PLEDGE AND SECURITY AGREEMENT

Exhibit 10.2

EXECUTION COPY

PLEDGE AND SECURITY AGREEMENT

made by

POWER-ONE, INC.

and

EACH OTHER PLEDGOR HEREUNDER

in favor of

THE BANK OF NEW YORK TRUST COMPANY, N.A., as Collateral Agent

Dated as of June 17, 2008

TABLE OF CONTENTS

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SECURITY AGREEMENT

This PLEDGE AND SECURITY AGREEMENT (this “ Agreement ”) is dated as of June 17, 2008 and entered into by and among POWER-ONE, INC. , a Delaware corporation (“ Company ”), each of THE UNDERSIGNED DIRECT AND INDIRECT SUBSIDIARIES of Company (each of such undersigned Subsidiaries being a “ Subsidiary Pledgor ” and collectively “ Subsidiary Pledgors, ”) and each Additional Pledgor that may become a party hereto after the date hereof in accordance with Section 18 hereof (each of Company, Subsidiary Pledgors and each Additional Pledgor being a “ Pledgor ” and collectively “ Pledgors ”), in favor of THE BANK OF NEW YORK TRUST COMPANY, N.A. , a national banking association (in such capacity, together with its successors and assigns, herein called “ Collateral Agent ”).

PRELIMINARY STATEMENTS

A.            Company and Collateral Agent are parties to an Indenture dated the date hereof (said indenture, as it may hereafter be amended, supplemented, amended and restated or otherwise modified from time to time, being the “Indenture” , the terms defined therein and not otherwise defined herein being used herein as therein defined; the Indenture, together with this Agreement and the other Security Documents, being collectively the “ Indenture Documents ”).  The Indenture Documents evidence and govern the issuance of debt securities (the “ Securities ”) by the Company in the original principal amount of up to Eighty Million Dollars ($80,000,000).

B.            As a condition to the purchase of the Securities pursuant to the Purchase Agreement, the Company and each other Pledgor party hereto is required to grant the security interests and undertake the obligations  contemplated by this Agreement.

C.            Each Pledgor is the legal and beneficial owner of certain shares of stock, partnership interests, interests in joint ventures, limited liability company interests and other equity interests (“ Equity Interests ”) in one or more Persons and/or certain other assets and property described herein.

NOW, THEREFORE , in consideration of the agreements set forth herein and for other good and valuable consideration, each Pledgor hereby agrees with Collateral Agent (and acknowledges that such Pledgor’s agreement to fulfill its obligations hereunder is a material and essential part of the consideration and inducement of Collateral Agent and the purchases of the Securities) as follows:

SECTION 1.              Certain Definitions .

(a)           The following terms used in this Agreement shall have the following meanings:

“Account Collateral” means each Pledgor’s right, title and interest, whether now existing or hereafter acquired or arising, in, to and under, each Deposit Account and Securities Account (including any successor accounts to any such accounts) and all amounts, investments

and any other property (including, but not limited to, checks, securities, financial assets, investment property, security entitlements and instruments) at any time deposited in or credited to any such account and all security entitlements with respect thereto, including all income or gain earned thereon and any proceeds thereof.

“ Account Control Agreement ” means, in respect of a Deposit Account, a Deposit Account Control Agreement, and in respect of a Securities Account, a Securities Account Control Agreement.

“Bankruptcy Code” means Title 11 of the United States Code, as now or hereafter in effect.

“ Cash Equivalents ” means any of the following, to the extent owned by a Pledgor free and clear of all Liens other than Liens created under the Indenture Documents and having a maturity of not greater than 360 days from the date of acquisition thereof: (a) readily marketable direct obligations of the Government of the United States or any agency or instrumentality thereof or obligations unconditionally guaranteed by the full faith and credit of the Government of the United States, (b) insured certificates of deposit of or time deposits with any commercial bank that is a member of the Federal Reserve System, issues (or the parent of which issues) commercial paper rated as described in clause (c) below, is organized under the laws of the United States or any State thereof and has combined capital and surplus of at least $1,000,000,000, (c) commercial paper in an aggregate amount of no more than $20,000,000 per issuer outstanding at any time, issued by any corporation organized under the laws of any State of the United States and rated at least “ Prime-1 ” (or the then equivalent grade) by Moody’s or “ A-1 ” (or the then equivalent grade) by S&P or (d) Investments, classified in accordance with GAAP as current assets of any Pledgor, in money market funds that are registered under the Investment Company Act of 1940, as amended, that are administered by financial institutions that have the highest rating obtainable from either Moody’s or S&P and the portfolios of which are limited solely to Investments of the character, quality and maturity described in clauses (a), (b) and (c) of this definition including, without limitation, any such fund for which any Secured Party or an Affiliate of a Secured Party serves as an investment advisor, administrator, shareholder servicing agent, custodian or sub-custodian, notwithstanding that (A) such Secured Party or Affiliate of a Secured Party charges and collects fees and expenses from such funds for services rendered (provided that such charges, fees and expenses are on terms consistent with terms negotiated at arm’s length) and (B) such Secured Party charges and collects fees and expenses for services rendered, pursuant to this Agreement.

