AMENDED AND RESTATED PLEDGE AGREEMENT
AMENDED AND RESTATED PLEDGE AGREEMENT (as amended, modified or
supplemented from time to time, this "Agreement"), dated as of February 3,
1998, and amended and restated as of May 29, 1998, made by each of the
undersigned pledgors (each a "Pledgor" and, together with any other entity
that becomes a pledgor hereunder pursuant to Section 24 hereof, the
"Pledgors") to BANKERS TRUST COMPANY, as Collateral Agent (the "Pledgee"),
for the benefit of the Secured Creditors (as defined below). Except as
otherwise defined herein, capitalized terms used herein and defined in the
Credit Agreement (as defined below) shall be used herein as therein defined.
W I T N E S S E T H :
WHEREAS, Elgar Holdings, Inc. ("Holdings"), Elgar Electronics
Corporation (the "Borrower"), the lenders from time to time party thereto
(the "Banks"), and Bankers Trust Company, as Agent (together with any
successor agent, 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"), providing for the making of Loans to, and the issuance
of Letters of Credit for the account of, the Borrower as contemplated therein
(the Banks, the Agent and the Pledgee are herein called the "Bank Creditors");
WHEREAS, the Borrower may at any time and from time to time enter
into one or more Interest Rate Protection Agreements or Other Hedging
Agreements with one or more Banks or any affiliate thereof (each such Bank or
affiliate, even if the respective Bank subsequently ceases to be a Bank under
the Credit Agreement for any reason, together with such Bank's or affiliate's
successors and assigns, if any, collectively, the "Other Creditors," and
together with the Bank Creditors, the "Secured Creditors");
WHEREAS, pursuant to the Subsidiaries Guaranty, each Subsidiary
Guarantor has jointly and severally guarantied to the Secured Creditors the
payment when due of all Guaranteed Obligations as described therein;
WHEREAS, pursuant to the Holdings Guaranty, Holdings has guaranteed
to the Secured Creditors the payment when due of all of the Guaranteed
Obligations as described therein;
WHEREAS, the Pledgee and the Pledgors (other than Power Ten)
entered into the Pledge Agreement, dated as of February 3, 1998 (the
"Original Pledge Agreement"), in connection with the Existing Credit
Agreement;
WHEREAS, it is a condition to the making of Loans to, and the
issuance of Letters of Credit for the account of, the Borrower under the
Credit Agreement that each Pledgor
shall have executed and delivered to the Pledgee this Agreement; and
WHEREAS, each Pledgor desires to enter into this Agreement in order
to satisfy the condition described in the preceding paragraph and to amend
and restate the Original Pledge Agreement in the form of this Agreement;
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Pledgor, the receipt and sufficiency of which are
hereby acknowledged, each Pledgor hereby makes the following representations
and warranties to the Pledgee for the benefit of the Secured Creditors and
hereby covenants and agrees with the Pledgee for the benefit of the Secured
Creditors as follows:
1. SECURITY FOR OBLIGATIONS. This Agreement is made by each
Pledgor for the benefit of the Secured Creditors to secure:
(i) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and indebtedness
(including, without limitation, indemnities, Fees and interest thereon) of
such Pledgor to the Bank Creditors, whether now existing or hereafter
incurred under, arising out of, or in connection with the Credit Agreement
and the other Credit Documents to which such Pledgor is a party (including,
in the case of each Guarantor, all such obligations and indebtedness of
such Guarantor under its Guaranty) and the due performance and compliance
by such Pledgor with all of the terms, conditions and agreements contained
in the Credit Agreement and such other Credit Documents (all such
obligations and liabilities under this clause (i), except to the extent
consisting of obligations or indebtedness with respect to Interest Rate
Protection Agreements or Other Hedging Agreements, being herein
collectively called the "Credit Document Obligations");
(ii) the full and prompt payment when due (whether at the stated
maturity, by acceleration or otherwise) of all obligations and liabilities
owing by such Pledgor to the Other Creditors under, or with respect to
(including by reason of such Pledgor's Guaranty), any Interest Rate
Protection Agreement or Other Hedging Agreement, whether such Interest Rate
Protection Agreement or Other Hedging Agreement is now in existence or
hereafter arising, and the due performance and compliance by such Pledgor
with all of the terms, conditions and agreements contained therein (all
such obligations and liabilities described in this clause (ii) being herein
