United States
Securities and Exchange Commission
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
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
October 30, 2007
(Date of Report)
(Date of Report)
ULTRALIFE BATTERIES, INC.
(Exact name of registrant as specified in its charter)
(Exact name of registrant as specified in its charter)
| Delaware | 000-20852 | 16-1387013 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
| 2000 Technology Parkway, Newark, New York (Address of principal executive offices) |
14513 (Zip Code) |
(315) 332-7100
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
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):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01 Entry into a Material Definitive Agreement.
On October 30, 2007, Ultralife Batteries, Inc. (the “Registrant”) entered into a stock
purchase agreement with Stationary Power Services, Inc., a Florida corporation (“SPS”) and William
Maher (the “SPS Agreement”). Mr. Maher owns all of the outstanding shares of common stock in SPS.
Also, on October 30, 2007, the Registrant entered into a stock purchase agreement with Reserve
Power Systems, Inc., a Florida corporation (“RPS”), William Maher, and Edward Bellamy (the “RPS
Agreement”). Together Mr. Maher and Mr. Bellamy (the “Sellers”) own all of the outstanding shares
of common stock in RPS. 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
Agreements. The SPS and RPS Agreements are described below.
SPS Transaction
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. Pursuant to the terms and conditions of
the SPS Agreement, at the closing of the transaction, which is expected to occur during the fourth
quarter of the Registrant’s current fiscal year, the Registrant will acquire all of the outstanding
shares of SPS’s common stock.
Pursuant to the terms and conditions of the SPS Agreement, at the closing of the transaction,
the Registrant will pay Mr. Maher an aggregate purchase price of $10,000,000, subject to certain
adjustments, and in exchange the Registrant will receive all of the outstanding shares of SPS
common stock. The Registrant will pay the purchase price by tendering a single cash payment in the
amount of $6,000,000 and by delivering a subordinated convertible promissory note in the principal
amount of $4,000,000. The purchase price is subject to adjustments in certain circumstances. If
the value of SPS’s adjusted net worth, as shown on its balance sheet as of the closing date
(“Adjusted Net Worth”), is less than $500,000, then the $6,000,000 single cash payment will be
reduced by the amount by which SPS’s Adjusted Net Worth is less than $500,000. If the value of
SPS’s Adjusted Net Worth is greater than $500,000, then the $6,000,000 single cash payment will be
increased by the amount by which SPS’s Adjusted Net Worth is greater than $500,000. In addition,
if certain sales milestones are met by SPS following its acquisition by the Registrant, the
Registrant will pay Mr. Maher, in up to five annual installments, an aggregate amount of up to
100,000 unregistered shares of the Registrant’s common stock. At the closing date, the Registrant,
SPS, and Mr. Maher will enter into a registration rights agreement (the “SPS 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.
The principal amount of the promissory note matures and is payable on the third anniversary of
the closing date of the SPS transaction. The promissory note bears interest at the rate of five
percent per year, which rate can increase if an event of default defined within the promissory note
occurs. During the term of the promissory note, interest is payable in arrears on a quarterly
basis. Subject to Mr. Maher’s conversion rights discussed below, the Registrant can pay off all
amounts outstanding under the promissory 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 promissory 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 promissory note is convertible into shares of the
Registrant’s common stock at any time prior to the time the outstanding principal amount of the
promissory note is paid in full. The initial per share conversion price is $15.00, and the
conversion price is subject to customary anti-dilution adjustments. The Registrant has the right to
compel Mr. Maher to convert the promissory note if the trailing 30-day average closing price of the
Registrant’s common stock exceeds $17.00 per share and if the shares of the Registrant’s common
stock that Mr. Maher is to receive have been registered under the Securities Act of 1933, as
amended, on a registration statement that has been declared effective by the United States
Securities and Exchange Commission. At the closing date, the Registrant will grant Mr. Maher
piggyback registration rights as set forth in the SPS Agreement and the SPS Registration Rights
Agreement for any unregistered shares of the Registrant’s common stock issuable to Mr. Maher upon
conversion of the promissory note.
