"CONFIDENTIAL TREATMENT"
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 6, 1997
ELECTROSOURCE, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-16323 74-2466304
(State or other jurisdiction (Commission File Number) (IRS Employer
incorporation) Identification Number)
2809 Interstate 35 South
San Marcos, Texas 78666
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (512) 753-6500
Previous address: 3800B Drossett Drive, Austin, Texas 78744-1131
(Former name or former address, if changed since last report)
Item 5. Other.
On March 6, 1997, the Company entered into an Interim Loan
Agreement ("Loan Agreement") and Promissory Note ("Note") with a
large domestic manufacturing company ("Lender"), a Fortune 500
company, with whom it is also discussing other business
arrangements. The unsecured loan is for $500,000 and is payable
on demand at any time after May 7, 1997. Interest is payable at
5% per annum. The Lender may credit the loan against any
purchase price it agrees to pay for any other securities,
however, there is no assurance that any other business
arrangements will be completed with the Lender.
Item 7. Financial Statements and Exhibits.
A redacted copy of the Loan Agreement and the Note are filed
as Exhibits A and B to this report to maintain confidentiality of
the Lender.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ELECTROSOURCE, INC.
By: /s/
James M. Rosel
Vice President Finance
and General Counsel
Date: March 10, 1997
EXHIBIT A
LOAN AGREEMENT
AGREEMENT made this 6th day of March, 1997, by and between
ELECTROSOURCE, INC., a company organized and existing under the
laws of the State of Delaware, having its principal office at
2809 IH 35 South, San Marcos, Texas ("Electrosource"), and
___________, a corporation organized and existing under the laws
of __________, having its principal office at __________.
WITNESSETH:
In consideration of the mutual promises and covenants
hereinafter set forth and intending to be legally bound, IT IS
HEREBY AGREED AS FOLLOWS:
1. Loan. Subject to the terms and conditions stated herein,
upon execution of this Agreement, __________ shall loan to
Electrosource, and Electrosource shall borrow from __________,
the aggregate principal amount of Five Hundred Thousand Dollars
($500,000) (the "Loan"), upon receipt of a promissory note
substantially in the form of Annex A hereto (the "Note") executed
in favor of __________ by Electrosource. Pursuant to the terms
hereof, Electrosource shall have the privilege of repaying the
Note at any time.
2. Interest. Electrosource shall pay __________ interest as
provided in the Note, computed on the amount of principal of the
Loan outstanding from time to time hereunder, at an annual rate
of five percent (5%), based on a year of three hundred sixty
(360) days.
3. Term and Payment. The principal amount of the Loan then
outstanding, plus all accrued and unpaid interest thereon, will
be due and payable in full upon demand made no earlier than sixty
(60) days from the date hereof. Electrosource shall remit
payment of principal and interest to __________ in immediately
available funds at such account as __________ may indicate from
time to time by written notice to Electrosource ("__________
Account").
4. Prepayment and Payment. Electrosource may prepay in
whole or in part amounts from time to time outstanding hereunder
at any time without penalty. Any partial prepayment permitted
hereunder must be in the amount of not less than One Hundred
Thousand Dollars ($100,000), or an integral multiple thereof and
made to __________ Account. __________ shall have the right to
demand repayment in whole or in part of the Loan and all interest
accrued thereon, upon five (5) business days' prior notice
thereof to Electrosource made any time after sixty (60) days from
the date hereof. __________ shall at any time have the option of
crediting any unpaid principal of the Loan or interest thereon
against any purchase price it agrees to pay for any securities,
(including common or other stock or options to purchase
securities or any promissory notes convertible into such
securities) which it may subsequently agree to purchase from
Electrosource.
5. Ranking of Loan. Electrosource's obligations hereunder
will rank at least pari passu in priority of payment and in all
other respects with all other unsecured loans, debts or
obligations of Electrosource. Electrosource shall not, while any
amount of the Loan remains outstanding, offer to borrow funds
from any third party on terms more favorable to the third party
lender than those extended to __________ for the Loan with
respect to security for the Loan, financial covenants or negative
pledges of Electrosource in favor of such third party, repayment
terms, or other significant matters, without offering such terms
to _________ in writing.
6. Default. Upon the occurrence of any one or more of the
following events, the amount of principal of the Loan then
outstanding, plus any accrued and unpaid interest thereon, shall
immediately become due and payable without presentment, demand,
protest or notice of any kind, all of which are hereby expressly
waived by Electrosource.
