FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1995.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _________________ to ______________
Commission file number 0-16323
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 742466304
(State or otherjurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3800B Drossett Drive, Austin,Texas 78744-1131
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 445-6606
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all reported
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [ ]
As of March 15, 1996, 35,282,134 common shares were outstanding and the
aggregate market value of the common shares held by non-affiliates
(based on the closing price of these shares $1.344 as reported by NASDAQ
at the close of business on March 15, 1996) was approximately $47,419,188.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated part or parts of this report:
Portions of the Company's Definitive Proxy Statement for the Annual
Meeting of Shareholders scheduled to be held on May 30, 1996, are
incorporated by reference into Part III hereof.
PART I
Item 1. Business.
General
Electrosource, Inc. ("ELSI" or the "Company"), is engaged in
the manufacture of advanced lead-acid, rechargeable storage
batteries and the development of related processes and
technologies. In 1994, the Company made the decision to become
the manufacturer of the Horizon battery in North America.
Previously, the Company intended to license the technology to
third party manufacturers throughout the world. In 1995, the
Company devoted substantial resources to purchasing machinery and
implementing production processes to significantly increase the
capacity of the manufacturing facility, and successfully
demonstrated the ability to produce the Horizon battery in
commercial quantities. Significant technical improvements were
also achieved. The Company intends to license production and
distribution of Horizon batteries outside of North America. The
Horizonr battery utilizes plate grids made from a patented
coextruded wire and a special paste mixture. The Company is
concentrating its efforts upon development of Horizonr battery
technology for use in many applications including motive power,
power management, portable systems and starting power.
The development of coextruded wire for use in plate grids for
lead-acid batteries was commenced in 1984 by Tracor, Inc.
("Tracor") under an exclusive license from Blanyer-Mathews
Associates, Inc. ("Blanyer-Mathews"), the owner of the patent on
the coextrusion process. In June 1987, Tracor organized the
Company as a wholly-owned subsidiary and in October 1987 granted
to the Company an exclusive sublicense for the coextrusion
technology.
Research and development efforts were conducted from July 1992
until June 1994 principally under research and development
agreements (the "R&D Agreements") with the Electric Power
Research Institute ("EPRI") under which EPRI funded additional
development of the Horizonr battery subject to matching funds
obligations on the part of the Company. On November 1, 1995, the
Company completed its research and development agreement with
EPRI. In accordance with the terms of a November 1995 amendment
to the agreement, the Company issued 2,158,000 shares of Common
Stock in exchange for the transfer of intellectual property
rights (purchased technology) and the transfer of title to
certain equipment which had been purchased by EPRI in connection
with research activity undertaken by the Company. The shares
were valued at $2,994,225. In addition, pursuant to the terms of
such agreement, certain member utilities of EPRI have elected to
receive royalties at the rate of one-half of one percent on sales
of products containing licensed technology and on other revenues
derived by the Company from license fees, joint ventures and
other arrangements involving the licensed technology.
The principal executive offices of the Company are located at
3800-B Drossett Drive, Austin, Texas 78744-1131, and its
telephone number is (512) 445-6606. The manufacturing operations
are conducted at an 88,000 square foot facility in San Marcos,
Texas.
The Horizon Battery
The Company has concentrated its efforts on the design of a new
concept of lead-acid battery employing coextruded wire in plates
oriented in the horizontal plane, as opposed to the vertical
plane orientation of conventional batteries. This battery
concept, named "Horizon," enables design of a lead-acid battery
with significantly higher energy density than is possible with
conventional battery design. The Horizon design may also be
more economical to manufacture than conventional batteries due to
the elimination of several steps in the manufacturing process.
Several hundred prototypes and production versions of the
Horizonr battery have been built and tested in a variety of
configurations. Testing by the Company and by third party
laboratories indicates that various configurations of the battery
meet or exceed the performance parameters established by major
governmental and industry groups for electric vehicle batteries.
However, no single configuration has been produced that meets all
such standards. The Company, through its ongoing development
program, continues to develop and test prototypes that the
Company believes will ultimately exhibit all of the desired
performance characteristics, but there can be no assurance that
the Company will be successful in developing such a battery.
The Company also believes the Horizon battery has a number of
applications other than electric vehicles, such as in power tools,
electric power management, uninterruptible power, and for starting,
lighting and ignition ("SLI") batteries for automobiles. The Company
has received various purchase orders for its batteries for evaluation,
testing and commercial use.
Coextrusion Technology
The Company holds an exclusive license for the development and
commercial exploitation of patented coextruded wire. Coextrusion
is a process by which one material is extruded, or forced through
a die, with uniform thickness, onto a core material passing
simultaneously through the same die. The process is capable of
extruding lead (or lead alloy) onto any material having adequate
tensile strength to pass at high speed through the pressurized
dies. Successfully coextruded core materials include fiberglass,
Kevlar and cross-linked carbon fiber yarns, aluminum, copper and
titanium wire and polypropylene, polyester, nylon and
polyethylene monofilament.
Coextruded lead wire facilitates the use in lead-acid batteries
of pure lead or extremely low concentration lead alloys, which
are difficult to cast repeatedly at the high rates required in
production. Management of the Company believes that grids made
from such wire and used in lead-acid storage batteries have
improved corrosion resistance and, therefore, longer life, or
equivalent life with reduced total material content.
Energy-Active Material Formulation
The Company has also developed a new type of energy-active
material, or paste, for use in lead-acid battery electrodes. The
Company invented two additional paste formulations, each of which
may contribute to the reduction of battery manufacturing cost.
The Company has protected this proprietary technology as trade
secrets, and does not plan to apply for patents related to these
formulations. The Company is continuing the development of these
formulations in connection with the Horizonr battery project, but
has no current plans for separate commercialization of the energy
active material.
Chrysler Contract
In September, 1994, Chrysler Corporation awarded the Company a
$1.6 million contract to retrofit the Horizonr battery for the
Chrysler NS mini-van electric vehicle program. The program
concluded in the first quarter of 1995. In December, 1995, the
Company received a Production Purchase Order for Horizonr which
could result in up to $80 million in battery sales cumulatively
over the next three years; however Chrysler has the right to
withhold or cancel orders. During 1995, approximately 50 percent
of the Company's battery sales were generated from Chrysler.
Licensing
In July 1994, the Company signed an agreement making Mitsui
Engineering and Shipbuilding Company, Ltd. ("MES"), the exclusive
distributor for all Electrosource products in Japan with an
option for exclusive manufacturing rights in the same territory.
Under the agreement MES agreed to pay the Company $2,000,000 for
the distribution rights; $1,000,000 in 1994 and the remaining
$1,000,000 in 1995; and $3,000,000 if MES elected to exercise
their option for a manufacturing license. In addition, the
Company borrowed $3,800,000 from MES and delivered a Convertible
Promissory Note for that amount to MES, which could be converted
into stock or applied in payment of license fees at MES' option.
In January 1996 MES terminated the Distribution Agreement. In
March 1996, the Company and MES executed a Termination Agreement.
In accordance with the terms of the agreement, MES applied
$1,000,000 of its Convertible Note to pay $1,000,000 of
outstanding license fees to the Company. Additionally, MES
notified the Company of its intent to convert the remainder of
its Convertible Note and notes issued for interest thereon
(approximately $3 million), at $3.80 per share, into shares of
Common Stock contingent upon the effectiveness of a registration
statement to register the sale of such shares.
Marketing
The worldwide market for lead-acid batteries can be classified
into the following major segments:
Starting, Lighting and Ignition for engine starting applications
as used in passenger cars, light and heavy trucks, garden
tractors and motorcycles.
Motive Power for use in electric vehicles, industrial fork lifts,
underground mining locomotives and golf carts. Such batteries
undergo daily discharging and overnight recharging and are
warranted for up to six years.
Power Management for use in utility emergency power,
telecommunications, uninterrupted computer and other power
supplies and cellular radio. Such batteries are typically used
as a secondary source of power.
Portable Power which is typically small, lead-acid batteries for
use in such items as portable power tools and outdoor power tool
products, as well as electrically driven medical equipment.
In 1995, the Company successfully demonstrated the ability to
manufacture the Horizon battery in commercial quantities.
Numerous production and prototype batteries were sent to
customers all over the world in 1995 in all of the above markets.
Management anticipates that in 1996/1997 many of these customers
will move from test phases to integration of Horizon technology
into their commercial products.
Competition
The lead-acid battery industry is mature, well-established and
highly competitive. The industry is characterized by a few major
domestic and foreign producers, all of which have substantially
greater financial resources than the Company. Accordingly, the
Company's ability to succeed in this market depends upon its
ability to demonstrate superior performance and cost attributes
of its technology. The Company has concentrated its activities
in the electric vehicle segment of the market with a view to
demonstrating improved energy to weight and longer battery life
in comparison to traditional lead-acid batteries. The principal
competitors of the Company in the electric vehicle market have
directed their efforts to other battery types, such as nickel-
cadmium, nickel-metal hydride, nickel-iron and sodium-sulfur
batteries, rather than lead-acid formulations, although at least
one major automobile manufacturer and one major battery company
are known to have research and development projects underway to
develop lead-acid batteries for electric vehicles.
Patents and Protection of Technology
Prior to May 1990, the Company held an exclusive sublicense
from Tracor under several US patents covering the coextruded wire
and the coextrusion apparatus for producing composite wire for
use only in lead-acid battery applications. In May 1990, Tracor
assigned to the Company all rights under the original license
agreement between Tracor and Blanyer-Mathews, the inventors of
the coextrusion technology. This assignment terminated the
sublicense between Tracor and the Company and allowed the Company
to apply the technology outside of the area of lead-acid storage
batteries, if any such applications are available. The license
assigned to the Company expires concurrently with the patents and
requires payment of annual minimum royalties to Blanyer-Mathews
of the greater of $100,000 or sales-based royalties equal to 1/2
percent of sales. The license may be terminated by the licensor
in the event that the Company defaults in its obligation to pay
royalties or enters bankruptcy. The Company is responsible for
the maintenance and administration of the licensed patent. Under
the terms of the assignment, the Company is to pay Tracor a
royalty of four percent on all technology sales unrelated to lead-
acid storage batteries for the term of the license. The Company
is obligated to pay minimum annual royalties of $10,000 to Tracor
for a five-year period beginning on the date of the assignment.
Such minimum royalties were to have begun in May 1991, but Tracor
deferred payment for two years, with the deferred amounts bearing
interest at 8.5 percent. The Company has made all scheduled
payments in accordance with the terms of the deferral agreement.
In March 1990, a patent was issued to the Company covering an
energy-active material formulation, including the processes for
manufacturing this material. In October 1990, a US patent was
issued to the Company for the Horizonr battery design.
The know-how relating to the Company's energy-active material
formulation and the application of coextruded wire to battery
electrodes is confidential and proprietary to the Company.
Research and Development
Initial research and development programs were directed toward
understanding the behavior of the wire in lead-acid battery
electrodes in various corrosive environments. With the
development of the Horizonr battery concept, the focus of
research work was redirected toward (a) understanding the
behavior of the wire and active material in the Horizonr battery,
(b) reformulating energy-active materials to improve performance,
(c) developing repeatable processes for the construction and
manufacture of laboratory prototype batteries, (d) developing
concepts for manufacturing Horizonr electrodes and plates using
automated processing techniques and (e) improving performance of
initial production models. Prototype models of Horizonr
batteries for specialized markets (see "Marketing") continue to
be built in attempts to optimize battery electrical performance
and life and to meet customer requests for different battery
configurations or performance.
The Company incurred approximately $3,455,000, $1,933,000, and
$1,530,000, in research and development costs in the years ended
December 31, 1995, 1994, and 1993, respectively.
Backlog
As of December 31, 1995, the Company has a backlog of
approximately $100,000 in battery orders and a basic order
agreement from Chrysler Corporation. The Company had a backlog
of approximately $3.5 million in battery orders as of December
31, 1994, most of which subsequently did not materialize.
Export Sales
During 1995 and 1994, the Company sold approximately $140,000
and $76,000, respectively, of Horizon batteries and related
services to foreign customers.
Raw Materials
The basic raw materials of lead-acid batteries are lead,
sulfuric acid and plastic, each of which is readily available.
The Company has experienced no material delays in obtaining
timely delivery of these materials.
Environmental Concerns
The management of the Company believes that the Company is
currently in compliance with all applicable local, state, and
federal environmental rules and regulations. The Company's
laboratory facility and manufacturing plant includes an enclosed
area specifically for the mixing of lead-oxide paste and the
application of such paste to battery electrodes. The air in
these areas is continuously filtered to remove lead particles.
Employees operating in these areas are instructed in the use of
safety equipment such as gloves, protective aprons, and
respirators and are required under Occupational Safety and Health
Administration ("OSHA") guidelines to submit to blood monitoring
tests on a periodic basis. The supervision and analysis of these
tests are undertaken by an outside, independent agency and the
results thereof are communicated to the Company's employees.
The management of the Company believes that the new energy-
active material being developed by the Company may be safer to
manufacture than energy-active materials currently in general use
due to reductions in potential environmental hazards. The active
material paste used in conventional batteries has a consistency
similar to wet cement and must be allowed to dry for two or three
days after being impressed into the grid of a battery plate.
When dried the plates produce fine lead dust as they are transported in a
plant through the battery assembly process. This airborne dust poses a
potential health risk to workers, and there are OSHA regulations
regarding allowable levels of airborne lead in abattery plant for
which manufacturers must devote significant resources in
prevention, treatment, and compliance. The Company's energy-
active material, on the other hand, has a consistency similar to
toothpaste and does not need to dry completely before the battery
assembly process begins, thus minimizing worker exposure to
airborne lead.
Employees
As of March 8, 1996, the Company employed 81 full-time
employees.
Item 2. Properties.
The Company's executive offices and research facilities are
located in leased premises covering approximately 30,000 square
feet at 3800-B Drossett Drive, Austin, Texas. The monthly gross
rental rate on the amended lease escalates each year over the
term of the lease from $12,000 per month to $15,500 in the final
year of the term. In addition, the Company has been granted an
option to extend the term of its lease for an additional period
of three years.
The Company's 88,000 square foot production facility is located
in San Marcos, Texas at 2809 IH 35 South. The monthly rental
rate is currently approximately $16,000 per month and escalates
over the entire life of the lease to $35,000 per month. The
lease is for a term of ten years, and the Company has an option
to purchase the property and improvements for $2,600,000 until
November 2003. The Company believes this site is adequate for
the low-rate production requirements and possesses enough
expansion capacity if the Company elects to expand capacity at
this site.
Management believes that all personal property used by the
Company is in good condition.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
Trading Market for ELSI Common Stock
The Company's Common Stock has been traded in the over-the-
counter market and reported on NASDAQ under the symbol "ELSI"
since January 1988. The following table sets forth, for the
periods indicated, the high and low bid price per share of Common
Stock as reported by NASDAQ. Prices represent inter-dealer
quotations, without adjustment for retail markup, markdown or
commission, and may not represent actual transactions.
High Low
1994
First Quarter 4 1/4 3 3/8
Second Quarter 4 2 1/4
Third Quarter 3 3/4 2 3/4
Fourth Quarter 3 1/2 2 3/4
1995
First Quarter 3 1/4 1 7/8
Second Quarter 4 1/4 2 5/16
Third Quarter 2 17/32 1 3/16
Fourth Quarter 2 13/32 1 1/4
The transfer agent and registrar for the Common Stock of the
Company is KeyCorp Shareholder Services, Inc., Society National
Bank, Dallas, Texas.
The approximate number of record holders of Common Stock at
March 15, 1996, was 3,918.
Dividends and Dividend Policy
The Company has paid no dividends on its Common Stock to date and
does not anticipate, currently or in the foreseeable future,
paying dividends on the Common Stock. Further, the Company
currently has a deficit in its "surplus" account (defined as the
excess of net assets over par value of shares outstanding) which,
under Delaware corporate law, precludes any distributions to
shareholders in a given year unless the Company reports net
income in that year or the preceding year, in which case
dividends could be paid to the extent of net income for the year
in which the dividend is declared and net income for the fiscal
year immediately preceding the year of declaration. In the event
that the earnings of the Company permit payment of dividends
under Delaware law, the timing and amount of such dividends will
be determined by the Board of Directors in light of the Company's
earnings, financial condition and capital requirements.
Item 6. Selected Financial Data.
(In thousands, except per share data)
Year Ended December 31,
1995 1994 1993 1992 1991
Revenues $ 3,278 $ 4,614 $ 3,373 $ 544 $ 773
Net Loss $(17,905) $(8,543) $ (197) $(1,228) $ (900)
Net Loss per Share $ (0.85) $ (0.61) $ (0.03) $ (0.20) $ (0.15)
Dividends per Share None None None None None
As of Year Ended December 31,
1995 1994 1993 1992 1991
Working Capital $ 1,556 $ 2,032 $ 1,122 $ 251 $ (495)
Total Assets $15,277 $ 9,318 $ 4,709 $2,802 $2,697
Shareholders'
Equity (Deficit) $ 1,240 $ (685) $ 3,322 $2,421 $2,149
Long Term Obligations $11,324 $ 7,107 $ 33 $ 200 None
The foregoing should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
In 1995, the Company devoted substantial resources to purchasing
machinery and implementing production processes to significantly
increase the capacity of the manufacturing facility, and
successfully demonstrated the ability to produce the Horizon
battery in commercial quantities. Significant strides in
technical performance were also achieved. Although sales were
less than anticipated, the Company delivered Horizon production
and prototype batteries to customers all over the world, seeding
target markets. The Company anticipates that markets will
materialize in 1996 as customers move from test phases to
integration of Horizon technology into their commercial products.
Results of Operations - Years ended December 31, 1995, 1994, and
1993
Revenue. The Company generated project revenue of approximately
$989,000, $2,902,000 and $2,967,000 for the years ending December
31, 1995, 1994, and 1993, respectively. Approximately $797,000
of project revenue in 1995 and $846,000 in 1994 was generated
under an agreement with Chrysler Corporation for the retrofit of
the Horizon battery for their NS mini van program. This program
concluded in 1995. Approximately $2,056,000 and $3,000,000 of
project revenue in 1994 and 1993, respectively, was earned under
an agreement with the Electric Power Research Institute ("EPRI")
for the development and commercialization of the Company's
proprietary advanced lead-acid battery. The Company's work under
the research and development program with EPRI was completed in
1994.
During the year ended December 31, 1995, the Company generated
$1,196,000 of battery sales compared to $378,000 in the year
ended December 31, 1994. There were no battery sales in 1993.
Almost one-half of the battery sales in 1995 were generated from
sales to Chrysler Corporation for testing in their NS electric
mini van program. As a result of successful battery testing, the
Company received a production purchase order from Chrysler in
December 1995 which could result in up to $80 million in battery
sales cumulatively over the next three years; however, Chrysler
has the right to withhold or cancel orders. Management expects
that sales under this purchase order will increase in late 1996.
Additional equipment, capital improvements and working capital
will be required to complete the Chrysler order. The remainder
of 1995 battery sales were generated from numerous customers
requesting batteries for testing and evaluation.
The Company also generated $1,000,000 and $800,000 in 1995 and
1994, respectively, in license fees under a Distribution
Agreement with Mitsui Engineering and Shipbuilding Co., Ltd.
("MES") for the export and exclusive distribution of the
Company's Horizon battery in Japan. In December 1995, the
Company received notification from MES of its intent to terminate
its Distribution Agreement and to settle all outstanding
financial matters with the Company. In March 1996, the Company
completed a Termination Agreement with MES which had no material
adverse effects on the Company.
Additionally, the Company generated revenue of $410,000 and
$340,000 in the years ended December 31, 1994 and 1993,
respectively, from an agreement with BDM Technologies, Inc.
("BDM") for technical support in developing a low rate initial
production line for the Horizon battery. The BDM agreement ended
in 1994.
Costs and expenses. Essentially all costs and expenses increased
substantially in the year ended December 31, 1995 as the Company
devoted substantial resources to purchasing machinery and
implementing production processes to significantly increase the
production capacity and quality of its manufacturing facility to
meet customer requirements, particularly Chrysler. Significant
increases in labor costs, primarily in the production area,
occurred in early 1995 in order to increase the production
capacity of the manufacturing facility. Significant reductions
in labor costs were made later in the year to reduce costs.
During 1995, the Company also incurred significant nonrecurring
costs to replace batteries which failed to perform as expected
due to early manufacturing problems as well as improper storage
and charging of the batteries by customers. Additionally, the
Company issued 1,360,000 shares of unregistered, restricted
shares of Common Stock in September 1995, which were valued at
$1,468,800 and charged to expense, associated with investor/public
relations services to be provided by a consulting firm over a two-
year period. Significant research and development expenditures
were incurred which resulted in technical achievements including
unequaled performance levels in specific energy, power and cycle
life from batteries produced on the manufacturing line, not
laboratory prototypes. Interest costs were higher for the year
ending December 31, 1995, as the Company received approximately
$13 million in Convertible Debt financing in 1995. Beginning in
mid-1995 and continuing into 1996, management of the Company
implemented cost control measures in an effort to conserve cash
and reduce monthly expenditures. As a result, routine monthly
costs and expenditures have continued to decrease since mid-1995.
Prior to June 1994 all costs were substantially lower as the
Company was primarily performing research and development
activity related to the Horizon battery, and related technologies
and costs for the production facility were borne by a strategic
corporate partner.
Effective the fourth quarter of 1994, the Company formalized
its arrangement with BDM and agreed to a Technology License
Agreement whereby the Company will license BDM's manufacturing
technology for use in producing the Horizon battery. In
accordance with the terms of the agreement, the Company agreed to
pay BDM: $80,000 cash; issue 1,700,000 shares of Common Stock in
equal installments over a three year period; issue 200,000 shares
of Common Stock if the Company decides to maintain the license
beyond the original three year term; and to grant 1,000,000
options to purchase Common Stock at $4.00 per share. The Company
also agreed to acquire BDM's interest in a corporate joint
venture formed by BDM and the Company in 1993 for 100,000 shares
of Common Stock. The Common Stock issued to BDM is unregistered
and restricted as to resale for two years; however, BDM has been
given certain demand and "piggyback" registration rights. The
Company recorded an expense of $3,819,350 in 1994 for the license
of this manufacturing technology and will have no further
expenses related to this technology in the future.
As a part of the battery manufacturing process, the Company
handles and disposes of various hazardous materials such as lead
and sulfuric acid. The Company is subject to strict
environmental regulations and has incurred significant costs in
installing state-of-the-art equipment to manage and control
hazardous substances and pollution. The Company expended
$385,000 and $198,000 in 1995 and 1994, respectively, in capital
expenditures for such equipment. As part of its on-going
operations, the Company incurred $170,000 and $80,000 in non-
capital expenditures in 1995 and 1994, respectively, to properly
dispose of hazardous materials and waste. As a result of such
preventive measures, the Company has not incurred significant
remediation costs and management is not currently aware of any
infrequent or non-recurring clean-up expenditures to be incurred
in the future based on present circumstances and conditions.
During 1995, the Company issued approximately 15,000,000 shares
of Common Stock as a result of financing transactions, purchases
of technology and equipment, payment of the Technology License
Payable and consulting services, and the exercise of stock
options. During 1994, the Company issued approximately 2,000,000
shares of Common Stock as a result of several financing
transactions and the exercise of stock options. As a result of
the increase in shares for both years, the loss per share in both
years was less than it would have been based on the shares
outstanding at the end of the preceding year. Management of the
Company believes that the issuance of shares in these years was
necessary to fund the increased working capital and capital
expenditure requirements.
Liquidity and Capital Resources. During 1995, the Company
devoted substantial resources to purchasing machinery and
implementing production processes to significantly increase the
capacity of the San Marcos production facility. As the
production capacity of the San Marcos facility increased in mid-
1995 to meet the needs of an emerging market in converted
electric fleet vehicles, the market did not materialize as
expected and sales were far less than originally anticipated. In
an effort to meet the increasing working capital needs associated
with the shortfall in sales and increased costs associated with
expanded production capabilities, marketing requirements and
research and development expenditures to further develop and
refine the Horizon battery, the Company completed several
financing transactions during 1995 and late 1994:
_In April, July and November 1995, the Company issued $12,780,000
of Convertible Debentures resulting in net proceeds to the
Company of $11,552,600. The Debentures were generally
convertible into shares of Common Stock at a price equal to 75 to
80 percent of the closing price of the Common Stock at the time
of conversion (generally 60 days from the issuance date). As of
December 31, 1995, Convertible Debentures with a principal
balance of $8,750,000 were converted into approximately 6,200,000
shares of Common Stock. In January and February 1996, an
additional $3,780,000 of Convertible Debentures and related
interest were converted into approximately 4,000,000 shares of
Common Stock. In addition, warrants to purchase 2,360,937 shares
of Common Stock were issued to holders of the Debentures or
agents of the respective Debenture holders at prices ranging from
$1.53 to $4.00 per share, with various periods of expiration, the
latest of which is July 27, 2000.
_In January, March, September and October 1995, the Company sold
approximately 4,500,000 shares of Common Stock which resulted in
net proceeds to the Company of $6,246,966. In addition, warrants
to purchase 22,500 shares of Common Stock at a price of $1.56 per
share, exercisable until November 10, 1997, were issued in
connection with certain of the equity financing transactions.
_In November 1995, the Company completed its research and
development agreement with EPRI. Pursuant to the terms of a
November 1995 amendment to the agreement, the Company issued
2,158,000 shares of Common Stock in exchange for the transfer of
certain intellectual property rights (purchased technology) and
title to certain equipment which had been purchased by EPRI in
connection with research activity undertaken by the Company. The
shares were valued at $2,994,225.
_In November 1994, the Company sold a Convertible Promissory Note
to MES for $3,800,000. The note carries an interest rate of five
percent per annum on the unpaid principal and interest is due and
payable semi-annually in the form of additional notes payable. A
note payable for $190,000 for interest was issued in October 1995
for the year then ended. In March 1996, the Company completed a
Termination Agreement with MES. In accordance with the terms of
such agreement, MES will convert $1,000,000 of its Convertible
Notes Payable to satisfy its obligation to pay $1,000,000 of
license fees to the Company. Additionally, MES notified the
Company of its intent to convert the remainder of its Convertible
Notes Payable (approximately $3 million), at $3.80 per share,
into shares of Common Stock upon the effectiveness of a
registration statement to register such shares.
_In the six month period ending December 31, 1994, the Company
issued 1,685,500 shares of Common Stock which resulted in net
proceeds of $4,058,030 to the Company. Additionally, in July and
August 1994, holders of 148,000 warrants to purchase the
Company's Common Stock exercised these warrants which resulted in
net proceeds of $333,000 to the Company.
Prior to 1994, the Company's operations were primarily focused
on research and development of the Horizon battery and related
technologies. The operations were funded primarily from a July
1992 research and development agreement with EPRI, which is now
complete. In addition, in early 1993, the Company completed the
sale of $550,000 of secured promissory notes in a private
offering. Warrants to purchase an aggregate of 200,000 and
440,000 shares of Common Stock at exercise prices of $1.625 and
$2.25, respectively, were issued to the purchasers of the notes.
Holders of warrants to purchase 452,000 shares of Common Stock
exercised their warrants in 1993, resulting in proceeds to the
Company of $892,000 before the costs of registration of the
Common Stock issued upon exercise of the respective warrants.
In 1995, the Company successfully demonstrated that it could
manufacture the Horizon battery in commercial quantities. As a
result of such efforts, in December 1995, the Company received a
production purchase order from Chrysler which could result in up
to $80 million in battery sales cumulatively over the next three
years. Chrysler has the right to withhold or cancel orders. In
addition, numerous Horizon production and prototype batteries
were sent to customers all over the world, seeding target
markets. Significant technical improvements were also made in
the battery's performance in 1995 in the areas of specific
energy, power and cycle life. The major portion of development
is completed, and in 1996 management will focus efforts on
capitalizing on market opportunities as customers move from test
phases to integration of Horizon technology into their commercial
products. In addition, management has significantly reduced
operating costs from mid-1995 levels in an effort to conserve
cash. The Company's cash sources in 1996 are largely dependent
on the successful commercialization of the Horizon battery.
Management expects the level of battery sales to increase in late
1996 as the Company receives commercial orders under the Chrysler
production purchase order as well as from other customers
currently testing the battery. Management does not expect sales
from these orders to generate sufficient funds to support its
overall working capital and capital expenditure needs in 1996;
therefore, it is expected that additional debt and/or equity
financing will be necessary. Equity financing is limited by the
number of unreserved shares available for issuance. As of March
15, 1996, the Company had approximately 4,700,000 shares of
Common Stock where were unreserved. Management intends to seek
shareholder approval of actions necessary to increase the number
of unissued and unreserved shares, including any required changes
to the Certificate of Incorporation. On March 1, 1996, the
Company sold 1,000,000 shares of Common Stock which resulted in
net proceeds to the Company of approximately $898,200.
Management is devoting substantial effort toward obtaining
additional funding sources. Management is also working to
develop long-term strategic relations with customers and
organizations that can aid penetration of target markets and can
assist financially.
The Company's Common Stock is traded in the Over-the-Counter
Market and is reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). In order to
maintain listing by NASDAQ, the Company must maintain a minimum
$1 million of stockholders' equity. The Company is currently in
compliance with this requirement and management believes that the
continuing impact of its cost control measures and increases in
sales will reduce the level of operating losses which should
result in maintaining compliance with this requirement into the
foreseeable future. However, if the minimum required balance is
not maintained, NASDAQ may choose to delist the stock of the
Company from trading which would restrict the liquidity of the
Common Stock. Delisting by NASDAQ would be an Event of Default
under the terms of the April 1995 Debentures, which could trigger
a requirement to repay the respective Debentures immediately.
April 1995 Debentures with a principal balance of $250,000 were
outstanding at December 31, 1995.
Although management is devoting substantial efforts to
successfully commercialize its Horizon technology and to secure
additional funding sources, there is no assurance that such
efforts will be successful. The financial statements do not
include any adjustments to reflect the possible future effects on
the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
Item 8. Financial Statements and Supplementary Data.
See Item 14(a) for an index of the financial statements and
schedule included as a part of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of Registrant.
Information with regard to directors and executive officers and
their business experience is set forth under "ELECTION OF
DIRECTORS" in the Company's Definitive Proxy Statement for the
Annual Meeting of Stockholders to be held on May 30, 1996, and is
incorporated herein by reference.
Information with regard to the filing of reports of ownership
and changes of ownership by the Company's directors, officers,
and persons who beneficially own more than ten percent of a
registered class of the Company's equity securities is set forth
under "ELECTION OF DIRECTORS - Section 16(a) Disclosure" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 30, 1996, and is incorporated
herein by reference.
Item 11. Executive Compensation.
Information with regard to executive compensation and pension
or similar plans is set forth under "ELECTION OF DIRECTORS -
Compensation of Executive Officers and Directors" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 30, 1996, and is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Information with regard to security ownership of certain
beneficial owners and management is set forth under "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on June 26, 1996, and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information with regard to certain transactions is set forth
under "ELECTION OF DIRECTORS - Compensation Committee Interlocks
and Insider Participation" and "ELECTION OF DIRECTORS - Certain
Relationships and Related Transaction" in the Company's
Definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on June 26, 1996, and is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a)(1) The following financial statements of the Company are
included in Item 8:
Page No.
Balance Sheets - December 31, 1995 and 1996 F-3
Statements of Operations - For the years
ended December 31, 1995, 1994, and 1993 F-4
Statements of Shareholders' Equity (Deficit) -
For the years ended December 31, 1995,
1994, and 1993 F-5
Statements of Cash Flow - For the years
ended December 31, 1995, 1994, and 1993 F-6
Notes to Financial Statements -
December 31, 1995 F-7
(2) Financial Statement Schedules
The following financial statement schedule required by
Regulation S-X is filed herewith at the page indicated:
Schedule II - Valuation and Qualifying Accounts S-1
All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are not required under
the related instructions or are inapplicable, and therefore have been omitted.
(3) Exhibits
3.1 Restated Certificate of Incorporation of El
ectrosource, Inc. (filed as Exhibit 3.1 to
Electrosource, Inc., Registration Statement on Form 10
filed October 19, 1987, as amended by Form 8
Amendments filed January 8, 1988 and January 13, 1988
(hereinafter referred to as "Form 10") and
incorporated herein by reference).
3.2 Certificate of Designation, Preferences, Rights and
Limitations of 1992 Series A Preferred Stock and
Series A-1 Preferred Stock of Electrosource, Inc. as
filed of record with the Delaware Secretary of State
on January 15, 1992 (filed as Exhibit 4.1 to
Electrosource, Inc. Form 8-K Current Report for
Issuers Subject to the 1934 Act Reporting Requirements
filed December 24, 1991 and incorporated herein by
reference).
3.3 Amendment to Restated Certificate of Incorporation
of Electrosource, Inc., increase in authorized shares
to 50,000,000 shares (filed as Exhibit 3.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
3.4 Amendment to Restated Certificate of Incorporation
of Electrosource, Inc., elimination of Certificate of
Designation for Series A and Series A-1 Preferred Stock
(filed as Exhibit 3.2 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated hereby by reference).
3.5 Bylaws of Electrosource, Inc. (filed as Exhibit 3.2
to Form 10 and incorporated herein by reference).
3.6 Amendment to Bylaws of Electrosource, Inc.,
pursuant to a Certificate of Secretary dated May 25,
1990 (filed as Exhibit 3.3 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
3.7 Amendment to Bylaws of Electrosource, Inc. dated
November 3, 1993 (filed as Exhibit 3.5 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1993, and incorporated
herein by reference).
3.8 Amendment to Bylaws of Electrosource, Inc. dated
June 23, 1994, (filed as Exhibit 3.6 to Electrosource,
Inc., Annual Report filed on Form 10-K for the period
ended December 31, 1994).
10.1 Sublicense Agreement dated as of October 5, 1987
between Electrosource, Inc., and Tracor, Inc. (filed
as Exhibit 10.4 to Form 10 and incorporated herein by
reference).
10.2 Patent and Technology Exclusive License Agreement
dated August 14, 1984, between Tracor, Inc., and
Blanyer-Mathews Associates, Inc. ("BMA") (filed as
Exhibit 10.9 to Form S-1 Registration Statement, file
number 33-30486, filed August 14, 1989, hereinafter
referred to as "Form S-1," and incorporated herein by
reference).
10.3 Amendment to Patent and Technology Exclusive
License Agreement dated May 29, 1987, between Tracor,
Inc., and BMA (filed as Exhibit 10.10 to Form S-1 and
incorporated herein by reference).
10.4 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to BMA on
April 12, 1988 (filed as Exhibit 10.11 to Form S-1 and
incorporated herein by reference).
10.5 Bonus Royalty Agreement dated May 26, 1989, among
Electrosource, Inc., Tracor, Inc., and BMA (filed as
Exhibit 19 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1989, and
incorporated herein by reference).
10.6 Amendment to Bonus Royalty Agreement entered into
as of November 30, 1989, by and among BMA, Tracor,
Inc., and Electrosource, Inc. (filed as Exhibit 10.17
to Post Effective Amendment No. 1 to Form S-1
Registration Statement, file number 33-34581, filed
December 11, 1989 (hereinafter referred to as "Post-
Effective Amendment No. 1 to Form S-1 filed December
11, 1989 (hereinafter referred to as "Post-Effective
Amendment") and incorporated herein by reference).
10.7 Assignment of Patent License dated as of May 14,
1990, by and between Electrosource, Inc., and Tracor,
Inc. (joined by BMA for limited purposes described
therein) (filed as Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the period ended
December 31, 1990, hereinafter referred to as the
"1990 Form 10-K," and hereby incorporated by
reference).
10.8 Letter Agreement dated as of January 15, 1991
between Electrosource, Inc., and BMA (filed as Exhibit
10.21 to the Company's 1990 Form 10-K, and
incorporated herein by reference).
10.9 License Modification Agreement dated January 16,
1992, between Blanyer Mathews & Associates, Inc.,
Electrosource, Inc., and Battery Horizons, Ltd. (filed
as Exhibit 10.23 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1991,
and incorporated herein by reference).
10.10 First Amendment to Assignment of Patent License
dated April 2, 1992, between Electrosource, Inc. and
Tracor, Inc. (filed as Exhibit 10.58 to Company's
Registration Statement on Form S-1 [Registration
Statement No. 33-65248] filed June 30, 1993, and
incorporated herein by reference).
10.11 Lease Agreement dated December 9, 1987, between
Electrosource, Inc., and Crow-Gottesman-Hill, a
Limited Partnership (filed as Exhibit 10.15 to Form S-
1 and incorporated herein by reference).
10.12 Lease Agreement between AEtna Life Insurance
Company and Electrosource, Inc., dated February 22,
1992 (filed as Exhibit 10.25 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.13 First Amendment to Lease Agreement between AEtna
Life Insurance Company and Electrosource, Inc., dated
February 24, 1993 (filed as Exhibit 10.27 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.14 Second Amendment to Lease Agreement between Aetna
Life Insurance Comopany and Electrosource, Inc., dated
March 1, 1996.
10.15 Securities Purchase Agreement dated December 12,
1991, between the registrant and Battery Horizons,
Ltd. ("BHL"), (filed as Exhibit 2.1 to the December
24, 1991 Form 8-K, and incorporated herein by
reference).
10.16 Amendment to Securities Purchase Agreement dated
as of January 7, 1992, between the registrant and BHL
(filed as Exhibit 2.2 to the December 24, 1991 Form 8-
K and incorporated herein by reference).
10.17 Second Amendment to Securities Purchase Agreement
dated January 16, 1992, between registrant and BHL
(filed as Exhibit 2.3 to the December 24, 1991 Form 8-
K and incorporated herein by reference).
10.18 EPRI Agreement RP2415-15 dated July 20, 1992,
between Electrosource, Inc., and Electric Power
Research Institute (filed as Exhibit 10.42 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.19 EPRI Agreement RP2415-15, Amendment No. 1 dated
November 12, 1992, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.43 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.20 EPRI Agreement RP2415-15, Amendment No. 2 dated
January 27, 1993, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.44 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.21 Amendment No. 3 to Agreement between Electrosource, Inc.
and Electric Power Research Institute, Inc. dated
March 22, 1993 (filed as Exhibit 10.53 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended December 31, 1993,
and incorporated herein by reference).
10.22 Amendment No. 4 to Agreement between Electrosource, Inc.
and Electric Power Research Institute, Inc. dated December 6, 1993
(filed as Exhibit 10.53 to Company's Registration Statement on
Form S-1 [Registration Statement No. 33-73582] filed December 24,
1993, and incorporated by reference).
10.23 Business Alliance and License Agreement dated September 17, 1993,
between Electrosource, Inc., and Electric Power Research Institute
(filed as Exhibit 10.61 to Company's Registration Statement on
Form S-1 [Registration Statement No. 33-65248] filed June 30, 1993,
and incorporated herein by reference).*
10.24 Amendment to Business Alliance and License Agreement dated
November 1, 1995, between Electric Power Research Institute and
Electrosource, Inc. (filed as Exhibit 10.2 to Form 10-Q for the
quarter ended September 30, 1995, and incorporated herein by
reference).
