Document:

Exhibit 10.36

Exhibit 10.36

PLEDGE AND SECURITY AGREEMENT

THIS PLEDGE AND SECURITY AGREEMENT (this “Pledge Agreement”) is made as of the 17th
day of February, 2010, by and between ULTRALIFE CORPORATION, a Delaware corporation (referred to
herein as “Pledgor”), in favor of RBS BUSINESS CAPITAL, a division of RBS ASSET FINANCE, INC.
(“Lender”) under the Credit Agreement referred to below.

W I T N E S S E T H :

WHEREAS, Pledgor, certain of Pledgor’s subsidiaries (the “Co-Borrowers”) and Lender are
parties to that certain Credit Agreement, dated as of even date herewith (as the same may be
amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”),
pursuant to which, among other things, Lender will make available to Pledgor and the Co-Borrowers
revolving credit loans in an aggregate amount of up to Thirty Five Million Dollars ($35,000,000)
(the “Revolving Loans”); and

WHERAS, the Secured Party and Pledgor have entered into a Security Agreement as the date
hereof (as the same may be amended, restated, supplemented or otherwise modified from time to time,
the “Security Agreement”).

WHEREAS, Pledgor owns the percentages of the issued and outstanding shares of capital stock
described on Exhibit A attached hereto (“Shares”) of its subsidiaries listed thereon (each,
a “Subsidiary” and collectively, the “Subsidiaries”); and

WHEREAS, as a condition to Lender’s entry into the Credit Agreement and to the making of the
Revolving Loans and the other extensions of credit thereunder, Lender has required that Pledgor
enter into this Pledge Agreement, pursuant to which, among other things, Pledgor shall grant a
security interest in all of its right, title and interest in and to the Shares, and related
collateral more fully described herein as security for its obligations under the Credit Agreement
and each of the agreements, documents and instruments executed and delivered in connection with the
Credit Agreement; and

WHEREAS, Pledgor desires to obtain the Revolving Loans, and/or the other extensions of credit
under the Credit Agreement, and has determined that it is and will be in its best interest and to
the direct advantage of Pledgor to agree to make and execute this Pledge Agreement in favor of
Lender to induce Lender to enter into the Credit Agreement and to extend to Pledgor the credit
contemplated by the Credit Agreement;

NOW, THEREFORE, for good and valuable consideration, the receipt, adequacy and sufficiency of
which are hereby acknowledged, Pledgor hereby agrees, for the benefit of Lender, as follows:

1. Definitions. When used herein, the following terms shall have the following respective
meanings:

“Code” means the Internal Revenue Code of 1986, and the rules and regulations
thereunder, each as amended, or supplemented from time to time.

 

 

 

“Collateral” shall have the meaning given such term in Section 2 hereof.

“Event of Default” means the occurrence of any one or more of the following events:

(a) the occurrence of any Event of Default under, and as such term is defined in, the Credit
Agreement; or

(b) any of the Collateral shall be attached or levied upon or seized in any legal proceedings,
or held by virtue of any lien or distress, or any other event or condition shall occur or exist
which shall result in Lender no longer having a perfected, first priority security interest in the
Collateral, subject only to Permitted Liens; or

(c) this Pledge Agreement ceases to be in full force and effect or Pledgor renounces or
disputes any of its obligations hereunder.

“Foreign Subsidiary” means any Subsidiary that is a foreign corporation within the
meaning of Section 7701 of the Code. As of the date of this Agreement, each of the Subsidiaries is
a Foreign Subsidiary.

“Permitted Liens” means the Liens on the Collateral expressly permitted under Section
7.01 of the Credit Agreement.

“Pledged Stock” shall have the meaning given such term in Section 2(a) hereof.

“Secured Obligations” means (a) any and all principal, interest, fees and other sums
due or to become due in connection with the Revolving Loans and other extensions of credit made
pursuant to the Credit Agreement; and (b) any and all other indebtedness, liabilities and
obligations of the Pledgor and the Co-Borrowers to Lender of every kind and description, whether
direct, indirect or contingent, now or hereafter existing, due or to become due, whether arising
under this Pledge Agreement, the Credit Agreement or any other Loan Document.

“Stock” means all shares, options, interests, participations or other equivalents
(howsoever designated) of or in any Person, whether certificated or uncertificated, and whether
voting or non-voting, including, without limitation, common stock, warrants, preferred stock,
convertible debentures and all agreements, instruments and documents convertible, in whole or in
part, into any one or more or all of the foregoing.

Except to the extent otherwise defined herein, all other capitalized terms contained in this
Pledge Agreement shall have the meanings ascribed to such terms in the Credit Agreement.

