<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
AMENDMENT NO. 1
to
Report on Form 8-K
Filed Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported): January 7, 1997
<TABLE>
<CAPTION>
BATTERIES BATTERIES, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<S> <C> <C>
Delaware 0-27994 13-383-5420
---------------------------- ---------------- -----------------
(State or other jurisdiction (Commission File (I.R.S. Employer
of incorporation) Number) Identification No.)
711 Fifth Avenue
New York, New York 10022
- --------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including Area Code: (212) 223-1260
---------------
</TABLE>
Page 1 of 13
<PAGE>
ITEM 2. ACQUISITION AND DISPOSITION OF ASSETS
On January 7, 1997 Batteries Batteries, Inc. (the "Company") acquired
as of December 31, 1996 the business and related assets of Battery Network,
Inc. ("Battery Network") and affiliated companies, a major assembler
and wholesale distributor of batteries servicing specialty battery customers
nationally. The acquired entities, which operate principally in California,
Illinois and New Jersey had combined revenues of approximately $23,000,000 for
the year ended December 31, 1996. The purchase was effected through the
acquisition of (i) the outstanding capital stock of Battery Network which in
anticipation of the acquisition by the Company had merged with Alexander
Battery Co. East, Inc. Alexander Battery Co. West, Inc. and Alexander Battery
Co. South, Inc. (collectively, "Alexander Battery"), (ii) the outstanding
capital stock of W.S. Battery Sales & Company Inc. ("WSB") and (iii)
substantially all the assets of WSJ Enterprises, Inc. ("Enterprises"). Battery
Network, Alexander Battery, WSB and Enterprises were owned by William Steven
Sapp ("WSS") and James Sapp ("JS") and their sister, Susan Grandt ("SG) or
their parents, William S. Sapp, the founder of the companies, and Dolores
Sapp, or an affiliate, W.S. Battery Sales & Co. Inc. Employee Stock Ownership
Plan & Trust (the "ESOP").
The purchase price consisted of (i) the payment of $8,314,551 in
cash, of which $2,000,000 was paid to the ESOP, $6,140,336 was paid to WSS, JS
and SG and William S. Sapp in payment of outstanding indebtedness of the
acquired companies to them and $174,215 was paid to Enterprises, and (ii) the
issuance to WSS, JS and SG of an aggregate of 550,000 shares of Common Stock
and five year options to purchase an additional 225,000 shares at an exercise
price of $4.50 per share. The cash portion of the purchase price is subject to
adjustment to the extent that the combined "net worth" of Battery Network, WSB
and Enterprises as of December 31, 1996, based on a combined balance sheet to
be prepared exceeds or is less than $8 million.
The Battery Network agreement also provides WSS, JS and SG with the
contingent right to receive additional consideration of up to $1 million in
cash, 350,000 shares of Common Stock and five year options to acquire 250,000
shares of Common Stock, of which half are exercisable at $4.50 per share and
half are exercisable at $6.00 per share. Payment of the additional
consideration is to be based on the excess amount by which the combined
"pre-tax income" as defined of the acquired companies and the Company's
California subsidiary, Tauber Electronics Inc. ("Tauber"), exceeds (i)
$2,100,000 for the year ending December 31, 1997 (the "One Year Period"), (ii)
$4,200,000 for the two years ending December 31, 1998 (the "Two Year Period")
or (iii) $6,300,000 for the three years ending December 31, 1999 (the "Three
Year Period"), with the maximum amount of additional consideration to be paid
if the excess for the One Year Period is $400,000, $800,000 for the Two Year
Period or $1,200,000 for the Three Year Period. WSS, who was elected President
of Battery Network on January 10, 1997, has agreed to supervise the
operations of Tauber which conducts its operations from facilities in
California.
Pursuant to the acquisition agreements, WSS, JS and SG entered into
employment agreements with Battery Network providing for their employment as
officers of Battery Network at a base salary of $100,000 per annum with WSS
and JS to be employed for three years and SG for six months. WSS and JS are
also to be paid annual bonuses not to exceed $400,000 in the
Page 2 of 13
<PAGE>
aggregate for the two individuals for any year computed at 30% of the first
$300,000 by which the combined pre-tax income of the acquired companies and
Tauber exceeds $2,500,000 for the year ending December 31, 1997, $2,750,000 for
the year ending December 31, 1998 and $3,025,000 for the year ending December
31, 1999 and 40% of the amount by which the combined pre-tax income for the
foregoing years exceed, respectively, $2,800,000, $3,050,000 and $3,325,000.
WSS, JS and SG also received five year employee stock options under the
Company's Employee Stock Option Plan to purchase an aggregate of 50,000 shares
of Common Stock at a price of $4.50 per share.
Upon consummation of the acquisition, Battery Network entered into
leases with JWS Partnership, an affiliate of the BN Stockholders, with
respect to its facilities in McHenry, Illinois and Long Branch, New Jersey.
Each lease is for a five year term, and contains a five year renewal option.
The aggregate rent for the two leases is $143,000 per annum subject to
increases commencing with the third year based on increments in the Consumer
Price Index. The lessee is to bear the insurance, real estate taxes and
maintenance related to the properties.
The cash portion of the purchase price was funded with a portion of
the proceeds of a borrowing pursuant to a Revolving Credit, Term Loan and
Security Agreement, dated January 6, 1997 (the "Loan Facility"), between IBJ
Schroder Bank & Trust Company, as Agent ("IBJ") and the Company and all its
subsidiaries. The Loan Facility consists of a $3,000,000 three year Term Loan
payable in 35 monthly installments of $50,000 each with the balance to be paid
at maturity and a revolving credit of up to $10,000,000 to be advanced at the
rate of 80% of eligible accounts receivable and 50% of inventories. The
revolving credit loans bear interest at the rate of 1/4 of 1% plus the higher
of (i) the base commercial lending rate of IBJ or (ii) the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers plus 1/4 of 1%. The interest
on the Term Loan is 1/2% higher than the revolving credit loan interest rate.
The loans are secured by a pledge of the assets of the borrowers and a pledge
of the outstanding capital stock of the subsidiaries of the Company.
Pursuant to its Management Services Agreement with Founders
Management Services, Inc. ("Founders") the Company will pay Founders with
which Messrs. Warren H. Haber, Chairman of the Board and Chief Executive
Officer and John L. Teeger, Vice President, Secretary and a Director of the
Company, are affiliated, for its origination and negotiating services in
connection with the acquisitions and loan, $240,000 and five year warrants to
purchase 50,000 shares of Common Stock at a price of $4.125 per share, the
closing sale price of the Common Stock on NASDAQ on the date of the closing
and financing of the acquisitions, to each of Messrs. Warren H. Haber and John
L. Teeger pursuant to the authorization of Founders.
ITEM 8. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of businesses acquired
(1) Report of independent auditors
Page 3 of 13
<PAGE>
(2) Combined Balance Sheets of Battery Network, Inc.,
W.S. Battery & Sales Company, Inc. and WSJ
as of September 30, 1996 and December 31, 1995
(3) Combined Statements of Operations and Retained
Earnings of the Combined Corporations for the nine
months ended September 30, 1996 and years ended
December 31, 1995 and December 31, 1994
(4) Combined Statements of Cash Flow of the Combined
Corporations for the nine months ended September
30, 1996 and years ended December 31, 1995 and
December 31, 1994
(5) Notes to Combined Financial Statements
(b) Pro Forma Financial Information
(1) Unaudited Pro Forma Combined Balance Sheet of the
Combined Corporations and the Company as of
September 30, 1996*
(2) Unaudited Pro Forma Combined Statement of Income of
the Combined Corporations for the nine months ended
September 30, 1996 and the year ended
December 31, 1995*
(c) Exhibits
(1) Copy of the Stock Purchase Agreement relating to
acquisition of the outstanding capital stock of
Battery Network, Inc.
