- Proxy Statement (definitive) (DEF 14A)
November 09 2010 - 4:06PM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant
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Filed by a Party other than the Registrant
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Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Pursuant to §240.14a-12
ENOVA SYSTEMS, INC.
(Name of Registrant as Specified In Its Charter)
Payment of Filing Fee (Check the appropriate box):
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No fee required.
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Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
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Title of each class of securities to which transaction applies:
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Aggregate number of securities to which transaction applies:
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Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on
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Proposed maximum aggregate value of transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the
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paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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ENOVA SYSTEMS, INC.
N
OTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 7, 2010
NOTICE IS HEREBY GIVEN that the 2010 Annual Meeting of Shareholders (the Annual Meeting) of
Enova Systems, Inc., a California corporation, will be held on December 7, 2010 at 9:00 a.m. local
time at Enova Systems, Inc.s principal executive office, located at 1560 West 190th Street,
Torrance, California 90501 for the following purposes:
1. To elect six directors to serve until the 2011 Annual Meeting of Shareholders and
until their respective successors are elected and qualify from among the following nominees:
Richard Davies, John J. Micek, Edwin O. Riddell, Roy Roberts, Michael Staran, and John R. Wallace.
2. To vote on ratifying the selection of PMB Helin Donovan, LLP as its independent
auditors for 2010.
3. To transact such other business as may be properly brought before the Annual Meeting
and at any postponements or adjournments thereof.
Any action may be taken on the foregoing matters at the Annual Meeting on the date
specified above, or on any date or dates to which, by original or later postponement or
adjournment, the Annual Meeting may be postponed or adjourned.
The Board of Directors has fixed the close of business on October 29, 2010 as the record
date for determining the shareholders entitled to receive notice of and to vote at the Annual
Meeting and at any postponements or adjournments thereof. Only holders of record of Enova Systems,
Inc.s common stock, no par value, or Preferred Stock, no par value, at that time will be entitled
to receive notice of and to vote at the Annual Meeting.
All shareholders are cordially invited to attend the meeting in person. To assure your
representation at the meeting, however, you are requested to authorize a proxy to vote your shares
by filling in and signing the enclosed proxy card, and by mailing it promptly in the enclosed
postage-prepaid envelope. You may also authorize a proxy to vote your shares electronically by
following the instructions on your proxy card. Any shareholder attending the meeting may vote in
person even if he or she has returned a proxy.
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By Order of the Board of Directors
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/s/ Michael Staran
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Michael Staran, President and Chief Executive Officer
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Torrance, California
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November 9, 2010
IMPORTANT:
Regardless of the number of shares you own, your vote is important. Please complete,
sign, date and promptly return the enclosed proxy card to vote your shares by following the
instructions on your proxy card.
Important Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to be Held on December 7, 2010: The Proxy Statement and Annual Report to Security
Shareholders are available at www.proxyvote.com
TABLE OF CONTENTS
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GENERAL INFORMATION ABOUT THE ANNUAL MEETING
Proxy Statement
This proxy statement is furnished to the shareholders of Enova Systems, Inc., a
California corporation, in connection with the solicitation of proxies by our Board of Directors
for use at our 2010 Annual Meeting of Shareholders to be held on Tuesday, December 7, 2010 at 9:00
a.m. local time at the Enova Systems principal executive office, located at 1560 West
190
th
Street, Torrance, California 90501 and at any and all adjournments of
the Annual Meeting. Directions to our office may be obtained by calling us at the following
telephone number: (310) 527-2800 ext. 128. This proxy statement and the accompanying Notice of
Annual Meeting and proxy card are first being sent to shareholders on or about November 9, 2010.
Please mark, date, sign and return the enclosed Proxy in the accompanying postage-prepaid,
return envelope as soon as possible so that, if you do not attend the Annual Meeting, your shares
may be voted.
Record Date and Voting
The close of business on October 29, 2010 has been fixed as the record date for
determining the holders of shares of common stock, Series A Preferred Stock, and Series B Preferred
Stock of Enova Systems entitled to notice of and to vote at the Annual Meeting. As of the close of
business on the record date, there were 31,431,564 shares of common stock, 2,652,159 shares of
Series A Preferred Stock, and 546,166 shares of Series B Preferred Stock, outstanding and entitled
to vote at the Annual Meeting. The common stock, Series A Preferred Stock and Series B Preferred
Stock will vote together as a single class on all matters voted on at the Annual Meeting.
Each outstanding share of common stock on the record date is entitled to one vote, each
outstanding share of Series A Preferred Stock on the record date is entitled to 1/45 or 2.22% of
one vote, and each outstanding share of Series B Preferred Stock on the record date is entitled to
2/45 or 4.44% of one vote on all matters voted on at the Annual Meeting. The conversion ratio for
the preferred stock reflects anti-dilution provisions to account for the 1:45 reverse stock-split
that our common stock underwent on July 20, 2005. On a converted basis therefore, the Series A
Preferred Stock holds the voting power of 58,937 shares of common stock and the Series B Preferred
Stock holds the voting power of 24,768 shares of common stock. Including the preferred stock on an
as converted basis together with the 31,431,564 shares of common stock, the total voting shares
entitled to vote on the record date was 31,515,269 shares.
The presence at the Annual Meeting of a majority of the shares of common stock, Series A
Preferred Stock, and Series B Preferred Stock of Enova Systems in the aggregate on an as converted
basis, or approximately 15,757,635 of these shares on an as converted basis either in person or by
proxy, will constitute a quorum for the transaction of business at the Annual Meeting.
Abstentions and broker non-votes will be counted for purposes of determining whether a
quorum is present for the transaction of business at the Annual Meeting. A broker non-vote refers
to a share represented at the Annual Meeting which is held by a broker or other nominee who has not
received instructions from the beneficial owner or person entitled to vote such share and with
respect to which, on one or more but not all proposals, such broker or nominee does not have
discretionary voting power to vote such share. Abstentions and broker non-votes are each included
in the determination of the number of shares present and voting, and each is tabulated separately.
However, broker non-votes are not counted for purposes of determining the number of votes cast with
respect to a particular proposal. In determining whether a proposal (other than the election of
directors) has been approved, abstentions are counted as votes against the proposal and broker
non-votes are not counted as votes for or against the proposal.
With respect to the election of directors (Proposal 1), the six nominees receiving the
highest number of affirmative votes of the common stock, Series A Preferred Stock (as converted),
and Series B Preferred Stock (as converted), present and voting together as a single class at the
meeting, either in person or by proxy, will be declared elected. The affirmative vote of a majority
of the shares of common stock, Series A Preferred Stock (as converted), and Series B Preferred
Stock (as converted), present and voting together as a single class at the meeting, either in
person or by proxy, is required for approval of Proposal 2 (ratification of independent auditors).
1
There is an important change this year regarding broker non-votes and director elections.
Effective for the Annual Meeting, the NYSE no longer permits brokers to vote with respect to the
Proposal 1 for the election of directors if the broker has not received instructions from the
beneficial owner. This represents a change from prior years, when brokers had discretionary voting
authority in the election of directors.
If a properly signed proxy is submitted but not marked as to a particular item, the proxy
will be voted FOR the election of the six nominees for director of Enova Systems named in this
proxy statement, and FOR the ratification of the selection of PMB Helin Donovan LLP as our
independent auditors for 2010.
The Board of Directors does not know of, and it is not anticipated that, any matters
other than those set forth in the proxy statement will be presented at the Annual Meeting. If other
matters are presented, proxies will be voted in the discretion of the proxy holders.
An automated system administered by our transfer agent will tabulate votes of the holders
of common stock, Series A and Series B Preferred Stock cast by proxy. An employee of Enova Systems
will tabulate votes cast in person at the Annual Meeting.
Solicitation
You may submit your proxy by signing your proxy card and mailing it in the enclosed,
postage-prepaid and addressed envelope. For shares you hold beneficially in street name, you may
sign the voting instruction card included by your broker or nominee and mail it in the envelope
provided.
