Document:

Exhibit

10.3

 

PATENT

SECURITY AGREEMENT

 

This PATENT 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, as the collateral agent for the

below-defined Lender Group (in such capacity, together with its successors, if

any, in such capacity, “Collateral Agent”).

 

RECITALS

 

WHEREAS, Elgar Holdings, Inc., a Delaware

corporation (“Parent”) and Debtor are parties to that certain Financing

Agreement (the “Financing Agreement”), of even date herewith, with the

Lenders (as defined below), Ableco Finance LLC, a Delaware limited liability

company 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;

 

WHEREAS, Parent, Debtor, and the Collateral Agent,

for the benefit of the Lender Group, are entering into that certain Security

Agreement, of even date herewith (the “Security Agreement”) pursuant to

which Parent and Debtor are granting to the Collateral Agent, for the benefit

of the Lender Group, a security interest in, among other things, all or

substantially all of the general intangibles of Debtor; and

 

WHEREAS, pursuant to the Financing Agreement and

the Security Agreement, 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 the Collateral Agent for filing with the

PTO (as defined below) and with any other relevant recording systems in any

jurisdiction, and as further evidence of and to effectuate Collateral Agent’s

existing security interests in the Patent Collateral (as defined below).

 

AGREEMENT

 

NOW,

THEREFORE, for

valuable consideration, the receipt and adequacy of which is hereby

acknowledged, Debtor hereby agrees in favor of the Collateral Agent, as

follows:

 

1.             Definitions; Interpretation.

 

(a)           Certain Defined Terms. As used

in this Agreement, the following terms shall have the following meanings:

 

 

“Administrative Agent” shall have the meaning ascribed to such

term in the Recitals to this Agreement.

 

“Agreement” shall have the meaning ascribed to such term in the

introductory paragraph hereto.

 

“Bankruptcy Code” means the United States Bankruptcy Code (11

U.S.C. §101 et  seq.), as amended, and any successor statute.

 

“Collateral Agent” shall have the meaning ascribed to such term

in the introductory paragraph hereto.

 

“Debtor” shall have the meaning ascribed to such term in the

introductory paragraph of this Agreement.

 

“Event of Default” shall have the meaning ascribed to such term

in 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).

 

“Parent” shall have the meaning ascribed to such term in the

Recitals to this Agreement.

 

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

 

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

 

“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 Patent Collateral, including

“proceeds” as defined at UCC Section 9–102(a)(64), 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 with respect to any of the Patent 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 Patent

Collateral, (iii) any and all

 

2

 

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

Patent 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 Patent Collateral or for or on account of any

damage or injury to or conversion of any Patent 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 issued pursuant to, or evidenced by the

Financing Agreement, the Security Agreement, this 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.

 

“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 ascribed

to them in the UCC.

 

(c)           Terms Defined in the Financing

Agreement.  Capitalized terms used

herein and not otherwise defined herein shall have the meanings ascribed to

them in the Financing Agreement.

 

(d)           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.

 

3

 

(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.

 

(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)        In the event of a direct conflict between the terms and

provisions of this Agreement and the Financing Agreement, it is the intention

of the parties hereto that both 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 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 the Collateral Agent for the

benefit of the Lender Group (whether under New York law or applicable federal

law), in each case in respect of the Patent Collateral, shall not be deemed a

conflict with the Financing Agreement.

 

2.             Security Interest.

 

(a)           Assignment and Grant of Security

in Respect of the Secured Obligations. 

As security for the prompt payment and performance of the Secured

Obligations, Debtor hereby grants, assigns, transfers, and conveys to the

Collateral Agent, for the benefit of the Lender Group, continuing security

interests in all of Debtor’s right, title and interest in, to and under the

following property, whether now existing or hereafter acquired or arising

(collectively, the “Patent Collateral”):

 

(i)            all

letters patent of the U.S. or any other country, all registrations and

recordings thereof, and all applications for letters patent of the U.S.

