EXHIBIT 10.28

                               AURA SYSTEMS, INC.

                          REGISTRATION RIGHTS AGREEMENT


                           Dated as of May ____, 2002

<PAGE>


                          REGISTRATION RIGHTS AGREEMENT


     THIS  REGISTRATION  RIGHTS  AGREEMENT dated as of May ___, 2002, is made by
and among AURA SYSTEMS,  INC., a Delaware  corporation (the "Company"),  and THE
INVESTORS  LISTED ON THE  SIGNATURE  PAGE HEREOF (each of whom is herein  called
individually, a "Investor" and all of whom are herein called, collectively,  the
"Investors"), with reference to the following facts:

     In connection  with the  Subscription  Agreement dated as of March 22, 2002
(the "Subscription Agreement"),  by and among the Company and the Investors, and
as a condition to the closing of the  transactions  contemplated  therein,  this
Agreement is to be executed and delivered by the Investors and the Company.

     NOW,  THEREFORE,  in consideration of the mutual promises and covenants set
forth herein and for other  consideration,  the receipt and sufficiency of which
is hereby acknowledged, the parties hereto further agree as follows:

     1. Registration Rights. The Company covenants and agrees as follows:

     1.1 Definitions. For purposes of this Section 1:

          (a) "Form  S-3" means such form under the 1933 Act as in effect on the
     date  hereof  or any  registration  form  under  the 1933 Act  subsequently
     adopted by the SEC that permits  inclusion or  incorporation of substantial
     information by reference to other  documents  filed by the Company with the
     SEC.

          (b)  "Holder"  means any person  owning or having the right to acquire
     Registrable  Securities or any assignee  thereof in accordance with Section
     1.11 hereof.

          (c) "1933 Act" means the Securities Act of 1933, as amended.

          (d) "1934 Act" means the Securities Exchange Act of 1934, as amended.

          (e)  "register",   "registered",   and   "registration"   refer  to  a
     registration  effected by preparing and filing a registration  statement or
     similar  document in compliance  with the 1933 Act, and the  declaration or
     ordering of effectiveness of such registration statement or document.

          (f)  "Registrable  Securities"  means (i) the  shares of the Stock (as
     defined in the  Subscription  Agreement),  (ii) the shares of the Company's
     Common  Stock  (as  defined  in the  Subscription  Agreement)  issuable  on
     exercise of the Registration  Warrants (as defined in Section 1.3(c)),  and
     (iii) any other  shares of stock of the Company  issued as (or  issuable on
     the conversion or exercise of any warrant,  right or other security that is
     issued as) a dividend or other distribution with respect to, or in exchange
     for, or in  replacement  of, the shares  referenced in clauses (i) and (ii)
     above;  provided  that there shall be excluded any  Registrable  Securities
     sold by a person in a transaction in which that person's  rights under this
     Section 1 are not assigned.

          (g) The number of shares of "Registrable Securities" outstanding shall
     be determined by the number of shares of Common Stock outstanding that are,
     and the  number  of  shares  of  Common  Stock  issuable  pursuant  to then
     exercisable or convertible securities that are, Registrable Securities.

          (h) "SEC" means the Securities and Exchange Commission.

          (i) Other Terms:  Any other  capitalized term not defined herein shall
     have the meaning set forth in the Subscription Agreement.

1.2      [Intentionally Omitted].

1.3      Agreed Registration.

          (a) Within one hundred  twenty (120) days after the Closing Date,  the
     Company  shall  prepare and file with the SEC a  registration  statement on
     Form  S-3  (or,  if  Form  S-3 is not  then  available,  on  such  form  of
     registration  statement that is then available to effect a registration  of
     all Registrable Securities,  subject to consent of the Investors holding at
     least a majority of the Registrable  Securities)  covering the registration
     of all of the Registrable  Securities,  other than the shares issuable upon
     exercise of the Registration  Warrants.  In the event that any Registration
     Warrants are issued,  the Company shall  promptly  amend such  registration
     statement  to also  include  the  shares  issuable  upon  exercise  of such
     Registration  Warrants.  The Company  shall use best  efforts to obtain the
     effectiveness   of  such   registration   statement  as  soon  as  possible
     thereafter. The Company shall keep such registration statement effective at
     all  times  until  the  earlier  of the date on which  all the  Registrable
     Securities  (i) are sold by the Holders in an open market  transaction  and
     (ii) can be sold by the Holders (and any affiliate of the Holders with whom
     the Holders must aggregate  their sales under Rule 144) in any  three-month
     period without volume  limitation  and without  registration  in compliance
     with Rule 144 under the 1933 Act.

