EXHIBIT 10.26

                              SETTLEMENT AGREEMENT
                          AND MUTUAL RELEASE OF CLAIMS


     This Settlement Agreement and Mutual Release of Claims (the "Agreement") is
entered into and effective as of this 26th day of February, 2002, by and between
GSS/ARRAY  TECNHOLOGY,  INC.  and  GSS/ARRAY  TECHNOLOGY  PUBLIC  COMPANY,  LTD.
(collectively  referred to herein as "GSS") and AURA  SYSTEMS,  INC., a Delaware
corporation ("Aura").

                                 R E C I T A L S

     WHEREAS,  the GSS is the holder of certain  indebtedness  with an aggregate
outstanding   principal   balance  including  accrued  and  unpaid  interest  of
$3,267,979.47 owing from Aura as of February 26, 2002 (the "Debt").

     WHEREAS,  GSS has assigned all of its respective right,  title and interest
in and to the Debt to  Lawrence  A.  Diamant,  as agent  for  various  investors
("Agent") for a cash payment of $1,600,000 to which Aura has consented.

     WHEREAS, by entering into this Agreement,  GSS and Aura desire to avoid the
risks,  uncertainties  and costs of  litigation  and to buy peace,  and to fully
compromise  and settle any and all  disputes,  known or unknown,  between  them,
which arise from any and all prior dealings and  associations  with one another,
including, but not limited to obligations arising under that certain Subcontract
Number  15817,  Amendment  #3  (the  "Subcontract"),  or  as  a  result  of  its
termination thereof.

     NOW, THEREFORE,  in consideration of the above stated premises,  the mutual
promises  and  agreements   contained  herein,   and  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:

     1. Releases.

     (a) GSS  hereby  releases,  acquits  and  forever  discharges  Aura and its
current   and  former   affiliates,   subsidiaries,   stockholders,   employees,
consultants,  managers, agents, attorneys,  officers and directors (collectively
the "Aura Released Parties"), from all claims, counterclaims, demands, causes of
action,  obligations,  express and implied warranties,  suits,  debts,  damages,
punitive and exemplary damages, expense reimbursements, common law and statutory
penalties, liens, attorneys' fees, judgments,  interest and expenses of any type
whatsoever, whether known or unknown, in any manner, arising out of, related to,
or  connected  with the prior  dealings of Aura and GSS through the date hereof,
including,  without limitation, the Subcontract,  Debt or the assignment thereof
occurring prior to and through the date of this Agreement. GSS acknowledges that
no Aura Released  Party owes any amount to GSS or its  affiliates as a result of
the assignment  thereof to Agent.  Nothing herein releases Aura's  obligation to
pay Agent the sums payable.

     (b) Aura hereby  releases,  acquits and  forever  discharges  GSS and their
respective current and former affiliates, subsidiaries, stockholders, employees,
consultants,  managers,  agents,  investment advisors,  attorneys,  officers and
directors   from  all  claims,   counterclaims,   demands,   causes  of  action,
obligations, express and implied warranties, suits, debts, damages, punitive and
exemplary damages,  common law and statutory penalties,  liens, attorneys' fees,
judgments,  interest  and  expenses  of any type  whatsoever,  whether  known or
unknown, in any manner,  arising out of, related to, or connected with the prior
dealings of Aura and GSS through the date hereof,  including without limitation,
the Subcontract,  Debt or the assignment  thereof occurring prior to and through
the date of this Agreement.

     2.   Continued    Protection   of    Proprietary    Information/Technology.
Notwithstanding  any provision to the contrary set forth in Section 1 above, GSS
agrees to continue  to protect  the  confidential  and  proprietary  information
related to its manufacture and supply of the AuraGen  Electronics  Control Unit.
GSS  acknowledges  that all  information  supplied to it by Aura other than that
expressly designated by Aura as non-confidential is confidential and proprietary
to Aura (collectively the "Aura Confidential  Information")  including,  without
limitation,  identification of its customers,  the price at which Aura purchases
its items, goods and services from GSS, the source and prices of goods and items
obtained by Aura,  copyrights,  trademarks,  patents or the technical methods of
manufacture of the items, goods, as well as information pertaining to materials,
equipment,  tools, guages, patterns, designs, drawings and engineering data. GSS
shall not  disclose or provide any Aura  Confidential  Information  to any third
party and shall take all necessary measures to prevent disclosure by its present
and future employees,  officers, agents,  subsidiaries,  dealers or consultants.
The provisions herein in this Section 2 shall be binding upon GSS, successors in
interest of GSS and shall survive for as long a period as is  permissible  under
law.

     3.  Intention of Parties.  It is expressly  understood  and agreed that the
terms hereof are  contractual  in nature and not merely  recitals,  and that the
agreements  and  releases  contained  herein  are  made  and  given  in order to
compromise and settle doubtful and disputed claims,  to avoid the cost, risk and
uncertainty of litigation and to buy peace. It is further  understood and agreed
that no term,  provision  or  agreement  contained  herein shall be construed or
interpreted  as an admission  of liability by or on behalf of any party  hereto,
all such liability being expressly denied.

     4.  Confidentiality  of Settlement.  The parties hereto agree that they and
their heirs,  assigns,  agents,  employees and attorneys  shall not disparage or
make any derogatory remarks whatsoever about any of the other parties thereto or
their heirs, assigns, agents, officers, directors, employees and attorneys.

     5. Binding  Effect.  This  Agreement and the releases  granted herein shall
inure to the  benefit of and be binding  against  the  parties  hereto and their
respective heirs, successors and assigns.

     6.  Governing  Law.  This  Agreement  shall be governed by and construed in
accordance with the laws of Delaware.

     7. Voluntary  Agreement.  Each of the parties hereto acknowledges that this
Agreement has been executed freely and voluntarily, without economic compulsion,
and with full knowledge of its legal significance and consequences.

     8. Ownership of Claims.  Each of the parties hereto represents and warrants
that it is the sole owner and holder of the various  claims and causes of action
released  herein  and that it has not  sold,  assigned,  conveyed  or in any way
transferred  any of its  rights in and to any of the claims and causes of action
to any third party.

     9. Severability.  This Agreement is intended to be severable.  If any term,
covenant,  condition,  or provision hereof is illegal,  invalid or unenforceable
for any reason whatsoever, such illegality, invalidity or unenforceability shall
not affect the legality,  validity or  enforceability  of the remaining parts of
this Agreement.

     10.  Counterparts.  This Agreement may be executed in  counterparts or with
detachable signature pages and shall constitute one agreement,  binding upon all
parties hereto as if all parties signed the same document.

     11.  Headings.  The headings used in this Agreement are intended solely for
the  convenience  of  reference,  and should not in any manner  amplify,  limit,
modify or otherwise be used in the  interpretation  of any of the  provisions of
this Agreement.

     12. Entire Agreement.  This Agreement  constitutes the entire understanding
and  agreement  of the parties and  supersedes  and  replaces all prior oral and
written agreements with respect to the subject matter hereof.  There are no oral
agreements between the parties hereto.



EXECUTED as of the date first above written.

AURA:

AURA SYSTEMS, INC., a Delaware corporation


By:
Name:
Title:



GSS:

GSS/ARRAY TECHNOLOGY, INC.
GSS/ARRAY TECHNOLOGY PUBLIC COMPANY, LTD


Boon Hoe, Chief Financial Officer