Document:

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                                                                    EXHIBIT 10.1

                                                                    May 14, 2003

Prandium, Inc.
2701 Alton Parkway
Irvine, CA, 92606

Attention:  Mr. Hugh Hilton

Mr.Hilton:

This Letter of Intent and the accompanying Term Sheet confirm the desire of
Triyar Companies, LLC, The 180(degree) Group, LLC, Prandium Acquisition Company,
LLC, Goense Bounds & Partners and their respective affiliates, assignees and
partners (collectively, the "Investors") to engage in a transaction resulting in
the acquisition of Prandium, Inc. ("Prandium") (the "Proposed Transaction"). The
Investors have been actively engaged in due diligence and discussions with
Prandium senior management since February, 2003 and have a lock-up agreement in
place with the holders of the 12% FRI-MRD Corporation Senior Secured Notes, due
January 31, 2005. The Proposed Transaction is intended to expedite Investors'
new capital investment and refinancing, which is required for Prandium to
successfully achieve its restructuring and operational initiatives. We are
highly confident that we will be able to complete the Proposed Transaction
expeditiously. Upon its acceptance by you, this letter would provide the basis
for further negotiations between us designed to carry out the Proposed
Transaction substantially in the manner outlined below. The terms of the
Proposed Transaction will include (without limitation) the following:

1.   Proposed Transaction. The Investors, through a newly formed special purpose
     --------------------
     company ("Newco"), will acquire in a merger transaction or other mutually
     agreed upon structure, 100% of the issued and outstanding common stock of
     Prandium, "in the money" portion of vested and unvested options held by
     employees and all other equity securities (convertible or otherwise), if
     any, outstanding as of the closing for total cash consideration of
     $6,400,000. In addition, the Investors would include certain contingent
     initiatives, namely (i) the Group A and Group B cash initiatives discussed
     in the Term Sheet attached hereto as Exhibit A (the "Term Sheet") and (ii)
                                          ---------
     the Lease Liability Initiatives as outlined in the attached Term Sheet.
     Additionally, the Definitive Agreement (defined below) will contain a
     standard and customary purchase price adjustment mechanism allowing for an
     adjustment to be made to the Investors' cash consideration based on the
     amount of working capital available to Prandium at closing.

2.   Definitive Agreement. The Proposed Transaction will be subject to and
     --------------------
     conditioned upon the negotiation, execution and delivery of a definitive
     agreement (the "Definitive Agreement") between the Investors and Prandium
     which would include (without limitation): (a) the terms of the Proposed
     Transaction set forth on the Term Sheet, (b) the basic terms and conditions
     set forth herein together with such other representations, warranties,
     covenants, terms and conditions as would be usual and customary for a
     transaction of this nature, and (c) that the Definitive Agreement would be
     governed by and

                                      -1-

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May 14, 2003

     construed under the internal laws of the State of Delaware. As soon as
     reasonably practicable after acceptance of the terms herein, the Investors
     would commence the preparation and negotiation of the Definitive Agreement
     and complete their review of Prandium. Each party will be obligated to use
     good faith in negotiating a Definitive Agreement that is consistent with
     the terms and conditions of the Proposed Transaction and that contains
     representations, warranties, covenants, terms and conditions as would be
     usual and customary for a transaction of this nature. The Definitive
     Agreement will contain a break up fee that is customary for a deal of this
     size and consistent with legal and fiduciary limitations and will be
     payable in the event that Prandium consummates a transaction with another
     party following the execution of the Definitive Agreement.

3.   Closing Conditions.
     ------------------

     (a)  The Investors' obligations to close the Proposed Transaction shall be
          conditioned, under the terms and conditions to be negotiated in the
          Definitive Agreement, upon the following:

          (i)  Subject to the terms and limitations in Section 4, satisfactory
               completion or waiver of business, strategy, legal and accounting
               review (the "Review") of Prandium by the Investors and their
               advisors;

          (ii) The closing of the agreed upon transaction between Investors and
               the holders of the 12% FRI-MRD Corporation Senior Secured Notes,
               due January 31, 2005;

          (iii) No material adverse change in the business or assets of Prandium
               between the execution of this Letter of Intent and the closing of
               the Proposed Transaction; and

          (iv) The approval of the Proposed Transaction and Definitive Agreement
               by the Board of Directors of each Investor.

     (b)  Prandium's obligations to close the Proposed Transaction shall be
          conditioned, under the terms and conditions to be negotiated in the
          Definitive Agreement, upon:

          (i)  The approval of the Definitive Agreement by Prandium's Board of
               Directors exercising their fiduciary duties, in good faith;

          (ii) The receipt by Prandium of an opinion from a non-affiliated
               financial advisor that the Proposed Transaction is fair to the
               Prandium stockholders; and

          (iii) Satisfactory proof of Investors' financing.

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May 14, 2003

     (c)  The parties obligations to close the Proposed Transaction shall be
          conditioned, under the terms and conditions to be negotiated in the
          Definitive Agreement, upon the following:

          (i)  Negotiation, execution and delivery of the definitive legal
               documentation, including the Definitive Agreement;

          (ii) Receipt or waiver of all governmental approvals and receipt of
               approval from a sufficient number of Prandium stockholders as
               required by law to effect the Proposed Transaction; and

          (iii) Receipt or waiver of all necessary third party consents (a full
               listing to be provided by Prandium and agreed to by the Investors
               during the Initial Period (as defined below) or the Extended
               Period (as defined below)) including the consent of Mackay
               Shields, LLC and Foothill Capital Corporation, if necessary.

4.   Timing. The Investors anticipate that they will be able to complete their
     ------
     Review of Prandium and finalize and sign the Definitive Agreement within
     seventy-seven (77) days of the signing of this Letter of Intent. As such,
     the Investors will be given forty-five (45) days to complete the Review in
     their sole and absolute discretion (the "Initial Period"). On the 20th,
     35th and 45th day of the Initial Period, the Investors will provide
     Prandium with a status update on the Investors' Review efforts. At any time
     during the Initial Period, Prandium shall have the right to send to the
     Investors a written notification of any potential issue that Prandium
     deems, in good faith, material. At any time during the final five (5) days
     of the Initial Period, the Investors shall send a good faith written
     response to such notification, if any (the "Investors' Response"). In
     addition, Investors will respond by the 35th day of the Initial Period to
     Prandium regarding the materiality of sales pricing and related strategy
     changes at Prandium's operating divisions. Prandium and the Investors
     hereby acknowledge and agree that if Prandium sends written notification of
     a material issue (pursuant to the process above) during the last five (5)
     days of the Initial Period or if Prandium requires the Investors to match
     an unsolicited offer within the last ten (10) days of the Initial Period,
     the Initial Period shall be extended by five (5) business days for the
     Investors to provide an Investors' Response or ten (10) days for the
     Investors to match an unsolicited offer. Upon the expiration of the Initial
     Period, there shall be a two (2) business day period (the "Cancellation
     Period") in which Prandium shall have a right to terminate this Letter of
     Intent and all aspects of the Proposed Transaction if, and only if, one of
     the following events shall have occurred during the Initial Period: (1) the
     Board of Directors of Prandium (the "Board") has received a bona fide
     unsolicited offer to acquire all or substantial portions of Prandium or its
     assets from a third party which the Board believes, in good faith, provides
     superior consideration to the proposal made by the Investors herein, and
     the Investors do not match such unsolicited offer within ten (10) days; (2)
     the Investors have voluntarily notified Prandium, in a separate writing,
     that there exists a material issue, uncovered during the Initial Period,
     that necessitates the Investors to seek a material change to the economic
     terms of the Proposed Transaction and such change cannot be mutually agreed
     to by both parties; or (3) Investors' Response contains an affirmative
     statement of the Investors' intent to materially change the economic terms
     of the Proposed Transaction

