As filed with the Securities and Exchange Commission on January 21, 1997
Registration No. _____
FORM S-3
SECURITIES AND EXCHANGE COMMISSION
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ELECTROSOURCE, INC.
(Exact name of issuer as specified in its charter)
Delaware 3690 742466304
(State or other (Primary Standard (IRS Employer
jurisdiction Industrial Identification No.)
of incorporation or Classification Code
organization) Number)
2809 Interstate 35 South Michael G. Semmens, President
San Marcos, Texas 78666 Electrosource, Inc.
(512) 753-6500 2809 Interstate 35 South
(Address, including zip code, San Marcos, Texas 78666
and telephone number, including (512) 753-6500
area code, of registrant's (Name, address, including zip code,
principal executive office) and telephone number, including
area code, of agent for service)
Copy to:
Bret Van Earp
Attorney at Law
100 Congress Avenue, Suite 1800
Austin, Texas 78701
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes
effective.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans, please
check the following box.
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in
connection with dividend or interest reinvestment plans, check the
following box. This box is checked.
Calculation of Registration Fee
Proposed Proposed
Title of each class maximum maximum Amount of
of securities Amount to be offering price aggregate registration
to be registered registered per unit* offering price fee
Common Stock, 160,000 shares $5.00 per share $800,000.00 $242.42
$1.00 par value
* Estimated solely for the purpose of determining the
registration fee and based upon the closing price quoted in the NASDAQ
system for a share of Electrosource, Inc. Common Stock on January 16,
1997.
The Registrant may amend this Registration Statement on such
date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically
states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of
1933, or until the Registration Statement shall become effective on
such date as the Commission, acting pursuant to said Section 8(a), may
determine.
Page 1 of 15 Pages.
An Exhibit Index appears on Page 15.
ELECTROSOURCE, INC.
CROSS REFERENCE SHEET
Information Required by Form S-3 Caption in Prospectus
Item 1. Forepart of the Registration Outside Front Cover Page
Statement and Outside Front Cover of Prospectus
Page of Prospectus
Item 2. Inside Front and Outside Back Cover Inside Front and Outside
Pages of Prospectus Back Cover Pages of Prospectus
Item 3. Summary Information, Risk Factors Summary of Prospectus;
and Ratio of Earnings Risk Factors
to Fixed Charges
Item 4. Use of Proceeds Not Applicable
Item 5. Determination of Offering Price Not Applicable
Item 6. Dilution Dilution
Item 7. Selling Security Holders Selling Security Holders
Item 8. Plan of Distribution The Offering
Item 9. Description of Securities to be Not Applicable
Registered
Item 10. Interests of Named Experts and Not Applicable
Counsel
Item 11. Material Changes Recent Developments
Item 12. Incorporation of Certain Inside Front Cover
Information by Reference Page of Prospectus
Item 13. Disclosure of Commission Position Indemnification of
on Indemnification for Securities Officers and Directors
Act Liabilities
SUBJECT TO COMPLETION, DATED January 21, 1997
Information contained herein is subject to completion or
amendment. A registration statement relating to these securities has
been filed with the Securities and Exchange Commission. These
securities may not be sold nor may offers to buy be accepted prior to
the time the registration statement becomes effective. This
prospectus shall not constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of these securities in
any State in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of
any such State.
PROSPECTUS
ELECTROSOURCE, INC.
160,000 Shares of Common Stock, $1.00 par value
The shares offered hereby are outstanding shares of the Common
Stock, $1.00 par value per share ("Common Stock"), of Electrosource,
Inc., a Delaware corporation (the "Company"), which are being sold by
the Selling Shareholders named herein. The Company will not receive
any part of the proceeds from the sale of such shares.
The Company has agreed to bear all costs of the preparation,
filing and prosecution of the registration statement of which this
Prospectus is a part. Such expenses are estimated to be approximately
$6,650 for the offering.
The Company has been advised that the sale of the shares may be
made from time to time by or for the account of the Selling
Shareholders in the over-the-counter market through broker-dealers.
These sales will be made at market prices prevailing at the time of
sale. The broker-dealers may act as agents of the Selling
Shareholders or may purchase any of the shares as principal and
thereafter may sell such shares from time to time in the over-the-
counter market at prices prevailing at the time of sale or at
negotiated prices. Neither the security to be offered nor the selling
method to be used may be varied.
Broker-dealers used by the Selling Shareholders may be deemed to
be "underwriters" as defined in the Securities Act of 1933. In
addition, the Selling Shareholders may be deemed to be an underwriter
within the meaning of the Securities Act of 1933 with respect to the
Common Stock offered hereby.
The Common Stock is traded in the over-the-counter market and is
quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ") under the symbol "ELSI." On January 14,
1997, the closing price for a share of Common Stock as reported on
NASDAQ was $5.00 per share.
SEE "RISK FACTORS," ON PAGE 4 OF THIS PROSPECTUS, FOR A
DISCUSSION OF CERTAIN IMPORTANT FACTORS INVOLVED IN THIS
OFFERING.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is January 21, 1997.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports and other information with the
Securities and Exchange Commission (the "Commission"). Such reports,
together with proxy statements and other information filed by the
Company, can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, NW,
Washington, DC 20549, and at certain of its Regional Offices located
at: 7 World Trade Center, New York, New York 10007; and Room 1204,
Everett McKinley Dirksen Building, 219 South Dearborn Street, Chicago,
Illinois 60604. Copies of such information can also be obtained from
the Public Reference Section of the Commission, 450 Fifth Street, NW,
Washington, DC 20549 at prescribed rates.
The Company has filed with the Commission a registration
statement under the Securities Act of 1933, as amended, with respect
to the securities offered hereby (the "Registration Statement"). As
permitted by the rules and regulations of the Commission, this
Prospectus omits certain information, exhibits and undertakings
contained in the Registration Statement. Such additional information
can be inspected at the principal office of the Commission, Room 1024,
450 Fifth Street, NW, Washington, DC 20549, and copies of the
Registration Statement can be obtained from the Commission at
prescribed rates by writing to the Commission at such address.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which are on file with the Commission,
are hereby specifically incorporated by reference into this
prospectus:
(1) The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1995;
(2) The Company's Quarterly Report on Form 10Q for the three
months ended March 31, 1996;
(3) The Company's Quarterly Report on Form 10Q for the six
months ended June 30, 1996;
(4) The Company's Quarterly Report on Form 10Q for the nine
months ended September 30, 1996; and
(5) All other reports filed by the Company pursuant to
Section 13(a) or Section 15(d) of the Exchange Act since
December 31, 1995, including the following:
(i) Form 8-K Current Report dated January 12, 1996;
(ii) Form 10-C Report by Issuer of Securities Quoted on
NASDAQ Interdealer Quotation System dated January 23, 1996;
(iii) Form 10-C Report by Issuer of Securities Quoted on NASDAQ
Interdealer Quotation System dated February 29, 1996; and
(iv) Form 10-C Report by Issuer of Securities Quoted on
NASDAQ Interdealer Quotation System dated June 11, 1996.
(6) The description of the Company's Common Stock set forth
under the captions "Description of Electrosource, Inc. Common Stock"
and "Purposes and Effects of Certain Provisions of the Electrosource,
Inc. Certificate and the Electrosource, Inc. Bylaws" in the
Information Statement filed as Exhibit 28.1 to the Company's
Registration Statement on Form 10 filed October 19, 1987 (as amended
by Form 8 Amendments filed January 8, 1988 and January 13, 1988),
which description of the Company's Common Stock was incorporated by
reference into the Registration Statement on Form 10 in response to
Item 11, "Description of Registrant's Securities to be Registered."
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to December 31,
1995, and prior to the termination of the offering shall be deemed to
be incorporated by reference into this prospectus.
The Company will provide without charge to each person, including
any beneficial owner, to whom this prospectus is delivered, upon
written or oral request of such person, a copy of any and all of the
information that has been incorporated by reference in this prospectus
(not including exhibits to the information that is incorporated by
reference unless such exhibits are specifically incorporated by
reference into the information that this prospectus incorporates).
Requests should be directed to Electrosource, Inc., Corporate
Secretary, 2809 Interstate 35 South, San Marcos, Texas 78666,
telephone (512) 753-6500.
SUMMARY OF PROSPECTUS
The following summary is qualified in its entirety by, and should
be read in conjunction with, the more detailed information and
financial statements contained elsewhere in this prospectus and in the
documents incorporated by reference herein.
The Company
Electrosource, Inc. (the "Company") is engaged in the development
and commercial application of technologies related to lead-acid,
rechargeable storage batteries and ancillary products. The Company's
principal activity is the development, manufacture and sale of a new
lead-acid battery concept called Horizon. See "The Company," below.
The principal executive offices of the Company are located at
2809 Interstate 35 South, San Marcos, Texas 78666 and its telephone
number is (512) 753-6500.
Recent Developments
The Company has undertaken a private placement of common stock
with its executive officers and certain other accredited investors to
raise approximately $750,000 for general corporate purposes. See
"Recent Developments" below.
The Company has filed suit in Travis County, Texas for a
declaratory judgment with respect to demands and claims from an Indian
entity. See "Recent Development" below.
The Offering
The shares offered hereby are 160,000 outstanding shares of the
Company's Common Stock, $1.00 par value per share ("Common Stock"),
which are being sold by Ally Capital Corporation, a domestic leasing
corporation organized under Massachusetts law ("Ally") as the agent
for Environmental Allies, N.V. and Environmental Allies International,
N.V., each a trust organized under the laws of the Netherlands
Antilles, (the "Selling Shareholders"). The Company will not receive
any part of the proceeds from the sale of such shares. See "The
Offering" below.
RISK FACTORS
An investment in the Common Stock offered hereby involves a high
degree of risk. The following factors should be considered in
evaluating an investment in the Company.
Financial Constraints. In the absence of additional financing
and without the generation of significant revenue or
offsetting cost reductions, the Company's cash will be substantially
depleted in the first quarter of 1997. There can be no assurance that
significant revenues or additional financing can be obtained on terms
satisfactory to the Company, if at all. The full depletion of the
Company's cash could lead to the Company's ceasing all operations and
activities and, ultimately, to its dissolution and liquidation.
Contingencies Related to Business Plan and Commercialization of
Product. In June 1994 the Company made the decision to become the
North American manufacturer of the Horizonr battery, while continuing
its previous plans with respect to licensing of third party
manufacturers overseas. The shift from research and development to
manufacturing has required, and will continue to require, significant
additional outlays for capital equipment as well as greatly increased
managerial and production staffing, which will in turn require
significant amounts of new capital. There can be no assurance that
the Company will be able to raise this capital on terms satisfactory
to the Company, or at all. Development of the Horizonr Battery and
manufacturing processes continue, and there can be no assurance that
the battery will be successfully commercialized.
Possible Loss of Trading Liquidity. 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 $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, NASDAQ would provide the
Company notice and an opportunity to present and carry out a plan for
compliance.
Termination of Technology License. The Company holds the rights
to develop and use certain coextrusion technology necessary to the
manufacturer of its principal products under an exclusive license from
Blanyer-Mathews Associates, Inc. ("Blanyer-Mathews"). This license is
subject to termination by Blanyer-Mathews in the event that the
Company enters bankruptcy proceedings or defaults in its obligation to
pay royalties. Loss of the rights to the coextrusion technology would
have a severe adverse impact upon the Company's continued viability.
Loss of Trade Secret Protection. The Company has elected to
protect certain aspects of its technology under state trade secret
laws, rather than under federal patent laws. Trade secret protection
requires that the Company preserve the confidentiality of the
technology subject to trade secret status. In the event that such
confidentiality cannot be maintained, or if third parties can
successfully "reverse engineer" the affected technology, trade secret
status may be lost. Loss of trade secret protection would allow third
parties to utilize the technology without obtaining a license from the
Company.
Competition. The lead-acid battery industry is highly
competitive and includes a number of firms, many with greater
financial, technological, manufacturing, marketing and other resources
and longer operating histories than the Company. There is no
assurance that the Company will be able to compete successfully in
this highly competitive environment due to the Company's limited
financial resources and lack of established products.
Dependence on Key Personnel. Management of the Company is
composed primarily of Michael Semmens, President, Chief Executive
Officer and Chairman of the Board, William Griffin, Executive Vice
President, Chris Morris, Vice President-Technical Operations, James M.
