DEFINITIVE PROXY STATEMENT
SCHEDULE 14(a) INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted
by Rule 14c-5(d)(2))
[X] Definitive Proxy Statement
BATTERIES BATTERIES, INC.
_________________________________________________________________
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g)
and 0-11.
1) Title of each class of securities to which transaction
applies:
_________________________________________________________________
2) Aggregate number of securities to which transaction
applies:
_________________________________________________________________
3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11:
_________________________________________________________________
4) Proposed maximum aggregate value of transaction:
_________________________________________________________________
5) Total fee paid:
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[ ] Fee previously paid with preliminary materials. <PAGE 1>
[ ] Check box if any part of the fee is offset as provided by
Exchange Act Rule 0-11(a)(2) and identify the filing for
which the offsetting fee was paid previously. Identify the
previous filing by registration statement number, or the
Form or Schedule and the date of its filing.
1) Amount Previously Paid:
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4) Date Filed:
_________________________________________________________________
PAGE 2
<PAGE>
BATTERIES BATTERIES, INC.
-----------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 26, 1998
-----------------
To the Stockholders of Batteries Batteries, Inc.:
The Annual Meeting of Stockholders of Batteries Batteries,
Inc., a Delaware corporation (the "Company"), will be held at the
offices of the Company's Advanced Fox Cellular Accessories
Division, 1840 County Line Road, Huntington Valley, Pennsylvania,
on Saturday, September 26, 1998, at 10:30 A.M., Eastern Time, for
the following purposes:
(1) To elect five 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 amend the Company's 1995 Stock Option Plan to
increase the number of shares reserved for issuance
thereunder by 350,000 shares.
(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
August 19, 1998, 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
__________________________________
Robert C. Meehan
Chairman of the Board
Dated: August 21, 1998
PAGE 3
<PAGE>
BATTERIES BATTERIES, INC.
PROXY STATEMENT FOR THE ANNUAL MEETING
OF STOCKHOLDERS TO BE HELD ON SEPTEMBER 26, 1998
GENERAL INFORMATION
Introduction. 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's Advanced Fox Cellular Accessories Division, 1840
County Line Road, Huntington Valley, Pennsylvania, on Saturday,
September 26, 1998, at 10:30 A.M., Eastern Time, and at any
adjournments thereof.
The address of the Company's executive offices is 50 Tannery
Road, Unit 2, North Branch, New Jersey 08876 and its telephone
number is (908) 534-2111. This proxy statement and the
accompanying proxy are first being distributed to the
stockholders of the Company on or about August 21, 1998.
Voting Securities and Record Date. Only stockholders of
record as of the close of business on August 19, 1998, 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. Cumulative voting rights do not exist with
respect to the election of Directors.
Revocability and Voting of Proxies. 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 FOR the election as
Directors of the persons named herein under the caption "Election
of Directors," and FOR the amendment to the Company's 1995 Stock
Option Plan. 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.
Solicitation of Proxies. 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
<PAGE 4>
fiduciaries for their reasonable out-of-pocket expenses in
forwarding soliciting material.
Recommendations. The Board of Directors recommends that the
shareholders vote FOR the election of the five nominees for
Director and FOR the amendment to the Company's 1995 Stock Option
Plan.
PRINCIPAL STOCKHOLDERS
The following table sets forth as information with respect
to the beneficial ownership as of July 31, 1998 of shares of
Common Stock of each stockholder of the Company known by
management of the Company to own beneficially more than 5% of the
outstanding shares of Common Stock:
Amount and Nature
Name and Address of Beneficial Percent of
of Beneficial Owner Ownership (1) Class
- ------------------------------ ------------------- -----------
Robert W. Tauber ............. 245,000 (2) 5.2
2192 Harbour Heights Road
San Diego, CA 92019
Stephen Rade ................. 645,000 13.6
3915 Somers Drive
Huntington Valley, PA 19606
William Steven Sapp .......... 278,932 (3) 5.9
c/o Battery Network, Inc.
