Document:

LOAN
      AGREEMENT

     

    THIS
      LOAN
      AGREEMENT (this “Agreement”),
      is
      executed as of April, 2007, by and between AuraSound, Inc. a California
      corporation (the “Company”),
      and
      Clearview Partners, LLC, a Nevada limited liability corporation (the
“Lender”).

     

    WHEREAS,
      the Company is preparing to conduct a private placement offering (the
“Private
      Placement”)
      simultaneously with a reverse merger (the “Merger”)
      with a
      publicly traded shell company (the “Public
      Company Parent”)
      whereby the Company will become a wholly-owned subsidiary of the Public Company
      Parent upon the consummation of the Merger;

     

    WHEREAS,
      in order to fund the Company’s operations until such Private Placement and
      Merger are completed, the Company wishes to borrow $500,000 from the Lender
      as a
      short-term bridge loan to be repaid upon the consummation of the Private
      Placement and the Merger; 

     

    WHEREAS,
      the Lender is willing to provide such financing on terms and conditions as
      set
      forth herein; and 

     

    WHEREAS,
      the Loan (as defined below) will not be secured by any of the assets of the
      Company.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements set forth
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Company and the Lender,
      intending to be legally bound, agree as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    1.1 Defined
      terms.
      Certain
      capitalized terms used in this Agreement shall have the specific meanings
      defined below:

     

    “Business
      Day”
shall
      mean a day other than a Saturday, Sunday, or other day on which commercial
      banks
      are authorized or required by law to close.

     

    “Common
      Stock”
shall
      mean the common stock of the Company.

     

    “Default
      Rate”
shall
      mean the higher of (a) the highest prime rate of interest per annum published
      in
      the Money Rate Table of the Western Edition of The Wall Street Journal, as
      adjusted on a daily basis, plus twelve and one-quarter percent (12.25%) per
      annum, or (b) 20.00% per annum, in either case compounded annually. From and
      after the occurrence of any Event of Default, the Default Rate shall
      apply.

     

    “Equity
      Securities”
shall
      mean the capital stock of such person or entity and/or any Stock Equivalents
      of
      such person or entity.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

     

    “Interest”
has
      the
      meaning set forth in Section 2.1.

     

    “Interest
      Rate”
shall
      mean 12.00% compounded annually.

     

    “Loan
      Closing Date”
shall
      mean the date upon which the Loan is made to the Company.

     

    “Stock
      Equivalents”
of
      any
      person or entity shall mean options, warrants, calls, rights, commitments,
      convertible securities and other securities pursuant to which the holder,
      directly or indirectly, has the right to acquire (with or without additional
      consideration) capital stock or equity of such person or entity.

     

    “Warrant”
has
      the
      meaning set forth in Section 7.1.

     

    ARTICLE
      2

    THE
      LOAN

     

    2.1 Loan.
      According to the terms and subject to the conditions of this Agreement, the
      Lender shall make a loan to the Company on the Loan Closing Date in the amount
      of $500,000 (the “Loan”).
      The
      Loan shall be evidenced by a promissory note in the form attached hereto as
      Exhibit A
      (the
“Note”),
      duly
      executed on behalf of the Company and dated as of the Loan Closing
      Date.

     

    2.2 Interest.
      The
      Loan shall bear interest (“Interest”)
      from
      the Loan Closing Date until the Maturity Date (as defined below) at the Interest
      Rate (calculated on the basis of the actual number of days elapsed over a year
      of 360 days). Interest is payable by the Company on a monthly basis in arrears
      on the first Business Day of the month. Notwithstanding anything to the
      contrary, in no event shall the Interest Rate be less than 12.00% per annum,
      nor
      shall the Interest Rate be adjusted to exceed the maximum amount permitted
      by
      applicable law.

     

    2.3 Prepayment
      of the Loan.
      The
      Company may from time to time prepay all or any portion of the Loan without
      premium or penalty of any type. The Company shall give the Lender at least
      three
      Business Days prior written notice of its intention to prepay the Loan,
      specifying the date of payment and the total amount of the Loan to be paid
      on
      such date. Once any portion of the Loan has been repaid, the funds may not
      be
      re-borrowed.

     

    2.4 Maturity
      Date.
      Unless
      the Loan is earlier accelerated pursuant to the terms hereof, the Loan and
      all
      accrued Interest thereon shall be due and payable in full on the earlier of
      (i)
      the date that is one hundred and twenty (120) days following the Loan Closing
      Date; and (ii) the date on which the Company has received an aggregate of
      $7,000,000 from the sale(s) of its Equity Securities, from and after the Loan
      Closing Date, in one or a series of transactions (the “Maturity
      Date”).

     

    
      
         

      

      
        -2-

        
          

        

      

       

    

    ARTICLE
      3

    CONDITIONS
      PRECEDENT TO THE LOAN

     

    3.1 Conditions
      on the Loan Closing Date.
      The
      obligation of the Lender to make the Loan pursuant to Section 2.1 shall be
      subject to the satisfaction, on or before the Loan Closing Date, of the
      conditions set forth in this Section. If the conditions set forth in this
      Section are not met on or prior to the Loan Closing Date, the Lender shall
      have
      no obligation to make the Loan. 

     

    (a) The
      Company shall have duly executed and delivered to the Lender the Note
      representing the Loan.

     

    (b) There
      shall exist no material adverse change in the condition (financial or
      otherwise), results of operations, assets, properties or prospects of the
      Company since September 30, 2006, the date of the most recent financial
      statements provided to Lender, except for the Company’s receipt of bridge loans
      totaling $2 million which are to repaid out of the proceeds of the Private
      Placement along with the Loan. 

     

    (c) There
      shall exist no material default in any of the Company’s obligations under any
      contract or agreement.

     

    (d) The
      Company shall be in material compliance with all applicable laws. 

     

    (e) The
      Company shall have retained Gemini Partners or GP Group, LLC as its exclusive
      financial advisor in connection with the Merger, and shall provide evidence
      of
      such engagement.

     

    (f) The
      Lender shall have received such other documents, certificates, or other
      materials as it reasonably requests from the Company with respect to the
      transaction contemplated by Agreement and the Note. 

     

    ARTICLE
      4

    REPRESENTATIONS
      AND WARRANTIES

     

    4.1 Due
      Incorporation and Good Standing.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of California with full and adequate power to carry
      on and conduct its business as presently conducted, and is duly licensed or
      qualified in all foreign jurisdictions wherein the failure to be so qualified
      or
      licensed would reasonably be expected to have a material adverse effect on
      the
      business of the Company.

     

    4.2 Due
      Authorization.
      The
      Company has full right, power and authority to enter into this Agreement, to
      make the borrowings hereunder and execute and deliver the Note as provided
      herein and to perform all of its duties and obligations under this Agreement
      and
      the Note. The execution and delivery of this Agreement and the Note will not,
      nor will the observance or performance of any of the matters and things herein
      or therein set forth, violate or contravene any provision of law or the
      Company’s bylaws or certificate of incorporation. All necessary and appropriate
      corporate action on the part of the Company has been taken to authorize the
      execution and delivery of this Agreement and the Note. Concurrently with the
      execution of this Agreement, the Company will deliver to the Lender a copy
      of
      the minutes of the meeting of the Company’s Board of Directors authorizing the
      Company to enter into this Agreement and the Note , to make the borrowings
      as
      provided herein, and to perform all of its duties and obligations under this
      Agreement and the Note and the . 

