10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                   to                  

Commission File No. 001-38202

Virgin Galactic Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware	85-3608069
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

1700 Flight Way Tustin California	92782
(Address of Principal Executive Offices)	(Zip Code)

(949) 774-7640

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, $0.0001 par value per share	SPCE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		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. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of October 31, 2022, there were 274,559,169 shares of the Company’s common stock, par value $0.0001, issued and outstanding.

VIRGIN GALACTIC HOLDINGS, INC.

TABLE OF CONTENTS

		Page
	Cautionary Note Regarding Forward-Looking Statements	2
	PART I - FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	29
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	40
Item 4.	Controls and Procedures	41
	PART II - OTHER INFORMATION
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	42
Item 5.	Other Information	42
Item 6.	Exhibits	43
Signatures		45

1

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q contains forward-looking statements (including within the meaning of the Private Securities Litigation Reform Act of 1995) concerning us and other matters. These statements may discuss goals, intentions and expectations as to future plans, trends, events, results of operations or financial condition, or otherwise, based on current beliefs of management, as well as assumptions made by, and information currently available to management. Forward-looking statements may be accompanied by words such as “achieve,” “anticipate,” “believe,” “can,” “continue,” “could,” “estimate,” “expect,” “future,” “grow,” “increase,” “intend,” “may,” “opportunity,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strategy,” “target,” “will,” “would,” or similar words, phrases, or expressions. These forward-looking statements are subject to various risks and uncertainties, many of which are outside our control. Therefore, you should not place undue reliance on such statements. Factors that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to, the following:

•any delay in completing the flight test program and final development of our spaceflight fleet, which is comprised of our SpaceShipTwo spaceships, VSS Unity and VSS Imagine, and our mothership carrier aircraft, VMS Eve;

•our ability to conduct test flights;

•our ability to operate our spaceflight system after commercial launch;

•the safety of our spaceflight systems;

•the development of the markets for commercial human spaceflight and commercial research and development payloads;

•our ability to effectively market and sell human spaceflights;

•our ability to convert our backlog or inbound inquiries into revenue;

•our anticipated full passenger capacity;

•our ability to achieve or maintain profitability;

•delay in development or the manufacture of spaceflight systems;

•our ability to successfully develop our next generation vehicles, and the time and costs associated with doing so;

•our ability to supply our technology to additional market opportunities;

•our expected capital requirements and the availability of additional financing;

•our ability to attract or retain highly qualified personnel;

•the impact of the COVID-19 pandemic on us, our operations, our future financial or operational results, and our access to additional financing;

•extensive and evolving government regulation that impact the way we operate;

•risks associated with international expansion;

•our ability to maintain effective internal control over financial reporting and disclosure and procedures; and

•our ability to continue to use, maintain, enforce, protect and defend our owned and licensed intellectual property, including the Virgin brand.

2

Additional factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part I, Item 1.“Business,” Part I, Item 1A. “Risk Factors,” and Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “Annual Report on Form 10-K") and in Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q. Although we believe that the expectations reflected in the forward-looking statements are reasonable, our information may be incomplete or limited, and we cannot guarantee future results. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.

Each of the terms the “Company,” “Virgin Galactic,” “we,” “our,” “us” and similar terms used herein refer collectively to Virgin Galactic Holdings, Inc., a Delaware corporation, and its consolidated subsidiaries, unless otherwise stated.

3

PART I. FINANCIAL INFORMATION

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	September 30, 2022		December 31, 2021
	(Unaudited)
Assets
Current assets
Cash and cash equivalents	$	394,032	$	524,481
Restricted cash	40,328		25,549
Marketable securities, short-term	606,713		79,418
Inventories	22,851		29,668
Prepaid expenses and other current assets	22,094		19,476
Total current assets	1,086,018		678,592
Marketable securities, long-term	69,072		301,463
Property, plant, and equipment, net	48,874		47,498
Other non-current assets	55,220		41,281
Total assets	$	1,259,184	$	1,068,834
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	19,872	$	9,237
Accrued liabilities	43,389		28,787
Customer deposits	103,971		90,863
Other current liabilities	3,336		2,636
Total current liabilities	170,568		131,523
Non-current liabilities
Convertible senior notes, net	415,188		—
Other long-term liabilities	59,885		43,047
Total liabilities	645,641		174,570
Commitments and contingencies (Note 17)
Stockholders' equity
Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding	—		—
Common stock, $0.0001 par value; 700,000,000 shares authorized; 274,481,195 and 258,166,417 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	27		26
Additional paid-in capital	2,096,901		2,019,750
Accumulated deficit	(1,472,975)		(1,123,643)
Accumulated other comprehensive income	(10,410)		(1,869)
Total stockholders' equity	613,543		894,264
Total liabilities and stockholders' equity	$	1,259,184	$	1,068,834

See accompanying notes to condensed consolidated financial statements.

4

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(In thousands, except for per share data)

(Unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenue	$	767	$	2,580	$	1,443	$	3,151
Operating expenses:
Customer experience	590		207		737		270
Selling, general, and administrative	46,113		48,268		127,820		128,503
Research and development	97,411		34,289		211,578		103,997
Depreciation and amortization	2,214		2,895		7,981		8,635
Total operating expenses	146,328		85,659		348,116		241,405
Operating loss	(145,561)		(83,079)		(346,673)		(238,254)
Interest income	3,524		240		6,327		785
Interest expense	(3,293)		(6)		(8,924)		(19)
Change in fair value of warrants	—		34,432		—		(34,650)
Other income, net	(203)		70		7		110
Loss before income taxes	(145,533)		(48,343)		(349,263)		(272,028)
Income tax expense	(21)		(25)		(69)		(74)
Net loss	(145,554)		(48,368)		(349,332)		(272,102)
Other comprehensive income (loss):
Foreign currency translation adjustment	(180)		3		(313)		11
Unrealized loss on marketable securities	(585)		(437)		(8,227)		(437)
Total comprehensive loss	$	(146,319)	$	(48,802)	$	(357,872)	$	(272,528)
Net loss per share:
Basic	$	(0.55)	$	(0.19)	$	(1.34)	$	(1.11)
Diluted	$	(0.55)	$	(0.32)	$	(1.34)	$	(1.11)
Weighted-average shares outstanding:
Basic	263,907,259		254,749,195		260,255,202		244,157,923
Diluted	263,907,259		255,147,228		260,255,202		244,157,923

See accompanying notes to condensed consolidated financial statements.

5

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Equity    

(In thousands, except for per unit and share data)

(Unaudited)

(For the period ended September 30, 2021)

	Common Stock
Balance as of	# of Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total
Balance as of December 31, 2020	236,123,659	$	23	$	1,297,794	$	(770,744)	$	5	$	527,078
Net loss	—	—		—		(129,694)		—		(129,694)
Other comprehensive income	—	—		—		—		26		26
Stock-based compensation		—		22,111		—		—		22,111
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	1,150,771	—		323		—		—		323
Balance as of March 31, 2021	237,274,430	23		1,320,228		(900,438)		31		419,844
Net loss	—	—		—		(94,040)		—		(94,040)
Other comprehensive loss	—	—		—		—		(20)		(20)
Stock-based compensation	—	—		14,423		—		—		14,423
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	275,283	—		840		—		—		840
Common stock issued related to warrants exercised	3,387,827	—		104,176		—		—		104,176
Balance as of June 30, 2021	240,937,540	23		1,439,667		(994,478)		11		445,223
Net loss	—	—		—		(48,368)		—		(48,368)
Other comprehensive loss	—	—		—		—		(432)		(432)
Stock-based compensation	—	—		12,170		—		—		12,170
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	685,487	—		1,916		—		—		1,916
Common stock issued related to warrants exercised	2,034,390	—		65,914		—		—		65,914
Issuance of common stock pursuant to an at-the-market offering	13,740,433	2		499,998		—		—		500,000
Transaction costs related to an at-the-market offering	—	—		(6,494)		—		—		(6,494)
Balance as of September 30, 2021	257,397,850	$	25	$	2,013,171	$	(1,042,846)	$	(421)	$	969,929

See accompanying notes to condensed consolidated financial statements.

6

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Equity

(In thousands, except for per unit and share data)

(Unaudited)

(For the period ended September 30, 2022)

	Common Stock
Balance as of	# of Shares	Par Value		Additional Paid-In Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total
Balance as of December 31, 2021	258,166,417	$	26	$	2,019,750	$	(1,123,643)	$	(1,869)	894,264
Net loss	—	—				(93,057)		—		(93,057)
Other comprehensive loss	—	—				—		(5,805)		(5,805)
Stock-based compensation	—	—		10,895		—		—		10,895
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	307,471	—		(1,882)		—		—		(1,882)
Purchase of capped calls	—	—		(52,318)		—		—		(52,318)
Balance as of March 31, 2022	258,473,888	26		1,976,445		(1,216,700)		(7,674)		752,097
Net loss		—				(110,721)				(110,721)
Other comprehensive loss		—				—		(1,970)		(1,970)
Stock-based compensation		—		12,083		—				12,083
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	216,758	—		(914)		—				(914)
Balance as of June 30, 2022	258,690,646	26		1,987,614		(1,327,421)		(9,644)		650,575
Net loss	—	—		—		(145,554)		—		(145,554)
Other comprehensive loss	—	—		—		—		(766)		(766)
Stock-based compensation	—	—		11,510		—		—		11,510
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	202,949	—		(633)		—		—		(633)
Issuance of common stock pursuant to an at-the-market offering	15,587,600	1		99,573		—		—		99,574
Transaction costs related to an at-the-market offering	—	—		(1,163)		—		—		(1,163)
Balance as of September 30, 2022	274,481,195	$	27	$	2,096,901	$	(1,472,975)	$	(10,410)	$	613,543

See accompanying notes to condensed consolidated financial statements.

7

VIRGIN GALACTIC HOLDINGS, INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
Cash flows from operating activities
Net loss	$	(349,332)	$	(272,102)
Stock-based compensation	34,488		48,704
Depreciation, amortization and impairment	12,174		8,635
Amortization of debt issuance costs	1,466		—
Change in fair value of warrants	—		34,650
Non-cash interest and other operating activities, net	6,063		(42)
Change in assets and liabilities
Inventories	6,817		1,178
Other current and non-current assets	2,253		6,342
Accounts payable and accrued liabilities	23,828		1,824
Customer deposits	13,108		2,148
Other current and non-current liabilities	136		3,026
Net cash used in operating activities	(248,999)		(165,637)
Cash flows from investing activity
Capital expenditures	(12,306)		(2,452)
Purchases of marketable securities	(604,945)		(286,132)
Proceeds from maturities and calls of marketable securities	294,612		—
Cash used in investing activity	(322,639)		(288,584)
Cash flows from financing activities
Payments of lease obligations	(132)		(105)
Proceeds from convertible senior notes	425,000		—
Debt issuance costs	(11,278)		—
Capped call premium	(52,318)		—
Repayment of commercial loan	(310)		(310)
Proceeds from issuance of common stock	99,573		500,000
Proceeds from issuance of common stock pursuant to stock options exercised	49		18,856
Transaction costs related to issuance of common stock	(1,137)		(6,753)
Withholding taxes paid on behalf of employees on net settled stock-based awards	(3,479)		(15,779)
Net cash provided by financing activities	455,968		495,909
Net increase (decrease) in cash and cash equivalents	(115,670)		41,688
Cash, cash equivalents and restricted cash at beginning of year	550,030		678,955
Cash, cash equivalents and restricted cash ending balances	$	434,360	$	720,643
Cash and cash equivalents	$	394,032	$	702,565
Restricted cash	40,328		18,078
Cash, cash equivalents and restricted cash	$	434,360	$	720,643

See accompanying notes to condensed consolidated financial statements.

8

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(1) Organization and its wholly owned subsidiaries

Virgin Galactic Holdings, Inc. and its wholly owned subsidiaries ("we," "us," "our," the "Company" and similar terms) are focused on the development, manufacture and operation of spaceships and related technologies for the purpose of conducting commercial human spaceflight and flying commercial research and development payloads into space. The development and manufacturing activities are located in Tustin, California and Mojave, California, with plans to operate the commercial spaceflights out of Spaceport America located in New Mexico.

(2) Summary of Significant Accounting Policies

(a)    Basis of Presentation

These condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation.

Certain reclassifications of the components of operating loss for the three and nine month period ended September 30, 2021 have been made to the comparable prior period in the Condensed Consolidated Statements of Operations and Comprehensive Loss to conform to the same current period presentations. Specifically, cost of revenue has been reclassified to customer experience, and gross margin is no longer presented. Customer experience expenses related to spaceflight operations include the consumption of a rocket motor and fuel and other consumables, as well as payroll and benefits for our pilots and ground crew. Customer experience expenses related to the payload cargo services, as well as engineering services, consist of materials and human capital, such as payroll and benefits, to perform these services. Additionally, customer experience expenses include costs associated with maintaining and growing our Future Astronaut community through offerings provided to community members, as well as hospitality, medical, safety, security, training, and facility costs that are for the benefit of our future astronauts. Additionally, depreciation and amortization expense are presented separately instead of included in selling, general, and administrative or research and development expenses. These reclassifications had no impact on total loss as previously reported.

(b)     Use of Estimates

The preparation of the consolidated financial statements in conformity with GAAP required us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe 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. Significant estimates inherent in the preparation of the consolidated financial statements include, but are not limited to, accounting for revenue, contract assets, contract liabilities, useful lives of property, plant and equipment, fair value of investments, accrued liabilities, income taxes including deferred tax assets and liabilities and impairment valuation, warrants, stock-based awards and contingencies.

9

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(c)    Convertible Senior Notes

On January 1, 2022, the Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which removes from GAAP the liability and equity separation model for convertible instruments with either cash or beneficial conversion features. As a result, convertible debt instruments would only be separated into multiple components if they were issued at a substantial premium or if embedded derivatives requiring bifurcation were identified. The convertible senior notes (the "2027 Notes") were not issued at a substantial premium, and the Company analyzed the provisions of the notes and did not identify any material embedded features which would require bifurcation from the host debt. As such, the notes are accounted for entirely as a liability net of unamortized issuance costs. The carrying amount of the liability is classified as long-term as the instrument does not mature within one year of the balance sheet date and the holder is not permitted to demand repayment of the principal within one year of the balance sheet date. However, if conditions to convertibility are met as described further in Note 11, the Company may be required to reclassify the carrying amount of the liability to current. The embedded conversion features are not remeasured as long as they do not meet the separation requirement of a derivative. Issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, however there was no impact during the current quarter as the convertible instruments were anti-dilutive.

(d)    Capped Call Transactions

In connection with the pricing of our 2027 Notes, the Company entered into capped call transactions with respect to its common stock (the "2027 Capped Calls"). The 2027 Capped Calls are purchased call options that give the Company the option to purchase shares of our common stock, subject to anti-dilution adjustments substantially identical to those in the 2027 Notes. The Company's capped call transactions are accounted for as separate transactions from the 2027 Notes and are classified as equity instruments as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheets. The instruments are initially recorded at fair value and not subsequently remeasured so long as they continue to qualify for equity classification based on the Company's intent and ability for the 2027 Capped Calls to be settled in shares of our common stock. The capped call transactions have the effect of reducing the number of shares outstanding if exercised. Therefore, the capped call transactions are anti-dilutive and not included in the calculation of diluted shares outstanding for the purposes of diluted net loss per share. See Note 11 for additional information on the 2027 Capped Calls.

(e)     Other Summary of Significant Accounting Policies

There have been no other significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "Annual Report on Form 10-K").

The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K. Interim results are not necessarily indicative of the results for a full year.

(3)    Recent Accounting Pronouncements

Changes to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”). See Note 2 for additional information on recently adopted accounting pronouncements.

10

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(4)    Related Party Transactions

The Company licenses its brand name from certain entities affiliated with Virgin Enterprises Limited (“VEL”), a company incorporated in England. VEL is an affiliate of the Company. Under the trademark license, the Company has the exclusive right to operate under the brand name “Virgin Galactic” worldwide. Royalty payables, excluding sponsorship royalties, for the use of license are the greater of 1% of revenue or $40,000 per quarter, prior to the commercial launch date. Sponsorship royalties payable are 25% of sponsorship revenue. We paid license and royalty fees of $40,000 and $390,000 for the three months ended September 30, 2022 and 2021, respectively. We paid license and royalty fees of $120,000 and $470,000 for the nine months ended September 30, 2022 and 2021, respectively.

The Company has a Transition Services Agreement ("TSA") with Virgin Orbit, LLC ("VO") based on allocated operating expense from Virgin Orbit Holdings, Inc. and its subsidiaries (“VOH”), a majority owned company of Virgin Investments Limited ("VIL"), for operations-related functions based on an allocation methodology that considers our headcount, unless directly attributable to the business. Operating expense allocations include use of machinery and equipment, pilot services, and other general administrative expenses. We were allocated $46,000 and $33,000 operating expenses, net, from VOH for the three months ended September 30, 2022 and 2021, respectively. We were allocated $80,000 and $104,000 of operating expenses, net from VOH for the nine months ended September 30, 2022 and 2021, respectively. The Company has a receivable from VOH of $32,000 and $43,000 as of September 30, 2022 and December 31, 2021, respectively.

(5)    Cash, Restricted Cash, Cash Equivalents and Marketable Securities

The amortized cost, unrealized loss and estimated fair value of the Company's cash, cash equivalents, restricted cash, and marketable securities as of September 30, 2022 and December 31, 2021:

	As of September 30, 2022
	Amortized Cost		Gross Unrealized Losses		Fair Value
	(In thousands)
Cash, restricted cash and cash equivalents
Cash and restricted cash	$	8,358	$	—	$	8,358
Money market	384,575		—		384,575
Certificate of deposits	41,427		—		41,427
Marketable securities
US treasuries	149,102		(183)		148,919
Corporate debt securities	536,913		(10,047)		526,866
Total cash, cash equivalents, restricted cash and marketable securities	$	1,120,375	$	(10,230)	$	1,110,145

11

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Losses		Fair Value
	(In thousands)
Cash, restricted cash and cash equivalents
Cash and restricted cash	$	55,592	$	—	$	55,592
Money market	402,889		—		402,889
Certificate of deposits	91,549		—		91,549
Marketable securities
Corporate debt securities	382,884		(2,003)		380,881
Total cash, cash equivalents and marketable securities	$	932,914	$	(2,003)	$	930,911

The Company included $39.8 million and $1.0 million of current restricted cash held in a money market account as of September 30, 2022 and December 31, 2021, respectively.

The Company included $3.2 million and $2.3 million of interest receivable in prepaid expenses and other current assets as of September 30, 2022 and December 31, 2021, respectively.

The Company recognizes amortization and accretion of purchase premiums and discounts on our marketable securities within interest income, net. The Company recognized $1.5 million and $0.3 million in amortization expense for our marketable securities within interest income, net for the three months ended September 30, 2022 and September 30, 2021, respectively. The Company recognized $5.5 million and $0.3 million in amortization expense for marketable securities within interest income, net for the nine months ended September 30, 2022 and September 30, 2021, respectively.

We record gross realized gains and losses as a component of other income, net in the consolidated statements of operations. For the three months ended September 30, 2022, the Company recognized $0.2 million loss in other income, net, and for the three months ended September 2021, the Company did not recognize any material gross realized gains and losses. For the nine months ended September 30, 2022, the Company recognized $0.3 million loss in other income, net. For the nine months ended September 30, 2021, the Company did not recognize any material gross realized gains and losses.

The following table presents the contractual maturities of the Company's marketable securities as of September 30, 2022:

	As of September 30, 2022
	Amortized Cost		Estimated Fair Value
	(In thousands)
Matures within one year	$	614,641	$	606,713
Matures between one to two years	71,374		69,072
Total	$	686,015	$	675,785

(6)    Inventory

As of September 30, 2022 and December 31, 2021, inventory is comprised of the following:

12

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Raw materials	$	13,267	$	21,127
Spare parts	9,584		8,541
Total inventory	$	22,851	$	29,668

For the three months ended September 30, 2022 and 2021,we wrote off $2.2 million and $0.2 million of inventory due to excess and obsolescence, respectively. For the nine months ended September 30, 2022 and September 30, 2021, we wrote off $3.3 million and $0.4 million of inventory due to excess and obsolescence, respectively.

(7)    Property, Plant, and Equipment, net

As of September 30, 2022 and December 31, 2021, property, plant, and equipment, net consisted of the following:

		As of
		September 30, 2022		December 31, 2021
		(Unaudited)
	(In thousands)
Land		$	1,302	$	—
Buildings		9,118		9,117
Leasehold improvements		30,457		29,155
Aircraft		195		195
Machinery and equipment		35,670		37,002
IT software and equipment		28,911		23,523
Construction in progress		3,152		2,901
		108,805		101,893
Less accumulated depreciation and amortization		(59,931)		(54,395)
Property, plant, and equipment, net		$	48,874	$	47,498

The following table sets forth the summary of depreciation and amortization expense for property, plant and equipment, net:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(Unaudited and in thousands)
Customer experience	$	—	$	—	$	—	$	—
Selling, general, and administrative	1,819		1,592		5,085		4,774
Research and development	395		1,304		2,896		3,861
	$	2,214	$	2,895	$	7,981	$	8,635

13

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(8)     Leases

On July 14, 2022, the Company entered into an agreement to lease 151,096 square feet of manufacturing and operations facilities in Mesa, Arizona consisting of two hangars ("Hangar C" and "Hangar B").

The lease has an initial term of approximately ten years and five months after the commencement date applicable to Hangar C or Hangar B, whichever is later, and is expected to commence ten months following the date of the agreement was entered into with respect to Hangar C and fifteen months following the date of the agreement was entered into for Hangar B. The average annual base rent under the lease is approximately $3.0 million. The Company has four options to extend the term of the lease, each for an additional five years.

The Company's leases are more fully described in Note 8 of the "Notes to Consolidated Financial Statements" to its Annual Report on Form 10-K.

The components of lease expense related to leases for the periods presented below are as follows:

	Three Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	2,553	$	1,244
Short-term lease expense	—		6
Finance Lease Cost:
Amortization of right-of-use assets	42		34
Interest on lease liabilities	11		6
Total finance lease cost	53		40
Variable lease cost	1,760		1,475
Total lease cost	$	4,366	$	2,765

14

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

	Nine Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	6,622	$	3,758
Short-term lease expense	—		26
Finance Lease Cost:
Amortization of right-of-use assets	100		103
Interest on lease liabilities	20		20
Total finance lease cost	120		123
Variable lease cost	4,654		4,185
Total lease cost	$	11,396	$	8,092

The components of supplemental cash flow information related to leases for the period are as follows:

	Nine Months Ended September 30,
	2022			2021
	(In thousands, except term and rate data)
Cash flow information:
Operating cash flows for operating leases	$	7,980		$	4,065
Operating cash flows for finance leases	$	20		$	20
Financing cash flows for finance leases	$	132		$	105
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	16,338		$	501
Finance Leases	$	230		$	19
Other Information:
Weighted average remaining lease term:
Operating leases (in years)	10.80			12.30
Finance leases (in years)	2.75			2.29
Weighted average discount rates:
Operating leases	12.14		%	11.66		%
Finance leases	11.26		%	8.22		%

15

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The supplemental balance sheet information related to leases for the period is as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Operating leases
Long-term right-of-use assets	$	49,324	$	35,486
Short-term operating lease liabilities	$	3,190	$	2,204
Long-term operating lease liabilities	56,856		39,965
Total operating lease liabilities	$	60,046	$	42,169

Commitments

The Company has certain non-cancelable operating leases primarily for its premises. These leases generally contain renewal options for periods ranging from 3 to 20 years and require the Company to pay all executory costs, such as maintenance and insurance. Certain lease arrangements have rent free periods or escalating payment provisions, and we recognize rent expense of such arrangements on a straight line basis.

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2022 are as follows:

	Operating Leases		Finance Leases
	(In thousands)
2022 (for the remaining period)	$	2,106	$	47
2023	8,676		170
2024	10,034		94
2025	10,190		64
2026	10,347		35
Thereafter	71,707		2
Total lease payments	$	113,060	$	412
Less:
Imputed interest/present value discount	$	(53,014)	$	(62)
Present value of lease liabilities	$	60,046	$	350

16

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(9)    Accrued Expenses

A summary of the components of accrued liabilities are as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Accrued payroll	$	8,331	$	4,214
Accrued vacation	6,383		5,372
Accrued bonus	11,578		12,218
Accrued interest expense	1,771		—
Accrued contract labor	7,869		1,147
Other accrued expenses	7,457		5,836
Total accrued expenses	$	43,389	$	28,787

(10)    Commercial Loan

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Commercial loan	$	—	$	310
Less: Current portion	—		(310)
Non-current portion	$	—	$	—

On June 18, 2020, we financed the purchase of software licenses through a loan totaling approximately $0.9 million. The loan amortized in three equal annual installments of approximately $0.3 million with the final payment due October 1, 2022 with 0% interest rate. The loan is secured by a standby letter of credit issued from our financial institution and restricted cash has been recorded for the corresponding outstanding balance. The outstanding balance is recorded in other current-liabilities on the Condensed Consolidated Balance Sheets.

The imputed interest of this loan was immaterial.

(11)    Convertible Senior Notes

2027 Convertible Senior Notes

On January 19, 2022, the Company completed an offering of $425 million aggregate principal amount of the 2027 Notes. The 2027 Notes are senior, unsecured obligations of the Company, and bear interest at a fixed rate of 2.50% per year. Interest is payable in cash semi-annually in arrears on February 1 and August 1 of each year,

17

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

beginning on August 1, 2022. The 2027 Notes mature on February 1, 2027 unless earlier repurchased, redeemed or converted.

The terms of the 2027 Notes are governed by an Indenture by and between the Company and U.S. Bank National Association, as Trustee (the "2027 Indenture"). Upon conversion by the noteholders, the 2027 Notes may be settled in cash, shares of the Company's common stock or a combination of cash and shares of common stock, par value $0.0001 per share (the “common stock”), at our election, based on the conversion rate.

The 2027 Notes are convertible at an initial conversion rate of 78.1968 shares of common stock per $1,000 principal amount of the 2027 Notes, which is equal to an initial conversion price of approximately $12.79 per share of common stock, subject to adjustment upon the occurrence of certain events. Noteholders will have the right to convert their notes during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on June 30, 2022, under the following circumstances:

•during any calendar quarter after June 30, 2022 (and only during such calendar quarter) if the last reported sale price of the Company's common stock for each of at least 20 trading days in a period of 30 consecutive trading days ending on and including the last trading day of the preceding calendar quarter is more than 130% of the then applicable conversion price for the Notes per share of common stock;

•during the five consecutive business days immediately after any ten consecutive trading day period in which the trading price per $1,000 principal amount of 2027 Notes for each day of that period was less than 98% of the product of the last reported sale price of our common stock and the then applicable conversion rate;

•the Company calls any or all of the 2027 Notes for redemption, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day prior to the redemption date, even if the 2027 Notes are not otherwise convertible at such time; or

•specified distributions to holders of our common stock are made or specified corporate events occur, as described in the 2027 Indenture.

On and after November 1, 2026, noteholders will have the right to convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will have the right to elect to settle conversions in cash, in shares of its common stock or in a combination of cash and shares of its common stock. During the three and nine months ended September 30, 2022, the conditions allowing holders of the 2027 Notes to convert were not met, and as a result, the 2027 Notes were classified as noncurrent liabilities as of September 30, 2022.

The 2027 Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company's option at any time, and from time to time, on or after February 6, 2025 and on or before the 20th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for a specified period of time and certain liquidity conditions have been satisfied. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. During the three and nine months ended September 30, 2022, the Company did not redeem any of the 2027 Notes.

Holders of the 2027 Notes who convert their 2027 Notes in connection with certain corporate events that constitute a make-whole fundamental change (as defined in the 2027 Indenture) or in connection with the Company's issuance of a redemption notice are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a corporate event that constitutes a fundamental change (as defined in the 2027 Indenture), holders of the 2027 Notes may require the Company to repurchase all or a portion of their 2027 Notes at a price equal to the principal amount of the 2027 Notes being repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The 2027 Notes, net consisted of the following (in thousands):

18

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

	As of
	September 30, 2022
	(Unaudited)
Principal	$	425,000
Less: unamortized debt issuance costs	(9,812)
Net carrying amount	$	415,188

As of September 30, 2022, we included $1.8 million of accrued interest expense on our 2027 Notes within accrued expenses. For the three months ended September 30, 2022, we recognized $3.2 million of total interest expense on our 2027 Notes, including $0.5 million of amortized debt issuance costs. For the nine months ended September 30, 2022, we recognized $8.9 million of total interest expense on our 2027 Notes, including $1.5 million of amortized debt issuance cost.

Capped Call Transactions

In connection with the pricing of the 2027 Notes, the Company entered into capped call transactions with respect to its common stock. The 2027 Capped Calls are purchased call options that give the Company the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2027 Notes, approximately 33 million shares of its common stock for approximately $12.79 per share (subject to adjustment), corresponding to the approximate initial conversion price of the 2027 Notes, exercisable upon conversion of the 2027 Notes. The 2027 Capped Calls have initial cap prices of $20.06 per share (subject to adjustment), which represents a premium of 100% over the closing price of the Company's common stock on January 13, 2022, and will expire in 2027, if not exercised earlier. The 2027 Capped Calls are intended to reduce potential dilution to the Company's common stock upon any conversion of the 2027 Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount upon any conversion of the 2027 Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the 2027 Capped Call transactions. The 2027 Capped Calls are separate transactions, each between the Company and the applicable option counterparty, and are not part of the terms of the 2027 Notes and will not affect any holder's rights under the 2027 Notes or the 2027 Indenture. Holders of the 2027 Notes will not have any rights with respect to the 2027 Capped Call transactions.

The Company paid an aggregate amount of $52.3 million for the 2027 Capped Calls. As these transactions meet certain accounting criteria, the amount paid for the 2027 Capped Calls was recorded as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheets. The fair value of the 2027 Capped Calls is not remeasured each reporting period so long as they continue to qualify for equity classification, which they did for the current period.

(12)    Income Taxes

Income tax expense was $21,000 and $25,000 for the three months ended September 30, 2022 and 2021, respectively. Income tax expense was $69,000 and $74,000 for the nine months ended September 30, 2022 and 2021, respectively. The effective income tax rate was nil for three and nine months ended September 30, 2022 and 2021. Our effective tax rate differs from the U.S. statutory rate primarily due to a substantially full valuation allowance against our net deferred tax assets where it is more likely than not that some or all of the deferred tax assets will not be realized.

19

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(13)    Stockholders' Equity

There have been no significant changes from the Stockholders' Equity disclosed in Note 12 of the “Stockholders Equity” included in our Annual Report on Form 10-K.

Stockholders' Agreement

In connection with the closing of the Virgin Galactic business combination in October 2019 (the "Business Combination"), the Company entered into a stockholders’ agreement with certain of the Company’s investors. Pursuant to the terms of the Stockholders’ Agreement, as long as VIL is entitled to designate two directors to the Company’s Board of Directors, the Company must obtain VIL’s prior written consent to engage in certain corporate transactions and management functions such as business combinations, disposals, acquisitions, incurring indebtedness, and engagement of professional advisors, among others.

Warrants and Warrant Redemption

Public and private placement warrants were initially issued as part of Social Capital Hedosophia Holdings Corp.'s ("SCH") initial public offering in 2017 and assumed upon the consumption of the Business Combination. As of September 30, 2022, and December 31, 2021, there were no public or private placement warrants outstanding.

The Company remeasured the fair value of the Warrants at each reporting date with changes recorded in earnings. In connection with the Company's remeasurement of the Warrants to fair value, the Company recorded income of approximately $34.4 million for the three months ended September 30, 2021 and expense of $34.7 million for the nine months ended September 30, 2021.

At The Market Offerings

On July 12, 2021, the Company entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $500.0 million of shares of the Company’s common stock, par value $0.0001 per share, through an "at the market offering" program ("ATM"), from time to time by the Company through the Agents, acting as the Company’s sales agents, or directly to one or more of the Agents, acting as principal.

We completed available offerings under the 2021 ATM on July 16, 2021, generating $500.0 million in gross proceeds through the sale of 13,740,433 shares of the Company's common stock, before deducting $6.2 million in underwriting discounts, commissions and other expenses payable by the Company.

On August 4, 2022, the Company entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC providing for the offer and sale of up to $300.0 million of shares of the Company’s common stock, par value $0.0001 per share, through an ATM (the "2022 ATM program").

As of September 30, 2022, we sold a total of 15,587,600 shares of the Company's common stock under the 2022 ATM program, generating $99.6 million in gross proceeds, before deducting $1.2 million in underwriting discounts, commissions and other expenses payable by the Company.

20

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(14)     Net Loss Per Share

The following table presents net loss per share and related information:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands, except for share and per share data)
Numerator:
Net loss attributable to common shareholders	$	(145,554)	$	(48,368)	$	(349,332)	$	(272,102)
Less: revaluation of warrant liability	—		(34,432)		—		—
Adjusted net loss	(145,554)		(82,800)		(349,332)		(272,102)
Denominator:
Weighted average shares of common stock outstanding	263,907,259		254,749,195		260,255,202		244,157,923
Add: dilutive effect of common stock issuable from assumed exercise of warrants	—		398,033		—		—
Weighted average shares outstanding, diluted	263,907,259		255,147,228		260,255,202		244,157,923
Net loss per share:
Basic	$	(0.55)	$	(0.19)	$	(1.34)	$	(1.11)
Diluted	$	(0.55)	$	(0.32)	$	(1.34)	$	(1.11)

Basic and diluted net loss per share was computed using the weighted-average number of common shares of common stock outstanding during the three and nine month periods ended September 30, 2022 and September 30, 2021. Basic net loss per share is the same as diluted net loss per share for the three and nine month periods ended September 30, 2022 and for the nine months ended September 30, 2021 as the inclusion of all potential common shares outstanding would have been anti-dilutive.

For the three months ended September 30, 2021, the Company included the potential effect of the warrants to purchase shares of common stock as the effect would be dilutive. Diluted net loss per share for the three months ended September 30, 2021 was computed by dividing the net loss, adjusted for the revaluation of warrant liability for private warrants, by the weighted average number of common shares outstanding for the period, adjusted for the dilutive effect of shares of common stock equivalents resulting from the assumed exercise of the warrants. The treasury stock method was used to calculate the potential dilutive effect of these common stock equivalents for the three months ended September 30, 2021.

Potentially dilutive securities that were not included in the diluted per share calculation for these periods, as they would have an anti-dilutive impact on net loss per share, are as follows (in thousands):

	As of September 30,
	2022	2021
Issued and outstanding stock options	3,794	4,428
Issued and outstanding performance stock options	406	—
Unvested restricted stock units issued and outstanding	4,502	3,442
Unvested performance stock units issued and outstanding	255	90
Shares related to the 2027 Notes (1)	33,234	—
Warrants to purchase shares of common stock	—	8,000
	42,191	15,960

(1) The Company uses the if-converted method for calculating any potential dilutive effect of the conversion options embedded in the 2027 Notes on diluted net loss per share, if applicable.

21

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(15)    Stock-Based Compensation

The Company's 2019 Incentive Award Plan ("2019 Plan") is more fully described in Note 14 of the "Notes to Consolidated Financial Statements" on Form 10-K. Under the 2019 Plan, the Company has the ability to grant incentive stock options, non-qualified stock options and restricted stock units ("RSUs") to employees, directors and other service providers. Performance stock units ("PSUs") are RSUs that vest based on achievement of specified performance criteria. Performance stock options ("PSOs") are stock options that vest based on achievement of specified performance criteria.

Stock Options

Twenty five percent of such stock options cliff vest at the grant date first anniversary, with the remaining options vesting ratably over the following three years, subject to continued employment on each vesting date. Vested options will be exercisable at any time until ten years from the grant date, subject to earlier expiration under certain terminations of service and other conditions. The stock options granted have an exercise price equal to the closing stock price of our common stock on the grant date.

In March 2022, we issued stock options as incentive compensation for certain key employees. The fair values of these stock options were estimated using a Black-Scholes model with the following assumptions:

	2022
Expected life (in years)(1)	6.11
Expected volatility(2)	69.0	%
Risk free interest rate(3)	2.19	%
Dividend yield(4)	—	%

(1) The expected life is the period of time that participants are expected to hold their options before exercised using the "simplified method" as described in Staff Accounting Bulletin No. 107.

(2) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(3) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(4) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

22

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth the summary of options activity for the nine month ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)	Weighted Average Grant Date Fair Value ($)
Options outstanding at December 31, 2021	4,253,767	$	14.09	7.60	6,187	—
Granted	303,030	7.99				4.95
Exercised	(4,182)	11.79
Forfeited options	(758,250)	18.96
Options outstanding at September 30, 2022	3,794,365	$	13.91	6.74	—	—
Options exercisable at September 30, 2022	2,346,118	$	13.96	6.14	—	—

(1) Aggregate intrinsic value is calculated based on the difference between our closing stock price at period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the period end date.

Performance Stock Options

Compensation expense on the PSOs will be recognized over the period between the grant date and the estimated vest date. The number of PSOs that will vest depends on the attainment of certain stock price goals. Vested options will be exercisable at any time until ten years from the grant date, subject to earlier expiration under certain terminations of service and other conditions. The stock options granted have an exercise price equal to the closing stock price of our common stock on the grant date.

In March 2022, we issued PSOs as incentive compensation for certain key employees. The fair values of these stock options were estimated using a Monte-Carlo simulation with the following assumptions:

	2022
Expected exercise behavior(1)	75.0	%
Expected Volatility(2)	58.0	%
Risk free interest rate(3)	2.19	%
Dividend yield(4)	—	%

(1) PSOs are expected to be exercised after 75% of the period between the vest date and the end of the contractual term has lapsed.

(2) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(3) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(4) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

23

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

The following table sets forth the summary of PSO activity for the nine month ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)	Weighted Average Grant Date Fair Value ($)
PSOs outstanding at December 31, 2021	—	$	—	0.00	—
Granted	405,680	8.99				4.93
Exercised	—	—
Forfeited options	—	—
PSOs outstanding at September 30, 2022	405,680	$	8.99	9.47	—
PSOs exercisable at s September 30, 2022	—	$	—	0.00	—

(1) Aggregate intrinsic value is calculated based on the difference between our closing stock price at period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the period end date.

Restricted Stock Units

The RSUs vest over four years with 25% cliff vest at the first year anniversary of the grant date, with the remaining vesting ratably over the next three years.

The following table sets forth the summary of RSUs activity for the nine months ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Shares	Weighted Average Fair Value
RSUs outstanding at December 31, 2021	2,396,732	$	27.89
Granted	3,900,745	8.42
Vested	(1,144,802)	20.20
Forfeited	(650,533)	16.54
RSUs outstanding at September 30, 2022	4,502,142	$	13.65

Performance Stock Units

Between 25% and 200% of the PSUs are eligible to vest based on the achievement of certain performance-based goals or market-based goals by specified target dates, subject to continued service through the applicable vesting date. PSUs with performance-based goals are amortized over the requisite service period in which it is probable that the performance goal is achieved. PSUs with market-based goals will vest based on the Company's common stock performance following the end of the three year performance measurement period based on the highest closing price over twenty consecutive trading days during the performance measurement period. PSUs with market-based goals cannot vest before the end of the performance measurement period, thus the requisite service period is three years.

24

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

In March 2022, we issued PSUs as incentive compensation for certain key employees. The fair values of these stock units were estimated using a Monte-Carlo simulation with the following assumptions:

	2022
Expected volatility(1)	95.0	%
Risk free interest rate(2)	2.13	%
Dividend yield(3)	—	%

(1) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(2) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(3) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

The following table sets forth the summary of PSUs activity for the nine months ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Shares	Weighted Average Fair Value
PSUs outstanding at December 31, 2021	89,839	$	26.47
Granted	277,552	14.62
Forfeited	(112,518)	26.17
PSUs outstanding at September 30, 2022	254,873	$	14.67

Stock-based compensation expense was recorded in the following expense categories in the Condensed Consolidated Statements of Operations and Comprehensive Loss:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Stock option and PSO expense
Selling, general and administrative	$	2,113	$	1,735	$	6,022	$	12,590
Research and development	596		776		2,020		2,445
Total stock option and PSO expense	2,710		2,511		8,042		15,035
RSU and PSU expense
Selling, general and administrative	6,045		6,805		18,046		24,414
Research and development	2,756		2,853		8,400		9,255
Total RSU and PSU expense	8,800		9,658		26,446		33,669
Total stock-based compensation expense	$	11,510	$	12,169	$	34,488	$	48,704

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VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

As of September 30, 2022, the unrecognized stock-based compensation related to stock options and PSOs was $12.5 million and $0.7 million, respectively. These amounts are expected to be recognized over weighted-average periods of 2.0 years and 0.7 years, respectively. As of September 30, 2022, the unrecognized stock-based compensation related to RSUs and PSUs was $76.7 million and $3.1 million, respectively. These amounts are expected to be recognized over weighted-average periods of 2.6 years and 2.5 years, respectively.

(16)     Fair Value Measurements

We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We estimate fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which is categorized in one of the following levels:

•Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the

reporting entity at the measurement date;

•Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability; and

•Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The carrying amounts included in the Condensed Consolidated Balance Sheets under current assets and current liabilities approximate fair value because of the short maturity of these instruments.

The following tables summarize the fair value of assets that are recorded in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 at fair value on a recurring basis:

Fair Value Measurements as of September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market	$	386,578	$	—	$	—	$	386,578
Certificate of deposit	41,777		—		—		41,777
US treasuries	148,919		—		—		148,919
Corporate debt securities	—		526,866		—		526,866
Total assets at fair value	$	577,274	$	526,866	$	—	$	1,104,140
Liabilities:
2027 Notes	$	—	$	—	$	238,451	$	238,451
Total liabilities at fair value	$	—	$	—	$	238,451	$	238,451

The estimated fair value of the 2027 Notes were determined based on the quoted bid prices of the 2027 Notes in an over-the-counter market on the last trading day of the reporting period.

26

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money Market	$	402,889	$	—	$	—	$	402,889
Certificate of Deposit	91,549		—		—		91,549
Corporate debt securities	—		380,881		—		380,881
Total assets at fair value	$	494,438	$	380,881	$	—	$	875,319

(17)    Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. The Company applies accounting for contingencies to determine when and how much to accrue for and disclose related to legal and other contingencies. Accordingly, the Company discloses contingencies deemed to be reasonably possible and accrues loss contingencies when, in consultation with legal advisors, it is concluded that a loss is probable and reasonably estimable. Although the ultimate aggregate amount of monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that any monetary liability or financial impact to the Company from these matters, individually and in the aggregate, beyond that provided at September 30, 2022, would not be material to the Company’s financial position, results of operations or cash flows. However, there can be no assurance with respect to such result, and monetary liability or financial impact to the Company from legal proceedings, lawsuits and other claims could differ materially from those projected.

Lavin v. the Company

On May 28, 2021, a class action complaint was filed against us in the Eastern District of New York captioned Lavin v. Virgin Galactic Holdings, Inc., Case No. 1:21-cv-03070. In September 2021, the Court appointed Robert Scheele and Mark Kusnier as co-lead plaintiffs for the purported class. Co-lead plaintiffs amended the complaint in December 2021, asserting violations of Sections 10(b), 20(a) and 20A of the Exchange Act of 1934 against us and certain of our current and former officers and directors on behalf of a putative class of investors who purchased our common stock between July 10, 2019 and October 14, 2021. The amended complaint alleges, among other things, that we and certain of our current and former officers and directors made false and misleading statements and failed to disclose certain information regarding the safety of its ships and success of its commercial flight program. Co-lead plaintiffs seek damages, interest, costs, expenses, attorneys' fees, and other unspecified equitable relief. Defendants filed a motion to dismiss on April 4, 2022, and that motion is now fully briefed. The Company intends to vigorously defend against this matter.

Spiteri, Grenier, and Laidlaw, derivatively on behalf of the Company vs. Certain Current and Former Officers and Directors

On February 21, 2022, March 1, 2022, and September 21, 2022, three alleged shareholders filed separate derivative complaints purportedly on behalf of the Company against certain of our current and former officers and directors in the Eastern District of New York captioned Spiteri v. Branson et al., Case No. 1:22-cv-00933, Grenier v. Branson et al., Case No. 1:22-cv-01100, and Laidlaw v. Branson et al., Case No. 1:22-cv-05634, respectively. Collectively, the complaints assert violations of Sections 10(b), 14(a), and 21D of the Exchange Act of 1934 and claims of breach of fiduciary duty, aiding and abetting breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, contribution and indemnification, and unjust enrichment arising from substantially similar allegations as those contained in the securities class action described above. The complaints seek an unspecified sum of damages, interest, restitution, expenses, attorneys’ fees and other equitable relief. The cases are at a preliminary stage.

27

VIRGIN GALACTIC HOLDINGS, INC.

Notes to Condensed Consolidated Financial Statements

(Unaudited)

(18)    Employee Benefit Plan

The Company has defined contribution plans, under which the Company pays fixed contributions into a separate entity, and additional contributions to the plans are based upon a percentage of the employees’ elected contributions. The Company will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized within selling, general, and administrative expenses and research and development in the Condensed Consolidated Statements of Operations and Comprehensive Loss, as incurred. Defined contributions were $1.4 million and $1.5 million for the three months ended September 30, 2022 and 2021, respectively. Defined contributions were $4.0 million and $4.1 million for the nine months ended September 30, 2022 and 2021, respectively.

(19)    Supplemental Cash Flow Information

	Nine Months Ended September 30,
	2022		2021
	(in thousands)
Supplemental disclosure
Cash payments and refunds for:
Income tax refund	$	56	$	—
Income tax paid	(90)		(84)
	$	(34)	$	(84)
Schedule for noncash investing activities:
Unpaid property, plant, and equipment received	$	1,356	$	1,021
	$	1,356	$	1,021
Schedule for noncash financing activities:
Issuance of common stock "cashless" warrants exercised	$	—	$	170,090
Issuance of common stock through restricted stock units vested	9,557		36,692
Commercial Loan	(310)		(310)
	$	9,247	$	206,472

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, all references in this section to the “Company,” "Virgin Galactic," “we,” “us,” or “our” refer to Virgin Galactic Holdings, Inc. and its subsidiaries.

You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited financial statements and the related notes thereto, and the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business” included in our Annual Report on Form 10-K. This discussion contains forward-looking statements that reflect our plans, estimates, and beliefs that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” section of our Annual Report on Form 10-K and under the "Cautionary Note Regarding Forward-Looking Statements" section and elsewhere in this Quarterly Report on Form 10-Q, our actual results may differ materially from those anticipated in these forward-looking statements.

Overview

We are at the vanguard of a new industry, pioneering a consumer space experience using reusable spaceflight systems. We believe the commercial exploration of space represents one of the most exciting and important technological initiatives of our time. Approximately 640 humans have ever traveled above the Earth’s atmosphere into space. This industry is growing dramatically due to new products, new sources of private and government funding, and new technologies. Demand is emerging from new sectors and demographics, which we believe is broadening the total addressable market. As government space agencies have retired or reduced their capacity to send humans into space, private companies are beginning to make exciting inroads into the fields of human space exploration. We have embarked on this journey with a mission to put humans and research experiments into space and return them safely to Earth on a routine and consistent basis. We believe that opening access to space will connect the world to the wonder and awe created by space travel, offering customers a transformative experience, and providing the foundation for a myriad of exciting new industries.

We are an aerospace and space travel company offering access to space for private individuals, researchers and government agencies. Our missions include flying passengers to space as tourists, as well as flying scientific payloads and researchers to space in order to conduct experiments for scientific and educational purposes. Our operations include the design and development, manufacturing, ground and flight testing, and post-flight maintenance of our spaceflight system vehicles. Our spaceflight system is developed using our proprietary technology and processes and is focused on providing space experiences for private astronauts, researcher flights and professional astronaut training.

We intend to offer our customers a unique, multi-day experience culminating in a spaceflight that includes several minutes of weightlessness and views of Earth from space. Our elegant and distinctive spaceflight system – which takes off and lands on a runway – has been designed for optimal safety and comfort. As part of our commercial operations, we have exclusive access to the Gateway to Space facility at Spaceport America located in New Mexico. Spaceport America is the world’s first purpose-built commercial spaceport and will be the site of our initial commercial spaceflight operations. We believe the site provides us with a competitive advantage as it has a desert climate with relatively predictable weather conditions preferable to support our spaceflights and it also has airspace that is restricted for surrounding general air traffic which facilitates frequent and consistent flight scheduling.

Our near-term focus is to launch the commercial program for human spaceflight. In December 2018, we made history by flying our groundbreaking spaceship, VSS Unity, to space. This represented the first flight of a spaceflight system built for commercial service to take humans into space. In February 2019, we flew our second spaceflight with VSS Unity, which carried a crew member in the cabin in addition to the two pilots. After relocating our operations to Spaceport America, we have flown an additional two spaceflights in May and July of 2021. The May 2021 flight carried revenue-generating research experiments as part of NASA’s Flight Opportunities Program. This was the third time Virgin Galactic has flown technology experiments in the cabin on a spaceflight. This flight also completed the data submission to the FAA resulting in the approval for the expansion of our commercial space transportation operator license to allow for the carriage of space flight participants. This marked the first time the FAA licensed a spaceline to fly customers and was further validation of the inherent safety of our system.

Our flight in July 2021 was the 22nd flight of VSS Unity, the fourth rocket powered spaceflight and the first spaceflight with a full crew of four mission specialists in the cabin, including our Founder, Sir Richard Branson.

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We believe that the market for commercial human spaceflight is significant and untapped. As of September 30, 2022, we received reservations for approximately 800 spaceflight tickets and collected more than $104.0 million in deposits from future astronauts. With each ticket purchased, future astronauts will experience a multi-day journey to prepare their mind and body for their upcoming flight, which includes a comprehensive spaceflight training preparation program and culminates with a trip to space on the final day. Each ticket purchased after our ticket sale reopening in 2021 also includes a membership in Virgin Galactic's Future Astronaut community. This membership provides access to events and experiences, including exclusive weeks 'at home' with Virgin Galactic Astronaut 001, Sir Richard Branson.

We have developed an extensive set of integrated aerospace development capabilities encompassing preliminary vehicle design and analysis, detail design, manufacturing, ground testing, flight testing, and maintenance of our spaceflight system. Our fully reusable spaceflight system consists of two primary components: our carrier aircraft, which is called the mothership, and our spaceship.

Our mothership is a twin-fuselage, custom-built aircraft designed to carry the spaceship up to an altitude of approximately 45,000 feet where it is released for its flight into space. Using the mothership’s air launch capability, rather than a standard ground-launch, reduces the energy requirements of our spaceflight system as the spaceship does not have to ascend through the higher density atmosphere closest to the Earth’s surface. It is also a fully reusable part of our spaceflight system. The spaceship is a vehicle with the capacity to carry pilots and private astronauts, research experiments, and researchers that travel with their experiments for human tended research flights into space and return them safely to Earth. It is powered by a hybrid rocket propulsion system, which propels the spaceship on a trajectory into space. The hybrid rocket motor utilizes liquid oxidizer and solid fuel and is designed to be a simple, safe, reliable propulsion system for the spaceship. The spaceship’s cabin has been designed to maximize the future astronaut’s safety, experience and comfort. A dozen windows line the sides and ceiling of the spaceship, offering customers the ability to view the blackness of space as well as stunning views of the Earth below.

Our team is currently in various stages of designing, testing and manufacturing additional spaceships, motherships, and rocket motors in order to meet the expected demand for human spaceflight experiences. Our next generation spaceships will include the various learnings from our flight test program so we are able to design and manufacture our future spaceships to allow for greater predictability, faster turnaround time and easier maintenance. Concurrently, we are also researching and developing new products and technologies to grow our company.

