-----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, Hre+kRruZchxCwZJOw/Z17dancczna2TbYqnsiZB+E80xTeJTyHSZeMpQ+a8oVnb 9wdzip10kxjY5cVcavuJug== 0001144204-05-010715.txt : 20050406 0001144204-05-010715.hdr.sgml : 20050406 20050406172247 ACCESSION NUMBER: 0001144204-05-010715 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20050330 ITEM INFORMATION: Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20050406 DATE AS OF CHANGE: 20050406 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: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-17249 FILM NUMBER: 05737687 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 8-K 1 v015937_8k.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549 
 
______________________
 
FORM 8-K 
______________________
 
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): March 30, 2005
 
AURA SYSTEMS, INC. 
(Exact name of registrant as specified in charter)
 
 
 
 
 
 
Delaware
 
0-17249
 
95-4106894
(State or other
jurisdiction of
incorporation) 
 
(Commission File
Number) 
 
(IRS Employer
Identification No.)

2335 Alaska Avenue, El Segundo California 90245
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (310) 643-5300

Not Applicable
(Former name or former address, if changed since last report)

______________________
 
Check the appropriate box below if the Form 8-K/A filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Item 5.02. Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

 
(a)
Salvador Díaz-Verson resigned from the Board of Directors of Aura Systems, Inc. (the “Company”) on March 30, 2005. Although dated March 30, 2005, the letter of resignation was received by the Company on April 5, 2005. Mr. Díaz-Verson also served as the Chairman of the Compensation Committee of the Board of Directors at the time of his resignation.

In his letter of resignation, Mr. Díaz-Verson cited several disagreements with certain members of the Board of Directors. These disagreements include whether the extension of time to consummate the transactions contemplated by an agreement for the sale of the Company’s real property (the “Real Estate Purchase Agreement”) was properly granted by the Board of Directors or was granted by the Chairman of the Board without authority. Mr. Díaz-Verson also cited the possibility of self-dealing by some directors and shareholders in connection with the Real Estate Purchase Agreement and other transactions, and questioned whether the terms of the Real Estate Purchase Agreement are still in the Company’s best interest.

In his letter of resignation, Mr. Díaz-Verson also cited the controversy over the previously reported resignation and/or removal of Mr. Izhar Fernbach from the Board of Directors. As described in the Company’s Current Report on Form 8-K dated March 25, 2005, Mr. Fernbach had been elected to the Board of Directors under the terms of a Shareholder Agreement dated as of August 19, 2004 (the “Shareholder Agreement”) between the Company and a number of its shareholders (the “Series B Shareholders”) in connection with the issuance of Series B Convertible Preferred Stock, par value $.005, and the issuance of promissory notes by some of the Series B Shareholders to the Company in connection with the payment for such stock (each, a “Purchase Money Note”). The Shareholder Agreement grants to each of four Series B Shareholders who are parties thereto the right to designate a member of the Company’s Board of Directors, for a total of four directors. Mr. Fernbach was the designee of one such Series B Shareholder, who subsequently defaulted on his obligations to the Company under his Purchase Money Note; therefore, that shareholder’s rights to designate a member of the Company’s Board of Directors terminated and Mr. Fernbach resigned. The default by such Series B Shareholder under his Purchase Money Note, and the related resignation of Mr. Fernbach, is disputed by certain directors of the Company. The Series B Shareholder who designated Mr. Fernbach is also a party to the Real Estate Purchase Agreement.

Additionally, in his letter of resignation, Mr. Díaz-Verson questioned the continued presence on the Board of Directors of Mr. Adi Harari, the designee of another Series B Shareholder who is a party to both the Shareholder Agreement and the Real Estate Purchase Agreement and who is also in default under his Purchase Money Note. The default by such Series B Shareholder under his Purchase Money Note is disputed by certain directors of the Company.

As required by the rules and regulations of the Securities and Exchange Commission (the “SEC”), the Company has provided Mr. Díaz-Verson a copy of the disclosures it is making in response to this Item 5.02 of this report on Form 8-K. In addition, the Company will (i) provide Mr. Díaz-Verson the opportunity to furnish to the Company as promptly as possible a letter addressed to the Company stating whether he agrees with the statements made in response to this Item 5.02 of this report on Form 8-K and, if not, stating the respects in which he does not agree; and (ii) file any letter received by the Company from Mr. Díaz-Verson with the SEC as an exhibit by an amendment to this report on Form 8-K within two business days after receipt by the Company.



Item 9.01. Financial Statements and Exhibits.

(a)  
Financial Statements of Business Acquired

None

(b)  
Pro Forma Financial Information.

None
  
 (c)    Exhibits

5.1     Letter of Resignation of Salvador Díaz-Verson dated March 30, 2005.


SIGNATURES
 
      Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
Date: April 6, 2005 
AURA SYSTEMS, INC.
 
 
 
By:  
/s/ Raymond Yu
 
 
 
Raymond Yu
 
 
 
President and Chief Executive Officer
 



EXHIBIT INDEX


No.    Document

5.1     Letter of Resignation of Salvador Díaz-Verson dated March 30, 2005

 

 EX-5.1 2 v015937_ex5-1.htm Unassociated Document
Exhibit 5.1
 

 
[LETTERHEAD OF DIAZ-VERSON CAPITAL INVESTMENTS, L.L.C.]
 