(2) Copy of Stock Purchase Agreement relating to
acquisition of outstanding capital stock of W.S.
Battery Sales & Company, Inc.
(3) Copy of Asset Purchase Agreement relating to
acquisition of assets of WSJ Enterprises, Inc.
(4) Form of Option Certificates issued to the former
stockholders of Battery Network, Inc.
(5) Copy of Employment Agreement between Battery
Network, Inc. and Susan Grandt
(6) Copy of Employment Agreement between Battery
Network, Inc. and William Steven Sapp
(7) Copy of Employment Agreement between Battery
Network, Inc. and James Sapp
(8) Copy of Bonus Agreement between the Company and
William Steven Sapp and James Sapp
--------
* Filed with Amendment No. 1.
Page 4 of 13
<PAGE>
(9) Copy of Revolving Credit, Term Loan and Security
Agreement, dated January 6, 1997 among IBJ Schroder
Bank & Trust Company as Agent and the Company,
Advanced Fox Antenna, Inc. Tauber Electronics,
Inc., Battery Acquisition Corp. Specific Energy
Corporation, Battery Network, Inc. and W.S. Battery
& Sales Company, Inc.
(10) Copy of Term Note issued pursuant to the Loan
Agreement
(11) Copy of Revolving Credit Note issued pursuant to
the Loan Agreement (12) Form of Pledge Agreement
with respect to pledge of outstanding shares of
each subsidiary of the Company.
(12) Form of Warrant issued to Messrs. Warren H. Haber
and John L. Teeger pursuant to authorization of
Founders*
(13) Copy of lease between J.W.S. Partnership and
Battery Network, Inc. relating to McHenry, Illinois
property
(14) Copy of Lease between J.W.S. Partnership and
Battery Network, Inc. relating to Long Branch, New
Jersey property
- --------
* Filed with Amendment No. 1.
Page 5 of 13
<PAGE>
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
BACKGROUND
In April 1996, Batteries Batteries, Inc. (the "Company") acquired, by
merger or stock acquisition (the "Mergers"), simultaneously with the closing
of its initial public offering of common stock and redeemable common stock
warrants (the "Offering"), Advanced Fox Antenna, Inc. ("Advanced Fox") and
Tauber Electronics, Inc. ("Tauber") (collectively, the "Merger Companies), for
common stock and cash. These three businesses through the date of the Mergers
are referred to herein as the "Founding Companies." As a result of the
substantial continuing interests in the Company of the former stockholders of
the Founding Companies, the historical financial information of each of the
Founding Companies has been combined on a historical cost basis in accordance
with generally accepted accounting principles as if the Founding Companies had
always been members of the same operating group. In June 1995, the Company
acquired 95% of the outstanding common stock of Specific Energy Corporation
("Specific Energy") in a business combination accounted for as a purchase. (In
June 1996, the Company acquired the remaining minority 5% interest in cash.)
The historical consolidated financial statements are representative of what
the financial position and results of operations would have been as if the
Founding Companies, except for Specific Energy, had been combined at the
beginning of fiscal 1995. Specific Energy is included from June 1, 1995.
On January 7, 1997, effective January 1, 1997, the Company acquired
the business and related assets of Battery Network, Inc. and affiliated
companies ("Battery Network") in a business combination accounted for as a
purchase.
BASIS OF PRESENTATION
The unaudited pro forma combined balance sheet gives effect to the
acquisition of Battery Network as if such acquisition had occurred on the
Company's most recent balance sheet dated September 30, 1996.
The unaudited pro forma combined statements of income give effect to
the acquisitions of Battery Network and Specific Energy, the Mergers and the
Offering as if such events had occurred on January 1, 1995.
The pro forma combined statement of income for the nine months ended
September 30, 1996 includes the unaudited interim financial information of the
Company and the audited financial information of Battery Network, Inc. for the
nine months ended September 30, 1996.
The pro forma combined statement of operations for the year ended
December 31, 1995 includes: (1) the audited financial information of the
Company for the year ended December 31, 1995 (which includes the results of
the Founding Companies for the year and of Specific Energy.
Page 6 of 13
<PAGE>
from its effective date of acquisition, June 1, 1995), (2) the audited
financial information of Specific Energy for the four months ended May 31,
1995 and (3) the audited financial information of Battery Network for the year
ended December 31, 1995.
Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate. The
unaudited pro forma combined financial data presented herein are not
necessarily indicative of the results the Company would have obtained had such
events occurred at the beginning of the period, as assumed, or of the future
results of the Company. The pro forma combined financial statements should be
read in conjunction with the other financial statements and notes thereto
included elsewhere in this report and other filings of the Company.
Page 7 of 13
<PAGE>
<TABLE>
<CAPTION>
BATTERIES BATTERIES, INC.
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
September 30, 1996
(in thousands)
Battery
Network, Pro Forma
ASSETS The Company iNC. Adjustments(1) Combined
- ------ ----------- -------- ------------ ---------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 2,283 1,262 (2,788) (c) 757
Accounts receivable 2,551 2,697 (684) (a) 4,564
Inventories 4,555 4,804 9,359
Prepaid expenses and other current assets 253 161 414
Current deferred income taxes 39 39
--------- -------- ----------- ------
Total current asstes 9,681 8,924 (3,472) 15,133
-------- ------- ----------- ------
PROPERTY AND EQUIPMENT - Net 641 184 825
EXCESS OF COST OVER NET ASSETS ACQUIRED 621 4,233 (a) 4,854
OTHER ASSETS 280 198 (c) 478
-------- ------- ----------- ------
TOTAL $ 11,223 9,108 959 21,290
======= ======= ----------- ======
LIABILITIES AND STOCKHOLDERS' EQUITY
- -----------------------------------
CURRENT LIABILITIES:
Short-term debt $ 590 (590)(b)
Accounts payable 850 1,310 2,160
Accrued expenses 469 469
Redeemable Preferred Stock 750 750
Other current liabilities 80 174 254
Due to stockholders 6,152 (6,152)(d)
Current Portion of Long Term debt and
capital lease obligations 24 600 (c) 624
-------- ------- ----------- ------
Total current liabilities 2,763 7,636 (6,142) 4,257
------- ------- ---------- ------
LONG-TERM DEBT 13 6,304 (c) 6,317
OBLIGATIONS UNDER CAPITAL LEASES 23 23
DEFERRED INCOME TAXES AND OTHER
DEFERRED CREDITS 9 9
STOCKHOLDERS' EQUITY
Common Stock 4 5 (5)(d) 4
Additional paid-in capital 8,001 2,269 (d) 10,270
Retained earnings 410 1,467 (1,467)(d) 410
-------- -------- ---------- ---------
Total stockholders' equity 8,415 1,472 797 10,684
-------- -------- ------------ -------
TOTAL $ 11,223 9,108 959 21,290
======== ======== ============ =======
</TABLE>
See notes to unaudited pro forma combined financial statements
Page 8 of 13
<PAGE>
<TABLE>
<CAPTION>
BATTERIES BATTERIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
NINE MONTHS ENDED SEPTEMBER 30, 1996
(In thousands, except share and
per share data)
Battery
The Network, Pro Forma
Company Inc. Adjustments(2) Combined
------- -------- -------------- ---------
<S> <C> <C> <C> <C>
NET SALES........................ $18,897 $17,069 $35,966
COST OF SALES.................... 13,439 13,235 26,674
------- ------- ------
Gross profit.................. 5,458 3,834 9,292
SELLING, GENERAL AND (147)(h)
ADMINISTRATIVE EXPENSES......... 4,744 2,675 (127)(i) 7,693
------- ------- ---------- ------
INCOME FROM OPERATIONS.......... 714 1,159 (274) 1,599
INTEREST EXPENSE, NET AND OTHER
(INCOME) ....................... 6 107 476 (i) 589
------ ------- ---------- ------
INCOME BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES................ 708 1,052 (750) 1,010
PROVISION (BENEFIT) FOR INCOME
TAXES........................... 253 (24) 185 (j) 414
------- -------- --------- ------
NET INCOME....................... 455 1,076 (935) 596
=====
PREFERRED STOCK DIVIDED
REQUIREMENTS.................... 45 45
------ ------
NET INCOME APPLICABLE
TO COMMON STOCKHOLDERS.......... $ 410 $ 551
====== ======
WEIGHTED AVERAGE SHARES
OUTSTANDING..................... 4,550,000
=========
INCOME PER COMMON
SHARE APPLICABLE TO
COMMON STOCKHOLDERS............. $.12
====
</TABLE>
See notes to unaudited pro forma financial statements
Page 9 of 13
<PAGE>
BATTERIES BATTERIES, INC.
