EXHIBIT 10.16

                                                                       Tier One

                               AGREEMENT REGARDING
                       TERMINATION OF EMPLOYMENT CONTRACT


                  This Agreement  Regarding  Termination of Employment  Contract
("Agreement")  is  entered  into as of this  21st day of  December,  2001 by and
between Zvi (Harry) Kurtzman  ("Executive"),  on the one hand, and Aura Systems,
Inc., a Delaware corporation ("Company"),  on the other hand (collectively,  the
"Parties").

                                    RECITALS

                  WHEREAS,  Executive  has been employed by the Company as Chief
Executive  Officer,  pursuant to an employment  agreement with the Company dated
March 5, 1998 (the "Employment Agreement");

                  WHEREAS,   Executive  and  the  Company  wish  to  voluntarily
terminate  Executive's  Employment  Agreement  and  make  Executive  an  at-will
employee of the Company effective December 21, 2001;

                  WHEREAS,  pursuant  to the terms of the  Employment  Agreement
Executive is entitled to receive a severance  payment upon such  termination  of
the Employment Agreement; and

                  WHEREAS,  the Company and  Executive  has  determined  that it
would be in the best interest of Executive,  the Company and its shareholders to
offer Executive a buyout of the Employment  Agreement and the severance  package
set forth herein, in exchange for covenants and agreements  contained herein and
in lieu of any  severance  payment  Executive  would  otherwise  be  entitled to
receive under the Employment Agreement.

                  WHEREAS, Executive and the Compensation Committee of the Board
of Directors have negotiated the terms and conditions of this  Agreement,  which
Agreement has been approved by the Board of Directors of the Company.

                  NOW  THEREFORE,  in  consideration  of the promises and mutual
covenants contained herein, and for other good and valuable  consideration,  the
receipt and sufficiency of which are expressly  acknowledged,  the Parties agree
and promise as follows:

                  1. TERMINATION OF EXECUTIVE'S EMPLOYMENT AGREEMENT.

               Pursuant to this Agreement, Executive's Employment Agreement with
          the  Company is  terminated  effective  December  21,  2001 (the "Term
          Date"). Executive shall continue as an at-will employee of the Company
          until the Company or Executive  terminates  such at-will  relationship
          (the "Separation Date").

                  2. BUYOUT AND SEVERANCE PAYMENT.

               In   consideration   of  Executive's   covenants  and  agreements
          contained  herein,  the  Company  shall pay  Executive  as a severance
          benefit (the "Severance Benefit") the following:

                           A. Tier One Buy-Out Stock Option

               The Company  shall grant to the  Executive  an option to purchase
          that  number of shares of Common  Stock of the Company  (the  "Stock")
          equal to the  quotient  of (x) three (3)  times the  Executive's  Base
          Salary (as defined in the Employment  Agreement)  divided by (y) $0.32
          multiplied by (z) two (2), (the "Buy-Out Stock Option"),  which option
          shall have an  exercise  price  equal to $0.55 per share.  The Buy-Out
          Stock  Option shall vest and become  exercisable  over a ten (10) year
          period from the date of grant,  with (i) one-third  (1/3) of the total
          shares  represented by the Buy-Out Stock Option (the "Option  Shares")
          vesting  and  becoming  exercisable  after the  expiration  of six (6)
          months from the date of this Agreement (the "First Vesting Date"), and
          (ii) two-thirds  (2/3) of the Option Shares vesting twelve (12) months
          after the First  Vesting  Date.  The  Buy-Out  Stock  Option  shall be
          exercisable,  to the extent vested, for the full ten (10) year term of
          the option without regard to the Executive's  status as an employee of
          the Company.  The Buy-Out  Stock Option shall be subject to such other
          terms as evidenced by a stock  option  agreement  entered into between
          Executive and the Company and attached hereto. The Company shall grant
          the Buy-Out  Stock Option  pursuant to a  shareholder-approved  option
          plan (a "Company  Option  Plan"),  and to the extent of any  shortfall
          where no additional  Stock is available for grant of options under any
          Company Option Plan,  then in the form of a warrant to purchase Stock,
          outside of any Company  Option Plan;  provided,  however,  that if the
          Company  shall grant the Executive a warrant,  the Executive  shall be
          entitled  to receive any  piggyback  registration  rights  customarily
          offered to similarly situated holders of warrants to purchase Stock.

