Exhibit 10.4

 

TRADEMARK SECURITY AGREEMENT

 

This TRADEMARK SECURITY AGREEMENT (this “Agreement”), dated as of June 26, 2002,
is made by and between ELGAR ELECTRONICS CORPORATION, a California corporation
(“Debtor”) in favor of ABLECO FINANCE LLC, a Delaware limited liability company
(“Ableco”), as the collateral agent for the below-defined Lender Group (in such
capacity, together with its successors, if any, such capacity, “Collateral
Agent”).

 

RECITALS

 

A.            Debtor is a party to that certain Financing Agreement (the
“Financing Agreement”), of even date herewith, with Elgar Holdings, Inc., a
Delaware corporation, the Lenders, Ableco, as administrative agent for the
Lender Group (in such capacity, together with its successors, if any, in such
capacity, “Administrative Agent”), and Collateral Agent, pursuant to which the
Lender Group has agreed to make certain financial accommodations to Debtor.

 

C.            Debtor has executed and delivered to Collateral Agent that certain
Security Agreement, of even date herewith (the “Security Agreement”), pursuant
to which Debtor has granted to Collateral Agent, for the benefit of the Lender
Group, security interests in (among other things) all or substantially all of
Debtor’s general intangibles.

 

D.            Pursuant to the Loan Documents, and as one of the conditions
precedent to the obligations of the Lenders under the Financing Agreement,
Debtor has agreed to execute and deliver this Agreement to Collateral Agent for
filing with the PTO (as defined below) and with any other relevant recording
systems in any domestic jurisdiction, and as further evidence of and to
effectuate Collateral Agent’s existing security interests in the trademarks and
other general intangibles described herein.

 

ASSIGNMENT

 

NOW, THEREFORE, for valuable consideration, the receipt and adequacy of which is
hereby acknowledged, Debtor hereby agrees in favor of Collateral Agent as
follows:

 

1.     DEFINITIONS; INTERPRETATION.

 

(A)   CERTAIN DEFINED TERMS.  AS USED IN THIS AGREEMENT, THE FOLLOWING TERMS
SHALL HAVE THE FOLLOWING MEANINGS:

 

“Ableco” shall have the meaning ascribed to such term in the preamble to this
Agreement.

 

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“Administrative Agent” shall have the meaning ascribed to such term in the
recitals to this Agreement.

 

“Collateral Agent” shall have the meaning ascribed to such term in the preamble
to this Agreement.

 

“Agreement” shall have the meaning ascribed to such term in the introductory
paragraph of this Agreement.

 

“Debtor” shall have the meaning ascribed to such term in the preamble to this
Agreement.

 

“Event of Default” means any Event of Default under the Financing Agreement.

 

“Financing Agreement” shall have the meaning ascribed to such term in the
recitals to this Agreement.

 

“Lender Group” means collectively the Lenders, Administrative Agent and
Collateral Agent.

 

“Lenders” means, individually and collectively, each of the lenders identified
on the signature pages of the Financing Agreement, and any other Person made a
party thereto in accordance with the provisions of Section 12.07 thereof
(together with their respective successors and assigns).

 

“Proceeds” means whatever is receivable or received from or upon the sale,
lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Trademark Collateral, including “proceeds” as
such term is defined in the UCC, and all proceeds of proceeds.  Proceeds shall
include (i) any and all accounts, chattel paper, instruments, general
intangibles, cash and other proceeds, payable to or for the account of Debtor,
from time to time in respect of any of the Trademark Collateral, (ii) any and
all proceeds of any insurance, indemnity, warranty or guaranty payable to or for
the account of Debtor from time to time with respect to any of the Trademark
Collateral, (iii) any and all claims and payments (in any form whatsoever) made
or due and payable to Debtor from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Trademark Collateral by any Person acting under color of
governmental authority, and (iv) any and all other amounts from time to time
paid or payable under or in connection with any of the Trademark Collateral or
for or on account of any damage or injury to or conversion of any Trademark
Collateral by any Person.

 

“PTO” means the United States Patent and Trademark Office and any successor
thereto.

 

“Secured Obligations” shall mean all liabilities, obligations, or undertakings
owing by Debtor of any kind or description arising out of or outstanding under,
advanced or

 

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issued pursuant to, or evidenced by the Financing Agreement, this Agreement, the
Security Agreement, or any of the other Loan Documents to which Debtor is a
party, irrespective of whether for the payment of money, whether direct or
indirect, absolute or contingent, due or to become due, voluntary or
involuntary, whether now existing or hereafter arising, and including all
interest (including interest that accrues after the filing of a case under the
Bankruptcy Code) and any and all costs, fees (including attorneys fees), and
expenses which Debtor is required to pay pursuant to any of the foregoing.

 

“Security Agreement” shall have the meaning ascribed to such term in the
recitals to this Agreement.

 

“Trademark Collateral” has the meaning set forth in Section 2.

 

“Trademarks” has the meaning set forth in Section 2.

 

“UCC” means the Uniform Commercial Code as in effect from time to time in the
State of New York.

 

“United States” and “U.S.” each mean the United States of America.

 

(B)   TERMS DEFINED IN UCC.  WHERE APPLICABLE AND EXCEPT AS OTHERWISE DEFINED
HEREIN, TERMS USED IN THIS AGREEMENT SHALL HAVE THE MEANINGS ASSIGNED TO THEM IN
THE UCC.