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
YEAR ENDED DECEMBER 31, 1995
(In thousands except share and
per share data)
<TABLE>
<CAPTION>
Specific
Energy
Four Months Battery
The Ended Network, Pro Forma
Company May 31, 1995 Inc. Adjustments(2) Combined
------- ------------ ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
NET SALES........................ $21,029 $ 853 $23,041 $44,923
COST OF SALES.................... 15,238 580 17,531 33,349
------ ------- ------ ------
Gross profit.................. 5,791 272 5,510 11,573
(289)(e)
8 (j)
SELLING, GENERAL AND (439)(h)
ADMINISTRATIVE EXPENSES ....... 4,577 224 5,944 169 (i) 10,194
-------- ------- ------- ---------- ------
INCOME (LOSS) FROM OPERATIONS.... 1,214 48 (434) (551) 1,379
5 (f)
INTEREST EXPENSE, NET AND OTHER (74)(g)
(INCOME)........................ 23 50 681 (c) 685
-------- ----------- -------- ---------- ------
INCOME BEFORE PROVISION (BENEFIT)
FOR INCOME TAXES................ 1,191 48 (484) (61) 694
PROVISION (BENEFIT) FOR INCOME
TAXES........................... (98) 12 21 349 (j) 284
-------- ------- ------- ---------- -----
NET INCOME....................... 1,289 36 (505)(l) (410) 410
======= ------------
PREFERRED STOCK DIVIDEND
REQUIREMENTS.................... 53 (20) (g) 33
------ --
NET INCOME APPLICABLE
TO COMMON STOCKHOLDERS.......... $ 1,236 $ 377
======== ================
WEIGHTED AVERAGE SHARES
OUTSTANDING..................... 4,550,000 (k)
================
INCOME PER COMMON SHARE
APPLICABLE TO COMMON
STOCKHOLDERS ................... $ .08
================
See notes to unaudited pro forma combined financial statements
Page 10 of 13
<PAGE>
BATTERIES BATTERIES, INC.
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS EXCEPT AS TO SHARES)
1. Unaudited Pro Forma Combined Balance Sheet Adjustments
(a) Adjustment to reflect the creation of goodwill representing the
excess of purchase price over the net assets acquired. Excluded
from the net assets of Battery Network acquired by the Company is
$684 of accounts receivables retained by the seller. The purchase
price of $11,173 was computed assuming (i) the issuance of 550,000
shares of common stock of the Company at a price of $4.125 per
share, (ii) cash consideration of $8,314, and (iii) acquisition
costs of $590. Such estimate of goodwill is preliminary and subject
to change.
(b) Adjustment to reflect the required payment of Advanced Fox's short
term debt resulting from the occurrence of the Battery Network
acquisition.
(c) Adjustment to reflect a portion of the purchase price expected to
be financed through bank borrowings at 7.75% per annum and the
remainder to be financed with available cash.
(d) Due to stockholders, common stock, additional paid in capital and
retained earnings have been adjusted to eliminate the equity
balances of Battery Network and reflect the common stock and
additional paid-in capital for the issuance of 550,000 shares of
common stock of the Company.
2. Unaudited Pro Forma Combined Statements of Income Adjustments
(e) Adjustment to reflect a decrease in the corporate overhead
resulting from the renegotiation of the executive compensation
agreements with the Presidents of the Merger Companies offset by
additional executives compensation and contractual management fees
to be paid to Founders.
(f) Adjustment to reflect an increase in interest expense and an
increase in amortization expense on the excess of cost over net
assets acquired related to the acquisition of Specific Energy. Such
excess of cost over net assets acquired is being amortized on a
straight-line basis over an estimated life of 25 years.
(g) Adjustment to reflect the reduction in interest expense resulting
from the retirement of debt and the reduction of the preferred
stock dividend resulting from the application of a portion of the
net proceeds of the Offering.
Page 11 of 13
<PAGE>
(h) Adjustment to reflect an increase (decrease) in the corporate
overhead resulting from the renegotiation of the executive
compensation agreements with the stockholders of Battery Network
and contractual management fees to be paid to Founders.
(i) Adjustment to reflect an increase in interest expense and an
increase in amortization expense on the excess of cost over net
assets acquired related to the acquisition of Battery Network. Such
excess of cost over net assets acquired is being amortized on a
straight-line basis over an estimated life of 25 years.
(j) Adjustment to record the income tax effect of the pro forma
operating adjustments and the pro forma tax provisions for Battery
Network and the predecessor companies which were organized as
Subchapter S corporations. The provision for income taxes on the
unaudited combined pro forma results of operations have been
calculated at an effective rate of 41%.
(k) The weighted average common shares outstanding include the
following:
Shares outstanding prior to the Offering 740,000
Shares issued to acquire Tauber 300,000
Shares issued to acquire Advanced Fox 660,000
Shares issued in the Offering 2,300,000
Shares issued in connection with the
acquisition of Battery Network 550,000
---------
Total 4,550,000
==========
Common Stock equivalents attributable to stock options and warrants
are not significant.
Notes:
- -----
(1) Included in the results of operations of Battery Network for the
year ended December 31, 1995 is a provision of $1,766 for the write
off of certain tooling and equipment. Excluding this charge, pro
forma net income applicable to common stockholders would have been
$1,348 ($.30 per share).
Page 12 of 13
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: March 22, 1997
BATTERIES BATTERIES, INC.
(Registrant)
By: /s/ Ronald E. Badke
-------------------------------
Ronald E. Badke, Chief Financial
and Chief Operating Officer
Page 13 of 13
</TABLE>
<PAGE>
EXHIBIT (13)
<PAGE>
THIS WARRANT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY OTHER SECURITIES STATUTE,
INCLUDING, WITHOUT LIMITATION, THE SECURITIES LAWS OF
ANY STATE, AND IS SUBJECT TO RESTRICTIONS ON EXERCISE AND
TRANSFER DESCRIBED IN SECTION 11 HEREOF.
WARRANT CERTIFICATE
BATTERIES BATTERIES, INC., a Delaware corporation (the
"Company"), agrees, that pursuant to the Agreement between the Company and
Founders Management Services, Inc., a Delaware corporation ("Founders"),
______________ c/o Founders, 200 Madison Avenue, New York, New York 10016
(hereinafter referred to as the "Holder") is entitled to purchase from the
Company, subject to the limitations and conditions hereinafter set forth,
up to 50,000 shares of the Company's Common Stock, $.00l par value per share
(the "Shares"). The purchase price per Share (the "Exercise Price") shall be
equal to $4.125. The number of Shares and the Exercise Price are subject to
adjustment as provided herein.