10.25 Shareholders Agreement dated April 25, 1993, between
Electrosource, Inc. and BDM Technologies, Inc. (filed as Exhibit 10.60
to Company's Registration Statement on Form S-1 [Registration
Statement No. 33-65248] filed June 30, 1993, and incorporated
herein by reference).*
10.26 Stock Purchase Agreement dated as January 31, 1995, between BDM
Technologies, Inc., and Electrosource, Inc., (filed as Exhibit
10.46 to Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.27 Operating Lease Agreement between Horizon Battery
Technologies, Inc., BDM Technologies, Inc., and
Electrosource, Inc., dated June 20, 1994 (filed as an
Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.28 Lease Agreement between William D. McMorris and Horizon Battery
Technologies, Inc., dated August 17, 1993, (filed as Exhibit 10.42
to Electrosource, Inc., Annual Report on Form 10-K for the period
ended December 31, 1994, and incorporated herein by reference).
10.29 Distributorship Agreement between Mitsui Engineering and Shipbuilding
Co., Ltd. and Electrosource, Inc., dated July 7, 1994 (filed as
an Exhibit to the Company's Form 10-Q/A No. 1 for the period
ended June 30, 1994, and incorporated herein by reference).
10.30 A Convertible Promissory Note in favor of Mitsui Engineering and
Shipbuilding Co., Ltd. was dated October 26, 1994 (filed as an
Exhibit to the Company's October 26, 1994, Form 8-K and
incorporated herein by reference).
10.31 The Note Purchase Agreement between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated October 26, 1994 (filed as
an Exhibit to the Company's October 26, 1994, Form 8-K
and incorporated herein by reference).
10.32 Notice of Intent to Terminate Distributorship
Agreement between Mitsui Engineering and Shipbuilding
Co. Ltd. and Electrosource, Inc., dated December 5,
1995 (filed as an Exhibit to the Company's December 22,
1995, Form 8-K and incorporated herein by reference).
10.33 A Convertible Promissory Replacement Note between
Mitsui Enginering and Shipbuilding Co. Ltd. and
Electrosource, Inc., dated March 6, 1996.
10.34 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co. Ltd. and
Electrosource, Inc., dated October 26, 1995.
10.35 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co. Ltd. and
Electrosource, Inc., dated March 6, 1996.
10.36 Termination Agreement between Electrosource,
Inc., and Mitsui Engineering & Shipbuilding Co., Ltd.,
dated March 6, 1996.
10.37 1992 Electrosource, Inc., Loan/Warrant Program,
Note (filed as Exhibit 10.53 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1992, and incorporated herein by
reference).
10.38 1992 Electrosource, Inc., Loan/Warrant Program,
Warrant (filed as Exhibit 10.54 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1992, and incorporated herein by
reference).
10.39 1992 Electrosource, Inc., Loan/Warrant Program,
Security Agreement with Addendum and First Amendment
(filed as Exhibit 10.55 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.40 1993 Electrosource, Inc., Loan/Warrant Program,
Note (with schedule) (filed as Exhibit 10.56 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.41 1993 Electrosource, Inc., Loan/Warrant Program,
Warrant (with schedule) (filed as Exhibit 10.57 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.42 Offshore Securities Subscription Agreement between
Williams DeBroe, a British institutional buyer, and
Electrosource, Inc., dated June 13, 1994 (filed as an
Exhibit to the Company's July 21, 1994, Form 8-K and
incorporated herein by reference).
10.43 Representative Subscription Agreement entered into
by each participant with Electrosource, dated on the
date of execution (filed as an Exhibit to the Company's
October 18, 1994, Form 8-K and incorporated herein by
reference).
10.44 Offshore Securities Subscription Agreement between
Rosehouse Ltd., a Bermuda-based institutional buyer,
and Electrosource, Inc., dated January 25, 1995 (filed
as an Exhibit to the Company's January 26, 1995, Form 8-
K and incorporated herein by reference).
10.45 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated March 9, 1995
(filed as an Exhibit to the Company's March 10, 1995,
Form 8-K and incorporated herein by reference).
10.46 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
Buyer with Form of Convertible Debenture, and
Electrosource, Inc., dated April 4, 1995 (filed as
Exhibits to the Company's April 12, 1995, Form 8-K and
incorporated hereby by reference).
10.47 Warrant to purchase up to 54,237 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated April
5, 1995 (filed as an Exhibit to the Company's April 12,
1995, Form 8-K and incorporated herein by reference).
10.48 Letter Agreement between Rosehouse Ltd., a
Bermuda-based institutional buyer, and Electrosource,
Inc., dated July 25, 1995 (filed as Exhibit 4.7 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
10.49 Letter Agreement between ACM Advisors of
Zurich, Switzerland, and Electrosource, Inc., dated
July 27, 1995 (filed as Exhibit 4.8 to Electrosource,
Inc., Quarterly Report on Form 10-Q for quarter ended
June 30, 1995, and incorporated hereby by reference).
10.50 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated July 27, 1995
(filed as Exhibit 4.10 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
10.51 Form of 10% Convertible Debentures entered
into by each participant with Electrosource, Inc.,
dated July 27, 1995 (filed as Exhibit 4.9 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
10.52 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.5 to Electrosource, Inc., Quarterly
Report of Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
10.53 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.6 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
10.54 Warrant to purchase up to 250,000 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated July
27, 1995 (filed as Exhibit 4.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
10.55 Representative Subscription Agreement entered
into by each participant with Electrosource, Inc.,
dated on the date of execution (filed as Exhibit 4.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference.).
10.56 Letter Agreement between Shoreline Pacific,
an institutional buyer, and Electrosource, Inc., dated
October 3, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
10.57 Offshore Securities Subscription Agreement
between participants and Electrosource, Inc., dated
October 10, 1995 (filed as Exhibit 4.3 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.58 Letter Agreement between Shoreline Pacific,
an institutional buyer, and Electrosource, Inc., dated
October 25, 1995 (filed as Exhibit 4.4 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.59 Offshore Securities Subscription Agreement
between participants and Electrosource, Inc., dated
November 29, 1995 (filed as Exhibit 4.5 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.60 Form of 8% Convertible Debentures entered
into by each participant with Electrosource, Inc.,
dated November 29, 1995 (filed as Exhibit 4.6 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.61 Subcontract Number 21614-TTS-7 between AECT, Inc.,
and Electrosource, Inc., dated March 21, 1994, (filed
as Exhibit 10.43 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1994,
and incorporated herein by reference).
10.62 Purchase Agreement between Quantum Energy Systems
and Technology LLC and Electrosource, Inc., dated
November 14, 1994, (filed as Exhibit 10.44 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.63 Equipment Lease Agreement dated April 6, 1995
between Ally Capital Corporation and Electrosource,
Inc. (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference.
10.64 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to Ally
Capital Management Inc. on April 17, 1995 (filed as
Exhibit 4.1 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference.
10.65 Equipment Lease Agreement dated September 7, 1995,
between Salem Capital Corporation and Electrosource,
Inc.
10.66 Warrant to purchase up to 90,000 shares of
Electrosource, Inc., Common Stock, issued to
Oppenheimer & Co., Inc. (Investment Bankers) dated
April 28, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by
reference).
10.67 National Association of Securities Dealers
Automated Quotation System Oral Hearing Notification
(filed as an Exhibit to the Company's December 22,
1995, Form 8-K and incorporated herein by reference).
10.68 Development Agreement and Agreement for
Purchase of Machinery and Supplies between
Electrosource, Inc., and Charles L. Mathews
("Contractor") dated November 1, 1995.
10.69 Purchase Order Between Chrysler Corporation
and Electrosource, Inc., dated January 9, 1996.
10.70 Agreement for Aircraft Starting Battery
Distribution between Electrosource, Inc., and Horizon
Aviation, Inc. dated February 13, 1996.
10.71 Joint Development Agreement between
Electrosource, Inc., and Black & Decker (U.S.) Inc.,
dated March 8, 1996.
The following exhibits filed under Paragraph 10 of Item 601 are
the Company's compensation plans and arrangements:
10.72 Form of Director Indemnification Agreement (filed as Exhibit
10.8 to Electrosource, Inc., Annual Report on Form 10-K
for the period ended December 31, 1987, and
incorporated herein by reference).
10.73 Director Indemnification Agreement dated January 16,
1992, between Electrosource, Inc., and Charles Mathews
(filed as Exhibit 10.26 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1991, and incorporated herein by reference).
10.74 Director Indemnification Agreement dated January
16, 1992, between Electrosource, Inc., and Benny E.
Jay (filed as Exhibit 10.27 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.75 Director Indemnification Agreement dated February
12, 1992, between Electrosource, Inc., and Donald
Thomas (filed as Exhibit 10.28 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.76 Director Indemnification Agreement dated February
12, 1992, between Electrosource, Inc., and Robert
Trembath (filed as Exhibit 10.29 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.77 Director Indemnification Agreement dated February
12, 1992, between Electrosource, Inc., and John Malone
(filed as Exhibit 10.30 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1991, and incorporated herein by reference).
10.78 Director Indemnification Agreement dated November
4, 1992, between Electrosource, Inc., and Thomas S.
Wilson (filed as Exhibit 10.41 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1992, and incorporated herein by
reference).
10.79 Director Indemnification Agreement dated April
17, 1993, between Electrosource, Inc., and John H.
Akin (filed as Exhibit 10.55 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1993, and incorporated herein by
reference).
10.80 Director Indemnification Agreement dated June 1,
1993, between Electrosource, Inc., and Frank Butler
(filed as Exhibit 10.56 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1993, and incorporated herein by reference).
10.81 Director Indemnification Agreement dated September 1, 1993,
between Electrosource, Inc., and Dr. Norman Hackerman (filed as
Exhibit 10-57 to Electrosource, Inc., Annual Report on
Form 10-K for the period ended December 31, 1993, and
incorporated herein by reference).
10.82 Director Indemnification Agreement dated September 1, 1993,
between Electrosource, Inc., and Todd Templeton (filed as Exhibit
10-58 to Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1993, and incorporated
herein by reference)
10.83 Director Indemnification Agreement dated June 23,
1994, between Electrosource, Inc., and Michael G.
Semmens, (filed as Exhibit 10.72 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.84 Director Indemnification Agreement dated November
2, 1994, between Electrosource, Inc., and Richard S.
Williamson, (filed as Exhibit 10.73 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.85 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and Nathan
Morton (filed as Exhibit 10.2 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.86 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and William R.
Graham (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.87 1987 Stock Option Plan of Electrosource, Inc.
(filed as Annex A, pages 44 to 48 of Company's
Information Statement filed October 16, 1987, and
incorporated herein by reference).
10.88 Amendment No. 1 to 1987 Stock Option Plan of
Electrosource, Inc., dated February 19, 1992 (filed
as Exhibit 4.3 to Company's Registration Statement on
Form S-8 [Registration Statement No. 33-49049] filed
June 30, 1992, and incorporated herein by reference).
10.89 Amendment No. 2 to 1987 Stock Option Plan of
Electrosource, Inc. (filed as Exhibit 10.36 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.90 1988 Non-Employee Director Option Plan of
Electrosource, Inc. (filed as Exhibit 4.2 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-22223] filed June 7, 1988, and
incorporated herein by reference).
10.91 Amendment No. 1 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.3 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed July 12, 1990, and
incorporated herein by reference).
10.92 Amendment No. 2 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.4 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed June 30, 1992, and
incorporated herein by reference).
10.93 Amendment No. 3 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.40 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.94 Amendment No. 4 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.3 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995, and incorporated
herein by reference).
10.95 1993 Non-Employee Consultant Stock Option Plan for
Electrosource, Inc. (filed as Exhibit 4.2 to
Registration Statement on Form S-8 [Registration
Statement No. 33-65386]).
10.96 1994 Stock Option Plan of Electrosource, Inc.
(filed as Exhibit 10.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.97 Consulting Agreement dated June 26, 1989, between
Electrosource, Inc., and R. J. Blanyer (filed as
Exhibit 10.18 to Post-Effective Amendment and
incorporated herein by reference).
10.98 Consulting Agreement dated July 1, 1989, between
Electrosource, Inc., and Charles Mathews (filed as
Exhibit 10.19 to Post-Effective Amendment and
incorporated herein by reference).
10.99 Consulting Agreement dated November 1, 1995
between Electrosource, Inc., and Charles L. Mathews.
10.100 Consulting Agreement effective December 30, 1991
between Electrosource, Inc., and Mark A. Huse (filed
as Exhibit 10.22 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1991,
and incorporated herein by reference).
10.101 Consulting Agreement dated September 1, 1992,
between Electrosource, Inc., and Norman Hackerman
(filed as Exhibit 10.45 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.102 Consulting Agreement dated August 1, 1993,
between Electrosource, Inc., and Norman Hackerman,
(filed as Exhibit 10.71 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.103 Agreement dated December 19, 1995, between
Electrosource, Inc., and Robert M. Trembath.
10.104 Consulting Agreement dated January 1, 1993,
between Electrosource, Inc., and Robert Holden (filed
as Exhibit 10.46 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.105 Consulting Agreement dated January 1, 1993,
between Electrosource, Inc., and Wilburn B. Laubach
(filed as Exhibit 10.48 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.106 Consulting Agreement dated February 5, 1992,
between Electrosource, Inc., and John D. Malone (filed
as Exhibit 10.49 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.107 Consulting Agreement dated March 1, 1992,
between Electrosource, Inc., and C. R. Kline, Jr.
(filed as Exhibit 10.47 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.108 Consulting Agreement dated August 11, 1992,
between Electrosource, Inc., and Ralph E. White (filed
as Exhibit 10.52 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.109 Letter Agreement dated August 12, 1993, between
Electrosource, Inc. and John Akin (filed as Exhibit
10.50 to Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference).
10.110 Consulting Agreement dated July 6, 1994, between
Electrosource, Inc., and John M. Lushetsky, (filed as
Exhibit 10.45 to Electrosource, Inc., Annual Report on
Form 10-K for the period ended December 31, 1994, and
incorporated herein by reference).
10.111 Consulting Agreement dated September 1, 1995,
between Electrosource, Inc., and Liviakis Financial
Communications, Inc. (filed as Exhibit 10.3 to Form 10-
Q for the quarter ended September 30, 1995, and
incorporated herein by reference).
10.112 Offer of Employment dated October 11, 1994,
between Electrosource, Inc., and Michael L. Weinstein,
(filed as Exhibit 10.74 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.113 Separation, Release and Indemnity Agreement dated
September 23, 1995, between Electrosource, Inc., and
Michael L. Weinstein.
10.114 Offer of Employment dated May 26, 1994, between
Electrosource, Inc., and Michael G. Semmens (filed as
an Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.115 Consulting Agreement dated August 1, 1995,
between Donald C. Perriello and Electrosource, Inc.
10.116 Consulting Agreement dated December 1, 1995,
between William Griffin and Electrosource, Inc.
10.117 Consulting Agreement dated March 4, 1995, between
Beacon Advisors, Inc. (Langhorne Reid, III) and
Electrosource, Inc.
10.118 Consulting Agreement dated January 1, 1996,
between Jack J. Guy and Electrosource, Inc.
10.119 Consulting Agreement dated Novemer 15, 1994,
between Richard C. Baker dba Talbot Management Services
and Electrosource, Inc.
24.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule
* Confidential treatment of certain information contained in
this Agreement has been requested pursuant to Rule 406, and
the Agreement has therefore been omitted and filed
separately with the Commission.
(b) Reports on Form 8-K.
Reports on Form 8-K filed during the quarter ended December 31, 1995 were:
October 10, 1995, Restated Financial Statements of December 31,
1994, to include recent developments.
December 22, 1995, Notice of Intent to Terminate Distributorship
Agreement between Mitsui Engineering and Shipbuilding Co. Ltd
and Electrosource, Inc., dated December 5, 1995.
December 22, 1995, National Association of Securities Dealers
Automatic Quotation System Oral Hearing Notification.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ELECTROSOURCE, INC.
By: /S/
Michael G. Semmens, President
Date: March 28, 1996
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
/S/ President, Director March 28, 1996
Michael G. Semmens (Chief Executive Officer)
/S/ Director March 28, 1996
William R. Graham
/S/ Director March 28, 1996
Norman Hackerman
/S/ Director March 28, 1996
John D. Malone
/S/ Director March 28, 1996
Charles L. Mathews
/S/ Director March 28, 1996
Nathan Morton
/S/ Director March 28,1996
Richard S. Williamson
/S/ Director March 28, 1996
Thomas S. Wilson
/S/ Controller/Treasurer March 28, 1996
Mary Beth Koenig (Principal Accounting Officer)
ELECTROSOURCE, INC.
Audited Financial Statements
December 31, 1995
Audited Financial Statements
Report of Independent Auditors F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Shareholders' Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Electrosource, Inc.
We have audited the accompanying balance sheets of Electrosource,
Inc., as of December 31, 1995 and 1994, and the related
statements of operations, shareholders' equity (deficit), and
cash flows for each of the three years in the period ended
December 31, 1995. Our audits also included the financial
statement schedule listed in the Index at Item 14(a). These
financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Electrosource, Inc. at December 31, 1995, and 1994, and the
results of its operations and its cash flows for each of the
three years in the period ended December 31, 1995, in conformity
with generally accepted accounting principles. Also, in our
opinion, the related financial statement schedule, when
considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects the information
set forth therein.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully
described in Note N, the Company has incurred recurring operating
losses and has experienced cash flow shortages at various times.
Management's plans in regard to these matters are also described
in Note N. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result
from the outcome of this uncertainty.
Austin, Texas
March 8, 1996, except for Note O,
as to which the date is March 18, 1996
ELECTROSOURCE, INC.
BALANCE SHEETS
December 31
1995 1994
ASSETS
CURRENT ASSETS
Cash and cash equivalents........................ $ 2,083,032 $ 2,193,290
Trade receivables (net of allowance for doubtful
accounts of $36,223 in 1995 and $7,500 in 1994) 1,535,749 2,478,311
Inventories...................................... 404,755 231,656
Prepaid expenses and other assets................ 245,133 24,651
TOTAL CURRENT ASSETS............................... 4,268,669 4,927,908
PROPERTY AND EQUIPMENT, Net........................ 6,009,334 2,632,049
INTANGIBLE ASSETS
Technology license agreement..................... 3,048,674 3,048,674
Purchased technology............................. 2,412,886
Less: Accumulated amortization.................. (1,613,973) (1,291,104)
NET INTANGIBLE ASSETS.............................. 3,847,587 1,757,570
RESTRICTED CASH.................................... 744,824
OTHER ASSETS....................................... 406,787
TOTAL ASSETS $15,277,201 $ 9,317,527
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable................................ $ 876,746 $ 1,221,432
Accrued salaries and employee benefits.......... 306,579 449,735
Other accrued liabilities....................... 931,341 203,369
Current portion of capital lease obligations.... 598,420 21,760
Deferred revenue................................ 1,000,000
TOTAL CURRENT LIABILITIES......................... 2,713,086 2,896,296
CONVERTIBLE NOTES PAYABLE......................... 8,020,000 3,800,000
TECHNOLOGY LICENSE PAYABLE........................ 2,178,014 3,271,343
CAPITAL LEASE OBLIGATIONS (less current portion).. 1,126,252 35,337
COMMITMENTS AND CONTINGENCIES (Note H)
SHAREHOLDERS' EQUITY (DEFICIT)
Common Stock, par value $0.10 per share; authorized
50,000,000 shares, shares issued and outstanding:
30,137,826 in 1995 and 15,134,463 in 1994..... 3,013,782 1,513,446
Preferred Stock, par value $1.00 per share;
authorized 10,000,00 shares, no shares issued
or outstanding................................
Warrants........................................
Paid in capital................................. 33,685,800 15,356,043
Accumulated deficit............................. (35,459,733) (17,554,938)
1,239,849 (685,449)
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT) $15,277,201 $ 9,317,527
See notes to financial statements.
ELECTROSOURCE, INC.
STATEMENTS OF OPERATIONS
For the years ended December 31
1995 1994 1993
REVENUES
Battery sales...................... $ 1,195,597 $ 377,666 $
Project revenue.................... 989,433 2,901,690 2,967,097
License fees....................... 1,000,000 800,000
Revenue from joint venture partner. 410,414 339,761
Royalty revenue.................... 50,000 50,000
Interest income.................... 93,354 74,400 15,712
3,278,384 4,614,170 3,372,570
COSTS and EXPENSES
Manufacturing...................... 9,365,660 2,210,748
Selling, general and administrative 6,329,776 4,485,650 1,586,829
Research and development.......... 3,454,578 1,932,685 1,530,132
Technology license and royalties... 110,000 3,929,350 110,000
Depreciation and amortization...... 1,167,461 446,602 272,885
Interest expense................... 635,704 72,000 70,000
21,063,179 13,077,035 3,569,846
LOSS BEFORE INCOME TAXES............. (17,784,795) (8,462,865) (197,276)
INCOME TAXES (FOREIGN)............... 120,000 80,000
NET LOSS............................. $(17,904,795) $(8,542,865) $(197,276)
LOSS PER SHARE....................... $(0.85) $(0.61) $(0.03)
AVERAGE SHARES OUTSTANDING........... 21,009,422 14,106,358 6,806,901
See notes to financial statements.
ELECTROSOURCE, INC.
<TABLE>
STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
For the years ended December 31, 1995, 1994, and 1993
<CAPTION>
Total
Shareholders'
Common Preferred Paid In Accumulated Equity
Stock Stock Capital (Deficit) (Deficit)
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1993............... $ 614,680 $ 1,280,000 $ 9,341,218 $ (8,814,797) $ 2,421,101
Preferred stock conversion(6,400,000 shs) 640,000 (1,280,000) 640,000
Warrants exercised(452,000 shares)....... 45,200 846,800 892,000
Stock options exercised(174,000 shares) 17,400 189,156 206,556
Net loss for year ended December 31, 1993 (197,276) (197,276)
Balance at December 31, 1993............. 1,317,280 11,017,174 (9,012,073) 3,322,381
Stock options exercised(128,166 shares).. 12,816 131,189 144,005
Warrants exercised(148,000 shares)....... 14,800 318,200 333,000
Shares issued in Regulation S offering
(1,200,000 shares)..................... 120,000 2,551,556 2,671,556
Shares issued in Regulation D offering
(485,500 shares)....................... 48,550 1,337,924 1,386,474
Net loss for year ended December 31, 1994 (8,542,865) (8,542,865)
Balance at December 31, 1994............. 1,513,446 15,356,043 (17,554,938) (685,449)
Shares issued in Regulation S offering
(2,051,282 shares).................... 205,128 2,794,872 3,000,000
Shares issued in Regulation S offering
(500,000 shares)....................... 50,000 950,000 1,000,000
Shares issued for Technology License
(666,664 shares)....................... 66,666 1,026,664 1,093,330
Stock options exercised(119,500 shares).. 11,950 131,595 143,545
Conversion of Convertible Notes Payable
(6,171,227 shares)..................... 617,123 7,266,104 7,883,227
Shares issued for consulting services
(1,360,000 shares)..................... 136,000 1,332,800 1,468,800
Shares issued in Regulation D offering
(806,333 shares)....................... 80,633 806,333 886,966
Shares issued in Regulation S offering
(1,170,357 shares)..................... 117,036 1,242,964 1,360,000
Shares issued for equipment and purchased
technology(2,158,000 shares)........... 215,800 2,778,425 2,994,225
Net loss for year ended December 31, 1995 (17,904,795) (17,904,795)
Balance at December 31, 1995............. $3,013,782 $33,685,800 $(35,459,733) $ 1,239,849
</TABLE>
See notes to financial statements.
ELECTROSOURCE, INC.
STATEMENTS OF CASH FLOWS
For the years ended December 31
1995 1994 1993
OPERATING ACTIVITIES
Net loss.......................... $(17,904,795) $(8,542,865) $ (197,276)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Common Stock issued for
Technology License.............. 3,271,343
Common Stock issued for
consulting services............. 1,468,800
Depreciation...................... 844,592 257,782 84,065
Amortization of intangible
assets.......................... 322,869 188,820 188,820
Amortization of deferred
financing costs................. 104,891
Amortization of prepaid
royalties....................... 75,000
Interest expense converted
to note payable................. 190,000
Decrease in deferred revenue...... (1,000,000)
Loss on sale of equipment......... 32,826
Changes in operating assets
and liabilities:
(Increase)/decrease in trade
receivables..................... 942,562 (39,929) (1,432,451)
Increase in inventories........... (173,099) (231,656)
(Increase)/decrease in prepaid
expenses and other assets....... (220,482) 12,429 (20,568)
Increase in accounts payable,
accrued salaries and employee
benefits and accrued liabilities 240,130 1,280,005 413,983
NET CASH USED IN OPERATING
ACTIVITIES ......................... (15,184,532) (3,804,071) (855,601)
INVESTING ACTIVITIES
Purchases of property
and equipment, net............. (3,640,537) (2,603,218) (122,569)
CASH USED IN INVESTING
ACTIVITIES......................... (3,640,537) (2,603,218) (122,569)
FINANCING ACTIVITIES
Proceeds from convertible
notes payable.................. 12,780,000 3,800,000 550,000
Payment of notes payable
and capital lease obligations.. (330,490) (735,179) (4,015)
Proceeds from issuance
of common stock................ 6,390,511 4,535,035 1,098,556
Proceeds from sale and
leaseback transactions......... 1,998,064
Debt issuance and lease
financing costs................ (1,378,450)
Increase in restricted cash...... (744,824)
CASH PROVIDED BY FINANCING
ACTIVITIES......................... 18,714,811 7,599,856 1,644,541
INCREASE/(DECREASE) IN CASH
AND CASH EQUIVALENTS............... (110,258) 1,192,567 666,371
Cash and cash equivalents at
beginning of period.............. 2,193,290 1,000,723 334,352
CASH AND CASH EQUIVALENTS AT
END OF PERIOD...................... $ 2,083,032 $ 2,193,290 $ 1,000,723
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
ELECTROSOURCE, INC.
December 31, 1995
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Electrosource, Inc. (the "Company") was
incorporated as a Delaware corporation on June 3, 1987. The
Company designs and manufactures advanced lead-acid batteries for
use in four major markets: motive power, portable power, power
management, and starting applications. The majority of revenue
recognized through December 31, 1995, has been generated from
domestic customers.
During 1993, the Company and BDM Technologies, Inc. ("BDM"),
under a strategic alliance, formed Horizon Battery Technologies,
Inc. ("HBTI") in order to establish and operate a limited
capability facility for manufacturing and producing advanced
technology batteries. Each partner maintained a 50% interest.
During 1994, the Company finalized a Technology License Agreement
with BDM and obtained an exclusive license to use certain
technologies under development by BDM for the manufacture of
batteries. In addition, the Company purchased BDM's interest in
HBTI for 100,000 shares of Common Stock (See also Note G).
Development Stage Company: Prior to 1995, the Company had been a
"development stage company" for financial reporting purposes. In
1995, the Company increased activity at its San Marcos, Texas
manufacturing facility and has earned significant revenue from
its intended operations. Accordingly, the Company no longer
reports as a "development stage company".
Cash and Cash Equivalents: The Company's cash and cash
equivalents consist of cash and short-term investments with a
maturity of three months or less when purchased.
Inventories: Inventories are stated at the lower of cost (first-
in-first-out method) or market value.
Property and Equipment: Property and equipment are recorded at
cost. The Company has also capitalized equipment in accordance
with the terms of related leases. Depreciation of property and
equipment (including amounts recorded under capitalized leases)
is computed using the straight-line method over the estimated
useful lives of the assets or the respective lease term, ranging
from 3 to 10 years.
Technology License Agreement and Purchased Technology: The
Company has been assigned all license rights relating to
coextruded wire by the original licensee (See Note D). The cost
of this license is being amortized over the legal life of the
patent on the technology (17 years). On November 1, 1995, the
Company obtained intellectual property rights (purchased
technology) developed under a Research and Development Agreement
(See Notes D and J). The cost of this purchased technology is
being amortized over three years. On an ongoing basis,
management reviews the valuation and amortization of its
intangibles, taking into consideration any events or
circumstances which might have diminished their value.
Stock Compensation: The Company accounts for its stock
compensation arrangements under the provisions of APB 25,
"Accounting for Stock Issued to Employees," and intends to
continue to do so.
Earnings (Loss) Per Share: Earnings (loss) per share is based on
the average number of shares of common stock outstanding during
each period. Since the Company has experienced net operating
losses, outstanding options and warrants to purchase common stock
have an antidilutive effect. Therefore, options and warrants
were not included in the earnings (loss) per share calculation.
Business Segments: The Company is engaged in the manufacture of
advanced lead-acid, rechargeable storage batteries and the
development of related processes and technologies. Accordingly,
the Company considers itself to be operating in one business
segment.
Income Taxes: The Company reports income taxes in accordance
with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes" ("SFAS 109"). SFAS 109 requires that deferred tax
assets and liabilities be determined based on the difference
between the financial statement and tax bases of assets and
liabilities using enacted tax rates in effect for the years in
which the differences are expected to reverse.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Reclassification: Certain reclassifications have been made to
the 1994 financial statements to conform with the 1995
presentation.
NOTE B - INVENTORIES
1995 1994
Raw materials $289,725 $217,675
Work in progress 80,729 13,981
Finished goods 34,301
$404,755 $231,656
NOTE C - PROPERTY AND EQUIPMENT
1995 1994
Office equipment $ 739,677 $ 390,546
Production equipment 4,157,700 1,379,206
Lab equipment 1,182,472 423,799
Leasehold improvements 1,468,384 1,132,805
7,548,233 3,326,356
Less - accumulated depreciation
and amortization (1,538,899) (694,307)
Total Property and Equipment $6,009,334 $2,632,049
Production equipment of $2,067,895 has been capitalized in
accordance with the terms of related leases at December 31, 1995.
Accumulated depreciation for such equipment was $305,525 at
December 31, 1995.
NOTE D - INTANGIBLE ASSETS
Technology License Agreement
The Company had, at its inception, obtained an exclusive
sublicense for the development, manufacture, and commercial
exploitation of coextruded wire for lead-acid battery
applications. In May 1990, the licensee, with the consent of the
licensor, assigned the rights under the original License
Agreement to the Company. This assignment provides the Company
with unrestricted applications of the licensed technology
and effectively terminates the Sublicense Agreement between
the licensee and the Company. Previous to this assignment, the
Company's use of the technology was limited specifically to products
and components associated with lead-acid, storage batteries. The Company
is responsible for the maintenance and administration of the licensed
patent and has an obligation to pay the original licensee a royalty of
four percent on all technology sales unrelated to lead-acid, storage
batteries for the term of the License Agreement. A minimum annual
royalty of $10,000 is due for a five year period beginning on the date
of the assignment. Such royalty payments were to have begun in May 1991,
but the licensee agreed to defer each payment for two years. The
deferred minimum royalty payments accrue interest at the rate of
8.5 percent per year, from the original due date until paid. The
Company is obligated to pay the licensor a royalty of one-half
percent of net sales of coextruded wire and wire-related
products, with a minimum annual royalty of $100,000.
Purchased Technology
On November 1, 1995, the Company completed a research and
development agreement with the Electric Power Research Institute
("EPRI") (See Note J). In accordance with the terms of a
November 1995 amendment to the agreement, the Company issued
2,158,000 shares of Common Stock in exchange for the transfer of
intellectual property rights (purchased technology) and the
transfer of title to certain equipment which had been purchased
by EPRI in connection with research activity undertaken by the
Company. The shares were valued at $2,994,225; recorded as
$581,339 to equipment and $2,412,886 to purchased technology. In
addition, pursuant to the terms of such agreement, certain member
utilities of EPRI have elected to receive royalties at the rate
of one-half of one percent on sales of products containing
licensed technology and on other revenues derived by the Company
from license fees, joint ventures and other arrangements
involving the licensed technology.
NOTE E - RESTRICTED CASH
In connection with lease transactions completed during 1995, the
Company was required to secure the obligations by establishing
standby letters-of-credit in the amount of $744,824. These
letters-of-credit are collateralized by certificates of deposit
of an equal amount.
NOTE F - CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable consist of the following:
1995 1994
Convertible Notes - 5% $3,990,000 $3,800,000
Convertible Notes - 10% 250,000
Convertible Notes - 8% 3,780,000
$8,020,000 $3,800,000
In October 1994, the Company entered into a Convertible
Promissory Note with Mitsui Engineering and Shipbuilding Co.,
Ltd. ("MES") for $3,800,000 maturing in October, 2004. The Note
carries an interest rate of five percent per annum on the unpaid
principal and interest is due and payable semi-annually in the
form of additional notes payable. A note payable in the amount of
$190,000 was issued in October, 1995 for interest for the year
then ended. In December 1995, the Company received notification
from MES of its intent to terminate its Distribution Agreement
and to settle all outstanding financial matters with the Company.
In March 1996, the Company completed a Termination Agreement with
MES which had no material adverse effects on the Company (See
Note O).
In April 1995, the Company issued $6,000,000 of 10% Convertible
Debentures (the "April 1995 Debentures") resulting in net
proceeds to the Company of $5,375,000. The April 1995 Debentures
are convertible into Common Stock at a conversion price equal to
80% of the average closing price of the Common Stock for the five
business days immediately preceding such time as the debentures
are converted and mature on April 5, 1997. Interest is payable
quarterly. In addition, warrants to purchase 54,237 shares of
Common Stock were issued with an exercise price of $3.6875 per
share exercisable until April 5, 2000. As of December 31, 1995,
April 1995 Debentures with a total principal amount of $5,750,000
were converted into 3,795,447 shares of Common Stock. Delisting
of the Company's Common Stock in the Over-the-Counter Market
would be an Event of Default under the terms of the April 1995
Debentures and could trigger a requirement to repay the
debentures immediately (See Note N).
In July 1995, the Company issued $3,000,000 of 10% Convertible
Debentures (the "July 1995 Debentures") resulting in net proceeds
to the Company of $2,700,000. The July 1995 Debentures were
convertible into Common Stock at a price equal to 80% of the
closing price of the Common Stock on the business day immediately
preceding such time as the debentures were converted, not to
exceed 120% of the closing bid price on July 27, 1995 of $1.53.
In addition, warrants to purchase 1,000,000 shares of Common
Stock at a price of $3.00 per share, and an additional 1,000,000
shares at a price of $4.00 per share, exercisable until January
27, 1998, were issued to an agent of the holders of the July 1995
Debentures. In addition, warrants to purchase 250,000 shares of
Common Stock at a price of $1.53 per share, the closing bid price
on July 27, 1995, exercisable until July 27, 2000, were issued to
another agent for this transaction. As of December 31, 1995,
July 1995 Debentures with a principal amount of $3,000,000 were
converted into 2,375,780 shares of Common Stock.
During November 1995, the Company issued $3,780,000 of 8%
Convertible Debentures (the "November 1995 Debentures") resulting
in net proceeds to the Company of $3,477,600. The November 1995
Debentures are convertible into Common Stock at a price equal to
75% of the average closing price of the Common Stock for the five
business days immediately preceding such time as the debentures
are converted. The November 1995 Debentures may be converted
beginning in January 1996. In addition, warrants to purchase
56,700 shares of Common Stock at a price of $1.56 per share,
exercisable until November 10, 1997, were issued to an agent of
the holders of the November 1995 Debentures.
Cash interest paid by the Company was approximately $342,000,
$72,000 and $70,000 in 1995, 1994 and 1993, respectively.
NOTE G - TECHNOLOGY LICENSE PAYABLE
Through its funding to HBTI for development of a low rate initial
production line for the Horizon battery, BDM owned the rights to
certain technologies for the manufacture of such batteries.
During 1994, the Company finalized a Technology License Agreement
with BDM. Under the terms of this agreement, the Company
obtained an exclusive license to use certain technologies under
development by BDM for the manufacture of batteries. The Company
agreed to pay BDM: $80,000 cash; issue 1,700,000 shares of
Common Stock in thirty-six equal installments; issue 200,000
additional shares of Common Stock if the Company decides to
maintain the license beyond the original three year term; grant
1,000,000 options to purchase Common Stock exercisable at $4.00
per share; and buy BDM's interest in HBTI for 100,000 shares of
Common Stock. The Company recorded an expense of $3,819,350 in
1994 for this transaction based on the fair market value of the
various components of the transaction. This was treated as an
expense as the technological feasibility of the manufacturing
technology licensed had not been completely proven and the
Company at that time had no alternative future uses for this
technology. During 1995, the Company issued 666,664 shares of
Common Stock to BDM under the terms of this agreement.
NOTE H - COMMITMENTS AND CONTINGENCIES
The Company leases various plant and office facilities, and
production, office and warehouse equipment under operating and
capital leases expiring between 1997 and 2000. Future minimum
annual rentals under lease arrangements at December 31, 1995 are
as follows:
Capital Leases
Fiscal Year Total Sale/Leasebacks Other Operating Leases
1996 $ 772,054 $ 751,342 $20,712 $ 812,738
1997 764,637 751,342 13,295 628,829
1998 348,800 344,285 4,515 630,789
1999 90,576 90,576 117,175
2000 67,932 67,932 40,934
2,043,999 2,005,477 38,522 $2,230,465
Less imputed
interest (319,327) (314,675) (4,652)
Present value of
capital lease
obligations $1,724,672 $1,690,802 $33,870
During 1995, the Company completed two agreements to sell and
lease back $1,998,064 of capital equipment. The leases are
collateralized by letters-of-credit in the amount of $663,220.
The agreements also provide the lessor with an option to extend
the lease term to four years, at reduced monthly rental rates, at
the end of the first year. In addition, the amount of the
letters-of-credit can be reduced if the Company achieves six
consecutive quarters of profitability or completes an offering of
securities with net proceeds of $20 million or more. In
connection with this transaction, the lessor was granted warrants
to purchase 75,000 shares of Common Stock at an exercise price of
$4.00 per share, exercisable until April 17, 2000. Other leased
equipment is collateralized by a letter-of-credit in the amount
of $81,604.
Rental expense for operating leases for the years ended December
31, 1995, 1994 and 1993 was $857,982, $496,645 and $105,746,
respectively.
In September 1995, the Company engaged Liviakis Financial
Communications, Inc. ("Liviakis") to provide consulting services
for a two year period. As consideration for these services, the
Company issued 1,360,000 unregistered, restricted shares of
Common Stock, which have been valued at $1,468,800 and charged as
an expense in 1995, and agreed to issue an additional 120,000
unregistered, restricted shares of Common Stock in six
installments over a two year period which are being expensed as
earned over the respective period.
Trade receivables are composed of balances due from a limited
customer base as the Company only recently emerged from the
development stage. Although the Company has a concentration of
credit risk, the Company has not experienced significant
collection losses from these respective customers.
The Company is involved in certain contingencies incidental to
its business. While the ultimate results of these matters cannot
be predicted with certainty, management does not expect them to
have a material adverse effect on the financial position of the
Company.
NOTE I - SHAREHOLDERS' EQUITY
The Company has a 1987 Stock Option Plan, a 1988 Non-Employee
Director Stock Option Plan, a 1993 Non-Employee Consultant Stock
Option Plan and a 1994 Stock Option Plan. All plans provide for
the grant/award of options at the discretion of the
Compensation/Stock Option Committee to purchase shares of the
Company's Common Stock at a price not less than 100% of the
market price of such stock on the date the option is granted.
