Loan commitment letter, dated January 11, 2021, by and among AeroVironment, Inc., Bank of America, N.A., BofA Securities, Inc., JPMorgan Chase Bank, N.A., and U.S. Bank National Association

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Very truly yours,

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BANK OF AMERICA, N.A.

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By:

/s/Angel Sutoyo

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Name:

Angel Sutoyo

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Title:

Senior Vice President

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BOFA SECURITIES, INC.

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By:

/s/Mark Post

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Name:

Mark Post

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Title:

Managing Director

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JPMORGAN CHASE BANK, N.A.

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By:

/s/Anna C. Araya

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Name:

Anna C. Araya

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Title:

Executive Director

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U.S. BANK NATIONAL ASSOCIATION

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By:

/s/G. Scott Lambert

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Name:

G. Scott Lambert

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Title:

Vice President

ACCEPTED AND AGREED TO

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AS OF THE DATE FIRST ABOVE WRITTEN:

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AEROVIRONMENT, INC.,

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a Delaware corporation

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By:

/s/Kevin P. McDonnell

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Name:

Kevin P. McDonnell

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Title:

CFO

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Borrower:

AeroVironment, Inc., a Delaware corporation (the “Borrower”).

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Guarantors:

The obligations arising under the Facilities (as defined below) (the “Obligations”) and the obligations arising in connection with any treasury or cash management services, interest rate, currency, foreign exchange or commodity swap or hedging arrangements entered into by the Borrower or any of its subsidiaries with a Lender (as defined below) (or any affiliate of any Lender) (the “Additional Secured Obligations”; the Additional Secured Obligations, together with the Obligations, the “Secured Obligations”) will be guaranteed by each existing and future direct and indirect domestic subsidiary of the Borrower (each, a “Guarantor”; the Guarantors, together with the Borrower, the “Credit Parties” and each a “Credit Party”). In addition, the Borrower will guaranty all Additional Secured Obligations of any subsidiary of the Borrower. All guarantees will be guarantees of payment and not of collection. Notwithstanding anything contained herein to the contrary, any Additional Secured Obligations of a Credit Party shall exclude certain swap obligations if, and to the extent that, such swap obligation is or becomes illegal under the Commodity Exchange Act with respect to such Credit Party (determined after giving effect to any keepwell or other support for the benefit of such Credit Party).

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Joint Lead Arrangers and Joint Bookrunners:

BofA Securities, Inc. (or any of its designated affiliates, “BofA Securities”), JPMorgan Chase Bank, N.A. (“JPM”) and U.S. Bank National Association (“U.S. Bank”; U.S. Bank, together with BofA Securities and JPM, in such capacities, the “Joint Lead Arrangers” and each a “Joint Lead Arranger”) will act as joint lead arrangers and joint bookrunners for the Facilities. It is understood and agreed that BofA Securities shall have the “left” placement in any and all marketing materials or other documentation used in connection with the Facilities and shall hold the leading role and responsibilities conventionally associated with such “left” placement, including sole selling role in respect of the Facilities.

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Administrative Agent:

Bank of America, N.A. (through itself or one of its designated affiliates or branch offices, “Bank of America”) will act as sole administrative agent (in such capacity, the “Administrative Agent”) for the Facilities.

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Lenders:

A syndicate of banks and financial institutions (including Bank of America, JPM and U.S. Bank) arranged by the Joint Lead Arrangers in consultation with the Borrower, which institutions shall be acceptable to

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the Administrative Agent and the Borrower (collectively, the “Lenders” and each a “Lender”).

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Facilities:

An aggregate principal amount of $300 million will be available through the following facilities:

(a)         a $100 million revolving credit facility available to the Borrower in U.S. dollars (the “Revolving Facility”), which will include a $10 million sublimit for the issuance of standby and commercial letters of credit (each, a “Letter of Credit”) to the Borrower or any subsidiary of the Borrower in U.S. dollars, and a $10 million sublimit for swingline loans (each, a “Swingline Loan”) available to the Borrower in U.S. dollars.  Letters of Credit will be issued by Bank of America (in such capacity, the “L/C Issuer”), and Swingline Loans may be made available by Bank of America (in such capacity, the “Swingline Lender”).  Each of the Lenders under the Revolving Facility will purchase an irrevocable and unconditional participation in each Letter of Credit and each Swingline Loan.

(b)         a $200 million term A loan, all of which will be drawn by the Borrower in U.S. dollars on the Closing Date (as defined below) (the “Term Loan Facility”).

The Revolving Facility and the Term Loan Facility are collectively referred to herein as the “Facilities.”

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Purpose:

The proceeds of the Revolving Facility shall be used from time to time after the Closing Date for working capital and other general corporate purposes not in contravention of any law or of the Definitive Documentation (as defined below).  The Revolving Facility shall be undrawn on the Closing Date.

The proceeds of the Term Loan Facility shall be used on the Closing Date to pay the Acquisition Costs.

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Closing Date:

The date of effectiveness of the Definitive Documentation and the consummation of the Acquisition (the “Closing Date”).

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Interest Rates:

As set forth in Addendum I to this Exhibit B.

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Maturity:

The Revolving Facility shall terminate, and all amounts outstanding thereunder shall be due and payable in full, on the date that is five (5) years after the Closing Date (the “Maturity Date”).

The Term Loan Facility shall be subject to repayment according to the Scheduled Amortization (as defined below), with the final payment of all amounts outstanding, plus accrued interest, being due on the Maturity Date.

Incremental Facilities:

The definitive documentation for the Facilities (the “Definitive Documentation”) will permit the Borrower, from time to time after the Closing Date, upon notice to the Administrative Agent, to increase the amount of the Revolving Facility (any such increase, a “Revolving Facility Increase”) and/or to add one or more additional tranches of term loans to the Definitive Documentation (any such additional tranche of term loans, an “Incremental Term Facility”; each Incremental Term Facility, together with each Revolving Facility Increase, each an “Incremental Facility”), in an aggregate amount for all such Incremental Facilities not to exceed an amount (the “Incremental Amount”) equal to, as of any date of determination, the sum of (a) the total of (i) $100 million, minus (ii) the aggregate amount of all Incremental Facilities incurred prior to such date in reliance on clause (a)(i) above, plus (b) an unlimited amount, so long as, after giving effect to the incurrence of any such Incremental Facility on a pro forma basis (and assuming for such purpose that all amounts with respect thereto are fully drawn), the Consolidated Leverage Ratio (as defined below) is equal to or less than 2.00 to 1.0 (the “Leverage-Based Prong”).