“Contractual Obligation” , as applied to any Person, means any provision of any security issued by that Person or of any material indenture, mortgage, deed of trust, contract, undertaking, agreement or other instrument to which that Person is a party or by which it or any of its properties is bound or to which it or any of its properties is subject.

“Copyrights” means all items under copyright in various published and unpublished works of authorship including, without limitation, computer programs, computer data bases, other computer software layouts, trade dress, drawings, designs, writings, and formulas.

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“Copyright Registrations” means all copyright registrations issued to any Pledgor and applications for copyright registration that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries.

“Copyright Rights” means all common law and other rights in and to the Copyrights in the United States and any state thereof and in foreign countries including all copyright licenses (but with respect to such copyright licenses, only to the extent permitted by such licensing arrangements), the right (but not the obligation) to renew and extend Copyright Registrations and any such rights and to register works protectable by copyright and the right (but not the obligation) to sue in the name of any Pledgor or in the name of Collateral Agent for past, present and future infringements of the Copyrights and any such rights.

“Counterpart” means a counterpart to this Agreement entered into by the Company or a subsidiary of Company pursuant to Section 18 hereof.

“Deposit Account Control Agreement” means, in respect of a Deposit Account, a Deposit Account Control Agreement, in a form reasonably acceptable to Collateral Agent, by and among the applicable Pledgor, Collateral Agent and a depositary institution, granting Collateral Agent Control over such Deposit Account.

“Designated Italian Merger” means a merger or consolidation of Power-One Italy Holdings S.p.A. with and into Power-One Italy S.p.A., provided that upon the effectiveness of such merger or consolidation, Company shall pledge all of the outstanding Equity Interests of the surviving or resulting Person (subject to the proviso to Section 2(a)), securing the payment of the Secured Obligations, and within five Business Days after such merger or consolidation, such pledge shall constitute a perfected (to the extent such concept or an analogous concept is applicable under the relevant laws) security interest in such Equity Interests prior to all other Liens.

“Domestic Subsidiary” means any direct or indirect Subsidiary of Company that is incorporated or organized under the laws of the United States of America, any state thereof or in the District of Columbia.

“ Equity Interests ” means, with respect to any Person, shares of capital stock of (or other ownership or profit interests in) such Person, warrants, options or other rights for the purchase or other acquisition from such Person of shares of capital stock of (or other ownership or profit interests in) such Person, securities convertible into or exchangeable for shares of capital stock of (or other ownership or profit interests in) such Person or warrants, rights or options for the purchase or other acquisition from such Person of such shares (or such other interests), and other ownership or profit interests in such Person (including, without limitation, partnership, member or trust interests therein), whether voting or nonvoting.

“Foreign Subsidiary” means any direct or indirect Subsidiary of Company that is not a Domestic Subsidiary.

“Grant” means a Grant of Trademark Security Interest, substantially in the form of Exhibit I annexed hereto, and a Grant of Patent Security Interest, substantially in the form of

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Exhibit II annexed hereto, and a Grant of Copyright Security Interest, substantially in the form of Exhibit III annexed hereto.

“Intellectual Property Collateral” means, with respect to any Pledgor all right, title and interest (including rights acquired pursuant to a license or otherwise but only to the extent permitted by agreements governing such license or other use) in and to all

(i)            Copyrights, Copyright Registrations and Copyright Rights, including, without limitation, each of the Copyrights, rights, titles and interests in and to the Copyrights, all derivative works and other works protectable by copyright, which are presently, or in the future may be, owned, created (as a work for hire for the benefit of such Pledgor), authored (as a work for hire for the benefit of such Pledgor), or acquired by such Pledgor, in whole or in part, and all Copyright Rights with respect thereto and all Copyright Registrations therefor, heretofore or hereafter granted or applied for, and all renewals and extensions thereof, throughout the world;

(ii)           Patents;

(iii)          Trademarks, Trademark Registrations, the Trademark Rights and goodwill of such Pledgor’s business symbolized by the Trademarks and associated therewith;

(iv)          all trade secrets, trade secret rights, know-how, customer lists, processes of production, ideas, confidential business information, techniques, processes, formulas, and all other proprietary information;

(v)           all proceeds thereof (such as, by way of example and not by limitation, license royalties and proceeds of infringement suits).

