EXHIBIT 10.29

                            SETTLEMENT AGREEMENT AND RELEASE

     This  Settlement  Agreement  shall be effective  as of May 7 ,2002,  and is
entered into by and between Aura Systems, Inc., a Delaware corporation ("Aura"),
and CRS Emergency Vehicles, Co. ("CRS"), an Oklahoma corporation, Custom Coaches
International,  an Oklahoma corporation ("CCI"), and C. Ray Smith,  individually
(hereinafter be referred to collectively as the  "Defendants").  This Settlement
Agreement is entered into with reference to the following facts:

                                    RECITALS

     A. WHEREAS,  on or about  December 11, 2001,  Aura caused a Complaint to be
filed against  Defendants  in the action which is commonly  known as Aura v. CRS
Emergency  Vehicles,  Co., et al, United States District Court Case No. 01-10612
DDP (BQRx). Said Complaint shall hereinafter be referred to as the "Action."

     B. WHEREAS,  the  Complaint in the Action  sought  recovery with respect to
Defendants'  breach of a  Distributor  Agreement  (attached to the  Complaint as
Exhibit "A") arising  from  Defendants'  failure to pay for 400 units of AuraGen
G5000  and G8500  generators.  The  amount  sought  by Aura in the  Action  was:
$1,341,472,  which includes the following:  damages1:  $1,234,729;  pre-judgment
interest2: $78,009; attorneys fees3: $28,294; and costs4: $440.

     C.  WHEREAS,  in  response  to the  allegations  of  Aura  in  the  Action,
Defendants'  Answer admits to certain  allegations plead in Aura's Complaint and
denies certain allegations.

     D.  WHEREAS,  the  Defendants  represent  that only 399 units were  shipped
instead of the 400 alleged by Aura (hereafter  "Shipped Units") and that four of
the  Shipped  Units were used to  replace  units  previously  sold by Aura under
warranty.  The one missing  unit shall  hereafter be referred to as the "Missing
Unit." The Defendants  further  represent that they have in their possession the
395  Shipped  Units and the four units that were  replaced  (hereafter  "Swapped
Units").  They further  represent  that the remaining  Shipped Units are in good
order and condition.

     E.  WHEREAS,  Aura and the  Defendants  now wish to  resolve  all  disputes
existing between them with respect to any and all matters and claims, both known
and  unknown,  arising  from or  related  to the  nonpayment  of the  Product as
asserted in the  Complaint  and in all  discovery  and  pleadings in the Action,
based on the terms and conditions of this Settlement Agreement ("Agreement").


                                    AGREEMENT

     NOW, THEREFORE, the parties hereto hereby agree as follows:

     1.  Affirmative  Obligations  of  the  Defendants  (hereafter  "Affirmative
Obligations"):

          i. Upon the signing of this Agreement, Defendants agree to immediately
     make  available  the Shipped  Units and the Swapped  Units to Aura or their
     designated  representative.  Aura will pick up and transport the Product at
     Aura's expense.

          ii.  Defendants  shall use their best  efforts to conduct a search for
     and, if found or located, immediately return, at their expense, the Missing
     Unit.

          iii. Upon the signing of this Agreement, Defendants shall turn over to
     Aura  all  documentation  relating,  in  any  way,  to  the  Swapped  Units
     including,  but not limited  to, work  orders,  purchase  orders,  warranty
     documentation,  packaging materials or any similar documentation containing
     information regarding the Swapped Units.

          iv. Upon the signing of this  Agreement,  Defendants  shall  return to
     Aura  any and all  documentation  relating  to its  performance  under  the
     Distributor  Agreement  and/or  its status as an  AuraGen(TM)  distributor,
     whether or not such documentation was supplied to them by Aura in the first
     instance,  including,  but not limited to, all  certificates,  advertising,
     sales or marketing materials,  manuals or instruction  materials,  warranty
     documentation, and the Distributor Agreement.

          v. The Defendants  agree to waive any rights they might otherwise have
     in connection with the Distributor Agreement and to any warranty or service
     obligation  on the part of Aura as to the Missing Unit or the Shipped Units
     used to replace the Swapped Units.

