FORM 10Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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 other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
3800-B Drossett Drive
Austin, Texas 78744-1131
(Address of principal (Zip Code)
executive offices)
(512)445-6606
(Registrant's telephone number, including area code)
__________________________________________
(Former name, former address and former fiscal year,
if changes since last report)
Indicate by check mark whether the registrant (1) has filed
all reports 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 __
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes __ No __
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
3,829,102 shares as of August 13, 1996.
INDEX TO FINANCIAL STATEMENTS
June 30, 1996
Electrosource, Inc. Commission file number 0-16323
Condensed Balance Sheets at June 30, 1996 (Unaudited)
and December 31, 1995........................................ Page 3
Condensed Statements of Operations for the three and six months
ended June 30, 1996 and 1995 (Unaudited)..................... Page 4
Condensed Statements of Cash Flows for the six months ended
June 30, 1996 and 1995 (Unaudited)............................ Page 5
Notes to Condensed Financial Statements.......................... Page 6
Managements' Discussion and Analysis............................. Page 9
Exhibits to Form 10Q............................................. Page 14
Index to Exhibits................................................ Page 15
Part I - Financial Information
Item I. Financial Statements
Electrosource, Inc.
Condensed Balance Sheets
June 30, 1996 December 31,
(Unaudited) 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 628,486 $ 2,083,032
Trade receivables 33,664 1,535,749
Inventories 219,694 404,755
Prepaid expenses and other assets 222,009 245,133
TOTAL CURRENT ASSETS 1,103,853 4,268,669
PLANT AND EQUIPMENT (net of accumulated
depreciation of $2,063,552 in 1996 and
$1,538,899 in 1995) 5,530,732 6,009,334
INTANGIBLE ASSETS (net of accumulated
amortization of $2,110,533 in 1996 and
$1,613,973 in 1995) 3,351,027 3,847,587
RESTRICTED CASH 744,824 744,824
OTHER ASSETS 97,125 406,787
TOTAL ASSETS $ 10,827,561 $ 15,277,201
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 610,755 $ 876,746
Accrued salaries and employee benefits 391,957 306,579
Other accrued liabilities 674,699 931,341
Current portion of capital lease obligations 625,314 598,420
Current portion of convertible notes payable 250,000 0
TOTAL CURRENT LIABILITIES 2,552,725 2,713,086
CONVERTIBLE NOTES PAYABLE 3,063,150 8,020,000
TECHNOLOGY LICENSE PAYABLE 1,868,238 2,178,014
CAPITAL LEASE OBLIGATIONS (less current portion) 854,920 1,126,252
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock par value $0.10 per share;
authorized 50,000,000 shares; shares issued
and outstanding: 37,317,416 in 1996 and
30,137,826 in 1995 3,731,741 3,013,782
Warrants 0 0
Paid in capital 39,418,733 33,685,800
Accumulated deficit (40,661,946) (35,459,733)
2,488,528 1,239,849
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
(DEFICIT) $10,827,561 $15,277,201
See notes to condensed financial statements.
Electrosource, Inc.
Condensed Statements of Operations (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1996 1995 1996 1995
Revenues
Battery sales $ 73,565 $ 398,917 $ 401,533 $ 552,340
Project revenue 938 100,000 61,090 878,593
License fees 0 0 0 1,000,000
Interest income 28,161 43,725 41,543 70,504
102,664 542,642 504,166 2,501,437
Costs and expenses
Manufacturing 802,642 2,865,418 1,664,554 4,790,089
Selling, general and
administrative 799,044 1,124,467 1,558,691 2,366,292
Research and development 531,901 1,516,759 1,001,688 2,606,561
Technology license
and royalties 25,000 74,705 50,000 149,410
Depreciation and amortization 526,911 135,111 1,041,907 268,383
Interest expense 91,109 122,473 217,644 169,747
Loss on disposal of equipment 0 0 171,895 0
2,776,607 5,838,933 5,706,379 10,350,482
Loss before income taxes (2,673,943) (5,296,291) (5,202,213) ( 7,849,045)
Income taxes (foreign) 0 20,000 0 120,000
Net loss $(2,673,943) $(5,316,291) $(5,202,213) $( 7,969,045)
Net loss per common share $ (.74) $ (2.92) $ (1.49) $ (4.55)
Average common shares
outstanding 3,635,403 1,819,760 3,494,239 1,753,018
See notes to condensed financial statements.
Electrosource, inc.