1. EXERCISE OF WARRANT.
1.1 Exercise. This Warrant may be exercised at any time and
from time to time on or prior to January 6, 2002 (the "Term of Warrant").
Exercise shall be effected by surrender of this Warrant, with the form of
subscription at the end hereof duly executed by such Holder, to the Company at
the Company's executive offices in New York City, currently 200 Madison
Avenue, Second Floor, New York, New York 10016, accompanied by payment in cash
or by wire transfer to the Company, in the amount obtained by multiplying the
number of Shares (giving effect to any adjustment therein) by the Exercise
Price, as adjusted; provided that, in case such Shares have not been
registered under the Securities Act of 1933, as amended (the "1933 Act"), the
Company may also require that such Holder furnish to the Company a written
statement that such Holder is purchasing such Shares for such Holder's own
account for investment and not with a view toward distribution thereof, and
that none of such Shares will be sold or otherwise distributed in violation of
the provisions of the 1933 Act.
-2-
<PAGE>
1.2 Exercise in Part. This Warrant may be exercised in part
by surrender of this Warrant in the manner and at the place provided in
Section 1.1, except that the amount payable by the Holder on such partial
exercise shall be the amount obtained by multiplying (a) the number of Shares
which may be acquired upon exercise as provided in Section 1.1 (giving effect
to any adjustment therein) designated by the Holder in the form of
subscription at the end hereof duly executed by such Holder by (b) the
Exercise Price, as adjusted. On any such partial exercise, the Company, at its
expense, will forthwith issue and deliver to the Holder hereof or its designee
a new Warrant or Warrants of like tenor, in the name of such Holder or its
designee (upon payment by such Holder of any applicable transfer taxes),
calling in the aggregate on the face or faces thereof for the number of Shares
equal (giving effect to any adjustment therein) to the number of such Shares
designated by the Holder in the form of subscription at the end hereof.
2. DELIVERY OF STOCK AND WARRANT CERTIFICATES, ETC. ON EXERCISE.
As soon as practicable after the exercise of this Warrant in
full or in part, and in any event within five (5) business days thereafter,
the Company, at its expense (including the payment by it of any applicable
issue taxes), will cause to be issued in the name of, and delivered to, the
Holder, or otherwise as the Holder may direct (upon payment by the Holder of
any applicable transfer taxes), a certificate or certificates for the number
of fully paid and nonassessable Shares to which the Holder shall be entitled
on such exercise, rounded upward to the nearest whole share.
3. ADJUSTMENTS.
3.1 Adjustments to Exercise Price. The Exercise Price of
the Warrants shall be adjusted from time to time as follows:
(a) Except as hereinafter provided, in case the Company
shall at any time after the date hereof issue or sell any shares of
Common Stock (including shares held in the Company's treasury) for a
consideration per share less than the Exercise Price in effect
immediately prior to the issuance or sale of such shares, or without
consideration, the Exercise Price shall forthwith be reduced to a
price determined by dividing:
-3-
<PAGE>
(x) an amount equal to (i) the total number of
shares of Common Stock outstanding immediately prior to such
issuance or sale multiplied by the Exercise Price in effect
immediately prior to such issuance or sale, plus (ii) the
consideration, if any, received by the Company upon such
issuance or sale, by
(y) the total number of shares of Common Stock
outstanding immediately after such issuance or sale.
For the purpose of any computation to be made in accordance with the
provisions of this paragraph 3.1(a), the following provisions shall be
applicable:
(i) In case of the issuance or sale of shares of
Common Stock for a consideration part or all of which shall
be cash, the amount of the cash consideration therefor shall
be deemed to be the amount of cash received by the Company
for such shares (or, if shares of Common Stock are offered
by the Company for subscription, the subscription price, or,
if shares of Common Stock shall be sold to underwriters or
dealers for public offering, the initial public offering
price before deducting therefrom any compensation paid or
discount allowed in the sale, underwriting or purchase
thereof by underwriters or dealers or others performing
similar services or any expenses incurred in connection
therewith.
(ii) In case of the issuance or sale (other than
as provided in subparagraph 3.1(a)(iii) or (iv) or on
conversion or exchange of other securities of the Company)
of shares of Common Stock for a consideration part or all of
which shall be other than cash, the amount of the
consideration therefor other than cash shall be deemed to be
the value of such consideration, as determined in good faith
by the Board of Directors of the Company as of the date of
the adoption of the resolution authorizing such issuance,
irrespective of accounting treatment. The reclassification
of securities other than Common Stock into securities
including Common Stock shall be deemed to involve the
issuance for a consideration other than cash of such Common
Stock immediately prior to the close of business on the date
fixed for the determination of security holders entitled to
receive such Common Stock.
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(iii) Shares of Common Stock issuable by way of
dividend or other distribution on any stock of the Company
shall be deemed to have been issued without consideration
immediately after the opening of business on the date
following the date fixed for the determination of
stockholders entitled to receive such dividend or other
distribution.
(iv) In the event of a merger in which the Company
is the surviving corporation, a merger or consolidation in
which a subsidiary of the Company is a constituent
corporation, or the acquisition of assets by the Company or
a subsidiary, the consideration received by the Company or
its subsidiary for any Common Stock issued by the Company in
connection therewith shall be deemed to equal the "market
value" of the securities issued by the Company. "Market
value" of securities issued by the Company shall be deemed
to be the average of the closing sales price of the Common
Stock for the 30 day period immediately preceding the date
the agreement of consolidation, merger or acquisition is
executed on the largest (by way of trading volume) national
securities exchange on which the Common Stock is listed or
if not then listed on a national securities exchange, on the
National Market System ("NMS") or if the Common Stock is not
so listed on a national securities exchange or NMS, then the
average of the low asked and high bid prices quoted on the
National Association of Securities Dealers Automated
Quotation System ("NASDAQ"), or if the Common Stock is not
listed on a national securities exchange, NMS or quoted on
NASDAQ, then the average of the low asked and high bid
prices as quoted on the Bulletin Board of the NASD.
(v) The number of shares of Common Stock at any
time outstanding shall not include any shares then owned or
held by or for the account of the Company, but shall include
the aggregate number of shares deliverable in connection
with those options, warrants and rights and convertible and
exchangeable securities referred to in paragraph 3.1(b)
while such options, warrants, rights or securities remain
outstanding and unexercised, unconverted or unexchanged, as
the case may be, and thereafter to the extent such options,
warrants, rights or securities have been exercised,
converted or exchanged.
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(b) In case the Company shall at any time after the date
hereof issue options, warrants or rights to subscribe for shares of
Common Stock (including shares held in the Company's treasury), or
issue any securities convertible into or exchangeable for shares of
Common Stock, for a consideration per share less than the Exercise
Price in effect immediately prior to the issuance of such options,
warrants or rights or convertible or exchangeable securities, or
without consideration, then the Exercise Price in effect immediately
prior to the issuance of such options, warrants or rights or
securities shall each be reduced to a price determined by making a
computation in accordance with the provisions of paragraph 3.1(a);
provided that:
(i) the aggregate maximum number of shares of
Common Stock deliverable under such options, warrants or
rights shall be considered to have been delivered at the
earliest time and to the extent such shares may be delivered
upon exercise of the options, warrants or rights first
become exercisable, and for a consideration equal to the
minimum purchase price per share of Common Stock provided
for issuance of such shares in such options, warrants or
rights, plus the cash consideration (determined in the same
manner as consideration received on the issue or sale of
Common Stock), if any, received by the Company for such
options, warrants or rights;
(ii) the aggregate maximum number of shares of
Common Stock deliverable upon conversion of or exchange for
any such securities shall be considered to have been
delivered at the time and to the extent, the conversion or
exchange right of such securities becomes operative and for
a consideration equal to the consideration (determined in
the same manner as consideration received on the issue or
sale of Common Stock) received by the Company for such
securities, plus the consideration, if any, to be received
by the Company upon the exchange or conversion thereof; and
(iii) on the expiration of such options, warrants
or rights or the termination of such right to convert or
exchange the convertible or exchangeable securities, the
Exercise Price shall forthwith be readjusted to such
Exercise Price as would have obtained had the adjustments
made upon the issuance of such options, warrants, rights or
convertible or exchangeable securities been made upon the
basis of the delivery of only
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the number of shares of Common Stock actually delivered upon
the exercise of such options, warrants or rights or upon
conversion or exchange of such securities.
