THIS WARRANT AND THE SHARES  ISSUABLE UPON THE EXERCISE OF THIS WARRANT
         HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
         EXCEPT AS OTHERWISE SET FORTH  HEREIN,  NEITHER THIS WARRANT NOR ANY OF
         SUCH SHARES MAY BE SOLD, OFFERED FOR SALE,  ASSIGNED,  TRANSFERRED,  OR
         OTHERWISE  DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT OR
         AN OPINION OF COUNSEL THAT  REGISTRATION IS NOT REQUIRED UNDER SUCH ACT
         OR UNLESS  SOLD  PURSUANT  TO RULE 144 UNDER  SUCH ACT.  ANY SUCH SALE,
         ASSIGNMENT  OR  TRANSFER  MUST  ALSO  COMPLY  WITH   APPLICABLE   STATE
         SECURITIES LAWS.

                                                          Right to
                                                          Purchase
                                                          1,200,000
                                                          Shares of
                                                          Common Stock,
par value $.005                                           per share


                             STOCK PURCHASE WARRANT

         THIS CERTIFIES THAT, for value received,  RGC INTERNATIONAL  INVESTORS,
LDC  ("RGC"),  or its  registered  assigns,  is entitled  to purchase  from Aura
Systems, Inc., a Delaware corporation (the "Company"),  at any time or from time
to time  during the period  specified  in  Paragraph  2 hereof,  One Million Two
Hundred  Thousand  (1,200,000)  fully  paid  and  nonassessable  shares  of  the
Company's Common Stock,  par value $.005 per share (the "Common  Stock"),  at an
exercise  price equal to (i) on or prior to January 31,  1999,  $1.40 per share;
(ii) from February 1, 1999 until June 30, 1999,  the lesser of (a) $1.40 and (b)
101% of the average  Closing Bid Price (as defined in  Paragraph  4(l)),  of the
Common Stock for the five (5)  consecutive  trading days ending January 31, 1999
(the "January  Price");  and (iii) after June 30, 1999, the lesser of (a) $1.40,
(b) the  January  Price  and (c) 101% of the  average  Closing  Bid Price of the
Common Stock for the five (5) consecutive trading days ending June 30, 1999 (the
"Exercise  Price").  The term  "Warrant  Shares," as used herein,  refers to the
shares of  Common  Stock  purchasable  hereunder.  The  Warrant  Shares  and the
Exercise Price are subject to adjustment as provided in Paragraph 4 hereof.  The
term Warrants means this Warrant and the other warrants  issued pursuant to that
certain  Securities  Purchase  Agreement dated October 7, 1998, by and among the
Company and RGC (the "Purchase Agreement").

         This  Warrant  is  subject  to the  following  terms,  provisions,  and
conditions:



<PAGE>





         1. Manner of Exercise;  Issuance of  Certificates;  Payment for Shares.
Subject to the  provisions  hereof,  this Warrant may be exercised by the holder
hereof,  in whole or in part, by the surrender of this Warrant,  together with a
completed  exercise  agreement  in  the  form  attached  hereto  (the  "Exercise
Agreement"),  to the Company during normal business hours on any business day at
the Company's principal executive offices (or such other office or agency of the
Company  as it may  designate  by notice  to the  holder  hereof),  and upon (i)
payment to the Company in cash,  by certified or official  bank check or by wire
transfer  for the account of the Company of the  Exercise  Price for the Warrant
Shares specified in the Exercise  Agreement or (ii) if the resale of the Warrant
Shares  by  the  holder  is  not  then  registered   pursuant  to  an  effective
registration  statement  under  the  Securities  Act of 1933,  as  amended  (the
"Securities Act"), delivery to the Company of a written notice of an election to
effect a "Cashless Exercise" (as defined in Section 11(c) below) for the Warrant
Shares  specified in the  Exercise  Agreement.  The Warrant  Shares so purchased
shall be deemed to be issued to the holder hereof or such holder's designee,  as
the record  owner of such  shares,  as of the close of  business  on the date on
which this Warrant shall have been surrendered, the completed Exercise Agreement
shall have been  delivered,  and payment shall have been made for such shares as
set forth above. Certificates for the Warrant Shares so purchased,  representing
the aggregate  number of shares  specified in the Exercise  Agreement,  shall be
delivered to the holder hereof within a reasonable time, not exceeding three (3)
business days, after this Warrant shall have been so exercised. The certificates
so delivered  shall be in such  denominations  as may be requested by the holder
hereof and shall be  registered in the name of such holder or such other name as
shall be  designated by such holder.  If this Warrant shall have been  exercised
only in part, then,  unless this Warrant has expired,  the Company shall, at its
expense,  at the time of delivery of such certificates,  deliver to the holder a
new Warrant representing the number of shares with respect to which this Warrant
shall not then have been exercised.

