Exhibit 10.27

                                 LOAN AGREEMENT

                              EXPLANATORY STATEMENT

      Hitschler,  Kimelman  Holdings,  LLC  ("Lender")  has  agreed  to  lend to
Ultralife Batteries,  Inc. ("Borrower") the sum of five hundred thousand dollars
($500,000.00)  (the "Loan Amount").  In consideration  of Lender's  agreement to
lend to Borrower the Loan Amount,  Borrower has agreed (i) pursuant to the terms
and  conditions  set forth in the  promissory  note  attached  as Exhibit A (the
"Promissory  Note")  to pay  Lender  the sum of five  hundred  thousand  dollars
($500,000.00),  together with interest at the rate of seven and one-half percent
(7.5%) per annum  accruing  from the date hereof on the  principal  balance from
time to time  unpaid,  with the total  principal  and interest due being due and
payable on June 4, 2003,  and (ii) to grant to Lender a warrant to purchase  for
twenty-five  thousand  (25,000)  shares of common stock of Borrower,  all on the
terms and  conditions  as set forth on the stock warrant  agreement  attached as
Exhibit B (the "Warrant"); and (iii) to provide Lender with the opportunity,  at
Lender's  option,  to convert the principal amount due under the Promissory Note
into one  hundred  twenty-five  thousand  (125,000)  shares of  common  stock of
Borrower, all on the terms and conditions as set forth in the Promissory Note.

      NOW, THEREFORE, the parties agree as follows:

      1.  LOAN BY  LENDER.  Lender  agrees  to  transfer  to  Borrower,  by wire
transfer,  the Loan Amount on or before  close of business on March 4, 2003 (the
"Closing Date").

      2. DELIVERY OF PROMISSORY NOTE AND WARRANT. On or before close of business
on the Closing Date,  Borrower will execute and deliver to Lender the Promissory
Note and the Warrant. Borrower covenants, represents, and warrants that both the
Promissory  Note  and  the  Warrant  are  obligations  of the  Borrower  and all
necessary authority and approval to issue,  execute,  and deliver the Promissory
Note and the Warrant have been made, obtained, or issued.

      3. CONDITIONS OF LENDING.  It is a condition precedent that the obligation
of Lender  to lend to  Borrower  the Loan  Amount is  subject  to the  following
express  conditions  precedent that all legal matters incident to this Agreement
shall be  satisfactory  to counsel for the Lender,  and the Borrower  shall have
reimbursed  the  Lender  for the  fees  and  expenses  of  Lender's  counsel  in
connection  with the  preparation  of this  Agreement  and all matters  incident
thereto.

      4.  SUBORDINATION OF PROMISSORY  NOTE.  Lender and Borrower agree that the
payment of the principal and interest  under this  Promissory  Note is expressly
subordinated to the payment of all Senior Indebtedness to the extent and subject
to the conditions set forth in this Section 4. As used herein,  the term "Senior
Indebtedness" means all indebtedness,  obligations, and liabilities of any kind,
including,  without  limitation,  the  principal  of, the interest on (including
interest   accruing   in  any   Insolvency   Proceeding   (as   defined   below)
notwithstanding


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<PAGE>

any law to the contrary),  and the premium, if any, fees, costs, and expenses on
or relating to all  indebtedness  of Borrower for money  incurred or borrowed by
Borrower from any financial  institution,  including banks,  commercial  finance
companies,  savings  institutions,  or insurance  companies,  including Congress
Financial Corporation (New England) and its affiliates (collectively "Congress")
and all renewals,  extensions, and refundings of any such indebtedness,  whether
such  indebtedness  shall have been incurred  prior to, on, or subsequent to the
date hereof,  unless by the terms of the  instrument  creating or evidencing any
such  indebtedness it is provided that such indebtedness is not to be considered
Senior Indebtedness for the purposes of the Promissory Note.