Condensed Statements of Cash Flows (Unaudited)
Six Months Ended
June 30,
1996 1995
OPERATING ACTIVITIES
Net loss $(5,202,213) $(7,969,045)
Adjustments to reconcile net loss to
net cash used in operating activities:
Common Stock issued for consulting service 32,400 0
Depreciation 533,259 265,024
Amortization of intangible assets 520,734 97,769
Interest expense converted to note
payable or paid in Common Stock 58,304 0
Loss on disposal of equipment 171,895 0
Non-cash compensation and other accruals 172,457 0
Decrease in deferred revenue 0 (1,000,000)
Changes in operating assets and liabilities:
Decrease in trade receivables 502,085 672,605
(Increase) decrease in inventories 185,061 (250,186)
(Increase) decrease in prepaid expenses
and other assets 23,124 (264,066)
Increase (decrease) in accounts payable,
accrued salaries and employee benefits
and other accrued liabilities (527,643) 1,148,265
NET CASH USED IN OPERATING
ACTIVITIES (3,530,537) (7,299,634)
INVESTING ACTIVITES
Purchases of property and equipment (226,552) (3,279,867)
CASH USED IN INVESTING ACTIVITIES (226,552) (3,279,867)
FINANCING ACTIVITIES
Payments on capital lease obligations (244,438) (106,894)
Proceeds from issuance of common stock, net 2,546,981 4,060,334
Proceeds from convertible notes payable 0 5,400,000
Proceeds from capital leases 0 991,702
Increase in restricted cash 0 (478,285)
CASH PROVIDED BY FINANCING
ACTIVITIES 2,302,543 9,866,857
DECREASE IN CASH AND
CASH EQUIVALENTS (1,454,546) (712,644)
Cash and cash equivalents at beginning
of period 2,083,032 2,193,290
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 628,486 $1,480,646
See notes to condensed financial statements.
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly, they
do not include all of the information and notes required by
generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for
a fair presentation have been included. These interim financial
statements should be read in conjunction with the financial
statements and notes thereto included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1995, and are
not necessarily indicative of results for the entire year.
Certain reclassifications have been made to the 1995 financial
statements to conform with the 1996 presentation.
NOTE B - INVENTORIES
June 30, December 31,
1996 1995
Raw materials $117,434 $289,725
Work In Progress 44,215 80,729
Finished Goods 58,045 34,301
$219,694 $404,755
NOTE C - PROPERTY AND EQUIPMENT
June 30, December 31,
1996 1995
Office Equipment $ 754,350 $ 739,677
Production Equipment 4,173,130 4,157,700
Lab Equipment 1,186,788 1,182,472
Leasehold Improvements 1,480,016 1,468,384
7,594,284 7,548,233
Less: Accumulated depreciation
and amortization (2,063,552) (1,538,899)
Total Property and Equipment $ 5,530,732 $ 6,009,334
NOTE D - LICENSE FEES
During 1994, the Company and Mitsui Engineering and Shipbuilding
Co. Ltd. ("MES") signed a distribution agreement whereby MES
agreed to pay the Company $2,000,000 for distribution rights of
the Horizon battery in Japan ($1,000,000 in 1994 and the
remaining $1,000,000 in 1995) and $3,000,000 if MES elected to
exercise its option for a manufacturing license. 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 Notes Payable to pay $1,000,000 of
outstanding license fees to the Company (See Note E). In July
1996, MES converted the remainder of its Convertible Notes
Payable ($3,063,150) and accrued interest ($46,798), at $38.00
per share (as adjusted for the effects of the reverse stock split-
See Note H), into 81,841 shares of Common Stock.
NOTE E - CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable consist of the following:
June 30, December 31,
1996 1995
Convertible Notes - 5% $3,063,150 $3,990,000
Convertible Notes - 10 % 250,000 250,000
Convertible Notes - 8% - 3,780,000
$3,313,150 $8,020,000
Less Current Maturities 250,000 0
$3,063,150 $8,020,000
In October 1994, the Company entered into a 5% Convertible
Promissory Note with MES for $3,800,000 maturing in October 2004
with interest 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 with the same terms and conditions as the original
note. In March 1996, MES applied $1,000,000 of its Convertible
Notes Payable to pay $1,000,000 of outstanding license fees to
the Company (See Note D). A Replacement Note for $2,800,000 was
issued at that time with the same terms and conditions as the
original note. Concurrently, a note payable in the amount of
$73,150 was issued for accrued interest on all notes (principal
and interest) through the period ended March 6, 1996. In July
1996, MES converted the Notes (principal and interest) into
81,841 shares of Common Stock at a conversion price of $38.00 per
share (as adjusted for the effects of the reverse stock split-See
Note H).
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 at a price of $3.6875 per share
exercisable until April 5, 2000 (before adjustment for the
effects of the reverse stock split-See Note H). As of March 31,
1996, April 1995 Debentures with a total principal amount of
$5,750,000 were converted into 3,795,447 shares of Common Stock
(before adjustment for the effects of the reverse stock split-See
Note H).
In 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 and related accrued interest were 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 the respective conversion date. In addition, warrants
to purchase 56,700 shares of Common Stock at a price of $1.56 per
share, exercisable until November 10, 1997, (before adjustment
for the effects of the reverse stock split-See Note H) were
issued to an agent of the holders of the November 1995
Debentures. During the quarter ended March 31, 1996, all of the
November 1995 Debentures with a principal amount of $3,780,000
and accrued interest of $47,216 were converted into 4,029,864
shares of Common Stock (before adjustment for the effects of the
reverse stock split-See Note H).