955 Borra Place
Escondito, CA 92029
James Sapp ................... 250,093 (4) 5.3
26 Gates Head Drive
Bridgewater, NJ 08807
Susan Grandt ................. 279,840 (5) 5.9
3731 Pitzen Road
McHenry, IL 60050
Kennedy Capital Management, Inc. 265,000 (6) 5.6
10829 Olive Boulevard
St. Louis, MO 63141
- ------------
(1) 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 after July 31, 1998. 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 them.
(2) Includes 50,000 shares issuable upon exercise of an option.
<PAGE 5>
(3) Includes 92,977 shares issuable upon exercise of options.
(4) Includes 72,608 shares issuable upon exercise of options.
(5) Includes 93,280 shares issuable upon exercise of options.
(6) Registered Investment Advisor. Information based upon the
Company's review of an SEC Form 13-F filed by Kennedy as of
March 31, 1998.
PAGE 6
<PAGE>
PROPOSAL 1
ELECTION OF DIRECTORS
General
The By-laws of the Corporation provide that the
Corporation's business and affairs shall be managed by its Board
of Directors. The By-laws provide that the number of directors
shall not be less than three. Within the foregoing limits, the
Board of Directors may from time to time fix the number of
directors. The Board of Directors has fixed the current number
of directors on the Board at five. Vacancies on the Board of
Directors may be filled by a majority of the remaining members of
the Board of Directors, though less than a quorum, or the
shareholders, and each person so appointed shall be a director
until the next succeeding annual meeting of shareholders and
until his successor shall have been elected and qualified.
The Board of Directors does not have a standing nominating
committee to nominate candidates for the Board of Directors.
Rather, the Board of Directors performs such function. The Board
of Directors unanimously nominated Allan S. Kalish, Robert C.
Meehan, Stephen Rade, William Schlessinger Sapp and Robert W.
Tauber directors at the Annual Meeting. Each such person is
currently serving as a director of the Corporation.
The Board of Directors recommends the election of the five
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:
FIRST
BECAME A
NAME AGE DIRECTOR
Allan S. Kalish.................... 72 1998
Robert C. Meehan................... 51 1998
Stephen Rade....................... 59 1996
William Schlessinger Sapp.......... 66 1997
Robert W. Tauber................... 73 1996
- ------------
Allan S. Kalish, age 72, is the owner of Kalish & <PAGE 7>
Associates, a consulting firm specializing in marketing,
advertising and public relations, which he founded in 1986.
Kalish & Associates serves advertisers, marketers and advertising
agencies throughout the country, including three New York Stock
Exchange companies. The business address of Kalish & Associates
is 828 Youngeford Road, Gladwyne, Pennsylvania 19035. Prior to
founding Kalish & Associates, Mr. Kalish managed Kalish & Rice,
Inc., one of the largest advertising agencies in Philadelphia.
Mr. Kalish served as a member of the Board of Directors of
Checkpoint Systems, Inc., a New York Stock Exchange company, from
1993 to 1997.
Robert C. Meehan, age 51, has served as Chairman since June
1998. He is a principal of Carriage House Investments, a private
investment fund which invests in publicly traded securities. The
business address of Carriage House Investments is 11 Johnson
Avenue, Binghamton, New York 13905. Prior to joining Carriage
House Investments in 1994, Mr. Meehan was a principal of R.C.
Meehan & Associates, a corporate finance consulting firm which he
founded in 1986.
Mr. Rade has been President and CEO since June 1998. Prior
to being named President, he was Vice President since April 1996
and Executive Vice President since September 1996. Prior to such
time, he was the President and director of Advanced Fox Antenna,
Inc., which Mr. Rade founded in 1990 and which was acquired by
the Company in April 1996.
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.
Mr. Tauber had been a consultant to the Company from
February 1997 through April 1998. From April 1996 until February
1997 he was a Vice President of the Company. Prior to that time,
he was President and a director of Tauber Electronics, Inc. which
was founded in 1975 and was acquired by the Company in April
1996.
Board and Committee Meetings
During the fiscal year ended December 31, 1997 ("Fiscal
1997"), the Board of Directors held five 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 presently
consists of Messrs. Kalish, Meehan, and Tauber. Those persons
took office in 1998. During Fiscal 1997, however, the Audit
Committee was composed of John L. Teeger, John Simon and Bruce A.
