<PAGE>
PRELIMINARY COPY
BATTERIES BATTERIES, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
AUGUST 11, 1997
To the Stockholders:
The Annual Meeting of Stockholders of Batteries Batteries,
Inc., a Delaware corporation (the "Company"), will be held at the offices of
the Company, 711 Fifth Avenue, New York, New York 10022, on Monday, August 11,
1997, at 10:00 A.M., Eastern Time, for the following purposes:
(1) To elect eight Directors of the Company, each of
whom is to hold office until the next Annual
Meeting of Stockholders and until the due election
and qualification of his successor.
(2) To approve the reservation by the Board of Directors
of additional shares of Common Stock of the Company.
(3) To transact such other business as may properly come
before the meeting or any adjournment thereof.
Only stockholders of record at the close of business on July
10, 1997, will be entitled to notice of, and to vote at, the meeting or any
adjournments thereof.
If you cannot personally attend the meeting, it is requested
that you promptly fill in, sign, and return the proxy submitted to you
herewith.
By order of the Board of Directors
JOHN L. TEEGER
Secretary
Dated: July ___, 1997
<PAGE>
PRELIMINARY COPY
BATTERIES BATTERIES, INC.
PROXY STATEMENT
This proxy statement is being furnished in connection with the
solicitation of proxies by the Board of Directors of Batteries Batteries,
Inc., a Delaware corporation (the "Company"), to be voted at the Annual
Meeting of Stockholders (the "Meeting") scheduled to be held at the offices of
the Company, 711 Fifth Avenue, New York, New York 10022 on August 11, 1997, at
10:00 A.M., Eastern Time, and at any adjournments thereof.
Only stockholders of record as of the close of business on July 10,
1997, are entitled to notice of and to vote at the Meeting or any adjournment
thereof. On that date, the Company had outstanding 4,743,000 shares of Common
Stock, par value $.01 per share (the "Common Stock"). The presence in person
or by proxy of the holders of a majority of such shares shall constitute a
quorum for the transaction of business at the Meeting. Each share is entitled
to one vote.
Each form of proxy which is properly executed and returned to the
Company will be voted in accordance with the directions specified thereon, or,
if no directions are specified, will be voted (i) for the election as
Directors of the persons named herein under the caption "Election of
Directors" and (ii) to approve the reservation of additional shares and
options to purchase additional shares of Common Stock to be issued upon
achievement of designated levels of future earnings of Battery Network Inc.,
which was acquired January 1997. Any stockholder giving a proxy may revoke it
at any time before it is exercised. Such revocation may be effected by voting
in person or by proxy at the Meeting, by returning to the Company prior to the
Meeting a proxy bearing a later date, or by otherwise notifying the Secretary
of the Company in writing prior to the Meeting.
The address of the Company's executive offices is 711 Fifth Avenue,
14th Floor, New York, New York 10022 and its telephone number is (212)
223-1260. This proxy statement and the accompanying proxy are first being
distributed to the stockholders of the Company on or about July 14, 1997.
<PAGE>
PRINCIPAL STOCKHOLDERS
The following table sets forth as information with respect to the
beneficial ownership as of March 31, 1997 of shares of Common Stock of each
stockholder of the Company known to own beneficially+ more than 5% of the
outstanding shares of Common Stock, and by all executive officers and
Directors of the Company as a group:
<TABLE>
<CAPTION>
NAME AND ADDRESS SHARES BENEFICIALLY % OF
OF BENEFICIAL OWNER OWNED AS OF 3/31 97 OUTSTANDING
- ------------------- ------------------- -----------
<S> <C> <C>
Warren H. Haber* 235,006 (1) 5.1
Robert W. Tauber 350,000 (2) 7.6
10656 Roselle Street
San Diego, CA 92121
Stephen Rade 660,000 14.5
3915 Somers Drive
Huntington Valley, PA 19606
William Steven Sapp** 262,027 (3) 5.7
James Sapp** 250,093 (4) 5.4
Susan Grandt** 261,880 (5) 5.7
Executive Officers and Directors as a group (12 1,971,754 (6) 38.2
persons)
</TABLE>
- ----------------
+ As used herein, the term beneficial ownership with respect to a security
is defined by Rule 13d-3 under the Exchange Act as consisting of sole or
shared voting power (including the power to vote or direct the vote
and/or sole or shared investment power (including the power to dispose or
direct the disposition)) with respect to the security through any
contract, arrangement, understanding, relationship, or otherwise,
including a right to acquire such power(s) during the next 60 days.
Unless otherwise noted, beneficial ownership consists of sole ownership,
voting, and investment power with respect to all shares of Common Stock
shown as beneficially owned by the individual or group.
* His address is c/o Batteries Batteries, Inc., 711 Fifth Avenue, 14th
Floor, New York, NY 10022.
** The address of each of Messrs. William Steven Sapp and James Sapp and Ms.
Susan Grandt is c/o Battery Network, Inc., 4071 Albany Street, McHenry,
IL 60050.
