail to agree upon the third arbitrator within the allotted time, the third arbitrator shall be appointed by JAMS in accordance with its rules. All arbitrators shall serve as neutral, independent and impartial arbitrators. The arbitration shall be administered by JAMS pursuant to its Comprehensive Arbitration Rules and Procedures. Judgment on the award may be entered in any court having jurisdiction, provided that the foregoing shall not preclude Parties from seeking provisional remedies in aid of arbitration from a court of appropriate jurisdiction. The arbitrator may award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual claim. The Parties agree that a party may bring claims only in its individual capacity and not as a plaintiff or class member in any purported class or representative proceeding. Further, unless the Parties agree otherwise, the arbitrator may not consolidate more than one party’s claims, and may not otherwise preside over any form of a representative or class proceeding. If applicable law precludes enforcement of any provisions of this Section 12(g) as to an individual claim for relief, then that claim (and only that claim) must be severed from any arbitration and may be brought in court. The Parties acknowledge that the Warrants evidence transactions involving interstate commerce. Notwithstanding Section 12(f) above, any arbitration conducted pursuant to the terms of the Warrants shall be governed by the Federal Arbitration Act (9 U.S.C., Secs. 1-16). The parties shall maintain the confidential nature of the arbitration proceeding and the award, including the hearing, except as may be necessary to prepare for or conduct the arbitration hearing on the merits, or except as may be necessary in connection with a court application for a preliminary remedy, a judicial challenge to an award or its enforcement, or unless otherwise required by law or judicial decision.

(h) Titles and Subtitles. The titles and subtitles used in these Warrants are used for convenience only and are not to be considered in construing or interpreting these Warrants. All references in these Warrants to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.

(i) Severability. If any provision of these Warrants becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, portions of such provision, or such provision in its

 

10


entirety, to the extent necessary, shall be severed from these Warrants, and such illegal, unenforceable or void provision shall be replaced with a valid and enforceable provision that will achieve, to the extent possible, the same economic, business and other purposes of the illegal, unenforceable or void provision. The balance of these Warrants shall be enforceable in accordance with its terms.

(j) Waiver of Jury Trial. EACH OF THE HOLDER AND FISKER WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATED TO THESE WARRANTS.

(k) Successors and Assigns. The rights and obligations of Fisker set forth herein may not be assigned or delegated by Fisker without the prior written consent of the Holder; provided that Fisker shall assign these Warrants to any acquiror of Fisker in a Change of Control that has assumed the Cooperation Agreement in accordance with its terms. Subject to the restrictions on transferability set forth in Sections 5 and 6 hereof, and the foregoing, these Warrants and the rights and obligations evidenced hereby shall inure to the benefit of and be enforceable by and binding upon the successors and permitted assigns of Fisker and the successors and permitted assigns of Holder.

(l) Determinations. Any determinations regarding calculations, adjustments or other similar matters under these Warrants shall be made by Fisker (or, where indicated, its Board of Directors or that of its successor), and shall be binding on all parties absent manifest error.

(m) Saturdays, Sundays and Holidays. If the last or appointed day for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may be taken or such right may be exercised on the next succeeding day that is a Business Day.

(n) Entire Agreement. Except as expressly set forth herein, these Warrants (including the exhibits attached hereto) and the Cooperation Agreement (including any exhibits incorporated by reference thereunder) constitutes the entire agreement and understanding of Fisker and the Holder with respect to the subject matter hereof and supersede all prior agreements and understandings relating to the subject matter hereof.

(Signature page follows)

 

11


Fisker and the Holder have signed these Warrants as of the date stated on the first page.

 

Fisker Inc.
By:   /s/ Henrik Fisker
Name:   Henrik Fisker
Title:   Chief Executive Officer

Address:

1888 Rosecrans Avenue, Manhattan Beach, CA,         90266

Attention: CFO

Magna International Inc.
By:   /s/ Matteo Del Sorbo
Name:   Matteo Del Sorbo
Title:   Vice-President, Business Development
By:   /s/ Jason Wolkove
Name:   Jason Wolkove
Title:   Vice-President, Mergers and Acquisitions

Address: 337 Magna Drive, Aurora, Ontario, L4G 7K1, Canada

Attention: Jason Wolkove


Appendix 1

NOTICE OF EXERCISE

TO: Fisker Inc.

Attention: Chief Financial Officer

Reference is hereby made to the Warrants attached hereto, dated as of October 29, 2020. Capitalized terms used but not defined herein have the meaning ascribed to such terms in the Warrants.

(1) Exercise. The undersigned elects to exercise Warrants pursuant to the terms of, and subject to the limitations set forth in, the attached Warrants.

(2) Representations. All representations and warranties of the undersigned set forth in Section 11 of the attached Warrants are true and correct as of the Exercise Date.

(3) Beneficial Ownership Following Exercise. As of the date of this Notice of Exercise, and after giving effect to the exercise of the number of Warrants set forth above, the Holder hereby represents that the Holder will beneficially own Shares in the aggregate.

 

     
     

 

(Print name of the warrant holder)

     

(Signature)

     

(Name and title of signatory, if applicable)

     

(Date)

     

(Fax number)

     

(Email address)

Exhibit 10.2

AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

THIS AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of October 29, 2020, is made and entered into by and among Fisker Inc., a Delaware corporation f/k/a Spartan Energy Acquisition Corp. (the “Company”), Spartan Energy Acquisition Sponsor LLC, a Delaware limited liability company (the “Sponsor”), and the undersigned parties listed under Holder on the signature pages hereto (each such party, together with the Sponsor and any person or entity who hereafter becomes a party to this Agreement pursuant to Section 5.2 of this Agreement, a “Holder” and collectively the “Holders”).

RECITALS

WHEREAS, on August 9, 2018, the Company, the Sponsor and certain other security holders named therein entered into that certain Registration Rights Agreement (the “Existing Registration Rights Agreement”), pursuant to which the Company granted the Sponsor and such other holders named therein certain registration rights with respect to certain securities of the Company;

WHEREAS, on July 10, 2020, the Company, Spartan Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Fisker Group Inc., a Delaware corporation f/k/a Fisker Inc. (“Fisker”), entered into that certain Business Combination Agreement and Plan of Reorganization (the “BCA”), pursuant to which Merger Sub will merge with and into Fisker on or about the date hereof, with Fisker surviving the merger as a wholly owned subsidiary of the Company (the “Business Combination”);

WHEREAS, after the closing of the Business Combination, the Holders will own shares of the Company’s Class A common stock, par value $0.0001 per share (the “Class A Common Stock”), certain Holders will own shares of the Company’s Class B common stock, par value $0.0001 per share (the “Class B Common Stock” and together with the Class A Common Stock, the “Common Stock”), and the Sponsor will own warrants to purchase 9,360,000 shares of Class A Common Stock (the “Private Placement Warrants”); and

WHEREAS, the Company and the Holders desire to amend and restate the Existing Registration Rights Agreement, pursuant to which the Company shall grant the Holders certain registration rights with respect to certain securities of the Company, as set forth in this Agreement.

NOW, THEREFORE, in consideration of the representations, covenants and agreements contained herein, and certain other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:


ARTICLE I

DEFINITIONS

1.1 Definitions. The terms defined in this Article I shall, for all purposes of this Agreement, have the respective meanings set forth below:

Adverse Disclosure” shall mean any public disclosure of material non-public information, which disclosure, in the good faith judgment of the Chief Executive Officer or principal financial officer of the Company, after consultation with counsel to the Company, (a) would be required to be made in any Registration Statement or Prospectus in order for the applicable Registration Statement or Prospectus not to contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements contained therein (in the case of any prospectus and any preliminary prospectus, in the light of the circumstances under which they were made) not misleading, (b) would not be required to be made at such time if the Registration Statement were not being filed, and (c) the Company has a bona fide business purpose for not making such information public.

Agreement” shall have the meaning given in the Preamble.

Board” shall mean the Board of Directors of the Company.

Business Combination” shall have the meaning given in the Recitals hereto.

Class A Common Stock” shall have the meaning given in the Recitals hereto.

Class B Common Stock” shall have the meaning given in the Recitals hereto.

Commission” shall mean the Securities and Exchange Commission.

Common Stock” shall have the meaning given in the Recitals hereto.

Company” shall have the meaning given in the Preamble.

Cooperation Agreement” shall mean that certain cooperation agreement by and among Magna, Fisker and the Company dated October 14, 2020.

Demanding Holder” shall mean any Holder or group of Holders that together elects to dispose of Registrable Securities having an aggregate value of at least $25 million, at the time of the Underwritten Demand, under a Registration Statement pursuant to an Underwritten Offering.

Effectiveness Period” shall have the meaning given in subsection 3.1.1.

Exchange Act” shall mean the Securities Exchange Act of 1934, as it may be amended from time to time.

Existing Registration Rights Agreement” shall have the meaning given in the Recitals hereto.

Fisker” shall have the meaning given in the Recitals hereto.

Fisker Holders” shall mean any Holder who holds Registrable Securities issued upon the conversion of Company Convertible Notes (as defined in the BCA) pursuant to the BCA.

Form S-3” shall mean Form S-3 or any similar short form registration statement that may be available at such time.

 

2


Founders” shall mean the parties to the Existing Registration Rights Agreement, Henrik Fisker and Geeta Gupta-Fisker.

Founders Shelf Registration” shall have the meaning given in subsection 2.1.1(a).

Holders” shall have the meaning given in the Preamble.

Magna” shall mean Magna International Inc. or its affiliates.

Maximum Number of Securities” shall have the meaning given in subsection 2.1.4.

 

Merger Sub” shall have the meaning given in the Recitals hereto.

Misstatement” shall mean an untrue statement of a material fact or an omission to state a material fact required to be stated in a Registration Statement or Prospectus, or necessary to make the statements in a Registration Statement or Prospectus in the light of the circumstances under which they were made not misleading.

Other Holders” shall mean all Holders other than the Founders and the Fisker Holders.

Piggyback Registration” shall have the meaning given in subsection 2.2.1.

Private Placement Warrants” shall have the meaning given in the Recitals hereto.

Pro Rata” shall have the meaning given in subsection 2.1.4.

Prospectus” shall mean the prospectus included in any Registration Statement, as supplemented by any and all prospectus supplements and as amended by any and all post-effective amendments and including all material incorporated by reference in such prospectus.

Registrable Security” shall mean (a) the Private Placement Warrants (including any shares of Class A Common Stock issued or issuable upon the exercise of any such Private Placement Warrants), (b) any outstanding share of Class A Common Stock held by a Holder as of the date of this Agreement (including, for the avoidance of doubt, Class A Common Stock held by a Holder following the conversion of Company Convertible Notes pursuant to the BCA), (c) the shares of Class A Common Stock issuable upon conversion of any shares of Class B Common Stock held by a Holder as of the date of this Agreement, (d) any equity securities (including the shares of Class A Common Stock issued or issuable upon the exercise of any such equity security) of the Company issuable upon conversion of any working capital loans in an amount up to $1,500,000 made to the Company by a Holder, (e) the warrants to be issued to Magna pursuant to the Cooperation Agreement, and (f) any other equity security of the Company issued or issuable with respect to any such share of Class A Common Stock by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or reorganization; provided, however, that, as to any particular Registrable Securities, such securities shall cease to be Registrable Securities when: (i) a Registration Statement with respect to the sale of such securities shall have become effective under the Securities Act and such securities shall have been sold, transferred, disposed of or exchanged in accordance with such Registration Statement; (ii) such securities shall have been otherwise transferred, new certificates for such securities not bearing a legend restricting further transfer shall have been delivered by the

 

3


Company and subsequent public distribution of such securities shall not require registration under the Securities Act; (iii) such securities shall have ceased to be outstanding; (iv) such securities may be sold without registration pursuant to Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission) (but with no volume or other restrictions or limitations); or (v) such securities have been sold to, or through, a broker, dealer or underwriter in a public distribution or other public securities transaction.

Registration” shall mean a registration effected by preparing and filing a registration statement or similar document in compliance with the requirements of the Securities Act, and the applicable rules and regulations promulgated thereunder, and such registration statement becoming effective.

Registration Expenses” shall mean the out-of-pocket expenses of a Registration, including, without limitation, the following:

(a) all registration and filing fees (including fees with respect to filings required to be made with the Financial Industry Regulatory Authority) and any securities exchange on which the Class A Common Stock is then listed;

(b) fees and expenses of compliance with securities or blue sky laws (including reasonable fees and disbursements of counsel for the Underwriters in connection with blue sky qualifications of Registrable Securities);

(c) printing, messenger, telephone and delivery expenses;

(d) reasonable fees and disbursements of counsel for the Company;

(e) reasonable fees and disbursements of all independent registered public accountants of the Company incurred specifically in connection with such Registration; and

(f) reasonable fees and expenses of one (1) legal counsel selected by the majority-in-interest of the Demanding Holders initiating an Underwritten Demand to be registered for offer and sale in the applicable Underwritten Offering.

Registration Statement” shall mean any registration statement under the Securities Act that covers the Registrable Securities pursuant to the provisions of this Agreement, including the Prospectus included in such registration statement, amendments (including post-effective amendments) and supplements to such registration statement, and all exhibits to and all material incorporated by reference in such registration statement.

Requesting Holder” shall have the meaning given in subsection 2.1.3.

Securities Act” shall mean the Securities Act of 1933, as amended from time to time.

 

Shelf Registration” shall have the meaning given in subsection 2.1.1(b).

Sponsor” shall have the meaning given in the Preamble hereto.

 

4


Underwriter” shall mean a securities dealer who purchases any Registrable Securities as principal in an Underwritten Offering and not as part of such dealer’s market-making activities.

Underwritten Demand” shall have the meaning given in subsection 2.1.3.

Underwritten Offering” shall mean a Registration in which securities of the Company are sold to an Underwriter in a firm commitment underwriting for distribution to the public.

ARTICLE II

REGISTRATIONS

2.1 Registration.

2.1.1 Shelf Registration.

(a) The Company agrees that, within thirty (30) calendar days after the consummation of the Business Combination, the Company will file with the Commission (at the Company’s sole cost and expense) a Registration Statement registering the resale of the Founders’ and Fisker Holders’ Registrable Securities (a “Founders Shelf Registration”). The Company shall use its reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable after the initial filing of the Registration Statement in accordance with Section 3.1 of this Agreement.

(b) The Company agrees that, as soon as reasonably practicable after the Company is eligible to register Registrable Securities on Form S-3, the Company will file with the Commission (at the Company’s sole cost and expense) a Registration Statement registering the resale of the Other Holders’ Registrable Securities (together with a Founders Shelf Registration, the “Shelf Registrations”). The Company shall use its reasonable best efforts to cause such Registration Statement to become effective as soon as reasonably practicable after the initial filing of the Registration Statement in accordance with Section 3.1 of this Agreement.

2.1.2 Effective Registration. Notwithstanding the provisions of subsection 2.1.1 above or any other part of this Agreement, a Registration pursuant to a Shelf Registration shall not count as a Registration unless and until (a) the Registration Statement filed with the Commission with respect to a Registration pursuant to a Shelf Registration has been declared effective by the Commission and (b) the Company has complied with all of its obligations under this Agreement with respect thereto. Subject to the limitations contained in this Agreement, the Company shall effect any Shelf Registration on such appropriate registration form of the Commission (x) as shall be selected by the Company and (y) as shall permit the resale of the Registrable Securities by the Holders.

2.1.3 Underwritten Offering. Subject to the provisions of subsection 2.1.4 and Section 2.3 hereof, the Demanding Holders may make a written demand to the Company for an Underwritten Offering pursuant to a Registration Statement filed with the Commission in accordance with Section 2.1.1 (an “Underwritten Demand”). The Company shall, within ten (10) days of the Company’s receipt of the Underwritten Demand, notify, in writing, all other Holders of Registrable Securities of such demand, and each such Holder who thereafter wishes to include all or a portion of such Holder’s Registrable Securities in such Underwritten Offering pursuant to an Underwritten Demand (each such Holder that includes all or a portion of such Holder’s

 

5


Registrable Securities in such Underwritten Offering, a “Requesting Holder”) shall so notify the Company, in writing, within two (2) days (one (1) day if such offering is an overnight or bought Underwritten Offering) after the receipt by the Holder of the notice from the Company. Upon receipt by the Company of any such written notification from a Requesting Holder(s), such Requesting Holder(s) shall be entitled to have their designated portion of Registrable Securities included in the Underwritten Offering pursuant to an Underwritten Demand. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.1.3 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Demanding Holders initiating the Underwritten Offering. Notwithstanding the foregoing, the Company is not obligated to effect more than an aggregate of three (3) Underwritten Offerings pursuant to this subsection 2.1.3 and is not obligated to effect an Underwritten Offering pursuant to this subsection 2.1.3 within ninety (90) days after the closing of an Underwritten Offering.

2.1.4 Reduction of Underwritten Offering. If the managing Underwriter or Underwriters in an Underwritten Offering pursuant to an Underwritten Demand, in good faith, advises the Company, the Demanding Holders and the Requesting Holders (if any) in writing that the dollar amount or number of Registrable Securities that the Demanding Holders and the Requesting Holders (if any) desire to sell, taken together with all other Class A Common Stock or other equity securities that the Company desires to sell and Class A Common Stock, if any, as to which inclusion has been requested pursuant to separate written contractual piggy-back registration rights held by any other stockholders who desire to sell, exceeds the maximum dollar amount or maximum number of equity securities that can be sold in the Underwritten Offering without adversely affecting the proposed offering price, the timing, the distribution method, or the probability of success of such offering (such maximum dollar amount or maximum number of such securities, as applicable, the “Maximum Number of Securities”), then the Company shall include in such Underwritten Offering, as follows: (a) first, the Registrable Securities of the Demanding Holders and the Requesting Holders (if any) (pro rata based on the respective number of Registrable Securities that each Demanding Holder and Requesting Holder (if any) has requested be included in such Underwritten Offering and the aggregate number of Registrable Securities that the Demanding Holders and Requesting Holders have requested be included in such Underwritten Offering (such proportion is referred to herein as “Pro Rata”)) that can be sold without exceeding the Maximum Number of Securities; (b) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (a), Class A Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (c) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (a) and (b), Class A Common Stock or other equity securities of other persons or entities that the Company is obligated to include pursuant to separate written contractual arrangements with such persons or entities and that can be sold without exceeding the Maximum Number of Securities.

2.2 Piggyback Registration.

2.2.1 Piggyback Rights. If the Company proposes to file a Registration Statement under the Securities Act with respect to an offering of equity securities, or securities or other obligations exercisable or exchangeable for, or convertible into equity securities, for its own account or for the account of stockholders of the Company other than the Holders, other than a

 

6


Registration Statement (a) filed in connection with any employee stock option or other benefit plan, (b) for an exchange offer or offering of securities solely to the Company’s existing stockholders, (c) for an offering of debt that is convertible into equity securities of the Company or (d) for a dividend reinvestment plan, or proposes to consummate an Underwritten Offering for its own account or for the account of stockholders of the Company other than the Holders, then the Company shall give written notice of such proposed action to all of the Holders of Registrable Securities as soon as practicable (but in the case of filing a Registration Statement not less than ten (10) days before the anticipated filing date of such Registration Statement), which notice shall (i) describe the amount and type of securities to be included, the intended method(s) of distribution, and the name of the proposed managing Underwriter or Underwriters, if any, and (ii) offer to all of the Holders of Registrable Securities the opportunity to register the sale of such number of Registrable Securities as such Holders may request in writing within five (5) days in the case of filing a Registration Statement and two (2) days in the case of an Underwritten Offering (unless such offering is an overnight or bought Underwritten Offering, then one (1) day), in each case, after receipt of such written notice (such Registration a “Piggyback Registration”). The Company shall, in good faith, cause such Registrable Securities to be included in such Piggyback Registration and shall use its best efforts to cause the managing Underwriter or Underwriters of a proposed Underwritten Offering to permit the Registrable Securities requested by the Holders pursuant to this subsection 2.2.1 to be included in a Piggyback Registration on the same terms and conditions as any similar securities of the Company included in such Registration and to permit the sale or other disposition of such Registrable Securities in accordance with the intended method(s) of distribution thereof. All such Holders proposing to distribute their Registrable Securities through an Underwritten Offering under this subsection 2.2.1 shall enter into an underwriting agreement in customary form with the Underwriter(s) selected for such Underwritten Offering by the Company.

2.2.2 Reduction of Piggyback Registration. If the managing Underwriter or Underwriters in an Underwritten Offering that is to be a Piggyback Registration, in good faith, advises the Company and the Holders of Registrable Securities participating in the Piggyback Registration in writing that the dollar amount or number of shares of the Class A Common Stock that the Company desires to sell, taken together with (i) the shares of Class A Common Stock, if any, as to which the Underwritten Offering has been demanded pursuant to separate written contractual arrangements with persons or entities other than the Holders of Registrable Securities hereunder, (ii) the Registrable Securities as to which inclusion has been requested pursuant to Section 2.2 hereof, and (iii) the shares of Class A Common Stock, if any, as to which inclusion has been requested pursuant to separate written contractual piggy-back registration rights of other stockholders of the Company, exceeds the Maximum Number of Securities, then:

(a) If the Underwritten Offering is undertaken for the Company’s account, the Company shall include in any such Underwritten Offering (i) first, the Class A Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Holders exercising their rights to include their Registrable Securities pursuant to subsection 2.2.1 hereof, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; and (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), Class A Common Stock, if any, as to which inclusion has been requested pursuant to written contractual piggy-back registration rights of other stockholders of the Company, which can be sold without exceeding the Maximum Number of Securities; and

 

7


(b) If the Underwritten Offering is pursuant to a request by persons or entities other than the Holders of Registrable Securities, then the Company shall include in any such Underwritten Offering (i) first, Class A Common Stock or other equity securities, if any, of such requesting persons or entities, other than the Holders of Registrable Securities, which can be sold without exceeding the Maximum Number of Securities; (ii) second, to the extent that the Maximum Number of Securities has not been reached under the foregoing clause (i), the Registrable Securities of Holders exercising their rights to include their Registrable Securities pursuant to subsection 2.2.1, Pro Rata, which can be sold without exceeding the Maximum Number of Securities; (iii) third, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i) and (ii), Class A Common Stock or other equity securities that the Company desires to sell, which can be sold without exceeding the Maximum Number of Securities; and (iv) fourth, to the extent that the Maximum Number of Securities has not been reached under the foregoing clauses (i), (ii) and (iii), Class A Common Stock or other equity securities for the account of other persons or entities that the Company is obligated to include pursuant to separate written contractual arrangements with such persons or entities, which can be sold without exceeding the Maximum Number of Securities.

2.2.3 Piggyback Registration Withdrawal. Any Holder of Registrable Securities shall have the right to withdraw from a Piggyback Registration for any or no reason whatsoever upon written notification to the Company and the Underwriter or Underwriters (if any) of his, her or its intention to withdraw from such Piggyback Registration prior to the effectiveness of the Registration Statement filed with the Commission with respect to such Piggyback Registration or the launch of the Underwritten Offering with respect to such Piggyback Registration. The Company (whether on its own good faith determination or as the result of a request for withdrawal by persons or entities pursuant to separate written contractual obligations) may withdraw a Registration Statement filed with the Commission in connection with a Piggyback Registration at any time prior to the effectiveness of such Registration Statement or abandon an Underwritten Offering in connection with a Piggyback Registration at any time prior to the launch of such Underwritten Offering. Notwithstanding anything to the contrary in this Agreement, the Company shall be responsible for the Registration Expenses incurred in connection with the Piggyback Registration prior to its withdrawal under this subsection 2.2.3.

2.2.4 Unlimited Piggyback Registration Rights. For purposes of clarity, any Underwritten Offering effected pursuant to Section 2.2 hereof shall not be counted as an Underwritten Offering pursuant to an Underwritten Demand effected under Section 2.1 hereof.

2.3 Restrictions on Registration Rights. If (a) the Holders of Registrable Securities have requested an Underwritten Offering pursuant to an Underwritten Demand and the Company and the Holders are unable to obtain the commitment of underwriters to firmly underwrite the offering; or (b) in the good faith judgment of the Board a Registration or Underwritten Offering would be seriously detrimental to the Company and the Board concludes as a result that it is essential to defer the filing of the applicable Registration Statement or the undertaking of such Underwritten Offering at such time, then in each case the Company shall furnish to such Holders a certificate signed by the Chairman of the Board stating that in the good faith judgment of the Board it would

 

8


be seriously detrimental to the Company for such Registration Statement to be filed or to undertake such Underwritten Offering in the near future and that it is therefore essential to defer the filing of such Registration Statement or undertaking of such Underwritten Offering. In such event, the Company shall have the right to defer such filing or offering for a period of not more than thirty (30) days; provided, however, that the Company shall not defer its obligation in this manner more than once in any 12-month period.

ARTICLE III

COMPANY PROCEDURES

3.1 General Procedures. The Company shall use its reasonable best efforts to effect such Registration to permit the sale of such Registrable Securities in accordance with the intended plan of distribution thereof, and pursuant thereto the Company shall, as expeditiously as possible:

3.1.1 prepare and file with the Commission within the time frame required by Section 2.1.1 a Registration Statement with respect to such Registrable Securities and use its reasonable best efforts to cause such Registration Statement to become effective and remain effective, including filing a replacement Registration Statement, if necessary, until all Registrable Securities covered by such Registration Statement have been sold or are no longer outstanding (the “Effectiveness Period”);

3.1.2 prepare and file with the Commission such amendments and post-effective amendments to the Registration Statement, and such supplements to the Prospectus, as may be reasonably requested by the Holders of Registrable Securities or any Underwriter of Registrable Securities or as may be required by the rules, regulations or instructions applicable to the registration form used by the Company or by the Securities Act or rules and regulations thereunder to keep the Registration Statement effective until all Registrable Securities covered by such Registration Statement are sold in accordance with the intended plan of distribution set forth in such Registration Statement or supplement to the Prospectus or are no longer outstanding;

3.1.3 prior to filing a Registration Statement or prospectus, or any amendment or supplement thereto, furnish without charge to the Underwriters, if any, and the Holders of Registrable Securities included in such Registration, and such Holders’ legal counsel, copies of such Registration Statement as proposed to be filed, each amendment and supplement to such Registration Statement (in each case including all exhibits thereto and documents incorporated by reference therein), the Prospectus included in such Registration Statement (including each preliminary Prospectus), and such other documents as the Underwriters and the Holders of Registrable Securities included in such Registration or the legal counsel for any such Holders may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holders; provided, that the Company will not have any obligation to provide any document pursuant to this clause that is available on the Commission’s EDGAR system’

3.1.4 prior to any Underwritten Offering of Registrable Securities, use its best efforts to (a) register or qualify the Registrable Securities covered by the Registration Statement under such securities or “blue sky” laws of such jurisdictions in the United States as the Holders of Registrable Securities included in such Registration Statement (in light of their intended plan of distribution) may request and (b) take such action necessary to cause such Registrable Securities

 

9


covered by the Registration Statement to be registered with or approved by such other governmental authorities as may be necessary by virtue of the business and operations of the Company and do any and all other acts and things that may be necessary or advisable to enable the Holders of Registrable Securities included in such Registration Statement to consummate the disposition of such Registrable Securities in such jurisdictions; provided, however, that the Company shall not be required to qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify or take any action to which it would be subject to general service of process or taxation in any such jurisdiction where it is not then otherwise so subject;

3.1.5 cause all such Registrable Securities to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed;

3.1.6 provide a transfer agent or warrant agent, as applicable, and registrar for all such Registrable Securities no later than the effective date of such Registration Statement;

3.1.7 advise each seller of such Registrable Securities, promptly after it shall receive notice or obtain knowledge thereof, of the issuance of any stop order by the Commission suspending the effectiveness of such Registration Statement or the initiation or threatening of any proceeding for such purpose and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal if such stop order should be issued;

3.1.8 during the Effectiveness Period, at least five (5) days prior to the filing of any Registration Statement or Prospectus or any amendment or supplement to such Registration Statement or Prospectus or any document that is to be incorporated by reference into such Registration Statement or Prospectus, furnish a copy thereof to each seller of such Registrable Securities or its counsel; provided, that the Company will not have any obligation to provide any document pursuant to this clause that is available on the Commission’s EDGAR system;

3.1.9 notify the Holders of Registrable Securities at any time when a Prospectus relating to such Registration Statement is required to be delivered under the Securities Act, of the happening of any event as a result of which the Prospectus included in such Registration Statement, as then in effect, includes a Misstatement, and then to correct such Misstatement as set forth in Section 3.4 hereof;

3.1.10 permit a representative of the Holders of Registrable Securities, the Underwriters, if any, and any attorney or accountant retained by such Holders or Underwriter to participate, at each such person’s own expense, in the preparation of the Registration Statement, and cause the Company’s officers, directors and employees to supply all information reasonably requested by any such representative, Underwriter, attorney or accountant in connection with the Registration; provided, however, that such representatives or Underwriters enter into a confidentiality agreement, in form and substance reasonably satisfactory to the Company, prior to the release or disclosure of any such information;

3.1.11 obtain a “cold comfort” letter from the Company’s independent registered public accountants in the event of an Underwritten Offering, in customary form and covering such matters of the type customarily covered by “cold comfort” letters as the managing Underwriter may reasonably request, and reasonably satisfactory to a majority-in-interest of the participating Holders;

 

10


3.1.12 on the date the Registrable Securities are delivered for sale pursuant to such Registration, obtain an opinion, dated such date, of counsel representing the Company for the purposes of such Registration, addressed to the Holders of such Registrable Securities, the placement agent or sales agent, if any, and the Underwriters, if any, covering such legal matters with respect to the Registration in respect of which such opinion is being given as the Holders, placement agent, sales agent, or Underwriter may reasonably request and as are customarily included in such opinions and negative assurance letters, and reasonably satisfactory to a majority in interest of the participating Holders;

3.1.13 in the event of any Underwritten Offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing Underwriter of such offering;

3.1.14 make available to its security holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve (12) months beginning with the first day of the Company’s first full calendar quarter after the effective date of the Registration Statement which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or any successor rule promulgated thereafter by the Commission);

3.1.15 if an Underwritten Offering pursuant to an Underwritten Demand involves Registrable Securities involving gross proceeds in excess of $50,000,000, use its reasonable efforts to make available senior executives of the Company to participate in customary “road show” presentations that may be reasonably requested by the Underwriter in such Underwritten Offering; and

3.1.16 otherwise, in good faith, cooperate reasonably with, and take such customary actions as may reasonably be requested by the Holders of Registrable Securities, in connection with such Registration.

3.2 Registration Expenses. The Registration Expenses of all Registrations shall be borne by the Company. It is acknowledged by the Holders that the Holders shall bear all incremental selling expenses relating to the sale of Registrable Securities, such as Underwriters’ commissions and discounts, brokerage fees, Underwriter marketing costs and, other than as set forth in the definition of “Registration Expenses,” all reasonable fees and expenses of any legal counsel representing the Holders.

3.3 Requirements for Participation in Underwritten Offerings. No person may participate in any Underwritten Offering initiated by the Company hereunder unless such person (a) agrees to sell such person’s securities on the basis provided in any underwriting arrangements approved by the Company and (b) completes and executes all customary questionnaires, powers of attorney, indemnities, lock-up agreements, underwriting agreements and other customary documents as may be reasonably required under the terms of such underwriting arrangements.

 

11


3.4 Suspension of Sales; Adverse Disclosure. Upon receipt of written notice from the Company that a Registration Statement or Prospectus contains a Misstatement, each of the Holders shall forthwith discontinue disposition of Registrable Securities until he, she or it has received copies of a supplemented or amended Prospectus correcting the Misstatement (it being understood that the Company hereby covenants to prepare and file such supplement or amendment as soon as practicable after the time of such notice), or until he, she or it is advised in writing by the Company that the use of the Prospectus may be resumed. If the filing, initial effectiveness or continued use of a Registration Statement in respect of any Registration or Underwritten Offering at any time would require the Company to make an Adverse Disclosure or would require the inclusion in such Registration Statement of financial statements that are unavailable to the Company for reasons beyond the Company’s control, the Company may, upon giving prompt written notice of such action to the Holders, delay the filing or initial effectiveness of, or suspend use of, such Registration Statement for the shortest period of time, but in no event more than thirty (30) days, determined in good faith by the Company to be necessary for such purpose. In the event the Company exercises its rights under the preceding sentence, the Holders agree to suspend, immediately upon their receipt of the notice referred to above, their use of the Prospectus relating to any Registration in connection with any sale or offer to sell Registrable Securities. The Company shall immediately notify the Holders of the expiration of any period during which it exercised its rights under this Section 3.4.

3.5 Reporting Obligations. As long as any Holder shall own Registrable Securities, the Company, at all times while it shall be a reporting company under the Exchange Act, covenants to file timely (or obtain extensions in respect thereof and file within the applicable grace period) all reports required to be filed by the Company after the date hereof pursuant to Section 13(a) or 15(d) of the Exchange Act. The Company further covenants that it shall take such further action as any Holder of Registrable Securities may reasonably request, all to the extent required from time to time to enable such Holder to sell Registrable Securities held by such Holder without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 promulgated under the Securities Act (or any successor rule promulgated thereafter by the Commission), including providing any legal opinions. Upon the request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written certification of a duly authorized officer as to whether it has complied with such requirements.

ARTICLE IV

INDEMNIFICATION AND CONTRIBUTION

4.1 Indemnification.

4.1.1 The Company agrees to indemnify, to the extent permitted by law, each Holder of Registrable Securities, its officers and directors and each person who controls such Holder (within the meaning of the Securities Act) against all losses, claims, damages, liabilities and expenses (including reasonable attorneys’ fees) caused by any untrue or alleged untrue statement of material fact contained in any Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading, except insofar as the same are caused by or contained in any information furnished in writing to the Company by such Holder expressly for use therein. The Company shall indemnify the Underwriters, their officers and directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to the indemnification of the Holder.

 

12


4.1.2 In connection with any Registration Statement in which a Holder of Registrable Securities is participating, such Holder shall furnish to the Company in writing such information and affidavits as the Company reasonably requests for use in connection with any such Registration Statement or Prospectus and, to the extent permitted by law, shall, severally and not jointly, indemnify the Company, its directors and officers and agents and each person who controls the Company (within the meaning of the Securities Act) against any losses, claims, damages, liabilities and expenses (including without limitation reasonable attorneys’ fees) resulting from any untrue statement of material fact contained in the Registration Statement, Prospectus or preliminary Prospectus or any amendment thereof or supplement thereto or any omission of a material fact required to be stated therein or necessary to make the statements therein not misleading, but only to the extent that such untrue statement or omission is contained in any information or affidavit so furnished in writing by such Holder expressly for use therein; provided, however, that the obligation to indemnify shall be several, not joint and several, among such Holders of Registrable Securities, and the liability of each such Holder of Registrable Securities shall be in proportion to and limited to the net proceeds received by such Holder from the sale of Registrable Securities pursuant to such Registration Statement. The Holders of Registrable Securities shall indemnify the Underwriters, their officers, directors and each person who controls such Underwriters (within the meaning of the Securities Act) to the same extent as provided in the foregoing with respect to indemnification of the Company.

4.1.3 Any person entitled to indemnification herein shall (a) give prompt written notice to the indemnifying party of any claim with respect to which it seeks indemnification (provided that the failure to give prompt notice shall not impair any person’s right to indemnification hereunder to the extent such failure has not materially prejudiced the indemnifying party) and (b) unless in such indemnified party’s reasonable judgment a conflict of interest between such indemnified and indemnifying parties may exist with respect to such claim or there may be reasonable defenses available to the indemnified party that are different from or addition to those available to the indemnifying party, permit such indemnifying party to assume the defense of such claim with counsel reasonably satisfactory to the indemnified party. If such defense is assumed, the indemnifying party shall not be subject to any liability for any settlement made by the indemnified party without its consent (but such consent shall not be unreasonably withheld). An indemnifying party who is not entitled to, or elects not to, assume the defense of a claim shall not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified by such indemnifying party with respect to such claim, unless in the reasonable judgment of any indemnified party a conflict of interest may exist between such indemnified party and any other of such indemnified parties with respect to such claim. No indemnifying party shall, without the consent of the indemnified party, consent to the entry of any judgment or enter into any settlement which cannot be settled in all respects by the payment of money (and such money is so paid by the indemnifying party pursuant to the terms of such settlement) or which settlement does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a release from all liability in respect to such claim or litigation.

 

13


4.1.4 The indemnification provided for under this Agreement shall remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and shall survive the transfer of securities. The Company and each Holder of Registrable Securities participating in an offering also agrees to make such provisions as are reasonably requested by any indemnified party for contribution to such party in the event the Company’s or such Holder’s indemnification is unavailable for any reason.

4.1.5 If the indemnification provided under Section 4.1 hereof from the indemnifying party is held by a court of competent jurisdiction to be unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities and expenses referred to herein, then the indemnifying party, in lieu of indemnifying the indemnified party, shall to the extent permitted by law contribute to the amount paid or payable by the indemnified party as a result of such losses, claims, damages, liabilities and expenses in such proportion as is appropriate to reflect the relative fault of the indemnifying party and the indemnified party, as well as any other relevant equitable considerations. The relative fault of the indemnifying party and indemnified party shall be determined by a court of law by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, was made by, or relates to information supplied by, such indemnifying party or indemnified party, and the indemnifying party’s and indemnified party’s relative intent, knowledge, access to information and opportunity to correct or prevent such action; provided, however, that the liability of any Holder under this subsection 4.1.5 shall be limited to the amount of the net proceeds received by such Holder in such offering giving rise to such liability. The amount paid or payable by a party as a result of the losses or other liabilities referred to above shall be deemed to include, subject to the limitations set forth in subsections 4.1.1, 4.1.2 and 4.1.3 above, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding. The parties hereto agree that it would not be just and equitable if contribution pursuant to this subsection 4.1.5 were determined by pro rata allocation or by any other method of allocation, which does not take account of the equitable considerations referred to in this subsection 4.1.5. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution pursuant to this subsection 4.1.5 from any person who was not guilty of such fraudulent misrepresentation.

ARTICLE V

MISCELLANEOUS

5.1 Notices. Any notice or communication under this Agreement must be in writing and given by (a) deposit in the United States mail, addressed to the party to be notified, postage prepaid and registered or certified with return receipt requested, (b) delivery in person or by courier service providing evidence of delivery, or (c) transmission by hand delivery, facsimile or email. Each notice or communication that is mailed, delivered or transmitted in the manner described above shall be deemed sufficiently given, served, sent, and received, in the case of mailed notices, on the third business day following the date on which it is mailed and, in the case of notices delivered by courier service, hand delivery, facsimile or email, at such time as it is delivered to the addressee (with the delivery receipt or the affidavit of messenger) or at such time as delivery is refused by the addressee upon presentation. Any notice or communication under this Agreement must be addressed, if the Company, to: 1850 Francisco Street, Suite B, Torrance, CA 90501 and, if to any Holders, to the address of such Holder as it appears in the applicable register for

 

14


Registrable Securities or such other address as may be designated in writing by such Holder (including on the signature pages hereto). Any party may change its address for notice at any time and from time to time by written notice to the other parties hereto, and such change of address shall become effective thirty (30) days after delivery of such notice as provided in this Section 5.1.

5.2 Assignment; No Third Party Beneficiaries.

5.2.1 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.

5.2.2 This Agreement and the provisions hereof shall be binding upon and shall inure to the benefit of each of the parties and its successors.

5.2.3 This Agreement shall not confer any rights or benefits on any persons that are not parties hereto, other than as expressly set forth in this Agreement and Section 5.2 hereof.

5.2.4 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 (a) written notice of such assignment as provided in Section 5.1 hereof and (b) 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). Any transfer or assignment made other than as provided in this Section 5.2 shall be null and void.

5.3 Counterparts. This Agreement may be executed in multiple counterparts (including facsimile or PDF counterparts), each of which shall be deemed an original, and all of which together shall constitute the same instrument, but only one of which need be produced.

5.4 Governing Law; Venue. NOTWITHSTANDING THE PLACE WHERE THIS AGREEMENT MAY BE EXECUTED BY ANY OF THE PARTIES HERETO, THE PARTIES EXPRESSLY AGREE THAT THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE STATE OF NEW YORK AS APPLIED TO AGREEMENTS AMONG NEW YORK RESIDENTS ENTERED INTO AND TO BE PERFORMED ENTIRELY WITHIN NEW YORK, WITHOUT REGARD TO THE CONFLICT OF LAW PROVISIONS OF SUCH JURISDICTION.

5.5 Amendments and Modifications. Upon the written consent of the Company and the Holders of at least sixty-five percent (65%) of the Registrable Securities at the time in question, compliance with any of the provisions, covenants and conditions set forth in this Agreement may be waived, or any of such provisions, covenants or conditions may be amended or modified; provided, however, that notwithstanding the foregoing, any amendment hereto or waiver hereof that adversely affects one Holder, solely in his, her or its capacity as a holder of the Registrable Securities, in a manner that is materially different from the other Holders (in such capacity) shall require the consent of the Holder so affected. No course of dealing between any Holder or the Company and any other party hereto or any failure or delay on the part of a Holder or the Company in exercising any rights or remedies under this Agreement shall operate as a waiver of any rights or remedies of any Holder or the Company. No single or partial exercise of any rights or remedies under this Agreement by a party shall operate as a waiver or preclude the exercise of any other rights or remedies hereunder or thereunder by such party.

 

15


5.6 Other Registration Rights. The Company represents and warrants that no person, other than (a) a Holder of Registrable Securities, (b) the parties to those certain Subscription Agreements, dated as of July 10, 2020, by and between the Company and certain investors, (c) Moore Strategic Ventures, LLC pursuant to that certain convertible equity security agreement dated July 7, 2020 by and between Fisker and such investor and (d) Magna pursuant to the Cooperation Agreement, has any right to require the Company to register any securities of the Company for sale or to include such securities of the Company in any Registration filed by the Company for the sale of securities for its own account or for the account of any other person. Further, the Company represents and warrants that this Agreement supersedes any other registration rights agreement or agreement with similar terms and conditions and in the event of a conflict between any such agreement or agreements and this Agreement, the terms of this Agreement shall prevail.

5.7 Term. This Agreement shall terminate upon the earlier of (a) the tenth anniversary of the date of this Agreement or (b) the date as of which the Holders cease to hold any Registrable Securities. The provisions of Section 3.5 and Article IV shall survive any termination.

[SIGNATURE PAGES FOLLOW]

 

16

Exhibit 10.3

October 29, 2020

Fisker Inc.

1850 Francisco Street

Suite B

Torrance, CA 90501

Re: Lock-Up Agreement

Ladies and Gentlemen:

This letter (this “Letter Agreement”) is being delivered to you in accordance with the Business Combination Agreement and Plan of Reorganization (the “BCA”) entered into by and among Fisker Inc., a Delaware corporation f/k/a Spartan Energy Acquisition Corp. (the “Company”), Spartan Merger Sub Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Merger Sub”), and Fisker Group Inc., a Delaware corporation f/k/a Fisker Inc. (“Fisker”), pursuant to which, among other things, Merger Sub will be merged with and into Fisker on or about the date hereof (the “Merger”), with Fisker surviving the Merger as a wholly owned subsidiary of the Company.

In order to induce the Company to proceed with the Merger and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the undersigned (the “Securityholder”) hereby agrees with the Company as follows:

1. Subject to the exceptions set forth herein, the Securityholder agrees not to, without the prior written consent of the board of directors of the Company, (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidate or decrease a call equivalent position within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules and regulations of the Securities and Exchange Commission promulgated thereunder, any shares of Class A Common Stock, par value $0.0001 per share, of the Company (“Class A Common Stock”) or any shares of Class B Common Stock, par value $0.0001 per share, of the Company (“Class B Common Stock” and together with Class A Common Stock, collectively, “Common Stock”) held by the Securityholder immediately after the effective time of the Merger, including any shares of Class A Common Stock issuable upon conversion of such shares of Class B Common Stock, or any shares of Common Stock issuable upon the exercise of options to purchase shares of Common Stock held by the Securityholder immediately after the effective time of the Merger (“Lock-Up Shares”), (ii) enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any of such Lock-Up Shares, whether any such transaction is to be settled by delivery of such securities, in cash or otherwise or (iii) publicly announce any intention to effect any transaction specified in clause (i) or (ii) (the actions specified in clauses (i)-(iii), collectively, “Transfer”) for one hundred eighty (180) days after the closing date of the Merger (the “Lock-Up”). [Thereafter, until the eighteen (18) month anniversary of the closing date of the Merger, subject to the exceptions set forth herein, the Securityholder agrees not to Transfer more than the lesser of (i) such number of Lock-Up Shares resulting in gross proceeds


to the Securityholder of $25,000,000 and (ii) 10% of the Lock-Up Shares. Thereafter, until the two (2) year anniversary of the closing date of the Merger, subject to the exceptions set forth herein, the Securityholder agrees not to Transfer more than the number of Lock-Up Shares that, together with any amounts Transferred pursuant to the immediately preceding sentence, would constitute 80% of Lock-Up Shares. The restrictions set forth in this paragraph that are applicable after the Lock-Up are referred to herein collectively as the “Extended Lock-Up.”]

2. The restrictions set forth in paragraph 1 shall not apply to:

 

  (i)

in the case of an entity, Transfers to a stockholder, partner, member or affiliate of such entity;

 

  (ii)

in the case of an individual, Transfers by gift to members of the individual’s immediate family (as defined below) or to a trust, the beneficiary of which is a member of one of the individual’s immediate family, an affiliate of such person or to a charitable organization;

 

  (iii)

in the case of an individual, Transfers by virtue of laws of descent and distribution upon death of the individual;

 

  (iv)

in the case of an individual, Transfers pursuant to a qualified domestic relations order;

 

  (v)

in the case of an entity, Transfers by virtue of the laws of the state of the entity’s organization and the entity’s organizational documents upon dissolution of the entity;

 

  (vi)

the exercise of any options to purchase Common Stock (which exercises may be effected on a cashless basis to the extent the instruments representing such options or warrants permit exercises on a cashless basis);

 

  (vii)

Transfers to the Company to satisfy tax withholding obligations pursuant to the Company’s equity incentive plans or arrangements;

 

  (viii)

Transfers to the Company pursuant to any contractual arrangement in effect at the effective time of the Merger that provides for the repurchase by the Company or forfeiture of the Securityholder’s Common Stock or options to purchase shares of Common Stock in connection with the termination of the Securityholder’s service to the Company;

 

  (ix)

the entry, by the Securityholder, at any time after the effective time of the Merger, of any trading plan providing for the sale of Common Stock by the Securityholder, which trading plan meets the requirements of Rule 10b5-1(c) under the Exchange Act, provided, however, that such plan does not provide for, or permit, the sale of any Common Stock during the Lock-Up [or the Extended Lock-Up that would be in violation of paragraph 1 of this Letter Agreement] and no public announcement or filing is voluntarily made or required regarding such plan during the Lock-Up;

 

2


  (x)

a bona fide pledge of Common Stock to a financial institution; provided, however, that no public announcement or filing is voluntarily made or required regarding such pledge during the Lock-Up and the financial institution, upon any foreclosure, must enter into a written agreement, in substantially the form of this Letter Agreement, agreeing to be bound by these Transfer restrictions;

 

  (xi)

transactions in the event of completion of a liquidation, merger, stock exchange or other similar transaction which results in all of the Company’s securityholders having the right to exchange their shares of Common Stock for cash, securities or other property;

provided, however, that in the case of clauses (i) through (v), these permitted transferees must enter into a written agreement, in substantially the form of this Letter Agreement (it being understood that any references to “immediate family” in the agreement executed by such transferee shall expressly refer only to the immediate family of the Securityholder and not to the immediate family of the transferee), agreeing to be bound by these Transfer restrictions. For purposes of this paragraph, “immediate family” shall mean a spouse, domestic partner, child, grandchild or other lineal descendant (including by adoption), father, mother, brother or sister of the undersigned; and “affiliate” shall have the meaning set forth in Rule 405 under the Securities Act of 1933, as amended.

3. This Letter Agreement constitutes the entire agreement and understanding of the parties hereto in respect of the subject matter hereof and supersedes all prior understandings, agreements or representations by or among the parties hereto, written or oral, to the extent they relate in any way to the subject matter hereof or the transactions contemplated hereby. This Letter Agreement may not be changed, amended, modified or waived (other than to correct a typographical error) as to any particular provision, except by a written instrument executed by all parties hereto.

4. No party hereto may assign either this Letter Agreement or any of its rights, interests or obligations hereunder without the prior written consent of the other party. Any purported assignment in violation of this paragraph shall be void and ineffectual and shall not operate to transfer or assign any interest or title to the purported assignee. This Letter Agreement shall be binding on the Securityholder and each of its respective successors, heirs and assigns and permitted transferees.

5. This Letter Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without giving effect to conflicts of law principles that would result in the application of the substantive laws of another jurisdiction. The parties hereto (i) all agree that any action, proceeding, claim or dispute arising out of, or relating in any way to, this Letter Agreement shall be brought and enforced in any Delaware Chancery Court, and irrevocably submit to such jurisdiction and venue, which jurisdiction and venue shall be exclusive and (ii) waive any objection to such exclusive jurisdiction and venue or that such courts represent an inconvenient forum.

6. This Letter Agreement shall terminate on the expiration of the Lock-Up [and the Extended Lock-Up].

 

3


[remainder of page intentionally left blank]

 

4


Very truly yours,

 

(Name of Securityholder – Please Print)

 

(Signature)

 

(Name of Signatory if Securityholder is an entity – Please Print)

 

(Title of Signatory if Securityholder is an entity – Please Print)
Address:  

 

 

 

 

 

[Signature Page to Lock-Up Agreement]

Exhibit 10.5

FISKER INC.

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “Agreement”) is made as of __________, by and between Fisker Inc., a Delaware corporation (the “Company”), and ____________________ (“Indemnitee”).

RECITALS

The Company and Indemnitee recognize the increasing difficulty in obtaining liability insurance for directors, officers and key employees, the significant increases in the cost of such insurance and the general reductions in the coverage of such insurance. The Company and Indemnitee further recognize the substantial increase in corporate litigation in general, subjecting directors, officers and key employees to expensive litigation risks at the same time as the availability and coverage of liability insurance has been severely limited. Indemnitee does not regard the current protection available as adequate under the present circumstances, and Indemnitee may not be willing to continue to serve in Indemnitee’s current capacity with the Company without additional protection. The Company desires to attract and retain the services of highly qualified individuals, such as Indemnitee, and to indemnify its directors, officers and key employees so as to provide them with the maximum protection permitted by law.

AGREEMENT

In consideration of the mutual promises made in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and Indemnitee hereby agree as follows:

1. Indemnification.

(a) Third-Party Proceedings. To the fullest extent permitted by applicable law, as such may be amended from time to time, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made, a party to or a participant (as a witness or otherwise) in any Proceeding (other than a Proceeding by or in the right of the Company to procure a judgment in the Company’s favor), against all Expenses, judgments, fines, losses, liabilities, penalties, and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld, conditioned or delayed) actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf 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, in the case of a criminal Proceeding, had no reasonable cause to believe Indemnitee’s conduct was unlawful.

(b) Proceedings By or in the Right of the Company. To the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee, if Indemnitee was, is or is threatened to be made a party to or a participant (as a witness or otherwise) in any Proceeding by or in the right of the Company to procure a judgment in the Company’s favor, against all Expenses 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, except that no indemnification shall be made in respect of any claim, issue or matter as to which Indemnitee shall have been finally adjudicated by court order or judgment to be liable to the Company unless and only to the extent that the Court of Chancery or the court in which such Proceeding is or was pending shall determine upon application that, in view of all the circumstances of the case, Indemnitee is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) Success on the Merits. To the fullest extent permitted by applicable law and to the extent that Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 1(a) or Section 1(b) or the defense of any claim, issue or matter therein, in whole or in part, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection therewith. Without limiting the generality of the foregoing, if Indemnitee is successful on the merits or otherwise as to one or more but less than all claims, issues or matters in a Proceeding, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such successfully resolved claims, issues or matters to the fullest extent permitted by applicable law. If any Proceeding is disposed of on the merits or otherwise (including a disposition without prejudice), without (i) the disposition being adverse to Indemnitee, (ii) an adjudication that Indemnitee was liable to the Company, (iii) a plea of guilty by Indemnitee, (iv) an adjudication that Indemnitee did not act in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, and (v) with respect to any criminal Proceeding, an adjudication that Indemnitee had reasonable cause to believe Indemnitee’s conduct was unlawful, Indemnitee shall be considered for the purposes hereof to have been wholly successful with respect thereto.

(d) Witness Expenses. To the fullest extent permitted by applicable law and to the extent that Indemnitee is a witness or otherwise asked to participate in any Proceeding to which Indemnitee is not a party, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding.

2. Indemnification Procedure.

(a) Advancement of Expenses. To the fullest extent permitted by applicable law, the Company shall advance all Expenses actually and reasonably incurred by Indemnitee in connection with a Proceeding within thirty (30) days after receipt by the Company of a statement requesting such advances from time to time, whether prior to or after final disposition of any Proceeding. Such advances shall be unsecured and interest free and shall be made without regard to Indemnitee’s ability to repay the Expenses and without regard to Indemnitee’s ultimate entitlement to indemnification under the other provisions of this Agreement. Indemnitee shall be entitled to continue to receive advancement of Expenses pursuant to this Section 2(a) unless and until the matter of Indemnitee’s entitlement to indemnification hereunder has been finally adjudicated by court order or judgment from which no further right of appeal exists. Indemnitee hereby undertakes to repay such amounts advanced only if, and to the extent that, it ultimately is determined that Indemnitee is not entitled to be indemnified by the Company under the other provisions of this Agreement. Indemnitee shall qualify for advances upon the execution and delivery of this Agreement, which shall constitute the requisite undertaking with respect to repayment of advances made hereunder and no other form of undertaking shall be required to qualify for advances made hereunder other than the execution of this Agreement.

 

-2-


(b) Notice and Cooperation by Indemnitee. 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 Proceeding or matter for which indemnification will or could be sought under this Agreement. Such notice to the Company shall include a description of the nature of, and facts underlying, the Proceeding, shall be directed to the Chief Executive Officer of the Company and shall be given in accordance with the provisions of Section 13(e) below. In addition, Indemnitee shall give the Company such additional information and cooperation as the Company may reasonably request. Indemnitee’s failure to so notify, provide information and otherwise cooperate with the Company shall not relieve the Company of any obligation that it may have to Indemnitee under this Agreement, except to the extent that the Company is adversely affected by such failure.

(c) Determination of Entitlement.

(i) Final Disposition. Notwithstanding any other provision in this Agreement, no determination as to entitlement to indemnification under this Agreement shall be required to be made prior to the final disposition of the Proceeding.

(ii) Determination and Payment. Subject to the foregoing, promptly after receipt of a statement requesting payment with respect to the indemnification rights set forth in Section 1, to the extent required by applicable law, the Company shall take the steps necessary to authorize such payment in the manner set forth in Section 145 of the Delaware General Corporation Law. The Company shall pay any claims made under this Agreement, under any statute, or under any provision of the Company’s Certificate of Incorporation or Bylaws providing for indemnification or advancement of Expenses, within thirty (30) days after a written request for payment thereof has first been received by the Company, and if such claim is not paid in full within such thirty (30) day-period, Indemnitee may, but need not, at any time thereafter bring an action against the Company in the Delaware Court of Chancery to recover the unpaid amount of the claim and, subject to Section 12, Indemnitee shall also be entitled to be paid for all Expenses actually and reasonably incurred by Indemnitee in connection with bringing such action. It shall be a defense to any such action (other than an action brought to enforce a claim for advancement of Expenses under Section 2(a)) that Indemnitee has not met the standards of conduct which make it permissible under applicable law for the Company to indemnify Indemnitee for the amount claimed. In making a determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement and the Company shall have the burden of proof to overcome that presumption with clear and convincing evidence to the contrary. The termination of any Proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not act in good faith and in a manner which Indemnitee reasonably believed to be in or not opposed to the best interests of the Company, or, in the case of a criminal Proceeding, that Indemnitee had reasonable cause to believe that Indemnitee’s conduct was unlawful. In addition, it is the parties’ intention that if the Company contests Indemnitee’s right to indemnification, the question of Indemnitee’s right to indemnification shall be for the court to decide, and neither the failure of the Company (including its Board of Directors, any committee

 

-3-


or subgroup of the Board of Directors, independent legal counsel, or its stockholders) to have made a determination that indemnification of Indemnitee is proper in the circumstances because Indemnitee has met the applicable standard of conduct required by applicable law, nor an actual determination by the Company (including its Board of Directors, any committee or subgroup of the Board of Directors, independent legal counsel, or its stockholders) that Indemnitee has not met such applicable standard of conduct, shall create a presumption that Indemnitee has or has not met the applicable standard of conduct. If any requested determination with respect to entitlement to indemnification hereunder has not been made within ninety (90) days after the final disposition of the Proceeding, the requisite determination that Indemnitee is entitled to indemnification shall be deemed to have been made.

(iii) Change of Control. Notwithstanding any other provision in this Agreement, if a Change of Control has occurred, any person or body appointed by the Board of Directors in accordance with applicable law to review the Company’s obligations hereunder and under applicable law shall be Independent Counsel selected by Indemnitee and approved by the Company (which approval shall not be unreasonably withheld). Such counsel, among other things, will render its written opinion to the Company and Indemnitee as to whether and to what extent Indemnitee would be entitled to be indemnified hereunder under applicable law and the Company agrees to abide by such opinion. The Company agrees to pay the reasonable fees of the Independent Counsel referred to above and to indemnify fully such counsel against any and all expenses (including attorneys’ fees), claims, liabilities and damages arising out of or relating to this Agreement or its engagement pursuant hereto. Notwithstanding any other provision of this Agreement, the Company shall not be required to pay Expenses of more than one Independent Counsel in connection with all matters concerning a single Indemnitee, and such Independent Counsel shall be the Independent Counsel for any or all other Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee shall provide a written statement setting forth in detail a reasonable objection to such Independent Counsel representing other indemnitees under agreements similar to this Agreement.

(d) Payment Directions. To the extent payments are required to be made hereunder, the Company shall, in accordance with Indemnitee’s request (but without duplication), (i) pay such Expenses on behalf of Indemnitee, (ii) advance to Indemnitee funds in an amount sufficient to pay such Expenses, or (iii) reimburse Indemnitee for such Expenses.

(e) Notice to Insurers. If, at the time of the receipt of a notice of a claim pursuant to Section 2(b) hereof, the Company has director and officer liability insurance in effect, the Company shall give prompt notice of the commencement of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies. The Company shall thereafter take all necessary or desirable action to cause such insurers to pay, on behalf of Indemnitee, all amounts payable as a result of such Proceeding in accordance with the terms of such policies. The Company shall provide to Indemnitee: (i) copies of all potentially applicable directors’ and officers’ liability insurance policies, (ii) a copy of such notice delivered to the applicable insurers, and (iii) copies of all subsequent correspondence between the Company and such insurers regarding the Proceeding, in each case substantially concurrently with the delivery or receipt thereof by the Company.

 

-4-


(f) Defense of Claim and Selection of Counsel. In the event the Company shall be obligated under Section 2(a) hereof to advance Expenses with respect to any Proceeding, the Company, if appropriate, shall be entitled to assume the defense of such Proceeding, with counsel reasonably acceptable to Indemnitee, upon the delivery to Indemnitee of written notice of its election so to do, and upon Indemnitee providing signed, written consent to such assumption, which shall not be unreasonably withheld. After delivery of such notice, approval of such counsel by Indemnitee and the retention of such counsel by the Company, the Company will not be liable to Indemnitee under this Agreement for any fees of counsel subsequently incurred by Indemnitee with respect to the same Proceeding, provided that (i) Indemnitee shall have the right to employ counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the employment of counsel by Indemnitee has been previously authorized by the Company, (B) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company and Indemnitee in the conduct of any such defense or (C) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding, then the fees and expenses of Indemnitee’s counsel shall be at the expense of the Company. In addition, if there exists a potential, but not an actual conflict of interest between the Company and Indemnitee, the actual and reasonable legal fees and expenses incurred by Indemnitee for separate counsel retained by Indemnitee to monitor the Proceeding (so that such counsel may assume Indemnitee’s defense if the conflict of interest between the Company and Indemnitee becomes an actual conflict of interest) shall be deemed to be Expenses that are subject to indemnification hereunder. The existence of an actual or potential conflict of interest, and whether such conflict may be waived, shall be determined pursuant to the rules of attorney professional conduct and applicable law. The Company shall not be required to obtain the consent of Indemnitee for the settlement of any Proceeding the Company has undertaken to defend if the Company assumes full and sole responsibility for each such settlement; provided, however, that the Company shall be required to obtain Indemnitee’s prior written approval, which shall not be unreasonably withheld, before entering into any settlement which (1) does not grant Indemnitee a complete release of liability, (2) would impose any penalty or limitation on Indemnitee, or (3) would admit any liability or misconduct by Indemnitee.

3. Additional Indemnification Rights.

(a) Scope. Notwithstanding any other provision of this Agreement, the Company hereby agrees to indemnify Indemnitee to the fullest extent permitted by law, notwithstanding that such indemnification is not specifically authorized by the other provisions of this Agreement, the Company’s Certificate of Incorporation, the Company’s Bylaws or by statute. In the event of any change, after the date of this Agreement, in any applicable law, statute, or rule which expands the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes shall be deemed to be within the purview of Indemnitee’s rights and the Company’s obligations under this Agreement. In the event of any change in any applicable law, statute or rule which narrows the right of a Delaware corporation to indemnify a member of its board of directors or an officer, such changes, to the extent not otherwise required by such law, statute or rule to be applied to this Agreement shall have no effect on this Agreement or the parties’ rights and obligations hereunder.

(b) Nonexclusivity. The indemnification provided by this Agreement shall not be deemed exclusive of any rights to which Indemnitee may be entitled under the Company’s Certificate of Incorporation, its Bylaws, any agreement, any vote of stockholders or disinterested members of the Company’s Board of Directors, the Delaware General Corporation Law, or otherwise, both as to action in Indemnitee’s official capacity and as to action in another capacity while holding such office.

 

-5-


(c) Interest on Unpaid Amounts. If any payment to be made by the Company to Indemnitee hereunder is delayed by more than ninety (90) days from the date the duly prepared request for such payment is received by the Company, interest shall be paid by the Company to Indemnitee at the legal rate under Delaware law for amounts which the Company indemnifies or is obligated to indemnify for the period commencing with the date on which Indemnitee actually incurs such Expense or pays such judgment, fine or amount in settlement and ending with the date on which such payment is made to Indemnitee by the Company.

(d) Third-Party Indemnification. The Company hereby acknowledges that Indemnitee has or may from time to time obtain certain rights to indemnification, advancement of expenses and/or insurance provided by one or more third parties (collectively, the “Third-Party Indemnitors”). The Company hereby agrees that it is the indemnitor of first resort (i.e., its obligations to Indemnitee are primary and any obligation of the Third-Party Indemnitors to advance expenses or to provide indemnification for the same expenses or liabilities incurred by Indemnitee are secondary), and that the Company will not assert that the Indemnitee must seek expense advancement or reimbursement, or indemnification, from any Third-Party Indemnitor before the Company must perform its expense advancement and reimbursement, and indemnification obligations, under this Agreement. No advancement or payment by the Third-Party Indemnitors on behalf of Indemnitee with respect to any claim for which Indemnitee has sought indemnification from the Company shall affect the foregoing. The Third-Party Indemnitors shall be subrogated to the extent of such advancement or payment to all of the rights of recovery which Indemnitee would have had against the Company if the Third-Party Indemnitors had not advanced or paid any amount to or on behalf of Indemnitee. If for any reason a court of competent jurisdiction determines that the Third-Party Indemnitors are not entitled to the subrogation rights described in the preceding sentence, the Third-Party Indemnitors shall have a right of contribution by the Company to the Third-Party Indemnitors with respect to any advance or payment by the Third-Party Indemnitors to or on behalf of the Indemnitee.

(e) Indemnification of Control Person. If (i) Indemnitee is or was affiliated with one or more of the Company’s current or former stockholders that may be deemed to be or to have been a controlling person of the Company (each a “Control Person”), (ii) a Control Person is, or is threatened to be made, a party to or a participant (including as a witness) in any Proceeding, and (iii) the Control Person’s involvement in the Proceeding is related to Indemnitee’s service to the Company as a director of the Company, or arises from the Control Person’s status or alleged status as a controlling person of the Company resulting from such Control Person’s affiliation with Indemnitee, then the Control Person shall be entitled to all of the indemnification rights and remedies under this Agreement to the same extent as Indemnitee.

4. Partial Indemnification. If Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of the Expenses, judgments, fines or amounts paid in settlement, actually and reasonably incurred in connection with a Proceeding, but not, however, for the total amount thereof, the Company shall nevertheless indemnify Indemnitee for the portion of such Expenses, judgments, fines and amounts paid in settlement to which Indemnitee is entitled.

 

-6-


5. Director and Officer Liability Insurance.

(a) D&O Policy. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of insurance with reputable insurance companies providing the directors and officers of the Company with coverage for losses from wrongful acts, or to ensure the Company’s performance of its indemnification obligations under this Agreement. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. In all policies of director and officer liability insurance, Indemnitee shall be named as an insured in such a manner as to provide Indemnitee the same rights and benefits as are accorded to the most favorably insured of the Company’s directors, if Indemnitee is a director; or of the Company’s officers, if Indemnitee is not a director of the Company but is an officer; or of the Company’s key employees, if Indemnitee is not an officer or director but is a key employee. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionate to the amount of coverage provided, if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit, or if Indemnitee is covered by similar insurance maintained by a parent or subsidiary of the Company.

(b) Tail Coverage. In the event of a Change of Control or the Company’s becoming insolvent (including being placed into receivership or entering the federal bankruptcy process and the like), the Company shall maintain in force any and all insurance policies then maintained by the Company in providing insurance (directors’ and officers’ liability, fiduciary, employment practices or otherwise) in respect of Indemnitee, for a period of six years thereafter.

6. Severability. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. The Company’s inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement. If this Agreement or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Company shall nevertheless indemnify Indemnitee to the full extent permitted by any applicable portion of this Agreement that shall not have been invalidated, and the balance of this Agreement not so invalidated shall be enforceable in accordance with its terms.

7. Exclusions. Any other provision herein to the contrary notwithstanding, the Company shall not be obligated pursuant to the terms of this Agreement:

(a) Claims Initiated by Indemnitee. To indemnify or advance Expenses to Indemnitee with respect to Proceedings initiated or brought voluntarily by Indemnitee and not by way of defense, except with respect to Proceedings brought to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, but such indemnification or advancement of Expenses may be provided by the Company in specific cases if the Board of Directors finds it to be appropriate; provided, however, that the exclusion set forth in the first clause of this subsection shall not be deemed to apply to any investigation initiated or brought by Indemnitee to the extent reasonably necessary or advisable in support of Indemnitee’s defense of a Proceeding to which Indemnitee was, is or is threatened to be made, a party;

 

-7-


(b) Lack of Good Faith. To indemnify Indemnitee for any Expenses incurred by Indemnitee with respect to any Proceeding instituted by Indemnitee to establish, enforce or interpret a right to indemnification under this Agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law, if a court of competent jurisdiction determines that each of the material assertions made by Indemnitee in such proceeding was not made in good faith or was frivolous;

(c) Unlawful Payments. To indemnify Indemnitee for Expenses to the extent it is determined by a final court order or judgment by a court of competent jurisdiction, to which all rights of appeal have either lapsed or been exhausted, that such indemnification is unlawful;

(d) Certain Conduct. To indemnify Indemnitee for Expenses on account of Indemnitee’s conduct that is established by a final court order or judgment by a court of competent jurisdiction, to which all rights of appeal have either lapsed or been exhausted, as knowingly fraudulent;

(e) Insured Claims. To indemnify Indemnitee for Expenses to the extent such Expenses have been paid directly to Indemnitee by an insurance carrier under an insurance policy maintained by the Company; or

(f) Certain Exchange Act Claims. To indemnify Indemnitee in connection with any claim made against Indemnitee for (i) an accounting of profits made from the purchase and sale (or sale and purchase) by Indemnitee of securities of the Company within the meaning of Section 16(b) of the Exchange Act or any similar successor statute or any similar provisions of state statutory law or common law, or (ii) any reimbursement of the Company by Indemnitee of any bonus or other incentive-based or equity-based compensation or of any profits realized by Indemnitee from the sale of securities of the Company, as required in each case under the Exchange Act (including any such reimbursements that arise from an accounting restatement of the Company pursuant to Section 304 of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) or Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the payment to the Company of profits arising from the purchase and sale by Indemnitee of securities in violation of Section 306 of the Sarbanes-Oxley Act); provided, however, that to the fullest extent permitted by applicable law and to the extent Indemnitee is successful on the merits or otherwise with respect to any such Proceeding, the Expenses actually and reasonably incurred by Indemnitee in connection with any such Proceeding shall be deemed to be Expenses that are subject to indemnification hereunder.

 

-8-


8. Contribution Claims.

(a) If the indemnification provided in Section 1 is unavailable in whole or in part and may not be paid to Indemnitee for any reason other than those set forth in Section 7, then in respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permitted by applicable law, the Company, in lieu of indemnifying Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses, judgments, fines, losses, liabilities, penalties, or amounts paid in settlement, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

(b) Without diminishing or impairing the obligations of the Company set forth in the preceding Section 8(a), if, for any reason, Indemnitee shall elect or be required to pay all or any portion of any Expenses, judgments, fines, losses, liabilities, penalties and amounts paid in settlement in any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses, judgments, fines, losses, liabilities, penalties and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, from the transaction or events from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company and all officers, directors or employees of the Company other than Indemnitee who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, in connection with the transaction or events that resulted in such Expenses, judgments, fines, losses, liabilities, penalties or settlement amounts, as well as any other equitable considerations which applicable law may require to be considered. The relative fault of the Company and all officers, directors or employees of the Company, other than Indemnitee, who are jointly liable with Indemnitee (or would be if joined in such Proceeding), on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary and the degree to which their conduct is active or passive.

(c) With respect to a Proceeding brought against directors, officers, employees or agents of the Company (other than Indemnitee), to the fullest extent permitted by applicable law, the Company shall indemnify Indemnitee from any claims for contribution that may be brought by any such directors, officers, employees or agents of the Company (other than Indemnitee) who may be jointly liable with Indemnitee, to the same extent Indemnitee would have been entitled to such indemnification under this Agreement if such Proceeding had been brought against Indemnitee.

9. No Imputation. The knowledge and/or actions, or failure to act, of any director, officer, agent or employee of the Company or the Company itself shall not be imputed to Indemnitee for purposes of determining any rights under this Agreement.

10. Determination of Good Faith. For purposes of any determination of good faith, Indemnitee shall be deemed to have acted in good faith if Indemnitee’s action is based on the records or books of account of the Enterprise, including financial statements, or on information supplied to Indemnitee by the officers of the Enterprise in the course of their duties, or on the advice of legal counsel for the Enterprise or the Board of Directors of the Enterprise or any counsel selected

 

-9-


by any committee of the Board of Directors of the Enterprise or on information or records given or reports made to the Enterprise by an independent certified public accountant or by an appraiser, investment banker, compensation consultant, or other expert selected with reasonable care by the Enterprise or the Board of Directors of the Enterprise or any committee thereof. The provisions of this Section 10 shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct. Whether or not the foregoing provisions of this Section are satisfied, it shall in any event be presumed that Indemnitee has at all times acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company.

11. Defined Terms and Phrases. For purposes of this Agreement, the following terms shall have the following meanings:

(a) “Beneficial Owner” and “Beneficial Ownership” shall have the meanings set forth in Rule 13d-3 promulgated under the Exchange Act as in effect on the date hereof.

(b) “Change of Control” shall be deemed to occur upon the earliest of any of the following events:

(i) Acquisition of Stock by Third Party. Any Person is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 20% or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors, unless (1) the change in the relative Beneficial Ownership of the Company’s securities by any Person results solely from a reduction in the aggregate number of outstanding shares of securities entitled to vote generally in the election of directors, or (2) such acquisition was approved in advance by the Continuing Directors and such acquisition would not constitute a Change of Control under part (iii) of this definition.

(ii) Change in Board of Directors. Individuals who, as of the date of this Agreement, constitute the Company’s Board of Directors (the “Board”), and any new director whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two thirds of the directors then still in office who were directors on the date of this Agreement (collectively, the “Continuing Directors”), cease for any reason to constitute at least a majority of the members of the Board.

(iii) Corporate Transaction. The effective date of a reorganization, merger, or consolidation of the Company (a “Business Combination”), in each case, unless, following such Business Combination: (1) all or substantially all of the individuals and entities who were the Beneficial Owners of securities entitled to vote generally in the election of directors immediately prior to such Business Combination beneficially own, directly or indirectly, more than 51% of the combined voting power of the then outstanding securities of the Company entitled to vote generally in the election of directors resulting from such Business Combination (including a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Business Combination, of the securities entitled to vote generally in the election of directors and with the power to elect at least a majority of the Board or other governing body of the surviving entity; (2) no Person (excluding any

 

-10-


corporation resulting from such Business Combination) is the Beneficial Owner, directly or indirectly, of 15% or more of the combined voting power of the then outstanding securities entitled to vote generally in the election of directors of such corporation except to the extent that such ownership existed prior to the Business Combination; and (3) at least a majority of the Board of Directors of the corporation resulting from such Business Combination were Continuing Directors at the time of the execution of the initial agreement, or of the action of the Board of Directors, providing for such Business Combination.

(iv) Liquidation. The approval by the Company’s stockholders of a complete liquidation of the Company or an agreement or series of agreements for the sale or disposition by the Company of all or substantially all of the Company’s assets, other than factoring the Company’s current receivables or escrows due (or, if such approval is not required, the decision by the Board to proceed with such a liquidation, sale or disposition in one transaction or a series of related transactions).

(v) Other Events. There occurs any other event of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or a response to any similar item or any similar schedule or form) promulgated under the Exchange Act whether or not the Company is then subject to such reporting requirement.

(c) “Company” shall include, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that if Indemnitee is or was a director, officer, employee or agent of such constituent corporation, or is or was serving at the request of such constituent corporation as a director, officer, trustee, general partner, managing member, fiduciary, employee or agent of any other enterprise, Indemnitee shall stand in the same position under the provisions of this Agreement with respect to the resulting or surviving corporation as Indemnitee would have with respect to such constituent corporation if its separate existence had continued.

(d) “Enterprise” means the Company and any other enterprise that Indemnitee was or is serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent.

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

(f) “Expenses” shall include all direct and indirect costs, fees and expenses of any type or nature whatsoever, including all attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, fees of private investigators and professional advisors, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, any federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payment under this Agreement (including taxes that may be imposed upon the actual or deemed receipt of payments under this Agreement with respect to the imposition of federal, state, local or foreign taxes), fax transmission charges, secretarial services and all other disbursements, obligations or expenses in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in, settlement or

 

-11-


appeal of, or otherwise participating in a Proceeding. Expenses also shall include any of the foregoing expenses incurred in connection with any appeal resulting from any Proceeding, including the principal, premium, security for, and other costs relating to any costs bond, supersedes bond, or other appeal bond or its equivalent. Expenses also shall include any interest, assessment or other charges imposed thereon and costs incurred in preparing statements in support of payment requests hereunder. Expenses, however, shall not include amounts paid in settlement by Indemnitee or the amount of judgments or fines against Indemnitee.

(g) “Independent Counsel” means an attorney or firm of attorneys, selected in accordance with the provisions of Section 2(c)(iii), who will not have otherwise performed services for the Company or Indemnitee within the last three years (other than with respect to matters concerning the rights of Indemnitee under this Agreement, or of other indemnitees under similar indemnity agreements).

(h) “Person” shall have the meaning as set forth in Section 13(d) and 14(d) of the Exchange Act as in effect on the date hereof; provided, however, that “Person” shall exclude: (i) the Company; (ii) any direct or indirect majority owned subsidiaries of the Company; (iii) any employee benefit plan of the Company or any direct or indirect majority owned subsidiaries of the Company or of any corporation owned, directly or indirectly, by the Company’s stockholders in substantially the same proportions as their ownership of stock of the Company (an “Employee Benefit Plan”); and (iv) any trustee or other fiduciary holding securities under an Employee Benefit Plan.

