GUARANTY


                  GUARANTY, dated as of February 22, 2000 (the "Guaranty"), made
by each of AURA  CERAMICS,  INC.,  a  Delaware  corporation  ("Aura  Ceramics"),
AURASOUND,  INC., a Delaware  corporation  ("AuraSound"),  AURA MEDICAL SYSTEMS,
INC., a Delaware corporation ("Aura Medical"),  ELECTROTEC PRODUCTIONS,  INC., a
California  corporation  ("Electrotec  Productions"),  DS  OSCILLATOR,  INC.,  a
California  corporation  ("DS  Oscillator"),  PHILIPS SOUND LABS, INC., a Nevada
corporation  ("Philips Sound") and ELECTROTEC AUDIO LEASE LIMITED, a corporation
organized  and  existing  under  the laws of  England  ("Electrotec  Audio"  and
together with the Company, Aura Ceramics,  AuraSound,  Aura Medical,  Electrotec
Productions,   DS  Oscillator,   and  Philips  Sound,  each  a  "Guarantor"  and
collectively,  the "Guarantors").  Unless the context otherwise requires,  terms
used herein and defined in the Secured  Notes (as defined  below)  shall be used
herein as so defined.


                              W I T N E S S E T H :


                  WHEREAS,  each Guarantor is a wholly owned  subsidiary of Aura
Systems, Inc., a Delaware corporation (the "Company").

                  WHEREAS,  each of Infinity Investors Limited,  Glacier Capital
Limited,  Global Growth Limited and Summit Capital  Limited  (collectively,  the
"Funds"),  is the holder of certain Variable Interest Rate Convertible Notes due
September 30, 1998 (the "Original  Notes") of the Company,  which are secured by
certain  assets of the Company as  specified in that  certain  Pledge  Agreement
dated September 30, 1997;

                  WHEREAS, on the date hereof the Company will issue and deliver
Secured Notes of even date herewith in an aggregate amount of $12,500,000.00 (as
modified, supplemented or amended from time to time, the "Secured Notes") to the
Funds in exchange  for Original  Notes held by the Funds after giving  effect to
the Assignment (the "Exchange");

                  WHEREAS, it is a condition to the Exchange that each Guarantor
shall have executed and delivered this Guaranty; and

                  WHEREAS,  each Guarantor  obtained benefits as a result of the
proceeds of the Original Notes and, thus, of the  Obligations  evidenced by each
Secured Note and,  accordingly,  desires to execute and deliver this Guaranty in
order to satisfy the condition described in the preceding paragraph;

                  NOW,  THEREFORE,  in  consideration of the foregoing and other
benefits  accruing to each  Guarantor,  the receipt and sufficiency of which are
hereby acknowledged,  each Guarantor hereby makes the following  representations
and  warranties to the Funds and hereby  covenants and agrees with the Agent and
each Fund as follows:

                  1. Each Guarantor  irrevocably and unconditionally  guarantees
the full and prompt payment when due (whether by  acceleration  or otherwise) of
the  principal  of and  interest  on any of the  Secured  Notes  and  all  other
Obligations  (including,  without  limitation,  indemnities,  fees and  interest
thereon) of the Company and each  Guarantor  now existing or hereafter  incurred
under,  arising  out of or in  connection  with the  Secured  Notes or any other
Transaction  Document and the due  performance  and compliance with the terms of
the Transaction Documents by the Company and each Guarantor (all such principal,
interest, and other Obligations,  collectively,  the "Guaranteed  Obligations").
All payments by the  Guarantors  under this  Guaranty  shall be made on the same
basis as payments by the Company under the Secured Notes.

                  2. Each  Guarantor  hereby waives notice of acceptance of this
Guaranty  and  notice  of any  liability  to  which  it may  apply,  and  waives
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liability, suit or taking of other action by the Agent or any Fund against,
and any other notice to, any party liable thereon (including such Guarantor).

                  3. The  Agent  and any  Fund may at any time and from  time to
time  without  the consent of, or notice to the  Guarantors,  without  incurring
responsibility  to  the  Guarantors  and  without  impairing  or  releasing  the
obligations of the Guarantors hereunder, upon or without any terms or conditions
and in whole or in part:

                  (a) change the manner,  place or terms of payment  of,  and/or
         change or extend the time of  payment  of,  renew or alter,  any of the
         Guaranteed  Obligations,   any  security  therefor,  or  any  liability
         incurred  directly or indirectly in respect  thereof,  and the Guaranty
         herein made shall apply to the  Guaranteed  Obligations  as so changed,
         extended, renewed or altered;