                  Notwithstanding  anything in this Warrant to the contrary,  in
no event  shall the Holder of this  Warrant be  entitled to exercise a number of
Warrants (or portions  thereof) in excess of the number of Warrants (or portions
thereof)  upon  exercise  of which the sum of (i) the number of shares of Common
Stock  beneficially owned by the Holder and its affiliates (other than shares of
Common Stock which may be deemed beneficially owned through the ownership of the
unexercised Warrants,  and unconverted portions of the Notes and the unexercised
or  unconverted  portion of any other  securities  of the  Company  subject to a
limitation  on exercise or  conversion  analogous  to the  limitation  contained
herein) and (ii) the number of shares of Common Stock  issuable upon exercise of
the  Warrants  (or portions  thereof)  with  respect to which the  determination
described  herein is being made,  would  result in  beneficial  ownership by the
Holder and its affiliates of more than 4.9% of the outstanding  shares of Common
Stock. For purposes of the immediately preceding sentence,  beneficial ownership
shall be determined in accordance with Section 13(d) of the Securities  Exchange
Act of 1934, as amended,  and Regulation 13D-G  thereunder,  except as otherwise
provided in clause (i).



<PAGE>


         2. Period of Exercise.  This Warrant is exercisable at any time or from
time to time on or after the date on which this Warrant is issued and  delivered
pursuant to the terms of the Securities Purchase Agreement and before 5:00 p.m.,
New York City time on the fifth (5th)  anniversary  of the date of issuance (the
"Exercise Period").

         3. Certain Agreements of the Company.  The Company hereby covenants and
agrees as follows:

                  (a) Shares to be Fully Paid.  All Warrant  Shares  will,  upon
issuance in accordance with the terms of this Warrant, be validly issued,  fully
paid, and nonassessable and free from all taxes, liens, and charges with respect
to the issue thereof.

                  (b)  Reservation of Shares.  During the Exercise  Period,  the
Company  shall at all times have  authorized,  and  reserved  for the purpose of
issuance upon exercise of this Warrant,  a sufficient number of shares of Common
Stock to provide for the exercise of this Warrant.

                  (c) Listing.  The Company shall promptly secure the listing of
the shares of Common  Stock  issuable  upon  exercise of the  Warrant  upon each
national  securities  exchange or automated quotation system, if any, upon which
shares of Common Stock are then listed  (subject to official  notice of issuance
upon exercise of this Warrant) and shall  maintain,  so long as any other shares
of Common  Stock shall be so listed,  such listing of all shares of Common Stock
from time to time issuable  upon the exercise of this  Warrant;  and the Company
shall  so list on each  national  securities  exchange  or  automated  quotation
system, as the case may be, and shall maintain such listing of, any other shares
of capital  stock of the Company  issuable  upon the exercise of this Warrant if
and so long as any  shares of the same  class  shall be listed on such  national
securities exchange or automated quotation system.

                  (d)  Certain  Actions  Prohibited.  The  Company  will not, by
amendment  of its  charter or through  any  reorganization,  transfer of assets,
consolidation,  merger,  dissolution,  issue or sale of securities, or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms to be observed or performed by it hereunder,  but will at all times in
good faith assist in the carrying out of all the  provisions of this Warrant and
in the taking of all such action as may reasonably be requested by the holder of
this  Warrant in order to protect the  exercise  privilege of the holder of this
Warrant  against  dilution or other  impairment,  consistent  with the tenor and
purpose of this Warrant.  Without limiting the generality of the foregoing,  the
Company  (i) will not  increase  the par value of any  shares  of  Common  Stock
receivable  upon the exercise of this Warrant  above the Exercise  Price then in
effect,  and (ii) will take all such actions as may be necessary or  appropriate
in  order  that the  Company  may  validly  and  legally  issue  fully  paid and
nonassessable shares of Common Stock upon the exercise of this Warrant.

                  (e) Successors and Assigns.  This Warrant will be binding upon
any entity succeeding to the Company by merger, consolidation, or acquisition of
all or substantially all the Company's assets.



<PAGE>


         4. Antidilution  Provisions.  During the Exercise Period,  the Exercise
Price and the number of Warrant Shares shall be subject to adjustment  from time
to time as provided in this Paragraph 4.

         In the event that any  adjustment  of the  Exercise  Price as  required
herein results in a fraction of a cent,  such Exercise Price shall be rounded up
to the nearest cent.