Barnet. It held no meetings during Fiscal 1997. 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
<PAGE 8>
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. Kalish, Meehan and Sapp are the present members of
the Compensation and Stock Option Committee. Those persons took
office during 1998. During Fiscal 1997, however, the
Compensation Committee was composed of Fred Corrado, Bruce A.
Barnet and John Simon. Its principal duties are the
administration of the Company's Stock Option Plan (the "Option
Plan") and the review and determination of the executive
officers' compensation program. The Committee did not hold any
meetings during the Fiscal 1997; any grants of options were made
by the Board of Directors.
EXECUTIVE COMPENSATION
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, 1997, 1996 and 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 $100,000.
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
NAME AND PRINCIPAL
ANNUAL COMPENSATION STOCK OPTIONS
POSITION PERIOD
SALARY ($) BONUS ($) (# OF SHARES)
<S> <C>
<C> <C> <C>
Warren H. Haber, Year ended 12/31/97
(1) (1) -0-
Chairman of the Board and acting Year ended 12/31/96
(1) (1) -0-
Chief Executive Officer (1)....... Year ended 12/31/95
(1) (1) -0- <PAGE 9>
Robert W. Tauber, Year ended 12/31/97
128,269 -0- -0-
Vice President and Director and Year ended 12/31/96
177,865 -0- -0-
President of Tauber (2)........... Year ended 12/31/95
578,500 -0- -0-
Stephen Rade, Year ended 12/31/97
150,000 200,000 (3) -0-
Vice President and Director and Year ended 12/31/96
190,057 157,768 (4) -0-
President of Advanced Fox......... Year ended 12/31/95
98,608 (5) -0- -0-
Ronald E. Badke, Vice President, Year ended 12/31/97
120,000 15,000 (7)
Chief Operating Officer and Year ended 12/31/96
114,515 -0- 40,000
Chief Financial Officer (6).......
William Sapp (8) Year ended 12/31/97
103,953 -0- 16,905
President of Battery Network, Inc.
</TABLE>
______________
(1) Appointed acting Chief Executive Officer in September 1996.
Resigned in May 1998. See "Certain Relationships and
Related Transactions" for compensation paid to his
affiliate.
(2) Was employed until February 1997. At that time, he became
an independent consultant until April, 1998.
(3) Represents a bonus of $200,000 earned in 1997 and payable in
1998 pursuant to an agreement relating to the acquisition of
Advanced Fox.
(4) Represents a bonus of $157,768 accrued in 1996 and paid in
1997 pursuant to an agreement relating to the acquisition of
Advanced Fox.
(5) Represents a management fee paid to an affiliate of Mr.
Rade, who did not otherwise receive compensation for his
services during such year.
(6) Mr. Badke joined the Company in November 1995.
(7) Earned in 1996 and paid in 1997.
(8) Mr. Sapp commenced employment with a principal subsidiary of
the Company in 1997.
Employment Agreements
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 the
<PAGE 10>
three year term and for Mr. Tauber to receive a salary of
$150,000 during the first year, $120,000 during the second year.
Mr. Tauber's relationship as consultant ceased in April 1998, by
mutual agreement.
Mr. Ronald E. Badke is employed pursuant to an employment
agreement expiring 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 "Battery 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, Inc. (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.
The terms of the respective employment agreements were
negotiated on arm's-length basis with each of the officers.
Director Compensation
In order to underscore the importance of aligning the
interests of the directors with those of the Company's
shareholders, the annual retainer paid to non-employee directors
will be primarily in the form of stock options. In this way, the
directors realize a benefit only if the Company performs well and
that performance is recognized by the market through a rising
stock price.
