Exhibit 10.36
AMENDMENT TO EMPLOYMENT AGREEMENT
     THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this “Amendment”) is entered into
as of December 31, 2008 by and between John D. Kavanjian, an individual (the
“Executive”) and Ultralife Corporation, a Delaware corporation (the “Company”).
     WHEREAS, the Company and the Executive entered into the Employment
Agreement, effective as of January 1, 2007 (the “Agreement”); and
     WHEREAS, Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”), and the Treasury Regulations and other official guidance issued
thereunder (collectively, “Section 409A”), require that the Company’s
compensation and benefit arrangements be in documentary compliance with
Section 409A on or before December 31, 2008, and this requires amendments to the
Agreement as set forth more fully below.
     NOW, THEREFORE, the Company and the Executive hereby agree that the
Agreement is amended as follows:
1. In Section 3, the initial salary amount is amended to read “$350,000” and
“2007” is replaced with “2008”.
2. The following is appended to the end of Section 4:
Bonuses shall be paid in accordance with the guidelines set forth under the
bonus program but in all events a bonus shall be paid between January 1 and
December 31 of the year following the year in which the bonus is earned.
3. Section 6(b) is amended to read as follows:
Involuntary Termination. If at any time during the term of this Agreement, other
than following a Change in Control to which Section 6(c) applies, the Company
terminates the employment of Executive without Business Reasons or a
Constructive Termination occurs, then Executive shall be entitled to receive the
following: (i) salary and the cash value of any accrued vacation (consistent
with the Company’s vacation policies then in effect) through the Termination
Date plus continued salary for a period of twenty-four (24) months following the
Termination Date, payable in accordance with the Company’s regular payroll
schedule as in effect from time to time, (ii) an amount equal to the average of
the bonuses paid to Executive during the two preceding fiscal years or, if no
bonuses were paid during such period, an amount equal to Executive’s then
current annual target bonus, to be paid between January 1 and December 31 of the
year following the year in which the termination occurs, (iii) acceleration of
vesting of all outstanding stock options, and other equity arrangements subject
to vesting and held by Executive subject

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to the provision, however, that the acceleration shall not cover more than two
(2) years from the Termination Date (and in this regard, all such options and
other exercisable rights held by Executive shall remain exercisable for one year
following the Termination Date, or through the original expiration date of the
stock options or other exercisable rights, if earlier), (iv) to the extent COBRA
shall be applicable to the Company, continuation of health benefits for
Executive, Executive’s spouse and any dependent children, at Executive’s cost,
for a period of 18 months after the Termination Date or such longer period as
may be applicable under the Company’s policies then in effect, provided the
Executive makes the appropriate election and payments, and (v) no other
compensation, severance or other benefits, except only that this provision shall
not limit any benefits otherwise available to Executive under Section 6(c) in
the case of a termination following a Change in Control.
4. Section 6(c)(i) is amended to read as follows:
Benefits. If at any time during the term of this Agreement a “Change in Control”
occurs (as defined below), and the Company terminates the employment of
Executive without Business Reasons or a Constructive Termination occurs within
eighteen (18) months of the date of the Change in Control, then Executive shall
be entitled to receive the following: (i) salary and the cash value of any
accrued vacation (consistent with the Company’s vacation policies then in
effect) through the Termination Date plus an amount equal to twenty-four
(24) months of Executive’s salary as then in effect, payable immediately upon
the Termination Date, (ii) an amount equal to the greater of the average of the
bonuses paid to Executive during the two preceding fiscal years or Executive’s
then current annual target bonus, to be paid between January 1 and December 31
of the year following the year in which the termination occurs,
(iii) acceleration in full of vesting of all outstanding stock options, and
other equity arrangements subject to vesting and held by Executive (and in this
regard, all such options and other exercisable rights held by Executive shall
remain exercisable for one year following the Termination Date, or through the
original expiration date of the stock options or other exercisable rights, if
earlier), (iv) to the extent COBRA shall be applicable to the Company,
continuation of health benefits for Executive, Executive’s spouse and any
dependent children, at Executive’s cost, for a period of eighteen (18) months
after the Termination Date or such longer period as may be applicable under the
Company’s policies then in effect, provided Executive makes the appropriate
election and payments, and (v) no other compensation, severance or other
benefits. Payment of benefits shall be accelerated upon a Change in Control only
if such Change in Control constitutes a “change in control” within the meaning
of Section 409A of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations and official guidance issued thereunder (collectively
“Section