     2. Dismissal With Prejudice Within ten (10) days of full performance of all
of the  Affirmative  Obligations,  Aura shall cause to be filed with the Court a
dismissal of the entire Action.

     3.  Standstill  Agreement  and Waiver of the  Statutes of  Limitations  The
parties  hereto agree that the Action is to be stayed in its present state as to
all matters pending the full performance of all of the Affirmative  Obligations,
and that,  prior to that time,  the Action  may be fully  reactivated  at Aura's
election upon the breach of this Agreement by any of the Defendants. The parties
further waive the application of all laws, rules or statutes of repose requiring
the timely bringing or prosecution of claims (including, but not limited to, the
statutes of limitations;  the doctrines of waiver,  estoppel and latches), as to
all claims which are or which might be  reasonably  assertable  in the Action by
way of the  current  Complaint  or by way of the filing of an amended  complaint
against any of the Defendants.

     5. Release  Except for any  remaining  rights or  obligations  as have been
created under this Agreement,  upon full performance by Defendants of all of the
Affirmative Obligations,  Aura and Defendants hereby fully, completely,  finally
and  forever  release,  relinquish  and  discharge  each other and each of their
respective parent companies,  predecessor  companies,  subsidiaries,  affiliated
companies,  related entities,  agents, present and former employees,  attorneys,
insurers,  successors and assigns (which said  aforementioned  released  parties
shall  hereinafter be referred to collectively as "Releasees"),  of and from any
and all claims, actions, causes of action, demands,  rights, debts,  agreements,
promises,  liabilities,  damages, accountings, costs and expenses, whether known
or unknown,  suspected  or  unsuspected,  fixed or  contingent,  of every nature
whatsoever,  which  relate to the claims  asserted in the Action.  Each party to
bear their own attorney's fees and costs. All matters released hereunder,  shall
sometimes hereinafter be referred to as the "Released Claims."

          IT IS THE INTENTION OF THE PARTIES  HERETO THAT THIS DOCUMENT SHALL BE
     EFFECTIVE AS A FULL AND FINAL ACCORD AND  SATISFACTION  AND RELEASE OF EACH
     AND EVERY RELEASED  CLAIM.  IN FURTHERANCE OF THIS  INTENTION,  THE PARTIES
     HERETO, AND EACH OF THEM,  ACKNOWLEDGE THAT THEY HAVE BEEN ADVISED BY LEGAL
     COUNSEL AND ARE  FAMILIAR  WITH THE  PROVISIONS  OF  CALIFORNIA  CIVIL CODE
     SECTION 1542, WHICH PROVIDES AS FOLLOWS:

          "A GENERAL  RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR  DOES
     NOT KNOW OR  SUSPECT  TO EXIST IN HIS  FAVOR AT THE TIME OF  EXECUTING  THE
     RELEASE,  WHICH,  IF  KNOWN  BY HIM,  MUST  HAVE  MATERIALLY  AFFECTED  HIS
     SETTLEMENT WITH THE DEBTOR."

          THE PARTIES HERETO, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY
     WAIVE  ANY  RIGHTS  THEY MAY HAVE  THEREUNDER,  AS WELL AS UNDER  ANY OTHER
     STATUTES OR COMMON LAW DOCTRINES OF SIMILAR EFFECT.

     The parties hereto,  and each of them,  acknowledge that they may hereafter
discover facts in addition to, or different  from,  those which they now know or
believe  to  be  true  with   respect  to  the   Released   Claims,   but  that,
notwithstanding  the foregoing,  it is their intention that this release operate
to fully, finally,  completely and forever settle and release each Releasee from
each,  every and all of the Released  Claims,  and that in  furtherance  of such
intention,  the releases  herein given shall be and remain in effect as full and
complete  releases,  notwithstanding  the  discovery  or  existence  of any such
additional or different facts.