Rosel, Vice President-Finance, General Counsel and Chief Financial
Officer, and Mary Beth Koenig, Chief Accounting Officer. The loss of
any of these executive officers could have a material adverse effect
on the Company. The Company does not have employment contracts with
Ms. Koenig or with Messrs. Rosel and Morris, and the employment
contracts between Mr. Semmens and the Company and Mr. Griffin and the
Company do not impose any material penalty in the event of
resignation.
Dilution. The market price of $5.00 per share of Common Stock as
of January 16, 1997, was substantially greater than the Company's
actual net tangible book value of $0.78 per outstanding share of
Common Stock at September 30, 1996. Purchasers of Common Stock at the
recent market price will suffer an immediate dilution of $4.22 per
share, measured by the difference between the market price and the
Company's net tangible book value per share. See "Dilution."
Certain Antitakeover Effects. Certain provisions contained in
the Delaware General Corporation Law and in the Company's Restated
Certificate of Incorporation and bylaws may make it difficult for any
third party to effect or attempt an acquisition of the Company without
the approval of the Company's Board of Directors. The Restated
Certificate of Incorporation also divides the Company's Board of
Directors into three classes serving staggered terms. This provision
may hinder or delay any attempt to gain control of the Company by
replacing the Board of Directors. Such potential antitakeover effects
may depress the market value of the Common Stock. In addition,
certain provisions of the Company's Restated Certificate of
Incorporation and bylaws require the affirmative vote of 90% of the
Company's outstanding Common Stock.
Absence of Dividends. The Company has never declared or paid any
dividends on its outstanding Common Stock, and it is unlikely that it
will do so in the foreseeable future.
THE COMPANY
Electrosource, Inc. (the "Company") is engaged in the development
and commercial application of technologies related to lead-acid,
rechargeable storage batteries and ancillary products. The Company's
principal activity is the development, manufacture and sale of a new
lead-acid battery concept called Horizon. The Horizon battery
utilizes plate grids made from a patented coextruded wire. The plates
are oriented in a horizontal plane rather than the vertical plane, as
is the practice in conventional batteries. Current activities are
concentrated upon development of Horizon concept batteries for use in
electric vehicle and non-electric vehicle applications. The Company
is also developing new processes for the energy-active material for
use in both Horizon and conventional batteries.
The continued development of the Horizon battery, as well as the
continued viability of the Company as a going concern, are contingent
upon the Company's ability to increase sales, increase contractual
activity or raise additional capital. There can be no assurance that
such sales, contracts or financing can be obtained. The offered
described in this prospectus will not result in any proceeds to the
Company. See "Risk Factors."
The principal executive offices of the Company are located at
2809 Interstate 35 South, San Marcos, Texas 78666, and its telephone
number is (512) 753-6500.
Recent Developments
The Company has undertaken a private placement of Common Stock
with its executive officers and certain other accredited investors to
raise approximately $750,000 for general corporate purposes. The
terms of the offer for up to $600,000 are $6.56 per share of Common
Stock purchased and one warrant at a strike price of $7.56 per share
for each dollar invested. All of the executive officers participating
in the Offering will be subject to these terms. For the remaining
$150,000, the terms are one share of Common Stock at $5.25 per share
of Common Stock purchased, with three warrants per share. One-half of
the warrants will be exercisable at a price of $5.25 per share and one-
half at $6.25 per share. As of January 16, 1997 the market price was
$5.00.
As of January 14, 1997 the Company had received approximately
$260,000 under the offering and believes it has commitments for the
balance with closing anticipated by January 22, 1997, although there
can be no assurance that the offering will be fully subscribed. The
Company has agreed to register the shares on a Form S-3 for those
purchasers who are not executive officers. The executive officers'
share and warrant purchase shall be subject to shareholder approval at
the next Annual Meeting of Shareholders. The approval may or may not
be sought as a part of a to be proposed employee stock purchase plan.
If the purchase by the executive officers is not approved, the
purchase price will be refunded, with interest at the prime rate.
The Company has received demands to arbitrate claims for alleged
breaches of agreements between the Company and Horizon Battery
Technologies, Ltd. ("HBTL") of India. HBTL claims damages of
approximately $5.1 million. The Company dispures the claim for damages
and will vigorously defend any actions taken by HBTL to pursue the claims.
The Company has filed a petition in Travis County, Texas seeking,
among other things, a declaratory judgment that HBTL has no right
to arbitration or monetary relief.
THE OFFERING
The shares to be offered pursuant to this prospectus are
outstanding shares of the Company's Common Stock acquired by the
Selling Shareholders in satisfaction of amount owed under the terms of
an Equipment Lease Agreement (the "Lease Agreement") dated April 6,
1995 (see "Selling Security Holders," below.)
The shares of Common Stock offered hereby may be sold from time
to time by the Selling Shareholders. Such sales must be made in the
over-the-counter market through broker-dealers at the then prevailing
market price. Neither the security to be offered nor the selling
method may be varied.
There is no underwriting or coordinating broker acting in
connection with this offering. The Selling Shareholders may be deemed
an "underwriters" within the meaning of the Securities Act of 1933
(the "Securities Act") with respect to the shares of Common Stock
offered hereunder. The Company and the Selling Shareholders have
agreed to indemnify one another against certain liabilities, including
liabilities under the Securities Act.
In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from Selling
Shareholders in amounts to be negotiated immediately prior to the
sale. Such brokers or dealers and any other participating brokers or
dealers may be deemed to be "underwriters" within the meaning of the
Securities Act in connection with such sales.
The Company has agreed to bear all costs of preparing, filing and
processing the registration statement of which this prospectus is a
part. Such expenses are estimated to be approximately $6,650 for the
offering.
SELLING SECURITY HOLDERS
The shares of Common Stock covered by this Prospectus are being
offered by Ally Capital Corporation as agent for the Selling
Shareholders. On behalf of the Selling Shareholders, Ally has been
issued the 160,000 shares offered hereunder as a prepayment of amounts
due under the terms of the Lease Agreement. If the proceeds of the
sale of the shares offered hereunder do not equal the outstanding
balance owed by the Company under the Lease Agreement, the Company
will, at the option of the Company, on a one time basis issue
additional shares or pay cash to the Selling Shareholders to make up
the deficiency. Following the offering, and assuming the sale of all
shares offered hereby, neither Ally nor the Selling Shareholders will
own shares of Common Stock; however, Ally has the right to purchase
7,500 shares of Common Stock at a price of $40.00 per share under the
terms of Warrants to Purchase Shares dated April 17 and July 27, 1995
issued in connection with the Lease Agreement. These Warrants expire
on April 17, 2000.
The Company agreed to register the shares of Common Stock
issuable upon prepayment of the Equipment Lease Agreement upon the
Selling Shareholders request and to keep such registration effective
for a period of 120 days after being declared effective. The shares
offered hereby are being registered pursuant to such a request.
USE OF PROCEEDS
The Company will realize no proceeds from the offering. The
Company will bear all costs of preparing, filing and processing the
registration statement of which this prospectus is a part.
DILUTION
At September 30, 1996, the Company had a net tangible book value
of $0.78 per share of Common Stock outstanding. "Net tangible book
value per share" represents the amount of total tangible assets of the
Company, reduced by the amount of total liabilities of the Company,
divided by the number of shares of Common Stock outstanding.
Purchasers of Common Stock for cash at the assumed offering price of
$5.00 per share (based on the market price of a share of Common Stock
as quoted by NASDAQ on January 16, 1997) will therefore incur an
immediate dilution of $4.22 per share from the assumed offering price
measured by the difference between the assumed offering price and the
Company's net tangible book value per share.
INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Company's Restated Certificate of Incorporation provides that
a director of the Company will not be personally liable to the Company
or its stockholders for monetary damages for breach of fiduciary duty
as a director, except that such provisions will not eliminate or limit
the liability of a director (i) for a breach of the director's duty of
loyalty to the Company or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) with respect to unlawful payments of dividends
or unlawful stock purchases or redemptions for which the director is
liable under Section 174 of the General Corporation Law of the State
of Delaware, or (iv) for any transaction from which the director
derives an improper personal benefit.
The Company's Bylaws provide that, to the extent permitted by
law, the Company will indemnify each of its directors, and authorize
the purchase of insurance with respect thereto. The Bylaws also
provide that the Company may indemnify its officers, employees or
agents who are made or threatened to be made defendants or respondents
to any threatened, pending or completed action, suit or proceeding due
to such person's service to the Company or to certain other entities
at the request of the Company, so long as such person acted in good
faith and in a manner he reasonably believed to be not opposed to the
best interests of the Company. Such indemnification may be made only
upon a determination that such indemnification is proper in the
circumstances because the person to be indemnified has met the
applicable standard of conduct to permit indemnification under the
law.
In addition to indemnification provided pursuant to the Company's
Restated Certificate of Incorporation and Bylaws, the Company has
entered into a Director Indemnification Agreement with each director
of the Company providing for, among other things, (i) indemnification
by the Company of each director to the full extent authorized or
permitted by Delaware statutes; (ii) maintenance by the Company of
director and officer insurance coverage for the benefit of each
director of up to $2,000,000, subject to availability at premiums not
substantially disproportionate to the amount of coverage; (iii)
indemnification by the Company of each director in connection with
settlements under certain circumstances; (iv) procedures relating to
independent review of determinations regarding director
indemnification (including special provisions in case of a change in
control of the Company); and (v) the advancement of expenses to
directors in connection with matters for which the director is
entitled to indemnification.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons
controlling the Company pursuant to the foregoing provisions, or
otherwise, the Company has been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against
public policy as expressed in the Securities Act and is therefore
unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the
Company in the successful defense of any action, suit or proceeding)
is asserted against the Company by such director, officer or
controlling person in connection with the securities being registered,
the Company will, unless in the opinion of its counsel the matter has
been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon
for the Company by Bret Van Earp, Attorney at Law, 100 Congress
Avenue, Suite 1800, Austin, Texas 78701.
EXPERTS
The financial statements and schedule of the Company appearing in
the Company's Annual Report (Form 10-K) for the year ended December
31, 1995, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon (which contains an
explanatory paragraph with respect to substantial doubt about the
Company's ability to continue as a going concern) included therein and
incorporated herein by reference. Such financial statements and
schedule are incorporated herein by reference in reliance upon such
report given upon the authority of such firm as experts in
accounting and auditing.
No dealer, salesman or other
person has been authorized to
give any information or to make
any representation not contained
in this prospectus in connection
with the offer contained herein, ELECTROSOURCE, INC.
and, if given or made, such
information or representation
must not be relied upon as having
been authorized by the Company.
This prospectus does not
constitute an offer to sell, or a
solicitation of an offer to buy,
any securities in any
jurisdiction to any person to
whom it is not lawful to make any
such offer or solicitation in
such jurisdiction. Neither the
delivery of this prospectus nor
any sale made hereunder shall,
under any circumstances, create 160,000 Shares of
an implication that there has
been no change in the affairs of Common Stock
the Company since the date hereof
or that the information herein is
correct as of any time subsequent
to its date
___________________________
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION 2 January 21, 1997
INCORPORATION OF CERTAIN
INFORMATION BY REFERENCE 2
SUMMARY OF PROSPECTUS 3
RISK FACTORS 4
THE COMPANY 5
RECENT DEVELOPMENTS 5
THE OFFERING 5
SELLING SECURITY HOLDER 6
DILUTION 6
INDEMNIFICATION OF OFFICERS
AND DIRECTORS 7
LEGAL MATTERS 7
EXPERTS 7
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
The following sets forth the estimated expenses expected to
be incurred in connection with the issuance and distribution of
the securities registered hereby:
SEC Registration Fee $ 500.00
Printing Costs 0.00
Legal Fees and Expenses 3,000.00
Accounting Fees and Expenses 3,400.00
Blue Sky Fees and Expenses 0.00
Total $6,650.00
Item 15. Indemnification of Directors and Officers.
See "Indemnification of Officers and Directors" in the
Prospectus, which is hereby incorporated by reference.
Item 16. Exhibits.
The following exhibits are filed with or incorporated by
reference into this registration statement:
4.1 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.
