-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, H0dco9avtRB5Crma/zFizj5aArwKStmGybtbN6s6Hw93JjyYVfpIZcVlaBj3Qfvp K4xS2rkdEAWhNehEeiJJrg== 0000826253-01-500051.txt : 20010816 0000826253-01-500051.hdr.sgml : 20010816 ACCESSION NUMBER: 0000826253-01-500051 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 20010815 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AURA SYSTEMS INC CENTRAL INDEX KEY: 0000826253 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690] IRS NUMBER: 954106894 STATE OF INCORPORATION: DE FISCAL YEAR END: 0228 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 333-57824 FILM NUMBER: 1714566 BUSINESS ADDRESS: STREET 1: 2335 ALASKA AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 BUSINESS PHONE: 3106435300 MAIL ADDRESS: STREET 1: 2335 ALASKA AVE CITY: EL SEGUNDO STATE: CA ZIP: 90245 S-3/A 1 s3atwo.txt As filed with the Securities and Exchange Commission on August 14, 2001 Registration No. 333-57824 --------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------ Amendment No. 2 to FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ---------------------------- Aura Systems, Inc. (Exact name of Registrant as specified in its charter) Delaware 95-4106894 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2335 Alaska Avenue, El Segundo, California 90245 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive office) Zvi (Harry) Kurtzman, Chief Executive Officer Aura Systems, Inc. 2335 Alaska Avenue El Segundo, CA 90245 (310) 643-5300 (Name, Address, including zip code, and telephone number, including area code, of agent for service) Copy to: Samuel S. Guzik, Esq. Guzik & Associates 1800 Century Park East, Fifth Floor Los Angeles, CA 90067 (310) 788-8600 Approximate date of proposed sale to the public: From time to time after the effective date of the Registration Statement. If the only securities registered on this form are being offered pursuant to dividend or interest reinvestment plans, check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] Calculation of Registration Fee
- ---------------------------------------------------------------------------------------------- Proposed Title of each class Proposed maximum of securities to be Amount to be maximum offering aggregate offering Amount of registered registered(4) price per share price - ------------------------ ----------------- ---------------------- ------------------- registration fee Common Stock, 19,200,143 $0.405(1) $ 7,776,058(1) $3,111(1) $.005 par value 21,390,773 $0.75 (2) $16,043,080(2) $6,418(2) 3,514,427 $0.615(3) $ 2,161,373(3) $865(3)
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) on the basis of the high and low price of the Registrant's common stock on March 27, 2001. This amount has previously been paid. (2) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) on the basis of the high and low price of the Registrant's common stock on June 11, 2001. This amount has been previously paid. (3) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457(c) on the basis of the high and low price of the Registrant's common stock on August 10, 2001. (4) Included in this amount are: (i) 34,105,343 shares of common stock previously issued by the Registrant in private placements; and (iii) 10,000,000 shares of common stock issued by the Registrant in settlement of litigation. The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. Information in this prospectus is not complete and may be changed. The selling stockholders may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and the selling stockholders are not soliciting the offer to buy these securities in any state where such offer or sale is not permitted. Subject to completion, dated August 14, 2001 Prospectus 44,105,343 SHARES OF COMMON STOCK AURA SYSTEMS, INC. The stockholders of Aura Systems, Inc. listed elsewhere in this prospectus may offer and sell from time to time shares of our common stock under this prospectus. These shares include: o 34,105,343 shares of common stock sold by us to stockholders in private sales; and o 10,000,000 shares of common stock issued in connection with the settlement of litigation. We will not receive any part of the proceeds from sales of common stock by the selling stockholders. Our common stock is traded on the NASD, Inc. OTC Bulletin Board under the trading symbol "AURA". On August 10, 2001, the last reported sales price of our common stock on the NASD, Inc. OTC Bulletin Board was $0.605. The purchase of our securities involves a high degree of risk. See "Risk Factors" at page four for a discussion of matters that you should consider before purchasing our common stock. Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this prospectus. Any representation to the contrary is a criminal offense. SUMMARY OUR COMPANY We develop, design, assemble and sell AuraGen(R) induction power systems for mobile power applications in the multibillion dollar mobile power generation markets. An induction power system refers to the basic electromagnetic approach used in electric motors that do not use brushes and permanent magnets. We provide a unique and patented energy solution and are the only company to provide a proven, commercially available, up to 8,500 watts of pure sine wave power system, that is fully integrated under the hood of a vehicle. Our system is capable of generating full power up to 8500 watts at all engine speeds including enhanced engine idle speed for gasoline based engines and at idle speed for bigger diesel based engines. The AuraGen(R) combines sophisticated mechanical and electronics design, advanced engineering and break-through electromagnetic technology to produce a highly reliable and flexible mobile power generating system that creates alternating current (AC) and direct current (DC) electricity, for industrial, commercial and military use. Traditional mobile power users are found in construction, cable, emergency/rescue, marine, entertainment, railroad, recreational vehicles, telecommunications, tool sales trucks, utilities, municipalities, military and personal use. We believe that in addition to the traditional mobile power market for generators, due to its compactness and clean power, the AuraGen(R) could allow for energy applications that were not previously practical, particularly in areas that require clean power such as computers and other sensitive digital instrumentation. The AuraGen(R) is an induction machine composed of three basic subsystems. The first subsystem consists of a mechanical device that is bolted to the vehicle engine. The second subsystem is an electronic control unit that can be mounted anywhere in the vehicle except under the hood. The third subsystem is the mounting brackets and supporting components for under-the-hood integration. The mechanical component generates electricity when the system is rotated by the vehicle engine in a manner similar to the conventional alternator. Unlike the alternator, this device generates maximum power at all speeds including enhanced idle speed for gasoline engines and idle speed for larger diesel engines. The electronic control unit filters and conditions the electricity to provide clean power at different steady voltages. References to Aura includes Aura Systems, Inc. and its subsidiaries, unless the context indicates otherwise. Our headquarters are located at 2335 Alaska Avenue, El Segundo, California 90245, and our telephone number is (310) 643-5300. Our Internet address is www.aurasystems.com. Information on this website is not a part of this prospectus. USE OF PROCEEDS All net proceeds from the sale of the shares of our common stock covered by this prospectus will go to the stockholders who offer and sell their shares. We will not receive any of the proceeds from the sales of these shares of our common stock by the selling stockholders. RISK FACTORS Should you choose to make an investment in our common stock, you must understand that this investment involves a high degree of risk. You should not purchase our common stock unless you can afford to lose your entire investment. Before purchasing our common stock you should carefully consider the following risk factors as well as the other information in this prospectus. Some of the statements contained in this prospectus involve forward looking statements. Our actual results may differ significantly from our projections. The risks discussed below, as well as risks and uncertainties not presently known to us or that we currently believe are immaterial, could have a material adverse effect on our business, operating results or financial condition. Our limited operating history in our current line of business makes it difficult to predict how our business will develop and future operating results. We have a limited operating history in our current line of business, which is centered around the development, manufacture and sales of the AuraGen(R) family of products, and we face many of the risks and uncertainties encountered by early-stage companies who introduce new products to an established market. Therefore, it is difficult to predict how our business will develop in the future. We have a history of losses, and we may not be profitable in any future period. In each fiscal year since our organization in 1987 we have not made a profit. We have an accumulated deficit of approximately $264 million from our inception through May 31, 2001. There are no assurances that we will achieve or maintain profitability. These losses reflect a number of events over the past 14 years. First, the majority of our revenues during the five years ended February 1999 were derived from our NewCom subsidiary, which was engaged in the computer peripherals business until it ceased operations in the first quarter of 1999. NewCom's business was severely impacted by an industry-wide slump in the computer peripherals business in 1998. Second, we were established in 1987 to develop electromagnetic and electrooptical technology used primarily in military applications and new commercial and consumer applications. These development activities required significant expenditures of capital over the years for development and to identify and commercialize new applications for this technology. Prior to the introduction of the AuraGen(R) products, only the sound speaker activities were able to achieve commercial success. Our revenues have declined significantly in recent years. We have experienced a significant decline in operating revenues over the past few years. Our net revenues peaked at approximately $136 million in our fiscal year ended February 1998. Revenues declined to $2.5 million for the fiscal year ended February 2001, and to $2.8 million for the quarter ended May 31, 2001. The decline in revenues is due primarily to the cessation of operations of our computer peripherals subsidiary, NewCom, Inc., in the first quarter of 1999, and the sale of our AuraSound speaker division and ceramics operations. All of our operating revenues are now derived from the sale of our AuraGen(R) products, which did not produce a material amount of revenues until the fourth quarter of our fiscal year ended February 2001. We expect that all of our operating revenues will continue to be derived from AuraGen(R) sales in the foreseeable future. Because our operating results have been uneven and may continue to fluctuate, this could affect our stock price. Because our efforts since 1999 have been focused entirely on the introduction of the AuraGen(R) family of products into the marketplace, our revenues and operating results have been uneven and may continue to be so during our current fiscal year and beyond. These fluctuations could affect our stock price. Factors which could affect our operating results include: o The size, timing and shipment of individual orders; o Market acceptance of our products; o Development of direct and indirect sales channels; and o The timing of introduction of new products or enhancements. The success of our business will depend entirely upon the commercial success of the AuraGen(R) products, as we are not currently engaged in any other line of business. In 1999 we implemented a restructuring of our business which involved the focus of all of our resources on the successful commercialization of the AuraGen(R) products, and we discontinued or sold most of our then ongoing operations, including computer peripherals, and sound and ceramics operations. Because we have elected to focus our business in a single line of business, rather than diversifying into other areas, our success will be dependent upon the commercial success of the AuraGen(R) product line. Our business will require additional capital, and there is no assurance that it will be available. The cash flow generated from our operations to date has not been sufficient to fund our working capital needs. Accordingly, we have relied upon external sources of financing to maintain liquidity, principally private and bank indebtedness and equity financing. We expect to fund any operating shortfall in our current fiscal year from cash on hand, and we expect to continue to seek external sources of capital such as debt and equity financing. We have no assurances that such funds will be available at the times or in the amounts required by us. If future financing involves the issuance of equity securities, existing stockholders may suffer dilution in net tangible book value per share. The unavailability of funds could have a material adverse effect on our financial statements, results of operations and our ability to expand operations. Our auditors have qualified their reports on our financial statements to indicate that there is substantial doubt as to our ability to continue as a going concern, which could adversely affect our ability to obtain third party financing. Our auditors, Singer Lewak Greenbaum Goldstein LLP, and their predecessor, Pannell Kerr Forster, Certified Public Accountants, a Professional Corporation, have qualified their reports on the financial statements for the fiscal year ended February 28, 2001, and the two years ended February 29, 2000, respectively, to indicate that there is "substantial doubt" about our ability to continue as a going concern. These opinions are based upon our continuing losses from operations, involvement in significant material litigation and non-compliance with various loan covenants. The existence of the going concern qualification could affect our ability to obtain financing from third parties or could result in increased cost of this financing. Our continued existence will require that we generate sufficient cash flow from operations or obtain necessary capital from outside sources. As indicated elsewhere in this prospectus, to date we have been unable to achieve profitability and our financial success is dependent upon the success of our AuraGen(R) line of products. Our ability to achieve profitability will depend upon a number of factors, many of which we do not control, including successful marketing and sales of the AuraGen(R) line of products. Until we are able to generate sufficient cash flow from our operations, we will be dependent on external sources of funding, such as the sale of equity, favorable vendor payment terms and debt financing. These sources of funding may not be available when we require them, or they may not be available in amounts sufficient to sustain our operations. Although we were not in compliance with the terms of indebtedness to a bank as of February 28, 2001, this indebtedness was paid in full in July 2001. For further information regarding our financial condition see "Management's Discussion and Analysis of Results of Operations" and our consolidated financial statements which are contained in our annual report on Form 10-K for the fiscal year ended February 28, 2001. We are a party to material litigation which, if adversely determined, could have a material adverse effect on our financial condition. We are involved in litigation which, if adversely determined, could have a material adverse effect on our financial condition. These proceedings discussed below arose from the operations of our subsidiary, NewCom, Inc., which ceased operations in 1999. Based upon the facts and circumstances known to us at this time, we do not anticipate that pending litigation will have a material adverse effect on our financial condition. Excalibur v. Aura On November 12, 1999, a lawsuit was filed by three investors against Aura and Zvi Kurtzman, Aura's Chief Executive Officer, in Los Angeles Superior Court entitled Excalibur Limited Partnership v. Aura Systems, Inc. (Case No. BC220054) arising out of two NewCom, Inc. financing consummated in December 1998. The NewCom financing comprised (1) a $3 million investment into NewCom in exchange for NewCom common stock, warrants for NewCom common stock, and repricing rights which entitled the investors to receive additional shares in the event the price of NewCom common stock fell below a specified level, and (2) a loan to NewCom of $1 million in exchange for a promissory note and warrants to purchase NewCom common stock. The Excalibur plaintiffs allege in their complaint that Aura breached its agreements by, among other things, failing to register the Aura common stock. They further allege that Aura misrepresented its intention to register the Aura shares in order to induce them to loan $1.0 million to NewCom. They are seeking damages of not less than $4.5 million. Aura has alleged certain cross-claims against the Excalibur plaintiffs. Aura contends that they violated their contractual obligations to Aura by engaging in unlawful short sales of NewCom stock, commencing on January 20, 1999, and were in violation of covenants in the subscription agreements. Aura contends that, as a result of the violations and on the basis of other factors and legal theories, Aura's obligations to deliver the shares and to make any payments to Plaintiffs was terminated. Aura further claims that its consent to its agreements was procured as a result of fraudulent misrepresentations. Aura also has asserted claims for damages based on alleged breaches of the Excalibur plaintiffs' contractual obligations to Aura and on their alleged misrepresentations to Aura. All individually named defendants have been dismissed by agreement of the parties. In May 2001 Aura moved and the Court granted Aura's motion to require the Excalibur plaintiffs' to post a bond in the amount of $225,000 to secure any cost award that may be entered in Aura's favor on the basis that it is "reasonably possible" that Aura will prevail in this matter. Aura's motion for summary judgment on the Excalibur plaintiffs' lawsuit has been taken under submission by the trial judge. The Excalibur plaintiffs' motion for summary judgment was denied. The court also vacated the trial date originally set and no trial date has yet been rescheduled. The Company believes that it has meritorious defenses and cross-claims to the Plaintiffs' allegations. However, no assurances can be given as to the ultimate outcome of this proceeding. Kerry Morgan, et. al. vs. NewCom, Inc. (Settlement Pending) In December 1999, a lawsuit was filed against NewCom, Inc. which, as currently amended also includes Aura Systems, Inc., Steven Veen, Sultan Khan, Asif Khan and Zvi Kurtzman, Deutsche Financial Services, Inc., Best Buy Co., Inc., Circuit City Stores, Inc. a/k/a Compusa, the Computer Super Store, and Staples, Inc., in the Circuit Court for the County of Wayne Michigan (Case No. 98-838563 CP). The plaintiff's sixth amended complaint purports to be a class action on behalf of a class alleged to consist of approximately two hundred thousand persons who purchased a NewCom Inc., a/k/a Atlas Peripherals computer product from Best Buy Co., Inc., Circuit City Stores, Inc., Computer City, and/or Staples, Inc. The complaint alleges that plaintiffs did not receive a rebate of between twenty to fifty dollars on NewCom products, as advertised and promoted by the above mass retailer. Plaintiffs further allege that the mass retailers without any justification, failed to pay NewCom for product received and sold. The lawsuit named Aura primarily on the basis that Aura was the "alter ego" of NewCom and seeks unspecified damages against Aura as well as the other defendants. The plaintiffs seek, among other remedies, to recover all or part of the amount that the retailers failed to pay. Circuit City has filed a cross-complaint against NewCom, Sultan Khan, Asif Khan, Aura, Deutche Financial Services, Zvi Kurtzman and Steven Veen. Deutsche Financial Services has filed a cross-complaint against Staples. No trial date has been set. The named individuals have tendered coverage of the claims to their respective insurers. Aura believes that NewCom was at all times independently operated and at no time did Aura assume any of NewCom's obligations regarding rebates. Aura also believes that in addition to meritorious defenses, it has cross-claims against Circuit City and other mass retailers, as they did not pay for the products they purchased from NewCom and then sold to consumers. Although we intend to vigorously prove our claims and defenses, no assurances, however, can be given as to the ultimate outcome of this proceeding. Based upon discussions of the parties under court supervision, Aura presently expects to enter into a definitive settlement with all parties, where Aura's settlement portion will be limited to $400,000 cash payable in monthly installments of $10,000 to the plaintiffs. No assurances, however, can be given that the settlement will be consummated as the parties are still in negotiations. The market acceptance of our AuraGen(R) product is uncertain. Our business is dependent upon sales generated from our AuraGen(R) family of products. This product utilizes new technology and has only recently been introduced into the existing mobile electric power marketplace. We are dependent on the broad acceptance by industry and businesses of our products. Because this is a new product in a well established marketplace, the timing for market acceptance cannot be predicted. A mass market for our product may fail to develop or it may develop more slowly than we anticipate. Our business may be adversely affected by industry competition. The industries in which we operate are extremely competitive. Many of our competitors have substantially greater financial resources, spend considerably larger sums than us on research, new product development and marketing, and have long-standing customer relationships. Furthermore, we must compete with many larger and better established companies in the hiring and retention of qualified personnel. Although