(c) In case the Company shall at any time subdivide or
combine the outstanding shares of Common Stock, the Exercise Price
shall forthwith be proportionately decreased in the case of
subdivision or increased in the case of combination to the nearest
one cent ($.01). Any such adjustment shall become effective at the
close of business on the date that such subdivision or combination
shall become effective.
(d) Within a reasonable time after the close of each month
during which the Exercise Price has been adjusted as herein provided,
the Company shall mail to the Holder a certificate signed by any of
the Chairman of the Board of Directors, the President, a Vice
President, the Treasurer and the Secretary of the Company, showing in
detail the facts requiring all such adjustments occurring during such
period and the Exercise Price after each such adjustment.
3.2 Non-Adjustment of Exercise Price. Notwithstanding anything
contained in Section 3.1 to the contrary, no adjustment of the Exercise Price,
other than pursuant to paragraph 3.1(c), shall be made:
(a) If the amount of such adjustment in the Exercise Price
shall be less than four cents ($.04), but in such case any adjustment
that would otherwise be required then to be made shall be carried
forward and shall be made at the time and together with the next
subsequent adjustment which, together with any adjustment so carried
forward, shall amount to not less than five cents ($.04).
(b) In connection with the issuance or sale of Common Stock
upon the exercise of options, warrants or rights or upon the
conversion or exchange of convertible or exchangeable securities in
any case where the adjustment provided in this section was made upon
the issuance of such options, warrants, rights, or convertible or
exchangeable securities by reason of the provisions of paragraph
3.1(b).
(c) By reason of the issuance of (i) shares of Common Stock
upon exercise of the Company's outstanding warrants issued prior to
the date hereof to GKN Securities Inc. or its assignees, (ii) the
issuance of stock and options
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to purchase Common Stock of the Company issued or to be issued
pursuant to agreements to which the Company is a party providing for
the Company or its subsidiaries to acquire capital stock or assets of
other companies or business entities which give rise to the payment
of fees to Founders or its assignees under the Management Services
Agreement and the issuance of shares of Common Stock upon exercise or
conversion of options, warrants or convertible securities issued
pursuant to such agreements, (iii) the issuance of options under the
Company's stock option plans or upon exercise of options granted
thereunder, (iv) shares pursuant to the anti-dilution provisions
of the foregoing securities or plan, including such provisions as
shall take effect as a result of the issuance and exercise of this
Warrant.
3.3 Effect of Reorganization or Reclassification. In the
case of any reorganization of the Company or reclassification of the
outstanding shares of Common Stock (other than a change in par value, or from
par value to no par value, or from no par value to par value, or as a result
of a subdivision of combination) or in the case of any consolidation of the
Company with, or merger of the Company into another corporation, or in the
case of any sale, lease or conveyance of all, or substantially all, of the
property, assets, business and goodwill of the Company as an entity, then, as
a part of such reorganization, reclassification, consolidation, merger or
sale, provision shall be made so that the holder of this Warrant shall
thereafter be entitled to receive upon exercise hereof
the amount of cash, number of shares of stock, warrants, or other securities
or property of the Company, or of the successor corporation resulting from
such consolidation, merger or sale, to which a holder of that number of Shares
deliverable upon the exercise of this Warrant would have been entitled on such
reorganization, reclassification, consolidation, merger or sale, as if this
Warrant had been exercised in full immediately prior to the effectiveness of
such reorganization, reclassification, consolidation, merger or sale.
3.4 Effect of Adjustment on Face of Warrant. Irrespective of
any adjustments in the Exercise Price or the number or kind of securities
issuable hereunder, this Warrant may continue to express the same price and
number and kind of shares and warrants as are herein stated.
3.5 Effect of Distribution of Assets. In case, prior to the
expiration of this Warrant by exercise or by its terms, the Company shall at
any time make any distribution of its assets to holders of its Common Stock as
a liquidating or partial liquidating dividend by way of return of capital or
otherwise (other than as either a
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cash dividend payable out of any surplus legally available for the payment of
dividends under the laws of the State of Delaware or as a stock dividend as
provided in paragraph 3.1(a) hereof), then the holder, upon receipt of any
Shares upon exercise of this Warrant after the date of record for the
determination of Holders of Common Stock entitled to such distribution of
assets, shall also be
entitled to receive, in addition to the Shares, the amount of such assets or
dividend which the Holder would have received had it been the holder of record
on the record date for the determination of those entitled to such
distribution of such assets.
4. NO DILUTION OR IMPAIRMENT.
The Company will not, by amendment of its Certificate of
Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in carrying out all such
terms and in taking all such action as may be necessary or appropriate in
order to protect the rights of the Holder hereunder. Without limiting the
generality of the foregoing, the Company (i) will not increase the par value
of Shares above the amount payable therefor on such exercise, and (ii) will
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable Shares upon
exercise of this Warrant.
5. NOTICES OF RECORD DATE, ETC.
In the event of:
(a) any taking by the Company of a record of the holders of
the Common Stock or any class of other securities for the purpose of
determining the holders thereof who are entitled to receive any
dividend or other distribution, or any right to subscribe for,
purchase or otherwise acquire any shares of stock of any class or any
other securities or property, or to receive any other right; or
(b) any capital reorganization of the Company, any
reclassification or recapitalization of the capital stock of the
Company or any sale of all or substantially all of the assets of the
Company to, or consolidation or merger of the Company with or into,
any other person or entity; or
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(c) any voluntary or involuntary dissolution, liquidation, or
winding up of the Company;
then if on or prior to the Record Date as hereinafter defined the Holder is
entitled to acquire shares upon exercise of this Warrant, and in such event,
the Company will mail or cause to be mailed to the Holder a notice specifying
(i) the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, stating the amount and character of such
dividend, distribution or right, (ii) the date on which any such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up is to take place, and the time,
if any, to be fixed as to which the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock
(or other securities) for securities or other property deliverable upon such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation or winding up (the "Record Date"), and (iii)
the amount and character of any stock or other securities, or rights or
warrants in respect thereof, proposed to be issued or granted, the date of
such proposed issue or grant and the persons or class of persons to whom such
proposed issue or grant is to be offered or made. Such notice shall be mailed
by certified mail, return receipt requested, at least 15 days prior to the
date therein specified.
6. RESERVATION OF STOCK, ETC., ISSUABLE UPON EXERCISE OF THIS
WARRANT.
The Company will at all times authorize, reserve and keep
available, solely for issuance and delivery upon exercise of this Warrant as
herein provided, all shares of Common Stock from time to time issuable upon
exercise of this Warrant. All such shares, when issued upon exercise, shall be
validly issued, fully paid and non-assessable, free and clear or all liens,
security interests, charges and other encumbrances or, except as set forth
herein, restrictions on sale and free and clear of all preemptive rights.
7. EXCHANGE OF WARRANT.
Upon surrender for exchange of this Warrant properly
endorsed to the Company, the Company, at its expense, will issue and deliver
to, or on the order of, the Holder, a new Warrant or Warrants of like tenor in
the name of the Holder or as the Holder (upon payment by the Holder of any
applicable transfer taxes) may direct,
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calling in the aggregate on the face or faces thereof for the number of shares
of Common Stock called for on the face of this Warrant.
