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DEBT REFINANCING AGREEMENT

This Debt Refinancing Agreement (this “ Agreement ”) is made and entered into this 24th day of January, 2017 (the “ Effective Date ”) by and between Aura Systems, Inc., a Delaware corporation (the “ Company ”) on the one hand, and Warren Breslow, an individual (“ Breslow ”), and the Survivor’s Trust Under the Warren L. Breslow Trust (the “ Breslow Trust ”) on the other hand.

WHEREAS, Warren Breslow, is presently a director and chairman of the board of the Company (Breslow together with the Breslow Trust being collectively the “ Breslow Parties ”); and

WHEREAS, the Breslow Parties have previously advanced funds to the Company, the aggregate unpaid principal amount of which are hereinafter referred to as the “ Breslow Notes ;” and

WHEREAS, Active Mortgage Corp., a California Corporation (“ Active Mortgage ”) has previously advanced funds to the Company, the aggregate unpaid principal amount of which are hereinafter referred to as the “ AM Notes ;” and

WHEREAS, Overland Financial Co., LLC, a California Limited Liability Company (“ Overland ” ) have previously advanced funds to the Company, the aggregate unpaid principal amount of which are hereinafter referred to as the “ Overland Notes ;” and

WHEREAS, as of the Effective Date, the total aggregate amount owed by the Company pursuant to the Breslow Notes, the AM Notes and the Overland Notes is $23,872,614.47 (the “ Aggregate Debt ”), of which $8,890,573.95 represents interest accrued (the “ Accrued Interest ” ); and

WHEREAS, as of the Effective Date, the only amounts owed by the Company to the Breslow Parties, Active Mortgage or Overland are the Aggregate Debt; and

WHEREAS, Breslow, Active Mortgage and Overland (collectively the “ Transferring Creditors ”) each have transferred, conveyed, and assigned over to the Breslow Trust, and the Breslow Trust has acquired from the Transferring Creditors, all of such Transferring Creditors’ right, title and interest in and to the Aggregate Debt (each a “ Note Conveyance ”); and

WHEREAS, the Company and the Breslow Trust now desire to restructure the indebtedness represented by the Aggregate Debt as set forth herein.

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NOW, THEREFORE, in consideration of the premises and the mutual covenants and agreements hereinafter contained, the parties hereby agree as follows:

1. Waiver of Interest and Penalties . The Breslow Parties, and each of them, hereby waives, cancels, and forgives any and all Accrued Interest through the Effective Date hereof (collectively the “ Waived Interest ”). Upon execution and delivery of this Agreement, but subject to Section 3B hereof, all Accrued Interest shall be, and hereby is, automatically deemed cancelled and forgiven and no longer outstanding, and all rights of the Breslow Parties, or any of them, with respect thereto shall forthwith cease and terminate except as expressly set forth in this Agreement or the New Promissory Note. The Breslow Parties, and each of them, represent and warrant that to the knowledge of the Breslow Parties other than the Aggregate Debt, no other debts, liabilities or obligations of any nature exist as of the date hereof with respect to the payment of any amount owed (or alleged to be owed) to him/it by the Company pursuant to any document or instrument evidencing, securing or otherwise pertaining to any indebtedness to any of the Breslow Parties.

2. The Loans . Concurrently upon execution of this Agreement, the Company shall execute and deliver to the Breslow Trust an unsecured, convertible promissory note of the Company payable to the order of the Breslow Trust in the amount equal to the difference of the Aggregate Debt less the Waived Interest (the “ Restructured Principal ”), substantially in the form of Exhibit “B” attached hereto and made a part hereof (the “ New Promissory Note ”).

3. Cancellation of Original Obligations .

A. Upon execution and delivery of this Agreement, but subject to Section 3B hereof, (i) all Accrued Interest shall automatically be deemed cancelled and forgiven and no longer outstanding, and all rights of the Breslow Parties, or any of them, with respect thereto will forthwith cease and terminate, (ii) the Breslow Parties, and each of them, waive any and all existing Events of Default under the Promissory Notes and any and all other agreements evidencing, securing or otherwise pertaining to the Aggregate Debt to which the Company is a party, and (iii) all instruments or other agreements evidencing, securing or otherwise pertaining to the Aggregate Debt (including without limitation the Promissory Notes) shall be deemed cancelled and shall be superseded and replaced in their entirety by this Agreement and the New Promissory Note.

B. Notwithstanding anything to the contrary in this Agreement, including without limitation Section 3A above, if Stockholder Approval is not obtained within twelve (12) months of the Effective Date hereof, this Agreement and the New Promissory Note shall be deemed to be rescinded by the parties hereto, and without further action by any party, shall be of no further force or effect and null and void ab initio; provided however , that in the event that each Breslow Party does not vote all of the voting securities of the Company beneficially owned by him/it, respectively, in favor of the Resolutions at each Shareholder Meeting, then in such event this Section 3B shall be void and of no effect. To the extent this Agreement and the New Promissory Notes are rescinded in accordance with this Section 3B, the Company shall promptly deliver to the Breslow Trust replacement promissory notes in form and substance equivalent to the Promissory Notes, representing the right to be paid aggregate principal and interest equal to the Aggregate Debt plus the amount of additional interest that would have accrued under the Promissory Notes had they remained outstanding between the date hereof and the date of delivery of such replacement promissory notes.

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4. Breslow Parties’ Representations and Warranties . The Breslow Parties, and each of them, represent and warrant to the Company that:

A. Authorization and Power . It/he has the requisite power and authority to enter into and perform its obligations under this Agreement and each other agreement contemplated by this Agreement to which it/he is a party or to be executed by it/him in connection with the transactions contemplated by this Agreement and the New Promissory Note. Without limiting the foregoing, the Breslow Trust is the current beneficial owner of the Aggregate Debt, entitled to be paid the principal amount and any accrued and unpaid interest amounts outstanding thereunder. The execution, delivery and performance of this Agreement by it/him and the consummation by it/him of the transactions contemplated hereby has been duly authorized and approved by all necessary corporate or partnership action, and no further consent or authorization of such party, as the case may be, is required. This Agreement has been duly executed and delivered by such party and constitutes, or shall constitute when executed and delivered, valid and binding obligations of such party enforceable against that party in accordance with its terms except as such enforceability may be limited by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally, the enforcement of applicable creditors’ rights and remedies and except as rights to indemnification and contribution may be limited by applicable law.