                  (b)  sell,  exchange,  release,  surrender,  realize  upon  or
         otherwise  deal with in any  manner  and in any order any  property  by
         whomsoever  at any time pledged or  mortgaged  to secure,  or howsoever
         securing,  the Guaranteed Obligations or any liabilities (including any
         of those hereunder)  incurred directly or indirectly in respect thereof
         or hereof, and/or any offset thereagainst;

                  (c) exercise or refrain from exercising any rights against the
         Company or others or otherwise act or refrain from acting;

                  (d) settle or compromise  any of the  Guaranteed  Obligations,
         any  security  therefor  or  any  liability  (including  any  of  those
         hereunder)  incurred  directly  or  indirectly  in  respect  thereof or
         hereof,  and may  subordinate the payment of all or any part thereof to
         the  payment of any  liability  (whether  due or not) of the Company to
         creditors of the Company other than the Funds and the Guarantors;

                  (e) apply any sums by whomsoever paid or howsoever realized to
         any Obligations of the Company to the Agent or the Funds  regardless of
         what Obligations of the Company remain unpaid; and/or

                  (f) consent to or waive any breach of, or any act, omission or
         default under,  any of the Transaction  Documents,  or otherwise amend,
         modify or supplement  any of the  Transaction  Documents or any of such
         other instruments or agreements.

                  4.  Obligations of each Guarantor under this Guaranty shall be
secured by that certain Security Agreement,  dated as of the date hereof,  among
each of the Company, each Guarantor and HW Partners,  LP, as agent for the Funds
(as  modified,  supplemented  or  amended  from  time  to  time,  the  "Security
Agreement").

                  5.  Obligations  of each  Guarantor  under this  Guaranty  are
absolute and  unconditional  and shall  remain in full force and effect  without
regard to,  and shall not be  released,  suspended,  discharged,  terminated  or
otherwise  affected by, any  circumstance or occurrence  whatsoever,  including,
without  limitation:  (a) any  action  or  inaction  by the Agent or any Fund as
contemplated in Section 3 of this Guaranty; or (b) any invalidity,  irregularity
or  unenforceability  of all or part  of the  Guaranteed  Obligations  or of any
security therefor (including,  without limitation, the Security Agreement). This
Guaranty is a primary obligation of each Guarantor. The entirety of this Section
5 notwithstanding, prior to the occurrence of an Event of Default (which has not
been cured in accordance with the terms of the Secured  Notes),  the obligations
of a  Guarantor  under this  Guaranty  shall be released  concurrently  with the
closing of the sale of all of the capital stock of such  Guarantor in accordance
with  Section  4.3(d) of the  Secured  Notes,  and the Agent and the Funds shall
execute all documents reasonably required by such purchaser to so evidence.

                  6. If and to the extent that any  Guarantor  makes any payment
to the Agent, any Fund, the holder of any Secured Note or to any other Person in
satisfaction of such Guarantor's  Guaranteed  Obligations under this Guaranty or
any other Transaction Document,  any claim which such Guarantor may have against
the  Company  by  reason  thereof,  including,  without  limitation,  by  way of
contribution, reimbursement or subrogation, is hereby waived, and such Guarantor
shall have no recourse  against  the  Company or its assets with  respect to any
such claims.

                  7. In order to induce the Funds to exchange the Original Notes
for the Secured Notes, each Guarantor  (except where otherwise  indicated below)
makes the following representations, warranties and agreements:

                  (a)  Each  of  Aura  Ceramics  and  AuraSound  (i)  is a  duly
         organized and validly  existing  corporation in good standing under the
         laws of the jurisdiction of its  incorporation,  (ii) has the power and
         authority  to own its  property and assets and to transact the business
         in  which  it  is  engaged,  (iii)  is  duly  qualified  as  a  foreign
         corporation  and in  good  standing  in  each  jurisdiction  where  the
         ownership,  leasing or  operation of its property or the conduct of its
         business  requires  such  qualification,  except for  failures to be so
         qualified or in good standing, as the case may be, which,  individually
         or in the  aggregate,  could  not  reasonably  be  expected  to  have a
         Material Adverse Effect, and (iv) has no subsidiaries.

                  (b) The Guarantor has the corporate power to execute,  deliver
         and perform the terms and provisions of this Guaranty and has taken all
         necessary  corporate  action to authorize the  execution,  delivery and
         performance  by it of this  Guaranty.  Each Guarantor has duly executed
         and delivered this Guaranty,  and this Guaranty  constitutes its legal,
         valid and binding obligation enforceable in accordance with its terms.

