Vieco 10, SCH Sponsor Corp. (the Sponsor) and Mr. Palihapitiya (together, the Voting
Parties), whose total combined voting power represents more than 50% of our combined voting power, are party to the Stockholders Agreement pursuant to which, among other things, (i) Vieco 10 and Mr. Palihapitiya have rights to
designate directors for election to the Board of Directors (and the Voting Parties will vote in favor of such designees at any annual or special meeting of stockholders in which directors are elected), (ii) Vieco 10 has agreed not to take action to
remove the members of the Board of Directors designated by Mr. Palihapitiya pursuant thereto, (iii) Mr. Palihapitiya has agreed not to take action to remove the members of the Board of Directors designated by Vieco 10 pursuant thereto
and (iv) Vieco 10 has, under certain circumstances, the right to approve certain matters as set forth therein.
Under the Stockholders
Agreement, Vieco 10 has the right to designate three directors (the VG designees) for as long as Vieco 10 beneficially owns 57,395,219 or more shares of our common stock, which represents 50% of the number of shares beneficially owned by
Vieco 10 immediately following the closing of the Virgin Galactic Business Combination and related transactions, provided that, when such beneficial ownerships falls below (x) 57,395,219 shares, Vieco 10 will have the right to designate only two
directors, (y) 28,697,610 shares, Vieco 10 will have the right to designate only one director and (z) 11,479,044 shares, Vieco 10 will not have the right to designate any directors. Each of the Sponsor and Mr. Palihapitiya have agreed to vote,
or cause to vote, all of their outstanding shares of our common stock at any annual or special meeting of stockholders in which directors are elected, so as to cause the election of the VG designees.
Additionally, pursuant to the Stockholders Agreement, Mr. Palihapitiya also has the right to designate two directors (the CP
designees), one of which must qualify as an independent director under stock exchange regulations applicable to us, for as long as Mr. Palihapitiya and the Sponsor collectively beneficially own at least 21,375,000 shares of
our common stock, which represents 90% of the number of shares beneficially owned by them as of immediately following the closing of the Virgin Galactic Business Combination, but excluding the 10,000,000 shares purchased by Mr. Palihapitiya
from Vieco USA, Inc., a Delaware corporation (Vieco US), provided that when such beneficial ownership falls below (x) 21,3750,000 shares, Mr. Palihapitiya will have the right to designate only one director, who will not be required
to qualify as an independent director and (y) 11,875,000 shares, Mr. Palihapitiya will not have the right to designate any directors. Vieco 10 has agreed to vote, or cause to vote, all of its outstanding shares of our common stock
at any annual or special meeting of stockholders in which directors are elected, so as to cause the election of the CP designees. The initial chairperson of the Board of Directors is Mr. Palihapitiya until such time as Vieco 10 identifies a
permanent chairperson who qualifies as an independent director and is reasonably acceptable to Mr. Palihapitiya.
Under the terms of the
Stockholders Agreement, two directors (the Other designees), each of whom must qualify as an independent director under stock exchange regulations applicable to us and one of whom must qualify as an audit
committee financial expert as defined under the rules of the SEC, were appointed in accordance with the Stockholders Agreement and, thereafter, will be as determined by the Board of Directors. In addition, under the terms of the
Stockholders Agreement, the individual serving as our Chief Executive Officer (the CEO designee), was appointed in accordance with the Stockholders Agreement to our Board of Directors and will, going forward, be determined by
what individual holds the title of Chief Executive Officer of the Company.
Vieco 10 designated Messrs. Kreeger, Lovell and Mattson for election to our
Board of Directors, Mr. Palihapitiya designated Messrs. Palihapitiya and Bain for election to our Board of Directors, Drs. Austin and Ryans were designated as the Other designees for election to our Board of Directors and Mr. Whitesides
was designated as the CEO designee.
Pursuant to the terms of the Stockholders Agreement, the VG designees, the CP designees and the Other designees
are only able to be removed with or without cause at the request of the party entitled to designate such director. In all other cases and at any other time, directors are only able to be removed by the affirmative vote of
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