In addition to compliance with the Incremental Amount, the incurrence of any Incremental Facility shall be subject to the following terms and conditions: (a) no existing Lender shall be required to participate in any such Incremental Facility without such Lender’s consent, and the decision to participate in any such Incremental Facility shall be made in the sole discretion of each Lender; (b) subject to the provisions set forth under the heading “Limited Condition Acquisitions” below, no default or event of default shall have occurred and be continuing at the time of incurrence of any such Incremental Facility or would exist immediately after giving effect thereto; (c) any such Incremental Facility shall rank pari passu in right of payment with the Facilities and shall be secured on a pari passu basis with the Collateral (as hereinafter defined); (d) subject to the provisions set forth under the heading “Limited Condition Acquisitions” below, the representations and warranties in the Definitive Documentation shall be true and correct in all material respects (or in all respects if any such representation or warranty is already qualified by materiality) on and as of the date of incurrence of any such Incremental Facility, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or in all respects if any such representation or warranty is already qualified by materiality) as of such earlier date, and except that for purposes of this condition, the representations and warranties contained in the Definitive Documentation with respect to accuracy of financial statements shall be deemed to refer to the most recent financial statements delivered pursuant to the Definitive Documentation; (e) subject to the provisions set forth under the heading “Limited Condition Acquisitions” below, upon giving effect to any such Incremental Facility on a pro forma basis (and assuming for such purpose that all amounts with respect thereto are fully drawn), the Credit Parties would be in compliance with the financial covenants set forth in the Definitive Documentation; (f) with respect to any such Incremental Facility that is an Incremental Term Facility: (i) the maturity date of such Incremental Term Facility shall be

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no earlier than the later of the Maturity Date and the then-latest maturity date for any then-existing Incremental Term Facility, (ii) the weighted average life to maturity of such Incremental Term Facility shall be no shorter than the then-remaining weighted average life to maturity of the term loans under the Term Loan Facility or any then-existing term loans under any then-existing Incremental Term Facility, and (iii) subject to clauses (f)(i) and (f)(ii) above, the amortization schedule applicable to such Incremental Term Facility shall be as determined by the Borrower and the lenders for such Incremental Term Facility; (g) any such Incremental Facility shall be in a minimum principal amount of $25 million and integral multiples of $1 million in excess thereof (or such other amount as the Administrative Agent may agree in its sole discretion); (h) the Administrative Agent shall have received (i) a certificate of the Borrower certifying that (A) before and after giving effect to the incurrence of such Incremental Facility, the conditions set forth in clauses (b) and (d) above have been satisfied, (B) the condition set forth in clause (e) above has been satisfied (which certification shall include reasonably detailed calculations to demonstrate satisfaction of such condition), and (C) to the extent such Incremental Facility is being incurred in reliance on the Leverage-Based Prong, after giving effect to the incurrence of such Incremental Facility, such Incremental Facility is permitted pursuant to the Leverage-Based Prong (which certification shall include reasonably detailed calculations to demonstrate satisfaction of such condition), (ii) a certificate of each Credit Party attaching the resolutions adopted by such Credit Party approving such Incremental Facility, and (iii) if requested by the Administrative Agent, an opinion or opinions of counsel for the Credit Parties, dated as of the date of incurrence of any such Incremental Facility, in form and substance reasonably satisfactory to the Administrative Agent; and (i)(i) any such Incremental Facility that is a Revolving Facility Increase shall be on the same terms and conditions as the Revolving Facility, and (ii) except as otherwise provided in clause (f) above, any such Incremental Facility that is an Incremental Term Facility shall be on the same terms and conditions as the Term Loan Facility, or, if not, shall be on terms and conditions satisfactory to the Administrative Agent (it being understood and agreed that the following shall be reasonably satisfactory to the Administrative Agent: (A) covenants or other provisions applicable only to periods after the later of the Maturity Date and the maturity date for any then-existing Incremental Term Facility, (B) to the extent required by any lender providing such Incremental Term Facility, covenants or other provisions that are not set forth in the Definitive Documentation at the time of incurrence of such Incremental Term Facility, so long as such covenants or other provisions are also added for the benefit of the Administrative Agent and the Lenders under the Definitive Documentation at the time of the incurrence of such Incremental Term Facility, and (C) to the extent required by any lender providing such Incremental Term Facility, customary call protection and mandatory prepayments, in each case, which may be applicable solely with respect to such Incremental Term Facility (provided, that, with respect to any mandatory prepayment required in connection with the establishment of such Incremental Term Facility, such mandatory prepayment shall be applied ratably to the term loans under the Term Loan Facility and any

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other then-existing term loans under any then-existing Incremental Term Facility)).

In connection with any Revolving Facility Increase, the Borrower shall prepay any revolving loans under the Revolving Facility outstanding on the effective date of such Revolving Facility Increase (and pay additional amounts to reimburse the Lenders’ breakage and redeployment costs in the case of prepayment of LIBOR borrowings) to the extent necessary to keep the outstanding revolving loans ratable with any revised revolving commitments arising from any non-ratable increase in connection such Revolving Facility Increase.

The Borrower may seek commitments in respect of any Incremental Facility from any existing Lender (each of which shall be entitled to agree or decline to participate in such Lender’s sole discretion) and additional financial institutions who will become Lenders in connection therewith.  Any new lender providing all or any portion of any Incremental Facility shall become a party to the Definitive Documentation by executing such joinder documentation as is required by the Administrative Agent.

