AGREEMENT FOR PURCHASE AND SALE OF ASSETS


         THIS AGREEMENT FOR PURCHASE AND SALE OF ASSETS (this  "Agreement"),  is
made effective as of October 25, 1996, by and between U.S.  ELECTRICAR,  INC., a
California  corporation  ("Buyer")  and  SYSTRONIX  CORPORATION,   a  California
corporation ("Seller").

                                    RECITALS

     A.   The Seller is  engaged  in the  business  of  developing  technologies
relating to the design and manufacture of electric-powered vehicles.

     B.   Buyer desires to purchase from the Seller,  and the Seller  desires to
sell to Buyer,  on the terms and subject to the  conditions  of this  Agreement,
substantially all the business, properties and assets of the Seller.

                                    AGREEMENT

     NOW,  THEREFORE,  in  consideration  of the mutual  agreements,  covenants,
representations and warranties  contained in this Agreement,  the parties hereto
hereby agree as follows:

     1.   Purchase and Sale of Assets.

          a.   Agreement  to  Purchase  and  Sell.  Subject  to  the  terms  and
conditions  set forth in this  Agreement,  the  Seller  agrees to sell,  convey,
transfer,  assign,  and deliver to Buyer,  and Buyer agrees to purchase from the
Seller, all of the assets, properties, and business of the Seller of every kind,
character,  and description,  whether tangible,  intangible,  real, personal, or
mixed, and wherever located (all of which are sometimes collectively referred to
as the "Assets"), including, but without limitation to, the following:

               i)   The  patents,  service  marks,   trademarks,   trade  names,
copyrights (and registrations and applications  therefor),  processes,  methods,
patterns, devices, formulae,  discoveries, trade secrets and other know-how, all
as identified on Exhibit "A" attached hereto (the "Technology"); and

               ii)  The inventory, work-in-progress,  parts, furniture, fixtures
and equipment  listed on Exhibit "B" attached hereto (the "Personal  Property");
and

               iii) Seller's  interest in that  certain  Industrial  Real Estate
Lease dated December 1, 1994, between Nakamichi U.S.A., Inc.  ("Nakamichi"),  as
sublessor  and Seller,  as  sublessee,  for the premises  located at 19850 South
Magellan Drive, Torrance, California, 90502 (the "Lease"); and

               iv)  The  contracts of Seller  identified in Exhibit "C" attached
hereto (the "Contracts"); and

               v)   All accounts  receivable or other amounts owing Seller as of
the Closing Date (the "Receivables"); and

               vi)  All of Seller's data, drawings, files and records pertaining
to the  Technology,  the Personal  Property,  the Lease,  the  Contracts and the
Receivables.

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<PAGE>

          b.   Aggregate  Purchase Price.  The aggregate  purchase price for the
Assets shall be for the  consideration set forth in Subsection 1.d. (below) (the
"Purchase Price").

          c.   Allocation  of  Purchase  Price.  The  Purchase  Price  shall  be
allocated  among the Assets in the manner mutually agreed to by Buyer and Seller
prior to the Closing.  The parties agree to report this  transaction for federal
and state income tax purposes in accordance with said allocation of the Purchase
Price.

          d.   Payment of Purchase Price. The Purchase Price shall be payable as
follows:

               (i)    Buyer shall be credited at the Closing with the amount of
$1,020,211 towards the Purchase Price,  which Buyer has previously  delivered to
Seller as a pre-payment of the Purchase Price;

               (ii)   Buyer shall  deliver to Seller at the Closing a Promissory
Note in form and  substance  as  attached  hereto as Exhibit D in the  principal
amount of Eight Hundred  Twenty-nine  Thousand,  Nine Hundred  Seventy-eight and
39/100 Dollars  ($829,978.39)  (the "Note")  secured by the Assets pursuant to a
security  agreement  in form and  substance  attached  hereto as  Exhibit E (the
"Security  Agreement").  The Note shall bear interest at the rate of six percent
(6%) per annum and  shall be  payable  (A) in full  thirty  (30) days  after the
Closing  and (B) in the amount of 45% of any  additional  financing  received by
Buyer until paid in full, whichever occurs first;

               (iii)  Buyer  shall  deliver  to (i)  Seller a share  certificate
representing  Two Million Seven Hundred  Thousand shares of Buyer's Common Stock
(the "ECAR  Shares") at the Closing and (ii) "Escrow  Agent" (as defined  below)
for  the  benefit  of  Seller  at the  Closing  a  certificate  or  certificates
representing  One  Million One Hundred  Thousand  (1,100,000)  shares of Buyer's
Common Stock (the "Escrow Stock"); and

               (iv)   Buyer shall assume and be credited at the Closing with the
$800,000 loan from Fontal International, Ltd., and the liabilities assumed under
Subparagraph 1.f. below in the approximate amount of $357,383.65.

          e.   Escrow.  At the  Closing,  certificates  representing  the Escrow
Stock shall be deposited in escrow (the "Escrow Shares") to be held by an Escrow
Agent as collateral for Seller's  indemnification  obligations under Paragraph 9
below and  pursuant  to the  provisions  of an  escrow  agreement  (the  "Escrow
Agreement")  to be  entered  into by Seller and Buyer in form and  substance  as
attached hereto as Exhibit F and incorporated herein by reference.

          f.   Assumption  of  Liabilities.  Buyer  agrees  to assume only those
liabilities set forth on Exhibit G attached hereto.  It is expressly  understood
and  agreed  that  Buyer  shall  not be  liable  for any of the  obligations  or
liabilities of the Seller of any kind or nature,  other than those  specifically
assumed  by Buyer  under  this  paragraph  as  identified  on Exhibit G ("Seller
Liabilities").

          g.   Stock  Option  Agreements.  Buyer and Daniel D. Rivers and Don C.
Kang shall also each enter into Stock Option  Agreements  in form and  substance
attached  hereto as  Exhibit H,  providing  for,  among  other  provisions,  the
issuance of stock options. Buyer shall also employ those employees of Seller set
forth on Exhibit I on the principal terms and conditions set forth on Exhibit I.


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<PAGE>

          h.   Registration Rights.

               i)     Piggyback Rights If Buyer at any time proposes to register
any of its  securities  under the Securities Act of 1933, as amended (the "Act")
(other than a  registration  effected  solely to implement  an employee  benefit
plan, a  transaction  to which Rule 145 of the  Commission  is applicable or any
other form or type of registration in which "Registrable Securities" (as defined
below) cannot be included pursuant to Commission regulation,  rule or practice),
then Seller shall receive  written notice from the Buyer (the "Buyer Notice") of
its intention to make such  registration  (the Escrow Stock, ECAR Shares and any
other securities issued upon any stock split, stock dividend,  recapitalization,
merger,  consolidation  or similar event with respect to such stock are referred
to herein as "Registrable  Securities").  If such registration is proposed to be
on a form which permits inclusion of the Registrable  Securities,  then upon the
written request of Seller holding  Registrable  Securities given within ten (10)
days after  transmittal  by the Buyer to Seller of the Buyer  Notice,  the Buyer
will,  subject to the limits  contained in this  section,  at its cost,  use its
reasonable  efforts  to  cause  such  Registrable  Securities  of  Seller  to be
registered  under the Act,  all to the extent  requisite  to permit such sale or
other disposition by Seller of the Registrable Securities so registered.

     The right of Seller to request  inclusion in the  registration  pursuant to
this section shall terminate (i) upon the second anniversary date of the Closing
or (ii) at such time that all shares of  Registrable  Securities  held by Seller
may be publicly  sold under Rule 144 or any  applicable  exemption  or any other
registration   statement   during   any   three   month   period.   Furthermore,
notwithstanding  any  other  provision  of this  Agreement,  if the  underwriter
managing such  registration  notifies Seller holding  Registrable  Securities in
writing that market or economic  conditions limit the amount of securities which
may  reasonably  be expected to be sold or that  inclusion  of such  Registrable
Securities  would  jeopardize  the success of the  offering,  then the Buyer may
exclude all or any portion of such Registrable  Securities;  provided,  however,
that such cutback shall be pro rata among Seller and the executive  officers and
directors of the Buyer desiring to participate in such registration based on the
number of shares of  Registrable  Securities  held by Seller  and the  number of
shares in the Buyer held by such executive officers and directors.

               ii)    S-3 Registration Rights Buyer also agrees, at its cost, to
use its reasonable  efforts to file an S-3 Registration  Statement  covering all
ECAR Shares  within 180 days after Buyer has received an aggregate of $6 million
in  additional  equity  capital  after  the  Closing.  The  right of  Seller  to
registration hereunder shall terminate at such time that all ECAR Shares held by
Seller may be publicly  sold under Rule 144 or any  applicable  exemption or any
other registration  statement during any three month period. With respect to the
ECAR Shares only and the rights granted to Seller to  registration  under an S-3
Registration  Statement,  Seller may transfer such rights to one transferee only
so long as Seller shall thereafter forfeit any such rights to any remaining ECAR
Shares it may hold.

               iii)   S-8 Registration Rights Buyer also agrees, at its cost, to
use its best efforts to file an S-8  Registration  Statement  covering all stock
options  received by Messrs.  Rivers and Kang pursuant to  subsection  g.(above)
(the "Stock  Options")  within 180 days after Buyer has received an aggregate of
$6 million in additional  equity  capital after the Closing or such earlier time
as Buyer shall file an S-8  Registration  Statement for any other  securities of
Buyer.


                                       -3-

<PAGE>

               iv)    Further Documents Any holder of Registrable  Securities or
ECAR Shares or Stock Options  desiring to participate  in a  registration  under
this   Agreement   shall   enter  into  such   further   agreements,   including
indemnification and customary underwriting agreements,  if applicable,  as Buyer
or the managing underwriter shall reasonably require.

     2.   The Closing.

          a.   Closing. The closing of the transactions provided for in
Paragraph  1 hereof  shall take place at the  offices of Pezzola & Reinke,  1999
Harrison Street, Suite 1300, Oakland, California, 94612, on October 25, 1996, at
10:00 am, or such other date  (and/or  place  and/or time) as may be agreed upon
between the parties, such date being referred to herein as the "Closing Date" or
"Closing".  If the  Closing  shall not take  place at such date or time,  either
party may terminate this Agreement upon written notice to the other.

          b.   Delivery at Closing.

               i)   Seller shall  deliver or cause to be delivered the following
at the Closing:

                    a)   One or more bills of sale or  assignments  covering the
Assets in form and substance satisfactory to counsel for Buyer; and

                    b)   A certified copy of a resolution  approving the sale of
the Assets adopted by the  shareholders  of Seller in such form as is acceptable
to Buyer; and

                    c)   A certified  copy of the written  consent of all of the
Directors  of  Seller  approving  the  sale of the  Assets  in  such  form as is
acceptable to Buyer; and

                    d)   The Stock Option Agreements, and Escrow Agreement, duly
executed by the parties thereto; and

                    e)   Such other documents or certificates as are required as
conditions precedent to the obligations of Buyer under Paragraph 7, or as may be
reasonably required by counsel for Buyer to place Buyer in actual possession and
operating control of the Assets pursuant to the provisions of this Agreement.

     The Seller at any time  before or after the  Closing  Date,  will  execute,
acknowledge, and deliver any further deeds, assignments,  conveyances, and other
assurances,  documents,  and  instruments of transfer,  reasonably  requested by
Buyer,  and will  take  any  other  action  consistent  with  the  terms of this
Agreement  that  may  reasonably  be  requested  by  Buyer  for the  purpose  of
assigning,  transferring,  granting,  conveying,  and  confirming  to Buyer,  or
reducing to possession, any or all property to be conveyed and transferred under
this  Agreement.  If requested by Buyer,  the Seller  further  agrees at Buyer's
expense to  prosecute  or  otherwise  enforce in its own name for the benefit of
Buyer any claims,  rights,  or benefits that are transferred to Buyer under this
Agreement and that require  prosecution  or  enforcement  in the Seller's  name.
Simultaneously  with the  consummation  of the transfer,  the Seller through its
officers,  agents,  and  employees,  will put  Buyer  into full  possession  and
enjoyment of all  properties  and Assets to be conveyed and  transferred by this
Agreement.



