<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-------------------------
Form 10-K/A
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended........................ February 29, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from...............to....................
Commission File Number....................................0-17249
AURA SYSTEMS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 95-4106894
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
2335 Alaska Ave.
El Segundo, California 90245
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(Address of principal executive offices)
(310) 643-5300
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Registrant's telephone number
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [_]
At May 30, 1996 the aggregate market value of the voting stock held by non-
affiliates of the Registrant was $279,090,777. The aggregate market value has
been computed by reference to the average bid and asked price of the stock on
May 30, 1996. On such date the Registrant had 62,858,283 shares of Common Stock
outstanding.
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PART IV
ITEM 14. FINANCIAL STATEMENTS, SCHEDULES, REPORTS ON FORM 8-K AND EXHIBITS
(a) Documents filed as part of this Form 10-K:
1. Exhibits
--------
See Exhibit Index
(b) Reports on Form 8-K
There were no reports on Form 8-K filed by the Registrant in the last
quarter of Fiscal 1995.
39
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INDEX TO EXHIBITS
-----------------
(1) 3.1 Certificate of Incorporation of Registrant.
(1) 3.2 Bylaws of Registrant.
4.1 Form of Warrant
(1) 10.1 Lease dated April 23, 1986, by and between Delphi Components,
Inc. and Birtcher Niguel.
(1) 10.2 Lease, dated April 3, 1987, between International Rectifier
Corporation and the Registrant.
(1) 10.3 Lease, dated February 1, 1986, between Plaza La Reina Office
Venture and the Registrant.
(2) 10.4 Convertible Promissory Note, dated October 27, 1987, between
Peter C. Jaquith and the Registrant.
(1) 10.5 Revolving Credit Agreement, dated November 1, 1987, between
Peter C. Jaquith and the Registrant.
(1) 10.6 Joint Venture Agreement, dated March 3, 1987, between
Cypher Master, Inc. and Innovative Information Systems, Inc.
(1) 10.7 Amendment to Revolving Credit Agreement, dated May 10, 1988,
between Peter C. Jaquith and the Registrant.
(1) 10.8 Aura Systems, Inc. 1987 Stock Option Plan for Non-Employee
Directors.
(1) 10.9 Form of Aura Systems, Inc. Non-Statutory Stock Option Agreement.
(1) 10.10 Sub-Contract, dated May 2, 1988, between Computer Sciences
Corporation and the Registrant.
(1) 10.11 Purchase Order, dated May 10, 1988, between General Dynamics
Corporation and the Registrant.
(1) 10.12 Purchase Contract, dated May 26, 1988, between Boeing Aerospace
Company and the Registrant.
(1) 10.13 Cost-Plus-a-Fixed-Fee Research and Development Contract, dated
August 15, 1988, by and between the Registrant and California
Institute of Technology Jet Propulsion Laboratory.
(1) 10.14 Award Contract, dated August 31, 1988, between the Department of
the Air Force and the Registrant.
(2) 10.15 Deed of Trust and Assignment of Rents, dated as of February 27,
1989, by the Registrant in favor of Chicago Title Insurance
Company, as Trustee, for the benefit of City National Bank.
(2) 10.16 Indenture, dated as of March 1, 1989, between the Registrant and
Interwest Transfer Co., Inc. as Trustee, relating to the 7%
Secured Convertible Non-Recourse Notes due 1999.
(2) 10.17 Form of 7% Secured Convertible Non-Recourse Notes due 1999.
40
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(2) 10.18 Deed of Trust, Assignment of Leases and Rents and Fixture Filing,
dated as of March 1, 1989, by the Registrant in favor of Ticor
Title Insurance Company, as Trustee, for the benefit of Interwest
Transfer Co., Inc., as trustee under the Indenture.
(3) 10.19 Contract of Purchase and Sale and Escrow Instructions, between
the Registrant and Plazamerica, Inc.
(3) 10.20 Form of 7% Secured Convertible Non-Recourse Note due 2000.
(4) 10.21 1989 Stock Option Plan.
(5) 10.22 Development and Manufacturing Agreement, dated August 16, 1991,
between the Registrant and Echlin Inc.
(5) 10.23 Research and Development Agreement, dated July 20, 1992, between
the Registrant and Inventio AG.
(5) 10.24 Joint Development and License Agreement, dated August 24, 1992,
between the Registrant and Daewoo Electronics Co., Ltd.