Prior to the closing date of the transaction, the SPS Agreement may be terminated under a
number of circumstances. Termination can occur upon the mutual consent of the Registrant and Mr.
Maher. In addition, the Registrant may terminate the SPS Agreement by providing written notice to
Mr. Maher on or before the 25th day following the signing of the SPS Agreement if the
Registrant is not satisfied with the results of its continuing business, legal, environmental, and
accounting due diligence regarding SPS. The Registrant may also terminate the SPS Agreement by
providing written notice to Mr. Maher at any time prior to the closing date if Mr. Maher has
breached any material representation, warranty, or covenant contained in the SPS Agreement in any
material respect and Mr. Maher has not remedied the breach within 10 days after being provided with
written notice of the breach by the Registrant. The Registrant may also terminate the SPS
Agreement if the closing date has not occurred on or before November 30, 2007 because the Sellers
have failed to satisfy any condition precedent to closing under the SPS Agreement.
Similarly, Mr. Maher may terminate the SPS Agreement by providing written notice to the
Registrant at any time prior to the closing date if the Registrant has breached any material
representation, warranty, or covenant contained in the SPS Agreement in any material respect and
the Registrant has not remedied the breach within 10 days of being provided with written notice of
the breach by Mr. Maher. Mr. Maher may also terminate the SPS Agreement if the closing date has
not occurred on or before November 30, 2007 because the Registrant has failed to satisfy any
condition precedent under the SPS Agreement.
The SPS Agreement contains customary representations, warranties and covenants for a
transaction of this type. The completion of the transaction is subject to the satisfaction of a
number of closing conditions, including conditions relating to the Registrant’s acquisition of RPS,
as described below, financing for the transaction, and the parties securing all necessary approvals
for the transaction. The SPS Agreement also contains an exclusivity provision that provides the
Registrant with the exclusive right to purchase Mr. Maher’s shares of SPS common stock.
RPS Transaction
RPS supplies lead acid batteries primarily for use by SPS in the design and installation of
standby power systems. SPS is RPS’s exclusive selling agent in the United States. Pursuant to the
terms and conditions of the RPS Agreement, at the closing of the transaction, which is expected to
occur during the fourth quarter of the Registrant’s current fiscal year, the Registrant will
acquire all of the outstanding shares of RPS common stock.
Pursuant to the terms and conditions of the RPS Agreement, at the closing of the transaction,
the Registrant will deliver to each of the Sellers a certificate representing 50,000 unregistered
shares of the Registrant’s common stock. At the closing date, the Registrant, RPS, and the Sellers
will enter 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
its acquisition by the Registrant, the Registrant will pay the Sellers, in up to three annual
installments, a cash amount based on a portion of RPS’s sales. Such sales milestones exclude sales
made to SPS, which historically has comprised substantially all of RPS’s sales, unless SPS resells
the RPS products underlying such sales to RPS customers and also exclude sales of certain low
margin products. 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 the
calendar year following the closing date 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.
Prior to the closing date of the transaction, the RPS Agreement may be terminated under a
number of circumstances. Termination can occur upon the mutual consent of the Registrant and the
Sellers. In addition, the Registrant may terminate the RPS Agreement by providing written notice
to the Sellers on or before the 25th day following the signing of the RPS Agreement if
the Registrant is not satisfied with the results of its continuing business, legal, environmental,
and accounting due diligence regarding RPS. The Registrant may also terminate the RPS Agreement by
providing written notice to the Sellers at any time prior to the closing date if the Sellers have
breached any material representation, warranty, or covenant contained in the RPS Agreement in any
material respect and the Sellers have not remedied the breach within 10 days after being provided
with written notice of the breach by the Registrant. The Registrant may also terminate the RPS
Agreement if the closing date has not occurred on or before November 30, 2007 because the Sellers
have failed to satisfy any condition precedent to closing under the RPS Agreement.
