Document:

Unassociated Document

    

      

      Security
        Agreement

      

      This
        Security Agreement (“Agreement”)
        is
        made this 29th day of January 2007 (the “Effective
        Date”),
        by
        and between AuraSound, Inc., a California corporation (“Debtor”)
        whose
        address is 11839 East Smith Ave, Santa Fe Springs, CA 90670, and Westrec
        Properties Inc. & Affiliated Companies 401(k) Plan (“Secured
        Party”).

      

      This
        Agreement is entered into in connection with: (i) Secured Party’s loan to Debtor
        of $500,000 (the “Loan”)
        pursuant to that certain Secured Promissory Note dated the Effective Date,
        made
        by Debtor in favor of Secured Party (the “Note”);
        (ii)
        that certain Loan Agreement dated the Effective Date between Debtor and Secured
        Party (the “Loan
        Agreement”);
        and
        (iii) that certain Intercreditor Agreement dated the Effective Date between
        Secured Party and Mapleridge Insurance Services (the “Intercreditor
        Agreement”).

      

      Secured
        Party and Debtor agree as follows:

      

      
        	
                A.

              	
                Definitions.

              

      

      

      
        	 	
                1.

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

              

        	 	 	 

      

      
        	 	
                (i)

              	
                Accounts;

              

        	 	 	 

      

      
        	 	
                (ii)

              	
                Chattel
                  paper;

              

        	 	 	 

      

      
        	 	
                (iii)

              	
                Inventory;

              

        	 	 	 

      

      
        	 	
                (iv)

              	
                Equipment;

              

        	 	 	 

      

      
        	 	
                (v)

              	
                Instruments,
                  including promissory notes;

              

        	 	 	 

      

      
        	 	
                (vi)

              	
                Investment
                  property;

              

        	 	 	 

      

      
        	 	
                (vii)

              	
                Documents;

              

        	 	 	 

      

      
        	 	
                (viii)

              	
                Deposit
                  Accounts;

              

        	 	 	 

      

      
        	 	
                (ix)

              	
                Commercial
                  Tort Claims; 

              

        	 	 	 

      

      
        	 	
                (x)

              	
                Letter-of-credit
                  right;

              

        	 	 	 

      

      
        	 	
                (xi)

              	
                General
                  intangibles (including without limitation all Intellectual
                  Property);

              

        	 	 	 

      

      
        	 	
                (xii)

              	
                Supporting
                  obligations; and

              

        	 	 	 

      

      
        	 	
                (xiii)

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

              

        	 	 	 

      

      
        	 	
                2.

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

              

        	 	 	 

      

      
      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      
        	 	
                3.

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

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

              	
                Trade
                  secrets or know-how;

              

        	 	 	 

      

      
        	 	
                (iii)

              	
                Design
                  rights which may be available to Debtor;
                  and

              

        	 	 	 

      

      
        	 	
                (iv)

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

              

        	 	 	 

      

      
        	 	
                4.

              	
                “Obligations.”
                  This Agreement secures the following:

              

        	 	 	 

      

      
        	 	
                (i)

              	
                Debtor’s
                  obligations under the Note and Loan
                  Agreement;

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                (iii)

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

              

        	 	 	 

      

      
        	 	
                (iv)

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

              

        	 	 	 

      

      
        	 	
                (v)

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

              

        	 	 	 

      

      
        	 	
                5.

              	
                “Mapleridge
                  Security Agreement.”
                  The Mapleridge Security Agreement is the December 29, 2006 Security
                  Agreement between Debtor and Mapleridge Insurance
                  Services.

              

        	 	 	 

      

      
        	 	
                6.

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

              

        	 	 	 

      

      
        	 	
                7.

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

              

        	 	 	 

      

      
        	 	
                8.

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

              

      

      

      
        	
                B.

              	
                Grant
                  of Security Interest.

              

      

      

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

      

      
        
          
          

        

        
          -2-

          
            

          

        

        
          
          

        

      

      

      
        	
                C.

              	
                Perfection
                  of Security Interests.

              

      

      

      
        	 	
                1.

              	
                Filing
                  of financing statement.

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

              	
                Secured
                  Party shall receive prior to the Closing an official report from
                  the
                  Secretary of State of each Collateral State, Chief Executive Office
                  State,
                  and the Debtor State (each as defined below) (the “SOS
                  Reports”)
                  indicating that Secured Party’s security interest is prior to all other
                  security interests or other interests reflected in the report,
                  other than
                  as provided in the Intercreditor Agreement, which shall provide
                  that
                  Secured Party’s security interest shall be pari
                  passu
                  to
                  the security interest granted by Debtor to Mapleridge Insurance
                  Services.
                  

              

        	 	 	 

      

      
        	 	
                2.

              	
                Possession.

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                3.

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

              

        	 	 	 

      

      
        	 	
                (i)

              	
                Deposit
                  Accounts; 

              

        	 	 	 

      

      
        	 	
                (ii)

              	
                Investment
                  Property;

              

        	 	 	 

      

      
        	 	
                (iii)

              	
                Letter-of-credit
                  rights; and

              

        	 	 	 

      

      
        	 	
                (iv)

              	
                Electronic
                  chattel paper.

              

        	 	 	 

      

      
        	 	
                4.

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

              

        	 	 	 

      

      
        	 	
                5.

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

              

      

      

      
        	
                D.

              	
                Post-Closing
                  Covenants and Rights Concerning the
                  Collateral.

              

      

      

      
        	 	
                1.

