[LOGO]Enova Systems                                     Contract Number 11072001
      Digital Power Management(TM)

CONFIDENTIAL TREATMENT REQESTED

* - Redacted portion has been omitted and filed separately with the SEC

             Panther(TM) Drive System Product and Services Agreement

1 Introduction and Purpose. This Product and Services Agreement ("Agreement") is
entered  into as of 12 June 2001 (the  "Effective  Date") by and  between  Enova
Systems,  Inc., a California  corporation  ("Enova") with its principal place of
business located at 19850 S. Magellan Drive, Torrance, California 90502, and Eco
Power Technology,  an Italian Company  ("Purchaser") with its principal place of
business located at Via Brolo 60/62, 25075 NAVE BS, Italy.

      1.1  Enova  manufactures  and  sells  certain  proprietary  vehicle  drive
systems, as further described in Appendix 1 (the "Panther Drive Systems").

      1.2 Purchaser manufactures and sells certain vehicles listed in Appendix 2
and wishes to incorporate  the Panther Drive Systems as an integral drive system
in those vehicles.

      1.3  Purchaser  wishes  to  obtain  Enova's   assistance  in  the  initial
incorporation  of the Enova Drive  Systems into its vehicles and Enova wishes to
provide joint development assistance to Purchaser.

      1.4  Purchaser  and Enova  wish to  address  marketing  opportunities  and
provide for the purchase of Panther Drive Systems for incorporation  Purchaser's
vehicles  and  sale  in  the  event  that  the  joint  development  efforts  are
successful.   The  Purchaser   products  listed  in  Appendix  2  developed  and
manufactured  under this  Agreement  incorporating  Panther  Drive  Systems  are
referred to herein as the "Products."

      1.4 Agreement.  This Agreement consists of the body of the Agreement,  the
Appendices,  and  any  purchase  order  issued  and  accepted  pursuant  to  the
provisions  of  this  Agreement.  Section  2  shall  only  apply  if  there  are
Development  Efforts (defined below in Section 2) and Sections 3 through 7 shall
only apply if there is Commercial  Production  (defined below in Section 3). The
terms,  conditions  and  provisions  of this  Agreement  shall be construed in a
manner that gives effect to the entire agreement to the extent  practicable.  To
the extent that any provisions  conflict,  the Agreement and Appendices  control
over any  inconsistent  purchase order terms,  Appendix 9 (Additional  Terms for
Development   Efforts)   controls  over  any  inconsistent   terms  relating  to
Development Efforts and Appendix 10 (Additional Terms for Commercial  Production
and  Additional  General  Terms)  controls  over  any  inconsistent  term in the
Agreement other than those relating to the Development Efforts.

2 Joint Technical Development and Grant of Rights

      2.1 Intention.  Purchaser intends to integrate a Panther Drive System into
a prototype vehicle (the "Prototype"), and as part of such efforts will endeavor
to combine Panther Drive System with products from manufacturers, suppliers, and
developers  other than Enova.  All efforts by  Purchaser  to combine the Panther
Drive System with other  products or otherwise  integrate  Panther  Drive System
into the  Prototype  are referred to herein as  "Development  Efforts."  Without
limiting the  generality  of the  foregoing,  Development  Efforts shall include
those  development  projects  undertaken  by  Enova  in  direct  response  to  a
Development Effort.

      2.2  Development  Effort Scope.  The parties shall perform the Development
Efforts  described  on Appendix 3. Each party  shall pay for  expenses  and make
other payments associated with the Development Efforts as provided in Appendix 3
and  Appendix 9. Any legal  terms that are  applicable  only to the  Development
Efforts are specified in Appendix 9.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


      2.3  Out-of-Scope  Efforts.  The parties  shall  endeavor in good faith to
establish their respective  rights and duties in any Development  Effort that is
not within the Development  Effort scope defined in Appendix 3. These rights and
duties may include, but are not limited to, assignment of intellectual  property
and payment for additional  hardware or services  delivered.  Unless the parties
agree otherwise in writing,  an out-of-scope  Development Effort that results in
new technology or improvement to existing  technology  will be owned as provided
in Attachment 9.

      2.4 Prototype Hardware  Restrictions.  The Prototype shall be considered a
prototype  product until such time as both parties  mutually agree  otherwise in
writing.  Enova and Purchaser agree that neither party shall publicly display at
trade  shows or  otherwise  promote,  market,  or sell any  prototype  Purchaser
Product without the other party's prior written approval.

      2.5 Commercial  Production.  Promptly  following the date (the  Acceptance
Date") on which Enova and Purchaser mutually agree that successful completion of
the development and testing of Purchaser Product has occurred as contemplated by
Appendix 3, then  Purchaser  shall  engage in  commercial  production,  sale and
support of Products ("Commercial Production").

3 Purchase and Sale of  Products.  If  Commercial  Production  commences,  Enova
agrees to sell and Purchaser  agrees to purchase  Panther Drive Systems pursuant
to the terms, conditions and provisions of this Agreement.

      3.1 Purpose.  Purchaser may purchase the Panther Drive Systems and related
spare and replacement parts for the sole purpose of incorporating  them into the
Purchaser  products  listed in Appendix 2 to create  Products and as replacement
parts for the  Products.  Purchaser  may use the  resulting  Products or sell or
lease them,  either  directly to purchasers  or  indirectly  through one or more
levels of distribution.

      3.2 Nonexclusivity. Enova reserves the right to select and authorize other
businesses  to sell and service Enova  products and parts,  to sell products and
parts directly to direct  accounts of Enova, to sell products and parts to other
purchasers or original  equipment  manufacturers  for use as an integral part of
assembled equipment, or to any other customers.

      3.3 Trained Sales Staff. Purchaser shall maintain a staff of trained sales
personnel in order to ensure maximum market penetration and fulfillment of sales
potential of the Products.

      3.4 Promotion of Products.  Following the Acceptance Date, Purchaser shall
develop a market and promote the sale of the Products  actively,  and  advertise
with a program of  advertising  to create  awareness of Enova products and their
associated value proposition. Such promotion and advertising may include, but is
not limited  to,  participation  in trade  shows,  presentations  at seminars or
industry  meetings,  direct mailings to key customer groups and market segments,
direct sales calls,  and other  appropriate  means.  Enova reserves the right to
review and disapprove all advertising  that contains Enova's name or products as
to form and substance.  Purchaser shall deliver to Enova prior to its use a copy
(translated   into   English  if  the   original  is  not  in  English)  of  any
advertisement,  promotion,  trademark listing,  or display with respect to Enova
products, and Enova shall have the right to review and approve or disapprove the
form and substance of each.

      3.5 Sales  Literature.  Enova  shall  provide  Purchaser  with an adequate
supply of Panther Drive System sales literature ("Promotional Materials") at the
prevailing  price.  Enova shall have no  obligation  to provide any  Promotional
Materials or other materials or documentation to Purchaser in any language other
than  English.  Enova  grants to  Purchaser  the right to  translate  or to have
translated  into other  languages any materials or  documentation  received from
Enova and  relating to the Enova  products  (including,  but not limited to, the
Promotional  Materials).   Purchaser  may  use,  reproduce,   and/or  sell  such
translations,  but only to the extent  necessary to support and market Products.
Enova shall not be responsible  or liable for the accuracy of such  translations
and  Purchaser  shall  indemnify  Enova and hold it harmless  from all  damages,
expenses and liabilities resulting from any translation inaccuracies.

      3.6 Press Releases. The relationship  established by this Agreement is one
that the parties hereto will want to announce,  either jointly or independently,
in the form of press releases, the contents,


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       Enova Panther(TM) Propulsion System Product and Services Agreement


format,  and timing of which will be subject to the prior  written  approval  of
Purchaser and Enova.  Such approval will not  unreasonably be withheld by either
party. No such prior written  approval shall be required for disclosure  reports
and filings, which either party is required to make as a matter of law.

      3.7  Professional  Standards.  Purchaser  shall  ensure  that  all  of its
personnel comply with professional  sales standards of conduct typical of a well
run business in order to maintain and promote responsible and ethical conduct on
the part of such  personnel and thereby  enhance and support the  reputation and
goodwill of Enova products.

      3.8  Records.  Purchaser  shall keep records of the  incorporation  of all
Enova products and parts into Purchaser products.

      3.9  Inspection.  Enova shall have the right during normal business hours,
at its cost with reasonable prior written notice,  to inspect all of Purchaser's
facilities, written policies and procedures, and books and records, which relate
to the fulfillment of Purchaser's  duties hereunder.  Purchaser shall cooperate,
and cause its personnel to cooperate, with any such inspection.

4 Service and Support.

      4.1 Qualified Service Provider Appointment.  Enova appoints Purchaser as a
Qualified  Service  Provider  ("QSP")  with  the  rights  and   responsibilities
described in this Section 4.

      4.2 Description of QSP Services.  Purchaser shall provide  services in any
location in which a Product is maintained,  used,  leased, or sold by Purchaser.
Services to be provided by Purchaser shall include, but are not limited to:

            4.2.1 providing to end users operating and maintenance  instructions
and advice with respect to Panther Drive Systems. Upon request,  Purchaser shall
provide  the  location  and the use of each unit to Enova.  Upon  commissioning,
Purchaser shall explain the provisions of Enova's  warranty to the end user, and
shall instruct the end user in the proper  operation of the Panther Drive System
incorporated into the Product.

            4.2.2  providing  services at such times  following  installation of
Panther  Drive  Systems  as may be  necessary  to ensure  proper  and  efficient
operation thereof,  including but not limited to commissioning the Panther Drive
System,  making  installation   inspections  and  necessary   adjustments,   and
performing  all other  services  reasonably  necessary  at the time of  delivery
thereof.

