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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Electrosource, Inc.
(Name of Issuer)
Common Stock, par value $.10 per share
(upon conversion of 5% Convertible Promissory Note)
(Title of Class of Securities)
28615010
(CUSIP Number)
Robert G. DeLaMater, Sullivan & Cromwell
125 Broad Street, New York, New York 10004
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
March 6, 1996
(Date of Event which Requires Filing of this
Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(b)(3) or (4), check the
following box [ ].
Check the following box if a fee is being paid with the statement [ ]. (A
fee is not required only if the reporting person: (1) has a previous
statement on file reporting beneficial ownership of more than five percent
of the class of securities described in Item 1; and (2) has filed no
amendment subsequent thereto reporting beneficial ownership of five percent
or less of such class.) (See Rule 13d-7).
NOTE: Six copies of this statement, including all exhibits, should be
filed with the Commission. See Rule 13d-1(a) for other parties to whom
copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities
Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of
that section of the Act but shall be subject to all other provisions of the
Act (however, see the Notes).
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- --------------------
CUSIP NO. 28615010
- --------------------
- ------------------------------------------------------------
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Mitsui Engineering & Shipbuilding Co., Ltd.
- ------------------------------------------------------------
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
- ------------------------------------------------------------
3. SEC USE ONLY
- ------------------------------------------------------------
4. SOURCE OF FUNDS
WC
- ------------------------------------------------------------
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(D) OR 2(E)
[ ]
- ------------------------------------------------------------
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
- ------------------------------------------------------------
7. SOLE VOTING POWER
806,092 shares (assuming conversion of 5%
NUMBER OF Convertible Promissory Note)
SHARES ----------------------------------------
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY
EACH ----------------------------------------
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON 806,092 shares (assuming conversion of 5%
WITH Convertible Promissory Note)
----------------------------------------
10. SHARED DISPOSITIVE POWER
- ------------------------------------------------------------
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON 806,092 shares (assuming conversion of 5% Convertible
Promissory Note)
- ------------------------------------------------------------
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES
[ ]
- ------------------------------------------------------------
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.9% of Common Stock (assuming conversion of 5% Convertible
Promissory Note)
- ------------------------------------------------------------
14. TYPE OF REPORTING PERSON
CO
- ------------------------------------------------------------
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Item 1. Security and Issuer
This Amendment No. 1 (this "Amendment") amends and restates the
statement on Schedule 13D (the "Statement") filed by Mitsui Engineering &
Shipbuilding Co., Ltd., a Corporation organized under the laws of Japan
("Mitsui"), with the Commission on November 10, 1994, with respect to the
Common Stock, par value $.10 per share (the "Common Stock"), of
Electrosource, Inc. (the "Company"), 3800B Drossett Drive, Austin, Texas
78744-1131, which is issuable upon conversion of the 5% Convertible
Promissory Notes (the "Notes") held by the entity making this filing.
Item 2. Identity and Background
This statement is being filed by Mitsui. The address of the
principal office and business of Mitsui is 6-4, Tsukiji 5-chome, Chuo-ku,
Tokyo 104, Japan, telephone: 011-813-3544-3147.
Mitsui is one of the largest heavy industrial enterprises in
Japan. It is engaged in the manufacture and construction of a wide range
of ships, such as merchant ships, naval ships and governmental ships and
steel structures such as bridges. It is also engaged in the manufacture of
industrial machinery, such as diesel engines, container handling cranes and
turbines; plant engineering and construction; and the construction of
environmental protection systems. In addition, Mitsui is diversifying its
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product line into various areas such as new materials, for example,
titanium alloys and amorphous metals.
The name, business address, present principal occupation and
citizenship of each executive officer and director of Mitsui are set forth
in Appendix A hereto.
During the last five years, none of Mitsui nor, to the best
knowledge of Mitsui, any of its executive officers or directors has been
convicted in any criminal proceeding (excluding traffic violations or
similar misdemeanors) or has been a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result
of such proceeding was or is subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities
subject to, Federal or State securities laws or finding any violation with
respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
The aggregate amount of funds used in making the initial
purchase of the Notes (the "$3,800,000 Note") on November 10, 1994 was
$3,800,000. Mitsui used working capital generated in the ordinary course
of its operations for such purchase.
