WAIVER AND TERMINATION
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OF
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SHAREHOLDERS' AGREEMENT
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THIS WAIVER AND TERMINATION OF SHAREHOLDERS' AGREEMENT (the "Agreement") is
entered into effective as of July 16, 2005 (the "Effective Date"), by and among
Jagen Pty, Ltd. ("Jagen") and Xxxxxxx Xxxxxxxxx ("Xxxxxxxxx" and together with
Jagen, the "Purchasers"), Xxxx X. Xxxxx ("Perry") and Enova Systems., Inc.
(formerly U.S. Electricar, Inc.), a California corporation (the "Company"). Any
Capitalized terms not otherwise defined herein shall have the meanings set forth
in that certain Placing Agreement by and among Investec Bank (UK) Limited, the
Company and the Directors of the Company (including but not limited to Xxxxxxxxx
as a Director) attached hereto as Exhibit A and incorporated herein by reference
(the "Placing Agreement") or as set forth in the Shareholders' Agreement (as
defined below).
R E C I T A L S:
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A. On June 1, 1999 the Purchasers, Perry and the Company entered into a
Shareholders' Agreement (the "Shareholders' Agreement") which provided for,
among other matters, the granting of certain preemptive and corporate governance
rights to the Purchasers which the parties now desire to waive and/or terminate.
B. The Company has engaged Investec Bank (UK) Limited to act as its agent
for the Company in respect of the Company proposing to sell up to 5,350,000 new
Common Shares of the Company (the "Placing Shares") pursuant to Regulation S
under the Securities Act of 1933, as amended, to persons subscribing for Placing
Shares pursuant to the Placing Agreement;
C. In connection with the Placing, among other matters set forth below, the
Company desires that the Purchasers waive their preemptive rights set forth in
Article III of the Shareholders' Agreement effective as of the Effective Date
and terminate the Shareholders' Agreement effective immediately prior to the
"Admission".
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I.
TERMINATION
So long as the Admission becomes effective on, or prior to, August 31,
2005, the Shareholders' Agreement is hereby terminated and of no further force
or effect with all rights and obligations of the parties thereto cancelled and
void, effective immediately prior to the Admission.
ARTICLE II.
ACKNOWLEDGMENT OF REFUSAL TO FUND SINKING FUND
The Purchasers acknowledged and confirm that with respect to any financing
which they have provided to the Company at any time, they have affirmatively
required that all of the proceeds from their investment be retained by the
Company and that no such financing in any amount was to have been placed into a
sinking fund escrow account in connection with that certain Credit Managers
Association April 22, 1996 Promissory Note.
ARTICLE III.
PREEMPTIVE RIGHTS
Effective as of the Effective Date, each Purchaser hereby waives his or its
right under Article III of the Shareholders' Agreement to purchase the Placing
Shares as contemplated in the Placing Agreement at such price as shall be
determined pursuant to the Placing Agreement and in such amounts in the
aggregate not to exceed 15 million pounds. Such waiver shall expire if the
Admission has not been consummated on, or prior to, August 31, 2005.
ARTICLE IV.
CORPORATE GOVERNANCE AND VOTING
Each Purchaser acknowledges and confirms that since June 1, 1999, Xxxxxxx
Xxxxxxxxx has been the Purchasers' Board member designee as contemplated in
Article IV of the Shareholders' Agreement. Each Purchaser further acknowledges
and confirms that he or it has approved any increase in the Company's authorized
number of Board members since June 1, 1999 as such increases have been disclosed
in the Company's SEC filings from time to time, including but not limited to an
increase to eight authorized directors in 2004 and the election of Xxxxx
Xxxxxxxx at the last Annual Shareholders Meeting as the most recently elected
new Director.
ARTICLE V.
REGISTRATION RIGHTS
Each of the Purchasers acknowledges and confirms that since June 1, 1999 it
has waived its rights to cause its Registrable Securities to be registered under
the Securities Act of 1933, as amended, pursuant to Section 5.2 of the
Shareholders' Agreement to the extent such Registrable Securities were not
included in any S-1 Registration Statement filed by the Company with the SEC
since June 1, 1999.
ARTICLE VI.
ADDITIONAL CONFIRMATION
Each Purchaser acknowledges and confirms that it has not assigned,
transferred or otherwise encumbered its rights under the Shareholders' Agreement
to or with any third party.
