FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended December 31, 1996.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to _________
Commission file number 0-16323
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 742466304
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed all
reported required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the Registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes x No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
As of March 14, 1997, 4,143,475 common shares were outstanding
and the aggregate market value of the common shares held by non-
affiliates (based on the closing price of these shares, of $6.50
as reported by NASDAQ at the close of business on March 14, 1997)
was approximately $26,933,000.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference
into the indicated part or parts of this report:
Portions of the Company's Definitive Proxy Statement for the
Annual Meeting of Shareholders scheduled to be held on May 22,
1997, are incorporated by reference into Part III hereof.
PART I
Item 1. Business.
General
Electrosource, Inc. ("ELSI" or the "Company"), is an energy
storage solutions company engaged initially in the manufacture of
advanced lead-acid, rechargeable storage batteries and the
development of related processes and technologies. The Horizonr
battery utilizes plate grids made from a patented coextruded wire
and a special paste mixture. The Company is concentrating its
efforts upon development of Horizonr battery technology for use
in many applications including hybrid power vehicles, electric
vehicles, neighborhood electric vehicles, power management,
portable systems and starting power.
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.
The Horizon Battery
The Company has concentrated its efforts on the design of a new
concept of lead-acid battery employing coextruded wire in plates
oriented in the horizontal plane, as opposed to the vertical
plane orientation of conventional batteries. This battery
concept, named "Horizon," enables design of a lead-acid battery
with significantly higher energy density than is possible with
conventional battery design. The Horizonr design may also be
more economical to manufacture than conventional batteries due to
the elimination of several steps in the manufacturing process.
Several hundred prototypes and production versions of the
Horizon battery have been built and tested in a variety of
configurations. Testing by the Company and by third parties
indicates that various configurations of the battery meet or
exceed some of the performance goals established by major
governmental and industry groups for electric vehicle batteries.
The Company also believes the Horizon battery has a number of
applications other than electric vehicles, such as hybrid powered
vehicles, power tools, electric power management, uninterruptible
power and for starting, lighting and ignition ("SLI") batteries
for automobiles. The Company has designed various prototype
batteries for such applications which are currently under
evaluation by customers.
Coextrusion Technology
The Company holds an exclusive license for the development and
commercial exploitation of patented coextruded wire. Coextrusion
is a process by which one material is extruded, or forced through
a die, with uniform thickness, onto a core material passing
simultaneously through the same die. The process is capable of
extruding lead (or lead alloy) onto any material having adequate
tensile strength to pass at high speed through the pressurized
dies. Successfully coextruded core materials include fiberglass,
Kevlar and cross-linked carbon fiber yarns, aluminum, copper and
titanium wire and polypropylene, polyester, nylon and
polyethylene monofilament.
Coextruded lead wire facilitates the use in lead-acid batteries
of pure lead or extremely low concentration lead alloys, which
are difficult to cast repeatedly at the high rates required in
production. The management of the Company believes that grids
made from such wire and used in lead-acid storage batteries have
improved corrosion resistance and, therefore, longer life, or
equivalent life with reduced total material content.
Energy-Active Material Formulation
The Company has also developed a new type of energy-active
material, or paste, for use in lead-acid battery electrodes. The
Company also invented two additional paste formulations, each of
which may contribute to the reduction of battery manufacturing
cost. The Company has protected this proprietary technology as
trade secrets, and does not plan to apply for patents related to
these formulations. The Company is continuing the development of
these formulations in connection with the Horizonr battery
project, but has no current plans for separate commercialization
of the energy active material.
Battery Grid
The Company has patented the use of its coextruded wire in
electrodes for lead-acid batteries. The claims in this patent
encompass not only the present method employed by the Company of
weaving the wire into a woven mesh to form the "bigrids" but also
any non-woven methods of using the coextruded wire in lead-acid
battery electrodes.
Compression Cage
During the development stage of the Company, it was learned
through battery life testing that the plates and separators in a
sealed lead-acid battery must be kept under a constant
compression in order to achieve high cycle life. The Company
developed and patented an idea to encase the plates and
separators in a "compression cage" to comply with this
requirement.
Marketing
The worldwide market for lead-acid batteries can be classified
into the following major segments:
Starting, Lighting and Ignition. For engine starting
applications as used in passenger cars, light and heavy trucks,
garden tractors and motorcycles.
Motive Power. For use in electric vehicles, hybrid
vehicles, industrial fork lifts, underground mining equipment,
golf carts and neighborhood electric vehicles. Such batteries
undergo daily discharging and overnight recharging.
Power Management. For use in utility emergency power,
telecommunications, uninterrupted computer and other power
supplies and cellular radio. Such batteries are typically used
as a secondary source of power.
Portable Power. Typically small, lead-acid batteries for
use in such items as portable power tools and outdoor power tool
products, as well as electrically driven medical equipment.
The Company has successfully demonstrated the ability to
manufacture the Horizon battery in commercial quantities. The
Company has initiated strategic business relationships and
cooperative development agreements with companies and government
agencies in all of the above markets. Management anticipates
that in 1997/1998 many of these customers will move from test
phases to integration of Horizon technology into their commercial
products.
Competition
The lead-acid battery industry is mature, well-established and
highly competitive. The industry is characterized by a few major
domestic and foreign producers including Exide, Delfi, Johnson
Controls, Inc., GNB, Hawker and Yuasa, all of which have
substantially greater financial resources than the Company.
Accordingly, the Company's ability to succeed in this market
depends upon its ability to demonstrate superior performance and
cost attributes of its technology. The Company has concentrated
its activities in the electric vehicle segment of the market with
a view to demonstrating improved energy to weight and longer
battery life in comparison to traditional lead-acid batteries.
The principal competitors of the company in the electric vehicle
market (Ovonics and Saft) have directed their efforts to other
battery types, such as nickel-cadmium, nickel-metal hydride,
nickel-iron and sodium-sulfur batteries, rather than lead-acid
formulations, although at least one major automobile manufacturer
and one major battery company are known to have research and
development projects underway to develop lead-acid batteries for
electric vehicles.
Patents and Protection of Technology
Prior to May 1990, the Company held an exclusive sublicense from
Tracor, Inc. ("Tracor") under several US patents covering the
coextruded wire and the coextrusion apparatus for producing
composite wire for use only in lead-acid battery applications.
In May 1990, Tracor assigned to the Company all rights under the
original license agreement between Tracor and Blanyer-Mathews,
the inventors of the coextrusion technology. This assignment
terminated the sublicense between Tracor and the Company and
allowed the Company to apply the technology outside of the area
of lead-acid storage batteries, if any such applications are
available. The license assigned to the Company expires
concurrently with the patent, or in 2004, and requires payment of
annual minimum royalties to Blanyer-Mathews of the greater of
$100,000 or sales-based royalties equal to 1/2 percent of sales.
The license may be terminated by the licensor in the event that
the Company defaults in its obligation to pay royalties or enters
bankruptcy. The Company is responsible for the maintenance and
administration of the licensed patent. Under the terms of the
assignment, the Company is to pay Tracor a royalty of four
percent on all technology sales unrelated to lead-acid storage
batteries for the term of the license. The Company is obligated
to pay minimum annual royalties of $10,000 to Tracor for a five-
year period beginning on the date of the assignment. Such
minimum royalties were to have begun in May 1991, but Tracor
deferred payment for two years, with the deferred amounts bearing
interest at 8.5 percent. The Company has made all scheduled
payments in accordance with the terms of the deferral agreement.
In March 1990, a patent was issued to the Company covering an
energy-active material formulation, including the processes for
manufacturing this material. In October 1990, a US patent was
issued to the Company for the Horizonr battery design.
In September 1989, a patent was issued to the Company covering
the battery grid and its producing method. In April 1995, a
patent was issued to the Company covering the battery plate
compression assembly.
The know-how relating to the Company's energy-active material
formulation and the application of coextruded wire to battery
electrodes is confidential and proprietary to the Company.
Research and Development
Initial research and development programs were directed toward
understanding the behavior of the wire in lead-acid battery
electrodes in various corrosive environments. With the
development of the Horizon battery concept, the focus of
research work has been redirected toward improving the
performance of the battery in the following areas; longer cycle
life, longer shelf life, and increased specific energy. In
addition, programs are in process to reconfigure the Horizon
battery concept into a number of different applications.
Prototype models of Horizon batteries for specialized markets
(see "Marketing") continue to be built in attempts to optimize
battery electrical performance and life and to meet customer
requests for different battery configurations or performance.
The Company incurred approximately $1,450,000, $3,455,000 and
$1,933,000 in research and development costs in the years ended
December 31, 1996, 1995, and 1994, respectively.
Backlog
As of December 31, 1996 and 1995, the Company has a backlog of
approximately $520,000 and $100,000, respectively, in battery
orders. As of December 31, 1996, the Company has a backlog of
approximately $1,950,000 in project revenue.
Export Sales
During 1996 and 1995, the Company sold approximately $208,000 and
$140,000, respectively, of Horizon batteries and related services
to foreign customers.
Customer Concentration
A significant portion of the Company's total revenue (81% and 83%
in 1996 and 1995, respectively) was generated from Chrysler
Corporation ("Chrysler"). Management is currently working with
several customers to design and build prototype batteries for a
variety of applications and believes that its sales to Chrysler
will decrease as a percentage of total revenue. However, loss of
this customer could have an adverse impact on operations.
Raw Materials
The basic raw materials of lead-acid batteries are lead, sulfuric
acid and plastic, each of which is readily available. The
Company has experienced no material delays in obtaining timely
delivery of these materials.
Environmental Concerns
The management of the Company believes that the Company is
currently in compliance with all applicable local, state, and
federal environmental rules and regulations. The Company's
laboratory facility and manufacturing plant includes an enclosed
area specifically for the mixing of lead-oxide paste and the
application of such paste to battery electrodes. The air in
these areas is continuously filtered to remove lead particles.
Employees operating in these areas are instructed in the use of
safety equipment such as gloves, protective aprons, and
respirators and are required under Occupational Safety and Health
Administration ("OSHA") guidelines to submit to blood monitoring
tests on a periodic basis. The supervision and analysis of these
tests are undertaken by an outside, independent agency and the
results thereof are communicated to the Company's employees.
The management of the Company believes that the energy-active
material developed by the Company may be safer to manufacture
than energy-active materials currently in general use due to
reductions in potential environmental hazards. The active
material paste used in conventional batteries has a consistency
similar to wet cement and must be allowed to dry for two or three
days after being impressed into the grid of a battery plate.
When dried the plates produce fine lead dust as they are
transported in a plant through the battery assembly process.
This airborne dust poses a potential health risk to workers, and
there are OSHA regulations regarding allowable levels of airborne
lead in a battery plant for which manufacturers must devote
significant resources in prevention, treatment, and compliance.
The Company's energy-active material, on the other hand, has a
consistency similar to toothpaste and does not need to dry
completely before the battery assembly process begins, thus
minimizing worker exposure to airborne lead.
As a part of the battery manufacturing process, the Company
handles and disposes of various hazardous materials such as lead
and sulfuric acid. The Company is subject to strict
environmental regulations and has incurred significant costs in
installing state-of-the-art equipment to manage and control
hazardous substances and pollution. The Company expended $8,000,
$385,000 and $198,000 in 1996, 1995 and 1994, respectively, in
capital expenditures for such equipment. As part of its on-going
operations, the Company incurred $10,000, $170,000 and $80,000 in
non-capital expenditures in 1996, 1995 and 1994, respectively, to
properly dispose of hazardous materials and waste. As a result
of such preventive measures, the Company has not incurred
significant remediation costs and management is not currently
aware of any infrequent or non-recurring clean-up expenditures to
be incurred in the future based on present circumstances and
conditions.
Employees
As of March 14, 1997, the Company employed approximately 70 full-
time employees.
Item 2. Properties.
All of the Company's operations are located in an 88,000 square
foot facility located in San Marcos, Texas at 2809 Interstate 35
South. The monthly rental rate is currently $25,000 per month
and escalates over the life of the lease to $35,000 per month
until expiration in 2003. The Company has an option to purchase
the property and improvements for $2,678,000 until August 1997.
The Company must pay the Lessor a fee of $30,000 upon expiration
of the option if it is not exercised. The Company believes this
site is adequate for low-rate production requirements and
possesses enough expansion capacity if the Company elects to
expand capacity at this site.
The Company also leases premises covering approximately 30,000
square feet at 3800-B Drossett Drive, Austin, Texas (which
formerly housed the executive offices and research facilities).
The monthly gross rental rate on the amended lease escalates over
the term of the lease from $12,000 per month to $15,500 in the
final year of the term. The lease expires in February 1999. In
February 1997, the Company signed a sublease agreement with an
unrelated party beginning in March 1997 through February 1999.
The monthly rental of the facilities from the sublease is
approximately the same as the Company's monthly rental payments.
Management believes that all personal property used by the
Company is in good condition.
Item 3. Legal Proceedings.
In 1994, the Company signed a "Know-How License Agreement" (the
"Agreement") with Horizon Battery Technologies, Ltd., ("HBTL"),
of Bombay, India, calling for the completion of several detailed
subordinate agreements with the ultimate purpose to license the
manufacture and sale of batteries in India. The effectiveness of
the Agreement was conditioned upon the subsequent execution of
these six related agreements, none of which were executed. The
Company believes, therefore, the Agreement never became effective
and has no force or effect. Separately in 1995, HBTL agreed to
pay the Company $250,000 for a Preliminary Design Review ("PDR")
for a potential manufacturing facility in India which was
required to complete one of the subordinate agreements. The
Company received $100,000 from HBTL and completed the PDR in
1995. The remaining $150,000 was never paid by HBTL, in spite of
repeated demands by the Company. After further negotiations
without an agreement being reached, the Company notified HBTL
that it was discontinuing discussions.
In September 1996, the Company received a demand from HBTL to
arbitrate damage claims for alleged breach of the Agreement
between the Company and HBTL. HBTL claims damages of
approximately $5,100,000 for its expenses and lost profits
related to the project. The Company disputes the claim for
damages and will vigorously defend any actions taken by HBTL to
pursue the claims. The Company filed a petition in the State
District Court of Travis County, Texas, on December 19, 1996,
seeking, among other things, a declaratory judgment that HBTL has
no right to arbitration or monetary relief. HBTL is contesting
jurisdiction and on February 6, 1997 removed the proceedings to
the U.S. District Court of the Western District of Texas. No
liability has been recorded in the financial statements at
December 31, 1996 for this uncertainty, as management is unable
to express an opinion with respect to the likelihood of an
unfavorable outcome of this matter or to estimate the amount or
range of potential loss should the outcome be unfavorable. The
resolution of this matter, the outcome of which cannot be
determined at this time, could in the worst case have a material
adverse effect on the financial position of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
PART II
Item 5. Market for the Registrant's Common Stock and Related
Stockholder Matters.
Trading Market for ELSI Common Stock
The Company's Common Stock has been traded in the over-the-
counter market and reported on NASDAQ under the symbol "ELSI"
since January 1988. The following table sets forth, for the
periods indicated, the high and low bid price per share of Common
Stock as reported by NASDAQ. Prices represent inter-dealer
quotations, without adjustment for retail markup, markdown or
commission, and may not represent actual transactions. Prices
have been adjusted to retroactively reflect a one-for-ten reverse
stock split which occurred on July 22, 1996.
High Low
1995
First Quarter 32 1/2 18 3/4
Second Quarter 42 1/2 23 1/8
Third Quart er 25 5/16 11 7/8
Fourth Quarter 24 1/16 12 1/2
1996
First Quarter 17 13/16 10
Second Quarter 15 15/16 5 15/16
Third Quarter 10 5/8 4 1/2
Fourth Quarter 9 3/8 4 13/32
The transfer agent and registrar for the Common Stock of the
Company is Harris Trust Co. of New York, 77 Water Street, 4th
Floor, New York, NY 10005.
The approximate number of record holders of Common Stock at March
14, 1997, was 3,742.
Dividends and Dividend Policy
The Company has paid no dividends on its Common Stock to date and
does not anticipate, currently or in the foreseeable future,
paying dividends on the Common Stock. Further, the Company
currently has a deficit in its "surplus" account (defined as the
excess of net assets over par value of shares outstanding) which,
under Delaware corporate law, precludes any distributions to
shareholders in a given year unless the Company reports net
income in that year or the preceding year, in which case
dividends could be paid to the extent of net income for the year
in which the dividend is declared and net income for the fiscal
year immediately preceding the year of declaration. In the event
that the earnings of the Company permit payment of dividends
under Delaware law, the timing and amount of such dividends will
be determined by the Board of Directors in light of the Company's
earnings, financial condition and capital requirements.
Item 6. Selected Financial Data.