NOTE F - COMMON STOCK
During the quarter ended March 31, 1996, the Company sold
1,000,000 shares of Common Stock which resulted in net proceeds
to the Company of $898,231. During the quarter ended June 30,
1996, the Company sold 1,920,838 shares of Common Stock which
resulted in net proceeds to the Company of $1,648,750. In
addition, in connection with the conversion of $3,827,216 of
principal and accrued interest associated with the November 1995
Debentures, the Company issued 4,029,864 shares of Common Stock
(See Note E).
On June 26, 1996, the Company's shareholders approved an
amendment to the Company's Restated Certificate of Incorporation
that effected a one-for-ten reverse stock split. The Company
amended its Certificate of Incorporation on July 22, 1996, to
effect a one-for-ten reverse stock split. Pursuant to this
amendment, each ten shares of Common Stock outstanding
immediately prior to the reverse stock split ("Old Shares") were
reclassified as one share of new Common Stock ("New Shares").
The par value per share of the Common Stock has correspondingly
increased from $0.10 per share to $1.00 per share as a result of
the reverse stock split. No fractional New Shares were issued as
a result of the reverse stock split. In lieu thereof, each
shareholder whose Old Shares were not evenly divisible by ten
received one additional New Share for the fractional New Share
that such shareholder would otherwise be entitled to have
received as a result of the reverse stock split. All references
in the financial statements to average numbers of shares
outstanding and related prices and per share amounts have been
restated to retroactively reflect the reverse stock split.
NOTE G - LIQUIDITY
As of June 30, 1996, the Company has not generated sufficient
cash flow from battery sales and project revenue to fund
operations. As a result, the Company has continued to raise
additional capital. During the six months ended June
30, 1996, the Company sold 2,920,838 shares of Common Stock which
resulted in net proceeds to the Company of $2,546,981 (before
adjustment for the effect of the reverse stock split - See Note
H). In July 1996, the Company received assistance in the form of
a $3,000,000 payment from Chrysler Corporation for compensation
for continued capacity maintenance, engineering, research and
development (R&D) effort and ramp-up costs incurred by the
Company in relation to its role as a supplier to the automaker
for its electric vehicle EPIC Minivan Program. As of August 9,
1996, the Company has approximately $2,400,000 of unrestricted
cash available. Management is continuing its efforts to control
costs and believes that it has sufficient cash to continue
operations at current levels through the third quarter of 1996
based on its present cash balance and expected cash flow from
battery sales and project revenue. However, it will be necessary
to raise additional financing before the end of the fourth
quarter of 1996 to sustain operations and fund anticipated
growth. The Company has historically been able to raise funds on
a repeated basis to sustain operations. Management is currently
attempting to raise additional funds; however, there can be no
assurance that such funding can be obtained on favorable terms to
the Company, if at all. As a result of the reverse stock split,
the Company has approximately 45,000,000 shares of Common Stock
which are unreserved and 10,000,000 shares of unissued Preferred
Stock as of August 13, 1996.
The Company's Common Stock is traded on the Over-the-Counter
Market and is reported on 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. If the minimum required balance is not
maintained, the NASDAQ may choose to delist the Common Stock of
the Company from trading which would restrict the liquidity of
the Common Stock. Ordinarily, before delisting, the NASDAQ would
provide the Company notice and an opportunity to present and
carry out a plan for compliance. Delisting by NASDAQ would be an
Event of Default under the terms of the April 1995 Debentures and
could trigger a requirement to repay the Debentures immediately.
April 1995 Debentures with a principal balance of $250,000 were
outstanding at June 30, 1996.
NOTE H - SUBSEQUENT EVENTS
On July 22, 1996, the Company amended its Certificate of
Incorporation to effect a one-for-ten reverse stock split (See
Note F). All references in the financial statements to average
numbers of shares outstanding and related prices and per share
amounts have been restated to retroactively reflect the reverse
stock split.
During July 1996, the Company received assistance in the form of
a $3,000,000 payment from Chrysler Corporation for compensation
for continued capacity maintenance, engineering, research and
development (R&D) effort and ramp-up costs incurred by the
Company in relation to its role as a supplier to the automaker
for its electric vehicle EPIC Minivan Program.
Results of Operations:
Revenues. The Company had battery sales of approximately $74,000
and $402,000 for the three and six months ended June 30, 1996, as
compared to $399,000 and $552,000 for the three and six months
ended June 30, 1995. The decrease in revenue during the three
months ended June 30, 1996, is primarly due to the timing of the
shipment of batteries and decreases in battery sales to Chrysler
Corporation. Approximately 70% of 1996 battery sales were to
Chrysler Corporation to fill orders placed in accordance with the
production purchase order placed in December 1995. The Company
does not expect battery sales under this purchase order or from
others currently testing the battery to significantly increase
until mid-1997 considering the level of prototype batteries
currently being tested and/or in production and subsequent
anticipated volume production. However, the timing of receipt of
orders from Chrysler Corporation under this order is uncertain
and cannot be assured due to market uncertainties caused by
revised mandates established by the California Air Resources
Board for zero emission vehicle production which has resulted in
a delay in the production of electric vehicles.