 

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2. Pledge. Pledgor hereby pledges, conveys, hypothecates, mortgages, assigns, sets over,
delivers and grants to Lender, as security for the payment and performance when due of all the
Secured Obligations, a security interest in, all of Pledgor’s right, title and
interest in and to the following, whether now owned or hereafter acquired (collectively, the
“Collateral”):

(a) not more than sixty-six percent (66%) of the Shares of the voting Stock of each Subsidiary
and each other Foreign Subsidiary, from time to time acquired by Pledgor in any manner from and
after the date hereof, whether or not represented by certificates (collectively, the “Pledged
Stock”), including, without limitation, all stock rights, rights to subscribe, stock splits, stock
dividends, new securities and certificates, subscriptions, additions and replacements declared or
issued with respect to or on account of any Pledged Stock,

(b) all cash, dividends, distributions, payments, additional securities, interests, investment
property, general intangibles, accounts and other property at any time and from time to time
arising or receivable or otherwise distributed in respect of or in exchange for any and all such
Pledged Stock, whether now owned or existing or hereafter acquired or arising; and

(c) all products and proceeds of any of the foregoing.

3. Representations and Warranties of Pledgors. Except as may otherwise be represented or
warranted in the Credit Agreement, Pledgor represents and warrants to Lender as follows:

(a) Corporate Existence and Qualification. Pledgor is a corporation duly organized,
validly existing and in good standing under the laws of its state of organization and is duly
qualified as a foreign limited liability company in good standing in each other state wherein the
conduct of its business or the ownership of its property requires such qualification.

(b) Authority; Valid and Binding Effect. Pledgor has the power and authority,
corporate or otherwise, to execute, deliver and perform its obligations under this Pledge Agreement
and the other Loan Documents to which it is a party, and has taken all necessary and appropriate
action, corporate or otherwise, to authorize the execution, delivery and performance of this Pledge
Agreement and such other Loan Documents to which it is a party. This Pledge Agreement and the other
Loan Documents to which Pledgor is a party constitute the valid and legally binding obligations of
Pledgor, enforceable against Pledgor and each in accordance with their respective terms except to
the extent enforceability may be limited by applicable bankruptcy, insolvency, moratorium,
reorganization and other similar laws applicable to creditors generally.

(c) No Conflict. The execution, delivery and performance by Pledgor of this Pledge
Agreement (a) is not in contravention of any provisions of Applicable Law; (b) will not violate or
result in a default under any agreement or indenture to which Pledgor is a party or by which
Pledgor or any of its assets or properties are bound; (c) does not contravene Pledgor’s Certificate
of Incorporation, By-Laws, or other applicable organizational documents; and (d) will not result in
or require the creation or imposition of any Lien on any of the property or assets of Pledgor other
than Liens in favor of Lender created by this Pledge Agreement.

 

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(d) Governmental Action. The execution, delivery and performance of this Pledge
Agreement does not require any registration with, consent or approval of, or any notice to, or
other action to, with or by any Governmental Authority, except for (a) filings, consents or notices
which have been obtained and a copy thereof furnished to Lender; and (b) filings necessary to
perfect the Liens granted by this Pledge Agreement.

(e) Security Interest. This Pledge Agreement and the pledge of the Collateral
pursuant hereto create a valid and, together with and upon the physical delivery of certificates
evidencing the Shares to Lender, perfected first priority security interest in the Collateral in
favor of Lender, securing the payment of the Secured Obligations, and all filings and all other
actions necessary or desirable to perfect such security interest have been taken.

(f) Title. Pledgor is the legal and equitable owner of, and has the complete and
unconditional authority to pledge, its Collateral and holds the same free and clear of any and all
liens, claims, charges, encumbrances and security interests of any nature whatsoever, except for
the security interest created by this Pledge Agreement; no effective financing statement or other
instrument similar in effect covering all or any part of the Collateral is on file in any recording
office, except such as may have been filed in favor of Lender, relating to this Pledge Agreement;
Pledgor has not granted or given any proxy, power of attorney, option or right of first refusal
with respect to any of the Collateral except to Lender; and Pledgor is not a party to any agreement
which restricts its right to vote, assign, pledge, transfer or give a proxy or power of attorney
with respect to any of the Collateral or any interest therein.

(g) Pledged Shares. The Pledged Shares constitute not more than sixty-six percent
(66%) of the issued and outstanding shares of Stock of each of the Subsidiaries of Pledgor, all of
which Shares have been duly authorized, are validly issued in full compliance with all applicable
securities laws and other Applicable Law, and are fully paid and nonassessable; and there are no
existing options, warrants or commitments of any kind or nature or any outstanding securities or
other instruments convertible into shares of any class of voting stock of such Subsidiaries, and no
stock of such Subsidiaries is held in treasury of such Subsidiaries.

(h) No Violation of Securities Laws. Pledgor’s execution and delivery of this Pledge
Agreement does not directly or indirectly violate or result in a violation of any securities laws.