These options become exercisable in three stages beginning six
months after the date of grant and expire up to ten years from
the date of grant. Total option activity for the three years
ended December 31, 1995 was as follows:
Number
of Shares Price Per Share ($)
Options outstanding January 1, 1993 850,000 1.06 - 1.87
Granted 475,000 2.31 - 4.62
Exercised (173,999) 1.06 - 2.31
Surrendered (40,000) 1.06
Options outstanding December 31, 1993 1,111,001 1.06 - 4.62
Granted 1,090,000 2.87 - 3.75
Exercised (128,166) 1.06 - 1.87
Surrendered (80,000) 4.00
Options outstanding December 31, 1994 1,992,835 1.06 - 4.62
Granted 755,000 1.37 - 3.37
Exercised (119,500) 1.06 - 2.31
Surrendered (248,000) 1.87 - 3.50
Options outstanding December 31, 1995 2,380,335 1.06 - 4.62
Options exercisable December 31, 1995 1,476,000
Available for grant, December 31, 1995 1,338,000
On January 29 and February 26, 1993, the Company entered into
several ten percent notes payable with several individuals with
warrants to purchase 440,000 shares of Common Stock for a
purchase price of $2.25 per share with an exercise period ending
on August 1, 1994. 252,000 and 148,000 of these warrants were
exercised during 1993 and 1994, respectively. The remainder of
the warrants expired in 1994.
In September and October 1994, the Company sold 485,500 shares of
Common Stock under a Regulation D offering. Warrants attached to
this offering allow the purchase of an equal number of shares.
In accordance with the terms of a 1995 private placement of
shares to these warrant holders, one-half of the warrants may be
exercised at a price of $2.50 per share and one-half may be
exercised at a price of $3.50 per share reduced from $4.50 and
$5.50 per share, respectively. In addition, the expiration date
of the warrants was extended to September 1997.
The Company issued numerous warrants in 1995 associated with
various debt and equity financings. The following table
represents a summary of warrant activity for the three years
ended December 31, 1995:
Warrants Price Per Warrant ($)
Warrants outstanding January 1, 1993 200,000 1.62
Granted 440,000 2.25
Exercised (452,000) 1.62 - 2.25
Warrants outstanding December 31, 1993 188,000 2.25
Granted 485,500 2.50 - 3.50
Exercised (148,000) 2.25
Expired (40,000) 2.25
Warrants outstanding December 31, 1994 485,500 2.50 - 3.50
Granted 2,458,437 1.53 - 4.00
Warrants outstanding December 31, 1995 2,943,937 1.53 - 4.00
At December 31, 1995, shares of the Company's Common Stock were
reserved as follows for issuance under:
Stock option plans 3,718,335
MES Note Payable conversion 740,000
BDM transaction 2,333,336
April and November 1995 Debentures 2,348,196
Exercise of warrants 2,943,937
Liviakis consulting agreement 120,000
12,203,804
NOTE J - PROJECT AND BATTERY REVENUE
The Company generated project revenue of approximately $2,056,000
and $3,000,000 in 1994 and 1993, respectively, under an Agreement
with EPRI for continuing efforts to develop and commercialize the
Company's proprietary advanced lead-acid battery. On November 1,
1995, the Company completed its Research and Development
Agreement with EPRI (See Note D).
In August 1994, Chrysler awarded the Company a $1,600,000
contract to custom fit the Horizon battery to prototypes of the
automaker's NS-series electric mini van. The Company recorded
approximately $778,000 and $846,000 in project revenue under this
agreement in 1995 and 1994, respectively. Additionally, during
1995 approximately 50 percent of the Company's battery sales were
generated from Chrysler.
NOTE K - INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company's deferred
tax asset at December 31, 1995, and 1994, are as follows:
1995 1994
Deferred Tax Assets:
Net operating loss and other tax carry forwards $9,064,000 $2,636,000
Book depreciation in excess of tax depreciation 263,000 133,000
Accruals and other 1,163,000 1,360,000
Total deferred tax assets 10,490,000 4,129,000
Less valuation allowance (10,490,000) (4,129,000)
Deferred tax assets, net $ -0- $ -0-
The reconciliation of income tax computed at the United States
federal statutory tax rates to income tax expense for the years
ended December 31, 1995, 1994 and 1993 are as follows:
1995 1994 1993
Income tax (benefit) at statutory
U.S. federal income tax rate (34.0)% (34.0)% (34.0)%
Increase (reduction) in rate resulting from:
Increase in valuation allowance 35.6% 34.0% 34.0%
Other (0.9)% 0.9% 0.0
Actual income tax rate 0.7% 0.9% 0.0%
Results of operations for the years ended December 31, 1995 and
1994, increased both deferred tax assets and the corresponding
valuation allowance by approximately $6.4 million and $2.8
million, respectively. At December 31, 1995 the Company had net
operating loss carry forwards of approximately $26 million which
will expire from 2002 through 2010, research and development
credits of approximately $35,000 and foreign tax credits of
approximately $200,000 which expire beginning in 2009 and 1999,
respectively. An ownership change in 1992 caused utilization of
the Company's then existing net operating losses to be limited.
Approximately $1.5 million of these losses remain limited to
utilization of $188,000 per year.
NOTE L - RELATED PARTY TRANSACTIONS
Certain directors of the Company are also directors and
shareholders of the licensor of coextruded wire technology (See
Note D).
During 1995, the Company entered into agreements with a director
of the Company for the development and manufacture of certain
machinery and materials as well as general consulting. The
Company has paid $17,000 under such agreements in 1995 and has
committed to pay approximately $9,000 per month through July
1997.
NOTE M - EMPLOYEE BENEFIT PLAN
The Company sponsors a qualified defined contribution plan
covering all full-time eligible employees. The Company matches
twenty-five percent of a participant's voluntary contributions up
to a maximum of one percent of a participant's compensation.
The Company's contribution expense was approximately $20,000,
$22,000 and $16,000 in 1995, 1994 and 1993, respectively.
NOTE N - ABILITY TO CONTINUE AS A GOING CONCERN
During 1995, the Company devoted substantial resources to
purchasing machinery and implementing production processes to
significantly increase the capacity of its manufacturing facility
and demonstrated that it could successfully manufacture the
Horizon battery in commercial quantities, which was a requirement
of obtaining large orders from potential customers. With the
successful completion of major development and production
milestones in 1995, management will focus efforts in 1996 on
capitalizing on market opportunities as customers move from test
phases to integration of Horizon technology into their commercial
products. While management has implemented plans to
significantly reduce operating costs, the Company's cash sources
in 1996 are largely dependent on the successful commercialization
of the Horizon battery. Management expects the level of battery
sales to increase in late 1996 as the Company receives commercial
orders under a Chrysler production purchase order and other
customers currently testing the battery. Management does not
expect sales from these orders to generate sufficient funds to
support its overall working capital and capital
expenditure needs; therefore, it is expected that additional
debt and/or equity financing will be necessary. On March 1,
1996, the Company sold 1,000,000 shares of Common Stock which
resulted in net proceeds to the Company of $898,200. Management is
devoting substantial effort to pursue additional funding sources.
Management is also focusing efforts on developing long-term strategic
relations with customers and organizations that can aid penetrations
of target markets and can assist financially.
The Company's Common Stock is traded in the Over-the-Counter
Market and is reported on the National Association of Securities
Dealers Automated Quotation System ("NASDAQ"). In order to
maintain listing by NASDAQ, the Company must maintain a minimum
$1 million of stockholders' equity. The Company is currently in
compliance with this requirement and management believes that the
continuing impact of its cost control measures and increases in
sales will reduce the level of operating losses which should
result in maintaining compliance with this requirement into the
foreseeable future. However, if the minimum required balance is
not maintained, NASDAQ may choose to delist the stock of the
Company from trading which would restrict the liquidity of the
Common Stock. Delisting by NASDAQ would be an Event of Default
under the terms of the April 1995 Debentures, of which $250,000
are outstanding at December 31, 1995, which could trigger a
requirement to repay the respective debentures immediately (See
Note F).
Although management is devoting substantial efforts to
successfully commercialize its Horizon technology and to secure
additional funding sources, there is no assurance that such
efforts will be successful. The financial statements do not
include any adjustments to reflect the possible future effects on
the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the
possible inability of the Company to continue as a going concern.
NOTE O - SUBSEQUENT EVENTS
In March 1996, the Company completed a Termination Agreement with
MES. In accordance with the terms of such agreement, MES will
convert $1,000,000 of its Convertible Notes Payable to satisfy
its obligations to pay $1,000,000 of license fees to the Company.
Additionally, MES notified the Company of its intent to convert
the remainder of its Convertible Notes Payable (approximately $3
million), at $3.80 per share, into shares of Common Stock upon
the effectiveness of a registration statement to register such
shares.
In January and February 1996, November 1995 Convertible
Debentures with a principal balance of $3,780,000 and related
interest were converted into 4,008,707 shares of Common Stock.
On March 1, 1996, the Company sold 1,000,000 shares of Common
Stock which resulted in net proceeds to the Company of $898,200.
SCHEDULE II
The Valuation and Qualifying Accounts
Additions
Balance at Charged to Charged Write-Off of Balance
Beginning Costs and to Other Uncollectible at End of
Description of Period Expense Accounts Accounts Period
Year ended
December 31, 1995
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts $7,500 $278,653 - 0 - $(249,930) $36,223
Year ended
December 31, 1994
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts - 0 - $7,500 - 0 - - 0 - $7,500
Year ended
December 31, 1993
Reserves and allowances
deducted from asset
accounts:
Allowance for
doubtful accounts - 0 - - 0 - - 0 - - 0 - - 0 -
Washington, D.C. 20549
EXHIBITS TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission file
December 31, 1995 Number 0-16323
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 742466304
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3800B Drossett Drive
Austin, Texas 78744-1131
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including
area code: (512) 445-6606
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of Electrosource, Inc. (filed as
Exhibit 3.1 to Electrosource, Inc., Registration Statement on Form 10
filed October 19, 1987, as amended by Form 8 Amendments filed
January 8, 1988 and January 13, 1988 (hereinafter referred to as
"Form 10") and incorporated herein by reference).
3.2 Certificate of Designation, Preferences, Rights and Limitations of 1992
Series A Preferred Stock and Series A-1 Preferred Stock of Electrosource,
Inc. as filed of record with the Delaware Secretary of State on
January 15, 1992 (filed as Exhibit 4.1 to Electrosource, Inc. Form 8-K
Current Report for Issuers Subject to the 1934 Act Reporting Requirements
filed December 24, 1991 and incorporated herein by reference).
3.3 Amendment to Restated Certificate of Incorporation of Electrosource,
Inc., increase in authorized shares to 50,000,000 shares (filed as
Exhibit 3.1 to Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by reference).
3.4 Amendment to Restated Certificate of Incorporation of Electrosource,
Inc., elimination of Certificate of Designation for Series A and Series
A-1 Preferred Stock (filed as Exhibit 3.2 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June 30, 1995, and
incorporated hereby by reference).
3.5 Bylaws of Electrosource, Inc. (filed as Exhibit 3.2 to Form 10 and
incorporated herein by reference).
3.6 Amendment to Bylaws of Electrosource, Inc., pursuant to a Certificate
of Secretary dated May 25, 1990 (filed as Exhibit 3.3 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended December 31,
1991, and incorporated herein by reference).
3.7 Amendment to Bylaws of Electrosource, Inc. dated November 3, 1993
(filed as Exhibit 3.5 to Electrosource, Inc., Annual Report on
Form 10-K for the period ended December 31, 1993, and incorporated
herein by reference).
3.8 Amendment to Bylaws of Electrosource, Inc. dated June 23, 1994,
(filed as Exhibit 3.6 to Electrosource, Inc., Annual Report filed
on Form 10-K for the period ended December 31, 1994).
10.1 Sublicense Agreement dated as of October 5, 1987 between
Electrosource, Inc., and Tracor, Inc. (filed as Exhibit 10.4 to
Form 10 and incorporated herein by reference).
10.2 Patent and Technology Exclusive License Agreement dated August 14,
1984, between Tracor, Inc., and Blanyer-Mathews Associates, Inc.
("BMA") (filed as Exhibit 10.9 to Form S-1 Registration Statement,
file number 33-30486, filed August 14, 1989, hereinafter referred to
as "Form S-1," and incorporated herein by reference).
10.3 Amendment to Patent and Technology Exclusive License Agreement dated
May 29, 1987, between Tracor, Inc., and BMA (filed as Exhibit 10.10 to
Form S-1 and incorporated herein by reference).
10.4 Warrant to purchase up to 50,000 shares of Electrosource, Inc.,
Common Stock, issued to BMA on April 12, 1988 (filed as Exhibit
10.11 to Form S-1 and incorporated herein by reference).
10.5 Bonus Royalty Agreement dated May 26, 1989, among Electrosource, Inc.,
Tracor, Inc., and BMA (filed as Exhibit 19 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended June 30, 1989,
and incorporated herein by reference).
10.6 Amendment to Bonus Royalty Agreement entered into as of November 30,
1989, by and among BMA, Tracor, Inc., and Electrosource, Inc. (filed
as Exhibit 10.17 to Post Effective Amendment No. 1 to Form S-1
Registration Statement, file number 33-34581, filed December 11,
1989 (hereinafter referred to as "Post-Effective Amendment No. 1
to Form S-1 filed December 11, 1989 (hereinafter referred to as
"Post-Effective Amendment") and incorporated herein by reference).
10.7 Assignment of Patent License dated as of May 14, 1990, by and between
Electrosource, Inc., and Tracor, Inc. (joined by BMA for limited
purposes described therein) (filed as Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the period ended December 31, 1990,
hereinafter referred to as the "1990 Form 10-K," and hereby
incorporated by reference).
10.8 Letter Agreement dated as of January 15, 1991 between Electrosource,
Inc., and BMA (filed as Exhibit 10.21 to the Company's 1990 Form 10-K,
and incorporated herein by reference).
10.9 License Modification Agreement dated January 16, 1992, between Blanyer
Mathews & Associates, Inc., Electrosource, Inc., and Battery Horizons,
Ltd. (filed as Exhibit 10.23 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1991, and incorporated
herein by reference).
10.10 First Amendment to Assignment of Patent License dated April 2, 1992,
between Electrosource, Inc. and Tracor, Inc. (filed as Exhibit 10.58
to Company's Registration Statement on Form S-1 [Registration
Statement No. 33-65248] filed June 30, 1993, and incorporated herein
by reference).
10.11 Lease Agreement dated December 9, 1987, between Electrosource, Inc.,
and Crow-Gottesman-Hill, a Limited Partnership (filed as Exhibit 10.15
to Form S-1 and incorporated herein by reference).
10.12 Lease Agreement between AEtna Life Insurance Company and
Electrosource, Inc., dated February 22, 1992 (filed as Exhibit 10.25
to Electrosource, Inc., Annual Report on Form 10-K for the period
ended December 31, 1991, and incorporated herein by reference).
10.13 First Amendment to Lease Agreement between AEtna Life Insurance
Company and Electrosource, Inc., dated February 24, 1993 (filed as
Exhibit 10.27 to Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated herein by
reference).
10.14 Second Amendment to Lease Agreement between Aetna Life Insurance
Company and Electrosource, Inc., dated March 1, 1996.
10.15 Securities Purchase Agreement dated December 12,
1991, between the registrant and Battery Horizons,
Ltd. ("BHL"), (filed as Exhibit 2.1 to the December
24, 1991 Form 8-K, and incorporated herein by
reference).
10.16 Amendment to Securities Purchase Agreement dated
as of January 7, 1992, between the registrant and BHL
(filed as Exhibit 2.2 to the December 24, 1991 Form 8-
K and incorporated herein by reference).
10.17 Second Amendment to Securities Purchase Agreement
dated January 16, 1992, between registrant and BHL
(filed as Exhibit 2.3 to the December 24, 1991 Form 8-
K and incorporated herein by reference).
10.18 EPRI Agreement RP2415-15 dated July 20, 1992,
between Electrosource, Inc., and Electric Power
Research Institute (filed as Exhibit 10.42 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.19 EPRI Agreement RP2415-15, Amendment No. 1 dated
November 12, 1992, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.43 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.20 EPRI Agreement RP2415-15, Amendment No. 2 dated
January 27, 1993, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.44 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.21 Amendment No. 3 to Agreement between Electrosource,
Inc. and Electric Power Research Institute, Inc. dated
March 22, 1993 (filed as Exhibit 10.53 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended December 31,
1993, and incorporated herein by reference).
10.22 Amendment No. 4 to Agreement between Electrosource,
Inc. and Electric Power Research Institute, Inc. dated December 6,
1993 (filed as Exhibit 10.53 to Company's Registration Statement on
Form S-1 [Registration Statement No. 33-73582] filed December 24,
1993, and incorporated by reference).
10.23 Business Alliance and License Agreement dated
September 17, 1993, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.61 to Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference).*
0.24 Amendment to Business Alliance and License
Agreement dated November 1, 1995, between Electric
Power Research Institute and Electrosource, Inc. (filed
as Exhibit 10.2 to Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference).
10.25 Shareholders Agreement dated April 25, 1993,
between Electrosource, Inc. and BDM Technologies, Inc.
(filed as Exhibit 10.60 to Company's Registration
Statement on Form S-1 [Registration Statement No. 33-
65248] filed June 30, 1993, and incorporated herein by
reference).*
10.26 Stock Purchase Agreement dated as January 31,
1995, between BDM Technologies, Inc., and
Electrosource, Inc., (filed as Exhibit 10.46 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.27 Operating Lease Agreement between Horizon Battery
Technologies, Inc., BDM Technologies, Inc., and
Electrosource, Inc., dated June 20, 1994 (filed as an
Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.28 Lease Agreement between William D. McMorris and
Horizon Battery Technologies, Inc., dated August 17,
1993, (filed as Exhibit 10.42 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.29 Distributorship Agreement between Mitsui Engineering and
Shipbuilding Co., Ltd. and Electrosource, Inc., dated July 7, 1994
(filed as an Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.30 A Convertible Promissory Note in favor of Mitsui
Engineering and Shipbuilding Co., Ltd. was dated
October 26, 1994 (filed as an Exhibit to the Company's
October 26, 1994, Form 8-K and incorporated herein by
reference).
10.31 The Note Purchase Agreement between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated October 26, 1994 (filed as
an Exhibit to the Company's October 26, 1994, Form 8-K
and incorporated herein by reference).
10.32 Notice of Intent to Terminate Distributorship
Agreement between Mitsui Engineering and Shipbuilding
Co. Ltd. and Electrosource, Inc., dated December 5,
1995 (filed as an Exhibit to the Company's December 22,
1995, Form 8-K and incorporated herein by reference).
10.33 A Convertible Promissory Replacement Note between
Mitsui Enginering and Shipbuilding Co. Ltd. and
Electrosource, Inc., dated March 6, 1996.
10.34 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co. Ltd. and
Electrosource, Inc., dated October 26, 1995.
10.35 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co. Ltd. and
Electrosource, Inc., dated March 6, 1996.
10.36 Termination Agreement between Electrosource,
Inc., and Mitsui Engineering & Shipbuilding Co., Ltd.,
dated March 6, 1996.
10.37 1992 Electrosource, Inc., Loan/Warrant Program,
Note (filed as Exhibit 10.53 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1992, and incorporated herein by
reference).
10.38 1992 Electrosource, Inc., Loan/Warrant Program,
Warrant (filed as Exhibit 10.54 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1992, and incorporated herein by
reference).
10.39 1992 Electrosource, Inc., Loan/Warrant Program,
Security Agreement with Addendum and First Amendment
(filed as Exhibit 10.55 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.40 1993 Electrosource, Inc., Loan/Warrant Program,
Note (with schedule) (filed as Exhibit 10.56 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.41 1993 Electrosource, Inc., Loan/Warrant Program,
Warrant (with schedule) (filed as Exhibit 10.57 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.42 Offshore Securities Subscription Agreement between
Williams DeBroe, a British institutional buyer, and
Electrosource, Inc., dated June 13, 1994 (filed as an
Exhibit to the Company's July 21, 1994, Form 8-K and
incorporated herein by reference).
10.43 Representative Subscription Agreement entered into
by each participant with Electrosource, dated on the
date of execution (filed as an Exhibit to the Company's
October 18, 1994, Form 8-K and incorporated herein by
reference).
10.44 Offshore Securities Subscription Agreement between
Rosehouse Ltd., a Bermuda-based institutional buyer,
and Electrosource, Inc., dated January 25, 1995 (filed
as an Exhibit to the Company's January 26, 1995, Form 8-
K and incorporated herein by reference).
0.45 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated March 9, 1995
(filed as an Exhibit to the Company's March 10, 1995,
Form 8-K and incorporated herein by reference).
10.46 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer with Form of Convertible Debenture, and
Electrosource, Inc., dated April 4, 1995 (filed as
Exhibits to the Company's April 12, 1995, Form 8-K and
incorporated hereby by reference).
10.47 Warrant to purchase up to 54,237 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated April
5, 1995 (filed as an Exhibit to the Company's April 12,
1995, Form 8-K and incorporated herein by reference).
10.48 Letter Agreement between Rosehouse Ltd., a
Bermuda-based institutional buyer, and Electrosource,
Inc., dated July 25, 1995 (filed as Exhibit 4.7 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
10.49 Letter Agreement between ACM Advisors of
Zurich, Switzerland, and Electrosource, Inc., dated
July 27, 1995 (filed as Exhibit 4.8 to Electrosource,
Inc., Quarterly Report on Form 10-Q for quarter ended
June 30, 1995, and incorporated hereby by reference).
10.50 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated July 27, 1995
(filed as Exhibit 4.10 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
10.51 Form of 10% Convertible Debentures entered
into by each participant with Electrosource, Inc.,
dated July 27, 1995 (filed as Exhibit 4.9 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
10.52 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.5 to Electrosource, Inc., Quarterly
Report of Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
10.53 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.6 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
10.54 Warrant to purchase up to 250,000 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated July
27, 1995 (filed as Exhibit 4.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
10.55 Representative Subscription Agreement entered
into by each participant with Electrosource, Inc.,
dated on the date of execution (filed as Exhibit 4.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference.).
10.56 Letter Agreement between Shoreline Pacific,
an institutional buyer, and Electrosource, Inc., dated
October 3, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
10.57 Offshore Securities Subscription Agreement
between participants and Electrosource, Inc., dated
October 10, 1995 (filed as Exhibit 4.3 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.58 Letter Agreement between Shoreline Pacific,
an institutional buyer, and Electrosource, Inc., dated
October 25, 1995 (filed as Exhibit 4.4 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.59 Offshore Securities Subscription Agreement
between participants and Electrosource, Inc., dated
November 29, 1995 (filed as Exhibit 4.5 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.60 Form of 8% Convertible Debentures entered
into by each participant with Electrosource, Inc.,
dated November 29, 1995 (filed as Exhibit 4.6 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
10.61 Subcontract Number 21614-TTS-7 between AECT, Inc.,
and Electrosource, Inc., dated March 21, 1994, (filed
as Exhibit 10.43 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1994,
and incorporated herein by reference).
10.62 Purchase Agreement between Quantum Energy Systems
and Technology LLC and Electrosource, Inc., dated
November 14, 1994, (filed as Exhibit 10.44 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.63 Equipment Lease Agreement dated April 6, 1995
between Ally Capital Corporation and Electrosource,
Inc. (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference.
10.64 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to Ally
Capital Management Inc. on April 17, 1995 (filed as
Exhibit 4.1 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference.
10.65 Equipment Lease Agreement dated September 7, 1995,
between Salem Capital Corporation and Electrosource,
Inc.
10.66 Warrant to purchase up to 90,000 shares of
Electrosource, Inc., Common Stock, issued to
Oppenheimer & Co., Inc. (Investment Bankers) dated
April 28, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by
reference).
10.67 National Association of Securities Dealers
Automated Quotation System Oral Hearing Notification
(filed as an Exhibit to the Company's December 22,
1995, Form 8-K and incorporated herein by reference).
10.68 Development Agreement and Agreement for
Purchase of Machinery and Supplies between
Electrosource, Inc., and Charles L. Mathews
("Contractor") dated November 1, 1995.
10.69 Purchase Order Between Chrysler Corporation
and Electrosource, Inc., dated January 9, 1996.
10.70 Agreement for Aircraft Starting Battery
Distribution between Electrosource, Inc., and Horizon
Aviation, Inc. dated February 13, 1996.
10.71 Joint Development Agreement between
Electrosource, Inc., and Black & Decker (U.S.) Inc.,
dated March 8, 1996.
The following exhibits filed under Paragraph 10 of Item 601 are
the Company's compensation plans and arrangements:
10.72 Form of Director Indemnification Agreement (filed as Exhibit
10.8 to Electrosource, Inc., Annual Report on Form 10-K
for the period ended December 31, 1987, and
incorporated herein by reference).
10.73 Director Indemnification Agreement dated January 16,
1992, between Electrosource, Inc., and Charles Mathews
(filed as Exhibit 10.26 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1991, and incorporated herein by reference).
10.74 Director Indemnification Agreement dated January
16, 1992, between Electrosource, Inc., and Benny E.
Jay (filed as Exhibit 10.27 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.75 Director Indemnification Agreement dated February
12, 1992, between Electrosource, Inc., and Donald
Thomas (filed as Exhibit 10.28 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.76 Director Indemnification Agreement dated February
12, 1992, between Electrosource, Inc., and Robert
Trembath (filed as Exhibit 10.29 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.77 Director Indemnification Agreement dated February
12, 1992, between Electrosource, Inc., and John Malone
(filed as Exhibit 10.30 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1991, and incorporated herein by reference).
10.78 Director Indemnification Agreement dated November
4, 1992, between Electrosource, Inc., and Thomas S.
Wilson (filed as Exhibit 10.41 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1992, and incorporated herein by
reference).
10.79 Director Indemnification Agreement dated April
17, 1993, between Electrosource, Inc., and John H.
Akin (filed as Exhibit 10.55 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1993, and incorporated herein by
reference).
10.80 Director Indemnification Agreement dated June 1,
1993, between Electrosource, Inc., and Frank Butler
(filed as Exhibit 10.56 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1993, and incorporated herein by reference).
10.81 Director Indemnification Agreement dated September 1, 1993,
between Electrosource, Inc., and Dr. Norman Hackerman (filed as
Exhibit 10.57 to Electrosource, Inc., Annual Report on Form
10-K for the period ended December 31, 1993, and incorporated
herein by reference).
10.82 Director Indemnification Agreement dated S
eptember 1, 1993, between Electrosource, Inc., and
Todd Templeton (filed as Exhibit 10-58 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1993, and incorporated
herein by reference)
10.83 Director Indemnification Agreement dated June 23,
1994, between Electrosource, Inc., and Michael G.
Semmens, (filed as Exhibit 10.72 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.84 Director Indemnification Agreement dated November
2, 1994, between Electrosource, Inc., and Richard S.
Williamson, (filed as Exhibit 10.73 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.85 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and Nathan
Morton (filed as Exhibit 10.2 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.86 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and William R.
Graham (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.87 1987 Stock Option Plan of Electrosource, Inc.
(filed as Annex A, pages 44 to 48 of Company's
Information Statement filed October 16, 1987, and
incorporated herein by reference).
10.88 Amendment No. 1 to 1987 Stock Option Plan of
Electrosource, Inc., dated February 19, 1992 (filed
as Exhibit 4.3 to Company's Registration Statement on
Form S-8 [Registration Statement No. 33-49049] filed
June 30, 1992, and incorporated herein by reference).
10.89 Amendment No. 2 to 1987 Stock Option Plan of
Electrosource, Inc. (filed as Exhibit 10.36 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.90 1988 Non-Employee Director Option Plan of
Electrosource, Inc. (filed as Exhibit 4.2 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-22223] filed June 7, 1988, and
incorporated herein by reference).
10.91 Amendment No. 1 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.3 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed July 12, 1990, and
incorporated herein by reference).
10.92 Amendment No. 2 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.4 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed June 30, 1992, and
incorporated herein by reference).
10.93 Amendment No. 3 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.40 to
Electrosource, Inc., Annual Report on Form 10-K for
the period ended December 31, 1992, and incorporated
herein by reference).
10.94 Amendment No. 4 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.3 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995, and incorporated
herein by reference).
10.95 1993 Non-Employee Consultant Stock Option Plan for
Electrosource, Inc. (filed as Exhibit 4.2 to
Registration Statement on Form S-8 [Registration
Statement No. 33-65386]).
10.96 1994 Stock Option Plan of Electrosource, Inc.
(filed as Exhibit 10.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.97 Consulting Agreement dated June 26, 1989, between
Electrosource, Inc., and R. J. Blanyer (filed as
Exhibit 10.18 to Post-Effective Amendment and
incorporated herein by reference).
10.98 Consulting Agreement dated July 1, 1989, between
Electrosource, Inc., and Charles Mathews (filed as
Exhibit 10.19 to Post-Effective Amendment and
incorporated herein by reference).
10.99 Consulting Agreement dated November 1, 1995
between Electrosource, Inc., and Charles L. Mathews.
10.100 Consulting Agreement effective December 30, 1991
between Electrosource, Inc., and Mark A. Huse (filed
as Exhibit 10.22 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1991,
and incorporated herein by reference).
10.101 Consulting Agreement dated September 1, 1992,
between Electrosource, Inc., and Norman Hackerman
(filed as Exhibit 10.45 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.102 Consulting Agreement dated August 1, 1993,
between Electrosource, Inc., and Norman Hackerman,
(filed as Exhibit 10.71 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.103 Agreement dated December 19, 1995, between
Electrosource, Inc., and Robert M. Trembath.
10.104 Consulting Agreement dated January 1, 1993,
between Electrosource, Inc., and Robert Holden (filed
as Exhibit 10.46 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.105 Consulting Agreement dated January 1, 1993,
between Electrosource, Inc., and Wilburn B. Laubach
(filed as Exhibit 10.48 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.106 Consulting Agreement dated February 5, 1992,
between Electrosource, Inc., and John D. Malone (filed
as Exhibit 10.49 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.107 Consulting Agreement dated March 1, 1992,
between Electrosource, Inc., and C. R. Kline, Jr.
(filed as Exhibit 10.47 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.108 Consulting Agreement dated August 11, 1992,
between Electrosource, Inc., and Ralph E. White (filed
as Exhibit 10.52 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.109 Letter Agreement dated August 12, 1993, between
Electrosource, Inc. and John Akin (filed as Exhibit
10.50 to Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference).
10.110 Consulting Agreement dated July 6, 1994, between
Electrosource, Inc., and John M. Lushetsky, (filed as
Exhibit 10.45 to Electrosource, Inc., Annual Report on
Form 10-K for the period ended December 31, 1994, and
incorporated herein by reference).
10.111 Consulting Agreement dated September 1, 1995,
between Electrosource, Inc., and Liviakis Financial
Communications, Inc. (filed as Exhibit 10.3 to Form 10-
Q for the quarter ended September 30, 1995, and
incorporated herein by reference).
10.112 Offer of Employment dated October 11, 1994,
between Electrosource, Inc., and Michael L. Weinstein,
(filed as Exhibit 10.74 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.113 Separation, Release and Indemnity Agreement dated
September 23, 1995, between Electrosource, Inc., and
Michael L. Weinstein.
10.114 Offer of Employment dated May 26, 1994, between
Electrosource, Inc., and Michael G. Semmens (filed as
an Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.115 Consulting Agreement dated August 1, 1995,
between Donald C. Perriello and Electrosource, Inc.
10.116 Consulting Agreement dated December 1, 1995,
between William Griffin and Electrosource, Inc.
10.117 Consulting Agreement dated March 4, 1995, between
Beacon Advisors, Inc. (Langhorne Reid, III) and
Electrosource, Inc.
10.118 Consulting Agreement dated January 1, 1996,
between Jack J. Guy and Electrosource, Inc.
10.119 Consulting Agreement dated Novemer 15, 1994,
between Richard C. Baker dba Talbot Management Services
and Electrosource, Inc.
24.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule
* Confidential treatment of certain information contained in
this Agreement has been requested pursuant to Rule 406, and
the Agreement has therefore been omitted and filed
separately with the Commission.
(b) Reports on Form 8-K.
Reports on Form 8-K filed during the quarter ended December 31, 1995 were:
October 10, 1995, Restated Financial Statements of December 31,
1994, to include recent developments.
December 22, 1995, Notice of Intent to Terminate Distributorship
Agreement between Mitsui Engineering and Shipbuilding Co. Ltd.
and Electrosource, Inc., dated December 5, 1995.
December 22, 1995, National Association of Securities Dealers
Automatic Quotation System Oral Hearing Notification.
EXHIBIT 10.14
SECOND AMENDMENT TO LEASE AGREEMENT BETWEEN
AETNA LIFE INSURANCE COMPANY, AS LANDLORD, AND
ELECTROSOURCE, INC., AS TENANT
To be attached to and form a part of Lease made
the 3rd day of February, 1992 (which together
with any amendments, modifications and
extensions thereof, is hereinafter called the
Lease), between Landlord and Tenant, covering a
total of 30,000 square feet and located at 3800
Drossett Drive, Suites B & B-1, Austin, Texas,
known as Mopac #4.
WITNESSETH that the Lease is hereby amended as follows:
1. The Lease shall be extended and renewed for a further term
of thirty-six (36) months to commence on the 1st day of March,
1996. The monthly base rental shall be:
March 1996 - February 1997 $ 9,480.00 per month
March 1997 - February 1998 $10,980.00 per month
March 1998 - February 1999 $12,480.00 per month
Plus property taxes, common area maintenance, and
insurance as provided herein.
2. Providing Tenant is not in default under the terms of this
lease, Tenant shall have the right to amortize up to $1.50 per
square foot ($45,000 total) for tenant finish work in the demised
premises performed only during the time preceding the
commencement date of the renewal term or the first twelve (12)
months of this renewal term. The total amount of the allowance
used by the Tenant by the end of the twelfth (12th) month of the
renewal term, which shall not exceed $45,000, shall be fully
amortized at ten percent (10%) per annum over the remaining lease
term and added to the base rent. This amortization period may be
started prior to the twelfth (12th) month but not prior to the
beginning of the renewal term and shall commence upon Tenant
notifying Landlord that all tenant finish work under this
agreement has been completed. For example, if Tenant notifies
Landlord of the completion of all Tenant finish work during the
first (1st) month of the lease term, the cost of the Tenant
finish work would be amortized into the lease rate for the
remaining 35 months. For Tenant finish work totaling $30,000.00,
the monthly rent would increase by $991.75 for this amortization.
Landlord shall pay such tenant finish allowance upon completion
of all work as evidenced by a Certificate of Occupancy by the
City of Austin, Contractors Affidavit and Subcontractors Lien
Waivers, but in no event prior to the commencement date of the
renewal term. Landlord shall only pay for costs incurred in the
interior improvement construction as evidence by contractor
invoices.
3. Landlord is the owner of the herein demised premises, as
well as the adjacent 17,018 square feet of space. It is agreed
that Tenant shall have the right of first refusal to lease the
adjacent space from the Landlord subject to the existing lease in
place with Advanced Micro Devices and subject to Tenant not being
in default. In the event a prospective tenant desires to lease
this space from Landlord, Landlord shall notify Tenant thereof in
the manner provided herein for notice, whereupon Tenant shall
have five (5) days after receipt of such notice in which to elect
to exercise Tenant's right of first refusal. In the vent Tenant
fails to give Landlord written notice of Tenant's election to
lease the adjacent space within said five (5) day period, Tenant
shall have no further right, title or interest in the adjacent
space and this right of first refusal shall terminate and be of
no further force and effected. If, on the other hand, Tenant
exercises its right to first refusal in the manner provided
above, the lease of the adjacent property shall be consummated at
a fair market rental rate.
4. Providing Tenant is not in default, Tenant shall have the
right and option to renew this Lease for one (1) additional three
(3) year term by delivering written notice thereof to Landlord at
Lease One Hundred Eighty (180) days prior to the expiration date
of the lease term, provided that at the time of such notice and
at the end of the lease term, Tenant is not in default hereunder.
Upon the delivery of said notice and subject to the conditions
set forth in the preceding sentence, this Lease shall be extended
upon the same, terms, covenants and conditions as provided in the
Lease, except that the rental payable during said extended term
shall be the prevailing market rental rate for space of
comparable size, quality and location at the commencement of such
extended term. If a conflict arises in the determination of such
FMV rental rate, a three-member committee, selected from the
Austin Board of Realtors, shall determine the FMV rental rate.
The first two members of such committee shall be selected by
Landlord and Tenant respectively, which two members shall select
the third.
5. Paragraph 9.B(i) of the Lease Agreement is hereby amended to
name the Management Company as an additional insured on all
Tenant's Liability Insurance Policies in connection with this
Lease (except for the workers' compensation policy as stated in
Paragraph 9.B)).
6. The following article previously deleted from the original
lease shall now be added back into the lease as follows:
PARAGRAPH 2. BASE RENT, SECURITY DEPOSIT AND ESCROW DEPOSITS.
C. Escrow Deposits. Without limiting in any way
Tenant's other obligations under this Lease, Tenant agrees
to pay to Landlord its Proportionate Share (as defined in
this Paragraph 2C below) of (I) Taxes (hereinafter defined)
payable by Landlord pursuant to Paragraph 3A below, (ii) the
cost of utilities payable by Landlord pursuant to Paragraph
8 below, (iii) Landlord's cost of maintaining insurance
pursuant to Paragraph 9A below, and (iv) Landlord's cost of
maintaining the Premises pursuant to paragraph 5E below and
any common area charges payable by Tenant in accordance with
Paragraph 4B below (collectively, the "Tenant Costs").
During each month of the term of this Lease, on the day that
rent is due hereunder, Tenant shall deposit in escrow with
Landlord an amount equal to one-twelfth (1/12) of the
estimated amount of Tenant's Proportionate Share of the
Tenant Costs. Tenant authorizes Landlord to use the funds
deposited with Landlord under this Paragraph 2C to pay such
Tenant Costs. The initial monthly escrow payments are based
upon the estimated amounts for the year in question and
shall be increased or decreased annually to reflect the
projected actual mount of all Tenant Costs. If the Tenant's
total escrow deposits for any calendar year are less than
Tenant's actual Proportionate Share of the Tenant Costs for
such calendar year, Tenant shall pay the difference to
Landlord within ten (10) days after demand. If the total
escrow deposits of Tenant for any calendar year are more
than Tenant's actual Proportionate Share of the Tenant Costs
for such calendar year, Landlord shall retain such excess
and credit it against Tenant's escrow deposits next maturing
after such determination. In the event the Premises
constitute a portion of a multiple occupancy building (the
"Building"), Tenant's "Proportionate Share" with respect to
the Building, as used in this Lease, shall mean a fraction,
the numerator of which is the gross rentable area continued
in the Premises and the denominator of which is the gross
rentable area contained in the entire Building. In the
event the Premises or the Building is part of a project or
business park owned, managed or leased by Landlord or an
affiliate of Landlord (the "Project"), Tenant's
"Proportionate Share" of the Project, as used in this Lease,
shall mean a fraction, the numerator of which is the gross
rentable area continued in the premises and the denominator
of which is the gross rentable are contained in all of the
buildings (including the Building) within the Project.