4.2 Amendment to Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to
Electrosource, Inc. Quarterly Report on Form 10-Q filed
August 14, 1995 and incorporated herein by reference).
4.3 Amendment to Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to
Electrosource, Inc., Quarterly Report n Form 10-Q filed
August 14, 1996 and incorporated hereby by reference).
4.4 Bylaws of Electrosource, Inc. (filed as Exhibit 3.2 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.
4.5 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).
4.6 Amendment to Bylaws of Electrosource, Inc. (filed as
Exhibit 3.3 to Electrosource, Inc., Annual Report on Form
10-K for the period ended December 31, 1993, and
incorporated herein by reference).
4.7 Amendment to Bylaws of Electrosource, Inc. (filed as
Exhibit 3.6 to Electrosource, Inc., Annual Report on Form
10-K for the period ended December 31, 1994, and
incorporated herein by reference.
4.8 Amendment to Bylaws of Electrosource, Inc. as approved by
the Board of Directors on November 13, 1996.
4.9 Letter of Agreement between Electrosource, Inc., and Ally
Capital Markets Group dated December 18, 1996.
4.10 Amendment dated January 21, 1997, to Letter of Agreement between
Electrosource, Inc., and Ally Capital Markets Group dated
December 18, 1996.
5.1 Opinion of Bret Van Earp
24.1 Consent of Ernst & Young LLP.
24.2 Consent of Bret Van Earp
25. Power of Attorney
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(a) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933 (to the extent
that the information required to be included in a
post-effective amendment is contained in periodic
reports filed with or furnished to the Securities and
Exchange Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in this registration statement);
(ii) To reflect in the prospectus any facts or events ari
sing after the effective date of the registration
statement (or the most recent post-effective
amendment thereof) which, individually or in the
aggregate, reflect a fundamental change in the
information set forth in the registration statement
(to the extent that the information required to be
included in a post-effective amendment is contained
in periodic reports filed with or furnished to the
Securities and Exchange Commission by the registrant
pursuant to section 13 or section 15(d) of the
Securities Exchange Act of 1934 that are incorporated
by reference in this registration statement); and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the registration statement or any material change to
such information in the registration statement.
(b) That, for purposes of determining any liability under the
Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered herein, and
the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective
amendment any of the securities being registered which
remain unsold at the termination of the offering.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bon fide offering thereof.
With respect to the undertaking required by paragraph (h) of
Item 512 of Regulation S-K, see "Indemnification of Officers and
Directors" in the Prospectus, which is incorporated herein by
reference.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in
the City of San Marcos, State of Texas, on January 16, 1997.
ELECTROSOURCE, INC.
By: /s/
Michael G. Semmens, President
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933,
this registration statement has been signed by the following
persons in the capacities and on the date indicated.
Signature Title Date
/s/ President, Chief Executive Officer
Michael G. Semmens and Chairman of the Board January 16, 1997
(Principal Executive Officer)
/s/
William R. Graham Director January 16, 1997
/s/
Norman Hackerman Director January 16, 1997
/s/
John D. Malone Director January 16, 1997
/s/
Charles L. Mathews Director January 16, 1997
/s/
Nathan Morton Director January 16, 1997
/s/
Richard S. Williamson Director January 16, 1997
/s/
Thomas S. Wilson Director January 16, 1997
/s/ Vice President, Finance and
James M. Rosel General Counsel January 16, 1997
(Chief Financial Officer)
/s/ Treasurer and Controller
Mary Beth Koenig (Principal Accounting Officer) January 16, 1997
EXHIBIT INDEX
Sequentially
Exhibit Number Numbered Page
4.1 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.
4.2 Amendment to Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to Electrosource, Inc.
Quarterly Report on Form 10-Q filed August 14, 1995 and
incorporated herein by reference).
4.3 Amendment to Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to Electrosource, Inc.,
Quarterly Report n Form 10-Q filed August 14, 1996 and
incorporated hereby by reference).
4.4 Bylaws of Electrosource, Inc. (filed as Exhibit 3.2 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.
4.5 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).
4.6 Amendment to Bylaws of Electrosource, Inc. (filed as
Exhibit 3.3 to Electrosource, Inc., Annual Report on Form
10-K for the period ended December 31, 1993, and incorporated
herein by reference).
4.7 Amendment to Bylaws of Electrosource, Inc. (filed as
Exhibit 3.6 to Electrosource, Inc., Annual Report on Form
10-K for the period ended December 31, 1994, and incorporated
herein by reference).
4.8 Amendment to Bylaws of Electrosource, Inc. as approved by
the Board of Directors on November 13, 1996.
4.9 Letter of Agreement between Electrosource, Inc., and Ally
Capital Markets Group dated December 18, 1996.
4.10 Amendment dated January 21, 1997, to Letter of Agreement between
Electrosource, Inc., and Ally Capital Markets Group dated
December 18, 1996.
5.1 Opinion of Bret Van Earp
24.1 Consent of Ernst & Young LLP.
24.2 Consent of Bret Van Earp
25. Power of Attorney
EXHIBIT 4.8
ELECTROSOURCE, INC.
BYLAWS
APPROVED BY:
Board of Directors
November 13, 1996
ELECTROSOURCE, INC.
BYLAWS
TABLE OF CONTENTS
Page
ARTICLE I - OFFICE
SECTION 1. 1. Registered Office 1
SECTION 1. 2. Other Offices 1
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2. 1. Annual Meeting 1
SECTION 2. 2. Voting List 1
SECTION 2. 3. Special Meeting 1
SECTION 2. 4. Notice of Meeting 2
SECTION 2. 5. Quorum 2
SECTION 2. 6. Voting 2
SECTION 2. 7. Consent of Stockholder 3
SECTION 2. 8. Voting of Stock of Certain Holders 3
SECTION 2. 9. Treasury Stock 3
SECTION 2.10. Fixing Record Date 3
SECTION 2.11. Presentation of Shareholder Proposals 3
(Added November 13, 1996)
ARTICLE III
BOARD OF DIRECTORS
SECTION 3. 1. Powers 4
SECTION 3. 2. Number and Qualifications 4
(Revised: February 13, 1990/See Appendix)
SECTION 3. 3. Election, Term of Office and Vacancies 4
SECTION 3. 4. Place of Meetings 4
SECTION 3. 5. Regular Meeting 4
SECTION 3. 6. Special Meeting 5
SECTION 3. 7. Notice of Special Meeting 5
SECTION 3. 8. Quorum and Participation 5
SECTION 3. 9. Action Without Meeting 5
SECTION 3.10. Compensation 5
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 4. 1. Executive Committee 6
SECTION 4. 2. Other Committees 6
SECTION 4. 3. Designation, Powers, and Name 6
SECTION 4. 4. Minutes 6
ARTICLE V
NOTICE
SECTION 5. 1. Methods of Giving Notice 7
SECTION 5. 2. Written Waiver 7
ARTICLE VI
OFFICERS
SECTION 6. 1. Officers 7
SECTION 6. 2. Election and Term of Office 7
SECTION 6. 3. Removal and Resignation 8
SECTION 6. 4. Vacancies 8
SECTION 6. 5. Salaries 8
SECTION 6. 6. Chairman of the Board 8
SECTION 6. 7. President 8
(Revised: November 3, 1993/See Appendix)
(Revised: June 23, 1994/See Appendix)
SECTION 6. 8. Vice Presidents 8
(Revised: November 3, 1993/See Appendix)
(Revised: June 23, 1994/See Appendix)
SECTION 6. 9. Secretary 9
SECTION 6.10. Treasurer 9
SECTION 6.11. Assistant Secretary or Treasurer 9
ARTICLE VII
CONTRACTS, CHECKS, AND DEPOSITS
SECTION 7. 1. Contracts 9
SECTION 7. 2. Checks, etc. 10
SECTION 7. 3. Deposits 10
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8. 1. Issuance 10
SECTION 8. 2. Lost Certificates 10
SECTION 8. 3. Transfers 11
SECTION 8. 4. Registered Stockholders 11
SECTION 8. 5. Stockholders' Addresses 11
ARTICLE IX
DIVIDENDS
SECTION 9. 1. Declaration 11
SECTION 9. 2. Reserve 11
ARTICLE X
INDEMNIFICATION
SECTION 10. 1. Third Party Actions 11
SECTION 10. 2. Actions by or in the Right of the Corporation 12
SECTION 10. 3. Determination of Conduct 12
SECTION 10. 4. Payment of Expenses in Advance 12
SECTION 10. 5. Indemnity Not Exclusive 12
SECTION 10. 6. Insurance 13
SECTION 10. 7. Constituent Corporation 13
ARTICLE XI
DIVISIONAL ORGANIZATION AND DIVISION OFFICERS
SECTION 11. 1. Divisional Organization 13
SECTION 11. 2. Division Officers 13
ARTICLE XII
MISCELLANEOUS
SECTION 12. 1. Seal 13
SECTION 12. 2. Books 13
ARTICLE XIII
AMENDMENT
Amendment 14
APPENDIX A-1
ELECTROSOURCE, INC.
BYLAWS
ARTICLE I
OFFICES
SECTION 1.1. Registered Office. The registered office of
the corporation in the State of Delaware shall be in the City of
Wilmington, County of New Castle, and the name of its registered
agent shall be The Corporation Trust Company.
SECTION 1.2. Other Offices. The corporation may also
have offices at such other places both within and without the
State of Delaware as the Board of Directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 2.1. Annual Meeting. The annual meeting of
stockholders for the election of directors shall be held at such
place either within or without the State of Delaware and at such
date and time as shall be designated from time to time by the
Board of Directors and stated in the notice of the meeting.
SECTION 2.2. Voting List. The officer who has charge of
the stock ledger of the corporation shall prepare and make, at
least ten days before every meeting of stockholders, a complete
list of the stockholders entitled to vote at the meeting,
arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of
each stockholder. Such list shall be open to the examination of
any stockholder, for any purpose germane to the meeting, during
ordinary business hours, for a period of at least ten days prior
to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the
notice, or if not so specified, at the place where the meeting is
to be held. The list shall also be produced and kept at the time
and place of the meeting during the whole time thereof, and may
be inspected by any stockholder who is present.
SECTION 2.3. Special Meeting. Special meetings of the
stockholders, for any purpose or purposes, unless otherwise
prescribed by statute or by the Certificate of Incorporation, may
be called by the President or by the Board of Directors or by
written order of a majority of the directors and shall be called
by the President or the Secretary at the request in writing of
stockholders owning a majority in amount of the entire capital
stock of the corporation issued and outstanding and entitled to
vote. Such request shall state the purpose of the proposed
meeting. The President or directors so calling, or the
stockholders so requesting, any such meeting shall fix the date
and time of, and the place (either within or without the State of
Delaware) for, the meeting.
SECTION 2.4. Notice of Meeting. Written notice of the
annual, and each special meeting of stockholders, stating the
time, place and purpose or purposes thereof, shall be given to
each stockholder entitled to vote thereat, not less than ten nor
more than sixty days before the meeting.
SECTION 2.5. Quorum. The holders of a majority of the
stock issued and outstanding and entitled to vote thereat,
present in person or represented by proxy, shall constitute a
quorum at any meeting of stockholders for the transaction of
business except as otherwise provided by statute or in the
Certificate of Incorporation. Notwithstanding the other
provisions of the Certificate of Incorporation or these Bylaws,
the holders of a majority of the shares of such stock, present in
person or represented by proxy, although not constituting a
quorum, shall have power to adjourn the meeting from time to
time, without notice other than announcement at the meeting
(except as otherwise provided by law), until a quorum shall be
present or represented. At such adjourned meeting at which a
quorum shall be present or represented, any business may be
transacted which might have been transacted at the meeting as
originally notified.
