EXHIBIT 10.1
FIRST AMENDMENT AND WAIVER
FIRST AMENDMENT AND WAIVER (this "Amendment"), dated as of February
12, 1999, among ELGAR HOLDINGS, INC. ("Holdings"), ELGAR ELECTRONICS
CORPORATION (the "Borrower"), the lenders party to the Credit Agreement
referred to below (the "Banks"), and BANKERS TRUST COMPANY, as Agent (the
"Agent"), and solely for purposes of Sections 14 and 15 of this Amendment,
J.F. LEHMAN EQUITY INVESTORS I, L.P. ("JFLEI"). All capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
provided such terms in the Credit Agreement referred to below.
W I T N E S S E T H:
WHEREAS, Holdings, the Borrower, the Banks and the Agent are
parties to a Credit Agreement, dated as of February 3, 1998 and amended and
restated as of May 29, 1998 (as amended, modified or supplemented to, but not
including, the date hereof, the "Credit Agreement");
WHEREAS, JFLEI, Holdings, the Borrower and the Agent have entered
into the Capital Call Agreement;
WHEREAS, the parties hereto wish to amend and/or waive certain
provisions of the Credit Agreement as herein provided and amend and restate
in its entirety the Capital Call Agreement as herein provided; and
WHEREAS, subject to the terms and conditions of this Amendment, the
parties hereto agree as follows;
NOW, THEREFORE, it is agreed:
1. Holdings, the Borrower, the Banks and the Agent hereby
acknowledge and agree that on the First Amendment Effective Date (as defined
below), the Total Revolving Loan Commitment shall be permanently reduced from
$15,000,000 to $5,000,000 (as such amount may be further reduced from time to
time in accordance with the terms of the Credit Agreement). In connection
therewith, Schedule I of the Credit Agreement is hereby amended by deleting
the amount "$15,000,000" appearing each place under the "Revolving Loan
Commitment" column appearing therein and inserting in lieu thereof the amount
"$5,000,000".
2. Section 4.02(c) of the Credit Agreement is hereby amended by
inserting the following text at the end of the final parenthetical appearing
therein:
"and 100% of any cash equity contributions paid to Holdings as
contemplated by Section 10.12 shall be applied as provided in Sections
4.02(h) and (i)".
3. Section 4.02(h) of the Credit Agreement is hereby amended by
(i) inserting "(A)" immediately after the words "PROVIDED, HOWEVER,"
appearing therein and (ii) inserting the following language at the end of
such proviso:
" and (B) that any amount invested in Holdings as contemplated by
Section 10.12 shall be applied to reduce the then remaining Scheduled
Repayments in direct order of maturity".
4. Section 8.01(f) of the Credit Agreement is hereby amended by
(i) inserting "(A)" immediately after the words "to establish" appearing
therein and (ii) inserting the following language at the end thereof:
", and (B) the Consolidated EBITDA for the four consecutive fiscal
quarters of Holdings ended on the last day of such fiscal quarter or
year, as the case may be".
5. Section 9.02 of the Credit Agreement is hereby amended by
inserting the words "with the prior written consent of the Required Banks,"
immediately before the first word of clause (xii) thereof.
6. Section 9.04 of the Credit Agreement is hereby amended by
inserting the words "with the prior written consent of the Required Banks,"
immediately before the first word of clause (xii) thereof.
7. Section 9.05 of the Credit Agreement is hereby amended by
inserting the words "with the prior written consent of the Required Banks,"
immediately before the first word of clause (xiv) thereof.
8. Section 9.07 of the Credit Agreement is hereby amended by
deleting the table appearing therein in its entirety and inserting the
following new table in lieu thereof:
"Fiscal Quarter
Ending Closest To Ratio
----------------- ---------
June 30, 2000 0.95:1:00
September 30, 2000 1.10:1:00
December 31, 2000 1.20:1:00
March 31, 2001 1.40:1.00
June 30, 2001 1.50:1.00
September 30, 2001 1.60:1.00
December 31, 2001 1.70:1.00
March 31, 2002 1.70:1.00
and the last day of each
fiscal quarter thereafter 1:75:1.00".
9. Section 9.08 of the Credit Agreement is hereby amended by
deleting the table appearing therein in its entirety and inserting the
following new table in lieu thereof:
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"Period Ratio
------- ---------
The last day of Holdings fiscal quarter ending closest to 6:85:1.00
March 31, 2001 through and including the day immediately
preceding the last day of Holdings' fiscal quarter ending
closest to June 30, 2001
The last day of Holdings fiscal quarter ending closest to 6.70:1.00
June 30, 2001 through and including the day immediately
preceding the last day of Holdings' fiscal quarter ending
closest to September 30, 2001
The last day of Holdings fiscal quarter ending closest to 6.50:1.00
September 30, 2001 through and including the day
immediately preceding the last day of Holdings' fiscal
quarter ending closest to December 31, 2001
The last day of Holdings fiscal quarter ending closest to 6.25:1.00
December 31, 2001 through and including the day immediately
preceding the last day of Holdings' fiscal quarter ending
closest to March 31, 2002
The last day of Holdings fiscal quarter ending closest to 6.00:1.00
March 31, 2002 through and including the day immediately
preceding the last day of Holdings' fiscal quarter ending
closest to June 30, 2002
The last day of Holdings fiscal quarter ending closest to 5.70:1.00
June 30, 2002 through and including the day immediately
preceding the last day of Holdings' fiscal quarter ending
closest to September 30, 2002
The last day of Holdings fiscal quarter ending closest to 5.45:1.00
September 30, 2002 through and including the day
immediately preceding the last day of Holdings' fiscal
quarter ending closest to December 31, 2002
The last day of Holdings fiscal quarter ending closest to 5.25:1.00".