                                       -4-

<PAGE>

               ii)  Buyer shall  deliver or cause to be  delivered to Seller the
following at the Closing:

                    a)   A duly  executed Promissory Note in the amount of Eight
Hundred Twenty-nine Thousand Nine Hundred Seventy-eight and 39/100 Dollars
($829,978.39); and

                    b)   To Escrow  Agent,  stock  certificates  evidencing  the
Escrow Stock and such other documents and  certificates as are required to issue
to Seller and placed into escrow One  Million One Hundred  Thousand  (1,100,000)
shares of Common Stock of Buyer; and

                    c)   To  Seller,  stock  certificates  evidencing  the  ECAR
Shares and such other  documents  and  certificates  as are required to issue to
Seller Two Million Seven Hundred Thousand  (2,700,000) shares of Common Stock of
Buyer; and

                    d)   A  certified  copy of the written consent of all of the
Directors  or a  certified  copy of the  minutes  of a  meeting  of the Board of
Directors of Buyer  approving the purchase of the Assets and the issuance of the
Stock in such form as is acceptable to Seller; and

                    e)   The  Employment   Agreements,   Escrow   Agreement  and
Security Agreement (together with any required UCC-1 Financing  Statements) duly
executed by the parties thereto; and

                    f)   Such other  documents and  certificates as are required
as conditions  precedent to the  obligations of Seller under  Paragraph 8, or as
may be reasonably required by counsel for Seller.

     3.   Representations  and  Warranties of the Seller.  The Seller represents
and  warrants  to Buyer  that,  except as set forth on the  disclosure  schedule
attached  hereto  as  Schedule  3 and  incorporated  herein  by  reference  (the
"Disclosure Schedule"):

          a.   Organization. The Seller is a corporation duly organized, validly
existing,  and in good  standing  under  the  laws of the  state in which it was
incorporated;  has all necessary  corporate  powers to own its properties and to
carry on its business as now owned and operated by it; and is duly  qualified to
do business and is in good standing in all  jurisdictions in which the nature of
the Seller's business or its properties makes such qualification necessary.

          b.   Authorization.   This  Agreement  has  been  duly  authorized  by
Seller's Board of Directors and shareholders and constitutes a valid and binding
obligation of the Seller  enforceable  in accordance  with its terms,  except as
limited by bankruptcy,  insolvency or other similar laws of general  application
affecting  creditors' rights.  This Agreement will not violate,  with or without
the giving of notice and/or the passage of time,  the Articles of  Incorporation
or the Bylaws of Seller,  any  agreement to which Seller may be a party,  or any
laws of any state which may be applicable to this Agreement,  and will be valid,
binding and enforceable against Seller in accordance with its terms.

          c.   Agreement Will Not Cause Breach or Violation. The consummation of
the transactions contemplated by this Agreement will not result in or constitute
with or  without 

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<PAGE>

the giving of notice  and/or the  passage  of time any of the  following:  (1) a
breach  ofany term or  provision  of this  Agreement;  (2) a default or an event
that,  with  notice or lapse of time or both,  would be a  default,  breach,  or
violation  of the  Articles of  Incorporation  or Bylaws of the  Seller,  or any
lease,  license,  promissory  note,  conditional  sales  contract,  com mitment,
indenture,  mortgage,  deed  of  trust,  or  other  agreement,   instrument,  or
arrangement  to  which  the  Seller  is a party or by which  the  Seller  or the
property  of the Seller is bound;  (3) an event  that would  permit any party to
terminate  any agreement or to accelerate  the maturity of any  indebtedness  or
other  obligation of the Seller;  or (4) the creation or imposition of any lien,
charge, or encumbrance on any of the properties of the Seller.

          d.   Authority  and  Consents.  The Seller has the right, power, legal
capacity,  and authority to enter into, and perform its  obligations  under this
Agreement,  and no  approvals  or  consents  of any  persons  are  necessary  in
connection  with it. The execution and delivery of this  Agreement by the Seller
has been duly  authorized by all necessary  corporate  action on the part of the
Seller.

          e.   Subsidiaries.  Seller does not own,  directly or indirectly,  any
interest or investment (whether equity or debt) in any corporation, partnership,
business, trust, or other entity.

          f.   Financial Statements.  Exhibit J to this Agreement sets forth the
unaudited financial  statements of the Seller as of October 25, 1996,  certified
by the chief  financial  officer  of the  Seller as  accurately  reflecting  the
financial  condition  of the Seller for the  periods  indicated.  The  financial
statements  in Exhibit J are referred to herein as the  "Financial  Statements."
The Financial  Statements fairly represent the financial  position of the Seller
and  contain  true and  accurate  statements  of each and all of the  assets and
liabilities  of Seller as of the  respective  dates  indicated in the  Financial
Statements,  and  the  results  of its  operations  for the  respective  periods
indicated.

          g.   Claims and  Liabilities.  Exhibit K to this Agreement  contains a
true and complete schedule of all liabilities and obligations of the Seller. The
Seller has no debts, liabilities, or obligations of any nature, whether accrued,
absolute,  contingent,  or otherwise, and whether due or to become due, that are
not set forth in  Exhibit  K.  Notwithstanding  the  foregoing,  only the Seller
Liabilities  set forth on Exhibit G as  referenced  in  Paragraph  1.f are being
assumed by Buyer.

          h.   Tax  Returns  and  Audits.  Within  the times  and in the  manner
prescribed  by law,  the  Seller  has filed all  federal,  state,  and local tax
returns required by law and has paid all taxes,  assessments,  and penalties due
and payable.  There are no present disputes as to taxes of any nature payable by
the  Seller.  The  Seller  has never  filed,  and will not file on or before the
Closing Date, any consent under ss.341(f) of the Internal  Revenue Code of 1986,
as amended.

          i.   Real  Property.  The Lease is valid and in full force,  and there
does not exist any default or event that with notice or lapse of time,  or both,
would  constitute  a default  under the Lease.  The Seller has  obtained or will
obtain prior to Closing all landlord consents necessary to transfer the Lease to
Buyer.

          j.   Hazardous  Materials.  To Seller's best  knowledge,  there are no
asbestos-containing materials incorporated into the leased premises set forth in
Paragraph 3.j. (above) buildings or interior  improvements that are part of that
real  property,  or into any  other 

                                       -6-

<PAGE>

Assets of the Seller, nor is there any electrical transformer, fluorescent light
fixture  with  ballasts,  or other  equipment  containing  PCBs on those  leased
premises.

          k.   Inventory. The inventories of raw materials, work in process, and
finished  goods  (collectively  called  "Inventories")  shown  on  the  Seller's
Financial  Statements,  are being  sold in their "As Is"  condition.  Except for
sales  made  in the  ordinary  course  of  business  since  that  date,  all the
Inventories  are the property of the Seller.  No items are subject to a security
interest.  The value of the  Inventories  has been  determined  on a  "first-in,
first-out" basis consistent with prior years.

          l.   Other Tangible Personal Property.  Exhibit L to this Agreement is
a complete and accurate schedule describing, and specifying the location of, all
trucks, automobiles,  machinery,  equipment,  furniture,  supplies, tools, dies,
rigs, molds, patterns,  drawings, and all other tangible personal property owned
by, in the possession of, or used by the Seller in connection with its business,
except  Inventories of raw materials,  work in process,  and finished goods. The
property  listed in Exhibit L constitutes  all such tangible  personal  property
necessary for the Seller's business as now conducted.  No personal property used
by the Seller in connection with its business is held under any lease,  security
agreement,  conditional  sales  contract,  or other title  retention or security
arrangement, or is located other than in the possession of the Seller.

          m.   Trade  Names,  Trademarks  and  Copyrights.  Exhibit  M  to  this
Agreement  is a schedule  of all  tradenames,  trademarks,  service  marks,  and
copyrights  and their  registrations,  owned by the Seller or in which they have
any rights or licenses,  together with a brief  description  of each. The Seller
does not have any  knowledge  of any  infringement  or alleged  infringement  by
others of any such  trade  name,  trademark,  service  mark,  or  copyright.  To
Seller's knowledge,  Seller has not infringed, and is not now infringing, on any
trade name, trademark, service mark, or copyright belonging to any other person,
firm,  partnership  or  corporation.  The Seller is not a party to any  license,
agreement,   or  arrangement,   whether  as  licensor,   licensee,   franchisor,
franchisee, or otherwise,  with respect to any trademarks,  service marks, trade
names,  or applications  for them, or any copyrights.  The Seller owns, or holds
adequate licenses or other rights to use, all trademarks,  service marks,  trade
names,  and  copyrights  necessary  for  its  business  as now  conducted  by it
(including  without  limitation  those  listed in Exhibit  M),  and to  Seller's
knowledge,  that use does not,  and will not,  conflict  with,  infringe  on, or
otherwise  violate  any  rights of  others.  The Seller has the right to sell or
assign to Buyer all such owned  trademarks,  trade  names,  service  marks,  and
copyrights, and all such licenses or other rights.

          n.   Patents and Patent Rights.  Exhibit M to this Agreement is a true
and complete schedule of all patents, inventions,  industrial models, processes,
designs,  and  applications  for patents owned by the Seller in which it has any
rights, licenses, or immunities (the "Intellectual  Property").  The patents and
applications  for  patents  listed in  Exhibit M are valid and in full force and
effect and are not subject to any taxes,  maintenance  fees, or actions  falling
due within  ninety  (90) days after the  Closing  Date.  There have not been any
interference  actions  or  other  judicial,   arbitration,  or  other  adversary
proceedings  concerning any of the Intellectual Property. To Seller's knowledge,
the  manufacture,  use, or sale of the  Intellectual  Property do not violate or
infringe on any patent or any proprietary or personal right of any person, firm,
or corporation;  and to Seller's knowledge,  the Seller has not infringed and is
not now infringing on any patent or other right  belonging to any person,  firm,
or  corporation.  The  Seller  is not a  party  to any  license,  agreement,  or
arrangement,  whether as licensee,  licensor, or otherwise,  with respect to any
patent, application for patent, invention, design, model, 

                                       -7-

<PAGE>

process, trade secret, or formula. The Seller has the right and authority to use
and to transfer to Buyer the Intellectual Property as are necessary to enable it
to conduct and to  continue to conduct all phases of its  business in the manner
presently  conducted by it, and that use does not, and will not,  conflict with,
infringe on, or violate any patent or other rights of others.

          o.   Trade Secrets. Exhibit N to this Agreement is a true and complete
list, of the Seller's trade secrets,  including all customer  lists,  processes,
know-how,  computer programs and routines,  archival  libraries,  pictures,  and
other   technical   data.   The  specific   location  of  each  trade   secret's
documentation,  if  any,  including  its  description,  specifications,  charts,
procedures, and other material relating to it, is also set forth with it in that
Exhibit.  To the extent that Seller has intended to completely  memorialize  its
trade  secrets  in  a  tangible   readable   form,   each  such  trade  secret's
documentation  is current,  accurate,  and  sufficient  in detail and content to
identify  and  explain it and to allow its full and proper use by Buyer  without
reliance on the special  knowledge or memory of others.  To Seller's  knowledge,
the Seller is the sole owner of each of these trade  secrets,  free and clear of
any liens, encumbrances,  restrictions,  or legal or equitable claims of others.
The Seller has taken all  reasonable  security  measures to protect the secrecy,
confidentiality,  and value of these trade secrets; any of its employees and any
other persons who, either alone or in concert with others, developed,  invented,
discovered,  derived,  programmed,  or  designed  these  secrets,  or  who  have
knowledge of or access to information  relating to them, have been put on notice
and,  if  appropriate,  have  entered  into  agreements  that these  secrets are
proprietary  to the  Seller  and not to be  divulged  or  misused.  To  Seller's
knowledge,  all these trade secrets are presently  valid and protectable and are
not part of the public  knowledge or literature;  nor to the Seller's  knowledge
have they been used,  divulged,  or appropriated  for the benefit of any past or
present employees or other persons, or to the detriment of the Seller.

          p.   Title to Assets.  Seller has good and marketable title to all its
Assets and interests in Assets,  whether real,  personal,  mixed,  tangible,  or
intangible,  which  constitute  all the assets and  interests in Assets that are
used in the  business of the Seller.  All these assets are free and clear of the
restrictions  on or conditions to transfer or assignment,  and free and clear of
mortgages, liens, pledges, charges,  encumbrances,  equities, claims, easements,
rights of way, covenants, conditions or restrictions, except the lien of current
taxes not yet due and payable and possible minor matters that, in the aggregate,
are not  substantial in amount and do not  materially  detract from or interfere
with the present or intended  use of any of these  Assets or  materially  impair
business operations.  The Seller is not in default or in arrears in any material
respect under any lease. All real property and tangible personal property of the
Seller  is  being  sold in its "As Is"  condition  solely  with  respect  to its
operating condition,  wear and tear. The Seller is in possession of all premises
leased to it from others. No officer,  director,  or employee of the Seller; nor
any spouse,  child, or other relative of any of these persons,  owns, or has any
interest,  directly or  indirectly,  in any of the real  property  leased to the
Seller or any  copyrights,  patents,  trademarks,  trade names, or trade secrets
licensed by the Seller or any other  Asset.  The Seller does not occupy any real
property in violation of any law, regulation, or decree.

          q.   Employment  Contracts  and  Benefits.  Seller  has no  employment
contracts   or   collective   bargaining   agreements,    or   pension,   bonus,
profit-sharing,  stock option, or other agreements or arrangements providing for
employee remuneration or benefits to which the Seller is a party or by which the
Seller  is  bound.  Seller  has  not  entered  into  any  severance  or  similar
arrangement in respect of any present or former employee that will result in any
obligation,  absolute or contingent, of Buyer, or the Seller to make any payment
to any present or former employee following termination of employment.