SECTION 2.6. Voting. When a quorum is present at any
meeting of the stockholders, the vote of the holders of a
majority of the stock having voting power present in person or
represented by proxy shall decide any question brought before
such meeting, unless the question is one upon which, by express
provision of the statutes, the Certificate of Incorporation or
these Bylaws, a different vote is required, in which case such
express provision shall govern and control the decision of such
question. Every stockholder having the right to vote shall be
entitled to vote in person, or by proxy appointed by an
instrument in writing, subscribed by such stockholder, bearing a
date not earlier than one year prior to voting, and filed with
the Secretary of the corporation before or at the time of the
meeting. If such instrument shall designate two or more persons
to act as proxies, unless such instrument shall provide the
contrary, a majority of such persons present at any meeting at
which their powers thereunder are to be exercised shall have and
may exercise all the powers of voting or giving consents thereby
conferred, or if only one be present, then such powers may be
exercised by that one, or, if an even number attend and a
majority do not agree on any particular issue, each proxy so
attending shall be entitled to exercise such powers in respect
of the same portion of the shares as he is of the proxies
representing such shares.
SECTION 2.7. Consent of Stockholder. Unless otherwise
provided in the Certificate of Incorporation, any action required
to be taken at any annual or special meeting of stockholders of
the corporation or any action which may be taken at any annual or
special meeting of such stockholders may be taken without a
meeting, without prior notice and without a vote, if a consent in
writing, setting forth the action so taken, shall be signed by
the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon
were present and voted. Prompt notice of the taking of the
corporate action without a meeting by less than unanimous written
consent shall be given by the Secretary of the corporation to
those stockholders who have not consented in writing.
SECTION 2.8. Voting of Stock of Certain Holders. Shares
standing in the name of another corporation, domestic or foreign,
may be voted by such officer, agency, or proxy as the Bylaws of
such corporation may prescribe, or in the absence of such
provision, as the Board of Directors of such corporation may
determine. Shares standing in the name of a deceased person may
be voted by the executor or administrator of such deceased
person, either in person or by proxy. Shares standing in the
name of a guardian, conservator, or trustee may be voted by such
fiduciary, either in person or by proxy, but no fiduciary shall
be entitled to vote shares held in such fiduciary capacity
without a transfer of such shares into the name of such
fiduciary. Shares standing in the name of a receiver may be
voted by such receiver. A stockholder whose shares are pledged
shall be entitled to vote such shares, unless in the transfer by
the pledgor on the books of the Corporation, he has expressly
empowered the pledgee to vote thereon.
SECTION 2.9. Treasury Stock. The corporation shall not
vote, directly or indirectly, shares of its own stock owned by
it; and such shares shall not be counted in determining the total
number of outstanding shares.
SECTION 2.10. Fixing Record Date. The Board of Directors
may fix in advance a date, not exceeding sixty days preceding the
date of any meeting of stockholders, or the date for payment of
any dividend or distribution, or the date for the allotment of
rights, or the date when any change, or conversion or exchange of
capital stock shall go into effect, or a date in connection with
obtaining a consent, as a record date for the determination of
the stockholders entitled to notice of, and to vote at, any such
meeting and any adjournment thereof, or entitled to receive
payment of such dividend or distribution, or to receive any such
allotment of rights, or to exercise the rights in respect of any
such change, conversion or exchange of capital stock, or to give
such consent, and in such case such stockholders and only such
stockholders as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, any
such meeting and any adjournment thereof, or to receive payment
of such dividends or distribution, or to receive such allotment
of rights, or to exercise such rights, or to give such consent,
as the case may be notwithstanding any transfer of any stock on
the books of the corporation after any such record date fixed as
aforesaid.
SECTION 2.11. Presentation of Shareholder Proposals. In
the event that in connection with any annual or special meeting
of the stockholders any shareholder shall have perfected the
right to have a shareholder proposal included in the proxy
solicitation materials of the corporation relating to that
meeting as contemplated by Rule 14a-8 of the Securities and
Exchange Commission, the following procedures shall apply with
respect to the presentation of any supporting statement
concerning such shareholder proposal. The proponent shall be
allotted a total period of ten minutes in which to read to the
meeting the text of any supporting statement included in the
proxy materials and make (if so desired) an additional. If the
proponent is not present at the meeting, a representative (who
must be qualified under Delaware law to present the proposal for
action at the meeting and provide evidence of the representative
capacity) may present the proposal in accordance with this
section. Management of the corporation will then have a period
of ten minutes to read a statement addressing the proposal that
has been included in the proxy materials for the meeting and to
make any additional statement in response to the proposal or to
the presentation at the meeting by the proponent. The chairman
of the meeting shall have the power to cut short the time
allotted to the proponent or to the management if the proponent
or management, as the case may be, engages in any slanderous or
defamatory language or it is otherwise out of order. After the
presentations by the proponent and management, the chairman of
the meeting shall call for discussion on the proposal. The
chairman of the meeting, after a period allowed for discussion
not to exceed ten minutes, shall request a motion from the floor
to end discussion and vote the question. If no such motion is
made, or if made fails for want of a second or by failure to
achieve the concurrence of a majority of the shares present and
voting on the motion (not including any broker nonvotes),
successive ten minute discussion period shall be observed
followed in each case by a renewed call by the chairman for a
motion to vote the question.
ARTICLE III
BOARD OF DIRECTORS
SECTION 3.1. Powers. The business and affairs of the
corporation shall be managed by its Board of Directors, which may
exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the
Certificate of Incorporation or by these Bylaws directed or
required to be exercised or done by the stockholders.
SECTION 3.2. Number and Qualifications. The number of
directors (exclusive of directors, if any, elected by the holders
of one or more series of preferred stock, which may at any time
be outstanding, voting separately as a class pursuant to the
provisions of the Certificate of Incorporation applicable
thereto) shall be not less than three nor more than 21 directors,
the exact number to be determined from time to time by resolution
adopted by affirmative vote of a majority of the entire Board of
Directors.
The directors need not be stockholders of the Corporation.
No person shall be eligible to stand for election as a
director who, except in the case of a former Chief Executive
Officer of the Corporation, shall have been retired from
employment with the Corporation or one of its subsidiary or
affiliated companies for more than twelve (12) months.
SECTION 3.3. Election, Term of Office and Vacancies. The
Board of Directors shall be divided into three classes, and the
term of office of each director shall be as provided in
ARTICLE SEVEN of the Certificate of Incorporation.
Directors shall be elected by ballot at the annual meeting
of stockholders by a plurality of the votes cast, in person or by
proxy, by the stockholders entitled to vote, each to hold office
until the expiration of his term of office and until a successor
is elected and qualified.
If any vacancy shall occur among the directors, including a
vacancy resulting from an increase in the numbers of directors
constituting the entire Board of Directors, a majority of
directors then in office may fill such a vacancy and any director
so chosen shall hold office until the next election of the class
for which such director shall have been chosen and until his
successor is elected and qualified.
In case of a vacancy on the Board, the remaining directors
shall continue to act; but, if at any time their number be
reduced to less than a quorum, the remaining directors or
director shall fill the vacancies.
SECTION 3.4. Place of Meetings. The directors may hold
their meetings at the office of the corporation in the City of
Austin, State of Texas, or at such other place or places as may
be designated in the notice of the meeting.
SECTION 3.5. Regular Meeting. A regular meeting of the
Board of Directors shall be held each year, without other notice
than provided by these Bylaws, at the place of, and immediately
following, the annual meeting of stockholders; and other regular
meetings of the Board of Directors shall be held each year, at
such time and place as the Board of Directors may provide, by
resolution, either within or without the State of Delaware,
without other notice than such resolution.
SECTION 3.6. Special Meeting. A special meeting of the
Board of Directors may be called by the Chairman of the Board or
by the President and shall be called by the Secretary on the
written request of any two directors. The Chairman or President
so calling, or the directors so requesting, any such meeting
shall fix the time and any place, either within or without the
State of Delaware, as the place for holding such meeting.
SECTION 3.7. Notice of Special Meeting. Written notice of
special meetings of the Board of Directors shall be given to each
director at least twenty-four hours prior to the time of such
meeting. Any director may waive notice of any meeting. The
attendance of a director at any meeting shall constitute a waiver
of notice of such meeting, except where a director attends a
meeting for the purpose of objecting to the transaction of any
business because the meeting is not lawfully called or convened.
Neither the business to be transacted at, nor the purpose of, any
special meeting of the Board of Directors need be specified in
the notice or waiver of notice of such meeting, except that
notice shall be given of any proposed amendment to the Bylaws if
it is to be adopted at any special meeting or with respect to any
other matter where notice is required by statute.
SECTION 3.8. Quorum and Participation. A majority of the
Board of Directors shall constitute a quorum for the transaction
of business at any meeting of the Board of Directors, and the act
of a majority of the directors present at any meeting at which
there is a quorum shall be the act of the Board of Directors,
except as may be otherwise specifically provided by statute, by
the Certificate of Incorporation or by these Bylaws. Members of
the Board of Directors may participate in a meeting of the Board
of Directors by means of conference telephone or similar
communications equipment by means of which all persons
participating in the meeting can hear each other and such
participation shall constitute presence in person and attendance
at such meeting. If a quorum shall not be present at any meeting
of the Board of Directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
SECTION 3.9. Action Without Meeting. Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws,
any action required or permitted to be taken at any meeting of
the Board of Directors, or of any committee thereof as provided
in Article IV of these Bylaws, may be taken without a meeting, if
a written consent thereto is signed by all members of the Board
or of such committee, as the case may be, and such written
consent is filed with the minutes of proceedings of the Board or
committee.
SECTION 3.10. Compensation. Directors, as such, shall not
be entitled to any stated salary for their services unless voted
by the stockholders or the Board of Directors; but by resolution
of the Board of Directors, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular
or special meeting of the Board of Directors or any meeting of a
committee of directors. No provisions of these Bylaws shall be
construed to preclude any director from serving the corporation
in any other capacity and receiving compensation therefor.
ARTICLE IV
COMMITTEES OF DIRECTORS
SECTION 4.1. Executive Committee. The Board of Directors
by resolution adopted by a majority of the entire Board may
appoint an Executive Committee (and may discontinue the same at
any time) to consist of three or more directors of the
corporation to hold office during the pleasure of the Board. The
Executive Committee shall have and may exercise all the powers
and authority of the Board in the management of the business and
affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; but
no such Committee shall have the power or authority to: (a)
amend the Certificate of Incorporation of the corporation, except
that such committee may, to the extent authorized in a resolution
or resolutions providing for the issuance of shares of stock
adopted by the Board of Directors, fix the designations and any
of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such
shares for, shares of any other class or classes or any other
series of the same or any other class or classes of stock of the
corporation or fix the number of shares of any series of stock or
authorize the increase or decrease of the shares of any series;
(b) adopt an agreement of merger or consolidation; (c) recommend
to the stockholders the sale, lease, or exchange of all or
substantially all of the corporation's property and assets;
(d) recommend to the stockholders a dissolution of the
corporation or a revocation of a dissolution; (e) amend the
Bylaws; (F) declare a dividend; (g) authorize the issuance of
stock; or (h) adopt a certificate of ownership and merger.
Meetings of the Executive Committee may be called at any time by
the Chairman of the Board or the Chairman of the Executive
Committee or any two members of the Executive Committee. Two
members of the Executive committee shall constitute a quorum for
the transaction of business.
SECTION 4.2. Other Committees. The Board of Directors by
resolution passed by a majority of the entire Board may appoint
other Committees as may be deemed advisable and may terminate any
such Committee at any time. Each Committee shall have one or
more members who shall serve at the pleasure of the Board and
shall have such powers as may be provided by resolution of the
Board and permitted by the laws of the State of Delaware. Two
members of each of such Committees shall constitute a quorum for
the transaction of business except that when such a Committee
consists of one member, then one member shall constitute a
quorum.
SECTION 4.3. Designation, Powers, and Name. The Board of
Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or
disqualified member at any meeting of such committee. In the
absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting
and not disqualified from voting, whether or not he or they
constitute a quorum, may unanimously appoint another member of
the Board of Directors to act at the meeting in the place of any
such absent or disqualified member.
SECTION 4.4. Minutes. Each committee of directors shall
keep regular minutes of its proceedings and report the same to
the Board of Directors when required.
ARTICLE V
NOTICE
SECTION 5.1. Methods of Giving Notice. Whenever under the
provisions of the statutes, the Certificate of Incorporation or
these Bylaws, notice is required to be given to any director,
member of any committee, or stockholder, such notice shall be in
writing and delivered personally or mailed to such director,
member, or stockholder; provided that in the case of a director
or a member of any committee such notice may be given orally or
by telephone or telegram. If mailed, notice to a director,
member of a committee or stockholder shall be deemed to be given
when deposited in the United States mail first class in a sealed
envelope, with postage prepaid, addressed, in the case of a
director or a member of a committee, to such person at his last
known business address. If sent by telegraph, notice to a
director or member of a committee shall be deemed to be given
when the telegram, addressed to the director's or member's last
known business address, is delivered to the telegraph company.
