EMPLOYMENT AGREEMENT
This
EMPLOYMENT AGREEMENT (the “Agreement”) is entered into as of May 15, 2008,
between AURA SYSTEMS INC., a Delaware Corporation (the “Company”) and XXXXXX
XXXXXXX, an individual (the “Employee”).
WHEREAS,
the Compensation Committee of the Board of Directors of the Company (the
“Compensation Committee”) has approved and authorized the entry into this
Agreement with the Employee; and
WHEREAS,
the parties desire to enter into this Agreement setting forth the terms and
conditions for the employment relationship of the Employee with the
Company.
NOW,
THEREFORE, in consideration of the promises and mutual covenants and agreements
herein contained and intending to be legally bound hereby, the Company and
the
Employee hereby agree as follows:
1:
TERM.
The
term
of this Agreement shall be for a period of three (3) years commencing as of
August 1, 2008 (the “Effective Date”) and expiring on July 31, 2011. This period
shall hereinafter be referred to as the “Employment Term”.
2:
DUTIES/RESPONSIBILITIES.
2.1:
Position. The Company hereby agrees to employ the Employee, and the Employee
hereby agrees to serve the Company, during the Term of Employment under the
title of Vice President, Sales.
2.2:
No
Restriction on Employment. Employee represents and warrants that there are
no
agreements or arrangements, whether written or oral, in effect which would
prevent Employee from rendering exclusive services as prescribed in this
Agreement to the Company during the term hereof, and that he has not made and
will not make any commitment, agreement or arrangement, or do any act in
conflict with this Agreement.
2.3:
Duties. In his capacity as Vice President, Sales, the Employee shall personally
and diligently devote his full working attention and energies to the performance
of such duties and responsibilities as are consistent with this position,
including, but not limited to any duties and responsibilities as may be
designated to him and which are not inconsistent with the Employee’s position.
Employee agrees to use his best efforts to perform such duties faithfully and
efficiently and shall regularly both consult with the senior executive officers
of the Company and report directly to the Company’s Chief Executive Officer.
|
1
of 12
|
3:
COMPENSATION.
3.1:
Compensation. As compensation to Employee for all services rendered under this
Agreement, the Company shall:
(i)
upon
full execution of this Agreement issue to Employee one hundred thousand
(100,000) shares of the Company’s common stock;
(ii)
grant Employee an option to purchase up to one hundred and fifty thousand
(150,000) shares of the Company’s common stock at a fixed exercise price of
three dollars ($3.00) per share each year for three years in accordance with
the
schedule set forth in EXHIBIT A. Such options shall vest monthly; and
(iii)
the
Company shall pay the Employee a salary at an annual rate of Three Hundred
Thousand Dollars ($300,000) (the “Base Salary”). This Base Salary may be
increased at such times, if any, and in such amounts as determined by the
Compensation Committee in its discretion. Base Salary payments shall be made
in
equal installments in accordance with Company's then prevailing payroll
policy.
3.2:
Benefits. During the Employment Term the Employee shall be eligible to
participate in the regular Company health insurance benefits, vacation, and
other employee benefit plans, programs and policies established by the Company
generally for its employees or senior management.
3.3:
Bonus. If, as set forth in EXHIBIT B, during the Employment Term the Company
meets certain revenue and collection milestones from the sale of mobile
refrigeration systems, Employee shall receive an option, each year for three
years, to purchase up to fifty thousand (50,000) shares of the Company’s common
stock at a fixed exercise price of three dollars ($3.00) per share as set forth
in EXHIBIT B.
3.4:
Business Expenses. Subject to prior written approval of the Employee’s direct
report, during the Employment Term, the Employee shall be authorized to incur
business expenses carrying out his duties and responsibilities in connection
with his employment. The Company will reimburse the Employee for such expenses
upon presentation of appropriate vouchers or receipts, in accordance with its
corporate expense reimbursement policies.
3.5:
Stock Holding Period. Employee understands that any securities offered and/or
issued under this agreement are subject to significant limitations on resale
under applicable securities laws. Employee understands that reliance upon Rule
144 under the Securities Act for resales of the Securities requires, among
other
conditions, a holding period and volume limitations prior to the resale. The
Employee understands and hereby acknowledges that the Company is under no
obligation to register any of the Securities under the Securities Act, any
applicable state securities or “blue sky” laws or any applicable foreign
securities laws.
|
2
of 12
|
3.6:
Stock Legends. The Employee consents to the placement of the legend set forth
below, or a substantial equivalent thereof, on any certificate or other document
evidencing any securities granted to him by the Company:
THE
SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY
APPLICABLE STATE SECURITIES LAWS, AND MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED
OR HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF A REGISTRATION
STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER THE SECURITIES ACT
OR
AN EXEMPTION FROM THE SECURITIES ACT. ANY SUCH TRANSFER MAY ALSO BE SUBJECT
TO
COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS AND THE LAWS OF OTHER
APPLICABLE JURISDICTIONS.