“Investment” means, with respect to any Person, (a) any purchase or other acquisition by such Person of (i) any Equity Interest issued by, (ii) a beneficial interest in any Equity Interest issued by, or (iii) any other equity ownership interest in, any other Person, (b) any purchase by such Person of all or substantially all of the assets of a business conducted by another Person or all or substantially all of the assets constituting the business of a division, branch or other unit operation of any other Person, (c) any loan, advance (other than deposits with financial institutions available for withdrawal on demand, prepaid expenses, accounts receivable and similar items made or incurred in the ordinary course of business as presently conducted), or capital contribution by such Person to any other Person, including all Indebtedness of any other Person to such Person arising from a sale of property by such Person other than in the ordinary course of its business, (d) any guarantee obligation incurred by such Person in respect of any obligation of another and (e) any purchase, or entry into, of any derivative instrument or other contract by such Person providing for the economic or risk equivalent of all or any part of any investment in another Person of the type referred to in clause (a), (b), (c)  or (d)  above.

“ IP Filing Office ” means either the United States Patent and Trademark Office (USPTO or PTO) or the United States Copyright Office, as applicable.

“IP Supplement” means an IP Supplement, substantially in the form of Exhibit IV annexed hereto.

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“Lien” means any lien, mortgage, pledge, assignment, security interest, charge or encumbrance of any kind (including any conditional sale or other title retention agreement, any lease in the nature thereof, and any agreement to give any security interest) and any option, trust or other preferential arrangement having the practical effect of any of the foregoing.

“Patents” means all patents and patent applications and rights and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned or held by a Pledgor and all patents and patent applications and rights, title and interests in patents and patent applications under any domestic or foreign law that are presently, or in the future may be, owned by such Pledgor in whole or in part, all rights (but not obligations) corresponding thereto to sue for past, present and future infringements and all re-issues, divisions, continuations, renewals, extensions and continuations-in-part thereof.

“Permitted Dispositions” means (A) dispositions in the ordinary course of business of inventory, (B) dispositions of obsolete or worn out property (including obsolete or valueless intellectual property), whether now owned or hereafter acquired, in the ordinary course of business, and dispositions of property (including intellectual property) that are reasonably determined by the Board of Directors of the disposing Pledgor (or, in the case of any disposition or series of related dispositions in an amount not in excess of $100,000, reasonably determined by the disposing Pledgor) in good faith to be of no practical use to the business of Company and its Subsidiaries, which dispositions do not, in the aggregate, materially adversely affect the value of the Pledged Collateral taken as a whole, in an aggregate amount not in excess of $2,000,000 over the term of this Agreement, (C) dispositions of cash or Cash Equivalents not otherwise prohibited herein,  (D) dispositions to any Pledgor not otherwise prohibited by the Indenture Documents, (E) dispositions of property to the extent such transaction constitutes a Permitted Investment, and (F) dispositions of equipment to the extent that such equipment is exchanged for credit against the purchase price of similar replacement equipment.

“Permitted Investments” means (i)  Investments by Company that are not through or in any Subsidiary or other Person and that are (x) reasonably determined by Company to be strategic in nature and to have a valid business purpose or (y) in the ordinary course of business, (ii) Investments in cash and Cash Equivalents, (iii) Investments in any Pledgor (including, for the avoidance of doubt, any newly formed Domestic or Foreign Subsidiary (first tier or otherwise) that has become a Domestic or Foreign Subsidiary Pledgor hereunder), (iv) Investments in any Subsidiary of a Pledgor that are in existence as of the Issue Date, (v) Investments in the ordinary course of business in any newly formed wholly-owned Foreign Subsidiary of a newly formed first tier Domestic or Foreign Subsidiary that has become a Domestic or Foreign Subsidiary Pledgor hereunder where Company has in good faith reasonably determined that the creation of the newly formed wholly-owned Foreign Subsidiary and the Investment each have a valid business purpose and do not materially impair the value of the Pledged Collateral taken as a whole, (vi) Investments (including debt obligations and Equity Interests) received in connection with the bankruptcy or reorganization of suppliers and customers or in settlement of delinquent obligations of, or other disputes with, customers and suppliers arising in the ordinary course of business or upon the foreclosure with respect to any secured Investment or other transfer of title with respect to any secured Investment, and (vii) Investments by a Pledgor in equipment, fixed assets, real property or improvements, or replacements or substitutions therefor or additions thereto (excluding normal replacements and maintenance which are properly charged to current