The Definitive Documentation shall be amended to give effect to any Incremental Facility pursuant to documentation executed by lenders providing such Incremental Facility, the Administrative Agent and the Credit Parties, without the consent of any person or entity (including any other existing Lender), including amendments (a) to reflect the existence and terms of such Incremental Facility, (b) to make such other changes to the Definitive Documentation consistent with the provisions and intent of such Incremental Facility, including (i) adding provisions to permit such Incremental Facility to share in the benefits of the Definitive Documentation and to include the lenders for such Incremental Facility in any applicable voting definitions, and (ii) amending any commitment schedule to reflect such Incremental Facility, (c) notwithstanding any other provisions of the Definitive Documentation to the contrary, if applicable, to permit the loans under such Incremental Facility to be “fungible” (including for purposes of the Internal Revenue Code of 1986, as amended) with any other then-existing loans under the Definitive Documentation, and (d) to effect such other amendments to the Definitive Documentation as may be necessary or appropriate, in the reasonable opinion of the Administrative Agent, to effect the provisions of any such Incremental Facility.

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Limited Condition Acquisitions:

To the extent that the terms of the Definitive Documentation require (a) compliance with any basket, financial ratio or test, (b) the absence of a default or an event of default, or (c) a determination of the accuracy of any representations and warranties, in each case in connection with the consummation of a Limited Condition Acquisition (as defined below), the determination of whether the relevant condition is satisfied may be made, at the election of the Borrower, on the date of the execution of the definitive agreement with respect to such Limited Condition Acquisition (such date, the “LCA Test Date”), after giving effect to the relevant

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Limited Condition Acquisition and any related incurrence of indebtedness on a pro forma basis; provided, that, notwithstanding the foregoing, in connection with any Limited Condition Acquisition: (A) the no default or event of default condition to the consummation of any Limited Condition Acquisition shall be satisfied if (1) no default or event of default shall have occurred and be continuing as of the LCA Test Date applicable to such Limited Condition Acquisition, and (2) no payment or bankruptcy event of default shall have occurred and be continuing at the time of consummation of such Limited Condition Acquisition; (B) if the proceeds of an Incremental Term Facility are being used to finance such Limited Condition Acquisition, then (1) the condition applicable to the incurrence of such Incremental Term Facility requiring that the representations and warranties be accurate shall be required to be satisfied at the time of closing of such Limited Condition Acquisition and the incurrence of such Incremental Term Facility but, if the lenders providing such Incremental Term Facility so agree, the representations and warranties which must be accurate at the time of closing of such Limited Condition Acquisition and the incurrence of such Incremental Term Facility may be limited to customary “specified representations”, customary “specified acquisition agreement representations” and such other representations and warranties as may be required by the lenders providing such Incremental Term Facility, and (2) the no default or event of default condition to the incurrence of such Incremental Term Facility shall, if and to the extent the lenders providing such Incremental Term Facility so agree, be satisfied if (x) no default or event of default shall have occurred and be continuing as of the LCA Test Date applicable to such Limited Condition Acquisition, and (y) no payment or bankruptcy event of default shall have occurred and be continuing at the time of the incurrence of such Incremental Term Facility in connection with the consummation of such Limited Condition Acquisition; and (C) such Limited Condition Acquisition, any related pro forma adjustments, and the related indebtedness to be incurred in connection therewith and the use of proceeds thereof shall be deemed consummated, made, incurred and/or applied at the LCA Test Date applicable to such Limited Condition Acquisition (until such time as the indebtedness is actually incurred or the applicable definitive agreement is terminated without actually consummating the applicable Limited Condition Acquisition) and outstanding thereafter for purposes of determining pro forma compliance with any financial ratio or test (other than for purposes of determining pro forma compliance in connection with the making of any restricted payment or the prepayment of certain indebtedness to be mutually agreed in the Definitive Documentation, it being understood and agreed that for purposes of determining pro forma compliance in connection with the making of any restricted payment or the prepayment of certain indebtedness to be mutually agreed in the Definitive Documentation, the Borrower shall be required to demonstrate compliance with the applicable financial ratio or test both (x) after giving effect to the applicable Limited Condition Acquisition, including related pro forma adjustments, and the incurrence of any related indebtedness to be incurred in connection therewith and the use of proceeds thereof, and (y) assuming that such Limited Condition Acquisition has not occurred).  For the avoidance of doubt, if any of such ratios or amounts for which

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compliance was determined or tested as of the LCA Test Date applicable to such Limited Condition Acquisition are thereafter exceeded or otherwise failed to have been complied with as a result of fluctuations in such ratio or amount, at or prior to the consummation of the relevant Limited Condition Acquisition, such ratios or amounts will not be deemed to have been exceeded or failed to be complied with as a result of such fluctuations solely for purposes of determining whether the relevant Limited Condition Acquisition is permitted to be consummated.  It is understood and agreed that the provisions set forth in this section shall not limit the conditions set forth under the heading “Conditions Precedent to All Other Extensions of Credit” below with respect to any borrowing of revolving loans under the Revolving Facility, any issuance of, extension of the expiry date of, or increase in the amount of, any Letter of Credit, any borrowing of Swingline Loans or any borrowing of term loans under the Term Loan Facility.

“Limited Condition Acquisition” means an acquisition permitted pursuant to the Definitive Documentation whose consummation is not conditioned on the availability of, or on obtaining, third party financing.

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Availability/Amortization:

Extensions of credit under the Revolving Facility may be made on a revolving basis up to the full amount of the Revolving Facility, Letters of Credit may be issued up to the sublimit for Letters of Credit, and Swingline Loans may be issued up to the sublimit for Swingline Loans.

Commencing as of last business day of the first full fiscal quarter of the Borrower ending after the Closing Date, the Term Loan Facility shall be subject to quarterly amortization of principal based on the annual amounts set forth below, with the balance of the Term Loan Facility paid on the Maturity Date (the “Scheduled Amortization”):

Principal Amount (% of original principal amount of Term Loan Facility)

Loan year 1       5.0%

Loan year 2       5.0%

Loan year 3       5.0%

Loan year 4       5.0%

Loan year 5       80.0%, consisting of three quarterly payments of 1.25% each, with the remaining outstanding principal amount of the Term Loan Facility due and payable on the Maturity Date.