         4.1. No  interest or  principal  shall be paid on the  Promissory  Note
without  the consent of the  holders of all Senior  Indebtedness  if (a) for the
thirty (30)  consecutive  days prior to and, as  projected,  for the thirty (30)
consecutive  days after the date fixed in the  Promissory  Note for  interest or
principal payment,  the average Excess  Availability (as such term is defined in
the Congress Loan  Agreement,  as defined below) shall be less than  $250,000.00
and such Excess  Availability  on the date of such payment,  after giving effect
thereto,  is less than  $250,000.00,  or (b) at the date fixed in the Promissory
Note for interest or principal payment,  Borrower shall be in default of payment
of principal or interest  upon such Senior  Indebtedness  or is in default under
that certain Loan and Security  Agreement  dated June 15, 2000,  as amended from
time to time, by and among, amongst others, Congress and Borrower (the "Congress
Loan  Agreement").  At least ten (10), but not more than twenty (20), days prior
to making any payment on the Promissory Note, Borrower shall provide to Congress
a projection on a daily basis of average Excess  Availability  during the thirty
(30) day period following the payment date. The projections shall be in form and
substance satisfactory to Congress.

         4.2. In the event of any default under the Congress  Loan  Agreement or
any dissolution, winding up, liquidation, or reorganization of Borrower, whether
in bankruptcy,  insolvency, or receivership  proceedings,  or upon an assignment
for the  benefit of  creditors,  or in any other  marshalling  of the assets and
liabilities  of  Borrower  (all of  which  are  referred  to  collectively  as a
"Insolvency Proceeding"),  the holders of all Senior Indebtedness shall first be
entitled  to receive  payment  in full of such  Senior  Indebtedness  before the
holder of the Promissory  Note shall be entitled to receive any payment upon the
principal of, or the interest on, the  indebtedness  evidenced by the Promissory
Note. In any  Insolvency  Proceeding,  no payment shall be made to the holder of
the  Promissory  Note until the  holders of the  Senior  Indebtedness  have been
indefeasibly paid in full in cash.

         4.3. In the event that, notwithstanding the provisions of Section 4.2.,
the holder of the Promissory  Note receives any payment or  distribution  of any
kind in an Insolvency Proceeding before the Senior Indebtedness has been paid in
full, the holder of the Promissory Note shall pay over to Congress and, once all
Senior  Indebtedness  held by  Congress  has been  paid in full in cash,  to the
holders of the Senior Indebtedness,  or their  representatives,  the payments or
distributions  so  made.  All  payments  shall  be first  made to  Congress  and
thereafter made to the holders of the Senior Indebtedness  ratably in proportion
to the amount of Senior Indebtedness that they hold.

         4.4. Subject to the complete  satisfaction and indefeasible  payment in
full in cash of the Senior  Indebtedness,  the holder of the Promissory Note, to
the extent permitted by law and to the extent of the payments or distributions


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<PAGE>

made to such holders  pursuant to the  provisions  of Sections  4.2. and 4.3. of
this Loan Agreement, shall be subrogated to the rights of the various holders of
the  Senior  Indebtedness  to receive  payments  or  distributions  of assets of
Borrower until the Promissory  Note has been completely  satisfied.  None of the
provisions of this Section 4 and no payments or distributions made to holders of
the Senior  Indebtedness  pursuant  to the terms of this  Section 4,  shall,  as
between  Borrower,  its  creditors,   other  than  the  holders  of  the  Senior
Indebtedness,  and the holder of the Promissory  Note, be deemed to be a payment
by Borrower to or on account of the  Promissory  Note,  the  provisions  of this
Section 4 being,  and being  intended,  solely for the purpose of  defining  the
relative  rights of the  holder of the  Promissory  Note,  on one hand,  and the
holders of the Senior Indebtedness,  on the other hand; and nothing contained in
this  Section 4 or  elsewhere  in this Loan  Agreement  is  intended to or shall
impair,  as between  Borrower,  the holder of the Promissory Note, and the other
creditors of Borrower,  other than the holders of the Senior  Indebtedness,  the
obligation of Borrower,  which unconditional and absolute,  to pay to the holder
of the  Promissory  Note as and when the same shall  become  due and  payable in
accordance with its terms and the terms of this Loan Agreement, or to affect the
relative  rights of the holder of the  Promissory  Note and other  creditors  of
Borrower,  other than the holders of the Senior Indebtedness,  or to prevent the
holder of the  Promissory  Note from  exercising  all of the remedies  otherwise
permitted by applicable law upon default as provided for in the Promissory  Note
and in this Loan Agreement,  subject to the rights, if any, under this Section 4
of the the holders of the Senior Indebtedness in respect of cash,  property,  or
securities of Borrower received upon the exercise of any such remedy.