The
Employee further consents to the placement of one or more restrictive legends
on
any securities issued in connection with this Agreement as may be required
by
applicable securities laws. Such Employee is aware that the Company will make
a
notation in its appropriate records with respect to the restrictions on the
transferability of the securities.
3.7:
Stock Issuance. All options and shares referenced herein shall be issued subject
to and in accordance with the Securities Laws of the United States and Blue
Sky
laws. Employee agrees to execute any and all documents and agreements with
respect to the issuance and exercise requested by the Company.
4:
RESTRICTIVE COVENANTS.
4.1:
Protection of Company’s Interests. To the extent allowed by law, the Employee
shall not, without the prior written consent of the Company, perform services
for any person, firm or corporation and/or engage in any activity which would
be
directly or indirectly competitive with the Company both during the Employment
Term and for a period of twelve (12) months following expiration of this
Agreement. The foregoing will not prevent Employee from holding at any time
less
than 5% of the outstanding capital stock of any company whose stock is publicly
traded.
4.2:
Antisolicitation. The Employee promises and agrees that while employed with
Company, and for a period of twelve (12) months following expiration of this
Agreement or any prior termination thereof, Employee will not, directly or
indirectly, influence or attempt to influence any person, firm, association,
partnership, corporation, or other entity that is a contracting party with,
or
known to be in negotiation with, the Company or any of its present or future
subsidiaries or affiliates to: (i) terminate any agreement with the Company,
except to the extent the Employee is acting on behalf of the Company in good
faith, or (ii) hire or attempt to hire for employment any person who is employed
by the Company, or attempt to influence any such person to terminate employment
with the Company, except to the extent the Employee is acting on behalf of
the
Company in good faith.
|
3 of
12
|
4.3:
Right to Property, Trade Secrets and Company Materials. To the extent permitted
by law, all rights worldwide with respect to any and all intellectual or other
property of any nature produced, created or suggested by the Employee during
the
Employment Term or resulting from Employee’s services shall be deemed to be a
work made for hire and shall be the sole and exclusive property of the Company.
Employee agrees to execute, acknowledge and deliver to Company at Company's
request, such further documents as Company finds appropriate to evidence
Company's rights in such property. Further, the Employee agrees that all styles,
designs, formulae, lists, materials, books, files, reports, correspondence,
records, and other documents (“Company Material”) used, prepared, or made
available to the Employee, shall be and shall remain the property of the
Company. Upon the termination of his employment or the expiration of this
Agreement, all Company Materials shall be returned immediately to the Company,
and the Employee shall not make or retain any copies thereof.
4.4:
Confidential Information. During the Term of this Agreement and thereafter,
the
Employee shall not either directly or indirectly disclose or use any
Confidential Information of the Company, its affiliates or subsidiaries, except
as may be required in the course of his employment by the Company, as may be
otherwise allowed with the written permission of the Company, its affiliates
or
subsidiaries, or as may be required by law; provided, however, that, if the
Executive is required by any subpoena, court order, regulation, or law to
disclose such information, he shall promptly notify the Company and cooperate
with the Company in seeking a protective order or other appropriate remedy.
“Confidential Information” shall mean information about the Company, its
subsidiaries and affiliates, and their respective clients and customers that
is
not available to the general public and that was learned by the Employee in
the
course of his employment by the Company, including (without limitation) any
data, formulae, information, proprietary knowledge, trade secrets and client
and
customer lists and all papers, resumes, records and the documents containing
such Confidential Information. The Employee acknowledges that such Confidential
Information is specialized, unique in nature and of great value to the Company,
and that such information gives the Company a competitive advantage. Upon the
expiration or termination of the Employment Term, Employee shall promptly return
to Company all such information that exists in written or other form (and all
copies thereof) under Employee’s control.