we believe we have significant technological advantages over our competitors, realizing and maintaining such advantages will require us to develop customer relationships and will also depend on market acceptance of our products. We face substantial competition from companies that have been offering traditional solutions such as gensets (portable generators) for the last 50 years. In addition we face competition from companies that offer inverter (a device that inverts battery direct current electricity to alternating current) solutions for the last 20 years. Our future revenues and profits will be largely dependent on the successful introduction of our AuraGen(R) products. Competitive pressures could reduce market acceptance of our products. We may not have the financial resources, technical expertise or marketing and support capabilities to compete successfully in the future. We depend upon our intellectual property to make our products competitive and if we are unable to protect our intellectual property our business will suffer. We protect our proprietary technology by means of patent protection, trade secrets and unpatented proprietary know-how. In particular, we are relying on a number of patents and patent applications to protect the AuraGen(R) products from competition, which cover the basic mechanical design of the AuraGen(R) system, the control system, and the fully integrated system. Without patent protection we would be vulnerable to competition from third parties who could potentially develop competing products through reverse engineering. We cannot assure you that pending or future patent applications will issue as patents or that any issued patents will not be invalidated, circumvented or challenged. A portion of our proprietary technology, principally the software that controls the electronics, depends upon unpatented trade secrets and know-how. Also, where we do not have patent protection, competitors may independently develop other equivalent technology or otherwise gain access to our trade secrets, know-how or other proprietary information. Our future growth could be impaired if we are unable to increase our direct sales infrastructure. Our future revenue growth will depend in large part on our ability to successfully expand our direct sales force. We may not be able to successfully manage the expansion of this function or to recruit and train additional direct sales support personnel. If we are unable to hire and retain additional highly skilled direct sales personnel, we may not be able to increase our revenue to the extent necessary to achieve profitability. If we are unable to hire highly trained support personnel we may be unable to meet customer demands. We are not likely to be able to increase our revenues as we plan if we fail to expand our direct sales force. Even if we are successful in expanding our direct sales force capability, the expansion may not result in revenue growth. We may not be able to establish an effective distribution network or strategic relationships, in which case our sales will not increase as expected. We are in the early stages of developing our distribution network and establishing strategic relationships with potentially large volume customers. We may not be able to identify appropriate distributors or customers on a timely basis. The distributors with which we partner may not focus adequate resources on selling our products or may otherwise be unsuccessful in selling them. In addition, we cannot assure you that we will be able to establish relationships with large customers on favorable terms or at all. The lack of success of distributors or customers in marketing our products may adversely affect our financial condition and results of operations. We may not be able to effectively manage our growth, which would impair our profitability. If we are successful in executing our business plan, we will experience growth in our business that could place a significant strain on our management and other resources. Our ability to manage our growth will require us to continue to improve our operational, financial and management information systems, to implement new systems and to motivate and effectively manage our employees. We cannot assure that our management will be able to effectively manage this growth. We may experience delays in product shipments and increased product costs because we depend on third party manufacturers for sub assemblies. We rely extensively on long term subcontracts with third party manufacturers for AuraGen(R) sub assemblies. The use of third party manufacturers increases the risk of delay of shipments of required sub assemblies that are final assembled and tested in our facilities and increases the risk of higher costs if our manufacturers fail to supply parts when needed and we must look for new suppliers. Our suppliers and manufacturers may not supply us with a sufficient amount of components which would delay production of our product. Although we generally use standard industrial and electrical parts and components for our products, some of our components such as IGBT (transistors) are currently available only from limited sources. We may experience delays in production of the AuraGen(R) if we fail to identify alternate vendors, or any parts supply is interrupted or reduced or there is a significant increase in production costs, each of which could materially adversely affect our business and operations. Our common stock price may be adversely affected by sales of our common stock by selling stockholders. Upon effectiveness of this prospectus, selling stockholders will be able to sell their common stock in the secondary market. Prior to the date of this prospectus these shares were not freely tradable under federal and state securities laws. In addition to the 44,105,343 shares which may be sold under this prospectus, there are 116,450,816 shares which may be offered and sold under other registrations or pursuant to SEC Rule 144, which permits sales of unregistered securities owned for more than one year. Large sales volumes by selling stockholders or market expectations of such sales could adversely affect the market price of our common stock. The average weekly trading volume for the four weeks ending August 10, 2001 was 1,882,500 shares per week. We have a history of filing late periodic reports with the SEC. In June 1999 we failed to file our annual report on Form 10-K on the due date prescribed by the SEC as we were unable to complete the audit of our financial statements. This in turn delayed the filing of three subsequent quarterly reports on Form 10-Q. The delay was occasioned by inadequate financial resources brought about by severe financial difficulties of our computer peripherals subsidiary, NewCom, Inc., which ceased operations in the first quarter of 1999. As a result of the delinquent filings our common stock was delisted from the Nasdaq National Market in July 1999. In February 2000 we completed our financial restructuring and filed all delinquent SEC reports, and we are now listed on the NASD, Inc. OTC Bulletin Board. Continued listing on the NASD, Inc. OTC Bulletin Board requires that we timely file periodic SEC reports. Our failure to remain timely, therefore, could result in the delisting of our common stock on the OTC Bulletin Board, which in turn could adversely affect the market liquidity of our common stock. Also, if at any time we do not timely file periodic reports with the SEC, the selling stockholders will be unable to utilize this prospectus to sell their shares until such filings are made. We may issue additional shares of our common stock without obtaining the approval of our stockholders. Our corporate charter currently authorizes our Board of Directors to issue up to 500,000,000 shares of common stock, of which 323,833,438 shares were outstanding as of August 10, 2001. The power of the Board of Directors to issue shares of common stock or warrants to purchase shares of common stock is not subject to stockholder approval under Delaware state law, the state of our corporate organization. Any additional issuance of our common stock may have the effect of further diluting the equity interest of stockholders. As of February 28, 1999, February 29, 2000, and February 28, 2001, the total number of shares outstanding on these dates was 107,752,042, 196,975,392, and 291,081,582, respectively, an increase of 82.8%, and 47.8% during the past two fiscal years. We have the ability to issue shares of preferred stock without obtaining the approval of our stockholders. Our Board of Directors also has the authority to issue up to 10,000,000 shares of preferred stock, none of which are issued or outstanding, and to determine the price, and the rights, preferences, privileges and restrictions, without any further vote or action by our stockholders. Because the holders of preferred stock may be entitled to vote on some matters as a class, issuance of preferred stock could have the effect of delaying, deferring or preventing a change of control of our company. The rights of the holders of common may be adversely affected by the rights of the holders of any preferred stock that may be issued in the future. The issuance of preferred stock, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire control of our company. Because our common stock is not traded on Nasdaq or a national or regional, market liquidity for our common stock could be adversely impacted. Effective July 1999, our common stock was delisted from the Nasdaq Stock Market, and began trading in the over-the-counter market. Since February 2001, our common stock has been traded in the over-the-counter market on the National Association of Securities Dealers, Inc. OTC Bulletin Board. As a result, an investor may find it more difficult to dispose of or to obtain accurate price quotations and volume information concerning our common stock than if it were listed on the Nasdaq Stock Market or a national or regional exchange. Because our common stock is subject to rules governing low priced securities, market liquidity for our common stock could be adversely impacted. Our common stock trades below $5.00 per share and is not listed on the Nasdaq Stock Market or a national or regional securities exchange. Therefore, our common stock is subject to the low priced security or so-called "penny stock" rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors. For any transaction involving a penny stock, unless exempt, the rules require, among other things, the delivery, prior to the transaction, of a disclosure schedule required by the Securities and Exchange Commission relating to the penny stock market. These rules also require that the broker determine, based upon information obtained from the investor, that transactions in penny stocks are suitable for the investor, and require the broker to obtain the written consent of the investor prior to effecting the penny stock transaction. The broker-dealer must also disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer's presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. So long as our common stock is characterized as a penny stock, the market liquidity for these shares could be severely affected. The regulations relating to penny stocks could limit the ability of broker-dealers to sell these securities and, in turn, the ability of stockholders to sell their shares in the secondary market. Future sales of common stock by our stockholders could adversely affect our common stock price. As of August 10, 2001, in addition to the shares of our common stock that may be offered by this prospectus, approximately 23.4 million shares of our common stock are issuable upon exercise of outstanding stock options under our employee stock options and an additional approximately 8.8 million shares of our common stock are reserved for issuance of additional options and shares under these plans. There are also currently 21,751,015 shares available for issuance under other outstanding warrants and options. We may issue and sell additional shares of our common stock from time to time in future transactions. Sale of a substantial number of our common shares in the market could adversely affect the price of our common stock. ABOUT THIS PROSPECTUS This prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission utilizing a "shelf" registration process. Under this shelf process, the selling stockholders may sell up to 44,105,343 shares of our common stock which they presently own. This prospectus provides you with a general description of our common stock which the selling stockholders may offer. When the selling stockholders sell our common stock, we may provide, if necessary, a prospectus supplement that will contain specific terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. You should read both this prospectus and any prospectus supplement together with the additional information described under the heading "Information Available to You." SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Some matters discussed under the captions "Risk Factors" and "Our Company" and elsewhere in this prospectus or in the information incorporated by reference constitute forward-looking statements. Some of the forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seeks," "approximately," "intends," "plans," "estimates," or "anticipates" or the negative of those words or other comparable terminology. The discussion of financial trends, strategy, plans or intentions may also include forward-looking statements. Forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those projected. These include factors discussed in this prospectus, including information which we have incorporated into this prospectus by reference. We undertake no obligation to update any forward-looking statements for any reason, even if new information becomes available in the future. INFORMATION AVAILABLE TO YOU Aura Systems, Inc. files annual, quarterly and special reports, proxy statements and other information with the SEC. You can inspect and copy the registration statement on Form S-3 of which this prospectus is a part, as well as reports, proxy statements and other information filed by Aura, at the public reference facilities maintained by the SEC at Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the following regional offices of the SEC: 7 World Trade Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. You can obtain copies of such material from the Public Reference Room of the SEC at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. You can call the SEC at 1-800-732-0330 for information regarding the operation of its Public Reference Room. The SEC also maintains a World Wide Web site at http:\\www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants (like Aura) that file electronically. This prospectus provides you with a general description of the common stock being registered. This prospectus is part of a registration statement that we have filed with the SEC. To see more detail, you should read the exhibits and schedules filed with our registration statement. The SEC allows this prospectus to "incorporate by reference" some other information that Aura files with them, which means that we can disclose important information to you by referring to those documents. The information incorporated by reference is an important part of this prospectus, and information that Aura files later with the SEC will automatically update and replace this information. We incorporate by reference the documents listed below and any future filings made by Aura with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities and Exchange Act of 1934 until all of the securities that we have registered have been sold. (1) Our Annual Report on Form 10-K/A for the fiscal year February 28, 2001; (2) Our Quarterly Report on Form 10-Q for the quarter ended May 31, 2001; and (3) The description of our common stock contained in our Report on Form 8-A filed with the SEC (File No. 0-17249). If you make a request for such information in writing or by telephone, we will provide to you, at no cost, a copy of any or all of the information incorporated by reference in the registration statement of which this prospectus is a part. Requests should be addressed to us as follows: Steven C. Veen, Senior Vice President and Chief Financial Officer Aura Systems, Inc. 2335 Alaska Avenue El Segundo, California 90245 Telephone: (310) 643-5300 You should rely only on the information incorporated by reference or provided in this prospectus or any prospectus supplement. We have not authorized anyone else to provide you with different information. The selling stockholders are not making an offer of the shares of our common stock in any state where the offer is not permitted. You should not assume that the information in this prospectus or any prospectus supplement is accurate as of any date other than the date on the front of those documents. SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION All of the shares of common stock covered by this prospectus are being sold for the account of the selling stockholders named in the table below and their pledgees, donees, transferees and other successors in interest. The shares being offered by the selling stockholders include 34,105,343 shares of common stock sold by us to stockholders in private sales; and 10,000,000 shares issued to a selling stockholder as part of a settlement of litigation. The shares being offered by the selling stockholders may be sold in one or more transactions (which may involve block transactions) on the NASD, Inc. OTC Bulletin Board or on such other market on which the common stock may from time to time be trading, in privately-negotiated transactions, through the writing of options on the shares, short sales, loans or pledges of the shares or any combination thereof. The sale price to the public may be the market price prevailing at the time of sale, a price related to such prevailing market price, a fixed price, a varying price determined at the time of sale, a negotiated price or such other price as the selling stockholders determine from time to time. The shares may also be sold pursuant to Section 4(1) of the Securities Act of 1933 or SEC Rule 144 rather than pursuant to this prospectus. The selling stockholders may sell the shares directly to purchasers. The selling stockholders may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers or otherwise sell the shares to or through underwriters, broker-dealers or agents. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. Underwriters, broker-dealers or agent may receive compensation in the form of underwriting discounts, concessions or commissions from the selling stockholders or purchasers for whom they act as agents. It is possible that a selling stockholder will attempt to sell shares of common stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. There can be no assurance that all or any of the shares offered hereby will be issued to, or sold by, the selling stockholders. The selling stockholders and any underwriters, brokers, dealers or agents, upon effecting the sale of any of the shares, may be deemed "underwriters" as that term is defined under the Securities Act of 1933 or the Securities Exchange Act of 1934, or the rules and regulations thereunder and any compensation received by an underwriter, broker-dealer or agent may be deemed to be underwriting discounts or commissions under the Securities Act of 1933. The selling stockholders and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, which provisions may limit the timing of purchases and sales of any other such person. The foregoing may affect the marketability of the shares. We have agreed to indemnify the selling stockholders against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the selling stockholders may be required to make in respect thereof. We have also agreed to pay certain expenses incurred in the connection with this registration. As to shares owned by Deutsche Financial Services Corp., it may not without our consent sell more than 5,000,000 shares per year in each year following May 9, 2001, may not sell any shares until September 7, 2001, and may not sell more than 50,000 shares in any day. Listed below are the names of each selling stockholder, the nature of any material relationship between the selling stockholder and our company or our affiliates, the total number of shares beneficially owned and the number of shares to be sold in this offering by each selling stockholder as of August 10, 2001, and the percentage of common stock owned by each selling stockholder after this offering:
Number of Shares of Shares of Common Stock Common Stock to Owned be Offered for Beneficially Selling Prior to Stockholder's Shares of Common Stock Owned Offering (1) Account (1) After Completion of Offering ------------ ----------- -------- (1) Name Number Number Percent - ---- ------ ------ ------- Koyah Leverage Partners, L.P. 13,674,751 (2)(4) 4,117,647 9,557,104 3.0 Koyah Partners, L.P. 3,126,689 (3)(4) 882,353 2,244,336 * Koyah Community Partners, L.P. 280,000 (4) 180,000 100,000 * Forrest Magers 851,268 (5) 150,000 701,268 * Wendell Reugh 365,800 (6) 300,000 65,800 * James M. Simmons 19,560,617 (4)(7) 6,280,000 13,280,617 5.7 Congregation Oir HaChaim 440,909 (8) 440,909 - - Lawrence A. Diamant 258,715 (9) 73,530 185,185 * Robinson, Diamant & Wolkowitz PC 611,607 (10) 142,857 468,750 * Prindle, Decker & Amaro LLP 1,200,657 (11) 625,000 575,657 * Liner, Yankelevitz Sunshine & 19,202 (12) 19,202 - - Reginstreif LLP Interwest Transfer Co., Inc. 315,000 (13) 100,000 215,000 * Lancer Partners LP 3,289,367 (14) 3,289,367 - - Lancer Offshore Inc. 9,090,536 (14) 6,395,536 2,695,000 1.2 The Viator Fund Ltd 400,000 (14) 400,000 - - The Orbiter Fund Ltd 781,250 (14) 781,250 - - Michael Lauer 17,464,030 (15) 13,388,454 4,075,576 1.7 Martin Garvey 662,500 662,500 - - Eric Hauser 575,000 575,000 - - Capital Research Ltd 2,135,228 (16) 2,135,228 - - Bruce D. Cowen 5,484,212 (16)(17) 3,877,761 1,606,451 * Jacob David Cowen 90,909 90,909 * Judith Cowen 100,000 100,000 - - Samuel S. Guzik 500,000 (18) 125,000 375,000 * Deutsche Financial Services Corp. 10,000,000 (19) 10,000,000 - - Vinson Investment Holdings 1,400,000 (20) 1,000,000 400,000 * Suryakant Shah in trust for Leala Shah 125,685 125,685 - - American Friends of Karen Chava Bnai Levi 260,000 (8) 260,000 - - Suryakant Shah in trust for Neal Shah 125,000 125,000 - - John B. Amos Insurance Trust 545,454 (21) 545,454 - Patricia Elizabeth Diaz-Verson 36,364 (21) 36,364 - Salvador Diaz-Verson III 36,364 (21) 36,364 - Salvador Diaz-Verson, Jr. 1,915,128 (21) 290,909 1,624,219 * Delaware Charter FBO John Carlisle SEP 45,455 45,455 - IRA 51-009993 Lawrence H. Lempert 160,000 160,000 - Hilton Chododrow 90,909 90,909 - The Carl Albert Trust Dated 6-7-91 1,220,893 (22) 909,091 311,802 - Edgar O. Appleby 200,000 200,000 - Hsin Chong Machinery Works Co., Ltd 1,580,789 1,580,789 - Aaron Mizrahi 1,241,590 1,241,590 - - Penny Lane Partners, L.P. 909,091 909,091 -
