EXTENSION OF FORBEARANCE AND AMENDMENT NUMBER EIGHT TO CREDIT AGREEMENT dated as of May 18, 2007 between ULTRALIFE BATTERIES, INC. and THE LENDERS PARTY THERETO and JPMORGAN CHASE BANK, N.A., as Administrative Agent
Exhibit 10.1
EXTENSION OF FORBEARANCE
AND
AMENDMENT NUMBER EIGHT TO CREDIT AGREEMENT
dated as of May 18, 2007
between
ULTRALIFE BATTERIES, INC.
and
THE LENDERS PARTY THERETO
and
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
as Administrative Agent
This Extension of Forbearance and Amendment Number Eight to Credit Agreement (the
“Amendment”), dated as of May 18, 2007, is made by and between ULTRALIFE BATTERIES, INC.
(the “Borrower”) and the Lenders party to the Credit Agreement and JPMORGAN CHASE BANK,
N.A. (formerly known as JPMorgan Chase Bank) as Administrative Agent for the Lenders (in such
capacity, the “Agent”).
Statement of the Premises
The Borrower, the Lenders and the Agent have previously entered into, among other agreements,
a Credit Agreement, dated as of June 30, 2004, which was amended by Amendment Number One dated as
of September 24, 2004, Amendment Number Two dated as of May 4, 2005, Amendment Number Three dated
as of August 5, 2005, Amendment Number Four dated as of November 1, 2005, that certain waiver
letter dated May 3, 2006, Amendment Number Five dated June 29, 2006, that certain waiver letter
dated October 20, 2006, that certain waiver letter dated November 30, 2006 as extended, that
certain Forbearance and Amendment Number Six to Credit Agreement dated February 14, 2007 and that
certain Extension of Forbearance and Amendment Number Seven to Credit Agreement dated as of March
23, 2007 (collectively, the “Credit Agreement”). The Borrower has requested that the
Lenders and Agent grant the Borrower additional time to comply with covenants contained in the
Credit Agreement.
Statement of Consideration
Accordingly, in consideration of the premises and under the authority of Section 5-1103 of the
New York General Obligations Law, the parties agree as follows:
Agreement
1. Defined Terms. The terms “this Agreement”, “hereunder” and similar
references in the Credit Agreement shall be deemed to refer to the Credit Agreement as amended by
this Amendment. Capitalized terms used and not otherwise defined herein shall have the meanings
ascribed to such terms in the Credit Agreement.
2. Extension of Forbearance. According to the terms of the forbearance provisions
contained within Amendment No. 6 and modified by that certain Extension of Forbearance and
Amendment Number Seven to Credit Agreement dated as of March 23, 2007 (the “Extension Agreement”),
the Forbearance Period, as defined in Amendment No. 6 and modified by the Extension Agreement,
shall terminate on or before May 18, 2007. Although the Borrower continues not to be in compliance
with the financial covenants set forth in subsections (a) and (b) of Section 6.09 of the Credit
Agreement for the fiscal quarters ending December 31, 2006 and March 31, 2007 and based on the
information received to date, does not contemplate being in compliance for the fiscal quarter
ending June 30, 2007 (the “Additional Default”), Borrower has requested the Lenders to further
extend the Forbearance Period.
Lenders and Agent agree, upon satisfaction of the conditions set forth in Section 5 hereof,
that:
A. The “Forbearance Period” as set forth in Amendment No. 6 and modified by the Extension
Agreement shall be further extended to the date which is the earliest of: (i) 5:01 p.m. (New York
time) on August 15, 2007; or (ii) the date on which the Required Lenders elect to terminate the
Forbearance Period upon the occurrence of an event described in Section 4(B) of Amendment No. 6, or
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(iii) the date on which any subsequent amendments to the Credit Agreement, relating to the Existing
Event of Default, as modified hereby or this Amendment, become effective. The parties hereto
acknowledge and agree that in each instance that the term “Forbearance Period” is used in the
Credit Agreement, the same shall mean the Forbearance Period, as extended hereby.
B. the “Existing Event of Default” as set forth in Amendment No. 6 shall be modified to also
include the Additional Default.
3. Amendments. Effective upon the satisfaction of all conditions specified in Section
5 hereof, the Credit Agreement is hereby amended as follows:
A. Section 5.01 of the Credit Agreement is hereby amended so that in subsection (h) thereof
the phrase “(February 3, 2007, March 3, 2007, March 31, 2007 and May 5, 2007)” is hereby superseded
and replaced in its entirety to read “(February 3, 2007, March 3, 2007, March 31, 2007, May 5,
2007, June 2, 2007, June 30, 2007 and August 4, 2007)”.
