<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File Number 0-27994
BATTERIES BATTERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-383-5420
(State of other jurisdiction (I.R.S. Employer)
incorporation or organization) Identification No.)
711 Fifth Avenue
New York, New York 10022
(Address of principal executive offices) (Zip Code)
(212) 223-1260
(Registrant's telephone number, including area code)
N/A
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
As of May 12, 1997, there were 4,550,000 shares of common stock
outstanding.
<PAGE>
BATTERIES BATTERIES, INC.
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1997
INDEX
Page No.
--------
PART I - FINANCIAL INFORMATION
Consolidated Financial Statements
Consolidated Balance Sheets ............................... 3
March 31, 1997 (unaudited) and December 31, 1996
Consolidated Statements of Income.......................... 4
For the three months ended March 31, 1997 and
1996 (unaudited)
Consolidated Statements of Cash Flows...................... 5
For the three months ended March 31, 1997 and
1996 (unaudited)
Notes to the Consolidated Financial Statements ............ 6
Management's Discussion and Analysis of Financial
Condition and Results of Operations........................ 10
PART II - OTHER INFORMATION ............................................. 12
2
<PAGE>
BATTERIES BATTERIES, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
<TABLE>
<CAPTION>
December 31, March 31,
1996 1997
---- ----
(unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 2,609 $ 863
Accounts receivable 2,730 6,343
Inventories 4,445 9,620
Prepaid expenses and other current assets 219 463
Current deferred income taxes 28 4
---------- ----------
Total current assets 10,031 17,293
---------- ----------
PROPERTY AND EQUIPMENT - Net 751 943
EXCESS OF COST OVER NET ASSETS ACQUIRED 615 4,973
OTHER ASSETS 337 364
---------- ----------
TOTAL $ 11,734 $ 23,573
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term debt $ 590 $ 0
Accounts payable 1,336 2,778
Accrued expenses 499 1,268
Redeemable Preferred Stock 750 750
Preferred dividends payable 35 50
Current portion of long-term bank debt 0 600
Current portion of obligations under capital leases 40 8
---------- ----------
Total current liabilities 3,250 5,454
---------- ----------
REVOLVING BANK CREDIT FACILITY 0 4,805
LONG-TERM BANK DEBT 0 2,300
OBLIGATIONS UNDER CAPITAL LEASES 7 26
DEFERRED INCOME TAXES AND OTHER DEFERRED CREDITS 17 9
STOCKHOLDERS' EQUITY
Common Stock, par value $.001, 10,000,000 shares
authorized, 4,000,000 shares and 4,550,000 shares,
respectively, issued and outstanding 4 5
Additional paid-in capital 8,000 10,264
Retained earnings 456 710
---------- ----------
Total stockholders' equity 8,460 10,979
---------- ----------
TOTAL $ 11,734 $ 23,573
========== ==========
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
BATTERIES BATTERIES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(in thousands, except share and per share data)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
March 31, 1996 March 31, 1997
-------------- --------------
<S> <C> <C>
NET SALES $ 6,179 $ 12,778
COST OF SALES 4,388 9,115
---------- ----------
Gross profit 1,791 3,663
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,510 3,052
---------- ----------
INCOME FROM OPERATIONS 281 611
INTEREST EXPENSE, NET 18 140
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES 263 471
PROVISION FOR INCOME TAXES 82 202
---------- ----------
NET INCOME 181 269
PREFERRED STOCK DIVIDEND
REQUIREMENTS 20 15
---------- ----------
NET INCOME ATTRIBUTABLE TO
COMMON STOCKHOLDERS $ 161 $ 254
========== ==========
NET INCOME PER SHARE $ .04 .06
========== ==========
WEIGHTED AVERAGE NUMBER OF COMMON &
COMMON EQUIVALENT SHARES OUTSTANDING 4,151,573 4,550,000
========== ==========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
BATTERIES BATTERIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In 000's)
<TABLE>
<CAPTION>
THREE MONTHS THREE MONTHS
ENDED ENDED
March 31, 1996 March 31, 1997
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 181 $ 269
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation & Amortization expense 36 131
Deferred income tax 0 16
Changes in assets and liabilities:
Accounts receivable (394) (1,090)
Inventories (105) (496)
Prepaid expenses and other assets (140) 37
Accounts payable and accrued expenses 809 698
---------- ----------
Net cash provided (used) by operating activities 387 (435)
---------- ----------
INVESTING ACTIVITIES:
Purchase of property and equipment, net (65) (72)
Acquisition of Battery Network, net of cash acquired 0 (10,462)
---------- ----------
Net cash used in investing activities (65) (10,534)
---------- ----------
FINANCING ACTIVITIES:
Borrowings under Term Loan Facility 0 3,000
Net borrowings under Revolving Credit Facility 0 4,805
Issuance of Common Stock to Stockholders of Battery Network 0 2,269
Proceeds from initial public offering, net of expenses 9,134 0
Payments to stockholders of Merger
Companies in connection with mergers (5,916) 0
Financing costs relating to the Battery Network aquisition 0 (148)
Payments under Term Loan Facility 0 (100)
Payments on other debt and capital lease obligations (24) (603)
---------- ----------
Net cash provided by financing activities 3,194 9,223
---------- ----------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 3,516 (1,746)
CASH AND CASH EQUIVALENTS,
BEGINNING OF PERIOD 946 2,609
---------- ----------
CASH AND CASH EQUIVALENTS,
END OF PERIOD 4,462 863
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH
FLOW INFORMATION:
Cash paid during period for:
Interest 30 67
========== ==========
Income taxes 39 110
========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
BATTERIES BATTERIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
1. ORGANIZATION BASIS OF PRESENTATION
In April 1996, effective March 31, 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 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 companies are referred to
herein as the "Combined Companies." As a result of the substantial continuing
interests in the Company of the former stockholders of the Combined Companies,
the historical financial information of each of the Combined Companies has been
combined on a historical cost basis in accordance with generally accepted
accounting principles as if the Combined 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).
On January 7, 1997, effective January 1, 1997, the Company acquired the
business and related assets of Battery Network, Inc. and affiliated companies
(see Note 2), an assembler and wholesale distributor of batteries servicing
specialty batteries customers nationally, in a business combination accounted
as a purchase. The results of operations of Battery Network are included in the
consolidated results of the Company from January 1, 1997, the effective date of
its acquisition.
The accompanying consolidated financial statements and related notes to the
consolidated financial statements are representative of what the financial
position, results of operations and cash flows would have been if the Combined
Companies, except for Battery Network, which is included from January 1, 1997,
the effective date of its acquisition, had been combined at the beginning of
fiscal 1996. The assets and liabilities of the Combined Companies are reflected
at their historical amounts. As of the date of the Mergers, the capital stock
of Batteries Batteries, Inc. was treated as capital stock of the Company and
the capital stock of Advanced Fox and Tauber was included in additional paid-in
capital and their retained earnings have been reclassified to additional
paid-in capital.