The solicitation of proxies will be conducted by mail and Enova Systems will bear all
attendant costs. These costs will include the expense of preparing and mailing proxy materials for
the Annual Meeting and reimbursements paid to brokerage firms and others for their expenses
incurred in forwarding solicitation material regarding the Annual Meeting to beneficial owners of
Enova Systems common stock or preferred stock. We may conduct further solicitation personally,
telephonically, by facsimile or by other electronic or written means through our officers,
directors and regular employees, none of whom will receive additional compensation for assisting
with the solicitation.
Revocability of Proxy
You may change your proxy instructions at any time prior to the vote at the Annual
Meeting. For shares held directly in your name, you may do this by granting a new proxy, by filing
a written revocation with the Secretary of Enova Systems, or by attending the Annual Meeting and
voting in person. Attendance at the Annual Meeting without further action will not cause your
previously granted proxy to be revoked. You may change your proxy instructions for shares you
beneficially own by submitting new voting instructions to your broker or nominee.
PROPOSAL 1
ELECTION OF DIRECTORS
The Board of Directors currently consists of six members. Our Bylaws provide that the
size of the Board shall be not less than six members nor more than nine members. Pursuant to our
Bylaws, the Board of Directors has established the authorized number of directors at six. Six
nominees will stand for election at the Annual Meeting and if elected will serve until the 2011
Annual Meeting of Shareholders and until their successors are elected and qualify. The following
six individuals have been nominated to serve as directors: Richard Davies, John J. Micek, Edwin O.
Riddell, Roy S. Roberts, Michael E. Staran and John R. Wallace. These six nominees currently serve
on the Board. Each of the existing Board members was elected at our prior annual meeting of
shareholders in December 2009.
The Board anticipates that each of the six nominees, if elected, will serve as a
director. In the unexpected event a nominee is unable or declines to serve as a director at the
time of the Annual Meeting, the shares of common stock, Series A Preferred Stock and Series B
Preferred Stock represented by the enclosed proxy may (unless such proxy contains instructions to
the contrary) be voted for such other person or persons as may be determined by the holders of such
proxies.
2
Information Regarding Nominees
Richard Davies.
Mr. Davies, age 42, has served on the Board of Directors since 2008.
Since 2007, he has served as Managing Director of investments for Jagen Pty Ltd. Prior to that
appointment, he managed the listed equity investments of Jagen Ptd Ltd. since 2003. Between 2001
and 2003, Mr. Davies co-founded Kicap Management, a global long short equity hedge fund. Between
1998 and 2001, Mr. Davies worked for Tiger Management as an analyst of telecom and media
industries. In addition to his experience as a portfolio manager and analyst, Mr. Davies between
1992 and 1996 practiced an attorney with Baker & McKenzie in Hong Kong and Melbourne, Australia and
then Freehill, Hollingdale & Page in Melbourne and Sydney, Australia. Mr. Davies graduated in 1992
from Monash University in 1992 with a Bachelor of Law (Honors) and Bachelor of Economics. He also
earned an MBA (Honors) from Columbia Business School.
Mr. Davies finance background, relationship with a key long-term significant shareholder, and
his performance as a board member of our Company led the Board of Directors to conclude that he
should be nominated to serve another term as a director.
John J. Micek.
Mr. Micek, age 58, was re-appointed to the Board of Directors in 2007. He
previously served on the Board between April 1999 and July 2005. Since 2000, Mr. Micek has been
Managing Director of Silicon Prairie Partners, LP, a Palo Alto, California based family-owned
venture fund. He also is admitted to practice law in California and his prior practice focused
financial services. Mr. Micek currently actively serves on the Board of Directors of Armanino Foods
of Distinction, UTEK Corporation and JAL/Universal Assurors. During the past five years, he
previously served on the Board of Directors of Benda Pharmaceutical, Wherify Wireless, and
ExchangeBlvd.com. Micek is a cum laude graduate of Santa Clara University, and the University of
San Francisco School of Law, where he was Senior Articles Editor of the Law Review.
Mr. Miceks finance and business background, longstanding relationship with our Company, and
his performance as a board member of our Company led the Board of Directors to conclude that he
should be nominated to serve another term as a director.
Edwin O. Riddell.
Mr. Riddell, age 68, has served on the Board of Directors since 1995.
He also served as our President and Chief Executive Officer from August 20, 2004 until his
retirement effective August 28, 2007. Between 1999 and 2004, Mr. Riddell was President of CR
Transportation Services, a consultant to the electric and hybrid vehicle industry. From 1992 to
1999, Mr. Riddell was Product Line Manager of the Transportation Business Unit at the Electric
Power Research Institute, and from 1985 until 1992, he served with the Transportation Group, Inc.
as Vice President of Engineering, working on electrically driven public transportation systems.
From 1979 to 1985, Mr. Riddell was Vice President, General Manager and COO of Lift-U, Inc., a
manufacturer of handicapped wheelchair lifts for the transit industry. He has also worked with
Ford, Chrysler, and General Motors in the area of auto design, and as a member of senior management
for a number of public transit vehicle manufacturers. Mr. Riddell served as a member of the
American Public Transportation Associations (APTA) Member Board of Governors for over 15 years,
and served on APTAs Board of Directors. Mr. Riddell was also Managing Partner of the U.S. Advanced
Battery Consortium. He also serves on the Electric Drive Association Board of Directors.
Mr. Riddells prior service as chief executive officer of our Company, historical perspective
on our Companys business, relationships and strategy; and his performance as a board member of our
Company led the Board of Directors to conclude that he should be nominated to serve another term as
a director.
Roy S. Roberts.
Mr. Roberts, age 71, was appointed to the Board of Directors in 2008. He
has served as Managing Director of Reliant Equity Investors, a venture capital firm, since
September 2000. Mr. Roberts retired from General Motors in 2000. At the time of his retirement, he
was Group Vice President for North American Vehicle Sales, Service and Marketing of General Motors
Corporation, having been elected to that position in October 1998. Prior to that time, he was Vice
President and General Manager in charge of Field Sales, Service and Parts for the Vehicle Sales,
Service and Marketing Group from August 1998 to October 1998, General Manager of the Pontiac-GMC
Division between 1996 and 1998, and General Manager of the GMC Truck Division between 1992 and
1996. Mr. Roberts first joined General Motors Corporation in 1977 and became a corporate officer of
General Motors Corporation in 1987. He was named 1996 Executive of the Year by Black Enterprise
magazine and 1997 Executive of the Year by African Americans on Wheels magazine. Mr. Roberts earned
a bachelors degree from Western Michigan University and completed the Executive Development
Program at Harvard University. He also received honorary doctorate degrees from Florida A&M
University and Grand Valley State College. He previously served as on the Board of Directors for
Burlington Northern Santa Fe Corporation, the Morehouse School of Medicine, the United Negro
College Fund, the National Urban League, and as president and on the National Board of Directors
for the Boy Scouts of America. He currently serves as a director for Abbott Laboratories and as
Trustee Emeritus at Western Michigan University.
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Mr. Roberts knowledge of the automotive industry, experience in key automotive companies, and
his performance as a board member of our Company led the Board of Directors to conclude that he
should be nominated to serve another term as a director.
Michael Staran.
Mr. Staran, age 49, was appointed to the Board of Directors in 2007. He
currently serves as our President and Chief Executive Officer. Mr. Staran became our Chief
Executive Officer effective August 28, 2007. He previously had served as President and Chief
Operating Officer since June 26, 2007 and Executive Vice President since November 17, 2006. He also
acted as a consultant for Enova Systems from November 2004 through February 2005 when he was hired
by us as Director of Sales and Marketing. Mr. Staran has over 25 years of experience in business
development, product management, sales and marketing, and engineering. Prior to joining us in 2006,
he had served since 1998 as President of Effective Solutions People LLC providing specialized
consulting to the OEM supplier segment. His affiliations and work history range from companies such
as Ford, General Motors and DaimlerChrysler to suppliers such as Johnson Controls Inc. and Decoma
International (a division of Magna International) where he was vice president of sales and
marketing for 13 years. Mr. Staran holds a Bachelor of Science degree in Mechanical Engineering
with a minor in Mathematics from Lawrence Institute of Technology in Southfield Michigan. Mr.