     

    
      
         

      

      
        -3-

        
          

        

      

      
         

      

    

     

    4.3 Enforceability.
      Each of
      this Agreement and the Note has been validly executed and delivered by the
      Company and constitutes the legal, valid and binding obligations of the Company
      enforceable against it in accordance with its respective terms, subject to
      applicable bankruptcy, insolvency, reorganization or similar laws relating
      to or
      affecting the enforcement of creditors’ right and to the availability of the
      remedy of specific performance.

     

    4.4 Capitalization.
      All of
      the Company’s authorized and outstanding Equity Securities are identified on
Schedule
      A
      attached
      hereto. Other than as set forth on Schedule A,
      there
      are no outstanding shares of capital stock or any options, warrants or other
      preemptive rights, rights of first refusal or similar rights to purchase Equity
      Securities of the Company.

     

    4.5 Subsidiaries.
      The
      Company owns no securities of any other entity, and there are no outstanding
      shares of capital stock or any options, warrants or other preemptive rights,
      rights of first refusal or similar rights to purchase equity securities of
      any
      other entity. 

     

    4.6 Compliance
      with Laws.
      The
      nature and transaction of the Company’s business and operations and the use of
      its properties and assets do not, and during the term of this Agreement shall
      not, violate or conflict with in any material respect any applicable law,
      statute, ordinance, rule, regulation or order of any kind or
      nature.

     

    4.7 Absence
      of Conflicts.
      The
      execution, delivery and performance by the Company of this Agreement and the
      Note, and the transactions contemplated hereby and thereby, do not constitute
      a
      breach or default, or require consents under, any agreement, permit, contract
      or
      other instrument to which the Company is a party, or by which the Company is
      bound or to which any of the assets of the Company is subject, or any judgment,
      order, writ, decree, authorization, license, rule, regulation, or statute to
      which the Company is subject, except as contemplated in Section 3.1(b)
      hereof.

     

    4.8 Litigation
      and Taxes.
      There
      is no litigation or governmental proceeding pending, or to the best knowledge
      of
      the Company after due inquiry, threatened, against the Company. The Company
      has
      duly filed all applicable income or other tax returns and has paid all material
      income or other taxes when due. There is no controversy or objection pending,
      or
      to the best knowledge of the Company after due inquiry, threatened in respect
      of
      any tax returns of the Company.

     

    4.9 No
      Omissions or Misstatements.
      None of
      the information included in this Agreement, other documents or information
      furnished or to be furnished by the Company contains any untrue statement of
      a
      material fact or is misleading in any material respect. Copies of all documents
      referred to herein have been delivered or made available to the Lender and
      constitute true and complete copies thereof and include all amendments,
      schedules, appendices, supplements or modifications thereto or waivers
      thereunder.

     

    4.10 Financial
      Statements.
      The
      financial statements of the Company provided to the Lender are complete and
      correct as of the dates thereof and for the periods specified therein, have
      been
      prepared from the books and records of the Company in accordance with generally
      accepted accounting principles consistently applied throughout the periods
      involved, except for changes specified therein and except that unaudited
      financial statements are not accompanied by notes, and present fairly the
      financial condition, results of operations, shareholders’ equity and changes in
      financial position of the Company as of the dates thereof and for the periods
      specified therein. 

     

    
      
         

      

      
        -4-

        
          

        

      

      
         

      

    

     

    4.11 Company
      Knowledge and Experience.
      The
      Company (together with its accountants, legal counsel and other representatives
      with whom it has consulted in connection with this Agreement) has such
      knowledge, experience and access to professional advice in financial and
      business matters, including loans like the Loan, to be capable of evaluating
      the
      risks and merits of receiving the Loan pursuant to this Agreement, and the
      Company has obtained such professional third-party advice concerning the Loan
      and the transactions contemplated hereby as it has desired and deemed
      prudent.

     

    ARTICLE
      5

    COVENANTS

     

    5.1 Negative
      Covenants of the Company.
      The
      Company covenants and agrees that, from the Loan Closing Date until the Maturity
      Date (and, in any event, during such time as any portion of the Loan or any
      Interest thereon is outstanding), without the consent of the Lender, the Company
      will not:

     

    (a) except
      for the Merger, merge or consolidate with or into any other corporation or
      sell
      or otherwise convey 25% or more of its assets;

     

    (b) in
      a
      single transaction or series of related transactions, effect a significant
      acquisition of any business or entity (for purposes hereof, a “significant”
acquisition shall be determined in accordance with Instructions 2, 3 and 4
      or
      Item 2 of Form 8-K of the Securities and Exchange
      Commission);

     

    (c) engage
      in
      any business other than the business conducted by the Company on the Loan
      Closing Date;

     

    (d) declare,
      set aside or pay any dividend or other distribution on any of its capital
      stock;

     

    (e) engage
      in
      any transaction with any Affiliate (as such term is defined in Rule 501(b)
      of the Securities Act of 1933, as amended) on terms less favorable to the
      Company than could be obtained from an unrelated party;

     

    (f) amend
      its
      Articles of Incorporation or Bylaws in any manner that adversely affects the
      rights associated with this Agreement or the Note; or

     

    The
      Company will give notice to the Lender of any default under any provisions
      of
      this Agreement within three business days after the discovery by the Company
      of
      such default. 

     

    
      
         

      

      
        -5-

        
          

        

      

      
         

      

    

     

    5.2 Affirmative
      Covenants of the Company.
      The
      Company covenants and agrees that, from the Loan Closing Date until the Maturity
      Date (and, in any event, during such time as any portion of the Loan or any
      Interest thereon is outstanding), the Company shall:

     

    (a) operate
      its business only in the ordinary course, maintain its properties and assets
      in
      good repair, working order and condition, and conduct all transactions with
      third parties, including affiliates of the Company, on an arm’s length
      basis;

     

    (b) cause
      to
      be done all things reasonably necessary to maintain, preserve and renew its
      corporate existence and all material licenses, authorizations and permits
      necessary to the conduct of its businesses;

     

    (c) comply
      with all applicable laws, rules and regulations of all governmental authorities,
      the violation of which could reasonably be expected to have a material adverse
      effect on its business, properties or prospects;

     

    (d) deliver
      to the Lender within 45 days of the end of each fiscal quarter unaudited
      consolidated financial statements (including balance sheets, statements of
      income and loss, statements of cash flow and statements of shareholders’ equity)
      all in reasonable detail, fairly presenting the financial position and the
      results of operations of the Company as of the end of and through such periods,
      prepared in accordance with generally accepted accounting principles,
      consistently applied in the United States and consistent with past practice;
      .

     

    (e) deliver
      to the Lender within five days after they are available (but in any event within
      ninety days after the end of each of its fiscal years) the Company’s audited
      annual financial statements and the Company’s annual budget, and allow the
      Lender reasonable access during normal business hours to visit the Company
      and
      inspect the financial records of the Company; and

     

    ARTICLE
      6

    DEFAULT

     

    6.1 Events
      of Default.
      The
      occurrence of any of the following events (each an “Event
      of Default”),
      not
      cured in the applicable cure period, if any, shall constitute an Event of
      Default of the Company:

     

    (a) a
      breach
      of any representation, warranty, covenant or other provision of this Agreement,
      or the Note, which, if capable of being cured, is not cured within seven days
      following the earlier of (i) notice thereof to the Company and (ii) the Company
      becoming aware of such breach;

     

    (b) the
      failure to make when due any payment described in this Agreement or the Note,
      whether on or after the Maturity Date, by acceleration or otherwise;

     

    (c) the
      failure of the Public Company Parent to issue the Warrant; or

     

    (d) (i) the
      application for the appointment of a receiver or custodian for the Company
      or
      the property of the Company, or (ii) the entry of an order for relief or
      the filing of a petition by or against the Company under the provisions of
      any
      bankruptcy or insolvency law, (iii) any assignment for the benefit of
      creditors by or against the Company.

