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 Anthony Rawlinson
("Rawlinson" and
together with
Jagen, the "Purchasers"), Carl D. Perry ("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 Rawlinson
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.
<PAGE>
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, Anthony
Rawlinson 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 Bjorn
Ahlstrom 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,