                  (a)  Adjustment  of  Exercise  Price and Number of Shares upon
Issuance of Common Stock.  Except as otherwise  provided in Paragraphs  4(c) and
4(e) hereof,  if and whenever on or after the date of issuance of this  Warrant,
the Company  issues or sells,  or in accordance  with  Paragraph  4(b) hereof is
deemed to have issued or sold,  any shares of Common Stock for no  consideration
or for a  consideration  per share (before  deduction of reasonable  expenses or
commissions  or  underwriting  discounts or allowances in connection  therewith)
less than the Market Price (as  hereinafter  defined) on the date of issuance (a
"Dilutive Issuance"),  then immediately upon the Dilutive Issuance, the Exercise
Price will be reduced to a price determined by multiplying the Exercise Price in
effect  immediately  prior  to the  Dilutive  Issuance  by a  fraction,  (i) the
numerator  of which is an amount equal to the sum of (x) the number of shares of
Common Stock actually  outstanding  immediately prior to the Dilutive  Issuance,
plus (y) the quotient of the aggregate consideration, calculated as set forth in
Paragraph  4(b)  hereof,  received by the Company  upon such  Dilutive  Issuance
divided  by the  Market  Price  in  effect  immediately  prior  to the  Dilutive
Issuance,  and (ii) the  denominator  of which is the total  number of shares of
Common  Stock  Deemed  Outstanding  (as  defined  below)  immediately  after the
Dilutive Issuance.

                  (b) Effect on Exercise Price of Certain  Events.  For purposes
of  determining  the adjusted  Exercise Price under  Paragraph 4(a) hereof,  the
following will be applicable:



<PAGE>


     (i) Issuance of Rights or Options.  If the Company in any manner  issues or
grants any warrants,  rights or options, whether or not immediately exercisable,
to subscribe  for or to purchase  Common Stock or other  securities  convertible
into or exchangeable for Common Stock ("Convertible Securities") (such warrants,
rights and  options to  purchase  Common  Stock or  Convertible  Securities  are
hereinafter  referred to as "Options")  and the price per share for which Common
Stock is  issuable  upon the  exercise  of such  Options is less than the Market
Price on the date of issuance or grant of such  Options,  then the maximum total
number of shares of Common Stock  issuable upon the exercise of all such Options
will, as of the date of the issuance or grant of such  Options,  be deemed to be
outstanding  and to have been  issued and sold by the Company for such price per
share.  For purposes of the preceding  sentence,  the "price per share for which
Common Stock is issuable  upon the exercise of such  Options" is  determined  by
dividing (i) the total amount,  if any, received or receivable by the Company as
consideration for the issuance or granting of all such Options, plus the minimum
aggregate  amount of additional  consideration,  if any,  payable to the Company
upon  the  exercise  of all  such  Options,  plus,  in the  case of  Convertible
Securities  issuable  upon the exercise of such Options,  the minimum  aggregate
amount of  additional  consideration  payable  upon the  conversion  or exchange
thereof at the time such  Convertible  Securities  first become  convertible  or
exchangeable,  by (ii) the  maximum  total  number of  shares  of  Common  Stock
issuable  upon the exercise of all such Options  (assuming  full  conversion  of
Convertible  Securities,  if applicable).  No further adjustment to the Exercise
Price  will be made upon the  actual  issuance  of such  Common  Stock  upon the
exercise of such  Options or upon the  conversion  or  exchange  of  Convertible
Securities issuable upon exercise of such Options.

     (ii)  Issuance  of  Convertible  Securities.  If the  Company in any manner
issues  or  sells  any  Convertible  Securities,   whether  or  not  immediately
convertible  (other  than  where  the same are  issuable  upon the  exercise  of
Options) and the price per share for which  Common  Stock is issuable  upon such
conversion  or exchange is less than the Market  Price on the date of  issuance,
then the  maximum  total  number of shares of  Common  Stock  issuable  upon the
conversion or exchange of all such  Convertible  Securities will, as of the date
of the issuance of such Convertible Securities,  be deemed to be outstanding and
to have been issued and sold by the  Company  for such price per share.  For the
purposes of the preceding sentence,  the "price per share for which Common Stock
is issuable upon such  conversion or exchange" is determined by dividing (i) the
total amount, if any, received or receivable by the Company as consideration for
the  issuance  or sale of all such  Convertible  Securities,  plus  the  minimum
aggregate  amount of additional  consideration,  if any,  payable to the Company
upon the conversion or exchange thereof at the time such Convertible  Securities
first become  convertible or  exchangeable,  by (ii) the maximum total number of
shares of Common  Stock  issuable  upon the  conversion  or exchange of all such
Convertible Securities. No further adjustment to the Exercise Price will be made
upon the actual  issuance of such Common  Stock upon  conversion  or exchange of
such Convertible Securities.

     (iii) Change in Option Price or  Conversion  Rate.  If there is a change at
any time in (i) the amount of  additional  consideration  payable to the Company
upon the exercise of any Options;  (ii) the amount of additional  consideration,
if  any,  payable  to  the  Company  upon  the  conversion  or  exchange  of any
Convertible  Securities;  or (iii) the rate at which any Convertible  Securities
are convertible  into or  exchangeable  for Common Stock (other than under or by
reason of provisions  designed to protect against dilution),  the Exercise Price
in effect at the time of such change will be  readjusted  to the Exercise  Price
which  would have been in effect at such time had such  Options  or  Convertible
Securities still outstanding provided for such changed additional  consideration
or changed  conversion rate, as the case may be, at the time initially  granted,
issued or sold.

