Unassociated Document


    AGREEMENT
      TO CONVERT DEBT

    


    This
      Agreement to Convert Debt (the “Agreement”) is made as of October 15, 2007 (the
“Effective Date”) by and among Inseat Solutions, LLC, a California Limited
      Liability Company (the “Holder”), and Hemcure, Inc., a Nevada
      corporation.

    


    RECITALS

    


    A. Pursuant
      to the promissory notes and other debt listed on Schedule I attached hereto,
      as
      of May 31, 2007, the Company’s wholly owned subsidiary, AuraSound, Inc., a
      California corporation, owes Inseat, in principal and accrued interest, the
      total sum of $3,646,344.63 (the “Total Amount Owed”), out of which Inseat has
      agreed to convert $2,500,000 (the “Converted Amount”) in accordance with this
      Agreement.

    


    B. The
      Company wishes to pay the Converted Amount by issuing securities to the Holder
      and the Holder has agreed to accept the Company’s securities as full and final
      payment of the Converted Amount, in accordance with the terms of this
      Agreement.

    


    Therefore,
      the Company and the Holder agree as follows:

    


    AGREEMENT

    


    1. Issuance
      of Securities and Cancellation of Debt.

    


    (a) Securities
      to be Issued.
      The
      Holder agrees to accept, and the Company agrees to issue to the Holder, as
      full
      and final payment of the Converted Amount, 1,666,667 shares (the “Shares”) of
      the Company’s $0.01 par value per share common stock (“Common Stock”), and a
      warrant, in the form attached hereto as Exhibit
      A,
      to
      purchase 1,666,667 shares of Common Stock at an exercise price of $1.50 per
      share (the “Warrant”). 

    


    (b) Exchange
      of Documents.
      A
      certificate representing the Shares and the Warrant shall be delivered to the
      Holder as soon as practicable. Upon receipt of the Shares and the Warrant,
      (i)
      the Holder will return to the Company for cancellation on its books and records
      all the original executed promissory notes listed on Schedule I hereto (the
      “Promissory Notes”), (ii) the Company shall record the payment of the Converted
      Amount on its books and records, and (iii) the Company shall issue a new
      promissory note to Inseat, bearing simple interest at the rate of 9% per annum,
      in the principal amount of $1,146,344.63, representing the difference between
      the Total Amount Owed and the Converted Amount.

    


    2. Representations
      by Company.

    


    The
      Company hereby represents and warrants to the Holder as follows:

    


    (i) The
      Company is duly organized, validly existing and in good standing under the
      laws
      of the State of Nevada.

    


    (ii) The
      Company has all requisite power and authority (corporate or otherwise) to
      execute, deliver and perform this Agreement and the transactions contemplated
      hereby, and the execution, delivery and performance by the Company of this
      Agreement has been duly authorized by all requisite action by the Company and
      this Agreement, when executed and delivered by the Company, constitutes a valid
      and binding obligation of the Company, enforceable against the Company in
      accordance with its terms, subject to applicable bankruptcy, insolvency,
      reorganization, fraudulent conveyance, moratorium or other similar laws
      affecting creditors' rights and remedies generally, and subject, as to
      enforceability, to general principles of equity (regardless of whether
      enforcement is sought in a proceeding at law or in equity).

    


    
      
        
        

      

      
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    (iii) The
      execution, delivery and performance by the Company of this Agreement have been
      duly authorized by all requisite corporate action of the Company; and this
      Agreement has been duly executed and delivered by the Company.

    


    (iv) The
      Shares and, when issued, the shares issuable upon exercise of the Warrant (the
      “Warrant Shares”), will be duly and validly issued, fully paid and
      nonassessable, and free of any liens or encumbrances.

    


    3. Representations
      by the Holder.

    


    The
      Holder hereby represents and warrants to the Company as follows:

    


    (i) The
      Holder has all requisite power and authority (corporate or otherwise) to
      execute, deliver and perform this Agreement and the transactions contemplated
      hereby, and the execution, delivery and performance by the Holder of this
      Agreement has been duly authorized by all requisite action by the Holder and
      this Agreement, when executed and delivered by the Holder, constitutes a valid
      and binding obligation of the Holder, enforceable against the Holder in
      accordance with its terms, subject to applicable bankruptcy, insolvency,
      reorganization, fraudulent conveyance, moratorium or other similar laws
      affecting creditors' rights and remedies generally, and subject, as to
      enforceability, to general principles of equity (regardless of whether
      enforcement is sought in a proceeding at law or in equity).

    


    (ii) The
      Holder has a pre-existing personal or business relationship with the Company
      and
      its officers and directors.

    


    (iii) The
      Holder is an “accredited investor”, as that term is defined in Rule 501 of
      Regulation D in that the sole shareholder of the Holder is a director and
      officer of the Company.

    


    (iv) The
      Holder has complied with all applicable investment laws and regulations in
      force
      relating to the legality of an investment in the Shares and the Warrant in
      the
      jurisdiction in which it is subject, and the Holder has obtained any consent,
      approval or permission required in that jurisdiction.

    


    
      
        
        

      

      
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    (v) The
      Holder understands and acknowledges that none of the Shares, the Warrant or
      the
      Warrant Shares have been registered with the Securities and Exchange Commission
      under Section 5 of the Securities Act or registered or qualified with any
      applicable state or territorial securities regulatory agency in reliance upon
      one or more exemptions afforded from registration or qualification.