B. No Public Sale or Distribution . Such party is acquiring the New Promissory Note for its/his own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof. Such party is acquiring the New Promissory Note in the ordinary course of its business and such party does not presently have any agreement or understanding, directly or indirectly, with any Person to distribute any such securities.

C. Accredited Investor Status . Such party is, pursuant to the Securities Act, an “accredited investor” within the meaning of Rule 501(a) of Regulation D and is not an entity formed for the sole purpose of acquiring the New Promissory Note.

D. Reliance on Exemptions . Such party understands that the New Promissory Note is being offered and sold to it/him in reliance on exemptions from the registration requirements of federal and state securities laws and that the Company is relying in part upon the truth and accuracy of such party’s representations and warranties and the compliance by that party of its agreements set forth herein in order to determine the availability of such exemptions and the eligibility of such party to acquire such securities from the Company. All information which has been furnished to the Company with respect to that party’s financial position and business experience is correct and complete as of the date hereof.

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E. Information and Exculpation . Such party has sufficient knowledge and experience in investing in the securities of companies similar to the Company so as to be able to evaluate the risks and merits of its investment in the Company. Such party and its advisors, if any, have been afforded the opportunity to ask questions of the Company. Such party understands and acknowledges that (i) its investment in the New Promissory Note involves a high degree of risk, (ii) it may be required to bear the financial risks of an investment in such securities for an indefinite period of time and (iii) prior to making an investment in these securities, such party has concluded that it is able to bear those risks for an indefinite period and is able to withstand a total loss of its investment. Such party has sought such accounting, legal, and tax advice as it has considered necessary to make an informed investment decision with respect to its acquisition of the New Promissory Note and such party acknowledges that it is purchasing such securities based on the results of its own due diligence investigation of the Company.

F. No Governmental Review . Such party understands that no U.S. federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the New Promissory Note or the fairness or suitability of an investment in such securities.

G. Transfer or Resale . Such party understands that the securities being acquired hereunder are characterized as “restricted securities” under federal and state securities laws. Such party is familiar with the resale limitations imposed by the Securities Act and applicable state securities laws, including without limitation, the requirement that restricted securities be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt from such registration. Such party further understands that the securities being acquired hereunder have not been registered under the Securities Act or any state securities laws and that neither the Company nor any other Person is under any obligation to register such securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

H. Legends . Such party understands that to the extent required by the Securities Act and applicable state securities laws, and until such time as no longer required under any applicable law or regulation, all certificates or other instruments issued in exchange therefor or in substitution thereof, or if held in book-entry form through a direct registration system as the case may be, shall bear a legend on the face thereof referencing the restrictions on the transferability of the securities being acquired hereunder in substantially the following form (and a stop-transfer order may be placed against transfer of such stock certificates):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE BUYER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

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I. No Conflicts . The execution, delivery and performance by such party of this Agreement and the consummation by such party of the transactions contemplated hereby will not (i) result in a violation of the organizational documents of such party or (ii) conflict with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such party is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities laws) applicable to such party.

J. Consents . Such party is not required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its obligations under or contemplated by this Agreement (other than (i) any consent, authorization or order that has been duly obtained as of the date hereof and (ii) any filing or registration that has been made as of the date hereof).

K. Residency . Such party is a resident of California.

L. No General Solicitation or Advertising . Such party acknowledges that the securities being acquired hereunder were not offered to such party by means of any form of general or public solicitation or general advertising, or publicly disseminated advertisements or sales literature, including (i) any advertisement, article, notice or other communication published in any newspaper, magazine, website, or similar media, or broadcast over television or radio, or (ii) any seminar or meeting to which the party was invited by any of the foregoing means of communications.

M. Brokers . No Person will have, as a result of the transactions contemplated by this Agreement, any valid right, interest or claim against or upon the Company for any commission, fee or other compensation pursuant to any agreement, arrangement or understanding entered into by or on behalf of such party.

5. Covenants .

A. Stockholder Meeting . The Company shall provide each stockholder entitled to vote at a special or annual meeting of stockholders of the Company (the “ Shareholder Meeting ”), a proxy statement, soliciting each such stockholder’s affirmative vote at the Shareholder Meeting for approval of resolutions (the “ Resolutions ”) (i) to approve an amendment to the Certificate of Incorporation to effect up to a 1-for-7 reverse stock split of the Common Stock (such reverse stock split is referred to herein as the “ Authorized Reverse Split ”); and (ii) if, and to the extent required under Applicable Law, to approve the issuances granted to the Breslow Trust hereunder, including the issuance of any common stock or other securities issued or issuable upon the conversion or exchange of the New Promissory Notes (such affirmative approval being referred to herein as the “ Stockholder Approval ”), and the Company shall use its best efforts to solicit its stockholders’ approval of the Resolutions and to cause the board of directors of the Company to recommend to the stockholders that they approve the Resolutions. In connection therewith, the Company shall be obligated to (i) cause a preliminary proxy statement relating to the Resolutions and the Shareholder Meeting to be filed with the SEC by no later than March 1, 2017, and (ii) hold the Shareholder Meeting promptly following the mailing of the definitive proxy statement. If, despite the Company’s best efforts, Stockholder Approval is not obtained at the first Shareholder Meeting, the Company shall cause an additional Shareholder Meeting to be held every four (4) months thereafter until the earlier of (x) the date such Stockholder Approval is obtained or (y) the date this Agreement and the New Promissory Notes are deemed rescinded pursuant to Section 3A hereof due to the failure to timely obtain the Stockholder Approval.

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B. Voting in Favor of Resolutions . Each of the Breslow Parties hereby irrevocably and unconditionally agrees that at any meeting of the stockholders of the Company, however called, including any adjournment or postponement thereof, he/it shall, in each case to the fullest extent that any of the Covered Common Stock is entitled to vote thereon: (i) appear at each such meeting or otherwise cause the Covered Common Stock to be counted as present thereat for purposes of calculating a quorum; and (ii) vote (or cause to be voted), in person or by proxy, all of the Covered Common Stock (1) in favor of the adoption of the Resolutions, and any transactions contemplated by the Resolutions; and (ii) against any action, proposal, agreement or transaction that would impede, interfere with, delay, postpone, discourage, frustrate the purposes of or adversely affect the Resolutions or the other transactions contemplated by the Resolutions.