Our operations also include spaceflight opportunities for research and technology development. Researchers have historically utilized parabolic aircraft and drop towers to create moments of microgravity and conduct significant research activities related to the space environment. In most cases, these solutions offer only seconds of continuous microgravity time and do not offer access to the upper atmosphere or space itself. Researchers can also conduct experiments on sounding rockets or satellites. These opportunities are expensive, infrequent and may impose highly limiting operational constraints. Our spaceflight system is intended to provide the scientific research community access to space for affordable and repeatable access to microgravity. Our suborbital platform is an end-to-end offering, which includes not only our vehicles, but also the hardware such as middeck lockers that we provide to researchers that request them, along with the processes and facilities needed for a successful campaign. The platform offers a routine, reliable and responsive service allowing for experiments to be repeated rapidly and frequently and with the opportunity to be tended in-flight by one or more researchers. This capability will enable scientific experiments as well as educational and research programs to be carried out by a broader range of individuals, organizations and institutions than ever before. Our commitment to advancing research and science has been present in all of our spaceflights to date. In May of 2021, we carried payloads into space for research purposes through NASA's Flight Opportunities Program, and our flight in July of 2021 included research payloads from the University of Florida.

We have also leveraged our knowledge and expertise in manufacturing spaceships to occasionally perform engineering services for third parties, such as research, design, development, manufacturing and integration of advanced technology systems.

Factors Affecting Our Performance

We believe that our performance and future success depend on a number of factors that present significant opportunities for us but also pose risks and challenges, including those discussed below and in Part 1, Item 1A. of our Annual Report on Form 10-K titled “Risk Factors.”

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Impact of COVID-19

The COVID-19 pandemic and the protocols and procedures we implemented in response to the pandemic caused delays to our business and operations, which led to accumulated impacts to both schedule and cost efficiency and some delays in operational and maintenance activities, including delays in our test flight program. While we are no longer experiencing delays from these measures, the longevity and extent of the COVID-19 pandemic remain uncertain, including due to the emergence and impact of the COVID-19 variants. Measures we may need to take in the future and challenges that result from the pandemic could affect our operations necessary to complete the development of our spaceflight systems, our scheduled flight test programs and commencement of our commercial flights. See the section entitled Part II, Item 1A. "Risk Factors" for further discussion of the impacts of the COVID-19 pandemic on our business. We believe our cash and cash equivalents on hand at September 30, 2022, and management's operating plan, will provide sufficient liquidity to fund our operations for at least the next twelve months from the issuance of these financial statements included in this Quarterly Report on Form 10-Q.

Commercial Launch of Our Human Spaceflight Program

We are in the final phases of developing our commercial spaceflight program. Prior to launch of commercial service, we must complete a period of planned maintenance and enhancements to the vehicles, as well as subsequent vehicle flight testing. Commercial service is currently expected to commence in the second quarter of 2023. We continuously monitor our supply chain for potential risk associated with the delivery of materials from our suppliers, which in turn could impact the schedule for completion of the enhancement period and the start of commercial service. We have identified some areas of risk for timely delivery and continue to work on mitigating these identified risks. Any delays in successful completion of our test flight program, whether due to the supply chain, the impact of COVID-19 and related macroeconomic factors or otherwise, will impact our ability to generate revenue from human spaceflight.

Customer Demand

While not yet in commercial service for human spaceflight, we have already received significant interest from potential future astronauts. Going forward, we expect the size of our backlog and the number of future astronauts that have flown to space on our spaceflight system to be an important indicator of our future performance. As of September 30, 2022, we had reservations for space flights for approximately 800 future astronauts. In August 2021, following Sir Richard Branson's successful test flight, we reopened ticket sales to a select group and increased the pricing of our consumer offerings to a base price of $450,000 per seat. In February 2022, we opened ticket sales to the general public. We are reserving our first 100 ticket sales for research and scientific experiments. As of September 30, 2022, the tickets sold represent approximately $213.2 million in expected future revenue upon completion of space flights.

We are the first spaceline to receive FAA approval to carry commercial customers to space. This was through an update to our existing commercial spaceflight license which we have held since 2016.

Available Capacity and Annual Flight Rate

We expect to commence commercial operations with a single spaceship, VSS Unity, and a single mothership carrier aircraft, VMS Eve, which together comprise our only spaceflight system. As a result, our annual flight rate will be constrained by the availability and capacity of this spaceflight system. Additionally, we may commence commercial operations while temporarily assigning one of the four passenger seats in VSS Unity to be occupied by one of our employees to gather input about the experience in order to help us create in the long-term a better experience for our customers. To reduce the capacity constraint associated with having only one spaceflight system, we are currently developing our newest spaceship, VSS Imagine. We intend to expand our fleet further with our next generation vehicles, our Delta class spaceships and our next generation motherships, which will allow us to increase our annual flight rate. We believe that expanding the fleet will allow us to increase our annual flight rate once commercialization is achieved. We are dedicating significant engineering resources to the work that precedes production of the future fleet. Simultaneously, we are focused on the launch and flight consistency of Unity and Eve to begin bringing our customers to space and to demonstrate the value of our product. Prioritizing our resources against these important efforts will likely impact the pace of work on our second spaceship, VSS Imagine, and we are reassessing its schedule for entering commercial service.

Safety Performance of Our Spaceflight Systems

Our spaceflight systems are highly specialized with sophisticated and complex technology. We have built operational processes to ensure that the design, manufacture, performance and servicing of our spaceflight systems meet rigorous quality standards. However, our spaceflight systems are still subject to operational and process risks, such as manufacturing and design

31

issues, human errors, or cyber-attacks. Any actual or perceived safety issues may result in significant reputational harm to our business and our ability to generate human spaceflight revenue.

Component of Results of Operations

Revenue

To date, we have primarily generated revenue from fees related to our Future Astronaut community membership and Future Astronaut community event, by transporting scientific commercial research and development payloads using our spaceflight systems and by providing engineering, and scientific research services. We also have generated revenues from sponsorship arrangements.

Following the commercial launch of our human spaceflight services, we expect the significant majority of our revenue to be derived from ticket sales to fly to space and related services. We also expect that we will continue to receive a small portion of our revenue by providing services relating to the research, design, development, manufacture and integration of advanced technology systems.

Customer Experience

Customer experience expenses related to spaceflight operations include the consumption of a rocket motor and fuel and other consumables, as well as payroll and benefits for our pilots and ground crew. Customer experience expenses related to the payload cargo services, as well as engineering services, consist of materials and human capital, such as payroll and benefits, to perform these services. Additionally, customer experience expenses include costs associated with maintaining and growing our Future Astronaut community through offerings provided to community members, as well as hospitality, medical, safety, security, training, and facility costs that are for the benefit of our astronauts.

Selling, General and Administrative

Selling, general and administrative expenses consist of human capital related expenses for employees involved in general corporate functions, including executive management and administration, accounting, finance, tax, legal, information technology, marketing and commercial, and human resources; rent relating to facilities, including a portion of the lease with Spaceport America, and equipment; professional fees; and other general corporate costs. Human capital expenses primarily include salaries, cash bonuses, stock-based compensation and benefits. As we continue to grow as a company, we expect that our selling, general and administrative costs will increase on an absolute dollar basis.

Research and Development

Research and development expense represents costs incurred to support activities that advance our human spaceflight system towards commercialization, including basic research, applied research, concept formulation studies, design, development, and related testing activities. Research and development costs consist primarily of the following costs for developing our spaceflight systems:

•flight testing programs, including rocket motors, fuel, and payroll and benefits for pilots and ground crew performing test flights;

•equipment, material, and labor hours (including from third party contractors) for developing the spaceflight system’s structure, spaceflight propulsion system, and flight profiles; and

•rent, maintenance, and other overhead expenses allocated to the research and development departments.

As of September 30, 2022, our current primary research and development objectives focus on the development of our mothership and spaceship vehicles for commercial spaceflights and developing our rocket motor, a hybrid rocket propulsion system that will be used to propel our spaceship vehicles into space. The successful development of mothership, spaceship and rocket motor involves many uncertainties, including:

•our ability to recruit and retain skilled engineering and manufacturing staff;

•timing in finalizing spaceflight systems design and specifications;

•successful completion of flight test programs, including flight safety tests;

32

•our ability to obtain additional applicable approvals, licenses or certifications from regulatory agencies, if required, and maintaining current approvals, licenses or certifications;

•performance of our manufacturing facilities despite risks that disrupt productions, such as natural disasters and hazardous materials;

•performance of a limited number of suppliers for certain raw materials and components;

•performance of our third-party contractors that support our manufacturing and research and development activities including the quality of components and subassemblies;

•our ability to maintain rights from third parties for intellectual properties critical to research and development activities;

•continued access to launch sites and airspace;

•our ability to continue funding and maintain our current research and development activities; and

•the impact of the ongoing global COVID-19 pandemic.

A change in the outcome of any of these variables could delay the development of our motherships, spaceships, or rocket motors, which in turn could impact when we are able to commence our human spaceflights.

As we are currently still in our final development and testing stage of our spaceflight system, we have expensed all research and development costs associated with developing and building our spaceflight system. We expect that our research and development expenses will decrease once technological feasibility is reached for our spaceflight systems as the costs incurred to manufacture additional spaceship vehicles, built by leveraging the invested research and development, will no longer qualify as research and development activities.

Depreciation and Amortization

Depreciation of property, plant, and equipment, net is calculated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized over the shorter period of the estimated life or the lease term. Once we have completed our test flight program and commenced commercial operations, we will capitalize the cost to construct any unfinished and additional spaceships and motherships. As these additional spaceships and motherships are placed into service, the related depreciation will be included in the Depreciation and Amortization line item on the Condensed Consolidated Statements of Operations and Comprehensive Loss. We have not capitalized any spaceship development costs to date.

Change in Fair Value of Warrants

Change in fair value of warrants reflects the non-cash change in the fair value of warrants. Certain warrants issued as part of the Company's initial public offering in 2017 and assumed upon the consummation of the Virgin Galactic business combination in October 2019 (the "Business Combination") were recorded at their fair value on the date of the Business Combination and are remeasured as of any warrant exercise date and at the end of each reporting period. No warrants were outstanding during the three and nine month period ended September 30, 2022.

Interest Income

Interest income primarily includes interest earned on our cash and cash equivalents and marketable securities.

Interest Expense

Interest expense consists of amortization of debt issuance costs and contractual interest expense for our 2027 Notes, as well as interest expense related to our finance lease obligations.

Other Income

Other income consists of miscellaneous non-operating items, such as gains on marketable securities and handling fees related to customer refunds.

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Income Tax Provision

We are subject to income taxes in the United States and the United Kingdom. Our income tax provision consists of an estimate of federal, state, and foreign income taxes based on enacted federal, state, and foreign tax rates, as adjusted for allowable credits, deductions, uncertain tax positions, changes in the valuation of our deferred tax assets and liabilities, and changes in tax laws.

Results of Consolidated Operations

The following tables set forth our results of operations for the periods presented and expresses the relationship of certain line items as a percentage of revenue for those periods. The period-to-period comparisons of financial results is not necessarily indicative of future results.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands)
Revenue	$	767	$	2,580	$	1,443	$	3,151
Operating expenses:
Customer experience	590		207		737		270
Selling, general and administrative	46,113		48,268		127,820		128,503
Research and development	97,411		34,289		211,578		103,997
Depreciation and amortization	2,214		2,895		7,981		8,635
Total operating expenses	146,328		85,659		348,116		241,405
Operating loss	(145,561)		(83,079)		(346,673)		(238,254)
Interest income	3,524		240		6,327		785
Interest expense	(3,293)		(6)		(8,924)		(19)
Change in fair value of warrants	—		34,432		—		(34,650)
Other income, net	(203)		70		7		110
Loss before income taxes	(145,533)		(48,343)		(349,263)		(272,028)
Income tax expense	(21)		(25)		(69)		(74)
Net loss	$	(145,554)	$	(48,368)	$	(349,332)	$	(272,102)

For the Three and Nine Months Ended September 30, 2022 Compared to the Three and Nine Months Ended September 30, 2021

Revenue

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	(In thousands, except %)
Revenue	$	767	$	2,580	$	(1,813)	(70)	%	$	1,443	$	3,151	$	(1,708)	(54)	%

We recorded revenues of $0.8 million for the three months ended September 30, 2022, compared to revenues of $2.6 million for the three months ended September 30, 2021. Revenues for the three months ended September 30, 2022 were primarily attributable to membership fees related to our Future Astronaut community, fees related to our Future Astronaut community event, and scientific research services earned under government contracts. Revenues for the three months ended September 30, 2021 were primarily attributable to sponsorship revenue generated from our Unity 22 spaceflight in July 2021, as well as revenue earned under government contracts from progress on the completion of certain technical milestones related to payload services.

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We recorded revenues of $1.4 million for the nine months ended September 30, 2022, compared to revenues of $3.2 million for the nine months ended September 30, 2021. Revenues for the nine months ended September 30, 2022 were primarily attributable to membership fees related to our Future Astronaut community, fees related to our Future Astronaut community event, and scientific research services under government contracts. Revenues for the nine months ended September 30, 2021 were primarily attributable to sponsorship revenue and spaceflights in May and July of 2021, as well as revenue earned under government contracts from progress on the completion of technical milestones related to payload services.

Customer Experience

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	(In thousands, except %)
Customer experience	$	590	$	207	$	383	185	%	$	737	$	270	$	467	173	%

We recorded customer experience costs of $0.6 million for the three months ended September 30, 2022, compared to $0.2 million of costs for the three months ended September 30, 2021. Customer experience costs for the three months ended September 30, 2022 were primarily attributable to costs related to our Future Astronaut community event. Costs for the three months ended September 30, 2021 were primarily attributable to incremental costs related to the completion of payload services, labor costs provided for engineering services under long-term U.S. government contracts, and agent fees related to sponsorship revenue.

We recorded customer experience costs of $0.7 million for the nine months ended September 30, 2022, compared to $0.3 million for the nine months ended September 30, 2021. Customer experience costs for the nine months ended September 30, 2022 were primarily attributable to costs related to our Future Astronaut community event, other costs to maintain our Future Astronaut community, and labor costs provided for scientific research services. Costs for the nine months ended September 30, 2021 were primarily attributable to incremental costs related to the completion of payload services, labor costs provided for engineering services under long-term U.S. government contracts, and agent fees related to sponsorship revenue.

Selling, General and Administrative

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	(In thousands, except %)
Selling, general and administrative	$	46,113	$	48,268	$	(2,155)	(4)	%	$	127,820	$	128,503	$	(683)	(1)	%

Selling, general and administrative expenses decreased from $48.3 million for the three months ended September 30, 2021 to $46.1 million for the three months ended September 30, 2022. This decrease was primarily due to a $8.7 million decrease in marketing related expenses attributable to our spaceflight in July 2021. This decrease was partially offset by a $4.6 million increase in salary, bonus, and other employee benefits and a $2.1 million increase in consulting, legal and other professional costs.

Selling, general and administrative expenses decreased from $128.5 million for the nine months ended September 30, 2021 to $127.8 million for the nine months ended September 30, 2022. This decrease was primarily due to a $12.9 million decrease in stock-based compensation and a $8.7 million decrease in marketing related expenses attributable to our spaceflights in May and July 2021. These decreases were partially offset by a $12.1 million increase in salary, bonus and other employee benefits, a $6.3 million increase in consulting, legal and other professional costs and a $2.2 million increase in software licensing and IT costs.

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Research and Development

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	(In thousands, except %)
Research and development	$	97,411	$	34,289	$	63,122	184	%	$	211,578	$	103,997	$	107,581	103	%

Research and development expenses increased from $34.3 million for the three months ended September 30, 2021 to $97.4 million for the three months ended September 30, 2022. This increase was primarily due to costs associated with developing our spaceflight system, specifically a $49.7 million increase in contract labor and materials and a $8.8 million increase in salaries, bonus, and other employee benefits. In addition, there was a $2.9 million increase in facilities costs and a $1.9 million increase in consulting, insurance, IT and other professional costs.

Research and development expenses increased from $104.0 million for the nine months ended September 30, 2021 to $211.6 million for the nine months ended September 30, 2022. This increase was primarily due to costs associated with developing our spaceflight system, specifically a $77.9 million increase in contract labor and materials and a $20.9 million increase in salaries, bonus, and other employee benefits. In addition, there was a $5.3 million increase in facilities costs and a $4.6 million increase in consulting, insurance, IT and other professional costs. These increases were partially offset by a $1.3 million decrease in stock-based compensation.

Depreciation and Amortization

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	($ in thousands)								(In thousands, except %)
Depreciation and amortization	$	2,214	$	2,895	$	(681)	(24)	%	$	7,981	$	8,635	$	(654)	(8)	%

Depreciation and amortization expense decreased from $2.9 million for the three months ended September 30, 2021 to $2.2 million for the three months ended September 30, 2022, a decrease of $0.7 million when compared to 2021.

Depreciation and amortization expense decreased from $8.6 million for the nine months ended September 30, 2021 to $8.0 million for the nine months ended September 30, 2022, a decrease of $0.7 million when compared to 2021.

Change in the Fair Value of Warrants

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	($ in thousands)								(In thousands, except %)
Change in fair value of warrants	$	—	$	34,432	$	(34,432)	(100)	%	$	—	$	(34,650)	$	34,650	(100)	%

Change in fair value of warrants reflects the non-cash change in the fair value of warrants. No warrants were outstanding during the three and nine month periods ended September 30, 2022.

Interest Income

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	(In thousands, except %)
Interest income	$	3,524	$	240	$	3,284	1,368	%	$	6,327	$	785	$	5,542	706	%

Interest income increased from $0.2 million for the three months ended September 30, 2021 to $3.5 million for the three months ended September 30, 2022. This increase was primarily driven by interest earned on marketable securities.

Interest income increased from $0.8 million for the nine months ended September 30, 2021 to $6.3 million for the nine months ended September 30, 2022. This increase was primarily driven by interest earned on marketable securities.

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Interest Expense

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	(In thousands, except %)
Interest expense	$	3,293	$	6	$	3,287	54,783	%	$	8,924	$	19	$	8,905	46,868	%

Interest expense increased from less than $0.1 million for three months ended September 30, 2021 to $3.3 million for the three months ended September 30, 2022. This increase was primarily driven by interest expense and amortization of debt issuance costs related to our January 2022 senior convertible notes.

Interest expense increased from less than $0.1 million for the nine months ended September 30, 2021 to $8.9 million for the nine months ended September 30, 2022. This increase was primarily driven by interest expense and amortization of debt issuance costs related to our January 2022 senior convertible notes.

Other Income (expense), net

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	($ in thousands)								(In thousands, except %)
Other income (expense), net	$	(203)	$	70	$	(273)	(390)	%	$	7	$	110	$	(103)	(94)	%

Other income (expense), net decreased from less than $0.1 million for three months ended September 30, 2021 to $(0.2) million for the three months ended September 30, 2022, a decrease of $0.3 million when compared to 2021.

Other income (expense), net decreased from $0.1 million for the nine months ended September 30, 2021 to less than $0.1 million for the nine months ended September 30, 2022, a decrease of $0.1 million when compared to 2021.

Income Tax Expense

	Three Months Ended September 30,				$ Change		% Change		Nine Months Ended September 30,				$ Change		% Change
	2022		2021						2022		2021
	($ in thousands)								(In thousands, except %)
Income tax expense	$	21	$	25	$	(4)	(16)	%	$	69	$	74	$	(5)	(7)	%

Income tax expense was immaterial for the three and nine months ended September 30, 2022 and 2021. We have accumulated net operating losses at the federal and state level as we have not yet started commercial operations. We maintain a substantially full valuation allowance against our net U.S. federal and state deferred tax assets. The income tax expenses shown above are primarily related to minimum state filing fees in the states where we have operations as well as corporate income taxes for our operations in the United Kingdom, which operates on a cost-plus arrangement.

Liquidity and Capital Resources

As of September 30, 2022, we had cash, cash equivalents and restricted cash of $434.4 million and $675.8 million in marketable securities. Since the consummation of our business combination transaction in 2019, our principal sources of liquidity have come from our sales of our common stock and offering of convertible senior notes ("2027 Notes").

In January 2022, we completed an offering of the 2027 Notes due on February 1, 2027, unless earlier repurchased, redeemed or converted, and received aggregate proceeds of $425 million, before deducting costs of issuance of $11.2 million. The 2027 Notes are senior, unsecured obligations of the Company, and bear interest at a fixed rate of 2.50% per year. Interest is payable in cash semi-annually in arrears on February 1 and August 1 of each year, beginning on August 1, 2022. The 2027 Notes mature on February 1, 2027 unless earlier repurchased, redeemed or converted. In connection with the 2027 Notes, we entered into capped call transactions with respect to our common stock (the "2027 Capped Calls"). We paid an aggregate amount of $52.3 million for the 2027 Capped Calls. See Note 11 in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information on the 2027 Capped Calls.

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Historical Cash Flows

	Nine Months Ended September 30,
	2022		2021
	(In thousands)
Net cash (used in) provided by
Operating activities	$	(248,999)	$	(165,637)
Investing activities	(322,639)		(288,584)
Financing activities	455,968		495,909
Net change in cash and cash equivalents and restricted cash	$	(115,670)	$	41,688

Operating Activities

Net cash used in operating activities was $249.0 million for the nine months ended September 30, 2022, which primarily consisted of $349.3 million of net losses, adjusted for non-cash items, which primarily included depreciation, amortization and impairment expense of $12.2 million, stock based compensation expense of $34.5 million, amortization of debt issuance costs of $1.5 million, non-cash interest and other operating activities of $6.1 million, as well as $46.1 million of cash provided by working capital.

Net cash used in operating activities was $165.6 million for the nine months ended September 30, 2021, which primarily consisted of $272.1 million of net losses, adjusted for non-cash items, which primarily included depreciation and amortization expense of $8.6 million, stock based compensation expense of $48.7 million, and change in fair value of warrants of $34.7 million, as well as $14.5 million of cash provided by working capital.

Investing Activities

Net cash used in investing activities was $322.6 million for the nine months ended September 30, 2022, which consisted of $604.9 million purchases of marketable securities, as well as $12.3 million in capital expenditures, which was offset by $294.6 million in proceeds from maturities and calls of marketable securities.

Net cash used in investing activities was $288.6 million for the nine months ended September 30, 2021, which consisted of $286.1 million purchases of marketable securities, as well as $2.5 million in capital expenditures.

Financing Activities

Net cash provided by financing activities was $456.0 million for the nine months ended September 30, 2022, which primarily consisted of the issuance of the 2027 Notes for net proceeds of $413.7 million and net cash proceeds from sale and issuance of common stock of $98.5 million, offset by the purchase of the 2027 Capped Calls of $52.3 million and tax withholdings for net settled stock-based awards of $3.5 million.

Net cash provided by financing activities was $495.9 million for the nine months ended September 30, 2021, which primarily consisted of net cash proceeds from sale and issuance of common stock of $512.1 million, offset by tax withholdings for net settled stock-based awards of $15.8 million.

Funding Requirements

We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we continue to advance the development of our spaceflight system and the commercialization of our human spaceflight operations. In addition, we expect customer experience expenses to increase significantly as we commence commercial operations and add additional spaceships to our operating fleet.

Specifically, our operating expenses will increase as we:

•scale up our manufacturing processes and capabilities to support expanding our fleet with additional spaceships, carrier aircraft and rocket motors upon commercialization;

•pursue further research and development on our future human spaceflights, including those related to our research and education efforts on point-to-point travel;

38

•hire additional personnel in research and development, manufacturing operations, testing programs, maintenance operations and guest services as we increase the volume of our spaceflights upon commercialization;

•seek regulatory approval for any changes, upgrades or improvements to our spaceflight technologies and operations in the future, especially upon commercialization;

•maintain, expand and protect our intellectual property portfolio;

•establish our astronaut campus in New Mexico; and

•hire additional personnel in management to support the expansion of our operational, financial, information technology, and other areas to support our operations as a public company.

In some cases, we expect our arrangements with third-party providers, including under our Master Agreement with Aurora Flight Sciences Corporation (“Aurora"), a wholly owned subsidiary of The Boeing Company, for the design and manufacture of our next generation of carrier aircraft, will require significant capital expenditures from us, but such amounts are subject to future negotiations and cannot be estimated with reasonable certainty. Although we believe that our current capital is adequate to sustain our operations for at least the next twelve months, changing circumstances may cause us to consume capital significantly faster than we currently anticipate, and we may need to spend more money than currently expected because of circumstances beyond our control. Additionally, we are in the final phases of developing our commercial spaceflight program. While we anticipate initial commercial launch with a single spaceship, we currently have additional spaceship vehicles under construction. We anticipate the costs to manufacture additional vehicles will begin to decrease as we continue to scale up our manufacturing processes and capabilities. Until we achieve technological feasibility with our spaceflight systems, we will not capitalize expenditures incurred to construct any additional components of our spaceflight systems and we will continue to expense these costs as incurred to research and development.

Short-term Liquidity and Capital Resources

For at least the next twelve months, we expect our principal demand for funds will be for our ongoing activities described above. We expect to meet our short-term liquidity requirements primarily through our cash, cash equivalents and marketable securities on hand. We believe we will have sufficient liquidity available to fund our business needs, commitments and contractual obligations for the next twelve months.

Long-term Liquidity and Capital Resources

Beyond the next twelve months, our principal demand for funds will be to sustain our operations, including the construction of additional motherships under an agreement with a third-party contractor, and spaceship vehicles, construction of our astronaut campus, expansion of the New Mexico Spaceport, and for the payment of the principal amount of our convertible senior notes as it becomes due. We expect to begin generating revenue from our human spaceflight program, which is expected to launch in the second quarter of 2023. To the extent this source of capital as well as the sources of capital described above are insufficient to meet our needs, we may also conduct additional offerings of our securities or refinance debt. We expect these resources will be adequate to fund our ongoing operating activities.

The commercial launch of our human spaceflight program and the anticipated expansion of our fleet have unpredictable costs and are subject to significant risks, uncertainties and contingencies, many of which are beyond our control, that may affect the timing and magnitude of these anticipated expenditures. Some of these risk and uncertainties are described in more detail in our Annual Report on Form 10-K under the heading Item 1A. “Risk Factors—Risks Related to Our Business.”

Contractual Obligations and Commitments

Except as set forth in Note 17, Commitments and Contingencies, of the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, there have been no material changes outside the ordinary course of business to our contractual obligations and commitments as described in Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K. Additionally, in some cases, we have entered arrangements with third-party providers for services, such as the design and manufacture of our next generation of carrier aircraft. The amounts we would pay under those arrangements will be significant but are not contractually committed until we execute specific task orders with the applicable counterparty, are subject to future negotiations and cannot be estimated with reasonable certainty.

39

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of our condensed consolidated financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses and related disclosures. We believe that the estimates, assumptions and judgments involved in the accounting policies described below have the greatest potential impact on our financial statements and, therefore, we consider these to be our critical accounting policies. Accordingly, we evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions and conditions. Please refer to Note 2 in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information about these critical accounting policies, as well as a description of our other significant accounting policies.

Recent Accounting Pronouncements

Please refer to Note 3 in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for a description of recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

We have operations within the United States and the United Kingdom and as such we are exposed to market risks in the ordinary course of our business, including the effects of interest rate changes and fluctuations in foreign currency exchange rates. We are also exposed to market risk from changes in our stock prices, which impact the fair value of our 2027 Notes. Information relating to quantitative and qualitative disclosures about these market risks is set forth below.

Interest Rate Risk

We had cash, cash equivalents and marketable securities totaling $1.1 billion as of September 30, 2022, of which $1.1 billion was invested in money market funds, certificate deposits, U.S. treasuries, and corporate debt securities. Our cash and cash equivalents are held for working capital purposes. Our marketable securities are held for capital preservation purposes. We do not enter into investments for trading or speculative purposes.

Our cash equivalents and our investment portfolio are subject to market risk due to changes in interest rates. Fixed rate securities may have their market value adversely affected due to a rise in interest rates. Due in part to these factors, our future investment income may fall short of our expectations due to changes in interest rates or we may suffer losses in principal if we are forced to sell securities that decline in market value due to changes in interest rates. However, because we classify our marketable securities as “available for sale,” no gains are recognized due to changes in interest rates. As losses due to changes in interest rates are generally not considered to be credit related changes, no losses in such securities are recognized due to changes in interest rates unless we intend to sell, it is more likely than not that we will be required to sell, we sell prior to maturity or we otherwise determine that all or a portion of the decline in fair value are due to credit related factors.

In January 2022, we issued the 2027 Notes in an aggregate principal amount of $425.0 million. Concurrently with the issuance of the 2027 Notes, we entered into separate capped call transactions. The 2027 Capped Calls were completed to reduce the potential dilution from the conversion of the 2027 Notes. The 2027 Notes have a fixed annual interest rate of 2.50%. Accordingly, we do not have economic interest rate exposure on the 2027 Notes. However, changes in market interest rates impact the fair value of the 2027 Notes. In addition, the fair value of the 2027 Notes fluctuates when the market price of our common stock fluctuates. The fair value was determined based on the quoted bid price of the 2027 Notes in an over-the-counter market on the last trading day of the reporting period.

As of September 30, 2022, a hypothetical 100 basis point change in interest rates would not have had a material impact on the value of our cash equivalents or investment portfolio.

Foreign Currency Risk

The functional currency of our operations in the United Kingdom is the local currency. We translate the financial statements of the operations in the United Kingdom to United States Dollars and as such we are exposed to foreign currency risk. Currently, we do not use foreign currency forward contracts to manage exchange rate risk, as the amount subject to foreign currency risk is not material to our overall operations and results.

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Item 4. Controls and Procedures

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2022, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

We are from time to time subject to various claims, lawsuits and other legal and administrative proceedings arising in the ordinary course of business. Some of these claims, lawsuits and other proceedings may involve highly complex issues that are subject to substantial uncertainties, and could result in damages, fines, penalties, non-monetary sanctions or relief. However, we do not consider any such claims, lawsuits or proceedings that are currently pending, individually or in the aggregate, to be material to our business or likely to result in a material adverse effect on our future operating results, financial condition or cash flows. See Note 17 in our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information.

Item 1A. Risk Factors

Our business, financial condition and operating results can be affected by a number of factors, whether currently known or unknown, including but not limited to those described as risk factors, any one or more of which could, directly or indirectly, cause our actual operating results and financial condition to vary materially from past, or anticipated future, operating results and financial condition. For a discussion of our potential risks and uncertainties, see the risk factors previously disclosed in Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K and in Part I, Item 2. “Management's Discussion and Analysis of Financial Condition and Results of Operations" in this Quarterly Report on Form 10-Q. There have been no material changes to the risk factors disclosed on our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

On November 2, 2022, Virgin Galactic, LLC (the “Subsidiary”), a wholly owned subsidiary of Virgin Galactic Holdings, Inc. (the “Company”) executed agreements (the “Master Agreements”) with Bell Textron Inc., a subsidiary of Textron Inc., and Qarbon Aerospace (Foundation), LLC (collectively, the “Suppliers”), under which the Suppliers will assist with the design and will manufacture the major subassemblies for the Company’s new Delta class spaceships.

The work under the Master Agreement is to be performed under a series of task orders, which cover the design assist, material procurement, tooling, and manufacturing of the new spaceships. Some portions of the work will be performed under task orders that will be billed on a time-and-materials basis, while others will be performed on a fixed-price basis.

The Subsidiary will retain responsibility as the design authority for the program, pursuant to which it will have final approval of the spaceship design and will perform final assembly, integration, and testing of the vehicles. The Subsidiary is also responsible for obtaining the airworthiness certificate for each spaceship manufactured under the program, as well as approval to use the new spaceship as part of the Company’s space flight system licensed by the U.S. Federal Aviation Administration.

The Master Agreement contains customary terms relating to payment terms, intellectual property, proprietary information, and termination. Under the preliminary schedule for the program, the first Delta class spaceship is expected to commence revenue-generating payload flights in late 2025, progressing to private astronaut flights in 2026. The foregoing description of the Master Agreement is a summary and is not complete and is qualified in its entirety by reference to the full text of the Master Agreements.

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Item 6. Exhibits

The following documents are filed as part of this report:

(1) Exhibits. The following exhibits are filed, furnished or incorporated by reference as part of this Quarterly Report on Form 10-Q.

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/Furnished Herewith
2.1(1)	Agreement and Plan of Merger, dated July 9, 2019, by and among the Registrant, Vieco 10 Limited, Foundation Sub 1, Inc., Foundation Sub 2, Inc., Foundation Sub LLC, TSC Vehicle Holdings, Inc., Virgin Galactic Vehicle Holdings, Inc. and Virgin Galactic Holdings, LLC	8-K/A	001-38202	2.1	07/11/2019
2.1(a)(1)	Amendment No. 1 to Agreement and Plan of Merger, dated October 2, 2019, by and among the Registrant, Vieco 10 Limited, Foundation Sub 1, Inc., Foundation Sub 2, Inc., Foundation Sub LLC, TSC Vehicle Holdings, Inc., Virgin Galactic Vehicle Holdings, Inc., Virgin Galactic Holdings, LLC and Vieco USA, Inc.	S-4	333-233098	2.1(a)	10/03/2019
3.1	Certificate of Incorporation of the Registrant	8-K	001-38202	3.1	10/29/2019
3.2	By-Laws of the Registrant	8-K	001-38202	3.2	10/29/2019
10.1(2)(3)	Master Agreement, dated July 5, 2022, by and between the Registrant and Aurora Flight Sciences Corporation	10-Q	001-38202	10.1	08/04/2022
10.2(2)(3)	Standard Industrial/Commercial Multi-Tenant Sublease - Net, dated July 14, 2022, by and between the Registrant and Gateway Executive Airpark, LLC					*
10.3(2)(3)	First Amended and Restated Standard Industrial/Commercial Multi-Tenant Sublease - Net, dated July 14, 2022, by and between the Registrant and Gateway Executive Airpark, LLC					*
10.4(3)	Agreement and General Release, dated August 30, 2022, by and between the Registrant and Michelle Kley					*
31.1	Certification of Principal Executive Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					*
31.2	Certification of Principal Financial Officer Pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002					*
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					**
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002					**
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document					*
101.SCH	Inline XBRL Taxonomy Extension Schema Document					*
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document					*
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document					*
101.LAB	Inline XBRL Taxonomy Extension Labels Linkbase Document					*

43

		Incorporated by Reference
Exhibit No.	Exhibit Description	Form	File No.	Exhibit	Filing Date	Filed/Furnished Herewith
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document					*
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)					*

* Filed herewith.

** Furnished herewith.

(1) Schedules and exhibits have been omitted pursuant to Item 601(b)(2) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

(2) Portions of this exhibit (indicated by asterisks) have been omitted pursuant to Regulation S-K, Item 601(b)(10). Such omitted information is not material and the registrant customarily and actually treats such information as private or confidential. Additionally, schedules and attachments to this exhibit have been omitted pursuant to Regulation S-K, Items 601(a)(5).

(3) Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Registrant agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request.

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Signatures

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, thereunto duly authorized.

	Virgin Galactic Holdings, Inc.
Date: November 3, 2022		/s/ Michael Colglazier
	Name:	Michael Colglazier
	Title:	Chief Executive Officer (Principal Executive Officer)
Date: November 3, 2022		/s/ Douglas Ahrens
	Name:	Douglas Ahrens
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)

45

EX-10.2

[***] Certain information in this document has been excluded pursuant to Regulation S-K Item 601(b)(10). Such excluded information is not material and is of the type that the registrant treats as private or confidential.

STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT SUBLEASE - NET

1.Basic Provisions ("Basic Provisions")

1.1Parties. This Standard Industrial/Commercial Multi-Tenant Sublease – Net ("Sublease"), dated for reference purposes only July 14, 2022, is made by and between Gateway Executive Airpark, LLC, a Delaware limited liability company, whose address is 7030 W. Oakland Street, Chandler, Arizona 85226 ("Sublessor") and Virgin Galactic Holdings, Inc., whose address is 1700 Flight Way, Tustin, California, 92782 ("Sublessee”) (collectively the "Parties", or individually a "Party").

1.2(a)    Premises: That certain real property, including all improvements located thereon or to be provided by Sublessor under the terms of this Sublease, commonly known as 5559 S. Sossaman Road, Mesa, Arizona 85212, Hangar B and Hangar C (collectively, the "Premises"). A description of the Premises and the Project (defined below) is attached to this Lease as Exhibit A and incorporated herein by this reference. The Premises are located within the Project in the County of Maricopa and are generally described as Hangar B (35,896 sq.ft) (“Hangar B”) and Hangar C (115,200 sq. ft.) (“Hangar C”). Hangar B and Hangar C are individually, a “Building”, and are sometimes collectively referred to herein as the “Buildings” or Premises. In addition to Sublessee's rights to use and occupy the Premises as hereinafter specified, Sublessee shall have exclusive rights to each and every part of the Premises, including without limitation, any utility raceways located within the Premises, but Sublessee shall not have any rights to access the roof, or change or modify the exterior walls of the Buildings (except as expressly set forth in this Sublease), or have any rights to any other buildings in the Project. Sublessee shall also have non-exclusive rights, together with other subtenants of the Project, to use the Common Areas (as defined in Paragraph 2.7 below). The Premises, the Common Areas, and the land upon which they are located, along with all other buildings and improvements located within Gateway Executive Park, also known as Lots 11, 12, 13 and 14, are herein collectively referred to as the "Project." (See also Paragraph 2). The Buildings’ square footages were calculated by the Project’s architect, Winton Architects, Inc., who has confirmed the basis for square foot calculation. Sublessee has had an opportunity to review and shall have until the full Lease execution, to agree, or disagree, with the square footages. The agreed upon square footage calculation shall not be changed during the term of the Sublease or any extensions thereof. Sublessor waives any rights to relocate Sublessee during the Term of the Sublease and any extensions thereof.

1.2(b) Land Lease: Sublessor is the tenant/lessee under that certain Land Lease dated effective as of October 1, 2019, and as amended by the First Amendment to Lease dated effective October 21, 2020 (as amended “Land Lease”) with PHOENIX-MESA GATEWAY AIRPORT AUTHORITY, a joint powers airport authority authorized and existing under the laws of the State of Arizona (“Land Lessor”); and pursuant to the Land Lease, Sublessor leased the Project from Land Lessor. A copy of the Land Lease is attached hereto as Exhibit B and made a part of this Sublease. Such Land Lease includes, without limitation: Sublessor’s use of the apron/ramp areas in front of Tenant’s aircraft access doors and use of all taxiways and runways subject to the Land Lease’s rules and regulations. Sublessor hereby grants to Sublessee all of those uses and rights granted and or leased to Sublessor, as lessee, under the Land Lease. In addition, Sublessor and Sublessee agree as follows with respect to the Land Lease:

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(1)Sublessee acknowledges that this Sublease is a sublease entered into by Sublessor as lessee under that the Land Lease, as whereby Land Lessor leases to Sublessor, and Sublessor leases from Land Lessor, the Project. Prior to the date of this Sublease, Sublessor has delivered to Sublessee a true and complete copy of the Land Lease. Sublessee hereby acknowledges and agrees that this Sublease is subject and subordinate to the terms and provisions of the Land Lease. Sublessee acknowledges and agrees that, without limiting any of Sublessee's other obligations set forth in this Sublease, Sublessee and its successors and assigns (to the extent permitted under the terms of this Sublease) shall comply with all of the terms and provisions of the Land Lease.

(2)Sublessor represents, warrants and agrees as follows: (i) Sublessor shall comply with all of the terms and provisions of the Land Lease, including without limitation, promptly and faithfully observing, enforcing, abiding by, discharging and performing, all of the terms, obligations, covenants, conditions, agreements, indemnities, representations, warranties or liabilities under the Land Lease on the part of the lessee thereunder to be kept, observed, discharged and performed, (ii) Sublessor shall do, or cause to be done, all things necessary to preserve and keep unimpaired all rights of Sublessor as lessee under the Land Lease, and to prevent any default on its part under the Land Lease, or any termination, surrender, cancellation, forfeiture, subordination or impairment thereof, (iii) the Land Lease is a valid and binding obligation of Sublessor and Land Lessor, enforceable in accordance with its terms, (iv) as of the date of this Sublease, there are no defaults on the part of Sublessor, as sublessee, or to Sublessor’s knowledge, Land Lessor, under the Land Lease, nor any event or circumstance with the giving of notice or the passage of time, would be a default under the Land Lease, and Sublessor shall give Sublessee prompt written notice following the occurrence of any such default, (v) there is no litigation, arbitration or other legal proceeding pending, or to Sublessor’s knowledge, threatened against either Sublessor, as lessee, or Land Lessor, (vi) as of the date of this Sublease, Sublessor has no claims, offsets, defenses or set-offs against the payment of rent under the Land Lease, (vii) Landlord shall use its good faith commercially reasonable efforts to obtain Land Lessor’s approval of Sublessee’s use and access to the tarmac area, if such approval is required by the Land Lease and (viii) Land Lessor’s consent is not required for an assignment or subletting by Sublessee, including without limitation, any assignment or subletting to a Sublessee Affiliate (as defined below).

(3)The parties acknowledge that the Land Lease includes the clause: “Non-Disturbance:Lessor agrees, for the benefit of all sub-tenants for all or any part of Premises, that if this Lease or Lessee’s right of possession of the Premises is terminated for default or others, all subleases for all or any part of the Premises, except any sublease of an affiliate of Lessee, shall continue full force and effect, notwithstanding the termination, as direct leases between the Lessor and sub-tenants, all such sub-tenants shall upon request, attorn in writing to Lessor.”

(4)Sublessor’s sole obligation in this Paragraph 1.2(b)(4) shall be to use Sublessor’s commercially reasonable efforts to obtainthe written consent of Land Lessor and the written consent of any mortgagee, ground lessor or other third party required under the LandLease, each in form reasonably acceptable to both Parties (collectively, “Land Lessor Consent”)(A) to this Sublease, (B) to Sublessee’s proposed use of the Premises, (C) to Sublessee’s right to assign or sublet all or a portion of the Premises to a “Sublessee Affiliate” (defined below), (D) to the extent the Sublessee Improvements, Sublessor Improvements and other alterations are described in this Sublease and Addendum, to the

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Sublessee Improvements (as defined in the Addendum attached hereto as Exhibit C and incorporated herein by this reference (“Addendum”)), Sublessor Improvements described in the Addendum and other alterations and improvements to be installed by Sublessee and Sublessor pursuant to the terms of this Sublease, Addendum and exhibits to this Sublease, (E) to Sublessee’s right to restrict access to certain areas of the Premises for security reasons (provided, Sublessee acknowledges that Sublessee is solely responsible for preparing its plan for securing the Premises and obtaining required governmental approvals) and (F) to Sublessee’s use and access to landing areas required for Sublessee’s space or aircraft. If the Land Lessor Consent is not delivered by Land Lessor to Sublessor and Sublessee on or before August 15, 2022, then Sublessor and Sublessee may each terminate this Sublease by delivering written notice thereof to the other Party, and upon such termination, Sublessor shall return to Sublessee all amounts delivered to Sublessor hereunder no later than two (2) business days following such date, and this Sublease shall be of no further force and effect and both Parties shall be released from all liabilities and obligations hereunder. Sublessee acknowledges and agrees that Sublessee is solely responsible for determining whether the Premises is suitable for its use and Sublessee has not relied upon Sublessor or any third party to make such determination.

(5)Any fees and expenses incurred by Land Lessor or any mortgagee, ground lessor or other third party (except Sublessor) in connection with requesting and obtaining the Land Lessor Consent shall be paid by Sublessor and shall thereafter be reimbursed by Sublessee to Sublessor not later than thirty (30) days after written demand by Sublessor. Sublessee agrees to cooperate reasonably with Land Lessor and supply all information and documentation reasonably requested by Land Lessor within ten (10) days of its written request therefor. Sublessor shall not be required to perform any acts, expend any funds, or bring any legal proceedings in order to obtain the Land Lessor Consent and Sublessee shall have no right to any claim against Sublessor in the event the Land Lessor Consent is not obtained; provided, Sublessee shall have the right to terminate this Sublease without cost or penalty to Sublessee in the event the Land Lessor consent is not obtained.

(6)In any case under this Sublease that requires the consent or approval of both Land Lessor and Sublessor, Sublessor agrees to submit the matter to be so consented to or approved of to Land Lessor, and if Land Lessor so consents or approves, Sublessor agrees that such consent shall be deemed given by Sublessor under this Sublease. In the event that the consent or approval of any matter is not required of Land Lessor under the Land Lease, no such consent or approval of Sublessor shall be required hereunder, unless, pursuant to the express terms of this Sublease, Sublessor’s consent or approval is required, in which event Sublessor agrees that it shall not unreasonably withhold or delay its consent or approval with respect thereto. In connection with any matter requiring the consent or approval of Land Lessor under this Sublease, Sublessor agrees to cooperate with and assist Sublessee in obtaining such Land Lessor’s consent or approval at Sublessee’s sole cost and expense. Sublessee and Sublessor each hereby covenants and agrees to promptly deliver to the other party copies of any and all notices or other correspondence received by it from Land Lessor or delivered by it to Land Lessor relating to the Premises.

(7)Sublessor shall not amend or modify the Land Lease if such amendment or modification may affect the Premises or the rights of Sublessee hereunder and Sublessor shall not voluntarily terminate the Land Lease in any manner without Sublessee’s prior written consent. Sublessor shall not cause or suffer a termination of the Land Lease as a result of an act or omission of Sublessor that constitutes a default under the Land Lease or this Sublease. Sublessor shall indemnify, defend and hold Sublessee harmless from and against all claims, judgments, liabilities, penalties, damages, costs and expenses

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Subtenant shall suffer (including reasonable attorneys’ fees) resulting from any breach of the covenant set forth in the immediately preceding sentence.

(8)If Land Lessor defaults in the performance of any of its obligations under the Land Lease, Sublessor shall, upon the written request of Sublessee, use its diligent good faith efforts to enforce the Land Lease and obtain Land Lessor’s compliance with its obligations thereunder. Sublessee’s performance hereunder shall be excused if Sublessor’s performance under the Land Lease is excused because of any default of Land Lessor or any failure or delay on the part of Land Lessor in performing its obligations under the Land Lease.

(9)If Sublessor defaults in the performance of any of Sublessor’s obligations under this Sublease or under any provisions of the Land Lease applicable to Sublessor, which default shall, by its nature, cause Land Lessor to seek to terminate the Land Lease, Sublessee, without thereby waiving such default, may, at Sublessee’s option, perform the same for the account and at the expense of Sublessor, subject to Sublessee providing Sublessor with not less than two (2) business days prior written notice. If Sublessor shall thereafter fail to cure the default, Sublessee may make such payment or expend such sums as may be necessary to perform and fulfill such term, covenant or condition. In such event, the amount of Sublessee’s expenditure or payment shall be that amount reasonably necessary to perform and fulfill any such term, covenant or condition, together with interest on the amount thereof from the time such moneys are expended until reimbursed by Sublessor at an annual rate equal to the lesser of (i) ten percent (10%) per annum or (ii) the maximum legal rate.

(10)Whenever the consent or approval of Sublessor is required, Sublessee shall also be obligated to obtain the written consent or approval of Land Lessor, if required pursuant to the terms of the Land Lease. Sublessor shall promptly make such consent request on behalf of Sublessee and Sublessee shall promptly provide any information or documentation that Land Lessor may request. Sublessee shall reimburse Sublessor, not later than ten (10) business days after written demand by Sublessor, for any fees and disbursements of attorneys, architects, engineers, or others charged by Land Lessor in connection with any consent or approval. Sublessor shall have no liability of any kind to Sublessee for Land Lessor’s failure to give its consent or approval.

1.2(c)    Parking: 1 7 2unreserved vehicle parking spaces. (See also Paragraph 2.5 and Exhibit A.) at no cost or expense to Sublessee during the Term, as such Term may be extended.

1.2Term:     The original term ("Original Term") shall commence upon the date of this Lease ("Commencement Date") and shall expire ten (10) years and five (5) months after the Rent Commencement Date applicable to Hangar C or Hangar B, whichever is later ("Expiration Date"). (See also Paragraph 3)

TERM AND COMMENCEMENT: The building shells with respect to (I) Hangar C’s delivery is estimated to be ten (10) months following the date of this Lease or a shell estimated completion date of April 1, 2023, but due to supply issues, the delivery date can neither be guaranteed by Sublessor’s General Contractor nor Sublessor. Base Rent and Common Area Operating Expenses for Hangar C shall commence upon delivery to Sublessee of the completed “shell “ for Hangar C as evidenced by a notice of completion delivered from the City of Mesa AZ Building Department (“Rent Commencement Date for Hangar C”). Hangar B’s delivery is estimated to be fifteen (15) months following the date of this Sublease or a shell estimated completion date of September 1, 2023, but due to supply issues, the delivery date can neither

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be guaranteed by Sublessor’s General Contractor nor Sublessor. Base Rent and Common Area Operating Expenses for Hangar B shall commence upon delivery to Sublessee of the completed “shell” for Hangar B as evidenced by a notice of completion delivered from the City of Mesa AZ Building Department (“Rent Commencement Date for Hangar B”). In both above cases of Hangar C and Hangar B, Sublessor shall provide no less than thirty (30) days prior written notice to Sublessee of the shell completion date and receipt of the notice of completion from the City of Mesa Building Department. Notwithstanding the foregoing, in the event that the Rent Commencement Date for Hangar C shall not have occurred by October 1, 2023, Sublessee shall have the right to terminate this Sublease and all monies previously paid to Sublessor shall be returned immediately thereafter to Sublessee.

1.3Early Possession: Sublessee, its General Contractor and sub-contractors shall be permitted to reasonable, non-exclusive possession of the Premises during the final stages of shell completion to commence work on the Sublessee’s tenant improvements provided that Sublessee’s General Contractor and sub-contractors (i) do not interfere or slow down in any material respect Sublessor’s final shell construction completion and (ii) agree to work harmoniously with Sublessor’s General Contractor and sub-contractors. (See also Paragraphs 3.2 and 3.3)

1.4Base Rent: $[***] per square foot per year, net, net, net. Base rent ("Base Rent") shall be payable by Sublessee commencing on the Rent Commencement Date for Hangar C with respect to Hangar C and the Rent Commencement Date for Hangar B with respect to Hangar B (See also Paragraph 4). Base Rent shall be payable on the first (1st) day of each calendar month and shall be prorated based upon the actual number of days in the calendar month for any partial months.

BASE RENTAL RATE SCHEDULE:

Year 1: Base Rental Rate of $[***]/SF/Year Triple Net (“NNN”).

Commencing on the (i) Rent Commencement Date for Hangar B, the monthly Base Rent applicable to Hangar B shall be abated by an amount equal to fifty percent (50%) for ten (10) full months following such Rent Commencement Date and (ii) Rent Commencement Date for Hangar C, the monthly Base Rent applicable to Hangar C shall be abated by an amount equal to fifty percent (50%) for ten (10) full months following such Rent Commencement Date.

Years 2 – 5 (SPECIFY IF DIFFERENT START DATE FOR HANGAR B AND HANGAR C): Monthly Base Rent shall increase by an amount equal to four percent (4%) of the monthly Base Rent paid by Sublessee in the immediately preceding twelve (12) month period.

Years 6 -10: (SPECIFY IF DIFFERENT START DATE FOR HANGAR B AND HANGAR C): Monthly Base Rent in year six (6) shall increase by the lower of an amount equal to five percent (5%) above year five’s monthly Base Rent or eighty percent (80%) of the CPI-U for Phoenix, Mesa and Scottsdale, Arizona for the immediately preceding twelve (12) month period and each subsequent year’s monthly Base Rent shall increase by the lower of an amount equal to five percent (5%) annually or eighty percent (80%) of the CPI-U for Phoenix, Mesa and Scottsdale, Arizona for the immediately preceding twelve (12) month period.

1.5Sublessee's Share of Common Area Operating Expenses: eighty-one percent (81%) ("Sublessee's Share"). In the event that the physical size of the Premises and/or the Project are expanded or contracted during the Term, Sublessor shall recalculate Sublessee's Share to reflect such modification.

1.6Base Rent and Other Monies Paid Upon Execution:

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(a)Base Rent: $[***]/sq. ft./yearfor the first (1st) month of the Term following the Rent Commencement Date for Hangar C is $[***] (Refer to Paragraph 1.5 of this Lease).

(b)Common Area Operating Expenses: The current estimate for the first (1st) month of the Term following the Rent Commencement Date for Hangar C is $[***].

(c)Security Deposit: $[***]] ("Security Deposit").

(d)Other: Not Applicable.

(e)Total Due Upon Execution of this Lease: $[***].