     (iv) Treatment of Expired Options and Unexercised  Convertible  Securities.
If, in any case,  the total  number  of  shares of Common  Stock  issuable  upon
exercise  of any  Option  or upon  conversion  or  exchange  of any  Convertible
Securities is not, in fact,  issued and the rights to exercise such Option or to
convert  or  exchange  such   Convertible   Securities  shall  have  expired  or
terminated, the Exercise Price then in effect will be readjusted to the Exercise
Price  which  would  have  been in  effect  at the  time of such  expiration  or
termination had such Option or Convertible Securities, to the extent outstanding
immediately  prior to such  expiration or termination  (other than in respect of
the actual  number of shares of Common Stock issued upon  exercise or conversion
thereof), never been issued.


<PAGE>


     (v) Calculation of Consideration  Received. If any Common Stock, Options or
Convertible  Securities are issued,  granted or sold for cash, the consideration
received  therefor for  purposes of this Warrant will be the amount  received by
the Company therefor,  before deduction of reasonable commissions,  underwriting
discounts or  allowances  or other  reasonable  expenses paid or incurred by the
Company in  connection  with such  issuance,  grant or sale.  In case any Common
Stock, Options or Convertible  Securities are issued or sold for a consideration
part or all of which shall be other than cash,  the amount of the  consideration
other  than  cash  received  by the  Company  will  be the  fair  value  of such
consideration,  except where such consideration consists of securities, in which
case the amount of  consideration  received  by the  Company  will be the Market
Price thereof as of the date of receipt.  In case any Common  Stock,  Options or
Convertible Securities are issued in connection with any acquisition,  merger or
consolidation in which the Company is the surviving  corporation,  the amount of
consideration  therefor  will be deemed to be the fair value of such  portion of
the net assets and business of the non-surviving  corporation as is attributable
to such Common Stock, Options or Convertible Securities, as the case may be. The
fair value of any consideration other than cash or securities will be determined
in good faith by the Board of Directors of the Company.

     (vi)  Exceptions  to  Adjustment  of Exercise  Price.  No adjustment to the
Exercise  Price will be made (i) upon the exercise of any  warrants,  options or
convertible  securities granted,  issued and outstanding on the date of issuance
of this  Warrant;  (ii) upon the grant or exercise of any stock or options which
may  hereafter  be granted or exercised  under any employee  benefit plan of the
Company now existing or to be implemented in the future, so long as the issuance
of such stock or options is approved by a majority of the independent members of
the  Board of  Directors  of the  Company  or a  majority  of the  members  of a
committee of independent  directors  established for such purpose; or (iii) upon
the exercise of the Warrants.

                  (c) Subdivision or Combination of Common Stock. If the Company
at any time subdivides (by any stock split,  stock  dividend,  recapitalization,
reorganization,  reclassification  or  otherwise)  the  shares of  Common  Stock
acquirable  hereunder into a greater number of shares,  then,  after the date of
record for effecting such subdivision,  the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company at any
time  combines  (by  reverse  stock  split,  recapitalization,   reorganization,
reclassification  or otherwise) the shares of Common Stock acquirable  hereunder
into a smaller  number of shares,  then,  after the date of record for effecting
such  combination,  the  Exercise  Price  in  effect  immediately  prior to such
combination will be proportionately increased.

                  (d)  Adjustment in Number of Shares.  Upon each  adjustment of
the Exercise Price pursuant to the provisions of this Paragraph 4, the number of
shares of Common Stock  issuable upon exercise of this Warrant shall be adjusted
by multiplying a number equal to the Exercise Price in effect  immediately prior
to such  adjustment  by the  number  of shares of  Common  Stock  issuable  upon
exercise of this Warrant  immediately  prior to such adjustment and dividing the
product so obtained by the adjusted Exercise Price.



<PAGE>


                  (e)   Consolidation,   Merger   or   Sale.   In  case  of  any
consolidation  of the  Company  with,  or merger of the  Company  into any other
corporation, or in case of any sale or conveyance of all or substantially all of
the assets of the  Company  other  than in  connection  with a plan of  complete
liquidation of the Company, then as a condition of such consolidation, merger or
sale or conveyance,  adequate  provision will be made whereby the holder of this
Warrant will have the right to acquire and receive upon exercise of this Warrant
in lieu of the shares of Common Stock  immediately  theretofore  acquirable upon
the exercise of this Warrant, such shares of stock,  securities or assets as may
be issued or payable  with respect to or in exchange for the number of shares of
Common Stock immediately  theretofore acquirable and receivable upon exercise of
this  Warrant had such  consolidation,  merger or sale or  conveyance  not taken
place. In any such case, the Company will make  appropriate  provision to insure
that the provisions of this Paragraph 4 hereof will  thereafter be applicable as
nearly as may be in  relation  to any shares of stock or  securities  thereafter
deliverable  upon the exercise of this Warrant.  The Company will not effect any
consolidation,  merger or sale or  conveyance  unless prior to the  consummation
thereof,  the  successor  corporation  (if other  than the  Company)  assumes by
written instrument the obligations under this Paragraph 4 and the obligations to
deliver to the holder of this Warrant such shares of stock, securities or assets
as, in accordance with the foregoing  provisions,  the holder may be entitled to
acquire.