Staran has developed three patented mechanical designs within the automotive components sector.
Mr. Starans role as our Chief Executive Officer, his knowledge our operations, and his
performance as a board member of our Company led the Board of Directors to conclude that he should
be nominated to serve another term as a director.
John R. Wallace.
Mr. Wallace, age 62, was elected to the Board of Directors in 2002 and
was elected Chairman of the Board of Directors on August 22, 2008. Mr. Wallace has been a member of
the Board of Directors for Xantrex Technology, Inc. based in Burnaby, B.C., Canada since 2003 and
also held the position of CEO at Xantrex from November 2005 until September 2008. From 2002 to
2005, Mr. Wallace worked independently as a consultant in the alternative energy sector. Prior to
working as a consultant, Mr. Wallace served in various capacities at Ford Motor Company from 1988
until his retirement in 2002. He served as Director of Fords Electronic Systems Research
Laboratory, Research Staff, from 1988 through 1990. He then worked in Fords alternative fuel
vehicle programs, serving first as Director of Technology Development Programs then as Director of
Electric Vehicle Programs, Director of Alternative Fuel Vehicles, and finally Director of
Environmental Vehicles. Prior to joining Ford Research Staff, he was president of Ford
Microelectronics, Inc., in Colorado Springs. Mr. Wallace has been past Chairman of the Electric
Vehicle Association of the Americas, past Executive Director and Chairman of the Board of Directors
of TH!NK Nordic, past chairman of the United States Advanced Battery Consortium, and past Chairman
of the California Fuel Cell Partnership. His other experience includes work as program manager with
Intel Corporation. He also served as Director, Western Development Center, for Perkin-Elmer
Corporation and as President of Precision Microdesign, Inc.
Mr. Wallaces automotive and commercial vehicle industry experience, relationships in the
electric and hybrid automotive industry, and his performance as a board member of our Company led
the Board of Directors to conclude that he should be nominated to serve another term as a director.
There is no family relationship between any director, nominee, or executive officer of Enova
Systems.
Required Vote and Recommendation
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The holders of the common stock, Series A Preferred Stock (on an as converted basis), and
Series B Preferred Stock (on an as converted basis), voting together as a single class, are
entitled to elect the members of the Board.
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Our Bylaws provide that every shareholder entitled to vote shall have the right to cumulate
the holders votes. Under cumulative voting, each holder of common stock, Series A and Series B
Preferred Stock may cast for a single candidate, or distribute among the candidates as such holder
chooses, a number of votes equal to the number of candidates (six at this Annual Meeting)
multiplied by the number of votes to which holders shares are entitled. Cumulative voting will
apply only to those candidates whose names have been placed in nomination prior to voting. No
shareholder shall be entitled to cumulate votes unless the shareholder has given notice at the
meeting, prior to the voting, of the shareholders intention to cumulate the shareholders votes.
If any one shareholder gives such notice, all shareholders may cumulate their votes for candidates
in nomination, except to the extent that if a shareholder withholds votes from the nominees. You
are being asked to grant discretionary authority to cumulate votes to the proxy holders. If
cumulative voting is properly invoked by any shareholder, the holders of the proxies solicited
hereby intend to vote such proxies in a manner that ensures the election of as many of the nominees
set forth herein as possible.
The six nominees receiving the most votes will be elected as directors. Abstentions and broker
non-votes will have no effect on the result of the vote, although they will count towards the
presence of a quorum. Properly executed and unrevoked proxies will be voted
FOR
the nominees set
forth in Proposal 1 unless contrary instructions or an abstention are set forth in the proxy. The
proxy
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holders named in the accompanying form of proxy, in their discretion, will if necessary,
exercise cumulative voting rights to secure the election of as many of the nominees as possible.
The Board of Directors unanimously recommends a vote FOR each and all of the nominees for
director.
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT PUBLIC AUDITORS
The Board recommends that the shareholders ratify the Audit Committees selection of PMB Helin
Donovan LLP as the principal registered independent auditors of Enova Systems for fiscal year 2010.
PMB Helin Donovan LLP served as our registered independent auditor at the conclusion of each of
our four most recently completed fiscal years. A representative of PMB Helin Donovan LLP is
expected to be present at the Annual Meeting, will have the opportunity to make a statement if such
representative desires to do so and will be available to respond to appropriate questions.
Although ratification is not required by our Bylaws or otherwise, the Board is submitting the
selection of PMB Helin Donovan LLP to our shareholders for ratification as a matter of good
corporate practice. If the selection is not ratified, the Audit Committee will consider whether it
is appropriate to select another registered public accounting firm. Even if the selection is
ratified, the Audit Committee in its discretion may select a different registered public accounting
firm at any time during the year if it determines that such a change would be in the best interests
of Enova Systems and our shareholders.
Required Vote and Recommendation
The affirmative vote of the holders of a majority of the shares of the common stock, Series A
Preferred Stock (on an as converted basis), and Series B Preferred Stock (on an as converted
basis), voting together as a single class, present or represented by proxy at the Annual Meeting,
is required to ratify the selection of PMB Helin Donovan. Abstentions and broker non-votes will
have no effect on the outcome of the vote, although they will count towards the presence of a
quorum. Proxies will be voted
FOR
ratifying the selection of PMB Helin Donovan LLP as our
independent auditors for fiscal year 2010 unless contrary instructions are set forth in the proxy.
The Board of Directors unanimously recommends a vote FOR the ratification of the selection of
PMB Helin Donovan LLP as Enova Systems independent auditors for fiscal year 2010.
CORPORATE GOVERNANCE AND RELATED MATTERS
Code of Ethics
Enova Systems has adopted a Code of Ethics For Officers, Directors, and Employees consistent
with Securities and Exchange Commission (SEC) rules requiring a Code of Ethics and the NYSE Amex
rules requiring a Code of Conduct and Ethics. It applies to our Board of Directors, Chief Executive
Officer, Chief Financial Officer and principal accounting officer, and employees. A copy of the
Code of Ethics for Officers, Directors, and Employees may be obtained free of charge by writing to
Enova Systems, Inc., 1560 West 190
th
Street, Torrance, California 90501, Attention:
Chief Financial Officer or by accessing the Investor Relations section of our website
(
www.enovasystems.com
). To the extent required by the rules of the SEC and the NYSE Amex, we will
post on our website any amendments and waivers relating to our code of ethics with respect to our
directors, principal executive officer, principal financial officer, principal accounting officer
or controller, or persons performing similar functions.
Board of Directors and its Committees
The Board of Directors currently is fixed at and consists of six directors. The minimum and
maximum number of Directors under our Bylaws is six and nine members.
The Board of Directors has determined that at least 50% of its current members are independent
within the meaning of NYSE Amex rules as applicable to a smaller reporting company. Specifically,
Messrs. Davies, Micek, Roberts and Wallace are independent.
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The Board met five times during 2009. The Board schedules regular executive sessions at each
of its meetings in which non-employee directors meet without management participation. In addition,
at least once each year the independent directors meet without non-independent director
participation. Each of the directors attended at least 75% of the total number of meetings of the
Board and meetings of the committees of the Board of which he was a member. The Board expects all
directors to attend, in person or by phone, our annual meetings of shareholders. All of the
current Board members attended, in person or by phone, our prior annual meeting of shareholders in
December 2009.
Audit Committee.
The Board of Directors has established an Audit Committee in accordance with
Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended. The current members of this
committee are Messrs. Micek (Chair), Roberts and Wallace. Although there presently are three
members of the Audit Committee, NYSE Amex rules permit us, as a smaller reporting company, to have
only two members of the Audit Committee. The Board has determined that the members of the Audit
Committee are independent under the rules of the SEC and the NYSE Amex. In addition to being
independent, Mr. Micek has been determined by the Board to be an audit committee financial expert
as defined by the SEC and the NYSE Amex. Mr. Miceks designation by the Board as an audit
committee financial expert is not intended to be a representation that he is an expert for any
purpose as a result of such designation, nor is it intended to impose on him any duties,
obligations or liability that are greater than the duties, obligations or liability imposed on him
as a member of the Audit Committee and the Board in the absence of such designation. Additionally,
his designation as an audit committee financial expert does not affect the duties, obligations or
liability of any other member of the Audit Committee.