(5) 10.25 Letter of Agreement, dated December 21, 1992, between the
Registrant and Global Investments, SA.
(10) 10.26 Preliminary Agreement dated May 25, 1993, between the Registrant
and Israel Aircraft Industries Limited.
(11) 10.27 Agreement, dated September 23, 1993, between the Registrant and
Burlington Technopole SDN. BHD.
(12) 10.28 Dedicated Supplier Agreement, dated December 2, 1993, between the
Registrant and Daewoo Electronics Co., Ltd.
(12) 10.29 Joint Venture and License Agreements, dated February 4, 1994,
between the Registrant and The Intergroup Corporation.
(13) 10.30 Form of 7% Secured Convertible Non-Recourse Note due 2002.
(14) 10.31 Agreement dated May 17, 1994 between the Company and Parviz
Nazarian.
(15) 10.32 Agreement dated August 4, 1994 between the Company and Fluid
Power Industries, Inc.
(15) 10.33 Purchase and sale agreement dated September 9, 1994 between the
company and Nuvo Corp.
(16) 10.34 Agreement dated February 20, 1995 between the company and Kunland,
Inc.
(16) 10.35 Agreement dated February 22, 1995 between the company and Zylux,
Inc.
10.36 Stock Purchase and Sale Agreement dated April 30, 1996 between
the Company and MYS Corporation
10.37 Joint Venture Agreement dated July 26, 1995 between the Company
and Microbell
(6) 16.1 Letter of Deloitte & Touche, dated June 26, 1992, commenting on
Item 4 of the Form 8-K filed by Aura Systems, Inc.
41
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(7) 16.2 Letter of KPMG Peat Marwick, dated November 20, 1991, regarding
change in certifying accountants.
(8) 21.1 Aura Systems, Inc. and Subsidiaries.
24.1 Power of Attorney
EX-27 Financial Data Schedule
(8) 28.1 Registrant's description of change in certifying accountants.
(1) Incorporated by reference to the Exhibits to the Registration
Statement on Form S-1 (File No. 33-19530).
(2) Incorporated by reference to the Exhibits in the Registrant's
Current Report on Form 8-K dated March 24, 1989 (File No. 0-17249).
(3) Incorporated by reference to the Exhibits to Post-Effective
Amendment No. 2 to the Registration Statement on Form S-1 (File No.
33-27164).
(4) Incorporated by reference to the Exhibits to the Registration
Statement on Form S-8 (File No. 33-32993).
(5) Incorporated by Reference to the Exhibit to the Registration
Statement on Form S-1 (File No. 35-57 454).
(6) Incorporated by reference to the Exhibits in the Registrant's
Report on Form 8 (amending the Registrant's Current Report on Form
8-K dated June 11, 1992) dated June 26, 1992 (File No. 0-17249).
(7) Incorporated by reference to the Exhibits in the Registrant's
Current Report on Form 8-K dated November 15, 1991 (File No. 0-
17249).
(8) Incorporated by reference to the Exhibits to the Registrant's
Annual Report on Form 10-K for the fiscal year ended February 28,
1991 (File No. 0-17249).
(9) Incorporated by reference to the Registrant's Current Report on
Form 8-K dated June 11, 1992 (File No.0-17249).
(10) Incorporated by reference to the Registrants Current Report in Form
10-Q dated May 31, 1993.
(11) Incorporated by reference to the Registrants Current Report in Form
10-Q dated November 30, 1993.
(12) Incorporated by reference to the Exhibits to the Registration
Statement on Form S-1 (File No.-33-57454).
(13) Incorporated by reference to the Exhibits to the registrants Annual
Report Form 10-K for the fiscal year ended February 28, 1994 (File
No. 0-172-49).
(14) Incorporated by reference to the Registrants Current Report in Form
10-Q dated May 31, 1994.
(15) Incorporated by reference to the Registrants Current Report in Form
10-Q dated August 31, 1994.
(16) Incorporated by reference to the Registrants Annual Report Form 10-
K for the fiscal year ended February 28, 1995 (File No. 0-172-49)
42
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
Dated: June 5,1996 AURA SYSTEMS, INC.