(i) Uncertificated Shares. Except as described on Exhibit A hereto, all
shares of Stock included in the Collateral are evidenced by stock certificates and constitute
“certificated securities” as such term is defined in Article 8 of the Uniform Commercial Code.
There are no certificates or other instruments or documents evidencing or representing any of the
shares of Stock shown on Exhibit A hereto as being uncertificated (the “Uncertificated
Stock”), and Pledgor will cause any and all instruments, documents, or certificates hereafter
issued evidencing or representing such Uncertificated Stock or other Collateral hereafter issued or
arising which is not evidenced by any documents or instruments (each in transferable form, duly
endorsed if required or accompanied by executed undated instruments of transfer in blank
satisfactory to Lender) to be forthwith delivered to

 

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and deposited with Lender in pledge hereunder
(and held apart separately in trust for the benefit of Lender, pending such delivery). The Uncertificated
Stock has not been represented by any certificates since the issuance thereof and at all times
subsequent thereto and including the date of this Pledge Agreement. The Uncertificated Stock is not
credited to a “securities account” within the meaning of the Uniform Commercial Code. After giving
effect to this Pledge Agreement and the other Loan Documents, no Person other than Lender has
“control” within the meaning of Article 8 of the Uniform Commercial Code in respect of the
Uncertificated Stock. Pledgor has not elected and will not cause or elect to have the
Uncertificated Stock governed by Article 8 of the Uniform Commercial Code. Pledgor shall not permit
or suffer (i) the Uncertificated Stock to be represented by any certificates or otherwise become
“certificated securities” or to be credited to a “securities account” within the meaning of the
Uniform Commercial Code or (ii) any Person other than Lender to have “control” within the meaning
of Article 8 of the Uniform Commercial Code in respect of the Uncertificated Stock.

(j) Principal Place of Business, Etc. The current and former corporate and fictitious
names utilized by the Pledgor, the chief executive office of the Pledgor, the office where the
Pledgor keeps its records concerning the Collateral and each place of business of the Pledgor are
all set forth in the Disclosure Schedule to the Security Agreement.

4. Covenants and Agreements of Pledgors. Unless specifically provided for otherwise in the
Credit Agreement or in a prior written consent or waiver from the Lender, Pledgor covenants and
agrees as follows:

(a) Delivery of Certificates. Concurrently with the execution of this Pledge
Agreement, Pledgor will deliver to Lender all certificates evidencing the Collateral, accompanied
by executed stock powers in blank, and such other instruments or documents as Lender or their
counsel may reasonably request.

(b) After Acquired Collateral Delivery. Promptly, and in any event within ten (10)
days after Pledgor acquires any additional Stock or receives or is issued any Stock or other
securities or property in respect of any of the Collateral, whether or not for value paid for it,
Pledgor shall (1) deliver such Stock or other securities or property (including, but not limited
to, any and all certificates evidencing any such Stock or securities) to Lender together with stock
powers or other necessary instruments of transfer, executed in blank, all to be held subject to the
terms of this Pledge Agreement; and (2) execute and deliver such pledge agreements, security
agreements, financing statements or other instruments, documents or agreements as may be necessary
to confirm, evidence or perfect the security interests granted hereby.

(c) No New Stock. Except as permitted by the Credit Agreement, Pledgor will not,
subsequent to the date of this Pledge Agreement, cause or permit any of its Subsidiaries to issue
any Stock or securities convertible into Stock.

(d) No New Pledges; Voting Rights. Pledgor shall not grant, give or pledge or permit
to exist any other liens, claims, charges, encumbrances and security interests of any nature
whatsoever with respect to any of the Shares, except for the security interest created by this
Pledge Agreement. Pledgor shall not grant or give any proxy, power of attorney, option or right of
first refusal with respect to any of the Shares except to Lender. Pledgor shall not be a
party to any agreement which restricts its right to vote, assign, pledge, transfer or give a proxy
or power of attorney with respect to any of the Shares or any interest therein.

 

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(e) Taxes. Pledgor will pay all taxes, assessments and charges levied, assessed or
imposed upon the Collateral owned by it prior to the date on which penalties attach thereto, except
where the same may be contested in good faith by appropriate proceedings and for which adequate
reserves have been established.

(f) No Transfer. Other than as permitted under Section 7.08 of the Credit Agreement,
Pledgor will not sell, assign, transfer or otherwise dispose of all or any portion of the
Collateral owned by Pledgor, or any rights therein.

(g) Further Assurances. Pledgor agrees at any time and from time to time, at
Pledgor’s expense, to execute and deliver all further instruments and documents and to perform all
acts and do all things that may be reasonably necessary or desirable or that Lender may request,
now or hereafter, to evidence, preserve or protect the creation, attachment or perfection of the
security interests herein granted to Lender, or to enable Lender, to exercise and enforce its
rights and remedies hereunder with respect to the Collateral including, without limitation, all
action specified in Section 6 hereof.