ARTICLE VII.
MISCELLANEOUS
Section 7.1 No Inconsistent Agreements. Except as set forth in the
Shareholders' Agreement until terminated herein, each party hereto hereby
consents to the termination of any other prior written or oral agreement or
understanding restricting, conditioning or limiting the ability of any party to
transfer or vote Shares. Each Purchaser represents and agrees that, as of the
Effective Date, there is no (and from and after the Effective Date it will not,
and will cause its Affiliates not to, enter into any) agreement with respect to
any securities of the Company or any of its Affiliates (and from and after the
Effective Date Purchaser shall not take, or permit any of its Affiliates to
take, any action) that is inconsistent in any material respect with the
provisions in this Agreement.
Section 7.2 Successors and Assigns. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto, and their respective
successors and permitted assigns; provided that (i) neither this Agreement nor
any rights or obligations hereunder may be transferred or assigned by the
Company (except by operation of law in any merger or Qualified Reorganization);
and (ii) neither this Agreement nor any rights or obligations hereunder or under
the Shareholders' Agreement may be transferred or assigned by a Purchaser or
Perry prior to September 1, 2005.
Section 7.3 No Waivers; Amendments.
(a) No failure or delay by any party in exercising any right, power or
privilege hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
(b) This Agreement may not be amended or modified, nor may any provision
hereof be waived, other than by a written instrument signed by (i) the Company,
(ii) the holders of 66% of the Shares held by Purchasers and (iii) Perry.
Section 7.4 Notices. Any notice, request or other communication required or
permitted hereunder will be in writing and shall be deemed to have been duly
given if personally delivered or if telecopied or mailed by registered or
certified mail, postage prepaid, at the respective addresses of the parties set
forth on the Company's records. Any party hereto may by notice so given change
its address for future notice hereunder. Notice will be deemed to have been
given when personally delivered or when deposited in the mail or telecopied in
the manner set forth above and will be deemed to have been received when
delivered.
Section 7.5 Consistency. In the event of a conflict between this Agreement
on the one hand and the Shareholders' Agreement or any other agreement relating
to the subject matter of this Agreement on the other hand, the terms and
provisions of this Agreement shall be deemed to set forth the true intentions of
the parties (to the extent permitted by applicable law) and shall supersede the
terms of any other agreement.
Section 7.6 Confidentiality The Purchasers shall not at any time (a)
disclose the Company's business plans and objectives, financial projections,
marketing plans, technical data, patentable and unpatentable designs, concepts,
ideas, inventions, know-how and other trade secrets of the Company (the
Confidential Information") to any Person whatsoever, (b) examine or make copies
of any reports or other documents, papers, memoranda, or extracts containing
Confidential Information, nor (c) utilize for their own benefit or for the
benefit of any other party other than the Company any such Confidential
Information except:
(i) Information which such party can show was rightfully in its
possession at the time of disclosure by the Company.
(ii) Information which such party can show was received from a third
party who lawfully developed the information independently of the
Company or obtained such information from the Company under conditions
which did not require that it be held in confidence.
(iii) Information which, at the time of disclosure, is in the public
domain.
Section 7.7 Applicable Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
Section 7.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. This Agreement may be executed by facsimile.
Section 7.9 Title and Subtitles. The titles of the Sections and subsections
of this Agreement are for the convenience of reference only and are not to be
considered in construing this Agreement.
Section 7.10 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith to achieve the closest comparable terms as is
possible. In the event that the parties cannot reach a mutually agreeable and
enforceable replacement for such provision, then (a) such provision shall be
excluded from this Agreement, (b) the balance of the Agreement shall be
interpreted as if such provision were so excluded and (c) the balance of the
Agreement shall be enforceable in accordance with its terms.
SIGNATURE PAGE TO
WAIVER AND TERMINATION OF SHAREHOLDERS' AGREEMENT
PURCHASER U.S. ELECTRICAR, INC.
JAGEN PTY, LTD.
By: /s/ Xxxxx Xxxxxxxx By: /s/ Xxxx Xxxxx
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(Signature) (Signature)
PURCHASER
XXXXXXX X. XXXXXXXXX
/s/ Xxxxxxx X. Xxxxxxxxx
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(Signature)
/s/ Xxxx Xxxxx
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XXXX XXXXX