- ---------------------------- * Less than 1%. (1) Assumes the sale of all shares offered pursuant to this prospectus. The actual number of shares of common stock offered hereby, and included in the registration statement of which this prospectus is a part, includes such additional number of shares of common stock as may be issued or issuable by reason of any stock split, stock dividend or similar transaction involving the common stock in accordance with Rule 416 under the Securities Act. (2) Includes 2,575,000 shares issuable upon exercise of warrants held by Koyah Leverage Partners, L.P. (3) Includes 625,000 shares issuable upon exercise of warrants held by Koyah Partners, L.P. (4) Koyah Ventures, LLC is the general partner of Koyah Leverage Partners, L.P., Koyah Partners, L.P., Koyah Community Partners, L.P. and, as a result, has shared voting and dispositive power over these shares held by both entities. ICM Asset Management, Inc. is the investment advisor to Koyah Leverage Partners, L.P., Koyah Partners, L.P., Koyah Community Partners, L.P. and, as a result, has shared voting and dispositive power over these shared held by both entities. James M. Simmons is the managing member of Koyah Ventures, LLC and the chief investment officer and controlling shareholder of ICM Asset Management, Inc. and as a result has shared voting and dispositive power over these shares held by both entities. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership in a group with any other entity or person within the meaning of Rule 13d-5(b) (1) under the Exchange Act. (5) Includes 15,329 shares held by Mr. Magers' spouse and 597,000 shares held by a trust for the benefit of Mr. Magers and his spouse. Mr. Magers is a co-trustee of this trust and as a result has shared voting and dispositive power over these shares held in trust. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule13d-5(b)(1) under the Exchange Act. (6) Includes 50,000 shares held by a corporation controlled by Mr. Reugh. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule 13d-5(b)(1) under the Exchange Act. (7) Mr. Simmons has voting and dispositive power over 19,560,617 shares of which 1,262,109 shares are held of record by Mr. Simmons and other family members. The balance of 18,298,508 shares include: (i) 13,674,751 shares held by Koyah, Leverage Partners L.P.; (ii) 3,126,689 shares held by Koyah Partners L.P.; (iii) 280,000 shares held by Koyah Community Partners, L.P.; (iv) 851,268 shares held by Forrest Magers and (v) 365,800 shares held by Wendell Reugh. The total shares offered in this registration is 6,280,000 shares of which 650,000 shares are registered for Mr. Simmons and other family members. The balance of 5,630,000 shares are comprised of (i) 4,117,647 shares for Koyah Leverage Partners, L.P.; (ii) 882,353 shares for Koyah Partners; L.P.; (iii) 180,000 shares for Koyah Community Partners, L.P.; (iv) 150,000 shares for Forrest Magers; and (v) 300,000 shares for Wendell Reugh. The shares owned upon completion of this offering are 13,280,617 shares of which 612,109 shares are held by Mr. Simmons and other family members. The balance of 12,688,501 shares is comprised of (i) 9,557,104 shares for Koyah Leverage Partners L.P.; (ii) 2,244,336 shares for Koyah Partners L.P.; (iii) 100,000 shares for Koyah Community Partners L.P.; (iv) 701,268 shares for Forrest Magers; and (v) 65,800 shares for Wendell Reugh. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule 13d-5(b)(1) under the Exchange Act. (8) Rabbi Eli Melech Lowey has sole voting and dispositive power with respect to these shares. (9) During the past two years Mr. Diamant has served as legal counsel to Aura and has received these shares pursuant to an investment in a private placement. (10) During the past two years this firm has served as legal counsel to Aura and has received these shares in payment of fees. (11) During the past two years this firm has served as legal counsel to Aura and has received these shares in payment of fees. (12) During the past two years this firm has served as legal counsel to Aura and has received these shares in payment of fees. (13) During at least the past three years this firm has served as Aura's transfer agent and has received these shares in payment of obligations to this selling stockholder. (14) Michael Lauer is the fund manager for these entities and has sole voting and dispositive power over these shares in such capacity. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule13d-5(b)(1) under the Exchange Act. (15) Mr. Lauer has sole voting and dispositive power over 17,464,033 shares of which 3,902877 shares are held of record. The balance of 13,561,153 shares include: (i) 3,289,367 shares held by Lancer Partners, L.P.; (ii) 6,395,536 shares held by Lancer Offshore, Inc.; (iii) 400,000 shares held by The Viator Fund Ltd.; and (iv) 781250 shares held by The Orbiter Fund Ltd. The total shares offered in this registration is 13,388,454 shares of which 2,522,301 shares are registered for Mr. Lauer. The balance of 10,866,153 shares are comprised of (i) 3,289,367 for Lancer Partners, L.P.; (ii) 6,395,536 of Lancer Offshore, Inc.; (iii) 400,000 for The Viator Fund, Ltd.; and (iv) 781,250 shares for The Orbiter Fund Ltd. The shares owned upon completion of this offering are 2,695,000 shares for Lancer Offshore, Inc. and 1,380,576 shares for Mr. Lauer. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule 13d-5(b)(1) under the Exchange Act. (16) Bruce D. Cowen is the Chairman of this entity and has sole voting and dispositive power over these shares in such capacity. Mr. Cowen disclaims beneficial ownership in these shares except to the extent of his pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule13d-5(b)(1) under the Exchange Act. (17) Mr. Cowen has sole voting and dispositive power over 5,484,212 shares of which 2,135,228 shares are held by Capital Research Ltd. and 3,348,984 shares are held of record by Mr. Cowen. Of these shares which Mr. Cowen has sole voting and dispositive power, 3,877,761 shares are being offered in this registration of which 2,135,228 are for Capital Research Ltd. and 1,742,533 are being offered for Mr. Cowen. Shares owned under Mr. Cowen's sole voting and dispositive power after completion of this offering are 1,606,451 shares, all of which Mr. Cowen holds of record. Each of these entities or persons disclaims beneficial ownership in these shares except to the extent of such entity's or person's pecuniary interest in these shares and disclaims membership within a group with any other entity or person within the meaning of Rule 13d-5(b)(1) under the Exchange Act. (18) During at least the past three years Mr. Guzik has served as legal counsel to Aura and has received these shares in payment of fees. (19) These shares have been issued as part of a settlement entered into between this selling stockholder and Aura in connection with certain obligations of NewCom, Inc. which were guaranteed by Aura. (20) J. C. Raphael has sole voting and dispositive power with respect to these shares. (21) Salvador Diaz Verson, Jr. is a member of Aura's Board of Directors. The shares include 1,296,946 shares which Mr. Diaz-Verson owns of record. It also includes 545,454 shares which are held by John B Amos Insurance Trust over which he has voting and disposition power and in which he disclaims beneficial ownership, except to the extent of his pecuniary interest in these shares. The shares also include 72,728 to his children which he disclaims any beneficial ownership interest. (22) Carl A. Albert is a member of Aura's Board of Directors. The shares also include an additional 311,802 shares which are owned by The Carl A. Albert Trust and to which Mr. Albert disclaims beneficial ownership interest. LEGAL MATTERS Certain legal matters with respect to the validity of the shares of common stock offered in this prospectus will be passed upon for us by Guzik & Associates, Los Angeles, California. Included in this prospectus are 75,000 shares of common stock owned by Samuel S. Guzik, who is a principal in the firm of Guzik & Associates. Mr. Guzik is the beneficial owner of less than 1% of our common stock. EXPERTS Our consolidated financial statements for the year ended February 28, 2001, incorporated by reference in this prospectus and registration statement, have been audited by Singer Lewak Greenbaum & Goldstein LLP, and our consolidated financial statements for the years ended February 29, 2000, and February 28, 1999, incorporated by reference in this prospectus and registration statement, have been audited by Pannell Kerr Forster, Certified Public Accountants, a Professional Corporation. The financial statements and schedules have been so incorporated by reference in reliance upon the respective reports given the authority of these firms as experts in accounting and auditing. TABLE OF CONTENTS SUMMARY.............................................................. RISK FACTORS......................................................... ABOUT THIS PROSPECTUS................................................ SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS .................. INFORMATION AVAILABLE TO YOU......................................... INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE...................... SELLING STOCKHOLDERS AND PLAN OF DISTRIBUTION........................ LEGAL MATTERS........................................................ EXPERTS.............................................................. PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution The following table sets forth the expenses payable by the Registrant in connection with the sale and distribution of the securities being registered hereby. All amounts are estimated except the Securities and Exchange Commission registration fee. SEC registration fee .....................................$ 865.00 Blue Sky fees and expenses ....................................1,000.00 Accounting fees and expenses ................................. 1,000.00 Legal fees and expenses ...................................... 7,500.00 Printing and engraving expenses ............................. 1,000.00 Registrar and Transfer Agent's fees ............................ 500.00 Miscellaneous fees and expenses ................................ 500.00 Total .......................................................$12,365.00 Item 15. Indemnification of Directors and Officers Section 145 of the Delaware General Corporation Law provides for the indemnification of officers, directors, and other corporate agents in terms sufficiently broad to indemnify such persons under certain circumstances for liabilities (including reimbursement of expenses incurred) arising under the Securities Act of 1933, as amended (the "Act"). The Registrant has entered into agreements with its directors to provide indemnity to such persons to the maximum extent permitted under applicable laws. Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits: (1)......2.1 Certificate of Incorporation of Registrant. (2)......4.3 Bylaws of Registrant. 5.1 Opinion of Guzik & Associates. 10.44.1 Subscription Agreement Dated as of March 16, 2001 with Koyah Leverage Partners, L.P., Koyah Partners, L.P., James M. Simmons, Wendell Reugh, and Forrest Magers. 10.44.2 Registration Rights Agreements Dated as of March 16, 2001 with Koyah Leverage Partners, L.P., Koyah Partners, L.P., James M. Simmons, Wendell Reugh, and Forrest Magers. 10.44.3 Warrant Agreement Dated as of March 16, 2001 with Koyah Leverage Partners, L.P., Koyah Partners, L.P., James M. Simmons, Wendell Reugh, and Forrest Magers. 10.45 Form Subscription Agreement Dated as of August 2001. 23.1 Consent of Singer Lewak Greenbaum Goldstein LLP. 23.2 Consent of Pannell Kerr Forster, certified public accountants. (3) 23.2 Consent of Guzik & Associates. 24.1 Power of Attorney (previously filed with this registration statement)
- --------------------------- (1) Incorporated by reference to the registrant's Form 10-K/A for the year ended February 29, 2000, as filed with the Commission on May 15, 2001. (2) Incorporated by reference to the Exhibits to the registration statement on Form S-1 (File No. 33-19531) (3) Included in Exhibit 5.1. (b) Financial Statement Schedules None. Item 17. Undertakings (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii)To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement. Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-3, Form S-8 or Form F-3, and the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. (c) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (d) The undersigned registrant hereby undertakes to deliver or cause to be delivered with the prospectus, to each person to whom the prospectus is sent or given, the latest annual report to security holders that is incorporated by reference in the prospectus and furnished pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of 1934; and, where interim financial information required to be presented by Article 3 of Regulation S-X are not set forth in the prospectus, to deliver, or cause to be delivered to each person to whom the prospectus is sent or given, the latest quarterly report that is specifically incorporated by reference in the prospectus to provide such interim financial information. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of El Segundo, State of California, on the 14th day of August 2001. AURA SYSTEMS, INC. By /s/ Zvi (Harry) Kurtzman --------------------------------------------- Zvi (Harry) Kurtzman Chairman of the Board and Chief Executive Officer Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
/s/ Zvi (Harry) Kurtzman Chairman of the Board, - ------------------------------------ Zvi (Harry) Kurtzman and Director August 14, 2001 (Chief Executive Officer) /s/ Steven C. Veen Vice President, Chief - ---------------------------------------- August 14, 2001 Steven C. Veen Financial Officer, (Principal Financial Officer and Principal Accounting Officer) /s/ Stephen A. Talesnick* Director August 14, 2001 - ------------------------------------ Stephen A. Talesnick /s/ Norman Reitman* Director August 14, 2001 - ------------------- Norman Reitman /s/ Harvey Cohen* Director August 14, 2001 - -------------------- Harvey Cohen /s/ Salvador Diaz-Verson, Jr.* Director August 14, 2001 - --------------------------------- Salvador Diaz-Verson, Jr. /s/ Harry Haisfield* Director August 14, 2001 - ------------------------------------ Harry Haisfield /s/ Neal Meehan* Director August 14, 2001 - ------------------------------ Neal Meehan /s/ William Richbourg* Director August 14, 2001 - ------------------------------------ William Richbourg Director August 14, 2001 - ------------------------------------ Carl A. Albert *By: /s/ Steven C. Veen August 14, 2001 ------------------ Steven C. Veen, Attorney-in-fact
EXHIBIT 5.1 Guzik & Associates 1800 Century Park East, Fifth Floor Los Angeles CA 90067 (310) 788-8600 August 14, 2001 U.S. Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Ladies and Gentlemen: We have acted as counsel to Aura Systems, Inc., a Delaware corporation (the "Company"), in connection with the preparation and filing by the Company of its registration statement on Form S-3 (the "Registration Statement") under the Securities Act of 1933, as amended, pertaining to the offering and sale from time to time by and for of the account of the Selling Stockholders named therein of up to 44,105,343 shares (the "Shares") of the Company's common stock, par value $.005 per share ("Common Stock"). In so acting, we have examined originals or copies, certified or otherwise identified to our satisfaction, of the Company's Certificate of Incorporation and Bylaws, and such other corporate records, agreements, documents and other instruments, and such certificates or comparable documents of public officials and of officers and representatives of the Company, and have made such inquiries of such officers and representatives, as we have deemed relevant and necessary as a basis for the opinions hereinafter set forth. In such examination, we have assumed the genuineness of all signatures, the legal capacity of natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity of the originals of such latter documents. As to all questions of fact material to this opinion that have not been independently established, we have relied upon certificates or comparable documents of officers and representatives of the Company. Based on the foregoing, and subject to the qualifications stated herein, we are of the opinion that the Shares have been duly authorized, validly issued, fully paid and non-assessable. The opinions expressed herein are limited to the corporate laws of the State of Delaware and we express no opinion as to the effect on the matters covered by this letter of the laws of any other jurisdiction. We hereby consent to the filing of this opinion letter as an exhibit to the Registration Statement and to the reference to our Firm under the caption "Legal Matters" in the prospectus contained therein. Very truly yours, /s/ Guzik & Associates EX-99 3 form_subagree.txt AURA SYSTEMS, INC. OFFEREE SUBSCRIPTION DOCUMENTS SUBSCRIPTION INSTRUCTIONS A. Offeree Questionnaire Complete and sign the Offeree Questionnaire. The purpose of this Questionnaire is to provide information as to the suitability of the subscriber for Common Stock of Aura Systems, Inc. The information provided is confidential. B. Subscription Agreement Complete and sign the Subscription Agreement. The Subscription Agreement should be read in its entirety. It contains various statements and representations of subscribers. C. Payment Enclose a check for the number of shares you wish to purchase (minimum subscription of $1,000,000). The check should be made payable to "Aura Systems, Inc.". All information must be typed or printed in ink. Any corrections must be initialed. If the subscriber is a corporation, trust, partnership, two or more individuals purchasing jointly, or other entity, please note the specific instructions on page 3, as well as on the Certificate to be signed (page 5). SPECIAL SUBSCRIPTION INSTRUCTIONS FOR CORPORATE, TRUST, PARTNERSHIP, AND JOINT PURCHASERS If the proposed purchaser is a joint owner or a corporation, partnership, trust or other entity, the following additional instructions must be followed. Information additional to that requested below may also be required in some cases. I. ORGANIZATIONAL DOCUMENTS REQUIRED If the proposed purchaser is a corporation, trust or partnership, please provide a copy of the applicable document(s) listed below: (a) the corporation's articles of incorporation, bylaws and authorizing resolution (b) the partnership agreement (c) the trust agreement. II. OFFEREE QUESTIONNAIRES A. CORPORATIONS If the proposed purchaser is a corporation, except as otherwise provided below, only the authorized officer(s) of the corporation who will be responsible for making the decision to purchase Units must date, sign and complete the Offeree Questionnaire. Each such officer should print the name of the corporation above his signature, and print his name and office held below his signature. B. PARTNERSHIPS If the proposed purchaser is a partnership, except as otherwise provided below, only the partner(s) responsible for making such decision to purchase Units must complete an Offeree Questionnaire. Each such partner should print the name of the partnership above his signature, and print his name and the word "partner" below his signature. C. TRUSTS If the proposed purchaser is an irrevocable trust, except as otherwise provided below, only the trustee(s) who will be responsible for making the decision to purchase the Units must complete an Offeree Questionnaire. Each such trustee should print the name of the trust above his signature, and print his name and the word "trustee" below his signature. If the proposed purchaser is a revocable trust, in lieu of the foregoing requirements, each grantor must complete an Offeree Questionnaire. III. SPECIAL RULES WITH RESPECT TO ALL ENTITIES. In lieu of the foregoing requirements, each beneficial owner of equity securities or equity interests in an entity must complete an Offeree Questionnaire if the entity was organized for the specific purpose of making this investment. The same requirement must be complied with if the proposed purchaser is a partnership in which any partner may elect not to participate in an investment made by the partnership. IV. JOINT OWNERSHIP. Except where specifically indicated with respect to married couples, joint purchasers must individually meet the suitability requirements, and in all cases must each date, sign and complete an Offeree Questionnaire. Joint purchasers must also state if they are purchasing Units as joint tenants with the right of survivorship, tenants in common, or community property, and must each execute the Subscription Agreement. CERTIFICATE FOR PURCHASERS WHICH ARE CORPORATIONS, TRUSTS, PARTNERSHIPS, OR OTHER ENTITIES (All information must be typed or printed in ink. Any corrections must be initialed.) If the proposed purchaser is a corporation, partnership, trust or other entity, then an authorized agent, officer, partner or trustee must date and execute the following Certificate and fill in the proposed purchaser's name where indicated below: * * * CERTIFICATE * * * I hereby certify that: a. The proposed purchaser has been duly formed and is validly existing under the laws of the state of its formation, with full power and authority to invest in Aura Systems, Inc. b. The proposed purchaser's Subscription Agreement, which is enclosed, has been duly and validly authorized and executed by the proposed purchaser according to the foregoing instructions and, upon its delivery to Aura Systems, Inc. will constitute the valid, binding and enforceable agreement of the proposed purchaser. -------------------------------------------- Date -------------------------------------------- Signature of Authorized Agent, Officer, Partner or Trustee --------------------------------------------- Title --------------------------------------------- Name of Proposed Purchaser OFFEREE QUESTIONNAIRE (CONFIDENTIAL) You are requested to answer the following questions in connection with the proposed offer and sale to a limited number of qualified investors of Common Shares of Aura Systems, Inc. (the "Company"). The Shares will be offered without registration under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemptions from registration provided by Section 4(2) of the Act and Rule 506 promulgated pursuant thereto. Similarly, the Shares will be offered without registration or qualification under the securities laws of various states in reliance upon similar applicable non-public offering exemptions. The availability of these exemptions depends, in part, on a determination that each person to whom an offer is made is a qualified investor. Accordingly, this questionnaire is not to be construed as an offer to sell or a solicitation of an offer to buy securities, but is merely intended as a request to obtain needed information which will be relied upon by the Company to establish the availability of the exemptions. The information supplied will be kept confidential and will be disclosed only to such parties as the Company may deem advisable if called upon to establish the availability under Federal or State securities laws of an exemption from registration or qualification for this private placement. For the foregoing purposes, you are required to represent and warrant, and by executing and delivering this questionnaire will be deemed to have represented and warranted, that the information stated herein is true, accurate and complete to the best of your knowledge and belief and by executing and delivering this questionnaire you agree to notify and supply corrective information promptly if, prior to the consummation of your purchase, any such information becomes inaccurate or incomplete. Your execution of this questionnaire does not constitute any indication of your intention to subscribe for this investment. 