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
November 16, 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 2.01 Completion of Acquisition or Disposition of Assets.
On November 16, 2007, Ultralife Batteries, Inc. (the "Registrant")
completed the acquisition of all the issued and outstanding shares of common
stock of Stationary Power Services, Inc., a Florida corporation ("SPS") from
William Maher (the "SPS Acquisition"). Also on November 16, 2007, the Registrant
completed the acquisition of all of the issued and outstanding shares of common
stock of Reserve Power Systems, Inc., a Florida corporation ("RPS") from William
Maher and Edward Bellamy (Maher and Bellamy being referred to as the "Sellers")
(the "RPS Acquisition"). There are no material relationships between the
Registrant or its affiliates and SPS, RPS, Mr. Maher or Mr. Bellamy other than
in respect of the SPS and RPS Acquisitions.
SPS Acquisition
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The SPS Acquisition was consummated pursuant to the terms of the Stock
Purchase Agreement, dated October 30, 2007, by and among the Registrant, SPS and
Mr. Maher (the "SPS Agreement"). The Registrant paid Mr. Maher an aggregate
purchase price of $10,000,000 and in exchange the Registrant received all of the
outstanding shares of SPS's common stock. The purchase price was paid by
tendering a single cash payment in the amount of $6,000,000 to Mr. Maher and
delivering to Mr. Maher a three-year subordinated convertible promissory note in
the principal amount of $4,000,000 (the "Note").
The $6,000,000 portion of the purchase price is subject to adjustment based
upon SPS's adjusted net worth, as shown on the balance sheet as of the closing
date ("Adjusted Net Worth"). If the Adjusted Net Worth is less than $500,000,
then the cash portion of the purchase price will be reduced by the amount by
which SPS's Adjusted Net Worth is less than $500,000. If SPS's Adjusted Net
Worth is greater than $500,000, then the purchase price will be increased by the
amount by which SPS's Adjusted Net Worth is greater than $500,000.
The Note bears interest at the rate of 5% per year, which rate can increase
if an event of default defined within the Note occurs. During the term of the
Note, interest is payable in arrears on a quarterly basis. Subject to Mr.
Maher's conversion rights, the Registrant can pay off all amounts outstanding
under the Note before its maturity date by providing written notice to Mr. Maher
at least 60 days before the anticipated payoff date. The payment of principal
and interest under the Note is subordinate to the rights of any senior
commercial lenders, such as banks or other financial institutions, which lend
money to the Registrant. Subject to certain limitations, the Note is convertible
into shares of the Registrant's common stock at any time prior to the time the
outstanding principal amount of the Note is paid in full. The initial per share
conversion price is $15, and the conversion price is subject to customary
anti-dilution adjustments. The Registrant has the right to compel Mr. Maher to
convert the Note if the trailing 30-day average price of the Registrant's common
stock exceeds $17 per share and if the shares of the Registrant's common stock
that Mr. Maher is to receive upon conversion of the Note have been registered
under the Securities Act of 1933, as amended.
In addition, if certain sales milestones are met by SPS following the SPS
Acquisition, the Registrant will pay Mr. Maher, in annual installments, an
aggregate amount of up to 100,000 unregistered shares of the Registrant's common
stock. The parties to the SPS Agreement have entered into a registration rights
agreement granting Mr. Maher piggyback registration rights for any unregistered
shares of the Registrant's common stock that he receives pursuant to the SPS
Agreement, including shares issuable on conversion of the Note.
SPS is an infrastructure power management services firm specializing in
engineering, installation and preventative maintenance of standby power systems,
uninterruptible power supply systems, DC power systems and switchgear/control
systems for the telecommunications, aerospace, technology, banking and
information services industries.
RPS Acquisition
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The RPS Acquisition was consummated pursuant to the terms of the Stock
Purchase Agreement, dated October 30, 2007, by and among the Registrant, RPS and
the Sellers (the "RPS Agreement"). As consideration for the RPS Acquisition, the
Registrant delivered to each of the Sellers a certificate representing 50,000
unregistered shares of the Registrant's common stock. The parties to the RPS
Agreement have entered into a registration rights agreement granting the Sellers
piggyback registration rights for any unregistered shares of the Registrant's
common stock they receive pursuant to the RPS Agreement.
In addition, if certain sales milestones are met by RPS following the RPS
Acquisition, the Registrant will pay the Sellers, in annual installments, a
portion of RPS's post-acquisition sales. Such sales milestones exclude sales
made to SPS, which historically has comprised substantially all of RPS's sales.
The Registrant shall pay the Sellers 5% of RPS's sales, up to the operating plan
amount set by the Registrant in its sole discretion (the "Operating Plan") for
the remainder of calendar year 2007 and for calendar years 2008, 2009, and 2010.
The Registrant shall also pay the Sellers 10% of the amount by which RPS's sales
exceeds the Operating Plan for calendar years 2008, 2009, and 2010.