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operations as operating expenses in accordance with GAAP), that have been or should be, in accordance with GAAP, reflected as additions to property, plant or equipment on a Consolidated balance sheet of such Pledgor or have a useful life of more than one year, (viii) lease, utility and other similar deposits in the ordinary course of business, (ix) hedging or other derivative obligations otherwise permitted to be incurred under the Indebtedness covenants under the Indenture and incurred in the ordinary course of business for a valid business purpose, (x) receivables owing to Company or any Subsidiary if created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as Company or any such Subsidiary deems commercially reasonable under the circumstances, (xi) Investments that are advances paid to third-party contract manufacturers in the ordinary course of business to purchase specialized equipment required to produce specialized products for Company or its Subsidiaries, (xii) Investments made by Company or a Subsidiary for consideration consisting only of common Equity Interests of Company, (xiii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Subsidiary or in satisfaction of judgments, (xiv) any other Investment where Company has in good faith reasonably determined that the Investment has a valid business purpose and does not materially impair the value of the Pledged Collateral taken as a whole if, upon the consummation of the Investment, the resulting Investment has been pledged for the benefit of the Secured Parties on a basis consistent with this Agreement and (xv) any other Investments not specified above that do not in the aggregate, since the Issue Date, exceed $1,000,000 (for purposes of calculating which, the amount of any Investment shall be the amount actually invested, without adjustment for subsequent increases or decreases in the value of such Investment).

“Permitted Securities” means (i) any security issued under any Company or Subsidiary employee, officer and/or director stock or option plan reflected in the financial statements contained in Company’s March 30, 2008 Form 10-Q, or under any Company or Subsidiary employee, officer and/or director stock or option plan adopted in the ordinary course of business after the date hereof, in each case whether directly or upon exercise of any option or other security issued thereunder and (ii) warrants for shares of Company’s common stock or securities issued in connection with the exercise thereof.

“Pledged Collateral” has the meaning provided therefor in Section 2.

“ Secured Parties ” means, collectively, the Trustee, Collateral Agent and each Holder.

“Securities Account Control Agreement” means, in respect of a Securities Account, a Securities Account Control Agreement, in a form reasonably acceptable to Collateral Agent, by and among the applicable Pledgor, Collateral Agent and a Securities Intermediary, granting Collateral Agent Control over such Securities Account.

“Trademarks” means all trademarks, service marks, designs, logos, indicia, tradenames, trade dress, corporate names, company names, business names, fictitious business names, trade styles and/or other source and/or business identifiers and applications pertaining thereto, owned by a Pledgor, or hereafter adopted and used, in its business.

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“Trademark Registrations” means all registrations that have been or may hereafter be issued or applied for thereon in the United States and any state thereof and in foreign countries (including, without limitation, the registrations and applications set forth on Schedule VII annexed hereto).

“Trademark Rights” means all common law and other rights (but in no event any of the obligations) in and to the Trademarks in the United States and any state thereof and in foreign countries.

“UCC” means the Uniform Commercial Code, as it exists on that date of the Agreement or as it may hereafter be amended in the State of New York.

(b)           The following terms are used herein as defined in the UCC: Accounts, Certificated Security, Chattel Paper, Commercial Tort Claims, Control, Deposit Account, Documents, Equipment, Farm Products, Goods, Instruments, Inventory, Letter of Credit Rights, Securities Account, Securities Intermediary and Supporting Obligations.

SECTION 2.              Pledge of Security .  Each Pledgor hereby appoints Collateral Agent to act as collateral agent hereunder and pledges and assigns to Collateral Agent, for the ratable benefit of the Secured Parties, and hereby grants to Collateral Agent, for the ratable benefit of the Secured Parties, a security interest in, all of such Pledgor’s right, title and interest in and to the following (the “ Pledged Collateral ”):

(a)

(i)           all of the Equity Interests now or hereafter owned by such Pledgor in each Domestic Subsidiary that is or subsequently becomes a first tier Subsidiary of Company;

(ii)          all of the Equity Interests now or hereafter owned by such Pledgor in each Foreign Subsidiary of Company listed on Schedule I ;

in each case, whether such Equity Interests are classified as investment property or general intangibles under the UCC, and shall include all securities convertible into, and rights, warrants, options and other rights to purchase or otherwise acquire, any Equity Interest, and shall include those owned on the date hereof and described in Schedule I for such Pledgor, the certificates or other instruments representing any of the foregoing and any interest of such Pledgor, and all such interests hereafter acquired by Pledgors (or any of them) and in the entries on the books of any Securities Intermediary pertaining thereto (the “ Pledged Equity ”), and all distributions, dividends, and other property received, receivable or otherwise distributed in respect of or in exchange therefore;

provided , that , if the issuer of any such Pledged Equity is a controlled foreign corporation (as such term is defined in Section 957(a) of the Internal Revenue Code of 1986, as amended), the Pledged Equity shall not include any Equity Interests of such issuer to the extent that creation of a security interest by Pledgor in such Equity Interests could reasonably be expected to result in material adverse tax consequences to Company, it being acknowledged and agreed that the creation of a security interest in Equity Interests possessing up to 66% of the voting power of all

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classes of Equity Interests of such issuer entitled to vote will not result in such adverse tax consequences;

(b)           the assets and property described in Schedule II for such Pledgor, whether now owned or hereafter acquired by such Pledgor and howsoever its interest therein may arise or appear (whether by ownership, security interest, claim or otherwise) (the “ Pledged Assets ”);