         4.5. In the event that the  Promissory  Note shall be declared  due and
payable before its stated maturity date because of the occurrence of an Event of
Default (as defined in the Promissory Note), Borrower will give prompt notice in
writing of such happening to the holders of the Senior Indebtedness, and any and
all Senior  Indebtedness  shall  forthwith  become  immediately  due and payable
regardless of the expressed maturity dates thereof.

      5.  REPRESENTATIONS AND WARRANTIES.  To induce the Lender to make the Loan
hereunder,   the  Borrower  hereby  makes  the  following   representations  and
warranties to the Lender:

         5.1. The Borrower (a) is a corporation duly organized, existing, and in
good standing under the laws of the State of Delaware,  and (b) has the power to
own its  property  and to carry on its  business and is qualified to do business
and is in  good  standing  in  each  jurisdiction  in  which  the  character  of
properties   owned  by  it  or  the  transaction  of  its  business  makes  such
qualification necessary.

         5.2.  The  Borrower  has full  power and  authority  to enter into this
Agreement,  to make  the  borrowings  hereunder,  to  execute  and  deliver  the
Promissory  Note and the  Warrant  and to  perform  and  comply  with the terms,
conditions,  and agreements set forth herein and therein, all of which have been
duly authorized by all proper and necessary corporate action of the Borrower. No
consent or approval of the shareholders of the Borrower or of any governmental


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<PAGE>

authority  is required as a condition  to the  validity of this  Agreement,  the
Promissory Note, or the Warrant.

         5.3.  This  Agreement  constitutes,  and the  Promissory  Note  and the
Warrant  constitute  or will  constitute  when  issued and  delivered  for value
received,  the valid and legally binding obligations of the Borrower enforceable
in accordance with their respective terms.

         5.4. Except as disclosed in Borrower's Exchange Act filings,  there are
no proceedings pending or, so far as any person signing below as or on behalf of
the Borrower knows,  threatened before any court or administrative  agency which
will materially  adversely  affect the financial  condition or operations of the
Borrower.

         5.5. There are no provisions of the Borrower's  charter and by-laws and
no  provisions of any existing  mortgage,  deed of trust,  indenture,  contract,
lease,  or agreement  binding on the Borrower or  affecting  its property  which
would conflict with or in any way prevent the execution,  delivery,  or carrying
out of the  terms  of this  Agreement,  the  Promissory  Note,  or the  Warrant;
provided,  however, there may be provisions in the Congress Loan Agreement which
may conflict  with or prevent the  execution,  delivery,  or carrying out of the
terms of this Agreement,  the Promissory Note, or the Warrant,  but Congress has
waived  any and  all  such  provisions  with  respect  to  this  Agreement,  the
Promissory Note, and the Warrant.

         5.6. The  Borrower's  financial  statements,  copies of which have been
furnished to the Lender,  were prepared in accordance  with  generally  accepted
accounting  principles  consistently  applied and are  complete  and correct and
fairly and  accurately  present the  financial  condition  of the Borrower as of
their date and the results of its operations for the period then ended,  subject
only to ordinary and  customary  year end audit  adjustments.  There has been no
material  adverse  change in the  financial  condition  of the  Borrower  or the
results of its operations since the date of such financial statements.

