SECURITY
      AGREEMENT

     

    This
      Security Agreement (“Agreement”) is made this 5th day of February, 2007 (the
“Effective Date”), by and between Aura Sound, Inc., a California corporation
      (“Debtor”) whose address is 11839 East Smith Ave, Santa Fe Springs, CA 90670 and
      Apex Investment Fund, Ltd.

     

    This
      Agreement is entered into in connection with Secured Party’s loan to Debtor of
      $500,0000 (the “Loan”) pursuant to a Secured Promissory Note dated the Effective
      Date (the “Note”) and a Loan Agreement dated the Effective Date (the “Loan
      Agreement”).

     

    Secured
      Party and Debtor agree as follows:

     

    
      	
              A.

            	
              Definitions.

            


    

     

    
      	 	
              1.

            	
              “Collateral”.
                The Collateral shall consist of all of the personal property of Debtor,
                wherever located, and now owned or hereafter acquired,
                including:

            


    

     

    
      	 	
              (i)

            	
              Accounts;

            


    

     

    
      	 	
              (ii)

            	
              Chattel
                paper;

            


    

     

    
      	 	
              (iii)

            	
              Inventory;

            


    

     

    
      	 	
              (iv)

            	
              Equipment;

            


    

     

    
      	 	
              (v)

            	
              Instruments,
                including promissory notes;

            


    

     

    
      	 	
              (vi)

            	
              Investment
                property;

            


    

     

    
      	 	
              (vii)

            	
              Documents;

            


    

     

    
      	 	
              (viii)

            	
              Deposit
                Accounts;

            


    

     

    
      	 	
              (ix)

            	
              Commercial
                Tort Claims; 

            


    

     

    
      	 	
              (x)

            	
              Letter-of-credit
                right;

            


    

     

    
      	 	
              (xi)

            	
              General
                intangibles (including without limitation all Intellectual
                Property);

            


    

     

    
      	 	
              (xii)

            	
              Supporting
                obligations; and

            


    

     

    
      	 	
              (xiii)

            	
              To
                the extent not listed above as original collateral, proceeds and
                products
                of the foregoing. 

            


    

     

    
      	 	
              2.

            	
              “Copyrights.”
                Copyrights are all copyright rights, applications or registrations
                and
                like protections in each work or authorship or derivative work, whether
                published or not (whether or not it is a trade secret) now or later
                existing, created, acquired or
                held.

            


    

     

    
      	 	
              3.

            	
              “Intellectual Property.”
                Intellectual Property is all of
                Debtor’s:

            


    

     

    
      	 	
              (i)

            	
              Intellectual
                property rights including Copyrights, Trademarks, and Patents, including
                amendments, renewals, extensions, and all licenses or other rights
                to use
                and all license fees and royalties from the
                use;

            


    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              Trade
                secrets or know-how;

            


    

     

    
      	 	
              (iii)

            	
              Design
                rights which may be available to Debtor;
                and

            


    

     

    
      	 	
              (iv)

            	
              Any
                claims for damages (past, present or future) for infringement of
                any of
                the rights above, with the right, but not the obligation, to sue
                and
                collect damages for use or infringement of the intellectual property
                rights above.

            


    

     

    
      	 	
              4.

            	
              “Obligations”.
                This Agreement secures the
                following:

            


    

     

    
      	 	
              (i)

            	
              Debtor’s
                obligations under the Note and Loan
                Agreement;

            


    

     

    
      	 	
              (ii)

            	
              all
                of Debtor’s other present and future obligations to Secured
                Party;

            


    

     

    
      	 	
              (iii)

            	
              the
                repayment of (a) any amounts that Secured Party may advance or spend
                for
                the maintenance or preservation of the Collateral, and (b) any other
                expenditures that Secured Party may make under the provisions of
                this
                Agreement or for the benefit of
                Debtor;

            


    

     

    
      	 	
              (iv)

            	
              all
                amounts owed under any modifications, renewals or extensions of any
                of the
                foregoing obligations; and

            


    

     

    
      	 	
              (v)

            	
              any
                of the foregoing that arises after the filing of a petition by or
                against
                Debtor under the United States Bankruptcy Code (the “Bankruptcy Code”),
                even if the obligations do not accrue because of the automatic stay
                under
                Bankruptcy Code § 362 or otherwise.

            


    

     

    
      	 	
              5.

            	
              “Patents.”
                Patents are patents, patent applications and like protections, including
                improvements, divisions, continuations, renewals, reissues,
                reexaminations, extensions and continuations-in-part of the
                same.