7. The following sentence previously deleted from the original
lease shall now be added back into the lease as follows:
PARAGRAPH 3. TAXES
A. Real Property Taxes. Subject to reimbursement
under Paragraph 2C herein
8. The following article previously deleted from the original
lease shall now be added back into the lease as follows:
PARAGRAPH 4. LANDLORD'S REPAIRS AND MAINTENANCE.
B. Tenant's Share of Common Area Charges. Tenant
agrees to pay its Proportionate Share of the cost of (I)
maintenance and/or landscaping (including both maintenance
and replacement of landscaping) of any property that is a
part of the Building and/or the Project; (ii) operating,
maintaining and repairing any property, facilities or
services (including without limitation utilities and
insurance therefor) provided for the use or benefit of
Tenant or the common use or benefit of Tenant and other
lessees of the Project or the Building; and (iii)
administrative fee of fifteen percent (15%) of all common
area maintenance charges. With the exception of this 15%
administrative fee, Tenant shall not be responsible or
liable for Landlord's management fees or related
reimbursements.
9. The following sentence previously deleted from the original
lease shall now be added back into the lease as follows:
PARAGRAPH 9. INSURANCE.
A. Landlord's Insurance. Subject to reimbursement
under Paragraph 2C herein,
10. Landlord and Tenant acknowledge and represent to one another
that, other than Trammell Crow Center Texas, Inc., representing
Landlord and Oxford Commercial, Inc., representing Tenant, no
real estate broker has been involved in this transaction. As
material consideration in this transaction, Landlord agrees to
cause a commission to be paid to Oxford Commercial, Inc. in an
amount which is equal to 4% of the aggregate net rent due under
this agreement (a total of $15,120.00) which has been amortized
into the lease rate. Such commission shall be due and payable
upon commencement of the renewal term.
Except as herein and hereby modified and amended the
Agreement of Lease shall remain in full force and effect and all
the terms, provisions, convenants and conditions thereof are
hereby ratified and confirmed.
DATED AS OF THE 1 DAY OF NOVEMBER, 1995.
WITNESS: LANDLORD:
AETNA LIFE INSURANCE COMPANY
BY: AETNA REALTY INVESTORS INC., ITS AGENT
/s/ BY: /s/
DIRECTOR
WITNESS: TENANT:
ELECTROSOURCE, INC.
/s/ BY: /s/
TITLE: Vice President and General Counsel
EXHIBIT 10.33
REPLACEMENT NOTE
5% CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE ("BLUE SKY LAWS"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
DELIVERY TO THE COMPANY OF EVIDENCE SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE.
Dated March 6, 1996 $2,800,000.00
FOR VALUE RECEIVED, Electrosource, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order
Mitsui Engineering and Shipbuilding Co., Ltd., a Japanese
corporation ("Mitsui" or the "original holder"), the principal
sum of Two Million Eight Hundred Thousand Dollars and NO/100
(U.S. $2,800,000.00) together with interest thereon calculated
from the date hereof, in accordance with the provisions of this
Note.
This Note is a 5% Convertible Promissory Note (the
"Replacement Note") issued in replacement of the 5% Convertible
Promissory Note (the "Original Note") issued pursuant to a Note
Purchase Agreement dated as of October 26, 1994, between the
Company and the original holder hereof (the "Purchase
Agreement"). The Original Note is hereby canceled. The Purchase
Agreement contains terms governing the rights and obligations of
the holder of this Note, and all provisions of the Purchase
Agreement are incorporated herein by reference. Unless otherwise
indicated herein, capitalized terms used in this Note have the
same meaning as set forth in the Purchase Agreement and the
Original Note.
Part 1. Payment of Interest.
1.A. Rate of Interest. Interest shall accrue at the rate of
five percent (5%) per annum on the unpaid principal amount of
this Note outstanding from time to time. Interest shall be paid
in additional Notes having terms identical to the Original Note
except in respect of principal amount, dated as of the Payment
Date (as defined below) with respect to which such interest is
payable and having a principal amount equal to the amount of
interest accrued and unpaid as of that Payment Date.
1.B. Payment Dates. On April 26, 1996, and on each
subsequent April 26 and October 26 (each of which dates shall be
a "Payment Date"), all unpaid interest that has accrued on the
unpaid principal amount of this Note on and prior to such Payment
Date or on any over-due interest on this Note shall become due
and payable.
1.C. Payment upon Maturity or Prepayment. All accrued
interest that has not theretofore been paid shall be paid in full
in cash on the date on which the entire principal amount
outstanding under this Note is paid, whether upon maturity as
provided in paragraph 2.A or upon prepayment as provided in
paragraphs 2.B or 2.C. In the event that any portion less than
the entire outstanding principal amount of this Note is prepaid
pursuant to paragraph 2.B, the accrued interest applicable to
such portion prepaid shall be paid as of the effective date of
such partial prepayment.
1.D. Saving Clause. All agreements and transactions between
the Company and the holder of this Note, whether now existing or
hereafter arising, whether contained herein or in any other
instrument, and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever, whether by
reason of acceleration of the maturity hereof, prepayment, demand
for prepayment or otherwise, shall the amount contracted for,
charged or received by the holder of this Note from the Company
for the use, forbearance or detention of the principal
indebtedness or interest hereof, which remains unpaid from time
to time, exceed the maximum amount permissible under applicable
law, it particularly being the intention of the parties hereto to
conform strictly to the applicable law of usury. Any interest
payable hereunder or under any other instrument relating to the
indebtedness evidenced hereby that is in excess of the legal
maximum, shall, in the event of acceleration of maturity,
prepayment, demand for prepayment or otherwise, be automatically,
as of the date of such acceleration, prepayment, demand or
otherwise, applied to a reduction of the principal indebtedness
hereof and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of such principal, such
excess shall be refunded to the Company. To the extent not
prohibited by law, determination of the legal maximum rate of
interest shall at all times be made by amortizing, prorating,
allocating and spreading in equal parts during the periods of the
full stated term of the indebtedness, all interest at any time
contracted for, charged or received from the Company in
connection with the indebtedness, so that the actual rate of
interest on account of such indebtedness is uniform throughout
the term hereof.
Part 2. Payment of Principal
2.A. Payment upon Maturity. The entire unpaid principal
amount hereof shall be due and payable on October 26, 2004.
2.B. Prepayment.
(i) The Company may prepay all or any part of this Note at
any time on or after the date hereof (the "Prepayment Date");
provided that, the aggregate market price of the shares of the
Company's Common Stock, par value $0.10 per share ("Common
Stock") into which this Note is then convertible equals or
exceeds for the thirty (30) trading days preceding the date of
notice of prepayment one hundred twenty percent (120%) of the
principal amount of this Note. The Company shall give not less
than thirty (30) days prior written notice of its intention to
prepay this Note. Notwithstanding the provisions of part 8
hereof, this Note may not be converted into Common Stock during
the period of ten (10) days prior to the date it is to be
prepaid. The market price of the Common Stock for purposes of
this section 2.B shall be the average of the closing market price
of such Common Stock as reported on NASDAQ.
(ii) Notwithstanding the provisions of part 8 hereof, in the
event that pursuant to part 5.D(ii) of the Purchase Agreement
Mitsui gives notice of an intention to tender this Note or any
other Notes in payment of license fees at a price determined
pursuant to part 5.D(iii)(B) of the Purchase Agreement or to
tender shares of Common Stock issued upon conversion of Notes in
payment of license fees (in each case, other than license fees
payable pursuant to paragraph 2.1(b) or (c) of the Distribution
Agreement dated July 7, 1994, between the Company and Mitsui),
Mitsui shall not have the right to convert this Note into shares
of Common Stock during the period beginning on the date of the
notice of such tender and extending for sixty (60) days
immediately following the date of such tender. The Company may,
during such period, prepay all or any portion of the Notes (other
than that portion of the Notes tendered in payment of license
fees pursuant to the notice of tender giving rise to such right)
at a price equal to the aggregate principal amount of Notes to be
prepaid, plus accrued and unpaid interest thereon; provided that,
the aggregate market price of the shares of the Common Stock into
which the Notes are then convertible equals or exceeds for the
thirty (30) trading days preceding the date of notice of
prepayment one hundred twenty percent (120%) of the principal
amount of such Notes.
(iii) This Note may be prepaid at the option of the
Company only in accordance with the terms of this section 2.B.
Part 3. Registration of Transfer.
The Company shall keep at its principal office a register
for the registration of Notes, which shall contain the name and
address of the registered holder (herein referred to as the
holder) of the Note and the principal and interest of the Note.
No transfer of the Note or any right to receive payments under
the Note shall be permitted unless made upon the Company's
register. Upon the surrender of any Note or Notes at such place,
the Company shall, at the request of the holder of such Note,
execute and deliver (at the Company's expense) a new Note or
Notes in exchange therefore representing in the aggregate the
principal amount represented by the surrendered Note. Each such
new Note shall be registered in such name and shall represent
such principal amount of Note as is requested by the holder of
the surrendered Note and shall be substantially identical in form
to the surrendered Note, and interest shall accrue on such new
Note from the date to which interest has been fully paid on such
Note represented by the surrendered Note; provided that, if any
Note is to be registered in the name of a person or persons other
than the holder of the Note, there has been compliance with all
laws applicable to such change of registered holder, including
but not limited to federal and state securities laws.
Part 4. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Company of the ownership and the loss, theft, destruction or
mutilation of any Note, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory
to the Company, or, in the case of any such mutilation upon
surrender of such Note, the Company shall (at its expense)
execute and deliver in lieu of such Note, a new Note of like kind
representing the principal amount of Note represented by such
lost. stolen, destroyed or mutilated Note and dated the date of
such lost, stolen, destroyed or mutilated Note, and interest
shall accrue on the Note represented by such new Note from the
date to which interest has been fully paid on such lost, stolen,
destroyed or mutilated Note.
Part 5. Cancellation.
After all principal and accrued interest at any time owed on
this Note has been paid in full, this Note shall be surrendered
to the Company for cancellation and shall not be reissued.
Part 6. Waiver of Notice, etc.
The Company hereby waives presentment, demand, notice,
protest and all other demands and notice in connection with the
delivery, acceptance, performance and enforcement of this Note,
and assents to extension of the time of payment or forbearance or
other indulgence without notice.
Part 7. Events of Default.
7.A. Events of Default. Each of the following shall
constitute an Event of Default:
(i) the Company fails to pay when due the full amount of
any principal or interest on this Note whether at maturity or by
acceleration or otherwise; or
(ii) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is
entered adjudicating the Company bankrupt or insolvent; or the
Company petitions or applies to any tribunal for the appointment
of a trustee, receiver or liquidator of the Company or of any
substantial part of the assets of the Company, or commences any
proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced against the Company
and either (X) the Company takes any action indicating its
approval thereof, consent thereto, or acquiescence therein or (Y)
such petition, application or proceeding is not dismissed within
ninety (90) days.
7.B. Remedies. Upon the occurrence and continuance of any
Event or Events of default, the holders of a majority of the
combined aggregate principal amount outstanding under this Note
and any Notes issued in payment of accrued interest on Notes may,
by written notice to the Company, declare all or any part of the
unpaid principal amount of the Notes then outstanding to be
forthwith due and payable, and thereupon such unpaid principal
amount or part thereof, together with interest accrued thereon,
shall become so due and payable without presentation,
presentment, protest, notice of intent to accelerate, notice of
acceleration, or further demand or notice of any kind, all of
which are hereby expressly waived, and such holder or holders may
proceed to enforce payment of such amount or part thereof in such
manner as it or they may elect. The Company hereby waives to the
extent not prohibited by applicable law which cannot itself be
waived (i) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions
hereof), (ii) any requirement of diligence or promptness on the
part of any holder of Notes in the enforcement of its rights
under the provisions of this Note, and (iii) any and all notices
of every kind and description which may be required to be given
by any statute or rule of law.
Part 8. Conversion.
8.A. Conversion Procedure.
(i) The holder of this Note may convert all or any portion
of the outstanding principal amount hereof (plus accrued but
unpaid interest on such principal amount or portion thereof) held
by such holder into a number of shares of the Company's Common
Stock computed by dividing the principal amount of this Note
(plus accrued but unpaid interest thereon) to be converted by the
"Conversion Price" (as defined below) then in effect.
(ii) Each conversion will be deemed to have been effected as
of the close of business on the date on which the instrument
representing this Note has been surrendered at the principal
office of the Company. At such time as such conversion has been
effected, the rights of the holder of this Note as such holder
will cease and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock are to be
issued upon such conversion will be deemed to have become the
holder or holders of record of the shares of Common Stock
represented thereby.
(iii) As soon as possible after a conversion has been
effected (but in any event within three business days in the case
of subparagraph (a) below), the Company will deliver to the
converting holder:
(a) a certificate representing the number of shares
of Common Stock issuable by reason of such conversion in
such name or names and such denomination or denominations
as the converting holder has specified (provided that, in
the event that the name specified by the converting
holder is other than that of the converting holder, the
Company has received evidence satisfactory to Company
counsel that the transfer of Common Stock from the
converting holder to the person specified may be
accomplished without violation of applicable law);
(b) a replacement Note having terms identical to
those of this Note other than the principal amount, which
shall be equal to portion of the principal amount of this
Note not converted; and
(c) the amount payable under subparagraph (vi)
below with respect to fractional shares of Common Stock
otherwise issuable upon such conversion.
(iv) The issuance of certificates for shares of Common Stock
upon conversion of this Note will be made without charge to the
holder of such Note for any issuance tax in respect thereof or
other cost incurred by the Company in connection with such
conversion and the related issuance of shares of Common Stock.
Upon conversion of this Note, the Company will take all such
actions as are necessary in order to insure that the Common Stock
issuable with respect to such conversion will be validly issued,
fully paid and nonassessable.
(v) The Company will not close its books against the
transfer of this Note or of Common Stock issued or issuable upon
conversion of this Note in any manner which interferes with the
timely conversion of this Note.
(vi) If any fractional interest in a share of Common Stock
would, except for the provisions of this subparagraph (vi), be
deliverable upon any conversion of this Note, the Company, in
lieu of delivering the fractional share therefore, may at its
option pay a cash adjustment for such fractional share equal to
such fraction times the fair market value per share of the Common
Stock at the close of business on the date of conversion, as
determined in good faith by the board of directors of the
Company.
(vii) In the event that pursuant to part 5.D(ii) of the
Purchase Agreement Mitsui gives notice of an intention to tender
this Note or any other Notes in payment of license fees at a
price determined pursuant to part 5.D(iii)(B) of the Purchase
Agreement or to tender shares of Common Stock issued upon
conversion of Notes in payment of license fees (in each case,
other than license fees payable pursuant to paragraph 2.1(b) or
(c) of the Distribution Agreement dated July 7, 1994, between the
Company and Mitsui), the Company may, by notice to Mitsui,
require that Mitsui surrender for conversion into Common Stock
all then outstanding Notes other than those Notes actually
tendered in payment of license fees pursuant to the notice of
tender giving rise to such right on the part of the Company. Any
such conversion shall be effective as of the date of the notice
given by Mitsui of its intention to tender.
(viii) The provisions of this part 8 shall be subject to
the limitations imposed by section 2.B hereof.
8.B. Conversion Price. The initial Conversion Price will be
U.S.$3.80. In order to prevent dilution of the conversion rights
granted under this part 8, the Conversion Price will be subject
to adjustment from time to time pursuant to this part 8; provided
that the Conversion Price will in no event be less than $.0001.
8.C. Subdivision or Combination of Common Stock.. If the
Company at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) its outstanding shares
of Common Stock into a greater number of shares, the Conversion
Price in effect immediately prior to such subdivision will be
proportionately reduced, and if the Company at any time combines
(by reverse stock split or otherwise) its outstanding shares of
Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
8.D. Reorganization, Reclassification, Consolidation, Merger
or Sale. Any reorganization, reclassification, consolidation,
merger or sale of all or substantially all of the Company's
assets to another Person which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
or upon subsequent liquidation), stock, securities or amounts
with respect to or in exchange for Common Stock is referred to
herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company will make appropriate provisions (in
form and substance satisfactory to the holders of a majority of
the outstanding principal amount of Notes then outstanding) to
insure that each of the holders of Notes will thereafter (for so
long as such holders have the right to convert the Notes as
provided in this part 8) have the right to receive, in lieu of or
in addition to the shares of Common Stock immediately theretofore
issuable upon the conversion of such holder's Notes, such shares
of stock, securities or assets as such holder would have received
in connection with such Organic Change if such holder had
converted his Notes immediately prior to such Organic Change. In
any such case, the Company will make appropriate provisions (in
form and substance satisfactory to the holders of a majority of
the outstanding principal amount of Notes then outstanding) to
insure that the provisions of this part 8 will thereafter (for so
long as such holders have the right to convert the Notes as
provided in this part 8) be applicable to the Notes.
8.E. Certain Events. If any event occurs of the type
contemplated by the provisions of this part 8 but not expressly
provided for by such provisions, then the Company's Board of
Directors will make an appropriate adjustment in the Conversion
Price so as to protect the rights of the holder of this Note;
provided that no such adjustment will increase the Conversion
Price as otherwise determined pursuant to this part 8 or decrease
the number of shares of Common Stock issuable upon conversion of
this Note.
8.F. Notices. Until the maturity of this Note:
(i) Immediately upon any adjustment of the Conversion
Price, the Company will give written notice thereof to the holder
of this Note.
(ii) The Company will give written notice to the holder of
this Note at least twenty (20) days prior to the date on which
the Company closes its books or takes a record (a) with respect
to any dividend or distribution upon Common Stock, (b) with
respect to any pro rata subscription offer to Holders of Common
Stock or (c) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation.
(iii) The Company will also give written notice to the
holder of this Note at least thirty (30) days prior to the date
on which any Organic Change will take place.
Part 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of this Note without the
prior written consent of the holders of at least sixty-seven
percent (67%) of the combined aggregate principal amount of this
Note and any additional Notes issued in payment of accrued
interest then outstanding.
Part 10. Notices.
Except as otherwise expressly provided, all notices referred
to herein will be in writing and will be delivered by registered
or certified mail, return receipt requested, postage prepaid and
will be deemed to have been given when so mailed (i) to the
Company, at its principal executive offices and (ii) to any
holder of this Note, at such holder's address as it appears in
the Note register maintained pursuant to part 3 hereof (unless
otherwise indicated by any such holder).
IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of March 6, 1996.
ELECTROSOURCE, INC.
By: /s/
James M. Rosel
Vice President
General Counsel
EXHIBIT 10.34
5% CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE ("BLUE SKY LAWS"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
DELIVERY TO THE COMPANY OF EVIDENCE SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE.
Dated October 26, 1995 $190,000.00
FOR VALUE RECEIVED, Electrosource, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order
Mitsui Engineering and Shipbuilding Co., Ltd., a Japanese
corporation ("Mitsui" or the "original holder"), the principal
sum of One Hundred Ninety Thousand Dollars and NO/100
(U.S.$190,000.00) together with interest thereon calculated from
the date hereof, in accordance with the provisions of this
October 1995 Note.
This Note is the 5% Convertible Promissory Note (the
"October 1995 Note") issued for payment of interest due pursuant
to the 5% Convertible Promissory Note (the "Original Note")
issued pursuant to a Note Purchase Agreement dated as of October
26, 1994, between the Company and the original holder hereof (the
"Purchase Agreement"). The Purchase Agreement contains terms
governing the rights and obligations of the holder of this
October 1995 Note, and all provisions of the Purchase Agreement
are incorporated herein by reference. Unless otherwise indicated
herein, capitalized terms used in this October 1995 Note and in
the Original Note have the same meaning as set forth in the
Purchase Agreement.
Part 1. Payment of Interest.
1.A. Rate of Interest. Interest shall accrue at the rate of
five percent (5%) per annum on the unpaid principal amount of
this October 1995 Note outstanding from time to time. Interest
shall be paid in additional Notes having terms identical to the
Original Note except in respect of principal amount, dated as of
the Payment Date (as defined below) with respect to which such
interest is payable and having a principal amount equal to the
amount of interest accrued and unpaid as of that Payment Date.
1.B. Payment Dates. On April 26, 1996, and on each
subsequent October 26 and April 26 (each of which dates shall be
a "Payment Date"), all unpaid interest that has accrued on the
unpaid principal amount of this October 1995 Note on and prior to
such Payment Date or on any over due interest on this October
1995 Note shall become due and payable.
1.C. Payment upon Maturity or Prepayment. All accrued
interest that has not theretofore been paid shall be paid in full
in cash on the date on which the entire principal amount
outstanding under this October 1995 Note is paid, whether upon
maturity as provided in paragraph 2.A or upon prepayment as
provided in paragraphs 2.B or 2.C. In the event that any portion
less than the entire outstanding principal amount of this October
1995 Note is prepaid pursuant to paragraph 2.B, the accrued
interest applicable to such portion prepaid shall be paid as of
the effective date of such partial prepayment.
1.D. Saving Clause. All agreements and transactions between
the Company and the holder of this October 1995 Note, whether now
existing or hereafter arising, whether contained herein or in any
other instrument, and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever,
whether by reason of acceleration of the maturity hereof,
prepayment, demand for prepayment or otherwise, shall the amount
contracted for, charged or received by the holder of this October
1995 Note from the Company for the use, forbearance or detention
of the principal indebtedness or interest hereof, which remains
unpaid from time to time, exceed the maximum amount permissible
under applicable law, it particularly being the intention of the
parties hereto to conform strictly to the applicable law of
usury. Any interest payable hereunder or under any other
instrument relating to the indebtedness evidenced hereby that is
in excess of the legal maximum, shall, in the event of
acceleration of maturity, prepayment, demand for prepayment or
otherwise, be automatically, as of the date of such acceleration,
prepayment, demand or otherwise, applied to a reduction of the
principal indebtedness hereof and not to the payment of interest,
or if such excessive interest exceeds the unpaid balance of such
principal, such excess shall be refunded to the Company. To the
extent not prohibited by law, determination of the legal maximum
rate of interest shall at all times be made by amortizing,
prorating, allocating and spreading in equal parts during the
periods of the full stated term of the indebtedness, all interest
at any time contracted for, charged or received from the Company
in connection with the indebtedness, so that the actual rate of
interest on account of such indebtedness is uniform throughout
the term hereof.
Part 2. Payment of Principal
2.A. Payment upon Maturity. The entire unpaid principal
amount hereof shall be due and payable on October 26, 2004.
2.B. Prepayment.
(i) The Company may prepay all or any part of this October
1995 Note at any time on or after October 26, 1999 (the
"Prepayment Date"); provided that, the aggregate market price of
the shares of the Company's Common Stock, par value $0.10 per
share ("Common Stock") into which this October 1995 Note is then
convertible equals or exceeds for the thirty (30) trading days
preceding the date of notice of prepayment one hundred twenty
percent (120%) of the principal amount of this October 1995 Note.
The Company shall give not less than thirty (30) days prior
written of its intention to prepay this October 1995 Note.
Notwithstanding the provisions of part 8 hereof, this October
1995 Note may not be converted into Common Stock during the
period of ten (10) days prior to the date it is to be prepaid.
The market price of the Common Stock for purposes of this section
2.B shall be the average of the closing market price of such
Common Stock as reported on NASDAQ.
(ii) Notwithstanding the provisions of part 8 hereof, in the
event that pursuant to part 5.D(ii) of the Purchase Agreement
Mitsui gives notice of an intention to tender this October 1995
Note or any other Notes in payment of license fees at a price
determined pursuant to part 5.D(iii)(B) of the Purchase Agreement
or to tender shares of Common Stock issued upon conversion of
Notes in payment of license fees (in each case, other than
license fees payable pursuant to paragraph 2.1(b) or (c) of the
Distribution Agreement dated July 7, 1994, between the Company
and Mitsui), Mitsui shall not have the right to convert this
October 1995 Note into shares of Common Stock during the period
beginning on the date of the notice of such tender and extending
for sixty (60) days immediately following the date of such
tender. The Company may, during such period, prepay all or any
portion of the Notes (other than that portion of the Notes
tendered in payment of license fees pursuant to the notice of
tender giving rise to such right) at a price equal to the
aggregate principal amount of Notes to be prepaid, plus accrued
and unpaid interest thereon; provided that, the aggregate market
price of the shares of the Common Stock into which the Notes are
then convertible equals or exceeds for the thirty (30) trading
days preceding the date of notice of prepayment one hundred
twenty percent (120%) of the principal amount of such Notes.
(iii) This October 1995 Note may be prepaid at the
option of the Company only in accordance with the terms of this
section 2.B.
Part 3. Registration of Transfer.
The Company shall keep at its principal office a register
for the registration of Notes, which shall contain the name and
address of the registered holder (herein referred to as the
holder) of the Note and the principal and interest of the Note.
No transfer of the Note or any right to receive payments under
the Note shall be permitted unless made upon the Company's
register. Upon the surrender of any Note or Notes at such place,
the Company shall, at the request of the holder of such Note,
execute and deliver (at the Company's expense) a new Note or
Notes in exchange therefore representing in the aggregate the
principal amount represented by the surrendered Note. Each such
new Note shall be registered in such name and shall represent
such principal amount of Note as is requested by the holder of
the surrendered Note and shall be substantially identical in form
to the surrendered Note, and interest shall accrue on such new
Note from the date to which interest has been fully paid on such
Note represented by the surrendered Note; provided that, if any
Note is to be registered in the name of a person or persons other
than the holder of the Note, there has been compliance with all
laws applicable to such change of registered holder, including
but not limited to federal and state securities laws.
Part 4. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Company of the ownership and the loss, theft, destruction or
mutilation of any Note, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory
to the Company, or, in the case of any such mutilation upon
surrender of such Note, the Company shall (at its expense)
execute and deliver in lieu of such Note, a new Note of like kind
representing the principal amount of Note represented by such
lost. stolen, destroyed or mutilated Note and dated the date of
such lost, stolen, destroyed or mutilated Note, and interest
shall accrue on the Note represented by such new Note from the
date to which interest has been fully paid on such lost, stolen,
destroyed or mutilated Note.
Part 5. Cancellation.
After all principal and accrued interest at any time owed on
this October 1995 Note has been paid in full, this October 1995
Note shall be surrendered to the Company for cancellation and
shall not be reissued.
Part 6. Waiver of Notice, etc.
The Company hereby waives presentment, demand, notice,
protest and all other demands and notice in connection with the
delivery, acceptance, performance and enforcement of this October
1995 Note, and assents to extension of the time of payment or
forbearance or other indulgence without notice.
Part 7. Events of Default.
7.A. Events of Default. Each of the following shall
constitute an Event of Default:
(i) the Company fails to pay when due the full amount of
any principal or interest on this October 1995 Note whether at
maturity or by acceleration or otherwise; or
(ii) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is
entered adjudicating the Company bankrupt or insolvent; or the
Company petitions or applies to any tribunal for the appointment
of a trustee, receiver or liquidator of the Company or of any
substantial part of the assets of the Company, or commences any
proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced against the Company
and either (X) the Company takes any action indicating its
approval thereof, consent thereto, or acquiescence therein or (Y)
such petition, application or proceeding is not dismissed within
ninety (90) days.
7.B. Remedies. Upon the occurrence and continuance of any
Event or Events of default, the holders of a majority of the
combined aggregate principal amount outstanding under this
October 1995 Note and any Notes issued in payment of accrued
interest on Notes may, by written notice to the Company, declare
all or any part of the unpaid principal amount of the Notes then
outstanding to be forthwith due and payable, and thereupon such
unpaid principal amount or part thereof, together with interest
accrued thereon, shall become so due and payable without
presentation, presentment, protest, notice of intent to
accelerate, notice of acceleration, or further demand or notice
of any kind, all of which are hereby expressly waived, and such
holder or holders may proceed to enforce payment of such amount
or part thereof in such manner as it or they may elect. The
Company hereby waives to the extent not prohibited by applicable
law which cannot itself be waived (i) all presentments, demands
for performance, notices of nonperformance (except to the extent
required by the provisions hereof), (ii) any requirement of
diligence or promptness on the part of any holder of Notes in the
enforcement of its rights under the provisions of this October
1995 Note, and (iii) any and all notices of every kind and
description which may be required to be given by any statute or
rule of law.
Part 8. Conversion.
8.A. Conversion Procedure.
(i) The holder of this October 1995 Note may convert all or
any portion of the outstanding principal amount hereof (plus
accrued but unpaid interest on such principal amount or portion
thereof) held by such holder into a number of shares of the
Company's Common Stock computed by dividing the principal amount
of this October 1995 Note (plus accrued but unpaid interest
thereon) to be converted by the "Conversion Price" (as defined
below) then in effect.
(ii) Each conversion will be deemed to have been effected as
of the close of business on the date on which the instrument
representing this October 1995 Note has been surrendered at the
principal office of the Company. At such time as such conversion
has been effected, the rights of the holder of this October 1995
Note as such holder will cease and the person or persons in whose
name or names any certificate or certificates for shares of
Common Stock are to be issued upon such conversion will be deemed
to have become the holder or holders of record of the shares of
Common Stock represented thereby.
(iii) As soon as possible after a conversion has been
effected (but in any event within three business days in the case
of subparagraph (a) below), the Company will deliver to the
converting holder:
(a) a certificate representing the number of shares
of Common Stock issuable by reason of such conversion in
such name or names and such denomination or denominations
as the converting holder has specified (provided that, in
the event that the name specified by the converting
holder is other than that of the converting holder, the
Company has received evidence satisfactory to Company
counsel that the transfer of Common Stock from the
converting holder to the person specified may be
accomplished without violation of applicable law);
(b) a replacement Note having terms identical to
those of this October 1995 Note other than the principal
amount, which shall be equal to portion of the principal
amount of the original Note not converted; and
(c) the amount payable under subparagraph (vi)
below with respect to fractional shares of Common Stock
otherwise issuable upon such conversion.
(iv) The issuance of certificates for shares of Common Stock
upon conversion of this October 1995 Note will be made without
charge to the holder of such Note for any issuance tax in respect
thereof or other cost incurred by the Company in connection with
such conversion and the related issuance of shares of Common
Stock. Upon conversion of this October 1995 Note, the Company
will take all such actions as are necessary in order to insure
that the Common Stock issuable with respect to such conversion
will be validly issued, fully paid and nonassessable.
(v) The Company will not close its books against the
transfer of this October 1995 Note or of Common Stock issued or
issuable upon conversion of this October 1995 Note in any manner
which interferes with the timely conversion of this October 1995
Note.
(vi) If any fractional interest in a share of Common Stock
would, except for the provisions of this subparagraph (vi), be
deliverable upon any conversion of this October 1995 Note, the
Company, in lieu of delivering the fractional share therefore,
may at its option pay a cash adjustment for such fractional share
equal to such fraction times the fair market value per share of
the Common Stock at the close of business on the date of
conversion, as determined in good faith by the board of directors
of the Company.
(vii) In the event that pursuant to part 5.D(ii) of the
Purchase Agreement Mitsui gives notice of an intention to tender
this October 1995 Note or any other Notes in payment of license
fees at a price determined pursuant to part 5.D(iii)(B) of the
Purchase Agreement or to tender shares of Common Stock issued
upon conversion of Notes in payment of license fees (in each
case, other than license fees payable pursuant to paragraph
2.1(b) or (c) of the Distribution Agreement dated July 7, 1994,
between the Company and Mitsui), the Company may, by notice to
Mitsui, require that Mitsui surrender for conversion into Common
Stock all then outstanding Notes other than those Notes actually
tendered in payment of license fees pursuant to the notice of
tender giving rise to such right on the part of the Company. Any
such conversion shall be effective as of the date of the notice
given by Mitsui of its intention to tender.
(viii) The provisions of this part 8 shall be subject to
the limitations imposed by section 2.B hereof.
8.B. Conversion Price. The initial Conversion Price will be
U.S.$3.80. In order to prevent dilution of the conversion rights
granted under this part 8, the Conversion Price will be subject
to adjustment from time to time pursuant to this part 8; provided
that the Conversion Price will in no event be less than $.0001.
8.C. Subdivision or Combination of Common Stock.. If the
Company at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) its outstanding shares
of Common Stock into a greater number of shares, the Conversion
Price in effect immediately prior to such subdivision will be
proportionately reduced, and if the Company at any time combines
(by reverse stock split or otherwise) its outstanding shares of
Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
8.D. Reorganization, Reclassification, Consolidation, Merger
or Sale. Any reorganization, reclassification, consolidation,
merger or sale of all or substantially all of the Company's
assets to another Person which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
or upon subsequent liquidation), stock, securities or amounts
with respect to or in exchange for Common Stock is referred to
herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company will make appropriate provisions (in
form and substance satisfactory to the holders of a majority of
the outstanding principal amount of Notes then outstanding) to
insure that each of the holders of Notes will thereafter (for so
long as such holders have the right to convert the Notes as
provided in this part 8) have the right to receive, in lieu of or
in addition to the shares of Common Stock immediately theretofore
issuable upon the conversion of such holder's Notes, such shares
of stock, securities or assets as such holder would have received
in connection with such Organic Change if such holder had
converted his Notes immediately prior to such Organic Change. In
any such case, the Company will make appropriate provisions (in
form and substance satisfactory to the holders of a majority of
the outstanding principal amount of Notes then outstanding) to
insure that the provisions of this part 8 will thereafter (for so
long as such holders have the right to convert the Notes as
provided in this part 8) be applicable to the Notes.
8.E. Certain Events. If any event occurs of the type
contemplated by the provisions of this part 8 but not expressly
provided for by such provisions, then the Company's Board of
Directors will make an appropriate adjustment in the Conversion
Price so as to protect the rights of the holder of this October
1995 Note; provided that no such adjustment will increase the
Conversion Price as otherwise determined pursuant to this part 8
or decrease the number of shares of Common Stock issuable upon
conversion of this October 1995 Note.
8.F. Notices. Until the maturity of this October 1995 Note:
(i) Immediately upon any adjustment of the Conversion
Price, the Company will give written notice thereof to the holder
of this October 1995 Note.
(ii) The Company will give written notice to the holder of
this October 1995 Note at least twenty (20) days prior to the
date on which the Company closes its books or takes a record (a)
with respect to any dividend or distribution upon Common Stock,
(b) with respect to any pro rata subscription offer to Holders of
Common Stock or (c) for determining rights to vote with respect
to any Organic Change, dissolution or liquidation.
(iii) The Company will also give written notice to the
holder of this October 1995 Note at least thirty (30) days prior
to the date on which any Organic Change will take place.
Part 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of this October 1995 Note
without the prior written consent of the holders of at least
sixty-seven percent (67%) of the combined aggregate principal
amount of this October 1995 Note and any additional Notes issued
in payment of accrued interest then outstanding.
Part 10. Notices.
Except as otherwise expressly provided, all notices referred
to herein will be in writing and will be delivered by registered
or certified mail, return receipt requested, postage prepaid and
will be deemed to have been given when so mailed (i) to the
Company, at its principal executive offices and (ii) to any
holder of this October 1995 Note, at such holder's address as it
appears in the Note register maintained pursuant to part 3 hereof
(unless otherwise indicated by any such holder).
IN WITNESS WHEREOF, the Company has executed and delivered
this October 1995 Note as of October 26, 1995.
ELECTROSOURCE, INC.
By: /S/
James M. Rosel
Vice President
General Counsel
EXHIBIT 10.35
INTEREST NOTE
5% CONVERTIBLE PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS OF ANY STATE ("BLUE SKY LAWS"), AND MAY
NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT OR
DELIVERY TO THE COMPANY OF EVIDENCE SATISFACTORY TO THE
COMPANY TO THE EFFECT THAT AN EXEMPTION FROM
REGISTRATION THEREUNDER IS AVAILABLE.
Dated March 6, 1996 $73,150.00
FOR VALUE RECEIVED, Electrosource, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to the order
Mitsui Engineering and Shipbuilding Co., Ltd., a Japanese
corporation ("Mitsui" or the "original holder"), the principal
sum of Seventy-three Thousand, One hundred Fifty Dollars and
NO/100 (U.S. $73,150) together with interest thereon calculated
from the date hereof, in accordance with the provisions of this
Note.
This Note is the 5% Convertible Promissory Note (the "March
1996 Note") issued for payment of interest due pursuant to the 5%
Convertible Promissory Note (the "Original Note") issued pursuant
to a Note Purchase Agreement dated as of October 26, 1994, and
for payment of interest under an additional Note dated October
26, 1995 (the "October 1995 Note" of $190,000) between the
Company and the original holder hereof (the "Purchase
Agreement"). The Purchase Agreement contains terms governing the
rights and obligations of the holder of this Note, and all
provisions of the Purchase Agreement are incorporated herein by
reference. Unless otherwise indicated herein, capitalized terms
used in this Note and in the Original Note have the same meaning
as set forth in the Purchase Agreement.
Part 1. Payment of Interest.
1.A. Rate of Interest. Interest shall accrue at the rate of
five percent (5%) per annum on the unpaid principal amount of
this Note outstanding from time to time. Interest shall be paid
in additional Notes having terms identical to the Original Note
except in respect of principal amount, dated as of the Payment
Date (as defined below) with respect to which such interest is
payable and having a principal amount equal to the amount of
interest accrued and unpaid as of that Payment Date.
1.B. Payment Dates. On April 26, 1996, and on each
subsequent October 26 and April 26 (each of which dates shall be
a "Payment Date"), all unpaid interest that has accrued on the
unpaid principal amount of this Note on and prior to such Payment
Date or on any over due interest on this Note shall become due
and payable.
1.C. Payment upon Maturity or Prepayment. All accrued
interest that has not theretofore been paid shall be paid in full
in cash on the date on which the entire principal amount
outstanding under this Note is paid, whether upon maturity as
provided in paragraph 2.A or upon prepayment as provided in
paragraphs 2.B or 2.C. In the event that any portion less than
the entire outstanding principal amount of this Note is prepaid
pursuant to paragraph 2.B, the accrued interest applicable to
such portion prepaid shall be paid as of the effective date of
such partial prepayment.
1.D. Saving Clause. All agreements and transactions between
the Company and the holder of this Note, whether now existing or
hereafter arising, whether contained herein or in any other
instrument, and whether written or oral, are hereby expressly
limited so that in no contingency or event whatsoever, whether by
reason of acceleration of the maturity hereof, prepayment, demand
for prepayment or otherwise, shall the amount contracted for,
charged or received by the holder of this Note from the Company
for the use, forbearance or detention of the principal
indebtedness or interest hereof, which remains unpaid from time
to time, exceed the maximum amount permissible under applicable
law, it particularly being the intention of the parties hereto to
conform strictly to the applicable law of usury. Any interest
payable hereunder or under any other instrument relating to the
indebtedness evidenced hereby that is in excess of the legal
maximum, shall, in the event of acceleration of maturity,
prepayment, demand for prepayment or otherwise, be automatically,
as of the date of such acceleration, prepayment, demand or
otherwise, applied to a reduction of the principal indebtedness
hereof and not to the payment of interest, or if such excessive
interest exceeds the unpaid balance of such principal, such
excess shall be refunded to the Company. To the extent not
prohibited by law, determination of the legal maximum rate of
interest shall at all times be made by amortizing, prorating,
allocating and spreading in equal parts during the periods of the
full stated term of the indebtedness, all interest at any time
contracted for, charged or received from the Company in
connection with the indebtedness, so that the actual rate of
interest on account of such indebtedness is uniform throughout
the term hereof.