          (b) If the Holders intend to distribute the Registrable  Securities by
     means of an underwriting, they shall so advise the Company. The underwriter
     will be selected by a majority in interest (as  determined by the number of
     Registrable  Securities  held)  of the  Holders  and  shall  be  reasonably
     acceptable  to the  Company.  In such  event,  the  right of any  Holder to
     include such Holder's Registrable  Securities in such registration shall be
     conditioned upon such Holder's  participation in such  underwriting and the
     inclusion  of such  Holder's  Registrable  Securities  in the  underwriting
     (unless otherwise mutually agreed by a majority in interest of the Holders)
     to the extent provided  herein.  All Holders  proposing to distribute their
     securities  through such  underwriting  shall (together with the Company as
     provided  in  Section  1.6(e))  enter  into an  underwriting  agreement  in
     customary  form with the  underwriter  or  underwriters  selected  for such
     underwriting.  Notwithstanding  any other provision of this Section 1.3, if
     the  underwriter  advises the  Holders in writing  that  marketing  factors
     require a limitation of the number of shares to be  underwritten,  then the
     Holders shall so advise all Holders of  Registrable  Securities  that would
     otherwise be  underwritten  pursuant  hereto,  provided  that the number of
     shares of Registrable  Securities to be included in such underwriting shall
     not be reduced unless all other securities are first entirely excluded from
     the underwriting.

          (c) If on the date one  hundred  eighty  (180) days after the  Closing
     Date either (i) the registration  statement  described in Section 1.3(a) is
     not declared  effective  or (ii) the  registration  statement  described in
     Section  1.3(a)  is  no  longer  deemed  to  be  effective   after  initial
     effectiveness (including without limitation any suspension of use under the
     circumstances  described in Section  1.6(f)  hereof),  the Company,  unless
     waived by the Investors, shall issue to each Investor a warrant in the form
     attached  hereto  as  Exhibit  A  (each,  a  "Registration   Warrant"  and,
     collectively,  the "Registration Warrants") to acquire the number of shares
     of Common Stock equal to (i) 5% multiplied by (ii) the aggregate  number of
     shares  of  Registrable  Stock  sold  to  such  Investor  pursuant  to  the
     Subscription  Agreement.  The  exercise  price  of each  such  Registration
     Warrant per share  shall be $.20 per share,  subject to  adjustment  as set
     forth in the Registration Warrant.

          (d) If at any time during the first  thirty (30) day period  after the
     initial one hundred  eighty (180) day period  referred to in Section 1.3(c)
     either (i) the  registration  statement  described in Section 1.3(a) is not
     declared effective or (ii) the registration  statement described in Section
     1.3(a) is no longer  deemed to be  effective  after  initial  effectiveness
     (including without limitation any suspension of use under the circumstances
     described in Section 1.6(f)  hereof),  the Company shall,  unless waived by
     the Investors, issue to each Investor an additional Registration Warrant to
     acquire the number of shares of Common Stock equal to (i) 5%  multiplied by
     (ii) the  aggregate  number  of shares of  Registrable  Stock  sold to such
     Investor pursuant to the Subscription Agreement. The exercise price of each
     such Registration Warrant shall be $.20 per share, subject to adjustment as
     set forth in the Registration Warrant.

          (e) If at any time  during of each  subsequent  thirty (30) day period
     after the first thirty (30) day period after the initial one hundred eighty
     (180) day period referred to in Section 1.3(c) either (i) the  registration
     statement described in Section 1.3(a) is not declared effective or (ii) the
     registration  statement  described in Section 1.3(a) is no longer deemed to
     be effective after initial effectiveness  (including without limitation any
     suspension  of use under the  circumstances  described  in  Section  1.6(f)
     hereof),  the Company shall, unless waived by the Investors,  issue to each
     Investor an additional Registration Warrant to acquire the number of shares
     of Common Stock equal to (i) 2.5%  multiplied by (ii) the aggregate  number
     of  shares of  Registrable  Stock  sold to such  Investor  pursuant  to the
     Subscription  Agreement.  The  exercise  price  of each  such  Registration
     Warrant will be $.20 per share,  subject to  adjustment as set forth in the
     Registration Warrant.

          (f) The Company  shall  execute  such other and further  certificates,
     instruments  and other  documents  as may be  reasonably  requested  by the
     Investors  or  reasonably  necessary or proper to  implement,  complete and
     perfect  the   Investors'   rights  under  this   Section  1.3  and,   upon
     effectiveness  of a registration  statement with respect to the Registrable
     Securities,  to freely trade the Registrable  Securities without limitation
     or restriction imposed or created by the Company or securities law.

          (g) The  terms  and  covenants  set  forth in this  Section  1.3 shall
     terminate  as to each  Holder and be of no further  force and effect on the
     earlier of the date on which all the  Registrable  Securities  beneficially
     owned by that Holder (i) are  registered  pursuant to this  Section 1.3 and
     sold by that  Holder in an open market  transaction  or (ii) can be sold by
     that  Holder  (and any  affiliate  of the Holder with whom such Holder must
     aggregate  its sales  under  Rule 144) in any  three-month  period  without
     volume  limitation  and without  registration  in compliance  with Rule 144
     under the 1933 Act.

1.4      Company Registration.

          (a) If (but without any  obligation to do so) the Company  proposes to
     register any of its stock (including a registration effected by the Company
     for stockholders other than the Holders) or other securities under the 1933
     Act in connection with the public offering of such securities,  the Company
     shall, at such time, promptly give each Holder notice of such registration.
     On the  request of each  Holder  given  within  thirty (30) days after such
     notice by the Company,  the Company  shall,  subject to the  provisions  of
     Section  1.4(c),  cause  to be  registered  under  the  1933 Act all of the
     Registrable   Securities   that  each  such  Holder  has  requested  to  be
     registered.

