Note 7 - Revolving Credit Agreement

9 Months Ended

Oct. 01, 2017

Debt and Capital Leases Disclosures [Text Block]

7.	REVOLVING CREDIT AGREEMENT

May 31, 2017,

Ultralife Corporation entered into a Credit and Security Agreement (the “Credit Agreement”) and related security agreements with KeyBank National Association (“KeyBank” or the “Bank”) to establish a

$30

,000

senior secured, cash flow-based, revolving credit facility that includes a

$1,500

letter of credit subfacility (the “Credit Facility”). The Credit Agreement provides that the Credit Facility

may

be increased with the Bank’s concurrence to

$50,000

prior to the last

six

months of the term and is scheduled to expire on

May 30, 2020.

The Credit Facility replaces the Company’s asset-based revolving credit facility with PNC Bank National Association which expired in accordance with its terms on

May 24, 2017 (

the “Prior Credit Agreement”).

The Credit Facility provides the Company with an aggregate of up to

$30

,000

of loan and letter of credit availability determined based on a borrowing base formula. The Company

may

use advances under the Credit Facility for general working capital purposes, to reimburse drawings under letters of credit and to fund capital expenditures and acquisitions, all subject to the terms of the Credit Agreement. The Company had

amounts drawn under the Prior Credit Agreement at the time of its expiration and has

not

borrowed under the Credit Facility.

Interest will accrue on outstanding indebtedness under the Credit Agreement at the Overnight LIBOR Rate plus the applicable margin, or at the Base Rate plus the applicable margin, as selected by the Company. During the period beginning

May 31, 2017

and ending

April 1, 2018,

the applicable margin for Overnight LIBOR Loans is

185

basis points, the applicable margin for Base Rate Loans is negative

basis points and applicable margin for the Unused Fee is

basis points. Beginning

April 2, 2018

and thereafter, the applicable margins will be determined based on the chart below.

Consolidated Senior Leverage Ratio	Applicable Basis Points for Overnight LIBOR Loans		Applicable Basis Points for Base Rate Loans			Applicable Basis Points for Unused Fee
Less than 1.50 to 1.00		185		(50	)		20
Greater than or equal to 1.50 to 1.00 but less than 2.50 to 1.00		200		(25	)		15
Greater than or equal to 2.50 to 1.00		215		0			10

The Company must pay a fee on its unused availability equal to the applicable margin for the Unused Fee and customary letter of credit fees.

In addition to the

affirmative and negative covenants, the Company must maintain a fixed charge coverage ratio of

1.15

1.0,

tested each fiscal quarter for the trailing

four

fiscal quarters, and a minimum tangible net worth of

$40,000,

tested as of the end of each calendar year. The Company was in full compliance with its covenants as of

October 1, 2017.

Any outstanding

borrowings must be repaid upon expiration of the term of the Credit Facility. Payments must be made during the term to the extent outstanding borrowings exceed the maximum amount then permitted to be drawn as borrowings under the Credit Facility and from the proceeds of certain transactions. Upon the occurrence of an event of default, the outstanding obligations of the Company under the Credit Facility

may

be accelerated in addition to the other remedies available to the Bank under the terms of the Credit Agreement. The Credit Facility is secured by substantially all the assets of the Company.