CAPITAL CALL AGREEMENT
CAPITAL CALL AGREEMENT (as amended, supplemented or modified from
time to time, this "Agreement"), dated as of May 29, 1998, made by and among
X.X. Xxxxxx Equity Investors L.P. ("JFLEI"), Elgar Holdings, Inc.
("Holdings"), Elgar Electronics Corporation (the "Borrower"), and Bankers
Trust Company, as Agent (the "Agent") for the benefit of the various lenders
(the "Banks") from time to time party to the Credit Agreement referred to
below. Except as otherwise defined herein, all capitalized terms used herein
and defined in the Credit Agreement are used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Holdings, the Borrower, the Banks and the Agent have
entered into an Amended and Restated Credit Agreement, dated as of February
3, 1998 and amended and restated as of May 29, 1998 (as amended, modified or
supplemented from time to time, the "Credit Agreement");
WHEREAS, on the date hereof, JFLEI owns approximately ___% of the
economic interest and voting interest in Holdings' capital stock, and
Holdings owns 100% of the economic and voting interest in the Borrower's
capital stock;
WHEREAS, it is a condition precedent to the making of Loans to, and
the issuance of Letters of Credit for the account of, the Borrower under the
Credit Agreement that JFLEI, Holdings and the Borrower shall have executed
and delivered this Agreement; and
WHEREAS, JFLEI, Holdings and the Borrower will obtain benefits as a
result of the making of Loans to, and the issuance of Letters of Credit for
the account of, the Borrower under the Credit Agreement and, accordingly,
desire to execute and deliver this Agreement in order to satisfy the
condition described in the preceding paragraph;
NOW, THEREFORE, it is agreed:
1. CERTAIN DEFINED TERMS. As used herein, the following terms
shall have the following meanings:
"Agent" shall have the meaning provided in the first paragraph of
this Agreement.
"Agreement" shall have the meaning provided in the first paragraph
of this Agreement.
"Banks" shall have the meaning provided in the first paragraph of
this Agreement.
"Borrower" shall have the meaning provided in the first paragraph
of this Agreement.
"Capital Call Amount" shall mean (i) in the case of a Capital Call
Event of the type described in clause (i) or (ii) of the definition thereof,
$4,000,000 or (ii) in the case of a Capital Call Event of the type described
in clause (iii) of the definition thereof, an amount equal to the lesser of
(A) $4,000,000 and (B) that amount necessary to be added back to Consolidated
EBITDA to result in Holdings' bearing in compliance with Section 9.08 for the
Test Period ending closest to March 31, 1999.
"Capital Call Event" shall mean the first to occur of (i) an Event
of Default under Section 10.01 of the Credit Agreement, (ii) an Event of
Default under Section 10.05 of the Credit Agreement, and (iii) an Event of
Default under Section 10.03 of the Credit Agreement as a result of Holdings'
failure to be in compliance with Section 9.08 of the Credit Agreement in
respect of the Test Period ending closest to March 31, 1999 (determined, for
purposes of this definition, without giving effect to the last sentence
contained in the definition of "Consolidated EBIDTA" in the Credit
Agreement); it being understood and agreed, however, that if Holdings is in
compliance with Section 9.08 of the Credit Agreement for the Test Period
ending closest to March 31, 1999 (without giving effect to the contribution
of the Capital Call Amount), then a Capital Call Event shall not thereafter
occur and this Agreement shall be terminated in accordance with Section 15
hereof.
"Credit Agreement" shall have the meaning provided in the first
recital of this Agreement.
"Holdings" shall have the meaning provided in the first paragraph
of this Agreement.
"Investment" shall mean a capital contribution to Holdings by
JFLEI.
"Proportionate Share" of each Bank at any time shall mean a
fraction (x) the numerator of which is the sum of (I) the aggregate principal
amount of all Loans made by such Bank and then outstanding plus (II) the
amount (if any) of such Bank's participation at such time in outstanding
Swingline Loans and Letter of Credit Outstandings and (y) the denominator of
which is the sum of (I) the aggregate principal amount of all Loans then
outstanding plus (II) the aggregate amount of all Letter of Credit
Outstandings at such time.