          (b) The Company  shall have the right to  terminate  or  withdraw  any
     registration   initiated  by  it  under  this  Section  1.4  prior  to  the
     effectiveness  of such  registration,  whether or not any Holder shall have
     elected to include  securities in such  registration.  The expenses of such
     withdrawn  registration  shall be borne by the Company in  accordance  with
     Section 1.8 hereof.

          (c) In  connection  with any  offering  involving an  underwriting  of
     shares of the Company's  capital  stock,  the Company shall not be required
     under this Section 1.4 to include any  requesting  Holder's  securities  in
     such underwriting, unless such Holder accepts the terms of the underwriting
     as agreed  between the Company and the  underwriters  selected by it (or by
     other  persons  entitled  to select the  underwriters)  and enters  into an
     underwriting   agreement  in  customary   form  with  the   underwriter  or
     underwriters selected by the Company, and then only in such quantity as the
     underwriters  determine in their sole  discretion  will not  jeopardize the
     success of the offering by the Company.  If the total amount of securities,
     including Registrable Securities, requested to be included in such offering
     by the Company, the Holders and other security holders to whom registration
     rights  have  been  granted  exceeds  the  amount  of  securities  that the
     underwriters  determine in their sole  discretion  is  compatible  with the
     success of the  offering,  then the Company shall be required to include in
     the  offering  only  that  number  of  securities  (including   Registrable
     Securities) that the  underwriters  determine in their sole discretion will
     not jeopardize the success of the offering (the  Registrable  Securities so
     included to be apportioned pro rata among the selling Holders  according to
     the total amount of Registrable Securities requested to be included therein
     owned by each selling Holder or in such other proportions as shall mutually
     be  agreed  to by such  selling  Holders);  provided,  that the  amount  of
     Registrable  Securities  requested  by the  Holders to be  included in such
     offering pursuant to this Section 1.4 and all other securities requested by
     other holders to be included in such offering pursuant to other "piggyback"
     registration rights shall be reduced first (the Registrable  Securities and
     other  securities so reduced to be  apportioned  pro rata among the selling
     Holders and other  holders  according  to the total  amount of  Registrable
     Securities and other  securities  requested to be included  therein by each
     selling Holder and other holder) before any reduction of any (i) securities
     requested  to be  included  in  such  offering  by any  holders  exercising
     "demand"  registration rights or (ii) any securities sold by the Company to
     be included in such  offering.  For  purposes of such  apportionment  among
     Holders,  for any  selling  stockholder  that is a  Holder  of  Registrable
     Securities and that is a partnership or corporation,  the partners, retired
     partners and stockholders of such Holder, or the estates and family members
     of any such partners and retired partners and any trusts for the benefit of
     any of the  foregoing  persons  shall be  deemed  to be a  single  "selling
     Holder",  and any pro rata reduction with respect to such "selling  Holder"
     shall be based on the aggregate amount of Registrable  Securities requested
     to  be  included  in  such  offering  by  all  such  related  entities  and
     individuals.

     1.5 Form S-3  Registration.  If the Company  shall receive from one or more
Holders a request or requests that the Company effect a registration on Form S-3
and any related blue sky or similar  qualification or compliance with respect to
at least 25% (or a lesser  percentage if the  requirements of Section  1.5(b)(i)
are met) of the  Registrable  Securities  owned by such Holder or  Holders,  the
Company shall:

     (a) promptly give notice of the proposed registration, and any related blue
sky or similar qualification or compliance, to all other Holders; and

     (b)  cause,  as soon as  practicable,  such  Registrable  Securities  to be
registered  for  offering  and  sale on  Form  S-3 and  cause  such  Registrable
Securities to be qualified in such  jurisdictions as such Holders may reasonable
request,  together with all or such portion of the Registrable Securities of any
other Holders joining in such request as are specified in a request given within
fifteen (15) days after  receipt of such notice from the Company;  provided that
the  Company   shall  not  be  obligated   to  effect  any  such   registration,
qualification or compliance, pursuant to this Section 1.5:

          (i) if the Holders,  together with the holders of any other securities
     of the Company entitled to inclusion in such registration,  propose to sell
     Registrable  Securities and such other  securities (if any) at an aggregate
     price to the public of less than $500,000;

          (ii) if the Company has, within the twelve month period  preceding the
     date of such request,  already  effected two  registrations on Form S-3 for
     the Holders pursuant to this Section 1.5;

          (iii) if the Company shall furnish to the Holders a certificate signed
     by the Chief  Executive  Officer of the  Company  stating  that in the good
     faith  judgment  of the  Board of  Directors  of the  Company,  it would be
     seriously detrimental to the Company and its stockholders for such Form S-3
     Registration  to be effected at such time, in which event the Company shall
     have the right to defer the filing of the Form S-3  registration  statement
     for a period of not more than sixty (60) days after  receipt of the request
     of the Holder or Holders under this Section 1.5;  provided that the Company
     shall not  utilize  this  right  more than once in any  twelve  (12)  month
     period;  provided,  further, that the Company shall not register shares for
     its own account  during such sixty (60) day  period,  but such  prohibition
     shall not apply to the  registration  of Company shares in connection  with
     (x) a merger or (y)  registration  of shares  relating  to a stock  option,
     stock purchase or similar plan; or

          (iv) in any  particular  jurisdiction  in which the  Company  would be
     required  to qualify  to do  business  or to  execute a general  consent to
     service  of  process  in  effecting  such  registration,  qualification  or
     compliance.

