8-K

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): March 27, 2007

Enova Systems, Inc.
__________________________________________
(Exact name of registrant as specified in its charter)

California	1-33001	95-3056150
_____________________ (State or other jurisdiction	_____________ (Commission	______________ (I.R.S. Employer
of incorporation)	File Number)	Identification No.)
19850 S. Magellan Drive, Torrance, California		90502
_________________________________ (Address of principal executive offices)		___________ (Zip Code)

Registrant’s telephone number, including area code: 310-527-2800

Not Applicable
______________________________________________
Former name or former address, if changed since last report

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

[  ]  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[  ]  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[  ]  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[  ]  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e)

Enova Systems, Inc. ("Enova") entered into a letter agreement (the "Agreement") with Mike Staran, Enova's Executive Vice President. The Agreement was executed on March 27, 2007, and is effective as of January 22, 2007.

Pursuant to the Agreement, Mr. Staran receives an annual salary of $190,000, is eligible to participate in the executive bonus program, receives health and life insurance benefits, and receives living and transportation reimbursements. In addition, Enova has agreed to issue Mr. Staran 5,000 shares of Enova common stock.

Mr. Staran's employment is at-will and may be terminated by Enova for any reason and at any time. In the event that Mr. Staran's employment is terminated by Enova without cause, as defined in the Agreement, Mr. Staran is entitled to receive (i) three month's salary and health benefits as severance and (ii) reimbursement for reasonable relocation expenses to return to Michigan. If Enova's Board of Directors should change Mr. Staran's duties or authori ty so that it may reasonably be found that Mr. Staran is no longer performing as the Executive Vice President of Enova or if Enova is sold, merged, or closed, then, in either instance, Mr. Staran shall have the right to terminate the Agreement and receive the same severance payment as if his employment had been terminated without cause. Mr. Staran may otherwise terminate his employment at any time with 120 days written notice of his decision to terminate to Enova, but will not be entitled to any severance benefits. In the event of a single period of prolonged inability to work due to the result of a sickness or an injury, Mr. Staran will be compensated at his full rate pay for at least 3 months from the date of the sickness or injury.

During the term of his employment and during the 12-month period following termination of his employment, Mr. Staran has agreed not to directly own, manage, operate, join, control, or participate in or be connected with, as an officer, employee, partner, stockholder o r otherwise, any competitive company or related business, partnership, firm or corporation that is at the time engaged principally or significantly in a business that is, directly or indirectly, at the time in competition with the business of Enova.

During the term of his employment and during the 12-month period following termination of his employment, Mr. Staran has agreed not to directly or indirectly through his own efforts, or otherwise, contract with, or in any way retain the services of, any employee or former employee of Enova, if such individual has provided professional or support services to Enova at any time during the term of the Agreement. In addition Mr. Staran has agreed not to interfere with the relationship of Enova and any of its employees and he will not attempt to divert from Enova any business in which Enova has been actively engaged during his employment.

The description above is qualified entirely by the terms of the Agreement, which is attached as Exhibit 10.1 to thi s Current Report on Form 8-K and incorporated into this Item 5.02 by reference.

Item 9.01 Financial Statements and Exhibits.

(d)

Exhibits

10.1 Letter Agreement entered into between Enova Systems, Inc. and Mike Staran, Enova's Executive Vice President, executed March 27, 2007.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	Enova Systems, Inc.
April 2, 2007	By:	/s/ Jarett Fenton
		Name: Jarett Fenton
		Title: Chief Financial Officer

Exhibit Index

Exhibit No.	Description
10.1	Letter Agreement entered into between Enova Systems, Inc. and Mike Staran, Enova's Executive Vice President, executed March 27, 2007.

EX-10.1

Executive Vice President
Employment Contract

This agreement, made and effective as of the 22nd day of January 2007, is by and between Enova Systems, Inc., a California corporation (hereinafter “Enova”), and Michael Staran, an individual (hereinafter “Staran”). This Agreement provides for a continuous employment, unless otherwise noted herein.

WHEREAS, the Enova desires to secure the services of Staran as Executive Vice President of Enova, and Staran desires to accept such employment.