(h) No Amendments. Pledgor will not approve or consent to any changes to the
Certificate of Formation, Operating Agreement or other organizational document of any Subsidiary
which would in any way impair or diminish the rights of Lender hereunder.

(i) Right to Perform. In the event that Pledgor fails or refuses to perform any of
its respective obligations set forth herein, Lender, shall have the right, without obligation, to
do all things it deems necessary to discharge the same, and any sums paid by Lender, or the cost
thereof, including without limitation, attorneys’ fees, shall constitute Secured Obligations, be
secured by the Collateral and bear interest as provided in the Credit Agreement until paid.

(j) No Obligation. Pledgor acknowledges and agrees that nothing contained herein
shall obligate Lender, or impose a duty upon Lender to assume any duties or obligations of Pledgor
with respect to any of the Collateral.

5. Distributions; Etc.

(a) Right of Pledgor to Receive Distributions. So long as no Event of Default has
occurred and is continuing hereunder or under the Credit Agreement, or would exist upon the payment
of the distribution amounts described in this Section 5(a), Pledgor shall have the right to receive
cash distributions declared and paid with respect to the Collateral owned by Pledgor, to the extent
such distributions are permitted by the Credit Agreement. Any and all stock or liquidating
distributions, other distributions in property, return of capital or other distributions made on or
in respect of Collateral, whether resulting from a subdivision, combination or reclassification of
the outstanding capital stock of any Subsidiary or received in exchange for Collateral or any part
thereof or as a result of any merger, consolidation, acquisition or other exchange of assets to
which any Subsidiary may be a party or otherwise, shall be and become
part of the Collateral pledged hereunder and, if received by Pledgor, shall be received in trust,
for the benefit of Lender, shall be segregated from other funds of Pledgor and shall be forthwith
paid over to Lender, as Collateral in the same form as so received (together with any necessary
endorsements).

 

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(b) Holding Collateral; Exchanges. Lender may hold any of the Collateral, endorsed or
assigned in blank, and may deliver any of the Collateral to Pledgor for the purpose of making
denominational exchanges or registrations or transfers or for such other reasonable purpose in
furtherance of this Pledge Agreement as Lender may deem desirable. Lender shall have the right, at
any time in its discretion and without notice to Pledgor to transfer to or register in the name of
Lender, or any of its nominees, any or all of the Collateral; provided that notwithstanding the
foregoing, until any transfer of beneficial ownership with respect to the Collateral pursuant to
any exercise of remedies under Section 6 hereof, Pledgor shall continue to be the beneficial owner
of the Collateral.

(c) Termination of Pledgor’s Right to Receive Distributions. Upon and after the
occurrence of any Event of Default and during the continuation thereof, all rights of Pledgor to
receive any cash distributions pursuant to Section 5(a) hereof shall cease, and all such rights
shall thereupon become vested in Lender, and Lender shall have the sole and exclusive right to
receive and retain the distributions which Pledgor would otherwise be authorized to receive and
retain pursuant to Section 5(a) hereof. In such event, Pledgor shall pay over to Lender any
distributions received by it with respect to the Collateral and any and all money and other
property paid over to or received by Lender pursuant to the provisions of this Section 5(c) shall
be retained by Lender as Collateral hereunder and/or shall be applied to the repayment of the
Secured Obligations in accordance with the provisions hereof.

6. Remedies. Upon and after the occurrence and during the continuance of an Event of Default,
Lender shall have the following rights and remedies:

(a) Set-Off. The right of Lender to set-off, without notice to Pledgor, any and all
deposits at any time credited by or due from Lender to Pledgor whether in a general or special,
time or demand, final or provisional account or any other account or represented by a certificate
of deposit and whether or not matured or contingent, against the Secured Obligations.

(b) Secured Creditor. All of the rights and remedies of a secured party under the
Uniform Commercial Code of the state where such rights and remedies are asserted, or under other
applicable law all of which rights and remedies shall be cumulative, and none of which shall be
exclusive, to the extent permitted by law, in addition to any other rights and remedies contained
in this Pledge Agreement.