                           B. Medical Benefits

               Executive shall receive  continued  medical benefits for a period
          of three (3) years following  termination of employment or be entitled
          to receive a payment in the form of cash in lieu of such  continuation
          of medical benefits; provided, that the Company shall not be obligated
          to pay a premium or incur any costs  related to the  provision of such
          continued  coverage in excess of one thousand dollars  ($1,000.00) per
          month for such three (3) year period.  The medical  benefits  shall be
          substantially  similar to the medical benefits Executive received from
          the Company prior to termination of employment.

                           C. Limitation of Benefits

               Except for (i) the Severance Benefit and (ii) Executive's  salary
          and all other compensation  through the Separation Date, including any
          earned but unpaid  vacation  pay,  Executive  shall not be entitled to
          receive any other  compensation  or  benefits  of any sort  including,
          without  limitation,   salary,   vacation,   bonuses,  stock  options,
          short-term or long-term disability benefits,  health care coverage and
          any severance  Executive might otherwise be entitled to received under
          the Employment  Agreement from the Company,  its affiliates,  or their
          respective partners,  principals,  officers, directors,  shareholders,
          managers, employees, agents, representatives,  or insurance companies,
          or their respective predecessors, successors or assigns at any time.

                  3. NO DISPARAGEMENTS.

               Executive  and the Company  agree that neither  Executive nor the
          Company shall make any oral or written, public or private,  statements
          that are disparaging of Executive or the Company,  its affiliates,  or
          their   respective   partners,   principals,    officers,   directors,
          shareholders,  managers, employees, agents, representatives,  or their
          respective predecessors,  successors or assigns at any time; provided,
          however,  nothing in this  Section 3 shall  preclude  Executive or the
          Company from making truthful factual statements regarding Executive or
          former officers, directors or employees of the Company.

                  4.       NON-COMPETITION.

               A. For a period  of three  (3) years  from the  Separation  Date,
          Executive shall not, directly or indirectly, without the prior written
          consent of the  Company,  provide  consultative  services or otherwise
          provide  services to (whether as an employee or a consultant,  with or
          without pay), own, manage, operate, join, control,  participate in, or
          be connected  with (as a  stockholder,  partner,  or  otherwise),  any
          business, individual, partner, firm, corporation, or other entity that
          is a competitor of the Company,  its subsidiaries or affiliates in any
          business  now  conducted,   or  conducted  at  any  time  through  the
          Separation Date, by the Company,  its subsidiaries or affiliates (each
          such  competitor a  "Competitor  of the  Company").  Executive and the
          Company acknowledge and agree that the business of the Company extends
          throughout the United  States,  Europe and Asia, and that the terms of
          the non-competition  agreement set forth herein shall apply throughout
          the United States, Europe and Asia

               B.  Non-Solicitation of Customers and Suppliers.  For a period of
          three years from the Separation Date, Executive shall not, directly or
          indirectly,  influence or attempt to influence  customers or suppliers
          of the Company,  or any of its  subsidiaries or affiliates,  to divert
          their business to any Competitor of the Company.

               C.  Non-Solicitation of Employees.  Executive  recognizes that he
          possesses  and  will  possess  confidential  information  about  other
          employees of the Company, its subsidiaries and affiliates, relating to
          their  education,  experience,  skills,  abilities,  compensation  and
          benefits,  and  inter-personal  relationships  with  customers  of the
          Company,  its subsidiaries and affiliates.  Executive  recognizes that
          the  information  he  possesses  and will  possess  about  these other
          employees  is not  generally  known,  is of  substantial  value to the
          Company,  its subsidiaries and affiliates in developing their business
          and in  securing  and  retaining  customers,  and has been and will be
          acquired by him because of his business position with the Company, its
          subsidiaries  and  affiliates.  Executive  agrees that for a period of
          three (3) years from the  Separation  Date,  he will not,  directly or
          indirectly,  solicit or  recruit  any  employee  of the  Company,  its
          subsidiaries  and  affiliates for the purpose of being employed by him
          or by  any  company  on  whose  behalf  he  is  acting  as  an  agent,
          representative  or  employee  and  that he will  not  convey  any such
          confidential information or trade secrets about other employees of the
          Company, its subsidiaries and affiliates to any other person.