                                      -3-

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May 14, 2003

     and such change cannot be mutually agreed to by both parties. If Prandium
     has not exercised its cancellation right during the Cancellation Period,
     the Initial Period shall be extended by an additional thirty (30) day
     period (an "Extended Period") beginning immediately after expiration of the
     Cancellation Period if (i) the Investors are and have been actively and
     reasonably engaged in the Review and working in good faith to complete the
     Definitive Agreement since the date of this Letter of Intent, but have not
     been able to complete the Review and/or finalizing the Definitive Agreement
     before expiration of the Initial Period and (ii) the Investors have
     provided written notice to Prandium during the Initial Period of their
     intent to use the Extended Period. The closing of the Proposed Transaction
     shall be as reasonably soon as practicable following execution of the
     Definitive Agreement and satisfaction of all closing conditions.
     Notwithstanding anything contained herein to the contrary, if Prandium
     exercises its cancellation right during the Cancellation Period pursuant to
     (1) above, Prandium shall pay the Investor Expenses (as defined in
     Section 8).

5.   Access to Company and Confidentiality. During the Initial Period and
     -------------------------------------
     Extended Period, the Investors and their authorized agents and other
     representatives shall have the right, upon reasonable notice and at
     reasonable times and without undue interruption, to meet with Prandium
     senior management. During the Initial Period, the Investors shall provide
     Prandium with a list of additional persons to meet with, including (without
     limitation) additional management, personnel, vendors, customers, and
     creditors (the "Interview List"). Upon receipt of the Interview List,
     Prandium shall have the right to reasonably approve each individual listed
     on the Interview List. The Investors shall have the right to examine and
     inspect the assets, properties, facilities, books and records of Prandium
     and shall be furnished with all such information and data concerning the
     business, operations, and affairs of Prandium as the Investors and their
     authorized agents or representatives may reasonably request. The Investors
     agree that any information provided to them and their authorized agents and
     representatives by Prandium shall be kept and remain confidential and shall
     not be used or disclosed except as provided in that certain letter
     agreement dated as of January 30, 2003 concerning "Confidential
     Information" between Prandium and The 180(degree)Group, LLC, attached
     hereto as Exhibit B. Each of the Investors also agrees to be bound by the
     contents of such letter agreement notwithstanding the fact that a
     particular party was not a signatory to such letter agreement.

6.   Publicity. Each of the Investors and Prandium agree to keep the Proposed
     ---------
     Transaction and any negotiations strictly confidential. The timing and text
     of any announcements or statements pertaining to the subject matter of this
     Letter of Intent or the transactions contemplated herein made either
     publicly, or to any governmental authority shall be mutually agreed to by
     the Investors and Prandium. Notwithstanding the preceding sentence, each
     party may make disclosures as may be required by judicial process and in
     its sole and absolute discretion, make any disclosures required by
     applicable securities laws, rules or regulations, the SEC, or by any
     exchange on which Prandium's securities are quoted or listed for trading.
     Additionally, Investors and Prandium will mutually agree on any disclosures
     made to Prandium's shareholders or employees, or to persons or entities
     associated with Prandium's business; provided, however, that Prandium may
     in its sole and absolute discretion, communicate internally with its
     employees.

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May 14, 2003

7.   Ordinary Course of Business. So long as this Letter of Intent remains in
     ---------------------------
     effect, and except as expressly contemplated herein, Prandium will conduct
     its business operations in the ordinary course of business and will not
     complete material asset sales not in the ordinary course of business,
     declare any dividends, whether in the form of cash, stock or other
     property, or distribute or issue any equity securities or grant any options
     or other rights to acquire equity securities of Prandium without the
     Investors' prior written consent. In addition, so long as this Letter of
     Intent remains in effect Prandium will not increase the compensation of any
     officer or employee or pay or agree to pay any additional bonus or
     severance payments to any officer or employee without the approval of the
     Investors, except as required by law or in the ordinary course of business.
     Notwithstanding anything contained in this Letter of Intent to the
     contrary, Prandium and its officers, directors and agents may solicit,
     furnish information regarding, pursue and consummate any transaction
     pertaining to the sale of all or any portion of its Hamburger Hamlet Chain
     ("Hamlet Sale"), provided, however, that Prandium must obtain the
     Investors' prior written consent (which consent may be withheld for any
     reason) to any Hamlet Sale that contemplates a purchase price of less than
     $10,000,000 cash consideration.

8.   Certain Fees and Expenses. If Prandium (a) receives an unsolicited offer
     -------------------------
     during the term of this Letter of Intent to acquire all or a substantial
     portion of Prandium or its assets, (b) provides such offeror with any
     non-public information concerning Prandium, and (c) Prandium subsequently
     consummates a transaction with the party or parties making such offer
     within twelve (12) months of receipt of the offer (after fully complying
     with all terms of this Letter of Intent), then Prandium shall pay the
     Investors an amount not to exceed $750,000 in the aggregate as
     reimbursement for reasonable out-of-pocket costs and expenses incurred by
     the Investors in connection with their examination and investigation of
     Prandium and the negotiation and preparation of the Definitive Agreement,
     including all reasonable out of pocket fees and expenses incurred by the
     Investors to potential lenders, accountants, attorneys and other agents
     ("Investor Expenses"). Notwithstanding anything contained in this Section 8
     to the contrary, Prandium shall not be obligated to pay any Investor
     Expenses or any other fees and expenses in the event that (i) this Letter
     of Intent terminates by reason of the parties failing to execute a
     Definitive Agreement before expiration of the Initial Period or Extended
     Period, as applicable, or (ii) the Investors notify Prandium that they have
     decided not to proceed with completion of the Definitive Agreement. The
     sale of Hamburger Hamlet will not trigger Prandium's payment of the
     Investors Expenses, provided such sale is in accordance with the provisions
     of Section 7 hereof.

9.   Non-Solicit Agreement. It is understood and agreed that the obligations of
     ---------------------
     the Investors to proceed with this Transaction are subject to the foregoing
     terms. Upon acceptance of this Letter of Intent, the Investors will commit
     substantial resources to completing their Review of Prandium and to the
     preparation and review of legal documents relating to this transaction. In
     consideration of such commitment by the Investors, during the Initial
     Period or the Extended Period, Prandium and its officers and directors and
     agents will not, directly or indirectly without the permission of Investors
     (i) solicit any offer or enter into any agreement for the sale, transfer or
     other disposition of any capital stock or any significant assets of
     Prandium (excluding Hamburger Hamlet and non-material asset transactions in
     the ordinary course of business), or for any business combination or
     reorganization involving

                                      -5-

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May 14, 2003

     Prandium, to or with any other entity or person; or (ii) except as provided
     below, furnish to any person or entity (other than the Investors and their
     authorized agents and representatives or prospective purchasers of
     Hamburger Hamlet) any non-public information concerning Prandium or its
     business, financial affairs or prospects with the intent of permitting such
     person or entity to evaluate a possible acquisition of any capital stock or
     significant assets of Prandium or a possible business combination or
     reorganization involving Prandium. In the event Prandium receives any
     unsolicited offer (for any such sale, transfer or other disposition,
     business combination or reorganization) or inquiry from any person, it will
     promptly (and in any event within forty-eight (48) hours) deliver to the
     Investors copies of any written communications relating to such unsolicited
     offer or inquiry as well as a complete and accurate description of any such
     offer or inquiry and the response of Prandium thereto, if any. If the Board
     of Directors of Prandium (the "Board") has received a bona fide unsolicited
     offer from a third party which the Board believes, in good faith, provides
     superior consideration to the proposal made by the Investors herein, the
     Board may grant such third party access to non-public information
     concerning Prandium and negotiate with such party while continuing to
     negotiate in good faith with the Investors toward the execution and
     delivery of the Definitive Agreement.