     The  parties  hereto  warrant  and  represent  to each other that as to any
Released Claim, the party releasing same is the sole and absolute owner thereof,
free and clear of all other  rights  and  interests  therein  and has the right,
ability and sole power to release such Released Claims,  and the releasing party
agrees to hold harmless and indemnify the released parties from any liability or
claim  asserted  against a released  party  which is based on a claim  which the
releasing party purported to release hereunder.

     6. Attorneys Fees In the event there is any dispute concerning the terms of
this Agreement or the  performance of any party hereto  pursuant to the terms of
this  Agreement,  and any  party  hereto  retains  counsel  for the  purpose  of
enforcing any of the  provisions of this  Settlement  Agreement or asserting the
terms of this  Agreement in defense of any suit filed  against  said party,  the
prevailing party in such a dispute shall be entitled to recover,  in addition to
any other  remedy to which  such  party  may be  entitled,  all of its costs and
attorneys fees in connection with the dispute, including costs and attorneys fee
incurred  on  appeal,  irrespective  of  whether  or not a lawsuit  is  actually
commenced or prosecuted to conclusion.

     7. No Admission  of  Liability  The  existence  of this  Agreement  nor the
conduct of any of the parties  hereto  shall  constitute  or be  construed as an
admission of any  liability or any  wrongdoing  whatsoever on the part of any of
the parties hereto.

     8.  Interpretation In the event that any language in this Agreement is held
to be uncertain, any such language shall not be interpreted against any party to
the Agreement based on who drafted such language.

     9. Authority The undersigned  further  represent and warrant that they have
taken all actions and obtained all authorizations, consents and approvals as are
conditions precedent to their authority to execute this Agreement.

     10. Counterparts This Agreement may be signed in counterparts which will be
binding upon the parties hereto as if all of said parties  executed the original
hereof.

     11.  Facsimile  Signatures  This  Agreement  may be executed  by  facsimile
signatures. A copy of this Agreement bearing a facsimile signature or signatures
shall  have the same  force  and  effect as an  original  agreement  with  inked
original signatures.

     12. Waiver No waiver by any party hereto of any  provision  hereof shall be
deemed to be a waiver of any other provision hereof or of any subsequent  breach
of the same or any other provision hereof.

     13.  Amendment  This  Agreement  cannot be amended or modified  except by a
writing  executed  by the  parties  hereto  which  expresses,  by its terms,  an
intention to modify this Agreement.

     14.  Successors  This  Agreement  shall be  binding  upon and  inure to the
benefit  of and be  enforceable  by the  parties  hereto  and  their  respective
administrators,  trustees, executors,  personal representatives,  successors and
permitted assigns.

     15.  Confidentiality Except as is noted below, neither the Parties, nor the
respective  employees,  agents,  or attorneys of any of them shall  disclose the
terms and existence of this Agreement or any documents and/or evidence  produced
or  learned  of during  discovery,  including  third  party  discovery,  written
discovery,  depositions  or the  facts  discovered  in this  action to any third
person without the prior written consent of the other parties to this Agreement.
This confidentiality agreement shall never expire.

     The exceptions are that such information as is necessary may be disclosed:

                  (a) If required by  operation  of law or court order or by way
                  of subpoena  with  reasonable  notice to the Parties to afford
                  any  opposing  Party  an  opportunity  to move to  quash  said
                  subpoena or seek a protective order;

                  (b) To the officers, directors,  employees, agents, attorneys,
                  corporate   affiliates    (including   officers,    directors,
                  employees,  agents and  attorneys  thereof)  of the parties to
                  this Agreement;

                  (c)  In an action to enforce the terms of this Agreement;

                  (d) Upon inquiry  from third  parties as to the results of the
                  litigation,  the parties may only disclose that the matter has
                  been resolved.

     In the event that either party  intends  disclosure  pursuant to subsection
(a) of this Section 15, at least ten (10) days  written  notice will be given to
the other parties hereto and their counsel prior to disclosing such information,
setting forth all information that is proposed to be disclosed,  the identity of
each person to whom the  information  is to be  disclosed,  the reasons for such
disclosure and the circumstances  pursuant to which disclosure is proposed to be
made.