December 31, 2002 and thereafter
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10. Section 9.09 of the Credit Agreement is hereby amended by
deleting the table appearing therein in its entirety and inserting the
following new table in lieu thereof:
"Fiscal Quarter
Ending Closest To Amount
----------------- ----------
March 31, 1999 $2,540,000
June 30, 1999 $1,118,000
September 30, 1999 $1,892,000
December 31, 1999 $2,210,000
March 31, 2000 $3,875,000
June 30, 2000 $10,321,000
September 30, 2000 $11,559,000
December 31, 2000 $12,989,000
March 31, 2001 $15,095,000
June 30, 2001 $15,250,000
September 30, 2001 $15,500,000
December 31, 2001 $16,000,000
March 31, 2002 $16,500,000
June 30, 2002 $17,000,000
September 30, 2002 $17,250,000
December 31, 2002 $17,500,000".
11. Section 10 of the Credit Agreement is hereby amended by (i)
inserting the word "or" immediately after Section 10.11(b) thereof and (ii)
inserting the following new Section 10.12 immediately after such Section
10.11:
"10.12 ADDITIONAL EQUITY CONTRIBUTIONS. Holdings shall not have
received at least $4,000,000 of new cash equity contributions from JFLEI by
March 31, 1999;".
12. Section 11.01 of the Credit Agreement is hereby amended as
follows:
(i) by deleting the definition of "Blocked Commitment" appearing
therein an d inserting the following new definition of "Blocked Commitment"
in lieu thereof:
"'Blocked Commitment' shall mean $5,000,000; provided that the Blocked
Commitment shall be reduced to 0 on the date on which the new equity
contributions are made to Holdings as contemplated by Section 10.12
and all of the proceeds therefrom are applied to repay outstanding
Term Loans in accordance with Section 4.02(c).";
(ii) by deleting the last sentence appearing in the definition of
"Consolidated EBITDA";
(iii) deleting the definition of "Initial Blocked Amount" appearing
therein; and
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(iv) deleting the definition of "Test Period" appearing therein and
inserting the following new definition of "Test Period" in lieu thereof:
"'Test Period' shall mean each period of four consecutive fiscal
quarters of Holdings then last ended (taken as one accounting period);
PROVIDED, HOWEVER, (i) for purposes of determining compliance with
Section 9.09 for any period ending on or prior to Holdings' fiscal
quarter ending closest to March 31, 2000, the term "Test Period" shall
mean the fiscal quarter of Holdings then last ended and (ii) for
purposes of determining the Applicable Base Rate Margin, the
Applicable Eurodollar Rate Margin and compliance with clause (iii) of
the definition of Capital Call Event (as defined in the Capital Call
Agreement) in respect of the Test Period ending closest to March 31,
1999, Consolidated EBITDA shall be determined on a PRO FORMA basis as
if the Acquisition and the related financing had occurred on March 29,
1998."
13. The Banks hereby waive any Event of Default that has arisen
under the Credit Agreement solely as a result of the failure of Holdings to
comply with (i) Section 9.08 of the Credit Agreement at any time on or prior
to February 12, 1999 and (ii) Sections 9.07 and 9.09 of the Credit Agreement
for the Test Period ended on the last day of Holdings' fiscal quarter ended
closest to December 31, 1998.
14. JFLEI hereby irrevocably agrees for the benefit of the Banks
that it will make the capital contributions to Holdings as contemplated by
Section 10.12 of the Credit Agreement so that no Default or Event of Default
will arise thereunder.
15. JFLEI, Holdings, the Borrower, the Banks and the Agent hereby
agree that the existing Capital Call Agreement (Exhibit J to the Credit
Agreement) shall be replaced in its entirety by the amended and restated
Capital Call Agreement in the form of Annex I attached hereto and that all
references in the Credit Agreement to the "Capital Call Agreement" shall mean
and be a reference to the Capital Call Agreement in the form of Annex I
attached hereto.
16. This Amendment shall become effective on the date (the "First
Amendment Effective Date") when (i) each of JFLEI, Holdings, the Borrower and
the Required Banks shall have signed a counterpart hereof (whether the same
or different counterparts) and shall have delivered (including by way of
facsimile transmission) the same to the Agent at the Notice Office and (ii)
JFLEI, Holdings, the Borrower and the Agent shall have signed a counterpart
of the Capital Call Agreement in the form of Annex I attached hereto (whether
the same or different counterparts) and shall have delivered (including by
way of facsimile transmission) the same to the Agent at the Notice Office.
17. In order to induce the Banks to enter into this Amendment,
each of Holdings and the Borrower hereby represents and warrants that no
Default or Event of Default exists on the First Amendment Effective Date,
after giving effect to this Amendment.
18. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed
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and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of counterparts shall
be delivered to the Borrower and the Agent.
19. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF
THE STATE OF NEW YORK.
20. From and after the First Amendment Effective Date, all
references in the Credit Agreement and each of the other Credit Documents to
the Credit Agreement and the Capital Call Agreement shall be deemed to be
references to the Credit Agreement and the Capital Call Agreement as modified
hereby.
21. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document (other than the Capital Call
Agreement).
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the
date first above written.
ELGAR HOLDINGS, INC.
By: /s/ Christopher W. Kelford
-----------------------------------
Chief Financial Officer
ELGAR ELECTRONICS CORPORATION
By: /s/ Christopher W. Kelford
-----------------------------------
Chief Financial Officer
J.F. LEHMAN EQUITY INVESTORS I, L.P.
(solely for purposes of Sections 14 and 15 of this
Amendment)
By: J.F.L. Investors, L.L.C., its general partner
By: /s/ Donald Glickman
-----------------------------------
Title:
BANKERS TRUST COMPANY,
Individually and as Agent
By: /s/ G. Andrew Keith
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Vice President