 

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(c) Right of Sale. Lender may, without demand and without advertisement, notice or
legal process of any kind (except as may be required by law), all of which Pledgor waives, at any
time or times (1) apply any cash distributions received by Lender pursuant to Section 5(c) hereof
to the Secured Obligations; and (2) if following such application there remains outstanding any
Secured Obligations, sell the remaining Collateral, or any part thereof, at public or private sale
or at any broker’s board or on any securities exchange, for cash, upon
credit or for future delivery as Lender shall deem appropriate. At any such sale, the Collateral,
or any portion thereof, to be sold may be sold in one lot as an entirety or in separate parcels, as
Lender may (in its sole and absolute discretion) determine. Lender shall not be obligated to make
any sale of the Collateral if it shall determine not to do so, regardless of the fact that notice
of the sale of the Collateral may have been given. In case the sale of all or part of the
Collateral is made on credit or for future delivery, the Collateral so sold may be retained by
Lender until the sale price is paid by the purchaser or purchasers thereof, but Lender shall not
incur any liability in case any such purchaser or purchasers shall fail to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may be sold again. At any sale
or sales made pursuant to this Section 6(c), Lender may bid for and purchase, free from any claim
or right of whatever kind, including any equity of redemption, of Pledgor any such demand, notice,
claim, right or equity being hereby expressly waived and released, any or all of the Collateral
offered for sale, and may make any payment on the account thereof by using any claim for moneys
then due and payable to Lender by Pledgor as a credit against the purchase price; and Lender, upon
compliance with the terms of sale, may hold, retain and dispose of the Collateral without further
accountability therefor to Pledgor or any third party. Lender shall be authorized at any sale (if,
on the advice of counsel, it deems it advisable to do so) to restrict the prospective bidders or
purchasers to Persons who will represent and agree that they are purchasing the Collateral for
their own account for investment and not with a view to the distribution or resale thereof, and
upon consummation of any sale Lender shall have the right to assign, transfer and deliver to the
purchaser or purchasers thereof the Collateral so sold. Each purchaser at any sale shall hold the
property sold absolutely free from any claim or right on the part of Pledgor, and Pledgor hereby
waives (to the extent permitted by law) all rights of redemption, stay and/or appraisal which
Pledgor now has or may have at any time in the future under any rule of law or statute now existing
or hereafter enacted. The proceeds realized from the sale of any Collateral shall be applied first
to the reasonable costs, expenses and attorneys’ fees incurred by Lender for collection and for
acquisition, completion, protection, removal, sale and delivery of the Collateral; second, to
interest due upon any of the Secured Obligations; and third, to the principal of the Secured
Obligations. If any deficiency shall arise, Pledgor shall remain liable to Lender therefor in
accordance with the terms of the Credit Agreement. If any surplus shall remain, Lender shall pay
such surplus to the Pledgor.

(d) Notice. Any notice required to be given by Lender of a sale, or other disposition
of the Collateral or any other intended action by such Lender, given to Pledgor in the manner
specified in Section 9(i) at least ten (10) days prior to the date of such intended action, shall
constitute commercially reasonable and fair notice thereof to Pledgor.

(e) Securities Laws. Pledgor understands that compliance with the Securities laws may
very strictly limit the course of Lender’s conduct if Lender attempts to dispose of all or any part
of the Collateral and may also limit the extent to which or the manner in which any subsequent
transferee of any Collateral may dispose of the same. Pledgor agrees that even if Lender shall
accept the first offer received or does not approach more than one possible purchaser such sale
shall still be deemed commercially reasonable. Without limiting the generality of the foregoing,
Pledgor clearly understands and agrees that Lender shall be entitled to place all or any part of
the Collateral for private placement by an investment banking firm, that any such investment
banking firm may purchase all or any part of the Collateral for its own
account, and that Lender shall be entitled to place all or any part of the Collateral privately
with a purchaser or purchasers.

 

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7. Power of Attorney; Proxy.

(a) Appointment of Lender as Pledgor’s Attorney-In-Fact. Pledgor irrevocably
designates, makes, constitutes and appoints Lender, (and all Persons designated by Lender), as its
true and lawful attorney (and agent-in-fact) and Lender, or Lender’s agent, may, without notice to
Pledgor, in the name of Pledgor, or in the name of Lender: (i) after the occurrence of an Event of
Default at such time or times thereafter (so long as such default shall be continuing) as Lender or
said agent, in its reasonable discretion may determine, endorse the name of Pledgor, upon any
checks, notes, acceptance, money orders, certificates, drafts or other forms of payment of security
that come into Lender’s possession; and (ii) after the occurrence of an Event of Default, (1)
transfer the Collateral on the books of Pledgor with full power of substitution in the premises,
and (2) do all acts and things necessary, in Lender’s reasonable discretion, to fulfill the
obligations of Pledgor under this Pledge Agreement. This power of attorney shall not be deemed to
revoke any other power of attorney granted by Pledgor nor shall any subsequent power granted by
Pledgor revoke this power unless there is a specific reference to this power and such revocation is
permitted under this Pledge Agreement.