1.7 Intentionally Omitted.

1.9 Permitted Use. Sublessee shall have the right to use the Buildings for hangar operations, assembly of space flight system vehicle and storage of the “Mother Ship” and as general industrial, warehouse, office, engineering, research and development, manufacture, assembly and testing of Tenant’s products, including the manufacturing and assembly of aircraft parts and equipment and incidental office uses related thereto and any other use that is compliant with applicable laws and regulations, compliant with current zoning ordinances and recorded conditions, covenants and restrictions (the "C, C & R's") pertaining to the Project, and with the reasonable approval of Landlord in the event of a material change in the use. Sublessee shall have uninterrupted and unfettered access to the its Buildings/Project twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year.

1.10 Access to Secured Areas. Notwithstanding anything to the contrary herein, Sublessee and any of Sublessee’s agents, employees, representatives, and assigns, shall have no right of access to the secured areas of the airport, unless and until Sublessee has obtained its own valid airport security clearance and media from Land Lessor. Sublessee acknowledges that it may take thirty (30) calendar days or more to process Sublessee and its agents, employees, representatives, assigns, and other parties thereto, if applicable, for security clearance and media.

1.1 Airport Rates and Charges Schedule. Sublessee, in accordance with Paragraph 4.5 (Airport Rates and Charges Schedule) of the Land Lease, shall pay all fees identified in the most current Airport Rates and Charges Schedule at the time of receipt of any covered service or use of any covered facilities, unless specifically outlined in this Sublease. The current Airport Rates and Charges Schedule is available at http://www.gatewayairport.com/PoliciesDocumentsandForms#BoardPolicies, internet links to such schedule is attached to this Sublease as Exhibit F and is subject to change without prior notice or approval of Sublessee. Sublessee further acknowledges and agrees that Land Lessor may amend the Airport Rates and Charges Schedule at any time at Land Lessor’s sole discretion, and that no fee shall apply to the use of the Premises or access to the Premises.

All payments required by this Section 7 shall be remitted to the following address by the due date(s) specified hereinabove or as otherwise set forth in the Airport Rates and Charges Schedule:

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Phoenix-Mesa Gateway Airport Authority

Attn.: Department of Finance (Accounts Receivable)

5835 S. Sossaman Road

Mesa, Arizona 85212-6014

or such other address specified in writing by Land Lessor to Sublessee.

1.2Insuring Party. Sublessor is the "Insuring Party". (See also Paragraph 7)

1.3Real Estate Brokers. (See also Paragraph 14 and 24)

(a)Representation: The following real estate broker(s) (the "Broker(s)") and brokerage relationships exist in this transaction (check applicable boxes):

Daum Commercial Real Estate Services represents Sublessor exclusively ("Sublessor's Broker"); and

Real Tech represents Sublessee exclusively ("Sublessee's Broker").

Payment to Brokers. Upon execution and delivery of this Sublease by both Parties, Sublessor shall pay to the Brokers the brokerage fee agreed to in a separate written agreement.

1.1Guarantor. None.

1.2Attachments. Attached hereto are the following, all of which constitute a part of this Sublease:

Exhibit A	Site Plan with Parking
Exhibit B	Land Lease and 1st Amendment
Exhibit C	Addendum
Exhibit D	Rules and Regulations
Exhibit E	Disclaimer
Exhibit F	Links to Gateway Executive Airpark’s Fees and Regulations

2Premises.

2.1    Letting. Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the Premises, for the term, at the rental, and upon all of the terms, covenants and conditions set forth in this Sublease. The Buildings’ square footages were calculated by the Project’s architect, Winton Architects, Inc. The agreed upon square footage calculation shall not be changed during the Term of the Sublease or any extensions thereof. Sublessor waives any and all rights to relocate Sublessee during the Term of the Sublease or any extensions thereof. Refer also to Paragraph 1.2(a).

2.2    Condition. Sublessor shall deliver Hangar B and Hangar C to Sublessee broom clean and free of debris upon delivery of the completed “shell” evidenced by a notice of completion or similar notice delivered from the City of Mesa AZ Building Department and covenants, represents and warrants to Sublessee that (i) the Premises shall be delivered in accordance with all Applicable requirements, including without limitation, the Americans with Disabilities

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Act, (ii) Sublessee shall incur no costs as a result of the inaccuracy of such covenant, representation and warranty, (iii) Sublessor shall remedy, at its sole cost and not as a Common Area Operating Expense, any violation of such covenants, representations and warranties, including without limitation, patent and latent defects discovered at any time during the Term as extended, (iv) the electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), loading doors, and all other such elements in the Premises, other than those constructed by Sublessee, shall be in good operating condition on said date, (v) the structural elements of the roof, bearing walls and foundation of the Premises shall be free of material defects, and (vi) the Premises do not contain any Hazardous Substances (defined below) or hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. If a non-compliance with such representation and warranty exists as of theRent CommencementDate for Hangar B or Rent Commencement Date for Hangar C, or if one of such systems or elements should malfunction or fail due to a patent or latent defect, during the Term, as such Term may be extended, Sublessor shall promptly after receipt of written notice from Sublessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, promptly rectify same at Sublessor's expense but in no event later than thirty (30) days following Sublessor’s receipt of written notice of such malfunction or failure. If Sublessee does not give Sublessor the required notice within the appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be the obligation of Sublessee at Sublessee's sole cost and expense (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls - see Paragraph 6). Sublessor also represents and warrants, that unless otherwise specified in writing, Sublessor is unaware of (i) any recorded Notices of Default affecting the Premises; (ii) any delinquent amounts due under any loan secured by the Premises; and (iii) any bankruptcy proceeding affecting the Premises.

2.3    Compliance. Sublessor represents and warrants that the Buildings and common areas of the Project comply with the building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances, including without limitation, the Americans with Disabilities Act ("Applicable Requirements") that were in effect as of the applicable Rent Commencement Date for Hangar B and Hangar C. In no event shall Sublessee be responsible for any costs arising from the inaccuracy of such representation and warranty and Sublessor shall remedy any violation hereof, including latent and patent defects at any time during the Term, as the term may be extended. Said representation and warranty does not apply to the use to which Sublessee will put the Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Sublessee’s use (see Paragraph 48), or to any Alterations or Utility Installations (as defined in Paragraph 6.3(a)) made or to be made by Sublessee. NOTE: Sublessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning are appropriate for Sublessee’s intended use. If the Premises do not comply with said representation and warranty, Sublessor shall, except as otherwise provided, promptly after receipt of written notice from Sublessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Sublessor's sole expense without reimbursement. If the Applicable Requirements are changed after the applicable Rent Commencement Date for Hangar B or Hangar C so as to require during the Term of this Sublease the construction of an addition to or an alteration of the Premises and/or Buildings, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Premises and/or Buildings ("Capital Expenditure"), Sublessor and Sublessee shall allocate the cost of such work as follows:

(a)    Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Premises by Sublessee as compared with uses by tenants in general at the Project, Sublessee shall be fully responsible for the cost thereof, provided, however, that if such Capital Expenditure is required during the last 2 years of the Term of this Lease and the cost thereof exceeds 6 months' Base Rent, Sublessee may instead terminate this Lease unless Sublessor notifies Sublessee, in writing, within 10 business days

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after receipt of Sublessee's termination notice that Sublessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. If Sublessee elects termination, Sublessee shall cease the use of the Premises which requires such Capital Expenditure and deliver to Sublessor written notice specifying a termination date at least 30 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Sublessee could legally utilize the Premises without commencing such Capital Expenditure.

(b)    If such Capital Expenditure is not the result of the specific and unique use of the Premises by Sublessee (such as, governmentally mandated seismic modifications), then Sublessor shall pay for such Capital Expenditure and Sublessee shall only be obligated to pay, each month during the remainder of the Term of this Lease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the portion of such costs reasonably attributable to the Premises. Sublessee shall pay Interest on the balance but may prepay its obligation at any time. If, however, such Capital Expenditure is required during the last 2 years of this Sublease or if Sublessor reasonably determines that it is not economically feasible to pay its share thereof, Sublessor shall have the option to terminate this Lease upon 90 days prior written notice to Sublessee unless Sublessee notifies Sublessor, in writing, within 10 business days after receipt of Sublessor's termination notice that Sublessee will pay for such Capital Expenditure. If Sublessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Sublessee may advance such funds and deduct same, with Interest, from Rent until Sublessor's share of such costs have been fully paid. If Sublessee is unable to finance Sublessor's share, or if the balance of the Rent due and payable for the remainder of this Sublease is not sufficient to fully reimburse Sublessee on an offset basis, Sublessee shall have the right to terminate this Sublease upon 30 days written notice to Sublessor.

(c)    Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Sublessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Premises made following the installation of Sublessee’s Tenant Improvements then, and in that event, Sublessee shall either: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Sublessee shall not have any right to terminate this Lease pursuant to this subparagraph (c).

2.4    Acknowledgements. Sublessee acknowledges that: (a) it has been given an opportunity to inspect the architectural drawings, renderings, and specifications of the Buildings and site plan and to accept/reject them and acknowledge the square footage of the Buildings, (b) it has been advised by Sublessor and/or Brokers 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 Sublessee's intended use, (c) Sublessee 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, (d) it is not relying on any representation as to the size of the Premises made by Brokers or Sublessor and (e) neither Sublessor, Sublessor's agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Sublease. In addition, Sublessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Sublessee's ability to honor the Sublease or suitability to occupy the Premises, and (ii) it is Sublessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.

2.5    Vehicle Parking. At no cost or expense during the Term, as the Term may be extended, Sublessee shall be entitled to use the number of Parking Spaces specified in

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Paragraph 1.2(c) on those portions of the Common Areas designated on the Site Plan attached to this Sublease for parking. Sublessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles," unless otherwise agreed to or designated in writing by Sublessor. Sublessor may regulate the loading and unloading of vehicles by adopting reasonable and non-discriminatory Rules and Regulations as provided in Paragraph 2.8. In addition:

(a)    Sublessee shall not permit or allow any vehicles that belong to or are controlled by Sublessee or Sublessee's employees, suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Sublessor for such activities.

(b)    Sublessee shall not service or store any vehicles in the Common Areas.

(c)    If Sublessee permits or allows any of the prohibited activities described in this Paragraph 2.5, then Sublessor shall have the right, following at least one (1) business days’ written notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the actual and reasonable cost to Sublessee, which cost shall be payable within five (5) days following written demand by Sublessor.

2.6    Common Areas - Definition. The term "Common Areas" is defined as all areas and facilities outside the Premises and within the exterior boundary line of the Project that are provided and designated by the Sublessor from time to time for the general non-exclusive use of Sublessor, Sublessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roofs, roadways, walkways, driveways and landscaped areas.

2.7    Common Areas - Sublessee's Rights. Sublessor grants to Sublessee, for the benefit of Sublessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Sublease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Sublessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Sublessor or Sublessor's designated agent. In the event that any unauthorized storage shall occur, then Sublessor shall, after delivering at least five (5) days prior written notice to Sublessee, have the right, in addition to such other rights and remedies that it may have, to remove the property and charge the actual and reasonable cost to Sublessee, which cost shall be payable within five (5) days after written demand by Sublessor.

2.8    Common Areas - Rules and Regulations. Sublessor or such other person(s) as Sublessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable and non-discriminatory rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Buildings and the Project and their invitees. Sublessee agrees to abide by and conform to all such Rules and Regulations, and shall use its commercially reasonable efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Sublessor shall not be responsible to Sublessee for the non-compliance with said Rules and Regulations by other tenants of the Project but Sublessor shall use its commercially reasonable efforts to enforce the Rules and Regulations.

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2.9    Common Areas - Changes. Sublessor shall have the right, in Lessor's reasonable discretion and with no less than thirty (30) days prior written notice to Sublessee, from time to time:

(a)    To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b)    To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Premises and parking areas remains available;

(c)    To designate other land outside the boundaries of the Project to be a part of the Common Areas;

(d)    To add additional buildings and improvements to the Common Areas;

(e)    To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and

(f)    To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Lessor may, in the exercise of sound business judgment, deem to be appropriate.

Provided, Sublessor agrees that none of the foregoing activities shall materially interfere with or reduce Sublessee’s access to the Premises or parking areas available to Sublessee.

3Term.

3.1    Term. The Commencement Date, Expiration Date, Rent Commencement Date for the applicable Hangar and Original Term of this Lease are as specified in Paragraph 1.3.

In no event shall the Term hereof exceed the term of the Land Lease, or the Sublease Expiration Date extend past the expiration of the term of the Land Lease. If for any reason the term of the Land Lease is terminated prior to the Sublease Expiration Date, except as otherwise provided in this Sublease or in the non-disturbance provided to Sublessee by Land Lessor, this Sublease shall terminate on the date of such termination.

3.2    Early Possession. Any provision herein granting Sublessee Early Possession of the Premises is subject to and conditioned upon the Premises being available for such possession prior to the Rent Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Premises. If Sublessee totally or partially occupies the Premises prior to the Rent Commencement Date for the applicable Hangar, the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Lease including payment of Sublessee's Share of Common Area Operating Expenses, the Land Lease, and insurance premiums and to maintain the Premises) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date.

3.3    Delay In Possession. Sublessor agrees to use commercially reasonable efforts to deliver exclusive possession of the Premises to Sublessee by the dates shown in Paragraph 1.3 of this Sublease. Commencement Date. If, despite said efforts, Lessor is unable to deliver possession by such date, Lessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Lease or change the Expiration Date. Sublessee shall not, however, be obligated to pay Rent or perform its other obligations until Sublessor delivers possession of the Premises and any period of rent abatement that Sublessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Sublessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Sublessee.

3.4 Partial Termination Rights: With respect to Hangar B, Sublessee shall have the right to terminate the portion of the Sublease pertaining to Hangar B in the event (i) a notice of completion from the City of Mesa, Arizona Building Department has not been issued and

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received by Sublessee on or before the date which is 18 months following the date of this Sublease and/or (ii) any or all of the following do not occur on or before the date which is 12 months following the date of this Sublease: (A) Sublessor or Sublessee fails to receive all building permits and other governmental approvals or Land Lessor approvals for the design and construction of Hangar B and/or and Sublessee Improvements for Hangar B (whether described in the Addendum or not), (B) Land Lessor shall not have approved of this Sublease or the Sublessee Improvements for Hangar B (whether described in the Addendum or not) and/or (C) if the FAA fails to grant any permits or approvals required or deemed advisable by Sublessee for Sublessee’s operations. In the event of a termination under subsection 3.4(ii) above only, Sublessee shall pay all of Sublessor’s actual documented costs resulting from the redesign of Hangar B, which shall include all itemized and documented costs to be submitted by the Project’s General Contractor, by way of example, but is not limited to, architectural fees, lender fees, including interest payments, attorney fees, and any brokerage commissions owed by Sublessor or paid to date of termination.

3.5    Sublessee Compliance. Sublessor shall not be required to tender possession of the Premises to Sublessee until Sublessee complies with its obligation to provide evidence of insurance (Paragraph 7.5). Pending delivery of such evidence, Sublessee shall be required to perform all of its obligations under this Sublease from the Lease Commencement Date and after the applicable Rent Commencement Date, including the payment of Rent upon the applicable Rent Commencement Date notwithstanding Sublessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Sublessee is required to perform any other conditions prior to or concurrent with the applicable Rent Commencement Date shall occur but Sublessor may elect to withhold possession until such conditions are satisfied.

4    Rent.

4.1    Rent Defined. All monetary obligations of Sublessee to Sublessor under the terms of this Sublease are deemed to be rent ("Rent").

4.2    Common Area Operating Expenses. Sublessee shall pay to Sublessor, in addition to the Base Rent, Sublessee's Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined. Sublessee shall commence the payment of Common Area Operating Expenses with respect to (i) Hangar C on the Rent Commencement Date for Hangar C and (ii) Hangar B on the Rent Commencement Date for Hangar B, and thereafter throughout the Term for both Hangar B and Hangar C in accordance with the following provisions:

(a)    "Common Area Operating Expenses" are defined, for purposes of this Sublease, as all costs relating to the ownership and operation of the Project, including, but not limited to, the following:

(i)    The operation, repair and maintenance, in neat, clean, good order and condition, and if necessary the replacement, of the following:

(aa) The Common Areas and Common Area improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, exterior walls of the buildings, building systems and roof drainage systems.

(bb) Exterior signs and any tenant directories.

(cc) Any fire sprinkler systems.

(dd) All other areas and improvements that are within the exterior boundaries of the Project but outside of the Premises and/or any other space occupied by a tenant.

(ii)    The cost of water, gas, electricity, cable, fiber optics and telephone to service the Common Areas and any utilities not separately metered.

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(iii)    The cost of trash disposal, pest control services, property management, security services, owners' association dues and fees and the cost to repaint the exterior of any structures.

(iv)    Intentionally Omitted.

(v)    The cost of the premiums for the insurance maintained by Sublessor pursuant to Paragraph 8.

(vi)    Any deductible portion of an insured loss concerning the Buildings or the Common Areas but not to exceed an amount equal to Ten Thousand Dollars in any twelve (12) month period.

(vii)    Auditors', accountants' and attorneys' fees and costs related to the operation, maintenance, repair and replacement of the Project.

(viii)    The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Sublessor shall allocate the cost of any such capital improvement over a 12 year period and Sublessee shall not be required to pay more than Sublessee's Share of 1/144th of the cost of such capital improvement in any given month. Sublessee shall pay Interest on the unamortized balance but may prepay its obligation at any time.

(ix)    The cost of any other services to be provided by Sublessor that are stated elsewhere in this Lease to be a Common Area Operating Expense.

(x) Rental payments made by Sublessor under the Land Lease to Land Lessor, but excluding any late charges or other amounts arising from or related to Sublessor’s failure to comply with and abide by the terms of the Land Lease.

Notwithstanding the foregoing, Common Area Operating Expenses shall not include (1) any principal and interest payments under mortgages, as well as any points and fees on debts; (2) costs of restoration following a casualty or condemnation to the extent of net insurance proceeds received by Sublessor with respect thereto; (3) environmental insurance, environmental management fees and environmental audits or any costs to remediate or incurred in connection with the presence, remediation, transportation or release any Hazardous Substance (defined below) except those caused to be present by Sublessee; (4) costs (including permit, license, and inspection fees) incurred in renovating, improving, decorating, painting, or redecorating vacant space or space for other tenants; (5) legal and auditing fees (other than those fees reasonably incurred in connection with the ownership and operation of all or any portion the Project); (6) leasing commissions, advertising expenses, and other costs incurred in connection with the leasing of the Project or future re-leasing of any portion of the Project; (7) depreciation of the Buildings or any other improvements; (8) any items for which Sublessor is actually and directly reimbursed or required to reimbursed by any other tenant; (9) other than any interest charges as expressly provided for in this Lease, any interest or payments on any financing for any portion of the Buildings or Project, interest, fines and penalties incurred as a result of Sublessor's late payment of any invoice and any bad debt loss or rent loss; (10) costs incurred because the Project or Buildings violate any Applicable Requirements in effect and as interpreted by government authorities as of the applicable Rent Commencement Date; (11) costs incurred due to (a) the Buildings or Project, when originally constructed, being constructed defectively with defective materials or workmanship or (b) the Buildings or Project, when originally designed, being designed defectively; (12) any capital expenditure, except to the extent amortized as set forth above; (13) any property management fee in excess of the fees set forth below; (14) costs (including in connection therewith all attorneys' fees and costs of settlement judgments and payments in lieu thereof) arising from claims, disputes or potential disputes in connection with potential or actual claims litigation or arbitrations pertaining to Sublessor, the Buildings or the Project; (15) any reserves for future expenditures or liabilities which would be incurred subsequent to the then current accounting year; (16) the expense of extraordinary services, installations or benefits provided to other tenants in the Buildings or Project, or quantities of such services furnished to some tenants which are also furnished to Sublessee but are furnished to other tenants in an amount materially in excess of

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that which would represent a fair proportion of such services; (17) costs associated with the operation of the business of the limited liability company, partnership or entity which constitutes Landlord as the same are distinguished from the costs of operation of the Buildings and Project, including partnership accounting and legal matters, costs of selling, syndicating, financing, mortgaging or hypothecating any of Sublessor's interest in the Buildings or Project; and (18) Real Property Taxes (as defined below), except to the extent expressly set forth in Section 9 of this Sublease.

As of the date of this Lease, the stabilized Common Area Operating Expenses for the Project are estimated to be $[***]/SF/Year. The total or aggregate of the property management fee and any administrative fees charged under this Sublease shall not exceed an amount equal to three percent (3%) of the gross rent received by Sublandlord from Sublessee. The controllable Operating Expenses billed to Sublessee shall not increase by more than an amount equal to six percent (6%) in any one-year period (the “Operating Expense Cap”). For purposes of calculating Common Area Operating Expenses or Additional Rent, the maximum increase in the amount of Controllable Operating Expenses (defined below) that may be included in calculating such additional rent for each calendar year shall be limited to an amount equal to six percent (6%) per calendar year on a cumulative, compounded basis; for example, the maximum amount of Controllable Operating Expenses that may be included in the calculation of such Additional Rent for each calendar year after 2023 shall equal the product of the 2023 Controllable Operating Expenses and the following percentages for the following calendar years: 106% for 2024; 112.36% for 2025; etc. “Controllable Operating Expenses” means all Common Area Operating Expenses which are within the reasonable control of Sublessor, thus excluding Land Lease payments and escalations privilege/rental tax assessments, insurance, utilities and any costs incurred to comply with the Applicable Requirements as required under this Sublease.

(b)    Any Common Area Operating Expenses that are specifically attributable to the Buildings or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Buildings, or other building. However, any Common Area Operating Expenses that are not specifically attributable to the Buildings or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Sublessor to all buildings in the Project. If the Project’s average occupancy during any calendar year of the term is less than 95%, then the Common Area Operating Expenses shall be adjusted to reflect the true and accurate Common Area operating Expenses as if the Project were in fact 95% leased. Sublessee shall not be responsible for any vacant space within the Project.

(c)    The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Sublessor to either have said improvements or facilities or to provide those services unless the Project already has the same, Sublessor already provides the services, or Sublessor has agreed elsewhere in this Sublease to provide the same or some of them.

(d)    Sublessee's Share of Common Area Operating Expenses is payable monthly on the same day as the Base Rent is due hereunder. The amount of such payments shall be based on Sublessor's estimate of the annual Common Area Operating Expenses. Within 60 days after the end of each calendar year, Sublessor shall deliver to Sublessee a reasonably detailed statement showing Sublessee's Share of the actual Common Area Operating Expenses for the preceding year. If Sublessee's payments during such calendar year exceed Sublessee's Share, Sublessor shall credit the amount of such over-payment against Sublessee's then immediately following future payments. If Sublessee's payments during such calendar year were less than Sublessee's Share, Sublessee shall pay to Sublessor the amount of the deficiency within 30 days after delivery by Sublessor to Sublessee of the statement.

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(e)    Common Area Operating Expenses shall not include any expenses paid by any tenant directly to third parties, or as to which Sublessor is otherwise reimbursed by any third party, other tenant, or insurance proceeds.

(f)Audit Rights: Even though Common Area Operating Expenses have been incurred, and such expenditures have been audited by a CPA firm employed by Sublessor, Sublessee may audit the results with its own advisors. During the ninety (90) day period following the delivery of Sublessor’s statements of the actual amount of Common Area Operating Expenses, Sublessee, at Sublessee's expense, shall have the right to audit Sublessor's books andrecords containing Sublessor's accounting of Common Area Operating Expenses. In no event shall Sublessee be liable for the payment of any Common Area Operating Expense of which Sublessee first receives written notice in excess of one (1) year following the expiration of the calendar year in which such Common Area Operating Expense was originally incurred. If Sublessee has overpaid by more than an amount equal to five percent (5%) of Common Area Operating Expenses in the applicable calendar year, Sublessor shall pay the reasonable out-of-pocket cost of the review of Sublessor’s records and the reasonable out-of-pocket cost of the review of Sublessor’s records.

4.3    Payment. Sublessee shall cause payment of Rent to be received by Sublessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Sublessor is inaccurate such inaccuracy shall not constitute a waiver and Sublessee shall be obligated to pay the amount set forth in this Sublease. Rent for any period during the Term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Sublessor at its address stated herein or to such other persons or place as Sublessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Sublessor's rights to the balance of such Rent, regardless of Sublessor's endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Sublessee to Sublessor is dishonored for any reason, Sublessee agrees to pay to Sublessor the sum of $[***] in addition to any Late Charge and Sublessor, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and reasonable attorney's fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.

4.4    Rental Taxes. In addition to Base Rent and Common Area Operating Expenses, Sublessee shall pay to Sublessor each month an amount equal to any rental taxes, gross receipts taxes, transaction privilege taxes, sales taxes, or similar taxes ("Rental Taxes") levied on the Base Rent and Common Area Operating Expenses then due or otherwise assessed in connection with the rental activity. Said monies shall be paid at the same time and in the same manner as the Base Rent.

5.    Use.

5.1    Use. Sublessee’s Permitted Use is as set forth in Section 1.19 of this Sublease.

5.2    Hazardous Substances.

(a)    Use in Accordance with Applicable Requirements. The term "Hazardous Substance" as used in this Sublease shall mean any chemical, pollutant, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Sublessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum,

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gasoline, and/or crude oil or any products, by-products or fractions thereof. Sublessee shall not cause or permit any Hazardous Substance to be brought upon, kept or used in or about the Premises by Sublessee's agents, employees, contractors or invitees in violation or threatened or suspected violation of any Applicable Requirement. The Parties recognize and agree that Sublessee may bring on the Premises and use Hazardous Substances that are ordinarily and customarily used in the conduct of Sublessee's permitted activities under this Sublease, provided that such use shall comply fully with all Applicable Requirements.

(b)    Duty to Inform Sublessor. If either Party knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Premises, other than as previously consented to by Sublessor or of which Sublessor has notified Sublessee in writing, the Party with such knowledge or reasonable cause to believe shall immediately give written notice of such fact to the other Party, and provide the other Party with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance.

(c)    Sublessee Remediation. Sublessee shall not cause or permit any Hazardous Substance brought on to the Premises during the Term of this Sublease by or for Sublessee to be spilled or released in, on, under, or about the Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Sublessee's expense, comply with all Applicable Requirements and take all investigatory and/or remedial action ordered or required by a governmental entity having jurisdiction for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Premises or neighboring properties, that was caused or materially contributed to by Sublessee, or pertaining to or involving any Hazardous Substance brought onto the Premises during the Term of this Sublease, by or for Sublessee.

(d)    Sublessee Indemnification. Sublessee shall indemnify, defend and hold Sublessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Premises by or for Sublessee (provided, however, that Sublessee shall have no liability under this Sublease with respect to underground migration of any Hazardous Substance under the Premises from areas outside of the Project not caused or contributed to by Sublessee). Sublessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Sublessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Sublease. No termination, cancellation or release agreement entered into by Lessor and Lessee shall release Sublessee from its obligations under this Sublease with respect to Hazardous Substances, unless specifically so agreed by Sublessor in writing at the time of such agreement.

(e)    Sublessor Indemnification. Except as otherwise provided in paragraph 8.7, Sublessor and its successors and assigns shall indemnify, defend, reimburse and hold Sublessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which are suffered as a direct result of Hazardous Substances on the Premises prior to Sublessee taking possession or which are caused by the gross negligence or willful misconduct of Sublessor, its agents or employees. Sublessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Sublease.

(f)    Investigations and Remediations. Sublessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Premises prior to the Sublessee taking possession, unless such remediation measure is required as a result of Sublessee's use (including "Alterations", as defined in paragraph 6.3(a) below) of the Premises, in which event Sublessee shall be responsible for such payment. Sublessee shall cooperate fully in any such activities at the request of Lessor, including allowing Sublessor and

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Sublessor's agents to have reasonable access to the Premises at reasonable times and with reasonable notice to Sublessee in order to carry out Sublessor's investigative and remedial responsibilities.

5.3    Sublessee's Compliance with Applicable Requirements. Except as otherwise provided in this Sublease, Sublessee shall, at Sublessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Sublessor's engineers and/or consultants which relate in any manner to the Premises, without regard to whether said Applicable Requirements are now in effect or become effective after the Commencement Date. Sublessee shall, within 30 days after receipt of Sublessor's written request, provide Sublessor with copies of all permits and other documents, and other information evidencing Sublessee's compliance with any Applicable Requirements specified by Sublessor, and shall promptly upon receipt, notify Sublessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Sublessee or the Premises to comply with any Applicable Requirements. Likewise, each Party shall promptly give written notice to the other Party of: (i) any water damage to the Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold of which a Party becomes aware; or (ii) any mustiness or other odors that might indicate the presence of mold in the Premises of which a Party becomes aware.

5.4    Sublessor and Sublessor's "Lender" (as defined in Paragraph 29.1) and consultants authorized by Sublessor shall have the right to enter the Premises at any time (provided, Sublessor shall use its best efforts to notify Sublessee both by telephone and in writing prior to entry), in the case of an emergency, and otherwise following no less than 48 business hours prior written notice, for the purpose of inspecting and/or testing the condition of the Premises and/or for verifying compliance by Sublessee with this Sublease; provided, Sublessee shall have the right to restrict Sublessor’s and Sublessor’s Lender’s access to certain areas of the Premises for security reasons. Any entry shall not interfere or disrupt Sublessee’s business operations in any manner. The actual and reasonable cost of any such inspections shall be paid by Sublessor, unless such inspection is due to (i) a violation by Sublessee of Applicable Requirements, (ii) a Hazardous Substance Condition (see Paragraph 8.1(e)) caused by Sublessee is found to exist or be imminent or (iii) the inspection is requested or ordered by a governmental authority due to alleged acts or omissions of Sublessee. In such case, Sublessee shall upon request reimburse Sublessor for the actual and reasonable cost of such inspection, so long as such inspection is reasonably related to a violation or contamination by Sublessee or its agents or contractors. In addition, Sublessee shall provide copies of all relevant material safety data sheets (MSDS) to Sublessor within 10 days of the receipt of written request therefor.

6.    Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

6.1    Sublessee's Obligations.

(a)    In General. Subject to the provisions of Paragraph 2.2 (Condition), 2.3 (Compliance), 5.3 (Sublessee's Compliance with Applicable Requirements), 6.2 (Sublessor's Obligations), 8 (Damage or Destruction), and 13 (Condemnation), Sublessee shall, at Sublessee's sole expense, keep the interior of the Premises, Utility Installations (intended for Sublessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Sublessee, and whether or not the need for such repairs occurs as a result of Sublessee's use, including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the

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responsibility of Sublessor pursuant to Paragraph 6.2. Sublessee, in keeping the interior of the Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 6.1(b) below. Sublessee's obligations shall include restorations, replacements or renewals when necessary to keep the Premises and all improvements thereon or a part thereof in good order, condition and state of repair.Sublessee's obligation to repair shall not extend to (1) damage and repairs covered under any insurance policy carried by Sublessor, (2) damage caused by any defects in the design, construction or materials of the original construction of the Buildings or Sublessor’s shell improvements, (3) damage caused in whole or in part by the negligence or willful misconduct of Sublessor or any of its agents, employees, invitees or licensees, (4) reasonable wear and tear; (5) damage due to fire, earthquake, acts of God, the elements, or other casualty; and (6) damage to the interior of the Premises resulting from causes outside the Premises.

(b)    Service Contracts. Sublessee shall, at Sublessee's sole expense, procure and maintain contracts, with copies to Sublessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, and (iii) clarifiers.

(c)    Failure to Perform. If Sublessee fails to perform Sublessee's obligations under this Paragraph 6.1, Sublessor shall give Sublessee written notice of such failure and if such failure is not cured by Sublessee within thirty (30) days following Sublessor’s written notice to Sublessee, may enter upon the Premises at any time thereafter (in the case of an emergency, no notice shall be required but Sublessor shall use its best efforts to provide prior notice), perform such obligations on Sublessee's behalf, and put the Premises in good order, condition and repair, and Sublessee shall promptly pay to Sublessor a sum equal to 105% of the actual and reasonable cost thereof.

(d)    Replacement. Subject to Sublessee's indemnification of Sublessor as set forth in Paragraph 7.8 below, and without relieving Sublessee of liability resulting from Sublessee's failure to exercise and perform good maintenance practices, if an item described in Paragraph 6.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Sublessor, and the cost thereof shall be prorated between the Parties and Sublessee shall only be obligated to pay, each month during the remainder of the Term of this Sublease or any extension thereof, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (i.e. 1/144th of the cost per month), which amortization shall fully repay all of such cost of replacing such item plus Interest. Sublessee shall pay Interest on the unamortized balance at a rate not to exceed seven percent (7%) per annum but may prepay its obligation at any time.

6.2    Sublessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 5 (Use), 6.1 (Sublessee's Obligations), 8 (Damage or Destruction) and 13 (Condemnation), Sublessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts of the Common Areas, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Sublessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Sublessor be obligated to maintain, repair or replace windows, doors or plate glass of the Premises.

6.3    Utility Installations; Trade Fixtures; Alterations.

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(a)    Definitions. The term "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Premises. The term "Trade Fixtures" shall mean Sublessee's machinery and equipment that can be removed without doing material damage to the Premises. The term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Sublessee Owned Alterations and/or Utility Installations" are defined as Alterations and/or Utility Installations made by Sublessee that are not yet owned by Sublessor pursuant to Paragraph 6.4(a). This Section 6.3 shall not govern the installation, removal or restoration of the improvements to be installed pursuant to Exhibit C and Exhibit C shall govern all such matters.

(b)    Consent. Sublessee shall have the right to make any Alterations or Utility Installations to the Premises as Sublessee deems appropriate, subject to Applicable requirements and Sublessor's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed unless such items would create substantial safety concerns for Sublessor, in Sublessor’s reasonable determination. In the event Sublessor shall not consent to any Alterations or Utility Installations requested by Sublessee, Sublessor shall specify in detail the specific reasons therefor. Sublessee may, however, make non-structural Alterations or Utility Installations to the interior of the Premises (excluding the roof) without such consent but upon notice to Sublessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls. Notwithstanding the foregoing, Sublessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of Sublessor, not to be unreasonably withheld, conditioned or delayed. Sublessor may, as a precondition to granting approval for Alterations which require Sublessor’s approval, require Sublessee to utilize a contractor chosen and/or approved by Sublessor. Any Alterations or Utility Installations that Sublessee shall desire to make and which require the consent of Sublessor shall be presented to Sublessor in written form with detailed plans. Consent shall be deemed conditioned upon Sublessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Sublessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. If applicable, Sublessee shall promptly upon completion furnish Sublessor with as-built plans and specifications.

(c)    Liens; Bonds. Sublessor shall have no lien on any of the Trade fixtures, Alterations or utility Installations of Sublessee. Sublessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Sublessee at or for use on the Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Premises or any interest therein. Sublessee shall give Sublessor not less than ten (10) days’ notice prior to the commencement of any work in, on or about the Premises, and Sublessor shall have the right to post notices of non-responsibility. If Sublessee shall contest the validity of any such lien, claim or demand, then Sublessee shall, at its sole expense defend and protect itself, Sublessor and the Premises against the same and shall pay and satisfy any such adverse judgment that may be rendered thereon before the enforcement thereof. If Sublessor shall require, Sublessee shall furnish a surety bond in an amount equal to 125% of the amount of such contested lien, claim or demand, indemnifying Sublessor against liability for the same. If Sublessor elects to participate in any such action, Sublessee shall pay Sublessor's reasonable attorneys' fees and costs.

6.4    Ownership; Removal; Surrender; and Restoration.

(a)    Ownership. Except as provided in Paragraph 6.4(b), all Alterations and/or Sublessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Sublease, become the property of Sublessor and be surrendered by Sublessee with the Premises.

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(b)    Removal. Sublessor may require that any or all Alterations and/or Sublessee Owned Alterations and Utility Installations be removed by the expiration or termination of this Lease by Sublessor requiring such removal at the time Sublessor consented to such installation or if Sublessor’s consent was not required to be requested, then no later than 6 months prior to the expiration or termination of the Term.

(c)    Surrender; Restoration. Sublessee shall surrender the Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Sublessee shall also remove from the Premises any and all Hazardous Substances brought onto the Premises by or for Sublessee (except Hazardous Substances which were deposited via underground migration from areas outside of the Project) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Sublessee and shall be removed by Sublessee. Any personal property of Sublessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Sublessee and may be disposed of or retained by Sublessor as Sublessor may desire. The failure by Sublessee to timely vacate the Premises pursuant to this Paragraph 6.4(c) without the express written consent of Sublessor shall constitute a holdover under the provisions of Paragraph 25 below.

7.    Insurance; Indemnity.

7.1    Payment of Premiums. The cost of the premiums for the insurance policies required to be carried by Sublessor, pursuant to Paragraphs 7.2(b), 7.3(a) and 7.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term of this Sublease shall be prorated to coincide with the corresponding Commencement Date or Expiration Date.

7.2    Liability Insurance.

(a)    Carried by Sublessee. Sublessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Sublessee and Sublessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $[***] per occurrence with an annual aggregate of not less than $[***]. Sublessee shall add Sublessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Lessors of Premises" Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Sublease as an "insured contract" for the performance of Sublessee's indemnity obligations under this Sublease. The limits of said insurance shall not, however, limit the liability of Sublessee nor relieve Sublessee of any obligation hereunder. Sublessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Sublessor, whose insurance shall be considered excess insurance only.

(b)    Carried by Sublessor. Sublessor shall maintain liability insurance as described in Paragraph 7.4, in addition to, and not in lieu of, the insurance required to be maintained by Sublessee. Sublessee shall not be named as an additional insured therein.

7.3    Sublessee Insurance.

(a) Form. Each insurance policy obtained pursuant to this Paragraph 7.3, except for Worker’s Compensation and Employer’s Liability policies, shall: (i) name Sublessor as a certificate holder or additional named insured; (ii) contain a provision that written notice of cancellation or modification thereof shall be given to Sublessor not less than thirty (30) days

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before such cancellation or modification takes effect ten (10) days in case of nonpayment of premium); and (iii) contain a waiver of subrogation in favor of Sublessor and Land Lessor. Sublessee shall not permit any insurance policy to be canceled or modified without Sublessor’s written consent unless equivalent replacement policies are issued with no lapse in coverage. All policies shall be obtained from insurance companies licensed to do business in the State of Arizona and possessing a rating of at least A – VII or higher from the A.M. Best Company, or an equivalent rating and approved by Sublessor.

(b) Certificates of Insurance. Sublessee shall deliver a certificate of insurance for each policy required along with an endorsement naming Phoenix-Mesa Gateway Airport Authority as additional insured herein to Sublessor and Land Lessor, in standard Acord or equivalent form, prior to the Commencement Date and shall continue to provide such certificates throughout the term of this Sublease.

7.4    Property Insurance - Building, Improvements and Rental Value.

(a)    Building and Improvements. Sublessor shall obtain and keep in force a policy or policies of insurance in the name of Sublessor, with loss payable to Sublessor, any ground-lessor, and to any Lender insuring loss or damage to the Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Premises, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Sublessee Owned Alterations and Utility Installations, Trade Fixtures, and Sublessee's personal property shall be insured by Sublessee not by Sublessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $[***] per occurrence.

(b)    Rental Value. Sublessor shall also obtain and keep in force a policy or policies in the name of Sublessor with loss payable to Sublessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days ("Rental Value insurance"). Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Sublessee, for the next 12-month period.

(c)    Adjacent Premises. Sublessee shall pay for any increase in the premiums for the property insurance of the Buildings and for the Common Areas or other buildings in the Project if said increase is caused by Sublessee's acts, omissions, use or occupancy of the Premises; provided, Sublessor shall notify Sublessee in writing prior to such notification of increase and permit Sublessee a period of thirty (30) days to attempt to remedy any such omissions.

(d)    Sublessee's Improvements. Since Sublessor is the Insuring Party, Sublessor shall not be required to insure Sublessee Owned Alterations and Utility Installations unless the item in question has become the property of Sublessor under the terms of this Sublease.

7.5    Sublessee's Property; Business Interruption Insurance; Worker's Compensation Insurance.

(a)    Property Damage. Sublessee shall obtain and maintain insurance coverage on all of Sublessee's personal property, Trade Fixtures, and Sublessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $[***] per occurrence. The proceeds from any such insurance shall be used by Sublessee for the replacement of personal property, Trade Fixtures and Sublessee Owned Alterations and Utility Installations.

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(b)    Intentionally Omitted.

(c)    Worker's Compensation Insurance. Sublessee shall obtain and maintain Worker's Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a 'Waiver of Subrogation' endorsement. Sublessee shall provide Sublessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by thjis Paragraph 7.5.

(d)    No Representation of Adequate Coverage. Sublessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Sublessee's property, business operations or obligations under this Sublease.

7.6    Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders Rating" of at least A-, VII, as set forth in the most current issue of "Best's Insurance Guide", or such other rating as may be required by a Lender. Sublessee shall not do or permit to be done anything which invalidates the required insurance policies. Subessee shall, prior to the Commencement Date, deliver to Sublessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable except after 30 days prior written notice to Sublessor. Sublessee shall, prior to the expiration of such policies, furnish Sublessor with evidence of renewals or "insurance binders" evidencing renewal thereof. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.

7.7    Waiver of Subrogation. Without affecting any other rights or remedies, Sublessee and Sublessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Sublessor or Sublessee, as the case may be, so long as the insurance is not invalidated thereby.

7.8     Indemnities. Except for Sublessor's negligence or willful misconduct and except for Sublessor’s breach of any of its obligations under this Lease, Sublessee shall indemnify, protect, defend and hold harmless the Premises, Sublessor and its agents, Sublessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, a Breach of this Sublease by Sublessee and/or the use and/or occupancy of the Premises and/or Project by Sublessee and/or by Sublessee's employees, contractors or invitees. If any action or proceeding is brought against Sublessor by reason of any of the foregoing matters, Sublessee shall upon notice defend the same at Sublessee's expense by counsel reasonably satisfactory to Sublessor and Sublessor shall cooperate with Sublessee in such defense. Sublessor need not have first paid any such claim in order to be defended or indemnified.Sublessor shall defend, indemnify, and hold Sublessee and its agents, officers, directors, employees, and contractors harmless against and from any and all injuries, claims, judgments, costs, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, and demands of any kind or nature (including reasonable attorneys' fees) by or on behalf of any person, entity, or governmental authority occasioned by or arising out of (a) injuries occurring in the Common Areas; (b) any intentional act, or negligence of Sublessor or Sublessor's agents, employees, or independent contractors; (c) any

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breach or default in the performance of any obligation on Sublessor's part to be performed under this Sublease; (d) any defects in the design, workmanship or materials of the original construction of the Buildings; or (e) the failure of any representation or warranty made by Sublessor herein to be true when made. This indemnity shall survive termination of this Lease only as to claims arising out of events that occur prior to termination of the Lease.

7.9    Exemption of Sublessor and its Agents from Liability. Except to the extent caused by the negligence or breach of this Sublease by Sublessor or its agents, neither Sublessor nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Sublessee, Sublessee's employees, contractors, invitees, customers, or any other person in or about the Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Premises or upon other portions of the Building, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant of Sublessor or from the failure of Sublessor or its agents to enforce the provisions of any other lease in the Project, or (iii) injury to Sublessee's business or for any loss of income or profit therefrom. Instead, except as provided above in this Paragraph 7.9, it is intended that Sublessee's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Sublessee is required to maintain pursuant to the provisions of Paragraph 7.

8.    Damage or Destruction.

8.1    Definitions.

(a)    "Premises Partial Damage" shall mean damage or destruction to the improvements on the Premises, other than Sublessee Owned Alterations and Utility Installations, which can reasonably be repaired in 15 months or less from the date of the damage or destruction. Sublessor shall notify Sublessee in writing within 15 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(b)    "Premises Total Destruction" shall mean damage or destruction to the improvements on the Premises, other than Sublessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 15 months or less from the date of the damage. Sublessor shall notify Subessee in writing within 15 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(c)    "Insured Loss" shall mean damage or destruction to improvements on the Premises, other than Sublessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 7.4(a), irrespective of any deductible amounts or coverage limits involved.

(d)    "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Sublessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.

(e)    "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Premises which requires restoration.

8.2    Partial Damage - Insured Loss. If a Premises Partial Damage that is an Insured Loss occurs, then Sublessor shall, at Sublessor's expense, repair such damage (but not Sublessee's Trade Fixtures or Sublessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Sublease shall continue in full force and effect; provided, however, that Sublessee shall have the right to make the repair of any damage or destruction the total cost

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to repair of which is $[***] or less, and, in such event, Sublessor shall make any applicable insurance proceeds available to Sublessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements or full replacement cost insurance coverage was not commercially reasonable and available, Sublessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Premises unless Sublessee provides Sublessor with the funds to cover same, or adequate assurance thereof, within 30 days following receipt of written notice of such shortage and request therefor. If Sublessor receives said funds or adequate assurance thereof within said 30-day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Sublease shall remain in full force and effect. If such funds or assurance are not received, Sublessor may nevertheless elect by written notice to Sublessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Sublessor paying any shortage in proceeds, in which case this Sublease shall remain in full force and effect, or (ii) have this Sublease terminate 30 days thereafter. Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 8.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

8.3    Partial Damage - Uninsured Loss. If a Premises Partial Damage that is not an Insured Loss occurs, Sublessor may either: (i) repair such damage as soon as reasonably possible at Sublessor's expense (subject to reimbursement pursuant to Paragraph 4.2), in which event this Lease shall continue in full force and effect, or (ii) terminate this Lease by giving written notice to Sublessee within 30 days after receipt by Sublessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Sublessor elects to terminate this Lease, Sublessee shall have the right within 10 business days after receipt of the termination notice to give written notice to Sublessor of Sublessee's commitment to pay for the repair of such damage without reimbursement from Sublessor; provided, Sublessee shall receive a credit against Rent next becoming due to the extent Sublessee contributes any such funds. Sublessee shall provide Sublessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Lease shall continue in full force and effect, and Sublessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Sublessee does not make the required commitment, this Lease shall terminate as of the date specified in the termination notice.

8.4    Total Destruction. Notwithstanding any other provision hereof, if a Premises Total Destruction occurs, this Sublease shall terminate 60 days following such Destruction.

If the damage or destruction was caused by the gross negligence or willful misconduct of Sublessee, Sublessor shall have the right to recover Sublessor's damages from Sublessee, except as provided in Paragraph 7.7.

8.5    Damage Near End of Term. If at any time during the last 6 months of this Sublease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Sublessor or Sublessee may terminate this Sublease effective 60 days following the date of occurrence of such damage by giving a written termination notice to the other Party within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Sublessee at that time has an exercisable option to extend this Sublease or to purchase the Premises, then Sublessee may preserve this Sublease by, (a) exercising such option and (b) providing Sublessor with any shortage in insurance proceeds (or adequate

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assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is 10 days after Sublessee's receipt of Sublessor's written notice purporting to terminate this Sublease, or (ii) the day prior to the date upon which such option expires. If Sublessee duly exercises such option during such period and provides Sublessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Sublessor shall, at Sublessor's commercially reasonable expense, repair such damage as soon as reasonably possible and this Sublease shall continue in full force and effect. If Sublessee fails to exercise such option and provide such funds or assurance during such period, then this Sublease shall terminate on the date specified in the termination notice and Sublessee's option(s) shall be extinguished.

8.6    Abatement of Rent; Sublessee’s Remedies.

(a)    Abatement. In the event of Premises Partial Damage or Premises Total Destruction, the Rent payable by Sublessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Sublessee’s use of the Premises is impaired. All other obligations of Sublessee and Sublessor hereunder shall be performed by the applicable Party, and Sublessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.

(b)    Remedies. If Sublessor is obligated to repair or restore the Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 45 days after such obligation shall accrue, Sublessee may, at any time prior to the commencement of such repair or restoration, give written notice to Sublessor and to any Lenders of which Sublessee has actual notice, of Sublessee’s election to terminate this Sublease on a date not less than 30 days following the giving of such notice. If Sublessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Sublease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Sublease shall continue in full force and effect. “Commence” shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Premises, whichever first occurs. If Sublessor is obligated to repair or restore the Premises and does not complete the repairs within six (6) months following the damage or casualty or Sublessor does not commence and complete the repairs with diligence, Sublessee shall have the right to terminate this Sublease.

8.7    Termination; Advance Payments. Upon termination of this Sublease pursuant to Paragraph 8, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Sublessee to Sublessor.

9.    Payment of Taxes. Except as otherwise provided in Paragraph 9.3, Land Lessor shall pay all of the Real Property Taxes applicable to the Project, and said payments shall NOT be included in the calculation of Common Area Operating Expenses.

9.1    Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Project by other lessees or by Sublessor for the exclusive enjoyment of such other lessees. Notwithstanding Paragraph 9.2 hereof, Sublessee shall, however, pay to Sublessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Premises by Sublessee or at Sublessee's written request or by reason of any alterations or improvements to the Premises made by Sublessor, at the written request of Sublessee, subsequent to the execution of this Sublease by the Parties.

9.2    Joint Assessment. If the Buildings are not separately assessed, Real Property Taxes allocated to the Buildings shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be

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reasonably determined by Sublessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available.

9.3    Personal Property Taxes. Sublessee shall pay prior to delinquency all taxes assessed against and levied upon Sublessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Sublessee contained in the Premises. When possible, Sublessee shall cause its Sublessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Sublessor. If any of Sublessee's said property shall be assessed with Sublessor's real property, Sublessee shall pay Sublessor the taxes attributable to Sublessee's property within 30 days after receipt of a written statement setting forth the taxes applicable to Sublessee's property.

10.    Utilities and Services. Sublessee shall pay for all 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 Sublessor 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 Sublessor's reasonable control or in cooperation with governmental request or directions. Provided no Default has then been declared under this Sublease, if electrical power or HVAC are interrupted due to the negligence or willful misconduct of Sublessor or its employees or agents (a “Utility Interruption”), and Sublessee is unable to carry on its business in a reasonably normal manner due to the failure of any of such utilities and services, and vacates all or the affected portion of the Premises for a period in excess of five (5) consecutive days, or a cumulative total of ten (10) days in any calendar year, the Base Rent and Common Area Operating Expenses payable under this Sublease shall be abated retroactively from the first (1st) day of the Utility Interruption (in proportion to the area of the Premises vacated by Sublessee by reason of such failure, if less than all of the Premises were affected) and for as long as such inability to carry on Sublessee’s business continued, until such time as the service is restored or Sublessee reoccupies the Buildings or affected portion thereof, whichever is earlier.  In the event of any curtailment, diminution, or failure with respect to utilities and services in the Premises, Sublessor shall use due diligence to restore full service.

Within thirty (30) days of Sublessor's written request, Sublessee agrees to deliver to Sublessor such information, documents and/or authorization as Sublessor reasonably needs in order to comply with new or existing Applicable Requirements relating to commercial building energy usage, ratings, and/or the reporting thereof.

11.    Assignment and Subletting.

11.1    Sublessor's Consent Required.

(a)    Sublessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Sublessee's interest in this Sublease or in the Premises without Sublessor's prior written consent, not to be unreasonably withheld, conditioned or delayed.

(b)    Unless Sublessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Sublessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of Sublessee shall constitute a change in control for this purpose. The parties acknowledge and agree that Sublessee is a publicly traded corporation on a national exchange and the provisions of this subparagraph (b) shall not be applicable to the original Sublessee.

(c)    Intentionally Omitted.

(d)    An assignment or subletting without consent shall be a Default curable after notice per Paragraph 12.1(d).

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(e)    Sublessee's remedy for any breach of Paragraph 12.1 by Sublessor shall be limited to compensatory damages and/or injunctive relief.

(f)    Sublessor may reasonably withhold consent to a proposed assignment or subletting if Sublessee is in Breach at the time consent is requested.

(g)    Notwithstanding the foregoing, allowing a de minimis portion of the Premises, ie. 10,000 square feet or less, to be used by a third party vendor shall not constitute a subletting.

11.2    Terms and Conditions Applicable to Assignment and Subletting.

(a)    Regardless of Sublessor's consent, no assignment or subletting shall : (i) be effective without the express written assumption by an assignee of the obligations of Sublessee under this Sublease (and any subtenant shall agree to comply with the terms of this Sublease), (ii) release Sublessee of any obligations hereunder, or (iii) alter the primary liability of Sublessee for the payment of Rent or for the performance of any other obligations to be performed by Sublessee.

(b)    Sublessor may accept Rent or performance of Sublessee's obligations from any person other than Sublessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Sublessor's right to exercise its remedies for Sublessee's Default or Breach.

(c)    Sublessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.