            


    

     

    
      	 	
              6.

            	
              “Trademarks.”
                Trademarks are trademark and servicemark rights, registered or not,
                applications to register and registrations and like protections,
                and the
                entire goodwill of the business of Debtor connected with the trademarks
                or
                servicemarks.

            


    

     

    
      	 	
              7.

            	
              “UCC”.
                Any term used in the Uniform Commercial Code (“UCC”) and not defined in
                this Agreement has the meaning given to the term in the
                UCC.

            


    

     

    
      	
              B.

            	
              Grant
                of Security Interest.

            


    

     

    Debtor
      grants a security interest in the Collateral to Secured Party to secure the
      payment or performance of the Obligations.

     

    
      	
              C.

            	
              Perfection
                of Security Interests.

            


    

     

    
      	 	
              1.

            	
              Filing
                of financing statement.

            


    

     

    
      	 	
              (i)

            	
              Debtor
                authorizes Secured Party to file a financing statement (the “Financing
                Statement”) describing the Collateral.


            


    

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (ii)

            	
              Secured
                Party shall receive prior to the Closing, or within a reasonable
                time
                thereafter, an official report from the Secretary of State of each
                Collateral State, Chief Executive Office State, and the Debtor State
                (each
                as defined below) (the “SOS Reports”) indicating that Secured Party’s
                security interest is prior to all other security interests or other
                interests reflected in the report.

            


    

     

    
      	 	
              2.

            	
              Possession.

            


    

     

    
      	 	
              (i)

            	
              Debtor
                shall have possession of the Collateral, except where expressly otherwise
                provided in this Agreement or where Secured Party chooses to perfect
                its
                security interest by possession in addition to the filing of a financing
                statement.

            


    

     

    
      	 	
              (ii)

            	
              Where
                Collateral is in the possession of a third party, Debtor will join
                with
                Secured Party in notifying the third party of Secured Party’s security
                interest and obtaining an acknowledgment from the third party that
                it is
                holding the Collateral for the benefit of Secured
                Party.

            


    

     

    
      	 	
              3.

            	
              Control.
                Debtor will cooperate with Secured Party in obtaining control with
                respect
                to Collateral consisting of:

            


    

     

    
      	 	
              (i)

            	
              Deposit
                Accounts; 

            


    

     

    
      	 	
              (ii)

            	
              Investment
                Property;

            


    

     

    
      	 	
              (iii)

            	
              Letter-of-credit
                rights; and

            


    

     

    
      	 	
              (iv)

            	
              Electronic
                chattel paper.

            


    

     

    
      	 	
              4.

            	
              Intellectual
                Property. Debtor
                authorizes Secured Party to record any documents with the United
                States
                Patent and Trademark Office and United States Copyright Office necessary
                to perfect or protect Secured Party’s security interest in Debtor’s
                Intellectual Property.

            


    

     

    
      	 	
              5.

            	
              Marking
                of Chattel Paper.
                Debtor will not create any Chattel Paper without placing a legend
                on the
                Chattel Paper acceptable to Secured Party indicating that Secured
                Party
                has a security interest in the Chattel
                Paper.

            


    

     

    
      	
              D.

            	
              Post-Closing
                Covenants and Rights Concerning the
                Collateral.

            


    

     

    
      	 	
              1.

            	
              Inspection.
                The parties to this Security Agreement may inspect any Collateral
                in the
                other party’s possession, at any time upon reasonable
                notice.

            


    

     

    
      	 	
              2.

            	
              Personal
                Property. The
                Collateral shall remain personal property at all times. Debtor shall
                not
                affix any of the Collateral to any real property in any manner which
                would
                change its nature from that of personal property to real property
                or to a
                fixture.

            


    

     

    
      	 	
              3.

            	
              Secured
                Party’s Collection Rights. Secured
                Party shall have the right at any time to enforce Debtor’s rights against
                the account debtors and obligors.

            


    

     

    
      	 	
              4.

            	
              Limitations
                on Obligations Concerning Maintenance of
                Collateral.

            


    

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              (i)

            	
              Risk
                of Loss.
                Debtor has the risk of loss of the
                Collateral.

            


    

     

    
      	 	
              (ii)

            	
              No
                Collection Obligation.
                Secured Party has no duty to collect any income accruing on the Collateral
                or to preserve any rights relating to the
                Collateral.

            


    

     

    
      	 	
              5.