 

4

 

or any other country, owned, held, or used by Debtor in whole

or in part, including all existing U.S. patents and patent applications of

Debtor which are described in Schedule A and Schedule B hereto,

as the same may be amended or supplemented pursuant hereto from time to time,

and together with and including all patent licenses held by Debtor, including

such patent licenses which are described in Schedule A and Schedule B

hereto, together with all reissues, divisions, continuations, renewals,

extensions and continuations-in-part thereof and the inventions disclosed

therein, and all rights corresponding thereto throughout the world, including

the right to make, use, lease, sell and otherwise transfer the inventions

disclosed therein, and all proceeds thereof, including all license royalties

and proceeds of infringement suits (collectively, the “Patents”);

 

(ii)           all

claims, causes of action and rights to sue for past, present and future

infringement or unconsented use of any of the Patents and all rights arising

therefrom and pertaining thereto;

 

(iii)          all

general intangibles (as defined in the UCC) and all intangible intellectual or

other similar property of Debtor of any kind or nature, whether now owned or

hereafter acquired or developed, associated with or arising out of any of the

Patents and not otherwise described above; and

 

(iv)          all

products and Proceeds of any and all of the foregoing.

 

(b)           Certain Exclusions from Grant of

Security Interest.  Anything

contained in this Agreement and the other Loan Documents to the contrary

notwithstanding, the term “Patent Collateral” shall not include any item of

Patent Collateral that is now or hereafter held by Debtor as lessee, licensee,

or debtor under purchase money secured financing, in the event that:  (1) as a result of the grant of a

security interest therein, Debtor would be deemed to have breached the

applicable lease, license, or other agreement that governs such asset pursuant

to restrictions contained in the applicable lease, license or other agreement;

and (2) any such restriction is effective and enforceable under applicable

law; provided, further, however, that the term “Patent

Collateral” shall include, at any time that the restrictions in the lease,

license, or other agreement are no longer effective and enforceable (including

as a result of the exercise of an option to purchase or the repayment of the

secured financing) or at any time that the applicable lessor, licensor or other

applicable party’s consent is obtained to the grant of a security interest in

and to such asset in favor of the Collateral Agent, for the benefit of the

Lender Group, (A) any and all Proceeds of such Patent Collateral, and (B) such

Patent Collateral.

 

(c)           Continuing Security Interests.  Debtor agrees that this Agreement shall

create continuing security interests in the Patent Collateral which shall

remain in effect until terminated in accordance with Section 16.

 

5

 

(d)           Incorporation into Financing

Agreement. This Agreement shall be fully incorporated into the Financing

Agreement and all understandings, agreements and provisions contained in the

Financing Agreement shall be fully incorporated into this Agreement. Without limiting

the foregoing, the Patent Collateral described in this Agreement shall

constitute part of the Collateral in the Financing Agreement.

 

(e)           Licenses. Anything in the

Financing Agreement or this Agreement to the contrary notwithstanding, so long

as no Event of Default has occurred and is continuing, Debtor may engage in

Permitted Dispositions of the Patent 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 the Collateral Agent any and all documents and instruments,

in form and substance reasonably satisfactory to the Collateral Agent, in its

reasonable discretion, and take any and all action, which the Collateral Agent

may reasonably request from time to time, to perfect and continue perfected,

maintain the priority of or provide notice of the security interests in the

Patent 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, the

Collateral Agent shall have the right to, 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, (i) to sign the name of Debtor on all or any of such documents or

instruments, and perform all other acts, that Collateral Agent reasonably deems

necessary or advisable in order to perfect or continue perfected, maintain the

priority or enforceability of or provide notice of the security interests in

the Patent 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 reasonably may deem necessary or advisable to maintain,

preserve and protect the Patent Collateral and to accomplish the purposes of

this Agreement, including (A) upon 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 Patent Collateral, (B) upon the occurrence

and during the continuance of any Event of Default, to assert or retain any

rights under any license agreement for any of the Patent Collateral, including

any rights of Debtor arising under Section 365(n) of the Bankruptcy Code, and

(C) upon 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 Patent Collateral, to grant or issue any exclusive

or non-exclusive license with respect to any Patent Collateral, and to assign,

convey or otherwise transfer title in or dispose of the Patent Collateral.  The power of attorney set forth in this Section

3, being coupled with an interest, is irrevocable so long as

 

6

 

this Agreement shall not have

terminated in accordance with Section 16.  Nothing herein shall be construed as requiring Debtor to maintain

any Patent such as by paying maintenance fees, undertaking any patent

prosecution action, or otherwise if such Patent is not being used by Debtor.