The results of operations of the Combined Companies for the three months ended
March 31, 1996 reflect the combined historical operating results of closely
held Subchapter S and C corporations through the effective date of the mergers,
and do not include pro forma adjustments for income taxes, officers' salaries
or other items necessary for combining Subchapter S and C corporations through
such date. However, net income and net income per share amounts would not have
been materially different from the reported historical amounts if such
adjustments were included.
6
<PAGE>
The accompanying consolidated financial statements as of March 31, 1997 and the
three months ended March 31, 1997 and March 31, 1996 are unaudited; but in the
opinion of management, the information contained herein reflects all
adjustments necessary to make the results of operations for the interim periods
a fair statement of such operations. All such adjustments are of a normal
recurring nature. Operating results for interim periods are not necessarily
indicative of results which may be expected for the year as a whole. These
consolidated financial statements should be read in conjunction with the
audited financial statements and footnotes thereto included in the Company's
Annual Report on Form 10-K for the year ended December 31, 1996.
2. ACQUISITION AND LOAN FACILITY
On January 7, 1997, effective January 1, 1997 the Company acquired (the
"Acquisition") the business and related assets of Battery Network, Inc. and
affiliated companies ("Battery Network"), an assembler and wholesale
distributor of batteries servicing specialty battery customers nationally.
Battery Network, which operates principally in California, New Jersey and
Illinois, had combined revenues of approximately $23 million for the year ended
December 31, 1996.
The purchase price of approximately $11.2 million consisted of (i) approximately
$8.3 million in cash, subject to adjustment to the extent that the net worth as
defined, of Battery Network, exceeds or is less than $7.3 million; (ii) 550,000
shares of common stock at a price of $4.125 per share and five year options to
purchase an additional 225,000 shares at an exercise price of $4.50 per share,
and (iii) approximately $590,000 in transaction costs.
The Battery Network agreement also provides the sellers 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 Battery
Network and 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 is $400,000 for the One-Year
Period, $800,000 for the Two-Year Period or $1,200,000 for the Three-Year
period. The sellers also entered into employment agreements and were granted
options under the Company's Stock Option Plan to purchase an aggregate of
75,000 shares of Common Stock.
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 Term Loan (the "Term
Loan") payable in 35 monthly installments of $50,000 each with the balance to
be paid at maturity and a Revolving Credit Facility (the "Revolver Loan") of up
to $10,000,000 to be advanced at the rate of 80% of eligible accounts
receivable and 50% of inventories. The Revolver Loans bears interest at
7
<PAGE>
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%, or, at the option of the Company at the
Eurodollar rate plus 2%. The Eurodollar rate is defined as Libor for a
designated period divided by one less the aggregate reserve requirements. The
interest on the Term Loan is 1/2% higher than the interest rate on the Revolver
Loans. The Loan Facility is secured by a pledge of the assets of the borrowers
and a pledge of the outstanding capital stock of the subsidiaries of the
Company. As of March 31, 1997, the amount of Term Loans outstanding was
$2,900,000 and the amount of Revolver Loans outstanding was $4,805,254.
Pursuant to the Management Agreement with Founders Management Services, Inc.
("Founders") , the Company paid Founders, for its origination and negotiating
services in connection with the acquisition and loan facility, $240,000 and
issued to the designees of Founders five year warrants to purchase 100,000
shares of Common Stock at a price of $4.125 per share.
The Acquisition was accounted for as a purchase in accordance with Accounting
Principles Board Opinion No. 16. The total purchase price net of cash acquired
was allocated to the assets acquired and liabilities assumed based on their
estimated fair values as follows:
(In Thousands)
Accounts receivable $ 2,522
-------
Inventories $ 4,679
-------
Property and equipment $ 185
-------
Other assets $ 177
-------
Accounts payable and Accrued expenses $(1,507)
-------
Excess of Cost Over Net Assets Acquired $ 4,406
-------
Total $10,462
=======
The excess of the purchase price over the net assets acquired will be
amortized over a period of 25 years. The results of operations of Battery
Network are included with those of the Company for the periods subsequent of
the date of Acquisition.
The following unaudited pro forma summary data presents the consolidated
results of operations of the Company for the three months ended March 31, 1996
as if the acquisition had been completed at the beginning of 1996 and does not
purport to be indicative of what would have occurred had the acquisition
actually been made as of such date or of results which may occur in the future.
THREE MONTHS
ENDED
MARCH 31, 1996
--------------
Net sales $ 11,903
========
Net income attributable to common
stockholders* $ 229
========
Net income per share attributable to
common stockholders* $ .05
========
8
<PAGE>
*Reflects adjustments for increased interest expense arising from acquisition
debt, amortization of goodwill, changes in compensation to stockholder
officers, and related tax adjustments.
3. INITIAL PUBLIC OFFERING
On April 8, 1996, effective March 31, 1996, the Company completed its initial
public offering (the "Offering") of 2,300,000 shares of Common Stock at an
initial public offering price of $5.00 per share and 2,300,000 redeemable
common stock purchase warrants (the "Warrants") at $.10 per Warrant. The net
proceeds to the Company net of underwriting discounts and Offering costs, were
approximately $9.1 million. Simultaneously with the closing of the Offering,
the Company issued 960,000 shares of Common Stock and options to purchase
50,000 shares of Common Stock and paid approximately $5.9 million in cash to
the former stockholders of the Merger Companies. In addition, the Company
subsequently paid an additional $.8 million in cash to the former stockholders
of the Merger Companies in connection with price adjustments stipulated in the
respective merger agreements. The cash consideration paid to the former
stockholders of the Merger Companies has been reflected as a reduction of
stockholders' equity in the consolidated financial statements. The remaining
cash proceeds from the Offering were used for general corporate purposes.
4. STOCKHOLDERS EQUITY
See Note 1 for information as to the issuance in January, 1997 in connection
with the acquisition of Battery Network, of 550,000 shares of Common Stock
valued at $4.125 per share and five year options to purchase 225,000 shares of
Common Stock at an exercise price of $4.50 per share. The Company also issued
in connection with the acquisition to designees of Founders Management Services
Inc., warrants to purchase 100,000 shares of Common Stock at a price of $4.125
per share.
5. SUBSEQUENT EVENTS
During April 1997, the Company redeemed its outstanding 750,000 shares of
Redeemable Preferred Stock at the redemption price of $1.00 per share plus
accrued dividends of $50,000.