            	
              No
                Disposition of Collateral.
                Secured Party does not authorize, and Debtor agrees not
                to:

            


    

     

    
      	 	
              (i)

            	
              make
                any sales or leases of any of the Collateral, other than sales of
                Inventory in the ordinary course of
                business;

            


    

     

    
      	 	
              (ii)

            	
              license
                any of the Collateral, other than licenses or sublicenses in the
                ordinary
                course of business; or

            


    

     

    
      	 	
              (iii)

            	
              grant
                any other security interest in any of the
                Collateral.

            


    

     

    
      	 	
              6.

            	
              Purchase
                Money Security Interests. To
                the extent Debtor uses the Loan to purchase Collateral, Debtor’s repayment
                of the Loan shall apply on a “first-in-first-out” basis so that the
                portion of the Loan used to purchase a particular item of Collateral
                shall
                be paid in the chronological order the Debtor purchased the
                Collateral.

            


    

     

    
      	
              E.

            	
              Debtor’s Representations
                and Warranties.

            


    

     

    Debtor
      warrants and represents that:

     

    
      	 	
              1.

            	
              Title
                to and transfer of Collateral.
                It
                has rights in or the power to transfer the Collateral and its title
                to the
                Collateral is free of all adverse claims, liens, security interests
                and
                restrictions on transfer or pledge except as created by this
                Agreement.

            


    

     

    
      	 	
              2.

            	
              Location
                of Collateral.
                All collateral consisting of goods is located solely in the State
                of
                California (the “Collateral State”).


            


    

     

    
      	 	
              3.

            	
              Copyrights.
                Set forth on Exhibit
                A
                is
                a true and complete list of Debtor’s Copyrights (including copyrights of
                software), setting forth the name of the copyright and application
                or
                registration number, which are registered with the United States
                Copyright
                Office and any foreign copyright office.


            


    

     

    
      	 	
              4.

            	
              Patents.
                Set
                forth on Exhibit
                B
                is
                a true and compete list
                of all of Debtor’s Patents, setting forth the name of the patent and
                application or registration number, which are pending or registered
                with
                the United States Patent and Trademark Office and any foreign patent
                office. 

            


    

     

    
      	 	
              5.

            	
              Trademarks.
                Set
                forth on Exhibit
                C
                is
                a true and compete list
                of all of Debtor’s Trademarks, setting forth the name of the trademark and
                application or registration number, which are pending or registered
                with
                the United States Patent and Trademark Office and any foreign trademark
                office.

            


    

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.

            	
              Intellectual
                Property.
                Debtor
                is
                the sole owner of the Intellectual Property, except for those licenses
                or
                sublicenses granted in the ordinary course of Debtor’s business and any
                interest or title of a licensor or under any license or sublicense,
                if
                the licenses and sublicenses permit granting Secured Party a security
                interest in the licenses. No part of the Intellectual Property has
                been
                judged invalid or unenforceable, in whole or in part, and no claim
                has
                been made that any part of the Intellectual Property violates the
                rights
                of any third party. 

            


    

     

    
      	 	
              7.

            	
              Location,
                State of Organization, and Name of Debtor. Debtor’s:

            


    

     

    
      	 	
              (i)

            	
              chief
                executive office is located in the State of New York (the “Chief Executive
                Office State”);

            


    

     

    
      	 	
              (ii)

            	
              state
                of organization is the State of New York (the “Debtor State”);
                and

            


    

     

    
      	 	
              (iii)

            	
              exact
                legal name is as set forth in the first paragraph of this
                Agreement.

            


    

     

    
      	
              F.

            	
              Debtor’s Covenants.

            


    

     

    Until
      the
      Obligations are paid in full, Debtor agrees that it will:

     

    
      	 	
              1.

            	
              Preserve
                its corporate existence and not, in one transaction or a series of
                related
                transactions, merge into or consolidate with any other entity, or
                sell all
                or substantially all of its assets;

            


    

     

    
      	 	
              2.

            	
              Not
                change the state where it is located;


            


    

     

    
      	 	
              3.

            	
              Not
                change its corporate name without providing Secured Party with 30
                days’
                prior written notice;

            


    

     

    
      	 	
              4.

            	
              (i) Use
                its best efforts to protect, defend and maintain the validity and
                enforceability of the Intellectual Property, (ii) promptly advise
                Secured
                Party in writing of any material infringements of the Intellectual
                Property by a third party as it becomes known to Debtor, and
                (iii) use its best efforts to prevent any Intellectual Property from
                being abandoned, forfeited or dedicated to the public without Secured
                Party’s written consent;

            


    

     

    
      	 	
              5.