(In thousands, except per share data)
Year Ended December 31,
1996 1995 1994 1993 1992
Revenues $3,563 $3,278 $4,614 $3,373 $544
Net Loss $(7,825) $(20,508) $(8,543) $(197) $(1,228)
Net Loss per Share $(2.13) $(9.76) $(6.05) $(0.29) $(1.99)
Dividends per Share None None None None None
As of Year Ended December 31,
1996 1995 1994 1993 1992
Working Capital (Deficit) $(2,845) $ 1,556 $2,032 $1,122 $ 251
Total Assets $9,488 $15,277 $9,318 $4,709 $2,802
Shareholders' Equity $3,847 $ 1,240 $ (685) $3,322 $2,421
Long-Term Obligations $1,768 $11,34 $7,107 $ 33 $ 200
The foregoing should be read in conjunction with the financial
statements and notes thereto appearing elsewhere in this report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Disclosure Regarding Forward-Looking Statements
From time to time, the Company may publish forward-looking
statements relating to such matters as anticipated financial
performance, business prospects, technological development, new
products, research and development activities and similar
matters. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements. In order
to comply with the terms of the safe harbor, the Company notes
that a variety of factors could cause the Company's actual
results and experience to differ materially from the anticipated
results or other expectations expressed in the Company's forward-
looking statements. When used in this discussion, the words
"expects", "believes", "anticipates" and similar expressions are
intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause
actual results to differ materially from those projected. The
risks and uncertainties that may affect the operations,
performance, development and results of the Company's business
primarily include delays in shipment or cancellation of orders,
timing of future orders, customer reorganization, fluctuations in
demand primarily associated with governmental mandates for the
production of zero emission vehicles and the ability to
successfully commercialize the Horizon battery. Readers are
cautioned not to place undue reliance on these forward-looking
statements which speak only as of the date hereof. The Company
undertakes no obligation to republish revised forward-looking
statements to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Readers are also urged to carefully review and consider the
various disclosures made by the Company which attempt to advise
interested parties of the factors which affect the Company's
business in this report and in the Company's periodic reports on
Forms 10-Q and 8-K filed with the Securities and Exchange
Commission.
Results of Operations
The Company's results of operations during 1996 and late 1995
were significantly impacted by changes in the zero emission
vehicle ("ZEV") mandates established by the California Air
Resource Board ("CARB") in an effort to improve California air
quality. (Electric vehicles ("EVs") are the only vehicles that
qualify as "Zero Emission.") The ZEV mandate originally required
that 2 percent of vehicles sold in California by 1998 be ZEV.
The 2 percent rule would have increased to 5 percent in 2000,
2001, and 2002 (an approximate total of 190,000 vehicles for all
five years). The mandate stepped up the requirement to 10
percent (approximately 100,000 vehicles) in 2003 and was to
continue at that rate for successive years. This mandate was
challenged by automakers and was reevaluated by CARB in 1995,
causing uncertainty in the EV market. In December 1995, CARB
announced a cancellation of the mandate for 1998 through 2002, in
return for an agreement from the automakers to continue
development of EV's, maintain production capacity and place a
limited amount of vehicles on the road prior to 2003. According
to CARB, each of the "Big Seven" automakers (GM, Ford,
Chrysler, and four Japanese auto manufacturers) have signed a
Memorandum of Agreement with CARB agreeing to maintain EV
production capacity of 5,000 EVs per year and to sell a limited
number of EVs in California in 1998, 1999 and 2000.
Massachusetts and New York have maintained mandates for ZEV sales
following California's original plan beginning with a 2 percent
ZEV requirement in 1998. These mandates have been challenged by
automakers, but remain in effect.
The Company's primary sources of funds from 1992 through 1996
were obtained from companies interested in the development and
manufacture of a lead-acid battery for EVs. During 1995, the
Company focused substantial resources on purchasing machinery and
implementing production processes to significantly increase the
capacity of the manufacturing facility and successfully
demonstrated the ability to produce the Horizon battery in
commercial quantities primarily for electric vehicles. As a
result of these efforts, the Company received a production
purchase order from Chrysler Corporation ("Chrysler") in December
1995 for up to $80 million in battery sales cumulatively over the
following three years. Shortly after the receipt of the Chrysler
order, CARB announced the ZEV mandate cancellation until 2003.
As a result, orders did not materialize as anticipated and the
Company expects battery orders from Chrysler to be substantially
reduced from its original order in the near-term. At this time
the Company is unable to quantity the amount and timing of
batteries which may be ordered from Chrysler. In July 1996, the
Company received a $3,000,000 payment from Chrysler as
compensation for the continued capacity maintenance and ramp-up
costs incurred by the Company in relation to its role as a
supplier to the automaker for its Electric Powered Interurban
Commuter ("EPIC") program and for various engineering, research
and development efforts ("ER&D").
With CARB's ruling to delay mandated sales of EVs in California,
automakers reduced their projected 1996-1998 EV production
numbers substantially. In 1995, the Company had received
substantial purchase orders and established business
relationships with several small vehicle conversion companies
(established to retrofit vehicles for electric propulsion).
These companies have either gone out of business or have
refocused efforts in other markets. To date, the Company has
sold only limited quantities of the two production Horizon models
to companies other than Chrysler.
As a result of much lower than anticipated mandate-related sales
of lead-acid batteries in 1996, the Company refocused efforts to
market the Horizon battery to OEMs producing EVs and hybrid-
electric vehicles ("HEV") in domestic and international markets
that have been driven by consumer demand rather than by
government legislation. The Company also expanded efforts into
other areas of the growing world-wide market for rechargeable
batteries including: portable power, starting, lighting, and
ignition ("SLI"), and power management. The Company has
developed or is working toward strategic business relationships
and cooperative development agreements with companies and
government agencies such as Black & Decker (portable power
tools), Lockheed Martin (HEVs), Fiat Auto (EVs and HEVs), the
Defense Advanced Project Agency ("DARPA" - EVs and HEVs), and
Horizon Aircraft (aircraft starting), and others which remain
confidential. In 1996 and early 1997, the Company designed seven
new Horizon battery designs; five of which have advanced to the
prototype stage. Management now believes it has opportunity for
volume sales with some of these companies and other OEMs expected
to begin in late 1997, which is later than initially anticipated.
However, the placement of such orders is dependent on final
customer acceptance of prototypes, the ability of the Company to
build large volumes of various battery types at a competitive
price and government certification of certain battery types for
particular uses.
Horizon technology allows for design flexibility while
maintaining expected performance characteristics and the
potential for low-cost manufacturing techniques; however,
extensive engineering design is required to customize each
Horizon module to meet the unique size, weight, and performance
characteristics required for different applications.
Additionally, two factors have affected progress with potential
applications: product performance problems early in 1995, which
were corrected in mid-1995, and questions regarding the Company's
ability to continue as a going concern. These factors are
evaluated carefully by customers before entering an agreement
with the Company or placing large orders for the Company's
products.
Management believes that revenue from cooperative development
agreements, contracts and battery sales will increase in 1997;
however, such revenue is not expected to be adequate to fund
operations prior to late 1997 when large quantity battery orders
may materialize. Until then, additional sources of debt and/or
equity financing will be required to sustain operations.
However, the placement of such orders is dependent on final
customer acceptance of prototypes, the ability of the Company to
build large volumes of various battery types at a competitive
price and government certification of certain battery types for
particular uses. Management is attempting to raise additional
funds, primarily in the form of strategic partner relationships
and license agreements with customers and organizations that can
aid the penetration of target markets and can assist financially;
however there can be no assurance that such funding can be
obtained on terms acceptable to the Company, if at all. The
Company recently completed an interim $500,000 loan with a large
manufacturing company and is discussing other arrangements with
that company which could result in additional debt or capital to
the Company. However, there is no assurance that any other
agreements with the manufacturing company will be made.
Revenue
The Company generated project revenue of approximately $295,000,
$989,000 and $2,902,000 for the years ending December 31, 1996,
1995 and 1994, respectively. During 1996, the Company generated
approximately $115,000 in project revenue from Chrysler for
various environmental and other tests performed on the Horizon
battery. The remainder of project revenue generated in 1996 was
from various customers with whom the Company is developing and/or
refining prototype batteries for various electric vehicle and non-
electric vehicle applications (FIAT, Black & Decker, DARPA and
others which remain confidential). Management believes that
revenue from project agreements which decreased from 1994-1996
may increase beginning in 1997 as the Company has repositioned
itself into its target markets with major OEMs and expects to
finalize and complete project agreements to design and build
prototype batteries; however, the amount and timing of such
revenue is uncertain. Approximately $797,000 of project revenue
in 1995 and $846,000 in 1994 was generated under an agreement
with Chrysler for the retrofit of the Horizon battery for their
NS Electric Minivan Program. The program concluded in 1995.
Project revenue of $100,000 generated during 1995 was from a
program to perform a Preliminary Design Review ("PDR") for a
potential manufacturing facility in India. This review was
concluded in 1995 and work under this program was terminated.
Approximately $2,056,000 of project revenue in 1994 was earned
under an agreement with the Electric Power Research Institute
("EPRI") for the development and commercialization of the
Company's proprietary advanced lead-acid battery. This program
concluded in 1994.
The Company had battery sales of $823,000, $1,196,000 and
$378,000 for the years ending December 31, 1996, 1995 and 1994,
respectively. Approximately 50% of the Company's 1996 and 1995
battery sales, were generated from Chrysler. In 1996, battery
sales to Chrysler were primarily to fill orders in accordance
with the production purchase order placed in December 1995. In
1995, battery sales to Chrysler were primarily for testing of the
battery in their NS Electric Minivan Program, which resulted in
the receipt of the production purchase order from Chrysler in
December 1995. The remainder of battery sales generated in all
years were from numerous customers requesting batteries for
testing and evaluation. Management expects the level of battery
sales to increase beginning in late 1997 or 1998 as the Company
receives an increase in orders under the Chrysler production
purchase order and from others currently testing various types of
batteries. However, the amount and timing of orders from
Chrysler and others is uncertain and could be impacted materially
by the California, New York, and Massachusetts mandates.
In July 1996, the Company received a $3,000,000 payment from
Chrysler. Chrysler designated $2,366,00 of this payment as
compensation for continued capacity maintenance and ramp-up costs
incurred by the Company in relation to its role as a supplier to
the automaker for its electric vehicle EPIC Minivan Program and
$634,000 for various ER&D efforts. The Company recorded
$2,366,000 as income as all tasks necessary to earn the income
were performed and there were no further obligations related to
such revenue. The Company recorded $634,000 as deferred revenue
which will be recognized in income as the ER&D tasks are
performed.
The Company also generated $1,000,000 and $800,000 in 1995 and
1994, respectively, in license fees under a Distribution
Agreement with Mitsui Engineering & Shipbuilding Co., Ltd.
("MES") for the export and exclusive distribution of the
Company's Horizon battery in Japan. In March 1996, the Company
completed a Termination Agreement with MES which terminated the
Distribution Agreement and settled all outstanding financial
matters with MES, including the conversion of all outstanding
Convertible Notes Payable owed to MES (approximately $3,000,000)
to Common Stock of the Company at $38.00 per share.
Additionally, the Company generated revenue of $410,000 in the
year ended December 31, 1994 from an agreement with BDM
Technologies, Inc. ("BDM") for technical support in developing a
low rate initial production line for the Horizon battery. The BDM
agreement ended in 1994.
Costs and Expenses
Total costs and expenses decreased significantly during the year
ended December 31, 1996 compared to 1995. During 1996, management
implemented cost control measures to conserve cash and to reduce
expenses, particularly in light of the change in the California
mandates. Costs were also reduced as a result of increases in
productivity. Generally, total costs were higher in 1995 as
compared to 1996, as in 1995, the Company began to purchase
machinery and implement production processes to manufacture the
Horizon battery in commercial quantities and increased the
production, marketing and administrative staffs accordingly in
anticipation of the production purchase order received from
Chrysler in December 1995. During 1995, the Company also
incurred significant nonrecurring costs to replace batteries
which failed to perform as expected due to early manufacturing
problems as well as improper storage and charging of the
batteries by customers. Additionally, the Company issued 136,000
shares of unregistered, restricted shares of Common Stock in 1995
which were valued at $1,468,000 and charged to expense,
associated with investor/public relations services to be provided
by a consulting firm. Significant research and development
expenditures were also incurred in 1995 which resulted in
technical achievements in specific energy, power and cycle life
from batteries produced on the manufacturing line, not just
laboratory prototypes. Interest costs were higher in 1995 as
well due to the incurrance in 1995 of approximately $13,000,000
in Convertible Debt financing which generally converted within 90
days of the respective financing. Interest costs in 1995
included $2,603,250 (recorded during 1996 as a restatement to
1995 financial statements) related to the conversion discount
from market on the Convertible Notes Payable (generally 20-25%).
The discount was amortized over the period beginning with the
issuance of the debt to the first date that conversion could
occur (generally 60 days). Interest costs of $141,750 were
recorded in 1996 for the Convertible Notes Payable issued in
1995. There were no Convertible Notes Payable issued in 1996.
Since sales did not materialize as anticipated in late 1995 and
into 1996, management began a cost reduction program. Staffing
was reduced by approximately 50% during 1996 and the capacity of
the San Marcos plant was increased through upgrades and further
refinement of the production processes. During late 1996,
management made the decision to consolidate its Austin
headquarters into the San Marcos manufacturing plant to further
reduce costs. Manufacturing costs have remained high as a
percentage of battery sales during 1996 due to the fact that the
Company has maintained the minimum production level necessary to
demonstrate the ability to manufacture the Horizon battery in
commercial quantities, even though battery sales of current
battery models were significantly less than expected. Management
expects manufacturing costs to decrease as a percentage of
battery sales when volume production begins; however, the timing
and amount of battery orders is uncertain. Management is
continuing its efforts to control costs and reduce monthly cash
expenditures.
Even though total costs and expenses decreased in 1996 compared
to 1995, certain non-cash expenses significantly increased during
1996 compared to 1995. Depreciation and amortization costs
nearly doubled from 1995 because a significant amount of
equipment and intangibles were acquired during 1995 and were
depreciated/amortized for the entire period in 1996 compared to a
shorter period in 1995. In addition, during 1996, the Company
disposed of approximately $526,000 of equipment which was no
longer in use.
Prior to June 1994, total costs were substantially lower, as the
Company was primarily performing research and development
activity related to the Horizon battery, and costs for the
production facility were borne by a strategic corporate partner.
In the fourth quarter of 1994, the Company formalized its
arrangement with BDM and agreed to a Technology License Agreement
whereby the Company licensed BDM's manufacturing technology for
use in producing the Horizon battery. In accordance with the
terms of the agreement, the Company agreed to pay BDM: $80,000
cash; issue 170,000 shares of Common Stock in equal installments
over a three year period; issue 20,000 shares of Common Stock if
the Company decides to maintain the license beyond the original
three year term; and to grant 100,000 options to purchase Common
Stock at $40.00 per share. The Company also agreed to acquire
BDM's interest in the corporate joint venture formed by BDM and
the Company in 1993 for 10,000 shares of Common Stock. The
Common Stock issued to BDM is unregistered; however, BDM has been
given certain demand and "piggyback" registration rights. The
Company recorded an expense of $3,819,350 in 1994 for the license
of this manufacturing technology and will have no further
expenses related to this technology in the future.
As a part of the battery manufacturing process, the Company
handles and disposes of various hazardous materials such as lead
and sulfuric acid. The Company is subject to strict
environmental regulations and has incurred significant costs in
installing state-of-the-art equipment to manage and control
hazardous substances and pollution. The Company expended $8,000,
$385,000 and $198,000 in 1996, 1995 and 1994, respectively, in
capital expenditures for such equipment. As part of its on-going
operations, the Company incurred $10,000, $170,000 and $80,000 in
non-capital expenditures in 1996, 1995 and 1994, respectively, to
properly dispose of hazardous materials and waste. As a result
of such preventive measures, the Company has not incurred
significant remediation costs and management is not currently
aware of any infrequent or non-recurring clean-up expenditures to
be incurred in the future based on present circumstances and
conditions.
During the years ended December 31, 1996, 1995 and 1994, the
Company issued approximately 844,000, 1,500,000 and 200,000
shares of Common Stock, respectively, as a result of financing
transactions, purchases of technology and equipment, payment of
the Technology License Payable and consulting services and the
exercise of stock options. As a result of the increase in shares
for these years, the loss per share in each was less than it
would have been based on the shares outstanding at the end of the
preceding year. Management of the Company believes that the
issuance of shares in these years was necessary to fund the
increased working capital and capital expenditure requirements.
