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<SEC-DOCUMENT>0000950152-07-001343.txt : 20070221
<SEC-HEADER>0000950152-07-001343.hdr.sgml : 20070221
<ACCEPTANCE-DATETIME>20070221161241
ACCESSION NUMBER:		0000950152-07-001343
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20070214
ITEM INFORMATION:		Entry into a Material Definitive Agreement
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20070221
DATE AS OF CHANGE:		20070221

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ULTRALIFE BATTERIES INC
		CENTRAL INDEX KEY:			0000875657
		STANDARD INDUSTRIAL CLASSIFICATION:	MISCELLANEOUS ELECTRICAL MACHINERY, EQUIPMENT & SUPPLIES [3690]
		IRS NUMBER:				161387013
		STATE OF INCORPORATION:			DE
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	000-20852
		FILM NUMBER:		07639022

	BUSINESS ADDRESS:	
		STREET 1:		2000 TECHNOLOGY PARKWAY
		CITY:			NEWARK
		STATE:			NY
		ZIP:			14513
		BUSINESS PHONE:		3153327100

	MAIL ADDRESS:	
		STREET 1:		2000 TECHNOLOGY PARKWAY
		CITY:			NEWARK
		STATE:			NY
		ZIP:			14513
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>l24849ae8vk.htm
<DESCRIPTION>ULTRALIFE BATTERIES, INC.    8-K
<TEXT>
<HTML>
<HEAD>
<TITLE>Ultralife Batteries, Inc.    8-K</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>




<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>United States Securities and Exchange Commission</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 8-K</B>
</DIV>


<DIV align="center" style="font-size: 12pt; margin-top: 12pt"><B>Current Report<BR>
Pursuant to Section&nbsp;13 or 15(d) of<BR>
the Securities Exchange Act of 1934</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>February&nbsp;14, 2007</B></DIV>

<DIV align="center" style="font-size: 10pt"><B>(Date of Report)</B></DIV>


<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>ULTRALIFE BATTERIES, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>Delaware</B><BR>
(State of incorporation)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>000-20852</B><BR>
(Commission File Number)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>16-1387013</B><BR>
(IRS Employer Identification No.)</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top" nowrap><B>2000 Technology Parkway, Newark, New York</B><BR>
(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>14513</B><BR>
(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>(315)&nbsp;332-7100</B><BR>
(Registrant&#146;s telephone number, including area code)</DIV>
<DIV align="center" style="margin-top: 6pt">
<DIV style="font-size: 3pt; margin-top: 6pt; width: 44%; border-top: 1px solid #000000">&nbsp;</DIV></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 3pt">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):
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Written communications pursuant to Rule&nbsp;425 under the Securities Act (17 CFR 230.425)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Soliciting material pursuant to Rule&nbsp;14a-12 under the Exchange Act (17 CFR 240.14a-12)</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Pre-commencement communications pursuant to Rule&nbsp;13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))</TD>
</TR>