     (c)  Subject  to the  foregoing,  the  Company  shall  file a  registration
statement covering the Registrable  Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders.

     1.6 Obligations of the Company.  Whenever  required under this Section 1 to
effect the  registration  of any Registrable  Securities,  the Company shall, as
expeditiously as reasonably possible:

     (a) except as otherwise  provided in Section 1.3, prepare and file with the
SEC a registration statement with respect to such Registrable Securities and use
best efforts to cause such registration statement to become effective,  and keep
such registration  statement effective for a period of up to two hundred seventy
(270)  days  or,  if  earlier,  until  the  distribution   contemplated  in  the
registration  statement has been  completed;  provided that (i) such two hundred
seventy (270) day period shall be extended for a period of time equal to (A) the
period  the  Holder  refrains  from  selling  any  securities  included  in such
registration  at the  request  of an  underwriter  of  Common  Stock  (or  other
securities)  of the Company and (B) the period of any  suspension of use of such
registration statement under the circumstances  described in Section 1.6(f); and
(ii) in the case of any  registration of Registrable  Securities on Form S-3 (or
any other Form, to the extent  permitted by law) that are intended to be offered
on a continuous  or delayed  basis,  such two hundred  seventy  (270) day period
shall be extended,  if necessary,  to keep the Registration  Statement effective
until all such  Registrable  Securities are sold,  except to the extent that the
Holders (and any  affiliate of the Holders with whom the Holders must  aggregate
their  sales  under  Rule 144) of such  Registrable  Securities  may sell  those
Registrable  Securities in any  three-month  period without regard to the volume
limitation and without  registration  in compliance with Rule 144 under the 1933
Act;

     (b) prepare and file with the SEC such  amendments and  supplements to such
registration   statement  and  the  prospectus  used  in  connection  with  such
registration  statement  as may be  necessary  to comply  with the 1933 Act with
respect  to the  disposition  of all  securities  covered  by such  registration
statement  during  the  period  of  time  such  registration  statement  remains
effective;

     (c)  furnish  to the  Holders  such  numbers  of  copies  of a  prospectus,
including a preliminary  prospectus,  in conformity with the requirements of the
1933 Act, and such other documents as they may reasonably  request to facilitate
the disposition of Registrable Securities owned by them;

     (d) use best efforts to register and qualify the securities covered by such
registration  statement  under  such other  securities  or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders; provided that the
Company shall not be required in connection  therewith or as a condition thereto
to qualify to do business or to file a general  consent to service of process in
any such states or jurisdictions;

     (e) in the  event  of any  underwritten  public  offering,  enter  into and
perform its obligations under an underwriting  agreement, in usual and customary
form, with the managing underwriter of such offering;

     (f)  during  the  period  of  time  such  registration   statement  remains
effective,  immediately notify each Holder of Registrable  Securities covered by
such  registration  statement  in  writing  at any time  when  (i) a  prospectus
relating  thereto is  required  to be  delivered  under the 1933 Act or (ii) the
happening  of any  event as a result of which the  prospectus  included  in such
registration  statement,  as then in effect,  includes an untrue  statement of a
material fact or omits to state a material fact required to be stated therein or
necessary  to make the  statements  therein not  misleading  in the light of the
circumstances  then existing,  and in the case of clause (ii) above,  the Holder
shall suspend the use of the prospectus  until its receipt of the written notice
referred to in the last  sentence of this Section  1.6(f).  Notwithstanding  the
provisions  of  this  Section  1.6,  the  Company  may,   during  the  period  a
registration  statement is required to remain effective  hereunder,  suspend the
use of the prospectus for a period not to exceed sixty (60) days (whether or not
consecutive)  in any  12-month  period if the Board of  Directors of the Company
determines  in good faith  that  because of valid  business  reasons,  including
pending  mergers  or  other  business  combination  transactions,   the  planned
acquisition or divestiture of assets,  pending material  corporate  developments
and similar  events,  it is in the best interests of the Company to suspend such
use,  and prior to or  contemporaneously  with  suspending  such use the Company
provides  the Holders of  Registrable  Securities  with  written  notice of such
suspension (which notice need not specify the nature of the event giving rise to
such  suspension),  and the Holder shall suspend the use of the prospectus until
its  receipt of the  written  notice  referred  to in the last  sentence of this
Section 1.6(f).  At the end of any suspension period referred to in the first or
second sentence of this Section 1.6(f),  the Company shall  immediately  provide
the Holders with written notice of the termination of such suspension.