Liquidity and Capital Resources
During 1996, the Company did not generate sufficient cash flow
from operations to fund its working capital needs. Net cash used
in operating activities was approximately $3,300,000 in 1996
(down from $15,200,000 in 1995). As a result, the Company sold
292,084 shares of Common Stock which resulted in net proceeds to
the Company of $2,547,000 during the year (down from $19,000,000
of external funding raised in 1995). Included in cash flow from
operations in 1996 is a $3,000,000 payment from Chrysler for
compensation for continued capacity maintenance, ER&D and ramp-up
costs incurred by the Company in relation to its role as a
supplier to the automaker for its electric vehicle EPIC Minivan
Program. Funds generated in 1996 were used to maintain minimum
production capabilities and a core staff to sustain operations.
Capital expenditures of approximately $384,000 were made in order
to further automate the production process and reduce operating
costs. During 1996, the Company significantly reduced operating
costs by reducing personnel approximately 50% and consolidating
its Austin headquarters into the San Marcos manufacturing
facility. These cost reductions were achieved while still
increasing the Company's production capacity.
Management expects the level of battery sales to increase
beginning in late 1997 as the Company receives an increase in
orders under the Chrysler production purchase order and from
others currently testing various types of batteries. However,
due to weakened government mandates, management does not expect
sales from Chrysler to reach levels originally projected in the
near-term. In addition, management expects revenue from project
agreements to increase from current levels beginning in late 1997
or 1998 as the Company finalizes project agreements to design and
build prototype batteries and delivers such products and
services. The timing and amount of battery sales and revenue
from project agreements is uncertain. Management does not
expect sales from these orders or services to generate sufficient
funds to support its overall working capital and capital
expenditure needs through 1997. Additional debt and/or equity
financing will be necessary to sustain operations.
In January 1997, the Company completed a private placement of
109,397 shares of Common Stock with its executive officers and
certain other accredited investors which generated net proceeds
of $680,508. In connection with this offering, the Company
issued 616,383 warrants with exercise prices ranging from $5.25
to $7.56 per share. All warrants have a two-year term from date
of issue. The portion of the private placement sold to executive
officers ($250,000) may have to be repaid by the Company if the
purchase of such shares is not approved by the shareholders.
In January 1997, the Company filed a registration statement on
Form S-3 for the sale of 160,000 shares issued to Ally Capital
Corporation ("Ally") as prepayment for capital lease obligations
owed by the Company. The shares will be sold by Ally, the
proceeds of which will be used to satisfy lease obligations
(approximately $900,000 as of March 14, 1997). If the proceeds
from the sale of such shares are not sufficient to satisfy the
lease obligations due to fluctuations in market prices, the
Company will, on a one time basis, issue additional shares of
Common Stock or pay cash to Ally to make up the deficiency. Ally
will retain any overage from the sale of such shares in excess of
the lease obligations. Upon payment of all lease obligations,
letters of credit of $663,000 which securitize the lease
obligations will be canceled and certificates of deposit of an
equal amount that collaterialize the letters of credit will be
released. Management does not expect to complete this
transaction until the second quarter of 1997. See Note Q in the
financial statements for further discussion regarding the
accounting for these shares as of December 31, 1996.
Subsequent to December 31, 1996, the Company received $500,000 in
the form of an unsecured promissory note bearing interest at 5%
from an unrelated "Fortune 500" manufacturing company with whom
the Company is pursuing additional relationships. The note is
payable on demand at any time after May 7, 1997. The lender may
credit the note 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.
The Company does not anticipate significant capital expenditures
in 1997 to satisfy anticipated demand for battery orders. There
were no significant capital commitments at December 31, 1996.
Convertible debentures of $250,000 will mature on April 12, 1997.
These debentures are convertible into Common Stock at a
conversion price equal to 80% of the average closing price of the
Common Stock for the five business days immediately preceding
such time as the debentures are converted.
As of March 14, 1997, the Company had approximately $550,000 of
unrestricted cash available. Management is continuing its
efforts to control costs and believes it has sufficient cash to
continue operations through the first quarter of 1997, however,
it will be necessary to raise additional financing before the end
of the second quarter of 1997 to sustain operations and fund
anticipated growth. Management believes that the cash shortage
from operations will decrease in 1997. If anticipated project
agreements are finalized and volume orders for batteries are
received, additional external financing for operations may not be
necessary in late 1997. However, the timing and amount of
battery orders and revenue from project agreements are uncertain.
The Company has historically been able to raise funds on a
repeated basis to sustain operations. Management is currently
attempting to raise additional funds, primarily in the form of
strategic partner relationships and license agreements with
customers and organizations that can aid penetration of target
markets and can assist financially; however, there can be no
assurance that such funding can be obtained on favorable terms to
the Company, if at all. The financial statements do not include
any adjustments to reflect the possible future effects on the
recoverability and classification of assets or the amounts and
classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
Other
In 1994, the Company signed a "Know-How License Agreement" (the
"Agreement") with Horizon Battery Technologies, Ltd., ("HBTL"),
of Bombay, India, calling for the completion of several detailed
subordinate agreements with the ultimate purpose to license the
manufacture and sale of batteries in India. The effectiveness of
the Agreement was conditioned upon the subsequent execution of
these six related agreements, none of which were executed. The
Company believes, therefore, the Agreement never became effective
and has no force or effect. Separately in 1995, HBTL agreed to
pay the Company $250,000 for a Preliminary Design Review ("PDR")
for a potential manufacturing facility in India which was
required to complete one of the subordinate agreements. The
Company received $100,000 from HBTL and completed the PDR in
1995. The remaining $150,000 was never paid by HBTL, in spite of
repeated demands by the Company.
In September 1996, the Company received a demand from HBTL to
arbitrate damage claims for alleged breach of the Agreement.
HBTL claims damages of approximately $5,100,000 for its expenses
and lost profits related to the Agreement. The Company disputes
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. HBTL is contesting jurisdiction and is seeking
removal of the proceedings to the U.S. Federal Courts. The
Company has not recorded a liability in the financial statements
at December 31, 1996 for this uncertainty, as management is
unable to determine the likelihood of an unfavorable outcome of
this matter or to estimate the amount or range of potential loss
should the outcome be unfavorable. The resolution of this matter
could, in the worst case, have a material adverse effect on the
financial position of the Company.
On June 26, 1996, the Company's shareholders approved an
amendment to the Company's Restated Certificate of Incorporation
that effected a one-for-ten reverse stock split. The Company
amended its Certificate of Incorporation on July 22, 1996 to
effect the reverse split. Pursuant to this amendment, each ten
shares of Common Stock outstanding immediately prior to the
reverse split ("Old Shares") were reclassified as one share of
new Common Stock ("New Shares"). The par value per share of the
Common Stock has correspondingly increased from $0.10 per share
to $1.00 per share. No fractional New Shares were issued as a
result of the reverse split; rather, each shareholder whose Old
Shares were not evenly divisible by ten received one additional
New Share for the fractional New Share that such shareholder
would otherwise be entitled to have received as a result of the
reverse split. All references in this report and in the
financial statements to share and per share amounts have been
restated to retroactively reflect the reverse split.
Management of the Company believes that inflation does not have a
material effect on the Company's results of operations.
Item 8. Financial Statements and Supplementary Data.
See Item 14(a) for an index of the financial statements and
schedules included as a part of this Annual Report on Form 10-K.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure.
None
PART III
Item 10. Directors and Executive Officers of Registrant.
Information with regard to directors and executive officers and
their business experience is set forth under "ELECTION OF
DIRECTORS" in the Company's Definitive Proxy Statement for the
Annual Meeting of Stockholders to be held on May 22, 1997, and is
incorporated herein by reference.
Information with regard to the filing of reports of ownership and
changes of ownership by the Company's directors, officers, and
persons who beneficially own more than ten percent of a
registered class of the Company equity securities is set forth
under "ELECTION OF DIRECTORS - Section 16(a) Disclosure" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 22, 1997, and is incorporated
herein by reference.
Item 11. Executive Compensation.
Information with regard to executive compensation and pension or
similar plans is set forth under "ELECTION OF DIRECTORS -
Compensation of Executive Officers and Directors" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 22, 1997, and is incorporated
herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and
Management.
Information with regard to security ownership of certain
beneficial owners and management is set forth under "SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the
Company's Definitive Proxy Statement for the Annual Meeting of
Stockholders to be held on May 22, 1997, and is incorporated
herein by reference.
Item 13. Certain Relationships and Related Transactions.
Information with regard to certain transactions is set forth
under "ELECTION OF DIRECTORS - Compensation Committee Interlocks
and Insider Participation" and "ELECTION OF DIRECTORS - Certain
Relationships and Related Transaction" in the Company's
Definitive Proxy Statement for the Annual Meeting of Stockholders
to be held on May 22, 1997, and is incorporated herein by
reference.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K.
(a)(1) The following financial statements of the Company are
included in Item 8:
Page No.
Balance Sheets -- December 31, 1996 and 1995 F-3
Statements of Operations--For the years
ended December 31, 1996, 1995, and 1994 F-4
Statements of Shareholders' Equity -- For
the years ended December 31, 1996, 1995 and 1994 F-5
Statements of Cash Flows--For the years
ended December 31, 1996, 1995, and 1994 F-6
Notes to Financial Statements--
December 31, 1996 F-7
(2) Financial Statement Schedules
All schedules for which provision is made in the applicable
accounting regulations of the Securities and Exchange Commission
are included in the notes to financial statements, not required under the
related instructions or are inapplicable, and therefore have been omitted.
(3) Exhibits
3.1 Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to
Electrosource, Inc., Registration Statement on Form 10
filed October 19, 1987, as amended by Form 8 Amendments
filed January 8, 1988 and January 13, 1988 (hereinafter
referred to as "Form 10") and incorporated herein by
reference).
3.2 Certificate of Designation, Preferences, Rights
and Limitations of 1992 Series A Preferred Stock and
Series A-1 Preferred Stock of Electrosource, Inc. as
filed of record with the Delaware Secretary of State on
January 15, 1992 (filed as Exhibit 4.1 to
Electrosource, Inc. Form 8-K Current Report for Issuers
Subject to the 1934 Act Reporting Requirements filed
December 24, 1991 and incorporated herein by
reference).
3.3 Amendment to Restated Certificate of Incorporation
of Electrosource, Inc., increase in authorized shares
to 50,000,000 shares (filed as Exhibit 3.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
3.4 Amendment to Restated Certificate of Incorporation
of Electrosource, Inc., elimination of Certificate of
Designation for Series A and Series A-1 Preferred Stock
(filed as Exhibit 3.2 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated hereby by reference).
3.5 Amendment to the Restated Certificate of
Incorporation of Electrosource filed as of July 22,
1996 (filed as Exhibit 3.1 to Electrosource, Inc.
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, and incorporated herein by reference).
3.6 Bylaws of Electrosource, Inc. (filed as Exhibit
3.2 to Form 10, and incorporated herein by reference).
3.7 Amendment to Bylaws of Electrosource, Inc.,
pursuant to a Certificate of Secretary dated May 25,
1990 (filed as Exhibit 3.3 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
3.8 Amendment to Bylaws of Electrosource, Inc. dated
November 3, 1993 (filed as Exhibit 3.5 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1993, and incorporated herein
by reference).
3.9 Amendment to Bylaws of Electrosource, Inc. dated
June 23, 1994, (filed as Exhibit 3.6 to Electrosource,
Inc., Annual Report filed on Form 10-K for the period
ended December 31, 1994).
3.10 Amendment to Bylaws of Electrosource, Inc. dated
November 13, 1996.
4.1 Letter Agreement between Rosehouse Ltd., a Bermuda-
based institutional Buyer, and Electrosource, Inc.,
dated July 25, 1995 (filed as Exhibit 4.7 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
4.2 Letter Agreement between ACM Advisors of Zurich,
Switzerland, and Electrosource, Inc., dated July 27,
1995 (filed as Exhibit 4.8 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated hereby by reference).
4.3 Offshore Securities Subscription Agreement between
Rosehouse Ltd., a Bermuda-based institutional Buyer,
and Electrosource, Inc., dated July 27, 1995 (filed as
Exhibit 4.10 to Electrosource, Inc., Quarterly Report
on Form 10-Q for quarter ended June 30, 1995, and
incorporated herein by reference).
4.4 Form of 10% Convertible Debentures entered into by
each participant with Electrosource, Inc., dated July
27, 1995 (filed as Exhibit 4.9 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
4.5 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.5 to Electrosource, Inc., Quarterly
Report of Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
4.6 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.6 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
4.7 Warrant to purchase up to 250,000 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated July
27, 1995 (filed as Exhibit 4.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
4.8 Representative Subscription Agreement entered into
by each participant with Electrosource, Inc., dated on
the date of execution (filed as Exhibit 4.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference.).
4.9 Letter Agreement between Shoreline Pacific, an
institutional Buyer, and Electrosource, Inc., dated
October 3, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
4.10 Offshore Securities Subscription Agreement between
participants and Electrosource, Inc., dated October 10,
1995 (filed as Exhibit 4.3 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
4.11 Letter Agreement between Shoreline Pacific, an
institutional Buyer, and Electrosource, Inc., dated
October 25, 1995 (filed as Exhibit 4.4 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
4.12 Offshore Securities Subscription Agreement between
participants and Electrosource, Inc., dated November
29, 1995 (filed as Exhibit 4.5 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
4.13 Form of 8% Convertible Debentures entered into by
each participant with Electrosource, Inc., dated
November 29, 1995 (filed as Exhibit 4.6 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
4.14 Offshore Securities Subscription Agreement dated
February 22, 1996 between Arbinter Omnivalor, S.A. and
Electrosource, Inc. (filed as Exhibit 4.1 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.15 Offshore Securities Subscription Agreement dated
May 2, 1996 between Arbinter Omnivalor, S.A. and
Electrosource, Inc. (filed as Exhibit 4.2 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.16 Warrants to purchase up to 22,789 shares of
Electrosource, Inc. Common Stock, issued to three
principals of Pacific Shoreline dated October 20, 1995
and issued as of May 9, 1996 (filed as Exhibit 4.3 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.17 Warrants to purchase up to 56,700 shares of
Electrosource, Inc. Common Stock, issued to three
principals of Pacific Shoreline dated December 5, 1995
and issued as of May 9, 1996 (filed as Exhibit 4.4 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.18 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to Ally
Capital Management Inc. on April 17, 1995 (filed as
Exhibit 4.1 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference).
4.19 Warrant to purchase up to 90,000 shares of
Electrosource, Inc., Common Stock, issued to
Oppenheimer & Co., Inc. (Investment Bankers) dated
April 28, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by
reference).
4.20 1988 Non-Employee Director Option Plan of
Electrosource, Inc. (filed as Exhibit 4.2 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-22223] filed June 7, 1988, and
incorporated herein by reference).
4.21 Amendment No. 1 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.3 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed July 12, 1990, and
incorporated herein by reference).
4.22 Amendment No. 2 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.4 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed June 30, 1992, and
incorporated herein by reference).
4.23 1993 Non-Employee Consultant Stock Option Plan for
Electrosource, Inc. (filed as Exhibit 4.2 to
Registration Statement on Form S-8 [Registration
Statement # 33-65386], and incorporated herein by
reference).
10.1 Sublicense Agreement dated as of October 5, 1987
between Electrosource, Inc., and Tracor, Inc. (filed as
Exhibit 10.4 to Form 10 and incorporated herein by
reference).
10.2 Patent and Technology Exclusive License Agreement
dated August 14, 1984, between Tracor, Inc., and
Blanyer-Mathews Associates, Inc. ("BMA") (filed as
Exhibit 10.9 to Form S-1 Registration Statement, file
number 33-30486, filed August 14, 1989, hereinafter
referred to as "Form S-1," and incorporated herein by
reference).
10.3 Amendment to Patent and Technology Exclusive
License Agreement dated May 29, 1987, between Tracor,
Inc., and BMA (filed as Exhibit 10.10 to Form S-1 and
incorporated herein by reference).
10.4 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to BMA on
April 12, 1988 (filed as Exhibit 10.11 to Form S-1 and
incorporated herein by reference).
10.5 Bonus Royalty Agreement dated May 26, 1989, among
Electrosource, Inc., Tracor, Inc., and BMA (filed as
Exhibit 19 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1989, and
incorporated herein by reference).
10.6 Amendment to Bonus Royalty Agreement entered into
as of November 30, 1989, by and among BMA, Tracor,
Inc., and Electrosource, Inc. (filed as Exhibit 10.17
to Post Effective Amendment No. 1 to Form S-1
Registration Statement, file number 33-34581, filed
December 11, 1989 (hereinafter referred to as "Post-
Effective Amendment No. 1 to Form S-1 filed December
11, 1989 (hereinafter referred to as "Post-Effective
Amendment") and incorporated herein by reference).
10.7 Assignment of Patent License dated as of May 14,
1990, by and between Electrosource, Inc., and Tracor,
Inc. (joined by BMA for limited purposes described
therein) (filed as Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the period ended
December 31, 1990, hereinafter referred to as the "1990
Form 10-K," and hereby incorporated by reference).
