United States
Securities and Exchange Commission
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934
October 3, 2007
(Date of Report)
ULTRALIFE BATTERIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 000-20852 16-1387013
(State of incorporation) (Commission File Number) (IRS Employer
Identification No.)
2000 Technology Parkway, Newark, New York 14513
(Address of principal executive offices) (Zip Code)
(315) 332-7100
(Registrant's telephone number, including area code)
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Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
[] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
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Item 1.01 Entry into a Material Definitive Agreement
On October 3, 2007, Ultralife Batteries, Inc. (the "Registrant") and
its wholly-owned subsidiary, McDowell Research Co., Inc., a Delaware corporation
formerly named MR Acquisition Corporation, entered into a settlement agreement
(the "Settlement Agreement") with MRC Chargers, Ltd., a Texas limited
partnership, formerly named McDowell Research, Ltd., Thomas Hauke, Earl Martin,
Sr., James Evans, Frank Alexander, Gloria Martin, and Lillian Hauke (the
"McDowell Parties"). The Settlement Agreement resolves various disputes, issues
and claims arising out of the Asset Purchase Agreement, dated May 1, 2006, among
the Registrant, its wholly-owned subsidiary, MR Acquisition Corporation,
McDowell Research, Ltd., Thomas Hauke, Earl Martin, Sr., James Evans and Frank
Alexander (the "Asset Purchase Agreement") pursuant to which the Registrant
acquired substantially all of the assets of McDowell Research, Ltd.
The material terms of the Settlement Agreement are as follows:
o The parties to the Settlement Agreement agreed to reduce the stated
purchase price, as defined in the Asset Purchase Agreement, from $25
million to $19 million. This adjustment was made by reducing from $20
million to $14 million the aggregate principal amount of the subordinated
convertible promissory notes outstanding immediately prior to the
execution of the Settlement Agreement, which notes were derived from the
original subordinated convertible promissory note issued by the Registrant
pursuant to the Asset Purchase Agreement.
o The parties further agreed that the $1.5 million paid by the Registrant in
the first quarter of 2007 against a purchase price adjustment of $3.4
million would fully satisfy Registrant's obligations with respect to the
purchase price adjustment.
o The subordinated convertible promissory notes were further amended to
increase the interest rate on the unpaid principal amount from four
percent (4%) to five percent (5%) per annum and to obligate the Registrant
to make a prepayment of $3.5 million on the principal amount of those
notes on or before November 18, 2007.
o The Settlement Agreement, including the purchase price reduction, related
interest rate increase and claim settlement, is subject to termination
retroactively if the Registrant fails to make the $3.5 million prepayment
on or before November 18, 2007.
The Settlement Agreement and the form of Amended and Restated Convertible
Promissory Notes are being filed as exhibits to this current report and
reference is made to those documents for a more complete description of their
terms and conditions. A copy of the press release issued by the Registrant in
connection with this matter is attached as Exhibit 99.1 to this current report.
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Item 9.01 Financial Statements and Exhibits
(d) Exhibits
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10.1 Settlement Agreement dated October 3, 2007, among MRC
Chargers, Ltd., Frank Alexander, James Evans, Thomas
Hauke, Earl Martin, Sr., Gloria Martin, Lillian Hauke,
Ultralife Batteries, Inc. and McDowell Research Co.,
Inc.
10.2(a) Form of Amended and Restated Subordinated
Convertible Promissory Note for Frank Alexander and
James Evans
10.2(b) Form of Amended and Restated Subordinated
Convertible Promissory Note for Thomas Hauke, Lillian
Hauke, Earl Martin, Sr. and Gloria Martin
99.1 Press Release dated October 5, 2007, announcing the
Settlement Agreement
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ULTRALIFE BATTERIES, INC.
Date: October 5, 2007
/s/ Peter F. Comerford
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Peter F. Comerford
Vice President - Administration &
General Counsel
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