Part 2. Payment of Principal
2.A. Payment upon Maturity. The entire unpaid principal
amount hereof shall be due and payable on October 26, 2004.
2.B. Prepayment.
(i) The Company may prepay all or any part of this Note at
any time on or after the date hereof (the "Prepayment Date");
provided that, the aggregate market price of the shares of the
Company's Common Stock, par value $0.10 per share ("Common
Stock") into which this Note is then convertible equals or
exceeds for the thirty (30) trading days preceding the date of
notice of prepayment one hundred twenty percent (120%) of the
principal amount of this Note. The Company shall give not less
than thirty (30) days prior written notice intention to prepay
this Note. Notwithstanding the provisions of part 8 hereof,
this Note may not be converted into Common Stock during the
period of ten (10) days prior to the date it is to be prepaid.
The market price of the Common Stock for purposes of this section
2.B shall be the average of the closing market price of such
Common Stock as reported on NASDAQ.
(ii) Notwithstanding the provisions of part 8 hereof, in the
event that pursuant to part 5.D(ii) of the Purchase Agreement
Mitsui gives notice of an intention to tender this Note or any
other Notes in payment of license fees at a price determined
pursuant to part 5.D(iii)(B) of the Purchase Agreement or to
tender shares of Common Stock issued upon conversion of Notes in
payment of license fees (in each case, other than license fees
payable pursuant to paragraph 2.1(b) or (c) of the Distribution
Agreement dated July 7, 1994, between the Company and Mitsui),
Mitsui shall not have the right to convert this Note into shares
of Common Stock during the period beginning on the date of the
notice of such tender and extending for sixty (60) days
immediately following the date of such tender. The Company may,
during such period, prepay all or any portion of the Notes (other
than that portion of the Notes tendered in payment of license
fees pursuant to the notice of tender giving rise to such right)
at a price equal to the aggregate principal amount of Notes to be
prepaid, plus accrued and unpaid interest thereon; provided that,
the aggregate market price of the shares of the Common Stock into
which the Notes are then convertible equals or exceeds for the
thirty (30) trading days preceding the date of notice of
prepayment one hundred twenty percent (120%) of the principal
amount of such Notes.
(iii) This Note may be prepaid at the option of the
Company only in accordance with the terms of this section 2.B.
Part 3. Registration of Transfer.
The Company shall keep at its principal office a register
for the registration of Notes, which shall contain the name and
address of the registered holder (herein referred to as the
holder) of the Note and the principal and interest of the Note.
No transfer of the Note or any right to receive payments under
the Note shall be permitted unless made upon the Company's
register. Upon the surrender of any Note or Notes at such place,
the Company shall, at the request of the holder of such Note,
execute and deliver (at the Company's expense) a new Note or
Notes in exchange therefore representing in the aggregate the
principal amount represented by the surrendered Note. Each such
new Note shall be registered in such name and shall represent
such principal amount of Note as is requested by the holder of
the surrendered Note and shall be substantially identical in form
to the surrendered Note, and interest shall accrue on such new
Note from the date to which interest has been fully paid on such
Note represented by the surrendered Note; provided that, if any
Note is to be registered in the name of a person or persons other
than the holder of the Note, there has been compliance with all
laws applicable to such change of registered holder, including
but not limited to federal and state securities laws.
Part 4. Replacement.
Upon receipt of evidence reasonably satisfactory to the
Company of the ownership and the loss, theft, destruction or
mutilation of any Note, and in the case of any such loss, theft
or destruction, upon receipt of indemnity reasonably satisfactory
to the Company, or, in the case of any such mutilation upon
surrender of such Note, the Company shall (at its expense)
execute and deliver in lieu of such Note, a new Note of like kind
representing the principal amount of Note represented by such
lost. stolen, destroyed or mutilated Note and dated the date of
such lost, stolen, destroyed or mutilated Note, and interest
shall accrue on the Note represented by such new Note from the
date to which interest has been fully paid on such lost, stolen,
destroyed or mutilated Note.
Part 5. Cancellation.
After all principal and accrued interest at any time owed on
this Note has been paid in full, this Note shall be surrendered
to the Company for cancellation and shall not be reissued.
Part 6. Waiver of Notice, etc.
The Company hereby waives presentment, demand, notice,
protest and all other demands and notice in connection with the
delivery, acceptance, performance and enforcement of this Note,
and assents to extension of the time of payment or forbearance or
other indulgence without notice.
Part 7. Events of Default.
7.A. Events of Default. Each of the following shall
constitute an Event of Default:
(i) the Company fails to pay when due the full amount of
any principal or interest on this Note whether at maturity or by
acceleration or otherwise; or
(ii) the Company makes an assignment for the benefit of
creditors or admits in writing its inability to pay its debts
generally as they become due; or an order, judgment or decree is
entered adjudicating the Company bankrupt or insolvent; or the
Company petitions or applies to any tribunal for the appointment
of a trustee, receiver or liquidator of the Company or of any
substantial part of the assets of the Company, or commences any
proceeding under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt, dissolution or liquidation law
of any jurisdiction; or any such petition or application is
filed, or any such proceeding is commenced against the Company
and either (X) the Company takes any action indicating its
approval thereof, consent thereto, or acquiescence therein or (Y)
such petition, application or proceeding is not dismissed within
ninety (90) days.
7.B. Remedies. Upon the occurrence and continuance of any
Event or Events of default, the holders of a majority of the
combined aggregate principal amount outstanding under this Note
and any Notes issued in payment of accrued interest on Notes may,
by written notice to the Company, declare all or any part of the
unpaid principal amount of the Notes then outstanding to be
forthwith due and payable, and thereupon such unpaid principal
amount or part thereof, together with interest accrued thereon,
shall become so due and payable without presentation,
presentment, protest, notice of intent to accelerate, notice of
acceleration, or further demand or notice of any kind, all of
which are hereby expressly waived, and such holder or holders may
proceed to enforce payment of such amount or part thereof in such
manner as it or they may elect. The Company hereby waives to the
extent not prohibited by applicable law which cannot itself be
waived (i) all presentments, demands for performance, notices of
nonperformance (except to the extent required by the provisions
hereof), (ii) any requirement of diligence or promptness on the
part of any holder of Notes in the enforcement of its rights
under the provisions of this Note, and (iii) any and all notices
of every kind and description which may be required to be given
by any statute or rule of law.
Part 8. Conversion.
8.A. Conversion Procedure.
(i) The holder of this Note may convert all or any portion
of the outstanding principal amount hereof (plus accrued but
unpaid interest on such principal amount or portion thereof) held
by such holder into a number of shares of the Company's Common
Stock computed by dividing the principal amount of this Note
(plus accrued but unpaid interest thereon) to be converted by the
"Conversion Price" (as defined below) then in effect.
(ii) Each conversion will be deemed to have been effected as
of the close of business on the date on which the instrument
representing this Note has been surrendered at the principal
office of the Company. At such time as such conversion has been
effected, the rights of the holder of this Note as such holder
will cease and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock are to be
issued upon such conversion will be deemed to have become the
holder or holders of record of the shares of Common Stock
represented thereby.
(iii) As soon as possible after a conversion has been
effected (but in any event within three business days in the case
of subparagraph (a) below), the Company will deliver to the
converting holder:
(a) a certificate representing the number of shares
of Common Stock issuable by reason of such conversion in
such name or names and such denomination or denominations
as the converting holder has specified (provided that, in
the event that the name specified by the converting
holder is other than that of the converting holder, the
Company has received evidence satisfactory to Company
counsel that the transfer of Common Stock from the
converting holder to the person specified may be
accomplished without violation of applicable law);
(b) a replacement Note having terms identical to
those of this Note other than the principal amount, which
shall be equal to portion of the principal amount of this
Note not converted; and
(c) the amount payable under subparagraph (vi)
below with respect to fractional shares of Common Stock
otherwise issuable upon such conversion.
(iv) The issuance of certificates for shares of Common Stock
upon conversion of this Note will be made without charge to the
holder of such Note for any issuance tax in respect thereof or
other cost incurred by the Company in connection with such
conversion and the related issuance of shares of Common Stock.
Upon conversion of this Note, the Company will take all such
actions as are necessary in order to insure that the Common Stock
issuable with respect to such conversion will be validly issued,
fully paid and nonassessable.
(v) The Company will not close its books against the
transfer of this Note or of Common Stock issued or issuable upon
conversion of this Note in any manner which interferes with the
timely conversion of this Note.
(vi) If any fractional interest in a share of Common Stock
would, except for the provisions of this subparagraph (vi), be
deliverable upon any conversion of this Note, the Company, in
lieu of delivering the fractional share therefore, may at its
option pay a cash adjustment for such fractional share equal to
such fraction times the fair market value per share of the Common
Stock at the close of business on the date of conversion, as
determined in good faith by the board of directors of the
Company.
(vii) In the event that pursuant to part 5.D(ii) of the
Purchase Agreement Mitsui gives notice of an intention to tender
this Note or any other Notes in payment of license fees at a
price determined pursuant to part 5.D(iii)(B) of the Purchase
Agreement or to tender shares of Common Stock issued upon
conversion of Notes in payment of license fees (in each case,
other than license fees payable pursuant to paragraph 2.1(b) or
(c) of the Distribution Agreement dated July 7, 1994, between the
Company and Mitsui), the Company may, by notice to Mitsui,
require that Mitsui surrender for conversion into Common Stock
all then outstanding Notes other than those Notes actually
tendered in payment of license fees pursuant to the notice of
tender giving rise to such right on the part of the Company. Any
such conversion shall be effective as of the date of the notice
given by Mitsui of its intention to tender.
(viii) The provisions of this part 8 shall be subject to
the limitations imposed by section 2.B hereof.
8.B. Conversion Price. The initial Conversion Price will be
U.S.$3.80. In order to prevent dilution of the conversion rights
granted under this part 8, the Conversion Price will be subject
to adjustment from time to time pursuant to this part 8; provided
that the Conversion Price will in no event be less than $.0001.
8.C. Subdivision or Combination of Common Stock.. If the
Company at any time subdivides (by any stock split, stock
dividend, recapitalization or otherwise) its outstanding shares
of Common Stock into a greater number of shares, the Conversion
Price in effect immediately prior to such subdivision will be
proportionately reduced, and if the Company at any time combines
(by reverse stock split or otherwise) its outstanding shares of
Common Stock into a smaller number of shares, the Conversion
Price in effect immediately prior to such combination will be
proportionately increased.
8.D. Reorganization, Reclassification, Consolidation, Merger
or Sale. Any reorganization, reclassification, consolidation,
merger or sale of all or substantially all of the Company's
assets to another Person which is effected in such a way that
holders of Common Stock are entitled to receive (either directly
or upon subsequent liquidation), stock, securities or amounts
with respect to or in exchange for Common Stock is referred to
herein as an "Organic Change." Prior to the consummation of any
Organic Change, the Company will make appropriate provisions (in
form and substance satisfactory to the holders of a majority of
the outstanding principal amount of Notes then outstanding) to
insure that each of the holders of Notes will thereafter (for so
long as such holders have the right to convert the Notes as
provided in this part 8) have the right to receive, in lieu of or
in addition to the shares of Common Stock immediately theretofore
issuable upon the conversion of such holder's Notes, such shares
of stock, securities or assets as such holder would have received
in connection with such Organic Change if such holder had
converted his Notes immediately prior to such Organic Change. In
any such case, the Company will make appropriate provisions (in
form and substance satisfactory to the holders of a majority of
the outstanding principal amount of Notes then outstanding) to
insure that the provisions of this part 8 will thereafter (for so
long as such holders have the right to convert the Notes as
provided in this part 8) be applicable to the Notes.
8.E. Certain Events. If any event occurs of the type
contemplated by the provisions of this part 8 but not expressly
provided for by such provisions, then the Company's Board of
Directors will make an appropriate adjustment in the Conversion
Price so as to protect the rights of the holder of this Note;
provided that no such adjustment will increase the Conversion
Price as otherwise determined pursuant to this part 8 or decrease
the number of shares of Common Stock issuable upon conversion of
this Note.
8.F. Notices. Until the maturity of this Note:
(i) Immediately upon any adjustment of the Conversion
Price, the Company will give written notice thereof to the holder
of this Note.
(ii) The Company will give written notice to the holder of
this Note at least twenty (20) days prior to the date on which
the Company closes its books or takes a record (a) with respect
to any dividend or distribution upon Common Stock, (b) with
respect to any pro rata subscription offer to Holders of Common
Stock or (c) for determining rights to vote with respect to any
Organic Change, dissolution or liquidation.
(iii) The Company will also give written notice to the
holder of this Note at least thirty (30) days prior to the date
on which any Organic Change will take place.
Part 9. Amendment and Waiver.
No amendment, modification or waiver shall be binding or
effective with respect to any provision of this Note without the
prior written consent of the holders of at least sixty-seven
percent (67%) of the combined aggregate principal amount of this
Note and any additional Notes issued in payment of accrued
interest then outstanding.
Part 10. Notices.
Except as otherwise expressly provided, all notices referred
to herein will be in writing and will be delivered by registered
or certified mail, return receipt requested, postage prepaid and
will be deemed to have been given when so mailed (i) to the
Company, at its principal executive offices and (ii) to any
holder of this Note, at such holder's address as it appears in
the Note register maintained pursuant to part 3 hereof (unless
otherwise indicated by any such holder).
IN WITNESS WHEREOF, the Company has executed and delivered
this Note as of March 6, 1996.
ELECTROSOURCE, INC.
By: /s/
James M. Rosel
Vice President
General Counsel
EXHIBIT 10.36
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 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 (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.
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 invoice from
Electrosource or 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 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
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 and
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 (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 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.
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.
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/ By: /s/
Michael G. Semmens Hitoshi Narita
President and Chairman of the Board Managing Director
EXHIBIT 10.65
MASTER LEASE AGREEMENT FOR EQUIPMENT
THIS AGREEMENT dated September 7, 1995, between SALEM
CAPITAL CORPORATION, having its principal place of business at
482 Lowell Street, Lynnfield, Massachusetts 01940-1621 ("Lessor")
and ELECTROSOURCE, INC. having its principal place of business at
3800 B Drossett Drive, Austin, Texas 78744-1131 ("Lessee").
Lessor agrees to lease to Lessee, and Lessee agrees to lease
from Lessor the machines and features (the "Equipment" described
in the Equipment Schedules now or hereafter executed and attached
from time to time by Lessor and Lessee covering such items of
Equipment as are delivered to and accepted by Lessee on or prior
to the Final Delivery Date for each item of Equipment. Each
Equipment Schedule, with Attached Certificate of Acceptance and
such other attachments as are referred to in the Equipment
Schedule shall constitute a separate Lease incorporation all the
terms and conditions of this Agreement.
The terms "Date of Certificate of Acceptance," "Daily Lease Rate
Factor," "Basic Lease Rate Factor," "Overdue Rate," "Interim Rent
Date," "First Basic Rent Date," "Last Basic Rent Date,"
"Expiration Date," "Casualty Value," and "lessor's Cost" shall
have the meaning set forth in the relevant Equipment Schedule.
Section 1. TERM OF LEASE
Upon delivery of the Equipment, Lessee shall inspect such
Equipment and, if it is found to be in good order, execute and
deliver to Lessor a Certificate of Acceptance in the form
attached to the Equipment Schedule. All items of Equipment
listed on such Certificate of Acceptance shall be deemed accepted
by lessee and shall be deemed to conform to this Agreement
despite any defect. The Lease term shall commence on the date of
Lessee's execution of such Certificate of Acceptance. The Lease
term shall end on the Expiration Date unless otherwise terminated
or extended pursuant to the provisions of this Agreement.
Section 2 RENTAL CHARGES AND OTHER REQUIRED PAYMENTS
(a) Lessee shall pay to Lessor as Basic Rent ("Basic Rent")
for each item of equipment, the following:
(i) On the Interim Rent Date, an amount equal to the
Daily Lease Rate Factor multiplied by the Lessor's
Cost of each item of equipment for each day from and
including the date of the Certificate of Acceptance
to and including the day immediately preceding the
Interim Rent Date;
(ii) On the First Basic Rent Date, and on each Basic
Rent Date thereafter, to and including the Last Basic
Rent Date, an amount equal to the Basic Lease Rate
Factor multiplied by the Lessor's Cost of each item
of equipment.
(b) Lessee shall pay the following amounts (herein referred
to as "Supplemental Rent" and, together with Basic Rent,
as "Rent"):
(i) On or before the applicable due date, all taxes,
however designated, which are levied or imposed by
any governmental authority upon the Equipment or its
sale, purchase, ownership or use, or upon Rent on
this Agreement, including but not limited to sales or
use taxes, personal property taxes, privilege or
excise taxes, franchise taxes ad valorem or value-
added taxes, leasing taxes, and stamp taxes, together
with any penalties, fines or interest thereon,
excluding, however, income taxes measured solely by
the net income of Lessor. To the extent permitted by
applicable law, Lessee shall prepare (in such manner
as will show Lessor's ownership of the Equipment) and
timely file all tax returns required in connection
with taxes payable by Lessee hereunder. With respect
to any such tax return required to be filed by
Lessor, Lessee shall notify Lessor of such equipment
and furnish Lessor with all forms and information
necessary for proper and timely filing of such
returns. Lessee shall inform Lessor as to any
governmental jurisdiction imposing personal property
taxes on the Equipment, and as to the amount of such
taxes.
(ii) On or before the date required by the terms
hereof (or upon Lessor's demand if no such date is
specified herein), any other amount which the Lessee
is obligated to pay hereunder, including but not
limited to indemnity payments and payments of
Casualty Value.
(c) On any payment of Basic Rent, Supplemental Rent, Other
Required Payment and Casualty Value Payment, which is
not paid on its due date, Lessee shall pay to Lessor
late charges computed from such payments due date until
paid, all the overdue Rate (computed on the basis of a
360-day year).
Section 3. NET LEASE
This lease is a net lease and Lessee's obligation to pay all
Rent shall be absolute and unconditional and, except as expressly
provided herein, shall not be subject to any abatement,
reduction, defense, counterclaim, setoff, or recoupment,
including any present or future claim against Lessor or the
manufacturer of the Equipment. Except as expressly proved
herein, this Lease shall not terminate for any reason, including
any defect in the Equipment or Lessor's title thereto or any
destruction or loss of use of any item of Equipment.
Section 4. OWNERSHIP OF EQUIPMENT
The Equipment shall at all times remain the property of
Lessor and may be removed by Lessor at any time after termination
of this Agreement.
Lessee shall affix tags, decals or plates to the Equipment
indicating Lessor's ownership, which type of tag, decal or plate
and location may be specified by Lessor, and Lessee shall not
permit their removal or concealment. Lessee shall cause each
item of Equipment to be kept numbered with the serial number
specified in the Equipment Schedule. Lessee shall provide to
Lessor any document (including UCC financing statements and
landlord or mortgagee waivers) reasonably requested by Lessor for
the purpose of evidencing or protecting Lessor's title and
interest in the Equipment. Lessee shall, at its own expense
protect and defend Lessor's title in the Equipment against all
claims and liens of Lessee's creditors and keep the Equipment
free and clear of all claims, liens and encumbrances except those
resulting from the agreements or acts of Lessor and not resulting
from Lessee's failure to perform its obligations under this
Agreement.
Section 5. POSSESSION
Lessor warrants to Lessee that Lessee shall be entitled, as
against all persons claiming by, through or under Lessor, to
possess the Equipment subject to the terms of this Agreement so
long as Lessee is not in default hereunder.
Upon expiration or termination of this Lease, Lessee at its
sole cost and expense shall return the Equipment to Lessor at the
place within the continental United States designated by Lessor
and in as good condition as when delivered to Lessee, reasonable
wear and tear excepted, subject to the terms of this Agreement.
At the time of such return, Lessee shall at its own expense
effect such repairs including any necessary engineering changes
as are required for the Equipment to remain qualified for
manufacturer's contract maintenance at then standard rates.
Section 6. MAINTENANCE
(a) Lessee shall either enter into and maintain in force a
manufacturer's maintenance agreement covering
maintenance of the Equipment, or maintain the Equipment
under manufacturer's specifications. Upon Lease
Expiration or any other surrender of the Equipment,
Lessee will provide to Lessor, its successors or
assigns, evidence that the Equipment complies with all
maintenance standards of the Manufacturer and that the
Equipment meets all current Manufacturer specifications
for this equipment type (this will include but not be
limited to such engineering changes and improvements to
the equipment which are available without additional
charge). Lessee shall bear all expenses involved in
producing such evidence from the Manufacturer. In the
event that the Equipment does not meet the
Manufacturer's standards and specifications the Lessee
shall immediately cause the Manufacturer to bring the
equipment up to said standards and specifications. All
expenses involved in bringing the Equipment up to said
standards and specifications shall be paid by Lessee.
Lessee shall also pay to the Lessor, it successors or
assigns, any economic loss in the value of the Equipment
that may result from the Equipment not being up to the
Manufacturer's standards and specifications and any
delay involved in causing the Equipment to be brought up
to said standards and specifications.
(b) All maintenance and service charges related to the
Equipment shall be borne by Lessee.
(c) The required suitable electric current to operate the
Equipment and a suitable place of installation shall be
furnished by Lessee. The installation facilities shall
be as specified in the manufacturer's installation
manual and shall at all times meet the minimum standard
of the National Board of Fire Underwriters for the
protection of Electronic Computer Systems as recommended
by the Nation Fire Protection Association. All supplies
consumed or required by the Equipment shall be furnished
by Lessee.
Section 7. LOCATION AND USE OF EQUIPMENT
(a) During the term of the lease, the Equipment shall be
located at the address indicated in the Certificate of
Acceptance. No Equipment shall be removed from the
above address without the prior written consent of
Lessor. Any relocation of the Equipment shall be at the
risk and the expense of the Lessee and in accordance
with the Manufacturer's specifications.
(b) Lessee covenants and warrants that during the period
that any Equipment is leased to Lessee hereunder, such
Equipment will at all times be used and operated in
compliance with the laws of the jurisdictions in which
it is located, and in compliance with all acts, rules,
regulations, and orders of any commission, board or
other legislative, administrative, or judicial body or
officer having power to regulate or supervise the use or
operation of the Equipment. Lessee shall not install or
use the Equipment in such manner or in such
circumstances that any part of the Equipment is deemed
to be an accession to other personal property or deemed
to be real property or a fixture thereon.
Section 8. INSURANCE
During the period that any Equipment is leased to Lessee
hereunder, Lessee will at all times and at its expense carry and
maintain or cause to be carried and maintained insurance for loss
of or damage to the Equipment caused by fire, lightening,
sprinkler breakage, tornado and windstorms, explosion, smoke and
smudge, aircraft and motor vehicle damage, strikes, riots and
civil commotion, burglary and theft, vandalism and malicious
mischief, and other casualty events customarily insured against
with respect to similar equipment, in an amount not less than the
Casualty Value of the Equipment. Lessee shall also carry and
maintain or cause to be carried and maintained at its expense
public liability insurance covering the Equipment, in such
amounts and against such risks as is customary with respect to
similar equipment. Lessee shall furnish appropriate evidence of
such insurance to Lessor naming Lessor as an additional insured
and naming Lessor's Assignee as loss payee. All required
insurance shall provide for ten (10) days' notice to Lessor and
its assign of any cancellations and shall not modify nor alter
said insurance without prior written consent of Lessor and its
Assignee.
Section 9. RISK OF LOSS, EVENT OF LOSS
Lessee hereby assumed and shall bear the entire risk of loss
or damage including but not limited to destruction, theft, or
governmental taking of any item of Equipment ("Event of Loss"),
whether partial or complete and whether or not covered by
insurance. No such loss or damage shall relieve Lessee of any of
its obligations under this Lease. Lessee shall immediately
notify Lessor of any Event of Loss involving the Equipment.
If an Event of Loss occurs with respect to any item of
Equipment, Lessee, at the option of Lessor, shall:
(a) repair or restore the equipment to good repair,
condition and working order; or
(b) replace the Equipment with identical equipment in good
repair, condition and working order; or
(c) pay Lessor in cash the Casualty Value for such item as
set forth in the relevant Equipment Schedule.
Upon payment of the Casualty Value and all other amounts due
hereunder with respect to such, this Lease shall terminate with
respect to the item of Equipment for which Lessor has received
payment, and Lessee shall become entitled to such item of
equipment AS-IS, WHERE-IS, without any warranty, express or
implied, with respect to any matter whatsoever. If Lessee has
paid the Casualty Value and such other amounts with respect to
such item of Equipment and if Lessee is not in default hereunder,
property damage insurance proceeds from such Event of Loss shall
be paid to Lessee up to the amount of said Casualty Value.
Section 10. ENFORCEMENT OF WARRANTY
(a) Upon receipt of written request from Lessee, and so long
as this Agreement shall remain in force, Lessor shall
take all reasonable action requested by Lessee to
enforce any manufacturer's warranty, express or implied,
issued on or applicable to the Equipment, which is
enforceable by Lessor in its own name, provided,
however, that Lessor shall not be obligated to resort to
litigation to enforce any such warranty unless Lessee
shall pay all expenses in connection therewith.
(b) Similarly, if any warranty shall be enforceable by
Lessee in its own name, Lessee hereby agrees, upon
receipt of written request from lessor and so long as
this Agreement shall remain in force, to take all
reasonable action requested by Lessor to enforce any
such warranty.
(c) Lessor hereby assigns to Lessee any warranty rights
which Lessor may have against the manufacturer with
respect to the Equipment, to the extent such warranty
rights are assignable, which assignment shall remain
effective so long as Lessee is not in default hereunder.
With respect to such warranty rights as are not
assignable, Lessor hereby appoints Lessee as its agent
and attorney-in-fact for purpose of enforcing such
warranty rights at Lessee's expense.
Section 11. DISCLAIMER OF WARRANTIES
LESSOR LEASES THE EQUIPMENT AS-IS, WHERE-IS, IN WHATEVER
CONDITION IT MAY BE, WITHOUT ANY AGREEMENT, WARRANTY OR
REPRESENTATION, EXPRESS OR IMPLIED. WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, LESSOR EXPRESSLY DISCLAIMS ANY
IMPLIED WARRANTY OR MERCHANTABILITY, FITNESS OR ADEQUACY FOR ANY
PARTICULAR PURPOSE OR USE, QUALITY, PRODUCTIVENESS OR CAPACITY.
LESSOR HEREBY ASSIGNS TO LESSEE (TO THE EXTENT TO WHICH THE SAME
MAY BE ASSIGNABLE), ANY WARRANTY OF THE MANUFACTURER RELATIVE TO
THE EQUIPMENT.
Section 12 INDEMNIFICATION
Lessor and its successors and assigns shall not be liable to
Lessee for, and Lessee shall indemnify and hold Lessor and its
successors and assigns harmless with respect to any third party,
from any liability (including liability for negligence), claim,
loss, damage or expense (including litigation expense) of any
kind or nature caused, directly or indirectly, by
(i) the inadequacy of any Equipment for any purpose,
(ii) any deficiency or defect in any Equipment,
(iii) the use or performance of any Equipment,
(iv) any interruption or loss of service, use or performance
of any Equipment,
(v) any patent, trademark, or copyright infringement
relating to the Equipment, or
(vi) any loss of business of other consequential damage
whether or not resulting from any of the foregoing.
IN PARTICULAR, LESSOR AND ITS SUCCESSORS AND ASSIGNS SHALL
NOT BE LIABLE FOR INJURIES TO PERSONS OR DAMAGES TO THE EQUIPMENT
OR OTHER PROPERTY UNDER ANY THEORY OF STRICT LIABILITY, AND LESS
SHALL INDEMNIFY AND SAVE LESSOR AND ITS SUCCESSORS AND ASSIGNS
HARMLESS FROM ANY SUCH LIABILITY AND ALL COSTS AND EXPENSES IN
DEFENDING THE SAME.
All of Lessor's rights under this Section 12 shall survive
the termination of this Agreement, however, Lessee shall not be
required to indemnify Lessor for claims arising from events which
occur after the Equipment has been redelivered to Lessor.
Section 13. MODIFICATIONS OF EQUIPMENT
(a) Provided the manufacturer permits changes, alterations,
modifications or attachment to the Equipment
(hereinafter called "Equipment Change") and consents to
the Equipment Change in writing and such Equipment
Change does not adversely affect the operation of the
Equipment in relation to its normal use and purpose and
a copy of the approval of the Equipment Change is
delivered to Lessor and its Assignee, the Lessee may, at
its own expense, make or cause to be made alterations or
attachments to the Equipment, so long as such
alternations or attachments do not interfere with the
normal operation of the Equipment. Any such alteration
or attachment, if Lessor so directs in writing, shall be
removed by Lessee and the Equipment shall be restored to
its original condition, reasonable wear and tear
excepted, upon termination of this Agreement. If an
alteration or attachment interferes with the normal and
satisfactory operation or maintenance of any part of the
Equipment, Lessee shall, upon notice from Lessor to that
effect, promptly remove the alteration or attachment and
restore the Equipment to its normal condition.
(b) If Lessee desires to add special features or model
changes ("Additional Special Features") to the Equipment
subsequent to the commencement of this Lease, Lessee
shall either:
(i) give Lessor an opportunity to obtain such Additional
Special Features at Lessor's expense and lease such
Additional Special Features to Lessee upon such terms
and conditions as Lessor and Lessee agree to (it
being understood that the monthly rental for such
Additional Special Features must be sufficient to
cover Lessor's related monthly debt payments, that
any such Additional Special Features obtained by
Lessor shall be deemed to be part of the Equipment,
and that Lessee shall be responsible for all related
transportation and installation charges, to the
extent provided in Section 14); or
(ii) upon Lessor's prior written consent (which
consent will not be unreasonably withheld), purchase
and install such Additional Special Features at
Lessee's own expense with no rend due Lessor for such
Additional Special Features, but such Additional
Special Features shall be subject to the provisions
of this Section 13, as if they were alterations or
attachments. Upon termination of this Agreement,
Lessor may direct in writing that Lessee remove such
Additional Special Features
(c) All alterations, attachments and Additional Special
Features shall become the property of Lessor.
Section 14. TRANSPORTATION EXPENSES
All transportation and installation expenses incurred in
connection with delivery of the Equipment to Lessee are to be
paid by Lessee. Necessary packing cases for the return of the
Equipment, and such labor as may be necessary for packing and
unpacking the Equipment when in the possession of Lessee, shall
be furnished by Lessee at its expenses. Transportation expenses
incurred in connection with redelivery to Lessor shall be paid by
Lessee.
Section 15. INSPECTION AND REPORTS
(a) Upon request, Lessee shall permit Lessor or persons
designated by Lessor to inspect the Equipment.
(b) Lessee shall immediately notify Lessor of any accident
arising out of the alleged or apparent improper
manufacturing, functioning or operation of the
Equipment, the time, place and nature of the accident
and damage, the names and addresses of parties involved
persons injured, witnesses and owners of property
damaged, and such other relevant information as may be
known, and shall promptly advise Lessor of all
correspondence, papers, notices and documents received
by Lessee in connection with any claim or demand related
to improper manufacturing, functioning or operation of
the Equipment or charging Lessor with liability, and
shall aid in the investigation and defense of all such
claims and shall aid in the recovery of damages from
third persons.
(c) Lessee shall furnish to Lessor and any assignee of
Lessor
(i) within one hundred twenty (120) days after the end of
each of Lessee's fiscal years, the annual financial
statement of Lessee, including a balance sheet and an
income and retained earnings statement for the fiscal
year covered thereby, setting forth in comparative
form, the figures for the previous fiscal year, all
in reasonable detail and duly certified by Lessee's
independent certified public accountant,
(ii) copies of such financial statements and reports
as Lessee shall send to its stockholders or file with
the Securities and Exchange Commission or any
governmental agency substitute therefor, and
(iii) such other information respecting the financial
condition and affairs of Lessee as may be necessary
to determine compliance with the terms and conditions
of this Lease.
Section 16. EVENTS OF DEFAULT AND LESSOR'S REMEDIES
(a) Should
(i) Lessee fail to pay any Basic Rent or other amount
due under this Agreement within ten (10) days of the
applicable due date;
(ii) Lessee attempt to remove, sell, transfer, encumber,
part with possession of, assign or sublet (except as
expressly permitted by the provisions hereof) the
Equipment or any part thereof;
(iii) any representation or warranty made by Lessee
in this Agreement or in any document or certificate
furnished to Lessor in connection herewith prove to
have been incorrect in any material respect when
made;
(iv) Lessee fail in the performance of any other of its
obligations under this Agreement for a continuous
period of thirty (30) days after receipt by Lessee
of written notice thereof from Lessor;
(v) Lessee cease doing business as a going concern;
(vi) a petition be filed by or against Lessee under the
Federal Bankruptcy Act or any amendment thereto
(including a petition for reorganization or
arrangement) which shall not have been discharged
within sixty (60) days after such filing.
(vii) a receiver be appointed for Lessor or its
property;
(viii) Lessee commit an act of bankruptcy, become
insolvent, make an assignment for the benefit of
creditors, or offer a composition of any of its
indebtedness;
(ix) the issuance of any writ or order of attachment or
execution or other legal process against any
Equipment which is not discharged or satisfied
within fifteen (15) days; or
(x) to the extent that Lessee is a corporation, if a
controlling interest of the stock of Lessee is
transferred (whether in increments or on one
occasion) to persons or other legal entities other
than those holding said controlling interest at the
date of execution of this Agreement,
then in any such event (herein referred to as an "Event
of Default"), Lessor may, at its option, exercise any
one or more of the remedies set forth in subsection (b)
of this Section 16 (in addition to any other remedy
Lessor may have under applicable law). Failure of
Lessee to pay or perform any obligation under any
Agreement with Lessor shall constitute a default as to
all Agreements between Lessor and Lessee.
(b) Upon the occurrence or continuation of any Event of
Default as specified in subsection (a) of this Section
16, Lessor may
(i) declare immediately due and payable by Lessee, as
liquidated damages for loss of a bargain, an amount
equal to the Casualty Value of the Equipment at the
date of the occurrence of any event of default,
(ii) terminate this Agreement;
(iii) take possession of the Equipment during Lessee's
normal working hours without demand or notice,
wherever the Equipment may be located, without court
order or other process of law (Lessee hereby waiving
any right it may have to notice and hearing before
repossession). Lessee hereby waives any and all
damages occasioned by such taking of possession. Any
taking of possession pursuant to this subsection
16(b) shall not in itself constitute termination of
this Agreement and shall not, in any event, relieve
Lessee of its obligations hereunder.
Lessee shall reimburse Lessor for all reasonable expenses
(including attorney's fees) incurred by Lessor in enforcing
its rights under this Section 16. Any overdue rent, and any
unpaid Casualty Value payable as liquidated damages pursuant
to clause (i) of this subsection 16(b), shall bear interest
at the Overdue Rate until paid in full. Upon taking
possession of the Equipment, Lessor may, at its option and
without notice to Lessee lease the repossessed Equipment to
any third party on such terms and conditions as Lessor may
determine, or sell said Equipment at public auction or at
private sale.
In the event that Lessor leases or sells repossessed
Equipment, the Net Proceeds (as defined below) shall first
be credited to amounts due and owing by Lessee, and shall
then be used to reimburse Lessee for any liquidated damage
payment made by Lessee pursuant to clause (i) of this
subsection 16(b). Any surplus shall be retained by Lessor.
Lessee shall remain liable for an amount equal to the
Casualty Value of the Equipment at the date of an occurrence
of an Event of Default less the Net Proceeds. As used in
this subsection 16(b), "Net Proceeds" shall mean the cash
sale price of the Equipment, or the aggregate rent payable
pursuant to a lease of the Equipment discounted at the rate
of twelve (12%) percent less all costs and expenses
(including reasonable attorneys' fees and disbursements)
incurred by Lessor as a result of Lessee's default and
Lessor's exercise of its remedies with respect thereto.
Lessor's rights and remedies in respect of any of the terms
and conditions of this Lease shall be cumulative and non-
exclusive and shall be in addition to any and all other
rights and remedies which may be provided by law.
Lessee acknowledges and agrees, for itself and for all
successors and assigns including any bankruptcy trustees of
Lessee (hereinafter collectively referred to as the
"Benefited Parties"), knowingly, voluntarily and
intentionally stipulate and agree, to the fullest extent
allowed by law and with the full intention that such
stipulation and agreement shall survive the filing of any
bankruptcy, that, in the event any of the Benefited Parties
become a debtor or debtor in possession in a case under the
United States Bankruptcy Code (11 U.S.C. 101 et seq.),
then pursuant to 11 U.S.C. 362(d)(1) and (2) Lessor shall
be entitled to the immediate termination of the automatic
stay to permit Lessor to exercise all of Lessor's legal
rights and remedies against Lessee under the lease,
including, without limitation, the right to repossess the
leased equipment and to setoff and apply to any amounts owed
by lessee to Lessor any security deposit or other sums
delivered to Lessor by Lessee from time to time as security
for the Lessee's performance under the lease.
Section 17. SUBLEASES AND ASSIGNMENTS
(a) Lessee may sublet the Equipment if Lessee notifies
Lessor of the proposed new location of the Equipment and
receives Lessor's prior written consent. No such
sublease shall in any way discharge or diminish any of
Lessee's obligations under this Agreement. Each
sublease shall be approved in form and content by lessor
(including, without limitation, any provisions granting
such sublessee an option to terminate such sublease) and
shall expressly provide that it is subject and
subordinate to this Lease. No amendment or modification
of any of the terms and conditions of such sublease
shall be made without the prior written consent of
Lessor.
(b) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective
successors and (to the extent specified in any
assignment) assigns. Lessee shall not assign this
Agreement without the prior written consent of Lessor.
Lessor may assign any or all of its rights under this
Agreement, and Lessee agrees to acknowledge in writing
any such assignment within five (5) days after receipt
of written notice thereof.
(c) So long as Lessor's rights hereunder are assigned to any
Assignee, Lessee may not assert against any such
Assignee any defense, counterclaim, recoupment, or set-
off Lessee may have against Lessor. Lessee agrees that
it will not seek to cancel or terminate this Agreement
(except as expressly permitted in this Agreement) or
otherwise avoid its obligations hereunder as against
such Assignee, and further agrees that it will pay to
such Assignee all Rent Due hereunder and assigned to
such Assignee, without regard to any such defense,
counterclaim, recoupment, or set-off, and will not seek
to recover any part of the same from such Assignee.
However, nothing herein shall be construed to prevent
Lessee from exercising against Lessor any claim for
damages or injunctive relief which Lessee may have
against Lessor.
Section 18. LESSEE'S AND LESSOR'S WARRANTIES
(a) Lessee hereby warrants and represents to Lessor, its
successors and assigns:
(i) that Lessee's execution and performance of this
Agreement have been duly authorized by all necessary
corporate action and are not in conflict with
Lessee's charter or bylaws, or with any indenture,
contract or agreement by which it is bound, or with
any statute, judgment, decree, rule or regulation
binding upon it;
(ii) that no consent or approval of any trustee or
holder of any indebtedness or obligation of Lessee,
and no consent or approval of any governmental
authority, is necessary (or, if required, has been
obtained) for Lessee's execution or performance of
this Agreement; and
(iii) that this Agreement is valid and binding and
enforceable against Lessee in accordance with its
terms, subject to enforcement limitations imposed by
rules of equity or by bankruptcy or similar laws.