C. Indemnification . The Breslow Parties, jointly and severally, shall defend, protect, indemnify and hold harmless the Company and all of the Company’s past and present stockholders, officers, directors, employees, attorneys, agents, successors, and other representatives (collectively, the “ Indemnitees ”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties, fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the “ Indemnified Liabilities ”), incurred by any Indemnitee as a result of, or arising out of, any breach of any representation, warranty or covenant of the Breslow Parties set forth in this Agreement. Any indemnification payment by the Breslow Parties may be in the form of a cash payment by the Breslow Parties or, provided that the ownership by the Breslow Trust of the Aggregate Debt or the New Promissory Note has not been invalidated or is then in dispute and the right and power of the Breslow Trust to enter into this Agreement has not been invalidated or is then in dispute, an assignment of or the surrender and cancellation of the New Promissory Note and any shares of Company Common Stock issued upon conversion thereof and then held by the Breslow Parties, or any combination of the foregoing, as determined in the Breslow Parties’ discretion. To request indemnification pursuant to this Section 5(C), the applicable Indemnitees shall deliver to the Breslow Parties prompt written notice of any demand, claim or circumstances which purportedly give rise to a claim or the commencement of any action, proceeding or investigation in respect of which such Indemnitees are entitled to be indemnified for Indemnifiable Losses pursuant to this Section 5C, and the Breslow Parties shall be entitled assume the defense thereof, including the employment of counsel reasonably satisfactory to such Indemnitee, and the Breslow Parties shall pay all fees and expenses incurred by them in connection with such defense; provided, however , that the failure of any Indemnitee so to notify the Breslow Parties shall not relieve the Breslow Parties of its obligations hereunder except to the extent that the Breslow Parties are actually and materially prejudiced by such failure to notify. Any Indemnitee shall have the right to participate in (but not control) the defense of such a claim using its own counsel, but the fees and expenses of such Indemnitee counsel shall be at the sole expense of such Indemnitee unless: (i) the Breslow Parties agree to pay such fees and expenses in their sole discretion or; (ii) the Breslow Parties shall have failed after timely delivery of written notice from the applicable Indemnitee(s) to assume the defense of such proceeding and to employ counsel reasonably satisfactory to such Indemnitee in such proceeding; or (iii) in the reasonable judgment of counsel to the Breslow Parties and such Indemnitee, representation of both parties by the same counsel would be inappropriate due to actual or potential legal or ethical conflicts of interests. Notwithstanding the foregoing or anything to the contrary herein, in no event shall the execution and delivery of this Agreement or the New Promissory Note nor the consummation of the transactions contemplated hereby or thereby, nor any rescission pursuant to Section 3(B) hereof, amend or impair any indemnification, contribution or exculpation rights for the benefit of Warren L. Breslow or any affiliate thereof as from time to time are available under applicable law, in equity, or pursuant to the organizational or governing documents of the Company or any applicable contract.

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6. Parties to Bear Own Costs . The Company and the Breslow Parties shall each be responsible for all costs and expenses, including, without limitation, attorneys’ fees and costs, incurred by such party in connection with (i) the negotiation, preparation and consummation of the transactions contemplated by this Agreement and the New Promissory Note, and (ii) any and all filings made by any such party with the Securities and Exchange Commission in connection with such matters.

7. Governing Law . THIS AGREEMENT AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED THERETO, THE RELATIONSHIP OF THE PARTIES, AND/OR THE INTERPRETATION AND ENFORCEMENT OF THE RIGHTS AND DUTIES OF THE PARTIES, WHETHER ARISING IN LAW OR IN EQUITY, IN CONTRACT, TORT OR OTHERWISE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE EXCLUSIVELY WITH THE LAWS OF THE STATE OF CALIFORNIA (WITHOUT REGARD TO ITS RULES REGARDING CHOICE OF LAW OR CONFLICTS OF LAW) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

8. Jurisdiction and Venue . ANY SUIT, LEGAL ACTION OR SIMILAR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR AGGREGATE DEBT SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN THE COUNTY OF LOS ANGELES OR, IF SUCH COURTS DO NOT HAVE JURISDICTION, THEN IN THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA SITTING IN THE COUNTY OF LOS ANGELES. EACH PARTY TO THIS AGREEMENT (I) IRREVOCABLY AND UNCONDITIONALLY SUBMITS TO THE PERSONAL JURISDICTION OF SUCH COURTS, (II) AGREES THAT IT WILL NOT ATTEMPT TO DENY OR DEFEAT SUCH PERSONAL JURISDICTION BY MOTION OR OTHER REQUEST FOR LEAVE FROM ANY SUCH COURT, (III) AGREES THAT ANY ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT SHALL BE BROUGHT, TRIED AND DETERMINED ONLY IN SUCH COURTS, (IV) WAIVES ANY CLAIM OF IMPROPER VENUE OR ANY CLAIM THAT THOSE COURTS ARE AN INCONVENIENT FORUM AND (V) AGREES THAT IT WILL NOT BRING ANY ACTION RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT IN ANY COURT OTHER THAN THE AFORESAID COURTS. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

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9. Prevailing Party . In any action, suit or other proceeding to enforce or interpret any of the provisions of this Agreement, the prevailing party shall be entitled to recover its attorneys’ fees and expenses incurred in connection therewith.

10. Counterparts . This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

11. Severability . If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent jurisdiction, such invalidity or unenforceability shall not affect the validity or enforceability of the remainder of this Agreement in that jurisdiction or the validity or enforceability of any provision of this Agreement in any other jurisdiction.

12. No Third Party Beneficiaries . This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors and assigns. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

13. Maximum Lawful Rate . In no event shall any payment made to any Breslow Party or any obligation on the part of the Company to pay any amount or any collection by a Breslow Party pursuant to this Agreement or the New Promissory Note exceed the maximum amount or rate permissible under Applicable Law. Accordingly, if any obligation to pay or payment made to a Breslow Party or collection by a Breslow Party pursuant this Agreement or the New Promissory Note is determined to violate any such Applicable Law, such obligation to pay, payment, or collection shall be deemed to have been made by mutual mistake of the Breslow Parties and the Company and such amount shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by Applicable Law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of the Breslow Trust, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to a Breslow Party under the respective applicable document(s).

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14. No Strict Construction . The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be deemed to be jointly drafted by the Company and the Breslow Parties and shall not be construed against any Person as the drafter hereof.

15. Headings; Gender . The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this Agreement. Unless the context clearly indicates otherwise, each pronoun herein shall be deemed to include the masculine, feminine, neuter, singular and plural forms thereof.