(1) Includes 50,000 shares issuable upon exercise of a warrant, but does not
include an aggregate of 25,900 shares owned by his adult children and
brother as to which shares he disclaims beneficial ownership.
-2-
<PAGE>
(2) Includes 50,000 shares issuable upon exercise of an option.
(3) Includes 76,072 shares issuable upon exercise of options.
(4) Includes 72,608 shares issuable upon exercise of options.
(5) Includes 76,320 shares issuable upon exercise of options.
(6) Includes 416,896 shares subject to options and warrants.
-3-
<PAGE>
ELECTION OF DIRECTORS
The Board of Directors recommends the election of the eight nominees
for Director listed below, all of whom are currently Directors of the Company.
The Directors to be elected are to hold office until the next Annual Meeting
of Stockholders and until their respective successors are elected and shall
have qualified. If for any reason any of said nominees shall become
unavailable for election, proxies will be voted for a substitute nominee
designated by the Board, but the Board has no reason to believe that this will
occur. Directors of the Company are elected by a plurality of the votes cast
at a meeting of Stockholders.
INFORMATION CONCERNING NOMINEES
The name and age of each nominee and the year he became a Director of
the Company, according to information furnished by each, is as follows:
<TABLE>
<CAPTION>
FIRST
BECAME A
NAME AGE DIRECTOR
- ---- --- --------
<S> <C> <C>
Warren H. Haber 56 1983
Stephen Rade 58 1996
John L. Teeger 53 1983
Robert W. Tauber 72 1996
Bruce Barnet 51 1995
John Simon 54 1995
Fred Corrado 56 1996
William Schlesinger Sapp 65 1997
</TABLE>
- ---------------------------
Mr. Haber has been Chairman of the Board of the Company since its
incorporation in November 1983, and its acting Chief Executive Officer since
September 1996. For more than 25 years, he has been Chairman of the Board and
Chief Executive Officer of Founders Equity, Inc., Founders Management
Services, Inc., and affiliates (collectively, the "Founders Group"), all
private investment concerns engaged in identifying businesses for acquisition
by companies in which the principal stockholders of the Founders Group have a
substantial equity interest and managing such businesses for such principal
stockholders' accounts. Since June 1993, Mr. Haber has been
-4-
<PAGE>
Chairman of the Board and, until August 1996, Chief Executive Officer of
HealthRite, Inc., a producer of vitamins, natural nutritional and dietary
supplements, herbal based products, and weight-loss products. He had been,
from December 1986 until December 1992, Chairman of the Board and Chief
Executive Officer of International Power Machines, an American Stock
Exchange-listed manufacturer of uninterruptible power equipment, with which
he had remained a director until February 1995 when it was merged into
another company. Mr. Haber has been for more than 25 years an officer and
director of Founders Property, Inc., a private real estate investment concern.
He is a director of Lunn Industries, Inc., an NMS-listed composite product
manufacturer. He is also a director of Realty Information Group L.P., a
privately held commercial real estate information provider and a director of
Beverly Glen Medical Systems Inc., a cardiac monitoring service company.
Mr. Rade, Vice President since April 1996 and Executive Vice
President since September 1996, has been, since he founded the company in
1990, the President and director of Advanced Fox Antenna, Inc. ("Advanced Fox")
which was acquired by the Company in April 1996.
Mr. Teeger, Vice President and Secretary and, until November 1995,
the Company's Chief Financial Officer, since its incorporation in November,
1983, has been employed since 1981 by, and has served since 1984 as, President
of the Founders Group. He has also been Vice Chairman and director of
HealthRite, Inc. since December 1993. From 1976 to 1981, Mr. Teeger was a Vice
President, Corporate Finance of Bear Stearns & Co., Inc., investment bankers.
Mr. Tauber had been from April 1996 until February 1997 a Vice
President of the Company and has been since February 1997 a consultant to the
Company. He had been, since he founded the company in 1975, until February
1997, the President and a Director of Tauber Electronics, Inc.
("Tauber Electronics") which was acquired by the Company in April 1996.
Mr. Barnet has been President of Cahners Publishing Company since
1995. Prior thereto, he had been, from March 1993 until 1995, Chief Executive
Officer of Cowles Enthusiast Media and from November 1991 to November 1993
President of the Family Media Publications of Riordan Publishing Company. From
1969 to 1990 he was associated with Time Inc., the last two years as President
of Time Inc. Magazines - Asia. Mr. Barnet is also a director of Culbro, Inc.
Mr. Simon is a Managing Director of the investment banking firm of
Allen & Company Incorporated, with which firm he has been affiliated for more
than 20 years. He is also a director of Immune Response Corp., Lunn Industries
Inc., Neurogen Corp. and T. Cell.
Mr. Corrado has been Vice Chairman and Chief Financial Officer of The
Great Atlantic & Pacific Tea Company for more than five years.