</TABLE>
</DIV>

<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;1.01 Entry into a Material Definitive Agreement</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective as of February&nbsp;14, 2007, Ultralife Batteries, Inc. (the &#147;<B><I>Company</I></B>&#148;) entered into
Forbearance and Amendment Number Six to the Credit Agreement (the &#147;<B><I>Forbearance and Amendment</I></B>&#148;) with
JPMorgan Chase Bank, N.A. and Manufacturers and Traders Trust Company (together, the &#147;<B><I>Lenders</I></B>&#148;).
The Company and the Lenders originally entered into the Credit Agreement as of June&nbsp;30, 2004, and
they subsequently amended the agreement on each of September&nbsp;24, 2004, May&nbsp;4, 2005, August&nbsp;5, 2005,
November&nbsp;1, 2005, November&nbsp;1, 2005, June&nbsp;29, 2006 and February&nbsp;14, 2007 (collectively, the &#147;<B><I>Credit
Agreement</I></B>&#148;). Neither the Company nor any of its affiliates has any material relationship with the
Lenders, other than in respect of the Credit Agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Forbearance and Amendment provides that the Lenders will forbear from exercising their
rights under the Credit Agreement arising from the Company&#146;s failure to comply with certain
financial covenants in the Credit Agreement with respect to the fiscal quarter ended December&nbsp;31,
2006. Specifically, the Company was not in compliance with the terms of the Credit Agreement
because it failed to maintain the required debt-to-earnings and EBIT-to-interest ratios provided
for in the Credit Agreement. The Lenders have agreed to forbear from exercising their respective
rights and remedies under the Credit Agreement until March&nbsp;23, 2007 (the &#147;<B><I>Forbearance Period</I></B>&#148;),
unless the Company breaches the Forbearance and Amendment or unless another event or condition
occurs that constitutes a default under the Credit Agreement. Once the Forbearance Period ends,
the Lenders may exercise their rights and remedies under the Credit Agreement without further
notice or action.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;During the Forbearance Period, each Lender has agreed to continue to make revolving loans
available to the Company. Pursuant to the Forbearance and Amendment, the aggregate amount of the
Lenders&#146; revolving loan commitment has been reduced from $20,000,000 to $15,000,000. During the
Forbearance Period, the applicable revolving interest rate and the applicable term interest rate,
in each case as set forth in the Credit Agreement, both shall be increased by 25 basis points. In
addition, in consideration of the Lenders entering into the Forbearance and Amendment, the Lenders
shall receive from the Company a one-time fee of $50,000.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to a number of technical and conforming amendments, the Forbearance and Amendment
revised the definition of &#147;Change in Control&#148; in the Credit Agreement to provide that the
acquisition of equity interests representing more than 30% of the aggregate ordinary voting power
represented by the issued and outstanding equity interests of the Company shall constitute a
&#147;Change in Control&#148; for purposes of the Credit Agreement. Previously, the equity interests
threshold had been set at 20%.
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Item&nbsp;9.01 Financial Statements and Exhibits</B>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>(d)</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><B>Exhibits.</B></TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="5%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Forbearance and Amendment Number Six to the Credit Agreement, dated
as of February&nbsp;14, 2007, among Ultralife Batteries, Inc., JPMorgan
Chase Bank, N.A. and Manufacturers and Traders Trust Company
</TD>
</TR>
</TABLE>
</DIV>
<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">

<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;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.
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">Date:  As of February 21, 2007      &nbsp;</TD>
    <TD colspan="3" align="left"><b>ULTRALIFE BATTERIES, INC.</b><BR>
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">/s/ Robert W. Fishback
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Robert W. Fishback&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left" nowrap>Vice President &#150; Finance and Chief
Financial Officer&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">INDEX TO EXHIBITS
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">(10)&nbsp;Additional Exhibits
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">10.1</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Forbearance and Amendment Number Six to the Credit Agreement, dated as of February
14, 2007, among Ultralife Batteries, Inc. JPMorgan Chase Bank, N.A. and Manufactures and
Traders Trust Company</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-10.1
<SEQUENCE>2
<FILENAME>l24849aexv10w1.htm
<DESCRIPTION>EX-10.1
<TEXT>
<HTML>
<HEAD>
<TITLE>EX-10.1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>
<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt">Exhibit&nbsp;10.1
</DIV>

<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 3px double #000000">&nbsp;</DIV></DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt">FORBEARANCE
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">AND

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">AMENDMENT NUMBER SIX TO CREDIT AGREEMENT

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">dated as of February&nbsp;14, 2007

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">between

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">ULTRALIFE BATTERIES, INC.

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">and

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">THE LENDERS PARTY THERETO

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">and

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">JPMORGAN CHASE BANK, N.A.,<BR>
as Administrative Agent