10.  Term/Termination. Except as otherwise specifically provided herein or for
     ----------------
     the provisions which are expressly specified to survive the termination of
     this letter, this Letter of Intent will terminate without further action of
     any party if the Definitive Agreement has not been executed by the parties
     hereto during the Initial Period or Extended Period or such other date as
     may be mutually approved in writing by the parties. Additionally, the
     Letter of Intent will terminate if the Investors notify Prandium that they
     have decided not to proceed with completion of the Definitive Agreement. If
     executed, the Definitive Agreement shall supersede this Letter of Intent in
     its entirety.

11.  Miscellaneous. This Letter of Intent is an expression of the current
     -------------
     intentions of the parties only and is not legally binding upon the parties
     hereto. This Letter of Intent does not set forth all of the matters upon
     which agreement must be reached in order for the Proposed Transaction to be
     consummated. No binding commitment or agreement regarding the Proposed
     Transaction shall exist unless and until the Definitive Agreement has been
     executed and delivered by the parties. The termination by any party of this
     Letter of Intent and of the negotiations for the Proposed Transaction
     without the execution and delivery of the Definitive Agreement for whatever
     reason shall not result in any obligation or liability of either party to
     the other except solely as expressly stated herein. Notwithstanding
     anything contained in this paragraph, the provisions of Sections 5 (Access
     to Company / Confidentiality), 6 (Publicity), 8 (Certain Fees and
     Expenses), 9 (Non-Solicit Agreement) and 10 (Term/Termination) of this
     Letter of Intent shall be legally binding upon and enforceable against each
     of the parties hereto. This Letter of Intent shall be governed by and
     construed under the internal laws of the State of Delaware. This Letter of
     Intent may be signed in counterparts. The Exhibits to this Letter of Intent
     are incorporated herein by this reference. In addition, the term "Appraised
     Fair Market Value" as used in the Term Sheet shall mean, the fair market
     value of the asset in question as stated in a written appraisal (the
     "Appraisal") of the asset performed by an independent, nationally certified
     appraiser. The Appraisal shall be in form and substance reasonably
     acceptable to the Investors and their

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May 14, 2003

     lenders. In addition, the Equity Holders shall (1) use their commercially
     reasonable efforts to cause the appraiser to allow the Appraisals to be
     relied upon by the Investors and the Investors' lenders and (2) be
     responsible for all reasonable and necessary costs and expenses associated
     with each Appraisal.

12.  Notices. Any notice or other communication hereunder must be given in
     -------
     writing and (a) delivered in person, (b) transmitted by facsimile (which
     shall be effective when transmitted), (c) mailed by certified or registered
     mail, postage prepaid, receipt requested (which shall be effective three
     days after deposited in the mail)or (d) overnight delivery service (which
     shall be effective the day after receipt by the delivery service) as
     follows:

          If to Investors, addressed to:

          The 180 Group, LLC
          10850 Wilshire Blvd.
          Los Angeles, CA 90024

          Attn: Mark S. Weber or Jennifer Stewart
          Facsimile:  310-273-4180

          With a copy to:

          Goense Bounds & Partners
          272 East Deerpath Road

          Suite 300
          Lake Forest, IL 60045
          Attn:  Erik Bloom
          Facsimile:  847-735-2003

          If to Prandium, addressed to:

          Prandium, Inc.
          2701 Alton Parkway
          Irvine, CA 92606
          Attn:  Matt Klein
          Facsimile: 949-863-8534

                                      -7-

<PAGE>

May 14, 2003

                                       Very truly yours,

                                       TRIYAR COMPANIES, LLC

                                       By: /s/ Mark S. Weber
                                          -------------------------
                                          Mark S. Weber
                                          Designated Representative

                                       THE 180(degree) GROUP LLC

                                       By: /s/ Jennifer Stewart
                                          -------------------------
                                          Jennifer Stewart
                                          Designated Representative

                                       PRANDIUM ACQUISITION COMPANY, LLC

                                       By: /s/ John Surdoval
                                          -------------------------
                                          John Surdoval
                                          Designated Representative

                                       GOENSE BOUNDS & PARTNERS

                                       By: /s/ Erik Bloom
                                          -------------------------
                                          Erik Bloom
                                          Designated Representative

ACCEPTED this 14 day of May, 2003.

PRANDIUM, INC.

By: /s/ Hugh Hilton
   --------------------------
   Hugh Hilton
   Chief Executive Officer

                                      -8-

<PAGE>

                                    Exhibit A

                                   Term Sheet

<PAGE>

                                   Term Sheet

Financial Terms.
---------------

1.   The parties have mutually identified certain potential assets of Prandium
     as "Group A" assets and "Group B" assets. In addition to a $6.4 million
     cash payment at Closing, the Investors shall provide the following to the
     holders of the outstanding equity securities of Prandium (the "Equity
     Holders") at the closing of the Proposed Transaction (the "Closing") as set
     forth below:

     (a)  Proceeds from initiatives to obtain Group A assets and generate
          capital therefrom shall be payable to the Equity Holders according to
          the terms of this paragraph. In the event that none of the Group A
          assets are under an executed agreement with the current owners for a
          change in ownership of such assets to Prandium's control on or before
          the Closing date, the Equity Holders shall be paid 55% of the
          Appraised Fair Market Value less reasonable estimated taxes (if
          applicable) in lieu of any future proceeds from the Group A assets.
          The Equity Holders acknowledge that Investors may be relying on
          outside lending sources to provide non-recourse financing to provide
          this payment of 55% of Appraised Fair Market Value. In the event that
          any of the Group A assets are under an executed agreement with the
          current owners for a change in ownership of such assets to Prandium's
          control on or before the Closing date, 80% of the proceeds (which for
          this purpose shall mean the Appraised Fair Market Value of such Group
          A assets, less outstanding debt and reasonable estimated taxes (if
          applicable), related transaction expenses, and reasonable origination
          fees) shall be paid to the Equity Holders. In the event that any of
          the Group A assets are under both an executed agreement with the
          current owners for a change in ownership of such assets to Prandium's
          control and an executed agreement with a third party (deposit
          received) for the outright sale of any of such assets arranged solely
          by the Equity Holders at a sale price equal to or greater than the
          Appraised Fair Market Value of the asset on or before the Closing
          date, 80% of the net sale proceeds (which for this purpose shall mean
          the purchase price of the particular Group A asset, less outstanding
          debt, reasonable estimated taxes (if applicable) and related
          transaction expenses) attributable to such Group A asset shall be paid
          to the Equity Holders at Closing and an additional 10% of the net sale
          proceeds upon the closing of each outright asset sale shall be paid as
          soon as is reasonably practicable upon the close of such outright
          asset sale.