(i) “Proceeding” shall include any actual, threatened, pending or completed action, suit, arbitration, mediation, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing, claim, or any other actual, threatened or completed proceeding, whether brought by a third party, a government agency, the Company or its Board of Directors or a committee thereof, whether in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative, legislative or investigative (formal or informal) nature, including any appeal therefrom, in which Indemnitee was, is, will or might be involved as a party, potential party, non-party witness or otherwise by reason of the fact that Indemnitee is or was a director, officer, employee or agent of the Company, by reason of any action (or failure to act) taken by Indemnitee or of any action (or failure to act) on Indemnitee’s part while acting as a director, officer, employee or agent of the Company, or by reason of the fact that Indemnitee is or was serving at the request of the Company as a director, officer, partner (general, limited or otherwise), member (managing or otherwise), trustee, fiduciary, employee or agent of any other enterprise, in each case whether or not serving in such capacity at the time any liability or expense is incurred for which indemnification, reimbursement or advancement of expenses can be provided under this Agreement.

(j) In addition, references to “other enterprise” shall include another corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or any other enterprise; references to “fines” shall include any excise taxes assessed on Indemnitee with respect to an employee benefit plan; references to “serving at the request of the Company” shall include any service as a director, officer, employee or agent of the Company which imposes duties on, or involves services by Indemnitee with respect to an employee benefit plan, its participants, or beneficiaries; and if Indemnitee acted in good faith and in a manner Indemnitee

 

-12-


reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan, Indemnitee shall be deemed to have acted in a manner “not opposed to the best interests of the Company” as referred to in this Agreement; references to “include” or “including” shall mean include or including, without limitation; and references to Sections, paragraphs or clauses are to Sections, paragraphs or clauses in this Agreement unless otherwise specified.

12. Attorneys Fees. In the event that any Proceeding is instituted by Indemnitee under this Agreement to enforce or interpret any of the terms hereof, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding, unless a court of competent jurisdiction determines that each of the material assertions made by Indemnitee as a basis for such Proceeding were not made in good faith or were frivolous. In the event of a Proceeding instituted by or in the name of the Company under this Agreement or to enforce or interpret any of the terms of this Agreement, the Company shall indemnify Indemnitee against all Expenses actually and reasonably incurred by Indemnitee in connection with such Proceeding (including with respect to Indemnitee’s counterclaims and cross-claims made in such action), unless a court of competent jurisdiction determines that each of Indemnitee’s material defenses to such action were made in bad faith or were frivolous.

13. Miscellaneous.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of Delaware, without giving effect to principles of conflicts of law.

(b) Entire Agreement; Binding Effect. Without limiting any of the rights of Indemnitee described in Section 3(b), this Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and merges all prior discussions and supersedes any and all previous agreements between them covering the subject matter herein. The indemnification provided under this Agreement applies with respect to events occurring before or after the effective date of this Agreement, and shall continue to apply even after Indemnitee has ceased to serve the Company in any and all indemnified capacities.

(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance.

(d) Successors and Assigns. This Agreement shall be binding upon the Company and its successors (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business and/or assets of the Company) and assigns, and inure to the benefit of Indemnitee and Indemnitee’s heirs, executors, administrators, legal representatives and assigns. The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all or substantially all of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

-13-


(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under applicable law, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile or scanned copy or by electronic means will have the same force and effect as execution of an original, and a facsimile, scanned or electronically generated signature will be deemed an original and valid signature.

(i) No Employment Rights. Nothing contained in this Agreement is intended to create in Indemnitee any right to continued employment.

(j) Company Position. The Company shall be precluded from asserting, in any Proceeding brought for purposes of establishing, enforcing or interpreting any right to indemnification under this Agreement, that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company is bound by all the provisions of this Agreement and is precluded from making any assertion to the contrary.

(k) Subrogation. Subject to Section 3(d), 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 documents required and shall do all acts that may be necessary to secure such rights and to enable the Company to effectively bring suit to enforce such rights.

[Signature Page Follows]

 

-14-


The parties have executed this Indemnification Agreement as of the date first set forth above.

 

THE COMPANY:
FISKER INC.
By:  

 

  (Signature)
Name:
Title:
Address:
                                  

                             

United States

 

AGREED TO AND ACCEPTED:
INDEMNITEE:

 

(PRINT NAME)

 

(Signature)
Address:

 

 

Email:  

 

Exhibit 10.7

SUBLEASE AGREEMENT

9/21/2020

THIS SUBLEASE AGREEMENT (this “Sublease”) is entered into this ___ day of September, 2020 (“Effective Date”), by and between Cosmo Co., USA Inc. (formerly Vystic Inc.), a Delaware corporation (“Sublandlord”) and Fisker Inc., a Delaware corporation (“Subtenant”).

Recitals

A. Mindful Investments, L.P., a California limited partnership, and subsequently transferred to Manoutchehr Movassate and Jaleh Movassate, Trustees of the Movassate Family Trust (“Master Landlord”), and Sublandlord entered into that certain Standard Industrial/Commercial Single-Tenant Lease—Gross dated March 28, 2017, as supplemented by that certain Addendum to Lease dated March 28, 2017 (as supplemented, the “Master Lease”), respecting the entire building commonly known as 3030 17th Street, San Francisco, California, consisting of approximately 16,238 rentable square feet of space (the “Master Premises”), as more particularly described in the Master Lease. A copy of the Master Lease is attached to this Sublease as Exhibit A.

B. Sublandlord desires to further sublease to Subtenant, and Subtenant desires to sublease from Sublandlord, a portion of the Master Premises consisting of approximately 5,533 rentable square feet, commonly known as Bay 1, as more particularly depicted on Exhibit B attached hereto and incorporated herein by this reference (the “Premises”), on the terms and conditions set forth in this Sublease.

NOW, THEREFORE, in consideration of the mutual covenants contained in this Sublease and other good and valuable consideration, the receipt and sufficiency of which are acknowledged, the parties agree as follows:

Agreement

1. Sublease. Sublandlord hereby subleases to Subtenant, and Subtenant hereby subleases from Sublandlord, the Premises on the terms and conditions hereinafter set forth.

2. Term; Early Termination.

The term of this Sublease shall commence upon the later of (i) the date of Master Landlord’s execution of the consent to this Sublease in the form attached hereto, as may be modified by Master Landlord, and (ii) October 1, 2020 (the “Commencement Date”) and shall expire on March 31, 2024 (the “Sublease Term”), unless sooner terminated under the provisions of this Sublease.

In the event Sublandlord is unable to obtain Master Landlord’s consent within thirty (30) days from the Effective Date, both Sublandlord and Subtenant shall have the right to terminate this Sublease by providing written notice of such termination to the other. Upon any such termination, this Sublease shall be cancelled and neither party shall have any liability or further obligations to the other party under this Sublease. Sublandlord shall have no obligation to Subtenant to exercise any of its options to extend under the Master Lease.

 

1


Upon the parties’ execution of this Sublease and prior to the Commencement Date, Subtenant shall have the right to access the Premises solely for the purpose of space planning, and installation of its furniture, fixtures and equipment. If Subtenant accesses the Premises prior to the Commencement Date, the obligation to pay Rent (including Additional Rent) shall be abated during such time, but all other terms of this Sublease shall be in effect during such period.

3. Rent.

(a) Monthly Base Rent. Commencing on the Commencement Date and continuing throughout the Sublease Term, Subtenant shall pay to Sublandlord, without prior demand therefor, as monthly base rent (“Monthly Base Rent”) at the same times (less two (2) days) and in the same manner as rent is payable under the Master Lease, and in accordance with the Base Rent schedule set forth below, except that Subtenant shall pay the first installment of Monthly Base Rent in the amount of $28,587.00 on the first day of the calendar month after the Commencement Date, which amount shall be applied to the first full calendar month’s Monthly Base Rent. The Base Rent, Additional Rent (as hereinafter defined), and such other sums due and payable by Subtenant hereunder are collectively referred to as “Rent.” Base Rent shall be payable in the amounts stated in the following Base Rent Schedule:

 

First 12 months following the Commencement Date    $28,587.00 per month
Months 13 to 24    $29,445.00 per month
Months 25 to 36    $30,328.00 per month
Months 37 to March 31, 2024    $31,238.00 per month
Monthly Base Rent shall be prorated for any partial month.   

(b) Additional Rent. Commencing January 1, 2022 and continuing during the Sublease Term, Subtenant shall pay to Sublandlord on or prior to the date such sums are due under the Master Lease (less 2 days), Subtenant’s Share of any additional increases and in Real Property Taxes or insurance premium increases billed to Sublandlord by Master Landlord (“Additional Rent”) payable under the Master Lease to the extent that such sums due under the Master Lease exceed the sums payable during calendar year 2021 (the “Base Year”). Sublandlord and Subtenant agree that this Sublease is intended to pass through to Subtenant Subtenant’s Share of all financial obligations imposed on Sublandlord pursuant to the Master Lease to the extent that such financial obligations exceed those payable during the Base Year; provided, however, that in no event shall Subtenant be responsible, and Additional Rent shall not include, any costs or expenses resulting from Sublandlord’s negligence, willful misconduct or breach of the provisions of the Master Lease. Any ambiguity in the terms of this Sublease shall be construed in accordance with such intention. The term “Subtenant’s Share” as used in this Sublease shall mean the percentage determined by dividing the rentable square footage of the Premises set forth in this Sublease by the rentable square footage of the Master Premises (16,238) and multiplying the quotient by 100, which the parties agree shall be thirty-four and 7/100ths percent (34.07%).

 

2


(c) Promptly following Sublandlord’s receipt from Master Landlord of a statement showing the amounts for which Sublandlord is responsible as “Lessee” under the Master Lease for the Base Year, Sublandlord shall provide Subtenant a statement showing the total expenses for the Base Year paid by Sublandlord. If Master Landlord does not provide such statement, Sublandlord shall prepare its own statement for showing the total expenses paid for the Base Year. Commencing January 1, 2022, Sublandlord shall notify Subtenant of Subtenant’s Share of any increases or decreases in such expenses over those incurred in the Base Year. In the event the total of the monthly payments which Subtenant has made for the prior calendar year is less than Subtenant’s Share of such expenses, then Subtenant shall pay the difference in a lump sum within thirty (30) days after receipt of a statement from Sublandlord. Overpayment by Subtenant shall be credited to Subtenant’s account, or returned to Subtenant if this Sublease has previously terminated. The obligations in the previous two (2) sentences shall survive the expiration or earlier termination of this Sublease. Subtenant shall have the right, for a period of sixty (60) days following Subtenant’s receipt of the statement showing the total actual expenses for prior calendar year, to audit Sublandlord’s records regarding such expenses. If Subtenant does not complete the audit within such 60-day period, Subtenant shall be deemed to have waived its audit right and to have accepted the statement of actual expenses provided by Sublandlord. If Subtenant’s audit results in a determination that Sublandlord’s expenses charged to Subtenant exceeded by five percent (5%) or more Subtenant’s share of the total actual expenses for the prior calendar year, Sublandlord shall reimburse Subtenant for the cost of Subtenant’s audit.

4. Security Deposit. Within two (2) business days following Subtenant’s receipt of Master Landlord’s written consent to this Sublease, Subtenant shall deposit with Sublandlord the sum equal to one Monthly Base Rent in the amount of Twenty Eight Thousand Five Hundred Eighty Seven Dollars and No Cents ($28,587.00) (the “Security Deposit”) as security for Subtenant’s performance of its obligations under this Sublease. If Subtenant breaches any provision hereof, Sublandlord may, at its option, without notice to Subtenant, apply all or part of the Security Deposit to cure such breach and compensate Sublandlord for any loss or damage caused by such breach. If Sublandlord so applies any portion of the Security Deposit, Subtenant, within seven (7) days after demand therefor, shall restore the Security Deposit to its original amount. The Security Deposit is not an advance payment of Rent or measure of damages. Any unapplied portion of the Security Deposit shall be returned to Subtenant within 60 days after the latest to occur of (a) the expiration of the Sublease Term, or (b) Subtenant’s surrender of the Subleased Premises as required hereunder.

5. Place of Payment of Rent. All Monthly Base Rent, Additional Rent and all other amounts payable to Sublandlord under this Sublease shall be paid to Sublandlord when due, without prior notice or demand and without deduction or offset, in lawful money of the United States of America payable to Cosmo Co., USA Inc, 3030 17th Street, San Francisco, CA 94110, Attention: Atman Buch, or to such other address as Sublandlord shall designate in writing. All of the terms of Section 13.4 (Late Charges) and Section 13.5 (Interest) of the Master Lease shall apply with respect to any late payment of Rent.

 

3


6. Use. The Premises shall be used and occupied only as permitted pursuant to Section 1.7 of the Master Lease (any use allowable under PDR-1-G zoning described in San Francisco Planning Code section 210.3 et seq.), and for no other purpose. Sublandlord acknowledges that Subtenant may, from time to time, have car prototypes in the Premises for testing purposes.

7. Incorporation of Master Lease Terms.

Except as may be inconsistent with the terms contained in this Sublease, this Sublease is subject and subordinate to all of the terms and conditions of the Master Lease and the Master Lease is incorporated herein in its entirety by this reference. Subtenant hereby assumes and agrees to perform the obligations of Sublandlord, as “Lessee”, under the Master Lease as set forth herein as such relates to the Premises. Neither Sublandlord nor Subtenant shall commit or permit to be committed any act or omission which would violate any term or condition of the Master Lease. Neither Sublandlord nor Subtenant shall do nor permit anything to be done which would cause the Master Lease to be terminated or forfeited by reason of any right of termination or forfeiture reserved or vested in Master Landlord under the Master Lease, and each party shall indemnify and hold the other harmless from and against all claims, liabilities, judgments, costs, demands, penalties, expenses, and damages of any kind whatsoever, including, without limitation, reasonable attorneys’ fees and court costs, (“Claims”) to the extent incurred by the other party by reason of any failure on the part of indemnifying party to perform any of the obligations of “Lessee” under the Master Lease which such indemnifying party is obligated hereunder to perform pursuant to this Sublease, and such indemnity and hold harmless shall survive the expiration or sooner termination of this Sublease. Subtenant agrees that as of the Commencement Date, it will have read and be familiar with the Master Lease. Notwithstanding the foregoing incorporation of the terms and conditions of the Master Lease, Sublandlord shall not be responsible for the performance of any obligations to be performed by Master Landlord under the Master Lease, and Subtenant shall look solely to Master Landlord for the performance of such obligations. Sublandlord shall not be liable to Subtenant for any failure by Master Landlord to perform its obligations under the Master Lease, nor shall such failure by Master Landlord excuse performance by Subtenant of its obligations hereunder; provided, however, that Sublandlord shall, upon Subtenant’s request, exercise its rights under the Master Lease to enforce Master Landlord’s obligations under the Master Lease. Notwithstanding anything herein contained, with respect to the services or rights to which Sublandlord is entitled under the Master Lease, Subtenant shall look solely to the Master Landlord under the Master Lease, and the obligations of Sublandlord hereunder shall be limited to making a demand upon Master Landlord to perform its obligations. The foregoing is not intended to limit Sublandlord’s obligations to be performed under this Sublease.

Sublandlord and Subtenant agree that as between Sublandlord and Subtenant the time periods for performance as set forth in the Master Lease, are modified to be two (2) days less than that given to Sublandlord, as tenant, under the Master Lease, and the following sections of the Master Lease shall not be applicable to this Sublease: Sections 1.1 through 1.6, 1.9, 2.2, 2.3, 3, 5, 12, 15, 51, 54, 56, 57, 59, 61, 67, and 71.

In all provisions of the Master Lease requiring “Lessee” to designate Master Landlord and as an additional or named insured on its insurance policy, Subtenant shall be required to so designate Master Landlord and any individual, party or entity as reasonably required by Master Landlord, on its insurance policy.

 

4


As provided in Section 70 of the Master Lease, to the extent that Sublandlord’s rental obligation is abated or reduced pursuant to the Master Lease, the Rent hereunder shall be abated or reduced in the same proportion and period as the abatement or reduction under the Master Lease. Subtenant shall not be entitled to any further abatement or reduction in Rent.

8. Condition and Acceptance of the Premises. Subtenant acknowledges that: (a) it has been given an opportunity to inspect and measure the Premises, (b) it has been advised by Sublandlord to satisfy itself with respect to the size and condition of the Premises (including but not limited to the electrical, HVAC and fire sprinkler systems, security, environmental aspects, and compliance with Applicable Requirements and the Americans with Disabilities Act), and their suitability for Subtenant’s intended use, (c) Subtenant has made such investigation as it deems necessary with reference to such matters and assumes all responsibility therefor as the same relate to its occupancy of the Premises, and (d) it is not relying on any representation as to the Premises made by Sublandlord. Sublandlord, at its sole cost and expense, shall deliver the Premises in good working order and condition, including but not limited to: the Premises being demised including all controls, lighting, HVAC, electrical„ plumbing, fixtures, and shall cure any deficiencies, at its sole cost and expense, during the initial 90 days following the Commencement Date if identified by Subtenant. Subject to the preceding sentence, by execution of this Sublease, Subtenant accepts the Premises without any representation or warranty by Sublandlord or Master Landlord as to the condition of the Premises and appurtenances or as to the use or occupancy which may be made thereof. Notwithstanding the foregoing, Sublandlord shall remain responsible for, and Subtenant shall have no obligation to perform, any work or make any payment required (1) to bring the Premises into compliance with applicable laws where such non-compliance existed on the Commencement Date of this Sublease unless the need for such work is triggered by Subtenant’s specific use of the Premises or (2) to remedy a breach or default under the Master Lease existing as of the Commencement Date.

9. Maintenance and Repair. Subtenant shall keep the Premises in good order and, with respect to the Premises, repair and perform all maintenance, repair and replacement obligations of “Lessee” required under the Master Lease as such relates to the Premises; provided, however, that Sublandlord shall retain responsibility for obtaining the contracts for security services, fire alarm monitoring, tree service/sidewalk cleaning, security camera monitoring and pest control (the “Services”). Subtenant shall reimburse Sublandlord on a monthly basis Subtenant’s Share of the costs incurred by Sublandlord in performing the Services. As of the date of this Sublease, Subtenant’s Share of the cost of the Services is $373.38 per month, which shall be paid together with the Monthly Base Rent. Sublandlord shall reconcile the actual amount of providing the Services against the amounts paid by Subtenant on a quarterly basis, and Subtenant shall reimburse Sublandlord for any amount underpaid, or shall receive a credit for any amount overpaid. Additionally, Sublandlord shall maintain the contract for the maintenance of the HVAC system serving the Premises (the “HVAC Services”). Subtenant shall reimburse Sublandlord on a monthly basis Subtenant’s Share of the costs incurred by Sublandlord in performing the HVAC Services. As of the date of this Sublease, Subtenant’s Share of the cost of the HVAC Services is $660 every six (6) months, which shall be paid by Subtenant in the amount of $110.00 per month together with the Monthly Base Rent. Sublandlord shall reconcile the actual amount of providing the HVAC Services against the amounts paid by Subtenant on an annual basis, and Subtenant shall reimburse Sublandlord for any amount underpaid, or shall receive a credit for any amount overpaid.

 

5


10. Utilities, Exterior Graffiti Removal. Subtenant shall pay for all separately metered water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Premises, together with any taxes thereon. There shall be no abatement of rent and Sublandlord shall not be liable in any respect whatsoever for the inadequacy, stoppage, interruption or discontinuance of any utility or service due to riot, strike, labor dispute, breakdown, accident, repair or other cause beyond Sublandlord’s reasonable control or in cooperation with governmental request or directions. In addition, Sublandlord shall maintain responsibility for cleaning exterior windows and all doors of the Premises, including removal of graffiti. Sublandlord shall be responsible for timely responding to any and all graffiti notices provided by the City and County of San Francisco. Subtenant shall reimburse Sublandlord for the costs of such performance within fifteen (15) days following Subtenant’s receipt of an itemized invoice from Sublandlord.

11. Insurance. Subtenant shall obtain and keep in force with respect to the Premises all of the policies of insurance required to be maintained by “Lessee” under the Master Lease which is incorporated therein, and such policies of insurance shall include as additional insureds Master Landlord and Sublandlord; provided, however, that Subtenant shall not be deemed the “Insuring Party” under Section 8.3 of the Master Lease. Without affecting any other rights or remedies, Sublandlord and Subtenant each hereby release and relieve the other, and waive their right to recover damages against the other, for loss of or damage to its property. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto.

12. Alterations. Subtenant shall not make any alteration, addition, improvement or change to the Premises (including, but not limited to any alteration of the paint color or carpeting in the Premises or installation of any security system other than as permitted in Paragraph 14 below) without Master Landlord’s prior written consent which may be withheld or conditioned in accordance with the Master Lease and Sublandlord’s prior written consent, which consent may be granted subject to any reasonable conditions which Sublandlord may impose, but shall not be unreasonably withheld or delayed. Sublandlord shall, at its sole cost and expense in accordance with applicable laws and pursuant to all required permits, cause to be completed (i) installation of a floor to ceiling wall between Bay 1 and Bay 2, and (ii) installation of a door between the mezzanines of Bay 1 and Bay 2 with card key access between the spaces (the “Tenant Improvements”). Sublandlord shall commence the Tenant Improvements work following the Effective Date and shall use commercially reasonable efforts to complete the Tenant Improvements prior to the Commencement Date.

13. Assignment and Subletting. Subtenant shall have no right to assign this Sublease or sublet all or any portion of the Premises or allow the Premises to be occupied by persons other than the employees and/or agents of Subtenant, except upon consent by Sublandlord and Master Landlord, which consent shall be subject to the terms of the Master Lease and applied to Subtenants; provided, however, that Sublandlord shall not withhold its consent to an assignment of this Sublease to a parent, affiliate, division, subsidiary and successors through merger or change of ownership, and shall use reasonable efforts, at no cost or liability to Sublandlord, to obtain

 

6


Master Landlord’s consent thereto (which consent may be given or withheld in accordance with the terms of the Master Lease). Any assignment or sublease in violation of this Paragraph 13 shall be deemed void and shall constitute a default by Subtenant under this Sublease. If the rent paid by any sub-sublessee exceeds the amount of Base Rent, Subtenant shall pay to Sublandlord fifty percent (50%) of the amount by which the sub-sublease rent exceeds the Base Rent payable hereunder, after deducting standard brokerage subleasing fees, legal costs, free rent and sub-sublease improvement costs.

14. Security System. Subtenant shall have the right to use the existing security system in place for the building of which the Premises is a part or to install a security system within the Premises that is consistent and compatible with the existing system, all on terms and conditions mutually agreed to by the parties.

15. Condition of Premises. To Sublandlord’s actual knowledge, the Premises and Building Systems, including the roof, mechanical, electrical, plumbing and lighting, are in good working order and condition and materially in compliance with applicable laws.

16. Regular Maintenance to the Premises. Subtenant agrees to clean, maintain and keep the Premises in good working order and repair when necessary the following:

(a) All components of the plumbing and sewage systems in the Premises, which are specific to the Subtenant’s use and only if such damage or maintenance is associated with the Subtenant’s specific us of said systems. Subtenant shall not be responsible for maintaining or repairing sewage and plumbing systems for which it has no direct control over. Sublandlord shall not be responsible for backed up toilets, sinks dishwashers or other appliances.

(b) All fixtures, interior walls, floors, carpets, draperies, window coverings and ceilings in the Premises.

(c) All windows, doors, entrances and plate glass in the Premises.

(d) All electrical facilities and all equipment in the Premises, including all light fixtures, lamps, bulbs, tubes, fans, vents, exhaust equipment and systems.

(e) Any fire detection, extinguisher equipment, and fire alarm systems in the Premises.

(f) Any and all items, fixtures or improvements installed by Subtenant.

17. Sublandlord Right to Financial Review. At such time as Subtenant becomes a publicly traded company, Sublandlord shall obtain Subtenant’s public filings online. However, if Subtenant is not publicly traded by December 31, 2020, at any subsequent time during the Sublease Term until the Subtenant becomes publicly listed with published financials, but not more than twice during the calendar year, Sublandlord may require Subtenant to provide Sublandlord with a current financial statement and financial statements of the two (2) years prior to the current financial statement year, which shall not be unreasonably withheld and provided within ten (10) days from such request. Notwithstanding anything to the contrary set forth above, Subtenant shall not be required to provide any of its financial information prior to the completion of the

 

7


merger between Subtenant and SPAQ; provided however, if Subtenant chooses not to, or is unable to complete the aforementioned merger with SPAQ by December 31, 2020, Sublandlord shall have full right to review financials as set forth above. Such statements shall be prepared in accordance with generally accepted accounting principles and, if such is the normal practice of Subtenant, shall be audited by an independent certified public accountant, or if not, Subtenant shall provide the most recent unaudited financial statements as are then available certified by Subtenant’s chief financial officer or chief accounting officer (or the person filling the most comparable role) to be true and correct and free from material mis-statement).

18. Building Hours and Access. Subtenant shall have access to the Premises seven (7) days per week, twenty-four (24) hours per day.

19. Signage. Subtenant shall have the right, subject to Sublandlord and Master Lessor’s prior written consent, not to be unreasonably withheld, as to the size, content and location, and compliance with the Applicable Requirements to install its signage to the exterior of the Building at Subtenant’s sole cost and expense. Subtenant shall be responsible for the maintenance and repair of such signage throughout the Sublease Term. Subtenant shall be responsible for all damage to the Building resulting from the installation of its signage. Upon the expiration or earlier termination of this Sublease, Subtenant shall remove the signage and repair any damage to the Building resulting from the removal of such signage.

20. Default.

(a) The occurrence of any of the following shall constitute a “Default” by Subtenant: (i) failure to pay Rent or any other amount within two (2) business days after written notice that such payment is past due; (ii) all those items of default set forth in the Master Lease where the obligation is incorporated in this Sublease which remain uncured after the cure period provided in the Master Lease; or (iii) Subtenant’s failure to perform timely and remain uncured after fifteen (15) days written notice of the default, any other provision of this Sublease. In the event of a Default, Sublandlord shall have the remedies set forth in the Master Lease as if Sublandlord is Master Landlord. These remedies are not exclusive; they are cumulative and in addition to any remedies now or later allowed by law.

(b) Sublandlord has the remedy described in California Civil Code Section 1951.4 (landlord may continue lease in effect after Subtenant’s breach and abandonment and recover rent as it becomes due, if Subtenant has right to sublet or assign, subject only to reasonable limitations). Sublandlord may continue this Sublease in full force and effect, and Sublandlord shall have the right to collect rent and other sums when due. During the period Subtenant is in Default, Sublandlord may enter the Premises and relet them, or any part of them, to third parties for Subtenant’s account and alter or install locks and other security devices at the Premises. Subtenant shall be liable to Sublandlord for all reasonable direct costs Sublandlord incurs in reletting the Premises, including, without limitation, reasonable attorneys’ fees, brokers’ commissions, expenses of remodeling the Premises required by the reletting, and like costs, less what Subtenant can prove Sublandlord could have avoided if it had used reasonable efforts to mitigate its damages. Reletting may be for a period equal to, shorter or longer than the remaining term of this Sublease and rent received by Sublandlord shall be applied to (i) first, any indebtedness from Subtenant to Sublandlord other than rent due from Subtenant; (ii) second, all reasonable costs

 

8


incurred by Sublandlord in reletting, including, without limitation, brokers’ fees or commissions and reasonable attorneys’ fees, the cost of removing and storing the property of Subtenant or any other occupant, and the costs of repairing, altering, maintaining, remodeling or otherwise putting the Premises into condition as it was at the Commencement Date, normal wear and tear excepted; and (iii) third, Rent due and unpaid under this Sublease. After deducting the payments referred to in this Paragraph 16.(b), any sum remaining from the rent Sublandlord receives from reletting shall be held by Sublandlord and applied in payment of future Rent and other amounts as Rent and such amounts become due under this Sublease. In no event shall Subtenant be entitled to any excess rent received by Sublandlord.

(c) Subtenant shall also pay without notice, or where notice is required under this Sublease, promptly upon demand without any abatement, deduction, or setoff, as additional rent all sums, impositions, costs, expenses, and other payments which Subtenant in any of the provisions of this Sublease assumes or agrees to pay, and, in case of any nonpayment thereof, Sublandlord shall have, in addition to all other rights and remedies under this Sublease, all the rights and remedies provided at law or in equity in the case of nonpayment of rent.

(d) Sublandlord may accept Subtenant’s payments without waiving any rights under the Sublease, including rights under a previously served notice of default. No payment by Subtenant or receipt by Sublandlord of a lesser amount than any installment of Rent due or other sums shall be deemed as other than a payment on account of the amount due, nor shall any endorsement or statement on any check or accompanying any check or payment be deemed an accord and satisfaction; and Sublandlord may accept such check or payment without prejudice of Sublandlord’s right to recover the balance of such Rent or other sum or pursue any other remedy provided in this Sublease, at law or in equity. If Sublandlord accepts payments after serving a notice of default, Sublandlord may nevertheless commence and pursue an action to enforce rights and remedies under the previously served notice of default without giving Subtenant any further notice or demand. Furthermore, Sublandlord’s acceptance of Rent from Subtenant when the Subtenant is holding over without express written consent does not convert Subtenant’s tenancy from a tenancy at sufferance to a month-to-month tenancy. No waiver of any provision of this Sublease shall be implied by any failure of either party to enforce any remedy for the violation of that provision, even if that violation continues or is repeated. Any waiver by a party of any provision of this Sublease must be in writing. Such waiver shall affect only the provisions specified and only for the time and in the manner stated in the writing. No delay or omission in the exercise of any right or remedy by a party shall impair such right or remedy or be construed as a waiver thereof by such party. Sublandlord’s consent to or approval of any act by Subtenant which requires Sublandlord’s consent or approval shall not be deemed to waive or render unnecessary Sublandlord’s consent to or approval of any subsequent act by Subtenant. No act or conduct of Sublandlord, including, without limitation the acceptance of keys to the Premises shall constitute acceptance of the surrender of the Premises by Subtenant before the expiration of the Sublease Term. Only written notice from Sublandlord to Subtenant of acceptance shall constitute such acceptance of surrender of the Premises.

(e) For purposes of this Sublease, Sublandlord shall not be deemed in default hereunder unless and until Subtenant shall first deliver to Sublandlord twenty (20) days’ prior written notice, and Sublandlord shall fail to cure said default within said twenty (20) day period, or in the event Sublandlord shall reasonably require in excess of twenty (20) days to cure said default, shall fail to commence said cure with said twenty (20) day period, and thereafter diligently prosecute the same to completion within twenty (20) additional days.

 

9


(f) Notice of Event of Default under Master Lease. Sublandlord shall notify Subtenant of any Default under the Master Lease, or of any other event of which Sublandlord has actual knowledge which will impair Subtenant’s ability to conduct its normal business at the Premises, as soon as reasonably practicable following Sublandlord’s receipt of notice from Master Landlord of a Default or Sublandlord’s actual knowledge of such impairment.

21. Notices. All notices, demands or requests which may be or are required to be given under this Sublease shall be in writing and shall be given by personal delivery, or by certified or registered mail, return receipt requested, postage prepaid, or by Federal Express or similar overnight courier, charges prepaid, and addressed as follows:

 

         Sublandlord:    Cosmo Co USA Inc
     3030 17th Street
     San Francisco, CA 94110
     Attention: Atman Buch
     Email:
  Subtenant:    Fisker, Inc.
     1580 Francisco Street
     Torrance, CA 90501
     Attention: Geeta Fisker
     Email:

The addresses of the parties may be changed from time to time by notice given in the manner set forth in this Paragraph 17. Each notice, request, demand, advice or designation given under this Sublease shall be deemed properly given only upon actual receipt or refusal of delivery. When this Sublease requires service of a notice, that notice shall replace rather than supplement any equivalent or similar statutory notice, including any notices required by Code of Civil Procedure Section 1161 or any similar or successor statute. When a statute requires service of a notice in a particular manner, service of that notice (or a similar notice required by this Sublease) shall replace and satisfy the statutory service-of-notice procedures, including those required by Code of Civil Procedure Section 1162 or any similar or successor statute.

22. Surrender of Premises. Upon the expiration or earlier termination of this Sublease or the termination of Subtenant’s right of possession to the Premises, Subtenant shall surrender and vacate the Premises and deliver possession thereof to Sublandlord in accordance with all of Sublandlord’s duties as “Lessee” under the Master Lease relating to surrender of the Premises, excluding, however, any obligation to remove any alteration or improvement performed prior to the Commencement Date and excluding any obligation to remove any Hazardous Substances not released in the Premises by Subtenant or its employees, agents or invitees. At the request of Sublandlord, Subtenant shall promptly remove any alterations, installations, additions, and improvements made by or for Subtenant, excluding the Tenant Improvements (which Sublandlord shall be responsible to remove, if required by Master Landlord), but including any lines, and Subtenant shall repair any damage occasioned by the removal thereof, but only if Master Landlord

 

10


or Sublandlord required such removal as a condition to granting their consent to the performance of such installations, additions and improvements. If Subtenant shall fail to promptly remove any such alterations, installations, additions, and improvements, then such items may be removed by Sublandlord, and Subtenant shall promptly reimburse Sublandlord for any reasonable expenses incurred by Sublandlord in connection therewith, including, without limitation, the cost of removal thereof and of repairing any damage caused thereby, plus a fifteen percent (15%) administration fee. Subtenant shall also remove from the Premises all of Subtenant’s goods, effects, movable personal property, business and trade fixtures, furniture, machinery and trade equipment, and shall repair all damage resulting from such removal. Any of such items not so removed by Subtenant at the expiration or termination of this Sublease shall be conclusively deemed to have been abandoned by Subtenant, Subtenant shall not receive any cost or credit therefor, and Sublandlord may dispose of the same without any liability to Subtenant; provided, however, that Subtenant shall promptly reimburse Sublandlord for any reasonable expenses incurred by Sublandlord in connection therewith, including, without limitation, the cost of removal thereof and of repairing any damage caused thereby, plus a fifteen percent (15%) administration fee. The obligations of Subtenant set forth in this Paragraph shall survive the expiration or sooner termination of this Sublease.

23. Termination of Master Lease. This Sublease is, and shall at all times remain, subordinate to the Master Lease. Sublandlord shall not voluntarily terminate the Master Lease without the prior written consent of Subtenant, which consent may not be unreasonably withheld. Sublandlord acknowledges and agrees that the withholding of consent to any termination of the Master Lease that would result in the loss of Subtenant’s right of possession of the Premises or which would increase Subtenant’s financial obligations or materially increase any other of Subtenant’s obligations is conclusively deemed to be reasonable. In the event the Master Lease is terminated for any reason, then, on the date of such termination, this Sublease shall automatically terminate and be of no further force or effect without any liability owed to Subtenant by Master Landlord or by Sublandlord unless the termination is due to Sublandlord’s breach of the Master Lease or voluntary termination of the Master Lease and not due to Subtenant’s breach of the Sublease.

24. Consent of the Landlord. Subtenant acknowledges that Sublandlord must obtain the consent of Master Landlord to any subletting by Sublandlord. This Sublease shall not be effective unless and until Master Landlord signs a consent to this subletting satisfactory to Sublandlord and Subtenant. Sublandlord shall submit a request to Master Landlord a request for Master Landlord’s consent to this Sublease promptly following Subtenant’s execution of the same. Subtenant will sign such consent if required by Master Landlord as reasonably presented by Master Landlord. Whenever the consent of the Landlord is required under the Master Lease, Subtenant shall obtain the consent of both Sublandlord and the Master Landlord, but in all instances Subtenant shall first request and obtain the consent of Sublandlord before requesting the consent of the Master Landlord.

25. Hold Harmless. In addition to any other rights or remedies of Sublandlord hereunder, Subtenant, its officers, directors, successors and assigns hereby covenant and agree to indemnify, defend (using counsel reasonably determined by Sublandlord), and hold Sublandlord, its officers, directors, members, managers, partners, shareholders, employees, agents, successors and assigns (each, a “Sublandlord Party”) harmless from and against any and all Claims, which

 

11


Sublandlord and/or any Sublandlord Party may incur arising out of, involving, or in connection with, the use and/or occupancy of the Premises by Subtenant or Subtenant’s breach of the terms and conditions of this Sublease or the Master Lease, including, but not limited to, any Claims which occur as a result of Sublandlord’s breach of the Master Lease, which are directly or indirectly, and in whole or in part, due to Subtenant’s breach of this Sublease. Excluded from this indemnity are claims or expenses caused solely by the gross negligence or willful misconduct of Sublandlord or its employees, agents or contractors with respect to the Premises. Except to the extent caused solely by the gross negligence, willful misconduct or a default under this Sublease by a Subtenant Party (as defined below), Sublandlord hereby covenants and agrees to indemnify, defend (using counsel reasonably determined by Subtenant), and hold Subtenant, its officers, directors, members, managers, partners, shareholders, employees, agents, successors and assigns (each, a “Subtenant Party”) harmless from and against any and all Claims, which any Subtenant Party incurs resulting from Sublandlord’s breach of its obligations under this Sublease or the Master Lease. The provisions of this paragraph shall survive the expiration or earlier termination of this Sublease.

26. Estoppel. If Sublandlord or the Master Landlord requests that Subtenant provide an estoppel certificate or a subordination and attornment agreement, or a document of similar import, Subtenant shall provide Sublandlord and Master Landlord with same, and pursuant to the requirements of the Master Lease, within ten (10) days after Landlord’s or Sublandlord’s request for same is received by Subtenant pursuant to the Notices section herein. Subtenant acknowledges and agrees that any duty of the Master Landlord to provide Sublandlord with a non-disturbance agreement and/or any right of Sublandlord to same under the Master Lease shall not constitute a duty of Sublandlord, or a right of Subtenant, with respect to same.

27. Holding Over. Subtenant shall have no right to holdover. If Subtenant continues to occupy the Premises after the expiration of the Sublease Term without the express written consent of Sublandlord, Subtenant shall be a tenant at sufferance, or at the sole election of Sublandlord, a month to month tenancy, and the parties agree in either case that the reasonable rental value, if at sufferance, or the Rent, if a month to month tenancy, shall be Rent at the greater of (1) the monthly rate of one hundred fifty percent (150%) of the then current monthly Rent, or (2) the fair market value for the Premises as reasonably determined by the market; provided however, if such holdover by Subtenant causes Sublandlord to be in holdover under the Master Lease, then such Rent shall be the greater of such amount set forth above, or the any and all Rent due to Master Landlord from Sublandlord under the holdover provisions of the Master Lease. Notwithstanding the foregoing, and in addition to all other rights and remedies on the part of Sublandlord if Subtenant fails to surrender the Premises upon the termination or expiration of this Sublease, in addition to any other liabilities to Sublandlord accruing therefrom, Subtenant shall indemnify, defend and hold Sublandlord harmless from all Claims resulting from such failure, including, without limitation, any Claims by any third parties based on such failure to surrender and any proven lost profits to Sublandlord resulting therefrom.

28. Exculpation. No principal, partner, member, officer, director, trustee or affiliate of Sublandlord or of Subtenant shall have any personal liability under any provision of this Sublease, including with respect to any representation or warranty made hereunder by such party.

 

12


29. Effect of Conveyance. As used in this Sublease, the term “Sublandlord” means the holder of the “tenant’s” leasehold interest under the Master Lease. In the event of any assignment or transfer of the “tenant’s” interest under the Master Lease, which assignment or transfer may occur at any time during the Sublease Term in Sublandlord’s sole discretion (and subject to the Master Lease), Sublandlord shall be and hereby is entirely relieved of the future performance of all covenants and obligations of Sublandlord hereunder if such future performance is assumed by the transferee in a writing and a copy thereof is delivered to Subtenant. Sublandlord may transfer and deliver any security of Subtenant to the transferee of the “tenant’s” interest under the Master Lease, and thereupon Sublandlord shall be discharged from any further liability with respect thereto if such transferee assumes in writing Sublandlord’s obligations with regard to such security in a writing delivered to Subtenant.

30. Waiver of Redemption. Subtenant hereby expressly waives any and all rights of redemption to which it may be entitled by or under any present or future laws in the event Sublandlord shall obtain a judgment for possession of the Premises.

31. Brokers. Each party represents to the other that other than Touchstone Commercial Partners, Inc, (“Sublandlord’s Broker”), and Tri Commercial and The Klabin Company and Jones Lang Lasalle, Inc., (“Subtenant’s Broker”), no other brokerage commission or finder’s fee has been incurred or is payable in connection with this transaction. It is understood that Sublandlord shall pay Sublandlord’s Broker and Subtenant’s Broker, pursuant to a separate agreement. Subtenant shall indemnify and hold Sublandlord harmless from and against any claim for brokerage or other commissions, or for a lien under any applicable broker’s lien law, asserted by any broker, agent or finder employed by Subtenant or with whom Subtenant has dealt, other than Tenant’s Broker. Sublandlord shall indemnify and hold Subtenant harmless from and against any claim for brokerage or other commissions asserted by any broker, agent or finder employed by Sublandlord or with whom Sublandlord has dealt. The parties’ indemnities set forth in this Paragraph shall survive the expiration or earlier termination of the Sublease Term.

32. Due Authority. If Subtenant signs as a corporation, such corporation represents and warrants that each of the persons executing this Sublease on behalf of Subtenant has the authority to bind Subtenant, Subtenant has been and is qualified to do business in the State of California, that the corporation has full right and authority to enter into this Sublease, and that all persons signing on behalf of the corporation were authorized to do so by appropriate corporate actions. If Subtenant signs as a partnership, trust or other legal entity, each of the persons executing this Sublease on behalf of Subtenant represent and warrant that they have the authority to bind Subtenant, Subtenant has complied with all applicable laws, rules and governmental regulations relative to its right to do business in the State of California and that such entity on behalf of the Subtenant was authorized to do so by any and all appropriate partnership, trust or other actions. Subtenant agrees to furnish promptly upon request a corporate resolution, proof of due authorization by partners, or other appropriate documentation evidencing the authorization of Subtenant to enter into this Sublease.

33. Waiver of Jury Trial. THE PARTIES EACH WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LEGAL REQUIREMENTS, ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS LEASE AND AGREE THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

13


34. Attorney Fees. In the event either party is required or elects to take legal action against the other party to enforce the provisions of this Sublease, then the prevailing party in such action shall be entitled to collect from the other party its reasonable costs and expenses incurred in connection with the legal action (including reasonable attorneys’ fees and court costs).

35. Waiver of Damages. Except as otherwise provided in this Sublease, in no event shall either party be liable for, and each party hereby waives any claim for, any indirect, consequential, special or punitive damages, including loss of profits or business opportunity, arising under or in connection with this Sublease.

36. Entire Agreement. This Sublease (along with the incorporated terms and conditions of the Master Lease) contains all of the terms, covenants and conditions agreed to by Sublandlord and Subtenant and may not be modified orally or in any manner other than by an agreement in writing signed by all the parties to this Sublease or their respective successors in interest.

37. Exhibits; Recitals. All exhibits attached hereto are incorporated in this Sublease, except as expressly excluded herein. The recitals set forth above are true and accurate and hereby affirmed by Sublandlord and Subtenant.

38. Counterparts. This Sublease may be executed in any number of counterparts, each of which shall be deemed an original, and when taken together they shall constitute one and the same sublease.

39. Disclosure. Pursuant to San Francisco Administrative Code Chapter 38, Sublandlord and Subtenant agree to the provisions of this Paragraph to confirm their express agreement as to which party will make and pay for any improvements to the Premises or the Building that may be required by any applicable provisions of Title 28 Sections 36.304 and 36.305 of the Code of Federal Regulations and any similar state and local laws (“Required Disability Access Improvements”). Accordingly, Sublandlord and Subtenant agree as follows: Subtenant shall be obligated to make and pay for any Required Disability Access Improvements to the Premises to the extent triggered by Subtenant’s specific use of the Premises beyond the proposed use or any alterations performed by or on behalf of Subtenant. Sublandlord may, in Sublandlord’s sole and absolute discretion, elect to make any Required Disability Access Improvements that are the obligation of Subtenant hereunder and in such case Subtenant shall reimburse Sublandlord for all reasonable out-of-pocket related costs and expenses. Any Required Disability Access Improvements made and paid for by Subtenant shall be included in “Basic Operating Costs” as defined in the Master Lease, except to the extent the same are subject to an exclusion set forth in the Master Lease. Sublandlord and Subtenant further agree that each party will use reasonable efforts to notify the other party if either makes alterations or other changes to the Premises or the Building that might impact accessibility under any applicable laws. The provisions of this Paragraph shall not limit the generality of other provisions of the Sublease or Master Lease governing alterations and compliance with applicable laws.

 

14


40. Disability Access Obligations Notice. Subtenant shall execute and return to Sublandlord the Disability Access Obligations Notice attached hereto as Exhibit C upon the signing of this Sublease by both parties.

[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]

 

15


IN WITNESS WHEREOF, the parties have caused this Sublease to be executed by their duly authorized representatives as of the day and year first above written.

 

SUBLANDLORD”:               SUBTENANT”:
COSMO CO., USA INC.,      FISKER INC.,
a Delaware corporation 9/21/2020      a Delaware corporation 9/21/2020
By:  

/S/ Atman Buch

     By:   

/S/ Geeta Gupta

Name: Atman Buch      Name: Geeta Gupta
Its: Chief Executive Officer      Its:
       By:   

 

       Name:
       Its:


Consent to Sublease

By execution of this Consent to Sublease (“Consent”), Mindful Investments, L.P., a California limited partnership and subsequently transferred to Manoutchehr Movassate and Jaleh Movassate, Trustees of the Movassate Family Trust,(“Master Landlord”) consents to the sub-sublease of the “Premises” (as described in the Sublease) pursuant to the Sublease Agreement dated as of September __, 2020 (“Sublease”), by and between Cosmo Co., USA Inc. (formerly Vystic Incorporated), a Delaware corporation (“Sublandlord”) and Fisker Inc., a Delaware corporation (“Subtenant”). Neither the Sublease nor this Consent shall (i) release or discharge Sublandlord under that certain Standard Industrial/Commercial Single-Tenant Lease—Gross dated March 28, 2017, as supplemented by that certain Addendum to Lease dated March 28, 2017 (as supplemented, the “Master Lease”), respecting the entire building commonly known as 3030 17th Street, San Francisco, California, consisting of approximately 16,238 rentable square feet of space from any liability, whether past, present or future, under the Master Lease; (ii) be construed to: (a) modify, waive, release or otherwise affect any of the terms, covenants, conditions, provision or agreements of the Master Lease; (b) waive any breach by Sublandlord of the Master Lease; (c) waive any rights of Master Landlord as landlord thereunder; or (d) enlarge or increase the obligations of Master Landlord as landlord thereunder; or (iii) be construed as a consent by Master Landlord to any further sublease or assignment of the Master Lease or any portion thereof, or any rights or interests therein, by Sublandlord or Subtenant.

 

MASTER LANDLORD:

Manoutchehr Movassate and Jaleh Movassate

Trustees of the Movassate Family Trust

By:  

/S/ Manou Movassate

   9/23/2020
Name:     Manou Movassate   
Its:  

 

  


EXHIBIT A

Master Lease

(See attached)


EXHIBIT B

Depiction of Premises


EXHIBIT C

Disability Access Obligations Notice

DISABILITY ACCESS OBLIGATIONS UNDER

SAN FRANCISCO ADMINISTRATIVE CODE CHAPTER 38

Before you, as the Tenant, enter into a lease with us, the Landlord, for the premises located at 3030 17th Street, San Francisco, California 94110 (the “Property”), please be aware of the following important information about the lease:

You May Be Held Liable for Disability Access Violations on the Property. Even though you are not the owner of the Property, you, as the tenant, as well as the Property owner, may still be subject to legal and financial liabilities if the leased Property does not comply with applicable Federal and State disability access laws. You may wish to consult with an attorney prior to entering this lease to make sure that you understand your obligations under Federal and State disability access laws. The Landlord must provide you with a copy of the Small Business Commission Access Information Notice under Section 38.6 of the Administrative Code in your requested language. For more information about disability access laws applicable to small businesses, you may wish to visit the website of the San Francisco Office of Small Business or call 415-554-6134.

The Lease Must Specify Who Is Responsible for Making Any Required Disability Access Improvements to the Property. Under City law, the lease must include a provision in which you, the Tenant, and the Landlord agree upon your respective obligations and liabilities for making and paying for required disability access improvements on the leased Property. The Lease must also require you and the Landlord to use reasonable efforts to notify each other if they make alterations to the leased Property that might impact accessibility under federal and state disability access laws. You may wish to review those provisions with your attorney prior to entering this lease to make sure that you understand your obligations under the lease.

By signing below I confirm that I have read and understood this Disability Access Obligations Notice.

 

Signed:   /S/ Geeta Gupta , Tenant
Signed:   /S/ Atman Buch , Landlord

PLEASE NOTE: The Property may not currently meet all applicable construction-related accessibility standards, including standards for public restrooms and ground floor entrances and exits.”

Exhibit 10.8

LEASE AGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is made and entered into as of October 2, 2020, by and between Lessor and Lessee, as defined below. Lessor and Lessee are hereinafter sometimes individually referred to as “Party,” or collectively referred to as “Parties.” Lessor hereby agrees to lease to Lessee and Lessee hereby agrees to lease from Lessor, the Premises, as defined below, pursuant to all of the terms and conditions set forth below:

ARTICLE 1 – DEFINED TERMS, GENERAL CONDITIONS AND PREMISES

Section 1.1 Defined Terms and Covenants. The terms listed below (“Defined Terms”) shall have the following meanings throughout this Lease, and the covenants described in this Section 1.1 shall have the same effect as the terms and conditions of the Lease:

(a) Lessor: Continental 830 Nash LLC, a Delaware limited liability company, as to an undivided 66% interest, and Continental Rosecrans Aviation L.P., a California limited partnership, as an undivided 34% interest, as tenants in common

(b) Lessee: Fisker Inc. a Delaware corporation

(c) Premises: The Building (as hereinafter defined) located at 1888 Rosecrans Avenue in the City of Manhattan Beach, California.

The Premises shall encompass the entire square footage of the Building.

(d) Building: The three-story office building located on the Property. The Building is shown on Exhibit “A-1”.

(e) Property: The mixed use project commonly referred to as Continental Park (depicted in Exhibit “A-2”).

(f) Rentable Square Footage of the Building/Premises: 72,649 rentable square feet. For purposes of this Lease, rentable area shall be calculated pursuant to Standard Method for Measuring Floor Area in Office Buildings, ANSI Z65.1—2017 and its accompanying guidelines (the method for measurement of rentable and usable area set forth above shall be called “BOMA”). Lessor has retained SAAIA to measure the Premises in accordance with BOMA and shall deliver such remeasurement to Lessee and Lessee’s architect within sixty (60) days following the date hereof. If such remeasurement confirms that the rentable square footage measurement set forth above is in excess of or lower than the square footage number which would have resulted had square footage been properly calculated using BOMA, any payments due either party (or other rights between Lessor and Lessee) based upon the amount of rentable area of the Premises shall be proportionally, retroactively and prospectively reduced or increased, as appropriate, to reflect the actual rentable area, as properly remeasured under BOMA, and Lessor and Lessee shall confirm the same in writing.

(g) Early Delivery Date: Upon mutual execution and delivery of this Lease, Lessee’s delivery of the Letter of Credit described in subsection “l” below, and Lessor’s lender’s approval of this Lease. On the Early Delivery Date, Lessor shall provide Lessee with early access to the Building in order to allow Lessee to (i) commence constructing its “Lessee Improvements” (including the Contemplated Leasehold Improvement) in accordance with the terms of the Construction Work Letter and (ii) conduct Lessee’s business operations, including hosting promotional events in connection with the Spartan Merger.

(h) Lessee’s Pro Rata Share (subject to Article 4): 100%.

(i) Term and Option to Extend: The Lease term shall be sixty-six (66) months following the Commencement Date (the “Term”), subject to the terms of Section 2.3 below. Lessee shall have one (1) option to extend the Term for five (5) years per option, pursuant to Rider No. One attached hereto.

 

1

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(j) Commencement Date: November 1, 2020. Lessee shall have early access to the Premises, at no charge, from the Early Delivery Date, subject to Lessee complying with all terms, conditions, covenants, rules and regulations of the Lease (other than payment of Rent) as of the date Lessee first occupies the Premises, including, but not limited to, the Article 14 insurance requirements and the Section 14.1 and Section 35.15(e) indemnity protections.

(k) Base Rental: Lessee shall not be charged any Base Rental from the Early Delivery Date, through the day preceding the Commencement Date. Subject to Section 3.3 below, commencing on the Commencement Date and continuing through the expiration of the Term, Lessee’s Base Rental shall be as follows:

 

Period

   Monthly Base Rental      Monthly Base Rental per RSF  

November 1, 2020 - October 31, 2021

   $ 272,433.75      $ 3.75  

November 1, 2021 - October 31, 2022

   $ 280,606.76      $ 3.86  

November 1, 2022 - October 31, 2023

   $ 289,024.97      $ 3.98  

November 1, 2023 - October 31, 2024

   $ 297,695.71      $ 4.10  

November 1, 2024 - October 31, 2025

   $ 306,626.59      $ 4.22  

November 1, 2025 - April 30, 2026

   $ 315,825.38      $ 4.35  

(l) Letter of Credit: Lessee shall provide Lessor with a letter of credit in the sum of $1,250,000.00, in accordance with Section 5 of the Lease.

(m) Base Year: Calendar year 2021 for all “Operating Expenses” (as defined in Section 4.3 below) other than “Taxes” (as defined in Section 4.3(m) below), and calendar year 2020 for Taxes.

(n) Use: General office use and ancillary use as an automobile design studio. Subject to Article 6.

(o) Parking Privileges: Lessee shall have the obligation to lease all of the parking spaces on the surface parking areas on the Property (the “Parking Areas”) at the locations within the Parking Areas shown on the On-Site Parking Plan that is attached to this Lease as Exhibit “G”, consisting of 202 parking spaces (“Parking Spaces”). “Monthly Parking Charge” for the Parking Spaces is set forth on Exhibit “H” attached hereto. Lessee shall not be required to pay the Monthly Parking Charge for the first twelve (12) months of the Term (the “Parking Charge Abatement”).

(p) Common Area: means the following exterior areas of the Building (i) the Parking Areas, and (ii) any driveways, walkways, landscaped and hardscaped areas.

(q) Lessor’s Construction Allowance: $3.00 per rentable square foot of the Premises, subject to the provisions of the Construction Work Letter.

(r) Normal Hours: Monday through Friday, from 8:00 a.m. to 6:00 p.m., Saturday, from 9:00 a.m. to 1:00 p.m., excepting the following state and/or federal holidays: New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day. Lessee shall have access to the Premises twenty-four (24) hours per day, seven (7) days a week.

(s) Guarantors: None.

Section 1.2 General Conditions.

(a) Unless this Lease provides for a contrary standard, whenever in this Lease the consent or approval of the Lessor or Lessee is required, such consent or approval shall not be unreasonably withheld, conditioned or delayed (except, however, with respect to any Lessor consent, for matters which are reasonably likely to have an adverse effect on the Building’s plumbing, heating, mechanical, life safety, ventilation, air conditioning or electrical systems, which are reasonably likely to adversely affect the structural integrity of the Building, or which are reasonably

 

2

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


likely to adversely affect the exterior appearance of the Building, Lessor may withhold such consent or approval in its sole discretion but shall act in good faith; provided, however, Lessor’s consent with respect to any of the Contemplated Leasehold Improvements shall not be unreasonably withheld, conditioned or delayed). Lessee shall be entitled to rely upon any consent or approval delivered by either tenant in common constituting Lessor, and such other tenant in common shall not have any right to contest or rescind any such consent or approval received by Lessee; and

(b) Unless a contrary standard or right is set forth in this Lease, whenever the Lessor or Lessee is granted a right to take action, exercise discretion, or make an allocation, judgment or other determination, Lessor or Lessee shall act reasonably and in good faith and take no action which might result in the frustration of the reasonable expectations of a sophisticated tenant and a sophisticated landlord concerning the benefits to be enjoyed under this Lease.

Section 1.3 Lease of Premises. Lessor leases to Lessee, and Lessee leases from Lessor, the Premises.

ARTICLE 2 – EFFECTIVE DATE; COMMENCEMENT DATE; TERM CONVERSION

Section 2.1 Effective Date. This Lease will become effective (the “Effective Date”) upon the execution and delivery of the Lease by Lessee and Lessor. All of the terms, conditions, covenants, rules and regulations of the Lease (other than the payment of Rent) shall apply as of the Effective Date.

Section 2.2 Commencement Date. The Term of this Lease and the Rent shall commence on the Commencement Date determined pursuant to Section 1.1(j), subject to the terms of Section 3.3 below.

Section 2.3 Term Conversion. If the “Spartan Merger” (as defined in Rider No. Two attached hereto and incorporated by this reference) does not occur by December 31, 2020, then the terms of this Lease shall be modified as set forth on Rider No. Two. In addition, if Lessee desires to perform any construction in the Premises prior to the first to occur of the Spartan Merger or “Qualified Subsequent Merger” (as defined in Rider No. Two), then as a condition to Lessor’s approval of any such construction, Lessee shall provide to Lessor reasonable evidence that the cost of construction to be performed by Lessee does not exceed ten percent (10%) of Lessee’s then available cash, which evidence shall include applicable bank statements and construction budgets and contracts.

ARTICLE 3 – RENT

Section 3.1 Payment of Base Rental. Lessee shall pay the Base Rental, in advance, without prior notice, demand or billing statement, on or before the first day of each calendar month during the entire Term. Concurrently with Lessee’s execution of this Lease and the submission thereof for Lessor’s execution, Lessee shall deliver to Lessor the Base Rental payable hereunder for one full calendar month of the Term as set forth in Section 1.1(k), reflecting the fifty percent (50%) of Base Rental that is owed for November 2020 and December 2020 (i.e., the first and second months of the Term).

Section 3.2 Governmental Assessments. In addition to the Base Rental, Lessee shall pay, prior to delinquency, all personal property taxes, charges, rates, duties and license fees (collectively, “Assessments”) assessed against or levied upon Lessee’s occupancy of the Premises, or upon any Lessee Improvements, trade fixtures, furnishings, equipment or other personal property contained in the Premises (collectively, “Personal Property”). Lessee shall cause such Assessments upon Personal Property to be billed separately from the property of Lessor. Lessee hereby agrees to indemnify, defend and hold Lessor harmless from and against the payment of all such Assessments.

Section 3.3 Base Rental Abatement. Provided that Lessee is not then in default under this Lease (beyond any applicable notice and cure period), Lessee shall be entitled to an abatement of fifty percent (50%) of the Base Rental due under this Lease for the period of November 1, 2020 through October 31, 2021 (i.e., the first twelve (12) months of the Term) (the “Abated Base Rent”). Lessee acknowledges that the foregoing Base Rental abatement right has been granted to Lessee as additional consideration for entering into this Lease and for agreeing to pay the Rent and perform the other terms and conditions required under this Lease. Accordingly, if Lessee shall be in default under this Lease and shall fail to cure such default within the time, if any, permitted for cure under this Lease, then Lessee’s rights to further abatement of Base Rental provided herein shall automatically terminate until such time as the default has been cured.

 

3

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 3.4 Special Charges for Special Services. Lessee agrees to pay to Lessor, within ten (10) business days following written demand, all charges, including labor costs, for any services, goods and/or materials, which shall include Lessor’s administrative cost surcharge thereon not to exceed five percent (5%), furnished by Lessor at Lessee’s request which are not otherwise required to be furnished by Lessor under this Lease without separate charge or reimbursement.

Section 3.5 Definition of Rent. Any and all payments of Base Rental (including any and all increases thereof) and any and all taxes, fees, charges, costs, expenses, insurance obligations, late charges, interest, and all other payments, disbursements or reimbursements which are attributable to, payable by or the responsibility of Lessee under this Lease (herein collectively referred to as the “Additional Rent”), constitute “rent” within the meaning of California Civil Code Section 1951(a). Base Rental and Additional Rent are herein collectively referred to as “Rent.” Any Rent payable to Lessor by Lessee for any fractional month shall be prorated based on a three hundred sixty-five (365) day year. All payments owed by Lessee under this Lease shall be paid to Lessor in lawful money of the United States of America at the Lessor’s Address for Payment of Rent set forth in Section 34.1 or such other address as Lessor notifies Lessee in writing from time to time. All payments shall be paid without deduction, setoff or counterclaim.

Section 3.6 Late Charge. Lessee acknowledges that the late payment of Rent will cause Lessor to incur damages, including administrative costs, loss of use of the overdue funds and other costs, the exact amount of which would be impractical and extremely difficult to ascertain. Lessor and Lessee agree that if Lessor does not receive a payment of Rent within five (5) business days after the date that such payment is due, Lessee shall pay to Lessor a late charge (“Late Charge”) equal to five percent (5%) of the delinquent amount, or the sum of twenty-five dollars ($25.00), whichever is greater, as liquidated damages for the damages which Lessor is likely to incur for the thirty (30) day period following the due date of such payment. Further, all portions of Rent not paid within thirty (30) days following its due date and all Late Charges associated therewith shall bear interest at the Interest Rate (as defined below) beginning on the thirty-first (31st) day following the due date of such Rent and continuing until such Rent, Late Charges and interest are paid in full. Notwithstanding the foregoing, no Late Charge shall be assessed by Lessor against the first delinquent payment of Rent during the Term as long as Lessee makes payment of Rent within five (5) business days after receipt of written notice from Lessor that such payment was not made when due. Acceptance of the Late Charge, and/or interest by Lessor shall not cure or waive Lessee’s default, nor prevent Lessor from exercising, before or after such acceptance, any and all of the rights and remedies for a default provided by this Lease or at law or in equity. Payment of the Late Charge is not an alternative means of performance of Lessee’s obligation to pay Rent at the times specified in this Lease. Lessee shall pay Lessor a fee of $30.00 for each check that Lessor shall receive from Lessee that is not honored by the bank upon which it is drawn. Furthermore, if two (2) checks given to Lessor by Lessee within any twelve (12) months period shall not be honored by the bank upon which it is drawn, Lessor, at its option, may require all subsequent payments made by Lessee to Lessor over the next twelve (12) months to be by certified check, cashier’s check, money order, or wire transfer. The term “Interest Rate” shall mean the lower of (a) the maximum interest rate permitted by law, or (b) twelve percent (12%) per annum. Whenever interest is required to be paid under this Lease, the interest shall be calculated from the date the payment was due (unless a late charge is assessed by Lessor, in which case the interest shall be calculated from the thirty-first (31st) day following the date the payment was due) or should have been due if correctly assessed or estimated (or any overcharge paid), until the date payment is made or the refund is paid or is credited against Rent next due. However, there shall not be any credit against Rent unless expressly allowed by the terms of this Lease.

Section 3.7 Disputes as to Payments of Rent. Lessee agrees to pay the Rent required under this Lease within the time limits set forth in this Lease. If Lessee receives from Lessor an invoice or statement, which invoice or statement is sent by Lessor in good faith in accordance with the terms hereof, and Lessee in good faith disputes whether all or any part of such Rent is due and owing, Lessee shall nevertheless pay to Lessor the amount of the Rent indicated on the invoice or statement until Lessee receives a final judgment from a court of competent jurisdiction (or when arbitration is permitted or required, receives a final award from an arbitrator) relieving or mitigating Lessee’s obligation to pay such Rent. In such instance where Lessee disputes its obligations to pay all or part of the Rent indicated on such invoice or statement, Lessee shall, concurrently with the payment of such Rent, provide Lessor with a letter or notice entitled “Payment Under Protest,” specifying in detail why Lessee is not required to pay all or part of such Rent. Lessee will be deemed to have waived its right to contest any past payment of Rent unless it has filed a

 

4

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


lawsuit against Lessor (or when arbitration is permitted or required, filed for arbitration and has served Lessor with notice of such filing), and has served a summons on Lessor, within one (1) year of such payment. Until an Event of Default by Lessee occurs beyond any applicable notice and cure period, Lessor shall continue to provide the services and utilities required by this Lease.

ARTICLE 4 – OPERATING EXPENSE ADJUSTMENTS

Section 4.1 Operating Expense Adjustments. Lessee shall pay to Lessor, in addition to the Base Rental due pursuant to Section 3.1, an Operating Expense Adjustment during each successive calendar year of the Term after the applicable Base Year, in the manner and at the times herein provided. Subject to the terms of this Lease, such payments shall become due and owing when (i) the Pro Rata Share of the aggregate annual Operating Expenses for any subsequent year of the Term exceeds the Pro Rata Share of the aggregate annual Operating Expenses for the Base Year for Operating Expenses set forth in Section 1.1(m) above, and (ii) the Pro Rata Share of the aggregate annual Taxes for any subsequent year of the Term exceeds the Pro Rata Share of the aggregate annual Taxes for the Base Year for Taxes set forth in Section 1.1(m) above (collectively, the “Excess Operating Expenses”). Should the Termination Date be other than the last day of a subsequent year of the Term, Operating Expense Adjustment for such year shall be prorated. This Article shall survive the termination of this Lease for a period of one (1) year.

Section 4.2 Procedure for Payment of Operating Expense Adjustments. Lessee shall pay any Excess Operating Expenses, as follows:

(a) Commencing on the Commencement Date, Lessor may, from time to time, but not more than once annually, by ten (10) business days written notice to Lessee, reasonably estimate in advance the amounts Lessee shall owe on a monthly basis for Excess Operating Expenses for any full or partial calendar year of the Term. In such event, Lessee shall pay such estimated amounts, on a monthly basis, on or before the first day of each calendar month, together with Lessee’s payment of Base Rental;

(b) Within one hundred fifty (150) days after the end of each calendar year, Lessor shall provide a statement (the “Statement”) to Lessee showing: (i) the amount of actual Operating Expenses for such calendar year, (ii) any amount paid by Lessee toward Excess Operating Expenses during such calendar year on an estimated basis, and (iii) any revised estimate of Lessee’s obligations for Excess Operating Expenses for the current calendar year;

(c) If the Statement shows that Lessee’s estimated payments were less than Lessee’s actual obligations for Excess Operating Expenses for such year, Lessee shall pay the difference, whether or not the Term has expired or terminated. If the Statement shows an increase in Lessee’s estimated payments for the current calendar year, Lessee shall pay the difference between the new and former estimates, for the period from January 1 of the current calendar year through the month in which the Statement is sent. Lessee shall make such payments within thirty (30) days after Lessor sends the Statement;

(d) If the Statement shows that Lessee’s estimated payments exceeded Lessee’s actual obligations for Excess Operating Expenses, Lessee shall receive a credit of such difference against payments by Lessee next due. If the Term shall have expired and no further payments of Excess Operating Expenses by Lessee shall be due, Lessee shall receive a refund of such difference within thirty (30) days after Lessor sends the Statement;

(e) So long as Lessee’s obligations hereunder are not materially adversely affected, Lessor reserves the right to reasonably change, from time to time, the manner or timing of the foregoing payments. No delay by Lessor in providing the Statement (or separate Statements) shall be deemed a default by Lessor or a waiver of Lessor’s right to require payment of Lessee’s obligations for actual or estimated Excess Operating Expenses; and

(f) If the Term commences other than on January 1, or ends other than on December 31, Lessee’s obligations to pay estimated and actual amounts toward Excess Operating Expenses for such first or final calendar years shall be prorated to reflect the portion of such years included in the Term. Such proration shall be made by multiplying the total estimated or actual (as the case may be) Excess Operating Expenses for such calendar years by a fraction, the numerator of which shall be the number of days of the Term during such calendar year, and

 

5

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


the denominator of which shall be 365. Lessee shall not be responsible for any Excess Operating Expenses which are first billed to Tenant more than two (2) calendar years after the earlier of the end of the calendar year to which such Excess Operating Expenses relate, provided that such cutoff shall not apply to Excess Operating Expenses levied by any governmental authority.

Section 4.3 Certain Defined Terms. “Lessee’s Pro Rata Share” means the ratio set forth in Section 1.1(h). “Operating Expenses” are defined to be the sum of all costs, expenses, and disbursements, of every kind and nature whatsoever, and the Taxes, incurred by Lessor in connection with the ownership, management, use, maintenance, operation, administration and repair of all or any portion of the Building and all areas appurtenant thereto which provide access to or otherwise benefit the Building, including, but not limited to, the following:

(a) All utility costs not otherwise charged (under this Lease) directly to or paid directly by Lessee or any other tenant of the Property;

(b) All wages and benefits and costs of employees or independent contractors or employees of independent contractors engaged in the operation, supervision, maintenance and security of the Building;

(c) All expenses for maintenance, security and safety services;

(d) Except as provided below and only to the extent allowed under subsection (i), all repairs to, replacements of, and physical maintenance of the Building, including the cost of all supplies, uniforms, equipment, tools and materials;

(e) All license, permit and inspection fees required in connection with the operation of the Building;

(f) All reasonable auditor’s or accounting fees and costs incurred in connection with the operation, maintenance, repair and replacement of the Building;

(g) All reasonable legal fees and costs incurred in connection with the operation, maintenance, repair and replacement of the Building;

(h) All reasonable fees for management services provided by a management company and/or by Lessor and/or an agent of Lessor (subject to subsection “21” below);

(i) Capital improvements or replacements: (A) which are intended as a labor-saving device or to effect other economies in the operation or maintenance of the Building, or any portion thereof, to the extent of the reasonably anticipated cost savings, or (B) which are made to the Building, or any portion thereof, after the Commencement Date that are required under any governmental law or regulation that was not applicable to the Building at the time of the Commencement Date, or (C) which are for the replacement of any component of the Building HVAC system, electrical system serving the Building, the roof of the Building, or any elevators serving the Building and such replacement is necessary to prevent damage to or ensure safety or continued operation of the Building or applicable Building systems; provided, however, that each such permitted capital expenditure shall be amortized (including interest on the unamortized cost not to exceed 7% annually) over its useful life as reasonably determined;

(j) Intentionally deleted;

(k) All insurance premiums and other charges (including, without limitation, unreimbursed reasonable deductible amounts) incurred by Lessor with respect to the insuring of the Building including, without limitation, the following to the extent carried by the Lessor: (i) fire and extended coverage insurance, windstorm, hail and explosion; (ii) riot attending a strike, civil commotion, aircraft, vehicle and smoke insurance; (iii) public liability, bodily injury and property damage insurance; (iv) elevator insurance; (v) workers’ compensation insurance for the employees specified in Section 4.3(b) above; (vi) boiler and machinery insurance, sprinkler leakage, water damage, property, burglary, fidelity and pilferage insurance on equipment and materials; (vii) loss of rent, rent abatement, rent continuation, business interruption insurance, and similar types of insurance; (viii) earthquake insurance; and (ix) such other insurance as is customarily carried by operators of other comparable first-class office buildings in Southern California;

 

6

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(l) Such other usual costs and expenses incurred by Lessor and which are paid by other landlords for the purpose of providing for the on-site operation, supervision, management, security, servicing, maintenance, repair and replacement of comparable first-class single-tenant office buildings in Southern California;

(m) All actual ad valorem real property taxes, other taxes, assessments, levies, charges, water and sewer charges, rapid transit and other similar or comparable governmental charges (collectively, “Taxes”) levied or assessed on, imposed upon or attributable to the calendar year in question (i) to the Building, and/or (ii) to the operation of the Building, including, but not limited to, Taxes against the Building, personal property taxes or assessments levied or assessed against the Building, plus any tax measured by gross rentals received from the Building, together with any costs incurred by Lessor, including reasonable attorneys’ fees, in contesting any such Taxes but excluding any net income, franchise, capital stock, estate, transfer, or inheritance taxes imposed by the State of California or the United States or by their respective agencies, branches or departments provided that, if at any time during that Term there shall be levied, assessed or imposed on Lessor or the Building by any governmental entity, any general or special, ad valorem or specific excised capital levy or other taxes on the payments received by Lessor under this Lease or other leases affecting the Building and/or any license fee, excise or franchise taxes measured by or based, in whole or in part, upon such payments, and/or transfer, transaction, or taxes based directly or indirectly upon the transaction represented by this Lease or other leases affecting the Building, and/or any occupancy, use, per capita or other taxes, based directly or indirectly upon the use or occupancy of the Premises or the Building, then all such taxes shall be deemed to be included within the definition of the term Taxes;

Notwithstanding the above, the amount of Taxes for the Base Year and each Adjustment Year shall be calculated exclusive of any reduction achieved under Revenue and Taxation Code section 51 (Proposition 8 reduction).

(n) All reasonable costs associated with those improvements, systems, signage, equipment, and installations that are designed by Lessor to serve or benefit the Building by facilitating the flow of traffic into or out of the Building and/or the Parking Areas, whether or not located within the Building and/or the Parking Areas.

(o) Intentionally Deleted.

(p) In the event that after the Base Year Lessor stops providing a material category of cost, service or utility to Lessee pursuant to this Lease (e.g., Lessor stops carrying earthquake insurance) , the cost of which was included in the calculation of Operating Expenses during the Base Year, then for purposes of calculating Excess Operating Expenses for the calendar year in which such material category of cost, service or utility is no longer provided by Lessor, the amount that previously was included in the Operating Expenses for the Base Year for such material category of cost, service or utility shall be excluded from the Base Year Operating Expenses. In the event that after the Base Year Lessor provides a new material category of cost, service or utility to Lessee pursuant to this Lease (e.g., Lessor commencing carrying earthquake insurance) during any calendar year of the Term of this Lease, the cost of which was not included in the calculation of Operating Expenses during the Base Year, then for purposes of calculating Excess Operating Expenses, the amount that was incurred in the first full calendar year in which such new material category of cost, service or utility is provided and directly paid for by Lessor shall be included in the Base Year Operating Expenses.

Notwithstanding the foregoing, Operating Expenses shall not include the following expenses:

(1) wages, salaries or fringe benefits paid to any employees above the grade of building manager, or where employees devote time to properties other than the Building, the portion properly allocated to such other properties;

 

7

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(2) leasehold improvements, alterations and decorations (including soft costs) which are made in connection with the preparation of any portion of the Building for occupancy by Lessee, a new tenant, or which improvements, alterations and decorations are not generally beneficial to all tenants of the Building;

(3) services performed for any tenant (other than Lessee) of the Building, whether at the expense of Lessor or such tenant, to the extent that such services are in excess of the services which Lessor is required to furnish under this Lease;

(4) costs incurred in connection with the making of repairs or replacements which are the obligation of another tenant or occupant of the Building;

(5) advertising, marketing, promotional, public relations or brokerage fees, commissions or expenditures;

(6) financing and refinancing costs in respect of any mortgage or security interest placed upon the Building or any portion thereof, including payments of principal, interest, finance or other charges, and any points and commissions in connection therewith;

(7) interest or penalties for any late or failed payments by Lessor unless resulting from Lessee’s failure to pay when and as due Lessee’s share of Operating Expenses;

(8) rent or other charges payable under any ground or underlying lease;

(9) costs of electrical or other utilities services furnished directly to any premises of other tenants of the Building if such service is separately metered for the Premises and such costs are separately charged to such other tenants;

(10) costs incurred in connection with Lessor’s preparation, negotiation, dispute resolution and /or enforcement of leases, including court costs and attorneys’ fees and disbursements (as well the cost of any judgment, settlement, or arbitration award) in connection with disputes with prospective tenants, employees, consultants, management agents, leasing agents, purchasers or mortgagees;

(11) costs incurred in connection with any additions to or expansions of the Building;

(12) costs of repairs, restoration or replacements occasioned by fire or other casualty or caused by the exercise of the right of eminent domain, whether or not insurance proceeds or condemnation award proceeds are recovered or adequate for such purposes;

(13) expenditures for capital improvements or replacements except as allowed under subsection (i) of this Section 4.3;

(14) the cost of performing, correcting defects in, or inadequacies of, the Lessor’s work or of otherwise correcting defects (including latent defects) in the Building or existing leasehold improvements;

(15) the cost in connection with making improvements, alterations and additions to the Building, Building elevators, and Building restrooms which are required in order to render the same in compliance with existing laws, rules, orders regulations and/or directives including the ADA;

(16) the cost of environmental monitoring, compliance, testing and remediation performed in, on, about and around the Building;

(17) any costs in the nature of fees, fines or penalties arising out of Lessor’s breach of any obligation (contractual or at law and including, without limitation, costs, fines, interest, penalties and costs of litigation incurred as a result of late payment of Taxes and /or utility bills), including reasonable attorney’s fees related hereto;

 

8

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(18) any costs, charges or expenses in the nature of licenses, permits or inspection fees that are not part of routine maintenance or result from the act, omission or negligence of Lessor or another tenant;

(19) depreciation;

(20) amounts paid to subsidiaries or affiliates of Lessor for services rendered to the Building to the extent such amounts exceed the costs for delivery of such services provided by third party non-affiliated managers in comparable buildings in El Segundo and Manhattan Beach;

(21) management fees to the extent in excess of three percent (3%) of actual gross rentals of the Building per annum;

(22) sculpture, paintings and other works of art; and

(23) rentals and other related expenses incurred in leasing HVAC systems, elevators or other equipment ordinarily considered to be capital expenditures, except for: (A) expenses in connection with making repairs on or keeping Building Systems in operation while repairs are being made and (B) costs of equipment not affixed to the Building which are used in providing janitorial or similar services;

(24) tax penalties incurred as a result of Lessor’s negligence, inability or unwillingness to make payments and/or to file any tax or informational returns when due;

(25) costs arising from the negligence or fault of other tenants or Lessor;

(26) costs arising from Lessor’s charitable or political contributions;

(27) cost to the extent Lessor is reimbursed therefor out of insurance proceeds or otherwise (other than by means of operating expense reimbursement provisions contained in the leases of other tenants);

(28) expenses that Lessor incurs in purchasing or selling the Property (or any portion thereof);

(29) charges for the general overhead costs that Lessor incurs in managing, operating, maintaining, or staffing its offices that are not located at the Building;

(30) costs incurred in operating any sign or other similar device designed principally for advertising or promotion of any third party;

(31) costs incurred by Lessor which result from Lessor’s breach of this Lease, including any costs that Lessor incurs to correct a representation made by Lessor in this Lease;

(32) fines or penalties that are assessed against Lessor by virtue of violations at the Building of applicable Laws;

(33) costs that are duplicative of any other cost that is included in Operating Expenses; or

(34) costs incurred in connection with the acquisition or sale of air rights, transferable development rights, easements or other real property interests.