By: /s/Zvi Kurtzman
---------------
Zvi Kurtzman, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant in the capacities and on the date indicated.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/Zvi Kurtzman June 5, 1996
- ---------------
Zvi Kurtzman President and Director
(Principal Executive Officer)
/s/Steven C. Veen
- -----------------
Steven C. Veen Senior Vice President, June 5, 1996
Chief Financial Officer
(Principal Financial and
Accounting Officer)
/s/Arthur J. Schwartz
- ---------------------
Arthur J. Schwartz Executive Vice President June 5, 1996
and Director
/s/Neal B. Kaufman
- ------------------
Neal B. Kaufman Senior Vice President and Director June 5, 1996
/s/Cipora Kurtzman Lavut
- ------------------------
Cipora Kurtzman Lavut Senior Vice President and Director June 5, 1996
/s/Norman Reitman
- -----------------
Norman Reitman Director June 5, 1996
/s/Harvey Cohen
- ---------------
Harvey Cohen Director June 5, 1996
/s/Anthony Cascio
- -----------------
Anthony Cascio Director June 5, 1996
/s/Phillip Saffman
- ------------------
Phillip Saffman Director June 5, 1996
</TABLE>
43
<PAGE>
EXHIBIT 10.37
JOINT VENTURE AGREEMENT
This Agreement is made by and between Microbell, Inc., ("Microbell"), an
individual, and Aura Systems, Inc. ("Aura"), a Delaware corporation, with
principal offices in El Segundo, California, USA, for the formation of a joint
venture between Microbell and Aura.
WITNESSETH
WHEREAS, Microbell is the owner of certain patented and trade secret
technology relating to multi-function writing instruments containing DTMF
dialer, other patent pending and trade secret technology relating to multi-
function writing instruments containing pager and other data transmission
functions;
WHEREAS, Microbell has identified to aura certain applications
incorporating the microbell patented and proprietary technology relating to such
instruments;
WHEREAS, Microbell does not possess the requisite facilities, equipment and
means to finalize development to manufacture and market such instruments;
WHEREAS, Aura possesses the requisite facilities, equipment and means to
manufacture such instruments;
WHEREAS, the parties are desirous of entering into a joint venture to
explore business relationships enabling aura to fund and manufacture and
microbell to sell products incorporating the microbell proprietary technology in
exchange for certain rights; and
WHEREAS, to accomplish the above, the parties are desirous of entering into
this Joint Venture agreement to further the manufacture and marketing of such
instruments incorporating the proprietary technology.
NOW, THEREFORE, the parties hereby acknowledge this agreement to be the
understanding reached by and between the parties hereto as of the date set forth
hereinbelow:
1. OBJECT
(a) The object of this Agreement is to form a Delaware company, Microbell
Technologies, Inc., (hereinafter referred to as "MTI") with principal
offices in or about Los Angeles, California under the joint ownership
of Aura and Microbell for the manufacture and marketing of products
(within the scope of a certain license agreement more particularly set
forth hereinbelow) incorporating Microbell's patented and proprietary
technology.
2. STRUCTURE
(a) The initial ownership of MTI will be 80% held by Microbell and 20%
held by Aura. Upon incorporation of MTI as a privately held company,
MTI shall issue shares (in an amount to be determined) equal to such
percentages. All shares of MTI shall have the same class, voting
rights, and preferences. The number of authorized shares shall be
sufficient to facilitate the transactions contemplated herein.
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(b) The MTI Board of Directors shall be comprised of seven board members,
three of which shall be appointed by Aura and three of which shall be
appointed by Microbell. The seventh member shall be Michael Klein. A
Microbell appointee shall serve without remuneration pursuant to
Paragraph 3(a)(6) below, as Chairman of the Board. Microbell
appointees shall serve as President, CEO, Secretary and Treasurer/CFO,
who shall serve without compensation or remuneration as per Paragraph
3(a)(6) below. An Aura appointee shall serve as COO. Each party
shall have the sole power to appoint its respective board members and
each party shall have the sole power to remove and replace or
substitute its respective board members.
(c) Aura and Microbell agree that the Articles of Incorporation of MTI,
and/or its By-Laws, shall provide and establish the structure of the
Board of Directors as set forth in Section 2(b), including the number
of its members and the representations on the MTI Board of Directors
by the parties hereto, and further agree that such provision in the
Articles of Incorporation and/or the By-Laws of MTI shall not be
amended or modified unless such amendments or modifications are
consented to by a two-thirds vote of the MTI shareholders.
