<PAGE>



10.23

                                PAYMENT AGREEMENT


                  THIS PAYMENT AGREEMENT  ("Agreement"),  dated as of January 1,
2000 is between AURA  SYSTEMS,  INC.,  a Delaware  corporation  ("Debtor"),  and
CREDIT  MANAGERS  ASSOCIATION  OF  CALIFORNIA,  a California  non-profit  mutual
benefit  corporation,  as  collection  agent (the  "Agent") for and on behalf of
those  creditors of the Debtor  listed on Exhibit A attached  hereto who vote to
accept the Debtor's plan for  repayment of its creditors  pending as of the date
of this Agreement and such additional creditors of the Debtor who vote to accept
the Debtor's plan for repayment of its creditors  pending as of the date of this
Agreement (collectively,  the "Parties," and individually, a "Party"). Exhibit A
shall be amended  from time to time by the Agent as  necessary  to  reflect  the
names and  current  addresses  of, and amounts  owed to, all Parties  under this
Agreement.


         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency of which is hereby  acknowledged by the parties,  the parties hereby
agree as follows:

1.  Definitions.  When used herein,  the capitalized  terms below shall have the
meanings indicated:

(a)      Obligations.  "Obligations" means:  (i) all account obligations of
Debtor to one or more of the Parties, arising prior to July 26, 1999, including,
without limitation, the amount set forth opposite each Party's name on Exhibit A
hereto;  and (ii) all expenditures made or incurred by the Agent or by any Party
on or after  July 26,  1999 to  enforce  the  rights of the  Parties  under this
Agreement.

                  (b) Restructure.  The phrase  "Restructure"  means the written
announcement  by the Debtor that it has  achieved  all of those  agreements  and
consents  necessary to achieve the debt for equity exchange,  and the investment
of up to $10  Million  in new  capital  into the Debtor in  accordance  with the
general terms of the  restructure  plan proposed by the Debtor in the package of
materials provided by the Debtor to Creditors at the general meeting of July 26,
1999, with modifications:  (i) thereafter  requested by a committee of creditors
elected by meeting  attendees to represent their interests (the "Committee") and
accepted by Debtor;  (ii)  proposed to the Committee by the Debtor on October 1,
1999 and accepted by the Committee on October 1, 1999; proposed to the Committee
by the Debtor and  accepted by the  Committee  on or about  November  11,  1999;
proposed to the  Committee  by the Debtor and  accepted by the  Committee  on or
about  December  23,  1999;  and (iii) as may be  subsequently  accepted  by the
Committee.

2. Monthly  Installment  Payments.  Debtor hereby agrees to pay to the Agent for
the benefit of the Parties, as follows:

                  (1) On or before the first business day of each calendar month
beginning  January 1, 2000,  an amount equal to 1/36 of the total of the amounts
set forth on Exhibit "A" hereto, plus such additional amounts as may be required
upon  reconciliation  of Exhibit "A" to the ballots  accepting the Debtor's Plan
for  repayment,  plus interest on the total amounts unpaid at the rate of 8% per
annum running from July 26, 1999, on a fully amortized basis.  Interest accruing
from July 26, 1999 through the date the first  installment  shall be paid by CMA
to creditors, shall be paid as a last, thirty-seventh (37th) monthly installment
payment;

(2) To those  Creditors  on Exhibit "A" whose  claims are less than $5,000 or by
their ballot have agreed to reduce their claim to $5,000, one installment in the
allowed  amount  listed on Exhibit "A" as soon as claims in such  category  have
been reconciled.


Following the occurrence of an Event of Default under Paragraph 4(a) hereof, the
principal  balance of the  Obligations  shall bear  interest  thereafter  at the
default rate of 12% per annum until all delinquent  amounts,  including  default
rate interest, are paid.

         3. Quarterly  Reporting.  The Debtor hereby agrees to provide the Agent
for the benefit of the Parties  quarterly  financial  reports  including  income
statements and balance  sheets,  on or before June 5th, July 20th,  October 20th
and January 20th, for the preceding  quarter,  with the first quarterly  reports
due on or about February 15, 2000.

         4. Events of Default.  Debtor shall be in default under this  Agreement
upon the  happening of any of the  following  events or  conditions  ("Events of
Default"):

(a) default in the payment on the due date  therefor of any monthly  installment
payment due under  Paragraph 2 above,  which has not been cured  within  fifteen
(15) calendar days after the due date thereof;
                  (b) dissolution, termination of existence of, appointment of a
receiver  for any  part of the  property  of,  assignment  for  the  benefit  of
creditors  by, or the  commencement  of any  proceeding  under  any  bankruptcy,
reorganization,  arrangement,  insolvency or other law relating to the relief of
debtors by or against, Debtor or any guarantor or surety for Debtor under any of
the Obligations;

                  (c) default in providing quarterly reports due under Paragraph
3 above, which has not been cured within fifteen (15) calendar days after notice
that such report is due.