(a) Electrosource's failure to pay when due any interest due
hereunder;
(b) the sale by Electrosource of a material part of the
business or assets of Electrosource other than in the
ordinary course of business;
(c) a resolution is passed or any order is made or other
proceeding or action is taken with a view to the winding
up, liquidation, dissolution or bankruptcy (whether
voluntary or involuntary) of Electrosource;
(d) an encumbrancer takes possession or a receiver is
appointed of the whole or a material part of the
property or assets of Electrosource, or if any distress,
execution or other analogous process is levied or
enforced upon or sued out against the whole or a
material part of the business or assets of Electrosource
and is not paid out or discharged within thirty days;
(e) Electrosource is unable to pay its debts or ceases or
threatens to cease to carry on its business or a
material part thereof or becomes insolvent;
(f) Electrosource compounds, or proposes, or enters into any
reorganization or special arrangement with its creditors
or any class thereof;
(g) any security created by any debenture, mortgage or
charge given by Electrosource becomes enforceable and
steps are taken to enforce such security;
(h) any indebtedness of Electrosource in respect of monies
borrowed or otherwise raised by Electrosource is not
paid when due (or within any applicable period of
grace), or, if any guarantee or indemnity given by
Electrosource in respect of monies borrowed or otherwise
raised by others is not honored when validly called upon
(or within any applicable period of grace);
(i) the taking, closing or nationalization of a material
part of the business or assets of Electrosource by
governmental or legal action; or
(j) any representation or warranty of Electrosource set
forth in this Agreement is shown to be, or becomes false
or untrue.
For the purposes of this Section 6, "a material part of the
business or assets of Electrosource" means more than one-third of
the gross assets of Electrosource as set forth in its most recent
audited consolidated financial statements.
7. Representations and Warranties of Electrosource. Electrosource hereby
represents and warrants as follows:
(a) Electrosource is a corporation duly organized, validly
existing and in good standing under the laws of the
State of Delaware and is in good standing as a foreign
corporation in each jurisdiction where the properties
owned, leased or operated, or the business conducted by
it require such qualification, except for such failure
to so qualify or be in such good standing, which, when
taken together with all other such failures, is not
reasonably likely to have a material adverse effect on
the financial condition, properties, business or results
of operations of Electrosource or the interest of
shareholders in Electrosource ( a "Material Adverse
Effect"). Electrosource has the requisite corporate
power and authority to carry on its business as it is
now being conducted.
(b) The Note when issued in compliance with the provisions
of this Agreement, will be duly authorized and validly
issued. The issuance of the Note will not be subject to
any preemptive rights or rights of first refusal created
by Electrosource.
(c) Electrosource has the requisite corporate power and
authority and has taken all corporate action necessary
in order to authorize, execute and deliver this
Agreement and the Note and to consummate the
transactions contemplated hereby and thereby and to
perform the acts contemplated on its part hereunder the
thereunder. Each of this Agreement and the Note is a
valid and legally binding agreement and obligation of
Electrosource enforceable against Electrosource in
accordance with their terms except as such enforcement
may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting creditors' rights generally
or by equitable principles.
(d) No notices, reports or other filings are required to be
made by Electrosource with, nor are any consents,
registrations, approvals, permits or authorizations
required to be obtained by Electrosource from, any
governmental or regulatory authority, agency,
commission, court or other entity, domestic or foreign
("Governmental Entity"), in connection with the
execution and delivery of this Agreement or the Note by
Electrosource, the consummation by Electrosource of the
transactions contemplated hereby and the performance of
the acts contemplated on the part of Electrosource
hereunder, except as may be required under federal
securities laws.
(e) The execution and delivery of this Agreement and the
Note by Electrosource do not, and the consummation by
Electrosource of the transactions contemplated hereby
and thereby and the performance of the acts contemplated
on the part of Electrosource hereunder and thereunder
will not, constitute or result in (i) a breach or
violation of, or a default under, the Certificate of
Incorporation or By-laws of the Company, or (ii) breach,
violation or event triggering a right of termination of,
or a default under, or the acceleration of or the
creation of a lien, pledge, security interest or other
encumbrance on assets (with or without the giving of
notice or the lapse of time or both) pursuant to any
provisions of any agreement, lease of real or personal
property, contract, note, mortgage, indenture,
arrangement or other obligation ("Contracts") of
Electrosource or any law, rule, ordinance or regulation,
agreement, instrument or judgment, decree, order or
award to which Electrosource is subject or any
governmental or non-governmental authorization, consent,
approval, registration, franchise, license or permit
under which Electrosource conducts its business.