Mr. Sapp had been for more than 10 years the Chief Executive Officer
and director of Battery Network Inc. and affiliated companies, which he founded,
until their acquisition by the Company in January 1997. Since the sale, he has
been an independent investor
-5-
<PAGE>
MEETINGS AND COMMITTEES
During the fiscal year ended December 31, 1996 ("Fiscal 1996"), the
Board of Directors held _______ meetings, including those in which matters
were adopted by unanimous written consent. The Board has an Audit Committee
and a Compensation and Stock Option Committee.
The Audit Committee of the Board of Directors consists of Messrs.
John L. Teeger, John Simon and Bruce A. Barnet. It held one meeting during
Fiscal 1996. The duties and responsibilities of the Audit Committee include,
among other things, review of the Company's financial statements, consideration
of the nature and scope of the work to be performed by the Company's
independent auditors, discussion of the results of such work, the receipt
from such auditors of their letters to management which evaluate (as part of
their annual audit of the Company's financial statements) the internal
accounting control systems of the Company and meeting with representatives of
management to discuss particular areas of the Company's operations.
Messrs. Fred Corrado, Bruce A. Barnet and John Simon are members of
the Compensation and Stock Option Committee. Its principal duties are the
administration of the Company's Stock Option Plan (the "Plan") and the review
and determination of the executive officers' compensation program. It held
________ meetings during the Fiscal year 1996.
EXECUTIVE COMPENSATION
COMPLIANCE WITH SECTION 16(A) OF
THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") and the rules of the Securities and Exchange Commission (the
"Commission") thereunder require the Company's Directors and officers, and any
person who owns more than ten percent of the Company's Common Stock
(collectively, "Reporting Persons"), to file reports of their ownership and
changes in ownership of Common Stock with the Commission. Reporting Persons
are also required to furnish the Company with copies of all Section 16(a)
reports they file.
Based solely upon a review of copies of such reports furnished to the
Company, and written representations that certain reports were not required,
the Company believes that all of its Reporting Persons filed on a timely basis
all reports required by Section 16(a) of the Exchange Act during or with
respect to the year ended December 31, 1996, except that Form 3 Reports of
those officers and Directors of the Company at the time of the consummation of
the Company's initial public offering in April 1996 and the Form 3 Report of
Mr. Corrado and the Form 3 Report and a Form 4 Report of Mr. Badke were not
timely filed.
-6-
<PAGE>
SUMMARY COMPENSATION TABLE
Batteries Batteries, Inc. did not conduct any operations prior to
June 6, 1995, the date of its acquisition of Specific Energy Corporation. No
executive officer or director received any compensation from Batteries
Batteries, Inc. prior to such date.
The following table sets forth for the years ended December 31, 1996
and December 31, 1995, the compensation for services rendered in all
capacities to the Company and subsidiaries by the Chief Executive Officer and
the four highest paid executive officers who received compensation in excess
of $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
- ------------------------------------------------------------------------------------------------------ ----------------
NAME AND PRINCIPAL STOCK OPTIONS
POSITION PERIOD SALARY ($) BONUS ($) (# OF SHARES)
- ---------------------------------- ----------------------------- ------------------ ----------------- ----------------
<S> <C> <C> <C> <C>
Warren H. Haber Year ended 12/31/96 (1)
Chairman of the Board and acting Year ended 12/31/95 (1)
Chief Executive Officer (1)
Donald L. Luke, former Year ended 12/31/96 197,615 (2)
President and Chief Executive Year ended 12/31/95 53,333 80,000
Officer (2)
Robert W. Tauber Year ended 12/31/96 177,865
Vice President and Director and Year ended 12/31/95 578,500
President of Tauber Electronics
Stephen Rade, Year ended 12/31/96 347,825 (3)
Vice President and Director and Year ended 12/31/95 98,608 (4)
President of Advanced Fox
Ronald E. Badke, Vice President, Year ended 12/31/96 114,615 15,000 40,000
Chief Operating Officer and Chief
Financial Officer(5)
</TABLE>
- ---------------------------
(1) Appointed acting Chief Executive Officer in September 1996. See
"Certain Relationships and Related Transactions" for compensation
paid to his affiliate.
(2) Includes $110,346 payment made to him pursuant to an agreement with
respect to termination of his employment agreement and his
resignation as an officer and Director in September 1996.
(3) Includes $200,000 accrued pursuant to an agreement relating to
acquisition of Advanced Fox.
(4) Represents a management fee paid to an affiliate of Mr. Rade, who did
not otherwise receive compensation for his services.
(5) Mr. Badke joined the Company in November 1995.
The Company entered into employment agreements in April 1996 with
each of Messrs. Rade and Tauber. The agreements provide for Mr. Rade to
receive a salary of $150,000 per annum during
-7-
<PAGE>
the three year term and for Mr. Tauber to receive a salary of $150,000 during
the first year, $120,000 during the second year, and, if extended by mutual
agreement, $100,000 during the third year. Mr. Tauber's agreement further
provides that after October 11, 1996 he will only be required to serve 20
hours per week; to the extent that the time served averages less than 20 hours
per week, his salary will be proportionately reduced. Each agreement obligates
the Company to continue the compensation for the term of the agreement in the
event of a termination of the officer's employment by the Company without
cause. Messrs. Tauber and Rade have agreed not to compete with the Company or
solicit any employees of the Company for a period of five years, subject to a
shorter period should the Company breach the agreement. Applicable law may
reduce the time period of the covenant not to compete.