                                       -8-

<PAGE>

          r.   Insurance Policies.  Exhibit O to this Agreement is a description
of all  insurance  policies  held by the  Seller  concerning  its  business  and
properties. All these policies are in the respective principal amounts set forth
in Exhibit O. The Seller has  maintained  and now maintains (1) insurance on all
its Assets and business of a type customarily insured,  covering property damage
and  loss of  income  by fire or  other  casualty,  and (2)  adequate  insurance
protection  against  all  liabilities,  claims,  and risks  against  which it is
customary  to insure.  The Seller is not in default  with  respect to payment of
premiums on any such policy. No claim is pending under any such policy.

          s.   Other  Contracts.  The  Seller  is  not a  party  to,  nor is its
property bound by, any distributor's or manufacturer's  representative or agency
agreement;  any output or requirements agreement; any agreement not entered into
in the ordinary course of business; any indenture,  mortgage,  deed of trust, or
lease;  or any  agreement  that  is  unusual  in  nature,  duration,  or  amount
(including,  without limitation,  any agreement requiring the performance by the
Seller of any obligation  for a period of time  extending  beyond one month from
the Closing Date or calling for consideration of more than Five Thousand Dollars
($5,000));  except the agreements listed in Exhibit P, copies of which have been
furnished to Buyer.  There is no default or event that,  with notice or lapse of
time  or  both,  would  constitute  a  default  by any  party  to  any of  these
agreements.  The Seller has not  received  notice that any party to any of these
agreements intends to cancel or terminate any of these agreements or to exercise
or not exercise any options under any of these  agreements.  The Seller is not a
party to, nor is any of its property  bound by, any agreement that is materially
adverse to the business, properties, or financial condition of the Seller.

          t.   Compliance With Laws.

               i)   Environmental  Protection  Laws.  The Seller has complied in
                    all
material respects with all federal,  state, and local  environmental  protection
laws and regulations and has not been cited for any violation of any such law or
regulation.  No material  capital  expenditures  will be required for compliance
with any applicable  federal,  state,  or local laws or regulations now in force
relating to the protection of the  environment.  There is no pending audit known
to the Seller or any of its  officers or Directors  by any  federal,  state,  or
local  governmental  authority  with  respect  to  groundwater,   soil,  or  air
monitoring;  the  storage,  burial,  release,  transportation,  or  disposal  of
hazardous  substances;  or the use of underground storage tanks by the Seller or
relating to the facilities of the Seller. The Seller does not have any agreement
with any third party or federal, state, or local governmental authority relating
to any such environmental matter or any environmental cleanup.

               ii)  OSHA Laws.  The Seller has complied with all requirements of
the Occupational Safety and Health Act and its state equivalents and regulations
promulgated under any such legislation, the consequences of a violation of which
could have a material  adverse  effect on its  operations,  and with all orders,
judgments,  and decrees of any tribunal under such legislation that apply to its
business or properties.

               iii) Export Laws. The Seller is not in violation of any provision
of the Export Administration Act of 1979 or the Foreign Corrupt Practices Act of
1977.
               iv)  Fees  or  Commissions.   The  Seller  has  not  directly  or
indirectly  paid or delivered any fee,  commission,  or other money or property,
however  characterized, 

                                       -9-

<PAGE>

to any finder, agent,  government official, or other party, in the United States
or any  other  country,  that  is in any  manner  related  to  the  business  or
operations  of the Seller and that the Seller  knows or has reason to believe to
have been illegal under any federal, state, or local law of the United States or
any other country having jurisdiction. The Seller has not participated, directly
or  indirectly,  in any boycott or other similar  practice  affecting any of its
actual or potential  customers.  The Seller has at all times done business in an
open and ethical manner.

               v)   Others.  The  Seller  has  complied  with,  and  is  not  in
violation  of,  any  applicable  federal,  state,  or  local  statute,  law,  or
regulation  (including,  without limitation,  any applicable  building,  zoning,
environmental  protection, or other law, ordinance, or regulation) affecting its
properties or the operation of its business.

          u.   Litigation.  There is not pending,  or, to the best  knowledge of
the Seller threatened, any suit, action, arbitration, or legal,  administrative,
or other  proceeding,  or  governmental  investigation  against or affecting the
Seller or any of its business, Assets, or financial condition. The Seller is not
in  default  with  respect  to any  order,  writ,  injunction,  or decree of any
federal, state, local, or foreign court, department, agency, or instrumentality.
The Seller is not presently engaged in any legal action to recover monies due to
damages sustained by it.

          v.   Interest in  Customers,  Suppliers and  Competitors.  No officer,
Director, shareholder, or employee of the Seller, nor any spouse or child of any
of them, has any direct or indirect  interest in any  competitor,  supplier,  or
customer of the Seller or in any person  from whom or to whom the Seller  leases
any real or personal  property,  or in any other  person with whom the Seller is
doing business.

          w.   Full Disclosure.  None of the representations and warranties made
by the  Seller  or made in any  certificate  or  memorandum  furnished  or to be
furnished  by the Seller or on its behalf,  contains or will  contain any untrue
statement of a material  fact,  or omits to state a material  fact  necessary to
make the  statements  made, in the light of the  circumstances  under which they
were made, not misleading.

          x.   Account. Seller is acquiring Buyer's Stock (the "Securities") for
investment  for its own  account,  and not  with a view  to,  or for  resale  in
connection with, any distribution  thereof,  and it has no present  intention of
selling  or  distributing  any  such  Securities.  Seller  understands  that the
Securities have not been registered under the Securities Act of 1933, as amended
(the "Securities  Act") by reason of a specific  exemption from the registration
provisions of the  Securities  Act which depends upon,  among other things,  the
bona fide nature of the investment as expressed herein.

          y.   Access to Data.  The  Seller  has had an  opportunity  to discuss
Buyer's  business,  management and financial  affairs with its management and to
obtain  any  additional   information  which  Seller  has  deemed  necessary  or
appropriate  for  deciding  whether or not to acquire  the Stock,  including  an
opportunity to receive,  review and understand the  disclosures  and information
regarding the Buyer's financial  statements,  capitalization  and other business
information  as set forth in Buyer's  Amended Form 10 filed with the  Securities
and  Exchange  Commission  ("SEC") on January 27, 1995 and  subsequent  10-K and
10-KA,  two 10-Qs and Proxy  Statement  filed with the SEC on October 30,  1995,
November  28,  1995,  December  15,  1995,  March 18,  1996,  and June 14, 1996,
respectively,  all incorporated herein by reference,  together with all exhibits
referenced therein. Seller also acknowledges receiving a copy of Buyer's Private
Placement Memorandum dated January 2, 1996 prepared for Buyer's trade 


                                      -10-

<PAGE>

creditors. The Investor acknowledges that no representations or warranties, oral
or written, have been made by the Buyer or any agent thereof except as set forth
in this Agreement.

          z.   No Fairness Determination. Seller is aware that no federal, state
or other  agency has made any  finding or  determination  as to the  fairness of
Seller's  acquisition  of  the  Securities,   nor  made  any  recommendation  or
endorsement of the Securities.

          aa.  Knowledge And  Experience.  Seller or its officers,  directors or
representatives,  have such  knowledge and  experience in financial and business
matters,  including  investments  in other  start-up  companies,  that  they are
capable,  on behalf of Seller as applicable,  of evaluating the merits and risks
of acquiring  the  Securities,  and Seller is able to bear the economic  risk of
such investment,  including an assessment of the Risk Factors attached hereto as
Exhibit Q and incorporated herein by reference.

          bb.  Economic  Risk.  Seller is aware  that it must bear the  economic
risk of the  investment  in the  Securities  for an  indefinite  period  of time
because the Securities  have not been  registered  under the Securities  Act, or
qualified  under the  California  Corporate  Securities  Law of 1968, as amended
("California Securities Law"), and the Securities cannot be sold unless they are
subsequently  registered under the Securities Act and the California  Securities
Law, or an exemption from such registration and qualification is available.

          cc.  No Public  Market.  Seller is aware  that there is  currently  no
public market for Buyer's Stock,  although a limited market on the "pink sheets"
exists  for some of  Buyer's  outstanding  capital.  There is no  guaranty  that
Buyer's  Stock  will  be  registered  in the  future  for  public  sale.  Seller
understands that the Securities  cannot be readily sold or liquidated in case of
an  emergency or other  financial  need.  Seller has  sufficient  liquid  assets
available so that the purchase and holding of the  Securities  will not cause it
undue financial difficulties.

          dd.  Restrictive   Legends.   Each   certificate   or  other   written
documentation  representing  any of  Buyer's  Stock  which  Seller is  acquiring
hereunder and any other securities issued upon any stock split,  stock dividend,
recapitalization,  merger,  consolidation  or  similar  event  (unless no longer
required in the opinion of the counsel for Buyer)  shall be stamped or otherwise
imprinted with a legend substantially in the following form:

"THE SECURITIES  REPRESENTED BY THIS  CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED,  OR QUALIFIED UNDER ANY STATE SECURITIES
LAW, AND MAY NOT BE SOLD, TRANSFERRED,  ASSIGNED OR HYPOTHECATED UNLESS THERE IS
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT COVERING SUCH SECURITIES,  OR
THE HOLDER  RECEIVES  AN OPINION  OF  COUNSEL  FOR THE HOLDER OF THE  SECURITIES
SATISFACTORY TO THE CORPORATION, STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION  IS  EXEMPT  FROM  THE   REGISTRATION   AND  PROSPECTUS   DELIVERY
REQUIREMENTS OF SUCH ACT AND THE QUALIFICATION REQUIREMENTS UNDER STATE LAW."

Buyer shall be entitled to enter stop  transfer  notices on its stock books with
respect to the Securities.

          ee.  Reliance.  Seller is aware that Buyer is relying on the  accuracy
of the above  representations  to  establish  compliance  with Federal and State
securities laws.