NOW THEREFORE, in consideration of the material advantages accruing to the two parties and the mutual covenants contained herein, and intending to be legally and ethically bound hereby, Enova and Staran agree with each other as follows:

1. Staran will render full-time professional services to Enova in the capacity of Executive Vice President of the Enova Systems, Inc. Staran will at all times, faithfully, industriously and to the best of his ability, perform all duties that may be required of him by virtue of his position as executive vice president and all duties set forth in Enova’s bylaws and in policy statements of the Board and the CEO. It is understood that these duties shall be substantially the same as those of an Executive Vice President of other business corporations. The Executive Vice President is hereby vested with authority to assist the President and CEO on behalf of the Board in keeping with policies adopted by the Board, as amended from time to time. In addition, Staran shall perform in the same manner any special duties assigned or delegated to him by the president and CEO.

2. Continued employment will be contingent upon Staran signing a copy of this contract, an Arbitration Agreement, and his ability to provide legally required documentation of his eligibility to work within the United States, as required by the Immigration Reform and Control Act.

3. In addition, as an employee of Enova, Staran will have access to certain Enova confidential information and may, during the course of his employment, develop certain information or trade secrets which will be the property of Enova. To protect the interests of the company, Staran will sing a “Confidential Information Agreement” if so requested at any time by Enova. Enova wishes to impress upon Staran that it does not want him to bring any confidential or proprietary material of any former employers prior to Enova Systems, or to violate any other obligation to his former employers.

4. In consideration for these services as Executive Vice President, Enova Systems, Inc. agrees to pay Staran a salary of $190,000.00 per annum or such higher figure as shall be agreed upon at an annual review of his compensation and performance by the President and CEO payable in bi-weekly installments throughout the contract year. This annual review shall occur three months prior to the end of each year of the contract for the express purpose of considering increments.

5. Staran will receive 6,000 shares common stock in Enova Systems, Inc. The shares will be restricted stock to for a period of one year from date of issuance.

6. Staran will be eligible for bonus, as well as the performance based stock plan established by Enova’s Compensation Committee annually. Objectives for such consideration shall be set forth no later than November of each year.

7. Benefits:

a. Staran shall be entitled to all other fringe benefits to which all executives and employees of the Enova are entitled.

b. Staran will be eligible on the first of the month following the date of hire for Medical, Dental, Vision, and the standard term benefit life insurance policy with his choice of beneficiary. In lieu of medical benefits, Enova agrees to pay the monthly employee-portion of Staran’s current medical insurance not to exceed $700.00 per month unless otherwise mutually agreed by both parties.

c. In the event of a single period of prolonged inability to work due to the result of a sickness or an injury, Staran will be compensated at his full rate pay for at least 3 (three) months from the date of the sickness or injury.

d. Staran will be eligible for a $300 per month automobile allowance. This allowance is to cover all expenses relating to the insurance cost of fuel and maintenance of set automobile when used on company business.

8. The President and CEO may at his discretion terminate Staran’s duties as Executive Vice President. Such action shall become effective upon written notice to Staran or at such later time as may be specified in said notice. After such termination, all rights, duties and obligations of both parties shall cease except that Enova Systems, inc. shall continue to pay Staran his then monthly salary for the month in which his duties were terminated. Staran shall also for 3 consecutive months thereafter as an agreed upon severance payment, during this period, Staran shall not be required to perform any duties for Enova Systems, Inc. or come to Enova’s offices. Neither shall the Staran accepts, and undertakes other employment during this period affect such payments. Also, for the period during which such payments are being made, Enova agrees to keep Staran’s group life, health and major medical insurance coverage paid up and in effect. Enova shall reimburse Staran for reasonable relocation to return to Michigan. Costs shall include moving of personal contents, airfare for both he and his wife and reasonable out-of-pocket expenses that may be occurred due to this relocation. The severance arrangements described in this paragraph will not be payable in the event that Staran’s employment is terminated for cause. Cause may include but not be limited to: fraud, other illegal acts either internal or external to Enova’s business; material violations of Enova policy; unethical acts; substantiated, unlawful discriminatory conduct including sexual/racial harassment. and

9. Should the President and CEO and/or Board in their discretion change Staran’s duties or authority so it can reasonably be found that Staran is no longer performing as the Executive Vice President of Enova, Staran shall have the right, within 90 days of such event, in his complete discretion, to terminate this contract by written notice delivered to the President and CEO. Upon such termination, Staran shall be entitled to the severance payment described in Paragraph 9, in accordance with the same terms of that paragraph.

10. If Enova Systems, Inc. is merged, sold or closed; Staran may terminate his employment at his discretion or be retained as Executive Vice President of Enova or any successor corporation to or holding company of Enova Systems, Inc. If Staran elects to terminate his employment at such time, he shall be entitled to the same severance arrangement as would be applicable under Paragraph 9 if Enova Systems, Inc. had terminated his employment at such time.

