EXHIBIT 10.15
INDEMNIFICATION AGREEMENT
AGREEMENT, effective as of July 10, 2001, between Aura Systems, Inc., a
Delaware corporation (the "Company"), and Xxxxx Xxxxxxxxx (the "Indemnitee").
WHEREAS, it is essential to the Company to retain and attract as directors
and officers the most capable persons available;
WHEREAS, Indemnitee has agreed to become a director of the Company;
WHEREAS, both the Company and Indemnitee recognize the risk of litigation
and other claims asserted against directors of public companies;
WHEREAS, in recognition of Indemnitee's desire for substantial protection
against personal liability in order to enhance Indemnitee's service to the
Company, and to provide Indemnitee with specific contractual assurance that the
indemnification protection provided by the By-Laws of the Company or authorized
by the Delaware General Corporation Law will be available to Indemnitee
(regardless of, among other things, any amendment to or revocation of the
Company's Certificate of Incorporation and By-Laws or any change in the
composition of the Company's Board of Directors), and in order to induce
Indemnitee to provide services to the Company as a director thereof, the Company
wishes to provide in this Agreement for the indemnification of and the advancing
of expenses to Indemnitee to the full extent (whether partial or complete)
permitted by law and as set forth in this Agreement, and, if and to the extent
insurance is maintained, for the coverage of Indemnitee under any directors' and
officers' liability insurance policies maintained by the Company; and
WHEREAS, this Agreement has been authorized by the duly adopted resolution
of the Board of Directors of the Company;
NOW, THEREFORE, in consideration of the foregoing, and intending to be
legally bound hereby, the parties hereto agree as follows:
1. Certain Definitions:
(a) Claim: any threatened, pending or completed action, suit, proceeding or
alternate dispute resolution mechanism, or any inquiry, hearing or
investigation, whether conducted by the Company or any other party, that
Indemnitee in good faith believes might lead to the institution of any such
action, suit, proceeding or alternate dispute resolution mechanism, whether
civil, criminal, administrative, investigative or other.
(b) Expenses: include attorneys' fees and all other costs, travel expenses,
fees of experts, transcript costs, filing fees, witness fees, telephone
charges, postage, delivery service fees, expenses and obligations of any
nature whatsoever paid or incurred in connection with investigating,
defending, being a witness in or participating in (including on appeal), or
preparing to defend, be a witness in or participate in, any Claim relating
to any Indemnifiable Event. (c) Indemnifiable Event: any event or
occurrence related to the fact that Indemnitee is or was a director,
officer, employee, agent or fiduciary of the Company, or is or was serving
at the request of the Company as a director, officer, employee, trustee,
agent or fiduciary of another corporation, partnership, joint venture,
employee benefit plan, trust or other enterprise, or by reason of anything
done or not done by Indemnitee in any such capacity.
(d) Reviewing Party: any appropriate person or body appointed by the Board
of Directors and consisting of a member or members of the Company's Board,
or any other person or body appointed by the Board who is not a party to
the particular Claim for which Indemnitee is seeking indemnification.
2. Basic Indemnification Arrangement
(a) In the event Indemnitee was, is or becomes a party to or witness or
other participant in, or is threatened to be made a party to or witness or
other participant in, a Claim by reason of (or arising in part out of) an
Indemnifiable Event, the Company shall indemnify Indemnitee to the fullest
extent permitted by the laws of Delaware, as the same exist or may
hereafter be amended (but, in the case of any amendment, only to the extent
that such amendment permits the Company to provide broader indemnification
rights than such law permitted the Company to provide prior to such
amendment), as soon as practicable but in any event not later than thirty
days after written demand is presented to the Company, against any and all
Expenses, judgments, fines, penalties and amounts paid in settlement
(including all interest, assessments and other charges paid or payable in
connection with or in respect of such Expenses, judgments, fines, penalties
or amounts paid in settlement) of such Claim and any federal, state, local
or foreign taxes imposed on the Indemnitee as a result of the actual or
deemed receipt of any payments under this Agreement. If so requested by
Indemnitee, the Company shall advance (within two business days of such
request) any and all Expenses to Indemnitee (an "Expense Advance").
Notwithstanding anything in this Agreement to the contrary and except as
provided in Section 3, Indemnitee shall not be entitled to indemnification
pursuant to this Agreement in connection with any Claim initiated by
Indemnitee against the Company or any director or officer of the Company
unless the Company has joined in or consented to the initiation of such
Claim. Notwithstanding anything in this Agreement to the contrary,
Indemnitee shall not be entitled to indemnification pursuant to this
Agreement on account of any suit in which a final judicial determination is
rendered against Indemnitee for an accounting of profits made from the
purchase and sale by Indemnitee of securities of the Company pursuant to
the provisions of Section 16(b) of the Securities Exchange Act of 1934, as
amended.