(b) Irrevocable Proxy. Following the occurrence of any Event of Default, upon the
delivery of notice from Lender to Pledgor affirmatively assuming voting rights with respect to the
Stock included in the Collateral, Lender, or its nominee, without further notice or demand of any
kind to Pledgor shall have the sole and exclusive right to exercise all voting powers pertaining to
any and all of the Collateral (and to give written consents in lieu of voting thereon) and may
exercise such power in such manner as Lender, in its sole discretion, shall determine. THIS PROXY
IS COUPLED WITH AN INTEREST AND IS IRREVOCABLE. The exercise by Lender of any of its rights and
remedies under this Section shall not be deemed a disposition of Collateral under Article 9 of the
Uniform Commercial Code nor an acceptance by Lender of any of the Collateral in satisfaction of any
of the Secured Obligations.

8. Release and Termination. Pledgor acknowledges and agrees that this Pledge Agreement shall
continue in full force and effect unless and until all Secured Obligations have been fully and
irrevocably paid and performed and all financing arrangements between Pledgor and Lender have been
terminated. After this Pledge Agreement has terminated, Lender, at Pledgor’s expense, shall return
all Collateral then in its possession and control to Pledgor and take such further action as
Pledgor may reasonably request to evidence such termination.

9. Miscellaneous.

(a) Modification of Agreement; Sale of Interest. This Pledge Agreement may not be
modified, altered or amended, except by an agreement in writing signed by Pledgor, and Lender.
Pledgor may not sell, assign or transfer this Pledge Agreement or any portion thereof, including,
without limitation, Pledgor’s rights, title, interests, remedies, powers, and/or duties hereunder.
Pledgor hereby consents to Lender’s assignment and transfer of this Pledge Agreement including,
without limitation, Lender’s rights, title, interests, remedies, powers,
and/or duties hereunder upon the appointment of any successor to Lender. Pledgor also hereby
consents to the assignment or transfer, at any time or times hereafter, of the beneficial interests
granted under this Pledge Agreement or of any portion thereof, upon the participation, sale,
assignment, transfer, or other disposition by Lender in accordance with the Credit Agreement.

 

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(b) Expenses. Pledgor will upon demand pay to Lender the amount of all reasonable
expenses, including, without limitation, the reasonable fees and expenses of its counsel, that
Lender may actually incur in connection with (1) the administration of this Pledge Agreement, (2)
the custody, preservation or sale of or the collection from, or other realization upon, any of the
Collateral, (3) the exercise, enforcement of any rights of Lender hereunder, and/or (4) the failure
by Pledgor to perform or observe any of the provisions hereof.

(c) Loan Document. This Pledge Agreement shall be construed as a Loan Document and
shall be subject to all of the benefits, terms and conditions of the Credit Agreement with respect
thereto.

(d) Waiver by Lender. Each and every right and remedy granted to Lender under this
Pledge Agreement, or any other document delivered hereunder or in connection herewith or allowed it
by law or in equity, shall be cumulative and may be exercised from time to time. The failure of
Lender, at any time or times hereafter, to require strict performance of any provision of this
Pledge Agreement by Pledgor shall not waive, affect or diminish any right of Lender thereafter to
demand strict compliance and performance therewith. Any suspension or waiver by Lender of an Event
of Default by Pledgor under this Pledge Agreement shall not suspend, waive or affect any other
Event of Default by Pledgor under this Pledge Agreement, whether the same is prior or subsequent
thereto and whether of the same or of a different type. None of the undertakings, agreements,
warranties, covenants and representations of Pledgor contained in this Pledge Agreement and no
Event of Default hereunder shall be deemed to have been suspended or waived by Lender, unless such
suspension or waiver is by an instrument in writing signed by a duly authorized representative of
Lender and directed to Pledgor specifying such suspension or waiver.

(e) Severability. Wherever possible, each provision of this Pledge Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Pledge Agreement shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity without invalidating the
remainder of such provision or the remaining provisions of this Pledge Agreement.

(f) Parties. This Pledge Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of Pledgor and Lender. This provision, however, shall not be
deemed to modify Section 9(a) hereof.

(g) Conflict of Terms. If any provision contained in this Pledge Agreement is in
conflict with, or inconsistent with, any provision in the Credit Agreement, the provision contained
in the Credit Agreement shall govern and control.

 

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(h) Waivers by Pledgor. Except as otherwise provided for in this Pledge Agreement,
Pledgor hereby waives (1) presentment, demand and protest and notice of presentment, protest,
default, non-payment, maturity, release, compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Pledgor may in any way be liable and hereby ratifies and
confirms whatever Lender may do in this regard; (2) any bond or security which might be required by
any court prior to allowing Lender to exercise any of Lender’s remedies; and (3) the benefit of all
valuation, appraisement and exemption laws.

(i) Notices. All notices, requests, demands and other communications under this
Pledge Agreement shall be in writing and shall be deemed to have been given or made when delivered
in the manner set forth in Section 10.05 of the Credit Agreement.

