Document:

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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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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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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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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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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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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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

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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 8Exhibit 10.28

THIS WARRANT AND THE SHARES OF COMPANY STOCK  ISSUABLE UPON THE EXERCISE  HEREOF
HAVE NOT BEEN REGISTERED  UNDER EITHER THE SECURITIES ACT OF 1933 (THE "ACT") OR
APPLICABLE  STATE  SECURITIES  LAWS (THE  "STATE  ACTS")  AND SHALL NOT BE SOLD,
PLEDGED,  HYPOTHECATED,  DONATED OR  OTHERWISE  TRANSFERRED  (WHETHER OR NOT FOR
CONSIDERATION)  BY THE  HOLDER  EXCEPT  UPON THE  ISSUANCE  TO THE  COMPANY OF A
FAVORABLE  OPINION OF COUNSEL AND/OR  SUBMISSION TO THE COMPANY OF SUCH EVIDENCE
AS MAY BE  SATISFACTORY  TO COUNSEL TO THE  COMPANY,  IN EACH SUCH CASE,  TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE ACT AND THE STATE
ACTS.

                    WARRANT TO PURCHASE TWENTY FIVE THOUSAND
                             SHARES OF COMMON STOCK
                                       Of
                            ULTRALIFE BATTERIES, INC.
                            (a Delaware Corporation)
                          Void after 5:00 O'Clock P.M.,
                     Eastern Standard Time, on June 4, 2006

      Ultralife  Batteries,  Inc., a Delaware corporation (the "Company") hereby
certifies that Hitschler,  Kimelman Holdings, LLC, its registered successors and
permitted  assigns  registered on the books of the Company  maintained  for such
purposes as the registered holder hereof (the "Holder"),  for value received, is
entitled to purchase from the Company  twenty-five  thousand (25,000) fully paid
and non-assessable shares of Common Stock of the Company, par value of ten cents
($.10)  per  share  (the  "Shares")  stated  above at the  purchase  price  (the
"Exercise  Price") of four  dollars  ($4.00) per share (the number of Shares and
Exercise  Price being subject to adjustment as  hereinafter  provided)  upon the
terms and conditions herein provided.

      1. EXERCISE OF WARRANTS.

         1.1.  Subject to Section 1.2., upon  presentation and surrender of this
Warrant  Certificate,  with the attached  Purchase  Form duly  executed,  at the
principal  office of the Company at Newark,  New York, or at such other place as
the Company may designate by notice to the Holder hereof,  together with a check
payable to the order of the  Company in the amount of the  Exercise  Price times
the number of Shares being  purchased,  the Company  shall deliver to the Holder
hereof, as promptly as practicable,  certificates  representing the Shares being
purchased.  This Warrant may be  exercised in whole or in part;  and, in case of
exercise hereof in part only, the Company,  upon surrender hereof,  will deliver
to the Holder a new Warrant Certificate or Warrant Certificates of like

                                                                     Page 1 of 4

<PAGE>

tenor  entitling  the Holder to  purchase  the number of Shares as to which this
Warrant has not been exercised.

         1.2.  This  Warrant may be exercised in whole or in part at any time on
and after June 4, 2003;  provided,  however,  that if Holder has  exercised  the
rights to convert the principal  amount of the  Promissory  Note issued to it on
even date  herewith into shares of the  Company's  common stock  pursuant to the
conversion provisions of the Promissory Note, this warrant shall immediately and
with no further  action on the part of the Holder or the Company become void and
of no further force or effect in the same proportion  that the principal  amount
of the Promissory Note that is converted to the Company's common stock.