Each year on the date of the annual meeting, non-employee
directors will receive an option to purchase 5,000 shares of the
Company's common stock, at an exercise price equal to the fair
market value of the common stock on the date of the grant,
exercisable one-half on the date of the grant and the remaining
one-half one year from the date of the grant, except that upon
the death of a director all remaining portions will become
immediately exercisable, and any unvested portion of the option
<PAGE 11>
shall terminate if the director resigns prior to one year from
the grant date. Each Chairman of an oversight committee of the
board will receive an option to purchase an additional 10,000
shares of common stock with the terms identical to the terms for
the options received by all directors. The Chairman of the Board
will receive an option to purchase an additional 10,000 shares of
common stock with the terms identical to the terms for the
options received by all directors. The Chairman is also paid a
monthly fee of $2,500 as partial compensation for the active role
the Chairman is expected to play in monitoring the affairs of the
Company. In addition, the Company reimburses non-employee
directors for their reasonable expenses associated with attending
Board of Directors meetings and provides the directors with
liability insurance coverage with respect to their activities as
directors of the Company.
For his services on behalf of the Board of Directors in
providing additional Board oversight of the Company during the
changeover of chief executive officers, including working with
the officers of the Company on business and financial strategy,
and his appointment as Chairman of the Board, Robert C. Meehan
received in July 1998 an option to purchase 50,000 shares of
common stock at an exercise price equal to the fair market value
of the common stock on the date of grant. The option is
exercisable one-half on the date of the grant and the remaining
one-half one year from the date of the grant. For his services
since becoming a member of the Board of Directors on May 18,
1998, Allan Kalish received in July 1998 an option to purchase
10,000 shares of common stock with terms identical to those of
Mr. Meehan.
Stock Options
The Company's Stock Option Plan (the "Option Plan")
presently 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 and 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,
1997 by Messrs. Warren Haber, Robert Tauber, Stephen Rade, Ronald
Badke, and William Sapp, each of whom was a named executive
officer during such year.
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT ASSUMED ANNUAL RATES OF STOCK PRICE
APPRECIATION
FOR INDIVIDUAL GRANTS <PAGE 12>
OPTION TERM
PERCENT OF
TOTAL
OPTIONS
GRANTED TO EXERCISE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED FISCAL YEAR ($/SH) DATE 0%
5% 10%
<S> <C> <C> <C> <C> <C>
<C> <C>
Warren H. Haber -0- -0- -- -- --
-- --
Robert W. Tauber -0- -0- -- -- --
-- --
Stephen Rade -0- -0- -- -- --
-- --
Ronald E. Badke 25,000 33.3% $2.80 4/15/2002 -0-
$19,250 $42,750
William Sapp 16,905 22.5% $4.50 1/3/2002 -0-
$12,848 $36,233
</TABLE>
NUMBER OF SHARES UNDERLYING
UNEXERCISED OPTIONS AT
FISCAL YEAR END
___________________________
NAME EXERCISABLE UNEXERCISABLE
Warren H. Haber -0- (1) -0- (1)
Robert W. Tauber -0- (1) -0- (1)
Stephen Rade -0- (1) -0- (1)
Ronald E. Badke 34,999 (2) 30,001
William Sapp 16,905 (1)(2) -0-
- --------------
(1) Excludes options held by such persons which were granted
other than pursuant to the Stock Option Plan.
(2) None of the outstanding options held by the named
individuals were in-the-money on December 31, 1997.
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.
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 <PAGE 13>
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
Allan S. Kalish
Robert C. Meehan
William S. Sapp
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, 1997, except that Form 3
reports of Messrs. Allan Kalish and Robert Meehan were not timely
filed.
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 adult children and brother acquired 74,988 units; Mr. John L.
Teeger, Vice President, Secretary and Director, who along with
his wife and children acquired 33,333 1/3 units; the wife of Mr.
Donald L. Luke, at the time President and Chief Executive Officer
<PAGE 14>
and a Director, who acquired 66,666 2/3 units; Allen & Company
Incorporated, of which Mr. John Simon is a Managing Director,
which acquired 83,333 1/3 units; and Mr. Bruce A. Barnet, a
Director, who acquired 16,666 2/3 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 April of 1996, the Company acquired Advanced Fox, a
corporation owned by Stephen Rade. This acquisition is described
at page 25 of the Registration Statement on Form S-1
(No. 33-89039) filed by the Company with the Securities and
Exchange Commission (the "SEC") and is hereby incorporated by
reference. In consideration for the sale of Advanced Fox,
Mr. Rade received 645,000 shares of Common Stock, having an
aggregate market value of approximately $3.2 Million at the time
of the closing; the market value of those shares has declined to
$1.4 million as of May 1, 1998.
