AEROVIRONMENT,INC. (NASDAQ:AVAV) Files An 8-K Entry into a Material Definitive Agreement

ME Staff 8-k

7 years ago

AEROVIRONMENT,INC. (NASDAQ:AVAV) Files An 8-K Entry into a Material Definitive AgreementItem 1.01. Entry into a Material Definitive Agreement.

On December27, 2017, AeroVironment,Inc. (the “Company”) executed a Design and Development Agreement (the “DDA”) with HAPSMobile,Inc. (“HAPSMobile”). Under the DDA, the Company will use its best efforts, up to a maximum net value of $65,011,481, to design and build prototype solar powered high altitude aircrafts (“Solar HAPS”) and ground control stations for HAPSMobile and conduct low altitude and high altitude flight tests of the prototype aircrafts. Under the DDA, HAPSMobile has agreed to pay the Company all of the Company’s costs actually incurred in performing its obligations under the DDA, plus a percentage (profit) fee of such incurred costs. HAPSMobile will pay the Company on a monthly basis for materials ordered throughout the program and make additional payments upon the achievement of certain milestones. The DDA will remain in force until all work contemplated under the DDA is completed by the Company and all amounts owed to the Company for its performance under the DDA are paid by HAPSMobile to the Company. The DDA may be terminated by either party for a material breach by the other party after a 60-day cure period, for a force majeure event resulting in a party not performing its obligations for a period longer than 180 days and for insolvency of the other party. HAPSMobile may also terminate the DDA for convenience at any time. In the event the DDA is terminated for any reason, the Company shall begin a 60-day ramp down process to wind down its performance obligations under the DDA. The Company will be paid for all costs incurred during the ramp down period, plus the applicable fee.

In connection with the execution of the DDA, the Company, HAPSMobile and SoftBank Corp. executed an Intellectual Property License Agreement (the “IPLA”) on December27, 2017 to which the Company and SoftBank each licensed certain of its background intellectual property to HAPSMobile. to the IPLA, HAPSMobile also granted a perpetual, exclusive license to the Company to all intellectual property (a)created by, for or on behalf of, assigned to, or otherwise owned by HAPSMobile under or in connection with a development or engineering agreement between HAPSMobile and either the Company or SoftBank, including the DDA, and (b)assigned, provided to or created by SoftBank under preliminary design agreements between the Company and SoftBank (collectively, “New Intellectual Property”), for non-commercial applications (except for non-commercial applications for the Japanese government). Non-commercial applications (“Non-Commercial Applications”) are non-weaponized military or defense applications by or on behalf of, or substantially for the benefit of, any governmental, public entity and/or similar agency. The license to the New Intellectual Property shall be non-royalty bearing until such time as revenue is generated from the use of the New Intellectual Property, at which time the royalty applied shall be on a FRAND (fair, reasonable and non-discriminatory) basis. The IPLA shall remain in effect until the earlier of (i)HAPSMobile’s dissolution; (ii)the expiration or termination of the Joint Venture Agreement between the owners of HAPSMobile (described below); or (iii)the termination of the IPLA by any party for a material breach by another party after a 60-day cure period or by any party upon the insolvency of another party. The Company’s perpetual license to the New Intellectual Property shall survive the term or termination of the IPLA. Each of the Company and SoftBank has the option to jointly, or singularly, purchase the New Intellectual Property if HAPSMobile ceases operations without the prospect of re-commencing operations. If purchasing the New Intellectual Property singularly in such case, the purchase price for the New Intellectual Property shall be the total cost of the development of the New Intellectual Property (excluding costs associated with any and all hardware and any development of a payload) and, subject to the discretion of HAPSMobile’s steering committee, the costs related to Solar HAPS hardware in which case the Solar HAPS hardware would also be purchased. Each of the Company and SoftBank also has the option to jointly, or singularly, purchase the New Intellectual Property if HAPSMobile’s steering committee decides not to commercialize the New Intellectual Property or agrees that either the Company or SoftBank may exercise its purchase rights to the New Intellectual Property. If purchasing the New Intellectual Property singularly in such case, the purchase price for the New Intellectual Property shall be an amount determined by the steering committee. If SoftBank and the Company jointly purchase the New Intellectual Property in either case, the purchase price for each of them will be an amount equal to the greater of 50% of (i)the total cost to develop the New Intellectual Property (excluding costs associated with any and all hardware and any development of a payload) or (ii)the fair market value of the New Intellectual Property.