Item 4. Purpose of Transaction
Mitsui has acquired the $3,800,000 Note on November 10, 1994
pursuant to the Note Purchase Agreement, dated October 26, 1994 (the "Note
Purchase Agreement"), for
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the purpose of investment in conjunction with its commercial licensing
relationship with Company. On December 6, 1995, Mitsui received as
interest on the $3,800,000 Note a Note dated October 26, 1995 in the
principal amount of $190,000 (the "$190,000 Note").
On December 5, 1995, Mitsui gave notice to the Company of the
termination of the commercial licensing relationship between Mitsui and the
Company. Pursuant to the Termination Agreement, dated March 6, 1996 (the
"Termination Agreement"), in connection with the termination of such
relationship, Mitsui and the Company agreed, among other things, that
Mitsui would apply $1,000,000 of the principal amount of the $3,800,000
Note toward the payment of certain amounts owed by Mitsui to the Company
and the Company would issue a replacement Note for the $3,800,000 Note. In
addition, the Company agreed to issue a Note as interest on the $3,800,000
Note and the $190,000 Note to the date of issuance of such replacement
Note. On March 8, 1996, Mitsui received from the Company the replacement
Note dated March 6, 1996 in the principal amount of $2,800,000 and a Note
dated March 6, 1996 in the principal amount of $73,150 representing the
interest on the $3,800,000 Note and the $190,000 Note. The $3,800,000 Note
was cancelled.
The Note Purchase Agreement and Exhibit A thereto, which were
attached to the Statement as Exhibit 1, and the Termination Agreement,
which is attached to this Amendment
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as Exhibit 2, are hereby incorporated by reference herein in their
entirety.
Item 5. Interest in Securities of the Issuer
(a) Mitsui owns directly the Notes, which have an aggregate
principal amount of $3,063,150. The Notes are presently convertible into
806,092 shares of Common Stock, equal to approximately 2.9%* of the total
number of shares of Common Stock outstanding, which Mitsui may be deemed to
own beneficially. Mitsui does not beneficially own any other shares of
Common Stock. To the best of Mitsui's knowledge, none of its directors or
executive officers beneficially owns any shares of Common Stock.
(b) Mitsui has the sole power to vote, or to direct the vote,
and the sole power to dispose of, or to direct the disposition of, the
Notes and the shares of Common Stock issuable upon conversion of the Notes.
(c) Except for the acquisition by Mitsui of the Notes
described in Item 4, no transaction in the Common Stock has been effected
by Mitsui during the past 60 days.
(d) No person other than Mitsui has the right to receive or
the power to direct the receipt of dividends from, or the proceeds from the
sale of, the Notes and the Common Stock issuable upon conversion of the
Notes.
* Based on 27,932,604 shares of Common Stock of the Company outstanding
as of November 30, 1995, as disclosed in the Company's report on Form
8-K filed with the Commission on January 13, 1996.
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(e) As of March 6, 1996, Mitsui ceased to be the beneficial
owner of more than five percent of Common Stock of the Company.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the
Issuer
The response to Item 4 is hereby incorporated herein by
reference.
Item 7. Material to be filed as Exhibits
1. Note Purchase Agreement, dated October 26, 1994, between
the Company and Mitsui, including Exhibit A thereto
(incorporated by reference to Exhibit 1 to the
Statement).
2. Termination Agreement, dated March 6, 1996, between the
Company and Mitsui.
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SIGNATURE
The undersigned certifies that after reasonable inquiry and to
the best of its knowledge and belief, the information set forth in this
statement is true, complete and correct.
MITSUI ENGINEERING & SHIPBUILDING
CO., LTD.
By /s/ Hitoshi Narita
Hitoshi Narita
Managing Director
Dated: March 18, 1996
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APPENDIX A
Executive Officers and Directors of Mitsui
The name and principal occupation or employment of each
executive officer and director of Mitsui are set forth below. Except as
otherwise noted, the principal employment of each person is with Mitsui and
the business address of each such person is 6-4, Tsukiji 5-chome, Chuo-ku,
Tokyo 104, Japan. All of the persons listed below are citizens of Japan.