10.8 Letter Agreement dated as of January 15, 1991
between Electrosource, Inc., and BMA (filed as Exhibit
10.21 to the Company's 1990 Form 10-K, and incorporated
herein by reference).
10.9 License Modification Agreement dated January 16,
1992, between Blanyer Mathews & Associates, Inc.,
Electrosource, Inc., and Battery Horizons, Ltd. (filed
as Exhibit 10.23 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1991,
and incorporated herein by reference).
10.10 First Amendment to Assignment of Patent
License dated April 2, 1992, between Electrosource,
Inc. and Tracor, Inc. (filed as Exhibit 10.58 to
Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference).
10.11 Lease Agreement dated December 9, 1987,
between Electrosource, Inc., and Crow-Gottesman-Hill, a
Limited Partnership (filed as Exhibit 10.15 to Form S-
1, and incorporated herein by reference).
10.12 Lease Agreement between Aetna Life Insurance
Company and Electrosource, Inc., dated February 22,
1992 (filed as Exhibit 10.25 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.13 First Amendment to Lease Agreement between
Aetna Life Insurance Company and Electrosource, Inc.,
dated February 24, 1993 (filed as Exhibit 10.27 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.14 Second Amendment to Lease Agreement between
Aetna Life Insurance Company and Electrosource, Inc.,
dated March 1, 1996 (filed as Exhibit 10.14 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995).
10.15 EPRI Agreement RP2415-15 dated July 20, 1992,
between Electrosource, Inc., and Electric Power
Research Institute (filed as Exhibit 10.42 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.16 EPRI Agreement RP2415-15, Amendment No. 1
dated November 12, 1992, between Electrosource, Inc.,
and Electric Power Research Institute (filed as Exhibit
10.43 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.17 EPRI Agreement RP2415-15, Amendment No. 2
dated January 27, 1993, between Electrosource, Inc.,
and Electric Power Research Institute (filed as Exhibit
10.44 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.18 Amendment No. 3 to Agreement between
Electrosource, Inc. and Electric Power Research
Institute, Inc. dated March 22, 1993 (filed as Exhibit
10.53 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1993, and
incorporated herein by reference).
10.19 Amendment No. 4 to Agreement between
Electrosource, Inc. and Electric Power Research
Institute, Inc. dated December 6, 1993 (filed as
Exhibit 10.53 to Company's Registration Statement on
Form S-1 [Registration Statement No. 33-73582] filed
December 24, 1993, and incorporated by reference).
10.20 Business Alliance and License Agreement dated
September 17, 1993, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.61 to Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference). *
10.21 Amendment to Business Alliance and License
Agreement dated November 1, 1995, between Electric
Power Research Institute and Electrosource, Inc. (filed
as Exhibit 10.2 to Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference).
10.22 Shareholders Agreement dated April 25, 1993,
between Electrosource, Inc. and BDM Technologies, Inc.
(filed as Exhibit 10.60 to Company's Registration
Statement on Form S-1 [Registration Statement No. 33-
65248] filed June 30, 1993, and incorporated herein by
reference). *
10.23 Stock Purchase Agreement dated as January 31,
1995, between BDM Technologies, Inc., and
Electrosource, Inc., (filed as Exhibit 10.46 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.24 Operating Lease Agreement between Horizon
Battery Technologies, Inc., BDM Technologies, Inc., and
Electrosource, Inc., dated June 20, 1994 (filed as an
Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.25 Lease Agreement between William D. McMorris
and Horizon Battery Technologies, Inc., dated August
17, 1993, (filed as Exhibit 10.42 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.26 Distributorship Agreement between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated July 7, 1994 (filed as an
Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.27 A Convertible Promissory Note in favor of
Mitsui Engineering and Shipbuilding Co., Ltd. was dated
October 26, 1994 (filed as an Exhibit to the Company's
October 26, 1994, Form 8-K and incorporated herein by
reference).
10.28 The Note Purchase Agreement between Mitsui
Engineering and Shipbuilding co., Ltd. and
Electrosource, Inc., dated October 26, 1994 (filed as
an Exhibit to the Company's October 26, 1994, Form 8-K
and incorporated herein by reference).
10.29 Notice of Intent to Terminate Distributorship
Agreement between Mitsui Engineering and Shipbuilding
Co., Ltd. and Electrosource, Inc., dated December 5,
1995 (filed as an Exhibit to the Company's December 22,
1995 Form 8-K, and incorporated herein by reference).
10.30 A Convertible Promissory Replacement Note
between Mitsui Engineering and Shipbuilding Co., Ltd.
and Electrosource, Inc., dated March 6, 1996 (filed as
Exhibit 10.33 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.31 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated October 26, 1995 (filed as
Exhibit 10.34 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.32 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated March 6, 1996 (filed as
Exhibit 10.35 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.33 Termination Agreement between Electrosource,
Inc. and Mitsui Engineering and Shipbuilding Co., Ltd.,
dated March 6, 1996 (filed as Exhibit 10.36 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995, and incorporated herein
by reference).
10.34 Offshore Securities Subscription Agreement
between Williams DeBroe, a British institutional buyer,
and Electrosource, Inc., dated June 13, 1994 (filed as
an Exhibit to the Company's July 21, 1994, Form 8-K and
incorporated herein by reference).
10.35 Representative Subscription Agreement entered
into by each participant with Electrosource, dated on
the date of execution (filed as an Exhibit to the
Company's October 18, 1994, Form 8-K and incorporated
herein by reference).
10.36 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated January 25, 1995
(filed as an Exhibit to the Company's January 26, 1995
Form 8-K, and incorporated herein by reference).
10.37 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated March 9, 1995
(filed as an Exhibit to the Company's March 10, 1995
Form 8-K, and incorporated herein by reference).
10.38 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
Buyer with Form of Convertible Debenture, and
Electrosource, Inc., dated April 4, 1995 (filed as
Exhibits to the Company's April 12, 1995 Form 8-K, and
incorporated hereby by reference).
10.39 Warrant to purchase up to 54,237 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated April
5, 1995 (filed as an Exhibit to the Company's April 12,
1995 Form 8-K, and incorporated herein by reference).
10.40 Subcontract Number 21614-TTS-7 between AECT,
Inc., and Electrosource, Inc., dated March 21, 1994,
(filed as Exhibit 10.43 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.41 Purchase Agreement between Quantum Energy
Systems and Technology LLC and Electrosource, Inc.,
dated November 14, 1994, (filed as Exhibit 10.44 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.42 Equipment Lease Agreement dated April 6, 1995
between Ally Capital Corporation and Electrosource,
Inc. (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference).
10.43 Equipment Lease Agreement dated September 7,
1995, between Salem Capital Corporation and
Electrosource, Inc. (filed as Exhibit 10.65 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ending December 31, 1995, and incorporated
herein by reference).
10.44 Development Agreement and Agreement for
Purchase of Machinery and Supplies between
Electrosource, Inc., and Charles L. Mathews
("Contractor") dated November 1, 1995 (filed as Exhibit
10.68 to Electrosource, Inc. Annual Report on Form 10-K
for the period ending December 31, 1995, and
incorporated herein by reference).
10.45 Purchase Order between Chrysler Corporation
and Electrosource, Inc., dated January 9, 1996 (filed
as Exhibit 10.69 to Electrosource, Inc. Annual Report
on Form 10-K for the period ending December 31, 1995,
and incorporated herein by reference).
10.46 Agreement for Aircraft Starting Battery
Distribution between Electrosource, Inc., and Horizon
Aviation, Inc. dated February 13, 1996 (filed as
Exhibit 10.70 to Electrosource, Inc. Annual Report on
Form 10-K for the period ending December 31, 1995, and
incorporated herein by reference).
10.47 Joint Development Agreement between
Electrosource, Inc. and Black & Decker (U.S.) Inc.,
dated March 8, 1996 (filed as Exhibit 10.71 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ending December 31, 1995, and incorporated
herein by reference).
10.48 Memorandum of Understanding between
Electrosource, Inc. and Lockheed Martin Corporation
dated March 15, 1996 (filed as Exhibit 10.1 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
The following exhibits filed under Paragraph 10 of Item 601 are
the Company's compensation plans and arrangements:
10.49 Form of Director Indemnification Agreement
(filed as Exhibit 10.8 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1987, and incorporated herein by reference).
10.50 Director Indemnification Agreement dated
January 16, 1992, between Electrosource, Inc., and
Charles Mathews (filed as Exhibit 10.26 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1991, and incorporated herein
by reference).
10.51 Director Indemnification Agreement dated
February 12, 1992, between Electrosource, Inc., and
John Malone (filed as Exhibit 10.30 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.52 Director Indemnification Agreement dated
November 4, 1992, between Electrosource, Inc., and
Thomas S. Wilson (filed as Exhibit 10.41 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.53 Director Indemnification Agreement dated
September 1, 1993, between Electrosource, Inc., and Dr.
Norman Hackerman (filed as Exhibit 10-57 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1993, and incorporated herein
by reference).
10.54 Director Indemnification Agreement dated June
23, 1994, between Electrosource, Inc., and Michael G.
Semmens, (filed as Exhibit 10.72 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.55 Director Indemnification Agreement dated
November 2, 1994, between Electrosource, Inc., and
Richard S. Williamson, (filed as Exhibit 10.73 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.56 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and Nathan
Morton (filed as Exhibit 10.2 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.57 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and William R.
Graham (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.58 1987 Stock Option Plan of Electrosource, Inc.
(filed as Annex A, pages 44 to 48 of Company's
Information Statement filed October 16, 1987, and
incorporated herein by reference).
10.59 Amendment No. 1 to 1987 Stock Option Plan of
Electrosource, Inc., dated February 19, 1992 (filed as
Exhibit 4.3 to Company's Registration Statement on Form
S-8 [Registration Statement No. 33-49049] filed June
30, 1992, and incorporated herein by reference).
10.60 Amendment No. 2 to 1987 Stock Option Plan of
Electrosource, Inc. (filed as Exhibit 10.36 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.61 Amendment No. 3 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.40 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.62 Amendment No. 4 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.3 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995, and incorporated
herein by reference).
10.63 1994 Stock Option Plan of Electrosource, Inc.
(filed as Exhibit 10.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.64 Consulting Agreement dated September 1, 1992,
between Electrosource, Inc., and Norman Hackerman
(filed as Exhibit 10.45 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.65 Consulting Agreement dated August 1, 1993,
between Electrosource, Inc., and Norman Hackerman,
(filed as Exhibit 10.71 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.66 Agreement dated December 19, 1995, between
Electrosource, Inc. and Robert M. Trembath (filed as
Exhibit 10.103 to Electrosource, Inc. Annual Report on
Form 10-K for the period ending December 31, 1995, and
incorporated herein by reference).
10.67 Consulting Agreement dated January 1, 1993,
between Electrosource, Inc., and Wilburn B. Laubach
(filed as Exhibit 10.48 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.68 Consulting Agreement dated February 5, 1992,
between Electrosource, Inc., and John D. Malone (filed
as Exhibit 10.49 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.69 Consulting Agreement dated August 11, 1992,
between Electrosource, Inc., and Ralph E. White (filed
as Exhibit 10.52 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.70 Consulting Agreement dated September 1, 1995,
between Electrosource, Inc., and Liviakis Financial
Communications, Inc. (filed as Exhibit 10.3 to Form 10-
Q for the quarter ended September 30, 1995, and
incorporated herein by reference).
10.71 Offer of Employment dated October 11, 1994,
between Electrosource, Inc., and Michael L. Weinstein,
(filed as Exhibit 10.74 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.72 Separation, Release and Indemnity Agreement
dated September 23, 1995, between Electrosource, Inc.
and Michael L. Weinstein (filed as Exhibit 10.113 to
Electrosource, Inc. Annual Report on Form 10-K for
period ending December 31, 1995, and incorporated
herein by reference).
10.73 Offer of Employment dated May 26, 1994,
between Electrosource, Inc., and Michael G. Semmens
(filed as an Exhibit to the Company's Form 10-Q/A No. 1
for the period ended June 30, 1994, and incorporated
herein by reference).
10.74 Consulting Agreement dated August 1, 1995,
between Donald C. Perriello and Electrosource, Inc. (as
filed Exhibit 10.115 to Electrosource, Inc. Annual
Report on Form 10-K for the period ended December 31,
1995, and incorporated herein by reference).
10.75 Consulting Agreement dated December 1, 1995,
between William Griffin and Electrosource, Inc. (as
filed Exhibit 10.116 to Electrosource, Inc. Annual
Report on Form 10-K for the period ended December 31,
1995, and incorporated herein by reference).
10.76 Employment Agreement dated March 25, 1996,
between William F. Griffin and Electrosource, Inc. (as
filed Exhibit 10.2 to Form 10-Q for the period ended
March 31, 1996, and incorporated herein by reference).
10.77 Consulting Agreement dated March 4, 1995,
between Beacon Advisors, Inc. (Langhorne Reid, III) and
Electrosource, Inc. (as filed Exhibit 10.117 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995, and incorporated herein
by reference).
10.78 Consulting Agreement dated January 1, 1996,
between Jack J. Guy and Electrosource, Inc. (as filed
Exhibit 10.118 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.79 Consulting Agreement dated November 15, 1994,
between Richard C. Baker dba Talbot Management Services
and Electrosource, Inc. (as filed Exhibit 10.119 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995, and incorporated herein
by reference).
10.80 Consulting Agreement between Electrosource,
Inc. and Richard J. Goranflo, dated March 29, 1996. (as
filed Exhibit 10.1 to Form 10-Q for the period ended
June 30, 1996, and incorporated herein by reference).
10.81 Consulting Agreement between Electrosource,
Inc. and James Jordan, dated April 6, 1996. (as filed
Exhibit 10.2 to Form 10-Q for the period ended June 30,
1996, and incorporated herein by reference).
10.82 Consulting Agreement between Electrosource,
Inc. and Robert H. Schwartz d/b/a Jeremiah Partners,
dated May 18, 1996. (as filed Exhibit 10.3 to Form 10-Q
for the period ended June 30, 1996, and incorporated
herein by reference).
10.83 Consulting Agreement between Electrosource,
Inc. and Len Grzanka dated July 15, 1996. (as filed
Exhibit 10.4 to Form 10-Q for the period ended June 30,
1996, and incorporated herein by reference).
10.84 Consulting Agreement between Electrosource,
Inc. and Rick Blanyer dated September 1, 1996. (as
filed Exhibit 10.1 to Form 10-Q for the period ended
September 30, 1996, and incorporated herein by
reference).
24.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule
* Confidential treatment of certain information contained in
this Agreement has been requested pursuant to Rule 406, and
the Agreement has therefore been omitted and filed
separately with the Commission.
(b) Reports on Form 8-K.
Reports on Form 8-K filed during the quarter ended
December 31, 1996 were:
None.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
ELECTROSOURCE, INC.
By: /s/
Michael G. Semmens, President
Date: March 25, 1997
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the dates indicated.
Signature Title Date
/s/ President, Director March 25, 1997
Michael G. Semmens (Chief Executive Officer)
/s/ Director March 25, 1997
Richard Balzhiser
/s/ Director March 25, 1997
William R. Graham
/s/ Director March 25, 1997
Norman Hackerman
/s/ Director March 25, 1997
John D. Malone
/s/ Director March 25, 1997
Charles L. Mathews
/s/ Director March 25, 1997
Nathan Morton
Director March __, 1997
Richard S. Williamson
/s/ Director March 25, 1997
Thomas S. Wilson
/s/ Vice President Finance March 25, 1997
James M. Rosel and General Counsel
(Chief Financial Officer)
/s/ Controller/Treasurer March 25, 1997
Mary Beth Koenig (Principal Accounting Officer)
ELECTROSOURCE, INC.
Audited Financial Statements
December 31, 1996
Audited Financial Statements
Report of Independent Auditors F-2
Balance Sheets F-3
Statements of Operations F-4
Statements of Shareholders' Equity F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Electrosource, Inc.
We have audited the accompanying balance sheets of Electrosource,
Inc., as of December 31, 1996 and 1995, and the related statements
of operations, shareholders' equity, and cash flows for each of the
three years in the period ended December 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits
provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of
Electrosource, Inc. at December 31, 1996 and 1995, and the results
of its operations and its cash flows for each of the three years in
the period ended December 31, 1996, in conformity with generally
accepted accounting principles.
The accompanying financial statements have been prepared assuming
that the Company will continue as a going concern. As more fully
described in Note P, the Company has incurred recurring operating
losses and has experienced cash flow shortages at various times.
Management's plans in regard to these matters are also described in
Note P. These conditions raise substantial doubt about the
Company's ability to continue as a going concern. The financial
statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result
from the outcome of this uncertainty.