     (b)  Proceeds from initiatives to obtain Group B assets and generate
          capital therefrom shall be payable to the Equity Holders according to
          the terms of this paragraph. In the event that none of the Group B
          assets are under an executed agreement with the current owners for a
          change in ownership of such assets to Prandium's control on or before
          the Closing date, the Equity Holders shall be paid 25% of the
          Appraised Fair Market Value less reasonable estimated taxes (if
          applicable). In the event that any of the Group B assets are under an
          executed agreement with the current owners for a change in ownership
          of such assets to Prandium's control within 60 days after the Closing
          date, 60% of the proceeds (which for this purpose shall mean the
          Appraised Fair Market Value of all Group B assets, less outstanding
          debt and reasonable

<PAGE>

               estimated taxes (if applicable), related transaction expenses,
               and reasonable origination fees), less any payments made pursuant
               to the 25% payment to Equity Holders outlined in this Section
               1(b) above, shall be paid to the Equity Holders. In the event
               that any of the Group B assets are, on or within 60 days after
               the Closing date, under both an executed agreement with the
               current owners for a change in ownership of such assets to
               Prandium's control and an executed agreement with a third party
               (deposit received) for the outright sale of any of such assets
               arranged solely by the Equity Holders at a sale price equal to or
               greater than the Appraised Fair Market Value of the asset, 75% of
               the net sale proceeds (which for this purpose shall mean the
               purchase price of the particular Group B asset, less outstanding
               debt, reasonable estimated taxes (if applicable) and related
               transaction expenses) attributable to such Group B asset, less
               any payments made pursuant to the 60% payment to Equity Holders
               outlined in this Section 1(b) above, shall be paid to the Equity
               Holders as soon as is reasonably practicable upon the close of
               such outright asset sale.

     2.   The Investors shall also pay to the Equity Holders at Closing 50% of
          the net present value (using a 15% discount rate) of any realized
          lease liability reductions achieved or under contract to be realized
          by Prandium or any of its subsidiaries after February 28, 2003 and
          before the Closing. Any amounts over $1 million will be paid pursuant
          to terms to be negotiated by the parties in the Definitive Agreement.
          Lease liability reductions cannot require any new financial
          commitments by Prandium or any of its subsidiaries (for current
          purposes, "financial commitments" is defined as CAPEX or lease
          extension commitments or any other commitments placing a financial
          burden on Prandium or any of its subsidiaries for which the Investors
          have not granted their prior written approval). No lease liability
          reductions shall be included in the calculation if such reductions
          are: (a) resulting from Group A assets and Group B assets, (b) due
          solely to the passage of time, (c) arranged solely by the Investors,
          or (d) result from an agreement with an uncreditworthy sublessee
          (which for this purpose shall mean a sublessee more than 60 days past
          due in rent on more than two separate occassions during the previous
          12-month period prior to the execution of the Definitive Agreement, a
          sublessee more than 60 days past due at Closing who has not
          demonstrated the ability to become current, a sublessee who is
          currently in default of a material financial obligation with its
          current creditors, the continuous nature of which during the remaining
          term of the sublease is a reasonable certainty, or a sublessee that
          has experienced a dramatic decline in its financial condition during
          the previous 12-month period prior to the execution of the Definitive
          Agreement with such decline making a default under the sublease a
          reasonable certainty).

     3.   The Investors and Equity Holders have agreed to a working capital
          adjustment that shall be negotiated and documented in the Definitive
          Agreement and shall be based on the working capital differential from
          Prandium's February 28, 2003 Balance Sheet.

<PAGE>

                                    Exhibit B

                            Non-Disclosure Agreement

<PAGE>

January 30, 2003

The 180 Group

9100 Wilshire Boulevard, Suite 880
Beverly Hills, CA 90212
Attention:  Mr. Mark Weber

Re:  Prandium, Inc.
     -------------

Dear Mark.

This letter agreement will establish the terms under which Prandium, Inc. (the
"Company") will provide you certain requested information in connection with
your expression of interest in the Company.

For purposes of this letter agreement, "Confidential Information" means all
information of whatever nature relating to Prandium or its subsidiaries, whether
oral, written or otherwise, furnished to you by Prandium or its directors,
officers, partners, advisors (including financial advisors), affiliates,
employees, agents or representatives and all materials prepared by you (in
whatever form maintained, whether documentary, computer storage or otherwise)
containing, reflecting of based upon, in whole or in part, any such information
or reflecting your review or view of Prandium or the Confidential Information.

You shall treat confidentially the existence and contents of the Confidential
Information, and neither the existence nor the contents of the Confidential
Information will be disclosed to any third party (except your representatives,
advisors, attorneys or accountants who agree to be bound by the terms hereof)
without Prandium's prior written consent. Notwithstanding the foregoing, you may
disclose Confidential Information, if required to do so under compulsion of a
subpoena or other legal process or otherwise required by law. If so required to
disclose Confidential Information you will use reasonable efforts to provide
Prandium with sufficient prior notice of the disclosure to permit them to seek a
protective order to take any other action it deems appropriate.

You hereby acknowledge that the Confidential Information may contain material,
non-public information, and that you are familiar with federal securities laws
imposing restrictions on trading in securities of an issuer by one in possession
of material, non-public information and on sharing that information with other
persons who may engage in such trading. You agree not to violate those
restrictions and to use your reasonable best efforts to prevent your
representatives, advisors, attorneys and accountants from doing so.

No failure or delay in exercising any right, power or privilege hereunder will
operate as a waiver thereof, nor will any single or

<PAGE>

partial exercise thereof preclude any other or further exercise thereof or the
exercise of any right, power or privilege hereunder. You agree that money
damages would not be a sufficient remedy for any violation of the terms of this
agreement and, accordingly, that Prandium will be entitled to specific
performance and injunctive relief as remedies for any violation. These remedies
will not be exclusive remedies but will be in addition to all other remedies to
them at law or equity.

Although Prandium will use reasonable efforts to ensure that the Confidential
Information is accurate and complete, you understand that neither Prandium nor
any of it's representatives have made or make any representation or warranty as
to the accuracy or completeness of the Confidential Information.

The parties to this letter agreement hereby acknowledge and agree that this
letter agreement is to be governed by California law. In order to avoid any
confusion or misunderstanding, each of us also agrees that this letter agreement
may only be amended in writing.

Notwithstanding anything herein to the contrary, Confidential Information does
not include information that (a) is or becomes generally available to the
public; (b) becomes available to you on a non-confidential basis from a source
that you reasonably believe is not prohibited from disclosing it; or (c) was in
your possession before the date of this letter agreement.

Each party represents that it has full power and authority to execute this
letter agreement and that it has received legal advice from counsel of its
choice regarding the meaning and legal significance of this letter agreement.
Each individual signatory below represents and warrants that he or she is duly
authorized to execute this letter agreement on behalf of the party for whom he
or she has done so.

This letter agreement shall be binding upon and inure to the benefit of the
party's hereto and their respective successors and assigns. This letter
agreement may be executed in counterpart. Except as provided herein, neither
party may assign its rights or delegate its duties under this letter agreement
without the other party's prior written consent.

Please execute a copy of this letter where indicated below and return it to the
Company as soon as possible. This letter shall constitute a binding agreement
between us upon our receipt of your signed copy. This letter agreement may be
terminated by either of us by delivering a written notice of termination to the
other patty, the termination to be effective upon receipt thereof.