     16. Integration This Agreement constitutes the final and complete agreement
of the parties  hereto with respect to the subject  matter hereof and supersedes
all prior or contemporaneous negotiations,  promises,  covenants,  agreements or
representations  concerning  any matters  directly,  indirectly or  collaterally
related  to the  subject  matter of this  Agreement.  The  parties  hereto  have
expressly  and  intentionally  included  in this  Agreement  all  collateral  or
additional  agreements  which may, in any manner,  touch or relate to any of the
subject  matter  of this  Agreement;  therefore,  all  promises,  covenants  and
agreements,   collateral  or  otherwise,   are  included  herein.   The  parties
acknowledge  that in  entering  into this  Agreement,  neither has relied on any
statement,  promise,   representation  or  warranty  whatsoever,  which  is  not
expressly contained herein. It is the intention of the parties to this Agreement
that it shall  constitute  an  integration  of all  their  agreements,  and each
understands  that in the  event of any  subsequent  litigation,  controversy  or
dispute concerning any of its terms,  conditions or provisions,  no party hereto
shall be  permitted  to  offer  or  introduce  any  oral or  extrinsic  evidence
concerning any other alleged  collateral or oral  agreement  between the parties
not included herein.

     17. Miscellaneous.

     17.1.  This Agreement shall be governed by and construed in accordance with
the laws of the State of California.

     17.2.  This Agreement  shall be deemed to have been drafted  jointly by the
parties  hereto;  accordingly,  any  rule  pertaining  to  the  construction  of
contracts to the effect that ambiguities are to be resolved against the drafting
party  shall  not  apply  to the  interpretation  of  this  Agreement  or of any
modifications of or amendments to this Agreement.

     17.3.  The  paragraph   headings   contained  in  this  Agreement  are  for
convenience  of  reference  only and  shall not  affect  the  interpretation  or
construction of this Agreement.

     17.4.  No failure or delay in  exercising  any  right,  power or  privilege
hereunder  shall  operate as a waiver  thereof,  nor shall any single or partial
exercise  thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege hereunder.


                                   SIGNATURES


                                            CRS EMERGENCY VEHICLES


Date: _____________                         By:____________________________
                                               [Signature]
                                               ----------------------------
                                               [Print Name and Title]


                                             CUSTOM COACH INTERNATIONAL


Date: _____________                          By:____________________________
                                                [Signature]
                                                ----------------------------
                                                [Print Name and Title]


Date: _____________                            ______________________________
                                                C. RAY SMITH
                                                [Signature]


                                               AURA SYSTEMS INC.

Date: _____________                           By:____________________________
                                                 [Signature]
                                                 ----------------------------
                                                 [Print Name and Title]


APPROVED AS TO FORM AND CONTENT:


                                            PRINDLE, DECKER & AMARO LLP


                                            By:____________________________
                                               R. JOSEPH DECKER
                                               Attorneys for AURA SYSTEMS, INC.


                                            THE DRUMMOND FIRM


                                            By:______________________________
                                               GENTER F. DRUMMOND
                                               WILL K. WRIGHT
                                               Attorneys for CRS EMERGENCY
                                               VEHICLES,   CUSTOM   COACH
                                               INTERNATIONAL, C. RAY SMITH


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1 See, Exhibit "C" attached to plaintiff's Complaint.

2 See, California Civil Code ss. 3289(b); "the obligation shall
bear interest at a rate of 10% per annum after a breach."
Pre-judgment interest was calculated to May 1, 2002, as
follows: (a) $266,000 was due on 07/12/01 (292 days) at 10% =
$21,280; (b) $266,000 was due on 08/30/01 (243 days) at 10% =
$17,709; (c) $266,000 was due on 09/30/01 (212 days) at 10% =
$15,450; (d) $436,729 was due on 10/15/01 (197 days) at 10% =
$23,570; Total: $78,009.

3 See, U.S.D.C Central District Local Rule 55-4; "$5,600 plus 2% of the amount
  over $100,000."

4 Court costs to date: (a) filing fee: $150; (b) service fees: $290 = $440