Mr. Ronald E. Badke is employed pursuant to an employment agreement
expiring in April 1998 at an annual salary of $120,000, which was increased to
$135,000 as of March 1, 1997, with provision for an annual bonus of up to 25%
of the base salary subject to the achievement of certain goals.
In January 1997, pursuant to agreements related to the acquisition of
Battery Network Inc. and affiliated companies or businesses (collectively
"Batteries Network"), each of Mr. William Steven Sapp ("WSS"), Mr. James Sapp
("JS") and Ms. Susan Grandt ("SG") entered into employment agreements 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 and each to serve as a consultant thereafter for the balance of a
five year term. The agreements with WSS and JS provide that they are to be
paid annual bonuses not to exceed $400,000 in the aggregate for any year,
with the bonuses to be the sum of (i) 30% of the first $300,000 by which the
combined pre-tax income of Battery Network and Tauber Electronics (the
Company's California subsidiary) exceeds $2,500,000 for the year ended
December 31, 1997, $2,750,000 for the year ended December 31, 1998, and
$3,025,000 for the year ended December 31, 1999, and (ii) 40% of the amount by
which the combined pre-tax income for the foregoing years exceeds,
respectively, $2,800,000, $3,050,000 and $3,325,000. WSS, JS and SG also
received five-year stock options under the Company's Stock Option Plan to
purchase an aggregate of 50,000 shares of Common Stock at a price of $4.50 per
share. See "Proposal to Approve Reservation of Common Stock".
The terms of the respective employment agreements were negotiated on
arm's-length basis with each of the officers.
Directors. The Company does not pay a fee to its directors. It
reimburses those who are not employees of the Company for their expenses
incurred in attending meetings.
-8-
<PAGE>
STOCK OPTIONS
The Company's Stock Option Plan (the "Plan") relates to 250,000
shares of its Common Stock and authorizes the Board of Directors or a Stock
Option Committee appointed by the Board to grant incentive stock options and
non-incentive stock options to officers, key employees, directors, and
independent consultants, with directors who are not employees and consultants
eligible only to receive non-incentive stock options.
The following table sets forth the details as to the options granted
during and held at the end of the year ended December 31, 1996 by Mr. Donald
L. Luke, who resigned as an officer and director in September 1996, and Mr.
Ronald E. Badke, the only executive officers who received options during the
year (neither Mr. Haber nor Mr. Tauber have been granted options under the
Plan, but see "Certain Relationships and Related Transactions" with respect
to an option granted in April 1996 to Mr. Tauber as part of the consideration
for the Tauber Electronics acquisition):
<TABLE>
<CAPTION>
Potential Realizable Value at
Assumed Annual Rates of Stock
Price Appreciation for
Individual Grants Option Term (1)
- ------------------------------------------------------------------------------------- ---------------------------------
(a) (b) (c) (d) (e) (f) (g) (h)
<S> <C> <C> <C> <C> <C> <C> <C>
Percent of
Total
Options
Granted to Exercise
Options Employees in Price Expiration
Name Granted Fiscal Year ($/sh) Date 0% 5% 10%
---- -------- ----------- -------- ------ -- ---- ----
Donald L. Luke 80,000 20.2% $5.00 8/31/97 $0 $20,000 $ 40,000
Ronald E. Badke 40,000 10.1% $5.00 3/11/01 $0 $66,827 $150,962
</TABLE>
- -------------------
(1) Based on the exercise price per share.
NUMBER OF SHARES UNDERLYING
UNEXERCISED OPTIONS AT
FISCAL YEAR END (1)
<TABLE>
<CAPTION>
NAME EXERCISABLE UNEXERCISABLE
- ---- ----------- -------------
<S> <C> <C>
Donald L. Luke 80,000 0
Ronald E. Badke 13,333 26,667
</TABLE>
- --------------------
(1) None of the outstanding options held by the named individuals were
in-the-money on December 31, 1996.
Options under the Plan to purchase 10,360 shares were granted to each
of Messrs. Bruce A. Barnet and John Simon in 1995 and to purchase 10,000
shares to Mr. Fred Corrado in 1996 in their capacities as Directors of the
Company.
-9-
<PAGE>
REPORT OF THE COMPENSATION COMMITTEE
ON EXECUTIVE COMPENSATION
The compensation of all of the Company's executive officers has been
determined by long term agreements negotiated prior to their employment,
except for Messrs. Warren H. Haber, Chairman of the Board and acting Chief
Executive Officer, and John L. Teeger, Vice President and Secretary, whose
services are provided pursuant to a Management Services Agreement between
Founders Management Services Inc. and the Company. The employment agreements
with all of the other executive officers other than Mr. Ronald E. Badke, were
also negotiated in connection with the acquisition of the companies or
businesses with which the officers were affiliated at the time of the
acquisitions.