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Mandatory Prepayments and Commitment Reductions:

In addition to the Scheduled Amortization, on and after the Closing Date, the following mandatory prepayments apply: (a) one hundred percent (100%) of all net cash proceeds received in connection with asset sales, dispositions and involuntary dispositions (provided, that, such net cash proceeds shall not be required to be applied as set forth below (i) until the aggregate amount of net cash proceeds derived from all such asset sales, dispositions and involuntary dispositions in any fiscal year of the Borrower is equal to or greater than $10 million, and (ii) if, at the election

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of the Borrower (as notified by the Borrower to the Administrative Agent on or prior to the date of such asset sale, disposition or involuntary disposition), so long as no event of default shall have occurred and be continuing at the time of such asset sale, disposition or involuntary disposition or at the time of such reinvestment, the Borrower or the applicable subsidiary of the Borrower reinvests all or any portion of such net cash proceeds in assets (other than current assets as classified by generally accepted accounting principles) that are used or useful in the same or a related line of business as the Borrower and its subsidiaries were engaged in on the Closing Date (or any reasonable extensions or expansions thereof) within one hundred eighty (180) days of the date of such asset sale, disposition or involuntary disposition (or to the extent the Borrower or such subsidiary commits within such one hundred eighty (180)-day period to make such reinvestment, within one hundred eighty (180) days after such one hundred eighty (180)-day period); provided, further, that, for purposes of the foregoing clause (ii), if such net cash proceeds shall have not been so reinvested by the end of such period(s), such net cash proceeds shall be promptly applied as set forth below); and (b) one hundred percent (100%) of all net cash proceeds received in connection with debt issuances not otherwise permitted under the Definitive Documentation; in each case shall be applied to the prepayment of the Facilities in the following manner: first, to the Term Loan Facility (and to the principal repayment installments thereof in the inverse order of maturity), second, to outstanding Swingline Loans, and third, to the Revolving Facility without a corresponding permanent reduction in the Revolving Facility.

Additionally, if for any reason, as of any date of determination, the sum of (such sum being the “Total Revolving Outstandings”) (a) the aggregate outstanding amount of revolving loans under the Revolving Facility as of such date, plus (b) the aggregate outstanding amount of Letter of Credit obligations as of such date, plus (c) the aggregate outstanding amount of Swingline Loans as of such date, exceeds the amount of the Revolving Facility as of such date, the Borrower shall immediately prepay such revolving loans and such swingline loans and/or shall immediately cash collateralize such Letter of Credit obligations in an aggregate amount equal to such excess; provided, that, the Borrower shall not be required to cash collateralize such Letter of Credit obligations unless, after the prepayment of such revolving loans and such swingline loans, the Total Revolving Outstandings exceeds the amount of the Revolving Facility.

The Revolving Facility and the commitments thereunder shall terminate on the Maturity Date.  The commitments under the Term Loan Facility shall terminate upon the funding of term loans thereunder on the Closing Date.

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Optional Prepayments and Commitment Reductions:

The Borrower may prepay the Revolving Facility, in whole or in part, at any time without premium or penalty (but subject to reimbursement of the Lenders’ breakage and redeployment costs in the case of prepayment of LIBOR borrowings).  The unutilized portion of the Revolving Facility may

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be irrevocably reduced or terminated by the Borrower at any time without penalty.

The Borrower may prepay the Term Loan Facility in whole or in part at any time without premium or penalty (but subject to reimbursement of the Lenders’ breakage and redeployment costs in the case of prepayment of LIBOR borrowings).  Each prepayment of the Term Loan Facility shall be applied to the principal repayment installments thereof as directed by the Borrower.

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Definitive Documentation:

The Facilities will be documented pursuant to Definitive Documentation reflecting (a) the terms and conditions set forth herein and in Exhibit C to the Commitment Letter, (b) materiality qualifications and other exceptions that give effect to and/or permit the structure and intended use of the Facilities, (c) the operational, administrative, agency and related requirements of the Administrative Agent, (d) customary increased cost, illegality, change in law, yield protection, withholding tax, capital adequacy, defaulting lender, EU and UK bail-in, borrower and lender ERISA, “hard-wired” LIBOR successor, limited liability company division, beneficial ownership and qualified financial contract-related provisions, and (e) the operational and strategic requirements of the Borrower (after giving effect to the Transactions).  To the extent any other terms are not expressly set forth herein, the Definitive Documentation will (i) be negotiated in good faith within a reasonable time period to be determined based on the expected Closing Date, and (ii) contain such other terms, conditions and provisions as the Borrower and the Joint Lead Arrangers shall mutually agree.

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Collateral:

Subject to the Limited Conditionality Provision, each Credit Party shall grant the Administrative Agent, for the benefit of the holders of the Secured Obligations, valid and perfected first priority liens and security interests in all of the following (collectively, the “Collateral”):

(a)         One hundred percent (100%) of the issued and outstanding equity interests of each domestic subsidiary directly owned by such Credit Party.

(b)         Sixty-five percent (65%) of the issued and outstanding equity interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) and one hundred percent (100%) of the issued and outstanding equity interests not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) in each foreign subsidiary directly owned by such Credit Party.

(c)         All of the present and future personal property and assets of such Credit Party, including machinery and equipment, inventory and other goods, accounts receivable, bank accounts, general intangibles, financial assets, investment property, license rights, patents, trademarks, tradenames, copyrights, chattel paper, insurance proceeds, contract rights, hedge agreements,

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documents, instruments, indemnification rights, tax refunds and cash.