(c)           all books, records, ledger cards, files, correspondence, computer programs, tapes, disks and related data processing software that at any time evidence or contain information relating to any of the Pledged Collateral or are otherwise necessary or helpful in the collection thereof or realization thereupon; and

(d)           to the extent not covered by clauses (a) and (b) above, all proceeds of any or all of the foregoing Pledged Collateral.  For purposes of this Agreement, the term “ proceeds ” means all “proceeds” as such term is defined in Section 9-102(a)(64) of the UCC and, in any event, shall include, without limitation, all dividends or other income from such Pledged Collateral, collections thereon or distributions or payments with respect thereto, whatever is receivable or received when Pledged Collateral or proceeds are sold, exchanged, collected or otherwise disposed of, whether such disposition is voluntary or involuntary, and includes, without limitation, proceeds of any indemnity or guaranty payable to Pledgors or Collateral Agent from time to time with respect to any of the Pledged Collateral.

SECTION 3.              Security for Obligations .  This Agreement secures, and the Pledged Collateral is collateral security for, the prompt payment or performance in full when due, whether at stated maturity, by required redemption, conversion, repurchase, acceleration, demand or otherwise (including the payment of amounts that would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. §362(a)), of all obligations and liabilities of every nature of Company now or hereafter existing under or arising out of or in connection with this Agreement or any of the Indenture Documents, together with all extensions or renewals thereof, whether for principal, interest (including without limitation interest that, but for the filing of a petition in bankruptcy with respect to any Pledgor, would accrue on such obligations, whether or not a claim is allowed against such Pledgor for such interest in the related bankruptcy proceeding), fees, expenses, indemnities or otherwise, whether voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Collateral Agent as a preference, fraudulent transfer or otherwise; all other loans and future advances made by Collateral Agent to any Pledgor and all other debts, obligations and liabilities of each Pledgor or every kind and character now or hereafter existing in favor of Collateral Agent, whether direct or indirect, primary or secondary, joint or several, fixed or contingent, secured or unsecured, and whether originally payable to Collateral Agent or to a third party and subsequently acquired by Collateral Agent, it being contemplated that any Pledgor may hereafter become indebted to Collateral Agent for such further debts, obligations and liabilities; and all obligations of every nature of Pledgors now or hereafter existing under this Agreement (all such obligations of Pledgors being the “ Secured Obligations ”).

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SECTION 4.              Delivery of Pledged Equity .  In the case of Pledged Equity consisting of Certificated Securities or Instruments, all such Certificated Securities or Instruments representing or evidencing such Pledged Equity shall be delivered to and held by or on behalf of Collateral Agent in a segregated account pursuant hereto and shall be in suitable form for transfer by delivery or, as applicable, shall be accompanied by the applicable Pledgor’s endorsement, where necessary, or duly executed instruments of transfer or assignment in blank, all in form and substance satisfactory to Collateral Agent.  Upon the occurrence and during the continuation of an Event of Default, Collateral Agent shall have the right, without notice to Pledgors, to transfer to or to register in the name of Collateral Agent or any of its nominees any or all of the Pledged Equity.

SECTION 5.              Representations and Warranties .  Each Pledgor represents and warrants as follows:

(a)           Organization and Powers .  Such Pledgor is duly organized, validly existing and in good standing (solely in the case of an entity incorporated or organized under the laws of the United States of America or any state thereof or in any other jurisdiction in which an entity may be in good standing) and has all requisite power and authority to own and operate its properties, to carry on its business as now conducted and proposed to be conducted and to enter into this Agreement and carry out the transactions contemplated hereby.

(b)           Good Standing .  Such Pledgor is qualified to do business and in good standing (solely in the case of an entity incorporated or organized under the laws of the United States of America or any state thereof or in any other jurisdiction in which an entity may be in good standing) wherever necessary to carry on its present business and operations, except in jurisdictions in which the failure to be so qualified or in good standing has not had and will not have a material adverse effect on the business, operations, properties, assets or condition (financial or otherwise) of such Pledgor and its subsidiaries, taken as a whole.

(c)           Binding Obligation .  This Agreement is the legally valid and binding obligation of such Pledgor, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws or equitable principles relating to or limiting creditors’ rights generally.

(d)           Due Authorization, etc. of Pledged Collateral .  All of the Pledged Equity described in Schedule I for such Pledgor has been duly authorized and validly issued and is fully paid and non-assessable and represents  all of the Pledged Equity owned by such Pledgor.

(e)           Description of Pledged Collateral .  The Pledged Equity constitutes all of the issued and outstanding Equity Interests in each issuer thereof (subject to the proviso to Section 2(a)), and there are no outstanding warrants, options or other rights to purchase, or other agreements outstanding with respect to, or property that is now or hereafter convertible into, or that requires the issuance or sale of, any securities, or rights or interest in any securities, of any of the issuers of any of the Pledged Equity or any of the properties or assets of any of such issuers.