     

    
      
         

      

      
        -6-

        
          

        

      

      
         

      

    

     

    6.2 Effect
      of Default.
      Upon
      the occurrence of any Event of Default that is not cured within any applicable
      cure period, the Lender may elect, by written notice delivered to the Company,
      to (i) declare this Agreement terminated and the outstanding amounts under
      the Note to be forthwith due and payable, whereupon the entire unpaid Loan,
      together with accrued and unpaid Interest thereon, and all other cash
      obligations hereunder, shall become forthwith due and payable, without
      presentment, demand, protest or any other notice of any kind, all of which
      are
      hereby expressly waived by the Company, anything contained herein or in the
      Note
      to the contrary notwithstanding, and (ii) exercise any and all other
      remedies provided hereunder or available at law or in equity upon the occurrence
      and continuation of an Event of Default. In addition, from and after the
      expiration of the applicable cure period following the first Event of Default
      until the entire unpaid principal amount of the Loan and all unpaid interest
      thereon is paid or the Event of Default is cured if susceptible to cure,
      Interest on the entire unpaid principal amount of the Loan and all unpaid
      interest thereon shall accrue at the Default Interest Rate.

     

    ARTICLE
      7

    WARRANT

     

    7.1 Issuance
      of Warrant.
      The
      Company shall cause the merger agreement for the Merger between the Company
      and
      Public Company Parent to include a covenant of the Public Company Parent that
      it
      will issue to the Lender at the closing of the Merger a Common Stock Purchase
      Warrant (the "Warrant"),
      in
      form and substance reasonably acceptable to the Lender and the Company, having
      substantially the following terms:

     

    (a) The
      number of shares for which the Warrant shall be exercisable shall be equal
      to:
      (i) 750,000 multiplied by (ii) a fraction, the numerator of which is $1.00
      and
      the denominator of which is the Lowest Equity Price. However, in the event
      that
      all or any portion of the Loan, all accrued Interest thereon and all other
      sums
      due hereunder, have not been received by Lender on or before the date that
      is
      one hundred twenty (120) days following the Loan Closing Date the number of
      shares for which the Warrant shall be exercisable shall be equal to: (i)
      1,500,000 multiplied by (ii) a fraction, the numerator of which is $1.00 and
      the
      denominator of which is the Lowest Equity Price.

     

    (b) The
      Initial Exercise Price (as defined in the Warrant) shall be the Lowest Equity
      Price, rounded to the nearest cent;

     

    (c) The
      Warrant shall be exercisable only for cash.

     

    (d) The
      date
      of the Warrant shall be the closing date of the Merger.

     

    For
      purposes of this Agreement, the "Lowest Equity Price" shall mean the lowest
      price per share at which the Public Company Parent issues Equity Securities
      from
      the date hereof until the closing of the Merger in a transaction the primary
      purpose of which is to raise capital

     

    7.2 Public
      Company Parent Issuance.
      The
      Company shall cause the Public Company Parent to issue the Warrant to the Lender
      upon the closing of the Merger and will not allow the Public Company Parent
      to
      take any action that will interfere with the issuance of the Warrant on the
      terms set forth in this Agreement. 

     

    
      
         

      

      
        -7-

        
          

        

      

      
         

      

    

     

    7.3 Warrant
      Obligations.
      The
      Company shall cause the Public Company Parent to comply on a timely basis with
      each and every obligation under the Warrant. 

     

    7.4 Failure
      to Complete Merger.
      If
      the Merger has not been completed before 270 days from the Loan Closing
      Date: 

     

    (a) The
      number of shares for which the Warrant shall be exercisable shall be equal
      to:
      (i) 750,000 multiplied by (ii) a fraction, the numerator of which is $1.00
      and
      the denominator of which is the lesser of (a) the Lowest Equity Price and (b)
      the last price per share paid for the Company’s Common Stock prior to the Loan
      Closing Date in
      a
      transaction the primary purpose of which was to raise capital,
      rounded
      to the nearest whole share;

     

    (b) The
      Initial Exercise Price (as defined in the Warrant) shall be the lower of 
(a) the Lowest Equity Price and (b) the last price per share paid for the
      Company’s Common Stock prior to the Loan Closing Date in a transaction the
      primary purpose of which was to raise capital, rounded to the nearest cent;
      

     

    7.5 Registration
      Rights.
      The
      Lender shall have substantially the same registration rights with respect to
      the
      Warrant shares as provided to the investors in the Private
      Placement.

     

    ARTICLE
      8

    MISCELLANEOUS

     

    8.1 Successors
      and Assigns; Participations.
      Subject
      to the exceptions specifically set forth in this Agreement, the terms and
      conditions of this Agreement shall inure to the benefit of and be binding upon
      the respective executors, administrators, heirs, successors and assigns of
      the
      parties. This Agreement may be assigned solely by the Lender to any person
      that
      is not a competitor of the Company. Furthermore, although this Agreement and
      the
      Note name the Lender as the holder thereof and/or the lender thereunder, the
      Lender is authorized to sell participation interests in the Loan to one or
      more
      other persons or entities that do not compete with the Company and that does
      not
      have an adverse claim against the Company. The Company agrees that: (a) each
      holder of a participation interest will be entitled to rely on the terms of
      this
      Agreement and the Note as if such holder had been named as an original party
      hereto and thereto; and (b) the Lender is authorized to provide all information
      furnished by the Company to the Lender to each holder of a participation
      interest.

     

    8.2 Titles
      and Subtitles.
      The
      titles and subtitles of the Sections of this Agreement are used for convenience
      only and shall not be considered in construing or interpreting this
      agreement.

     

    
      
         

      

      
        -8-

        
          

        

      

      
         

      

    

     

    8.3 Notices.
      Any
      notice, request or other communication required or permitted hereunder shall
      be
      in writing and shall be delivered personally or by facsimile (receipt confirmed
      electronically) or shall be sent by a reputable express delivery service or
      by
      certified mail, postage prepaid with return receipt requested, addressed as
      follows:

     

    
      	
              if
                to Borrower, to:

              Arthur
                Liu

              AuraSound,
                Inc.

              11839
                East Smith Ave

              Santa
                Fe Springs, CA 90670

            
	 
	
              with
                a copy to:

              Kevin
                Friedmann

              Richardson
                & Patel, LLP

              The
                Chrysler Building 

              405
                Lexington Avenue, 26th Floor 

              New
                York, NY 10174

            
	 
	
              if
                to the Lender, to:

              John
                Linton

              Clearview
                Partners, LLC

              21015
                Cactus Cliff

              San
                Antonio, TX 78258

            
	 
	
              with
                a copy to:

              Carmelo
                Gordian

              Andrews
                Kurth LLP

              111
                Congress Avenue

              Suite
                1700

              Austin,
                Texas 78701

            
	 

    

    Either
      party hereto may change the above specified recipient or mailing address by
      notice to the other party given in the manner herein prescribed. All notices
      shall be deemed given on the day when actually delivered as provided above
      (if
      delivered personally or by facsimile, provided that any such facsimile is
      received during regular business hours at the recipient’s location) or on the
      day shown on the return receipt (if delivered by mail or delivery
      service).