 

(C)   INTERPRETATION.  IN THIS AGREEMENT, EXCEPT TO THE EXTENT THE CONTEXT
OTHERWISE REQUIRES:

 

(I)            ANY REFERENCE TO A SECTION OR A SCHEDULE IS A REFERENCE TO A
SECTION HEREOF, OR A SCHEDULE HERETO, RESPECTIVELY, AND TO A SUBSECTION OR A
CLAUSE IS, UNLESS OTHERWISE STATED, A REFERENCE TO A SUBSECTION OR A CLAUSE OF
THE SECTION OR SUBSECTION IN WHICH THE REFERENCE APPEARS.

 

(II)           THE WORDS “HEREOF,” “HEREIN,” “HERETO,” “HEREUNDER” AND THE LIKE
MEAN AND REFER TO THIS AGREEMENT AS A WHOLE AND NOT MERELY TO THE SPECIFIC
SECTION, SUBSECTION, PARAGRAPH OR CLAUSE IN WHICH THE RESPECTIVE WORD APPEARS.

 

(III)          THE MEANING OF DEFINED TERMS SHALL BE EQUALLY APPLICABLE TO BOTH
THE SINGULAR AND PLURAL FORMS OF THE TERMS DEFINED.

 

(IV)          THE WORDS “INCLUDING,” “INCLUDES” AND “INCLUDE” SHALL BE DEEMED TO
BE FOLLOWED BY THE WORDS “WITHOUT LIMITATION.”

 

(V)           REFERENCES TO AGREEMENTS AND OTHER CONTRACTUAL INSTRUMENTS SHALL
BE DEEMED TO INCLUDE ALL SUBSEQUENT AMENDMENTS AND OTHER MODIFICATIONS THERETO.

 

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(VI)          REFERENCES TO STATUTES OR REGULATIONS ARE TO BE CONSTRUED AS
INCLUDING ALL STATUTORY AND REGULATORY PROVISIONS CONSOLIDATING, AMENDING OR
REPLACING THE STATUTE OR REGULATION REFERRED TO.

 

(VII)         ANY CAPTIONS AND HEADINGS ARE FOR CONVENIENCE OF REFERENCE ONLY
AND SHALL NOT AFFECT THE CONSTRUCTION OF THIS AGREEMENT.

 

(VIII)        CAPITALIZED WORDS NOT OTHERWISE DEFINED HEREIN SHALL HAVE THE
RESPECTIVE MEANINGS ASSIGNED TO THEM IN THE FINANCING AGREEMENT.

 

(IX)           IN THE EVENT OF A DIRECT CONFLICT BETWEEN THE TERMS AND
PROVISIONS OF THIS AGREEMENT AND THE FINANCING AGREEMENT, OR BETWEEN THE TERMS
AND PROVISIONS OF THIS AGREEMENT AND THE SECURITY AGREEMENT, IT IS THE INTENTION
OF THE PARTIES HERETO THAT SUCH DOCUMENTS SHALL BE READ TOGETHER AND CONSTRUED,
TO THE FULLEST EXTENT POSSIBLE, TO BE IN CONCERT WITH EACH OTHER.  IN THE EVENT
OF ANY ACTUAL, IRRECONCILABLE CONFLICT BETWEEN THIS AGREEMENT AND THE FINANCING
AGREEMENT THAT CANNOT BE RESOLVED AS AFORESAID, THE TERMS AND PROVISIONS OF THE
FINANCING AGREEMENT SHALL CONTROL AND GOVERN; PROVIDED, HOWEVER, THAT THE
INCLUSION HEREIN OF ADDITIONAL OBLIGATIONS ON THE PART OF DEBTOR AND
SUPPLEMENTAL RIGHTS AND REMEDIES IN FAVOR OF COLLATERAL AGENT FOR THE BENEFIT OF
THE LENDER GROUP (WHETHER UNDER FEDERAL LAW OR APPLICABLE NEW YORK LAW), IN EACH
CASE IN RESPECT OF THE TRADEMARK COLLATERAL, SHALL NOT BE DEEMED A CONFLICT IN
THE FINANCING AGREEMENT.  IN THE EVENT OF ANY ACTUAL, IRRECONCILABLE CONFLICT
BETWEEN THIS AGREEMENT AND THE SECURITY AGREEMENT THAT CANNOT BE RESOLVED AS
AFORESAID, THE TERMS AND PROVISIONS OF THIS AGREEMENT SHALL CONTROL AND GOVERN.

 

2.     SECURITY INTEREST.

 

(A)   ASSIGNMENT AND GRANT OF SECURITY IN RESPECT OF THE SECURED OBLIGATIONS. 
TO SECURE THE PROMPT PAYMENT AND PERFORMANCE OF THE SECURED OBLIGATIONS, DEBTOR
HEREBY GRANTS, ASSIGNS, TRANSFERS AND CONVEYS TO COLLATERAL AGENT, FOR THE
BENEFIT OF THE LENDER GROUP, A CONTINUING SECURITY INTEREST IN ALL OF DEBTOR’S
RIGHT, TITLE AND INTEREST IN AND TO THE FOLLOWING PROPERTY, WHETHER NOW EXISTING
OR HEREAFTER ACQUIRED OR ARISING AND WHETHER REGISTERED OR UNREGISTERED
(COLLECTIVELY, THE “TRADEMARK COLLATERAL”):

 