In April of 1996, the Company acquired Tauber Electronics,
Inc., a corporation owned by Robert W. Tauber. This acquisition
is described at page 25 of the Registration Statement on Form S-1
(No. 33-89039) filed by the Company with the SEC and is hereby
incorporated by reference. In consideration for the sale of
Tauber Electronics, Mr. Tauber received 300,000 shares of Common
Stock, having an aggregate market value of approximately
$1.5 Million at the time of the closing; the market value of
those shares has declined to $656,000 as of May 1, 1998.
In January of 1997, the Company acquired Battery Network.
Battery Network was owned by William S. Sapp, Sr. and his spouse
and by his three children, William S. Sapp, Sr., James Sapp and
Susan Sapp Grandt (collectively, the "Sapp Family"). Pursuant to
the acquisition of Battery Network, the Company entered into
employment agreements with each of William S. Sapp, Jr., James
Sapp and Susan Sapp Grandt, none of whom are currently employed
by the Company. This acquisition is described in Item 2 of the
Current Report on Form 8-K dated January 7, 1997 filed by the
Company with the SEC and is hereby incorporated by reference. In
consideration for the sale of Battery Network, the Sapp family
received 550,000 shares of Common Stock, having an aggregate
market value of approximately $2.5 Million at the time of the
closing; the market value of those shares has declined to
approximately $1.2 million as of May 1, 1998.
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,
<PAGE 15>
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 Huntington 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.
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, who during Fiscal 1997 was Chairman
of the Board, and John L. Teeger, who during Fiscal 1997 was 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 provided
advice and consultative services regarding management, overall
strategic planning, acquisition policy, relations with commercial
and investment banking institutions, and stockholders matters to
or on behalf of the Company. The agreement was, however,
terminated on May 5, 1998 upon the resignation of Messrs. Haber
and Teeger as directors and officers of the Company. During
Fiscal 1997, Founders received a fee of $150,000.
Performance Graph
[THE NARRATIVE AND/OR TABULAR INFORMATION BELOW IS A FAIR AND
ACCURATE DESCRIPTION OF GRAPHIC OR IMAGE MATERIAL OMITTED FOR THE
PURPOSE OF EDGAR FILING.]
<PAGE 16>
COMPARATIVE ANNUAL TOTAL RETURN
BATTERIES BATTERIES, INC., RUSSELL 2000 INDEX AND PEER GROUP
(Performance Results Through 12/31/97)
4/9/96 12/31/96 12/31/97
Batteries Batteries, Inc. $100.00 $ 64.14 $ 30.97
Russell 2000 Index $100.00 $105.17 $128.51
Peer Group $100.00 $ 81.08 $ 82.02
Assumes $100 invested at the open of trading (4/9/96) in
Batteries Batteries, Inc. Common Stock, Russell 2000 Index and
Peer Group which consists of: U.S Office Products Company; Richy
Electronics Inc., Omnipoint Corp; Kent Electronics Corp; and
Brightpoint Inc.
* Cumulative total return assumes reinvestment of dividends
Source: Value Line, Inc.
Factual material is obtained from sources believed to be
reliable, but the publisher is not responsible for any errors or
omissions contained herein.
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 July 31,
1998 of each executive officer and director, 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 August 21, 1998 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>
AMOUNT AND NATURE
OF BENEFICIAL
PERCENT
NAME OF BENEFICIAL OWNER OWNERSHIP
OF CLASS(6)
<S> <C>
<C>
Allan S. Kalish ............................ 5,000 (1)
Less than 1%
Robert C. Meehan ........................... 110,000 (2)
2.3%
Robert W. Tauber............................ 245,000 (3)
5.0% <PAGE 17>
Stephen Rade ............................... 645,000
13.3%
William Schlessinger Sapp .................. 6,000 (4)
Less than 1%
Ronald L. Badke ............................ 34,999 (5)
Less than 1%
Executive officers and Directors as a group
(6 persons) ............................... 1,045,999
21.5%
</TABLE>
- ------------
(1) Represents shares issuable upon exercise of an option.