      2. RIGHTS AND OBLIGATIONS OF WARRANT HOLDER.

         2.1.  The  Holder of this  Warrant  Certificate  shall  not,  by virtue
hereof, be entitled to any rights of a stockholder in the Company, either at law
or in equity; provided,  however, in the event that any certificate representing
the Shares as issued to the Holder hereof upon  exercise of this  Warrant,  such
Holder shall, for all purposes, be deemed to have become the holder of record of
such Shares on the date on which this Warrant Certificate,  together with a duly
executed  Purchase Form, was  surrendered  and payment of the Exercise Price was
made, irrespective of the date of delivery of such Share certificate. The rights
of the Holder of this  Warrant  are  limited to those  expressed  herein and the
Holder of this Warrant,  by its acceptance hereof,  consents to and agrees to be
bound by and to comply  with all the  provisions  of this  Warrant  Certificate,
including,  without  limitation,  all the  obligations  imposed  upon the Holder
hereof by  Sections 2 and 4 hereof.  In  addition,  the  Holder of this  Warrant
Certificate,  by accepting the same,  agrees that the Company may deem and treat
the person in whose name this Warrant  Certificate is registered on the books of
the Company  maintained for such purpose as the absolute,  true and lawful owner
for all purposes whatsoever,  notwithstanding any notation of ownership or other
writing  thereon,  and the  Company  shall not be  affected by any notice to the
contrary.

         2.2. No Holder of this Warrant Certificate,  as such, shall be entitled
to vote or  receive  dividends  or to be deemed  the  holder  of Shares  for any
purpose,  nor shall anything contained in this Warrant  Certificate be construed
to confer  upon any  Holder of this  Warrant  Certificate,  as such,  any of the
rights of a  shareholder  of the Company or any right to vote,  give or withhold
consent to any action by the Company, receive dividends, subscription rights, or
otherwise,  until  this  Warrant  shall  have  been  exercised  and  the  Shares
purchasable upon the exercise thereof shall have become  deliverable as provided
herein;  provided,  however,  that any such  exercise on any date when the stock
transfer  books of the Company  shall be closed shall  constitute  the person or
persons in whose name or names the certificate or certificates  for those Shares
are to be issued as the record holder or holders thereof for all purposes at the
opening of  business  on the next  succeeding  day on which such stock  transfer
books are open, and the Warrant surrendered shall not be deemed to have been

                                                                     Page 2 of 4

<PAGE>

exercised, in whole or in part as the case may be, until the next succeeding day
on  which  stock  transfer  books  are  open  for  the  purpose  of  determining
entitlement to dividends on the Company's common stock.

      3. SHARES UNDERLYING  WARRANTS.  The Company covenants and agrees that all
Shares  delivered  upon the exercise of this Warrant  shall,  upon  delivery and
payment  therefor,  be duly and validly  authorized  and issued,  fully-paid and
non-assessable, and free from all stamp-taxes, liens and charges with respect to
the purchase  thereof.  In addition,  the Company agrees at all times to reserve
and keep  available  an  authorized  number of Shares  sufficient  to permit the
exercise in full of this Warrant.

      4.  DISPOSITION  OF  WARRANTS  OR  SHARES.  The  holder  of  this  Warrant
Certificate  and any  transferee  hereof  or of the  Shares  issuable  upon  the
exercise of the Warrant  Certificate,  by their  acceptance  hereof,  hereby (i)
represent and warrant that this Warrant Certificate and the shares issuable upon
exercise thereof are being acquired for investment for the account of the holder
and with no intent to sell,  transfer or subdivide  such Warrant  Certificate or
Shares, and (ii) except as herein specifically provided and permitted understand
and agree that the Warrant,  and the Shares  issuable upon the exercise  hereof,
have not been registered  under either the Securities Act of 1933 (the "Act") or
applicable  State  Securities  Laws (the  "State  Acts")  and shall not be sold,
pledged,  hypothecated,  donated or  otherwise  transferred  (whether or not for
consideration) except upon the issuance to the Company of a favorable opinion of
counsel and/or submission to the Company of such evidence as may be satisfactory
to  counsel to the  Company,  in each such  case,  to the  effect  that any such
transfer  shall not be in violation of the Act and the State Acts. It shall be a
condition to the transfer of this Warrant that any transferee thereof deliver to
the Company its written agreement to accept and be bound by all of the terms and
conditions of this Warrant Certificate.