(j) Survival. All representations, warranties and covenants made herein shall survive
the execution and delivery of all of this Pledge Agreement and the other Loan Documents. The terms
and provisions of this Pledge Agreement shall continue in full force and effect until all of the
Secured Obligations have been paid in full and Lender has terminated the Credit Agreement in
writing, whichever last occurs; provided, further that Pledgor’s obligations under Section 9(b)
shall survive the repayment of the Secured Obligations and the termination of this Pledge
Agreement.

(k) Time of the Essence. Time is of the essence in each provision of this Pledge
Agreement of which time is an element.

(l) Section Titles. The section titles contained in this Pledge Agreement are and
shall be without substantive meaning or content of any kind whatsoever and are not a part of the
agreement between the parties hereto.

(m) Reinstatement. This Pledge Agreement shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Secured
Obligations is rescinded or must otherwise be restored or returned by Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of Pledgor, or any of them, or upon or as a
result of the appointment of a receiver, intervenor or conservator of, or custodian, trustee or
similar officer for Pledgor, or any of them, or any part of their respective property, or
otherwise, all as though such payments had not been made.

(n) Counterparts. This Pledge Agreement may be executed in two (2) or more
counterparts, each of which when fully executed shall be an original and all of said counterparts
taken together, shall constitute one and the same agreement. Any signature page to this Pledge
Agreement may be witnessed by a telecopy or facsimile of any original signature page and any
signature page of any counterpart hereof may be appended to any other counterpart hereof to form a
completely executed counterpart hereof.

 

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(o) Master Pledge and Security Agreement. This Pledge Agreement is a master agreement
and it is the intent of the parties hereto that the identity of Pledgor hereunder may change from
time to time if new Subsidiaries of Pledgor are required to join this Pledge
Agreement as additional Pledgors (the “Additional Pledgors”). Any such Subsidiary may join this
Pledge Agreement as an Additional Pledgor by executing and delivering to Lender, a joinder
agreement, in a form satisfactory to Lender (a “Joinder Agreement”), with a copy of this Pledge
Agreement attached thereto. Upon execution and delivery of a Joinder Agreement by an Additional
Pledgor, such Additional Pledgor shall thereafter be regarded as a “Pledgor” hereunder as if such
Additional Pledgor had been an original party to this Pledge Agreement and Lender shall have
received, by virtue of this Pledge Agreement and such Joinder Agreement, a valid Lien on and
security interest in any Collateral described in such Joinder Agreement and in all other collateral
relating thereto. Neither the addition of any Additional Pledgor to this Pledge Agreement nor the
release by Lender of any Pledgor party to this Pledge Agreement shall affect the obligations of any
other Pledgor under this Pledge Agreement or any other Loan Document and Pledgor waives any
defenses it may have arising out of the addition of any Additional Pledgor or the release of any
Pledgor or any Collateral hereunder.

(p) GOVERNING LAW; JURISDICTION. This Agreement will be deemed to be a contract under
the laws of the State of New York and for all purposes will be governed by and construed and
enforced in accordance with the laws of said State. The Pledgor consents to the exclusive
jurisdiction and venue of the federal and state courts located in Erie County, New York, in any
action on, relating to or mentioning this Agreement the other Loan Documents, or any one or more of
them.

(q) WAIVER OF JURY TRIAL. THE PLEDGOR AND THE LENDER EXPRESSLY, KNOWINGLY AND
VOLUNTARILY WAIVE ALL BENEFIT AND ADVANTAGE OF ANY RIGHT TO A TRIAL BY JURY, AND NEITHER WILL AT
ANY TIME INSIST UPON, OR PLEAD OR IN ANY MANNER WHATSOEVER CLAIM OR TAKE THE BENEFIT OR ADVANTAGE
OF A TRIAL BY JURY IN ANY ACTION ARISING IN CONNECTION WITH THIS PLEDGE AGREEMENT OR ANY OF THE
LOAN DOCUMENTS.

IN WITNESS WHEREOF, Pledgor has caused this Pledge Agreement to be executed by its duly
authorized officers as of the day and year first above written.

	 	 	 	 	 
	 	Pledgor

ULTRALIFE CORPORATION

 	 
	 	By:  	/s/ Philip A. Fain
 	 
	 	 	Philip A. Fain 	 
	 	 	Chief Financial Officer 	 
	 

 

- 12 -Exhibit 10.37

Exhibit 10.37

NEGATIVE PLEDGE — REAL PROPERTY

	 	 	 
	Date:

	 	February 17, 2010
	 
	 	 
	Borrower(s):

	 	Ultralife Corporation
	 
	 	 
	Lender:

	 	RBS Business Capital, a division of RBS Asset Finance, Inc.
	 