(2) Includes 25,000 shares issuable upon exercise of an option.
(3) Includes 50,000 shares issuable upon exercise of an option.
(4) Does not include 808,865 shares owned by Mr. Sapp's adult
children.
(5) Represents shares issuable upon exercise of options.
(6) Based upon 4,743,000 shares outstanding plus 114,999
exercisable options held by those persons in this table.
PROPOSAL 2
AMENDMENT TO THE 1995 STOCK OPTION PLAN
TO INCREASE THE NUMBER OF SHARES
RESERVED FOR ISSUANCE THEREUNDER
General
The Company's 1995 Stock Option Plan (the "Option Plan") was
adopted by the Company on June 6, 1995. At the time of approval,
a total of 75,000 shares of Common Stock were initially reserved
for issuance thereunder. As a result of an amendment in
December, 1995, such number was adjusted to 250,000.
As of the Record Date, no shares have been issued pursuant
to the exercise of options granted under the Option Plan, but
options to purchase 256,245 shares were outstanding, leaving no
shares available for grants under the Option Plan (without giving
effect to this proposed amendment).
Proposed Amendment to Increase Shares Reserved
Stockholder approval is hereby being sought for an amendment
approved by the Board of Directors which increases the number of
shares of Common Stock reserved for issuance under the Option
Plan by 350,000 shares. The total number of shares of Common
Stock presently reserved for issuance under the Option Plan is
250,000. If the proposed amendment is approved, the total number
of shares of Common Stock reserved for issuance under the Option
Plan will be 600,000.
Required Vote
<PAGE 18>
The affirmative vote of a majority of the votes cast will be
required to approve the proposed amendment to the Option Plan.
Summary of the Option Plan
The essential features of the Option Plan are outlined
below.
Purpose. The Option Plan is designed to improve the
performance of the Company by encouraging ownership of the
Company by directors, employees, and non-employee consultants and
advisors.
Description. The Plan authorizes the Board or a Stock
Option Committee (the "Committee") of the Board of Directors to
grant options for the purchase shares of the Common Stock. Any
shares as to which an option expires, lapses unexercised, or is
terminated or canceled may be subject to a new option.
Under the Option Plan, both "Incentive Stock Options" (as
defined in Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code")), which qualify for certain tax benefits,
and options which do not qualify for such tax benefits
("Nonqualified Stock Options") may be granted.
All current employees of the Company are eligible to
participate in the Plan. As of the Record Date, there were
approximately 260 such employees.
The Option Plan authorizes the Committee to administer and
interpret the Option Plan. The Committee is composed of at least
two members of the Board, who serve at the discretion of the
Board.
The exercise price for Incentive Stock Options granted under
the 1997 Employee Plan will be equal to at least the fair market
value of the stock underlying the option on the date the option
is granted. However, the exercise price for Nonqualified Stock
Options granted under the Option Plan will be such dollar amount
as may be specified by the Committee. Therefore, the Company may
issue Nonqualified Stock Options having an exercise price which
is less than the fair market value of the stock underlying the
option on the date of grant.
Stock Options granted under the Option Plan may be exercised
for up to 10 years after the date of grant, except in certain
limited circumstances. With the approval of the Committee, an
optionee may pay the required exercise price for an option by
surrendering shares of Common Stock with a value equal to such
exercise price, subject to certain limitations with respect to
payment with shares acquired through the exercise of Incentive
Stock Options. No option may be transferred by the optionee
other than by will or by the laws of descent and distribution,
and each option is exercisable during the optionee's lifetime
only by the optionee, or his guardian or legal representative,
unless otherwise approved by the Committee.
<PAGE 19>
Under the Option Plan, in the event of an optionee's
retirement or other termination without cause, Options lapse 90
days from the date of retirement. With respect to an optionee
whose employment terminates due to death or disability, the
optionee or his or her legal representative may exercise the
option until the expiration of the term of the option.
Otherwise, all options granted to such person under the
Option Plan terminate upon the date employment is terminated,
unless the Committee permits the optionee to exercise such
options until no later than the expiration of the term of the
option.