            	
              Give
                prompt notice of any material change in the composition of the
                Intellectual Property, including any subsequent ownership right of
                Debtor
                in or to any Copyright, Patent or Trademark or knowledge of an event
                that
                materially adversely affects the value of the Intellectual Property;
                and

            


    

     

    
      	 	
              6.

            	
              Not
                register any of its Copyrights with the United States Copyright Office
                without first executing and simultaneously registering an intellectual
                property security agreement, with the United States Copyright Office,
                listing such Copyrights in order to protect and perfect Secured Party’s
                security interest in such Copyrights. Promptly after such registration,
                Debtor shall forward to Secured Party, at the address set forth above,
                a
                copy of, and the original Intellectual Property Security Agreement
                as
                filed with the United States Copyright Office.


            


    

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    
      	
              G.

            	
              Events
                of Default.

            


    

     

    The
      occurrence of any of the following shall, at the option of Secured Party, be
      an
      Event of Default:

     

    
      	 	
              1.

            	
              Any
                default or Event of Default by Debtor under this Agreement, the Note,
                the
                Loan Agreement or any of the other
                Obligations;

            


    

     

    
      	 	
              2.

            	
              Debtor’s
                failure to comply with any of the provisions of,
                or the incorrectness of any representation or warranty contained
                in, this
                Agreement, the Note, the Loan Agreement or in any of the other
                Obligations;

            


    

     

    
      	 	
              3.

            	
              Transfer
                or disposition of any of the Collateral, except as expressly permitted
                by
                this Agreement;

            


    

     

    
      	 	
              4.

            	
              Attachment,
                execution, or levy on any of the Collateral;


            


    

     

    
      	 	
              5.

            	
              Debtor
                voluntarily or involuntarily becoming subject to any proceeding under
                (a) the Bankruptcy Code or (b) any similar remedy under state
                statutory or common law;

            


    

     

    
      	 	
              6.

            	
              Debtor
                shall fail to comply with any federal, state or local (a) hazardous
                waste
                or environmental law, (b) asset forfeiture or similar law which can
                result
                in the forfeiture of property, or
                (c) other law, where noncompliance may have any significant effect
                on the
                Collateral; 

            


    

     

    
      	 	
              7.

            	
              Debtor
                shall become subject to any administrative or judicial proceeding
                under
                any federal, state or local (a) hazardous waste or environmental
                law, (b)
                asset forfeiture or similar law which can result in the forfeiture
                of
                property, or
                (c) other law, where such proceeding may have any significant effect
                on
                the Collateral; or

            


    

     

    
      	 	
              8.

            	
              Secured
                Party shall receive at any time following the Closing an SOS Report
                indicating that Secured Party’s security interest is not prior to all
                other security interests or other interests reflected in the
                report.

            


    

     

    
      	
              H.

            	
              Default
                Costs.

            


    

     

    Should
      an
      Event of Default occur, Debtor will pay to Secured Party all costs reasonably
      incurred by the Secured Party for the purpose of enforcing its rights hereunder,
      including:

     

    
      	 	
              1.

            	
              Costs
                of foreclosure;

            


    

     

    
      	 	
              2.

            	
              Costs
                of obtaining money damages; and

            


    

     

    
      	 	
              3.

            	
              A
                reasonable fee for the services of an attorney employed by Secured
                Party
                for any purpose related to this Agreement or the Obligations, including
                consultation, drafting documents, sending notices or instituting,
                prosecuting or defending litigation or
                arbitration.

            


    

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    
      	
              I.

            	
              Remedies Upon
                Default.

            


    

     

    
      	 	
              1.

            	
              General.
                Upon any Event of Default, Secured Party may pursue any remedy available
                at law (including those available under the provisions of the UCC),
                or in
                equity to collect, enforce, or satisfy any Obligations then owing,
                whether
                by acceleration or otherwise.

            


    

     

    
      	 	
              2.

            	
              Concurrent
                Remedies.
                Upon an Event of Default, the Secured Party shall have the right
                to pursue
                any of the following remedies separately, successively, or
                simultaneously:

            


    

     

    
      	 	
              (i)

            	
              File
                suit and obtain judgment, and, in conjunction with any action, Secured
                Party may seek any ancillary remedies provided by law, including
                levy of
                attachment and garnishment.

