AUSI Aura Systems Inc (PK)

Item 1.01 Entry into a Material Definitive Agreement

On March 14, 2022, Aura Systems, Inc. (the “Company”) reached an agreement with former director Robert Kopple and his related entities (collectively the “Kopple Parties”) to resolve all remaining litigation between them stemming from the previously disclosed litigation originally brought by the Kopple Parties against the Company and various other defendants in 2017.

In connection with this litigation the Kopple Parties claimed to be owed in excess of $13 million as a result of various loans made by the Kopple Parties between 2013 and 2016. Additionally, the Kopple Parties were seeking the current equivalent of the approximately 23 million warrants, exercisable for seven years at a price of $0.10 per share, which they claimed should have been originally issued to them pursuant to a 2014 agreement with the Company.

Under the terms of the settlement, the Company has agreed to pay the Kopple Parties an aggregate amount of $10 million over a period of seven years; $3 million of which is to be paid within approximately three months, after which, interest will accrue on the unpaid balance at a rate of 6%, compounded annually. All amounts, including all accrued interest, are to be paid no later than eight years from the date of the initial payment. The Company may prepay any amount at any time without penalty. Plaintiffs will additionally receive seven-year warrants to purchase up to an aggregate of approximately 3.3 million shares of the Company’s common stock at a price of $0.85 per share. The settlement also provides for standard mutual general release provisions and includes customary representations, warranties, and covenants, including certain increases in the amount payable to the Kopple Parties and the right of such parties to enter judgment against the Company if the Company remains in uncured default in its payment obligations under the settlement.

The settlement resolves all claims asserted against the Company by the Kopple Parties without any admission, concession or finding of any fault, liability or wrongdoing by the Company.