EXHIBIT 10.30
AMENDMENT AND WAIVER
AGREEMENT
THIS AMENDMENT AND WAIVER AGREEMENT (this "Agreement") is entered into as
of August 6, 2003 between AURA SYSTEMS, INC., a Delaware corporation (the
"Company"), and KOYAH LEVERAGE PARTNERS, L.P. and KOYAH PARTNERS, L.P. each a
Delaware limited partnership (collectively the "Lenders").
WHEREAS, in connection with loans to the Company by the Lenders, the
Company and the Lenders entered into an Agreement dated as of July 24, 2003 (the
"Agreement"), the Company executed in favor of the Lenders four Convertible
Promissory Notes (collectively, the "Notes") dated July 24, 2003, the Company
executed in favor of Koyah Leverage Partners, L.P. (as collateral agent for the
Lenders) a Security Agreement dated as of July 24, 2003 (the "Security
Agreement" and together with the Agreement and the Notes, the "Transaction
Documents");
WHEREAS, the Company has requested that the Lenders amend or waive certain
provisions of the Transaction Documents and the parties wish to correct or
clarify certain other provisions of the Transaction Documents; and
WHEREAS, the parties are entering into this Agreement to provide for such
amendments and waivers, on the terms and conditions set forth herein.
NOW, THEREFORE, for valuable consideration, the receipt of which is hereby
acknowledged, the parties do hereby agree as follows:
1. Section 1(g)(ii) of Agreement.
The Lenders hereby waive any breach of the Company's representation and
warranty contained in Section 1(g)(ii) of the Agreement arising from the
existing defaults set forth under the heading "Defaults" in the Schedule of
Exceptions attached to this Agreement, so long as any creditor involved in such
defaults takes no further actions and exercises no further remedies to collect
on the obligations involved or enforce its related rights and the Company
otherwise remains in compliance with all of the provisions of the Transaction
Documents (as modified by the amendments and waivers set forth in this
Agreement) and this Agreement.
2. Section 1(i) of Agreement.
The Lenders hereby waive any breach of the Company's representation and
warranty contained in Section 1(i) of the Agreement arising from the existing
liens set forth under the heading "Liens" in the Schedule of Exceptions attached
to this Agreement, so long as any creditor involved in such defaults takes no
further actions and exercises no further remedies to collect on the obligations
involved or enforce its related rights and the Company otherwise remains in
compliance with all of the provisions of the Transaction Documents (as modified
by the amendments and waivers set forth in this Agreement) and this Agreement.
3. Section 3(l) of Agreement.
The word "rulers" contained in the first sentence of Section 3(l) of the
Agreement hereby is amended to read "rules".
4. Section 3 of Notes.
Section 3 of each Note hereby is amended in its entirety to read as
follows:
In light of the conversion feature of this Note and to protect Lender's
right of conversion hereunder, Borrower shall not have the right to prepay
the outstanding principal balance of this Note or accrued interest thereon,
in whole or in part, prior to the Maturity Date without the prior written
consent of Lender; provided, however, that Borrower may prepay such
principal balance or accrued interest, in whole only, prior to the Maturity
Date without such consent if Borrower (i) gives Lender twenty (20) days
prior written notice of such prepayment and (ii) together with and at the
time of such prepayment, pays Lender a fee equal to twenty percent (20%) of
the outstanding principal balance as compensation to Lender for the loss of
its continued conversion rights (which fee Lender shall have the right, at
its option, to convert pursuant to Section 9 below in lieu of payment
thereof in the same manner as principal, interest or other amounts payable
under this Note). The parties acknowledge and agree that the damages
suffered by Lender in the event of the loss of its continued conversion
right is difficult to determine and that the parties have set such fee as
liquidated damages in an amount that they believe reasonably estimates such
damages.
5. Section 5 of Notes.
Section 5 of each Note hereby is amended in its entirety to read as set
forth below:
If any payment of principal or interest under this Note shall not be made
within five (5) days after the due date, this Note shall bear interest
(after as well as before judgment) at a rate of five percent (5%) per annum
above the rate of interest which would otherwise have been payable under
this Note or the maximum rate of interest permitted to be charged by
applicable law, whichever is less.