    


    (vi) The
      Holder understands and acknowledges that the Shares, the Warrant and the Warrant
      Shares are
      deemed to be “restricted” securities under the Securities Act, and may be
      re-sold only pursuant to exemptions provided by the Securities Act. The Holder
      understands and acknowledges that the Company is required to place a legend
      on
      each certificate representing the Shares and the Warrant stating that the Shares
      and the Warrant have not been registered under the Securities Act.

    


    (vii) The
      Holder understands and acknowledges that: (i) prior to any sale, transfer,
      assignment, pledge, hypothecation or other disposition of the Shares, the
      Warrant or the Warrant Shares it must either: (1) furnish the Company with
      an
      opinion of counsel, in form and substance reasonably satisfactory to the Company
      and to its legal counsel, to the effect that such disposition is exempted from
      the registration and prospectus delivery requirement under the Securities Act
      and the securities laws of the jurisdiction in which the Holder resides, and
      legal counsel for the Company shall have concurred in such opinion; or
      (2)
      satisfy the Company that a registration statement on Form SB-2 under the
      Securities Act (or any other form appropriate under the Securities Act, or
      any
      form replacing any such form) with respect to the securities proposed to be
      so
      disposed of shall then be effective; and that such disposition shall have been
      appropriately qualified or registered in accordance with the applicable
      securities laws of the jurisdiction in which the Holder resides.

    


    4. Miscellaneous.

    


    (a) Amendments
      and Waivers.
      The
      provisions of this Agreement may not be amended, modified or supplemented,
      and
      waivers or consents to departures from the provisions hereof may not be given,
      unless the same shall be in writing and signed by the Company and the
      Holder.

    


    (b) Notices.
      Any and
      all notices or other communications or deliveries to be provided by the Holder
      hereunder shall be in writing and delivered personally, by facsimile or sent
      by
      a nationally recognized overnight courier service, addressed to the Company
      at
      11839 East Smith Avenue Santa Fe Springs, California 90670, facsimile number
      (562) 447-1788, Attn: Chief Executive Officer or such other address or facsimile
      number as the Company may specify for such purposes by notice to the Holder
      delivered in accordance with this Section. Any and all notices or other
      communications or deliveries to be provided by the Company hereunder shall
      be in
      writing and delivered personally, by facsimile, sent by a nationally recognized
      overnight courier service addressed to the Holder at 11839 East Smith Avenue
      Santa Fe Springs, California 90670, facsimile number (562) 447-1788, Attn:
      Chief
      Executive Officer. Any notice or other communication or deliveries hereunder
      shall be deemed given and effective on the earliest of (i) the date of
      transmission, if such notice or communication is delivered via facsimile at
      the
      facsimile telephone number specified in this Section prior to 5:30 p.m. (Pacific
      time), (ii) the date after the date of transmission, if such notice or
      communication is delivered via facsimile at the facsimile telephone number
      specified in this Section later than 5:30 p.m. (Pacific time) on any date and
      earlier than 11:59 p.m. (Pacific time) on such date, (iii) the second Business
      Day following the date of mailing, if sent by nationally recognized overnight
      courier service, or (iv) upon actual receipt by the party to whom such notice
      is
      required to be given.

    


    
      
        
        

      

      
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    (c) Successors
      and Assigns.
      This
      Agreement shall inure to the benefit of and be binding upon the successors
      and
      permitted assigns of each of the parties. Neither the Holder nor the Company
      may
      assign its rights or obligations hereunder without the prior written consent
      of
      the other.

    


    (d) Counterparts.
      This
      Agreement may be executed in any number of counterparts, each of which when
      so
      executed shall be deemed to be an original and, all of which taken together
      shall constitute one and the same Agreement. In the event that any signature
      is
      delivered by facsimile transmission, such signature shall create a valid binding
      obligation of the party executing (or on whose behalf such signature is
      executed) the same with the same force and effect as if such facsimile signature
      were the original thereof.

    


    (e) Severability.
      If any
      term, provision, covenant or restriction of this Agreement is held by a court
      of
      competent jurisdiction to be invalid, illegal, void or unenforceable, the
      remainder of the terms, provisions, covenants and restrictions set forth herein
      shall remain in full force and effect and shall in no way be affected, impaired
      or invalidated, and the parties hereto shall use their reasonable efforts to
      find and employ an alternative means to achieve the same or substantially the
      same result as that contemplated by such term, provision, covenant or
      restriction. It is hereby stipulated and declared to be the intention of the
      parties that they would have executed the remaining terms, provisions, covenants
      and restrictions without including any of such that may be hereafter declared
      invalid, illegal, void or unenforceable.

    


    (f) Headings.
      The
      headings in this Agreement are for convenience of reference only and shall
      not
      limit or otherwise affect the meaning hereof.

    


    [SIGNATURES
      FOLLOW]

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF, the parties have executed this Agreement to Convert Debt as
      of
      the date first written above.

    


    


    
      	
              HEMCURE,
                INC.

            
	 	 
	 	 
	
              By:
                

            	
              /s/
                Arthur Liu

            
	 	
              Arthur
                Liu, Chief Executive Officer

            
	 	 
	 	 
	
              INSEAT
                SOLUTIONS, LLC

            
	 	 
	
              By:
                

            	
              /s/
                Judie Rothenberger

            
	 	
              Judie
                Rothenberger, Chief Executive
                Officer

            


    

    


    
      
        
        

      

      
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