               If Executive in any way violates the  provisions  of this Section
          4, all Severance Benefits shall cease, including the continued vesting
          of the Stock Options.

                  5.       RETURN OF THE COMPANY'S DOCUMENTS AND PROPERTY.

               Executive  agrees to return all  records,  documents,  proposals,
          notes, lists, files and any and all other materials including, without
          limitation,  computerized  and/or electronic  information that refers,
          relates or otherwise pertains to the Company,  its affiliates,  and/or
          their   respective   partners,   principals,    officers,   directors,
          shareholders,   managers,  employees,  agents,   representatives,   or
          insurance companies, or their respective  predecessors,  successors or
          assigns  at any  time.  In  addition,  Executive  shall  return to the
          Company all property or equipment  that he has been issued  during the
          course of his  employment or which he otherwise  currently  possesses.
          Executive  shall deliver to the Company before the Separation  Date at
          Executive's   expense  all  of  the  Company's   records,   documents,
          proposals,   notes,  lists,  files  and  materials  and  property  and
          equipment that are in his  possession.  Executive is not authorized to
          retain any copies of any such records,  documents,  proposals,  notes,
          lists, files or materials. Nor is he authorized to retain any other of
          the Company's property or equipment.

                  6.       PROPRIETARY INFORMATION.

               Executive  acknowledges  that  Executive  has had or may have had
          access to proprietary  information,  trade secrets,  and  confidential
          material of the Company or its affiliates,  including, but not limited
          to, all ideas, information and materials,  tangible or intangible, not
          generally known to the public,  relating in any manner to the business
          of  the  Company,  its  personnel  (including  partners,   principals,
          employees  and  contractors),  its clients or others with whom it does
          business that Executive learned,  acquired,  or created,  or helped to
          create during the period of  Executive's  employment  with the Company
          ("Proprietary Information").  Proprietary Information includes, but is
          not  limited  to, all trade  secrets,  patents  and  pending  patents,
          documents,  computer programs, source code, users manuals, algorithms,
          compilations of technical,  financial,  legal or other data, client or
          prospective client lists, names of suppliers, specifications, designs,
          business or marketing plans, forecasts, financial information, work in
          progress,  and other  technical  or  business  information.  Executive
          agrees,   without   limitation  in  time  or  until  such  Proprietary
          Information shall become public other than by Executive's unauthorized
          disclosure, to maintain the confidentiality of such information and to
          refrain  from   divulging,   disclosing  or  using  said   Proprietary
          Information for any other purpose.  Executive acknowledges and affirms
          that all existing Proprietary Information is the exclusive property of
          the Company and  Executive  hereby  assigns to the Company any and all
          rights the Executive may have had or acquired (or hereinafter may have
          or  acquire)  in  any  Proprietary   Information.   Executive  further
          acknowledges  and  agrees  that the  Company is the sole owner of such
          Proprietary  Information  and  Executive  has no claim of ownership to
          such Proprietary Information.

                  7.       CONSULTING ARRANGEMENT.

               For a  period  of one (1) year  following  the  Separation  Date,
          Executive shall consult for the Company and make himself  available to
          the Company as  reasonably  needed and  requested  by the Company (the
          "Consulting  Period").  During the Consulting  Period  Executive shall
          receive an amount  equal to 85% of the Base Salary  under  Executive's
          Employment  Contract on a monthly  basis.  All such payments  shall be
          paid in accordance  with normal payroll  practices of the Company.  In
          the event that the Company and the Executive enter into an arrangement
          subsequent to the date hereof whereby the Executive accepts a position
          as an employee of the Company,  the provisions of this Section 7 shall
          be subject to appropriate modification.