     (g) cause all such Registrable Securities registered hereunder to be listed
on each securities  exchange on which securities of the same class issued by the
Company are then listed;

     (h) provide a transfer agent and registrar for all  Registrable  Securities
registered hereunder and a CUSIP number for all such Registrable Securities,  in
each case not later than the effective date of such registration; and

     (i)  furnish,  at  the  request  of  any  Holder,  on the  date  that  such
Registrable  Securities are delivered to the underwriters for sale in connection
with a  registration  pursuant to this Section 1, if such  securities  are being
sold through  underwriters,  or, if such  securities  are not being sold through
underwriters,  on the date that the registration  statement with respect to such
securities  becomes effective,  (i) an opinion,  dated such date, of the counsel
representing  the Company for the  purposes  of such  registration,  in form and
substance as is customarily  given to  underwriters  in an  underwritten  public
offering,  addressed to the underwriters,  if any, and to the Holders requesting
registration of Registrable  Securities,  and (ii) a "comfort"  letter signed by
the independent  public  accountants who have certified the Company's  financial
statements included in the registration  statement,  covering  substantially the
same matters  with respect to the  registration  statement  (and the  prospectus
included  therein)  and with  respect  to events  subsequent  to the date of the
financial  statements,  as  are  customarily  covered  in  accountants'  letters
delivered to the  underwriters  in underwritten  public  offerings of securities
addressed  to  the  underwriters,   if  any,  and  to  the  Holders   requesting
registration of Registrable Securities.

     1.7  Information  from  Holder.  It shall be a condition  precedent  to the
obligations  of the Company to take any action  pursuant to this  Section 1 with
respect to the  Registrable  Securities  of any selling  Holder that such Holder
shall  furnish to the  Company  such  information  regarding  such  Holder,  the
Registrable  Securities  held  by  such  Holder,  and  the  intended  method  of
disposition of such  securities as shall be required to effect the  registration
of such Registrable Securities.

     1.8 Expenses of  Registration.  All expenses  incurred in  connection  with
registrations,  filings or qualifications  pursuant to this Section 1, including
without  limitation all registration,  filing and qualification  fees,  printing
fees and expenses,  accounting  fees and  expenses,  fees and  disbursements  of
counsel for the Company and the reasonable fees and disbursements of one counsel
for the selling Holders  selected by the Holders,  not to exceed $5,000 for each
registration  statement or each amendment  thereto  (provided that there are not
more than two drafts  thereof),  shall be borne by the Company.  Notwithstanding
the foregoing,  the Company shall not be required to pay for any expenses of any
registration   proceeding  begun  pursuant  to  Sections  1.3  and  1.5  if  the
registration request is subsequently  withdrawn at the request of the Holders of
a majority of the  Registrable  Securities to be  registered  (in which case all
participating  Holders  shall bear such expenses pro rata based on the number of
Registrable  Securities  that were  requested  to be included  in the  withdrawn
registration);  provided  that, if at the time of such  withdrawal,  the Holders
shall have learned of a material adverse change in the condition,  business,  or
prospects  of the  Company  from that known to the  Holders at the time of their
request  and  shall  have  withdrawn  the  request  with  reasonable  promptness
following  disclosure by the Company of such material  adverse change,  then the
Holders shall not be required to pay any of such expenses and shall retain their
rights  pursuant  to  Sections  1.3 and 1.5.  Anything  herein  to the  contrary
notwithstanding,   all  underwriting   discounts  and  commissions  incurred  in
connection with a sale of Registrable  Securities shall be borne and paid by the
Holder thereof, and the Company shall have no responsibility therefor.

     1.9  Indemnification.  If any  Registrable  Securities  are  included  in a
registration statement under this Section 1:

     (a) To the extent  permitted by law, the Company  will  indemnify  and hold
harmless each Holder,  the partners or officers,  directors and  stockholders of
such Holder,  legal counsel and accountants for such Holder, any underwriter (as
defined in the 1933 Act) for such Holder and each  person,  if any, who controls
such Holder or  underwriter  within the meaning of the 1933 Act or the 1934 Act,
against any losses,  claims,  damages or liabilities (joint or several) to which
they may become subject under the 1933 Act, the 1934 Act or any other federal or
state securities law, insofar as such losses, claims, damages or liabilities (or
actions in respect  thereof)  arise out of or are based on any of the  following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement  or alleged  untrue  statement  of a material  fact  contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or  necessary  to make the  statements  therein  not  misleading,  or (iii)  any
violation or alleged violation by the Company of the 1933 Act, the 1934 Act, any
state securities law or any rule or regulation  promulgated  under the 1933 Act,
the 1934 Act or any state  securities  law; and the Company will  reimburse such
Holder,  underwriter  or  controlling  person  for any  legal or other  expenses
incurred,  as incurred,  in connection with  investigating or defending any such
loss, claim, damage,  liability or action; provided that the indemnity agreement
in this Section 1.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage,  liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably  withheld or
delayed),  nor shall the  Company  be liable in any such case for any such loss,
claim,  damage,  liability  or action to the extent  that it arises out of or is
based on a Violation  that occurs in reliance on and in conformity  with written
information  furnished expressly for use in connection with such registration by
such Holder, underwriter or controlling person.