SECTION 5.2. Written Waiver. Whenever any notice is
required under the provisions of the statutes, the Certificate of
Incorporation or these Bylaws, a waiver thereof in writing,
signed by the person or persons entitled to said notice, whether
before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE VI
OFFICERS
SECTION 6.1. Officers. The officers of the corporation
shall be a Chairman of the Board and a Vice Chairman of the Board
(if such offices are created by the Board), a President, one or
more Vice Presidents, any one or more of which may be designated
Executive Vice President, Senior Vice President, or Group Vice
President, a Secretary, and a Treasurer. The Board of Directors
may be resolution create the office of Vice Chairman of the Board
and define the duties of such office. The Board of Directors may
appoint such other officers and agents, including Assistant Vice
Presidents, Assistant Secretaries, and Assistant Treasurers, as
it shall deem necessary, who shall hold their offices for such
terms and shall exercise such powers and perform such duties as
shall be determined by the Board. Any two or more offices, other
than the offices of President and Secretary, may be held by the
same person. No officer shall execute, acknowledge, verify, or
countersign any instrument on behalf of the corporation in more
than one capacity, if such instrument is required by law, by
these Bylaws, or by any act of the corporation to be executed,
acknowledge, verified, or countersigned by two or more officers.
The Chairman and Vice Chairman of the Board shall be elected from
among the directors. With the foregoing exceptions, none of the
other officers need be a director, and none of the officers need
be a stockholder of the corporation.
SECTION 6.2. Election and Term of Office. The officers of
the corporation shall be elected annually by the Board of
Directors at its first regular meeting held after the annual
meeting of stockholders, or at any other regular or special
meeting of the Board of Directors. Each officer shall hold
office until his successor shall have been chosen and shall have
qualified or until his death or the effective date of his
resignation or removal, or until he shall cease to be a director
in the case of the Chairman and Vice Chairman.
SECTION 6.3. Removal and Resignation. Any officer or agent
elected or appointed by the Board of Directors may be removed
without cause by the affirmative vote of a majority of the Board
of Directors whenever, in its judgment, the best interest of the
corporation shall be served thereby, but such removal shall be
without prejudice to the contractual rights, if any, of the
person removed. Any officer may resign at any time by giving
written notice to the corporation. Any such resignation shall
take effect at the date of the receipt of such notice or at any
later time specified therein, and unless otherwise specified
therein, the acceptance of such resignation shall not be
necessary to make it effective.
SECTION 6.4. Vacancies. Any vacancy occurring in any
office of the corporation by death, resignation, removal, or
otherwise, may be filled by the Board of Directors for the
unexpired portion of the term.
SECTION 6.5. Salaries. The salaries of all officers and
agents of the corporation shall be fixed by the Board of
Directors or pursuant to its direction; and no officer shall be
prevented from receiving such salary by reason of his also being
a director.
SECTION 6.6. Chairman of the Board. The Chairman of the
Board (if such office is created by the Board) shall preside at
all meetings of the Board of Directors or of the stockholders of
the corporation. In the Chairman's absence, such duties shall be
attended to by the Vice Chairman of the Board. The Chairman
shall formulate and submit to the Board of Directors or the
Executive Committee matters of general policy of the corporation
and shall perform such other duties as usually appertain to the
office or as may be prescribed by the Board of Directors or the
Executive Committee.
SECTION 6.7. President. The President shall be the chief
executive officer of the corporation and, subject to the control
of the Board of Directors, shall in general supervise and control
the business and affairs of the corporation. In the absence of
the Chairman of the Board or the Vice Chairman of the board (if
such offices are created by the Board), the President shall
preside at all meetings of the Board of Directors and of the
stockholders. He may also preside at any such meeting attended by
the Chairman or Vice Chairman of the Board if he is so designated
by the Chairman, or in the Chairman's absence by the Vice
Chairman. He shall have the power to appoint and remove
subordinate officers, agents, and employees, except those elected
or appointed by the Board of Directors. The President shall keep
the Board of Directors and the Executive Committee fully informed
and shall consult them concerning the business of the
corporation. He may sign with the Secretary or any other officer
of the corporation thereunto authorized by the Board of
Directors, certificates for shares of the corporation and any
deeds, bonds, mortgages, contracts, checks, notes, drafts, or
other instruments which the Board of Directors has authorized,
except in cases where the signing and executing thereof has been
expressly delegated by these Bylaws or by the Board of Directors
to some other officer or agent of the corporation, or shall be
required by law to be otherwise executed. He shall vote, or give
a proxy to any other officer of the corporation to vote, all
shares of stock of any other corporation standing in the name of
the corporation and in general he shall perform all other duties
normally incident to the office of President and such other
duties as may be prescribed by the stockholders, the Board of
Directors or the Executive Committee from time to time.
SECTION 6.8. Vice Presidents. In the absence of the
President, or in the event of his inability or refusal to act,
the Executive Vice President (or in the event there shall be no
Vice President designated Executive Vice President, any Vice
President designated by the Board) shall perform the duties and
exercise the powers of the President. Any Vice President may
sign, with the Secretary or Assistant Secretary, certificates for
shares of the corporation. The Vice Presidents shall perform
such other duties as from time to time may be assigned to them by
the President, the Board of Directors, or the Executive
Committee.
SECTION 6.9. Secretary. The Secretary shall (a) keep the
minutes of the meetings of the stockholders, the Board of
Directors, and committees of directors; (b) see that all notices
are duly given in accordance with the provisions of these Bylaws
and as required by law; (c) be custodian of the corporate records
and of the seal of the corporation, and see that the seal of the
corporation or a facsimile thereof is affixed to all certificates
for shares prior to the issue thereof and to all documents, the
execution of which on behalf of the corporation under its seal is
duly authorized in accordance with the provisions of these
Bylaws; (d) keep or cause to be kept a register of the post
office address of each stockholder which shall be furnished by
such stockholder; (e) sign with the President, or any Executive
Vice President or Vice President, certificates for shares of the
corporation, the issue of which shall have been authorized by
resolution of the Board of Directors; (f) have general charge of
the stock transfer books of the corporation; and (g) in general,
perform all duties assigned to him by the President, the Board of
Directors, or the Executive Committee.
SECTION 6.10. Treasurer. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine. He shall
(a) have charge and custody of and be responsible for all funds
and securities of the corporation; receive and give receipts for
moneys due and payable to the corporation from any source
whatsoever and deposit all such moneys in the name of the
corporation in such banks, trust companies, or other depositories
as shall be selected in accordance with the provisions of Section
7.3. of these Bylaws; (b) prepare, or cause to be prepared, for
submission at each regular meeting of the Board of Directors, at
each annual meeting of the stockholders, and at such other times
as may be required by the Board of Directors, the President, or
the Executive Committee, a statement of financial condition of
the corporation in such detail as may be required; and (c) in
general, perform all the duties incident to the office of
Treasurer and such other duties as from time to time may be
assigned to him by the President, the Board of Directors, or the
Executive Committee.
SECTION 6.11. Assistant Secretary or Treasurer. The
Assistant Secretaries and Assistant Treasurers shall, in general,
perform such duties as shall be assigned to them by the Secretary
or the Treasurer, respectively, or by the President, the Board of
Directors, or the Executive Committee. The Assistant Secretaries
and Assistant Treasurers shall, in the absence of the Secretary
or Treasurer, respectively, perform all functions and duties
which such absent officers may delegate, but such delegation
shall not relieve the absent officer from the responsibilities of
his office. The Assistant Secretaries may sign, with the
President or a Vice President, certificates for shares of the
corporation, the issue of which shall have been authorized by a
resolution of the Board of Directors. The Assistant Treasurers
shall respectively, if required by the Board of Directors, give
bonds for the faithful discharge of their duties in such sums and
with such sureties as the Board of Directors shall determine.
ARTICLE VII
CONTRACTS, CHECKS, AND DEPOSITS
SECTION 7.1. Contracts. Subject to the provisions of
Section 6.1., the Board of Directors may authorize any officer,
officers, agent or agents, to enter into any contract or execute
and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to
specific instances.
SECTION 7.2. Checks, etc. All checks, demands, drafts, or
other orders for payment of money, notes, or other evidences of
indebtedness issued in the name of the corporation, shall be
signed by such officer or officers or such agent or agents of the
corporation, and in such manner, as shall be determined by the
Board of Directors.
SECTION 7.3. Deposits. All funds of the corporation not
otherwise employed shall be deposited from time to time to the
credit of the corporation in such banks, trust companies, or
other depositories as the Board of Directors may select.
ARTICLE VIII
CERTIFICATES OF STOCK
SECTION 8.1. Issuance. Each stockholder of this
corporation shall be entitled to a certificate or certificates
showing the number of shares of stock registered in his name on
the books of the corporation. The certificates shall be in such
form as may be determined by the Board of Directors, shall be
issued in numerical order and shall be entered in the books of
the corporation as they are issued. They shall exhibit the
holder's name and number of shares and shall be signed by the
President or a Vice President and by the Secretary or an
Assistant Secretary. Any of or all of the signatures on the
certificate may be facsimiles. If the corporation shall
authorize to issue more than one class of stock or more than one
series of any class, the designations, preferences, and relative
participating, optional, or other special rights of each class of
stock or series thereof and the qualifications, limitations, or
restrictions of such preferences and rights shall be set forth in
full or summarized on the face or back of the certificate which
the corporation shall issue to represent such class of stock;
provided that, except as otherwise provided by statute, in lieu
of the foregoing requirements there may be set forth on the face
or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the
corporation will furnish to each stockholder who so requests the
designations, preferences, and relative, participating, optional,
or other special rights of each class of stock or series thereof
and the qualifications, limitations, or restrictions of such
preferences and rights. All certificates surrendered to the
corporation for transfer shall be canceled and no new certificate
shall be issued until the former certificate for a like number of
shares shall have been surrendered and canceled, except that in
the case of a lost, stolen, destroyed, or mutilated certificate,
a new one may be issued therefor upon such terms and with such
indemnity, if any, to the corporation as the Board of Directors
may prescribe. Certificates shall not be issued representing
fractional shares of stock.
SECTION 8.2. Lost Certificates. The Board of Directors may
direct a new certificate or certificates to be issued in place of
any certificate or certificates theretofore issued by the
corporation alleged to have been lost, stolen, or destroyed, upon
the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the
Board of Directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such
lost, stolen, or destroyed certificate or certificates, or his
legal representative, to advertise the same in such manner as it
shall require or to give the corporation a bond in such sum as it
may direct as indemnity against any claim that may be made
against the corporation with respect to the certificate or
certificates alleged to have been lost, stolen, or destroyed.
SECTION 8.3. Transfers. Upon surrender to the corporation
or the transfer agent of the corporation of a certificate for
shares duly endorsed or accompanied by proper evidence of
succession, assignment, or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person
entitled thereto, cancel the old certificate, and record the
transaction upon its books. Transfers of shares shall be made
only on the books of the corporation by the registered holder
thereof, or by his attorney thereunto authorized by power of
attorney and filed with the Secretary of the corporation or the
transfer agent.
SECTION 8.4. Registered Stockholders. The corporation
shall be entitled to treat the holder of record of any share or
shares of stock as the holder in fact thereof, and, accordingly,
shall not be bound to recognize any equitable or other claim to
or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice
thereof, except as otherwise provided by the laws of the State of
Delaware.
SECTION 8.5. Stockholders' Addresses. Every stockholder
transferee shall furnish the Secretary or a transfer agent with
the address to which notice of meetings and all other notices may
be served upon or mailed to him, and in default thereof, he shall
not be entitled to service or mailing of any such notice.
ARTICLE IX
DIVIDENDS
SECTION 9.1. Declaration. Dividends upon the capital stock
of the corporation, subject to the provisions of the Certificate
of Incorporation, if any, may be declared by the Board of
Directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of
capital stock, subject to the provisions of the Certificate of
Incorporation.