            4.2.3  providing  warranty  services  with respect to Panther  Drive
Systems consistent with Enova's Warranty Policy and Procedures.

            4.2.4  providing   adequate  service  facilities  and  vehicles  and
providing  an adequate  staff of trained  service  personnel in order to provide
service for those Enova products in a professional and timely manner.

      4.3 Service  Certification.  Purchaser shall cause a sufficient  number of
its qualified  employees to obtain and maintain QSP certification to provide the
services  described  above.  Purchaser shall send such employees,  at reasonable
intervals,  to Enova's  QSP  certification  seminars  in  Torrance,  California.
Thereafter,  Purchaser  shall send all such employees to periodic  refresher and
new Enova certification seminars so that such employees may maintain their Enova
QSP  Certifications.  Enova shall bear the cost of  preparing  such  courses and
Purchaser  shall bear all travel,  lodging,  and related  costs for sending such
employees  to attend  such  seminars,  including  a fee to Enova for each course
attended.  At Purchaser's  request,  Enova shall, subject to availability and at
such time upon which the Parties mutually agree, send Enova personnel to present
training  seminars  for  Purchaser's  employees at a location to be specified by
Purchaser, provided that Purchaser shall pay all documented travel, lodging, and
related costs, plus a fee to Enova for each course taught.

      4.4 Service  Parts.  Purchaser  shall  purchase  and maintain a sufficient
inventory of service parts as prescribed by Enova  according to Enova's  uniform
parts inventory stocking guidelines in effect


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       Enova Panther(TM) Propulsion System Product and Services Agreement


from time to time and based on the field  population  of Products to be serviced
by  Purchaser,  so as to be able to fulfill  its service  responsibilities  in a
timely and professional  manner.  Purchaser may sell or deliver Enova parts only
to end users who  purchased  Products  from  Purchaser or to another  Enova QSP.
Under no circumstances  shall Purchaser sell,  lease,  distribute,  deliver,  or
transfer  Enova parts unless done in  connection  with a specific  Panther Drive
System warranty repair or replacement.

            4.4.1 Parts.  In  providing  services on Enova  products,  Purchaser
shall use only authorized Enova parts, unless Enova agrees otherwise in writing.

            4.4.2  Service Part  Discount.  The discount from list price for all
service parts will be <REDACTED>*

            4.4.3 Service Facilities, Prices. All services billable to end users
or submitted  as a warranty  claim to Enova shall be provided at the same rates.
Service parts prices charged by Purchaser shall not exceed the Enova list price,
plus applicable freight or taxes in the location of service.

      4.5 Purchaser's  Basic Warranty Service  Obligation.  Purchaser's  primary
warranty service duty as a QSP is to identify and replace  malfunctioning  parts
under warranty  promptly and  efficiently in accordance  with Enova's  technical
service policies and parts stocking guide in effect from time to time. Purchaser
shall make  reasonable  efforts to  determine  whether  the end user has a valid
warranty claim.  Purchaser shall not recondition or retrofit any product or part
and shall keep in a central location for Enova's  inspection all defective Enova
products and parts.  At Enova's  direction and expense,  Purchaser  shall return
promptly to Enova all such  defective  products and parts.  Purchaser  shall not
instruct an end user to return any Enova product or part directly to Enova.

      4.6 Compensation for Warranty  Repairs.  Enova shall compensate  Purchaser
for services  associated  with  warranty  repairs upon receipt and approval of a
valid warranty claim form pursuant to Enova's Warranty Procedure. As part of the
warranty claim  procedure,  Purchaser  comply with Enova's  warranty  acceptance
criteria,  as set  forth in  Appendix  4 and  submit  to Enova  the  information
required  by Enova  to  demonstrate  compliance  with  the  warranty  acceptance
criteria.  <REDACTED>* Enova shall pay Purchaser for its labor on the Enova flat
rate schedule  attached as Appendix 5 for removal and replacement of serviceable
components. Enova shall reimburse Purchaser for the price of service parts owned
and used by Purchaser to provide  warranty  service at the rate of  <REDACTED>*.
Enova  reserves  the right to verify  any  claims  that a Panther  Drive  System
requires warranty service under the product  warranty.  If Enova determines that
any Panther  Drive System is free from defects or otherwise  conforms to Enova's
obligations  and  warranties  under this  Agreement,  <REDACTED>*  shall pay all
reasonable   costs  of  such   determination,   including  any  labor,   travel,
transportation  and shipping  expenses.  In the event that Enova determines that
the  service or repair is not  covered  under the terms of the  warranty,  Enova
shall not be required to reimburse  Purchaser for labor,  parts,  or other costs
incurred in such service or repair.

      4.7 System  Upgrades.  Enova may change  the design of the  Panther  Drive
System from time to time and, at its sole  discretion,  provide  upgraded parts,
including without limitation  hardware,  firmware and software,  for the Panther
Drive Systems (collectively, "Upgrades") shipped to Purchaser but which have not
yet been incorporated in Products and shipped to an end user. In the event Enova
decides to provide such an Upgrade,  Enova will notify Purchaser of the Upgrade,
and Enova and Purchaser  will  mutually  agree upon a time for the Upgrade to be
installed and the party or parties who will do the installation.


      4.8  Availability  of Parts.  During the term of this  Agreement and for a
period  of  (5)  years  thereafter,  Enova  shall  maintain  the  capability  to
manufacture or otherwise  provide to Purchaser spare parts for the Panther Drive
Systems that it purchases  hereunder,  except to the extent that Enova is unable
to do so due to  unavailability  of parts from its  supplier;  provided  that in
response  to a request by  Purchaser  to supply  such spare  parts  during  this
period,  Enova may, at its option,  instead  provide to Purchaser  all necessary
information  to enable  Purchaser  to acquire  each  spare  part from  component
suppliers.  At any time that Enova is still manufacturing or otherwise providing
spare parts to Purchaser  under this Agreement,  Enova may, at its option,  make
substitutions  in the spare parts it provides so long as the substitute part has
equivalent or better form, fit and function.



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       Enova Panther(TM) Propulsion System Product and Services Agreement


      4.9  Support  Documentation.  Enova will make  available  for  purchase by
Purchaser  comprehensive  training,  repair,  and  service  manuals  for  use in
maintaining and servicing the Panther Drive Systems.

      4.10 Manufacturer Support.

            4.10.1  Scope  of  Support.  Enova  will use  reasonable  commercial
efforts to make its technical  personnel  available as  reasonably  necessary to
provide  after-sale  assistance to Purchaser  technical and service personnel to
resolve  technical  support  issues.  Such support shall consist  principally of
making  appropriate Enova technical  personnel  available to <REDACTED>*.  Enova
will endeavor to respond to Purchaser inquiries within <REDACTED>* after receipt
and will endeavor to assist Purchaser in resolving  technical  support issues as
soon as practicable through the exercise of diligent efforts. Enova will provide
such support to Purchaser personnel only and shall have no obligation to provide
any support whatsoever directly to any Purchaser customer.

            4.10.2 Fees and Expenses.  Enova will provide <REDACTED>*.  Hours in
excess of that amount shall be billed at Enova's standard  consulting rate as in
effect at the time services are  rendered.  Except for on-site  visits,  if any,
that  Enova  personnel  make in  connection  with the  performance  of  warranty
services,  Purchaser shall reimburse Enova for expenses that its personnel incur
in  performing  on-site  support and shall,  in addition,  pay Enova's  standard
consulting  rate for such  personnel  as in  effect  at the  time  services  are
rendered.

5 Order, Delivery and Payment.

      5.1  Prices.  The prices of all Enova goods and  services to be  delivered
hereunder  for  Development  Efforts  shall be as set forth on  Appendix  3. The
prices of all Enova goods and services to be delivered  hereunder for Commercial
Production purposes shall be as set forth on Appendix 7. In addition, and except
to  the  extent  that  Purchaser  may  provide  proper  exemption  certificates,
Purchaser  shall  reimburse  Enova in the amount of any federal,  state or local
excise,  sales, use and other taxes, duties,  tariffs or other governmental fees
withheld and/or payable with respect to the manufacture, transportation, use, or
sale of each Panther Drive System or component that Purchaser purchases, whether
such taxes are imposed on Purchaser  or required to be  collected  by Enova,  or
imposed on Enova  products,  Enova,  or Purchaser in connection with the sale of
Enova  products,  and whether such taxes are on receipts and gross income or are
occupation or excise  taxes;  provided,  however,  that  Purchaser  shall not be
responsible  for taxes upon the income that Enova receives for its sale of Enova
products, parts and services to Purchaser hereunder. Whenever possible, such tax
or taxes shall be added to the invoice for the  applicable  Enova  products as a
separate charge or invoiced separately.

      5.2 Rolling  Forecast.  With respect to Panther  Drive Systems and related
spare parts,  Purchaser  shall deliver to Enova,  <REDACTED>*.  Forecasts  shall
reflect  Purchaser's good faith  expectations of end user demand,  and Purchaser
shall  act in a  commercially  reasonable  manner to avoid  creating  production
capacity problems for Enova.

