Fill and Sign the What is an Employee Stock Ownership Plan with Pictures Form

Employees Stock Ownership PlanThe Company sponsors an Employees Stock Ownership Plan (the "Plan") which constitutes an individual account plan as defined in Section 3(34) of the Employee Retirement Income Security Act of 1974, as amended, and is intended to qualify as a stock bonus plan under Section 401(a) of the Internal Revenue Code (the "Code"). Part of the Plan also constitutes an employee stock ownership plan under Section 4975(e)7 of the Code, and the other part of the plan constitutes a cash or deferred arrangement under Section 401(k) of the Code. Each participant in the Plan may elect to defer a percentage of his compensation and have the Company contribute it to the Plan for his benefit. If a participant chooses to have the Company make such "Deferral Contributions" for his benefit, the Company will also make "Matching Contributions" as described below. The Company may also make "Vested Discretionary Contributions" and "Employees Stock Ownership Contributions" for the benefit of participants as described below. An individual account will be maintained in the Plan for each participant to reflect his interest in the Plan. E ach participant's benefit under the Plan, subject to the vesting rules described below, is equal to the contributions allocated to the participant's account, plus earning and forfeitures by other participants; and minus losses of the Plan which are allocated to the participant's account. Benefits from the Plan are generally distributable to a participant upon his retirement, total disability, death or termination of employment with the Company. Any subsidiary of the Company may adopt the Plan with the consent of the Company. Employees of the Company who were employed on March 1, 1989 are eligible to participate in the Plan. New entrants to the Plan are eligible to participate on semi-annual entry dates of March 1 and September I after 90 days of continuous service. Each eligible participant may elect to make Deferral Contributions in an amount of at least 4% but not more than 12% of his compensation (or, in the discretion of the Plan's administration committee, 1%, 2% or 3% of his compensation). Such Deferral Contributions are deducted from the participant's compensation. A participant's Deferral Contributions for any calendar year, however, cannot currently exceed $9,240 (adjusted annually for cost of living increases). Under the Plan, not more than $150,000 of compensation (adjusted annually for increases in the cost of living) is taken into account for any participant for any fiscal year. The Company will make a Matching Contribution of $.20 for each $1.00 of Deferral Contributions made by a participant which do not exceed 7% of his compensation. Matching Contributions and earnings thereon are fully vested and nonforfeitable at all times. For the fiscal year ended February 28, 1994, the Company made Matching Contributions to the accounts of all participants in the amount of $35,338. The Company may make Employees Stock Ownership Contributions to the Plan in an amount determined in the Company's discretion, which will be allocated to participants who are employed by the Company on the last day of the fiscal year. For the fiscal year ended February 28, 1994, the Company made Employees Stock Ownership Contributions to the Plan equal to 4% of each such participant's compensation from March 1, 1993 through October 22, 1993. The total amount of such Employees Stock Ownership Contributions for such fiscal year was $146,752. A majority of such amounts were fully vested on February 28, 1994. The Plan provides for vesting at the rate of 20% for each fiscal year of service completed by participants. The Company has not yet made any Vested Discretionary Contributions for the fiscal year ended February 28, 1994. The Company intends to make such Vested Discretionary Contributions only if necessary to satisfy certain requirements of the Code. If the Company makes such Vested Discretionary Contributions, such contributions will be allocated to participants who complete 1,000 hours of service with the Company during the fiscal year and who were employed by the Company on the last day of the fiscal year. Such Vested Discretionary Contributions are fully vested and nonforfeitable at all times. Aura Systems, Inc. 7/12194 EMPLOYEE STOCK OWNERSHIP PLAN In November 1988, the Company's Board of Directors approved the Chock Full O'Nuts Corporation Employee Stock Ownership Plan ("ESOP") which is a noncontributory plan established to acquire shares of the Company's common stock for the benefit of all eligible employees. In December 1988, March 1989, February 1990, January 1991 and April 1991, the Company loaned the ESOP $1,000,000, $750,000, $1,140,000, $325,000 and $675,000, respectively, to be repaid in equal annual installments over eight years from the date of the loan with interest at 9% and 10%. With the proceeds of the December 1988 and March 1989 loans, the ESOP purchased approximately 110,000 and 85,000 shares of the Company's common stock from certain directors and officers at a price of $8.125 and $8 per share. With the proceeds of the January 1991 and April 1991 loans, the ESOP purchased approximately 134,000 shares of the Company's common stock from certain directors, officers and employees at prices of $5.625 and $7.75 per share. George Rudy, Howard Leitner and Joseph Breslin sold approximately 67,500, 57,100 and 10,400, respectively, of such shares, to the ESOP for which they received approximately $510,000, $429,400 and $83,600. With the proceeds of the February 1990 loan, the ESOP purchased approximately 212,000 shares of the Company's common stock in the open market at prices between $5.50 and $6.50 per share. Each full-time employee of the Company who is not represented by a labor union is eligible to participate in the ESOP on the date which is one year after the date of his employment by the Company. All such participating employees are vested in those shares allocated to their specific accounts after a period of five years. Shares are allocated to participant's accounts annually based upon the annual compensation (up to $200,000) earned by each participant. As the Company makes annual contributions to the ESOP, these contributions are used to repay the loans to the Company, together with accrued interest. Deferred compensation equal to the loans has been recorded as a reduction of stockholders' equity representing the Company's -prepayment of future compensation expense. As the loans are repaid, common stock is allocated to ESOP participants and deferred compensation is reduced by the amount of the principal payment on the loans. Marvin 1. Haas and Howard Leitner are the administrators of the ESOP. As of the date of this proxy statement a total of 3,116 shares of common stock were allocated to each of the accounts of Messrs. Rudy, Leitner and Breslin and 1,724 and 787 shares were allocated to the accounts of Mr. Haas and Mr. Sahulman. Shares allocated to the account of Mr. Rudy have been distributed to him.