RPS supplies lead acid batteries primarily for use by SPS in the design and
installation of standby power systems. SPS was RPS's exclusive selling agent in
the United States.
Item 3.02 Unregistered Sales of Equity Securities.
As described above in greater detail under Item 2.01 of this Report,
effective on November 16, 2007, the Registrant issued to William Maher a Note in
the principal amount of $4,000,000 in connection with the closing of the SPS
Acquisition. The Note is convertible into shares of the Registrant's common
stock at $15 per share, which amount is subject to adjustment for certain
anti-dilution measures. Mr. Maher can also receive an aggregate amount of up to
100,000 shares of unregistered common stock if certain sales milestones are met
by SPS following the SPS Acquisition. Also as described above in greater detail
under Item 2.01 of this Report, effective on November 16, 2007, the Registrant
issued 50,000 shares of its unregistered common stock to each of William Maher
and Edward Bellamy in connection with the closing of the RPS Acquisition (the
"Restricted Shares").
The Registrant issued the Note to Mr. Maher and the Restricted Shares to
Mr. Maher and Mr. Bellamy without registration under Section 5 of the Securities
Act of 1933 in reliance on the exemption from registration contained in Section
4(2) of the Securities Act. Section 4(2) of the Securities Act exempts from
registration "transactions by an issuer not involving any public offering." To
qualify for this exemption, the purchasers of the securities must (1) have
sufficient knowledge and experience in finance and business matters to evaluate
the risk and merits of the investment or be able to bear the investment's
economic risk, (2) have access to the type of information normally provided in a
prospectus and (3) agree not to resell or distribute the securities to the
public absent an effective registration statement. In addition, the Registrant
cannot use any form of public solicitation or general advertising in connection
with the transaction.
The Registrant believes that all of the requirements to qualify to use the
exemption from registration contained in Section 4(2) of the Securities Act have
been satisfied in connection with the issuance of the Note to Mr. Maher and the
issuance of the Restricted Shares to Mr. Maher and Mr. Bellamy. Specifically,
(1) the Registrant has determined that Mr. Maher and Mr. Bellamy, together with
their advisors, are knowledgeable and experienced in finance and business
matters and thus are able to evaluate the risks and merits of acquiring the Note
and the Restricted Shares and, in the event the Note is converted, the
Registrant's common stock underlying the Note; (2) Mr. Maher and Mr. Bellamy
have advised the Registrant that they are able to bear the economic risk of
acquiring the Note and, in the event the Note is converted, the Registrant's
common stock underlying the Note, and the Restricted Shares; (3) the Registrant
has provided Mr. Maher and Mr. Bellamy with access to the type of information
normally provided in a prospectus; (4) Mr. Maher and Mr. Bellamy have each
agreed not to resell or distribute the securities to the public except as
permitted by the federal securities laws; and (5) the Registrant did not use any
form of public solicitation or general advertising in connection with the
issuance of the Note or the Restricted Shares.
Item 8.01 Other Events.
On November 16, 2007, the Registrant completed a registered direct offering
(the "Offering") of 1,000,000 shares of the Registrant's common stock pursuant
to the terms of the Placement Agency Agreement with Stephens Inc. entered into
on November 8, 2007. The shares were sold at a price of $13.50 per share for an
aggregate purchase price of $13,500,000. The Registrant paid Stephens Inc., as
the exclusive agent for the Offering, a fee of $675,000, which is equal to 5% of
the gross proceeds of the Offering.
The Registrant used $6,000,000 of the net proceeds of the Offering to fund
the cash portion of the purchase price for the SPS Acquisition described in Item
2.01 of this Report and used $3.5 million of the net proceeds to prepay
indebtedness due on subordinated convertible promissory notes in the aggregate
outstanding principal amount of $14,000,000 which were issued as partial
consideration for the Registrant's acquisition of substantially all of the
assets of McDowell Research Co., Ltd. in July of 2006.
Item 9.01 Financial Statements and Exhibits.
(a) Financial statements of business acquired.
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The financial statements required by this item are not being filed
herewith. To the extent that such information is required by this item, the
Registrant will file the financial statements as an amendment to this Current
Report on Form 8-K no later than 71 days after the date hereof.
(b) Pro forma financial information.
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The pro forma financial information required by this item is not being
filed herewith. To the extent that such information is required by this item,
the Registrant will file the pro forma financial information as an amendment to
this Current Report on Form 8-K no later than 71 days after the date hereof.
(c) Exhibits.
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99.1 Press Release, dated November 19, 2007, announcing the closing of
the SPS Acquisition and the RPS Acquisition.
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.
Date: November 19, 2007 ULTRALIFE BATTERIES, INC.
By: /s/ Robert W. Fishback
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Robert W. Fishback
Vice President - Finance and Chief
Financial Officer