(I)            ALL STATE (INCLUDING COMMON LAW) AND FEDERAL TRADEMARKS, SERVICE
MARKS AND TRADE NAMES, CORPORATE NAMES, COMPANY NAMES, BUSINESS NAMES,
FICTITIOUS BUSINESS NAMES, TRADE STYLES, TRADE DRESS, LOGOS, OTHER SOURCE OR
BUSINESS IDENTIFIERS, DESIGNS AND GENERAL INTANGIBLES OF LIKE NATURE, NOW
EXISTING OR HEREAFTER ADOPTED OR ACQUIRED, TOGETHER WITH AND INCLUDING ALL
LICENSES THEREFOR HELD BY DEBTOR, AND ALL REGISTRATIONS AND RECORDINGS THEREOF,
AND ALL APPLICATIONS FILED OR TO BE FILED IN CONNECTION THEREWITH, INCLUDING
REGISTRATIONS AND APPLICATIONS IN THE PTO, ANY STATE OF THE UNITED STATES (BUT
EXCLUDING EACH APPLICATION TO REGISTER ANY TRADEMARK, SERVICE MARK, OR OTHER
MARK PRIOR TO THE FILING UNDER APPLICABLE LAW OF A VERIFIED STATEMENT OF USE (OR
THE EQUIVALENT) FOR SUCH TRADEMARK OR SERVICE MARK, IT BEING UNDERSTOOD THAT
THIS EXCLUSION IS IN NO WAY AN IMPLICATION THAT THE GRANTING OF THIS SECURITY
INTEREST IS A

 

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PRESENT ASSIGNMENT OF TRADEMARK RIGHTS) AND ALL EXTENSIONS OR RENEWALS THEREOF,
INCLUDING WITHOUT LIMITATION ANY OF THE FOREGOING IDENTIFIED ON SCHEDULE A
HERETO (AS THE SAME MAY BE AMENDED, MODIFIED OR SUPPLEMENTED FROM TIME TO TIME),
AND THE RIGHT (BUT NOT THE OBLIGATION) TO REGISTER CLAIMS UNDER ANY STATE OR
FEDERAL TRADEMARK LAW OR REGULATION AND TO APPLY FOR, RENEW AND EXTEND ANY OF
THE SAME, TO SUE OR BRING OPPOSITION OR CANCELLATION PROCEEDINGS IN DEBTOR’S
NAME OR IN THE NAME OF COLLATERAL AGENT OR IN THE NAME OF COLLATERAL AGENT FOR
THE BENEFIT OF THE LENDER GROUP FOR PAST, PRESENT OR FUTURE INFRINGEMENT OR
UNCONSENTED USE THEREOF, AND ALL RIGHTS ARISING THEREFROM THROUGHOUT THE WORLD
(COLLECTIVELY, THE “TRADEMARKS”);

 

(II)           ALL CLAIMS, CAUSES OF ACTION AND RIGHTS TO SUE FOR PAST, PRESENT
OR FUTURE INFRINGEMENT OR UNCONSENTED USE OF ANY TRADEMARKS AND ALL RIGHTS
ARISING THEREFROM AND PERTAINING THERETO;

 

(III)          ALL GENERAL INTANGIBLES RELATED TO OR ARISING OUT OF ANY OF THE
TRADEMARKS AND ALL THE GOODWILL OF DEBTOR’S BUSINESS SYMBOLIZED BY THE
TRADEMARKS OR ASSOCIATED THEREWITH; AND

 

(IV)          ALL PROCEEDS OF ANY AND ALL OF THE FOREGOING.

 

(B)   CONTINUING SECURITY INTEREST.  DEBTOR HEREBY AGREES THAT THIS AGREEMENT
SHALL CREATE A CONTINUING SECURITY INTEREST IN THE TRADEMARK COLLATERAL WHICH
SHALL REMAIN IN EFFECT UNTIL TERMINATED IN ACCORDANCE WITH SECTION 18.

 

(C)   INCORPORATION INTO FINANCING AGREEMENT.  WITHOUT LIMITING THE FOREGOING,
THE TRADEMARK COLLATERAL DESCRIBED IN THIS AGREEMENT SHALL CONSTITUTE PART OF
THE COLLATERAL IN THE FINANCING AGREEMENT OR THE SECURITY AGREEMENT, AS
APPLICABLE.

 

(D)   LICENSES. ANYTHING IN THE FINANCING AGREEMENT OR THIS AGREEMENT TO THE
CONTRARY NOTWITHSTANDING, DEBTOR MAY ENGAGE IN PERMITTED DISPOSITIONS OF
TRADEMARK COLLATERAL.

 