      5.3  Calculation  of Annual  Volume  Pricing.  <REDACTED>*  following  the
Effective Date during the term of this  Agreement,  Enova shall sell products to
Purchaser  at  <REDACTED>*  as set  forth  in  Appendix  7.  <REDACTED>*  of the
Effective  Date,  the parties  will confer and  mutually  agree upon  production
volumes for the following  year. At the end of  <REDACTED>*  in which  Purchaser
does not  release  for  shipment  the  forecasted  amounts,  Enova will  invoice
Purchaser <REDACTED>*

      5.4 Purchase Orders and Shipment Terms.  Purchaser shall order and release
Enova products and services for delivery by delivering to Enova a purchase order
("Purchase Order").  This Agreement will apply to every Purchase Order for Enova
products  issued to Enova by  Purchaser  unless the parties  expressly  agree in
writing that this Agreement does not apply.  Subject to the following  sentence,
each  Purchase  Order  accepted by Enova,  together with this  Agreement,  shall
constitute the entire agreement  between Purchaser and Enova with respect to the
purchase,  sale and delivery of the Enova  products  described in such  Purchase
Order. Any terms or conditions  stated in any Purchase Order,  acknowledgment or
invoice  (except for details of price,  quantity,  delivery  schedule  and other
details of delivery which are not inconsistent with the terms of this Agreement)
shall be of no force and


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       Enova Panther(TM) Propulsion System Product and Services Agreement


effect, and no course of dealing, usage of trade, or course of performance shall
be relevant to explain or modify any term expressed in the Agreement.

      5.5  Procedures.  From  time to time  during  the term of this  Agreement,
Purchaser  may order  quantities  of Enova  products from Enova by submitting to
Enova,  at least the number of days in advance of the requested  delivery  dates
specified in Appendix 7 hereto as the required  "Lead Time," a written  Purchase
Order stating the items and quantities of Enova products which Purchaser  wishes
to purchase  from Enova and the  requested  delivery  dates for such  items.  As
permitted below, Purchaser may also request adjustments to the delivery dates in
a previously  accepted  Purchase  Order by  submitting  a new Purchase  Order (a
"Modified Purchase Order") specifying the requested changes.  Enova shall accept
any  Purchase  Order  issued by  Purchaser  within the scope of the most  recent
forecast  submitted  to Enova  pursuant to Section 5.2 above and in  conformance
with the terms of this  Agreement,  including  the  provision  of adequate  Lead
Times.  Lead Times are estimates and are subject to change,  except with respect
to any Purchase Order previously  accepted by Enova. Unless canceled or deferred
as permitted below (via a Modified Purchase Order), Purchaser shall be obligated
to purchase the  quantities of Enova  products on the schedule  specified in any
Purchase  Order  accepted by Enova.  Enova  shall  acknowledge  in writing  each
Purchase Order within  <REDACTED>* of receipt,  and such Purchase Order shall be
deemed  accepted  by Enova  unless,  within  ten (10)  days of  receipt  of such
Purchase  Order,  Enova  submits to Purchaser,  in writing,  an objection to the
Purchase Order based upon the failure of Purchaser to comply with this Agreement
in submitting the Purchase Order (including,  without limitation, the obligation
to submit monthly rolling  forecasts in accordance  with Section 5.2 above).  If
Enova so objects to any Purchase Order, such Purchase Order shall not be binding
on either  party until a compliant  Purchase  Order is submitted by Purchaser to
Enova. A Purchase Order becomes a part of this Agreement in accordance with this
Section 5 only after it is accepted in writing by Enova or is deemed accepted in
accordance with the above provisions.

      5.6   Reschedule/Cancellation.   Purchaser  and  Enova   acknowledge  that
substantial lead-times are involved in the manufacture and delivery of the Enova
products and that Enova would likely suffer  significant  loss in the event that
Purchaser seeks to cancel an order for Enova products within such lead-times. In
recognition of these factors, any initial Purchase Order accepted by Enova shall
be subject to the terms regarding  cancellation or deferral of delivery of Enova
products by Purchaser set forth in Appendix 7.

      5.7 Delivery.  All deliveries of Enova products shall be made <REDACTED>*,
California facility or such other facility as Enova may designate ("FOB Point").
In the  absence of written  shipping  instructions  from  Purchaser,  Enova will
select the carrier and use best ground  transportation and ensure that the Enova
products are adequately insured. In the event Enova pays any shipping,  freight,
or insurance charges on behalf of Purchaser,  Purchaser shall promptly reimburse
Enova for all such shipping,  freight or insurance charges incurred on behalf of
Purchaser.  If shipment of any Enova products is delayed at Purchaser's request,
Purchaser shall bear <REDACTED>* of holding such Product,  and Enova may invoice
Purchaser  for such Enova  products  on the date when Enova is  prepared to make
shipment.

      5.8 Title And Risk Of Loss. <REDACTED>*

      5.9  Inspection;  Acceptance.  Purchaser  shall inspect and may reject all
Enova  products that are  defective  <REDACTED>*  after the date of  Purchaser's
receipt thereof.  If Purchaser fails to effectively reject any Enova products in
a written  document  delivered  to Enova  within  <REDACTED>*  (other than those
described in the  following  sentence must  thereafter  be remedied  through the
product  warranty  in  Appendix  6).  This  provision  shall  in no  way  impair
Purchaser's  rights with respect to latent or other defects which would not have
been readily ascertainable upon inspection of the Enova products within
<REDACTED>*.

      5.10  Payment  Terms.  Enova will  invoice  Purchaser  for Enova  products
purchased upon delivery of such products to the FOB Point,  and Purchaser  shall
pay all such invoices by check or wire  transfer  within  <REDACTED>*  after the
invoice  date.  Enova  reserves the right to require  reasonable  assurances  of
payment by  Purchaser  (for  example,  the issuance of a letter of credit from a
reputable bank provided by Purchaser to Enova not later <REDACTED>* prior to the
scheduled  delivery date).


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       Enova Panther(TM) Propulsion System Product and Services Agreement


Enova may, from time to time, evaluate  Purchaser's credit standing and, on that
basis, establish a credit limit to accommodate  Purchaser's issuance of Purchase
Orders as herein  provided.  Purchaser  shall provide any reasonable  assistance
requested by Enova to make such evaluation.

      5.11 Late Payments. Regardless of what payment terms apply to any Purchase
Order,  Purchaser shall pay to Enova  <REDACTED>* or part thereof or the maximum
amount permitted by law, whichever is less.  Purchaser hereby agrees to make all
payments when due for the purchase of any and all Products accepted by Purchaser
regardless of any offset or claim which Purchaser might otherwise be entitled to
assert. Such agreement shall be without prejudice to Purchaser's right to pursue
any claim or remedy  except as an offset  against any payment  owed by Purchaser
under this Agreement.

      5.12 Changes.  Enova expects to be able to provide  Purchaser with advance
notice regarding  changes in the design of any Enova products.  Enova shall have
the right, however, to change the design of Enova products at the same time that
Enova provides  notice to Purchaser and shall have the right at any time to make
changes in materials and to improve Enova products,  provided that the resulting
modified  product  meets or exceeds  any  applicable  specifications  under this
Agreement for such product and the  modifications  do not materially  affect the
form, fit, or function of such products.

6 Warranties to End Users.

      6.1 Enova's End User Product Warranty. Purchaser shall include Enova's End
User Product  Warranty in each  agreement  for sale or lease of the products and
parts  entered into by Purchaser  with end users and  Purchaser  shall furnish a
copy of such End User  Product  Warranty  to the end user upon  delivery of each
product.  Enova's End User Product  Warranty in effect on the Effective  Date is
attached as Appendix 6. Enova reserves the right to modify, change or revise the
product warranty at any time upon notice to Purchaser,  with such modifications,
changes or revisions applicable for any products or parts that are ordered after
the revision  date. If any such  modification  substantially  changes any of the
discussions  or  agreements  Purchaser  may have had  with its then  current  or
prospective  customers,  Enova and  Purchaser  will discuss and determine how to
resolve such modifications.

      6.2 Any Additional  Purchaser  Warranties.  Enova shall have no obligation
with  respect  to,  and  Purchaser  shall be  solely  responsible  for and shall
indemnify and hold harmless Enova with respect to, any warranties beyond Enova's
End User License and  Warranty  that  Purchaser  may provide with respect to any
product or part.

7 Trademarks and Branding.

      7.1 License to Use Enova Trademarks.  Purchaser acknowledges that Enova is
the owner of all right,  title, and interest in and to Enova  trademarks.  Enova
hereby grants to Purchaser a license,  for so long as this Agreement  remains in
effect,  to use  Enova  trademarks,  provided  that  Purchaser  uses  the  Enova
trademarks solely in marketing,  distributing, and selling Panther Drive Systems
as integrated in Products  under the terms and  conditions of this Agreement and
in accordance with the  specifications as to style,  color, and typeface for the
Enova trademarks.  Upon termination of this Agreement,  Purchaser shall take all
action  necessary to transfer and assign to Enova or Enova's  nominee any right,
title,  or  interest  in or to any  Enova  trademarks  that  Purchaser  may have
acquired  in any manner as a result of the  marketing,  distribution,  sale,  or
resale  of any  Enova  product,  and  Purchaser  shall  cease  using  any  Enova
trademarks.

      7.2 Branding. Purchaser shall prominently display on the Products, as well
as on all  promotional  and other  collateral  materials  relating  to,  and all
packaging  for  Products,   such   trademarks,   trade  names,   service  marks,
designations  that Enova may adopt to identify it or any Enova products,  or any
patent, patent application, or other proprietary markings in the size and manner
that Enova designates from time to time. Under no circumstances  shall Purchaser
remove  any such  proprietary  notice or marking  affixed to any Enova  product,
parts, or related materials.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


8 Term and Termination


      8.1 Term: This Agreement shall commence on the Effective Date and continue
in full  force and effect for a period of 5 years.  Thereafter,  this  Agreement
automatically  shall renew for subsequent terms of one year each,  unless either
party  provides the other party with notice of its  intention  not to renew this
Agreement  no fewer than 90 calendar  days prior to the end of the  then-current
term.