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

              

      

      
      

       

      
        
          
          

        

        
          -3-

          
            

          

        

        
          
          

        

      

       

      
        	 	
                2.

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

              

        	 	 	 

      

      
        	 	
                3.

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

              

        	 	 	 

      

      
        	 	
                4.

              	
                Limitations
                  on Obligations Concerning Maintenance of
                  Collateral.

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                5.

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

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                (iii)

              	
                grant
                  any other security interest in any of the
                  Collateral.

              

        	 	 	 

      

      
        	 	
                6.

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

              

      

      

      
        	
                E.

              	
                Debtor’s Representations
                  and Warranties.

              

      

      

      Debtor
        warrants and represents that:

      

      
        	 	
                1.

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

              

        	 	 	 

      

      
        	 	
                2.

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

              

        	 	 	 

      

      
        	 	
                3.

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

              

      

       

      
        
          
          

        

        
          -4-

          
            

          

        

        
          
          

        

      

      
      

       

      
        	 	
                4.

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

              

        	 	 	 

      

      
        	 	
                5.

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

              

        	 	 	 

      

      
        	 	
                6.

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

              

        	 	 	 

      

      
        	 	
                7.

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

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                (iii)

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

              

      

      

      
        	
                F.

              	
                Debtor’s Covenants.

              

      

      

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

      

      
        	 	
                1.

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

              

        	 	 	 

      

      
        	 	
                2.

              	
                Not
                  change the state where it is located; 

              

        	 	 	 

      

      
        	 	
                3.

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

              

        	 	 	 

      

      
        	 	
                4.

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

              

        	 	 	 

      

      
        	 	
                5.

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

              

      

       

      
        
          
          

        

        
          -5-

          
            

          

        

        
          
          

        

      

       

      
        	 	
                6.

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

              

      

      

      
        	
                G.

              	
                Events
                  of Default.

              

      

      

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

      

      
        	 	
                1.

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

              

        	 	 	 

      

      
        	 	
                2.

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

              

        	 	 	 

      

      
        	 	
                3.

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

              

        	 	 	 

      

      
        	 	
                4.

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

              

        	 	 	 

      

      
        	 	
                5.

              	
                The
                  (a) application for the appointment of a receiver or custodian
                  for Debtor
                  or the property of Debtor, (b) the entry of an order for relief
                  or the
                  filing of a petition for relief by or against Debtor under the
                  Bankruptcy
                  Code or other insolvency law, (c) any assignment for the benefit
                  of
                  creditors by or against Debtor, or (d) Debtor becomes
                  insolvent;

              

        	 	 	 

      

      
        	 	
                6.

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

              

        	 	 	 

      

      
        	 	
                7.

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

              

        	 	 	 

      

      
        	 	
                8.

              	
                Secured
                  Party shall receive at any time following the Closing an SOS Report
                  indicating that Secured Party’s security interest is not prior to all
                  other security interests or other interests reflected in the report,
                  other
                  than the existing security interests as provided under the Mapleridge
                  Security Agreement.

              

      

       

      
        
          
          

        

        
          -6-

          
            

          

        

        
          
          

        

      

      
 

      
        	
                H.

              	
                Default
                  Costs.

              

      

      

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

      

      
        	 	
                1.

              	
                Costs
                  of foreclosure;

              

        	 	 	 

      

      
        	 	
                2.

              	
                Costs
                  of obtaining money damages; and

              

        	 	 	 

      

      
        	 	
                3.

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

              

      

      

      
        	
                I.

              	
                Remedies Upon
                  Default.

              

      

      

      
        	 	
                1.

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

              

        	 	 	 

      

      
        	 	
                2.

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

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                (iii)

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

              

      

      

      
        	
                J.

              	
                Foreclosure
                  Procedures.

              

      

      

      
        	 	
                1.

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

              

        	 	 	 

      

      
        	 	
                2.

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

              

        	 	 	 

      

      
        	 	
                3.

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

              

      

       

      
        
          
          

        

        
          -7-

          
            

          

        

        
          
          

        

      

       

      
      

       

      
        	 	
                4.

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

              

        	 	 	 

      

      
        	 	
                5.

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

              

        	 	 	 

      

      
        	 	
                6.

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

              

        	 	 	 

      

      
        	 	
                7.

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

              

        	 	 	 

      

      
        	 	
                8.

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

              

        	 	 	 

      

      
        	 	
                9.

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

              

        	 	 	 

      

      
        	 	
                10.

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

              

        	 	 	 

      

      
        	 	
                (i)

              	
                the
                  Note,

              

        	 	 	 

      

      
        	 	
                (ii)

              	
                any
                  of the other Obligations, or

              

        	 	 	 

      

      
        	 	
                (iii)

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

              

      

      

      
        	
                K.

              	
                Miscellaneous.

              

      

      

      
        	 	
                1.

              	
                Assignment.

              

        	 	 	 

      

      
        	 	
                (i)

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

              

      

      
      

       

      
        
          
          

        

        
          -8-

          
            

          

        

        
          
          

        

      

       

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                (iii)

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

              

        	 	 	 

      

      
        	 	
                2.

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

              

        	 	 	 

      

      
        	 	
                3.

              	
                Notices.
                  Any 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 Debtor, to:

                Arthur
                  Liu

                AuraSound,
                  Inc.