16. Entire Agreement; Amendments . This Agreement supersede all other prior oral or written agreements between the Breslow Parties and the Company with respect to the matters discussed herein, and this Agreement and the instruments referenced herein contain the entire understanding of the parties with respect to the matters covered herein and, except as specifically set forth herein, neither the Company nor any Breslow Party makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement may be amended other than by an instrument in writing signed by the Company and the applicable Breslow Party. No provision hereof may be waived other than by an instrument in writing signed by the party against whom enforcement is sought.

17. Notices . All notices, requests, demands and other communications which are required or may be given under this Agreement shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile prior to 4:00 p.m. California time on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile on a day which is not a Business Day or later than 4:00 p.m. California time on a Business Day; (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given, in each case properly addressed to the party to receive the same and, provided confirmation of transmission, deposit, or delivery, as the case may be, is mechanically or electronically generated and kept on file by the sending party. The addresses, and facsimile numbers for such communications shall be:

If to the Company:

Aura Systems, Inc.
10541 Ashdale Avenue

Stanton, CA 90680
Attention: Chief Executive Officer
Telephone: (310) 643-5300
Facsimile: (310) 643-7457

If to any Breslow Party:

At the address and/or facsimile number provided for the Breslow Trust on the signature page hereof

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or at such other address or addresses or facsimile number and/or to the attention of such other Person as the recipient party may specify by written notice given in accordance with this Paragraph 17.

18. Defined Terms . The following terms shall have the following definitions:

“ Accrued Interest ” means all interest amounts (whether default interest, base interest, or otherwise) as well as any penalties of any nature (whether pursuant to an Event of Default or otherwise) in each case, accrued as of the date hereof relating to the Promissory Notes or the Aggregate Debt.

“ Applicable Laws ” means all applicable provisions of all (i) constitutions, treaties, statutes, laws, rules, regulations and ordinances of any Governmental Authority and all common law duties, (ii) Consents of any Governmental Authority and (iii) orders, writs, decisions, rulings, judgments or decrees of any Governmental Authority binding upon, or applicable to, the Lender or Borrower, as the case may be.

“ Business Day ” means any day that is not a Saturday, a Sunday or a day on which banking institutions in the City of Los Angeles, California, are authorized or required by law to close.

“ Common Stock ” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

“ Consents ” means all consents, approvals, authorizations, waivers, permits, grants, franchises, licenses, findings of suitability, exemptions or orders of, or any registrations, certificates, qualifications, declarations or filings with, or any notices to, any Governmental Authority or other Person.

“ Covered Common Stock ” means, with respect to each Breslow Party, all shares of Common Stock of which such party is the record and/or beneficial owner as of the Effective Date together with such additional shares of Common Stock of which such party becomes the record holder or that become beneficially owned by such party, whether upon the exercise of options, conversion of convertible securities or otherwise, after the date hereof.

“ Events of Default ” has the meaning as prescribed in the New Promissory Note.

“ Governmental Authority ” means any nation or government, and any state or political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including the SEC and any court, tribunal or arbitrator(s) of competent jurisdiction, and any other stock exchange or self-regulatory organization, including the OTC Bulletin Board, OTC Markets Inc. and the Pink OTC Markets, Inc.

“ Person ” means any entity, corporation, company, association, joint venture, joint stock company, partnership, trust, organization, individual (including personal representatives, executors and heirs of a deceased individual), nation, state, government (including agencies, departments, bureaus, boards, divisions and instrumentalities thereof), trustee, receiver or liquidator, as well as any syndicate or group that would be deemed to be a Person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

“Promissory Notes ” means collectively any and all instruments or other agreements evidencing, securing or otherwise pertaining to the Aggregate Debt (including without limitation the AM Notes, the Overland Notes and the Breslow Notes).

“ SEC ” means the Securities and Exchange Commission, or any successor agency.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.

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IN WITNESS WHEREOF, the Breslow Parties and the Company have caused their respective signature page to this Agreement to be duly executed as of the date first written above.

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NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Aura Systems, Inc.

Unsecured Convertible Promissory Note

THIS UNSECURED CONVERTIBLE PROMISSORY NOTE (this “ Note ”), is made as of January 24, 2017, by and between The Survivor’s Trust Under the Warren L. Breslow Trust or its registered assigns (“ Holder ”), and AURA SYSTEMS, INC., a Delaware corporation (the “ Company ”). Capitalized terms not defined herein that are defined in the Debt Refinancing Agreement dated as of the date hereof (the “ Refinancing Agreement ”) by and between the Company, Warren Breslow, and the Holder shall have the meaning ascribed to them therein.

RECITALS

WHEREAS, Holder is the present owner and holder of the Breslow Notes, the AM Notes and the Overland Notes (collectively, the “ Prior Notes ”) which in the aggregate evidence an indebtedness of the Company in the current outstanding amount of $23,872,614.47, (the “ Aggregate Debt ”); representing principal in the amount of $14,982,040.52, (the “ Principal Debt ”) together with interest accrued thereon in the amount of $8,890,573.95 (the “ Accrued Interest ”); and

WHEREAS, this Note is one of the “New Promissory Notes” referred to in, and being issued in connection with the consummation of the transactions contemplated by, the Debt Refinancing Agreement.

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NOW, THEREFORE, for value received, the Company hereby promises to pay to the order of Holder the principal amount of $14,982,040.52 (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “ New Principal ”) together with accrued interest and other amounts owing from time to time hereunder, all as provided herein.

1. CANCELLATION OF PRIOR NOTES . This Note supersedes and replaces all Prior Notes in their entirety. Upon issuance of this Note, all Prior Notes shall automatically be deemed canceled and no longer outstanding, and all rights with respect thereto will forthwith cease and terminate.

2. INTEREST .

2.1. Base Interest . During the period commencing upon the Issuance Date and continuing through the six-month anniversary of the Issuance Date, (the “ Initial Interest Period ”) the Company shall pay interest on the unpaid New Principal balance of, and accrued and unpaid interest on, this Note at a rate per annum equal to zero percent (0.00%) (the “ Interest Rate ”). Upon expiration of the Initial Interest Period, the Interest Rate will automatically increase to five percent (5.00%) per annum.