                                      -11-

<PAGE>

     4.   Buyer's Representations and Warranties.  Buyer represents and warrants
to the Seller that:

          a.   Reorganization.   All   matters  to  be  voted  upon  by  Buyer's
shareholders as set forth in that certain Proxy Statement of Buyer dated January
24, 1996, distributed by Buyer to its shareholders have been approved.

          b.   Corporate  Status.  Buyer (i) is a  corporation  duly  organized,
validly existing and in good standing under the laws of the State of California,
(ii) has the  requisite  corporate  power and authority to own,  lease,  use and
operate  its  property  and assets and to transact  the  business in which it is
engaged,  and (iii) is duly qualified and is authorized to do business and is in
good  standing  in  each  jurisdiction  where  the  ownership,  leasing,  use or
operation  of  its   property  or  the  conduct  of  its  business   makes  such
qualification  necessary,  except where the failure to be so qualified would, in
the aggregate,  not reasonably be expected to have a material  adverse effect on
the Buyer and its subsidiaries,  taken as a whole.  "Material Adverse Effect" or
similar derivatives shall mean where the effect on Buyer would be a liability in
excess of $100,000.

          c.   Capitalization  of Buyer.  Immediately prior to execution of this
Agreement,  Buyer's  entire  authorized  capital stock  consists of  300,000,000
shares of no par value Common Stock ("Buyer's  Common Stock"),  of which a total
of 60,704,083  shares are issued and outstanding,  30,000,000 shares of Series A
Preferred   Stock,  of  which  a  total  of  5,283,140  shares  are  issued  and
outstanding,  and 5,000,000  shares of Series B Convertible  Preferred Stock, of
which a total of not in excess of 2,000,000  shares are issued and  outstanding.
There are,  and as of the  Closing  there  will be, no shares of Buyer's  Common
Stock issued and held by Buyer as treasury  stock.  All of Buyer's  Common Stock
has been,  and the  Stock to be issued  hereunder  to Seller  shall be,  validly
issued,  fully paid and non  assessable  and the issuance of which has not been,
nor will be, in violation of any preemptive right of stockholders.

          d.   Corporate  Records and  Authorization.  All corporate  records of
Buyer,  including but not limited to the Articles of  Incorporation,  the Bylaws
(including  all  amendments to both) and all minutes of the  proceedings  of the
Board of  Directors  of Buyer and the  shareholders  thereof,  are  complete and
correct and will be made available to Seller  immediately  upon the execution of
this Agreement upon reasonable prior notice to Buyer.

          e.   Financial Statements. The certified financial statements of Buyer
for the fiscal  years ending July 31, 1994,  July 31,  1995,  and the  unaudited
financial  statements for the quarterly  periods  thereafter  ending January 31,
1996, as filed with the Securities and Exchange  Commission  (collectively,  the
"Financial Statements"), contain true and accurate statements of each and all of
the  assets and  liabilities  of Buyer and fairly  and  accurately  present  the
financial  condition of Buyer as of said dates and the results of the operations
of Buyer for the periods then ended,  and that said  Financial  Statements  were
prepared by the accountants indicated therein for such fiscal years and by Buyer
for the two most recent quarterly periods, in accordance with generally accepted
accounting principles  consistently applied (except for the absence of footnotes
for the last two quarterly periods). As of the Closing Date, Buyer will not have
any liabilities,  obligations or commitments,  secured or unsecured, absolute or
contingent  which are not reflected in the Financial  Statements and which would
reasonably be expected to have a material adverse effect on Buyer.


                                      -12-

<PAGE>

          f.   Directors' Authorization. This Agreement has been duly authorized
by Buyer's Board of Directors.  This Agreement will not violate, with or without
the giving of notice and/or the passage of time,  the Articles of  Incorporation
or the Bylaws of Buyer, any mortgage,  contract or other agreement or instrument
to which  Buyer  may be a party,  and will be  valid,  binding  and  enforceable
against Buyer in accordance with its terms.

          g.   Subsidiaries.  All of the outstanding  shares of capital stock or
other  equity  interests  in  each  subsidiary  of  Buyer   (collectively,   the
"Subsidiaries") have been duly authorized and validly issued, are fully paid and
nonassessable  and are owned,  of record and  beneficially,  by Buyer,  free and
clear of all liens, encumbrances, restrictions and claims of any kind.

          h.   Consents. No order, consent, approval, license,  authorization or
validation of, or filing, recording or registration with (except as have already
been obtained or made),  or review or exemption by, and  governmental  or public
body or  authority,  or any  subdivision  thereof,  or any bank is  required  in
connection with, (i) the execution, delivery or performance of this Agreement by
Buyer  or  (ii)  the  authorization,   legality,  validity,  binding  effect  or
enforceability  of this  Agreement  against  Buyer,  except where the failure to
obtain any such consent or approval would not have a material  adverse effect on
Buyer and its subsidiaries, taken as a whole.

          i.   Compliance With Laws. At the Closing, Buyer will be in compliance
with all applicable laws,  regulations and administrative orders of any country,
state,  municipality or any subdivision  thereof to which it or its business and
its  employment  of labor or use or occupancy of  properties or any part thereof
may be subject. Buyer has all permits, licenses and franchises from governmental
agencies  required to conduct its business as is now being conducted.  Buyer has
not failed to comply with any statute, law, ordinance, regulation, rule or order
of any federal,  state,  local or other  governmental  agency,  or any judgment,
decree, or order of any court,  relating to or materially affecting its business
or its assets which would have a material adverse effect on Buyer.

          j.   Execution  and  Performance  of  Agreement.   The  execution  and
performance by Buyer of this Agreement and the transactions  contemplated hereby
will not violate any  provision  of, or result in the breach of, or constitute a
default  under any law or any order,  writ,  injunction  or decree of any court,
governmental  agency or  arbitration  tribunal,  or any  contract,  agreement or
instrument by which Buyer is or will at the Closing be bound.

          k.   Litigation.   Neither  Buyer  nor  any  of  its  Subsidiaries  is
presently  engaged in or threatened  with any litigation  (including  appeals of
lower  court  decisions,  arbitration,  claim  or  other  legal  proceedings  or
governmental  or any other  investigation  which (i) is material  and adverse to
Buyer and its  subsidiaries  taken as a whole or (ii)  questions the validity or
enforceability of this Agreement.

          l.   Accuracy of Information.  No  representation  or warranty in this
Agreement,  nor any of the material  heretofore  furnished or to be furnished to
Seller by Buyer or the employees, agents or representatives of Buyer contains or
will contain any untrue or misleading  statement of a material fact, or omits or
will omit to state any material fact required to make the  statements  herein or
therein contained not misleading.



                                      -13-

<PAGE>

     5.   The  Seller's  Obligations  Before Closing.  The Seller covenants that
from the date of this Agreement until the Closing:

          a.   Access  to  Premises  and  Information.  Buyer  and its  counsel,
accountants,  and other  representatives  shall have full access  during  normal
business hours to all  properties,  books,  accounts,  records,  contracts,  and
documents of or relating to the Seller.  The Seller shall furnish or cause to be
furnished to Buyer and its representatives  all data and information  concerning
the business,  finances,  and  properties  of the Seller that may  reasonably be
requested.  To the extent  feasible  and  without  extra  expense to Buyer,  the
inspection may occur on the weekends or outside of the Seller's  principal place
of business.

          b.   Conduct of  Business in Normal  Course.  The Seller will carry on
its business and activities  diligently and in substantially  the same manner as
it has  previously  been carried out and shall not make or institute any unusual
or novel methods of manufacture,  purchase, sale, lease, management, accounting,
or operation  that vary  materially  from those methods used by the Seller as of
the date of this Agreement.

          c.   Preservation of Business and  Relationships.  The Seller will use
its  best  efforts  to  preserve  its  business  organizations  intact,  to keep
available  the  services  of  present  employees  and to  preserve  its  present
relationships   with   suppliers,   customers,   and  others   having   business
relationships with it, including preserving all goodwill associated therewith.

          d.   Maintenance  of Insurance.  The Seller will continue to carry its
existing  insurance,  subject to variations in amounts  required by the ordinary
operations of its business.

          e.   Employees and  Compensation.  The Seller will not do, or agree to
do, any of the following acts: (1) make any increase in compensation  payable or
to become payable by it, to any officer,  or director,  or any increase  greater
than  the  increase  in  the  last  year  to  any  employee,   sales  agent,  or
representative;  (2) make any  increase  in  benefits  payable  to any  officer,
employee,  sales  agent,  or  representative  under any bonus or pension plan or
other contract or commitment;  or (3) modify any collective bargaining agreement
to which it is a party or by which it may be bound.

          f.   New  Transactions.  The Seller shall not, without Buyer's written
consent, do or agree to do any of the following acts:

               i)   Unusual  Contracts.  Enter into any contract, commitment, or
transaction not in the usual and ordinary course of its business; or

               ii)  Excessive Contracts. Enter into any contract, commitment, or
transaction  in the usual and  ordinary  course of business  involving an amount
exceeding Ten Thousand Dollars ($10,000), individually, or in the aggregate; or

               iii) Capital  Expenditures.  Make  any  capital  expenditures  in
excess of Ten  Thousand  Dollars  ($10,000)  for any single  item or One Hundred
Thousand  Dollars  ($100,000)  in the  aggregate,  or enter  into any  leases of
capital  equipment or property  under which the annual lease charge is in excess
of Ten Thousand Dollars ($10,000); or

               iv)  Sale or Disposal. Sell or dispose of any capital Assets with
a fair market value exceeding Ten Thousand Dollars ($10,000) individually, or in
the aggregate.


                                      -14-

<PAGE>

          g.   Payment of Liabilities and Waiver of Claims. The Seller shall not
do, or agree to do, any of the following acts: (1) waive or compromise any right
or  claim;  or (2)  cancel,  without  full  payment,  any note,  loan,  or other
obligation owing to the Seller.

          h.   Existing Agreements.  The Seller shall not modify, amend, cancel,
or terminate any of its existing contracts or agreements,  or agree to do any of
those acts without Buyer's prior written consent.

          i.   Representations    and   Warranties   True   at   Closing.    All
representations  and warranties of the Seller set forth in this Agreement and in
any written  statements  delivered to Buyer by the Seller  under this  Agreement
will also be true and correct as of the Closing Date as if made on that date.

     6.   Buyer's Obligations Before Closing.

          a.   Cooperation in Securing Third-Party Consents.  Buyer will use its
best  efforts to assist the Seller in  obtaining  the  consent of all  necessary
persons and  agencies  to the  assignment  and  transfer to Buyer of any and all
properties, Assets, and agreements,  including agreements with the United States
government  or any of its  agencies,  to be assigned and  transferred  under the
terms of this Agreement.

     7.   Conditions Precedent to Buyer's Performance.  The obligations of Buyer
to purchase the Assets under this Agreement are subject to the satisfaction,  at
or before the  Closing,  of all the  conditions  set out below in this  Section.
Buyer may waive any or all of these conditions in whole or in part without prior
notice; provided, however, that no such waiver of a condition shall constitute a
waiver by Buyer of any of its other rights or remedies,  at law or in equity, if
the Seller  shall be in default of any of its  representations,  warranties,  or
covenants under this Agreement.

          a.   Accuracy of Representations  and Warranties.  Except as otherwise
permitted by this Agreement, all representations and warranties by the Seller in
this Agreement,  or in any written statement that shall be delivered to Buyer by
it under this  Agreement,  shall be true on and as of the Closing Date as though
made at that time.

          b.   Performance.  The Seller  shall have  performed,  satisfied,  and
complied  with  all  covenants,  agreements,  and  conditions  required  by this
Agreement to be performed or complied with by them, or any of them, on or before
the Closing Date.

          c.   No Material  Adverse  Change.  During the period from October 25,
1996, to the Closing Date, there shall not have been any material adverse change
in the financial condition or the results of operations of the Seller, and shall
not have  sustained  any material  loss or damage to its Assets,  whether or not
insured,  that materially  affects its ability to conduct a material part of its
business.

          d.   Certification. Buyer shall have received a certificate, dated the
Closing  Date,  signed and verified by the  Seller's  president  and  treasurer,
certifying, in such detail as Buyer and its counsel may reasonably request, that
the conditions specified in paragraphs 7a-c (above) have been fulfilled.



                                      -15-

<PAGE>

          e.   Absence of Litigation.  No action, suit, or proceeding before any
court or any  governmental  body or  authority,  pertaining  to the  transaction
contemplated  by  this  Agreement  or  to  its  consummation,  shall  have  been
instituted or threatened on or before the Closing Date.

          f.   Corporate Approval.  The execution and delivery of this Agreement
by the Seller,  and the performance of its covenants and  obligations  under it,
shall have been duly  authorized  by all  necessary  corporate  and  shareholder
action,  and Buyer shall have received copies of all  resolutions  pertaining to
that authorization, certified respectively by the Secretary of the Seller.

          g.   Sales and Use Tax on Prior  Sales and on this  Sale.  The  Seller
agrees (i) to  furnish  to Buyer a  clearance  certificate  from all  applicable
jurisdictions regulating the payment of sales taxes and any related certificates
that  Buyer  may  reasonably  request  as  evidence  that all  sales and use tax
liabilities  of the  Seller  accruing  before the  Closing  Date have been fully
provided for or otherwise satisfied.  Seller and Buyer shall each be responsible
for paying fifty percent  (50%) of any taxes  required to be paid to obtain such
clearance certificates;  provided,  however, that Seller shall remain liable for
any  misrepresentations  hereunder  regarding  taxes  owed  or  any  outstanding
liabilities of Seller.

          h.   Consents. All necessary agreements and consents of any parties to
the  consummation  of  the  transactions  contemplated  by  this  Agreement,  or
otherwise  pertaining to the matters  covered by it, shall have been obtained by
the Buyer and the Seller and delivered to Buyer.

          i.   Approval  of  Documentation.   The  form  and  substance  of  all
certificates,  instruments,  opinions,  and other  documents  delivered to Buyer
under this Agreement shall be  satisfactory in all reasonable  respects to Buyer
and its counsel.

