**Exhibit10.5**

** **

**RESTRUCTURINGBONUS AGREEMENT**

This RESTRUCTURINGBONUS AGREEMENT (“**Agreement**”),dated as of March 31, 2003, is by and between Elgar Holdings, Inc., aDelaware corporation (“**Holdings**”),and Joseph Budano (“**Executive**”).

**RECITALS**

WHEREAS, Holdingsis contemplating a financial restructuring that will involve exchanging up to$90 million of its Senior Notes due 2008 for a combination of new seniornotes, preferred stock and common stock (the “**Restructuring**”), in order to reduce its annualized cash interestexpense; and

WHEREAS, Holdingsdesires to incentivize Executive to use his reasonable best efforts tofacilitate the Restructuring by paying him a restructuring bonus, as describedherein, if the Restructuring is completed.

**AGREEMENT**

NOW THEREFORE, inconsideration of the premises and the mutual agreements hereinafter set forth,the parties hereto hereby agree as follows:

**1.             Restructuring Bonus. **If the Restructuring is completed on or prior toAugust 2, 2003, Executive shall be entitled to receive $135,000 (the “**Restructuring Bonus**”), payable asfollows:  Executive shall be entitled toreceive $22,500 during the month the Restructuring is completed, and shall beentitled to receive an additional $22,500 in each of the five successivemonths.  All compensation paid toExecutive under this Agreement shall be subject to customary withholding andemployment taxes as required by federal and state law, and shall be paid inaccordance with Holdings’ standard payroll procedures.  If there is a question as to whether theRestructuring has been completed so as to give rise to the Restructuring Bonus,the good faith determination of the Board of Directors of Holdings will beconclusive.

**2.             Successors and Assigns.** The rights and obligations of Holdings under this Agreement shall inureto the benefit of and shall be binding upon the successors and assigns ofHoldings.  Executive shall not beentitled to assign any of his rights or obligations under this Agreement.

**3.             Governing Law.** This Agreement shall be interpreted, construed, governed and enforced inaccordance with the laws of the State of Delaware.

**4.             Amendments.** No amendment or modification of the terms or conditions of thisAgreement shall be valid unless in writing and signed by the parties hereto.

**5.             Counterparts. **This Agreement may be executed in one or morecounterpart copies, each of which shall be deemed to be an original and all ofwhich taken together shall be deemed one and the same instrument.

IN WITNESS WHEREOF, Holdings has caused this Agreement to be executedon its behalf by its duly authorized officer and Executive has executed thesame as of the day and year first above written.

**ELGARHOLDINGS, INC.**
| By:               | /s/ Donald Glickman                                       |
|-------------------|-----------------------------------------------------------|
|              | Donald Glickman  Chairman of the Board and Vice President |
|              |                                                      |
|              |                                                      |
| /s/ Joseph Budano |
| Joseph Budano     |

 

 

----