collectively called the "Other Obligations");
(iii) any and all sums advanced by the Pledgee in order to
preserve the Collateral (as hereinafter defined) or preserve its security
interest in the Collateral;
(iv) in the event of any proceeding for the collection or enforcement
of any indebtedness, obligations or liabilities of such Pledgor referred to
in clauses (i), (ii) and (iii) above, after an Event of Default (which term
to mean and include any Event of Default under, and as defined in, the
Credit Agreement or any payment default by the Borrower under any Interest
Rate Protection Agreement or Other Hedging Agreement
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and shall, in any event, include, without limitation, any payment default
on any of the Obligations (as hereinafter defined)) shall have occurred
and be continuing, the reasonable expenses of retaking, holding, preparing
for sale or lease, selling or otherwise disposing of or realizing on the
Collateral, or of any exercise by the Pledgee of its rights hereunder,
together with reasonable attorneys' fees and court costs; and
(v) all amounts paid by any Secured Creditor as to which such
Secured Creditor has the right to reimbursement under Section 11 of this
Agreement;
all such obligations, liabilities, sums and expenses set forth in clauses (i)
through (v) of this Section 1 being herein collectively called the
"Obligations," it being acknowledged and agreed that the "Obligations" shall
include extensions of credit of the types described above, whether
outstanding on the date of this Agreement or extended from time to time after
the date of this Agreement.
2. DEFINITION OF STOCK, NOTES, SECURITIES, PARTNERSHIP INTERESTS,
ETC. (a) As used herein, (i) the term "Stock" shall mean all of the issued
and outstanding shares of capital stock, and all warrants and options to
purchase any such capital stock, of any corporation at any time owned by any
Pledgor, provided that the term "Stock" shall not include more than 65% of
the issued and outstanding capital stock of any Pledgor that is a foreign
Subsidiary of the Borrower and also is not a Subsidiary Guarantor (including
Elgar FSC), (ii) the term "Notes" shall mean any and all Intercompany Notes
and all other promissory notes or other evidences of indebtedness from time
to time issued to, or held by, any Pledgor and (iii) the term "Securities"
shall mean all of the Stock and Notes. Each Pledgor represents and warrants,
that on the date hereof, (A) the Stock held by such Pledgor consists of the
number and type of shares of the stock of the corporations as described in
Annex A hereto for such Pledgor, (B) such Stock constitutes that percentage
of the issued and outstanding capital stock of the issuing corporation as is
set forth in Annex A hereto, (C) the Notes held by such Pledgor consist of
the promissory notes described in Annex B hereto for such Pledgor, (D) such
Pledgor is the holder of record and sole beneficial owner of the Stock and
the Notes held by such Pledgor and (E) such Pledgor owns no other Securities.
(b) As used herein, the term "Partnership Interest" shall mean the
entire partnership interests (whether general and/or limited partnership
interests) at any time owned by each Pledgor in any Person (each a "Pledged
Partnership"). Each Pledgor represents and warrants that, on the date
hereof, (A) the Partnership Interests held by such Pledgor constitutes that
percentage of the entire partnership interest of the respective Pledged
Partnership as is set forth on Annex C hereto for such Pledgor and (B) such
Pledgor owns no other Partnership Interests. Notwithstanding anything to the
contrary contained in this Agreement, no Pledgor shall be required to pledge
any Partnership Interest owned by such Pledgor in a Person that is not a
Subsidiary of such Pledgor to the extent a pledge of such Partnership
Interest would violate any provision of the partnership agreement pursuant to
which such Partnership Interest is created.
(c) All Stock at any time pledged or required to be pledged
hereunder is hereinafter called the "Pledged Stock;" all Notes at any time
pledged or required to be pledged
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hereunder are hereinafter called the "Pledged Notes;" all Pledged Stock and
Pledged Notes together are called the "Pledged Securities;" all Partnership
Interests at any time pledged or required to be pledged hereunder are
hereinafter called the "Pledged Partnership Interests", and the Pledged
Securities and the Pledged Partnership Interests, together with all proceeds
thereof, including any securities and moneys received and at the time held by
the Pledgee hereunder, are hereinafter called the "Collateral."