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The Collateral shall exclude the following with respect to each Credit Party: (i)(A) any fee-owned real property of such Credit Party, and (B) any real property leasehold interests of such Credit Party; (ii) any personal property (including motor vehicles, airplanes and other assets subject to certificates of title) of such Credit Party in respect of which perfection of a lien is neither (A) governed by the Uniform Commercial Code, nor (B) effected by appropriate evidence of the lien being filed in either the United States Copyright Office or the United States Patent and Trademark Office; (iii) any asset of such Credit Party if the pledge of, or the granting of a security interest in, such asset is prohibited by law, rule or regulation applicable to such Credit Party; provided, that, (A) any such prohibition described in this clause (iii) on the security interests granted pursuant to the Definitive Documentation shall only apply to the extent that any such prohibition is not rendered ineffective pursuant to the Uniform Commercial Code, any other applicable law or principles of equity, and (B) in the event of the termination or elimination of any such prohibition contained in any applicable law, rule or regulation, a security interest in such assets shall be automatically and simultaneously granted pursuant to the Definitive Documentation and such assets shall be included as Collateral; (iv) any property of such Credit Party which is subject to a purchase money security interest or similar arrangement to the extent that a grant of a security interest in such property would violate the agreement pursuant to which such purchase money security interest or similar arrangement was granted or would create a right of termination in favor of any other party to such agreement; (v) any general intangible, permit, lease, license, contract or other instrument of such Credit Party to the extent the grant of a security interest in such general intangible, permit, lease, license, contract or other instrument in the manner contemplated by the Definitive Documentation, under the terms thereof or under applicable law, is prohibited and would result in the termination thereof or give the other parties thereto the right to terminate, accelerate or otherwise alter such Credit Party’s rights, titles and interests thereunder (including upon the giving of notice or the lapse of time or both); provided, that, (A) any such limitation described in this clause (v) on the security interests granted pursuant to the Definitive Documentation shall only apply to the extent that any such limitation could not be rendered ineffective pursuant to the Uniform Commercial Code, any other applicable law, or principles of equity, and (B) in the event of the termination or elimination of any such limitation or the requirement for any consent contained in any applicable law, general intangible, permit, lease, license, contract or other instrument, to the extent sufficient to permit any such item to become Collateral, or upon the granting of any such consent, or waiving or termination of any requirement for such consent, or the elimination of such limitation, as applicable, a security interest in such general intangible, permit, lease, license, contract or other instrument shall be automatically and

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simultaneously granted under the Definitive Documentation and shall be included as Collateral; (vi) any asset of such Credit Party as to which the Administrative Agent and the Borrower reasonably agree that the cost of obtaining a security interest therein or perfection thereof are excessive in relation to the benefit to the holders of the Secured Obligations to be afforded thereby; and (vii) any “intent-to-use” application for registration of a trademark of such Credit Party filed in the United States Patent and Trademark Office pursuant to Section 1(b) of the Lanham Act, 15 U.S.C. §1051, prior to the filing of a “Statement of Use” pursuant to Section 1(d) of the Lanham Act or an “Amendment to Allege Use” pursuant to Section 1(c) of the Lanham Act with respect thereto, solely to the extent, if any, that, and solely during the period, if any, in which the grant of a security interest therein would impair the validity or enforceability of any registration that issues from such intent-to-use application under applicable federal law.

The Collateral shall ratably secure the Secured Obligations.

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Conditions Precedent to Effectiveness and Borrowings on the Closing Date:

The effectiveness of the Definitive Documentation and the availability of the Necessary Acquisition Funds on the Closing Date shall be subject solely to the conditions set forth in Exhibit C to the Commitment Letter.

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Conditions Precedent to All Other Extensions of Credit:

The obligation of each Lender, the Swingline Lender and the L/C Issuer to honor any request for credit extension after the funding of the Necessary Acquisition Funds on the Closing Date shall be subject to the satisfaction of the following conditions precedent:

(a)         The representations and warranties in the Definitive Documentation shall be true and correct in all material respects (or in all respects if any such representation or warranty is already qualified by materiality) on and as of the date of such credit extension, except to the extent that such representations and warranties specifically refer to an earlier date, in which case they shall be true and correct in all material respects (or in all respects if any such representation or warranty is already qualified by materiality) as of such earlier date, and except that for purposes of this condition, the representations and warranties contained in the Definitive Documentation with respect to accuracy of financial statements shall be deemed to refer to the most recent financial statements delivered pursuant to the Definitive Documentation.

(b)         No default or event of default shall exist or would result from such proposed credit extension or from the application of the proceeds thereof.

(c)         The Administrative Agent and, if applicable, the L/C Issuer or the Swingline Lender, shall have received a request for credit

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extension in accordance with the requirements of the Definitive Documentation.

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Representations and Warranties:

The Definitive Documentation shall include representations and warranties with respect to the following: (a) existence, qualification and power; (b) authorization; no contravention; (c) governmental authorization; other consents; (d) enforceability; (e) accuracy of financial statements; (f) no material adverse effect; (g) no litigation; (h) no default; (i) ownership of property; (j) environmental matters; (k) maintenance of insurance; (l) payment of taxes; (m) ERISA compliance; (n) margin regulation; Investment Company Act compliance; (o) accuracy of disclosure, including accuracy in all respects of the information included in any Beneficial Ownership Certification delivered to the Administrative Agent or any Lender on or prior to the Closing Date; (p) compliance with laws; (q) solvency; (r) sanctions; anti-corruption laws; (s) subsidiaries; equity interests; information with respect to Credit Parties; (t) collateral documentation and deliverables with respect to the Collateral; (u) intellectual property; licenses; (v) real properties; (w) no Credit Party is an affected financial institution; and (x) no Credit Party is a covered entity.

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Affirmative Covenants:

The Definitive Documentation shall include affirmative covenants with respect to the following: (a) delivery of financial statements, budgets and forecasts; (b) delivery of compliance certificate and other information; (c) delivery of notices; (d) payment of obligations; (e) preservation of existence; maintenance of permits, licenses and franchises; preservation and renewal of intellectual property; (f) maintenance of properties; (g) maintenance of insurance; (h) compliance with laws; (i) maintenance of books and records; (j) granting of inspection rights; (k) use of proceeds; (l) covenant to guarantee obligations; (m) covenant to give security; further assurances; (n) compliance with anti-corruption laws; and (o) compliance with sanctions.