     (b) To the extent  permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers who shall
have signed the registration  statement,  each person,  if any, who controls the
Company  within the meaning of the 1933 Act, legal counsel and  accountants  for
the Company,  any  underwriter,  any other  Holder  selling  securities  in such
registration  statement and any  controlling  person of any such  underwriter or
other Holder, against any losses, claims, damages or liabilities to which any of
the foregoing  persons may become  subject,  under the 1933 Act, the 1934 Act or
any other  federal or state  securities  law,  insofar as such  losses,  claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
on any Violation,  in each case to the extent (and only to the extent) that such
Violation  occurs in  reliance on and in  conformity  with  written  information
furnished by such Holder expressly for use in connection with such registration;
and each such  Holder  will  reimburse  any person  intended  to be  indemnified
pursuant to this  Section  1.9(b),  for any legal or other  expenses  reasonably
incurred,  as  incurred,  by such person in  connection  with  investigating  or
defending any such loss, claim, damage,  liability or action;  provided that the
indemnity  agreement in this  Section  1.9(b) shall not apply to amounts paid in
settlement  of any  such  loss,  claim,  damage,  liability  or  action  if such
settlement is effected  without the consent of the Holder  (which  consent shall
not be unreasonably withheld or delayed);  and provided further that in no event
shall any indemnity by such Holder under this Section  1.9(b),  when  aggregated
with amounts  contributed,  if any,  pursuant to Section 1.9(d),  exceed the net
proceeds  from the sale of  Registrable  Securities  hereunder  received by such
Holder.

     (c) Promptly after receipt by an  indemnified  party under this Section 1.9
of notice of the commencement of any action (including any governmental action),
such indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this Section 1.9, deliver to the indemnifying party
notice of the  commencement  thereof and the  indemnifying  party shall have the
right to  participate  in,  and, to the extent  that the  indemnifying  party so
desires,  jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties;  provided
that an indemnified party (together with all other indemnified  parties that may
be represented  without  conflict by one counsel) shall have the right to retain
one separate counsel,  with the fees and expenses to be paid by the indemnifying
party, if  representation  of such indemnified  party by the counsel retained by
the  indemnifying  party  would be  inappropriate  due to  actual  or  potential
differing   interests  between  such  indemnified  party  and  any  other  party
represented  by such  counsel  in such  proceeding.  The  failure  to notify the
indemnifying  party within a  reasonable  time of the  commencement  of any such
action, if prejudicial to its ability to defend such action,  shall relieve such
indemnifying  party of any liability to the indemnified party under this Section
1.9, but the omission so to notify the indemnifying party will not relieve it of
any liability  that it may have to any  indemnified  party  otherwise than under
this Section 1.9.

     (d) If the indemnification  provided in this Section 1.9 is held by a court
of competent jurisdiction to be unavailable to an indemnified party with respect
to any loss,  liability,  claim,  damage or expense referred to herein, then the
indemnifying  party, in lieu of indemnifying  such indemnified  party hereunder,
shall  contribute to the amount paid or payable by such  indemnified  party as a
result of such loss,  liability,  claim, damage or expense in such proportion as
is appropriate to reflect the relative  fault of the  indemnifying  party on the
one  hand and of the  indemnified  party on the  other  in  connection  with the
statements or omissions that shall have resulted in such loss, liability, claim,
damage or  expense,  as well as any  other  relevant  equitable  considerations;
provided that in no event shall any  contribution by a Holder under this Section
1.9(d),  when aggregate with amounts paid, if any,  pursuant to Section  1.9(b),
exceed  the net  proceeds  from the  sale of  Registrable  Securities  hereunder
received by such Holder. The relative fault of the indemnifying party and of the
indemnified  party shall be  determined  by reference  to,  among other  things,
whether  the  untrue or  alleged  untrue  statement  of a  material  fact or the
omission  to state a  material  fact  relates  to  information  supplied  by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge,  access to  information,  and  opportunity to correct or prevent such
statement or omission.

     (e)  Notwithstanding  the  foregoing,  to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection  with the  underwritten  public offering are in conflict with
the foregoing  provisions,  the provisions in the  underwriting  agreement shall
control.

     (f) The obligations of the Company and Holders under this Section 1.9 shall
survive  the  completion  of  any  offering  of  Registrable   Securities  in  a
registration statement under this Section 1, and otherwise.