The Compensation and Stock Options Committee (the "Committee") is
authorized to review and make recommendation to the Board as to the
compensation in cash or other forms for its executive officers. Its
compensation policy will be to provide for base salaries which are
comparable to the compensation paid to executive officers of equivalent
competency and responsibilities by companies of comparable size and
capitalization both in and out of the batteries and cellular distribution
industry. The Committee also intends to provide for the payment of cash
bonuses or grants of stock options to executive officers as awards based
on the attainment of favorable operating results by the Company.
The Committee believes that the Company's stock option program, as it
has been in the past, should be used as a means to conserve cash in rewarding
executive and key employees for good or exceptional performance, the
performance of increased responsibilities, improved performance independent of
operating results, loyalty and seniority.
The Compensation and Stock Option Committee
Fred Corrado
Bruce Barnet
John Simon
-10-
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In June 1995, the Company sold in a private placement, at a price of
$3.00 per unit, 500,000 units, each consisting of two shares of 8% Preferred
Stock, Series A and one share of Class A Common Stock, or an aggregate of
1,000,000 shares of Preferred Stock, Series A and 500,000 shares of Class A
Common Stock, which were subsequently, as a result of a 1.47 for one stock
split in December 1994 and a .70475 for one reverse stock split in March 1996
increased to 517,990 shares. Included among the purchasers were Mr. Warren H.
Haber, Chairman of the Board, who along with his children and brother acquired
74,988 units; Mr. John L. Teeger, Vice President, Secretary and Director, who
along with his wife and children acquired 33,3331/3 units; the wife of Mr.
Donald L. Luke, at the time President and Chief Executive Officer and a
Director, who acquired 66,6662/3 units; Allen & Company Incorporated, of which
Mr. John Simon is a Managing Director, which acquired 83,3331/3 units; and Mr.
Bruce Barnet, a Director, who acquired 16,6662/3 units. The shares of
Preferred Stock were redeemed at par plus accrued dividends at the rate of 8%
per annum to the extent of 25% at the closing of the Company's initial public
offering in April 1996 and the balance in May 1997. The shares of Class A
Common Stock were, pursuant to their terms, converted into a like number of
shares of Common Stock at the close of the initial public offering.
In consideration for the acquisition of Tauber Electronics and
Advanced Fox, the Company in April 1996 issued to Mr. Robert W. Tauber 300,000
shares of Common Stock and a five-year option to purchase an additional 50,000
shares at $5.00 per share and issued to Mr. Stephen Rade 660,000 shares of
Common Stock; and paid cash of $3,289,000 to an affiliate of Mr. Tauber, and
$2,175,000 to Mr. Rade. Mr. Rade also has a contingent right to receive
additional cash consideration of up to $600,000, but not more than $200,000
per year, depending on the achievement of designated levels of pre-tax
earnings by the Advanced Fox subsidiary over the three period ending December
31, 1998. The Company has accrued $200,000 based on the earnings of Advanced
Fox for the year ended December 31, 1996, of which $157,758 was paid in March,
1997.
Advanced Video Corp. ("AVC"), an affiliate of Mr. Stephen Rade,
provided management consulting services to Advanced Fox during the twelve
months ended December 31, 1995 for which it received a management fee of
$98,608. Such fee was in lieu of any salary for Mr. Rade's services. Mr. Rade,
AVC and Advanced Cellular of Philadelphia, which is affiliated with Mr. Rade,
from time to time extended to and received loans from Advanced Fox, some
of which were noninterest bearing and others of which bore interest at the
rate of 12% per annum. As of December 31, 1995, the amounts outstanding were
$165,498. The outstanding balance of the loans was repaid during 1996 from the
proceeds of the Company's public offering.
The principal offices of Advanced Fox, which comprise approximately
6,400 square feet in Huntingdon Valley, Pennsylvania, are occupied under a
five year lease terminating December 31, 1999 with Rare Limited Partnership,
of which Mr. Rade and his wife are the partners. The lease, as amended with
respect to additions to the facility, provides for an annual rent of $70,000
with the tenant obligated to pay the applicable real estate taxes, maintenance
and insurance costs. Rental payment for the twelve months ended December 31,
1996 was $70,000.
-11-
<PAGE>
In September 1996, the Company entered into an agreement with Mr.
Donald L. Luke, in connection with his resignation as President, Chief
Executive Officer and Director of the Company, providing for (i) the
termination of his employment agreement which was to extend to April 11, 1998
and which provided for an annual salary of $165,000 plus an annual bonus of up
to $82,500 upon the attainment of certain goals; (ii) the payment by the
Company to Mr. Luke of $110,000; (iii) his employment as a consultant at $500
per month through August 31, 1997; (iv) the amendment of his stock option to
permit exercise as to all 80,000 shares at any time during the consulting
period; and (v) the agreement of the Company to acquire or to find purchasers
for 20,000 shares of Common Stock held by his wife at a price of not less than
$5 per share in or prior to January 1997. In January 1997, the 20,000 shares
were sold and the Company paid her $21,000 to cover the difference between the
aggregate sales proceeds and the $5.00 per share minimum.