(d)    In the event of any Default or Breach by Sublessee, Sublessor may proceed directly against Sublessee or anyone else responsible for the performance of Sublessee's obligations under this Sublease, including any assignee or sublessee, without first exhausting Sublessor's remedies against any other person or entity responsible therefor to Sublessor, or any security held by Sublessor.

(e)    Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Sublessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Premises, if any, together with a fee of $[***] as consideration for Sublessor's considering and processing said request. Sublessee agrees to provide Sublessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 35)

(f)    Any assignee of this Lease shall, by reason of accepting such assignment be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Sublessee during the term of said assignment, other than such obligations as are contrary to or inconsistent with provisions of an assignment to which Sublessor has specifically consented to in writing.

(g)    Sublessor's consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Sublessee by this Sublease unless such transfer is specifically consented to by Sublessor in writing. (See Paragraph 38.2)

11.3    Additional Terms and Conditions. The following terms and conditions shall apply to any subletting by Sublessee of all or any part of the Premises and shall be deemed included in all subleases under this Sublease whether or not expressly incorporated therein:

(a)    Sublessee shall have the right to sublease or assign any portion of the Buildings to any related entity, parent company, subsidiary or affiliate, or to a successor by merger or purchase (a “Sublessee Affiliate”) without Sublessor’s written consent, but subject to the consent of Land Lessor. Sublessee shall have the right to sublease or assign any portion of the Premises to any other assignee/subtenant with Sublessor’s written consent, which shall not be unreasonably withheld, conditioned, or delayed, and delivered within fifteen (15) business days of receipt of notice. Sublessee’s right to sublease is also subject to the written consent of Land Lessor. Sublessor shall have no right of recapture. In the event Sublessor does

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not consent to an assignment or subletting, Sublessor shall state in specific detail the reasons therefor.

(b)    Sublessor shall be entitled to share in fifty percent (50%) of the net “profits” attributable to any sublease or assignment. Net profits shall be defined as the net rent (sublease rent compared with contract rent under this Sublease) received from the subtenant reduced by all typical subleasing costs, such as rent and other concessions, tenant improvements, broker commissions and “bonuses”, legal fees, other subleasing costs and downtime – the time the space is vacant and listed for sublease by a local commercial real estate broker, such typical subleasing costs to be amortized over the term of the sublease or remaining Term of this Sublease if an assignment.

(c)     Sublessee hereby assigns and transfers to Sublessor all of Sublessee’s interest in all Rent payable on any sublease, and Sublessor may collect such Rent and apply same toward Sublessee’s obligations under this Sublease; provided, however, that until a Breach shall occur in the performance of Sublessee’s obligations, Sublessee may collect said Rent. In the event that the amount collected by Sublessor exceeds Sublessee’s then outstanding obligations any such excess shall be refunded to Sublessee. Sublessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Sublessee to perform and comply with any of Sublessee’s obligations to such sublessee. Sublessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Sublessor stating that a Breach exists in the performance of Sublessee’s obligations under this Sublease, to pay to Sublessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Sublessor and shall pay all Rents to Sublessor without any obligation or right to inquire as to whether such Breach exists, notwithstanding any claim from Sublessee to the contrary.

(d)    In the event of a Breach by Sublessee, Sublessor may, at its option, require sublessee to attorn to Sublessor, in which event Sublessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Sublessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior Defaults or Breaches of such sublessor.

(e)    Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Sublessor.

(f)    No sublessee shall further assign or sublet all or any part of the Premises without Sublessor's prior written consent.    Sublessor shall deliver a copy of any notice of Default or Breach by Sublessee to the sublessee, who shall have the right to cure the Default of Sublessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Sublessee for any such Defaults cured by the sublessee.

12.    Default; Breach; Remedies.

12.1    Default; Breach. A "Default" is defined as a failure by the Sublessee to comply with or perform any of the terms, covenants, conditions or Rules and Regulations under this Sublease. A "breach" is defined as the occurrence of one or more of the following Defaults, and the failure of Sublessee to cure such Default within any applicable grace period:

(a)    The abandonment of the Premises.

(b)    The failure of Sublessee to make any payment of Rent required to be made by Sublessee hereunder to Sublessor where such failure continues for a period of 3 business days following written notice to Sublessee. THE ACCEPTANCE BY SUBLESSOR OF A PARTIAL PAYMENT OF RENT SHALL NOT CONSTITUTE A WAIVER OF ANY OF SUBLESSOR'S RIGHTS, INCLUDING SUBLESSOR'S RIGHT TO RECOVER POSSESSION OF THE PREMISES.

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(c)    The failure of Sublessee to allow Sublessor and/or its agents access to the Premises or the commission of waste, act or acts constituting public or private nuisance, and/or an illegal activity on the Premises by Sublessee, where such actions continue for a period of 3 business days following written notice to Sublessee.

(d)    The failure by Sublessee to provide (i) reasonable written evidence of compliance with Applicable Requirements, (ii) the service contracts, (iii) the rescission of an unauthorized assignment or subletting, (iv) an Estoppel Certificate or financial statements, (v) a requested subordination or (vi) any document requested under Paragraph 42, where any such failure continues for a period of 30 business days following written notice to Sublessee.

(e)    A Default by Sublessee as to the terms, covenants, conditions or provisions of this Lease, or of the rules adopted under Paragraph 2.9 hereof, other than those described in subparagraphs 12.1(a), (b), (c) or (d), above, where such Default continues for a period of 30 days after written notice; provided, however, that if the nature of Sublessee's Default is such that more than 30 days are reasonably required for its cure, then it shall not be deemed to be a Breach if Sublessee commences such cure within said 30 day period and thereafter diligently prosecutes such cure to completion.

(f)    The occurrence of any of the following events: (i) the making of any general arrangement or assignment for the benefit of creditors; (ii)“becoming a "debtor" as defined in 11 U.S.C. § 101 or any successor statute thereto (unless, in the case of a petition filed against Sublessee, the same is dismissed within 60 days); (iii) the appointment of a trustee or receiver to take possession of substantially all of Sublessee's assets located at the Premises or of Sublessee's interest in this Sublease, where possession is not restored to Sublessee within 30 days; or (iv) the attachment, execution or other judicial seizure of substantially all of Sublessee's assets located at the Premises or of Sublessee's interest in this Sublease, where such seizure is not discharged within 30 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, and not affect the validity of the remaining provisions.

(g)    The discovery that any financial statement of Sublessee given to Sublessor was materially false.

12.2    Remedies. In the event of a Breach, Sublessor may, with or without further notice or demand, and without limiting Sublessor in the exercise of any right or remedy which Sublessor may have by reason of such Breach:

(a) Terminate Sublessee's right to possession of the Premises by any lawful means, in which case this Sublease shall terminate and Sublessee shall immediately surrender possession to Sublessor. In such event Sublessor shall be entitled to recover from Sublessee: (i) the unpaid Rent which had been earned at the time of termination; (ii) the worth at the time of award of the amount by which the unpaid rent which would have been earned after termination until the time of award exceeds the amount of such rental loss that the Sublessee proves could have been reasonably avoided; (iii) the worth at the time of award of the amount by which the unpaid rent for the balance of the term after the time of award exceeds the amount of such rental loss that the Sublessee proves could be reasonably avoided; and (iv) any other amount necessary to compensate Sublessor for all the detriment proximately caused by the Sublessee's failure to perform its obligations under this Sublease or which in the ordinary course of things would be likely to result therefrom, including but not limited to the cost of recovering possession of the Premises, expenses of reletting, including necessary renovation and alteration of the Premises, reasonable attorneys' fees, and that portion of any leasing commission paid by Sublessor in connection with this Sublease applicable to the unexpired term of this Sublease. The worth at the time of award of the amount referred to in provision (iii) of the immediately preceding sentence shall be computed by discounting such amount at the discount rate of the Federal Reserve Bank of the District within which the Premises are located at the time of award plus one percent. Efforts by Sublessor to mitigate damages caused by Sublessee's Breach of this Sublease shall not waive Sublessor's right to recover any damages to which Sublessor is otherwise entitled. If termination of this Sublease is obtained

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through the provisional remedy of unlawful detainer, Sublessor shall have the right to recover in such proceeding any unpaid Rent and damages as are recoverable therein, or Sublessor may reserve the right to recover all or any part thereof in a separate suit. If a notice and grace period required under Paragraph 12.1 was not previously given, a notice to pay rent or quit, or to perform or quit given to Sublessee under the unlawful detainer statute shall also constitute the notice required by Paragraph 12.1. In such case, the applicable grace period required by Paragraph 12.1 and the unlawful detainer statute shall run concurrently, and the failure of Sublessee to cure the Default within the greater of the two such grace periods shall constitute both an unlawful detainer and a Breach of this Sublease entitling Sublessor to the remedies provided for in this Sublease and/or by said statute.

(b)    Continue the Sublease and Sublessee's right to possession and recover the Rent as it becomes due, in which event Sublessee may sublet or assign, subject only to reasonable limitations. Acts of maintenance, efforts to relet, and/or the appointment of a receiver to protect the Sublessor's interests, shall not constitute a termination of the Sublessee's right to possession.

(c)    Pursue any other remedy now or hereafter available under the laws or judicial decisions of the state wherein the Premises are located. The expiration or termination of this Sublease and/or the termination of Sublessee's right to possession shall not relieve Sublessee from liability under any indemnity provisions of this Sublease as to matters occurring or accruing during the term hereof or by reason of Sublessee's occupancy of the Premises.

12.3    Inducement Recapture. Any agreement for free or abated Base Rent or Common Area Operating Expenses, all of which concessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Sublessee's full and faithful performance of all of the terms, covenants and conditions of this Sublease. Upon Breach of this Sublease by Sublessee which is not cured by Sublessee, a portion of such abated or free Base Rent and Common Area Operating Expenses in an amount equal to the then unamortized amount of free Base Rent and Common Area Operating Expenses shall be immediately due and payable by Sublessee to Sublessor (for example, in the event the Term of this Sublease is ten (10) years and Sublessee’s Breach of this Sublease occurs on the last day of the sixtieth (60th) month of the Term, Sublessee shall be obligated to pay an amount equal to fifty percent (50%) of any free Base Rent and Common Area Operating Expenses provided to Sublessee). The acceptance by Sublessor of rent or the cure of the Breach which initiated the operation of this paragraph shall not be deemed a waiver by Sublessor of the provisions of this paragraph unless specifically so stated in writing by Sublessor at the time of such acceptance.

12.4 Late Charges. Sublessee hereby acknowledges that late payment by Sublessee of Rent will cause Sublessor to incur costs not contemplated by this Sublease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Sublessor by any Lender. Accordingly, if any Rent shall not be received by Sublessor within 10 days after such amount shall be due, then, without any requirement for notice to Sublessee, Sublessee shall immediately pay to Sublessor a one-time late charge equal to 2% of each such overdue amount or $[***], whichever is greater; provided, no such late charge shall be payable in the event Sublessee pays such overdue amount within five (5) business days following written notice to Sublessee. The parties hereby agree that such late charge represents a fair and reasonable estimate of the costs Sublessor will incur by reason of such late payment. Acceptance of such late charge by Sublessor shall in no event constitute a waiver of Sublessee's Default or Breach with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Lease to the contrary, Base Rent shall, at Sublessor's option, become due and payable quarterly in advance.

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12.5    Interest. Any monetary payment due Sublessor hereunder, other than late charges, not received by Sublessor, when due shall bear interest from and after the 31st day after it was due. The interest ("Interest") charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 12.3.

12.6    Breach by Sublessor.

(a)    Notice of Breach. Sublessor shall not be deemed in breach of this Sublease unless Sublessor fails within a reasonable time to perform an obligation required to be performed by Sublessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Sublessor, and any Lender whose name and address shall have been furnished to Sublessee in writing for such purpose, of written notice specifying wherein such obligation of Sublessor has not been performed; provided, however, that if the nature of Sublessor's obligation is such that more than 30 days are reasonably required for its performance, then Sublessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion.

(b)    Performance by Sublessee on Behalf of Sublessor. In the event that neither Sublessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion or if the breach is of an emergency nature and is not cured within five (5) days following written notice from Sublessee, then Sublessee may elect to cure said breach at Sublessee's expense and offset from Rent the actual and reasonable cost to perform such cure. Sublessee shall document the cost of said cure and supply said documentation to Sublessor.

13.    Condemnation. If the Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Sublease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of a Hangar, or more than 25% of the parking spaces is taken by Condemnation, Sublessee may, at Sublessee's option, to be exercised in writing within 30 days after Sublessor shall have given Sublessee written notice of such taking (or in the absence of such notice, within 30 days after the condemning authority shall have taken possession) terminate this Sublease as of the date the condemning authority takes such possession. If Sublessee does not terminate this Sublease in accordance with the foregoing, this Sublease shall remain in full force and effect as to the portion of the Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Sublessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Sublessee shall be entitled to any compensation paid by the condemnor for Sublessee's relocation expenses, bonus value of this Sublease, loss of business goodwill and/or Trade Fixtures, without regard to whether or not this Sublease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Premises by Sublessee, for purposes of Condemnation only, shall be considered the property of the Sublessee and Sublessee shall be entitled to any and all compensation which is payable therefor. In the event that this Sublease is not terminated by reason of the Condemnation, Sublessor shall repair any damage to the Premises caused by such Condemnation.

14.    Brokerage Fees.

14.1    Additional Commission. In addition to the payments owed pursuant to Paragraph 1.7 above, Sublessor agrees that: (a) if Sublessee exercises any Option, (b) if Sublessee or anyone affiliated with Sublessee acquires from Sublessor any rights to the Premises or other premises owned by Sublessor and located within the Project, (c) if Sublessee remains in

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possession of the Premises, with the consent of Sublessor, after the expiration of this Sublease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation clause herein, then, Sublessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time this Sublease was executed. The provisions of this paragraph are intended to supersede the provisions of any earlier agreement to the contrary.

14.2    Assumption of Obligations. Any buyer or transferee of Sublessor's interest in this Sublease shall be deemed to have assumed Sublessor's obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10, 14, 21 and 30. If Sublessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Sublease when due, then such amounts shall accrue Interest. In addition, if Sublessor fails to pay any amounts to Sublessee's Broker when due, Sublessee's Broker may send written notice to Sublessor and Sublessee of such failure and if Sublessor fails to pay such amounts within 10 days after said notice, Sublessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Sublessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Sublessor and Sublessor's Broker for the limited purpose of collecting any brokerage fee owed.

14.3    Representations and Indemnities of Broker Relationships. Sublessee and Sublessor each represent and warrant to the other that it has had no dealings with any person, firm, broker, agent or finder (other than the Brokers and Agents, if any) in connection with this Sublease, and that no one other than said named Brokers and Agents is entitled to any commission or finder's fee in connection herewith. Sublessee and Sublessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurred with respect thereto.

15.    Estoppel Certificates.

(a)    Each Party (as "Responding Party") shall within 10 business days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current "Estoppel Certificate" form published by AIR CRE, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party.

(b)    If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Sublease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults in the Requesting Party's performance, and (iii) if Sublessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate.

(c)    If Sublessor desires to finance, refinance, or sell the Premises, or any part thereof, Sublessee shall within 30 days after written notice from Sublessor deliver to any potential lender or purchaser designated by Sublessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Sublessee's financial statements for the past 3 years. All such financial statements shall be received by Sublessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. This subparagraph (c) shall not be applicable to any entity whose common stock is traded on a national stock exchange.

16.    Definition of Sublessor. The term "Sublessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Premises, or, if this is a sublease, of the tenant’s interest in the Land Lease. Upon transfer or assignment and delivery of any security

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deposit, the prior Sublessor shall be relieved of all liability with respect to the obligations and/or covenants under this Sublease thereafter to be performed by the Sublessor but not any liability which may have accrued prior to such transfer. Subject to the foregoing, the obligations and/or covenants in this Sublease to be performed by the Sublessor shall be binding only upon the Sublessor as hereinabove defined.

17.    Severability. The invalidity of any provision of this Sublease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

18.    Days. Unless otherwise specifically indicated to the contrary, the word "days" as used in this Sublease shall mean and refer to calendar days.

19.    Limitation on Liability. The obligations of a Party under this Sublease shall not constitute personal obligations of such Party, or its partners, members, directors, officers or shareholders, and Sublessee shall look to the Premises, and to no other assets of Sublessor, for the satisfaction of any liability of Sublessor with respect to this Sublease, and shall not seek recourse against Sublessor's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.

20.    Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Sublease.

21.    No Prior or Other Agreements; Broker Disclaimer. This Sublease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Brokers have no responsibility with respect to the condition of the Premises or with respect to any default or breach hereof by either Party.

22.    Notices.

22.1    Notice Requirements. Except as provided in Paragraph 22.3 below, all notices required or permitted by this Sublease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by nationally recognized overnight courier, regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 22. The addresses noted adjacent to a Party's signature on this Sublease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice. A copy of all notices to Sublessor shall be concurrently transmitted to such party or parties at such addresses as Sublessor may from time to time hereafter designate in writing. Sublessee’s Notice address is as follows:

Virgin Galactic Holdings, Inc.                

1700 Flight Way

Tustin CA 92606

Attention: Swami Iyer

With a copy to:

Virgin Galactic Holdings, Inc.

1700 Flight Way

Tustin, CA 92606

Attention: General Counsel

22.2    Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand, or transmitted by facsimile transmission or by email shall be deemed delivered upon written confirmation by the receiving Party of actual receipt. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

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22.3    Options. Notwithstanding the foregoing, in order to exercise any Options (see paragraph 38), the Notice must be sent by nationally recognized overnight courier, Certified Mail (return receipt requested), Express Mail (signature required), courier (signature required) or some other methodology that provides a receipt establishing the date the notice was received by the Sublessor.

23.    Waivers.

(a)    No waiver by Sublessor of the Default or Breach of any term, covenant or condition hereof by Sublessee, shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Default or Breach by Sublessee of the same or of any other term, covenant or condition hereof. Sublessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Sublessor's consent to, or approval of, any subsequent or similar act by Sublessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Sublease requiring such consent.

(b)    The acceptance of Rent by Sublessor shall not be a waiver of any Default or Breach by Sublessee. Any payment by Sublessee may be accepted by Sublessor on account of monies or damages due Sublessor, notwithstanding any qualifying statements or conditions made by Sublessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Sublessor at or before the time of deposit of such payment.

(c)    THE PARTIES AGREE THAT THE TERMS OF THIS SUBLEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS SUBLEASE.

24.    Intentionally Omitted.

25.    No Right To Holdover. Sublessee shall have the right to holdover the Premises on a daily basis for up to six (6) months after expiration of this Sublease without Sublessor’s consent by notifying Sublessor in writing no earlier than nine (9) months and no later than six (6) months prior to expiration of the term, as it may be extended. Except as set forth above, Sublessee has no right to retain possession of the Premises or any part thereof beyond the expiration or termination of this Sublease. In the event that Sublessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Holdover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Sublessor to any holding over by Sublessee.

26.    Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

27.    Covenants and Conditions; Construction of Agreement. All provisions of this Sublease to be observed or performed by Sublessee are both covenants and conditions. In construing this Sublease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Sublease. Whenever required by the context, the singular shall include the plural and vice versa. This Sublease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

28.    Binding Effect; Choice of Law. This Sublease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Premises are located. Any litigation between the Parties hereto concerning this Sublease shall be initiated in the county in which the Premises are located. Signatures to this Sublease accomplished by means of electronic signature or similar technology shall be legal and binding.

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29.    Subordination; Attornment; Non-Disturbance.

29.1    Subordination. Subject to the terms and conditions of this Sublease, this Sublease and any Option granted hereby shall be subject and subordinate to any ground lease, mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Sublessee agrees that the holders of any such Security Devices (in this Sublease together referred to as "Lender") shall have no liability or obligation to perform any of the obligations of Sublessor under this Sublease unless and until such Lender is the Sublessor under this Sublease. Any Lender may elect to have this Sublease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Sublessee, whereupon this Sublease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

29.2    Attornment. In the event that Sublessor transfers title to the Premises, or the Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Sublease is subordinated (i) Sublessee shall, subject to the non-disturbance provisions of Paragraph 29.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Sublease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Sublease will automatically become a new sublease between Sublessee and such new owner, and (ii) Sublessor shall thereafter be relieved of any further obligations hereunder and such new owner shall assume all of Sublessor's obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior lessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Sublessee might have against any prior lessor, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to any prior lessor which was not paid or credited to such new owner.

29.3    Non-Disturbance. With respect to any Security Devices currently encumbering the Premises and with respect to any Security Devices entered into by Sublessor after the execution of this Sublease, Sublessee's subordination of this Lease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-DisturbanceAgreement") from the Lender which Non-Disturbance Agreement provides that Sublessee's possession of the Premises, and this Sublease, including any options to extend the term hereof, will not be disturbed so long as Sublessee is not in Breach hereof and attorns to the record owner of the Premises. Execution and delivery of such Non-Disturbance Agreement (in recordable form, with notary acknowledgements) from each Lender currently encumbering the Premises, Sublessor and Sublessee shall be a condition to the effectiveness of this Sublease. Sublessor represents and warrants to Sublessee that, as of the date of this Sublease set forth in Paragraph 1.1, there are no Security Devices encumbering the Premises except a construction loan obtained by Sublessor. In the event a Non-Disturbance Agreement is not provided to Sublessee by such Security Device holder, and executed, notarized an delivered by all parties thereto, within thirty (30) days after the date of this Sublease, Sublessee shall have the right to terminate this Sublease.

29.4    Self-Executing. The agreements contained in this Paragraph 29 shall be effective without the execution of any further documents; provided, however, that, upon written request from Sublessor or a Lender in connection with a sale, financing or refinancing of the Premises, Sublessee and Sublessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.

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30.    Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred.

31.    Intentionally Omitted.

32.    Auctions. Sublessee shall not conduct, nor permit to be conducted, any auction upon the Premises without Sublessor's prior written consent. Sublessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.

33.    Signs. Sublessor may place on the Premises ordinary "For Sale" signs at any time and ordinary "For Lease" signs during the last 6 months of the term hereof. All signs must comply with all Applicable Requirements.Sublessor grants Sublessee the exclusive right to place its illuminated, if desired, corporate identity anywhere on the interior/exterior of the Buildings, including the roof structure to be visible to flying aircraft. In addition, Sublessee shall be granted reasonable directional signs, to the Premises, within the Project. All signage shall be pursuant to local sign ordinances from the jurisdiction providing any approvals/permits for exterior Building/Project signage permits, and the Airport Authority, if required. All signage shall be subject to Sublessor’s approval, not to be unreasonably withheld, conditioned or delayed, and Land Lessor’s approval.

34.    Termination; Merger.

Unless specifically stated otherwise in writing by Sublessor, the voluntary or other surrender of this Sublease by Sublessee, the mutual termination or cancellation hereof, or a termination hereof by Sublessor for Breach by Sublessee, shall automatically terminate any sublease or lesser estate in the Premises; provided, however, that Sublessor may elect to continue any one or all existing subtenancies. Sublessor's failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Sublessor’s election to have such event constitute the termination of such interest.

35.    Consents. All requests for consent shall be in writing. Except as otherwise provided herein, wherever in this Sublease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld, conditioned or delayed. Sublessor's actual reasonable costs and expenses (including but not limited to reasonable and actual architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Sublessee for any Sublessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Sublessee upon receipt of an invoice and supporting documentation therefor. Sublessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Default or Breach by Sublessee of this Sublease exists, nor shall such consent be deemed a waiver of any then existing Default or Breach, except as

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may be otherwise specifically stated in writing by Sublessor at the time of such consent. The failure to specify herein any particular condition to Sublessor's consent shall not preclude the imposition by Sublessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.

36.    Guarantor. Intentionally Omitted.

37.    Quiet Possession. Subject to payment by Sublessee of the Rent and performance of all of the covenants, conditions and provisions on Sublessee's part to be observed and performed under this Lease, Sublessee shall have quiet possession and quiet enjoyment of the Premises during the Term hereof, as such Term may be extended.

38.    Options. If Sublessee is granted any option, as defined below, then the following provisions shall apply.

38.1    Definition. "Option" shall mean: (a) the right to extend or reduce the Term of or renew this Lease or to extend or reduce the Term of or renew any lease that Sublessee has on other property of Sublessor; (b) the right of first refusal or first offer to lease or sublease either the Premises or other property of Sublessor; (c) the right to purchase, the right of first offer to purchase or the right of first refusal to purchase the Premises or other property of Sublessor.

38.2    Options Personal To Original Sublessee and Sublessee Affiliates. Any Option granted to Sublessee in this Sublease is personal to the original Sublessee and Sublessee Affiliates, and cannot be assigned or exercised by anyone other than said original Sublessee and Sublessee Affiliates, and only while the original Sublessee or Sublessee Affiliate(s) is/are in possession of no less than fifty percent (50%) of the Premises.

38.3    Multiple Options. In the event that Sublessee has any multiple Options to extend or renew this Sublease, a later Option cannot be exercised unless the prior Options have been validly exercised.

38.4    Effect of Default on Options.

(a)    Sublessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of Default and continuing until said Default is cured, (ii) during the time Sublessee is in Breach of this Sublease, or (iii) in the event that Sublessee has been given 3 or more notices of separate Default, whether or not the Defaults are cured, during the 12 month period immediately preceding the exercise of the Option.

(b)    The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Sublessee's inability to exercise an Option because of the provisions of Paragraph 38.4(a).

(c)    An Option shall terminate and be of no further force or effect, notwithstanding Sublessee's due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, if Sublessee commits a Breach of this Sublease.

39.    Security Measures. Sublessee hereby acknowledges that the Rent payable to Sublessor hereunder does not include the cost of guard service or other security measures. Sublessee shall take responsibility for the protection of the Premises, Sublessee, its agents and invitees and their property from the acts of third parties. Sublessor grants Sublessee the right to install on-site security, equipment, personnel, procedures and systems inside and outside the Buildings, including without limitation, card readers, security cameras and any other devices to

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enhance security, so long as such devices to not impair or impede other tenants of the Project or Sublessor.

40.    Reservations. Sublessor reserves the right: (i) to grant, without the consent or joinder of Sublessee, such easements, rights and dedications that Sublessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Premises by Sublessee. Sublessee agrees to sign and deliver to Sublessor any documents reasonably requested by Sublessor to effectuate such rights.

41.    Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid "under protest" within 6 months shall be deemed to have waived its right to protest such payment.

42.    Authority; Multiple Parties; Execution.

(a)    If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, such entity represents and warrants that it is duly authorized to execute and deliver this Sublease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.

(b)    If this Sublease is executed by more than one person or entity as "Sublessee", each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Sublessees shall be empowered to execute any amendment to this Sublease, or other document ancillary thereto and bind all of the named Sublessees, and Sublessor may rely on the same as if all of the named Sublessees had executed such document.

(c)    This Sublease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

43.    Conflict. Any conflict between the printed provisions of this Sublease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

44.    Offer. Preparation of this Sublease by either party or their agent and submission of same to the other Party shall not be deemed an offer to lease or sublease to the other Party. This Sublease is not intended to be binding until executed and delivered by all Parties hereto.

45.    Amendments. This Sublease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially in Sublessee’s reasonable judgment) change Sublessee's rights, duties, liabilities or obligations hereunder, Sublessee agrees to make such reasonable non-monetary modifications to this Sublease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Premises.

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46.    Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS SUBLEASE.

47.    Sublessee’s Right to Install an Emergency Generator. Sublessee shall have the right (until the earlier of the expiration or earlier termination of the Term), at Sublessee's sole cost and expense, subject to the provisions of this Sublease, to install one (1) above-ground back-up generator (the "Generator"), at a location to be mutually agreed upon by the parties, acting reasonably (and pursuant to plans and specifications approved in advance by Sublessor, which approval shall not be unreasonably withheld), together with any and all underground connections required to use and operate the Generator. The Generator, and Sublessee's rights with respect thereto, shall be subject to the additional following terms and conditions:

        (a)    All costs and expenses associated with the Generator, including, without limitation, all costs and expenses relating to any required soundproofing, screening, compliance with all Applicable Requirements, safety, protection of property, installation, noise reduction, environmental monitoring and remediation, maintenance, repairs, replacements and removal, in each case to the extent reasonably necessary, shall be paid for by Sublessee. Sublessor='s review of plans and specifications shall be for its own benefit only, and Sublessor shall have no liability to Sublessee in connection with such review. Sublessee shall ensure that the Generator complies at all times with all Applicable Requirements in all respects.

        (b)    Sublessee shall indemnify, defend and hold Sublessor harmless from and against any and all claims arising out of or in connection with the Generator, and shall repair all damage to the Premises contained therein arising in connection with the Generator.

        (c)    Sublessee, at Sublessee's sole cost and expense, shall be obligated to secure and obtain and provide Sublessor with copies of all required permits, approvals and licenses for or with respect to the installation or operation of the Generator prior to the commencement of any installation activities hereunder, and shall be obligated to keep in full force and effect and renew, as applicable, all required permits, approvals and licenses required hereunder.

(d) The Generator shall be screened as required by Applicable Requirements or any covenants, conditions and restrictions recorded against the Project. Installation of the Generator shall be anticipated by Sublessor and Sublessor’s designers in the re-design of Hangar B and the existing design of Hangar C in order to minimize any trenching after construction of all or a material proportion of Hangar C for running of conduits from the Generator to the switch gear/transfer switches. To support communications and networking, Sublessor shall provide fiber optics to within Hangar B and Hangar C, as more particularly described in the Addendum and exhibits attached to this Sublease.

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The parties hereto have executed this Sublease at the place and on the dates specified above their respective signatures.

Executed at:    Phoenix, AZ     On:    July 14, 2022     By SUBLESSOR: Gateway Executive Airpark, LLC By:    /s/ Stephen McKendry Name Printed:    Stephen McKendry Title:     Manager     Phone:    [***]     Fax:    [***] Email:     [***]     By:    /s/ Daryl J. Donkersloot Name Printed:    Daryl J. Donkersloot Title:    Manager Phone:    [***] Fax:     Email:    [***] Address:    [***] Federal ID No.:    [***]

Executed at:    10:43 AM     On:    July 14, 2022     By SUBLESSEE:    Doug Ahrens     By:    /s/ Doug Ahrens     Name Printed:    Doug Ahrens     Title:     Chief Financial Officer     Phone:    [***]     Fax:     Email:     [***]     Federal ID No.:    [***]     By:     Name Printed:     Title:     Phone:     Fax:     Email:     Address:     Federal ID No.:

BROKER     Dalin Commercial Real Estate Services     Attn:    Stephen McKendry Title:    Designated Broker Address:    [***] Phone:    [***] Fax:    [***] Email:     Federal ID No.:    [***] Broker License #:    [***]

BROKER     /s/ Kim Josephson Attn:    Kim Josephson Title:    Broker Address:    [***] Phone:    [***] Fax:     Email:    [***] Federal ID No.:     Broker License #:

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INDEX OF EXHIBITS

Exhibit A	Site Plan with Parking
Exhibit B	Land Lease and 1st Amendment
Exhibit C	Addendum (with Exhibits)
Exhibit D	Rules and Regulations
Exhibit E	Disclaimer
Exhibit F	Links to Gateway Executive Airpark’s Fees and Regulations

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Exhibit A

Site Plan with Parking

[***]

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Exhibit B

Land Lease with 1st Amendment

[***]

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Exhibit C

Addendum (with Exhibits)

[***]

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Exhibit D

RULES AND REGULATIONS

[***]

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Exhibit E

Disclaimer

[***]

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Exhibit F

Links to Gateway Executive Airpark’s Fees and Regulations

[***]

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EX-10.3

[***] Certain information in this document has been excluded pursuant to Regulation S-K Item 601(b)(10). Such excluded information is not material and is of the type that the registrant treats as private or confidential.

FIRST AMENDED AND RESTATED STANDARD INDUSTRIAL/COMMERCIAL MULTI-TENANT SUBLEASE - NET

1.Basic Provisions ("Basic Provisions")

1.1Parties. This First Amended and Restated Standard Industrial/Commercial Multi-Tenant Sublease – Net ("Sublease"), dated for reference purposes only July 14, 2022, is made by and between Gateway Executive Airpark, LLC, a Delaware limited liability company, whose address is 7030 W. Oakland Street, Chandler, Arizona 85226 ("Sublessor") and Virgin Galactic Holdings, Inc., whose address is 1700 Flight Way, Tustin, California, 92782 ("Sublessee”) (collectively the "Parties", or individually a "Party"). This Sublease amends and restates that certain Standard Industrial/Commercial Multi-Tenant Sublease – Net dated July 14, 2022 in its entirety.

1.2(a)    Sublease Premises: That certain real property, including all improvements located thereon or to be provided by Sublessor under the terms of this Sublease, commonly known as 5559 S. Sossaman Road, Mesa, Arizona 85212, Hangar B and Hangar C (collectively, the "Sublease Premises"). A description of the Sublease Premises and the Project (defined below) is attached to this Sublease as Exhibit A and incorporated herein by this reference. The Sublease Premises are located within the Project in the County of Maricopa and are generally described as Hangar B (35,896 sq.ft) (“Hangar B”) and Hangar C (115,200 sq. ft.) (“Hangar C”). Hangar B and Hangar C are individually, a “Building”, and are sometimes collectively referred to herein as the “Buildings” or Sublease Premises. In addition to Sublessee's rights to use and occupy the Sublease Premises as hereinafter specified, Sublessee shall have exclusive rights to each and every part of the Sublease Premises, including without limitation, any utility raceways located within the Sublease Premises, but Sublessee shall not have any rights to access the roof, or change or modify the exterior walls of the Buildings (except as expressly set forth in this Sublease), or have any rights to any other buildings in the Project. Sublessee shall also have non-exclusive rights, together with other subtenants of the Project, to use the Common Areas (as defined in Paragraph 2.7 below). The Sublease Premises, the Common Areas, and the land upon which they are located, along with all other buildings and improvements located within Gateway Executive Park, also known as Lots 11, 12, 13 and 14, are herein collectively referred to as the "Project" and referred to as the “Premises” in the Land Lease (See also Paragraph 2). The Buildings’ square footages were calculated by the Project’s architect, Winton Architects, Inc., who has confirmed the basis for square foot calculation. Sublessee has had an opportunity to review and to agree, or disagree, with the square footages. The agreed upon square footage calculation shall not be changed during the Term of this Sublease or any extensions thereof. Sublessor waives any rights to relocate Sublessee during the Term of this Sublease and any extensions thereof.

1.2(b)    Land Lease: Sublessor is the “Lessee” under that certain Land Lease dated effective as of October 1, 2019, and as amended by the First Amendment to Lease dated effective October 21, 2020 (as amended “Land Lease”) with PHOENIX-MESA GATEWAY AIRPORT AUTHORITY, a joint powers airport authority authorized and existing under the laws of the State of Arizona (“Land Lessor”); and pursuant to the Land Lease, Sublessor leased the Project from Land Lessor. A copy of the Land Lease is attached hereto as Exhibit B and made a part of this Sublease. Such Land Lease includes, without limitation: Sublessor’s use of the apron/ramp areas in front of Sublessee’s aircraft access doors and non-exclusive use of all taxiways and runways subject to the Land Lessor’s rules and regulations. Sublessor hereby grants to Sublessee all of those uses and rights granted and or leased to Sublessor, as “Lessee”, under

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the Land Lease. In addition, Sublessor and Sublessee agree as follows with respect to the Land Lease:

(1)Sublessee acknowledges that this Sublease is a sublease entered into by Sublessor as “Lessee” under that the Land Lease, whereby Land Lessor leases to Sublessor, and Sublessor leases from Land Lessor, the Project. Prior to the date of this Sublease, Sublessor has delivered to Sublessee a true and complete copy of the Land Lease. Sublessee hereby acknowledges and agrees that this Sublease is subject and subordinate to the terms and provisions of the Land Lease. Sublessee acknowledges and agrees that, without limiting any of Sublessee's other obligations set forth in this Sublease, Sublessee and its successors and assigns (to the extent permitted under the terms of this Sublease) shall comply with all of the terms and provisions of the Land Lease. In the event of any conflict between the provisions of this Sublease and the provisions of the Land Lease (including without limitation, the Airport Rules and Regulations, the Airport Minimum Standards (as defined in the Land Lease) and the terms and conditions described in Section 9.6 of the Land Lease under which Land Lessor acquired the Project), then such conflict, as between Land Lessor, on the one hand, and Sublessee and/or Sublessor on the other hand, shall be resolved in favor of the Land Lease (including without limitation, the Airport Rules and Regulations, the Airport Minimum Standards and the terms and conditions described in Section 9.6 of the Land Lease under which Land Lessor acquired the Project). In the event of any conflict between the provisions of the Land Lease (including without limitation, the Airport Rules and Regulations, the Airport Minimum Standards and the terms and conditions described in Section 9.6 of the Land Lease under which Land Lessor acquired the Project) and this Sublease, then, as between Sublessor and Sublessee, such conflict shall be resolved in favor of the provisions of this Sublease.

(2)Sublessor represents, warrants and agrees as follows: (i) Sublessor shall comply with all of the terms and provisions of the Land Lease, including without limitation, promptly and faithfully observing, enforcing, abiding by, discharging and performing, all of the terms, obligations, covenants, conditions, agreements, indemnities, representations, warranties or liabilities under the Land Lease on the part of the “Lessee” thereunder to be kept, observed, discharged and performed, (ii) Sublessor shall do, or cause to be done, all things necessary to preserve and keep unimpaired all rights of Sublessor as”Lessee” under the Land Lease, and to prevent any Event of Default (as defined in and under the Land Lease) on its part under the Land Lease, or any termination, surrender, cancellation, forfeiture, subordination or impairment thereof, (iii) the Land Lease is a valid and binding obligation of Sublessor and Land Lessor, enforceable in accordance with its terms, (iv) as of the date of this Sublease, except as has been disclosed in writing to Sublessee by Sublessor with respect to construction deadlines in the Land Lease, there have occurred no Events of Default (as defined in and under the Land Lease) on the part of Sublessor, as sublessee, or to Sublessor’s knowledge, Land Lessor, under the Land Lease, nor any event or circumstance with the giving of notice or the passage of time, would be an Event of Default (as defined in and under the Land Lease), and Sublessor shall give Sublessee prompt written notice following the occurrence of any such Event of Default, (v) there is no litigation, arbitration or other legal proceeding pending, or to Sublessor’s knowledge, threatened against either Sublessor, as “Lessee” under the Land Lease, or Land Lessor, (vi) as of the date of this Sublease, Sublessor has no claims, offsets, defenses or set-offs against the payment of Base Rent under the Land Lease and (vii) Sublessor shall use its good faith commercially reasonable efforts to obtain Land Lessor’s approval of Sublessee’s use and access to the tarmac area, if such approval is required by the Land Lease.

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(3)The parties acknowledge that Section 9.5 of the Land Lease includes the clause: “Non-Disturbance: Lessor agrees, for the benefit of all sub-tenants for all or any part of Premises, that if this Lease or Lessee’s right of possession of the Premises is terminated for default or otherwise, all subleases for all or any part of the Premises, except any sublease of an affiliate of Lessee, shall continue full force and effect, notwithstanding the termination, as direct leases between the Lessor and sub-tenants, all such sub-tenants shall upon request, attorn in writing to Lessor.”

(4)Sublessor’s sole obligation in this Paragraph 1.2(b)(4) shall be to use Sublessor’s commercially reasonable efforts to obtainthe written consent of Land Lessor and the written consent of any mortgagee, ground lessor or other third party required under the LandLease, each in form reasonably acceptable to both Parties (collectively, “Land Lessor Consent”)(A) to this Sublease, (B) to Sublessee’s proposed use of the Sublease Premises, (C) to the extent the Sublessee Improvements, Sublessor Improvements and other alterations are described in this Sublease and Addendum, to the Sublessee Improvements (as defined in the Addendum attached hereto as Exhibit C and incorporated herein by this reference (“Addendum”)), Sublessor Improvements described in the Addendum and other alterations and improvements to be installed by Sublessee and Sublessor pursuant to the terms of this Sublease, Addendum and exhibits to this Sublease (provided, Sublessee acknowledges and agrees that Land Lessor shall have no obligation to pay for (or fund any improvement allowance) or construct any improvements or alterations contemplated to be paid for and constructed by Sublessor pursuant to the terms of this Sublease), (D) subject to Section 37 of the Land Lease (with which Sublessor and Sublessee shall comply), to Sublessee’s right to restrict access to certain areas of the Sublease Premises for security reasons (provided, Sublessee acknowledges that Sublessee is solely responsible for preparing its plan for securing the Sublease Premises and obtaining required governmental approvals) and (E) to Sublessee’s use and access to landing areas required for Sublessee’s space or aircraft. If the Land Lessor Consent is not delivered by Land Lessor to Sublessor and Sublessee on or before August 15, 2022, then Sublessor and Sublessee may each terminate this Sublease by delivering written notice thereof to the other Party, and upon such termination, Sublessor shall return to Sublessee all amounts delivered to Sublessor hereunder no later than two (2) business days following such date, and this Sublease shall be of no further force and effect and both Parties shall be released from all liabilities and obligations hereunder. Sublessee acknowledges and agrees that Sublessee is solely responsible for determining whether the Sublease Premises is suitable for its use and Sublessee has not relied upon Sublessor or any third party to make such determination.

(5)Any fees and expenses incurred by Land Lessor or any mortgagee, ground lessor or other third party (except Sublessor) in connection with requesting and obtaining the Land Lessor Consent shall be paid by Sublessor and shall thereafter be reimbursed by Sublessee to Sublessor not later than thirty (30) days after written demand by Sublessor. Sublessee agrees to cooperate reasonably with Land Lessor and supply all information and documentation reasonably requested by Land Lessor within ten (10) days of its written request therefor. Sublessor shall not be required to perform any acts, expend any funds, or bring any legal proceedings in order to obtain the Land Lessor Consent and Sublessee shall have no right to any claim against Sublessor in the event the Land Lessor Consent is not obtained; provided, Sublessee shall have the right to terminate this Sublease without cost or penalty to Sublessee in the event the Land Lessor consent is not obtained.

(6)In any case under this Sublease that requires the consent or approval of both Land Lessor and Sublessor, Sublessor agrees to submit the matter to be so consented to or

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approved of to Land Lessor, and if Land Lessor so consents or approves, Sublessor agrees that such consent shall be deemed given by Sublessor under this Sublease. In the event that the consent or approval of any matter is not required of Land Lessor under the Land Lease, no such consent or approval of Sublessor shall be required hereunder, unless, pursuant to the express terms of this Sublease, Sublessor’s consent or approval is required, in which event Sublessor agrees that it shall not unreasonably withhold or delay its consent or approval with respect thereto. In connection with any matter requiring the consent or approval of Land Lessor under this Sublease, Sublessor agrees to submit any reasonable requests of Sublessee to Land Lessor for Land Lessor’s consent and Sublessor agrees to cooperate therewith at Sublessee’s sole cost and expense. Sublessee and Sublessor each hereby covenants and agrees to promptly deliver to the other party copies of any and all notices or other correspondence received by it from Land Lessor or delivered by it to Land Lessor relating to the Sublease Premises.

(7)Sublessor shall not amend or modify the Land Lease if such amendment or modification may affect the Sublease Premises or the rights of Sublessee hereunder and Sublessor shall not voluntarily terminate the Land Lease in any manner without Sublessee’s prior written consent. Sublessor shall not cause or suffer a termination of the Land Lease as a result of an act or omission of Sublessor that constitutes an Event of Default under the Land Lease or an Event of Default of this Sublease. Sublessor shall indemnify, defend and hold Sublessee harmless from and against all claims, judgments, liabilities, penalties, damages, costs and expenses Sublessee shall suffer (including reasonable attorneys’ fees) resulting from any breach of the covenant set forth in the immediately preceding sentence.

(8)If Land Lessor defaults in the performance of any of its obligations under the Land Lease, Sublessor shall, upon the written request of Sublessee, use its diligent good faith efforts to enforce the Land Lease and obtain Land Lessor’s compliance with its obligations thereunder. Sublessee’s performance hereunder shall be excused if Sublessor’s performance under the Land Lease is excused because of any default of Land Lessor or any failure or delay on the part of Land Lessor in performing its obligations under the Land Lease.

(9)If Sublessor defaults in or breaches the performance of any of Sublessor’s obligations under this Sublease or there occurs an Event of Default under any provisions of the Land Lease applicable to Sublessor, which Event of Default shall, by its nature, cause Land Lessor to seek to terminate the Land Lease, Sublessee, without thereby waiving such Event of Default, may, at Sublessee’s option, request that Land Lessor accept Sublessee’s performance of the same for the account and at the expense of Sublessor, subject to Sublessee providing Sublessor with not less than two (2) business days prior written notice. In such event, the amount of Sublessee’s expenditure or payment shall be that amount reasonably necessary to perform and fulfill any such term, covenant or condition, together with interest on the amount thereof from the time such moneys are expended until reimbursed by Sublessor at an annual rate equal to the lesser of (i) ten percent (10%) per annum or (ii) the maximum legal rate.

(10)Whenever the consent or approval of Sublessor is required, Sublessee acknowledges and agrees that the Land Lease may require that Sublessor also obtain the written consent of Land Lessor consent of Land Lessor (but Sublessee shall not have a right to request such consent directly from Land Lessor). Sublessor shall promptly make such consent request on behalf of Sublessee and Sublessee shall promptly provide any information or documentation that Land Lessor may request. Sublessee shall reimburse Sublessor, not later than ten (10) business days after

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written demand by Sublessor, for any fees and disbursements of attorneys, architects, engineers, or others charged by Land Lessor in connection with any consent or approval. Sublessor shall have no liability of any kind to Sublessee for Land Lessor’s failure to give its consent or approval.

1.2(c)    Parking: 1 7 2unreserved vehicle parking spaces. (See also Paragraph 2.5 and Exhibit A.) at no cost or expense to Sublessee during the Term, as such Term may be extended.

1.2Term:     The original term ("Term") shall commence upon the date of this Sublease ("Commencement Date") and shall expire ten (10) years and five (5) months after the Rent Commencement Date applicable to Hangar C or Hangar B, whichever is later ("Expiration Date"). (See also Paragraph 3)

TERM AND COMMENCEMENT: The building shells with respect to (I) Hangar C’s delivery is estimated to be ten (10) months following the date of this Sublease or a shell estimated completion date of April 1, 2023, but due to supply issues, the delivery date can neither be guaranteed by Sublessor’s General Contractor nor Sublessor. Base Rent and Common Area Operating Expenses for Hangar C shall commence upon delivery to Sublessee of the completed “shell“ for Hangar C as evidenced by a notice of completion delivered from the City of Mesa AZ Building Department (“Rent Commencement Date for Hangar C”). Hangar B’s delivery is estimated to be fifteen (15) months following the date of this Sublease or a shell estimated completion date of September 1, 2023, but due to supply issues, the delivery date can neither be guaranteed by Sublessor’s General Contractor nor Sublessor. Base Rent and Common Area Operating Expenses for Hangar B shall commence upon delivery to Sublessee of the completed “shell” for Hangar B as evidenced by a notice of completion delivered from the City of Mesa AZ Building Department (“RentCommencement Date for Hangar B”). In both above cases of Hangar C and Hangar B, Sublessor shall provide no less than thirty (30) days prior written notice to Sublessee of the shell completion date and receipt of the notice of completion from the City of Mesa Building Department. Notwithstanding the foregoing, in the event that the Rent Commencement Date for Hangar C shall not have occurred by October 1, 2023, Sublessee shall have the right to terminate this Sublease and all monies previously paid to Sublessor shall be returned immediately thereafter to Sublessee.

1.3Early Possession: Sublessee, its General Contractor and sub-contractors shall be permitted to reasonable, non-exclusive possession of the Sublease Premises during the final stages of shell completion to commence work on the Sublessee’s tenant improvements provided that Sublessee’s General Contractor and sub-contractors (i) do not interfere or slow down in any material respect Sublessor’s final shell construction completion and (ii) agree to work harmoniously with Sublessor’s General Contractor and sub-contractors. (See also Paragraphs 3.2 and 3.3)

1.4Base Rent: $[***] per square foot per year, net, net, net. Base rent ("Base Rent") shall be payable by Sublessee commencing on the Rent Commencement Date for Hangar C with respect to Hangar C and the Rent Commencement Date for Hangar B with respect to Hangar B (See also Paragraph 4). Base Rent shall be payable on the first (1st) day of each calendar month and shall be prorated based upon the actual number of days in the calendar month for any partial months.

BASE RENTAL RATE SCHEDULE:

Year 1: Base Rental Rate of $[***]/SF/Year Triple Net (“NNN”).

Commencing on the (i) Rent Commencement Date for Hangar B, the monthly Base Rent applicable to Hangar B shall be abated by an amount equal to fifty percent (50%) for ten (10) full months following such Rent Commencement Date and (ii) Rent Commencement Date for

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Hangar C, the monthly Base Rent applicable to Hangar C shall be abated by an amount equal to fifty percent (50%) for ten (10) full months following such Rent Commencement Date.

Years 2 – 5: With respect to each of Hangar B and Hangar C, monthly Base Rent shall increase by an amount equal to four percent (4%) of the monthly Base Rent paid by Sublessee in the immediately preceding twelve (12) month period.

Years 6 - Expiration Date: With respect to each of Hangar and Hangar C, monthly Base Rent in year six (6) shall increase by the lower of an amount equal to five percent (5%) above year five’s monthly Base Rent or eighty percent (80%) of the CPI-U for Phoenix, Mesa and Scottsdale, Arizona for the immediately preceding twelve (12) month period and each subsequent year’s monthly Base Rent through the Expiration Date shall increase by the lower of an amount equal to five percent (5%) annually or eighty percent (80%) of the CPI-U for Phoenix, Mesa and Scottsdale, Arizona for the immediately preceding twelve (12) month period.

1.5Sublessee's Share of Common Area Operating Expenses: eighty-one percent (81%) ("Sublessee's Share"). In the event that the physical size of the Sublease Premises and/or the Project are expanded or contracted during the Term, Sublessor shall recalculate Sublessee's Share to reflect such modification.

1.6Base Rent and Other Monies Paid Upon Execution:

(a)Base Rent: $[***]/sq. ft./yearfor the first (1st) month of the Term following the Rent Commencement Date for Hangar C is $[***] (Refer to Paragraph 1.5 of this Sublease).

(b)Common Area Operating Expenses: The current estimate for the first (1st) month of the Term following the Rent Commencement Date for Hangar C is $[***].

(c)Security Deposit: $[***] ("Security Deposit").

(d)Other: Not Applicable.

(e)Total Due Upon Execution of this Sublease: $[***].

1.7Intentionally Omitted.

1.9     Permitted Use. Subject to the terms of the Land Lease (including without limitation, Sections 1.4, 1.5 and 9.4.1(e) thereof, as well as Sections 26, 30, 31, 32, 33, 35 and 37), Sublessee shall have the right to use the Buildings for hangar operations, assembly of space flight system vehicle and storage of the “Mother Ship” and as general industrial, warehouse, office, engineering, research and development, manufacture, assembly and testing of Sublessee’s aerospace products, including the manufacturing and assembly of aircraft parts and equipment and incidental office uses related thereto and any other use that is compliant with applicable laws and regulations, compliant with current zoning ordinances and recorded conditions, covenants and restrictions (the "C, C & R's") pertaining to the Project (including without limitation, the Airport Rules and Regulations, the Airport Minimum Standards (as defined in the Land Lease) and the terms and conditions described in Section 9.6 of the Land Lease under which Phoenix-Mesa Gateway Airport Authority acquired the Project), and with the reasonable approval of Land Lessor in the event of a material change in the use. Sublessee shall have uninterrupted and unfettered access to the Premises twenty-four (24) hours per day, seven (7) days per week, three hundred sixty-five (365) days per year.

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1.10     Access to Secured Areas. Notwithstanding anything to the contrary herein, Sublessee and any of Sublessee’s agents, employees, representatives, and assigns, shall have no right of access to the secured areas of the airport, unless and until Sublessee has obtained its own valid airport security clearance and media from Land Lessor. Sublessee acknowledges that it may take thirty (30) calendar days or more to process Sublessee and its agents, employees, representatives, assigns, and other parties thereto, if applicable, for security clearance and media.