     8.   Conditions Precedent to Seller's  Performance.  The obligations of the
Seller to sell and transfer the Assets under this  Agreement  are subject to the
satisfaction,  at or before the Closing,  of all the following  conditions.  The
Seller  may waive  any or all of these  conditions  in whole or in part  without
prior  notice;  provided,  however,  that no such  waiver of a  condition  shall
constitute a waiver by the Seller of any of its other rights or remedies, at law
or in  equity,  if Buyer  should be in  default  of any of its  representations,
warranties, or covenants under this Agreement.

          a.   Accuracy of Representations  and Warranties.  All representations
and warranties by Buyer contained in this Agreement or in any written  statement
delivered by Buyer under this  Agreement  shall be true on and as of the Closing
Date as though such repre  sentations and warranties were made on and as of that
date.

          b.   Performance.  Buyer shall have  performed  and complied  with all
covenants and  agreements  and satisfied all  conditions  that it is required by
this Agreement to perform, comply with, or satisfy, before or at the Closing.

          c.   Corporate  Approval.  All corporate action necessary or proper to
fulfill the Buyer's  obligations  to be  performed  under this  Agreement  on or
before the Closing Date shall have been obtained.


                                      -16-

<PAGE>

          d.   Consents. All necessary agreements and consents of any parties to
the  consummation  of  the  transactions  contemplated  by  this  Agreement,  or
otherwise  pertaining to the matters  covered by it, shall have been obtained by
the Buyer and the Seller and delivered to Buyer.

     9.   Obligations After Closing of the Parties.

          a.   Indemnification.  Each party shall  indemnify,  defend,  and hold
harmless the other party against and in respect of any and all claims,  demands,
losses, costs, expenses,  obligations,  liabilities,  damages,  recoveries,  and
deficiencies,  including interest,  penalties,  and reasonable  attorneys' fees,
that the other party shall incur or suffer,  that arise,  result from, or relate
to any breach of, or failure by a party to perform  any of the  representations,
warranties,  covenants,  or  agreements  in this  Agreement or in any  schedule,
certificate,  Exhibit,  or other  instrument  furnished or to be furnished by it
under this Agreement;  provided,  however,  the parties'  obligations under this
Paragraph 9.a. shall expire on December 31, 1998.

          b.   Use of Name.  Seller  agrees that after the Closing Date it shall
not use or employ in any manner  directly or indirectly the names that Buyer has
purchased  pursuant to this  Agreement or any name that would be similar to such
names,  and that it will take and cause to be taken all necessary  action by its
Board of  Directors,  stockholders,  and any other persons in order to make this
change in the  Seller's  name  within ten (10)  calendar  days after the Closing
Date.

          c.   Name Change. The Seller agrees that immediately after the Closing
Date it will take all action required to change its name to a name that does not
employ in any manner  directly or indirectly  the names that Buyer has purchased
pursuant to this Agreement or any name that would be similar to such names.

     10.  Miscellaneous.

          a.   Brokers  and  Finders.  Except  as set  forth  in the  Disclosure
Schedule,  each party represents that it has not dealt with any broker or finder
in connection with any transac tion contemplated by this Agreement.

          b.   Costs and  Expenses.  Except  as  specifically  provided  in this
Agreement,  each  party  shall  pay all  costs and  expenses  incurred  or to be
incurred by it in  negotiating  and preparing  this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.

          c.   Form of Agreement.  The subject  headings of the  paragraphs  and
subparagraphs  of this Agreement are included for convenience only and shall not
affect the construction or interpretation of any of its provisions.

          d.   Entire  Agreement.  This Agreement and the Exhibits and Schedules
attached  hereto,  all of  which  are  incorporated  by this  reference  herein,
constitute the entire  agreement  between the parties  pertaining to the subject
matter contained in it and supersede all prior and  contemporaneous  agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this Agreement  shall be binding  unless  executed in writing by
all the parties.  No waiver of any of the provisions of this Agreement  shall be
deemed,  or shall  constitute,  a waiver of any other provision,  whether or not
similar, 


                                      -17-

<PAGE>

nor shall any waiver constitute a continuing  waiver. No waiver shall be binding
unless executed in writing by the party making the waiver.

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

          f.   Parties in Interest.  Nothing in this Agreement,  whether express
or implied,  is intended to confer any rights or remedies  under or by reason of
this Agreement on any persons other than the parties to it and their  respective
successors and assigns, nor is anything in this Agreement intended to relieve or
discharge the  obligation or liability of any third persons to any party to this
Agreement,  nor  shall  any  provision  give  any  third  persons  any  right of
subrogation or action over against any party to this Agreement.

          g.   Assignment.  This  Agreement  shall not be  assignable  by either
party without the prior written  consent of the other party.  No such assignment
shall release the assigning  party from its  obligations  under this  Agreement.
Subject to the foregoing,  this  Agreement  shall inure to the benefit of and be
binding upon Buyer,  its successors and assigns and upon Seller,  its successors
and assigns.  Nothing in this  Agreement,  expressed or implied,  is intended to
confer upon any other  person any rights or remedies  under or by reason of this
Agreement.

          h.   Attorneys'  Fees and  Costs.  In the event of any  litigation  or
other  dispute  arising  as a result  of or by  reason  of this  Agreement,  the
prevailing  party in any such  litigation or other dispute shall be entitled to,
in addition to any other damages assessed,  its reasonable  attorneys' fees, and
all other costs and expenses  incurred in connection  with settling or resolving
such dispute.  The  attorneys'  fees which the  prevailing  party is entitled to
recover shall include fees for  prosecuting or defending any appeal and shall be
awarded for any supplemental  proceedings  until the final judgment is satisfied
in full. In addition to the foregoing award of attorneys' fees to the prevailing
party,  the prevailing  party in any lawsuit on this Agreement shall be entitled
to its reasonable  attorneys' fees incurred in any post judgment  proceedings to
collect or enforce the judgment.  This attorneys' fees provision is separate and
several and shall survive the merger of this Agreement into any judgment.

          i.   Representations and Warranties. All representations, warranties,
covenants,  and agreements of the parties contained in this Agreement, or in any
instrument,  certificate,  opinion,  or other writing  provided for in it, shall
survive the Closing.

          j.   Notices. All notices,  requests,  demands,  instructions or other
communications  required or permitted to be given under this Agreement  shall be
in  writing  and  shall be deemed to have been  duly  given  upon  delivery,  if
delivered  personally or by one-day courier, or by facsimile  transmission where
receipt  is  acknowledged  by the  receiving  machine  or if  given  by  prepaid
telegram,  or  mailed  first-class  airmail,  postage  prepaid,   registered  or
certified mail, return receipt requested,  shall be deemed to have been given 72
hours after such delivery,  to the applicable  party's  address set forth on the
signature page herein.  Either party hereto may change the address to which such
communications  are to be directed by giving  written  notice to the other party
hereto of such change in the manner provided above.

          k.   Governing  Law. This  Agreement  shall be construed in accordance
with,  and  governed  by,  the laws of the State of  California,  as  applied to
contracts that are executed and performed entirely in California.




                                      -18-

<PAGE>

          l.   Severability.  If any provision of this Agreement is held invalid
or  unenforceable  by any court of final  jurisdiction,  it is the intent of the
parties that all other provisions of this Agreement be construed to remain fully
valid, enforceable, and binding on the parties.

          m.   Number and Gender. All terms in this Agreement shall be construed
to mean either the singular or the plural, masculine, feminine or neuter, as the
situation  may demand.  When the term Seller is used  herein,  it shall refer to
each entity within that definition.

          n.   Ambiguities.  This  Agreement has been  negotiated at arms-length
and between persons  sophisticated and knowledgeable in the matters dealt within
this Agreement. In addition, each party has had the benefit of legal advice from
experienced  and  knowledgeable  legal  counsel.  Accordingly,  any  rule of law
(including  California Civil Code ss.1654), or legal decision that would require
interpretation  of any ambiguities in this Agreement  against the party that has
drafted it, is not  applicable  and is waived.  The provisions of this Agreement
shall be  interpreted  in a  reasonable  manner to  effect  the  purpose  of the
parties.

          o.   Bulk Sales Law. Buyer and Seller agree to waive  compliance  with
the  provisions  of the  California  law commonly  known as the "Bulk Sales Law"
(Section 6101 eg seg. of the California Commercial Code).

          p.   Repurchase of ECAR/Escrow  Shares. If Seller, or any affiliate of
Seller,  directly  or  indirectly,  shall  recover  possession  of and  title to
substantially  all of the  Assets  at any  time  on,  or  prior  to,  the  first
anniversary date following the Closing (the "Recovery Period"), then Buyer shall
have a right to  repurchase  the ECAR  Shares and  Escrow  Shares at a per share
price of $0.30  within  the  longer of the  Recovery  Period and sixty (60) days
after such recovery.



                                      -19-

<PAGE>

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


BUYER:                                       SELLER:

U.S. ELECTRICAR, INC.                        SYSTRONIX CORPORATION

By:  /s/ Roy Kusumoto                        By:  /s/ Dan Rivers
     ---------------------------------            ------------------------------
     (Signature)                                  (Signature)

--------------------------------------       -----------------------------------
(Print Name & Title)                         (Print Name & Title)
5 Thomas Mellon Circle, Suite 305            19850 South Magellan Drive
San Francisco, CA  94134                     Torrance, CA  90502

With copy to:                                With copy to:

Donald C. Reinke, Esq.                       Francis W. Costello
Pezzola & Reinke, APC                        Whitman Breed Abbott & Morgan
1999 Harrison Street, Suite 1300             633 West Fifth Street, Suite 2100
Oakland, CA  94612                           Los Angeles, CA  90071



The following  Exhibits to this Agreement are included:  (1) Secured  Promissory
Note; (2) Purchase  Money  Security  Agreement;  and (3) Escrow  Agreement.  The
remainder  of Exhibits  are deemed not to be  material  in nature,  and would be
prohibitively  expensive to submit.  The Exhibits are  available for review from
the Company upon request.

                                      -20-

<PAGE>

                              U.S. ELECTRICAR, INC.
                             SECURED PROMISSORY NOTE

                                                       San Francisco, California
$829,978.39                                                     October 25, 1996

     U.S.  ELECTRICAR,  INC.,  a California  corporation  (the  "Company"),  the
principal  office of which is located at San Francisco  Executive Park, 5 Thomas
Mellon Circle,  Ste. 305 San  Francisco,  CA 94134,  for value  received  hereby
promises to pay to Systronix Corporation, a California corporation or registered
assigns,   the  sum  of  Eight   Hundred   Twenty-nine   Thousand  Nine  Hundred
Seventy-eight  and 39/100 U.S. Dollars  ($829,978.39),  or such lesser amount as
shall  then  equal  the  outstanding  principal  amount  hereof on the terms and
conditions set forth  hereinafter.  The principal  hereof and any unpaid accrued
interest hereon, as set forth below, shall be due and payable on, or before, the
thirtieth  calendar day following  the date of this Note (the "Due Date").  This
Note is entered  into and  delivered  by the Company to Holder  pursuant to that
certain  Agreement  For Purchase and Sale of Assets  executed by the Company and
Holder on even date herewith (the "Purchase Agreement"). Any "C"apitalized terms
not defined herein shall have the meaning set forth in the Purchase Agreement.

     The  following  is a statement of the rights of the Holder of this Note and
the conditions to which this Note is subject, and to which the Holder hereof, by
the acceptance of this Note, agrees:

     1.   Definitions.  As used in this Note,  the following  terms,  unless the
context otherwise requires, have the following meanings:

          a.   "Company"  includes  any  corporation  which shall  succeed to or
assume the obligations of the Company under this Note.

          b.   "Holder," when the context refers to a holder of this Note, shall
mean any person who shall at the time be the registered holder of this Note.

     2.   Interest.  Until all  outstanding  principal and interest on this Note
shall  have been paid in full,  interest  shall be  payable  on the  outstanding
principal  balance of this Note,  in arrears on the Due Date, at the rate of six
percent  (6.0%) per annum  accruing from the date of this Note (the "Loan Date")
(the "Interest  Rate"). In the event that any portion of the principal amount of
this Note is not paid in full on, or  before,  the Due Date by  depositing  such
payment in the United  States mails,  postage  prepaid,  on, or before,  the Due
Date,  interest at the Interest Rate shall  continue to accrue on the balance of
any unpaid principal and accrued interest until such balance is paid.