 

4.             Representations and Warranties.  Debtor represents and warrants to each

member of the Lender Group as follows:

 

(a)           No Other Patents.  A true and correct list of all material

Patents owned, held (whether pursuant to a license or otherwise), or used by

Debtor, in whole or in part, as of the date hereof, is set forth in Schedule

A and Schedule B; provided, that Schedule B only

lists those Patents pending as of the date hereof.

 

(b)           Validity.  Each of the Patents listed on Schedule A

and Schedule B is subsisting and has not been adjudged invalid or

unenforceable, in whole or in part, all maintenance fees required to be paid on

account of any such Patents have been paid for maintaining such Patents in

force, and, to Debtor’s knowledge, each of such Patents is valid and

enforceable, except such nonpayment of maintenance fees as reasonably could

not, individually or in the aggregate, be expected to have a Material Adverse

Effect.

 

(c)           Title.  (i) Debtor has rights in and good title to

the existing Patent Collateral, (ii) with respect to the Patent Collateral

shown on Schedule A and Schedule B hereto as owned by it, Debtor

is the sole and exclusive owner thereof, free and clear of any Liens and rights

of others (other than (A) Liens in favor of Collateral Agent, for the benefit

of the Lender Group, and (B) Permitted Liens), (iii) with respect to any Patent

set forth in Schedule A and Schedule B for which Debtor is either

a licensor or a licensee pursuant to a license or licensee agreement regarding

Patent, each such license or licensing agreement is in full force and effect,

Debtor is not in default of any of its material obligations thereunder and,

other than (A) 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 Patent Collateral, 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 is known by

Debtor to have any rights in or to any such Patent Collateral.

 

(d)           No Infringement.  To Debtor’s knowledge, (i) no material

infringement or unauthorized use presently is being made of any of the Patent

Collateral by any Person, and (ii) the past, present and contemplated future

use of any material item of the Patent Collateral by Debtor has not, does not

and will not infringe upon or violate any right, privilege or license agreement

of or with any other Person.

 

(e)           Powers.  Debtor has the unqualified right, power and

authority to pledge and to grant to Collateral Agent security interests in all

of the Patent Collateral

 

7

 

 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.  Debtor covenants that so long as this

Agreement shall be in effect, Debtor shall:

 

(a)           comply with all of the covenants,

terms and provisions of this Agreement, the Financing Agreement and the other

Loan Documents to which Debtor is a party;

 

(b)           promptly give Collateral Agent

written notice of the occurrence of any event that reasonably could be expected

to have a Material Adverse Effect on (i) any of the Patents listed in Schedule

A and Schedule B or (ii) the Patent Collateral, including any

petition under the Bankruptcy Code filed by or against any licensor of any such

Patents for which Debtor is a licensee;

 

(c)           on a continuing basis, make, execute,

acknowledge and deliver, and file and record in the proper filing and recording

places, all such instruments and documents, including appropriate financing and

continuation statements and security agreements, and take all such action as

may be necessary or may be reasonably requested by Collateral Agent, in its

reasonable discretion, to carry out the intent and purposes of this Agreement,

or for assuring, confirming or protecting the grant or perfection of the

security interests granted or purported to be granted hereby, to ensure

Debtor’s compliance with this Agreement or to enable Collateral Agent to

exercise and enforce its rights and remedies hereunder with respect to the

Patent Collateral.  Without limiting the

generality of the foregoing sentence, Debtor:

 