(f) No investment banker, broker or finder is entitled to
any financial advisory, brokerage or finder's fee or
other similar payment from either ___________ or
Electrosource based on agreements, arrangements or
undertakings made by Electrosource or any of its
directors, officers or employees in connection with the
transactions and acts contemplated hereby.
(g) In furnishing information to ___________ for purposes of
this Agreement, to the best of Electrosource's
information and belief, it has not made any untrue
statements of a material fact to __________ or omitted
to state a material fact necessary to make such
statements not misleading to ___________ in light of the
circumstances under which they were made.
8. Waiver. __________ shall not be deemed to have waived
any of its rights or remedies hereunder unless such waiver is in
writing and is duly signed by an authorized officer of
___________.
9. Binding Effect; No Assignment. This Agreement shall be
binding upon and inure to the benefit of __________ and
Electrosource and their respective successors and assigns. The
rights of Electrosource hereunder are not capable of being
assigned without the prior written consent of __________.
10. Applicable Law. This Agreement shall be governed by
and constructed in accordance with the laws of the State of
___________ U.S.A.
11. Modifications. No modification or amendment to the
terms and conditions of this Agreement shall be made except by a
writing duly executed by __________ and Electrosource.
12. Termination. This Agreement shall terminate upon the
date all amounts borrowed by Electrosource hereunder and
remaining outstanding on such date together with accrued interest
thereon has been paid by Electrosource to ___________.
IN WITNESS WHEREOF, the parties have caused this Loan
Agreement to be executed by their duly authorized representatives
in a manner binding upon them as of the date first above written.
__________
By /s/
ATTEST:
/s/
ELECTROSOURCE, INC.
By /s/
ATTEST: Michael G. Semmens
President, CEO and Chairman
/s/
Audrey T. Dearing
Corporate Secretary
ANNEX A
ELECTROSOURCE, INC.
$500,000 March 6, 1997
PROMISSORY NOTE
FOR VALUE RECEIVED, Electrosource, Inc., a company organized
and existing under the laws of the State of Delaware, having its
principal office at 2809 IH 35 South, San Marcos, Texas
("Electrosource"), hereby promises to pay within five (5)
business days of written notice of demand for repayment made by
__________ to Electrosource any time after May 7, 1997, to the
order of __________, a corporation duly organized and existing
under the laws of the State of __________, having its principal
office at __________, (a) Five Hundred Thousand Dollars
($500,000) ("Principal Amount") and (b) all accrued and unpaid
interest on the Principal Amount. Interest on said Principal
Amount shall accrue at a rate of five percent (5%) per annum
computed on the basis of a year of 360 days.
All payments of principal and interest pursuant to this Note
are to be made in U.S. dollars and remitted to such an Account as
__________ may from time to time specify in writing.
This Note is issued pursuant to the Loan Agreement dated
March 6, 1997 between __________ and Electrosource and is subject
to the terms and conditions thereof.
IN WITNESS WHEREOF, Electrosource has caused this Note to be
executed on its behalf by its duly authorized officer as of this
_____ day of _______________.
ELECTROSOURCE, INC.
By:______________________
EXHIBIT B
ELECTROSOURCE, INC.
$500,000 March 6, 1997
PROMISSORY NOTE
FOR VALUE RECEIVED, Electrosource, Inc., a company organized
and existing under the laws of the State of Delaware, having its
principal office at 2809 IH 35 South, San Marcos, Texas
("Electrosource"), hereby promises to pay within five (5)
business days of written notice of demand for repayment made by
__________ to Electrosource any time after May 7, 1997, to the
order of __________, a corporation duly organized and existing
under the laws of the State of __________, having its principal
office at __________, (a) Five Hundred Thousand Dollars
($500,000) ("Principal Amount") and (b) all accrued and unpaid
interest on the Principal Amount. Interest on said Principal
Amount shall accrue at a rate of five percent (5%) per annum
computed on the basis of a year of 360 days.
All payments of principal and interest pursuant to this Note
are to be made in U.S. dollars and remitted to such an Account as
__________ may from time to time specify in writing.
This Note is issued pursuant to the Loan Agreement dated
March 6, 1997 between __________ and Electrosource and is subject
to the terms and conditions thereof.
IN WITNESS WHEREOF, Electrosource has caused this Note to be
executed on its behalf by its duly authorized officer as of this
6th day of March, 1997.
ELECTROSOURCE, INC.
By: /s/
James M. Rosel
Vice President Finance
and General Counsel