Principal
Occupation or
Name Employment Address
Yasunosuke Ishii Chairman
Jiro Hoshino President
Masao Iwane Senior Managing
Director
Yoshiaki Shinojima Senior Managing
Director
Tetsuo Takeuchi Senior Managing
Director
Norikazu Ohta Managing Director
Mikihiko Miyake Managing Director
Yoshihiro Hasegawa Managing Director
Hitoshi Narita Managing Director
Toshimichi Okano Managing Director
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Principal
Occupation or
Name Employment Address
Osamu Taki Director
Masayuki Sumi Director
Yuji Tanaka Director
Hiroshi Kitashima Director
Shigeru Koshikawa Director
Hideo Kajiki Director
Tadashi Biwa Director
Makio Kanaiwa Director
Osami Yamamoto Director
Takeshi Sasaki Director
Kanjiro Fukushima Corporate Auditor
Seishi Sakaki Corporate Auditor
Toshiyuki Sakai* Senior Managing 35-22 Ohokayama 1-
Director, chome, Meguro-ku,
Toyo Electronics Tokyo, 152 Japan
Corp.
Takayuki Mino Corporate Auditor
* Statutory Auditor of Mitsui
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EXHIBIT INDEX
Page on which
Exhibit appears
1. Note Purchase Agreement, dated N/A
October 26, 1994, between the Company
and Mitsui, including Exhibit A
thereto.
2. Termination Agreement, dated March 6, 12
1996, between the Company and Mitsui.
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TERMINATION AGREEMENT
This termination agreement (hereinafter referred to as the
"Termination Agreement") is entered into as of this 6th day of March, 1996,
by and between ELECTROSOURCE, INC., a Delaware corporation, having a
principal place of business in Austin, Texas (hereinafter referred to as
"Electrosource"), and MITSUI ENGINEERING & SHIPBUILDING CO., LTD., a
Japanese corporation, having a principal place of business in Tokyo, Japan
(hereinafter referred to as "Mitsui"). Electrosource and Mitsui may
hereinafter be collectively referred to as the "Parties" and from time to
time may be individually referred to as the "Party."
RECITALS
WHEREAS, Electrosource and Mitsui, on or about July 7, 1994,
entered into that certain Distributorship Agreement, as amended August 25,
1994 and March 23, 1995 (hereinafter referred to as the "Distributorship
Agreement"), and Electrosource and Mitsui, on or about October 26, 1994,
entered into that certain Note Purchase Agreement (hereinafter referred to
as the "Note Purchase Agreement"), and Electrosource issued to Mitsui its
Three Million Eight Hundred thousand (US $3,800,000) 5% Convertible
Promissory Note (the "Note"), and
WHEREAS, Mitsui gave notice to Electrosource on December 5,
1995 of termination of the Distributorship
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Agreement pursuant to Article 22.2 thereof, effective January 4, 1996, and
WHEREAS, Electrosource and Mitsui wish to agree upon the
details of such termination, settle all outstanding financial matters under
the Distributorship Agreement and further wish to make certain
modifications to the Note Purchase Agreement,
NOW, THEREFORE, in consideration of the premises and the
covenants and conditions contained herein the Parties agree as follows:
I
TERMINATION
1.1 Mitsui terminated the Distributorship Agreement, pursuant
to Article 22.2 thereof, effective January 4, 1996.
II
PAYMENT OF FEES
2.1 Mitsui shall make the payments required under Section
2.1(b) and (c) of the Distributorship Agreement in the amounts of Two
Hundred Thousand US Dollars (US $200,000.00) and Eight Hundred Thousand US
Dollars (US $800,000.00), respectively, which totals One Million US Dollars
(US $1,000,000.00) to Electrosource. The payment shall be made by applying
One Million US Dollars
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(US $1,000,000.00) of the principal amount of the Note against such license
fee as provided for in Section 5D of the Note Purchase Agreement.
2.2 The resulting balance of the principal amount of the Note
shall then be Two Million Eight Hundred Thousand US Dollars (US
$2,800,000.00), and Electrosource shall immediately issue a replacement
note (the "Replacement Note") in that amount to Mitsui. Mitsui shall in
exchange surrender the Note to Electrosource. The Replacement Note in the
principal amount of Two Million Eight Hundred Thousand US Dollars (US
$2,800,000.00) shall otherwise be on the same terms and conditions as the
Note. The terms "Note" and "Notes" in the Note Purchase Agreement shall
include the "Replacement Note" and such terms shall have the same meaning
herein as in the Note Purchase Agreement.