2.2. Default Interest Rate . If an Event of Default shall have occurred and be continuing, then, in addition to the other rights, powers and remedies available to the Holder under this Note and Applicable Law, then, subject to Section 22 hereof, the Interest Rate shall be increased to a rate of eighteen percent (18%) commencing on the date on which the applicable Event of Default shall be deemed to have occurred and continuing until such Event of Default shall have been cured or waived in accordance with the terms of this Note.

2.3. Interest Payment Dates . All interest on this Note shall be payable monthly in arrears in cash on the last Business Day of each calendar month. All interest due on this Note shall be computed on the basis of a 360-day year, and the amount of interest payable each month will be based on the actual number of calendar days during such month and, for the purposes of calculating interest, the amount of interest shall be calculated by multiplying the unpaid principal balance of this Note by the applicable interest rate, dividing the product by 360 and multiplying the quotient by the actual number of days elapsed during the month. Holder understands that the amount allocated to interest for each month will vary depending on the actual number of calendar days during such month.

3. MATURITY DATE . The entire unpaid New Principal balance of this Note, together with all accrued and unpaid interest on and all other unpaid amounts owing under this Note shall be due and payable on the sixtieth (60 ^th ) month anniversary of the Issuance Date (the “ Maturity Date ”), provided however , that if the date of the sixtieth (60 ^th ) month anniversary of the Issuance Date is not a Business Day, then the Maturity Date shall be the next succeeding day which is a Business Day.

4. PRIORITY OF PAYMENTS AND PREPAYMENT . All payments on this Note shall first be applied to pay accrued and unpaid interest, and thereafter to pay outstanding principal amounts. At any time and from time to time before the Maturity Date the Company may, in its sole and absolute discretion, voluntarily prepay or redeem any amounts then outstanding under this Note, either in whole or in part, and without premium or penalty.

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5. CONVERSION OF NOTES .

5.1. Mandatory Conversion Upon Authorized Reverse Split. Immediately upon the Authorized Reverse Split (as defined in the Refinancing Agreement) becoming effective (the “ Mandatory Conversion Date ”), $11,982,041 of the unpaid New Principal balance then outstanding under this Note shall automatically (and without further act) convert into 7,403,705 validly issued, fully paid and non-assessable shares of the Company’s Common Stock. Upon conversion pursuant to this Article 5.1, the Company shall timely issue and deliver to the Holder, a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder shall be entitled. Notwithstanding anything to the contrary set forth in this Note, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Company unless the Holder has provided the Company with prior written notice requesting reissuance or transfer of this Note upon physical surrender hereof. The foregoing notwithstanding, if this Note is physically surrendered by the Holder upon conversion pursuant to this Section 5.1, then the Company shall as soon as practicable issue and deliver to the Holder (or its designee) a new Note of like tenor evidencing the remaining portion, if any, of this Note not so converted.

5.2. Voluntary Conversion Right . At any time from and after the effective date of an Approved Reserve Split (but not before) and so long as any portion of this Note shall remain unpaid and outstanding, the Holder shall be entitled to from time to time convert any or all of the unpaid and unconverted New Principal balance then outstanding under this Note together with any and all then-accrued but unpaid interest thereon (the “ Remaining Balance ”), in whole or in part, into such number of validly issued, fully paid and non-assessable shares of the Company’s Common Stock as is equal to the quotient of (x) the Conversion Amount divided by (y) the Voluntary Conversion Price. Any conversion made pursuant to this Section 5.2 shall be effectuated by Holder (i) delivering to the Company at its principal office written notice of the Holder’s conversion election in the form attached hereto as Exhibit I (the “ Conversion Notice ”) and (ii) surrendering this Note at the principal office of the Company. Any duly completed and executed Conversion Notice shall be effective as of the date of the Company’s actual receipt thereof (the “ Voluntary Conversion Date ”), and not before. Upon conversion pursuant to this Section 5.2, the Company shall as soon as practicable issue and deliver to the Holder (or its designee) a new Note of like tenor evidencing the remaining portion of this Note not so converted.

5.3. No Fractional Shares; Basis of Conversion Calculations . The Company shall not issue any fraction of a share or scrip for any such fraction of a share of Common Stock upon any conversion of this Note. In lieu of any fractional share of Common Stock to which the Holder would otherwise be entitled, the Company shall make a cash payment therefor equal to the product of such fraction multiplied by the Fair Market Value of one share of Common Stock on the Mandatory Conversion Date or Voluntary Conversion Date, as the case may be. The Holder and the Company acknowledge that the number of shares of the Company’s Common Stock that are issuable upon the Mandatory Conversion Date was calculated as previously represented to Breslow by the Company.

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6. REISSUANCE OF THIS NOTE .

6.1. Transfer . If this Note is to be transferred, the Holder shall surrender this Note to the Company, whereupon the Company will record such transfer upon the Company’s Register and forthwith issue and deliver upon the order of the Holder a new Note (in accordance with Section 6.4) registered as the Holder may request, representing the outstanding New Principal being transferred by the Holder and, if less than the entire outstanding New Principal is being transferred, a new Note (in accordance with Section 6.4) to the Holder representing the outstanding New Principal not being transferred. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of Sections 4 and/or 5, the outstanding New Principal represented by this Note may be less than the Principal stated on the face of this Note.

6.2. Lost, Stolen or Mutilated Note . Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation of this Note and, in the case of any such loss, theft or destruction, upon receipt of an indemnity agreement or other indemnity reasonably satisfactory in form and amount to the Company or, in the case of any such mutilation, upon surrender and cancellation of such mutilated Note, the Company shall issue and timely deliver a new Note, of like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.

6.3. Note Exchangeable for Different Denominations . This Note is exchangeable, upon the surrender hereof by the Holder at the principal office of the Company, for a new Note or Notes (in accordance with Section 6.4) representing in the aggregate the outstanding New Principal of this Note, and each such new Note will represent such portion of such outstanding New Principal as is designated by the Holder at the time of such surrender.

6.4. Issuance of New Notes . Whenever the Company is required to issue a new Note pursuant to the terms of this Note, such new Note (i) shall be of like tenor with this Note, (ii) shall represent, as indicated on the face of such new Note, the New Principal remaining outstanding (or in the case of a new Note being issued pursuant to Section 6.1 or Section 6.3, the New Principal designated by the Holder which, when added to the principal represented by the other new Notes issued in connection with such issuance, does not exceed the New Principal remaining outstanding under this Note immediately prior to such issuance of new Notes), (iii) shall have an issuance date, as indicated on the face of such new Note, which is the same as the Issuance Date of this Note, and (iv) shall have the same rights and conditions as this Note, including the right to be paid any accrued and unpaid interest upon the principal amount evidenced or represented by the new Note.

