EX-99 3 ts071002.txt Aura Systems, Inc. Term Sheet Instrument Convertible Note Amount $500,000 Use of Proceeds Working capital Closing July 10, 2002 Interest 8% simple interest due in arrears. Term 180 days Conversion Price $0.11 per share Registration Rights To be included in Registration Statement to be filed within ninety days following issuance of common stock. Documentation Company will provide complete documentation subsequent to Closing. Other Conditions If Aura Systems, Inc. ("Aura") receives equity funding for an amount of at least $2 million (unrelated to the contemplated sale-leaseback of the building) between July 1, 2002 and the time of the final payment of the loan and accrued interest, the loan will convert into common stock either at a conversion rate of $0.11 per share or the average of the new equity sale rate, whichever is lower. Should, at any time prior either to the conversion or payment in full of the note, Aura grant a security interest in the patents to one or more entities as part of an equity funding, Aura will grant the participant note holders a security interest pari passu. This provision is inapplicable to strategic transactions involving technology licensing or transfers. On behalf of Aura Systems, Inc. __________________________on this date_________________ Carl Albert, Chairman On behalf of Investors: Amount of participation $250,000 __________________________on this date_________________ Lancer Offshore, Inc. Amount of participation $250,000 _________________________on this date__________________ Prudent Bear Fund