Pledge Agreement
This Pledge Agreement ("Agreement") is entered into on this 1st day of
December, 2002 between Aura Systems, Inc., a Delaware corporation ("Aura"), and
Purchaser (as defined in the Agreement for Sale and Leaseback described below),
with regard to the following:
RECITALS
A. In accordance with that certain Agreement for Sale and Leaseback dated
as of December, 2002, by and between Aura and Purchaser, to which a copy of this
Agreement is attached, Aura has agreed to lease from Aura Realty, Inc., a
Delaware corporation ("Aura Realty"), and Aura Realty has agreed to lease to
Aura those certain real properties commonly known as 0000 Xxxxxx Xxxxxx and 0000
Xxxx Xxxxxx, in El Segundo, California, by and pursuant to that certain lease
agreement dated as of December 1, 2002 (the "Lease"). Capitalized terms used and
not otherwise defined herein shall have the same meanings given such terms in
the Agreement for Sale and Leaseback.
B. Purchaser desires security from Aura to secure performance of Aura's
obligations under the Lease and, in the event that LaSalle does not consent to
the transfer of the Stock, performance of Aura's obligations under the Agreement
for Sale and Leaseback.
C. Aura is willing to pledge to Purchaser as security for Aura's
performance of its obligations under the Lease and, in the event that LaSalle
does not consent to the transfer of the Stock, Aura's performance of its
obligations under the Agreement for Sale and Leaseback, a security deposit in
the amount of $231,806.50 and a holdback (the "Holdback") in the amount of
$250,000.00 (collectively, the "Cash Collateral").
NOW, THEREFORE, in consideration of the Recitals and the mutual covenants,
conditions and agreements set forth herein, and for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties covenant, warrant, represent and agree as follows:
1. Pledge.
A. In accordance with the Agreement for Sale and Leaseback and the Lease,
Aura has delivered to Purchaser the Cash Collateral in the aggregate amount of
$481,806.50. Subject to Aura's rights under Section 1.D below, Aura hereby
unconditionally pledges to Purchaser its interest in the Cash Collateral as
security for: (i) performance of Aura's obligations under the Lease; (ii) in the
event that LaSalle does not consent to the transfer of the Stock, performance of
Aura's obligation to (a) make payments under the Secured Loan when due and
payable, (b) make the $30,332 monthly payments pursuant to Section 1.4 of the
Agreement for Sale and Leaseback and (c) repay the loan evidenced by the Aura
Note; and (iii) in the event that LaSalle does not consent to the transfer of
the Stock, performance of Aura's obligation to transfer the remaining balance of
the shares of the Stock to Purchaser on the date of the Second Closing, at which
time this Agreement shall secure performance of Aura's obligations under the
Lease. Aura further agrees that Purchaser may file a UCC-1 Financing Statement
to perfect its security interest in the Cash Collateral.
B. An "Event of Default" shall mean (i) the failure of Aura to pay the full
rent under the Lease when due and payable in accordance with the terms of the
Lease including applicable notice and cure periods, (ii) in the event that
LaSalle does not consent to the transfer of the Stock, the failure of Aura to
make a payment under the Secured Loan when due and payable by Aura in accordance
with the terms of the Secured Loan and the Agreement for Sale and Leaseback
including applicable notice and cure periods (iii) in the event that LaSalle
does not consent to the transfer of the Stock, the failure of Aura to make a
$30,332 monthly payment pursuant to Section 1.4 of the Agreement for Sale and
Leaseback when due and payable in accordance with the terms of the Agreement for
Sale and Leaseback including applicable notice and cure periods, (iv) in the
event that LaSalle does not consent to the transfer of the Stock, the failure of
Aura to make a payment when due and payable in accordance with the terms of the
Aura Note including applicable notice and cure periods, and (v) in the event
that LaSalle does not consent to the transfer of the Stock, the failure of Aura
to transfer the remaining balance of the shares of the Stock to Purchaser on the
date of the Second Closing in accordance with the terms of the Agreement for
Sale and Leaseback. Notice of an Event of Default will be given if any payment
or Stock transfer obligation is not satisfied by the tenth (10th) day after such
obligation is due. Any partial payment or Stock transfer will be deemed an
acceptance on account only, and the failure to satisfy the entire obligation due
prior to such tenth (10th) day shall be and continue to be an Event of Default.
C. Upon the occurrence and during the continuation of an Event of Default,
Purchaser shall have all rights and remedies granted to a secured party under
the California Commercial Code or otherwise provided by law.
D. Provided that an Event of Default has not occurred and is continuing,
Purchaser shall release the Holdback and any accrued interest thereon to
Aura if
Aura raises additional capital in the aggregate amount of not less than Two
Million Dollars ($2,000,000) through the sale of equity or from a source other
than the Alpha Agreement or the Agreement for Sale and Leaseback. Upon Aura's
satisfaction of the foregoing and issuance of a press release to that effect,
Purchaser shall release the Holdback and any accrued interest thereon to Aura
within three (3) business days after such press release and file a termination
of any UCC-1 Financing Statement filed in connection therewith.
2. Entire Agreement. This Agreement, together contains the entire understanding
of the parties with respect to the subject matter hereof.
3. Notices. Any and all notices or communications required or permitted
hereunder shall be in writing and shall be deemed given and effected if by
facsimile or personal delivery, on the date of transmission and if by mail, on
the third day after the postmark date. The addresses for such communications
shall be:
If to Aura: Aura Systems, Inc.
0000 Xxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Attn: Xxxxxxx Froch
Facsimile No.: (000) 000-0000
If to Purchaser: Zvi Kurtzmn
00000 Xxxxxxxx Xxxx., Xxxxx 000
Xxx Xxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
4. Headings Descriptive. The headings herein are for convenience only and do not
constitute a party of this Agreement and shall not be deemed to limit or affect
any of the provisions hereof.
5. Governing Law. This Agreement, and the rights and obligations of the parties
hereunder, shall be construed in accordance with and governed by the laws of the
State of California.
6. Counterparts. This Agreement may be executed in two or more counterparts, all
of which when taken together shall be considered one and the same Agreement and
shall become effective when counterparts have been signed by each party and
delivered to the other party, it being understood that both parties need not
sign the same counterpart. In the event that any signature is delivered by
facsimile transmission, such signature shall create a valid and binding
obligation of the party executing (or on whose behalf such signature is
executed) the same with the same force and effect as if such facsimile signature
page were an original thereof.
AURA:
AURA SYSTEMS, INC., a Delaware corporation
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: CEO and Chairman of the Board of Directors
PURCHASER:
/s/ Xxx Xxxxxxxx
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Xxx Xxxxxxxx, attorney-in-fact for the individuals listed on
Schedule 1 of the Agreement for Sale and Leaseback
/s/ Xxx Xxxxx
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Xxx Xxxxx, attorney-in-fact for the individuals listed on
Schedule 2 of the Agreement for Sale and Leaseback