VIA FACSIMILE AND U.S. CERTIFIED MAIL

March 30, 2005

Raymond Yu, President
Aura Systems, Inc.
2335 Alaska Ave.
El Segundo, CA 90245

To the Board of Directors of Aura Systems, Inc. (“Aura”):

With the writing of this letter I resign effective immediately from the Board of Directors of Aura (the “Board”) and voice my disapproval of recent actions taken by some of this Board’s members.

On May 28, 2004, this Board approved and ratified an agreement for the purchase and sale of Aura’s properties located at 2335 Alaska Avenue and 2330 Utah Avenue in El Segundo, CA 90245, to David Maimon and Yair Ben-Moshe (“Agreement”). Based on the then-available information, I was among the Directors who voted in May 2004 to make Aura a party to this Agreement. The Agreement was fair and attractive and perhaps even a necessary measure. The Board at that time believed in its collective judgment that the Agreement would maximize Aura’s value. However, recent circumstances and actions by some of this Board’s members and investors call into question the appropriateness of currently reviving and moving forward with the Agreement, which expired on February 28, 2005.

On and around September 15, 2004, in a series of transactions separate and apart from the execution of the Agreement, Messrs. Maimon and Ben-Moshe, and other investors, acquired shares from Aura, along with the rights to designate Directors on this Board, subject to the terms of twelve (12) enforceable promissory Notes (“Notes”), under which Messrs. Maimon and Ben-Moshe are currently in default. Messrs. Maimon and Ben-Moshe are delinquent under their Notes in the amount of $1.2 million, and will owe a total of $1.9 million if the aforementioned amount is not paid by April 12, 2005. Despite this ongoing breach, which under the terms of the Notes triggers—to be effective immediately and without notice—the resignation and removal from the Board of the defaulting party’s designees, David Maimon’s Director-designee, Adi Harari, remains on this Board, and controversy persists over whether Ben-Moshe’s Director-designee, Izhar Fernbach, was appropriately removed from this Board at a Special Meeting held on March 18, 2005. In light of the amounts currently owed Aura by Messrs. Maimon and Ben-Moshe, and the persistent presence of Messrs. Maimon and Ben-Moshe’s Director-designee’s on this Board—despite what I interpret to be a clear default of the Notes—the Agreement now smacks of self-dealing and is no longer in Aura’s best interest. It is my belief that Aura would be best served if this Board, as an alternative to selling Aura’s properties to Messrs. Maimon and Ben-Moshe at what I have been advised by President Raymond Yu is a below-market price, took action to collect both the outstanding principal and interest on these Notes to create capital for Aura in an effort to pay its creditors and employees.
 
 

 
On March 11, 2005, ignoring this apparent conflict of interests and state of affairs, the Chairman of this Board, Dr. Alfred Balister, unilaterally committed Aura to an extension of the Agreement (which had expired as of February 28, 2005) to March 31, 2005. Unlike the two prior extensions to the Agreement in November 2004 and in January 2005, both of which were approved by this Board pursuant to a formal meeting and vote on the issue, Chairman Balister’s unilateral extension lacked the appropriate stamp of approval from this Board that is required under Aura’s Bylaws. Although I was informally questioned by Chairman Balister on the issue, if given the chance in an appropriate forum, I would have voted against reviving and extending the Agreement. I had hoped to voice my opinion and vote on this important matter at an emergency Special Meeting called by President Raymond Yu to be held by telephone conference on March 28, 2005 at 4:30 p.m. PST. This meeting, however, failed to meet a quorum when two (3) members of the Board, Adi Harari, Alfred Balister, and Izhar Fernbach (who may or may not at this time actually be a Director), cited scheduling conflicts and deficient notice, even though they had previously agreed to confer at the stated time. Though the meeting has been postponed until April 5, after the supposed extended expiration date for the Agreement, I believe that Aura is not, and cannot, be bound by the terms of Chairman Balister’s extension, for which there was no authority. Nonetheless, this Board has done nothing to remedy or rectify this situation. And because I believe that this Board will not act within the current window of opportunity for rectifying the situation, I declare here in this resignation that, if I had been presented with the opportunity to vote on the issues currently dividing this Board, I would have voted against reviving and extending the Agreement (defunct as of February 28, 2005) and in favor of both the immediate resignation of Directors Izhar Fernbach and Adi Harari in accordance with the terms of the Notes and the enforcement of Messrs. Maimon and Ben-Moshe’s obligations under the Notes.

It is for the foregoing reasons—because I fear that the Chairman lacked authority to bind Aura to an extension to the Agreement, because I believe this Board will not rectify this problem in a timely fashion, because I feel that certain Directors and investors in Aura are engaging in self-dealing in violation of both their contractual duties and fiduciary obligations to this company, and because I believe the dynamic and proper functioning of the Board as a governing body to be in an irreparable state of disarray and disrepair—that I resign effective immediately from the Board of Directors of Aura.


Very truly yours,
 
/s/ Sal Díaz-Verson

Sal Díaz-Verson



cc:   Dr. Alfred Balister
    Neal Meehan
    John Pincavage
    Ed Soyster
    Izhar Fernbach
    Adi Harari
    Billy Anders

 
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