4.5:
Disparaging Comments by Employee. While employed with Company, and for a period
of twelve (12) months following expiration of this Agreement or any prior
termination thereof, the Employee shall not publicly criticize or disparage
the
Company, any subsidiary, affiliate or any director, officer, executive, or
agent
of the Company or any subsidiary or affiliate, except as may be required by
law.
4.6:
Disparaging Comments by Company. While the Employee is employed with Company,
and for a period of twelve (12) months following expiration of this Agreement
or
any prior termination thereof, the Company shall not issue any disparaging
statements about the Employee.
|
4 of
12
|
4.7:
Breach of Restrictive Covenants. Any material breach by the Employee of the
provisions of Sections 4.1 through 4.6 (inclusive) of this Agreement shall
relieve the Company of all obligations to make any further payments to the
Employment pursuant to this Agreement. The Employee acknowledges that the
restrictions contained in this Section 4 are reasonable and necessary to protect
the legitimate interests of the Company and that any breach by the Employee
of
any portion of this Section 4 will result in irreparable injury to the Company.
The Employee agrees that the Company’s remedies at law would be inadequate in
the event of a breach or threatened breach of this Section 4 and, accordingly,
that the Company shall be entitled, in addition to its rights at law, to
temporary, preliminary, and permanent injunctive relief and other equitable
relief, without the need to post a bond.
5:
TAXES.
The
Company makes no representations regarding the tax implications of the
compensation and/or securities provided for in this Agreement. The Company
advises the Employee to consult with a tax professional and/or their attorney
regarding such implications and the Employee’s responsibilities regarding
fulfillment of his taxation obligations. By accepting this offer, Employee
acknowledge and agrees that (i) Employee shall be liable for all taxes assessed
by any federal, state, or local authorities with respect to the compensation
and/or securities provided herein and (ii) that the Company is authorized to
withhold for all such customary
withholdings and such excise or other taxes as
is
required by law otherwise deemed necessary by the Company.
6:
NAME AND LIKENESS.
The
Company shall have the right to use Employee’s name, refer to Employee’s prior
professional services and Employee’s services hereunder and likeness in
connection with its business.
7:
INDEMNIFICATION.
7.1:
Scope of Indemnification. Employee shall be indemnified and held harmless by
the
Company to the fullest extent permitted by law or by the Company’s bylaws or
resolutions of the Company's Board of Directors from any claim, liability,
loss,
cost or expense of any nature reasonably incurred by the Employee, and not
otherwise received by him from another source, such as insurance, by reason
of
the fact that he is or was a director, officer or employee of the Company or
serving at the request of the Company as a director, officer, member, employee
or agent of another corporation, limited liability corporation, partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans.
7.2:
Limits on Indemnification. Notwithstanding the foregoing, the indemnification
provided in Section 7.1 will not apply and no indemnity
pursuant to this Agreement shall be provided by the Company:
(i)
for
any loss, costs, damages, and expenses arising out of or relating in any way
to
any employment of Employee by any former employer or the termination of any
such
employment;
|
5 of
12
|
(ii)
on
account of any suit in which a final, unappealable judgment is rendered against
Employee for an accounting of profits made from the purchase or sale by Employee
of securities of the Company in violation of the provisions of the Securities
Exchange Act of 1934, as amended;
(iii)
for
damages that have been paid directly to Employee by an insurance carrier under
a
policy of directors' and officers' liability insurance maintained by the
Company;
(iv)
with
respect to remuneration paid to Employee if it shall be determined by a final
judgment or other final adjudication that such remuneration was in violation
of
law;
(v)
on
account of Employee’s conduct which is finally adjudged to have been intentional
misconduct, gross misconduct, a knowing violation of law or a transaction from
which Employee derived an improper personal benefit; or
(vi)
if a
final decision by a court having jurisdiction in the matter shall determine
that
such indemnification is not lawful.
7.3:
Insurance. In the same amount and to the same extent, if any, as the Company
covers its other officers and directors, the Company shall cover the Employee
under directors and officers liability insurance throughout the Employment
Term.
8:
TERMINATION.