      8.2  Termination by Either Party:  Each party may terminate this Agreement
immediately by delivering to the other party written notice of such  termination
in the event of any of the following:

            8.2.1 failure of the Prototype or the Panther Drive System  provided
as part of the Development  Efforts to pass acceptance test criteria as outlined
in Appendix 3;

            8.2.2 a material  breach of this  Agreement  by the other party that
continues uncured for thirty (30) calendar days following written notice thereof
from the non-breaching party;

            8.2.3  a  material  breach  of   confidentiality   or  nondisclosure
agreements by the other party, including, without limitation, Section 9 below;

            8.2.4 the other  party's  failure  to pay when due any  indebtedness
owed by Purchaser to Enova for Enova products or parts;

            8.2.5 the  execution  by the other  party of an  assignment  for the
benefit of  creditors,  or the  commencement  by or against  the other  party of
voluntary or involuntary proceedings (which are not dismissed within 60 calendar
days) under any bankruptcy, reorganization, or similar laws of any jurisdiction,
or if any order  shall be made or any  resolution  passed  for the  winding  up,
liquidation or dissolution of the other party, if a receiver be appointed for it
for all or substantially all of its assets,  or if a substantial  portion of its
goods or properties shall be taken in execution; or

            8.2.6 the other party ceases to do business or otherwise  terminates
its business operations relevant to this Agreement.

      8.3  Termination by Enova.  In addition to the grounds for termination set
forth in Section 8.2, Enova may terminate this Agreement upon

            8.3.1  Any  attempted  or  actual  transfer  or  assignment  of this
Agreement  or any  right  or  obligation  hereunder  by  Purchaser,  whether  by
operation  of law,  change of control or  otherwise,  without the prior  written
approval of Enova; or if

            8.3.2 Purchaser merges into any entity, or the Sale of a Controlling
Stock Interest in Purchaser  occurs, in each case other than in a transaction in
which the person or persons  controlling the surviving,  continuing or acquiring
person after the transaction is or are substantially  identical to the person or
persons controlling Purchaser before the transaction;  provided that, "Sale of a
Controlling  Stock  Interest" of Purchaser means the acquisition by any "person"
or "group," as such terms are defined under the Securities Exchange Act of 1934,
of 50% or more of the voting securities of Purchaser.

      8.4 Termination of Purchase Orders.  Either party may terminate a Purchase
Order under this Agreement under the same  circumstances as would give rise to a
right to terminate this Agreement.

      8.5 Payment. Any termination of this Agreement shall not release Purchaser
or Enova from paying any amount that it may then owe to the other party.  In the
event of termination of this Agreement, all of Purchaser's debt to Enova and all
of Enova's  obligations  to Purchaser  pursuant to this  Agreement  shall become
immediately  due and payable on the date of  termination.  Termination  does not
relieve  Purchaser of the  obligation to pay for Enova products or parts ordered
but not shipped prior to termination.

      8.6 Survival of  Obligations.  In addition to any provisions  that survive
the termination of this Agreement by their express terms and any provisions that
would be necessary or useful to the parties in


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       Enova Panther(TM) Propulsion System Product and Services Agreement


enforcing their respective rights under the Agreement,  the following provisions
shall survive the termination of this Agreement:  3.8, 3.9, 4.8 (for a period of
five years),  5.10,  5.11,  6, 8.5,  8.6, 9, 10-15,  and Sections 4.0 and 5.0 in
Appendix 3.

9 Confidential Information and Intellectual Property.

      9.1 Confidential  Information.  Confidential information shall be governed
by the standard Enova Nondisclosure Agreement, pursuant to Appendix 8, the terms
and  provisions of which are  incorporated  herein by this reference and binding
upon the parties hereto.

      9.2  Intellectual  Property.  The sale of Enova products to Purchaser does
not convey to Purchaser any intellectual property rights in such Enova products,
including but not limited to any rights under any patent, trademark,  copyright,
or trade secret.  Except as expressly provided in Section 9.3 of this Agreement,
Purchaser may not use or sell any Enova product,  alone or in  combination  with
other  products,  without a separate  license  from Enova  under all  applicable
patents,  copyrights  and  trademarks.  Purchaser's  use and  sale of any  Enova
products  shall be solely in  accordance  with the terms and  conditions of this
Agreement.  Neither  the sale of any Enova  Product  nor any  provision  of this
Agreement  shall be  construed  to  grant to  Purchaser,  either  expressly,  by
implication  or by way of  estoppel,  any  license  under any  patents  or other
intellectual  property rights of Enova covering or relating to any other product
or  invention  or any  combination  of Enova  products  with any other  product.
Purchaser  shall use the Enova products  furnished by Enova solely in accordance
with  the  terms  of this  Agreement,  and  Purchaser  shall  not,  directly  or
indirectly,  disassemble,  decompile,  reverse engineer, or analyze the physical
construction of any of the Enova products for any purpose.


      9.3 License  Grant.  Enova  hereby  grants to  Purchaser  a  nonexclusive,
nontransferable   worldwide  royalty-free  license  under  Enova's  intellectual
property rights to use the Panther Drive Systems and any hardware, firmware, and
software  embodied  therein,  in combination with Purchaser  products and/or the
technology  of a third  person for the  specific  purpose of  providing  primary
propulsion power in Products as listed in Appendix 2.


10 Legal Compliance.

      10.1 Compliance with Applicable Law. Purchaser shall ensure that all Enova
products and parts,  and  Purchaser's  services with respect to them,  including
without limitation the sale, leasing,  rental,  installation,  commissioning and
warranty  service,  comply with all  applicable  laws,  rules,  regulations  and
standards  within the sales territory.  Purchaser shall obtain and maintain,  at
its sole expense, any and all certifications,  licenses,  other  authorizations,
ratings  and  approvals  required  or  advisable  under  the  laws of the  sales
territory   and   elsewhere  in   connection   with   Purchaser's   integration,
distribution,  sales,  and  provision of services for Enova  products and parts.
Without limiting the generality of the foregoing, Purchaser shall (a) supply and
fit all signs and safety  notices to the Enova units and provide all manuals and
instructions so that they comply with all applicable laws and  regulations,  and
(b) obtain all necessary governmental approvals and licenses. Enova shall assist
Purchaser where possible in obtaining such approvals and compliance.

      10.2 Improper  Payments.  Purchaser  and Enova  represent and warrant that
they have not made, or promised to make,  any payment to any public  official in
violation of the United States Foreign Corrupt Practices Act or other applicable
laws.  Purchaser  and Enova  represent  and  warrant  that they are aware of the
applicable United States regulations  governing bribery,  agency, and government
purchases  and any other  relevant  regulations  and that they shall comply with
such rules and regulations.  Each party hereto agrees to hold the other harmless
from and against the consequences of a violation by it of this provision.

      10.3 Export Regulations. Purchaser represents and warrants that it has and
will comply in all material respects with all provisions of United States export
regulations and laws.  Purchaser  acknowledges  that it has read and is familiar
with  these  regulations  and laws and  shall,  for a period of at least two (2)
years after the  expiration  or earlier  termination  of this  Agreement,  fully
comply  with all  provisions  of these  regulations  and  shall  permit  Enova's
representatives  and/or  representatives  of the  United  States  government  to
inspect all such records as may be required.  Purchaser  represents and warrants
that it shall  provide  Enova,  upon  Enova's  request,  with copies of bills of
lading and other


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       Enova Panther(TM) Propulsion System Product and Services Agreement


shipping  documentation in order to demonstrate  Purchaser's compliance with the
foregoing.  Purchaser  represents  and  warrants  that it shall  obtain  written
assurance from end users of the Panther Drive Systems that they are not intended
to be used  for any  purposes  prohibited  by  United  States  export  laws  and
regulations and shall provide Enova with such  information and  documentation as
Enova  reasonably  requests  in order to verify that  Purchaser's  export of the
Panther Drive Systems complies with applicable United States export  regulations
and laws.


11 DISCLAIMER.  EXCEPT FOR THE LIMITED WARRANTY GIVEN ONLY TO END USERS PURSUANT
TO ENOVA'S END USER LICENSE AND WARRANTY,  ENOVA GIVES NO  WARRANTIES  REGARDING
ENOVA  AND  THIRD-PARTY  PRODUCTS,  PARTS,  AND  SERVICES  THAT  ENOVA  PROVIDES
HEREUNDER AND, TO THE EXTENT  PERMITTED BY LAW,  DISCLAIMS ALL EXPRESS,  IMPLIED
AND STATUTORY WARRANTIES, INCLUDING, BUT NOT LIMITED TO, ANY IMPLIED WARRANTY OF
MERCHANTABILITY,   FITNESS  FOR  A  PARTICULAR  PURPOSE,   AND  NONINFRINGEMENT.
SPECIFICALLY,  BUT WITHOUT LIMITING THE APPLICATION OF THE FOREGOING DISCLAIMER,
THE PARTIES  RECOGNIZE AND AGREE THAT THE ENOVA PRODUCTS AND PARTS MAY ENCOUNTER
OPERATIONAL DIFFICULTIES. ENOVA DOES NOT WARRANT (I) THAT THE ENOVA PRODUCTS AND
PARTS WILL MEET PURCHASER'S OR THE END USER'S REQUIREMENTS,  (II) THAT THE ENOVA
PRODUCTS  AND PARTS  WILL  OPERATE  IN THE  COMBINATIONS  WHICH THE END USER MAY
SELECT FOR USE, (III) THAT THE OPERATION OF THE ENOVA PRODUCTS AND PARTS WILL BE
UNINTERRUPTED OR ERROR-FREE, OR (IV) THAT MALFUNCTIONS IN THE ENOVA PRODUCTS AND
PARTS  CAN BE  CORRECTED.  EXCEPT  FOR  ACTIONS  FOR  NONPAYMENT  OR  BREACH  OF
CONFIDENTIALITY  OR IP RIGHTS,  ANY ACTION FOR AN ALLEGED BREACH OF ANY CONTRACT
OF SALE OR OF WARRANTY MUST BE COMMENCED  WITHIN ONE (1) AFTER THE DATE ON WHICH
THE CAUSE OF ACTION ACCRUES.

