On March 16, 2023, Nikola Corporation and Romeo Power, Inc. filed a petition in the Delaware Court of Chancery pursuant to Section 205 of the Delaware General Corporation Law.

Petition Filed to Validate Corporate Acts

On March 16, 2023, Romeo Power, Inc. (“Romeo”) and Nikola Corporation (“Nikola”) filed a petition in the Delaware Court of Chancery pursuant to Section 205 of the Delaware General Corporation Law (“DGCL”), seeking validation of (i) Romeo’s Second Amended and Restated Certificate of Incorporation (the “Second Amended Charter”), (ii) securities that Romeo issued in reliance on the Second Amended Charter; and (iii) a certificate of merger (the “Certificate of Merger”) filed on October 14, 2022 effecting a merger that resulted in Romeo becoming a wholly-owned subsidiary of Nikola and an amendment and restatement of the Second Amended Charter.

The filing is in response to uncertainty created by a recent Court of Chancery decision in Garfield v. Boxed, Inc., 2022 WL 17959766 (Del. Ch. Dec. 27, 2022) that potentially affects the validity of the Second Amended Charter, securities issued in reliance on the validity of that charter, and Nikola’s acquisition of Romeo. Out of an abundance of caution, Romeo and Nikola have elected to pursue the remedial actions described below, and the Court has expedited a hearing on their petition.

Background

On December 28, 2020, at a special meeting of stockholders of RMG Acquisition Corp. (“RMG,” the predecessor to Romeo) called to approve a de-SPAC business combination (the “Business Combination”), a majority of the then-outstanding shares of RMG class A common stock and class B common stock, voting together as a single class, voted on a proposal to approve the Second Amended and Restated Certificate of Incorporation. The proposal, among other things, increased the authorized shares of combined common stock of RMG to 250,000,000, which had previously been authorized as 100,000,000 shares of class A common stock and 10,000,000 shares of class B common stock (the “Authorized Share Charter Amendment”).

Following the completion of the Business Combination, Romeo (formerly known as RMG) issued additional shares of common stock in reliance on the validity of the Authorized Share Charter Amendment that exceeded the 100,000,000 shares of class A common stock previously authorized under the Amended and Restated Certificate of Incorporation of RMG (the “First Amended and Restated Charter”).

On July 30, 2022, Nikola, Romeo and J Purchaser Corp., a wholly owned subsidiary of Nikola, entered into a merger agreement that contemplated Nikola acquiring all outstanding shares of Romeo in an all-stock transaction that ultimately resulted in the holders of Romeo’s common stock receiving shares of Nikola’s common stock at an exchange ratio. On October 14, 2022, the merger was approved and the Certificate of Merger was filed with the State of Delaware.

The decision in Garfield v. Boxed has created uncertainty as to whether Section 242(b)(2) of the DGCL would have required the Authorized Share Charter Amendment to be approved by a separate vote of the majority of the then-outstanding shares of RMG’s Class A common stock, voting as a separate class. As a result, there is uncertainty as to the validity of Romeo’s additional share issuances that were in excess of the number of shares of Class A common stock authorized under the First Amended and Restated Charter, and whether the transactions effectuating the merger with Nikola were validly approved.

To remove uncertainty created by the Boxed decision, Romeo and Nikola filed a petition pursuant to Section 205 of the DGCL seeking validation of the Second Amended Charter, the shares issued in reliance on the validity of the Second Amended Charter, and the Certificate of Merger, including the merger effected thereby and the Third Amended and Restated Certificate of Incorporation attached to the Certificate of Merger. Section 205 of the DGCL permits the Court of Chancery, in its discretion, to validate potentially defective corporate acts and stock after considering a variety of factors.

Since the decision in Boxed v. Garfield, the Court of Chancery has heard and approved a number of petitions filed under Section 205 of the DGCL by companies facing similar uncertainty arising out of the Boxed decision. As explained in the petition, if Romeo and Nikola are not successful with the petition, the uncertainty with respect to Romeo’s capitalization could have a material adverse impact on the companies.

Hearing Date

On March 17, 2023, the Court of Chancery granted the motion to expedite and set a hearing date for the petition to be heard at 1:30 p.m. on March 29, 2023, at the Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware 19801.

A copy of Romeo and Nikola’s petition in the form filed with the Court of Chancery is available at the following address: 03-16-23 Section 205 Petition

If any current or former stockholder of the companies wishes to express a position on the petition, the stockholder may (i) appear at the Section 205 hearing or (ii) file a written submission with the Register in Chancery, Leonard L. Williams Justice Center, 500 North King Street, Wilmington, Delaware 19801, referring to the case captioned, In re Romeo Power, Inc., Case Number 2023-0330-LWW in advance of the hearing, and any such written submission should be emailed to Petitioners’ counsel, Thomas Will, Morris, Nichols, Arsht & Tunnell LLP at twill@morrisnichols.com.