3.     FURTHER ASSURANCES; APPOINTMENT OF COLLATERAL AGENT AS ATTORNEY-IN-FACT. 
DEBTOR AT ITS EXPENSE SHALL EXECUTE AND DELIVER, OR CAUSE TO BE EXECUTED AND
DELIVERED, TO COLLATERAL AGENT ANY AND ALL DOCUMENTS AND INSTRUMENTS, IN FORM
AND SUBSTANCE REASONABLY SATISFACTORY TO COLLATERAL AGENT, AND TAKE ANY AND ALL
ACTION, WHICH COLLATERAL AGENT, IN THE EXERCISE OF ITS REASONABLE DISCRETION,
MAY REQUEST FROM TIME TO TIME, TO PERFECT AND CONTINUE THE PERFECTION OR TO
MAINTAIN THE PRIORITY OF, OR PROVIDE NOTICE OF THE SECURITY INTEREST IN THE
TRADEMARK COLLATERAL HELD BY COLLATERAL AGENT FOR THE BENEFIT OF THE LENDER
GROUP AND TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT.  IF DEBTOR REFUSES TO
EXECUTE AND DELIVER, OR FAILS TIMELY TO EXECUTE AND DELIVER, ANY OF THE
DOCUMENTS IT IS REASONABLY REQUESTED TO EXECUTE AND DELIVER BY COLLATERAL AGENT
IN ACCORDANCE WITH THE FOREGOING, COLLATERAL AGENT SHALL HAVE THE RIGHT, IN THE
NAME OF DEBTOR, OR IN THE NAME OF COLLATERAL AGENT OR OTHERWISE, WITHOUT NOTICE
TO OR ASSENT BY DEBTOR, AND DEBTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS
COLLATERAL AGENT (AND ANY OF COLLATERAL AGENT’S OFFICERS OR EMPLOYEES OR AGENTS
DESIGNATED BY COLLATERAL AGENT) AS DEBTOR’S TRUE AND LAWFUL ATTORNEY-IN-FACT
WITH FULL POWER AND AUTHORITY,

 

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 (I) TO SIGN THE NAME OF DEBTOR ON ALL OR ANY OF SUCH DOCUMENTS OR INSTRUMENTS
AND PERFORM ALL OTHER ACTS THAT COLLATERAL AGENT IN THE EXERCISE OF ITS
REASONABLE DISCRETION DEEMS NECESSARY IN ORDER TO PERFECT OR CONTINUE THE
PERFECTION OF, MAINTAIN THE PRIORITY OR ENFORCEABILITY OF OR PROVIDE NOTICE OF
THE SECURITY INTEREST IN THE TRADEMARK COLLATERAL HELD BY COLLATERAL AGENT FOR
THE BENEFIT OF THE LENDER GROUP, AND (II) TO EXECUTE ANY AND ALL OTHER DOCUMENTS
AND INSTRUMENTS, AND TO PERFORM ANY AND ALL ACTS AND THINGS FOR AND ON BEHALF OF
DEBTOR, WHICH COLLATERAL AGENT, IN THE EXERCISE OF ITS REASONABLE DISCRETION,
MAY DEEM NECESSARY OR ADVISABLE TO MAINTAIN, PRESERVE AND PROTECT THE TRADEMARK
COLLATERAL AND TO ACCOMPLISH THE PURPOSES OF THIS AGREEMENT, INCLUDING (A) AFTER
THE OCCURRENCE AND DURING THE CONTINUANCE OF ANY EVENT OF DEFAULT, TO DEFEND,
SETTLE, ADJUST OR INSTITUTE ANY ACTION, SUIT OR PROCEEDING WITH RESPECT TO THE
TRADEMARK COLLATERAL, (B) AFTER THE OCCURRENCE AND DURING THE CONTINUATION OF
ANY EVENT OF DEFAULT, TO ASSERT OR RETAIN ANY RIGHTS UNDER ANY LICENSE AGREEMENT
FOR ANY OF THE TRADEMARK COLLATERAL, AND (C) AFTER THE OCCURRENCE AND DURING THE
CONTINUANCE OF ANY EVENT OF DEFAULT, TO EXECUTE ANY AND ALL APPLICATIONS,
DOCUMENTS, PAPERS AND INSTRUMENTS FOR COLLATERAL AGENT TO USE THE TRADEMARK
COLLATERAL, TO GRANT OR ISSUE ANY EXCLUSIVE OR NON-EXCLUSIVE LICENSE WITH
RESPECT TO ANY TRADEMARK COLLATERAL, AND TO ASSIGN, CONVEY OR OTHERWISE TRANSFER
TITLE IN OR DISPOSE OF THE TRADEMARK COLLATERAL.  THE POWER OF ATTORNEY SET
FORTH IN THIS SECTION 3, BEING COUPLED WITH AN INTEREST, IS IRREVOCABLE SO LONG
AS THIS AGREEMENT SHALL NOT HAVE TERMINATED IN ACCORDANCE WITH SECTION 18;
PROVIDED THAT THE FOREGOING POWER OF ATTORNEY SHALL TERMINATE WHEN ALL OF THE
SECURED OBLIGATIONS HAVE BEEN FULLY AND FINALLY REPAID AND PERFORMED AND THE
LENDER GROUP’S OBLIGATION TO EXTEND CREDIT UNDER THE FINANCING AGREEMENT IS
TERMINATED.  NOTHING HEREIN SHALL BE CONSTRUED TO IMPOSE AN OBLIGATION ON DEBTOR
TO USE ANY TRADEMARK OR ATTEMPT TO MAINTAIN ANY TRADEMARK APPLICATION OR
REGISTRATION IF SUCH TRADEMARK IS NOT BEING USED BY DEBTOR.

 

4.     REPRESENTATIONS AND WARRANTIES. DEBTOR REPRESENTS AND WARRANTS TO EACH
MEMBER OF THE LENDER GROUP, IN EACH CASE TO THE BEST OF ITS KNOWLEDGE,
INFORMATION, AND BELIEF, AS FOLLOWS:

 

(A)   NO OTHER TRADEMARKS.  SCHEDULE A SETS FORTH A TRUE AND CORRECT LIST, AS OF
THE DATE HEREOF, OF ALL OF DEBTOR’S EXISTING TRADEMARKS THAT ARE REGISTERED WITH
THE PTO OR ANY CORRESPONDING OR SIMILAR TRADEMARK OFFICE OF ANY OTHER U.S.
JURISDICTION, OR FOR WHICH ANY APPLICATION FOR REGISTRATION HAS BEEN FILED WITH
THE PTO OR ANY CORRESPONDING OR SIMILAR TRADEMARK OFFICE OF ANY OTHER U.S.
JURISDICTION, AND THAT ARE OWNED AND USED BY DEBTOR.