     3.   Prepayment. The Company may prepay any portion or all of the principal
balance or interest of this Note. Likewise,  the Company shall pay Holder within
five (5)  business  days of  receipt  forty-five  percent  (45%)  of any  equity
financing  received by the Company  prior to the Due Date until all  outstanding
principal  and accrued  hereunder is paid in full.  Any  prepayment of this Note
will be credited first against accrued interest then principal.

     4.   Purchase Money Security Interest. All principal and interest hereunder
shall be secured by the Assets.  The Company shall be in "Default"  hereunder if
any monies owed hereunder are not paid when due and payable.  Upon Default,  the
provisions set forth in the Purchase Money Security Agreement shall govern.


                                      - 1 -

<PAGE>
     5.   Notices.  Any  notice  required  or permitted under this Note shall be
given in writing and shall be deemed effectively given upon personal delivery to
the party to be notified by hand or professional courier service or for mailings
from and to any address in North America (Canada, United States and Mexico) five
(5) days after  deposit with the United  States Post Office,  by  registered  or
certified mail, postage prepaid and addressed to the party to be notified at the
address  indicated for such party below,  or at such other address as such party
may designate by ten (10) days' advance written notice to the other parties.

     6.   Governing  Law.  This Note  shall be  governed  by, and  construed  in
accordance  with, the laws of the State of  California,  applicable to contracts
between  California  residents entered into and to be performed  entirely within
the State of California.

     7.   Attorneys'  Fees.  If any action at law or in equity is  necessary  to
enforce or  interpret  the terms of this Note,  the  prevailing  party  shall be
entitled to reasonable  attorneys' fees, costs and  disbursements in addition to
any other relief to which such party may be entitled.

     8.   Heading; References. All headings used herein are used for convenience
only and shall not be used to construe or interpret this Note.

     IN WITNESS WHEREOF, the Company has caused this Note to be issued as of the
date first set forth above.

                                       U.S. ELECTRICAR, INC.

                                       By:
                                          -------------------------------
                                             (Signature)

                                       -----------------------------------
                                             (Print Name and Title)


                                      - 2 -

<PAGE>


                        PURCHASE MONEY SECURITY AGREEMENT

     This Purchase Money  Security  Agreement  ("Agreement"),  dated October 15,
1996,  is made by and between U.S.  Electricar,  Inc., a California  corporation
("Debtor"),  and  Systronix  Corporation,  a  California  corporation  ("Secured
Party").

                                    RECITALS

     A.   Secured  Party and Debtor have entered into an Agreement  for Purchase
and Sale of  Assets  made  effective  as of  October  25,  1996  (the  "Purchase
Agreement")  whereby  Secured  Party has  agreed  to sell to  Debtor  all of the
assets, properties and business of Secured Party (the "Assets");

     B.   Pursuant  to  the  terms  of  the  Purchase   Agreement,   Debtor  has
concurrently  herewith executed and delivered to Secured Party a promissory note
in the original  principal  amount of Eight  Hundred  Twenty Nine  Thousand Nine
Hundred Seventy Eight Dollars and 39/100  ($829,978.39) (the "Promissory Note"),
which sum represents partial payment for the Assets of Secured Party:

     C.   Debtor  has  agreed  with  Secured  Party that  Debtor  shall  provide
security for the obligations of Debtor under the Promissory Note with a purchase
money first priority security interest in all of the Assets of the Secured Party
to be transferred to Debtor pursuant to the Purchase Agreement.

     NOW,  THEREFORE,  in consideration of the foregoing premises and the mutual
covenants and conditions herein, the parties hereby agree as follows:

                                    AGREEMENT

     1.   Grant of Security.  As security for and in further  consideration  for
the obligations of Debtor under the Promissory  Note and this Agreement,  Debtor
hereby  grants to Secured  Party a security  interest  in all present and future
right,  title and  interest  whatsoever  of Debtor in or to,  and all rights and
powers  whatsoever of Debtor to transfer any interest in or to, in the following
property:

          (a) the patents,  service marks,  trademarks,  trade names, copyrights
(and registrations and applications  therefor),  processes,  methods,  patterns,
devices,  formulae,  discoveries,  trade  secrets  and  other  know-how,  all as
identified on Exhibit "A" attached hereto (the "Technology"); and

          (b) the inventory,  work-in-progress,  parts, furniture,  fixtures and
equipment listed on Exhibit "B" attached hereto (the "Personal Property"); and



<PAGE>


          (c) the Debtor's interest in that certain Industrial Real Estate Lease
dated  December  1,  1994,  between  Nakamichi  U.S.A.,  Inc.  ("Nakamichi")  as
sublessor and Secured  Party,  as sublessee,  for the premises  located at 19850
South Magellan Drive, Torrance, California 90502 (the "Lease"); and

          (d) the  contracts  identified  in Exhibit  "C"  attached  hereto (the
"Contracts"); and

          (e) all accounts receivable or other amounts owing Secured Party as of
the Closing Date (as defined in the Purchase Agreement) (the "Receivables"); and

          (f)  all  data,   drawings,   files  and  records  pertaining  to  the
Technology, the Personal Property, the Lease, and the Receivables; and

          (g) All other tangible and intangible  property of Debtor  relating to
or  arising  out of  the  Business,  including  but  not  limited  to  the  name
"Systronix" and the mark "Panther"; and

          (h) All rights,  remedies,  powers  and/or  privileges  of Debtor with
respect to any of the foregoing; and

          (i) Any and all proceeds of any of the foregoing,  including,  without
limitation,  all  money,  accounts,   general  intangibles,   deposit  accounts,
documents,  instruments, chattel paper, goods, insurance proceeds, and any other
tangible or intangible  property received upon the sale or disposition of any of
the foregoing.

The  property so  described  in this  Section 1 shall be  referred to  hereafter
collectively as the "Collateral".  Notwithstanding the foregoing, nothing herein
shall be deemed to grant  Secured  Party any  security  interest in any property
which does not comprise the "Assets" as of the date hereof  except as referenced
in subparagraph (i) above.

     2.   Indebtedness.  The Collateral secures and will secure all indebtedness
owed by Debtor to Secured Party under the Promissory Note and this Agreement.

     3.   Representations, Warranties and Covenants.  Debtor hereby  represents,
warrants and  covenants  that,  unless  compliance is waived by Secured Party in
writing:

          (a) Debtor will  properly  maintain and care for the  Collateral,  not
cause or permit any waste or confiscation of the Collateral,  and pay all taxes,
assessments and liens now or hereafter imposed on the Collateral;

                                     - 2 -

<PAGE>

          (b) Debtor will notify Secured Party in writing prior to any change in
Debtor's place of business, or, if Debtor has or acquires more than one place of
business,  prior to any change in Debtor's chief executive office, the office or
offices where Debtor's books and records  concerning the Collateral are kept, or
where Debtor's inventory is kept;

          (c) Debtor will  immediately  notify  Secured Party of any proposed or
actual change of Debtor's name, identity or corporate structure;

          (d) Debtor will maintain such insurance  covering the Collateral as is
customary for businesses similar to the business of Debtor;

          (e) Debtor will not sell,  contract for sale or  otherwise  dispose of
any of the  Collateral  except in the ordinary  course of business as heretofore
conducted by Debtor;

          (f) Debtor will promptly  notify Secured Party in writing of any event
which  affects  the value of the  Collateral,  the  ability of Debtor or Secured
Party to dispose of the Collateral,  or the rights and remedies of Secured Party
in  relation  thereto,  including,  but not  limited  to,  the levy of any legal
process  against  the  Collateral  and  the  adoption  of any  marketing  order,
arrangement  or procedure  affecting the  Collateral,  whether  governmental  or
otherwise;

          (g) Until Secured Party exercises its right to make collection, Debtor
will  diligently  collect all receivables and keep accurate books and records of
the receivables and all collections thereof; and

          (h) The security  interest granted to Secured Party on the date hereof
is and shall at all times remain first in priority, subject only to any liens or
encumbrances existing immediately prior to Secured Party's sale of the Assets to
Debtor under the Purchase  Agreement,  and Debtor shall not further encumber the
Collateral  or any part  thereof  without the prior  written  consent of Secured
Party,  nor shall  Debtor  transfer,  convey or license  any of the  Collateral,
whether to an affiliate of Debtor or otherwise, except as otherwise permitted in
Section 3(e) hereof.

     4.   Additional  Covenants.  Debtor hereby agrees that Secured Party may at
any time at its option,  whether or not Debtor is in default, do any one or more
of the following, and Debtor hereby agrees to promptly comply:

          (a) Require  Debtor to  periodically  deliver to Secured Party records
and schedules (in such form as deemed  satisfactory to Secured Party) which show
the  status  and  

                                     - 3 -

<PAGE>

condition  of the  Collateral, where it is  located  and such contracts or other
matters which affect the Collateral;

          (b) Verify the Collateral and,  subject to reasonable  confidentiality
requirements, inspect the books and records of Debtor and make copies thereof or
extracts therefrom where such records refer to or relate to the Collateral;

          (c) Require Debtor to obtain Secured  Party's prior written consent to
any sale,  contract  of sale or other  disposition  of any  inventory  or of any
products  or other  goods  covered  by any  document  of  title  not made in the
ordinary course of business;

          (d) Notify any account debtors,  any buyers of the Collateral,  or any
other persons,  of Secured  Party's  interest in the Collateral and the proceeds
thereof.

     5.   Defaults.  Any  one  or  more  of the  following  shall  be a  default
hereunder:

          (a) Debtor shall fail to pay any  indebtedness  owed to Secured  Party
when due;

          (b)  Debtor   shall   breach   any  term,   provision,   warranty   or
representation under this Agreement;

          (c)  Any   financial   statements,   profit   and   loss   statements,
certificates, or other statements furnished by Debtor to Secured Party hereunder
prove false or incorrect in any material respect; or

          (d) An event of default shall have occurred under the Promissory  Note
or the Purchase Agreement.

                  6.       Remedies.  In the event of any default hereunder,
Secured Party (in its sole discretion), may do any one or more of
the following:

          (a)  Declare  any  indebtedness  secured  hereby  immediately  due and
payable;

          (b) Enforce the  security  interest  given  hereunder  pursuant to the
California  Commercial  Code or any other law and enforce  any other  rights and
remedies of Secured Party under the Promissory Note;

          (c)  Require  Debtor  to  assemble  the  Collateral  and  the  records
pertaining to the Collateral and make them available to Secured Party at a place
designated by Secured Party;

                                     - 4 -

<PAGE>

          (d) Enter the premises of Debtor and take possession of the Collateral
and of the records pertaining to the Collateral;

          (e) Grant  extensions,  compromise  claims and sell the Collateral for
less than face value, all without prior notice to Debtor;

          (f)  Use,  in  connection  with any  assembly  or  disposition  of the
Collateral, any trademark,  trade name, trade style, copyright,  patent right or
technical process used or utilized by Debtor;

          (g) Proceed in the  foreclosure of Secured Party's  security  interest
and sale of the Collateral in any manner permitted by law or this Agreement;

          (h) Sell,  lease or otherwise  dispose of the  Collateral at public or
private sale;

          (i) Retain the  Collateral  in full  satisfaction  of the  obligations
secured hereby and in connection therewith operate the Business;

          (j) Require  Debtor to segregate all  collections  and proceeds of the
Collateral  so that they are capable of  identification,  and deliver daily such
collections and proceeds to Secured Party in kind;

          (k)  Require  Debtor to  deliver  to  Secured  Party  any  receivables
evidenced by instruments or chattel paper;

          (l)  Require  Debtor to direct all  account  debtors  to  forward  all
remittances,  payments and proceeds of the Collateral to a post office box under
Secured Party's exclusive control; or

          (m)  Demand  and  collect  any  receivables  and any  proceeds  of the
Collateral. In connection therewith, Debtor irrevocably authorizes Secured Party
to  endorse  or  sign  Debtor's  name  on all  collections,  receipts  or  other
documents,  take  possession of and open the mail addressed to Debtor and remove
therefrom payments of receivables and proceeds of the Collateral.