12 Intellectual Property Infringement Protection. Enova shall have the liability
expressed in this  paragraph  with  respect to a claim that an Enova  product or
part  infringes any  intellectual  property  right of any third party,  provided
that:  (a) Purchaser or its end user, as  applicable,  notifies Enova in writing
within ten days of the receipt of any such claim;  (b) Enova has sole control of
the defense of such claim and all related settlement negotiations; (c) Purchaser
and its end user make no  asmission of any such  alleged  infringement;  and (d)
Purchaser  and its end user,  as  applicable,  provide  Enova  with  assistance,
information  and  authority  necessary  to  perform  Enova's  duties  under this
paragraph. In no event shall Enova be liable for any claim of infringement based
on the use of any Enova product altered in whole or in part by Purchaser  and/or
its end user or used in  connection  with  absolutely  any  equipment,  process,
software or technology other than that necessary for use of the Enova product in
the Product pursuant to specifications  expressly approved by Enova. If an Enova
product or part is held, or believed by Enova, to infringe, Enova shall have the
sole  option in its sole  discretion  and at its sole  expense  to (a modify the
Enova product or part to cause the same to be noninfringing;  (b) obtain for the
authorized  end user a license to continue  using the Enova  product or part; or
(c)  refund  the fees paid for the  Enova  product  or part upon  return of such
product or part to Enova at its expense. Enova shall have the right to refuse to
supply additional Enova products or parts subject to a claim or threatened claim
of infringement.  THE FOREGOING STATES THE SOLE AND EXCLUSIVE  LIABLITY OF ENOVA
FOR INFRINGEMENT OF INTELLECTUAL PROPERTY RIGHTS UNDER THIS AGREEMENT, AND IS IN
LIEU OF ALL WARRANTIES,  EXPRESS, IMPLIED OR STATUTORY IN REGARD TO THOSE ITEMS,
INCLUDING WITHOUT LIMITATION THE WARRANTY AGAINST INFRINGEMENT  SPECIFIED IN THE
UNIFORM COMMERCIAL CODE.

13 Limitation of Liability In General. Independent of, severable from, and to be
enforced  independently of any other  enforceable or unenforceable  provision of
this  Agreement,  ENOVA  SHALL  NOT BE  LIABLE  FOR  INCEDENTAL,  CONSEQUENTIAL,
INDIRECT,  SPECIAL,  PUNITIVE, OR EXEMPLARY DAMAGES OF ANY KIND - INCLUDING LOST
GOODWILL,  LOST PROFITS,  LOST BUSINESS, OR OTHER INDIRECT ECONOMIC DAMAGES, AND
FURTHER INCLUDING INJURY TO PROPERTY, WHETHER SUCH CLAIM IS BASED ON THEORIES OF
CONTRACT,  NEGLIGENCE,  TORT  (INCLUDING  STRICT  LIABILITY) OR OTHERWISE - AS A
RESULT OF BREACH OF ANY WARRANTY OR OTHER TERM OF THIS AGREEMENT,  REGARDLESS OF
WHETHER  ENOVA WAS  ADVISED,  HAD OTHER  REASON TO KNOW,  OR IN FACT KNEW OF THE
POSSIBILITY  OF SUCH  DAMAGES.  Purchaser  shall  indemnify,  defend,  and  hold
harmless Enova and its directors,  shareholders,  officers,  agents,  employees,
successors,  and assigns from and against any and all claims  arising  from,  in
connection with, or related in any way,  directly or indirectly,  to Purchaser's
or end user's  improper  use or operation  of the Panther  Drive  Systems or any
other products provided  hereunder,  including without  limitation,  all damages
resulting from any products liability claim.


14 Dispute  Resolution:  All  disputes,  controversies,  claims for temporary or
permanent  redress or relief  arising out of or with reference to this Agreement
and  relating  to  the  ownership,  licensing,  use,  sublicensing,   violation,
infringement  or  performance  hereunder with respect to  intellectual  property
rights shall be brought by either party  <REDACTED>* or other court of competent
jurisdiction.  All  other  disputes,  controversies,  claims  for  temporary  or
permanent  redress or relief  arising out of or with reference to this Agreement
shall be  settled  by  arbitration  by a panel of three  arbitrators  under  the
commercial arbitration rules of the American Arbitration Association,  Endispute
or  the  Judicial  Arbitration  and  Mediation  Service.  The  location  of  the
arbitration  shall be <REDACTED>*.  Such arbitration shall be conducted by three
arbitrators,  one chosen by Enova, one chosen by Purchaser and a third,  neutral
arbitrator,  selected by the first two.  The award of the  arbitrators  shall be
final and binding and the parties


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       Enova Panther(TM) Propulsion System Product and Services Agreement


consent  to the  exclusive  jurisdiction  of any  <REDACTED>*  for  purposes  of
enforcing any decision of the arbitration panel. By this Agreement,  the parties
do not intend to deprive any court of its  jurisdiction  to issue a  prearbitral
injunction,  prearbitral  attachment  or  other  order  in  aid  of  arbitration
proceedings  and  enforcement  of  the  award,   including  without  limitation,
injunctive relief for the protection of intellectual property rights.

15 Miscellaneous:

      15.1 Governing Law. This Agreement will be governed in all respects by the
laws of the State of <REDACTED>*  as such laws are applied to contracts  between
<REDACTED>* residents entered into and to be performed entirely within the State
of  <REDACTED>*.  The parties agree to exclude  entirely the  application of the
United Nations  Convention on Contracts for the International Sale of Goods from
this  Agreement  and from any agreement or  transaction  that may be executed or
carried out pursuant to this Agreement.

      15.2 Entire and Sole Agreement. This document,  together with the attached
exhibits specifically referenced in this document,  constitutes the complete and
exclusive  statement of the mutual  understanding of the parties with respect to
its  subject   matter.   This   Agreement   supersedes  any  and  all  prior  or
contemporaneous understandings,  representations, or other communication between
the parties of any sort,  whether  written or oral,  with respect to its subject
matter.  The terms of this Agreement shall supersede any inconsistent  terms and
conditions of any Purchase  Order,  regardless  of form,  issued by Purchaser to
Enova.  In any  proceeding  brought to enforce  or  interpret  the terms of this
Agreement,  the  nonprevailing  party  shall  pay to the  prevailing  party  the
prevailing party's attorneys' fees and costs incurred.

      15.3 Assignment. Neither party shall assign this Agreement or any right or
interest under this  Agreement or delegate any obligation to be performed  under
this Agreement  without the other party's prior written  consent,  which consent
shall not be unreasonably withheld, and any attempt to do so shall be void.

      15.4 Force  Majeure.  Each party's  performance  under this  Agreement (i)
shall be  suspended  (other  than the  obligation  to pay monies  already due to
either party or becoming due as a result of filling  orders placed and accepted)
for so  long  as  such  performance  is  hindered  or  prevented  by  events  or
occurrences beyond its reasonable  control ("Force  Majeure"),  such as, but not
limited to, riots,  labor disputes of a general  nature,  national or civil wars
(declared or undeclared), insurrections,  rebellions, terrorist acts, embargoes,
civil  disturbances,  dispositions or orders of governmental  authority (whether
such  authority  be actual or  assumed),  acts of civil or  military  authority,
fires, strikes,  delays in transportation,  inability to obtain necessary labor,
manufacturing  facilities  or materials  from usual  sources and acts of God and
(ii) any  delays  resulting  from  any  such  cause  shall  extend  the time for
performance correspondingly. If a failure to perform results from a governmental
law, rule, regulation,  disposition or order and the affected party is unable to
perform,  after  making  reasonable  efforts  to comply  with  such  law,  rule,
regulation, disposition or order, the matter shall be deemed a Force Majeure. IN
NO EVENT SHALL EITHER  PARTY BE LIABLE TO THE OTHER FOR GENERAL,  CONSEQUENTIAL,
INDIRECT OR SPECIAL DAMAGES DUE TO ANY FORCE MAJEURE.

      15.5 Counterparts.  This Agreement may be executed and delivered in one or
more counterparts and by facsimile  transmission,  each of which shall be deemed
an  original,  but all of  which  together  shall  constitute  one and the  same
instrument.

      15.6 Severability. In the event any provision of this Agreement is held to
be invalid or unenforceable, the remaining provisions shall remain in full force
and effect.

      15.7 Relationship of the Parties.  Purchaser shall conduct its business in
the purchase,  distribution,  marketing,  sale, installation,  commissioning and
provision of services with respect to Enova  products  hereunder as a principal,
for its own account and at its own expense and risk.  Nothing  contained in this
Agreement shall be construed as creating a joint venture,  partnership,  agency,
or  employment  relationship  between the parties  hereto nor shall either party
have the right, power, or authority to create any obligation or duty, express or
implied, on behalf of the other party. Purchaser shall


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not act or represent itself, either directly or by implication,  as an agent for
Enova and will not attempt to create any obligation, or make any representation,
warranty,  or covenant that Enova has not specifically  authorized in working on
behalf, or in the name, of Enova.

      15.8 No Third Party Beneficiaries. Unless otherwise expressly provided, no
provisions  of this  Agreement are intended or shall be construed to confer upon
or give to any  person or entity  other  than Enova or  Purchaser,  any  rights,
remedies or other benefits under or by reason of this Agreement.