Tax Consequences
General. The Option Plan is not a qualified plan under
Code Section 401(a). The Corporation has been advised that,
under the Code, the following federal income tax consequences
will result when Incentive Stock Options or Nonqualified Stock
Options, or any combination thereof, are granted or exercised,
although the following is not intended to be a complete statement
of the applicable law.
Incentive Stock Options. An optionee generally will not be
deemed to receive any income for federal tax purposes at the time
an Incentive Stock Option is granted, nor will the Corporation be
entitled to a tax deduction at that time. No income is
recognized by an optionee upon the exercise of such an option.
Upon the sale or exchange of the shares at least two years after
the grant of the option and one year after receipt of the shares
by the optionee upon exercise, the optionee will recognize long-
term capital gain or loss upon the sale of such shares equal to
the difference between the amount realized on such sale and the
exercise price.
If the foregoing holding periods are not satisfied, the
optionee will recognize ordinary income equal to the difference
between the exercise price and the lower of the fair market value
of the stock at the date of the option exercise or the sale price
of the stock. If the sale price exceeds the fair market value on
the date of exercise, the gain in excess of the ordinary income
portion will be treated as either long-term or short-term capital
gain, depending on whether the stock has been held for more than
12 months on the date of sale. Any loss on disposition is a
long-term or short-term capital loss, depending upon whether the
optionee had held the stock for more than 12 months. A different
rule for measuring ordinary income upon such a premature
disposition may apply if the optionee is a director or 10 percent
shareholder of the Corporation or an officer of the Corporation
subject to Section 16(b) of the Exchange Act. If the Corporation
cancels an option, the optionee recognizes income to the extent
of the amount paid to the optionee by the Corporation to cancel
the option over the optionee's basis in such option, if any.
No income tax deduction will be allowed to the Corporation
with respect to shares purchased by an optionee upon the exercise
of an Incentive Stock Option, provided that such shares are held
<PAGE 20>
at least two years after the date of grant and at least one year
after the date of exercise. However, if those holding periods
are not satisfied, the Corporation may deduct an amount equal to
the ordinary income recognized by the optionee upon disposition
of the shares.
The exercise of an Incentive Stock Option could subject an
optionee to alternative minimum tax liability for federal income
tax purposes.
Nonqualified Stock Options. An optionee will not be deemed
to receive any income for federal tax purposes at the time a
nonqualified stock option is granted, nor will the Corporation be
entitled to a tax deduction at that time. At the time of
exercise, however, the optionee will realize ordinary income in
an amount equal to the excess of the market value of the shares
at such time over the option price of such shares. The
Corporation will generally be allowed a federal income tax
deduction, at the time of such recognition by the optionee, in an
amount equal to the ordinary income recognized by the optionee,
subject to certain possible limitations under the Code. Gain or
loss on the subsequent disposition of option stock by the
optionee will normally be capital gain or loss.
New Plan Benefits
The selection of participants who will receive awards under
the Option Plan and the size and type of award are to be
determined by the Compensation Committee in its discretion. Such
future grants are not presently determinable and it is not
possible to predict the benefits or amounts that will be received
by or allocated to particular individuals or groups in the
future.
The following table sets forth the benefits that were
received by the following people pursuant to the Option Plan
during the fiscal year ended December 31, 1997: (i) the
executive officers named in the Summary Compensation Table set
forth under "EXECUTIVE COMPENSATION AND RELATED MATTERS;"
(ii) all current executive officers as a group; (iii) all current
directors who are not executive officers as a group; and (iv) all
employees who are not executive officers, as a group:
Name and Position Dollar Value ($) Number of Units
Named Executive Officers (2) 41,905 (1)
(4 persons)
All current executive officers (2) 41,905 (1)
as a group (4 persons)
All directors who are not -- 0
executive officers, as a <PAGE 21>
group (3 persons)
All employees, excluding (2) 33,095
executive officers, as a
group
______________________
(1) The number of units shown corresponds to the number of
shares underlying options that were granted to William Sapp
on January 3, 1997 (16,905) and to Ronald Badke on April 15,
1997 (25,000).