Upon Lessor's request, Lessee shall submit to Lessor an
opinion of Lessee's counsel that the above warranties
and representations are true.
(b) Lessor hereby warrants and represents to Lessee, it
successors and assigns:
(i) that Lessor's execution and performance of this
Agreement have been duly authorized by all necessary
corporate or partnership action and are not in
conflict with Lessor's charter and bylaws or
partnership agreement, or with any indenture,
contract or agreement by which it is bound, or with
any statute, judgment, decree, rule or regulation
binding upon it;
(ii) that no consent or approval of any trustee or
holder of any indebtedness or obligation of Lessor,
and no consent or approval of any governmental
authority, is necessary for Lessor's execution or
performance of this Agreement;
(iii) that this Agreement is valid and binding and
enforceable against Lessor in accordance with its
terms, subject to enforcement limitations imposed by
rules of equity or by bankruptcy or similar laws; and
(iv) Lessor is the owner of the Equipment and said
Equipment is free and clear of all liens and
encumbrances, except the lien of and security
interest granted by Lessor to its Assignee.
Upon Lessee's request, Lessor shall submit to Lessee an
opinion of Lessor's counsel that the above warranties and
representations are true.
Section 19. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of and jurisdiction shall be in the
Commonwealth of Massachusetts.
Section 20. AMENDMENTS
This Agreement constitutes the entire agreement between
Lessor and Lessee with respect to the Equipment and may be
amended or modified only by a writing signed by the parties
hereto or their respective successors and assigns.
Section 21. ADDRESS FOR COMMUNICATIONS
Any communication in connection with this Agreement shall be
made in writing to the address shown in the first paragraph of
this Agreement, or to such other address as has been most
recently designated in writing by one party to the other. Unless
otherwise specified herein any notice or communication shall
become effective when deposited in the United States mail
properly addressed with proper postage for first-class mail
prepaid.
Section 22. UNIFORM COMMERCIAL CODE DOCUMENTATION
Lessee agrees to execute such Uniform Commercial Code
("UCC") financing statements and other documents deemed necessary
by Lessor or its Assignees to perfect and protect the interests
of Lessor and its Assignees in the Lease and the Equipment. With
respect to each Lease, there shall be a single executed original
Equipment Schedule, which shall be marked "Original" and all
other counterparts shall be marked "Conformed Copy". To the
extent that this Lease may constitute chattel paper (as defined
in the Uniform Commercial Code) no security interest may be
created through the possession of any counterpart of the
Equipment Schedule other than the Original.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed.
SALEM CAPITAL CORPORATION ELECTROSOURCE, INC.
(Lessor) (Lessee)
By /s/ By /s/
Ellen F. Kennedy Michael Rosen
Title President CFO
Date 10/17/95 Date 9/19/95
EXHIBIT 10.68
DEVELOPMENT AGREEMENT AND
AGREEMENT FOR PURCHASE OF
MACHINERY AND SUPPLIES
This Agreement is made this 1st day of November, 1995
by and between Electrosource, Inc. ("ELSI") and Charles L.
Mathews ("Contractor").
Whereas, ELSI produces lead-acid batteries ("Horizon")
with patented technology developed in part by Contractor,
and ELSI wishes to arrange for the supply of certain
equipment and supplies from Contractor for its facilities
and potentially for its licensees and affiliates, and
Whereas, contractor wishes to develop and supply such
equipment and materials to ELSI,
Now, therefore, for good and valuable consideration,
the adequacy which is acknowledged, ELSI and Contractor
agree:
1. Contractor agrees to sell to ELSI and ELSI agrees
to purchase from Contractor, machines to make co-
extruded wire ("Co-extruders"), with necessary
attachments. The Co-extruders will be for use in
present and anticipated ELSI production facilities and
will be purchased as and when deemed necessary by ELSI.
Alternatively, Contractor and ELSI may agree to a lease
arrangement for the Co-extruders in addition to or
instead of sales.
2. ELSI hereby grants rights to manufacture the Co-
extruders to Contractor for the term of this Agreement,
so long as the supply of Co-extruders is not
interrupted and the Co-extruders meet ELSI's
requirements for quality, quantity and timely delivery,
as specified in writing in advance by ELSI and
Contractor.
3. Quantities, prices and payment terms for Co-
extruders shall be agreed upon for the following year
at least two (2) months before the end of each calendar
year, or at such other time or times as the parties can
best determine, and shall be evidenced by a detailed
purchase order. ELSI will advance 50% of the purchase
price to Contractor for each such Co-extruder it agrees
to purchase, with the advance to be made at the time or
times necessary to maintain delivery schedules. Prices
shall be negotiated in good-faith, based upon the
actual cost of the Co-extruders and the availability
and price of competing products. Currently, the price
to the Company from Contractor for a single head Co-
extruder is expected to be $110,000.
4. Contractor shall warrant the Co-extruders against
defects in materials and workmanship for at least one
year. The machines and components shall be new, of
good quality and fit for the particular purpose
intended, with guaranteed rates of thru-put by
Contractor. Finished wire specifications will be as
agreed upon in advance from time to time.
5. Contractor shall also continue development work on
Co-extruders and such other equipment, processes and
methods as ELSI shall reasonably request hereunder.
Contractor shall review the substance and direction of
his work hereunder with the President of ELSI on at
least quarterly intervals.
6. ELSI also agrees to pay contractor for the
development of an automated billet maker, which shall
belong exclusively to ELSI as will all intellectual
property rights thereto. The billet maker may be
located on Contractor's premises for the term of the
agreement or at such other location as ELSI may direct.
Contractor shall have the right to manufacture and use
such billet makers for supply of billets exclusively to
ELSI, provided the Contractor remains ready and able to
make billet makers and billets of acceptable quality
and quantity on a timely basis at a cost which is
reasonable and competitive. ELSI shall pay Contractor
$65,000 hereunder for development of the billet maker
and other development work hereunder, to be paid at the
rate of $3,611 per month for eighteen (18) months,
payments to be made on the 1st and 15th day of each
month. The development cost of $65,000 shall include
all related costs, including taxes, labor, engineering,
drawings, etc. The price of the first billet maker
shall be an additional $60,000 as will be detailed in a
purchase order to be issued at the discretion of
Electrosource. The development work and billet maker
price shall include:
a. A new fully automatic lead billet maker.
b. An automatic shear mechanism integrated
with the billet maker to make billets, shear the
ends and place the billets on a pallet.
c. All engineering drawings.
ELSI shall pay $30,000 as a down payment for the billet
maker upon issuance of a purchase order, and the
balance in monthly installments, as detailed therein
and agreed upon by Contractor. After development of
the initial automated billet maker, Contractor agrees
to manufacture and sell additional billet makers to
ELSI at a price $60,000 each, including, without
limitation, installation and taxes.
7. Contractor shall also supply lead billets to ELSI
in the quantities and on the dates as required by ELSI,
provided that the supply of lead billets by Contractor
is not interrupted and the specifications as agreed in
writing in advance are met. Purchases from Contractor
shall begin as soon as reasonable after the date hereof
based upon a trial program to begin as soon as
possible. The price for the lead billets shall be
competitive with other sources of supply, with the
current pricing being the cost of lead plus $.30 per
pound, which shall be reduced to the price of lead plus
$.24 per pound, or market rates as adjusted at least
yearly, after development of the automated billet maker
provided for above. It is anticipated that ELSI will
continue to purchase the lead directly and supply it to
Contractor for the making of billets, in which case the
cost of lead would not be included in Contractor's
billings.
8. The term of this Agreement shall begin upon the
date hereof and continue for a period of two (2) years,
unless sooner terminated in accordance with its terms.
The Agreement may be extended by mutual consent.
Neither party may terminate this Agreement except for
cause, and after thirty (30) days written notice of
default, provided the default is not cured during such
thirty (30) day period.
9. ELSI shall own all inventions or improvements to
inventions made by Contractor pursuant to this
Agreement. At termination, and otherwise upon the
request of ELSI, Contractor will assign to ELSI any
such inventions or improvements and shall cooperate
fully with ELSI on any patent applications.
10. Each party shall hold all confidential information
disclosed to it by the other during the term of this
Agreement in confidence and not disclose it or use it
(except for this Agreement) without the prior written
consent of the other.
11. This Agreement may not be assigned by either party
without the prior written approval of the other, which
may be withheld for any reason.
12. Contractor is an independent contractor, and not
the employee or agent of ELSI. Contractor is
responsible for his own insurance and taxes.
13. Contractor hereby agrees to indemnify and hold
ELSI harmless from and against any and all claims or
litigation, damages, costs or attorney fees resulting
from Contractor's negligence or willful misconduct in
the performance of this contract.
14. Notices may be given to Contractor at: Charles L.
Mathews, 111 Cardinal Drive, Page, Texas 78629, and to
ELSI at: Electrosource, Inc., 3800-B Drossett Drive,
Austin, Texas 78744-1131.
15. This Agreement shall be construed, interpreted and
enforced under the laws of Texas.
IN WITNESS WHEREOF, the Parties have executed this
Agreement as of this 1st day of November, 1995.
CONTRACTOR ELECTROSOURCE, INC.
By: /S/ By: /S/
Charles L. Mathews James M. Rosel
Vice President, General Counsel
EXHIBIT 10.69
CHRYSLER
CORPORATION
Box Chrysler Corporation, a Delaware Corporation,
Chkd. (Chrysler), hereby agrees to Purchase and Receive, and
PURCHASE ORDER 07266003-A
Box Chrysler Canada Ltd., A Canadian Corporation,
Chkd. (Chrysler), hereby agrees to Purchase and Receive, and
Supplier No. 18621
Date Type 01-09-96
ELECTROSOURCE, INC.
3800 B DROSSETT DRIVE DELIVERY
AUSTIN TX 78744-1131
Box Per Written Release
Chkd.
Seller agrees to see and deliver, the goods Routing as Instructed by Buyers .
or services specified herein. IN ACCORDANCE Traffic Department
WITH THE TERMS AND CONDITIONS ON THE FACE F.O.B. (Title Transfer Point)
AND REVERSE SIDE HEREOF AND ANY SIGNED Box Ckd. Carrier Seller's Plant
ATTACHMENTS HERETO, and futher, in accordance Box Ckd. See Below
with those clauses in the Chrysler forms
referenced below which are numbered and Terms: NET 30th Prox
completed as noted, all of which constitute
the entire and final agreement of the parties
and cancels and supersedes any prior or
contemporaneous negotiation or agreements. The
Chrysler forms referenced are in booklet
84-806-1824 (09/92) the receipt of which seller
hereby acknolwedges by acceptance of this order.
Such forms may be modified, amended or have
additions made thereto and when such
modifications are written and signed they
will be attached hereto.
THIS ORDER EXPRESSLEY LIMITS ACCEPTANCE TO
THE TERMS OF THIS ORDER AND ANY ADDITIONAL OR
DIFFERENT TERMS, WHETHER CONTAINED IN SELLER'S
FORMS OR OTHERWISE PRESENTED BY THE SELLER ARE
REJECTED UNLESS EXPRESSLY AGREED TO IN
WRITING BY THE PURCHASER.
CLAUSES: 022A 078 098A 190 190A 193 229 281 288C
Description of Supplies and/or Services Ordered Price
This order incorporates the terms and conditions
contained in Chrysler's Production Purchasing General
Terms and Conditions, Form Number 84-806-1875 (2/94).
Blanket order for approximately 65-100% of our
following plant requirements beginning 1997 model
year and continuing on a year to year basis thereafter.
This purchase order is automatically cancelled at
no cost to Chrysler if no releases are issued under
this order during any twelve-month period.
All vehicle assembly plants
F.O.B. Carrier-Sellers Plant
From: 18621 Austin TX
Freight Collect
Manuf: 18621 Austin TX
SERIES # 7
PART # 04788049 Battery Pack Shipping 7345.00
Payable Funds = United States ea
FINISH PER MATERIAL STANDARDS AND B/P CHANGE A
T/C- 20 /2
CLAUSE #005F: The Seller agrees to advise the Chrysler
Customs Department, in advance, whenever Chrysler owned
tooling is being shipped into or out of the U.S.
temporarily or permanently. The seller will show
"no charge" for the value of his commercial invoice
and add the following in the body of the invoice.
Chrysler owned material
Original purchase cost in U.S. Funds (Insert the
Original Purchase Cost)
Dated (Fill in purchase order date)
Value for U.S. Customs purposes (to be determined by
Chrysler Customs Prior to Shipping the tools)
Call, FAX or TELEX:
Manager, Customs
(810) 977-5144, 977-5138, 977-5134
TELEX: UWD 012-5246 CHRY-IM-EX-DET
FAX: (810) 977-5093
CLAUSE #240: Seller is required to submit to Chrysler
on a quarterly basis an accounting of minority sub-
supplier payments made. Chrysler Form #84-809-5000,
a copy of which can be obtained from the buyer, is
to be utilized. Form #84-809-5000 requires the
following information:
SUB-SUPPLER NAME(S)
CHRYSLER P.O. #
CHRYSLER BUYER NAME
MINORITY CLASS CODE
PRODUCTS/SERVICES PURCHASED
QUARTERLY PAYMENTS
The National Minority Supplier Development Council, or
any of its regional affiliates, is the required certifying
organization. Class code refer to type of minority
ownership and control (Minimum of 51%), and they are
identified as:
Black American
Hispanic American
Native American
Asian Pacific American
Asian-Indian American
Supplier relations, as noted on Form #84-809-5000.
Reporting of payments is to be submitted to Chrysler
special supplier relations, as noted on Form #84-809-5000.
CLAUSE #409: Notwithstanding the provsions of Clause 23
of the General Terms and Conditions (Form No. 84-806-1652A,
Rev. 2/94), the 1980 United Nations Convention on Contracts
for the International sale of goods, to the extent it may
be deemed to apply, shall not, pursuant to Article 6
thereof, apply to this Purchase Order (including Amendments)
or any transactions pursuant thereto.
CLAUSE #198: Included in piece price is packaging cost of
04788049 / 0.0001/ea
CLAUSES AND FORM IN BOOKLET 84-806-1824 10-94 or on a prior amendment
005D <ELECTROSOURCE INC ><IS>
220D <END OF MODEL YEAR 1997>
CLAUSES AND FORM(S) IN BOOKLET 84-806-1824 10-94
REASON FOR AMENDMENT
NEW PURCHASE ORDER
Ship to box chkd. Per Written Release
Invoice to: box chkd. Per Written Release
"DELAY IN PAYMENT OF INVOICES CAN RESULT IF THE REQUIREMENTS
BELOW ARE NOT FOLLOWED.
Invoices and packing slips must bear the Chrysler-assigned
Supplier number; Purchase Order number; Part number (or Non-
Production Material code) and the Requisition number (on
quantity buy) or Release number (on blanket order). The
"Ship to" address and Chrysler-assigned Plant Location code
and "Invoice to" address is also required."
C.A. JACOBS 116266 PH (810) 576-3275
BUYER NAME & DECK NO.
EXHIBIT 10.70
Agreement for Aircraft Starting Battery Distribution
This agreement is made this 13th day of February, 1996, by
and between Electrosource, Inc., Delaware Corporation,
having its principal place of business at 3800 B Drossett
Dr., Austin, Texas, 78744-1131 (hereinafter referred to as
"Electrosource"), and Horizon Aircraft, Inc., a Texas
corporation whose address is 1710 Travelair, Houston, Texas,
77061 (hereinafter referred to as the "Distributor").
Electrosource and Distributor are hereinafter collectively
referred to as the "Parties," and from time to time may be
individually referred to as a "Party."
Recitals
Whereas, Electrosource is developing a certain proprietary
lead acid battery for use in aviation applications, which
battery is part of the Horizon family of Electrosource
batteries (hereinafter known as "Batteries" or "Products"),
and
Whereas Distributor wishes to join with Electrosource to
further develop, obtain necessary certifications and market
the Battery for an aviation applications, and
Whereas Electrosource wishes to grant a license to
Distributor for distribution of the Battery, and
Electrosource wishes to become a co-owner of Distributor,
Now therefore in consideration of the covenants and
conditions herein contained, the Parties agree as follows:
1.Distribution License. Electrosource hereby grants
to Distributor a worldwide, exclusive right to
distribute its products for aviation applications.
"Aviation Applications" includes starting applications
for all aircraft, including helicopters and military
aircraft which are the same or similar to civilian
counterparts, but excludes tactical military aircraft
(fixed wing and rotary).
2.Term. The initial term of the license shall be for
fifteen years. In addition, Distributor may elect to
extend this agreement on the same terms for an additional
fifteen year period by notifying Electrosource of such
election in writing on or before ninety (90) days from
the end of the initial term.
3.Certification, Test Marketing and Production.
Distributor shall use all reasonable efforts to obtain
United States Federal Aviation Administration ("FAA")
certification of the Battery for use in Aviation
Applications. The Distributor shall also use its best
efforts to obtain necessary certifications in such
other countries as Distributor in its discretion
believes are necessary. Distributor shall also use its
best efforts to test and test market the Battery,
perform market research and investigate the utility,
pricing, performance, size and other specifications
necessary for Aviation Applications.
4.Production. If market research and FAA
certification demonstrate an adequate and profitable
market for the Batteries for both Distributor and
Electrosource as determined from a good faith financial
analysis based upon projected sales, prices and costs,
then Electrosource will use its best reasonable efforts
to make Batteries available in commercial quantities
and in amounts requested by Distributor. Electrosource
will provide for the necessary manufacturing equipment,
facility improvements, etc. at its cost. If, however,
FAA certification is not obtained within two years from
the date hereof or if the Distributor cannot within
such time period demonstrate the reasonable likelihood
of an adequate market for Batteries in light of
projected costs for both Parties, then either Party may
terminate this Agreement upon thirty days advance
written notice to the other. If production is
initiated, a good faith financial analysis will also be
performed each year thereafter with respect to the
prior year's results and projections for the next
calendar year. If such analysis does not demonstrate a
reasonable likelihood of a reasonable profit in the
future to each of Electrosource and Distributor, then
either party may terminate this agreement upon ninety
days notice to the other. The financial analysis will
include the opportunity for each party to examine the
books, records and accounts of the other to verify
costs, revenues and other relevant matters and to
provide input into such analysis.
5.Electrosource Assistance. Electrosource will
provide a reasonable number of prototype batteries for
testing, certification and test marketing to
Distributor free of charge. Electrosource will also
provide such promotional, educational and consulting
support to Distributor as is reasonably necessary and
appropriate to assist Distributor in its certification,
market research and marketing hereunder. Electrosource
will assist Distributor in advertising the Batteries,
including without limitation, sharing camera-ready art
work without charge and paying the cost of national
advertising for its Batteries.
6.Distributor's Duties. In addition to the duties
outlined in paragraph 3 above, Distributor shall also:
a. Organize, train and maintain a competent sales force,
b. Provide central warehousing, receiving, shipping, credit extension,
billing and other facilities and services as necessary to
maximize sales of the Battery,
c. Use its best efforts to promote sales of Batteries in the United
States and on a worldwide basis, but concentrating on the
countries that Distributor in its discretion believes are most
appropriate in order to maximize sales and profits, and
d. Comply with all legal and professional requirements pertaining to
the conduct of its business and refrain from any illegal,
deceptive, misleading or unethical acts and practices.
7.Orders, Product and Product Changes. Electrosource
will use its best reasonable efforts to fill all orders
for Batteries received from Distributor, but reserves
the right to reject orders that it deems itself unable
to fill on a reasonable basis and may condition its
acceptance of orders on Distributor's adherence to such
credit and other terms and conditions as Electrosource
may establish from time to time in keeping with
industry standards. Electrosource will not make
modifications to any Batteries that have received or
are undergoing certification from the FAA if such
changes are expected to impair FAA certification
without the prior consent of Distributor, which consent
will not be unreasonably withheld or delayed.
8.Product Price and Payment. Distributor shall
purchase Batteries from Electrosource for distribution
at such price and on such terms as may be established
by Electrosource from time to time in recognition of
market conditions based upon information supplied by
Distributor. In general, it is anticipated that
Batteries will be sold to Distributor at a sixty
percent (60%) discount from retail market price as it
is set from time to time, plus insurance, freight and
other costs of shipment. The parties will discuss from
time to time possible adjustments to this discount in
response to market conditions. Payment for batteries
shall be due from Distributor within thirty days of
receipt of the invoice from Electrosource. Late fees
and interest will be added to late payments. Batteries
will be shipped in accordance with good commercial
practice, FOB Electrosource's loading dock. Risk of
loss or damage for transfer, use, handling, storage or
disposal of Batteries will pass to Distributor once the
batteries are placed in shipment by Electrosource.
9.Product Alterations. Distributor shall not mix,
repackage or otherwise alter or modify the Batteries
without the prior written consent of Electrosource.
Any improvements made to the Battery by Distributor,
including any patentable inventions or other
intellectual property enhancements, shall be the
property of Electrosource. FAA certification of the
Batteries shall not be considered to be such an
improvement, invention or enhancement.
10. Trademarks, Tradenames and Copyrights.
Electrosource grants to Distributor for the term of
this agreement a non-exclusive, non-transferable right
to use the trademarks and tradenames associated with
the Batteries for Aviation Applications and to copy,
reproduce and use copyrighted material furnished by
Electrosource to Distributor. Use of the trademarks
and tradenames is strictly conditioned upon full
compliance of this Agreement by Distributor.
Distributor may market products under a tradename
selected by it provided such tradename uses the mark
"Horizon" and provided further that Electrosource
consents to such name, which consent will not be
unreasonably withheld or delayed.
11. Representations and Warranties.
a. Electrosource warrants that the Batteries, to the best of its
knowledge, do not infringe upon any copyrights, patents or any
other intellectual property rights validly registered in the
United States.
b. Electrosource shall initially sell all prototype batteries on a
"AS IS" basis.
Electrosource HEREBY DISCLAIMS ANY AND ALL
WARRANTIES, EXPRESSED OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, WARRANTIES OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
c. When the Battery is made available for
commercial sale for Aviation Applications
Distributor and Electrosource will agree upon
an appropriate warranty for such products.
d. ELECTROSOURCE SHALL IN NO EVENT BE LIABLE
FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES,
WHETHER OR NOT FORESEEABLE, ARISING OUT OF OR
IN CONNECTION WITH ANY BREACH OF ANY WARRANTY
HEREUNDER. Any claim for warranty breach
shall be submitted in writing within thirty
business days after such breach is
discovered, and shall be accompanied within a
reasonable time thereafter by the Battery for
which the warranty is allegedly breached.
12. Nature of Relationship. Distributor shall not
have the right or authority to obligate Electrosource
in connection with any order, contract, sales agreement
or credit agreement and shall not make any warranties
concerning the Battery except as provided by
Electrosource and shall not otherwise act or be
considered as an employee or agent of Electrosource.
13. Ownership Interest in Distributor. Electrosource,
in consideration of the grant of the license herein to
Distributor, shall be entitled to receive immediately
upon execution hereof stock representing twenty-five
percent (25%) of the outstanding shares, calculated
after such issuance to Electrosource, of any and all
classes of stock in Distributor. Electrosource shall
also be entitled to proportionate representation on the
board of directors of Distributor. Without dilution to
Electrosource's percentage ownership, Distributor shall
otherwise obtain the necessary funds to carry out its
initial operations hereunder (that is, through FAA
certification), provided that Electrosource's interest
in Distributor cannot be reduced below twenty-five
percent without good cause and without Electrosource's
prior written consent. Thereafter, all shareholders
shall have pre-emptive rights as to future sales of
stock in Distributor to the extent of such Parties`
percentage ownership in Distributor. Any shareholder
who chooses not to exercise such pre-emptive rights may
suffer dilution of its ownership percentage.
14. Reliance on Personnel. It is understood and
agreed that Electrosource is relying a large part on
the expertise of Eugene H. Dukes and David Rogers, who
are principals in Distributor. The Distributor agrees
to assign and make available Dukes and Rogers to the
business of this agreement for an extended and
substantial period of time.
15. Selling Shareholder Agreement. Electrosource and
the Distributor shall cause a Shareholders Agreement to
be entered into between Electrosource and Distributor's
other two shareholders such that Electrosource, Eugene
H. Dukes and David Rogers shall each have a right of
first refusal for sale of stock in Distributor by the
others.
16. Books and Records. Distributor shall maintain and
make available for inspection by Electrosource ordinary
and necessary books and records of its accounts.
17. Exports. Electrosource and Distributor are
subject to United States laws and regulations
controlling the export of technical data, computer
software and other commodities, and any exports
hereunder are contingent upon compliance with any
applicable United States export laws and regulations.
Export of commodities to certain foreign countries may
also require a license or permission from relevant
United States agencies and no such exports will be made
by Distributor without necessary approvals.
18. Arbitration. All disputes, controversies or
differences which may arise between the parties out of
or in connection with this agreement, or the
interpretation or breach thereof, shall be settled by
arbitration in Austin, Texas pursuant to the commercial
arbitration rules of the American Arbitration
Association.
19. Assignment. Neither Party to this agreement may
assign this agreement or any of its right or
obligations hereunder without the prior written consent
of the other Party.
IN WITNESS WHEREOF the Parties have executed this agreement
as of the day first above written.
Electrosource, Inc. Distributor: Horizon Aviation, Inc.
/s/ /s/
by: Michael G. Semmens by: David Rogers
title: President/CEO title: President
date: 2/13/1996 date: 2/14/96
EXHIBIT 10.71
JOINT DEVELOPMENT AGREEMENT
BETWEEN
ELECTROSOURCE, INC.
AND
BLACK & DECKER (U.S.) INC.
JOINT DEVELOPMENT
ARTICLE I - DEFINITIONS
1.1 "BATTERY" 1
1.2 "BATTERY TECHNOLOGY 1
1.3 "EPRI TECHNOLOGY" 1
1.4 "MOWER" 1
1.5 "OUTDOOR PRODUCTS" 1
1.6 "POWER TOOL" 2
1.7 "PROJECT" 2
ARTICLE II - JOINT DEVELOPMENT 2
2.1 Scope of PROJECT 2
2.2 Prototypes 2
2.3 Production Volumes 2
ARTICLE III - EXCLUSIVITY; CONFIDENTIALITY AND
OTHER INTELLECTUAL PROPERTY 2
3.1 Duration 2
3.2 Exclusivity Extinguished 3
3.3 Intellectual Property 3
ARTICLE IV - TERM, TERMINATION AND SURVIVAL OF RIGHTS
4.1 Term 3
4.2 Termination 3
4.3 Survival of Rights 3
ARTICLE V - PUBLICITY 3
ARTICLE VI - NOTICES 4
ARTICLE VII - REPRESENTATIONS AND WARRANTIES 4
ARTICLE VIII - GENERAL 4
8.1 Vicarious Performance 4
8.2 Assignment 4
8.3 Applicable Law 5
8.4 Force Majeure 5
8.5 No Obligation to Third Parties 5
8.6 Supplemental Documentation 5
8.7 Negation of Implications 5
8.8 Parties Are Independent Contractors 5
8.9. Sublicenses 6
8.10 Integration, Modification, No Waiver 6
APPENDICES
Appendix A - Specifications
Appendix B - Test Plan
Appendix C - Intellectual Property
JOINT DEVELOPMENT AGREEMENT
Effective ________________ ("AGREEMENT DATE") ELECTROSOURCE,
INC., having an office at 3800-B Drossett Drive, Austin, Texas
78744-1131 ("ELSI") and BLACK & DECKER (U.S.) INC., having an
office at 701 E. Joppa Road, Towson, Maryland 21286 ("B&D") agree
as follows:
ARTICLE I - DEFINITIONS
Terms in this Agreement (other than the names of parites and
article headings) which are set forth entirely in uppercase
letters shall have the meanings attributed to such terms below
and in Appendix "C." The following definitions are for the
purposes of this Agreement, only:
1.1 "BATTERY" means an ELSI rechargeable lead-acid battery
for use on a MOWER or other POWER TOOL.
1.2 "BATTERY TECHNOLOGY" means all technology of any kind,
and all intellectual property rights therein, covering or
embodied in BATTERIES or the manufacture, use or sale of
BATTERIES.
1.3 "EPRI TECHNOLOGY" means all technology of any kind that
may have been owned or controlled by the Electric Power Research
Institute ("EPRI") and its successors, and all intellectual
property rights therein, covering or embodied in BATTERIES or the
manufacture, use or sale of BATTERIES.
1.4 "MOWER" means a B&D cordless electric walk-behind
lawnmower having a power rating in the range of from 400 watts to
5000 watts and designed to be powered by an on-board rechargeable
battery, together with the entire battery charger system and all
mechanical and electrical interfaces with the battery, which
battery, charger system and interfaces may exist apart, or be
removable, from the mower deck.
1.5 "OUTDOOR PRODUCTS" means products for use outdoors,
including without limitation walk-behind mowers, string trimmers,
hedge trimmers, lights, shredders, blowers and stand-alone power
units comprising at least a battery, electric motor and output
shaft, having a power rating of 7HP or less, for connection to a
working implement.
1.6 "POWER TOOLS" means any OUTDOOR PRODUCT (excluding
riding mowers) and any other powered tool or appliance and any
accessory therefor (i) that is used for cutting, including but
not limited to construction material, food or vegetation;
drilling; hammering; planing, measuring; soldering; grinding;
sanding; sawing; spraying; fastening; polishing; screwdriving;
nutdriving; compressing; vacuum cleaning; grass cutting; hedge
trimming; pruning; mowing; blowing; cooking, hearing, gluing; can
opening; knife sharpening; ironing; food preparation including
but not limited to juicing, chopping and mixing; or lighting; and
(ii) that can be, in use, portable, bench top, countertop,
stationary (ground or floor-supported) or wheeled.
1.7 "PROJECT" means the development project between B&D and
ELSI to jointly develop commercially acceptable BATTERIES and
POWER TOOLS, beginning with MOWERS.
ARTICLE II - JOINT DEVELOPMENT
2.1 Scope of PROJECT. Initially, B&D and ELSI desire to
develop commercially acceptable BATTERIES and MOWERS, where the
BATTERIES meet the Specifications attached as Appendix "A" and
made a part hereof, and pass the Test Plan attached as Appendix
"B" and made a part hereof, as such Specifications and Test Plan
may be modified from time to time. The parties will negotiate
their respective roles and obligations and timetables. It is
also the intent of the parties to explore additional
opportunities to apply ELSI technology to other B&D POWER TOOLS,
including additional types of OUTDOOR PRODUCTS.
2.2 Prototypes. It is the intent of the parties for B&D to
purchase prototype BATTERIES from ELSI meeting the requirements
of Appendices "A" and "B", on mutually agreeable terms inclduing
without limitation quantity, price, qualify and delivery. Aside
from such prototype BATTERIES, each party will bear its own
expenses inclurred during the PROJECT.
2.3 Production Volumes. In the event that it can be
demonstrated to B&D's sole satisfaction that ELSI can
successfully manufacture production volumes of BATTERIES meeting
B&D's cost, delivery and quality requirements, it is the intent
of the parties that B&D and ELSI will negotiate an agreement for
the purchase, under mutually acceptable terms including without
limitation price, delivery and quality, of production volumes of
BATTERIES from ELSI for use on MOWERS.
ARTICLE III - EXCLUSIVITY;
CONFIDENTIALITY AND OTHER INTELLECTUAL PROPERTY
3.1 Duration. Beginning with the AGREEMENT DATE and
continuing for the duration of this Agreement and any extension
hereof, and any agreement to purchase production volumes of
BATTERIES pursuant to Section 2.3, ELSI will not sell BATTERIES
or license BATTERY TECHNOLOGY to third parties in the field of
POWER TOOLS.
3.2 Exclusivity Extinguished. In the event this Agreement
expires or is terminated, and no purchase agreement of production
volumes made pursuant to Section 2.3 above, exists, ELSI's
obligations under Section 3.1 above shall be extinguished,
subject to B&D's patent, trademark, copyright and trade dress
rights, under which no license is granted herein.
3.3 Intellectucal Property. Confidentiality and other
intellectual property topics are addressed in Appendix "C" to
this Agreement, attached hereto and made a part hereof.
ARTICLE IV - TERM, TERMINATION
AND SURVIVAL OF RIGHTS
4.1 Term - The term of this Agreement shall be for three
(3) years from the AGREEMENT DATE unless sooner terminated
pursuant to Paragraph 4.2, below.
4.2 Termination - Either party may terminate this Agreement
at any time for any reason by giving one (1) month's prior
written notice to the other party.
4.3 Survival of Rights - The following rights and
obligations shall survive the termination or expiration of this
Agreement for any reason:
4.31 B&D's obligation to pay ELSI for prototype
BATTERIES, if any, purchased from ELSI pursuant to Section 2.2 of
this Agreement.
4.32 The parties' respective rights and obligations
regarding INVENTIONS and MUTUAL CONFIDENTIALLY pursuant to
Appendix "C" to this Agreement, and exclusivity pursuant to
Article III of this Agreement.
ARTICLE V - PUBLICITY
The parties may independently, or if mutually agreeable,
jointly, issue press releases and other publicity upon the
complete execution of this Joint Development Agreement concerning
this Agreement's content, except that ELSI may not disclose any
information regarding quantities or pricing of MOWERS or
BATTERIES except as required by law or regulation. Each party
warrants that all such publicity it issues will be accurate.
Except for permissible publicity under this Article V, nothing in
this Agreement shall be construed as conferring upon a party a
right to use in advertising, other publicity, or otherwise, any
trademark or tradename of the other party's.
ARTICLE VI - NOTICES
6.1 The parties shall serve notice to one another to their
respective addresses set forth above, as follows:
President, for ELSI, and
Product Manager for MOWERS, for B&D, with a copy to
Patent Department (Outdoor Products) - TW199
6.2 All notices shall be sent via FAX with a confirmation
copy by overnight courier or U.S. overnight Express Mail. The
notices shall be effective as of the date of transmission. Each
party may change its address for notice by written notice to the
other party.
ARTICLE VII - REPRESENTATIONS AND WARRANTIES
7.1 Each of the parties represents and warrants that as of
the AGREEMENT DATE it is solvent; that no petitions for relief
under the U.S. Bakruptcy Code or any similar Federal or State
statute has been filed against it; that no application for the
appointment of a receiver for or the making of a general
assignment for the benefit of creditors by it has been made; and
that it is contemplating no such application or assignment.
7.2 Each of the parties represents and warrants that it has
not entered into and will not enter into any agreement with any
third party in conflict with the provisions of this Agreement.
7.3 ELSI represents and warrants that it has the full,
entire and exclusive right and power to enter into this
Agreement, to grant licenses under all BATTERY TECHNOLOGY,
including without limitation EPRI TECHNOLOGY, and to make, use
and sell BATTERIES.
ARTICLE VIII - GENERAL
8.1 Vicarious Performance. The parties may perform any of
their duties and obligations herein through their respective
parents, wholly-owned subsidiaries and wholly-owned subsidiaries
and affiliates of either. Performance by a party's parent,
wholly-owned subsidiary or wholly-owned subsidiary or parent of
either shall be deemed to be performance by such party. Any
rights granted in this Agreement to the parties shall extend to
their respective parents, wholly-owned subsidiaries and indirect
wholly-owned subsidiaries or either, and its successors and
assigns.
8.2 Assignment. B&D may freely assign this Agreement to
any of its parents, wholly-owned subsidiaries and subsidiaries
and affiliates of either. This Agreement may be freely assigned
by a party to any entity which acquires all or a portion of the
business of such party pertaining to the subject matter of this
Agreement. This Agreement may otherwise not be assigned by a
party without the prior written consent of the other party, which
consent shall not unreasonably be withheld.
8.3 Applicable Law. This Agreement shall be construed,
interpreted and applied in accordance with the applicable laws of
the State of Maryland.
8.4 Force Majeure. No party hereto shall be considered to
be in breach of its obligations hereunder if it shall fail to
fulfill the same for reasons arising wholly or principally from
acts of God, war, riot, civil commotion, tempest, flood, fire,
strike, lockout or any other circumstances beyond the control of
the party or sublicensee which would, but for the provisions of
this Paragraph 8.4, be in default of its obligation.
8.5 No Obligation to Third Parties. The execution and
delivery of this Agreement shall not be deemed to confer any
rights upon, nor obligate any of the parties hereto, to any
person or entity other than each other, unless specifically
described in this Agreement.
8.6 Supplemental Documentation. Each party agrees to
execute and deliver any and all further agreements, documents or
instruments necessary to effectuate this Agreement and the
transactions contemplated hereby or reasonably requested by the
other party to perfect or evidence such party's rights hereunder.
8.7 Negation of Implications. Nothing herein shall be
construed as:
(a) Creating any obligation of either of the parties to
introduce or maintain any produce on the market;
(b) Subject to the mutual confidentiality provisions of
this Agreement, preventing a party from making, using or selling
any product except to the extent that such product is covered by
the valid trademarks, copyrights or issued patents of the other
party; or
(c) Except for publicity under Article V of this Agreement,
conferring a right to use in advertising, publicity, or otherwise
any trademark or tradename of the party from which a license is
received under this Agreement
8.8 Parties Are Independent Contractors. Each party is
acting as an independent contractor and not as an agent for,
partner of, or joint venture with, the other party.
8.9 Sublicenses. No non-exclusive licensee established
under any provision of this Agreement may grant sublicenses to
any other entity, except to its customers as implied licensees,
to its partents or wholly-owned subsidiaries or wholly-owned
direct or indirect subsidiaries of either, and to any entity
which acquires all or a portion of its business pertaining to the
subject matter of this Agreement. Exclusive licensees
established under this Agreement may freely grant sublicenses.
8.10 Integration, Modification, No Waiver. This document
contains the entire and only agreement between the parties and
supersedes all preexisting agreements between them respecting its
subject matter. No modification or amendment of this Agreement
may be made except by a written agreement signed by all of the
parties to this Agreement then existing. Any of the terms or
provisions this Agreement may be waived, but only in writing by
the party which such waiver is sought to be enforced. The
failure to any party hereto to insist upon strict performance of
any of the provisions of this Agreement will not consitute a
waiver of any right of such party hereunder.
The parties hereto, intending to be legally bound hereby, have
respectively executed this Agreement in duplicate as of the
AGREEMENT DATE.
BLACK & DECKER (U.S.) INC. ELECTROSOURCE INCORPORATED
BY: /S/ BY: /S/
NAME: Charles E. Fenton NAME: Michael G. Semmens
TITLE: Vice President and TITLE: CEO & President
Assistant Secretary
DATE: March 8, 1996 DATE: March 11, 1996
EXHIBIT 10.99
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
95-C-076
THIS CONSULTING AGREEMENT (the "Agreement"), made
effective the 1st day of November 1995, is between Electrosource,
Inc., ("Electrosource") a Delaware corporation, having its
principal offices at 3800-B Drossett Drive, Austin, Texas, 78744-
1131, USA ("Electrosource") and, Charles L. Mathews ("Consultant")
having his principal place of business at 1111 Cardinal Drive, Paige,
Texas 78629.