1. Is the proposed purchaser a revocable trust? Yes _______ No _______ If the answer is Yes, each grantor must complete a separate offeree questionnaire. 2. Is the proposed purchaser a partnership in which any partner may elect not to invest in the Units? Yes _______ No _______ If the answer is Yes, then each partner who does not so elect must complete a separate offeree questionnaire. 3. Is the proposed purchaser a corporation, partnership, trust or other entity organized for the specific purpose of acquiring the Units? Yes _______ No _______ If the answer is Yes, each beneficial owner of equity securities or equity interests in the entity must complete a separate offeree questionnaire. 4. Will the proposed purchaser of the Units be a joint owner with another? Yes _______ No _______ If the answer is Yes, each joint owner must complete a separate questionnaire. 5. Name of Proposed Purchaser: 6. Your full name and date of birth: Residence Address (street number, city, state and zip): Residence and Business Telephone Numbers: Business Address (street number, city, state and zip): Employer Name & Position or Title: 7. Please indicate whether you are acting solely for your own account: Yes _______ No _______ a. If the answer to Item 7 is No because you are not acting solely for your own account (for example, if you are acting as trustee for an irrevocable trust; or as agent for a corporation, bank, broker or dealer, insurance company, investment company, business development company, small business investment company, private business development company or charitable organization; or as a partner on behalf of a partnership; or as a plan fiduciary for an employee benefit plan;) please complete the following: (i.) Capacity in which you are acting (as trustee, agent, partner or otherwise): (ii) Name and type of entity you represent: (iii)List principal office address and telephone number of the entity you represent: (iv) Describe evidence of authority and attach a copy of such evidence of authority: (v) What are the total assets of the entity you represent? $ $ b. If the answer to Item 7 is Yes because you are acting solely for your own account, or if the proposed purchaser is a self-directed employee benefit plan, or if you are required to complete an offeree questionnaire because the answer to Item 1, 2, 3 or 4 is Yes, set forth in the space provided below: (i.) Whether your actual or anticipated income from all sources (exclude your spouse's actual or anticipated income from all sources if you are married) exceeded $200,000 for the years indicated: 1999 (Actual) Yes _______ No _______ 2000 (Actual) Yes _______ No _______ 2001 (Anticipated) Yes _______ No _______ (ii.) Whether your and your spouse's combined actual or anticipated income from all sources exceeded $300,000 for the years indicated: 1999 (Actual) Yes _______ No _______ 2000 (Actual) Yes _______ No _______ 2001 (Anticipated) Yes _______ No _______ (iii) Is your net worth (for married persons, joint net worth) greater than $1 million? Yes _______ No _______ For purposes of this question, net worth is defined as the excess of total assets at fair market value, including home, home furnishings and personal automobiles, over total liabilities. 8. Describe your educational background, including dates of attendance and degrees obtained: 9. Describe briefly the principal positions you have held during the past ten years. Specific employers need not be identified. What is sought is a sufficient description to enable the Company to determine the extent of your vocationally related experience in financial and business matters: 10. Describe your Investment Experience: a. Generally: b. In stocks and bonds: (Include description of investment, person in whose name title is held, cost and year purchased.) 11. Please indicate in the space provided below any additional information that you think may be helpful in enabling the Company to determine that your knowledge and experience in financial and business matters is sufficient to enable you to evaluate the merits and risks of this investment and to protect your interests or the interests of the entity you represent in connection with this transaction. 12. Does the proposed purchaser have any debts or obligations, or are there any other reasonably foreseeable circumstances, that are likely in the future to require the proposed purchaser to dispose of any Units that may be purchased? Yes _______ No _______ If Yes, please describe briefly: 13. Will the proposed purchaser be investing solely for his or its own account, for investment and without a view to distribution? Yes _______ No _______ 14. Does the proposed purchaser alone, or with the purchaser representative designated below, have the capacity to protect his or its own interests in connection with this investment? Yes _______ No _______ 15. Is the proposed purchaser alone, or with the purchaser representative designated below, capable of evaluating the risks and merits of the proposed investment? Yes _______ No _______ 16. Can the proposed purchaser bear the economic risk of investing in the Units? Yes _______ No _______ 17. Does the proposed purchaser have a personal or business relationship with the Company? Yes _______ No _______ If Yes, please describe the nature and duration of the relationship: 18. If applicable, the name of the purchaser representative(s) of the proposed purchaser in connection with this investment is: 19. The relationship of the purchaser representative to the proposed purchaser is as follows: 20. If the investment will be in the name of a partnership, trust, corporation or other entity, answer the following: Type of Entity: _______________________________________________ Date of Formation: ____________________________________________ Number of Shareholders, Beneficiaries or Partners: ____________ If a revocable trust, state names of any other grantors and their relationship to you: -------------------------------------------- Date -------------------------------------------- Name of Partnership, Corporation or Trust -------------------------------------------- Signature of Offeree --------------------------------------------- Print Full Name of Offeree --------------------------------------------- Position or Title of Offeree THE COMMON STOCK WHICH IS BEING SUBSCRIBED FOR HAS NOT BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION UNDER THE SECURITIES ACT OF 1933 (THE "ACT"), IN RELIANCE UPON CERTAIN EXEMPTIONS FROM REGISTRATION PROVIDED IN THE ACT AND THE RULES AND REGULATIONS THERETO, NOR HAVE SUCH SECURITIES BEEN REGISTERED OR QUALIFIED UNDER ANY STATE'S SECURITIES LAWS. ACCORDINGLY, IT IS UNLAWFUL TO CONSUMMATE A SALE OR TRANSFER OF SUCH SECURITIES UNLESS (1) SUCH SECURITIES ARE SUBSEQUENTLY REGISTERED OR QUALIFIED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR EXEMPTIONS THEREFROM ARE AVAILABLE, AND (2) THE PROPOSED SALE OR TRANSFER WILL NOT CONSTITUTE A VIOLATION OF THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. This Subscription Agreement by the undersigned ("Subscriber") is for Common Shares of Aura Systems, Inc. ("Aura" or the "Company"), a Delaware Corporation. 1. Subscription. Subject to the terms and conditions hereof, the Subscriber hereby applies to purchase the number of Shares of Aura indicated below at $0.55 per share, with a minimum subscription of one million dollars ($1,000,000) unless said minimum is waived by the Company. 2. Acceptance of Subscription. Aura reserves the unrestricted right to reject this subscription in whole or in part and nothing stated herein shall be construed as a promise to issue any securities subscribed for herein. Subscriptions need not be accepted in the order received and shares may be allocated in the event of over subscription. If this subscription is not accepted by the Company within five (5) business days of receipt of the full subscription price, all subscription proceeds will be returned by the Company. 3. Warranties of the Subscriber. The Subscriber represents and warrants as follows (for persons subscribing jointly, the representations and warranties set forth below are true as to all such persons. For revocable trusts, the representations and warranties set forth below are also true as to each grantor of the trust. For corporations, partnerships, trusts and other entities formed specifically to invest in Aura (including any entity in which any one of the beneficial owners may elect not to participate in the investment) the representations and warranties set forth below are also true as to every person having a beneficial interest in such corporation, partnership, trust or other entity). 4. The Subscriber is acquiring the Common Stock, ("Securities") for his own account (or if the Subscriber is a trustee, an agent subscribing for a corporation or other entity, or a partner subscribing for a partnership, for the account of the entity which is represented) for investment and not with a view to resale or distribution. He has not offered or sold any portion of his Securities and has no present intention of dividing his Securities with others or of reselling or otherwise disposing of any portion thereof either currently or after the passage of a fixed or determinable period of time or upon the occurrence of nonoccurrence of any predetermined event or circumstance. 5. The Subscriber is aware that the Securities are speculative and that he may lose his entire investment and he can afford to bear the risks of an investment in Aura, including the risk of losing his entire investment. 6. The Subscriber or his purchaser representative both: (a.) Have been provided an opportunity to obtain information concerning Aura and any other relevant matters as Subscriber has requested; and (b.) Have been given the opportunity to ask questions of and receive answers from Aura concerning the terms and conditions of the offering of the Units. 7. All the information which has heretofore been furnished to Aura pursuant to the Offeree Questionnaire(s) or which is set forth herein with respect to the Subscriber's financial position and business experience is correct and complete as of the date hereof and if there is any change in such information prior to his purchase of the Units, he will immediately furnish such revised or corrected information to Aura. 8. The Subscriber is aware that he must bear the economic risk of his investment in Aura for an indefinite period of time because: (1) the Securities have not been registered under the Securities Act of 1933, as amended (the "Act"), or qualified under the California Corporate Securities Law of 1968 or any other state securities laws, and therefore cannot be sold, assigned or otherwise disposed of unless appropriate exemptions from such registration or qualification requirements are available; (2) Aura will place a legend on the certificates evidencing the Securities (unless and until, with respect to the Common Stock, a Registration Statement covering the Registrable Securities is in effect) stating that the Securities have not been registered under the Act or any state securities laws and setting forth the limitations on resale contained above and Aura will also require that its registrar and transfer agent make a notation of such restrictions in its appropriate records; and (3) the Share cannot be readily sold, as there is not a public market for such Securities. He further understands and agrees that Aura will not honor any attempt by him to sell, transfer of otherwise dispose of the Securities in the absence of either an effective Registration Statement and qualification under applicable Blue Sky laws or exemptions therefrom. 9. The Subscriber acknowledges that a legend will be placed on any certificates or instruments evidencing the Securities substantially as set forth on the first page of this Subscription Agreement for as long as necessary to comply with the Act and applicable state securities laws. 10. The Subscriber is an "accredited investor" as such term is defined in Regulation D under the Act. The Subscriber is over the age of twenty-one years (if an individual), and is knowledgeable and experienced with respect to investment matters such as a proposed purchase of Securities. He has such knowledge and experience in business and financial matters as to be capable of evaluating the merits and risks of this investment and has the capacity to protect his own interests in connection with this investment. 11. The Subscriber agrees to indemnify and hold harmless Aura and its directors, officers, affiliates and agents from and against any and all losses, damages and liabilities (including, but not limited to, court costs and reasonable attorneys' fees) arising or resulting from, or attributable to, any breach of the representations and warranties set forth in this Paragraph 3 or the fact that any of the representations, acknowledgements or understandings set forth in this Paragraph 3 are untrue or without adequate factual basis to be considered true and not misleading. 12. The Securities offered hereby were not offered to the Subscriber by way of general solicitation or general advertising. 13. The Subscriber has adequate means of providing for his current needs and possible personal contingencies, and he has no need now, and anticipates no need in the foreseeable future, to sell this investment, and consequently, without limiting the generality of the foregoing, he is able to hold his securities for an indefinite period of time and has a sufficient net worth to sustain a loss of his entire investment in Aura in the event such loss should occur. 14. The Subscriber has decided to subscribe to purchase the securities on the basis of his own independent investigation and has relied on no oral statements, representations or warranties as to the quality of the investment other than from his purchaser representative. 15. Applicable Law. This Subscription Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of California. 16. Warranties of the Company. The Company represents and warrants that the information contained in the Offering Memorandum and in the Company's SEC filings referred to therein, was true and correct as of the date of the relevant document, and no such document contained any untrue statement of material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The Company further represents and warrants that the sale of the Shares is duly authorized and approved by all necessary corporate action on the part of the Company and the Shares, when issued, will be duly authorized, validly issued, fully paid, non-assessable and free of preemptive rights. 17. Use of Proceeds. The Company will use the proceeds from the sale of the Shares solely for business purposes, which shall include general working capital needs and the service of existing debt. 18. Registration. At the Company's sole expense, as soon as practicable and in any event within 90 days of date hereof, the Company will cause to be filed a registration statement with the Securities and Exchange Commission or will amend a currently filed but not yet effective registration statement, and thereafter use best efforts to register the Shares for resale, taking such action as the Subscriber may reasonably request to facilitate Subscriber's resale, including through public distribution, of the Shares. 19. Survival. All representations, warranties and covenants contained in this Subscription Agreement shall survive the acceptance of the subscription and the issuance of the Securities. 19. 20. Numberof Shares. Subject to acceptance by Aura, the undersigned hereby irrevocably subscribes for Shares in accordance with the terms and conditions of this Subscription Agreement, as follows: _____ Shares at $0.55 per Share for an aggregate subscription price of $____________ One Hundred Percent (100%) of the subscription price must accompany this Subscription Agreement. 21. Items to be Delivered by Subscriber. The following items must be delivered herewith: A. Completed and executed Subscription Agreement. B. Completed and executed Offeree Questionnaire(s). C. Check or wire transfer in the amount of 100% of the total subscription price as follows: (i.) Checks are to be made payable for Aura Systems, Inc. and mailed to the following address: Aura Systems, Inc. 2335 Alaska Ave. El Segundo, Ca. 90245 (ii.)Wire transfers to be sent to: Aura Systems, Inc. Pacific Century Bank 3300 North Sepulveda Blvd. Manhattan Beach, Ca. 90266 ABA # 122228812 A/C# 1014002107 SECURITIES ARE TO BE REGISTERED AS FOLLOWS: (check one) - ------------------------------------------------------------------------------- Complete and sign page 18 (Signature Page for Individual Investors [ ] INDIVIDUAL OWNERSHIP (One signature required) [ ] TENANTS IN COMMON (All tenants must sign) [ ] JOINT TENANTS WITH RIGHT OF SURVIVORSHIP (All tenants must sign) [ ] COMMUNITY PROPERTY (Both spouses must sign) - ------------------------------------------------------------------------------- Complete and sign page 19 (Signature Page for Partnerships, Corporations and Other Entities) [ ] PARTNERSHIP (Authorized Partner(s) must sign) [ ] CORPORATION OR OTHER ENTITY (Authorized officer(s) or agent(s) must sign) - ------------------------------------------------------------------------------- Complete and sign page 20 (Signature Page for Trust Investors) [ ] TRUST (Authorized Trustee(s) must sign) - ------------------------------------------------------------------------------ AURA SYSTEMS, INC. SIGNATURE PAGE FOR INDIVIDUAL INVESTORS INVESTOR #1 - --------------------------------------- Signature - --------------------------------------- Social Security Number - --------------------------------------- Print or Type Name - --------------------------------------- Residence Address 1 - --------------------------------------- Residence Address 2 - --------------------------------------- City, State & Zip If applicable, please check: [ ] Joint Tenants with Right of Survivorship [ ] Tenants in Common [ ] Community Property - --------------------------------------- Executed at - --------------------------------------- City & State This __________ day of _______________, 2001 INVESTOR #2 (if applicable) - --------------------------------------- Signature - --------------------------------------- Social Security Number - --------------------------------------- Print or Type Name - --------------------------------------- Residence Address 1 - --------------------------------------- Residence Address 2 - --------------------------------------- City, State & Zip If applicable, please check: [ ] Joint Tenants with Right of Survivorship [ ] Tenants in Common [ ] Community Property - --------------------------------------- Executed at - --------------------------------------- City & State This _________ day of _______________, 2001 The foregoing subscription for _______ Shares Is accepted this _______ day of __________, 2001 AURA SYSTEMS, INC. By ______________________________________ Name:___________________________________ Title:____________________________________ AURA SYSTEMS, INC. SIGNATURE PAGE FOR PARTNERSHIPS, CORPORATIONS & OTHER ENTITIES - ----------------------------------------------------------- Name of Partnership, Corporation, or Other Entity - ----------------------------------------------------------- Name of general partner, authorized officer or authorized agent - ----------------------------------------------------------- Signature - ----------------------------------------------------------- Name of additional general partner, authorized officer or authorized agent (if required by Partnership Agreement) - ----------------------------------------------------------- Signature Taxpayer Identification #: _______________________________________________ Principal Office Address: _______________________________________________ Mailing Address: _______________________________________________ (if different) __________________________________________ ATTN: _______________________________________________ Executed at - ------------------------------------------------- City & State This _________________ day of __________________, 2001 The foregoing subscription for _______ Shares Is accepted this _______ day of __________, 2001 AURA SYSTEMS, INC. By ______________________________________ Name:___________________________________ Title:____________________________________ AURA SYSTEMS, INC. SIGNATURE PAGE FOR TRUST INVESTORS - ----------------------------------------------------- Name of Trust - ----------------------------------------------------- Name of Trustee - ----------------------------- Signature Date Trust was formed: ___________________________________________ Taxpayer Identification #: _______________________________________________ Trustee's Address: _______________________________________ ATTN: _______________________________________________ Executed at - ------------------------------------------------- City & State This _______________ day of ________________, 2001 The foregoing subscription for _______ Shares Is accepted this _______ day of __________, 2001 AURA SYSTEMS, INC. By: ___________________________________ Name: Title:____________________________________ EX-99 4 sub_agree.txt AURA SYSTEMS, INC. SUBSCRIPTION AGREEMENT SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of March 16, 2001, by and among AURA SYSTEMS, INC. a Delaware corporation (the "Company"), and the undersigned (the "Purchasers"). The Company desires to issue and sell to the Purchasers, and the Purchasers desire to purchase from the Company, a total of 5,750,000 shares of the Company's Common Stock, par value $.005 (the "Stock"), for an aggregate purchase price of $1,955,000 (or $.34 per share), upon and subject to the terms and conditions hereinafter set forth. As used herein, the term "Offering" shall mean the offering of the Stock and the Additional Securities (collectively the "Securities") by the Company to the Purchasers. Certain other capitalized terms used herein are defined in Section 5. Accordingly, in consideration of the premises and the mutual covenants, obligations and agreements contained herein, the Purchasers and the Company hereby agree as follows: 1. Purchase and Sale of the Stock. Subject to the terms and conditions set forth herein and in exchange for payment by each Purchaser of its respective portion of the purchase price to be paid on the applicable closing date referred to below, the Company hereby agrees to issue and sell to such Purchaser, and such Purchaser hereby agrees, severally but not jointly, to purchase from the Company, on such closing date its respective portion of the Stock to be purchased on such closing date, all as specified opposite the name of such Purchaser on the signature page of this Agreement. Subject to the terms and conditions set forth herein, the closing of the sale of the Stock to be sold to Koyah Leverage Partners, L.P. and Koyah Partners, L.P. shall occur on March 16, 2001 (the "Closing Date") and the closing of the sale of the Stock to be sold to the other Purchasers shall occur on or before March 21, 2001 (the "Additional Closing Date"), all as specified opposite the name of such Purchaser on the signature page of this Agreement. Payment of the purchase price to be paid by each Purchaser on the Closing Date or Additional Closing Date, as applicable, shall be made by wire transfer to the Company's account in accordance with wire transfer instructions provided by the Company. 