                  (f) Distribution of Assets.  In case the Company shall declare
or make any  distribution  of its assets  (including  cash) to holders of Common
Stock  as a  partial  liquidating  dividend,  by way of  return  of  capital  or
otherwise,  then, after the date of record for determining stockholders entitled
to such distribution,  but prior to the date of distribution, the holder of this
Warrant  shall be entitled upon exercise of this Warrant for the purchase of any
or all of the shares of Common Stock  subject  hereto,  to receive the amount of
such assets which would have been payable to the holder had such holder been the
holder of such shares of Common  Stock on the record date for the  determination
of stockholders entitled to such distribution.

                  (g) Notice of  Adjustment.  Upon the  occurrence  of any event
which  requires any  adjustment of the Exercise  Price,  then,  and in each such
case, the Company shall give notice thereof to the holder of this Warrant, which
notice shall state the Exercise  Price  resulting  from such  adjustment and the
increase or decrease in the number of Warrant  Shares  purchasable at such price
upon exercise,  setting forth in reasonable detail the method of calculation and
the facts  upon which  such  calculation  is based.  Such  calculation  shall be
certified by the chief financial officer of the Company.

                  (h) Minimum Adjustment of Exercise Price. No adjustment of the
Exercise  Price shall be made in an amount of less than 1% of the Exercise Price
in effect at the time such adjustment is otherwise  required to be made, but any
such lesser  adjustment  shall be carried  forward and shall be made at the time
and  together  with the next  subsequent  adjustment  which,  together  with any
adjustments  so  carried  forward,  shall  amount  to not  less  than 1% of such
Exercise Price.



<PAGE>


                  (i) No Fractional Shares. No fractional shares of Common Stock
are to be issued upon the exercise of this Warrant,  but the Company shall pay a
cash  adjustment  in respect of any  fractional  share which would  otherwise be
issuable in an amount equal to the same  fraction of the Market Price of a share
of Common Stock on the date of such exercise.

                  (j) Other Notices. In case at any time:

                           (i) the Company  shall  declare any dividend upon the
Common  Stock  payable  in  shares  of  stock of any  class  or make  any  other
distribution  (including  dividends  or  distributions  payable  in cash  out of
retained earnings) to the holders of the Common Stock;

                           (ii) the  Company  shall offer for  subscription  pro
rata to the holders of the Common Stock any additional
shares of stock of any class or other rights;

                           (iii) there shall be any  capital  reorganization  of
the Company, or reclassification of the Common Stock, or consolidation or merger
of the Company with or into, or sale of all or substantially  all its assets to,
another corporation or entity; or

                           (iv)  there  shall  be  a  voluntary  or  involuntary
dissolution, liquidation or winding-up of the Company;

then,  in each such case,  the Company  shall give to the holder of this Warrant
(a) notice of the date on which the books of the Company shall close or a record
shall be taken for  determining  the holders of Common Stock entitled to receive
any such dividend,  distribution,  or subscription rights or for determining the
holders of Common Stock entitled to vote in respect of any such  reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding-up  and (b) in the  case of any such  reorganization,  reclassification,
consolidation,  merger, sale, dissolution,  liquidation or winding-up, notice of
the date (or,  if not then  known,  a  reasonable  approximation  thereof by the
Company) when the same shall take place. Such notice shall also specify the date
on which the holders of Common Stock shall be entitled to receive such dividend,
distribution, or subscription rights or to exchange their Common Stock for stock
or  other  securities  or  property   deliverable   upon  such   reorganization,
reclassification,  consolidation,  merger, sale,  dissolution,  liquidation,  or
winding-up,  as the case  may be.  Such  notice  shall be given at least 30 days
prior to the record date or the date on which the Company's  books are closed in
respect thereto. Failure to give any such notice or any defect therein shall not
affect the validity of the proceedings  referred to in clauses (i), (ii),  (iii)
and (iv) above.

                  (k)  Certain   Events.   If  any  event  occurs  of  the  type
contemplated by the adjustment  provisions of this Paragraph 4 but not expressly
provided for by such  provisions,  the Company will give notice of such event as
provided in Paragraph  4(g) hereof,  and the Company's  Board of Directors  will
make an appropriate adjustment in the Exercise Price and the number of shares of
Common Stock  acquirable upon exercise of this Warrant so that the rights of the
Holder shall be neither enhanced nor diminished by such event.



<PAGE>


                  (l)      Certain Definitions.

