AEROVIRONMENT, INC.
Exhibit 10.7
AEROVIRONMENT, INC.
2002 EQUITY INCENTIVE PLAN
Unless otherwise defined herein, the terms defined in the Plan shall have the same defined
meanings in this Stock Option Agreement.
I. NOTICE OF STOCK OPTION GRANT
[Optionee]
[Address]
You (“Optionee”) have been granted an option to purchase Common Stock of the Company, subject
to the terms and conditions of the Plan and this Stock Option Agreement. The terms of your grant
are set forth below:
Date of Grant: |
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Vesting Commencement Date: |
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Exercise Price per Share:
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$_____per share | |||
Total Number of Shares Granted: |
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Total Exercise Price:
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$_____ | |||
Type of Option:
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Incentive Stock Option | |||
| Non-Qualified Stock Option | ||||
Term/Expiration Date: |
Exercise and Vesting Schedule:
The Shares subject to this Option shall vest according to the following schedule:
[Twenty percent (20%) of the Shares subject to the Option (rounded down to the next whole
number of shares) shall vest on each annual anniversary of the Vesting Commencement Date so that
all of the Shares shall be vested on the fifth annual anniversary of the Vesting Commencement
Date.]
Termination Period:
This Option may be exercised, to the extent vested, for thirty (30) days after Optionee ceases
to be a Service Provider, or such longer period as may be applicable upon the death or disability
of Optionee as provided herein (or, if not provided herein, then as provided in the Plan), but in
no event later than the Term/Expiration Date as provided above.
II. AGREEMENT
1. Grant of Option. The Company hereby grants to the Optionee an Option to purchase
the Common Stock (the “Shares”) set forth in the Notice of Grant, at the exercise price per share
set forth in the Notice of Grant (the “Exercise Price”). Notwithstanding anything to the contrary
anywhere else in this Option Agreement, this grant of an Option is subject to the terms,
definitions and provisions of the AeroVironment, Inc. 2002 Equity Incentive Plan (the “Plan”)
adopted by the Company, which is incorporated herein by reference.
If designated in the Notice of Grant as an Incentive Stock Option, this Option is intended to
qualify as an Incentive Stock Option as defined in Section 422 of the Code; provided, however, that
to the extent that the aggregate Fair Market Value of stock with respect to which Incentive Stock
Options (within the meaning of Code Section 422, but without regard to Code Section 422(d)),
including the Option, are exercisable for the first time by the Optionee during any calendar year
(under the Plan and all other incentive stock option plans of the Company or any Subsidiary)
exceeds $100,000, such options shall be treated as not qualifying under Code Section 422, but
rather shall be treated as Non-Qualified Stock Options to the extent required by Code Section 422.
The rule set forth in the preceding sentence shall be applied by taking options into account in the
order in which they were granted. For purposes of these rules, the Fair Market Value of stock
shall be determined as of the time the option with respect to such stock is granted.
2. Exercise of Option. This Option is exercisable as follows:
(a) Right to Exercise.
(i) This Option shall be exercisable cumulatively according to the vesting schedule set out in
the Notice of Grant. For purposes of this Stock Option Agreement, Shares subject to this Option
shall vest based on Optionee’s continued status as a Service Provider.
(ii) This Option may not be exercised for a fraction of a Share.
(iii) In the event of Optionee’s death, disability or other termination of the Optionee’s
status as a Service Provider, the exercisability of the Option is governed by Sections 7, 8 and 9
below.
(iv) In no event may this Option be exercised after the date of expiration of the term of this
Option as set forth in the Notice of Grant.
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(b) Method of Exercise. This Option shall be exercisable by written Notice (in the
form attached as Exhibit A). The Notice must state the number of Shares for which the
Option is being exercised, and such other representations and agreements with respect to such
shares of Common Stock as may be required by the Company pursuant to the provisions of the Plan.
The Notice must be signed by the Optionee and shall be delivered in person or by certified mail to
the Secretary of the Company. The Notice must be accompanied by payment of the Exercise Price,
including payment of any applicable withholding tax. This Option shall be deemed to be exercised
upon receipt by the Company of such written Notice accompanied by the Exercise Price and payment of
any applicable withholding tax.