During May 1997, the Company acquired the business and related assets of
Cliffco of Tampa Bay, Inc. ("CTB"), a distributor of cellular products
operating out of Tampa, Florida. The total purchase price was $521,985
consisting of cash of approximately $75,000 and 193,500 shares of common stock
valued at $2.31 per share or $446,985 in the aggregate. In addition, the
Company repaid Cliffco's debt in the amount of approximately $560,000 to its
collateralized lender, with borrowings under the Revolver Loans.
9
<PAGE>
Item 2. MANAGEMENTS DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
RESULTS OF OPERATIONS
The following table represents the Company's statement of operations data
expressed as a percentage of net sales for the respective periods:
Three Months Ended March 31,
----------------------------
1996 1997
---- ----
Net 100.0% 100.0%
Sales
Cost of Sale 71.1 71.3
---- ----
Gross Margin 28.9 28.7
Selling Gen. & Admin.
Expenses 24.4 23.9
---- ----
Operating Income 4.5 4.8
Interest expense, net .3 1.1
-- ---
Income before provision for
Income Taxes 4.2 3.7
Income Taxes 1.3 1.6
--- ---
Net Income 2.9% 2.1%
=== ===
Three Months ended March 31, 1997 ("1997") Compared to Three Months Ended March
31, 1996 ("1996")
Net sales increased 107% from $6.2 million in 1996 to $12.8 million in 1997.
The increase was primarily due to the acquisition of Battery Network, effective
January 1, 1997, which had $6.3 million of sales for the quarter, and the
continued growth of Advanced Fox's cellular accessory business (up 14.5% as
compared to 1996), partially offset by a decline in Specific Energy's sales of
16.5 %.
Gross profit increased by $1.9 million from $1.8 million in 1996 to $3.7
million in 1997 but as a percentage of sales decreased from 28.9% in 1996 to
28.7% in 1997. The bulk of the increase in dollars is attributable to the
acquisition of Battery Network ($1.7 million) and to increases in Advanced
Fox of $.2 million.
Selling, general and administrative ("SG&A") expenses increased from $1.5
million in 1996 to $3.1 million in 1997 or a total net increase of $1.6 million
and as a percentage of sales decreased from
10
<PAGE>
24.4% to 23.9%. The bulk of the increase in dollars is attributable to (i) the
acquisition of Battery Network ($1.3 million), to (ii) general and
administration costs associated with being a publicly held company and (iii) an
increase in marketing, selling and distribution costs incurred by and to
Advanced Fox, and Specific Energy, offset in part by cost reductions in the
Tauber division, and (iv) amortization of Goodwill related to the Battery
Network acquisition. The reduction as a percentage of sales is mainly
attributable to Battery Network's significantly lower rate of selling and
administrative costs than the other operations of the Company taken as a whole.
Interest expense, net increased from $18,000 in 1996 to $140,000 in 1997,
primarily due to interest on borrowings incurred in connection with the
acquisition of Battery Network.
The Company's effective income tax rate increased from 31.2% in 1996 to 43.0%
in 1997. Prior to the Mergers, certain of the Founding Companies had operated
as Subchapter S Corporations under the Internal Revenue Code of 1986, as
amended. Upon consummation of the Mergers, effective March 31, 1996 the Company
files as a consolidated group for Federal income tax purposes. The income tax
provision for the three months ended March 31, 1997 reflects income taxes at an
estimated annual rate.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary capital needs have been to fund (i) the working capital
requirements necessitated by its sales growth, (ii) acquisitions and (iii)
prior to the initial public offering, distributions to its existing
stockholders primarily to satisfy their tax liabilities resulting from the S
Corporation status of certain of the Predecessor Companies. The Company's
primary sources of financing have been cash from operations, the initial public
offering and bank borrowings under the Loan Facility.
The Company's working capital as of March 31, 1997 was $11.8 million. For the
three months ended March 31, 1996, net cash provided by operating activities
was $.4 million and for the same period in 1997, cash used in operating
activities was $.4 million. The difference results from several factors
including the increase in net income, changes in inventory, accounts
receivable, accounts payable and accrued expenses, prepaid expenses and other
assets. Cash used for additions to property and equipment were $65,000 and
$72,000 for 1996 and 1997 periods, respectively. Investing activities in 1997,
included the purchase price and related expenses net of cash acquired of
$10,462,000 relating to the acquisition of Battery Network. The cash provided
by financing activities was $3.2 million in 1996, primarily due to the net
proceeds from the Offering. Of the $9.1 million net proceeds from the Offering,
$6.7 million was paid to the former stockholders of the Merger Companies. In
1996, cash provided by financing activities was $6.2 million consisting of net
borrowings of $7.1 million offset by financing and acquisition costs relating
to the Battery Network acquisition. Financing activities in 1997, included the
issuance of 550,000 shares of common stock at $4.125 per share, totalling
$2,269,000 as part of the purchase price of Battery Network and the finance
costs of $148,000 expended in 1997 related to Revolving Credit, Term Loan and
Security Agreement with IBJ Schroder Bank & Trust Company of $148,000 and net
borrowings under this facility, partially offset by a payment of Long-Term
Debt of $590,000 and capital lease obligations of $13,000. The Company had at
March 31,1997 cash and cash equivalents of approximately $.9 million.
On January 7, 1997, effective January 1, 1997 the Company acquired the business
and related assets of Battery Network, Inc. ("Battery Network") and affiliated
companies, as discussed in (Note 2)
11
<PAGE>
"Acquisition and Loan Facility" to the Consolidated Financial Statements.
The Company redeemed in April 1997 the outstanding 750,000 shares of Series A
Preferred Stock at the redemption price of $1.00 per share plus accrued
dividends at 8% per annum, for a total of $800,000.
On May 12, 1997 the Company acquired the business and related assets of
Cliffco of Tampa Bay, Inc. ("CTB") a distributor of cellular products
operating out of Tampa, Florida as discussed in (Note 5) "Subsequent Events"
to the Consolidated Financial Statement.
The Preferred Stock redemption and the cash payments made in connection with
the CTB acquisition were funded under the Company's Revolving Credit, Term Loan
and Security Agreement, as amended on May 13, 1997.
The Company estimates that it will incur additional capital expenditures of
approximately $1,000,000 during the next twelve months in connection with the
expansion and relocation of office and warehouse facilities, acquisition of
machinery and equipment used in the assembly of battery packs and procurement
of computer systems.
Based upon its present plans, management believes that operating cash flow,
available cash and available credit resources, will be adequate to make the
repayments of indebtedness described herein, to meet the working capital cash
needs of the Company and to meet anticipated capital expenditures needs during
the next twelve months. Although the Company intends to issue shares of Common
Stock as its primary method of financing acquisitions, it anticipates that
additional funds will be required to implement successfully its acquisition
program, and it will use various methods to finance acquisitions, including
the payment of cash, for this purpose.