W I T N E S S E T H:
WHEREAS, Consultant possesses the knowledge and experience
in battery technology, engineering, production technology, production
equipment and related fields; and
WHEREAS, Consultant has the knowledge and ability and is
duly licensed or authorized to assist Electrosource in the
development, testing, production and commercialization of its
technology; and
WHEREAS, Electrosource desires the assistance of Consultant.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements hereinafter contained, the parties hereto agree as follows:
1. Term. Electrosource hereby engages Consultant as an
independent contractor for a term commencing on the date hereof
and ending two (2) years thereafter, unless sooner terminated in
accordance with the terms hereof. The parties may extend this
agreement by mutual agreement.
Notwithstanding any other provision of this Agreement,
if Consultant materially breaches any of its provisions,
Electrosource may terminate this Agreement immediately upon
written notice to Consultant. Electrosource may also
terminate this Agreement at any time after June 30, 1996 if
Electrosource has or is ordering lead, lead billet makers
and/or co-extruders from Consultant under separate
agreements in amounts sufficient to provide contractor a
reasonable profit in Electrosource's opinion for Consultant
to have a self-sustaining business.
Upon termination of this Agreement, Electrosource shall
have no obligation to make further payments to Consultant for
services performed after notice is received by Consultant.
Notice may be hand carried or sent by certified mail.
Notice is effective upon receipt or within five days of
mailing, whichever is earlier.
2. Duties. Consultant shall use his best efforts on
behalf of Electrosource to assist Electrosource with respect
to all matters pertaining to battery development, engineering,
production equipment, materials and related matters. Consultant
shall not, during the term of this Agreement accept any other engagement
as a cconsultant, or enter into any employment relationship with
respect to which any portion of his duties would entail assisting any
other entity in the field of battery research, development or
production. Consultant shall be reasonably available on an on-call,
as-needed basis to perform such consulting duties as may be assigned
from time to time by Electrosource by its President or his designee.
Consulting services shall be provided either at the offices of
Electrosource or of Consultant, or at such other location as the
parties may agree.
3. Compensation. As full compensation for the services which
Consultant renders to Electrosource under this Agreement, Electrosource
shall pay to Consultant $5,000 per month on the 1st and 15th day of
each month. It is anticipated that for a substantial and indefinite
period, Consultant's services will be needed on a regular basis for
approximately one-half his time. It is further understood that
Consultant may supply equipment or supplies to Electrosource under
separate agreement and for separate compensation (see Section 1).
Consultant shall invoice monthly for his services hereunder.
4. Expenses. Electrosource shall reimburse Consultant for
all proper and reasonable expenses incurred by him pursuant
to Consultant's consulting duties hereunder. Such expenses
may include necessary actual expenses of out-of-town travel
costs, communications, hotel accommodations, meals and the
like, provided that Consultant shall keep and provide
Electrosource an accurate and complete accounting of all
such expenses so incurred, and shall obtain Electrosource's
prior written consent to any such expenses. Reimbursement
of expenses will be issued within fifteen (15) days of receipt
of complete accounting of same.
5. Confidential and Proprietary Information. The parties
agree that from time to time during performance of this
Agreement, confidential or proprietary technical or business
information may be provided either orally or in written form
to Consultant. Such information will be specifically
designated by Electrosource as confidential or proprietary.
Consultant shall keep confidential all such designated
information furnished by Electrosource and safeguard same
from disclosure or use by any unauthorized individuals for
any purpose other than in performance of this Agreement.
Consultant shall restrict the disclosure of
Electrosource's confidential or proprietary technical and
business information to those of his employees who need to
know the same for purposes of carrying out this contract.
Consultant shall advise all such employees of Consultant's
obligations of confidentiality under this Agreement.
In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees
promptly to deliver to Electrosource all written information
of any sort made available to Consultant or created by it
under the terms of this Agreement.
Work product created by Consultant shall become the
confidential proprietary property of Electrosource.
Consultant agrees to treat such work product in the same
manner as confidential proprietary information of
Electrosource. Consultant agrees that any remedy at law
would be inadequate or a violation of this provision;
consequently, Consultant agrees that Electrosource is
entitled to obtain an injunction against Consultant's
disclosure of any confidential proprietary information.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under this Section 5.
6. Classified Information. Except in connection with
authorized visits, classified material shall not be
possessed by the Consultant off the premises of the Company.
The Company shall not furnish classified material to the
Consultant at any other location than the premises of the
Company and performance of the consulting services by the
Consultant shall be accomplished at the premises of the
Company.
The Consultant and his certifying employees shall not
disclose classified information to unauthorized persons.
Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions. Consultant shall
convey to Electrosource all rights to each invention, whether or
not patentable, which is conceived, developed, written, or reduced to
practice by Consultant in performing this Agreement. Consultant
agrees to execute all necessary patent and copyright
applications, assignments and other instruments at
Electrosource's expense and to give all lawful and proper
testimony in aid of Electrosource obtaining and maintaining
in its name full and complete patent protection on any such
invention. Before final payment is made under this
Agreement, Consultant shall furnish Electrosource complete
information with respect to any invention and all work
product subject to this Section.
Consultant hereby irrevocably appoints each officer and
director of Electrosource as his attorney-in-fact for
purposes of filing any applications or assignments necessary
to properly reflect the sole ownership by Electrosource of
any invention or work of authorship subject to this Section.
8. Assignment and Subcontracting. Neither this Agreement
nor its performance, either in whole or in part, shall be
assigned or subcontracted by Consultant to a third party
without, in each case, the prior written consent of
Electrosource, which may be withheld for any reason.
9. No Conflicts. Consultant represents and warrants that:
(a) He has full authority to enter into this Agreement and
to perform his obligations hereunder; and
(b) Performance by Consultant of his obligations hereunder will
not be in conflict with any other of his obligations.
Notwithstanding any other provision of this Agreement,
Electrosource shall have the right to terminate this
Agreement if, in Electrosource's sole opinion, a conflict of
interest rises or may arise between Consultant's
representation of Electrosource and its representation of
its other clients. Such termination shall become effective
upon five (5) days written notification by Electrosource.
10. Independent Contractor. Consultant's relationship to
Electrosource shall be solely to provide personal services
on an independent contractor basis. In this capacity,
Consultant will not be an employee of Electrosource and will
not be entitled to worker's compensation coverage, unemployment
insurance, or any other type or form of insurance or benefit
normally provided by Electrosource for its employees, and
Electrosource will not be responsible for withholding federal income
or social security taxes from the fees paid to Consultant. The
Consultant will be solely responsible for reporting and paying all
Federal, State and Local taxes arising from his performance of this
Agreement. The Consultant is generally free to perform the services
hereunder in any manner desired, subject to satisfactory completion
of the subject task.
11. Notice. A notice communicated to Electrosource shall
be sent to: President, Electrosource, Inc., 3800-B Drossett
Drive, Austin, Texas 78744-1131, or to such other place or places as
Electrosource, by notice in writing, shall specify. Any
notice to Consultant shall be sent to Charles L. Mathews at
111 Cardinal Drive, Paige, Texas 78629. Any notice to be served shall
be deemed to be served if the same be sent by registered or
certified mail through the United States mail, addressed to
the party on which service is to be effected at the address
stated in the immediately preceding sentences and shall be
deemed to have been received on the day indicated on the
return receipt relating thereto.
12. Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns
of Electrosource, and to the successors and assigns of
Consultant.
13. Modification. This Agreement supersedes all prior
agreements or understandings between Consultant and
Electrosource relating to the subject matter hereof, and no
change, termination or attempted waiver of any of the
provisions hereof shall be binding unless reduced to writing
and signed by duly authorized officers of Electrosource and
by Consultant.
14. Construction. This Agreement shall be construed and
enforced in accordance with the laws of the State of Texas.
Consultant hereby submits to the continuing jurisdiction of
the laws and the courts of the State of Texas in the
prosecution of any interpretation or dispute under or
arising out of this Agreement. Should any portion of this
Agreement be adjudged or held to be invalid, unenforceable
or void, such judgment shall not have the effect of
invalidating or voiding the remainder of this Agreement, and
the parties hereto agree that the portion to be held
invalid, unenforceable or void shall, if possible be deemed
amended or reduced in scope or to otherwise be stricken from
this Agreement to the extent required for the purposes of
validity and enforcement thereof.
IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.
ELECTROSOURCE, INC.
By: /S/ By: /S/
James M. Rosel, Vice President Charles L. Mathews
and General Counsel
Date: October 31, 1995 Date:October 31, 1995
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
EXHIBIT 10.103
AGREEMENT
The undersigned parties agree as follows:
1. Electrosource, Inc. ("ELSI") will pay Robert Trembath
("Trembath") and Cold Services, Inc. ("CSI") the sum of $40,000
in two installments, payable as follows:
a. $15,000 to Trembath, on or before December 21, 1995.
b. $25,000 to CSI, on or before January 5, 1996.
2. ELSI will pay CSI a 4% finder's fee for financing
obtained by ELSI through the following four entities: Edmund
McMullen, Salem/Old Colony Leasing (equipment leasing), Bankers
Capital (loans) and La Jolla Capital. The 4% fee will be
calculated based on the net proceeds ELSI receives from these
sources as and when received. The parties agree that ELSI is
free to use or not these sources, based on its own business
judgment. As to each of these four sources of potential
financing, the 4% fee will apply only if ELSI enters into a
financing transaction with that source on or before August 31,
1996. For each of these four sources, if ELSI does enter into a
financing transaction on or before August 31, 1996, then as to
that company, the 4% fee will apply to all its financing
transactions with ELSI unless a period of six months elapses
during which ELSI has no financing contractual relationship with
such company. Trembath and CSI further agree that in the event
either of them wants to submit a proposal for ELSI to La Jolla
Capital, he will first obtain ELSI's written approval through
ELSI's General Counsel.
3. Trembath and CSI hereby release and forever discharge
ELSI, its officers, directors, employees, and agents from all
claims or causes of action, whether know or unknown, and accrued
or unaccrued, arising out of any consulting relationship, any
written or oral agreement, services rendered, expenses incurred,
or any other basis, except claims that arise out of obligations
created by this agreement. This release also specifically
includes any claims related to consulting services in connection
with possible future plants in Sacramento or Los Angeles,
California.
4. ELSI hereby releases and forever discharges Trembath and
CSI, its officers, directors, employees, and agents from all
known claims or causes of action, arising out of any consulting
relationship, any written or oral agreement, services rendered,
expenses incurred, or any other basis, except claims that arise
out of obligations created by this agreement. This release also
specifically includes any claims related to consulting services
in connection with possible future plants in Sacramento or Los
Angeles, California.
5. Trembath agrees that he will not talk to ELSI employees
to interfere with ELSI business and will not talk to actual or
potential customers or finance providers (except as provided in
paragraph 2 above) about ELSI and will not represent himself as a
consultant to or having any relationship with ELSI. He further
agrees that he will not personally represent other
entities or persons in any negotiations with ELSI, other than to
represent the direct interests of himself and his wife.
6. The parties specifically agree that all prior written and
oral agreements related to consulting, commissions, finder's fees
or any other subject between CSI and ELSI and between Trembath
and ELSI are hereby terminated and superseded by this agreement.
7. The parties agree that neither party will disparage the
other. In the event this paragraph 7 agreement is materially
breached by Trembath, then ELSI will be entitled to a refund of
the $40,000 payment described in paragraph 1 above.
8. Trembath represents to ELSI that he has full authority to
enter into this agreement without any consent or approval of his
spouse.
DATED: December 19, 1995.
ELECTROSOURCE, INC. COLD SERVICES, INC.
/S/ /S/
By: James M. Rosel By: Robert Trembath
Its: Vice President and Its: President
General Counsel
/S/
Robert Trembath, individually
EXHIBIT 10.113
SEPARATION, RELEASE AND INDEMNITY AGREEMENT
This Separation, Release and Indemnity Agreement (this
"Agreement") is made as of the dates executed below, to be
effective eight (8) working days after notarized signatures as
provided below, and is made by and between Electrosource, Inc.
("Electrosource) or "the Corporation"), a Delaware corporation
with its principal offices at 3800 "B" Drossett Drive, Austin,
Texas 78744-1131, and Michael L. Weinstein ("Weinstein") an
individual residing at 1190 Laurel Loop, NE, Albuquerque, New
Mexico 87122. So that Electrosource and Weinstein may each
obtain the benefits given under this Agreement, Weinstein on his
own behalf, and on behalf of his heirs and assigns, and
Electrosource enter into this Agreement and agree as follows:
1. RECITALS
(a) In a letter and Clarifying Memorandum dated, October
11, 1994, from Michael G. Semmens, President and Chief Executive
Officer of Electrosource to Michael L. Weinstein (hereinafter
"the Employment Agreement"), Weinstein was offered and accepted a
position as Vice President and Special Assistant to the Chairman
of the Board with responsibilities for capital fundraising,
interacting with the Customer Relations and Marketing
Organization of Electrosource and performing other duties as
assigned;
(b) On or about August 3, 1995, Electrosource made a
payment to Weinstein in the gross amount of $48,653.85 and on
August 4, 1995, another payment in the gross amount of $25,926.70
respectively. Electrosource asserts that all and/or a portion of
these payments constituted advance severance payments of
Electrosource pursuant to Weinstein's October 11, 1994,
Employment Agreement and satisfaction of other liabilities or
obligations pursuant to that Employment Agreement while Weinstein
asserts that the monies constitute a bonus;
(c) Weinstein's employment with Electrosource ended on
Friday, September 15, 1995, and, Weinstein ceased to be an
officer of the corporation and to hold any positions of authority
with the Company effective that date;
(d) Electrosource and Weinstein now desire to confirm their
mutual agreements with respect to the cessation of Weinstein's
employment with Electrosource and all positions of authority with
the Company and to resolve all outstanding issues between them;
(e) Weinstein has been advised he will be given a period of
time of at least twenty-one (21) days, to review this Separation,
Release and Indemnity Agreement ("Agreement") prior to executing
it and has been advised by Electrosource to seek legal advice
from an attorney of his choice prior to signature and Weinstein
has in fact secured legal counsel;
(f) Weinstein has made a purely voluntary decision to elect
the benefits under this Agreement which are substantially in
excess of the payments made to departing employees; and
(g) Each of the parties acknowledges that each of the
agreements and obligations of each of the parties to this
Agreement is supported by, good, valuable and adequate
consideration.
2. SEPARATION DATE
(a) Weinstein's employment as an officer and employee of
Electrosource ended on September 15, 1995 (the "Separation
Date"), and Weinstein has no authority to act on behalf of the
Corporation after that date; and
(b) Weinstein agrees not to seek employment with nor to be
employed by Electrosource after September 15, 1995, nor shall he
represent to any party that he is an Electrosource officer,
employee or agent after that date.
3. RELEASE OF ELECTROSOURCE AND AFFILIATES
In accepting the consideration noted in Paragraph 5 below,
Weinstein, on behalf of himself, his heirs and assigns, agrees to
and hereby does release, acquit and forever discharge
Electrosource and its current and former officers, directors,
employees, agents, shareholders, subsidiaries, attorneys
affiliates, successors and assigns (collectively, "the
Affiliates") from any and all claims, counterclaims, debts,
liabilities, demands, actions causes of action, suits, expenses
and liabilities of every kind and character whether suspected or
unsuspected, whether known or unknown, whether now existing or
hereinafter arising, whether arising in tort or in contract, by
statute or by legislation, or otherwise express or implied,
whether at law or in equity, and whether fixed or contingent,
which Weinstein ever had or now has or may have or claim to have
against any one or more of the Affiliates, jointly and severally
or jointly or severally including without limitation, any and all
claims and liabilities arising out of or in connection with his
Employment Agreement, his employment, the termination of an/or
separation from his employment by Electrosource, and any and all
entitlement to severance pay or other monies including reasonable
attorney fees, expenses or any other equitable or monetary relief
(hereinafter "Claims"). Weinstein hereby promises not to file
any lawsuit against the Electrosource or its Affiliates to assert
any such Claims. This release includes, but is not limited to,
any Claims arising under any employment relations or wage payment
laws, any Claims arising under any federal, state, or local law
or regulation or executive order that prohibit discrimination on
account of age, sex, race, color, sexual orientation, national
origin, religion, handicap, disability or veteran status,
including claims under the Civil Rights Act of 1991 and the Age
Discrimination in Employment Act of 1967, as amended, to the date
of this Agreement, any Claims arising under federal or state
securities laws, any wrongful termination Claims at law or in
equity, in contract or in tort whether known or unknown. This
release does not have any effect on (i) statutory indemnification
rights Weinstein enjoys as a corporate officer under Section
145(c) of the General Corporate Law of the State of Delaware or
(ii) on any future claim Weinstein may have against Electrosource
that is solely with respect to, or that arises solely out of, any
act by the Corporation that takes place after the date of execute
of this Agreement, including any claim against Electrosource for
breach of its obligation to pay the salary and benefits described
in Paragraph 5 below. This release does extend to and include,
however, without limitation, any present or future consequences,
damages or injuries, or Claims with respect thereto, arising or
that may arise out of any events that occurred on or before the
date of execution of this Agreement.
4. RELEASE OF WEINSTEIN
In consideration of the promises and representations made by
Weinstein under this Agreement, Electrosource on behalf of itself
and its successors and assigns, hereby releases Weinstein from
any and all known claims, known counterclaims, known debts, known
liabilities, known demands, known actions, known causes of
action, known suits, know expenses and known liabilities through
the date of execution of this Agreement.
5. PAYMENT TO WEINSTEIN
In full consideration of Weinstein signing this Agreement
and for the promises contained herein, Electrosource, on behalf
of itself and its Affiliates hereby agrees to pay Weinstein as
follows:
(a) No later than eight (8) working days after Weinstein
and his spouse have executed this Agreement in the presence of a
notary provided Weinstein has not exercised in the interim his
revocation rights under paragraph 13 of this Agreement,
Electrosource, on behalf of itself and its Affiliates shall pay
to Weinstein in one lump sum in certified funds the gross amount
of FIFTY-SIX THOUSAND AND NO/100 DOLLARS ($56,000.00) less
applicable taxes and withholding resulting in a net amount of
THIRTY-NINE THOUSAND FIVE HUNDRED AND EIGHT AND NO/100 DOLLARS
($39,508.00). All monies due under this Agreement shall be
delivered to Weinstein's attorneys, Small Craig & Werkenthin,
P.C., at 100 Congress Avenue, Suite 1100, Austin, Texas 78701.
(b) Until his Separation Date, Weinstein was a participant
in a group life insurance plan of Electrosource. Weinstein's
group coverage terminated September 15, 1995. Weinstein shall
have the right, on his timely payment of premiums to convert his
life insurance coverage to a permanent life individual policy
pursuant to the terms and time limits of the group policy's
conversion provision. Electrosource has requested a copy of the
continuation form and shall forward it to Weinstein on or before
the effective date of this Agreement. Weinstein acknowledges
receipt of the conversion form(s) and agrees that once received,
completion and mailing of the appropriate forms and timely
payment of all premium is his sole responsibility.
(c) Until his Separation Date, Weinstein was a participant
in a group disability insurance plan of Electrosource.
Weinstein's group disability coverage terminated September 15,
1995, and there is not right of conversion on this policy.
(d) Electrosource has paid to Weinstein, sixty (60) hours
of accrued and unused vacation pay in the gross amount of FOUR
THOUSAND ONE HUNDRED FIFTY-FIVE AND 91/100 DOLLARS ($4,155.91)
and final wages for September 10-15, 1995, in the gross amount of
TWO THOUSAND SEVEN HUNDRED SIXTY-NINE AND 20/100 DOLLARS
($2,769.20). Weinstein acknowledges and agrees that
Electrosource has paid him all vacation pay and final wages that
he is due.
(e) Weinstein was offered and declined the opportunity to
participate in the 401(k) Plan of Electrosource and its group
health and dental plans. Weinstein acknowledges and agrees that
has (i) no vested monies in the 401(k) Plan of Electrosource and
(ii) no continuation rights to group health or dental coverage
under Electrosource plans.
(f) Pursuant to Plan terms and applicable I.R.S.
regulations, Weinstein is a participant in that certain 1994
Stock Option Plan of Electrosource, Inc. ("the Plan") dated
November 2, 1994, attached hereto as Exhibit A-1, and an
Incentive Stock Option Agreement dated November 16, 1994 for
75,000 shares at a strike price of $3.50, 25,000 of which
Weinstein has the present right to exercise, attached hereto as
Exhibit A-2, and an Incentive Stock Option Agreement dated May
31, 1995, for 11,107 shares at a price of $3.375 per share
attached hereto as Exhibit A-3 and a Non-Incentive Stock Option
Agreement also dated May 31, 1995, for 18,891 shares at a price
of $3.375 per share, attached hereto as Exhibit A-4. Weinstein
has no present right to exercise the shares in either of the May
31, 1995, options described herein.
(g) Electrosource has leased office space at 3900 Juan
Tabo, N.E., Suite 7, in Albuquerque, New Mexico. On execution of
an appropriate assignment and assumption and payment of all
leasehold responsibilities by Weinstein, Electrosource will
permit Weinstein to continue to utilize this space at his sole
expense from September 16, 1995, forward, provided the lessor of
the premises agrees. Electrosource agrees to work in good faith
to effect the transfer as promptly as possible after the
effective date of this Agreement. The telephone number of the
space, (505) 298-1800, shall not be transferred to Weinstein by
Electrosource.
(h) Weinstein has submitted business expense reimbursement
requests in amounts not to exceed $150.00. Electrosource agrees
to reimburse Weinstein for these expenses in accordance with the
Corporation's normal business expense reimbursement practices no
later than the effective date of this Agreement.
6. NO OTHER PAYMENTS
Except as specifically described in Paragraph 5, Weinstein
shall not be entitled to, and hereby waives any Claims with
respect to, any other salary, bonuses, costs, severance payments,
referral payments, monies, business expenses, options, property,
benefits, attorneys' fees, vacation payments or other
considerations from Electrosource and/or its Affiliates.
7. NONASSIGNMENT
Weinstein and his spouse, Bonnie L. Weinstein, each
represent and warrant that he or she has not pledged, transferred
or assigned to any party or otherwise encumbered any Claims each
may have against Electrosource or its Affiliates, that no other
person, organization or entity has any interest in any Claims
settled hereby, and that Weinstein and Bonnie L. Weinstein each
has full power and authority to enter into and perform under this
Agreement.
8. NONADMISSION
Weinstein acknowledges and agrees that this Agreement is not
and shall not be construed to be an admission by Electrosource of
any violation of any federal, state or local law or regulation or
of any duty owed by any one or more of Electrosource and its
Affiliates to Weinstein and that his execution of this Agreement
is a voluntary act to provide an amicable conclusion to
Weinstein's employment relationship with Electrosource.
9. CONFIDENTIALITY
Weinstein agrees that he will maintain the confidentiality
of any and all confidential information that he has received by
virtue of his employment with Electrosource and will refrain from
using such information or disclosing it to anyone other than
Electrosource or its designees. For purposes of this Agreement,
confidential information is information which Electrosource or
its Affiliates endeavor to keep confidential, including, without
limitation, employee lists, the terms of contracts and policies,
marketing plans, products and/or program designs, products,
technology, trade secrets, proprietary and financial information,
and any information provided by a third party to any one or more
of Electrosource or its Affiliates in confidence. Weinstein
agrees that on execution of this Agreement or otherwise upon
request of the Electrosource, he will return to Electrosource any
records in his possession containing confidential information of
Electrosource or records that are the property of Electrosource
or of any of its Affiliates.
10. NO CHARGES
Weinstein represents that he has not filed any complaints or
charges against Electrosource or its Affiliates with the Equal
Employment Opportunity Commission, the Texas Commission on Human
Rights, the New Mexico Commission on Human Rights, or with any
other local, state or federal agency or court, that Weinstein
will not do so at any time hereafter, and that if any such agency
or court assumes jurisdiction of any complaint or charge against
Electrosource on behalf of Weinstein, he will request such agency
or court to withdraw immediately from the matter.
11. NONDISCLOSURE
Weinstein hereby agrees that neither Weinstein nor any
person, organization, or entity acting on his behalf will
communicate or permit to be communicated, either directly or
indirectly, any information regarding the financial or other
terms of this Agreement except to his counsel, his accountant,
governmental agencies, or to any court involved in any action
brought by either party to enforce the terms of this Agreement.
12. OWBPA COMPLIANCE
Weinstein acknowledges that he has read and understands all
of the terms of this Agreement. Weinstein acknowledges that he
has been informed he may have at least twenty-one (21) days to
consider this Agreement prior to his executing it and that
Electrosource has advised Weinstein to consult with an attorney
of his choice prior to executing this Agreement. Weinstein
acknowledges that he signs this Agreement in exchange for the
consideration to be given to him which Weinstein acknowledges is
adequate and satisfactory, and that neither Electrosource nor any
of its Affiliates have made any representations to Weinstein
concerning the terms or effects of this Agreement other than
those contained in this Agreement. Weinstein acknowledges and
agrees that if he signs this Agreement prior to the twenty-one
(21) day period he has freely and voluntarily waived his rights
under O.W.B.P.A. for the longer time period stated above.
13. REVOCATION
Weinstein may revoke this Agreement within seven (7) days
after he signs it, and this Agreement shall be of no force or
effect with respect to either Electrosource or Weinstein until
this seven (7) day period has expired. Any revocation must be in
writing, signed by Weinstein and received by Electrosource by
5:00 p.m. on the seventh day after this Agreement has been signed
by Weinstein to be effective. Such revocation must be sent by
certified mail as provided by paragraph 22 or hand-delivered to
the same address as the address to which this Agreement is to be
sent or delivered, which address is:
Electrosource, Inc.
ATTN: Mr. James Rosel, General Counsel
3800 "B" Drossett Drive
Austin, TX 78744-1131
14. CORPORATION RECORDS, FILES, AND OTHER ASSETS
Weinstein agrees to leave with, and promptly turn over to,
the Corporation at its offices in Travis County, Texas, any and
all records (including financial and client records), books of
account, client files and materials, computer files, keys, credit
cards beepers, portable phones, furniture, fixtures, equipment,
and other assets of the Corporation now in the possession and
control of Weinstein; provided, however, that Weinstein shall be
entitled to keep and retain his personal letters, files, and
records maintained by Weinstein as an employee and officer of the
Corporation. If Aaron Rents agrees, and upon appropriate payment
and execution of all documents, Weinstein may continue to rent
the office furniture in the lease space described in paragraph
5(g) at his sole expense from September 16, 1995, forward.
15 OTHER REPRESENTATIONS
(a) Weinstein agrees that the Corporation shall have the
right, from time to time, to communicate the fact of Weinstein's
separation from employment with the Corporation to such
employees, clients, and other persons, and in such truthful
manner as the Corporation in its sole discretion deems
appropriate; and
(b) The Corporation agrees that Weinstein shall have the
right, from time to time, to communicate the fact of Weinstein's
separation from employment with the Corporation in such truthful
manner as Weinstein in his sole discretion deems appropriate.
16. SPOUSE'S SIGNATURE
This Agreement has been executed below y Bonnie L.
Weinstein, the spouse of Weinstein, in order to evidence her
consent to and joinder in the execution and delivery by Weinstein
of this Agreement, and by so executing this Agreement, she shall
be bound to all of the terms hereof to the extent of any
interest, community or otherwise, in any of the property or
assets of Weinstein, including, without limitation, the payment
described in paragraph 5(a).
17. SEVERABILITY
If any provision of this Agreement, or the application
thereof to any party or under any circumstances, shall be invalid
or unenforceable to any extent, the remainder of this Agreement
and the application of such provision to other persons or
circumstances shall not be affected thereby and shall be enforced
to the greatest extent permitted by law.
18. COMPLETE AGREEMENT
This Agreement, together with attached Exhibits A-1, A-2, A-
3, and A-4 contains the entire Agreement of the parties with
respect to the subject matter hereof, supersede any prior or
contemporaneous discussions and agreements and may be modified
only by a written instrument duly executed by all parties hereto.
Weinstein has carefully read and fully understands all the
provisions of this Agreement and acknowledges that he has not
relied upon any representations or statement, written or oral,
not set forth in this Agreement.
19. GOVERNING LAW
It is understood and agreed that this Agreement is made and
entered into in the State of Texas and shall be governed by,
construed and enforced in accordance with, ad subject to, the
laws of the State of Texas and is performable in Travis County,
Texas. The parties agree that any actions to enforce this
Agreement or relating to Weinstein's employment or the
termination of such employment with Electrosource shall be
brought in Travis County, Texas.
20. ATTORNEYS' FEES
In the event of any suit, action, or proceeding between the
parties with respect to this Agreement, including, without
limitation, any suit to enforce, interpret, or construe this
Agreement or seeking of declaration of rights and/or remedies
available hereunder or damages for the breach hereof, the
prevailing party or parties in any such action shall be entitled
to recover from the non prevailing party or parties reasonable
attorneys' fees, expenses, and court costs.
21. NOTICES
All notices required or permitted to be given under this
Agreement shall be given in writing and shall be deemed given
upon the first to occur on either (a) actual delivery to the
party charged with such notice, or (b) deposit in the United
States mail, certified mail, return receipt requested, postage
prepaid, in an envelope or of the container addressed to the
party charged with such notice at the address for such party set
forth below:
Corporation: Electrosource, Inc.
3800 "B" Drossett Drive
Austin, TX 78744-1131
Attention: James Rosel
Weinstein: 1190 Laurel Loop, NE
Albuquerque, New Mexico 87122
22. BINDING EFFECT
This Agreement shall be binding upon Weinstein, Bonnie L.
Weinstein, and each of their respective heirs, and assigns and
Electrosource and its assigns.
23. COUNTERPARTS
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
24. REPRESENTATIONS
The representations, warranties, and agreements of the
parties contained in this Agreement shall survive the execution
of this Agreement and the consummation of the transactions
contemplated hereby.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the dates stated below in 1995, consisting of 17
pages and Exhibits A-1, A-2, A-3, and A-4, to be effective the
eighth working day after Weinstein has executed this Agreement in
the presence of a notary, provided he has not revoked his
acceptance in the interim, as provided in paragraph 13.
ACKNOWLEDGMENT
I hereby verify that the foregoing Separation, Release and
Indemnity Agreement is true and correct to the best of my
knowledge.
ELECTROSOURCE, INC.
By: /s/
MICHAEL G. SEMMENS as
CHIEF EXECUTIVE OFFICER AND
AND CHAIRMAN OF THE BOARD
THE STATE OF TEXAS
COUNTY OF TRAVIS
BEFORE ME, the undersigned Notary Public, personally
appeared MICHAEL G. SEMMENS, as Chief Executive Officer and
Chairman of the Board of Electrosource, Inc., known to me to be
the person whose name is subscribed to the foregoing instrument
and acknowledged to me that he executed the instrument for the
purposes and consideration therein expressed; that he executed
the instrument as his free and voluntary act and deed after
reading it fully and having conferred with his attorney; that the
instrument was executed by him without any threat, force, fraud
or duress; and that MICHAEL G. SEMMENS, at the time of the
execution of this Separation, Release and Indemnity Agreement,
was completely sober, sane and capable of understanding the
character of his acts and deeds and was in complete control of
his faculties and capable of executing this instrument and
understanding the significance of his acts.
Given under my hand and seal of office this 22nd day of
September, 1995
/s/
NOTARY PUBLIC, STATE OF TEXAS
Audrey T. Dearing
(Printed name of notary)
8/31/1996
Date commission expires
ACKNOWLEDGMENT
I hereby verify that the foregoing Separation, Release and
Indemnity Agreement is true and correct to the best of my
knowledge.
MICHAEL L. WEINSTEIN
By: /s/
MICHAEL L. WEINSTEIN
THE STATE OF NEW MEXICO
COUNTY OF BERNALILLO
BEFORE ME, the undersigned Notary Public, personally
appeared MICHAEL L. WEINSTEIN, known to me to be the person whose
name is subscribed to the foregoing instrument and acknowledged
to me that he executed the instrument for the purposes and
consideration therein expressed; that he executed the instrument
as his free and voluntary act and deed after reading it fully and
having conferred with his attorney; that the instrument was
executed by him without any threat, force, fraud or duress; and
that MICHAEL L. WEINSTEIN, at the time of the execution of this
Separation, Release and Indemnity Agreement, was completely
sober, sane and capable of understanding the character of his
acts and deeds and was in complete control of his faculties and
capable of executing this instrument and understanding the
significance of his acts.
Given under my hand and seal of office this 23 day of
September, 1995
/s/
NOTARY PUBLIC, STATE OF NEW MEXICO
Myra Jordan
(Printed name of notary)
June 30, 1999
Date commission expires
ACKNOWLEDGMENT
I hereby verify that the foregoing Separation, Release and
Indemnity Agreement is true and correct to the best of my
knowledge.
BONNIE L. WEINSTEIN
By: /s/
BONNIE L. WEINSTEIN
THE STATE OF NEW MEXICO
COUNTY OF BERNALILLO
BEFORE ME, the undersigned Notary Public, personally
appeared BONNIE L. WEINSTEIN, known to me to be the person whose
name is subscribed to the foregoing instrument and acknowledged
to me that she executed the instrument for the purposes and
consideration therein expressed; that she executed the instrument
as her free and voluntary act and deed after reading it fully and
having conferred with her attorney; that the instrument was
executed by her without any threat, force, fraud or duress; and
that BONNIE L. WEINSTEIN, at the time of the execution of this
Separation, Release and Indemnity Agreement, was completely
sober, sane and capable of understanding the character of her
acts and deeds and was in complete control of her faculties and
capable of executing this instrument and understanding the
significance of her acts.
Given under my hand and seal of office this 23 day of
September, 1995
/s/
NOTARY PUBLIC, STATE OF NEW MEXICO
Myra Jordan
(Printed name of notary)
June 30, 1999
Date commission expires
EXHIBIT 10.115
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
95-C-075
THIS CONSULTING AGREEMENT (the "Agreement"), made
effective the 1st day of August, 1995, is between Electrosource,
Inc., a Delaware corporation, having principal offices at 3800-B
Drossett Drive, Austin, Texas, 78744-1131, U.S.A.
("Electrosource") and, DONALD C. PERRIELLO (Consultant) whose
mailing address is Post Office Box 18361, Austin, Texas 78760.
W I T N E S S E T H:
WHEREAS, Consultant possesses the knowledge and expertise in
accounting and administraive matters; and
WHEREAS, Electrosource desires the assistance of
Consultant.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements hereinafter contained, the parties hereto agree
as follows:
Electrosource and Consultant, intending to be legally bound,
agree as follows:
1. Term. Electrosource hereby engages Consultant as
independent contractor for a term commencing on August 1,
1995, and ending on June 30, 1997.
Electrosource shall have the right to extend this
Agreement by written modification at the same rate of
compensation provided for in Section 3 by written notice not
less than two weeks prior to the last day of the initial
term of this Agreement or Amendment to same.
Electrosource may cancel this Agreement at its sole
discretion with ninety (90) days written notice to
Consultant. Electrosource's sole liability will be for
hours worked at the rate specified, and for reasonable
travel or business expenses incurred in accordance with
Section 4.
Notwithstanding any other provision of this Agreement,
if Consultant breaches any of its provisions, Electrosource
may terminate this Agreement immediately upon written notice
to Consultant.
Upon termination of this Agreement in accordance with
any of its provisions, Electrosource shall have no
obligation to make further payments to Consultant for
services performed after notice is received by Consultant.
Notice may be hand carried or sent by certified mail.
Notice is effective upon receipt or within five days of
mailing, whichever is earlier.
2. Duties. Consultant shall use his best efforts on
behalf of Electrosource to assist Electrosource with respect
to all matters pertaining to accounting and other
administrative matters . Consultant shall be reasonably
available on an on-call, as-needed basis to perform such
advising and consulting duties as may be assigned from time
to time by Electrosource. Such consulting services shall be
provided either at the offices of Electrosource or
Consultant, or at such other locations as the parties may
agree.
Specific duties shall include, but not be limited to,
serving the particular needs of the Project Manager and
others designated by him.
3. Compensation. As full compensation for the services
which Consultant renders to Electrosource under this
Agreement, Electrosource shall pay to Consultant $50.00 per
hour. Invoices Consultant submits to Electrosource for
services rendered shall include the heading "a professional
consulting firm (or individual)."
4. Expenses. Electrosource shall reimburse Consultant for
all proper and reasonable expenses incurred by him pursuant
to Consultant's consulting duties. Such expenses may
include necessary actual expenses of out-of-town travel
costs, communications, hotel accommodations, meals and the
like provided that Consultant shall keep and provide
Electrosource an accurate and complete accounting of all
such expenses so incurred, and shall obtain Electrosource's
prior written consent to any such expenses. Reimbursement
of expenses will be issued within ten (10) days of receipt
of complete accounting of same.
5. Confidential and Proprietary Information. The parties
agree that from time to time during performance of this
Agreement confidential or proprietary technical or business
information may be provided either orally or in written form
to Consultant. Such information will be specifically
designated by Electrosource as confidential or proprietary.
Consultant shall keep confidential all such designated
information furnished by Electrosource and safeguard same
from disclosure or use by any unauthorized individuals for
any purpose other than in performance of this Agreement.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under Section 5.
Consultant shall restrict the disclosure of
Electrosource's confidential or proprietary technical and
business information to those of his employees who need to
know the same for purposes of carrying out this contract.
Consultant shall advise all such employees of Consultant's
obligations of confidentiality under this Agreement.
In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees
promptly to deliver to Electrosource all written information
of any sort made available to Consultant or created by it
under the terms of this Agreement.
Work product created by Consultant shall become the
confidential proprietary property of Electrosource.
Consultant agrees to treat such work product in the same
manner as confidential proprietary information of
Electrosource. Consultant agrees that any remedy at law
would be inadequate or a violation of this provision;
consequently, Consultant agrees that Electrosource is
entitled to obtain an injunction against Consultant's
disclosure of any confidential proprietary information.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under this Section 5.
6. Classified Information. Except in connection with
authorized visits, classified material shall not be
possessed by the Consultant off the premises of the Company.
The Company shall not furnish classified material to the
Consultant at any other location than the premises of the
Company and performance of the consulting services by the
Consultant shall be accomplished at the premises of the
Company; and classification guidance will be provided by the
Company.
The Consultant and his certifying employees shall not
disclose classified information to unauthorized persons.
Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions. Consultant shall
convey to Electrosource all rights to each work of
authorship, whether or not patentable, which is conceived,
developed, written, or reduced to practice by Consultant in
performing the requirements of this agreement. Consultant
agrees to execute all necessary patent and copyright
applications, assignments and other instruments at
Electrosource's expense and to give all lawful and proper
testimony in aid of Electrosource obtaining and maintaining
in its name full and complete patent protection on any such
invention. Before final payment is made under this
Agreement, Consultant shall furnish Electrosource complete
information with respect to any invention and all work
product subject to this Section.
Consultant hereby irrevocably appoints each officer and
director of Electrosource as his attorney-in-fact for
purposes of filing any applications or assignments necessary
to properly reflect the sole ownership by Electrosource of
any invention or work of authorship subject to this Section.
8. Assignment and Subcontracting. Neither this Agreement
nor its performance, either in whole or in part, shall be
assigned or subcontracted by Consultant to a third party
without, in each case, the prior written consent of
Electrosource.
9. No Conflicts. Consultant represents and warrants that:
(a) He has full authority to enter into this
Agreement and to perform his obligations hereunder; and
(b) Performance by Consultant of his obligations
hereunder will not be in conflict with any other of his
obligations.
