Item 1.01. Entry Into or Amendment of a Material Definitive Agreement.
Indenture and Notes
On January 19, 2022, Virgin Galactic Holdings, Inc. (the "Company") issued
$425,000,000 principal amount of its 2.50% Convertible Senior Notes due 2027
(the "Notes"). The Notes were issued pursuant to, and are governed by, an
indenture (the "Indenture"), dated as of January 19, 2022, between the Company
and U.S. Bank National Association, as trustee (the "Trustee"). Pursuant to the
purchase agreement between the Company and the initial purchasers of the Notes,
the Company also granted the initial purchasers an option to purchase, for
settlement within a period of 13 days from, and including, the date when the
Notes are first issued, up to an additional $75,000,000 principal amount of
Notes.
The Notes will be the Company's senior, unsecured obligations and will be (i)
equal in right of payment with the Company's future senior, unsecured
indebtedness; (ii) senior in right of payment to the Company's future
indebtedness that is expressly subordinated to the Notes; (iii) effectively
subordinated to the Company's future secured indebtedness, to the extent of the
value of the collateral securing that indebtedness; and (iv) structurally
subordinated to all existing and future indebtedness and other liabilities,
including trade payables, and (to the extent the Company is not a holder
thereof) preferred equity, if any, of the Company's subsidiaries.
The Notes will accrue interest at a rate of 2.50% per annum, payable
semi-annually in arrears on February 1 and August 1 of each year, beginning on
August 1, 2022. The Notes will mature on February 1, 2027, unless earlier
repurchased, redeemed or converted. Before November 1, 2026, noteholders will
have the right to convert their Notes only upon the occurrence of certain
events. From and after November 1, 2026, noteholders may 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. The initial conversion
rate is 78.1968 shares of common stock per $1,000 principal amount of Notes,
which represents an initial conversion price of approximately $12.79 per share
of common stock. The conversion rate and conversion price will be subject to
customary adjustments upon the occurrence of certain events. In addition, if
certain corporate events that constitute a "Make-Whole Fundamental Change" (as
defined in the Indenture) occur, then the conversion rate will, in certain
circumstances, be increased for a specified period of time.
The Notes will be redeemable, in whole or in part (subject to certain
limitations described below), 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 (i) the last
reported sale price per share of the Company's common stock exceeds 130% of the
conversion price on (a) each of at least 20 trading days, whether or not
consecutive, during the 30 consecutive trading days ending on, and including,
the trading day immediately before the date the Company sends the related
redemption notice; and (b) the trading day immediately before the date the
Company sends such notice; and (ii) the "Liquidity Conditions" (as defined in
the Indenture) have been satisfied. However, the Company may not redeem less
than all of the outstanding Notes unless at least $150 million aggregate
principal amount of Notes are outstanding and not called for redemption as of
the time the Company sends the related redemption notice. The redemption price
will be a cash amount equal to the principal amount of the Notes to be redeemed,
plus accrued and unpaid interest, if any, to, but excluding, the redemption
date. In addition, calling any Note for redemption will constitute a Make-Whole
Fundamental Change with respect to that Note, in which case the conversion rate
applicable to the conversion of that Note will be increased in certain
circumstances if it is converted after it is called for redemption and prior to
the close of business on the business day immediately preceding the related
redemption date.
If certain corporate events that constitute a "Fundamental Change" (as defined
in the Indenture) occur, then, subject to a limited exception, noteholders may
require the Company to repurchase their Notes at a cash repurchase price equal
to the principal amount of the Notes to be repurchased, plus accrued and unpaid
interest, if any, to, but excluding, the fundamental change repurchase date. The
definition of Fundamental Change includes certain business combination
transactions involving the Company and certain de-listing events with respect to
the Company's common stock.
The Notes will have customary provisions relating to the occurrence of "Events
of Default" (as defined in the Indenture), which include the following: (i)
certain payment defaults on the Notes (which, in the case of a default in the
payment of interest on the Notes, will be subject to a 30 day cure period); (ii)
the Company's failure to send certain notices under the Indenture within
specified periods of time; (iii) the Company's failure to settle conversions