No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such
exercise comply with all relevant provisions of law and the requirements of any stock exchange upon
which the Shares may then be listed. Assuming such compliance, for income tax purposes the Shares
shall be considered transferred to the Optionee on the date on which the Option is exercised with
respect to such Shares.
3. Optionee’s Representations. If the Shares purchasable pursuant to the exercise of
this Option have not been registered under the Securities Act of 1933, as amended (the “Securities
Act”), at the time this Option is exercised, Optionee shall, if required by the Company,
concurrently with the exercise of all or any portion of this Option, deliver to the Company his or
her Investment Representation Statement in the form attached hereto as Exhibit B.
4. Lock-Up Period. Optionee hereby agrees that if so requested by the Company or any
representative of the underwriters (the “Managing Underwriter”) in connection with any registration
of the offering of any securities of the Company under the Securities Act, Optionee shall not sell
or otherwise transfer any Shares or other securities of the Company during the 180-day period (or
such longer period as may be requested in writing by the Managing Underwriter and agreed to in
writing by the Company) (the “Market Standoff Period”) following the effective date of a
registration statement of the Company filed under the Securities Act; provided, however, that such
restriction shall apply only to the first registration statement of the Company to become effective
under the Securities Act that includes securities to be sold on behalf of the Company to the public
in an underwritten public offering under the Securities Act. The Company may impose stop-transfer
instructions with respect to securities subject to the foregoing restrictions until the end of such
Market Standoff Period.
5. Method of Payment. Payment of the Exercise Price shall be by any of the following,
or a combination thereof, at the election of the Optionee:
(a) cash;
(b) check;
(c) with the consent of the Administrator, a full recourse promissory note bearing interest
(at no less than a market rate of interest which shall also preclude the imputation of interest
under the Code) and payable upon such terms as may be prescribed by the Administrator;
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(d) with the consent of the Administrator, surrender of other shares of Common Stock of the
Company which (A) in the case of Shares acquired from the Company, have been owned by the Optionee
for more than six (6) months on the date of surrender, and (B) have a Fair Market Value on the date
of surrender equal to the Exercise Price of the Shares as to which the Option is being exercised;
(e) with the consent of the Administrator, surrendered Shares issuable upon the exercise of
the Option having a Fair Market Value on the date of exercise equal to the aggregate Exercise Price
of the Option or exercised portion thereof;
(f) with the consent of the Administrator, property of any kind which constitutes good and
valuable consideration; or
(g) with the consent of the Administrator, delivery of a notice that the Optionee has placed a
market sell order with a broker with respect to Shares then issuable upon exercise of the Option
and that the broker has been directed to pay a sufficient portion of the net proceeds of the sale
to the Company in satisfaction of the aggregate Exercise Price; provided, that payment of such
proceeds is then made to the Company upon settlement of such sale.
6. Restrictions on Exercise. This Option may not be exercised until the Plan has been
approved by the stockholders of the Company. If the issuance of Shares upon such exercise or if
the method of payment for such shares would constitute a violation of any applicable federal or
state securities or other law or regulation, then the Option may also not be exercised. The
Company may require Optionee to make any representation and warranty to the Company as may be
required by any applicable law or regulation before allowing the Option to be exercised.
7. Termination of Relationship. If Optionee ceases to be a Service Provider (other
than by reason of the Optionee’s death or the total and permanent disability of the Optionee as
defined in Code Section 22(e)(3)), Optionee may exercise this Option during the Termination Period
set out in the Notice of Grant, to the extent the Option was vested at the date of such
termination. To the extent that Optionee was not vested in this Option at the date on which
Optionee ceases to be a Service Provider, or if Optionee does not exercise this Option within the
time specified herein, the Option shall terminate.
8. Disability of Optionee. If Optionee ceases to be a Service Provider as a result of
his or her total and permanent disability as defined in Code Section 22(e)(3), Optionee may
exercise the Option to the extent the Option was vested at the date on which Optionee ceases to be
a Service Provider, but only within twelve (12) months from such date (and in no event later than
the expiration date of the term of this Option as set forth in the Notice of Grant). To the extent
that the Option is not vested at the date on which Optionee ceases to be a Service Provider, or if
Optionee does not exercise such Option within the time specified herein, the Option shall
terminate.