(d) Notwithstanding anything to the contrary contained in this
Agreement (including certain of the representations and warranties in Section
16 hereof), no Pledgor shall be required to pledge any Notes hereunder with
an outstanding principal amount of $50,000 or less, provided that no more
than $100,000 in the aggregate of all such $50,000 or less Notes (including,
for this purpose, any Instruments (as defined in the Security Agreement) not
required to be delivered pursuant to the Security Agreement) shall be
excluded from the delivery requirements under this Agreement.
3. PLEDGE OF SECURITIES, ETC.
3.1. PLEDGE. (a) To secure the Obligations of such Pledgor and
for the purposes set forth in Section 1 hereof, each Pledgor hereby (i)
grants to the Pledgee (and reconfirms its grant to the Pledgee under the
Original Pledge Agreement of) a security interest in all of the Collateral
owned by such Pledgor, (ii) pledges and deposits as security with the
Pledgee, the Securities owned by such Pledgor on the date hereof, and
delivers to the Pledgee certificates or instruments therefor, duly endorsed
in blank by such Pledgor in the case of Notes and accompanied by undated
stock powers duly executed in blank by such Pledgor (and accompanied by any
transfer tax stamps required in connection with the pledge of such
Securities) in the case of Stock, or such other instruments of transfer as
are reasonably acceptable to the Pledgee, and without limitation of clause
(i), grants to Pledgee a security interest in such Pledgor's Partnership
Interests (and delivers any certificates or instruments evidencing such
partnership interests, duly endorsed in blank) and all of such Pledgor's
right, title and interest in each Pledged Partnership including, without
limitation:
(i) all of the capital thereof and its interest in all profits,
losses, Partnership Assets (as defined below) and other distributions to
which such Pledgor shall at any time be entitled in respect of any such
Collateral;
(ii) all other payments due or to become due to such Pledgor in
respect of any such Collateral, whether under any partnership agreement or
otherwise, whether as contractual obligations, damages, insurance proceeds
or otherwise;
(iii) all of its claims, rights, powers, privileges, authority,
options, security interest, liens and remedies, if any, under any
partnership or other agreement or at law or otherwise in respect of any
such Collateral;
(iv) all present and future claims, if any, of such Pledgor against
any Pledged Partnership for moneys loaned or advanced, for services
rendered or otherwise;
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(v) all of such Pledgor's rights under any partnership agreement or
at law to exercise and enforce every right, power, remedy, authority,
option and privilege of such Pledgor relating to any Partnership Interest,
including any power, if any, to terminate, cancel or modify any general or
limited partnership agreement, to execute any instruments and to take any
and all other action on behalf of and in the name of such Pledgor in
respect of such Partnership Interest and any Pledged Partnership, to make
determinations, to exercise any election (including, but not limited to,
election of remedies) or option or to give or receive any notice, consent,
amendment, waiver or approval, together with full power and authority to
demand, receive, enforce, collect, or receipt for any of the foregoing or
for any Partnership Asset, to enforce or execute any checks, or other
instruments or orders, to file any claims and to take any action in
connection with any of the foregoing;
(vi) all other property hereafter delivered in substitution for or in
addition to any of the foregoing, all certificates and instruments
representing or evidencing such other property and all cash, securities,
interest, dividends, distributions, rights and other property at any time
and from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all thereof; and
(vii) to the extent not otherwise included, all proceeds of any or
all of the foregoing.
(b) As used herein, the term "Partnership Assets" shall mean all
assets, whether tangible or intangible and whether real, personal or mixed
(including, without limitation, all partnership capital and interests in
other partnerships), at any time owned by any Pledged Partnership or
represented by any Partnership Interest.