            


    

     

    
      	 	
              (ii)

            	
              Take
                possession of any Collateral if not already in its possession without
                demand and without legal process. Upon Secured Party’s demand, Debtor will
                assemble and make the Collateral available to the Secured Party as
                they
                direct. Debtor grants to Secured Party the right, for this purpose,
                to
                enter into or on any premises where Collateral may be
                located.

            


    

     

    
      	 	
              (iii)

            	
              Without
                taking possession, sell, lease or otherwise dispose of the Collateral
                at
                public or private sale in accordance with the
                UCC.

            


    

     

    
      	
              J.

            	
              Foreclosure
                Procedures.

            


    

     

    
      	 	
              1.

            	
              No
                Waiver.
                No delay or omission by the Secured Party to exercise any right or
                remedy
                accruing upon any Event of Default shall (a) impair any right or
                remedy,
                (b) waive any default or operate as an acquiescence to the Event
                of
                Default, or (c) affect any subsequent default of the same or of a
                different nature.

            


    

     

    
      	 	
              2.

            	
              Notices.
                Secured Party shall give Debtor such notice of any private or public
                sale
                as may be required by the UCC.

            


    

     

    
      	 	
              3.

            	
              Condition
                of Collateral.
                Secured Party has no obligation to clean-up or otherwise prepare
                the
                Collateral for sale.

            


    

     

    
      	 	
              4.

            	
              No
                Obligation to Pursue Others.
                Secured Party has no obligation to attempt to satisfy the Obligations
                by
                collecting them from any other person liable for them and Secured
                Party
                may release, modify or waive any collateral provided by any other
                person
                to secure any of the Obligations, all without affecting Secured Party’s
                rights against Debtor. Debtor
                waives any right it may have to require Secured Party to pursue any
                third
                person for any of the Obligations.

            


    

     

    
      	 	
              5.

            	
              Compliance
                With Laws.
                Secured Party may comply with any applicable state or federal law
                requirements in connection with a disposition of the Collateral and
                compliance will not be considered to adversely affect the commercial
                reasonableness of any sale of the
                Collateral.

            


    

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              6.

            	
              Warranties.
                Secured
                Party may sell the Collateral without giving any warranties as to
                the
                Collateral. Secured Party may specifically disclaim any warranties
                of
                title or the like. This procedure will not be considered adversely
                to
                affect the commercial reasonableness of any sale of the
                Collateral.

            


    

     

    
      	 	
              7.

            	
              Intellectual
                Property.
                Secured Party is granted a non-exclusive, royalty-free license or
                other
                right to use, without charge, Debtor’s labels, Patents, Copyrights, rights
                of use of any name, trade secrets, trade names, Trademarks, service
                marks,
                and advertising matter, or any similar property as it pertains to
                the
                Collateral, solely in completing production of, advertising for sale,
                and
                selling any Collateral and, in connection with Secured Party’s exercise of
                its rights under this Section, Debtor’s rights under all licenses and all
                franchise agreements inure to Secured Party’s
                benefit;

            


    

     

    
      	 	
              8.

            	
              Sales
                on Credit.
                If the Secured Party sells any of the Collateral upon credit, Debtor
                will
                be credited only with payments actually made by the purchaser, received
                by
                Secured Party and applied to the indebtedness of the Purchaser. In
                the
                event the purchaser fails to pay for the Collateral, Secured Party
                may
                resell the Collateral and Debtor shall be credited with the proceeds
                of
                the sale.

            


    

     

    
      	 	
              9.

            	
              Purchases
                by Secured Party.
                In the event Secured Party purchases any of the Collateral being
                sold,
                Secured Party may pay for the Collateral
                by
                crediting some or all of the Obligations of the
                Debtor.

            


    

     

    
      	 	
              10.

            	
              No
                Marshaling. Secured
                Party has no obligation to marshal any assets in favor of Debtor,
                or
                against or in payment of:

            


    

     

    
      	 	
              (i)

            	
              the
                Note,

            


    

     

    
      	 	
              (ii)

            	
              any
                of the other Obligations, or

            


    

     

    
      	 	
              (iii)

            	
              any
                other obligation owed to Secured Party by Debtor or any other
                person.

            


    

     

    
      	
              K.

            	
              Miscellaneous.

            


    

     

    
      	 	
              1.

            	
              Assignment.

            


    

     

    
      	 	
              (i)

            	
              Binds
                Assignees.
                This Agreement shall bind and shall inure to the benefit of the heirs,
                legatees, executors, administrators, successors, and assigns of Secured
                Party and
                shall bind all persons who become bound as a debtor to this
                Agreement.