                  (c) Neither the  execution,  delivery or  performance  by each
         Guarantor of this  Guaranty,  nor  compliance  by it with the terms and
         provisions  hereof,  (i)  will  contravene  any  provision  of any law,
         statute, rule or regulation or any order, writ, injunction or decree of
         any court or  governmental  instrumentality,  (ii) will  conflict or be
         inconsistent  with  or  result  in any  breach  of  any  of the  terms,
         covenants,  conditions or provisions of, or constitute a default under,
         or result in the creation or imposition of (or the obligation to create
         or  impose)  any  Lien  upon  any of the  property  or  assets  of such
         Guarantor  pursuant to the terms of any  indenture,  mortgage,  deed of
         trust,  credit  agreement,  loan  agreement  or  any  other  agreement,
         contract or instrument  to which such  Guarantor is a party or by which
         it or any of its  property  or  assets  is  bound or to which it may be
         subject or (iii) will  violate  any  provision  of the  certificate  of
         incorporation or by-laws of such Guarantor.

                  (d) With  respect to Aura  Ceramics and  AuraSound,  no order,
         consent, approval, license,  authorization or validation of, or filing,
         recording or  registration  with (except as have been  obtained or made
         prior to the  Execution  Date),  or exemption by, any  governmental  or
         public body or authority,  or any subdivision  thereof,  is required to
         authorize,  or is  required  in  connection  with,  (i) the  execution,
         delivery  and  performance  of  this  Guaranty  or (ii)  the  legality,
         validity, binding effect or enforceability of this Guaranty.

                  (e) There are no actions,  suits or proceedings pending or, to
         the best  knowledge of each  Guarantor,  threatened (i) with respect to
         any  Transaction  Document  or  (ii)  that  are  reasonably  likely  to
         materially  and adversely  affect the business,  operations,  property,
         assets,  condition  (financial  or  otherwise)  or  prospects  of  such
         Guarantor.

                  (f) All factual  information  (taken as a whole) heretofore or
         contemporaneously  furnished  by or on  behalf  of  each  Guarantor  in
         writing to the Agent or any Fund (including,  without  limitation,  all
         information  contained  herein) for purposes of or in  connection  with
         this Guaranty or any transaction  contemplated herein is, and all other
         such factual  information (taken as a whole) hereafter  furnished by or
         on behalf of such  Guarantor  in  writing to the Agent or any Fund will
         be, true and accurate in all material  respects on the date as of which
         such  information  is dated or certified and not incomplete by omitting
         to state any fact necessary to make such information (taken as a whole)
         not misleading at such time in light of the  circumstances  under which
         such information was provided.

                  (g) Each of Aura Ceramics and AuraSound is in compliance  with
         all applicable statutes,  regulations and orders of, and all applicable
         restrictions imposed by, all governmental bodies,  domestic or foreign,
         in respect of the  conduct of its  business  and the  ownership  of its
         property  (including  applicable  statutes,   regulations,  orders  and
         restrictions relating to environmental standards and controls),  except
         such  noncompliances  as would not, in the  aggregate,  have a material
         adverse effect on the business, operations, property, assets, condition
         (financial or otherwise) or prospects of such Guarantor.

                  (h)  The  Security  Agreement  creates,  as  security  for the
         Guaranteed  Obligations  hereunder  and  under  all  other  Transaction
         Documents,  a valid and  enforceable  security  interest  in all of the
         right,  title  and  interest  of the  relevant  Guarantor  as set forth
         thereunder in and to the Collateral  described  therein in favor of the
         Agent,  for the benefit of the Funds and, as to Aura  Ceramics and Aura
         Sound, of first priority on all of the Collateral superior to all Liens
         (subject to the priority  rights of holders of  Permitted  Liens of the
         types  described  in clauses  (c) and (i) of Section 4.1 of the Secured
         Notes and any extension,  renewal or replacement  thereof to the extent
         permitted by Section 4.1(k) of the Secured Notes);

                  (i) Each Guarantor is not an "investment  company"  within the
         meaning  of the  United  States  Investment  Company  Act of  1940,  as
         amended.

                  (j)  Each   Guarantor  is  not  a  "holding   company,"  or  a
         "subsidiary  company" of a "holding  company," or an  "affiliate"  of a
         "holding  company" or of a "subsidiary  company" of a "holding company"
         within the meaning of the United States Public Utility  Holding Company
         Act of 1935, as amended.