2. Representations, Warranties and Covenants of the Company. The Company hereby represents, warrants and covenants to each Purchaser as follows, as of the Closing Date and the Additional Closing Date: 2.1 Accuracy of Reports. All reports required to be filed by the Company since and including the filing of the Company's Form 10-K for the fiscal year ended February 28, 2000 and subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, to and including the Closing Date and the Additional Closing Date, as applicable (collectively, the "SEC Reports"), have been duly filed with the Securities and Exchange Commission. As of their respective dates, the SEC Reports complied in all material respects with the requirements of the Securities Act or the Securities Exchange Act, as the case may be, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder applicable to the SEC Reports. None of the SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The financial statements of the Company included in the SEC Reports complied as of their respective dates of filing in all material respects with applicable accounting requirements and the published rules and regulations of the Securities and Exchange Commission with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited statements, as permitted by Regulation S-X promulgated by the Securities and Exchange Commission) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto), and fairly present the financial position of the Company as of the dates thereof and the results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). The Company has on a timely basis made all filings required to be made by the Company with the Securities and Exchange Commission since March 1, 2000. Since the date of the most recent SEC Report, there has been no material adverse change in the condition (financial or otherwise), business, operations, assets, liabilities or prospects of the Company. 2.2 Organization, Good Standing and Qualification. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware and has full corporate power and authority to conduct its business. 2.3 Capitalization and Voting Rights. The Securities have been duly and validly authorized and, when issued and/or paid for pursuant to this Agreement and/or the Registration Rights Agreement (collectively, the "Agreements"), will be validly issued, fully paid and nonassessable. Except as set forth in the Agreements and as otherwise required by law, there are no restrictions upon the voting or transfer of the Securities pursuant to the Company's Certificate of Incorporation, By-laws or other governing documents or any agreement or other instruments to which the Company is a party or by which the Company is bound. 2.4 Authorization; Enforceability. The Company has all corporate right, power and authority to enter into the Agreements and to consummate the transactions contemplated by the Agreements. The Agreements have been duly executed and delivered by the Company and constitute legal, valid and binding obligations of the Company, enforceable against the Company in accordance with their terms, subject to laws of general application relating to bankruptcy, insolvency and the relief of debtors and rules of law governing specific performance, injunctive relief or other equitable remedies, and to limitations of public policy. The issuance and/or sale of the Securities contemplated by the Agreements will not give rise to any preemptive rights or rights of first refusal on behalf of any person. 2.5. No Conflict; Governmental Consents. (a) The execution and delivery by the Company of the Agreements and the consummation of the transactions contemplated by the Agreements will not result in the violation by the Company of any law, statute, rule, regulation, order, writ, injunction, judgment or decree of any court or governmental authority to or by which the Company is bound, or of any provision of the Certificate of Incorporation or By-laws of the Company, and will not conflict with, or result in a breach or violation of, any of the terms or provisions of, or constitute (with due notice or lapse of time or both) a default under, any lease, loan agreement, mortgage, security agreement, trust indenture, securities purchase agreement, registration rights agreement or other agreement or instrument to which the Company is a party or by which it is bound or to which any of its properties or assets is subject, nor result in the creation or imposition of any lien upon any of the properties or assets of the Company. (b) No consent, approval, authorization or other order of any governmental authority or other third party is required to be obtained by the Company in connection with the authorization, execution and delivery of the Agreements or with the authorization, issue and/or sale of the Securities, except such filings as may be required to be made with the Securities and Exchange Commission, or with any state or foreign blue sky or securities regulatory authority. The Company shall make all such filings. The Offering is exempt from the registration requirements of the Securities Act and applicable state or foreign blue sky or securities laws, and neither the Company nor any authorized agent acting on its behalf has taken or will take any action that would cause the loss of such exemption. The Company is eligible to register the resale of the Securities as a secondary offering on a registration statement on Form S-3 under the Securities Act as contemplated by the Registration Rights Agreement. 2.6. Licenses. The Company has all licenses, permits and other governmental authorizations currently required for the conduct of its business or ownership of properties and is in all material respects in compliance therewith. 2.7. Capitalization. The total authorized capital stock of the Company immediately prior to the Closing Date consists of (i) 500,000,000 shares of Common Stock and (ii) 10,000,000 shares of Preferred Stock. Of such authorized Common Stock, 291,733,868 shares are issued and outstanding. Of such authorized Preferred Stock, no shares of Preferred Stock are issued and outstanding. Except for (a) 34,801,387 shares of Common Stock issuable upon exercise of options granted or available for grant under the Company's Stock Option Plans, (b) 22,374,808 shares of Common Stock issuable upon exercise of outstanding warrants and other rights, (c) an indeterminate number of shares of Common Stock which may be issuable pursuant to certain "Repricing Rights" issued to certain investors in New Com, Inc. described in the SEC Reports, (d) 10,000,000 shares of Common Stock reserved for issuance to Deutsche Financial Services, Inc. in contemplation of a settlement of their outstanding litigation described in the SEC Reports, (e) not more than 20,000,000 shares of Common Stock reserved for issuance in connection with certain outstanding indebtedness in the original principal amount of $12,500,000 described in the SEC Reports and (f) the Securities, no other shares of capital stock of the Company have been reserved for issuance and there are no outstanding options, warrants or other rights to subscribe for or purchase from the Company any shares of its capital stock or any securities convertible into or exchangeable for its capital stock. 3. Representations and Warranties of each Purchaser. Each Purchaser, severally but not jointly, hereby represents and warrants to the Company as follows: 3.1 Risk of Investment. Purchaser understands that the purchase of the Securities involves a high degree of risk including, but not limited to, the following: (i) the Company has a limited operating history and requires substantial funds in addition to the proceeds of the Offering; (ii) an investment in the Company is highly speculative, and only investors who can afford the loss of their entire investment should consider investing in the Company or the Securities; (iii) the Purchaser may not be able to liquidate its investment; (iv) transferability of the Securities is limited under applicable securities laws; (v) in the event of a disposition of the Securities the Purchaser could sustain the loss of its entire investment and (vi) the Company has not paid any dividends on its Common Stock since inception and does not anticipate the payment of dividends on the Common Stock in the foreseeable future. Such risks are more fully set forth in the SEC Reports. 3.2 Lack of Liquidity. Purchaser confirms that it is able (i) to bear the economic risk of this investment, (ii) to hold the Securities for an indefinite period of time, and (iii) to afford a complete loss of its investment. 3.3 Purchaser Capacity. Purchaser hereby represents that such Purchaser, by reason of such Purchaser's business or financial experience, has the capacity to protect such Purchaser's own interests in connection with the transactions contemplated by the Agreements. 3.4 Receipt of Information. Purchaser hereby acknowledges that such Purchaser has carefully reviewed the SEC Reports and the Company's Confidential Private Placement Memorandum dated January 5, 2001 (the "PPM") and hereby represents that it has been furnished by the Company, during the course of this transaction, with all information regarding the Company which the Purchaser or its representative has requested or desired to know, has been afforded the opportunity to ask questions of, and to receive answers from, duly authorized officers or other representatives of the Company concerning the terms and conditions of the Offering and the affairs of the Company and has received any additional information which such Purchaser or its representative has requested. 3.5 Reliance on Information. Purchaser has relied upon the information provided by the Company in the SEC Reports, the PPM and in this Agreement in making the decision to invest in the Securities. To the extent deemed necessary or advisable by it, Purchaser has retained, at the sole expense of such Purchaser, and relied upon, appropriate professional advice regarding the investment, tax and legal merits and consequences of the Agreements and a purchase of the Securities. 3.6 No Solicitation. Purchaser represents that (i) the Purchaser was contacted regarding the sale of the Securities by the Company (or an authorized agent or representative thereof) with whom such Purchaser had a prior substantial pre-existing relationship and (ii) no Securities were offered or sold to such Purchaser by means of any form of general solicitation or general advertising, and in connection therewith Purchaser has not (A) received or reviewed any advertisement, article, notice or other communication published in a newspaper or magazine or similar media or broadcast over television or radio whether closed circuit, or generally available, or (B) attended any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising. 3.7 Registration. Purchaser hereby acknowledges that the Offering has not been reviewed by the Securities and Exchange Commission or any state regulatory authority, since the Offering is intended to be exempt from the registration requirements of Section 5 of the Securities Act pursuant to Regulation D. The Purchaser shall not sell or otherwise transfer the Securities unless a subsequent disposition is registered under the Securities Act or is exempt from such registration. 3.8 Purchase for Own Account. Purchaser understands that the Securities have not been registered under the Securities Act by reason of a claimed exemption under the provisions of the Securities Act which depends, in part, upon the Purchaser's investment intention. In this connection, Purchaser hereby represents that it is purchasing Securities for its own account for investment and not with a view toward the resale or distribution to others or for resale in connection with any distribution or public offering (within the meaning of the Securities Act), nor with any present intention of distributing or selling the same and Purchaser has no present or contemplated agreement, undertaking, arrangement, obligation or commitment providing for the disposition thereof, other than in accordance with the Securities Act and applicable state securities laws. Purchaser was not formed for the purpose of purchasing the Securities. Notwithstanding the foregoing, the disposition of Purchaser's property shall be at all times within Purchaser's own control, and Purchaser's right to sell or otherwise dispose of all or any part of the Securities shall not be prejudiced; provided that Purchaser complies with Section 3.10. Nothing herein shall prevent the distribution of any Securities to any member, partner or stockholder, former member, partner, or stockholder of Purchaser in compliance with the Securities Act and applicable state securities laws. 3.9 Holding Period. Purchaser understands that the Securities are subject to significant limitations on resale under applicable securities laws. Purchaser understands that reliance upon Rule 144 under the Securities Act for resale of the Securities requires, among other conditions, a one-year holding period prior to the resale (such resale after such one year holding period being further subject to sales volume limitations). Purchaser understands and hereby acknowledges that the Company is under no obligation to register any of the Securities under the Securities Act or any applicable non-United States, state securities or "blue sky" laws, except as set forth in the Registration Rights Agreement. 3.10 Legends. Each Purchaser consents to the placement of the legend, or a substantial equivalent thereof, set forth below on any certificate or other document evidencing the Securities: 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. Purchaser further consents to the placement of one or more restrictive legends on any Securities issued in connection with this Offering as may be required by applicable securities laws. Purchaser is aware that the Company will make a notation in its appropriate records with respect to the restrictions on the transferability of the Securities. 3.11 Residence of Purchaser. Purchaser hereby represents that the address of such Purchaser furnished by such Purchaser on the signature page hereof is such Purchaser's principal business address. 3.12 Authorization; Enforceability. Purchaser represents that such Purchaser has full power and authority (corporate, statutory and otherwise) to execute and deliver this Agreement and to purchase the Securities. The Agreements constitute the legal, valid and binding obligations of the Purchaser, enforceable against such Purchaser in accordance with their terms. 3.13 Authority. Purchaser (a) is authorized and qualified to become an investor in the Company and the person signing this Agreement on behalf of such entity has been duly authorized by such entity to do so, and (b) is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. 3.14 Brokers. Purchaser has not engaged, consented to nor authorized any broker, finder or intermediary to act on its behalf, directly or indirectly, as a broker, finder or intermediary in connection with the transactions contemplated by the Agreements. Purchaser shall indemnify and hold harmless the Company from and against all fees, commissions or other payments owing to any other such person or firm acting on behalf of such Purchaser hereunder. 3.15 Accredited Investor. Purchaser represents that it is an "accredited investor" as such term is defined in Rule 501 of Regulation D. 3.16 Reliance on Representation and Warranties. Purchaser understands that the Securities are being offered and sold to the undersigned in reliance on specific exemptions from the registration requirements of United States Federal and state securities laws and that the Company is relying upon the truth and accuracy of the representations, warranties, agreements, acknowledgments and understandings of Purchaser set forth herein in order to determine the applicability of such exemptions and the suitability of Purchaser to acquire the Securities. 4. Each Purchaser's Conditions to each Closing. Each Purchaser's obligation to purchase and pay for the shares of Stock to be sold to such Purchaser at the applicable closing is subject to the fulfillment to such Purchaser's satisfaction, prior to or at such closing, of the following conditions: 4.1 Representations and Warranties. The representations and warranties of the Company contained in Section 2 shall be true and correct when made and on and as of the date of the applicable closing with the same effect as though such representations and warranties had been made on and as of the date of such closing, except to the extent of changes caused by transactions expressly contemplated herein. 4.2 Performance. The Company shall have performed and complied with all agreements, obligations and conditions contained in this Agreement that are required to be performed by it or with which it is required to have complied on or before the applicable closing. 4.3 Certificate. The Company shall deliver to each Purchaser at the applicable closing, relating to such Purchaser's purchase of shares of the Stock, a certificate signed by a duly authorized officer of the Company certifying the matters set forth in Sections 4.1 through 4.3. 4.4 Opinion of Counsel. The Company shall deliver to each Purchaser at the applicable closing an opinion of counsel for the Company, dated as of the Closing Date, in form and substance satisfactory to such Purchaser. 5. Certain Definitions. For the purposes of this Agreement the following terms have the respective meanings set forth below: 5.1 "Additional Securities" means the warrants contemplated by the Registration Rights Agreement and the Common Stock issuable upon exercise of such warrants. 5.2 "Common Stock" means the Company's common stock, par value $.005 per share. 5.3 "Person" means any individual, sole proprietorship, partnership, limited liability company, joint venture, trust, unincorporated organization, association, corporation, institution, public benefit corporation, firm, joint stock company, estate, entity or governmental agency. 5.4 Preferred Stock" means the Company's preferred stock, par value $.005 per share. 5.5 "Regulation D" means Regulation D promulgated under the Securities Act. 5.6 "Securities Act" means, as of any given time, the Securities Act of 1933, as amended, or any similar federal law then in force. 5.7 "Securities Exchange Act" means, as of any given time, the Securities Exchange Act of 1934, as amended. 5.8 "Securities and Exchange Commission" includes any governmental body or agency succeeding to the functions thereof. 6. Miscellaneous. 6.1 Amendments and Waivers. (a) This Agreement, together with the Registration Rights Agreement, set forth the entire agreement and understanding between the parties as to the subject matter hereof and merges and supersedes all prior discussions, agreements and understandings of any and every nature among them. This Agreement may be amended only by mutual written agreement of the Company and Purchasers holding more than 50% of the Stock being acquired hereunder, and the Company may take any action herein prohibited or omit to take any action herein required to be performed by it, and any breach of any covenant, agreement, warranty or representation may be waived, only if the Company has obtained the written consent or waiver of Purchasers holding more than 50% of the Stock being acquired hereunder. No course of dealing between or among any persons having any interest in this Agreement will be deemed effective to modify, amend or discharge any part of this Agreement or any rights or obligations of any person under or by reason of this Agreement. (b) After an amendment or waiver becomes effective it shall bind every holder of any Securities regardless of whether such holder held such Securities at the time such amendment or waiver became effective, or subsequently acquired such Securities. 