SEASONALITY AND INFLATION
The Company's net sales typically show no significant seasonal variations,
although net sales may be affected in the future by timing of retail store
openings or acquisitions.
The impact of inflation on the Company's operations has not been significant
to date. However, there can be no assurance that a high rate of inflation in
the future would not have an adverse effect on the Company's operating results.
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K
a) Exhibits
12
<PAGE>
(1) Copy of Amendment No. 1 and Joinder Agreement dated May 13, 1997
to Revolving Credit, Term Loan and Security Agreement among IBJ Schroder Bank
and Trust Company, as Agent, the Company and its subsidiaries, including
Cliffco of Tampa Bay Inc. (the "Loan Agreement")
(2) Copy of Amended and Restated Term Note issued pursuant to
Amendment No. 1 to the Loan Agreement.
(3) Copy of Amended and Restated Revolving Credit Note issued pursuant
to Amendment No. 1 to the Loan Agreement.
27. Financial Data Schedule.
b) Reports on Form 8-K
No Report on Form 8-K was filed during the three months ended March
31, 1997, except a Report on Form 8-K for January 7, 1997 providing information
with respect to the acquisition of Battery Network Inc, and affiliated
companies and the related bank term loan and revolving credit facility
financing.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
5/20/97 By: Ronald E. Badke /s/
----------- ---------------------------------------
Date Ronald E. Badke
Vice President and Chief Financial Officer
5/20/97 By: John L. Teeger /s/
----------- ---------------------------------------
Date John L. Teeger
Vice President, Secretary and Director
14
<PAGE>
AMENDMENT NO. 1 AND JOINDER AGREEMENT
THIS AMENDMENT NO. 1 AND JOINDER AGREEMENT ("Agreement") is entered
into as of May 13, 1997, by and among Batteries Batteries, Inc. ("BATS"),
Tauber Electronics, Inc. ("TEI"), Advanced Fox Antenna, Inc. ("AFA"), Specific
Energy Corporation ("SEC"), W.S. Battery & Sales Company, Inc. ("WSBS"),
Battery Network, Inc. ("BN"), Battery Acquisition Corp. ("BAC"), Cliffco of
Tampa Bay, Inc. (formerly known as Cellular Florida Acquisition, Inc.) ("CTB")
(BATS, TEI, AFA, SEC, WSBS, BN, BAC and CTB, each a "Borrower" and, jointly and
severally, the "Borrowers") and IBJ Schroder Bank and Trust Company, as Lender
and Agent (as such terms are hereinafter defined).
BACKGROUND
----------
BATS, TEI, AFA, SEC, WSBS, BN and BAC, IBJ Schroder Bank and Trust
Company ("IBJS"), each of the other financial institutions named in the Loan
Agreement (as hereinafter defined) or which hereafter become parties thereto
(IBJS and such financial institutions, the "Lenders") and IBJS as agent for the
Lenders (IBJS in such capacity, the "Agent") are parties to a Revolving Credit,
Term Loan and Security Agreement dated as of January 7, 1997 (as amended,
supplemented, modified or restated from time to time, the "Loan Agreement")
pursuant to which Lenders and Agent provided Borrowers (other than CTB) with
certain financial accommodations.
Pursuant to an Asset Purchase Agreement dated April 27, 1997 by and
among BATS, Cellular Florida Acquisition, Inc., a wholly owned subsidiary of
BATS ("Sub"), Cliffco of Tampa Bay, Inc. (now known as Costilow Communications
and Accessories, Inc.) ("Seller") and David Costilow, the stockholder of Seller
(the "Purchase Agreement"), Seller sold to Sub and Sub purchased from Seller
certain assets of Seller. Following such acquisition, Sub changed its name to
Cliffco of Tampa Bay, Inc.
BATS, TEI, AFA, SEC, WSBS, BN and BAC have requested that Agent and
Lenders permit CTB to become a Borrower and provide financial accommodations to
CTB under the Loan Agreement and Agent and Lenders are willing to do so on the
terms and conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by Agent
or Lenders and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Definitions. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. Joinder.
(a) CTB is hereby added as an additional Borrower under the Loan
Agreement, and all references to "Borrower" or "Borrowers" thereunder shall
henceforth be deemed to include CTB.
<PAGE>
(b) CTB hereby adopts the Loan Agreement and each of the Other
Documents and assumes in full, and acknowledges that it is jointly and
severally liable for, the payment, discharge, satisfaction and performance of
all Obligations under the Loan Agreement and the Other Documents. Without
limiting the generality of the foregoing, in order to secure the prompt payment
and performance of the Obligations, CTB hereby assigns, pledges and grants to
Agent for the benefit of Lenders a continuing security interest in and to all
of its Collateral, whether now owned or existing or hereafter acquired or
arising and wheresoever located.
3. Amendment to Loan Agreement. Subject to satisfaction of the
conditions precedent set forth in Section 4 below, the Loan Agreement is hereby
amended as follows:
(a) Section 1.2 is hereby amended by
(i) adding the following defined terms in their appropriate
alphabetical order:
"Amendment No. 1" shall mean Amendment No. 1 and Joinder
Agreement dated as of May __, 1997 among Borrowers,
Lenders and Agent.
"Amendment No. 1 Effective Date" shall mean May __,
1997.
"Amendment No. 1 Projections" shall have the meaning set
forth in Section 5.5(c) hereof.
"CTB" shall mean Cliffco of Tampa Bay, Inc. (formerly
known as Cellular Acquisition, Inc.), a Florida
corporation.
"CTB Acquisition Agreement" shall mean the Asset
Purchase Agreement dated as of April __, 1997 among
BATS, Cellular Florida Acquisition, Inc. (now known as
Cliffco of Tampa Bay, Inc.), Old Cliffco, as seller and
David Costilow, as Stockholder.
"Old Cliffco" shall mean Cliffco of Tampa Bay, Inc., a
Florida corporation, now known as Costilow
Communications and Accessories, Inc.
(ii) amending the following defined term in its entirety to
provide as follows:
"Acquisition Agreement" shall mean collectively, the BN
Acquisition Agreement, the WSBS Acquisition Agreement,
the BAC Acquisition Agreement and the CTB Acquisition
Agreement.
(b) Section 5.5 is amended by adding the following subsection (c)
after the end of subsection (b):
-2-
<PAGE>
"(c) The twelve-month cash flow projections of BATS on a
consolidated basis and their projected balance sheets as
of the Amendment No. 1 Effective Date, copies of which
are attached as Exhibit 5.5(c) to Amendment No. 1 (the
"Amendment No. 1 Projections") were prepared by
Borrowing Agent, reflect the consummation of the
transaction contemplated by Amendment No. 1 and the CTB
Acquisition Agreement, are based on underlying
assumptions which provide a reasonable basis for the
projections contained therein."