                  8. This Guaranty is a continuing  one and all  liabilities  to
which it  applies  or may apply  under the terms  hereof  shall be  conclusively
presumed  to have been  created in reliance  hereon.  No failure or delay on the
part of the  Agent or any  Fund in  exercising  any  right,  power or  privilege
hereunder  and no course of dealing  between the Company,  the  Guarantors,  the
Agent,  any Fund or the holder of any  Secured  Note  shall  operate as a waiver
thereof;  nor shall any  single  or  partial  exercise  of any  right,  power or
privilege  hereunder  preclude  any other or  further  exercise  thereof  or the
exercise of any other right, power or privilege. The rights, powers and remedies
herein expressly provided are cumulative and not exclusive of any rights, powers
or remedies  which the Agent,  any Fund or the holder of any Secured  Note would
otherwise  have.  No notice to or demand  on the  Guarantors  in any case  shall
entitle such Guarantor to any other further notice or demand in similar or other
circumstances or constitute a waiver of the rights of the Agent, any Fund or the
holder of any Secured Note to any other or further  action in any  circumstances
without notice or demand.

                  9. This Guaranty  shall be binding upon each Guarantor and its
respective  successors  and  assigns and shall inure to the benefit of the Agent
and the Funds and their respective successors and assigns.

                  10.  Neither  this  Guaranty nor any  provision  hereof may be
changed, waived, discharged or terminated except with the prior written approval
of the Agent.

                  11. The Guarantor acknowledges that an executed (or conformed)
copy of each of the  Secured  Notes has been  made  available  to its  principal
executive officers and such officers are familiar with the contents thereof.

                  12. In addition to any rights now or hereafter  granted  under
applicable  law or  otherwise,  and not by way of limitation of any such rights,
upon the  occurrence  of an  Event  of  Default  (which  has not  been  cured in
accordance  with the  terms of the  Secured  Notes),  the Agent and each Fund is
hereby authorized at any time or from time to time, without presentment, demand,
protest,  or other notice of any kind to the  Guarantors or to any other Person,
any such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits  (general or special) and any other  Indebtedness  at
any time  held or owing by the  Agent or such  Fund to or for the  credit or the
account of the Guarantors  against and on account of the Guaranteed  Obligations
of the Guarantors to the Agent or such Fund under this Guaranty, irrespective of
whether or not the Agent or such Fund shall have made any demand  hereunder  and
although said  Guaranteed  Obligations,  or any of them,  shall be contingent or
unmatured.

                  13. All notices and other  communications  hereunder  shall be
made at the  addresses,  in the manner and with the effect  provided  in Section
10.1 of the Security Agreement.

                  14. If a claim is ever made  upon the  Agent,  any Fund or the
holder of any Secured  Note for  repayment  or recovery of any amount or amounts
received in payment or on account of any of the Guaranteed  Obligations  and any
of the  aforesaid  payees repays all or part of said amount by reason of (a) any
judgment,   decree  or  order  of  any  court  or  administrative   body  having
jurisdiction  over such payee or any of its  property or (b) any  settlement  or
compromise  of any such claim  effected  by such  payee  with any such  claimant
(including the Company),  then and in such event each Guarantor  agrees that any
such judgment, decree, order, settlement or compromise shall be binding upon it,
notwithstanding any revocation hereof or the cancellation of any Secured Note or
other  instrument  evidencing  any liability of the Company,  and each Guarantor
shall be and remain liable to the aforesaid  payees  hereunder for the amount so
repaid or  recovered  to the same extent as if such amount had never  originally
been received by any such payee.

                  15. Any  acknowledgment or new promise,  whether by payment of
principal  or  interest  or  otherwise  and  whether  by the  Company  or others
(including the  Guarantors),  with respect to any of the Guaranteed  Obligations
shall,  if the statute of  limitations  in favor of the  Guarantors  against the
Agent,  any Fund or the holder of any Note shall have commenced to run, toll the
running of such  statute of  limitations,  and if the period of such  statute of
limitations  shall  have  expired,  prevent  the  operation  of such  statute of
limitations.