     

    8.4 Governing
      Law; Venue.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of California without giving effect to any choice of law
      or
      conflict of law provision or rule (whether of the State of California or any
      other jurisdiction) that would cause the application of the laws of any
      jurisdiction other than the State of California. Any action arising out of
      this
      Agreement or the Note shall be brought in a state or federal court sitting
      in
      the City of Los Angeles, California.

     

    8.5 Waiver
      and Amendment.
      Any
      term of this Agreement may be amended, waived or modified with the written
      consent of the Company and the Lender.

     

    8.6 Remedies.
      No
      delay or omission by the Lender in exercising any of its rights, remedies,
      powers or privileges hereunder or at law or in equity and no course of dealing
      between the Lender and the undersigned or any other person shall be deemed
      a
      waiver by the Lender of any such rights, remedies, powers or privileges, even
      if
      such delay or omission is continuous or repeated, nor shall any single or
      partial exercise of any right, remedy, power or privilege preclude any other
      or
      further exercise thereof by the Lender or the exercise of any other right,
      remedy, power or privilege by the Lender. The rights and remedies of the Lender
      described herein shall be cumulative and not restrictive of any other rights
      or
      remedies available under any other instrument, at law or in equity.

     

    
      
         

      

      
        -9-

        
          

        

      

      
         

      

    

     

    8.7 Expenses.
      The
      Company shall pay all customary costs and expenses incurred by the Lender in
      connection with the negotiation and preparation of the documents contemplated
      by
      this Agreement and the Loan closing (including the Lender’s reasonable
      attorneys’ fees), not to exceed $10,000.

     

    8.8 Integration. This
      Agreement, along with the Note, constitutes the complete and exclusive agreement
      between the Company and the Lender with respect to the subject-matter herein
      and
      replaces and supersedes any and all other prior written and oral agreements
      or
      statements by such parties hereto relating to such subject-matter.

     

    
      
         

      

      
        -10-

        
          

        

      

      
         

      

    

     

    IN
      WITNESS WHEREOF, the Company has caused this Loan Agreement to be signed in
      its
      name on the date first set forth above.

    
      	 	 	 
	 
 	 
 	 
 
	
            	By:  	/s/ 
John
              Linton
	 	
              

              John
                Linton

              Managing
                Director 

              Clearview
                Partners, LLC

            

    

     

    
      	 	 	 
	 
 	 
 	 
 
	 	By:  	/s/Arthur Liu
	 	
              

              Arthur
                Liu

              Chief
                Executive Officer

              Aura
                Sound, Inc.

            
	 	 

    

     

    
      
         

      

      
        -11-

        
          

        

      

      
         

      

    

     

    SCHEDULE A

    CAPITALIZATION
      OF THE COMPANY

    
       

        
          	
                  AuraSound
                    Capitalization Table

                	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	
                  Outstanding
                    Shares

                	 	
                  
                    Issued

                    Options/Warrants

                  

                	 	
                  TOTAL

                	 
	
                  Pre-Offering
                    Shareholders

                	 	 	 	 	 	 	 	 	 	 
	
                  Arthur
                    Liu

                	 	 	
                  10,647,071

                	 	 	
                  -

                	 	 	
                  10,647,071

                	 
	
                  Zvi
                    Kurtzman

                	 	 	
                  824,319

                	 	 	
                  -

                	 	 	
                  824,319

                	 
	
                  Steve
                    Veen

                	 	 	
                  368,412

                	 	 	
                  -

                	 	 	
                  368,412

                	 
	
                  Hazlaut
                    Investment

                	 	 	
                  354,241

                	 	 	
                  -

                	 	 	
                  354,241

                	 
	
                  Art
                    Schwartz

                	 	 	
                  240,883

                	 	 	
                  -

                	 	 	
                  240,883

                	 
	
                  Warren
                    Braslow

                	 	 	
                  212,544

                	 	 	
                  -

                	 	 	
                  212,544

                	 
	
                  Cipora
                    Lavut

                	 	 	
                  184,205

                	 	 	
                  -

                	 	 	
                  184,205

                	 
	
                  Neal
                    Kaufman

                	 	 	
                  174,995

                	 	 	
                  -

                	 	 	
                  174,995

                	 
	
                  Melvin
                    Gagerman

                	 	 	
                  143,114

                	 	 	
                  -

                	 	 	
                  143,114

                	 
	
                  Maurice
                    Zeitlin

                	 	 	
                  141,696

                	 	 	
                  -

                	 	 	
                  141,696

                	 
	
                  Jeanette
                    Avery

                	 	 	
                  69,077

                	 	 	
                  -

                	 	 	
                  69,077

                	 
	
                  Gemel

                	 	 	
                  68,014

                	 	 	
                  -

                	 	 	
                  68,014

                	 
	
                  TOTAL

                	 	 	
                  13,428,571

                	 	 	
                  -

                	 	 	
                  13,428,571

                	 

        

      

    

    

    The
      Company’s authorized capital stock consists of 100,000,000 shares of Common
      Stock, no par value per share.

     

    
      
         

      

      
        Schedule
          A-1

        
          

        

      

      
         

      

    

     

     

    EXHIBIT A

    PROMISSORY
      NOTE

     

    See
      attached.

     

    
      
         

      

      
        Exh
          B-1LOAN
      AGREEMENT

     

    THIS
      LOAN
      AGREEMENT (this “Agreement”),
      is
      executed as of February 14, 2007, by and between AuraSound, Inc. a California
      corporation (the “Company”),
      and
      YKA Partners Ltd. (the “Lender”).

     

    WHEREAS,
      the Company is preparing to conduct a private placement offering (the
“Private
      Placement”)
      simultaneously with a reverse triangular merger (the “Merger”)
      with
      and into a wholly-owned subsidiary of a publicly traded company (the
“Public
      Company Parent”)
      whereby the Company will survive such Merger;

     

    WHEREAS,
      in order to fund the Company’s operations until such Offering and Merger are
      completed, the Company wishes to borrow $200,000 from the Lender as a short-term
      bridge loan; 

     

    WHEREAS,
      the Lender is willing to provide such financing on terms and conditions as
      set
      forth herein; and 

     

    WHEREAS,
      the Loan (as defined below) will not be secured by any of the assets of the
      Company.

     

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements set forth
      herein, and for other good and valuable consideration, the receipt and
      sufficiency of which are hereby acknowledged, the Company and the Lender,
      intending to be legally bound, agree as follows:

     

    ARTICLE
      1

    DEFINITIONS

     

    1.1 Defined
      terms.
      Certain
      capitalized terms used in this Agreement shall have the specific meanings
      defined below:

     

    “Business
      Day”
shall
      mean a day other than a Saturday, Sunday, or other day on which commercial
      banks
      are authorized or required by law to close.

     

    “Common
      Stock”
shall
      mean the common stock of the Company.

     

    “Default
      Rate”
shall
      mean the higher of (a) the highest prime rate of interest per annum published
      in
      the Money Rate Table of the Western Edition of The Wall Street Journal, as
      adjusted on a daily basis, plus twelve and one-quarter percent (12.25%) per
      annum, or (b) 20.00% per annum, in either case compounded annually. The
      occurrence of any Event of Default will result in the retroactive application
      of
      the Default Rate.