 

(B)   TRADEMARKS SUBSISTING.  EACH OF DEBTOR’S TRADEMARKS LISTED IN SCHEDULE A
IS SUBSISTING AND HAS NOT BEEN ADJUDGED INVALID OR UNENFORCEABLE, IN WHOLE OR IN
PART, AND, TO THE BEST OF DEBTOR’S KNOWLEDGE, EACH OF THE TRADEMARKS SET FORTH
ON SCHEDULE A IS VALID AND ENFORCEABLE.

 

(C)   OWNERSHIP OF TRADEMARK COLLATERAL; NO VIOLATION.  (I) DEBTOR HAS RIGHTS IN
AND GOOD AND DEFENSIBLE TITLE TO THE TRADEMARK COLLATERAL, (II) DEBTOR IS THE
SOLE AND EXCLUSIVE OWNER OF THE TRADEMARK COLLATERAL, FREE AND CLEAR OF ANY
LIENS AND RIGHTS OF OTHERS (OTHER THAN THE SECURITY INTEREST CREATED HEREUNDER
AND OTHER THAN PERMITTED LIENS), INCLUDING LICENSES, REGISTERED USER AGREEMENTS
AND COVENANTS BY DEBTOR NOT TO SUE THIRD PERSONS, AND

 

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(III) WITH RESPECT TO ANY TRADEMARKS FOR WHICH DEBTOR IS EITHER A LICENSOR OR A
LICENSEE PURSUANT TO A LICENSE OR LICENSING AGREEMENT REGARDING SUCH TRADEMARK,
EACH SUCH LICENSE OR LICENSING AGREEMENT IS IN FULL FORCE AND EFFECT, DEBTOR IS
NOT IN MATERIAL DEFAULT OF ANY OF ITS OBLIGATIONS THEREUNDER AND, (A) OTHER THAN
THE PARTIES TO SUCH LICENSES OR LICENSING AGREEMENTS, OR (B) IN THE CASE OF ANY
NON-EXCLUSIVE LICENSE OR LICENSE AGREEMENT ENTERED INTO BY DEBTOR OR ANY SUCH
LICENSOR REGARDING SUCH TRADEMARK, THE PARTIES TO ANY OTHER SUCH NON-EXCLUSIVE
LICENSES OR LICENSE AGREEMENTS ENTERED INTO BY DEBTOR OR ANY SUCH LICENSOR WITH
ANY OTHER PERSON, NO OTHER PERSON HAS ANY RIGHTS IN OR TO ANY OF THE TRADEMARK
COLLATERAL.  NOTHING IN THIS SECTION 4(C) SHALL BE CONSIDERED TO BE A
REPRESENTATION THAT DEBTOR IS THE EXCLUSIVE USER OF ANY TRADEMARK, IT BEING
GENERALLY UNDERSTOOD THAT THE SAME TRADEMARK MAY BE VALIDLY USED BY INDEPENDENT
PARTIES IF NO LIKELIHOOD OF CONFUSION WOULD RESULT.  TO THE BEST OF DEBTOR’S
KNOWLEDGE, THE PAST, PRESENT AND CONTEMPLATED FUTURE USE OF THE TRADEMARK
COLLATERAL BY DEBTOR HAS NOT, DOES NOT AND WILL NOT MATERIALLY INFRINGE UPON OR
MATERIALLY VIOLATE ANY RIGHT, PRIVILEGE OR LICENSE AGREEMENT OF OR WITH ANY
OTHER PERSON OR GIVE ANY SUCH PERSON THE RIGHT TO TERMINATE ANY SUCH RIGHT,
PRIVILEGE OR LICENSE AGREEMENT.

 

(D)   NO INFRINGEMENT.  TO THE BEST OF DEBTOR’S KNOWLEDGE NO MATERIAL
INFRINGEMENT OR UNAUTHORIZED USE PRESENTLY IS BEING MADE OF ANY OF THE TRADEMARK
COLLATERAL BY ANY PERSON.

 

(E)   POWERS.  DEBTOR HAS THE UNQUALIFIED RIGHT, POWER AND AUTHORITY TO PLEDGE
AND TO GRANT TO COLLATERAL AGENT SECURITY INTERESTS IN THE TRADEMARK COLLATERAL
PURSUANT TO THIS AGREEMENT, AND TO EXECUTE, DELIVER AND PERFORM ITS OBLIGATIONS
IN ACCORDANCE WITH THE TERMS OF THIS AGREEMENT, WITHOUT THE CONSENT OR APPROVAL
OF ANY OTHER PERSON EXCEPT AS ALREADY OBTAINED.

 

5.     COVENANTS.  SO LONG AS ANY OF THE SECURED OBLIGATIONS REMAIN UNSATISFIED,
DEBTOR AGREES: (I) THAT IT WILL COMPLY IN ALL MATERIAL RESPECTS WITH ALL OF THE
COVENANTS, TERMS AND PROVISIONS OF THIS AGREEMENT, AND (II) THAT IT WILL
PROMPTLY GIVE COLLATERAL AGENT WRITTEN NOTICE OF THE OCCURRENCE OF ANY EVENT
THAT REASONABLY COULD BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON ANY OF
THE TRADEMARKS AND THE TRADEMARK COLLATERAL, INCLUDING ANY PETITION UNDER THE
BANKRUPTCY CODE FILED BY OR AGAINST ANY LICENSOR OF ANY OF THE TRADEMARKS FOR
WHICH DEBTOR IS A LICENSEE.