     (i) "Common  Stock Deemed  Outstanding"  shall mean the number of shares of
Common Stock actually  outstanding (not including shares of Common Stock held in
the treasury of the Company), plus (x) pursuant to Paragraph 4(b)(i) hereof, the
maximum  total  number of shares of Common Stock  issuable  upon the exercise of
Options,  as of the date of such issuance or grant of such Options,  if any, and
(y) pursuant to Paragraph 4(b)(ii) hereof, the maximum total number of shares of
Common Stock issuable upon conversion or exchange of Convertible Securities,  as
of the date of issuance of such Convertible Securities, if any.

     (ii)  "Market  Price,"  as of any date,  means (i) the  average of the last
reported  sale  prices  for the shares of Common  Stock on the  Nasdaq  National
Market ("Nasdaq") for the five (5) trading days immediately  preceding such date
as  reported  by  Bloomberg,  L.P.  ("Bloomberg"),  or (ii) if Nasdaq is not the
principal trading market for the shares of Common Stock, the average of the last
reported sale prices on the principal trading market for the Common Stock during
the same period as reported by  Bloomberg,  or (iii) if market  value  cannot be
calculated as of such date on any of the foregoing bases, the Market Price shall
be the fair market value as reasonably determined in good faith by (a) the Board
of Directors of the Corporation or, at the option of a  majority-in-interest  of
the holders of the outstanding Warrants by (b) an independent investment bank of
nationally  recognized  standing in the valuation of  businesses  similar to the
business  of the  Company.  The manner of  determining  the Market  Price of the
Common Stock set forth in the foregoing  definition  shall apply with respect to
any other security in respect of which a  determination  as to market value must
be made hereunder.

     (iii) "Common Stock," for purposes of this Paragraph 4, includes the Common
Stock,  par value  $.005 per  share,  and any  additional  class of stock of the
Company having no preference as to dividends or  distributions  on  liquidation,
provided that the shares purchasable pursuant to this Warrant shall include only
shares of Common  Stock,  par value  $.005 per  share,  in respect of which this
Warrant is exercisable,  or shares resulting from any subdivision or combination
of such Common Stock,  or in the case of any  reorganization,  reclassification,
consolidation,  merger,  or sale of the character  referred to in Paragraph 4(e)
hereof,  the  stock  or  other  securities  or  property  provided  for in  such
Paragraph.


<PAGE>


     (iv)  "Closing  Bid Price"  means,  for any  security  as of any date,  the
closing bid price on Nasdaq as reported  by  Bloomberg  or, if Nasdaq is not the
principal  trading  market  for such  security,  the  closing  bid price of such
security  on the  principal  securities  exchange or trading  market  where such
security is listed or traded as reported by  Bloomberg,  or if the  foregoing do
not apply, the closing bid price of such security in the over-the-counter market
on the electronic bulletin board for such security as reported by Bloomberg, or,
if no closing bid price of such security in the  over-the-counter  market on the
electronic  bulletin board for such security or in any of the foregoing manners,
the average of the bid prices of any market  makers for such  security  that are
listed in the "pink  sheets"  by the  National  Quotation  Bureau,  Inc.  If the
Closing Bid Price  cannot be  calculated  for such  security on such date in the
manner provided  above,  the Closing Bid Price shall be the fair market value as
reasonably  determined  in good  faith  by (a) the  Board  of  Directors  of the
Corporation  or, at the option of a majority  in  interest of the holders of the
outstanding  Warrants  by (b)  an  independent  investment  bank  of  nationally
recognized  standing in the valuation of  businesses  similar to the business of
the Company.

         5. Issue Tax. The issuance of certificates  for Warrant Shares upon the
exercise  of this  Warrant  shall be made  without  charge to the holder of this
Warrant or such shares for any issuance  tax or other costs in respect  thereof,
provided  that the  Company  shall not be  required  to pay any tax which may be
payable in respect of any transfer  involved in the issuance and delivery of any
certificate in a name other than the holder of this Warrant.

         6. No Rights or Liabilities  as a  Shareholder.  This Warrant shall not
entitle the holder  hereof to any voting rights or other rights as a shareholder
of the  Company.  No provision of this  Warrant,  in the absence of  affirmative
action by the holder hereof to purchase Warrant Shares,  and no mere enumeration
herein of the rights or privileges of the holder hereof,  shall give rise to any
liability  of such  holder for the  Exercise  Price or as a  shareholder  of the
Company,  whether  such  liability is asserted by the Company or by creditors of
the Company.

         7.       Transfer, Exchange, and Replacement of Warrant.

                  (a)  Restriction  on  Transfer.  This  Warrant  and the rights
granted  to the  holder  hereof  are  transferable,  in whole  or in part,  upon
surrender of this Warrant,  together with a properly executed  assignment in the
form  attached  hereto,  at the office or agency of the  Company  referred to in
Paragraph 7(e) below,  provided,  however, that any transfer or assignment shall
be subject to the conditions set forth in Paragraph 7(f).  Until due presentment
for registration of transfer on the books of the Company,  the Company may treat
the  registered  holder  hereof as the owner and holder hereof for all purposes,
and  the  Company  shall  not  be  affected  by  any  notice  to  the  contrary.
Notwithstanding  anything to the contrary  contained  herein,  the  registration
rights  described  in Paragraph 8 are  assignable  only in  accordance  with the
provisions of that certain Registration Rights Agreement, dated as of October 7,
1998,  by  and  among  the  Company  and  the  other  signatories  thereto  (the
"Registration Rights Agreement").