         5.  Remedies  Upon The  Occurrence  Of Any Event of  Default.  Upon the
occurrence of an Event of Default,  and with the consent of the  Committee,  the
Agent may, without notice to or demand on Debtor, declare any of the Obligations
immediately due and payable and this Agreement in default, whereupon the Parties
shall be free to pursue collection of the Obligations, with interest as provided
herein.

6.       Appointment of Agent.

(a)      Each Party hereby irrevocably appoints and authorizes the Agent
to act as its agent  hereunder,  with such powers as are expressly  delegated to
the  Agent  under  this  Agreement,  together  with  such  other  powers  as are
reasonably incidental thereto.

(b)      If the Agent receives notice of the occurrence of an Event of
Default under this Agreement or any other notice, request or other communication
from the Debtor under this Agreement, the Agent shall give prompt notice thereof
to the  Parties.  The Agent shall take such action with  respect to such notice,
request or other communication as may be directed by a  Majority-in-Interest  of
the Parties.  With the approval of a  Majority-in-Interest  of the Parties,  the
Agent  may  consent  to any  modifications,  supplement  or  waiver  under  this
Agreement,  provided,  however,  that without the prior  written  consent of all
Parties, the Agent shall not modify or amend this Paragraph 6(b).

                  (c)  In  the  event  that  Credit   Managers   Association  of
California becomes unable or unwilling to serve as Agent, a Majority-in-Interest
of the Parties shall  promptly  designate  another  person or entity to serve as
Agent hereunder.

7.       General

(a)      No default shall be waived by the Agent except in writing and with
prior  consent of the  Committee,  and no waiver of any  payment or other  right
under this Agreement shall operate as a waiver of any other payment or right.

(b)      Any consent, notice or other communication required or
contemplated by this Agreement shall be in writing.  If intended for Debtor,  it
shall be deemed  given upon  receipt by Debtor,  or three days after  deposit if
mailed,  postage  prepaid,  to Debtor at the  address set forth below or at such
other address given by notice as herein  provided.  If intended for a Party,  it
shall be deemed given only if actually  received by the Agent at the address set
forth below or at such other address given by notice as herein provided.

                  Debtor:

                  AURA SYSTEMS, INC.
                  2335 Alaska Avenue
                  El Segundo, California  90245
                  Fax No.:  (310) 643-8719





                  Agent:

                  CREDIT MANAGERS ASSOCIATION
                    OF CALIFORNIA
                  40 E. Verdugo Avenue
                  Burbank, California  91502-1931
                  Fax No.:  (818) 972-5301


(c)      This Agreement shall be construed under and governed by the laws
of the State of  California,  and,  where  applicable  and  except as  otherwise
defined  herein,  terms used herein  shall have the  meanings  given them in the
California Uniform Commercial Code.

(d)      This Agreement may be executed in any number of counterparts,
and by the  parties  hereto  in  separate  counterparts,  each of which  when so
executed and delivered  shall be deemed an original,  but all such  counterparts
together shall constitute but one and the same instrument.

(e)      All of the rights of each Party under this Agreement shall be
cumulative  and shall inure to the benefit of the successors and assigns of such
Party.  All obligations of Debtor hereunder shall be binding upon the successors
and  assigns  of  Debtor.  All  provisions  of  this  Agreement  concerning  the
relationship  between  the Agent and the  Parties  are for the  benefit  of such
parties, and shall not be enforceable by or inure to the benefit of the Debtor.

(f)      This Agreement may be modified by the parties hereto upon the

receipt by the Agent of written  instructions  authorizing  and  directing  such
modification  from  a  majority  of  the  members  of  the  informal   committee
representing the interests of unsecured creditors  consenting to the Restructure
(the "Informal  Committee") and the written agreement of the Debtor thereto. The
members of the Informal Committee are:





                                              Please See The Attached






<PAGE>







                  EXECUTED on the dates set forth below, to be effective for all
purposes as of the date first above written.



         DEBTOR:



                               AURA SYSTEMS, INC.





                                 By:___________________________

                                 Name:  Gerald S. Papazian

                                 Title:  President



                                  Date:___________________________









                                  AGENT:



                                  CREDIT MANAGERS ASSOCIATION OF

                                  CALIFORNIA,   as  collateral  and
                                   collection  agent  for  the
                                  parties listed on Exhibit A




                                  By:_______________________________

                                      Name:  Robert Hoder

                                      Title:



                                  Date:_______________________________






<PAGE>