 

6.     FUTURE RIGHTS.  FOR SO LONG AS ANY OF THE SECURED OBLIGATIONS SHALL
REMAIN OUTSTANDING, OR, IF EARLIER, UNTIL COLLATERAL AGENT SHALL HAVE RELEASED
OR TERMINATED, IN WHOLE BUT NOT IN PART, ITS INTEREST IN THE TRADEMARK
COLLATERAL, IF AND WHEN DEBTOR SHALL OBTAIN RIGHTS TO ANY NEW TRADEMARKS, OR ANY
REISSUE, RENEWAL OR EXTENSION OF ANY TRADEMARKS, THE PROVISIONS OF SECTION 2
SHALL AUTOMATICALLY APPLY THERETO AND, IF SUCH NEW TRADEMARKS WOULD HAVE BEEN
REQUIRED TO BE LISTED ON SCHEDULE A AS OF THE DATE OF FORMATION OF THIS
AGREEMENT, DEBTOR SHALL GIVE TO COLLATERAL AGENT PROMPT NOTICE THEREOF.  DEBTOR
SHALL DO ALL THINGS REASONABLY DEEMED NECESSARY BY COLLATERAL AGENT IN THE
EXERCISE OF ITS REASONABLE DISCRETION TO ENSURE THE VALIDITY, PERFECTION,
PRIORITY AND ENFORCEABILITY OF THE SECURITY INTERESTS OF COLLATERAL AGENT IN
SUCH FUTURE ACQUIRED TRADEMARK COLLATERAL.  IF DEBTOR REFUSES TO EXECUTE AND
DELIVER, OR FAILS TIMELY TO EXECUTE AND DELIVER, ANY OF THE DOCUMENTS IT IS
REASONABLY

 

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REQUESTED TO EXECUTE AND DELIVER BY COLLATERAL AGENT IN CONNECTION HEREWITH,
DEBTOR HEREBY AUTHORIZES COLLATERAL AGENT TO MODIFY, AMEND OR SUPPLEMENT THE
SCHEDULES HERETO AND TO RE-EXECUTE THIS AGREEMENT FROM TIME TO TIME ON DEBTOR’S
BEHALF AND AS ITS ATTORNEY-IN-FACT TO INCLUDE ANY FUTURE TRADEMARKS WHICH ARE OR
BECOME TRADEMARK COLLATERAL AND TO CAUSE SUCH RE-EXECUTED AGREEMENT OR SUCH
MODIFIED, AMENDED OR SUPPLEMENTED SCHEDULES TO BE FILED WITH THE PTO.

 

7.     DUTIES OF COLLATERAL AGENT AND THE LENDER GROUP.  NOTWITHSTANDING ANY
PROVISION CONTAINED IN THIS AGREEMENT, NEITHER COLLATERAL AGENT NOR ANY MEMBER
OF THE LENDER GROUP SHALL HAVE ANY DUTY TO EXERCISE ANY OF THE RIGHTS,
PRIVILEGES OR POWERS AFFORDED TO IT AND SHALL NOT BE RESPONSIBLE TO DEBTOR OR
ANY OTHER PERSON FOR ANY FAILURE TO DO SO OR DELAY IN DOING SO.  EXCEPT FOR THE
ACCOUNTING FOR MONEYS ACTUALLY RECEIVED BY COLLATERAL AGENT OR ANY OTHER MEMBER
OF THE LENDER GROUP HEREUNDER OR IN CONNECTION HEREWITH, NEITHER COLLATERAL
AGENT NOR ANY MEMBER OF THE LENDER GROUP SHALL HAVE ANY DUTY OR LIABILITY TO
EXERCISE OR PRESERVE ANY RIGHTS, PRIVILEGES OR POWERS PERTAINING TO THE
TRADEMARK COLLATERAL.

 

8.     EVENTS OF DEFAULT.  THE OCCURRENCE OF ANY “EVENT OF DEFAULT” UNDER THE
FINANCING AGREEMENT SHALL CONSTITUTE AN EVENT OF DEFAULT HEREUNDER.

 