                11839
                  East Smith Ave

                Santa
                  Fe Springs, CA 90670

                Fax:
                  (562) 447-1788

                 

              
	 	
                with
                  a copy to:

                Kevin
                  Friedmann

                Richardson
                  & Patel, LLP

                The
                  Chrysler Building 

                405
                  Lexington Avenue, 26th Floor 

                New
                  York, NY 10174

                Fax:
                  212-907-6687

                 

              
	 	
                if
                  to Secured Party, to:

                Westrec
                  Properties Inc. & Affiliated Companies 401(k) Plan

                Att:
                  Michael Sachs

                16633
                  Ventura Blvd., 6th Floor

                Encino,
                  CA  91436

                Fax:
                  (818) 907-1104

              

      

       

      
        
          
          

        

        
          -9-

          
            

          

        

        
          
          

        

      

       

      
        	 	
                with
                  a copy to:

                Heller
                  Ehrman LLP

                333
                  Hope Street, 39th
                  Floor

                Los
                  Angeles, CA 90071

                Att:
                  Steven O. Weise, Esq.

                Fax:
                  (213) 614-1868

              

      

       

      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).

      

      
        	 	
                4.

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

              

        	 	 	 

      

      
        	 	
                5.

              	
                Governing
                  Law.
                  This Agreement is being executed and delivered and is intended
                  to be
                  performed in the State of California and shall be construed and
                  enforced
                  in accordance with the laws of the State of
                  California.

              

        	 	 	 

      

      
        	 	
                6.

              	
                Rules
                  of Construction.

              

        	 	 	 

      

      
        	 	
                a.

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

              

        	 	 	 

      

      
        	 	
                b.

              	
                “Includes”
                  and “including” are not limiting.

              

        	 	 	 

      

      
        	 	
                c.

              	
                “Or”
                  is not exclusive.

              

        	 	 	 

      

      
        	 	
                d.

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

              

        	 	 	 

      

      
        	 	
                7.

              	
                Integration
                  and Modifications.

              

        	 	 	 

      

      
        	 	
                (i)

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

              

        	 	 	 

      

      
        	 	
                (ii)

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

              

        	 	 	 

      

      
        	 	
                8.

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

              

        	 	 	 

      

      
        	 	
                9.

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

              

      

      

      

      [Signature
        follows]

      

      
        
          
          

        

        
          -10-

          
            

          

        

        
          
          

        

      

      
 

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

      

      

      
        	
                DEBTOR:

                 

                AURASOUND,
                  INC.

                 

                 

                 

                By:/s/
                  Arthur Liu_________________

                Arthur
                  Liu, its President

                 

              	
                SECURED
                  PARTY:

                 

                WESTREC
                  PROPERTIES INC. & AFFILIATED COMPANIES 401(K)
                  PLAN

                 

                 

                By:/s/
                  Michael M. Sachs_____________

                Michael
                  M. Sachs, its Trustee

              

      

      

      

      

      
        
          
          

        

        
          -11-

          
            

          

        

        
          
          

        

      

      

      

      EXHIBIT
        A

      

      COPYRIGHTS

      

      NONE.

      

      

      

      
        
          
          

        

        
          A

          
            

          

        

        
          
          

        

      

      

      EXHIBIT
        B

      

      PATENTS

      

      

      
        
          
          

        

        
          BUnassociated Document

     

    INTERCREDITOR
      AGREEMENT

    

    THIS
      INTERCREDITOR AGREEMENT (this "Agreement"),
      dated
      as of January 29, 2007 (the “Effective
      Date”),
      is
      entered into between Mapleridge Insurance Services, a California S corporation
      ("Mapleridge")
      and
Westrec
      Properties Inc. & Affiliated Companies 401(k) Plan
      (the
“Plan”)
      (sometimes collectively referred to as the “Creditors”
or,
      individually as a “Creditor”),
      based
      upon the following:

    

    RECITALS

    

    A.  WHEREAS,
      AuraSound, Inc., a California corporation, formerly known as Algo Sound, Inc.
      (dba Aura Sound, Inc.) (the “Debtor”),
      and
      Mapleridge have entered into: (i) a Loan Agreement; (ii) a Secured Promissory
      Note in the principal amount of $750,000 (the “Mapleridge
      Note”);
      (iii)
      a Security Agreement; and (iv) a Common Stock Purchase Warrant, each of which
      is
      dated December 29, 2006, and together are referred to herein as the
“Mapleridge
      Loan Documents.”
      

    

    B.  WHEREAS,
      the Debtor and the Plan have entered into: (i) a Loan Agreement; (ii) a Secured
      Promissory Note in the original principal amount of $500,000 (the “Plan
      Note”);
      and
      (iii) a Security Agreement, each of which is dated as of the Effective Date,
      and
      together are referred to herein as the “Plan
      Loan Documents.”

    

    C.  WHEREAS,
      the Debtor’s obligations under the Mapleridge Loan Documents and the Plan Loan
      Documents are secured by the Collateral, as herein defined.

    

    D.  WHEREAS,
      the Creditors desire to enter into this Agreement pursuant to which all
      obligations under the Mapleridge Loan Documents and the Plan Loan Documents
      will
      be secured on parity with respect to the Collateral, and to stipulate that
      all
      rights and remedies with respect to such debt will be controlled by this
      Agreement. 

    

    NOW,
      THEREFORE, the Creditors agree as follows:

     

    Article
      I.  

    DEFINITIONS

     

    Section
      1.01  Definitions.
      Terms
      not defined elsewhere in this Agreement shall have the meanings specified
      herein.