     

    “Equity
      Securities”
shall
      mean the capital stock of such person or entity and/or any Stock Equivalents
      of
      such person or entity.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    “Interest
      Rate”
shall
      mean 12.00% compounded annually.

     

    “Loan
      Closing Date”
shall
      mean the date upon which the Loan is made to the Company.

     

    “Stock
      Equivalents”
of
      any
      person or entity shall mean options, warrants, calls, rights, commitments,
      convertible securities and other securities pursuant to which the holder,
      directly or indirectly, has the right to acquire (with or without additional
      consideration) capital stock or equity of such person or entity.

     

    ARTICLE
      2

    THE
      LOAN

     

    2.1 Loan.
      According to the terms and subject to the conditions of this Agreement, the
      Lender shall make a loan to the Company on the Loan Closing Date in the amount
      of $200,000 (the “Loan”).
      The
      Loan shall be evidenced by a promissory note in the form attached hereto as
      Exhibit A
      (“Note”),
      duly
      executed on behalf of the Company and dated as of the Loan Closing
      Date.

     

    2.2 Interest.
      The
      Loan shall bear interest (“Interest”)
      from
      the date of payment by the Lender until the Maturity Date (as defined below)
      at
      the Interest Rate (calculated on the basis of the actual number of days elapsed
      over a year of 360 days). Interest is payable by the Company on a monthly basis
      in arrears on the first Business Day of the month. Notwithstanding anything
      to
      the contrary, in no event shall the Interest Rate be less than 12.00% per annum,
      nor shall the Interest Rate be adjusted to exceed the maximum amount permitted
      by applicable law.

     

    2.3 Prepayment
      of the Loan.
      The
      Company may from time to time prepay all or any portion of the Loan without
      premium or penalty of any type. The Company shall give the Lender at least
      three
      Business Day prior written notice of its intention to prepay the Loan,
      specifying the date of payment and the total amount of the Loan to be paid
      on
      such date. Once any portion of the Loan has been repaid, the funds may not
      be
      re-borrowed.

     

    2.4 Maturity
      Date.
      Unless
      the Loan is earlier accelerated pursuant to the terms hereof, the Loan and
      all
      accrued Interest thereon shall be due and payable in full on the earlier of
      (i)
      the date that is one hundred and twenty (120) days following the Loan Closing
      Date; and (ii) the date on which the Company has received an aggregate of
      $1,000,000 from the sale(s) of its Equity Securities, from and after the Loan
      Closing Date, in one or a series of transactions (the “Maturity
      Date”).

     

    2.5 Lender
      Approval of Subsequent Loans, First to Be Repaid.
      The
      Company warrants and agrees that, until payment in full of all amounts due
      under
      this Agreement, it will consult with Lender prior to seeking or applying for
      additional bridge funding or other loans (with the exception of lines of credit
      obtained in the ordinary course of business). No subsequent loans shall be
      accepted by the Company without prior written approval of Lender. Furthermore,
      the Company agrees to repay Lender prior to repaying any other creditors or
      lenders, regardless of the maturity dates of such other debt or
      loans.

     

    
      
        
        

      

      
        -2-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      3

    CONDITIONS
      PRECEDENT TO THE LOAN

     

    3.1 Conditions
      on the Loan Closing Date.
      The
      obligation of the Lender to make the Loan pursuant to Section 2.1 shall be
      subject to the satisfaction, on or before the Loan Closing Date, of the
      conditions set forth in this Section. If the conditions set forth in this
      Section are not met on or prior to the Loan Closing Date, the Lender shall
      have
      no obligation to make the Loan. 

     

    (a) The
      Company shall have duly executed and delivered to the Lender the Note
      representing the Loan.

     

    (b) The
      Lender shall have received on or before the Loan Closing Date a Warrant
      Agreement in the form attached hereto as Exhibit B,
      dated
      as of the Loan Closing Date.

     

    (c) There
      shall exist no material adverse change in the condition (financial or
      otherwise), results of operations, assets, properties or prospects of the
      Company since September 30, 2006, the date of the most recent financial
      statements provided to Lender. 

     

    (d) There
      shall exist no material default in any of the Company’s obligations under any
      contract or agreement.

     

    (e) The
      Company shall be in material compliance with all applicable laws. 

     

    (f) The
      Company shall have retained Gemini Partners or GP Group, LLC as its exclusive
      financial advisor in connection with the Merger, and shall provide evidence
      of
      such engagement.

     

    (g) The
      Lender shall have received such other documents, certificates, or other
      materials as it reasonably requests from the Company with respect to the
      transaction contemplated by Agreement, the Note, and the Security Agreement.
      

     

    ARTICLE
      4

    REPRESENTATIONS
      AND WARRANTIES

     

    4.1 Due
      Incorporation and Good Standing.
      The
      Company is a corporation duly organized, validly existing and in good standing
      under the laws of the State of California with full and adequate power to carry
      on and conduct its business as presently conducted, and is duly licensed or
      qualified in all foreign jurisdictions wherein the failure to be so qualified
      or
      licensed would reasonably be expected to have a material adverse effect on
      the
      business of the Company.

     

    4.2 Due
      Authorization.
      The
      Company has full right, power and authority to enter into this Agreement, to
      make the borrowings hereunder and execute and deliver the Note as provided
      herein and to perform all of its duties and obligations under this Agreement,
      the Note, and the Security Agreement. The execution and delivery of this
      Agreement, the Note, and the Security Agreement will not, nor will the
      observance or performance of any of the matters and things herein or therein
      set
      forth, violate or contravene any provision of law or the Company’s bylaws or
      certificate of incorporation. All necessary and appropriate corporate action
      on
      the part of the Company has been taken to authorize the execution and delivery
      of this Agreement, the Note and the Security Agreement. Concurrently with the
      execution of this Agreement, the Company will deliver to the Lender a copy
      of
      the minutes of the meeting of the Company’s Board of Directors authorizing the
      Company to enter into this Agreement, the Note and the Security Agreement,
      to
      make the borrowings as provided herein, and to perform all of its duties and
      obligations under this Agreement, the Note and the Security Agreement.

     

    
      
        
        

      

      
        -3-

        
          

        

      

      
        
        

      

    

     

    4.3 Enforceability.
      Each of
      this Agreement, the Note, and the Security Agreement has been validly executed
      and delivered by the Company and constitutes the legal, valid and binding
      obligations of the Company enforceable against it in accordance with its
      respective terms, subject to applicable bankruptcy, insolvency, reorganization
      or similar laws relating to or affecting the enforcement of creditors’ right and
      to the availability of the remedy of specific performance.

     

    4.4 Capitalization.
      All of
      the Company’s authorized and outstanding equity securities (including securities
      convertible into equity securities) are identified on Schedule A attached
      hereto. Other than as set forth on Schedule A,
      there
      are no outstanding shares of capital stock or any options, warrants or other
      preemptive rights, rights of first refusal or similar rights to purchase equity
      securities of the Company.

     

    4.5 Subsidiaries.
      The
      Company owns no securities of any other entity, and there are no outstanding
      shares of capital stock or any options, warrants or other preemptive rights,
      rights of first refusal or similar rights to purchase equity securities of
      any
      other entity. 

     

    4.6 Compliance
      with Laws.
      The
      nature and transaction of the Company’s business and operations and the use of
      its properties and assets do not, and during the term of this Agreement shall
      not, violate or conflict with in any material respect any applicable law,
      statute, ordinance, rule, regulation or order of any kind or
      nature.