The Audit Committee, among other functions, has the sole authority to appoint and replace
the independent auditors, is responsible for the compensation and oversight of the work of the
independent auditors, reviews the results of the audit engagement with the independent auditors,
and reviews and discusses with management and the independent auditors quarterly and annual
financial statements and major changes in accounting and auditing principles. The Audit Committee
met six times during 2009. The Board has adopted a written charter for the Audit Committee.
Compensation Committee.
The Board of Directors has established a Compensation Committee. The
current members of this committee are Messrs. Davies (Chair), Roberts and Wallace. The Board has
determined that Messrs. Davies, Roberts and Wallace are independent members of the Compensation
Committee under the rules of the NYSE Amex.
The Compensation Committee, among other functions, reviews and recommends compensation
structures, programs and amounts, and establishes performance goals and objectives relative to the
Chief Executive Officer. The determinations of the Compensation Committee typically are ratified by
the full Board of Directors, including a majority of independent directors. In performing its
functions with respect to management and employees, the Compensation Committee may rely upon the
recommendations of or delegate authority to our Chief Executive Officer. The Compensation Committee
met two times during 2009. The Board has adopted a written charter for the Compensation Committee.
A copy of the Compensation Committee charter may be obtained free of charge by writing to Enova
Systems, Inc., 1560 West 190th Street, Torrance, California 90501, Attention: Chief Financial
Officer or by accessing the Investor Relations section of our website
(www.enovasystems.com).
Pursuant to its charter, the Compensation Committee is authorized to retain compensation
consultants to assist it in carrying out its duties. The Compensation Committee has the authority
to approve any compensation consultants fees and other retention terms. The Company did not engage
a compensation consultant during fiscal 2009 to provide advice or recommendations on the amount or
form of executive and director compensation
Nominating and Governance Committee.
The Board of Directors has established a Nominating and
Governance Committee. The current members of this committee are Messrs. Davies, Roberts and
Wallace. The Nominating and Governance Committee generally monitors, reviews, and makes
recommendations on (i) Board composition including assessment of skills, performance, and
independence, and (ii) corporate governance matters and practices, including formulating and
periodically reviewing the Code of Ethics applicable to the Companys directors, officers and
employees. The Nominating and Governance Committee met one time during 2009. The Board has adopted
a written charter for the Nominating and Governance Committee. A copy of the charter may be
obtained free of charge by writing to Enova Systems, Inc., Enova Systems, Inc., 1560 West 190th
Street, Torrance, California 90501, Attention: Chief Financial Officer or by accessing the
Investor Relations section of our web site (
www.enovasystems.com
). There have been no material
changes during the last fiscal year to the procedures by which security holders may recommend
nominees to Enovas board of directors.
6
Board Leadership Structure and Role in Risk Oversight
The Chief Executive Officer and Chairman roles are currently separated between Mr. Staran
and Mr. Wallace, respectively. The Board believes that its current leadership structure provides
appropriate board oversight and engagement by having our Chief Executive Officer role separate from
that of the Chairman of the Board. The Chief Executive Officer is best positioned as the individual
with primary responsibility for managing the Companys day-to-day operations, carries in-depth
knowledge and understanding of the Company, while the Chairman of the Board chairs regular Board
meetings as we discuss key business and strategic issues. In conjunction with the non-executive
directors who are elected annually, we believe this structure provides appropriate oversight of the
day-to-day management of business operations.
The Board believes that the Companys governance structure operates to effectively oversee
material risks related to the Company. The Boards role, as a whole and through its committees, in
the risk oversight process includes receiving regular reports from members of senior management on
areas of material risk to the Company, including operational, financial and strategic risks. Also,
the involvement of the Board in reviewing, approving and monitoring our fundamental financial and
business strategies, as contemplated by our corporate governance documents, is important to the
determination of the types and appropriate levels of risk the Company undertakes.
Consideration of Director Nominees
In evaluating and determining whether to recommend a person as a candidate for election as a
director, the Nominating and Governance Committee considers the persons qualities and skills,
which include business and professional background, history of leadership or contributions to other
organizations, functional skill set and expertise, general understanding of marketing, finance,
accounting and other elements relevant to the success of a publicly-traded company in todays
business environment, and service on other boards of directors. The Nominating and Governance
Committee does not have a formal policy regarding the consideration of diversity in identifying
director nominees, but looks for individuals with specific qualifications so that the Board as a
whole may maintain an appropriate mix both of experience, background, expertise and skills, and of
age, gender, and ethnic and racial diversity. There are no specific minimum qualifications for
nominees. The Nominating and Governance Committee may employ a variety of methods for identifying
and evaluating nominees for director. The Nominating and Governance Committee may assess the size
of the Board, the need for particular expertise on the Board, the upcoming election cycle of the
Board and whether any vacancies are expected, due to retirement or otherwise. In the event that
vacancies are anticipated or otherwise arise, the Nominating and Governance Committee will consider
various potential candidates for director which may come to the Nominating and Governance
Committees attention through current Board members, professional search firms, shareholders or
other persons. No fees were paid to any third party to identify or evaluate potential nominees for
inclusion in this proxy statement.
In exercising its function of recommending individuals for nomination by the Board for
election as directors, the Nominating and Governance Committee considers nominees recommended by
shareholders under the criteria summarized above. The Nominating and Governance Committee will make
an initial analysis of the qualities and skills of any candidate recommended by a shareholder or
others pursuant to the criteria summarized above to determine whether the candidate is suitable for
service on our Board before deciding to undertake a complete evaluation of the candidate. If any
materials are provided by a shareholder or professional search firm in connection with the
nomination of a director candidate, such materials are forwarded to the Nominating and Governance
Committee as part of its review. The same identifying and evaluating procedures apply to all
candidates for director nomination, including candidates submitted by shareholders. There have
been no material changes to the procedures by which shareholders may recommend nominees since our
prior annual meeting of shareholders in December 2009.
To request that the Nominating and Governance Committee consider a prospective candidate for
election to our Board of Directors at our 2011 Annual Meeting of Shareholders, please submit the
candidates name and biographical description to: Enova Systems, Inc., 1560 West 190
th
Street, Torrance, California 90501, Attention: Secretary.
Contacting the Board
You may contact any of our directors, or our independent directors as a group, by writing to
them c/o Enova Systems, Inc., 1560 West 190
th
Street, Torrance, California 90501,
Attention: Secretary. Your letter should clearly specify the name of the individual director or
group of directors to whom your letter is addressed. Any communications received in this manner
will be forwarded to the appropriate director(s) as addressed, except for solicitations or other
matters unrelated to our company.