(b) Notwithstanding the foregoing, (i) the obligations of the Company under
Section 2(a) shall be subject to the condition that the Reviewing Party
shall not have determined that Indemnitee would not be permitted to be
indemnified under applicable law, and (ii) the obligation of the Company to
make an Expense Advance pursuant to Section 2(a) shall be subject to the
condition that, if, when and to the extent that the Reviewing Party
determines that Indemnitee would not be permitted to be so indemnified
under applicable law, the Company shall be entitled to be reimbursed by
Indemnitee (who hereby agrees to reimburse the Company) for all such
amounts theretofore paid; provided, however, that if Indemnitee has
commenced legal proceedings in a court of competent jurisdiction to secure
a determination that Indemnitee should be indemnified under applicable law,
any determination made by the Reviewing Party that Indemnitee would not be
permitted to be indemnified under applicable law shall not be binding and
Indemnitee shall not be required to reimburse the Company for any Expense
Advance until a final judicial determination is made with respect thereto
(as to which all rights of appeal therefrom have been exhausted or lapsed).
Indemnitee's obligation to reimburse the Company for Expense Advances shall
be unsecured and no interest shall be charged thereon. If there has been no
determination by the Reviewing Party or if the Reviewing Party determines
that Indemnitee substantively would not be permitted to be indemnified in
whole or in part under applicable law, Indemnitee shall have the right to
commence litigation in the Court of Chancery of the State of Delaware or in
any court in the County of Los Angeles, California, having jurisdiction
over the dispute, seeking an initial determination by the court or
challenging any such determination by the Reviewing Party or any aspect
thereof, or the legal or factual bases therefor and the Company hereby
consents to service of process and to appear in any such proceeding. Any
determination by the Reviewing Party otherwise shall be conclusive and
binding on the Company and Indemnitee.
(c) In the event the Company shall be obligated under Section 2(a) above to
pay the expenses of any proceeding against Indemnitee, the Company, if
appropriate, shall be entitled to assume the defense of such proceeding,
with counsel approved by Indemnitee, upon the delivery to Indemnitee of
written notice of the Company's election to do so. After delivery of such
notice, approval of such counsel by Indemnitee and the retention of such
counsel by the Company, the Company will not be liable to Indemnitee under
this Agreement for any fees of counsel subsequently incurred by Indemnitee
with respect to the same proceeding; provided that (i) Indemnitee shall
have the right to employ his counsel in any such proceeding at Indemnitee's
expense; and (ii) if (A) the employment of counsel by Indemnitee has been
previously authorized by the Company, or (B) the Reviewing Party shall have
reasonably concluded that there may be a conflict of interest between the
Company and Indemnitee in the conduct of any such defense or (C) the
Company shall not, in fact, have employed counsel to assume the defense of
such proceeding, then the fees and expenses of Indemnitee's counsel shall
be at the expense of the Company. The Company shall not be liable to
indemnify Indemnitee under this Agreement for any amounts paid in
settlement of any Claim effected without its prior written consent. The
Company may, without the consent of Indemnitee, settle any Claim for which
it is obligated to provide indemnity under Section 2(a) above, and
Indemnitee shall take all actions required to cooperate in effecting such
settlement; provided, however, that the Company shall not settle any Claim
in any manner which would impose any penalty or limitation on Indemnitee
without Indemnitee's written consent. Neither the Company nor Indemnitee
will unreasonably withhold their consent to any proposed settlement.
3. Indemnification for Additional Expenses
The Company shall indemnify Indemnitee against any and all expenses
(including attorneys' fees) and, if requested by Indemnitee, shall (within
two business days of such request) advance such expenses to Indemnitee,
which are incurred by Indemnitee in connection with any claim asserted
against or in connection with any action brought by Indemnitee for (i)
indemnification or advance payment of Expenses by the Company under this
Agreement or any other agreement or Certificate of Incorporation or By-Laws
of the Company now or hereafter in effect relating to Claims for
Indemnifiable Events and/or (ii) recovery under any directors' and
officers' liability insurance policies maintained by the Company,
regardless of whether Indemnitee ultimately is determined to be entitled to
such indemnification, advance expense payment or insurance recovery, as the
case may be; provided, however, that the Company shall not have any
obligation to indemnify Indemnitee for any expenses incurred by the
Indemnitee with respect to any proceeding instituted by Indemnitee to
enforce or interpret this Agreement or to enforce any obligations to
indemnification or to advance payment of expenses hereunder, if a court of
competent jurisdiction determines that each of the material assertions made
by the Indemnitee in such proceedings was not made in good faith or was
frivolous.
4. Partial Indemnity, Burden of Proof
(a) If Indemnitee is entitled under any provision of this Agreement to
indemnification by the Company for some or a portion of the Expenses,
judgments, fines, penalties and amounts paid in settlement of a Claim but
not, however, for all of the total amount thereof, the Company shall
nevertheless indemnify Indemnitee for the portion thereof to which
Indemnitee is entitled. Moreover, notwithstanding any other provision of
this Agreement, to the extent that Indemnitee has been successful on the
merits or otherwise in defense of any or all Claims relating in whole or in
part to an Indemnifiable Event or in defense of any issue or matter
therein, including dismissal without prejudice, Indemnitee shall be
indemnified against all Expenses incurred in connection therewith.