     

    4.7 Absence
      of Conflicts.
      The
      execution, delivery and performance by the Company of this Agreement, the Note,
      and the Security Agreement, and the transactions contemplated hereby and
      thereby, do not constitute a breach or default, or require consents under,
      any
      agreement, permit, contract or other instrument to which the Company is a party,
      or by which the Company is bound or to which any of the assets of the Company
      is
      subject, or any judgment, order, writ, decree, authorization, license, rule,
      regulation, or statute to which the Company is subject, except as contemplated
      in Section 3.1(b) hereof.

     

    4.8 Litigation
      and Taxes.
      There
      is no litigation or governmental proceeding pending, or to the best knowledge
      of
      the Company after due inquiry, threatened, against the Company. The Company
      has
      duly filed all applicable income or other tax returns and has paid all material
      income or other taxes when due. There is no controversy or objection pending,
      or
      to the best knowledge of the Company after due inquiry, threatened in respect
      of
      any tax returns of the Company.

     

    4.9 No
      Omissions or Misstatements.
      None of
      the information included in this Agreement, other documents or information
      furnished or to be furnished by the Company contains any untrue statement of
      a
      material fact or is misleading in any material respect or omits to state any
      material fact. Copies of all documents referred to herein have been delivered
      or
      made available to the Lender and constitute true and complete copies thereof
      and
      include all amendments, schedules, appendices, supplements or modifications
      thereto or waivers thereunder.

     

    
      
        
        

      

      
        -4-

        
          

        

      

      
        
        

      

    

     

    4.10 Financial
      Statements.
      The
      financial statements of the Company are complete and correct, have been prepared
      from the books and records of the Company in accordance with generally accepted
      accounting principles consistently applied throughout the periods involved,
      except for changes specified therein and except that unaudited financial
      statements are not accompanied by notes, and present fairly the financial
      condition, results of operations, shareholders’ equity and changes in financial
      position of the Company and its consolidated Subsidiaries as of the dates
      thereof and for the periods specified therein. Except as set forth in the
      balance sheet as of September 30, 2006 included in such financial statements
      or
      incurred in the ordinary course of business since September 30, 2006, the
      Company has no indebtedness, obligation or liability, absolute, accrued,
      contingent or otherwise, and there has been no material adverse change in the
      condition (financial or otherwise), results of operations, assets, properties
      or
      prospects of the Company.

     

    4.11 Company
      Knowledge and Experience.
      The
      Company (together with its accountants, legal counsel and other representatives
      with whom it has consulted in connection with this Agreement) has such
      knowledge, experience and access to professional advice in financial and
      business matters, including loans like the Loan, to be capable of evaluating
      the
      risks and merits of receiving the Loan pursuant to this Agreement, and the
      Company has obtained such professional third-party advice concerning the Loan
      and the transactions contemplated hereby as it has desired and deemed
      prudent.

     

    4.12 Lender
      Security Interest.
      The
      Lender holds a perfected security interest, or shall effect such interest within
      a reasonable time after the Closing Date, in the Collateral (as defined in
      the
      Security Agreement).

     

    ARTICLE
      5

    COVENANTS

     

    5.1 Negative
      Covenants of the Company.
      The
      Company covenants and agrees that, from the Loan Closing Date until the Maturity
      Date (and, in any event, during such time as any portion of the Loan or any
      Interest thereon is outstanding), without the consent of the Lender, the Company
      will not:

     

    (a) create,
      incur, assume or suffer to exist, without the Lender’s prior written consent,
      which consent the Lender may withhold in its sole and absolute discretion,
      any
      secured indebtedness (other than that existing on the Loan Closing Date) or
      any
      other indebtedness (other than trade payables arising in the Company’s ordinary
      course of business) that is in any way senior or superior to this Agreement
      or
      the indebtedness represented hereby;

     

    (b) except
      for the Merger, merge or consolidate with or into any other corporation or
      sell
      or otherwise convey 25% or more of its assets;

     

    
      
        
        

      

      
        -5-

        
          

        

      

      
        
        

      

    

     

    (c) in
      a
      single transaction or series of related transactions, effect a significant
      acquisition of any business or entity (for purposes hereof, a “significant”
acquisition shall be determined in accordance with Instructions 2, 3 and 4
      or
      Item 2 of Form 8-K of the Securities and Exchange
      Commission);

     

    (d) engage
      in
      any business other than the business conducted by the Company on the Loan
      Closing Date;

     

    (e) declare,
      set aside or pay any dividend or other distribution on any of its capital
      stock;

     

    (f) engage
      in
      any transaction with any Affiliate (as such term is defined in Rule 501(b)
      of the Securities Act of 1933, as amended) on terms less favorable to the
      Company than could be obtained from an unrelated party;

     

    (g) amend
      its
      Articles of Incorporation or Bylaws in any manner that adversely affects the
      rights associated with this Agreement, the Common Stock issuable upon the
      exercise of the Warrant, or the Warrant; or

     

    The
      Company will give notice to the Lender of any default under any provisions
      of
      this Agreement within three business days after the discovery by the Company
      of
      such default. 

     

    5.2 Affirmative
      Covenants of the Company.
      The
      Company covenants and agrees that, from the Loan Closing Date until the Maturity
      Date (and, in any event, during such time as any portion of the Loan or any
      Interest thereon is outstanding), the Company shall:

     

    (a) operate
      its business only in the ordinary course, maintain its properties and assets
      in
      good repair, working order and condition, and conduct all transactions with
      third parties, including affiliates of the Company, on an arm’s length
      basis;

     

    (b) cause
      to
      be done all things reasonably necessary to maintain, preserve and renew its
      corporate existence and all material licenses, authorizations and permits
      necessary to the conduct of its businesses;

     

    (c) comply
      with all applicable laws, rules and regulations of all governmental authorities,
      the violation of which could reasonably be expected to have a material adverse
      effect on its business, properties or prospects;

     

    (d) deliver
      to the Lender within 10 days after the end of each fiscal month and within
      30
      days of the end of each fiscal quarter, (i) unaudited consolidated financial
      statements (including balance sheets, statements of income and loss, statements
      of cash flow and statements of shareholders’ equity) all in reasonable detail,
      fairly presenting the financial position and the results of operations of the
      Company as of the end of and through such periods, prepared in accordance with
      generally accepted accounting principles, consistently applied in the United
      States and consistent with past practice; (ii) a statement of any litigation
      or
      legal action pending or threatened against the Company certified as true and
      correct by the Company’s Chief Executive Officer; and (iii) such other reports
      as the Lender may reasonably request.

     

    
      
        
        

      

      
        -6-

        
          

        

      

      
        
        

      

    

     

    (e) deliver
      to the Lender within five days after they are available (but in any event within
      ninety days after the end of each of its fiscal years) the Company’s audited
      annual financial statements and the Company’s annual budget, and allow the
      Lender reasonable access during normal business hours to visit the Company
      and
      inspect the financial records of the Company; and

     

    (f) provide
      the Lender with copies of all minutes of any meeting of the Board of Directors
      of the Company promptly after they become available, but in no event more than
      4
      days after the date of any meeting. 