SECTION 9.2. Reserve. Before payment of any dividend,
there may be set aside out of any funds of the corporation
available for dividends such sum or sums as the Board of
Directors from time to time, in their absolute discretion, think
proper as a reserve or reserves to meet contingencies, or for
equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the
Board of Directors shall think conducive to the interest of the
corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.
ARTICLE X
INDEMNIFICATION
SECTION 10.1. Third Party Actions. The corporation shall
indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending, or completed action,
suit, or proceeding, whether civil, administrative, or
investigative (other than an action by or in the right of the
corporation) by reason of the fact that he is or was a director,
officer, employee, or agent of the corporation, or is, or was
serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint
venture, trust, or other enterprise, against expenses (including
attorneys' fees), judgments, fines, and amounts paid in
settlement actually and reasonably incurred by him in connection
with such action, suit, or proceeding if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to
the best interest of the corporation, and with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful. The termination of any action, suit,
or proceeding by judgment, order, settlement, or conviction, or
upon a plea of nolo contendere or its equivalent, shall not, of
itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or
not opposed to the best interests of the corporation, with
respect to any criminal action or proceeding, had reasonable
cause to believe that his conduct was unlawful.
SECTION 10.2. Actions by or in the Right of the Corporation.
The corporation shall indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending,
or completed action or suit by or in the right of the corporation
to procure a judgment in its favor by reason of the fact that he
is or was a director, officer, employee, or agent of the
corporation, or is or was serving at the request of the
corporation as a director, officer, employee, or agent of another
corporation, partnership, joint venture, trust, or other
enterprise against expenses (including attorneys' fees) actually
and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no
indemnification shall be made in respect of any claim, issue, or
matter as to which such person shall have been adjudged to be
liable unless and only to the extent that the Court of Chancery
or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such
expenses which the Court of Chancery or such other court shall
deem proper.
SECTION 10.3. Determination of Conduct. The determination
that an officer, director, employee, or agent, has met the
applicable standard of conduct set forth in Sections 10.1. and
10.2. (unless indemnification is ordered by a court) shall be
made (a) by the Board of Directors by a majority vote of a quorum
consisting of Directors who were not parties to such action,
suit, or proceeding, or (b) if such quorum is not obtainable, or
even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or
(c) by the stockholders.
SECTION 10.4. Payment of Expenses in Advance. Expenses
incurred in defending a civil or criminal action, suit, or
proceeding shall be paid by the corporation in advance of the
final disposition of such action, suit, or proceeding upon
receipt of an undertaking by or on behalf of the director,
officer, employee, or agent to repay such amount if it shall
ultimately be determined that he is not entitled to be
indemnified by the corporation as authorized in this Article X.
SECTION 10.5. Indemnity Not Exclusive. The indemnification
and advancement of expenses provided by or granted hereunder
shall not be deemed exclusive of any other rights to which those
seeking indemnification and advancement of expenses may be
entitled under any other bylaw, agreement, vote of stockholders,
or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while
holding such office, and shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to
be a director, officer, employee, or agent and shall inure to the
benefit of the heirs, executors, and administrators of such a
person.
SECTION 10.6. Insurance. The corporation may purchase and
maintain insurance on behalf of any person who is or was a
director, officer, employee, or agent of the corporation, or is
or was serving at the request of the corporation as a director,
officer, employee, or agent of another corporation, partnership,
joint venture, trust, or other enterprise against any liability
asserted against him and incurred by him in any such capacity, or
arising out of his status as such, whether or not the corporation
would have the power to indemnify him against such liability
under the provisions of this Article X of the Bylaws.
SECTION 10.7. Constituent Corporation. For the purposes of
Article X, reference to "the corporation" include all constituent
corporations absorbed in a consolidation or merger as well as the
resulting or surviving corporation so that any person who is or
was a director, officer, employee, or agent of such a constituent
corporation or is or was serving at the request of such
constituent corporation as a director, officer, employee, or
agent of any other corporation, partnership, joint venture,
trust, or other enterprise shall stand in the same position under
the provisions of this Article X with respect to the resulting or
surviving corporation in the same capacity.
ARTICLE XI
DIVISIONAL ORGANIZATION AND DIVISION OFFICERS
SECTION 11.1. Divisional Organization. The President of
the corporation, in the exercise of his discretion, shall have
the authority to organize any of the separate businesses and
subsidiaries of the corporation into one or more operating
groups, any of which may be designated as a "Division" of the
corporation for all purposes. The creation of any such division
and the designation of its composition and internal
administrative structure may be accomplished, altered, or
reversed by directive of the President.
SECTION 11.2. Division Officers. Upon the formation of a
Division of the corporation, whether such shall be composed of
one or more corporate subsidiaries or otherwise, the President
may appoint individual employees of the corporation, the
principal scope of whose employment shall be limited to that of
such Division, to serve as "Division Officers," having such
respective titles, duties, powers, and responsibilities as the
President may specify. Division Officers may include a Division
President, Division Vice Presidents, and such other positions as
the President shall deem necessary and appropriate. No Division
Officer shall be deemed to be an officer of the corporation,
within the contemplation of Article VI of these Bylaws, unless he
shall be appointed as such by resolution of the Board of
Directors. Any Division Officer appointed by the President may
be removed by the President at his discretion.
ARTICLE XII
MISCELLANEOUS
SECTION 12.1. Seal. The corporation seal shall have
inscribed thereon the name of the corporation, and the words
"Seal, Delaware." The seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise
reproduced.
SECTION 12.2. Books. The books of the corporation may be
kept (subject to any provision contained in the statutes) outside
the State of Delaware at the offices of the corporation at
Austin, Texas, or at such other place or places as may be
designated from time to time by the Board of Directors.
ARTICLE XIII
AMENDMENT
These Bylaws may be altered, amended, or repealed at any
regular meeting of the Board of Directors without prior notice,
or at any special meeting of the Board of Directors if notice of
such alteration, amendment, or repeal be contained in the notice
of such special meeting, by a majority vote of the entire Board
of Directors.
/s/
Michael G. Semmens, President
/s/
Audrey T. Dearing, Secretary
APPENDIX
BYLAW REVISION
Revision
Date
Before Amendment:
SECTION 3.2. Number and Qualifications.
"No person shall be eligible to stand for election as a director:
(1) who shall have attained the age of seventy (70) or,
(2) who, except in the case of a former Chief Executive Officer of
the Company........"
After Amendment:
SECTION 3.2. Number and Qualifications.
"No person shall be eligible to stand for election as a director Bd. Dir.
who, except in the case of a former Chief Executive Officer 90/02/13
of the Company...." Sharehlds.
90/05/24
Before Amendment:
SECTION 6.7. President. The President shall be the chief executive
officer of the corporation and, subject to the control of the Board
of Directors, shall in general supervise and control the business
and affairs of the corporation. In the absence of the Chairman
of the board or the Vice Chairman of the Board (if such offices
are created by the Board), the President shall preside at all
meetings of the Board of Directors and of the stockholders. He
may also preside at any such meeting attended by the Chairman
or Vice Chairman of the Board if he is so designated by the
Chairman, or in the Chairman's absence by the Vice Chairman.
He shall have the power to appoint and remove subordinate
officers, agents, and employees, except those elected or
appointed by the Board of Directors. The President shall keep
the Board of Directors and the Executive Committee fully informed
and shall consult them concerning the business of the corporation.
He may sign with the Secretary or any other officer of the
corporation thereunto authorized by the Board of Directors,
certificates for shares of the corporation and any deeds, bonds,
mortgages, contracts, checks, notes, drafts, or other instruments
which the Board of Directors has authorized, except in cases where
the signing and executing thereof has been expressly delegated by
these Bylaws or by the board of Directors to some other officer
or agent of the corporation, or shall be required by law to be
otherwise executed. He shall vote, or give a proxy to any other
officer of the corporation to vote, all shares of stock of any
other corporation standing in the name of the corporation and in
general he shall perform all other duties normally incident to
the office of President and such other duties as may be prescribed
by the stockholders, the Board of Directors or the Executive
Committee from time to time.
SECTION 6.8. Vice Presidents. In the absence of the President, or
in the event of his inability or refusal to act, the Executive
Vice President (or in the event there shall be no Vice President
designated Executive Vice President, any Vice President designated
by the Board) shall perform the duties and exercise the powers of
the President. Any Vice President may sign, with the Secretary or
Assistant Secretary, certificates for shares of the corporation.
The Vice Presidents shall perform such other duties as from time
to time may be assigned to them by the President, the Board of
Directors, or the Executive Committee.
After Amendment:
SECTION 6.7. President. The President shall have the title "Chief Bd. Dir.
Executive Officer" of the corporation and, subject to the 93/11/03
control of the Board of Directors, shall in general (subject to
any express delegation to any other officer by these Bylaws or
by the Board of Directors of any one or more duties normally
performed by a chief executive officer) supervise and control the
business and affairs of the corporation. In the absence of the
Chairman of the Board of the Vice Chairman of the board (if such
offices are created by the Board), the President shall preside
at all meetings of the Board of Directors and of the stockholders.
He may also preside at any such meeting attended by the Chairman
or Vice Chairman of the Board if he is so designated by the
Chairman, or in the Chairman's absence by the Vice Chairman. He
shall have the power to appoint and remove subordinated officers,
agents, and employees, except those elected or appointed by the
Board of Directors. The President shall keep the Board of
Directors and the Executive Committee fully informed and shall
consult them concerning the business of the corporation. He
may sign with the Secretary or any other officer of the corporation
thereunto authorized by the Board of Directors, certificates for
shares of the corporation and any deeds, bonds, mortgages, contracts,
checks, notes, drafts, or other instruments which the Board
of Directors has authorized to be executed, except in cases where
the signing and executing thereof has been expressly delegated by
these Bylaws or by the Board of Directors to some other officer
or agent of the corporation, or shall be required by law to be
otherwise executed. He shall perform all other duties as may be
prescribed by the stockholders, the Board of Directors or the
Executive Committee from time to time. The President shall
oversee the marketing and sales efforts of the corporation, make
recommendations to the Board of Directors with respect to new
products for evaluation, and coordinate the efforts of the Vice
President in charge of Business Development as such efforts
relate to marketing matters.
SECTION 6.8. Vice Presidents. In the absence of the President,
or in the event of his inability or refusal to act, the
Executive Vice President (or in the event there shall be no
Vice President designated by the Board) shall perform the
duties and exercise the powers of the President. Any Vice
President may sign, with the Secretary or Assistant Secretary,
certificates for shares of the corporation. The Vice
Presidents shall perform such other duties as from time to
time may be assigned to them by the Board of Directors.
The Board of Directors may designate an Executive Vice
President who shall have the title "Chief Operating Officer"
of the corporation. The Executive Vice President shall,
subject to the control of the Board of Directors, oversee
all operations of the corporation in the areas of technology
development, project management, accounting, contract
administration, personnel, purchasing and facilities. The
Executive Vice President shall report to the President, and
shall consult with and advise the Board of Directors and the
Executive Committee directly with respect to matters within
the above-listed areas of authority in order that the Board
of Directors and the Executive Committee shall be kept fully
informed with respect to such matters. The Executive Vice
President shall have the power to appoint and remove subordinate
officers, agents, and employees whose responsibilities fall
within such areas of authority, except those elected or
appointed by the Board of Directors. The Executive Vice
President shall perform all other duties as may be prescribed
or assigned by the stockholders or the Board of Directors from
time to time.
Before Amendment:
SECTION 6.7. President. The President shall have the title
"Chief Executive Officer" of the corporation and, subject
to the control of the Board of Directors, shall in general
(subject to any express delegation to any other officer by
these Bylaws or by the Board of Directors of any one or
more duties normally performed by a chief executive officer)
supervise and control the business and affairs of the
corporation. In the absence of the Chairman of the Board
or the Vice Chairman of the board (if such offices are
created by the Board), the President shall preside at all
meetings of the Board of Directors and of the stockholders.