If the Building does not have at least ninety-five percent (95%) of the usable area of the Building occupied during the entirety of any calendar year during the Term, then the Operating Expenses for such calendar year period shall be deemed to be equal to the total of (x) the Operating Expenses, that vary in amounts based upon the occupancy level of the building, including, but not limited to, maintenance, utilities and property management, which would have been incurred by Lessor if ninety-five percent (95%) of the usable area of the Building had been occupied for the entirety of such calendar year (y) the actual Taxes as defined in Section 4.3(m) and (z) all other Operating Expenses incurred in such calendar year. The annual amortization of costs as required above shall be reasonably determined by Lessor. Operating Expenses shall be computed according to the cash or accrual basis of accounting, as Lessor may elect in accordance with generally accepted accounting principles employed by Lessor consistently applied.

 

9

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 4.4 Review of Operating Expenses. So long as no Event of Default (as defined in Article 17) has occurred, which remains uncured, Lessee shall have the right, at Lessee’s own expenses, for a period of one (1) year following receipt of each Statement, and after paying Lessor in full the amount indicated due and owing on said Statement, to inspect, at Lessor’s office during normal business hours, Lessor’s books and records directly related to the Operating Expenses for the calendar year period in question and the Base Year (the “Inspection”). Lessee shall choose an independent firm or certified public accountant of national standing with commercial real estate experience (not being compensated on a contingency fee basis) to conduct the Inspection. Lessee’s Inspection shall be completed within twenty (20) business days after commencement thereof. Lessee agrees that any records reviewed or information obtained as part of the Inspection shall constitute confidential information of Lessor, which shall not be disclosed to anyone other than the accountants performing the Inspection and the principals and advisors of Lessee receiving said information. Lessee shall use commercially reasonable efforts to cause the firm or accountant chosen by Lessee to conduct the Inspection to sign a confidentiality agreement to provide all records reviewed or information obtained remain at all times confidential information of the Lessor. Lessee shall pay Lessor, within fifteen (15) business days after receipt of written demand and as Additional Rent, Lessor’s actual out-of-pocket costs for (i) the photocopying of documents requested by Lessee, and (ii) any other reasonable expense of Lessor incidental to Lessee’s Inspection. A copy of the results of Lessee’s Inspection shall be delivered to Lessor within thirty (30) days after Lessee’s completion of the Inspection. Lessee shall be entitled to no more than one (1) Inspection per calendar year. If Lessee shall not have availed itself of such Inspection, Lessee shall be deemed to have accepted as final and determinative the amounts shown on the Statement. If Lessee shall have availed itself of its right to inspect the books and records, and then disputes the accuracy of the information set forth in Lessor’s books and records with respect to the Statement, Lessee shall no later than one (1) year after receipt of the Statement (or its right to contest such charges shall be deemed waived) institute arbitration proceedings against Lessor in an arbitration proceeding governed by the rules of the American Arbitration Association to collect and recover any overpayments made by Lessee, and Lessee shall, within ten (10) business days of having instituted such arbitration proceeding, serve Lessor with a copy of the complaint filed in such proceeding. Lessee shall be precluded from contesting Operating Expenses and Lessor’s computations of the amounts payable by Lessor or Lessee pursuant to this Article 4 unless an arbitration complaint is filed and served within the aforesaid periods of time.

If Lessee institutes such arbitration proceedings, then the arbitrator shall have the power to, and shall inquire into and determine, not only whether or not Lessee was overcharged for any Excess Operating Expenses, but whether or not Lessee was undercharged for such Excess Operating Expenses. At the conclusion of the arbitration, the arbitrator shall issue a ruling as to what the Excess Operating Expenses should have been had Lessor strictly complied with the provisions of this Lease. If Lessor overcharged Lessee for Excess Operating Expenses, the amount of the overcharge shall be returned to Lessee within thirty (30) days following the conclusion of the arbitration. If the arbitrator determines that Lessee was undercharged for Excess Operating Expenses, Lessee shall pay the amount of such undercharge to Lessor within thirty (30) days following the issuance of the arbitration ruling.

Should the arbitrator find errors in excess of four percent (4%) of the Statement, then Lessor shall be responsible for all reasonable fees and costs incurred by Lessee with respect to the arbitration proceeding.

Section 4.5 Method of Allocation of Expenses. The parties acknowledge that the Building is a part of a multi-building Property and that some of the Operating Expenses incurred in connection with the Property (including security services, landscaping services, and repair/maintenance/engineering services) should be shared on a reasonable and logical basis between the Building and the other Buildings in the Property. Accordingly, with respect to Property-wide Operating Expenses, Lessor shall determine the method of allocation to the Building using a reasonable method of allocation determined in good faith by Lessor.

Section 4.6 Lessee’s Payment of Certain Taxes. Notwithstanding anything to the contrary contained in this Lease, in the event that, at any time during the initial Term, any direct or indirect sale or change in ownership of the Building or Landlord is consummated, and as a result thereof, and to the extent that in connection therewith, the Building is reassessed (the “Reassessment”) for real estate tax purposes by the appropriate governmental authority pursuant to the terms of Proposition 13, then the terms of this Section 4.6 shall apply to such Reassessment of the Building.

 

10

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(a) The Tax Increase. For purposes of this Section 4.6, the term “Tax Increase” shall mean that portion of the Taxes, as calculated immediately following the Reassessment, to the extent attributable to the Reassessment. Accordingly, the term Tax Increase shall not include any portion of the Taxes, as calculated immediately following the Reassessment, which (i) is attributable to the initial assessment of the value of the Building, or the construction of improvements in the Building by Lessor or Lessee pursuant to this Lease; (ii) is attributable to assessments which were pending immediately prior to the Reassessment which assessments were conducted during, and included in, such Reassessment, or which assessments were otherwise rendered unnecessary following the Reassessment; or (iii) is attributable to the annual inflationary increase of real estate taxes currently permitted under Proposition 13, but not in excess of two percent (2.0%) per annum (unless California law is amended to provide for greater increase, in which event such greater increase shall apply).

(b) Protection. During the initial Term (the “Protection Period”), Lessee shall not be obligated to pay a portion of the Tax Increase relating to a Reassessment of the Building occurring during the initial Term.

ARTICLE 5 – LETTER OF CREDIT

Concurrently with Lessee’s execution of this Lease, Lessee shall deliver to Lessor, as security for the performance by Lessee of all of its obligations under this Lease and for all losses and damages Lessor may suffer and for which Lessee is liable under the Lease (or which Lessor reasonably estimates that it may suffer and for which Lessee is liable under the Lease) as a result of any breach or default by Lessee under this Lease that is not cured after expiration of all applicable notice and cure periods, an irrevocable standby letter of credit (the “Letter of Credit”), in the form reasonably acceptable to Lessor and containing the terms required herein, payable in the City of Los Angeles, California, running in favor of Lessor and issued by a solvent, nationally recognized bank with a long term rating of A- or better by Standard & Poor’s and with total assets of Fifteen Billion Dollars ($15,000,000,000.00) or more, under the supervision of the Superintendent of Banks of the State of California, or a national banking association, in the amount set forth in Section 1.1(l) above as such amount may be reduced in accordance herewith (the “Letter of Credit Amount”). The Letter of Credit shall (i) be “callable” at sight and irrevocable (ii) be maintained in effect, whether through renewal, extension, or replacement for the period from the Lease Commencement Date and continuing until the date that is thirty (30) days after the expiration of the Term (the “LC Expiration Date”), (iii) assignable by Lessor to its successors and assigns who acquire the Building and assume the Lease or to Lessor’s lender who enter into a subordination and nondisturbance agreement with Lessee, (iv) permit partial draws and multiple presentations and drawings, and (v) be otherwise subject to the Uniform Customs and Practices for Documentary Credits (1993-Rev), International Chamber of Commerce Publication #500, or the International Standby Practices-ISP 98, International Chamber of Commerce Publication #590. In addition to the foregoing, the form and terms of the Letter of Credit (and the bank issuing the same (the “Bank”)) shall be acceptable to Lessor, in Lessor’s reasonable discretion, provided that Lessor hereby approves JP Morgan Chase as the Bank. Lessor shall have the right to draw down an amount up to the face amount of the Letter of Credit if any of the following shall have occurred or be applicable: (A) such amount is due to Lessor under the terms and conditions of this Lease as a result of an Event of Default by Lessee that has not been cured after notice and expiration of any applicable cure period, or (B) Lessee has filed a voluntary petition under the U. S. Bankruptcy Code or any state bankruptcy code (collectively, “Bankruptcy Code”), or (C) an involuntary petition has been filed against Lessee under the Bankruptcy Code, or (D) the Bank has notified Lessor that the Letter of Credit will not be renewed or extended through the LC Expiration Date. The Letter of Credit will be honored by the Bank regardless of whether Lessee disputes Lessor’s right to draw upon the Letter of Credit.

In connection with any permitted transfer or assignment of the Letter of Credit by Lessor, Lessee shall, at Lessee’s sole cost and expense, execute and submit to the Bank such applications, documents and instruments as may be necessary to effectuate such transfer, and Lessee shall be responsible for paying the Bank’s transfer and processing fees in connection therewith.

If, as a result of any drawing by Lessor on the Letter of Credit, the amount of the Letter of Credit shall be less than the Letter of Credit Amount, Lessee shall, within five (5) business days thereafter, provide Lessor with additional letter(s) of credit or an amendment to the letter of credit in an amount equal to the deficiency, and any such additional letter(s) of credit or amendment shall comply with all of the provisions of this Section 5, and if Lessee fails to comply with the foregoing, notwithstanding anything to the contrary contained in Section 5 above, the same shall constitute a default by Lessee under this Lease (without the need for any additional notice and/or cure period). Lessee further covenants and warrants that it will neither assign nor encumber the Letter of Credit or any part thereof and that

 

11

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


neither Lessor nor its successors or assigns will be bound by any such assignment, encumbrance, attempted assignment or attempted encumbrance. Without limiting the generality of the foregoing, if the Letter of Credit expires earlier than the LC Expiration Date, Lessor will accept a renewal thereof (such renewal letter of credit to be in effect and delivered to Lessor, as applicable, not later than thirty (30) days prior to the expiration of the Letter of Credit), which shall be irrevocable and automatically renewable as above provided through the LC Expiration Date upon the same terms as the expiring Letter of Credit or such other terms as may be acceptable to Lessor in its reasonable discretion. However, if the Letter of Credit is not timely renewed, or if Lessee fails to maintain the Letter of Credit in the amount and in accordance with the terms set forth in this Section 5, Lessor shall have the right to present the Letter of Credit to the Bank in accordance with the terms of this Section 5, and the proceeds of the Letter of Credit may be applied by Lessor against any Rent payable by Lessee under this Lease that is not paid when due and/or to pay for all losses and damages that Lessor has suffered or that Lessor reasonably estimates that it will suffer as a result of any breach or default by Lessee under this Lease and for which Lessee is liable under this Lease. Any unused proceeds shall need not be segregated from Lessor’s other assets. Lessor agrees to pay to Lessee, within fifteen (15) business days after the LC Expiration Date, the amount of any proceeds of the Letter of Credit received by Lessor and not applied against any Rent payable by Lessee under this Lease that was not paid when due or used to pay for any actual losses and/or damages suffered by Lessor (or reasonably estimated by Lessor that it will suffer) and for which lessee is liable under this Lease as a result of any breach or default by Lessee under this Lease; provided, however, that if prior to the LC Expiration Date a voluntary petition is filed by Lessee, or an involuntary petition is filed against Lessee by any of Lessee’s creditors, under the Bankruptcy Code, then Lessor shall not be obligated to make such payment in the amount of the unused Letter of Credit proceeds until either all preference issues relating to payments under this Lease have been resolved in such bankruptcy or reorganization case or such bankruptcy or reorganization case has been dismissed.

Lessee hereby acknowledges and agrees that Lessor is entering into this Lease in material reliance upon the ability of Lessor to draw upon the Letter of Credit upon the occurrence of any breach or default on the part of Lessee under this Lease. If Lessee shall fail to perform any of its obligations hereunder (including without limitation timely payment of Rent), Lessor may, but without obligation to do so, upon prior written notice to Lessee and expiration of all applicable cure periods, draw upon the Letter of Credit, in part or in whole, to cure any such failure of Lessee and/or to compensate Lessor for any and all damages of any kind or nature reasonably sustained or which Lessor reasonably estimates that it will sustain resulting from the same, including, but not limited to, all damages or rent due upon termination of this Lease pursuant to Section 1951.2 of the California Civil Code for which Lessee is liable under this Lease. The use, application or retention of the Letter of Credit, or any portion thereof, by Lessor shall not prevent Lessor from exercising any other right or remedy provided by this Lease or by any applicable law, it being intended that Lessor shall not first be required to proceed against the Letter of Credit, and shall not operate as a limitation on any recovery to which Lessor may otherwise be entitled. Lessee agrees not to interfere in any way with payment to Lessor of the proceeds of the Letter of Credit, either prior to or following a “draw” by Lessor of any portion of the Letter of Credit, regardless of whether any dispute exists between Lessee and Lessor as to Lessor’s right to draw upon the Letter of Credit. No condition or term of this Lease shall be deemed to render the Letter of Credit conditional to justify the issuer of the Letter of Credit in failing to honor a drawing upon such Letter of Credit in a timely manner in accordance with the terms of the Letter of Credit. Lessee agrees and acknowledges that (i) the Letter of Credit constitutes a separate and independent contract between Lessor and the Bank, (ii) Lessee is not a third party beneficiary of such contract, (iii) Lessee has no property interest whatsoever in the Letter of Credit, and (iv) in the event Lessee becomes a debtor under any chapter of the Bankruptcy Code, neither Lessee, any trustee, nor Lessee’s bankruptcy estate shall have any right to restrict or limit Lessor’s claim and/or rights to the Letter of Credit and/or the proceeds thereof by application of Section 502(b)(6) of the U. S. Bankruptcy Code or otherwise.

Lessor and Lessee acknowledge and agree that in no event or circumstance shall the Letter of Credit or any renewal thereof be (i) deemed to be or treated as a “security deposit” within the meaning of California Civil Code Section 1950.7, (ii) subject to the terms of such Section 1950.7, or (iii) intended to serve as a “security deposit” within the meaning of such Section 1950.7. The Parties hereto (A) recite that the Letter of Credit is not intended to serve as a security deposit and such Section 1950.7 and any and all other laws, rules and regulations applicable to security deposits in the commercial context (“Security Deposit Laws”) shall have no applicability or relevancy thereto and (B) waive any and all rights, duties and obligations either Party may now or, in the future, will have relating to or arising from the Security Deposit Laws.

 

12

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


The amount of the Letter of Credit shall be reduced by $250,000.00 on each anniversary of the Commencement Date (each, a “Reduction Date”), provided that in no event shall the Letter of Credit be reduced below $315,825.38. Notwithstanding anything to the contrary in this Section 5, the amount of the Letter of Credit shall only decrease as set forth above if, as of the applicable Reduction Date, Lessee is not in default under this Lease and Lessor has not delivered a notice of default under this Lease that is uncured by Lessee. In the event Lessee does not satisfy the foregoing condition as of a particular Reduction Date (the “Letter of Credit Reduction Condition”), the Letter of Credit shall not be reduced as of such Reduction Date but if Lessee thereafter satisfies the LC Reduction Condition, the Letter of Credit shall be decreased upon such satisfaction of the LC Reduction Condition. Not more than thirty (30) days prior to each of the applicable reduction dates, Lessee shall deliver Lessor a notice (the “Reduction Request”) requesting that Lessor provide the Bank issuing the Letter of Credit a notice as required to cause the applicable reduction is to occur on the reduction date (the “Reduction Certification”). Within five (5) business days after Lessor’s receipt of the Reduction Request, and provided that Lessee meets the Letter of Credit Reduction Condition, Lessor shall deliver the Reduction Certification to the Bank in the form required by the terms of the Letter of Credit. If Lessor fails to deliver the Reduction Certification when required hereunder, Lessee shall have the right to offset such amount against Rent due under this Lease.

ARTICLE 6 – USE

Section 6.1 Restriction on Use. Except to the extent otherwise approved by Lessor, Lessee shall not do or permit to be done in or about the Property, nor bring, keep or permit to be brought or kept therein, anything which is prohibited by the attached Exhibit “E” and Exhibit “F” or by any standard form fire insurance policy or which will in any way increase the existing rate of, or affect, any fire or other insurance upon the Building or its contents. Lessee shall place no equipment in the Premises, nor construct any improvements to the Premises, that shall exceed or otherwise impact the Building’s total live load capacity. Lessee shall obtain Lessor’s prior reasonable written approval before placing any equipment in the Premises, or constructing any improvements to the Premises, that may exceed the Building’s total live load capacity (which approval may be conditioned upon Lessee’s satisfaction of all reasonable conditions imposed by Lessor, at Lessee’s sole cost and expense, to maintain the structural integrity of the Building, including, but not limited to, securing and submitting for Lessor’s review and approval all appropriate and necessary plans, specifications and engineering analysis of the proposed equipment and/or improvements).

Lessee, at Lessee’s sole cost, shall comply with all applicable federal, state, and local governmental statutes, ordinances, codes, rules, regulations, controls and guidelines (collectively, “Laws”) affecting Lessee’s use or occupancy of the Premises, and with the requirements of any Board of Fire Underwriters or other similar body now or hereafter instituted, and shall also comply with any order, directive or certificate of occupancy issued pursuant to any Laws, which affect the condition, use or occupancy of the Premises, including, but not limited to, any requirements of structural changes related to or affected by Lessee’s acts, occupancy or use of the Premises. The judgment of any court of competent jurisdiction or the admission of Lessee in any action against Lessee, whether or not Lessor is a party to such action, shall be conclusive as between Lessor and Lessee in establishing such violation. Lessee shall not conduct retail operations from the Premises or use the Premises for medical or dental offices, provided the foregoing shall not prohibit or limit Lessee’s right to sell, market and promote its products online or over the internet in the ordinary course of its business.

Section 6.2 Compliance by Other Lessees. Lessor shall not be liable to Lessee for the failure of any other occupant or tenant to conduct itself in accordance with the provisions of this Article 6, and Lessee shall not be released or excused from the performance of any of its obligations under this Lease in the event of any such failure; provided, however, that Lessor shall use commercially reasonable efforts (but not including the institution of legal proceedings) to cause such other tenants and occupants of the Property to comply with the provisions of this Article 6, to the extent such non-compliance materially and adversely interferes with Lessee’s access to the Premises or use of the Premises for the purposes permitted under this Lease.

ARTICLE 7 – ALTERATIONS AND ADDITIONS

Section 7.1 Lessee’s Rights To Make Alterations. Following the date on which Lessee first occupies the Premises, Lessee, at its sole cost and expense, shall have the right upon receipt of Lessor’s reasonable consent (for all matters other than (i) structural modifications, and (ii) Core Elements (as hereinafter defined) in which case Lessor shall be permitted to withhold consent in its sole and absolute discretion), to make alterations, additions or improvements to the Premises if such alterations, additions or improvements are made in accordance with this Article 7, are normal for Lessee’s use, do not adversely affect the utility or value of the Premises or the Building for

 

13

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


future tenants, do not alter the exterior appearance of the Building, are not of a structural nature, do not require excessive removal expenses and are not otherwise prohibited under this Lease (collectively, “Alterations”); provided, however, Lessor’s consent shall not be required for “cosmetic” alterations that do not require obtaining permits or licenses to perform. The term “Core Elements” collectively means: the (i) elevators; (ii) the stairwells; (iii) the parking level lobby area; and (iv) the first floor lobby area. All such Alterations shall be made in conformity with the requirements of Section 7.2 below. Lessee shall not be required to use Lessor’s contractors in connection with the Alterations, unless such alterations pertain to HVAC, fire life safety, electrical or mechanical matters, for which Lessee shall be required to employ Lessor’s contractors provided that Lessor’s contractors’ pricing and terms are commercially competitive. Once the Alterations have been completed, such Alterations shall thereafter be included within the designation of Lessee Improvements and shall be treated as Lessee Improvements. Lessor shall advise Lessee within ten (10) business days after Lessor’s receipt of a request for Alterations if Lessor approves or disapproves such Alterations. If Lessor fails to timely respond, Lessee may deliver to Lessor a second written request for such approval, which written notice must state in bold and all caps, “FAILURE TO RESPOND TO THIS WRITTEN NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT HEREOF SHALL CONSTITUTE APPROVAL OF THE PROPOSED ALTERATIONS.” If Lessor fails to advise Lessee whether if Lessor approves or disapproves such Alterations within such five (5) business day period, then Lessor will be deemed to have approved the proposed Alterations. Lessor acknowledges that Lessee has advised Lessor that Lessee intends to perform the following improvements as part of the Lessee Improvements or as Alterations: (a) installation of a rollup door to allow automobile ingress and egress, (b) installation of an automobile lift from the parking area beneath the ground floor of the Building to the ground floor of the Building, (c) moving (which may include removal) of certain bollards outside the Building on Aviation Boulevard, (d) installation of clay plates on the first floor of the Building, (e) construction of a research and development area (which may be in approximately 4,000 square feet of space in the Parking Areas) (the “R&D Area”), (f) installation of security system pursuant to Section 33.1 below, (vii) installation of Antennae as contemplated by Section 35.34 below and (g) installation of signage as contemplated by Section 35.37 below (collectively, the “Contemplated Leasehold Improvements”). Notwithstanding anything in this Lease or the Construction Work Letter to the contrary, Lessor hereby approves in concept the Contemplated Leasehold Improvements (including structural modifications and those affecting Core Elements), subject to (A) Lessor’s approval of the plans for such Contemplated Leasehold Improvements, which approval shall not be unreasonably withheld, conditioned, or delayed (provided Lessee complies with the reasonable recommendations of Lessor’s structural engineer), and (B) the approval of all applicable governmental entities to the extent required. Notwithstanding anything to the contrary in this Lease, Lessor shall have the right, but not the obligation, which right must be exercised if at all, by written notice to Lessee prior to the end of the Term of this Lease, to require Lessee to remove from the Premises some or all of the Contemplated Leasehold Improvements (other than the rollup door, which shall not be removed). Lessee shall repair all damage to the Premises caused by such removal. If the R&D Area takes up any parking spaces, Lessee shall still be required to pay for such parking spaces pursuant to the terms of this Lease.

Section 7.2 Installation of Alterations. Provided the Lessor shall have previously given Lessee written approval and consent to Alterations (to the extent required under this Lease), any Alterations installed by Lessee during the Term shall be done in strict compliance with all of the following:

(a) No such work shall proceed without Lessor’s prior reasonable approval of (i) Lessee’s contractor(s); (ii) certificates of insurance from a company or companies reasonably approved by Lessor, furnished to Lessor by Lessee’s Contractor(s), for combined single limit bodily injury and property damage insurance covering comprehensive general liability and automobile liability, in an amount not less than One Million Dollars ($1,000,000) per person and per occurrence and endorsed to show Lessor as an additional insured, and for workers’ compensation as required by law, endorsed to show a waiver of subrogation by the insurer to any claims Lessee’s contractor may have against Lessor, Lessor’s agents, employees, contractors and other tenants of the Building (provided, however, nothing in this Section 7.2(a) shall release Lessee of its other insurance obligations hereunder); and (iii) detailed plans and specifications for such work;

(b) All such work shall be done in a first-class workmanlike manner and in conformity with a valid building permit and all other permits and licenses when and where required, copies of which shall be furnished to Lessor before the work is commenced, and any work not acceptable to any governmental authority or agency having or exercising jurisdiction over such work, shall be promptly replaced and corrected at Lessee’s expense. Lessor’s approval or consent to any such work shall not impose any liability upon Lessor. No work shall proceed until and unless Lessor has received at least ten (10) days’ notice that such work is to commence;

 

14

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(c) Lessee shall, within fifteen (15) business days after receipt of written demand, reimburse Lessor for any third party expense actually incurred by Lessor in reviewing and approving the plans and specifications for such work or by reason of any faulty work done by Lessee or Lessee’s contractors, or by reason of inadequate cleanup;

(d) Lessee or its contractors will in no event be allowed to make plumbing, mechanical or electrical improvements to the Premises, or any structural modification to the Building without first obtaining Lessor’s written consent; and

(e) All work by Lessee shall be diligently and continuously pursued from the date of its commencement through its completion.

Section 7.3 Alterations and Improvements—Treatment at End of Lease. All Alterations and Lessee Improvements made by or for Lessee, whether temporary or permanent in character, made either by Lessor or Lessee, including, but not limited to, all air-conditioning or heating systems, paneling, lighting fixtures, decorations, cabling, partitions and railings (except movable furniture and equipment belonging to Lessee) shall become the property of the Lessor and shall remain upon, and be surrendered with, the Premises as a part thereof at the termination of this Lease, without compensation to Lessee; provided, however, Lessor shall have the right, but not the obligation, which right must be exercised if at all, by written notice to Lessee at the time of Lessor’s approval to the Lessee Improvements (as set forth in the Construction Work Letter) and Alterations (as set forth in Section 7.1 above) requested by Lessee, to require Lessee, at Lessee’s sole expense, prior to the expiration of the Term (or within fifteen (15) business days following the earlier termination of this Lease), to: (a) remove from the Premises those Alterations and/or Lessee Improvements (or that portion of the Alterations and/or Lessee Improvements) that are (i) located in the Common Areas of the Property or (ii) are not customary office alterations or tenant improvements; and (b) repair all damage to the Premises caused by such removal. In addition to the foregoing, Lessee shall remove prior to the expiration of the Term (or within fifteen (15) business days following the earlier termination of the Lease), any data lines or cabling (unless Lessor requests that Lessee leave such cabling) that Lessee has installed in the Building. Lessor shall have the right, upon reasonable notice to Lessee, to enter and fully inspect the entire Premises just prior to the expiration of the Term or earlier termination of this Lease to determine the condition of the Premises, and to ascertain what removals, if any, Lessor shall require of Lessee pursuant to the terms hereof.

All of Lessee’s Personal Property, including, but not limited to, moveable furniture, trade fixtures and equipment, not attached to the Building or the Premises, shall be completely removed by Lessee prior to the expiration of the Term (or within ten (10) business days following the earlier termination of this Lease), provided, however, that Lessee shall repair all damage caused by such removal prior to the expiration of the Term (or within ten (10) business days following the earlier termination of this Lease), and provided further, that any of Lessee’s Personal Property not so removed shall, at the option of Lessor, be deemed abandoned by Lessee and shall automatically become the property of Lessor (whereupon Lessor shall then be permitted to retain and/or dispose the same, or any part thereof, in any manner whatsoever, without liability to Lessee). Lessee expressly, knowingly and intentionally waives and relinquishes any and all rights Lessee has under Sections 1993 through 1993.09 of the California Civil Code, and all other similar provisions of the law, now or hereafter in effect, which establish procedures commercial real property landlords must follow to dispose of property that remains on the Premises after a tenancy has terminated (collectively “Property Disposition Laws”) and further knowingly and intentionally releases Lessor from any duties and obligations Lessor may have under said Property Disposition Laws.

ARTICLE 8 – LESSEE’S REPAIRS AND CLEANING OBLIGATIONS

Section 8.1 Lessee’s Repairs and Cleaning Obligations. Lessee shall, at Lessee’s sole cost and expense, keep the non-structural, interior portions of the Premises in good, clean condition and repair at all times during the Term. All damage or breakage to any part or portion of the Premises, and all damage or breakage to any portion of the Property caused by the willful or negligent act or omission of Lessee or Lessee’s agents, employees, contractors, licensees, directors, officers, partners, trustees, invitees, affiliates, subsidiaries, successors, assigns, heirs, shareholders, and members (collectively, “Lessee’s Employees”), shall be repaired or replaced by Lessee, at Lessee’s

 

15

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


sole cost and expense, to the reasonable satisfaction of Lessor. Upon prior written notice to Lessee, Lessor may make any repairs or replacements which are not made by Lessee within a reasonable amount of time (except in the case of emergency when such repairs or replacements can be made without such advance notice), and charge Lessee for the actual cost of such repairs and replacements. Lessee shall be solely responsible for the design and function of all of Lessee Improvements whether or not installed by Lessor at Lessee’s request. Subject to Section 10.1, Lessee waives all rights to make repairs or replacements to the Premises or to the Property at the expense of Lessor, or to deduct the cost of such repairs or replacements from any payment owed to Lessor under this Lease. If upon expiration or earlier termination of this Lease Lessee shall have failed to leave the Premises in good, clean condition and repair, reasonable wear and tear excepted, then Lessor may use any portion of the Letter of Credit necessary to compensate Lessor for actual out-of-pocket costs and expenses incurred by Lessor for Lessee’s failure to comply with its obligations stated herein.

ARTICLE 9 – NO LIENS BY LESSEE

Section 9.1 No Liens By Lessee. Lessee shall at all times keep the Premises, the Building and the Property free from any liens arising out of any work performed or allegedly performed, materials, furnished or allegedly furnished or obligations incurred by or for Lessee. In the event of the filing of any such lien and Lessee’s actual knowledge thereof, Lessee shall give Lessor written notice thereof and shall secure in a prompt and diligent manner (but in any event no later than twenty (20) days of the recording of such lien) the release of the same by bonding or other appropriate means; if Lessee shall fail to do so within said twenty (20) day period, Lessor, after providing reasonable notice to Lessee, may (but shall not be so required to) pay the same and any costs, and the amount so paid, shall be due and owing from Lessee to Lessor within twenty (20) days after demand. Lessee agrees to indemnify, defend, protect, and hold Lessor harmless from and against any and all claims for mechanics’, materialman’s or other liens in connection with any Alterations, repairs, or any work performed, materials furnished or obligations incurred by or for Lessee. These indemnities shall survive the expiration or earlier termination of this Lease. During periods in the Term in which Lessee is not leasing one hundred percent (100%) of the rentable square footage in the Building, Lessor shall have the right to enter the interior portions of the Premises, upon prior written notice to Lessee, for the purpose of posting such notices of non-responsibility as may be permitted by law, or desired by Lessor. Lessor can post notices on non-responsibility on the exterior portions of the Premises without prior notice to Lessee.

ARTICLE 10 – LESSOR’S MAINTENANCE AND REPAIR OBLIGATIONS

Section 10.1 Scope of Lessor’s Repairs.

(a) Lessor shall maintain and repair the structural elements, mechanical, electrical, plumbing and fire/life/safety systems, elevators, restrooms and the public and common areas and parking areas of the Building as the same may exist from time to time, consistent with a “first-class, institutional quality” office building, except for non-insured damage or wear and tear which is the result of a negligent or willful act or omission of Lessee or Lessee’s Employees. Lessor shall make repairs or replacements to the Premises or to the Property under this Article 10 within five (5) business days after notice from Lessee of the need for such repairs; provided, however, Lessor shall not be deemed to be in default if it shall commence performance of such repairs or replacements within such five (5) business day period and diligently pursue such repairs or replacements to completion as soon as reasonably practicable. In no event shall any payments owed by Lessee under this Lease be abated on account of Lessor’s failure to make repairs under this Article 10, except as provided in subsection (b). Lessor, at Lessor’s sole cost, shall comply with all Laws with respect to Lessor’s repair and maintenance hereunder.

(b) In the event that (i) Lessor fails to perform or commence to perform any repair and maintenance obligation of Lessor within five (5) business days following written notice from Lessee (and thereafter diligently pursue such performance) in accordance with the provisions of subsection (a), and (ii) such failure by Lessor materially and adversely affects Lessee’s use of the Premises for the operation of Lessee’s business, Lessee may, at its option, provide a second written notice to Lessor (the “Second Notice”) specifying the nature of Lessor’s continued failure, the remedial action necessary and what action Lessee intends to take if Lessor does not cure such failure within two (2) business days after delivery of the Second Notice to Lessor (or if such repair and maintenance obligation cannot reasonably be completed within such two (2) business day period, if Lessor fails to commence the performance within such two (2) business days and thereafter diligently pursue the performance of such obligation to completion).

 

16

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


If within two (2) business days following delivery of the Second Notice, Lessor fails to perform or commence such performance (or thereafter fails to diligently pursue that performance obligation to completion), Lessee shall have the right, but not the obligation, to perform the action set forth in the Second Notice. In the event that Lessee performs such action in accordance with the provisions of this subsection (b), Lessor shall pay to Lessee, within thirty (30) days after receipt of written invoices therefor, the reasonable costs incurred by Lessee to perform such action (but only to the extent those costs would not have been borne by Lessee under any other provisions of this Lease). If Lessor does not pay Lessee for such reasonable costs within thirty (30) days of the delivery of the written invoices to Lessor, then Lessee shall have the right to deduct such unreimbursed reasonable expenses from the Base Rental due or becoming due under this Lease until Lessee has been fully reimbursed for such reasonable expenses. Notwithstanding any provision of this subsection (b) to the contrary, Lessee shall have no rights to make any repairs or modifications to the following elements of the Building or exercise any rights or remedies under this subsection (b) with respect to the foundations, exterior walls, or roof of the Building. The exercise by Lessee of any rights granted to Lessee under this subsection (b) shall be without waiver by Lessee of any rights or remedies to recover monetary damages from Lessor in the event that Lessor fails to perform or commence to perform (and thereafter diligently pursue such performance obligation to completion) in accordance with the provisions of subsection (a).

Section 10.2 Lessor’s Right of Entry to Make Repairs. Upon prior written notice to Lessee (except for emergencies, in which case Lessor shall use reasonable efforts to contact Lessee prior to its entry), Lessor and Lessor’s Employees (as defined in Section 14.1) shall have the right to enter the Premises during reasonable business hours for the purpose of making any alterations, additions, improvements, repairs or replacements to the Premises or the Property as Lessor is required to perform (a) to comply with Lessor’s repair and maintenance obligations under this Lease or (b) to comply with applicable Laws. Lessee shall have the right to have a representative of Lessee accompany Lessor and Lessor’s Employees during the time they are present in the Premises (however, if Lessee shall fail to promptly provide a representative of Lessee to accompany Lessor, then Lessor shall be permitted to enter the Premises without a representative of Lessee). Lessor shall give reasonable notice to Lessee of Lessor’s intent to enter the Premises, except, however, in an emergency situation, in which case Lessor shall use reasonable efforts to contact Lessee prior to its entry.

ARTICLE 11 – BUILDING SERVICES

Section 11.1 Standard Building Services. Lessor shall furnish the Premises with the standard building services and utilities as set forth in the attached Exhibit “D.”

Section 11.2 Additional Services. Intentionally deleted.

Section 11.3 Lessor’s Right to Cease Providing Services. Lessor may reduce, interrupt or cease the services required to be performed by Lessor under this Lease if Lessor is required to do so by applicable Law, or Lessor’s performance thereof is prevented by emergency, Force Majeure or applicable Law.

No interruption, reduction or cessation of any building services or utilities shall constitute an eviction or disturbance of Lessee’s use or possession of the Premises or Property, or an ejection or eviction of Lessee from the Premises, or a breach by Lessor of any of its obligations, or entitle Lessee to be relieved from any of its obligations under this Lease, or result in any abatement of Rent, except as set forth herein. In the event of any such interruption, reduction, or cessation, Lessor shall use due diligence to restore such service where it is within Lessor’s reasonable control to do so.

Notwithstanding the foregoing, in the event that Lessee is prevented from using the Premises or any material portion thereof, for four (4) consecutive business days or an aggregate of ten (10) business days in any twelve (12) month period following written notice to Lessor (the “Eligibility Period”) as a result of (1) any damage or destruction to the Premises, the Parking Areas, the Building and/or the Property (that does not arise from or is not related to the acts of Lessee or any Lessee’s Employees), (2) any repair (other than repair of damage that arises from or is related to the acts of Lessee’s Employees), maintenance or alteration performed by Lessor after the Commencement Date, which substantially interferes with Lessee’s use of the Premises, the Parking Areas, the Building and/or the Property, (3) any failure by Lessor to provide Lessee with services or access to the Premises, the Parking Areas, and/or the Building due to matters within Lessor’s control, or (4) the partial taking of the Premises because of an eminent domain proceeding, then Lessee’s Rent shall be abated or reduced, as the case may be, after

 

17

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


expiration of the Eligibility Period for such time that Lessee continues to be so prevented from using, and does not use, the Premises or any portion thereof, in the proportion that the rentable area of the portion of the Premises that Lessee is prevented from using, and does not use, bears to the total rentable area of the Premises. However, in the event that Lessee is prevented from conducting its business in any portion of the Premises for a period of time in excess of the Eligibility Period, and the remaining portion of the Premises is not sufficient to allow Lessee to effectively conduct its business therein, then for such time after expiration of the Eligibility Period during which Lessee is so prevented from effectively conducting its business therein, and does not conduct business therein, the Rent for the entire Premises shall be abated; provided, however, if Lessee reoccupies and conducts its business from any portion of the Premises during such period, the Rent allocable to such reoccupied portion, based on the proportion that the rentable area of such reoccupied portion of the Premises bears to the total rentable area of the Premises, shall be payable by Lessee from the date such business operations commence. If Lessee’s right to abatement occurs during a free rent period (for these purposes, free rent shall be deemed to include half rent, etc.) which arises after the Commencement Date, Lessee’s free rent period shall be extended for the number of days that the abatement period overlapped the free rent period (“Overlap Period”). If Lessee’s right to abatement occurs because of an eminent domain taking and/or because of damage or destruction to the Parking Areas, the Building and/or Lessee’s property, Lessee’s abatement period shall continue until Lessee has been given sufficient time, and sufficient access to the Premises, the Parking Areas and/or the Building, to rebuild such portion it is required to rebuild, to install its property, furniture, fixtures, and equipment to the extent the same shall have been removed and/or damaged as a result of such damage or destruction and/or eminent domain taking and to move in over a weekend. To the extent Lessee is entitled to abatement without regard to the Eligibility Period, because of an event covered by Section 15 and Section 16 of the Lease, then the Eligibility Period shall not be applicable.

ARTICLE 12 – ASSIGNMENT AND SUBLETTING

Section 12.1 Right to Assign and Sublease. Lessee may voluntarily assign its interest in this Lease or in the Premises, or sublease all or any part of the Premises, or allow any other person or entity to occupy or use all or any part of the Premises, upon first obtaining Lessor’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed), but only if (i) Lessee is not then in default of this Lease with any applicable notice and cure period having expired, (ii) such assignment or sublease does not conflict with any restrictive use covenants of record, and (iii) unless Lessor otherwise agrees in writing, in its sole business judgment, such proposed assignee or sublessee of Lessee’s proposed assignment or sublease is not:

(a) a governmental entity or an educational institution, unless a governmental entity and/or an educational institution shall be an occupant of the Building as of the date of Lessee’s proposed assignment of Lease or sublease of all or any part of the Premises; or

(b) a party of reasonable financial worth and/or financial stability in light of the responsibilities to be undertaken in connection with the assignment or sublease on the date consent is requested; or

(c) a present tenant in the Continental Park project.

Any assignment, encumbrance or sublease without Lessor’s prior written consent (to the extent Lessor’s consent is required by this Lease), as provided herein, shall be voidable, at Lessor’s election. No consent to an assignment, encumbrance or sublease shall constitute a further waiver of the provisions of this Article 12.

Section 12.2 Procedure for Assignment and Sublease. Lessee shall advise Lessor by notice of (a) Lessee’s intent to assign, encumber or sublease this Lease, (b) the name of the proposed assignee or sublessee, and (c) the material terms of the proposed assignment or subletting. Lessor shall, within thirty (30) days of receipt of such notice, elect one of the following:

(i) Consent to such proposed assignment, encumbrance or sublease; or

(ii) Refuse such consent, which refusal shall be on reasonable grounds detailed in such response.

 

18

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


If Lessor fails to notify Lessee in writing of such approval or disapproval within such thirty (30) day period, Lessee may send a reminder notice for such approval, which written notice must state in bold and all caps, “FAILURE TO RESPOND TO THIS WRITTEN NOTICE WITHIN FIVE (5) BUSINESS DAYS AFTER RECEIPT HEREOF SHALL CONSTITUTE APPROVAL OF THE PROPOSED ASSIGNMENT OR SUBLEASE.” If Lessor fails to respond within five (5) additional business days after such reminder, Lessor shall be deemed to have approved such assignment or sublease.

Section 12.3 Conditions Regarding Consent to Sublease and Assignment. Lessee shall pay within ten (10) days of receipt of Lessor’s election of (i) or (ii) above Lessor’s processing costs and attorneys’ fees (not to exceed $3,000.00 in the aggregate) incurred in determining whether to give such consent if such consent is required by this Lease. Notwithstanding any permitted assignment or subletting, Lessee shall at all times remain primarily liable for all payments owed by Lessee under this Lease and for compliance with all obligations under the terms, provisions and covenants of this Lease. If for any proposed assignment or sublease, Lessee actually receives Profits either initially or over the term of the assignment or sublease, in excess of the rent and all other charges required by this Lease, or, in the case of the sublease of a portion of the Premises, Lessee shall be required to pay Lessor fifty percent (50%) of such Profits. Whenever Lessor is entitled to share in any Profits resulting from an assignment or sublease of the Premises, the following shall constitute the definition of “Profits”: the gross revenue received from the assignee or sublessee during the sublease term or during the assignment with respect to the space covered by the sublease or the assignment (“Transferred Space”) less: (a) the gross revenue paid to Lessor by Lessee during the period of the sublease term or during the assignment with respect to the Transferred Space; (b) any improvement allowance or other economic concession (planning allowance, moving expenses, etc.) paid by Lessee to the sublessee or assignee; (c) broker’s commissions paid by Lessee in connection with the sublease or assignment; (d) reasonable attorney’s fees paid by Lessee in connection with the sublease or assignment; (e) costs of advertising the Transferred Space for sublease or assignment; and (f) any other reasonable costs actually paid in assigning or subletting the Transferred Space. For any proposed sublease, the sublease agreement (a) shall require Lessee and the sublessee to send Lessor copies of any and all notices concerning the Premises that either party shall send to one another, and (b) shall require the sublessee to obtain a waiver of subrogation against Lessor from the sublessee’s insurers. Lessor’s consent, if granted, to any assignment or sublease shall be deemed limited solely to said original assignment or sublease, and Lessor reserves the right to consent or to withhold consent (pursuant to the provisions of this Article 12) with respect to any further or additional assignments, sublets or other transfers of the Lease.

Section 12.4 Termination of Sublease upon Lease Termination. Except as otherwise set forth in this Lease, including, without limitation, the provisions of Section 12.6, if at any time prior to the expiration or termination of an approved sublease the Lease shall expire or terminate for any reason whatsoever (or Lessee’s right to possession shall terminate without termination of the Lease), then the sublease shall simultaneously expire and terminate. However, if the sublessee agrees, at the election and upon the written demand of Lessor, and not otherwise, to attorn to Lessor for the remainder of the term of the sublease, such attornment shall be upon all of the terms and conditions of the Lease, with such reasonable modifications as Lessor may require (and if the Base Rental set forth in the sublease is greater than the Base Rental set forth in the Lease then the sublessee agrees that the Base Rental set forth in the sublease shall be substituted as the Base Rental to be paid to Lessor). The foregoing provisions of this Section 12.4 shall apply notwithstanding that, as a matter of law, the sublease may otherwise terminate upon the termination of the Lease, and shall be self-operative upon such written demand of the Lessor, and no further instrument shall be required to give effect to said provisions; provided, however, sublessee agrees to execute an attornment agreement, in the form and substance acceptable to Lessor and the sublessee, pursuant to which the sublessee confirms that the obligations owed to Lessee under the sublease shall become obligations to Lessor for the balance of the term of the sublease.

Section 12.5 Affiliated Companies/Restructuring of Business Organization. Notwithstanding anything to the contrary contained in this Lease, occupancy of all or part of the Premises by a parent, subsidiary, affiliated companies of Lessee or of Lessee’s parent or of Lessee’s subsidiary or any direct or indirect transfer of any portion of Lessee’s corporate stock, or issuance of additional stock or securities, shall not be deemed an assignment or subletting requiring Lessor’s consent herein provided that any such affiliated companies were not formed as a subterfuge to avoid the obligations of this Article 12. Furthermore, without limiting the generality of the foregoing, and notwithstanding anything to the contrary contained herein, Lessee may assign the Lease at any time, or sublease all or part of the Premises, without receipt of Lessor’s consent, but upon prior written notice to Lessor, to the “Merger Entity” (as defined in Section 2.3 above) or any entity which acquires Lessee, or which is acquired by Lessee, or which is controlled directly or indirectly by Lessee, or which entity controls, directly or indirectly, Lessee

 

19

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(collectively, “Affiliate”), or which owns or is owned by the Affiliate, so long as such transaction was not entered into as a subterfuge to avoid the obligations and restrictions of the Lease. In addition to the foregoing, and notwithstanding anything to the contrary contained herein, Lessee shall have the right to assign this Lease or sublease all or any portion of the Premises without receipt of Lessor’s prior consent to (a) any entity resulting from a merger or consolidation or (b) any entity succeeding to the business and assets of Lessee. Notwithstanding anything to the contrary contained in this Lease, Lessor shall not be entitled to any portion of the consideration received by Lessee in connection with any assignment, subletting, transfer, merger or other transfer contemplated by this Section 12.5 and in no event shall any such amounts be deemed to be Profits.

Section 12.6 Occupancy by Others. Lessee may allow any person or company which is a customer of Lessee or which is providing service to Lessee, to occupy certain portions of the Premises (not to exceed ten percent (10%) of the rentable area of the Premises) without such occupancy being deemed an assignment or subleasing as long as no new demising walls are constructed to accomplish such occupancy and as long as such relationship was not created as a subterfuge to avoid the obligations set forth in this Article 12. Notwithstanding anything to the contrary contained in this Lease, Lessor shall not be entitled to any portion of the consideration received by Lessee in connection with any occupancy contemplated by this Section 12.6 and in no event shall any such amounts be deemed to be Profits.

ARTICLE 13 – COMMON AREA; UTILITIES

Section 13.1 Common Area. Subject in all cases and at all times to (i) the terms and conditions set forth in this Lease, including without limitation, the rights reserved by Lessor with respect to the Common Area, and (ii) compliance with applicable Laws:

(a) Lessee shall have the exclusive right to use the Common Area;

(b) Lessor may : (i) restrain unauthorized persons from using the Common Area; and/or (ii) temporarily close any portion of the Common Area (A) for repairs, improvements or alterations as Lessor is required to perform (x) to comply with Lessor’s repair and maintenance obligations under this Lease or (y) to comply with applicable Laws, or (B) to prevent dedication or prescriptive rights.

Section 13.2 Payment for Utilities. Lessee shall be responsible for obtaining and paying for all utilities supplied to the Building directly from the applicable utility provider including (i) electricity, (ii) water, (iii) trash removal, and (iv) gas, if any.

ARTICLE 14 – INDEMNIFICATION; INSURANCE

Section 14.1 Indemnification. Effective as of the Effective Date, Lessee shall, at its expense, protect, defend, indemnify and hold Lessor and Lessor’s agents, contractors, licensees, employees, directors, officers, partners, trustees, invitees, affiliates, subsidiaries, successors, assigns, heirs, shareholders and members (collectively, “Lessor’s Employees”) and any and all of Lessor’s lessors and mortgagees (whose names shall have been furnished to Lessee) harmless from and against any and all claims, arising out of or in connection with Lessee’s use of the Premises, the Building or the Property, the conduct of Lessee’s business, any activity, work or things done, permitted or allowed by Lessee in or about the Premises or the Building, Lessee’s or Lessee’s Employees’ nonobservance or nonperformance of any statute, ordinance, rule, regulation or other Law, or any negligence or willful act or failure to act of Lessee or Lessee’s Employees. Effective as of the Effective Date, Lessor shall, at its expense, protect, defend, indemnify and hold Lessee and Lessee’s Employees harmless from and against any and all claims, arising out of or in connection with Lessor’s or Lessor’s Employees’ nonobservance or nonperformance of any statute, ordinance, rule, regulation or other Law, or any negligence or willful act or failure to act of Lessor or Lessor’s Employees. These indemnities shall survive the expiration or earlier termination of this Lease. Lessor has made no express representations or warranties and disclaims any implied representations or warranties relating to the condition of the Property, Building, Premises, or any part thereof, including, without limitation, the building systems (including the HVAC system), and the indoor air quality (“IAQ”) within the Building. Lessor shall not be liable for any latent or patent defects therein. Lessor acknowledges that Lessee has no obligation to perform any Alteration to the existing leasehold improvements in the Premises to satisfy the requirements of the Minimum Building Standard Lessee Improvement Finishes & Materials attached to the Construction Work Letter as Schedule “C-1”.

 

20

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 14.2 Insurance. Effective as of the Effective Date, Lessee and Lessor, as applicable, shall have the following insurance obligations:

(a) Liability Insurance. Lessee shall obtain and keep in full force a policy of commercial general liability insurance to cover Third Party Damage and Bodily Injury (including non-owned and hired automotive liability) personal injury and broad form contractual liability under which Lessee is named as the insured and Lessor, Lessor’s Employees and all of Lessor’s lessors and mortgagees (whose names from time to time shall have been furnished to Lessee) are named as additional insureds under which the insurer agrees to indemnify, protect, defend, and hold Lessor, its managing agent and all such lessors and mortgagees harmless from and against reasonable costs, expenses and liabilities arising out of or based upon the indemnification obligations of this Lease. The minimum limits of liability shall be a combined single limit with respect to each occurrence of not less than Two Million Dollars ($2,000,000.00). The Lessee’s policy shall contain a separation of insureds clause identical in form and substance to the Separations of Insureds clause contained in the standard ISO form #CGOO 01 (10-01) and shall not otherwise eliminate cross-liability. The policy also shall be primary coverage for Lessee and Lessor for any liability arising out of Lessee’s and Lessee’s Employees’ use, occupancy, maintenance, repair and replacement of the Premises and all areas appurtenant thereto. Such insurance shall provide that it is primary insurance and not “excess over” or contributory with any other valid, existing and applicable insurance in force for or on behalf of Lessor. Not more frequently than once each year, if, in the reasonable opinion of Lessor’s lender or of the insurance consultant retained by Lessor, the amount of public liability and property damage insurance coverage at that time is not adequate, Lessee shall increase the insurance coverage as reasonably required by either Lessor’s lender or Lessor’s insurance consultant;

(b) Lessee’s Property Insurance. Lessee shall maintain on all of its Personal Property, Lessee Improvements and Alterations, in, on or about the Premises, an “All-Risk” or Special Form Property policy that will be valued at replacement cost;

(c) Worker’s Compensation. Lessee shall maintain Worker’s Compensation and Employer’s Liability insurance as required by law with Employer’s Liability limits as required by applicable law;

(d) Business Income. Lessee shall maintain loss of income and business interruption insurance in such amounts as will reimburse Lessee for direct or indirect loss of earnings and incurred costs attributable to all perils commonly insured against by Lessee’s property insurance described above, but in no event in an amount less than the Rent and all Additional Rent payable hereunder for twelve (12) months;

(e) Intentionally Deleted;

(f) Insurance Criteria. All the insurance required under this Lease shall:

(i) Be issued by insurance companies admitted or authorized to business in the State of California, with a financial rating of at least an A-X status as rated in the most recent edition of Best’s Insurance Reports;

(ii) Be issued as a primary policy as respects any insurance maintained by the Lessor, and that any such insurance maintained by the Lessor, is excess and noncontributory with this policy, provided the loss is caused by the negligence of the named insured;

(iii) Contain an endorsement requiring written notice from the insurance company to both Parties and to Lessor’s lender before cancellation; and

(iv) With respect to property loss or damage by fire or other casualty, a waiver of subrogation must be obtained, as required by Section 14.4;

(g) Evidence of Coverage. As evidence of the insurance coverage required herein, except worker’s compensation, Lessee shall provide Lessor with written confirmation from the insurer with respect to the insurance policies that is satisfactory to Lessor confirming that such coverage in is effect and that Lessor and Lessor’s affiliates, subsidiaries, successors, assigns, directors, officers, shareholders, partners, members, employees and lenders

 

21

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(“Lessor’s Parties”) are additional insured parties with respect to the coverage required in Section 14.2(a). Such written confirmation shall be delivered to Lessor at least five (5) business days prior to the date which Lessor estimates the Commencement Date will occur (the delivery of which to Lessor shall be a condition to Lessee entering onto the Premises to either commence the performance of Lessee’s Improvements or occupy the Premises), and on renewal of the policy not less than five (5) business days prior to the expiration of the term of the policy. Not later than fifteen (15) business days after the delivery of such written confirmation to Lessor, Lessee shall deposit with Lessor an endorsement from the insurer with respect to such coverage, together with an Accord Binder therefor.

(h) No Limitation of Liability. The insurance obligations of Lessee and Lessor hereunder, and/or the limits on such insurance as described herein shall in no event waive, release or discharge Lessee or Lessor of any or all of their respective other obligations and liabilities contained in this Lease or otherwise; and

(i) Lessor’s Insurance. At all times during the Term of this Lease, Lessor, as part of Operating Expenses, shall maintain on the Building an “All-Risk” or Special form Property policy that will be valued at 100% replacement cost. Lessor shall also obtain and keep in full force (a) a policy of commercial general liability and property damage insurance, (b) loss of rent insurance for twelve (12) months and (c) workers’ compensation insurance, all such insurance being in amounts and with deductibles comparable to the insurance being carried by landlords of Comparable Buildings.

Section 14.3 Assumption of Risk. Lessee, as a material part of the consideration to Lessor, hereby assumes all risk of damage to Lessee’s Personal Property, Lessee Improvements and Alterations or injury to persons, in, upon or about the Premises and/or the Property from any cause and Lessee hereby waives all such claims against Lessor except for damage or injury caused by the gross negligence or willful misconduct of Lessor. Lessor and Lessor’s Employees shall not be liable for any damage to any of Lessee’s Personal Property entrusted to Lessor or Lessor’s Employees, nor for loss or damage to any of Lessee’s Personal Property by theft or otherwise. Lessee shall give prompt notice to Lessor in case of fire or accidents in the Premises or in the Building. Further, except for the indemnification obligations set forth in Section 14.1 above, Lessor and Lessor’s Employees shall have no liability to Lessee or any of Lessee’s Employees for any damage, loss, cost or expense incurred or suffered by any of them (including, without limitation, damage to Lessee’s business), and Lessee hereby waives any claim with respect to Lessor’s and Lessor’s Employees’ acts or omissions hereunder, including, without limitation, any claims relating to the maintenance, repair, restoration and/or replacement of the Premises, or the Building, and the exercise of any other right which Lessor is authorized hereunder to do.

Section 14.4 Allocation of Insured Risks/Subrogation. Notwithstanding anything to the contrary contained herein, Lessor and Lessee release each other from any claims and demands of whatever nature for damage, loss or injury to the Premises and/or the Building, or to the other’s property in, on or about the Premises and the Building, that are caused by or result from risks or perils insured against under any insurance policies required by this Lease to be carried by Lessor and/or Lessee and in force at the time of any such damage, loss or injury. Lessor and Lessee shall cause each insurance policy obtained by them or either of them to provide that the insurance company waives all right of recovery by way of subrogation against either Lessor or Lessee in connection with any damage covered by any policy. Neither Lessor nor Lessee shall be liable to the other for any damage caused by fire or any of the risks insured against under any insurance policy required by this Lease. If an insurance policy cannot be obtained with a waiver of subrogation, or is obtainable only by the payment of an additional premium charge above that charged by insurance companies issuing policies without waiver of subrogation, the Party undertaking to obtain the insurance shall notify the other Party of this fact. The other Party shall have a period of ten (10) days after receiving the notice either to place the insurance with a company that is reasonably satisfactory to the other Party and that will carry the insurance with a waiver of subrogation, or to agree to pay the additional premium if such a policy is obtainable at additional cost. If the insurance cannot be obtained or the Party in whose favor a waiver of subrogation is desired refuses to pay the additional premium charged, the other Party is relieved of the obligation to obtain a waiver of subrogation with respect to the particular insurance involved.

ARTICLE 15 – DAMAGE OR DESTRUCTION

Section 15.1 Loss Covered by Insurance. If, at any time prior to the expiration or termination of this Lease, the Premises or the Building or the Property is wholly or partially damaged or destroyed by a casualty, the loss to Lessor from which is fully covered (except for the normal deductible) by insurance maintained by Lessor or for

 

22

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Lessor’s benefit, which casualty renders the Premises totally or partially inaccessible or unusable by Lessee in the ordinary conduct of Lessee’s business, then (provided that Lessor shall not be required to use the proceeds of such insurance for the purposes described in subsections (a) and (b) below):

(a) Repairs Which Can Be Completed Within Fifteen Months. Within forty-five (45) days of notice to Lessor of such damage or destruction, Lessor shall provide Lessee with notice of its reasonable determination of whether the damage or destruction can be repaired within fifteen (15) months of such damage or destruction without the payment of overtime or other premium. If all repairs to such Premises or Building or Property can, in Lessor’s judgment, be completed within fifteen (15) months following the date of notice to Lessor of such damage or destruction without the payment of overtime or other premium, Lessor shall, at Lessor’s expense, subject to Section 15.4 below, repair the same to substantially their former condition and this Lease shall remain in full force and effect and a proportionate reduction of Base Rental and any Additional Rent shall be allowed Lessee (to the extent of the proceeds of rental interruption insurance received by Lessor) for such portion of the Premises as shall be rendered inaccessible or unusable to Lessee, and which is not used by Lessee, during the period of time that such portion is unusable or inaccessible and not used by Lessee. If Lessor fails to (x) commence restoration within 120 days or (y) complete restoration and deliver the Premises to Lessee within fifteen (15) months (as extended to the extent of any Force Majeure) following the date of notice to Lessor of such damage or destruction, then Lessee may, at Lessor’s sole and absolute option, upon written notice to Lessor, elect to terminate this Lease; or

(b) Repairs Which Cannot Be Completed Within Fifteen Months. If all such repairs to the Premises or Building or Property cannot, in Lessor’s reasonable judgment, be completed within fifteen (15) months following the date of notice to Lessor of such damage or destruction without the payment of overtime or other premium, Lessor shall notify Lessee of such determination within forty-five (45) days after notice to Lessor of the occurrence of such damage or destruction, and either Lessor or Lessee may, by written notice to the other no later than ninety (90) days after the occurrence of such damage or destruction, elect to terminate this Lease as of the date of the occurrence of such damage or destruction.

Section 15.2 Loss Not Covered By Insurance. If, at any time prior to the expiration or termination of this Lease, the Premises or the Building or the Property is totally or partially damaged or destroyed from a casualty, which loss to Lessor is not fully covered (except for any deductible) by insurance maintained by Lessor or for Lessor’s benefit, and which damage renders the Premises inaccessible or unusable to Lessee in the ordinary course of its business, Lessor may, at its option, upon written notice to Lessee within sixty (60) days after notice to Lessor of the occurrence of such damage or destruction, and subject to Section 15.4 below, elect to repair or restore such damage or destruction to substantially their former condition, or Lessor may elect to terminate this Lease (provided Lessor shall not be required to use said insurance proceeds, if any, for the purposes described in this Section 15.2). If Lessor elects to repair or restore such damage or destruction, this Lease shall continue in full force and effect but the Base Rental shall be proportionately reduced as provided in Section 15.1(a). If Lessor does not elect by notice to Lessee to repair or restore such damage, this Lease shall terminate.

Section 15.3 Damage During Final Year. Notwithstanding anything to the contrary contained in Section 15.1 or 15.2: if the Premises or the Building or the Property are wholly or partially damaged or destroyed within the final twelve (12) months of the Term of this Lease, and no renewal rights have been exercised by Lessee prior to such damage or destruction and such damage or destruction cannot be repaired within sixty (60) days of such damage or destruction without the payment of overtime or other premium, then Lessor or Lessee shall have the right to terminate this Lease by written notice thereof.

Section 15.4 Exclusive Remedy. This Article 15 shall be Lessee’s sole and exclusive remedy in the event of damage or destruction to the Premises and/or the Building, and Lessee, as a material inducement to Lessor’s entering into this Lease, irrevocably waives and releases Lessee’s rights under California Civil Code Sections 1932(2) and 1933(4) and any other applicable existing or future law permitting the termination of a lease agreement in the event of damage to, or destruction of, any part or all of the Premises and/or Building. No damages, compensation or claim shall be payable by Lessor for any inconvenience, any interruption or cessation of Lessee’s business, or any annoyance, arising from any damage to or destruction of all or any portion of the Premises or the Building. In no event shall Lessor have any obligation to repair or restore any of Lessee’s personal property or trade fixtures.

 

23

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 15.5 Lessee’s Assignment of Insurance Proceeds. Upon the occurrence of any damage to the Premises, upon notice to Lessee from Lessor, Lessee shall assign to Lessor all insurance proceeds payable to Lessee for the Lessee Improvements or Alterations under Lessee’s insurance required under Section 14.2(b) of this Lease (but excluding all insurance proceeds relating to Lessee’s Personal Property), and Lessor, as part of Lessor’s reconstruction of the Premises, shall repair any injury or damage to the Lessee Improvements and Alterations installed in the Premises and shall return such Lessee Improvements and Alterations to their original condition or as reasonably modified by Lessee; provided that if the cost of such repair by Lessor exceeds the amount of insurance proceeds received by Lessor from Lessee’s insurance carrier, as assigned by Lessee, the cost of such repairs shall be paid by Lessee to Lessor prior to Lessor’s commencement of repair of the damage.

ARTICLE 16 – EMINENT DOMAIN

Section 16.1 Permanent Taking—When Lease Can Be Terminated. If the whole of the Premises, or so much of the Premises as to render the balance unusable by Lessee, shall be taken under the power of eminent domain, this Lease shall automatically terminate as of the date of final judgment in such condemnation, or as of the date possession is taken by the condemning authority, whichever is earlier. A sale by Lessor under threat of condemnation shall constitute a “taking” for the purpose of this Article 16. No award for any partial or entire taking shall be apportioned and Lessee assigns to Lessor all awards which may be made in such taking or condemnation, together with all rights of Lessee to such award, including, without limitation, any award of compensation for the value of all or any part of the leasehold estate created hereby; provided that nothing contained in this Article 16 shall be deemed to give Lessor any interest in or to require Lessee to assign to Lessor any award made to Lessee for (a) the taking of Lessee’s Personal Property, or (b) interruption of or damage to Lessee’s business (including moving costs), or (c) Lessee’s unamortized cost of the Lessee Improvements to the extent paid for by Lessee; provided further that Lessee’s award shall in no event diminish the award to Lessor.

Section 16.2 Permanent Taking—When Lease Cannot Be Terminated. In the event of a partial taking which does not result in a termination of this Lease under Section 16.1, Base Rental shall be proportionately reduced based on the portion of the Premises rendered unusable, and Lessor shall restore the Premises or the Building to the extent of available condemnation proceeds.

Section 16.3 Temporary Taking. No temporary taking of the Premises or any part of the Premises and/or of Lessee’s rights to the Premises or under this Lease shall terminate this Lease or give Lessee any right to any abatement of any payments owed to Lessor pursuant to this Lease, any award made to Lessee by reason of such temporary taking shall belong entirely to Lessee; provided, however, in no event shall an award to Lessee reduce any award to Lessor.

Section 16.4 Exclusive Remedy. This Article 16 shall be Lessee’s sole and exclusive remedy in the event of a taking or condemnation. Lessee hereby waives the benefit of California Code of Civil Procedure Section 1265.130.

Section 16.5 Release Upon Termination. Upon termination of this Lease pursuant to this Article 16, Lessee and Lessor hereby agree to release each other from any and all obligations and liabilities with respect to this Lease except such obligations and liabilities which arose or accrued prior to such termination.

ARTICLE 17 – DEFAULTS

Section 17.1 Default by Lessee. Each of the following shall be an “Event of Default” (sometimes referred to herein as a “default”) by Lessee and a material breach of this Lease:

(a) Lessee fails to make any payment of Base Rental or Excess Operating Expenses owed by Lessee under this Lease as and when due, if the failure continues for five (5) business days after written notice of the failure from Lessor to Lessee;

 

24

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(b) Lessee shall fail to observe, keep or perform any of the terms, covenants, agreements or conditions under this Lease that Lessee is obligated to observe or perform, other than that described in subsection (a) above, for a period of thirty (30) days after notice to Lessee of said failure; provided, however, that if the nature of Lessee’s default is such that more than thirty (30) days are reasonably required for its cure, then Lessee shall not be deemed to be in default under this Lease if Lessee shall commence the cure of such default so specified within said thirty (30) day period and diligently prosecute the same to completion thereafter (but in no event shall such cure period exceed one hundred twenty (120) calendar days). Such notice shall be in lieu of, and not in addition to, any notice required under Section 1161 of the California Code of Civil Procedure;

(c) Any of the following shall occur (i) Lessee shall make any general arrangement or assignment for the benefit of creditors; (ii) Lessee shall become a “debtor” as defined in 11 U.S.C. Section 101 or any successor statute thereto (unless, in case of a petition filed against Lessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where possession is not restored to Lessee within 60 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Lessee’s assets located at the Premises or of Lessee’s interest in this Lease, where such seizure is not discharged within 60 days. Provided, however, in the event that any provision of this subparagraph is contrary to any applicable law, such provision shall be of no force or effect.

Any notice required or permitted by this Section 17.1 shall satisfy, to the maximum extent permissible under applicable law, any and all notice requirements imposed by law on the Lessor under the Lease, and this Section 17.1 shall not be intended to create notice obligations beyond what is legally required. Lessor may serve a notice to quit, a notice to pay rent or quit, a notice of default, or any other notice, as the case may be, to effect the giving of any notice required by this Section 17.1.

Section 17.2 Default by Lessor. Lessor shall not be in default in the performance of any obligation required to be performed under this Lease unless Lessor has failed to perform such obligation within thirty (30) days after the receipt of notice from Lessee specifying Lessor’s failure to perform; provided, however, that if the nature of Lessor’s obligation is such that more than thirty (30) days are required for its performance, then Lessor shall not be deemed in default if it shall commence such performance within such thirty (30) day period and thereafter and diligently pursues such cure to completion thereafter (but in no event shall such cure period exceed one hundred twenty (120) calendar days). Notwithstanding anything to the contrary contained in this Lease, except as expressly provided in Section 10.1(b), Lessee’s remedy for any breach or default of this Lease by Lessor shall be limited to an action for damages or an action for specific performance or injunctive relief. Lessee agrees that, in the event that it becomes entitled to receive damages from Lessor, Lessee shall not be allowed to recover from Lessor consequential damages as a result of a default by Lessor. Lessor agrees that, in the event that it becomes entitled to receive damages from Lessee, Lessor shall not be allowed to recover from Lessee consequential damages as a result of a default by Lessee, except with respect to Lessee’s indemnification obligations under Section 22.1 below resulting from Lessee’s failure to timely surrender possession of the Premises. In any event, it is expressly understood and agreed that notwithstanding anything in this Lease to the contrary, and notwithstanding any applicable law to the contrary, the liability of Lessor hereunder (including any successor lessor) and any recourse by Lessee against Lessor shall be limited solely and exclusively to the interest of Lessor in and to the Property and Building, and neither Lessor, nor any of its constituent partners, shall have any personal liability therefor, and Lessee hereby expressly waives and releases such personal liability on behalf of itself and all persons claiming by, through or under Lessee. Except as otherwise set forth herein, Lessee hereby waives and relinquishes any right which Lessee may have to terminate this Lease or withhold any payment owed by Lessee under this Lease, on account of any damage, condemnation, destruction or state of disrepair of the Premises (including, without limiting the generality of the foregoing, those rights under California Civil Code Sections 1941, 1941.1 and 1942).

ARTICLE 18 – LESSOR’S REMEDIES AND RIGHTS

Section 18.1 Termination of Lease. In case of an Event of Default by Lessee, Lessor shall have the right, in addition to all other rights available to Lessor under this Lease or now or later permitted by law or equity, to terminate this Lease by providing Lessee with a notice of termination. Upon termination, Lessor may recover any damages proximately caused by Lessee’s failure to perform under this Lease, or which are likely in the ordinary course of business to be incurred, including any amount expended or to be expended by Lessor in an effort to mitigate damages, as well as any other damages to which Lessor is entitled to recover under any statute now or later in effect. Lessor’s damages include the worth, at the time of any award, of the amount by which the unpaid Rent for the balance of the Term after the time of the award exceeds the amount of the Rent loss that the Lessee proves could be reasonably avoided. The worth at the time of award shall be determined by discounting to present value such amount at one percent (1%) more than the discount rate of the Federal Reserve Bank in San Francisco in effect at the time of the award. Other damages to which Lessor is entitled shall bear interest at the Interest Rate.

 

25

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 18.2 Continuation of Lease. In accordance with California Civil Code Section 1951.4 (or any successor statute), Lessee acknowledges that in the event Lessee has breached this Lease and abandoned the Premises, this Lease shall continue in effect for so long as Lessor does not terminate Lessee’s right to possession, and Lessor may enforce all its rights and remedies under this Lease, including the right to recover the Rent as it becomes due under this Lease. Acts of maintenance or preservation or efforts to re-let the Premises or the appointment of a receiver upon initiative of Lessor to protect Lessor’s interest under this Lease shall not constitute a termination of Lessee’s right to possession.

Section 18.3 Right of Entry. In case of an Event of Default by Lessee, Lessor shall also have the right, with or without terminating this Lease, to enter the Premises and remove all persons and personal property from the Premises, such property being removed and stored in a public warehouse or elsewhere at Lessee’s sole cost and expense for at least thirty (30) days, and after such thirty (30) day period, Lessor shall have the right to discard or otherwise dispose of such property without liability therefor to Lessee or any other person. No removal by Lessor of any persons or property in the Premises shall constitute an election to terminate this Lease. Such an election to terminate may only be made by Lessor in writing, or decreed by a court of competent jurisdiction. Lessor’s right of entry shall include the right to remodel the Premises and re-let the Premises. All costs incurred in such entry and re- letting shall be paid by Lessee. Rents collected by Lessor from any other tenant which occupies the Premises shall be offset against the amounts owed to Lessor by Lessee. Lessee shall be responsible for any amounts not recovered by Lessor from any other tenant which occupies the Premises. Any payments made by Lessee shall be credited to the amounts owed by Lessee in the sole order and discretion of Lessor, irrespective of any designation or request by Lessee. No entry by Lessor shall prevent Lessor from later terminating this Lease by written notice.

Section 18.4 Remedies. Lessee hereby waives, for itself and all persons claiming by and under Lessee, all rights and privileges which it might have under any present or future law to redeem the Premises or to continue this Lease after being dispossessed or ejected from the Premises. The rights and remedies of Lessor set forth in this Lease are not exclusive, and Lessor may exercise any other right or remedy available to it under this Lease, at law or in equity.

Section 18.5 Lessor’s Right to Assign. Lessor shall have the right to sell, encumber, convey, transfer and/or assign any and all of its rights and obligations under this Lease.

Section 18.6 Intentionally Deleted.

ARTICLE 19 – ATTORNEYS’ FEES

Section 19.1 Attorneys’ Fees. If either Lessor or Lessee commences or engages in, or threatens to commence or engage in, any action, litigation, arbitration or proceeding against the other Party arising out of or in connection with this Lease, the Premises, the Building or the Property, including, but not limited to, any action or proceeding (a) for recovery of any payment owed by either Party under this Lease, or (b) to recover possession of the Premises, or (c) for damages for breach of this Lease, or (d) relating to the enforcement or interpretation of either Party’s rights or obligations under this Lease (whether in contract, tort, or both), or (e) relating to any proceeding where either Party is requesting a determination of rights and responsibilities under the Lease, the prevailing Party shall be entitled to have and recover from the losing Party reasonable attorneys’ fees and other costs and expenses incurred in connection with the action, litigation, arbitration or proceeding, including any attorney’s fees, costs and expenses incurred in preparation of said action, litigation, arbitration or proceeding, and also incurred on collection and appeal. If Lessor becomes involved in any action, litigation, arbitration or dispute, threatened or actual, by or against anyone not a party to this Lease, but arising by reason of, or related to, any act or omission of Lessee or Lessee’s Employees, Lessee agrees to pay Lessor’s reasonable attorneys’ fees and other costs incurred in connection with the action, litigation, arbitration or dispute, regardless of whether an action, lawsuit or arbitration proceeding is actually filed. If Lessee becomes involved in any action, litigation, arbitration or dispute, threatened or actual, by or against anyone not a party to this Lease, but arising by reason of or related to any act or omission of Lessor or Lessor’s Employees, Lessor agrees to pay Lessee’s reasonable attorneys’ fees and other costs incurred in connection with the action, litigation, arbitration or dispute, regardless of whether an action, lawsuit or arbitration proceeding is actually filed.

 

26

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


ARTICLE 20 – SUBORDINATION, NON-DISTURBANCE AND ATTORNMENT

Section 20.1 Obligations of Lessee. This Lease and the rights granted to Lessee by this Lease are and shall be subject and subordinate at all times to (a) all ground or underlying leases affecting all or any part of the Property now or later existing and all amendments, renewals, modifications, supplements and extensions of this Lease, and (b) all deeds of trust or mortgages now or later affecting or encumbering all or any part of the Property and/or any ground or underlying leasehold estate; provided, however, that if Lessor elects at any time to have Lessee’s interest in this Lease be or become superior, senior or prior to any such instrument, then upon receipt by Lessee of written notice of such election, this Lease shall be superior, senior and/or prior to such instrument. If, at any time during the Term of this Lease, Lessor elects to encumber the Building with a ground/underlying, lease, deed of trust or mortgage, Lessor shall, as a condition to Lessee’s agreement to subordinate this Lease to such ground/underlying lease, deed of trust or mortgage, deliver to Lessee, a Subordination, Non-Disturbance and Attornment Agreement reasonably acceptable to Lessee confirming the subordination and/or superiority, as applicable, of this Lease to such mortgage, deed of trust, ground or underlying lease and the non-disturbance of Lessee’s tenancy in the Premises as long as there is no default by Lessee following written notice and expiration of the applicable cure period under the Lease, if any. Lessor shall use commercially reasonable efforts to cause Lessor’s existing lender holding a deed of trust encumbering the Building to execute in favor of Lessee a subordination, non-disturbance and attornment agreement in commercially reasonable form.

Section 20.2 Lessor’s Right to Assign. Lessor’s interest in this Lease may be assigned to any mortgagee or trust deed beneficiary as additional security. Nothing in this Lease shall empower Lessee to do any act without Lessor’s prior written consent which can, shall or may encumber the title of the owner of all or any part of the Property.

Section 20.3 Attornment by Lessee. In the event of the cancellation or termination of any or all ground or underlying leases affecting all or any part of the Building in accordance with its terms or by the surrender thereof, whether voluntary, involuntary or by operation of law, or by summary proceedings, or in the event of any foreclosure of any or all mortgages or deeds of trust encumbering all or any part of the Building by trustee’s sale, voluntary agreement, deed in lieu of foreclosure, or by the commencement of any judicial action seeking foreclosure, Lessee, at the request of the then landlord under this Lease, shall attorn to and recognize (a) the ground or underlying lessor, under the ground or underlying lease being terminated or canceled, and (b) the beneficiary or purchaser at the foreclosure sale, as Lessee’s landlord under this Lease, and Lessee agrees to execute and deliver at any time upon request of such ground or underlying lessor, beneficiary, purchaser or their successors, any and all reasonable instruments to further evidence such attornment provided any such purchaser or lender shall agree not to disturb Lessee’s tenancy in the Premises as provided in Sections 20.1 and 20.4. Lessee hereby waives its right, if any, to elect to terminate this Lease or to surrender possession of the Premises in the event of any such cancellation or termination of such ground or underlying lease or foreclosure of any mortgage or deed of trust.