The Company had project revenue of approximately $1,000 and
$61,000 for the three and six months ended June 30, 1996, as
compared to $100,000 and $879,000 for the three and six months
ended June 30, 1995. The project revenue in 1996 was primarily
generated from Chrysler Corporation for various environmental and
other tests performed on the Horizon battery. Project revenue of
$100,000 generated during the second quarter of 1995 was
generated from a program to perform a Preliminary Design Review
for a potential manufacturing facility in India. This review was
concluded in 1995 and work under this program was terminated.
The remaining project revenue generated during 1995 was from an
agreement with Chrysler for the retrofit of the Horizon battery
for the NS Minivan Program. This agreement concluded in the
first quarter of 1995 and resulted in the receipt of a production
purchase order from Chrysler in December 1995. This order, which
called for up to $80 million in battery sales cumulatively over
the next few years, is subject to Chrysler's right to withhold or
cancel orders. Battery sales to date under this order have been
less than originally expected and it now appears that the amount
and timing of sales under this purchase order is uncertain.
Management is working with Chrysler Corporation to finalize
project agreements for further research and testing of the
Horizon battery and expects revenue from such agreements to be
generated beginning in the third quarter of 1996. The Company is
also currently working with several potential domestic and
international customers (Black & Decker, the U.S. Army Tank-
Automotive and Armaments Command, Fiat and others) to finalize
project agreements to design and provide prototype batteries for
a variety of electric vehicle and non-electric vehicle
applications. Management expects project revenue from such
agreements to increase from current levels beginning in the third
quarter of 1996.
License fees in 1995 represent final license payments from Mitsui
Engineering and Shipbuilding Co., Ltd. ("MES") in accordance with
a distribution agreement which was terminated in 1996.
Costs and Expenses. Total costs and expenses significantly
decreased during the three and six months ended June 30, 1996 as
compared to the three and six months ended June 30, 1995, as a
result of management's implementation of cost control measures to
conserve cash and to reduce expenses to a level more commensurate
with sales. Generally, total costs were higher in 1995 as
compared to 1996 as the Company began to purchase machinery and
implement production processes to manufacture the Horizon battery
in commercial quantities and increased the sales, marketing and
administrative staffs accordingly. Staffing was reduced in
January 1996 throughout the Company while still increasing the
capacity of the San Marcos plant through upgrades and further
refinement of the production processes. Manufacturing costs have
remained high as a percentage of battery sales due to the fact
that the Company is maintaining the minimum production level
necessary to demonstrate the ability to manufacture the Horizon
battery in commercial quantities; however battery sales of
current battery models have been less than expected. Management
expects manufacturing costs to decrease as a percentage of
battery sales when volume production begins, which is uncertain
based on current market conditions. Management is continuing its
efforts to control costs and reduce monthly cash expenditures.
Even though total costs and expenses decreased in 1995 compared
to 1996, certain non-cash expenses significantly increased during
the three and six month periods ending June 30, 1996 compared to
the corresponding period in 1995. Depreciation costs were higher
in 1996 as compared to 1995 due to the fact that a significant
amount of equipment was purchased throughout 1995 associated with
the automation of the San Marcos production facility
(approximately $3,600,000), and in 1996 depreciation was
recognized on the larger equipment base for the entire period.
Amortization costs were higher in 1996 compared to 1995 due to
purchased technology with a value of approximately $2,400,000
which was obtained in the fourth quarter of 1995 and began being
amortized at that time. In addition, approximately $172,000 of
equipment which was no longer in use was disposed of in the first
quarter of 1996.
Liquidity and Capital Resources. As of August 9, 1996, the
Company had sold 2,920,838 shares of Common Stock which resulted
in net proceeds to the Company of $2,546,981 during 1996 (before
adjustment for the effect of the reverse stock split). These
funds have been used to fund the costs associated with
maintaining production capabilities and marketing requirements
and research and development expenditures to further develop and
refine the Horizon battery. In July 1996, the Company received
assistance in the form of a $3,000,000 payment from Chrysler
Corporation for compensation for continued capacity maintenance,
engineering, research and development effort (R&D) and ramp-up
costs incurred by the Company in relation to its role as a
supplier to the automaker for its electric vehicle EPIC Minivan
Program.
As of June 30, 1996, several working capital items have changed
significantly since December 31, 1995. Accounts receivable have
decreased approximately $1,500,000 primarily due to the
application by MES of $1,000,000 of its Convertible Notes Payable
to satisfy its obligation to pay $1,000,000 of outstanding
license fees to the Company. All other accounts receivable
outstanding as of December 31, 1995 have been collected. In
addition, almost all revenues generated during the first six
months of 1996 have been collected as of June 30, 1996,
resulting in the decrease in the balance at June 30, 1996.