<PAGE>

Notwithstanding any termination, this letter agreement shall forever govern the
treatment of all Confidential Information. After this letter agreement's
termination, you agree to promptly return or destroy (at your option) any
Confidential Information in your possession, promptly upon Prandium's written
request.

Very truly yours,

PRANDUM, INC.

By:    /s/ Robert T. Trebing, Jr.
       -------------------------
Name:  Robert T. Trebing, Jr.
Title: President and CEO

ACCEPTED AND AGREED TO AS OF
THE DATE FIRST WRITTEN ABOVE

THE 180 GROUP

By:    /s/ Mark S. Weber
       -----------------
Name:  Mark S. Weber
Title: Managing DirectorJOINT VENTURE AGREEMENT

This  Agreement is entered  into  effective as of this 18th day of March 2003 by
and between Enova Systems,  Inc., a corporation organized and existing under the
laws of the State of California, U.S.A., with its principal place of business at
19850  South  Magellan  Drive,  Torrance  CA 90502  (hereinafter  referred to as
"ENOVA") and Hyundai Heavy  Industries  Co.,  Ltd., a corporation  organized and
existing  under the laws of the Republic of Korea,  with its principal  place of
business at Ulsan, Korea (hereinafter referred to as "HHI").

                                   WITNESSETH

WHEREAS, ENOVA is engaged in research, development, sales and marketing of power
management, conversion and propulsion systems for electric,  hybrid-electric and
fuel cell vehicles; and

WHEREAS,  HHI is engaged in design,  development  and  manufacture of electrical
equipment such as switchgears,  transformers,  circuit breakers, instrumentation
and control system, power electronics, motors and generators; and

WHEREAS, ENOVA and HHI desire to collaborate by establishing and funding a joint
venture  company  ("JVC") to which ENOVA and HHI will  license  certain of their
respective  technologies  to the JVC,  pursuant to the  License  and  Technology
Transfer  Agreements  in form and substance as set forth in Exhibits B-1 and B-2
attached hereto (the "Licenses"),  in consideration of HHI investing  $6,000,000
($3,000,000  directly  in ENOVA and  $3,000,000  in the JVC),  pursuant to Stock
Purchase  Agreement  substantially  in form and  substance  attached  hereto  as
Exhibit A (the "Stock Purchase Agreement") and ENOVA investing $2 million in the
JVC; and

WHEREAS,  the JVC shall engage in the research and  development of certain power
conversion  and power  management  technology and products,  including  electric
vehicle  products and distributed  generation  systems as set forth herein,  and
shall grant licenses of its  technologies  to HHI and ENOVA to  manufacture  and
market  products as more fully set forth in Exhibits C-1 and C-2 attached hereto
(the "Manufacturing and Sales Agreements").

NOW,  THEREFORE,  in  consideration  of promises and covenants  hereinafter  set
forth, ENOVA and HHI agree as follows:

                                       1

<PAGE>

                             Article 1. Definitions

For the purposes of this Agreement, the following terms shall have the following
meanings respectively:

1.1 The term "Agreement " shall mean this Joint Venture Agreement.

1.2   The term "Agreement  Date" shall mean the effective date of this Agreement
      as set forth in the preamble above.

1.3   The term "Parties" shall mean ENOVA and HHI.

1.4   The term "JVC" shall mean that joint  venture  company to be  incorporated
      under the laws of the State of  California  by the  Parties  in the manner
      provided in this Agreement.

1.5   The  term  "Related   Agreements"   shall  mean  those  agreements  to  be
      incorporated  into this Agreement as exhibits which are to be entered into
      between or among ENOVA,  HHI and/or the JVC, as the case may be,  pursuant
      to Article 3 hereof.

1.6   The term  "Products"  shall mean those  products  set forth on  Schedule 1
      attached hereto.

1.7   Unless specifically  provided to the contrary,  all amounts referred to in
      this Agreement are in United States Dollars.

                           Article 2. Formation of JVC

2.1 Formation.  As soon as practically possible after the Agreement Date, but in
no event later than ninety (90) days after the Agreement Date, provided that all
of the Related  Agreements  referred  to in Article 3 have been  executed by the
Parties,  the Parties shall cause the JVC to be organized and  registered  under
the laws of the State of  California.  The Parties shall  closely  cooperate and
consult with each other with respect to the  procedures  and  particulars of the
organization  and  registration of the JVC. The JVC will be a close  corporation
and the initial registered principal office of the JVC shall be located at 19850
South Magellan Drive, Torrance CA 90502.

                                       2
<PAGE>

2.2 Articles of Incorporation.  At the time of the organization and registration
of  the  JVC,  the  Parties  shall  cause  the  JVC to  adopt  the  Articles  of
Incorporation  and Bylaws  annexed  hereto and marked as  Exhibits  D-1 and D-2,
respectively  (collectively,  the Articles and Bylaws to be hereinafter referred
to as the "Charter Documents").

2.3 Paid-in Capital. JVC shall have a paid-in capital of US Five Million Dollars
(USD 5,000,000)  consisting of five million shares  (5,000,000) of common stock.
HHI shall  subscribe to and pay US Three  Million  Dollars (USD  3,000,000)  for
three million shares (3,000,000)  amounting to sixty percent (60%) of JVC common
stock shares and ENOVA shall  subscribe  to and pay US Two Million  Dollars (USD
2,000,000) for two million shares  (2,000,000)  amounting to forty percent (40%)
of JVC common stock shares.  The subscription  shall take place in the following
manner:

        A.  At the  time  of  incorporation  of JVC,  HHI  shall  wire  transfer
            [REDACTED]* to the bank account of JVC  [REDACTED]*  and at the same
            time,  shall wire transfer  [REDACTED]* to the bank account of ENOVA
            pursuant  to the Stock  Purchase  Agreement  attached  as  Exhibit A
            hereto.

        B.  One year  following  the  Agreement  Date,  HHI shall wire  transfer
            [REDACTED]* to the bank account of JVC  [REDACTED]*  and at the same
            time,  shall wire transfer  [REDACTED]* to the bank account of ENOVA
            pursuant to the ENOVA Stock Purchase Agreement attached as Exhibit A
            hereto.

        C.  From the above  transactions  and as pursuant to the Stock  Purchase
            Agreement, ENOVA shall be deemed to have subscribed to and purchased
            forty  percent  (40%) of JVC  common  stock  shares and HHI shall be
            deemed to have  subscribed to and  purchased  sixty percent (60%) of
            JVC common stock shares. Moreover, as consideration of HHI paying US
            Two Million  Dollars (USD  2,000,000) on behalf of ENOVA for ENOVA's
            subscription  of JVC's common stock  shares,  HHI shall be deemed to
            have purchased  ENOVA's  common stock shares  equivalent to US Three
            Million Dollars (USD 3,000,000).

2.4 Formation Costs.  Expenses  incurred by each Party up to the Agreement Date,
including  travel  expenses  and  legal  fees,  shall be  borne by the  Party so
incurring such expenses. After the Agreement Date, all costs and expenses of the
formation of JVC, to the extent the same are not incurred or assumed by the JVC,
be borne equally by the Parties.

                                       3
<PAGE>

                         Article 3. Related Agreements

Immediately  after the formation and registration of the JVC,  including but not
limited to filing of the Articles of Incorporation  ("Exhibit D-1") and adoption
of the Bylaws  (Exhibit  D-2") by the JVC,  the  following  agreements  shall be
entered into between the relevant Parties.