6.2 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company and its successors and assigns and each Purchaser and its successor and registered assigns. The provisions hereof which are for each Purchaser's benefit as purchaser or holder of the Securities are also for the benefit of, and enforceable by, any subsequent registered holder of such Securities. 6.3 Notices. All notices, demands and other communications to be given or delivered under or by reason of the provisions of this Agreement shall be in writing and shall be deemed to have been given when delivered personally or when mailed by certified or registered mail, return receipt requested and postage prepaid, and addressed to the addresses of the respective parties set forth below or to such changed addresses as such parties may have fixed by written notice; provided, however, that any notice of change of address shall be effective only upon receipt: If to the Company: Aura Systems, Inc. 2335 Alaska Avenue El Segundo, CA 90245 Attn: Zvi (Harry) Kurtzman If to Purchasers: As indicated on the signature page hereto. 6.4 Governing Law. The validity, performance, construction and effect of this Agreement shall be governed by the internal laws of the State of Washington without giving effect to any State's principles of conflict of laws. 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. 6.5 Attorneys' Fees. If any action at law or in equity is necessary to enforce or interpret the terms of the Agreements, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 6.6 Counterparts. This Agreement may be executed in any number of counterparts and, notwithstanding that any of the parties did not execute the same counterpart, each of such counterparts (or facsimile copies thereof) shall, for all purposes, be deemed an original, and all such counterparts shall constitute one and the same instrument binding on all of the parties hereto. Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be as effective as delivery of a manually executed counterpart of a signature page of this Agreement. 6.7 Headings. The headings of the Sections hereof are inserted as a matter of convenience and for reference only and in no way define, limit or describe the scope of this Agreement or the meaning of any provision hereof. 6.8 Severability. In the event that any provision of this Agreement or the application of any provision hereof is declared to be illegal, invalid or otherwise unenforceable by a court of competent jurisdiction, the remainder of this Agreement shall not be affected except to the extent necessary to delete such illegal, invalid or unenforceable provision unless the provision held invalid shall substantially impair the benefit of the remaining portion of this Agreement. 6.9 Survival of Warranties. The representations, warranties and covenants of the Company and the Purchasers made in this Agreement shall survive the execution and delivery of this Agreement and the applicable closing. 6.10 Expenses. The Company shall pay (i) on the Closing Date, the legal fees and expenses of outside legal counsel to the Purchasers incurred in connection with the Agreements and the closing of the transactions on the Closing Date contemplated by the Agreements in an amount not to exceed $10,000 and (ii) on the Additional Closing Date, the legal fees and expenses of outside legal counsel to the Purchasers incurred in connection with the Agreements and the closing of the transactions on the Additional Closing Date in an amount not to exceed $1,500. 6.11 Exculpation Among Purchasers. Each Purchaser acknowledges that such Purchaser is not relying upon any person, firm or corporation, other than the Company and its officers and directors, in making its investment or decision to invest in the Company. Each Purchaser agrees that no Purchaser nor the respective controlling person, officers, directors, partners, agents or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore or hereafter taken or omitted to be taken by any of them in connection with the purchase of the Stock or the execution of or performance under any of the Agreements. 6.12 Representation. Each party hereto acknowledges that (a) ICM Asset Management, Inc. retained Paine Hamblen Coffin Brooke & Miller LLP to represent only ICM Asset Management, Inc. and its affiliates (collectively, "ICM") in connection with the Agreements and the transactions related thereto, (b) the interests of ICM may not necessarily coincide with the interests of other Purchasers, (c) Paine Hamblen Coffin Brooke & Miller LLP does not represent any Purchaser other than ICM, and (d) each Purchaser has consulted with, or has had an opportunity to consult with, its own legal counsel and has not relied on Paine Hamblen Coffin Brooke & Miller LLP for legal counsel in connection with the Agreements and the transactions related thereto. [SIGNATURES APPEAR ON THE FOLLOWING PAGE] SIGNATURE PAGE SUBSCRIPTION AGREEMENT DATED AS OF MARCH 16, 2001
"COMPANY" AURA SYSTEMS, INC. By: ________________________________ Name: _____________________________ Title: ______________________________ "PURCHASERS" Closing Date: KOYAH LEVERAGE PARTNERS, L.P. By: Koyah Ventures LLC, its general partner No. of Shares: 4,117,647 By:_______________________________ Purchase Price: $1,400,000 Name:_____________________________ Title: ____________________________ Address: c/o ICM Asset Management, Inc. 601 West Main Avenue, Suite 600 Spokane, WA 99201 Attn: Robert Law, Esq. Closing Date: KOYAH PARTNERS, L.P. By: Koyah Ventures LLC, its general partner No. of Shares: 882,353 By:_______________________________ Purchase Price: $300,000 Name:_____________________________ Title: ____________________________ Address: c/o ICM Asset Management, Inc. 601 West Main Avenue, Suite 600 Spokane, WA 99201 Attn: Robert Law, Esq. Additional Closing Date: ______________________________________ JAMES M. SIMMONS No. of Shares: 300,000 Address: Purchase Price: $102,000 ______________________________________ ______________________________________ Additional Closing Date ______________________________________ WENDELL REUGH No. of Shares: 300,000 Address: Purchase Price: $102,000 ______________________________________ ______________________________________ Additional Closing Date: ______________________________________ FORREST MAGERS No. of Shares: 150,000 Address: Purchase Price: $51,000 ______________________________________ ______________________________________
EX-99 5 reg_rightsagree.txt AURA SYSTEMS, INC. REGISTRATION RIGHTS AGREEMENT Dated as of March 16, 2001 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT is made as of March 16, 2001, by and among Aura Systems, Inc., a Delaware corporation (the "Company"), and the Investors listed on Schedule A hereto (each of whom is herein called individually, a "Investor" and all of whom are herein called, collectively, the "Investors"), with reference to the following facts: The Investors are parties to the Subscription Agreement, dated as of March 16, 2001 (the "Subscription Agreement"), by and among the Company and the Investors, which provides that as a condition to the closing of the transactions contemplated therein, pursuant to which the Company will issue and sell a total of 5,750,000 shares of the Company's Common Stock, par value $.005 per share (the "Common Stock"), to the Investors, this Agreement must be executed and delivered by the Investors and the Company. NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein and for other consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto further agree as follows: 1. Registration Rights. The Company covenants and agrees as follows: 1.1 Definitions. For purposes of this Section 1: (a) "Form S-3" means such form under the 1933 Act as in effect on the date hereof or any registration form under the 1933 Act subsequently adopted by the SEC that permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC. (b) "Holder" means any person owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with Section 1.11 hereof. (c) "1933 Act" means the Securities Act of 1933, as amended. (d) "1934 Act" means the Securities Exchange Act of 1934, as amended. (e) "register", "registered", and "registration" refer to a registration effected by preparing and filing a registration statement or similar document in compliance with the 1933 Act, and the declaration or ordering of effectiveness of such registration statement or document. (f) "Registrable Securities" means (i) the shares of the Company's Common Stock issued pursuant to the Subscription Agreement, (ii) shares of the Company's Common Stock issuable on exercise of the Registration Warrants (as defined in Section 1.3(c)), and (iii) any Common Stock of the Company issued as (or issuable on the conversion or exercise of any warrant, right or other security that is issued as) a dividend or other distribution with respect to, or in exchange for, or in replacement of, the shares referenced in clauses (i) - (ii) above; provided that there shall be excluded any Registrable Securities sold by a person in a transaction in which that person's rights under this Section 1 are not assigned. (g) The number of shares of "Registrable Securities" outstanding shall be determined by the number of shares of Common Stock outstanding that are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities that are, Registrable Securities. (h) "SEC" means the Securities and Exchange Commission. (i) Any other capitalized term not defined herein shall have the meaning set forth in the Subscription Agreement. 1.2 [Intentionally Omitted]. 1.3 Required Registration. (a) Within thirty (30) days after the Closing Date, the Company shall prepare and file with the SEC a registration statement on Form S-3 (or, if Form S-3 is not then available, on such form of registration statement that is then available to effect a registration of all Registrable Securities, subject to consent of the Investors holding at least a majority of the Registrable Securities) covering the registration of all of the Registrable Securities. The Company shall use best efforts to obtain the effectiveness of the Registration Statement as soon as possible after the Closing Date. The Company shall keep such registration statement effective at all times until the earlier of the date on which all the Registrable Securities (i) are sold and (ii) can be sold by the Holders (and any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) in any three-month period without volume limitation and without registration in compliance with Rule 144 under the 1933 Act. (b) If the Holders intend to distribute the Registrable Securities by means of an underwriting, they shall so advise the Company. The underwriter will be selected by a majority in interest (as determined by the number of Registrable Securities held) of the Holders and shall be reasonably acceptable to the Company. In such event, the right of any Holder to include his, her or its Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Holders) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in Section 1.6(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting. Notwithstanding any other provision of this Section 1.3, if the underwriter advises the Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Holders shall so advise all Holders of Registrable Securities that would otherwise be underwritten pursuant hereto, provided that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities are first entirely excluded from the underwriting. (c) If on the date one hundred twenty (120) days after the Closing Date either (i) the registration statement described in Section 1.3(a) is not declared effective or (ii) the registration statement described in Section 1.3(a) is no longer deemed to be effective after initial effectiveness, the Company, unless waived by the Investors who purchased at least 10% of the Common Stock sold pursuant to the Subscription Agreement, shall issue to each Investor a warrant in the form attached hereto as Exhibit A (each, a "Registration Warrant" and, collectively, the "Registration Warrants") to acquire the number of shares of Common Stock equal to (i) 5% multiplied by (ii) the aggregate number of shares of Common Stock sold to such Investor under the Subscription Agreement. The exercise price of each such Registration Warrant per share of Common Stock issuable on exercise of the Registration Warrant will be $.34 per share. (d) If on the end of the first thirty (30) day period after the initial one hundred twenty (120) day period referred to in Section 1.3(c) either (i) the registration statement described in Section 1.3(a) is not declared effective or (ii) the registration statement described in Section 1.3(a) is no longer deemed to be effective after initial effectiveness, the Company shall, unless waived by the Investors who purchased at least 10% of the Common Stock sold pursuant to the Subscription Agreement, issue to each Investor an additional Registration Warrant to acquire the number of shares of Common Stock equal to (i) 5% multiplied by (ii) the aggregate number of shares of Common Stock sold to such Investor pursuant to the Subscription Agreement. The exercise price of each such Registration Warrant will be $.34 per share of Common Stock issuable on exercise of the Registration Warrant. (e) If at the end of each subsequent thirty (30) day period after the first thirty (30) day period after the initial one hundred twenty (120) day period referred to in Section 1.3(c) either (i) the registration statement described in Section 1.3(a) is not declared effective or (ii) the registration statement described in Section 1.3(a) is no longer deemed to be effective after initial effectiveness, the Company shall, unless waived by the Investors who purchased at least 10% of the Common Stock sold pursuant to the Subscription Agreement, issue to each Investor an additional Registration Warrant to acquire the number of shares of Common Stock equal to (i) 2.5% multiplied by (ii) the aggregate number of shares of Common Stock sold to such Investor pursuant to the Subscription Agreement. The exercise price of each such Registration Warrant will be $.34 per share of Common Stock issuable on exercise of the Registration Warrant. (f) The Company shall execute such other and further certificates, instruments and other documents as may be reasonably requested by the Investors or reasonably necessary or proper to implement, complete and perfect the Investors' rights under this Section 1.3 and to freely trade the Registrable Securities without limitation or restriction imposed or created by the Company or securities law. (g) The terms and covenants set forth in this Section 1.3 shall terminate as to each Holder and be of no further force and effect on the earlier of the date on which all the Registrable Securities beneficially owned by that Holder (i) are registered pursuant to this Section 1.3 and sold by that Holder in an open market transaction or (ii) can be sold by that Holder (and any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) in any three-month period without volume limitation and without registration in compliance with Rule 144 under the 1933 Act. 1.4 Company Registration. (a) If (but without any obligation to do so) the Company proposes to register any of its stock (including a registration effected by the Company for stockholders other than the Holders) or other securities under the 1933 Act in connection with the public offering of such securities, the Company shall, at such time, promptly give each Holder notice of such registration. On the request of each Holder given within thirty (30) days after such notice by the Company, the Company shall, subject to the provisions of Section 1.4(c), cause to be registered under the 1933 Act all of the Registrable Securities that each such Holder has requested to be registered. (b) The Company shall have the right to terminate or withdraw any registration initiated by it under this Section 1.4 prior to the effectiveness of such registration, whether or not any Holder shall have elected to include securities in such registration. The expenses of such withdrawn registration shall be borne by the Company in accordance with Section 1.8 hereof. (c) In connection with any offering involving an underwriting of shares of the Company's capital stock, the Company shall not be required under this Section 1.4 to include any requesting Holder's securities in such underwriting, unless such Holder accepts the terms of the underwriting as agreed between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters) and enters into an underwriting agreement in customary form with the underwriter or underwriters selected by the Company, and then only in such quantity as the underwriters determine in their sole discretion will not jeopardize the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested to be included in such offering by the Company, the Holders and other security holders to whom registration rights have been granted exceeds the amount of securities that the underwriters determine in their sole discretion is compatible with the success of the offering, then the Company shall be required to include in the offering only that number of securities (including Registrable Securities) that the underwriters determine in their sole discretion will not jeopardize the success of the offering (the Registrable Securities so included to be apportioned pro rata among the selling Holders according to the total amount of Registrable Securities requested to be included therein owned by each selling Holder or in such other proportions as shall mutually be agreed to by such selling Holders); provided, that the amount of Registrable Securities requested by the Holders to be included in such offering pursuant to this Section 1.4 and all other securities requested by other holders to be included in such offering pursuant to other "piggyback" registration rights shall be reduced first (the Registrable Securities and other securities so reduced to be apportioned pro rata among the selling Holders and other holders according to the total amount of Registrable Securities and other securities requested to be included therein by each selling Holder and other holder) before any reduction of any (i) securities requested to be included in such offering by any holders exercising "demand" registration rights or (ii) any securities sold by the Company to be included in such offering. For purposes of such apportionment among Holders, for any selling stockholder that is a Holder of Registrable Securities and that is a partnership or corporation, the partners, retired partners and stockholders of such Holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to be a single "selling Holder", and any pro rata reduction with respect to such "selling Holder" shall be based on the aggregate amount of Registrable Securities requested to be included in such offering by all such related entities and individuals. 1.5 Form S-3 Registration. If the Company shall receive from one or more Holders a request or requests that the Company effect a registration on Form S-3 and any related blue sky or similar qualification or compliance with respect to at least 25% (or a lesser percentage if the requirements of Section 1.5(b)(i) are met) of the Registrable Securities owned by such Holder or Holders, the Company shall: (a) promptly give notice of the proposed registration, and any related blue sky or similar qualification or compliance, to all other Holders; and (b) cause, as soon as practicable, such Registrable Securities to be registered for offering and sale on Form S-3 and cause such Registrable Securities to be qualified in such jurisdictions as such Holders may reasonable request, together with all or such portion of the Registrable Securities of any other Holders joining in such request as are specified in a request given within fifteen (15) days after receipt of such notice from the Company; provided that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this Section 1.5: (i) if the Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public of less than $500,000; (ii) if the Company has, within the twelve month period preceding the date of such request, already effected two registrations on Form S-3 for the Holders pursuant to this Section 1.5; (iii)if the Company shall furnish to the Holders a certificate signed by the Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than sixty (60) days after receipt of the request of the Holder or Holders under this Section 1.5; provided that the Company shall not utilize this right more than once in any twelve (12) month period; provided, further, that the Company shall not register shares for its own account during such sixty (60) day period, but such prohibition shall not apply to the registration of Company shares in connection with (x) a merger or (y) registration of shares relating to a stock option, stock purchase or similar plan; or (iv) in any particular jurisdiction in which the Company would be required to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance. (c) Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Holders. 1.6 Obligations of the Company. Whenever required under this Section 1 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: (a) except as otherwise provided in Section 1.3, prepare and file with the SEC a registration statement with respect to such Registrable Securities and use best efforts to cause such registration statement to become effective, and keep such registration statement effective for a period of up to two hundred seventy (270) days or, if earlier, until the distribution contemplated in the registration statement has been completed; provided that (i) such two hundred seventy (270) day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 (or any other Form, to the extent permitted by law) that are intended to be offered on a continuous or delayed basis, such two hundred seventy (270) day period shall be extended, if necessary, to keep the Registration Statement effective until all such Registrable Securities are sold, except to the extent that the Holders (and any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) of such Registrable Securities may sell those Registrable Securities in any three-month period without regard to the volume limitation and without registration in compliance with Rule 144 under the 1933 Act; (b) prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the 1933 Act with respect to the disposition of all securities covered by such registration statement during the period of time such registration statement remains effective; (c) furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the 1933 Act, and such other documents as they may reasonably request to facilitate the disposition of Registrable Securities owned by them; (d) use best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders; provided that the Company shall not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions; (e) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering; (f) during the period of time such registration statement remains effective, notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the 1933 Act or the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing. (g) cause all such Registrable Securities registered hereunder to be listed on each securities exchange on which securities of the same class issued by the Company are then listed; (h) provide a transfer agent and registrar for all Registrable Securities registered hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; and (i) (i) furnish, at the request of any Holder, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 1, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities, and (ii) a "comfort" letter signed by the independent public accountants who have certified the Company's financial statements included in the registration statement, covering substantially the same matters with respect to the registration statement (and the prospectus included therein) and with respect to events subsequent to the date of the financial statements, as are customarily covered in accountants' letters delivered to the underwriters in underwritten public offerings of securities addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities. 