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Negative Covenants:

The Definitive Documentation shall include negative covenants restricting the following: (a) liens; (b) indebtedness; (c) investments (including acquisitions); (d) fundamental changes; (e) dispositions; (f) payments of dividends, share repurchases and other distributions; (g) changes in nature of business; (h) transactions with affiliates; (i) burdensome agreements; (j) use of proceeds to purchase or carry margin stock; (k) amendments to organizational documents; changes in fiscal year; changes in legal name, state of organization or form of entity; and accounting changes; (l) sale and leaseback transactions; (m) prepayment of certain indebtedness; (n) amendment of certain indebtedness; (o) use of credit extensions (or proceeds thereof) in violation of sanctions; and (p) use of credit extensions (or proceeds thereof) in violation of anti-corruption laws.

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Financial Covenants:

The following:

(a)         The Credit Parties shall not permit the Consolidated Leverage Ratio as of the end of any period of four (4) consecutive fiscal quarters of the Borrower ending as of the last day of any fiscal

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quarter of the Borrower to be greater than 3.00 to 1.0; provided, that, upon the occurrence of a Qualified Acquisition, for each of the four (4) fiscal quarters of the Borrower immediately following the consummation of such Qualified Acquisition (including, for the avoidance of doubt, the fiscal quarter in which such Qualified Acquisition was consummated) (such period of increase, the “Leverage Increase Period”), the ratio set forth above shall be increased to 3.50 to 1.0; provided, further, that, (i) no more than one (1) Leverage Increase Period shall be in effect at any time, (ii) for at least two (2) fiscal quarters of the Borrower immediately following each Leverage Increase Period, the Consolidated Leverage Ratio as of the end of such fiscal quarters shall not be greater than 3.00 to 1.0 prior to giving effect to another Leverage Increase Period, and (iii) each Leverage Increase Period shall only apply with respect to the calculation of the Consolidated Leverage Ratio for purposes of (A) determining compliance with the financial maintenance covenant as of the end of any period of four (4) consecutive fiscal quarters of the Borrower ending as of the last day of any fiscal quarter of the Borrower, and (B) any calculation of the Consolidated Leverage Ratio in determining the permissibility of the consummation of the Qualified Acquisition with respect to which such Leverage Increase Period relates (or, to the extent such Qualified Acquisition is financed with the proceeds of an Incremental Facility, for purposes of determining the permissibility of the incurrence of such Incremental Facility in connection with the consummation of such Qualified Acquisition).

“Consolidated Leverage Ratio” means, as of any date of determination, the ratio of (a) consolidated funded indebtedness of the Borrower and its subsidiaries as of such date, to (b) consolidated EBITDA of the Borrower and its subsidiaries for the period of four (4) consecutive fiscal quarters of the Borrower most recently completed on or prior to such date.

“Qualified Acquisition” means an acquisition (or series of related acquisitions consummated in any six-month period) permitted pursuant to the Definitive Documentation for which the aggregate consideration is at least $75 million, but only to the extent that at least $75 million of such consideration is funded with the proceeds of consolidated funded indebtedness of the Borrower and its subsidiaries (including any indebtedness assumed by the Borrower or any of its subsidiaries in connection with such acquisition(s)); provided, that, for any acquisition (or series of related acquisitions) to qualify as a “Qualified Acquisition,” the Administrative Agent shall have received a certificate from a responsible officer of the Borrower certifying that such acquisition (or series of related acquisitions) meets the criteria set forth in this definition and notifying the Administrative Agent that the Borrower has elected to treat such acquisition (or series of related acquisitions) as a “Qualified Acquisition”.

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(b)         The Credit Parties shall not permit the Consolidated Fixed Charge Coverage Ratio (as defined below) as of the end of any period of four (4) consecutive fiscal quarters of the Borrower ending as of the last day of any fiscal quarter of the Borrower to be less than 1.25 to 1.0.

“Consolidated Fixed Charge Coverage Ratio” means, as of any date of determination, the ratio of (a) the total of (i) consolidated EBITDA of the Borrower and its subsidiaries for the period of four (4) consecutive fiscal quarters of the Borrower most recently completed on or prior to such date, minus (ii) consolidated maintenance capital expenditures of the Borrower and its subsidiaries for such period, to (b) the sum of (i) consolidated cash taxes of the Borrower and its subsidiaries paid during the period of four (4) consecutive fiscal quarters of the Borrower most recently completed on or prior to such, plus (ii) the cash portion of consolidated interest charges of the Borrower and its subsidiaries for such period, plus (iii) the amount of all scheduled payments of principal on consolidated funded indebtedness of the Borrower and its subsidiaries for such period, plus (iv) the amount of all dividends, share repurchases and other distributions made in cash by the Borrower and its subsidiaries in such period (other than any such dividend, share repurchase or other distribution made to the Borrower or any subsidiary of the Borrower in such period).

Each of the ratios referred to above will be calculated on a pro forma basis.  Certain components of the Consolidated Fixed Charge Coverage Ratio shall be annualized in connection with calculations of the Consolidated Fixed Charge Coverage Ratio occurring prior to the one-year anniversary of the Closing Date.

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Events of Default:

The Definitive Documentation shall include the following events of default: (a) non-payment of principal, interest, fees or other amounts; (b) default of specific covenants; (c) default of other covenants and agreements; (d) any representation, warranty, certification or statement of fact being incorrect or misleading; (e) cross-defaults to other indebtedness in an amount to be agreed; (f) bankruptcy and insolvency proceedings; (g) inability to pay debts; attachment; (h) judgments; (i) ERISA; (j) invalidity of Definitive Documentation; (k) failure of collateral documentation to create a valid and perfected first priority security interest (subject to certain exceptions to be mutually agreed) in the Collateral; and (l) change of control.