(c) Section 5.8 is amended by adding after the end of Section
5.8(e) a new Section 5.8(f) which provides as follows:
"(e) After giving effect to the transactions
contemplated by Amendment No. 1 and the Cliffco
Acquisition Agreement, each Borrower will be solvent,
able to pay its debts as they mature, have capital
sufficient to carry on its business and all businesses
in which it is about to engage, and (i) as of the
Amendment No. 1 Effective Date, the fair present
saleable value of its assets, calculated on a going
concern basis, is in excess of the amount of its
liabilities and (ii) subsequent to the Amendment No. 1
Effective Date, the fair saleable value of its assets
(calculated on a going concern basis) will be in excess
of the amount of its liabilities."
(d) Section 5.24 is added after the end of Section 5.23 and
provides as follows:
"5.24. Delivery of CTB Acquisition Agreement. Agent has
received complete copies of the CTB Acquisition
Agreement, including all exhibits, schedules and
disclosure letters referred to therein or delivered
pursuant thereto and all amendments thereto, waivers
relating thereto and other side letters or agreements
affecting the terms thereof. None of such documents and
agreements has been amended or supplemented, nor have
any of the provisions thereof been waived, except
pursuant to a written agreement or instrument which has
heretofore been delivered to Agent."
(e) Section 7.1(a) is amended in its entirety to provide as
follows:
"(a) Enter into any merger, consolidation or other
reorganization with or into any other Person other than
a Borrower or acquire all or a substantial portion of
the assets or stock of any Person other than a Borrower
and other than the assets of Old Cliffco in accordance
with the CTB Acquisition Agreement or permit any other
Person to consolidate with or merge with it other than a
Borrower."
(f) Section 7.12(a) is amended in its entirety to provide as
follows:
-3-
<PAGE>
"(a) Form any Subsidiary, except that BATS may form
CTB."
(g) Section 16.3(b) is hereby amended by adding the following
parenthetical immediately after "any Transferee" on the tenth line thereof:
"(other than to a Transferee that is an affiliate or
subsidiary of IBJS)"
(h) Section 16.3(c is amended by adding the following sentence at
the end thereof:
"Without in any manner limiting the foregoing, the
Borrowers specifically consent to the sale, assignment
and/or transfer by IBJS to IBJ Schroder Business Credit
Corporation of all or any part of its rights and
obligations under this Agreement and the Other Documents
in its capacity as Agent and as Lender."
(i) Exhibit 2.1(a) is amended in its entirety to provide as set
forth on Exhibit A attached to this Agreement.
(j) Exhibit 2.4 is amended in its entirety to provide as set forth
on Exhibit B attached to this Agreement.
(k) Schedule 4.5 (Equipment and Inventory Locations) is amended by
adding the following at the end thereof:
"(o) 12816 Dupont Circle, Tampa, Florida 33626 (until 6/30/97)
(p) 201 Vollmer Avenue, Oldsmar, Florida 34677 (commencing
7/1/97)"
(l) Schedule 4.15(c) (Location of Executive Offices) is amended by
adding the following at the end thereof:
"(h) Cliffco of Tampa Bay, Inc.
(i) 12816 Dupont Circle
Tampa, Florida 33626
(until June 30, 1997)
(ii) 201 Vollmer Avenue
Oldsmar, Florida 34677
(commencing July 1, 1997)"
(m) Schedule 5.2(a) (States of Qualification/Good Standing) is
amended by adding the following at the end thereof:
"Cliffco of Tampa Bay, Inc. - Florida"
-4-
<PAGE>
(n) Schedule 5.2(b) (Subsidiaries) is amended by adding the
following at the end of the first section thereof:
"(e) Cliffco of Tampa Bay, Inc."
(o) Schedule 5.4(b) (Federal Tax Identification Numbers) is amended
by adding the following at the end of the first section thereof:
"(h) Cliffco of Tampa Bay, Inc. -- 65-0750742
(p) Schedule 5.6 (Prior Names) is amended by adding the following
at the end thereof:
"(f) Cliffco of Tampa Bay, Inc. was previously "Cellular
Florida Acquisition, Inc." The amendment to the
Certificate of Incorporation was filed on the Amendment
No. 1 Effective Date. Cliffco of Tampa Bay, Inc. uses the
tradename "Cliffco"."
(q) Schedule 5.9 (Intellectual Property, Source Code, Escrow
Agreements) is amended by adding the following at the end thereof:
""Accessory Solutions for a Wireless World" trademark
registration application file no: 3-11-96, filed: 75/069,921
"Your Phone" trademark registration application, file no:
75/203,707, filed: 11-25-96
"Starter Kit" trademark registration application, file no:
75/227,177, filed: 1-16-97
"Starter Kit 2" trademark registration application, 75/227,178,
filed: 1-16-97
4. Conditions of Effectiveness. This Agreement shall become
effective upon satisfaction of the following conditions precedent:
(i) Agent shall have received in form and substance
satisfactory to Lender four (4) copies of this Agreement duly
executed by each Borrower;
(ii) Agent shall have received in form and substance
satisfactory to Agent an executed Purchase Agreement and all
exhibits and schedules thereto and all other documents and
agreements executed in connection therewith;
(iii) BATS and/or CTB shall have obtained all necessary
consents with respect to each contract, lease, and agreement being
assigned to CTB pursuant to the Purchase Agreement. BATS and CTB
hereby covenant that no conditions to
-5-
<PAGE>
effectiveness of the Purchase Agreement shall be waived by BATS or
CTB without Agent's prior written consent;
(iv) Agent shall have received an executed Amended and Restated
Term Note in the form attached hereto as Exhibit A and (b) Amended
and Restated Revolving Credit Note in the form attached hereto as
Exhibit B;
(v) Agent shall have received in form and substance
satisfactory to Agent a Collateral Assignment executed by BATS with
respect to its rights under the Purchase Agreement;
(vi) Each document (including, without limitation, any Uniform
Commercial Code financing statement) required by this Agreement or
under law or reasonably requested by Agent to be filed, registered
or recorded in order to create, in favor of Agent for the ratable
benefit of the Lenders, a perfected security interest in or lien
upon the Collateral owned by CTB shall have been properly filed,
registered or recorded in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested,
and Agent shall have received an acknowledgment copy, or other
evidence satisfactory to it, of each such filing, registration or
recordation and satisfactory evidence of the payment of any
necessary fee, tax or expense relating thereto;
(vii) Agent shall have received a copy of the resolutions in
form and substance reasonably satisfactory to Agent, of the Board
of Directors of (x) CTB authorizing (1) the execution, delivery and
performance of this Agreement and (2) the granting by CTB of the
Liens upon the Collateral, certified by the Secretary or an
Assistant Secretary of CTB as of the date of this Agreement; and
(y) of BATS, TEI, AFA, SEC, WSBS, BN and BAC authorizing (1) the
execution, delivery and performance of this Agreement and (2) the
addition of CTB as a "Borrower" under the Loan Agreement; and, such
certificates shall state that the resolutions thereby certified
have not been amended, modified, revoked or rescinded as of the
date of such certificate;
(viii) Agent shall have received a copy of the Articles or
Certificate of Incorporation of CTB, and all amendments thereto,
certified by the Secretary of State or other appropriate official
of its jurisdiction of incorporation together with copies of the
