Exhibit 10.4




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WAIVER
AND
AMENDMENT NUMBER ONE
TO
AMENDED AND RESTATED CREDIT AGREEMENT
 Amendment Borrower Agent
 Background Statement
 Credit
Agreement
 Statement of Consideration
  Agreement
 Defined Terms this Amendment hereunder
 Amendments
  Amendment No. 1
 Banking Services Obligations




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2
 Banking Services
 Report(s)
 Applicable Revolving Rate
 1 2
  (h)
    
    On a weekly basis, the Borrowers rolling
thirteen (13) week cash forecast, in form historically prepared
by Borrower.
  5.10
    
    Reports. The Borrower (a) acknowledges
and agrees that the Lenders require a more detailed review and
analysis of the Borrowers projections and assets and that the
Agent and Lenders shall conduct or shall engage third party
examiners or other professionals to conduct (i) an asset
valuation/appraisal of the Borrowers and the Subsidiaries
inventory, machinery and equipment, and (ii) a field audit
examination of the Borrowers and Subsidiaries books, records
and collateral and prepare a Report with respect thereto, (b)
shall cooperate with the Agent, Lenders and/or such
examiners/professionals in the preparation of such Reports and
shall provide to such parties, in a reasonably prompt manner,
all such documents, reports, agreements, financial and other
information and other items as may be reasonably requested with
respect to the Borrower and its business, and (c) shall pay
and/or reimburse the Agent and Lenders upon demand, all costs
and expenses incurred by the Agent, Lenders and/or their
respective Affiliates in connection with such appraisals, field
examinations and audits (including, without limitation,
examiners fees, travel expenses and duplication costs) and the
preparation of the Reports based on the fees charged by a third
party retained by the Agent or any Lender or the internally
allocated fees for each Person employed




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3 by the Agent or any Lender with respect to such asset
valuation/appraisal and/or field audit examination.
 5.11
    
    Guaranty of Subsidiaries Banking Services
Obligations. Borrower hereby unconditionally and
irrevocably guarantees, without any setoff or other deduction,
the payment when due whether by acceleration or lapse of time
or otherwise of all Banking Services Obligations of any
Subsidiary now or hereafter existing whether such obligations
are arising or accruing prior or subsequent to any commencement
of any case or other proceeding pursuant to any bankruptcy,
insolvency or similar statute and whether or not allowed as a
claim in any such case or other proceeding. Such guarantee is
continuing, absolute and unconditional and a guaranty of
payment rather than collection. Borrower shall pay to each
Lender on demand each cost and expense (including, but not
limited to, if such Lender retains counsel for advice,
litigation or any other purpose, reasonable attorneys fees and
disbursements) hereafter incurred by such Lender in endeavoring
to enforce any Banking Services Obligations of any Subsidiary
or preserve or exercise any right or remedy of any Lender
pursuant to this Agreement or arising as a result of this
Agreement. This Section 5.11 shall remain in full force and
effect and shall terminate only upon (a) the termination of all
agreement(s) of each Lender to extend Banking Services to any
Subsidiary and (b) the final indefeasible payment in full of
the obligations of Borrower under this Agreement and any other
agreement executed in connection herewith, including each cost
and expense that Borrower is obligated to pay pursuant to this
section of this Agreement. Borrower agrees not to exercise any
right of subrogation, indemnification, reimbursement or
contribution and each similar right against such Subsidiary
heretofore or hereafter arising in connection with this
Agreement or any other agreements in connection therewith
(including but not limited to pursuant to any agreement
providing any collateral) until the guaranteed obligation has
been satisfied.
  Indebtedness




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4      Investments, Loans, Advances, Guarantees and
Acquisitions




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5   Restricted Payments
  Waiver of Existing Covenant Violations
 Representations




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6 Conditions of Effectiveness
     Covenants
    Reference to and Effect on Loan Documents




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7 Waiver and Release
 Representation by Counsel
 Governing Law
 Headings
 Execution in Counterparts
 Entire Agreement
 Third Parties
 Invalidity




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8




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IN WITNESS WHEREOF
 ULTRALIFE CORPORATIONBy:
    /s/ John C. CasperName:
    John C. CasperTitle:
    Chief Financial OfficerADMINISTRATIVE AGENT:
    JPMORGAN CHASE BANK, N.A., as AgentBy:
    /s/ Thomas C. StrasenburghName:
    Thomas C. StrasenburghTitle:
    Vice PresidentLENDERS:
    JPMORGAN CHASE BANK, N.A.By:
    /s/ Thomas C. StrasenburghName:
    Thomas C. StrasenburghTitle:
    Vice PresidentMANUFACTURERS AND TRADERS
TRUST COMPANYBy:
    /s/ Jon FogleName:
    Jon FogleTitle:
    Vice President