Total current liabilities have decreased by approximately
$400,000 due to payments made in the first six months of 1996 of
outstanding liabilities associated with increased expenditures
incurred in 1995 to increase production capacity of the San
Marcos plant.
As of August 9, 1996, the Company had approximately $2,400,000 of
unrestricted cash available. Management is continuing its
efforts to control costs and believes it has sufficient cash to
continue operations through the third quarter of 1996 at current
levels based on expected cash flow from battery sales and project
revenue. Therefore, it will be necessary to raise additional
financing by the end of the fourth quarter of 1996 to sustain
operations and fund anticipated growth. The Company has
historically been able to raise funds on a repeated basis to
sustain operations. Management is currently attempting to raise
additional funds; however, there can be no assurance that such
funding can be obtained on favorable terms to the Company, if at
all.
On June 26, 1996, the Company's shareholders approved an
amendment to the Company's Restated Certificate of Incorporation
that effected a one-for-ten reverse stock split. The Company
amended its Certificate of Incorporation on July 22, 1996 to
effect a one-for-ten reverse stock split. Pursuant to this
amendment, each ten shares of Common Stock currently outstanding
was reclassified as one share of new Common Stock. As a result
of the reverse stock split, the Company has approximately
45,000,000 shares of Common Stock which were unreserved and
10,000,000 shares of unissued Preferred Stock as of August 13,
1996.
The Company's Common Stock is traded on the Over-the-Counter
Market and is reported on NASDAQ. In order to maintain listing
by NASDAQ, the Company must maintain a minimum of $1 million of
stockholders' equity. The Company is currently in compliance
with this requirement. If the minimum required balance is not
maintained, the NASDAQ may choose to delist the Common Stock of
the Company from trading which would restrict the liquidity of
the Common Stock. Ordinarily, before delisting, the NASDAQ would
provide the Company notice and an opportunity to present and
carry out a plan for compliance. Delisting by NASDAQ would be an
Event of Default under the terms of the April 1995 Debentures and
could trigger a requirement to repay the Debentures immediately.
April Debentures with a principal balance of $250,000 were
outstanding at June 30, 1996.
Part II - Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
At the Company's Annual Meeting of Shareholders on June 26,
1996, the Shareholders approved an amendment to the
Company's Restated Certificate of Incorporation to effect a
reverse split of the Company's outstanding shares of Common
Stock on the basis of one new share of Common Stock for each
ten outstanding shares of Common Stock, with the authorized
shares remaining at 50 million shares.
Item 3. Defaults on Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
PROPOSITION FOR AGAINST ABSTAIN NON-VOTE
1. Directors
Hackerman, Norman 31,146,846 588,076 N/A
Mathews, Charles L. 31,128,483 606,199 N/A 501
Williamson, Richard S. 31,128,222 606,199 N/A 501
2. Amend Certificate of Incorporation
To effect a reverse stock
split and to retain 50
million authorized shares 28,968,079 2,460,061 199,245 107,537
3. Shareholder Proposal of
Recommendation 4,457,735 12,104,001 450,873 14,722,313
4. Approve Ernst & Young LLP as
independent auditors for
fiscal 1996 30,205,809 1,397,976 130,636 501
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Amendment to the Restated Certificate of Incorporation of
Electrosource filed as of July 22, 1996.
10.1 Consulting Agreement between Electrosource, Inc., and
Richard J. Goranflo, dated March 29, 1996.
10.2 Consulting Agreement between Electrosource, Inc., and James
Jordan, dated April 6, 1996.
10.3 Consulting Agreement between Electrosource, Inc., and Robert
H. Schwartz d/b/a Jeremiah Partners, dated May 18, 1996.
10.4 Consulting Agreement between Electrosource, Inc., and Len
Grzanka dated July 15, 1996.
27. Financial Data Schedule.
(b) Reports on Form 8-K.
Reports on Form 8-K filed during the quarter ended June 30,
1996, were:
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.
Date: August 14, 1996 ELECTROSOURCE, INC.
/s/
Mary Beth Koenig
Chief Accounting Officer
Treasurer/Controller
/s/
Michael G. Semmens
Chairman, President
and Chief Executive Officer
Form 10-Q
Securities and Exchange Commission
Washington, D.C. 20549
EXHIBITS TO
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarter ended Commission file
June 30, 1996 Number 0-16323
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 74246630
(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 Amendment to the Restated Certificate of Incorporation of
Electrosource filed as of July 22, 1996.
10.1 Consulting Agreement between Electrosource, Inc., and
Richard J. Goranflo, dated March 29, 1996.
10.2 Consulting Agreement between Electrosource, Inc., and James
Jordan, dated April 6, 1996.
10.3 Consulting Agreement between Electrosource, Inc., and Robert
H. Schwartz d/b/a Jeremiah Partners, dated May 18, 1996.
10.4 Consulting Agreement between Electrosource, Inc., and Len
Grzanka dated July 15, 1996.