     

    
      	(a)  	
              “Business
                Day” shall mean a day other than a Saturday, Sunday, or other day on which
                national banks in the United States are authorized or required by
                law to
                close.

            

    

     

     

    
      	(b)  	
              “Collateral”
                means all presently existing and hereafter acquired personal property
                of
                the Debtor, including all Collateral as such term is defined in the
                Loan
                Documents.

            

    

     

     

    
      	(c)  	
              “Loan
                Documents” shall mean collectively the Plan Loan Documents and the
                Mapleridge Loan Documents.

            

    

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    
      	(d)  	
              “Majority
                Creditor” shall have the meaning defined in Section
                4.02.

            

    

     

    
      	(e)  	
              “Mapleridge
                Indebtedness” means any and all indebtedness, claims, debts, liabilities
                or other obligations owing from the Debtor to Mapleridge under the
                Mapleridge Loan Documents, of whatever nature, character or description,
                howsoever arising and whether currently existing or arising hereafter,
                together with all interest accruing thereon and all costs and expenses,
                including attorneys’ fees, or collection thereof, whether the same accrues
                or is incurred before or after the commencement of any bankruptcy
                case by
                or against the Debtor.

            

    

     

    
      	(f)  	
              “Minority
                Creditor” shall have the meaning defined in Section
                3.04.

            

    

     

    
      	(g)  	
              “Notes”
                shall mean collectively the Plan Note and the Mapleridge
                Note.

            

    

     

    
      	(h)  	
              “Plan
                Indebtedness” means any and all indebtedness, claims, debts, liabilities
                or other obligations owing from the Debtor to the Plan under the
                Plan Loan
                Documents, of whatever nature, character or description, howsoever
                arising
                and whether currently existing or arising hereafter, together with
                all
                interest accruing thereon and all costs and expenses, including attorneys’
                fees, or collection thereof, whether the same accrues or is incurred
                before or after the commencement of any bankruptcy case by or against
                the
                Debtor.

            

    

     

    
      	(i)  	
              “UCC”
                means the Uniform Commercial Code as the same may, from time to time,
                be
                in effect in the state of incorporation of the Debtor; provided,
                however,
                in the event that, by reason of mandatory provisions of law, any
                or all of
                the attachment, perfection or priority of the Creditor’s interest in any
                Collateral is governed by the UCC as in effecting a jurisdiction
                other
                than the one stated herein, the term “UCC” shall mean the Uniform
                Commercial Code as in effect in such other jurisdiction or such other
                laws, as the case may be, for purposes of the provisions hereof relating
                to such attachment, perfection or
                priority.

            

    

    

    Article
      II.  

    REPRESENTATIONS
      AND WARRANTIES

    

    Section
      2.01  Representation
      and Warranties of All Parties.
      Each
      party hereto represents and warrants that:

     

    
      	(a)  	
              Existence.
                It is duly organized or formed, and validly existing under the laws
                of the
                jurisdiction of its formation.

            

    

     

     

    
      	(b)  	
              Authority.
                The execution, delivery and performance of this Agreement and the
                performance of the transactions contemplated hereby have been duly
                authorized by all necessary actions and do not violate any provision
                of
                law or any charter, articles of incorporation, organization documents
                or
                bylaws, trust formation documents, as applicable, or result in any
                breach
                of, or constitute a default under, any agreement, security agreement,
                not
                or other instrument to which it is a party or by which it may be
                bound.

            

    

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    
      	(c)  	
              Consent.
                No authorizations, approvals or consents of, and no filings or
                registrations with, any governmental or regulatory authority or agency
                are
                necessary for the execution, delivery or performance of this Agreement
                or
                for the validity or enforceability
                hereof.

            

    

     

    
      	(d)  	
              No
                Existing Transfer or Subordination.
                It
                has not (i) sold, assigned or otherwise transferred, in whole or
                in part,
                its respective Note, any interest therein or any collateral security
                or
                guaranty therefor to any other person, or (ii) made, given or permitted
                any currently effective subordination or postponement in respect
                of its
                respective Note or the Collateral, except as provided
                herein.

            

    

     

    Section
      2.02  Representations
      and Warranties of the Creditors.
      Each
      Creditor represents and agrees that:

     

    
      	(a)  	
              No
                Fiduciary Relationship.
                The
                relationship between each Creditor as provided hereunder is solely
                that of
                creditors and neither Creditor has a fiduciary duty or other special
                relationship with the other.

            

    

     

    
      	(b)  	
              Independent
                Credit Investigations.
                Each
                Creditor has entered into its respective financing agreements with
                the
                Debtor based upon its own independent investigation, and makes no
                warranty
                or representation to the other, nor does it rely upon any representation
                of the other Creditor with respect to the financial condition or
                ability
                of the Debtor to repay any obligation secured under the respective
                Loan
                Documents. 

            

    

    

    Article
      III.  

    RIGHTS
      AND REMEDIES AS TO CREDITORS

    

    Section
      3.01  Exclusive
      Remedies.
      It is
      the intent of the Creditors that the rights and remedies provided herein with
      respect to any of the Collateral shall be governed solely by the provisions
      hereof, notwithstanding the date, manner or order of attachment or perfection,
      or the lack of any thereof, or the description of any such Collateral by or
      for
      the benefit of any Creditor, and shall supersede all other remedies provided
      for
      in the Loan Documents, or any other documents to which they are a party with
      respect to the Collateral. Each Creditor hereby covenants that it shall only
      execute on the Collateral in accordance with this Agreement.