                  16. This Guaranty and the rights and obligations of the Agent,
each of the Funds, the holders of any Secured Note and the Guarantors  hereunder
shall be  construed in  accordance  with and governed by the law of the State of
New York.  Any legal action or  proceeding  with respect to this Guaranty may be
brought in the  courts of the State of New York or of the United  States for the
Southern  District of New York, and, by execution and delivery of this Guaranty,
each  Guarantor  hereby  irrevocably  accepts  for  itself and in respect of its
property,  generally  and  unconditionally,  the  jurisdiction  of the aforesaid
courts.  Each Guarantor  hereby  irrevocably  designates,  appoints and empowers
Robinson,  Diamant & Brill,  1888  Century Park East,  Suite 1500,  Los Angeles,
California 90067, Attn. Lawrence A. Diamant, Esq. as its designee, appointee and
agent to receive,  accept and acknowledge for and on its behalf,  and in respect
of its  property,  service of any and all legal  process,  summons,  notices and
documents  which may be  served in any such  action  or  proceeding  under  this
Guaranty or the Security Agreement.  If for any reason such designee,  appointee
and agent shall cease to be available to act as such,  each Guarantor  agrees to
designate a new designee,  appointee and agent on the terms and for the purposes
of this provision  satisfactory to the Agent. Each Guarantor further irrevocably
consents to the service of process  out of any of the  aforementioned  courts in
any such action or proceeding by the mailing of copies  thereof by registered or
certified  mail,  postage  prepaid,  to such  Guarantor at its address set forth
opposite its signature below,  such service to become effective thirty (30) days
after such mailing. Nothing herein shall affect the right of the Agent, any Fund
or the holder of any Note to serve process in any other manner  permitted by law
or to commence legal  proceedings or otherwise proceed against each Guarantor in
any other  jurisdiction.  Each Guarantor hereby irrevocably waives any objection
which  it may  now or  hereafter  have  to the  laying  of  venue  of any of the
aforesaid  actions or  proceedings  arising  out of or in  connection  with this
Guaranty brought in the courts referred to above and hereby further  irrevocably
waives and  agrees not to plead or claim in any such court that any such  action
or  proceeding  brought  in any such court has been  brought in an  inconvenient
forum.

                  17. The  obligation of each  Guarantor to make payment in cash
of any Guaranteed Obligations due hereunder shall not be discharged or satisfied
by any tender, or any recovery  pursuant to any judgment,  which is expressed in
or converted into any currency other than cash, except to the extent such tender
or  recovery  shall  result in the actual  receipt by the Agent at its office on
behalf of the Funds or holders of the  Secured  Notes of the full amount of cash
expressed  to be  payable in respect  of any such  Guaranteed  Obligations.  The
obligation  of each  Guarantor  to make  payment in cash as  aforesaid  shall be
enforceable as an  alternative or additional  cause of action for the purpose of
recovery in cash of the amount,  if any, by which such actual receipt shall fall
short of the full amount of cash  expressed to be payable in respect of any such
Guaranteed Obligations, and shall not be affected by judgment being obtained for
any other sums due under this Guaranty.

                            [SIGNATURE PAGE FOLLOWS]


<PAGE>



                                [SIGNATURE PAGE]


                                [SIGNATURE PAGE]
                  IN WITNESS WHEREOF, each Guarantor has caused this Guaranty to
be executed and delivered by their duly authorized  officer as of the date first
indicated above.


                                               AURA CERAMICS, INC., as Guarantor



                                                     By:
                                                     Name:  Steven C. Veen
                                                     Title:    Vice President



                                                     By:
                                                     Name:  Michael Froch
                                                     Title:    Secretary


                                                   AURASOUND, INC., as Guarantor



                                                     By:
                                                     Name:  Steven C. Veen
                                                     Title: Vice President



                                                     By:
                                                     Name:  Michael Froch
                                                     Title:    Secretary


                                        AURA MEDICAL SYSTEMS, INC., as Guarantor



                                                     By:
                                                     Name:  Steven C. Veen
                                                     Title: Vice President



                                                     By:
                                                     Name:  Michael Froch
                                                     Title:    Secretary


                                      ELECTROTEC PRODUCTIONS, INC., as Guarantor



                                                     By:
                                                     Name:  Steven C. Veen
                                                     Title:    Vice President



                                                     By:
                                                     Name:  Michael Froch
                                                     Title:    Secretary


                                             DS OSCILLATOR, INC., as Guarantor



                                                     By:
                                                     Name:  Steven C. Veen
                                                     Title:    Vice President



                                                     By:
                                                     Name:  Michael Froch
                                                     Title:    Secretary


                                         PHILIPS SOUND LABS, INC., as Guarantor



                                                     By:
                                                     Name:  Steven C. Veen
                                                     Title:    Vice President



                                                     By:
                                                     Name:  Michael Froch
                                                     Title:    Secretary





                                   ELECTROTEC AUDIO LEASE LIMITED, as Guarantor



                                                     By:
                                      Name:
                                     Title:



ACKNOWLEDGED AND ACCEPTED                HW PARTNERS, LP, as Agent for the Funds
BY:
                                                     By:    HW Finance, LLC
                                                            Its Managing Partner

                                                     By:
                                                     Name:  Stuart J. Chasanoff
                                                     Title:Senior Vice President