Section 20.4 Non-Disturbance. Notwithstanding any of the provisions of this Article 20 to the contrary, Lessee shall be allowed to occupy the Premises subject to the conditions of this Lease, and this Lease shall remain in effect until an Event of Default occurs or until Lessee’s rights hereunder are terminated because of an Eminent Domain proceeding pursuant to Article 16 or because of the occurrence of damage and destruction pursuant to Article 15.

Section 20.5 Delivery of Instruments. If Lessee fails to execute and deliver, within fifteen (15) days after receipt of written request thereof by Lessor, any documents or instruments required by this Article 20, such failure shall constitute a default under this Lease, which default shall be subject to cure pursuant to Section 17.1(b) hereof (but with no extension of the thirty (30) day cure period thereunder).

 

27

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


ARTICLE 21 – RULES AND REGULATIONS

Section 21.1 Rules and Regulations. Effective as of the Effective Date, Lessee shall faithfully observe and comply with the rules and regulations pertaining to the Property (“Rules and Regulations”), a copy of which is attached to this Lease as Exhibit “E” and all reasonable modifications and additions to the Rules and Regulations from time to time put into effect by Lessor; provided, however, that no modifications or additions to the Rules and Regulations shall materially reduce Lessee’s rights (or Lessor’s obligations) or materially increase Lessee’s obligations (or Landlord’s rights) or materially increase Tenant’s monetary obligations. Lessor shall not be responsible to Lessee for the nonperformance of any of the Rules and Regulations by any other occupant or tenant of the Property; provided, however, that Lessor shall use commercially reasonable efforts (but not including the institution of legal proceedings) to cause such other tenants and occupants of the Property to comply with the Rules, to the extent such non-compliance materially and adversely interferes with Lessee’s access to the Premises or use of the Premises for the purposes permitted under this Lease.

Section 21.2 Certain Construction Requirements. Prior to undertaking any physical work in or around the Premises, Lessee shall notify Lessor, in writing, of the exact nature and location of the proposed work and shall promptly supply such additional information regarding the proposed work as Lessor shall reasonably request. After receipt of Lessee’s notice, Lessor may, to the extent appropriate, supply Lessee with the Building’s reasonable regulations and procedures for working in areas where there is a risk of coming into contact with materials or building systems which if not properly handled could cause health or safety risks, is reasonably likely to damage such systems and/or the Building, or which is reasonably likely to adversely impact any warranty relating thereto. Lessee shall, at Lessee’s sole cost and expense, comply with all such reasonable Building regulations and procedures established by Lessor and with all applicable Laws with respect to such physical work in or around the Premises. Upon 48 hours prior notice to Lessee (except for emergencies, in which case no prior notice shall be required) and only if accompanied by a representative of Lessee, Lessor shall have the right to enter the Premises during reasonable business hours to monitor the work for compliance with the Building reasonable regulations and procedures, the Rules and all Laws (however, if Lessee shall fail to promptly provide a representative of Lessee to accompany Lessor, then Lessor shall be permitted to enter the Premises without a representative of Lessee). If Lessor reasonably determines that any applicable Laws or any Rules and/or any Building regulations or procedures are not being complied with in a material respect, Lessor may immediately require, by written demand, the cessation of all work being performed in or around the Premises until such time as Lessor is reasonably satisfied that the applicable Rules, Laws, regulations and procedures will be observed. Lessor’s monitoring of any work in or around the Premises shall not be deemed a certification by Lessor of compliance with any applicable Laws, Rules, Building regulations or procedures or a waiver by Lessor of its right to require strict compliance with such Laws, Rules, regulations or procedures, nor shall such monitoring relieve Lessee from any liabilities relating to such work.

ARTICLE 22 – HOLDING OVER

Section 22.1 Surrender of Possession. Lessee shall surrender possession of the Premises immediately upon the expiration of the Term or termination of this Lease. If Lessee shall continue to occupy or possess the Premises after such expiration or termination without the consent of Lessor, then unless Lessor and Lessee have otherwise agreed in writing, Lessee shall be a tenant from month-to-month. All the terms, provisions and conditions of this Lease shall apply to this month-to-month tenancy except those terms, provisions and conditions pertaining to the Term, and except that the Base Rental shall be as follows (i) for the first two (2) months of such holding over, the Base Rental shall be one hundred twenty-five percent (125%) of the Base Rental for the Premises in effect under this Lease during the month which includes the day immediately prior to the date of the expiration or termination of this Lease, and (ii) thereafter, the Base Rental shall be one hundred fifty percent (150%) of the Base Rental for the Premises in effect under this Lease during the month which includes the day immediately prior to the date of the expiration or termination of this Lease. This month-to-month tenancy may be terminated by Lessor or Lessee upon thirty (30) days’ prior notice to the other Party. In the event that Lessee fails to surrender the Premises upon such termination or expiration (and provided that Lessor has provided Lessee with at least thirty (30) days prior written notice that Lessor has a signed proposal or lease from a succeeding lessee to lease the Premises), then Lessee shall indemnify, defend and hold Lessor harmless against all loss or liability resulting from or arising out of Lessee’s failure to surrender the Premises, including, but not limited to, any amounts required to be paid to any tenant or prospective tenant who was to have occupied the Premises after said termination or expiration and any related attorneys’ fees and brokerage commissions.

 

28

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 22.2 Payment of Money After Termination. No payment of money by Lessee to Lessor after the termination of this Lease by Lessor, or after the giving of any notice of termination to Lessee by Lessor which Lessor is entitled to give Lessee under this Lease, shall reinstate, continue or extend the Term of this Lease or shall affect any such notice given to Lessee prior to the payment of such money, it being agreed that after the service of such notice or the commencement of any suit by Lessor to obtain possession of the Premises, Lessor may receive and collect, when due, any and all payments owed by Lessee under this Lease, and otherwise exercise any and all of its rights and remedies. The making of any such payments by Lessee or acceptance of same by Lessor shall not waive such notice of termination, or in any manner affect any pending suit or judgment obtained.

ARTICLE 23 – INSPECTIONS AND ACCESS

Section 23.1 Inspections And Access. Upon twenty-four (24) hours prior notice, provided Landlord shall use reasonable efforts to minimize any interference with Lessee’s business operations, and only if accompanied by a representative of Lessee (however, if Lessee shall fail to promptly provide a representative of Lessee to accompany Lessor, then Lessor shall be permitted to enter the Premises without a representative of Lessee), Lessor may enter the Premises for the purposes set forth in Section 10.2 above and Section 35.28 below.

ARTICLE 24 – NAME OF BUILDING AND CONTINENTAL PARK

Section 24.1 Building Name. Lessee shall not use any name, insignia or logotype of Continental Park for any purpose other than for designating Lessee’s address. Lessee shall not use any picture of Continental Park (other than the Building) in its advertising, stationery or any other manner. Lessee shall not represent to any party that Lessee owns the Building. Lessor expressly reserves the right in Lessor’s sole and absolute discretion, at any time to change the name, insignia, logotype or street address of Continental Park without in any manner being liable to Lessee; provided, however, during the Term, Lessee shall not change the name or street address of the Building.

ARTICLE 25 – SURRENDER OF LEASE

Section 25.1 Surrender Of Lease. The voluntary or other surrender of this Lease by Lessee, shall not work a merger, and shall, at the option of Lessor, terminate all or any existing subleases or subtenancies, or may, at the option of Lessor, operate as an assignment to it of Lessee’s interest in any or all such subleases or subtenancies.

ARTICLE 26 – WAIVER

Section 26.1 Waiver. No obligation, term, covenant, or agreement in this Lease shall be deemed waived unless such waiver is in writing and signed by the Party so waiving the same. The waiver by Lessor or Lessee of any term, covenant, agreement or condition contained in this Lease shall not be deemed to be a waiver of any subsequent breach of the same or of any other term, covenant, agreement, condition or provision of this Lease, nor shall any failure to enforce compliance with any or all of the terms, covenants, agreements, conditions or provisions of this Lease (except as expressly provided in this Lease), or any custom or practice which may develop between the Parties in the administration of this Lease, be construed to waive or lessen the right of Lessor or Lessee to insist upon the performance by the other in strict accordance with all of the terms, covenants, agreements, conditions and provisions of this Lease. The subsequent acceptance by Lessor of any payment owed by Lessee to Lessor under this Lease, or the payment of Rent by Lessee, shall not be deemed to be a waiver of any preceding breach by Lessee of any term, covenant, agreement, condition or provision of this Lease, other than the failure of Lessee to make the specific payment so accepted by Lessor, regardless of Lessor’s or Lessee’s knowledge of such preceding breach at the time of the making or acceptance of such payment. No payment by Lessee, nor receipt by Lessor, of a lesser amount than the Rent required to be paid under this Lease will be deemed to be anything other than a payment on account of the earliest Rent due hereunder. No endorsement or statement on any check, or any letter accompanying any check or payment as Rent, will be deemed an accord and satisfaction. The delivery of Lessee’s keys to any employee or agent of Lessor will not constitute a termination of this Agreement unless Lessor has entered into a written agreement to that effect.

ARTICLE 27 – SALE BY LESSOR

Section 27.1 Sale By Lessor. In the event Lessor shall sell, assign, convey or transfer all or a part of its interest in the Building or any part of the Property, Lessee agrees to attorn to such transferee, assignee or new owner, and upon consummation of such sale, conveyance or transfer, Lessor shall automatically be freed and relieved from all liability and obligations accruing or to be performed from and after the date of such sale, transfer or conveyance.

 

29

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Lessor shall have the right, at Lessor’s sole cost, to subdivide the Property into separate legal lots or parcels and, without materially and adversely affecting the obligations of Lessee, the right to reallocate and adjust the rights, duties and obligations of Lessor and Lessee hereunder so that, as between Lessor and Lessee, those rights, duties and obligations relate only to the lots or parcels on which the Building is located and on which sufficient parking facilities are located to comply with Lessor’s obligations under this Lease.

ARTICLE 28 – NO LIGHT AND AIR EASEMENT

Section 28.1 No Light And Air Easement. Any diminution or shutting off of light or air by any structure which may be erected on the land or upon lands adjacent to or in the vicinity of the Property shall not affect this Lease, abate any payment owed by Lessee under this Lease or otherwise impose any liability on Lessor.

ARTICLE 29 – FORCE MAJEURE

Section 29.1 Force Majeure. Provided that the party claiming the delay delivers written notice of the delay within five (5) business days of the date on which the claimed delay first occurs, a party shall not be chargeable with, liable for, or responsible to the other party (following notice to such other party) for anything or in any amount for any failure to perform or delay caused by: fire; earthquake; explosion; flood; hurricane; the elements; Acts of God or the public enemy; pandemic or other public health crisis; actions, restrictions, limitations or interference of governmental authorities or agents; war; invasion; insurrection; rebellion; riots; strikes or lockouts; inability to obtain necessary materials, goods, equipment, services, utilities or labor; or any other cause whether similar or dissimilar to the foregoing which is beyond the reasonable control of such party; and any such failure or delay due to said causes or any of them shall not be deemed a breach of or default in the performance of this Lease by the party in question. The provisions of this Section 29.1 shall not apply to delays related to financial inability or insolvency of a party and in no event shall the foregoing excuse the payment of Rent by Lessee.

ARTICLE 30 – ESTOPPEL CERTIFICATES

Section 30.1 Estoppel Certificates. Lessee and Lessor shall, at any time and from time to time upon the written request of the other party, within ten (10) business days following such written request from the other party, execute, acknowledge and deliver an estoppel certificate (“Estoppel Certificate”), in writing, in commercially reasonable form. Lessee’s or Lessor’s failure to respond or deliver the Estoppel Certificate within this ten (10) business day period shall constitute an acceptance of the terms stated therein and an acknowledgment by such party that statements included in the estoppel certificate are true and correct, without exception.

ARTICLE 31 – RIGHT TO PERFORMANCE

Section 31.1 Right To Performance. All covenants, conditions and agreements to be performed by Lessee under this Lease shall be performed by Lessee at Lessee’s sole cost and expense. If Lessee shall fail to perform any such covenant, condition or agreement on its part to be performed under this Lease, and such failure shall continue for thirty (30) days after notice thereof to Lessee (provided that no notice shall be required in cases of emergency), Lessor may, but shall not be obligated to do so, without waiving or releasing Lessee from any obligations of Lessee under this Lease, perform any such act on Lessee’s part to be made or performed as provided in this Lease. Any performance by Lessor of Lessee’s obligations shall not waive or cure any Event of Default of Lessee for such failure. All costs incurred by Lessor with respect to any such performance by Lessor (including reasonable attorneys’ fees) shall be immediately paid by Lessee to Lessor.

ARTICLE 32 – PARKING RULES AND REGULATIONS

Section 32.1 Parking Rules and Regulations. Lessee’s privileges during the term hereof with respect to the Parking Spaces shall be in accordance with the rules and regulations set forth in the attached Exhibit “F.”

 

30

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


ARTICLE 33 – SECURITY SYSTEMS

Section 33.1 Lessee’s Right to Install Security System. If Lessee wishes to establish or install any automated and/or non-automated security system in, on or about the Premises, Lessee shall first notify Lessor of Lessee’s plan for any such system, and Lessor shall have the right to review and approve or disapprove said plan in Lessor’s reasonable discretion. If Lessor approves any such plan and Lessee establishes or installs any automated and/or non-automated security system in, on or about the Premises that ties into the security systems of Continental Park (which shall then be considered a Lessee Improvement under this Lease), and should such system materially adversely affect the Continental Park or have an adverse effect on other tenants of Continental Park, Lessor shall subsequently have the right to review Lessee’s security system from time to time and request Lessee to make reasonable changes in personnel and/or equipment. Lessee shall make said requested reasonable changes as promptly as possible upon Lessor’s written request. Lessee shall have sole responsibility for the protection of itself, Lessee’s Employees and all property of Lessee and Lessee’s Employees located in, on or about the Premises or the Building or the Property, and the provisions of Section 14.3 shall, nevertheless, continue in full force and effect. If requested at the time of Lessor’s approval of the installation of the security system, Lessee shall remove any security system installed by Lessee, including any cabling therefor, at Lessee’s expenses, at the expiration of the Term of this Lease or earlier termination thereof.

ARTICLE 34 – NOTICES

Section 34.1 Notices. All notices, requests, consents, approvals, payments in connection with this Lease, or communications that either Party desires or is required or permitted to give or make to the other Party under this Lease, shall only be deemed to have been given, made and delivered, when (a) made or given in writing and personally served; or (b) deposited in the United States mail, certified or registered mail, return receipt requested, postage prepaid to the respective addresses of Lessee or Lessor as set forth below; (c) delivered by a reputable overnight delivery service such as Federal Express, United Parcel Service, or DHL Worldwide Express, with charges prepaid, notice to be effective on delivery if confirmed by the delivery service; or (d) by electronic mail (provided that the sender does not receive an automated reply indicating that the e-mail was not delivered to the intended recipient or that the intended recipient was out of the office). Any notice hereunder that is not sent by electronic mail shall also be sent by electronic mail. Lessor or Lessee may from time to time designate other addresses for notice purposes by written notice to the other in accordance herewith.

 

Lessee’s Address for Notices:    Fisker Inc.
   1888 Rosecrans Ave.
   Manhattan Beach, CA 90266
   Attn: Matt Riley
Copy to:    Orrick, Herrington & Sutcliffe LLP
   1000 Marsh Road
   Menlo Park, CA 94025-1015
   United States
   Attention: Mitchell Zuklie
Lessee’s Address for Billing Purposes:    Fisker Inc.
   1888 Rosecrans Ave., Suite 100
   Manhattan Beach, CA 90245
   Attention: Attn: Matt Riley

 

31

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Lessor’s Address for Notices:    Continental 830 Nash LLC
   c/o Continental Development Corporation
   2041 Rosecrans Avenue, Suite 200
   El Segundo, CA 90245
   Attention: Richard C. Lundquist
Copy to:    Continental Rosecrans Aviation L.P.
   c/o Continental Development Corporation
   2041 Rosecrans Avenue, Suite 200
   El Segundo, CA 90245
   Attention: Gian-Carlo M. Yanke, Esq.
Wiring Instructions:   
and   
   Novos Law LLP
   1801 Century Park East, 16th Floor
   Los Angeles, CA 90067
   Attention: Jordan Fishman
Lessor’s Address for Payment of Rent:   

(a)   If the payment is made by first class mail:

   Continental 830 Nash, LLC
   c/o Continental Development Corporation
   P.O. Box 916
   El Segundo, CA 90245-0916

(b)   If the payment is made by overnight delivery:

   Continental 830 Nash, LLC
   c/o Continental Development Corporation
   2041 Rosecrans Avenue, Suite 200
   El Segundo, CA 90245-0916

ARTICLE 35 – MISCELLANEOUS

Section 35.1 Authorization to Sign Lease. If Lessee is a corporation, each individual executing this Lease on behalf of Lessee represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of Lessee in accordance with a duly adopted resolution of Lessee’s Board of Directors. If Lessee is a partnership or trust, each individual executing this Lease on behalf of Lessee represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of Lessee in accordance with the terms of such entity’s partnership agreement or trust agreement, respectively. If Lessor is a corporation, each individual executing this Lease on behalf of Lessor represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of Lessor in accordance with a duly adopted resolution of Lessee’s Board of Directors. If Lessor is a partnership or trust, each individual executing this Lease on behalf of Lessor represents and warrants that he/she is duly authorized to execute and deliver this Lease on behalf of Lessor in accordance with the terms of such entity’s partnership agreement or trust agreement, respectively.

Section 35.2 Entire Agreement. This Lease contains the entire agreement between the Parties respecting the Premises and all other matters covered or mentioned in this Lease. This Lease may not be altered, changed or amended except by an instrument in writing specifically designated as an amendment to this Lease and signed by both Parties hereto. Lessee acknowledges and agrees that no prior information provided or statements made by Lessor or Lessor’s agents (“Prior Information”) have in any way induced Lessee to enter into this Lease, and that Lessee has satisfied itself of all its concerns prior to entering into this Lease by conducting an independent investigation of the validity of such Prior Information.

 

32

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 35.3 Severability. The illegality, invalidity or unenforceability of any term, condition or provision of this Lease shall in no way impair or invalidate any other term, provision or condition of this Lease, and all such other terms, provisions and conditions shall remain in full force and effect.

Section 35.4 Covenants and Conditions. All provisions, whether covenants or conditions, on the part of Lessee shall be deemed to be both covenants and conditions.

Section 35.5 Gender, Definitions and Headings; Governing Law. The words “Lessor” and “Lessee” as used herein shall include the plural as well as the singular and, when appropriate, shall refer to action taken by or on behalf of Lessor or Lessee by their respective employees, agents or authorized representatives. Words in masculine or neuter gender include the masculine, feminine and neuter. If there is more than one person constituting Lessee, the obligations hereunder imposed upon such persons constituting Lessee shall be joint and several. The paragraph headings of this Lease are not a part of this Lease and shall have no effect upon the construction or interpretation of any part hereof. Subject to the provisions of Articles 12 and 27, and except as otherwise provided to the contrary in this Lease, the terms, conditions and agreements of this Lease shall apply to and bind the heirs, successors, legal representatives and permitted assigns of the Parties hereto. Any reference to the word persons shall be deemed to include a corporation, a government entity, an individual, a general partnership, a limited partnership, a joint venture, a trust and/or an association. This Lease shall be governed by and construed pursuant to the laws of the State of California.

Section 35.6 Exhibits and Riders. The exhibits and riders, if any, that are attached to this Lease shall hereby be incorporated in and made a part of this Lease. In the event a discrepancy, ambiguity or variance should exist between terms and conditions in the Lease and in the exhibits and/or riders thereto, then the terms and conditions of the Lease shall prevail and control.

Section 35.7 Modification for Lender. Upon Lessor’s request and, with respect to Lessor’s existing Lender, provided that such existing lender has executed in favor of Lessee a subordination, non-disturbance and attornment agreement in commercially reasonable form, Lessee agrees to modify this Lease to meet the reasonable requirements of any or all lenders or ground lessors selected by Lessor who request such reasonable modification as a condition precedent to providing any loan or financing or to entering into any ground lease affecting or encumbering the Property or any part thereof, provided that (1) such modification does not (a) increase Base Rental, (b) alter the Term, or (c) materially adversely affect Lessee’s rights under this Lease and (2) such lender or ground lessor delivers a Subordination, Non-Disturbance and Attornment Agreement form reasonably acceptable to Lessee.

Section 35.8 Transportation System Management Program. Lessee hereby covenants and agrees, at its sole cost and expense, to participate in and cooperate with the requirements of any and all government promulgated or sponsored transportation system management programs adopted for the Building and Property.

Section 35.9 Quiet Enjoyment. So long as this Lease is in full force and effect, Lessor covenants and agrees that Lessee shall peaceably and quietly hold, occupy and enjoy the Premises during the Term of this Lease without hindrance or molestation from Lessor subject to the terms and provisions of this Lease.

Section 35.10 No Recordations. Lessor and Lessee agree that in no event and under no circumstances shall this Lease be recorded by Lessee.

Section 35.11 Time is of the Essence. Subject to the provisions of Article 29 of this Lease, time shall be of the essence of this Lease and of each of the provisions hereof.

Section 35.12 Cumulative Remedies. No remedy or election provided, allowed or given by any provision of this Lease shall be deemed exclusive unless so indicated, but shall, whenever possible, be cumulative with all other remedies in law or equity.

 

33

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 35.13 Intentionally Deleted.

Section 35.14 Confidentiality. Lessor shall keep confidential any financial or other confidential information disclosed by Lessee to Lessor in the course of Lessor’s analysis and consideration of Lessee and this Lease (other than information which is a matter of public knowledge or may be obtained from sources readily available to the public), so long as Lessee clearly identifies such information in writing as “confidential” at the time of such disclosure. Lessee shall keep confidential (i) this Lease, and (ii) any financial or other confidential information of Lessor disclosed by Lessor to Lessee in connection with this Lease (other than information which is a matter of public knowledge or may be obtained from sources readily available to the public), so long as Lessor clearly identifies such information in writing as “confidential” at the time of such disclosure. However, such matters may be disclosed: (a) to the directors, officers, partners, members, legal counsel, real estate brokers, and accountants of Lessor or Lessee, as the case may be, to the extent Lessor or Lessee, as the case may be, deems it necessary or appropriate in connection with the evaluation of this Lease; (b) with respect to Lessor, to a potential purchaser of the Property; (c) with respect to Lessee, to secure an assignee or sublessee for the Premises, (d) to potential or existing sources of financing or to potential or existing holders of direct or indirect equity interests of such party (including any disclosures to lenders, investors, underwriters, and other appropriate persons in connection with the offering of equity or debt interests); and (e) to the extent required by applicable Law, court order, or in any litigation in connection with this Lease.

Section 35.15 Lessee’s Responsibility Regarding Hazardous Substances.

(a) Prohibition. Lessee shall not cause or permit the manufacture, generation, storage, use, transportation, treatment, incineration, disposal, discharge or release of any Hazardous Substance in, on, under, from or about the Premises or the Property. Notwithstanding the preceding sentence, Lessee may store and use supplies (in amounts not exceeding quantities normally used for Lessee’s approved use of Premises) containing Hazardous Substances so long as such supplies (a) are of a type and chemical composition commonly associated with Lessee’s approved use of Premises, (b) are stored and used only in such quantities as are reasonably incidental to such use and in compliance with any manufacturer’s directions or warnings and all applicable Laws, and (c) are disposed of by Lessee in compliance with applicable Laws. Lessee shall store and use all such supplies in a manner which reduces to the greatest extent reasonably practical the threat of any release of any Hazardous Substance and shall promptly and with reasonable care clean up any such release to the reasonable satisfaction of Lessor and any governmental authority having jurisdiction thereof. In no event shall Lessee use or store any asbestos-containing materials or PCBs on or about the Property or the Premises.

(b) Required Warnings. Lessee shall give all warnings required by the California Safe Drinking Water and Toxic Enforcement Act of 1986 (California Health & Safety Code §§ 25249.5 et seq.), as amended from time to time, with respect to any exposures occurring in the Premises or as a result of Lessee’s use of the Premises or the Property.

(c) Environmental Problems. If Lessee knows or has reasonable cause to believe that any Hazardous Substance is located or will come to be located on the Premises or Property (an “Environmental Problem”), whether or not caused or permitted by Lessee, Lessee shall, as promptly as possible, notify Lessor. Lessee shall exercise reasonable care to avoid any Lessee Related Environmental Problem (as such term is defined below). Lessee shall give any and all notices of any Lessee Related Environmental Problem required by applicable Environmental Protection Laws, including, without limitation, any notice required by Section 103 of the Comprehensive Environmental Response, Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.) and any notice required by Sections 13271 or 13272 of the California Water Code, as each may be amended from time to time. Lessee shall, as promptly as possible, but in no event later than five (5) business days from the date Lessee shall be informed of the governmental investigation/decree, give Lessor notice of any governmental investigation or any governmental or regulatory action, proceeding, order or decree relating to any Lessee Related Environmental Problem and, at Lessee’s expense, shall timely comply in all respects with any such order or decree, unless Lessor first notifies Lessee that Lessor intends to contest such order or decree. Prior to commencing any corrective or remedial action with respect to any Environmental Problem (except for any such action taken to comply with an order or decree which Lessor has not elected to contest), Lessee shall obtain the consent of Lessor (which shall not be unreasonably withheld, conditioned, or delayed) and each governmental authority exercising jurisdiction with respect to such Environmental Problem.

 

34

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


(d) Lessor’s Access to Information. Within ten (10) business days after Lessor’s written request therefor, Lessee shall provide Lessor with any information reasonably requested by Lessor, to enable Lessor to comply with any applicable Environmental Protection Law.

Environmental Protection Law” means any applicable Law governing the manufacture, generation, storage, use, transportation, treatment, incineration, disposal, discharge, threatened discharge, release or threatened release of any Hazardous Substance, or otherwise relating to the protection of the environment or the health and safety of persons, including, without limitation, the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), the Clean Air Act (42 U.S.C. §§ 7401 et seq.), the Water Pollution Prevention and Control Act (33 U.S.C. §§ 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. §§ 2601 et seq.), the California Hazardous Substance Account Act (CA Health & Safety Code §§ 25300 et seq.), the California Hazardous Waste Control Act (CA Health & Safety Code §§ 25100 et seq.), the California Safe Drinking Water and Toxic Enforcement Act of 1986 (CA Health & Safety Code §§ 25249.5 et seq.) and the Porter Cologne Water Quality Control Act (CA Water Code §§ 13000 et seq.), as each may be amended from time to time.

Hazardous Substance” means any hazardous, toxic, explosive, radioactive, infectious or dangerous substance, material, chemical, waste, contaminant or pollutant, including, without limitation, (a) any “hazardous substance” within the meaning of the Comprehensive Environmental Response Compensation and Liability Act (42 U.S.C. §§ 9601 et seq.) or the Carpenter-Presley-Tanner Hazardous Substance Account Act (CA Health & Safety Code §§ 25300 et seq.), as each may be amended from time to time, (b) any “hazardous waste” within the meaning of the Resource Conservation and Recovery Act (42 U.S.C. §§ 6901 et seq.), as amended from time to time, (c) any “hazardous waste,” “extremely hazardous waste” or “restricted hazardous waste” within the meaning of the California Hazardous Waste Control Act (CA Health & Safety Code §§ 25100 et seq.), as amended from time to time, (d) any “hazardous substance”, “waste” or “sewage” as defined or used in the Porter Cologne Water Quality Control Act (CA Water Code §§ 13000 et seq.), as amended from time to time, (e) petroleum, including crude oil or any fraction thereof, (f) any natural gas, liquefied natural gas, natural gas liquid or synthetic gas usable for fuel (or mixtures of natural and synthetic gas), or (g) any other substance, material, chemical, waste, toxicant, pollutant or contaminant regulated by any applicable Environmental Protection Law.

Lessee Related Environmental Problem” means any Environmental Problem resulting from or related to (a) any act or omission of Lessee or Lessee’s Employees, or (b) Lessee’s use of the Premises or any other part of the Property.

(e) Indemnity by Lessee. If Lessee breaches its obligations stated in this Section 35.15, or if the presence of Hazardous Substances in, upon, under or about the Premises or other portions of the Building or Property caused or permitted by Lessee, Lessee’s Employees or Lessee’s sublessees or their invitees results in the contamination of the Premises or other portions of the Building, in each case in violation of applicable Environmental Protection Laws, then Lessee shall indemnify, defend and hold Lessor and Lessor’s Employees harmless from and against any and all liabilities, costs, expenses, claims, judgments, damages, penalties, fines or losses (including, without limitation, diminution in value of the Premises or other portions of the Building, damages for the loss or restriction on use of rentable or usable space or of any amenity of the Premises or other portions of the Building, damages arising from any adverse impact on marketing of space in the Premises or other portions of the Building, and sums paid in settlement of claims, reasonable attorneys’ fees, consultants’ fees and experts’ fees) which arise after the execution date of this Lease or during the Term of this Lease or after the Term of this Lease as a result of such contamination. This obligation of Lessee to indemnify, defend and hold Lessor harmless shall survive and extend beyond the expiration or earlier termination of this Lease. Lessor expressly acknowledges and agrees that the indemnity in this Section 35.15(e) shall not apply to any Hazardous Substances that are present on, in or under the Premises on or prior to the execution date of this Lease and that Lessee shall have no obligations or liability with respect to any such existing Hazardous Substances.

Section 35.16 Nondiscrimination. The Lessee herein covenants by and for himself, his heirs, executors, administrators and assigns, and all persons claiming under or through him, and this Lease is made and accepted upon and subject to the following conditions. That there shall be no discrimination against or segregation of any person or group of persons on account of sex, marital status, race, color, religion, creed, national origin or ancestry, in the leasing, subleasing, transferring, use or enjoyment of the Premises, nor shall the Lessee himself, or any person claiming under or through him establish or permit any such practice or practices of discrimination or segregation with reference to the selection, location, number, use or occupancy, of tenants, lessees, sublessees, subtenants or vendees in the Premises.

 

35

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 35.17 No Offer. The preparation of this Lease and/or the submission of this Lease to Lessee shall not be deemed an offer to lease the Premises or any other premises to Lessee. This Lease shall only become binding upon Lessor and Lessee when it is fully executed and a fully executed original Lease is delivered by each party hereto.

Section 35.18 Broker’s Commission. Lessor and Lessee each hereby represent and warrant to the other that it has not engaged or dealt with any real estate brokers, salespersons, finders or other persons entitled to any compensation (“Broker’s Commission”) relating to this Lease, except for The Klabin Company and CBRE, Inc. (collectively, the “Brokers”). Lessor shall pay the Brokers’ Commission pursuant to a separate agreement between Lessor and the Brokers. If Lessee’s or Lessor’s representation and warranty contained in this paragraph is inaccurate, then the Party making the inaccurate representation hereby agrees to indemnify, defend, and hold the other harmless from and against any and all liabilities, costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred in connection with the claims of any brokers, salespersons, finders or other persons.

Section 35.19 Joint and Several Obligations of Lessee. If more than one individual or entity comprises Lessee, the obligations imposed on each individual or entity that comprises Lessee under this Lease shall be joint and several.

Section 35.20 Jurisdiction And Enforcement. The Parties hereto agree that this Lease Agreement is made and entered into in the County of Los Angeles, State of California, and that all legal actions relating to this Lease Agreement shall be filed and entertained in the Courts in and for the County of Los Angeles, State of California.

Section 35.21 Intentionally Deleted.

Section 35.22 Compliance with Safety Regulations. Lessee shall comply, and Lessee shall cause Lessee’s Employees to comply, with all safety, fire protection, and evacuation procedures and regulations established by Lessor or by any government agency.

Section 35.23 Costs Incurred by a Party Hereunder. Unless expressly provide otherwise in this Lease, any time a party hereunder is responsible to reimburse the costs incurred by the other party, such costs shall be deemed to mean the actual, reasonable, out-of-pocket costs incurred by the other party.

Section 35.24 Intentionally Deleted.

Section 35.25 Ban on Smoking. Lessee understands that Lessor’s ventilation system in the Building connects to more than one premises and/or to the Building’s common areas, and that the City of Manhattan Beach bans tenants from smoking within their own premises whenever a landlord’s ventilation system connects to more than one premises or to the Building’s commons areas. Therefore, to prevent second-hand smoke from traveling through the Building’s ventilation system and adversely affecting non-smoking tenants in other premises or common areas, Lessee agrees (1) that it will not permit any of Lessee’s Employees to smoke any substance through any form (including, but not limited to, cigarettes, cigars, pipes, hookahs, vaporizers, e-cigarettes or electronic nicotine delivery systems (ENDS)) in the Premises or anywhere within the Building, and (2) that it will implement reasonable measures to direct Lessee’s Employees to smoke outside the Building. Lessee shall comply with all current and future federal, state, and local environmental and IAQ laws, regulations, and industry standards, including, without limitation, any restrictions on smoking in the workplace.

Section 35.26 Financial Information Disclosure. The term “Annual Financial Statements” means current, accurate and complete, and detailed financial statements of the applicable entity, including a balance sheet, statement of operations, statement of cash flows, and related notes to the financial statements, prepared in accordance with generally accepted accounting principles consistently applied. If reasonably required by Lessor, one time per year, after such Annual Financial Statements have been finalized and upon not less than thirty (30) days prior written request, Lessee shall deliver to Lessor consolidated Annual Financial Statements of Lessee and its subsidiaries, certified by the Chief Financial Officer of Lessee to be a fair and true presentation of the current financial position of Lessee and its subsidiaries, provided that Lessee shall have no obligation to deliver any Annual Financial Statements if Lessee is then a publicly traded company.

 

36

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 35.27 Signs.

(a) Exterior Signs. Subject to the terms and conditions set forth in this Section 35.27(a) and Section 35.27(c), Lessee shall be allowed to install and maintain the following signs on the exterior of the Building and the Property (sometimes collectively, the “Exterior Signs”) during the Term of this Lease: (a) the three following exterior signs: (A) one (1) exclusive Identification Signage (as hereinafter defined) on the Rosecrans frontage of the Building (including the parapet) (Lessee may select one of the areas designated by the red circles on Exhibit “B-1” attached hereto, not the area where the Fisker sign is shown on such exhibit), (B) one (1) Identification Signage on the Aviation Boulevard frontage of the Building in the area designated in the red circle on Exhibit “B-2” attached hereto, not the area where the Fisker sign is shown on such exhibit, and (C) one (1) Identification Signage on either the existing monument signage on Aviation Boulevard or one of the other areas designated by the other red circles on Exhibit “B-3” attached hereto, not the area where the Fisker sign is shown on such exhibit; and (b) exclusive use of the existing monument signage on Rosecrans Avenue, which exterior building signs are shown on Exhibits “B-1” through “B-3” attached hereto for purposes of showing general size and location. The term “Identification Signage” means a sign that contains (i) Lessee’s corporate or trade name, and/or (ii) Lessee’s corporate logo. No other names, logos or other content may be contained on any Exterior Signs. The type, size, composition, configuration and location of any proposed new Exterior Signs, as well as any changes to any previously approved Exterior Signs shall be subject to the prior written approval of Lessor, which shall not be unreasonably withheld, conditioned or delayed. Lessee shall be solely responsible for obtaining, at Lessee’s sole cost and expense, all required approvals and permits from the City of Manhattan Beach for the installation of any Exterior Signs and Lessee shall deliver such permits and approvals to Lessor prior to the installation of the Exterior Signs. Lessee may not assign any of its rights under this Section 35.27(a) to any other person or entity except to an assignee of all of Lessee’s rights and obligations under this Lease that is expressly permitted under the terms and conditions of this Lease or otherwise approved in writing by Lessor, provided that such entity does not have an “Objectionable Name.” For purposes of this Lease, the term “Objectionable Name” shall mean any name which relates to an entity which is of a character or reputation, or is associated with a political orientation or faction, which is inconsistent with the quality of the Property, or which would otherwise reasonably offend a prudent landlord of the Comparable Buildings. Lessor may require the removal of any Exterior Signs that are not in compliance with the provisions of this Section 35.27. Except for the Exterior Signs set forth above, Lessee will not, without Lessor’s prior approval, install or permit to be installed in the Premises any other sign, decoration or advertising material of any kind on the exterior of the Building or the Property.

(b) Interior Signs and Displays. Subject to the terms and conditions set forth in this Section 35.27(b) and Section 35.27(c), Lessee will be permitted to install and maintain in the interior portions of the Building any signage that Lessee may elect to install, provided that, notwithstanding any other provision of this Lease to the contrary, without Lessor’s prior written approval, no interior sign or decoration shall be installed in the Building if such sign or decoration is displayed with the intent that it be for commercial advertising or marketing purposes visible from the streets surrounding the Building; provided, however, Lessor hereby acknowledges that Lessee may display its products (and components) in manners that are visible from the streets surrounding the Building for commercial advertising or marketing purposes and Lessor hereby consents to such displays. All signs that are subject to the provisions of this Section 35.27(b) are hereinafter collectively referred to as the “Interior Signs”.

(c) General Signage Provisions. Lessee shall keep all Exterior Signs and the Interior Signs installed by Lessee in good working condition and good repair at all times and in compliance with all Laws. Lessee shall bear any and all costs related to the design, fabrication, installation, illumination, maintenance and repair of all of its Exterior Signs and Interior Signs. Lessee shall repair, at its sole cost, any damage to the exterior or interior of the Building arising from or related to the installation, repair or removal of any of Lessee’s Exterior Signs and Interior Signs. At Lessor’s prior written request, Lessee shall remove any Exterior Signs or Interior Signs installed by Lessee, at Lessee’s expense, at the expiration of the Term of this Lease or earlier termination thereof.

(d) Directory Signage. At Lessor’s expense, Lessee shall be provided its proportional share (based upon then Lessee’s Pro Rata Share) of directory listings on the interior directory for the Building located on the first floor of the Building.

 

37

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Section 35.28 Rights Reserved by Lessor. Provided that the exercise of such rights does not unreasonably interfere with Lessee’s occupancy of the Premises, Lessor shall have the following rights, subject to the terms of Article 23 above:

(a) Building and Property Operations. To the extent permitted pursuant to the express provisions of this Lease, including Section 10.2 and Section 11.3 above: to make inspections, repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Building and Property, or any part thereof; only to enter upon the Premises accompanied by a representative of Lessee (after giving Lessee reasonable written notice thereof, except in cases of real or apparent emergency, in which case no notice shall be required) and, during the continuance of any such work, to temporarily close doors, entryways, public space, and corridors in the Building and Property; to interrupt or temporarily suspend Building services and facilities;

(b) Prospective Purchasers and Lenders. to enter the Premises during reasonable business hours to show the Premises to prospective purchasers or lenders; and

(c) Prospective Lessees. At any time during the last twelve (12) months of the Term (or earlier if Lessee has notified Lessor in writing that it does not desire to renew the Term) or at any time following the occurrence of an Event of Default, to enter the Premises at all reasonable business hours to show the Premises to prospective tenants.

Section 35.29 Construction of Agreement. Each Party herein shall be deemed to have been the draftsman of this Lease and the language of this Lease shall be construed according to its fair meaning and not strictly for or against any of the Parties hereto.

Section 35.30 CASp. For purposes of Section 1938 of the California Civil Code, Lessor hereby discloses to Lessee, and Lessee hereby acknowledges, that the Premises has not undergone inspection by a Certified Access Specialist (CASp). As required by Section 1938(e) of the California Civil Code, Lessor hereby states as follows: “A Certified Access Specialist (CASp) can inspect the subject premises and determine whether the subject premises comply with all of the applicable construction-related accessibility standards under state law. Although state law does not require a CASp inspection of the subject premises, the commercial property owner or lessor may not prohibit the lessee or tenant from obtaining a CASp inspection of the subject premises for the occupancy or potential occupancy of the lessee or tenant, if requested by the lessee or tenant. The parties shall mutually agree on the arrangements for the time and manner of the CASp inspection, the payment of the fee for the CASp inspection, and the cost of making any repairs necessary to correct violations of construction-related accessibility standards within the premises.” In furtherance of the foregoing, Lessor and Lessee hereby agree that any CASp inspection requested by Lessee shall be conducted at Lessee’s sole cost and expense, by a CASp reasonably approved in advance by Lessor (which approval shall not be unreasonably withheld).

Section 35.31 Internationally Deleted.

Section 35.32 Internationally Deleted.

Section 35.33 Internationally Deleted.

Section 35.34 Satellite Dish or Satellite Antenna. Lessee shall be permitted to install two (2) satellite dishes and one (1) satellite antenna (collectively, the “Antennae”) with a non-roof penetrating mounting system and plenum-rated cabling from the Premises to the roof of the Building to connect to the Antennae. The satellite dishes shall not be more than four (4) feet in diameter (unless approved by Lessor), and if over five (5) feet in diameter must be screened, and shall be in a location specified by Lessor in its reasonable discretion. The satellite antenna shall not be more than 5 feet in height above the roof surface as of the execution date of this Lease (unless approved by Lessor). Subject to Lessor’s approval of Lessee’s plans for installation, Lessee may use existing risers, conduits and towers (subject to reasonable space limitations and Lessor’s requirements for use of such areas) for purposes of installing such cabling from the Antennae to the Premises. Lessee’s use of the Antennae shall be solely for Lessee’s business in the Premises (and not for use by any third party). The Antennae shall be installed using an integral non-roof penetrating, non-friction mount support structure. Lessee agrees that upon the expiration or earlier termination of the

 

38

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


Lease, Lessee shall remove the Antennae, the mounting system, cabling, and any and all elements thereof and repair all damage to the roof and building caused thereby and restore all such items to substantially the condition which existed prior to the installation of the Antennae. Lessee shall have access to the Antennae site and cabling raceways for the purposes of maintenance and repairs at all reasonable times. Lessee shall provide a Certificate of Insurance showing that the Antennae are fully insured and that Lessor is named as an additional insured under Lessee’s liability and property policies with regard to the Antennae. Lessee shall comply with all laws governing the installation and operation of the Antennae, including any building permits and any licenses or permits required by the Federal Communications Commission, the Federal Aviation Administration or any other governmental agency having jurisdiction over the building.

Section 35.35 Utility Billing Information. If Lessee is permitted to contract directly for the provision of electricity, gas, water, trash to the Premises with the third-party provider thereof, Lessee shall promptly provide Lessor with a copy of each invoice for such items from the applicable utility provider and any other energy usage data requested by Lessor in order to comply with Applicable Laws regarding energy usage and any disclosures or submittals to third parties required in connection therewith. If requested by Lessor, Lessee shall authorize the utility company serving the Premises which is contracted directly by Lessee to release Lessee’s utility usage consumption data to Lessor. Lessee shall reasonably cooperate with Lessor with respect to any such disclosures or submittals and hereby consents to Lessor’s disclosure to third parties of such consumption data as may be required of Lessor under applicable Laws.

remainder of page intentionally left blank

 

39

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 


IN WITNESS WHEREOF, the Parties acknowledge that each has carefully read each and every provision of this Lease and that each has fully entered into this Lease as of the date first appearing above of its own free will and volition. Signatures obtained by facsimile or pdf shall be deemed original signatures and shall carry the same full force and effect of original signatures to bind the Parties to the terms and conditions of this Lease.

 

LESSOR       LESSEE
Continental 830 Nash LLC     FISKER INC.,
a Delaware limited liability company     a Delaware corporation
By:   Continental 830 Corporation     By:  

/s/ Geepta Gupta-Fisker

 

a Delaware corporation

its Managing Member

    Its:  

Chief Financial Officer

  By:  

/s/ Michael Simon

    By:  

 

    Michael Simon      
    Treasurer     Its:  

 

Continental Rosecrans Aviation L.P.      
a California limited partnership      
By:  

Continental Terrace Corporation

a Texas corporation

     
  By:  

/s/ Gian-Carlo M. Yanke

     
    Gian-Carlo M. Yanke      
    Assistant Secretary      

 

40

   Lessor’s (Landlord’s) initials            Lessee’s (Tenant’s) initials                 

Exhibit 10.9

FISKER INC.

OUTSIDE DIRECTOR COMPENSATION POLICY

Each member of the Board of Directors (the “Board”) of Fisker Inc. (the “Company”) who is not an employee of the Company (each such member, an “Outside Director”) will receive the compensation described in this Outside Director Compensation Policy (the “Director Compensation Policy”) for his or her Board service following the date this Outside Director Compensation Policy is effective (the “Effective Date”).

The Director Compensation Policy may be amended at any time in the sole discretion of the Board.

Annual Cash Compensation

Each Outside Director will receive the cash compensation set forth below for service on the Board. The annual cash compensation amounts will be payable in arrears, in equal quarterly installments following the end of each fiscal quarter of the Company in which the service occurred. Any amount payable for a partial quarter of service will be pro-rated by multiplying such amount by a fraction, the numerator of which will be the number of days of service that the Outside Director provided in such quarter and the denominator of which will be the number of days in such quarter inclusive. All annual cash fees are vested upon payment. For purposes of clarity, the first quarterly installment of the annual retainers set forth below shall be paid for the first quarter that ends on or after the Effective Date, with the amount of such payment equal to the full quarterly installment, pro-rated as applicable based on the days of service that the Outside Director provided in such quarter.

 

1.

Annual Board Member Service Retainer:

a. All Outside Directors: $50,000.

b. Outside Director serving as Lead Independent Director: $25,000 (in addition to above).

 

2.

Annual Committee Member Service Retainer:

a. Member of the Audit Committee: $10,000.

b. Member of the Compensation Committee: $7,500.

c. Member of the Nominating and Corporate Governance Committee: $5,000.

 

3.

Annual Committee Chair Service Retainer (in lieu of Annual Committee Member Service Retainer):

a. Chairperson of the Audit Committee: $25,000.

b. Chairperson of the Compensation Committee: $18,000.

c. Chairperson of the Nominating and Corporate Governance Committee: $10,000.

Equity Compensation

Equity awards will be granted under the Company’s 2020 Equity Incentive Plan or any successor equity incentive plan adopted by the Board and the stockholders of the Company (the “Plan”).

 

  (a)

Automatic Equity Grants.

(i) Annual Grant for Continuing Outside Directors. Without any further action of the Board, at the close of business on the date of each Annual Meeting following the Effective Date, each continuing Outside Director shall be granted restricted stock units (“RSUs”) under the Plan covering shares of the Company’s Common Stock (“Shares”) having an RSU Value of $200,000 (a “Continuing Director


Annual RSU”); provided that the number of Shares covered by each Continuing Director Annual RSU will be rounded down to the nearest whole Share and, provided further, if the Company does not have an effective Form S-8 registration statement on file with the SEC with sufficient Shares available to cover the applicable restricted stock unit award as of the date such award is to be granted (an “Effective S-8”), the grant of such restricted stock unit award shall be delayed until such time as there is an Effective S-8. Each Continuing Director Annual RSU shall vest in equal quarterly installments over the 12-month period following the grant date, subject to the applicable Outside Director’s continued service as a member of the Board through each such vesting date.

(ii) Annual Grant for New Outside Directors. Without any further action of the Board, each person who, after the Effective Date, is elected or appointed for the first time to be an Outside Director will automatically, upon the date of his or her initial election or appointment to be an Outside Director, be granted restricted stock units under the Plan covering Shares having an RSU Value of $200,000, pro-rated based on the number of full months that are expected to lapse between the Outside Director’s appointment to the Board and the next Annual Meeting (a “New Director Annual RSU”); provided that the number of Shares covered by each New Director Annual RSU will be rounded down to the nearest whole Share and, provided further, if there is no Effective S-8, the grant of such restricted stock unit award shall be delayed until such time as there is an Effective S-8. Each New Director Annual RSU shall vest in equal installments on each full quarterly anniversary from the Company’s last Annual Meeting that are expected to lapse between the Outside Director’s appointment to the Board and the next Annual Meeting, subject to the applicable Outside Director’s continued service as a member of the Board through each such vesting date.

(b) Vesting; Change in Control. All vesting is subject to the Outside Director’s continued service as a member of the Board through each applicable vesting date. Notwithstanding the foregoing, for each Outside Director who remains in continuous service as a member of the Board until immediately prior to the closing of a “Change in Control” (as defined in the Plan), any unvested portion of any restricted stock unit award granted in consideration of such Outside Director’s service as a member of the Board shall vest in full immediately prior to, and contingent upon, the consummation of the Change in Control.

(c) Calculation of RSU Value. The “RSU Value” of a restricted stock unit award to be granted under this policy will equal the number of Shares subject to the restricted stock unit award multiplied by the average closing price of a Share on the stock exchange or a national market system on which the Shares are listed over the 30 trading days preceding the grant date.

(d) Remaining Terms. The remaining terms and conditions of each restricted stock unit award granted under this policy will be as set forth in the Plan and the Company’s standard form of restricted stock unit award agreement, as amended from time to time by the Board or the Compensation Committee of the Board, as applicable.

Discretion to Receive RSUs in Lieu of Annual Cash Retainer

(a) RSU Election. Each Outside Director may elect to convert all or a portion of his or her Annual Board Member Service Retainer (not including any annual retainer that an Outside Director may receive for serving as Lead Director and not including any annual retainers for committee service) into RSUs under either of the following alternatives (such election, an “RSU Election”):

(i) Quarterly RSU Election. If an Outside Director timely makes a quarterly RSU Election, then on the quarterly cash retainer payment date(s) to which such RSU Election applies, such Outside Director will automatically and in lieu of the applicable cash retainer payment be granted a number of RSUs equal to (x) the amount of cash subject to such RSU Election divided by (y) the applicable RSU Value on such date. Such RSUs will be fully vested on the grant date.

 

2


(ii) Annual RSU Election. If an Outside Director timely makes an annual RSU Election, then on the Annual Meeting date(s) to which such RSU Election applies, such Outside Director will automatically and in lieu of the applicable cash retainer payment payable with respect to such fiscal year be granted a number of RSUs equal to (x) the amount of cash subject to such RSU Election divided by (y) the applicable RSU Value on such date. Such RSUs will be subject to vesting on the same schedule, and subject to the same conditions, as applied to the underlying annual cash retainer.

(b) RSU Election Mechanics. Each RSU Election must be submitted to the Company’s General Counsel in writing at least 10 business days in advance of a cash retainer payment date (with respect to a quarterly RSU Election) or at least 10 business days in advance of the scheduled Annual Meeting date to which such RSU Election applies (with respect to an annual RSU Election), and subject to any other conditions specified by the Board or Compensation Committee. An Outside Director may only make an RSU Election during a period in which the Company is not in a quarterly or special blackout period and only if there is an Effective S-8. Once an RSU Election is properly submitted, it will remain in effect for successive cash retainer payment dates unless and until the Outside Director revokes it in accordance with clause (c) below or there is no Effective S-8.

(c) RSU Election Revocation Mechanics. The revocation of any RSU Election must be submitted to the Company’s General Counsel in writing at least 10 business days in advance of the cash retainer payment date to which such RSU Election applies (with respect to a quarterly RSU Election) or at least 10 business days in advance of the scheduled Annual Meeting date to which such RSU Election applies (with respect to an annual RSU Election), and subject to any other conditions specified by the Board or Compensation Committee. An Outside Director may only revoke an RSU Election during a period in which the Company is not in a quarterly or special blackout period. Once the revocation of the RSU Election is properly submitted, it will remain in effect for successive cash retainer payment dates unless and until the Outside Director makes a new RSU Election in accordance in accordance with clause (b) above. The section below entitled “Discretion to Receive Cash in Lieu of RSUs” may not be utilized as a separate means of revoking any RSU Election.

Discretion to Receive Cash in Lieu of RSUs

(a) Cash Election. Each Outside Director may elect to convert all or a portion of his or her RSUs into cash (such election, a “Cash Election”). If an Outside Director timely makes a Cash Election, then on each RSU grant date to which such Cash Election applies, such Outside Director automatically and in lieu of such RSUs will be granted a restricted cash award with respect to the value of such RSUs as calculated in accordance with this Director Compensation Policy. Such restricted cash award will vest pursuant to the underlying RSUs’ vesting schedule in accordance with this Director Compensation Policy (disregarding for this purpose such Cash Election).

(b) Cash Election Mechanics. Each Cash Election must be submitted to the Company’s General Counsel in writing at least 10 business days in advance of the scheduled Annual Meeting date to which such Cash Election applies, and subject to any other conditions specified by the Board or Compensation Committee and the share ownership guidelines of the Company as they may exist from time to time. An Outside Director may only make a Cash Election during a period in which the Company is not in a quarterly or special blackout period. Once a Cash Election is properly submitted, it will be in effect for the next RSU grant date and will remain in effect for successive RSU grant dates unless and until the Outside Director revokes it in accordance with clause (c) below.

 

3


(c) Cash Election Revocation Mechanics. The revocation of any Cash Election must be submitted to the Company’s General Counsel in writing at least 10 business days in advance of the scheduled Annual Meeting date to which such Cash Election applies, and subject to any other conditions specified by the Board or Compensation Committee. An Outside Director may only revoke a Cash Election during a period in which the Company is not in a quarterly or special blackout period. Once the revocation of the Cash Election is properly submitted, it will be in effect for the next RSU grant date and will remain in effect for successive RSU grant dates unless and until the Outside Director makes a new Cash Election in accordance in accordance with clause (b) above. The section above entitled “Discretion to Receive RSUs in Lieu of Cash” may not be utilized as a separate means of revoking any Cash Election.

Expenses

The Company will reimburse each Outside Director for ordinary, necessary and reasonable out-of-pocket travel expenses to cover in-person attendance at, and participation in, Board and committee meetings; provided, that the Outside Director timely submits to the Company appropriate documentation substantiating such expenses in accordance with the Company’s travel and expense policy, as in effect from time to time.

 

4

Exhibit 10.10

FISKER INC.

EXECUTIVE INCENTIVE BONUS PLAN

 

1.

PURPOSE

The purpose of the Fisker Inc. Executive Incentive Bonus Plan (as amended from time to time, the “Plan”) is to motivate and reward eligible employees for their contributions toward the achievement of certain Performance Goals (as defined below) by Fisker Inc. (together with its subsidiaries, the “Company”).

 

2.

DEFINITIONS

The following definitions shall be applicable throughout the Plan:

(a) “Award” means the amount of cash incentive payable under the Plan to a Participant with respect to a Performance Period.

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

(c) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

(d) “Committee” means the Compensation Committee of the Board unless another Committee is designated by the Board. The members of any Committee designated by the Board shall be appointed from time to time by, and serve at the pleasure of, the Board. Any member of any such Committee may resign at any time by notice in writing mailed or delivered to the Secretary of the Company. As of the Effective Date, the Plan shall be administered by the Compensation Committee of the Board.

(e) “Effective Date” means [•], 2020.

(f) “Participant” means any officer or employee of the Company who is designated as a Participant by the Committee.

(g) “Performance Goal” means a formula or standard determined by the Committee with respect to each Performance Period based on one or more of the following criteria and any adjustment(s) thereto established by the Committee: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost


targets, reductions and savings and expense management; (16) return on assets (gross or net), return on investment, return on capital, or return on shareholder equity; (17) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share (basic or diluted); (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share, completion of strategic agreements such as licenses, joint ventures, acquisitions, and the like, geographic business expansion, objective customer satisfaction or information technology goals, intellectual property asset metrics; (24) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects, including project completion, timing and/or achievement of milestones, project budget, technical progress against work plans; and (27) enterprise resource planning. Awards issued to Participants may take into account other factors (including subjective factors). Performance Goals may differ from Participant to Participant, Performance Period to Performance Period and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, any increase (or decrease) over the passage of time and/or any measurement against other companies or financial or business or stock index metrics particular to the Company), (iii) on a per share and/or share per capita basis, (iv) against the performance of the Company as a whole or against any affiliate(s), or a particular segment(s), a business unit(s) or a product(s) of the Company or individual project company, (v) on a pre-tax or after-tax basis, and/or (vi) using an actual foreign exchange rate or on a foreign exchange neutral basis.

(h) “Performance Period” means the Company’s fiscal year, multiple fiscal years or any other period longer or shorter than one fiscal year, as determined by the Committee, in its sole discretion. The Committee may establish different Performance Periods for different Participants, and the Committee may establish concurrent or overlapping Performance Periods.

 

3.

ADMINISTRATION

The Plan shall be administered by the Committee, which shall have the discretionary authority to interpret the provisions of the Plan, including all decisions on eligibility to participate, the establishment of Performance Goals, the amount of Awards payable under the Plan, and the payment of Awards. The Committee shall also have the discretionary authority to establish rules under the Plan so long as such rules do not explicitly conflict with the terms of the Plan and any such rules shall constitute part of the Plan. The decisions of the Committee shall be final and binding on all parties making claims under the Plan. The Committee, in its sole discretion and on such terms and conditions as it may provide, may delegate all or part of its authority and powers under the Plan to one or more directors and/or officers of the Company.

 

-2-


4.

ELIGIBILITY

Officers and other key employees of the Company designated by the Committee to participate in the Plan shall be eligible to participate in this Plan, provided the Committee has not, in its sole discretion, withdrawn such designation and he or she meets the following conditions:

(a) is a part-time or full-time regular employee of the Company as of the last day of the applicable Performance Period; and

(b) is not subject to disciplinary action, is in good standing with the Company and is not subject to a performance improvement plan.

 

5.

AMOUNT OF AWARDS

With respect to each Participant, the Committee will establish one or more Performance Periods, an individual Participant incentive target (which may be, but is not required to be, based on the Participant’s base salary) for each Performance Period and the Performance Goal(s) to be met during such Performance Period(s).

Except as otherwise required by applicable law or as determined by the Committee, base salary shall not include salary paid during any paid leave of absence or any variable forms of compensation including, but not limited to, overtime, on-call pay, lead premiums, shift differentials, bonuses, incentive compensation, commissions, stock options, restricted stock units, restricted stock, stock appreciation rights, or expense allowances or reimbursements. Nothing in the Plan, or arising as a result of a Participant’s participation in the Plan, shall prevent the Company from changing a Participant’s base salary at any time based on such factors as the Company shall in its discretion determine appropriate.

Awards may be pro-rated on any basis determined appropriate in the Committee’s sole discretion, including, but not limited to, in connection with transfers to new positions or new locations, new hires, Participants on a leave of absence for all or any portion of a Performance Period, or Participants working less than full-time. The Committee reserves the right, in its sole discretion, to increase, reduce or eliminate the amount of an Award otherwise payable to a Participant with respect to any Performance Period.

 

6.

PAYMENT OF AWARDS

(a) Unless otherwise determined by the Committee, a Participant must be actively employed and in good standing with the Company on the date the Award is paid. The Committee may make exceptions to this requirement in the case of retirement, death or disability, an unqualified leave of absence or under other circumstances, as determined by the Committee in its sole discretion.

(b) Any distribution made under the Plan shall be made in cash and shall occur within a reasonable period of time after the end of the Performance Period in which the Participant has earned the Award. Notwithstanding the foregoing, in order to comply with the short-term deferral exception under Code Section 409A, if the Committee waives the requirement that a Participant must be employed on the date the Award is to be paid, payout shall occur no later than the 15th day of the third month following the later of (i) the end of the Company’s taxable year in which such Award is earned or (ii) the end of the calendar year in which such Award is earned, or shall otherwise be structured to comply with, or be exempt from, Code Section 409A.

 

-3-


7.

GENERAL

(a) TAX WITHHOLDING. The Company shall have the right to deduct from all Awards any applicable taxes, and any other deductions, required to be withheld with respect to such payments. The Company also may withhold such amounts from any other amount payable by the Company or any affiliate to the Participant, subject to compliance with applicable laws.

(b) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. Nothing in the Plan shall confer on any Participant the right to continued employment with the Company or any of its affiliates, or affect in any way the right of the Company or any affiliate to terminate the Participant’s employment at any time, and for any reason, or change the Participant’s responsibilities. Awards represent unfunded and unsecured obligations of the Company and a holder of any right hereunder in respect of any Award shall have no rights other than those of a general unsecured creditor to the Company.

(c) BENEFICIARIES. To the extent the Committee permits beneficiary designations, any payment of Awards under the Plan to a deceased Participant shall be paid to the beneficiary duly designated by the Participant in accordance with the Company’s practices. If no such beneficiary has been designated or survives the Participant, payment shall be made to the Participant’s legal representative, legal beneficiary or estate, as applicable. A beneficiary designation may be changed or revoked by a Participant at any time, provided the change or revocation is filed with the Committee prior to the Participant’s death.

(d) NONTRANSFERABILITY. A person’s rights and interests under the Plan, including any Award previously made to such person or any amounts payable under the Plan, may not be sold, assigned, pledged, transferred or otherwise alienated or hypothecated except, in the event of a Participant’s death, to a designated beneficiary as provided in the Plan, or in the absence of such designation, by will or the laws of descent and distribution.

(e) SUCCESSOR. All obligations of the Company under the Plan, with respect to Awards granted hereunder, shall be binding on any successor to the Company, whether the existence of such successor is the result of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all of the business or assets of the Company.

(f) INDEMNIFICATION. Each person who is or shall have been a member of the Committee and each employee of the Company or an affiliate who is delegated a duty under the Plan shall be indemnified and held harmless by the Company from and against any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action or failure to act under the Plan and against and from any and all amounts paid by him or her in satisfaction of judgment in any such action, suit or proceeding against him or her, provided such loss, cost, liability or expense is not attributable to such person’s willful misconduct. Any person seeking indemnification under this

 

-4-


provision shall give the Company prompt notice of any claim and shall give the Company an opportunity, at its own expense, to handle and defend the same before the person undertakes to handle and defend such claim on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled, including under the Company’s Articles of Incorporation or Bylaws, as a matter of law, or otherwise, or any power that the Company may have to indemnify them or hold them harmless.

(g) EXPENSES. The expenses of administering the Plan shall be borne by the Company.

(h) TITLES AND HEADINGS. The titles and headings of the sections in the Plan are for convenience of reference only, and in the event of any conflict, the text of the Plan, rather than such titles or headings, shall control.

(i) INTENT. It is the intent of this Plan that all payments hereunder be exempt from the requirements of Code Section 409A so that none of the payments to be provided under this Plan will be subject to the adverse tax penalties imposed under Code Section 409A, and any ambiguities or ambiguous terms herein will be interpreted to be so exempt. The Company and each Participant will work together in good faith to consider amendments to the Plan or revisions to the Plan with respect to the payment of any Awards under the Plan, which are necessary or appropriate to avoid imposition of any additional tax or income recognition prior to the actual payment to the Participant under Code Section 409A. In no event will the Company be liable for or reimburse a Participant for any taxes or other penalties that may be imposed on the Participant as a result of Code Section 409A.

(j) GOVERNING LAW. The validity, construction, and effect of the Plan, any rules and regulations relating to the Plan, and any Award shall be determined in accordance with the laws of the State of California (without giving effect to principles of conflicts of laws thereof) and applicable federal law.

(k) AMENDMENTS AND TERMINATION. The Committee may terminate the Plan at any time, provided such termination shall not affect the payment of any Awards accrued under the Plan prior to the date of the termination. The Committee may, at any time, or from time to time, amend or suspend and, if suspended, reinstate, the Plan in whole or in part; provided, however, that any amendment of the Plan shall be subject to the approval of the Company’s shareholders to the extent required to comply with applicable laws, regulations or rules.

 

-5-

Exhibit 10.11

FISKER INC.

EXECUTIVE SEVERANCE AGREEMENT

This Executive Severance Agreement (the “Agreement”) is made and entered into by and between ______________ (“Executive”) and Fisker Inc. (the “Company”), effective as of ___________________ (the “Effective Date”).

RECITALS

1. The Board has determined that it is in the best interest of the Company and its stockholders to provide certain payments and benefits in connection with certain terminations of Executive’s employment with the Company.

2. Capitalized terms used in this Agreement and not otherwise defined herein are defined in Section 6 below.

AGREEMENT

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

1. At-Will Employment. The Company and Executive acknowledge that Executive’s employment is and will continue to be at-will, as defined under applicable law.

2. Rights Upon Termination. Except as expressly provided in Section 3, upon the termination of Executive’s employment, Executive shall only be entitled to: (i) all earned but unpaid salary, all accrued but unpaid vacation and all other earned but unpaid compensation or wages, (ii) any unreimbursed business expenses incurred by Executive on or before the termination date and which are reimbursable under the Company’s business expense reimbursement policies, which will be paid to Executive promptly following Executive’s submission of any required receipts and other documentation to the Company in accordance with the Company’s business expense reimbursement policies, provided such receipts and documents are received by the Company within forty-five (45) days after the date of Executive’s termination, and (iii) such other compensation or benefits due to Executive under any Company-provided retirement, health or equity plans, policies, and arrangements or as otherwise required by law (collectively, the “Accrued Benefits”).

3. Severance Benefits.

(a) Termination without Cause or Resignation for Good Reason. If (i) the Company (or any parent, subsidiary or successor of the Company) terminates Executive’s employment without Cause, or (ii) Executive resigns Executive’s employment with the Company (or any parent, subsidiary or successor of the Company) for Good Reason, in each case, such that, following such termination, Executive is no longer employed by the Company or any of its successors or affiliates, then, subject to Section 4 below, Executive will receive the following severance benefits from the Company:

(i) Cash Severance. $______________ shall be paid to Executive in a single lump-sum payment within thirty (30) days following the Release Deadline.

 

1


(ii) Benefits Severance. The amount equal to the monthly premiums that would be due for ______________ of COBRA continuation coverage for Executive and Executive’s eligible dependents shall be paid to Executive in a single lump-sum payment within thirty (30) days following the Release Deadline. For purposes of clarity, this severance payment shall be made to Executive regardless of whether Executive elects COBRA continuation coverage and the applicable monthly premium amount shall be equal to the premium amount that would be due for the first month of COBRA coverage if Executive were to elect such COBRA continuation coverage based on the coverage levels in effect immediately prior to Executive’s termination or resignation.

(b) Resignation; Termination for Cause. If Executive’s employment with the Company is terminated at any time (i) by Executive other than for Good Reason, or (ii) for Cause by the Company, then Executive will not be entitled to receive severance or other benefits pursuant to this Agreement except for the Accrued Benefits.

(c) Disability; Death. If the Company terminates Executive’s employment as a result of Executive’s Disability where Executive is no longer willing or able to continue performing services for the Company, or Executive’s employment terminates due to Executive’s death, then Executive will not be entitled to receive severance or other benefits pursuant to this Agreement except for the Accrued Benefits.

(d) Breach. The parties acknowledge that Executive’s entitlement to the severance payments contained in this Section 3 are of the essence and an integral part of this Agreement, and that, without such severance provisions, the parties would not enter into this Agreement. Therefore, if the Company, or any successor to the Company, breaches the terms of this Section 3 by failing or refusing pay any of the severance payments owed to Executive in the amounts and/or according to the time periods set forth herein, Executive shall be entitled to two times (2x) the amount of severance payments that Executive would otherwise be entitled to receive pursuant to this Agreement according to the same terms set forth herein. The parties acknowledge and agree that any additional severance payments paid pursuant to this Section 3(d) constitute liquidated damages that would be incurred by Executive and that these additional severance payments are not a penalty, rather they are a reasonable amount intended as liquidated damages that will compensate Executive in the circumstances in which they are payable for the efforts and resources expended, and opportunities foregone, while negotiating and/or enforcing this Agreement and in reliance on this Agreement and on the expectation of the consummation of the transactions contemplated by this Agreement, which amounts would otherwise be impossible to calculate with precision.

4. Conditions to Receipt of Severance.

(a) Release of Claims Agreement. The receipt of any severance payments pursuant to Section 3 will be subject to Executive signing and not revoking a general release of all claims in a form provided by the Company, which release shall release each of the Company and its subsidiaries and their respective affiliates, and the foregoing entities’ respective shareholders, members, partners, officers, managers, directors, predecessors, successors, fiduciaries, employees, representatives, agents and benefit plans (and fiduciaries of such plans) from any and all claims, including any and all causes of action arising out of Executive’s employment, engagement, or affiliation with the Company and any of its affiliates or the termination of such employment, engagement or affiliation, but excluding all claims to severance or other benefits Executive may have under this Agreement, and such release becoming effective and irrevocable no later than the Release Deadline. No severance will be paid pursuant to this Agreement until the release becomes effective and irrevocable. If the release does not become effective and irrevocable by the Release Deadline, Executive will forfeit all rights to severance payments under this Agreement.

 

2


(b) Confidential Information Agreement and Other Requirements. Executive’s receipt of any payments or benefits under Section 3 will be subject to Executive continuing to comply with the terms of the Confidential Information and Invention Assignment Agreement entered into by and between Executive and the Company effective ___________________ (as such agreement may be amended from time to time), which Executive acknowledges and agrees shall remain in full force and effect.

(c) Code Section 409A. For purposes of Section 409A, each payment that is paid pursuant to this Agreement is hereby designated as a separate payment. Further (i) no severance or benefits to be paid or provided to Executive, if any, pursuant to this Agreement that, when considered together with any other severance payments or benefits, are considered deferred compensation under Section 409A, will be paid or otherwise provided until Executive has had a “separation from service” within the meaning of Section 409A, (ii) no severance or benefits to be paid or provided to Executive, if any, pursuant to this Agreement that are intended to be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) will be paid or otherwise provided until Executive has had an “involuntary separation from service” within the meaning of Section 409A, and (iii) in the case of (i) and (ii), any reference in this Agreement to “termination” or “termination of employment” or any similar term shall be construed to mean a “separation from service” within the meaning of Section 409A. The parties intend that all payments and benefits provided or to be provided under this Agreement comply with, or are exempt from, the requirements of Section 409A so that none of the payments or benefits will be subject to the adverse tax penalties imposed under Section 409A, and any ambiguities herein will be interpreted to so comply or be so exempt. The Company and Executive agree to work together in good faith to consider amendments to this Agreement, and to take such reasonable actions, which are necessary, appropriate or desirable to avoid imposition of any additional tax or income recognition under Section 409A before payments or benefits are provided to Executive. Any severance payments or benefits made in connection with Executive’s termination under this Agreement and provided on or before the 15th day of the 3rd month following the end of Executive’s tax year in which Executive’s termination occurs or, if later, the 15th day of the 3rd month following the end of the Company’s tax year in which Executive’s termination occurs, shall be exempt from Section 409A to the maximum extent permitted pursuant to Treasury Regulation Section 1.409A-1(b)(4) and any additional payments or benefits provided in connection with Executive’s termination under this Agreement shall be exempt from Section 409A to the maximum extent permitted pursuant to Treasury Regulation Section 1.409A-1(b)(9)(iii) (to the extent it is exempt pursuant to such section it will in any event be provided no later than the last day of Executive’s 2nd taxable year following the taxable year in which Executive’s termination occurs). Notwithstanding the foregoing, if any of the payments or benefits provided in connection with Executive’s termination do not qualify for any reason to be exempt from Section 409A pursuant to Treasury Regulation Section 1.409A-1(b)(4), Treasury Regulation Section 1.409A-1(b)(9)(iii), or any other applicable exemption and Executive is, at the time of Executive’s termination, a “specified employee,” as defined in Treasury Regulation Section 1.409A-1(i), each such payment or benefit will not be provided until the first regularly scheduled payroll date that occurs on or after the date six (6) months and one (1) day following Executive’s termination and, on such date (or, if earlier, another date that occurs as soon as practicable after Executive’s death), Executive will receive all payments and benefits that would have been provided during such period in a single lump sum, if applicable. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement are exempt from, or compliant with, Section 409A and in no event shall the Company or any of its affiliates be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Executive on account of non-compliance with Section 409A.

5. Limitation on Payments. In the event that the severance benefits provided for in this Agreement and/or other payments and benefits otherwise provided to Executive (i) constitute “parachute payments” within the meaning of Section 280G of the Code and (ii) but for this Section 5, would be subject to the excise tax imposed by Section 4999 of the Code, then Executive’s severance benefits under Section 3, and/or the other payments and benefits otherwise provided to Executive, will be either:

 

3


(a) delivered in full, or

(b) delivered as to such lesser extent which would result in no portion of such severance benefits being subject to excise tax under Section 4999 of the Code,

whichever of the foregoing amounts, taking into account the applicable federal, state and local income taxes and the excise tax imposed by Section 4999, results in the receipt by Executive on an after-tax basis, of the greatest amount of severance benefits and other payments and benefits, notwithstanding that all or some portion of such severance benefits and other payments and benefits may be taxable under Section 4999 of the Code. Unless the Company and Executive otherwise agree in writing, any determination required under this Section 5 will be made in writing by the Firm, whose determination will be conclusive and binding upon Executive and the Company for all purposes. For purposes of making the calculations required by this Section 5, the Firm may make reasonable assumptions and approximations concerning applicable taxes and may rely on reasonable, good faith interpretations concerning the application of Sections 280G and 4999 of the Code. The Company and Executive will furnish to the Firm such information and documents as the Firm may reasonably request in order to make a determination under this Section. The Company will bear all costs the Firm may reasonably incur in connection with any calculations contemplated by this Section 5. Any reduction made pursuant to this Section 5 shall be made in accordance with the following order of priority: (i) Underwater Options, (ii) Full Credit Payments (as defined below) that are payable in cash, (iii) non-cash Full Credit Payments that are taxable, (iv) non-cash Full Credit Payments that are not taxable (v) Partial Credit Payments (as defined below) and (vi) non-cash employee welfare benefits. In each case, reductions shall be made in reverse chronological order such that the payment or benefit owed on the latest date following the occurrence of the event triggering the excise tax will be the first payment or benefit to be reduced (with reductions made pro-rata in the event payments or benefits are owed at the same time).

6. Definition of Terms. The following terms referred to in this Agreement will have the following meanings:

(a) Board. For purposes of this Agreement, “Board” means the Board of Directors of the Company.

(b) Cause. For purposes of this Agreement, “Cause” means a termination of Executive’s employment by the Company (or any parent, subsidiary or successor of the Company) due to: (i) Executive’s conviction of a felony or crime, or Executive’s entering a plea of guilty or nolo contendere to a felony or crime, that in any case results in, or is reasonably expected to result in, a material adverse effect on the business or reputation of the Company; (ii) Executive’s recklessness, dishonesty, willful malfeasance, or gross misconduct in connection with Executive’s employment that results in, or is reasonably expected to result in, a material adverse effect on the business or reputation of the Company; (iii) Executive’s willful failure to perform the lawful duties assigned to Executive and/or to follow the reasonable and lawful instructions from the Board, that results in, or is reasonably expected to result in, a material adverse effect on the business or reputation of the Company, and that Executive fails to correct within thirty (30) days following receipt of written notice from Company; or (iv) Executive’s breach of any material provision of the Confidential Information and Invention Assignment Agreement entered into by and between Executive and the Company effective ______________. For purposes of clarity, a termination without “Cause” does not include any termination that occurs solely as a result of Executive’s death or Disability. The foregoing definition does not in any way limit the Company’s ability (or that of any parent, subsidiary or successor of the Company, as applicable) to terminate Executive’s employment at any time, subject to applicable laws.

 

4


(c) COBRA. For purposes of this Agreement, “COBRA” means the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended.

(d) Code. For purposes of this Agreement, “Code” means the Internal Revenue Code of 1986, as amended.

(e) Disability. For purposes of this Agreement, “Disability” means total and permanent disability as defined in Section 22(e) (3) of the Code.

(f) Firm. For purposes of this Agreement, the “Firm” means the Company’s outside legal counsel or independent public accountants or other firm selected by the Company.

(g) Full Credit Payment. For purposes of this Agreement, “Full Credit Payment” means a payment, distribution or benefit, whether paid or payable or distributed or distributable pursuant to the terms of this Agreement or otherwise, that if reduced in value by one dollar reduces the amount of the parachute payment (as defined in Section 280G of the Code) by one dollar, determined as if such payment, distribution or benefit had been paid or distributed on the date of the event triggering the excise tax.