(2) The exercise price for all such options granted was equal to
or greater than the fair market value of the shares on the
date of grant.
Recommendation
The Board of Directors recommends a vote for the amendment
of the Option Plan to increase the number of shares reserved for
issuance thereunder. The effect of an abstention is the same as
that of a vote against the amendment of the Option Plan.
ANNUAL REPORT
The Annual Report of the Company, consisting of the
Company's Form 10-K, to the stockholders for the year ended
December 31, 1997, including financial statements, is being
mailed to stockholders with this proxy material.
INDEPENDENT PUBLIC ACCOUNTANTS
Deloitte & Touche, LLP., certified public accountants, which
has audited the Company's financial statements as of December 31,
1997 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.
Any proposals intended to be presented by stockholders at
the Annual Meeting of Stockholders to be held in 1999 must be
received by the Company for inclusion in the Company's proxy
material a reasonable time prior to the solicitation of proxies
with respect to the Annual Meeting of Stockholders to be held in
1999. The solicitation is anticipated to commence in June 1999.
<PAGE 22>
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.
August 21, 1998
PAGE 23
<PAGE>
BATTERIES BATTERIES, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS.
The undersigned hereby appoints ROBERT C. MEEHAN and ALLAN S.
KALISH 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 1840 County
Line Road, Huntington Valley, pennsylvania, at 9:00 A.M., Eastern
Time, or at any adjournment or adjournments of said meeting, on
the following proposals as indicated:
1. THE ELECTION OF FIVE 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 [ ] WITHHOLD AUTHORITY [ ]
TO VOTE FOR ALL NOMINEES
(EXCEPT AS MARKED TO THE CONTRARY LISTED BELOW
NOMINEES: Robert C. Meehan, Allan S. Kalish, Stephen Rade,
Robert W. Tauber, William Schlessinger Sapp
(INSTRUCTION: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL,
STRIKE A LINE THROUGH THE NOMINEE'S NAME ABOVE)
2. TO AMEND THE COMPANY'S STOCK OPTION PLAN TO RESERVE FOR
ISSUANCE THEREUNDER A TOTAL OF 600,000 SHARES OF COMMON
STOCK.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. TO TRANSACT SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE
THE MEETING OR ANY ADJOURNMENT THEREOF.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(PLEASE SIGN ON REVERSE SIDE)
PAGE 24
<PAGE>
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 STOCK OPTION PLAN PROPOSAL.
DATED: , 1998
__________________________________
(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 undersigned hereby
revokes all proxies heretofore
given by the undersigned to vote at
said meeting or any adjournments
thereof.
PLEASE SIGN AND RETURN THIS PROXY
PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS NECESSARY IF MAILED
IN THE UNITED STATES.
PAGE 25
<PAGE>
1998 AMENDMENT
TO THE
BATTERIES BATTERIES, INC.
STOCK OPTION PLAN
This Amendment, dated the 21st day of August, 1998, to the
Batteries Batteries, Inc. Stock Option Plan
W I T N E S S E T H:
WHEREAS, the Batteries Batteries, Inc. 1995 Stock Option
Plan (the "Plan") was adopted by Batteries Batteries, Inc. (the
"Corporation") on June 6, 1995 and further amended in December
1995; and
WHEREAS, the Plan, as initially adopted and approved,
provided for a maximum issuance of options to purchase 75,000
shares of the Corporation's common stock, increased upwards in
December 1995 to 250,000 shares; and
WHEREAS, in order to assist in fostering the continued
growth of the Corporation and to enhance the Corporation's
ability to attract additional talented personnel, the Board has
determined that it would be in the best interest of the
Corporation and its shareholders to increase the number of shares
of common stock that may be made subject to option under the
Plan;
NOW, THEREFORE, Section 4 of the Plan is hereby amended to
increase the number of shares of Stock subject to the Plan to a
total of 600,000. This amendment shall be effective on the date
it is approved by the stockholders of the Corporation.
IN WITNESS WHEREOF, the Corporation has executed this
Amendment.
BATTERIES BATTERIES, INC.
By_________________________________
Name:
Title:
<PAGE 26>