9. Death of Optionee. If Optionee ceases to be a Service Provider as a result of the
death of Optionee, the vested portion of the Option may be exercised at any time within twelve (12)
months following the date of death (and in no event later than the expiration date of the term of
this Option as set forth in the Notice of Grant) by Optionee’s estate or by a person
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who acquires the right to exercise the Option by bequest or inheritance. To the extent that
the Option is not vested at the date of death, or if the Option is not exercised within the time
specified herein, the Option shall terminate.
10. Non-Transferability of Option. This Option may not be transferred in any manner
except by will or by the laws of descent or distribution . It may be exercised during the lifetime
of Optionee only by Optionee. The terms of this Option shall be binding upon the executors,
administrators, heirs, successors and assigns of the Optionee.
11. Term of Option. This Option may be exercised only within the term set out in the
Notice of Grant.
12. Restrictions on Shares. Optionee hereby agrees that Shares purchased upon the
exercise of the Option shall be subject to such terms and conditions as the Administrator shall
determine in its sole discretion, including, without limitation, restrictions on the
transferability of Shares, the right of the Company to repurchase Shares, and a right of first
refusal in favor of the Company with respect to permitted transfers of Shares. Such terms and
conditions may, in the Administrator’s sole discretion, be contained in the Exercise Notice with
respect to the Option or in such other agreement as the Administrator shall determine and which the
Optionee hereby agrees to enter into at the request of the Company.
[Signature page follows]
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This Agreement may be executed in two or more counterparts, each of which shall be deemed an
original and all of which shall constitute one document.
| AEROVIRONMENT, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
OPTIONEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE OPTION HEREOF IS
EARNED ONLY BY CONTINUING CONSULTANCY OR EMPLOYMENT AT THE WILL OF THE COMPANY (NOT THROUGH
THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER). OPTIONEE
FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS AGREEMENT, NOR IN THE COMPANY’S 2002
EQUITY INCENTIVE PLAN WHICH IS INCORPORATED HEREIN BY REFERENCE, SHALL CONFER UPON OPTIONEE
ANY RIGHT WITH RESPECT TO CONTINUATION OF EMPLOYMENT OR CONSULTANCY BY THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH OPTIONEE’S RIGHT OR THE COMPANY’S RIGHT TO TERMINATE
OPTIONEE’S EMPLOYMENT OR CONSULTANCY AT ANY TIME, WITH OR WITHOUT CAUSE.
Optionee acknowledges receipt of a copy of the Plan and represents that he is familiar with
the terms and provisions thereof. Optionee hereby accepts this Option subject to all of the terms
and provisions hereof. Optionee has reviewed the Plan and this Option in their entirety, has had
an opportunity to obtain the advice of counsel prior to executing this Option and fully understands
all provisions of the Option. Optionee hereby agrees to accept as binding, conclusive and final
all decisions or interpretations of the Administrator upon any questions arising under the Plan or
this Option. Optionee further agrees to notify the Company upon any change in the residence
address indicated below.
Dated: |
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| [OPTIONEE] | ||||||||
| Residence Address: | ||||||||
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EXHIBIT A
AEROVIRONMENT, INC.
2002 EQUITY INCENTIVE PLAN
EXERCISE NOTICE
AeroVironment, Inc.
Attention: Chief Financial Officer
1. Exercise of Option. Effective as of today, , ___, the undersigned
(“Optionee”) hereby elects to exercise Optionee’s option to purchase ___shares of the Common
Stock (the “Shares”) of AeroVironment, Inc. (the “Company”) under and pursuant to the
AeroVironment, Inc. 2002 Equity Incentive Plan (the “Plan”) and the ¨ Incentive
¨ Non-Qualified Stock Option Agreement dated , ___, (the “Option
Agreement”).
2. Representations of Optionee. Optionee acknowledges that Optionee has received,
read and understood the Plan and the Option Agreement. Optionee agrees to abide by and be bound by
their terms and conditions.