Messrs. Warren H. Haber, Chairman of the Board and John L. Teeger,
Vice President, Secretary and Director of the Company are the sole
stockholders, officers and directors of Founders Management Services, Inc.
("Founders"). Pursuant to an agreement dated as of June 6, 1995, as
subsequently amended, Founders provides advice and consultative services
regarding management, overall strategic planning, acquisition policy,
relations with commercial and investment banking institutions, and
stockholder matters to or on behalf of the Company. The agreement is for a
term expiring in April 1999, subject to five one-year renewal options and
provided for Founders to receive a base fee of $120,000 per annum which was
increased to $150,000 per annum upon consummation of the acquisition of
Battery Network. Founders is also to receive an additional fee of 5% of the
Company's annual pre-tax income in excess of $750,000. Under the agreement,
Founders is also entitled to receive originating fees with respect to
acquisitions or financings for which it performed originating services in
amounts which are customarily charged by non-affiliated investment bankers or
professional originators for transactions of similar size and nature. The
amount of the fee is subject to the approval of a majority of the Directors
not affiliated with Founders. Founders received for its origination and
consultation services in connection with the combination with Advanced Fox and
Tauber a fee of $150,000; and in connection with the Battery Network
acquisition and related financing of $13,000,000, a fee of $240,000 and
five-year warrants to purchase 100,000 shares of Common Stock at a price of
$4.125 per share. The warrants were issued to the extent of 50,000 shares each
to Messrs. Haber and Teeger as designees of Founders. The Company believes
that the terms of the management services agreement are no less favorable than
the terms the Company could have received from an unaffiliated party.
Founders is to also receive an origination fee of $40,000 for its
services with respect to the Company's acquisition of the assets and
business of Cliffco of Tampa Bay Inc. ("Cliffco") for $75,199 in cash,
193,000 shares of Common Stock and the assumption of Cliffco's liabilities at
the time of the acquisition, which included indebtedness of approximately
$563,000.
See "Proposal to Approve Reservation of Common Stock" for information
concerning issuance of shares of Common Stock and cash payments to Messrs.
William Steven Sapp and James Sapp and Susan
-12-
<PAGE>
Grandt in consideration for the acquisition of Battery Network and contingent
obligations as to additional cash and stock consideration based on future
results of operations of Battery Network.
PERFORMANCE GRAPH
VALUE LINE INSTITUTIONAL SERVICES
1-800-531-1425
TOTAL RETURNS
ISSUE TICKER 1996
- ----- ------ ----
BRIGHTPOINT INC CELL 89.89
KENT ELECTRONICS CORP KNT -38.87
OMNIPOINT CORP OMPT -35.83
RICHEY ELECTRONICS INC RCHY -10.58
U S OFFICE PRODS CO OFIS -5.21
MARKET CAPITALIZATIONS
ISSUE TICKER 1996
- ----- ------ ----
BATTERIES BATTERIES INC BATS 22,313,000
BRIGHTPOINT INC CELL 223,210,000
KENT ELECTRONICS CORP KNT 849,160,000
OMNIPOINT CORP OMPT 1,348,326,000
RICHEY ELECTRONICS INC RCHY 134,678,000
U S OFFICE PRODS CO OFIS 1,044,240,000
SUMMARY DATA
NAME 1996
- ---- ----
BATTERIES BATTERIES INC -35.86
Russell 2000 Index 4.61
Peer Group -18.92
GRAPH PLOT POINTS
NAME 4/9/96 1996
- ---- ------ ----
BATTERIES BATTERIES INC 100.00 64.14
Russell 2000 Index 100.00 104.61
Peer Group 100.00 81.08
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<PAGE>
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth information with respect to the
beneficial ownership of shares of Common Stock as of June 20, 1997 of each
executive officer and director, and of each stockholder of the Company known
to own beneficially more than 5% of the outstanding shares of Common Stock and
all officers and Directors as a group. The number of shares beneficially owned
is determined under the rules of the Securities and Exchange Commission and
the information is not necessarily indicative of beneficial ownership for any
other person. Under such rules, "beneficial ownership" includes shares as to
which the undersigned has sole or shared voting power or investment power and
shares which the undersigned has the right to acquire within 60 days of June
20, 1997 through the exercise of any stock option or other right. Unless
otherwise indicated, the named person has sole investment and voting power
with respect to the shares set forth in the table.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY % OF
NAME OF BENEFICIAL OWNER OWNED AS OF 6/20/97 OUTSTANDING
------------------------ -------------------- -----------
<S> <C> <C>
Warren H. Haber* 235,006 (1) 5.1
John L. Teeger 104,762 (2) 2.3
Robert W. Tauber 350,000 (3) 7.6
10656 Roselle Street
San Diego, CA 92121
Stephen Rade 660,000 14.5
3915 Somers Drive
Huntington Valley, PA 19606
Ronald E. Badke 21,667 (4) ***
Bruce A. Barnet 27,626 (5) ***
John Simon 10,360 (6) ***
Fred Corrado 10,000 (4) ***
William Steven Sapp** 262,027 (7) 5.7
James Sapp** 250,093 (8) 5.4
Susan Grandt** 261,880 (9) 5.7
William Schlesinger Sapp None ----
Executive officers and Directors as a group (12 per 1,971,754 38.2
sons)
</TABLE>
- ----------------------
* His address is c/o Batteries Batteries, Inc., 711 Fifth Avenue, New
York, New York 10022.