(d) Aura and Microbell agree that the Articles of Incorporation of MTI,
and/or its By-Laws, shall provide and establish that MTI shall not be
liquidated unless such liquidation is approved by a two-thirds vote of
MTI shareholders, and further agree that such provision in the
Articles of Incorporation and/or the By-Laws of MTI shall not be
amended or modified unless such amendments or modifications are
consented to by a two-thirds vote of the MTI shareholders.
(e) Aura and Microbell shall jointly manage the administration of MTI.
Aura shall have primary responsibility over manufacturing the
products. Microbell shall have primary responsibility over marketing
and selling the products. Together, they shall both seek to form
business relationships which further the manufacture, marketing, and
sale of the products incorporating the proprietary technology.
(f) MTI, in addition to the executive officers, shall be authorized to
employ Avi Madmony, Guy Ravid and Abe Sher (who may also serve as any
such executive officer) for a period of three years without benefits,
on the following terms:
First year: $15,000.00 per month
Second year: $18,000.00 per month
Third year: $21,000.00 per month
In addition, at the commencement of the Second year, MTI shall be
authorized to hire a chief financial officer for a salary of $6,000.00
per month without benefits, to be increased to $7,000.00 per month
after one year.
Aura shall be responsible for the payroll and may pay such employees
through Aura's payroll system as Aura employees. Aura shall, upon
verification and proof of debt in addition to receipt of appropriate
settlement and releases, further pay Microbell creditors Dr. Mordechai
Banajan $60,000 and Kaya Oren $40,000 for a total of $100,000 pursuant
to Exhibit "B" hereto.
(g) MTI shall be incorporated as soon as practicable after execution of
this Agreement.
3. CONTRIBUTION AND COMMITMENTS
(a) PHASE ONE. The following shall represent the contributions and
---------
commitments of Aura and Microbell during the initial period of this
agreement, hereinafter referred to as "Phase One". All conditions,
covenants and obligations in this phase shall be performed and
satisfied approximately within one year of the date hereof.
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(1) Aura shall make budgeted funds set forth in Exhibit B available on
an as needed basis. MTI shall be established and incorporated from
such funds. Payment of the debt of Microbell shall be made within a
reasonable time after demand.
(2) Microbell shall unconditionally transfer all assets, free and
clear of all liens and encumbrances, owned or controlled by Microbell
to MTI in consideration for that certain ownership interest granted to
Microbell under Article 2(a) above. Such assets shall include but not
be limited to all Microbell patents, patents pending, and proprietary
technologies. Notwithstanding this provision 3(a)(2), nothing
contained herein shall be construed as a sale of the business of
Microbell to MTI nor a transfer of any debt, expense or liability of
Microbell to MTI.
(3) MTI shall grant to Aura an exclusive license, without payment of
separate fee or royalty, for the purposes of manufacturing the writing
instruments. The referenced license is attached hereto as Exhibit "A"
and made a part hereof.
(4) In consideration for that certain ownership interest granted in
Article 2(a) above Aura shall manufacture for the sole benefit of MTI
a production prototype of the multi-function writing instrument and,
in addition thereto, One Thousand units.
(5) Each of the parties shall abide by the MTI Phase One budget, using
best efforts in not exceeding expenditures of the enumerated amounts
contained in Exhibit "B", which is attached hereto and made a part
hereof.
(6) Each of the parties shall further contribute, without compensation
for consultancy or otherwise, their respective expertise and know how
regarding the Board and management functions assumed under Article 2
of this Agreement. Nothing contained in this paragraph 3(a) shall
limit or restrict Aura's rights to receive payment from MTI for
engineering services ordered by MTI after completion of Phase One. Any
such order for engineering services shall, however, be at Aura's costs
plus 10%. This provision 3(a)(6) shall carry through and apply equally
to Phase Two below.
(b) PHASE TWO. Upon completion of Phase One, MTI grants unconditionally
----------
to Aura an option to purchase an additional twenty-five percent (25%)
ownership interest of MTI to bring Aura's ownership interest to 45%.
The option shall be exercisable upon payment by Aura to MTI of One
Million U.S. Dollars ($1,000,000.00) and such option shall be freely
transferable and assignable. The term of the option shall be ninety
(90) days from the closing of Phase One. Aura may remit the exercise
consideration in three (3) equal monthly payments, the first payment
due upon exercise.