By-Laws of CTB certified as accurate and complete by the Secretary
or an Assistant Secretary of CTB;
(ix) Agent shall have received good standing certificates for
CTB dated not more than thirty (30) days prior to the date of this
Agreement, issued by the Secretary of State or other appropriate
official of CTB's jurisdiction of incorporation and each
jurisdiction where the conduct of CTB's business activities or the
ownership of its properties necessitates qualification;
(x) Agent shall have received the executed legal opinions of
Brock,
-6-
<PAGE>
Fensterstock, Silverstein, McAuliffe & Wade, LLC in form and
substance satisfactory to Agent regarding the due authorization,
enforceability and validity of (i) this Agreement and (ii) the
Purchase Agreement, and the transactions contemplated herein
and therein;
(xi) Agent shall have received in form and substance
satisfactory to Agent, certified copies of CTB's casualty insurance
policies, together with loss payable endorsements on Lender's
standard form of loss payee endorsement naming Agent as loss payee,
and certified copies of CTB's liability insurance policies,
together with endorsements naming Agent as a co-insured;
(xii) Agent shall have received in form and substance
satisfactory to Agent all landlord, mortgagee or warehousemen
agreements for CTB's existing premises at 12816 Dupont Circle,
Tampa, Florida and future premises at 201 Vollmer Avenue, Oldsmar,
Florida;
(xiii) Agent shall have received the stock certificate issued
by CTB in favor of BATS, along with an executive stock power which
shall be pledged to Agent under and pursuant to the Pledge
Agreement dated January 7, 1997 by and between Agent and BATS;
(xiv) (A) No litigation, investigation or proceeding before or
by any arbitrator or Governmental Body shall be continuing or
threatened against any Borrower or against the officers or
directors of any Borrower (x) in connection with this Agreement or
any of the Transactions contemplated by the CTB Acquisition
Agreement and which, in the reasonable opinion of Agent, is deemed
material or (y) which if adversely determined, would, in the
reasonable opinion of Agent, have a Material Adverse Effect on
Borrowers taken as a whole; and (B) no injunction, writ,
restraining order or other order of any nature materially adverse
to any Borrower, or the conduct of the business of any Borrower, or
inconsistent with the due consummation of this Agreement or the CTB
Acquisition Agreement shall have been issued by any Governmental
Body;
(xv) Agent shall have received an executed Financial Condition
Certificate satisfactory in form and substance to it, certifying
the solvency of Borrowers on a consolidated basis after giving
effect to the transactions contemplated by this Agreement and the
CTB Acquisition Agreement and as to Borrowers' financial resources
and their ability to meet their obligations and liabilities as they
become due;
(xvi) Agent shall have completed Collateral examinations, the
results of which shall be satisfactory in form and substance to
Agent, of the Receivables, Inventory and General Intangibles of CTB
and all books and records in connection therewith;
(xvii) Agent shall have received a copy of the Amendment No. 1
Projections which shall be satisfactory in all respects to Agent;
(xviii) Agent shall have received duly executed agreement(s)
establishing the
-7-
<PAGE>
Blocked Account(s) with financial institutions reasonably
acceptable to Agent for the collection or servicing of the
Receivables and proceeds of the Collateral of CTB;
(xix) Agent shall have received any and all Consents necessary
to permit the effectuation of the transactions contemplated by this
Agreement; and, Agent shall have received such Consents and waivers
of such third parties as might assert claims with respect to the
Collateral, as Agent and its counsel shall deem necessary;
(xx) (A) Since January 7, 1997 there shall not have occurred
(x) any material adverse change in the financial condition,
operations, properties or prospects of Borrowers taken as a whole
and Old Cliffco, (y) any material damage or destruction to any of
the Collateral nor any material depreciation in the value thereof
and (z) any event, condition or state of facts which would
reasonably be expected to have a Material Adverse Effect on
Borrowers taken as a whole and Old Cliffco and (B) no
representations made or information supplied to Agent shall have
been proven to be inaccurate or misleading in any material respect;
(xxi) Agent shall have received a closing certificate signed by
the Chief Financial Officer of each Borrower dated as of the date
hereof, stating that (A) all representations and warranties set
forth in the Loan Agreement and the Other Documents are true and
correct in all material respects on and as of such date, (B)
Borrowers are on such date in compliance with all the terms and
provisions set forth in the Loan Agreement and the Other Documents
and (C) on such date no Default or Event of Default has occurred or
is continuing;
(xxii) Agent shall have received a duly executed collateral
assignment of the rights of each of BATS and CTB under the CTB
Acquisition Agreement, in form and substance satisfactory to
Lender;
(xxiii) Agent shall have reviewed all material contracts of CTB
including, without limitation, leases, union contracts, labor
contracts, vendor supply contracts, license agreements and
distributorship agreements and such contracts and agreements shall
be satisfactory in all respects to Agent; and
(xxiv) Agent shall have received such other certificates,
instruments, documents and agreements as may reasonably be required
by Agent or its counsel, each of which shall be in form and
substance satisfactory to Agent and its counsel.
5. Representations and Warranties. Each Borrower hereby
represents and warrants as follows:
(a) This Agreement and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrowers and
are enforceable against Borrowers in accordance with their
respective terms.
(b) Upon the effectiveness of this Agreement, such Borrower
(other than
-8-
<PAGE>
CTB) hereby reaffirms and CTB affirms all covenants,
representations and warranties made in the Loan Agreement to the
extent the same are not amended hereby and agrees that all such
covenants, representations and warranties shall be deemed to have
been remade as of the effective date of this Agreement.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Agreement.
(d) Such Borrower has no defense, counterclaim or offset with
respect to the Loan Agreement.
6. Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 2 hereof, each reference in
the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the Loan Agreement as
amended hereby.
(b) Except as specifically amended herein, the Loan Agreement, and
all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Agreement
shall not operate as a waiver of any right, power or remedy of Lender, nor
constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
7. Governing Law. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns and shall be governed by and construed in accordance with the laws of
the State of New York.
8. Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose.
9. Counterparts; Telecopied Signatures. This Agreement may be
executed in any number of and by different parties hereto, on separate
counterparts, all of which when so executed shall be deemed an original, but
all such counterparts shall constitute one and the same agreement. Any
signature delivered by a party by facsimile transmission shall be deemed to be
an original signature hereto.