2. REQUIRED CONTRIBUTIONS TO HOLDINGS; ETC. (a) JFLEI hereby
absolutely, irrevocably and unconditionally agrees that on the date any
Capital Call Event shall have occurred, JFLEI will immediately make an
Investment in Holdings in an amount equal to the applicable Capital Call
Amount; PROVIDED that to the extent such Capital Call Event arises because of
an Event of Default under Section 10.05 of the Credit Agreement or if any
such Investment in Holdings cannot be made by any reason whatsoever, then (in
either case) JFLEI's Investment shall instead be made by means of the
purchase by JFLEI from each of the Banks of a subordinated participation in
such Banks' outstanding Loans (and, to the extent provided below, such Banks'
participations in outstanding Swingline Loans and Letter of Credit
Outstandings), PRO RATA among the Banks based on their respective
Proportionate Shares at such time, with such participations to be evidenced
by a subordinated participation agreement in form and substance reasonably
satisfactory to the Agent. In the event that participations are purchased by
JFLEI as
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provided in this Section 2, then (i) the Total Unutilized Revolving Loan
Commitment pursuant to the Credit Agreement shall immediately terminate as
provided therein and (ii) the participations purchased from each Bank shall
be allocated ratably to the outstanding Loans and participations in Swingline
Loans and Letter of Credit Outstandings of the various Banks, although each
Bank with a Revolving Loan Commitment shall instead allocate any amounts
received in respect of Swingline Loans or Letter of Credit Outstandings first
to Revolving Loans, with any excess above the amount of outstanding
Revolving Loans to be held by the Agent as cash collateral for the
participations purchased in outstanding Swingline Loans and Letter of Credit
Outstandings; PROVIDED, FURTHER, that to the extent the respective Swingline
Loans are repaid by the Borrower or the Letter of Credit Outstandings are
reduced or repaid without requiring the funding by the respective Bank
participating in same (and thereby eliminating the need to use the collateral
for the purchased participation therein), any excess funds on deposit with
the Agent as a result of the purchase of participations in such contingent
obligations shall be reallocated (at the time and to the extent the Agent
determines that excess amounts are then held by it) to purchase
participations as otherwise required by the immediately preceding sentence.
(b) Holdings hereby irrevocably agrees that, immediately upon
receipt thereof, it will contribute the total Capital Call Amount received by
it pursuant to clause (a) of this Section 2 to the capital of the Borrower.
(c) The Borrower hereby acknowledges, confirms and agrees that
immediately upon receipt of the Capital Call Amount it shall apply such
amounts as a mandatory repayment of Loans in accordance with the provisions
of Sections 4.02(h) and (i) of the Credit Agreement.
3. PAYMENTS. All payments required to be made pursuant to this
Agreement shall be made in Dollars and in immediately available funds, and
shall be made on the same basis as provided in Sections 4.03 and 4.04 of the
Credit Agreement.
4. OBLIGATIONS INDEPENDENT. The obligations of JFLEI hereunder
are independent of the obligations of any Guarantor, the Borrower or any
other party, and a separate action or actions may brought and prosecuted
against JFLEI whether or not an action is brought against any Guarantor, the
Borrower or any other party and whether or not any Guarantor, the Borrower or
any other party shall be joined in any such action or actions. JFLEI waives,
to the fullest extent permitted by law, the benefit of statute of limitations
affecting its liability hereunder or the enforcement hereof.
5. CERTAIN WAIVERS BY JFLEI. JFLEI hereby waives notice of
acceptance of this Agreement and notice of any liability to which it may
apply, and waives presentment, demand of payment, protest, notice of
dishonor, or nonpayment of any such liability, suit or taking of other action
by Holdings, the Borrower, the Agent or any Bank against, and any other
notice to, JFLEI or any other party liable thereon.