(i)            hereby

authorizes Collateral Agent, in its reasonable discretion, 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, to modify this Agreement without first obtaining Debtor’s approval of or

signature to such modification by amending Schedule A and Schedule B

hereof to include a reference to any right, title or interest in any existing

material Patent Collateral or Patent Collateral acquired or developed by Debtor

after the execution hereof, or to delete any reference to any right, title or

interest in any Patent Collateral in which Debtor no longer has or claims any

right, title or interest; and

 

(ii)           hereby

authorizes Collateral Agent, in its reasonable discretion, to file one or more

financing or continuation statements, if Debtor refuses to execute and deliver,

or fails timely to execute and deliver, any such amendment thereto it is

reasonably requested to execute and deliver by Collateral Agent, any

 

8

 

amendments thereto, relative to all or any portion of the

Patent Collateral, without the signature of Debtor where permitted by law;

 

(d)           comply, in all material respects,

with all applicable statutory and regulatory requirements in connection with

any and all of the Patent Collateral, the failure to comply with which could

reasonably be expected to have a Material Adverse Effect, and give such notice

of patent, prosecute such material claims, and do all other acts and take all

other measures which, in Debtor’s reasonable business judgment, may be

necessary to preserve, protect and maintain the Patent Collateral and all of

Debtor’s rights therein, including diligently prosecute any material patent

application pending as of the date of this Agreement or thereafter;

 

(e)           comply with each of the terms and

provisions of this Agreement and the Financing Agreement, and not enter into

any agreement (for example, a license agreement) which is inconsistent with the

obligations of Debtor under this Agreement and the Financing Agreement without

Collateral Agent’s prior written consent; and

 

(f)            not permit the inclusion in any

contract to which Debtor becomes a party of any provision that would impair or

prevent the creation of a security interest in favor of Collateral Agent, for

the benefit of the Lender Group, in Debtor’s rights and interest in any

property included within the definition of Patent Collateral acquired under

such contracts.

 

6.             Future Rights.  If and when Debtor shall obtain rights to

any new patentable inventions (with respect to which Debtor, in its reasonable

business judgment, endeavors to register with the PTO), or become entitled to

the benefit of any Patent, or any reissue, division, continuation, renewal,

extension or continuation-in-part of any Patent or Patent Collateral or any

improvement thereof (whether pursuant to any license or otherwise), the

provisions of this Agreement shall automatically apply thereto and Debtor shall

give to Collateral Agent notice thereof in accordance with Section 12.01

of the Financing Agreement.  Debtor

shall do all things deemed necessary or advisable by Collateral Agent, in its

discretion, to ensure the validity, perfection, priority and enforceability of

the security interests of Collateral Agent in such future acquired Patent

Collateral.  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 Patents which are or become Patent

Collateral and to cause such re-executed Agreement or such modified, amended or

supplemented Schedules to be filed with the PTO.

 

7.             Remedies.  Upon the occurrence and during the

continuance of an Event of Default, the Lender Group and Collateral Agent on

behalf thereof 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 Patent

 

9

 

Collateral or any other

Collateral.  Debtor agrees that such

rights and remedies include the right of Collateral Agent as a Collateral Agent

to sell or otherwise dispose of its Collateral after default, pursuant to UCC

Section 9-610.  Debtor agrees that

Collateral Agent shall at all times have such royalty free licenses, to the

extent permitted by law, for any Patent Collateral that is reasonably necessary

to permit the exercise of any of Collateral Agent’s rights or remedies upon the

occurrence and during the continuation 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 deems necessary or advisable, in the name of Debtor or

Collateral Agent, to enforce or protect any of the Patent Collateral, in which

event Debtor shall, at the reasonable request of Collateral Agent, do any and

all lawful acts and execute any and all documents required by Collateral Agent

in aid of such enforcement.  To the

extent that Collateral Agent shall elect not to bring suit to enforce such

Patent 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 violations 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 violation.  Nothing herein shall permit the Collateral

Agent to assert any of the rights, claims or causes of action contemplated by Section

2(a)(ii), except after the occurrence and during the continuance of an

Event of Default.

 

8.             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.

 

9.             Notices.  All notices and other communications

hereunder shall be in writing and shall be mailed, sent or delivered in

accordance with the Financing Agreement.