</DIV>
<DIV align="center"><DIV style="font-size: 3pt; margin-top: 16pt; width: 100%; border-top: 3px double #000000">&nbsp;</DIV></DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORBEARANCE<BR>
AND<BR>
AMENDMENT NUMBER SIX TO CREDIT AGREEMENT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This Forbearance and Amendment Number Six to Credit Agreement (the &#147;<U>Amendment</U>&#148;), dated
as of February&nbsp;14, 2007, is made by and between ULTRALIFE BATTERIES, INC. (the &#147;<U>Borrower</U>&#148;)
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
&#147;<U>Agent</U>&#148;).
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Statement of the Premises</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Borrower, the Lenders and the Agent have previously entered into, among other agreements,
a Credit Agreement, dated as of June&nbsp;30, 2004, which was amended by Amendment Number One dated as
of September&nbsp;24, 2004, Amendment Number Two dated as of May&nbsp;4, 2005, Amendment Number Three dated
as of August&nbsp;5, 2005, Amendment Number Four dated as of November&nbsp;1, 2005, that certain waiver
letter dated May&nbsp;3, 2006, Amendment Number Five dated June&nbsp;29, 2006, that certain waiver letter
dated October&nbsp;20, 2006, and that certain waiver letter dated November&nbsp;30, 2006 as extended
(collectively, the &#147;<U>Credit Agreement</U>&#148;). The Borrower has requested that the Lenders and
Agent grant the Borrower additional time to comply with covenants contained the Credit Agreement
and the Borrower, the Lenders and the Agent desire to amend the Credit Agreement as referenced
herein.
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Statement of Consideration</B></U>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accordingly, in consideration of the premises and under the authority of Section&nbsp;5-1103 of the
New York General Obligations Law, the parties agree as follows:
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U><B>Agreement</B></U>
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Defined Terms</B></U>. The terms &#147;<U>this Agreement</U>&#148;, &#147;<U>hereunder</U>&#148; 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Amendment</B></U>. Effective upon the satisfaction of all conditions specified in
Section&nbsp;4 hereof, the Credit Agreement is hereby amended as follows:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">A.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The definition of &#147;<U>Change in Control</U>&#148; as set
forth in Section&nbsp;1.01 of the Credit Agreement is hereby amended so that the
figure &#147;20%&#148; contained therein is superseded and replaced in its entirety
with &#147;30%&#148;.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">B.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The following definition is hereby added to Section
1.01 of the Credit Agreement in the appropriate alphabetical order:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&#147;<U>Amendment No.&nbsp;6</U>&#148; means that certain Forbearance and
Amendment Number Six to the Credit Agreement dated as of February
14, 2007 among, Borrower, Administrative Agent and Lenders.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">C.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The definition of &#147;<U>Applicable Revolving Rate</U>&#148;
as set forth in Section&nbsp;1.01 of the Credit Agreement is hereby amended so
that the following provision is added to the end thereof:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Provided further, however, during the Forbearance Period (as defined
in Amendment No.&nbsp;6), the Applicable Revolving Rate with respect to
the Eurodollar Spread and the ABR Spread shall be the basis points
number
</DIV>

<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">

<Div align="center" style="font-size: 10pt;  margin-top: 12pt">2</div>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">set forth in the above grid otherwise in accordance with the terms
hereof plus an additional 25 basis points.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">D.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The definition of &#147;<U>Applicable Term Rate</U>&#148; as set
forth in Section&nbsp;1.01 of the Credit Agreement is hereby amended so that the
following provision is added to the end thereof:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">Provided further, however, during the Forbearance Period (as defined
n Amendment No.&nbsp;6), the Applicable Term Rate shall be the basis
points number set forth in the above grid otherwise in accordance
with the terms hereof plus an additional 25 basis points.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">E.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The definition of &#147;<U>Commitment</U>&#148; as set forth in
Section&nbsp;1.01 of the Credit Agreement is hereby superseded and replaced in
its entirety and amended to read as follows:</TD>
</TR>