                  8.       COOPERATION IN LITIGATION.

               Executive shall cooperate with the Company,  its affiliates,  and
          each of their respective  attorneys,  barristers,  solicitors or other
          legal representatives  (collectively,  "Attorneys") in connection with
          any claim, litigation, or judicial or arbitral proceeding which is now
          pending or may  hereinafter  be  brought  against  the  Company or its
          affiliates by any third-p arty.  Executive's duty of cooperation shall
          include,  but not be limited to, (a) meeting with the Company's and/or
          its  affiliates'  Attorneys  by  telephone  or in person  at  mutually
          convenient times and places in order to state truthfully his knowledge
          of matters at issue and  recollection of events;  (b) appearing at the
          Company's,  its affiliates'  and/or their Attorneys'  request (and, to
          the extent  possible,  at a time convenient to Executive that does not
          conflict with the needs or requirements of his then-current  employer)
          as  a  witness  at  depositions  or  trials,  without  necessity  of a
          subpoena,  in order  to  state  truthfully  Executive's  knowledge  of
          matters at issue;  and (c) signing at the Company's,  its  affiliates'
          and/or  their  Attorneys'  request  declarations  or  affidavits  that
          truthfully state matters of which Executive has knowledge. The Company
          and/or its  affiliates  shall  promptly  reimburse  Executive  for his
          actual and  reasonable  travel or other  expenses that he may incur in
          cooperating with the Company,  its affiliates,  and/or their Attorneys
          pursuant to this Section 8.

                  9.       INDEMNIFICATION.

               The Company shall continue to indemnify Executive for all actions
          and inactions  related to his service as an officer or director of the
          Company to the extent such  actions and  inactions  are covered by the
          Company's  Directors and Officers  insurance  policy as then in effect
          ("Indemnified  Actions")  through  the  expiration  of the  applicable
          statute of limitations.  Notwithstanding  the foregoing,  in the event
          such Indemnified  Actions result from Executive's  gross negligence or
          willful misconduct, the indemnification hereunder shall not apply.

                  10.      BINDING EFFECT.

               This  Agreement  shall be  binding  upon the  Parties  and  their
          respective   heirs,   administrators,    representatives,   executors,
          successors and assigns,  and shall inure to the benefit of the Parties
          and   their   respective   heirs,   administrators,   representatives,
          executors, successors and assigns.

                  11.      SEVERABILITY.

               While the  provisions  contained in this Agreement are considered
          by the Parties to be reasonable in all circumstances, it is recognized
          that some provisions may fail for technical reasons.  Accordingly,  it
          is  hereby  agreed  and  declared  that  if any  one or  more  of such
          provisions shall, either by itself or themselves or taken with others,
          be  adjudged  to be invalid as  exceeding  what is  reasonable  in all
          circumstances for the protection of the interests of the Company,  but
          would be valid  if any  particular  restrictions  or  provisions  were
          deleted or restricted or limited in a particular manner, then the said
          provisions   shall  apply  with  any  such  deletions,   restrictions,
          limitations,  reductions,  curtailments,  or  modifications  as may be
          necessary  to  make  them  valid  and   effective  and  the  remaining
          provisions shall be unaffected thereby.

                  12. ENTIRE AGREEMENT; MODIFICATION.

               This Agreement  constitutes  the entire  understanding  among the
          Parties and may not be modified without the express written consent of
          the Parties.  This Agreement  supersedes all prior written and/or oral
          and  all   contemporaneous   oral   agreements,   understandings   and
          negotiations regarding the subject matter hereof.

                  13.      GOVERNING LAW.

               This  Agreement  shall be governed by and  construed and enforced
          pursuant  to the  laws  of  the  State  of  California  applicable  to
          contracts made and entirely to be performed therein.

                  14.      VOLUNTARY AGREEMENT; NO INDUCEMENTS.

               Each Party to this Agreement  acknowledges and represents that he
          or it (a) has fully and carefully read this Agreement prior to signing
          it,  (b) has  been,  or has  had the  opportunity  to be,  advised  by
          independent  legal  counsel  of his or its own  choice as to the legal
          effect  and  meaning  of  each of the  terms  and  conditions  of this
          Agreement,  and (c) is signing and entering  into this  Agreement as a
          free and voluntary act without  duress or undue  pressure or influence
          of any kind or nature  whatsoever  and has not relied on any promises,
          representations  or  warranties  regarding  the subject  matter hereof
          other than as set forth in this Agreement first written above.

IN WITNESS WHEREOF, the Parties have set their hand as of the date

                           EXECUTIVE:

                           [signature]

                           AURA SYSTEMS, INC.

                           Michael I. Froch
                           Sr. Vice President, General Counsel and Secretary

                           Approved

                           [signature]
                           Title:   Vice Chairman