(h) Good Reason. For purposes of this Agreement, resignation for “Good Reason” means Executive’s resignation due to the occurrence of any of the following conditions which occurs without Executive’s written consent, provided that the requirements regarding advance notice and an opportunity to cure set forth below are satisfied:

(i) Any material adverse change, or diminution, in Executive’s base compensation (including base salary and target bonus), title, position, authority, duties or responsibilities;

(ii) The Company conditions Executive’s continued service with the Company on the relocation of Executive’s principal work location to a location that is more than thirty (30) miles from Executive’s then current principal work location and such relocation results in an increase in Executive’s one-way commuting distance from Executive’s home by thirty (30) miles or more;

(iii) The failure of the Company to obtain the assumption of this Agreement by any successor to the Company; or

(iv) Any material breach or material violation of a material provision of this Agreement by the Company (or any successor to the Company).

In order for Executive to resign for Good Reason, Executive must provide written notice to the Company of the existence of the Good Reason condition within ninety (90) days of the initial existence of such Good Reason condition. Upon receipt of such notice, the Company will have thirty (30) days during which it may remedy the Good Reason condition and not be required to provide the severance payments described herein as a result of such proposed resignation. If the Good Reason condition is not remedied within such thirty (30) day cure period, Executive may resign based on the Good Reason condition specified in the notice effective no later than ninety (90) days following the expiration of the thirty (30) day cure period.

(i) Partial Credit Payment. For purposes of this Agreement, “Partial Credit Payment” means any payment, distribution or benefit that is not a Full Credit Payment. In no event shall Executive have any discretion with respect to the ordering of payment reductions.

 

5


(j) Release Deadline. For purposes of this Agreement, “Release Deadline” means the sixtieth (60th) day following Executive’s termination.

(k) Section 409A. For purposes of this Agreement, “Section 409A” means Section 409A of the Code, the regulations and other guidance there under and any state law of similar effect.

(l) Underwater Options. For purposes of this Agreement, “Underwater Options” means stock options whose exercise price exceeds the fair market value of the optioned stock.

7. Successors.

(a) Company Successors. Any successor to the Company (whether direct or indirect and whether by purchase, merger, consolidation, liquidation or otherwise) to all or substantially all of the Company’s business and/or assets shall assume the obligations under this Agreement and agree expressly to perform the obligations under this Agreement in the same manner and to the same extent as the Company would be required to perform such obligations in the absence of a succession. For all purposes under this Agreement, the term “Company” will include any such successor to the Company’s business and/or assets.

(b) Executive’s Successors. The terms of this Agreement and all rights of Executive hereunder will inure to the benefit of, and be enforceable by, Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees and legatees.

8. Notice.

(a) General. Notices and all other communications contemplated by this Agreement will be in writing and will be deemed to have been duly given when personally delivered or when mailed by U.S. registered or certified mail, return receipt requested and postage prepaid. In the case of Executive, mailed notices will be addressed to Executive at the home address which Executive most recently communicated to the Company in writing. In the case of the Company, mailed notices will be addressed to its corporate headquarters, and all notices will be directed to the attention of the Company’s Secretary (or, if Executive is the Company’s Secretary, any other executive officer of the Company).

(b) Notice of Termination. Any termination by the Company for Cause or by Executive for Good Reason or as a result of a voluntary resignation will be communicated by a notice of termination to the other party hereto given in accordance with Section 8(a) of this Agreement. Such notice will indicate the specific termination provision in this Agreement relied upon, will set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination under the provision so indicated, and will specify the termination date.

9. Miscellaneous Provisions.

(a) No Duty to Mitigate. Executive will not be required to mitigate the amount of any payment contemplated by this Agreement, nor will any earnings that Executive may receive from any other source reduce any such payment.

(b) Waiver. No provision of this Agreement will be modified, waived or discharged unless the modification, waiver or discharge is agreed to in writing and signed by Executive and by an authorized officer of the Company (other than Executive). No waiver by either party of any breach of, or of compliance with, any condition or provision of this Agreement by the other party will be considered a waiver of any other condition or provision or of the same condition or provision at another time.

 

6


(c) Headings. All captions and section headings used in this Agreement are for convenient reference only and do not form a part of this Agreement.

(d) Choice of Law. The validity, interpretation, construction and performance of this Agreement will be governed by the laws of the State of California (with the exception of its conflict of law provisions).

(e) Entire Agreement. This Agreement and the Confidential Information and Invention Assignment Agreement entered into by and between Executive and the Company effective ______________ represent the entire agreement and understanding between the parties hereto and supersedes all prior or contemporaneous agreements with respect to the subject matter of this Agreement. Further, this Agreement supersedes in their entirety any and all prior offer letters or employment agreements entered into by and between Executive and the Company, which offer letters and employment agreements shall be null and void. No waiver, alteration, or modification of any of the provisions of this Agreement will be binding unless in writing and signed by duly authorized representatives of the parties hereto and which specifically mention this Agreement. In entering into this Agreement, no party has relied on or made any representation, warranty, inducement, promise, or understanding that is not in this Agreement. To the extent that any provisions of this Agreement conflict with those of any other agreement between Executive and the Company, the terms in this Agreement will prevail.

(f) Severability. In the event that any provision or any portion of any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void, this Agreement will continue in full force and effect without said provision or portion of provision. The remainder of this Agreement shall be interpreted so as best to give effect to the intent of the Company and Executive.

(g) Taxes, Withholding and Required Deductions. All payments and, if applicable, benefits made pursuant to this Agreement will be subject to all applicable taxes, withholding of taxes, and any other required deductions.

(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile or scanned copy will have the same force and effect as execution of an original, and a facsimile or scanned signature will be deemed an original and valid signature.

(Remainder of page intentionally left blank)

 

7


IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the case of the Company by its duly authorized officer, as of the day and year set forth below.

 

COMPANY                                  FISKER INC.
                                                                                      
    (Signature)
    By:                                                                                       
    Title:                                                                                    
    Date:                                                                                       
EXECUTIVE     [EXECUTIVE]
                                                                                      
    (Signature)
    By:                                                                                       
    Date:                                                                                      

 

8

Exhibit 10.12

FISKER INC.

2020 EQUITY INCENTIVE PLAN

1. Purposes of the Plan. The purposes of this Plan are (a) to attract and retain the best available personnel to ensure the Company’s success and accomplish the Company’s goals, (b) to incentivize Employees, Directors and Independent Contractors with long-term equity-based compensation to align their interests with the Company’s stockholders, and (c) to promote the success of the Company’s business.

The Plan permits the grant of Incentive Stock Options, Nonstatutory Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation Rights, Performance Units, Performance Shares, Other Stock-Based Awards and Other Cash-Based Awards.

This Plan is a continuation of the Company’s 2016 Stock Plan, which the Company assumed from a Subsidiary and amended, restated and re-named into the form of this Plan effective as of the Effective Date.

2. Definitions. As used herein, the following definitions will apply:

(a) “Administrator” means the Board or any of its Committees as will be administering the Plan, in accordance with Section 4 of the Plan.

(b) “Affiliate” means (i) an entity other than a Subsidiary which, together with the Company, is under common control of a third person or entity and (ii) an entity other than a Subsidiary in which the Company and/or one or more Subsidiaries own a controlling interest.

(c) “Applicable Laws” means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal or state laws, rules and regulations, the rules and regulations of any stock exchange or quotation system on which the Common Stock is listed or quoted, and the applicable laws, rules and regulations of any other country or jurisdiction where Awards are, or will be, granted under the Plan or Participants reside or provide services to the Company or any Parent or Subsidiary of the Company, as such laws, rules, and regulations shall be in effect from time to time.

(d) “Award” means, individually or collectively, a grant under the Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Performance Shares, Other Stock-Based Awards and Other Cash-Based Awards.

(e) “Award Agreement” means the written or electronic agreement setting forth the terms and provisions applicable to each Award granted under the Plan. The Award Agreement is subject to the terms and conditions of the Plan.

(f) “Board” means the Board of Directors of the Company.


(g) “Cause” means, with respect to the termination of a Participant’s status as a Service Provider, except as otherwise defined in an Award Agreement, (i) in the case where there is no employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate of the Company and the Participant at the time of the grant of the Award (or where there is such an agreement but it does not define “cause” (or words of like import) or where it only applies upon the occurrence of a change in control and one has not yet taken place): (A) any material breach by Participant of any material written agreement between Participant and the Company; (B) any failure by Participant to comply with the Company’s material written policies or rules as they may be in effect from time to time; (C) neglect or persistent unsatisfactory performance of Participant’s duties; (D) Participant’s repeated failure to follow reasonable and lawful instructions from the Board or Chief Executive Officer; (E) Participant’s indictment for, conviction of, or plea of guilty or nolo contendre to, any felony or crime that results in, or is reasonably expected to result in, a material adverse effect on the business or reputation of the Company; (F) Participant’s commission of or participation in an act of fraud against the Company; (G) Participant’s intentional material damage to the Company’s business, property or reputation; or (H) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company; or (ii) in the case where there is an employment agreement, consulting agreement, change in control agreement or similar agreement in effect between the Company or an Affiliate and the Participant at the time of the grant of the Award that defines “cause” (or words of like import), “cause” as defined under such agreement; provided, however, that with regard to any agreement under which the definition of “cause” only applies on occurrence of a change in control, such definition of “cause” shall not apply until a change in control actually takes place and then only with regard to a termination thereafter. For purposes of clarity, a termination without “Cause” does not include any termination that occurs solely as a result of Participant’s death or Disability. The determination as to whether a Participant’s status as a Service Provider for purposes of the Plan has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability (or that of any Parent or Subsidiary or any successor thereto, as appropriate) to terminate a Participant’s employment or consulting relationship at any time, subject to Applicable Laws.

(h) “Change in Control” except as may otherwise be provided in an Award Agreement or other applicable agreement, means the occurrence of any of the following:

(i) The consummation of a merger or consolidation of the Company with or into another entity or any other corporate reorganization, if the Company’s stockholders immediately prior to such merger, consolidation or reorganization cease to directly or indirectly own immediately after such merger, consolidation or reorganization at least a majority of the combined voting power of the continuing or surviving entity’s securities outstanding immediately after such merger, consolidation or reorganization;

(ii) The consummation of the sale, transfer or other disposition of all or substantially all of the Company’s assets (other than (x) to a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company, (y) to a corporation or other entity 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 or (z) to a continuing or surviving entity described in Section 2(h)(i) in connection with a merger, consolidation or reorganization that does not result in a Change in Control under Section 2(h)(i));

 

-2-


(iii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election; or

(iv) The consummation of any transaction as a result of which any Person 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. For purposes of this Section 2(h), 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 of the Company or an affiliate of the Company;

(2) a corporation or other entity 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;

(3) the Company; and

(4) a corporation or other entity of which at least a majority of its combined voting power is owned directly or indirectly by the Company.

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 transactions. In addition, if any Person (as defined above) is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered to cause a Change in Control. If required for compliance with Code Section 409A, in no event will a Change in Control be deemed to have occurred if such transaction is not also a “change in the ownership or effective control of” the Company or “a change in the ownership of a substantial portion of the assets of” the Company as determined under Treasury Regulation Section 1.409A-3(i)(5) (without regard to any alternative definition thereunder).

(i) “Code” means the Internal Revenue Code of 1986, as amended. Reference to a specific section of the Code or regulation thereunder shall include such section or regulation, any valid regulation promulgated under such section, and any comparable provision of any future legislation or regulation amending, supplementing or superseding such section or regulation.

 

-3-


(j) “Code Section 409A” means Code Section 409A, as amended from time to time, including the guidance and regulations promulgated thereunder and successor provisions, guidance and regulations thereto.

(k) “Committee” means a committee of Directors or of other individuals satisfying Applicable Laws appointed by the Board in accordance with Section 4 hereof.

(l) “Common Stock” means the Class A common stock of the Company.

(m) “Company” means Fisker Inc., a Delaware corporation, or any successor thereto.

(n) “Director” means a member of the Board.

(o) “Disability” means total and permanent disability as defined in Code Section 22(e)(3), provided that in the case of Awards other than Incentive Stock Options, the Administrator in its discretion may determine whether a permanent and total disability exists in accordance with uniform and non-discriminatory standards adopted by the Administrator from time to time.

(p) “Effective Date” means October 29, 2020.

(q) “Employee” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company. Neither service as a Director nor payment of a director’s fee by the Company will be sufficient to constitute “employment” by the Company.

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

(s) “Exchange Program” means a program under which outstanding Awards are amended to provide for a lower exercise price or surrendered or cancelled in exchange for (i) Awards with a lower exercise price, (ii) a different type of Award or awards under a different equity incentive plan, (iii) cash, or (iv) a combination of (i), (ii) and/or (iii). Notwithstanding the preceding, the term Exchange Program does not include (A) any action described in Section 15 or any action taken in connection with a Change in Control transaction nor (B) any transfer or other disposition permitted under Section 14. For the purpose of clarity, each of the actions described in the prior sentence, none of which constitute an Exchange Program, may be undertaken (or authorized) by the Administrator in its sole discretion without approval by the Company’s stockholders.

(t) “Fair Market Value” means, as of any date, the value of a share of Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the day of determination, as reported in such source as the Administrator deems reliable;

 

-4-


(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value will be the mean between the high bid and low asked prices for the Common Stock on the day of determination, as reported in such source as the Administrator deems reliable; or

(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Administrator in compliance with Applicable Laws and regulations and in a manner that complies with Code Section 409A.

(u) “Fiscal Year” means the fiscal year of the Company.

(v) “Incentive Stock Option” means an Option that by its terms qualifies and is intended to qualify as an incentive stock option within the meaning of Code Section 422 and the regulations promulgated thereunder.

(w) “Independent Contractor” means any person, including an advisor, consultant or agent, engaged by the Company or a Parent or Subsidiary to render services to such entity or who renders, or has rendered, services to the Company, or any Parent, Subsidiary or affiliate and is compensated for such services.

(x) “Inside Director” means a Director who is an Employee.

(y) “Nonstatutory Stock Option” means an Option that by its terms does not qualify or is not intended to qualify as an Incentive Stock Option.

(z) “Officer” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(aa) “Option” means a stock option granted pursuant to the Plan.

(bb) “Other Cash-Based Award” shall mean a right or other interest granted to a Participant pursuant to Section 11 other than an Other Stock-Based Award.

(cc) “Other Stock-Based Award” shall mean a right or other interest granted to a Participant, valued in whole or in part by reference to, or otherwise based on, or related to, Common Stock pursuant to Section 11, including but not limited to (i) unrestricted Common Stock awarded as a bonus or upon the attainment of performance goals or otherwise as permitted under the Plan, and (ii) a right granted to a Participant to acquire Common Stock from the Company containing terms and conditions prescribed by the Administrator.

(dd) “Outside Director means a Director who is not an Employee.

(ee) “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 fifty percent (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 considered a Parent commencing as of such date.

 

-5-


(ff) “Participant” means the holder of an outstanding Award.

(gg) “Performance Goal” means a formula or standard determined by the Administrator with respect to each Performance Period based on one or more of the following criteria and any adjustment(s) thereto established by the Administrator: (1) sales or non-sales revenue; (2) return on revenues; (3) operating income; (4) income or earnings including operating income; (5) income or earnings before or after taxes, interest, depreciation and/or amortization; (6) income or earnings from continuing operations; (7) net income; (8) pre-tax income or after-tax income; (9) net income excluding amortization of intangible assets, depreciation and impairment of goodwill and intangible assets and/or excluding charges attributable to the adoption of new accounting pronouncements; (10) raising of financing or fundraising; (11) project financing; (12) revenue backlog; (13) gross margin; (14) operating margin or profit margin; (15) capital expenditures, cost targets, reductions and savings and expense management; (16) return on assets (gross or net), return on investment, return on capital, or return on stockholder equity; (17) cash flow, free cash flow, cash flow return on investment (discounted or otherwise), net cash provided by operations, or cash flow in excess of cost of capital; (18) performance warranty and/or guarantee claims; (19) stock price or total stockholder return; (20) earnings or book value per share (basic or diluted); (21) economic value created; (22) pre-tax profit or after-tax profit; (23) strategic business criteria, consisting of one or more objectives based on meeting specified market penetration or market share, completion of strategic agreements such as licenses, joint ventures, acquisitions, and the like, geographic business expansion, objective customer satisfaction or information technology goals, intellectual property asset metrics; (24) objective goals relating to divestitures, joint ventures, mergers, acquisitions and similar transactions; (25) objective goals relating to staff management, results from staff attitude and/or opinion surveys, staff satisfaction scores, staff safety, staff accident and/or injury rates, compliance, headcount, performance management, completion of critical staff training initiatives; (26) objective goals relating to projects, including project completion, timing and/or achievement of milestones, project budget, technical progress against work plans; and (27) enterprise resource planning. Awards issued to Participants may take into account other criteria (including subjective criteria). Performance Goals may differ from Participant to Participant, Performance Period to Performance Period and from Award to Award. Any criteria used may be measured, as applicable, (i) in absolute terms, (ii) in relative terms (including, but not limited to, any increase (or decrease) over the passage of time and/or any measurement against other companies or financial or business or stock index metrics particular to the Company), (iii) on a per share and/or share per capita basis, (iv) against the performance of the Company as a whole or against any affiliate(s), or a particular segment(s), a business unit(s) or a product(s) of the Company or individual project company, (v) on a pre-tax or after-tax basis, and/or (vi) using an actual foreign exchange rate or on a foreign exchange neutral basis.

(hh) “Performance Period” means the time period during which the Performance Goals or other vesting provisions must be satisfied for Performance Shares or Performance Units.

 

-6-


(ii) “Performance Share” means an Award denominated in Shares which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine pursuant to Section 10.

(jj) “Performance Unit” means an Award which may be earned in whole or in part upon attainment of Performance Goals or other vesting criteria as the Administrator may determine and which may be settled for cash, Shares or other securities or a combination of the foregoing pursuant to Section 10.

(kk) “Period of Restriction” means the period during which the transfer of Shares of Restricted Stock are subject to restrictions and therefore, the Shares are subject to a substantial risk of forfeiture. Such restrictions may be based on the passage of time, the achievement of target levels of performance, or the occurrence of other events as determined by the Administrator.

(ll) “Plan” means this 2020 Equity Incentive Plan.

(mm) “Restricted Stock” means Shares issued pursuant to a Restricted Stock award under Section 7 of the Plan.

(nn) “Restricted Stock Unit” means a bookkeeping entry representing an amount equal to the Fair Market Value of one Share, granted pursuant to Section 8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of the Company.

(oo) “Rule 16b-3” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(pp) “Section 16(b)” means Section 16(b) of the Exchange Act.

(qq) “Service Provider” means an Employee, Director or Independent Contractor.

(rr) “Share” means a share of the Common Stock, as adjusted in accordance with Section 15 of the Plan.

(ss) “Stock Appreciation Right” means an Award, granted alone or in connection with an Option, that pursuant to Section 9 is designated as a Stock Appreciation Right.

(tt) “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 fifty percent (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 Subsidiary on a date after the adoption of the Plan shall be considered a Subsidiary commencing as of such date.

 

-7-


(uu) “Tax-Related Items” means income tax, social insurance or other social contributions, national insurance, social security, payroll tax, fringe benefits tax, payment on account or other tax-related items.

3. Stock Subject to the Plan.

(a) Stock Subject to the Plan. Subject to the provisions of Section 15 of the Plan, the maximum aggregate number of Shares that may be issued under the Plan is 42,579,430 Shares (consisting of 18,481,679 Shares subject to awards outstanding under the Company’s 2016 Stock Plan prior to being amended, restated and re-named into this Plan and 24,097,751 Shares available for issuance under this Plan) (the “Share Reserve”). The Shares may be authorized, but unissued, or reacquired Common Stock. Notwithstanding the foregoing, subject to the provisions of Section 15 below, in no event shall the maximum aggregate number of Shares that may be issued under the Plan pursuant to Incentive Stock Options exceed the Share Reserve plus, to the extent allowable under Code Section 422 and the regulations promulgated thereunder, any Shares that again become available for issuance pursuant to Sections 3(b) and 3(c).

(b) Automatic Share Reserve Increase. The number of Shares available for issuance under the Plan will be automatically increased on the first day of each Fiscal Year beginning with the 2022 Fiscal Year, in an amount equal to the lessor of (i) three percent (3%) of the outstanding Shares on the last day of the immediately preceding Fiscal Year and (ii) such number of Shares determined by the Board.

(c) Lapsed Awards. To the extent an Award should expire or be forfeited or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Exchange Program, the unissued Shares that were subject thereto shall, unless the Plan shall have been terminated, continue to be available under the Plan for issuance pursuant to future Awards. In addition, any Shares that are retained by the Company upon exercise of an Award in order to satisfy the exercise or purchase price for such Award or any withholding taxes due with respect to such Award shall be treated as not issued and shall continue to be available under the Plan for issuance pursuant to future Awards. Shares issued under the Plan and later forfeited to the Company due to the failure to vest or repurchased by the Company at the original purchase price paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with a Participant ceasing to be a Service Provider) shall again be available for future grant under the Plan. To the extent an Award under the Plan is paid out in cash rather than Shares, such cash payment will not result in reducing the number of Shares available for issuance under the Plan.

(d) Shares Available Following Certain Transactions. Awards granted in accordance with applicable stock exchange requirements that are in substitution or exchange for awards previously granted by a company acquired by the Company or a Parent or Subsidiary or with which the Company or a Parent or Subsidiary combines shall not reduce the Shares authorized for issuance under the Plan or the limitations on grants to Outside Directors under Section 12, nor shall Shares subject to such Awards be added to the Shares available for issuance under the Plan as provided above (whether or not such Awards are later cancelled, forfeited or otherwise terminated). Additionally, in the event that a company acquired by the Company or a Parent or Subsidiary or with which the Company or any subsidiary combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition

 

-8-


or combination, the shares available for grant pursuant to the terms of such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may, if and to the extent determined by the Board and subject to compliance with applicable stock exchange requirements, be used for Awards under the Plan and shall not reduce the Shares authorized for issuance under the Plan (and Shares subject to such Awards shall not be added to the Shares available for issuance under the Plan as provided above); provided that Awards using such available Shares shall not be made beyond the latest date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not, prior to such acquisition or combination, Employees, Independent Contractors or Outside Directors immediately prior to such acquisition or combination.

4. Administration of the Plan.

(a) Procedure.

(i) Multiple Administrative Bodies. Different Committees with respect to different groups of Service Providers may administer the Plan.

(ii) Rule 16b-3. To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder will be structured to satisfy the requirements for exemption under Rule 16b-3.

(iii) Other Administration. Other than as provided above, the Plan will be administered by (A) the Board or (B) a Committee, which committee will be constituted to satisfy Applicable Laws.

(b) Powers of the Administrator. Subject to the provisions of the Plan, the Administrator will have the authority, in its discretion:

(i) to determine the Fair Market Value in accordance with Section 2(c);

(ii) to select the Service Providers to whom Awards may be granted hereunder;

(iii) to determine the number of Shares to be covered by each Award granted hereunder;

(iv) to approve forms of Award Agreements for use under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder; such terms and conditions include, but are not limited to, the exercise price, the time or times when Awards may be exercised (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the Shares relating thereto, based in each case on such factors as the Administrator will determine;

 

-9-


(vi) to institute and determine the terms and conditions of an Exchange Program; provided, however, that the Administrator shall not implement an Exchange Program without the approval of the holders of a majority of the Shares that are present in person or by proxy and entitled to vote at any annual or special meeting of Company’s stockholders;

(vii) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan;

(viii) to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations established for the purpose of satisfying applicable non-U.S. laws, for qualifying for favorable tax treatment under applicable non-U.S. laws or facilitating compliance with non-U.S. laws (sub-plans may be created for any of these purposes);

(ix) to modify or amend each Award (subject to Section 22 of the Plan), including but not limited to the discretionary authority to extend the post-termination exercisability period of Awards, to accelerate vesting and to extend the maximum term of an Option (subject to the terms and conditions of the Plan and compliance with all Applicable Laws, including, without limitation, Code Section 409A);

(x) to allow Participants to satisfy tax withholding obligations in such manner as prescribed in Section 16 of the Plan;

(xi) to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

(xii) to allow a Participant to defer the receipt of the payment of cash or the delivery of Shares that would otherwise be due to such Participant under an Award; and

(xiii) to make all other determinations deemed necessary or advisable for administering the Plan.

(c) Effect of Administrator’s Decision. The Administrator’s decisions, determinations and interpretations will be final and binding on all Participants and any other holders of Awards.

(d) Delegation by the Administrator. To the extent permitted by Applicable Laws, the Administrator, in its sole discretion and on such terms and conditions as it may provide, may delegate all or any part of its authority and powers under the Plan to one or more Directors or officers of the Company. Any such delegation shall not limit the right of such Directors or officers to receive Awards; provided, however, that such Directors or officers may not grant Awards to himself or herself, a member of the Board, or any executive officer of the Company or a Parent or Subsidiary, or take any action with respect to any Award previously granted to himself or herself, a member of the Board, or any executive officer of the Company or a Parent or Subsidiary. The Committee may also appoint agents who are not executive officers of the Company or Directors to assist in administering the Plan, provided, however, that such individuals may not be delegated the authority to grant or modify any Awards that will, or may, be settled in Common Stock.

 

-10-


(e) Limitation of Liability. The Administrator and each member thereof shall be entitled to, in good faith, rely or act upon any report or other information furnished thereto by any officer or employee of the Company or any Parent, Subsidiary or Affiliate, the Company’s legal counsel, independent auditors, consultants or any other agents assisting in the administration of the Plan. Members of the Administrator and any officer or employee of the Company or any Parent, Subsidiary or Affiliate acting at the direction or on behalf of the Administrator shall not be personally liable for any action or determination taken or made in good faith with respect to the Plan, and shall, to the fullest extent permitted by law, be indemnified and held harmless by the Company with respect to any such action or determination.

5. Award Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares and Performance Units may be granted to Service Providers. Incentive Stock Options may be granted only to Employees.

6. Stock Options.

(a) Limitations. Each Option will be designated in the Award Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option. However, notwithstanding such designation, to the extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options are exercisable for the first time by the Participant during any calendar year (under all plans of the Company and any Parent or Subsidiary) exceeds one hundred thousand dollars ($100,000), such Options will be treated as Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock Options will be taken into account in the order in which they were granted. The Fair Market Value of the Shares will be determined as of the date the Option with respect to such Shares is granted.

(b) Term of Option. The term of each Option will be stated in the Award Agreement. In the case of an Incentive Stock Option, the term will be ten (10) years from the date of grant or such shorter term as may be provided in the Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a Participant who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any Parent or Subsidiary, the term of the Incentive Stock Option will be five (5) years from the date of grant or such shorter term as may be provided in the Award Agreement.

(c) Option Exercise Price and Consideration.

(i) Exercise Price. The per share exercise price for the Shares to be issued pursuant to exercise of an Option will be determined by the Administrator, subject to the following:

(1) In the case of an Incentive Stock Option

 

-11-


(A) granted to an Employee who, at the time the Incentive Stock Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary, the per Share exercise price will be no less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant.

(B) granted to any Employee other than an Employee described in paragraph (A) immediately above, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(2) In the case of a Nonstatutory Stock Option, the per Share exercise price will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.

(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price of less than one hundred percent (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, Code Section 424(a).

(ii) Waiting Period and Exercise Dates. At the time an Option is granted, the Administrator will fix the period within which the Option may be exercised and will determine any conditions that must be satisfied before the Option may be exercised.

(iii) Form of Consideration. The Administrator will determine the acceptable form of consideration for exercising an Option, including the method of payment. In the case of an Incentive Stock Option, the Administrator will determine the acceptable form of consideration at the time of grant. Such consideration for both types of Options may consist of: (1) cash; (2) check; (3) promissory note, to the extent permitted by Applicable Laws, (4) other Shares, provided that such Shares have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which such Option will be exercised and provided that accepting such Shares will not result in any adverse accounting consequences to the Company, as the Administrator determines in its sole discretion; (5) consideration received by the Company under a broker-assisted (or other) cashless exercise program (whether through a broker or otherwise) implemented by the Company in connection with the Plan; (6) by net exercise; (7) such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws; or (8) any combination of the foregoing methods of payment.

(d) Exercise of Option.

(i) Procedure for Exercise; Rights as a Stockholder. Any Option granted hereunder will be exercisable according to the terms of the Plan and at such times and under such conditions as determined by the Administrator and set forth in the Award Agreement. An Option may not be exercised for a fraction of a Share.

 

-12-


An Option will be deemed exercised when the Company receives: (i) a notice of exercise (in such form as the Administrator may specify from time to time) from the person entitled to exercise the Option, and (ii) full payment for the Shares with respect to which the Option is exercised (together with full payment of any applicable taxes or other amounts required to be withheld or deducted with respect to the Option). Full payment may consist of any consideration and method of payment authorized by the Administrator and permitted by the Award Agreement and the Plan. Shares issued upon exercise of an Option will be issued in the name of the Participant or, if requested by the Participant, in the name of the Participant and his or her spouse. Until the Shares are issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to an Option, notwithstanding the exercise of the Option. The Company will issue (or cause to be issued) such Shares promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Shares are issued, except as provided in Section 15 of the Plan.

(ii) Termination of Relationship as a Service Provider. If a Participant ceases to be a Service Provider, other than upon the Participant’s termination as the result of the Participant’s death, Disability or Cause, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for three (3) months following the Participant’s termination. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified by the Administrator, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(iii) Disability of Participant. If a Participant ceases to be a Service Provider as a result of the Participant’s Disability, the Participant may exercise his or her Option within such period of time as is specified in the Award Agreement to the extent the Option is vested on the date of termination (but in no event later than the expiration of the term of such Option as set forth in the Award Agreement). In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s termination as a result of the Participant’s Disability. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If after termination the Participant does not exercise his or her Option within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(iv) Death of Participant. If a Participant dies while a Service Provider, the Option may be exercised following the Participant’s death within such period of time as is specified in the Award Agreement to the extent that the Option is vested on the date of death (but in no event may the Option be exercised later than the expiration of the term of such Option as set forth in the Award Agreement), by the Participant’s designated beneficiary, provided such beneficiary has been designated prior to Participant’s death in a form acceptable to the Administrator. If no such beneficiary has been designated by the Participant, then such Option may be exercised by the personal representative of the Participant’s estate or by the person(s) to

 

-13-


whom the Option is transferred pursuant to the Participant’s will or in accordance with the laws of descent and distribution. In the absence of a specified time in the Award Agreement, the Option will remain exercisable for twelve (12) months following the Participant’s death. Unless otherwise provided by the Administrator, if on the date of termination the Participant is not vested as to his or her entire Option, the Shares covered by the unvested portion of the Option will revert to the Plan. If the Option is not so exercised within the time specified herein, the Option will terminate, and the Shares covered by such Option will revert to the Plan.

(v) Termination for Cause. If a Participant ceases to be a Service Provider as a result of being terminated for Cause, any outstanding Option (including any vested portion thereof) held by such Participant shall immediately terminate in its entirety upon the Participant being first notified of his or her termination for Cause and the Participant will be prohibited from exercising his or her Option from and after the date of such notification. All the Participant’s rights under any Option, including the right to exercise the Option, may be suspended pending an investigation of whether Participant will be terminated for Cause.

7. Restricted Stock.

(a) Grant of Restricted Stock. Subject to the terms and provisions of the Plan, the Administrator, at any time and from time to time, may grant Shares of Restricted Stock to Service Providers in such amounts as the Administrator, in its sole discretion, will determine.

(b) Restricted Stock Agreement. Each Award of Restricted Stock will be evidenced by an Award Agreement that will specify the Period of Restriction, the number of Shares granted, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Unless the Administrator determines otherwise, the Company as escrow agent will hold Shares of Restricted Stock until the restrictions on such Shares have lapsed.

(c) Transferability. Except as provided in this Section 7 or the Award Agreement, Shares of Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the end of the applicable Period of Restriction.

(d) Other Restrictions. The Administrator, in its sole discretion, may impose such other restrictions on Shares of Restricted Stock as it may deem advisable or appropriate.

(e) Removal of Restrictions. Except as otherwise provided in this Section 7, Shares of Restricted Stock covered by each Restricted Stock grant made under the Plan will be released from escrow as soon as practicable after the last day of the Period of Restriction or at such other time as the Administrator may determine. The Administrator, in its discretion, may accelerate the time at which any restrictions will lapse or be removed.

(f) Voting Rights. During the Period of Restriction, Service Providers holding Shares of Restricted Stock granted hereunder may exercise full voting rights with respect to those Shares, unless the Administrator determines otherwise.

 

-14-


(g) Dividends and Other Distributions. During the Period of Restriction, Service Providers holding Shares of Restricted Stock will be entitled to receive all dividends and other distributions paid with respect to such Shares, unless the Administrator provides otherwise. If any such dividends or distributions are paid in Shares, the Shares will be subject to the same restrictions, including, without limitation, restrictions on transferability and forfeitability, as the Shares of Restricted Stock with respect to which they were paid.

(h) Return of Restricted Stock to Company. On the date set forth in the Award Agreement, the Restricted Stock for which restrictions have not lapsed will be cancelled and returned as unissued shares to the Company and again will become available for grant under the Plan.

8. Restricted Stock Units.

(a) Grant. Restricted Stock Units may be granted at any time and from time to time as determined by the Administrator. After the Administrator determines that it will grant Restricted Stock Units under the Plan, it will advise the Participant in an Award Agreement of the terms, conditions, and restrictions (if any) related to the grant, including the number of Restricted Stock Units.

(b) Vesting Criteria and Other Terms. The Administrator will set vesting criteria in its discretion, which, depending on the extent to which the criteria are met, will determine the number of Restricted Stock Units that will be paid out to the Participant. The Administrator may set vesting criteria based upon the achievement of Company-wide, business unit, or individual goals (including, but not limited to, continued employment), or any other basis (including the passage of time) determined by the Administrator in its discretion.

(c) Earning Restricted Stock Units. Upon meeting the applicable vesting criteria, the Participant will be entitled to receive a payout as determined by the Administrator. Notwithstanding the foregoing, at any time after the grant of Restricted Stock Units, the Administrator, in its sole discretion, may reduce or waive any vesting criteria that must be met to receive a payout.

(d) Dividend Equivalents. The Administrator may, in its sole discretion, award dividend equivalents in connection with the grant of Restricted Stock Units that may be settled in cash, in Shares of equivalent value, or in some combination thereof. The Administrator may provide that such dividend equivalents shall be paid or distributed when accrued or at a later specified date and, if distributed at a later date, may be deemed to have been reinvested in additional Shares, Awards, or other investment vehicles or accrued in a bookkeeping account without interest, and subject to such restrictions on transferability and risks of forfeiture, as the Administrator may specify. Absent a contrary provision in the Award Agreement, such dividend equivalents shall be subject to the same restrictions and risk of forfeiture as the Restricted Stock Units with respect to which the dividends accrue and shall not be paid unless and until such Restricted Stock Units have settled.

(e) Form and Timing of Payment. Payment of earned Restricted Stock Units will be made upon the date(s) determined by the Administrator and set forth in the Award Agreement, which shall specify whether earned Restricted Stock Units may be settled in cash, Shares, or a combination of both.

 

-15-


(f) Cancellation. On the date set forth in the Award Agreement, all Shares underlying any unvested, unlapsed unearned Restricted Stock Units will be forfeited to the Company for future issuance.

9. Stock Appreciation Rights.

(a) Grant of Stock Appreciation Rights. Subject to the terms and conditions of the Plan, a Stock Appreciation Right may be granted to Service Providers at any time and from time to time as will be determined by the Administrator, in its sole discretion.

(b) Number of Shares. The Administrator will have complete discretion to determine the number of Stock Appreciation Rights granted to any Service Provider.

(c) Exercise Price and Other Terms. The per share exercise price for the Shares to be issued pursuant to exercise of a Stock Appreciation Right will be determined by the Administrator and will be no less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant. Otherwise, the Administrator, subject to the provisions of the Plan, will have complete discretion to determine the terms and conditions of Stock Appreciation Rights granted under the Plan.

(d) Stock Appreciation Right Agreement. Each Stock Appreciation Right grant will be evidenced by an Award Agreement that will specify the exercise price, the term of the Stock Appreciation Right, the conditions of exercise, and such other terms and conditions as the Administrator, in its sole discretion, will determine.

(e) Expiration of Stock Appreciation Rights. A Stock Appreciation Right granted under the Plan will expire upon the date determined by the Administrator, in its sole discretion, and set forth in the Award Agreement. Notwithstanding the foregoing, the rules of Section 6(b) relating to the maximum term and Section 6(d) relating to exercise also will apply to Stock Appreciation Rights.

(f) Payment of Stock Appreciation Right Amount. Upon exercise of a Stock Appreciation Right, a Participant will be entitled to receive payment from the Company in an amount determined by multiplying:

(i) The difference between the Fair Market Value of a Share on the date of exercise over the exercise price; times

(ii) The number of Shares with respect to which the Stock Appreciation Right is exercised.

At the discretion of the Administrator, the payment upon Stock Appreciation Right exercise may be in cash, in Shares of equivalent value, or in some combination thereof.

 

-16-


10. Performance Units and Performance Shares.

(a) Grant of Performance Units/Shares. Performance Units and Performance Shares may be granted to Service Providers at any time and from time to time, as will be determined by the Administrator, in its sole discretion. The Administrator will have complete discretion in determining the number of Performance Units and Performance Shares granted to each Participant.

(b) Value of Performance Units/Shares. Each Performance Unit will have an initial value that is established by the Administrator on or before the date of grant. Each Performance Share will have an initial value equal to the Fair Market Value of a Share on the date of grant.

(c) Performance Goals and Other Terms. The Administrator will set Performance Goals or other vesting provisions (including, without limitation, continued status as a Service Provider) in its discretion which, depending on the extent to which they are met, will determine the number or value of Performance Units/Shares that will be paid out to the Service Providers. Each Award of Performance Units/Shares will be evidenced by an Award Agreement that will specify the Performance Period, and such other terms and conditions as the Administrator, in its sole discretion, will determine. Without limiting the foregoing, the Administrator shall adjust any Performance Goals or other feature of an Award that relates to or is wholly or partially based on the number of, or the value of, any stock of the Company, to reflect any stock dividend or split, repurchase, recapitalization, combination, or exchange of shares or other similar changes in such stock.

(d) Earning of Performance Units/Shares. After the applicable Performance Period has ended, the holder of Performance Units/Shares will be entitled to receive a payout of the number of Performance Units/Shares earned by the Participant over the Performance Period, to be determined as a function of the extent to which the corresponding Performance Goals or other vesting provisions have been achieved. After the grant of a Performance Unit/Share, the Administrator, in its sole discretion, may reduce or waive any Performance Goals or other vesting provisions for such Performance Unit/Share.

(e) Form and Timing of Payment of Performance Units/Shares. Payment of earned Performance Units/Shares will be made upon the time set forth in the applicable Award Agreement. The Administrator, in its sole discretion, may pay earned Performance Units/Shares in the form of cash, in Shares (which have an aggregate Fair Market Value equal to the value of the earned Performance Units/Shares at the close of the applicable Performance Period) or in a combination thereof.

(f) Cancellation of Performance Units/Shares. On the date set forth in the Award Agreement, all unearned or unvested Performance Units/Shares will be forfeited to the Company, and again will be available for grant under the Plan.

 

-17-


11. Other Stock-or Cash-Based Awards. The Administrator is authorized to grant Awards to Participants in the form of Other Stock-Based Awards or Other Cash-Based Awards, as deemed by the Administrator to be consistent with the purposes of the Plan. To the extent necessary to satisfy the short-term deferral exception to Code Section 409A, unless the Administrator shall determine otherwise, the awards shall provide that payment shall be made within 2 1/2 months after the end of the year in which the Participant has a legally binding vested right to such award. The Administrator may establish such other rules applicable to the Other Stock- or Cash-Based Awards as it deems appropriate, to the extent not inconsistent with the Plan.

12. Outside Director Limitations. No Outside Director may receive Awards under the Plan with a total grant date fair value that, when combined with cash compensation received for service as an Outside Director, exceeds $750,000 in a calendar year, increased to $1,000,000 in the calendar year of his or her initial services as an Outside Director. Grant date fair value for purposes of Awards to Outside Directors under the Plan will be determined as follows: (a) for Options and Stock Appreciation Rights, grant date fair value will be calculated using the Black-Scholes valuation methodology on the date of grant of such Option or Stock Appreciation Right and (b) for all other Awards other than Options and Stock Appreciation Rights, grant date fair value will be determined by either (i) calculating the product of the Fair Market Value per Share on the date of grant and the aggregate number of Shares subject to the Award or (ii) calculating the product using an average of the Fair Market Value over a number of trading days and the aggregate number of Shares subject to the Award. Awards granted to an individual while he or she was serving in the capacity as an Employee or while he or she was an Independent Contractor but not an Outside Director will not count for purposes of the limitations set forth in this Section 12.

13. Leaves of Absence/Transfer Between Locations. The Administrator shall have the discretion to determine at any time whether and to what extent the vesting of Awards shall be suspended during any leave of absence; provided, however, that in the absence of such determination, vesting of Awards shall continue during any paid leave and during any unpaid leave (unless otherwise required by Applicable Laws). A Participant will not cease to be an Employee in the case of (a) any leave of absence approved by the Participant’s employer or (b) transfers between locations of the Company or between the Company, its Parent, or any Subsidiary. If an Employee is holding an Incentive Stock Option and such leave exceeds three (3) months then, for purposes of Incentive Stock Option status only, such Employee’s service as an Employee shall be deemed terminated on the first (1st) day following such three (3) month period and the Incentive Stock Option shall thereafter automatically treated for tax purposes as a Nonstatutory Stock Option in accordance with Applicable Laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written Company policy.

14. Transferability of Awards. Unless determined otherwise by the Administrator, an Award may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Participant, only by the Participant. If the Administrator makes an Award transferable, such Award will contain such additional terms and conditions as the Administrator deems appropriate.

 

-18-


15. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

(a) Adjustments. In the event of a stock split, reverse stock split, stock dividend, combination, consolidation, recapitalization (including a recapitalization through a large nonrecurring cash dividend) or reclassification of the Shares, subdivision of the Shares, a rights offering, a reorganization, merger, spin-off, split-up, repurchase, or exchange of Common Stock or other securities of the Company or other significant corporate transaction, or other change affecting the Common Stock occurs, the Administrator, in order to prevent dilution, diminution or enlargement of the benefits or potential benefits intended to be made available under the Plan, will, in such manner as it may deem equitable, adjust the number, kind and class of securities that may be delivered under the Plan and/or the number, class, kind and price of securities covered by each outstanding Award. Notwithstanding the forgoing, all adjustments under this Section 15 shall be made in a manner that does not result in taxation under Code Section 409A.

(b) Dissolution or Liquidation. In the event of the proposed winding up, dissolution or liquidation of the Company, the Administrator will notify each Participant as soon as practicable prior to the effective date of such proposed transaction. To the extent it has not been previously exercised or settled, an Award will terminate immediately prior to the consummation of such proposed action.

(c) Corporate Transaction. In the event of (i) a transfer of all or substantially all of the Company’s assets, (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of the Company’s then outstanding capital stock (a “Corporate Transaction”), each outstanding Award (vested or unvested) will be treated as the Administrator determines, which determination may be made without the consent of any Participant and need not treat all outstanding Awards (or portion thereof) in an identical manner. Such determination, without the consent of any Participant, may provide (without limitation) for one or more of the following in the event of a Corporate Transaction: (A) the continuation of such outstanding Awards by the Company (if the Company is the surviving corporation); (B) the assumption of such outstanding Awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parent of new options or other equity awards for such Awards; (D) the cancellation of such Awards in exchange for a payment to the Participants equal to the excess of (1) the Fair Market Value of the Shares subject to such Awards as of the closing date of such Corporate Transaction over (2) the exercise price or purchase price paid or to be paid (if any) for the Shares subject to the Awards; provided that at the discretion of the Administrator, such payment may be subject to the same conditions that apply to the consideration that will be paid to holders of Shares in connection with the transaction; provided, however, that any payout in connection with a terminated award under this clause (D) shall comply with Code Section 409A to the extent necessary to avoid taxation thereunder; or (E) the opportunity for Participants to exercise the Options prior to the occurrence of the Corporate Transaction and the termination (for no consideration) upon the consummation of such Corporate Transaction of any Options not exercised prior thereto.

 

-19-


(d) Change in Control. An Award may be subject to additional acceleration of vesting and exercisability upon or after a Change in Control as may be provided in the Award Agreement for such Award or as may be provided in any other written agreement between the Company or any Affiliate and the Participant, but in the absence of such provision, no such acceleration will occur.

16. Tax.

(a) Withholding Requirements. Prior to the delivery of any Shares or cash pursuant to an Award (or exercise thereof) or prior to any time the Award or Shares are subject to taxation or other Tax-Related Items, the Company and/or the Participant’s employer will have the power and the right to deduct or withhold, or require a Participant to remit to the Company, an amount sufficient to satisfy any Tax-Related Items or other items that are required to be withheld or deducted or otherwise applicable with respect to such Award.

(b) Withholding Arrangements. The Administrator, in its sole discretion and pursuant to such procedures as it may specify from time to time, may permit a Participant to satisfy such withholding or deduction obligations or any other Tax-Related Items, in whole or in part by (without limitation) (i) paying cash, (ii) electing to have the Company withhold otherwise deliverable Shares or cash (including, without limitation, withholding cash from the proceeds of a sale of Shares subject to an Award), (iii) delivering to the Company already-owned Shares; or (iv) such other method as may be set forth in the Award Agreement; provided that, unless specifically permitted by the Company, any proceeds derived from a cashless exercise must be an approved broker-assisted cashless exercise or the cash or Shares withheld or delivered must be limited to avoid financial accounting charges under applicable accounting guidance or Shares must have been previously held for the minimum duration required to avoid financial accounting charges under applicable accounting guidance. Except as otherwise determined by the Administrator, the Fair Market Value of the Shares to be withheld or delivered will be determined as of the date that the amounts are required to be withheld or deducted.

(c) Compliance With Code Section 409A. Awards will be designed and operated in such a manner that they are either exempt from the application of, or comply with, the requirements of Code Section 409A such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. The Plan and each Award Agreement under the Plan is intended to meet the requirements of Code Section 409A (or an exemption therefrom) and will be construed and interpreted in accordance with such intent, except as otherwise determined in the sole discretion of the Administrator. To the extent that an Award or payment, or the settlement or deferral thereof, is subject to Code Section 409A the Award will be granted, paid, settled or deferred in a manner that will meet the requirements of Code Section 409A (or an exemption therefrom), such that the grant, payment, settlement or deferral will not be subject to the additional tax or interest applicable under Code Section 409A. In no event will the Company be responsible for or reimburse a Participant for any taxes or other penalties incurred as a result of the application of Code Section 409A.

 

-20-


17. No Effect on Employment or Service. Neither the Plan nor any Award will confer upon a Participant any right with respect to continuing the Participant’s relationship as a Service Provider with the Company or any Subsidiary or Affiliate, nor will they interfere in any way with the Participant’s right or the Company’s or any Subsidiary or Affiliate’s right to terminate such relationship at any time, with or without cause, to the extent permitted by Applicable Laws.

18. Date of Grant. The date of grant of an Award will be, for all purposes, the date on which the Administrator makes the determination granting such Award, or such other later date as is determined by the Administrator. Notice of the determination will be provided to each Participant within a reasonable time after the date of such grant.

19. Corporate Records Control. In the event that the corporate records (e.g., Board consents, resolutions or minutes) documenting the corporate action constituting the grant contain terms (e.g., exercise price, vesting schedule or number of shares) that are inconsistent with those in the Award Agreement or related grant documents as a result of a clerical error in the papering of the Award Agreement or related grant documents, the corporate records will control and the Participant will have no legally binding right to the incorrect term in the Award Agreement or related grant documents.

20. Clawback/Recovery. All Awards granted under the Plan will be subject to recoupment in accordance with any clawback policy that the Company is required to adopt pursuant to the listing standards of any national securities exchange or association on which the Company’s securities are listed or as is otherwise required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act or other Applicable Laws. In addition, the Board may impose such other clawback, recovery or recoupment provisions in an Award Agreement as the Board determines necessary or appropriate, including but not limited to a reacquisition right in respect of previously acquired Shares or other cash or property upon the occurrence of an event constituting Cause. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company.

21. Term of Plan. Subject to Section 25 of the Plan, the restatement of the Company’s 2016 Stock Plan into this Plan will become effective as of the Effective Date. The Plan will continue in effect for a term of ten (10) years measured from the earlier of the date the Board approves the restatement of the Company’s 2016 Stock Plan into this Plan or the approval of such restatement by the Company’s stockholders, unless terminated earlier under Section 22 of the Plan.

22. Amendment and Termination of the Plan.

(a) Amendment and Termination. The Administrator may at any time amend, alter, suspend or terminate the Plan.

(b) Stockholder Approval. The Company will obtain stockholder approval of any Plan amendment to the extent necessary and desirable to comply with Applicable Laws.

(c) Effect of Amendment or Termination. No amendment, alteration, suspension or termination of the Plan will materially impair the rights of any Participant, unless mutually agreed otherwise between the Participant and the Administrator, which agreement must be in writing and signed by the Participant and the Company. Termination of the Plan will not affect the Administrator’s ability to exercise the powers granted to it hereunder with respect to Awards granted under the Plan prior to the date of such termination.

 

-21-


23. Conditions Upon Issuance of Shares.

(a) Legal Compliance. Shares will not be issued pursuant to the exercise or vesting (as applicable) of an Award unless the exercise or vesting of such Award and the issuance and delivery of such Shares will comply with Applicable Laws and will be further subject to the approval of counsel for the Company with respect to such compliance.

(b) Investment Representations. As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required.

24. Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any Shares hereunder, will relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority will not have been obtained.

25. Stockholder Approval. The Plan will be subject to approval by the stockholders of the Company within twelve (12) months after the date the Plan is adopted by the Board. Such stockholder approval will be obtained in the manner and to the degree required under Applicable Laws.

26. Governing Law. The Plan and all Awards hereunder shall be construed in accordance with and governed by the laws of the State of California, but without regard to its conflict of law provisions.

27. Severability and Reformation. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or Award, or would unintentionally disqualify the Plan or any Award under any Applicable Laws, such provision shall be construed or deemed amended to conform to the Applicable Laws or, if it cannot be construed or deemed amended without, in the determination of the Administrator, materially altering the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction, person or Award and the remainder of the Plan and any such Award shall remain in full force and effect. If any of the terms or provisions of the Plan or any Award Agreement conflict with the requirements of Rule 16b-3 (as those terms or provisions are applied to Participants who are subject to Section 16 of the Exchange Act) or Code Section 422 (with respect to Incentive Stock Options), then those conflicting terms or provisions shall be deemed inoperative to the extent they so conflict with the requirements of Rule 16b-3 or Code Section 422 (unless the Administrator has expressly determined that the Plan or such Award should not comply with Rule 16b-3 or Code Section 422, as applicable), in each case, only to the extent Rule 16b-3 and Code Section 422 are applicable. With respect to Incentive Stock Options, if the Plan does not contain any provision required to be included herein under Code Section 422, that provision shall be deemed to be incorporated herein with the same force and effect as if that provision had been set out at length herein; provided that, to the extent any Option that is intended to qualify as an Incentive Stock Option cannot so qualify, that Option (to that extent) shall be deemed a Nonstatutory Option for all purposes of the Plan.

 

-22-


28. Unfunded Status of Awards; No Trust or Fund Created. The Plan is intended to constitute an “unfunded” plan for certain incentive awards. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company or a Parent or Subsidiary and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company or a Parent or Subsidiary pursuant to an Award, such right shall be no greater than the right of any general unsecured creditor of the Company or such Parent or Subsidiary.

29. Nonexclusivity of the Plan. Neither the adoption of the Plan by the Board, nor its submission to the stockholders of the Company for approval, shall be construed as creating any limitations on the power of the Board or a committee thereof to adopt such other incentive arrangements as it may deem desirable. Nothing contained in the Plan shall be construed to prevent the Company or a Parent or Subsidiary from taking any corporate action which is deemed by the Company or such Parent or Subsidiary to be appropriate or in its best interest, whether or not such action would have an adverse effect on the Plan or any Award made under the Plan. No Participant, beneficiary or other person shall have any claim against the Company or a Parent or Subsidiary as a result of any such action.

30. Status under ERISA. It is the intent of the Company that the Plan shall not constitute an “employee benefit plan” for purposes of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

o O o

FISKER INC.

2020 EQUITY INCENTIVE PLAN

STOCK OPTION AWARD AGREEMENT

 

-23-


Unless otherwise defined herein, the terms defined in the Fisker Inc. 2020 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Stock Option Award Agreement (this “Award Agreement”).

NOTICE OF STOCK OPTION GRANT

Participant Name:

You have been granted an Option to purchase Common Stock of Fisker Inc. (the “Company”), subject to the terms and conditions of the Plan and this Award Agreement, as follows:

 

  Grant Number   

 

  Date of Grant   

 

  Vesting Commencement Date   

 

  Exercise Price per Share    USD $   

 

  Total Number of Shares   

 

  Total Exercise Price    USD $   

 

  Type of Option:   

 

   U.S. Incentive Stock Option
    

 

   Nonstatutory Stock Option
  Term/Expiration Date:   

 

  Vesting Schedule:   

 

Subject to Section 2 of this Award Agreement, this Option may be exercised, in whole or in part, in accordance with the following schedule:

 

 

 

 

 

 

 

 

-24-


Termination Period:

This Option will be exercisable for three (3) months after Participant ceases to be a Service Provider, unless such termination is due to Participant’s death, Disability or Cause. If Participant’s relationship as a Service Provider is terminated as a result of the Service Provider’s death or Disability, this Option will be exercisable for twelve (12) months after Participant ceases to be a Service Provider. If Participant’s relationship as a Service Provider is terminated for Cause, this

Option (including any vested portion thereof) shall immediately terminate in its entirety upon Participant’s being first notified such termination for Cause and Participant will be prohibited from exercising this Option from and after the date of such notification. Notwithstanding the foregoing, in no event may this Option be exercised after the Term/Expiration Date as provided above and may be subject to earlier termination as provided in Section 15 of the Plan.

By Participant’s signature and the signature of the Company’s representative below, or by Participant otherwise accepting or exercising this Option, Participant and the Company agree that this Option is granted under and governed by the terms and conditions of the Plan and this Award Agreement, including the Terms and Conditions of Stock Option Grant (including any country- specific addendum thereto), attached hereto as Exhibit A, all of which are made a part of this document. Participant has reviewed the Plan and this Award Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement and fully understands all provisions of the Plan and this Award Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator on any questions relating to the Plan and this Award Agreement.

 

PARTICIPANT:    FISKER INC.

 

  

 

Signature    By

 

  

 

Print Name    Title

 

-25-


EXHIBIT A

TERMS AND CONDITIONS OF STOCK OPTION GRANT

1. Grant of Option. The Company hereby grants to Participant named in the Notice of Stock Option Grant attached as Part I of this Award Agreement (the “Participant”) an option (the “Option”) to purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”), subject to all of the terms and conditions set forth in the Notice of Stock Option Grant and in this Award Agreement and the Plan, which is incorporated herein by reference. Subject to Section 22 of the Plan, if there is a conflict between the terms and conditions of the Plan and the terms and conditions of this Award Agreement, the terms and conditions of the Plan will prevail.

If designated in the Notice of Stock Option Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an ISO to the maximum extent permitted under Section 422 of the U.S. Internal Revenue Code of 1986, as amended (the “Code”). However, if this Option is intended to be an ISO, to the extent that it exceeds the USD $100,000 rule of Code Section 422(d), it will be treated as a Nonstatutory Stock Option (“NSO”). Further, if for any reason this Option (or portion thereof) will not qualify as an ISO, then, to the extent of such non- qualification, such Option (or portion thereof) shall be regarded as a NSO granted under the Plan. In no event will the Administrator, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Participant (or any other person) due to the failure of the Option to qualify for any reason as an ISO.

2. Vesting Schedule. Except as provided in Section 3, the Option awarded by this Award Agreement will vest in accordance with the vesting provisions set forth in the Notice of Stock Option Grant. Options scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in accordance with any of the provisions of this Award Agreement, unless Participant will have been continuously a Service Provider from the Date of Grant until the date such vesting occurs. Service Provider status for purposes of this Award will end on the day that Participant is no longer actively providing services as an Employee, Director, or Independent Contractor and will not be extended by any notice period or “garden leave” that may be required contractually or under any Applicable Laws. Notwithstanding the foregoing, the Administrator (or any delegate) shall have the sole and absolute discretion to determine when Participant is no longer actively providing services for purposes of Service Provider status and participation in the Plan.

3. Exercise of Option.

(a) Right to Exercise. This Option may be exercised only within the term set forth in the Notice of Stock Option Grant and may be exercised during such term only in accordance with the Plan and the terms of this Award Agreement.

(b) Method of Exercise. This Option is exercisable by delivery of an exercise notice, in the form attached as Exhibit B (the “Exercise Notice”), or in a manner and pursuant to such procedures as the Administrator may determine, which will state the election to exercise the Option, the number of Shares in respect of which the Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company

 

-26-


pursuant to the provisions of the Plan. The Exercise Notice will be completed by Participant and delivered to the Company. The Exercise Notice will be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares together with any Tax-Related Items (as defined below) required to be withheld, paid or provided pursuant to any Applicable Laws. This Option will be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by such aggregate Exercise Price and any other requirements or restrictions that may be imposed by the Company to comply with Applicable Laws or facilitate administration of the Plan. Notwithstanding the above, Participant understands that the Applicable Laws of the country in which Participant is residing or working at the time of grant, vesting, and/or exercise of this Option (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent exercise of this Option, and neither the Company nor any Parent or Subsidiary assumes any liability in relation to this Option in such case.

4. Method of Payment. Payment of the aggregate Exercise Price will be by any of the following, or a combination thereof, at the election of Participant unless otherwise specified by the Company in its sole discretion:

(a) cash (U.S. dollars); or

(b) check (denominated in U.S. dollars); or

(c) consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(d) if Participant is subject to Section 16 of the Exchange Act, Participant may direct the Company to withhold Shares to be issued upon exercise of the Option to pay the aggregate Exercise Price and any such disposition of Shares to the Company shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3(e).

Participant understands and agrees that, unless otherwise permitted by the Company, any cross-border remittance made to exercise this Option or transfer proceeds received upon the sale of Shares must be made through a locally authorized financial institution or registered foreign exchange agency and may require Participant to provide such entity with certain information regarding the transaction.

5. Tax Obligations.

(a) Withholding Taxes. Regardless of any action the Company or Participant’s employer (the “Employer”) takes with respect to any or all applicable national, local, or other tax or social contribution, withholding, required deductions, or other payments, if any, that arise upon the grant, vesting, or exercise of this Option, the holding or subsequent sale of Shares, and the receipt of dividends, if any, or otherwise in connection with this Option or the Shares (“Tax-Related Items”), Participant acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by Participant is and remains Participant’s responsibility and may exceed any amount actually withheld by the Company or the Employer. Participant further acknowledges and agrees that Participant is solely responsible for filing all relevant documentation that may be required in relation to this Option or any Tax-Related Items (other

 

-27-


than filings or documentation that is the specific obligation of the Company or a Parent, Subsidiary, or Employer pursuant to Applicable Laws) such as but not limited to personal income tax returns or reporting statements in relation to the grant, vesting or exercise of this Option, the holding of Shares or any bank or brokerage account, the subsequent sale of Shares, and the receipt of any dividends. Participant further acknowledges that the Company and the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Option, including the grant, vesting, or exercise of the Option, the subsequent sale of Shares acquired under the Plan and the receipt of dividends, if any; and (b) does not commit to and is under no obligation to structure the terms of the Option or any aspect of the Option to reduce or eliminate Participant’s liability for Tax-Related Items, or achieve any particular tax result. Participant also understands that Applicable Laws may require varying Share or Option valuation methods for purposes of calculating Tax-Related Items, and the Company assumes no responsibility or liability in relation to any such valuation or for any calculation or reporting of income or Tax-Related Items that may be required of Participant under Applicable Laws. Further, if Participant has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b) Satisfaction of Tax-Related Items. As a condition to the grant, vesting and exercise of this Option and as set forth in Section 16 of the Plan, Participant hereby agrees to make adequate provision for the satisfaction of (and will indemnify the Company and any Parent or Subsidiary for) any Tax-Related Items. No payment will be made to Participant (or his or her estate or beneficiary) related to an Option, and no Shares will be issued pursuant to an Option, unless and until satisfactory arrangements (as determined by the Company) have been made by Participant with respect to the payment of any Tax-Related Items obligations of the Company and/or any Parent, Subsidiary, or Employer with respect to the grant, vesting or exercise of the Option.    In this regard, Participant authorizes the Company and/or any Parent, Subsidiary, or Employer, or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

(i) withholding from Participant’s wages or other cash compensation paid to Participant by the Company or the Employer; or

(ii) withholding from proceeds of the sale of Shares acquired upon exercise of the Option, either through a voluntary sale or through a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization); or

(iii) withholding in Shares to be issued upon exercise of the Option.

Notwithstanding the foregoing, if Participant is subject to Section 16 of the Exchange Act, Participant may direct the Company to withhold Shares to be issued upon exercise of the Option to satisfy Participant’s obligations with regard to all Tax-Related Items and any such disposition of Shares to the Company shall be exempt from Section 16(b) of the Exchange Act pursuant to Rule 16b-3(e).

 

-28-


If the obligation for Tax-Related Items is satisfied by withholding Shares, Participant is deemed to have been issued the full number of Shares purchased for tax purposes, notwithstanding that a number of Shares is held back solely for the purpose of paying the Tax-Related Items due as a result of Participant’s participation in the Plan. Participant shall pay to the Company or a Parent, Subsidiary, or Employer any amount of Tax-Related Items that the Company may be required to withhold, pay or otherwise provide for as a result of Participant’s participation in the Plan that cannot be satisfied by one or more of the means previously described in this Section 5. Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to issue or deliver the Shares or the proceeds of the sale of Shares if Participant fails to comply with his or her obligations in connection with the Tax-Related Items.

(c) Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of Grant, or (ii) the date one (1) year after the date of exercise, Participant will immediately notify the Company in writing of such disposition. At any time during the one (1)-year or two (2)-year periods set forth above, the Company may place a legend on any certificate representing Shares acquired pursuant to this Option requesting the transfer agent for the Company’s stock to notify the Company of any such disposition. Participant’s obligation to notify the Company of any such disposition will continue notwithstanding that a legend has been placed on the certificate pursuant to the preceding sentence.

(d) Code Section 409A (Applicable Only to Participants Subject to U.S. Taxes). Under Code Section 409A, an option that is granted with a per Share exercise price that is determined by the Internal Revenue Service (the “IRS”) to be less than the Fair Market Value of a Share on the date of grant (a “Discount Option”) may be considered “deferred compensation.” A Discount Option may result in (i) income recognition by Participant prior to the exercise of the option, (ii) an additional twenty percent (20%) federal income tax, and (iii) potential penalty and interest charges. The Discount Option may also result in additional state income, penalty and interest charges to Participant. Participant acknowledges that the Company cannot and has not guaranteed that the IRS will agree that the per Share exercise price of this Option equals or exceeds the Fair Market Value of a Share on the Date of Grant in a later examination. Participant agrees that if the IRS determines that the Option was granted with a per Share exercise price that was less than the Fair Market Value of a Share on the date of grant, Participant will be solely responsible for Participant’s costs related to such a determination.

6. Rights as Stockholder. Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares unless and until such Shares will have been issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). After such issuance, Participant will have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares, but prior to such issuance, Participant will not have any rights to dividends and/or distributions on such Shares.

 

-29-


7. No Guarantee of Continued Service or Grants. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF SHALL OCCUR ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE EMPLOYER OR CONTRACTING ENTITY (AS APPLICABLE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER.PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE EMPLOYER OR THE COMPANY, PARENT, OR SUBSIDIARY TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE (SUBJECT TO APPLICABLE LOCAL LAWS).

8. Nature of Grant. In accepting the Option, Participant acknowledges, understands and agrees that:

(a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

(b) the grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, or benefits in lieu of Options even if Options have been granted repeatedly in the past;

(c) all decisions with respect to future awards of Options, or other Awards, if any, will be at the sole discretion of the Company;

(d) Participant’s participation in the Plan is voluntary;

(e) the Option and the Shares subject to the Option are extraordinary items that do not constitute regular compensation for services rendered to the Company or the Employer, and that are outside the scope of Participant’s employment contract, if any;

(f) the Option and the Shares subject to the Option are not intended to replace any pension rights or compensation;

(g) the Option and the Shares subject to the Option are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, or end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Employer, subject to Applicable Laws;

(h) the future value of the underlying Shares is unknown and cannot be predicted with certainty; further, if Participant exercises the Option and obtains Shares, the value of the Shares acquired upon exercise may increase or decrease in value, even below the Exercise Price;

 

-30-


(i) Participant also understands that neither the Company nor any affiliate is responsible for any foreign exchange fluctuation between local currency and the United States Dollar or the selection by the Company or any affiliate in its sole discretion of an applicable foreign currency exchange rate that may affect the value of the Option (or the calculation of income or Tax-Related Items thereunder);

(j) in consideration of the grant of the Option, no claim or entitlement to compensation or damages shall arise from forfeiture of the Option resulting from termination of employment by the Employer (for any reason whatsoever and whether or not in breach of Applicable Laws, including, without limitation, applicable local labor laws), and Participant irrevocably releases the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim; and

(k) the Option and the benefits under the Plan, if any, will not without the Administrator’s consent transfer to another company in the case of a merger, take-over or transfer of liability.

9. No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s participation in the Plan, or Participant’s acquisition or sale of the underlying Shares. Participant is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding Participant’s participation in the Plan before taking any action related to the Plan.

10. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participant’s Personal Data (as described below) by and among, as applicable, the Company, any Parent, Subsidiary, or Affiliate, or third parties as may be selected by the Company for the exclusive purpose of implementing, administering and managing Participant’s participation in the Plan. Participant understands that refusal or withdrawal of consent will affect Participant’s ability to participate in the Plan; without providing consent, Participant will not be able to participate in the Plan or realize benefits (if any) from the Option.

Participant understands that the Company and any Parent, Subsidiary, Affiliate, or designated third parties may hold personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company or any Parent, Subsidiary, or Affiliate, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Personal Data”). Participant understands that Personal Data may be transferred to any Parent, Subsidiary, Affiliate, or third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the United States, Participant’s country (if different than the United States), or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Participant’s country. In particular, the Company may transfer Personal Data to the broker or stock plan administrator assisting with the Plan, to its legal counsel and tax/accounting advisor, and to the Subsidiary or Affiliate or entity that is Participant’s employer and its payroll provider.

 

-31-


Participant should also refer to any data privacy policy implemented by the Company (which will be available to Participant separately and may be updated from time to time) for more information regarding the collection, use, storage, and transfer of Participant’s Personal Data.

11. Address for Notices. Any notice to be given to the Company under the terms of this Award Agreement will be addressed to the Company, in care of its Secretary at Fisker Inc., 1580 Francisco Street, Suite B, Torrance, California 90501, or at such other address as the Company may hereafter designate in writing.

12. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Participant only by Participant.

13. Binding Agreement. Subject to the limitation on the transferability of this Option contained herein, this Award Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

14. Additional Conditions to Issuance of Stock. If at any time the Company will determine, in its discretion, that the listing, registration, qualification or compliance of the Shares upon or with any securities exchange or under any Applicable Laws, the tax code and related regulations or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the grant or vesting of the Option or purchase by, or issuance of Shares to, Participant (or his or her estate) hereunder, such purchase or issuance will not occur unless and until such listing, registration, qualification, compliance, consent or approval will have been completed, effected or obtained free of any conditions not acceptable to the Company. The Company will make all reasonable efforts to meet the requirements of any Applicable Laws. Assuming such compliance, for purposes of the Tax-Related Items, the Exercised Shares will be considered transferred to Participant on the date the Option is exercised with respect to such Exercised Shares. The Company shall not be obligated to issue any Shares pursuant to this Option at any time if the issuance of Shares, or the exercise of an Option by Participant, violates or is not in compliance with any Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel.

15. Lock-Up Agreement. If so requested by the Company (or any successor thereof) or the underwriters in connection with the initial public offering of the securities of the Company (or any successor or parent thereof), or any other transaction pursuant to which the securities of the Company will be exchanged for securities of the Company (or any successor or parent thereof), registered under the Securities Act of 1933, as amended, including, without limitation, through a transaction with a publicly-listed blank check company then registered under the Securities Act (a “SPAC Transaction”), Participant shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (or any successor thereof) however or whenever acquired (except for those being registered) without the prior written consent of the Company or such underwriters, as the case may be, for 180 days from the effective date of the registration statement or becoming a listed security (including, without limitation, pursuant to a SPAC Transaction), and Participant shall execute an agreement reflecting the foregoing as may be requested by the Company (or any successor or parent thereof) or the underwriters at the time of such offering or listing.

 

-32-


16. Plan Governs. This Award Agreement is subject to all terms and provisions of the Plan. If there is a conflict between one or more provisions of this Award Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Capitalized terms used and not defined in this Award Agreement will have the meaning set forth in the Plan.

17. Administrator Authority. The Administrator will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination regarding whether any Shares subject to the Option have vested). All actions taken, and all interpretations and determinations made, by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. No member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Award Agreement.

18. Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to Participant’s current or future participation in the Plan, this Option, the Shares subject to this Option, any other securities of the Company or any other Company-related documents, by electronic means. By accepting this Option, whether electronically or otherwise, Participant hereby (a) consents to receive such documents by electronic means, (b) consents to the use of electronic signatures, and (c) agrees to participate in the Plan and/or receive any such documents through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.

19. Translation. If Participant has received this Award Agreement, including appendices, or any other document related to the Plan translated into a language other than English, and the meaning of the translated version is different than the English version, the English version will control.

20. Imposition of Other Requirements. The Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Option and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with any Applicable Laws or facilitate the administration of the Plan, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, Participant understands that the Applicable Laws of the country in which he or she is resident at the time of grant, vesting, and/or exercise of this Option or the holding or disposition of Shares (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent exercise of this Option or may subject Participant to additional procedural or regulatory requirements he or she is solely responsible for and will have to independently fulfill in relation to this Option or the Shares. Notwithstanding any provision herein, this Option and any Shares shall be subject to any special terms and conditions or disclosures as set forth in any addendum for Participant’s country (the “Country-Specific Addendum,” which forms part this Award Agreement). Participant also understands and agrees that if he works, resides, moves to, or otherwise is or becomes subject to Applicable Laws or company policies of another jurisdiction at any time, certain country-specific notices, disclaimers and/or terms and conditions may apply to him as from the date of grant, unless otherwise determined by the Company in its sole discretion.

 

-33-


21. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.

22. Agreement Severable. If any provision in this Award Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Award Agreement.

23. Modifications to this Award Agreement. This Award Agreement and the Plan constitute the entire understanding of the parties on the subjects covered. Participant expressly warrants that he or she is not accepting this Award Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Award Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the contrary in the Plan or this Award Agreement, the Company reserves the right to revise this Award Agreement as it deems necessary or advisable, in its sole discretion and without the consent of Participant, to comply with Code Section 409A or to otherwise avoid imposition of any additional tax or income recognition under Code Section 409A in connection to this Option.

24. Agreement to Furnish Information. Participant agrees to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any Applicable Laws.

25. Clawback. Notwithstanding any provision in this Award Agreement or the Plan to the contrary, to the extent required by (a) Applicable Laws, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, any Securities Exchange Commission rule, and the listing standards of any national securities exchange or association on which the Company’s securities are listed and/or (b) any policy that may be adopted or amended by the Administrator from time to time, all Shares issued upon exercise of the Option shall be subject to forfeiture, repurchase, recoupment and/or cancellation to the extent necessary to comply with such Applicable Laws and/or policy.

26. Amendment, Suspension or Termination of the Plan. By accepting this Award, Participant expressly warrants that he or she has received an Option under the Plan, and has received, read and understood a description of the Plan. Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.

27. Governing Law and Venue. This Award Agreement will be governed by the laws of the State of California, without giving effect to the conflict of law principles thereof. For purposes of litigating any dispute that arises under this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California and agree that such litigation will be conducted in the courts of Los Angeles County, California, or the federal courts for the United States for the Central District of California, and no other courts.

***

 

-34-


Country-Specific Addendum

This Addendum includes additional country-specific notices, disclaimers, and/or terms and conditions that apply to individuals who are working or residing in the countries listed below, if any, and that may be material to Participant’s participation in the Plan. Such notices, disclaimers, and/or terms and conditions may also apply, as from the date of grant, if Participant moves to or otherwise is or becomes subject to the Applicable Laws or company policies of any country listed below. However, because foreign exchange regulations and other local laws are subject to frequent change, Participant is advised to seek advice from his or her own personal legal and tax advisor prior to accepting or exercising an Option or holding or selling Shares acquired under the Plan. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s acceptance of the Option or participation in the Plan. Unless otherwise noted below, capitalized terms shall have the same meaning assigned to them under the Plan, the Notice of Stock Option Grant and the Award Agreement. This Addendum forms part of the Award Agreement and should be read in conjunction with the Award Agreement and the Plan.

Securities Law Notice: Unless otherwise noted, neither the Company nor the Shares are registered with any local stock exchange or under the control of any local securities regulator outside the United States. The Award Agreement (of which this Addendum is a part), the Notice of Stock Option Grant, the Plan, and any other communications or materials that you may receive regarding participation in the Plan do not constitute advertising or an offering of securities outside the United States, and the issuance of securities described in any Plan-related documents is not intended for public offering or circulation in your jurisdiction.

 

 

 

European Union (“EU”)/European Economic Area (“EEA”)   

Data Privacy. For residents of the EU/EEA and elsewhere as may be applicable, the following provision applies and supplements Section 10 of the Award Agreement:

 

Participant understands and acknowledges:

 

•  The data controller is the Company; queries or requests regarding Participant’s Personal Data should be made in writing to the Company’s representative for Plan or Option matters, who may be contacted at [insert email address];

 

•  The legal basis for the processing of Personal Data is that the processing is necessary for the performance of a contract to which Participant is a party (namely, this Award Agreement); and

 

•  Personal Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan.

 

Participant may, at any time, access his or her Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data without cost or exercise any other rights they may have in relation to their Personal Data under applicable law, including the right to make a complaint to an EU/EEA data protection regulator.

 

 

 

-35-


United Kingdom   

The following supplements Sections 5(a) and (b) of the Agreement:

 

Withholding of Tax. If payment or withholding of the Tax-Related Items is not made within ninety (90) days of the end of the UK tax year in which the event giving rise to the Tax-Related Items occurs (the “Due Date”) or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, the amount of any uncollected Tax-Related Items will constitute a loan owed by Participant to the Employer, effective on the Due Date. Participant agrees that the loan will bear interest at the then-current Official Rate of Her Majesty’s Revenue and Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Sections 5(a) and (b) of the Award Agreement. Notwithstanding the foregoing, if Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), Participant will not be eligible for such a loan to cover the Tax-Related Items. In the event that Participant is a director or executive officer and the Tax-Related Items are not collected from or paid by Participant by the Due Date, the amount of any uncollected Tax-Related Items will constitute a benefit to Participant on which additional income tax and national insurance contributions will be payable. Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime.

 

HMRC National Insurance Contributions. Participant agrees that (a) Tax-Related Items within Sections 5(a) and (b) of the Award Agreement shall include any secondary class 1 (employer) National Insurance Contributions that (i) any employer (or former employer) of Participant is liable to pay (or reasonably believes it is liable to pay); and (ii) may be lawfully recovered from Participant; and (b) if required to do so by the Company (at any time when the relevant election can be made) Participant shall: (i) make a joint election (with the employer or former employer) in the form provided by the Company to transfer to Participant the whole or any part of the employer’s liability that falls within Sections 5(a) and (b) of the Award Agreement; and (ii) enter into arrangements required by HM Revenue & Customs (or any other tax authority) to secure the payment of the transferred liability.

 

 

 

 

-36-


Draft 10.2.20

EXHIBIT B

FISKER INC.

2020 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

 

Fisker Inc.
                                                                                  
                                                                                  
Attention:                                                                 

1. Exercise of Option. Effective as of today,                 ,                 , the undersigned (“Purchaser”) hereby elects to purchase,                 , shares (the “Shares”) of the Common Stock of Fisker Inc. (the “Company”) under and pursuant to the Fisker Inc. 2020 Equity Incentive Plan (the “Plan”) and the Stock Option Award Agreement dated                 ,                  (the Award Agreement). The purchase price for the Shares will be USD $                 , as required by the Award Agreement.

2. Delivery of Payment. Purchaser herewith delivers to the Company, or otherwise makes adequate arrangements satisfactory to the Company, the full purchase price of the Shares and any Tax-Related Items (as defined in the Agreement) to be paid in connection with the exercise of the Option.