      15.9  Notices.  All notices or other  communications  that shall or may be
given  pursuant  to  this  Agreement,  shall  be in  writing,  shall  be sent by
certified or registered air mail with postage prepaid, return receipt requested,
by facsimile,  e-mail,  reputable overnight or other rapid courier with tracking
capabilities,  or by hand delivery; provided, however, that if a notice or other
communication  is sent via  facsimile  or e-mail,  such notice or  communication
shall also sent by one of the other means of transmittal  (with the exception of
facsimile or e-mail,  as the case may be). Such  communications  shall be deemed
given and received upon delivery if sent by overnight courier or hand delivered,
within three business days of mailing,  if sent by certified or registered mail,
and within the time period set forth above for such method other than  facsimile
or e-mail if sent by facsimile or e-mail,  and shall be addressed to the Parties
as set forth in the preamble to this  Agreement  or such other  addresses as the
Parties  may  designate  and provide  notice of in writing  from time to time in
accordance with this Section.

      15.10  Waiver.  No waiver of any  provision  of this  Agreement  or of any
rights or obligations  of either party  hereunder  shall be effective  unless in
writing and signed by the party waiving compliance, and any such waiver shall be
effective only in the specific  instance and for the specific  purpose stated in
such writing.

      15.11 Amendments. This Agreement shall not be modified, amended, or in any
way altered except by an instrument in writing signed by the parties hereto.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


IN WITNESS  WHEREOF,  the parties  have  entered  into this  Agreement as of the
Effective Date.

ENOVA SYSTEMS, INC.                            PURCHASER


By:  ______________________________            By:  ____________________________

Name: Carl Dean Perry                          Name:

Title:  President & CEO                        Title:  President & CEO


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       Enova Panther(TM) Propulsion System Product and Services Agreement


List of Appendixes

16.1     Appendix 1.  Panther Drive System Products covered by this agreement.

16.2     Appendix 2.  Purchaser Products covered by this agreement.

16.3     Appendix 3.  Development Program Responsibilities, Acceptance Criteria,
                      and Payments and Expenses

16.4     Appendix 4.  Warranty Acceptance Criteria for Purchaser Product

16.5     Appendix 5.  Warranty Labor Flat Rate Schedule

16.6     Appendix 6.  End User Product Warranty

16.7     Appendix 7.  Prices and Other Commercial Terms

16.8     Appendix 8.  Non-Disclosure Agreement

16.9     Appendix 9.  Additional Terms for Development Efforts.

16.10    Appendix 10. Additional Terms for Commercial Production and Additional
                      General Terms.


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       Enova Panther(TM) Propulsion System Product and Services Agreement

                                   Appendix 1

                          Panther Drive System Products

<REDACTED>*


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       Enova Panther(TM) Propulsion System Product and Services Agreement


                                   Appendix 2

                               Purchaser Products

All public transportation vehicles under 30,000 GVWR.

Development program covers the DUALBUS vehicle.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


                                   Appendix 3

  Development Program Responsibilities, Acceptance Criteria, Special Terms, and
                              Payments and Expenses

1.0 Development Program Responsibilities.

      1.1 Joint  Responsibilities.  In  addition  to the joint  responsibilities
described  in  Appendix  9,  the  parties   shall  have  the   following   joint
responsibilities in performing the Development Efforts;

            1.1.1 None

      1.2   Enova   Responsibilities.   Enova   shall,   in   addition   to  the
responsibilities described in Section 1.1 to Appendix 3, do the following:

            1.2.1 Panther Drive System and Other Purchased  Deliverables.  Enova
Shall be  responsible  for  providing  to  Purchaser  material  and  services as
outlined  Attachment  1 to  Appendix 3 to support  the  development  program and
prototype vehicle build.

            1.2.2  Personnel  and  Equipment.  Make  available at the  Purchaser
facility  in Via Brolo,  60/62  NAVE BS,  Italy,  the  following  personnel  and
equipment  to support  the  assembly  and testing of the  Prototype,  as will as
Engineering  and Technical  personnel to support  vehicle  integration and drive
system tuning, including appropriate diagnostic tools.

            1.2.3 Consulting Services.  Advise Purchaser on the components to be
used by Purchaser in the Prototype and incorporate  these into the Panther Drive
System control system where applicable,  and provide support and guidance in the
total integration of the Panther Drive System into the Prototype, as needed.

            1.2.4  Training.  Provide  the  following  training  services to the
number of Purchaser personnel at the times and locations specified below:

            <REDACTED>*

            1.2.5 Documentation.  Develop and provide to Purchaser in connection
with the sale of Panther Drive Systems training,  service and repair manuals for
the Panther Drive Systems as follows:

            <REDACTED>*

      1.3  Purchaser  Responsibilities.  Purchaser  shall,  in  addition  to the
responsibilities  described in Section 1.1 to Appendix 3, be responsible for the
design of the Prototype and the  procurement  and assembly of all components for
the Prototype, as further specified on Attachment 2 to Appendix 3.

      2.0  Deliverables  Schedule.  Each  party will use  reasonable  commercial
efforts to deliver the  products and  materials  and to perform the services and
other obligations within the period specified below:

      Not Applicable, prototype vehicle is already in operation.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


3.0 Acceptance Criteria.

      Not Applicable, prototype vehicle is already in operation

4.0 Special Terms.  Special terms that apply to the Development  Efforts are set
forth in Appendix 9.

None


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                           Attachment 1 to Appendix 3

              Panther Drive System and Other Purchased Deliverables

                      In support of the Development Program

Not Applicable, prototype vehicle is already in operation


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                           Attachment 2 to Appendix 3

                Prototype Components to be Supplied by Purchaser

Not Applicable, prototype vehicle is already in operation


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       Enova Panther(TM) Propulsion System Product and Services Agreement


                                   Appendix 4

               Warranty Acceptance Criteria for Purchaser Product

1 Vehicle Application

      1.1 The Purchaser  will submit a technical  paper to Enova  describing the
application. The document shall include:

            1.1.1 Overall description of the product.

            1.1.2 Panther  Drive System load profile and drive cycle,  including
maximum grade, maximum speed, and average power.

            1.1.3 General description of the Panther Drive System  installation,
including:

            <REDACTED>*

            1.1.4 Product regulatory requirements

            1.1.5 Product safety features and options

            1.1.6 Product monitoring and/or diagnostics

      1.2 Enova review of the  technical  paper and written  approval from Enova
will complete this step.

2 Prototype Installation

      2.1 The  Purchaser  will submit  engineering  drawings.  The drawings will
detail:

            <REDACTED>*

      2.2 The Purchaser will submit a  specification  for the control system and
system interface to the Panther Drive System. The specification will include:

            2.2.1 <REDACTED>*

      2.3 Enova review of the drawings and  specification  and written  approval
from Enova will complete this step.

3 Installation Approval Inspection

      3.1 At its  discretion,  Enova  will  arrange to visit the  purchaser  and
physically  inspect  the  completed  installation  to  ensure  that it meets the
descriptions and specifications provided above.

      3.2 Written  approval of the  installation  from Enova will  complete this
step.

4 Beginning of warranty coverage.

      4.1 When the three steps above are completed, the Purchaser's installation
is approved  and the Enova End User  Product  Warranty is  applicable.  Material
changes  in  the   installation   of  Purchaser's   installation   will  require
re-approval.

      4.2 Enova  will  provide  written  confirmation  that the  warranty  is in
effect.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


                                   Appendix 5

                        Warranty Labor Flat Rate Schedule

The following  schedule covers the maximum allowed  reimbursable  labor expenses
under warranty for The Panther Drive System and components.

       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------
       <REDACTED>*                    <REDACTED>*
       -----------------------------------------------------------------

The labor rate will be <REDACTED>*. To calculate the reimbursable labor expense,
multiply the replacement time by the labor rate.

This labor rate and replacement time list is valid for orders placed by December
31, 2001. A new labor rate and  replacement  time list will be provided no later
than December 15th of each year for the following year.


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                                   Appendix 6

                            End User Product Warranty

Enova Panther(TM) Propulsion System Warranty

Terms of Coverage:

      1.    Users. Enova Systems, Inc. ("Enova") provides the following warranty
            for the  Panther(TM)  Propulsion  Systems and for the optional parts
            and  systems  available  for  the  Panther(TM)  Propulsion  Systems,
            <REDACTED>*. This warranty applies to the first user only during the
            warranty period and is not transferable.

      2.    Coverage.  Enova warrants that any standard part of the  Panther(TM)
            Propulsion  System  and any  optional  part or  system  (as  defined
            below),   that  is  properly   installed   and   operated   per  the
            specifications  provided by Enova,  and found by Enova under  normal
            use and service to malfunction during the warranty period, solely as
            a result of defects in materials or workmanship, will be repaired or
            replaced,  at Enova's option.  This coverage  includes  <REDACTED>*.
            Warranty  coverage will only become  effective upon  completion of a
            Warranty   Acceptance   Criteria  Checklist  covering  the  specific
            application.

      3.    Panther(TM)Propulsion  System Parts.  Parts covered by this warranty
            include <REDACTED>*,  and any optional parts or systems manufactured
            or supplied by Enova. Without limitation of the foregoing,  excluded
            are  any  optional  parts  or  accessories  or  interface   controls
            manufactured  or purchased by others to meet  customer  installation
            requirements.

      4.    Warranty Period.  The "Warranty Period" begins on the date the parts
            are shipped to the customer and <REDACTED>*, whichever comes first.

      5.    Panther(TM)  Propulsion  System  Replacement  Part Warranty  Period.
            Panther(TM)  Propulsion  System  parts  supplied by Enova under this
            warranty for  replacement  or repair of any  workmanship or material
            defect will carry a Warranty  Period that is equal to the  remaining
            Warranty  Period and Coverage of the Original  Panther  Drive System
            parts.

