Exhibit 10.1
As of February 19, 2002
Ultralife Batteries, Inc.
0000 Xxxxxxxxxx Xxxxxxx
Xxxxxx, XX 00000
Ultralife Batteries (UK) Ltd.
00 Xxxxxxxx Xxx
Xxxxxxxx, Xxxxxxxxxxx, XX 00
0XX England
Re: Fourth Amendment to Financing Agreements ("Amendment")
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Gentlemen:
Reference is made to the Loan and Security Agreement dated June 15, 2000,
as amended, between you and the undersigned (the "Loan Agreement"). All
capitalized terms not otherwise defined herein shall have the meanings given
such terms in the Loan Agreement.
Borrowers have requested that Lender agree to certain modifications to the
Loan Agreement. Subject to the terms and conditions hereof, the Lender agrees
with the Borrowers as follows:
(1) Section 1.15 is amended to delete the first sentence thereof and to
replace it with the following:
"1.15 "Eligible Inventory" shall mean Inventory consisting of
finished goods held for resale in the ordinary course of business of
Parent, raw materials for such finished goods and Quasi-Finished
Goods."
(2) Section 1.35 is deleted in its entirety and replaced with the
following:
"1.35 "Maximum Credit" shall mean the amount of $15,000,000.00"
(3) Section 1.41 is deleted in its entirety and replaced with the
following:
"1.41 "Quasi-Finished Goods" shall mean sub-assembled 9 volt
(excluding labeling, packaging, cans, etc.), and fully assembled
5372 and 5368 batteries that are undergoing only final cure and
testing, that satisfy the criteria for Eligible Inventory (other
than the requirement of being only finished goods or raw materials)
and that are otherwise acceptable to Lender."
(4) Section 1.49 is deleted in its entirety and replaced with the
following:
Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 2
"1.49 Intentionally Omitted."
(5) Section 2.1(a)(ii) is deleted in its entirety and replaced with the
following:
"2.1(a)(ii) the lesser of: (A) the sum of (1) seventy (70%) percent
of the Value of Eligible Inventory consisting of finished goods,
plus (2) the lesser of seventy (70%) of the Value of Eligible
Inventory consisting of Quasi-Finished Goods or $750,000, plus (3)
thirty (30%) percent of the Value of Eligible Inventory consisting
of raw materials or (B) $6,000,000.00, less"
(6) Section 2.3 is deleted in its entirety and replaced with the
following:
"2.3 Term Loans. On the date of the Fourth Amendment, a Term Loan in
the principal amount of $2,050,000.00 was outstanding to Parent and
a Term Loan in the principal amount of $683,333.27 was outstanding
to Ultralife (UK). Each Term Loan is (a) evidenced by a Term
Promissory Note in the original principal amount borrowed, (b) to be
repaid, together with interest and other amounts, in accordance with
this Agreement, the applicable Term Promissory Note and other
Financing Agreements and (c) secured by all of the Collateral."
(7) Section 9.15 of the Loan Agreement is deleted and replaced with the
following:
"9.15 Adjusted Net Worth. Borrowers shall, at all times, maintain an
Adjusted Net Worth of not less than $33,500,000.00." If the Borrower
takes an asset impairment write-down prior to June 30, 2002, then
the Adjusted Net Worth shall not be less than: (a) $33,500,000.00
less (b) asset impairment write-down amount.
(8) Parent has advised Lender that it may sell its 33% equity interest in
Ultralife Taiwan, Inc. ("UTI") and has requested that Lender specify the
conditions that Lender would place on its consent to such sale. Accordingly,
Lender agrees that so long as no Event of Default or event or condition which
with the passage of time or notice or both would constitute an Event of Default,
has occurred and is continuing, Lender will consent to the sale by Borrower of
its equity interest in UTI and release its security interest in such equity
interest, subject to the receipt by Lender in immediately available funds of
twenty (20%) percent of the total proceeds of such sale, which amount will be
applied to establish an Availability Reserve equal to such amount.
Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 3
(9) In addition to and without in any way limiting or substituting for the
Collateral granted by Borrowers to Lender pursuant to the Financing Agreements
and under the amendments thereto, as security for the payment and performance of
all Obligations and any and all other obligations of every type of Borrowers to
Lenders, each Borrower hereby grants to Lender a continuing security interest
and lien upon all of its property and assets of every type whatsoever, now owned
or hereafter acquired, wherever located, including without limitation all of the
following categories of property and interests in property, as defined under the
UCC presently in effect in the Commonwealth of Massachusetts or as hereafter
amended: goods (including inventory, equipment and any accessions thereto),
instruments (including promissory notes), documents, accounts (including
health-care insurance receivables), chattel paper (whether tangible or
electronic), deposit accounts, letters of credit (whether or not the letter of
credit is evidenced by a writing), banker's acceptances and similar instruments
and including all letter-of-credit rights, commercial tort claims, securities
and all other investment property, general intangibles (including payment
intangibles and software), supporting obligations and any and all products and
proceeds of any of the foregoing (collectively, the "Collateral"). For all
purposes under the Financing Agreements, each of the foregoing categories of
property shall be deemed to be included in the Collateral and the definition of
Collateral is hereby amended to include such categories. No Borrower shall
change its state of incorporation without obtaining Lender's prior written
consent, such consent to be in Lender's discretion. Borrowers promptly shall
notify Lender in writing upon any Borrower acquiring any commercial tort
claim(s). Each Borrower irrevocably and unconditionally authorizes Lender (or
its agent) to file at any time and from time to time such financing statements
with respect to the Collateral naming Lender or its designee as the secured
party and Borrowers as debtor, and including any other information with respect
to the Borrowers or otherwise required by part 5 of Article 9 of the UCC,
together with amendments and continuations with respect thereto, which
authorization shall apply to all financing statements naming Lender or its
designee as secured party and Borrowers as debtor filed on, prior to or after
the date hereof. In no event shall Borrowers file or permit or cause to be filed
any correction statement, amendment, or termination statement with respect to
any such financing statement. Borrowers shall take or cause to be taken all
action required to cause the attachment, perfection and first priority of, and
the ability of Lender to enforce the Lender's security interests and liens
including, without limitation, obtaining control agreements with respect to
deposit accounts, letter-of-credit rights, electronic, chattel paper,
instruments and investment property.
(10) In connection with the execution and delivery of this Amendment,
Borrowers shall pay to Lender a fee of $15,000.00, which fee shall be fully
earned and non-refundable on the date hereof.
Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 4
(11) In connection with the execution and delivery of this Amendment, if
requested by Lender, the Borrowers shall furnish to the Lender certified copies
of all requisite corporate action and proceedings of the Borrowers in connection
with this Amendment.
(12) Each Borrower confirms and agrees that (a) all representations and
warranties contained in the Loan Agreement and in the other Financing Agreements
are on the date hereof true and correct in all material respects (except for
changes that have occurred as permitted by the covenants in Section 9 of the
Loan Agreement), and (b) it is unconditionally liable for the punctual and full
payment of all Obligations, including, without limitation, all charges, fees,
expenses and costs (including attorneys' fees and expenses) under the Financing
Agreements, and that Borrowers have no defenses, counterclaims or setoffs with
respect to full, complete and timely payment of all Obligations.
(13) Borrowers hereby agree to pay to Lender all reasonable attorney's
fees and costs which have been incurred or may in the future be incurred by
Lender in connection with the negotiation and preparation of this Amendment and
any other documents and agreements prepared in connection with this Amendment.
The undersigned confirm that the Financing Agreements remain in full force and
effect without amendment or modification of any kind, except for the amendments
explicitly set forth herein. The undersigned further confirm that after giving
effect to this Amendment, no Event of Default or events which with notice or the
passage of time or both would constitute an Event of Default have occurred and
are continuing. Except as explicitly provided herein, the execution and delivery
of this Amendment by Lender shall not be construed as a waiver by Lender of any
Event of Default under the Financing Agreements. This Amendment shall be deemed
to be a Financing Agreement and, together with the other Financing Agreements,
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersedes all prior dealings, correspondence, conversations
or communications between the parties with respect to the subject matter hereof.
[Remainder of Page Left Intentionally Blank]
Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of February 19, 2001
Page 5
If you accept and agree to the foregoing please sign and return the
enclosed copy of this letter. Thank you.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(NEW ENGLAND)
By: /s/ Xxxxxxx X. Post
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Name: Xxxxxxx X. Post
Title: Assistant Vice President
AGREED:
ULTRALIFE BATTERIES, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
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Name: Xxxxxx X. Xxxxxxxx
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Title: VP - Finance & CFO
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ULTRALIFE BATTERIES (UK) Ltd.
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
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Title: C.O.O.
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