BATTERIES BATTERIES, INC.
C/O FOUNDERS EQUITY INC.
000 XXXXXXX XXXXXX
XXX XXXX, XXX XXXX 00000
(000) 000-0000
FAX: (000) 000-0000
January 3, 1997
Xxxxxxx Xxxxxx Xxxx
0000 Xxx Xxxxxx Xxx
Xxxxx, XX 00000
Xxxxx Xxxx
0000 Xxxxxx Xxxxxx Xxxx
Xxx Xxxxx, XX 00000
Gentlemen:
Batteries Batteries, Inc., a Delaware corporation ("Buyer") and
Messrs. Xxxxxxx Xxxxxx Xxxx ("WSS") and Xxxxx Xxxx ("JS") are to enter into an
agreement (the "Stock Agreement") providing for the purchase by Buyer from WSS,
JS and Xx. Xxxxx Xxxxxx of the outstanding capital stock of Battery Network,
Inc., an Illinois corporation ("BN") and the execution by WSS and JS of
employment agreements providing for their employment by BN as executive officers
for a period of three years following consummation of the acquisition.
To induce WSS and JS (collectively the "Two BN Executives") to execute and
deliver the employment agreements at the closing of the acquisition, Buyer
hereby agrees that subject to the Two BN Executives remaining in the employ of
BN under their respective employment agreement during the Bonus Period as
hereinafter defined, the Buyer will cause BN to pay to the Two BN Executives an
aggregate bonus equal to 30% of the first $300,000 by which the combined income
of BN, W.S. Battery & Sales Company, Inc. ("WSB") and Xxxxxx Electronics Inc.
("Xxxxxx") before provision for income taxes and any extraordinary item
("Combined Pre-Tax Income") determined in accordance with generally accepted
accounting principles consistently applied and included in the consolidated
financial statements of the Buyer and its subsidiaries for such period exceeds
the Applicable Minimum as hereinafter defined and 40% of the amount by which the
Combined Pre-Tax Income exceeds the Applicable Second Threshold as hereinafter
defined, but in no event shall the bonus exceed in the aggregate $400,000 for
any Bonus Period.
The Bonus Periods and the Applicable Minimum and Applicable Second
Thresholds are as follows:
APPLICABLE
BONUS PERIOD APPLICABLE MINIMUM SECOND THRESHOLD
------------ ------------------ ----------------
Year ended December 31, 1997 $2,500,000 $2,800,000
Year ended December 31, 1998 2,750,000 3,050,000
Year ended December 31, 1999 3,025,000 3,325,000
Xxxxxxx Xxxxxx Xxxx
Xxxxx Xxxx
January 3, 1996
Page 2
The bonus, if any, to be paid for a Bonus Period shall be paid to the Two
BN Executives in such proportions as they advised the Buyer in writing within
seven days of the delivery of the consolidated financial statements of Buyer and
its subsidiaries, including BN, WSB and Xxxxxx for the Bonus Period audited by
an independent accounting firm designated by the Buyer. Such financial
statements shall include the combined statement of operations of BN, WSB and
Xxxxxx which need not be audited. Buyer shall transmit a copy of such financial
statements to the Two BN Executives promptly after completion. Payment shall be
made within ten days following the delivery of the written advice from the Two
BN Executives to the Buyer.
Any notice given pursuant to this Agreement to any party hereto shall be
deemed to have been duly given (i) when mailed by registered or certified mail,
return receipt requested, (ii) when telecopied, provided a copy of the notice
is mailed by registered or certified mail, return receipt requested, within one
business day following the date of the telecopied transmission, or (iii) when
hand delivered to the party to whom it is to be given at the address of such
party set forth in the Stock Agreement or at such other address as a party shall
designate by written notice, in the above manner to the other party with copies
to such parties to be sent to the applicable counsel set forth in Section 8.9
of the Stock Agreement.
Any disputes as to the determination of the Combined Pre-Tax Income shall
be resolved in the manner provided for the resolution of Audit Dispute in the
Stock Agreement.
If the foregoing correctly and fully sets forth our agreement, please
execute at the places indicated and return a copy of this letter agreement to
the Buyer.
BATTERIES BATTERIES, INC.
/s/ Xxxxxx X. Xxxxx
------------------------
Xxxxxx X. Xxxxx
AGREED AND ACCEPTED
/s/ Xxxxxxx Xxxxxx Xxxx
-----------------------
Xxxxxxx Xxxxxx Xxxx
Attorney & Agent
/s/ Xxxxx Xxxx
-----------------------
Xxxxx Xxxx