4. LICENSE
(a) MTI shall grant to Aura as heretofore mentioned, by separate written
instrument, without fee or royalty, an exclusive, non-transferable,
non-assignable and non-divisible right, license, without further right
of sub-license, and privilege to use the MTI patented and proprietary
technology, including patents, patent applications and trade secrets
(hereinafter referred to as the "Licensed Technology") in the field of
multi-function writing instruments containing DTMF dialer, pager and
other transmission applications (hereinafter referred to as the
"License Field") for the manufacture and sale of products in the
License Field incorporating the Licensed Technology (hereinafter
referred to as the "Licensed Products") to MTI (the "MTI License").
Aura shall sell the Licensed Products to MTI at Aura's cost plus ten
percent (10%) but in any event, the selling price to MTI shall be
reasonably competitive.
(b) Microbell further agrees not to compete in the License Field with
either Aura or MTI, nor invest in or fund others in competition with
Aura or MTI in the License Field. The foregoing
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<PAGE>
obligation of Microbell and rights of Aura under this Paragraph 4(b)
shall apply mutatis mutundis with respect to obligations of Aura and
rights of Microbell. The covenant of this provision 4(b) shall survive
termination of this Agreement for a period of five (5) years. Nothing
contained herein shall prohibit ownership of shares in any company in
competition with Aura or MTI provided that such ownership does not
exceed 4.9% of the outstanding shares of such company.
(c) In the event MTI makes a general assignment of any or all of the MTI
assets for the benefit of creditors, then this license shall not
revert and the assignee-creditor takes title to such transferred
technology subject to the terms of this Agreement.
(d) In the event an adjudication of bankruptcy or for reorganization is
made under Chapter 7 or 11 of the U.S. Bankruptcy Laws, then this
license granted to Aura shall not revert to MTI and the assignee-
creditor takes title to such transferred technology subject to the
terms of this Agreement.
(e) Any and all improvements to the Licensed Technology made by Aura
subsequent to the date of this Agreement shall be subject to the terms
of the negotiated license agreement set forth in Exhibit "A".
(f) The parties covenant that they shall execute the license agreement as
contained in Exhibit "A", subsequent to incorporation, and upon
transfer of Microbell assets to MTI.
5. BOOKS AND RECORDS
(a) MTI shall establish and maintain at its principal place of business,
or at such other place as the parties may consent to in writing, full,
true and accurate books of account, records and other data, kept in
accordance with generally accepted accounting principles, containing
all particulars necessary for a precise auditing of the complete
financial statements of MTI. The parties and its agents, including
their accountants and attorneys, shall, during the term of this
Agreement, have the right, during normal business hours, and upon
reasonable prior notice, to inspect and make extracts from such books
of account, records and other data relating to the financial condition
of MTI provided, however, that such examinations shall be conducted no
more often than once for each fiscal year period.
(b) All financial reporting and accounting of MTI shall be performed by a
qualified, independent international auditor.
6. REPRESENTATIONS AND WARRANTIES
(a) Microbell represents and warrants to Aura that, as of the date of this
Agreement: (i) Microbell has the corporate power and authority to
enter into and to carry out the terms and provisions of this
Agreement; (ii)EMicrobell has not entered into any agreement or
understanding regarding the manufacture of the Licensed Products in
the License Field which is in conflict with or inconsistent with any
of the terms or conditions of this Agreement, (iii) Microbell has no
actual knowledge that its Licensed Technology or Licensed Products
conflict with, violate or infringe any rights of any third party, and
(iv) there are no actions or proceedings pending, or to Aura's
knowledge, threatened, which would prevent or make unlawful the
consummation of the transactions contemplated by this Agreement.
(b) Aura represents and warrants to Microbell that, as of the date of this
Agreement: (i) Aura has the power and authority to enter into and to
carry out the terms and provisions of this Agreement, (ii) the
execution, delivery and performance of this Agreement by Aura will not
conflict with or violate any agreements or understandings to which
Aura is a party or by which it may be bound,
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<PAGE>
(iii) Aura has the financial resources, liquidity, equity, credit and
net worth to make the contributions and commitments contemplated
herein, and (iv) there are no actions or proceedings pending, or to
Aura's knowledge, threatened, which would prevent or make unlawful the
consummation of the transactions contemplated by this Agreement.