6. ACTIONS RELATING TO OBLIGATIONS UNDER CREDIT AGREEMENT. The
Agent or the Banks (or any of the Banks) may (except as shall be required by
applicable statute and cannot be waived) at any time and from time to time
without the consent of, or notice to, JFLEI, without incurring responsibility
to JFLEI, without impairing or releasing the obligations of JFLEI
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hereunder, upon or without any terms or conditions and in whole or in part:
(a) change the manner, place or terms of payment of, and/or change
or extend the time of payment of, renew, alter or increase any of the
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof;
(b) take and hold security for the payment of the Obligations and
sell, exchange, release, impair, surrender, realize upon or otherwise deal
with in any manner and in any order any property by whomsoever at any time
pledged or mortgaged to secure, or howsoever securing, the Obligations or any
liabilities (including any of those hereunder) incurred directly or
indirectly in respect thereof or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower, any other Credit Party or others or otherwise act or refrain from
acting;
(d) settle or compromise any of the Obligations, any security
therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether
due or not) of the Borrower to creditors of the Borrower other than the
Secured Creditors;
(e) except as otherwise expressly provided herein, apply any sums
by whomsoever paid or howsoever realized to any liability or liabilities of
the Borrower to the Agent or the Banks regardless of what liability or
liabilities of JFLEI or the Borrower remain unpaid;
(f) release or substitute any one or more endorsers, guarantors,
Credit Parties or other obligors;
(g) consent to or waive any breach of, or any act, omission or
default under, any of the Credit Documents or any of the instruments or
agreements referred to therein, or otherwise amend, modify or supplement any
of the Credit Documents or any of such other instruments or agreements;
(h) act or fail to act in any manner referred to in this Agreement
which may deprive such JFLEI of any right to subrogation against the Borrower
to recover any payments made pursuant to this Agreement;
(i) pursue its rights and remedies under this Agreement and/or
under any guaranty of all or any part of the Obligations in whatever order,
or collectively, and the Agent and the Banks shall be entitled to JFLEI's
performance hereunder, notwithstanding any action taken (or not taken) by the
Agent and the Banks to enforce any of its rights or remedies against JFLEI or
any other Person, for all or any part of the Obligations or any payment
received under this Agreement or any other such guaranty; and/or
(j) take any other action which would, under otherwise applicable
principles of
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common law, give rise to a legal or equitable discharge of JFLEI from its
liabilities under this Agreement.
7. INVALIDITY, ETC., OF OBLIGATIONS. No invalidity, irregularity or
unenforceability of all or any of the Loans and/or any of the other Obligations
or of any security therefor shall affect, impair or be a defense to this
Agreement, and the obligations of JFLEI hereunder shall be absolute and
unconditional notwithstanding the occurrence of any event or the existence of
any circumstance, including, without limitation, any bankruptcy or insolvency
proceeding with respect to JFLEI, Holdings or any of its Subsidiaries or any
event or circumstance which would constitute a legal or equitable discharge,
except payment in full in cash of all Obligations in accordance with the Credit
Agreement.
8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. In order to induce
the Banks to enter into the Credit Agreement, JFLEI makes the following
representations, warranties and agreements:
(i) JFLEI is a duly organized and validly existing limited
partnership in good standing under the laws of the State of Delaware and has
the power and authority to own its property and assets and to transact the
business in which it is engaged and presently proposes to engage.
(ii) JFLEI has the power and authority to execute, deliver and
perform the terms and provisions of this Agreement and has taken all
necessary action to authorize the execution, delivery and performance by it
of this Agreement. JFLEI has duly executed and delivered this Agreement, and
this Agreement constitutes its legal, valid and binding obligation
enforceable against it in accordance with its terms, except to the extent
that the enforceability hereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws generally
affecting creditors' rights and by equitable principles (regardless of
whether enforcement is sought in equity or at law).
(iii) Neither the execution, delivery or performance by JFLEI of
this Agreement, nor compliance by it with the terms and provisions hereof,
nor the consummation of the transactions contemplated herein, (x) will
contravene any provision of any applicable law, statute, rule or regulation
or any applicable order, writ, injunction or decree of any court or
governmental instrumentality, (y) will conflict with or result in any breach
of any of the terms, covenants, conditions or provisions of, or constitute a
default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien upon any of the property or assets of JFLEI
pursuant to the terms of any indenture, mortgage, deed of trust, credit
agreement, loan agreement or any other material agreement, contract or
instrument to which JFLEI is a party or by which it or any of its property or
assets is bound or to which it may be subject or (z) will violate any
provision of any of the organizational documents of JFLEI.
(iv) No order, consent, approval, license, authorization or
validation of, or filing, recording or registration with, or exemption by,
any governmental or public body or authority, or any subdivision thereof, is
required to authorize, or is required in connection with, (x) the execution,
delivery and performance of this Agreement or (y) the legality, validity,
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binding effect or enforceability of this Agreement.