2.3 In addition, on the date of issue of the Replacement Note,
Electrosource will pay interest on the Note and on the outstanding interest
Note issued in October 1995 accrued to the date of issue of the Replacement
Note by issuing an additional Note pursuant to Section 1A of the Note
having terms identical to the Note in a principal amount equal to the
amount of interest accrued and unpaid on the Note and on the outstanding
interest Note issued in October 1995 as of the date of issue of the
Replacement Note.
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2.4 Electrosource shall remit to Mitsui One Hundred Thousand
US Dollars (US $100,000.00) for Japanese withholding tax to be paid by
Mitsui on the One Million US Dollars (US $1,000,000.00) license fee payment
referred to in Section 2.1 hereof. This remittance will be made by wiring
funds to Mitsui's bank account on or before the date of the payment in
Section 2.1 hereof.
III
OUTSTANDING INVOICES
3.1 Mitsui has provided reasonable documentation for all
batteries invoiced that it asserts have failed under proper use or were not
received in good condition, the disposal or reclamation records, and the
letter regarding the prototype batteries set forth in Don Orr Memorandum,
attached as Exhibit A hereto for Electrosource's review. As a result, the
Parties have agreed upon the amount of payment for outstanding invoices
submitted by Electrosource to Mitsui, and for which payment has not yet
been received by Electrosource, to be US $19,203.36 and US $62,160 for
prototypes ordered and canceled. Mitsui shall make such payments in the
total amount of US $81,363.36 within ten (10) business days after Mitsui's
receipt of US $100,000 set forth in Section 2.4, whichever is the later by
wiring funds to Electrosource's bank account. Electrosource shall credit
or return to Mitsui amounts paid for prototypes ordered but
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not delivered to the extent Electrosource covers the cost of same by sales
to others, less reasonable additional costs incurred as a direct result of
such resale. Electrosource shall report to Mitsui on a monthly basis on
the record of sales of such prototypes.
IV
REGISTRATION OF SHARES
4.1 Upon Mitsui's written request which must be made, if at
all, and received by Electrosource within 10 days of the date hereof,
Electrosource will use its best reasonable efforts to file a registration
statement on Form S-3 or amend its existing registration statement on Form
S-3 within thirty (30) days after receipt of such request for registration
for the purpose of selling the shares of Common Stock (as defined in the
Note Purchase Agreement) issued or issuable upon conversion of the Notes.
Electrosource shall use its best reasonable efforts to make effective and
keep effective for a period of nine months such registration statement.
Electrosource believes it is currently eligible to use Form S-3 and it has
a currently effective S-3 registration. If Electrosource is not able after
reasonable effort and the cooperation of Mitsui to have a registration on
Form S-3 (as amended or otherwise) declared effective, Mitsui may rescind
its notice of conversion. This immediate registration right will apply
only if Mitsui in the
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aforesaid notice converts, or commits to convert upon the effectiveness of
the registration statement, the Notes in full into shares of Common Stock
at the rate provided for therein which is Three and 80/100 US Dollars (US
$3.80) per share.
4.2 The plan of distribution by Mitsui under such registration
statement, when effective, may include an underwritten offering, sales from
time to time on NASDAQ and any other permitted manner of sale. Mitsui
agrees that it shall not pursuant to such immediate registration statement
sell on NASDAQ in excess of twenty thousand (20,000) shares in any one day,
except in block transactions or as may be otherwise mutually agreed. This
immediate registration right is in addition to the existing registration
rights set forth in Section 7A(i) and (ii) of the Note Purchase Agreement.
Upon Mitsui's request, Electrosource will assist Mitsui in attempting to
find a buyer or buyers to purchase the shares of Common Stock issued or
issuable upon conversion of the Notes.
V
OPTION TO PURCHASE NOTE
5.1 Until October 1, 1996, Mitsui grants to Electrosource the
option to re-purchase the Notes for a price equal to the number of shares
issuable upon conversion of the Notes times the greater of (x) $1.50 per
share or
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(y) the market price per share. "Market price" means the average closing
price per share reported by NASDAQ for the last five (5) trading days prior
to notice of exercise of this option. The $1.50 per share amount is
subject to review and change after mutual discussion. This option can be
exercised by Electrosource by written notice and together with tender of
the cash purchase price. Such option cannot be exercised if Mitsui has
already agreed to sell the Notes or Common Stock issuable on conversion
thereof in a signed binding agreement or has engaged an underwriter or
placement agent for an underwriting or placement of such Common Stock.