9.     REMEDIES.  FROM AND AFTER THE OCCURRENCE AND DURING THE CONTINUATION OF
AN EVENT OF DEFAULT, COLLATERAL AGENT SHALL HAVE ALL RIGHTS AND REMEDIES
AVAILABLE TO IT UNDER THE FINANCING AGREEMENT AND APPLICABLE LAW (WHICH RIGHTS
AND REMEDIES ARE CUMULATIVE) WITH RESPECT TO THE SECURITY INTERESTS IN ANY OF
THE TRADEMARK COLLATERAL.  DEBTOR HEREBY AGREES THAT SUCH RIGHTS AND REMEDIES
INCLUDE THE RIGHT OF COLLATERAL AGENT AS A SECURED PARTY TO SELL OR OTHERWISE
DISPOSE OF THE TRADEMARK COLLATERAL AFTER DEFAULT, PURSUANT TO THE UCC.  DEBTOR
HEREBY AGREES THAT COLLATERAL AGENT SHALL AT ALL TIMES HAVE SUCH ROYALTY-FREE
LICENSES, TO THE EXTENT PERMITTED BY LAW AND THE LOAN DOCUMENTS, FOR ANY
TRADEMARK COLLATERAL THAT IS REASONABLY NECESSARY TO PERMIT THE EXERCISE OF ANY
OF COLLATERAL AGENT’S RIGHTS OR REMEDIES UPON OR AFTER THE OCCURRENCE OF (AND
DURING THE CONTINUANCE OF) AN EVENT OF DEFAULT WITH RESPECT TO (AMONG OTHER
THINGS) ANY TANGIBLE ASSET OF DEBTOR IN WHICH COLLATERAL AGENT HAS A SECURITY
INTEREST, INCLUDING COLLATERAL AGENT’S RIGHTS TO SELL INVENTORY, TOOLING OR
PACKAGING WHICH IS ACQUIRED BY DEBTOR (OR ITS SUCCESSOR, ASSIGNEE OR TRUSTEE IN
BANKRUPTCY).  IN ADDITION TO AND WITHOUT LIMITING ANY OF THE FOREGOING, UPON THE
OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT, COLLATERAL AGENT
SHALL HAVE THE RIGHT BUT SHALL IN NO WAY BE OBLIGATED TO BRING SUIT, OR TO TAKE
SUCH OTHER ACTION AS COLLATERAL AGENT, IN THE EXERCISE OF ITS REASONABLE
DISCRETION, DEEMS NECESSARY, IN THE NAME OF DEBTOR OR COLLATERAL AGENT, TO
ENFORCE OR PROTECT ANY OF THE TRADEMARK COLLATERAL, IN WHICH EVENT DEBTOR SHALL,
AT THE REQUEST OF COLLATERAL AGENT, DO ANY AND ALL LAWFUL ACTS AND EXECUTE ANY
AND ALL DOCUMENTS REQUIRED BY COLLATERAL AGENT NECESSARY TO SUCH ENFORCEMENT. 
TO THE EXTENT THAT COLLATERAL AGENT SHALL ELECT NOT TO BRING SUIT TO ENFORCE
SUCH TRADEMARK COLLATERAL, DEBTOR, IN THE EXERCISE OF ITS REASONABLE BUSINESS
JUDGMENT, AGREES TO USE ALL REASONABLE MEASURES AND ITS DILIGENT EFFORTS,
WHETHER BY ACTION, SUIT, PROCEEDING OR OTHERWISE, TO PREVENT THE INFRINGEMENT,
MISAPPROPRIATION OR VIOLATION THEREOF BY OTHERS AND FOR THAT PURPOSE AGREES
DILIGENTLY TO MAINTAIN ANY ACTION, SUIT OR PROCEEDING AGAINST ANY PERSON
NECESSARY TO PREVENT SUCH INFRINGEMENT, MISAPPROPRIATION OR

 

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VIOLATION.  NOTHING HEREIN SHALL PERMIT THE COLLATERAL AGENT TO ASSERT ANY OF
THE RIGHTS, CLAIMS OR CAUSES OF ACTION, OR TAKE ANY OF THE ACTIONS, CONTEMPLATED
BY THE LAST SIX (6) FULL LINES OF SECTION 2(A)(I) OR SECTION 2(A)(II), EXCEPT
AFTER THE OCCURRENCE AND DURING THE CONTINUANCE OF AN EVENT OF DEFAULT.

 

10.   BINDING EFFECT.  THIS AGREEMENT SHALL BE BINDING UPON, INURE TO THE
BENEFIT OF AND BE ENFORCEABLE BY DEBTOR AND COLLATERAL AGENT FOR THE BENEFIT OF
THE LENDER GROUP AND THEIR RESPECTIVE SUCCESSORS AND ASSIGNS.

 

11.   NOTICES.  ALL NOTICES AND OTHER COMMUNICATIONS HEREUNDER SHALL BE IN
WRITING AND SHALL BE MAILED, SENT OR DELIVERED IN ACCORDANCE WITH THE FINANCING
AGREEMENT.

 

12.   GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE FEDERAL LAWS OF THE UNITED STATES OF AMERICA
AND THE LAWS OF THE STATE OF NEW YORK.

 

13.   ENTIRE AGREEMENT; AMENDMENT.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS,
TOGETHER WITH THE SCHEDULES HERETO AND THERETO, CONTAINS THE ENTIRE AGREEMENT OF
THE PARTIES WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ALL PRIOR
DRAFTS AND COMMUNICATIONS RELATING TO SUCH SUBJECT MATTER.  NEITHER THIS
AGREEMENT NOR ANY PROVISION HEREOF MAY BE MODIFIED, AMENDED OR WAIVED EXCEPT BY
THE WRITTEN AGREEMENT OF THE PARTIES TO THIS AGREEMENT.  NOTWITHSTANDING THE
FOREGOING, COLLATERAL AGENT MAY REEXECUTE THIS AGREEMENT OR MODIFY, AMEND OR
SUPPLEMENT THE SCHEDULES HERETO AS PROVIDED IN SECTION 6 HEREOF.

 

14.   SEVERABILITY.  IF ONE OR MORE PROVISIONS CONTAINED IN THIS AGREEMENT SHALL
BE INVALID, ILLEGAL OR UNENFORCEABLE IN ANY RESPECT IN ANY JURISDICTION OR WITH
RESPECT TO ANY PARTY, SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY IN SUCH
JURISDICTION OR WITH RESPECT TO SUCH PARTY SHALL, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, NOT INVALIDATE OR RENDER ILLEGAL OR UNENFORCEABLE
ANY SUCH PROVISION IN ANY OTHER JURISDICTION OR WITH RESPECT TO ANY OTHER PARTY,
OR ANY OTHER PROVISIONS OF THIS AGREEMENT.