7
Director Compensation
The table below summarizes the total compensation we paid to our non-executive directors for
the fiscal year ended December 31, 2009:
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|
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|
|
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|
|
Nonequity
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|
|
Nonqualified
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Incentive
|
|
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Deferred
|
|
|
|
|
|
|
|
|
|
Fees Earned or
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|
Stock
|
|
|
Option
|
|
|
Plan
|
|
|
Compensation
|
|
|
All Other
|
|
|
|
|
Non-Executive
|
|
Paid in
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Earnings
|
|
|
Compensation
|
|
|
|
|
Director Name
|
|
Cash ($)
|
|
|
($)
(C)
|
|
|
($)
(D)
|
|
|
($)
|
|
|
($)
|
|
|
($)
|
|
|
Total ($)
|
|
Bjorn Ahlstrom
(A)
|
|
$
|
15,000
|
|
|
$
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,500
|
|
Malcolm Currie
(A)
|
|
$
|
15,000
|
|
|
$
|
22,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
37,500
|
|
Richard Davies
(B)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
John Micek
|
|
$
|
20,000
|
|
|
$
|
30,000
|
|
|
$
|
27,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,376
|
|
Edwin Riddell
|
|
$
|
20,000
|
|
|
$
|
30,000
|
|
|
$
|
27,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,376
|
|
Roy Roberts
|
|
$
|
20,000
|
|
|
$
|
30,000
|
|
|
$
|
27,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,376
|
|
John Wallace
|
|
$
|
20,000
|
|
|
$
|
30,000
|
|
|
$
|
27,376
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
77,376
|
|
|
|
|
(A)
|
|
Messrs. Ahlstrom and Currie did not stand for reelection to the Board in connection with our prior
annual meeting and therefore their positions as directors ended effective December 8, 2009.
|
|
(B)
|
|
Mr. Davies elected not to receive compensation for his services in the year ended December 31, 2009.
|
|
(C)
|
|
Stock awards issued to directors as compensation for services are valued in accordance to SEC rules
as of the grant date value at issuance in accordance with FASB ASC 718.
|
|
(D)
|
|
The options vest over one year on a quarterly basis on the last day of each calendar quarter
provided the option holder is then a director of Enova as of such date. The first 1/4 or 25% of the
shares under each option will vest on March 31, 2010. In the event there is a change of control of
Enova, the options will become fully vested.
|
During 2009, we issued, or accrued for issuance, an aggregate of 157,918 shares of common
stock to the non-executive board members. During 2009, the equity-based component of the Board
compensation was adjusted. Under the standing policy in effect since July 1, 2008, each
non-executive director was entitled to receive quarterly compensation at a flat rate of $5,000 in
cash and $7,500 in stock valued at the closing price of our common stock on the last day of the
quarter in which the meeting is held. The flat rate is not dependent on the amount or type of
services performed by the directors. As of December 8, 2009, in lieu of the quarterly stock
compensation, the Board compensation policy provides that each non-executive director is entitled
to be awarded an annual stock option grant in the amount of 34,500 shares under the Companys 2006
Equity Compensation Plan exercisable per share at an exercise price equal to the fair market value
of one share of common stock on the date of grant vesting in 25% increments as of the last day of
each calendar quarter of 2010, commencing with the calendar quarter ending March 31, 2010, provided
the optionee director is then a director as of such date. In addition, under the standing policy,
members of the Board who serve on our Audit Committee are provided additional cash compensation of
$2,500 per quarter for the Chairman of the Audit Committee and $1,250 per quarter for other members
of the Audit Committee. All directors are also reimbursed for out-of-pocket expenses incurred in
connection with attending Board and committee meetings.
EXECUTIVE OFFICERS
We currently have three executive officers.
Michael Staran
. Please see Information Regarding Nominees above for a biographical
discussion of Mr. Staran, our President and Chief Executive Officer
Jarett Fenton.
Mr. Fenton, age 34, has served as our Chief Financial Officer since February
5, 2007. He previously served from March 2003 through February 2007 as the Chief Executive of the
Clarity Group, a company he founded to provide SEC reporting and corporate compliance consultancy.
From September 1998 to March of 2003, Mr. Fenton worked as a Senior Associate in the Middle Market
practice of PricewaterhouseCoopers in the Orange County, CA office where he facilitated audit
engagements, worked on SEC reporting issues, controls assessments, client reporting, financial
guidance interpretation and staff development. Mr. Fenton has a B.A. in Business Economics with an
emphasis in Accounting from the University of California at Santa Barbara and is a Certified Public
Accountant in the State of California.
8
John Mullins.
Mr. Mullins, age 46, joined Enova Systems on December 12, 2007 as Director of
Supply Chain Management and was appointed Chief Operating Officer on October 22, 2009. He has 20
years operations related management experience, 11 based outside the United States. From September
2006 to October 2007, Mr. Mullins served as COO/VP Operations for American Racing, an automotive
supply company. From September 2004 to July 2006, Mr. Mullins served as SBU global General Manager
of Ingersoll-Rands industrial tool and pump business based in Shanghai, China. His past roles also
include General Manager of TRW Automotives North American aftermarket business; Operations general
manager-Europe for Lucas Aftermarket, based in Solihull England, and a variety of positions with
Kelsey-Hayes company in engineering and program management, based in Tokyo, Japan and Detroit,
Michigan.
EXECUTIVE COMPENSATION
Summary Compensation Table
The table below summarizes the total compensation paid to or earned by each of the named
executive officers for the fiscal years ended December 31, 2009 and 2008:
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|
|
|
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|
|
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|
Stock
|
|
|
Options
|
|
|
All other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Awards
|
|
|
Awards
|
|
|
Compensation
|
|
|
Total
|
|
Name and Principal Position
|
|
Fiscal Year
|
|
|
Salary ($)
|
|
|
Bonus ($)
(A)
|
|
|
($)
(B)
|
|
|
($)
(C)
|
|
|
($)
(D)
|
|
|
($)
|
|
Michael Staran
|
|
|
2009
|
|
|
$
|
250,000
|
|
|
$
|
140,000
|
|
|
|
|
|
|
$
|
162,261
|
|
|
$
|
76,850
|
|
|
$
|
629,111
|
|
Chief Executive Officer
|
|
|
2008
|
|
|
$
|
249,653
|
|
|
|
|
|
|
$
|
285,000
|
|
|
$
|
286,020
|
|
|
$
|
51,911
|
|
|
$
|
872,584
|
|
Jarett Fenton
|
|
|
2009
|
|
|
$
|
185,050
|
|
|
$
|
60,000
|
|
|
|
|
|
|
$
|
95,687
|
|
|
$
|
16,174
|
|
|
$
|
356,911
|
|
Chief Financial Officer
|
|
|
2008
|
|
|
$
|
183,007
|
|
|
|
|
|
|
|
|
|
|
$
|
200,214
|
|
|
$
|
14,379
|
|
|
$
|
397,600
|
|
John Mullins(E)
|
|
|
2009
|
|
|
$
|
175,346
|
|
|
$
|
50,000
|
|
|
|
|
|
|
$
|
72,306
|
|
|
$
|
277
|
|
|
$
|
297,929
|
|
Chief Operating Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
The Board of Directors awarded discretionary bonuses to the companys
officers in December based on several factors, predominately due to
the negotiation of the equity raise with the payment of minimal
investment banking fees in December 2009.
|
|
(B)
|
|
Stock awards issued to employees as compensation for services are
valued in accordance to SEC rules as the grant date value at issuance
in accordance with FASB ASC 718.
|
|
(C)
|
|
The valuation of option awards issued to employees are calculated in
accordance with SEC rules as the grant date value in accordance with
FASB ASC 718 consistent with the assumptions set forth in Note 13 to
the financial statements in the Annual Report on Form 10-K. Amounts in
2008 have been recomputed under the same methodology in accordance
with SEC rules.
|
|
(D)
|
|
For Mr. Staran, the amount shown attributable to 2009 includes (i)
$34,314 for lease of apartment and related insurance; (ii) $18,418 for
auto allowance and insurance; (iii) $2,218 value of life insurance
premiums paid; and (iv) $15,505 in medical insurance premiums. For Mr.
Fenton, the amount shown attributable to 2009 includes (i) $2,218
value of life insurance premiums paid; (ii) $3,436 in medical
insurance premiums paid; and (iii) $8,828 in auto allowance and
insurance.
|
|
(E)
|
|
Mr. Mullins became a named executive officer on October 22, 2009.
The amount shown represents his compensation for the entire fiscal
year ended December 31, 2009, including his service to us prior to
becoming an executive officer.
|
Michael Staran
Effective February 11, 2008, we entered into an employment agreement with Mr. Staran to
provide him an annual salary of $250,000 beginning as of January 1, 2008. Pursuant to his
employment agreement, we leased a car for Mr. Starans use and pay for related expenses. Mr. Staran
also is entitled to reimbursement for an apartment at the rate of $2,822 per month. The employment
agreement further provides for life, medical and disability benefits and 15 days of annual accrued
vacation.