      6.    Repairs  Under  Warranty.  All repairs  under this  warranty must be
            conducted by <REDACTED>*.  During the warranty period, any use of or
            substitution of parts other than Panther(TM) Propulsion System parts
            supplied  or approved  by Enova will void the  warranty.  All claims
            under  this  warranty  must  be  made  to  the  <REDACTED>*  of  the
            malfunction  of the Panther Drive System.  All parts  replaced under
            this warranty shall become the property of Enova.

      7.    Exclusions to Warranty.

            a.    Internal   Combustion   Engines   used  as  part  of  internal
                  combustion hybrid systems.  Enova will make reasonable efforts
                  to  arrange  a  pass  through  of the  original  manufacturers
                  warranty terms and conditions.

            b.    Turbine   Generator  sets  used  as  part  of  turbine  hybrid
                  propulsion  systems.  Enova  will make  reasonable  efforts to
                  arrange a pass through of the original  manufacturers warranty
                  terms and conditions.

            c.    Fuel  Cell  Power  Systems  used as part of fuel  cell  hybrid
                  propulsion  systems.  Enova  will make  reasonable  efforts to
                  arrange a pass through of the original  manufacturers warranty
                  terms and conditions.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


            d.    Traction  Batteries used in pure electric and hybrid  electric
                  propulsion  systems.  Enova  will make  reasonable  efforts to
                  arrange a pass through of the original  manufacturers warranty
                  terms and conditions.

            e.    Connectors  and  Receptacles  used to complete  the vehicle to
                  charger connection for Rapid Charging systems (power levels in
                  excess of  6.6kW).  Enova  will  make  reasonable  efforts  to
                  arrange a pass through of the original  manufacturers warranty
                  terms and conditions.

            f.    Firmware  and  software  used for  operation  and  maintenance
                  reporting.  Notwithstanding  the  foregoing,  Enova  will make
                  reasonable efforts to resolve firmware or software problems.

            g.    Parts and labor for repairs  that are due to shipping  damage,
                  vandalism, accidents, misuse, misapplication,  storage damage,
                  acts of God or nature, negligence, or modification to products
                  that are not authorized in writing by Enova.

            h.    Parts and labor for  repairs to parts or  components  that are
                  not manufactured <REDACTED>*.

            i.    Parts and labor for routinely scheduled maintenance or repairs
                  that result from <REDACTED>*.

            j.    Parts and labor and any costs to investigate  problems  and/or
                  repair  products  that  are  caused  by any  operation  of the
                  product outside the operating specifications defined by Enova.
                  Without limitation of the foregoing,  specifically excluded is
                  damage caused by power quality  disturbances (sags, surges and
                  harmonics) in grid connected  operation,  and operation of the
                  Gas  Compression  System outside the pressure and  temperature
                  specifications provided by Enova.

            k.    Any incidental or  consequential  damages or expenses that the
                  owner  or user  may  incur as a  result  of a  malfunction  or
                  failure covered by this warranty.

      8.    Other Exclusions. Parts and labor reimbursement by Enova is the only
            remedy to owners  and users  under  this  warranty.  Enova  does not
            authorize  any  person or party to assume or create for it any other
            obligation or liability in connection  with the products or any part
            of the products.  Enova's  warranties  shall not be enlarged by, nor
            shall any  obligation  or  liability  of Enova  arise due to,  Enova
            providing  technical  advice,  facilities,  or service in connection
            with any Product or Contract.

      9.    THIS  WARRANTY IS THE  EXCLUSIVE AND ONLY WARRANTY FOR ENOVA PANTHER
            PROPULSION SYSTEMS. ENOVA SYSTEMS MAKES NO OTHER WARRANTIES, EXPRESS
            OR IMPLIED,  INCLUDING,  WITHOUT LIMITATION, ANY IMPLIED WARRANTY OF
            MERCHANTABILITY,    FITNESS   FOR   A   PARTICULAR    PURPOSE,    OR
            NONINFRINGEMENT.   ENOVA   SYSTEMS  SHALL  NOT  BE  LIABLE  FOR  ANY
            INCIDENTAL OR CONSEQUENTIAL DAMAGES.


                                    24 of 32
<PAGE>

                                                        Contract Number 11072001

                                   Appendix 7

                        Prices and Other Commercial Terms

1. Prices.

      <REDACTED>*

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       Enova Panther(TM) Propulsion System Product and Services Agreement


<REDACTED>*


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                                                        Contract Number 11072001


2. LEAD TIME

The lead-time for delivery of Panther Drive Systems under a Purchase Order shall
be <REDACTED>* from the date of Purchase Order submission.

3. RESCHEDULE AND CANCELLATION TERMS

Orders scheduled for delivery at or within <REDACTED>* of the committed date may
not be rescheduled. A charge of <REDACTED>* of the purchase price may be made to
Purchaser for non-acceptance of delivery.

Orders  scheduled  for  delivery  between  <REDACTED>*  and  <REDACTED>*  may be
<REDACTED>*, but not beyond <REDACTED>* of the originally scheduled ship date.

Orders scheduled for delivery at or  within<REDACTED>* of the request may not be
canceled. A charge of <REDACTED>* of the purchase price may be made to Purchaser
for non-acceptance of delivery.

Orders scheduled for delivery between <REDACTED>* may be canceled at a charge to
Purchaser based upon <REDACTED>*, and any cancellation charges assessed to Enova
by its vendors.

Purchaser must notify Enova in writing with the cancellation request.

Orders scheduled for delivery beyond  <REDACTED>* may be canceled or rescheduled
as requested.

This price list is valid for orders  placed by December  31,  2001.  A new price
list will be provided no later than December 15th of each year for the following
year.


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       Enova Panther(TM) Propulsion System Product and Services Agreement


                                   Appendix 8

                            Non-Disclosure Agreement

Enova Systems, a corporation  organized under the laws of California and and Eco
Power  Technology,  an  Italian  Company,  desire to  explore  certain  possible
business transactions and in facilitating that, it is understood and agreed that
certain business and trade  information  which the parties deem confidential may
be provided or disclosed by one to the other:

In consideration of the receiving party being granted access or continued access
to such information, it is agreed as follows:

      1.  "INFORMATION"  shall mean any information,  technical data or know-how
relating to the  business,  services or  products of the  disclosing  party or a
third party,  including  without  limitation any research,  products,  services,
developments,  inventions,  processes,  techniques,  designs, components, parts,
documents,   drawings,   electronic  files,  data  sketches,   plans,  programs,
specifications,   software,   and/or   distribution,   engineering,   marketing,
financial,  merchandising,  sales, and salary information and/or other materials
(hereinafter  collectively  referred to as "INFORMATION")  which is disclosed by
such party or on its behalf, before or after the date hereof, to the other party
or its  employees  or  agents,  directly  or  indirectly,  in  writing,  orally,
electronically,  or by drawings or  inspection.  "INFORMATION"  does not include
information,  technical data or know-how which the receiving party  establishes:
(i) is already  published  or  available to the public other than by a breach of
this Agreement or any  confidentiality  obligation owed to the disclosing party;
(ii) is rightfully  received from a third party  without,  and not in breach of,
any obligation of confidentiality; (iii) is independently developed by personnel
or agents of the receiving party without access to the INFORMATION of the other;
(iv) is  known to the  receiving  party at the  time of  disclosure  without  an
obligation of confidentiality;  or (v) is produced in compliance with applicable
law or a court  order,  provided  that  the  receiving  party  first  gives  the
disclosing party reasonable notice of such law or order and gives the disclosing
party opportunity to oppose and/or attempt to limit such production.

      2. The  receiving  party  shall  hold in  trust  and  confidence,  and not
disclose to others,  by any means, any and all INFORMATION  disclosed under this
Agreement.  INFORMATION  may be used by the receiving party only for the purpose
of considering or pursuing a business  relationship or business transaction with
the disclosing  party.  The receiving  party may disclose  INFORMATION  received
under this Agreement to persons within its  organization who have a need to know
such  information and only if such persons are bound in writing  (pursuant,  for
example to a general employee  non-disclosure  agreement  protecting third party
confidential information as well as the employer's confidential  information) to
protect the  confidentiality  of such  INFORMATION.  The receiving party further
agrees it shall take the same  measures,  but no less than  reasonable  security
measures,  and use the same care, but no less than a reasonable  degree of care,
to preserve and protect the secrecy of, and to avoid  disclosure or unauthorized
use of, the disclosing  party's  INFORMATION as it uses with its own information
of  similar  importance.   With  respect  to  tangible  materials   constituting
INFORMATION  the  receiving  party agrees not to analyze any such  materials for
composition or structure.

      3.  Title  to all  property  received  by the  receiving  party  from  the
disclosing party, including all INFORMATION,  shall remain at all times the sole
property of the disclosing  party,  and this Agreement shall not be construed to
grant to  receiving  party any  licenses or similar  rights to such  property or
INFORMATION  (including all  intellectual  property)  disclosed to the receiving
party hereunder. Nothing in this Agreement shall limit or restrict the rights of
the  disclosing  party to assert  infringement  or other  intellectual  property
claims  against the receiving  party or to impose on either party any obligation
to disclose any INFORMATION or to purchase or sell any products.


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      4. The receiving party shall,  upon request of the disclosing  party:  (i)
return to the  disclosing  party all  documents,  drawings,  equipment and other
tangible  materials,  including all INFORMATION and all manifestations  thereof,
delivered  to the  receiving  party  under  this  Agreement,  and all copies and
reproductions  thereof;  and (ii) certify to the disclosing  party that all such
INFORMATION has been returned.