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(f)            Ownership of Pledged Collateral .  Such Pledgor is the legal, record and beneficial owner of the Pledged Collateral and its interests in the Pledged Collateral are free and clear of any Lien except for the security interest created by this Agreement.

(g)           Governmental Authorizations .  No authorization, approval or other action by, and no notice to or filing with, any governmental authority or regulatory body is required for either (i) the pledge by such Pledgor of the Pledged Collateral pursuant to this Agreement and the grant by such Pledgor of the security interest granted hereby, (ii) the execution, delivery or performance of this Agreement by such Pledgor, or (iii) the exercise by Collateral Agent of the voting or other rights, or the remedies in respect of the Pledged Collateral, provided for in this Agreement (except as may be required in connection with a disposition of Pledged Collateral by laws affecting the offering and sale of securities generally).

(h)           Perfection .  Upon (i) the filing of UCC financing statements naming such Pledgor as “debtor,” naming Collateral Agent as “secured party” and describing the Pledged Collateral in the filing offices set forth on Schedule III , (ii) in the case of Pledged Collateral consisting of certificated securities or evidenced by instruments, in addition to filing such financing statements, delivery of the certificates representing such certificated securities and delivery of such instruments to Collateral Agent, in each case duly endorsed or accompanied by duly executed instruments of assignment or transfer in blank (and in the case of Pledged Collateral issued by a foreign issuer, any actions required under foreign law to perfect (to the extent such concept or an analogous concept is applicable under the relevant laws) a security interest in such Pledged Collateral), (iii) in the case of the Intellectual Property Collateral, in addition to the filing of such UCC financing statements, the recordation of a Grant with the applicable IP Filing Office, and (iv) in the case of Pledged Collateral consisting of Account Collateral with respect to a Deposit Account or Securities Account, the effectiveness of an Account Control Agreement in respect of such Deposit Account or Securities Account, the security interests in the Pledged Collateral, granted to Collateral Agent, will constitute perfected (to the extent such concept or an analogous concept is applicable under the relevant laws) security interests in the Pledged Collateral prior to all other Liens (except for Permitted Liens of the types described in clauses (i), (ii), (iii), (iv), (vi), (vii), (viii) (solely with respect to the extension, renewal or refinancing of Indebtedness secured by Liens of the type described in clause (vi) thereof), (ix) and (xii) of the definition of Permitted Liens), securing the payment of the Secured Obligations.

(i)            Office Locations; Type and Jurisdiction of Organization .  Such Pledgor’s name as it appears in official filings in its jurisdiction of organization, type of organization (i.e. corporation, limited liability company, etc.), jurisdiction of organization, principal place of business, chief executive office, office where such Pledgor keeps its records regarding the Pledged Collateral, and organization number provided by the applicable government authority of the jurisdiction of organization are set forth on Schedule IV annexed hereto or the applicable Counterpart.

(j)            Names .  No Pledgor (or predecessor by merger or otherwise of such Pledgor) has, within the five-year period preceding the date hereof, or, in the case of an Additional Pledgor, the date of the applicable Counterpart, had a different name from the name `

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of such Pledgor listed on the signature pages hereof, except the names set forth on Schedule IV annexed hereto or the applicable Counterpart.

(k)           Margin Regulations .  The pledge of the Pledged Collateral pursuant to this Agreement does not violate Regulation T, U or X of the Board of Governors of the Federal Reserve System.

(l)            Account Collateral .  The value of cash and other property in all Deposit Accounts and Securities Accounts constituting Pledged Collateral, that are not subject to effective Account Control Agreements, does not, in the aggregate, exceed $1,000,000.

(m)          Other Information .  All information heretofore, herein or hereafter supplied to Collateral Agent by or on behalf of such Pledgor with respect to the Pledged Collateral is accurate and complete in all material respects.

(n)           Account Debtors .  None of the account debtors or other persons obligated on any of the portions of the Pledged Assets consisting of accounts receivable is a governmental authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Pledged Collateral.

The representations and warranties as to the information set forth in Schedules referred to herein are made, as to each Pledgor as of the date hereof (or, in the case of the representation and warranty set forth in clause (l) above, shall be made on and as of June 30, 2008) and, as to each Additional Pledgor, as of the date of the applicable Counterpart, that, in the case of a Pledge Amendment, such representations and warranties are made as of the date of such Pledge Amendment.

Company shall cause its legal counsel to deliver a legal opinion regarding certain of the representations and warranties set forth in this Section 5 and such other matters as may be reasonably requested by Collateral Agent.