Bonus Arrangement
Effective March 22, 2010 and for the fiscal year ending December 31, 2010, the Board of
Directors approved a cash bonus arrangement for Messrs. Staran, Fenton and Mullins comprised of
three separate components, two of which are performance-based and one of which is discretionary.
If certain performance-based goals related to margins are met, the bonus for Mr. Staran would range
from a low of $11,475 to a high of $80,000; the bonus for Mr. Mullins would range from a low of
$7,650 to a high of $50,000; and the bonus for Mr. Fenton would range from a low of $6,375 to a
high of $40,000. An additional performance bonus of like amount
9
based on the achievement of certain operating cash flow goals will be payable to each of
Messrs. Staran, Mullins and Fenton if such operating cash flow goals are met. The discretionary
bonus will be determined by the Compensation Committee and, as such bonus (if any) is
discretionary, the amount thereof is not determinable at this time.
Outstanding Equity Awards at Fiscal Year-Ended December 31, 2009
The following table presents information regarding outstanding equity awards held by the
executive officers named in the Summary Compensation Table at December 31, 2009.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
|
Number of
|
|
|
Number of
|
|
|
|
|
|
|
|
|
|
|
Number of
|
|
|
Market Value of
|
|
|
|
Securities
|
|
|
Securities
|
|
|
|
|
|
|
|
|
|
|
Shares or Units
|
|
|
Shares or Units
|
|
|
|
Underlying
|
|
|
Underlying
|
|
|
|
|
|
|
|
|
|
|
of Stock
|
|
|
of Stock
|
|
|
|
Unexercised
|
|
|
Unexercised
|
|
|
Option
|
|
|
Option
|
|
|
That Have Not
|
|
|
That Have Not
|
|
|
|
Options (#)
|
|
|
Options (#)
|
|
|
Exercise
|
|
|
Expiration
|
|
|
Vested
|
|
|
Vested
|
|
Name
|
|
Exercisable
|
|
|
Unexercisable
|
|
|
Price
|
|
|
Date
|
|
|
(#)
|
|
|
($)
|
|
Michael Staran
|
|
|
|
|
|
|
100,000
|
(A)
|
|
$
|
1.26
|
|
|
|
12/18/2019
|
|
|
|
25,000
|
(F)
|
|
$
|
46,250
|
|
|
|
|
|
|
|
|
100,000
|
(B)
|
|
$
|
0.80
|
|
|
|
4/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
66,667
|
|
|
|
33,333
|
(C)
|
|
$
|
3.81
|
|
|
|
3/23/2018
|
|
|
|
|
|
|
|
|
|
|
|
|
23,000
|
|
|
|
|
|
|
$
|
4.35
|
|
|
|
9/21/2015
|
|
|
|
|
|
|
|
|
|
Jarett Fenton
|
|
|
|
|
|
|
50,000
|
(A)
|
|
$
|
1.26
|
|
|
|
12/18/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
70,000
|
(B)
|
|
$
|
0.80
|
|
|
|
4/13/2014
|
|
|
|
|
|
|
|
|
|
|
|
|
46,667
|
|
|
|
23,333
|
(C)
|
|
$
|
3.81
|
|
|
|
3/23/2018
|
|
|
|
|
|
|
|
|
|
John Mullins
|
|
|
|
|
|
|
50,000
|
(A)
|
|
$
|
1.26
|
|
|
|
12/18/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
7,500
|
|
|
|
22,500
|
(D)
|
|
$
|
0.80
|
|
|
|
4/13/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
15,000
|
|
|
|
15,000
|
(E)
|
|
$
|
0.21
|
|
|
|
3/11/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
(A)
|
|
The options were granted on December 18, 2009 and vest over three
years on a quarterly basis on the last day of each calendar quarter
provided the option holder is then an officer of Enova as of such
date. The first 1/12 or 8.33% of the shares under each option vested
on January 1, 2010. In the event there is a change of control of
Enova, the options will become fully vested.
|
|
(B)
|
|
The options were granted on April 14, 2009 and vest over three years
on an annual basis on the anniversary of the grant date provided the
option holder is then an officer of Enova as of such date. The first
1/3 or 33.33% of the shares under each option will vest on April 14,
2010. In the event there is a change of control of Enova, the options
will become fully vested.
|
|
(C)
|
|
The options were granted on March 24, 2008 and vest over three years
on an annual basis on December 31st of each year, provided the option
holder is then an officer of Enova as of such date. The second 1/3 or
33.33% of the shares under each option vested on December 31, 2009. In
the event there is a change of control of Enova, the options will
become fully vested.
|
|
(D)
|
|
The options were granted on April 14, 2009 and vest over three years
on a quarterly basis on the last day of each calendar quarter provided
the option holder is then an officer of Enova as of such date. The
first 1/12 or 8.33% of the shares under each option vested on June 30,
2009. In the event there is a change of control of Enova, the options
will become fully vested.
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(E)
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The options were granted on March 12, 2009 and vest over two years on
a quarterly basis on the last day of each calendar quarter provided
the option holder is then an officer of Enova as of such date. The
first 1/8 or 12.5% of the shares under each option vested on March 31,
2009. In the event there is a change of control of Enova, the options
will become fully vested.
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(F)
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Equity shares totaling 75,000 shares were granted on April 4, 2008 and
vest over three years on an annual basis on December 31st of each
year, provided the holder is then an officer of Enova as of such date.
The second 1/3 or 33.33% of the shares vested on December 31, 2009. In
the event there is a change of control of Enova, the shares will
become fully vested.
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Current Equity Incentive Plans
We presently have only one active stock-based compensation plan. The 2006 Equity Compensation
Plan authorizes the Compensation Committee to grant stock options and other stock awards to
employees and consultants, including executives and directors, and such grants are currently
approved by the whole board of directors. The determination of whether option grants are
appropriate each year is based upon individual measures established for each individual within the
subjective determination of the board of directors. Options are not necessarily granted to each
executive during each year. Options granted to executive officers generally vest in conjunction
with the attainment of the performance goals of the Company. In 2009, Messrs. Staran, Fenton and
Mullins were granted 200,000 stock options, 120,000 stock options and 110,000 stock options,
respectively.
In addition, Mr. Staran was awarded a stock grant in 2008 totaling 75,000 shares vesting over
three years in equal tranches of 25,000 shares, with the first tranche vested on December 31, 2008
and each year thereafter.
10
Change of Control and Retirement Arrangements
The terms of the February 11, 2008 employment agreement, as modified on February 17, 2009,
with our current Chief Executive Officer provides that in the event Mr. Starans employment is
terminated by us without cause, he is entitled to receive as severance (i) three months of health
benefits, (ii) his contingent bonus, (iii) 18 months payment of his current base salary on a
monthly basis and (iv) a relocation allowance of $20,000. If his duties or responsibilities are
materially diminished or if he is assigned duties that are demeaning or otherwise materially
inconsistent with the duties then currently performed by him, Mr. Staran will have the right to
receive the same severance payment as if his employment had been terminated without cause.
On February 17, 2009, we entered into a severance agreement with Jarett Fenton, the Chief
Financial Officer of Enova. Mr. Fentons agreement provides for a 12 month severance provision. In
the event that Mr. Fentons employment is terminated by Enova without cause, he is entitled to
receive as severance three months of health benefits and 12 months payment of his current base
salary, to be paid on a monthly basis. If Mr. Fentons duties or responsibilities are materially
diminished or he is assigned duties that are demeaning or otherwise materially inconsistent with
the duties then currently performed, he will have the right to terminate his agreement and receive
the same severance payment as if his employment had been terminated without cause.
On August 31, 2009, we entered into a severance agreement with John Mullins, the Chief
Operating Officer of Enova. Mr. Mullins agreement provides a 12 month severance provision. In the
event that Mr. Mullins employment is terminated by Enova without cause, he is entitled to receive
as severance three months of health benefits and 12 months payment of his current base salary, to
be paid on a monthly basis. If Mr. Mullins duties or responsibilities are materially diminished or
he is assigned duties that are demeaning or otherwise materially inconsistent with the duties then
currently performed, he will have the right to terminate his agreement and receive the same
severance payment as if his employment had been terminated without cause.