As discussed in Note G, the Company has restated its financial
statements as of December 31, 1995 and for the year then ended to
recognize interest expense for the discount feature of convertible
debentures convertible to common stock at a discount to market
price.
Austin, Texas
February 28, 1997
ELECTROSOURCE, INC.
Balance Sheets
December 31
1996 1995
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 367,861 $ 2,083,032
Trade receivables (net of allowance
for doubtful accounts of $15,599
in 1996 and $36,223 in 1995) 247,631 1,535,749
Inventories 249,235 404,755
Prepaid expenses and other assets 164,319 245,133
TOTAL CURRENT ASSETS 1,029,046 4,268,669
PROPERTY AND EQUIPMENT, Net 4,787,019 6,009,334
INTANGIBLE ASSETS
Technology license agreement 3,048,674 3,048,674
Purchased technology 2,412,886 2,412,886
Less: accumulated amortization (2,607,093) (1,613,973)
NET INTANGIBLE ASSETS 2,854,467 3,847,587
RESTRICTED CASH 744,824 744,824
OTHER ASSETS 72,950 406,787
TOTAL ASSETS $9,488,306 $15,277,201
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 704,841 $ 876,746
Accrued liabilities 1,103,751 1,237,920
Deferred revenue and advance
payments on batteries 1,157,028 -
Current portion of capital lease
obligations 658,226 598,420
Convertible notes payable 250,000 -
TOTAL CURRENT LIABILITIES 3,873,846 2,713,086
CONVERTIBLE NOTES PAYABLE - 8,020,000
TECHNOLOGY LICENSE PAYABLE 1,248,684 2,178,014
CAPITAL LEASE OBLIGATIONS
(less current portion) 519,047 1,126,252
COMMITMENTS AND CONTINGENCIES (Note H)
SHAREHOLDERS' EQUITY
Common Stock, par value $1.00 per
share, authorized 50,000,000
shares; issued and outstanding
3,857,912 in 1996 and
3,013,782 in 1995 3,857,912 3,013,782
Preferred Stock, par value $1.00
per share; authorized 10,000,000
shares, no shares issued or - -
outstanding
Warrants (Note K) - -
Paid in capital 45,876,668 36,289,050
Accumulated deficit (45,887,851) (38,062,983)
3,846,729 1,239,849
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 9,488,306 $15,277,201
See notes to financial statements.
ELECTROSOURCE, INC.
Statements of Operations
For the years ended December 31
1996 1995 1994
REVENUES
Battery sales $ 822,698 $ 1,195,597 $ 377,666
Project revenue 295,015 989,433 2,901,690
Capacity maintenance
revenue 2,365,535 - -
Interest income 79,263 93,354 74,400
License fees - 1,000,000 800,000
Revenue from joint
venture partner - - 410,414
Royalty revenue - - 50,000
3,562,511 3,278,384 4,614,170
COSTS AND EXPENSES
Manufacturing 3,661,320 9,365,660 2,210,748
Selling, general and
administrative 3,108,909 6,329,776 4,485,650
Research and
development 1,450,658 3,454,578 1,932,685
Technology license
and royalties 111,271 110,000 3,929,350
Depreciation and
amortization 2,042,007 1,167,461 446,602
Interest expense 487,717 3,238,954 72,000
Loss on disposal of
equipment 525,497 - -
11,387,379 23,666,429 13,077,035
LOSS BEFORE INCOME
TAXES (7,824,868) (20,388,045) (8,462,865)
INCOME TAXES
(ALL FOREIGN) _ 120,000 80,000
NET LOSS $(7,824,868)$(20,508,045) $(8,542,865)
LOSS PER SHARE $ (2.13)$ (9.76) $ (6.05)
AVERAGE SHARES
OUTSTANDING 3,667,776 2,102,295 1,411,989
See notes to financial statements.
ELECTROSOURCE, INC.
Statements of Shareholders' Equity
For the years ended December 31, 1996, 1995 and 1994
Total
Common Paid In Accumulated Shareholders'
Stock Capital Deficit Equity
Balance at
January 1, 1994 $1,317,280 $11,017,174 $ (9,012,073) $ 3,322,381
Stock options exercised 12,816 131,189 - 144,005
Warrants exercised 14,800 318,200 - 333,000
Shares issued in
Regulation S offering 120,000 2,551,556 - 2,671,556
Shares issued in
Regulation D offering 48,550 1,337,924 - 1,386,474
Net loss for year ended
December 31, 1994 (8,542,865) (8,542,865)
Balance at
December 31, 1994 1,513,446 15,356,043 (17,554,938) (685,449)
Shares issued in
Regulation S offering 372,164 4,987,836 - 5,360,000
Shares issued for
Technology License 66,666 1,026,664 - 1,093,330
Stock options exercised 11,950 131,595 - 143,545
Conversion of Convertible
Notes Payable 617,123 7,266,104 - 7,883,227
Shares issued for
consulting services 136,000 1,332,800 - 1,468,800
Shares issued in
Regulation D offering 80,633 806,333 - 886,966
Shares issued for equipment
and purchased technology 215,800 2,778,425 - 2,994,225
Adjustment for conversion
discount on Convertible
Notes Payable
(See Note G) - 2,603,250 - 2,603,250
Net loss for year ended
December 31, 1995
(See Note G) - - (20,508,045) (20,508,045)
Balance at December 31, 1995
(As Restated - Note G) 3,013,782 36,289,050 (38,062,983) 1,239,849
Shares issued in
Regulation S offerings 292,084 2,254,908 - 2,546,992
Conversion of Convertible
Notes Payable 484,828 6,176,048 - 6,660,876
Conversion discount on
Convertible Notes Payable - 141,750 - 141,750
Reverse Split - Fractional
Shares (One-for-Ten) 1,353 (1,353) - -
Shares issued for
Technology License 56,665 872,665 - 929,330
Shares issued for
consulting services 6,000 58,800 - 64,800
Shares issued for
equipment 3,200 14,800 - 18,000
Stock options issued for
consulting services _ 70,000 - 70,000
Net loss for year ended
December 31, 1996 - - (7,824,868) (7,824,868)
Balance at
December 31, 1996 $3,857,912 $45,876,668 $(45,887,851) $ 3,846,729
See notes to financial statements.
ELECTROSOURCE, INC.
Statements of Cash Flows
For the years ended December 31
1996 1995 1994
OPERATING ACTIVITIES
Net loss $(7,824,868) $(20,508,045) $(8,542,865)
Adjustments to reconcile net
loss to net cash used in
operating activities:
Common Stock issued for
Technology License - - 3,271,343
Equity instruments issued
for consulting services 134,800 1,468,800 -
Depreciation and amortization 2,042,007 1,167,461 446,602
Amortization of deferred
financing costs 48,349 104,891 -
Non-cash interest expense
(conversion discount) 141,750 2,603,250 -
Interest expense paid in
common stock 105,103 190,000 -
Decrease in deferred revenue - (1,000,000) -
Loss on disposal of equipment 575,497 - -
Changes in operating assets and
liabilities:
(Increase) decrease in trade
receivables 288,118 942,562 (39,929)
(Increase) decrease in
inventories 155,520 (173,099) (231,656)
(Increase) decrease in prepaid
expenses and other assets 80,814 (220,482) 12,429
Increase (decrease) in
accounts payable and
accrued liabilities (234,813) 240,130 1,280,005
Increase in deferred revenue
and advance payments on
batteries 1,157,028 - -
CASH USED IN OPERATING ACTIVITIES (3,330,695) (15,184,532) (3,804,071)
INVESTING ACTIVITIES
Purchases of property and
equipment, net (384,069) (3,640,537) (2,603,218)
CASH USED IN INVESTING ACTIVITIES (384,069) (3,640,537) (2,603,218)
FINANCING ACTIVITIES
Proceeds from convertible
notes payable - 12,780,000 3,800,000
Payment of notes payable and
capital lease obligations (547,399) (330,490) (735,179)
Proceeds from issuances of
common stock, net 2,546,992 6,390,511 4,535,035
Proceeds from sale and
leaseback transactions - 1,998,064 -
Debt issuance and lease
financing costs - (1,378,450) -
Increase in restricted cash - (744,824) -
CASH PROVIDED BY FINANCING
ACTIVITIES 1,999,593 18,714,811 7,599,856
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,715,171) (110,258) 1,192,567
Cash and cash equivalents at
beginning of period 2,083,032 2,193,290 1,000,723
CASH AND CASH EQUIVALENTS AT END OF
PERIOD $ 367,861 $ 2,083,032 $ 2,193,290
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
ELECTROSOURCE, INC.
December 31, 1996
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Electrosource, Inc. (the "Company") was
incorporated as a Delaware corporation on June 3, 1987. The
Company designs and manufactures advanced lead-acid batteries for
use in four major markets: motive power, portable power, power
management, and starting applications. The majority of revenue
recognized through December 31, 1996, has been generated from
domestic customers.
During 1993, the Company and BDM Technologies, Inc. ("BDM"),
under a strategic alliance, formed Horizon Battery Technologies,
Inc. ("HBTI") in order to establish and operate a limited
capability facility for manufacturing and producing advanced
technology batteries. Each partner maintained a 50% interest.
During 1994, the Company finalized a Technology License Agreement
with BDM and obtained an exclusive license to use certain
technologies under development by BDM for the manufacture of
batteries. In addition, the Company purchased BDM's interest in
HBTI for 100,000 shares of Common Stock. (See also Note H.)
Cash and Cash Equivalents: The Company's cash and cash
equivalents consist of cash and short-term investments with a
maturity of three months or less when purchased.
Inventories: Inventories are stated at the lower of cost (on a
standard, direct materials cost basis) or market value.
Property and Equipment: Property and equipment are recorded at
cost. The Company has also capitalized equipment in accordance
with the terms of related leases. Depreciation of property and
equipment (including amounts recorded under capitalized leases)
is computed using the straight-line method over the estimated
useful lives of the assets or the respective lease term, ranging
from 3 to 10 years.
Technology License Agreement and Purchased Technology: The
Company has been assigned all license rights relating to
coextruded wire by the original licensee. (See Note D.) The
cost of this license is being amortized over the legal life of
the patents on the technology (17 years). The patents expire
beginning in 2004. On November 1, 1995, the Company obtained
intellectual property rights (purchased technology) developed
under a Research and Development Agreement. (See Notes D and L.)
The cost of this purchased technology is being amortized over
three years. On an ongoing basis, management reviews the
valuation and amortization of its intangibles, taking into
consideration any events or circumstances which might have
diminished their value.
Stock Compensation: The Company accounts for its stock
compensation arrangements under the provisions of APB 25,
"Accounting for Stock Issued to Employees."
Loss Per Share: Loss per share is based on the average number of
shares of common stock outstanding during each period. Since the
Company has experienced net operating losses, outstanding options
and warrants to purchase common stock have an antidultive effect.
Therefore, options and warrants were not included in the loss per
share calculation.
Business Segments: The Company is engaged in the manufacture of
advanced lead-acid, rechargeable storage batteries and the
development of related processes and technologies. Accordingly,
the Company considers itself to be operating in one business
segment.
Income Taxes: The Company reports income taxes in accordance
with the Financial Accounting Standards Board's Statement of
Financial Accounting Standards No. 109, "Accounting for Income
Taxes" ("SFAS 109"). SFAS 109 requires that deferred tax assets
and liabilities be determined based on the difference between the
financial statement and tax bases of assets and liabilities using
enacted tax rates in effect for the years in which the
differences are expected to reverse.
Use of Estimates: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
Reclassification: Certain reclassifications have been made to
the 1995 financial statements to conform with the 1996
presentation.
NOTE B - INVENTORIES
1996 1995
Raw materials $151,841 $289,725
Work in progress 31,406 80,729
Finished goods 65,988 34,301
$249,235 $404,755
NOTE C - PROPERTY AND EQUIPMENT
1996 1995
Office equipment $ 751,342 $ 739,677
Production and lab equipment 5,062,475 5,340,172
Leasehold improvements 1,290,197 1,468,384
7,104,014 7,548,233
Less - accumulated depreciation
and amortization (2,316,995) (1,538,899)
Total Property and Equipment $ 4,787,019 $ 6,009,334
Production equipment of $2,067,895 has been capitalized in
accordance with the terms of related leases at December 31, 1996.
Accumulated depreciation for such equipment was $589,614 at
December 31, 1996.
NOTE D - INTANGIBLE ASSETS
Technology License Agreement
At its inception, the Company obtained an exclusive sublicense
for the development, manufacture and commercial exploitation of
coextruded wire for lead-acid battery applications. In May 1990,
the licensee, with the consent of the licensor, assigned the
rights under the original License Agreement to the Company. This
assignment provides the Company with unrestricted applications of
the licensed technology and effectively terminates the Sublicense
Agreement between the licensee and the Company. Previous to this
assignment, the Company's use of the technology was limited
specifically to products and components associated with lead-
acid, storage batteries. The Company is responsible for the
maintenance and administration of the licensed patent and has an
obligation to pay the original licensee a royalty of four percent
on all technology sales unrelated to lead-acid, storage batteries
for the term of the License Agreement. A minimum annual royalty
of $10,000 was due for a five year period beginning on the date
of the assignment. Such royalty payments were to have begun in
May 1991, but the licensee agreed to defer each payment for two
years. The deferred minimum royalty payments accrue interest at
the rate of 8.5 percent per year, from the original due date
until paid. The Company has made all scheduled payments in
accordance with the terms of the deferral agreement. The Company
is obligated to pay the licensor a royalty of one-half of one
percent of net sales of coextruded wire and wire-related
products, with a minimum annual royalty of $100,000.
Purchased Technology
In November, 1995, the Company completed a research and
development agreement with the Electric Power Research Institute
("EPRI"). (See Note L.) In accordance with the terms of a
November 1995 amendment to the agreement, the Company issued
215,800 shares of Common Stock in exchange for the transfer of
intellectual property rights (purchased technology) and the
transfer of title to certain equipment which had been purchased
by EPRI in connection with research activity undertaken by the
Company. The shares were valued at $2,994,225; recorded as
$581,339 to equipment and $2,412,886 to purchased technology. In
addition, pursuant to the terms of such agreement, certain member
utilities of EPRI have elected to receive royalties at the rate
of one-half of one percent on sales of products containing
licensed technology and on other revenues derived by the Company
from license fees, joint ventures and other arrangements
involving the licensed technology.
NOTE E - RESTRICTED CASH
In connection with lease transactions completed during 1995, the
Company was required to collateralize the obligations by
establishing standby letters-of-credit in the amount of $744,824.
These letters-of-credit are collateralized by certificates of
deposit of an equal amount.
NOTE F - ACCRUED LIABILITIES
1996 1995
Payroll and related items $ 240,030 $ 306,579
Due to BDM (occupancy related) 407,269 178,083
Other 456,452 753,258
$1,103,751 $1,237,920
NOTE G - CONVERTIBLE NOTES PAYABLE
Convertible Notes Payable consist of the following:
1996 1995
Convertible Notes - 10% $ 250,000 $ 250,000
Convertible Notes - 5% - 3,990,000
Convertible Notes - 8% _ 3,780,000
250,000 8,020,000
Less Current Maturities (250,000) 0
Total Convertible Notes Payable $ 0 $8,020,000
In October 1994, the Company entered into a 5% Convertible
Promissory Note with Mitsui Engineering and Shipbuilding Co.,
Ltd. ("MES") for $3,800,000 maturing in October 2004, with
interest due and payable semi-annually in the form of additional
notes payable. A note payable in the amount of $190,000 was
issued in October 1995 for interest for the year then ended with
the same terms and conditions as the original note. In March
1996, MES applied $1,000,000 of its Convertible Notes Payable
against $1,000,000 of outstanding license fees to the Company. A
Replacement Note for $2,800,000 was issued at that time with the
same terms and conditions as the original note. In July 1996,
MES converted the Replacement Note (and subsequent accrued
interest) into 81,841 shares of Common Stock at a conversion
price of $38.00 per share.
In April 1995, the Company issued $6,000,000 of 10% Convertible
Debentures (the "April 1995 Debentures") resulting in net
proceeds to the Company of $5,375,000. The April 1995 Debentures
are convertible into Common Stock at a conversion price equal to
80% of the average closing price of the Common Stock for the five
business days immediately preceding such time as the debentures
are converted and mature on April 12, 1997. Interest is payable
quarterly. Warrants to purchase 5,424 shares of Common Stock at
a price of $36.875 per share, exercisable until April 5, 2000,
were issued to the purchasers of the April 1995 Debentures. As
of December 31, 1996, April 1995 Debentures with a total
principal amount of $5,750,000 have been converted into 379,548
shares of Common Stock.