     1.10 Reports under 1934 Act. With a view to making available to the Holders
the  benefits of Rule 144  promulgated  under the 1933 Act and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public  without  registration  or pursuant to a  registration
statement (including,  without limitation, Form S-3), the Company agrees to: (a)
make and keep public information available,  as those terms are used in SEC Rule
144, at all times;

     (b) take such action as is  necessary to enable the Holders to utilize Form
S-3 for the sale of their Registrable Securities;

     (c) file with the SEC in a timely  manner all reports  and other  documents
required of the Company under the 1933 Act and the 1934 Act; and

     (d)  furnish  to any  Holder,  so long as the Holder  owns any  Registrable
Securities, forthwith on request, (i) a written statement by the Company that it
has complied with the reporting  requirements  of SEC Rule 144, the 1933 Act and
the 1934 Act, or that it  qualifies  as a  registrant  whose  securities  may be
resold  pursuant to Form S-3, (ii) a copy of the most recent annual or quarterly
report of the  Company  and such other  reports  and  documents  so filed by the
Company,  and (iii) such other  information  as may be  reasonably  requested in
availing  any  Holder  of any rule or  regulation  of the SEC that  permits  the
selling of any such securities without registration or pursuant to such form.

     1.11 Assignment of Registration  Rights. The rights to cause the Company to
register Registrable  Securities pursuant to this Section 1 may be assigned (but
only with all related  obligations)  by a Holder to a transferee  or assignee of
such Registrable Securities that (i) is a subsidiary,  parent, current or former
partner, current or former limited partner, current or former member, current or
former  manager  or  stockholder  of a Holder,  (ii) is an  entity  controlling,
controlled  by  or  under  common  control  with  a  Holder,  including  without
limitation  a  corporation  or  limited  liability  company  that is a direct or
indirect  parent or subsidiary of the Holder,  (iii) is a transferee or assignee
of a Holder and the number of shares  representing or underlying the Registrable
Securities  (whether in the form of shares,  warrants to purchase  shares,  or a
combination of the foregoing) transferred or assigned constitute at least 50,000
shares of  Registrable  Securities  held by such Holder (as  adjusted  for stock
split, combinations, dividends and the like); provided that: (a) the Company is,
within a reasonable  time after such transfer,  notified of the name and address
of such  transferee or assignee and the  Registrable  Securities with respect to
which  such  registration  rights are being  assigned;  (b) such  transferee  or
assignee  agrees  in  writing  to be  bound  by and  subject  to the  terms  and
conditions of this  Agreement;  (c) such  assignment  shall be effective only if
immediately  following such transfer the further  disposition of such securities
by the  transferee  or assignee is  restricted  under the 1933 Act; and (d) such
assignment is not made pursuant to a registration statement effected pursuant to
this Agreement.

     1.12  Duplicative  Registration  Rights.  The rights of the Investors under
Section  1.4 or  Section  1.5  shall not apply to the  extent  that  Registrable
Securities  then held by the  Investors  are  already  covered  by an  effective
registration statement under Section 1.3 or any other Section of this Agreement.

     1.13  Termination of  Registration  Rights.  No Holder shall be entitled to
exercise  any right  provided in this  Section 1 with  respect to a  Registrable
Security  (i) after the date on which that  Registrable  Security  has been sold
under a registration  statement  filed in accordance with this Agreement or (ii)
if all  Registrable  Securities  held by such Holder (and any  affiliate  of the
Holder  with whom such Holder  must  aggregate  its sales under Rule 144) can be
sold  in  any   three-month   period  without  volume   limitation  and  without
registration in compliance with Rule 144 under the 1933 Act.

     2. Covenants.

     2.1 Reserve for Exercise Shares. The Company shall at all times reserve and
keep available out of its  authorized  but unissued  shares of Common Stock such
number of shares (the "Exercise  Shares") as shall be sufficient to enable it to
comply with its exercise obligations under the Registration  Warrants. If at any
time the  number of  Exercise  Shares  shall  not be  sufficient  to effect  the
exercise of the  Registration  Warrants,  the Company will  forthwith  take such
corporate  action as may be necessary to increase  its  authorized  but unissued
shares of Common Stock to such number as will be sufficient  for such  purposes.
The Company will obtain authorization,  consent, approval or other action by, or
make any  filing  with,  any  administrative  body  that may be  required  under
applicable  state  securities  laws in connection  with the issuance of Exercise
Shares.

     2.2 Confidential Information.  The Company shall provide to each Holder not
less than ten days' prior  written  notice of its  intention  to deliver to such
Holder confidential or non-public  information relating to the Company and shall
mark such  information as  "confidential"  or "non-public." If a Holder notifies
Company  that it does not  desire to receive  such  confidential  or  non-public
information, then the Company shall not deliver such information to such Holder.
Whether or not a Holder has so  notified  the  Company,  such Holder may, in its
sole  discretion,  decline to receive  from the  Company  such  confidential  or
non-public  information,  and as a result  thereof  shall  not be deemed to have
received or have any knowledge of such  confidential or non-public  information;
provided  that it has not  received  the same or promptly  returns the same upon
receipt by such Holder.

     3. Miscellaneous.

     3.1  Successors  and Assigns.  Except as otherwise  provided  herein,  this
Agreement  shall inure to the benefit of and bind the respective  successors and
assigns of the  parties  (including  transferees  of any  shares of  Registrable
Securities).  Nothing in this  Agreement,  express or  implied,  is  intended to
confer on any party other than the parties hereto or their respective successors
and assigns any rights, remedies, obligations, or liabilities under or by reason
of this Agreement, except as expressly provided in this Agreement.