3. Rights as Stockholder. Until the stock certificate evidencing such Shares is
issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized
transfer agent of the Company), no right to vote or receive dividends or any other rights as a
stockholder shall exist with respect to Shares subject to the Option, notwithstanding the exercise
of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly
after the Option is exercised. No adjustment will be made for a dividend or other right for which
the record date is prior to the date the stock certificate is issued, except as provided in Section
11 of the Plan.
Optionee shall enjoy rights as a stockholder until such time as Optionee disposes of the
Shares or the Company and/or its assignee(s) exercises the Right of First Refusal hereunder. Upon
such exercise, Optionee shall have no further rights as a holder of the Shares so purchased except
the right to receive payment for the Shares so purchased in accordance with the provisions of this
Agreement, and Optionee shall forthwith cause the certificate(s) evidencing the Shares so purchased
to be surrendered to the Company for transfer or cancellation.
4. Optionee’s Rights to Transfer Shares.
(a) Company’s Right of First Refusal. Before any Shares held by Optionee or any
permitted transferee (each, a “Holder”) may be sold, pledged, assigned, hypothecated, transferred,
or otherwise disposed of (including transfer by gift or operation of law and, collectively,
“Transfer” or “Transferred”), the Company or its assignee(s) shall have a right of first refusal to
purchase the Shares on the terms and conditions set forth in this Section (the “Right of First
Refusal”).
(i) Notice of Proposed Transfer. The Holder of the Shares shall deliver to the
Company a written notice (the “Notice”) stating: (i) the Holder’s bona fide intention to sell or
otherwise Transfer such Shares; (ii) the name of each proposed purchaser or other transferee
(“Proposed Transferee”); (iii) the number of Shares to be Transferred to each Proposed Transferee;
and (iv) the bona fide cash price or other consideration for which the Holder proposes to Transfer
the Shares (the “Offered Price”), and the Holder shall offer the Shares at the Offered Price to the
Company or its assignee(s).
(ii) Exercise of Right of First Refusal. Within thirty (30) days after receipt of the
Notice, the Company and/or its assignee(s) may elect in writing to purchase all, but not less than
all, of the Shares proposed to be Transferred to any one or more of the Proposed Transferees. The
purchase price will be determined in accordance with subsection (c) below.
(iii) Purchase Price. The purchase price (“Purchase Price”) for the Shares
repurchased under this Section shall be the Offered Price. If the Offered Price includes
consideration other than cash, the cash equivalent value of the non-cash consideration shall be
determined by the Board of Directors of the Company in good faith.
(iv) Payment. Payment of the Purchase Price shall be made, at the option of the
Company or its assignee(s), in cash (by check), by cancellation of all or a portion of any
outstanding indebtedness of the Holder to the Company (or, in the case of repurchase by an
assignee, to the assignee), or by any combination thereof within thirty (30) days after receipt of
the Notice or in the manner and at the times set forth in the Notice.
(v) Holder’s Right to Transfer. If all of the Shares proposed in the Notice to be
transferred to a given Proposed Transferee are not purchased by the Company and/or its assignee(s)
as provided in this Section, then the Holder may sell or otherwise Transfer such Shares to that
Proposed Transferee at the Offered Price or at a higher price, provided that such sale or other
Transfer is consummated within one hundred twenty (120) days after the date of the Notice and
provided further that any such sale or other Transfer is effected in accordance with any applicable
securities laws and the Proposed Transferee agrees in writing that the provisions of this Section
shall continue to apply to the Shares in the hands of such Proposed Transferee. If the Shares
described in the Notice are not Transferred to the Proposed Transferee within such period, a new
Notice shall be given to the Company, and the Company and/or its assignees shall again be offered
the Right of First Refusal as provided herein before any Shares held by the Holder may be sold or
otherwise Transferred.
(b) Exception for Certain Family Transfers and Transfers to Other Stockholders.