In July 1995, the Company issued $3,000,000 of 10% Convertible
Debentures (the "July 1995 Debentures") resulting in net proceeds
to the Company of $2,700,000. The July 1995 Debentures were
convertible into Common Stock at a price equal to 80% of the
closing price of the Common Stock on the business day immediately
preceding such time as the debentures were converted, not to
exceed 120% of the closing bid price on July 27, 1995 of $15.30.
In addition, warrants to purchase 100,000 shares of Common Stock
at a price of $30.00 per share, and an additional 100,000 shares
at a price of $40.00 per share, exercisable until January 27,
1998, were issued to an agent of the holders of the July 1995
Debentures. In addition, warrants to purchase 25,000 shares of
Common Stock at a price of $15.30 per share, the closing bid
price on July 27, 1995, exercisable until July 27, 2000, were
issued to another agent for this transaction. As of December 31,
1996, all of the July 1995 Debentures were converted into 237,578
shares of Common Stock.
In November 1995, the Company issued $3,780,000 of 8% Convertible
Debentures (the "November 1995 Debentures") resulting in net
proceeds to the Company of $3,477,600. The November 1995
Debentures and related accrued interest were convertible into
Common Stock at a price equal to 75% of the average closing price
of the Common Stock for the five business days immediately
preceding the respective conversion date. In addition, warrants
to purchase 5,670 shares of Common Stock at a price of $15.60 per
share, exercisable until November 10, 1997, were issued to an
agent of the holders of the November 1995 Debentures. As of
December 31, 1996, all of the November 1995 Convertible
Debentures and related interest were converted into 402,987
shares of Common Stock.
Previously, the Company accounted for the conversion of
convertible debentures, issued with conversion rights at a
discount to market, as sales of securities and treated the
discount as a cost of capital. The Securities and Exchange
Commission recently announced that it believes such discounts
should be treated as interest expense. Accordingly, the Company
has restated its financial statements for the year ended December
31, 1995 to reclassify the discount (generally 20-25%) as
interest expense and record it as a cost of borrowing. The
discount was amortized over the period beginning with the
issuance of the debt to the first date that conversion could
occur (generally 60 days). The restatement increased the net
loss for the year ended December 31, 1995 by $2,603,250 ($1.24
per share) and increased the accumulated deficit and paid in
capital by the same amount. In addition, the Company has
recorded an additional $141,750 in interest expense related to
the quarter ended March 31, 1996.
Cash interest paid by the Company was approximately $241,000,
$342,000 and $72,000 in 1996, 1995 and 1994, respectively.
NOTE H - TECHNOLOGY LICENSE PAYABLE
Through its funding to HBTI for development of a low rate initial
production line for the Horizon battery, BDM owned the rights to
certain technologies for the manufacture of such batteries.
During 1994, the Company finalized a Technology License Agreement
with BDM. Under the terms of this agreement, the Company
obtained an exclusive license to use certain technologies under
development by BDM for the manufacture of batteries. The Company
agreed to pay BDM: $80,000 cash; issue 170,000 shares of Common
Stock in thirty-six equal installments; issue 20,000 additional
shares of Common Stock if the Company decides to maintain the
license beyond the original three year term; grant 100,000
options to purchase Common Stock exercisable at $40.00 per
share; and buy BDM's interest in HBTI for 10,000 shares of Common
Stock. The Company recorded an expense of $3,819,350 in 1994 for
this transaction based on the fair market value of the various
components of the transaction. This was treated as an expense as
the technological feasibility of the manufacturing technology
licensed had not been completely proven and the Company at that
time had no alternative future uses for this technology.
NOTE I - LEASE AND OTHER COMMITMENTS
The Company leases various plant and office facilities, and
production, office and warehouse equipment under operating and
capital leases expiring between 1997 and 2003. Future minimum
annual rentals under lease arrangements at December 31, 1996 are
as follows:
Capital Leases
Sale/ Operating
Fiscal Year Total Leasebacks Other Leases
1997 $ 764,637 $ 751,342 $13,295 $ 897,331
1998 403,864 399,349 4,515 899,887
1999 90,576 90,576 _ 441,070
2000 75,480 75,480 _ 370,934
2001 _ _ _ 365,000
Thereafter _ _ _ 805,000
1,334,557 1,316,747 17,810 $3,779,222
Less imputed interest (157,284) (154,959) (2,325)
Present value of capital
lease obligations $1,177,273 $1,161,788 $15,485
During 1995, the Company completed two agreements to sell and
lease back $1,998,064 of capital equipment. The leases are
collateralized by letters-of-credit in the amount of $663,220.
The amount of the letters-of-credit can be reduced if the Company
completes an offering of securities with net proceeds of $20
million or more. In connection with this transaction, the lessor
was granted warrants to purchase 7,500 shares of Common Stock at
an exercise price of $40.00 per share, exercisable until April
17, 2000. In January 1997, the Company filed a registration
statement on Form S-3 to register 160,000 shares of the Company's
Common Stock which were issued to the Lessor for prepayment of
the equipment lease obligations. (See Note Q.) Other leased
equipment is collateralized by a letter-of-credit in the amount
of $81,604.
The Company's monthly rental rate on its 88,000 square foot
facility is approximately $25,000 per month, expiring in November
2003. The Company has an option to purchase the property and
improvements for $2,678,000 until August 1997. The Company's
obligations under this lease are guaranteed by BDM. The Company
must pay the Lessor a fee of $30,000 upon expiration of the
option if it is not exercised. Rental expense for operating
leases for the years ended December 31, 1996, 1995 and 1994 was
approximately $824,000, $858,000 and $497,000, respectively.
In September 1995, the Company engaged Liviakis Financial
Communications, Inc. ("Liviakis") to provide consulting services
for a two year period. As consideration for these services, the
Company issued 136,000 unregistered, restricted shares of Common
Stock to Liviakis, which were valued at $1,468,800 and charged as
an expense in 1995, and agreed to issue an additional 12,000
unregistered, restricted shares of Common Stock to Liviakis in
six installments over a two year period which are being expensed
as earned over the respective period.
NOTE J - CONTINGENCIES
In 1994, the Company signed a "Know-How License Agreement" (the
"Agreement") with Horizon Battery Technologies, Ltd. ("HBTL"), of
Bombay, India, calling for the completion of several detailed
subordinate agreements with the ultimate purpose to license the
manufacture and sale of batteries in India. The effectiveness of
the Agreement was conditioned upon the subsequent execution of
these six related agreements, none of which were executed. The
Company believes, therefore, the Agreement never became effective
and has no force or effect. Separately in 1995, HBTL agreed to
pay the Company $250,000 for a Preliminary Design Review ("PDR")
for a potential manufacturing facility in India which was
required to complete one of the subordinate agreements. The
Company received $100,000 from HBTL and completed the PDR in
1995. The remaining $150,000 was never paid by HBTL, in spite of
repeated demands by the Company.
In September 1996, the Company received a demand from HBTL to
arbitrate damage claims for alleged breach of the Agreement.
HBTL claims damages of approximately $5.1 million for its
expenses and lost profits related to the Agreement. The Company
disputes 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. HBTL is contesting jurisdiction
and is seeking removal of the proceedings to the U.S. Federal
Courts. The Company has not recorded a liability in the
financial statements at December 31, 1996 for this uncertainty as
management is unable to determine the likelihood of an
unfavorable outcome of this matter or to estimate the amount or
range of potential loss should the outcome be unfavorable. The
resolution of this matter could, in the worst case, have a
material adverse effect on the financial position of the Company.
The Company is also involved in certain other contingencies
incidental to its business. While the ultimate results of these
matters cannot be predicted with certainty, management does not
expect them to have a material adverse effect on the financial
position of the Company.
Trade receivables are composed of balances due from a limited
customer base. Although the Company has a concentration of
credit risk, the Company has not experienced significant
collection losses from these respective customers.
Activity in the Company's allowance for doubtful accounts was as follows:
<TABLE>
<CAPTION>
Additions
Balance at Charged to Charged to Write-Off of Balance at
Beginning Costs and Other Uncollectible End of
Description of Period Expense Accounts Accounts Period
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1996
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts $36,223 $15,599 - 0 - $(36,223) $15,599
Year ended December 31, 1995
Reserves and allowances deducted
from asset accounts:
Allowance for doubtful accounts $7,500 $278,653 - 0 - $(249,930) $36,223
Year ended December 31, 1994
Reserves and allowances deducted
from asset accounts:
Allowance for doubtfull accounts - 0 - $7,500 - 0 - - 0 - $7,500
</TABLE>
NOTE K - SHAREHOLDERS' EQUITY
Reverse Stock Split
On June 26, 1996, the Company's shareholders approved an
amendment to the Company's Restated Certificate of Incorporation
that effected a one-for-ten reverse stock split. The Company
amended its Certificate of Incorporation on July 22, 1996 to
effect the reverse split. Pursuant to this amendment, each ten
shares of Common Stock outstanding immediately prior to the
reverse split ("Old Shares") were reclassified as one share of
new Common Stock ("New Shares"). The par value per share of the
Common Stock was correspondingly increased from $0.10 per share
to $1.00 per share. No fractional New Shares were issued as a
result of the reverse split. In lieu thereof, each shareholder
whose Old Shares were not evenly divisible by ten received one
additional New Share for the fractional New Share that such
shareholder would otherwise be entitled to have received as a
result of the reverse split. All references in the financial
statements to share and per share amounts have been restated to
retroactively reflect the reverse split.
Stock Option Plans
The Company has elected to follow Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB
25") and related Interpretations in accounting for its employee
stock options because, as discussed below, the alternative fair
value accounting provided for under FASB Statement No. 123,
"Accounting for Stock-Based Compensation," requires use of option
valuation models that were not developed for use in valuing
employee stock options. Under APB 25, because the exercise price
of the Company's employee stock options equals the market price
of the underlying stock on the date of grant, no compensation
expense is recognized.
The Company has a 1987 Stock Option Plan, a 1988 Non-Employee
Director Stock Option Plan, a 1993 Non-Employee Consultant Stock
Option Plan and a 1994 Stock Option Plan (collectively referred
to as the "Plans"). The Plans provide for the grant/award of
options at the discretion of the Compensation/Stock Option
Committee to purchase shares of the Company's Common Stock at
prices not less than 100% of the market price of such stock on
the date the option is granted. These options generally become
exercisable in three stages beginning six months after the date
of grant and expire up to ten years from the date of grant. As
of December 31, 1996, there are 60,922 shares available for grant
under the Plans.
Management is seeking shareholder approval of a 1996 Stock Option
Plan ("1996 Plan"), under which all outstanding options under the
Plans presently in place would be aggregated and the Plans would
be terminated. Management is seeking shareholder approval of
960,000 shares in the 1996 Plan, an increase of 588,165 shares
currently authorized under the Plans. Grants of options to
purchase 247,144 shares, approved by the Compensation Stock
Option Committee under the 1996 Plan, have not been included in
the information below as the 1996 Plan requires shareholder
approval.
Pro forma information regarding net loss and loss per share is
required for 1996 and 1995 by FASB Statement 123, and has been
determined as if the Company had accounted for its employee stock
options under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using
a Black-Scholes option pricing model with the following weighted-
average assumptions for 1995 and 1996, respectively: risk-free
interest rates of 6.1% and 6.0%; dividend yield of 0%; volatility
factors of the expected market price of the Company's common
stock of .93 and 1.0; and a weighted-average expected life of the
option of five years.
The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option
valuation models require the input of highly subjective
assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because
changes in the subjective input assumptions can materially affect
the fair value estimate, in management's opinion, the existing
models do not necessarily provide a reliable single measure of
the fair value of its employee stock options.
For purposes of pro forma disclosures, the estimated fair value
of the options is amortized to expense over the options' vesting
period. The Company's pro forma information follows:
1996 1995
Pro forma stock-based compensation expense $ 873,410 $ 422,610
Pro forma net loss 8,698,278 20,930,655
Pro forma loss per share 2.37 9.96
The effects of applying Statement No. 123 for pro forma
disclosures are not necessarily indicative of future amounts due
to the prospective adoption of FASB Statement No. 123's effects
on reported net income for future years.
A summary of changes in common stock options during 1994, 1995
and 1996 is as follows:
Weighted
Range of Average
Exercise Exercise
Shares Prices ($) Price ($)
Options outstanding January 1, 1994 111,101 10.60-46.25 22.56
Granted 109,000 28.75-37.50 34.86
Exercised (12,816) 10.60-18.75 11.24
Surrendered (8,000) 40.00 40.00
Options outstanding December 31, 1994 199,285 10.60-46.25 29.31
Granted 75,500 13.72-33.75 25.06
Exercised (11,950) 10.60-23.10 12.01
Surrendered (24,900) 18.75-35.00 31.07
Options outstanding December 31, 1995 237,935 10.60-46.25 28.65
Granted 106,625 5.28-13.00 11.40
Exercised _ _ _
Surrendered (68,767) 12.50-46.25 31.78
Options outstanding December 31, 1996 275,793 5.28-37.50 21.20
Options exercisable, December 31
1994 81,525 10.60-46.25 21.33
1995 132,602 10.60-46.25 27.01
1996 181,880 5.28-37.50 21.80
The weighted-average fair value of options granted during 1996 and 1995 was
$7.62 and $15.58 per share, respectively.
A summary of option information by exercise price as of December 31, 1996
follows:
Total Options Outstanding Currently Exercisable
Weighted-
Weighted Average Weighted-
Number Average Remaining Number Average
of Exercise Contractual of Exercise
Options Price Life Options Price
5.28 - 10.00 11,392 $ 5.67 4.61 11,392 $ 5.67
10.01 - 15.00 126,151 11.86 6.53 70,338 11.64
15.01 - 20.00 20,200 16.80 3.58 15,400 17.17
20.01 - 25.00 5,750 23.10 1.01 5,750 23.10
25.01 - 30.00 17,900 27.76 7.22 13,067 27.74
30.01 - 35.00 82,400 34.86 4.46 55,600 34.86
35.01 - 37.50 12,000 36.98 2.03 10,333 37.10
5.28 - 37.50 275,793 $21.20 5.35 181,880 $21.80
Warrants
The Company has issued numerous warrants associated with various
debt and equity financings with varying expiration dates through
July 2000. The following table represents a summary of warrant
activity for the three years ended December 31, 1996:
Price Per
Warrants Warrant ($)
Warrants outstanding January 1, 1994 18,800 22.50
Issued 48,550 25.00 - 35.00
Exercised (14,800) 22.50
Expired (4,000) 22.50
Warrants outstanding December 31, 1994 48,550 25.00 - 35.00
Issued 245,844 15.30 - 40.00
Warrants outstanding December 31, 1995 294,394 15.30 - 40.00
Warrants outstanding December 31, 1996 294,394 15.30 - 40.00
Reserved Shares
At December 31, 1996, shares of the Company's Common Stock were
reserved as follows for issuance under:
Stock option plans 371,835
BDM transaction 176,668
Conversion of the
April 1995 Debentures 45,000
Exercise of warrants 294,423
Liviakis consulting agreement 6,000
893,926
NOTE L - REVENUE
Project
The Company generated project revenue of approximately $2,056,000
in 1994 under an agreement with EPRI for continuing efforts to
develop and commercialize the Company's proprietary advanced lead-
acid battery. On November 1, 1995, the Company completed its
Research and Development Agreement with EPRI. (See Note D.)
In August 1994, Chrysler awarded the Company a $1,600,000
contract to custom fit the Horizon battery to prototypes of
Chrysler's NS electric minivan. The Company recorded
approximately $778,000 and $846,000 in project revenue under this
agreement in 1995 and 1994, respectively.
During 1996, the Company generated project revenue of
approximately $115,000 from Chrysler for various environmental
and other tests performed on the Horizon battery. The remainder
of project revenue generated in 1996 was from agreements to
design and provide prototype batteries to various customers for a
variety of applications.
Capacity Maintenance
In July 1996, the Company received a $3,000,000 payment from
Chrysler. Chrysler designated $2,366,000 of this payment as
compensation for continued capacity maintenance and ramp-up costs
incurred by the Company in relation to its role as a supplier to
the automaker for its electric vehicle EPIC Minivan Program and
$634,000 for various engineering, research and development (ER&D)
efforts. The Company recorded $2,366,000 as income as all tasks
necessary to earn the income had been performed and there were no
further obligations related to such revenue. The Company
recorded $634,000 as deferred revenue which will be recognized in
income as the ER&D tasks are performed.
Batteries
Approximately 50% of the Company's 1996 and 1995 battery sales
were to Chrysler.