    A.  The Stock Purchase Agreement ("Exhibits A");

    B.  The License and Technology Transfer  Agreements  (Exhibits B-1 and B-2);
        and

    C.  The Manufacturing and Sales Agreements (Exhibits C-1 and C-2).

                         Article 4. Organization of JVC

4.1 JVC Governance. The organization and governance of the JVC shall be governed
by the  Charter  Documents  except as  otherwise  set  forth in this  Agreement.
Notwithstanding anything set forth in the Charter Documents to the contrary, the
following  corporate  actions shall require the written consent or authorization
at a duly  held  meeting  of  the  shareholders  of the  JVC  holding  at  least
seventy-five percent (75%) of the outstanding shares in the JVC:

        A.  Any  amendment  to the  Charter  Documents  which has the  effect of
            increasing  or  decreasing  of the share  capital  of the JVC or the
            authorized number of directors of the JVC;

        B.  Any merger or other reorganization with another entity;

        C.  Any  dissolution  of the JVC except  pursuant to the  termination of
            this Agreement in accordance with its terms;

        D.  Any sale of all or substantially all of the assets of the JVC; and

        E.  Any compensation of the Board of Directors.

4.2 Directors and the Board of Directors.

4.2.1 Except as otherwise  required by mandatory  provisions  of law or provided
for  in  the  Charter  Documents  or  this  Agreement,  responsibility  for  the
management,  direction  and  control  of the JVC shall be vested in the Board of
Directors.

                                       4
<PAGE>

4.2.2 The Board of Directors may delegate authority for management of the JVC to
officers  of  the  JVC  in  accordance  with  this  Agreement  and  the  Bylaws,
resolutions  duly passed by the Board of Directors  and as  consistent  with the
Articles of Incorporation and mandatory provisions of law.

4.2.3 The  directors of the JVC shall be elected as provided in the Bylaws.  The
Bylaws of the JVC shall  provide for the election of five (5)  directors.  It is
understood  and agreed by the Parties that three (3) of the directors of the JVC
shall be  individuals  appointed  by HHI and two (2) of the  directors  shall be
individuals  nominated by ENOVA. The term of directors shall be for one (1) year
and  directors  shall  be  eligible  for  re-election  as  are  consistent  with
applicable law and the Bylaws.

4.2.4 In the event of  death,  incapacity,  prolonged  illness,  resignation  or
removal  of a  director  prior  to the  completion  of the  term to which he was
elected, the Board of Directors or shareholders shall vote their shares and take
such other  action as may be  necessary  to appoint or cause to be  appointed  a
director  nominated  by the  shareholder  Party which  originally  elected  such
director as his replacement.

4.2.5  Meetings of the Board of Directors of JVC shall be convened and conducted
not less than once  during  each  calendar  quarter of the JVC.  Meetings of the
Board of Directors shall be called by the President of the JVC or at the request
of any  member of the Board of  Directors.  Meetings  of the Board of  Directors
shall be chaired by the  President/CEO of JVC who shall be a member of the Board
of Directors.

4.2.6      [REDACTED]*
A.         [REDACTED]*;
B.         [REDACTED]*;
C.         [REDACTED]*;
D.         [REDACTED]*;
E.         [REDACTED]*;
F.         [REDACTED]*;
G.         [REDACTED]*;
H.         [REDACTED]*;
I.         [REDACTED]*;
J.         [REDACTED]*;

                                       5
<PAGE>

K. [REDACTED]*; and
L. [REDACTED]*.

4.3 Officers and Employees of JVC.

      4.3.1  President/CEO.  The JVC shall have a President/CEO  responsible for
      day-to-day  management  and  operation of the JVC, who shall be elected by
      the Board of  Directors.  The first  President/CEO  shall be  nominated by
      ENOVA for approval by the Board of Directors for a two-year term.
      [REDACTED]*

      4.3.2  Vice  President.  The JVC  shall  have  one (1) Vice  President  of
      Finance/CFO  who shall be in charge of finance  and  accounting.  The Vice
      President of Finance/CFO shall be appointed by HHI.

      4.3.3 Employees of JVC. As the Parties recognize the importance of the JVC
      obtaining the best available  personnel for its success,  during the first
      two (2)  years  of the  JVC's  formation,  the  Parties  agree to use best
      efforts to assist,  at no  additional  financial  expense,  the JVC in its
      efforts to locate and hire capable employees and the Board of Directors of
      the JVC shall have the right to approve the personnel employed by the JVC.

4.4 Financial Records and Fiscal Year.

      4.4.1.  A single set of  complete  books of  account  shall be kept at all
      times by the JVC which shall  accurately  reflect its  financial  affairs.
      Such  books  shall be kept in  accordance  with GAAP and  applicable  U.S.
      Securities  and  Exchange  rules  and  regulations.  Major  financial  and
      operating   statements,   including  balance  sheets,  income  statements,
      statements  of  changes  in  financial  position,  and  others  as  may be
      requested by the Parties  from time to time,  shall be prepared by the JVC
      and shall be  furnished to each of the Parties on no less than a quarterly
      basis  to  insure  that  each  party is  reasonably  able to  comply  with
      governmental regulatory obligations.

      4.4.2 The  accounts  and records of the JVC shall be audited at the end of
      each fiscal  year and at the  expense of the JVC by a firm of  independent
      public accountants selected by agreement between the Parties.

      4.4.3 The Parties  agree that each of them may at its own expense have the
      full right and power to

                                       6
<PAGE>

      examine,  audit, inspect and copy the books,  records, and accounts of the
      JVC during normal business hours. For this purpose, the JVC shall preserve
      all records relating to each fiscal year for a minimum period of seven (7)
      years.

                    Article 5. Business and Operations of JVC

      5.1 Business  Scope.  The business  scope of the JVC shall be research and
      development of power  conversion,  power  management,  including  electric
      vehicle products, distributed generation systems, manufacturing technology
      of such products,  and other  technologies which are deemed to be feasible
      and consistent with the terms and conditions of the Licenses (Exhibits B-1
      and B-2) and the Manufacturing and Sales Agreements (Exhibits C-1 and C-2)
      and the products and technologies identified on Schedule 1 attached hereto
      and incorporated herein by reference.  The JVC agrees not to develop, sell
      or license  Products  or  technologies  which  would  compete  with either
      Party's  existing  products  or  technologies  without  the other  Party's
      consent.  Furthermore,  in no event will the JVC develop,  sell or license
      any Products or  technologies  that  conflict  with  existing  contractual
      obligations of either Party.

           5.1.1 [REDACTED]*.

           5.1.2 [REDACTED]*.

5.2 Assistance to JVC.

    5.2.1 Both Parties shall  diligently  assist the JVC for a period of two (2)
    years following formation of the JVC without financial cost:

           A. [REDACTED]*;
           B. [REDACTED]*;
           C. [REDACTED]*; and
           D. [REDACTED]*.

5.3 Grants by ENOVA and HHI to JVC.

                                       7
<PAGE>

     5.3.1  ENOVA and HHI shall each grant the JVC  [REDACTED]*  as set forth in
     the respective License and Technology Transfer Agreements (Exhibits B-1 and
     B-2). Each Party shall likewise be granted manufacturing and sales licenses
     from  the  JVC as set  forth  in the  respective  Manufacturing  and  Sales
     Agreements as set in Exhibits C-1 and C-2.