     3.2 Governing  Law. This  Agreement  shall be governed by and construed and
interpreted  in  accordance  with the laws of the State of  Washington,  without
giving  effect to its  conflicts of law  principles.  All  disputes  between the
parties  hereto  arising  out of or in  connection  with this  Agreement  or the
Registrable Securities, whether sounding in contract, tort, equity or otherwise,
shall  be  resolved  only by  state  and  federal  courts  located  in  Spokane,
Washington,  and the  courts to which an  appeal  therefrom  may be  taken.  All
parties  hereto waive any  objections  to the  location of the  above-referenced
courts,   including  but  not  limited  to  any  objection   based  on  lack  of
jurisdiction,  improper  venue  or forum  non  conveniens.  Notwithstanding  the
foregoing,   any  party   obtaining   an  order  or   judgment  in  any  of  the
above-referenced  courts may bring an action in a court in another  jurisdiction
in order to enforce such order or judgment.

     3.3   Counterparts.   This  Agreement  may  be  executed  in  two  or  more
counterparts,  each of  which  shall be  deemed  an  original,  but all of which
together shall constitute one and the same instrument.

     3.4 Headings.  The headings of sections and  subsections  in this Agreement
are used for  convenience  of  reference  only and are not to be  considered  in
construing or interpreting this Agreement.

     3.5 Notices. Any request,  consent,  notice or other communication required
or permitted  under this Agreement  shall be in writing and shall be deemed duly
given and received when delivered  personally or  transmitted by facsimile,  one
business  day after being  deposited  for  next-day  delivery  with a nationally
recognized  overnight  delivery  service,  or three  business  days after  being
deposited as first class mail with the United States Postal Service, all charges
or postage prepaid,  and properly  addressed to the party to receive the same at
the address for such party  indicated  on the  signature  page hereof or at such
other address as such party may designate by advance written notice to the other
parties.

     3.6 Expenses.  If any action at law or in equity is necessary to enforce or
interpret  any of the terms of this  Agreement,  the  prevailing  party shall be
entitled to reasonable  attorneys' fees, costs and  disbursements in addition to
any other relief to which such party may be entitled.  In addition,  the Company
shall  pay the  reasonable  attorneys'  fees,  costs  and  disbursements  of the
Investors in enforcing any terms of this Agreement, whether or not any action at
law or in equity is brought.

     3.7 Entire Agreement:  Amendments and Waivers.  This Agreement  constitutes
the full and entire understanding and agreement among the parties with regard to
the subject  matter  hereof.  Any term of this  Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular  instance and either  retroactively or  prospectively)  only with the
consent  of the  Company  and the  holders  of more than 50% of the  Registrable
Securities; provided that no amendment shall be effective unless approved by the
holder or holders of Registrable Securities that shall be affected adversely, or
affected  differently  from  the  Holders  generally,  by  such  amendment.  Any
amendment  or waiver  effected  in  accordance  with this  Section  3.7 shall be
binding on the  Company,  each  holder of any  Registrable  Securities  and each
future holder of all such Registrable Securities.

     3.8 Severability.  If any provision of this Agreement is held by a court of
competent  jurisdiction to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement  shall be
interpreted  as if such  provision  were so excluded and shall be enforceable in
accordance with its terms.

                  [Remainder of page intentionally left blank]


<PAGE>


     IN  WITNESS  WHEREOF,  this  Registration  Rights  Agreement  has been duly
executed  by or on  behalf of the  parties  hereto  as of the date  first  above
written.

                                    "Company"

                                    AURA SYSTEMS, INC.

                                    By:
                                    Name:
                                    Title:

                                    2335 Alaska Avenue
                                    El Segundo, CA 90245
                                    Attn: ________________
                                    Fax: _________________

                                    "Investors"

                                     KOYAH LEVERAGE PARTNERS, L.P.

                                     By:      Koyah Ventures LLC,
                                              its general partner

                                     By:
                                     Name:
                                     Title:


                                     c/o ICM Asset Management, Inc.
                                     601 West Main Avenue, Suite 600
                                     Spokane, WA  99201
                                     Attn:    Robert Law
                                     Fax:  (509) 444-4500







                [Signature page to Registration Rights Agreement]

                                       KOYAH PARTNERS, L.P.

                              By:      Koyah Ventures LLC, its general partner

                                       By:
                                       Name:
                                       Title:


                                       c/o ICM Asset Management, Inc.
                                       601 West Main Avenue, Suite 600
                                       Spokane, WA  99201
                                       Attn:    Robert Law
                                       Fax:  (509) 444-4500


                                       RAVEN PARTNERS, L.P.

                              By:      Koyah Ventures LLC, its general partner

                                       By:
                                       Name:
                                       Title:


                                       c/o ICM Asset Management, Inc.
                                       601 West Main Avenue, Suite 600
                                       Spokane, WA  99201
                                       Attn:    Robert Law
                                       Fax:  (509) 444-4500



                [Signature page to Registration Rights Agreement]


<PAGE>

                                    EXHIBIT A

                          Form of Registration Warrant


                      [Separate document - need to attach]