</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 6%">&#147;<U>Commitment</U>&#148; means, with respect to each Lender, the
commitment of such Lender to make Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an
amount representing the maximum aggregate amount of such Lender&#146;s
Revolving Credit Exposure hereunder, as such commitment may be (a)
reduced from time to time pursuant to Section&nbsp;2.09 and (b)&nbsp;reduced
or increased from time to time pursuant to assignments by or to such
Lender pursuant to Section&nbsp;9.04. The amount of each Lender&#146;s
Commitment is set forth on Schedule&nbsp;2.01, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its
Commitment, as applicable. As of the effective date of the
Amendment No.&nbsp;6, the aggregate amount of the Lenders&#146; Commitments is
$15,000,000.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">F.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Schedule&nbsp;2.01 of the Credit Agreement is hereby
superseded and replaced in its entirety with the Schedule&nbsp;2.01 attached to
this Amendment.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="8%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">G.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Section&nbsp;5.01 of the Credit Agreement is hereby amended
so that: (i)&nbsp;in subsection (f)&nbsp;thereof the word &#147;and&#148; at the end of such
subsection is hereby deleted, (ii)&nbsp;in subsection (g)&nbsp;thereof the period
&#147;.&#148; at the end of such subsection is hereby deleted and replaced with &#147;;
and&#148; and (iii)&nbsp;the following subsections are added thereto in the
appropriate alphabetical order:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="5%" nowrap align="left">(h)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the Forbearance Period (as defined in
Amendment No.&nbsp;6), within twenty (20)&nbsp;days after the close of
each calendar month end (February&nbsp;3, 2007 and March&nbsp;3, 2007),
Borrower&#146;s internally prepared financial statements for such
month, including balance sheet and related statements of
operations and cash flows in form historically prepared by
Borrower; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="6%" style="background: transparent">&nbsp;</TD>
    <TD width="5%" nowrap align="left">(i)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>During the Forbearance Period (as defined in
Amendment No.&nbsp;6), on a weekly basis, the Borrower&#146;s cash
forecast, in form historically prepared by Borrower.</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Representations</B></U>. The Borrower hereby represents and warrants to the Lenders and
the Agent that: (i)&nbsp;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, except as and to the extent disclosed
to the Lenders by letter dated this date; (ii)&nbsp;except the Existing Event of Default (as
hereinafter defined), no Default or Event of Default specified in the Credit Agreement has
occurred and is continuing, (iii)&nbsp;since the
</TD>
</TR>
</TABLE>
</DIV>
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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


</TABLE>
</DIV>

<Div align="center" style="font-size: 10pt;  margin-top: 12pt">3</div>





<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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)&nbsp;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)&nbsp;contravene the Borrower&#146;s
certificate of incorporation or by-laws, (b)&nbsp;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)&nbsp;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)&nbsp;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)&nbsp;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)&nbsp;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)&nbsp;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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Forbearance of Existing Covenant Violations</B></U>. The Borrower has advised the
Agent that it is not in compliance with the financial covenants set forth in subsections
(a)&nbsp;and (b)&nbsp;of Section&nbsp;6.09 of the Credit Agreement as amended for the fiscal quarter
ending December&nbsp;31, 2006 (the &#147;Existing Event of Default&#148;).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;<U>Forbearance Period</U>. Subject to satisfaction of the conditions in Section&nbsp;5 hereof,
Lenders and Agent shall forbear from exercising their respective rights and remedies under the
Credit Agreement and Loan Documents arising from the Existing Event of Default from the effective
date of this Amendment until the Forbearance Termination Date (the &#147;Forbearance Period&#148;).
&#147;Forbearance Termination Date&#148; means the date which is the earliest of (i)&nbsp;5:01 p.m. (New York
time) on March&nbsp;23, 2007; or (ii)&nbsp;the date on which the Required Lenders elect to terminate the
Forbearance Period upon the occurrence of an event described in Section&nbsp;4(B) hereof, or (iii)&nbsp;the
date on which any subsequent amendments to the Credit Agreement, relating to the Existing Event of
Default or this Agreement, become effective.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;<U>Optional Termination</U>. Required Lenders may direct Agent to terminate the
Forbearance Period upon the occurrence of any of the following events:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i)&nbsp;The breach by the Borrower of any of the terms of this Amendment; or
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii)&nbsp;The occurrence of an event or condition that constitutes a Default under the Loan
Documents, other than the Existing Event of Default or a continuation thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C. <U>Effect of Forbearance Termination</U>. On termination of the Forbearance Period (other
than a termination occasioned by clause (iii)&nbsp;of the definition of &#147;Forbearance Termination Date&#148;
herein), Lenders and Agent may exercise their respective rights and remedies under the Loan
Documents and this Agreement without the requirement of any further notice or other action by
Lenders or Agent. Borrower agrees not to contest any such lawful exercise by Lenders and/or Agent
of their respective rights and remedies under the Loan Documents. All of Lenders&#146; and Agent&#146;s
rights and remedies, whether arising hereunder, under the Loan Documents, or otherwise, are
cumulative.
</DIV>