3.2. SUBSEQUENTLY ACQUIRED SECURITIES AND/OR PARTNERSHIP
INTERESTS. (a) If any Pledgor shall acquire (by purchase, stock dividend or
otherwise) any additional Securities at any time or from time to time after
the date hereof, such Pledgor will promptly thereafter deposit such
Securities (or certificates or instruments representing such Securities) as
security with the Pledgee and deliver to the Pledgee certificates or
instruments therefor, duly endorsed in blank in the case of such Notes, and
accompanied by undated stock powers duly executed in blank by such Pledgor
(and accompanied by any transfer tax stamps required in connection with the
pledge of such Securities) in the case of such Stock, or such other
instruments of transfer as are reasonably acceptable to the Pledgee, and will
promptly thereafter deliver to the Pledgee a certificate executed by a
principal executive officer of such Pledgor describing such Securities and
certifying that the same has been duly pledged with the Pledgee hereunder.
(b) If any Pledgor shall acquire (by purchase, distribution or
otherwise) any additional Partnership Interest at any time or from time to
time after the date hereof, and, to the extent such Partnership Interest is
certificated, such Pledgor shall forthwith deliver to the Pledgee
certificates therefor, accompanied by such instruments of transfer as are
acceptable to the Pledgee, and shall promptly thereafter deliver to the
Pledgee a certificate executed by a principal executive officer of such
Pledgor describing such Partnership Interest and certifying that the
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same has been duly pledged with the Pledgee hereunder.
3.3. UNCERTIFICATED SECURITIES AND PARTNERSHIP INTERESTS.
Notwithstanding anything to the contrary contained in Sections 3.1 and 3.2
hereof, if any Securities (whether now owned or hereafter acquired) or
Partnership Interests are uncertificated securities, the relevant Pledgor
shall promptly notify the Pledgee thereof, and shall promptly take all
actions (to the extent not already taken) required to perfect the security
interest of the Pledgee under applicable law (including, in any event, under
the applicable provisions of the relevant UCC). Each Pledgor further agrees
to take such actions as the Pledgee deems necessary or reasonably desirable
to effect the foregoing and to permit the Pledgee to exercise any of its
rights and remedies hereunder.
4. APPOINTMENT OF SUB-AGENTS; ENDORSEMENTS, ETC. If and to the
extent necessary to enable the Pledgee to perfect its security interest in
any of the Collateral or to exercise any of its remedies hereunder, the
Pledgee shall have the right to appoint one or more sub-agents for the
purpose of retaining physical possession of the Pledged Securities or Pledged
Partnership Interests, which may be held (in the discretion of the Pledgee)
in the name of the relevant Pledgor, endorsed or assigned in blank or in
favor of the Pledgee or any nominee or nominees of the Pledgee or a sub-agent
appointed by the Pledgee.
5. VOTING, ETC., WHILE NO EVENT OF DEFAULT. Unless and until
there shall have occurred and be continuing an Event of Default, each Pledgor
shall be entitled to exercise any and all (i) voting and other consensual
rights pertaining to the Pledged Securities owned by it, and to give
consents, waivers or ratifications in respect thereof, and (ii) voting,
consent, administration, management and other rights and remedies under any
partnership agreement or otherwise with respect to the Pledged Partnership
Interests of such Pledgor; PROVIDED, that, in each case, no vote shall be
cast or any consent, waiver or ratification given or any action taken or
omitted to be taken which would violate or be inconsistent with any of the
terms of this Agreement, the Credit Agreement, any other Credit Document or
any Interest Rate Protection Agreement or Other Hedging Agreement
(collectively, the "Secured Debt Agreements"), or which would have the effect
of impairing the security interest of the Pledgee in the Collateral. All
such rights of each Pledgor to vote and to give consents, waivers and
ratifications shall cease in case an Event of Default has occurred and is
continuing, and Section 7 hereof shall become applicable.
6. DIVIDENDS AND OTHER DISTRIBUTIONS. Unless and until there
shall have occurred and be continuing an Event of Default, (i) all cash
dividends and distributions payable in respect of the Pledged Stock and all
payments in respect of the Pledged Notes shall be paid to the respective
Pledgor and (ii) all cash distributions payable in respect of the Pledged
Partnership Interests shall be paid to the respective Pledgor. The Pledgee
shall be entitled to receive directly, and to retain as part of the
Collateral:
(i) all other or additional stock or other securities or partnership
interests (other than cash) paid or distributed by way of dividend,
distribution or otherwise in respect of the Collateral;
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(ii) all other or additional stock or other securities or partnership
interests paid or distributed in respect of the Collateral by way of
merger, consolidation, conveyance of assets, liquidation, exchange of
stock, stock-split, spin-off, split-up, reclassification, combination of
shares or similar rearrangement; and
(iii) all other property (other than cash) paid or distributed by
way of dividend or distribution in respect of the Collateral.