-9-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first written above.
BATTERIES BATTERIES, INC., as Borrower and
Borrowing Agent
By:
--------------------------------
Title:
-----------------------------
TAUBER ELECTRONICS, INC., as Borrower
By:
--------------------------------
Title:
-----------------------------
ADVANCED FOX ANTENNA, INC., as Borrower
By:
--------------------------------
Title:
-----------------------------
SPECIFIC ENERGY CORPORATION, as
Borrower
By:
--------------------------------
Title:
-----------------------------
BATTERY NETWORK, INC., as Borrower
By:
--------------------------------
Title:
-----------------------------
W.S. BATTERY & SALES COMPANY, INC., as
Borrower
By:
--------------------------------
Title:
-----------------------------
-10-
<PAGE>
BATTERY ACQUISITION CORP., as Borrower
By:
--------------------------------
Title:
-----------------------------
CLIFFCO OF TAMPA BAY, INC., as Borrower
(f/k/a Cellular Florida Acquisition, Inc.)
By:
--------------------------------
Title:
-----------------------------
IBJ SCHRODER BANK & TRUST COMPANY,
as Agent and Lender
By:
--------------------------------
Title:
-----------------------------
-11-
<PAGE>
AMENDED AND RESTATED
TERM NOTE
$3,000,000 New York, New York
May 13, 1997
This Amended and Restated Term Note is executed and delivered under
and pursuant to the terms of that certain Revolving Credit, Term Loan and
Security Agreement dated as of January 7, 1997 as amended by Amendment No. 1
and Joinder Agreement dated as of the date hereof (as same may be further
amended, supplemented or modified from time to time the "Loan Agreement") by
and among BATTERIES BATTERIES, INC., a corporation organized under the laws of
the State of Delaware ("BATS"), TAUBER ELECTRONICS, INC., a corporation
organized under the laws of the State of California ("TEI"), ADVANCED FOX
ANTENNA, INC., a corporation organized under the laws of the State of Delaware
("AFA"), SPECIFIC ENERGY CORPORATION, a corporation organized under the laws of
the State of Arizona ("SEC"), BATTERY NETWORK, INC., a corporation organized
under the laws of the State of Illinois ("BN"), W.S. BATTERY & SALES COMPANY,
INC., a corporation organized under the laws of the State of Illinois ("WSBS"),
BATTERY ACQUISITION CORP., a corporation organized under the laws of the State
of New York ("BAC") and CLIFFCO OF TAMPA BAY, INC. (formerly known as Cellular
Florida Acquisition, Inc.), a corporation organized under the laws of the State
of Florida ("CTB") (BATS, TEI, AFA, SEC, BN, WSBS, BAC and CTB, each a
"Borrower" and, jointly and severally, the "Borrowers"), IBJ SCHRODER BANK &
TRUST COMPANY ("IBJS"), each of the other financial institutions named in or
which hereafter become a party to the Loan Agreement (IBJS and such other
financial institutions, the "Lenders") and IBJS as agent for the Lenders (IBJS
in such capacity, the "Agent"). Capitalized terms not otherwise defined herein
shall have the meanings as provided in the Loan Agreement.
FOR VALUE RECEIVED, Borrowers, jointly and severally, hereby promise
to pay to the order of Agent for the ratable benefit of Lenders at its offices
located at One State Street, New York, New York 10004 or at such other place as
Agent may from time to time designate to Borrowers in writing:
(i) the principal sum of THREE MILLION AND 00/100 DOLLARS
($3,000,000.00) payable in accordance with the terms of the Loan Agreement,
subject to acceleration upon the occurrence of an Event of Default under the
Loan Agreement, earlier termination of the Loan Agreement or earlier prepayment
as required pursuant to the terms thereof; and
(ii) interest on the principal amount of this Note from time to time
outstanding, payable at the Term Loan Rate in accordance with the provisions of
the Loan Agreement. Upon and after the declaration of an Event of Default, and
during the continuation thereof, interest shall be payable at the Default Rate.
In no event, however, shall interest hereunder exceed the maximum interest rate
permitted by law.
This Note is the Term Note referred to in the Loan Agreement and is
secured, inter alia, by the Liens granted pursuant to the Loan Agreement and
the Other Documents, is
<PAGE>
entitled to the benefits of the Loan Agreement and the Other Documents and is
subject to all of the agreements, terms and conditions therein contained.
This Note amends and restates in its entirety and is given in
substitution for (but not in satisfaction of), that certain Term Note dated
January 7 1997 made by BATS, TEI, AFA, SEC, BN, WSBS and BAC in favor of Agent
for the ratable benefit of Lenders in the original principal amount of
$3,000,000.
This Note is subject to mandatory prepayment and may be voluntarily
prepaid, in whole or in part, on the terms and conditions set forth in the Loan
Agreement.
If an Event of Default under Section 10.7 of the Loan Agreement shall
occur, then this Note shall immediately become due and payable, without notice,
together with reasonable attorneys' fees if the collection hereof is placed in
the hands of an attorney to obtain or enforce payment hereof. If any other
Event of Default shall occur under the Loan Agreement or any of the Other
Documents, which is not cured within any applicable grace period, then this
Note may, as provided in the Loan Agreement, be declared to be immediately due
and payable, without notice, together with reasonable attorneys' fees, if the
collection hereof is placed in the hands of an attorney to obtain or enforce
payment hereof.
This Note is being delivered in the State of New York, and shall be
construed and enforced in accordance with the laws of such State.
Borrowers expressly waive any presentment, demand, protest, notice of
protest, or notice of any kind except as expressly provided in the Loan
Agreement.
BATTERIES BATTERIES, INC. TAUBER
ELECTRONICS, INC. ADVANCED FOX ANTENNA,
INC. SPECIFIC ENERGY CORPORATION BATTERY
NETWORK, INC. W.S. BATTERY & SALES
COMPANY, INC. BATTERY ACQUISITION CORP.
CLIFFCO OF TAMPA BAY, INC. (formerly
known as Cellular Florida Acquisition,
Inc.)
By:
-----------------------------------
Name:
---------------------------------
of each of the foregoing corporations
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ____ day of May, 1997, before me personally came
______________________, to me known, who being by me duly sworn, did depose and
say that he is the __________________ of each of Batteries Batteries, Inc.,
Tauber Electronics, Inc., Advanced Fox Antenna, Inc., Specific Energy
Corporation, Battery Network, Inc., W.S. Battery & Sales Company, Inc., Battery
Acquisition Corp. and Cliffco of Tampa Bay, Inc., the corporations described in
and which executed the foregoing instrument; and that he signed his name
thereto by order of the each of the respective boards of directors of said
corporations.