6. Section 9 of Notes.
The first sentence of Section 9 of each Note hereby is amended to add ",
fees" after the words "accrued interest" contained in such Section.
7. Section 13(b) of Notes.
The Lenders hereby waive any breach of the event of default contained in
Section 13(b) of each Note arising from the existing defaults set forth under
the heading "Defaults" in the Schedule of Exceptions attached to this Agreement,
so long as any creditor involved in such defaults takes no further actions and
exercises no further remedies to collect on the obligations involved or enforce
its related rights and the Company otherwise remains in compliance with all of
the provisions of the Transaction Documents (as modified by the amendments and
waivers set forth in this Agreement) and this Agreement.
8. Section 13(d) of Notes.
The Lenders hereby waive any breach of the event of default contained in
Section 13(d) of each Note arising from the existing liens set forth under the
heading "Liens" in the Schedule of Exceptions attached to this Agreement, if
any, which may cover collateral under the Security Agreement and have priority
under applicable law over the security interest of the Security Agreement, so
long as the Company otherwise remains in compliance with all of the provisions
of the Transaction Documents (as modified by the amendments and waivers set
forth in this Agreement) and this Agreement.
9. Section 16(g) of Notes.
Section 16(g) of each Note hereby is amended to add at the end of such
Section a new sentence which reads as follows:
The parties acknowledge that Borrower currently does not have any
authorized but unissued shares of its common stock available for issuance
and Borrower hereby agrees to use its best efforts to take action to call a
shareholder meeting and increase its authorized but unissued common stock
as soon as practicable.
10. Section 16(i) of Notes.
Section 16(i) of each Note hereby is amended to delete the words "of Common
Stock".
11. Section 3.5 of Security Agreement.
The third sentence of Section 3.5 of the Security Agreement hereby is
amended to read as follows:
Promptly upon request of the Secured Party, the Debtor shall deliver and
turn over to the Secured Party copies of all books and records pertaining
to the Collateral.
12. Section 3.6 of Security Agreement.
The Lenders hereby waive any breach of the Company's covenant contained in
Section 3.6 of the Security Agreement arising from the existing liens set forth
under the heading "Liens" in the Schedule of Exceptions attached to this
Agreement, so long as the Company otherwise remains in compliance with all of
the provisions of the Transaction Documents (after giving effect to the
amendments and waivers set forth in this Agreement) and this Agreement.
13. Section 4.1 of Security Agreement.
The Lenders hereby waive any breach of the Company's representation and
warranty contained in Section 4.1 of the Security Agreement arising from the
existing liens set forth under the heading "Liens" in the Schedule of Exceptions
attached to this Agreement, so long as the Company otherwise remains in
compliance with all of the provisions of the Transaction Documents (after giving
effect to the amendments and waivers set forth in this Agreement) and this
Agreement.
14. Reaffirmation and Survival of Representations.
The Company hereby re-affirms and re-makes all of the representations and
warranties contained in the Transaction Documents as of the date hereof (as
modified by the amendments and waivers set forth in this Agreement), and such
representations and warranties shall survive the closing of the transactions
contemplated by the Transaction Documents and this Agreement.
15. Amendments and Waivers.
Any term of this Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of the
Company and the Lenders in the case of an amendment and only with the written
consent of the waiving party in the case of a waiver.
16. Entire Agreement.
This Agreement, together with the Transaction Documents, constitute the
entire agreement of the parties concerning the subject matter hereof and
thereof, all prior discussions, proposals, negotiations and understandings
having been merged herein and therein. Except as specifically modified by this
Agreement, the Transaction Documents shall remain unchanged and in full force
and effect.
17. Successors.
This Agreement shall inure to the benefit of and be binding upon the
successors and assigns of the Company and the Lenders. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective permitted successors and assigns any
rights, remedies, obligations or liabilities under or by reason of this
Agreement, except as may be expressly provided in this Agreement.