Nothing contained in this Section 6 shall limit or restrict in any way the
Pledgee's right to receive proceeds of the Collateral in any form in
accordance with Section 3 of this Agreement. All dividends, distributions or
other payments which are received by any Pledgor contrary to the provisions
of this Section 6 and Section 7 hereof shall be received in trust for the
benefit of the Pledgee, shall be segregated from other property or funds of
such Pledgor and shall be forthwith paid over to the Pledgee as Collateral in
the same form as so received (with any necessary endorsement).
7. REMEDIES IN CASE OF DEFAULT OR EVENT OF DEFAULT. If there shall
have occurred and be continuing an Event of Default, then and in every such
case, the Pledgee shall be entitled to exercise all of the rights, powers and
remedies (whether vested in it by this Agreement, any other Secured Debt
Agreement or by law) for the protection and enforcement of its rights in
respect of the Collateral, and the Pledgee shall be entitled to exercise all
the rights and remedies of a secured party under the Uniform Commercial Code
and also shall be entitled, without limitation, to exercise the following
rights, which each Pledgor hereby agrees to be commercially reasonable:
(a) to receive all amounts payable in respect of the Collateral
otherwise payable under Section 6 hereof to the respective Pledgor;
(b) to transfer all or any part of the Collateral into the
Pledgee's name or the name of its nominee or nominees;
(c) to accelerate any Pledged Note which may be accelerated in
accordance with its terms, and take any other lawful action to collect upon
any Pledged Note (including, without limitation, to make any demand for
payment thereon);
(d) to vote all or any part of the Pledged Stock or Pledged
Partnership Interests (whether or not transferred into the name of the
Pledgee) and give all consents, waivers and ratifications in respect of the
Collateral and otherwise act with respect thereto as though it were the
outright owner thereof (each Pledgor hereby irrevocably constituting and
appointing the Pledgee the proxy and attorney-in-fact of such Pledgor, with
full power of substitution to do so); and
(e) at any time and from time to time to sell, assign and deliver,
or grant options to purchase, all or any part of the Collateral, or any
interest therein, at any public or private sale, without demand of
performance, advertisement or notice of intention to sell or of the time or
place of sale or adjournment thereof or to redeem or otherwise (all of which
are hereby waived
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by each Pledgor), for cash, on credit or for other property, for immediate or
future delivery without any assumption of credit risk, and for such price or
prices and on such terms as the Pledgee in its absolute discretion may
determine, PROVIDED that at least 10 days' written notice of the time and
place of any such sale shall be given to the respective Pledgor. The Pledgee
shall not be obligated to make any such sale of Collateral regardless of
whether any such notice of sale has theretofore been given. Each Pledgor
hereby waives and releases to the fullest extent permitted by law any right
or equity of redemption with respect to the Collateral, whether before or
after sale hereunder, and all rights, if any, of marshalling the Collateral
and any other security for the Obligations or otherwise. At any such sale,
unless prohibited by applicable law, the Pledgee on behalf of the Secured
Creditors may bid for and purchase all or any part of the Collateral so sold
free from any such right or equity of redemption. Neither the Pledgee nor
any other Secured Creditor shall be liable for failure to collect or realize
upon any or all of the Collateral or for any delay in so doing nor shall any
of them be under any obligation to take any action whatsoever with regard
thereto.
8. REMEDIES, ETC., CUMULATIVE. Each and every right, power and
remedy of the Pledgee provided for in this Agreement, or now or hereafter
existing at law or in equity or by statute shall be cumulative and concurrent
and shall be in addition to every other such right, power or remedy. The
exercise or beginning of the exercise by the Pledgee or any other Secured
Creditor of any one or more of the rights, powers or remedies provided for in
this Agreement or in any other Secured Debt Agreement or now or hereafter
existing at law or in equity or by statute or otherwise shall not preclude
the simultaneous or later exercise by the Pledgee or any other Secured
Creditor of all such other rights, powers or remedies, and no failure or
delay on the part of the Pledgee or any other Secured Creditor to exercise
any such right, power or remedy shall operate as a waiver thereof. No notice
to or demand on any Pledgor in any case shall entitle it to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of any of the rights of the Pledgee or any other Secured Creditor to
any other or further action in any circumstances without notice or demand.