                  (b) Warrant  Exchangeable  for Different  Denominations.  This
Warrant is  exchangeable,  upon the surrender hereof by the holder hereof at the
office or agency of the Company  referred to in  Paragraph  7(e) below,  for new
Warrants of like tenor  representing  in the aggregate the right to purchase the
number of shares of Common Stock which may be purchased hereunder,  each of such
new Warrants to represent  the right to purchase  such number of shares as shall
be designated by the holder hereof at the time of such surrender.



<PAGE>


                  (c)   Replacement   of  Warrant.   Upon  receipt  of  evidence
reasonably  satisfactory  to the  Company of the loss,  theft,  destruction,  or
mutilation  of this  Warrant  and,  in the  case of any  such  loss,  theft,  or
destruction,  upon delivery of an indemnity agreement reasonably satisfactory in
form and amount to the  Company,  or, in the case of any such  mutilation,  upon
surrender and cancellation of this Warrant,  the Company,  at its expense,  will
execute and deliver, in lieu thereof, a new Warrant of like tenor.

                  (d) Cancellation;  Payment of Expenses.  Upon the surrender of
this Warrant in  connection  with any  transfer,  exchange,  or  replacement  as
provided in this  Paragraph  7, this Warrant  shall be promptly  canceled by the
Company.  The Company shall pay all taxes (other than securities transfer taxes)
and all other  expenses  (other  than legal  expenses,  if any,  incurred by the
Holder or transferees)  and charges payable in connection with the  preparation,
execution, and delivery of Warrants pursuant to this Paragraph 7.

                  (e)  Register.  The Company shall  maintain,  at its principal
executive  offices  (or such  other  office or agency of the  Company  as it may
designate by notice to the holder hereof), a register for this Warrant, in which
the Company  shall  record the name and address of the person in whose name this
Warrant has been issued,  as well as the name and address of each transferee and
each prior owner of this Warrant.

                  (f) Exercise or Transfer Without Registration. If, at the time
of the surrender of this Warrant in connection with any exercise,  transfer,  or
exchange of this  Warrant,  this Warrant (or, in the case of any  exercise,  the
Warrant Shares issuable hereunder), shall not be registered under the Securities
Act of 1933,  as  amended  (the  "Securities  Act") and under  applicable  state
securities or blue sky laws, the Company may require, as a condition of allowing
such exercise,  transfer, or exchange, (i) that the holder or transferee of this
Warrant,  as the case may be,  furnish  to the  Company  a  written  opinion  of
counsel,  which opinion and counsel are acceptable to the Company, to the effect
that such exercise, transfer, or exchange may be made without registration under
said Act and under  applicable  state securities or blue sky laws, (ii) that the
holder or transferee  execute and deliver to the Company an investment letter in
form and substance acceptable to the Company and (iii) that the transferee be an
"accredited investor" as defined in Rule 501(a) promulgated under the Securities
Act; provided that no such opinion, letter or status as an "accredited investor"
shall be required in connection  with a transfer  pursuant to Rule 144 under the
Securities  Act.  The first  holder of this  Warrant,  by taking and holding the
same,  represents to the Company that such holder is acquiring  this Warrant for
investment and not with a view to the distribution thereof.

         8. Registration Rights. The initial holder of this Warrant (and certain
assignees  thereof) is entitled  to the benefit of such  registration  rights in
respect  of this  Warrant  and  the  Warrant  Shares  as are  set  forth  in the
Registration Rights Agreement.



<PAGE>


         9. Notices. All notices, requests, and other communications required or
permitted to be given or delivered hereunder to the holder of this Warrant shall
be in writing, and shall be personally delivered,  or shall be sent by certified
or registered mail or by recognized overnight mail courier,  postage prepaid and
addressed,  to such holder at the address  shown for such holder on the books of
the  Company,  or at such  other  address as shall  have been  furnished  to the
Company  by  notice  from  such  holder.  All  notices,   requests,   and  other
communications  required or permitted to be given or delivered  hereunder to the
Company shall be in writing, and shall be personally delivered, or shall be sent
by certified or registered mail or by recognized overnight mail courier, postage
prepaid and addressed,  to the office of the Company at 2335 Alaska  Avenue,  El
Segundo,  California 90245,  Attention:  President,  or at such other address as
shall  have been  furnished  to the holder of this  Warrant  by notice  from the
Company.  Any  such  notice,  request,  or  other  communication  may be sent by
facsimile,  but  shall  in such  case be  subsequently  confirmed  by a  writing
personally  delivered or sent by certified or  registered  mail or by recognized
overnight  mail  courier as provided  above.  All notices,  requests,  and other
communications  shall be  deemed to have  been  given  either at the time of the
receipt  thereof by the person entitled to receive such notice at the address of
such person for  purposes of this  Paragraph 9, or, if mailed by  registered  or
certified mail or with a recognized overnight mail courier upon deposit with the
United States Post Office or such overnight mail courier,  if postage is prepaid
and the mailing is properly addressed, as the case may be.