Similarly, the Sellers may terminate the RPS Agreement by providing written notice to the
Registrant at any time prior to the closing date if the Registrant has breached any material
representation, warranty, or covenant contained in the RPS Agreement in any material respect and
the Registrant has not remedied the breach within 10 days of being provided with written notice of
the breach by the Sellers. The Sellers may also terminate the RPS Agreement if the closing date
has not occurred on or before November 30, 2007 because the Registrant has failed to satisfy any
condition precedent under the RPS Agreement.
The RPS Agreement contains customary representations, warranties and covenants for a
transaction of this type. The completion of the transaction is subject to the satisfaction of a
number of closing conditions, including conditions relating to the Registrant’s acquisition of SPS,
as described above, and the parties securing all necessary approvals for the transaction. The RPS
Agreement also contains an exclusivity provision that provides the Registrant with the exclusive
right to purchase the Sellers’ shares of RPS common stock.
The Registrant expects to file the SPS Agreement and RPS Agreement as exhibits to its annual
report on Form 10-K for the fiscal year ended December 31, 2007. A copy of the press release issued
by the Registrant in connection these transactions is attached as Exhibit 99.1 to this current
report.
Item 9.01 Financial Statements and Exhibits
(d) Exhibits.
99.1
|
Press Release, dated October 31, 2007, announcing the agreements to acquire SPS and RPS. |
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 2, 2007
|
ULTRALIFE BATTERIES, INC. | |||
| /s/ Robert W. Fishback | ||||
| Robert W. Fishback | ||||
| Vice President — Finance and Chief Financial Officer |
Exhibit 99.1
Company Contact:
|
Investor Relations Contact: | |
Ultralife Batteries, Inc.
|
Lippert/Heilshorn & Associates, Inc. | |
Pete Comerford
|
Jody Burfening | |
(315) 332-7100
|
(212) 838-3777 | |
pcomerford@ulbi.com
|
jburfening@lhai.com |
Ultralife to Acquire Stationary Power Services, Inc.
- - Company Expands into High-Growth Standby Power Market -
- - Company Also to Acquire Affiliate, Reserve Power Systems, Inc. -
- - Company Expands into High-Growth Standby Power Market -
- - Company Also to Acquire Affiliate, Reserve Power Systems, Inc. -
Newark, New York — October 31, 2007 — Ultralife Batteries, Inc. (NASDAQ: ULBI) has entered into
definitive agreements to acquire all of the outstanding shares of two affiliated companies
headquartered in Clearwater, Florida: Stationary Power Services, Inc., an infrastructure power
management services company, and Reserve Power Systems, Inc., a provider of lead-acid batteries for
standby power systems. The purchase price for both companies, excluding the payment of any
contingent purchase price, is anticipated to be approximately $11.3 million. The acquisitions,
subject to customary closing conditions, are expected to close by the end of the fourth quarter.
Ultralife anticipates that these acquisitions will be accretive in the first quarter of 2008.
Established in 1989, Stationary Power Services is an infrastructure power management services firm
specializing in the engineering, installation and preventive maintenance of standby power systems,
uninterrupted power supply systems, DC power systems and switchgear/control systems for the
telecommunications, aerospace, technology, banking and information services industries. Stationary
Power Services is 100% owned by Bill Maher, the company’s founder and president. In 2006,
Stationary Power Services generated operating income of $1.3 million on $8.9 million in revenue.
Under the terms of the agreement, the purchase price will consist of $6 million in cash, a $4
million non-transferable subordinated convertible note to be held by the seller, and a
performance-based equity incentive payable in 100,000 unregistered shares of Ultralife common stock
over a period of up to five years. The $4 million convertible note carries a three-year term and is
convertible at $15 per share of Ultralife common stock, with a forced conversion feature at $17 per
share. Ultralife is working with its banks to finalize the financing.