Any election to terminate employment under this Paragraph must be made prior to Enova Systems, Inc. merger, sale or closure, as applicable.

If Staran continues to be employed by Enova or its successor organization, all of the terms and conditions of this Agreement shall remain in effect. Enova agrees that neither it nor its present or any future holding company shall enter into any agreement that would negate or contradict the provisions of this Agreement.

11. Should Staran at his discretion elect to terminate this contract for any other reason than as stated in Paragraph 9, he shall give the President and CEO 120 days’ written notice of his decision to terminate. At the end of the 120 days, all rights, duties and obligations of both parties to the contract shall cease and Staran will not be entitled to severance benefits.

12. If an event described in Paragraph 9, 10, 11 occurs and Staran accepts any of the severance benefits or payments described therein, to the extent not prohibited by law, Staran shall be deemed to voluntary release and forever discharge Enova and its officers, directors, employees, agents, and related corporations and their successors and assigns, both individually and collectively and in their official capacities (hereinafter referred to collectively as “Releasees”), from any and all liability arising out of this employment and/or the cessation of said employment. Nothing contained in this paragraph shall prevent Staran from bringing an action to enforce the terms of this Agreement.

13. Staran shall maintain confidentiality with respect to information that he receives in the course of his employment and not disclose any such information. Staran shall not, either during the term of employment of thereafter, use or permit the use of any information of or relating to Enova in connection with any activity or business and shall not divulge such information to any person, firm, or corporation whatsoever, except as may be necessary in the performance of his duties hereunder or as may be required by law or legal process.

14. During the term of his employment and during the 12-month period following termination of his employment, Staran shall not directly own, manage, operate, join, control, or participate in or be connected with, as an officer employee, partner, stockholder or otherwise, any competitive company or related business, partnership, firm, or corporation (all of which hereinafter are referred to as “entity”) that is at the time engaged principally or significantly in a business that is, directly or indirectly, at the time in competition with the business of Enova Systems. Nothing herein shall prohibit Staran from acquiring or holding any issue of stock or securities of any entity that has any securities listed on a national securities exchange or quoted in a daily listing of over-the-counter market securities, provided that any one time Staran and members of Staran’s immediate family do not own more than one percent of any voting securities of any such entity. This covenant shall be construed as an agreement independent of any other provision of this Agreement, and the existence of any claim or cause of action, whether predicted on this Agreement or otherwise, shall not constitute a defense to the enforcement by Enova of this covenant. In the event of actual or threatened breach by Staran of this provision, Enova shall be entitled to an injunction restraining Staran from violation or further violation of the terms thereof.

15. Staran shall not directly or indirectly through his own efforts, or otherwise, during the term of this Agreement, and for a period of 12 months thereafter, employ, solicit to employ, or otherwise contract with, or in any way retain the services of any employee or former employee of the Enova, if such individual has provided professional or support services to Enova at any time during this Agreement without the express written consent of Enova. Staran will not interfere with the relationship of Enova and any of its employees and Staran will not attempt to divert from Enova any business in which Enova has been actively engaged during his employment.

16. This contract constitutes the entire agreement between the parties and contains all the agreements between them with respect to the subject matter hereof. It also supersedes any and all other agreements or contracts, either oral or written, between the parties with respect to the subject matter hereof.

17. Except as otherwise specially provided, the terms and conditions of this contract may be amended at any time by mutual agreement of the parties, provided that before any amendment shall be valid or effective it shall have been reduced to writing and signed by the President and CEO and Staran.

18. The invalidity or unenforceability of any particular provision of this contract shall not affect its other provisions, and this contract shall be construed in all respects as if such invalid or unenforceable provisions had been omitted.

19. This agreement shall be binding upon Enova Systems, Inc., its successors and assigns, including, without limitation, any corporation into which Enova may be merged or by which it may be acquired, and shall inure to the benefit of Staran, his administrators, executors, legatees, heirs, and assigns.

20. This agreement shall be construed and enforced under and in accordance with the laws of the State of California.

Enova Systems, Inc.

By:_/s/Edwin Riddell____________________ By__/s/ Bjorn Ahlstrom____________________
Edwin Riddell Bjorn Ahlstrom,
President and CEO Chairman – Compensation Committee
Accepted By:	_/s/ Michael Staran________________	Date __March 27, 2007 ______
	Michael Staran