Anything to the contrary contained in this Section notwithstanding, the following Transfers shall
be exempt from the Right of First Refusal: (i) a Transfer of any or all of the Shares during the
Optionee’s lifetime or on the Optionee’s death by will or intestacy to the Optionee’s Immediate
Family or a trust for the benefit of the Optionee’s Immediate Family and (ii) a Transfer to any
other stockholder of the Company. As used herein, “Immediate Family” shall mean spouse, lineal
descendant or antecedent, father, mother, brother or sister or stepchild (whether or not adopted).
In such case, the transferee or other recipient shall receive and hold the Shares so Transferred
subject to the provisions of this Section (including the Right of First
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Refusal) and there shall be no further Transfer of such Shares except in accordance with the
terms of this Section.
(c) Termination of Right of First Refusal. The Right of First Refusal shall terminate
as to all Shares upon the first to occur of (i) ninety (90) days after a sale of Common Stock of
the Company to the general public pursuant to a registration statement filed with and declared
effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended (a
“Public Offering”), or (ii) a sale of the Company (whether by merger, consolidation, sale or all or
substantially all of the Company’s assets or sale of all of the Company’s capital stock) which is
approved by the holders of the Company’s securities representing at least fifty-one percent (51%)
of the combined voting power of all outstanding securities of the Company.
5. Company Call Right.
(a) Upon the occurrence of any Purchase Event (as defined below), the Company shall have the
right to purchase from Optionee, or Optionee’s personal representative, as the case may be, any or
all of the Shares (and any shares of the Company’s Common Stock issued to the Optionee with respect
to the Shares as a result of any reclassification, reorganization, recapitalization, stock split,
stock dividend, combination or similar transaction) owned by the Optionee as of the date of the
Company’s exercise of its purchase right under this Section 5 (the “Call Right”) at the Purchase
Price (as defined below).
(b) The Company may exercise the Company Call Right by delivering personally or by registered
mail to Optionee (or his authorized transferee or legal representative, as the case may be), within
ninety (90) days of the Purchase Event, a notice in writing indicating the Company’s intention to
exercise the Company Call Right and setting forth a date for closing not later than thirty (30)
days from the mailing of such notice (the “Closing Date”). The closing shall take place at the
Company’s office. At the closing, the holder of the certificates for the Shares being transferred
shall deliver the stock certificate or certificates evidencing the Shares, and the Company shall
deliver the purchase price therefor.
(c) The Purchase Price may be paid to the Optionee, or Optionee’s personal representative, as
the case may be, at the option of the Company, by either of the following methods:
(i) Payment in full in cash on the Closing Date; or
(ii) Cancellation of purchase money indebtedness.
(d) The Company Call Right shall terminate as to all Shares upon the first to occur of (i)
ninety days (90) days following the date of the Purchase Event, if the Company does not elect to
exercise the Company Call Right by giving the requisite notice within such time, (ii) a Public
Offering, or (iii) a sale of the Company (whether by merger, consolidation, sale of all or
substantially all of the Company’s assets or sale of all of the Company’s capital stock) which is
approved by the holders of the Company’s securities representing at least fifty-one percent (51%)
of the combined voting power of all outstanding securities of the Company.
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(e) As used herein, “Purchase Event” shall mean (i) death of the Holder, (ii) termination of
the Optionee’s Service Provider relationship with the Company for any reason, or (iii) a bona fide
proposal by the Optionee to mortgage, pledge or otherwise encumber all or a part of the Shares (and
any shares of the Company’s Common Stock issued to the Optionee with respect to the Shares as a
result of any reclassification, reorganization, recapitalization, stock split, stock dividend,
combination or similar transaction) to which the Company does not consent within the ten (10) days
following the Company’s receipt of notice of such proposal from the Optionee.
(f) As used herein, “Purchase Price” shall be determined in accordance with the following
provisions.
(i) If there has been a Substantial Sale of stock of the Company within one (1) year of the
Purchase Event, the Purchase Price shall be the price paid per share in the such sale of stock of
the Company.