-------------------------------
Notary Public
<PAGE>
AMENDED AND RESTATED
REVOLVING CREDIT NOTE
$10,000,000 New York, New York
May 13, 1997
This Amended and Restated Revolving Credit Note is executed and
delivered under and pursuant to the terms of that certain Revolving Credit,
Term Loan and Security Agreement dated as of January 7, 1997 as amended by
Amendment No. 1 and Joinder Agreement dated as of the date hereof (as same may
be further amended, supplemented or modified from time to time the "Loan
Agreement") by and among BATTERIES BATTERIES, INC., a corporation organized
under the laws of the State of Delaware ("BATS"), TAUBER ELECTRONICS, INC., a
corporation organized under the laws of the State of California ("TEI"),
ADVANCED FOX ANTENNA, INC., a corporation organized under the laws of the State
of Delaware ("AFA"), SPECIFIC ENERGY CORPORATION, a corporation organized under
the laws of the State of Arizona ("SEC"), BATTERY NETWORK, INC., a corporation
organized under the laws of the State of Illinois ("BN"), W.S. BATTERY & SALES
COMPANY, INC., a corporation organized under the laws of the State of Illinois
("WSBS"), BATTERY ACQUISITION CORP., a corporation organized under the laws of
the State of New York ("BAC") and CLIFFCO OF TAMPA BAY, INC. (formerly known as
Cellular Florida Acquisition, Inc.), a corporation organized under the laws of
the State of Florida ("CTB") (BATS, TEI, AFA, SEC, BN, WSBS, BAC and CTB each a
"Borrower" and, jointly and severally, the "Borrowers"), IBJ SCHRODER BANK &
TRUST COMPANY ("IBJS"), each of the other financial institutions named in or
which hereafter become a party to the Loan Agreement (IBJS and such other
financial institutions, the "Lenders") and IBJS as agent for the Lenders (IBJS
in such capacity, the "Agent"). Capitalized terms not otherwise defined herein
shall have the meanings as provided in the Loan Agreement.
FOR VALUE RECEIVED, Borrowers, jointly and severally, hereby promise
to pay to the order of Agent for the ratable benefit of Lenders at its offices
located at One State Street, New York, New York 10004 or at such other place as
Agent may from time to time designate to Borrowers in writing:
(i) the principal sum of TEN MILLION 00/100 DOLLARS ($10,000,000) or,
if different from such amount, such amount of evolving Advances as may be due
and owing under the Loan Agreement, payable in accordance with the provisions
of the Loan Agreement and subject to acceleration upon the occurrence and
during the continuation of an Event of Default under the Loan Agreement or
earlier termination of the Loan Agreement pursuant to the terms thereof; and
(ii) interest on the principal amount of this Note from time to time
outstanding, payable at the Revolving Interest Rate in accordance with the
provisions of the Loan Agreement. Upon and after the declaration of an Event of
Default, and during the continuation thereof, interest shall be payable at the
Default Rate. In no event, however, shall interest exceed the maximum interest
rate permitted by law.
<PAGE>
This Note is the Revolving Credit Note referred to in the Loan
Agreement and is secured, inter alia, by the Liens granted pursuant to the Loan
Agreement and the Other Documents, is entitled to the benefits of the Loan
Agreement and the Other Documents and is subject to all of the agreements,
terms and conditions therein contained.
This Note amends and restates in its entirety and is given in
substitution for (but not in satisfaction of) that certain Revolving Credit
Note dated January 7, 1997 made by BATS, TEI, AFA, SEC, BN, WSBS and BAC in
favor of Agent for the ratable benefit of Lenders in the original principal
amount of $10,000,000.
This Note may be voluntarily prepaid, in whole, on the terms and
conditions set forth in the Loan Agreement.
If an Event of Default under Section 10.7 of the Loan Agreement shall
occur, then this Note shall immediately become due and payable, without notice,
together with reasonable attorneys' fees if the collection hereof is placed in
the hands of an attorney to obtain or enforce payment hereof. If any other
Event of Default shall occur under the Loan Agreement or any of the Other
Documents, which is not cured within any applicable grace period, then this
Note may, as provided in the Loan Agreement, be declared to be immediately due
and payable, without notice, together with reasonable attorneys' fees, if the
collection hereof is placed in the hands of an attorney to obtain or enforce
payment hereof.
This Note is being delivered in the State of New York, and shall be
construed and enforced in accordance with the laws of such State.
Borrowers expressly waive any presentment, demand, protest, notice of
protest, or notice of any kind except as expressly provided in the Loan
Agreement.
BATTERIES BATTERIES, INC. TAUBER
ELECTRONICS, INC. ADVANCED FOX ANTENNA,
INC. SPECIFIC ENERGY CORPORATION BATTERY
NETWORK, INC. W.S. BATTERY & SALES
COMPANY, INC. BATTERY ACQUISITION CORP.
CLIFFCO OF TAMPA BAY, INC. (formerly
known as Cellular Florida Acquisition,
Inc.)
By:
-----------------------------------
Name:
---------------------------------
of each of the foregoing corporations
-2-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
On the ____ day of May, 1997, before me personally came
______________________, to me known, who being by me duly sworn, did depose and
say that he is the __________________ of each of Batteries Batteries, Inc.,
Tauber Electronics, Inc., Advanced Fox Antenna, Inc., Specific Energy
Corporation, Battery Network, Inc., W.S. Battery & Sales Company, Inc., Battery
Acquisition Corp. and Cliffco of Tampa Bay, Inc., the corporations described in
and which executed the foregoing instrument; and that he signed his name
thereto by order of the each of the respective boards of directors of said
corporations.
-------------------------------
Notary Public
-3-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
unaudited consolidated balance sheet as of March 31, 1997 and the unaudited
statement of income for the three months then ended contained in the report on
Form 10-Q for the three months ended March 31, 1997 of Batteries Batteries,
Inc. and is qualified in its entirety by reference to such statements:
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 863
<SECURITIES> 0
<RECEIVABLES> 6,745
<ALLOWANCES> 402
<INVENTORY> 9,620
<CURRENT-ASSETS> 17,293
<PP&E> 943
<DEPRECIATION> 131
<TOTAL-ASSETS> 23,433
<CURRENT-LIABILITIES> 5,314
<BONDS> 0
750
0
<COMMON> 5
<OTHER-SE> 10,974
<TOTAL-LIABILITY-AND-EQUITY> 23,433
<SALES> 12,778
<TOTAL-REVENUES> 12,778
<CGS> 9,115
<TOTAL-COSTS> 9,115
<OTHER-EXPENSES> 3,052
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 140
<INCOME-PRETAX> 471
<INCOME-TAX> 202
<INCOME-CONTINUING> 269
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 226
<EPS-PRIMARY> $.06
<EPS-DILUTED> $.06
</TABLE>