         5.7. All information contained in any financial statement, application,
schedule,  report,  certificate,  opinion,  or any other  document  given by the
Borrower  or by any  other  person  in  connection  with  the  Loan or with  the
Promissory  Note or the Warrant is in all respects  true and  accurate,  and the
Borrower or such other person has not omitted to state any material  fact or any
fact necessary to make such information not misleading.

         5.8. The Borrower has never done business under any name other than the
name of the Borrower set forth in this  Agreement  except as follows:  Ultralife
(UK).

         5.9.  Neither  the  consummation  of the Loan nor the use,  directly or
indirectly,  of all or any portion of the  proceeds of the Loan  hereunder  will
violate or result in a violation  of any  provision of any  applicable  statute,
regulation or order of, or any restriction imposed by any state having


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<PAGE>

jurisdiction  over Borrower or the United States of America or by any authorized
official, board, department, instrumentality, or agency thereof.

      6. EVENTS OF DEFAULT.  The  occurrence of any one or more of the following
events (the "Events of Default") shall constitute an event of default hereunder:

         6.1. If the Borrower  shall fail to make any payment on the  Promissory
Note, whether of principal or interest,  within ten (10) days after such payment
is due and payable.

         6.2.  If the  Borrower  shall fail to duly  perform,  comply  with,  or
observe any of the other  terms,  conditions,  or  covenants  contained  in this
Agreement, the Promissory Note, or the Warrant.

         6.3.  If  any   representation   and  warranty  or  any   statement  or
representation made in any report, opinion, schedule,  officer's certificate, or
other certificate or any other information given by the Borrower or furnished in
connection  with the Loan shall prove to be false or  incorrect  in any material
respect on the date as of which made.

         6.4. If an event of default (as  described  or defined  therein)  shall
occur or exist under the provisions of the Promissory Note or the Warrant.

         6.5. If any obligation of the Borrower (other than the Loan Amount) for
the payment of borrowed money becomes or is declared to be due and payable prior
to the expressed maturity thereof and the time of payment is not extended by the
lender.

         6.6. If any judgment  against the Borrower or any  attachment  or other
levy  against  the  property of the  Borrower  with  respect to a claim  remains
unpaid, unstayed on appeal, undischarged,  unbonded, or undismissed for a period
of thirty (30) days.

         6.7. If the Borrower  becomes  insolvent or generally  does not pay its
debts as they become due, or if a petition for relief in a  bankruptcy  court is
filed  by  the  Borrower,  or if the  Borrower  applies  for,  consents  to,  or
acquiesces  in the  appointment  of a trustee,  custodian,  or receiver  for the
Borrower or any of its assets and property,  or makes a general  assignment  for
the benefit of creditors;  or, in the absence of such application,  consent,  or
acquiescence, a trustee, custodian, or receiver is appointed for the Borrower or
for a  substantial  part of the assets and  property of the  Borrower and is not
discharged   within  (30)  days;  or  any   bankruptcy,   reorganization,   debt
arrangement,  or other proceeding or case under any bankruptcy or insolvency law
or any dissolution or liquidation proceeding is instituted against the Borrower,
and if  instituted  against the Borrower is consented to or acquiesced in by the
Borrower or remains  undismissed  for sixty (60) days; or the Borrower takes any
action to authorize any of the actions described in this subsection.

      7. REMEDIES. The occurrence or non-occurrence of an Event of Default under
this  Agreement  shall in no way affect or condition  the right of the Lender to
demand payment at any time of any amount due under the  Promissory  Note that is
payable on demand  regardless  of  whether  or not such an Event of Default  has
occurred.  If any one or more Events of Default  shall  occur,  then in


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<PAGE>

each and every  such case,  the Lender at its option may at any time  thereafter
exercise and/or enforce any or all of the following rights and remedies:

         7.1.  Declare  without notice to the Borrower the amounts due under the
Promissory  Note to be  immediately  due and payable,  whereupon  the same shall
become due and  payable,  together  with  accrued and unpaid  interest  thereon,
without  presentment,  demand,  protest,  or notice,  all of which the  Borrower
hereby waives.