(ii) If no Substantial Sale of stock of the Company has occurred within one (1) year of the
Purchase Event, the Purchase Price shall be determined by (a) multiplying the Company’s pre-tax
profit, excluding extraordinary items, for the one (1) year period ending on the Valuation Date (as
determined pursuant to the Company’s unaudited financial statements for the periods then ended) by
six (6) and dividing the product thus obtained by the number of shares of the Company’s stock
outstanding as of the Valuation Date, assuming that that all vested stock options outstanding as of
the date of the calculation were exercised as of such Valuation Date on the terms applicable to
such options; or (b) such other method or manner as the Administrator shall determine in its sole
discretion is reasonable and appropriate in light of the circumstances of the Company at the time
of such determination. As used herein, “Valuation Date” shall mean the last day of the month
immediately prior to the Closing Date.
(iii) As used herein, “Substantial Sale” shall mean a sale of not less than twenty thousand
(20,000) shares of stock of the Company pursuant to terms made known to the Company, provided
however that Substantial Sale shall not include any purchases of stock pursuant to employee stock
options.
(iv) Notwithstanding the provisions of Paragraph (f)(1) and (ii), in no event shall the
Purchase Price be less than the value determined on the last day of the month immediately prior to
the Closing Date in accordance with the determinations made monthly by the Company on the basis of
the balance sheets prepared monthly for management purposes, following generally accepted
accounting principles, consistently applied, and assuming that all vested stock options outstanding
as of the date of the calculation were exercised as of such date on the terms applicable to such
options.
(v) Should any adjustments be required upon audit of the Company’s unaudited financial
statements, or in order to assure the reporting pursuant to the unaudited financial statements as
in accordance with generally accepted accounting principles, the Purchase Price determined
hereunder shall be retroactively adjusted. Equitable adjustment shall be made in the event of one
or more stock splits, reverse stock splits, stock dividend or comparable events. Each party
expressly acknowledges and agrees that the formula described herein is a
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good-faith attempt to determine the fair-market value of the stock of the Company for the
purpose of the Company Call Right.
6. Tax Consultation. Optionee understands that Optionee may suffer adverse tax
consequences as a result of Optionee’s purchase or disposition of the Shares. Optionee represents
that Optionee has consulted with any tax consultants Optionee deems advisable in connection with
the purchase or disposition of the Shares and that Optionee is not relying on the Company for any
tax advice.
7. Restrictive Legends and Stop-Transfer Orders.
(a) Legends. Optionee understands and agrees that the Company shall cause the legends
set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s)
evidencing ownership of the Shares together with any other legends that may be required by state or
federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE
ACT OR, IN THE OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE
ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR
HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
RESTRICTIONS ON TRANSFER AND RIGHT OF FIRST REFUSAL OPTIONS HELD BY THE
ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE EXERCISE NOTICE BETWEEN THE
ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE
OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS
AND RIGHT OF FIRST REFUSAL ARE BINDING ON TRANSFEREES OF THESE SHARES.
(b) Stop-Transfer Notices. Optionee agrees that, in order to ensure compliance with
the restrictions referred to herein, the Company may issue appropriate “stop transfer” instructions
to its transfer agent, if any, and that, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.
(c) Refusal to Transfer. The Company shall not be required (i) to transfer on its
books any Shares that have been sold or otherwise transferred in violation of any of the provisions
of this Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay
dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
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8. Successors and Assigns. The Company may assign any of its rights under this
Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the
successors and assigns of the Company. Subject to the restrictions on transfer herein set forth,
this Agreement shall be binding upon Optionee and his or her heirs, executors, administrators,
successors and assigns.
9. Interpretation. Any dispute regarding the interpretation of this Agreement shall
be submitted by Optionee or by the Company forthwith to the Company’s Board of Directors or the
committee thereof that administers the Plan (the “Administrator”), which shall review such dispute
at its next regular meeting. The resolution of such a dispute by the Administrator shall be final
and binding on the Company and on Optionee.
10. Governing Law; Severability. This Agreement shall be governed by and construed in
accordance with the laws of the State of California excluding that body of law pertaining to
conflicts of law. Should any provision of this Agreement be determined by a court of law to be
illegal or unenforceable, the other provisions shall nevertheless remain effective and shall remain
enforceable.