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Assignments and Participations:

Subject to the consents described in the immediately following sentence, the Definitive Documentation shall permit (a) each Lender under the Revolving Facility to make assignments to other financial institutions in respect of the Revolving Facility in a minimum amount equal to $5 million, and (b) after the funding of the Necessary Acquisition Funds on the Closing Date, each Lender under the Term Loan Facility to make assignments to other financial institutions in respect of the Term Loan

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Facility in a minimum amount equal to $1 million.  No consent shall be required for any such assignment, other than: (i) the consent of the Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (A) an event of default has occurred and is continuing at the time of such assignment, or (B) the assignment is to a Lender, an affiliate of a Lender or an Approved Fund (as defined below); provided, that, the Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) business days after having received notice thereof; (ii) the consent of the Administrative Agent (such consent not to be unreasonably withheld or delayed) shall be required for any assignment (A) in respect of the Revolving Facility to an entity that is not a Lender under the Revolving Facility, an affiliate of such Lender or an Approved Fund in respect of such Lender, or (B) of any outstanding term loan under the Term Loan Facility to an entity that is not a Lender, an affiliate of a Lender or an Approved Fund; and (iii) the consent of the L/C Issuer and the Swingline Lender shall be required for any assignment in respect of the Revolving Facility.  The parties to each assignment shall execute and deliver to the Administrative Agent an assignment and assumption, together with a processing and recordation fee of $3,500 for each assignment; provided, that, the Administrative Agent may, in its sole discretion, elect to waive such processing and recordation fee in the case of any such assignment.  Each Lender will also have the right, without consent of the Borrower or the Administrative Agent, to assign as security, all or part of its rights under the Definitive Documentation to any Federal Reserve Bank.

“Approved Fund” means any person (other than a natural person) or entity that is (or will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of its activities and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender, or (c) any entity or an affiliate of an entity that administers or manages a Lender.

Any Lender shall be permitted to sell participations in such Lender’s rights and obligations under the Definitive Documentation, subject to customary terms and conditions.

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Waivers and Amendments:

Amendments and waivers of the provisions of the Definitive Documentation will require the approval of Lenders holding loans and commitments representing more than fifty percent (50%) of the aggregate amount of the loans and commitments under the Facilities (the “Required Lenders”), except that no amendment or waiver shall: (a) extend or increase any commitment of any Lender (or reinstate any terminated commitment) without the written consent of such Lender (it being understood and agreed that neither (i) a waiver of any condition precedent under the heading “Conditions Precedent to All Other Extensions of Credit” above, nor (ii) a waiver of any default or event of default, in each case, shall be considered an extension of or increase in any commitment of any Lender); (b) postpone any date for any payment (excluding mandatory prepayments) of principal, interest, fees or other amounts due

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to any Lender without the written consent of such Lender; (c) reduce the principal of, or the rate of interest on, any loan, or (subject to the ability to amend any fee letter solely with the consent of the parties to such fee letter) any fees or other amounts payable to any Lender without the written consent of such Lender; provided, that, only the consent of the Required Lenders shall be necessary to amend (i) the provisions of the Definitive Documentation with respect to default rate interest (including waiving any obligation to pay interest or fees at the Default Rate (as defined below)), or (ii) any financial covenant (or any defined term used therein), even if the effect of such amendment would be to reduce the rate of interest on any loan or to reduce any fee payable to the Lenders; (d) change certain of the provisions of the Definitive Documentation in a manner that would alter the pro rata sharing of payments required thereby without the written consent of each Lender that is directly and adversely affected thereby; (e) change any provision of the amendment section of the credit agreement or the definition of “Required Lenders” without the written consent of each Lender; (f) release all or substantially all of the Collateral without the written consent of each Lender; (g) subordinate the liens in the Collateral without the written consent of each Lender; (h) release all or substantially all of the value of the guaranties provided pursuant to the Definitive Documentation without the written consent of each Lender (with an exception for any release in connection with a transaction permitted pursuant to the Definitive Documentation); or (i) release the Borrower or permit the Borrower to assign or transfer any of its rights or obligations under the Definitive Documentation without the written consent of each Lender.

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Indemnification:

The Credit Parties will indemnify the Administrative Agent (and any sub-agent thereof), each Joint Lead Arranger, each Lender, the L/C Issuer, the Swingline Lender, and each of their respective affiliates, and their and such affiliates’ respective officers, directors, employees, agents, advisors and other representatives (each, an “Indemnified Party”) against, and hold each Indemnified Party harmless from, any and all actual or prospective losses, claims, damages, liabilities and related expenses (including, without limitation, the reasonable fees, disbursements and other charges of counsel (but limited, in the case of legal fees and expenses, to the reasonable and documented out of pocket fees, disbursements and other charges of one primary counsel to all Indemnified Parties (taken as a whole) and, if reasonably necessary, a single local counsel for all Indemnified Parties (taken as a whole) in each relevant jurisdiction and a single specialty counsel for all Indemnified Parties (taken as a whole) with respect to each relevant specialty, and in the case of an actual or perceived conflict of interest, one additional primary, local or specialty counsel, as the case may be, to the affected Indemnified Parties similarly situated and taken as a whole)) incurred by any Indemnified Party or asserted against any Indemnified Party by any person or entity (including any Credit Party) arising out of, in connection with, or as a result of (a) the execution or delivery of the Definitive Documentation, the performance by the parties thereto of their respective obligations thereunder or the consummation of the transactions contemplated thereby, or, in the case of the Administrative Agent (and any sub-agent thereof) and its related parties only, the

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administration of the Definitive Documentation, (b) any loan under the Facilities or any Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the L/C Issuer to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (c) any actual or alleged presence or release of hazardous materials on or from any property owned, leased or operated by a Credit Party or any of its subsidiaries, or any environmental liability related in any way to a Credit Party or any of its subsidiaries, or (d) any actual or prospective claim, litigation, arbitration, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Credit Party, and regardless of whether any Indemnified Party is a party thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNIFIED PARTY; provided, that, such indemnity shall not, as to any Indemnified Party, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of such Indemnified Party.

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Governing Law, etc.:

State of New York.  Additionally, each of the parties shall (a) waive its right to a trial by jury, and (b) submit to New York jurisdiction.