         7.2.  Exercise  any rights and  remedies  available to the Lender under
this Agreement, the Promissory Note, the Warrant and under applicable laws.

         7.3. The Borrower shall reimburse and pay to the Lender upon demand all
costs and expenses (the "Liquidation  Costs"),  including,  without  limitation,
reasonable attorneys' fees and expenses,  advanced, incurred by, or on behalf of
the Lender in collecting  and enforcing the  Promissory  Note,  this  Agreement,
and/or the Warrant.  All  Liquidation  Costs shall bear interest  payable by the
Borrower to the Lender upon demand from the date advanced or incurred until paid
in full at ten percent (10%) per annum.

         7.4.  Each right,  power,  and remedy of the Lender as provided  for in
this  Agreement  or in the  Promissory  Note  or  Warrant,  or now or  hereafter
existing at law or in equity or by statute or otherwise  shall be cumulative and
concurrent  and shall be in  addition  to every other  right,  power,  or remedy
provided for in this  Agreement or in the  Promissory  Note or Warrant or now or
hereafter  existing  at law or in equity or by  statute  or  otherwise,  and the
exercise or  beginning  of the exercise by the Lender of any one or more of such
rights,  powers,  or  remedies  shall not  preclude  the  simultaneous  or later
exercise by the Lender of any or all such other rights, powers, or remedies.

         7.5.  No  failure  or delay by the  Lender  to insist  upon the  strict
performance of any term, condition,  covenant, or agreement of this Agreement or
of the Promissory  Note or Warrant,  or to exercise any right,  power, or remedy
consequent  upon a breach thereof,  shall  constitute a waiver of any such term,
condition,  covenant, or agreement or of any such breach, or preclude the Lender
from exercising any such right,  power, or remedy at any later time or times. By
accepting payment after the due date of any amount payable under this Agreement,
the Promissory Note, or the Warrant, the Lender shall not be deemed to waive the
right either to require  prompt  payment when due of all other  amounts  payable
under this Agreement or under the Promissory  Note, or the Warrant or to declare
an Event of Default for failure to effect such prompt  payment of any such other
amount.

      8. MISCELLANEOUS.

         8.1.  ASSURANCES.  Each of the parties to this Agreement  shall execute
all such  certificates  and  other  documents  and  shall  do all  such  filing,
recording,  publishing  and  other  acts as is  appropriate  to  effectuate  the
provisions of this Agreement.

         8.2.  SPECIFIC  PERFORMANCE.  The parties  recognize  that  irreparable
injury will result from a breach of any provision of this  Agreement,  and money
damages will be inadequate to fully remedy the injury. Accordingly, in the event


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<PAGE>

of a  breach  or  threatened  breach  of one or more of the  provisions  of this
Agreement, any party who may be injured (in addition to any other remedies which
may be available to that party) shall be entitled to one or more  preliminary or
permanent  orders (i) restraining and enjoining any act which would constitute a
breach or (ii)  compelling  the  performance  of any  obligation  which,  if not
performed, would constitute a breach.

         8.3. COMPLETE AGREEMENT. This Agreement and the various instruments and
agreements  attached as exhibits constitute the complete and exclusive statement
of the agreement  among the parties.  They  supersede all prior written and oral
statements,   including  any  prior  representation,   statement,  condition  or
warranty.  This Agreement and the various instruments and agreements attached as
exhibits, including, without limitation, the Promissory Note, may not be amended
without  the written  consent of all of the  parties and the written  consent of
Congress.