8. REPLACEMENT OF WARRANT.
Upon receipt of evidence reasonably satisfactory to the
Company of the loss, theft, destruction or mutilation of this Warrant and, in
the case of any such loss, theft or destruction, upon delivery of an agreement
of indemnity reasonably satisfactory in form and amount to the Company or, in
the case of any such mutilation, upon surrender and cancellation of this
Warrant, the Company, at its expense, will execute and deliver, in lieu
thereof, a new Warrant of like tenor.
9. REMEDIES.
The Company stipulates that the remedies at law of the
Holder in the event of any default or threatened default by the Company in the
performance of or compliance with any of the terms of this Warrant are not,
and will not be, adequate and that such terms may be specifically enforced by
a decree for the specific performance of any agreement contained herein or by
an injunction against a violation of any of the terms hereof or otherwise.
10. NEGOTIABILITY, ETC.
This Warrant is issued upon the following terms, to all of
which the Holder by the taking hereof consents and agrees:
(a) subject to Section 11 hereof, title to this Warrant may
be transferred by endorsement (by the Holder' s executing the form of
assignment at the end hereof) and delivery in the same manner as in
the case of a negotiable instrument transferable by endorsement and
delivery;
(b) any person in possession of this Warrant, properly
endorsed, is authorized to represent himself as absolute owner hereof
and is empowered to transfer absolute title hereto by endorsement and
delivery hereof to a bona fide purchaser hereof for value, subject to
Section 11 hereof; each prior taker or owner waives and renounces all
of his equities or rights in this Warrant in favor of each such bona
fide purchaser, and each such bona fide purchaser shall acquire
absolute title hereto and to all rights represented hereby; and
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(c) until this Warrant is transferred on the books of the
Company, the Company may treat the Holder as the absolute owner
hereof for all purposes, notwithstanding any notice to the contrary.
11. RESTRICTIONS ON TRANSFER OF WARRANT OR SHARES.
11.1 Restrictions in General.
(a) Notwithstanding any provisions contained herein to the
contrary, this Warrant and the Shares shall not be transferable
except upon the conditions specified in this Section 11, which
conditions are intended, among other things, to insure
compliance with the provisions of the 1933 Act with respect to
transfer of this Warrant or of the Shares. The Holder agrees that it
will not transfer this Warrant to any person other than an affiliate,
which shall mean a person controlling or controlled by the Holder or
a member of the Holder's immediate family, except by will or the laws
of descent, or transfer any of the Shares prior to delivery to the
Company of the opinion of counsel referred to, and to the effect
described, in Section 11.2 hereof or until the effectiveness of the
registration under the 1933 Act of the Shares to be transferred.
(b) The Company shall maintain its registration under
Section 12 of the Securities Exchange Act of 1934 (the "1934 Act") as
long as this Warrant remains outstanding and shall timely file the
reports required to be filed as a result of its registration under
the 1934 Act (including those required to make available the benefits
of Rule 144 under the 1933 Act).
11.2 Statement of Intention to Transfer; Opinion of Counsel.
The Holder, by its acceptance of this Warrant, agrees that prior to any
transfer of the Shares, such Holder will deliver a statement to the Company
setting forth the intention of such Holder's prospective transferee with
respect to its retention or disposition of the Shares and if the Shares have
not been registered under the 1933 Act, together with a signed copy of the
opinion of such Holder's counsel as to the non-necessity for registration
under the 1933 Act in connection with such transfer. If, in the opinion of
such Holder's counsel, which opinion must be reasonably satisfactory to the
Company's counsel, the proposed transfer of the Shares may be effected without
registration under the 1933 Act, then the Holder shall be entitled to transfer
the Shares in accordance with the intended method of disposition specified in
the statement delivered by such Holder
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to the Company, in which event the Company will promptly instruct the transfer
agent for the Common Stock to effect the required transfer upon appropriate
presentation and execution of the certificate for the Shares being transferred
and the foregoing documents.
11.3 Instructions to Transfer Agent. The Holder covenants
and agrees with the Company that the Company may instruct its transfer agent
not to transfer the Shares unless such agent has been advised by the Company
or has otherwise been satisfied that the transferor has complied with the
provisions described above.
11.4 Transfer Restriction Legend.
(a) Each certificate representing Shares initially issued
upon exercise of this Warrant, unless at the time of exercise such
Shares are registered under the 1933 Act, shall bear the following
legend (and any additional legend required by any securities exchange
or organized trading market on which the Shares may, at the time, be
listed) on the face thereof:
"The securities represented hereby have not been registered
under the Securities Act of 1933 and the transfer of such
securities is subject to the restrictions set forth in
Section 11 of a Warrant Certificate issued by Batteries
Batteries, Inc. (the "Company"), a copy of which is
available for inspection at the head office of the Company,
and no transfer of said securities shall be valid or
effective unless and until the terms and conditions of said
Section 11 shall have been complied with."
(b) Any certificate issued at any time upon transfer of, or
in exchange for or replacement of, any certificate bearing such
legend shall also bear such legend unless, in the opinion of counsel
for the Holder thereof, which opinion is reasonably satisfactory to
Company's counsel, addressed and delivered to the Company and the
Holder, the shares represented thereby need no longer be subject to
the restrictions contained in this Article 11. The provisions of this
Article 11 shall be binding upon all subsequent Holders of
certificates bearing the above legend.
12. PIGGYBACK REGISTRATIONS.
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(a) If the Company at any time proposes after 12 months from
the date hereof to register any shares of Common Stock of the Company
for sale for cash by the Company or by selling security holders
("Other Holders") such proposed registration being hereinafter
referred to as an "Underlying Registration"), the Company will at
each such time give fifteen (15) days' prior written notice to the
Holders of all the Warrants issued pursuant to the January 7, 1997
Agreement (the "Warrant Holders") and the shares of Common Stock
issued upon exercise of the Warrants (the "Warrant Shares")
(collectively, the "Holders") of the Company's intention to file a
registration statement to effect the Underlying Registration (the
fifteen-day (15) period following such notice being given being
hereinafter referred to as the "Purchaser Registration Request
Period"). Upon the request of one or more of the Holders received by
the Company in writing within the Purchaser Registration Request
Period, the Company will use its reasonable best efforts to cause to
be included in such Underlying Registration the number of Registrable
Shares the Holders have requested to be registered; provided that the
Company's obligation under this Paragraph 1 shall terminate as to any
Underlying Registration that the Company abandons prior to the
effective date of such Underlying Registration and provided further,
that if such registration statement relates to an underwritten public
offering, then the Company shall be required to include the
Registered Shares only (i) if the Holders thereof agree to sell the
Registered Shares in the manner adopted by and on terms satisfactory
to the underwriters for such public offering and (ii) to the extent
that in the opinion of the managing underwriters, the inclusion in
the public offering of the Registered Shares requested to be included
would not materially adversely affect the terms or success of the
offering or require the Company to reduce the number of shares
proposed to be sold by it; and, provided further, that if the
managing underwriter or underwriters require the Company to reduce
the number of the Registered Shares proposed to be sold by the
Holders or a Holder, any such reduction shall be applied
proportionately among the Holder or Holders, and other holders of
securities proposed to be included in the registration statement
("Other Holders") based on the number of securities each Holder and
each Other Holder has requested to have included. The Company shall
not be required to comply with more than two requests for an
Underlying Registration pursuant to this Paragraph 1 not including
any requests which resulted in an abandoned Underlying Registration
or the reduction by at least 50% of the number of Registrable
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Shares which were requested to be registered which reduction was
effected pursuant to this paragraph.