                              Article 6. Financing

6.1 Working Capital.

      6.1.1 If necessary,  upon prior  approval of a majority of the  authorized
      number of the Board of Directors in accordance  with  applicable  law, the
      JVC may obtain its necessary  working  capital over and above its original
      share capital by commercial borrowing.  If, as a condition to granting any
      such loan, the lender requires guarantee(s),  the Parties may undertake to
      provide the guarantee(s), each in proportion to its equity interest in the
      JVC as they may mutually agree in writing in their sole discretion.

      6.1.2 In the event the JVC is unable to borrow funds considered by HHI and
      ENOVA to be necessary, subject to approval by a majority of the authorized
      number of the Board of Directors of the JVC in accordance  with applicable
      law, the Parties  [REDACTED]* to the JVC the  [REDACTED]* in the JVC up to
      such amounts as they may from time to time mutually  agree upon in writing
      in their sole discretion. Each Party shall make each such loan to the JVC,
      unless otherwise  mutually agreed in writing in their sole discretion , on
      the same terms and conditions regarding duration,  interest, repayment and
      otherwise, as the corresponding loan made by the other Party.

6.2 Manner of Providing Additional Equity Capital. [REDACTED]*, upon approval of
a majority of the authorized number of the Board of Directors in accordance with
applicable law and the provisions of this  Agreement.  Upon the  contribution of
such capital to the JVC, the Parties shall [REDACTED]* to their  contribution as
agreed by both Parties in writing.

                Article 7. Other Matters Pertaining to JVC Stock

7.1  Preemptive  Rights.  ENOVA and HHI shall  retain  the  preemptive  right to
subscribe and pay for

                                       8
<PAGE>

any shares of the JVC issued after the Agreement Date as more fully set forth in
the Bylaws.

7.2 Transfers of Shares.

      7.2.1  Except as otherwise  expressly  provided for in this Article 7, the
      Parties mutually  covenant and agree  [REDACTED]* any of the shares of JVC
      held by them, or preemptive  rights to new shares allotted to them, except
      (i) with the written  consent of the other Party or (ii) as  stipulated in
      this Agreement.

      7.2.2 No [REDACTED]*

      7.2.3  Each  Party to the extent  permitted  by law hereby  extends to the
      other  Party a right  of first  refusal  with  respect  to the sale of the
      shares of JVC held by it as set forth in the Bylaws of the JVC.

                       Article 8. Payment and Withholding

8.1 Manner and Place of  Payments.  Any and all  payments to be made to ENOVA or
HHI by the JVC in consequence of or in connection  with the acts or transactions
contemplated  by this  Agreement and the Related  Agreements,  including but not
limited to dividends,  royalties,  interest payments,  reimbursable expenses and
repatriated  capital,  shall be made,  except as otherwise  provided herein,  in
United States Dollars,  to ENOVA or HHI, as applicable,  to the attention of the
appropriate  individual and address as ENOVA or HHI, as  applicable,  shall have
specified by written notice or at such bank in Korea or the United States as may
from time to time be designated by ENOVA or HHI, as applicable.

8.2 Withholding  Taxes.  Any sum required under  California or U.S.  Federal tax
laws to be withheld by JVC for the account of ENOVA or HHI from  payments due to
ENOVA or HHI, as applicable, shall be withheld and shall be promptly paid by JVC
to the appropriate tax  authorities,  and the Parties shall cause JVC to furnish
ENOVA or HHI, as applicable, official tax receipts or other appropriate evidence
issued by the State of California or U.S. Federal tax authorities  sufficient to
enable  ENOVA or HHI,  as  applicable,  to  establish  the  payment of the taxes
described above.

                                       9
<PAGE>

                    Article 9. Confidentiality of Information

9.1 Duty of Secrecy and  Confidentiality.  Except to the extent that disclosures
may be  permitted  by any of the Related  Agreements,  each Party agrees to keep
strictly secret and confidential  all information  obtained from the other Party
or the JVC which is  designated as  confidential  by said other Party or JVC, as
the case may be until three (3) years after  termination of this  Agreement.  To
that end, all records, copies,  reproductions,  reprints and translation of such
information  shall be plainly  marked to  indicate  the secret and  confidential
nature thereof and to prevent unauthorized use or reproduction thereof.

9.2 Limitations and Survival of Obligation.  Such obligations,  as undertaken by
the  Parties  pursuant  to this  Article 9, shall  survive  termination  of this
Agreement  and shall remain in effect and be binding on the Parties for a period
of  three  (3)  years  after  the  termination  of  this  Agreement  except  for
information  that  becomes  part  of the  public  domain,  is  received  from an
independent  source,  or  disclosure  is  required  under  applicable  law or by
governmental authority.

                       Article 10. Compliance with the Law

The Parties  shall comply with and shall cause JVC to comply with all  statutes,
regulations,  judicial or governmental  agency orders or other laws of the State
of California,  U.S.A. or any other  jurisdiction which are or may be applicable
to JVC, and shall obtain and maintain all approvals,  licenses and authorization
necessary  for  JVC to  conduct  its  business  as it may  from  time to time be
conducted.

                        Article 11. Term and Termination

11.1 Term. The term of this  Agreement  shall begin as of the Agreement Date and
shall continue in force and effect for an indefinite term thereafter,  until the
JVC shall be  dissolved  or otherwise  cease to exist as a separate  entity,  or
until this Agreement is terminated  earlier pursuant to the following  provision
of this Article 11.

                                       10
<PAGE>

11.2 Termination. This Agreement shall be terminated as provided below:

      11.2.1 Upon  agreement in writing  between the Parties to  terminate  this
      Agreement;

      11.2.2 By either Party if any of the conditions  prior to signing will not
      have been met, or not have been waived in writing by the other Party prior
      to or on the Agreement Date;

      11.2.3 [REDACTED]*;

      11.2.4 Upon liquidation or dissolution of the JVC; or

      11.2.5 Upon a Party  giving rise to an event  listed  below  (referred  to
      herein  as the  "Event  of  Default")  unless  waived  in  writing  by the
      Non-Defaulting  Party.  For purposes of this  Agreement,  the Party giving
      rise to the Event of  Default  is  referred  to herein as the  "Defaulting
      Party" and the Party not giving  rise to the Event of Default is  referred
      to herein as the "Non-Defaulting Party". Events of Default are as follows:

          A. [REDACTED]*;
          B. [REDACTED]*;
          C. [REDACTED]*;
          D. [REDACTED]*; or
          E. [REDACTED]*.

      11.2.6  Upon the rise of an Event of  Default,  Non-Defaulting  Party  may
      elect to terminate  this Agreement upon written notice given within thirty
      (30) days after each Event of Default  (except  for  Section  11.2.5  (D),
      whereupon the Party  desiring to sell such assets or equity may notify the
      other Party of its intention to sell and the  non-selling  Party must make
      its termination  election within thirty (30) days after such notice),  and
      may thereafter elect one of the following options:

          A. The Defaulting Party will [REDACTED]*
          B. [REDACTED]*

                                       11
<PAGE>

11.3 Upon termination of the Agreement, the Licenses [REDACTED]* compliance with
the   Manufacturing  and  Sales  Agreements  and  the  Manufacturing  and  Sales
Agreements shall [REDACTED]* except in accordance with their specific terms. Any
ongoing  royalties or other payments that would  otherwise be payable to the JVC
after  dissolution shall be paid first to any creditors of the JVC and then paid
to the  shareholders  of the JVC at the time of dissolution  in accordance  with
their respective  ownership  interests in the JVC at the time of dissolution and
applicable law.