         8.4.  APPLICABLE  LAW.  All  questions   concerning  the  construction,
validity  and  interpretation  of  this  Agreement  and the  performance  of the
obligations imposed by this Agreement shall be governed by the internal law, not
the law of conflicts, of the State of Delaware.

         8.5.  SECTION  TITLES.  The headings herein are inserted as a matter of
convenience  only,  and do not  define,  limit  or  describe  the  scope of this
Agreement or the intent of the provisions hereof.

         8.6. BINDING PROVISIONS.  This Agreement is binding upon, and inures to
the  benefit  of, the  parties  hereto and their  respective  heirs,  executors,
administrators,  personal and legal  representatives,  successors  and permitted
assigns.

         8.7.  JURISDICTION  AND VENUE. Any suit involving any dispute or matter
arising under this  Agreement may only be brought in the United States  District
Court  for  the  District  of  Delaware  or  any  Delaware  State  Court  having
jurisdiction  over the  subject  matter of the  dispute  or  matter.  All of the
parties  hereto hereby consent to the exercise of personal  jurisdiction  by any
such court with respect to any such proceeding.

         8.8.  JURY  TRIAL.  Neither  party  shall  elect a trial by jury in any
action, suit, proceeding, or counterclaim arising out of or in any way connected
with this Agreement.

         8.9.  TERMS.  Common nouns and pronouns shall be deemed to refer to the
masculine,  feminine, neuter, singular and plural, as the identity of the person
may in the context require.

         8.10.  SEPARABILITY  OF  PROVISIONS.  Each  provision of this Agreement
shall  be  considered  separable;  and if,  for any  reason,  any  provision  or
provisions  herein are  determined to be invalid and contrary to any existing or
future law,  such  invalidity  shall not impair the operation of or affect those
portions of this Agreement which are valid.

         8.11. COUNTERPARTS; FACSIMILE AND ELECTRONIC SIGNATURES. This Agreement
may be executed  simultaneously  in two or more counterparts each of which shall
be deemed an original, and all of which, when taken together, constitute one and
the same document. The signature of any party to any counterpart shall be deemed
a


                                                                     Page 7 of 8

<PAGE>

signature  to, and may be  appended  to, any other  counterpart.  Facsimile  and
electronic signatures shall be deemed to be original signatures.

         8.12. NO STRICT CONSTRUCTION. The language used in this Agreement shall
be deemed to be the  language  chosen by the  parties  hereto to  express  their
mutual  intent,  and this Agreement  shall be interpreted  without regard to any
presumption  or other  rule  requiring  interpretation  of this  agreement  more
strongly against the party causing this Agreement to be drafted.

         8.13.  ATTORNEYS'  FEES.  In the event  that any party is  required  to
institute  legal  action  to remedy  any  breach  or  threatened  breach of this
Agreement,  the  prevailing  party shall be  entitled,  in addition to all other
remedies,  to an award of reasonable  attorneys' fees and expenses of litigation
incurred in such action, including any fees and expenses incurred in enforcing a
judgment.  As used in this Section,  the term "prevailing party" means the party
in the legal  action  which has  achieved  the  greatest  material  benefit with
respect to the various matters at issue taken as a whole.

         8.14. EXPLANATORY STATEMENT. The Explanatory Statement set forth at the
beginning of this Agreement is incorporated into this Agreement as a substantive
provision.

      IN WITNESS  WHEREOF,  Lender and Borrower have  executed  this  Agreement,
under seal, the day and year first above written.

ATTEST/WITNESS:

                                             Ultralife Batteries, Inc.

/s/ John Kavazanjian                         By /s/ Robert W. Fishback    (SEAL)
--------------------                         -----------------------------------
                                             Robert W. Fishback,
                                             Vice President of Finance
                                             and Chief Financial Officer

                                             Hitschler, Kimelman Holdings, LLC

______________________________               By /s/ W. Anthony Hitschler  (SEAL)
                                             -----------------------------------
                                             W. Anthony Hitschler, Member


                                                                     Page 8 of 8