27. Financial Data Schedule.
STATE OF DELAWARE
Office of the Secretary of State
I, EDWARD J. FREEL, SECRETARY OF STATE OF THE STATE OF
DELAWARE, DO HEREBY CERTIFY THE ATTACHED IS A TRUE AND
CORRECT COPY OF THE CERTIFICATE OF AMENDMENT OF
"ELECTROSOURCE, INC.", FILED IN THIS OFFICE ON THE TWENTY-
SECOND DAY OF JULY, A.D. 1996, AT 10 O'CLOCK A.M.
A CERTIFIED COPY OF THIS CERTIFICATE HAS BEEN
FORWARDED TO THE NEW CASTLE COUNTY RECORD OF DEEDS FOR
RECORDING.
/S/
Edward J. Freel, Secretary of
State
2128168 8100 AUTHENTICATION:
960212217 DATE:
8035513
07-22-96
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF ELECTROSOURCE, INC.
Electrosource, Inc. (the "Company"), a corporation organized
and existing under and by virtue of the General Corporation Law
of the State of Delaware, does hereby certify:
1. That the Board of Directors of the Company duly adopted a
resolution setting forth a proposed amendment to the Certificate
of Incorporation of said corporation by a Unanimous Written
Consent of Directors dated April 15, 1996, declaring said
amendment to be advisable and calling for the consideration by
the shareholders of the Company of such amendment at the annual
meeting of the shareholders held on June 26, 1996. The
resolutions setting forth the proposed amendment are as follows:
Resolved, that the Board of Directors has determined that it
is advisable that the Restated Certificate of Incorporation
of the Company be amended to effect a reverse split having
the effect of reclassifying each ten (10) shares of the
Corporation's authorized and outstanding Common Stock, ten
cents ($.10) par value, into one share of Common Stock, one
dollar ($1.00) par value, without reducing the total number
of authorized shares of Common Stock; and be it further
Resolved, that the initial paragraph of Article Four of the
Restated Certificate of Incorporation of the Company be
amended to read in its entirety as follows:
The total number of shares of all classes of stock that
the Corporation shall have authority to issue shall be
sixty million, (60,000,000), of which fifty million
(50,000,000) shall be shares of Common Stock of the par
value of One and no/100 Dollars ($1.00) each, and ten
million (10,000,000) shall be shares of Preferred Stock
of the par value of One and no/100 Dollars ($1.00) each.
A description of the different classes of stock of the
Corporation and a statement of the designations and the
powers, preferences and rights, and the qualifications,
limitations or restrictions thereof, in respect of each
class of such stock are as follows:
Resolved, that the foregoing amendment be considered at
the next annual meeting of the stockholders of the
Company; and be it further
Resolved, that upon the approval of the foregoing amendment
by the stockholders of the Company, the officers of the
Company shall file with the Secretary of State of Delaware a
Certificate of Amendment to the Restated Certificate of
Incorporation of the Company reflecting such amendment,
which Certificate of Amendment may provide for an effective
date later than the date of filing (but not later than
ninety (90) days after such filing) to the extent that the
same is necessary or desirable to effect the share exchange
contemplated by the foregoing amendment.
Resolved, that upon date specified for effectiveness in the
Certificate of Amendment reflecting such amendment or, if no
later date is specified therein, upon the filing of the
Certificate of Amendment with the Secretary of State of
Delaware following stockholder approval of such amendment
(as applicable, the "Effective Time"), each ten (10) issued
and outstanding shares of the Corporation's Common Stock,
par value ten cents ($.10) per share (the "Old Common
Stock"), shall be reclassified and changed into one (1)
shares of Common Stock, par value One and No/100 Dollars
($1.00) per share (the "New Common Stock"), automatically
and without any further action on the part of the
Corporation or any of its stockholders. Each certificate
representing shares of Old Common Stock issued and
outstanding as of the Effective Time shall represent a
number of shares of New Common Stock equal to the whole
number of shares nearest to, but not exceeding, the number
of shares of Old Common Stock represented by such
certificate divided by ten (10). No scrip or fractional
shares will be issued in connection with this
reclassification, and instead each stockholder that would
otherwise receive a fractional share due to the fact that
the number of shares held of record by such stockholder is
not evenly divisible by ten (10) shall receive on additional
whole shares of New Common Stock in lieu of such fractional
share.
2. That thereafter such amendment was approved by the
affirmative vote of holders of a majority of the outstanding
stock entitled to vote thereon.
3. That said amendment was duly adopted in accordance with
section 242 of the General Corporation Law of the State of
Delaware.
4. That the effective time of such amendment shall be at the
close of business July 22, 1996.
IN WITNESS WHEREOF, Electrosource, Inc., has caused this
Certificate to be signed by Michael G. Semmens, its President,
and attested by Audrey T. Dearing, its Secretary, on this the
10th day of July 1996.
ELECTROSOURCE, INC. ATTEST:
By: /S/ /S/
Michael G. Semmens, President Audrey T.