In addition, effective March 22, 2010 and for the fiscal year ending December 31, 2010, the
Board of Directors approved a bonus arrangement providing for certain payments to Messrs. Staran,
Fenton and Mullins in the event of an extraordinary transaction the result of which is a change in
control of Enova. In the event of certain change of control transactions and provided certain
criteria are satisfied, Messrs. Staran, Mullins and Fenton would be entitled to a bonus based on
the amount and type of consideration received in that transaction and such bonus would be payable
in the same ratio of cash and stock as may be payable to the shareholders of Enova in that
transaction. The amount of the bonuses that would be paid to Messrs. Staran, Mullins and Fenton,
individually, would be aggregated with any other change of control payments that they are then
eligible to receive under other arrangements and the total amount of the aggregated change of
control payments would be capped as determined by the Board to avoid excise taxes and to permit
their deductibility. Because of the variables associated with this arrangement and other factors
related thereto, Enova cannot predict if any such bonus amount will become payable or, if so, the
amount thereof.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Table of Beneficial Ownership
The table below sets forth information as to (a) any person, including their address, known to
us to own beneficially more than 5% of our voting securities, (b) equity securities beneficially
owned by each of our named executive officers and directors; and (c) equity securities beneficially
owned by the current executive officers and directors as a group. Beneficial ownership is
determined in accordance with the SECs Regulation 13D-G. Accordingly, the information below
reflects stock options, warrants, and other securities beneficially held by the specified person
that may be exercised or converted into common stock within 60 days. Except as indicated in the
footnotes to this table and subject to applicable community property laws, the persons named in the
table to our knowledge have sole voting and investment power with respect to all shares of
securities shown as beneficially owned by them. The information in this table is as of October 29,
2010 based upon an aggregate of 31,515,269 voting shares from (i) 31,431,564 shares of common stock
outstanding and (ii) potential conversion of Series A Preferred Stock and Series B Preferred Stock
into 83,705 shares of common stock.
11
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Percent of
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|
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|
|
|
|
|
|
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Common Stock,
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|
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|
|
|
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|
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Series A and
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Series B Preferred
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|
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Number of Shares of
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Percent of
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Stock, and Common Stock
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Owner
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Common Stock
|
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Common Stock
|
|
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Voting Together
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Jagen, Pty., Ltd.
(1)
|
|
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3,222,222
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|
|
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10.3
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%
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10.2
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%
|
9 Oxford Street, South Ybarra 3141
Melbourne, Victoria Australia
|
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Shell Asset Management BV
(2)
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6,054,960
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19.3
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%
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19.2
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%
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Sir Winston Churchillaan 366H,
2285 SJ Rijswijk ZH, The Netherlands
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Special Situation Fund, L.P.
(3)
|
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4,530,814
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14.4
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%
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14.4
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%
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527 Madison Avenue, Suite 2600,
New York, NY 10022
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J O Hambro Capital Management Group Limited
(4)
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2,227,500
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7.1
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%
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7.1
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%
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Ground Floor, Ryder Court 14 Ryder Street London,
United Kingdom
SW1Y 6QB
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GAM Holdings AG
(5)
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2,244,275
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7.1
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%
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7.1
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%
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Klaustrasse 10 8008 Zurich, Switzerland
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SAM Sustainable Asset Management AG
(6)
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1,771,750
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|
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5.6
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%
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5.6
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%
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Josefstrasse 218, 8005 Zurich, Switzerland
|
|
|
|
|
|
|
|
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Michael Staran
(7)
|
|
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226,833
|
*
|
|
|
|
|
|
|
*
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Jarett Fenton
(8)
|
|
|
91,666
|
*
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|
|
|
|
|
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*
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John Mullins
(9)
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77,917
|
*
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|
|
|
|
|
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*
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|
Richard Davies
(1)(10)
|
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3,222,222
|
|
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10.3
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%
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|
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10.2
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%
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John J. Micek
(11)(12)
|
|
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209,783
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*
|
|
|
|
|
|
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*
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Roy S. Roberts
(11
)
|
|
|
77,120
|
*
|
|
|
|
|
|
|
*
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John R. Wallace
(11)
|
|
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97,813
|
*
|
|
|
|
|
|
|
*
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Edwin O. Riddell
(13)
|
|
|
135,542
|
*
|
|
|
|
|
|
|
*
|
|
All Executive Officers and Directors as a group
|
|
|
4,286,148
|
|
|
|
13.6
|
%
|
|
|
13.5
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%
|
|
|
|
*
|
|
Does not exceed 1%
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(1)
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|
Jagen Pty. Ltd. (Jagen) shares beneficial ownership with Jagens controlling shareholder, the B.
Liberman Family Trust and its trustee, Jagen Nominees, Pty. Ltd. Mr. Davies is Managing Director for
Jagen. Boris and Helen Liberman possess ultimate voting and discretionary authority over the shares.
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(2)
|
|
Based on a Schedule 13G/A filed on reporting information as of December 15, 2009 which discloses that
Shell Asset Management Company BV manages assets of The Shell Group and its subsidiaries and
affiliates, including certain pension plans organized for the benefit of employees of The Shell Group.
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(3)
|
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Based on a Schedule 13G filed January 7, 2010. MGP Advisors Limited (MGP) is the general partner of
the Special Situations Fund III, QP, L.P. AWM Investment Company, Inc. (AWM) is the general partner
of MGP and the general partner of and investment adviser to the Special Situations Cayman Fund, L.P.
Austin W. Marxe and David M. Greenhouse are the principal owners of MGP and AWM. Through their control
of MGP and AWM, Messrs. Marxe and Greenhouse share voting and investment power over the portfolio
securities of each of the funds listed above.
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(4)
|
|
Based upon a Holding(s) in Company filed on August 19, 2008 via the Regulatory News Service (RNS) on
the London Stock Exchange.
|
|
(5)
|
|
Based upon a Schedule 13G/A filed February 11, 2009, GAM Holding AG holds shared voting and investment
power with its wholly-owned subsidiaries, GAM International Management Limited (GIML) and GAM London
Limited (GAM London) of which GIML is the investment adviser of GAM Global Diversified and GAM London
is the investment adviser of SJP GAM Managed-Life, SJP GAM Managed Pension, SJPI GAM Sterling
Managed Fund and SJPI GAM US Dollar Managed Fund.
|
|
(6)
|
|
Based on a Schedule 13G/A filed February 16, 2010 reporting information as of December 31, 2009.
|
|
(7)
|
|
Includes 156,333 shares of common stock underlying stock options that are exercisable within 60 days.
|
|
(8)
|
|
Includes 86,666 shares of common stock underlying stock options that are exercisable within 60 days.
|
|
(9)
|
|
Includes 77,917 shares of common stock underlying stock options that are exercisable within 60 days.
|
|
(10)
|
|
Mr. Davies has elected not to receive quarterly equity-based compensation for his services as director.
|
|
(11)
|
|
Includes 25,875 shares of common stock underlying stock options that are exercisable within 60 days.
|
|
(12)
|
|
Includes 122,000 shares of common stock owned by Silicon Prairie Partners, L.P., of which Mr. Micek is
Managing Director.
|
|
(13)
|
|
Includes 55,875 shares of common stock underlying stock options that are exercisable within 60 days.
|
12
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires our officers and directors and
beneficial owners of greater than 10% owners of our common stock to file reports of ownership and
changes in ownership with the SEC and provide copies to us. Based solely on a review of Section 16
reports and written representations from officers and directors, we believe that during the fiscal
year ended December 31, 2009, our officers, directors, and greater than 10% owners timely filed all
reports they were required to file under Section 16(a), except: (i) Shell Asset Management Company,
in connection with the following acquisitions by three of its pension fund clients, did not file on
a timely basis (a) a Form 3 to report its acquisition of 2,152,728 shares of Common Stock on July
28, 2008, (b) Form 4s to report 64 acquisition transactions in 2008 covering a total of 2,880,000
shares of Common Stock, which transactions occurred during the period from July 2008 through
October 2008 and (c) Form 5s filed in December 2009 when all of such transactions were subsequently
reported.; and (ii) Mr. John Micek, a non-executive director, did not file on a timely basis a Form
4 to report the acquisition in one transaction of 100,000 shares of Common Stock in December 2009,
which Form 4 was subsequently filed.