(b) With respect to each Underlying Registration, the
Company shall:
(i) Use its reasonable best efforts to cause such
registration statement to be declared effective by the
Commission as expeditiously as possible and to keep such
registration effective until the earlier of (i) the date
when all Registrable Shares covered by the registration
statement have been sold or (ii) 180 days from the effective
date of the registration statement; provided, that before
filing a registration statement or prospectus or any
amendments or supplements thereto, the Company will furnish
to each Holder of Registrable Shares covered by such
registration statement and the underwriters, if any, copies
of all such documents proposed to be filed (excluding
exhibits, unless any such person shall specifically request
exhibits), which documents will be subject to the reasonable
review of such holders and underwriters, and the Company
will not file such registration statement or any amendment
thereto or any prospectus or any supplement thereto
(including any documents incorporated by reference therein)
with the Commission if a selling Holder shall reasonably
object to the information in such registration statement or
prospectus concerning such selling Holder;
(ii) prepare and file with the Commission such
amendments and post-effective amendments to such
registration statement as may be necessary to keep such
registration statement effective during the period referred
to in Paragraph 12 (b) and to comply with the provisions of
the Securities Act with respect to the disposition of all
securities covered by such registration statement, and cause
the prospectus to be supplemented by any required prospectus
supplement, and, as so supplemented, to be filed with the
Commission pursuant to Rule 424 under the Securities Act.
(iii) furnish to the selling Holders and to each
underwriter such numbers of copies of such registration
statement, each amendment thereto, the prospectus included
in such registration statement
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(including each preliminary prospectus), each supplement
thereto and such other documents as they may reasonably
request in order to facilitate the disposition of
Registrable Shares owned by them.
(iv) use its reasonable best efforts to register
and qualify the Registrable Shares under such other
securities laws of such jurisdictions as shall be reasonably
requested by any selling Holder and do any and all other
acts and things which may be reasonably necessary or
advisable to enable such selling Holder to consummate the
disposition of the Registerable Shares owned by such Holder
in such jurisdictions; provided, that the Company shall not
be required in connection therewith or as a condition
thereto to qualify to transact business or to file a general
consent to service of process in any such states or
jurisdictions.
(v) promptly notify each selling Holder of such
Registrable Shares at any time when a prospectus relating
thereto is required to be delivered under the Securities Act
of the happening of any event as a result of which the
prospectus included in such registration statement contains
an untrue statement of a material fact or omits any fact
necessary to make the statements therein, under the
circumstances in which they are made, not misleading and, at
the request of any such Holder, the Company will prepare a
supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable
Shares, such prospectus will not contain an untrue statement
of a material fact or omit to state a material fact
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(vi) in connection with an underwritten offering,
entered into such underwriting agreements in customary form
for a primary offering), make such representations and
warranties to the underwriters, obtain such opinions of
counsel and "cold comfort" letters addressed to the
underwriters, and take all such other actions as the
underwriters reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities.
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(vii) make available for inspection by any selling
Holder of Registrable Shares, any underwriter participating
in any disposition pursuant to such registration statement
and any attorney, accountant or other agent retained by any
such selling holder or underwriter, all financial and other
records, pertinent corporate documents and properties of the
Company, and cause the officers, directors, employees and
independent accountants of the Company to supply all
information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection
with such registration statement.
(viii) promptly notify the Holders of Registrable
Shares and the underwriters, if any, of the following
events: (1) the filing of the prospectus or any prospectus
supplement and the registration statement and any amendment
or post-effective amendment thereto and, with respect to the
registration statement or any post-effective amendment
thereto and, with respect to the registration statement or
any post-effective amendment thereto, the declaration of the
effectiveness of such documents, (2) any requests by the
Commission for amendments or supplements to the registration
statement or the prospectus or for additional information,
(3) the issuance or threat of issuance by the Commission of
any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings
for that purpose and (4) the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Registrable Shares for sale in any
jurisdiction or the initiation or threat of initiation of
any proceeding for such purpose.
(ix) make every reasonable effort to prevent the
entry of any order suspending the effectiveness of the
registration statement and obtain at the earliest possible
moment the withdrawal of any such order, if entered.
(x) if reasonably requested by any underwriter or a
selling Holder of Registrable Shares in connection with any
underwritten offering, promptly incorporate in a prospectus
supplement or post-effective amendment such information as
the underwriters and the Holders of a majority of the
Registrable Shares being sold reasonably agree should be
included therein relating to the sale of the Registrable
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Shares, including, without limitation, information with
respect to the number of Registrable Shares being sold to
such underwriters, the purchase price being paid therefor by
such underwriters and any other terms of the underwritten
(or best efforts underwritten) offering of the Registrable
Shares to be sold in such offering, and make all required
filings of such prospectus supplement or post-effective
amendment promptly after being notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment.
(xi) prior to the filing of any document that is to
be incorporated by reference into the registration statement
or the prospectus (after the initial filing of the
registration statement with the Commission), (i) promptly
provide copies of such document to counsel for the selling
Holders of the Registrable Shares and counsel for the
underwriters, if any, (ii) make representatives of the
Company reasonably available for discussion of such document
and (iii) make such changes in such document prior to the
filing thereof as counsel for the selling Holders of a
majority of the Registrable Shares and underwriters, if any,
may reasonably request.
(xii) cooperate with the selling Holders of
Registrable Shares and the underwriters, if any, to
facilitate the timely preparation and delivery of
certificates representing Registrable Shares to be sold and
not bearing any restrictive legends, and enable such
Registrable Shares to be in such lots and registered in such
names as the underwriters may request at least three
business days prior to any delivery of Registrable Shares to
the underwriters.
(xiii) use its reasonable best efforts to list the
Registrable Securities covered by such registration
statement with any national securities exchange on which the
Common Stock is listed or on the NASDAQ system if the Common
Stock is then quoted thereon.
(c) Notwithstanding anything to the contrary in this
Agreement, the Company shall not be required to register any
Registrable Shares of any Holder pursuant to Paragraph 1 of this
Agreement in the event that (a) the Company shall obtain an opinion
of its counsel (which opinion shall be reasonably satisfactory to the
affected Holder) that all such Registrable Shares may then be sold
without registration under the Securities Act pursuant to
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Rule 144; or, (b) (i) the Company files and causes to become
effective a Registration Statement pursuant to Rule 415 or its
successor under the Securities Act (a "Rule 415 Registration"), (ii)
the Company, at least thirty days prior to the initial filing of such
Rule 415 Registration, shall have given written notice to all Holders
of its offer to include all or any Registrable Share in such Rule 415
Registration, and (iii) the Company shall pay all expenses related
thereto as specified in Paragraph 12(d) hereto; provided, however,
that the provisions of this Paragraph 12(c) shall apply to any Rule
415 Registration, and provided, further, that the registration rights
provided in this Agreement shall revive on the date a Rule 415
Registration is withdrawn or abandoned if any or all of the
Registrable Shares are not sold pursuant to such Rule 415
Registration.
(d) All expenses incurred in connection with a registration
(excluding underwriters' discounts and commissions), including,
without limitation, all registration and qualification fees, printing
and accounting fees, fees and disbursement of counsel for the
Company, transfer taxes, listing fees, quotation fees, and fees and
expenses of transfer agents and registrars, shall be borne by the
Company. The underwriters' discounts and commissions with respect to
the sale of the Registrable Shares and the fees and expenses of
counsel to the selling Holders shall be borne by the selling Holders.