      5.  ADJUSTMENTS.  The  aggregate  number and shares of common stock of the
Company subject to this Warrant and the Exercise Price shall be  proportionately
adjusted for any increase,  decrease,  or change in the total outstanding shares
of the Company's common stock resulting from a stock dividend, recapitalization,
merger, consolidation,  split-up,  combination,  exchange of shares, issuance of
additional shares, or similar  transaction.  An adjustment made pursuant to this
Section 5.1.  shall be made  whenever any of such events shall occur,  but shall
become effective retroactively after such record date or such effective date, as
the case may be, as to Warrants  exercised between such record date or effective
date and the date of happening of any such event.  Whenever the number of Shares
purchasable hereunder is adjusted as herein provided, the Company shall cause to
be mailed to the Holder in  accordance  with the  provisions of this Section 5 a
notice (i) stating that the number of Shares  purchasable  upon exercise of this
Warrant have been  adjusted,  (ii) setting  forth the adjusted  number of Shares
purchasable  upon the exercise of this Warrant and (iii)  showing in  reasonable
detail the  computations  and the facts,  including the amount of  consideration
received  or  deemed to have been  received  by the  Company,  upon  which  such
adjustments are based.

                                                                     Page 3 of 4

<PAGE>

      6. PIGGY-BACK  REGISTRATION  RIGHTS.  The Company shall bear all costs and
expenses  of  registration  of the  Shares  with  the  Securities  and  Exchange
Commission or any State  Securities  Commission in the event that the Company at
any time proposes to register any of its  securities  for its own account or for
the account of any other person (other than pursuant to a  registration  on Form
S-4  or  Form  S-8).  The  Holder  agrees  to  provide  the  Company  with  such
information,  understandings,  and indemnifications a the Company may reasonably
request in connection with any such registration.  The Holder agrees that, if it
is able to sell publicly the Shares pursuant to Rule 144, it will not be able to
avail itself of the registration rights hereunder.

      7. LOSS OR  DESTRUCTION.  Upon  receipt of  evidence  satisfactory  to the
Company  of  the  loss,  theft,   destruction  or  mutilation  of  this  Warrant
Certificate  and,  in the case of any such  loss,  theft  or  destruction,  upon
delivery of an indemnity  agreement or bond satisfactory in form,  substance and
amount to the Company or, in the case of any such mutilation, upon surrender and
cancellation  of this  Warrant  Certificate,  the  Company at its  expense  will
execute and deliver, in lieu thereof, a new Warrant Certificate of like tenor.

      8. SURVIVAL.  The various  rights and  obligations of the Holder hereof as
set forth herein shall survive the exercise of the Warrants  represented  hereby
and the surrender of this Warrant Certificate.

      9. NOTICES.  Whenever any notice,  payment of any purchase price, or other
communication  is  required  to be given or  delivered  under  the terms of this
Warrant,  it shall be in writing and delivered by hand delivery or United States
registered or certified mail,  return receipt  requested,  postage prepaid,  and
will be deemed to have been given or delivered on the date such notice, purchase
price or other communication is so delivered or posted, as the case may be; and,
if to the Company,  it will be  addressed to the address  specified in Section 1
hereof,  and if to the Holder,  it will be addressed to the registered Holder at
its address as it appears on the books of the Company.

                                             Ultralife Batteries, Inc.

/s/ John Kavazanjian                         By /s/ Robert W. Fishback    (SEAL)
--------------------                         -----------------------------------
                                             Robert W. Fishback,
                                             Vice President of Finance and
                                             Chief Financial Officer
                                             March 4, 2003

                                             Agreed and Acknowledged

                                             Hitschler, Kimelman Holdings, LLC

                                             By /s/ W. Anthony Hitschler
                                             -----------------------------------
                                             W. Anthony Hitschler, Member

                                                                     Page 4 of 4

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