Mitsui cannot convert the Notes to shares of Common Stock after receiving
valid notice by Electrosource of exercise of its option together with
tender of the purchase price. If Mitsui requests by written notice to
Electrosource to exercise this option, Electrosource will duly consider
such request, given its financial condition at the time.
VI
FUTURE LICENSE FEES
6.1 For a period of two (2) years from the date hereof, if
Mitsui wishes to re-purchase an exclusive or non-exclusive distribution or
manufacturing license for Electrosource Products for Japan, and subject to
agreement on all other terms, if Electrosource has not previously committed
such territory to another party on an exclusive
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basis, then Mitsui and Electrosource will re-enter into such licensing
relationship, subject to any other pre-existing rights in other parties and
Electrosource will credit against any license fees that may then be agreed
upon the Two Million US Dollars (US $2,000,000.00) that Mitsui has paid for
distribution rights under the Distributorship Agreement.
VII
CONTINUING COOPERATION
7.1 It is the Parties' intention to dialogue, exchange
information and discuss marketing and other matters from time to time to
promote commercialization and improvement of Electrosource products. The
Parties will not speak negatively of each other or their relationship.
Electrosource and Mitsui may well entertain future relationships as the
business develops.
VIII
RELEASE
8.1 Each of the Parties herein hereby fully releases and
discharges the other from any and all other claims, damages or amounts
owing, except as is specifically set forth herein, and except as set forth
in the termination provisions of Article 23 of the Distributorship
Agreement.
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IX
SURVIVAL OF NOTE PURCHASE AGREEMENT
9.1 Except as expressly provided herein, all the terms and
conditions of the Note Purchase Agreement shall be unaffected and remain in
full force and effect.
X
BINDING EFFECT
10.1 This Agreement shall be binding upon and inure to the
benefit of the Parties hereto.
XI
GOVERNING LAW AND ARBITRATION
11.1 This Termination Agreement shall be subject to the
governing law provisions and arbitration provisions in the Distributorship
Agreement.
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IN WITNESS WHEREOF, the Parties have executed this Termination
Agreement on the date first above written.
ELECTROSOURCE, INC. MITSUI ENGINEERING &
SHIPBUILDING CO., LTD.
By: /s/ Michael G. Semmens By: /s/ Hitoshi Narita
Michael G. Semmens Hitoshi Narita
President and Chairman Managing Director
of the Board
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EXHIBIT A
ELECTROSOURCE MEMO
To: Jim Rosel
From: F. Donald Orr
Date: 12/05/95
Subject: MES Prototype Status (Revised)
Here is a compilation of where I think we now stand with MES as far as
prototype shipments and WIP goes.
Date
Shipped or Invoice
Customer # Type P.O. WIP Comment Value
Equos Res. 8 12U20 H40072-R2 WIP Invoiced 8,640
Tokyo R&D 12 12U40 H50015 11/22/95 12,960
Imasen 3 12U40 H50301 11/22/95 6,000
Equos Res. 42 12U20 H40072-R2 WIP 45,360
Honda 2 12U60 H50007 WIP 2,160
Based on agreements with Y. Kojima on 5 December, 1995, the Termination
Agreement will stipulate that MES will pay for the above prototype
batteries (except H50015 Tokyo R&D) with the following conditions:
MES will assume ownership of these prototypes and Electrosource will
issue an invoice to cover these prototypes that have not already been
invoiced (except Tokyo R&D).
Electrosource will remain in possession of the prototypes, not
already in Japan, and ship to MES any of these Austin resident
prototypes at MES' request.
If MES receives payment for the batteries delivered to their
customers, they would retain the payments.
H50015 (Tokyo R&D) will be invoiced by Electrosource if MES receives
payment from Tokyo R&D.
If MES does not receive payments, for any of the invoiced prototypes,
Electrosource will make their best effort to sell them to other
customers MES will receive credit for these payments.
All other prototype orders or planning information is canceled as of
this date.
Originator: F. Donald Orr Privileged, Proprietary, and
Distribution: Unlimited Page 1 Confidential Information of
Date: 12/6/95 IR951205.DOC Electrosource, Inc.