3. Representations of Purchaser. Purchaser acknowledges that Purchaser has received, read and understood the Plan and the Award Agreement and agrees to abide by and be bound by their terms and conditions.

4. Rights as Stockholder. Until the issuance (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company) of the Shares, no right to vote or receive dividends or any other rights as a stockholder will exist with respect to the Shares subject to the Option, notwithstanding the exercise of the Option. The Shares so acquired will be issued to Purchaser as soon as practicable after exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date of issuance, except as provided in Section 14 of the Plan.

5. Tax Consultation. Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted with any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.

6. Entire Agreement; Governing Law. The Plan and Award Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Award Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Purchaser with respect to the subject matter hereof, and may not be modified adversely to the Purchaser’s interest except by means of a writing signed by the Company and Purchaser. This agreement is governed by the internal substantive laws, but not the choice of law rules, of the State of California.

 

-37-


Submitted by:    Accepted by:
PURCHASER:    FISKER INC.
                                                                                                                                                                                                                        
Signature    By
                                                                                                                                                                                                                        
Print Name    Title
                                                                                                             
   Date Received

 

-38-


FISKER INC.

2020 EQUITY INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

Unless otherwise defined herein, the terms defined in the Fisker Inc. 2020 Equity Incentive Plan (the “Plan”) will have the same defined meanings in this Restricted Stock Unit Award Agreement (this “Award Agreement”).

31. NOTICE OF RESTRICTED STOCK UNIT GRANT

Participant Name:

You have been granted the right to receive an Award of Restricted Stock Units, subject to the terms and conditions of the Plan and this Award Agreement, as follows:

 

Grant Number

                                                                                                

Date of Grant

                                                                                                

Vesting Commencement Date

                                                                                                

Number of Restricted Stock Units

                                                                                                

Vesting Schedule:

Subject to Section 3 of this Award Agreement, the Restricted Stock Units will vest in accordance with the following schedule:

 

 

 

 

 

 

If Participant ceases to be a Service Provider for any or no reason before Participant vests in a Restricted Stock Unit, the Restricted Stock Unit and Participant’s right to acquire any Shares hereunder will terminate in accordance with Section 3 of this Award Agreement.

 

-39-


By Participant’s signature and the signature of the representative of Fisker Inc. (the “Company”) below, or by Participant otherwise accepting this Award, including through performance of services as an Employee, Director, or Independent Contractor and the Shares issuable upon vesting, Participant and the Company agree that this Award of Restricted Stock Units is granted under and governed by the terms and conditions of the Plan and this Award Agreement, including the Terms and Conditions of Restricted Stock Unit Grant (including any country-specific addendum thereto), attached hereto as Exhibit A, all of which are made a part of this document. Participant has reviewed the Plan and this Award Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Award Agreement and fully understands all provisions of the Plan and Award Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator on any questions relating to the Plan and Award Agreement.

 

PARTICIPANT:    FISKER INC.

 

Signature

  

 

By

 

Print Name

  

 

Title

 

-40-


EXHIBIT A

32. TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT GRANT

1. Grant. The Company hereby grants to the individual named in the Notice of Grant attached as Part I of this Award Agreement (the “Participant”) under the Plan an Award of Restricted Stock Units, subject to all of the terms and conditions in this Award Agreement and the Plan, which is incorporated herein by reference. Subject to Section 22 of the Plan, if there is a conflict between the terms and conditions of the Plan and the terms and conditions of this Award Agreement, the terms and conditions of the Plan will prevail.

2. Companys Obligation to Pay. Each Restricted Stock Unit represents the right to receive one (1) Share on the date it vests. Unless and until the Restricted Stock Units will have vested in the manner set forth in Section 3, Participant will have no right to receive Shares pursuant to any such Restricted Stock Units. Prior to actual payment of any vested Restricted Stock Units, such Restricted Stock Units will represent an unsecured obligation of the Company, payable only from the general assets of the Company. Any Restricted Stock Units that vest in accordance with Section 3 may not be settled by delivery of cash and may only be settled by delivery of whole Shares as set forth herein to Participant (or in the event of Participant’s death, to his or her estate), subject to Participant satisfying any Tax-Related Items as set forth in Section 7. Subject to the provisions of Section 4, such vested Restricted Stock Units will be settled by delivery of whole Shares as soon as practicable after vesting, but in each such case within the period ending no later than the date that is two and one-half (212) months from the end of the Company’s tax year that includes the vesting date. In no event will Participant be permitted, directly or indirectly, to specify the taxable year in which Shares will be issued upon payment of any Restricted Stock Units under this Award Agreement. Neither this Section 2 nor any action taken pursuant to or in accordance with this Award Agreement shall be construed to create a trust or a funded or secured obligation of any kind.

3. Vesting Schedule. The Restricted Stock Units awarded by this Award Agreement will vest in accordance with the vesting provisions set forth in the Notice of Grant. Restricted Stock Units scheduled to vest on a certain date or upon the occurrence of a certain condition will not vest in accordance with any of the provisions of this Award Agreement, unless Participant will have been continuously a Service Provider from the Date of Grant until the date such vesting occurs. Service Provider status for purposes of this Award will end on the day that Participant is no longer actively providing services as an Employee, Director, or Independent Contractor and will not be extended by any notice period or “garden leave” that may be required contractually or under Applicable Laws. Notwithstanding the foregoing, the Administrator (or any delegate) shall have the sole and absolute discretion to determine when Participant is no longer actively providing services for purposes of Service Provider status and participation in the Plan.

4. Administrator Discretion. Notwithstanding anything in the Plan or this Award Agreement to the contrary, if the vesting of the balance, or some lesser portion of the balance, of the Restricted Stock Units is accelerated in connection with Participant’s termination as a Service Provider (provided that such termination is a “separation from service” within the meaning of Code Section 409A, as determined by the Company), other than due to death, and if (x) Participant is a “specified employee” within the meaning of Code Section 409A at the time of such termination as a Service Provider and (y) the payment of such accelerated Restricted Stock Units will result in

 

-41-


the imposition of additional tax under Code Section 409A if paid to Participant on or within the six (6) month period following Participant’s termination as a Service Provider, then the payment of such accelerated Restricted Stock Units will not be made until the date six (6) months and one (1) day following the date of Participant’s termination as a Service Provider, unless the Participant dies following his or her termination as a Service Provider, in which case, the Restricted Stock Units will be settled in Shares to the Participant’s estate as soon as practicable following his or her death. It is the intent of this Award Agreement that it and all payments and benefits hereunder be exempt from, or comply with, the requirements of Code Section 409A so that none of the Restricted Stock Units provided under this Award Agreement or Shares issuable thereunder will be subject to the additional tax imposed under Code Section 409A, and any ambiguities herein will be interpreted to be so exempt or so comply. Each payment payable under this Award Agreement is intended to constitute a separate payment for purposes of U.S. Treasury Regulation Section 1.409A-2(b)(2). Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Award Agreement are exempt from or compliant with Code Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by Participant on account of non-compliance with Code Section 409A.

5. Forfeiture upon Termination of Status as a Service Provider. Notwithstanding any contrary provision of this Award Agreement, but subject to any separate agreement between the Company and Participant, any Restricted Stock Units that have not vested will be forfeited and will return to the Plan on the date that is 30 days following the termination of Participant’s status as a Service Provider.

6. Death of Participant. Any distribution or delivery to be made to Participant under this Award Agreement will, if Participant is then deceased, be made to Participant’s designated beneficiary, if so allowed by the Administrator in its sole discretion, or if no beneficiary survives Participant, the administrator or executor of Participant’s estate. Any such transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any Applicable Laws or regulations pertaining to said transfer.

7. Withholding of Taxes. Regardless of any action the Company or Participant’s employer (the “Employer”) takes with respect to any or all applicable national, local, or other tax or social contribution, withholding, required deductions, or other payments, if any, that arise upon the grant or vesting of the Restricted Stock Units or the holding or subsequent sale of Shares, and the receipt of dividends, if any, or otherwise in connection with the Restricted Stock Units or the Shares (“Tax-Related Items”), Participant acknowledges and agrees that the ultimate liability for all Tax-Related Items legally due by Participant is and remains Participant’s responsibility and may exceed any amount actually withheld by the Company or the Employer. If amounts paid by the Employer in respect of Tax-Related Items are less than Participant’s tax obligations, Participant is solely responsible for any additional taxes due. If amounts paid by the Employer in respect of Tax-Related Items exceed Participant’s tax obligations, Participant’s sole recourse will be against the relevant taxing authorities, and the Company and its affiliates will have no obligation to issue additional Shares or pay cash to Participant in respect thereof. Participant further acknowledges and agrees that Participant is solely responsible for filing all relevant documentation that may be required in relation to the Restricted Stock Units or any Tax-Related Items (other than filings or

 

-42-


documentation that is the specific obligation of the Company or a Parent, Subsidiary, or Employer pursuant to Applicable Laws) such as, but not limited to, personal income tax returns or reporting statements in relation to the grant, vesting or payment of the Restricted Stock Units, the holding of Shares or any bank or brokerage account, the subsequent sale of Shares, and the receipt of any dividends. Participant further acknowledges that the Company and the Employer (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including the grant or vesting of the Restricted Stock Units, the subsequent sale of Shares acquired under the Plan, and the receipt of dividends, if any; and (b) do not commit to and are under no obligation to structure the terms of the Restricted Stock Units or any aspect of the Restricted Stock Units to reduce or eliminate Participant’s liability for Tax-Related Items, or achieve any particular tax result. Participant also understands that Applicable Laws may require varying Share or Restricted Stock Unit valuation methods for purposes of calculating Tax-Related Items, and the Company assumes no responsibility or liability in relation to any such valuation or for any calculation or reporting of income or Tax-Related Items that may be required of Participant under Applicable Laws. Further, if Participant has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, Participant acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction. Notwithstanding any contrary provision of this Award Agreement, no Shares will be issued to Participant, unless and until satisfactory arrangements (as determined by the Administrator) will have been made by Participant with respect to the payment of any Tax-Related Items which the Company determines must be withheld with respect to such Shares.

As a condition to the grant and vesting of the Restricted Stock Units and as set forth in Section 16 of the Plan, Participant hereby agrees to make adequate provision for the satisfaction of (and will indemnify the Company and any Parent or Subsidiary for) any Tax-Related Items. In this regard, Participant authorizes the Company and/or the Employer or their respective agents, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following: (i) by receipt of a cash payment from Participant; (ii) by withholding from Participant’s wages or other cash compensation paid to Participant by the Company or the Employer; (iii) withholding Shares that otherwise would be issued to Participant upon payment of the vested Restricted Stock Units (provided that amounts withheld shall not exceed the amount necessary to satisfy the Company’s statutory maximum tax withholding obligations in the applicable jurisdiction(s)); (iv) by withholding from proceeds of the sale of Shares acquired upon payment of the vested Restricted Stock Units through a voluntary sale or a mandatory sale arranged by the Company (on Participant’s behalf pursuant to this authorization), or (v) by any other arrangement approved by the Administrator. Notwithstanding the foregoing, if Participant is subject to Section 16 of the Exchange Act, Participant’s obligations with respect to all Tax-Related Items shall be satisfied by the Company withholding Shares that otherwise would be issued to Participant upon payment of the vested Restricted Stock Units; provided that amounts withheld shall not exceed the amount necessary to satisfy the Company’s minimum tax withholding obligations. Any Shares withheld pursuant to this Section 7 shall be valued based on the Fair Market Value as of the date the withholding obligations are satisfied. Furthermore, Participant agrees to pay the Company or any Parent, Subsidiary, or Employer any Tax-Related Items that cannot be satisfied by the foregoing methods. Participant acknowledges that there may be adverse tax consequences upon the receipt, vesting or settlement of this Award of Restricted Stock Units

 

-43-


or disposition of the underlying Shares and that Participant has been advised, and hereby is advised, to consult a tax advisor. Participant represents that Participant is in no manner relying on the Board, the Administrator, the Company, any Parent or Subsidiary or any of their respective managers, directors, officers, employees or authorized representatives (including attorneys, accountants, consultants, bankers, lenders, prospective lenders and financial representatives) for tax advice or an assessment of such tax consequences.

8. Rights as Stockholder. Neither Participant nor any person claiming under or through Participant will have any of the rights or privileges of a stockholder of the Company in respect of any Shares deliverable hereunder unless and until such Shares will have been issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company). After such issuance, Participant will have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares, but prior to such issuance, Participant will not have any rights to dividends and/or distributions on such Shares.

9. No Guarantee of Continued Service or Grants. PARTICIPANTACKNOWLEDGES AND AGREES THAT THE VESTING OF THE RESTRICTED STOCK UNITS PURSUANT TO THE VESTING SCHEDULE HEREOF SHALL OCCUR ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE EMPLOYER OR CONTRACTING ENTITY (AS APPLICABLE) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS AWARD OF RESTRICTED STOCK UNITS OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AWARD AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND WILL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE EMPLOYER OR THE COMPANY (OR ANY PARENT OR SUBSIDIARY) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE, SUBJECT TO APPLICABLE LAWS.

Participant also acknowledges and agrees that: (a) the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time; (b) the grant of Restricted Stock Units is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units even if Restricted Stock Units have been granted repeatedly in the past; (c) all decisions with respect to future awards of Restricted Stock Units, if any, will be at the sole discretion of the Company; (d) Participant’s participation in the Plan is voluntary; (e) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are extraordinary items that do not constitute regular compensation for services rendered to the Company or the Employer, and that are outside the scope of Participant’s employment contract, if any; (f) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not intended to replace any pension rights or compensation; (g) the Restricted Stock Units and the Shares subject to the Restricted Stock Units are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, or end of service payments, bonuses, long-service awards,

 

-44-


pension or retirement or welfare benefits or similar payments and in no event should be considered as compensation for, or relating in any way to, past services for the Company or the Employer, subject to Applicable Laws; (h) in consideration of the grant of the Restricted Stock Units, no claim or entitlement to compensation or damages shall arise from forfeiture of the Restricted Stock Units resulting from termination of employment by the Employer (for any reason whatsoever and whether or not in breach of Applicable Laws, including, without limitation, applicable local labor laws), and Participant irrevocably releases the Employer from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim; and (i) the Restricted Stock Units and the benefits under the Plan, if any, will not without the Administrator’s consent transfer to another company in the case of a merger, take-over or transfer of liability

10. Address for Notices. Any notice to be given to the Company under the terms of this Award Agreement will be addressed to the Company, in care of its Secretary at Fisker Inc., 1580 Francisco Street, Suite B, Torrance, California 90501, or at such other address as the Company may hereafter designate in writing.

11. Grant is Not Transferable. Except to the limited extent provided in Section 6, this grant and the rights and privileges conferred hereby may not be transferred, assigned, pledged or hypothecated in any way (whether by operation of Applicable Laws or otherwise) and may not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

12. Binding Agreement. Subject to the limitation on the transferability of this grant contained herein, this Award Agreement will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties hereto.

13. Additional Conditions to Issuance of Stock and Imposition of Other Requirements. If at any time the Company will determine, in its discretion, that the listing, registration, qualification or compliance of the Shares upon or with any securities exchange or under any Applicable Laws, the tax code and related regulations or the consent or approval of any governmental regulatory authority is necessary or desirable as a condition to the issuance of Shares to Participant (or his or her estate) hereunder, such issuance will not occur unless and until such listing, registration, qualification, compliance, consent or approval will have been completed, effected or obtained free of any conditions not acceptable to the Company. Where the Company determines that the delivery of any Shares will violate any state, federal or foreign securities or exchange laws or other Applicable Laws, the Company will defer delivery until the earliest date at which the Company reasonably anticipates that the delivery of Shares will no longer cause such violation. The Company will make all reasonable efforts to meet the requirements of any Applicable Laws or securities exchange and to obtain any such consent or approval of any such governmental authority or securities exchange. The Company shall not be obligated to issue any Shares pursuant to the Restricted Stock Units at any time if the issuance of Shares violates or is not in compliance with any Applicable Laws.

 

-45-


Furthermore, the Company reserves the right to impose other requirements on Participant’s participation in the Plan, on the Restricted Stock Units and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with any Applicable Laws or facilitate the administration of the Plan, and to require Participant to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, Participant understands that the Applicable Laws of the country in which he or she is resident at the time of grant or vesting of the Restricted Stock Units or the holding or disposition of Shares (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent the issuance of Shares or may subject Participant to additional procedural or regulatory requirements he or she is solely responsible for and will have to independently fulfill in relation to the Restricted Stock Units or the Shares. Notwithstanding any provision herein, the Restricted Stock Units and any Shares shall be subject to any special terms and conditions or disclosures as set forth in any addendum for Participant’s country (the “Country-Specific Addendum,” which forms part this Award Agreement). Participant also understands and agrees that if he or she works, resides, moves to, or otherwise is or becomes subject to Applicable Laws or company policies of another jurisdiction at any time, certain country-specific notices, disclaimers and/or terms and conditions may apply to him as from the date of grant, unless otherwise determined by the Company in its sole discretion.

14. Lock-Up Agreement. If so requested by the Company (or any successor thereof) or the underwriters in connection with the initial public offering of the securities of the Company (or any successor or parent thereof), or any other transaction pursuant to which the securities of the Company will be exchanged for securities of the Company (or any successor or parent thereof), registered under the Securities Act of 1933, as amended, including, without limitation, through a transaction with a publicly-listed blank check company then registered under the Securities Act (a “SPAC Transaction”), Participant shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company (or any successor thereof) however or whenever acquired (except for those being registered) without the prior written consent of the Company or such underwriters, as the case may be, for 180 days from the effective date of the registration statement or becoming a listed security (including, without limitation, pursuant to a SPAC Transaction), and Participant shall execute an agreement reflecting the foregoing as may be requested by the Company (or any successor or parent thereof) or the underwriters at the time of such offering or listing.

15. Plan Governs. This Award Agreement is subject to all terms and provisions of the Plan. If there is a conflict between one or more provisions of this Award Agreement and one or more provisions of the Plan, the provisions of the Plan will govern. Capitalized terms used and not defined in this Award Agreement will have the meaning set forth in the Plan.

16. Administrator Authority. The Administrator will have the power to interpret the Plan and this Award Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination regarding whether any Restricted Stock Units have vested). All actions taken, and all interpretations and determinations made, by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. No member of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Award Agreement.

 

-46-


17. Electronic Delivery and Acceptance; Translation. The Company may, in its sole discretion, decide to deliver any documents related to Participant’s current or future participation in the Plan, this Award, the Shares subject to this Award, any other securities of the Company or any other Company-related documents, by electronic means. By accepting this Award, whether electronically or otherwise, Participant hereby (a) consents to receive such documents by electronic means, (b) consents to the use of electronic signatures, and (c) agrees to participate in the Plan and/or receive any such documents through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions.

18. Translation. If Participant has received this Award Agreement, including appendices, or any other document related to the Plan translated into a language other than English, and the meaning of the translated version is different than the English version, the English version will control.

19. Captions. Captions provided herein are for convenience only and are not to serve as a basis for interpretation or construction of this Award Agreement.

20. Agreement Severable. If any provision in this Award Agreement will be held invalid or unenforceable, such provision will be severable from, and such invalidity or unenforceability will not be construed to have any effect on, the remaining provisions of this Award Agreement.

21. Modifications to this Award Agreement. This Award Agreement and the Plan constitute the entire understanding of the parties on the subjects covered. Participant expressly warrants that he or she is not accepting this Award Agreement in reliance on any promises, representations, or inducements other than those contained herein. Modifications to this Award Agreement or the Plan can be made only in an express written contract executed by a duly authorized officer of the Company. Notwithstanding anything to the contrary in the Plan or this Award Agreement, the Company reserves the right to revise this Award Agreement as it deems necessary or advisable, in its sole discretion and without the consent of Participant, to comply with Code Section 409A or to otherwise avoid imposition of any additional tax or income recognition under Code Section 409A in connection to this Award of Restricted Stock Units.

22. Data Privacy. Participant hereby explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of Participants Personal Data (as described below) by and among, as applicable, the Company, any Parent, Subsidiary, or affiliate, or third parties as may be selected by the Company for the exclusive purpose of implementing, administering and managing Participants participation in the Plan. Participant understands that refusal or withdrawal of consent will affect Participants ability to participate in the Plan; without providing consent, Participant will not be able to participate in the Plan or realize benefits (if any) from the Restricted Stock Units.

 

-47-


Participant understands that the Company and any Parent, Subsidiary, affiliate, or designated third parties may hold personal information about Participant, including, but not limited to, Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company or any Parent, Subsidiary, or affiliate, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Participant’s favor (“Personal Data”). Participant understands that Personal Data may be transferred to any Parent, Subsidiary, affiliate, or third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the United States, Participant’s country (if different than the United States), or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Participant’s country. In particular, the Company may transfer Personal Data to the broker or stock plan administrator assisting with the Plan, to its legal counsel and tax/accounting advisor, and to the affiliate or entity that is Participant’s employer and its payroll provider.

Participant should also refer to any data privacy policy implemented by the Company (which will be available to Participant separately and may be updated from time to time) for more information regarding the collection, use, storage, and transfer of Participant’s Personal Data.

23. Foreign Exchange Fluctuations and Restrictions. Participant understands and agrees that the future value of the underlying Shares is unknown and cannot be predicted with certainty and may decrease. Participant also understands that neither the Company, nor any affiliate is responsible for any foreign exchange fluctuation between local currency and the United States Dollar or the selection by the Company or any affiliate in its sole discretion of an applicable foreign currency exchange rate that may affect the value of the Restricted Stock Units or Shares received (or the calculation of income or Tax-Related Items thereunder). Participant understands and agrees that any cross-border remittance made to transfer proceeds received upon the sale of Shares must be made through a locally authorized financial institution or registered foreign exchange agency and may require the Participant to provide such entity with certain information regarding the transaction.

24. Agreement to Furnish Information. Participant agrees to furnish to the Company all information requested by the Company to enable it to comply with any reporting or other requirement imposed upon the Company by or under any Applicable Laws.

25. Clawback. Notwithstanding any provision in this Award Agreement or the Plan to the contrary, to the extent required by (a) Applicable Laws, including, without limitation, the requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act, any Securities Exchange Commission rule, and the listing standards of any national securities exchange or association on which the Company’s securities are listed, and/or (b) any policy that may be adopted or amended by the Administrator from time to time, all Shares issued hereunder shall be subject to forfeiture, repurchase, recoupment and/or cancellation to the extent necessary to comply with such Applicable Laws and/or policy.

 

-48-


26. Amendment, Suspension or Termination of the Plan. By accepting this Award, Participant expressly warrants that he or she has received an Award of Restricted Stock Units under the Plan, and has received, read and understood a description of the Plan. Participant understands that the Plan is discretionary in nature and may be amended, suspended or terminated by the Company at any time.

27. Governing Law and Venue. This Award Agreement will be governed by the laws of the State of California, without giving effect to the conflict of law principles thereof. For purposes of litigating any dispute that arises under this Award of Restricted Stock Units or this Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, and agree that such litigation will be conducted in the courts of Los Angeles County, California, or the federal courts for the United States for the Central District of California, and no other courts.

***

 

-49-


Final

Country-Specific Addendum

This Addendum includes additional country-specific notices, disclaimers, and/or terms and conditions that apply to individuals who are working or residing in the countries listed below, if any, and that may be material to Participant’s participation in the Plan. Such notices, disclaimers, and/or terms and conditions may also apply, as from the date of grant, if Participant moves to or otherwise is or becomes subject to the Applicable Laws or company policies of any country listed below. However, because foreign exchange regulations and other local laws are subject to frequent change, Participant is advised to seek advice from his or her own personal legal and tax advisor prior to accepting the Restricted Stock Units or holding or selling Shares acquired under the Plan. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Participant’s acceptance of the Restricted Stock Units or participation in the Plan. Unless otherwise noted below, capitalized terms shall have the same meaning assigned to them under the Plan, the Notice of Restricted Stock Unit Grant and the Award Agreement. This Addendum forms part of the Award Agreement and should be read in conjunction with the Award Agreement and the Plan.

Securities Law Notice: Unless otherwise noted, neither the Company nor the Shares are registered with any local stock exchange or under the control of any local securities regulator outside the United States. The Award Agreement (of which this Addendum is a part), the Notice of Restricted Stock Unit Grant, the Plan, and any other communications or materials that you may receive regarding participation in the Plan do not constitute advertising or an offering of securities outside the United States, and the issuance of securities described in any Plan-related documents is not intended for public offering or circulation in your jurisdiction.

 

 

 

European Union (“EU”)/European Economic Area (“EEA”)   

Data Privacy. For residents of the EU/EEA and elsewhere as may be applicable, the following provision applies and supplements Section 22 of the Award Agreement:

 

Participant understands and acknowledges:

 

•  The data controller is the Company; queries or requests regarding Participant’s Personal Data should be made in writing to the Company’s representative for Plan or Restricted Stock Unit matters, who may be contacted at stockplan@fiskerinc.com;

 

•  The legal basis for the processing of Personal Data is that the processing is necessary for the performance of a contract to which Participant is a party (namely, this Award Agreement); and

 

•  Personal Data will be held only as long as is necessary to implement, administer and manage Participant’s participation in the Plan.

 

Participant may, at any time, access his or her Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data without cost or exercise any other rights they may have in relation to their Personal Data under applicable law, including the right to make a complaint to an EU/EEA data protection regulator.

 

 

 

-50-


United Kingdom   

The following supplements Section 7 of the Agreement:

 

Withholding of Tax. If payment or withholding of the Tax-Related Items is not made within ninety (90) days of the end of the UK tax year in which the event giving rise to the Tax-Related Items occurs (the “Due Date”) or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003, the amount of any uncollected Tax-Related Items will constitute a loan owed by Participant to the Employer, effective on the Due Date. Participant agrees that the loan will bear interest at the then-current Official Rate of Her Majesty’s Revenue and Customs (“HMRC”), it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 7 of the Award Agreement. Notwithstanding the foregoing, if Participant is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), Participant will not be eligible for such a loan to cover the Tax-Related Items. In the event that Participant is a director or executive officer and the Tax-Related Items are not collected from or paid by Participant by the Due Date, the amount of any uncollected Tax-Related Items will constitute a benefit to Participant on which additional income tax and national insurance contributions will be payable. Participant will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime.

 

HMRC National Insurance Contributions. Participant agrees that (a) Tax-Related Items within Section 7 of the Award Agreement shall include any secondary class 1 (employer) National Insurance Contributions that (i) any employer (or former employer) of Participant is liable to pay (or reasonably believes it is liable to pay); and (ii) may be lawfully recovered from Participant; and (b) if required to do so by the Company (at any time when the relevant election can be made) Participant shall: (i) make a joint election (with the employer or former employer) in the form provided by the Company to transfer to Participant the whole or any part of the employer’s liability that falls within Section 7 of the Award Agreement; and (ii) enter into arrangements required by HM Revenue & Customs (or any other tax authority) to secure the payment of the transferred liability.

 

 

 

-2-

Exhibit 10.13

FISKER INC.

2020 EMPLOYEE STOCK PURCHASE PLAN

1. General; Purpose.

(a) The Plan provides a means by which Eligible Employees and/or Eligible Service Providers of either the Company or a Designated Company may be given an opportunity to purchase shares of Common Stock. The Plan permits the Company to grant a series of Purchase Rights to Eligible Employees and/or Eligible Service Providers.

(b) The Company, by means of the Plan, seeks to retain and assist its Related Corporations or Affiliates in retaining the services of such Eligible Employees and Eligible Service Providers, to secure and retain the services of new Eligible Employees and Eligible Service Providers and to provide incentives for such persons to exert maximum efforts for the success of the Company and its Related Corporations and Affiliates.

(c) The Plan includes two components: a 423 Component and a Non-423 Component. The Company intends (but makes no undertaking or representation to maintain) the 423 Component to qualify as an Employee Stock Purchase Plan. The provisions of the 423 Component, accordingly, will be construed in a manner that is consistent with the requirements of Section 423 of the Code, including without limitation, to extend and limit Plan participation in a uniform and non-discriminating basis. In addition, this Plan authorizes grants of Purchase Rights under the Non-423 Component that do not meet the requirements of an Employee Stock Purchase Plan. Except as otherwise provided in the Plan or determined by the Board, the Non-423 Component will operate and be administered in the same manner as the 423 Component. In addition, the Company may make separate Offerings which vary in terms (provided that such terms are not inconsistent with the provisions of the Plan and, except with respect to a Non-423 Component, the requirements of an Employee Stock Purchase Plan), and the Company will designate which Designated Company is participating in each separate Offering and if any Eligible Service Providers will be eligible to participate in a separate Offering. Eligible Employees will be able to participate in the 423 Component or Non-423 Component of the Plan. Eligible Service Providers will only be able to participate in the Non-423 Component of the Plan.

2. Administration.

(a) The Board will administer the Plan unless and until the Board delegates administration of the Plan to a Committee or Committees, as provided in Section 2(c).

(b) The Board will have the power, subject to, and within the limitations of, the express provisions of the Plan:

(i) To determine how and when Purchase Rights will be granted and the provisions of each Offering (which need not be identical).


(ii) To designate from time to time which Related Corporations will be eligible to participate in the Plan as Designated 423 Corporations or as Designated Non-423 Corporations, which Affiliates will be eligible to participate in the Plan as Designated Non-423 Corporations, and which Designated Companies will participate in each separate Offering (to the extent that the Company makes separate Offerings).

(iii) To designate from time to time which persons will be Eligible Service Providers and which Eligible Service Providers will participate in each separate Offering (to the extent that the Company makes separate Offerings).

(iv) To construe and interpret the Plan and Purchase Rights, and to establish, amend and revoke rules and regulations for its administration. The Board, in the exercise of this power, may correct any defect, omission or inconsistency in the Plan, in a manner and to the extent it deems necessary or expedient to make the Plan fully effective.

(v) To settle all controversies regarding the Plan and Purchase Rights granted under the Plan.

(vi) To suspend or terminate the Plan at any time as provided in Section 12.

(vii) To amend the Plan at any time as provided in Section 12.

(viii) Generally, to exercise such powers and to perform such acts as it deems necessary or expedient to promote the best interests of the Company, its Related Corporations, and Affiliates and to carry out the intent that the 423 Component be treated as an Employee Stock Purchase Plan.

(ix) To adopt such rules, procedures and sub-plans relating to the operation and administration of the Plan as are necessary or appropriate under applicable local laws, regulations and procedures to permit or facilitate participation in the Plan by Employees or Eligible Service Providers who are non-U.S. nationals or employed or providing services or located or otherwise subject to the laws of a jurisdiction outside the United States. Without limiting the generality of, but consistent with, the foregoing, the Board specifically is authorized to adopt rules, procedures, and sub-plans, which, for purposes of the Non-423 Component, may be beyond the scope of Section 423 of the Code, regarding, without limitation, eligibility to participate in the Plan, handling and making of Contributions, establishment of bank or trust accounts to hold Contributions, payment of interest, conversion of local currency, obligations to pay payroll tax, determination of beneficiary designation requirements, withholding procedures and handling of share issuances, any of which may vary according to applicable requirements.

(c) The Board may delegate some or all of the administration of the Plan to a Committee or Committees. If administration is delegated to a Committee, the Committee will have, in connection with the administration of the Plan, the powers theretofore possessed by the Board that have been delegated to the Committee, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Board will thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Board. The Board may retain the authority to concurrently administer the Plan with the Committee and may, at any time, revest in the Board some or all of the powers previously delegated. Whether or not the Board has delegated administration of the Plan to a Committee, the Board will have the final power to determine all questions of policy and expediency that may arise in the administration of the Plan.

 

-2-


(d) All determinations, interpretations and constructions made by the Board in good faith will not be subject to review by any person and will be final, binding and conclusive on all persons.

3. Shares of Common Stock Subject to the Plan.

(a) Subject to the provisions of Section 11(a) relating to Capitalization Adjustments, the maximum number of shares of Common Stock that may be issued under the Plan will not exceed 3,213,034 shares of Common Stock, plus the number of shares of Common Stock that are automatically added on the first day of each Fiscal Year beginning with the 2022 Fiscal Year and ending on (and including) the first day of the 2032 Fiscal Year, in an amount equal to one-half percent (0.5%) of the total number of shares of Common Stock outstanding on the last day of the calendar month prior to the date of such automatic increase. Notwithstanding the foregoing, the Board may act prior to the first day of any fiscal year to provide that there will be no increase in the share reserve for such fiscal year or that the increase in the share reserve for such fiscal year will be a lesser number of shares of Common Stock than would otherwise occur pursuant to the preceding sentence.

(b) If any Purchase Right granted under the Plan terminates without having been exercised in full, the shares of Common Stock not purchased under such Purchase Right will again become available for issuance under the Plan.

(c) The stock purchasable under the Plan will be shares of authorized but unissued or reacquired Common Stock, including shares repurchased by the Company on the open market.

4. Grant of Purchase Rights; Offering.

(a) The Board may from time to time grant or provide for the grant of Purchase Rights to Eligible Employees and/or Eligible Service Providers under an Offering (consisting of one or more Purchase Periods) on an Offering Date or Offering Dates selected by the Board. Each Offering will be in such form and will contain such terms and conditions as the Board will deem appropriate, and, with respect to the 423 Component, will comply with the requirement of Section 423(b)(5) of the Code that all Employees granted Purchase Rights will have the same rights and privileges. The terms and conditions of an Offering will be incorporated by reference into the Plan and treated as part of the Plan. The provisions of separate Offerings need not be identical, but each Offering will include (through incorporation of the provisions of this Plan by reference in the Offering Document or otherwise) the period during which the Offering will be effective, which period will not exceed twenty-seven (27) months beginning with the Offering Date, and the substance of the provisions contained in Sections 5 through 8, inclusive.

(b) If a Participant has more than one Purchase Right outstanding under the Plan, unless he or she otherwise indicates in forms delivered to the Company: (i) each form will apply to all of his or her Purchase Rights under the Plan, and (ii) a Purchase Right with a lower exercise price (or an earlier-granted Purchase Right, if different Purchase Rights have identical exercise prices) will be exercised to the fullest possible extent before a Purchase Right with a higher exercise price (or a later-granted Purchase Right if different Purchase Rights have identical exercise prices) will be exercised.

 

-3-


(c) The Board will have the discretion to structure an Offering so that if the Fair Market Value of a share of Common Stock on the first Trading Day of a new Purchase Period within that Offering is less than or equal to the Fair Market Value of a share of Common Stock on the Offering Date for that Offering, then (i) that Offering will terminate immediately as of that first Trading Day, and (ii) the Participants in such terminated Offering will be automatically enrolled in a new Offering beginning on the first Trading Day of such new Offering Period and Purchase Period.

5. Eligibility.

(a) Purchase Rights may be granted only to Employees of the Company or, as the Board may designate in accordance with Section 2(b), to Employees of a Related Corporation or, solely with respect to the Non-423 Component, Employees of an Affiliate or Eligible Service Providers.

(b) The Board may provide that Employees will not be eligible to be granted Purchase Rights under the Plan if, on the Offering Date, the Employee (i) has not completed at least two (2) years of service since the Employee’s last hire date (or such lesser period of time as may be determined by the Board in its discretion), (ii) customarily works not more than twenty (20) hours per week (or such lesser period of time as may be determined by the Board in its discretion), (iii) customarily works not more than five (5) months per calendar year (or such lesser period of time as may be determined by the Board in its discretion), (iv) is an Officer, (v) is a highly compensated employee within the meaning of Section 423(b)(4)(D) of the Code, or (vi) has not satisfied such other criteria as the Board may determine consistent with Section 423 of the Code. Unless otherwise determined by the Board for any Offering Period, an Employee will not be eligible to be granted Purchase Rights unless, on the Offering Date, the Employee customarily works more than twenty (20) hours per week and more than five (5) months per calendar year.

(c) No Employee will be eligible for the grant of any Purchase Rights if, immediately after any such Purchase Rights are granted, such Employee owns stock possessing five (5) percent or more of the total combined voting power or value of all classes of stock of the Company or of any Related Corporation. For purposes of this Section 5(c), the rules of Section 424(d) of the Code will apply in determining the stock ownership of any Employee, and stock which such Employee may purchase under all outstanding Purchase Rights and options will be treated as stock owned by such Employee.

(d) As specified by Section 423(b)(8) of the Code, an Eligible Employee may be granted Purchase Rights only if such Purchase Rights, together with any other rights granted under all Employee Stock Purchase Plans of the Company and any Related Corporations, do not permit such Eligible Employee’s rights to purchase stock of the Company or any Related Corporation to accrue at a rate which, when aggregated, exceeds U.S. $25,000 of Fair Market Value of such stock (determined at the time such rights are granted, and which, with respect to the Plan, will be determined as of their respective Offering Dates) for each calendar year in which such rights are outstanding at any time.

(e) An Eligible Service Provider will not be eligible to be granted Purchase Rights unless the Eligible Service Provider is providing bonafide services to the Company or a Designated Company on the applicable Offering Date.

 

-4-


(f) Notwithstanding anything set forth herein except for Section 5(e) above, the Board may establish additional eligibility requirements, or fewer eligibility requirements, for Employees and/or Eligible Service Providers with respect to Offerings made under the Non-423 Component even if such requirements are not consistent with Section 423 of the Code.

6. Purchase Rights; Purchase Price.

(a) On each Offering Date, each Eligible Employee or Eligible Service Provider, pursuant to an Offering made under the Plan, will be granted a Purchase Right to purchase up to that number of shares of Common Stock (rounded down to the nearest whole share) purchasable either with a percentage or with a maximum dollar amount, as designated by the Board; provided however, that in the case of Eligible Employees, such percentage or maximum dollar amount will in either case not exceed 15% of such Employee’s earnings (as defined by the Board in each Offering) during the period that begins on the Offering Date (or such later date as the Board determines for a particular Offering) and ends on the date stated in the Offering, which date will be no later than the end of the Offering, unless otherwise provided for in an Offering.

(b) The Board will establish one or more Purchase Dates during an Offering on which Purchase Rights granted for that Offering will be exercised and shares of Common Stock will be purchased in accordance with such Offering.

(c) In connection with each Offering made under the Plan, the Board may specify (i) a maximum number of shares of Common Stock that may be purchased by any Participant on any Purchase Date during such Offering, (ii) a maximum aggregate number of shares of Common Stock that may be purchased by all Participants pursuant to such Offering, and (iii) a maximum aggregate number of shares of Common Stock that may be purchased by all Participants on any Purchase Date under the Offering. If the aggregate purchase of shares of Common Stock issuable on exercise of Purchase Rights granted under the Offering would exceed any such maximum aggregate number, then, in the absence of any Board action otherwise, a pro rata (based on each Participant’s accumulated Contributions) allocation of the shares of Common Stock (rounded down to the nearest whole share) available will be made in as nearly a uniform manner as will be practicable and equitable.

(d) The purchase price of shares of Common Stock acquired pursuant to Purchase Rights will be not less than the lesser of:

(i) an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the Offering Date; or

(ii) an amount equal to 85% of the Fair Market Value of the shares of Common Stock on the applicable Purchase Date.

7. Participation; Withdrawal; Termination.

(a) An Eligible Employee may elect to authorize payroll deductions as the means of making Contributions by completing and delivering to the Company, within the time specified by the Company, an enrollment form provided by the Company or any third party designated by the Company (each, a “Company Designee”). The enrollment form will specify the amount of Contributions not to exceed the maximum amount specified by the Board. Each Participant’s Contributions will be credited to a bookkeeping account for such Participant under the Plan and will be deposited with the general funds of the Company except where applicable laws or regulations require that Contributions be deposited with a Company Designee or otherwise be segregated.

 

-5-


(b) If permitted in the Offering, a Participant may begin Contributions with the first payroll or payment date occurring on or after the Offering Date (or, in the case of a payroll date or payment date that occurs after the end of the prior Offering but before the Offering Date of the next new Offering, Contributions from such payroll or payment will be included in the new Offering) or on such other date as set forth in the Offering. If permitted in the Offering, a Participant may thereafter reduce (including to zero) or increase his or her Contributions. If required under applicable laws or regulations or if specifically provided in the Offering, in addition to or instead of making Contributions by payroll deductions, a Participant may make Contributions through a payment by cash, check, or wire transfer prior to a Purchase Date, in a manner directed by the Company or a Company Designee.

(c) During an Offering, a Participant may cease making Contributions and withdraw from the Offering by delivering to the Company or a Company Designee a withdrawal form provided by the Company. The Company may impose a deadline before a Purchase Date for withdrawing. On such withdrawal, such Participant’s Purchase Right in that Offering will immediately terminate and the Company will distribute as soon as practicable to such Participant all of his or her accumulated but unused Contributions without interest and such Participant’s Purchase Right in that Offering will then terminate. A Participant’s withdrawal from that Offering will have no effect on his or her eligibility to participate in any other Offerings under the Plan, but such Participant will be required to deliver a new enrollment form to participate in subsequent Offerings.

(d) Purchase Rights granted pursuant to any Offering under the Plan will terminate immediately if the Participant either (i) is no longer an Eligible Employee or Eligible Service Provider for any reason or for no reason, or (ii) is otherwise no longer eligible to participate. The Company shall have the exclusive discretion to determine when Participant is no longer actively providing services and the date of the termination of employment or service for purposes of the Plan. As soon as practicable, the Company will distribute to such individual all of his or her accumulated but unused Contributions without interest.

(e) During a Participant’s lifetime, Purchase Rights will be exercisable only by such Participant. Purchase Rights are not transferable by a Participant, except by will, by the laws of descent and distribution, or, if permitted by the Company, by a beneficiary designation as described in Section 10.

(f) Unless otherwise specified in the Offering or required by applicable laws, the Company will have no obligation to pay interest on Contributions.

8. Exercise of Purchase Rights.

(a) On each Purchase Date, each Participant’s accumulated Contributions will be applied to the purchase of shares of Common Stock (rounded down to the nearest whole share), up to the maximum number of shares of Common Stock permitted by the Plan and the applicable Offering, at the purchase price specified in the Offering. No fractional shares will be issued unless specifically provided for in the Offering.

 

-6-


(b) Unless otherwise provided in the Offering, if any amount of accumulated Contributions remains in a Participant’s account after the purchase of shares of Common Stock on the final Purchase Date in an Offering, then such remaining amount will roll over to the next Offering.

(c) No Purchase Rights may be exercised to any extent unless the shares of Common Stock to be issued on such exercise under the Plan are covered by an effective registration statement pursuant to the Securities Act and the Plan is in material compliance with all applicable U.S. federal and state, non-U.S. and other securities, exchange control, and other laws applicable to the Plan. If on a Purchase Date the shares of Common Stock are not so registered or the Plan is not in such compliance, no Purchase Rights will be exercised on such Purchase Date, and the Purchase Date will be delayed until the shares of Common Stock are subject to such an effective registration statement and the Plan is in material compliance, except that the Purchase Date will in no event be more than three (3) months from the original Purchase Date. If, on the Purchase Date, as delayed to the maximum extent permissible, the shares of Common Stock are not registered and the Plan is not in material compliance with all applicable laws or regulations, as determined by the Company in its sole discretion, no Purchase Rights will be exercised and all accumulated but unused Contributions will be distributed as soon as practicable to the Participants without interest.

9. Covenants of the Company. The Company will seek to obtain from each U.S. federal or state, non-U.S. or other regulatory commission or agency having jurisdiction over the Plan such authority as may be required to grant Purchase Rights and issue and sell shares of Common Stock thereunder unless the Company determines, in its sole discretion, that doing so would cause the Company to incur costs that are unreasonable. If, after commercially reasonable efforts, the Company is unable to obtain the authority that counsel for the Company deems necessary for the grant of Purchase Rights or the lawful issuance and sale of Common Stock under the Plan, and at a commercially reasonable cost, the Company will be relieved from any liability for failure to grant Purchase Rights or to issue and sell Common Stock on exercise of such Purchase Rights.

10. Designation of Beneficiary.

(a) The Company may, but is not obligated to, permit a Participant to submit a form designating a beneficiary who will receive any shares of Common Stock or Contributions from the Participant’s account under the Plan if the Participant dies before such shares or Contributions are delivered to the Participant. The Company may, but is not obligated to, permit the Participant to change such designation of beneficiary. Any such designation or change must be on a form approved by the Company or as approved by the Company for use by a Company Designee.

(b) If a Participant dies, in the absence of a valid beneficiary designation, the Company will deliver any shares of Common Stock and Contributions to the executor or administrator of the estate of the Participant. If no executor or administrator has been appointed (to the knowledge of the Company), the Company, in its sole discretion, may deliver such shares of Common Stock and Contributions, without interest, to the Participant’s spouse, dependents or relatives, or if no spouse, dependent or relative is known to the Company, then to such other person as the Company may designate.

 

-7-


11. Capitalization Adjustments; Dissolution or Liquidation; Corporate Transactions.

(a) In the event of a Capitalization Adjustment, the Board will appropriately and proportionately adjust: (i) the class(es) and maximum number of securities subject to the Plan pursuant to Section 3(a), (ii) the class(es) and maximum number of securities by which the share reserve is to increase automatically each year pursuant to Section 3(a), (iii) the class(es) and number of securities subject to, and the purchase price applicable to outstanding Offerings and Purchase Rights, and (iv) the class(es) and number of securities that are the subject of the purchase limits under each ongoing Offering. The Board will make these adjustments, and its determination will be final, binding, and conclusive.

(b) In the event of a dissolution or liquidation of the Company, the Board will shorten any Offering then in progress by setting a New Purchase Date prior to the consummation of such proposed dissolution or liquidation. The Board will notify each Participant in writing, prior to the New Purchase Date that the Purchase Date for the Participant’s Purchase Rights has been changed to the New Purchase Date and that such Purchase Rights will be automatically exercised on the New Purchase Date, unless prior to such date the Participant has withdrawn from the Offering as provided in Section 7.

(c) In the event of a Corporate Transaction, then: (i) any surviving corporation or acquiring corporation (or the surviving or acquiring corporation’s parent company) may assume or continue outstanding Purchase Rights or may substitute similar rights (including a right to acquire the same consideration paid to the stockholders in the Corporate Transaction) for outstanding Purchase Rights, or (ii) if any surviving or acquiring corporation (or its parent company) does not assume or continue such Purchase Rights or does not substitute similar rights for such Purchase Rights, then the Participants’ accumulated Contributions will be used to purchase shares of Common Stock (rounded down to the nearest whole share) prior to the Corporate Transaction under the outstanding Purchase Rights (with such actual date to be determined by the Board in its sole discretion), and the Purchase Rights will terminate immediately after such purchase. The Board will notify each Participant in writing, prior to the New Purchase Date that the Purchase Date for the Participant’s Purchase Rights has been changed to the New Purchase Date and that such Purchase Rights will be automatically exercised on the New Purchase Date, unless prior to such date the Participant has withdrawn from the Offering as provided in Section 7.

12. Amendment, Termination or Suspension of the Plan.

(a) The Board may amend the Plan at any time in any respect the Board deems necessary or advisable. However, except as provided in Section 11(a) relating to Capitalization Adjustments, stockholder approval will be required for any amendment of the Plan for which stockholder approval is required by applicable laws, regulations or listing requirements, including any amendment that either (i) increases the number of shares of Common Stock available for issuance under the Plan, (ii) expands the class of individuals eligible to become Participants and receive Purchase Rights, (iii) materially increases the benefits accruing to Participants under the Plan or reduces the price at which shares of Common Stock may be purchased under the Plan, (iv) extends the term of the Plan, or (v) expands the types of awards available for issuance under the Plan, but in each of (i) through (v) above only to the extent stockholder approval is required by applicable laws, regulations, or listing requirements.

 

-8-


(b) The Board may suspend or terminate the Plan at any time. No Purchase Rights may be granted under the Plan while the Plan is suspended or after it is terminated.

(c) Any benefits, privileges, entitlements, and obligations under any outstanding Purchase Rights granted before an amendment, suspension, or termination of the Plan will not be materially impaired by any such amendment, suspension, or termination except (i) with the consent of the person to whom such Purchase Rights were granted, (ii) as necessary to comply with any laws, listing requirements, or governmental regulations (including, without limitation, the provisions of Section 423 of the Code and the regulations and other interpretive guidance issued thereunder relating to Employee Stock Purchase Plans) including without limitation any such regulations or other guidance that may be issued or amended after the date the Plan is adopted by the Board, or (iii) as necessary to obtain or maintain any special tax, listing, or regulatory treatment. To be clear, the Board may amend outstanding Purchase Rights without a Participant’s consent if such amendment is necessary to ensure that the Purchase Right or the 423 Component complies with the requirements of Section 423 of the Code.

13. Section 409A of the Code; Tax Qualification.

(a) Purchase Rights granted under the 423 Component are intended to be exempt from the application of Section 409A of the Code under U.S. Treasury Regulation Section 1.409A-1(b)(5)(ii). Purchase Rights granted under the Non-423 Component to U.S. taxpayers are intended to be exempt from the application of Section 409A of the Code under the short-term deferral exception and any ambiguities will be construed and interpreted in accordance with such intent. Subject to Section 13(b) below, Purchase Rights granted to U.S. taxpayers under the Non-423 Component will be subject to such terms and conditions that will permit such Purchase Rights to satisfy the requirements of the short-term deferral exception available under Section 409A of the Code, including the requirement that the shares subject to a Purchase Right be delivered within the short-term deferral period. Subject to Section 13(b) below, in the case of a Participant who would otherwise be subject to Section 409A of the Code, to the extent the Board determines that a Purchase Right or the exercise, payment, settlement, or deferral thereof is subject to Section 409A of the Code, the Purchase Right will be granted, exercised, paid, settled, or deferred in a manner that will comply with Section 409A of the Code, including U.S. Department of Treasury regulations and other interpretive guidance issued thereunder, including, without limitation, any such regulations or other guidance that may be issued after the adoption of the Plan. Notwithstanding the foregoing, the Company will have no liability to a Participant or any other party if the Purchase Right that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Board with respect thereto.

(b) Although the Company may endeavor to (i) qualify a Purchase Right for special tax treatment under the laws of the United States or jurisdictions outside of the United States, or (ii) avoid adverse tax treatment (e.g., under Section 409A of the Code), the Company makes no representation to that effect and expressly disavows any covenant to maintain special or to avoid unfavorable tax treatment, notwithstanding anything to the contrary in this Plan, including Section 13(a) above. The Company will be unconstrained in its corporate activities without regard to the potential negative tax impact on Participants under the Plan and in no event will the Company, any Related Corporation or any Affiliate be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by a Participant on account of non-compliance with Section 409A of the Code.

 

-9-


14. Effective Date of Plan. The Plan will become effective on the Effective Date. No Purchase Rights will be exercised unless and until the Plan has been approved by the stockholders of the Company, which approval must be within twelve (12) months before or after the date the Plan is adopted (or, if required under Section 12(a) above, amended) by the Board.

15. Miscellaneous Provisions.

(a) Proceeds from the sale of shares of Common Stock pursuant to Purchase Rights will constitute general funds of the Company.

(b) A Participant will not be deemed to be the holder of, or to have any of the rights of a holder with respect to, shares of Common Stock subject to Purchase Rights unless and until the Participant’s shares of Common Stock acquired on exercise of Purchase Rights are recorded in the books of the Company (or its transfer agent).

(c) The Plan and the Offerings do not constitute an employment or service contract. Nothing in the Plan or in the Offerings will in any way alter the at-will nature of a Participant’s employment, if applicable, or be deemed to create in any way whatsoever any obligation on the part of any Participant to continue his or her employment or service relationship with the Company, a Related Corporation, or an Affiliate, or on the part of the Company, a Related Corporation, or an Affiliate to continue the employment or service of a Participant.

(d) The provisions of the Plan will be governed by the laws of the State of Delaware without resort to that state’s conflicts of laws rules. For purposes of litigating any dispute that may arise directly or indirectly from the Plan or any Offering, the parties hereby submit and consent to the exclusive jurisdiction of the State of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.

(e) If any particular provision of the Plan is found to be invalid or otherwise unenforceable, such provision will not affect the other provisions of the Plan, but the Plan will be construed in all respects as if such invalid provision were omitted.

(f) If any provision of the Plan does not comply with applicable laws or regulations, such provision will be construed in such a manner as to comply with applicable laws or regulations.

16. Withholding of Taxes; Other Charges. To the extent tax withholding or the payment of similar tax obligations is required by applicable federal, state, local or non-U.S. law, a Participant must make arrangements satisfactory to the Company for the payment of any withholding or similar tax obligations that arise in connection with the Plan or any Offering including, without limitation, any such taxes payable on (a) any Contributions, (b) the benefit derived from acquiring shares of Common Stock at an exercise price that is less than the Fair Market Value of such shares, and (c) the transfer of shares of Common Stock to the Participant or a person designated by the Participant, including a sale or other disposition of the shares. The obligations of the Company under the Plan

 

-10-


shall be conditioned on the making of such payments or arrangements, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to the Participant. Participants shall be solely responsible for any commissions or other charges imposed with respect to the sale or transfer of shares of Common Stock pursuant to the terms of this Plan. Each of the Company and any Related Corporation, as applicable, is authorized to deduct, or cause to be deducted, from any amounts payable to a Participant, and may also undertake any other action reasonably necessary to permit compliance with applicable tax withholding laws, including, without limitation, withholding a portion of the shares of Common Stock otherwise deliverable to or for the account of a Participant or requiring, as a condition to the transfer of shares of Common Stock to such Participant or a person designated by such Participant, payment of any applicable withholding tax.

17. Definitions. As used in the Plan, the following definitions will apply to the capitalized terms indicated below:

(a) “423 Component” means the part of the Plan, which excludes the Non-423 Component, pursuant to which Purchase Rights that satisfy the requirements for an Employee Stock Purchase Plan may be granted to Eligible Employees.

(b) “Affiliate” means any entity, other than a Related Corporation, in which the Company has an equity or other ownership interest or that is directly or indirectly controlled by, controls, or is under common control with the Company, in all cases, as determined by the Board, whether now or hereafter existing.

(c) “Board” means the Board of Directors of the Company.

(d) “Capitalization Adjustment” means, with respect to the Common Stock subject to the Plan or subject to any Purchase Right after the date the Plan is adopted by the Board, a stock split, reverse stock split, stock dividend, combination, consolidation, recapitalization (including a recapitalization through a large nonrecurring cash dividend) or reclassification of the Common Stock, subdivision of the Common Stock, a rights offering, a reorganization, merger, spin-off, split-up, repurchase, or exchange of Common Stock or other securities of the Company or other significant corporate transaction, or other change affecting the Common Stock occurs.

(e) “Code” means the U.S. Internal Revenue Code of 1986, as amended, including any applicable regulations and guidance thereunder.

(f) “Committee” means a committee of one or more members of the Board to whom authority has been delegated by the Board in accordance with Section 2(c).

(g) “Common Stock” means the Class A common stock of the Company.

(h) “Company” means Fisker Inc., a Delaware corporation.

(i) “Contributions” means the payroll deductions or other payments specifically provided for in the Offering that a Participant contributes to fund the exercise of a Purchase Right. A Participant may make additional payments into his or her account if specifically provided for in the Offering, and then only if the Participant has not already contributed the maximum permitted amount of payroll deductions and other payments during the Offering.

 

-11-


(j) “Corporate Transaction” means the consummation, in a single transaction or in a series of related transactions, of any one or more of the following events:

(i) a transfer of all or substantially all of the Company’s assets;

(ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person; or

(iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of the Company’s then outstanding capital stock.

(k) “Designated 423 Corporation” means any Related Corporation selected by the Board as participating in the 423 Component.

(l) “Designated Company” means any Designated Non-423 Corporation or Designated 423 Corporation, provided, however, that at any given time, a Related Corporation participating in the 423 Component will not be a Related Corporation participating in the Non-423 Component.

(m) “Designated Non-423 Corporation” means any Related Corporation or Affiliate selected by the Board as participating in the Non-423 Component.

(n) “Director” means a member of the Board.

(o) “Effective Date” means October 29, 2020.

(p) “Eligible Employee” means an Employee who meets the requirements set forth in the document(s) governing the Offering for eligibility to participate in the Offering, provided that such Employee also meets the requirements for eligibility to participate set forth in the Plan. For purposes of the Plan, the employment relationship will be treated as continuing intact while the Employee is on sick leave or other leave of absence approved by the Company or a Related Corporation or Affiliate that directly employs the Employee. Where the period of leave exceeds three (3) months and the Employee’s right to reemployment is not guaranteed either by statute or by contract, the employment relationship will be deemed to have terminated three (3) months and one (1) day following the commencement of such leave.

(q) “Eligible Service Provider” means a natural person other than an Employee or Director who (i) is designated by the Committee to be an “Eligible Service Provider,” (ii) provides bonafide services to the Company or a Related Corporation, (iii) is not a U.S. taxpayer and (iv) meets the requirements set forth in the document(s) governing the Offering for eligibility to participate in the Offering, provided that such person also meets the requirements for eligibility to participate set forth in the Plan.

 

-12-


(r) “Employee” means any person, including an Officer or Director, who is treated as an employee in the records of the Company or a Related Corporation or Affiliate. However, service solely as a Director, or payment of a fee for such services, will not cause a Director to be considered an “Employee” for purposes of the Plan.

(s) “Employee Stock Purchase Plan” means a plan that grants Purchase Rights intended to be options issued under an “employee stock purchase plan,” as that term is defined in Section 423(b) of the Code.

(t) “Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended and the rules and regulations promulgated thereunder.

(u) “Fair Market Value” means, as of any date, the value of a share of the Common Stock determined as follows:

(i) If the Common Stock is listed on any established stock exchange or a national market system, its Fair Market Value will be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such exchange or system on the date of determination, as reported in such source as the Board deems reliable;

(ii) If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, its Fair Market Value will be the mean of the closing bid and asked prices for the Common Stock on the date of determination, as reported in such source as the Board deems reliable; or

(iii) In the absence of an established market for the Common Stock, the Fair Market Value will be determined in good faith by the Board in compliance with applicable laws and regulations and in a manner that complies with Section 409A of the Code.

(v) “Fiscal Year” means the fiscal year of the Company.

(w) “New Purchase Date” means a new Purchase Date set by shortening any Offering then in progress.

(x) “Non-423 Component” means the part of the Plan, which excludes the 423 Component, pursuant to which Purchase Rights that are not intended to satisfy the requirements for an Employee Stock Purchase Plan may be granted to Eligible Employees and Eligible Service Providers.

(y) “Offering” means the grant to Eligible Employees or Eligible Service Providers of Purchase Rights, with the exercise of those Purchase Rights automatically occurring at the end of one or more Purchase Periods. The terms and conditions of an Offering will generally be set forth in the “Offering Document” approved by the Board for that Offering.

(z) “Offering Date” means a date selected by the Board for an Offering to commence.

 

-13-


(aa) “Officer” means a person who is an officer of the Company or a Related Corporation or Affiliate within the meaning of Section 16 of the Exchange Act.

(bb) “Participant” means an Eligible Employee or Eligible Service Provider who holds an outstanding Purchase Right.

(cc) “Plan” means this Fisker Inc. 2020 Employee Stock Purchase Plan, including both the 423 Component and the Non-423 Component, as amended from time to time.

(dd) “Purchase Date” means one or more dates during an Offering selected by the Board on which Purchase Rights will be exercised and on which purchases of shares of Common Stock will be carried out in accordance with such Offering.

(ee) “Purchase Period” means a period of time specified within an Offering, generally beginning on the Offering Date or on the first Trading Day following a Purchase Date, and ending on a Purchase Date. An Offering may consist of one or more Purchase Periods.

(ff) “Purchase Right” means an option to purchase shares of Common Stock granted pursuant to the Plan.

(gg) “Related Corporation” means any “parent corporation” or “subsidiary corporation” of the Company whether now or subsequently established, as those terms are defined in Sections 424(e) and (f), respectively, of the Code.

(hh) “Securities Act” means the U.S. Securities Act of 1933, as amended.

(ii) “Trading Day” means any day on which the exchange or market on which shares of Common Stock are listed is open for trading.

o O o

 

-14-

Exhibit 10.14

FISKER INC.

2016 STOCK PLAN

1. Purposes of the Plan. The purposes of this 2016 Stock Plan are to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to Employees and Consultants, and to promote the success of the Company’s business. Options granted under the Plan may be Incentive Stock Options or Nonstatutory Stock Options, as determined by the Administrator at the time of grant of an Option and subject to the applicable provisions of Section 422 of the Code and the regulations promulgated thereunder. Restricted Stock may also be granted under the Plan.

2. Definitions. As used herein, the following definitions shall apply:

(a) Administrator means the Board or a Committee.

(b) Affiliate means (i) an entity other than a Subsidiary which, together with the Company, is under common control of a third person or entity and (ii) an entity other than a Subsidiary in which the Company and /or one or more Subsidiaries own a controlling interest.

(c) Applicable Laws means all applicable laws, rules, regulations and requirements, including, but not limited to, all applicable U.S. federal or state laws, any Stock Exchange rules or regulations, and the applicable laws, rules or regulations of any other country or jurisdiction where Options or Restricted Stock are granted under the Plan or Participants reside or provide services, as such laws, rules, and regulations shall be in effect from time to time.

(d) Award means any award of an Option or Restricted Stock under the Plan.

(e) Board means the Board of Directors of the Company.

(f) California Participant means a Participant whose Award is issued in reliance on Section 25102(o) of the California Corporations Code.

(g) Cashless Exercise means a program approved by the Administrator in which payment of the Option exercise price or tax withholding obligations or other required deductions may be satisfied, in whole or in part, with Shares subject to the Option, including by delivery of an irrevocable direction to a securities broker (on a form prescribed by the Company) to sell Shares and to deliver all or part of the sale proceeds to the Company in payment of such amount.

(h) Cause for termination of a Participant’s Continuous Service Status will exist (unless another definition is provided in an applicable Option Agreement, Restricted Stock Purchase Agreement, employment agreement or other applicable written agreement) if the Participant’s Continuous Service Status is terminated for any of the following reasons: (i) any


material breach by Participant of any material written agreement between Participant and the Company and Participant’s failure to cure such breach within 30 days after receiving written notice thereof; (ii) any failure by Participant to comply with the Company’s material written policies or rules as they may be in effect from time to time; (iii) neglect or persistent unsatisfactory performance of Participant’s duties and Participant’s failure to cure such condition within 30 days after receiving written notice thereof; (iv) Participant’s repeated failure to follow reasonable and lawful instructions from the Board or Chief Executive Officer and Participant’s failure to cure such condition within 30 days after receiving written notice thereof; (v) Participant’s conviction of, or plea of guilty or nolo contendere to, any crime that results in, or is reasonably expected to result in, material harm to the business or reputation of the Company; (vi) Participant’s commission of or participation in an act of fraud against the Company; (vii) Participant’s intentional material damage to the Company’s business, property or reputation; or (viii) Participant’s unauthorized use or disclosure of any proprietary information or trade secrets of the Company or any other party to whom the Participant owes an obligation of nondisclosure as a result of his or her relationship with the Company. For purposes of clarity, a termination without “Cause” does not include any termination that occurs as a result of Participant’s death or disability. The determination as to whether a Participant’s Continuous Service Status has been terminated for Cause shall be made in good faith by the Company and shall be final and binding on the Participant. The foregoing definition does not in any way limit the Company’s ability to terminate a Participant’s employment or consulting relationship at any time, and the term “Company” will be interpreted to include any Subsidiary, Parent, Affiliate, or any successor thereto, if appropriate.

(i) Change of Control means (i) a sale of all or substantially all of the Company’s assets other than to an Excluded Entity (as defined below), (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, limited liability company or other entity other than an Excluded Entity, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of all of the Company’s then outstanding voting securities.

Notwithstanding the foregoing, a transaction shall not constitute a Change of Control if its purpose is to (A) change the jurisdiction of the Company’s incorporation, (B) create a holding company that will be owned in substantially the same proportions by the persons who hold the Company’s securities immediately before such transaction, or (C) obtain funding for the Company in a financing that is approved by the Company’s Board. An “Excluded Entity” means a corporation or other entity of which the holders of voting capital stock of the Company outstanding immediately prior to such transaction are the direct or indirect holders of voting securities representing at least a majority of the votes entitled to be cast by all of such corporation’s or other entity’s voting securities outstanding immediately after such transaction.

(j) Code means the Internal Revenue Code of 1986, as amended.

(k) Committee means one or more committees or subcommittees of the Board consisting of two (2) or more Directors (or such lesser or greater number of Directors as shall constitute the minimum number permitted by Applicable Laws to establish a committee or sub-committee of the Board) appointed by the Board to administer the Plan in accordance with Section 4 below.

 

-2-


(l) Common Stock means the Company’s Class A common stock.

(m) Company means Fisker Inc., a Delaware corporation.

(n) Consultant means any person or entity, including an advisor but not an Employee, that renders, or has rendered, services to the Company, or any Parent, Subsidiary or Affiliate and is compensated for such services, and any Director whether compensated for such services or not.

(o) Continuous Service Status means the absence of any interruption or termination of service as an Employee or Consultant. Continuous Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of: (i) Company approved sick leave; (ii) military leave; (iii) any other bona fide leave of absence approved by the Company, provided that, if an Employee is holding an Incentive Stock Option and such leave exceeds 3 months then, for purposes of Incentive Stock Option status only, such Employee’s service as an Employee shall be deemed terminated on the 1st day following such 3-month period and the Incentive Stock Option shall thereafter automatically become a Nonstatutory Stock Option in accordance with Applicable Laws, unless reemployment upon the expiration of such leave is guaranteed by contract or statute, or unless provided otherwise pursuant to a written Company policy. Also, Continuous Service Status as an Employee or Consultant shall not be considered interrupted or terminated in the case of a transfer between locations of the Company or between the Company, its Parents, Subsidiaries or Affiliates, or their respective successors, or a change in status from an Employee to a Consultant or from a Consultant to an Employee.

(p) Director means a member of the Board.

(q) Disability means “disability” within the meaning of Section 22(e)(3) of the Code.

(r) Employee means any person employed by the Company, or any Parent, Subsidiary or Affiliate, with the status of employment determined pursuant to such factors as are deemed appropriate by the Company in its sole discretion, subject to any requirements of Applicable Laws, including the Code. The payment by the Company of a director’s fee shall not be sufficient to constitute “employment” of such director by the Company or any Parent, Subsidiary or Affiliate.

(s) Exchange Act means the Securities Exchange Act of 1934, as amended.

(t) Fair Market Value means, as of any date, the per share fair market value of the Common Stock, as determined by the Administrator in good faith on such basis as it deems appropriate and applied consistently with respect to Participants. Whenever possible, the determination of Fair Market Value shall be based upon the per share closing price for the Shares as reported in The Wall Street Journal for the applicable date.

 

-3-


(u) Family Members means any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, son-in-law, daughter-in-law, brother-in-law, or sister-in-law (including adoptive relationships) of the Participant, any person sharing the Participant’s household (other than a tenant or employee), a trust in which these persons (or the Participant) have more than 50% of the beneficial interest, a foundation in which these persons (or the Participant) control the management of assets, and any other entity in which these persons (or the Participant) own more than 50% of the voting interests.

(v) Incentive Stock Option means an Option intended to, and which does, in fact, qualify as an incentive stock option within the meaning of Section 422 of the Code.

(w) Involuntary Termination means (unless another definition is provided in the applicable Option Agreement, Restricted Stock Purchase Agreement, employment agreement or other applicable written agreement) the termination of a Participant’s Continuous Service Status other than for (i) death, (ii) Disability or (iii) for Cause by the Company or a Parent, Subsidiary, Affiliate or successor thereto, as appropriate.

(x) “Listed Security” means any security of the Company that is listed or approved for listing on a national securities exchange or designated or approved for designation as a national market system security on an interdealer quotation system by the Financial Industry Regulatory Authority (or any successor thereto).

(y) Nonstatutory Stock Option means an Option that is not intended to, or does not, in fact, qualify as an Incentive Stock Option.

(z) Option means a stock option granted pursuant to the Plan.

(aa) Option Agreement means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of an Option granted under the Plan and includes any documents attached to or incorporated into such Option Agreement, including, but not limited to, a notice of stock option grant and a form of exercise notice.

(bb) Option Exchange Program means a program approved by the Administrator whereby outstanding Options (i) are exchanged for Options with a lower exercise price, Restricted Stock, cash or other property or (ii) are amended to decrease the exercise price as a result of a decline in the Fair Market Value.

(cc) Optioned Stock means Shares that are subject to an Option or that were issued pursuant to the exercise of an Option.

(dd) Optionee means an Employee or Consultant who receives an Option.

(ee) Parent means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of grant of the Award, 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 considered a Parent commencing as of such date.

 

-4-


(ff) Participant means any holder of one or more Awards or Shares issued pursuant to an Award.

(gg) Plan means this 2016 Stock Plan.

(hh) Restricted Stock means Shares acquired pursuant to a right to purchase or receive Common Stock granted pursuant to Section 8 below.

(ii) Restricted Stock Purchase Agreement means a written document, the form(s) of which shall be approved from time to time by the Administrator, reflecting the terms of Restricted Stock granted under the Plan and includes any documents attached to such agreement.

(jj) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act, as amended from time to time, or any successor provision.

(kk) Share means a share of Class A Common Stock, as adjusted in accordance with Section 10 below.

(ll) Stock Exchange means any stock exchange or consolidated stock price reporting system on which prices for the Common Stock are quoted at any given time.

(mm) Subsidiary means any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time of grant of the Award, 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. 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.

(nn) Ten Percent Holder means a person who owns stock representing more than 10% of the voting power of all classes of stock of the Company or any Parent or Subsidiary measured as of an Award’s date of grant.

3. Stock Subject to the Plan. Subject to the provisions of Section 10 below, the maximum aggregate number of Shares that may be issued under the Plan is 8,823,530 Shares, all of which Shares may be issued under the Plan pursuant to Incentive Stock Options. The Shares issued under the Plan may be authorized, but unissued, or reacquired Shares. If an Award should expire or become unexercisable for any reason without having been exercised in full, or is surrendered pursuant to an Option Exchange Program, the unissued Shares that were subject thereto shall, unless the Plan shall have been terminated, continue to be available under the Plan for issuance pursuant to future Awards. In addition, any Shares which are retained by the Company upon exercise of an Award in order to satisfy the exercise or purchase price for such Award or any withholding taxes due with respect to such Award shall be treated as not issued and shall continue to be available under the Plan for issuance pursuant to future Awards. Shares issued under the Plan and later forfeited to the Company due to the failure to vest or repurchased

 

-5-


by the Company at the original purchase price paid to the Company for the Shares (including, without limitation, upon forfeiture to or repurchase by the Company in connection with the termination of a Participant’s Continuous Service Status) shall again be available for future grant under the Plan. Notwithstanding the foregoing, subject to the provisions of Section 10 below, in no event shall the maximum aggregate number of Shares that may be issued under the Plan pursuant to Incentive Stock Options exceed the number set forth in the first sentence of this Section 3 plus, to the extent allowable under Section 422 of the Code and the Treasury Regulations promulgated there under, any Shares that again become available for issuance pursuant to the remaining provisions of this Section 3.

4. Administration of the Plan.

(a) General. The Plan shall be administered by the Board, a Committee appointed by the Board, or any combination thereof, as determined by the Board. The Plan may be administered by different administrative bodies with respect to different classes of Participants and, if permitted by Applicable Laws, the Board may authorize one or more officers of the Company to make Awards under the Plan to Employees and Consultants (who are not subject to Section 16 of the Exchange Act) within parameters specified by the Board.

(b) Committee Composition. If a Committee has been appointed pursuant to this Section 4, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board. From time to time the Board may increase the size of any Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefor, fill vacancies (however caused) and dissolve a Committee and thereafter directly administer the Plan, all to the extent permitted by Applicable Laws and, in the case of a Committee administering the Plan in accordance with the requirements of Rule 16b-3 or Section 162(m) of the Code, to the extent permitted or required by such provisions.

(c) Powers of the Administrator. Subject to the provisions of the Plan and, in the case of a Committee, the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its sole discretion:

(i) to determine the Fair Market Value in accordance with Section 2(t) above, provided that such determination shall be applied consistently with respect to Participants under the Plan;

(ii) to select the Employees and Consultants to whom Awards may from time to time be granted;

(iii) to determine the number of Shares to be covered by each Award;

(iv) to approve the form(s) of agreement(s) and other related documents used under the Plan;

(v) to determine the terms and conditions, not inconsistent with the terms of the Plan, of any Award granted hereunder, which terms and conditions include but are not limited to the exercise or purchase price, the time or times when Awards may vest and/or be exercised (which may be based on performance criteria), the circumstances (if any) when vesting will be accelerated or forfeiture restrictions will be waived, and any restriction or limitation regarding any Award, Optioned Stock, or Restricted Stock;

 

-6-


(vi) to amend any outstanding Award or agreement related to any Optioned Stock or Restricted Stock, including any amendment adjusting vesting (e.g., in connection with a change in the terms or conditions under which such person is providing services to the Company), provided that no amendment shall be made that would materially and adversely affect the rights of any Participant without his or her consent;

(vii) to determine whether and under what circumstances an Option may be settled in cash under Section 7(c)(iii) below instead of Common Stock;

(viii) subject to Applicable Laws, to implement an Option Exchange Program and establish the terms and conditions of such Option Exchange Program without consent of the holders of capital stock of the Company, provided that no amendment or adjustment to an Option that would materially and adversely affect the rights of any Participant shall be made without his or her consent;

(ix) to approve addenda pursuant to Section 18 below or to grant Awards to, or to modify the terms of, any outstanding Option Agreement or Restricted Stock Purchase Agreement or any agreement related to any Optioned Stock or Restricted Stock held by Participants who are foreign nationals or employed outside of the United States with such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences in local law, tax policy or custom which deviate from the terms and conditions set forth in this Plan to the extent necessary or appropriate to accommodate such differences; and

(x) to construe and interpret the terms of the Plan, any Option Agreement or Restricted Stock Purchase Agreement, and any agreement related to any Optioned Stock or Restricted Stock, which constructions, interpretations and decisions shall be final and binding on all Participants.

(d) Indemnification. To the maximum extent permitted by Applicable Laws, each member of the Committee (including officers of the Company, if applicable), or of the Board, as applicable, shall be indemnified and held harmless by the Company against and from (i) any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan or pursuant to the terms and conditions of any Award except for actions taken in bad faith or failures to act in good faith, and (ii) any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit, or proceeding against him or her, provided that such member shall give the Company an opportunity, at its own expense, to handle and defend any such claim, action, suit or proceeding before he or she undertakes to handle and defend it on his or her own behalf. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s Certificate of Incorporation or Bylaws, by contract, as a matter of law, or otherwise, or under any other power that the Company may have to indemnify or hold harmless each such person.

 

-7-


5. Eligibility.

(a) Recipients of Grants. Nonstatutory Stock Options and Restricted Stock may be granted to Employees and Consultants. Incentive Stock Options may be granted only to Employees, provided that Employees of Affiliates shall not be eligible to receive Incentive Stock Options.

(b) Type of Option. Each Option shall be designated in the Option Agreement as either an Incentive Stock Option or a Nonstatutory Stock Option.

(c) ISO $100,000 Limitation. Notwithstanding any designation under Section 5(b) above, to the extent that the aggregate Fair Market Value of Shares with respect to which options designated as incentive stock options are exercisable for the first time by any Optionee during any calendar year (under all plans of the Company or any Parent or Subsidiary) exceeds $100,000, such excess options shall be treated as nonstatutory stock options. For purposes of this Section 5(c), incentive stock options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares subject to an incentive stock option shall be determined as of the date of the grant of such option.

(d) No Employment Rights. Neither the Plan nor any Award shall confer upon any Employee or Consultant any right with respect to continuation of an employment or consulting relationship with the Company (any Parent, Subsidiary or Affiliate), nor shall it interfere in any way with such Employee’s or Consultant’s right or the Company’s (Parent’s, Subsidiary’s or Affiliate’s) right to terminate his or her employment or consulting relationship at any time, with or without cause.

6. Term of Plan. The Plan shall become effective upon its adoption by the Board and shall continue in effect for a term of 10 years unless sooner terminated under Section 14 below.

7. Options.

(a) Term of Option. The term of each Option shall be the term stated in the Option Agreement; provided that the term shall be no more than 10 years from the date of grant thereof or such shorter term as may be provided in the Option Agreement and provided further that, in the case of an Incentive Stock Option granted to a person who at the time of such grant is a Ten Percent Holder, the term of the Option shall be 5 years from the date of grant thereof or such shorter term as may be provided in the Option Agreement.

(b) Option Exercise Price and Consideration.