-14-
<PAGE>
** The address of each of Messrs. William Steven Sapp and James Sapp and
Ms. Susan Grandt is c/o Battery Network, Inc. 4071 Albany Street,
McHenry, IL 60050.
*** Less than 1%.
(1) Includes 50,000 shares issuable upon exercise of a warrant, but does
not include an aggregate of 25,900 shares owned by his adult children
and brother as to which shares he disclaims beneficial ownership.
(2) Includes 50,000 shares issuable upon exercise of a warrant, but does
not include an aggregate of 24,173 shares owned by his wife and
children as to which shares he disclaims beneficial ownership.
(3) Includes 50,000 shares issuable upon exercise of an option.
(4) Represents shares issuable upon exercise of an option.
(5) Includes 10,360 shares issuable upon exercise of an option.
(6) Represents shares issuable upon exercise of options; does not include
shares owned by Allen & Company Incorporated, of which he is a
Managing Director.
(7) Includes 76,608 shares issuable upon exercise of options.
(8) Includes 72,608 shares issuable upon exercise of options.
(9) Includes 76,320 shares issuable upon exercise of options.
(10) Includes 416,896 shares subject to options and warrants referred to
in the foregoing notes.
-15-
<PAGE>
PROPOSAL TO APPROVE RESERVATION OF COMMON STOCK
On January 7, 1997 the Company acquired the business and related
assets of Battery Network, Inc. and affiliated companies (collectively
"Battery Network"), a major assembler and wholesale distributor of specialty
batteries servicing customers in the United States, Canada and Europe. The
purchase was effected through the acquisition of: (i) the outstanding capital
stock of Battery Network Inc., 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 of the assets of WSJ
Enterprises, Inc. ("Enterprises"). Battery Network, Alexander Battery and WSB
were owned by WSS, JS and their sister SG, or their parents, William
Schlesinger Sapp, the founder of the companies, and Dolores Sapp. Enterprises
is owned by their affiliate, W.S. Battery Sales & Co. Inc. Employee Stock
Ownership Plan & Trust.
The purchase price consisted of: (i) a cash payment of $8,314,551, and
(ii) the issuance 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. An additional cash consideration is payable to the
extent the combined net worth of Battery Network, WSB and Enterprises as
defined in the acquisition agreement exceeded $7.3 million as of December 31,
1996. The determination of the excess, if any, had not been made as of June
30, 1997.
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, with one-half of the options exercisable at $4.50 and
one-half exercisable at $6.00 per share. Payment of the contingent
consideration is to be based on the amount by which the combined "pre-tax"
income of the acquired companies and Tauber Electronics exceeds (i) $2,100,000
for the year ending December 31, 1997, (ii) $4,200,000 for the year ending
December 31, 1998, or (iii) $6,300,000 for the year ending December 31, 1999,
with the maximum amount of consideration payable if the excess is $400,000,
$800,000 or $1,200,000 for 1997, 1998 and 1999, respectively.
Upon consummation of the acquisition, Battery Network entered into
leases with J.W.S. Partnership, an affiliate of WSS, JS and SG, with respect
to its facilities in McHenry, Illinois and North Branch, New Jersey. Each
lease is for a five-year term and contains a five-year renewal option.
Aggregate rent for the two leases is $143,000 per annum, subject to increases
commencing in third year based on incremental increases in the Consumer Price
Index. The lessee is to bear the cost of insurance, real estate taxes and
maintenance related to the properties.
WSS, JS and SG entered into employment agreements with Battery
Network and in connection therewith were granted under the Company's Stock
Option Plan options to purchase an aggregate of 50,000 shares of Common Stock
at a price of $4.50 per share.
-16-
<PAGE>
The Company pursuant to its agreement with the National Association
of Securities Dealers Inc. is seeking the approval of its stockholders to
reserve the shares of Common Stock for issuance in the event the contingent
right to the additional stock consideration vests in whole or in part - a
maximum of 600,000 shares, of which 250,000 will be issuable upon exercise of
five year options. The failure to issue such shares should the rights vest
would result in the Company being required to make substantial cash payments,
at least equal to the fair market values of the shares of Common Stock and
options on the date or dates the respective obligations to issue such
securities arise.
The approval of the holders of a majority of the shares of Common
Stock present in person or by proxy at the Meeting for this purpose is
required. The shares of holders who abstain will be counted in the
determination and therefore will have the same effect as a vote against.