He may also preside at any such meeting attended by the
Chairman or Vice Chairman ofthe Board if he is so designated
by the Chairman, or in the Chairman's absence by the Vice
Chairman. He shall have the power to appoint and remove
subordinated officers, agents, and employees, except those
elected or appointed by the Board of Directors. The President
shall keep the Board of Directors and the Executive Committee
fully informed and shall consult them concerning the business
of the corporation. He may sign with the Secretary or any
other officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation
and any deeds, bonds, mortgages, contracts, checks, notes,
drafts, or other instruments which the Board of Directors has
authorized to be executed, except in cases where the signing
and executing thereof has been expressly delegated by these
Bylaws or by the Board of Directors to some other officer or
agent of the corporation, or shall be required by law to be
otherwise executed. He shall perform all other duties as may
be prescribed by the stockholders, the Board of Directors or
the Executive Committee from time to time. The President
shall oversee the marketing and sales efforts of the
corporation, make recommendations to the Board of Directors
with respect to new products for evaluation, and coordinate
the efforts of the Vice President in charge of Business
Development as such efforts relate to marketing matters.
SECTION 6.8. Vice Presidents. In the absence of the President,
or in the event of his inability or refusal to act, the
Executive Vice President (or in the event there shall be
no Vice President designated Executive Vice President, any
Vice President designated by the Board) shall perform the
duties and exercise the powers of the President. Any Vice
President may sign, with the Secretary or Assistant Secretary,
certificate for shares of the corporation. The Vice
Presidents shall perform such other duties as from time to
time may be assigned to them by the Board of Directors. The
Board of Directors may designate an Executive Vice President
who shall have the title "Chief Operating Officer" of the
corporation. The Executive Vice President shall, subject to
the control of the Board of Directors, oversee all operations
of the corporation in the areas of technology development,
project management, accounting, contract administration,
personnel, purchasing and facilities. The Executive Vice
President shall report to the President, and shall consult
with and advise the Board of Directors and the Executive
Committee directly with respect to matters within the above-
listed areas of authority in order that the Board of Directors
and the Executive Committee shall be kept fully informed with
respect to such matters. The Executive Vice President shall
have the power to appoint and remove subordinate officers,
agents, and employees whose responsibilities fall within such
areas of authority, except those elected or appointed by the
Board of Directors. The Executive Vice President shall
perform all other duties as may be prescribed or assigned by
the stockholders or the Board of Directors from time to time.
After Amendment:
SECTION 6.7. President. The President shall be the chief Bd. Dir.
executive officer of the corporation and, subject to the 94/06/23
control of the Board of Directors, shall in general supervise
and control the business and affairs of the corporation.
In the absence of the Chairman of the Board or the Vice
Chairman of the board (if such offices are created by the
Board), the President shall preside at all meetings of the
Board of Directors and of the stockholders. He may also
preside at any such meeting attended by the Chairman or
Vice Chairman of the Board if he is so designated by the
Chairman, or in the Chairman's absence by the Vice Chairman.
He shall have the power to appoint and remove subordinate
officers, agents, and employees, except those elected or
appointed by the Board of Directors. The President shall
keep the Board of Directors and the Executive Committee
fully informed and shall consult them concerning the business
of the corporation. He may sign with the Secretary or any
other officer of the corporation thereunto authorized by the
Board of Directors, certificates for shares of the corporation
and any deeds, bonds, mortgages, contracts, checks, notes,
drafts, or other instruments which the Board of Directors
has authorized, except in cases where the signing and
executing thereof has been expressly delegated by these
Bylaws or by the Board of Directors to some other officer
or agent of the corporation, or shall be required by law
to be otherwise executed. He shall vote, or give a proxy
to any other officer of the corporation to vote, all shares
of stock of any other corporation standing in the name of
the corporation and in general he shall perform all other
duties normally incident to the office of President and such
other duties as may be prescribed by the stockholders, the
Board of Directors or the Executive Committee from time to time.
SECTION 6.8. Vice Presidents. In the absence of the President, or
in the event of his inability or refusal to act, the Executive
Vice President (or in the event there shall be no Vice President
designated Executive Vice President, any Vice President
designated by the Board) shall perform the duties and exercise
the powers of the President. Any Vice President may sign,
with the Secretary or Assistant Secretary, certificates for
shares of the corporation. The Vice Presidents shall perform
such other duties as from time to time may be assigned to them
by the President, the Board of Directors, or the Executive Committee.
EXHIBIT 4.9
December 18, 1996
Steve Pickens, Vice President
Ally Capital Markets Group
Marina Plaza
2330 Marinship Way, Suite 300
Sausalito, California 94965-2853
RE: Prepayment of Lessors
Dear Steve:
Here is a further revised proposal for your consideration on
behalf of Environmental Allies, NV and Environmental Allies
International, NV ("Purchasers").
Electrosource (the "Company") offers to prepay the Lease of April
6, 1995 ("Lease") consisting of Lease Schedules 1871001, 1872001
and 1872002. The Company will issue and deliver shares of
unregistered common stock to Ally on behalf of the Purchasers, in
an amount calculated to be sufficient to satisfy all obligations
under the Lease as of February 1, 1997, being 160,000 shares
based upon the market price as of this date of $6.75 per share,
less associated costs. The number of shares may be adjusted to
the date of delivery of the shares to account for changes in
market value of the shares and anticipated lease payments. The
Company will file a registration statement on Form S-3 to permit
the sale of such shares by Ally on behalf of the Purchasers (see
"Registration Rights" below). The Company will use its best
reasonable efforts to file an S-3 within 20 days after issue of
the shares. All proceeds from the sale of the shares shall be
credited against The Company's obligations as set out in
Attachment A hereto as of December 1, 1996. If the sale of such
shares results in proceeds of less than the amount necessary to
satisfy all such obligations, then The Company shall, at its
option, issue additional shares of unregistered common stock to
Ally on behalf of the Purchasers in the amount of the deficiency,
and promptly undertake to register such additional shares for
sale, or pay the deficiency in cash. If Ally realizes more from
the sale of the shares than the amount due, the surplus shall be
for the Purchasers' account.
Upon receipt and application by Ally on behalf of the Purchasers
of the net proceeds from sale of the shares in an amount
sufficient to fully satisfy all obligations, the Lease will be
deemed paid in full and The Company will be the owner of the
equipment, free and clear of any and all liens or charges arising
by, through or under Ally or the Purchasers. Electrosource shall
continue to be responsible for and continue to make payments
under the lease until Ally has received and applied net proceeds
from the sale of shares equal to the obligations then
outstanding, after taking into account lease payments received in
the normal course of business. Ally shall immediately apply all
proceeds received. Ally and Purchasers shall promptly thereafter
release or cause to be released their respective interests, if
any, in all collateral and security interests, if any, in such
equipment. Proportionate releases of part or all of the
collateral may be made in Ally's discretion prior to satisfaction
in full of all amounts due and applied net.
The balance of this letter deals with the details of the issue,
registration and sale of the common stock and representations
necessary to carry out the transactions.
THE OFFERING OF SECURITIES OF ELECTROSOURCE, INC. HEREUNDER HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), IN RELIANCE UPON THE AVAILABILITY OF
EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 4(2) OF SAID ACT
AND REGULATION D OF THE GENERAL RULES AND REGULATIONS PROMULGATED
THEREUNDER. THERE ARE SUBSTANTIAL RESTRICTIONS UPON TRANSFER OF
THE SECURITIES. ACCORDINGLY, THE SECURITIES ARE NOT FREELY
TRANSFERABLE AND MAY HAVE TO BE HELD UNTIL TRANSFER MAY BE MADE
PURSUANT TO A REGISTERED TRANSACTION OR AN EXEMPTION FROM
REGISTRATION.
1. Company Representations.
(a) Corporate Power. The Company has all requisite legal
and corporate power to execute and deliver this Agreement,
and all requisite and legal corporate power to sell and
issue the common stock ("Shares") and to carry out and
perform its obligations under the terms of this Agreement.
(b) Authorization. All corporate action on the part of The
Company necessary for the authorization, execution, delivery
and performance of this Agreement, the authorization, sale,
issuance and delivery of the Shares and the performance of
the company's obligations hereunder has been taken or will
be taken prior to issuance of the shares. This Agreement,
when executed and delivered, shall constitute the valid and
binding obligation of the Company, enforceable in accordance
with its terms, subject to laws of general application
relating to bankruptcy, insolvency and the relief of
debtors, rules of law governing specific performance,
injunctive relief or other equitable remedies, and
limitations of public policy. The Shares, issued in
compliance with the provisions of this Agreement, will be
validly issued, fully paid and non-assessable and free of
any liens or encumbrances; provided, however, that the
Shares are subject to restrictions on transfer under state
and/or federal securities laws as set forth herein. The
shares are not subject to any preemptive rights or rights of
first refusal.
2. Purchasers and Ally Representations.
The Purchasers and Ally hereby represent and warrant to the
Company as follows, and acknowledges and agrees that the Company
will rely upon such representations and warranties in accepting
the subscription of the undersigned for the purchase of the
shares:
(a) The Purchasers are each an "Accredited Investor," as
such term is defined in Rule 501 promulgated under the
Securities Act, which is a corporation, Massachusetts or
similar business trust, or partnership, not formed for the
specific purpose of acquiring the Shares, with total assets
in excess of $5,000,000. The proposed investment of the
Purchasers in the securities of the Company represents less
than 20% of the each Purchaser's net worth.
(b) No representations or warranties have been made to the
Purchasers or Ally by the Company, or any agent, employee or
affiliate of the Company, and in entering into this
transaction the Purchasers and Ally are not relying upon any
information other than the information contained in the
documents and reports filed by the Company with the
Securities and Exchange Commission under the Securities
Exchange Act of 1934 (the "SEC filings"), or resulting from
their own independent investigation. The Purchasers and
Ally, before the date hereof, have had an opportunity to ask
questions and receive answers from the Company or a person
or persons acting on its behalf, concerning the terms and
conditions of this investment and has had an opportunity to
examine all applicable documents and such applicable
information as specified in Schedule A to the Securities
Act, to the extent such documents and information are
relevant to this transaction and are possessed by the
Company or are obtainable by the Company without
unreasonable effort or expense, and all such questions have
been answered and documents and information have been
supplied to the full satisfaction of the Purchasers and
Ally.
(c) The Purchasers and Ally are aware that:
(i) there are substantial risks incident to an
investment in the Common Stock of the Company (the
"Shares"), and such investment is speculative and
involves a high degree of risk of loss of its entire
investment in the Company;
(ii) no Federal or State agency has passed upon the
sale of the Shares or made any finding or determination
concerning the fairness of this investment, and the
terms of the offering may not conform to the guidelines
of certain state securities administrators;
(iii) the Company has and may continue to have a
significant need for cash for operating expenses and
other purposes; that the aggregate proceeds from the
sale of the Shares alone may not be sufficient to
satisfy the cash requirements of the Company for any
appreciable period of time; that other sources of funds
may not be available;
(iv) the industry in which the Company is engaged is
occupied by several firms, some of which will be
substantially greater in size and have financial
resources and personnel staff larger and more
established than those of the Company, and there can be
no assurance that the Company will be able to compete
in the market effectively;
(d) The Purchasers and Ally understand that an investment
in the Company is an illiquid investment and further
recognizes and agrees that because the Shares have not been
registered under applicable securities laws or an exemption
from such registration is available, the Purchasers and Ally
must bear the economic risk of the investment for an
indefinite period of time. The Purchasers and Ally further
acknowledge that each certificate representing Shares will
bear a legend to the effect that the Shares have not been
registered under any securities law and setting forth or
referring to the restrictions on transferability and sale of
the shares. The Purchasers and Ally further acknowledge
that the Company will issue stop transfer orders to its
transfer agent restricting transfer of the Shares in the
absence of registration under the securities laws or
exemption therefrom.
(e) The Purchasers and Ally acknowledge awareness that
there are substantial restrictions on the transferability of
the Shares. Unless the Shares are registered under the
Securities Act and any applicable state securities law, the
Shares may not be, and the Purchasers and Ally agrees that
they shall not be, sold unless such sale is exempt from such
registration under the Securities Act and any other
applicable state blue sky laws or regulations. The
Purchasers and Ally further acknowledge that the Company is
under no obligation to aid it in obtaining any exemption
from the registration requirements. The Purchasers and Ally
also acknowledge responsibility for compliance with all
conditions on transfer imposed by any securities
administrator of any state.