Reserve Power Systems, established in 2006, supplies lead acid batteries primarily for use by
Stationary Power Services in the design and installation of standby power systems. The purchase
price for Reserve Power Systems consists of 100,000 unregistered shares of Ultralife common stock,
currently valued at approximately $1.3 million, to be issued upon closing, and a performance-based
earn-out through 2010 payable in cash. Reserve Power Systems is 50% owned by Bill Maher and 50%
owned by Ed Bellamy, Stationary Power’s vice president of sales and marketing.
“Acquiring Stationary Power Services will further our transformation from a battery company to a
value-added power solutions, accessories and engineering services company serving a broad spectrum
of government/defense and commercial markets. The global standby power market is experiencing
enormous growth arising in large part from extensive investment in telecommunications, utility and
transportation infrastructure especially in emerging markets that require reliable back-up power
systems,” said John D. Kavazanjian, Ultralife’s president and chief executive officer.
“Entering this market as an installer with proven standby power systems, strong customer
relationships and established distribution channels will give us an immediate, differentiated
competitive position in this highly attractive market. It will also expand our addressable market
for rechargeable power solutions; complement the development project we have been working on for a
telecommunications OEM; leverage our SmartCircuit™ technology; and place us in an excellent
position to exploit the growing interest in eventually replacing lead acid batteries with lithium
battery solutions in some standby power applications.”
- Continued -
Kavazanjian concluded, “As the founder and president of Stationary Power Services, Bill Maher has
created a highly respected and profitable company, and we are pleased that he plans to stay with
the company. Stationary Power Services will continue operating from its Florida facility under the
leadership of Philip Meek, currently Ultralife’s vice president of manufacturing who will move to
become Stationary Power’s chief operating officer. Bill Maher will become vice president of sales
and marketing and Ed Bellamy will become vice president of engineering, each reporting to Phil. By
combining the engineering expertise of Stationary Power Services and Ultralife, we are creating a
dominant force to compete at the forefront of the rapidly expanding standby power market.”
Bill Maher, founder of Stationary Power Services, said, “We have been providing mission critical
standby power solutions to a broad range of customers and applications for many years, and offer a
comprehensive product portfolio, professional engineering assistance and highly skilled, factory
certified technicians and installers. We are delighted to join Ultralife and to play a major role
in executing the company’s strategy to further diversify its product and service offerings and
expand its geographic footprint.”
About Ultralife Batteries, Inc.
Ultralife is a global provider of high-energy power solutions, communications accessories, and
engineering and technical services for diverse applications. The company develops, manufactures and
markets a wide range of non-rechargeable and rechargeable batteries, charging systems and
accessories for markets including defense, commercial and consumer portable electronics.
Through its portfolio of standard products and engineered solutions, Ultralife is at the forefront
of providing the next generation of power systems, communications accessories and technical
services. Defense, commercial and retail customers include: General Dynamics, Raytheon, Philips
Medical Systems, General Motors, Energizer, Kidde Safety, Lowe’s, Radio Shack and the national
defense agencies of the United States, United Kingdom, Germany, Australia and New Zealand, among
others.
Ultralife’s headquarters, principal manufacturing and research facilities, and its McDowell
Research operating unit are in Newark, New York, near Rochester. Ultralife’s other operating units
are: Ultralife Batteries (UK) Ltd., in Abingdon, England; Innovative Solutions Consulting in
Hollywood, Maryland; and ABLE New Energy in Shenzhen, China. Detailed information on Ultralife is
available at: www.ultralifebatteries.com.
This press release may contain forward-looking statements based on current expectations that
involve a number of risks and uncertainties. The potential risks and uncertainties that could cause
actual results to differ materially include: worsening global economic conditions, increased
competitive environment and pricing pressures, disruptions related to restructuring actions and
delays. Further information on these factors and other factors that could affect Ultralife’s
financial results is included in Ultralife’s Securities and Exchange Commission (SEC) filings,
including the latest Annual Report on Form 10-K.
Ultralife® and McDowell Research® are registered trademarks of Ultralife
Batteries, Inc.
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