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409A”). If acceleration is not permissible, payment will be made at the time
provided under Section 6(b).
5. Section 6(d) is amended to read as follows:
Termination for Disability. If at any time during the term of this Agreement,
other than following a Change in Control to which Section 6(c) applies,
Executive shall become unable to perform his duties as an employee as a result
of incapacity, which gives rise to termination of employment for Disability,
then Executive shall be entitled to receive the following: (i) salary and the
cash value of any accrued vacation (consistent with the Company’s vacation
policies then in effect) through the Termination Date plus continued salary for
a period of twenty-four (24) months following the Termination Date, payable in
accordance with the Company’s regular payroll schedule as in effect from time to
time, (ii) an amount equal to the annual target bonus for the fiscal year in
which the Termination Date occurs (plus any unpaid bonus from the prior fiscal
year), to be paid between January 1 and December 31 of the year following the
year in which the termination occurs, (iii) acceleration in full of vesting of
all outstanding stock options held by Executive subject to the provision,
however, that the acceleration shall not cover more than two (2) years from the
Termination Date (and in this regard, all such options and other exercisable
rights held by Executive shall remain exercisable for one year following the
Termination Date, or through the original expiration date of the stock options
or other exercisable rights, if earlier), (iv) to the extent COBRA shall be
applicable to the Company, continuation of health benefits for Executive,
Executive’s spouse and any dependent children, at Executive’s cost, for a period
of 18 months after the Termination Date, or such longer period as may be
applicable under the Company’s policies then in effect, provided Executive makes
the appropriate election and payments, and (v) no other compensation, severance
or other benefits, except only that this provision shall not limit any benefits
otherwise available to Executive under Section 6(c) in the case of a termination
following a Change in Control. Notwithstanding the foregoing, however, the
Company may deduct from the salary specified in clause (i) hereof the amount of
any payments then received by Executive under any disability benefit program
maintained by the Company to the extent permissible under Section 409A.
6. Section 6(e) is amended to read as follows:
Voluntary Termination or Involuntary Termination for Business Reasons. If
(A) Executive voluntarily terminates his employment (other than in the case of a
Constructive Termination), or (B) Executive is terminated involuntarily for
Business Reasons, then in any such event Executive or his representatives shall
be entitled to receive the following: (i) salary and the cash value of any
accrued vacation (consistent with the Company’s

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vacation policies then in effect) through the Termination Date only, (ii) the
right to exercise, for thirty (30) days following the Termination Date, or
through the original expiration date of the stock options, if earlier, all stock
options held by Executive, but only to the extent vested as of the Termination
Date, (iii) to the extent COBRA shall be applicable to the Company, continuation
of health benefits for Executive, Executive’s spouse and any dependent children,
at Executive’s cost, for a period of eighteen (18) months after the Termination
Date, or such longer period as may be applicable under the Company’s policies
then in effect, provided Executive makes the appropriate election and payments,
and (iv) no other compensation, severance, or other benefits.
7. Section 6(f) is amended to read as follows:
Termination Upon Death. If Executive’s employment is terminated because of
death, then Executive’s representatives shall be entitled to receive the
following: (i) salary and the cash value of any accrued vacation (consistent
with the Company’s vacation policies then in effect) through the Termination
Date, (ii) an amount equal to the annual target bonus for the fiscal year in
which the Termination Date occurs (plus any unpaid bonus from the prior fiscal
year), to be paid between January 1 and December 31 of the year following the
year in which the termination occurs, (iii) except in the case of any such
termination following a Change in Control to which Section 6(c) applies,
acceleration in full of vesting of all outstanding stock options, and other
equity arrangements subject to vesting and held by Executive subject to the
provision, however, that the acceleration shall not cover more than two
(2) years from the Termination Date (and in this regard, all such options and
other exercisable rights held by Executive shall remain exercisable for one year
following the Termination Date, or through the original expiration date of the
stock options or other exercisable rights, if earlier), (iv) to the extent COBRA
shall be applicable to the Company, continuation of health benefits for
Executive’s spouse and any dependent children, at their cost, for a period of
eighteen (18) months after the Termination Date, or such longer period as may be
applicable under the Company’s policies then in effect provided Executive’s
estate makes the appropriate election and payments, (v) any benefits payable to
Executive or his representatives upon death under insurance or other programs
maintained by the Company for the benefit of the Executive, and (vi) no further
benefits or other compensation, except only that this provision shall not limit
any benefits otherwise available to Executive under Section 6(c) in the case of
a termination following a Change in Control.
8. A new Section 6(h) is added to read as follows:
Termination. The word “termination” and any variant thereof with respect to the
Executive’s employment shall mean a “separation from service”

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within the meaning provided by Section 409A. Payments provided for under this
Section 6 are contingent upon a termination satisfying this definition.
9. A new Section 9(l) is added to read as follows:
Six Month Waiting Period. Notwithstanding anything to the contrary, to the
extent that any payments under this Agreement are subject to a six-month waiting
period under Section 409A, any such payments that would be payable before the
expiration of six months following the Executive’s separation from service but
for the operation of this sentence shall be made during the seventh month
following the Executive’s separation from service.
10. A new Section 9(m) is added to read as follows:
Reimbursement of Expenses. Reimbursements under this Agreement shall only be
made for expenses incurred during the term of this Agreement. Any reimbursements
made under this Agreement shall be made by the end of the year following the
year in which the expense was incurred, and the amount of the reimbursable
expenses or in-kind benefits provided in one year shall not increase or decrease
the amount of reimbursable expenses or in-kind benefits provided in a subsequent
year. In order to receive reimbursements under this Agreement, the Executive
shall provide any required supporting documentation by a date reasonably
specified by the Company in accordance with the deadlines set forth in this
section.
11. A new Section 9(n) is added to read as follows:
Section 409A of the Code. It is intended that the payments and benefits provided
for by this Agreement comply with the requirements of Section 409A, and this
Agreement shall be administered and interpreted in a manner consistent with such
intention.
[signature page follows]

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     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, as of the day and year first
above written.

            Ultralife Corporation
      By:   /s/ Daniel W. Christman         Daniel W. Christman        Chair of
Compensation and Management Committee        John D. Kavazanjian
      /s/ John D. Kavazanjian       John D. Kavazanjian           

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