 

10.           Governing Law.  This Agreement shall be governed by, and

construed and enforced in accordance with, the laws of the State of New York,

except to the extent that the validity or perfection of the security interests

hereunder in respect of the Patent Collateral are governed by federal law, in

which case such choice of New York law shall not be deemed to deprive

Collateral Agent of such rights and remedies as may be available under federal

law.

 

11.           Entire Agreement; Amendment.  This Agreement and the Financing Agreement,

together with the Schedules hereto and thereto, contain the entire agreement of

the parties with respect to the subject matter hereof and supersedes all prior

drafts and communications relating to such subject matter.  Neither this Agreement nor any provision

 

10

 

hereof may be modified, amended or

waived except by the written agreement of the parties, as provided in the

Financing Agreement.  Notwithstanding

the foregoing, Collateral Agent may re-execute this Agreement or modify, amend

or supplement the Schedules hereto as provided in Section 6 hereof.

 

12.           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.

 

13.           Counterparts; Telefacsimile

Execution.  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.  Delivery of an executed counterpart of this Agreement by telefacsimile

shall be equally as effective as delivery of an original executed counterpart

of this Agreement.  Any party delivering

an executed counterpart of this Agreement by telefacsimile also shall deliver

an original executed counterpart of this Agreement but the failure to deliver

an original executed counterpart shall not affect the validity, enforceability,

and binding effect of this Agreement.

 

14.           Financing Agreement.  Debtor acknowledges that the rights and

remedies of Collateral Agent with respect to the security interests in the

Patent Collateral granted hereby are more fully set forth in the Security

Agreement and Financing Agreement and all such rights and remedies are

cumulative.

 

15.           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 accordance with their respective terms.

 

16.           Termination.  Upon the indefeasible payment 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 and the security interests granted hereunder shall terminate and

Collateral Agent shall execute and deliver such documents and instruments and

take such further action reasonably requested by Debtor and at Debtor’s expense

as shall be necessary to evidence termination of the security interests granted

by Debtor to Collateral Agent for the benefit of the Lender Group hereunder.

 

11

 

[Signature page follows]

 

12

 

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

 

	

   

  	

  ABLECO

  FINANCE LLC,

  a Delaware

  limited liability company

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Kevin Genda 

  	

   

  
	

   

  	

  Name:

  	

  Kevin Genda

  
	

   

  	

  Title:

  	

  Senior Vice President

  

 

 

S-2

 

SCHEDULE A

to the Patent Security Agreement

 

ISSUED PATENTS AS

OF THE DATE HEREOF

 

	

  Owner

  	

   

  	

  Patent

  	

   

  	

  Patent

  Number

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Elgar

  Electronics Corporation

  	

   

  	

  “Overvoltage

  Protection Circuit”

  	

   

  	

  6,239,961

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Elgar

  Electronics Corporation

  	

   

  	

  “Optimal and

  Adaptive Control of Variable Speed AC Motor Drives”

  	

   

  	

  4,387,421

  
	

   

  	

   

  	

   

  	

   

  	

   

  
	

  Elgar

  Electronics Corporation (formerly owned by Power Ten)

  	

   

  	

  “Internally

  Programmable Modular Power Supply Method”

  	

   

  	

  5,917,719

  

 

A-1

 

SCHEDULE B

to the Patent Security Agreement

 

PENDING PATENTS AS OF THE

DATE HEREOF

 

 

NONE.

 

B-1Exhibit

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.

 

 

“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 

 

2

 

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.

 

3

 

(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 

 

4

 

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,

 

5

 

 (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 

 

6

 

(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 

 

7

 

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 

 

8

 

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

 

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

 

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

 

	

   

  	

  ABLECO

  FINANCE LLC,
 a Delaware limited liability company

  
	

   

  	

   

  
	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Kevin Genda

  	

   

  
	

   

  	

  Name:

  	

  Kevin Genda

  
	

   

  	

  Title: 

  	

  Senior Vice President

  

 

S-2

 

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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