(c) The parties represent and warrant to each other that neither of them
shall liquidate its ownership of MTI without first offering to the
other of them the right to obtain the liquidating party's ownership
upon the same or better term's to the liquidating party as offered by
a third party.
(d) Aura shall warrant the Licensed Products which Aura manufactures to be
free from defects in material and workmanship for a period of ninety
(90) days. MTI shall extend the same warranty to its customers.
(e) Microbell, as transferor of the patented and proprietary technology,
represents and warrants that the goods manufactured by Aura are free
from claims of third party patent infringement or any claims
whatsoever of third party rights, and covenants to indemnify Aura from
any and all loss arising therefrom.
7. INSURANCE
During Phase I, the Board of Directors of MTI shall in its sole discretion
determine whether insurance of any type shall be obtained. Thereafter, MTI
shall maintain insurance coverage which is customary and commercially
reasonable.
8. DEFAULT
(a) Each of the following shall constitute an event of default hereunder
("Event of Default"): (i) Either Party fails to perform any material
covenant or agreement contained in this Agreement and Either Party
fails to perform such covenant following thirty (30) days' written
notice from the other party and opportunity to cure, provided,
however, if the default is of such a nature that it cannot reasonably
be cured within such thirty (30)-day period, then the defaulting party
shall not be deemed to be in default so long as the defaulting party
promptly commences to cure such default and diligently pursues such
cure to completion; (ii) Any representation or warranty of either
party herein shall prove to be incorrect in any material respect;
(iii) Microbell shall at any time challenge or otherwise assert the
invalidity of any of AURA's rights to Licensed Technology licensed
hereunder; or (iv) Either party makes a general assignment or general
arrangement for the benefit of creditors without the prior written
consent of the other party, a petition for adjudication of bankruptcy
or for reorganization or rearrangement is filed by or against either
party and is not dismissed within thirty (30) days, a trustee or
receiver is appointed to take possession of all or a substantial
portion of either party's properties and possession thereof is not
restored to such party within sixty (60) days, or all or a substantial
portion of either party's assets shall be subjected to attachment,
execution or other judicial seizure which is not discharged, stayed or
bonded within sixty (60) days.
(b) If a Default shall occur hereunder, either party shall have the right,
to be exercised by it in its sole discretion (after reasonable
opportunity to cure the default has been given), to terminate this
Agreement upon written notice to the defaulting party. The right of
either party to terminate this Agreement for Default shall be in
addition to any other rights or remedies to which either party shall
be entitled at law. Termination of this Agreement shall be without
prejudice to any rights or remedies which either party may have, under
this Agreement
(c) In the event this Agreement is terminated by Aura by reason of default
of Microbell, then the license granted to Aura under Section 4(a)
shall terminate with the subject proprietary technology contained in
said license transferred to Aura.
-5-
<PAGE>
9. SECRECY
(a) AURA and Microbell have taken reasonable security measures to protect
the secrecy of their proprietary technologies. The parties agree that
these proprietary technologies are valuable only so long as they
remain secret. Accordingly, each party agrees to take all steps
reasonably necessary to protect Confidential Information (as
hereinafter defined) from entering the public domain or falling into
the hands of unauthorized third parties. All information which in any
way embodies, evidences or relates to proprietary technology is
referred to herein as "Confidential Information". Confidential
Information excludes any information which is or becomes in the public
domain by public use, publication, general knowledge or similar means
other than by breach of this Agreement.
(b) Each party agrees to take reasonable steps to maintain the secrecy of
Confidential Information.
10. BUSINESS PLAN
(a) The parties hereto shall, as soon as practicable after execution of
this Agreement, develop a business plan for MTI.
11. SUCCESSORS
(a) Except as otherwise provided herein, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their
permitted successors and assigns.
12. SEVERABILITY
(a) The provisions of this Agreement are severable, and if any one or more
provisions are determined to be judicially unenforceable, in whole or
in part, the remaining provisions, and any partially unenforceable
provisions to the extent enforceable, shall nevertheless be binding
and enforceable. In the event that any act, regulation, directive, or
law of a government having jurisdiction and respect of this Agreement,
including its departments, agencies or courts, should make it
impossible or prohibit, restrain, modify or eliminate any act or
obligation of Microbell under this Agreement, Aura shall have the
right, at its option, to suspend this Agreement or to make such
modifications therein as may be necessary.