18. Severability.
If any part of this Agreement is determined to be illegal or unenforceable,
all other parts shall remain in full force and effect.
19. Attorneys' Fees.
The Company shall pay the reasonable attorneys' fees, costs and
disbursements of the Lenders in enforcing any terms of this Agreement, whether
or not any action at law or in equity is brought.
20. Governing Law.
The Agreement shall be governed by and construed and interpreted in
accordance with the law of the State of Washington, without regard to that
state's conflict of laws principles. All disputes between the parties hereto,
whether sounding in contract, tort, equity or otherwise, shall be resolved only
by state and federal courts located in Spokane, Washington, and the courts to
which an appeal therefrom may be taken. All parties hereto waive any objections
to the location of the above referenced courts, including but not limited to any
objection based on lack of jurisdiction, improper venue or forum non-conveniens.
Notwithstanding the foregoing, any party obtaining any order or judgment in any
of the above referenced courts may bring an action in a court in another
jurisdiction in order to enforce such order or judgment.
21. Miscellaneous.
Any notice under this Agreement shall be given in writing and shall be
addressed to the party to be notified at the address indicated below, or at such
other address as such party may designate by written notice to the other party.
Aura Systems, Inc.
0000 Xxxxxx Xxxxxx
Xx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxx
Fax: 000-000-0000
Koyah Leverage Partners, L.P.
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx XX 00000
Attn: Xxxxxx Xxx
Fax: 000-000-0000
Koyah Partners, L.P.
c/o ICM Asset Management, Inc.
000 Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxxxxx XX 00000
Attn: Xxxxxx Xxx
Fax: 000-000-0000
22. The Company shall pay the costs and expenses of legal counsel to the
Lenders in connection with the negotiation, execution and delivery of this
Agreement, the Transaction Documents, and any other related agreements with the
Lenders as well as the consummation of the transactions contemplated by and the
administration of such agreements and any amendments or waivers of such
agreements. The Company shall pay such costs and expenses immediately upon
submittal, and the Lenders may apply any retainer held by them or their legal
counsel against such costs and expenses. Alternatively, the Lenders may deduct
some or all of such costs and expenses from the proceeds of the loans from the
Lenders when disbursing such loans and/or pay such costs and expenses directly
and then the amounts so paid shall constitute advances made under the Notes.
Notwithstanding that the Company is paying such costs and expenses, the Company
acknowledges and agrees that such legal counsel is representing only the
Lenders, and not the Company.
[Remainder of Page Intentionally Left Blank]
[Signature Page to Amendment and Waiver Agreement]
ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY, EXTEND CREDIT, OR TO
FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT ENFORCEABLE UNDER
WASHINGTON LAW.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the date first set forth above.
AURA SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
Name: Xxxx X. Xxxxxx
Title: Chairman & Chief Executive Officer
KOYAH LEVERAGE PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By: /s/ Xxxxxx X. Law
Name: Xxxxxx X. Law
Title: Vice President
KOYAH PARTNERS, L.P.
By: Koyah Ventures LLC, its general partner
By: /s/ Xxxxxx X. Law
Name: Xxxxxx X. Law
Title: Vice President
Schedule of Exceptions
Liens
1. El Segundo real property and facilities are subject to a security
interest related to mortgage financing and a pending sale/leaseback transaction.
2. Note receivable for approximately $1,000,000 under the Alpha Ceramics
purchase agreement has been assigned as collateral to the purchasers in such
sale/leaseback transaction.
3. Security interest in 177,000 shares of Telemac Corporate held as a
long-term investment has been granted to a lender to secure a $200,000 note
issued in May 2003.
Defaults
1. Shareholder litigation (Xxxxxxxx/Chiau et al) judgment settlement for
approximately $789,000 is in default. In April 2003, this creditor served Writs
of Execution against one of the Company's bank accounts but has taken no further
action.
2. Convertible notes issued in August - October 2002 for a total principal
amount of $625,000 are or may be in default.