Dearing, Secretary
CONSULTING AGREEMENT
96-C-080
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,
U.S.A. and RICHARD J. GORANFLO d/b/a AMERICAN HEARTLINE
CORPORATION (Consultant) having his place of business at 10600
Double Tree Cove, Austin, Texas 78750.
W I T N E S S E T H:
WHEREAS, Consultant possesses the knowledge and experience
in the writing of computer software programs for the battery
management systems technology and/or related fields of activity;
and
WHEREAS, Consultant has the knowledge and ability to assist
Electrosource in the development of software programs; 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 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 (2) weeks prior to the last
day of the initial term of this Agreement or Amendment
to same.
1.3 Electrosource may cancel this Agreement at its
sole discretion with thirty (30) 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.
1.4 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.
1.5 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
2.1 Consultant shall use his best efforts on behalf of
Electrosource to assist Electrosource with respect to
all matters pertaining to computer programming and the
creation of the appropriate software to accomplish such
end. 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. 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.
2.2 Specific duties shall include, but not be limited
to, serving the particular needs of the Assistant Vice
President for Finance or other designee of
Electrosource.
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 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 expenses. Reimbursement of expenses
will be issued within ten (10) days of receipt of complete
accounting, with receipts, of same.
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 Consultant shall restrict the disclosure of
Electrosource's confidential and/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.
5.3 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.
5.4 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.
5.5 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
6.1 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.
6.2 The Consultant and his certifying employees shall
not disclose classified information to unauthorized
persons.
6.3 Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions
7.1 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.
7.2 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.
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
9.1 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.
9.2 Consultant shall advise Electrosource's 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.
9.3 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, General Counsel,
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.
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. CONSULTANT
AMERICAN HEARTLINE CORP.
By: /s/ By: /s/
James M. Rosel Richard J. Goranflo
Vice President, General Counsel Vice President
Date: 1/10/1996 Date: 3/29/1996
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
74-2548740
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
96-C-082
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,
U.S.A. and JAMES J. JORDAN (Consultant) having his place of
business at 3310 S. Pleasant Valley Rd., Austin, Texas 78741.
W I T N E S S E T H:
WHEREAS, Consultant has the knowledge and ability to assist
Electrosource in the development of digital circuit and computer
hardware; 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 April
5, 1996 and ending on December 31, 1996.
1.2 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 (2) weeks prior to the last
day of the initial term of this Agreement or Amendment
to same.
1.3 Electrosource may cancel this Agreement at its
sole discretion with thirty (30) 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.
1.4 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.
1.5 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
2.1 Consultant shall use his best efforts on behalf of
Electrosource to assist Electrosource with respect to
all matters pertaining to the development of battery
management systems and the creation of the appropriate
computer and digital hardware circuitry to accomplish
such end. 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. Consultant is able to provide
services on an after hours and weekend basis only due
to an existing employment commitment. Such consulting
services shall be provided either at the offices of
Electrosource or Consultant, or at such other locations
as the parties may agree.
2.2 Specific duties shall include, but not be limited
to, serving the particular needs of the Assistant Vice
President for Marketing and Development or other
designee of Electrosource.
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)." Payment of compensation will be within 30
days of the date invoices are submitted for approved work
that was done, as indicated by time sheet approved by
signature of responsible Electrosource designee.
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 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 expenses. Reimbursement of expenses
will be issued within ten (10) days of receipt of complete
accounting, with receipts, of same.
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 Consultant shall restrict the disclosure of
Electrosource's confidential and/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.
5.3 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.
5.4 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.
5.5 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
6.1 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,
that deal with classified information by the Consultant
shall be accomplished at the premises of the Company;
and classification guidance will be provided by the
Company.
6.2 The Consultant and his certifying employees shall
not disclose classified information to unauthorized
persons.
6.3 Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions
7.1 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.
7.2 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.
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
9.1 Consultant represents and warrants that:
(a) He has full authority to enter into this
Agreement and to perform his obligations hereunder
described in Section 2.1; and
(b) Performance by Consultant of his
obligations hereunder will not be in conflict with
any other of his obligations described in Section
2.1.
9.2 Consultant shall advise Electrosource's 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.
9.3 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, General Counsel,
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.
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. CONSULTANT
By: /s/ By: /s/
James M. Rosel James J. Jordan
Vice President, General Counsel
Date: 4/9/1996 Date: 4/6/1996
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
96-C-85
THIS CONSULTING AGREEMENT (the "Agreement"), made effective
the 18th day of May, 1996, is between ELECTROSOURCE,
INC. ("Electrosource"), a Delaware corporation, having its
principal offices at 3800-B Drossett Drive, Austin, Texas, 78744-
1131, U.S.A. and ROBERT H. SCHWARTZ d/b/a JEREMIAH PARTNERS
having his place of business at 2804 Wooldridge Drive, Austin,
Texas 78703
W I T N E S S E T H:
WHEREAS, Consultant possesses knowledge and experience in
general management, and
WHEREAS, Electrosource desires the assistance of Consultant,
as requested from time to time by Michael G. Semmens, the
Chairman, CEO and President;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein, the parties agree as follows:
1. Term
1.1 Electrosource hereby engages Consultant for an
initial six-month term, commencing on May 1, 1996 and
ending on November 1, 1996.