 

15.   COUNTERPARTS.  THIS AGREEMENT MAY BE EXECUTED IN ANY NUMBER OF
COUNTERPARTS AND BY DIFFERENT PARTIES HERETO IN SEPARATE COUNTERPARTS, EACH OF
WHICH WHEN SO EXECUTED SHALL BE DEEMED TO BE AN ORIGINAL AND ALL OF WHICH TAKEN
TOGETHER SHALL CONSTITUTE BUT ONE AND THE SAME AGREEMENT.

 

16.   FINANCING AGREEMENT. DEBTOR ACKNOWLEDGES THAT THE RIGHTS AND REMEDIES OF
COLLATERAL AGENT WITH RESPECT TO THE SECURITY INTEREST IN THE TRADEMARK
COLLATERAL GRANTED HEREBY ARE MORE FULLY SET FORTH IN THE FINANCING AGREEMENT
AND THE SECURITY AGREEMENT AND ALL SUCH RIGHTS AND REMEDIES ARE CUMULATIVE.

 

17.   NO INCONSISTENT REQUIREMENTS.  DEBTOR ACKNOWLEDGES THAT THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS MAY CONTAIN COVENANTS AND OTHER TERMS AND PROVISIONS
VARIOUSLY STATED REGARDING THE SAME OR SIMILAR MATTERS, AND DEBTOR AGREES THAT
ALL SUCH COVENANTS, TERMS AND PROVISIONS ARE CUMULATIVE AND ALL SHALL BE
PERFORMED AND SATISFIED IN

 

9

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ACCORDANCE WITH THEIR RESPECTIVE TERMS.  DEBTOR AGREES THAT, TO THE EXTENT OF
ANY CONFLICT BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE FINANCING
AGREEMENT, THE PROVISIONS OF THE FINANCING AGREEMENT SHALL GOVERN.  DEBTOR
FURTHER AGREES THAT, TO THE EXTENT OF ANY CONFLICT BETWEEN THE PROVISIONS OF
THIS AGREEMENT AND THE SECURITY AGREEMENT, THE PROVISIONS OF THIS AGREEMENT
SHALL GOVERN.

 

18.   TERMINATION.  UPON THE PAYMENT AND PERFORMANCE IN FULL IN CASH OF THE
SECURED OBLIGATIONS, INCLUDING THE CASH COLLATERALIZATION, EXPIRATION, OR
CANCELLATION OF ALL SECURED OBLIGATIONS, IF ANY, CONSISTING OF LETTERS OF
CREDIT, AND THE FULL AND FINAL TERMINATION OF ANY COMMITMENT TO EXTEND ANY
FINANCIAL ACCOMMODATIONS UNDER THE FINANCING AGREEMENT, THIS AGREEMENT SHALL
TERMINATE, AND COLLATERAL AGENT SHALL EXECUTE AND DELIVER SUCH DOCUMENTS AND
INSTRUMENTS AND TAKE SUCH FURTHER ACTION REASONABLY REQUESTED BY DEBTOR, AT
DEBTOR’S EXPENSE, AS SHALL BE NECESSARY TO EVIDENCE TERMINATION OF THE SECURITY
INTEREST GRANTED BY DEBTOR TO COLLATERAL AGENT FOR THE BENEFIT OF THE LENDER
GROUP HEREUNDER, INCLUDING CANCELLATION OF THIS AGREEMENT BY WRITTEN NOTICE FROM
COLLATERAL AGENT TO THE PTO.

 

[Signature page follows]

 

10

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement, as of
the date first above written.

 

 

ELGAR ELECTRONICS CORPORATION,
a California corporation

 

 

 

 

 

By:

/s/ Joseph A. Stroud

 

 

Name:

Joseph A. Stroud

 

Title:

Chief Financial Officer

 

S-1

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ABLECO FINANCE LLC,
 a Delaware limited liability company

 

 

 

 

 

By:

/s/ Kevin Genda

 

 

Name:

Kevin Genda

 

Title:

Senior Vice President

 

S-2

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SCHEDULE A

 

to the Trademark Security Agreement
Trademarks of Debtor

 

Owner

 

Trademark

 

Serial
Number/Registration
Number

 

 

 

 

 

Elgar Electronics Corporation

 

ELGAR

 

76/351,996

 

 

 

 

 

Elgar Electronics Corporation

 

ELGAR & Design

 

76/351,976

 

 

 

 

 

Elgar Electronics Corporation

 

SmartWave

 

76/351,975

 

 

 

 

 

Elgar Electronics Corporation

 

SW

 

75/791,012

 

 

 

 

 

Elgar Electronics Corporation

 

TW

 

76/351,977

 

 

 

 

 

Elgar Electronics Corporation

 

EW

 

75/791,010

 

 

 

 

 

Elgar Electronics Corporation

 

GUPS

 

75/791,375

 

 

 

 

 

Elgar Electronics Corporation

 

ContinuousWave

 

75/789,634

 

 

 

 

 

Elgar Electronics Corporation

 

CW

 

75/789,635

 

 

 

 

 

Elgar Electronics Corporation

 

Sorensen

 

0972782

 

 

A-1

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