1.1Airport Rates and Charges Schedule. Sublessee, in accordance with Paragraph 4.5 (Airport Rates and Charges Schedule) of the Land Lease, shall pay all fees identified in the most current Airport Rates and Charges Schedule at the time of receipt of any covered service or use of any covered facilities, unless specifically outlined in this Sublease. The current Airport Rates and Charges Schedule is available at http://www.gatewayairport.com/PoliciesDocumentsandForms#BoardPolicies, internet links to such schedule is attached to this Sublease as Exhibit F and is subject to change without prior notice or approval of Sublessee. Sublessee further acknowledges and agrees that Land Lessor may amend the Airport Rates and Charges Schedule at any time at Land Lessor’s sole discretion, and that no fee shall apply to the use of the Sublease Premises or access to the Sublease Premises.

All payments required by this Section 1.11 shall be remitted to the following address by the due date(s) specified hereinabove or as otherwise set forth in the Airport Rates and Charges Schedule:

Phoenix-Mesa Gateway Airport Authority

Attn.: Department of Finance (Accounts Receivable)

5835 S. Sossaman Road

Mesa, Arizona 85212-6014

or such other address specified in writing by Land Lessor to Sublessee.

1.2Insuring Party. Sublessor is the "Insuring Party". (See also Paragraph 7)

1.3Real Estate Brokers. (See also Paragraph 14 and 24)

(a)Representation: The following real estate broker(s) (the "Broker(s)") and brokerage relationships exist in this transaction (check applicable boxes):

Daum Commercial Real Estate Services represents Sublessor exclusively ("Sublessor'sBroker"); and

Real Tech represents Sublessee exclusively ("Sublessee's Broker").

(b)Payment to Brokers. Upon execution and delivery of this Sublease by both Parties, Sublessor shall pay to the Brokers the brokerage fee agreed to in a separate written agreement.

1.1Guarantor. None.

1.2Attachments. Attached hereto are the following, all of which constitute a part of this Sublease:

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Exhibit A	Site Plan with Parking
Exhibit B	Land Lease
Exhibit C	Addendum
Exhibit D	Rules and Regulations
Exhibit E	Disclaimer
Exhibit F	Links to Gateway Executive Airpark’s Fees and Regulations

2Sublease Premises.

2.1    Letting. Sublessor hereby subleases to Sublessee, and Sublessee hereby subleases from Sublessor, the Sublease Premises, for the Term, at the Base Rent, Common Area Operating Expenses and other Rent (each term as defined in this Sublease), and upon all of the terms, covenants and conditions set forth in this Sublease. The Buildings’ square footages were calculated by the Project’s architect, Winton Architects, Inc. The agreed upon square footage calculation shall not be changed during the Term or any extensions thereof. Sublessor waives any and all rights to relocate Sublessee during the Term or any extensions thereof. Refer also to Paragraph 1.2(a).

2.2    Condition. Sublessor shall deliver Hangar B and Hangar C to Sublessee broom clean and free of debris upon delivery of the completed “shell” evidenced by a notice of completion or similar notice delivered from the City of Mesa AZ Building Department and covenants, represents and warrants to Sublessee that (i) the Sublease Premises shall be delivered in accordance with all Applicable Requirements, including without limitation, the Americans with Disabilities Act, (ii) Sublessee shall incur no costs as a result of the inaccuracy of such covenant, representation and warranty, (iii) Sublessor shall remedy, at its sole cost and not as a Common Area Operating Expense, any violation of such covenants, representations and warranties, including without limitation, patent and latent defects discovered at any time during the Term as extended, (iv) the electrical, plumbing, fire sprinkler, lighting, heating, ventilating and air conditioning systems ("HVAC"), loading doors, and all other such elements in the Sublease Premises, other than those constructed by Sublessee, shall be in good operating condition on said date, (v) the structural elements of the roof, bearing walls and foundation of the Sublease Premises shall be free of material defects, and (vi) the Sublease Premises do not contain any Hazardous Substances (defined below) or hazardous levels of any mold or fungi defined as toxic under applicable state or federal law. If a non-compliance with such representation and warranty exists as of theRent CommencementDate for Hangar B or Rent Commencement Date for Hangar C, or if one of such systems or elements should malfunction or fail due to a patent or latent defect, during the Term, as such Term may be extended, Sublessor shall promptly after receipt of written notice from Sublessee setting forth with specificity the nature and extent of such non-compliance, malfunction or failure, promptly rectify same at Sublessor's expense but in no event later than thirty (30) days following Sublessor’s receipt of written notice of such malfunction or failure. If Sublessee does not give Sublessor the required notice within the appropriate warranty period, correction of any such non-compliance, malfunction or failure shall be the obligation of Sublessee at Sublessee's sole cost and expense (except for the repairs to the fire sprinkler systems, roof, foundations, and/or bearing walls - see Paragraph 6). Sublessor also represents and warrants, that unless otherwise specified in writing, Sublessor is unaware of (i) any recorded Notices of Default affecting the Sublease Premises; (ii) any delinquent amounts due under any loan secured by the Sublease Premises; and (iii) any bankruptcy proceeding affecting the Sublease Premises.

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2.3    Compliance. Sublessor represents and warrants that the Buildings and common areas of the Project comply with the building codes, applicable laws, covenants or restrictions of record, regulations, and ordinances, including without limitation, the Americans with Disabilities Act ("Applicable Requirements") that were in effect as of the applicable Rent Commencement Date for Hangar B and Hangar C. In no event shall Sublessee be responsible for any costs arising from the inaccuracy of such representation and warranty and Sublessor shall remedy any violation hereof, including latent and patent defects at any time during the Term, as the term may be extended. Said representation and warranty does not apply to the use to which Sublessee will put the Sublease Premises, modifications which may be required by the Americans with Disabilities Act or any similar laws as a result of Sublessee’s use (see Paragraph 48), or to any Alterations or Utility Installations (as defined in Paragraph 6.3(a)) made or to be made by Sublessee. NOTE: Sublessee is responsible for determining whether or not the Applicable Requirements, and especially the zoning are appropriate for Sublessee’s intended use. If the Sublease Premises do not comply with said representation and warranty, Sublessor shall, except as otherwise provided, promptly after receipt of written notice from Sublessee setting forth with specificity the nature and extent of such non-compliance, rectify the same at Sublessor's sole expense without reimbursement. If the Applicable Requirements are changed after the applicable Rent Commencement Date for Hangar B or Hangar C so as to require during the Term of this Sublease the construction of an addition to or an alteration of the Sublease Premises and/or Buildings, the remediation of any Hazardous Substance, or the reinforcement or other physical modification of the Sublease Premises and/or Buildings ("Capital Expenditure"), Sublessor and Sublessee shall allocate the cost of such work as follows:

(a)    Subject to Paragraph 2.3(c) below, if such Capital Expenditures are required as a result of the specific and unique use of the Sublease Premises by Sublessee as compared with uses by subtenants in general at the Project, Sublessee shall be fully responsible for the cost thereof, provided, however, that if such Capital Expenditure is required during the last 2 years of the Term of this Sublease and the cost thereof exceeds 6 months' Base Rent, Sublessee may instead terminate this Sublease unless Sublessor notifies Sublessee, in writing, within 10 business days after receipt of Sublessee's termination notice that Sublessor has elected to pay the difference between the actual cost thereof and the amount equal to 6 months' Base Rent. If Sublessee elects termination, Sublessee shall cease the use of the Sublease Premises which requires such Capital Expenditure and deliver to Sublessor written notice specifying a termination date at least 30 days thereafter. Such termination date shall, however, in no event be earlier than the last day that Sublessee could legally utilize the Sublease Premises without commencing such Capital Expenditure.

(b)    If such Capital Expenditure is not the result of the specific and unique use of the Sublease Premises by Sublessee (such as, governmentally mandated seismic modifications), then Sublessor shall pay for such Capital Expenditure and Sublessee shall only be obligated to pay, each month during the remainder of the Term of this Sublease or any extension thereof, on the date that on which the Base Rent is due, an amount equal to 1/144th of the portion of such costs reasonably attributable to the Sublease Premises. Sublessee shall pay Interest on the balance but may prepay its obligation at any time. If, however, such Capital Expenditure is required during the last 2 years of this Sublease or if Sublessor reasonably determines that it is not economically feasible to pay its share thereof, Sublessor shall have the option to terminate this Sublease upon 90 days prior written notice to Sublessee unless Sublessee notifies Sublessor, in writing, within 10 business days after receipt of Sublessor's termination notice that Sublessee will pay for such Capital Expenditure. If Sublessor does not elect to terminate, and fails to tender its share of any such Capital Expenditure, Sublessee may advance such funds and deduct same, with Interest, from Base Rent until Sublessor's share of such costs have been fully paid. If Sublessee is unable to finance Sublessor's share, or if the balance of the Rent (as defined in Paragraph 4.1) due and payable for the remainder of this Sublease is not

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sufficient to fully reimburse Sublessee on an offset basis, Sublessee shall have the right to terminate this Sublease upon 30 days written notice to Sublessor.

(c)    Notwithstanding the above, the provisions concerning Capital Expenditures are intended to apply only to non-voluntary, unexpected, and new Applicable Requirements. If the Capital Expenditures are instead triggered by Sublessee as a result of an actual or proposed change in use, change in intensity of use, or modification to the Sublease Premises made following the installation of Sublessee’s tenant improvements then, and in that event, Sublessee shall either: (i) immediately cease such changed use or intensity of use and/or take such other steps as may be necessary to eliminate the requirement for such Capital Expenditure, or (ii) complete such Capital Expenditure at its own expense. Sublessee shall not have any right to terminate this Sublease pursuant to this subparagraph (c).

2.4    Acknowledgements. Sublessee acknowledges that: (a) it has been given an opportunity to inspect the architectural drawings, renderings, and specifications of the Buildings and site plan and to accept/reject them and acknowledge the square footage of the Buildings, (b) it has been advised by Sublessor and/or Brokers to satisfy itself with respect to the size and condition of the Sublease 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 Sublessee's intended use, (c) Sublessee 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 Sublease Premises, (d) it is not relying on any representation as to the size of the Sublease Premises made by Brokers or Sublessor, (e) neither Sublessor, Sublessor's agents, nor Brokers have made any oral or written representations or warranties with respect to said matters other than as set forth in this Sublease and (f) it has been given a copy of the Land Lease and Sublessee has reviewed such Land Lease, including without limitation Section 9.4 thereof. In addition, Sublessor acknowledges that: (i) Brokers have made no representations, promises or warranties concerning Sublessee's ability to honor the Sublease or suitability to occupy the Sublease Premises, and (ii) it is Sublessor's sole responsibility to investigate the financial capability and/or suitability of all proposed tenants.

2.5    Vehicle Parking. At no cost or expense during the Term, as the Term may be extended, Sublessee shall be entitled to use the number of Parking Spaces specified in Paragraph 1.2(c) on those portions of the Common Areas designated on the Site Plan attached to this Sublease for parking. Sublessee shall not use more parking spaces than said number. Said parking spaces shall be used for parking by vehicles no larger than full-size passenger automobiles or pick-up trucks, herein called "Permitted Size Vehicles," unless otherwise agreed to or designated in writing by Sublessor. Sublessor may regulate the loading and unloading of vehicles by adopting reasonable and non-discriminatory Rules and Regulations as provided in Paragraph 2.8. In addition:

(a)    Sublessee shall not permit or allow any vehicles that belong to or are controlled by Sublessee or Sublessee's employees, suppliers, shippers, customers, contractors or invitees to be loaded, unloaded, or parked in areas other than those designated by Sublessor for such activities.

(b)    Sublessee shall not service or store any vehicles in the Common Areas.

(c)    If Sublessee permits or allows any of the prohibited activities described in this Paragraph 2.5, then Sublessor shall have the right, following at least one (1) business days’ written notice, in addition to such other rights and remedies that it may have, to remove or tow away the vehicle involved and charge the actual and reasonable cost to Sublessee, which cost shall be payable within five (5) days following written demand by Sublessor.

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2.6    Common Areas - Definition. The term "Common Areas" is defined as all areas and facilities outside the Sublease Premises and within the exterior boundary line of the Project that are provided and designated by the Sublessor from time to time for the general non-exclusive use of Sublessor, Sublessee and other tenants of the Project and their respective employees, suppliers, shippers, customers, contractors and invitees, including parking areas, loading and unloading areas, trash areas, roofs, roadways, walkways, driveways and landscaped areas.

2.7    Common Areas - Sublessee's Rights. Sublessor grants to Sublessee, for the benefit of Sublessee and its employees, suppliers, shippers, contractors, customers and invitees, during the term of this Sublease, the non-exclusive right to use, in common with others entitled to such use, the Common Areas as they exist from time to time, subject to any rights, powers, and privileges reserved by Sublessor under the terms hereof or under the terms of any rules and regulations or restrictions governing the use of the Project. Under no circumstances shall the right herein granted to use the Common Areas be deemed to include the right to store any property, temporarily or permanently, in the Common Areas. Any such storage shall be permitted only by the prior written consent of Sublessor or Sublessor's designated agent. In the event that any unauthorized storage shall occur, then Sublessor shall, after delivering at least five (5) days prior written notice to Sublessee, have the right, in addition to such other rights and remedies that it may have, to remove the property and charge the actual and reasonable cost to Sublessee, which cost shall be payable within five (5) days after written demand by Sublessor.

2.8    Common Areas - Rules and Regulations. Sublessor or such other person(s) as Sublessor may appoint shall have the exclusive control and management of the Common Areas and shall have the right, from time to time, to establish, modify, amend and enforce reasonable and non-discriminatory rules and regulations ("Rules and Regulations") for the management, safety, care, and cleanliness of the grounds, the parking and unloading of vehicles and the preservation of good order, as well as for the convenience of other occupants or tenants of the Buildings and the Project and their invitees. Sublessee agrees to abide by and conform to all such Rules and Regulations, and shall use its commercially reasonable efforts to cause its employees, suppliers, shippers, customers, contractors and invitees to so abide and conform. Sublessor shall not be responsible to Sublessee for the non-compliance with said Rules and Regulations by other tenants of the Project but Sublessor shall use its commercially reasonable efforts to enforce the Rules and Regulations.

2.9    Common Areas - Changes. Sublessor shall have the right, in Sublessor's reasonable discretion and with no less than thirty (30) days prior written notice to Sublessee, from time to time:

(a)    To make changes to the Common Areas, including, without limitation, changes in the location, size, shape and number of driveways, entrances, parking spaces, parking areas, loading and unloading areas, ingress, egress, direction of traffic, landscaped areas, walkways and utility raceways;

(b)    To close temporarily any of the Common Areas for maintenance purposes so long as reasonable access to the Sublease Premises and parking areas remains available;

(c)    To designate other land outside the boundaries of the Project to be a part of the Common Areas;

(d)    To add additional buildings and improvements to the Common Areas;

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(e)    To use the Common Areas while engaged in making additional improvements, repairs or alterations to the Project, or any portion thereof; and

(f)    To do and perform such other acts and make such other changes in, to or with respect to the Common Areas and Project as Sublessor may, in the exercise of sound business judgment, deem to be appropriate.

Provided, Sublessor agrees that none of the foregoing activities shall materially interfere with or reduce Sublessee’s access to the Sublease Premises or parking areas available to Sublessee.

3Term.

3.1    Term. The Commencement Date, Expiration Date, Rent Commencement Date for the applicable Hangar and Term of this Sublease are as specified in Paragraph 1.3.

In no event shall the Term (as extended by any Options) hereof exceed the term of the Land Lease, or the Sublease Expiration Date extend past the expiration of the term of the Land Lease. If for any reason the term of the Land Lease is terminated prior to the Expiration Date, except as otherwise provided in the Land Lease, Paragraphs 1.2(b)(2) and 29 of this Sublease, and Section 9.5 of the Land Lease, or in any non-disturbance provided to Sublessee by Land Lessor, this Sublease shall terminate on the date of such termination.

3.2    Early Possession. Any provision herein granting Sublessee Early Possession of the Sublease Premises is subject to and conditioned upon the Sublease Premises being available for such possession prior to the Rent Commencement Date. Any grant of Early Possession only conveys a non-exclusive right to occupy the Sublease Premises. If Sublessee totally or partially occupies the Sublease Premises prior to the Rent Commencement Date for the applicable Hangar, the obligation to pay Base Rent shall be abated for the period of such Early Possession. All other terms of this Sublease including payment of Sublessee's Share of Common Area Operating Expenses, the Land Lease, and insurance premiums and to maintain the Sublease Premises) shall be in effect during such period. Any such Early Possession shall not affect the Expiration Date.

3.3    Delay In Possession. Sublessor agrees to use commercially reasonable efforts to deliver exclusive possession of the Sublease Premises to Sublessee by the dates shown in Paragraph 1.3 of this Sublease. If, despite said efforts, Sublessor is unable to deliver possession by such date, Sublessor shall not be subject to any liability therefor, nor shall such failure affect the validity of this Sublease or change the Expiration Date. Sublessee shall not, however, be obligated to pay Rent or perform its other obligations until Sublessor delivers possession of the Sublease Premises and any period of rent abatement that Sublessee would otherwise have enjoyed shall run from the date of delivery of possession and continue for a period equal to what Sublessee would otherwise have enjoyed under the terms hereof, but minus any days of delay caused by the acts or omissions of Sublessee.

3.4     Partial Termination Rights: With respect to Hangar B, Sublessee shall have the right to terminate the portion of the Sublease pertaining to Hangar B in the event (i) a notice of completion from the City of Mesa, Arizona Building Department has not been issued and received by Sublessee on or before the date which is 18 months following the date of this Sublease and/or (ii) any or all of the following do not occur on or before the date which is twelve (12) months following the date of this Sublease: (A) Sublessor or Sublessee fails to receive all building permits and other governmental approvals or Land Lessor approvals for the design and construction of Hangar B and/or and Sublessee Improvements for Hangar B (whether described in the Addendum or not), (B) Land Lessor shall not have approved of this Sublease or the Sublessee Improvements for Hangar B (whether described in the Addendum

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or not) and/or (C) if the FAA fails to grant any permits or approvals required or deemed advisable by Sublessee for Sublessee’s operations. In the event of a termination under subsection 3.4(ii) above only, Sublessee shall pay all of Sublessor’s actual documented costs resulting from the redesign of Hangar B, which shall include all itemized and documented costs to be submitted by the Project’s General Contractor, by way of example, but is not limited to, architectural fees, lender fees, including interest payments, attorney fees, and any brokerage commissions owed by Sublessor or paid to date of termination.

3.5    Sublessee Compliance. Sublessor shall not be required to tender possession of the Sublease Premises to Sublessee until Sublessee complies with its obligation to provide evidence of insurance (Paragraph 7.5). Pending delivery of such evidence, Sublessee shall be required to perform all of its obligations under this Sublease from the Commencement Date and after the applicable Rent Commencement Date, including the payment of Rent upon the applicable Rent Commencement Date notwithstanding Sublessor's election to withhold possession pending receipt of such evidence of insurance. Further, if Sublessee is required to perform any other conditions prior to or concurrent with the applicable Rent Commencement Date shall occur but Sublessor may elect to withhold possession until such conditions are satisfied.

4Rent.

4.1    Rent Defined. All monetary obligations of Sublessee to Sublessor under the terms of this Sublease are deemed to be rent ("Rent").

4.2    Common Area Operating Expenses. Sublessee shall pay to Sublessor, in addition to the Base Rent, Sublessee's Share (as specified in Paragraph 1.6) of all Common Area Operating Expenses, as hereinafter defined. Sublessee shall commence the payment of Common Area Operating Expenses with respect to (i) Hangar C on the Rent Commencement Date for Hangar C and (ii) Hangar B on the Rent Commencement Date for Hangar B, and thereafter throughout the Term for both Hangar B and Hangar C in accordance with the following provisions:

(a)    "Common Area Operating Expenses" are defined, for purposes of this Sublease, as all costs relating to the ownership and operation of the Project, including, but not limited to, the following:

(i)    The operation, repair and maintenance, in neat, clean, good order and condition, and if necessary the replacement, of the following:

(aa)     The Common Areas and Common Area improvements, including parking areas, loading and unloading areas, trash areas, roadways, parkways, walkways, driveways, landscaped areas, bumpers, irrigation systems, Common Area lighting facilities, fences and gates, elevators, roofs, exterior walls of the buildings, building systems and roof drainage systems.

(bb)     Exterior signs and any tenant directories.

(cc)     Any fire sprinkler systems.

(dd)     All other areas and improvements that are within the exterior boundaries of the Project but outside of the Sublease Premises and/or any other space occupied by a tenant.

(ii)    The cost of water, gas, electricity, cable, fiber optics and telephone to service the Common Areas and any utilities not separately metered.

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(iii)    The cost of trash disposal, pest control services, property management, security services, owners' association dues and fees and the cost to repaint the exterior of any structures.

(iv)    Intentionally Omitted.

(v)    The cost of the premiums for the insurance maintained by Sublessor pursuant to Paragraph 8.

(vi)    Any deductible portion of an insured loss concerning the Buildings or the Common Areas but not to exceed an amount equal to Ten Thousand Dollars in any twelve (12) month period.

(vii)    Auditors', accountants' and attorneys' fees and costs related to the operation, maintenance, repair and replacement of the Project.

(viii)    The cost of any capital improvement to the Building or the Project not covered under the provisions of Paragraph 2.3 provided; however, that Sublessor shall allocate the cost of any such capital improvement over a twelve (12) year period and Sublessee shall not be required to pay more than Sublessee's Share of 1/144th of the cost of such capital improvement in any given month. Sublessee shall pay Interest on the unamortized balance but may prepay its obligation at any time.

(ix)    The cost of any other services to be provided by Sublessor that are stated elsewhere in this Sublease to be a Common Area Operating Expense.

(x)     Rental payments made by Sublessor under the Land Lease to Land Lessor, but excluding any late charges or other amounts arising from or related to Sublessor’s failure to comply with and abide by the terms of the Land Lease.

Notwithstanding the foregoing, Common Area Operating Expenses shall not include (1) any principal and interest payments under mortgages, as well as any points and fees on debts; (2) costs of restoration following a casualty or condemnation to the extent of net insurance proceeds received by Sublessor with respect thereto; (3) environmental insurance, environmental management fees and environmental audits or any costs to remediate or incurred in connection with the presence, remediation, transportation or release any Hazardous Substance (defined below) except those caused to be present by Sublessee; (4) costs (including permit, license, and inspection fees) incurred in renovating, improving, decorating, painting, or redecorating vacant space or space for other tenants; (5) legal and auditing fees (other than those fees reasonably incurred in connection with the ownership and operation of all or any portion the Project); (6) leasing commissions, advertising expenses, and other costs incurred in connection with the leasing of the Project or future re-leasing of any portion of the Project; (7) depreciation of the Buildings or any other improvements; (8) any items for which Sublessor is actually and directly reimbursed or required to reimbursed by any other tenant; (9) other than any interest charges as expressly provided for in this Lease, any interest or payments on any financing for any portion of the Buildings or Project, interest, fines and penalties incurred as a result of Sublessor's late payment of any invoice and any bad debt loss or rent loss; (10) costs incurred because the Project or Buildings violate any Applicable Requirements in effect and as interpreted by government authorities as of the applicable Rent Commencement Date; (11) costs incurred due to (a) the Buildings or Project, when originally constructed, being constructed defectively with defective materials or workmanship or (b) the Buildings or Project, when originally designed, being designed defectively; (12) any capital expenditure, except to the extent amortized as set forth above; (13) any property management fee in excess of the

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fees set forth below; (14) costs (including in connection therewith all attorneys' fees and costs of settlement judgments and payments in lieu thereof) arising from claims, disputes or potential disputes in connection with potential or actual claims litigation or arbitrations pertaining to Sublessor, the Buildings or the Project; (15) any reserves for future expenditures or liabilities which would be incurred subsequent to the then current accounting year; (16) the expense of extraordinary services, installations or benefits provided to other tenants in the Buildings or Project, or quantities of such services furnished to some tenants which are also furnished to Sublessee but are furnished to other tenants in an amount materially in excess of that which would represent a fair proportion of such services; (17) costs associated with the operation of the business of the limited liability company, partnership or entity which constitutes Sublessor as the same are distinguished from the costs of operation of the Buildings and Project, including partnership accounting and legal matters, costs of selling, syndicating, financing, mortgaging or hypothecating any of Sublessor's interest in the Buildings or Project; and (18) Real Property Taxes (as defined below), except to the extent expressly set forth in Section 9 of this Sublease.

As of the date of this Lease, the stabilized Common Area Operating Expenses for the Project are estimated to be $[***]/SF/Year. The total or aggregate of the property management fee and any administrative fees charged under this Sublease shall not exceed an amount equal to three percent (3%) of the gross rent received by Sublessor from Sublessee. The controllable Operating Expenses billed to Sublessee shall not increase by more than an amount equal to six percent (6%) in any one-year period (the “Operating Expense Cap”). For purposes of calculating Common Area Operating Expenses or Additional Rent, the maximum increase in the amount of Controllable Operating Expenses (defined below) that may be included in calculating such additional rent for each calendar year shall be limited to an amount equal to six percent (6%) per calendar year on a cumulative, compounded basis; for example, the maximum amount of Controllable Operating Expenses that may be included in the calculation of such Additional Rent for each calendar year after 2023 shall equal the product of the 2023 Controllable Operating Expenses and the following percentages for the following calendar years: 106% for 2024; 112.36% for 2025; etc. “Controllable Operating Expenses” means all Common Area Operating Expenses which are within the reasonable control of Sublessor, thus excluding Land Lease payments and escalations privilege/rental tax assessments, insurance, utilities and any costs incurred to comply with the Applicable Requirements as required under this Sublease.

(b)    Any Common Area Operating Expenses that are specifically attributable to the Buildings or to any other building in the Project or to the operation, repair and maintenance thereof, shall be allocated entirely to such Buildings, or other building. However, any Common Area Operating Expenses that are not specifically attributable to the Buildings or to any other building or to the operation, repair and maintenance thereof, shall be equitably allocated by Sublessor to all buildings in the Project. If the Project’s average occupancy during any calendar year of the term is less than 95%, then the Common Area Operating Expenses shall be adjusted to reflect the true and accurate Common Area operating Expenses as if the Project were in fact 95% leased. Sublessee shall not be responsible for any vacant space within the Project.

(c)    The inclusion of the improvements, facilities and services set forth in Subparagraph 4.2(a) shall not be deemed to impose an obligation upon Sublessor to either have said improvements or facilities or to provide those services unless the Project already has the same, Sublessor already provides the services, or Sublessor has agreed elsewhere in this Sublease to provide the same or some of them.

(d)    Sublessee's Share of Common Area Operating Expenses is payable monthly on the same day as the Base Rent is due hereunder. The amount of such payments shall be based on

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Sublessor's estimate of the annual Common Area Operating Expenses. Within 60 days after the end of each calendar year, Sublessor shall deliver to Sublessee a reasonably detailed statement showing Sublessee's Share of the actual Common Area Operating Expenses for the preceding year. If Sublessee's payments during such calendar year exceed Sublessee's Share, Sublessor shall credit the amount of such over-payment against Sublessee's then immediately following future payments. If Sublessee's payments during such calendar year were less than Sublessee's Share, Sublessee shall pay to Sublessor the amount of the deficiency within 30 days after delivery by Sublessor to Sublessee of the statement.

(e)    Common Area Operating Expenses shall not include any expenses paid by any tenant or subtenant directly to third parties, or as to which Sublessor is otherwise reimbursed by any third party, other tenant or subtenant, or insurance proceeds.

(f)Audit Rights: Even though Common Area Operating Expenses have been incurred, and such expenditures have been audited by a CPA firm employed by Sublessor, Sublessee may audit the results with its own advisors. During the ninety (90) day period following the delivery of Sublessor’s statements of the actual amount of Common Area Operating Expenses, Sublessee, at Sublessee's expense, shall have the right to audit Sublessor's books and records containing Sublessor's accounting of Common Area Operating Expenses. In no event shall Sublessee be liable for the payment of any Common Area Operating Expense of which Sublessee first receives written notice in excess of one (1) year following the expiration of the calendar year in which such Common Area Operating Expense was originally incurred. If Sublessee has overpaid by more than an amount equal to five percent (5%) of Common Area Operating Expenses in the applicable calendar year, Sublessor shall pay the reasonable out-of-pocket cost of the review of Sublessor’s records and the reasonable out-of-pocket cost of the review of Sublessor’s records.

4.3    Payment. Sublessee shall cause payment of Rent to be received by Sublessor in lawful money of the United States, without offset or deduction (except as specifically permitted in this Lease), on or before the day on which it is due. All monetary amounts shall be rounded to the nearest whole dollar. In the event that any invoice prepared by Sublessor is inaccurate such inaccuracy shall not constitute a waiver and Sublessee shall be obligated to pay the amount set forth in this Sublease. Rent for any period during the Term hereof which is for less than one full calendar month shall be prorated based upon the actual number of days of said month. Payment of Rent shall be made to Sublessor at its address stated herein or to such other persons or place as Sublessor may from time to time designate in writing. Acceptance of a payment which is less than the amount then due shall not be a waiver of Sublessor's rights to the balance of such Rent, regardless of Sublessor's endorsement of any check so stating. In the event that any check, draft, or other instrument of payment given by Sublessee to Sublessor is dishonored for any reason, Sublessee agrees to pay to Sublessor the sum of $[***] in addition to any Late Charge and Sublessor, at its option, may require all future Rent be paid by cashier's check. Payments will be applied first to accrued late charges and reasonable attorney's fees, second to accrued interest, then to Base Rent and Common Area Operating Expenses, and any remaining amount to any other outstanding charges or costs.

4.4    Rental Taxes. In addition to Base Rent and Common Area Operating Expenses, Sublessee shall pay to Sublessor each month an amount equal to any rental taxes, gross receipts taxes, transaction privilege taxes, sales taxes, or similar taxes levied on the Base Rent and Common Area Operating Expenses then due or otherwise assessed in connection with the rental activity. Said monies shall be paid at the same time and in the same manner as the Base Rent.

5.    Use.

5.1    Use. Sublessee’s Permitted Use is as set forth in Section 1.19 of this Sublease.

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5.2    Hazardous Substances.

(a)    Use in Accordance with Applicable Requirements. The term "HazardousSubstance" as used in this Sublease shall mean any chemical, pollutant, substance, or waste whose presence, use, manufacture, disposal, transportation, or release, either by itself or in combination with other materials expected to be on the Sublease Premises, is either: (i) potentially injurious to the public health, safety or welfare, the environment or the Sublease Premises, (ii) regulated or monitored by any governmental authority, or (iii) a basis for potential liability of Sublessor to any governmental agency or third party under any applicable statute or common law theory. Hazardous Substances shall include, but not be limited to, hydrocarbons, petroleum, gasoline, and/or crude oil or any products, by-products or fractions thereof. Sublessee shall not cause or permit any Hazardous Substance to be brought upon, kept or used in or about the Sublease Premises by Sublessee's agents, employees, contractors or invitees in violation or threatened or suspected violation of any Applicable Requirement. The Parties recognize and agree that Sublessee may bring on the Sublease Premises and use Hazardous Substances that are ordinarily and customarily used in the conduct of Sublessee's permitted activities under this Sublease, provided that such use shall comply fully with all Applicable Requirements.

(b)    Duty to Inform Sublessor. If either Party knows, or has reasonable cause to believe, that a Hazardous Substance has come to be located in, on, under or about the Sublease Premises, other than as previously consented to by Sublessor or of which Sublessor has notified Sublessee in writing, the Party with such knowledge or reasonable cause to believe shall immediately give written notice of such fact to the other Party, and provide the other Party with a copy of any report, notice, claim or other documentation which it has concerning the presence of such Hazardous Substance.

(c)    Sublessee Remediation. Sublessee shall not cause or permit any Hazardous Substance brought on to the Sublease Premises during the Term of this Sublease by or for Sublessee to be spilled or released in, on, under, or about the Sublease Premises (including through the plumbing or sanitary sewer system) and shall promptly, at Sublessee's expense, comply with all Applicable Requirements and take all investigatory and/or remedial action ordered or required by a governmental entity having jurisdiction for the cleanup of any contamination of, and for the maintenance, security and/or monitoring of the Sublease Premises or neighboring properties, that was caused or materially contributed to by Sublessee, or pertaining to or involving any Hazardous Substance brought onto the Sublease Premises during the Term of this Sublease, by or for Sublessee.

(d)    Sublessee Indemnification. Sublessee shall indemnify, defend and hold Sublessor, its agents, employees, lenders and ground lessor, if any, harmless from and against any and all loss of rents and/or damages, liabilities, judgments, claims, expenses, penalties, and attorneys' and consultants' fees arising out of or involving any Hazardous Substance brought onto the Sublease Premises by or for Sublessee (provided, however, that Sublessee shall have no liability under this Sublease with respect to underground migration of any Hazardous Substance under the Sublease Premises from areas outside of the Project not caused or contributed to by Sublessee). Sublessee's obligations shall include, but not be limited to, the effects of any contamination or injury to person, property or the environment created or suffered by Sublessee, and the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Sublease. No termination, cancellation or release agreement entered into by Sublessor and Sublessee shall release Sublessee from its obligations under this Sublease with respect to Hazardous Substances, unless specifically so agreed by Sublessor in writing at the time of such agreement.

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(e)    Sublessor Indemnification. Except as otherwise provided in paragraph 8.7, Sublessor and its successors and assigns shall indemnify, defend, reimburse and hold Sublessee, its employees and lenders, harmless from and against any and all environmental damages, including the cost of remediation, which are suffered as a direct result of Hazardous Substances on the Sublease Premises prior to Sublessee taking possession or which are caused by the gross negligence or willful misconduct of Sublessor, its agents or employees. Sublessor's obligations, as and when required by the Applicable Requirements, shall include, but not be limited to, the cost of investigation, removal, remediation, restoration and/or abatement, and shall survive the expiration or termination of this Sublease.

(f)    Investigations and Remediations. Sublessor shall retain the responsibility and pay for any investigations or remediation measures required by governmental entities having jurisdiction with respect to the existence of Hazardous Substances on the Sublease Premises prior to the Sublessee taking possession, unless such remediation measure is required as a result of Sublessee's use (including "Alterations", as defined in paragraph 6.3(a) below) of the Sublease Premises, in which event Sublessee shall be responsible for such payment. Sublessee shall cooperate fully in any such activities at the request of Sublessor, including allowing Sublessor and Sublessor's agents to have reasonable access to the Sublease Premises at reasonable times and with reasonable notice to Sublessee in order to carry out Sublessor's investigative and remedial responsibilities.

(g) Notwithstanding anything to the contrary contained in this Paragraph 5.2, Sublessee’s shall comply with the terms and conditions of Section 14 of the Land Lease and Sublessee acknowledges and agrees that the terms of such Section 14 of the Land Lease are applicable to Sublessee.

5.3    Sublessee's Compliance with Applicable Requirements. Except as otherwise provided in this Sublease, Sublessee shall, at Sublessee's sole expense, fully, diligently and in a timely manner, materially comply with all Applicable Requirements, the requirements of any applicable fire insurance underwriter or rating bureau, and the recommendations of Sublessor's engineers and/or consultants which relate in any manner to the Sublease Premises, without regard to whether said Applicable Requirements are now in effect or become effective after the Commencement Date. Sublessee shall, within 30 days after receipt of Sublessor's written request, provide Sublessor with copies of all permits and other documents, and other information evidencing Sublessee's compliance with any Applicable Requirements specified by Sublessor, and shall promptly upon receipt, notify Sublessor in writing (with copies of any documents involved) of any threatened or actual claim, notice, citation, warning, complaint or report pertaining to or involving the failure of Sublessee or the Sublease Premises to comply with any Applicable Requirements. Likewise, each Party shall promptly give written notice to the other Party of: (i) any water damage to the Sublease Premises and any suspected seepage, pooling, dampness or other condition conducive to the production of mold of which a Party becomes aware; or (ii) any mustiness or other odors that might indicate the presence of mold in the Sublease Premises of which a Party becomes aware.

5.4    Sublessor and Sublessor's "Lender" (as defined in Paragraph 29.1) and consultants authorized by Sublessor shall have the right to enter the Sublease Premises at any time (provided, Sublessor shall use its best efforts to notify Sublessee both by telephone and in writing prior to entry), in the case of an emergency, and otherwise following no less than 48 business hours prior written notice, for the purpose of inspecting and/or testing the condition of the Sublease Premises and/or for verifying compliance by Sublessee with this Sublease; provided, Sublessee shall have the right to restrict Sublessor’s and Sublessor’s Lender’s access to certain areas of the Sublease Premises for security reasons. Any entry shall not interfere or disrupt Sublessee’s business operations in any manner. The actual and reasonable cost of any such inspections shall be paid by Sublessor, unless such inspection is due to (i) a violation by

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Sublessee of Applicable Requirements, (ii) a Hazardous Substance Condition (see Paragraph 8.1(e)) caused by Sublessee is found to exist or be imminent or (iii) the inspection is requested or ordered by a governmental authority due to alleged acts or omissions of Sublessee. In such case, Sublessee shall upon request reimburse Sublessor for the actual and reasonable cost of such inspection, so long as such inspection is reasonably related to a violation or contamination by Sublessee or its agents or contractors. In addition, Sublessee shall provide copies of all relevant material safety data sheets (MSDS) to Sublessor within 10 days of the receipt of written request therefor.

6.    Maintenance; Repairs; Utility Installations; Trade Fixtures and Alterations.

6.1    Sublessee's Obligations.

(a)    In General. Subject to the provisions of the Land Lease, Paragraph 2.2 (Condition), 2.3 (Compliance), 5.3 (Sublessee's Compliance with Applicable Requirements), 6.2 (Sublessor's Obligations), 8 (Damage or Destruction), and 13 (Condemnation), Sublessee shall, at Sublessee's sole expense, keep the interior of the Sublease Premises, Utility Installations (intended for Sublessee's exclusive use, no matter where located), and Alterations in good order, condition and repair (whether or not the portion of the Sublease Premises requiring repairs, or the means of repairing the same, are reasonably or readily accessible to Sublessee, and whether or not the need for such repairs occurs as a result of Sublessee's use, including, but not limited to, all equipment or facilities, such as plumbing, HVAC equipment, electrical, lighting facilities, boilers, pressure vessels, fixtures, interior walls, interior surfaces of exterior walls, ceilings, floors, windows, doors, plate glass, and skylights but excluding any items which are the responsibility of Sublessor pursuant to Paragraph 6.2. Sublessee, in keeping the interior of the Sublease Premises in good order, condition and repair, shall exercise and perform good maintenance practices, specifically including the procurement and maintenance of the service contracts required by Paragraph 6.1(b) below. Sublessee's obligations shall include restorations, replacements or renewals when necessary to keep the Sublease Premises and all improvements thereon or a part thereof in good order, condition and state of repair.Sublessee's obligation to repair shall not extend to (1) damage and repairs covered under any insurance policy carried by Sublessor, (2) damage caused by any defects in the design, construction or materials of the original construction of the Buildings or Sublessor’s shell improvements, (3) damage caused in whole or in part by the negligence or willful misconduct of Sublessor or any of its agents, employees, invitees or licensees, (4) reasonable wear and tear; (5) damage due to fire, earthquake, acts of God, the elements, or other casualty; and (6) damage to the interior of the Sublease Premises resulting from causes outside the Sublease Premises.

(b)    Service Contracts. Sublessee shall, at Sublessee's sole expense, procure and maintain contracts, with copies to Sublessor, in customary form and substance for, and with contractors specializing and experienced in the maintenance of the following equipment and improvements, if any, if and when installed on the Sublease Premises: (i) HVAC equipment, (ii) boiler and pressure vessels, and (iii) clarifiers.

(c)    Failure to Perform. If Sublessee fails to perform Sublessee's obligations under this Paragraph 6.1, Sublessor shall give Sublessee written notice of such failure and if such failure is not cured by Sublessee within thirty (30) days following Sublessor’s written notice to Sublessee, may enter upon the Sublease Premises at any time thereafter (in the case of an emergency, no notice shall be required but Sublessor shall use its best efforts to provide prior notice), perform such obligations on Sublessee's behalf, and put the Sublease Premises in good order, condition and repair, and Sublessee shall promptly pay to Sublessor a sum equal to 105% of the actual and reasonable cost thereof.

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(d)    Replacement. Subject to Sublessee's indemnification of Sublessor as set forth in Paragraph 7.8 below, and without relieving Sublessee of liability resulting from Sublessee's failure to exercise and perform good maintenance practices, if an item described in Paragraph 6.1(b) cannot be repaired other than at a cost which is in excess of 50% of the cost of replacing such item, then such item shall be replaced by Sublessor, and the cost thereof shall be prorated between the Parties and Sublessee shall only be obligated to pay, each month during the remainder of the Term of this Sublease or any extension thereof, on the date on which Base Rent is due, an amount equal to the product of multiplying the cost of such replacement by a fraction, the numerator of which is one, and the denominator of which is 144 (i.e. 1/144th of the cost per month), which amortization shall fully repay all of such cost of replacing such item plus Interest. Sublessee shall pay Interest on the unamortized balance at a rate not to exceed seven percent (7%) per annum but may prepay its obligation at any time.

6.2    Sublessor's Obligations. Subject to the provisions of Paragraphs 2.2 (Condition), 2.3 (Compliance), 4.2 (Common Area Operating Expenses), 5 (Use), 6.1 (Sublessee's Obligations), 8 (Damage or Destruction) and 13 (Condemnation), Sublessor, subject to reimbursement pursuant to Paragraph 4.2, shall keep in good order, condition and repair the foundations, exterior walls, structural condition of interior bearing walls, exterior roof, fire sprinkler system, Common Area fire alarm and/or smoke detection systems, fire hydrants, parking lots, walkways, parkways, driveways, landscaping, fences, signs and utility systems serving the Common Areas and all parts of the Common Areas, as well as providing the services for which there is a Common Area Operating Expense pursuant to Paragraph 4.2. Sublessor shall not be obligated to paint the exterior or interior surfaces of exterior walls nor shall Sublessor be obligated to maintain, repair or replace windows, doors or plate glass of the Sublease Premises.

6.3    Utility Installations; Trade Fixtures; Alterations.

(a)    Definitions. The term "Utility Installations" refers to all floor and window coverings, air and/or vacuum lines, power panels, electrical distribution, security and fire protection systems, communication cabling, lighting fixtures, HVAC equipment, plumbing, and fencing in or on the Sublease Premises. The term "Trade Fixtures" shall mean Sublessee's machinery and equipment that can be removed without doing material damage to the Sublease Premises. The term "Alterations" shall mean any modification of the improvements, other than Utility Installations or Trade Fixtures, whether by addition or deletion. "Sublessee Owned Alterations and/or UtilityInstallations" are defined as Alterations and/or Utility Installations made by Sublessee that are not yet owned by Sublessor pursuant to Paragraph 6.4(a). This Section 6.3 shall not govern the installation, removal or restoration of the improvements to be installed pursuant to Exhibit C and Exhibit C shall govern all such matters.

(b)    Consent. Subject to the terms and conditions of the Land Lease (including without limitation, obtaining Land Lessor’s prior written consent to any Alterations or Utility Installations), Sublessee shall have the right to make any Alterations or Utility Installations to the Sublease Premises as Sublessee deems appropriate, subject to Applicable Requirements and Sublessor's prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed unless such items would create substantial safety concerns for Sublessor, in Sublessor’s reasonable determination. In the event Sublessor shall not consent to any Alterations or Utility Installations requested by Sublessee, Sublessor shall specify in detail the specific reasons therefor. Subject to the terms of the Land Lease, Sublessee may, however, make non-structural Alterations or Utility Installations to the interior of the Sublease Premises (excluding the roof) without such consent but upon notice to Sublessor, as long as they are not visible from the outside, do not involve puncturing, relocating or removing the roof or any existing walls. Notwithstanding the foregoing, Sublessee shall not make or permit any roof penetrations and/or install anything on the roof without the prior written approval of

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Sublessor, not to be unreasonably withheld, conditioned or delayed. Sublessor may, as a precondition to granting approval for Alterations which require Sublessor’s approval, require Sublessee to utilize a contractor chosen and/or approved by Sublessor. Any Alterations or Utility Installations that Sublessee shall desire to make and which require the consent of Sublessor shall be presented to Sublessor and Land Lessor in written form with detailed plans. Consent shall be deemed conditioned upon Sublessee's: (i) acquiring all applicable governmental permits, (ii) furnishing Sublessor with copies of both the permits and the plans and specifications prior to commencement of the work, and (iii) compliance with all conditions of said permits and other Applicable Requirements in a prompt and expeditious manner. Any Alterations or Utility Installations shall be performed in a workmanlike manner with good and sufficient materials. If applicable, Sublessee shall promptly upon completion furnish Sublessor with as-built plans and specifications.

(c)    Liens; Bonds. Sublessor shall have no lien on any of the Trade fixtures, Alterations or utility Installations of Sublessee. Sublessee shall pay, when due, all claims for labor or materials furnished or alleged to have been furnished to or for Sublessee at or for use on the Sublease Premises, which claims are or may be secured by any mechanic's or materialmen's lien against the Sublease Premises or any interest therein. Sublessee shall give Sublessor not less than ten (10) days’ notice prior to the commencement of any work in, on or about the Sublease Premises, and Sublessor shall have the right to post notices of non-responsibility. Sublessee shall keep the Sublease Premises and all improvements constructed by Sublessee thereon free of any mechanic or materialmen’s liens. In the event that any such lien is filed, Sublessee shall, at its sole cost, cause such lien to be removed from the Sublease Premises by bonding or otherwise within thirty (30) calendar days of notice thereof.

6.4    Ownership; Removal; Surrender; and Restoration.

(a)    Ownership. Except as provided in Paragraph 6.4(b) of this Sublease and Section 7.4 of the First Amendment to Land Lease, all Alterations and/or Sublessee Owned Alterations and Utility Installations shall, at the expiration or termination of this Sublease, become the property of Sublessor and be surrendered by Sublessee with the Sublease Premises.

(b)    Removal. Subject to the terms of Section 7.4 of the First Amendment to the Land Lease, Sublessor may require that any or all Alterations and/or Sublessee Owned Alterations and Utility Installations be removed by the expiration or termination of this Sublease by Sublessor requiring such removal at the time Sublessor consented to such installation or if Sublessor’s consent was not required to be requested, then no later than 6 months prior to the expiration or termination of the Term.

(c)    Surrender; Restoration. Sublessee shall surrender the Sublease Premises by the Expiration Date or any earlier termination date, with all of the improvements, parts and surfaces thereof broom clean and free of debris, and in good operating order, condition and state of repair, ordinary wear and tear excepted. "Ordinary wear and tear" shall not include any damage or deterioration that would have been prevented by good maintenance practice. Sublessee shall also remove from the Sublease Premises any and all Hazardous Substances brought onto the Sublease Premises by or for Sublessee (except Hazardous Substances which were deposited via underground migration from areas outside of the Project) to the level specified in Applicable Requirements. Trade Fixtures shall remain the property of Sublessee and shall be removed by Sublessee. Any personal property of Sublessee not removed on or before the Expiration Date or any earlier termination date shall be deemed to have been abandoned by Sublessee and may be disposed of or retained by Sublessor as Sublessor may desire. The failure by Sublessee to timely vacate the Sublease Premises pursuant to this

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Paragraph 6.4(c) without the express written consent of Sublessor shall constitute a holdover under the provisions of Paragraph 25 below.

7.    Insurance; Indemnity.

7.1    Payment of Premiums. The cost of the premiums for the insurance policies required to be carried by Sublessor, pursuant to Paragraphs 7.2(b), 7.3(a) and 7.3(b), shall be a Common Area Operating Expense. Premiums for policy periods commencing prior to, or extending beyond, the term of this Sublease shall be prorated to coincide with the corresponding Commencement Date or Expiration Date.

7.2    Liability Insurance.

(a)    Carried by Sublessee. Sublessee shall obtain and keep in force a Commercial General Liability policy of insurance protecting Sublessee and Sublessor as an additional insured against claims for bodily injury, personal injury and property damage based upon or arising out of the ownership, use, occupancy or maintenance of the Sublease Premises and all areas appurtenant thereto. Such insurance shall be on an occurrence basis providing single limit coverage in an amount not less than $[***] per occurrence with an annual aggregate of not less than $[***]. Sublessee shall add Sublessor as an additional insured by means of an endorsement at least as broad as the Insurance Service Organization's "Additional Insured-Managers or Lessors of Premises" Endorsement. The policy shall not contain any intra-insured exclusions as between insured persons or organizations, but shall include coverage for liability assumed under this Sublease as an "insured contract" for the performance of Sublessee's indemnity obligations under this Sublease. The limits of said insurance shall not, however, limit the liability of Sublessee nor relieve Sublessee of any obligation hereunder. Sublessee shall provide an endorsement on its liability policy(ies) which provides that its insurance shall be primary to and not contributory with any similar insurance carried by Sublessor, whose insurance shall be considered excess insurance only.

(b)    Carried by Sublessor. Sublessor shall maintain liability insurance as described in Paragraph 7.4, in addition to, and not in lieu of, the insurance required to be maintained by Sublessee. Sublessee shall not be named as an additional insured therein.

7.3    Sublessee Insurance.

(a)     Form. Each insurance policy obtained pursuant to this Paragraph 7.3, except for Worker’s Compensation and Employer’s Liability policies, shall: (i) name Sublessor as a certificate holder or additional named insured; (ii) contain a provision that written notice of cancellation or modification thereof shall be given to Sublessor not less than thirty (30) days before such cancellation or modification takes effect ten (10) days in case of nonpayment of premium); and (iii) contain a waiver of subrogation in favor of Sublessor and Land Lessor. Sublessee shall not permit any insurance policy to be canceled or modified without Sublessor’s written consent unless equivalent replacement policies are issued with no lapse in coverage. All policies shall be obtained from insurance companies licensed to do business in the State of Arizona and possessing a rating of at least A – VII or higher from the A.M. Best Company, or an equivalent rating and approved by Sublessor.

(b)     Certificates of Insurance. Sublessee shall deliver a certificate of insurance for each policy required along with an endorsement naming Phoenix-Mesa Gateway Airport Authority as additional insured herein to Sublessor and Land Lessor, in standard Acord or equivalent form, prior to the Commencement Date and shall continue to provide such certificates throughout the term of this Sublease.

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7.4    Property Insurance - Building, Improvements and Rental Value.

(a)    Building and Improvements. Sublessor shall obtain and keep in force a policy or policies of insurance in the name of Sublessor, with loss payable to Sublessor, any ground-lessor, and to any Lender insuring loss or damage to the Sublease Premises. The amount of such insurance shall be equal to the full insurable replacement cost of the Sublease Premises, as the same shall exist from time to time, or the amount required by any Lender, but in no event more than the commercially reasonable and available insurable value thereof. Sublessee Owned Alterations and Utility Installations, Trade Fixtures, and Sublessee's personal property shall be insured by Sublessee not by Sublessor. If the coverage is available and commercially appropriate, such policy or policies shall insure against all risks of direct physical loss or damage (except the perils of flood and/or earthquake unless required by a Lender), including coverage for debris removal and the enforcement of any Applicable Requirements requiring the upgrading, demolition, reconstruction or replacement of any portion of the Sublease Premises as the result of a covered loss. Said policy or policies shall also contain an agreed valuation provision in lieu of any coinsurance clause, waiver of subrogation. If such insurance coverage has a deductible clause, the deductible amount shall not exceed $[***] per occurrence.

(b)    Rental Value. Sublessor shall also obtain and keep in force a policy or policies in the name of Sublessor with loss payable to Sublessor and any Lender, insuring the loss of the full Rent for one year with an extended period of indemnity for an additional 180 days. Said insurance shall contain an agreed valuation provision in lieu of any coinsurance clause, and the amount of coverage shall be adjusted annually to reflect the projected Rent otherwise payable by Sublessee, for the next 12-month period.

(c)    Adjacent Premises. Sublessee shall pay for any increase in the premiums for the property insurance of the Buildings and for the Common Areas or other buildings in the Project if said increase is caused by Sublessee's acts, omissions, use or occupancy of the Sublease Premises; provided, Sublessor shall notify Sublessee in writing prior to such notification of increase and permit Sublessee a period of thirty (30) days to attempt to remedy any such omissions.