Shares held in nominee names as to which the broker does not vote on the
proposal will not be counted in determining the shares present in person or by
proxy as to this proposal.
THE BOARD OF DIRECTORS RECOMMENDS THE STOCKHOLDERS VOTE FOR THE
PROPOSAL.
-17-
<PAGE>
ANNUAL REPORT
The Annual Report of the Company to the stockholders for the year
ended December 31, 1996, including financial statements, is being mailed to
stockholders with this proxy material. The Company's Current Report on Form
8-K for January 1997 reporting the acquisition of Battery Network is
incorporated herein by reference thereto.
On written request, the Company will provide without charge to each
record or beneficial holder of the Common Stock as of July 10, 1997, a copy of
the Company's Annual Report on Form 10-K for the year ended December 31, 1996,
as filed with the Securities and Exchange Commission. Requests should be
addressed to John L. Teeger, Secretary, c/o Founders Management Services,
Inc., 711 Fifth Avenue, New York, New York 10022.
PROXY SOLICITATION
The cost of soliciting proxies will be borne by the Company. In
addition to the use of the mails, proxies may be solicited, personally or by
telephone or telegraph, by officers, Directors and regular employees of the
Company, who will not be specially compensated for this purpose. The Company
will also request record holders of Common Stock who are securities brokers,
custodians, nominees and fiduciaries to forward soliciting material to the
beneficial owners of such stock, and will reimburse such brokers, custodians,
nominees and fiduciaries for their reasonable out-of-pocket expenses in
forwarding soliciting material.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche, LLP., certified public accountants, which has
audited the Company's financial statements as of December 31, 1996 and for the
year then ended, has been selected by management to audit the Company's
financial statements for the current fiscal year. A representative of that
firm is expected to be present or available by telephone at the Meeting with
an opportunity to make a statement to the stockholders if he desires to do so,
and will respond to appropriate questions.
OTHER MATTERS
The Company is unaware of any matters, other than those mentioned
above, which will be brought before the Meeting for action. However, if any
other matters properly come before the Meeting, it is the intention of the
persons named in the accompanying form of proxy to vote such proxy in
accordance with their judgment on such matters.
-18-
<PAGE>
Any proposals intended to be presented by stockholders at the Annual
Meeting of Stockholders to be held in 1998 must be received by the Company for
inclusion in the Company's proxy material by a reasonable time prior to the
solicitation of proxies with respect to the Annual Meeting of Stockholders to
be held in 1998. The solicitation is anticipated to commence in June 1998.
It is important that your proxy be returned promptly no matter how
small or large your holding may be. Stockholders who do not expect to attend
in person are urged to execute and return the enclosed form of proxy.
July 11, 1997
-19-
<PAGE>
PRELIMINARY COPY
PROXY
BATTERIES BATTERIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints Warren H. Haber and John L. Teeger,
and either of them, with full power of substitution, as attorneys for and in
the name, place and stead of the undersigned, to vote all the shares of the
Common Stock of BATTERIES BATTERIES, INC. owned or entitled to be voted by the
undersigned as of the record date, at the Annual Meeting of Stockholders of
said Company scheduled to be held at the offices of the Company, 711 Fifth
Avenue, 14th Floor, New York, New York, 10022 on Monday, August 11, 1997, at
10:00 A.M., Eastern Time, or at any adjournment or adjournments of said
meeting, on the following proposals as indicated :
1. The election of eight Directors of the Company, each of whom is to
hold office until the next Annual Meeting of Stockholders and until
the due election and qualification of his successor.
|_| FOR all nominees listed below (except as marked to the contrary
below)
|_| WITHHOLD AUTHORITY to vote for all nominees listed below
NOMINEES: WARREN H. HABER, STEPHEN RADE, JOHN L. TEEGER, ROBERT W. TAUBER,
BRUCE A. BARNET, FRED CORRADO, JOHN SIMON, WILLIAM SCHLESINGER SAPP
(Instruction: To withhold authority to vote for any individual,
strike a line through the nominee's name above)
2. The proposal to approve the reservation of additional shares of
Common Stock.
|_| FOR |_| AGAINST |_| ABSTAIN
3. To transact such other business as may properly come before the
meeting or any adjournment thereof.
<PAGE>
PRELIMINARY COPY
This proxy if properly executed and returned will be voted in accordance with
the directions specified on the reverse side hereof. If no directions are
specified, this proxy will be voted FOR the election of the Directors named on
the reverse side hereof or their substitutes as designated by the Board of
Directors and FOR the share reservation proposal.
Dated: ______________, 1997
--------------------------------------
(Signature)
--------------------------------------
(Signature if held jointly)
Please sign exactly as name appears
hereon. Joint owners should each sign.
When signing as attorney, executor,
administrator, trustee or guardian, please
give full title as such. The signor hereby
revokes all proxies heretofore given by
the signor to vote at said meeting or any
adjournments thereof.