    

    Section
      3.02  Rights
      as to Collateral.
      Each
      Creditor acknowledges the other’s right, on a pari passu basis, in the
      Collateral and a lien therein securing the indebtedness of each Creditor
      evidenced by the Notes. Neither Creditor will challenge or contravene the
      perfection of the security interests of the other Creditor. Each Creditor agrees
      to hold and administer, as trustee for the pro rata benefit of itself and the
      other Creditor, any agreements or other security instruments or interests that
      may be conveyed or granted to it pursuant to the provisions of its respective
      Loan Documents and, upon either Creditor receiving any proceeds from any sale,
      assignment, foreclosure or other disposition of or realization upon any of
      the
      Collateral, such Creditor will hold such proceeds, to the extent it may legally
      do so, for the ratable benefit of itself and the other Creditor and will apply
      the same in accordance with the provisions of this Article.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    Section
      3.03  Distribution
      of proceeds.
      Any
      Creditor conducting a liquidation or other enforcement action with respect
      to
      the Collateral shall provide the other Creditor with copies of all demands,
      communications, correspondence, and pleadings that relate to such Creditor’s
      conduct. Such enforcing Creditor shall provide the other Creditor with a written
      statement of the results of such liquidation or other action. The receipt of
      any
      proceeds from such action(s) shall be distributed to the other Creditor as
      soon
      as practicable on a pro rata basis with respect to each Creditor’s outstanding
      balance on its respective Note. Notwithstanding the agreement to ratably share
      the Collateral and the proceeds thereof, the Creditor conducting such
      liquidation or other action shall be entitled to first apply the proceeds
      collected on the Collateral to its reasonable costs of such action(s), including
      reasonable attorney’s fees, before distributing the remainder among the
      Creditors.

    

    Section
      3.04  Rights
      of Minority Creditor.
      The
      Creditor that is not the Majority Creditor (the “Minority
      Creditor”)
      shall
      not exercise and enforce against the Collateral any rights or remedies herein
      or
      in its respective Loan Documents conferred upon or reserved by law to such
      Creditor unless and until ten (10) days have passed after the Majority Creditor
      shall have had knowledge of the happening of an Event or Events of Default.
      Then, and only then, such Minority Creditor may proceed to exercise any such
      right(s) and remedies not being enforced by the Majority Creditor.

    

    Section
      3.05  Independent
      Loans.
      Subject
      to the terms of this Agreement, each Creditor is entitled to manage and
      supervise its respective loans and extensions of credit to the Debtor in
      accordance with law and as it may otherwise, in its sole discretion, deem
      appropriate. Neither Creditor shall have any duty to the other to act or refrain
      from acting in a manner that would allow, or result in, the occurrence or
      continuance of an Event of Default, regardless of any knowledge thereof which
      either Creditor may have or be charged with.

    

    Section
      3.06  Remedies
      for Non-compliance.
      Upon
      the occurrence of a breach of this Agreement by either Creditor, the other
      Creditor may pursue all rights and remedies available to it that are
      contemplated by this Agreement in the manner, upon the conditions, and with
      the
      effect provided herein, including, but not limited to, a suit for specific
      performance or injunctive relief.

    

    Article
      IV.  

    RIGHTS
      AND REMEDIES AS TO DEBTOR

     

    Section
      4.01  Acceleration
      of Maturity; Annulment of Acceleration

     

    
      	(a)  	
              If
                any Event of Default, as hereinafter defined, has occurred and is
                continuing, any Creditor may, by written notice to the Debtor and
                delivery
                of a copy thereof to the other Creditor, declare all unpaid principal
                and
                accrued interest on any or all of their respective Notes to be due
                and
                payable immediately; and upon any such declaration, all such unpaid
                principal and accrued interest shall immediately become due and payable,
                notwithstanding anything contained herein or in any Note to the
                contrary.

            

    

     

    
      	(b)  	
              If
                after the unpaid principal and accrued interest on any of the Notes
                shall
                have been so declared to be due and payable, all payments in respect
                of
                principal and interest that have become due and payable by the terms
                of
                such Note shall be paid to the Creditor who accelerated its Note,
                such
                Creditor may, by written notice to the Debtor and delivery of a copy
                thereof to the other Creditor, annul such declaration or declarations
                and
                waive such default(s) and consequences thereof, with such waiver
                not
                extending to or affecting any subsequent default or impairing any
                right
                consequent thereon.

            

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    Section
      4.02  Remedies
      of Majority Creditor.
      If any
      Event of Default has occurred and is continuing, the holder of not less than
      a
      majority of the total amount of principal outstanding on the Notes, (hereinafter
      the “Majority
      Creditor”)
      for
      itself and as the agent of the other Creditor, personally or by attorney, in
      its
      or its discretion, may, insofar as not prohibited by law:

     

     

    
      	(a)  	
              (i)
                take immediate possession of the Collateral; (ii) collect and receive
                all
                credits, outstanding accounts, bills, receivables, rents, income,
                revenues, and profits of the Debtor, pertaining to or arising from
                the
                Collateral, or any part thereof, and issue binding receipts therefor;
                and
                (iii) manage, control, and/or operate the Collateral as fully as
                the
                Debtor might do if in possession thereof, including, without limitation,
                the making of all repairs or replacements deemed necessary or
                advisable;

            

    

     