4. Representations. The Borrower hereby represents and warrants to the Lenders and the
Agent that: (i) the covenants, representations and warranties set forth in the Credit Agreement are
true and correct on and as of the date of execution hereof as if made on and as of said date and as
if each reference therein to the Credit Agreement were a reference to the Credit Agreement as
amended by this Amendment; (ii) except for the Existing Event of Default (as modified hereby), no
Default or Event of Default specified in the Credit Agreement has occurred and is continuing, (iii)
since the date of the Credit Agreement, there has been no material adverse change in the financial
condition or business operations of the Borrower which has not been disclosed to Lenders; (iv) the
making and performance by the Borrower of this Amendment have been duly authorized by all necessary
corporate action, and do not, and will not, (a) contravene the Borrower’s certificate of
incorporation or by-laws, (b) violate any law, including without limitation the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended, or any rule, regulation
(including Regulations T, U or X of the Board of Governors of the Federal Reserve System) order,
writ, judgment, injunction, decree, determination or award, and (c) conflict with or result in the
breach of, or constitute a default under, any material contract, loan agreement, indenture, note,
mortgage, deed of trust or any other material instrument or agreement binding on the Borrower or
any Subsidiary or any of their properties or result in or require the creation or imposition of any
lien upon or with respect to any of their properties; (v) this Amendment has been duly executed and
delivered by the Borrower and is the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its terms; (vi) no authorization or approval or
other action by, and no notice to or filing with, any governmental authority or regulatory body or
any other third party is required for (a) the due execution, delivery or performance by the
Borrower of this Amendment or any other agreement or document related hereto or contemplated hereby
to which the Borrower is or is to be a party or otherwise bound, or (b) the exercise by the Agent
or any Lender of its rights under the Credit Agreement as modified by this Amendment; and (vii) the
security interests and charges granted by the Borrower and its Subsidiary pursuant to the Security
Agreements continue to constitute valid, binding and enforceable, first in priority Liens on the
Collateral, subject only to Liens permitted under the terms of the Security Agreements and Credit
Agreement.
5. Conditions of Effectiveness. The effectiveness of each and all of the modifications
and waiver contained in the Amendment and the Forbearance is subject to the satisfaction, in form
and substance satisfactory to the Agent, of each of the following conditions precedent:
A. Agent shall have received 4 duplicate original counterparts of this Amendment executed by
Borrower, Lenders and Agent.
B. Agent shall have received a secretarial certificate of the Borrower in a form reasonably
acceptable to Agent, certifying that the June 29, 2006 secretary’s certificate of Borrower is true
and correct as of the date of execution hereof, and the authorizing resolutions and the incumbency
of officers of the Borrower remain in full force and effect.
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C. The representation and warranties contained in Section 5 hereof and in the Credit Agreement
shall be true, correct and complete as of the effective date of this Amendment as though made on
such date.
6. Reference to and Effect on Loan Documents.
A. Upon the effectiveness hereof, each reference in the Credit Agreement to “this Agreement,”
“hereunder,” “hereof,” “herein,” “Amendment No. 6,” or words of like import, and each reference in
the other Loan Documents to the Credit Agreement shall mean and be a reference to the Credit
Agreement or Amendment No. 6, as applicable, as amended hereby and by the Extension Agreement.
B. Except as specifically amended above, the Credit Agreement, and all other Loan Documents
shall remain in full force and effect and are hereby ratified and confirmed.
C. The amendments set forth in Section 3 and the extended Forbearance Period set forth in
Section 2 hereto are only applicable and shall only be effective in the specific instance and for
the specific purpose for which made, are expressly limited to the facts and circumstances referred
to herein, and shall not operate as (i) a waiver of, or consent to non-compliance with any
provision of the Credit Agreement or any other Loan Document, including specifically, but without
limitation, any further advances or loans made by the Borrower in contravention of the terms of the
Credit Agreement, (ii) a waiver or modification of any right, power or remedy of either the Agent
or any Lender under the Credit Agreement or any Loan Document, or (iii) a waiver or modification
of, or consent to, any Event of Default or Default under the Credit Agreement or any Loan Document.
7. Costs and Expenses. Borrower agrees to pay on demand all costs and expenses of
Agent in connection with the preparation, execution and delivery of this Amendment and the other
documents related hereto, including the fees and out-of-pocket expenses of counsel for Agent.
8. Waiver and Release. As a material inducement for, and in consideration of, the
Lenders’ and Agent’s agreements herein, the Borrower, by signing this Amendment, hereby forever
waives, releases, remises and discharges any and all rights to assert any and all defenses to and
setoffs, counterclaims, and claims of every kind against any Lenders or Agent, its respective
agents, servants, employees, officers, directors and attorneys now existing or arising hereafter on
the basis of actions or events occurring on or prior to the date hereof. Each of the parties
signing this agreement confirms that the foregoing waiver and release is informed and freely given.
9. Representation by Counsel. Borrower hereby represents and warrants to the Lenders
and Agent that throughout the negotiations, preparation and execution of this Amendment and the
closing hereunder, Borrower has been represented by legal counsel of its own choosing and that this
Amendment was entered into by the free will of Borrower and pursuant to arm’s-length negotiations.
10. Governing Law. This Amendment shall be governed and construed in accordance with
the laws of the State of New York without regard to any conflicts-of-laws rules which would require
the application of the laws of any other jurisdiction.
11. Headings. Section headings in this Amendment are included herein for convenience
of reference only and shall not constitute a part of this Amendment for any other purpose.
12. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original and all or which taken together shall
constitute but one and the same instrument.
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by
their respective representatives thereunto duly authorized as of the date first above written.
| ULTRALIFE BATTERIES, INC. | ||||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||
| Title: | Vice President of Finance and Chief Financial Officer | |||
| ADMINISTRATIVE AGENT: | JPMORGAN CHASE BANK, N.A., as Agent | |||
| By: | /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ | |||
| Title: | Vice President | |||
| LENDERS: | JPMORGAN CHASE BANK, N.A. | |||
| By: | /s/ ▇▇▇▇▇▇ ▇. Stransenburgh | |||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ | |||
| Title: | Vice President | |||
| MANUFACTURERS AND TRADERS TRUST COMPANY |
||||
| By: | /s/ ▇▇▇ ▇▇▇▇▇ | |||
| Name: | ▇▇▇ ▇▇▇▇▇ | |||
| Title: | Vice President | |||