      5. The receiving  party's duties under Section 2 of this Agreement  expire
with respect to any particular item of INFORMATION  five years after the date of
disclosure hereunder to the receiving party, or three years after the expiration
or  termination  of the  relationship  between  the  parties to this  Agreement,
whichever is later.

      6. The parties further agree to the following terms and conditions:

            (a) Neither  party shall  without the prior  written  consent of the
other party disclose to a third party any aspect of the commercial  relationship
between the parties including,  but not limited to, pricing, items or quantities
offered  or sold,  payment  terms,  production  methods or  schedules,  delivery
locations  and means and  suppliers.  Each  party  agrees not to issue any press
release or make any  statement  on the  Internet,  America on Line,  CompuServe,
Prodigy or any other public electronic  network, or to any analysts or reporters
concerning  the other  party or its  products  or  services,  without  the other
party's prior written authorization.

            (b) Receiving party shall adhere to the U.S.  Export  Administration
Laws and  Regulations  and shall not export or re-export any  technical  data or
products  received from the  disclosure or the direct  product of such technical
data to any proscribed countries.

            (c) Any breach by the receiving party of its obligations  under this
Agreement  will result in irreparable  injury to the disclosing  party for which
damages and other legal remedies will be inadequate.  In seeking  enforcement of
any of these obligations,  the disclosing party will be entitled (in addition to
other  remedies) to preliminary  and permanent  injunctive  and other  equitable
relief.

            (d) If any provision of this Agreement is invalid or  unenforceable,
then such provision shall be construed and limited to the extent  necessary,  or
severed if necessary, in order to eliminate such invalidity or unenforceability,
and the other provisions of this Agreement shall not be affected thereby.

            (e) No delay or omission  by either  party in  exercising  any right
under this  Agreement  will  operate as a waiver of that or any other  right.  A
waiver or consent given by either party on any one occasion is effective only in
that  instance  and will not be  construed as a bar to or waiver of any right on
any other occasion.

            (f) This  Agreement  shall  be  binding  upon and will  inure to the
benefit of the parties hereto, and their respective successors and assigns.

            (g)  This  Agreement  is  governed  by  and  will  be  construed  in
accordance  with the laws of the State of California,  and the state and federal
courts of California shall be the exclusive forum.

            (h) This Agreement supersedes all prior agreements, written or oral,
between  the  disclosing   party  and  receiving  party  (or  their   respective
predecessors in interest) relating to the subject matter of this Agreement. This
Agreement  may not be amended  except by an agreement in writing  signed by both
parties that specifically refers to this Agreement.

Eco Power Technology                        ENOVA SYSTEMS


By:_______________________________          By:_______________________________

                                            Carl Dean Perry

Date:_____________________________          Date:_____________________________


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                                   Appendix 9

                    Additional Terms for Development Efforts

The following provisions pertain solely to the Development Efforts and supersede
any different or inconsistent  provisions elsewhere in the Agreement,  including
those in Appendix 10.

1.0 Development Program Responsibilities.

      1.1 Joint  Responsibilities.  In performing the Development Efforts,  each
party shall

            1.1.1 Cooperate and  collaborate  fully with the other and use their
commercially reasonable efforts to develop the Prototype;

            1.1.2 Devote such amount of materials, number of personnel and other
physical and available  financial  resources as shall  reasonably be required to
complete the  development of the Prototype  within the  time-frame  specified in
this Agreement;

            1.1.3 Keep the other party  timely  informed of (i) the  progress of
the  development  of Prototype  or part  thereof  that such party is  separately
undertaking,  and (ii)  immediately  communicate to the other party all material
matters  relating  to or  arising  from the  development  of  Prototype  or part
thereof;  including but not limited arranging and attending  quarterly  business
and technical review meetings;

            1.1.4 Conduct  collaboration  and review meetings on a regular basis
and upon the reasonable request of the other party; and

            1.1.5  Upon the  reasonable  request of the other  party,  disclose,
pursuant,  and subject, to this Agreement,  such information as shall reasonably
be required by each party to complete the development of the Prototype.

            1.1.6 Perform such other joint  responsibilities as may be described
in Appendix 3.

2.0  Warranty  Disclaimer.  EACH  PARTY  ACKNOWLEDGES  TO  THE  OTHER  THAT  THE
DEVELOPMENT  EFFORTS ARE EXPERIMENTAL IN NATURE AND THAT NO WARRANTY IS PROVIDED
FOR THE SERVICES OR THE  PRODUCTS  AND  MATERIALS  PROVIDED  HEREUNDER.  WITHOUT
LIMITATION,   EACH  PARTY  DISCLAIMS,  TO  THE  EXTENT  PERMITTED  BY  LAW,  ALL
WARRANTIES,  WHETHER EXPRESS, IMPLIED, OR STATUTORY,  INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
AND NONINFRINGEMENT.

3.0 Intellectual Property Rights and Work Product Ownership.

      3.1 Intellectual  Property Rights Defined. For purposes of this Agreement,
"Intellectual  Property  Rights"  means  a  party's  intellectual  property  and
proprietary rights, however characterized,  including, but not limited to ideas,
processes,  techniques,  inventions,  formulas,  technologies,  know-how,  data,
discoveries,  works of authorship,  copyrightable  works,  patent rights,  trade
secret rights,  copyright rights, trademark rights, service mark rights, and any
enhancements,  improvements,  derivative  works, and other  derivations  thereof
(whether  now  in  existence  or  hereafter  developed,  invented  or  otherwise
derived).

      3.2 Ownership of  Intellectual  Property  Rights.  Each party shall retain
ownership of all its pre-existing  Intellectual Property Rights  notwithstanding
their  disclosure  and use  hereunder.  To the extent that  Development  Efforts
result in the creation of new Intellectual Property Rights,  Purchaser shall own
all new Intellectual  Property Rights relating to the Prototype (excluding those
relating to the Panther  Drive System but  including  the unique  data,  if any,
concerning  the interface of the drive system to the


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       Enova Panther(TM) Propulsion System Product and Services Agreement


Prototype) and Enova shall own all new Intellectual  Property Rights relating to
electric and hybrid drive systems,  including,  without limitation,  the Panther
Drive Systems.  To the extent that a new Intellectual  Property Right is created
that cannot be described by the  foregoing  sentence,  it shall be jointly owned
with no obligation to account to the other party therefor.

      3.3 Materials and Work Product.  Except for items described in Section 5.0
to Appendix 3, which Purchaser is to purchase in connection with the Development
Efforts and which shall become the property of Purchaser upon payment  therefor,
all materials and equipment that a party uses in connection with the Development
Efforts  and  all  work  product  produced  a party  during  the  course  of the
Development Efforts shall remain the sole and exclusive property of that party.

4.0 Payments and Expenses.

      4.1  Expenses.  Except as  otherwise  specified  below or in  Appendix  3,
Purchaser  shall be  responsible  for all expenses  incurred by it in connection
with  the  Development  Efforts,  including,  without  limitation,  the  travel,
lodging,   and  living  expenses  of  Purchaser  personnel  traveling  to  Enova
facilities,  and Enova shall be responsible  for all expenses  incurred by it in
connection with the Development  Efforts,  including,  without  limitation,  the
travel,  lodging,  and living expenses of Enova personnel traveling to Purchaser
facilities.

            4.1.1 Panther Drive System.  Purchaser will pay the amount specified
in Appendix 3 for any Panther Drive System,  parts, or equipment to be purchased
at the prices set forth in Appendix 3.

            4.1.2 Training and Technical  Materials.  Purchaser will pay Enova's
cost,  plus ten percent  (10%) for training and technical  materials  that Enova
delivers to Purchaser  for use by Purchaser  personnel  in  connection  with the
Development Efforts.

      4.2 Freight and Taxes.  The  foregoing  price is inclusive of shipping and
insurance to Purchaser's  designated  facility,  but does not include any taxes,
fees,  duties or  assessments  incurred by either party in  connection  with the
purchase,  shipment and delivery of the Panther Drive System, all of which shall
be paid by Purchaser  (except for those imposed on Enova for the income received
in the sale).


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                                   Appendix 10

                   Additional Terms for Commercial Production
                                       and
                            Additional General Terms

The following provisions amend and modify the provisions of the Agreement except
for those  relating to the  Development  Efforts and supersede any  inconsistent
provisions therein.

1.0   Exclusivity  and duration  terms of this Agreement are modified to include
      the following:

1.1   <REDACTED>*

            1.2 Purchaser will  exclusively  use the Panther 120kW line of drive
      systems in all of their electric and hybrid-electric  vehicle applications
      of the vehicle class covered by this  agreement.  Such rights will include
      all system improvements, developments, and derivations.

2.0   Termination terms of this Agreement are modified to include the following:

            2.1 This  Agrement  between Enova and Purchaser can be terminated by
      either party based upon the commercial success of the resulting production
      transit bus.

            2.2 ENOVA can terminate  this  agreement if Purchaser  fails to meet
      the  requirements of a  sub-distributor  of  <REDACTED>*,  as specified in
      paragraph 3.0 below

3.0   Upon execution of this Agreement,  Purchaser will become a sub-distributor
      of the  <REDACTED>*.  As a  sub-distributor,  Purchaser  will ensure that,
      through  its action or  inaction,  is does not cause  ENOVA to violate the
      terms and conditions of its  <REDACTED>*.  Further,  Purchaser will comply
      with all  requirements  of  Section  4,  Field  Service  Requirements  and
      Authorized   Service  Provider  ("ASP")   Appointment   contained  in  the
      <REDACTED>*.  A reference copy available upon written request.  Failure to
      meet the requirements


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