    
      	(b)  	
              the
                Majority Creditor, or any employee or agent of it, is hereby constituted
                and appointed as true and lawful attorney-in-fact of the Debtor with
                full
                power to (i) notify or require the Debtor to notify any and all customers
                that the Collateral has been assigned to the Creditors and/or that
                the
                Creditors have a security interest in the Collateral; (ii) sign and
                endorse the name of the Debtor upon any notes, checks, acceptances,
                drafts, money orders, or other instruments of payment (including
                payments
                made under any policy of insurance) that may come into possession
                of
                either Creditor, or upon any invoice, freight or express bill, bill
                of
                lading, storage or warehouse receipt, assignment, verification, or
                notice
                in connection with receivables, all in full or part payment of any
                amount
                owing to any Creditor; (iii) send requests for verifications of the
                Collateral to customers or account debtors; (iv) sell, assign, sue
                for,
                collect, or compromise payment of all or any part of the Collateral
                in the
                name of the Debtor or in its own name, or make any other disposition
                of
                Collateral, or any part thereof, for cash, credit, or any combination
                thereof; granting to the Majority Creditor, as the attorney-in-fact
                of the
                Debtor, full power of substitution and full power to do any and all
                things
                necessary to be done in and about the premises fully and effectually
                as
                the Debtor might or could do but for this appointment, and hereby
                ratifying all that said attorney-in-fact shall lawfully do or cause
                to be
                done by virtue hereof. The Majority Creditor, the other Creditor,
                their
                employees, or agents shall not be liable for any act, omission, error
                of
                judgment, or mistake of fact or law in its capacity as attorney-in-fact.
                This power of attorney is coupled with an interest and shall be
                irrevocable during the term of this Agreement so long as any Notes
                shall
                remain outstanding;

            

    

     

    
      	(c)  	
              proceed
                to protect and enforce the rights of the Creditors under this Agreement
                by
                suits or actions in equity or at law in any court of competent
                jurisdiction, whether for specific performance of any covenant or
                any
                agreement contained herein, for aid of execution of any power herein
                granted, for foreclosure hereunder, for sale of the Collateral, or
                any
                part thereof, for collection of debts hereby secured, or for enforcement
                of other appropriate legal or equitable remedies as may be deemed
                most
                effectual to protect and enforce the rights and remedies herein granted
                or
                conferred; 

            

    

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    
      	(d)  	
              sell
                or cause to be sold the Collateral, all or in part, and all right,
                title,
                interest, claim, and demand of the Debtor therein or thereto, in
                accordance with the UCC. The expenses incurred by the Creditor(s),
                including but not limited to professional fees, including attorneys’ fees,
                cost of advertisement, and agents’ compensation, in the exercise of any of
                the remedies provided in this Agreement shall be secured by this
                Agreement; and

            

    

     

    
      	(e)  	
              enter
                and/or remain upon the premises of the Debtor without any obligation
                to
                pay rent to the Debtor or others, or any other place(s) where any
                of the
                Collateral is located and kept, and: (i) remove the Collateral therefrom
                in order to maintain, collect, sell, and/or liquidate the Collateral
                or,
                (ii) use such premises, together with materials, supplies, books,
                and
                records of the Debtor, to maintain possession and/or the condition
                of the
                Collateral, and to prepare the Collateral for sale, liquidation,
                or
                collection. The Creditors may require the Debtor to assemble the
                Collateral and make it available to the Creditors at a place to be
                designated by the Creditors.

            

    

     

    Section
      4.03  Enforcement
      Action(s) by Minority Creditor.
      Notwithstanding the rights and remedies of the Majority Creditor as provided
      in
      Section 4.02, upon the expiration of ten (10) days after the Majority Creditor
      shall have had knowledge of the happening of an Event or Events of Default,
      any
      right, power or remedy herein or by law conferred which the Majority Creditor
      shall not have proceeded to exercise or enforce, may be exercised and enforced
      by the Minority Creditor.

     

    Section
      4.04  Right
      to Purchase Collateral.
      At any
      sale hereunder any Creditor shall have the right to bid for and purchase the
      Collateral, or such part thereof as shall be offered for sale, and any Creditor
      may in lieu of actual payment of the purchase price, set off against the
      purchase price the amount owing to said Creditor as evidenced by its respective
      Note and such set off amount shall be credited as a payment on account of
      principal and interest on said Note held by such Creditor.

     

    Section
      4.05  Remedies
      Cumulative, No Election.
      Every
      right or remedy herein conferred upon or reserved to the Creditors shall be
      cumulative and shall be in addition to every other right and remedy given
      hereunder, or now or hereafter existing at law, in equity, or by statute. The
      pursuit of any right or remedy shall not be construed as an
      election.

     

    Section
      4.06  Waiver
      of Appraisement Rights, Marshaling of Assets Not Required.
      The
      Debtor, for itself and for all who may claim through or under it, covenants
      that
      it will not at any time insist upon or plead, or in any manner whatsoever,
      claim
      or take the benefit or advantage of, any appraisal, valuation, stay, extension,
      or redemption laws, now or hereafter in force in any locality where any of
      the
      Collateral may be situated, in order to prevent, delay or hinder the enforcement
      or foreclosure of this Agreement, or the absolute sale of the Collateral, or
      any
      part thereof, or the final and absolute putting into possession thereof,
      immediately after such sale, of the purchaser(s) thereat, and the Debtor, for
      itself and for all who may claim through or under it, hereby waives the benefit
      of all such laws, unless such waiver shall be forbidden by law. Under no
      circumstance shall there be any marshalling of assets upon any foreclosure
      or
      other enforcement of this Agreement.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    

    Article
      V.  