TRANSACTIONS WITH RELATED PERSONS
Item 404 of Regulation S-K of the SEC rules requires that we disclose any transaction in which
a related person has a direct or indirect material interest and where the amount exceeds $120,000.
In the fiscal year ended December 31, 2009 and including any currently proposed transaction, there
were no transactions that fit the Item 404 criteria.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PMB Helin Donovan LLP served as our registered independent auditor for the most recently
completed fiscal year, and has served in that role since its appointment by the Audit Committee on
January 31, 2007.
Pre-Approval of Audit and Permissible Non-Audit Services
The Audit Committee pre-approves all audit and permissible non-audit services provided by the
independent auditors. These services may include audit services, audit-related services, tax
services and other services. The independent auditors and management are required to periodically
report to the Audit Committee regarding the extent of services provided by the independent auditors
in accordance with this pre-approval, and the fees for the services performed to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.
Audit Fees
The following table sets forth the aggregate fees billed or to be billed by our principal
accountant for the following services for the years ended December 31, 2009 and 2008:
|
|
|
|
|
|
|
|
|
|
|
2009
|
|
|
2008
|
|
|
|
|
|
|
|
|
Audit Fees
|
|
$
|
195,000
|
|
|
$
|
216,000
|
|
Audit-Related Fees
|
|
$
|
25,000
|
|
|
$
|
6,000
|
|
Tax Fees
|
|
$
|
13,000
|
|
|
$
|
13,500
|
|
All Other Fees
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
233,000
|
|
|
$
|
235,500
|
|
The tax fees above were pre-approved by our Audit Committee as appropriate, which concluded
that the provision of such services by PMB Helin Donovan was compatible with the maintenance of
that firms independence in the conduct of its auditing functions.
13
REPORT OF THE AUDIT COMMITTEE
The Audit Committee reviews our financial reporting process on behalf of the Board of
Directors. Management has primary responsibility for this process, including our system of internal
controls, and for the preparation of our consolidated financial statements in accordance with
generally accepted accounting principles. Our independent auditors, and not the Audit Committee,
are responsible for auditing and expressing an opinion on the conformity of our audited financial
statements to generally accepted accounting principles.
The Audit Committee reviewed and discussed the audited financial statements for the fiscal
year ended December 31, 2009 with management and the independent auditors. The Audit Committee also
discussed with the independent auditors the matters required to be discussed by Statement on
Auditing Standards No. 61 (Communication with Audit Committees), as amended. In addition, the Audit
Committee received from the independent auditors the written disclosures and the letter required by
the applicable requirements of the Public Company Accounting Oversight Board regarding independent
auditors communications with the Audit Committee concerning independence and discussed with the
independent auditors their independence from Enova Systems and its management.
Based on the reviews and discussions referred to above, the Audit Committee recommended to the
Board of Directors, and the Board of Directors approved, that the audited financial statements be
included in our Annual Report on SEC Form 10-K for the year ended December 31, 2009 for filing with
the SEC.
Submitted by the Audit Committee
John J. Micek (Chair)
Roy S. Roberts
John R. Wallace
The material in the Report of the Audit Committee is not soliciting material, is not deemed
filed with the SEC and is not to be incorporated by reference into any filing by Enova Systems
under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.
ADDITIONAL INFORMATION
Shareholder Proposals for Annual Meetings
Proposals of shareholders intended to be presented at the next annual meeting must be received
by us at our offices at Enova Systems, Inc., 1560 West 190
th
Street, Torrance,
California 90501, Attention: Secretary, no later than July 12, 2011, a date not less than one
hundred twenty (120) days prior to a one year anniversary of our initial mailing to shareholders of
this proxy statement. Any shareholder proposals must satisfy the conditions established by the SEC
for inclusion in our proxy materials.
Annual Report to Shareholders
Our 2009 Annual Report on Form 10-K, including financial statements for the fiscal year ended
December 31, 2009, is being mailed to shareholders concurrently with this proxy statement. The
Annual Report, however, is not part of the proxy solicitation material.
A copy of our Annual Report
on
Form 10-K
for the fiscal year ended December 31, 2009 filed with the SEC may be obtained free of
charge by writing to Enova Systems, Inc., 1560 West 190
th
Street, Torrance, California
90501, Attention: Chief Financial Officer or by accessing the Investor Relations section of our
website (www.enovasystems.com).
14
VOTE BY INTERNET www.proxyvote.com Use the Internet to transmit your voting instructions and
for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off
date or meeting date. Have your proxy card in hand when you access the web site and follow the
instructions to obtain your records and to create an electronic voting instruction form. ENOVA
SYSTEMS, INC. 1560 WEST 190TH STREET Electronic Delivery of Future PROXY MATERIALS TORRANCE, CA
90501 If you would like to reduce the costs incurred by our company in mailing proxy materials, you
can consent to receiving all future proxy statements, proxy cards and annual reports electronically
via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions
above to vote using the Internet and, when prompted, indicate that you agree to receive or access
proxy materials electronically in future years. VOTE BY PHONE 1-800-690-6903 Use any touch-tone
telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the
cut-off date or meeting date. Have your proxy card in hand when you call and then follow the
instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid
envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way,
Edgewood, NY 11717. TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION
FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND
DATED. For Withhold For All To withhold authority to vote for any All All Except individual
nominee(s), mark For All Except and write the number(s) of the The Board of Directors recommends
a vote nominee(s) on the line below. FOR the following: 0 0 0 1. Election of Directors Nominees 01
Richard Davies 02 John J. Micek 03 Edwin O. Riddell 04 Roy S. Roberts 05 Michael Staran 06 John R.
Wallace The Board of Directors recommends a vote FOR the following proposal: For Against Abstain 2
To ratify the selection of PMB Helin Donovan, LLP as the Companys independent auditors for the
year ending December 31, 0 0 0 2010. NOTE: Such other business as may properly come before the
meeting or any adjournment thereof. Yes No R2.09.05.010 Please indicate if you plan to attend this
meeting 0 0 1 Please sign exactly as your name(s) appear(s) hereon. When signing as 0000077720
attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners
should each sign personally. All holders must sign. If a corporation or partnership, please sign in
full corporate or partnership name, by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date
Signature (Joint Owners) Date
|
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Form
10-K, Notice & Proxy Statement is/are available at www.proxyvote.com . ENOVA SYSTEMS, INC. Annual
Meeting of Shareholders December 7, 2010 9:00 AM Local Time This proxy is solicited by the Board of
Directors The undersigned shareholder of Common Stock and/or Series A and/or Series B Preferred
Stock of Enova Systems, Inc., a California corporation (the Company) hereby appoints Michael
Staran and Jarett Fenton and each of them, as proxies for the undersigned, each with full power of
substitution, to attend the Annual Meeting of Shareholders to be held at Enova Systems, Inc.s
principal executive office, located at 1560 West 190th Street, Torrance, California 90501 on
December 7, 2010, 9:00 a.m. local time, and any adjournments or postponements thereof (the Annual
Meeting), to cast on behalf of the undersigned all votes that the undersigned is entitled to cast
at the Annual Meeting and otherwise to represent the undersigned with all of the powers the
undersigned would possess if personally present at the Annual meeting. The undersigned hereby
acknowledges receipt of the Notice of the Annual Meeting of Shareholders and of the Proxy
Statement, the terms of each of which are incorporated herein by reference, and revokes any proxy
heretofore given with respect to the Annual Meeting. This proxy, when properly executed, will be
voted in the manner directed herein. If no such direction is made, this proxy will be voted in
accordance with the Board of Directors recommendations. R2.09.05.010 2 0000077720 Continued and to
be signed on reverse side
|
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