     7.   Waivers.  Debtor hereby  waives,  to the maximum  extent  permitted by
applicable laws, all demands, presentments and notices of every kind and nature,
including  notice of any  public or  private  judicial  or  nonjudicial  sale or
foreclosure  of any of the  Collateral.  Debtor further  waives,  to the maximum
extent  permitted by applicable laws (i) any rights which it may have to require
Secured  Party to conduct a public or private  judicial or  nonjudicial  sale or
foreclosure  of any of the  Collateral or to pursue any other  remedy;  (ii) the
pleading of 

                                     - 5 -

<PAGE>

any statute of limitations as a defense to Debtor's obligations hereunder; (iii)
and any and all laws  providing for exemption of property from  execution or for
valuation and appraisal upon  foreclosure;  (iv) the benefit of, or any right to
participate  in, any Collateral now or hereafter held by Secured Party;  and (v)
any rights to require  Secured Party to sell the  Collateral  in a  commercially
reasonable  manner.  Debtor agrees that upon an event of default,  Secured Party
shall  automatically  be deemed  to be in  possession  of all of the  Collateral
including,  without  limitation,  the  Technology.  In the event  Secured  Party
elects, after an event of default, to retain the Collateral in full satisfaction
of the  obligations  secured hereby,  Debtor agrees to immediately  surrender to
Secured  Party  all  of  Debtor's  rights,  title  and  interest  in  and to the
Collateral.  Debtor acknowledges an understanding of the consequences of each of
the foregoing waivers.

     8.   Relief  from   Automatic   Stay.   Debtor   further  agrees  that,  in
consideration of the recitals and mutual covenants contained herein,  including,
but not limited to, the  agreement  of Secured  Party to accept  payment for the
Assets in installments as set forth in the Promissory  Note, in the event Debtor
shall file,  be the  subject of any order for  relief,  or be the subject of any
petition  under Title 11 of the United  States  Code,  as now  existing or later
amended (the  "Bankruptcy  Code"),  Secured Party shall thereupon be entitled to
immediate  relief  from  the  automatic  stay  imposed  by  Section  362  of the
Bankruptcy  Code,  as now  existing or later  amended,  against the  exercise of
Secured Party's rights and remedies,  including, but not limited to, foreclosure
remedies under this Agreement or as provided by applicable law.

     Debtor  acknowledges  and  represents  that  prior to payment of sums owing
under the  Promissory  Note (i) it does not have any equity in the Collateral as
that term is used in Section  362(d)(2)(A) of the Bankruptcy  Code, and (ii) the
Collateral  is not  necessary  to an  effective  reorganization  of Debtor under
Section 362(d)(2)(A) of the Bankruptcy Code.

     9.   Miscellaneous.

          (a) Any waiver,  expressed or implied,  of any provision hereunder and
any delay or  failure  by  Secured  Party to  enforce  any  provision  shall not
preclude Secured Party from enforcing any such provision thereafter.

          (b) Debtor shall, at the request of Secured Party,  execute such other
agreements,  documents  or  instruments  in  connection  with this  Agreement as
Secured Party may reasonably deem necessary, including but not limited to a Form
UCC-1 Financing  Statement and the recordation of the security  interest granted
hereunder with the U.S. Patent and Trademark Office.

                                     - 6 -

<PAGE>

          (c) This Agreement shall be governed by and construed according to the
laws of the State of California.

          (d) All rights and remedies  herein  provided are  cumulative  and not
exclusive  of any rights or remedies  otherwise  provided by law.  Any single or
partial  exercise of any right or remedy shall not preclude the further exercise
thereof or the exercise of any other right or remedy.

          (e)  All  terms  not  defined  herein  are  used as set  forth  in the
California Commercial Code.

          (f) In the  event of any  litigation  or other  dispute  arising  as a
result of or by  reason  of this  Agreement,  the  prevailing  party in any such
litigation  or other  dispute  shall be  entitled  to, in  addition to any other
damages  assessed,  its  reasonable  attorneys'  fees,  and all other  costs and
expenses  incurred in connection  with settling or resolving  such dispute.  The
attorneys' fees which the prevailing  party is entitled to recover shall include
fees for  prosecuting  or  defending  any appeal  and shall be  awarded  for any
supplemental  proceedings  until the final  judgment is  satisfied  in full.  In
addition to the foregoing award of attorneys' fees to the prevailing  party, the
prevailing  party in any  lawsuit on this  Agreement  shall be  entitled  to its
reasonable  attorneys' fees incurred in any post judgment proceedings to collect
or enforce the judgment.  This attorneys' fees provision is separate and several
and shall survive the merger of this Agreement into any judgment.

          (g) If any term, provision, covenant or condition of this Agreement is
held by a court of competent  jurisdiction to be invalid, void or unenforceable,
the remainder of the provisions  shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

          (h) This  Agreement  shall not be  released,  discharged,  changed  or
modified  in any manner,  except by an  instrument  signed by a duly  authorized
officer or  representative of both Debtor and Secured Party. No oral explanation
or oral  information  by either of the parties hereto shall alter the meaning or
interpretation of this Agreement.

          (i) This  Agreement  shall inure to the benefit of and be binding upon
the parties hereto and their successors and assigns;  provided that Debtor shall
not be entitled to assign its  obligations  hereunder  without  Secured  Party's
consent.

          (j) All notices, requests, demands, and other communications hereunder
shall be in writing and shall be deemed given if delivered  personally  or three
(3) days after mailed by certified or registered mail,  postage prepaid,  return
receipt  requested,  to the  parties,  their  successors  in  interest  or their

                                     - 7 -

<PAGE>

assignees at the following addresses,  or at such other addresses as the parties
may designate by written notice in the manner aforesaid:

If to Debtor, to:                   U.S. Electricar, Inc.
                                    San Francisco Executive Park
                                    5 Thomas Mellon Circle, Ste. 305
                                    San Francisco, California 94134
                                    Attention:
                                    Telephone: (415) 656-2400
                                    Facsimile: (415) 656-2404

with a copy to:                     Pezzola & Reinke
                                    Attorneys At Law
                                    Lake Merritt Plaza Building
                                    1999 Harrison Street, Suite 1300
                                    Oakland, California 94612
                                    Attention: Donald C. Reinke, Esq.
                                    Telephone: (510) 273-8750
                                    Facsimile: (510) 834-7440

If to Secured Party, to:            Systronix Corporation
                                    19850 South Magellan Drive
                                    Torrance, California 90502
                                    Attention: Dr. Dan Rivers
                                    Telephone: (310) 527-3841
                                    Facsimile: (310) 527-7888


with a copy to:                     Whitman Breed Abbott & Morgan
                                    633 West Fifth Street, Ste. 2100
                                    Los Angeles, California 90071
                                    Attention: Francis W. Costello
                                    Telephone: (213) 896-2400
                                    Facsimile: (213) 896-2450



                                      - 8 -


<PAGE>



     IN WITNESS WHEREOF,  Debtor and Secured Party have caused this Agreement to
be duly executed on the date set forth above.

                                             U.S. ELECTRICAR, INC. ("Debtor")


                                             By:______________________________
                                             Name:____________________________
                                             Title:___________________________


                                             SYSTRONIX CORPORATION ("Secured
                                             Party")


                                             By:______________________________
                                             Name:____________________________
                                             Title:___________________________




                                      - 9 -


<PAGE>



                                    EXHIBIT A
                                   Technology

                                     - 10 -


<PAGE>



                                    EXHIBIT B
                                Personal Property

                                      - 11 -


<PAGE>


                                    EXHIBIT C
                                    Contracts

                                      - 12 -

<PAGE>

                                ESCROW AGREEMENT


     This  Agreement is made and entered into  effective as of October 25, 1996,
by and among Pezzola & Reinke, a professional  corporation (the "Escrow Agent"),
U.S.  Electricar,   Inc.,  a  California   corporation  ("ECAR")  and  Systronix
Corporation, a California corporation (the "Company").

                                   WITNESSETH:

     WHEREAS,  ECAR and the Company have entered into an Agreement  For Purchase
And Sale of  Assets,  dated  as of  October  25,  1996  (collectively,  with all
amendments,  schedules,  exhibits  and  certificates  referred to  therein,  the
"Purchase  Agreement"),  which provides for the acquisition of substantially all
of the assets of the Company (the "Acquisition"); and

     WHEREAS,  the Purchase Agreement provides that on the effective date of the
Acquisition,  certain shares of ECAR's common stock ("ECAR Common Stock"), to be
issued in the  Acquisition,  will be  deposited  in escrow with the Escrow Agent
pursuant to this Agreement.

     NOW,  THEREFORE,  in  consideration  of the mutual  premises and  covenants
contained in the Purchase Agreement and herein, the parties agree as follows:

     1.   Escrow and Escrow Shares.

          a.   Escrow.  Subject to Section 2.a. of this  Agreement,  One Million
One Hundred  Thousand  (1,100,000)  shares of ECAR Common Stock  issuable in the
Acquisition  shall be withheld and shall be delivered  into escrow to the Escrow
Agent on the effective date of the Acquisition (such shares to be delivered into
escrow are referred to herein as the "Escrow  Shares").  The Escrow Shares shall
be held and  distributed  by the Escrow Agent in  accordance  with the terms and
conditions of this Agreement.

     2.   Indemnification.

          a.   Survival   of   Representations,    Warranties,   Covenants   and
Agreements.

               (1)  Except as set forth in Section 3.a.  (below),  the Escrow as
provided  in Section  1.c.  of the  Acquisition  Agreement  shall  terminate  on
December 31, 1998 (the "Escrow Termination Date"). Likewise, except as set forth
in 2.a.(2)  (below),  all  warranties and  representations  of the Company shall
terminate on December 31, 1998.

               (2)  Notwithstanding  the  foregoing,  in the event of fraud or a
willful  breach,  the  representations  and  warranties  of the  Company and its
indemnity  obligations  under  Section  9 of the  Purchase  Agreement  shall not
terminate.  All  representations,  warranties,  covenants and  agreements  shall
survive  as to any claim or demand  made prior to the  Escrow  Termination  Date
until such claim or demand is fully paid or  otherwise  resolved  by the parties
hereto in writing or by a court of competent jurisdiction.



<PAGE>

          b.   Claims for Indemnification.

               (1)  Whenever any claim shall arise for indemnification under the
Purchase Agreement,  ECAR shall describe such claim in a written notice ("Notice
of Claim") to a Representative  (as defined below) and, when known,  specify the
facts constituting the basis for such claim and the amount or an estimate of the
amount  of  such  claim.  Each  Notice  of  Claim  shall  (a)  be  signed  by  a
representative  of ECAR,  (b) contain a description of the claim and (c) specify
the amount of such claim.

               (2)  ECAR shall  give such  Representative  prompt  notice of any
claim for  indemnification  hereunder resulting from, or in connection with, any
claim  or legal  proceeding  by a  person  who is not a party to this  Agreement
("Third  Party  Claim")  and,  with  respect  to any  Third  Party  Claim,  such
Representative shall undertake the defense thereof by representatives reasonably
satisfactory to ECAR and such Representative. Such Representative shall not have
the right to settle or compromise or enter into any binding  agreement to settle
or compromise,  or consent to entry of any judgment arising from, any such claim
or proceeding in its sole discretion  without the prior written consent of ECAR.
ECAR shall have the right to  participate  in any such  defense of a Third Party
Claim with advisory counsel of its own choosing at the Company's  expense.  ECAR
shall have the right to undertake the defense,  compromise or settlement of such
Third  Party  Claim on behalf of, and for the  account  of the  Company,  at the
expense  and risk of the  Company  to the extent of its  liability  set forth in
Section 9 of the Purchase Agreement.  The Company shall not settle or compromise
any such Third  Party  Claim or consent to entry of any  judgment  that does not
include,  as an  unconditional  term thereof,  the giving by the claimant or the
plaintiff to ECAR and/or  ECAR's  subsidiary  or  subsidiaries,  or affiliate or
affiliates,  as the case may be, an unconditional  release from all liability in
respect of such Third Party Claim.  Notwithstanding  any provision herein to the
contrary,  failure of ECAR to give any notice of any Third Party Claim  required
hereunder shall not constitute a waiver of ECAR's right to  indemnification or a
defense to any claim by ECAR hereunder.