13. NOTICES
(a) All notices and other communications permitted or required by the
provisions of this Agreement shall be in writing and shall be
personally delivered or deposited in the United States Mail, bearing
adequate first class postage and addressed as hereinafter provided.
Notices delivered in person shall be effective upon the date of
delivery. Notices by mail shall be effective upon the receipt thereof
by the addressee or upon the tenth (10th) calendar day after being
deposited in the U.S. mail, as the case may be, whichever is earlier.
Any party hereto shall have the right from time to time and at any
time while this Agreement is in effect to change the respective
addressees thereof and each shall have the right to specify as the
address thereof any other address. Any notice herein required or
permitted to be given may be given, in addition to the manner set
forth above, by courier, telex, TWX, cable or facsimile transmission,
provided that the party giving such notice obtains acknowledgment by
courier proof of delivery, telex, TWX, cable or facsimile transmission
that such notice has been received by the party to be notified. Notice
given in this manner shall be effective upon transmission of
acknowledgment of receipt of same by the parties to be notified.
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14. DISPUTES
(a) All disputes between the parties arising under or out of this
Agreement shall be settled by arbitration conducted in Los Angeles,
California. Either side to the dispute may institute arbitration by
giving written notice to the other party of its intention to
arbitrate.
(b) Unless otherwise expressly provided herein or agreed upon by the
parties in writing, the arbitration shall be conducted in accordance
with the commercial rules then obtaining of the American Arbitration
Association.
(c) Any award made pursuant to arbitration may be entered as a judgment by
any court of competent jurisdiction upon the application of any party
to said arbitration. Such award shall include an award of costs and
reasonable attorney's fees incurred by the prevailing party.
(d) Notwithstanding the foregoing provisions of this Article 14, either
party shall have the right to petition a court of appropriate
jurisdiction seeking injunctive or other similar relief pending the
conclusion of any arbitration proceedings.
15. LITIGATION
(a) In the event of any litigation or proceeding in arbitration between
the parties arising in any manner out of this Agreement or the
asserted breach thereof, the prevailing party shall recover court
costs or costs of arbitration, as appropriate, and actual attorneys'
fees.
16. WAIVER
(a) The waiver or excuse by either party hereto as to any breach, default
or deficiency and the performance by the other party of any duty or
obligation by the other party to be performed hereunder shall not
constitute or be deemed a continuing waiver or excuse of the same or
any other duty or obligation owed by the other.
17. REMEDIES NOT EXCLUSIVE
(a) No remedy conferred by any of the specific provisions of this
Agreement is intended to be exclusive of any other remedy and each and
every remedy shall be cumulative and shall be in addition to every
other remedy given hereunder or now or hereafter existing at law or in
equity or by statute or otherwise. The election of any one or more
remedies by any of the parties shall not constitute a waiver of the
right to pursue other remedies.
18. CAPTIONS
(a) Captions and paragraph headings used herein are for convenience only
and are not a part of this Agreement and shall not be used in
construing it.
19. ENTIRE AGREEMENT
This Agreement contains the entire understanding between the parties
concerning the subject matter of this Agreement and supersedes all prior
understandings and agreements, whether oral or written, between them
respecting the subject matter hereof. There are no representations,
agreements, arrangements or understandings, oral or written, between the
parties hereto relating to the subject matter of this agreement which are
not fully expressed herein. This Agreement may be modified only by an
agreement in writing signed by all of the parties hereto.
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20. COUNTERPARTS
(a) This Agreement may be executed in any number of counterparts, each of
which shall constitute an original and all of which together shall
constitute one and the same instrument.
21. GENDER; NUMBER
(a) Terms used herein in any number or gender include other numbers or
genders, as the context may require.
22. GOVERNING LAW
(a) This Agreement is made and entered into in the State of California,
United States of America. It is the intention of the parties hereto
that this Agreement shall be subject to and shall be enforced and
construed pursuant to the internal laws and procedures of State of
California without reference to its choice of law rules.
WHEREFORE, the parties agree that this Agreement constitutes and
memorializes the understanding reached by and between the parties on the date
set forth hereinbelow, and intend to be legally bound by the mutual covenants,
terms and conditions herein.
AURA SYSTEMS, INC. MICROBELL INC.
By: By:
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Name: Name:
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Title: Title:
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Dated: Date:
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By:
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Name:
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Title:
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Date:
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By:
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Name:
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Title:
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Date:
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