The Secured Creditors (by their acceptance of the benefits of this Agreement)
agree that this Agreement may be enforced only by the action of the Agent or
the Pledgee, in each case acting upon the instructions of the Required
Secured Creditors (as defined in the Security Agreement) and that no Secured
Creditor, other than the Agent or the Pledgee, shall have any right
individually to seek to enforce or to enforce this Agreement or to realize
upon the security to be granted hereby, it being understood and agreed that
such rights and remedies may be exercised by the Agent or the Pledgee or the
holders of at least a majority of the outstanding Other Obligations, as the
case may be, for the benefit of the Secured Creditors upon the terms of this
Agreement.
9. APPLICATION OF PROCEEDS. (a) All moneys collected by the
Pledgee upon any sale or other disposition of the Collateral pursuant to the
terms of this Agreement, together with all other moneys received by the
Pledgee hereunder, shall be applied in the manner provided in the Security
Agreement.
(b) It is understood and agreed that the Pledgors shall remain
jointly and severally liable to the extent of any deficiency between the
amount of the proceeds of the Collateral hereunder and the aggregate amount
of the Obligations.
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10. PURCHASERS OF COLLATERAL. Upon any sale of the Collateral by
the Pledgee hereunder (whether by virtue of the power of sale herein granted,
pursuant to judicial process or otherwise), the receipt of the Pledgee or the
officer making the sale shall be a sufficient discharge to the purchaser or
purchasers of the Collateral so sold, and such purchaser or purchasers shall
not be obligated to see to the application of any part of the purchase money
paid over to the Pledgee or such officer or be answerable in any way for the
misapplication or nonapplication thereof.
11. INDEMNITY. Each Pledgor jointly and severally agrees (i) to
indemnify and hold harmless the Pledgee in such capacity and each other
Secured Creditor and their respective successors, assigns, employees, agents
and servants (individually an "Indemnitee," and collectively the
"Indemnitees") from and against any and all claims, demands, losses,
judgments and liabilities (including liabilities for penalties) of whatsoever
kind or nature, and (ii) to reimburse each Indemnitee for all costs and
expenses, including reasonable attorneys' fees, in each case growing out of
or resulting from this Agreement or the exercise by any Indemnitee of any
right or remedy granted to it hereunder or under any other Secured Debt
Agreement (but excluding any claims, demands, losses, judgments and
liabilities or expenses to the extent incurred by reason of gross negligence
or willful misconduct of such Indemnitee (as finally determined by a court of
competent jurisdiction)). In no event shall the Pledgee be liable, in the
absence of gross negligence or willful misconduct on its part (as finally
determined by a court of competent jurisdiction), for any matter or thing in
connection with this Agreement other than to account for monies actually
received by it in accordance with the terms hereof. If and to the extent
that the obligations of any Pledgor under this Section 11 are unenforceable
for any reason, such Pledgor hereby agrees to make the maximum contribution
to the payment and satisfaction of such obligations which is permissible
under applicable law.
12. PLEDGEE NOT BOUND. (a) Nothing herein shall be construed to
make the Pledgee or any other Secured Creditor liable as a general partner or
limited partner of any Pledged Partnership and the Pledgee or any other
Secured Creditor by virtue of this Agreement or otherwise (except as referred
to in the following sentence) shall not have any of the duties, obligations
or liabilities of a general partner or limited partner of any Pledged
Partnership. The parties hereto expressly agree that, unless the Pledgee
shall become the absolute owner of a Pledged Partnership Interest pursuant
hereto, this Agreement shall not be construed as creating a partnership or
joint venture among the Pledgee, any other Secured Creditor and/or any
Pledgor.