(d)    Sublessee's Improvements. Since Sublessor is the Insuring Party, Sublessor shall not be required to insure Sublessee Owned Alterations and Utility Installations unless the item in question has become the property of Sublessor under the terms of this Sublease.

7.5    Sublessee's Property; Business Interruption Insurance; Worker's Compensation Insurance.

(a)    Property Damage. Sublessee shall obtain and maintain insurance coverage on all of Sublessee's personal property, Trade Fixtures, and Sublessee Owned Alterations and Utility Installations. Such insurance shall be full replacement cost coverage with a deductible of not to exceed $[***] per occurrence. The proceeds from any such insurance shall be used by Sublessee for the replacement of personal property, Trade Fixtures and Sublessee Owned Alterations and Utility Installations.

(b)    Intentionally Omitted.

(c)    Worker's Compensation Insurance. Sublessee shall obtain and maintain Worker's Compensation Insurance in such amount as may be required by Applicable Requirements. Such policy shall include a 'Waiver of Subrogation' endorsement. Sublessee

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shall provide Sublessor with a copy of such endorsement along with the certificate of insurance or copy of the policy required by this Paragraph 7.5.

(d)    No Representation of Adequate Coverage. Sublessor makes no representation that the limits or forms of coverage of insurance specified herein are adequate to cover Sublessee's property, business operations or obligations under this Sublease.

7.6    Insurance Policies. Insurance required herein shall be by companies maintaining during the policy term a "General Policyholders Rating" of at least A-, VII, as set forth in the most current issue of "Best's Insurance Guide", or such other rating as may be required by a Lender. Sublessee shall not do or permit to be done anything which invalidates the required insurance policies. Sublessee shall, prior to the Commencement Date, deliver to Sublessor certified copies of policies of such insurance or certificates with copies of the required endorsements evidencing the existence and amounts of the required insurance. No such policy shall be cancelable except after 30 days prior written notice to Sublessor. Sublessee shall, prior to the expiration of such policies, furnish Sublessor with evidence of renewals or "insurance binders" evidencing renewal thereof. If either Party shall fail to procure and maintain the insurance required to be carried by it, the other Party may, but shall not be required to, procure and maintain the same.

7.7    Waiver of Subrogation. Without affecting any other rights or remedies, Sublessee and Sublessor each hereby release and relieve the other, and waive their entire right to recover damages against the other, for loss of or damage to its property arising out of or incident to the perils required to be insured against herein. The effect of such releases and waivers is not limited by the amount of insurance carried or required, or by any deductibles applicable hereto. The Parties agree to have their respective property damage insurance carriers waive any right to subrogation that such companies may have against Sublessor or Sublessee, as the case may be, so long as the insurance is not invalidated thereby.

7.8    Indemnities. Except for Sublessor's negligence or willful misconduct and except for Sublessor’s breach of any of its obligations under this Lease, Sublessee shall indemnify, protect, defend and hold harmless the Sublease Premises, Sublessor and its agents, Sublessor's master or ground lessor, partners and Lenders, from and against any and all claims, loss of rents and/or damages, liens, judgments, penalties, attorneys' and consultants' fees, expenses and/or liabilities arising out of, involving, or in connection with, an Event of Default of this Sublease by Sublessee and/or the use and/or occupancy of the Sublease Premises and/or Project by Sublessee and/or by Sublessee's employees, contractors or invitees. If any action or proceeding is brought against Sublessor by reason of any of the foregoing matters, Sublessee shall upon notice defend the same at Sublessee's expense by counsel reasonably satisfactory to Sublessor and Sublessor shall cooperate with Sublessee in such defense. Sublessor need not have first paid any such claim in order to be defended or indemnified. Sublessor shall defend, indemnify, and hold Sublessee and its agents, officers, directors, employees, and contractors harmless against and from any and all injuries, claims, judgments, costs, expenses, liabilities, losses, damages, injunctions, suits, actions, fines, penalties, and demands of any kind or nature (including reasonable attorneys' fees) by or on behalf of any person, entity, or governmental authority occasioned by or arising out of (a) injuries occurring in the Common Areas; (b) any intentional act, or negligence of Sublessor or Sublessor's agents, employees, or independent contractors; (c) any breach or default in the performance of any obligation on Sublessor's part to be performed under this Sublease; (d) any defects in the design, workmanship or materials of the original construction of the Buildings; or (e) the failure of any representation or warranty made by Sublessor herein to be true when made. This indemnity shall survive termination of this Sublease only as to claims arising out of events that occur prior to termination of the Lease.

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7.9    Exemption of Sublessor and its Agents from Liability. Except to the extent caused by the negligence or breach of this Sublease by Sublessor or its agents, neither Sublessor nor its agents shall be liable under any circumstances for: (i) injury or damage to the person or goods, wares, merchandise or other property of Sublessee, Sublessee's employees, contractors, invitees, customers, or any other person in or about the Sublease Premises, whether such damage or injury is caused by or results from fire, steam, electricity, gas, water or rain, indoor air quality, the presence of mold or from the breakage, leakage, obstruction or other defects of pipes, fire sprinklers, wires, appliances, plumbing, HVAC or lighting fixtures, or from any other cause, whether the said injury or damage results from conditions arising upon the Sublease Premises or upon other portions of the Building, or from other sources or places, (ii) any damages arising from any act or neglect of any other tenant or subtenant of Sublessor or from the failure of Sublessor or its agents to enforce the provisions of any other lease in the Project, or (iii) injury to Sublessee's business or for any loss of income or profit therefrom. Instead, except as provided above in this Paragraph 7.9, it is intended that Sublessee's sole recourse in the event of such damages or injury be to file a claim on the insurance policy(ies) that Sublessee is required to maintain pursuant to the provisions of Paragraph 7.

8.    Damage or Destruction.

8.1    Definitions.

(a)    "SubleasePremises Partial Damage" shall mean damage or destruction to the improvements on the Sublease Premises, other than Sublessee Owned Alterations and Utility Installations, which can reasonably be repaired in 15 months or less from the date of the damage or destruction. Sublessor shall notify Sublessee in writing within 15 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(b)    "SubleasePremises Total Destruction" shall mean damage or destruction to the improvements on the Sublease Premises, other than Sublessee Owned Alterations and Utility Installations and Trade Fixtures, which cannot reasonably be repaired in 15 months or less from the date of the damage. Sublessor shall notify Sublessee in writing within 15 days from the date of the damage or destruction as to whether or not the damage is Partial or Total.

(c)    "Insured Loss" shall mean damage or destruction to improvements on the Sublease Premises, other than Sublessee Owned Alterations and Utility Installations and Trade Fixtures, which was caused by an event required to be covered by the insurance described in Paragraph 7.4(a), irrespective of any deductible amounts or coverage limits involved.

(d)    "Replacement Cost" shall mean the cost to repair or rebuild the improvements owned by Sublessor at the time of the occurrence to their condition existing immediately prior thereto, including demolition, debris removal and upgrading required by the operation of Applicable Requirements, and without deduction for depreciation.

(e)    "Hazardous Substance Condition" shall mean the occurrence or discovery of a condition involving the presence of, or a contamination by, a Hazardous Substance, in, on, or under the Sublease Premises which requires restoration.

8.2    Partial Damage - Insured Loss. If a Sublease Premises Partial Damage that is an Insured Loss occurs, then Sublessor shall, at Sublessor's expense, repair such damage (but not Sublessee's Trade Fixtures or Sublessee Owned Alterations and Utility Installations) as soon as reasonably possible and this Sublease shall continue in full force and effect; provided, however, that Sublessee shall have the right to make the repair of any damage or destruction

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the total cost to repair of which is $[***] or less, and, in such event, Sublessor shall make any applicable insurance proceeds available to Sublessee on a reasonable basis for that purpose. Notwithstanding the foregoing, if the required insurance was not in force or the insurance proceeds are not sufficient to effect such repair, the Insuring Party shall promptly contribute the shortage in proceeds as and when required to complete said repairs. In the event, however, such shortage was due to the fact that, by reason of the unique nature of the improvements or full replacement cost insurance coverage was not commercially reasonable and available, Sublessor shall have no obligation to pay for the shortage in insurance proceeds or to fully restore the unique aspects of the Sublease Premises unless Sublessee provides Sublessor with the funds to cover same, or adequate assurance thereof, within 30 days following receipt of written notice of such shortage and request therefor. If Sublessor receives said funds or adequate assurance thereof within said 30-day period, the party responsible for making the repairs shall complete them as soon as reasonably possible and this Sublease shall remain in full force and effect. If such funds or assurance are not received, Sublessor may nevertheless elect by written notice to Sublessee within 10 days thereafter to: (i) make such restoration and repair as is commercially reasonable with Sublessor paying any shortage in proceeds, in which case this Sublease shall remain in full force and effect, or (ii) have this Sublease terminate 30 days thereafter. Sublease Premises Partial Damage due to flood or earthquake shall be subject to Paragraph 8.3, notwithstanding that there may be some insurance coverage, but the net proceeds of any such insurance shall be made available for the repairs if made by either Party.

8.3    Partial Damage - Uninsured Loss. If a Sublease Premises Partial Damage that is not an Insured Loss occurs, Sublessor may either: (i) repair such damage as soon as reasonably possible at Sublessor's expense (subject to reimbursement pursuant to Paragraph 4.2), in which event this Sublease shall continue in full force and effect, or (ii) terminate this Sublease by giving written notice to Sublessee within 30 days after receipt by Sublessor of knowledge of the occurrence of such damage. Such termination shall be effective 60 days following the date of such notice. In the event Sublessor elects to terminate this Lease, Sublessee shall have the right within 10 business days after receipt of the termination notice to give written notice to Sublessor of Sublessee's commitment to pay for the repair of such damage without reimbursement from Sublessor; provided, Sublessee shall receive a credit against Rent next becoming due to the extent Sublessee contributes any such funds. Sublessee shall provide Sublessor with said funds or satisfactory assurance thereof within 30 days after making such commitment. In such event this Sublease shall continue in full force and effect, and Sublessor shall proceed to make such repairs as soon as reasonably possible after the required funds are available. If Sublessee does not make the required commitment, this Sublease shall terminate as of the date specified in the termination notice.

8.4    Total Destruction. Notwithstanding any other provision hereof, if a Sublease Premises Total Destruction occurs, this Sublease shall terminate 60 days following such Destruction. If the damage or destruction was caused by the gross negligence or willful misconduct of Sublessee, Sublessor shall have the right to recover Sublessor's damages from Sublessee, except as provided in Paragraph 7.7.

8.5    Damage Near End of Term. If at any time during the last 6 months of this Sublease there is damage for which the cost to repair exceeds one month's Base Rent, whether or not an Insured Loss, Sublessor or Sublessee may terminate this Sublease effective 60 days following the date of occurrence of such damage by giving a written termination notice to the other Party within 30 days after the date of occurrence of such damage. Notwithstanding the foregoing, if Sublessee at that time has an exercisable option to extend this Sublease or to purchase the Sublease Premises, then Sublessee may preserve this Sublease by, (a) exercising such option and (b) providing Sublessor with any shortage in insurance proceeds (or adequate assurance thereof) needed to make the repairs on or before the earlier of (i) the date which is

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10 days after Sublessee's receipt of Sublessor's written notice purporting to terminate this Sublease, or (ii) the day prior to the date upon which such option expires. If Sublessee duly exercises such option during such period and provides Sublessor with funds (or adequate assurance thereof) to cover any shortage in insurance proceeds, Sublessor shall, at Sublessor's commercially reasonable expense, repair such damage as soon as reasonably possible and this Sublease shall continue in full force and effect. If Sublessee fails to exercise such option and provide such funds or assurance during such period, then this Sublease shall terminate on the date specified in the termination notice and Sublessee's option(s) shall be extinguished.

8.6    Abatement of Rent; Sublessee’s Remedies.

(a)    Abatement. In the event of Sublease Premises Partial Damage or Sublease Premises Total Destruction, the Rent payable by Sublessee for the period required for the repair, remediation or restoration of such damage shall be abated in proportion to the degree to which Sublessee’s use of the Sublease Premises is impaired. All other obligations of Sublessee and Sublessor hereunder shall be performed by the applicable Party, and Sublessor shall have no liability for any such damage, destruction, remediation, repair or restoration except as provided herein.

(b)    Remedies. If Sublessor is obligated to repair or restore the Sublease Premises and does not commence, in a substantial and meaningful way, such repair or restoration within 45 days after such obligation shall accrue, Sublessee may, at any time prior to the commencement of such repair or restoration, give written notice to Sublessor and to any Lenders of which Sublessee has actual notice, of Sublessee’s election to terminate this Sublease on a date not less than 30 days following the giving of such notice. If Sublessee gives such notice and such repair or restoration is not commenced within 30 days thereafter, this Sublease shall terminate as of the date specified in said notice. If the repair or restoration is commenced within such 30 days, this Sublease shall continue in full force and effect. “Commence” shall mean either the unconditional authorization of the preparation of the required plans, or the beginning of the actual work on the Sublease Premises, whichever first occurs. If Sublessor is obligated to repair or restore the Sublease Premises and does not complete the repairs within six (6) months following the damage or casualty or Sublessor does not commence and complete the repairs with diligence, Sublessee shall have the right to terminate this Sublease.

8.7    Termination; Advance Payments. Upon termination of this Sublease pursuant to Paragraph 8, an equitable adjustment shall be made concerning advance Base Rent and any other advance payments made by Sublessee to Sublessor.

9.    Payment of Taxes. Except as otherwise provided in Paragraph 9.3, Sublessor shall pay all of the Real Property Taxes applicable to the Project, and said payments shall NOT be included in the calculation of Common Area Operating Expenses.

9.1    Additional Improvements. Common Area Operating Expenses shall not include Real Property Taxes specified in the tax assessor's records and work sheets as being caused by additional improvements placed upon the Project by other sublessees or by Sublessor for the exclusive enjoyment of such other sublessees. Notwithstanding Paragraph 9.2 hereof, Sublessee shall, however, pay to Sublessor at the time Common Area Operating Expenses are payable under Paragraph 4.2, the entirety of any increase in Real Property Taxes if assessed solely by reason of Alterations, Trade Fixtures or Utility Installations placed upon the Sublease Premises by Sublessee or at Sublessee's written request or by reason of any alterations or improvements to the Sublease Premises made by Sublessor, at the written request of Sublessee, subsequent to the execution of this Sublease by the Parties.

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9.2    Joint Assessment. If the Buildings are not separately assessed, Real Property Taxes allocated to the Buildings shall be an equitable proportion of the Real Property Taxes for all of the land and improvements included within the tax parcel assessed, such proportion to be reasonably determined by Sublessor from the respective valuations assigned in the assessor's work sheets or such other information as may be reasonably available.

9.3    Personal Property Taxes. Sublessee shall pay prior to delinquency all taxes assessed against and levied upon Sublessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all personal property of Sublessee contained in the Sublease Premises. When possible, Sublessee shall cause its Sublessee Owned Alterations and Utility Installations, Trade Fixtures, furnishings, equipment and all other personal property to be assessed and billed separately from the real property of Sublessor. If any of Sublessee's said property shall be assessed with Sublessor's real property, Sublessee shall pay Sublessor the taxes attributable to Sublessee's property within 30 days after receipt of a written statement setting forth the taxes applicable to Sublessee's property.

10.    Utilities and Services. Sublessee shall pay for all water, gas, heat, light, power, telephone, trash disposal and other utilities and services supplied to the Sublease Premises, together with any taxes thereon. There shall be no abatement of Rent and Sublessor 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 Sublessor's reasonable control or in cooperation with governmental request or directions. Provided no Event of Default has then occurred and be continuing under this Sublease, if electrical power or HVAC are interrupted due to the negligence or willful misconduct of Sublessor or its employees or agents (a “UtilityInterruption”), and Sublessee is unable to carry on its business in a reasonably normal manner due to the failure of any of such utilities and services, and vacates all or the affected portion of the Sublease Premises for a period in excess of five (5) consecutive days, or a cumulative total of ten (10) days in any calendar year, the Base Rent and Common Area Operating Expenses payable under this Sublease shall be abated retroactively from the first (1st) day of the Utility Interruption (in proportion to the area of the Sublease Premises vacated by Sublessee by reason of such failure, if less than all of the Sublease Premises were affected) and for as long as such inability to carry on Sublessee’s business continued, until such time as the service is restored or Sublessee reoccupies the Buildings or affected portion thereof, whichever is earlier.  In the event of any curtailment, diminution, or failure with respect to utilities and services in the Sublease Premises, Sublessor shall use due diligence to restore full service.

Within thirty (30) days of Sublessor's written request, Sublessee agrees to deliver to Sublessor such information, documents and/or authorization as Sublessor reasonably needs in order to comply with new or existing Applicable Requirements relating to commercial building energy usage, ratings, and/or the reporting thereof.

11.    Assignment and Subletting.

11.1    Sublessor's and Land Lessor’s Consent Required.

(a)    Sublessee shall not voluntarily or by operation of law assign, transfer, mortgage or encumber (collectively, "assign or assignment") or sublet all or any part of Sublessee's interest in this Sublease or in the Sublease Premises without Sublessor's prior written consent, not to be unreasonably withheld, conditioned or delayed.

(b)    Unless Sublessee is a corporation and its stock is publicly traded on a national stock exchange, a change in the control of Sublessee shall constitute an assignment requiring consent. The transfer, on a cumulative basis, of 25% or more of the voting control of

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Sublessee shall constitute a change in control for this purpose. The parties acknowledge and agree that Sublessee is a publicly traded corporation on a national exchange and the provisions of this subparagraph (b) shall not be applicable to the original Sublessee.

(c)    Intentionally Omitted.

(d)    An assignment or subletting without consent shall be an Event of Default if not cured as set forth in Section 11 of the Land Lease, as incorporated herein by Paragraph 12 of this Sublease.

(e)    Sublessee's remedy for any breach of Paragraph 11.1 by Sublessor shall be limited to compensatory damages and/or injunctive relief.

(f)    Sublessor may reasonably withhold consent to a proposed assignment or subletting if there has occurred and is continuing an Event of Default under this Sublease at the time consent is requested.

(g)    Notwithstanding the foregoing, allowing a de minimis portion of the Sublease Premises, i.e., 10,000 square feet or less, to be used by a third party vendor shall not constitute a subletting.

(h) Land Lessor’s prior written consent shall be required for any assignment or sublet of the Sublease Premises.

11.2    Terms and Conditions Applicable to Assignment and Subletting.

(a)    Regardless of Sublessor's consent, no assignment or subletting shall : (i) be effective without the express written assumption by an assignee of the obligations of Sublessee under this Sublease (and any subtenant shall agree to comply with the terms of this Sublease), (ii) release Sublessee of any obligations hereunder, or (iii) alter the primary liability of Sublessee for the payment of Rent or for the performance of any other obligations to be performed by Sublessee.

(b)    Sublessor may accept Rent or performance of Sublessee's obligations from any person other than Sublessee pending approval or disapproval of an assignment. Neither a delay in the approval or disapproval of such assignment nor the acceptance of Rent or performance shall constitute a waiver or estoppel of Sublessor's right to exercise its remedies for an Event of Default by Sublessee.

(c)    Sublessor's consent to any assignment or subletting shall not constitute a consent to any subsequent assignment or subletting.

(d)    Upon the occurrence and during the continuance of an Event of Default by Sublessee, Sublessor may proceed directly against Sublessee or anyone else responsible for the performance of Sublessee's obligations under this Sublease, including any assignee or sublessee, without first exhausting Sublessor's remedies against any other person or entity responsible therefor to Sublessor, or any security held by Sublessor.

(e)    Each request for consent to an assignment or subletting shall be in writing, accompanied by information relevant to Sublessor's determination as to the financial and operational responsibility and appropriateness of the proposed assignee or sublessee, including but not limited to the intended use and/or required modification of the Sublease Premises, if any, together with a fee of $[***] as consideration for Sublessor's considering and

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processing said request. Sublessee agrees to provide Sublessor with such other or additional information and/or documentation as may be reasonably requested. (See also Paragraph 35)

(f)    Any assignee of this Sublease shall, by reason of accepting such assignment be deemed to have assumed and agreed to conform and comply with each and every term, covenant, condition and obligation herein to be observed or performed by Sublessee during the term of said assignment, other than such obligations as are contrary to or inconsistent with provisions of an assignment to which Sublessor has specifically consented to in writing.

(g)    Sublessor's consent to any assignment or subletting shall not transfer to the assignee or sublessee any Option granted to the original Sublessee by this Sublease unless such transfer is specifically consented to by Sublessor in writing. (See Paragraph 38.2)

11.3    Additional Terms and Conditions. The following terms and conditions shall apply to any subletting by Sublessee of all or any part of the Sublease Premises and shall be deemed included in all subleases under this Sublease whether or not expressly incorporated therein:

(a)    Sublessee shall have the right to sublease or assign any portion of the Buildings to any related entity, parent company, subsidiary or affiliate, or to a successor by merger or purchase (a “Sublessee Affiliate”) without Sublessor’s written consent, but subject to the consent of Land Lessor. Sublessee shall have the right to sublease or assign any portion of the Sublease Premises to any other assignee/subtenant with Sublessor’s written consent, which shall not be unreasonably withheld, conditioned, or delayed, and delivered within fifteen (15) business days of receipt of notice. Sublessee’s right to sublease is also subject to the written consent of Land Lessor. Sublessor shall have no right of recapture. In the event Sublessor does not consent to an assignment or subletting, Sublessor shall state in specific detail the reasons therefor.

(b)    Sublessor shall be entitled to share in fifty percent (50%) of the Net Profits attributable to any sublease or assignment. “Net Profits” shall be defined as the net rent (sublease rent compared with contract rent under this Sublease) received from the subtenant reduced by all typical subleasing costs, such as rent and other concessions, tenant improvements, broker commissions and bonuses, legal fees, other subleasing costs and downtime – the time the space is vacant and listed for sublease by a local commercial real estate broker, such typical subleasing costs to be amortized over the term of the sublease or remaining Term of this Sublease if an assignment.

(c)     Sublessee hereby assigns and transfers to Sublessor all of Sublessee’s interest in all Rent payable on any sublease, and Sublessor may collect such Rent and apply same toward Sublessee’s obligations under this Sublease; provided, however, that until an Event of Default shall occur in the performance of Sublessee’s obligations, Sublessee may collect said Rent. In the event that the amount collected by Sublessor exceeds Sublessee’s then outstanding obligations any such excess shall be refunded to Sublessee. Sublessor shall not, by reason of the foregoing or any assignment of such sublease, nor by reason of the collection of Rent, be deemed liable to the sublessee for any failure of Sublessee to perform and comply with any of Sublessee’s obligations to such sublessee. Sublessee hereby irrevocably authorizes and directs any such sublessee, upon receipt of a written notice from Sublessor stating that an Event of Default in then continuing, to pay to Sublessor all Rent due and to become due under the sublease. Sublessee shall rely upon any such notice from Sublessor and shall pay all Rents to Sublessor without any obligation or right to inquire as to whether such Event of Default is then continuing, notwithstanding any claim from Sublessee to the contrary.

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(d)    Upon the occurrence and during the continuance of an Event of Default, Sublessor may, at its option, require sublessee to attorn to Sublessor, in which event Sublessor shall undertake the obligations of the sublessor under such sublease from the time of the exercise of said option to the expiration of such sublease; provided, however, Sublessor shall not be liable for any prepaid rents or security deposit paid by such sublessee to such sublessor or for any prior defaults or breaches of such sublessor.

(e)    Any matter requiring the consent of the sublessor under a sublease shall also require the consent of Sublessor.

(f)No sublessee shall further assign or sublet all or any part of the Sublease Premises without Sublessor's prior written consent. Sublessor shall deliver a copy of any notice of an Event of Default by Sublessee to the sublessee, who shall have the right to cure the Event of Default of Sublessee within the grace period, if any, specified in such notice. The sublessee shall have a right of reimbursement and offset from and against Sublessee for any such Events of Default cured by the sublessee.

12.    Event ofDefault; Remedies.

12.1    Event ofDefault. The terms and provisions of Sections 11.1 through 11.9 of the Land Lease are incorporated herein by this reference such that the term “Lease” used in such sections shall mean this Sublease, the term “Lessee” shall mean Sublessee, the term “Lessor” shall mean Sublessor, the term “Transfer” shall mean an assignment or subletting by Sublessee, the term “Term” shall mean the Term of this Sublease, the term “Premises” shall mean the Sublease Premises and the term “Base Rent” shall mean the Base Rent payable by Sublessee under this Sublease.

12.2     Intentionally Omitted.

12.3    Inducement Recapture. Any agreement for free or abated Base Rent or Common Area Operating Expenses, all of which concessions are hereinafter referred to as "Inducement Provisions," shall be deemed conditioned upon Sublessee's full and faithful performance of all of the terms, covenants and conditions of this Sublease. Upon the occurrence and during the continuance of an Event of Default, a portion of such abated or free Base Rent and Common Area Operating Expenses in an amount equal to the then unamortized amount of free Base Rent and Common Area Operating Expenses shall be immediately due and payable by Sublessee to Sublessor (for example, in the event the Term of this Sublease is ten (10) years and an Event of Default of this Sublease occurs on the last day of the sixtieth (60th) month of the Term, Sublessee shall be obligated to pay an amount equal to fifty percent (50%) of any free Base Rent and Common Area Operating Expenses provided to Sublessee). The acceptance by Sublessor of rent or the cure of an Event of Default which initiated the operation of this paragraph shall not be deemed a waiver by Sublessor of the provisions of this paragraph unless specifically so stated in writing by Sublessor at the time of such acceptance.

12.4     Late Charges. Sublessee hereby acknowledges that late payment by Sublessee of Rent will cause Sublessor to incur costs not contemplated by this Sublease, the exact amount of which will be extremely difficult to ascertain. Such costs include, but are not limited to, processing and accounting charges, and late charges which may be imposed upon Sublessor by any Lender. Accordingly, if any Rent shall not be received by Sublessor within 10 days after such amount shall be due, then, without any requirement for notice to Sublessee, Sublessee shall immediately pay to Sublessor a one-time late charge equal to 2% of each such overdue amount or $[***], whichever is greater; provided, no such late charge shall be payable in the event Sublessee pays such overdue amount within five (5) business days following written notice to Sublessee. The parties hereby agree that such late charge represents a fair and

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reasonable estimate of the costs Sublessor will incur by reason of such late payment. Acceptance of such late charge by Sublessor shall in no event constitute a waiver of Sublessee's Event of Default with respect to such overdue amount, nor prevent the exercise of any of the other rights and remedies granted hereunder. In the event that a late charge is payable hereunder, whether or not collected, for 3 consecutive installments of Base Rent, then notwithstanding any provision of this Sublease to the contrary, Base Rent shall, at Sublessor's option, become due and payable quarterly in advance. Notwithstanding anything in this Paragraph 12.4 to the contrary, in the event Land Lessor shall become the “Sublessor” hereunder, the terms of the Land Lease shall govern and control the payment of any late charges by Sublessee.

12.5    Interest. Any monetary payment due Sublessor hereunder, other than late charges, not received by Sublessor, when due shall bear interest from and after the 31st day after it was due. The interest ("Interest") charged shall be computed at the rate of 10% per annum but shall not exceed the maximum rate allowed by law. Interest is payable in addition to the potential late charge provided for in Paragraph 12.4.

12.6    Breach by Sublessor.

(a)    Notice of Breach. Sublessor shall not be deemed in breach of this Sublease unless Sublessor fails within a reasonable time to perform an obligation required to be performed by Sublessor. For purposes of this Paragraph, a reasonable time shall in no event be less than 30 days after receipt by Sublessor, and any Lender whose name and address shall have been furnished to Sublessee in writing for such purpose, of written notice specifying wherein such obligation of Sublessor has not been performed; provided, however, that if the nature of Sublessor's obligation is such that more than 30 days are reasonably required for its performance, then Sublessor shall not be in breach if performance is commenced within such 30 day period and thereafter diligently pursued to completion.

(b)    Performance by Sublessee on Behalf of Sublessor. In the event that neither Sublessor nor Lender cures said breach within 30 days after receipt of said notice, or if having commenced said cure they do not diligently pursue it to completion or if the breach is of an emergency nature and is not cured within five (5) days following written notice from Sublessee, then Sublessee may elect to cure said breach at Sublessee's expense and offset from Rent the actual and reasonable cost to perform such cure. Sublessee shall document the cost of said cure and supply said documentation to Sublessor.

13.    Condemnation. If the Sublease Premises or any portion thereof are taken under the power of eminent domain or sold under the threat of the exercise of said power (collectively "Condemnation"), this Sublease shall terminate as to the part taken as of the date the condemning authority takes title or possession, whichever first occurs. If more than 10% of the floor area of a Hangar, or more than 25% of the parking spaces is taken by Condemnation, Sublessee may, at Sublessee's option, to be exercised in writing within 30 days after Sublessor shall have given Sublessee written notice of such taking (or in the absence of such notice, within 30 days after the condemning authority shall have taken possession) terminate this Sublease as of the date the condemning authority takes such possession. If Sublessee does not terminate this Sublease in accordance with the foregoing, this Sublease shall remain in full force and effect as to the portion of the Sublease Premises remaining, except that the Base Rent shall be reduced in proportion to the reduction in utility of the Sublease Premises caused by such Condemnation. Condemnation awards and/or payments shall be the property of Sublessor, whether such award shall be made as compensation for diminution in value of the leasehold, the value of the part taken, or for severance damages; provided, however, that Sublessee shall be entitled to any compensation paid by the condemnor for Sublessee's relocation expenses, bonus value of this Sublease, loss of business goodwill and/or Trade

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Fixtures, without regard to whether or not this Sublease is terminated pursuant to the provisions of this Paragraph. All Alterations and Utility Installations made to the Sublease Premises by Sublessee, for purposes of Condemnation only, shall be considered the property of the Sublessee and Sublessee shall be entitled to any and all compensation which is payable therefor. In the event that this Sublease is not terminated by reason of the Condemnation, Sublessor shall repair any damage to the Sublease Premises caused by such Condemnation.

14.    Brokerage Fees.

14.1    Additional Commission. In addition to the payments owed pursuant to Paragraph 1.7 above, Sublessor agrees that: (a) if Sublessee exercises any Option, (b) if Sublessee or anyone affiliated with Sublessee acquires from Sublessor any rights to the Sublease Premises or other premises owned by Sublessor or leased by Sublessor and located within the Project, (c) if Sublessee remains in possession of the Sublease Premises, with the consent of Sublessor, after the expiration of this Sublease, or (d) if Base Rent is increased, whether by agreement or operation of an escalation clause herein, then, Sublessor shall pay Brokers a fee in accordance with the fee schedule of the Brokers in effect at the time this Sublease was executed. The provisions of this paragraph are intended to supersede the provisions of any earlier agreement to the contrary.

14.2    Assumption of Obligations. Any buyer or transferee of Sublessor's interest in this Sublease shall be deemed to have assumed Sublessor's obligation hereunder. Brokers shall be third party beneficiaries of the provisions of Paragraphs 1.10, 14, 21 and 30. If Sublessor fails to pay to Brokers any amounts due as and for brokerage fees pertaining to this Sublease when due, then such amounts shall accrue Interest. In addition, if Sublessor fails to pay any amounts to Sublessee's Broker when due, Sublessee's Broker may send written notice to Sublessor and Sublessee of such failure and if Sublessor fails to pay such amounts within 10 days after said notice, Sublessee shall pay said monies to its Broker and offset such amounts against Rent. In addition, Sublessee's Broker shall be deemed to be a third party beneficiary of any commission agreement entered into by and/or between Sublessor and Sublessor's Broker for the limited purpose of collecting any brokerage fee owed.

14.3    Representations and Indemnities of Broker Relationships. Sublessee and Sublessor each represent and warrant to the other that it has had no dealings with any person, firm, broker, agent or finder (other than the Brokers and Agents, if any) in connection with this Sublease, and that no one other than said named Brokers and Agents is entitled to any commission or finder's fee in connection herewith. Sublessee and Sublessor do each hereby agree to indemnify, protect, defend and hold the other harmless from and against liability for compensation or charges which may be claimed by any such unnamed broker, finder or other similar party by reason of any dealings or actions of the indemnifying Party, including any costs, expenses, attorneys' fees reasonably incurred with respect thereto.

15.    Estoppel Certificates.

(a)    Each Party (as "Responding Party") shall within 10 business days after written notice from the other Party (the "Requesting Party") execute, acknowledge and deliver to the Requesting Party a statement in writing in form similar to the then most current "Estoppel Certificate" form published by AIR CRE, plus such additional information, confirmation and/or statements as may be reasonably requested by the Requesting Party. For purposes of this Paragraph 15, Sublessee shall comply with any request made by Land Lessor under the Land Lease for an estoppel certificate and such compliance by Sublessee shall be in accordance with the terms of the Land Lease.

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(b)    If the Responding Party shall fail to execute or deliver the Estoppel Certificate within such 10 day period, the Requesting Party may execute an Estoppel Certificate stating that: (i) the Sublease is in full force and effect without modification except as may be represented by the Requesting Party, (ii) there are no uncured defaults, breaches or Events of Default in the Requesting Party's performance, and (iii) if Sublessor is the Requesting Party, not more than one month's rent has been paid in advance. Prospective purchasers and encumbrancers may rely upon the Requesting Party's Estoppel Certificate, and the Responding Party shall be estopped from denying the truth of the facts contained in said Certificate.

(c)    If Sublessor desires to finance, refinance, or sell the Sublease Premises, or any part thereof, Sublessee shall within 30 days after written notice from Sublessor deliver to any potential lender or purchaser designated by Sublessor such financial statements as may be reasonably required by such lender or purchaser, including but not limited to Sublessee's financial statements for the past 3 years. All such financial statements shall be received by Sublessor and such lender or purchaser in confidence and shall be used only for the purposes herein set forth. This subparagraph (c) shall not be applicable to any entity whose common stock is traded on a national stock exchange.

16.    Definition of Sublessor. The term "Sublessor" as used herein shall mean the owner or owners at the time in question of the fee title to the Sublease Premises, or, if this is a sublease, of the “Lessee’s” interest in the Land Lease. Upon transfer or assignment and delivery of any security deposit, the prior Sublessor shall be relieved of all liability with respect to the obligations and/or covenants under this Sublease thereafter to be performed by the Sublessor but not any liability which may have accrued prior to such transfer. Subject to the foregoing, the obligations and/or covenants in this Sublease to be performed by the Sublessor shall be binding only upon the Sublessor as hereinabove defined.

17.    Severability. The invalidity of any provision of this Sublease, as determined by a court of competent jurisdiction, shall in no way affect the validity of any other provision hereof.

18.    Days. Unless otherwise specifically indicated to the contrary, the word "days” as used in this Sublease shall mean and refer to calendar days.

19.    Limitation on Liability. The obligations of a Party under this Sublease shall not constitute personal obligations of such Party, or its partners, members, directors, officers or shareholders, and Sublessee shall look to the Sublease Premises, and to no other assets of Sublessor, for the satisfaction of any liability of Sublessor with respect to this Sublease, and shall not seek recourse against Sublessor's partners, members, directors, officers or shareholders, or any of their personal assets for such satisfaction.

20.    Time of Essence. Time is of the essence with respect to the performance of all obligations to be performed or observed by the Parties under this Sublease.

21.    No Prior or Other Agreements; Broker Disclaimer. This Sublease contains all agreements between the Parties with respect to any matter mentioned herein, and no other prior or contemporaneous agreement or understanding shall be effective. Brokers have no responsibility with respect to the condition of the Sublease Premises or with respect to any default or breach hereof by either Party.

22.    Notices.

22.1    Notice Requirements. Except as provided in Paragraph 22.3 below, all notices required or permitted by this Sublease or applicable law shall be in writing and may be delivered in person (by hand or by courier) or may be sent by nationally recognized overnight

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courier, regular, certified or registered mail or U.S. Postal Service Express Mail, with postage prepaid, or by facsimile transmission, or by email, and shall be deemed sufficiently given if served in a manner specified in this Paragraph 22. The addresses noted adjacent to a Party's signature on this Sublease shall be that Party's address for delivery or mailing of notices. Either Party may by written notice to the other specify a different address for notice. A copy of all notices to Sublessor shall be concurrently transmitted to such party or parties at such addresses as Sublessor may from time to time hereafter designate in writing. Sublessee’s Notice address is as follows:

Virgin Galactic Holdings, Inc.                

1700 Flight Way

Tustin CA 92606

Attention: Swami Iyer

With a copy to:

Virgin Galactic Holdings, Inc.

1700 Flight Way

Tustin, CA 92606

Attention: General Counsel

22.2    Date of Notice. Any notice sent by registered or certified mail, return receipt requested, shall be deemed given on the date of delivery shown on the receipt card, or if no delivery date is shown, the postmark thereon. If sent by regular mail the notice shall be deemed given 72 hours after the same is addressed as required herein and mailed with postage prepaid. Notices delivered by United States Express Mail or overnight courier that guarantees next day delivery shall be deemed given 24 hours after delivery of the same to the Postal Service or courier. Notices delivered by hand, or transmitted by facsimile transmission or by email shall be deemed delivered upon written confirmation by the receiving Party of actual receipt. If notice is received on a Saturday, Sunday or legal holiday, it shall be deemed received on the next business day.

22.3    Options. Notwithstanding the foregoing, in order to exercise any Options (see paragraph 38), the Notice must be sent by nationally recognized overnight courier, Certified Mail (return receipt requested), Express Mail (signature required), courier (signature required) or some other methodology that provides a receipt establishing the date the notice was received by the Sublessor.

23.    Waivers.

(a)    No waiver by Sublessor of an Event of Default by Sublessee shall be deemed a waiver of any other term, covenant or condition hereof, or of any subsequent Event of Default by Sublessee of the same or of any other term, covenant or condition hereof. Sublessor's consent to, or approval of, any act shall not be deemed to render unnecessary the obtaining of Sublessor's consent to, or approval of, any subsequent or similar act by Sublessee, or be construed as the basis of an estoppel to enforce the provision or provisions of this Sublease requiring such consent.

(b)    The acceptance of Rent by Sublessor shall not be a waiver of any Event of Default by Sublessee. Any payment by Sublessee may be accepted by Sublessor on account of monies or damages due Sublessor, notwithstanding any qualifying statements or conditions made by Sublessee in connection therewith, which such statements and/or conditions shall be of no force or effect whatsoever unless specifically agreed to in writing by Sublessor at or before the time of deposit of such payment.

(c)    THE PARTIES AGREE THAT THE TERMS OF THIS SUBLEASE SHALL GOVERN WITH REGARD TO ALL MATTERS RELATED THERETO AND HEREBY WAIVE THE PROVISIONS OF ANY PRESENT OR FUTURE STATUTE TO THE EXTENT THAT SUCH STATUTE IS INCONSISTENT WITH THIS SUBLEASE.

24.    Intentionally Omitted.

25.    No Right To Holdover. Sublessee shall have the right to holdover the Sublease Premises on a daily basis for up to six (6) months after expiration of this Sublease without Sublessor’s consent by notifying Sublessor in writing no earlier than nine (9) months and no later than six

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(6) months prior to expiration of the term, as it may be extended. Except as set forth above, Sublessee has no right to retain possession of the Sublease Premises or any part thereof beyond the expiration or termination of this Sublease. In the event that Sublessee holds over, then the Base Rent shall be increased to 150% of the Base Rent applicable immediately preceding the expiration or termination. Holdover Base Rent shall be calculated on monthly basis. Nothing contained herein shall be construed as consent by Sublessor to any holding over by Sublessee. Notwithstanding anything to the contrary contained in this Paragraph 25, the terms of the Land Lease shall govern and control any holdover by Sublessee.

26.    Cumulative Remedies. No remedy or election hereunder shall be deemed exclusive but shall, wherever possible, be cumulative with all other remedies at law or in equity.

27.    Covenants and Conditions; Construction of Agreement. All provisions of this Sublease to be observed or performed by Sublessee are both covenants and conditions. In construing this Sublease, all headings and titles are for the convenience of the Parties only and shall not be considered a part of this Sublease. Whenever required by the context, the singular shall include the plural and vice versa. This Sublease shall not be construed as if prepared by one of the Parties, but rather according to its fair meaning as a whole, as if both Parties had prepared it.

28.    Binding Effect; Choice of Law. This Sublease shall be binding upon the Parties, their personal representatives, successors and assigns and be governed by the laws of the State in which the Sublease Premises are located. Any litigation between the Parties hereto concerning this Sublease shall be initiated in the county in which the Sublease Premises are located. Signatures to this Sublease accomplished by means of electronic signature or similar technology shall be legal and binding.

29.    Subordination; Attornment; Non-Disturbance.

29.1    Subordination. Subject to the terms and conditions of this Sublease, this Sublease and any Option granted hereby shall be subject and subordinate to any ground lease (including without limitation, the Land Lease (including without limitation, the Airport Rules and Regulations, the Airport Minimum Standards (as defined in the Land Lease) and the terms and conditions described in Section 9.6 of the Land Lease under which Phoenix-Mesa Gateway Airport Authority acquired the Project), mortgage, deed of trust, or other hypothecation or security device (collectively, "Security Device"), now or hereafter placed upon the Sublease Premises, to any and all advances made on the security thereof, and to all renewals, modifications, and extensions thereof. Sublessee agrees that the holders of any such Security Devices (in this Sublease together referred to as "Lender") shall have no liability or obligation to perform any of the obligations of Sublessor under this Sublease unless and until such Lender is the Sublessor under this Sublease. Any Lender may elect to have this Sublease and/or any Option granted hereby superior to the lien of its Security Device by giving written notice thereof to Sublessee, whereupon this Sublease and such Options shall be deemed prior to such Security Device, notwithstanding the relative dates of the documentation or recordation thereof.

29.2    Attornment. In the event that Sublessor transfers title to the Premises, or the Sublease Premises are acquired by another upon the foreclosure or termination of a Security Device to which this Sublease is subordinated (i) Sublessee shall, subject to the non-disturbance provisions of Paragraph 29.3, attorn to such new owner, and upon request, enter into a new lease, containing all of the terms and provisions of this Sublease, with such new owner for the remainder of the term hereof, or, at the election of the new owner, this Sublease will automatically become a new sublease between Sublessee and such new owner, and (ii) Sublessor shall thereafter be relieved of any further obligations hereunder and such

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new owner shall assume all of Sublessor's obligations, except that such new owner shall not: (a) be liable for any act or omission of any prior sublessor or with respect to events occurring prior to acquisition of ownership; (b) be subject to any offsets or defenses which Sublessee might have against any prior sublessor, (c) be bound by prepayment of more than one month's rent, or (d) be liable for the return of any security deposit paid to any prior sublessor which was not paid or credited to such new owner. Sublessee shall make no prepayment of Rent (as defined in Paragraph 4.1) in excess of one (1) month in advance.

29.3    Non-Disturbance. With respect to any Security Devices currently encumbering the Sublease Premises and with respect to any Security Devices entered into by Sublessor after the execution of this Sublease, Sublessee's subordination of this Sublease shall be subject to receiving a commercially reasonable non-disturbance agreement (a "Non-DisturbanceAgreement") from the Lender which Non-Disturbance Agreement provides that Sublessee's possession of the Sublease Premises, and this Sublease, including any options to extend the term hereof, will not be disturbed so long as there has not occurred and is continuing an Event of Default by Sublessee and attorns to the record owner or sublessor of the Sublease Premises. Execution and delivery of such Non-Disturbance Agreement (in recordable form, with notary acknowledgements) from each Lender currently encumbering the Sublease Premises, Sublessor and Sublessee shall be a condition to the effectiveness of this Sublease. Sublessor represents and warrants to Sublessee that, as of the date of this Sublease set forth in Paragraph 1.1, there are no Security Devices encumbering the Sublease Premises except a construction loan obtained by Sublessor. In the event a Non-Disturbance Agreement is not provided to Sublessee by such Security Device holder, and executed, notarized and delivered by all parties thereto, within thirty (30) days after the date of this Sublease, Sublessee shall have the right to terminate this Sublease.

29.4    Self-Executing. The agreements contained in this Paragraph 29 shall be effective without the execution of any further documents; provided, however, that, upon written request from Sublessor or a Lender in connection with a sale, financing or refinancing of the Sublease Premises, Sublessee and Sublessor shall execute such further writings as may be reasonably required to separately document any subordination, attornment and/or Non-Disturbance Agreement provided for herein.

30.    Attorneys' Fees. If any Party or Broker brings an action or proceeding involving the Sublease Premises whether founded in tort, contract or equity, or to declare rights hereunder, the Prevailing Party (as hereafter defined) in any such proceeding, action, or appeal thereon, shall be entitled to reasonable attorneys' fees. Such fees may be awarded in the same suit or recovered in a separate suit, whether or not such action or proceeding is pursued to decision or judgment. The term, "Prevailing Party" shall include, without limitation, a Party or Broker who substantially obtains or defeats the relief sought, as the case may be, whether by compromise, settlement, judgment, or the abandonment by the other Party or Broker of its claim or defense. The attorneys' fees award shall not be computed in accordance with any court fee schedule, but shall be such as to fully reimburse all attorneys' fees reasonably incurred.

31.    Intentionally Omitted.

32.    Auctions. Sublessee shall not conduct, nor permit to be conducted, any auction upon the Sublease Premises without Sublessor's prior written consent. Sublessor shall not be obligated to exercise any standard of reasonableness in determining whether to permit an auction.

33.    Signs. Sublessor may place on the Sublease Premises ordinary "For Sale" signs at any time and ordinary "For Lease" signs during the last 6 months of the term hereof. All signs must

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comply with all Applicable Requirements and are subject to the terms and conditions of the Land Lease with respect to signage.Sublessor grants Sublessee the exclusive right to place its illuminated, if desired, corporate identity anywhere on the interior/exterior of the Buildings, including the roof structure to be visible to flying aircraft. In addition, Sublessee shall be granted reasonable directional signs, to the Sublease Premises, within the Project. All signage shall be pursuant to local sign ordinances from the jurisdiction providing any approvals/permits for exterior Building/Project signage permits, and the Airport Authority, if required. All signage shall be subject to Sublessor’s approval, not to be unreasonably withheld, conditioned or delayed, and Land Lessor’s approval.

34.    Termination; Merger. Unless specifically stated otherwise in writing by Sublessor, the voluntary or other surrender of this Sublease by Sublessee, the mutual termination or cancellation hereof, or a termination hereof by Sublessor as a result of an Event of Default by Sublessee, shall automatically terminate any sublease or lesser estate in the Sublease Premises; provided, however, that Sublessor may elect to continue any one or all existing subtenancies. Sublessor's failure within 10 days following any such event to elect to the contrary by written notice to the holder of any such lesser interest, shall constitute Sublessor’s election to have such event constitute the termination of such interest.

35.    Consents. All requests for consent shall be in writing. Except as otherwise provided herein, wherever in this Sublease the consent of a Party is required to an act by or for the other Party, such consent shall not be unreasonably withheld, conditioned or delayed. Sublessor's actual reasonable costs and expenses (including but not limited to reasonable and actual architects', attorneys', engineers' and other consultants' fees) incurred in the consideration of, or response to, a request by Sublessee for any Sublessor consent, including but not limited to consents to an assignment, a subletting or the presence or use of a Hazardous Substance, shall be paid by Sublessee upon receipt of an invoice and supporting documentation therefor. Sublessor's consent to any act, assignment or subletting shall not constitute an acknowledgment that no Event of Default by Sublessee of this Sublease exists, nor shall such consent be deemed a waiver of any then existing Event of Default, except as may be otherwise specifically stated in writing by Sublessor at the time of such consent. The failure to specify herein any particular condition to Sublessor's consent shall not preclude the imposition by Sublessor at the time of consent of such further or other conditions as are then reasonable with reference to the particular matter for which consent is being given. In the event that either Party disagrees with any determination made by the other hereunder and reasonably requests the reasons for such determination, the determining party shall furnish its reasons in writing and in reasonable detail within 10 business days following such request.

36.    Guarantor. Intentionally Omitted.

37.    Quiet Possession. Subject to payment by Sublessee of the Rent and performance of all of the covenants, conditions and provisions on Sublessee's part to be observed and performed under this Lease, Sublessee shall have quiet possession and quiet enjoyment of the Sublease Premises during the Term hereof, as such Term may be extended.

38.    Options. If Sublessee is granted any option, as defined below, then the following provisions shall apply.

38.1    Definition. "Option" shall mean: (a) the right to extend or reduce the Term of or renew this Sublease or to extend or reduce the Term of or renew any lease or sublease that Sublessee has on other property of Sublessor; (b) the right of first refusal or first offer to lease or sublease either the Sublease Premises or other property of Sublessor; (c) the right to purchase, the right of first offer to purchase or the right of first refusal to purchase the Sublease Premises or other property of Sublessor.

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38.2    Options Personal To Original Sublessee and Sublessee Affiliates. Any Option granted to Sublessee in this Sublease is personal to the original Sublessee and Sublessee Affiliates, and cannot be assigned or exercised by anyone other than said original Sublessee and Sublessee Affiliates, and only while the original Sublessee or Sublessee Affiliate(s) is/are in possession of no less than fifty percent (50%) of the Sublease Premises.

38.3    Multiple Options. In the event that Sublessee has any multiple Options to extend or renew this Sublease, a later Option cannot be exercised unless the prior Options have been validly exercised.

38.4    Effect of Default on Options.

(a)    Sublessee shall have no right to exercise an Option: (i) during the period commencing with the giving of any notice of an Event of Default and continuing until said Event of Default is cured, (ii) during the time there has occurred and is continuing an Event of Default by Sublessee or (iii) in the event that Sublessee has been given 3 or more notices of separate Events of Default, whether or not the Events of Default are cured, during the 12 month period immediately preceding the exercise of the Option.

(b)    The period of time within which an Option may be exercised shall not be extended or enlarged by reason of Sublessee's inability to exercise an Option because of the provisions of Paragraph 38.4(a).

(c)    An Option shall terminate and be of no further force or effect, notwithstanding Sublessee's due and timely exercise of the Option, if, after such exercise and prior to the commencement of the extended term or completion of the purchase, there has occurred an Event of Default of this Sublease which is not cured prior to the commencement of such extended term or completion of the purchase.

39.    Security Measures. Sublessee hereby acknowledges that the Rent payable to Sublessor hereunder does not include the cost of guard service or other security measures. Sublessee shall take responsibility for the protection of the Sublease Premises, Sublessee, its agents and invitees and their property from the acts of third parties. Sublessor grants Sublessee the right to install on-site security, equipment, personnel, procedures and systems inside and outside the Buildings, including without limitation, card readers, security cameras and any other devices to enhance security, so long as such devices to not impair or impede other tenants of the Project or Sublessor.

40.    Reservations. Sublessor reserves the right: (i) to grant, without the consent or joinder of Sublessee, such easements, rights and dedications that Sublessor deems necessary, (ii) to cause the recordation of parcel maps and restrictions, and (iii) to create and/or install new utility raceways, so long as such easements, rights, dedications, maps, restrictions, and utility raceways do not unreasonably interfere with the use of the Sublease Premises by Sublessee. Sublessee agrees to sign and deliver to Sublessor any documents reasonably requested by Sublessor to effectuate such rights.

41.    Performance Under Protest. If at any time a dispute shall arise as to any amount or sum of money to be paid by one Party to the other under the provisions hereof, the Party against whom the obligation to pay the money is asserted shall have the right to make payment "under protest" and such payment shall not be regarded as a voluntary payment and there shall survive the right on the part of said Party to institute suit for recovery of such sum. If it shall be adjudged that there was no legal obligation on the part of said Party to pay such sum or any part thereof, said Party shall be entitled to recover such sum or so much thereof as

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it was not legally required to pay. A Party who does not initiate suit for the recovery of sums paid "under protest" within 6 months shall be deemed to have waived its right to protest such payment.

42.    Authority; Multiple Parties; Execution.

(a)    If either Party hereto is a corporation, trust, limited liability company, partnership, or similar entity, such entity represents and warrants that it is duly authorized to execute and deliver this Sublease on its behalf. Each Party shall, within 30 days after request, deliver to the other Party satisfactory evidence of such authority.

(b)    If this Sublease is executed by more than one person or entity as "Sublessee", each such person or entity shall be jointly and severally liable hereunder. It is agreed that any one of the named Sublessees shall be empowered to execute any amendment to this Sublease, or other document ancillary thereto and bind all of the named Sublessees, and Sublessor may rely on the same as if all of the named Sublessees had executed such document.