(i) Exercise Price. The per Share exercise price for the Shares to be issued pursuant to the exercise of an Option shall be such price as is determined by the Administrator and set forth in the Option Agreement, but shall be subject to the following:

(1) In the case of an Incentive Stock Option

 

-8-


a. granted to an Employee who at the time of grant is a Ten Percent Holder, the per Share exercise price shall be no less than 110% of the Fair Market Value on the date of grant;

b. granted to any other Employee, the per Share exercise price shall be no less than 100% of the Fair Market Value on the date of grant;

(2) Except as provided in subsection (3) below, in the case of a Nonstatutory Stock Option the per Share exercise price shall be such price as is determined by the Administrator, provided that, if the per Share exercise price is less than 100% of the Fair Market Value on the date of grant, it shall otherwise comply with all Applicable Laws, including Section 409A of the Code; and

(3) Notwithstanding the foregoing, Options may be granted with a per Share exercise price other than as required above pursuant to a merger or other corporate transaction.

(ii) Permissible Consideration. The consideration to be paid for the Shares to be issued upon exercise of an Option, including the method of payment, shall be determined by the Administrator (and, in the case of an Incentive Stock Option and to the extent required by Applicable Laws, shall be determined at the time of grant) and may consist entirely of (1) cash; (2) check; (3) to the extent permitted under, and in accordance with, Applicable Laws, delivery of a promissory note with such recourse, interest, security and redemption provisions as the Administrator determines to be appropriate (subject to the provisions of Section 152 of the Delaware General Corporation Law); (4) cancellation of indebtedness; (5) other previously owned Shares that have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which the Option is exercised; (6) a Cashless Exercise; (7) such other consideration and method of payment permitted under Applicable Laws; or (8) any combination of the foregoing methods of payment. In making its determination as to the type of consideration to accept, the Administrator shall consider if acceptance of such consideration may be reasonably expected to benefit the Company and the Administrator may, in its sole discretion, refuse to accept a particular form of consideration at the time of any Option exercise.

(c) Exercise of Option.

(i) General.

(1) Exercisability. Any Option granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator, consistent with the terms of the Plan and reflected in the Option Agreement, including vesting requirements and/or performance criteria with respect to the Company, and Parent, Subsidiary or Affiliate, and/or the Optionee.

 

-9-


(2) Leave of Absence. The Administrator shall have the discretion to determine at any time whether and to what extent the vesting of Options shall be tolled during any leave of absence; provided, however, that in the absence of such determination, vesting of Options shall continue during any paid leave and shall be tolled during any unpaid leave (unless otherwise required by Applicable Laws). Notwithstanding the foregoing, in the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon an Optionee’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Options to the same extent as would have applied had the Optionee continued to provide services to the Company (or any Parent, Subsidiary or Affiliate, if applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

(3) Minimum Exercise Requirements. An Option may not be exercised for a fraction of a Share. The Administrator may require that an Option be exercised as to a minimum number of Shares, provided that such requirement shall not prevent an Optionee from exercising the full number of Shares as to which the Option is then exercisable.

(4) Procedures for and Results of Exercise. An Option shall be deemed exercised when written notice of such exercise has been received by the Company in accordance with the terms of the Option Agreement by the person entitled to exercise the Option and the Company has received full payment for the Shares with respect to which the Option is exercised and has paid, or made arrangements to satisfy, any applicable taxes, withholding, required deductions or other required payments in accordance with Section 9 below. The exercise of an Option shall result in a decrease in the number of Shares that thereafter may be available, both for purposes of the Plan and for sale under the Option, by the number of Shares as to which the Option is exercised.

(5) Rights as Holder of Capital Stock. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a holder of capital stock shall exist with respect to the Optioned Stock, notwithstanding the exercise of the Option. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock is issued, except as provided in Section 10 below.

(ii) Termination of Continuous Service Status. The Administrator shall establish and set forth in the applicable Option Agreement the terms and conditions upon which an Option shall remain exercisable, if at all, following termination of an Optionee’s Continuous Service Status, which provisions may be waived or modified by the Administrator at any time. To the extent that an Option Agreement does not specify the terms and conditions upon which an Option shall terminate upon termination of an Optionee’s Continuous Service Status, the following provisions shall apply:

(1) General Provisions. If the Optionee (or other person entitled to exercise the Option) does not exercise the Option to the extent so entitled within the time specified below, the Option shall terminate and the Optioned Stock underlying the unexercised portion of the Option shall revert to the Plan. In no event may any Option be exercised after the expiration of the Option term as set forth in the Option Agreement (and subject to this Section 7).

 

-10-


(2) Termination other than Upon Disability or Death or for Cause. In the event of termination of an Optionee’s Continuous Service Status other than under the circumstances set forth in the subsections (3) through (5) below, such Optionee may exercise any outstanding Option at any time within 3 months following such termination to the extent the Optionee is vested in the Optioned Stock.

(3) Disability of Optionee. In the event of termination of an Optionee’s Continuous Service Status as a result of his or her Disability, such Optionee may exercise any outstanding Option at any time within 12 months following such termination to the extent the Optionee is vested in the Optioned Stock.

(4) Death of Optionee. In the event of the death of an Optionee during the period of Continuous Service Status since the date of grant of any outstanding Option, or within 3 months following termination of the Optionee’s Continuous Service Status, the Option may be exercised by any beneficiaries designated in accordance with Section 16 below, or if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, at any time within 12 months following the date the Optionee’s Continuous Service Status terminated, but only to the extent the Optionee is vested in the Optioned Stock.

(5) Termination for Cause. In the event of termination of an Optionee’s Continuous Service Status for Cause, any outstanding Option (including any vested portion thereof) held by such Optionee shall immediately terminate in its entirety upon first notification to the Optionee of termination of the Optionee’s Continuous Service Status for Cause. If an Optionee’s Continuous Service Status is suspended pending an investigation of whether the Optionee’s Continuous Service Status will be terminated for Cause, all the Optionee’s rights under any Option, including the right to exercise the Option, shall be suspended during the investigation period. Nothing in this Section 7(c)(ii)(5) shall in any way limit the Company’s right to purchase unvested Shares issued upon exercise of an Option as set forth in the applicable Option Agreement.

(iii) Buyout Provisions. The Administrator may at any time offer to buy out for a payment in cash or Shares an Option previously granted under the Plan based on such terms and conditions as the Administrator shall establish and communicate to the Optionee at the time that such offer is made.

8. Restricted Stock.

(a) Rights to Purchase. When a right to purchase or receive Restricted Stock is granted under the Plan, the Company shall advise the recipient in writing of the terms, conditions and restrictions related to the offer, including the number of Shares that such person shall be entitled to purchase, the price to be paid, if any (which shall be as determined by the Administrator, subject to Applicable Laws, including any applicable securities laws), and the time within which such person must accept such offer. The permissible consideration for Restricted Stock shall be determined by the Administrator and shall be the same as is set forth in Section 7(b)(ii) above with respect to exercise of Options. The offer to purchase Shares shall be accepted by execution of a Restricted Stock Purchase Agreement in the form determined by the Administrator.

 

-11-


(b) Repurchase Option.

(i) General. Unless the Administrator determines otherwise, the Restricted Stock Purchase Agreement shall grant the Company a repurchase option exercisable upon the voluntary or involuntary termination of the Participant’s Continuous Service Status for any reason (including death or Disability) at a purchase price for Shares equal to the original purchase price paid by the purchaser to the Company for such Shares and may be paid by cancellation of any indebtedness of the purchaser to the Company. The repurchase option shall lapse at such rate as the Administrator may determine.

(ii) Leave of Absence. The Administrator shall have the discretion to determine at any time whether and to what extent the lapsing of Company repurchase rights shall be tolled during any leave of absence; provided, however, that in the absence of such determination, such lapsing shall continue during any paid leave and shall be tolled during any unpaid leave (unless otherwise required by Applicable Laws). Notwithstanding the foregoing, in the event of military leave, the lapsing of Company repurchase rights shall toll during any unpaid portion of such leave, provided that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to Shares purchased pursuant to the Restricted Stock Purchase Agreement to the same extent as would have applied had the Participant continued to provide services to the Company (or any Parent, Subsidiary or Affiliate, if applicable) throughout the leave on the same terms as he or she was providing services immediately prior to such leave.

(c) Other Provisions. The Restricted Stock Purchase Agreement shall contain such other terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its sole discretion. In addition, the provisions of Restricted Stock Purchase Agreements need not be the same with respect to each Participant.

(d) Rights as a Holder of Capital Stock. Once the Restricted Stock is purchased, the Participant shall have the rights equivalent to those of a holder of capital stock, and shall be a record holder when his or her purchase and the issuance of the Shares is entered upon the records of the duly authorized transfer agent of the Company. No adjustment will be made for a dividend or other right for which the record date is prior to the date the Restricted Stock is purchased, except as provided in Section 10 below.

9. Taxes.

(a) As a condition of the grant, vesting and exercise of an Award, the Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) shall make such arrangements as the Administrator may require for the satisfaction of any applicable U.S. federal, state, local or foreign tax, withholding, and any other required deductions or payments that may arise in connection with such Award. The Company shall not be required to issue any Shares under the Plan until such obligations are satisfied.

 

-12-


(b) The Administrator may, to the extent permitted under Applicable Laws, permit a Participant (or in the case of the Participant’s death or a permitted transferee, the person holding or exercising the Award) to satisfy all or part of his or her tax, withholding, or any other required deductions or payments by Cashless Exercise or by surrendering Shares (either directly or by stock attestation) that he or she previously acquired; provided that, unless specifically permitted by the Company, any such Cashless Exercise must be an approved broker-assisted Cashless Exercise or the Shares withheld in the Cashless Exercise must be limited to avoid financial accounting charges under applicable accounting guidance and any such surrendered Shares must have been previously held for any minimum duration required to avoid financial accounting charges under applicable accounting guidance. Any payment of taxes by surrendering Shares to the Company may be subject to restrictions, including, but not limited to, any restrictions required by rules of the Securities and Exchange Commission.

10. Adjustments Upon Changes in Capitalization, Merger or Certain Other Transactions.

(a) Changes in Capitalization. Subject to any action required under Applicable Laws by the holders of capital stock of the Company, (i) the numbers and class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the exercise price per Share of each such outstanding Option, and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award, shall be automatically proportionately adjusted in the event of a stock split, reverse stock split, stock dividend, combination, consolidation, reclassification of the Shares or subdivision of the Shares. In the event of any increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, a declaration of an extraordinary dividend with respect to the Shares payable in a form other than Shares in an amount that has a material effect on the Fair Market Value, a recapitalization (including a recapitalization through a large nonrecurring cash dividend), a rights offering, a reorganization, merger, a spin-off, split-up, change in corporate structure or a similar occurrence, the Administrator shall make appropriate adjustments, in its discretion, in one or more of (i) the numbers and class of Shares or other stock or securities: (x) available for future Awards under Section 3 above and (y) covered by each outstanding Award, (ii) the exercise price per Share of each outstanding Option and (iii) any repurchase price per Share applicable to Shares issued pursuant to any Award, and any such adjustment by the Administrator shall be made in the Administrator’s sole and absolute discretion and shall be final, binding and conclusive. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Award. If, by reason of a transaction described in this Section 10(a) or an adjustment pursuant to this Section 10(a), a Participant’s Award agreement or agreement related to any Optioned Stock or Restricted Stock covers additional or different shares of stock or securities, then such additional or different shares, and the Award agreement or agreement related to the Optioned Stock or Restricted Stock in respect thereof, shall be subject to all of the terms, conditions and restrictions which were applicable to the Award, Optioned Stock and Restricted Stock prior to such adjustment.

 

-13-


(b) Dissolution or Liquidation. In the event of the dissolution or liquidation of the Company, each Award will terminate immediately prior to the consummation of such action, unless otherwise determined by the Administrator.

(c) Corporate Transactions. In the event of (i) a transfer of all or substantially all of the Company’s assets, (ii) a merger, consolidation or other capital reorganization or business combination transaction of the Company with or into another corporation, entity or person, or (iii) the consummation of a transaction, or series of related transactions, in which any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) becomes the “beneficial owner” (as defined in Rule 13d-3 of the Exchange Act), directly or indirectly, of more than 50% of the Company’s then outstanding capital stock (a “Corporate Transaction”), each outstanding Award (vested or unvested) will be treated as the Administrator determines, which determination may be made without the consent of any Participant and need not treat all outstanding Awards (or portion thereof) in an identical manner. Such determination, without the consent of any Participant, may provide (without limitation) for one or more of the following in the event of a Corporate Transaction: (A) the continuation of such outstanding Awards by the Company (if the Company is the surviving corporation); (B) the assumption of such outstanding Awards by the surviving corporation or its parent; (C) the substitution by the surviving corporation or its parent of new options or equity awards for such Awards; (D) the cancellation of such Awards in exchange for a payment to the Participants equal to the excess of (1) the Fair Market Value of the Shares subject to such Awards as of the closing date of such Corporate Transaction over (2) the exercise price or purchase price paid or to be paid for the Shares subject to the Awards; or (E) the cancellation of any outstanding Options or an outstanding right to purchase Restricted Stock, in either case, for no consideration. Notwithstanding anything under this Plan, any Award agreement or otherwise, any escrow, holdback, earn-out or similar provisions agreed to pursuant to, or in connection with, a Corporate Transaction shall, unless otherwise determined by the Board, apply to any payment or other right a Participant may be entitled to under this Plan, if any, to the same extent and in the same manner as such provisions apply generally to the holders of the Company’s Common Stock with respect to the Corporate Transaction, but only to the extent permitted by Applicable Law, including (without limitation), Section 409A of the Code.

11. Non-Transferability of Awards.

(a) General. Except as set forth in this Section 11, Awards (or any rights of such Awards) may not be sold, pledged, encumbered, assigned, hypothecated, or disposed of or otherwise transferred in any manner other than by will or by the laws of descent or distribution. The designation of a beneficiary by a Participant will not constitute a transfer. An Option may be exercised, during the lifetime of the holder of the Option, only by such holder or a transferee permitted by this Section 11.

(b) Limited Transferability Rights. Notwithstanding anything else in this Section 11, the Administrator may in its sole discretion provide that any Nonstatutory Stock Options may be transferred by instrument to an inter vivos or testamentary trust in which the Options are to be passed to beneficiaries upon the death of the trustor (settlor) or by gift to Family Members. Further, beginning with (i) the period when the Company begins to rely on the exemption described in Rule 12h-1(f)(1) promulgated under the Exchange Act, as determined by

 

-14-


the Board in its sole discretion, and (ii) ending on the earlier of (A) the date when the Company ceases to rely on such exemption, as determined by the Board in its sole discretion, or (B) the date when the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, an Option, or prior to exercise, the Shares subject to the Option, may not be pledged, hypothecated or otherwise transferred or disposed of, in any manner, including by entering into any short position, any “put equivalent position” or any “call equivalent position” (as defined in Rule 16a-1(h) and Rule 16a-1(b) of the Exchange Act, respectively), other than to (i) persons who are Family Members through gifts or domestic relations orders, or (ii) to an executor or guardian of the Participant upon the death or disability of the Participant. Notwithstanding the foregoing sentence, the Board, in its sole discretion, may permit transfers of Nonstatutory Stock Options to the Company or in connection with a Change of Control or other acquisition transactions involving the Company to the extent permitted by Rule 12h-1(f).

12. Non-Transferability of Stock Underlying Awards.

(a) General. Notwithstanding anything to the contrary, no Participant or other stockholder shall Transfer (as such term is defined below) any Shares (or any rights of or interests in such Shares) acquired pursuant to any Award (including, without limitation, Shares acquired upon exercise of an Option) to any person or entity unless such Transfer is approved by the Company prior to such Transfer, which approval may be granted or withheld in the Company’s sole and absolute discretion. “Transfer” shall mean, with respect to any security, the direct or indirect assignment, sale, transfer, tender, pledge, hypothecation, or the grant, creation or suffrage of a lien or encumbrance in or upon, or the gift, placement in trust, or the Constructive Sale (as such term is defined below) or other disposition of such security (including transfer by testamentary or intestate succession, merger or otherwise by operation of law) or any right, title or interest therein (including, but not limited to, any right or power to vote to which the holder thereof may be entitled, whether such right or power is granted by proxy or otherwise), or the record or beneficial ownership thereof, the offer to make such a sale, transfer, Constructive Sale or other disposition, and each agreement, arrangement or understanding, whether or not in writing, to effect any of the foregoing. “Constructive Sale” shall mean, with respect to any security, a short sale with respect to such security, entering into or acquiring an offsetting derivative contract with respect to such security, entering into or acquiring a futures or forward contract to deliver such security, or entering into any other hedging or other derivative transaction that has the effect of materially changing the economic benefits and risks of ownership. Any purported Transfer effected in violation of this Section 12 shall be null and void and shall have no force or effect and the Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of the Plan or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

(b) Approval Process. Any Participant or stockholder seeking the approval of the Company to Transfer some or all of its Shares shall give written notice thereof to the Secretary of the Company that shall include: (1) the name of the stockholder; (2) the proposed transferee; (3) the number of shares of the Transfer of which approval is thereby requested; and (4) the purchase price, if any, of the shares proposed for Transfer. The Company may require the Participant to supplement its notice with such additional information as the Company may

 

-15-


request or as may otherwise be required by the applicable Option Agreement, Restricted Stock Purchase Agreement or other applicable written agreement. In addition such request for Transfer shall be subject to such right of first refusal, transfer provisions and any other terms and conditions as may be set forth in the applicable Option Agreement, Restricted Stock Purchase Agreement or other applicable written agreement.

13. Time of Granting Awards. The date of grant of an Award shall, for all purposes, be the date on which the Administrator makes the determination granting such Award, or such other date as is determined by the Administrator.

14. Amendment and Termination of the Plan. The Board may at any time amend or terminate the Plan, but no amendment or termination shall be made that would materially and adversely affect the rights of any Participant under any outstanding Award, without his or her consent. In addition, to the extent necessary and desirable to comply with Applicable Laws, the Company shall obtain the approval of holders of capital stock with respect to any Plan amendment in such a manner and to such a degree as required.

15. Conditions Upon Issuance of Shares. Notwithstanding any other provision of the Plan or any agreement entered into by the Company pursuant to the Plan, the Company shall not be obligated, and shall have no liability for failure, to issue or deliver any Shares under the Plan unless such issuance or delivery would comply with Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. As a condition to the exercise of any Option or purchase of any Restricted Stock, the Company may require the person exercising the Option or purchasing the Restricted Stock to represent and warrant at the time of any such exercise or purchase that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is advisable or required by Applicable Laws. Shares issued upon exercise of Options or purchase of Restricted Stock prior to the date, if ever, on which the Common Stock becomes a Listed Security shall be subject to a right of first refusal in favor of the Company pursuant to which the Participant will be required to offer Shares to the Company before selling or transferring them to any third party on such terms and subject to such conditions as is reflected in the applicable Option Agreement or Restricted Stock Purchase Agreement.

16. Beneficiaries. If permitted by the Company, a Participant may designate one or more beneficiaries with respect to an Award by timely 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. Except as otherwise provided in an Award agreement, if no beneficiary was designated or if no designated beneficiary survives the Participant, then after a Participant’s death any vested Award(s) shall be transferred or distributed to the Participant’s estate or to any person who has the right to acquire the Award by bequest or inheritance.

17. Approval of Holders of Capital Stock. If required by Applicable Laws, continuance of the Plan shall be subject to approval by the holders of capital stock of the Company within 12 months before or after the date the Plan is adopted or, to the extent required by Applicable Laws, any date the Plan is amended. Such approval shall be obtained in the manner and to the degree required under Applicable Laws.

 

-16-


18. Addenda. The Administrator may approve such addenda to the Plan as it may consider necessary or appropriate for the purpose of granting Awards to Employees or Consultants, which Awards may contain such terms and conditions as the Administrator deems necessary or appropriate to accommodate differences in local law, tax policy or custom, which may deviate from the terms and conditions set forth in this Plan. The terms of any such addenda shall supersede the terms of the Plan to the extent necessary to accommodate such differences but shall not otherwise affect the terms of the Plan as in effect for any other purpose.

19. Information to Holders of Options. In the event the Company is relying on the exemption provided by Rule 12h-1(f) under the Exchange Act, the Company shall provide the information described in Rule 701(e)(3), (4) and (5) of the Securities Act of 1933, as amended, to all holders of Options in accordance with the requirements thereunder until such time as the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act. The Company may request that holders of Options agree to keep the information to be provided pursuant to this Section confidential. If the holder does not agree to keep the information to be provided pursuant to this Section confidential, then the Company will not be required to provide the information unless otherwise required pursuant to Rule 12h-1(f)(1) of the Exchange Act.

 

-17-


ADDENDUM A

2016 Stock Plan

(California Participants)

Prior to the date, if ever, on which the Common Stock becomes a Listed Security and/or the Company is subject to the reporting requirements of the Exchange Act, the terms set forth herein shall apply to Awards issued to California Participants. All capitalized terms used herein but not otherwise defined shall have the respective meanings set forth in the Plan.

1. The following rules shall apply to any Option in the event of termination of the Participant’s Continuous Service Status:

(a) If such termination was for reasons other than death, “Permanent Disability” (as defined below), or Cause, the Participant shall have at least 30 days after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date, provided that in no event shall the Option be exercisable after the expiration of the term as set forth in the Option Agreement.

(b) If such termination was due to death or Permanent Disability, the Participant shall have at least 6 months after the date of such termination to exercise his or her Option to the extent the Participant is entitled to exercise on his or her termination date, provided that in no event shall the Option be exercisable after the expiration of the term as set forth in the Option Agreement.

Permanent Disability” for purposes of this Addendum shall mean the inability of the Participant, in the opinion of a qualified physician acceptable to the Company, to perform the major duties of the Participant’s position with the Company or any Parent or Subsidiary because of the sickness or injury of the Participant.

2. Notwithstanding anything to the contrary in Section 10(a) of the Plan, the Administrator shall in any event make such adjustments as may be required by Section 25102(o) of the California Corporations Code.

3. Notwithstanding anything stated herein to the contrary, no Option shall be exercisable on or after the 10th anniversary of the date of grant and any Award agreement shall terminate on or before the 10th anniversary of the date of grant.

4. The Company shall furnish summary financial information (audited or unaudited) of the Company’s financial condition and results of operations, consistent with the requirements of Applicable Laws, at least annually to each California Participant during the period such Participant has one or more Awards outstanding, and in the case of an individual who acquired Shares pursuant to the Plan, during the period such Participant owns such Shares; provided, however, the Company shall not be required to provide such information if (i) the issuance is limited to key persons whose duties in connection with the Company assure their access to equivalent information or (ii) the Plan or any agreement complies with all conditions of Rule 701 of the Securities Act of 1933, as amended; provided that for purposes of determining such compliance, any registered domestic partner shall be considered a “family member” as that term is defined in Rule 701.


FISKER INC.

2016 STOCK PLAN

NOTICE OF STOCK OPTION GRANT

Name: See Carta

You have been granted an option to purchase Class A Common Stock of Fisker Inc., a Delaware corporation (the “Company”), as follows:

 

Date of Grant:    See Carta
Exercise Price Per Share:    See Carta
Total Number of Shares:    See Carta
Total Exercise Price:    See Carta
Type of Option:    See Carta
Expiration Date:    10 years after Date of Grant
Vesting Commencement Date:    See Carta
Vesting/Exercise Schedule:   

So long as your Continuous Service Status does not terminate (and provided that no vesting shall occur following the Termination Date (as defined in Section 5 of the Stock Option Agreement) unless otherwise determined by the Company in its sole discretion), the Shares underlying this Option shall vest and become exercisable in accordance with the following schedule:

 

See Carta

Termination Period:    You may exercise this Option for 3 month(s) after the Termination Date except as set out in Section 5 of the Stock Option Agreement (but in no event later than the Expiration Date). You are responsible for keeping track of these exercise periods following the Termination Date. The Company will not provide further notice of such periods.
Transferability:    You may not transfer this Option except as set forth in Section 6 of the Stock Option Agreement (subject to compliance with Applicable Laws). You must obtain Company approval prior to any transfer of the Shares received upon exercise of this Option.

[Signature Page Follows]


By your signature and the signature of the Company’s representative or by otherwise accepting or exercising this Option, you and the Company agree that this Option is granted under and governed by the terms and conditions of this Notice and the Fisker Inc. 2016 Stock Plan and Stock Option Agreement (which includes the Country-Specific Addendum, as applicable), both of which are attached to and made a part of this Notice.

In addition, you agree and acknowledge that your rights to any Shares underlying this Option will vest only as you provide services to the Company over time, that the grant of this Option is not as consideration for services you rendered to the Company prior to your date of hire, and that nothing in this Notice or the attached documents confers upon you any right to continue your employment or consulting relationship with the Company for any period of time, nor does it interfere in any way with your right or the Company’s right to terminate that relationship at any time, for any reason, with or without cause, subject to Applicable Laws. Also, to the extent applicable, the Exercise Price Per Share has been set in good faith compliance with the applicable guidance issued by the IRS under Section 409A of the Code. However, there is no guarantee that the IRS will agree with the valuation, and by signing below, you agree and acknowledge that the Company, its Board, officers, employees, agents and stockholders shall not be held liable for any applicable costs, taxes, or penalties associated with this Option if, in fact, the IRS or any other person (including, without limitation, a successor corporation or an acquirer in a Change of Control) were to determine that this Option constitutes deferred compensation under Section 409A of the Code. You should consult with your own tax advisor concerning the tax consequences of such a determination by the IRS. For purposes of this paragraph, the term “Company” will be interpreted to include any Parent, Subsidiary or Affiliate.

 

THE COMPANY:
FISKER INC.
By:  

 

  Henrik Fisker
  President
OPTIONEE:

 

Name:
Address:

 

 

 

2


FISKER INC.

2016 STOCK PLAN

STOCK OPTION AGREEMENT

1. Grant of Option. Fisker Inc., a Delaware corporation (the “Company”), hereby grants to the person (“Optionee”) named in the Notice of Stock Option Grant (the “Notice”), an option (the “Option”) to purchase the total number of shares of Class A Common Stock (the “Shares”) set forth in the Notice, at the exercise price per Share set forth in the Notice (the “Exercise Price”) subject to the terms, definitions and provisions of the Fisker Inc. 2016 Stock Plan (the “Plan”) adopted by the Company, which is incorporated in this Stock Option Agreement (this “Agreement”) by reference. Unless otherwise defined in this Agreement, the terms used in this Agreement or the Notice shall have the meanings defined in the Plan.

2. Designation of Option. This Option is intended to be an Incentive Stock Option as defined in Section 422 of the Code only to the extent so designated in the Notice, and to the extent it is not so designated or to the extent this Option does not qualify as an Incentive Stock Option, it is intended to be a Nonstatutory Stock Option.

Notwithstanding the above, if designated as an Incentive Stock Option, in the event that the Shares subject to this Option (and all other incentive stock options granted to Optionee by the Company or any Parent or Subsidiary, including under other plans) that first become exercisable in any calendar year have an aggregate fair market value (determined for each Share as of the date of grant of the option covering such Share) in excess of USD$100,000, the Shares in excess of USD$100,000 shall be treated as subject to a nonstatutory stock option, in accordance with Section 5(c) of the Plan.

3. Exercise of Option. This Option shall be exercisable during its term in accordance with the Vesting/Exercise Schedule set out in the Notice and with the provisions of Section 7(c) of the Plan as follows:

(a) Right to Exercise.

(i) This Option may not be exercised for a fraction of a share.

(ii) In the event of Optionee’s death, Disability or other termination of Continuous Service Status, the exercisability of this Option is governed by Section 5 below, subject to the limitations contained in this Section 3.

(iii) In no event may this Option be exercised after the Expiration Date set forth in the Notice.


(b) Method of Exercise.

(i) This Option shall be exercisable by execution and delivery of the Exercise Agreement attached hereto as Exhibit A or of any other form of written notice approved for such purpose by the Company which shall state Optionee’s election to exercise this Option, the number of Shares in respect of which this Option is being exercised, and such other representations and agreements as to the holder’s investment intent with respect to such Shares as may be required by the Company pursuant to the provisions of the Plan. Such written notice shall be signed by Optionee and shall be delivered to the Company by such means as are determined by the Company in its discretion to constitute adequate delivery. The written notice shall be accompanied by payment of the aggregate Exercise Price for the purchased Shares.

(ii) As a condition to the grant, vesting and exercise of this Option and as further set forth in Section 9 of the Plan, Optionee hereby agrees to make adequate provision for the satisfaction of (and will indemnify the Company and any Subsidiary or Affiliate for) any applicable taxes or tax withholdings, social contributions, required deductions, or other payments, if any (“Tax-Related Items”), which arise upon the grant, vesting or exercise of this Option, ownership or disposition of Shares, receipt of dividends, if any, or otherwise in connection with this Option or the Shares, whether by withholding, direct payment to the Company, or otherwise as determined by the Company in its sole discretion. Regardless of any action the Company or any Subsidiary or Affiliate takes with respect to any or all applicable Tax-Related Items, Optionee acknowledges and agrees that the ultimate liability for all Tax-Related Items is and remains Optionee’s responsibility and may exceed any amount actually withheld by the Company or any Subsidiary or Affiliate. Optionee further acknowledges and agrees that Optionee is solely responsible for filing all relevant documentation that may be required in relation to this Option or any Tax-Related Items (other than filings or documentation that is the specific obligation of the Company or any Subsidiary or Affiliate pursuant to Applicable Laws), such as but not limited to personal income tax returns or reporting statements in relation to the grant, vesting or exercise of this Option, the holding of Shares or any bank or brokerage account, the subsequent sale of Shares, and the receipt of any dividends. Optionee further acknowledges that the Company makes no representations or undertakings regarding the treatment of any Tax-Related Items and does not commit to and is under no obligation to structure the terms or any aspect of the Option to reduce or eliminate Optionee’s liability for Tax-Related Items or achieve any particular tax result. Optionee also understands that Applicable Laws may require varying Share or option valuation methods for purposes of calculating Tax-Related Items, and the Company assumes no responsibility or liability in relation to any such valuation or for any calculation or reporting of income or Tax-Related Items that may be required of Optionee under Applicable Laws. Further, if Optionee has become subject to Tax-Related Items in more than one jurisdiction, Optionee acknowledges that the Company or any Subsidiary or Affiliate may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(iii) The Company is not obligated, and will have no liability for failure, to issue or deliver any Shares upon exercise of this Option unless such issuance or delivery would comply with the Applicable Laws, with such compliance determined by the Company in consultation with its legal counsel. Furthermore, Optionee understands that the Applicable Laws of the country in which Optionee is residing or working at the time of grant, vesting, and/or exercise of this Option (including any rules or regulations governing securities, foreign exchange, tax, labor or other matters) may restrict or prevent exercise of this Option. This Option may not be exercised until such time as the Plan has been approved by the holders of capital stock of the Company, or if the issuance of such Shares upon such exercise or the method

 

2


of payment of consideration for such Shares would constitute a violation of any Applicable Laws, including any applicable U.S. federal or state securities laws or any other law or regulation, including any rule under Part 221 of Title 12 of the Code of Federal Regulations as promulgated by the Federal Reserve Board. As a condition to the exercise of this Option, the Company may require Optionee to make any representation and warranty to the Company as may be required by the Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Optionee on the date on which this Option is exercised with respect to such Shares, subject to Applicable Laws.

(iv) Subject to compliance with Applicable Laws, this Option shall be deemed to be exercised upon receipt by the Company of the appropriate written notice of exercise accompanied by the Exercise Price and the satisfaction of any applicable obligations described in Section 3(b)(ii) above.

4. Method of Payment. Unless otherwise specified by the Company in its sole discretion to comply with Applicable Laws or facilitate the administration of the Plan, payment of the Exercise Price shall be by cash or check or, following the initial public offering of the Company’s Class A Common Stock, by Cashless Exercise pursuant to which the Optionee delivers an irrevocable direction to a securities broker (on a form prescribed by the Company and according to a procedure established by the Company).

Optionee understands and agrees that, if required by the Company or Applicable Laws, any cross-border cash remittance made to exercise this Option or transfer proceeds received upon the sale of Shares must be made through a locally authorized financial institution or registered foreign exchange agency and may require Optionee to provide to such entity certain information regarding the transaction. Moreover, Optionee understands and agrees that the future value of the underlying Shares is unknown and cannot be predicted with certainty and may decrease in value, even below the Exercise Price. Optionee understands that neither the Company nor any Subsidiary or Affiliate is responsible for any foreign exchange fluctuation between local currency and the United States Dollar or the selection by the Company or any Subsidiary or Affiliate in its sole discretion of an applicable foreign currency exchange rate that may affect the value of the Option (or the calculation of income or Tax-Related Items thereunder).

5. Termination of Relationship. Following the date of termination of Optionee’s Continuous Service Status for any reason (the “Termination Date”), Optionee may exercise this Option only as set forth in the Notice and this Section 5. If Optionee does not exercise this Option within the Termination Period set forth in the Notice or the termination periods set forth below, this Option shall terminate in its entirety. In no event may any Option be exercised after the Expiration Date of this Option as set forth in the Notice. For the avoidance of doubt and for purposes of this Option only, termination of Continuous Service Status and the Termination Date will be deemed to occur as of the date Optionee is no longer actively providing services as an Employee or Consultant (except, in certain circumstances, to the extent Optionee is on a Company-approved leave of absence and subject to any Company policy or Applicable Laws regarding such leaves) and will not be extended by any notice period or “garden leave” that may be required contractually or under Applicable Laws, unless otherwise determined by the Company in its sole discretion.

 

3


(a) General Termination. In the event of termination of Optionee’s Continuous Service Status other than as a result of Optionee’s Disability or death or Optionee’s termination for Cause, Optionee may, to the extent Optionee is vested in the Optioned Stock, exercise this Option during the Termination Period set forth in the Notice.

(b) Termination upon Disability of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s Disability, Optionee may, but only within 12 month(s) following the Termination Date, exercise this Option to the extent Optionee is vested in the Optioned Stock.

(c) Death of Optionee. In the event of termination of Optionee’s Continuous Service Status as a result of Optionee’s death, or in the event of Optionee’s death within 3 month(s) following Optionee’s Termination Date, this Option may be exercised at any time within 12 month(s) following the Termination Date, or if later, 12 month(s) following the date of death by any beneficiaries designated in accordance with Section 16 of the Plan or, if there are no such beneficiaries, by the Optionee’s estate, or by a person who acquired the right to exercise the Option by bequest or inheritance, but only to the extent Optionee is vested in the Optioned Stock.

(d) Termination for Cause. In the event of termination of Optionee’s Continuous Service Status for Cause, this Option (including any vested portion thereof) shall immediately terminate in its entirety upon first notification to Optionee of such termination for Cause. If Optionee’s Continuous Service Status is suspended pending an investigation of whether Optionee’s Continuous Service Status will be terminated for Cause, all Optionee’s rights under this Option, including the right to exercise this Option, shall be suspended during the investigation period.

6. Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Optionee only by him or her. The terms of this Option shall be binding upon the executors, administrators, heirs, successors and assigns of Optionee.

7. Lock-Up Agreement. If so requested by the Company or the underwriters in connection with the initial public offering of the Company’s securities registered under the Securities Act of 1933, as amended, Optionee shall not sell, make any short sale of, loan, grant any option for the purchase of, or otherwise dispose of any securities of the Company however or whenever acquired (except for those being registered) without the prior written consent of the Company or such underwriters, as the case may be, for 180 days from the effective date of the registration statement, plus such additional period, to the extent required by FINRA rules, up to a maximum of 216 days from the effective date of the registration statement, and Optionee shall execute an agreement reflecting the foregoing as may be requested by the underwriters at the time of such offering.

8. Effect of Agreement. Optionee acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof (and has had an opportunity to consult counsel regarding the Option terms), and hereby accepts this Option and agrees to be bound by its contractual terms as set forth herein and in the Plan. Optionee hereby

 

4


agrees to accept as binding, conclusive and final all decisions and interpretations of the Administrator regarding any questions relating to this Option. In the event of a conflict between the terms and provisions of the Plan and the terms and provisions of the Notice and this Agreement, the Plan terms and provisions shall prevail.

9. Imposition of Other Requirements. The Company reserves the right, without Optionee’s consent, to cancel or forfeit outstanding grants or impose other requirements on Optionee’s participation in the Plan, on this Option and the Shares subject to this Option and on any other Award or Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with Applicable Laws or facilitate the administration of the Plan. Optionee agrees to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing. Furthermore, Optionee acknowledges that the Applicable Laws of the country in which Optionee is residing or working at the time of grant, holding, vesting, and exercise of the Option or the holding or sale of Shares received pursuant to the Option (including any rules or regulations governing securities, foreign exchange, tax, labor, or other matters) may subject Optionee to additional procedural or regulatory requirements that Optionee is and will be solely responsible for and must fulfill. If applicable, such requirements may be outlined in but are not limited to the Country-Specific Addendum (the “Addendum”) attached hereto, which forms part of this Agreement. Notwithstanding any provision herein, Optionee’s participation in the Plan shall be subject to any applicable special terms and conditions or disclosures as set forth in the Addendum. The Optionee also understands and agrees that if the Optionee works, resides, moves to, or otherwise is or becomes subject to Applicable Laws or Company policies of another jurisdiction at any time, certain country-specific notices, disclaimers and/or terms and conditions may apply to him as from the date of grant, unless otherwise determined by the Company in its sole discretion.

10. Electronic Delivery and Translation. The Company may, in its sole discretion, decide to deliver any documents related to Optionee’s current or future participation in the Plan, this Option, the Shares subject to this Option, any other Company Securities or any other Company-related documents, by electronic means. By accepting this Option, whether electronically or otherwise, Optionee hereby (i) consents to receive such documents by electronic means, (ii) consents to the use of electronic signatures, and (iii) if applicable, agrees to participate in the Plan and/or receive any such documents through an on-line or electronic system established and maintained by the Company or a third party designated by the Company, including but not limited to the use of electronic signatures or click-through electronic acceptance of terms and conditions. To the extent Optionee has been provided with a copy of this Agreement, the Plan, or any other documents relating to this Option in a language other than English, the English language documents will prevail in case of any ambiguities or divergences as a result of translation.

11. No Acquired Rights or Employment Rights. In accepting the Option, Optionee acknowledges that the Plan is established voluntarily by the Company, is discretionary in nature, and may be modified, amended, suspended or terminated by the Company at any time. The grant of the Option is voluntary and occasional and does not create any contractual or other right to receive future grants of Options, other Awards or benefits in lieu of Options, even if Options have been granted repeatedly in the past, and all decisions with respect to future grants of Options or other Awards, if any, will be at the sole discretion of the Company. In addition,

 

5


Optionee’s participation in the Plan is voluntary, and the Option and the Shares subject to the Option are extraordinary items that do not constitute regular compensation for services rendered to the Company or any Subsidiary or Affiliate and are outside the scope of Optionee’s employment contract, if any. The Option and the Shares subject to the Option are not intended to replace any pension rights or compensation and are not part of normal or expected salary or compensation for any purpose, including but not limited to calculating severance payments, if any, upon termination.

Nothing contained in this Agreement is intended to constitute or create a contract of employment, nor shall it constitute or create the right to remain associated with or in the employ of the Company or any Subsidiary or Affiliate for any particular period of time. This Agreement shall not interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate Optionee’s employment or service at any time, subject to Applicable Laws.

12. Data Privacy. Optionee hereby explicitly and unambiguously consents to the collection, use and transfer, whether in electronic or other form, of Optionee’s Personal Data (as described below) by and among, as applicable, the Company and any Subsidiary or Affiliate or third parties as may be selected by the Company for the exclusive purpose of implementing, administering, and managing Optionee’s participation in the Plan. Optionee understands that refusal or withdrawal of consent will affect Optionee’s ability to participate in the Plan; without providing consent, Optionee will not be able to participate in the Plan or realize benefits from the Option.

Optionee understands that the Company and any Subsidiary or Affiliate or designated third parties may hold personal information about Optionee, including, but not limited to, Optionee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of stock or directorships held in the Company or any Subsidiary or Affiliate, details of all Options or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in Optionee’s favor (“Personal Data”). Optionee understands that Personal Data may be transferred to any Subsidiary or Affiliate or third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the United States, Optionee’s country, or elsewhere, and that the recipient’s country may have different data privacy laws and protections than Optionee’s country. In particular, the Company may transfer Personal Data to the broker or stock plan administrator assisting with the Plan, to its legal counsel and tax/accounting advisor, and to the Subsidiary or Affiliate that is Optionee’s employer and its payroll provider.

For more information regarding the collection, use, storage and transfer of Optionee’s Personal Data, Optionee should also refer to any applicable policies issued by the Company from time to time relating to data protection and privacy.

13. Miscellaneous.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with

 

6


the laws of the state of California, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.

(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.

(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance.

(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may 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.

(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

 

7


(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile or scanned copy will have the same force and effect as execution of an original, and a facsimile or scanned signature will be deemed an original and valid signature.

 

8


Country-Specific Addendum

This Addendum includes additional country-specific notices, disclaimers, and/or terms and conditions that apply to Optionees who are working or residing in the countries listed below and that may be material to their participation in the Plan. Such notices, disclaimers, and/or terms and conditions may also apply, as from the date of grant, if the Optionee moves to or otherwise is or becomes subject to the Applicable Laws or Company policies of the country listed. However, because foreign exchange regulations and other local laws are subject to frequent change, Optionee is advised to seek advice from his or her own personal legal and tax advisor prior to accepting or exercising an Option or holding or selling Shares acquired under the Plan. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Optionee’s acceptance of the Option or participation in the Plan. Unless otherwise noted below, capitalized terms shall have the same meaning assigned to them under the Plan, the Notice of Stock Option Grant and the Stock Option Agreement. This Addendum forms part of the Stock Option Agreement and should be read in conjunction with the Stock Option Agreement and the Plan.

Securities Law Notice: Unless otherwise noted, neither the Company nor the Shares are registered with any local stock exchange or under the control of any local securities regulator outside the United States. The Stock Option Agreement (of which this Addendum is a part), the Notice of Stock Option Grant, the Plan, and any other communications or materials that Optionee may receive regarding participation in the Plan do not constitute advertising or an offering of securities outside the United States, and the issuance of securities described in any Plan-related documents is not intended for public offering or circulation in Optionee’s jurisdiction.

 

European Union (“EU”)/European Economic Area (“EEA”)/ UK   

Data Privacy. For residents of the EU/EEA, UK and elsewhere as may be applicable, the following provision applies and supplements Section 12 of the Stock Option Agreement. Optionee understands and acknowledges that:

 

•  The data controller is the Company; queries or requests regarding the Optionee’s Personal Data should be made in writing to the Company’s representative relating to the Plan or award matters, who may be contacted at: stockplan@fiskerinc.com;

 

•  The legal basis for the processing of Personal Data is that the processing is necessary for the performance of a contract to which the Optionee is a party (namely, the Notice of Stock Option Grant and the Stock Option Agreement);

 

•  Personal Data will be held only as long as is necessary to implement, administer and manage Optionee’s participation in the Plan; and

 

•  Optionee may, at any time, access Optionee’s Personal Data, request additional information about the storage and processing of Personal Data, require any necessary amendments to Personal Data without cost or exercise any other rights Optionee may have in relation to Optionee’s Personal Data under Applicable Law, including the right to make a complaint to an EU data protection regulator, or if Optionee is in the UK, the UK Information Commissioner’s Office.


Austria    Foreign Ownership Reporting. If Optionee is an Austrian national who owns securities in foreign deposits (including Shares acquired under the Plan), Optionee must file an annual notification with the Austrian National Bank if the value of the securities in foreign deposits exceeds €5 million or equivalent at the end of the year. If the value of these securities in foreign deposits exceeds €30 million or equivalent at the end of a quarter, then these notifications shall be made quarterly.
Japan   

Securities Law Notice. With respect to this Option, the Company hereby informs Optionee that (a) a filing under the provisions of Article 4, Paragraph 1 of the Financial Instruments and Exchange Law of Japan (“FIEL”) has not been made, as any solicitation of this Option constitutes a private placement to a small number of investors (shoninzu muke kanyu) as provided under Article 23-13, Paragraph 4, Item 1 (i) of the FIEL, and (b) this Option may not be transferred (including a transfer thereof in whole) other than by will or by the laws of descent or distribution (subject to compliance with Applicable Laws).

 

LOGO

 

Share Ownership and Payment Reporting. If Optionee acquires Shares valued at more than ¥100,000,000 total, Optionee must file a Securities Acquisition Report with the Ministry of Finance (“MOF”) through the Bank of Japan within 20 days of the acquisition of the Shares.

 

In addition, if Optionee pays more than ¥30,000,000 in a single transaction for the Shares at exercise of the Option, Optionee must file a Payment Report with the MOF through the Bank of Japan by the 20th day of the month following the month in which the payment was made. The precise reporting requirements may vary depending on the bank handling the payment.

 

A Payment Report is required independently of a Securities Acquisition Report. Consequently, if the total amount that Optionee pays on a one-time basis at exercise of the Option exceeds ¥100,000,000, Optionee must file both a Payment Report and a Securities Acquisition Report.

 

Exit Tax. Please note that Optionee may be subject to tax on the Option, even prior to exercise, if Optionee relocates from Japan and (1) holds financial assets with an aggregate value of ¥100,000,000 or more upon departure from Japan and (2) maintained a principal place of residence (jusho) or temporary place of abode (kyosho) in Japan for 5 years or more during the 10-year period immediately prior to departing Japan. Optionee should discuss tax treatment with Optionee’s personal tax advisor.

 

2


United Kingdom   

HMRC National Insurance Contributions. Optionee agrees that Tax-Related Items within Section 3(b)(ii) of the Stock Option Agreement shall include any secondary class 1 (employer) National Insurance Contributions that:

 

(a)   any employer or former employer (an “Employer”) of Optionee is liable to pay (or reasonably believes it is liable to pay); and

 

(b)   may be lawfully recovered from Optionee.

 

Unless the requirement is expressly waived by the Company, Optionee is required as a precondition to exercise the Option:

 

(a)   to make a joint election with Optionee’s Employer to transfer to Optionee the whole or any part of the Employer’s liability that falls within Section 3(b)(ii) of the Stock Option Agreement (a “NIC Joint Election”); and

 

(b)   to enter into arrangements required by Her Majesty’s Revenue and Customs (“HMRC”) (or any other tax authority) to secure the payment of the transferred liability.

 

Restricted Securities Elections. Unless the requirement is expressly waived by the Company, as a precondition to exercise the Option, Optionee agrees to enter into an election with the Employer (or former employer) under section 431(1) of Income Tax (Earnings & Pensions) Act 2003 (a “Section 431 Election”) for the full disapplication of Chapter 2 Part 7 of that Act in respect of:

 

(a)   any Shares acquired (or to be acquired) on exercise of the Option;

 

(b)   any securities acquired (or to be acquired) as a result of any surrender of the Option; and

 

(c)   any securities acquired (or to be acquired) as a result of holding either Shares acquired on exercise of the Option or securities specified in paragraph (b) above or this paragraph (c).

   Withholding of Tax. If payment or withholding of the Tax-Related Items is not made within 90 days of the end of the UK tax year in which the event giving rise to the Tax-Related Items occurs (the “Due Date”) or such other period specified in Section 222(1)(c) of the Income Tax (Earnings and Pensions) Act 2003, the amount of any uncollected Tax-Related Items will constitute a loan owed by Optionee to Optionee’s Employer, effective on the Due Date. Optionee agrees that the loan will bear interest at the then-current Official Rate of HMRC, it will be immediately due and repayable, and the Company or the Employer may recover it at any time thereafter by any of the means referred to in Section 3(b)(ii) of the Agreement. Notwithstanding the foregoing, if Optionee is a director or executive officer of the Company (within the meaning of Section 13(k) of the Exchange Act), Optionee will not be eligible for such a loan to cover the Tax-Related Items. In the event that Optionee is a director or executive officer and the Tax-Related Items are not collected from or paid by Optionee by the Due Date, the amount of any uncollected Tax-Related Items will constitute a benefit to

 

3


   Optionee on which additional income tax and national insurance contributions will be payable. Optionee will be responsible for reporting and paying any income tax due on this additional benefit directly to HMRC under the self-assessment regime.

 

4


EXHIBIT A

FISKER INC.

2016 STOCK PLAN

EXERCISE AGREEMENT

This Exercise Agreement (this “Agreement”) is made as of _______________, by and between Fisker Inc., a Delaware corporation (the “Company”), and _____________________ (“Purchaser”). To the extent any capitalized terms used in this Agreement are not defined, they shall have the meaning ascribed to them in the Company’s 2016 Stock Plan (the “Plan”) and the Option Agreement (as defined below).

1. Exercise of Option. Subject to the terms and conditions hereof, Purchaser hereby elects to exercise his or her option to purchase _____________ shares of the Class A Common Stock (the “Shares”) of the Company under and pursuant to the Plan, the Notice of Stock Option Grant and the Stock Option Agreement granted _____________ (the “Option Agreement”). The purchase price for the Shares shall be USD$_____________ per Share for a total purchase price of USD$___________. The term “Shares” refers to the purchased Shares and all securities received in connection with the Shares pursuant to stock dividends or splits, all securities received in replacement of the Shares in a recapitalization, merger, reorganization, exchange or the like, and all new, substituted or additional securities or other property to which Purchaser is entitled by reason of Purchaser’s ownership of the Shares.

2. Time and Place of Exercise. The purchase and sale of the Shares under this Agreement shall occur at the principal office of the Company simultaneously with the execution and delivery of this Agreement, the payment of the aggregate exercise price by any method listed in Section 4 of the Option Agreement, and the satisfaction of any applicable tax, withholding, required deductions or other payments, all in accordance with the provisions of Section 3(b) of the Option Agreement. The Company shall issue the Shares to Purchaser by entering such Shares in Purchaser’s name as of such date in the books and records of the Company or, if applicable, a duly authorized transfer agent of the Company, against payment of the exercise price therefor by Purchaser. The Company will deliver to Purchaser a stock certificate or, upon request in the case of uncertificated securities, a notice of issuance, for the Shares as soon as practicable following such date.

3. Limitations on Transfer. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the transfer restrictions set forth in Section 12 of the Plan, (ii) the terms and conditions that apply to the Company’s Class A Common Stock, as set forth in the Company’s Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Bylaws, as may be in effect at the time of any proposed transfer (the “Bylaw Provisions”), and (iii) any other limitation or restriction on transfer created by Applicable Laws. Purchaser shall not assign, encumber or dispose of any interest in the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Provisions, Applicable Laws, and the provisions below. Purchaser acknowledges and agrees that the Shares purchased under this Agreement are subject to (i) the terms and conditions


that apply to the Company’s Class A Common Stock, as set forth in the Company’s Bylaws, including (without limitation) certain transfer restrictions set forth in Section 8.9 of the Company’s Bylaws, as may be in effect at the time of any proposed transfer (the “Bylaw Provisions”), and (ii) any other limitation or restriction on transfer created by Applicable Laws. Purchaser shall not assign, encumber or dispose of any interest in the Shares except to the extent permitted by, and in compliance with, Section 12 of the Plan, the Bylaw Provisions, Applicable Laws, and the provisions below.

(a) Transfer Restrictions; Right of First Refusal. Before any Shares held by Purchaser or any transferee of Purchaser (either being sometimes referred to herein as the “Holder”) may be sold or otherwise transferred (including transfer by gift or operation of law), the Company shall first, to the extent the Company’s approval is required by the Plan or any applicable Bylaw Provisions, have the right to approve such sale or transfer, in full or in part, and shall then have the right to purchase all or any part of the Shares proposed to be sold or transferred, in each case, in its sole and absolute discretion (the “Right of First Refusal”). If the Holder would like to sell or transfer any Shares, the Holder must provide the Company or its assignee(s) with a Notice (as defined below) requesting approval to sell or transfer the Shares and offering the Company or its assignee(s) a Right of First Refusal on the same terms and conditions set forth in this Section 3(a). The Company may either (1) exercise its Right of First Refusal in full or in part and purchase such Shares pursuant to this Section 3(a), (2) decline to exercise its Right of First Refusal in full or in part and permit the transfer of such Shares to the Proposed Transferee (as defined below) in full or in part or (3) decline to exercise its Right of First Refusal in full or in part and, to the extent the Company’s approval is required by the Plan or any applicable Bylaw Provisions, decline the request to sell or transfer the Shares in full or in part.

(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the Company a written notice (the “Notice”) stating: (A) the Holder’s intention to sell or otherwise transfer such Shares; (B) the name of each proposed purchaser or other transferee (“Proposed Transferee”); (C) the number of Shares to be sold or transferred to each Proposed Transferee; (D) the terms and conditions of each proposed sale or transfer, including (without limitation) the purchase price for such Shares (the “Purchase Price”); and (E) the Holder’s offer to the Company or its assignee(s) to purchase the Shares at the Purchase Price and upon the same terms (or terms that are no less favorable to the Company).

(ii) Exercise of Right of First Refusal. At any time within 30 days after receipt of the Notice, the Company and/or its assignee(s) shall deliver a written notice to the Holder indicating whether the Company and/or its assignee(s) elect to permit or reject the proposed sale or transfer, in full or in part, and/or elect to accept or decline the offer to purchase any or all of the Shares proposed to be sold or transferred to any one or more of the Proposed Transferees, at the Purchase Price, provided that if the Purchase Price consists of no legal consideration (as, for example, in the case of a transfer by gift), the purchase price will be the fair market value of the Shares as determined in good faith by the Company. If the Purchase Price includes consideration other than cash, the cash equivalent value of the non-cash consideration shall be determined by the Company in good faith.

 

2


(iii) Payment. Payment of the Purchase Price shall be made, at the election of the Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any outstanding indebtedness, or by any combination thereof within 60 days after receipt of the Notice or in the manner and at the times set forth in the Notice.

(iv) Holder’s Right to Transfer. If any of the Shares proposed in the Notice to be sold or transferred to a given Proposed Transferee are both (A) not purchased by the Company and/or its assignee(s) as provided in this Section 3(a) and (B) approved by the Company to be sold or transferred, then the Holder may sell or otherwise transfer any such Shares to the applicable Proposed Transferee at the Purchase Price or at a higher price, provided that such sale or other transfer is consummated within 120 days after the date of the Notice; provided that any such sale or other transfer is also effected in accordance with the Bylaw Provisions, the transfer restrictions set forth in the Plan and any Applicable Laws and the Proposed Transferee agrees in writing that the Plan, the Bylaw Provisions and the provisions of the Option Agreement and this Agreement, including this Section 3 and the waiver of statutory information rights in Section 8 shall continue to apply to the Shares in the hands of such Proposed Transferee. The Company, in consultation with its legal counsel, may require the Holder to provide an opinion of counsel evidencing compliance with Applicable Laws. If the Shares described in the Notice are not transferred to the Proposed Transferee within such period, or if the Holder proposes to change the price or other terms to make them more favorable to the Proposed Transferee, a new Notice shall be given to the Company, and the Company and/or its assignees shall again have the right to approve such transfer and be offered the Right of First Refusal.

(v) Exception for Certain Family Transfers. Anything to the contrary contained in this Section 3(a) notwithstanding, the transfer of any or all of the Shares during Holder’s lifetime or on Holder’s death by will or intestacy to Holder’s Immediate Family or a trust for the benefit of Holder’s Immediate Family shall be exempt from the provisions of this Section 3(a). “Immediate Family” as used herein shall mean lineal descendant or antecedent, spouse (or spouse’s antecedents), father, mother, brother or sister (or their descendants), stepchild (or their antecedents or descendants), aunt or uncle (or their antecedents or descendants), brother-in-law or sister-in-law (or their antecedents or descendants) and shall include adoptive relationships, or any person sharing Holder’s household (other than a tenant or an employee). In such case, the transferee or other recipient shall receive and hold the Shares so transferred subject to the provisions of the Plan, the Bylaw Provisions and the provisions of the Option Agreement and this Agreement, including this Section 3 and Section 8, and there shall be no further transfer of such Shares except in accordance with the terms of this Section 3, the Plan, and the Bylaw Provisions.

(b) Companys Right to Purchase upon Involuntary Transfer. In the event of any transfer by operation of law or other involuntary transfer (including death or divorce, but excluding a transfer to Immediate Family as set forth in Section 3(a)(v) above) of all or a portion of the Shares by the record holder thereof, the Company shall have an option to purchase any or all of the Shares transferred at the Fair Market Value of the Shares on the date of transfer (as determined by the Company in its sole discretion). Upon such a transfer, the Holder shall promptly notify the Secretary of the Company of such transfer. The right to purchase such Shares shall be provided to the Company for a period of 30 days following receipt by the Company of written notice from the Holder.

 

3


(c) Assignment. The right of the Company to purchase any part of the Shares may be assigned in whole or in part to any holder or holders of capital stock of the Company or other persons or organizations.

(d) Restrictions Binding on Transferees. All transferees of Shares or any interest therein will receive and hold such Shares or interest subject to the Plan, the Bylaw Provisions, the provisions of the Option Agreement and this Agreement, including, without limitation, Sections 3 and 8 of this Agreement, Section 7 of the Option Agreement and Section 12 of the Plan. Any sale or transfer of the Shares shall be void unless the provisions of this Agreement are satisfied.

(e) Termination of Rights. The transfer restrictions set forth in Section 3(a) above and Section 12 of the Plan, the Right of First Refusal granted the Company by Section 3(a) above and the right to repurchase the Shares in the event of an involuntary transfer granted the Company by Section 3(b) above shall terminate upon (i) the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (the “Securities Act”) (other than a registration statement relating solely to the issuance of Common Stock pursuant to a business combination or an employee incentive or benefit plan) or (ii) any transfer or conversion of Shares made pursuant to a statutory merger or statutory consolidation of the Company with or into another corporation or corporations if the common stock of the surviving corporation or any direct or indirect parent corporation thereof is registered under the Exchange Act. Upon termination of such transfer restrictions, the Company will remove any stop-transfer notices referred to in Section 6(b) below and related to the restrictions in this Section 3 and a new stock certificate or, in the case of uncertificated securities, notice of issuance, for the Shares not repurchased shall be issued, on request, without the legend referred to in Section 6(a)(ii) below and delivered to Holder.

(f) Lock-Up Agreement. The lock-up provisions set forth in Section 7 of the Option Agreement shall apply to the Shares issued upon exercise of the Option hereunder and Purchaser reaffirms Purchaser’s obligations set forth therein.

4. Investment and Taxation Representations. In connection with the purchase of the Shares, Purchaser represents to the Company the following:

(a) Purchaser is aware of the Company’s business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Shares. Purchaser is purchasing the Shares for investment for Purchaser’s own account only and not with a view to, or for resale in connection with, any “distribution” thereof within the meaning of the Securities Act or under any applicable provision of state law. Purchaser does not have any present intention to transfer the Shares to any other person or entity.

 

4


(b) Purchaser understands that the Shares have not been registered under the Securities Act by reason of a specific exemption therefrom, which exemption depends upon, among other things, the bona fide nature of Purchaser’s investment intent as expressed herein.

(c) Purchaser further acknowledges and understands that the securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Purchaser further acknowledges and understands that the Company is under no obligation to register the securities.

(d) Purchaser is familiar with the provisions of Rule 144, promulgated under the Securities Act, which, in substance, permits limited public resale of “restricted securities” acquired, directly or indirectly, from the issuer of the securities (or from an affiliate of such issuer), in a non-public offering subject to the satisfaction of certain conditions. Purchaser understands that the Company provides no assurances as to whether he or she will be able to resell any or all of the Shares pursuant to Rule 144, which rule requires, among other things, that the Company be subject to the reporting requirements of the Exchange Act, that resales of securities take place only after the holder of the Shares has held the Shares for certain specified time periods, and under certain circumstances, that resales of securities be limited in volume and take place only pursuant to brokered transactions. Notwithstanding this Section 4(d), Purchaser acknowledges and agrees to the restrictions set forth in Section 4(e) below.

(e) Purchaser further understands that in the event all of the applicable requirements of Rule 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rule 144 is not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rule 144 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk.

(f) Purchaser represents that Purchaser is not subject to any of the “Bad Actor” disqualifications described in Rule 506(d)(1)(i) to (viii) under the Securities Act. Purchaser also agrees to notify the Company if Purchaser becomes subject to such disqualifications after the date hereof.

(g) Purchaser understands that Purchaser may suffer adverse tax consequences as a result of Purchaser’s purchase or disposition of the Shares. Purchaser represents that Purchaser has consulted any tax consultants Purchaser deems advisable in connection with the purchase or disposition of the Shares and that Purchaser is not relying on the Company for any tax advice.

5. Voting Provisions. As a condition precedent to entering into this Agreement, at the request of the Company, Purchaser shall become a party to any voting agreement to which the Company is a party at the time of Purchaser’s execution and delivery of this Agreement, as such voting agreement may be thereafter amended from time to time (the “Voting Agreement”), by executing an adoption agreement or counterpart signature page agreeing to be bound by and subject to the terms of the Voting Agreement and to vote the Shares in the capacity of a “Common Holder” and a “Stockholder,” as such terms may be defined in the Voting Agreement.

 

5


6. Restrictive Legends and Stop-Transfer Orders.

(a) Legends. Any stock certificate or, in the case of uncertificated securities, any notice of issuance, for the Shares shall bear the following legends (as well as any legends required by the Company or applicable state and federal corporate and securities laws):

(i) “THE SECURITIES REFERENCED HEREIN HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE OR DISTRIBUTION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”

(ii) “THE SECURITIES REFERENCED HEREIN MAY BE TRANSFERRED ONLY IN ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH AND MAY BE OBTAINED FROM THE SECRETARY OF THE COMPANY AT NO CHARGE.”

(iii) THE TRANSFER OF THE SECURITIES REFERENCED HEREIN IS SUBJECT TO CERTAIN TRANSFER RESTRICTIONS SET FORTH IN THE COMPANY’S BYLAWS AND STOCK PLAN, COPIES OF WHICH MAY BE OBTAINED UPON WRITTEN REQUEST TO THE COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS. THE COMPANY SHALL NOT REGISTER OR OTHERWISE RECOGNIZE OR GIVE EFFECT TO ANY PURPORTED TRANSFER OF SECURITIES THAT DOES NOT COMPLY WITH SUCH TRANSFER RESTRICTIONS.”

(iv) Any legend required by the Voting Agreement, as applicable.

(b) Stop-Transfer Notices. Purchaser agrees that, in order to ensure compliance with the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions to its transfer agent, if any, and that, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.

(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.

(d) Required Notices. Purchaser acknowledges that the Shares are issued and shall be held subject to all the provisions of this Section 6, the Certificate of Incorporation and the Bylaws of the Company and any amendments thereto, copies of which are on file at the

 

6


principal office of the Company. A statement of all of the rights, preferences, privileges and restrictions granted to or imposed upon the respective classes and/or series of shares of stock of the Company and upon the holders thereof may be obtained by any stockholder upon request and without charge, at the principal office of the Company, and the Company will furnish any stockholder, upon request and without charge, a copy of such statement. Purchaser acknowledges that the provisions of this Section 6 shall constitute the notices required by Sections 151(f) and 202(a) of the Delaware General Corporation Law and the Purchaser hereby expressly waives the requirement of Section 151(f) of the Delaware General Corporation Law that it receive the written notice provided for in Sections 151(f) and 202(a) of the Delaware General Corporation Law within a reasonable time after the issuance of the Shares.

7. No Employment Rights. Nothing in this Agreement shall affect in any manner whatsoever the right or power of the Company, or a parent, subsidiary or affiliate of the Company, to terminate Purchaser’s employment or consulting relationship, for any reason, with or without cause.

8. Waiver of Statutory Information Rights. Purchaser acknowledges and understands that, but for the waiver made herein, Purchaser would be entitled, upon written demand under oath stating the purpose thereof, to inspect for any proper purpose, and to make copies and extracts from, the Company’s stock ledger, a list of its stockholders, and its other books and records, and the books and records of subsidiaries of the Company, if any, under the circumstances and in the manner provided in Section 220 of the Delaware General Corporation Law (any and all such rights, and any and all such other rights of Purchaser as may be provided for in Section 220, the “Inspection Rights”). In light of the foregoing, until the first sale of Common Stock of the Company to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, Purchaser hereby unconditionally and irrevocably waives the Inspection Rights, whether such Inspection Rights would be exercised or pursued directly or indirectly pursuant to Section 220 or otherwise, and covenants and agrees never to directly or indirectly commence, voluntarily aid in any way, prosecute, assign, transfer, or cause to be commenced any claim, action, cause of action, or other proceeding to pursue or exercise the Inspection Rights. The foregoing waiver applies to the Inspection Rights of Purchaser in Purchaser’s capacity as a stockholder and shall not affect any rights of a director, in his or her capacity as such, under Section 220. The foregoing waiver shall not apply to any contractual inspection rights of Purchaser under any written agreement with the Company.

9. Miscellaneous.

(a) Governing Law. The validity, interpretation, construction and performance of this Agreement, and all acts and transactions pursuant hereto and the rights and obligations of the parties hereto shall be governed, construed and interpreted in accordance with the laws of the state of California, without giving effect to principles of conflicts of law. For purposes of litigating any dispute that may arise directly or indirectly from this Agreement, the parties hereby submit and consent to the exclusive jurisdiction of the state of California and agree that any such litigation shall be conducted only in the courts of California or the federal courts of the United States located in California and no other courts.

 

7


(b) Entire Agreement. This Agreement sets forth the entire agreement and understanding of the parties relating to the subject matter herein and supersedes all prior or contemporaneous discussions, understandings and agreements, whether oral or written, between them relating to the subject matter hereof.

(c) Amendments and Waivers. No modification of or amendment to this Agreement, nor any waiver of any rights under this Agreement, shall be effective unless in writing signed by the parties to this Agreement. No delay or failure to require performance of any provision of this Agreement shall constitute a waiver of that provision as to that or any other instance.

(d) Successors and Assigns. Except as otherwise provided in this Agreement, this Agreement, and the rights and obligations of the parties hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights and obligations under this Agreement. No other party to this Agreement may 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.

(e) Notices. Any notice, demand or request required or permitted to be given under this Agreement shall be in writing and shall be deemed sufficient when delivered personally or by overnight courier or sent by email, or 48 hours after being deposited in the U.S. mail as certified or registered mail with postage prepaid, addressed to the party to be notified at such party’s address as set forth on the signature page, as subsequently modified by written notice, or if no address is specified on the signature page, at the most recent address set forth in the Company’s books and records.

(f) Severability. If one or more provisions of this Agreement are held to be unenforceable under Applicable Laws, the parties agree to renegotiate such provision in good faith. In the event that the parties cannot reach a mutually agreeable and enforceable replacement for such provision, then (i) such provision shall be excluded from this Agreement, (ii) the balance of the Agreement shall be interpreted as if such provision were so excluded and (iii) the balance of the Agreement shall be enforceable in accordance with its terms.

(g) Construction. This Agreement is the result of negotiations between and has been reviewed by each of the parties hereto and their respective counsel, if any; accordingly, this Agreement shall be deemed to be the product of all of the parties hereto, and no ambiguity shall be construed in favor of or against any one of the parties hereto.

(h) Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be deemed an original, and all of which together shall constitute one and the same agreement. Execution of a facsimile or scanned copy will have the same force and effect as execution of an original, and a facsimile or scanned signature will be deemed an original and valid signature.

 

8


(i) Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to this Agreement or any notices required by applicable law or the Company’s Certificate of Incorporation or Bylaws by email or any other electronic means. Purchaser hereby consents to (i) conduct business electronically (ii) receive such documents and notices by such electronic delivery and (iii) sign documents electronically and agrees to participate through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

The parties have executed this Exercise Agreement as of the date first set forth above.

 

THE COMPANY:
FISKER INC.
By:  

                          

  Henrik Fisker
  President
PURCHASER:

 

Name:
Address:

 

 

Email:                                                                            

 

9


I, ____________________, spouse of _________________________ (“Purchaser”), have read and hereby approve the foregoing Agreement. In consideration of the Company’s granting my spouse the right to purchase the Shares as set forth in the Agreement, I hereby agree to be bound irrevocably by the Agreement and further agree that any community property or other such interest that I may have in the Shares shall hereby be similarly bound by the Agreement. I hereby appoint my spouse as my attorney-in-fact with respect to any amendment or exercise or waiver of any rights under the Agreement.

 

 

Spouse of Purchaser (if applicable)

 

10

Exhibit 16.1

November 4, 2020

Office of the Chief Accountant

Securities and Exchange Commission

100 F Street, NE

Washington, D.C. 20549

Ladies and Gentlemen:

We have read Fisker Inc. statements (formally known as Spartan Energy Acquisition Corp.) included under Item 4.01 of its Form 8-K dated November 4, 2020. We agree with the statements concerning our Firm under Item 4.01, in which we were informed of our dismissal on October 29, 2020. We are not in a position to agree or disagree with other statements contained therein.

 

Very truly yours,
/s/ WithumSmith+Brown, PC
New York, New York

Exhibit 21.1

Fisker Inc. Subsidiaries

Fisker Group Inc.– Delaware

Exhibit 99.1

SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING DATA OF FISKER

The selected historical condensed consolidated statements of operations data of Legacy Fisker for the nine months ended September 30, 2020 and 2019 and the condensed consolidated balance sheet data as of September 30, 2020 are derived from Legacy Fisker’s unaudited interim condensed consolidated financial statements included elsewhere in this Form 8-K. The selected historical consolidated statements of operations data of Legacy Fisker for the years ended December 31, 2019 and 2018 and the historical consolidated balance sheet data as of December 31, 2019 and 2018 are derived from Legacy Fisker’s audited consolidated financial statements included elsewhere in this Form 8-K. In Legacy Fisker management’s opinion, the unaudited interim condensed consolidated financial statements include all adjustments necessary to state fairly Legacy Fisker’s financial position as of September 30, 2020 and the results of operations for the nine months ended September 30, 2020 and 2019. Legacy Fisker’s historical results are not necessarily indicative of the results that may be expected in the future and Legacy Fisker’s results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any other period. You should read the following selected historical consolidated financial data together with “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Legacy Fisker” and Legacy Fisker’s consolidated financial statements and related notes included elsewhere in this Form 8-K.

The financial information contained in this section relates to Legacy Fisker, prior to and without giving pro forma effect to the impact of the Business Combination and, as a result, the results reflected in this section may not be indicative of our results going forward. See the section entitled “Unaudited Pro Forma Condensed Combined Financial Information” included elsewhere in this Form 8-K.

 

Statement of Operations Data    For The Nine
months Ended
September 30,
2020
    For The Nine
months Ended
September 30,
2019
    For The Year
Ended December 31,
2019
    For The Year
Ended December 31,
2018
 
     (in actual dollars and shares)  

Revenue

   $ —       $ —       $ —       $ —    

General and administrative

     8,055,515       2,882,451       3,625,833       1,475,613  

Research and development

     3,962,711       4,942,532       6,961,981       1,938,871  
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss from operations

     (12,018,226     (7,824,983     (10,587,814     (3,414,484

Other income (expense):

        

Other income (expense)

     15,000       —         575       (21,000

Interest income

     13,460       7,088       8,503       7,427  

Interest expense

     (1,326,370     (19,728     (177,997     (1,590

Change in fair value of embedded derivative

     (405,567     (8,904     (79,751     —    

Change in fair value of convertible equity security

     (29,003,494     —         —         —    

Foreign currency gain (loss)

     121,695       (15,340     (42,266     (1,298
  

 

 

   

 

 

   

 

 

   

 

 

 

Net Loss

   $ (42,603,502   $ (7,861,867   $ (10,878,750   $ (3,430,945
  

 

 

   

 

 

   

 

 

   

 

 

 

Deemed dividend attributable to preferred stock

     —         —         —         (1,222,368
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss attributable to common shareholders

   $ (42,603,502   $ (7,861,867   $ (10,878,750   $ (4,653,313
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding of Class A common stock

     94,754       51,837       57,139       20,040  

Weighted average shares outstanding of Class B common stock

     38,727,340       38,727,340       38,727,340       38,727,340  

Net loss per share attributable to Class A and Class B Common shareholders- Basic and Diluted

   $ (1.10   $ (0.20   $ (0.28   $ (0.12
  

 

 

   

 

 

   

 

 

   

 

 

 

 

Balance Sheet Data    September 30, 2020     December 31, 2019     December 31, 2018  

Total assets

   $ 47,948,757     $ 2,076,427     $ 5,651,302  

Total liabilities

     96,257,899       8,198,823       987,749  

Total temporary equity

     11,020,683       11,020,683       11,020,683  

Total stockholders’ deficit

     (59,329,825     (17,143,079     (6,357,130


SELECTED HISTORICAL FINANCIAL INFORMATION OF SPARTAN

The selected historical condensed statements of operations data of Spartan for the nine months ended September 30, 2020 and 2019 and the condensed balance sheet data as of September 30, 2020 are derived from Spartan’s unaudited interim condensed financial statements included elsewhere in this Form 8-K. The selected historical statements of operations data of Spartan for the years ended December 31, 2019 and 2018 and the historical balance sheet data as of December 31, 2019 and 2018 are derived from Spartan’s audited financial statements included elsewhere in this Form 8-K. In Spartan management’s opinion, the unaudited interim condensed financial statements include all adjustments necessary to state fairly Spartan’s financial position as of September 30, 2020 and the results of operations for the nine months ended September 30, 2020 and 2019.

Spartan’s historical results are not necessarily indicative of the results that may be expected in the future and Spartan’s results for the nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2020 or any other period. The information below is only a summary and should be read in conjunction with the sections entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Spartan” and “Information About Spartan” and the financial statements, and the notes and schedules related thereto, which are included elsewhere in this Form 8-K. In connection with the Business Combination, Legacy Fisker was determined to be the accounting acquirer.