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Pricing/Fees/Expenses:

As set forth in Addendum I to this Exhibit B.

Interest Rates:

The interest rates per annum applicable to the Facilities (other than in respect of Swingline Loans) will be LIBOR plus the Applicable Margin (as defined below) or, at the option of the Borrower, the Base Rate (to be defined as the highest of (a) the Federal Funds Rate plus one-half percent (0.50%), (b) the Bank of America prime rate, and (c) the one (1) month LIBOR (adjusted daily) plus one percent (1.00%)) plus the Applicable Margin.  “Applicable Margin” means (a) in the case of LIBOR loans, (i) until delivery of financial statements and a compliance certificate for the first full fiscal quarter of the Borrower ending after the Closing Date, 2.00% per annum, and (ii) thereafter, a percentage per annum to be determined in accordance with the performance pricing grid set forth below, and (b) in the case of Base Rate loans, (i) until delivery of financial statements and a compliance certificate for the first full fiscal quarter of the Borrower ending after the Closing Date, 1.00% per annum, and (ii) thereafter, a percentage per annum to be determined in accordance with the performance pricing grid set forth below.  Each Swingline Loan shall bear interest at the Base Rate plus the Applicable Margin for Base Rate loans.  If the Base Rate shall be less than one percent (1%), such rate shall be deemed one percent (1%) for purposes of the Definitive Documentation; and if LIBOR shall be less than zero, such rate shall be deemed zero for purposes of the Definitive Documentation.

The Borrower may select interest periods with respect to LIBOR loans of one (1), two (2), three (3) or six (6) months, in each case subject to availability.  Interest on each Base Rate loan and each Swingline Loan shall be due and payable on the last business day of March, June, September and December, and on the Maturity Date; and interest on each LIBOR loan shall be due and payable on the last day of each interest period applicable thereto, and if such interest period extends over three (3) months, at the end of each three (3) month interval during such interest period.

If any amount of principal of any loan is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, or a payment or bankruptcy default exists, all outstanding Obligations shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.  If any amount (other than principal of any loan) is not paid when due (without regard to any applicable grace periods), whether at stated maturity, by acceleration or otherwise, then upon the request of the Required Lenders, such amount shall thereafter bear interest at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws.  Upon the request of the Required Lenders, while any event of default exists, all outstanding Obligations shall accrue at a fluctuating interest rate per annum at all times equal to the Default Rate to the fullest extent permitted by applicable laws. Accrued and unpaid interest on past due amounts

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(including interest on past due interest) shall be due and payable upon demand.

“Default Rate” means (a) with respect to any Obligation for which a rate is specified, a rate per annum equal to two percent (2%) in excess of the rate otherwise applicable thereto, and (b) with respect to any Obligation for which a rate is not specified or available, a rate per annum equal to the Base Rate plus the Applicable Margin for Base Rate loans plus two percent (2%), in each case, to the fullest extent permitted by applicable law.

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Commitment Fee:

Commencing on the Closing Date, a commitment fee of (a) until delivery of financial statements and a compliance certificate for the first full fiscal quarter of the Borrower ending after the Closing Date, 0.30% per annum, and (b) thereafter, a percentage per annum to be determined in accordance with the performance pricing grid set forth below, shall be payable on the actual daily unused portions of the Revolving Facility.  Such fee shall be payable quarterly in arrears, commencing on the first quarterly payment date to occur after the Closing Date.  Swingline Loans will not be considered utilization of the Revolving Facility for purposes of calculating the commitment fee.

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Letter of Credit Fees:

Letter of Credit fees shall be payable on the maximum amount available to be drawn under each Letter of Credit at a rate per annum equal to the Applicable Margin from time to time applicable to LIBOR loans. Such fees with respect to any Letter of Credit shall be (a) payable quarterly in arrears, commencing on the first quarterly payment date to occur after the issuance of such Letter of Credit, and (b) shared proportionately by the Lenders under the Revolving Facility.  In addition, a fronting fee shall be payable to the L/C Issuer for its own account, in an amount to be mutually agreed.

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Performance Pricing:

The Applicable Margin with respect to LIBOR loans, Base Rate loans and the commitment fee shall be the following percentages per annum, based upon the Consolidated Leverage Ratio as set forth in the most recent compliance certificate received by the Administrative Agent pursuant to the Definitive Documentation:

Calculation of Interest/Fees:

Computations of interest for Base Rate loans shall be made on the basis of a year of 365/366 days.  All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed.

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Expenses:

The Credit Parties shall pay (a) all reasonable and documented out-of-pocket expenses incurred by the Administrative Agent and its affiliates (including the reasonable and documented fees, disbursements and other charges of one primary counsel to the Administrative Agent and, if reasonably necessary, one local counsel for the Administrative Agent in each relevant jurisdiction and one specialty counsel for the Administrative Agent in each relevant specialty (and, solely in the case of an actual or potential conflict of interest of any of the foregoing counsel, one additional primary, local or specialty counsel, as the case may be, to the affected persons similarly situated and taken as a whole)) in connection with the syndication of the Facilities, the preparation, negotiation, execution, delivery and administration of the Definitive Documentation or any amendments, modifications or waivers of the provisions thereof (whether or not the transactions contemplated thereby shall be consummated), (b) all reasonable out-of-pocket expenses incurred by the L/C Issuer in connection with the issuance, amendment, extension, reinstatement or renewal of any Letter of Credit or any demand for payment thereunder, and (c) all out-of-pocket expenses incurred by the Administrative Agent, any Lender, the Swingline Lender or the L/C Issuer (including the fees, charges and disbursement of counsel for the Administrative Agent, any Lender, the Swingline Lender or the L/C Issuer), in connection with the enforcement or protection of its rights (i) in connection with the Definitive Documentation, or (ii) in connection with loans made or Letters of Credit issued under the Facilities, including all such out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of such loans or Letters of Credit.

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AEROVIRONMENT, INC.,

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a Delaware corporation

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By:

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Name:

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Title:

Chief Financial Officer