HAPSMobile is a Japanese corporation that was formed in December2017 and is 5% owned by the Company and 95% owned by SoftBank Corp. and is governed by a Joint Venture Agreement (the “JVA”) executed between the Company and SoftBank. The Company purchased its 5% stake in HAPSMobile for 210,000,000 yen ($1.9 million) effective as of December27, 2017. Under the JVA, the Company committed to make additional capital contributions of 150,000,000 yen ($1.3 million) and 209,500,000 yen ($1.8 million) in or around April2018 and January2019, respectively, to maintain its 5% ownership stake. Additionally under the JVA, the Company may

purchase additional shares of HAPSMobile, at the same per share price for the purchase of its original 5% stake, to increase its ownership percentage of HAPSMobile to 19% prior to the first flight test of the prototype aircraft produced under the DDA. to the JVA, HAPSMobile has exclusive right to the Solar HAPS in any application other than Non-Commercial Applications and for Non-Commercial Applications for Japan. The Company has the exclusive rights the Solar HAPS for Non-Commercial Applications, except for Non-Commercial Applications for Japan, provided that if such Non-Commercial Applications have a material negative impact on HAPSMobile, the Company will cease activities causes such impact and work with HAPSMobile to eliminate any such negative impact. Additionally, the Company has exclusive rights for the future design and manufacturing work of Solar HAPS aircraft if its quality, performance and cost for such work is competitive.

The foregoing descriptions of the DDA,IPLA and JVA do not purport to be complete and are qualified in their entirety by reference to the complete text of such agreements. The Company intends to seek confidential treatment for certain portions of the DDA,IPLA and JVA , and subject to such confidential treatment, the Company will file the agreements as exhibits to its Quarterly Report on Form10-Q for the quarter ending January27, 2018.

Item 7.01 Regulation FD Disclosure.

The Company’s press release issued on January3, 2018 announcing its entry into the DDA,IPLA and JVA and the transactions contemplated thereby is attached as Exhibit99.1 to this Current Report on Form8-K and incorporated by reference herein.

Item 9.01 Financial Statements and Exhibits.

AeroVironment Inc ExhibitEX-99.1 2 a17-29060_1ex99d1.htm EX-99.1 Exhibit 99.1 AeroVironment Announces Joint Venture and Solar High-Altitude Long-Endurance Unmanned Aircraft System Development Program · Joint venture to fund development and production of solar-powered high-altitude unmanned aircraft systems · AeroVironment to design and develop solar aircraft and ground control stations for flight testing and certification · Net value of development contract is $65 million MONROVIA,…To view the full exhibit click here
About AEROVIRONMENT,INC. (NASDAQ:AVAV)
AeroVironment, Inc. designs, develops, produces, supports and operates a portfolio of products and services for government agencies, businesses and consumers. The Company operates through two segments: Unmanned Aircraft Systems (UAS), which focuses primarily on the design, development, production, support and operation of UAS and tactical missile systems that provide situational awareness, multi-band communications, force protection and other mission effects, and Efficient Energy Systems (EES), which focuses primarily on the design, development, production, marketing, support and operation of electric energy systems. The Company supplies UAS, tactical missile systems and related services primarily to organizations within the United States Department of Defense (DoD). The Company also supplies charging systems and services for electric vehicles (EVs), and power cycling and test systems to commercial, consumer and government customers.