EX-2.1.2 Asset Purchase Agreement

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                                                                   Exhibit 2.1.2

                            ULTRALIFE BATTERIES, INC.
                             2000 TECHNOLOGY PARKWAY
                             NEWARK, NEW YORK 14513

                                   July 5, 2006

McDowell Research, Ltd.
Thomas Hauke, Earl Martin, Sr., James Evans, Frank Alexander
300 South Eighth Street
Waco, Texas 76701

Gentlemen:

          Based upon our recent conversations regarding the status of the Thales
contract novation and product claims being asserted by Thales, we have agreed to
the following:

     1.    The current account receivable from Thales to McDowell Research, Ltd.
          in the approximate amount of $500,000 shall be excluded from the
          accounts receivable on the Final Balance Sheet for purposes of the
          calculation pursuant to Section 2.6(c) of the Asset Purchase Agreement
          and McDowell Research, Ltd. shall be responsible for collecting that
          receivable and shall get the benefit of that receivable.

     2.    Warranty service relating to recent claims for the products shipped by
          McDowell