7. RIGHTS UPON ISSUANCE OF OTHER SECURITIES . If the Company at any time on or after the Issuance Date subdivides (by any stock split, stock dividend, recapitalization or otherwise) one or more classes of its outstanding shares of Common Stock into a greater number of shares, the Voluntary Conversion Price in effect immediately prior to such subdivision will be proportionately reduced. If the Company at any time on or after the Issuance Date combines (by combination, reverse stock split or otherwise) one or more classes of its outstanding shares of Common Stock into a smaller number of shares, the Voluntary Conversion Price in effect immediately prior to such combination will be proportionately increased. The foregoing notwithstanding, neither the number of shares issuable upon mandatory conversion pursuant to Section 5.1 above nor the Dollar amount so converted shall be adjusted in the event of any subdivision or combination of Common Stock resulting from the Authorized Reverse Split. Any adjustment pursuant to this Section 7 shall become effective immediately after the effective date of such subdivision or combination.

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8. VOTING RIGHTS . Except as required by Applicable Law, neither this Note nor any provision hereof shall entitle Holder, as the holder of this Note, to vote or receive dividends or be deemed the holder of share capital of the Company for any purpose, nor shall anything contained in this Note be construed to confer upon the Holder, as a holder of this Note, any of the rights of a stockholder of the Company or any right to vote, give or withhold consent to any corporate action (whether any reorganization, issue of stock, reclassification of stock, consolidation, merger, conveyance or otherwise), receive notice of meetings, receive dividends or subscription rights, or otherwise.

9. DEFAULT AND ACCELERATION .

9.1. Events of Default . The occurrence, after the Effective Date, of any one or more of the following events, acts or occurrences shall constitute an event of default (each an “ Event of Default ”):

9.1.1. The Company shall fail to pay, within five (5) Business Days of the due date (whether at stated maturity or upon acceleration, demand, required prepayment or otherwise), any principal amount of the Note; or

9.1.2. The Company shall breach or fail to pay interest or any other amount (including fees, costs, expenses or other amounts) under this Note (other than as provided in Section 9.1.1 above) within five (5) Business Days after the due date thereof; or

9.1.3. The Company shall breach or fail to perform, comply with or observe, or be in default under, any covenant or obligation required to be performed by it (other than as provided in Sections 9.1.1 and 9.1.2) under this Note, and if such breach or failure may be cured, such breach or failure shall not have been cured within ten (10) Business Days after the receipt of written notice that such breach or failure shall have occurred; or

9.1.4. There shall be commenced against the Company an involuntary case seeking the liquidation or reorganization under the Bankruptcy Laws or any similar proceeding under any other Applicable Laws or an involuntary case or proceeding seeking the appointment of a receiver, custodian, trustee or similar official for it, or to take possession of all or a substantial portion of its property or to operate all or a substantial portion of its business, and any of the following events occur: (i) the Company consents to such involuntary case or proceeding or fails to diligently contest it in good faith; (ii) the petition commencing the involuntary case or proceeding is not timely controverted; (iii) the petition commencing the involuntary case or proceeding remains undismissed or unstayed for a period of sixty (60) calendar days; or (iv) an order for relief shall have been issued or entered therein or a receiver, custodian, trustee or similar official appointed; or

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9.1.5. The Company shall institute a voluntary case seeking liquidation or reorganization under the Bankruptcy Laws or any similar proceeding under any other Applicable Laws, or shall consent thereto; or shall consent to the conversion of an involuntary case to a voluntary case; or shall file a petition, answer a complaint or otherwise institute any proceeding seeking, or shall consent or acquiesce to the appointment of, a receiver, custodian, trustee or similar official for it, or to take possession of all or a substantial portion of its property or to operate all or a substantial portion of its business; or shall make a general assignment for the benefit of creditors; or shall generally not pay its debts as they become due or shall admit in writing its inability to pay its debts generally; or the board of directors of the Company (or any committee thereof) adopts any resolution or otherwise authorizes action to approve any of the foregoing.

9.2. Acceleration . If any Event of Default (other than an Event of Default specified in clause 9.1.4 or 9.1.5 of Section 9.1 above) occurs and is continuing, Holder may, without notice, declare all outstanding principal of, accrued and unpaid interest on, and all other amounts under, the Note to become immediately due and payable. Upon any such declaration of acceleration, such outstanding principal of, and accrued and unpaid interest on, and other amounts under the Note shall become immediately due and payable. If an Event of Default specified in clause 9.1.4 or 9.1.5 of Section 9.1 above occurs, all outstanding principal of, and accrued and unpaid interest on, and all other amounts under, this Note automatically shall become immediately due and payable without any declaration or other act on the part of the Holder. The Company hereby waives all presentment for payment, demand, protest, notice of protest and notice of dishonor, and all other notices of any kind to which it may be entitled under Applicable Laws or otherwise.

9.3. Other Remedies . If any Default or Event of Default shall occur and be continuing, the Holder may proceed to protect and enforce its rights and remedies under this Note by exercising all rights and remedies available under this Note or Applicable Laws, either by suit in equity or by action at law, or both, whether for the collection of principal of or interest on the Note, to enforce the specific performance of any covenant or other term contained in this Note. No remedy conferred in this Note upon Holder is intended to be exclusive of any other remedy, and each and every such remedy shall be cumulative and shall be in addition to every other remedy conferred herein or now or hereafter existing at law or in equity or by statute or otherwise.

9.4. Waiver of Past Defaults . As of and from the time of their occurrence and through the Effective Date, Holder hereby waives any and all Events of Default under the Prior Notes and/or any and all other agreements evidencing, securing or otherwise pertaining to the indebtedness evidenced thereby to which the Company is or hereafter becomes a party.

10. SECURITIES REPRESENTATIONS OF HOLDER

10.1. No Public Sale or Distribution . Holder understands that: (i) the Securities are being offered and sold to Holder in reliance upon specific exemptions from the registration requirements of federal and state securities laws; (ii) such exemption depends, in part, on the accuracy and truthfulness of the representations of Holder made herein and (iii) the Company is relying upon the truth and accuracy of such representations, warranties, agreements, acknowledgments and understandings of Holder set forth herein. All information which has been furnished to the Company with respect to Holder’s financial position and business experience is correct and complete as of the date hereof. Holder (a) is acquiring this Note, and (b) upon conversion of its Note will acquire the Conversion Shares issuable upon conversion thereof, in each case, for its own account and not with a view towards, or for resale in connection with, the public sale or distribution thereof in violation of applicable securities laws except pursuant to sales registered or exempted under the Securities Act. Holder has no present or contemplated agreement, arrangement or understanding, directly or indirectly, with any Person to distribute any of the Securities in violation of applicable securities laws. Holder was not formed for the purpose of purchasing the Securities.