            


    

     

    
      	 	
              (ii)

            	
              No
                Assignments by Debtor.
                Secured Party does not consent to any assignment by Debtor except
                as
                expressly provided in this
                Agreement.

            


    

     

    
      	 	
              (iii)

            	
              Secured
                Party Assignments. Secured
                Party may assign its right or interest under this Agreement. If an
                assignment is made, Debtor shall render performance under this Agreement
                to the assignee. Debtor waives and will not assert against any assignee
                any claims, defenses, or setoffs which Debtor could assert against
                Secured
                Party except defenses which cannot be
                waived.

            


    

     

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    
      	 	
              2.

            	
              Severability.
                Should any provision of this Agreement be found to be void, invalid
                or
                unenforceable by a court or panel of arbitrators of competent
                jurisdiction, that finding shall only affect the provisions found
                to be
                void, invalid or unenforceable and shall not affect the remaining
                provisions of this Agreement.

            


    

     

    
      	 	
              3.

            	
              Notices.
                Any notices required by this Agreement shall be deemed to be delivered
                when a record has been (a) deposited in any United States postal
                box if
                postage is prepaid, and the notice properly addressed to the intended
                recipient, (b) received by telecopy, (c) received through the Internet,
                and (d) when personally delivered.

            


    

     

    
      	 	
              4.

            	
              Headings.
                Section headings used this Agreement are for convenience only. They
                are
                not a part of this Agreement and shall not be used in construing
                it.

            


    

     

    
      	 	
              5.

            	
              Governing
                Law.
                This Agreement is being executed and delivered and is intended to
                be
                performed in the State of California and shall be construed and enforced
                in accordance with the laws of the State of California
                except to the extent that the UCC
                provides for the application of the law of the Debtor States.

            


    

     

    
      	 	
              6.

            	
              Rules
                of Construction.

            


    

     

    
      	 	
              a.

            	
              No
                reference to “proceeds” in this Agreement authorizes any sale, transfer,
                or other disposition of the Collateral by the
                Debtor.

            


    

     

    
      	 	
              b.

            	
              “Includes”
                and “including” are not limiting.

            


    

     

    
      	 	
              c.

            	
              “Or”
                is not exclusive.

            


    

     

    
      	 	
              d.

            	
              “All”
                includes “any” and “any” includes
“all.”

            


    

     

    
      	 	
              7.

            	
              Integration
                and Modifications.

            


    

     

    
      	 	
              (i)

            	
              This
                Agreement is the entire agreement of the Debtor and Secured Party
                concerning its subject matter.

            


    

     

    
      	 	
              (ii)

            	
              Any
                modification to this Agreement must be made in writing and signed
                by the
                party adversely affected.

            


    

     

    
      	 	
              8.

            	
              Waiver.
                Any
                party to this Agreement may waive the enforcement of any provision
                to the
                extent the provision is for its
                benefit.

            


    

     

    
      	 	
              9.

            	
              Further
                Assurances. Debtor
                agrees to execute any further documents, and to take any further
                actions,
                reasonably requested by Secured Party to evidence or perfect the
                security
                interest granted herein, to maintain the first priority of the security
                interests, or to effectuate the rights granted to Secured Party
                herein.

            


    

     

    (*******************)

     

    (Signatures
      on Following Page)

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    The
      parties have signed this Agreement as of the day and year first above written.
      

     

    
      	 	 	 
	 	
              
              

              “Debtor’’

            
	 
 	 
 	 
 
	
            	By:  	
              /s/
                Arthur Liu    

            
	 	
              
                

              

              Arthur Liu

              Chairman

              
                Aura
                  Sound, Inc.

              

            


    

     

    
      	 	 	 
	 	
              
                “Secured
                  Party” 

              

            
	 
 	 
 	 
 
	
            	By:  	
              /s/
                Susan E. Fairhurst

            
	 	
              

              Susan
                E. Fairhurst    

              Director,
                Apex Investment Fund, Ltd. 

            


    

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

                 

    
      EXHIBIT
        A

       

      COPYRIGHTS

      


      NONE.

       

      
        
          
          

        

        
          A-1

          
            

          

        

        
          
          

        

         

        EXHIBIT
          B

      

       

      PATENTS

       

      

       

      
        
          
          

        

        
          B-1

          
            

          

        

        
          
          

        

      


      

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    


    EXHIBIT
      C

     

    TRADEMARKS