8.1:
General. Employee’s employment hereunder shall terminate upon the earlier of:
(i) the expiration of the Employment Term, (ii) the death of Employee, (iii)
the
expiration of a continuous period of thirty (90) calendar days during which
Employee is unable to perform his material duties due to physical or mental
incapacity (during which period the Company shall continue to provide Employee
with all participatory
benefits
previously made available to Employee and to pay Employee his Base Salary as
set
forth in Section 3.1; provided that the Base Salary shall be reduced by all
amounts paid to Employee on account of disability or other insurance, worker's
compensation, social security or other payments made to Employee arising out
of
his disability which in each case, where applicable, are paid under or pursuant
to any plan or arrangement provided at the cost of the Company; and
notwithstanding the foregoing, all such payments by the Company shall cease
upon
the earlier termination or expiration of this Agreement), (iv) termination
by
the Company due to "Just Cause," (v) termination by Employee due to a material
breach of this Agreement by the Company ("Good Reason"), (vi) termination by
the
Company without just cause, or (vii) termination by Employee without Good
Reason. The exercise of the right of the Company or Employee to terminate this
Agreement pursuant to clauses (iv) or (v) hereof, as the case may be, shall
not
abrogate the rights and remedies of the terminating party in respect of the
breach giving rise to such termination.
8.2:
Just
Cause. "Just cause" hereunder shall be defined and limited to mean:
(i)
Employee’s failure or refusal, as determined by the Board in its sole
discretion, to perform specific directives of the Board which are consistent
with the scope and nature of Employee’s duties and responsibilities as set forth
herein (including the duties described in Section 2), which failure or refusal
continues after notice thereof and a reasonable time to cure;
|
6 of
12
|
(ii)
Employee’s conviction for a felony or any crime involving moral turpitude,
fraud, or misrepresentation, or the presentation of proof satisfactory to the
Board in the exercise of its reasonable judgment of Employee’s misappropriation
or embezzlement of funds or assets from the Company;
(iii)
any
intentional act having the purpose and effect of injuring the reputation,
business or business relationships of the Company in any material respect;
and
(iv)
any
breach by Employee of any material provision of this Agreement, including,
without limitation, the restrictive covenants contained in Section 4
hereof.
8.3:
Company Obligations Upon Termination. If Employee’s employment hereunder is
terminated pursuant to:
(i)
Section 8.1(i), the Company shall have no further obligations or liabilities
hereunder, except that Employee shall be entitled to receive the cash equivalent
of any accrued but unused vacation time and any approved unreimbursed
expenses;
(ii)
Section 8.1(ii), (iii), (iv) or (v), the Company shall have no further
obligations or liabilities hereunder except that Employee shall be entitled
to
receive that portion of his Base Salary (as described in Section 3.1(iii))
which
has accrued through the effective date of such termination, the cash equivalent
of any accrued but unused vacation time and any approved unreimbursed
expenses.
(iii)
Section 8.1(vi), the Employee shall continue to receive payment of his Base
Salary as prescribed in Section 3.1(iii) for the remaining term of this
Agreement. Employee shall also be entitled to receive reimbursement of any
approved unreimbursed expenses accrued through the effective date of such
termination
(iv)
Section 8.1(vii), the Company shall have no further obligations or liabilities
hereunder except that Employee shall be entitled to receive that portion of
his
Base Salary (as described in Section 3.1(iii)) which has accrued through the
effective date of such termination as well as reimbursement for any approved
unreimbursed expenses.
8.4:
Effect of Termination on Securities. If Employee’s employment hereunder is
terminated pursuant to Section 8.1(ii), (iii), (iv) or (v), the Company may,
at
its sole discretion, rescind any or all options which are granted hereunder
but
not yet vested at the time of termination.
9:
ASSIGNMENT.
9.1:
General. This Agreement is personal to each of the parties hereto. No party
may
assign or delegate any rights or obligations hereunder without first obtaining
the written consent of the other party hereto, except that this Agreement shall
be binding upon and inure to the benefit of any successor corporation to the
Company.
|
7 of
12
|
9.2:
Company Successorship. The Company shall require any successor (whether direct
or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, “Company” shall mean the Company as
hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes this Agreement by operation of law, or
otherwise.
9.3:
Employee Sucessorship. This Agreement shall inure to the benefit of and be
enforceable by the Employee and his personal or legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees.
10:
NOTICE.
For
the
purpose of this Agreement, notices and all other communications provided for
in
this Agreement shall be in writing and shall be deemed to have been duly given
when delivered or mailed by United States certified or registered mail, return
receipt requested, postage prepaid, addressed to the respective addresses set
forth below, or to such other addresses as either party may have furnished
to
the other in writing in accordance herewith, except that notice of a change
of
address shall be effective only upon actual receipt:
|
If
to Company:
|
If
to Employee:
|
|
|
Aura
Systems, Inc.
|
Xxxxxx
Xxxxxxx
|
|
|
0000
Xxxx Xxxxxx
|
______________________ | |
|
Xx
Xxxxxxx, Xxxxxxxxxx 00000
|
______________________ | |
|
Attn:
_____________________
|
11:
AMENDMENTS OR ADDITIONS.