SECTION 6.              Covenants .  Each Pledgor shall:

(a)           not, except as expressly permitted by the Indenture Documents and without prejudice to clause (y) below, (i) sell, assign (by operation of law or otherwise) or otherwise dispose of, or grant any option with respect to, any of the Pledged Collateral, except for Permitted Dispositions, (ii) create or suffer to exist any Lien (other than, for the avoidance of doubt, Permitted Liens) upon or with respect to any of the Pledged Collateral, except for the security interest under this Agreement or any other Indenture Document, or (iii) permit any issuer of Pledged Equity to merge or consolidate with another Person (except (x) with a Pledgor in a merger or consolidation in which the surviving or resulting Person is a Pledgor and (y) the Designated Italian Merger) unless upon the effectiveness of such merger or consolidation, the surviving or resulting Person (if other than a Pledgor) becomes a Pledgor hereunder and all of the outstanding Equity Interests of the surviving or resulting Person (subject to the proviso to Section 2(a)) become pledged hereunder and no cash, securities or other property is distributed in respect of the outstanding shares of any other constituent Person;

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(b)           do or cause to be done, and cause each issuer of Pledged Equity to do or cause to be done, all things necessary to preserve and keep in full force and effect its respective corporate existence in accordance with its organizational documents (as the same may be amended from time to time);

(c)           (i) cause each issuer of Pledged Equity not to issue Equity Interests (except Permitted Securities) in addition to or in substitution for the Pledged Equity issued by such issuer, except to Company or any other Pledgor, (ii) subject to the proviso to Section 2(a), pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all additional Equity Interests of each issuer of Pledged Equity, and (iii) subject to the proviso to Section 2(a), pledge hereunder, immediately upon its acquisition (directly or indirectly) thereof, any and all Equity Interests of any Person that, after the date of this Agreement, becomes, as a result of any occurrence, a direct Domestic Subsidiary or a first tier Foreign Subsidiary of Company;

(d)           at its expense (i) perform and comply in all material respects with all terms and provisions of any agreement related to the Pledged Collateral required to be performed or complied with by it, (ii) maintain its agreements in all such agreements in full force and effect, and (iii) enforce its rights under all such agreements in accordance with their terms;

(e)           give Collateral Agent at least 30 days’ prior written notice of any (i) change in such Pledgor’s name, identity or corporate structure and (ii) reincorporation, reorganization or other action that results in a change of the jurisdiction or organization of such Pledgor;

(f)            promptly deliver to Collateral Agent all written notices received by it with respect to the Pledged Collateral;

(g)           pay promptly when due all taxes, assessments and governmental charges or levies imposed upon, and all claims against, the Pledged Collateral, except to the extent the validity thereof is being contested in good faith and with respect to which reserves in conformity with GAAP have been provided on the books of the applicable Pledgor; provided that such Pledgor shall in any event pay such taxes, assessments, charges, levies or claims not later than five days prior to the date of any proposed sale under any judgement, writ or warrant of attachment entered or filed against such Pledgor or any of the Pledged Collateral as a result of the failure to make such payment;

(h)           keep adequate records concerning the Pledged Collateral and permit Collateral Agent or its representatives or designees from time to time upon reasonable notice within normal business hours to examine and make copies of and abstracts from such records;

(i)            at its expense, defend Collateral Agent’s right, title and security interest in and to the Pledged Collateral against the claims of any person;

(j)            at its expense, at any time and from time to time, promptly execute and deliver all further instruments, financing statements, continuation statements and documents and take all further action that may be necessary or desirable or that Collateral Agent may reasonably request in order to (i) perfect and protect the security interests created or purported to be created

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hereby, (ii) enable Collateral Agent to exercise and enforce its rights and remedies hereunder in respect of the Pledged Collateral or (iii) otherwise effect the purposes of this Agreement;

(k)           not make or consent to any amendment or other modification or waiver with respect to any agreement concerning the Pledged Collateral as permitted by the Indenture Documents and this Agreement; not take any action that could, or fail to take any action which failure could, reasonably be expected to result in any one or more of the representations and warranties set forth in Section 5 of this Agreement being incorrect or inaccurate in any material respect when made;

(l)            in the case of Company, not have or permit to exist any first-tier Domestic Subsidiary that is not a Pledgor hereunder without the prior written consent of Collateral Agent (provided, however, in the case of a Domestic Subsidiary that is directly or indirectly acquired or formed by Company after the Issue Date, this covenant shall not be breached for a period of five Business Days after such acquisition or formation thereof, provided that within such period such acquired or formed Domestic Subsidiary shall become an Additional Pledgor in accordance with Section 18, and Schedule II shall be updated to reflect such Domestic Subsidiary as a Pledgor);

(m)          not take any action which would, or fail to take any action which failure would, in any manner impair the enforceability of Collateral Agent’s security interest in any Pledged Collateral; `

(n)           keep the Pledged Collateral in good order and repair and not use the same in violation of law or any policy of insurance thereon;