(c)    This Sublease may be executed by the Parties in counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same instrument.

43.    Conflict. Any conflict between the printed provisions of this Sublease and the typewritten or handwritten provisions shall be controlled by the typewritten or handwritten provisions.

44.    Offer. Preparation of this Sublease by either party or their agent and submission of same to the other Party shall not be deemed an offer to lease or sublease to the other Party. This Sublease is not intended to be binding until executed and delivered by all Parties hereto.

45.    Amendments. This Sublease may be modified only in writing, signed by the Parties in interest at the time of the modification. As long as they do not materially in Sublessee’s reasonable judgment) change Sublessee's rights, duties, liabilities or obligations hereunder, Sublessee agrees to make such reasonable non-monetary modifications to this Sublease as may be reasonably required by a Lender in connection with the obtaining of normal financing or refinancing of the Sublease Premises.

46.    Waiver of Jury Trial. THE PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING INVOLVING THE PROPERTY OR ARISING OUT OF THIS SUBLEASE.

47.    Sublessee’s Right to Install an Emergency Generator. Sublessee shall have the right (until the earlier of the expiration or earlier termination of the Term), at Sublessee's sole cost and expense, subject to the provisions of this Sublease, to install one (1) above-ground back-up generator (the "Generator"), at a location to be mutually agreed upon by the parties, acting reasonably (and pursuant to plans and specifications approved in advance by (i) Sublessor, which approval shall not be unreasonably withheld and (ii) Land Lessor), together with any and all underground connections required to use and operate the Generator. The Generator, and Sublessee's rights with respect thereto, shall be subject to the additional following terms and conditions:

(a)    All costs and expenses associated with the Generator, including, without limitation, all costs and expenses relating to any required soundproofing, screening, compliance with all Applicable Requirements, safety, protection of property, installation, noise

Page 40 of 141

reduction, environmental monitoring and remediation, maintenance, repairs, replacements and removal, in each case to the extent reasonably necessary, shall be paid for by Sublessee. Sublessor's review of plans and specifications shall be for its own benefit only, and Sublessor shall have no liability to Sublessee in connection with such review. Sublessee shall ensure that the Generator complies at all times with all Applicable Requirements in all respects.

(b)    Sublessee shall indemnify, defend and hold Sublessor harmless from and against any and all claims arising out of or in connection with the Generator, and shall repair all damage to the Sublease Premises contained therein arising in connection with the Generator.

(c)    Sublessee, at Sublessee's sole cost and expense, shall be obligated to secure and obtain and provide Sublessor with copies of all required permits, approvals and licenses for or with respect to the installation or operation of the Generator prior to the commencement of any installation activities hereunder, and shall be obligated to keep in full force and effect and renew, as applicable, all required permits, approvals and licenses required hereunder.

(d)     The Generator shall be screened as required by Applicable Requirements or any covenants, conditions and restrictions recorded against the Project. Installation of the Generator shall be anticipated by Sublessor and Sublessor’s designers in the re-design of Hangar B and the existing design of Hangar C in order to minimize any trenching after construction of all or a material proportion of Hangar C for running of conduits from the Generator to the switch gear/transfer switches. To support communications and networking, Sublessor shall provide fiber optics to within Hangar B and Hangar C, as more particularly described in the Addendum and exhibits attached to this Sublease.

///continued on next page///

Page 41 of 141

The parties hereto have executed this Sublease at the place and on the dates specified above their respective signatures.

Executed at:     On:     By SUBLESSOR: Gateway Executive Airpark, LLC By:    /s/ Stephen McKendry Name Printed:    Stephen McKendry Title:     Manager     Phone:    [***]     Fax:    [***] Email:     [***]     By:    /s/ Daryl J. Donkersloot Name Printed:    Daryl J. Donkersloot Title:    Manager Phone:    [***] Fax:     Email:    [***] Address:    [***] Federal ID No.:    [***]	Executed at:     On:     By SUBLESSEE:     By:    /s/ Doug Ahrens     Name Printed:    Doug Ahrens     Title:     Chief Financial Officer     Phone:    [***]     Fax:     Email:     [***]     By:     Name Printed:     Title:     Phone:     Fax:     Email:     Address:     Federal ID No.:
BROKER     Dalin Commercial Real Estate Services     Attn:    Stephen McKendry Title:    Designated Broker Address:    [***] Phone:    [***] Fax:    [***] Email:     Federal ID No.:    [***] Broker License #:    [***]	BROKER     /s/ Kim Josephson Attn:    Kim Josephson Title:    Broker Address:    [***] Phone:    [***] Fax:     Email:    [***] Federal ID No.:     Broker License #:

Page 42 of 141

INDEX OF EXHIBITS

Exhibit A	Site Plan with Parking
Exhibit B	Land Lease
Exhibit C	Addendum
Exhibit D	Rules and Regulations
Exhibit E	Disclaimer
Exhibit F	Links to Gateway Executive Airpark’s Fees and Regulations

Page 43 of 141

Exhibit A

Site Plan with Parking

[***]

Page 44 of 141

Exhibit B

Land Lease with 1st Amendment

[***]

Page 45 of 141

Exhibit C

TO STANDARD INDUSTRIAL/COMMERCIAL MULTI-SUBLESSEE SUBLEASE - NET

ADDENDUM (with Exhibits)

[***]

Page 46 of 141

Exhibit D

RULES AND REGULATIONS

[***]

Page 47 of 141

Exhibit E

Disclaimer

[***]

Page 48 of 141

Exhibit F

Links to Gateway Executive Airpark’s Fees and Regulations

[***]

Page 49 of 141

EX-10.4

AGREEMENT AND GENERAL RELEASE

This Agreement and General Release (this “Agreement”) is made and entered into by and between Michelle Kley (“Kley”) and the Company (as defined below).

WHEREAS, Kley’s employment relationship with the Company terminated effective July 19, 2022 (the “SeparationDate”); and

WHEREAS, Kley and the Company wish to enter into this Agreement which settles fully and finally any and all differences and matters between them.

1.    Release. For good and valid consideration set forth in Section 4 of this Agreement, the receipt and adequacy of which are hereby acknowledged, Kley does hereby release and forever discharge the “Releasees” hereunder, consisting of Galactic Co., LLC, a Delaware limited liability company (“OpCo”), Virgin Galactic Holdings, Inc. a Delaware corporation (“PubCo” and, together with OpCo, the “Company”), and the Company’s partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees, representatives, lawyers, insurers, and all persons acting by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands, damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which Kley now has or may hereafter have against the Releasees, or any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof.  The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon, or related to the employment or termination of employment of Kley by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on Releasees’ right to terminate the employment of Kley; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In Employment Act, the Americans With Disabilities Act.

2.    Claims Not Released. Notwithstanding the foregoing, the release in Section 1 (the “Release”) shall not operate to release any rights or claims of Kley (i) to payments or benefits described herein; (ii) with respect to Section 2(b)(v) of the that certain Employment Agreement, dated as of November 20, 2019, by and between (among others) PubCo and Kley; (iii) to accrued or vested benefits Kley may have, if any, as of the date hereof under any applicable plan, policy, practice, program, contract or agreement with the Company; (iv) to file a claim for unemployment or workers’ compensation benefits; (v) to bring to the attention of the U.S. Equal Employment Opportunity Commission or similar state or local administrative agency claims of discrimination, harassment, interference with leave rights, and retaliation; provided, however, that Kley releases Kley’s right to secure damages or other relief for any such alleged treatment; (vi) to any Claims for indemnification and/or advancement of expenses arising under any indemnification agreement between Kley and the Company or under the bylaws, certificate of incorporation or other similar governing document of the Company; (vii) to any Claims which cannot be waived by an employee under applicable law; or (viii) with respect to Kley’s right to communicate directly with, cooperate with, or provide information to, any federal, state or local government regulator.

3.    Unknown Claims.

KLEY ACKNOWLEDGES THAT KLEY HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.”

|||

KLEY, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS KLEY MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

4.    Consideration. Provided Kley timely executes this Agreement, and does not revoke the Release contained in this Agreement, the Company shall provide to Kley (i) the prompt reimbursement for all reasonable personal security expenses, determined in accordance with the guidelines set forth on Exhibit A, incurred by Kley or her affiliates from (and including) the Separation Date through (and including) the six-month anniversary of the Separation Date (such period, the “Reimbursement Period”) and (ii) a cash amount equal to the aggregate imputed or imposed federal, state and local taxes on any such reimbursements, plus any taxes imposed on such cash amount, so that Kley on an after-tax basis is in the same position as if there had been no imputation or imposition of income on Kley (and Kley’s then-applicable marginal tax rates shall be used to calculate the cash amount). Kley agrees and acknowledges to submit any such expenses in accordance with the guidelines set forth on Exhibit A. Likewise, the Company agrees to reimburse Kley for any such expenses in accordance with the guidelines set forth on Exhibit A.

5.    Exceptions. Notwithstanding anything in this Agreement to the contrary, nothing contained herein shall prohibit Kley from (i) filing a charge with, reporting possible violations of federal law or regulation to, participating in any investigation by, or cooperating with any governmental agency or entity or making other disclosures that are protected under the whistleblower provisions of applicable law or regulation and/or (ii) communicating directly with, cooperating with, or providing information (including trade secrets) in confidence to, any federal, state or local government regulator (including, but not limited to, the U.S. Securities and Exchange Commission, the U.S. Commodity Futures Trading Commission, or the U.S. Department of Justice) for the purpose of reporting or investigating a suspected violation of law, or from providing such information to Kley’s attorney or in a sealed complaint or other document filed in a lawsuit or other governmental proceeding. Pursuant to 18 USC Section 1833(b), Kley will not be held criminally or civilly liable under any federal or state trade secret law for the disclosure of a trade secret that is made: (x) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney, and solely for the purpose of reporting or investigating a suspected violation of law; or (y) in a complaint or other document filed in a lawsuit or other proceeding, if such filing is made under seal. Nothing in this Agreement prevents Kley from discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that Kley has reason to believe is unlawful.

6.    Representations. Kley represents and warrants that there has been no assignment or other transfer of any interest in any Claim which Kley may have against Releasees, or any of them, and Kley agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer.  It is the intention of the parties that this indemnity does not require payment as a condition precedent to recovery by the Releasees against Kley under this indemnity.

7.    No Action. Kley agrees that if Kley hereafter commences any suit arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then Kley agrees to pay to Releasees, and each of them, in addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim.

8.    No Admission. Kley further understands and agrees that neither the payment of any sum of money nor the execution of this Agreement shall constitute or be construed as an admission of any liability whatsoever by the Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to Kley.

9.    OWBPA. Kley agrees and acknowledges that this Agreement constitutes a knowing and voluntary waiver and release of all Claims Kley has or may have against the Company and/or any of the Releasees as set forth herein, including, but not limited to, all Claims arising under the Older Worker’s

Benefit Protection Act and the Age Discrimination in Employment Act. In accordance with the Older Worker’s Benefit Protection Act, Kley is hereby advised as follows:

(i)Kley has read the terms of this Agreement, and understands its terms and effects, including the fact that Kley agreed to release and forever discharge the Company and each of the Releasees, from any Claims released in this Agreement;

(ii)Kley understands that, by entering into this Agreement, Kley does not waive any Claims that may arise after the date of Kley’s execution of this Agreement, including without limitation any rights or claims that Kley may have to secure enforcement of the terms and conditions of this Agreement;

(iii)Kley has signed this Agreement voluntarily and knowingly in exchange for the consideration described in this Agreement, which Kley acknowledges is adequate and satisfactory to Kley and which Kley acknowledges is in addition to any other benefits to which Kley is otherwise entitled;

(iv)the Company advises Kley to consult with an attorney prior to executing this Agreement;

(v)Kley has been given at least 21 days in which to review and consider this Agreement. To the extent that Kley chooses to sign this Agreement prior to the expiration of such period, Kley acknowledges that Kley has done so voluntarily, had sufficient time to consider the Agreement, to consult with counsel and that Kley does not desire additional time and hereby waives the remainder of the 21-day period; and

(vi)Kley may revoke the Release within seven days from the date Kley signs this Agreement and this Agreement will become effective upon the expiration of that revocation period. If Kley revokes the Release during such seven-day period, this Agreement will be null and void and of no force or effect on either the Company or Kley and Kley will not be entitled to the consideration described in this Agreement, which is expressly conditioned upon the execution and non-revocation of this Agreement. Any revocation must be in writing and sent to Michelle Carpenter, the Company’s outside legal counsel, via electronic mail at michelle.carpenter@lw.com, on or before 11:59 p.m. Pacific time on the seventh day after this Agreement is executed by Kley.

10.    Governing Law. This Agreement is deemed made and entered into in the State of California, and in all respects shall be interpreted, enforced and governed under the internal laws of the State of California, to the extent not preempted by federal law.

11.    Entire Agreement. This Agreement, together with the covenants referenced in this Section 11, sets forth the entire agreement between Kley and the Company and supersedes and replaces any and all prior oral or written agreements or understandings between Kley and the Company on the subject matter hereof. Kley acknowledges and agrees that Kley previously agreed to certain restrictive covenants with respect to the Company, and Kley hereby acknowledges and agrees that such provisions shall remain in full force and effect in accordance with their terms and that Kley shall be bound by their terms and conditions.

IN WITNESS WHEREOF, Kley has executed this Agreement this 30 day of August, 2022.

/s/ Michelle Kley            

        Michelle Kley        

EXHIBIT A

SECURITY EXPENSE GUIDELINES

[***]

EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Michael Colglazier, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Virgin Galactic Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 3, 2022	/s/ Michael Colglazier
	Michael Colglazier
	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Douglas Ahrens, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Virgin Galactic Holdings, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

November 3, 2022	/s/ Douglas Ahrens
	Douglas Ahrens
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Virgin Galactic Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Colglazier, Chief Executive Officer (Principal Executive Officer), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

November 3, 2022	/s/ Michael Colglazier
	Michael Colglazier
	Chief Executive Officer
	(Principal Executive Officer)

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Virgin Galactic Holdings, Inc. (the “Company”) on Form 10-Q for the period ended September 30, 2022, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Douglas Ahrens, Chief Financial Officer (Principal Financial Officer), certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of and for the period covered by the Report.

November 3, 2022	/s/ Douglas Ahrens
	Douglas Ahrens
	Chief Financial Officer
	(Principal Financial and Accounting Officer)

This certification shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

XML

Cover Page - shares	9 Months Ended
	Sep. 30, 2022	Oct. 31, 2022
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2022
Document Transition Report	false
Entity File Number	001-38202
Entity Registrant Name	Virgin Galactic Holdings, Inc.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	85-3608069
Entity Address, Address Line One	1700 Flight Way
Entity Address, City or Town	Tustin
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92782
City Area Code	(949)
Local Phone Number	774-7640
Title of 12(b) Security	Common stock, $0.0001 par value per share
Trading Symbol	SPCE
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding (in shares)		274,559,169
Amendment Flag	false
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2022
Entity Central Index Key	0001706946
Current Fiscal Year End Date	--12-31

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets
Cash and cash equivalents	$ 394,032	$ 524,481
Restricted cash	40,328	25,549
Marketable securities, short-term	606,713	79,418
Inventories	22,851	29,668
Prepaid expenses and other current assets	22,094	19,476
Total current assets	1,086,018	678,592
Marketable securities, long-term	69,072	301,463
Property, plant, and equipment, net	48,874	47,498
Other non-current assets	55,220	41,281
Total assets	1,259,184	1,068,834
Current liabilities
Accounts payable	19,872	9,237
Accrued liabilities	43,389	28,787
Customer deposits	103,971	90,863
Other current liabilities	3,336	2,636
Total current liabilities	170,568	131,523
Non-current liabilities
Convertible senior notes, net	415,188	0
Other long-term liabilities	59,885	43,047
Total liabilities	645,641	174,570
Commitments and contingencies (Note 17)
Stockholders' equity
Preferred stock, $0.0001 par value; 10,000,000 authorized; none issued and outstanding	0	0
Common stock, $0.0001 par value; 700,000,000 shares authorized; 274,481,195 and 258,166,417 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively	27	26
Additional paid-in capital	2,096,901	2,019,750
Accumulated deficit	(1,472,975)	(1,123,643)
Accumulated other comprehensive income	(10,410)	(1,869)
Total stockholders' equity	613,543	894,264
Total liabilities and stockholders' equity	$ 1,259,184	$ 1,068,834

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized (in shares)	700,000,000	700,000,000
Common stock, shares issued (in shares)	274,481,195	258,166,417
Common stock, shares outstanding (in shares)	274,481,195	258,166,417

XML

Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Revenue	$ 767	$ 2,580	$ 1,443	$ 3,151
Operating expenses:
Customer experience	590	207	737	270
Selling, general, and administrative	46,113	48,268	127,820	128,503
Research and development	97,411	34,289	211,578	103,997
Depreciation and amortization	2,214	2,895	7,981	8,635
Total operating expenses	146,328	85,659	348,116	241,405
Operating loss	(145,561)	(83,079)	(346,673)	(238,254)
Interest income	3,524	240	6,327	785
Interest expense	(3,293)	(6)	(8,924)	(19)
Change in fair value of warrants	0	34,432	0	(34,650)
Other income, net	(203)	70	7	110
Loss before income taxes	(145,533)	(48,343)	(349,263)	(272,028)
Income tax expense	(21)	(25)	(69)	(74)
Net loss	(145,554)	(48,368)	(349,332)	(272,102)
Other comprehensive income (loss):
Foreign currency translation adjustment	(180)	3	(313)	11
Unrealized loss on marketable securities	(585)	(437)	(8,227)	(437)
Total comprehensive loss	$ (146,319)	$ (48,802)	$ (357,872)	$ (272,528)
Net loss per share:
Basic (in dollars per share)	$ (0.55)	$ (0.19)	$ (1.34)	$ (1.11)
Diluted (in dollars per share)	$ (0.55)	$ (0.32)	$ (1.34)	$ (1.11)
Weighted-average shares outstanding:
Basic (in shares)	263,907,259	254,749,195	260,255,202	244,157,923
Diluted (in shares)	263,907,259	255,147,228	260,255,202	244,157,923

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Condensed Consolidated Statements of Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income (Loss)
Beginning balance (in shares) at Dec. 31, 2020		236,123,659
Beginning balance at Dec. 31, 2020	$ 527,078	$ 23	$ 1,297,794	$ (770,744)	$ 5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(129,694)			(129,694)
Other comprehensive income (loss)	26				26
Stock-based compensation	22,111		22,111
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes (in shares)		1,150,771
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	323		323
Ending balance (in shares) at Mar. 31, 2021		237,274,430
Ending balance at Mar. 31, 2021	419,844	$ 23	1,320,228	(900,438)	31
Beginning balance (in shares) at Dec. 31, 2020		236,123,659
Beginning balance at Dec. 31, 2020	527,078	$ 23	1,297,794	(770,744)	5
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(272,102)
Ending balance (in shares) at Sep. 30, 2021		257,397,850
Ending balance at Sep. 30, 2021	969,929	$ 25	2,013,171	(1,042,846)	(421)
Beginning balance (in shares) at Mar. 31, 2021		237,274,430
Beginning balance at Mar. 31, 2021	419,844	$ 23	1,320,228	(900,438)	31
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(94,040)			(94,040)
Other comprehensive income (loss)	(20)				(20)
Stock-based compensation	14,423		14,423
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes (in shares)		275,283
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	840		840
Common stock issued related to warrants exercised (in shares)		3,387,827
Common stock issued related to warrants exercised	104,176		104,176
Ending balance (in shares) at Jun. 30, 2021		240,937,540
Ending balance at Jun. 30, 2021	445,223	$ 23	1,439,667	(994,478)	11
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(48,368)			(48,368)
Other comprehensive income (loss)	(432)				(432)
Stock-based compensation	12,170		12,170
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes (in shares)		685,487
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	1,916		1,916
Common stock issued related to warrants exercised (in shares)		2,034,390
Common stock issued related to warrants exercised	65,914		65,914
Common stock issued pursuant to at-the-market offering (in shares)		13,740,433
Issuance of common stock pursuant to an at-the-market offering	500,000	$ 2	499,998
Transaction costs related to an at-the-market offering	(6,494)		(6,494)
Ending balance (in shares) at Sep. 30, 2021		257,397,850
Ending balance at Sep. 30, 2021	$ 969,929	$ 25	2,013,171	(1,042,846)	(421)
Beginning balance (in shares) at Dec. 31, 2021	258,166,417	258,166,417
Beginning balance at Dec. 31, 2021	$ 894,264	$ 26	2,019,750	(1,123,643)	(1,869)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(93,057)			(93,057)
Other comprehensive income (loss)	(5,805)				(5,805)
Stock-based compensation	10,895		10,895
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes (in shares)		307,471
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	(1,882)		(1,882)
Purchase of capped calls	(52,318)		(52,318)
Ending balance (in shares) at Mar. 31, 2022		258,473,888
Ending balance at Mar. 31, 2022	$ 752,097	$ 26	1,976,445	(1,216,700)	(7,674)
Beginning balance (in shares) at Dec. 31, 2021	258,166,417	258,166,417
Beginning balance at Dec. 31, 2021	$ 894,264	$ 26	2,019,750	(1,123,643)	(1,869)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	$ (349,332)
Ending balance (in shares) at Sep. 30, 2022	274,481,195	274,481,195
Ending balance at Sep. 30, 2022	$ 613,543	$ 27	2,096,901	(1,472,975)	(10,410)
Beginning balance (in shares) at Mar. 31, 2022		258,473,888
Beginning balance at Mar. 31, 2022	752,097	$ 26	1,976,445	(1,216,700)	(7,674)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(110,721)			(110,721)
Other comprehensive income (loss)	(1,970)				(1,970)
Stock-based compensation	12,083		12,083
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes (in shares)		216,758
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	(914)		(914)
Ending balance (in shares) at Jun. 30, 2022		258,690,646
Ending balance at Jun. 30, 2022	650,575	$ 26	1,987,614	(1,327,421)	(9,644)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(145,554)			(145,554)
Other comprehensive income (loss)	(766)				(766)
Stock-based compensation	11,510		11,510
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes (in shares)		202,949
Issuance of common stock pursuant to stock-based compensation, net of withholding taxes	(633)		(633)
Common stock issued pursuant to at-the-market offering (in shares)		15,587,600
Issuance of common stock pursuant to an at-the-market offering	99,574	$ 1	99,573
Transaction costs related to an at-the-market offering	$ (1,163)		(1,163)
Ending balance (in shares) at Sep. 30, 2022	274,481,195	274,481,195
Ending balance at Sep. 30, 2022	$ 613,543	$ 27	$ 2,096,901	$ (1,472,975)	$ (10,410)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities
Net loss	$ (349,332)	$ (272,102)
Stock-based compensation	34,488	48,704
Depreciation, amortization and impairment	12,174	8,635
Amortization of debt issuance costs	1,466	0
Change in fair value of warrants	0	34,650
Non-cash interest and other operating activities, net	6,063	(42)
Change in assets and liabilities
Inventories	6,817	1,178
Other current and non-current assets	2,253	6,342
Accounts payable and accrued liabilities	23,828	1,824
Customer deposits	13,108	2,148
Other current and non-current liabilities	136	3,026
Net cash used in operating activities	(248,999)	(165,637)
Cash flows from investing activity
Capital expenditures	(12,306)	(2,452)
Purchases of marketable securities	(604,945)	(286,132)
Proceeds from maturities and calls of marketable securities	294,612	0
Cash used in investing activity	(322,639)	(288,584)
Cash flows from financing activities
Payments of lease obligations	(132)	(105)
Proceeds from convertible senior notes	425,000	0
Debt issuance costs	(11,278)	0
Capped call premium	(52,318)	0
Repayment of commercial loan	(310)	(310)
Proceeds from issuance of common stock	99,573	500,000
Proceeds from issuance of common stock pursuant to stock options exercised	49	18,856
Transaction costs related to issuance of common stock	(1,137)	(6,753)
Withholding taxes paid on behalf of employees on net settled stock-based awards	(3,479)	(15,779)
Net cash provided by financing activities	455,968	495,909
Net increase (decrease) in cash and cash equivalents	(115,670)	41,688
Cash, cash equivalents and restricted cash at beginning of year	550,030	678,955
Cash, cash equivalents and restricted cash ending balances	434,360	720,643
Cash and cash equivalents	394,032	702,565
Restricted cash	40,328	18,078
Cash, cash equivalents and restricted cash	$ 434,360	$ 720,643

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Organization and its wholly owned subsidiaries	9 Months Ended
	Sep. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and its wholly owned subsidiaries	Organization and its wholly owned subsidiariesVirgin Galactic Holdings, Inc. and its wholly owned subsidiaries ("we," "us," "our," the "Company" and similar terms) are focused on the development, manufacture and operation of spaceships and related technologies for the purpose of conducting commercial human spaceflight and flying commercial research and development payloads into space. The development and manufacturing activities are located in Tustin, California and Mojave, California, with plans to operate the commercial spaceflights out of Spaceport America located in New Mexico.

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting PoliciesBasis of Presentation

These condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation.

Certain reclassifications of the components of operating loss for the three and nine month period ended September 30, 2021 have been made to the comparable prior period in the Condensed Consolidated Statements of Operations and Comprehensive Loss to conform to the same current period presentations. Specifically, cost of revenue has been reclassified to customer experience, and gross margin is no longer presented. Customer experience expenses related to spaceflight operations include the consumption of a rocket motor and fuel and other consumables, as well as payroll and benefits for our pilots and ground crew. Customer experience expenses related to the payload cargo services, as well as engineering services, consist of materials and human capital, such as payroll and benefits, to perform these services. Additionally, customer experience expenses include costs associated with maintaining and growing our Future Astronaut community through offerings provided to community members, as well as hospitality, medical, safety, security, training, and facility costs that are for the benefit of our future astronauts. Additionally, depreciation and amortization expense are presented separately instead of included in selling, general, and administrative or research and development expenses. These reclassifications had no impact on total loss as previously reported.

Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP required us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe 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. Significant estimates inherent in the preparation of the consolidated financial statements include, but are not limited to, accounting for revenue, contract assets, contract liabilities, useful lives of property, plant and equipment, fair value of investments, accrued liabilities, income taxes including deferred tax assets and liabilities and impairment valuation, warrants, stock-based awards and contingencies.Convertible Senior NotesOn January 1, 2022, the Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which removes from GAAP the liability and equity separation model for convertible instruments with either cash or beneficial conversion features. As a result, convertible debt instruments would only be separated into multiple components if they were issued at a substantial premium or if embedded derivatives requiring bifurcation were identified. The convertible senior notes (the "2027 Notes") were not issued at a substantial premium, and the Company analyzed the provisions of the notes and did not identify any material embedded features which would require bifurcation from the host debt. As such, the notes are accounted for entirely as a liability net of unamortized issuance costs. The carrying amount of the liability is classified as long-term as the instrument does not mature within one year of the balance sheet date and the holder is not permitted to demand repayment of the principal within one year of the balance sheet date. However, if conditions to convertibility are met as described further in Note 11, the Company may be required to reclassify the carrying amount of the liability to current. The embedded conversion features are not remeasured as long as they do not meet the separation requirement of a derivative. Issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, however there was no impact during the current quarter as the convertible instruments were anti-dilutive. Capped Call TransactionsIn connection with the pricing of our 2027 Notes, the Company entered into capped call transactions with respect to its common stock (the "2027 Capped Calls"). The 2027 Capped Calls are purchased call options that give the Company the option to purchase shares of our common stock, subject to anti-dilution adjustments substantially identical to those in the 2027 Notes. The Company's capped call transactions are accounted for as separate transactions from the 2027 Notes and are classified as equity instruments as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheets. The instruments are initially recorded at fair value and not subsequently remeasured so long as they continue to qualify for equity classification based on the Company's intent and ability for the 2027 Capped Calls to be settled in shares of our common stock. The capped call transactions have the effect of reducing the number of shares outstanding if exercised. Therefore, the capped call transactions are anti-dilutive and not included in the calculation of diluted shares outstanding for the purposes of diluted net loss per share. See Note 11 for additional information on the 2027 Capped Calls.Other Summary of Significant Accounting PoliciesThere have been no other significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "Annual Report on Form 10-K").The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K. Interim results are not necessarily indicative of the results for a full year.

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Recent Accounting Pronouncements	9 Months Ended
	Sep. 30, 2022
Accounting Changes and Error Corrections [Abstract]
Recent Accounting Pronouncements	Recent Accounting PronouncementsChanges to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”). See Note 2 for additional information on recently adopted accounting pronouncements.

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Related Party Transactions	9 Months Ended
	Sep. 30, 2022
Related Party Transactions [Abstract]
Related Party Transactions	Related Party TransactionsThe Company licenses its brand name from certain entities affiliated with Virgin Enterprises Limited (“VEL”), a company incorporated in England. VEL is an affiliate of the Company. Under the trademark license, the Company has the exclusive right to operate under the brand name “Virgin Galactic” worldwide. Royalty payables, excluding sponsorship royalties, for the use of license are the greater of 1% of revenue or $40,000 per quarter, prior to the commercial launch date. Sponsorship royalties payable are 25% of sponsorship revenue. We paid license and royalty fees of $40,000 and $390,000 for the three months ended September 30, 2022 and 2021, respectively. We paid license and royalty fees of $120,000 and $470,000 for the nine months ended September 30, 2022 and 2021, respectively. The Company has a Transition Services Agreement ("TSA") with Virgin Orbit, LLC ("VO") based on allocated operating expense from Virgin Orbit Holdings, Inc. and its subsidiaries (“VOH”), a majority owned company of Virgin Investments Limited ("VIL"), for operations-related functions based on an allocation methodology that considers our headcount, unless directly attributable to the business. Operating expense allocations include use of machinery and equipment, pilot services, and other general administrative expenses. We were allocated $46,000 and $33,000 operating expenses, net, from VOH for the three months ended September 30, 2022 and 2021, respectively. We were allocated $80,000 and $104,000 of operating expenses, net from VOH for the nine months ended September 30, 2022 and 2021, respectively. The Company has a receivable from VOH of $32,000 and $43,000 as of September 30, 2022 and December 31, 2021, respectively.

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Cash, Restricted Cash, Cash Equivalents and Marketable Securities

9 Months Ended

Sep. 30, 2022

Cash and Cash Equivalents [Abstract]

Cash, Restricted Cash, Cash Equivalents and Marketable Securities

Cash, Restricted Cash, Cash Equivalents and Marketable Securities

The amortized cost, unrealized loss and estimated fair value of the Company's cash, cash equivalents, restricted cash, and marketable securities as of September 30, 2022 and December 31, 2021:

	As of September 30, 2022
	Amortized Cost		Gross Unrealized Losses		Fair Value
	(In thousands)
Cash, restricted cash and cash equivalents
Cash and restricted cash	$	8,358	$	—	$	8,358
Money market	384,575		—		384,575
Certificate of deposits	41,427		—		41,427
Marketable securities
US treasuries	149,102		(183)		148,919
Corporate debt securities	536,913		(10,047)		526,866
Total cash, cash equivalents, restricted cash and marketable securities	$	1,120,375	$	(10,230)	$	1,110,145

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Losses		Fair Value
	(In thousands)
Cash, restricted cash and cash equivalents
Cash and restricted cash	$	55,592	$	—	$	55,592
Money market	402,889		—		402,889
Certificate of deposits	91,549		—		91,549
Marketable securities
Corporate debt securities	382,884		(2,003)		380,881
Total cash, cash equivalents and marketable securities	$	932,914	$	(2,003)	$	930,911

The Company included $39.8 million and $1.0 million of current restricted cash held in a money market account as of September 30, 2022 and December 31, 2021, respectively.

The Company included $3.2 million and $2.3 million of interest receivable in prepaid expenses and other current assets as of September 30, 2022 and December 31, 2021, respectively.

The Company recognizes amortization and accretion of purchase premiums and discounts on our marketable securities within interest income, net. The Company recognized $1.5 million and $0.3 million in amortization expense for our marketable securities within interest income, net for the three months ended September 30, 2022 and September 30, 2021, respectively. The Company recognized $5.5 million and $0.3 million in amortization expense for marketable securities within interest income, net for the nine months ended September 30, 2022 and September 30, 2021, respectively.

We record gross realized gains and losses as a component of other income, net in the consolidated statements of operations. For the three months ended September 30, 2022, the Company recognized $0.2 million loss in other income, net, and for the three months ended September 2021, the Company did not recognize any material gross realized gains and losses. For the nine months ended September 30, 2022, the Company recognized $0.3 million loss in other income, net. For the nine months ended September 30, 2021, the Company did not recognize any material gross realized gains and losses.

The following table presents the contractual maturities of the Company's marketable securities as of September 30, 2022:

	As of September 30, 2022
	Amortized Cost		Estimated Fair Value
	(In thousands)
Matures within one year	$	614,641	$	606,713
Matures between one to two years	71,374		69,072
Total	$	686,015	$	675,785

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Inventory

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Inventory

InventoryAs of September 30, 2022 and December 31, 2021, inventory is comprised of the following:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Raw materials	$	13,267	$	21,127
Spare parts	9,584		8,541
Total inventory	$	22,851	$	29,668

For the three months ended September 30, 2022 and 2021,we wrote off $2.2 million and $0.2 million of inventory due to excess and obsolescence, respectively. For the nine months ended September 30, 2022 and September 30, 2021, we wrote off $3.3 million and $0.4 million of inventory due to excess and obsolescence, respectively

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Property, Plant, and Equipment, net

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment, net

Property, Plant, and Equipment, net

As of September 30, 2022 and December 31, 2021, property, plant, and equipment, net consisted of the following:

		As of
		September 30, 2022		December 31, 2021
		(Unaudited)
	(In thousands)
Land		$	1,302	$	—
Buildings		9,118		9,117
Leasehold improvements		30,457		29,155
Aircraft		195		195
Machinery and equipment		35,670		37,002
IT software and equipment		28,911		23,523
Construction in progress		3,152		2,901
		108,805		101,893
Less accumulated depreciation and amortization		(59,931)		(54,395)
Property, plant, and equipment, net		$	48,874	$	47,498

The following table sets forth the summary of depreciation and amortization expense for property, plant and equipment, net:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(Unaudited and in thousands)
Customer experience	$	—	$	—	$	—	$	—
Selling, general, and administrative	1,819		1,592		5,085		4,774
Research and development	395		1,304		2,896		3,861
	$	2,214	$	2,895	$	7,981	$	8,635

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Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

Leases

On July 14, 2022, the Company entered into an agreement to lease 151,096 square feet of manufacturing and operations facilities in Mesa, Arizona consisting of two hangars ("Hangar C" and "Hangar B").

The lease has an initial term of approximately ten years and five months after the commencement date applicable to Hangar C or Hangar B, whichever is later, and is expected to commence ten months following the date of the agreement was entered into with respect to Hangar C and fifteen months following the date of the agreement was entered into for Hangar B. The average annual base rent under the lease is approximately $3.0 million. The Company has four options to extend the term of the lease, each for an additional five years.

The Company's leases are more fully described in Note 8 of the "Notes to Consolidated Financial Statements" to its Annual Report on Form 10-K.

The components of lease expense related to leases for the periods presented below are as follows:

	Three Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	2,553	$	1,244
Short-term lease expense	—		6
Finance Lease Cost:
Amortization of right-of-use assets	42		34
Interest on lease liabilities	11		6
Total finance lease cost	53		40
Variable lease cost	1,760		1,475
Total lease cost	$	4,366	$	2,765

	Nine Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	6,622	$	3,758
Short-term lease expense	—		26
Finance Lease Cost:
Amortization of right-of-use assets	100		103
Interest on lease liabilities	20		20
Total finance lease cost	120		123
Variable lease cost	4,654		4,185
Total lease cost	$	11,396	$	8,092

The components of supplemental cash flow information related to leases for the period are as follows:

	Nine Months Ended September 30,
	2022			2021
	(In thousands, except term and rate data)
Cash flow information:
Operating cash flows for operating leases	$	7,980		$	4,065
Operating cash flows for finance leases	$	20		$	20
Financing cash flows for finance leases	$	132		$	105
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	16,338		$	501
Finance Leases	$	230		$	19
Other Information:
Weighted average remaining lease term:
Operating leases (in years)	10.80			12.30
Finance leases (in years)	2.75			2.29
Weighted average discount rates:
Operating leases	12.14		%	11.66		%
Finance leases	11.26		%	8.22		%

The supplemental balance sheet information related to leases for the period is as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Operating leases
Long-term right-of-use assets	$	49,324	$	35,486
Short-term operating lease liabilities	$	3,190	$	2,204
Long-term operating lease liabilities	56,856		39,965
Total operating lease liabilities	$	60,046	$	42,169

Commitments

The Company has certain non-cancelable operating leases primarily for its premises. These leases generally contain renewal options for periods ranging from 3 to 20 years and require the Company to pay all executory costs, such as maintenance and insurance. Certain lease arrangements have rent free periods or escalating payment provisions, and we recognize rent expense of such arrangements on a straight line basis.

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2022 are as follows:

	Operating Leases		Finance Leases
	(In thousands)
2022 (for the remaining period)	$	2,106	$	47
2023	8,676		170
2024	10,034		94
2025	10,190		64
2026	10,347		35
Thereafter	71,707		2
Total lease payments	$	113,060	$	412
Less:
Imputed interest/present value discount	$	(53,014)	$	(62)
Present value of lease liabilities	$	60,046	$	350

Leases

Leases

On July 14, 2022, the Company entered into an agreement to lease 151,096 square feet of manufacturing and operations facilities in Mesa, Arizona consisting of two hangars ("Hangar C" and "Hangar B").

The lease has an initial term of approximately ten years and five months after the commencement date applicable to Hangar C or Hangar B, whichever is later, and is expected to commence ten months following the date of the agreement was entered into with respect to Hangar C and fifteen months following the date of the agreement was entered into for Hangar B. The average annual base rent under the lease is approximately $3.0 million. The Company has four options to extend the term of the lease, each for an additional five years.

The Company's leases are more fully described in Note 8 of the "Notes to Consolidated Financial Statements" to its Annual Report on Form 10-K.

The components of lease expense related to leases for the periods presented below are as follows:

	Three Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	2,553	$	1,244
Short-term lease expense	—		6
Finance Lease Cost:
Amortization of right-of-use assets	42		34
Interest on lease liabilities	11		6
Total finance lease cost	53		40
Variable lease cost	1,760		1,475
Total lease cost	$	4,366	$	2,765

	Nine Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	6,622	$	3,758
Short-term lease expense	—		26
Finance Lease Cost:
Amortization of right-of-use assets	100		103
Interest on lease liabilities	20		20
Total finance lease cost	120		123
Variable lease cost	4,654		4,185
Total lease cost	$	11,396	$	8,092

The components of supplemental cash flow information related to leases for the period are as follows:

	Nine Months Ended September 30,
	2022			2021
	(In thousands, except term and rate data)
Cash flow information:
Operating cash flows for operating leases	$	7,980		$	4,065
Operating cash flows for finance leases	$	20		$	20
Financing cash flows for finance leases	$	132		$	105
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	16,338		$	501
Finance Leases	$	230		$	19
Other Information:
Weighted average remaining lease term:
Operating leases (in years)	10.80			12.30
Finance leases (in years)	2.75			2.29
Weighted average discount rates:
Operating leases	12.14		%	11.66		%
Finance leases	11.26		%	8.22		%

The supplemental balance sheet information related to leases for the period is as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Operating leases
Long-term right-of-use assets	$	49,324	$	35,486
Short-term operating lease liabilities	$	3,190	$	2,204
Long-term operating lease liabilities	56,856		39,965
Total operating lease liabilities	$	60,046	$	42,169

Commitments

The Company has certain non-cancelable operating leases primarily for its premises. These leases generally contain renewal options for periods ranging from 3 to 20 years and require the Company to pay all executory costs, such as maintenance and insurance. Certain lease arrangements have rent free periods or escalating payment provisions, and we recognize rent expense of such arrangements on a straight line basis.

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2022 are as follows:

	Operating Leases		Finance Leases
	(In thousands)
2022 (for the remaining period)	$	2,106	$	47
2023	8,676		170
2024	10,034		94
2025	10,190		64
2026	10,347		35
Thereafter	71,707		2
Total lease payments	$	113,060	$	412
Less:
Imputed interest/present value discount	$	(53,014)	$	(62)
Present value of lease liabilities	$	60,046	$	350

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Accrued Expenses

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Accrued Expenses

Accrued Expenses

A summary of the components of accrued liabilities are as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Accrued payroll	$	8,331	$	4,214
Accrued vacation	6,383		5,372
Accrued bonus	11,578		12,218
Accrued interest expense	1,771		—
Accrued contract labor	7,869		1,147
Other accrued expenses	7,457		5,836
Total accrued expenses	$	43,389	$	28,787

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Commercial Loan

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Commercial Loan

Commercial Loan

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Commercial loan	$	—	$	310
Less: Current portion	—		(310)
Non-current portion	$	—	$	—

On June 18, 2020, we financed the purchase of software licenses through a loan totaling approximately $0.9 million. The loan amortized in three equal annual installments of approximately $0.3 million with the final payment due October 1, 2022 with 0% interest rate. The loan is secured by a standby letter of credit issued from our financial institution and restricted cash has been recorded for the corresponding outstanding balance. The outstanding balance is recorded in other current-liabilities on the Condensed Consolidated Balance Sheets.

The imputed interest of this loan was immaterial.

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Convertible Senior Notes

9 Months Ended

Sep. 30, 2022

Convertible Debt [Abstract]

Convertible Senior Notes

Convertible Senior Notes

2027 Convertible Senior Notes

On January 19, 2022, the Company completed an offering of $425 million aggregate principal amount of the 2027 Notes. The 2027 Notes are senior, unsecured obligations of the Company, and bear interest at a fixed rate of 2.50% per year. Interest is payable in cash semi-annually in arrears on February 1 and August 1 of each year,

beginning on August 1, 2022. The 2027 Notes mature on February 1, 2027 unless earlier repurchased, redeemed or converted.

The terms of the 2027 Notes are governed by an Indenture by and between the Company and U.S. Bank National Association, as Trustee (the "2027 Indenture"). Upon conversion by the noteholders, the 2027 Notes may be settled in cash, shares of the Company's common stock or a combination of cash and shares of common stock, par value $0.0001 per share (the “common stock”), at our election, based on the conversion rate.

The 2027 Notes are convertible at an initial conversion rate of 78.1968 shares of common stock per $1,000 principal amount of the 2027 Notes, which is equal to an initial conversion price of approximately $12.79 per share of common stock, subject to adjustment upon the occurrence of certain events. Noteholders will have the right to convert their notes during any calendar quarter (and only during such calendar quarter) commencing after the calendar quarter ending on June 30, 2022, under the following circumstances:

•during any calendar quarter after June 30, 2022 (and only during such calendar quarter) if the last reported sale price of the Company's common stock for each of at least 20 trading days in a period of 30 consecutive trading days ending on and including the last trading day of the preceding calendar quarter is more than 130% of the then applicable conversion price for the Notes per share of common stock;

•during the five consecutive business days immediately after any ten consecutive trading day period in which the trading price per $1,000 principal amount of 2027 Notes for each day of that period was less than 98% of the product of the last reported sale price of our common stock and the then applicable conversion rate;

•the Company calls any or all of the 2027 Notes for redemption, holders may convert all or any portion of their notes at any time prior to the close of business on the scheduled trading day prior to the redemption date, even if the 2027 Notes are not otherwise convertible at such time; or

•specified distributions to holders of our common stock are made or specified corporate events occur, as described in the 2027 Indenture.

On and after November 1, 2026, noteholders will have the right to convert their notes at any time at their election until the close of business on the second scheduled trading day immediately before the maturity date. The Company will have the right to elect to settle conversions in cash, in shares of its common stock or in a combination of cash and shares of its common stock. During the three and nine months ended September 30, 2022, the conditions allowing holders of the 2027 Notes to convert were not met, and as a result, the 2027 Notes were classified as noncurrent liabilities as of September 30, 2022.

The 2027 Notes will be redeemable, in whole or in part (subject to certain limitations), for cash at the Company's option at any time, and from time to time, on or after February 6, 2025 and on or before the 20th scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of the Company's common stock exceeds 130% of the conversion price for a specified period of time and certain liquidity conditions have been satisfied. The redemption price will be equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. During the three and nine months ended September 30, 2022, the Company did not redeem any of the 2027 Notes.

Holders of the 2027 Notes who convert their 2027 Notes in connection with certain corporate events that constitute a make-whole fundamental change (as defined in the 2027 Indenture) or in connection with the Company's issuance of a redemption notice are, under certain circumstances, entitled to an increase in the conversion rate. Additionally, in the event of a corporate event that constitutes a fundamental change (as defined in the 2027 Indenture), holders of the 2027 Notes may require the Company to repurchase all or a portion of their 2027 Notes at a price equal to the principal amount of the 2027 Notes being repurchased, plus any accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.

The 2027 Notes, net consisted of the following (in thousands):

	As of
	September 30, 2022
	(Unaudited)
Principal	$	425,000
Less: unamortized debt issuance costs	(9,812)
Net carrying amount	$	415,188

As of September 30, 2022, we included $1.8 million of accrued interest expense on our 2027 Notes within accrued expenses. For the three months ended September 30, 2022, we recognized $3.2 million of total interest expense on our 2027 Notes, including $0.5 million of amortized debt issuance costs. For the nine months ended September 30, 2022, we recognized $8.9 million of total interest expense on our 2027 Notes, including $1.5 million of amortized debt issuance cost.

Capped Call Transactions

In connection with the pricing of the 2027 Notes, the Company entered into capped call transactions with respect to its common stock. The 2027 Capped Calls are purchased call options that give the Company the option to purchase, subject to anti-dilution adjustments substantially identical to those in the 2027 Notes, approximately 33 million shares of its common stock for approximately $12.79 per share (subject to adjustment), corresponding to the approximate initial conversion price of the 2027 Notes, exercisable upon conversion of the 2027 Notes. The 2027 Capped Calls have initial cap prices of $20.06 per share (subject to adjustment), which represents a premium of 100% over the closing price of the Company's common stock on January 13, 2022, and will expire in 2027, if not exercised earlier. The 2027 Capped Calls are intended to reduce potential dilution to the Company's common stock upon any conversion of the 2027 Notes and/or offset the potential cash payments that the Company could be required to make in excess of the principal amount upon any conversion of the 2027 Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the 2027 Capped Call transactions. The 2027 Capped Calls are separate transactions, each between the Company and the applicable option counterparty, and are not part of the terms of the 2027 Notes and will not affect any holder's rights under the 2027 Notes or the 2027 Indenture. Holders of the 2027 Notes will not have any rights with respect to the 2027 Capped Call transactions.

The Company paid an aggregate amount of $52.3 million for the 2027 Capped Calls. As these transactions meet certain accounting criteria, the amount paid for the 2027 Capped Calls was recorded as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheets. The fair value of the 2027 Capped Calls is not remeasured each reporting period so long as they continue to qualify for equity classification, which they did for the current period.

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Income Taxes	9 Months Ended
	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Income Taxes	Income TaxesIncome tax expense was $21,000 and $25,000 for the three months ended September 30, 2022 and 2021, respectively. Income tax expense was $69,000 and $74,000 for the nine months ended September 30, 2022 and 2021, respectively. The effective income tax rate was nil for three and nine months ended September 30, 2022 and 2021. Our effective tax rate differs from the U.S. statutory rate primarily due to a substantially full valuation allowance against our net deferred tax assets where it is more likely than not that some or all of the deferred tax assets will not be realized.

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Stockholders' Equity

9 Months Ended

Sep. 30, 2022

Equity [Abstract]

Stockholders' Equity

Stockholders' Equity

There have been no significant changes from the Stockholders' Equity disclosed in Note 12 of the “Stockholders Equity” included in our Annual Report on Form 10-K.

Stockholders' Agreement

In connection with the closing of the Virgin Galactic business combination in October 2019 (the "Business Combination"), the Company entered into a stockholders’ agreement with certain of the Company’s investors. Pursuant to the terms of the Stockholders’ Agreement, as long as VIL is entitled to designate two directors to the Company’s Board of Directors, the Company must obtain VIL’s prior written consent to engage in certain corporate transactions and management functions such as business combinations, disposals, acquisitions, incurring indebtedness, and engagement of professional advisors, among others.

Warrants and Warrant Redemption

Public and private placement warrants were initially issued as part of Social Capital Hedosophia Holdings Corp.'s ("SCH") initial public offering in 2017 and assumed upon the consumption of the Business Combination. As of September 30, 2022, and December 31, 2021, there were no public or private placement warrants outstanding.

The Company remeasured the fair value of the Warrants at each reporting date with changes recorded in earnings. In connection with the Company's remeasurement of the Warrants to fair value, the Company recorded income of approximately $34.4 million for the three months ended September 30, 2021 and expense of $34.7 million for the nine months ended September 30, 2021.

At The Market Offerings

On July 12, 2021, the Company entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC (each, an “Agent” and collectively, the “Agents”) providing for the offer and sale of up to $500.0 million of shares of the Company’s common stock, par value $0.0001 per share, through an "at the market offering" program ("ATM"), from time to time by the Company through the Agents, acting as the Company’s sales agents, or directly to one or more of the Agents, acting as principal.

We completed available offerings under the 2021 ATM on July 16, 2021, generating $500.0 million in gross proceeds through the sale of 13,740,433 shares of the Company's common stock, before deducting $6.2 million in underwriting discounts, commissions and other expenses payable by the Company.

On August 4, 2022, the Company entered into a distribution agency agreement with Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and Goldman Sachs & Co. LLC providing for the offer and sale of up to $300.0 million of shares of the Company’s common stock, par value $0.0001 per share, through an ATM (the "2022 ATM program").

As of September 30, 2022, we sold a total of 15,587,600 shares of the Company's common stock under the 2022 ATM program, generating $99.6 million in gross proceeds, before deducting $1.2 million in underwriting discounts, commissions and other expenses payable by the Company.

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Net Loss Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Share

Net Loss Per Share

The following table presents net loss per share and related information:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands, except for share and per share data)
Numerator:
Net loss attributable to common shareholders	$	(145,554)	$	(48,368)	$	(349,332)	$	(272,102)
Less: revaluation of warrant liability	—		(34,432)		—		—
Adjusted net loss	(145,554)		(82,800)		(349,332)		(272,102)
Denominator:
Weighted average shares of common stock outstanding	263,907,259		254,749,195		260,255,202		244,157,923
Add: dilutive effect of common stock issuable from assumed exercise of warrants	—		398,033		—		—
Weighted average shares outstanding, diluted	263,907,259		255,147,228		260,255,202		244,157,923
Net loss per share:
Basic	$	(0.55)	$	(0.19)	$	(1.34)	$	(1.11)
Diluted	$	(0.55)	$	(0.32)	$	(1.34)	$	(1.11)

Basic and diluted net loss per share was computed using the weighted-average number of common shares of common stock outstanding during the three and nine month periods ended September 30, 2022 and September 30, 2021. Basic net loss per share is the same as diluted net loss per share for the three and nine month periods ended September 30, 2022 and for the nine months ended September 30, 2021 as the inclusion of all potential common shares outstanding would have been anti-dilutive.

For the three months ended September 30, 2021, the Company included the potential effect of the warrants to purchase shares of common stock as the effect would be dilutive. Diluted net loss per share for the three months ended September 30, 2021 was computed by dividing the net loss, adjusted for the revaluation of warrant liability for private warrants, by the weighted average number of common shares outstanding for the period, adjusted for the dilutive effect of shares of common stock equivalents resulting from the assumed exercise of the warrants. The treasury stock method was used to calculate the potential dilutive effect of these common stock equivalents for the three months ended September 30, 2021.

Potentially dilutive securities that were not included in the diluted per share calculation for these periods, as they would have an anti-dilutive impact on net loss per share, are as follows (in thousands):

	As of September 30,
	2022	2021
Issued and outstanding stock options	3,794	4,428
Issued and outstanding performance stock options	406	—
Unvested restricted stock units issued and outstanding	4,502	3,442
Unvested performance stock units issued and outstanding	255	90
Shares related to the 2027 Notes (1)	33,234	—
Warrants to purchase shares of common stock	—	8,000
	42,191	15,960

(1) The Company uses the if-converted method for calculating any potential dilutive effect of the conversion options embedded in the 2027 Notes on diluted net loss per share, if applicable.