    AFFIRMATIVE
      COVENANTS OF THE CREDITORS

     

    Section
      5.01  Further
      Acts.
      The
      Creditors will promptly execute and deliver such further documents and do such
      further acts and things as may be reasonably required in order to affect fully
      the intent of this Agreement.

    

    Section
      5.02  Access
      to Contracts, Books and Records.
      In the
      event that any Creditor obtains title to any of the Collateral, that Creditor
      shall allow the other Creditor, and its agents or representatives to have the
      right, upon reasonable prior written request to the obtaining Creditor, and
      during normal business hours, to review the contracts, books and records
      relating to the obtained Collateral.

    

    Section
      5.03  Information
      Sharing.
      In the
      event that either Creditor shall, in connection with any enforcement action
      over
      the Collateral, receive possession or control of any books and records that
      contain information identifying or pertaining to any of the Collateral herein,
      it shall notify the other Creditor that it has received such books and records
      and shall, as promptly as practicable thereafter, make available to it duplicate
      copies of such books and records in the same form as the original. The failure
      of either Creditor to share information shall not create a cause of action
      against the party failing to share information or create any claim on behalf
      of
      it or any third Party.

    

    Section
      5.04  Bailee.
      To the
      extent that either Creditor obtains possession of the Collateral, the Creditor
      having possession shall notify the other of such fact. Each Creditor shall
      be a
      bailee for the other with respect to Collateral in its possession. 

    

    Section
      5.05  Legend.
      The
      Creditors agree that they shall place or cause to be placed on the face of
      the
      Notes or other instruments evidencing the Mapleridge Indebtedness, or the Plan
      Indebtedness, a legend stating that the payment thereof is subject to the terms
      of this Agreement. 

    

    Article
      VI.  

    [INTENTIONALLY
      OMITTED]

    

    Article
      VII.  

    NEGATIVE
      COVENANTS

     

    Section
      7.01  Adequate
      Protection.
      Each
      Creditor, on behalf of itself and the other Creditor, agrees that it will not
      contest (or support any other person contesting) (a) any request by the other
      Creditor for adequate protection, or (b) any objection by the Creditor to any
      motion, relief, action or proceeding, which objection is based on the Creditor’s
      claim to a lack of adequate protection.

    

    Section
      7.02  Prohibition
      on Contesting Liens.
      Each
      Creditor, for itself and on behalf of the other Creditor, agrees that it shall
      not, and hereby waives any right to, contest or support any other person in
      contesting, in any proceeding, the priority, validity or enforceability of
      a
      lien held by the other Creditor on the Collateral; provided that nothing in
      this
      Agreement shall be construed to prevent or impair the rights of each Creditor
      to
      enforce this Agreement.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    
 

    Article
      VIII.  

    NOTICE

     

    Section
      8.01  Notice
      Hereunder.
      Any
      notice, demand, offer, request or other communication required or permitted
      to
      be given pursuant to the terms of this Agreement shall be in writing and shall
      be deemed effectively given the earlier of (i) when received,
      (ii) when delivered personally, (iii) one Business Day after being
      delivered by facsimile (with receipt of appropriate confirmation), (iv) one
      Business Day after being deposited with an overnight courier service, or
      (v) four days after being deposited in the U.S. mail, First Class with
      postage prepaid, and addressed to the recipient at the address set forth below
      unless another address is provided to the other party in writing:

    
      	 	
              if
                to Mapleridge, to:

              Jim
                Adams

              Mapleridge
                Insurance Services

              114
                Pacifica, Suite 130

              Irvine,
                CA 92618

              Fax:
                _________________

            
	 	
               

              with
                a copy to:

              Mark
                Niu

              114
                Pacifica, Suite 100

              Irvine,
                CA  92618

              Fax:
                _________________

            
	 	
               

              if
                to the Plan, to:

              Westrec
                Properties Inc. & Affiliated Companies 401(k) Plan

              Att:
                Michael Sachs

              16633
                Ventura Blvd., 6th Floor

              Encino,
                CA 91436

              Fax:
                (818) 907-1104

            
	 	
               

              with
                a copy to:

              Heller
                Ehrman LLP

              333
                Hope Street, 39th
                Floor

              Los
                Angeles, CA 90071

              Att:
                Steven O. Weise, Esq.

              Fax:
                (213) 614-1868

            

    

    

    Section
      8.02  Notice
      to Other Agreements.
      Each of
      the Creditors shall provide the other with a copy of any notice of demand,
      or
      similar communication as and when given to the Debtor. Each of the Creditors
      shall make reasonable efforts to provide the other as and when received, given,
      or executed, a copy of any amendment, modification, waiver, replacement or
      supplement of their respective agreements with the Debtor. No Creditor shall
      have any liability to any other Creditor for failure to comply with this
      Section. 

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    Section
      8.03  Change
      to Notice.
      Any of
      the addresses set forth in this Article may be changed upon prior written notice
      to the other party.

    

    Article
      IX.  

    MISCELLANEOUS

     

    Section
      9.01  Term.
      This
      Agreement shall continue until all amounts owing under the Notes have been
      fully
      paid, beyond any applicable state or federal preference period.

    

    Section
      9.02  Enforcement.
      In the
      event that any Creditor finds it necessary to retain counsel in connection
      with
      the interpretation, defense, or enforcement of this Agreement, the prevailing
      party shall recover its reasonable attorney’s fees and expenses from the
      unsuccessful party.