 

Statement of Operations Data    For the Nine
months Ended
September 30,
2020
    For the Nine
months Ended
September 30,
2019
    For the
Year ended
December 31,
2019
    For the
Year ended
December 31,
2018
 
     (in actual dollars and shares)  

Revenue

   $ —       $ —       $ —       $ —    

Expenses

      

Administrative fee—related party

     90,000       90,000       120,000       40,000  

General and administrative expenses

     4,248,250       1,021,755       1,132,661       811,091  

Other Income

      

Investment income from Trust Account

     4,554,058       9,927,002       12,654,638       4,375,763  

Interest income

     2,387       19,400       22,557       6,947  

Income tax provision

     (924,823     (2,053,257     (2,615,474     (878,369
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ (706,628   $ 6,781,390     $ 8,809,060     $ 2,653,250  

Weighted average shares outstanding of Class A common stock

     55,198,449       55,200,000       55,200,000       55,200,000  

Basic and diluted net income per share, Class A

   $ 0.06     $ 0.14     $ 0.18     $ 0.06  

Weighted average shares outstanding of Class B common stock

     13,800,000       13,800,000       13,800,000       13,800,000  

Basic and diluted net loss per share, Class B

   $ (0.31   $ (0.07   $ (0.07   $ (0.05

 

Balance Sheet Data    September 30, 2020      December 31, 2019      December 31, 2018  

Total assets

   $ 569,245,438      $ 565,975,181      $ 557,475,687  

Total liabilities

     23,689,808        19,636,001        19,945,567  

Value of Class A Common Stock that may be redeemed in connection with an initial business combination

     540,555,620        541,339,170        532,530,110  

Total stockholders’ equity

     5,000,010        5,000,010        5,000,010  
Index to Financial Statements

Exhibit 99.2

FISKER INC. AND SUBSIDIARIES

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

     Page  

Unaudited Condensed Consolidated Financial Statements

  

Unaudited Condensed Consolidated Balance Sheets as of September  30, 2020 and December 31, 2019

     F-2  

Unaudited Condensed Consolidated Statements of Operations for the nine months ended September 30, 2020 and 2019

     F-4  

Unaudited Condensed Consolidated Statements of Temporary Equity and Stockholders’ Deficit for the nine months ended September 30, 2020 and 2019

     F-5  

Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019

     F-6  

Notes to Unaudited Condensed Consolidated Financial Statements

     F-7  

 

F-1


Index to Financial Statements

Fisker Inc. and Subsidiaries

Unaudited Condensed Consolidated Balance Sheets

 

     As of
September 30, 2020
     As of
December 31, 2019
 

ASSETS

     

Current assets:

     

Cash and cash equivalents

   $ 44,976,281      $ 1,858,093  

Prepaid expenses and other current assets

     2,675,593        18,401  
  

 

 

    

 

 

 

Total current assets

     47,651,874        1,876,494  
  

 

 

    

 

 

 

Non-current assets:

     

Property and equipment, net

     262,784        65,261  

Right-of-use asset, net

     34,099        134,672  
  

 

 

    

 

 

 

Total non-current assets

     296,883        199,933  
  

 

 

    

 

 

 

TOTAL ASSETS

   $  47,948,757      $  2,076,427  
  

 

 

    

 

 

 

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

     

Current liabilities:

     

Accounts payable

   $ 674,210      $ 2,134,696  

Accrued expenses

     2,676,788        927,516  

Founders demand note payable

     —          250,000  

Convertible equity security

     79,003,494        —    

Bridge notes payable, current

     10,927,368        —    

Lease liabilities

     36,331        143,599  
  

 

 

    

 

 

 

Total current liabilities

     93,318,191        3,455,811  
  

 

 

    

 

 

 

Non-current liabilities:

     

Bridge notes payable, non-current

     —          3,797,200  

Customer deposits

     2,939,708        945,812  
  

 

 

    

 

 

 

Total non-current liabilities

     2,939,708        4,743,012  
  

 

 

    

 

 

 

Total liabilities

     96,257,899        8,198,823  
  

 

 

    

 

 

 

COMMITMENTS AND CONTINGENCIES (NOTE 18)

     

Temporary equity:

     

Series A Convertible Preferred stock, $0.00001 par value; 6,252,530 shares authorized, issued and outstanding as of September 30, 2020 and December 31, 2019 (liquidation value of $4,676,892 as of September 30, 2020 and December 31, 2019)

     4,634,416        4,634,416  

 

F-2


Index to Financial Statements

Series B Convertible Preferred stock, $0.00001 par value; 2,126,750 shares authorized, 1,386,370 shares issued and outstanding as of September 30, 2020 and December 31, 2019 (liquidation value of $6,518,712 as of September 30, 2020 and December 31, 2019)

     6,386,267       6,386,267  

Stockholders’ deficit:

    

Founders Convertible Preferred stock, $0.00001 par value; 10,000,000 shares authorized, issued and outstanding as of September 30, 2020 and December 31, 2019

     100       100  

Class A Common stock, $0.00001 par value; 150,000,000 shares authorized; 131,746 and 77,631 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively

     1       —    

Class B Common Stock, $0.00001 par value; 40,000,000 shares authorized; 38,727,340 shares issued and outstanding as of September 30, 2020 and December 31, 2019

     387       387  

Additional paid-in capital

     1,173,234       756,479  

Accumulated deficit

     (60,503,547     (17,900,045
  

 

 

   

 

 

 

Total stockholders’ deficit

     (59,329,825     (17,143,079
  

 

 

   

 

 

 

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

   $ 47,948,757     $ 2,076,427  
  

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-3


Index to Financial Statements

Fisker Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Operations

 

     Nine Months Ended September 30,  
     2020     2019  

Operating costs and expenses:

    

General and administrative

   $ 8,055,515     $ 2,882,451  

Research and development

     3,962,711       4,942,532  
  

 

 

   

 

 

 

Total operating costs and expenses

     12,018,226       7,824,983  
  

 

 

   

 

 

 

Loss from operations

     (12,018,226     (7,824,983

Other income (expense):

    

Other income

     15,000       —    

Interest income

     13,460       7,088  

Interest expense

     (1,326,370     (19,728

Change in fair value of embedded derivative

     (405,567     (8,904

Change in fair value of convertible equity security

     (29,003,494     —    

Foreign currency gain (loss)

     121,695       (15,340
  

 

 

   

 

 

 

Total other expense

     (30,585,276     (36,884
  

 

 

   

 

 

 

Net loss

   $  (42,603,502)     $  (7,861,867)  
  

 

 

   

 

 

 

Net loss per common share

    

Net loss per share attributable to Class A and Class B Common stockholders- Basic and Diluted

   $ (1.10)     $ (0.20)  

Weighted average shares outstanding

    

Weighted average Class A and Class B Common shares outstanding- Basic and Diluted

     38,822,094       38,779,177  

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-4


Index to Financial Statements

Fisker Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Temporary Equity and Stockholders’ Deficit

 

                                                                                                                                                                                                  
                                                    Class B Common Stock    

Additional

Paid-in

         

Total

Stockholders’

 
    Series A Convertible Preferred     Series B Convertible Preferred     Founders Convertible Preferred     Class A Common Stock     Accumulated
Deficit
 
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit  

Balance at December 31, 2019

    6,252,530     $  4,634,416       1,386,370     $  6,386,267       10,000,000     $  100       77,631     $  —         38,727,340     $  387     $ 756,479     $ (17,900,045   $  (17,143,079)  

Stock-based compensation

    —         —         —         —         —         —         —         —         —         —         334,011       —         334,011  

Exercise of stock options

    —         —         —         —         —         —         54,115       1       —         —         82,744       —         82,745  

Net loss

    —         —         —         —         —         —         —         —         —         —         —         (42,603,502     (42,603,502
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2020

    6,252,530     $ 4,634,416       1,386,370     $ 6,386,267       10,000,000     $ 100       131,746     $ 1       38,727,340     $ 387     $  1,173,234     $  (60,503,547)     $ (59,329,825)  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

                                                               

Additional

Paid-in

         

Total

Stockholders’

 
    Series A Convertible Preferred     Series B Convertible Preferred     Founders Convertible Preferred     Class A Common Stock     Class B Common Stock     Accumulated
Deficit
 
    Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Shares     Amount     Capital     Deficit  

Balance at December 31, 2018

    6,252,530     $ 4,634,416       1,386,370     $  6,386,267       10,000,000     $  100       34,272     $  —         38,727,340     $  387     $  663,678     $  (7,021,295)     $  (6,357,130)  

Stock-based compensation

    —         —         —         —         —         —         —         —         —         —         43,615       —         43,615  

Exercise of stock options

    —         —         —         —         —         —         32,374       —         —         —         5,850       —         5,850  

Net loss

    —         —         —         —         —         —         —         —         —         —         —         (7,861,867     (7,861,867
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance at September 30, 2019

    6,252,530     $ 4,634,416       1,386,370     $ 6,386,267       10,000,000     $ 100       66,646     $ —         38,727,340     $ 387     $ 713,143     $  (14,883,162)     $ (14,169,532
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-5


Index to Financial Statements

Fisker Inc. and Subsidiaries

Unaudited Condensed Consolidated Statements of Cash Flows

 

     Nine Months Ended September 30,  
     2020     2019  

Cash Flows from Operating Activities:

    

Net loss

   $  (42,603,502)     $  (7,861,867)  

Reconciliation of net loss to net cash used in operating activities:

    

Stock-based compensation

     334,011       43,615  

Depreciation and amortization

     26,169       18,435  

Amortization of right-of-use asset

     100,573       97,266  

Amortization of debt discount

     1,091,033       14,876  

Change in fair value of embedded derivative

     405,567       8,904  

Change in fair value of convertible equity security

     29,003,494       —    

Reclassification of expensed payments to arrangers of convertible security

     3,500,000       —    

Unrealized loss on foreign currency

     11,835       —    

Changes in operating assets and liabilities:

    

Prepaid expenses and other current assets

     (744,634     19,281  

Accounts payable and accrued expenses

     (952,660     2,704,783  

Customer deposits

     1,993,896       144,643  

Change in operating lease liability

     (107,268     (100,766
  

 

 

   

 

 

 

Net cash used in operating activities

     (7,941,486     (4,910,830
  

 

 

   

 

 

 

Cash Flows from Investing Activities:

    

Purchase of property and equipment

     (223,692     (13,890
  

 

 

   

 

 

 

Net cash used in investing activities

     (223,692     (13,890
  

 

 

   

 

 

 

Cash Flows from Financing Activities:

    

Proceeds from the issuance of bridge notes

     5,371,733       1,082,788  

Proceeds from issuance of convertible equity security, net

     46,500,000       —    

Payments of deferred offering costs

     (671,112     —    

Proceeds from the exercise of stock options

     82,745       5,850  
  

 

 

   

 

 

 

Net cash provided by financing activities

     51,283,366       1,088,638  
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     43,118,188       (3,836,082

Cash and cash equivalents, beginning of the period

     1,858,093       5,545,663  
  

 

 

   

 

 

 

Cash and cash equivalents, end of the period

   $ 44,976,281     $ 1,709,581  
  

 

 

   

 

 

 

Non-cash financing activities

    

Issuance of bridge note for founders demand note

   $ 250,000     $ —    
  

 

 

   

 

 

 

Deferred offering costs in prepaid assets and accounts payable and accrued expenses

   $ 1,241,445     $ —    
  

 

 

   

 

 

 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

 

F-6


Index to Financial Statements

Fisker Inc. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

(Information as of September 30, 2020 and for the nine months ended September 30, 2020 and 2019 is unaudited. Information as of December 31, 2019 is derived from the audited financial statements)

1. Overview of the Company

Fisker Inc. (“Fisker” or the “Company”) was incorporated in the state of Delaware on September 21, 2016. The Company is currently designing and developing sustainable electric vehicles. The Company is currently accepting reservations for the Fisker Ocean.

In connection with its formation, the Company entered into stock purchase agreements with the Company’s founders, whereby the founders contributed certain IP (primarily trademarks) and interests in Platinum IPR LLC. Platinum IPR LLC is an entity solely owned by the Company’s founders, which held Fisker trademarks registered in a variety of jurisdictions around the world. The founders’ transfer of its interest in Platinum IPR LLC and the transfer of trademarks was accounted for as a transfer of assets between entities under common control. The carrying amount of the transferred assets is recorded based on the prior carrying value, which was de minimis.

In December 2018, the Company effected a 10-for-1 stock split of its outstanding common and preferred stock, and a proportional adjustment to the existing conversion ratios for each series of preferred stock was made at the time of the effectiveness of the reverse stock split. Accordingly, all share and per share amounts for all periods presented in these condensed consolidated financial statements and notes thereto, have been adjusted retroactively, where applicable, to reflect this reverse stock split and adjustment of the preferred stock conversion ratio.

On July 10, 2020, the Company entered into a Business Combination Agreement and Plan of Reorganization (as amended, the “Merger”) with Spartan Energy Acquisition Corp., a Delaware corporation (“Spartan”). On October 29, 2020, the Company and Spartan consummated the Merger and the Company is now a wholly-owned subsidiary of Spartan, subsequently renamed “Fisker Inc.” The Merger is further described in Note 19.

Going Concern, Liquidity and Capital Resources

The Company evaluated whether there are any conditions and events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern over the next twelve months through November 2021. Since inception, the Company has incurred significant losses of approximately $60.5 million. As of September 30, 2020, the Company had approximately $45.0 million in cash and cash equivalents. The Company expects to continue to incur significant operating losses for the foreseeable future. The Company has historically funded its operations primarily through the sale of convertible debt and equity securities. However, based on anticipated spend and cash received from the Merger and timing of expenditure assumptions, the Company currently expects that its cash will be sufficient to fund its operating expenses and capital expenditure requirements for at least the next 12 months from issuance.

2. Summary of Significant Accounting Policies

Basis of Presentation

The Company’s condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”) as determined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) and pursuant to the regulations of the U.S. Securities and Exchange Commission (“SEC”).

Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities in the condensed consolidated financial statements and accompanying notes. The Company bases these estimates on historical experience and on various other assumptions that it believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates.

 

F-7


Index to Financial Statements

Unaudited Interim Condensed Consolidated Financial Statements

The accompanying interim condensed consolidated balance sheet as of September 30, 2020, the interim condensed consolidated statements of temporary equity and stockholders’ deficit and the interim condensed consolidated statements of operations for the nine months ended September 30, 2020 and 2019, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2020 and 2019, are unaudited. The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited annual consolidated financial statements and, in management’s opinion, include all adjustments consisting of only normal recurring adjustments necessary for the fair statement of the Company’s financial position as of September 30, 2020 and its results of operations for the nine months ended September 30, 2020 and 2019 and cash flows for the nine months ended September 30, 2020 and 2019. The financial data and the other financial information disclosed in the notes to these condensed consolidated financial statements related to the nine-month periods are also unaudited. The results of operations for the nine months ended September 30, 2020 are not necessarily indicative of the results to be expected for the full fiscal year or any other period.

These unaudited interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the related notes included in the Company’s annual financial statements for the fiscal year ended December 31, 2019.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU No. 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. ASU No. 2019-12 removes certain exceptions to the general principles in ASC 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. This guidance introduces a new model for recognizing credit losses on financial instruments based on an estimate of current expected credit losses. This AU also provides updated guidance regarding the impairment of available-for-sale debt securities and includes additional disclosure requirements. The new guidance is effective for non-public companies, and public business entities that meet the definition of a Smaller Reporting Company as defined by the Securities and Exchange Commission, for interim and annual periods beginning after December 15, 2022. The Company is currently evaluating the impact of this standard on its condensed consolidated financial statements.

 

F-8


Index to Financial Statements

3. Fair Value Measurements

The Company’s financial assets and liabilities subject to fair value measurements on a recurring basis and the level of inputs used for such measurements were as follows:

 

     Fair Value Measured as of September 30, 2020 Using:         
     Level 1      Level 2      Level 3      Total  

Assets included in:

           

Money market funds included in cash and cash equivalents

   $ 32,513,006      $  —        $  —        $ 32,513,006  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fair value

   $ 32,513,006      $ —        $ —        $ 32,513,006  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities included in:

           

Embedded derivative in bridge notes

   $ —        $ —        $ 3,664,848      $ 3,664,848  

Convertible equity security

     —          —          79,003,494        79,003,494  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fair value

   $ —        $ —        $ 82,668,342      $ 82,668,342  
  

 

 

    

 

 

    

 

 

    

 

 

 
     Fair Value Measured as of December 31, 2019 Using:         
     Level 1      Level 2      Level 3      Total  

Assets included in:

           

Money market funds included in cash and cash equivalents

   $ 1,731,455      $ —        $ —        $ 1,731,455  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fair value

   $ 1,731,455      $ —        $ —        $ 1,731,455  
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities included in:

           

Embedded derivative in bridge notes

   $ —        $  —        $ 1,325,049      $ 1,325,049  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total fair value

   $ —        $ —        $ 1,325,049      $ 1,325,049  
  

 

 

    

 

 

    

 

 

    

 

 

 

The fair value of the Company’s money market funds is determined using quoted market prices in active markets for identical assets.

The carrying amounts included in the Condensed Consolidated Balance Sheets under Current assets approximate fair value because of the short maturity of these instruments.

The carrying amount of bridge notes approximate fair value due to management’s opinion that current rates and terms that would be available to the Company with the same maturity and security structure would be essentially equivalent to that of the Company’s bridge notes. Certain features of the bridge notes were determined to be an embedded derivative requiring separate measurement from the loan host instrument.

The Company measures the embedded derivative liability and the convertible equity security at fair value based on significant inputs not observable in the market, which causes it to be classified as a Level 3 measurement within the fair value hierarchy. The valuation of the embedded derivative and the convertible equity security use assumptions and estimates the Company believes would be made by a market participant in making the same valuation. The Company assess these assumptions and estimates on an on-going basis as additional data impacting the assumptions and estimates are obtained. Changes in the fair value of the embedded derivative and convertible equity security related to updated assumptions and estimates are recognized within the Condensed Consolidated Statements of Operations.

The embedded derivative liability and convertible equity security may change significantly as additional data is obtained, impacting the Company’s assumptions regarding probabilities of outcomes used to estimate the fair value of the liability. In evaluating this information, considerable judgment is required to interpret the data used to develop the assumptions and estimates. The estimates of fair value may not be indicative of the amounts that could be realized in a current market exchange. Accordingly, the use of different market assumptions and/or different valuation techniques may have a material effect on the estimated fair value amounts, and such changes could materially impact the Company’s results of operations in future periods.

 

F-9


Index to Financial Statements

Level 3 Disclosures

The following table provides quantitative information associated with the fair value measurement of the Company’s Level 3 inputs:

 

    

Fair Value as of
September 30, 2020

  

Valuation
Technique

  

Unobservable
Input Description

  

Input

Embedded derivative in bridge notes

   $3,664,848    Probability-adjusted discounted cash flow    Probabilities of Completion of Next Equity Financing    100%
         Period in which outcomes are expected to be achieved    0.1 years
         Discount rate    11.5%—16.7%

Convertible equity security

   $79,003,494    Probability-adjusted market approach   

Probabilities

of Conversion into

Series C Preferred

Stock

   15%
        

Probabilities

of Conversion upon

Merger

   85%

The fair value of the embedded derivative liability represents the fair value of the Company’s liability for all potential payments if the holders of the bridge notes elected to convert into cash or shares of common stock. The significant unobservable inputs used in the fair value measurement of the Company’s embedded derivative liability are the probabilities of the Company’s closing of the sale of capital stock on or prior to the bridge notes’ maturity dates, resulting in gross proceeds in excess of at least $20.0 million (the “Completion of the Next Equity Financing”), which would trigger conversion of the embedded derivative liability, probabilities as to the periods in which the outcomes are expected to be achieved and a discount rate. Significant changes in any of the probabilities of the Completion of the Next Equity Financing or significant changes in the period in which outcomes are expected to be achieved would result in a significantly higher or lower fair value measurement, respectively.

The fair value of the convertible equity security represents the fair value of the potential common stock to be issued to the holder of the convertible equity security in the event of a SPAC transaction or conversion to shares of a to-be-issued Series C preferred stock. The significant unobservable input used in the fair value measurement of the Company’s convertible equity security is the probability of the Company’s closing of a SPAC transaction, which would trigger conversion of the convertible equity security. Significant changes in any of the probabilities of the SPAC transaction would result in a significantly higher or lower fair value measurement, respectively.

The following table presents changes in Level 3 liabilities measured at fair value for the nine months ended September 30, 2020 and 2019:

 

     Embedded derivative
in bridge notes
     Convertible equity
security
     Total  

Balance, December 31, 2019

   $ 1,325,049      $ —        $ 1,325,049  

Issuance of bridge notes

     1,934,232        —          1,934,232  

Issuance of Convertible equity security

     —          50,000,000        50,000,000  

Change in fair value

     405,567        29,003,494        29,409,061  
  

 

 

    

 

 

    

 

 

 

Balance, September 30, 2020

   $ 3,664,848      $ 79,003,494      $ 82,668,342  
  

 

 

    

 

 

    

 

 

 

 

F-10


Index to Financial Statements
     Embedded derivative
in bridge notes
 

Balance, December 31, 2018

   $ —    

Issuance of bridge notes

     405,718  

Change in fair value

     8,904  
  

 

 

 

Balance, September 30, 2019

   $ 414,622  
  

 

 

 

For the nine months ended September 30, 2020 and 2019, the changes in the fair value of the embedded derivative liability resulted from an adjustment to the remaining period to the expected outcome and probabilities of completion. For the nine months ended September 30, 2020, the changes in the fair value of the convertible equity security resulted from changes in price of Spartan’s common stock and an adjustment to the probabilities of completion of a SPAC transaction. No other changes in valuation techniques or inputs occurred during the nine months ended September 30, 2020.

4. Prepaid expenses and other current assets

Prepaid expenses and other current assets consists of the following as of September 30, 2020 and as of December 31, 2019:

 

     As of September 30,      As of December 31,  
     2020      2019  

Prepaid insurance

   $ 595,000      $ —    

Deferred offering costs

     1,912,235        —    

Other prepaid expenses and other current assets

     168,358        18,401  
  

 

 

    

 

 

 
   $  2,675,593      $  18,401  
  

 

 

    

 

 

 

5. Property and Equipment, net

Property and equipment, net, consists of the following as of September 30, 2020 and as of December 31, 2019:

 

     As of September 30,      As of December 31,  
     2020      2019  

Leasehold improvements

   $ 59,485      $ 59,485  

Furniture and fixtures

     45,377        45,377  

Computer equipment

     235,354        11,662  
  

 

 

    

 

 

 

Total property and equipment

     340,216        116,524  

Less: Accumulated depreciation and amortization

     (77,432      (51,263
  

 

 

    

 

 

 

Property and equipment, net

   $ 262,784      $ 65,261  
  

 

 

    

 

 

 

Depreciation and amortization expense for the nine months ended September 30, 2020 and 2019 was $26,169 and $18,435, respectively.

6. Leases

The Company currently leases its headquarters space in the Los Angeles area under a single lease classified as an operating lease expiring on December 30, 2020. Fixed rent escalates each year, but the Company is not responsible for any portion of the landlord’s operating expenses. Under the lease, the Company has one 18-month renewal option with specified fixed rent, which has not been included in the calculation of lease liabilities and right of use assets; at the adoption date, exercise of the option was not reasonably certain. This lease does not have any contingent rent payments, does not impose any financial restrictions, and does not contain residual value guarantees.

 

F-11


Index to Financial Statements

The Company does not act as a lessor or have any leases classified as financing leases.

At September 30, 2020 and December 31, 2019, the Company had operating lease liabilities of $36,331 and $143,599, respectively, and right-of-use assets of $34,099 and $134,672, respectively, in the Condensed Consolidated Balance Sheets.

The tables below present information regarding the Company’s lease assets and liabilities:

 

     As of September 30,      As of December 31,  
     2020      2019  

Assets:

     

Operating lease right-of-use assets

   $ 34,099      $ 134,672  

Liabilities:

     

Current

     

Operating

   $ 36,331      $ 143,599  

The components of lease related expense are as follows:

 

     Nine months ended September 30,  
     2020      2019  

Lease costs:

     

Operating lease expense

   $ 102,880      $ 102,880  

Short-term lease expense

     9,750        9,450  

Variable rent concession

     (1,340      —    
  

 

 

    

 

 

 

Total lease costs

   $ 111,290      $ 112,330  
  

 

 

    

 

 

 

The components of supplemental cash flow information related to leases are as follows:

 

     Nine months ended September 30,  
     2020     2019  

Cash flow information:

    

Cash paid for amounts included in the measurement of lease liabilities:

    

Operating cash flows from operating leases

   $ 109,575     $ 106,380  

Non-cash activity:

    

ROU asset obtained in exchange for lease obligations

   $ —       $ 264,900  

Other Information

    

Weighted average remaining lease term (in years)

     0.25       1.25  

Weighted average discount rate

     3.20     3.20

 

F-12


Index to Financial Statements

Future minimum payments during the next five years and thereafter are as follows:

 

     Operating
Leases
 

Three Months Ended December 31, 2020

   $ 36,525  

Year Ended December 31, 2021

     —    

Year Ended December 31, 2022

     —    

Year Ended December 31, 2023

     —    

Year Ended December 31, 2024

     —    

Thereafter

     —    
  

 

 

 

Total

     36,525  

Less present value discount

     (194
  

 

 

 

Operating lease liabilities

   $ 36,331  
  

 

 

 

The Company’s lease agreement does not provide an implicit rate, so the Company used an estimated incremental borrowing rate, which was derived from third-party information available at the time the Company adopted ASC 842, in determining the present value of lease payments. The rate used is for a secured borrowing of a similar term as the lease.

7. Accrued Expenses

A summary of the components of accrued expenses is as follows:

 

     As of September 30,      As of December 31,  
     2020      2019  

Accrued payroll

     178,954        84,726  

Accrued professional fees

     2,218,781        39,396  

Accrued research and development

     —          9,853  

Accrued interest

     276,217        42,305  

Accrued other

     2,836        1,236  

Accrued legal settlement

     —          750,000  
  

 

 

    

 

 

 

Total accrued liabilities

   $ 2,676,788      $ 927,516  
  

 

 

    

 

 

 

8. Customer Deposits

Customer deposits consists of the following as of September 30, 2020 and as of December 31, 2019:

 

     As of September 30,      As of December 31,  
     2020      2019  

Customer reservation deposits

   $ 2,185,725      $ 466,500  

Customer SUV option

     753,983        479,312  
  

 

 

    

 

 

 

Total customer deposits

   $ 2,939,708      $ 945,812  
  

 

 

    

 

 

 

9. Founders Demand Note

In connection with the Company formation in September 2016, HF Holdco LLC, an entity controlled by Henrik Fisker, the Company’s Chief Executive Officer and founder, and Dr. Geeta Gupta, the Company’s Chief Financial Officer and founder, advanced the Company $250,000 in the form of a demand note.

In May 2020, in satisfaction of the advances made by HF Holdco LLC, the Company issued a bridge note payable to HF Holdco LLC with the principal sum of $250,000. The bridge note bears substantially the same terms as the bridge notes payable as described in Note 10.

 

F-13


Index to Financial Statements

As of December 31, 2019, the entire amount of the founder demand note is outstanding.

10. Bridge Notes Payable

From July 2019 to September 2020, the Company entered into note agreements with investors. As of September 30, 2020 and December 31, 2019, the aggregate principal amount of the bridge notes is approximately $10.0 million and $4.1 million, respectively, which are due July 29, 2021, with simple interest rate of 5% per annum. All notes mature in less than twelve months from September 30, 2020. The outstanding principal and any accrued but unpaid interest under the bridge notes shall be automatically converted into equity securities issued by the Company at the initial closing of the Company’s next sale of capital stock occurring on or prior to the notes’ maturity date resulting in gross proceeds in excess of at least $20.0 million, (the “Next Equity Financing”), at an exchange price equal to 75% of the per share price received from investors in the Next Equity Financing.

In June 2020, the Company entered into an amendment to the note agreements with holders of the Company’s outstanding bridge notes to provide for amendments to the definition of the Next Equity Financing such that in the event of a Special Purpose Acquisition Corporation (“SPAC”) Transaction, as defined, prior to repayment or conversion in full of the note, immediately prior to such SPAC Transaction, the outstanding principal and any accrued but unpaid interest under the bridge notes shall automatically convert into shares of Class A Common Stock of the Company (or, at the election of the Company, directly into proceeds paid to the holders of Class A Common Stock in connection with such SPAC Transaction) at a price per share that is 75% of the price per share of Class A Common Stock paid in such SPAC Transaction.

In the event the Next Equity Financing has not been consummated on or before the maturity date, at the option of the Company, the outstanding principal and any accrued but unpaid interest under the bridge notes shall convert into shares of the Company’s Series B Convertible Preferred Stock at the Series B Convertible Preferred Stock original issue price of $4.702.

In the event of a change in control, as defined in the note agreements, prior to repayment or conversion, the outstanding principal and any accrued but unpaid interest under the bridge notes shall, at the option of the majority holders, settle in cash equal to 1.5 times the outstanding principal and unpaid interest or settle with common stock of the Company at a price per share that is 75% of the price per share of common stock paid at the change of control.

Certain holders of the bridge notes were issued option agreements providing the holder with a non-binding right to receive a base model Fisker Ocean SUV within the first 12 months of production, subject to the terms and conditions. The proceeds received from these holders were allocated to the bridge notes and option agreements on a relative fair value basis, resulting in an initial discount to the bridge notes.

The automatic exchange feature is the predominant settlement feature and the change of control feature within the bridge notes are embedded contingent put options that, collectively, are required to be bifurcated from the debt host and measured at fair value with changes in fair value recognized in earnings (see Note 3). After bifurcation of the embedded derivative, the initial carrying value of the bridge notes are accreted to their stated principal value over the contractual term of the bridge notes, using the effective interest method. The Company recognized approximately $1.2 million of accretion of debt discount from the issuance dates of the bridge notes through September 30, 2020, classified as interest expense in the Condensed Consolidated Statement of Operations.

The estimated fair value of the embedded derivative at issuance was $3,179,530. The Company recognized $405,567 of other expense due to the change in fair value of the embedded derivative for the nine months ended September 30, 2020.

 

F-14


Index to Financial Statements

The following table summarizes the aggregate values recorded for the bridge notes as of September 30, 2020 and December 31, 2019:

 

            As of September 30,  
     At Issuance      2020  

Principal

   $ 9,990,882      $ 10,015,385  

Embedded derivative

     3,179,530        3,664,848  

Unamortized discounts and fees

     (3,970,061      (2,752,865
  

 

 

    

 

 

 

Net carrying amount

   $ 9,200,351      $ 10,927,368  
  

 

 

    

 

 

 

 

            As of December 31,  
     At Issuance      2019  

Principal

   $ 4,094,448      $ 4,099,080  

Embedded derivative

     1,245,298        1,325,049  

Unamortized discounts and fees

     (1,761,159      (1,626,929
  

 

 

    

 

 

 

Net carrying amount

   $ 3,578,587      $ 3,797,200  
  

 

 

    

 

 

 

Certain of the Company’s bridge notes include a covenant as to the use of proceeds from the issuance. Proceeds of $1.0 million are to be used for the development of certain battery technology. As of September 30, 2020, the Company is in compliance with such covenant.

11. Temporary Equity

Series A and Series B Convertible Preferred Stock

As of September 30, 2020, the Company is authorized to issue 8,379,280 shares of Preferred stock with a par value of $0.00001, of which, 6,252,530 shares are designated Series A Convertible Preferred Stock and 2,126,750 are designated as Series B Convertible Preferred Stock. The original issue price and the liquidation value, as of September 30, 2020, of each class of Convertible Preferred Stock is as follows:

 

     Shares Issued
and Outstanding
     Original Issue Price      Original Issue value      Aggregate
Liquidation
Preference
 

Series A

     6,252,530      $ 0.748      $ 4,676,892      $ 4,676,892  

Series B

     1,386,370      $ 4.702      $ 6,518,712      $ 6,518,712  

Dividends

Series A holders receive non-cumulative dividends at a rate per annum equal to $0.045 per share, if and when declared by the Company’s Board of Directors. Series A holders receive dividends prior to and in preference to any dividends on Series B Convertible Preferred Stock, Founders Convertible Preferred and Common Stockholders. After payment of any Series A dividends, any additional dividends are distributed to Founders Convertible Preferred and Common Stockholders pro-rata based on the number of shares of Common Stock held (assuming conversion of all such Founders Convertible Preferred into Common Stock). No dividends have been declared or paid as of September 30, 2020.

Liquidation

Holders of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock are entitled to receive a liquidation preference prior to any distribution to holders of Founders Convertible Preferred and Common Stock.

Upon the occurrence of a liquidation transaction, Convertible Preferred Stock Series A and Convertible Preferred Stock Series B will be redeemed by the Company at the greater of (i) $0.748 per share (Series A) or $4.702 (Series B) (adjusted for stock splits, stock dividends, reclassifications etc.) and (ii) such amount per share as would have been payable had all shares of Convertible Preferred Series A or Convertible Preferred Series B been converted into Class A Common Stock immediately prior to the liquidation transaction (a “Deemed Conversion”).

 

F-15


Index to Financial Statements

Remaining assets are distributed among the holders of Founders Convertible Preferred and Common Stock pro rata based on the number of shares of Common Stock held by each (assuming conversion of Founders Convertible Preferred into Common Stock).

Conversion

Series A Convertible Preferred Stock and Series B Convertible Preferred Stock are convertible at any time, at the option of the holder, into Class A Common Stock as is determined by dividing the then-original issue price, as adjusted, for such share of preferred stock by the conversion price, as adjusted, in effect on the date the certificate is surrendered for conversion (“Conversion Price”).

The Conversion Prices of Series A and Series B Convertible Preferred Stock as of September 30, 2020 and December 31, 2019 are as follows:

 

     Conversion Price  

Series A

   $  0.748  

Series B

   $ 4.702  

Additionally, all outstanding shares of the Series A Convertible Preferred Stock and Series B Convertible Preferred Stock shall automatically be converted into shares of underlying Class A Common Stock upon either (a) the Company’s sale of its Common Stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, which results in aggregate cash proceeds to the Company of not less than $50,000,000, net of underwriting discounts and commissions (a “Qualified IPO”); or (b) the date, or upon the occurrence of an event, specified by vote or written consent of the holders of a majority of the then outstanding shares of Convertible Preferred Stock, voting together as a single class on an as-converted basis.

Voting Rights

Holders of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock are entitled to the same voting rights as the Common Stockholders and to notice of stockholders’ meeting. The holders of Common Stock, Founders Convertible Preferred, Series A Convertible Preferred Stock and Series B Convertible Preferred Stock shall vote together as a single class (on an as-converted basis) on all matters. Each holder of Series A Convertible Preferred Stock and Series B Convertible Preferred Stock is entitled to the number of votes equal to the number of shares of Class A Common Stock into which such shares of Preferred Stock could be converted.

Each of the Series A and Series B Convertible Preferred Stock is conditionally puttable by the holders upon a “deemed liquidation event,” which includes a merger, consolidation, reorganization or recapitalization in which a subsidiary of the Company is a constituent party and the Company issues shares of its capital stock pursuant to such transaction, or a sale of substantially all of the Company’s assets. A “deemed liquidation event” is not solely within the control of the Company given holders of the Series A Convertible Preferred Stock have representation on the Company’s board of directors. As such, the Series A and Series B Convertible Preferred Stock is classified as temporary equity. Any discount to liquidation preference of the Series A and Series B Convertible Preferred Stock is not being accreted as a deemed dividend, as at September 30, 2020, it is not currently probable that the Series A and Series B Convertible Preferred Stock will become redeemable. Subsequent adjustments to increase the carrying values to the ultimate redemption values will be made only when it becomes probable that such a liquidation event will occur.

12. Convertible equity security

On July 7, 2020, the Company issued an investor a convertible security (the “Security”) in the amount of $50.0 million. The Security is classified as a SAFE agreement (Simple Agreement for Future Equity). The Security is automatically convertible into shares of capital stock of the combined entity upon the closing of a transaction with a special purpose acquisition company at a conversion price equal to 85% of the price per share upon consummation of such transaction (a “SPAC Transaction”). In the event the SPAC Transaction contemplated at the time of entering

 

F-16


Index to Financial Statements

into the transaction terminates or does not occur by December 31, 2020, the Security is automatically convertible into a newly created Series C Convertible preferred stock at price per share equal to $1.4 billion divided by the number of shares of capital stock of the Company (on an as-converted basis) then issued and outstanding, assuming exercise and/or conversion of all outstanding options, warrants and other convertible securities. The Security had no interest rate or maturity date and the SAFE investor had no voting right prior to conversion. The Security was recorded as a liability of $50 million and $79 million at issuance and as of September 30, 2020, respectively.

13. Stockholders’ Deficit

Common Stock

As of September 30, 2020 and December 31, 2019, the Company is authorized to issue 150,000,000 shares of Class A Common Stock and 40,000,000 shares of Class B Common Stock. Both classes of common stock qualify and share equally in dividends, if declared by the Company’s Board of Directors. In the event of liquidation, dissolution, distribution of assets or winding-up of the Company, the holders of both classes of common stock have equal rights to receive all the assets of the Company, after rights of the holders of the preferred stock, if any, have been satisfied.

Class A Common Stock

Holders of Class A Common Stock are entitled to one vote per share on matters to be voted upon by stockholders. Holders of Class A Common Stock have no preemptive rights to subscribe for or to purchase any additional shares of Class A Common Stock or other obligations convertible into shares of Class A Common Stock which the Company may issue in the future.

All of the outstanding shares of Class A Common Stock are fully paid and non-assessable. Holders of Class A Common Stock are not liable for further calls or assessments.

Class B Common Stock

Holders of Class B Common Stock are entitled to ten votes per share on matters to be voted upon by stockholders.

Holders of the Class B Common Stock may, at any time, convert their Class B Common Stock into one share of Class A Common Stock.

Founders Convertible Preferred Stock

As of September 30, 2020 and December 31, 2019, the Company is authorized to issue 10,000,000 shares of Founders Convertible Preferred Stock with a par value of $0.00001, of which 10,000,000 shares are issued and outstanding.

Holders of Founders Convertible Preferred Stock are entitled to ten votes for each share of Class A Common Stock into which such Founders Convertible Preferred Stock could be then directly converted.

Founders Convertible Preferred Stock are convertible at any time, at the option of the holder, into Class A Common Stock as is determined by dividing $0.10, as adjusted, for such share of preferred stock by the conversion price, as adjusted, in effect on the date the certificate is surrendered for conversion.

Additionally, all outstanding shares of the Founders Convertible Preferred Stock shall automatically be converted (i) upon any transfer, as defined, into Class A Common Stock (ii) upon any exempt transfer, as defined, into Class B Common Stock (iii) into Class A Common Stock upon the earlier of (a) the Company’s sale of its Common Stock in a public offering pursuant to a registration statement under the Securities Act of 1933 which results in aggregate cash proceeds to the Company of not less than $50,000,000, net of underwriting discounts and commissions (a “Qualified IPO”); or (b) the date, or upon the occurrence of an event, specified by vote or written consent of the holders of a majority of the then outstanding shares of Founders Convertible Preferred Stock, voting together as a single class on an as-converted basis.

 

F-17


Index to Financial Statements

14. Loss Per Share

Founders Convertible Preferred Stock are participating securities as the Founders Convertible Preferred Stock participates in undistributed earnings on an as-if converted basis. The Company computes earnings (loss) per share of Class A Common Stock and Class B Common Stock using the two-class method required for participating securities. Basic and diluted earnings per share was the same for each period presented as the inclusion of all potential Class A Common Stock and Class B Common Stock outstanding would have been anti-dilutive. The Company excluded the convertible equity security from the calculation of earnings per share as it is considered a contingently issuable share. For more information regarding the convertible equity security and the conversion terms, refer to Note 12. Basic and diluted earnings per share are the same for each class of common stock because they are entitled to the same liquidation and dividend rights. The following table sets forth the computation of basic and diluted loss per Class A Common Stock and Class B Common Stock:

 

     Nine months ended September 30,  
     2020      2019  

Numerator:

     

Net loss attributable to common stockholders

   $  (42,603,502)      $  (7,861,867)  
  

 

 

    

 

 

 

Denominator:

     

Weighted average Class A common shares outstanding

     94,754        51,837  

Weighted average Class B common shares outstanding

     38,727,340        38,727,340  
  

 

 

    

 

 

 

Weighted average Class A and Class B common shares outstanding- Basic

     38,822,094        38,779,177  
  

 

 

    

 

 

 

Dilutive effect of potential common shares

     —          —    
  

 

 

    

 

 

 

Weighted average Class A and Class B common shares outstanding- Diluted

     38,822,094        38,779,177  
  

 

 

    

 

 

 

Net loss per share attributable to Class A and Class B Common stockholders- Basic

   $ (1.10)      $ (0.20)  
  

 

 

    

 

 

 

Net loss per shares attributable to Class A and Class B Common stockholders- Diluted

   $ (1.10)      $ (0.20)  
  

 

 

    

 

 

 

The following table presents the potential common shares outstanding that were excluded from the computation of diluted net loss per share of common stock as of the periods presented because including them would have been antidilutive:

 

     Nine months ended September 30,  
     2020      2019  

Series A Preferred Stock

     6,252,530        6,252,530  

Series B Preferred Stock

     1,386,370        1,386,370  

Founder Preferred Stock

     10,000,000        10,000,000  

Bridge notes

     2,189,725        288,110  

Stock Options

     6,965,679        6,410,615  

Convertible equity security

     2,269,397        —    
  

 

 

    

 

 

 

Total

     29,063,701        24,337,625  
  

 

 

    

 

 

 

 

F-18


Index to Financial Statements

15. Stock Based Compensation

The Company maintains the 2016 Stock Plan (the “Plan”). The Plan is a stock-based compensation plan which provides for the grants of options and restricted stock to employees and consultants of the Company. Options granted under the Plan may be either incentive options (“ISO”) or nonqualified stock options (“NSO”). The maximum aggregate number of shares of the Company’s Class A Common Stock that may be issued under the Plan is 8,823,530 shares (subject to adjustments upon changes in capitalization, merger or certain other transactions).

Options under the Plan may be granted at prices as determined by the Board of Directors, provided, however, that (i) the exercise price of an ISO and NSO shall not be less than 100% of the estimated fair value of the shares on the date of grant, and (ii) the exercise price of an ISO granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant. The fair value of the shares is determined by the Board of Directors on the date of grants. Stock options generally have a contractual life of 10 years.

In 2016 and 2017, the Company’s founders were granted an aggregate of 5,882,360 options which are fully vested. Options granted to other employees and consultants become vested and are exercisable over a range of up to six years from the date of grant.

The following table summarizes option activity under the Plan:

 

     Shares available for
Grant
     Options      Weighted average
exercise price
     Weighted average
contractual term
(in years)
 

Balance as of December 31, 2019

     2,335,588        6,410,311      $ 0.24        7.2  

Granted

     (726,450      726,450        9.89     

Exercised

     —          (54,115      1.53     

Forfeited

     116,967        (116,967      6.37     
  

 

 

    

 

 

       

Balance as of September 30, 2020

     1,726,105        6,965,679      $  1.14        6.8  
  

 

 

    

 

 

       

Additional information regarding stock options exercisable as of September 30, 2020 is summarized below:

 

     Options Exercisable at September 30, 2020     

 

 

Range of Exercise Price

   Number      Weighted
average exercise
price
     Weighted average
contractual term
(in years)
 

$0.152 - $17.50  

     6,073,077      $  0.198        6.4  

The aggregate intrinsic value represents the total pretax intrinsic value (i.e., the difference between the fair value of the Company’s common stock price and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options. The aggregate intrinsic value of options outstanding as of September 30, 2020 was $114.0 million. The intrinsic value of options exercisable was $105.1 million as of September 30, 2020. The total intrinsic value of options exercised was $0.9 million for the nine months ended September 30, 2020.

The weighted-average grant date fair value per share for the stock option grants during the nine months ended September 30, 2020 was $7.31. As of September 30, 2020, the total unrecognized compensation related to unvested stock option awards granted was $4.8 million, which the Company expects to recognize over a weighted-average period of approximately 1.9 years.

 

F-19


Index to Financial Statements

The fair value of each stock option grant under the Plan was estimated on the date of grant using the Black-Scholes option pricing model, with the following weighted-average assumptions:

 

     Nine months ended September 30,  
     2020     2019  

Expected term (in years)

     6.1       6.4  

Volatility

     89.7     83.1

Dividend yield

     0     0.0

Risk-free interest rate

     0.5     2.1

Common stock price

   $  9.89     $  2.88  

The Black-Scholes option pricing model requires various highly subjective assumptions that represent management’s best estimates of the fair value of the Company’s common stock, volatility, risk-free interest rates, expected term, and dividend yield. Given the absence of an active market for the Company’s common stock, the Company determines its common stock value generally using the market approach valuation methods. The valuation results are reviewed and approved by the Company’s board of directors.

The expected term represents the weighted-average period that options granted are expected to be outstanding giving consideration to vesting schedules. Since the Company does not have an extended history of actual exercises, the Company has estimated the expected term using a simplified method which calculates the expected term as the average of the time-to-vesting and the contractual life of the awards. The Company has never declared or paid cash dividends and does not plan to pay cash dividends in the foreseeable future; therefore, the Company used an expected dividend yield of zero. The risk-free interest rate is based on U.S. Treasury rates in effect during the expected term of the grant. The expected volatility is based on historical volatility of publicly-traded peer companies.

Stock-based compensation expense for the nine months ended September 30, 2020 and 2019 is as follows:

 

     Nine months ended September 30,  
     2020      2019  

General and administrative expense

   $  177,661      $  22,548  

Research and development

     156,350        21,067  
  

 

 

    

 

 

 

Total

   $ 334,011      $ 43,615  
  

 

 

    

 

 

 

16. Income Taxes

On March 27, 2020, the U.S. President signed into law the CARES Act, an economic stimulus package in response to the COVID-19 global pandemic. The CARES Act contains several corporate income tax provisions, including making remaining alternative minimum tax credits immediately refundable; providing a 5-year carryback of net operating loss carryforwards (“NOLs”) generated in tax years 2018, 2019, and 2020, and removing the 80% taxable income limitation on utilization of those NOLs if carried back to prior tax years or utilized in tax years beginning before 2021; and temporarily liberalizing the interest deductibility rules under Section 163(j) of the Tax Cuts and Jobs Act, by raising the adjusted taxable income limitation from 30% to 50% for tax years 2019 and 2020 and giving taxpayers the election of using 2019 adjusted taxable income for purposes of computing 2020 interest deductibility. The Company is still evaluating the impact but does not currently expect the provisions of the CARES Act to have a material effect on the realizability of deferred income tax assets or tax expense. There is no material impact for the nine months ended September 30, 2020. As additional guidance is released, the Company will evaluate whether there would need to be a change in the period when such guidance is issued.

 

F-20


Index to Financial Statements

As of September 30, 2020, there were no material changes to either the nature or the amounts of the uncertain tax positions previously determined for the year ended December 31, 2019.

17. Related Party Transactions

In July 2019 and in June 2020, the Company entered into bridge note payables with Roderick K. Randall, a member of the Company’s Board of Directors, for the principal sum of $100,000 and $220,000, respectively. As of September 30, 2020, the bridge notes with an aggregate principal balance of $320,000 are outstanding and the accrued interest balance of the notes is $8,885. As of December 31, 2019, the principal balance of $100,000 is outstanding and the accrued interest balance of the notes is $2,068.

As described in Note 9, in connection with the Company formation in September 2016, HF Holdco LLC, an entity controlled by Mr. Fisker and Dr. Gupta advanced the Company $250,000 in the form of a demand note. In May 2020, in satisfaction of the advances made by HF Holdco LLC, the Company issued a bridge note payable to HF Holdco LLC with the principal sum of $250,000.

In February 2020, the Company temporarily suspended the disbursement of cash compensation to Mr. Fisker and Dr. Gupta. In March 2020, the Company also temporarily furloughed employees and reduced the cash compensation disbursed to such employees. During the nine months ended September 30, 2020, the Company repaid accrued compensation of $33,280 to Mr. Fisker and Dr. Gupta and $88,866 for furloughed employee compensation.

18. Commitments and Contingencies

The Company is not a party to any material legal proceedings and is not aware of any pending or threatened claims. From time to time however, the Company may be subject to various legal proceedings and claims that arise in the ordinary course of its business activities.

Beginning in early March 2020, the COVID-19 pandemic and the measures imposed to contain this pandemic have disrupted and are expected to continue to impact the Company’s business. The magnitude of the impact of the COVID-19 pandemic on the Company’s productivity, results of operations and financial position, and its disruption to the Company’s business and vehicle development and timelines, will depend, in part, on the length and severity of these restrictions and on the Company’s ability to conduct business in the ordinary course.

19. Subsequent Events

The Company has completed an evaluation of all subsequent events through November 4, 2020, which is the date the condensed consolidated financial statements were available to be issued, to ensure that these condensed consolidated financial statements include appropriate disclosure of events both recognized in the condensed consolidated financial statements and events which occurred but were not recognized in the condensed consolidated financial statements. Except as described below, the Company has concluded that no subsequent event has occurred that requires disclosure.

In October 2020, the Company entered into a forty-two month sublease agreement with annual escalating rental payments for its first dedicated engineering and technology center, to be located in the Mission District of San Francisco, California. This facility will be the development center for the Company’s software and vehicle electronics. Also, the Company entered into a lease agreement for its new headquarters in the city of Manhattan Beach, California with more than 73,000 square feet of space. The lease includes an option to extend the lease term an additional 60 months at the end of the initial 66-month rental period. Rental payments escalate each annual period. The Company will measure and recognize the right of use assets and lease liabilities during the fourth quarter of 2020.

On October 14, 2020, Fisker and Spartan entered into a Cooperation Agreement with Magna International Inc. (“Magna”) setting forth certain terms for the development of a full electric vehicle (the “Cooperation Agreement”). The Cooperation Agreement sets out the main terms and conditions of the upcoming operational phase agreements (the “Operational Phase Agreements”) that will extend from the Cooperation Agreement and other agreements with Magna (or its affiliates) that are expected to be entered into by and between Fisker and Magna (or its affiliates). The

 

F-21


Index to Financial Statements

upcoming Operational Phase Agreements referenced in the Cooperation Agreement relate to various platform and manufacturing agreements. The Cooperation Agreement provides that New Fisker (as defined below) will issue to Magna (or to an affiliate of Magna designated by Magna) warrants to purchase Class A Common Stock in an amount equal to six percent (6%) of the capital stock of New Fisker on a fully diluted basis (which means for these purposes, after giving effect to the deemed conversion or exercise of all options, warrants and other convertible securities of New Fisker outstanding on the issuance date; provided, however, that the “public warrants” sold as part of the units issued by Spartan in its initial public offering which closed on August 14, 2018 shall not be deemed to be exercised for these purposes) after giving effect to the Merger and issuance of the warrants to purchase such shares to Magna, with an exercise price of $0.01 per share of (the “Magna Warrants”). The Magna Warrants are subject to vesting upon the achievement of certain milestones as set forth in the Cooperation Agreement. Additionally, the shares of Class A Common Stock underlying the Magna Warrants will be entitled to registration rights under the Amended and Restated Registration Rights Agreement being entered into in connection with the consummation of the Business Combination and Magna will enter into a lock-up agreement on the same terms as the other investors in Fisker.

On October 28, 2020, the stockholders of Spartan, a Delaware corporation, approved the Merger, by and among Spartan, Fisker, Merger Sub and certain other parties thereto, pursuant to which Merger Sub merged with and into Fisker, with Fisker surviving the merger (the “Fisker Merger”) and the stockholders of Fisker received shares of Class A common stock and two stockholders of Fisker also received shares of Class B Common Stock of New Fisker. Fisker is now a wholly-owned subsidiary of Spartan, which was renamed “Fisker Inc.” and is referred to herein as “New Fisker.” The Fisker Merger resulted in the Company receiving $977.6 million in gross proceeds on October 29, 2020.

Under the term of the Fisker Merger, 46,838,585 shares of Class A Common Stock will be issued to the Historical Rollover Stockholders in the Business Combination in exchange for all outstanding shares of Fisker Class A Common Stock, or reserved for issuance in respect of New Fisker options issued in exchange for outstanding pre-merger Fisker Options, assuming that certain provisions of the Merger do not result in an upward adjustment (including for Closing Cash (as defined in the Business Combination Agreement) of Fisker) to the number of such shares at Closing (including 941,518 shares of Class A Common Stock issued to HF Holdco and 15,882,711 shares of Class A Common Stock underlying options to purchase Class A Common Stock held by Henrik Fisker and Dr. Geeta Gupta). In addition, in connection with the Closing, New Fisker will implement a dual class stock structure comprised of Class A Common Stock, which will carry one vote per share, and Class B Common Stock, which will carry 10 votes per share. At the Closing, 132,354,128 shares of Class B Common Stock will be issued to Henrik Fisker and Dr. Geeta Gupta in the Merger in exchange for all outstanding shares of Fisker Class B Common Stock and Fisker Founders Stock.

Upon the Closing, the conversion feature upon a business combination was triggered for the Bridge Notes and the convertible equity security as described in Note 10 and Note 12, respectively, causing a conversion of the $10.0 million outstanding principal amount of these Bridge Notes and $50.0 million outstanding principal of the convertible equity security and any unpaid accrued interest in equity securities at a specified price. The noteholders and convertible equity security holder received 1,361,268 and 5,882,352 shares of Class A Common Stock in New Fisker, respectively, as result of the conversion.

New Fisker has adopted a dual class stock structure comparable to the one in effect at Fisker as of immediately prior to the Closing, comprised of Class A Common Stock, which carries one vote per share, and Class B Common Stock, which carries 10 votes per share. All stockholders of New Fisker only hold shares of New Fisker Class A Common Stock, except for Mr. Fisker and Dr. Gupta, who hold shares of New Fisker Class A Common Stock and shares of New Fisker Class B Common Stock.

The Merger is expected to be accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, Spartan is expected to be treated as the “acquired” company for financial reporting purposes. Accordingly, the Fisker Merger is expected to be treated as the equivalent of Fisker issuing stock for the net assets of Spartan, accompanied by a recapitalization. The net assets of Spartan will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be those of Fisker.

 

F-22

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

Defined terms included below have the same meaning as terms defined and included elsewhere in this Current Report on Form 8-K and, if not defined in the Form 8-K, the Proxy Statement. Unless the context otherwise requires, the “Company” refers to Fisker Inc. and its subsidiaries after the Closing, and Spartan Energy Acquisition Corp. prior to the Closing.

Introduction

The Company is providing the following unaudited pro forma condensed combined financial information to aid you in your analysis of the financial aspects of Legacy Fisker becoming a wholly-owned subsidiary of Spartan Energy Acquisition Corp. (“Spartan”) as a result of Spartan’s wholly-owned subsidiary, Merger Sub, merging with and into Legacy Fisker, and Legacy Fisker surviving the merger (the “Merger Transaction”). Subsequent to the transaction, Spartan was renamed Fisker Inc. (the “Business Combination”). 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 September 30, 2020 combines the historical balance sheet of Spartan and the historical balance sheet of Legacy Fisker on a pro forma basis as if the Business Combination and related transactions, summarized below, had been consummated on September 30, 2020. The unaudited pro forma condensed combined statements of operations for the year ended December 31, 2019 and the nine months ended September 30, 2020 combine the historical statements of operations of Spartan and Legacy Fisker 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 Merger Sub with and into Legacy Fisker, with Fisker surviving the merger as a wholly-owned subsidiary of Spartan;

 

   

the net proceeds of $482.5 million ($500.0 million gross proceeds less $17.5 million in fees) from the issuance and sale of 50,000,000 shares of Class A Common Stock at $10.00 per share in the PIPE Financing;

 

   

the issuance and conversion of all of Legacy Fisker convertible equity securities (the “Legacy Fisker Convertible Equity Securities”) and Legacy Fisker convertible notes into Class A Common Stock; and

 

   

the conversion of all outstanding Legacy Fisker shares and Legacy Fisker stock options into Class A Common Stock totaling 179.2 million shares.

The pro forma condensed combined financial information may not be useful in predicting the future financial condition and results of operations of the post-combination company. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors.

The historical financial information of Spartan was derived from the unaudited and audited financial statements of Spartan as of and for the nine months ended September 30, 2020, and for the year ended December 31, 2019, which are incorporated by reference. The historical financial information of Fisker was derived from the unaudited and audited consolidated financial statements of Fisker as of and for the nine months ended September 30, 2020, which are included in this 8-K and for the year ended December 31, 2019, which are incorporated by reference. This information should be read together with Spartan’s and Fisker’s unaudited and audited financial statements and related notes, the section of the Proxy Statement entitled “Managements Discussion and Analysis of Financial Condition and Results of Operations of Spartan,” which is incorporated by reference, and the section set forth in this Form 8-K entitled “Managements Discussion and Analysis of Financial Condition and Results of Operations of Fisker” and other financial information which is included in this 8-K for the nine months ended September 30, 2020 and incorporated by reference for the year ended December 31, 2019.

The Business Combination was accounted for as a reverse recapitalization, in accordance with GAAP. Under this method of accounting, Spartan was treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Legacy Fisker issuing stock for the net assets of Spartan, accompanied by a recapitalization, whereby no goodwill or other intangible assets was recorded. Operations prior to the Business Combination are those of Legacy Fisker.


Legacy Fisker was determined to be the accounting acquirer based on evaluation of the following facts and circumstances:

 

   

Fisker stockholders have the largest voting interest in the post-combination company;

 

   

The Class B Common Stock issued to two Fisker stockholders allows for incremental voting rights;

 

   

The Board of Directors of the post-combination company has seven members, and Legacy Fisker has the ability to nominate the majority of the members of the Board of Directors;

 

   

Fisker management holds executive management roles for the post-combination company and is responsible for the day-to-day operations;

 

   

The post-combination company assumed the Fisker name; and

 

   

The intended strategy of the post-combination entity will continue Fisker’s current strategy of being a leader in the electric vehicle industry.

Description of the Business Combination

The aggregate consideration for the Business Combination was $1.8 billion, paid in the form of shares of Common Stock.

The following summarizes the consideration:

 

(in thousands, except for share and per share amounts)       

Shares transferred at Closing

     179,192,713  

Value per share(1)

     10.00  
  

 

 

 

Total Share Consideration

   $ 1,791,927  
  

 

 

 

 

(1)

Share Consideration is calculated using a $10.00 reference price. The closing share price on the date of the consummation of the Merger Transaction was $8.96. As the Merger Transaction was accounted for as a reverse recapitalization, the value per share is disclosed for informational purposes only in order to indicate the fair value of shares transferred.

Holders of Legacy Fisker Class A Common Stock and Legacy Fisker Class B Common Stock received shares of Class A Common Stock and Class B Common Stock, respectively, in an amount determined by application of the Exchange Ratio except for the purchaser of the Legacy Fisker Convertible Equity Security. The purchaser of the Legacy Fisker Convertible Equity Security received a number of shares as defined in the Convertible Equity Security Purchase Agreement, dated July 7, 2020. The following summarizes the pro forma Common Stock shares at Closing:

 

     New Fisker Shares      %  

Fisker Stockholders—Class A Common Stock

     39,594,965        12.6

Convertible Equity Security shares

     5,882,352        1.9

Convertible Note shares

     1,361,268        0.4
  

 

 

    

 

 

 

Fisker total—Class A

     46,838,585        14.9
  

 

 

    

 

 

 

Fisker Stockholders—Class B Common Stock

     132,354,128        42.0
  

 

 

    

 

 

 

Total Fisker Merger Shares

     179,192,713        56.9

Magna Warrant Shares (1)

     19,474,454        6.1

Spartan public shares

     53,188,245        16.9

Founder Shares

     13,358,824        4.2

PIPE Financing

     50,000,000        15.9
  

 

 

    

 

 

 

Pro Forma Common Stock at Closing

     315,214,236        100.0
  

 

 

    

 

 

 

 

(1)

The shares underlying the Magna Warrants do not represent legally issued and outstanding shares of the Class A Common Stock and are not exercisable immediately upon the Closing (and were issued following the Closing). The Magna Warrants vest upon achievement of certain production milestones as specified in the Cooperation Agreement entered into by Legacy Fisker and Magna, the holder of the Magna Warrants, dated October 15, 2020, and thus are not directly attributable to the Business Combination. As such, the shares underlying these warrants are excluded in the calculation of pro forma basic loss per share.


The following unaudited pro forma condensed combined balance sheet as of September 30, 2020 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 are based on the historical financial statements of Spartan and Legacy Fisker. The unaudited pro forma adjustments are based on information currently available, and assumptions and estimates underlying the unaudited pro forma adjustments are described in the accompanying notes. Actual results may differ materially from the assumptions used to present the accompanying unaudited pro forma condensed combined financial information.


UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET

AS OF SEPTEMBER 30, 2020

(in thousands)

 

     As of September 30, 2020                         As of September 30, 2020  
     Fisker
(Historical)
    Spartan
(Historical)
     Reclassification
Adjustments
(Note 2)
    Pro Forma
Adjustments
           Pro Forma
Combined
 

ASSETS

              

Current assets:

              

Cash and cash equivalents

   $ 44,976     $ 165      $ —       $ 569,041       A      $ 1,018,649  
            500,000       B     
            (19,320     C     
            (55,499     D     
            (50     E     
            (20,664     M     

Prepaid expenses

     —         39        (39     —            —    

Prepaid expenses and other current assets

     2,676       —          39       (1,913     D        802  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

Total current assets

     47,652       204        —         971,595          1,019,451  

Non-current assets:

              

Cash and investments held in Trust Account

     —         569,041        —         (569,041     A        —    

Property and equipment, net

     263       —          —         —            263  

Right-of-use asset, net

     34       —          —         —            34  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

Total non-current assets

     297       569,041        —         (569,041        297  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

TOTAL ASSETS

     47,949       569,245        —         402,554          1,019,748  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT)

              

Accounts payable

     676       —          2,722       (2,672     D        676  
            (50     E     

Accrued expenses

     2,678       —          262       (1,242     D        1,422  
            (276     F     

Accounts payable and accrued expenses

     —         2,722        (2,722     —            —    

Accrued income and franchise taxes

     —         262        (262     —            —    

Advances from related parties

     —         1,385          (1,385     D        —    

Convertible Security

     79,003       —          —         (79,003     L        —    

Bridge notes payable

     10,927       —          —         (10,927     F        —    

Lease liabilities

     36       —          —         —            36  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

Total current liabilities

     93,320       4,369        —         (95,555        2,134  

Non-current liabilities:

              

Customer deposits

     2,940       —          —         —            2,940  

Deferred underwriting commissions

     —         19,320        —         (19,320     C        —    
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

Total non-current liabilities

     2,940       19,320        —         (19,320        2,940  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

Total liabilities

     96,260       23,689        —         (114,875        5,074  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

COMMITMENTS AND CONTINGENCIES

              

Temporary equity:

              

Series A Convertible Preferred stock

     4,634       —          —         (4,634     H        —    

Series B Convertible Preferred stock

     6,386       —          —         (6,386     H        —    

Common stock subject to possible redemption

     —         540,556        —         (540,556     G        —    

Stockholders’ equity (deficit):

              

Founders Convertible Preferred stock

     —         —          —         —            —    

Class A Common stock

     —         —          —         5       B        16  
            —         F     
            5       G     
            4       H     
            1       I     
            1       L     
            —         M     

Class B Common stock

     —         1        —         (1     I        13  
            13       J     

Additional paid-in capital

     1,173       4,146        —         499,995       B        1,107,849  
            (19,413     D     
            11,203       F     
            540,551       G     
            11,016       H     
            (13     J     
            853       K     
            79,002       L     
            (20,664     M     

Retained earnings

     —         853        (853     —            —    

Accumulated deficit

     (60,504     —          853       (32,700     D        (93,204
            (853     K     
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

Total stockholders’ equity (deficit)

     (59,331     5,000        —         1,069,005          1,014,674  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT

     47,949       569,245        —         402,554          1,019,748  
  

 

 

   

 

 

    

 

 

   

 

 

      

 

 

 


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020

(in thousands, except share and per share data)

 

     For the Nine Months Ended September 30, 2020                  For the Nine Months Ended
September 30, 2020
 
     Fisker
(Historical)
    Spartan
(Historical)
    Pro Forma
Adjustments
           Pro Forma
Combined
 

Revenue:

           

Revenue

   $ —       $ —       $ —          $ —    

Operating costs and expenses:

           

Administrative fee - related party

     —         90       —            90  

General and administrative

     8,056       4,248       (4,067     AA        8,237  

Research and development

     3,963       —         —            3,963  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total operating costs and expenses

     12,019       4,338       (4,067        12,290  
  

 

 

   

 

 

   

 

 

      

 

 

 

Loss from operations

     (12,019     (4,338     4,067          (12,290

Other income (expense):

           

Other income (expense)

     15         —            15  

Interest income

     13       2       —            15  

Interest expense

     (1,326     —         1,326       BB        —    

Change in fair value of embedded derivative

     (406     —         406       CC        —    

Change in fair value of Convertible Security

     (29,003     —         29,003       DD        —    

Foreign currency gain

     122       —         —            122  

Other income - Interest income on Trust Account

     —         4,554       (4,554     EE        —    
  

 

 

   

 

 

   

 

 

      

 

 

 

Total other income (expense)

     (30,585     4,556       26,181          152  
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss) before income tax provision

     (42,604     218       30,248          (12,138

Income tax provision

     —         925       (925     FF        —    
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss)

     (42,604     (707     31,173          (12,138
  

 

 

   

 

 

   

 

 

      

 

 

 

Weighted average Common shares outstanding - Class A

     94,754       55,198,449            163,385,654  

Basic and diluted net income (loss) per share - Class A

   $ (1.10   $ 0.06          $ (0.04

Weighted average Common shares outstanding - Class B

     38,727,340       13,800,000            132,354,128  

Basic and diluted net income (loss) per share - Class B

   $ (1.10   $ (0.31        $ (0.04


UNAUDITED PRO FORMA CONDENSED COMBINED STATEMENT OF OPERATIONS

FOR YEAR ENDED DECEMBER 31, 2019

(in thousands, except share and per share data)

 

     For the Year ended
December 31, 2019
                 For the Year ended
December 31, 2019
 
     Fisker
(Historical)
    Spartan
(Historical)
    Pro Forma
Adjustments
           Pro Forma
Combined
 

Revenue:

           

Revenue

   $ —       $ —       $ —          $ —    

Operating costs and expenses:

           

Administrative fee - related party

     —         120       —            120  

General and administrative

     3,626       1,133       —            4,759  

Research and development

     6,962       —         —            6,962  
  

 

 

   

 

 

   

 

 

      

 

 

 

Total operating costs and expenses

     10,588       1,253       —            11,841  
  

 

 

   

 

 

   

 

 

      

 

 

 

Loss from operations

     (10,588     (1,253     —            (11,841

Other income (expense):

           

Other income (expense)

     1       —         —            1  

Interest income

     9       23       —            32  

Interest expense

     (178     —         178       BB        —    

Change in fair value of embedded derivative

     (80     —         80       CC        —    

Foreign currency gain (loss)

     (42     —         —            (42

Other income - Interest income on Trust Account

     —         12,655       (12,655     EE        —    
  

 

 

   

 

 

   

 

 

      

 

 

 

Total other income (expense)

     (290     12,678       (12,397        (9
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss) before income tax provision

     (10,878     11,425       (12,397        (11,850

Income tax provision

     —         2,615       (2,615     FF        —    
  

 

 

   

 

 

   

 

 

      

 

 

 

Net income (loss)

     (10,878     8,810       (9,782        (11,850
  

 

 

   

 

 

   

 

 

      

 

 

 

Weighted average Common shares outstanding - Class A

     57,139       55,200,000            163,385,654  

Basic and diluted net income (loss) per share - Class A

   $ (0.28   $ 0.18          $ (0.04

Weighted average Common shares outstanding - Class B

     38,727,340       13,800,000            132,354,128  

Basic and diluted net income (loss) per share - Class B

   $ (0.28   $ (0.07        $ (0.04


NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

1. Basis of Presentation

The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, Spartan was treated as the “acquired” company for financial reporting purposes. Accordingly, the Business Combination was treated as the equivalent of Legacy Fisker issuing stock for the net assets of Spartan, accompanied by a recapitalization, whereby no goodwill or other intangible assets was recorded. Operations prior to the Business Combination are those of Legacy Fisker.

The unaudited pro forma condensed combined balance sheet as of September 30, 2020 assumes that the Business Combination occurred on September 30, 2020. The unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2020 and the year ended December 31, 2019 present pro forma effect to the Business Combination as if it had been completed on January 1, 2019.

The unaudited pro forma condensed combined balance sheet as of September 30, 2020 has been prepared using, and should be read in conjunction with, the following:

 

   

Spartan’s unaudited condensed balance sheet as of September 30, 2020 and the related notes for the period ended September 30, 2020, incorporated by reference; and

 

   

Legacy Fisker’s unaudited condensed consolidated balance sheet as of September 30, 2020 and the related notes for the period ended September 30, 2020, included in this Form 8-K.

The unaudited pro forma condensed combined statement of operations for the nine months ended September 30, 2020 has been prepared using, and should be read in conjunction with, the following:

 

   

Spartan’s unaudited condensed statement of operations for the nine months ended September 30, 2020 and the related notes, incorporated by reference; and

 

   

Legacy Fisker’s unaudited condensed consolidated statement of operations for the Nine months ended September 30, 2020 and the related notes, included in this Form 8-K.

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:

 

   

Spartan’s audited statement of operations for the year ended December 31, 2019 and the related notes, incorporated by reference; and

 

   

Fisker’s audited consolidated statement of operations for the year ended December 31, 2019 and the related notes, 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 the Company 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. The Company 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 this 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 Spartan and Legacy Fisker.

2. Accounting Policies

Upon consummation of the Business Combination, management will perform a comprehensive review of the two entities’ accounting policies. As a result of the review, management may identify differences between the accounting policies of the two entities which, when conformed, could have a material impact on the financial statements of the post-combination company. Based on its initial analysis, management had identified differences that would have an impact on the unaudited pro forma condensed combined financial information and recorded the necessary adjustments.

3. 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. Legacy Fisker and Spartan have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.

The pro forma combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the post-combination company filed consolidated income tax returns during the periods presented.

The pro forma basic and diluted earnings per share amounts presented in the unaudited pro forma condensed combined statements of operations are based upon the number of the post-combination company’s shares outstanding, assuming the Business Combination occurred on January 1, 2019.

Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet

The adjustments included in the unaudited pro forma condensed combined balance sheet as of September 30, 2020 are as follows:

 

  (A)

Reflects the reclassification of $569.0 million of cash and cash equivalents held in the Trust Account at the balance sheet date that becomes available to fund expenses in connection with the Business Combination or future cash needs of the Company.

 

  (B)

Represents the gross proceeds from the private placement of 50,000,000 shares of Class A Common Stock at $10.00 per share pursuant to the PIPE Financing.

 

  (C)

Reflects the payment of $19.3 million of deferred underwriters’ fees. The fees were paid at the Closing out of the trust account.

 

  (D)

Represents transaction costs totaling $56.2 million, consisting of approximately $19.4 million of equity issuance costs. Classification of transaction costs is as follows:


(in thousands)    Amount  

Costs related to issuance of equity

  

Amounts previously capitalized and paid

     671  

Amounts previously capitalized and not paid

     1,242  

Amounts incurred as part of the Business Combination (1)

     17,500  
  

 

 

 

Subtotal

     19,413  

Transaction expenses

  

Amounts previously incurred and paid

     10  

Amounts previously incurred but not paid

     4,057  

Amounts incurred as part of the Business Combination

     32,700  
  

 

 

 

Subtotal

     36,767  
  

 

 

 

Grand Total

     56,180  
  

 

 

 

 

(1)

Includes estimated fees of $17.5 million related to the issuance of the PIPE payable by the Company.

 

  (E)

Reflects the settlement of Spartan’s historical liabilities that were settled prior to the consummation of the Business Combination and thus will not be part of the Company after the Closing.

 

  (F)

Represents the conversion of the Fisker Convertible Notes upon a business combination, causing a conversion of the outstanding principal amount and any unpaid accrued interest into equity securities (Legacy Fisker did not utilize the election to convert directly into proceeds paid to the holders of Legacy Fisker’s Class A Common Stock in connection with the Business Combination). The Fisker Convertible Notes were issued from July 2019 to July 2020 and converted at the Closing.

 

  (G)

Reflects the reclassification of approximately $540.6 million of Class A Common Stock subject to possible redemption to permanent equity.

 

  (H)

Represents recapitalization of Legacy Fisker equity and issuance of 39.9 million of the post-combination company’s Class A Common Stock to Fisker equity holders as consideration for the reverse recapitalization.

 

  (I)

Reflects the conversion of Spartan’s Class B Common Stock held by the initial stockholders to Class A Common Stock. Pursuant to the terms of the Company’s seconded amended and restated certificate of incorporation, all shares of Class B Common Stock outstanding prior to the Effective Time were converted into shares of Class A Common Stock at the Closing. All of the shares of Class B Common Stock converted into shares of Class A Common Stock are no longer outstanding and have ceased to exist, and each holder of such Class B Common Stock has ceased to have any rights with respect to such securities.

 

  (J)

Reflects the issuance of 132.0 million shares of Class B Common Stock to Henrik Fisker and Dr. Geeta Gupta in exchange for their shares of Fisker Class B Common Stock.

 

  (K)

Reflects the reclassification of Spartan’s historical retained earnings.

 

  (L)

Reflects the conversion of the Fisker Convertible Security upon the Closing. Upon the Closing, the mandatory conversion feature upon a business combination was triggered, causing a conversion of the outstanding principal amount of the Fisker Convertible Security into equity securities at a specified price. The Fisker Convertible Security was outstanding from July 2020 through the Closing.

 

  (M)

Reflects actual redemptions of 2,004,297 public shares at the Closing for aggregate redemption payments of approximately $20.6 million allocated to Class A Common Stock and additional paid-in capital using par value $0.0001 per share and at a redemption price of $10.31 per share.


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 Nine months ended September 30, 2020 and year ended December 31, 2019 are as follows:

 

  (AA)

Elimination of non-recurring transaction expenses incurred in connect with the Business Combination.

 

  (BB)

Elimination of interest expense from the Fisker Convertible Notes that converted upon the Closing.

 

  (CC)

Elimination of the change in fair value of the embedded derivative liability in the Fisker Convertible Notes that converted upon the Closing.

 

  (DD)

Elimination of the change in fair value of the Fisker Convertible Security that converted upon the Closing.

 

  (EE)

Elimination of investment income on the Trust Account.

 

  (FF)

Reflects elimination of income tax expense as a result of elimination of the trust account income (noted in footnote EE).

4. 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 and related equity transactions are being reflected as if they had occurred at the beginning of the periods presented, the calculation of weighted average shares outstanding for basic and diluted net income (loss) per share assumes that the shares issuable relating to the Business Combination have been outstanding for the entire periods presented. Holders of Fisker Class A Common Stock and Fisker Class B Common Stock received shares of Class A Common Stock and Class B Common Stock, respectively, in an amount determined by application of the Exchange Ratio except for the purchaser of the Legacy Fisker Convertible Equity Security. The purchaser of the Legacy Fisker Convertible Equity Security received a number of shares as defined in the Convertible Equity Security Purchase Agreement, dated July 7, 2020.

The unaudited pro forma condensed combined financial information has been prepared for the nine months ended September 30, 2020 and for the year ended December 31, 2019:

 

     For the Nine Months
Ended September 30, 2020
     For the Year ended
December 31, 2019
 

Pro forma net loss

     (12,138      (11,850

Weighted average shares outstanding of Class A Common Stock(1)

     163,385,654        163,385,654  

Net loss per share (Basic and Diluted) attributable to Class A Common
Stockholders (1)(2)

   $ (0.04    $ (0.04

Weighted average shares outstanding of Class B Common Stock

     132,354,128        132,354,128  

Net loss per share (Basic and Diluted)

attributable to Class B Common Stockholders (2)

   $ (0.04    $ (0.04

 

(1)

Excludes approximately 19,474,454 shares of Class A Common Stock underlying the Magna Warrants issued on October 29, 2020 that are included as part of the capitalization table. The shares underlying the Magna Warrants will not represent legally issued and outstanding shares of Class A Common Stock and are not exercisable upon the Closing (and were issued following the Closing). The Magna Warrants vest upon achievement of certain production milestones as specified in the Cooperation Agreement entered into by Legacy Fisker and Magna, the holder of the Magna Warrants, dated October 15, 2020, and thus are not directly attributable to the Business Combination. As such, the shares underlying these warrants will be excluded in the calculation of pro forma basic loss per share.

(2)

For the purposes of calculating diluted earnings per share, it was assumed that all outstanding warrants sold in the IPO and the private placement are exchanged to Class A common stock. However, since this results in anti-dilution, the effect of such exchange was not included in calculation of diluted loss per share.


COMPARATIVE SHARE INFORMATION

The following table sets forth summary historical comparative share information for Spartan and Legacy Fisker and unaudited pro forma condensed combined per share information after giving effect to the Business Combination.

The pro forma book value information reflects the business combination as if it had occurred on September 30, 2020. The weighted average shares outstanding and net earnings per share information reflect the business combination as if it had occurred on January 1, 2019.

This information is only a summary and should be read in conjunction with the historical financial statements of Spartan and Legacy Fisker and related notes included elsewhere in this Form 8-K. The unaudited pro forma combined per share information of Spartan and Legacy Fisker is derived from, and should be read in conjunction with, the unaudited pro forma condensed combined financial statements and related notes included elsewhere in this Form 8-K.

The unaudited pro forma combined earnings (loss) per share information below does not purport to represent the earnings (loss) per share which would have occurred had the companies been combined during the periods presented, nor earnings per share for any future date or period. The unaudited pro forma combined book value per share information below does not purport to represent what the value of Spartan and Legacy Fisker would have been had the companies been combined during the periods presented.

 

     Fisker
(Historical)
     Spartan
(Historical)
     Combined
Pro Forma
 

As of and for the Nine Months ended September 30, 2020

        

Book Value per share (1)

   $ (1.53    $ 0.07      $ 3.43  

Weighted average shares outstanding of Class A common stock—basic and diluted

     94,754        55,198,449        163,385,654  

Weighted average shares outstanding of Class B common stock—basic and diluted

     38,727,340        13,800,000        132,354,128  

Net income (loss) per share of Class A common stock—basic and diluted

   $ (1.10    $ 0.06      $ (0.04

Net loss per share of Class B common stock—basic and diluted

   $ (1.10    $ (0.31    $ (0.04

As of and for the Year ended December 31, 2019

        

Weighted average shares outstanding of Class A common stock—basic and diluted

     57,139        55,200,000        163,385,654  

Weighted average shares outstanding of Class B common stock—basic and diluted

     38,727,340        13,800,000        132,354,128  

Net income (loss) per share of Class A common stock—basic and diluted

   $ (0.28    $ 0.18      $ (0.04

Net loss per share of Class B common stock—basic and diluted

   $ (0.28    $ (0.07    $ (0.04

 

(1)

Book value per share = (Total equity excluding preferred shares)/shares outstanding. The components of book value per share calculation are as follow (in thousands except per share data):

 

     Fisker
(Historical)
     Spartan
(Historical)
     Pro Forma
Combined
 

Total Equity (excluding preferred shares)

     (59,331      5,000        1,014,674  

Total Shares Outstanding —Class A and B

     38,822,094        68,998,449        295,739,782