10.23
PAYMENT AGREEMENT
THIS PAYMENT AGREEMENT ("Agreement"), dated as of January 1,
2000 is between AURA SYSTEMS, INC., a Delaware corporation ("Debtor"), and
CREDIT MANAGERS ASSOCIATION OF CALIFORNIA, a California non-profit mutual
benefit corporation, as collection agent (the "Agent") for and on behalf of
those creditors of the Debtor listed on Exhibit A attached hereto who vote to
accept the Debtor's plan for repayment of its creditors pending as of the date
of this Agreement and such additional creditors of the Debtor who vote to accept
the Debtor's plan for repayment of its creditors pending as of the date of this
Agreement (collectively, the "Parties," and individually, a "Party"). Exhibit A
shall be amended from time to time by the Agent as necessary to reflect the
names and current addresses of, and amounts owed to, all Parties under this
Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged by the parties, the parties hereby
agree as follows:
1. Definitions. When used herein, the capitalized terms below shall have the
meanings indicated:
(a) Obligations. "Obligations" means: (i) all account obligations of
Debtor to one or more of the Parties, arising prior to July 26, 1999, including,
without limitation, the amount set forth opposite each Party's name on Exhibit A
hereto; and (ii) all expenditures made or incurred by the Agent or by any Party
on or after July 26, 1999 to enforce the rights of the Parties under this
Agreement.
(b) Restructure. The phrase "Restructure" means the written
announcement by the Debtor that it has achieved all of those agreements and
consents necessary to achieve the debt for equity exchange, and the investment
of up to $10 Million in new capital into the Debtor in accordance with the
general terms of the restructure plan proposed by the Debtor in the package of
materials provided by the Debtor to Creditors at the general meeting of July 26,
1999, with modifications: (i) thereafter requested by a committee of creditors
elected by meeting attendees to represent their interests (the "Committee") and
accepted by Debtor; (ii) proposed to the Committee by the Debtor on October 1,
1999 and accepted by the Committee on October 1, 1999; proposed to the Committee
by the Debtor and accepted by the Committee on or about November 11, 1999;
proposed to the Committee by the Debtor and accepted by the Committee on or
about December 23, 1999; and (iii) as may be subsequently accepted by the
Committee.
2. Monthly Installment Payments. Debtor hereby agrees to pay to the Agent for
the benefit of the Parties, as follows:
(1) On or before the first business day of each calendar month
beginning January 1, 2000, an amount equal to 1/36 of the total of the amounts
set forth on Exhibit "A" hereto, plus such additional amounts as may be required
upon reconciliation of Exhibit "A" to the ballots accepting the Debtor's Plan
for repayment, plus interest on the total amounts unpaid at the rate of 8% per
annum running from July 26, 1999, on a fully amortized basis. Interest accruing
from July 26, 1999 through the date the first installment shall be paid by CMA
to creditors, shall be paid as a last, thirty-seventh (37th) monthly installment
payment;
(2) To those Creditors on Exhibit "A" whose claims are less than $5,000 or by
their ballot have agreed to reduce their claim to $5,000, one installment in the
allowed amount listed on Exhibit "A" as soon as claims in such category have
been reconciled.
Following the occurrence of an Event of Default under Paragraph 4(a) hereof, the
principal balance of the Obligations shall bear interest thereafter at the
default rate of 12% per annum until all delinquent amounts, including default
rate interest, are paid.
3. Quarterly Reporting. The Debtor hereby agrees to provide the Agent
for the benefit of the Parties quarterly financial reports including income
statements and balance sheets, on or before June 5th, July 20th, October 20th
and January 20th, for the preceding quarter, with the first quarterly reports
due on or about February 15, 2000.
4. Events of Default. Debtor shall be in default under this Agreement
upon the happening of any of the following events or conditions ("Events of
Default"):
(a) default in the payment on the due date therefor of any monthly installment
payment due under Paragraph 2 above, which has not been cured within fifteen
(15) calendar days after the due date thereof;
(b) dissolution, termination of existence of, appointment of a
receiver for any part of the property of, assignment for the benefit of
creditors by, or the commencement of any proceeding under any bankruptcy,
reorganization, arrangement, insolvency or other law relating to the relief of
debtors by or against, Debtor or any guarantor or surety for Debtor under any of
the Obligations;
(c) default in providing quarterly reports due under Paragraph
3 above, which has not been cured within fifteen (15) calendar days after notice
that such report is due.