    

    Section
      9.03  Successors
      and Assigns.
      All of
      the agreements, covenants, stipulations, undertakings, and promises herein
      of
      the parties hereto shall bind their successors and assigns, whether so specified
      or not, and all titles, rights, and remedies hereby granted to, or conferred
      upon, the Creditors shall pass to and inure to the benefit of the successors
      and
      assigns of the Creditors and shall be deemed to be granted or conferred for
      the
      ratable benefit and security of all who shall from time to time be the holders
      of Notes executed and delivered as herein provided.

    

    Section
      9.04  Headings.
      The
      descriptive headings of the various articles of this Agreement were formulated
      and inserted for convenience only and shall not be deemed to affect the meaning
      or construction of any provision hereof.

    

    Section
      9.05  Conflicts
      among Loan Documents.
      To the
      extent that any of the provisions of this Agreement conflict with any provisions
      of the Loan Documents, the provisions of this Agreement shall
      control.

    

    Section
      9.06  Modifications
      and Waivers.
      Any
      modification or waiver of any provision of this Agreement, or any consent to
      any
      departure by either party from the terms hereof, shall not be effective unless
      the same is in writing and signed by the parties hereto, and then such
      modification, waiver or consent shall be effective only in the specific instance
      and for the specific purpose given. No failure or delay in exercising any right
      hereunder shall impair any such right that a party may have.

    

    Section
      9.07  Amendments
      to Financing Arrangements.
      Each
      Creditor shall each endeavor to notify the other of any material amendment
      or
      modification of its Loan Documents, respectively, but the failure to do so
      shall
      not create a cause of action against the party failing to give such notice
      or
      create any claim or right on behalf of the other Party. Each Creditor shall,
      upon request of the other, provide copies of all such modifications or
      amendments and copies of all other documentation relevant to the
      Collateral.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    Section
      9.08  Creditors
      Right to File Financing Statements.
      The
      Creditors shall have the right to file such financing statements and
      continuation statements on their behalf, as secured party, and the Debtor,
      as
      debtor, as the Creditors deem necessary to perfect a first lien on the
      Collateral and to maintain and preserve such perfected first lien as long as
      their respective Notes remain outstanding. 

    

    Section
      9.09  Severability
      Cause.
      If any
      provision of this Agreement shall for any reason be found or held invalid or
      unenforceable by any governmental agency or court of competent jurisdiction,
      such invalidity or unenforceability shall not affect the validity, legality,
      and
      enforceability of the remainder of such provision, nor any other provision
      thereof and this Agreement shall survive and be construed as if such invalid
      or
      unenforceable provision had not been contained therein. Any invalidity or
      unenforceability as to any Creditor hereunder shall not affect or impair the
      rights hereunder of the other Creditor.

    

    Section
      9.10  Counterparts.
      This
      Agreement may be simultaneously executed and delivered in two or more
      counterparts, each of which so executed and delivered shall be deemed an
      original, and shall constitute but one and the same instrument.

    

    Section
      9.11  Choice
      of law; Venue.
      THE
      VALIDITY OF THIS AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT
      AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER, GOVERNED BY
      AND
      CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. THE PARTIES
      AGREE THAT ALL ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT
      SHALL BE TRIED AND LITIGATED ONLY IN THE STATE COURTS LOCATED IN THE COUNTY
      OF
      LOS ANGELES, STATE OF CALIFORNIA, OR THE FEDERAL COURTS WHOSE VENUE INCLUDES
      THE
      COUNTY OF LOS ANGELES, STATE OF CALIFORNIA. THE PARTIES EXPRESSLY SUBMIT AND
      CONSENT IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR PROCEEDING COMMENCED
      IN
      ANY SUCH COURT, AND THE PARTIES HEREBY WAIVE ANY OBJECTION WHICH EITHER MAY
      HAVE
      BASED UPON LACK OF PERSONAL JURISDICTION AND HEREBY CONSENT TO THE GRANTING
      OF
      SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY ANY SUCH COURT.
      

    

    Section
      9.12  Waiver
      of Right to Trial by Jury.
      THE
      PARTIES HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
      CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE
      TRANSACTIONS CONTEMPLATED HEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH
      OF DUTY CLAIMS AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. THE PARTIES
      REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY
      WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN
      THE
      EVENT OF LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
      TO A TRIAL BY THE COURT.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    

 

    IN
      WITNESS WHEREOF, the parties hereto have entered into this Intercreditor
      Agreement as of the date first above written.

     

     

     

    
      	
              MAPLERIDGE
                INSURANCE SERVICES

            	
              WESTREC
                PROPERTIES INC. & AFFILIATED COMPANIES 401(K)
                PLAN 

            
	
               

              By:________________________________

              Name:_____________________________

              Its:
                _______________________________

            	
               

              By:
                __________________________________

              Name:
                Michael Sachs

              Its:
                Trustee

            

    

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    

    The
      undersigned, AuraSound, Inc., a California corporation, being the Debtor named
      in the foregoing Intercreditor Agreement, hereby accepts and consent thereto
      and
      agrees to be bound by all of the provisions thereof and to recognize all
      priorities and other rights granted thereby to Mapleridge and the Plan in
      accordance therewith.

    

      
        	 	 
	
                DATED:
                  January__, 2007

              	
                AURASOUND,
                  INC.,
                  a
                  California corporation

              
	 	 
	 	 
	 	
                By:_____________________________

              
	 	
                Name:
                  Arthur Liu

              
	 	
                Title:
                  President

              

      

    
      
        
        

      

      
        12

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