11. Notices. Any notice required or permitted hereunder shall be given in writing and
shall be deemed effectively given upon personal delivery or upon deposit in the United States mail
by certified mail, with postage and fees prepaid, addressed to the other party at its address as
shown below beneath its signature, or to such other address as such party may designate in writing
from time to time to the other party.
12. Further Instruments. The parties agree to execute such further instruments and to
take such further action as may be reasonably necessary to carry out the purposes and intent of
this Agreement.
13. Delivery of Payment. Optionee herewith delivers to the Company the full Exercise
Price for the Shares, as well as any applicable withholding tax.
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14. Entire Agreement. The Plan and Stock Option Agreement are incorporated herein by
reference. This Agreement, the Plan, the Stock Option Agreement and the Investment Representation
Statement constitute the entire agreement of the parties and supersede in their entirety all prior
undertakings and agreements of the Company and Optionee with respect to the subject matter hereof.
| Submitted by: | Accepted by: | |||||||
| OPTIONEE: | AEROVIRONMENT, INC. | |||||||
| By: | ||||||||
| Its: | ||||||||
Address: |
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EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
OPTIONEE
|
: | |||
COMPANY
|
: | AEROVIRONMENT, INC. | ||
SECURITY
|
: | COMMON STOCK | ||
AMOUNT
|
: | |||
DATE
|
: |
In connection with the purchase of the above-listed Securities, the undersigned Optionee represents
to the Company the following:
(a) Optionee is aware of the Company’s business affairs and financial condition and has
acquired sufficient information about the Company to reach an informed and knowledgeable decision
to acquire the Securities. Optionee is acquiring these Securities for investment for Optionee’s
own account only and not with a view to, or for resale in connection with, any “distribution”
thereof within the meaning of the Securities Act of 1933, as amended (the “Securities Act”).
(b) Optionee acknowledges and understands that the Securities constitute “restricted
securities” under the Securities Act and have not been registered under the Securities Act in
reliance upon a specific exemption therefrom, which exemption depends upon, among other things, the
bona fide nature of Optionee’s investment intent as expressed herein. In this connection, Optionee
understands that, in the view of the Securities and Exchange Commission, the statutory basis for
such exemption may be unavailable if Optionee’s representation was predicated solely upon a present
intention to hold these Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the market price of the
Securities, or for a period of one year or any other fixed period in the future. Optionee further
understands that the Securities must be held indefinitely unless they are subsequently registered
under the Securities Act or an exemption from such registration is available. Optionee further
acknowledges and understands that the Company is under no obligation to register the Securities.
Optionee understands that the certificate evidencing the Securities will be imprinted with a legend
which prohibits the transfer of the Securities unless they are registered or such registration is
not required in the opinion of counsel satisfactory to the Company and any other legend required
under applicable state securities laws.
(c) Optionee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under
the Securities Act, which, in substance, permit limited public resale of “restricted securities”
acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701
at
the time of the grant of the Option to the Optionee, the exercise will be exempt from
registration under the Securities Act. In the event the Company becomes subject to the reporting
requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days
thereafter (or such longer period as any market stand-off agreement may require) the Securities
exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions
specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited
“broker’s transaction” or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability
of certain public information about the Company, (3) the amount of Securities being sold during any
three (3) month period not exceeding the limitations specified in Rule 144(e), and (4) the timely
filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time of grant of the
Option, then the Securities may be resold in certain limited circumstances subject to the
provisions of Rule 144, which requires the resale to occur not less than one year after the later
of the date the Securities were sold by the Company or the date the Securities were sold by an
affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the
Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than
two (2) years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of
the paragraph immediately above.
(d) Optionee further understands that in the event all of the applicable requirements of Rule
701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A,
or some other registration exemption will be required; and that, notwithstanding the fact that
Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has
expressed its opinion that persons proposing to sell private placement securities other than in a
registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden
of proof in establishing that an exemption from registration is available for such offers or sales,
and that such persons and their respective brokers who participate in such transactions do so at
their own risk. Optionee understands that no assurances can be given that any such other
registration exemption will be available in such event.
| Signature of Optionee: | ||||
Date: , 2002
1