     

    ARTICLE
      6

    DEFAULT

     

    6.1 Events
      of Default.
      The
      occurrence of any of the following events (each an “Event
      of Default”),
      not
      cured in the applicable cure period, if any, shall constitute an Event of
      Default of the Company:

     

    (a) a
      breach
      of any representation, warranty, covenant or other provision of this Agreement,
      or the Note, which, if capable of being cured, is not cured within three days
      following the earlier of (i) notice thereof to the Company and (ii) the Company
      becoming aware of such breach;

     

    (b) the
      failure to make when due any payment described in this Agreement, the Note
      or
      the Security Agreement, whether on or after the Maturity Date, by acceleration
      or otherwise; 

     

    (c) the
      failure of the Public Company Parent to issue the Warrant to the Lender at
      the
      closing of the Merger, or the Company to issue the Warrant if the Merger does
      not occur and the Lender requests that the Company issue the Warrant, and in
      either case, to thereafter comply with the terms thereof; or

     

    (d) (i) the
      application for the appointment of a receiver or custodian for the Company
      or
      the property of the Company, (ii) the entry of an order for relief or the
      filing of a petition by or against the Company under the provisions of any
      bankruptcy or insolvency law, (iii) any assignment for the benefit of
      creditors by or against the Company, or (iv) the Company becomes
      insolvent.

     

    6.2 Effect
      of Default.
      Upon
      the occurrence of any Event of Default that is not cured within any applicable
      cure period, the Lender may elect, by written notice delivered to the Company,
      to take any or all of the following actions: (i) declare this Agreement
      terminated and the outstanding amounts under the Note to be forthwith due and
      payable, whereupon the entire unpaid Loan, together with accrued and unpaid
      Interest thereon, and all other cash obligations hereunder, shall become
      forthwith due and payable, without presentment, demand, protest or any other
      notice of any kind, all of which are hereby expressly waived by the Company,
      anything contained herein or in the Note or the Security Agreement to the
      contrary notwithstanding, (ii) increase the aggregate interest due to the Lender
      to be equal to the amount of the Loan multiplied by the Default Interest Rate
      from the Loan Closing Date until the Maturity Date (calculated on the basis
      of
      the actual number of days elapsed over a year of 360 days), as well as on any
      days Lender remains unpaid in full, including both principal and interest,
      following the Maturity Date and (iii) exercise any and all other remedies
      provided hereunder or available at law or in equity upon the occurrence and
      continuation of an Event of Default. In addition, during the occurrence of
      any
      Event of Default, the Company shall not pay make any payment on any other
      outstanding indebtedness of the Company (other than indebtedness of the Company
      to which the Lender has agreed in writing to subordinate this Agreement and
      the
      Note hereunder)

     

    
      
        
        

      

      
        -7-

        
          

        

      

      
        
        

      

    

     

    ARTICLE
      7

    WARRANT

     

    7.1 Issuance
      of Warrant.
      The
      Company shall cause the merger agreement for the Merger between the Company
      and
      Public Company Parent to include a covenant of the Public Company Parent that
      it
      will issue to the Lender at the closing of the Merger a Common Stock Purchase
      Warrant (the "Warrant")
      in the
      form attached hereto as Exhibit B,
      appropriately completed as follows:

     

    (a) The
      number of shares for which the Warrant shall be exercisable shall be equal
      to:
      (i) 200,000 multiplied by (ii) a fraction, the numerator of which is $1.00
      and
      the denominator of which is the lesser of (a) the Reverse Merger Price or
      (b) the Lowest Equity Price. However, in the event that all or any portion
      of the Loan, all accrued Interest thereon and all other sums due hereunder,
      have
      not been received by Lender on or before the date that is one hundred twenty
      (120) days following the Loan Closing Date the number of shares for which the
      Warrant shall be exercisable shall be equal to: (i) 200,000 multiplied by (ii)
      a
      fraction, the numerator of which is $1.00 and the denominator of which is the
      lesser of (a) the Reverse Merger Price or (b) the Lowest Equity
      Price.

     

    (b) The
      Initial Exercise Price (as defined in the Warrant) shall be the lower of 
(a) the Reverse Merger Price and (b) the Lowest Equity Price, rounded down
      to the nearest cent;

     

    (c) The
      date
      of the Warrant shall be the closing date of the Merger.

     

    For
      purposes of this Agreement, the "Lowest Equity Price" shall mean the lowest
      price per share at which the Public Company Parent or the Company issues Equity
      Securities after the date hereof. For purposes of this Agreement, the “Reverse
      Merger Price” shall mean the actual price at which the Company issues shares
      adjusted by dividing the actual price by the conversion ratio in the Merger.
      

     

    7.2 Public
      Company Parent Issuance.
      The
      Company shall cause the Public Company Parent to issue the Warrant to the Lender
      upon the closing of the Merger and will not allow the Public Company Parent
      to
      take any action that will interfere with the issuance of the Warrant on the
      terms set forth in this Agreement. 

     

    7.3 Warrant
      Obligations.
      The
      Company shall cause the Public Company Parent to comply on a timely basis with
      each and every obligation under the Warrant. 

    
       

      7.4 Failure
        to Complete Merger.
        If
        the Merger has not been completed before 270 days from the Loan Closing
        Date: 

       

      (a) The
        number of shares for which the Warrant shall be exercisable shall be equal
        to:
        (i) 200,000 multiplied by (ii) a fraction, the numerator of which is $1.00
        and
        the denominator of which is the lesser of (a) the Reverse Merger Price
        (b) the Lowest Equity Price and (c) the last price per share paid for the
        Company’s Common Stock prior to the Loan Closing Date;

       

    

    
      
        
        

      

      
        -8-

        
          

        

      

      
        
        

      

    

     

    (b) The
      Initial Exercise Price (as defined in the Warrant) shall be the lower of 
(a) the Reverse Merger Price (b) the Lowest Equity Price and (c) the last
      price per share paid for the Company’s Common Stock prior to the Loan Closing
      Date, rounded down to the nearest cent;

     

    7.5 Registration
      Rights.
      The
      Lender shall have the registration rights provided in Section 3 of the Warrant,
      “Registration Rights”. 

     

    7.6 Net
      Issue Exercise.
      If the
      Lender exercises the Warrant pursuant to Section 1(b) of the Warrant
      (“Net
      Issue Exercise”),
      the
      Company or the Public Company Parent, as applicable, will cause to be delivered
      to the Company’s transfer agent or the Public Company Parent’s transfer agent,
      as applicable, an opinion of counsel that the holding period under Rule 144
      with
      respect to any Warrant Shares (as defined in the Warrant) issued to the Lender
      as a result of such Net Issue Exercise commenced as of the date of issuance
      of
      the Warrant. 

     

    ARTICLE
      8

    MISCELLANEOUS

     

    8.1 Successors
      and Assigns; Participations.
      Subject
      to the exceptions specifically set forth in this Agreement, the terms and
      conditions of this Agreement shall inure to the benefit of and be binding upon
      the respective executors, administrators, heirs, successors and assigns of
      the
      parties. This Agreement may be assigned solely by the Lender. Furthermore,
      although this Agreement, the Note and the Security Agreement name the Lender
      as
      the holder thereof and/or the lender thereunder, the Lender is authorized to
      sell participation interests in the Loan to one or more other persons or
      entities. The Company agrees that: (a) each holder of a participation interest
      will be entitled to rely on the terms of this Agreement, the Note and the
      Security Agreement as if such holder had been named as an original party hereto
      and thereto; and (b) the Lender is authorized to provide all information
      furnished by the Company to the Lender to each holder of a participation
      interest.

     

    8.2 Titles
      and Subtitles.
      The
      titles and subtitles of the Sections of this Agreement are used for convenience
      only and shall not be considered in construing or interpreting this
      agreement.