NOTE M - INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities
for financial reporting purposes and the amounts used for income
tax purposes. Significant components of the Company's deferred
tax asset at December 31, 1996, and 1995, are as follows:
1996 1995
Deferred Tax Assets:
Net operating loss and other tax carry-forwards $11,432,000 $ 9,064,000
Book depreciation in excess of tax depreciation 576,000 263,000
Accruals and other 730,000 1,163,000
Total deferred tax assets 12,738,000 10,490,000
Less valuation allowance (12,738,000) (10,490,000)
Deferred tax assets, net $ _ $ _
The reconciliation of income tax computed at the United States
federal statutory tax rates to income tax expense for the years
ended December 31, 1996, 1995 and 1994 are as follows:
1996 1995 1994
Income tax benefit at statutory
U.S. federal income tax rate (34.0%) (34.0%) (34.0%)
Increase in valuation allowance 34.0% 35.6% 34.0%
Other 0.0% (0.9%) 0.9%
Effective income tax rate 0.0% 0.7% 0.9%
The Company's valuation allowance increased by $2.2 million and
$6.4 million during the years ended 1996 and 1995, respectively,
as a result of net operating losses which were generated but may
not be realizable. At December 31, 1996, the Company had net
operating loss carryforwards of approximately $37 million, which
will expire from 2002 through 2011, research and development
credits of approximately $35,000 and foreign tax credits of
approximately $200,000 which expire beginning in 2009 and 1999,
respectively. Ownership changes have resulted in utilization of
the Company's net operating losses being limited.
NOTE N - RELATED PARTY TRANSACTIONS
Certain directors of the Company are also shareholders of the
licensor of coextruded wire technology.
During 1995, the Company entered into agreements with a director
of the Company for the development of certain machinery and
materials as well as general consulting. The Company paid
$103,000 and $17,000 under such agreements in 1996 and 1995,
respectively, and has committed to pay approximately $9,000 per
month through July 1997. The Company may also purchase machinery
developed in accordance with this agreement at its option for an
additional fee. In addition, the Company has leased
approximately 4,000 square feet in the director's manufacturing
facility through December 1, 1997 for a total cost of $4,800.
NOTE O - EMPLOYEE BENEFIT PLAN
The Company sponsors a qualified defined contribution plan
covering all full-time eligible employees. The Company matches
twenty-five percent of a participant's voluntary contributions up
to a maximum of four percent of a participant's compensation.
The Company's contribution expense was approximately $18,000,
$20,000 and $22,000 in 1996, 1995 and 1994, respectively.
NOTE P - ABILITY TO CONTINUE AS A GOING CONCERN
During 1996, management focused attention on developing
relationships with customers to design and provide prototype
batteries for a variety of electric vehicle and non-electric
vehicle applications and made progress toward integration of the
Horizon battery technology into certain products. In addition,
management significantly reduced operating costs. However, to
date such efforts have not resulted in sufficient cash flow to
sustain operations. Although management is making efforts to
improve cash flow from operations, additional debt and/or equity
financing will be necessary.
In January and March 1997, the Company completed private
placements of debt and equity generating net proceeds to the
Company of $1,180,508. (See Note Q.) Management is continuing
to control costs and believes it has sufficient cash to continue
operations at current levels through the first quarter of 1997;
however, it will be necessary to raise additional financing
before the end of the second quarter of 1997 to sustain
operations and fund anticipated growth.
The Company has historically raised funds to sustain operations.
Management is currently attempting to raise additional funds,
primarily in the form of strategic partner relationships and
license agreements with customers and organizations that can aid
penetration of target markets and can assist financially; however
there can be no assurance that such funding can be obtained on
terms acceptable to the Company, if at all. The financial
statements do not include any adjustments to reflect the possible
future effects on the recoverability and classification of assets
or the amounts and classification of liabilities that may result
from the possible inability of the Company to continue as a going
concern.
NOTE Q - SUBSEQUENT EVENTS
In January 1997, the Company completed a private placement of
109,397 shares of Common Stock with its executive officers and
certain other accredited investors which generated net proceeds
of $680,508. In connection with this offering, the Company
issued 616,383 warrants with a term of two years and exercise
prices ranging from $5.25 to $7.56 per share.
In January 1997, the Company filed a registration statement on
Form S-3 for the sale of 160,000 shares issued to Ally Capital
Corporation ("Ally") as prepayment for capital lease obligations
owed by the Company. The shares will be sold by Ally, the
proceeds of which will be used to satisfy the lease obligations
(approximately $1,050,000 as of December 31, 1996). If the
proceeds from the sale of such shares are not sufficient to
satisfy the lease obligations due to fluctuations in market
prices, the Company will, on a one time basis, issue additional
shares of Common Stock or pay cash to Ally to make up the
deficiency. Ally will retain any overage from the sale of such
shares in excess of the lease obligations. Upon payment of all
lease obligations, letters of credit for $663,000 which
securitize the lease obligations will be canceled and
certificates of deposit of an equal amount that collateralize the
letters of credit will be released. The 160,000 shares were
issued and outstanding as of December 31, 1996, but were not
recorded as shareholders' equity in the financial statements
because the aggregate amount of consideration for the transaction
had not been determined and the lease obligation had not been
satisfied at December 31, 1996.
Subsequent to December 31, 1996, the Company received $500,000 in
the form of an unsecured demand note bearing interest at 5% from
an unrelated corporation with whom the Company is pursuing
additional relationships.
Washington, D.C. 20549
________________________________________
EXHIBITS TO
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended Commission
File
December 31, 1996 Number 0-16323
__________________________________________
ELECTROSOURCE, INC.
(Exact name of Registrant as specified in its charter)
Delaware 742466304
(State or other jurisdiction
(I.R.S. Employer
of incorporation or organization)
Identification No.)
2809 Interstate 35 South 78666
San Marcos, Texas (Zip Code)
(Address of principal
executive offices)
Registrant's telephone number, including
area code: (512) 753-6500
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $1.00 per share
INDEX TO EXHIBITS
3.1 Restated Certificate of Incorporation of
Electrosource, Inc. (filed as Exhibit 3.1 to
Electrosource, Inc., Registration Statement on Form 10
filed October 19, 1987, as amended by Form 8 Amendments
filed January 8, 1988 and January 13, 1988 (hereinafter
referred to as "Form 10") and incorporated herein by
reference).
3.2 Certificate of Designation, Preferences, Rights
and Limitations of 1992 Series A Preferred Stock and
Series A-1 Preferred Stock of Electrosource, Inc. as
filed of record with the Delaware Secretary of State on
January 15, 1992 (filed as Exhibit 4.1 to
Electrosource, Inc. Form 8-K Current Report for Issuers
Subject to the 1934 Act Reporting Requirements filed
December 24, 1991 and incorporated herein by
reference).
3.3 Amendment to Restated Certificate of Incorporation
of Electrosource, Inc., increase in authorized shares
to 50,000,000 shares (filed as Exhibit 3.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
3.4 Amendment to Restated Certificate of Incorporation
of Electrosource, Inc., elimination of Certificate of
Designation for Series A and Series A-1 Preferred Stock
(filed as Exhibit 3.2 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated hereby by reference).
3.5 Amendment to the Restated Certificate of
Incorporation of Electrosource filed as of July 22,
1996 (filed as Exhibit 3.1 to Electrosource, Inc.
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996, and incorporated herein by reference).
3.6 Bylaws of Electrosource, Inc. (filed as Exhibit
3.2 to Form 10, and incorporated herein by reference).
3.7 Amendment to Bylaws of Electrosource, Inc.,
pursuant to a Certificate of Secretary dated May 25,
1990 (filed as Exhibit 3.3 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
3.8 Amendment to Bylaws of Electrosource, Inc. dated
November 3, 1993 (filed as Exhibit 3.5 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1993, and incorporated herein
by reference).
3.9 Amendment to Bylaws of Electrosource, Inc. dated
June 23, 1994, (filed as Exhibit 3.6 to Electrosource,
Inc., Annual Report filed on Form 10-K for the period
ended December 31, 1994).
3.10 Amendment to Bylaws of Electrosource, Inc. dated
November 13, 1996.
4.1 Letter Agreement between Rosehouse Ltd., a Bermuda-
based institutional Buyer, and Electrosource, Inc.,
dated July 25, 1995 (filed as Exhibit 4.7 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended June 30, 1995, and incorporated herein by
reference).
4.2 Letter Agreement between ACM Advisors of Zurich,
Switzerland, and Electrosource, Inc., dated July 27,
1995 (filed as Exhibit 4.8 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated hereby by reference).
4.3 Offshore Securities Subscription Agreement between
Rosehouse Ltd., a Bermuda-based institutional Buyer,
and Electrosource, Inc., dated July 27, 1995 (filed as
Exhibit 4.10 to Electrosource, Inc., Quarterly Report
on Form 10-Q for quarter ended June 30, 1995, and
incorporated herein by reference).
4.4 Form of 10% Convertible Debentures entered into by
each participant with Electrosource, Inc., dated July
27, 1995 (filed as Exhibit 4.9 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
4.5 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.5 to Electrosource, Inc., Quarterly
Report of Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
4.6 Warrant to purchase up to 1,000,000 shares of
Electrosource, Inc., Common Stock, issued to ACM
Advisors, Zurich, Switzerland, dated July 27, 1995
(filed as Exhibit 4.6 to Electrosource, Inc., Quarterly
Report on Form 10-Q for quarter ended June 30, 1995,
and incorporated herein by reference).
4.7 Warrant to purchase up to 250,000 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated July
27, 1995 (filed as Exhibit 4.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended June
30, 1995, and incorporated herein by reference).
4.8 Representative Subscription Agreement entered into
by each participant with Electrosource, Inc., dated on
the date of execution (filed as Exhibit 4.1 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference.).
4.9 Letter Agreement between Shoreline Pacific, an
institutional Buyer, and Electrosource, Inc., dated
October 3, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
4.10 Offshore Securities Subscription Agreement between
participants and Electrosource, Inc., dated October 10,
1995 (filed as Exhibit 4.3 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
4.11 Letter Agreement between Shoreline Pacific, an
institutional Buyer, and Electrosource, Inc., dated
October 25, 1995 (filed as Exhibit 4.4 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
4.12 Offshore Securities Subscription Agreement between
participants and Electrosource, Inc., dated November
29, 1995 (filed as Exhibit 4.5 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for quarter ended
September 30, 1995, and incorporated herein by
reference).
4.13 Form of 8% Convertible Debentures entered into by
each participant with Electrosource, Inc., dated
November 29, 1995 (filed as Exhibit 4.6 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
quarter ended September 30, 1995, and incorporated
herein by reference).
4.14 Offshore Securities Subscription Agreement dated
February 22, 1996 between Arbinter Omnivalor, S.A. and
Electrosource, Inc. (filed as Exhibit 4.1 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.15 Offshore Securities Subscription Agreement dated
May 2, 1996 between Arbinter Omnivalor, S.A. and
Electrosource, Inc. (filed as Exhibit 4.2 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.16 Warrants to purchase up to 22,789 shares of
Electrosource, Inc. Common Stock, issued to three
principals of Pacific Shoreline dated October 20, 1995
and issued as of May 9, 1996 (filed as Exhibit 4.3 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.17 Warrants to purchase up to 56,700 shares of
Electrosource, Inc. Common Stock, issued to three
principals of Pacific Shoreline dated December 5, 1995
and issued as of May 9, 1996 (filed as Exhibit 4.4 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
4.18 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to Ally
Capital Management Inc. on April 17, 1995 (filed as
Exhibit 4.1 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1995, and
incorporated herein by reference).
4.19 Warrant to purchase up to 90,000 shares of
Electrosource, Inc., Common Stock, issued to
Oppenheimer & Co., Inc. (Investment Bankers) dated
April 28, 1995 (filed as Exhibit 4.2 to Electrosource,
Inc., Quarterly Report on Form 10-Q for the quarter
ended June 30, 1995, and incorporated herein by
reference).
4.20 1988 Non-Employee Director Option Plan of
Electrosource, Inc. (filed as Exhibit 4.2 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-22223] filed June 7, 1988, and
incorporated herein by reference).
4.21 Amendment No. 1 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.3 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed July 12, 1990, and
incorporated herein by reference).
4.22 Amendment No. 2 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 4.4 to Company's
Registration Statement on Form S-8 [Registration
Statement No. 33-49042] filed June 30, 1992, and
incorporated herein by reference).
4.23 1993 Non-Employee Consultant Stock Option Plan for
Electrosource, Inc. (filed as Exhibit 4.2 to
Registration Statement on Form S-8 [Registration
Statement # 33-65386], and incorporated herein by
reference).
10.1 Sublicense Agreement dated as of October 5, 1987
between Electrosource, Inc., and Tracor, Inc. (filed as
Exhibit 10.4 to Form 10 and incorporated herein by
reference).
10.2 Patent and Technology Exclusive License Agreement
dated August 14, 1984, between Tracor, Inc., and
Blanyer-Mathews Associates, Inc. ("BMA") (filed as
Exhibit 10.9 to Form S-1 Registration Statement, file
number 33-30486, filed August 14, 1989, hereinafter
referred to as "Form S-1," and incorporated herein by
reference).
10.3 Amendment to Patent and Technology Exclusive
License Agreement dated May 29, 1987, between Tracor,
Inc., and BMA (filed as Exhibit 10.10 to Form S-1 and
incorporated herein by reference).
10.4 Warrant to purchase up to 50,000 shares of
Electrosource, Inc., Common Stock, issued to BMA on
April 12, 1988 (filed as Exhibit 10.11 to Form S-1 and
incorporated herein by reference).
10.5 Bonus Royalty Agreement dated May 26, 1989, among
Electrosource, Inc., Tracor, Inc., and BMA (filed as
Exhibit 19 to Electrosource, Inc., Quarterly Report on
Form 10-Q for the quarter ended June 30, 1989, and
incorporated herein by reference).
10.6 Amendment to Bonus Royalty Agreement entered into
as of November 30, 1989, by and among BMA, Tracor,
Inc., and Electrosource, Inc. (filed as Exhibit 10.17
to Post Effective Amendment No. 1 to Form S-1
Registration Statement, file number 33-34581, filed
December 11, 1989 (hereinafter referred to as "Post-
Effective Amendment No. 1 to Form S-1 filed December
11, 1989 (hereinafter referred to as "Post-Effective
Amendment") and incorporated herein by reference).
10.7 Assignment of Patent License dated as of May 14,
1990, by and between Electrosource, Inc., and Tracor,
Inc. (joined by BMA for limited purposes described
therein) (filed as Exhibit 10.20 to the Company's
Annual Report on Form 10-K for the period ended
December 31, 1990, hereinafter referred to as the "1990
Form 10-K," and hereby incorporated by reference).
10.8 Letter Agreement dated as of January 15, 1991
between Electrosource, Inc., and BMA (filed as Exhibit
10.21 to the Company's 1990 Form 10-K, and incorporated
herein by reference).
10.9 License Modification Agreement dated January 16,
1992, between Blanyer Mathews & Associates, Inc.,
Electrosource, Inc., and Battery Horizons, Ltd. (filed
as Exhibit 10.23 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1991,
and incorporated herein by reference).
10.10 First Amendment to Assignment of Patent
License dated April 2, 1992, between Electrosource,
Inc. and Tracor, Inc. (filed as Exhibit 10.58 to
Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference).
10.11 Lease Agreement dated December 9, 1987,
between Electrosource, Inc., and Crow-Gottesman-Hill, a
Limited Partnership (filed as Exhibit 10.15 to Form S-
1, and incorporated herein by reference).
10.12 Lease Agreement between Aetna Life Insurance
Company and Electrosource, Inc., dated February 22,
1992 (filed as Exhibit 10.25 to Electrosource, Inc.,
Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.13 First Amendment to Lease Agreement between
Aetna Life Insurance Company and Electrosource, Inc.,
dated February 24, 1993 (filed as Exhibit 10.27 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.14 Second Amendment to Lease Agreement between
Aetna Life Insurance Company and Electrosource, Inc.,
dated March 1, 1996 (filed as Exhibit 10.14 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995).
10.15 EPRI Agreement RP2415-15 dated July 20, 1992,
between Electrosource, Inc., and Electric Power
Research Institute (filed as Exhibit 10.42 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.16 EPRI Agreement RP2415-15, Amendment No. 1
dated November 12, 1992, between Electrosource, Inc.,
and Electric Power Research Institute (filed as Exhibit
10.43 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.17 EPRI Agreement RP2415-15, Amendment No. 2
dated January 27, 1993, between Electrosource, Inc.,
and Electric Power Research Institute (filed as Exhibit
10.44 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1992, and
incorporated herein by reference).
10.18 Amendment No. 3 to Agreement between
Electrosource, Inc. and Electric Power Research
Institute, Inc. dated March 22, 1993 (filed as Exhibit
10.53 to Electrosource, Inc., Annual Report on Form 10-
K for the period ended December 31, 1993, and
incorporated herein by reference).
10.19 Amendment No. 4 to Agreement between
Electrosource, Inc. and Electric Power Research
Institute, Inc. dated December 6, 1993 (filed as
Exhibit 10.53 to Company's Registration Statement on
Form S-1 [Registration Statement No. 33-73582] filed
December 24, 1993, and incorporated by reference).