1.7 Information from Holder. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 1 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding such Holder, the Registrable Securities held by such Holder, and the intended method of disposition of such securities as shall be required to effect the registration of such Registrable Securities. 1.8 Expenses of Registration. All expenses incurred in connection with registrations, filings or qualifications pursuant to this Section 1, including (without limitation) all registration, filing and qualification fees, printing fees and expenses, accounting fees and expenses, fees and disbursements of counsel for the Company and the reasonable fees and disbursements (in an amount not exceeding $5,000) of one counsel for the selling Holders selected by the Holders, shall be borne by the Company. Notwithstanding the foregoing, the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Sections 1.3 and 1.5 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all participating Holders shall bear such expenses pro rata based on the number of Registrable Securities that were requested to be included in the withdrawn registration); provided that, if at the time of such withdrawal, the Holders shall have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request and shall have withdrawn the request with reasonable promptness following disclosure by the Company of such material adverse change, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Sections 1.3 and 1.5. Anything herein to the contrary notwithstanding, all underwriting discounts and commissions incurred in connection with a sale of Registrable Securities shall be borne and paid by the Holder thereof, and the Company shall have no responsibility therefor. 1.9 Indemnification. If any Registrable Securities are included in a registration statement under this Section 1: (a) To the extent permitted by law, the Company will indemnify and hold harmless each Holder, the partners or officers, directors and stockholders of such Holder, legal counsel and accountants for such Holder, any underwriter (as defined in the 1933 Act) for such Holder and each person, if any, who controls such Holder or underwriter within the meaning of the 1933 Act or the 1934 Act, against any losses, claims, damages or liabilities (joint or several) to which they may become subject under the 1933 Act, the 1934 Act or any other federal or state securities law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any of the following statements, omissions or violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any state securities law or any rule or regulation promulgated under the 1933 Act, the 1934 Act or any state securities law; and the Company will reimburse such Holder, underwriter or controlling person for any legal or other expenses incurred, as incurred, in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the indemnity agreement in this Section 1.9(a) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld or delayed), nor shall the Company be liable in any such case for any such loss, claim, damage, liability or action to the extent that it arises out of or is based on a Violation that occurs in reliance on and in conformity with written information furnished expressly for use in connection with such registration by such Holder, underwriter or controlling person. (b) To the extent permitted by law, each selling Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who shall have signed the registration statement, each person, if any, who controls the Company within the meaning of the 1933 Act, legal counsel and accountants for the Company, any underwriter, any other Holder selling securities in such registration statement and any controlling person of any such underwriter or other Holder, against any losses, claims, damages or liabilities to which any of the foregoing persons may become subject, under the 1933 Act, the 1934 Act or any other federal or state securities law, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based on any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance on and in conformity with written information furnished by such Holder expressly for use in connection with such registration; and each such Holder will reimburse any person intended to be indemnified pursuant to this Section 1.9(b), for any legal or other expenses reasonably incurred, as incurred, by such person in connection with investigating or defending any such loss, claim, damage, liability or action; provided that the indemnity agreement in this Section 1.9(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if such settlement is effected without the consent of the Holder (which consent shall not be unreasonably withheld or delayed); and provided further that in no event shall any indemnity by such Holder under this Section 1.9(b), when aggregated with amounts contributed, if any, pursuant to Section 1.9(d), exceed the net proceeds from the sale of Registrable Securities hereunder received by such Holder. (c) Promptly after receipt by an indemnified party under this Section 1.9 of notice of the commencement of any action (including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 1.9, deliver to the indemnifying party notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent that the indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided that an indemnified party (together with all other indemnified parties that may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the fees and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to notify the indemnifying party within a reasonable time of the commencement of any such action, if prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party under this Section 1.9, but the omission so to notify the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than under this Section 1.9. (d) If the indemnification provided in this Section 1.9 is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage or expense in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that shall have resulted in such loss, liability, claim, damage or expense, as well as any other relevant equitable considerations; provided that in no event shall any contribution by a Holder under this Section 1.9(d), when aggregate with amounts paid, if any, pursuant to Section 1.9(b), exceed the net proceeds from the sale of Registrable Securities hereunder received by such Holder. The relative fault of the indemnifying party and of the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. (e) Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. (f) The obligations of the Company and Holders under this Section 1.9 shall survive the completion of any offering of Registrable Securities in a registration statement under this Section 1, and otherwise. 1.10 Reports under 1934 Act. With a view to making available to the Holders the benefits of Rule 144 promulgated under the 1933 Act and any other rule or regulation of the SEC that may at any time permit a Holder to sell securities of the Company to the public without registration or pursuant to a registration statement (including, without limitation, Form S-3), the Company agrees to: (a) make and keep public information available, as those terms are used in SEC Rule 144, at all times; (b) take such action as is necessary to enable the Holders to utilize Form S-3 for the sale of their Registrable Securities; (c) file with the SEC in a timely manner all reports and other documents required of the Company under the 1933 Act and the 1934 Act; and (d) furnish to any Holder, so long as the Holder owns any Registrable Securities, forthwith on request, (i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144, the 1933 Act and the 1934 Act, or that it qualifies as a registrant whose securities may be resold pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly report of the Company and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in availing any Holder of any rule or regulation of the SEC that permits the selling of any such securities without registration or pursuant to such form. 1.11 Assignment of Registration Rights. The rights to cause the Company to register Registrable Securities pursuant to this Section 1 may be assigned (but only with all related obligations) by a Holder to a transferee or assignee of such Registrable Securities that (i) is a subsidiary, parent, current or former partner, current or former limited partner, current or former member, current or former manager or stockholder of a Holder, (ii) is an entity controlling, controlled by or under common control with a Holder, including without limitation a corporation or limited liability company that is a direct or indirect parent or subsidiary of the Holder, (iii) is a transferee or assignee of a Holder and the number of shares representing or underlying the Registrable Securities (whether in the form of shares, warrants to purchase shares, or a combination of the foregoing) transferred or assigned constitute at least 100,000 shares of Registrable Securities held by such Holder (as adjusted for stock split, combinations, dividends and the like); provided that: (a) the Company is, within a reasonable time after such transfer, notified of the name and address of such transferee or assignee and the Registrable Securities with respect to which such registration rights are being assigned; (b) such transferee or assignee agrees in writing to be bound by and subject to the terms and conditions of this Agreement; (c) such assignment shall be effective only if immediately following such transfer the further disposition of such securities by the transferee or assignee is restricted under the 1933 Act; and (d) such assignment is not made pursuant to a registration statement effected pursuant to this Agreement. 1.12 Duplicative Registration Rights and Special Adjustment of Registration Rights. The rights of the Investors under Section 1.4 or Section 1.5 shall not apply to the extent that Registrable Securities then held by the Investors are already covered by an effective registration statement under another Section of this Agreement. In addition, notwithstanding the provisions of Sections 1.3, 1.4 and 1.5, the Company shall not be obligated to include the portion of the Registrable Securities consisting of the shares of Common Stock issuable on exercise of the Registration Warrants in any registration statement which becomes effective on or before April 17, 2001. 1.13 Termination of Registration Rights. No Holder shall be entitled to exercise any right provided in this Section 1 with respect to a Registrable Security (i) after the date on which that Registrable Security has been sold under a registration statement filed in accordance with this Agreement or (ii) if all Registrable Securities held by such Holder (and any affiliate of the Holder with whom such Holder must aggregate its sales under Rule 144) can be sold in any three-month period without volume limitation and without registration in compliance with Rule 144 under the 1933 Act. 2. Covenants. 2.1 Delivery of SEC Reports. The Company shall deliver to each Holder holding Registrable Securities all reports and other documents of the Company that the Company is required to file with the SEC under the 1933 Act or the 1934 Act within twenty-four hours of the time such reports or other documents are filed with the SEC. 2.2 Confidential Information. (a) The Company shall provide to each Holder not less than ten days' prior written notice of its intention to deliver to such Holder confidential or non-public information relating to the Company which shall be marked as "confidential" or "non-public." If a Holder notifies the Company that it does not desire to receive such confidential or non-public information, then the Company shall not deliver such confidential or non-public information to such Holder. (b) Each Holder covenants with the Company that, subject to the Company's compliance with the provision of Section 2.2(a) hereto, the Holder confirms, acknowledges, and covenants that information which is marked "confidential" or "non-public", and is received by it with respect to the Company pursuant to this Agreement, or with respect to the transactions described herein or in the Subscription Agreement, or in connection with the participation by the Holder or its employee or agent as a stockholder of the Company, is and shall be confidential and for the Holder's use only, and the Holder will not use such information in violation of the securities laws, or any other laws, or reproduce, disclose or disseminate such information to any other person (other than the Holder's employees, directors or agents having a need to know the contents of such information and the Holder's attorneys), except in connection with the exercise of rights under this Agreement, unless (i) the Company has made such information available to the public generally, (ii) such information has otherwise been made generally or publicly available, or (iii) the Holder is required to disclose such information by a governmental body or pursuant to legal process, in which case the Holder shall provide at least three days' prior notice of such proposed disclosure or such lesser notice as the Holder shall have received. The Company acknowledges no information contained in this Agreement and the Subscription Agreement is confidential or non-public information. Notwithstanding the foregoing, the Holder may, in its sole discretion, decline to receive from the Company information which is marked "confidential" or "non-public", and as a result thereof shall not be deemed to have received or have any knowledge of such information marked "confidential" or "non-public", provided the Holder has declined delivery of such information or promptly returned to the Company such information upon delivery. 2.3 Reserve for Exercise Shares. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock such number of shares of Common Stock (the "Exercise Shares") as shall be sufficient to enable it to comply with its exercise obligations under the Registration Warrants. If at any time the number of Exercise Shares shall not be sufficient to effect the exercise of the Registration Warrants, the Company will forthwith take such corporate action as may be necessary to increase its authorized but unissued shares of Common Stock to such number as will be sufficient for such purposes. The Company will obtain authorization, consent, approval or other action by, or make any filing with, any administrative body that may be required under applicable state securities laws in connection with the issuance of Exercise Shares. 2.4 Termination of Covenants. The covenants set forth in Sections 2.1 through 2.3 shall terminate as to each Holder and be of no further force and effect at the time the Holders no longer hold any Registrable Securities. 3. Miscellaneous. 3.1 Successors and Assigns. Except as otherwise provided herein, this Agreement shall inure to the benefit of and bind the respective successors and assigns of the parties (including transferees of any shares of Registrable Securities). Nothing in this Agreement, express or implied, is intended to confer on any party other than the parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement. 3.2 Governing Law. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Washington, without giving effect to its conflicts of law 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. 3.3 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 3.4 Headings. The headings of sections and subsections in this Agreement are used for convenience of reference only and are not to be considered in construing or interpreting this Agreement. 3.5 Notices. Any request, consent, notice or other communication required or permitted under this Agreement shall be in writing and shall be deemed duly given and received when delivered personally or transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being deposited as first class mail with the United States Postal Service, all charges or postage prepaid, and properly addressed to the party to receive the same at the address indicated for such party on the applicable signature page hereof, or at such other address as such party may designate by ten days' advance notice to the other parties. 3.6 Expenses. If any action at law or in equity is necessary to enforce or interpret any of the terms of this Agreement, the prevailing party shall be entitled to reasonable attorneys' fees, costs and necessary disbursements in addition to any other relief to which such party may be entitled. 3.7 Entire Agreement: Amendments and Waivers. This Agreement (including the Schedule and Exhibit hereto) constitutes the full and entire understanding and agreement among the parties with regard to the subjects hereof and thereof. 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 consent of the Company and the holders of more than 50% of the Registrable Securities; provided that no amendment shall be effective unless approved by the holder or holders of Registrable Securities that shall be affected adversely, or affected differently from the Holders generally, by such amendment. Any amendment or waiver effected in accordance with this paragraph shall be binding on the Company, each holder of any Registrable Securities and each future holder of all such Registrable Securities. 3.8 Severability. If any provision of this Agreement is held by a court of competent jurisdiction to be unenforceable under applicable law, such provision shall be excluded from this Agreement and the balance of the Agreement shall be interpreted as if such provision were so excluded and shall be enforceable in accordance with its terms. [Signatures appear on the following page] IN WITNESS WHEREOF, this Registration Rights Agreement has been duly executed by or on behalf of the parties hereto as of the date first above written. "Company"
AURA SYSTEMS, INC. By: --------------------------------------------------------- Name: ------------------------------------------------------- Title: ------------------------------------------------------- 2335 Alaska Avenue El Segundo, CA 90245 Attn: Zvi (Harry) Kurtzman "Investor" KOYAH LEVERAGE PARTNERS, L.P. By: Koyah Ventures LLC, its general partner By: ------------------------------------------------ Name: ------------------------------------- Title: --------------------------------------------- c/o ICM Asset Management, Inc. 601 West Main Avenue, Suite 600 Spokane, WA 99201 Attn: Robert Law, Esq. KOYAH PARTNERS, L..P. By: Koyah Ventures LLC, its general partner By: ------------------------------------------------ Name: ------------------------------------- Title: --------------------------------------------- c/o ICM Asset Management, Inc. 601 West Main Avenue, Suite 600 Spokane, WA 99201 Attn: Robert Law, Esq. ------------------------------------------ JAMES M. SIMMONS ------------------------------------------ WENDELL REUGH ------------------------------------------ FORREST MAGERS