     

    8.3 Notices.
      Any
      notice, request or other communication required or permitted hereunder shall
      be
      in writing and shall be delivered personally or by facsimile (receipt confirmed
      electronically) or shall be sent by a reputable express delivery service or
      by
      certified mail, postage prepaid with return receipt requested, addressed as
      follows:

     

    
      if
        to
        Borrower, to:

      Arthur
        Liu

      AuraSound,
        Inc.

      11839
        East Smith Ave

      Santa
        Fe
        Springs, CA 90670

    

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

     

    
      with
        a
        copy to:

      Kevin
        Friedmann

      Richardson
        & Patel, LLP

      The
        Chrysler Building 

      405
        Lexington Avenue, 26th Floor 

      New
        York,
        NY 10174

    

     

    if
      to the Lender, to:

     

    with
      a copy to:

     

    Either
      party hereto may change the above specified recipient or mailing address by
      notice to the other party given in the manner herein prescribed. All notices
      shall be deemed given on the day when actually delivered as provided above
      (if
      delivered personally or by facsimile, provided that any such facsimile is
      received during regular business hours at the recipient’s location) or on the
      day shown on the return receipt (if delivered by mail or delivery
      service).

     

    8.4 Governing
      Law.
      This
      Agreement shall be governed by and construed in accordance with the domestic
      laws of the State of California without giving effect to any choice of law
      or
      conflict of law provision or rule (whether of the State of California or any
      other jurisdiction) that would cause the application of the laws of any
      jurisdiction other than the State of California.

     

    8.5 Waiver
      and Amendment.
      Any
      term of this Agreement may be amended, waived or modified with the written
      consent of the Company and the Lender.

     

    8.6 Remedies.
      No
      delay or omission by the Lender in exercising any of its rights, remedies,
      powers or privileges hereunder or at law or in equity and no course of dealing
      between the Lender and the undersigned or any other person shall be deemed
      a
      waiver by the Lender of any such rights, remedies, powers or privileges, even
      if
      such delay or omission is continuous or repeated, nor shall any single or
      partial exercise of any right, remedy, power or privilege preclude any other
      or
      further exercise thereof by the Lender or the exercise of any other right,
      remedy, power or privilege by the Lender. The rights and remedies of the Lender
      described herein shall be cumulative and not restrictive of any other rights
      or
      remedies available under any other instrument, at law or in equity.

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    8.7 Expenses.
      The
      Company shall pay all customary costs and expenses incurred by the Lender in
      connection with the negotiation and preparation of the documents contemplated
      by
      this Agreement and the Loan closing (including the Lender’s reasonable
      attorneys’ fees).

     

    8.8 Integration. This
      Agreement, along with the Note and the Security Agreement, constitutes the
      complete and exclusive agreement between the Company and the Lender with respect
      to the subject-matter herein and replaces and supersedes any and all other
      prior
      written and oral agreements or statements by such parties hereto relating to
      such subject-matter.

     

    8.9 Prevailing
      Party. If
      either
      party hereto brings any legal suit, action or proceeding against another party
      arising out of, relating to, or concerning the interpretation or the enforcement
      of rights and duties hereunder or any transaction related hereto (collectively,
      an “Action”),
      the
      losing party shall pay to the prevailing party a reasonable sum for attorneys’
fees and shall reimburse all costs (whether or not such costs are otherwise
      recoverable under the provisions of the California Code of Civil Procedure
      or
      other statutory law of California or any other jurisdiction) incurred in
      connection with the prosecution or defense of such Action and/or enforcement
      of
      any judgment, order, ruling or award granted therein, all of which shall be
      deemed to have accrued on the commencement of such Action and shall be paid
      whether or not such Action is prosecuted to a judgment, order, ruling or award.
      “Prevailing
      Party”
within
      the meaning of this Section includes, without limitation, a party which agrees
      to dismiss an Action on the other party’s payment of some or all sums allegedly
      due or performance of some or all of the covenants allegedly breached, or which
      obtains substantially the relief sought by it.

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Company has caused this Loan Agreement to be signed in
      its
      name on the date first set forth above.

    
      	 	 	 
	 	
            
	 
 	 
 	 
 
	
            	By:  	/s/ Kenneth Aldrich
	 	
              

              Kenneth
                Aldrich

              YKA
                Partners Ltd.

            

    

    
      	 	 	 
	 
 	 
 	 
 
	
            	By:  	/s/ Arthur Liu
	 	
              

              Arthur
                Liu

              Chairman

              Aura
                Sound, Inc.

            

    

     

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

     

    SCHEDULE A

     

    CAPITALIZATION
      OF THE COMPANY

     

    
      AuraSound
        Capitalization Table

      

      
        	 	 	
                Outstanding

              	
                 

              	
                Issued

              	
                 

              	
                 

              	
                 

              
	
                 

              	
                 

              	
                 Shares

              	
                 

              	
                Options/Warrants

              	
                 

              	
                TOTAL

              	 
	 	 	 	 	 	 	 	 
	
                Pre-Offering
                  Shareholders

              	 	 	 	 	 	 	 
	
                Arthur
                  Liu

              	 	 	
                10,647,071

              	 	 	
                -

              	 	 	
                10,647,071

              	 
	
                Zvi
                  Kurtzman

              	 	 	
                824,319

              	 	 	
                -

              	 	 	
                824,319

              	 
	
                Steve
                  Veen

              	 	 	
                368,412

              	 	 	
                -

              	 	 	
                368,412

              	 
	
                Hazlaut
                  Investment

              	 	 	
                354,241

              	 	 	
                -

              	 	 	
                354,241

              	 
	
                Art
                  Schwartz

              	 	 	
                240,883

              	 	 	
                -

              	 	 	
                240,883

              	 
	
                Warren
                  Braslow

              	 	 	
                212,544

              	 	 	
                -

              	 	 	
                212,544

              	 
	
                Cipora
                  Lavut

              	 	 	
                184,205

              	 	 	
                -

              	 	 	
                184,205

              	 
	
                Neal
                  Kaufman

              	 	 	
                174,995

              	 	 	
                -

              	 	 	
                174,995

              	 
	
                Melvin
                  Gagerman

              	 	 	
                143,114

              	 	 	
                -

              	 	 	
                143,114

              	 
	
                Maurice
                  Zeitlin

              	 	 	
                141,696

              	 	 	
                -

              	 	 	
                141,696

              	 
	
                Jeanette
                  Avery

              	 	 	
                69,077

              	 	 	
                -

              	 	 	
                69,077

              	 
	
                Gemel

              	 	 	
                68,014

              	 	 	
                -

              	 	 	
                68,014

              	 
	 	 	 	              
                 	 	 	          
                 	 	 	             
                 	 
	
                TOTAL

              	 	 	
                13,428,571

              	 	 	
                -

              	 	 	
                13,428,571

              	 

      

       

      
        
          
          

        

        
          Schedule
            A - 1

          
            

          

        

        
          
          

        

      

    

     

    EXHIBIT A

     

    PROMISSORY
      NOTE

     

    See
      attached.

     

    
      
        
        

      

      
        
          Exh
            A -
            1

        

        
          

        

      

      
        
        

      

    

     

    EXHIBIT B

     

    COMMON
      STOCK PURCHASE WARRANT

     

    See
      attached.

     

    
      
        
        

      

      
        Exh
          B -
          1

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00126-of-00352.parquet"}]]