5. Remedies Upon The Occurrence Of Any Event of Default. Upon the
occurrence of an Event of Default, and with the consent of the Committee, the
Agent may, without notice to or demand on Debtor, declare any of the Obligations
immediately due and payable and this Agreement in default, whereupon the Parties
shall be free to pursue collection of the Obligations, with interest as provided
herein.
6. Appointment of Agent.
(a) Each Party hereby irrevocably appoints and authorizes the Agent
to act as its agent hereunder, with such powers as are expressly delegated to
the Agent under this Agreement, together with such other powers as are
reasonably incidental thereto.
(b) If the Agent receives notice of the occurrence of an Event of
Default under this Agreement or any other notice, request or other communication
from the Debtor under this Agreement, the Agent shall give prompt notice thereof
to the Parties. The Agent shall take such action with respect to such notice,
request or other communication as may be directed by a Majority-in-Interest of
the Parties. With the approval of a Majority-in-Interest of the Parties, the
Agent may consent to any modifications, supplement or waiver under this
Agreement, provided, however, that without the prior written consent of all
Parties, the Agent shall not modify or amend this Paragraph 6(b).
(c) In the event that Credit Managers Association of
California becomes unable or unwilling to serve as Agent, a Majority-in-Interest
of the Parties shall promptly designate another person or entity to serve as
Agent hereunder.
7. General
(a) No default shall be waived by the Agent except in writing and with
prior consent of the Committee, and no waiver of any payment or other right
under this Agreement shall operate as a waiver of any other payment or right.
(b) Any consent, notice or other communication required or
contemplated by this Agreement shall be in writing. If intended for Debtor, it
shall be deemed given upon receipt by Debtor, or three days after deposit if
mailed, postage prepaid, to Debtor at the address set forth below or at such
other address given by notice as herein provided. If intended for a Party, it
shall be deemed given only if actually received by the Agent at the address set
forth below or at such other address given by notice as herein provided.
Debtor:
AURA SYSTEMS, INC.
0000 Xxxxxx Xxxxxx
Xx Xxxxxxx, Xxxxxxxxxx 00000
Fax No.: (000) 000-0000
Agent:
CREDIT MANAGERS ASSOCIATION
OF CALIFORNIA
00 X. Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000-0000
Fax No.: (000) 000-0000
(c) This Agreement shall be construed under and governed by the laws
of the State of California, and, where applicable and except as otherwise
defined herein, terms used herein shall have the meanings given them in the
California Uniform Commercial Code.
(d) This Agreement may be executed in any number of counterparts,
and by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
(e) All of the rights of each Party under this Agreement shall be
cumulative and shall inure to the benefit of the successors and assigns of such
Party. All obligations of Debtor hereunder shall be binding upon the successors
and assigns of Debtor. All provisions of this Agreement concerning the
relationship between the Agent and the Parties are for the benefit of such
parties, and shall not be enforceable by or inure to the benefit of the Debtor.
(f) This Agreement may be modified by the parties hereto upon the
receipt by the Agent of written instructions authorizing and directing such
modification from a majority of the members of the informal committee
representing the interests of unsecured creditors consenting to the Restructure
(the "Informal Committee") and the written agreement of the Debtor thereto. The
members of the Informal Committee are:
Please See The Attached
EXECUTED on the dates set forth below, to be effective for all
purposes as of the date first above written.
DEBTOR:
AURA SYSTEMS, INC.
By:___________________________
Name: Xxxxxx X. Xxxxxxxx
Title: President
Date:___________________________
AGENT:
CREDIT MANAGERS ASSOCIATION OF
CALIFORNIA, as collateral and
collection agent for the
parties listed on Exhibit A
By:_______________________________
Name: Xxxxxx Xxxxx
Title:
Date:_______________________________