     3.   Application of Escrow Shares.

          a.   Distribution of Escrow Shares/Notice.  The Escrow Shares shall be
held as a source of  satisfaction of  indemnification  claims made by ECAR under
Section 9 of the  Purchase  Agreement  and this  Agreement,  its  directors  and
officers, and each other person, if any, who controls ECAR within the meaning of
the  Securities  Act  of  1933,  as  amended  (the  "Act")  (collectively,   the
"Indemnified Parties" and,  individually,  an "Indemnified Party").  Within five
(5) business days after the Escrow Termination Date (the  "Distribution  Date"),
the Escrow Agent shall distribute to the Company all of the Escrow Shares,  less
the number of Escrow Shares (in whole shares)  having an aggregate  market value
(determined  as provided  below) most nearly  equal to the amount of any pending
claims asserted by the Indemnified Parties hereunder (the "Pending Claims"). The
value of such Pending  Claims shall be  determined in good faith by the Board of
Directors  of ECAR,  after  taking  into  account  such  factors as the Board of
Directors  shall deem  appropriate,  provided that if the Company by delivery of
written notice prior to the Distribution Date to the Escrow Agent does not agree
with the Board of  Directors'  determination  of the amount of any such  

                                       -2-

<PAGE>

Pending  Claims,  the  amount  of any  such  Pending  Claims  shall  be  finally
determined in accordance with this Agreement (the "Pending Claims Amount").

     The Escrow  Shares not so  distributed  shall be  retained in escrow by the
Escrow  Agent until all such  Pending  Claims are  resolved and the Escrow Agent
receives  written  instructions  from ECAR to  distribute  such  Escrow  Shares;
provided,  that upon the  disposition  of any such  Pending  Claims prior to the
disposition of all such claims,  the Escrow Agent shall, upon receipt of written
instructions from ECAR,  deliver to the Company such number of Escrow Shares (in
whole shares) as is indicated in such written notice and as is most nearly equal
to the excess of the  aggregate  market  value of the  remaining  Escrow  Shares
(determined as provided  below) over the amount of the remaining  unresolved and
aggregate Pending Claims as determined above.

          b.   Value of Escrow  Shares.  For  purposes of this  Agreement,  each
Escrow Share shall be deemed to have a value of $0.30 per share.

          c.   Ownership of Escrow  Shares;  Voting  Rights.  The Company  shall
remain the  registered  owner of Escrow Shares while they are held in escrow and
shall  retain the right to vote the  Escrow  Shares  and  receive  distributions
thereon and the  obligations  to pay all taxes,  assessment,  and  charges  with
respect  thereto,  but the Company  shall not have the right to sell,  transfer,
pledge,  hypothecate or otherwise dispose of any Escrow Shares;  provided,  that
any  distribution  of stock of ECAR on or with respect to the Escrow  Shares and
any other shares or  securities  into which such Escrow Shares may be changed or
for which they may be exchanged  pursuant to corporate  action of ECAR affecting
holders of ECAR Common  Stock  generally  shall be delivered to the Escrow Agent
and upon such  delivery and receipt,  held in escrow and shall be subject to the
provisions  of this  Agreement as if they were Escrow  Shares.  The Escrow Agent
shall have no  responsibility  or liability for shares or property not delivered
and received by it.

     4.   Escrow Agent.

          a.   Duties and Obligations.  The duties and obligations of the Escrow
Agent are exclusively set forth in this Agreement, as each may from time to time
be amended.  The Escrow Agent may request and rely upon,  and shall be protected
in acting or refraining from acting upon, any written notice,  request,  wavier,
consent,  receipt or other  paper or document  from ECAR,  the  Company,  or any
Stockholder, not only as to its due execution and the validity and effectiveness
of its provision, but also as to the truth of any information therein contained,
that the Escrow  Agent in good faith  believes to be genuine and as to which the
Escrow  Agent shall have no actual  notice of  invalidity,  lack of authority or
other deficiency.

     The Escrow Agent shall not be liable for any error of judgment,  or for any
act done or step  taken or omitted by it in good  faith,  or for any  mistake of
fact or law,  for anything  which it may do or refrain from doing in  connection
therewith,  except for any  liability  arising from its own gross  negligence or
willful misconduct.

     The  Escrow  Agent  shall  be  entitled  to  consult  with   competent  and
responsible  counsel of its choice and at its own cost and expense  with respect
to the  interpretation  of the  

                                       -3-

<PAGE>

provisions  hereof,  and any other legal matters relating  hereto,  and shall be
fully  protected  in taking  any action or  omitting  to take any action in good
faith in accordance  with the advice of such counsel.  The Escrow Agent shall be
entitled to request  written  instructions  from ECAR or the Company as the case
may be, and shall have the right to refrain  from acting  until it has  received
such written instructions.

     The Escrow Agent shall not be responsible for following or interpreting any
condition  set forth in the  Purchase  Agreement  and shall only be bound by the
terms and conditions of this Agreement, as may be amended from time to time.

     The Escrow Agent will be promptly paid or  reimbursed  upon request for any
and all reasonable expenses, fees, costs,  disbursements and/or advances (except
attorney's  fees)  which may be incurred  or made by it in  accordance  with the
provisions hereof.

          b.   Risk of Loss.  The  Escrow Agent acknowledges and agrees that the
Escrow Agent bears the exclusive  risk of loss,  theft or damage with respect to
the Escrow Shares in its possession.

          c.   Escrow Agent's  Compensation.  ECAR shall pay to the Escrow Agent
all  compensation in respect of the Escrow Agent's duties and obligations  under
this Agreement.

          d.   Resignation.  The  Escrow  Agent may resign at any time by giving
not less than sixty  (60) days  written  notice  thereof to each of ECAR and the
Company.  Within (60) days after the date  hereof,  ECAR and the  Company  shall
mutually agree on a replacement  Escrow Agent for Pezzola & Reinke,  APC. If the
Company  and ECAR fail to so mutually  agree  within such sixty (60) day period,
the  selection  of a  replacement  Escrow  Agent shall be  submitted  to binding
arbitration  by  JAMS/Endispute  under  the  JAMS/Endispute  Rules  for  Complex
Arbitration.

          e.   Successor Escrow Agent. Upon receipt of the Escrow Agent's notice
of resignation,  ECAR and the Company may appoint a successor escrow agent. Upon
the  acceptance  of the  appointment  as escrow  agent  hereunder by a successor
escrow  agent and the  transfer  to such  successor  escrow  agent of the Escrow
Shares,  the  resignation  of the Escrow  Agent shall become  effective  and the
Escrow Agent shall be discharged  from any future duties and  obligations  under
this Agreement.

          f.   Conflicting  Demands.  If on or before  the  close of escrow  the
Escrow Agent receives or becomes aware of any conflicting demands or claims with
respect to the Escrow Shares or the rights of any of the parties  hereto to such
Escrow Shares,  the Escrow Agent shall have the right to discontinue  any or all
further acts on the Escrow  Agent's part until such  conflict is resolved to the
Escrow  Agent's  satisfaction,  and the  Escrow  Agent  shall  have the right to
commence  or defend  any action or  proceedings  for the  determination  of such
conflict.  In the event any of the  above-described  events occur,  ECAR and the
Company  each  agree  to pay  one  half of all  costs,  damages,  judgments  and
expenses,  including  reasonable  attorneys  fees,  suffered  or incurred by the
Escrow Agent in connection with, or arising out of, such conflicting  demands or
claims,  including,  without limitation,  a suit in interpleader  brought by the
Escrow Agent.  ECAR and the Company each  acknowledges  that Escrow Agent is the

                                       -4-

<PAGE>


general corporate counsel to ECAR and waives any conflicts  associated therewith
and hereby  consents to Escrow Agent's role,  rights and  obligations  hereunder
notwithstanding  its  position as ECAR's law firm in  negotiating  the terms and
conditions  of this Escrow  Agreement,  and all ancillary  documents  referenced
herein or in connection therewith.

          g.   Indemnity.  The  Company  and ECAR  hereby  agree to jointly  and
severally  indemnify the Escrow Agent for, and to hold it harmless against,  any
loss,  liability or expense  arising out of or in connection with this Agreement
and  carrying  out its duties  hereunder,  including  the costs and  expenses of
defending itself against any claim or liability, except for acts or omissions by
the Escrow  Agent  that  constitute  gross  negligence  or  willful  misconduct.
Anything in this  Agreement to the contrary  notwithstanding,  in no event shall
the Escrow Agent be liable for special, indirect or consequential loss or damage
or any kind whatsoever  (including,  but not limited to, lost profits),  even if
the Escrow Agent has been advised of the  likelihood  of such loss or damage and
regardless of the form of action.

     5.   Miscellaneous.

          a.   Notices.   Unless  otherwise  provided,   all  notices  or  other
communications  required or permitted to be given to the parties hereto shall be
in  writing  and  shall be deemed to have  been  given if  personally  delivered
(including  personal  delivery by facsimile,  provided that the sender  receives
telephonic  or  electronic  confirmation  that the facsimile was received by the
recipient),  or three (3) days after  mailing by certified or  registered  mail,
return receipt requested,  first class postage prepaid, addressed as follows (or
at such other  address as the  addressed  party may have  substituted  by notice
pursuant to this Section 5.a):

         If to ECAR:

                  U.S. Electricar, Inc.
                  San Francisco Executive Park
                  5 Thomas Mellon Circle, Ste. 305
                  San Francisco, CA  94134
                  Attention:  Legal Department

         If to the Escrow Agent:

                  Pezzola & Reinke, A Professional Corporation
                  1999 Harrison Street, Suite 1300
                  Oakland, California 94612
                  Attn. Donald C. Reinke, Esq.

         If to the Company:

                  Systronix Corporation
                  19850 South Magellan Drive
                  Torrance, California 90502





                                       -5-

<PAGE>

          b.   Termination.  This  Agreement  shall  terminate  upon the  mutual
written express agreement of ECAR and the Company.  In any event, this Agreement
shall terminate when all of the Escrow Shares have been distributed according to
its terms.

          c.   Interpretation.  The validity,  construction,  interpretation and
enforcement  of this  Agreement  shall be determined and governed by the laws of
the State of California.  The invalidity or unenforceability of any provision of
this Agreement or the invalidity or unenforceability of any provision as applied
to a  particular  occurrence  or  circumstance  shall not affect the validity or
enforceability  of  any  of  the  other  provisions  of  this  Agreement  or the
applicability of such provision,  as the case may be. In the event of a conflict
between the terms of this Agreement and the Purchase Agreement, the terms of the
Purchase  Agreement shall govern.  All capitalized terms used in this Agreement,
unless otherwise defined herein, shall have the meanings ascribed to them in the
Purchase Agreement. No party hereto, nor its respective counsel, shall be deemed
the drafter of this  Agreement for purposes of construing the provisions of this
Agreement, and all provisions of this Agreement shall be construed in accordance
with their fair meaning, and not strictly for or against any party hereto.

          d.   Attorneys'  Fees.  Should suit be brought to enforce or interpret
any part of this Agreement,  the prevailing  party shall be entitled to recover,
as an element  of the costs of suit and not as  damages,  reasonable  attorneys'
fees to be fixed by the court (including without limitation, costs, expenses and
fees on any appeal). The prevailing party shall be the party entitled to recover
its costs of suit, regardless of whether such suit proceeds to final judgment. A
party not  entitled  to  recover  its costs  shall not be  entitled  to  recover
attorneys'  fees. No sum for attorneys' fees shall be counted in calculating the
amount of a judgment  for  purposes  of  determining  if a party is  entitled to
recover costs or attorneys' fees.

          e.   Venue.  Any action or proceeding  arising  directly or indirectly
from this Agreement shall be litigated in an appropriate  state or federal court
in the County of San Francisco, State of California.

          f.   Counterparts.  This  Agreement  may  be  signed  in  two  or more
counterparts,  each of which shall be deemed an original  and all of which shall
constitute one agreement.

          g.   Transfer  of  Interests.  The Company  shall not sell,  transfer,
pledge,  hypothecate or otherwise  dispose of any Escrow Shares, or any interest
therein  prior to the  distribution  of such Escrow  Shares in  accordance  with
Section 2.a. above.

          h.   Taxes.  For  purposes of federal and state income  taxation,  the
Escrow Shares shall be treated as owned by the Company and this Agreement  shall
be  interpreted  in a manner to effect  the  Company's  ownership  of the Escrow
Shares for such tax purposes.

                  (REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.)

                                       -6-

<PAGE>

     IN WITNESS  WHEREOF,  the parties have signed this Agreement on the day and
year first above written.


Pezzola & Reinke, A Professional Corporation, as Escrow Agent

By:
   ----------------------------------------------
   Donald C. Reinke, Vice President and Secretary


U.S. ELECTRICAR, INC.,
a California corporation


By:
   ----------------------------------------------
    (Signature)

-------------------------------------------------
(Print Name & Title)



SYSTRONIX CORPORATION


By:
   ----------------------------------------------
    (Signature)

-------------------------------------------------
    (Print Name & Title)




                                       -7-