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company's 2019 Incentive Award Plan ("2019 Plan") is more fully described in Note 14 of the "Notes to Consolidated Financial Statements" on Form 10-K. Under the 2019 Plan, the Company has the ability to grant incentive stock options, non-qualified stock options and restricted stock units ("RSUs") to employees, directors and other service providers. Performance stock units ("PSUs") are RSUs that vest based on achievement of specified performance criteria. Performance stock options ("PSOs") are stock options that vest based on achievement of specified performance criteria.

Stock Options

Twenty five percent of such stock options cliff vest at the grant date first anniversary, with the remaining options vesting ratably over the following three years, subject to continued employment on each vesting date. Vested options will be exercisable at any time until ten years from the grant date, subject to earlier expiration under certain terminations of service and other conditions. The stock options granted have an exercise price equal to the closing stock price of our common stock on the grant date.

In March 2022, we issued stock options as incentive compensation for certain key employees. The fair values of these stock options were estimated using a Black-Scholes model with the following assumptions:

	2022
Expected life (in years)(1)	6.11
Expected volatility(2)	69.0	%
Risk free interest rate(3)	2.19	%
Dividend yield(4)	—	%

(1) The expected life is the period of time that participants are expected to hold their options before exercised using the "simplified method" as described in Staff Accounting Bulletin No. 107.

(2) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(3) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(4) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

The following table sets forth the summary of options activity for the nine month ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)	Weighted Average Grant Date Fair Value ($)
Options outstanding at December 31, 2021	4,253,767	$	14.09	7.60	6,187	—
Granted	303,030	7.99				4.95
Exercised	(4,182)	11.79
Forfeited options	(758,250)	18.96
Options outstanding at September 30, 2022	3,794,365	$	13.91	6.74	—	—
Options exercisable at September 30, 2022	2,346,118	$	13.96	6.14	—	—

(1) Aggregate intrinsic value is calculated based on the difference between our closing stock price at period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the period end date.

Performance Stock Options

Compensation expense on the PSOs will be recognized over the period between the grant date and the estimated vest date. The number of PSOs that will vest depends on the attainment of certain stock price goals. Vested options will be exercisable at any time until ten years from the grant date, subject to earlier expiration under certain terminations of service and other conditions. The stock options granted have an exercise price equal to the closing stock price of our common stock on the grant date.

In March 2022, we issued PSOs as incentive compensation for certain key employees. The fair values of these stock options were estimated using a Monte-Carlo simulation with the following assumptions:

	2022
Expected exercise behavior(1)	75.0	%
Expected Volatility(2)	58.0	%
Risk free interest rate(3)	2.19	%
Dividend yield(4)	—	%

(1) PSOs are expected to be exercised after 75% of the period between the vest date and the end of the contractual term has lapsed.

(2) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(3) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(4) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

The following table sets forth the summary of PSO activity for the nine month ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)	Weighted Average Grant Date Fair Value ($)
PSOs outstanding at December 31, 2021	—	$	—	0.00	—
Granted	405,680	8.99				4.93
Exercised	—	—
Forfeited options	—	—
PSOs outstanding at September 30, 2022	405,680	$	8.99	9.47	—
PSOs exercisable at s September 30, 2022	—	$	—	0.00	—

(1) Aggregate intrinsic value is calculated based on the difference between our closing stock price at period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the period end date.

Restricted Stock Units

The RSUs vest over four years with 25% cliff vest at the first year anniversary of the grant date, with the remaining vesting ratably over the next three years.

The following table sets forth the summary of RSUs activity for the nine months ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Shares	Weighted Average Fair Value
RSUs outstanding at December 31, 2021	2,396,732	$	27.89
Granted	3,900,745	8.42
Vested	(1,144,802)	20.20
Forfeited	(650,533)	16.54
RSUs outstanding at September 30, 2022	4,502,142	$	13.65

Performance Stock Units

Between 25% and 200% of the PSUs are eligible to vest based on the achievement of certain performance-based goals or market-based goals by specified target dates, subject to continued service through the applicable vesting date. PSUs with performance-based goals are amortized over the requisite service period in which it is probable that the performance goal is achieved. PSUs with market-based goals will vest based on the Company's common stock performance following the end of the three year performance measurement period based on the highest closing price over twenty consecutive trading days during the performance measurement period. PSUs with market-based goals cannot vest before the end of the performance measurement period, thus the requisite service period is three years.

In March 2022, we issued PSUs as incentive compensation for certain key employees. The fair values of these stock units were estimated using a Monte-Carlo simulation with the following assumptions:

	2022
Expected volatility(1)	95.0	%
Risk free interest rate(2)	2.13	%
Dividend yield(3)	—	%

(1) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(2) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(3) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

The following table sets forth the summary of PSUs activity for the nine months ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Shares	Weighted Average Fair Value
PSUs outstanding at December 31, 2021	89,839	$	26.47
Granted	277,552	14.62
Forfeited	(112,518)	26.17
PSUs outstanding at September 30, 2022	254,873	$	14.67

Stock-based compensation expense was recorded in the following expense categories in the Condensed Consolidated Statements of Operations and Comprehensive Loss:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Stock option and PSO expense
Selling, general and administrative	$	2,113	$	1,735	$	6,022	$	12,590
Research and development	596		776		2,020		2,445
Total stock option and PSO expense	2,710		2,511		8,042		15,035
RSU and PSU expense
Selling, general and administrative	6,045		6,805		18,046		24,414
Research and development	2,756		2,853		8,400		9,255
Total RSU and PSU expense	8,800		9,658		26,446		33,669
Total stock-based compensation expense	$	11,510	$	12,169	$	34,488	$	48,704

As of September 30, 2022, the unrecognized stock-based compensation related to stock options and PSOs was $12.5 million and $0.7 million, respectively. These amounts are expected to be recognized over weighted-average periods of 2.0 years and 0.7 years, respectively. As of September 30, 2022, the unrecognized stock-based compensation related to RSUs and PSUs was $76.7 million and $3.1 million, respectively. These amounts are expected to be recognized over weighted-average periods of 2.6 years and 2.5 years, respectively.

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Fair Value Measurements

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

Fair Value Measurements

We utilize valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. We estimate fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which is categorized in one of the following levels:

•Level 1 inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the

reporting entity at the measurement date;

•Level 2 inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability; and

•Level 3 inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.

The carrying amounts included in the Condensed Consolidated Balance Sheets under current assets and current liabilities approximate fair value because of the short maturity of these instruments.

The following tables summarize the fair value of assets that are recorded in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 at fair value on a recurring basis:

Fair Value Measurements as of September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market	$	386,578	$	—	$	—	$	386,578
Certificate of deposit	41,777		—		—		41,777
US treasuries	148,919		—		—		148,919
Corporate debt securities	—		526,866		—		526,866
Total assets at fair value	$	577,274	$	526,866	$	—	$	1,104,140
Liabilities:
2027 Notes	$	—	$	—	$	238,451	$	238,451
Total liabilities at fair value	$	—	$	—	$	238,451	$	238,451

The estimated fair value of the 2027 Notes were determined based on the quoted bid prices of the 2027 Notes in an over-the-counter market on the last trading day of the reporting period.

Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money Market	$	402,889	$	—	$	—	$	402,889
Certificate of Deposit	91,549		—		—		91,549
Corporate debt securities	—		380,881		—		380,881
Total assets at fair value	$	494,438	$	380,881	$	—	$	875,319

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Legal Proceedings

From time to time, the Company is a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business. The Company applies accounting for contingencies to determine when and how much to accrue for and disclose related to legal and other contingencies. Accordingly, the Company discloses contingencies deemed to be reasonably possible and accrues loss contingencies when, in consultation with legal advisors, it is concluded that a loss is probable and reasonably estimable. Although the ultimate aggregate amount of monetary liability or financial impact with respect to these matters is subject to many uncertainties and is therefore not predictable with assurance, management believes that any monetary liability or financial impact to the Company from these matters, individually and in the aggregate, beyond that provided at September 30, 2022, would not be material to the Company’s financial position, results of operations or cash flows. However, there can be no assurance with respect to such result, and monetary liability or financial impact to the Company from legal proceedings, lawsuits and other claims could differ materially from those projected.

Lavin v. the Company

On May 28, 2021, a class action complaint was filed against us in the Eastern District of New York captioned Lavin v. Virgin Galactic Holdings, Inc., Case No. 1:21-cv-03070. In September 2021, the Court appointed Robert Scheele and Mark Kusnier as co-lead plaintiffs for the purported class. Co-lead plaintiffs amended the complaint in December 2021, asserting violations of Sections 10(b), 20(a) and 20A of the Exchange Act of 1934 against us and certain of our current and former officers and directors on behalf of a putative class of investors who purchased our common stock between July 10, 2019 and October 14, 2021. The amended complaint alleges, among other things, that we and certain of our current and former officers and directors made false and misleading statements and failed to disclose certain information regarding the safety of its ships and success of its commercial flight program. Co-lead plaintiffs seek damages, interest, costs, expenses, attorneys' fees, and other unspecified equitable relief. Defendants filed a motion to dismiss on April 4, 2022, and that motion is now fully briefed. The Company intends to vigorously defend against this matter.

Spiteri, Grenier, and Laidlaw, derivatively on behalf of the Company vs. Certain Current and Former Officers and Directors

On February 21, 2022, March 1, 2022, and September 21, 2022, three alleged shareholders filed separate derivative complaints purportedly on behalf of the Company against certain of our current and former officers and directors in the Eastern District of New York captioned Spiteri v. Branson et al., Case No. 1:22-cv-00933, Grenier v. Branson et al., Case No. 1:22-cv-01100, and Laidlaw v. Branson et al., Case No. 1:22-cv-05634, respectively. Collectively, the complaints assert violations of Sections 10(b), 14(a), and 21D of the Exchange Act of 1934 and claims of breach of fiduciary duty, aiding and abetting breach of fiduciary duty, abuse of control, gross mismanagement, waste of corporate assets, contribution and indemnification, and unjust enrichment arising from substantially similar allegations as those contained in the securities class action described above. The complaints seek an unspecified sum of damages, interest, restitution, expenses, attorneys’ fees and other equitable relief. The cases are at a preliminary stage.

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Employee Benefit Plan	9 Months Ended
	Sep. 30, 2022
Retirement Benefits [Abstract]
Employee Benefit Plan	Employee Benefit PlanThe Company has defined contribution plans, under which the Company pays fixed contributions into a separate entity, and additional contributions to the plans are based upon a percentage of the employees’ elected contributions. The Company will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution plans are recognized within selling, general, and administrative expenses and research and development in the Condensed Consolidated Statements of Operations and Comprehensive Loss, as incurred. Defined contributions were $1.4 million and $1.5 million for the three months ended September 30, 2022 and 2021, respectively. Defined contributions were $4.0 million and $4.1 million for the nine months ended September 30, 2022 and 2021, respectively.

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Supplemental Cash Flow Information

9 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow Information

Supplemental Cash Flow Information

	Nine Months Ended September 30,
	2022		2021
	(in thousands)
Supplemental disclosure
Cash payments and refunds for:
Income tax refund	$	56	$	—
Income tax paid	(90)		(84)
	$	(34)	$	(84)
Schedule for noncash investing activities:
Unpaid property, plant, and equipment received	$	1,356	$	1,021
	$	1,356	$	1,021
Schedule for noncash financing activities:
Issuance of common stock "cashless" warrants exercised	$	—	$	170,090
Issuance of common stock through restricted stock units vested	9,557		36,692
Commercial Loan	(310)		(310)
	$	9,247	$	206,472

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Basis of Presentation

Basis of Presentation

These condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). All intercompany transactions and balances between the various legal entities comprising the Company have been eliminated in consolidation.

Certain reclassifications of the components of operating loss for the three and nine month period ended September 30, 2021 have been made to the comparable prior period in the Condensed Consolidated Statements of Operations and Comprehensive Loss to conform to the same current period presentations. Specifically, cost of revenue has been reclassified to customer experience, and gross margin is no longer presented. Customer experience expenses related to spaceflight operations include the consumption of a rocket motor and fuel and other consumables, as well as payroll and benefits for our pilots and ground crew. Customer experience expenses related to the payload cargo services, as well as engineering services, consist of materials and human capital, such as payroll and benefits, to perform these services. Additionally, customer experience expenses include costs associated with maintaining and growing our Future Astronaut community through offerings provided to community members, as well as hospitality, medical, safety, security, training, and facility costs that are for the benefit of our future astronauts. Additionally, depreciation and amortization expense are presented separately instead of included in selling, general, and administrative or research and development expenses. These reclassifications had no impact on total loss as previously reported.

Use of Estimates

Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP required us to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. We base these estimates on historical experience and on various other assumptions that we believe 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. Significant estimates inherent in the preparation of the consolidated financial statements include, but are not limited to, accounting for revenue, contract assets, contract liabilities, useful lives of property, plant and equipment, fair value of investments, accrued liabilities, income taxes including deferred tax assets and liabilities and impairment valuation, warrants, stock-based awards and contingencies.

Convertible Senior Notes

Convertible Senior NotesOn January 1, 2022, the Company adopted ASU 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which removes from GAAP the liability and equity separation model for convertible instruments with either cash or beneficial conversion features. As a result, convertible debt instruments would only be separated into multiple components if they were issued at a substantial premium or if embedded derivatives requiring bifurcation were identified. The convertible senior notes (the "2027 Notes") were not issued at a substantial premium, and the Company analyzed the provisions of the notes and did not identify any material embedded features which would require bifurcation from the host debt. As such, the notes are accounted for entirely as a liability net of unamortized issuance costs. The carrying amount of the liability is classified as long-term as the instrument does not mature within one year of the balance sheet date and the holder is not permitted to demand repayment of the principal within one year of the balance sheet date. However, if conditions to convertibility are met as described further in Note 11, the Company may be required to reclassify the carrying amount of the liability to current. The embedded conversion features are not remeasured as long as they do not meet the separation requirement of a derivative. Issuance costs are amortized on a straight-line basis, which approximates the effective interest rate method, to interest expense over the term of the notes. Additionally, ASU 2020-06 requires the application of the if-converted method to calculate the impact of convertible instruments on diluted earnings per share, however there was no impact during the current quarter as the convertible instruments were anti-dilutive.

Capped Call Transactions

Capped Call TransactionsIn connection with the pricing of our 2027 Notes, the Company entered into capped call transactions with respect to its common stock (the "2027 Capped Calls"). The 2027 Capped Calls are purchased call options that give the Company the option to purchase shares of our common stock, subject to anti-dilution adjustments substantially identical to those in the 2027 Notes. The Company's capped call transactions are accounted for as separate transactions from the 2027 Notes and are classified as equity instruments as a reduction to additional paid-in capital in the Condensed Consolidated Balance Sheets. The instruments are initially recorded at fair value and not subsequently remeasured so long as they continue to qualify for equity classification based on the Company's intent and ability for the 2027 Capped Calls to be settled in shares of our common stock. The capped call transactions have the effect of reducing the number of shares outstanding if exercised. Therefore, the capped call transactions are anti-dilutive and not included in the calculation of diluted shares outstanding for the purposes of diluted net loss per share. See Note 11 for additional information on the 2027 Capped Calls.

Other Summary Of Significant Accounting Policies

Other Summary of Significant Accounting PoliciesThere have been no other significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the "Annual Report on Form 10-K").The interim financial information is unaudited, but reflects all normal recurring adjustments that are, in the opinion of management, necessary to fairly present the information set forth herein. The interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K. Interim results are not necessarily indicative of the results for a full year.

Recent Accounting Pronouncements

Recent Accounting PronouncementsChanges to GAAP are established by the Financial Accounting Standards Board (“FASB”) in the form of Accounting Standards Updates (“ASU”). See Note 2 for additional information on recently adopted accounting pronouncements.

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Cash, Restricted Cash, Cash Equivalents and Marketable Securities (Tables)

9 Months Ended

Sep. 30, 2022

Cash and Cash Equivalents [Abstract]

Schedule of Marketable Securities

The amortized cost, unrealized loss and estimated fair value of the Company's cash, cash equivalents, restricted cash, and marketable securities as of September 30, 2022 and December 31, 2021:

	As of September 30, 2022
	Amortized Cost		Gross Unrealized Losses		Fair Value
	(In thousands)
Cash, restricted cash and cash equivalents
Cash and restricted cash	$	8,358	$	—	$	8,358
Money market	384,575		—		384,575
Certificate of deposits	41,427		—		41,427
Marketable securities
US treasuries	149,102		(183)		148,919
Corporate debt securities	536,913		(10,047)		526,866
Total cash, cash equivalents, restricted cash and marketable securities	$	1,120,375	$	(10,230)	$	1,110,145

	As of December 31, 2021
	Amortized Cost		Gross Unrealized Losses		Fair Value
	(In thousands)
Cash, restricted cash and cash equivalents
Cash and restricted cash	$	55,592	$	—	$	55,592
Money market	402,889		—		402,889
Certificate of deposits	91,549		—		91,549
Marketable securities
Corporate debt securities	382,884		(2,003)		380,881
Total cash, cash equivalents and marketable securities	$	932,914	$	(2,003)	$	930,911

Schedule of Contractual Maturities

The following table presents the contractual maturities of the Company's marketable securities as of September 30, 2022:

	As of September 30, 2022
	Amortized Cost		Estimated Fair Value
	(In thousands)
Matures within one year	$	614,641	$	606,713
Matures between one to two years	71,374		69,072
Total	$	686,015	$	675,785

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Inventory (Tables)

9 Months Ended

Sep. 30, 2022

Inventory Disclosure [Abstract]

Schedule of Inventory

As of September 30, 2022 and December 31, 2021, inventory is comprised of the following:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Raw materials	$	13,267	$	21,127
Spare parts	9,584		8,541
Total inventory	$	22,851	$	29,668

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Property, Plant, and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2022

Property, Plant and Equipment [Abstract]

Schedule of Property, Plant, and Equipment

As of September 30, 2022 and December 31, 2021, property, plant, and equipment, net consisted of the following:

		As of
		September 30, 2022		December 31, 2021
		(Unaudited)
	(In thousands)
Land		$	1,302	$	—
Buildings		9,118		9,117
Leasehold improvements		30,457		29,155
Aircraft		195		195
Machinery and equipment		35,670		37,002
IT software and equipment		28,911		23,523
Construction in progress		3,152		2,901
		108,805		101,893
Less accumulated depreciation and amortization		(59,931)		(54,395)
Property, plant, and equipment, net		$	48,874	$	47,498

The following table sets forth the summary of depreciation and amortization expense for property, plant and equipment, net:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(Unaudited and in thousands)
Customer experience	$	—	$	—	$	—	$	—
Selling, general, and administrative	1,819		1,592		5,085		4,774
Research and development	395		1,304		2,896		3,861
	$	2,214	$	2,895	$	7,981	$	8,635

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Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Summary of Lease Expense and Cash Flow Information

The components of lease expense related to leases for the periods presented below are as follows:

	Three Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	2,553	$	1,244
Short-term lease expense	—		6
Finance Lease Cost:
Amortization of right-of-use assets	42		34
Interest on lease liabilities	11		6
Total finance lease cost	53		40
Variable lease cost	1,760		1,475
Total lease cost	$	4,366	$	2,765

	Nine Months Ended September 30,
	2022		2021
	(Unaudited and in thousands)
Lease Cost:
Operating lease expense	$	6,622	$	3,758
Short-term lease expense	—		26
Finance Lease Cost:
Amortization of right-of-use assets	100		103
Interest on lease liabilities	20		20
Total finance lease cost	120		123
Variable lease cost	4,654		4,185
Total lease cost	$	11,396	$	8,092

The components of supplemental cash flow information related to leases for the period are as follows:

	Nine Months Ended September 30,
	2022			2021
	(In thousands, except term and rate data)
Cash flow information:
Operating cash flows for operating leases	$	7,980		$	4,065
Operating cash flows for finance leases	$	20		$	20
Financing cash flows for finance leases	$	132		$	105
Non-cash activity:
Right-of-use assets obtained in exchange for lease obligations
Operating leases	$	16,338		$	501
Finance Leases	$	230		$	19
Other Information:
Weighted average remaining lease term:
Operating leases (in years)	10.80			12.30
Finance leases (in years)	2.75			2.29
Weighted average discount rates:
Operating leases	12.14		%	11.66		%
Finance leases	11.26		%	8.22		%

Summary of Balance Sheet Information

The supplemental balance sheet information related to leases for the period is as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Operating leases
Long-term right-of-use assets	$	49,324	$	35,486
Short-term operating lease liabilities	$	3,190	$	2,204
Long-term operating lease liabilities	56,856		39,965
Total operating lease liabilities	$	60,046	$	42,169

Summary of Operating Lease Maturities

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2022 are as follows:

	Operating Leases		Finance Leases
	(In thousands)
2022 (for the remaining period)	$	2,106	$	47
2023	8,676		170
2024	10,034		94
2025	10,190		64
2026	10,347		35
Thereafter	71,707		2
Total lease payments	$	113,060	$	412
Less:
Imputed interest/present value discount	$	(53,014)	$	(62)
Present value of lease liabilities	$	60,046	$	350

Summary of Finance Lease Maturities

Future minimum lease payments under non-cancelable operating leases (with initial or remaining lease terms in excess of one year) and future minimum finance lease payments as of September 30, 2022 are as follows:

	Operating Leases		Finance Leases
	(In thousands)
2022 (for the remaining period)	$	2,106	$	47
2023	8,676		170
2024	10,034		94
2025	10,190		64
2026	10,347		35
Thereafter	71,707		2
Total lease payments	$	113,060	$	412
Less:
Imputed interest/present value discount	$	(53,014)	$	(62)
Present value of lease liabilities	$	60,046	$	350

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Accrued Expenses (Tables)

9 Months Ended

Sep. 30, 2022

Payables and Accruals [Abstract]

Schedule of Accrued Expenses

A summary of the components of accrued liabilities are as follows:

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Accrued payroll	$	8,331	$	4,214
Accrued vacation	6,383		5,372
Accrued bonus	11,578		12,218
Accrued interest expense	1,771		—
Accrued contract labor	7,869		1,147
Other accrued expenses	7,457		5,836
Total accrued expenses	$	43,389	$	28,787

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Commercial Loan (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Schedule of Long-term Debt Instruments

	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands)
Commercial loan	$	—	$	310
Less: Current portion	—		(310)
Non-current portion	$	—	$	—

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Convertible Senior Notes (Tables)

9 Months Ended

Sep. 30, 2022

Convertible Debt [Abstract]

Convertible Debt

The 2027 Notes, net consisted of the following (in thousands):

	As of
	September 30, 2022
	(Unaudited)
Principal	$	425,000
Less: unamortized debt issuance costs	(9,812)
Net carrying amount	$	415,188

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Net Loss Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Net Loss Per Share

The following table presents net loss per share and related information:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(In thousands, except for share and per share data)
Numerator:
Net loss attributable to common shareholders	$	(145,554)	$	(48,368)	$	(349,332)	$	(272,102)
Less: revaluation of warrant liability	—		(34,432)		—		—
Adjusted net loss	(145,554)		(82,800)		(349,332)		(272,102)
Denominator:
Weighted average shares of common stock outstanding	263,907,259		254,749,195		260,255,202		244,157,923
Add: dilutive effect of common stock issuable from assumed exercise of warrants	—		398,033		—		—
Weighted average shares outstanding, diluted	263,907,259		255,147,228		260,255,202		244,157,923
Net loss per share:
Basic	$	(0.55)	$	(0.19)	$	(1.34)	$	(1.11)
Diluted	$	(0.55)	$	(0.32)	$	(1.34)	$	(1.11)

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

Potentially dilutive securities that were not included in the diluted per share calculation for these periods, as they would have an anti-dilutive impact on net loss per share, are as follows (in thousands):

	As of September 30,
	2022	2021
Issued and outstanding stock options	3,794	4,428
Issued and outstanding performance stock options	406	—
Unvested restricted stock units issued and outstanding	4,502	3,442
Unvested performance stock units issued and outstanding	255	90
Shares related to the 2027 Notes (1)	33,234	—
Warrants to purchase shares of common stock	—	8,000
	42,191	15,960

(1) The Company uses the if-converted method for calculating any potential dilutive effect of the conversion options embedded in the 2027 Notes on diluted net loss per share, if applicable.

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Stock-Based Compensation (Tables)

9 Months Ended

Sep. 30, 2022

Share-Based Payment Arrangement [Abstract]

Schedule of Weighted Average Assumptions

The fair values of these stock options were estimated using a Black-Scholes model with the following assumptions:

	2022
Expected life (in years)(1)	6.11
Expected volatility(2)	69.0	%
Risk free interest rate(3)	2.19	%
Dividend yield(4)	—	%

(1) The expected life is the period of time that participants are expected to hold their options before exercised using the "simplified method" as described in Staff Accounting Bulletin No. 107.

(2) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(3) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(4) The Company does not currently pay dividends nor has announced plans to begin paying dividendsThe fair values of these stock options were estimated using a Monte-Carlo simulation with the following assumptions:

	2022
Expected exercise behavior(1)	75.0	%
Expected Volatility(2)	58.0	%
Risk free interest rate(3)	2.19	%
Dividend yield(4)	—	%

(1) PSOs are expected to be exercised after 75% of the period between the vest date and the end of the contractual term has lapsed.

(2) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(3) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(4) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

The fair values of these stock units were estimated using a Monte-Carlo simulation with the following assumptions:

	2022
Expected volatility(1)	95.0	%
Risk free interest rate(2)	2.13	%
Dividend yield(3)	—	%

(1) The expected volatility is a measure of the amount by which a stock price is expected to fluctuate based primarily on our and our peers' historical data.

(2) The risk-free interest rate for the periods within the contractual term of the options is based on the U.S. Treasury yield curve in effect at the time of the grant.

(3) The Company does not currently pay dividends nor has announced plans to begin paying dividends.

Schedule of Options Outstanding

The following table sets forth the summary of options activity for the nine month ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)	Weighted Average Grant Date Fair Value ($)
Options outstanding at December 31, 2021	4,253,767	$	14.09	7.60	6,187	—
Granted	303,030	7.99				4.95
Exercised	(4,182)	11.79
Forfeited options	(758,250)	18.96
Options outstanding at September 30, 2022	3,794,365	$	13.91	6.74	—	—
Options exercisable at September 30, 2022	2,346,118	$	13.96	6.14	—	—

(1) Aggregate intrinsic value is calculated based on the difference between our closing stock price at period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the period end date.

The following table sets forth the summary of PSO activity for the nine month ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Number of Shares	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (in years)	Aggregate Intrinsic Value(1)	Weighted Average Grant Date Fair Value ($)
PSOs outstanding at December 31, 2021	—	$	—	0.00	—
Granted	405,680	8.99				4.93
Exercised	—	—
Forfeited options	—	—
PSOs outstanding at September 30, 2022	405,680	$	8.99	9.47	—
PSOs exercisable at s September 30, 2022	—	$	—	0.00	—

(1) Aggregate intrinsic value is calculated based on the difference between our closing stock price at period end and the exercise price, multiplied by the number of in-the-money options and represents the pre-tax amount that would have been received by the option holders, had they all exercised all their options on the period end date.

Schedule of Restricted Stock Units Activity

The following table sets forth the summary of RSUs activity for the nine months ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Shares	Weighted Average Fair Value
RSUs outstanding at December 31, 2021	2,396,732	$	27.89
Granted	3,900,745	8.42
Vested	(1,144,802)	20.20
Forfeited	(650,533)	16.54
RSUs outstanding at September 30, 2022	4,502,142	$	13.65

Schedule of Performance Stock Unit Activity

The following table sets forth the summary of PSUs activity for the nine months ended September 30, 2022 under the 2019 Plan (dollars in thousands, except per share data):

	Shares	Weighted Average Fair Value
PSUs outstanding at December 31, 2021	89,839	$	26.47
Granted	277,552	14.62
Forfeited	(112,518)	26.17
PSUs outstanding at September 30, 2022	254,873	$	14.67

Summary of Stock Option and RSU Expense

Stock-based compensation expense was recorded in the following expense categories in the Condensed Consolidated Statements of Operations and Comprehensive Loss:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
	(in thousands)
Stock option and PSO expense
Selling, general and administrative	$	2,113	$	1,735	$	6,022	$	12,590
Research and development	596		776		2,020		2,445
Total stock option and PSO expense	2,710		2,511		8,042		15,035
RSU and PSU expense
Selling, general and administrative	6,045		6,805		18,046		24,414
Research and development	2,756		2,853		8,400		9,255
Total RSU and PSU expense	8,800		9,658		26,446		33,669
Total stock-based compensation expense	$	11,510	$	12,169	$	34,488	$	48,704

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2022

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Assets Measured on Recurring Basis

The following tables summarize the fair value of assets that are recorded in the Company’s Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021 at fair value on a recurring basis:

Fair Value Measurements as of September 30, 2022
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money market	$	386,578	$	—	$	—	$	386,578
Certificate of deposit	41,777		—		—		41,777
US treasuries	148,919		—		—		148,919
Corporate debt securities	—		526,866		—		526,866
Total assets at fair value	$	577,274	$	526,866	$	—	$	1,104,140
Liabilities:
2027 Notes	$	—	$	—	$	238,451	$	238,451
Total liabilities at fair value	$	—	$	—	$	238,451	$	238,451

The estimated fair value of the 2027 Notes were determined based on the quoted bid prices of the 2027 Notes in an over-the-counter market on the last trading day of the reporting period.

Fair Value Measurements as of December 31, 2021
	Level 1		Level 2		Level 3		Total
	(In thousands)
Assets:
Money Market	$	402,889	$	—	$	—	$	402,889
Certificate of Deposit	91,549		—		—		91,549
Corporate debt securities	—		380,881		—		380,881
Total assets at fair value	$	494,438	$	380,881	$	—	$	875,319

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Supplemental Cash Flow Information (Tables)

9 Months Ended

Sep. 30, 2022

Supplemental Cash Flow Elements [Abstract]

Schedule of Supplemental Cash Flow Information

	Nine Months Ended September 30,
	2022		2021
	(in thousands)
Supplemental disclosure
Cash payments and refunds for:
Income tax refund	$	56	$	—
Income tax paid	(90)		(84)
	$	(34)	$	(84)
Schedule for noncash investing activities:
Unpaid property, plant, and equipment received	$	1,356	$	1,021
	$	1,356	$	1,021
Schedule for noncash financing activities:
Issuance of common stock "cashless" warrants exercised	$	—	$	170,090
Issuance of common stock through restricted stock units vested	9,557		36,692
Commercial Loan	(310)		(310)
	$	9,247	$	206,472

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Related Party Transactions (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021
Related Party Transaction [Line Items]
Royalty payable, as a percentage of revenue	1.00%		1.00%
Royalty payable, quarterly amount	$ 40		$ 40
Sponsorship royalties payable, as a percentage of revenue	25.00%		25.00%
Affiliated Entity | License and royalty fees
Related Party Transaction [Line Items]
Expenses from related party	$ 40	$ 390	$ 120	$ 470
Subsidiary of Common Parent
Related Party Transaction [Line Items]
Related party receivable	32		32		$ 43
Subsidiary of Common Parent | Allocation of corporate expenses
Related Party Transaction [Line Items]
Transaction amounts from related party	$ 46	$ 33	$ 80	$ 104

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Cash, Restricted Cash, Cash Equivalents and Marketable Securities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash, restricted cash and cash equivalents, amortized cost	$ 434,360	$ 720,643	$ 434,360	$ 720,643	$ 550,030	$ 678,955
Marketable securities amortized cost	686,015		686,015
Total cash, cash equivalents, restricted cash and marketable securities, amortized cost	1,120,375		1,120,375
Gross Unrealized Losses	(10,230)		(10,230)
Marketable securities, fair value	675,785		675,785
Total assets at fair value	1,110,145		1,110,145
Other non-current assets	55,220		55,220		41,281
Restricted cash and cash equivalents	40,328	18,078	40,328	18,078	25,549
Interest receivable	3,200		3,200		2,300
Amortization expense for marketable securities	1,500	300	5,500	300
Material gross realized gains and losses	(200)	$ 0	(300)	$ 0
US treasuries
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Marketable securities amortized cost	149,102		149,102		382,884
Gross Unrealized Losses	(183)		(183)		(2,003)
Marketable securities, fair value	148,919		148,919		380,881
Corporate debt securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Marketable securities amortized cost	536,913		536,913
Total cash, cash equivalents, restricted cash and marketable securities, amortized cost					932,914
Gross Unrealized Losses	(10,047)		(10,047)		(2,003)
Marketable securities, fair value	526,866		526,866
Total assets at fair value					930,911
Cash and restricted cash
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash, restricted cash and cash equivalents, amortized cost	8,358		8,358		55,592
Cash and cash equivalents, fair value	8,358		8,358		55,592
Money market
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash, restricted cash and cash equivalents, amortized cost	384,575		384,575		402,889
Cash and cash equivalents, fair value	384,575		384,575		402,889
Restricted cash and cash equivalents	39,800		39,800		1,000
Certificate of deposit
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Cash, restricted cash and cash equivalents, amortized cost	41,427		41,427		91,549
Cash and cash equivalents, fair value	$ 41,427		$ 41,427		$ 91,549

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Cash, Restricted Cash, Cash Equivalents and Marketable Securities - Contractual Maturities (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Amortized Cost
Matures within one year	$ 614,641
Matures between one to two years	71,374
Total	686,015
Estimated Fair Value
Matures within one year	606,713
Matures between one to two years	69,072
Total	$ 675,785

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Inventory (Schedule of Inventory) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Raw materials	$ 13,267	$ 21,127
Spare parts	9,584	8,541
Total inventory	$ 22,851	$ 29,668

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Inventory (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Inventory Disclosure [Abstract]
Inventory write-down	$ 2.2	$ 0.2	$ 3.3	$ 0.4

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Property, Plant, and Equipment, net (Schedule of Property, Plant, and Equipment) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	$ 108,805	$ 101,893
Less accumulated depreciation and amortization	(59,931)	(54,395)
Property, plant, and equipment, net	48,874	47,498
Land
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	1,302	0
Buildings
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	9,118	9,117
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	30,457	29,155
Aircraft
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	195	195
Machinery and equipment
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	35,670	37,002
IT software and equipment
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	28,911	23,523
Construction in progress
Property, Plant and Equipment [Line Items]
Property, plant, and equipment	$ 3,152	$ 2,901

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Property, Plant, and Equipment, net (Depreciation and Amortization) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Property, Plant and Equipment [Line Items]
Depreciation, amortization and impairment	$ 2,214	$ 2,895	$ 7,981	$ 8,635
Customer experience
Property, Plant and Equipment [Line Items]
Depreciation, amortization and impairment	0	0	0	0
Selling, general, and administrative
Property, Plant and Equipment [Line Items]
Depreciation, amortization and impairment	1,819	1,304	5,085	3,861
Research and development
Property, Plant and Equipment [Line Items]
Depreciation, amortization and impairment	$ 395	$ 1,592	$ 2,896	$ 4,774

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Leases (Narrative) (Details) $ in Millions	Jul. 14, 2022 USD ($) ft² hangar lease_option	Sep. 30, 2022
Minimum
Lessee, Lease, Description [Line Items]
Operating lease, renewal term (in years)		3 years
Maximum
Lessee, Lease, Description [Line Items]
Operating lease, renewal term (in years)		20 years
Arizona
Lessee, Lease, Description [Line Items]
Area of real estate property | ft²	151,096
Number of real estate property | hangar	2
Initial term (in years)	10 years
Operating lease expense, annual | $	$ 3.0
Number of lease option | lease_option	4
Operating lease, renewal term (in years)	5 years
Arizona | Hangar C
Lessee, Lease, Description [Line Items]
Term before lease is commenced	10 months
Arizona | Hangar B
Lessee, Lease, Description [Line Items]
Term before lease is commenced	15 months

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Leases (Lease Cost) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Leases [Abstract]
Operating lease expense	$ 2,553	$ 1,244	$ 6,622	$ 3,758
Short-term lease expense	0	6	0	26
Finance Lease Cost:
Amortization of right-of-use assets	42	34	100	103
Interest on lease liabilities	11	6	20	20
Total finance lease cost	53	40	120	123
Variable lease cost	1,760	1,475	4,654	4,185
Total lease cost	$ 4,366	$ 2,765	$ 11,396	$ 8,092

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Leases (Cash Flow Information) (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flow information:
Operating cash flows for operating leases	$ 7,980	$ 4,065
Operating cash flows for finance leases	20	20
Financing cash flows for finance leases	132	105
Right-of-use assets obtained in exchange for lease obligations
Operating leases	16,338	501
Finance Leases	$ 230	$ 19
Weighted average remaining lease term:
Operating leases (in years)	10 years 9 months 18 days	12 years 3 months 18 days
Finance leases (in years)	2 years 9 months	2 years 3 months 14 days
Weighted average discount rates:
Operating leases	12.14%	11.66%
Finance leases	11.26%	8.22%

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Leases (Supplemental Balance Sheet) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Leases [Abstract]
Long-term right-of-use assets	$ 49,324	$ 35,486
Short-term operating lease liabilities	3,190	2,204
Long-term operating lease liabilities	56,856	39,965
Total operating lease liabilities	$ 60,046	$ 42,169

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Leases (Lease Maturities) (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Operating Leases
2022 (for the remaining period)	$ 2,106
2023	8,676
2024	10,034
2025	10,190
2026	10,347
Thereafter	71,707
Total lease payments	113,060
Imputed interest/present value discount	(53,014)
Present value of lease liabilities	60,046
Finance Leases
2022 (for the remaining period)	47
2023	170
2024	94
2025	64
2026	35
Thereafter	2
Total lease payments	412
Imputed interest/present value discount	(62)
Present value of lease liabilities	$ 350

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Accrued Expenses (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Payables and Accruals [Abstract]
Accrued payroll	$ 8,331	$ 4,214
Accrued vacation	6,383	5,372
Accrued bonus	11,578	12,218
Accrued interest expense	1,771	0
Accrued contract labor	7,869	1,147
Other accrued expenses	7,457	5,836
Total accrued expenses	$ 43,389	$ 28,787

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Commercial Loan (Schedule of Debt) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Jun. 18, 2020
Debt Instrument [Line Items]
Less: Current portion	$ 0	$ (310)
Non-current portion	0	0
Commercial loan | Commercial loan
Debt Instrument [Line Items]
Total debt	$ 0	$ 310	$ 900

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Commercial Loan (Narrative) (Details) - Commercial loan - Commercial loan $ in Thousands	27 Months Ended
	Sep. 30, 2022 USD ($)	Dec. 31, 2021 USD ($)	Jun. 18, 2020 USD ($) installment
Debt Instrument [Line Items]
Commercial loan	$ 0	$ 310	$ 900
Number of installments | installment			3
Annual payment	$ 300
Interest rate			0.00%

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Convertible Senior Notes - Narrative (Details) $ / shares in Units, shares in Millions		3 Months Ended		9 Months Ended
	Jan. 19, 2022 USD ($) day $ / shares shares	Sep. 30, 2022 USD ($) $ / shares	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) $ / shares	Sep. 30, 2021 USD ($)	Dec. 31, 2021 $ / shares
Line of Credit Facility [Line Items]
Common stock, par value (in dollars per share) | $ / shares	$ 0.0001	$ 0.0001		$ 0.0001		$ 0.0001
Interest expense		$ 3,293,000	$ 6,000	$ 8,924,000	$ 19,000
Amortization of debt issuance costs				1,466,000	$ 0
Call Option
Line of Credit Facility [Line Items]
Capped call option to purchase common shares (in shares) | shares	33
Call option price per share (in dollars per share) | $ / shares	$ 12.79
Derivative, cap price (in dollars per share) | $ / shares	$ 20.06
Premium over share price, percentage	100.00%
Derivative, notional amount	$ 52,300,000
2027 Notes | Convertible Debt
Line of Credit Facility [Line Items]
Principal amount	$ 425,000,000
Interest rate	2.50%
Conversion ratio	0.0781968
Conversion price (in dollars per share) | $ / shares	$ 12.79
Debt instrument, convertible, threshold trading days | day	20
Threshold percentage of stock price trigger	130.00%
Accrued interest expense		1,800,000		1,800,000
Interest expense		3,200,000		8,900,000
Amortization of debt issuance costs		$ 500,000		$ 1,500,000
2027 Notes | Convertible Debt | Debt Conversion Option One
Line of Credit Facility [Line Items]
Debt instrument, convertible, threshold trading days | day	20
Debt instrument, convertible, threshold consecutive trading days | day	30
Threshold percentage of stock price trigger	130.00%
2027 Notes | Convertible Debt | Debt Conversion Option Two
Line of Credit Facility [Line Items]
Debt instrument, convertible, threshold trading days | day	5
Debt instrument, convertible, threshold consecutive trading days | day	10
Threshold percentage of stock price trigger	98.00%

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Convertible Senior Notes - 2027 Notes (Details) - 2027 Notes - Convertible Debt $ in Thousands	Sep. 30, 2022 USD ($)
Debt Instrument [Line Items]
Principal	$ 425,000
Less: unamortized debt issuance costs	(9,812)
Total debt	$ 415,188

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Income Taxes (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Tax Disclosure [Abstract]
Income tax expense	$ 21	$ 25	$ 69	$ 74
Effective income tax rate	0.00%	0.00%	0.00%	0.00%

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Stockholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands				3 Months Ended		9 Months Ended
	Aug. 04, 2022	Jul. 16, 2021	Jul. 12, 2021	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Jan. 19, 2022	Dec. 31, 2021
Class of Warrant or Right [Line Items]
Change in fair value of warrants				$ 0	$ 34,432	$ 0	$ (34,650)
Common stock, par value (in dollars per share)				$ 0.0001		$ 0.0001		$ 0.0001	$ 0.0001
Proceeds from issuance of common stock						$ 99,573	500,000
Stock issuance costs						1,137	$ 6,753
At The Market Offering
Class of Warrant or Right [Line Items]
Stock sold, aggregate consideration	$ 300,000		$ 500,000
Common stock, par value (in dollars per share)	$ 0.0001		$ 0.0001
Proceeds from issuance of common stock		$ 500,000				99,600
Stock issuance costs		$ 6,200				$ 1,200
Stock sold (in shares)		13,740,433				15,587,600
Public Warrant
Class of Warrant or Right [Line Items]
Outstanding warrants (in shares)				0		0			0

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Net Loss Per Share (Schedule of Net Loss Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Numerator:
Net loss attributable to common shareholders	$ (145,554)	$ (48,368)	$ (349,332)	$ (272,102)
Less: revaluation of warrant liability	0	(34,432)	0	0
Adjusted net loss	$ (145,554)	$ (82,800)	$ (349,332)	$ (272,102)
Weighted average common shares outstanding - basic (in shares)	263,907,259	254,749,195	260,255,202	244,157,923
Add: dilutive effect of common stock issuable from assumed exercise of warrants (in shares)	0	398,033	0	0
Weighted average common share outstanding - diluted (in shares)	263,907,259	255,147,228	260,255,202	244,157,923
Basic net loss per share (in dollars per share)	$ (0.55)	$ (0.19)	$ (1.34)	$ (1.11)
Diluted net loss per share (in dollars per share)	$ (0.55)	$ (0.32)	$ (1.34)	$ (1.11)

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Net Loss Per Share - Anti-dilutive (Details) - shares shares in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	42,191	15,960
Stock option
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	3,794	4,428
Performance stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	406	0
Restricted stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	4,502	3,442
Performance stock units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	255	90
Convertible Debt
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	33,234	0
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Potential effect of warrants to purchase stock (in shares)	0	8,000

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Stock-Based Compensation (Narrative) (Details) $ in Millions	1 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2022 USD ($) day
Stock option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Unrecognized stock-based compensation expense		$ 12.5
Unrecognized compensation cost, period for recognition		2 years
Stock option | 2019 Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Performance stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expiration period		10 years
Vesting percentage	75.00%
Unrecognized stock-based compensation expense		$ 0.7
Unrecognized compensation cost, period for recognition		8 months 12 days
Restricted stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		4 years
Unrecognized compensation cost, period for recognition		2 years 7 months 6 days
Unrecognized stock-based compensation expense, excluding options		$ 76.7
Restricted stock units | Tranche one
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Restricted stock units | Tranche two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Restricted stock units | Tranche three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Restricted stock units | Tranche four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period		3 years
Consecutive trading days | day		20
Unrecognized compensation cost, period for recognition		2 years 6 months
Unrecognized stock-based compensation expense, excluding options		$ 3.1
Performance stock units | Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		25.00%
Performance stock units | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage		200.00%

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Stock-Based Compensation (Valuation Assumptions) (Details)	1 Months Ended	9 Months Ended
	Mar. 31, 2022	Sep. 30, 2022
Stock option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life (in years)	6 years 1 month 9 days
Expected volatility	69.00%
Risk free interest rate	2.19%
Dividend yield	0.00%
Vesting percentage		25.00%
Performance stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected exercise behavior	75.00%
Expected volatility	58.00%
Risk free interest rate	2.19%
Dividend yield	0.00%
Vesting percentage	75.00%
Performance stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	95.00%
Risk free interest rate	2.13%
Dividend yield	0.00%

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Stock-Based Compensation (2019 Stock Plan Activity) (Details) - 2019 Stock Plan - Stock option - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Number of Shares
Beginning balance (in shares)	4,253,767
Granted (in shares)	303,030
Exercised (in shares)	(4,182)
Forfeited options (in shares)	(758,250)
Ending balance (in shares)	3,794,365	4,253,767
Options exercisable (in shares)	2,346,118
Weighted Average Exercise Price
Weighted-average exercise price, beginning (in dollars per share)	$ 14.09
Granted (in dollars per share)	7.99
Exercised (in dollars per share)	11.79
Forfeited options (in dollars per share)	18.96
Weighted-average exercise price, ending (in dollars per share)	13.91	$ 14.09
Options exercisable (in dollars per share)	$ 13.96
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Options outstanding, weighted average contractual term	6 years 8 months 26 days	7 years 7 months 6 days
Options exercisable, weighted average contractual term	6 years 1 month 20 days
Options outstanding, aggregate intrinsic value	$ 0	$ 6,187
Options exercisable, aggregate intrinsic value	$ 0
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 4.95

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Stock-Based Compensation (PSO Activity) (Details) - Performance stock options - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Number of Shares
Beginning balance (in shares)	0
Granted (in shares)	405,680
Exercised (in shares)	0
Forfeited options (in shares)	0
Ending balance (in shares)	405,680	0
PSOs exercisable (in shares)	0
Weighted Average Exercise Price
Weighted-average exercise price, beginning (in dollars per share)	$ 0
Granted (in dollars per share)	8.99
Exercised (in dollars per share)	0
Forfeited options (in dollars per share)	0
Weighted-average exercise price, ending (in dollars per share)	8.99	$ 0
PSOs exercisable (in dollars per share)	$ 0
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
Weighted average contractual term	9 years 5 months 19 days	0 years
PSOs exercisable, weighted average contractual term	0 years
PSOs outstanding, aggregate intrinsic value	$ 0	$ 0
PSOs exercisable, aggregate intrinsic value	$ 0
Weighted Average Grant Date Fair Value
Granted (in dollars per share)	$ 4.93

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Stock-Based Compensation (RSU Activity) (Details) - Restricted stock units	9 Months Ended
	Sep. 30, 2022 $ / shares shares
Shares
Outstanding, beginning balance (in shares) | shares	2,396,732
Granted (in shares) | shares	3,900,745
Vested (in shares) | shares	(1,144,802)
Forfeited (in shares) | shares	(650,533)
Outstanding, ending balance (in shares) | shares	4,502,142
Weighted Average Fair Value
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 27.89
Granted (in dollars per share) | $ / shares	8.42
Vested (in dollars per share) | $ / shares	20.20
Forfeited (in dollars per share) | $ / shares	16.54
Outstanding, ending balance (in dollars per share) | $ / shares	$ 13.65

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Stock-Based Compensation (PSU Activity) (Details) - Performance stock units	9 Months Ended
	Sep. 30, 2022 $ / shares shares
Shares
Outstanding, beginning balance (in shares) | shares	89,839
Granted (in shares) | shares	277,552
Forfeited (in shares) | shares	(112,518)
Outstanding, ending balance (in shares) | shares	254,873
Weighted Average Fair Value
Outstanding, beginning balance (in dollars per share) | $ / shares	$ 26.47
Granted (in dollars per share) | $ / shares	14.62
Forfeited (in dollars per share) | $ / shares	26.17
Outstanding, ending balance (in dollars per share) | $ / shares	$ 14.67

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Stock-Based Compensation (Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 11,510	$ 12,169	$ 34,488	$ 48,704
Stock option
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	2,710	2,511	8,042	15,035
Stock option | Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	2,113	1,735	6,022	12,590
Stock option | Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	596	776	2,020	2,445
RSU and PSU
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	8,800	9,658	26,446	33,669
RSU and PSU | Selling, general and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	6,045	6,805	18,046	24,414
RSU and PSU | Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Stock-based compensation expense	$ 2,756	$ 2,853	$ 8,400	$ 9,255

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Fair Value Measurements (Fair Values) (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	$ 675,785
Total assets at fair value	1,110,145
US treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	148,919	$ 380,881
Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	526,866
Total assets at fair value		930,911
Money market
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	384,575	402,889
Certificate of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	41,427	91,549
Fair Value, Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	1,104,140	875,319
Total liabilities at fair value	238,451
Fair Value, Recurring | 2027 Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
2027 Notes	238,451
Fair Value, Recurring | US treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	148,919
Fair Value, Recurring | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	526,866
Fair Value, Recurring | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	577,274	494,438
Total liabilities at fair value	0
Fair Value, Recurring | Level 1 | 2027 Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
2027 Notes	0
Fair Value, Recurring | Level 1 | US treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	148,919
Fair Value, Recurring | Level 1 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	0
Fair Value, Recurring | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	526,866	380,881
Total liabilities at fair value	0
Fair Value, Recurring | Level 2 | 2027 Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
2027 Notes	0
Fair Value, Recurring | Level 2 | US treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	0
Fair Value, Recurring | Level 2 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	526,866
Fair Value, Recurring | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets at fair value	0	0
Total liabilities at fair value	238,451
Fair Value, Recurring | Level 3 | 2027 Notes
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
2027 Notes	238,451
Fair Value, Recurring | Level 3 | US treasuries
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	0
Fair Value, Recurring | Level 3 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Marketable securities, fair value	0
Fair Value, Recurring | Money market
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	386,578	402,889
Fair Value, Recurring | Money market | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	386,578	402,889
Fair Value, Recurring | Money market | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	0	0
Fair Value, Recurring | Money market | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	0	0
Fair Value, Recurring | Certificate of deposit
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	41,777	91,549
Fair Value, Recurring | Certificate of deposit | Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	41,777	91,549
Fair Value, Recurring | Certificate of deposit | Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	0	0
Fair Value, Recurring | Certificate of deposit | Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value	$ 0	0
Fair Value, Recurring | Cash equivalents | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value		380,881
Fair Value, Recurring | Cash equivalents | Level 1 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value		0
Fair Value, Recurring | Cash equivalents | Level 2 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value		380,881
Fair Value, Recurring | Cash equivalents | Level 3 | Corporate debt securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Cash and cash equivalents, fair value		$ 0

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Commitments and Contingencies (Narrative) (Details)	Sep. 21, 2022 shareholder
Commitments and Contingencies Disclosure [Abstract]
Number of shareholders	3

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Employee Benefit Plan (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Retirement Benefits [Abstract]
Defined contributions	$ 1.4	$ 1.5	$ 4.0	$ 4.1

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Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash payments and refunds for:
Income tax refund	$ 56	$ 0
Income tax paid	(90)	(84)
Income tax paid, net	(34)	(84)
Schedule for noncash investing activities:
Unpaid property, plant, and equipment received	1,356	1,021
Schedule for noncash financing activities:
Issuance of common stock "cashless" warrants exercised	0	170,090
Issuance of common stock through restricted stock units vested	9,557	36,692
Commercial Loan	(310)	(310)
Noncash financing activities	$ 9,247	$ 206,472