         10.  Governing Law. THIS WARRANT SHALL BE GOVERNED BY AND CONSTRUED AND
ENFORCED IN ACCORDANCE  WITH THE INTERNAL LAWS OF THE STATE OF DELAWARE  WITHOUT
REGARD TO THE BODY OF LAW CONTROLLING CONFLICTS OF LAW.

         11.      Miscellaneous.

                  (a) Amendments. This Warrant and any provision hereof may only
be amended by an  instrument  in writing  signed by the  Company  and the holder
hereof.

                  (b)  Descriptive  Headings.  The  descriptive  headings of the
several  paragraphs of this Warrant are inserted for purposes of reference only,
and shall not  affect  the  meaning  or  construction  of any of the  provisions
hereof.

                  (c)  Cashless  Exercise.   Notwithstanding   anything  to  the
contrary  contained in this Warrant,  if the resale of the Warrant Shares by the
holder is not then registered  pursuant to an effective  registration  statement
under the  Securities  Act,  this Warrant may be exercised by  presentation  and
surrender of this Warrant to the Company at its principal executive offices with
a written  notice of the  holder's  intention  to  effect a  cashless  exercise,
including  a  calculation  of the number of shares of Common  Stock to be issued
upon such exercise in accordance with the terms hereof (a "Cashless  Exercise").
In the event of a Cashless  Exercise,  in lieu of paying the  Exercise  Price in
cash,  the holder  shall  surrender  this  Warrant  for that number of shares of
Common Stock  determined by multiplying the number of Warrant Shares to which it
would  otherwise be entitled by a fraction,  the numerator of which shall be the
difference  between the then current  Market Price per share of the Common Stock
and the Exercise  Price,  and the denominator of which shall be the then current
Market Price per share of Common Stock.






<PAGE>


          WITNESS  WHEREOF,  the Company has caused this Warrant to be signed by
its duly authorized officer.

                                             AURA SYSTEMS, INC.


                                       ------------------------------------
                                       Steven Veen
                                       Chief Financial Officer

Dated as of October 7, 1998


<PAGE>


                                             FORM OF EXERCISE AGREEMENT


                                             Dated:  ________, ____.


To:  AURA SYSTEMS, INC.


         The  undersigned,  pursuant to the  provisions  set forth in the within
Warrant,  hereby agrees to purchase  ________  shares of Common Stock covered by
such Warrant, and makes payment herewith in full therefor at the price per share
provided by such Warrant in cash or by  certified or official  bank check in the
amount of,  or, if the resale of such  Common  Stock by the  undersigned  is not
currently registered pursuant to an effective  registration  statement under the
Securities  Act of 1933, as amended,  by surrender of  securities  issued by the
Company  (including a portion of the Warrant) having a market value (in the case
of a portion of this Warrant, determined in accordance with Section 11(c) of the
Warrant) equal to $_________.  Please issue a certificate  or  certificates  for
such shares of Common  Stock in the name of and pay any cash for any  fractional
share to:


                Name:                         ________________________________

                Signature:                    ________________________________
                Address:                      ________________________________
                                              ================================


     Note:    The above signature should  correspond  exactly with the name on 
              the face of the within Warrant.

and,  if said  number  of shares of  Common  Stock  shall not be all the  shares
purchasable under the within Warrant,  a new Warrant is to be issued in the name
of said undersigned  covering the balance of the shares  purchasable  thereunder
less any fraction of a share paid in cash.


<PAGE>


                               FORM OF ASSIGNMENT


         FOR  VALUE  RECEIVED,   the  undersigned  hereby  sells,  assigns,  and
transfers  all the  rights of the  undersigned  under the within  Warrant,  with
respect  to the  number  of shares of Common  Stock  covered  thereby  set forth
hereinbelow, to:

Name of Assignee                    Address                        No of Shares






,   and   hereby   irrevocably    constitutes   and   appoints    ______________
________________________  as agent and attorney-in-fact to transfer said Warrant
on the books of the within-named corporation, with full power of substitution in
the premises.


Dated: _____________________, ____,


In the presence of



------------------


                 Name:                       ________________________________


                 Signature:                  _________________________________

                 Title of Signing 
                 Officer or Agent (if any):  _________________________________

                 Address:                    _________________________________
                                             =================================


       Note:    The above signature should  correspond  exactly with the 
                name on the face of the within Warrant.