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10.2. Accredited Investor Status; Independent Investigation . Holder is an “accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act. By reason of its business and financial experience, Holder has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the investment in the Securities, has the capacity to protect its own interests, and is able to bear the economic risk of such investment (including the complete loss thereof). Holder has conducted its own investigation of the Company and to the extent deemed necessary or advisable by Holder, has retained and relied upon qualified professional advice regarding the investment, tax and legal merits and consequences of this Note and an investment in the Securities. Holder and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of the Company and with all materials relating to the offer and sale of the Securities which have been requested by Holder. Holder and its advisors, if any, have been afforded the opportunity to ask questions of the Company.

10.3. No Governmental Review . Holder understands that no United States federal or state agency or any other government or governmental agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of any investment in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.

10.4. Restricted Securities . Holder understands that the Securities being acquired hereunder are characterized as “restricted securities” under the federal and state securities or “blue sky” laws inasmuch as they are being acquired from the Company in a transaction not involving a public offering and that under such laws and applicable regulations such securities may be resold without registration under the Securities Act and applicable state securities or “blue sky” laws only in certain limited circumstances. Holder is familiar with Rule 144 promulgated by the SEC, as presently in effect, and understands the resale limitations imposed thereby and by the Securities Act and applicable state securities laws, pursuant to which the Securities must be held indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt from such registration. Holder further understands that the Securities have not been registered under the Securities Act or any state securities laws and that neither the Company nor any other Person is under any obligation to register the Securities under the Securities Act or any state securities laws or to comply with the terms and conditions of any exemption thereunder.

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10.5. Validity; Enforcement . The consummation of the transactions contemplated hereby have been duly and validly authorized by all necessary action on the part of Holder and this Note has been duly and validly authorized, executed and delivered on behalf of Holder. Upon execution by Holder, this Note will be a legal, valid and binding obligation of Holder, enforceable against Holder in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or conveyance or similar laws relating to or limiting creditors’ rights generally or by equitable principles relating to enforceability and except as rights of indemnity or contribution may be limited by federal or state securities or other laws or the public policy underlying such laws.

10.6. Brokers . Holder has not paid and is not obligated to pay any fee or commission to any broker, finder, investment banker or other intermediary in connection with this Note or any of the transactions contemplated hereby.

10.7. No Solicitation . No Securities were offered or sold to Holder by means of any form of general solicitation or general advertising, and in connection therewith Holder has not (i) 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 (ii) attended any seminar meeting or industry investor conference whose attendees were invited by any general solicitation or general advertising.

11. CONSTRUCTION; HEADINGS . This Note shall be deemed to be jointly drafted by the Company and the Holder and shall not be construed against any Person as the drafter hereof. The headings of this Note are for convenience of reference and shall not form part of, or affect the interpretation of, this Note. Unless the context clearly requires otherwise, the use of the word “including” is not limiting and the use of the word “or” has the inclusive meaning represented by the phrase “and/or.” Unless otherwise specified, the plural includes the singular and vice versa.

12. FAILURE OR INDULGENCE NOT WAIVER . Except as expressly provided otherwise in this Note, no failure or delay on the part of a party in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privilege. No waiver shall be effective unless it is in writing and signed by an authorized representative of the waiving party.

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13. NOTICES; PAYMENTS; AMENDMENTS .

13.1. Notices . All notices, requests, demands and other communications which are required or may be given under this Note shall be in writing and shall be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via facsimile prior to 3:00 p.m. California time on a Business Day, (ii) the next Business Day after the date of transmission, if such notice or communication is delivered via facsimile on a day which is not a Business Day or later than 3:00 p.m. California time on a Business Day; (iii) the second Business Day following the date of mailing, if sent by nationally recognized overnight courier service, or (iv) upon actual receipt by the party to whom such notice is required to be given, in each case properly addressed to the party to receive the same and, provided confirmation of transmission, deposit, or delivery, as the case may be, is mechanically or electronically generated and kept on file by the sending party. The addresses, and facsimile numbers for such communications shall be:

If to the Company:

Aura Systems, Inc.
10541 Ashdale Avenue
Stanton, CA 90680
Attention: Chief Executive Officer
Telephone: (310) 643-5300
Facsimile: (310) 643-7457

If to Holder:

At the address and/or facsimile as provided on the signature page hereof

or at such other address or addresses or facsimile number and/or to the attention of such other Person as the recipient party may specify by written notice given in accordance with this Section.

13.2. Amendments . This Note may be amended, supplemented or otherwise modified only with the written consent or agreement of both the Company and the Holder.

13.3. Payments . Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a Business Day, the same shall instead be due on the next succeeding day which is a Business Day.

14. CANCELLATION . After all Principal, accrued interest, and other amounts at any time owed on this Note have been converted or otherwise paid in full, this Note shall automatically be deemed canceled, shall be surrendered to the Company for cancellation and shall not be reissued.

15. GOVERNING LAW . IN ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE (WITHOUT REGARD TO CHOICE OF LAW OR CONFLICTS OF LAW PROVISIONS) AND ANY APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

16. CONSENT TO JURISDICTION AND VENUE . ANY SUIT, LEGAL ACTION OR SIMILAR PROCEEDING ARISING OUT OF OR IN CONNECTION WITH THIS NOTE SHALL BE BROUGHT EXCLUSIVELY IN THE COURTS OF THE STATE OF CALIFORNIA SITTING IN THE CITY OF LOS ANGELES OR IN THE COURTS OF THE UNITED STATES FOR THE CENTRAL DISTRICT OF CALIFORNIA SITTING IN THE CITY OF LOS ANGELES. HOLDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND HEREBY IRREVOCABLY WAIVES, AND AGREES NOT TO ASSERT IN ANY SUIT, ACTION OR PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF ANY SUCH COURT, THAT SUCH SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT FORUM OR THAT THE VENUE OF SUCH SUIT, ACTION OR PROCEEDING IS IMPROPER. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO LIMIT IN ANY WAY ANY RIGHT TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.