(b) For purposes of this Agreement, in connection with any determination by
the Reviewing Party or otherwise as to whether Indemnitee is entitled to be
indemnified hereunder the burden of proof shall be on the Company to
establish by clear and convincing evidence that Indemnitee is not so
entitled, and if the Company does not carry such burden of proof with such
evidence Indemnitee shall be deemed to be so entitled.
5. No Presumption
For purposes of this Agreement, the termination of any claim, action, suit
or proceeding, by judgment, order, settlement (whether with or without
court approval) or conviction, or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that Indemnitee did not meet any
particular standard of conduct or have any particular belief or that a
court has determined that indemnification is not permitted by applicable
law.
6. Non-exclusivity, Etc.
The rights of Indemnitee hereunder shall be in addition to any other rights
Indemnitee may have under the Certificate of Incorporation or By-Laws of
the Company or the Delaware General Corporation Law or otherwise. To the
extent that a change in the Delaware General Corporation Law (whether by
statute or judicial decision) permits greater indemnification by agreement
than would be afforded currently under the Certificate of Incorporation and
By-Laws of the Company and this Agreement, it is the intent of the parties
hereto that Indemnitee shall enjoy by this Agreement the greater benefits
so afforded by such change.
7. No Construction as Employment Agreement
Nothing contained herein shall be construed as giving Indemnitee any right
to be retained in the employ of the Company or any of its subsidiaries.
8. Liability Insurance
If and to the extent the Company maintains an insurance policy or policies
providing directors' and officers' liability insurance, Indemnitee shall be
covered by such policy or policies, in accordance with its or their terms,
to the maximum extent of the coverage provided to any Company director or
officer.
9. Amendments, Etc.
No supplement, modification or amendment of this Agreement shall be binding
unless executed in writing by both the parties hereto. No waiver of any of
the provisions of this Agreement shall be deemed or shall constitute a
waiver of any other provisions hereof (whether or not similar) nor shall
such waiver constitute a continuing waiver.
10. Subrogation
In the event of payment under this Agreement, the Company shall be
subrogated to the extent of such payment to all of the rights of recovery
of Indemnitee, who shall execute all papers required and shall do
everything that may be necessary to secure such rights, including the
executing of such documents necessary to enable the Company effectively to
bring suit to enforce such rights.
11. No Duplication of Payments
The Company shall not be liable under this Agreement to make any payment in
connection with any claim made against Indemnitee to the extent Indemnitee
has otherwise actually received payment (under any insurance policy,
Certificate of Incorporation or By-Laws of the Company or otherwise) of the
amounts otherwise indemnifiable hereunder.
12. Binding Effect, Etc.
This Agreement shall be binding upon and inure to the benefit of and be
enforceable by the parties hereto and their respective successors and
assigns, including any direct or indirect successor by purchase, merger,
consolidation or otherwise to all or substantially all of the business
and/or assets of the Company, and shall inure to the benefit of
Indemnitee's spouse, heirs, and personal and legal representatives and
assigns. The Company shall require and cause 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, by written
agreement expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform if no such succession had taken place. This Agreement shall
continue in effect regardless of whether Indemnitee continues to serve as a
director of the Company.
13. Severability
The provisions of this Agreement shall be severable in the event that any
of the provisions hereof (including any provision within a single section,
paragraph or sentence) are held by a court of competent jurisdiction to be
invalid, void or otherwise unenforceable, and the remaining provisions
shall remain enforceable to the fullest extent permitted by law.
Furthermore, to the fullest extent possible, the provisions of this
Agreement (including, without limitation, each portion of this Agreement
containing any provision held to be invalid, void or otherwise
unenforceable, that is not itself invalid, void or unenforceable) shall be
construed so as to give effect to the intent manifested by the provision
held invalid, illegal or unenforceable.
14. Governing Law
This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Delaware applicable to contracts
made and to be performed in such state without giving effect to the
principles of conflicts of laws.
15. Mutual Acknowledgement
The Company and Indemnitee acknowledge that the Securities and Exchange
Commission has taken the position that indemnification is not permissible
for liabilities arising under certain federal securities laws under certain
circumstances, and federal legislation prohibits indemnification for
certain ERISA violations. Indemnitee understands and acknowledges that the
Company has undertaken or may be required in the future to undertake to
submit to the Securities and Exchange Commission the question of
indemnification to a court in certain circumstances for a determination of
the Company's right under public policy to indemnify Indemnitee. If any
such circumstance occurs, the Company will vigorously assert and prosecute
its rights to indemnify Indemnitee.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the 10th day of July, 2001.
AURA SYSTEMS, INC.
By: ________________________
Xxxxxx X. Xxxxxxxx
President & C.O.O.
AGREED TO AND ACCEPTED:
INDEMNITEE
By: ________________________
Xxxxx Xxxxxxxxx