SCHEDULE A TO REGISTRATION RIGHTS AGREEMENT Schedule of Investors Name Koyah Leverage Partners, L.P. Koyah Partners, L.P. James M. Simmons Wendell Reugh Forrest Magers EXHIBIT A TO THE REGISTRATION RIGHTS AGREEMENT Form of Registration Warrant [Need to attach] EX-99 6 reg_warrant.txt EXHIBIT A TO REGISTRATION RIGHTS AGREEMENT Form of Registration Warrant THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES LAWS OF CERTAIN STATES. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. INVESTORS SHOULD BE AWARE THAT THEY MAY BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN FORM AND SUBSTANCE SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS. Warrant To Purchase Common Stock Of AURA SYSTEMS, INC. - -------------, --- No. W-__ This certifies that ____________________ (the "Holder") is entitled, subject to the terms and conditions of this Warrant, to purchase from Aura Systems, Inc., a Delaware corporation (the "Company"), all or any part of an aggregate of _________ shares of the Company's authorized and unissued Common Stock, par value $.005 (the "Warrant Stock"), at the Warrant Price (as defined herein), upon surrender of this Warrant at the principal offices of the Company, together with a duly executed subscription form in the form attached hereto as Exhibit 1 and simultaneous payment of the Warrant Price for each share of Warrant Stock so purchased in lawful money of the United States, unless exercised in accordance with the provisions of Section 2.6 of this Warrant. The Holder may exercise the Warrant at any time after the date of this Warrant and prior to the second anniversary of the date hereof, subject to the provisions of Section 2.5 hereof (the "Expiration Date"). This Warrant is issued pursuant to that certain Registration Rights Agreement dated as of March 16, 2001 (the "Registration Rights Agreement"), by and among the Company, the Holder and certain of the other investors listed on the signature page of the Subscription Agreement ("Investors") by and among the Company, the Holder and certain other Investors dated March 16, 2001 (the "Subscription Agreement"). 1. Definitions. The following definitions shall apply for purposes of this Warrant: 1.1 "Acquisition" means any consolidation, merger or reorganization of the Company with or into any other corporation or other entity or person, or any other corporate reorganization, in which the stockholders of the Company immediately prior to such consolidation, merger or reorganization, own less than fifty percent of the Company's voting power immediately after such consolidation, merger or reorganization, or any transaction or series of related transactions to which the Company is a party in which in excess of fifty percent of the Company's voting power is transferred, excluding any consolidation, merger or reorganization effected exclusively to change the domicile of the Company. 1.2 "Asset Transfer" means a sale, lease or other disposition of all or substantially all of the assets of the Company. 1.3 "Company" means the "Company" as defined above and includes any corporation or other entity that succeeds to or assumes the obligations of the Company under this Warrant. 1.4 "Fair Market Value" of a share of Warrant Stock means (i) if the Common Stock is traded on a securities exchange, the average of the closing price each trading day over the thirty consecutive day period ending three days before the day the Fair Market Value of the securities is being determined, (ii) if the Common Stock is actively traded over-the counter, the average of the closing bid and asked prices quoted on the NASDAQ system (or similar system) each trading day over the thirty consecutive day period ending three days before the day the Fair Market Value of the securities is being determined, or (iii) if at any time the Common Stock is not listed on any securities exchange or quoted in the NASDAQ System or the over-the-counter market, then the Fair Market Value determined by the Company's Board of Directors in good faith. 1.5 "Holder" means the "Holder" as defined above and includes any transferee who shall at the time be the registered holder of this Warrant. 1.6 "Warrant" means this Warrant and any warrant(s) delivered in substitution or exchange therefor, as provided herein. 1.7 "Warrant Price" means $.34 per share of Warrant Stock. The Warrant Price is subject to adjustment as provided herein. 1.8 "Warrant Stock" means the Common Stock of the Company. The number and character of shares of Warrant Stock are subject to adjustment as provided herein and the term "Warrant Stock" shall include stock and other securities and property at any time receivable or issuable upon exercise of this Warrant in accordance with its terms. 2. Exercise. 2.1 Method of Exercise. Subject to the terms and conditions of this Warrant, the Holder may exercise the purchase rights represented by this Warrant in whole or in part, at any time or from time to time, on or after the date hereof and before the Expiration Date, by surrendering this Warrant at the principal offices of the Company, with the subscription form attached hereto duly executed by the Holder, and payment of an amount equal to the product obtained by multiplying (i) the number of shares of Warrant Stock so purchased by (ii) the Warrant Price, as specified in Section 2.2 below. 2.2 Form of Payment. Except as provided in Section 2.6, payment may be made by (i) a check payable to the Company's order, (ii) wire transfer of funds to the Company, or (3) any combination of the foregoing. 2.3 Partial Exercise. Upon a partial exercise of this Warrant, this Warrant shall be surrendered by the Holder and replaced with a new Warrant or Warrants of like tenor for the balance of the shares of Warrant Stock purchasable under the Warrant surrendered upon such purchase. The Warrant or Warrants will be delivered to the Holder thereof within a reasonable time. 2.4 No Fractional Shares. No fractional shares may be issued upon any exercise of this Warrant, and any fractions shall be rounded down to the nearest whole number of shares. If upon any exercise of this Warrant a fraction of a share results, the Company will pay an amount equal to the such fraction multiplied by the Fair Market Value of a share of Warrant Stock. 2.5 [Intentionally omitted.] 2.6 Net Exercise Election. If at any time the Holder elects to exercise this Warrant there is not an effective registration statement which covers all of the Warrant Stock as contemplated by the Registration Rights Agreement, the Holder may elect to convert all or a portion of this Warrant, without the payment by the Holder of any additional consideration, by the surrender of this Warrant or such portion to the Company, with the net exercise election selected in the subscription form attached hereto duly executed by the Holder, into up to the number of shares of Warrant Stock that is obtained under the following formula: X = Y (A-B) A where X = the number of shares of Warrant Stock to be issued to the Holder pursuant to this Section 2.6. Y = the number of shares of Warrant Stock purchasable under this Warrant, or if only a portion of the Warrant is being exercised, the number of shares of Warrant Stock represented by the portion of the Warrant being exercised. A = the Fair Market Value of one share of Warrant Stock as at the time the net exercise election is made pursuant to this Section 2.6. B = the Warrant Price. 3. Issuance of Stock. This Warrant shall be deemed to have been exercised immediately prior to the close of business on the date of its surrender for exercise as provided above, and the person entitled to receive the shares of Warrant Stock issuable upon such exercise shall be treated for all purposes as the holder of record of such shares as of the close of business on such date. As soon as practicable, but in any event no later than three days after such date, the Company shall issue and deliver to the person or persons entitled to receive the same a certificate or certificates for the number of whole shares of Warrant Stock issuable upon such exercise. The Company covenants and agrees that all shares of Warrant Stock that are issued upon the exercise of the rights represented by this Warrant will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable and free from all preemptive rights of any stockholder, free of all taxes, liens and charges with respect to the issue thereof and free and clear of any restrictions on transfer (other than under the Act and state securities laws). 4. Adjustment Provisions. The number and character of shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or other securities or property at the time receivable or issuable upon exercise of this Warrant) and the Warrant Price for the Common Stock are subject to adjustment upon the occurrence of the following events between the date this Warrant is issued and the date it is exercised: 4.1 Adjustment for Stock Splits, Stock Dividends, Recapitalizations, etc. The Warrant Price of this Warrant and the number of shares of Warrant Stock issuable upon exercise of this Warrant (or any shares of stock or other securities at the time issuable upon exercise of this Warrant) shall each be appropriately and proportionally adjusted to reflect any stock dividend, stock split, reverse stock split, combination of shares, reclassification, recapitalization or other similar event affecting the number of outstanding shares of Warrant Stock (or such other stock or securities). 4.2 Adjustment for Other Dividends and Distributions. In case the Company shall make or issue, or shall fix a record date for the determination of eligible holders entitled to receive, a dividend or other distribution payable with respect to the Warrant Stock that is payable in (a) securities of the Company (other than issuances with respect to which adjustment is made under Section 4.1), or (b) assets (other than cash dividends paid or payable solely out of retained earnings), then, and in each such case, the Holder, upon exercise of this Warrant at any time after the consummation, effective date or record date of such event, shall receive, in addition to the shares of Warrant Stock issuable upon such exercise prior to such date, the securities or such other assets of the Company to which the Holder would have been entitled upon such date if the Holder had exercised this Warrant immediately prior thereto (all subject to further adjustment as provided in this Warrant). 4.3 Adjustment for Reorganization, Consolidation, Merger. In case of any reorganization of the Company (or of any other corporation or entity, the stock or other securities of which are at the time receivable on the exercise of this Warrant), after the date of this Warrant, or in case, after such date, the Company (or any such corporation or entity) shall consolidate with or merge into another corporation or entity or convey all or substantially all of its assets to another corporation or entity, then, and in each such case, the Holder, upon the exercise of this Warrant (as provided in Section 2), at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the stock or other securities and property receivable upon the exercise of this Warrant prior to such consummation, the stock or other securities or property to which the Holder would have been entitled upon the consummation of such reorganization, consolidation, merger or conveyance if the Holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in this Warrant, and the successor or purchasing corporation or entity in such reorganization, consolidation, merger or conveyance (if other than the Company) shall duly execute and deliver to the Holder a supplement hereto acknowledging such corporation's or entity's obligations under this Warrant; and in each such case, the terms of this Warrant shall be applicable to the shares of stock or other securities or property receivable upon the exercise of this Warrant after the consummation of such reorganization, consolidation, merger or conveyance. 4.4 Notice of Certain Events and Adjustments. The Company shall give thirty days prior written notice of the record date fixed for any Acquisition, Asset Transfer or event referred to in Section 4.2 or 4.3. The Company shall promptly give written notice of (i) each adjustment or readjustment of the Warrant Price or the number of shares of Warrant Stock or other securities issuable upon exercise of this Warrant and (ii) each adjustment or readjustment of the price per share of Common Stock triggering the call provisions set forth in Section 2.5. The notice shall describe the adjustment or readjustment and show in reasonable detail the facts on which the adjustment or readjustment is based. 4.5 No Change Necessary. The form of this Warrant need not be changed because of any adjustment in the Warrant Price or in the number of shares of Warrant Stock issuable upon its exercise. 5. No Rights or Liabilities as Stockholder. This Warrant does not by itself entitle the Holder to any voting rights or other rights as a stockholder of the Company. In the absence of affirmative action by the Holder to purchase Warrant Stock by exercise of this Warrant, no provisions of this Warrant, and no enumeration herein of the rights or privileges of the Holder, shall cause the Holder to be a stockholder of the Company for any purpose. 6. Attorneys' Fees. In the event any party is required to engage the services of any attorneys for the purpose of enforcing this Warrant, or any provision thereof, the prevailing party shall be entitled to recover its reasonable expenses and costs in enforcing this Warrant, including attorneys' fees. 7. Transfer. This Warrant may be transferred or assigned by the Holder hereof in whole or in part, if, on the Company's reasonable request, the Holder provides an opinion of counsel reasonably satisfactory to the Company that such transfer does not require registration under the Act and the applicable state securities law, except that this Warrant may be transferred by a Holder which is a partnership or limited liability company to a partner, former partner, member, former member or other affiliate of such partnership or limited liability company, as the case may be, if (a) the transferee agrees in writing to be subject to the terms of this Warrant; and (b) the Holder delivers notice of such transfer to the Company. The rights and obligations of the Company and the Holder under this Warrant shall be binding upon and benefit their respective permitted successors, assigns, heirs, administrators and transferees. 8. Loss or Mutilation. Upon receipt by the Company of evidence reasonably satisfactory to it of the ownership and the loss, theft, destruction or mutilation of this Warrant, and of indemnity reasonably satisfactory to it, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver in lieu thereof a new Warrant of like tenor. 9. Reservation of Warrant Stock. If at any time the number of authorized but unissued shares of the Warrant Stock shall not be sufficient to effect the exercise of this Warrant, the Company will take all such corporate action as may be necessary to increase its authorized but unissued shares of Warrant Stock to such number of shares of Warrant Stock as shall be sufficient for such purpose. 10. Governing Law. This Warrant shall be governed by and construed and interpreted in accordance with the laws of the State of Washington, without giving effect to its conflicts of law 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. 11. Headings. The headings and captions used in this Warrant are used for convenience only and are not to be considered in construing or interpreting this Warrant. All references in this Warrant to sections and exhibits shall, unless otherwise provided, refer to sections hereof and exhibits attached hereto, all of which exhibits are incorporated herein by this reference. 12. Notices. Any request, consent, notice or other communication required or permitted under this Warrant shall be in writing and shall be deemed duly given and received when delivered personally or transmitted by facsimile, one business day after being deposited for next-day delivery with a nationally recognized overnight delivery service, or three days after being deposited as first class mail with the United States Postal Service, all charges or postage prepaid, and properly addressed to the party to receive the same at the address indicated for such party on the signature pages of the Subscription Agreement. Any party may, at any time, by providing ten days' advance notice to the other party hereto, designate any other address in substitution of the an address established pursuant to the foregoing. 13. Amendment; Waiver. Any term of this Warrant may be amended, and the observance of any term of this Warrant 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 Holder. 14. Severability. If one or more provisions of this Warrant are held to be unenforceable under applicable law, such provision(s) shall be excluded from this Warrant and the balance of the Warrant shall be interpreted as if such provision(s) were so excluded and shall be enforceable in accordance with its terms. 15. Terms Binding. By acceptance of this Warrant, the Holder accepts and agrees to be bound by all the terms and conditions of this Warrant. 16. Valid Issuance; Taxes. All shares of Warrant Stock issued upon the exercise of this Warrant shall be validly issued, fully paid and non-assessable, and the Company shall pay all taxes and other governmental charges that may be imposed in respect of the issue or delivery thereof. The Company shall not be required to pay any transfer tax or other similar charge imposed in connection with any transfer involved in the issuance of any certificate for shares of Warrant Stock in any name other than that of the Holder of this Warrant. 17. Registration Rights. All shares of Warrant Stock issuable upon exercise of this Warrant shall be deemed to be "Registrable Securities" or such other definition of securities entitled to registration rights pursuant to the Registration Rights Agreement, and are entitled, subject to the terms and conditions of that agreement, to all registration rights granted to holders of Registrable Securities thereunder. 18. No Impairment. The Company will not, by amendment of its Certificate of Incorporation or bylaws, or through reorganization, consolidation, merger, dissolution, issue or sale of securities, sale of assets or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such action as may be necessary or appropriate in order to protect the rights of the Holder of this Warrant against impairment. Without limiting the generality of the foregoing, the Company (a) will not increase the par value of any shares of stock issuable upon the exercise of this Warrant above the amount payable therefor upon such exercise, and (b) will take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and non-assessable shares of Warrant Stock upon exercise of this Warrant. [Signature appears on the following page.] IN WITNESS WHEREOF, the undersigned has executed this Warrant as of the date and year set forth below. Dated: _____________, ______ AURA SYSTEMS, INC. By: Name: ______________________________ Title: _______________________________ [Signature Page to Warrant] Exhibit 1 FORM OF SUBSCRIPTION (To be signed only upon exercise of Warrant) To: Aura Systems, Inc. (1) Check the box that applies and the provide the necessary information: |_| Cash Payment Election. The undersigned Holder hereby elects to purchase shares of Common Stock of Aura Systems, Inc. (the "Warrant Stock"), pursuant to the terms of the attached Warrant, and tenders herewith payment of the purchase price for such shares in full. |_| Net Exercise Election. The undersigned Holder elects to convert the Warrant into shares of Warrant Stock by net exercise election pursuant to Section 2.6 of the Warrant. This conversion is exercised with respect to __________ shares of Common Stock of Aura Systems, Inc. (the "Warrant Stock") covered by the Warrant. (2) In exercising the Warrant, the undersigned Holder hereby makes the representations and warranties set forth on Appendix A hereto as of the date hereof. (3) Please issue a certificate or certificates representing such shares of Warrant Stock in the name or names specified below:
(Name) (Name) (Address) (Address) (City, State, Zip Code) (City, State, Zip Code) (Federal Tax Identification Number) (Federal Tax Identification Number) (Date) (Signature of Holder)
Appendix A INVESTMENT REPRESENTATION The undersigned, _____________________ (the "Holder"), intends to acquire shares of Common Stock (the "Common Stock") of Aura Systems, Inc. (the "Company") from the Company pursuant to the exercise or conversion of a Warrant to purchase Common Stock held by the Holder. The Common Stock will be issued to the Holder in a transaction not involving a public offering and pursuant to an exemption from registration under the Securities Act of 1933, as amended (the "Securities Act"), and applicable state securities laws. In connection with such purchase and in order to comply with the exemptions from registration relied upon by the Company, the Holder represents, warrants and agrees as follows: (a) The Holder is acquiring the Common Stock for its own account, to hold for investment, and the Holder shall not make any sale, transfer or other disposition of the Common Stock in violation of the Securities Act or the General Rules and Regulations promulgated thereunder by the Securities and Exchange Commission or in violation of any applicable state securities law. The Holder is an "accredited investor" as such term is defined in Rule 501 of Regulation D promulgated under the Securities Act. (b) The Holder has been advised that the Common Stock has not been registered under the Securities Act or state securities laws on the ground that this transaction is exempt from registration, and that reliance by the Company on such exemptions is predicated in part on the Holder's representations set forth herein. (c) The Holder has been informed that under the Securities Act, the Common Stock must be held indefinitely unless it is subsequently registered under the Securities Act or unless an exemption from such registration (such as Rule 144) is available with respect to any proposed transfer or disposition by the Holder of the Common Stock. The Holder further agrees that the Company may refuse to permit the Holder to sell, transfer or dispose of the Common Stock (except as permitted under Rule 144) unless there is in effect a registration statement under the Securities Act and any applicable state securities laws covering such transfer, or unless the Holder furnishes an opinion of counsel reasonably satisfactory to counsel for the Company to the effect that such registration-is not required. The Holder also understands and agrees that there will be placed on the certificate(s) for the Common Stock or any substitutions therefor, a legend stating in substance: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Securities Act"), or any state securities laws. These shares have been acquired for investment purposes and may not be sold or otherwise transferred in the absence of an effective registration statement for these shares under the Securities Act and applicable state securities laws or an opinion of counsel satisfactory to the Company that registration is not required and that an applicable exemption is available." EX-99 7 singer_consent.txt EXHIBIT 23.1 INDEPENDENT AUDITOR'S CONSENT We consent to the incorporation by reference in previously filed Registration Statements of Aura Systems, Inc. on Form S-3 (File Nos. 333-1315, 33-75160, 333-41509, 333-46773 and 333-57824) and Form S-8 (File No. 33-66982) of our report dated April 12, 2001, which contains an emphasis paragraph relating to an uncertainty as to the Company's ability to continue as a going concern, appearing in this Annual Report on Form 10-K/A of Aura Systems, Inc. for the year ended February 28, 2001. SINGER LEWAK GREENBAUM & GOLDSTEIN LLP Los Angeles, California August 3, 2001 EX-99 8 pkf_consent.txt EXHIBIT 23.2 CONSENT OF PANNELL KERR FORSTER, CERTIFIED PUBLIC ACCOUNTANTS A PROFESSIONAL CORPORATION We hereby consent to the incorporation by reference in the Registration Statement of Form S-3 of our report dated June 12, 2000, on our audits of the consolidated financial statements of Aura Systems, Inc. as of February 29, 2000, and for each of the two years then ended. We also hereby consent to the reference to our firm under the caption "Experts" in the Registration Statement and Prospectus. Pannell Kerr Forster Certified Public Accountants A Professional Corporation Los Angeles, California August 3, 2001 -----END PRIVACY-ENHANCED MESSAGE-----