10.21.1
FIRST AMENDMENT TO SECURITY AGREEMENT
THIS FIRST AMENDMENT TO SECURITY AGREEMENT, dated as of October 22,
1999 (the "Amendment") is entered into between and among RGC INTERNATIONAL
INVESTORS, LDC, a Cayman Islands limited duration company ("Secured Party"), and
AURA SYSTEMS, INC., a Delaware corporation ("Debtor").
Preliminary Statement
WHEREAS, Debtor and Secured Party are parties to that certain Security
Agreement, dated as of October 7, 1998, (the "Existing Security Agreement")
pursuant to which Debtor has granted a lien on, and security interest in,
certain of its assets as security for, among other things, the repayment of that
certain Convertible Senior Secured Note, dated as of October 7, 1998 and amended
and restated effective as of October 22, 1999, payable from Debtor to the order
of Secured Party (the "Note"); and
WHEREAS, Debtor has requested, and Secured Party has agreed, to amend
the Existing Security Agreement in certain respects to effect such requested
modifications.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the Debtor
and Secured Party hereby amend the Existing Security Agreement, but only to the
extent and on the terms and conditions specifically set forth herein. All
capitalized terms used herein and not otherwise defined shall have the
respective meanings ascribed to them in the Existing Security Agreement.
1. Amendment to the Existing Security Agreement.
(a) Section 3.5 - Section 3.5 of the Existing Security Agreement is
hereby amended by deleting the section in its entirety and substituting
"[RESERVED]" in place thereof.
(b) Section 3.9 - Section 3.9 of the Existing Security Agreement is
hereby amended by deleting the first sentence thereof in its entirety.
(c) Section 7 - Section 7 of the Existing Security Agreement is hereby
amended by deleting the definition of "Permitted Liens" contained therein in its
entirety and substituting in place thereof the following definition:
"Permitted Liens" shall mean (a) any liens for current taxes,
assessments, and other governmental charges not yet due and payable;
(b) any mechanic's, materialman's, carrier's, warehousemen's or similar
liens for sums not yet due; (c) easements, rights-of-way, restrictions
and other similar encumbrances on the real property or fixtures of the
Debtor incurred in the ordinary course of business which individually
or in the aggregate are not substantial in amount and which do not in
any case materially detract from the value or marketability of the
property subject thereto or interfere with the ordinary conduct of the
business of the Debtor; (d) liens (other than liens imposed on any
property of the Debtor pursuant to ERISA or Section 412 of the Code)
incurred or deposits made in the ordinary course of business, including
liens in connections with workers' compensation, unemployment insurance
and other types of social security and liens to secure performance of
tenders, statutory obligations, surety and appeal bonds (in the case of
appeal bonds such lien shall not secure any reimbursement or indemnity
obligation in an amount greater than $100,000), bids, leases that are
not capital leases, performance bonds, sales contracts and other
similar obligations, in each case, not incurred in connection with the
obtaining of credit or the payment of a deferred purchase price; (e)
liens on and security interests in the Collateral created in favor of
the Secured Party; (f) purchase money liens to secure the deferred
purchase price of property not to exceed the lower of the cost or fair
market value of the property that is purchased in the ordinary course
of business consistent with past practice; (g) liens evidenced by
perfected security interests existing on October 1, 1999 and listed in
the "lien searches" attached hereto as Schedule 7.2(a) and made a part
hereof and liens evidenced by judgments entered against the Debtor
prior to October 1, 1999 and listed in Schedule 7.2(b) and made a part
hereof; and (h) liens existing after October 1, 1999 so long as no such
lien (excluding judgment liens), individually, evidences indebtedness
of more than $100,000 and so long as all such liens (including judgment
liens), in the aggregate, evidence indebtedness of not more than
$500,000.
(d) Section 7.1 - Section 7.1 of the Existing Security Agreement is
hereby amended by deleting the section in its entirety and substituting in place
thereof the following:
"7.1 Except as otherwise permitted by Section 1.3 of the Notes, sell,
assign (by operation of law or otherwise), or otherwise dispose of any
of the Collateral except sales or inventory in the ordinary course of
business."
(e) Section 10 - Section 10 of the Existing Security Agreement is
hereby amended by inserting the following language at the end of the last
sentence thereof:
"; provided, however, that in connection with any
disposition of assets by Aura Ceramics, Inc., MYS
Corporation, Aura Sound, Inc. or Electrotec Productions,
Inc. in accordance with Section 1.3 of the Notes, the
Secured Party Agrees to execute termination statements with
respect to such dispositions as reasonably requested by
Debtor on or after the consummation of such transactions."
2. Effect of Amendment.
This Amendment amends the Existing Security Agreement only to the
extent and in the manner herein set forth, and in all other respects the
Existing Security Agreement is ratified and confirmed.
3. Counterparts.
This Amendment may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures hereto
were upon the same instrument.
4. Governing Law.
This Amendment and all rights and obligations of the parties hereunder
shall be governed by and construed in accordance with the laws of the State of
Delaware applicable to agreements made and to be performed in the State of
Delaware (without regard to principles of conflict of laws). Both parties
irrevocably consent to the jurisdiction of the United States federal courts and
the state courts located in Delaware with respect to any suit or proceeding
based on or arising under this Amendment, the agreements entered into in
connection herewith or the transactions contemplated hereby or thereby and
irrevocably agree that all claims in respect of such suit or proceeding may be
determined in such courts. Both parties irrevocably waive the defense of an
inconvenient forum to the maintenance of such suit or proceeding. Both parties
further agree that service of process upon a party mailed by first class mail
shall be deemed in every respect effective service of process upon the party in
any such suit or proceeding. Nothing herein shall affect either party's right to
serve process in any other manner permitted by law. Both parties agree that a
final non-appealable judgment in any such suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on such judgment or in any
other lawful manner.
IN WITNESS WHEREOF, Debtor and Secured Party have caused this First
Amendment to Security Agreement to be executed by their proper corporate
officers thereunto duly authorized as of the day and year first above written.
AURA SYSTEMS, INC.
By:______________________________
Name:
Title:
RGC INTERNATIONAL INVESTORS, LDC
By: Xxxx Xxxx Capital Management, L.P., Investment Manager
By: RGC General Partner Corp., as General Partner
By: ______________________________
Xxxxx X. Xxxxx
Managing Director
1