	 	 
	Credit Agreement:

	 	Dated as of February 17, 2010
	 
	 	 
	Credit Facility:

	 	$35,000,000 Revolving Credit

Ultralife Corporation, a Delaware corporation, (the “Borrower”) is now or hereafter may be
indebted to RBS Business Capital, a division of RBS Asset Finance, Inc. (the “Lender”) and has
agreed to enter into a certain Credit Agreement of even date herewith (as such agreement may be
further amended, modified or supplemented from time to time, the “Credit Agreement”). Unless
otherwise defined herein, terms shall have the meaning as defined in the Credit Agreement.
Further, if any provision contained herein is in conflict with, or inconsistent with, any provision
in the Credit Agreement, the provision contained in the Credit Agreement shall govern and control.

ACCORDINGLY, in consideration of the Revolving Credit Loans and other financial accommodations
made to Borrower and certain of its Subsidiaries (the “Co-Borrowers”) by Lender pursuant to the
Credit Agreement, and for other good and valuable consideration, receipt of which is hereby
acknowledged, and in order to secure (1) the payment of the principal of, and interest on the
Revolving Credit Note issued in connection with the Credit Agreement and (2) the performance and
observance by the Borrower and the Co-Borrowers of all of the covenants, agreements,
representations and warranties in the Credit Agreement and the Loan Documents, Borrower hereby
agrees and pledges that it shall not, without the prior written consent of the Lender, assign,
mortgage, hypothecate, pledge, grant a lien on and security interest in, all of the estate, right,
title and interest of the Borrower, to any third party, in, to and under any and all of the
following described property, whether now owned or held or hereafter acquired (the “Property”):

(A) All respective right, title and interest of the Borrower in and to the real estate (more
particularly described in Exhibit “A” attached hereto) (the “Land”) including, without
limitation, any and all agreements or contracts to use the Land or any portion thereof, and all
appurtenances and incidence thereto, including all rights and interest of the Borrower to any
streets, ways or alleys adjoining the Land;

(B) All right, title and interest of the Borrower in and to all buildings, structures,
improvements and appurtenances now standing, or at any time hereafter constructed or placed, upon
the Land or any part thereof, including all right, title and interest of the Borrower in and to all
building materials and fixtures of every kind and nature whatsoever on the Land or in any building
now or hereafter standing on the Land or any part thereof;

(C) All right, title and interest in and to all easements, royalties, mineral, oil and gas
rights and profits, water, water rights and water stock relating to the Land necessary for the
ownership, operation, use and maintenance of the Borrower’s business operations;

(D) All leases, contract rights, general intangibles and other agreements affecting the use,
operation or occupancy of all or any portion of the Land or the other real property described above
now or
hereafter entered into, and the right to receive and apply the rents, issues and profits of the
Land described above to the payment of the Revolving Credit Loans;

 

 

 

(E) All proceeds of and any unearned premiums on any insurance policies covering the Land or
the other real property described above, including, without limitation, the right to receive and
apply the proceeds of any insurance or judgments, or settlements made in lieu thereof, for damage
to any of the foregoing;

(F) The right, in the name and on behalf of the Borrower, to appear in and defend any action
or proceeding brought with respect to the Property or any part thereof and to commence any action
or proceeding to protect the interest of the Lender with respect thereto;

(G) All of the Borrower’s respective right, title and interest in and to all permits,
licenses, certificates, authorizations and approvals relating to the ownership, construction, use,
operation and maintenance of the Land and or Property;

(H) All other proceeds of the conversion, whether voluntary or involuntary, of the Land or any
other Property or rights encumbered or conveyed hereby into cash or liquidated claims, including,
without limitation, all title insurance, hazard insurance, condemnation and other awards; and

(I) All extensions, additions, substitutions and accessions with respect to any of the
foregoing.

The Borrower shall not enter into any agreement with any Person which prohibits the Borrower
from granting any liens to the Lender, in the Property, other than negative pledges granted in
connection with indebtedness secured by purchase money security interests and capitalized leases
permitted under the Credit Agreement, provided that any such negative pledge granted in accordance
with this clause be limited to the asset acquired and be an ordinary and customary requirement of
such purchase money financing.

	 	 	 	 	 
	 	BORROWER:

ULTRALIFE CORPORATION

 	 
	 	By:  	/s/ Philip A. Fain
 	 
	 	 	Philip A. Fain 	 
	 	 	Chief Financial Officer 	 
	 

	 	 	 
	STATE OF NEW YORK
	 	)
	 
	 	) ss:
	COUNTY OF MONROE
	 	)

On the 17th day of February in the year 2010 before me, the undersigned, a notary
public in and for said state, personally appeared PHILIP A. FAIN, personally known to me or proved
to me on the basis of satisfactory evidence to be the individual whose name is subscribed to the
within instrument and acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual or the person upon behalf of which the individual
acted, executed the instrument.

	 	 	 	 	 
	 	 	 
	 	                                                         /s/ Peter F. Comerford
 	 
	 	NOTARY PUBLIC 	 
	 	 	 
	 

 

- 2 -

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