11.4 Upon termination of the Agreement, no Party shall be discharged from and of
its antecedent  obligations or liabilities to the other Party provided herein or
under any of the Related Agreements and confidentiality obligations as set forth
in Article 9, unless otherwise agreed in writing by the Parties.

11.5 If either  Party  challenges  or  disagrees  with the  asserted  basis of a
termination  hereunder,  the termination will not be considered  effective until
after a decision of the arbitration  tribunal, in accordance with the procedures
of Article 12 hereto.

                           Article 12. Interpretation

12.1  Applicable  Law.  The  validity,  construction  and  performance  of  this
Agreement  shall be governed by and  interpreted in accordance  with the laws of
the State of California excluding that body of law known as conflicts of law.

12.2 Settlement of Dispute.  Any dispute or conflict which may arise between the
Parties,  out of or in relation to or in connection  with this  Agreement or for
the breach  thereof  which  cannot be  resolved  between  the  Parties  shall be
referred to the board of directors of each such Party. Each board shall nominate
one of its  members to confer  with a member  nominated  by the other  Party and
present to each board a recommended  solution.  If within thirty (30) days after
receipt of such  recommendation,  the  respective  boards cannot agree with each
other,  then each Party shall be entitled to initiate the  relevant  arbitration
procedures.

12.3 Arbitration. All disputes, controversies, or differences, that remain after
the  settlement  of dispute  procedure as provided in paragraph  12.2,  shall be
submitted to arbitration in Los Angeles under the

                                       12
<PAGE>

then  current   Commercial   Arbitration  Rules  of  the  American   Arbitration
Association ("AAA") by three arbitrators.  The award rendered by the arbitrators
shall be final and binding upon both Parties.

12.4  Effect of  Headings.  The  headings  to articles  and  paragraphs  of this
Agreement  are to  facilitate  reference  only,  do not  form  a  part  of  this
Agreement, and shall not in any way affect the interpretation hereof.

12.5 Entire  Agreement.  This Agreement,  with Related  Agreements and exhibits,
constitutes  the entire  agreement  of the Parties  with  respect to the subject
matter hereof and  supercedes  and cancels any and all prior  understandings  or
agreements, verbal or otherwise, in relation hereto, which may exist between the
Parties.  No amendment or change hereof or addition hereto shall be effective or
binding on either of the Parties  unless  reduced to writing and executed by the
respective duly authorized representatives of the Parties.

12.6  Waivers.  No term or condition  shall be deemed waived by any Party unless
the  waiver has been  reduced to  writing,  and signed by the  Parties  and such
waiver shall not  constitute or be deemed a waiver of any other right  hereunder
or against any other  failure to perform or breach  hereof by such other  Party,
whether of a similar or dissimilar nature hereto.

12.7. Representations and Warranties. All representations and warranties made by
either Party, whether by Party's officers,  employees,  agents,  representatives
and consultants,  whether acting or not in their authorized capacity but so long
as relied upon by the other Party relating to a material  fact,  shall be deemed
to be an essential condition of this Agreement,  the misstatement of which shall
give  cause to the  non-defaulting  Party to  rescind  this  Agreement  with the
resulting legal consequences.

                            Article 13. Miscellaneous

13.1 No Agency.  The Parties and JVC shall act in all matters pertaining to this
Agreement  as  independent   contractors  and  nothing  contained  herein  shall
constitute any Party or JVC the partner,  agent or legal  representative  of any
other Party or JVC.

13.2 Force Majeure.  Not withstanding any other provisions of this Agreement,  a
Party  shall  not be liable to the  other  Party  for any loss,  injury,  delay,
damages or other casualty suffered or incurred by

                                       13
<PAGE>

the latter due to strikes, riots, storms, fires,  explosions,  acts of God, war,
action of any  governmental or any other cause beyond the reasonable  control of
the Party, and any failure or delay by either Party in performance of any of its
obligations  under this  Agreement  due to one or more of the  foregoing  causes
shall not be a breach of this  Agreement.  However,  each Party  shall  promptly
notify the other Party of the  occurrence  of such force majeure  condition.  If
such  condition  continues  for longer than three (3) months,  the Parties shall
mutually  consult about the appropriate  modification  of this  Agreement.  This
provision  shall not exempt any Party from its duty to perform  the  obligations
under this  Agreement as soon as  practicable  after a force  majeure  condition
ceases to exist.

13.3  Severability.  In the event any term or provision of this Agreement  shall
for any  reason be  invalid,  illegal  or  unenforceable  in any  respect,  such
invalidity,  illegality or unenforceability  shall not affect any other terms or
provisions  hereof,  and in such event,  this Agreement shall be interpreted and
construed as if such term or provision, to the extent, that shall have been held
invalid, illegal or unenforceable, had never been contained herein.

13.4 Notices.  Any notice or other  communication  required or permitted by this
Agreement shall be made in the English language and shall be sufficiently  given
(i) if delivered in person, on the date so delivered or (ii) if sent by telex or
e-mail  with  confirmation  of  receipt  or  simultaneous  confirmation  sent by
registered  airmail, on the date so sent, to the following address or such other
address as may be furnished by written notice by a Party to the other Party:

To HHI

     Mr. C. D. Lee Senior
     Vice President
     Electro-Mechanical Research Institute
     102-18, MABOOK-RI, KUSEOUNG-EUP,
     YONGIN-SHI, GYUNGGI-DO, KOREA 449-716

To ENOVA

     Mr. Carl D. Perry
     President
     Enova Systems Inc.

                                       14
<PAGE>

     19850 S. Magellan Drive, Torrance,
     CA 90502, U.S.A.

13.5 Use of Trademarks.  It is understood and agreed that no Party's  trademark,
trade  name,   service  mark,   symbol  or  any  other   identification  or  any
abbreviation, contraction or simulation thereof or reference to any Party or its
customers  shall be used in connection  with any of JVC's  products or in any of
its or their advertising or promotional  efforts without prior consultation with
and approval of the relative Party.

13.6 Assignment.  No Party shall have the right to assign by operation of law or
otherwise any or all of its rights or obligations  under this Agreement  without
the prior written consent of the other Party.

13.7 Survival. The Parties agree that the terms and conditions of this Agreement
shall survive all legal acts contemplated herein. Any third party called upon to
interpret and resolve any  difference  between the Parties to this  Agreement in
the future, even after the realization of the legal acts contemplated,  shall be
guided by the general principles of intention and general  obligations set forth
in this Agreement.

13.8 Exhibits. The Exhibits attached to this Agreement shall constitute the part
     --------
of this Agreement and

have same effect with this Agreement.

IN WITNESS  WHEREOF,  and having been approved by the Board of Directors of each
Party,  the Parties  hereto have caused this  Agreement  to be executed by their
duly authorized representatives on the day and year first set above.

                                    Enova Systems Inc.

                           By __________________________________

                                    Hyundai Heavy Industries Co., Ltd.

                           By_________________________________

                                       15
<PAGE>

                                   Schedule 1

                       Technology and Product Development

1.1.1      [REDACTED]*

1.1.2      [REDACTED]*

1.1.3      [REDACTED]*

1.1.4      [REDACTED]*

1.1.5      [REDACTED]*

1.1.6      [REDACTED]*

                                       16
<PAGE>

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