No
modification, waiver or discharge or addition made to this Agreement shall
be
binding unless agreed to in writing and signed by both the Employee and such
officer(s) as may be specifically designated by the Board.
12:
SECTION HEADINGS.
The
section headings used in this Agreement are included solely for convenience
and
shall not affect, or be used in connection with, the interpretation of this
Agreement.
|
8 of
12
|
13:
SEVERABILITY.
The
provisions of this Agreement shall be deemed severable and the invalidity or
unenforceability of any provision shall not affect the validity or
enforceability of the other provisions hereof.
14:
COUNTERPARTS.
This
Agreement may be executed in counterparts, each of which shall be deemed to
be
an original, but both of which together will constitute one and the same
instrument.
15:
ARBITRATION.
Any
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three
arbitrators in Los Angeles, California, in accordance with the rules of the
American Arbitration Association then in effect. Judgment may be entered on
the
arbitrator’s award in any court having jurisdiction.
16:
ENTIRE AGREEMENT.
This
Agreement constitutes the final written expression of all terms to which the
Company and Employee have agreed and is a complete and exclusive statement
of
those terms. Both the Company and Employee acknowledges that, in agreeing to
enter into this Agreement, neither has relied on any representation, warranty,
collateral contract or other assurance (except those set out in this Agreement
and any documents referred to in it) made by or on behalf of any other party
or
any other person whatsoever before the execution of this Agreement.
17:
WAIVER.
No
waiver
by either party hereto at any time of any breach by the other party hereto
of,
or compliance with, any condition or provision of this Agreement to be performed
by such other party shall be deemed a waiver of similar or dissimilar provisions
or conditions at the same or at any prior or subsequent time. A party’s failure
to insist upon performance under this Agreement shall neither constitute a
waiver of that party’s right to insist upon performance thereafter, nor a waiver
of any rights or remedies provided under this Agreement or under
law.
18:
GOVERNING LAW.
The
validity, interpretation, construction and performance of this Agreement shall
be governed by the laws of the State of California without regard to its
conflicts of law principles. In addition, this Agreement shall be subject to
and
in accordance with the securities laws of the United States. All references
to
the Compensation Committee shall be deemed also to refer to any committee of
the
Board however designated that performs similar functions.
|
EMPLOYMENT
AGREEMENT
|
9 of
12
|
IN
WITNESS WHEREOF, each of the parties hereto has executed this Agreement on
the
date first indicated above.
|
AURA
SYSTEMS, INC.
|
|
a
Delaware corporation
|
|
By:
|
|
Xxxxxx
Xxxxxxxx
|
|
Chief
Executive Officer/
|
|
Chairman
of the Board
|
|
EMPLOYEE:
|
|
By:
|
|
|
XXXXXX
XXXXXXX
|
EMPLOYMENT
AGREEMENT
|
10 of
12
|
EXHIBIT
A
Three-Year
Stock Option Schedule
|
Year
|
Number of Vesting Options
|
|||
|
1
(____2008-____2009)
|
150,000
|
|||
|
2
(____2009-____2010)
|
150,000
|
|||
|
3
(____2010-____2011)
|
150,000
|
|||
|
|
||||
|
Total
|
450,000
|
|||
All
options issued herein pursuant to Section 3.1(ii) shall have an expiration
date
of July 31, 2013.
|
EMPLOYMENT
AGREEMENT
|
11
of 12
|
EXHIBIT
B
Bonus
Schedule Based on Revenue and Collection Milestones
|
Year
|
Revenue From Sale of
Mobile Refrigeration Systems
|
Number of Options
Granted if Revenue
Met
|
Date Options To Be
Issued (if at all)
|
|||||||
|
1
__/08-__/09
|
$
|
8
million
|
50,000
|
___
2009
|
||||||
|
2
__/09-__/10
|
$
|
14
million
|
50,000
|
___
2010
|
||||||
|
3
__/10-__/11
|
$
|
20
million
|
50,000
|
___
2011
|
||||||
All
options issued herein pursuant to Section 3.3 shall have an expiration date
of
July 31, 2013.
|
EMPLOYMENT
AGREEMENT
|
12
of 12
|