1.2 Electrosource shall have the right to extend this
Agreement for an additional six months, at the same
rate of compensation provided for in Section 3, by
written notice not less than two (2) weeks prior to the
last day of the initial term of this Agreement.
1.3 Either party may cancel this Agreement at its sole
discretion upon thirty (30) days prior written notice.
In the event of cancellation, Electrosource's sole
liability will be for days worked at the rate
specified, and for reasonable travel or business
expenses incurred in accordance with Section 4.
1.4 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.
1.5 Upon termination of this Agreement, Electrosource
shall have no obligation to make payments to Consultant
for services performed after notice of termination is
received by Consultant. Notice may be hand carried,
faxed 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 efforts to assist
Electrosource with respect to all matters requested
pertaining to general management, including, without
limitation, strategic planning, organization and training.
Consultant will take direction from and report to Michael
Semmens or his designee. 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, which are anticipated to be on the order of 2-
5 days per month. 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
shall pay to Consultant $1,000 per 8-hour day, pro-rated for
any part thereof. 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 his work
under this agreement. Such expenses may include necessary
actual expenses of out-of-town travel, communications, hotel
accommodations, meals and the like, provided that Consultant
shall provide Electrosource an accurate and complete
accounting of all such expenses so incurred, with receipts,
and shall obtain Electrosource's prior written approval for
any such expenses. Reimbursement of expenses will be issued
within thirty (30) days of receipt of complete accounting of
same.
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 Consultant shall restrict the disclosure of
Electrosource's confidential and/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.
5.3 In event of termination or cancellation of this
Agreement for any reason whatsoever, Consultant agrees
to promptly deliver to Electrosource all written
information of any sort made available to Consultant or
created by it under the terms of this Agreement.
5.4 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.
5.5 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
6.1 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.
6.2 The Consultant and his certifying employees shall
not disclose classified information to unauthorized
persons.
6.3 Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions
7.1 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.
7.2 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.
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
9.1 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.
9.2 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, General Counsel,
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.
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.
ROBERT H. SCHWARTZ d/b/a
ELECTROSOURCE, INC. JEREMIAH PARTNERS
By: /s/ By: /s/
James M. Rosel Robert H. Schwartz
Date: 5/24/1996 Date: 5/18/1996
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
###-##-####
ELECTROSOURCE, INC.
CONSULTING AGREEMENT
96-C-087
THIS CONSULTING AGREEMENT (the "Agreement"), made effective
the 15th day of July, 1996, is between ELECTROSOURCE, INC.
("Electrosource"), a Delaware corporation, having its principal
offices at 3800-B Drossett Drive, Austin, Texas, 78744-1131,
U.S.A. and LEN GRZANKA (Consultant) having his place of business
at BEVILACQUA KNIGHT, INC., 501 Fourteenth St., Suite 200,
Oakland, CA 94612.
W I T N E S S E T H:
WHEREAS, Consultant possesses knowledge and experience in
media and investor relations; 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 July
15, 1996, and ending on December 31, 1996.
1.2 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 (2) weeks prior to the last
day of the initial term of this Agreement or Amendment
to same.
1.3 Electrosource may cancel this Agreement at its
sole discretion with ten (10) 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.
1.4 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.
1.5 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
2.1 Consultant shall use his best efforts on behalf of
Electrosource to assist Electrosource with respect to
matters pertaining to Media Relations as directed in
writing in advance by Michael G. Semmens or Robin
Roberson. Consultant shall provide a written estimate
of time and charges for all work for pre-approval
hereunder. Such consulting services shall be provided
at the offices of 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
shall pay to Consultant $100.00 per hour for such hours as
are approved in advance by Michael G. Semmens or Robin
Roberson (per 2.1 above) in writing. 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 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 expenses per Michael G. Semmens or Robin
Roberson. Reimbursement of expenses will be issued within
thirty (30) days of receipt of complete accounting, with
receipts, of same.
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 Consultant shall restrict the disclosure of
Electrosource's confidential and/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.
5.3 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.
5.4 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.
5.5 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
6.1 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.
6.2 The Consultant and his certifying employees shall
not disclose classified information to unauthorized
persons.
6.3 Electrosource shall brief the Consultant as to the
security controls and procedures applicable to the
Consultant's performance.
7. Works of Authorship and Inventions
7.1 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.
7.2 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.
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
9.1 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.
9.2 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, General Counsel,
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.
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. CONSULTANT
By: /s/ By: /s/
James M. Rosel Len Grzanka
Date: 7/15/1996 Date: 7/15/1996
SOCIAL SECURITY NUMBER OR
FEDERAL IDENTIFICATION NUMBER:
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