(f) The Purchasers and Ally are acquiring the Shares for
which Purchasers hereby subscribe for their own account, as
principal, and not for the account of any other person.
(g) Ally Capital Corporation, in executing this letter
agreement on behalf of the Purchasers, represents and
warrants in its individual capacity, and not as agent for
the Purchasers, that it has all necessary power and
authority to execute this letter agreement on behalf of the
Purchasers, and that the Purchasers will be legally bound
hereby.
3. Registration Rights.
(a) The Company agrees to file a registration statement on
Form S-3 under the Securities Act of 1933, as amended (the
OSecurities ActO) covering the sale of the shares of Common
Stock sold to the Purchasers pursuant to the Offering. Such
registration statement will be applicable only to sales by
the Purchasers of Shares purchased in the Offering made
through registered broker-dealers at market prices
prevailing at the time of sale, although the Company may
elect to include in the registration securities to be
registered for the account of selling shareholders other
than the Purchasers. The obligation of the Company to effect
the registration of the Shares may at the election of the
Company be accomplished through the filing of a new
registration statement or through the amendment of a then-
currently filed registration statement to include the Shares
so long as such registration statement remains current for
the time period set forth in paragraph (b)(ii) below.
(b) In connection with the registration of Shares
undertaken by the Company pursuant to this paragraph 3, the
Company shall:
(i) promptly prepare and file with the Securities and
Exchange Commission (the OCommissionO) a registration
statement on Form S-3 with respect to such shares, and
thereafter and use its reasonable best efforts to cause
such registration statement to become effective;
(ii) prepare and file with the Commission such
amendments and supplements to such registration
statement and the prospectus used in connection
therewith as may be necessary to keep such registration
statement current at any time that sales are proposed
to be made thereunder for a period expiring one hundred
twenty (120) days after the date that such registration
statement is declared to be effective by the
Commission.
(iii) provide Purchasers a reasonable opportunity
to review prior to filing the registration statement
and any amendments or supplements to such registration
statement and any prospectus used in connection
therewith;
(iv) furnish to Purchasers such number of conformed
copies of such registration statement and of each such
amendment and supplement thereto (in each case
including all exhibits), such number of copies of the
prospectus included in such registration statement
(including each preliminary prospectus and prospectus
supplement), in conformity with the requirements of the
Securities Act, and such other documents as Purchasers
may reasonably request in order to facilitate the sale
of the Shares covered by such registration statement;
(v) notify Purchasers at any time when a prospectus
relating to the Shares covered by such registration
statement is required to be delivered under the
Securities Act, of the CompanyOs becoming aware that
the prospectus included in such registration statement,
as then in effect, includes an untrue statement of a
material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing, and at the request of
Purchasers promptly prepare and furnish to Purchasers a
reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter
delivered to the Purchasers of such shares, such
prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required
to be stated therein or necessary to make the
statements therein not misleading in light of the
circumstances then existing; and
(vi) use its best efforts to cause all of the Shares by
such registration statement to be accepted for
quotation on NASDAQ.
(c) In connection with any registration pursuant to this
paragraph 3, the Company shall pay all registration and
filing fees, printing expenses, fees and disbursements of
the CompanyOs legal counsel and accountants, and transfer
agentsO and registrarsO fees. Purchasers shall pay all
underwriting discounts, commissions and expenses
attributable to the sale of the Shares and all fees and
disbursements of Purchasers' legal counsel and accountants.
(d) At least ten days prior to making any offer or sale of
Shares pursuant to the registration statement, the
Purchasers shall advise the Company that the Purchasers
propose to make offers or sales of Shares, the number of
Shares proposed to be offered and sold, the name and address
of each broker or dealer to or through which such offers and
sales are proposed to be made, and the approximate period of
time in which such offers and sales are proposed to be made.
If, in the reasonable judgment of the Company, it is
necessary to amend or supplement the registration statement
or the prospectus contained therein (the OprospectusO) prior
to or in connection with any such offer or sale or during
the period any such offer or sale is being made, the Company
will advise the Purchasers, who shall promptly notify each
broker or dealer named by the Purchasers as participating in
the offer or sale of Shares by the Purchasers. The
Purchasers and each broker or dealer participating in the
offer or sale of Shares by the Purchasers shall not make any
offer or sale of Shares until the expiration of ten business
days after such Purchaser has advised the Company that it
proposes to make such offers and sales and, following such
ten-day period, shall offer and sell Shares only during the
period specified by such Purchaser in the notice given to
the Company. Notwithstanding the foregoing, if the Company
shall advise the Purchasers of its determination that it is
necessary to amend or supplement the registration statement
or prospectus, the Purchasers and each broker or dealer
participating in the offer and sale of Shares by the
Purchasers shall make no offers or sales of Shares until the
Company notifies the Purchasers that such supplement has
been filed with or that such amendment has been declared
effective by the Commission. Purchasers shall promptly
notify the Company of each sale of Shares and shall promptly
notify the Company when the sale or other distribution of
all Shares held by the Purchasers have been completed.
(e) The Purchasers hereby represent and warrant to the
Company that no broker, dealer, Underwriter, Prospective
Underwriter, Affiliated Purchasers or other person who has
agreed to Participate or is Participating in the
Distribution contemplated hereby on behalf of or at the
direction of such Purchasers, shall directly or indirectly,
by the use of any means or instrumentality of interstate
commerce, or of the mails, or of any facility of any
national securities exchange, either alone or with one or
more other persons, bid for or purchase for any account in
which he has a beneficial interest, any shares of Common
Stock, or any right to purchase shares of Common Stock, or
attempt to induce any person to purchase any shares of
Common Stock or rights until after he has completed his
Participation in such Distribution. Purchasers shall be
deemed to have completed his Participation in the
Distribution when he has sold all Shares owned by him. So
long as such transactions are not engaged in for the purpose
of creating actual, or apparent, active trading in or
raising the price of the Common Stock, this paragraph shall
not prohibit (i) transactions in connection with the
Distribution contemplated hereby effected otherwise than on
a securities exchange with the Company or the Purchasers on
whose behalf such distribution is being made or among
Underwriters, Prospective Underwriters or other persons who
have agreed to Participate or are Participating in such
Distribution; or (ii) unsolicited, privately negotiated
purchases, each involving at least a block of shares, that
are not effected from or through a broker or dealer; or
(iii) purchases by the Company effected more than 40 days
after the effective date of the Registration Statement
covering the Common Stock to be distributed hereunder, for
the purpose of satisfying a sinking fund or similar
obligation to which the Company is subject and which becomes
due as of a date that does not exceed twelve months from the
date of such purchases; or (iv) odd-lot transactions and
round-lot transactions that offset odd-lot transactions
previously or simultaneously executed or reasonably
anticipated in the usual course of business by a person who
acts in the capacity of an odd-lot dealer; or (v) brokerage
transactions not involving solicitation of the customer's
order; or (vi) brokerage transactions involving the
solicitation of a customerOs order made prior to the later
of nine business days before commencement of offers or sales
of the Shares to be Distributed or the time the broker-
dealer becomes a Participant in the Distribution; or (vii)
offers to sell or the solicitation of offers to buy Shares
being Distributed or securities or rights offered as
principal by the person making such offer to sell or
solicitation; or (viii) the exercise of any right or
conversion privilege set forth in the instrument governing a
security, to acquire any security directly from the Company;
or (ix) bids or purchases by an Underwriter, Prospective
Underwriter, Affiliated Purchasers or dealer, if all such
bids or purchases are made (a) prior to the later of nine
business days prior to the commencement of offers or sales
of the shares of Common Stock to be Distributed or the time
such person becomes a Participant in the Distribution or (b)
in the case of unsolicited purchases, prior to the later of
the date of commencement of offers or sales of the shares of
Common Stock to be Distributed or the time such person
becomes a Participant in the Distribution; or (x) bids or
purchases by the Company or the Purchasers or by an
Affiliated Purchasers if all such bids and purchases are
made (a) nine or more business days prior to the
commencement of offers or sales of the shares of Common
Stock to be Distributed or (b) in the case of unsolicited
purchases, prior to the date of commencement of offers or
sales of the Shares. Capitalized terms used in this
paragraph and not defined in this Agreement shall have the
meanings assigned to such terms in Rule 10b-6 of the
Commission.
(f) The Company and the Purchasers agree to comply with all
applicable federal and state laws and regulations in
connection with the registration, qualification, offering
and sale of Shares, including but not limited to the
Securities Act, the Securities Exchange Act of 1934 (the
OExchange ActO), the rules and regulations promulgated by
the Commission under the Securities Act and the Exchange Act
and, particularly, Rules 10b-2, 10b-6 and 10b-7 of the
Commission under the Exchange Act.
(g) Neither any Purchasers nor any broker or dealer or
other person acting for or on behalf of the Purchasers shall
place any bid or effect any purchase for the purpose of
pegging, fixing or stabilizing the price of the Shares to be
offered as contemplated herein.
(h) The Purchasers shall comply with all applicable
requirements with respect to the delivery of prospectuses
set forth in sections 5 and 10 of the Securities Act and all
applicable rules thereunder.
If these terms are acceptable, please sign where provided below
and return a copy to me as soon as possible. We can then issue
the stock and begin the registration process.
Very truly yours,
/s/
James M. Rosel
Vice President Finance
and General Counsel
JMR:sdl
AGREED and ACCEPTED this _20_ day of _December_, 1996.
Environmental Allies NV, Environmental Allies International, NV
and Ally Capital Markets Group
By: Ally Capital Markets Group, authorized signatory
By: /s/
Steve Pickens
Its: Vice President
January 20, 1997
Mr. Steve Pickens VIA: FAX (415-331-1212)
Ally Capital Corporation
2330 Marinship Way, Suite 300
Sausalito, California 94965
RE: Prepayment of Equipment Lease
Dear Steve:
With respect to our letter agreement of December 18, 1996 ("Agreement") for
prepayment of the Equipment Lease, please sign where indicated below to
evidence Ally's agreement, on behalf of the Lessors, that it will not dispose
of Electrosource common stock in a fashion that will result in a credit of less
than $1.00 per share, and that if the stock price drops to $1.00 or less, the
Agreement shall automatically be rescinded and the stock returned to
Electrosource. Electrosource will, under such circumstances remain responsible
for all balances due under the Lease Agreement and the Letter Agreement of
December 18, 1996 that may remain at such time as whatever stock remains
unsold is returned. This is necessary because Electrosource's par value per
share of stock is $1.00 and the Company must receive at least that much in
value for the shares to be fully paid and non-assessable. The current market
price is approximately $5.12 per share.
If you have any questions, please call. Thank you for your cooperation and
early consideration of this letter.
Very truly yours,
/s/
James M. Rosel
Vice President Finance
and General Counsel
JMR:sdl
cc: Bret Van Earp
AGREED TO on behalf of ALLY CAPITAL CORPORATION on this 21st day of
January, 1997.
By: /s/
Printed Name: Stephan M. Pickens
Its: Vice President
EXHIBIT 5
January 21, 1997
Electrosource, Inc.
2809 Interstate 35, South
San Marcos, Texas 78666
Re: Registration Statement on Form S-3
Gentlemen:
Reference is made to the registration statement on Form S-3
(the "Registration Statement") filed with the Securities and
Exchange Commission by Electrosource, Inc. (the "Company") under
the Securities Act of 1933 relating to the distribution of
160,000 shares of the Common Stock, $1.00 par value, ("Common
Stock"), of the Company by certain selling shareholders.
I have made such examination of law and have examined such certificates,
documents, and records as I have deemed necessary for purposes of this
opinion. Based upon such examination and review, I am of the opinion that
the Common Stock to be distributed pursuant to the Registration Statement is
validly issued, fully paid, and non-assessable.
I consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of my name in the "Legal
Matters" section of the prospectus included therein.
Very Truly Yours,
/s/ Bret Van Earp
Bret Van Earp
EXHIBIT 24.1
Consent of Ernst & Young LLP
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3 No. 33-_____)
and related Prospectus of Electrosource, Inc. for the registration
of 160,000 shares of its common stock and to the incorporation by
reference therein 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 its Annual Report (Form 10-K) for the year ended
December 31, 1995, filed with the Securities and Exchange
Commission.
/s/ Ernst & Young LLP
Austin, Texas
January 16, 1997