<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<Div align="center" style="font-size: 10pt;  margin-top: 12pt">4</div>





<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;<U>Borrowings During the Forbearance Period</U>. During the Forbearance Period,
notwithstanding the Existing Event of Default or a continuation thereof, each Lender agrees
severally (not jointly) to continue to make Revolving Loans to the Borrower, otherwise in
accordance with the terms and conditions of the Credit Agreement.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Conditions of Effectiveness</B></U>. The effectiveness of each and all of the
modifications 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:</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Agent shall have received 4 duplicate original counterparts of this Amendment executed by
Borrower, Lenders and Agent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;Agent shall have received a secretarial certificate of the Borrower in a form reasonably
acceptable to Agent, certifying that the June&nbsp;29, 2006 secretary&#146;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;The representation and warranties contained in Section&nbsp;3 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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;D.&nbsp;The Agent shall have received $50,000.00 from Borrower for the benefit of the Lenders on a
pro rata basis in consideration of the modifications set forth herein.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;6.&nbsp;<U><B>Reference to and Effect on Loan Documents</B></U>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A.&nbsp;Upon the effectiveness hereof, each reference in the Credit Agreement to &#147;this Agreement,&#148;
&#147;hereunder,&#146; &#147;hereof,&#148; &#147;herein,&#148; 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 as amended
hereby.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;B.&nbsp;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.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;C.&nbsp;The amendments set forth in Section&nbsp;2 and the Forbearance set forth in Section&nbsp;4 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)&nbsp;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)&nbsp;a waiver or modification of, or consent to, any
Event of Default or Default under the Credit Agreement or any Loan Document.
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">7.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Costs and Expenses</B></U>. 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">8.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Waiver and Release</B></U>. As a material inducement for, and in consideration of, the
Lenders&#146; and Agent&#146;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</TD>
</TR>

</TABLE>
</DIV>
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</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<Div align="center" style="font-size: 10pt;  margin-top: 12pt">5</div>




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">9.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Representation by Counsel</B></U>. 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&#146;s-length negotiations.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">10.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Governing Law</B></U>. 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">11.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Headings</B></U>. 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.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left">12.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD><U><B>Execution in Counterparts</B></U>. 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.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt">&#091;Signature Page Follows&#093;
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B>IN WITNESS WHEREOF</B>, the parties hereto have caused this Amendment to be executed by their
respective representatives thereunto duly authorized as of the date first above written.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="35%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left"><B>ULTRALIFE BATTERIES, INC.</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ <I>Robert W. Fishback</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Robert W. Fishback</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><FONT style="white-space: nowrap">Vice President of Finance and Chief Financial Officer</FONT></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><B>ADMINISTRATIVE AGENT:</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left"><B>JPMORGAN CHASE BANK, N.A.</B>, as Agent</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ <I>Thomas C. Strasenburgh</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thomas C. Strasenburgh</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><B>LENDERS:</B></TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left"><B>JPMORGAN CHASE BANK, N.A.</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ <I>Thomas C. Strasenburgh</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Thomas C. Strasenburgh</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="5" valign="top" align="left"><B>MANUFACTURERS AND TRADERS TRUST COMPANY</B></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ <I>Jon Fogle</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Jon Fogle</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice President</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: Helvetica,Arial,sans-serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><U>SCHEDULE 2.01</U>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">Commitments as of February&nbsp;14, 2007

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments
to Make Revolving Loans &#151; $ 15,000,000</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">JPMorgan Chase Bank, N.A.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturers and Traders Trust Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,000,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Term Loan
Commitments &#151; $ 4,833,332.33</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">JPMorgan Chase Bank, N.A.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,899,999.40</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">60</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Manufacturers and Traders Trust Company</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,933,332.93</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">40</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt"><!-- Folio -->&nbsp;<!-- /Folio -->
</DIV>

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