(o)           permit Collateral Agent, or its designee, to inspect the Pledged Collateral at any reasonable time, wherever located;

(p)           not, from and after June 30, 2008, permit the value of all cash and other assets maintained in all Deposit Accounts and Securities Accounts constituting Pledged Collateral, that are not subject to effective Account Control Agreements, to exceed, in the aggregate, $1,000,000;

(q)           not grant Control over any Deposit Account or Securities Account constituting Pledged Collateral to any Person other than Collateral Agent;

(r)            promptly notify Collateral Agent in writing of, and update Schedule II so as to list with specificity, all Commercial Tort Claims at any time held or acquired by such Pledgor (except for such Commercial Tort Claims in amounts as do not, in the aggregate, exceed $1,000,000), in each case including a summary description of such claim, and grant to Collateral Agent in writing a security interest therein and in the proceeds thereof, all upon the terms of this Agreement, with such writing to be in form and substance reasonably satisfactory to Collateral Agent;

(s)            [Intentionally omitted];

(t)             [Intentionally omitted];

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(u)           [Intentionally omitted];

(v)           conduct all transactions with any of its Affiliates on terms that are fair and reasonable and no less favorable to such Pledgor than it would obtain in a comparable arm’s length transaction with a Person not an Affiliate;

(w)          [Intentionally omitted];

(x)           [Intentionally omitted];

(y)           in the case of Company, maintain direct ownership of all of, and not transfer or dispose of any of, and not permit to be issued to any Person other than Company any of, the Capital Stock in the Pledged Subsidiaries; provided that, in the case of Shenzhen, PAI shall maintain direct ownership of all of, and shall not transfer or dispose of any of, and shall not permit to be issued to any Person other than PAI any of, the Capital Stock in Shenzhen; and provided further that, in the case of PowerOne UK, Company shall maintain direct ownership of no less than 60.5% of, and shall not transfer or dispose of any of, and shall not permit to be issued (if after such issuance Company shall have less than 60.5% of the Capital Stock in PowerOne UK) to any Person other than Company any of, the Capital Stock in PowerOne UK; and

(z)            not make or hold any Investments in any other Person, except for Permitted Investments.

SECTION 7.              Further Assurances .

(a)           Each Pledgor agrees that from time to time, at the expense of such Pledgor, such Pledgor will promptly execute and deliver, and cause to be executed and delivered, at request of Collateral Agent, agreements establishing that Collateral Agent has control over all Pledged Collateral and all further instruments and documents, and take all further action, that may be necessary or desirable, or that Collateral Agent may request, in order to perfect and protect any security interest granted or purported to be granted hereby or to enable Collateral Agent to exercise and enforce its rights and remedies hereunder with respect to any Pledged Collateral.  Without limiting the generality of the foregoing, each Pledgor will:  (i) execute (if necessary) and file such financing or continuation statements, or amendments thereto, and such other instruments or notices, as may be necessary or desirable, or as Collateral Agent may request, in order to perfect and preserve the security interests granted or purported to be granted hereby (including, without limitation, pledge agreements under the local law of the jurisdiction of any Person the Equity Interests in which constitute Pledged Collateral, and all filings, notices, instruments and other documents relating thereto) and (ii) at Collateral Agent’s request, appear in and defend any action or proceeding that may affect such Pledgor’s title to or Collateral Agent’s security interest in all or any part of the Pledged Collateral.  Each Pledgor hereby authorizes Collateral Agent ( provided Collateral Agent shall have no obligation) to file one or more financing or continuation statements, and amendments thereto, relative to all or any part of the Pledged Collateral without the signature of such Pledgor; provided , however, that each Pledgor shall have the primary obligation to file any financing or continuation statement.

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(b)           Each Pledgor further agrees that it will, upon obtaining any additional Equity Interest (including any additional Equity Interest hereafter owned in a Domestic Subsidiary that is a direct subsidiary of Company or a Foreign Subsidiary that is a first tier subsidiary of Company (in each case, formed or acquired after the date of this Agreement)), promptly (and in any event within five Business Days) deliver to Collateral Agent a Pledge Amendment, duly executed by such Pledgor, in substantially the form of Schedule V annexed hereto (a “ Pledge Amendment ”), in respect of the additional Pledged Equity to be pledged pursuant to this Agreement; provided that the failure of such Pledgor to execute a Pledge Amendment with respect to any additional Pledged Equity shall not impair the security interest of Collateral Agent therein or otherwise adversely affect the rights and remedies of Collateral Agent hereunder with respect thereto.  Upon each such acquisition, the representations and warranties contained in Section 5 hereof shall be deemed to have been made by such Pledgor as to the Pledged Equity described in such Pledge Amendment.

(c)           Each Pledgor shall promptly notify Collateral Agent in writing of any rights to Intellectual Property Collateral acquired by such Pledgor after the date hereof.  Promptly aft