Notwithstanding any other provision of this Agreement,
Electrosource shall have the right to terminate this
Agreement if, in Electrosource's sole opinion, a conflict of
interest rises or may arise between Consultant's
representation of Electrosource and its representation of
its other clients. Such termination shall become effective
upon five (5) days written notification by Electrosource.
10. Independent Contractor. Consultant's relationship to
Electrosource shall be solely to provide personal services
on an independent contractor basis. In this capacity,
Consultant will not be a regular employee of Electrosource
and will not be entitled to worker's compensation coverage,
unemployment insurance, or any other type or form of
insurance or benefit normally provided by Electrosource for
its employees, and Electrosource will not be responsible for
withholding federal income or social security taxes from the
fees paid to Consultant. The Consultant will be solely
responsible for reporting and paying all Federal, State and
Local taxes arising from his performance of this agreement.
The consultant is generally free to perform the services
hereunder in any manner desired, subject to satisfactory
completion of the subject task.
11. Notice. A notice communicated to Electrosource shall
be sent to James M. Rosel, Vice President, Electrosource,
Inc., 3800-B Drossett Drive, Austin, TX 78744-1131, or to
such other place or places as Electrosource by notice in
writing shall specify. Any notice to be served shall be
deemed to be served if the same be sent by registered or
certified mail through the United States mail, addressed to
the party on which service is to be effected at the address
stated in the immediately preceding sentences and shall be
deemed to have been received on the day indicated on the
return receipt relating thereto.
12. Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns
of Electrosource, and to the successors and assigns of
Consultant.
13. Modification. This Agreement supersedes all prior
agreements or understandings between Consultant and
Electrosource relating to the subject matter hereof, and no
change, termination or attempted waiver of any of the
provisions hereof shall be binding unless reduced to writing
and signed by duly authorized officers of Electrosource and
by Consultant.
14. Construction. This Agreement shall be construed in
accordance with the laws of the State of Texas. Consultant
hereby submits to the continuing jurisdiction of the laws
and the courts of the State of Texas in the prosecution of
any interpretation or dispute under or arising out of this
Agreement. Should any portion of this Agreement be adjudged
or held to be invalid, unenforceable or void, such judgment
shall not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree
that the portion to be held invalid, unenforceable or void
shall, if possible be deemed amended or reduced in scope or
to otherwise be stricken from this Agreement to the extent
required for the purposes of validity and enforcement
thereof.
IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.
ELECTROSOURCE, INC. DONALD C. PERRIELLO
By: /S/ By: /S/
James M. Rosel Donald C. Perriello
Vice President, General Counsel
Date: September 1, 1995 Date: September 1, 1995
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
EXHIBIT 10.116
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
95C-078
THIS CONSULTING AGREEMENT (the "Agreement"), made
effective the 1st day of December, 1995, is between
Electrosource, Inc., a Delaware corporation, having principal
offices at 3800-B Drossett Drive, Austin, Texas 78744-1131,
U.S.A. ("Electrosource") and, William Griffin, (Consultant)
having principal place of business at 10938 Blue Roan Road,
Oakton, Virginia 22124.
W I T N E S S E T H:
WHEREAS, Consultant has knowledge and experience in sales
and marketing of battery technology; and
WHEREAS, Electrosource desires the assistance of Consultant
for sales and marketing.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements hereinafter contained, the parties hereto agree
as follows:
Electrosource and Consultant, intending to be legally bound,
agree as follows:
1. Term. Electrosource hereby engages Consultant as
independent contractor for a term commencing on December 1,
1995, and ending on March 31, 1996.
Electrosource shall have the right to extend this
Agreement by written notification in accordance with one of
the following (as mutually agreed): the same rate of
compensation provided for in Section 3 by written notice not
less than two weeks prior to the last day of the initial
term of this Agreement or Amendment to same; a non-retainer
daily rate; or as a $1.00 per year Consultant.
Electrosource may cancel this Agreement at its sole
discretion with thirty (30) days advance written notice to
Consultant. Electrosource's sole liability will be for
hours worked at the rate specified, and for reasonable
travel or business expenses incurred in accordance with
Section 4.
Notwithstanding any other provision of this Agreement,
if Consultant breaches any of its provisions, Electrosource
may terminate this Agreement immediately upon written notice
to Consultant.
Upon termination of this Agreement in accordance with
any of its provisions, Electrosource shall have no
obligation to make further payments to Consultant for
services performed after notice is received by Consultant.
Notice may be hand carried or sent by certified mail.
Notice is effective upon receipt or within five days of
mailing, whichever is earlier.
2. Duties. Consultant shall use his best efforts to assist
Electrosource with respect to all matters pertaining to
sales and marketing as directed by the President and CEO.
Consultant shall not, during the term of this Agreement,
accept any other engagement as consultant, or enter into any
employment relationship, with respect to which any portion
of his duties would entail assisting any other entity in the
field of battery sales and marketing. Consultant is engaged
and shall be available on a full time basis to perform his
duties hereunder. Such consulting services shall be
provided either at the offices of Electrosource or
Consultant, or at such other locations as Electrosource
shall direct.
3. Compensation. As full compensation for the services
which Consultant renders to Electrosource under this
Agreement, Electrosource shall pay to Consultant Twelve
Thousand and NO/100 Dollars ($12,000.00) per month.
Invoices Consultant submits to Electrosource for services
rendered shall include the heading "a professional
consulting firm (or individual)." In addition, the
Compensation/Stock Option Committee is expected to make a
grant of 30,000 shares to Consultant under the terms and
conditions of the 1993 Non-Employee Consultant Stock Option
Plan.
4. Expenses. Electrosource shall reimburse Consultant for
all proper and reasonable expenses incurred by him pursuant
to Consultant's consulting duties. Such expenses may
include necessary actual expenses of out-of-town travel,
communications, hotel accommodations, meals and the like,
provided that Consultant shall keep and provide
Electrosource an accurate and complete accounting of all
such expenses so incurred, and shall obtain Electrosource's
prior written consent to any such expenses. Reimbursement
of expenses will be issued within ten (10) days of receipt
of complete accounting of same.
5. Confidential and Proprietary Information. The parties
agree that from time to time during performance of this
Agreement confidential or proprietary technical or business
information may be provided either orally or in written form
to Consultant or may be developed by Consultant in the
course of his duties. Consultant shall keep confidential
all such information and safeguard same from disclosure or
use by any unauthorized individuals for any purpose other
than in performance of this Agreement.
In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees
promptly to deliver to Electrosource all written information
of any sort made available to Consultant or created by it
under the terms of this Agreement.
Work product created by Consultant shall become the
confidential proprietary property of Electrosource.
Consultant agrees to treat such work product in the same
manner as confidential proprietary information of
Electrosource. Consultant agrees that any remedy at law
would be inadequate or a violation of this provision;
consequently, Consultant agrees that Electrosource is
entitled to obtain an injunction against Consultant's
disclosure of any confidential proprietary information.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under this Section 5.
6. Classified Information. Except in connection with
authorized visits, classified material shall not be
possessed by the Consultant off the premises of the Company.
The Company shall not furnish classified material to the
Consultant at any other location than the premises of the
Company and performance of the consulting services by the
Consultant shall be accomplished at the premises of the
Company; and classification guidance will be provided by the
Company.
The Consultant and his certifying employees shall not
disclose classified information to unauthorized persons.
Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions. Consultant shall
convey to Electrosource all rights to each work of
authorship, whether or not patentable, which is conceived,
developed, written, or reduced to practice by Consultant in
performing the requirements of this agreement. Consultant
agrees to execute all necessary patent and copyright
applications, assignments and other instruments at
Electrosource's expense and to give all lawful and proper
testimony in aid of Electrosource obtaining and maintaining
in its name full and complete patent protection on any such
invention. Before final payment is made under this
Agreement, Consultant shall furnish Electrosource complete
information with respect to any invention and all work
product subject to this Section.
Consultant hereby irrevocably appoints each officer and
director of Electrosource as his attorney-in-fact for
purposes of filing any applications or assignments necessary
to properly reflect the sole ownership by Electrosource of
any invention or work of authorship subject to this Section.
8. Assignment and Subcontracting. Neither this Agreement
nor its performance, either in whole or in part, shall be
assigned or subcontracted by Consultant to a third party
without, in each case, the prior written consent of
Electrosource.
9. No Conflicts. Consultant represents and warrants that:
(a) He has full authority to enter into this
Agreement and to perform his obligations hereunder; and
(b) Performance by Consultant of his obligations
hereunder will not be in conflict with any other of his
obligations.
Consultant shall advise Electrosource's President and
CEO or Vice President and General Counsel of all clients
under similar agreement to him within five (5) days after
execution of this Agreement. Consultant shall not contract
for additional clients without first having notified
Electrosource in writing.
Notwithstanding any other provision of this Agreement,
Electrosource shall have the right to terminate this
Agreement if, in Electrosource's sole opinion, a conflict of
interest rises or may arise between Consultant's
representation of Electrosource and its representation of
its other clients. Such termination shall become effective
upon five (5) days written notification by Electrosource.
10. Independent Contractor. Consultant's relationship to
Electrosource shall be solely to provide personal services
on an independent contractor basis. In this capacity,
Consultant will not be a regular employee of Electrosource
and will not be entitled to worker's compensation coverage,
unemployment insurance, or any other type or form of
insurance or benefit normally provided by Electrosource for
its employees, and Electrosource will not be responsible for
withholding federal income or social security taxes from the
fees paid to Consultant. The Consultant will be solely
responsible for reporting and paying all federal, state and
local taxes arising from his performance of this agreement.
The consultant is generally free to perform the services
hereunder in any manner desired, subject to satisfactory
completion of the subject task.
11. Notice. A notice communicated to Electrosource shall
be sent to James M. Rosel, Vice President and General
Counsel, Electrosource, Inc., 3800-B Drossett Drive, Austin,
TX 78744-1131, or to such other place or places as
Electrosource by notice in writing shall specify. Any
notice to be served shall be deemed to be served if the same
be sent by registered or certified mail through the United
States mail, addressed to the party on which service is to
be effected at the address stated in the immediately
preceding sentences and shall be deemed to have been
received on the day indicated on the return receipt relating
thereto.
12. Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns
of Electrosource, and to the successors and assigns of
Consultant.
13. Modification. This Agreement supersedes all prior
agreements or understandings between Consultant and
Electrosource relating to the subject matter hereof, and no
change, termination or attempted waiver of any of the
provisions hereof shall be binding unless reduced to writing
and signed by duly authorized officers of Electrosource and
by Consultant.
14. Construction. This Agreement shall be construed in
accordance with the laws of the State of Texas. Consultant
hereby submits to the continuing jurisdiction of the laws
and the courts of the State of Texas in the prosecution of
any interpretation or dispute under or arising out of this
Agreement. Should any portion of this Agreement be adjudged
or held to be invalid, unenforceable or void, such judgment
shall not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree
that the portion to be held invalid, unenforceable or void
shall, if possible be deemed amended or reduced in scope or
to otherwise be stricken from this Agreement to the extent
required for the purposes of validity and enforcement
thereof.
IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.
ELECTROSOURCE, INC.
By: /s/ By: /s/
James M. Rosel William Griffin
Vice President, General Counsel Consultant
Date: January 2, 1996 Date: December 21, 1995
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
EXHIBIT 10.117
CONSULTING AGREEMENT
94-C-060
THIS CONSULTING AGREEMENT (the "Agreement") is between
Electrosource, Inc., a Delaware corporation, having principal
offices at 3800-B Drossett Drive, Austin, Texas, 78744-1131,
U.S.A. ("Electrosource") and Beacon Advisors, Inc. ("Consultant")
having its place of business at 25 Highland Park Village, Suite
100, Lock Box 285, Dallas, Texas 75205.
W I T N E S S E T H:
WHEREAS, Consultant possesses knowledge and experience in
investment banking, finance, strategic relationships, mergers,
acquisitions, international business and related matters, and
WHEREAS, Electrosource desires the assistance of Consultant
in its financial and business arrangements,
NOW, THEREFORE, in consideration of the promises and
agreements hereinafter contained, Electrosource and Consultant,
intending to be legally bound, agree as follows:
1. Term. Electrosource hereby engages Consultant as an
independent contractor for a six month term commencing on
the effective date hereof. Either party may cancel this
Agreement for cause upon at least twenty (20) days prior
written notice. Upon early termination, Electrosource's sole
liability will be to pay for services rendered to that date
at the rate specified for the month(s) or fraction thereof.
Electrosource shall also pay any success fee earned to that
date as provided for herein and for reasonable travel or
business expenses incurred to that date in accordance with
Section 4.
2. Duties. Consultant is expected to the use its best
efforts, through its employee Langhorne Reid, III, to assist
Electrosource with respect to investment banking, finance,
corporate structuring and strategic relationships and to
provide general corporate advisory services to
Electrosource.
All such work shall be coordinated with and directed by the
President of Electrosource. Consultant shall be reasonably
available to perform such services as may be requested from
time to time by Electrosource, recognizing that Mr. Reid is
involved in other business activities and cannot make a
specific time commitment to the work under this agreement.
3. Compensation.
(a) Monthly Fee. As compensation for the services
which Consultant renders to Electrosource under this
Agreement, Electrosource shall pay to Consultant a fee
of $3,000 per full month. Consultant shall also be
granted 2,000 options or warrants to purchase
Electrosource common stock each month at market price
on the date of each issue. Payment shall be made at
the end of each thirty day period hereunder. Consultant
shall invoice Electrosource monthly for such services,
together with expenses as set forth in Section 4.
(b) Success Fee. Consultant shall also be entitled to
a fee for its efforts in successfully developing and
completing agreements during the term hereof for a
strategic partner, financing or similar agreements for
Electrosource as mutually identified from time to time.
The success fee shall be based upon the net proceeds to
Electrosource from such agreements (exclusive of
product sales). If another broker or finder is
involved in such transaction to which Electrosource
owes a fee, Consultant shall be paid a success fee of
three percent (3%) of the net proceeds to
Electrosource. The fee shall be paid in the form of
options or warrants at the then market price ( i.e. the
strike price shall be at the last trade price quoted by
NASD for the prior day). The amount of options or
warrants shall be for one share for each $1 represented
by the three percent (3%) fee. For example a $10
million financing would result in grant of 300,000
options or warrants (3% x 10 million x 1).
The fee if no other broker or finder is involved shall
be an industry standard fee of 7-10% (to be agreed) of
the net proceeds, one-half in cash and the other one-
half in options or warrants as above.
The success fee shall be paid within 10 days of receipt
of the relevant funds by Electrosource, as and when
received. The success fee payments shall cease upon
termination of this Agreement, except with respect to
contracts consummated or substantially completed prior
to such date in which case the success fee will
continue to apply.
4. Expenses. Electrosource shall reimburse Consultant for
all proper and reasonable expenses incurred by consultant
pursuant to Consultant's duties hereunder. Such expenses
may include necessary, actual expenses of out-of-town
travel, communications, hotel accommodations, meals and the
like, provided that Consultant shall keep and provide to
Electrosource an accurate and complete accounting of all
such expenses. Consultant shall obtain Electrosource's
prior consent to any significant such expenses.
Reimbursement of expenses will be made within thirty (30)
days of receipt of an accounting of same.
5. Confidential and Proprietary Information. The parties
agree that from time to time during performance of this
Agreement confidential or proprietary technical or business
information may be provided either orally or in written form
to Consultant. Consultant shall keep confidential all such
designated information furnished by Electrosource and
safeguard same from disclosure or use by any unauthorized
individuals for any purpose other than in performance of
this Agreement.
Consultant shall restrict the disclosure of Electrosource's
confidential or proprietary technical and business
information to those of its employees who need to know the
same for purposes of carrying out this contract. Consultant
shall advise all such employees of Consultant's obligations
of confidentiality under this Agreement. In event of
termination or cancellation of this Agreement for any reason
whatsoever, Consultant agrees promptly to deliver to
Electrosource all written information of any sort made
available to Consultant or created by it under the terms of
this Agreement.
Work product created by Consultant shall become the
confidential proprietary property of Electrosource.
Consultant agrees to treat such work product in the same
manner as confidential proprietary information of
Electrosource. Consultant agrees that any remedy at law
would be inadequate for a violation of this provision;
consequently, Consultant agrees that Electrosource is
entitled to obtain an injunction against Consultant's
disclosure of any confidential proprietary information.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under this Section 5.
6. Assignment and Subcontracting. Neither this Agreement
nor its performance, either in whole or in part, shall be
assigned or subcontracted by Consultant to a third party
without, in each case, the prior written consent of
Electrosource.
7. No Conflicts. Consultant represents and warrants that:
(a) He has full authority to enter into this
Agreement and to perform his obligations hereunder; and
(b) Performance by Consultant of his obligations
hereunder will not be a conflict of interest with
representation of other clients.
8. Independent Contractor. Consultant's relationship to
Electrosource shall be solely to provide personal services
on an independent contractor basis. In this capacity,
Consultant will not be a regular employee of Electrosource
and will not be entitled to worker's compensation coverage,
unemployment insurance, or any other type or form of
insurance or benefit normally provided by Electrosource for
its employees except as may be required by law for payments
to non-residents, and Electrosource will not be responsible
for withholding federal income or social security taxes from
the fees paid to Consultant. The Consultant will be solely
responsible for reporting and paying all taxes arising from
his performance of this agreement. The consultant is
generally free to perform the services hereunder in any
manner desired, subject to satisfactory completion of the
subject task.
9. Notice. A notice communicated to Electrosource shall
be sent to the President or Vice President, and General
Counsel, Electrosource, Inc., 3800-B Drossett Drive, Austin,
TX 78744-1131, or to such other place or places as
Electrosource by notice in writing shall specify. Any
notice to be served shall be deemed to be served if the same
be sent by registered or certified mail through the United
States mail, addressed to the party on which service is to
be effected at the address stated in the immediately
preceding sentences and shall be deemed to have been
received on the day indicated on the return receipt relating
thereto.
10. Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns
of Electrosource, and to the successors and assigns of
Consultant.
11. Modification. This Agreement supersedes all prior
agreements or understandings between Consultant and
Electrosource relating to the subject matter hereof, and no
change, termination or attempted waiver of any of the
provisions hereof shall be binding unless reduced to writing
and signed by duly authorized officers of Electrosource and
by Consultant.
12. Construction. This Agreement shall be construed in
accordance with the laws of the State of Texas. Consultant
hereby submits to the continuing jurisdiction of the laws
and the courts of the State of Texas in the prosecution of
any interpretation or dispute under or arising out of this
Agreement. Should any portion of this Agreement be adjudged
or held to be invalid, unenforceable or void, such judgment
shall not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree
that the portion to be held invalid, unenforceable or void
shall, if possible be deemed amended or reduced in scope or
to otherwise be stricken from this Agreement to the extent
required for the purposes of validity and enforcement
thereof.
13. All dollars referenced herein are $U.S.
14. Mediation/Arbitration. Any controversy, claim or
dispute arising out of or relating to this Agreement or any
breach thereof which cannot be settled amicably by the
parties shall be resolved by mediation with a mediator
mutually selected by the Parties, or failing successful
mediation, by arbitration in Austin, Texas or other location
in the Texas under the Commercial Arbitration Rules of the
American Arbitration Association. Arbitration shall be by a
single arbitrator chosen by the Parties, provided that if
the Parties fail to agree and appoint an arbitrator within
30 days after demand for arbitration, the Arbitrator shall
be chosen in accordance with the Rules. The decision of the
arbitrator shall be final and binding on the Parties, and a
judgment on any award may be entered in any court of
competent jurisdiction.
IN WITNESS WHEREOF, this Agreement is dated and is effective
as of this 15th day of February, 1996.
ELECTROSOURCE, INC. CONSULTANT:BEACON ADVISORS, INC.
By: /S/ By: /S/
James M. Rosel, Vice President Langhorne Reid, III
Finance, Law and Contracts President
Date: March 4, 1996 Date: March 4, 1996
EXHIBIT 10.118
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
96-C-079
THIS CONSULTING AGREEMENT (the "Agreement"), made effective
the 1st day of January, 1996, is between ELECTROSOURCE, INC.
("Electrosource"), a Delaware corporation, having its principal
offices at 3800-B Drossett Drive, Austin, Texas, 78744-1131, USA
and JACK J. GUY (Consultant) having his place of business at 702
Winstead Court, Sunnyvale, California 94087.
W I T N E S S E T H:
WHEREAS, Consultant possesses knowledge and experience in
battery technology, research and development, marketing,
fundraising and business alliances; and
WHEREAS, Consultant has the knowledge and ability to assist
Electrosource in matters related to the development, testing and
commercialization of its technology; and
WHEREAS, Electrosource desires the assistance of Consultant.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements hereinafter contained, the parties hereto agree
as follows:
Electrosource and Consultant, intending to be legally bound,
agree as follows:
1. Term
1.1 Electrosource hereby engages Consultant as
independent contractor for a term commencing on January
1, 1996 and ending on December 31, 1996.
1.2 Electrosource may cancel this Agreement with
thirty (30) days prior written notice to Consultant but
only in the event of severe budgetary constraints such
that it has to curtail its activities significantly.
Electrosource's sole liability will be for hours worked
at the rate specified, and for reasonable travel or
business expenses incurred in accordance with Section 4.
1.3 Notwithstanding any other provision of this
Agreement, if Consultant breaches any of its
provisions, Electrosource may terminate this Agreement
immediately upon written notice to Consultant.
1.4 Upon termination of this Agreement in accordance
with any of its provisions, Electrosource shall have no
obligation to make further payments to Consultant for
services performed after notice is received by
Consultant. Notice may be hand carried or sent by
certified mail. Notice is effective upon receipt or
within five (5) days of mailing, whichever is earlier.
2. Duties
Consultant shall use his best, businesslike, timely efforts
on behalf of Electrosource to assist Electrosource with
respect to strategic relationships, partnering, marketing,
fundraising, research and development agreements and
business alliances pertaining to battery technology, battery
research and development and related matters. Consultant
shall report to and be directed by the Chairman and CEO
and/or Vice President for Marketing of Electrosource.
Consultant shall be reasonably available on an on-call, as-
needed basis to perform such advising and consulting duties
as may be assigned from time to time by Electrosource to the
extent specified in Section 3 below. Such consulting
services shall be provided either at the offices of
Electrosource or Consultant, or at such other locations as
the parties may agree.
3. Compensation
As full compensation for the services which Consultant
renders to Electrosource under this Agreement, Electrosource
will pay to Consultant $6,000 per month, beginning January
1996, for approximately one week or 20% of Consultant's time
each month. If Electrosource requests more than one week of
time in a particular month, such additional time will be
paid for at the rate of $4,000 per week. Any such
additional time shall be approved in writing, in advance by
the Chairman and CEO of Electrosource. Upon execution of
this Agreement, Electrosource shall also pay to Consultant
$2,500 for past expenses and as an advance for future
expenses (to be supported by an itemized accounting with
receipts from Consultant) and a $6,000 signing bonus.
Consultant shall submit invoices monthly to Electrosource
for services rendered, invoices shall include the heading "a
professional consulting firm (or individual)."
4. Expenses
Electrosource shall reimburse Consultant for travel expenses
incurred by him pursuant to Consultant's consulting duties.
Such expenses may include necessary actual expenses of out-
of-town travel costs, communications, hotel accommodations,
meals and the like provided that Consultant shall keep
receipts and provide Electrosource an accurate and complete
accounting of all such expenses so incurred, and shall
obtain Electrosource's prior written consent to any such
travel. Reimbursement of expenses in excess of the $2,500
payment to be made under Section 3 above will be issued
within twenty (20) days of receipt of the complete
accounting, with receipts.
5. Confidential and Proprietary Information
5.1 The parties agree that from time to time during
performance of this Agreement confidential or
proprietary technical or business information may be
provided either orally or in written form to
Consultant. Such information will be specifically
designated by Electrosource as "confidential" and/or
"proprietary." Consultant shall keep confidential all
such designated information furnished by Electrosource
and safeguard same from disclosure or use by any
unauthorized individuals for any purpose other than in
performance of this Agreement.
5.2 In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees
promptly to deliver to Electrosource all written
information of any sort made available to Consultant or
created by it under the terms of this Agreement.
5.3 Work product created by Consultant shall become
the confidential proprietary property of Electrosource.
Consultant agrees to treat such work product in the
same manner as confidential proprietary information of
Electrosource. Consultant agrees that any remedy at
law would be inadequate or a violation of this
provision; consequently, Consultant agrees that
Electrosource is entitled to obtain an injunction
against Consultant's disclosure of any confidential
proprietary information.
5.4 Neither expiration of this Agreement nor its
earlier termination for any reason shall release
Consultant from its obligations under this Section 5.
6. Works of Authorship and Inventions
6.1 Consultant shall convey to Electrosource all
rights to each work of authorship, whether or not
patentable, which is conceived, developed, written, or
reduced to practice by Consultant in performing the
requirements of this Agreement. Consultant agrees to
execute all necessary patent and copyright
applications, assignments and other instruments at
Electrosource's expense and to give all lawful and
proper testimony in aid of Electrosource obtaining and
maintaining in its name full and complete patent
protection on any such invention. Before final payment
is made under this Agreement, Consultant shall furnish
Electrosource complete information with respect to any
invention and all work product subject to this Section.
6.2 Consultant hereby irrevocably appoints each
officer and director of Electrosource as his attorney-
in-fact for purposes of filing any applications or
assignments necessary to properly reflect the sole
ownership by Electrosource of any invention or work of
authorship subject to this Section.
7. Assignment and Subcontracting
Neither this Agreement nor its performance, either in whole
or in part, shall be assigned or subcontracted by Consultant
to a third party without, in each case, the prior written
consent of Electrosource.
8. No Conflicts
8.1 Consultant represents and warrants that:
(a) He has full authority to enter into this
Agreement and to perform his obligations
hereunder; and
(b) Performance by Consultant of his
obligations hereunder will not be in conflict with
any other of his obligations.
8.2 Notwithstanding any other provision of this
Agreement, Electrosource shall have the right to
suspend this Agreement subject to arbitration in
accordance with the rules of the American Arbitration
Association if, in Electrosource's sole opinion, a
conflict of interest arises or may arise between
Consultant's representation of Electrosource and its
representation of its other clients.
9. Independent Contractor
Consultant's relationship to Electrosource shall be solely
to provide personal services on an independent contractor
basis. In this capacity, Consultant will not be a regular
employee of Electrosource and will not be entitled to
worker's compensation coverage, unemployment insurance, or
any other type or form of insurance or benefit normally
provided by Electrosource for its employees. Electrosource
will not be responsible for withholding federal income or
social security taxes from the fees paid to Consultant. The
Consultant will be solely responsible for reporting and
paying all Federal, State and Local taxes arising from his
performance of this Agreement. The consultant is generally
free to perform the services hereunder in any manner
desired, subject to satisfactory completion of the subject
task.
10. Notice
A notice communicated to Electrosource shall be sent to the
Chairman and CEO, Electrosource, Inc., 3800-B Drossett
Drive, Austin, Texas 78744-1131, or to such other place or
places as Electrosource by notice in writing shall specify.
Any notice to be served shall be deemed to be served if the
same be sent by registered or certified mail through the
United States mail, addressed to the party on which service
is to be effected at the address stated in the immediately
preceding sentences and shall be deemed to have been
received on the day indicated on the return receipt relating
thereto.
11. Binding Agreement
This Agreement shall be binding upon and inure to the
benefit of the successors and assigns of Electrosource and
to the successors and assigns of Consultant.
12. Modification
This Agreement supersedes all prior agreements or
understandings between Consultant and Electrosource relating
to the subject matter hereof, and no change, termination or
attempted waiver of any of the provisions hereof shall be
binding unless reduced to writing and signed by duly
authorized officers of Electrosource and by Consultant.
13. Construction
This Agreement shall be construed in accordance with the
laws of the State of Texas. Consultant hereby submits to
the continuing jurisdiction of the laws and the courts of
the State of Texas in the prosecution of any interpretation
or dispute under or arising out of this Agreement. Should
any portion of this Agreement be adjudged or held to be
invalid, unenforceable or void, such judgment shall not have
the effect of invalidating or voiding the remainder of this
Agreement, and the parties hereto agree that the portion to
be held invalid, unenforceable or void shall, if possible be
deemed amended or reduced in scope or to otherwise be
stricken from this Agreement to the extent required for the
purposes of validity and enforcement thereof.
IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.
ELECTROSOURCE, INC. CONSULTANT
By: /S/ By: /S/
James M. Rosel Jack J. Guy
Vice President, General Counsel
Date: January 9, 1996 Date: January 9, 1996
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
EXHIBIT 10.119
CONSULTING AGREEMENT
94-C-049A
THIS CONSULTING AGREEMENT (the "Agreement"), made
effective the 15th day of November 1994, is between
Electrosource, Inc., a Delaware corporation, having principal
offices at 3800-B Drossett Drive, Austin, Texas, 78744-1131,
U.S.A. ("Electrosource") and, RICHARD C. BAKER DBA TALBOT
MANAGEMENT SERVICES having his place of business at 751 Kelly
Avenue, Half Moon Bay, CA 94019 ("Consultant").
W I T N E S S E T H:
WHEREAS, Consultant possesses the knowledge and experience
in battery testing technology, production technology and/or
related fields of marketing or engineering activity financial
matters; and
WHEREAS, Consultant has the knowledge and ability and is
duly licensed or authorized to assist Electrosource in the
development, testing or commercialization of its technology
financial planning and fund raising; and
WHEREAS, Electrosource desires the assistance of
Consultant.
NOW, THEREFORE, in consideration of the promises and the
mutual agreements hereinafter contained, the parties hereto agree
as follows:
Electrosource and Consultant, intending to be legally bound,
agree as follows:
1. Term. Electrosource hereby engages Consultant as
independent contractor for a term commencing on November 15,
1994, and to continue for a period of one year.
Notwithstanding any other provision of this Agreement,
if Consultant breaches any of its provisions, Electrosource
may terminate this Agreement immediately upon written notice
to Consultant.
Upon termination of this Agreement in accordance with
any of its provisions, Electrosource shall have no
obligation to make further payments to Consultant for
services performed after notice is received by Consultant.
Notice may be hand carried or sent by certified mail.
Notice is effective upon receipt or within five days of
mailing, whichever is earlier.
2. Duties. Consultant shall use his best efforts on
behalf of Electrosource to assist Electrosource with respect
to all matters pertaining to financial advising and fund
raising. Consultant shall not, during the term of this Agreement,
accept any other engagement as consultant, or enter into any employment
relationship, with respect to which any portion of his duties would
entail assisting any other entity in the field of battery research
and/or production. Consultant shall be reasonably available on an
on-call, as-needed basis at least four (4) days per month to perform
such advising and consulting duties as may be assigned from time to
time by Electrosource. Such consulting services shall be provided
either at the offices of Electrosource or Consultant, or at such other
locations as the parties may agree.
Specific duties shall include, but not be limited to,
serving the particular needs of the President/CEO and others designated
by him in areas of (i) Global strategic planning; (ii) Financial
structuring and fund raising; and (iii) Global business operations and
construction.
3. Compensation. As full compensation for the services
which Consultant may render to Electrosource under this
Agreement, Electrosource shall pay to Consultant a retainer
of $6,000 per month to be utilized at $1,500 per day and one
and one-half percent (1-1/2 %) of funds raised under this
Agreement. Additional time over four days per month, as
directed by Electrosource, shall be billed at $1,000 per
day.
4. Expenses. Electrosource shall reimburse Consultant for
all proper and reasonable expenses incurred by him pursuant
to Consultant's consulting duties. Such expenses may
include necessary expenses of out-of-town travel costs, communications,
hotel accommodations, meals and the like provided that Consultant shall
keep and provide Electrosource an accurate and complete accounting of
all such expenses so incurred, and shall obtain Electrosource's prior
written consent to any such expenses. Reimbursement of expenses will be
issued within ten (10) days of receipt of complete accounting of same.
5. Confidential and Proprietary Information. The parties
agree that from time to time during performance of this
Agreement confidential or proprietary technical or business
information may be provided either orally or in written form
to Consultant. Such information will be specifically
designated by Electrosource as confidential or proprietary.
Consultant shall keep confidential all such designated
information furnished by Electrosource and safeguard same
from disclosure or use by any unauthorized individuals for
any purpose other than in performance of this Agreement.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under Section 5.
Consultant shall restrict the disclosure of
Electrosource's confidential or proprietary technical and
business information to those of his employees who need to
know the same for purposes of carrying out this contract.
Consultant shall advise all such employees of Consultant's
obligations of confidentiality under this Agreement.
In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees
promptly to deliver to Electrosource all written information
of any sort made available to Consultant or created by it
under the terms of this Agreement.
Work product created by Consultant shall become the
confidential proprietary property of Electrosource.
Consultant agrees to treat such work product in the same
manner as confidential proprietary information of
Electrosource. Consultant agrees that any remedy at law
would be inadequate or a violation of this provision;
consequently, Consultant agrees that Electrosource is
entitled to obtain an injunction against Consultant's
disclosure of any confidential proprietary information.
Neither expiration of this Agreement nor its earlier
termination for any reason shall release Consultant from its
obligations under this Section 5.
6. Classified Information. Except in connection with
authorized visits, classified material shall not be
possessed by the Consultant off the premises of the Company.
The Company shall not furnish classified material to the
Consultant at any other location than the premises of the
Company and performance of the consulting services by the
Consultant shall be accomplished at the premises of the
Company; and classification guidance will be provided by the
Company.
The Consultant and his certifying employees shall not
disclose classified information to unauthorized persons.
Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions. Consultant shall
convey to Electrosource all rights to each work of
authorship, whether or not patentable, which is conceived,
developed, written, or reduced to practice by Consultant in
performing the requirements of this agreement. Consultant
agrees to execute all necessary patent and copyright
applications, assignments and other instruments at
Electrosource's expense and to give all lawful and proper
testimony in aid of Electrosource obtaining and maintaining
in its name full and complete patent protection on any such
invention. Before final payment is made under this
Agreement, Consultant shall furnish Electrosource complete
information with respect to any invention and all work
product subject to this Section.
Consultant hereby irrevocably appoints each officer and
director of Electrosource as his attorney-in-fact for
purposes of filing any applications or assignments necessary
to properly reflect the sole ownership by Electrosource of
any invention or work of authorship subject to this Section.
8. Assignment and Subcontracting. Neither this Agreement
nor its performance, either in whole or in part, shall be
assigned or subcontracted by Consultant to a third party
without, in each case, the prior written consent of
Electrosource.
9. No Conflicts. Consultant represents and warrants that:
(a) He has full authority to enter into this
Agreement and to perform his obligations hereunder; and
(b) Performance by Consultant of his obligations
hereunder will not be in conflict with any other of his
obligations.
Consultant shall advise Electrosource's Vice President,
Finance, Law and Administration of all clients under similar
agreement to him within five (5) days after execution of this
Agreement. Consultant shall not contract for additional clients
without first having notified Electrosource in writing.
Notwithstanding any other provision of this Agreement,
Electrosource shall have the right to terminate this
Agreement if, in Electrosource's sole opinion, a conflict of
interest rises or may arise between Consultant's
representation of Electrosource and its representation of
its other clients. Such termination shall become effective
upon five (5) days written notification by Electrosource.
10. Independent Contractor. Consultant's relationship to
Electrosource shall be solely to provide personal services
on an independent contractor basis. In this capacity,
Consultant will not be a regular employee of Electrosource
and will not be entitled to worker's compensation coverage,
unemployment insurance, or any other type or form of
insurance or benefit normally provided by Electrosource for
its employees, and Electrosource will not be responsible for
withholding federal income or social security taxes from the
fees paid to Consultant. The Consultant will be solely
responsible for reporting and paying all Federal, State and
Local taxes arising from his performance of this agreement.
The consultant is generally free to perform the services
hereunder in any manner desired, subject to satisfactory
completion of the subject task.
11. Notice. A notice communicated to Electrosource shall
be sent to James M. Rosel, Vice President, Electrosource,
Inc., 3800-B Drossett Drive, Austin, TX 78744-1131, or to
such other place or places as Electrosource by notice in
writing shall specify. Any notice to be served shall be
deemed to be served if the same be sent by registered or
certified mail through the United States mail, addressed to
the party on which service is to be effected at the address
stated in the immediately preceding sentences and shall be
deemed to have been received on the day indicated on the
return receipt relating thereto.
12. Binding Agreement. This Agreement shall be binding
upon and inure to the benefit of the successors and assigns
of Electrosource, and to the successors and assigns of
Consultant.
13. Modification. This Agreement supersedes all prior
agreements or understandings between Consultant and
Electrosource relating to the subject matter hereof, and no
change, termination or attempted waiver of any of the
provisions hereof shall be binding unless reduced to writing
and signed by duly authorized officers of Electrosource and
by Consultant.
14. Construction. This Agreement shall be construed in
accordance with the laws of the State of Texas. Consultant
hereby submits to the continuing jurisdiction of the laws
and the courts of the State of Texas in the prosecution of
any interpretation or dispute under or arising out of this
Agreement. Should any portion of this Agreement be adjudged
or held to be invalid, unenforceable or void, such judgment
shall not have the effect of invalidating or voiding the
remainder of this Agreement, and the parties hereto agree
that the portion to be held invalid, unenforceable or void
shall, if possible be deemed amended or reduced in scope or
to otherwise be stricken from this Agreement to the extent
required for the purposes of validity and enforcement
thereof.
IN WITNESS WHEREOF, this Agreement is dated and is effective
the date and year first above written.
ELECTROSOURCE, INC. RICHARD C. BAKER dba
TALBOT MANAGEMENT SERVICES
By: /S/ By: /S/
James M. Rosel, Vice President Richard C. Baker
Date: October 27, 1994 Date: October 27, 1994
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
EXHIBIT 24.1
Consent of Independent Auditors
We consent to the incorporation by reference in:
(i) the Registration Statement Number 33-21598 on Form
S-8, (ii) the Registration Statement Number 33-49040 on
Form S-8 and (iii) the Registration Statement Number 33-
64110 on Form S-8 pertaining to the 1987 Stock Option
Plan of Electrosource, Inc.; (i) the Registration
Statement Number 33-22223 on Form S-8, (ii) the
Registration Statement Number 33-35856 on Form S-8,
(iii) the Registration Statement Number 33-49042 on
Form S-8 and (iv) the Registration Statement Number 33-
64108 on Form S-8 pertaining to the 1988 Non-Employee
Director Stock Option Plan of Electrosource, Inc.; the
Registration Statement Number 33-65386 on Form S-8
pertaining to the 1993 Non-Employee Consultant Stock
Option Plan of Electrosource, Inc.; the Registration
Statement Number 33-63363 on Form S-8 pertaining to the
1994 Stock Option Plan of Electrosource, Inc.; and the
Registration Statement (Amendment Number 2 to Form S-3
Number 33-63361) and related Prospectus of
Electrosource, Inc. for the registration of 1,859,333
shares of its common stock of our report dated March 8,
1996, except for Note O, as to which the date is March
18, 1996, with respect to the financial statements and
schedule of Electrosource, Inc., included in this
Annual Report on Form 10-K for the year ended December
31, 1995.
/s/
ERNST & YOUNG LLP
Austin, Texas
March 27, 1996
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