(v) There are no actions, suits or proceedings pending or, to the
knowledge of JFLEI, threatened (x) with respect to this Agreement or (y) that
could reasonably be expected to (I) materially and adversely effect the
business, operations, property, assets, liabilities or condition (financial
or otherwise) of JFLEI or (II) have a material adverse effect on the rights
or remedies of the Banks or the Agent hereunder or on the ability of JFLEI to
perform its obligations to the Banks or the Agent hereunder.
(vi) JFLEI is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by, all
governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property.
(vii) JFLEI or the general partner thereof has the right to call
cash capital contributions from the partners of JFLEI in amounts, and at
times, sufficient to fund in a timely manner all obligations of JFLEI under
this Agreement.
9. MAINTAIN ABILITY TO FUND OBLIGATIONS. Each of JFLEI and the
general partner thereof agrees to take all action as may be necessary so
that, at all time prior to the satisfaction and release of all obligations of
JFLEI under this Agreement pursuant to Section 15 hereof, JFLEI and/or the
general partner thereof shall have the right to call cash capital
contributions from the partners of JFLEI in amounts, and at times, sufficient
to fund in a timely manner all obligations of JFLEI under this Agreement.
10. CAPITAL CALL EVENT OF DEFAULT. The following shall constitute
a "Capital Call Event of Default":
JFLEI shall commence a voluntary case concerning itself under Title
11 of the United States Code entitled "Bankruptcy," as now or hereafter in
effect, or any successor thereto (the "Bankruptcy Code"); or an involuntary
case is commenced against JFLEI, and the petition is not controverted within
10 days, or is not dismissed within 60 days, after commencement of the case;
or a custodian (as defined in the Bankruptcy Code) is appointed for, or takes
charge of, all or substantially all of the property of JFLEI, or JFLEI
commences any other proceeding under any reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction whether now or hereafter in effect
relating to JFLEI, or there is commenced against JFLEI any such proceeding
which remains undismissed for a period of 60 days, or JFLEI is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or JFLEI suffers any appointment of any
custodian or the like for it or any substantial part of its property to
continue undischarged or unstayed for a period of 60 days; or JFLEI makes a
general assignment for the benefit of creditors; or any corporate action is
taken by JFLEI for the purpose of effecting any of the foregoing.
11. WAIVERS OF FAILURES; DELAYS; ETC. No failure or delay on the
part of the Agent, any Bank, JFLEI, Holdings, the Borrower or any other
Credit Party in exercising any right, power or privilege hereunder and no
course of dealing between JFLEI, the Agent, any
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Bank, Holdings, the Borrower or any other Credit Party shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, power
or privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights, powers and
remedies herein expressly provided are cumulative and not exclusive of any
rights, powers or remedies which the Agent or any Bank would otherwise have.
No notice to or demand on JFLEI in any case shall entitle JFLEI to any other
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or any Bank to any other or further action
in any circumstances without notice or demand.
12. BENEFIT OF AGREEMENT. This Agreement shall be binding upon
JFLEI, Holdings and the Borrower, and their successors and assigns
(including, without limitation, any executors or administrators) and shall
inure to the benefit of the Agent and the Banks and their successors and
assigns. Each of JFLEI, Holdings and the Borrower acknowledges and agrees
that this Agreement is made for the benefit of the Agent and the Banks and
that the Agent and/or the Banks may enforce all of the obligations of JFLEI,
Holdings and the Borrower hereunder directly against them. Neither JFLEI,
Holdings nor the Borrower may assign any of its rights or obligations
hereunder without the consent of the Required Banks.
13. AMENDMENTS; WAIVERS. Neither this Agreement nor any provision
hereof may be changed, modified, amended or waived except with the written
consent of JFLEI, Holdings, the Borrower and the Agent (acting with the
consent of the Required Banks).
14. NOTICES. All notices and other communication hereunder shall
be made at the addresses, in the manner and with the effect provided in
Section 13.03 of the Credit Agreement, provided that, for this purpose, the
address of JFLEI shall be the address specified opposite its signature below.
15. TERMINATION OF AGREEMENT. This Agreement shall terminate and
be of no further force and effect (except to the extent any party's
obligations, if any, arising prior to such time hereunder have not
theretofore been fulfilled) upon the earliest of (i) the date on which the
Agent gives written notice to JFLEI, Holdings and the Borrower that their
obligations under this Agreement have been fulfilled or terminated and (ii)
the date on which all Commitments and Letters of Credit under the Credit
Agreement have been terminated and all Obligations under the Credit Agreement
have been repaid in full in cash in accordance with the requirements of the
Credit Agreement.
16. GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY TRIAL. (a) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF JFLEI,
HOLDINGS, THE BORROWER, THE AGENT AND THE BANKS HEREUNDER SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
MAY BE BROUGHT IN XXX XXXXXX XX XXX XXXXX XX XXX XXXX AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF JFLEI,
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HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH OF JFLEI,
HOLDINGS AND THE BORROWER HEREBY FURTHER IRREVOCABLY WAIVES ANY CLAIM THAT
ANY SUCH COURTS LACK JURISDICTION OVER SUCH PERSON, AND AGREES NOT TO PLEAD
OR CLAIM, IN ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
BROUGHT IN ANY OF THE AFORESAID COURTS, THAT ANY SUCH COURT LACKS
JURISDICTION OVER SUCH PERSON. EACH OF JFLEI, HOLDINGS, AND THE BORROWER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING BY THE MAILING OF XXXXX THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO SUCH PERSON, AT ITS ADDRESS FOR NOTICES PURSUANT TO
SECTION 13.03 OF THE CREDIT AGREEMENT OR AS SET FORTH OPPOSITE ITS SIGNATURE
BELOW, AS THE CASE MAY BE, SUCH SERVICE TO BECOME EFFECTIVE 30 DAYS AFTER
SUCH MAILING. EACH OF JFLEI, HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION TO SUCH SERVICE OF PROCESS AND FURTHER IRREVOCABLY
WAIVES AND AGREES NOT TO PLEAD OR CLAIM IN ANY ACTION OR PROCEEDING COMMENCED
HEREUNDER THAT SERVICE OF PROCESS WAS IN ANY WAY INVALID OR INEFFECTIVE.
NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE AGENT, ANY BANK OR THE HOLDER OF
ANY NOTE TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE
LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST JFLEI, HOLDINGS OR THE
BORROWER IN ANY OTHER JURISDICTION.
(c) EACH OF JFLEI, HOLDINGS AND THE BORROWER HEREBY IRREVOCABLY
WAIVES ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
VENUE OF ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE
(B) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVES AND AGREES NOT TO PLEAD OR
CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY
SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH OF JFLEI,
HOLDINGS AND THE BORROWER FURTHER IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO
TRIAL BY JURY IN ANY COURT OR JURISDICTION, INCLUDING, WITHOUT LIMITATION,
THOSE REFERRED TO IN CLAUSE (B) ABOVE, IN RESPECT OF ANY MATTER ARISING OUT
OF OR RELATING TO THIS AGREEMENT.
17. COSTS OF ENFORCEMENT; INDEMNITY. (a) JFLEI hereby agrees to
pay all out-of-pocket costs and expenses of each of the Agent and each Bank
in connection with the enforcement of this Agreement and JFLEI agrees to pay
all out-of-pocket costs and expenses of the Agent in connection with any
amendment, waiver or consent relating hereto (including, without limitation,
in each case, the reasonable fees and disbursements of counsel employed by
the Agent and each Bank, as the case may be).
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(b) JFLEI hereby agrees to indemnify and hold the Agent and each
Bank free and harmless from and against all loss, cost, damage, and expense,
by reason of the inaccuracy costs, which it shall at any time have actually
sustained by reason of the inaccuracy or breach of any of the foregoing
representations, warranties and covenants.
18. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original, but all of
which shall together constitute one and the same instrument. A set of
counterparts executed by all the parties hereto shall be lodged with JFLEI,
Holdings, the Borrower and the Agent.
19. HEADINGS DESCRIPTIVE. The headings of the several sections
and subsections of this Agreement are inserted for convenience only and shall
not in any way affect the meaning or construction of any provision of this
Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed and delivered as of the date first above written.
Addresses:
000 Xxxx Xxxxxx X.X. XXXXXX EQUITY INVESTORS I, L.P.
Xxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
By: J.F.L. Investors, L.L.C.,
Telephone: (000) 000-0000 its general partner
Telecopier: (000) 000-0000
Attention: Xxxxxx Xxxxxxxx By: /s/ XXXXXX XXXXXXXX
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Name:
Title: A Managing Member
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Agent for the Banks
By: /s/ XXXXXX XXXXX
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Name:
Title:
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