Exhibit 10.38
As of June 1, 2001
Ultralife Batteries, Inc.
2000 Technology Parkway
Newark, NY 14513
Ultralife Batteries (UK) Ltd.
18 Nuffield Way
Abingdon, Oxfordshire, OX 14
1TG England
Re: Third Amendment to Financing Agreements ("Amendment")
Gentlemen:
Reference is made to the Loan and Security Agreement dated June 15, 2000,
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 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 $35,000,000.00."
(2) Borrowers acknowledge and agree that at any time that the Adjusted Net
Worth of the Borrowers shall be less than $40,000,000, Lender shall establish an
Availability Reserve of $1,000,000, which Availability Reserve shall remain in
effect until the Borrowers' Adjusted Net Worth, as evidenced by the financial
statements of Borrowers furnished to Lender pursuant to Section 9.6, equals or
exceeds $40,000,000.
(3) In connection with the execution and delivery of this Amendment,
Borrowers shall pay to Lender a fee of $10,000.00, which fee shall be fully
earned and non-refundable on the date hereof.
(4) Within thirty (30) days of the date of this Amendment, Borrowers shall
obtain an updated appraisal of their Equipment from an appraiser acceptable to
Lender and in form and substance satisfactory to Lender.
Ultralife Batteries, Inc.
Ultralife Batteries (UK) Ltd.
As of June 1, 2001
Page 2
(5) 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.
(6) 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.
(7) 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 June 1, 2001
Page 3
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/Marc E. Swartz
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Name: Marc E. Swartz
Title: Senior Vice President
AGREED:
ULTRALIFE BATTERIES, INC.
By: /s/Robert W. Fishback
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Name:Robert W. Fishback
Title:Vice President - Finance & CFO
ULTRALIFE BATTERIES (UK) Ltd.
By: /s/William A. Schmitz
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Name:William A. Schmitz
Title:Vice President - Primary Batteries