(e) In the event any Registrable Shares are included in a
registration statement under this Agreement:
(i) To the full extent permitted by law, the
Company will and hereby does indemnify and hold harmless the
Holders, whose Registrable Shares are included (the
"Included Holders"), each employee or agent of the Included
Holders, any underwriter (as defined in the Securities Act
for such Holders, against any losses, claims, damages or
liabilities, joint or several, to which they may become
subject under the Securities Act and applicable state
securities laws insofar as such losses, claims, damages or
liabilities are based on any untrue or alleged untrue
statement of any material fact contained in such
registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances
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under which they were made, not misleading or arise out of
any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the
Company and relating to action or inaction required of the
Company in connection with any such registration; and will
reimburse each such person or entity for any legal or other
expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damages,
liability or action; provided, however, that the indemnity
agreement contained in this Paragraph 12 shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without
the consent of the Company (which consent shall not be
unreasonably withheld) nor shall the Company be liable in
any such case for any such loss, claim, damage, liability or
action to the extent that it arises out of or is based upon
an untrue statement or alleged untrue statement or omission
or alleged omission made in connection with such
registration statement, preliminary prospectus, final
prospectus, or amendments or supplements thereto, in
reliance upon and in conformity with written information
furnished expressly for use in connection with such
registration by or on behalf of the Included Holders or the
underwriter for the included Holders.
(ii) to the full extent permitted by law, the
Included Holders jointly and severally, will indemnify and
hold harmless the Company, each of its directors, each of
its officers who have signed the registration statement,
each person, if any, who controls the Company within the
meaning of the Securities Act, and any underwriter for the
Company (within the meaning of the Securities Act), each
Other Holder, and each person, if any, who controls such
Other Holder within the meaning of the Securities Act
against any losses, claims, damages or liabilities, joint or
several, to which the Company or any such director, officer,
controlling person, Other Holder or underwriter may become
subject, under the Securities Act and applicable state
securities laws, insofar as such losses, claims, damages or
liabilities (or actions in respect hereof) arise out of or
are based upon any untrue statement or alleged untrue
statement of any material fact contained in such
registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or
supplements thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material
fact required to be stated therein or
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necessary to make the statements therein not misleading in
light of the circumstances under which they were made, in
each case to the extent, but only to the extent that such
untrue statement or alleged untrue statement or omission or
alleged omission was made in such registration statement,
preliminary or final prospectus, any amendments or
supplements thereto, in reliance upon and in conformity with
written information furnished by or on behalf of the
Included Holders expressly for use in connection with such
registration; and each Included Holder will reimburse any
legal or other expenses reasonably incurred by the Company
or any such director, officer, controlling person, Other
Holder or underwriter in connection with investigating or
defending any such loss or claim, damage, liability or
action; provided, however, that the indemnity agreement
contained in this Paragraph 12 (c) shall not apply to
amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without
the consent of the Included Holders (which consent shall not
be unreasonably withheld).
In no event shall the liability of the Included Holders
exceed the amount of the proceeds received by such Holders upon the sale of
the Registrable Shares giving rise to such indemnification obligation.
(iii) promptly after receipt by an indemnified
party under this Paragraph 12 of notice of the commencement
of any action or knowledge of a claim that would, if
asserted give rise to a claim for indemnity hereunder such
indemnified party shall, if a claim in respect thereof is to
be made against any indemnifying party under this Paragraph
12, notify the indemnifying party in writing of the
commencement thereof or knowledge thereof and the
indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed
to assume the defense thereof with counsel mutually
satisfactorily to the parties, and, after notice from the
indemnifying party to such indemnified party of its election
so to assume and undertake the defense thereof, the
indemnifying party shall not be liable to such indemnified
party under this Paragraph 12 for any legal expenses
subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable
costs of investigation and of liability with counsel so
selected; provided,
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however, that if (x) the defendants in any such action
include both the indemnified party and the indemnifying
party and the indemnified party shall have concluded, based
upon the reasonable advice of counsel that there may be
reasonable defenses available to it which are different from
or in addition to those available to the indemnifying party,
or (y) the interests of the indemnified party reasonably may
be deemed to conflict with the interest of the indemnifying
party, the indemnified party shall have the right to select
a separate counsel and to assume such legal defense and
otherwise to participate in the defense of such action, the
expenses and reasonable fees of such separate counsel and
other expenses related to such participation shall be
reimbursed by the indemnifying party as incurred. Without
the prior written consent of an indemnified party, the
indemnifying party shall not consent to the imposition of
any injunctive or other equitable relief against such
indemnified party, or to the admission by such indemnified
party to any violation of the laws or regulations (including
without limitation the Securities Act or the Securities
Exchange Act of 1934) or to the payment of any amounts by
such indemnified party unless the indemnifying party has and
will keep separate and in trust immediately available funds
sufficient to effect payment of such amount. The failure to
notify an indemnifying party promptly of the commencement of
any such action or of the knowledge of any such claim, if
prejudicial to such party's ability to defend such action,
shall relieve such indemnifying party of any liability to
the indemnified party under this Paragraph 12, but the
omission so to notify the indemnifying party will not
relieve such party of any liability that such party may have
to any indemnified party otherwise than under this
Agreement.
Notwithstanding the foregoing, in no event shall the
indemnifying party be liable for the fees and expenses of more than one
counsel at any item for all indemnified parties.
13. NO CANCELLATION OR REDEMPTION RIGHTS AS TO THIS WARRANT OR
THE SHARES.
The Company shall not have any right to redeem or cancel
this Warrant or redeem any or all of the Shares.
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14. LISTING ON SECURITIES EXCHANGE.
The Company will, at its own expense, list on each national
securities exchange or over-the-counter market, including the NMS, on which
any Common Stock may at any time be listed all Shares from time to time
issuable upon exercise of this Warrant, and will maintain such listing so long
as any other shares of its Common Stock are so listed.
15. NOTICES, ETC.
Except as otherwise provided herein and unless the Holder or
the Company, as the case may be, is notified in writing otherwise, all notices
and other communications hereunder shall be mailed by first class registered
or certified mail, postage prepaid, to such addresses as may be furnished from
time to time by the Company or the Holder to each other, and prior thereto, as
follows:
(a) To the Company, at:
Batteries Batteries, Inc.
200 Madison Avenue, Second Floor
New York, New York 10016
Attention: Chairman of the Board or President
and
(b) the Holder, at the address set forth in the opening
paragraph.
16. SURVIVAL OF AGREEMENTS.
All covenants and agreements contained herein, whether made
by the Company or by the Holder, shall survive the execution and delivery of
this Warrant and any investigation at any time made by the Holder or on the
Holder's behalf.
17. MISCELLANEOUS.
This Warrant and any term hereof may be changed, waived,
discharged or terminated only by an instrument in writing signed by the party
against which enforcement of such change, waiver, discharge or termination is
sought. This Warrant is being delivered in the State of New York and shall be
construed and enforced in accordance with and governed by the laws of such
state and applicable federal law.
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<PAGE>
The headings in this Warrant are for purposes of reference only, and shall not
limit or otherwise affect any of the terms hereof.
BATTERIES BATTERIES, INC.
By:
----------------------------------------
Ronald E. Badke, Chief Operating Officer
AGREED:
- ----------------------------------
, Holder
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SUBSCRIPTION FORM
TO BE EXECUTED BY THE REGISTERED HOLDER
IF HE DESIRES TO EXECUTE THE WARRANT
The undersigned hereby exercises the right to purchase the number of
shares of Common Stock set forth below covered by this Warrant according to
the conditions thereof and herewith makes payment of the Exercise Price of
such Shares in full.
Exercise as to _____ shares of Common Stock.
Signature:
--------------------------------------
Address:
-------------------------------------
-------------------------------------
Dated: ____________________
NOTICE
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The signature to the foregoing Subscription Form must correspond to
the name as written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
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