10.20 Business Alliance and License Agreement dated
September 17, 1993, between Electrosource, Inc., and
Electric Power Research Institute (filed as Exhibit
10.61 to Company's Registration Statement on Form S-1
[Registration Statement No. 33-65248] filed June 30,
1993, and incorporated herein by reference). *
10.21 Amendment to Business Alliance and License
Agreement dated November 1, 1995, between Electric
Power Research Institute and Electrosource, Inc. (filed
as Exhibit 10.2 to Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference).
10.22 Shareholders Agreement dated April 25, 1993,
between Electrosource, Inc. and BDM Technologies, Inc.
(filed as Exhibit 10.60 to Company's Registration
Statement on Form S-1 [Registration Statement No. 33-
65248] filed June 30, 1993, and incorporated herein by
reference). *
10.23 Stock Purchase Agreement dated as January 31,
1995, between BDM Technologies, Inc., and
Electrosource, Inc., (filed as Exhibit 10.46 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.24 Operating Lease Agreement between Horizon
Battery Technologies, Inc., BDM Technologies, Inc., and
Electrosource, Inc., dated June 20, 1994 (filed as an
Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.25 Lease Agreement between William D. McMorris
and Horizon Battery Technologies, Inc., dated August
17, 1993, (filed as Exhibit 10.42 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.26 Distributorship Agreement between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated July 7, 1994 (filed as an
Exhibit to the Company's Form 10-Q/A No. 1 for the
period ended June 30, 1994, and incorporated herein by
reference).
10.27 A Convertible Promissory Note in favor of
Mitsui Engineering and Shipbuilding Co., Ltd. was dated
October 26, 1994 (filed as an Exhibit to the Company's
October 26, 1994, Form 8-K and incorporated herein by
reference).
10.28 The Note Purchase Agreement between Mitsui
Engineering and Shipbuilding co., Ltd. and
Electrosource, Inc., dated October 26, 1994 (filed as
an Exhibit to the Company's October 26, 1994, Form 8-K
and incorporated herein by reference).
10.29 Notice of Intent to Terminate Distributorship
Agreement between Mitsui Engineering and Shipbuilding
Co., Ltd. and Electrosource, Inc., dated December 5,
1995 (filed as an Exhibit to the Company's December 22,
1995 Form 8-K, and incorporated herein by reference).
10.30 A Convertible Promissory Replacement Note
between Mitsui Engineering and Shipbuilding Co., Ltd.
and Electrosource, Inc., dated March 6, 1996 (filed as
Exhibit 10.33 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.31 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated October 26, 1995 (filed as
Exhibit 10.34 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.32 A Convertible Promissory Note between Mitsui
Engineering and Shipbuilding Co., Ltd. and
Electrosource, Inc., dated March 6, 1996 (filed as
Exhibit 10.35 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.33 Termination Agreement between Electrosource,
Inc. and Mitsui Engineering and Shipbuilding Co., Ltd.,
dated March 6, 1996 (filed as Exhibit 10.36 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995, and incorporated herein
by reference).
10.34 Offshore Securities Subscription Agreement
between Williams DeBroe, a British institutional buyer,
and Electrosource, Inc., dated June 13, 1994 (filed as
an Exhibit to the Company's July 21, 1994, Form 8-K and
incorporated herein by reference).
10.35 Representative Subscription Agreement entered
into by each participant with Electrosource, dated on
the date of execution (filed as an Exhibit to the
Company's October 18, 1994, Form 8-K and incorporated
herein by reference).
10.36 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated January 25, 1995
(filed as an Exhibit to the Company's January 26, 1995
Form 8-K, and incorporated herein by reference).
10.37 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
buyer, and Electrosource, Inc., dated March 9, 1995
(filed as an Exhibit to the Company's March 10, 1995
Form 8-K, and incorporated herein by reference).
10.38 Offshore Securities Subscription Agreement
between Rosehouse Ltd., a Bermuda-based institutional
Buyer with Form of Convertible Debenture, and
Electrosource, Inc., dated April 4, 1995 (filed as
Exhibits to the Company's April 12, 1995 Form 8-K, and
incorporated hereby by reference).
10.39 Warrant to purchase up to 54,237 shares of
Electrosource, Inc., Common Stock, issued to Rosehouse
Ltd., a Bermuda-based institutional buyer, dated April
5, 1995 (filed as an Exhibit to the Company's April 12,
1995 Form 8-K, and incorporated herein by reference).
10.40 Subcontract Number 21614-TTS-7 between AECT,
Inc., and Electrosource, Inc., dated March 21, 1994,
(filed as Exhibit 10.43 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.41 Purchase Agreement between Quantum Energy
Systems and Technology LLC and Electrosource, Inc.,
dated November 14, 1994, (filed as Exhibit 10.44 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.42 Equipment Lease Agreement dated April 6, 1995
between Ally Capital Corporation and Electrosource,
Inc. (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
September 30, 1995, and incorporated herein by
reference).
10.43 Equipment Lease Agreement dated September 7,
1995, between Salem Capital Corporation and
Electrosource, Inc. (filed as Exhibit 10.65 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ending December 31, 1995, and incorporated
herein by reference).
10.44 Development Agreement and Agreement for
Purchase of Machinery and Supplies between
Electrosource, Inc., and Charles L. Mathews
("Contractor") dated November 1, 1995 (filed as Exhibit
10.68 to Electrosource, Inc. Annual Report on Form 10-K
for the period ending December 31, 1995, and
incorporated herein by reference).
10.45 Purchase Order between Chrysler Corporation
and Electrosource, Inc., dated January 9, 1996 (filed
as Exhibit 10.69 to Electrosource, Inc. Annual Report
on Form 10-K for the period ending December 31, 1995,
and incorporated herein by reference).
10.46 Agreement for Aircraft Starting Battery
Distribution between Electrosource, Inc., and Horizon
Aviation, Inc. dated February 13, 1996 (filed as
Exhibit 10.70 to Electrosource, Inc. Annual Report on
Form 10-K for the period ending December 31, 1995, and
incorporated herein by reference).
10.47 Joint Development Agreement between
Electrosource, Inc. and Black & Decker (U.S.) Inc.,
dated March 8, 1996 (filed as Exhibit 10.71 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ending December 31, 1995, and incorporated
herein by reference).
10.48 Memorandum of Understanding between
Electrosource, Inc. and Lockheed Martin Corporation
dated March 15, 1996 (filed as Exhibit 10.1 to
Electrosource, Inc. Quarterly Report on Form 10-Q for
quarter ended March 31, 1996, and incorporated herein
by reference).
The following exhibits filed under Paragraph 10 of Item 601 are
the Company's compensation plans and arrangements:
10.49 Form of Director Indemnification Agreement
(filed as Exhibit 10.8 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1987, and incorporated herein by reference).
10.50 Director Indemnification Agreement dated
January 16, 1992, between Electrosource, Inc., and
Charles Mathews (filed as Exhibit 10.26 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1991, and incorporated herein
by reference).
10.51 Director Indemnification Agreement dated
February 12, 1992, between Electrosource, Inc., and
John Malone (filed as Exhibit 10.30 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1991, and incorporated herein by
reference).
10.52 Director Indemnification Agreement dated
November 4, 1992, between Electrosource, Inc., and
Thomas S. Wilson (filed as Exhibit 10.41 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.53 Director Indemnification Agreement dated
September 1, 1993, between Electrosource, Inc., and Dr.
Norman Hackerman (filed as Exhibit 10-57 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1993, and incorporated herein
by reference).
10.54 Director Indemnification Agreement dated June
23, 1994, between Electrosource, Inc., and Michael G.
Semmens, (filed as Exhibit 10.72 to Electrosource,
Inc., Annual Report on Form 10-K for the period ended
December 31, 1994, and incorporated herein by
reference).
10.55 Director Indemnification Agreement dated
November 2, 1994, between Electrosource, Inc., and
Richard S. Williamson, (filed as Exhibit 10.73 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1994, and incorporated herein
by reference).
10.56 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and Nathan
Morton (filed as Exhibit 10.2 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.57 Director Indemnification Agreement dated June
22, 1995, between Electrosource, Inc., and William R.
Graham (filed as Exhibit 10.1 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.58 1987 Stock Option Plan of Electrosource, Inc.
(filed as Annex A, pages 44 to 48 of Company's
Information Statement filed October 16, 1987, and
incorporated herein by reference).
10.59 Amendment No. 1 to 1987 Stock Option Plan of
Electrosource, Inc., dated February 19, 1992 (filed as
Exhibit 4.3 to Company's Registration Statement on Form
S-8 [Registration Statement No. 33-49049] filed June
30, 1992, and incorporated herein by reference).
10.60 Amendment No. 2 to 1987 Stock Option Plan of
Electrosource, Inc. (filed as Exhibit 10.36 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.61 Amendment No. 3 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.40 to
Electrosource, Inc., Annual Report on Form 10-K for the
period ended December 31, 1992, and incorporated herein
by reference).
10.62 Amendment No. 4 to 1988 Non-Employee Director
Stock Option Plan (filed as Exhibit 10.3 to
Electrosource, Inc., Quarterly Report on Form 10-Q for
the quarter ended June 30, 1995, and incorporated
herein by reference).
10.63 1994 Stock Option Plan of Electrosource, Inc.
(filed as Exhibit 10.4 to Electrosource, Inc.,
Quarterly Report on Form 10-Q for the quarter ended
June 30, 1995, and incorporated herein by reference).
10.64 Consulting Agreement dated September 1, 1992,
between Electrosource, Inc., and Norman Hackerman
(filed as Exhibit 10.45 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.65 Consulting Agreement dated August 1, 1993,
between Electrosource, Inc., and Norman Hackerman,
(filed as Exhibit 10.71 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.66 Agreement dated December 19, 1995, between
Electrosource, Inc. and Robert M. Trembath (filed as
Exhibit 10.103 to Electrosource, Inc. Annual Report on
Form 10-K for the period ending December 31, 1995, and
incorporated herein by reference).
10.67 Consulting Agreement dated January 1, 1993,
between Electrosource, Inc., and Wilburn B. Laubach
(filed as Exhibit 10.48 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1992, and incorporated herein by reference).
10.68 Consulting Agreement dated February 5, 1992,
between Electrosource, Inc., and John D. Malone (filed
as Exhibit 10.49 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.69 Consulting Agreement dated August 11, 1992,
between Electrosource, Inc., and Ralph E. White (filed
as Exhibit 10.52 to Electrosource, Inc., Annual Report
on Form 10-K for the period ended December 31, 1992,
and incorporated herein by reference).
10.70 Consulting Agreement dated September 1, 1995,
between Electrosource, Inc., and Liviakis Financial
Communications, Inc. (filed as Exhibit 10.3 to Form 10-
Q for the quarter ended September 30, 1995, and
incorporated herein by reference).
10.71 Offer of Employment dated October 11, 1994,
between Electrosource, Inc., and Michael L. Weinstein,
(filed as Exhibit 10.74 to Electrosource, Inc., Annual
Report on Form 10-K for the period ended December 31,
1994, and incorporated herein by reference).
10.72 Separation, Release and Indemnity Agreement
dated September 23, 1995, between Electrosource, Inc.
and Michael L. Weinstein (filed as Exhibit 10.113 to
Electrosource, Inc. Annual Report on Form 10-K for
period ending December 31, 1995, and incorporated
herein by reference).
10.73 Offer of Employment dated May 26, 1994,
between Electrosource, Inc., and Michael G. Semmens
(filed as an Exhibit to the Company's Form 10-Q/A No. 1
for the period ended June 30, 1994, and incorporated
herein by reference).
10.74 Consulting Agreement dated August 1, 1995,
between Donald C. Perriello and Electrosource, Inc. (as
filed Exhibit 10.115 to Electrosource, Inc. Annual
Report on Form 10-K for the period ended December 31,
1995, and incorporated herein by reference).
10.75 Consulting Agreement dated December 1, 1995,
between William Griffin and Electrosource, Inc. (as
filed Exhibit 10.116 to Electrosource, Inc. Annual
Report on Form 10-K for the period ended December 31,
1995, and incorporated herein by reference).
10.76 Employment Agreement dated March 25, 1996,
between William F. Griffin and Electrosource, Inc. (as
filed Exhibit 10.2 to Form 10-Q for the period ended
March 31, 1996, and incorporated herein by reference).
10.77 Consulting Agreement dated March 4, 1995,
between Beacon Advisors, Inc. (Langhorne Reid, III) and
Electrosource, Inc. (as filed Exhibit 10.117 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995, and incorporated herein
by reference).
10.78 Consulting Agreement dated January 1, 1996,
between Jack J. Guy and Electrosource, Inc. (as filed
Exhibit 10.118 to Electrosource, Inc. Annual Report on
Form 10-K for the period ended December 31, 1995, and
incorporated herein by reference).
10.79 Consulting Agreement dated November 15, 1994,
between Richard C. Baker dba Talbot Management Services
and Electrosource, Inc. (as filed Exhibit 10.119 to
Electrosource, Inc. Annual Report on Form 10-K for the
period ended December 31, 1995, and incorporated herein
by reference).
10.80 Consulting Agreement between Electrosource,
Inc. and Richard J. Goranflo, dated March 29, 1996. (as
filed Exhibit 10.1 to Form 10-Q for the period ended
June 30, 1996, and incorporated herein by reference).
10.81 Consulting Agreement between Electrosource,
Inc. and James Jordan, dated April 6, 1996. (as filed
Exhibit 10.2 to Form 10-Q for the period ended June 30,
1996, and incorporated herein by reference).
10.82 Consulting Agreement between Electrosource,
Inc. and Robert H. Schwartz d/b/a Jeremiah Partners,
dated May 18, 1996. (as filed Exhibit 10.3 to Form 10-Q
for the period ended June 30, 1996, and incorporated
herein by reference).
10.83 Consulting Agreement between Electrosource,
Inc. and Len Grzanka dated July 15, 1996. (as filed
Exhibit 10.4 to Form 10-Q for the period ended June 30,
1996, and incorporated herein by reference).
10.84 Consulting Agreement between Electrosource,
Inc. and Rick Blanyer dated September 1, 1996. (as
filed Exhibit 10.1 to Form 10-Q for the period ended
September 30, 1996, and incorporated herein by
reference).
24.1 Consent of Ernst & Young LLP.
27 Financial Data Schedule
* Confidential treatment of certain information contained
in this Agreement has been requested pursuant to Rule
406, and the Agreement has therefore been omitted and
filed separately with the Commission.
EXHIBIT 3.10
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 electionas aa Bd Dir.
director who, except in the case of a former Chief 90/02/13
Executive Officer 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 Bd. Dir.
"Chief Executive Officer" of the corporation and, subject 93/11/03
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
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 appoint 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 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 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 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
executive officer of the corporation and, subject to the Bd Dir.
control of the Board of Directors, shall in general 94/06/23
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 stock-
holders. 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.
Consent of Independent Auditors
We consent to the incorporation by reference in: (i)
the Registration Statement Number 33-21598 on Form S-8,
(ii) the Registration Statement Number 33-49040 on Form S-8
and (iii) the Registration Statement Number 33-64110 on
Form S-8 pertaining to the 1987 Stock Option Plan of
Electrosource, Inc.; (i) the Registration Statement Number
33-22223 on Form S-8, (ii) the Registration Statement
Number 33-35856 on Form S-8, (iii) the Registration
Statement Number 33-49042 on Form S-8 and (iv) the
Registration Statement Number 33-64108 on Form S-8
pertaining to the 1988 Non-Employee Director Stock Option
Plan of Electrosource, Inc.; the Registration Statement
Number 33-65386 on Form S-8 pertaining to the 1993 Non-
Employee Consultant Stock Option Plan of Electrosource,
Inc.; the Registration Statement Number 33-63363 on Form S-
8 pertaining to the 1994 Stock Option Plan of
Electrosource, Inc.; the Registration Statement (Amendment
Number 2 to Form S-3 Number 33-63361) and related
Prospectus for the registration of 185,934 shares of
Electrosource, Inc., common stock; the Registration
Statement (Form S-3 Number 333-04637) and related
Prospectus for the registration of 80,610 shares of
Electrosource, Inc. common stock; the Registration
Statement (Form S-3 Number 333-10715) and related
Prospectus for the registration of 1,231 shares of
Electrosource, Inc., common stock; and the Registration
Statement (Form S-3 Number 333-20103) and related
Prospectus for the registration of 160,000 shares of
Electrosource, Inc., common stock of our report dated
February 28, 1997, with respect to the financial statements
of Electrosource, Inc., included in this Annual Report on
Form 10-K for the year ended December 31, 1996.
/s/
ERNST & YOUNG LLP
Austin, Texas
March 24, 1997
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