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of the Notes within a specified period of time; (iv) the Company's failure to
comply with certain covenants in the Indenture relating to the Company's ability
to consolidate with or merge with or into, or sell, lease or otherwise transfer,
in one transaction or a series of transactions, all or substantially all of the
assets of the Company and its subsidiaries, taken as a whole, to another person;
(v) a default by the Company in its other obligations or agreements under the
Indenture or the Notes if such default is not cured or waived within 60 days
after notice is given in accordance with the Indenture; (vi) certain defaults by
the Company or any of its significant subsidiaries with respect to certain
indebtedness for borrowed money or final judgments rendered against the Company
or any of its significant subsidiaries, in each case of at least $40,000,000;
and (vii) certain events of bankruptcy, insolvency and reorganization involving
the Company or any of its significant subsidiaries.
If an Event of Default involving bankruptcy, insolvency or reorganization events
with respect to the Company (and not solely with respect to a significant
subsidiary of the Company) occurs, then the principal amount of, and all accrued
and unpaid interest on, all of the Notes then outstanding will immediately
become due and payable without any further action or notice by any person. If
any other Event of Default occurs and is continuing, then, the Trustee, by
notice to the Company, or noteholders of at least 25% of the aggregate principal
amount of Notes then outstanding, by notice to the Company and the Trustee, may
declare the principal amount of, and all accrued and unpaid interest on, all of
the Notes then outstanding to become due and payable immediately. However,
notwithstanding the foregoing, the Company may elect, at its option, that the
sole remedy for an Event of Default relating to certain failures by the Company
to comply with certain reporting covenants in the Indenture consists exclusively
of the right of the noteholders to receive special interest on the Notes for up
to 270 days at a specified rate per annum not exceeding 1.00% on the principal
amount of the Notes.
The above description of the Indenture and the Notes is a summary and is not
complete. A copy of the Indenture and the form of the certificate representing
the Notes are filed as exhibits 4.1 and 4.2, respectively, to this Current
Report on Form 8-K, and the above summary is qualified by reference to the terms
of the Indenture and the Notes set forth in such exhibits.
Capped Call Transactions
On January 13, 2022 in connection with the pricing of the offering of Notes, the
Company entered into privately negotiated capped call transactions (the "Base
Capped Call Transactions") with one or more of the initial purchasers or
affiliates thereof and other financial institutions (the "Option
Counterparties"). If the initial purchasers exercise their option to purchase
additional Notes, the Company expects to enter into additional capped call
transactions with each of the Option Counterparties (the "Additional Capped Call
Transactions" and, to the extent the confirmation(s) for the Additional Capped
Call Transactions are entered into, such Additional Capped Call Transactions and
the Based Capped Call Transactions are collectively referred herein as the
"Capped Call Transactions"). The Capped Call Transactions cover, subject to
customary anti-dilution adjustments, the aggregate number of shares of the
Company's common stock that initially underlie the Notes, and are expected
generally to reduce potential dilution to the Company's common stock upon any
conversion of Notes and/or offset any cash payments the Company is required to
make in excess of the principal amount of converted Notes, as the case may be,
with such reduction and/or offset subject to a cap, based on the cap price of
the Capped Call Transactions. The cap price of the Capped Call Transactions is
initially $20.0600 per share, which represents a premium of 100% over the last
reported sale price of the Company's common stock on January 13, 2022.
The Capped Call Transactions are separate transactions, each between the Company
and the applicable Option Counterparty, and are not part of the terms of the
Notes and will not affect any holder's rights under the Notes or the Indenture.
Holders of the Notes will not have any rights with respect to the Capped Call
Transactions.
The above description of the Capped Call Transactions is a summary and is not
complete. A form of the confirmation for the Capped Call Transactions is filed
as exhibit 10.1 to this Current Report on Form 8-K, and the above summary is
qualified by reference to the terms of the confirmation set forth in such
exhibit.
Item 2.03. Creation of a Direct Financial Obligation or an Off-Balance Sheet
Arrangement.
The disclosure set forth in Item 1.01 above is incorporated by reference into
this Item 2.03.

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Item 3.02. Unregistered Sales of Equity Securities.
The disclosure set forth in Item 1.01 above is incorporated by reference into
this Item 3.02. The Notes were issued to the initial purchasers in reliance upon
Section 4(a)(2) of the Securities Act of 1933, as amended (the "Securities
Act"), in transactions not involving any public offering.
The Notes were resold by the initial purchasers to persons whom the initial
purchasers reasonably believe are "qualified institutional buyers," as defined
in, and in accordance with, Rule 144A under the Securities Act. Any shares of
the Company's common stock that may be issued upon conversion of the Notes will
be issued in reliance upon Section 3(a)(9) of the Securities Act as involving an
exchange by the Company exclusively with its security holders. Assuming the
initial purchasers fully exercise their option to purchase additional Notes,
initially, a maximum of 42,372,840 shares of the Company's common stock may be
issued upon conversion of the Notes, based on the initial maximum conversion
rate of 99.7008 shares of common stock per $1,000 principal amount of Notes,
which is subject to customary anti-dilution adjustment provisions.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
   Exhibit Number           Description
         4.1                  Indenture, dated as of January 19, 2022,

between Virgin Galactic Holdings,


                            Inc. and U.S. Bank National Association, as

trustee


         4.2                  Form of certificate representing the 2.50%

Convertible Senior Notes due


                            2027 (included as Exhibit A to Exhibit 4.1)
        10.1                  Form of Confirmation of a Capped Call

Transaction


         104                Cover page interactive data file (embedded

within the inline XBRL document).

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