EXHIBIT 10.31
ADDITIONAL ADVANCE
AGREEMENT
THIS ADDITIONAL ADVANCE AGREEMENT (this "Agreement") is entered into as of
August 18, 2003 between AURA SYSTEMS, INC., a Delaware corporation (the
"Company"), and KOYAH LEVERAGE PARTNERS, L.P. and KOYAH PARTNERS, L.P., each a
Delaware limited partnership (collectively the "Lenders").
WHEREAS, in connection with loans to the Company by the Lenders, the
Company and the Lenders entered into an Agreement dated as of July 24, 2003 (the
"Agreement"), the Company executed in favor of the Lenders four Convertible
Promissory Notes dated July 24, 2003 (collectively, the "Notes"), and the
Company executed in favor of Koyah Leverage (as collateral agent for the
Lenders) a Security Agreement dated as of July 24, 2003 (the "Security
Agreement");
WHEREAS, the Company and the Lenders also entered into an Amendment and
Waiver Agreement dated as of August 6, 2003 (the "Amendment");
WHEREAS, the Lenders have made certain additional optional advances to the
Company under (i) the Note in the favor of Koyah Leverage in the maximum
principal amount of $800,000 and (ii) the Note in favor of Koyah in the maximum
principal amount of $200,000 (collectively, the "Optional Advance Notes");
WHEREAS, the Company owns 177,777 shares (the "Telemac Shares") of common
stock of Telemac Corporation, a Delaware corporation ("Telemac"), which are
currently encumbered by a security interest granted to Judgment Acquisitions,
Inc. ("Judgment Acquisitions") to secure a loan made to the Company by Judgment
Acquisitions (the "Judgment Acquisitions Loan");
WHEREAS, the Company is in default under the Judgment Acquisitions Loan;
WHEREAS, the Company has requested that the Lenders make further additional
optional advances under the Optional Advance Notes to pay off the Judgment
Acquisitions Loan (the "Further Advances");
WHEREAS, in connection therewith, the Lenders are requiring, as a condition
to making the Further Advances, that the Lenders receive a first-priority pledge
of and security interest in the Telemac Shares; and
WHEREAS, the parties are entering into this Agreement to provide for the
Further Advances and related matters, on the terms and conditions set forth
herein.
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, the parties do hereby agree as follows:
1. Further Advances.
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The Company hereby requests that the Lenders make advances in an aggregate
amount of $_____________ (the "Further Advances") as further additional optional
advances under the Optional Advance Notes. The Company hereby directs the
Lenders to disburse the Further Advances in the form of direct payment to
Judgment Acquisitions in order to pay off the Judgment Acquisitions Loan in
full.
2. Escrow Arrangements with Judgment Acquisitions.
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Prior to such disbursement of the Further Advances directly to Judgment
Acquisitions, Judgment Acquisitions shall enter into escrow arrangements with
the Lenders satisfactory to them, with Xxxxx, Xxxxxxxx & Xxxxxxx, LLP in
Atlanta, Georgia acting as escrow agent (the "Escrow Agent"). Such escrow
arrangements shall provide, among other things, for the Escrow Agent, upon
receipt of confirmation of wire transfer(s) of the Further Advances to Judgment
Acquisitions, to deliver to the Lenders (or their designee) (i) an
acknowledgment from Judgment Acquisitions of satisfaction in full of the
Judgment Acquisitions Loan and termination and release of any security interest
in favor of Judgment Acquisitions in the Telemac Shares and (ii) stock
certificate No. C2233 evidencing the Telemac Shares.
3. Pledge of Telemac Shares.
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In addition to the security interest in the Telemac Shares already arising under
the Security Agreement, the Company shall execute and deliver a Stock Pledge
Agreement satisfactory to the Lenders in favor of Koyah Leverage (as collateral
agent for the Lenders) to further evidence and effectuate a first-priority
pledge of and security interest in the Telemac Shares (the "Stock Pledge
Agreement").
4. Additional Representation and Reaffirmation of Prior Representations;
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Survival.