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17. WAIVER OF TRIAL BY JURY . TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HEREBY KNOWINGLY, INTENTIONALLY AND VOLUNTARILY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR IN CONNECTION WITH THIS NOTE OR THE TRANSACTIONS RELATED THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING.

18. ATTORNEYS FEES . In any action, suit or other proceeding to enforce or interpret any of the provisions of this Note, the prevailing party shall be entitled to recover its attorneys’ fees and expenses incurred in connection therewith.

19. SEVERABILITY . If any provision of this Note is prohibited by law or otherwise determined to be invalid or unenforceable in any respect by a court of competent jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect the validity of the remaining provisions of this Note so long as this Note as so modified continues to express, without material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s), the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).

20. ENTIRE AGREEMENT . This Note together with the Refinancing Agreement constitutes the entire understanding and agreement between the Holder and the Company with respect to the collective subject matter hereof and thereof and supersedes all prior and contemporaneous oral or written agreements, understandings, negotiations, discussions and undertakings relating to such subject matter.

21. COUNTERPARTS . This Note may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same instrument. In the event that any signature is delivered by facsimile transmission or by an e-mail which contains a portable document format (.pdf) file of an executed signature page, such signature page shall create a valid and binding obligation of the party executing (or on whose behalf such signature is executed) with the same force and effect as if such signature page were an original thereof.

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22. MAXIMUM PAYMENTS . Nothing contained in this Note shall, or shall be deemed to, establish or require the payment of a rate of interest or other charges in excess of the maximum permitted under Applicable Law. In the event that the rate of interest required to be paid or other charges under this Note exceeds the maximum permitted by Applicable Law, then such rate or amount, as the case may be, shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate, as the case may be, as would not be so prohibited by Applicable Law. Such adjustment shall be effected, to the extent necessary, by reducing or refunding, at the option of the Holder, the amount of interest or any other amounts which would constitute unlawful amounts required to be paid or actually paid to Holders under this Note.

23. NO THIRD PARTY BENEFICIARIES . This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person.

24. CERTAIN DEFINITIONS . For purposes of this Note, the following terms shall have the following meanings:

“ Applicable Laws ” means all applicable provisions of all (i) constitutions, treaties, statutes, laws, rules, regulations and ordinances of any Governmental Authority and all common law duties, (ii) Consents of any Governmental Authority and (iii) orders, writs, decisions, rulings, judgments or decrees of any Governmental Authority binding upon, or applicable to, the Company or Holder, as the case may be.

“ Authorized Reverse Split ” has the meaning as prescribed in the Refinancing Agreement.

“ Bankruptcy Laws ” means Title 11 of the United States Code (11 U.S.C. Section 101 et seq.) or any other federal or state law relating to bankruptcy, insolvency or reorganization or for the relief of debtors, in each case as amended from time to time.

“ Bloomberg ” means Bloomberg, L.P. or any successor entity.

“ Business Day ” means any day that is not a Saturday, a Sunday or a day on which banking institutions in the City of Los Angeles, California, are authorized or required by law to close.

“ Closing Sale Price ” means, for any security as of any date, the last closing trade price for such security on the Principal Market, as reported by Bloomberg, or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price then the last trade price of such security prior to 4:00 p.m., New York time, as reported by Bloomberg, or, if the Principal Market is not the principal securities exchange or trading market for such security, the last trade price of such security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no last trade price, respectively, is reported for such security by Bloomberg, the average of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc. If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined in good faith by the Company’s board of directors whose determination or calculation (as the case may be) shall be binding upon all parties absent demonstrable error.

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“ Common Stock ” means (i) the Company’s shares of common stock, $0.0001 par value per share, and (ii) any capital stock into which such common stock shall have been changed or any share capital resulting from a reclassification of such common stock.

“ Consents ” means all consents, approvals, authorizations, waivers, permits, grants, franchises, licenses, findings of suitability, exemptions or orders of, or any registrations, certificates, qualifications, declarations or filings with, or any notices to, any Governmental Authority or other Person.

“ Conversion Amount ” means the portion of the Remaining Balance to be converted or otherwise redeemed.

“ Conversion Shares ” means those shares of Common Stock issuable to Holder upon conversion of this Note in accordance with the terms hereof.

“ Effective Date ” has the meaning as prescribed in the Refinancing Agreement.

“Fair Market Value” means the average of the Closing Sale Prices for the Common Stock on the Principal Market or, if the Common Stock is not listed on the electronic bulletin board, as reported by the principal U.S. national or regional securities exchange or quotation system on which the Common Stock is then listed or quoted, as reported by Bloomberg, in each case for the seven (7) Trading Days prior to the date of determination of fair market value. If the Fair Market Value cannot be calculated on the foregoing basis, the Fair Market Value shall be the fair market value as determined in good faith by the Company’s Board of Directors.

“ Governmental Authority ” means any nation or government, and any state or political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government (including the SEC and any court, tribunal or arbitrator(s) of competent jurisdiction, and any other stock exchange or self-regulatory organization, including the OTC Bulletin Board, OTC Markets Inc. and the Pink OTC Markets, Inc.

“ Issuance Date ” means January 20, 2017.

“Person” means any entity, corporation, company, association, joint venture, joint stock company, partnership, trust, organization, individual (including personal representatives, executors and heirs of a deceased individual), nation, state, government (including agencies, departments, bureaus, boards, divisions and instrumentalities thereof), trustee, receiver or liquidator, as well as any syndicate or group that would be deemed to be a Person under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.

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“ Principal Market ” means the exchange or over-the-counter market on which the Common Stock is primarily listed on or quoted for trading, which, as of the date hereof is the OTC Bulletin Board.

“ SEC ” means the Securities and Exchange Commission, or any successor agency.

“ Securities” means collectively this Note and the Conversion Shares.

“ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, all as the same shall be in effect at the time.

“ Stockholder Approval ” has the meaning as prescribed in the Refinancing Agreement.

“ Resolutions ” has the meaning as prescribed in the Refinancing Agreement.

“Voluntary Conversion Price” means $0.20 per share as subject to adjustment from time to time pursuant to the provisions of this Note.

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IN WITNESS THEREOF, the Company has caused this Note to be duly executed as of the date first set forth above.

AGREED AND ACCEPTED:

THE SURVIVOR’S TRUST UNDER THE WARREN L. BRESLOW TRUST