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In addition to making the additional representations and warranties contained in
the Stock Pledge Agreement, the Company hereby re-affirms and re-makes all of
the representations and warranties contained in the Agreement, the Notes and the
Security Agreement as of the date hereof (as modified by the amendments and
waivers set forth in the Amendment). For purposes of this Agreement as well as
reaffirming the representations and warranties contained in the Agreement, the
term "Transaction Documents" as used herein and therein shall mean the
Agreement, the Notes, the Security Agreement, the Amendment, the Stock Pledge
Agreement and this Agreement. All of such additional and re-affirmed
representations and warranties shall survive the closing of the transactions
contemplated by this Agreement and the other Transaction Documents.
5. Amendments and Waivers.
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Any term of this Agreement may be amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Lenders in the case of an amendment and only with the written consent of
the waiving party in the case of a waiver.
6. Entire Agreement.
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This Agreement, together with the other Transaction Documents, constitute the
entire agreement of the parties concerning the subject matter hereof and
thereof, all prior discussions, proposals, negotiations and understandings
having been merged herein and therein. Except as specifically modified by this
Agreement, the other Transaction Documents shall remain unchanged and in full
force and effect.
7. Successors.
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This Agreement shall inure to the benefit of and be binding upon the successors
and assigns of the Company and the Lenders. Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective permitted successors and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement, except as may
be expressly provided in this Agreement.
8. Severability.
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If any part of this Agreement is determined to be illegal or unenforceable, all
other parts shall remain in full force and effect.
9. Attorneys' Fees.
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The Company shall pay the reasonable attorneys' fees, costs and disbursements of
the Lenders in enforcing any terms of this Agreement, whether or not any action
at law or in equity is brought.
10. Governing Law.
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The Agreement shall be governed by and construed and interpreted in accordance
with the law of the State of Washington, without regard to that state's conflict
of laws principles. All disputes between the parties hereto, whether sounding in
contract, tort, equity or otherwise, shall be resolved only by state and federal
courts located in Spokane, Washington, and the courts to which an appeal
therefrom may be taken. All parties hereto waive any objections to the location
of the above referenced courts, including but not limited to any objection based
on lack of jurisdiction, improper venue or forum non-conveniens. Notwithstanding
the foregoing, any party obtaining any order or judgment in any of the above
referenced courts may bring an action in a court in another jurisdiction in
order to enforce such order or judgment.
11. Miscellaneous.
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Any notice under this Agreement shall be given in writing and shall be addressed
to the party to be notified at the address indicated below, or at such other
address as such party may designate by written notice to the other party.
Aura Systems, Inc.
0000 Xxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Fax: 000-000-0000
Koyah Leverage Partners, L.P.
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx XX 00000
Attn: Xxxxxx Xxx
Fax: 000-000-0000
Koyah Partners, L.P.
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx XX 00000
Attn: Xxxxxx Xxx
Fax: 000-000-0000
12. The Company shall pay the costs and expenses of legal counsel to the Lenders
in connection with the negotiation, execution and delivery of this Agreement
(including those in connection with prior discussions among the parties of a
possible purchase of the Telemac Shares before a change in structure to the
Further Advances instead), the other Transaction Documents, and any other
related agreements with the Lenders as well as the consummation of the
transactions contemplated by and the administration of such agreements and any
amendments or waivers of such agreements. The Company shall pay such costs and
expenses immediately upon submittal, and the Lenders may apply any retainer held
by them or their legal counsel against such costs and expenses. Alternatively,
the Lenders may deduct some or all of such costs and expenses from the proceeds
of the loans from the Lenders when disbursing such loans and/or pay such costs
and expenses directly and then the amounts so paid shall constitute advances
made under the Optional Advance Notes. Notwithstanding that the Company is
paying such costs and expenses, the Company acknowledges and agrees that such
legal counsel is representing only the Lenders, and not the Company.
[Remainder of Page Intentionally Left Blank]
[SIGNATURE PAGE TO ADDITIONAL ADVANCE AGREEMENT]
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR
FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER WASHINGTON LAW.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.
AURA SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
KOYAH LEVERAGE PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By: /s/ Xxxxxx X. Law
Name: Xxxxxx X. Law
Title: Vice President
KOYAH PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By: /s/ Xxxxxx X. Law
Name: Xxxxxx X. Law
Title: Vice President