(b) Except as provided in the last sentence of paragraph (a) of
this Section, the Pledgee, by accepting this Agreement, did not intend to
become a general partner or limited partner of any Pledged Partnership or
otherwise be deemed to be a co-venturer with respect to any Pledgor or any
Pledged Partnership either before or after an Event of Default shall have
occurred. The Pledgee shall have only those powers set forth herein and
shall assume none of the duties, obligations or liabilities of a general
partner or limited partner of any Pledged Partnership or of any Pledgor.
(c) The Pledgee shall not be obligated to perform or discharge any
obligation of any Pledgor as a result of the security interest hereby
effected.
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(d) The acceptance by the Pledgee of this Agreement, with all the
rights, powers, privileges and authority so created, shall not at any time or
in any event obligate the Pledgee to appear in or defend any action or
proceeding relating to the Collateral to which it is not a party, or to take
any action hereunder or thereunder, or to expend any money or incur any
expenses or perform or discharge any obligation, duty or liability under the
Collateral.
13. FURTHER ASSURANCES; POWER-OF-ATTORNEY. (a) Each Pledgor
agrees that it will join with the Pledgee in executing and, at such Pledgor's
own expense, file and refile under the Uniform Commercial Code or other
applicable law such financing statements, continuation statements and other
documents in such offices as the Pledgee may reasonably deem necessary and
wherever required by law in order to perfect and preserve the Pledgee's
security interest in the Collateral and hereby authorizes the Pledgee to file
financing statements and amendments thereto relative to all or any part of
the Collateral without the signature of such Pledgor where permitted by law,
and agrees to do such further acts and things and to execute and deliver to
the Pledgee such additional conveyances, assignments, agreements and
instruments as the Pledgee may reasonably require or deem necessary to carry
into effect the purposes of this Agreement or to further assure and confirm
unto the Pledgee its rights, powers and remedies hereunder.
(b) Each Pledgor hereby appoints the Pledgee such Pledgor's
attorney-in-fact, with full authority in the place and stead of such Pledgor
and in the name of such Pledgor or otherwise, to act from time to time solely
after the occurrence and during the continuance of an Event of Default in the
Pledgee's reasonable discretion to take any action and to execute any
instrument which the Pledgee may deem necessary or advisable to accomplish
the purposes of this Agreement.
14. THE PLEDGEE AS AGENT. The Pledgee will hold in accordance
with this Agreement all items of the Collateral at any time received under
this Agreement. It is expressly understood and agreed by each Secured
Creditor that by accepting the benefits of this Agreement each such Secured
Creditor acknowledges and agrees that the obligations of the Pledgee as
holder of the Collateral and interests therein and with respect to the
disposition thereof, and otherwise under this Agreement, are only those
expressly set forth in this Agreement. The Pledgee shall act hereunder on
the terms and conditions set forth herein and in Section 12 of the Credit
Agreement.
15. TRANSFER BY THE PLEDGORS. No Pledgor will sell or otherwise
dispose of, grant any option with respect to, or mortgage, pledge or
otherwise encumber any of the Collateral or any interest therein (except as
may be permitted in accordance with the terms of the Credit Agreement).
16. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE PLEDGORS.
Each Pledgor represents, warrants and covenants that (i) it is the legal,
record and beneficial owner of all Pledged Securities and Pledged Partnership
Interests pledged by it hereunder, subject to no Lien (except the Lien
created by this Agreement and, in the case of Pledged Partnership Interests,
other Permitted Liens); (ii) it has full power, authority and legal
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right to pledge all the Pledged Securities and Pledged Partnership Interests
pledged by it pursuant to this Agreement; (iii) this Agreement has been duly
authorized, executed and delivered by such Pledgor and constitutes a legal,
valid and binding obligation of such Pledgor enforceable 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);
(iv) except as have been obtained by the Pledgors as of the date hereof, no
consent of any other party (including, without limitation, any stockholder,
partner or creditor of such Pledgor or any of its Subsidiaries or any Pledged
Partnership) and no consent, license, permit, approval or authorization of,
exemption by, notice or report to, or registration, filing or declaration
with, any governmental authority is required to be obtained by such Pledgor
in connection with the execution, delivery or performance of this Agreement,
the validity or enforceability of this Agreement, the perfection or
enforceability of the Pledgee's security interest in the Collateral or,
except for compliance with or as may be required by applicable securities
laws, the exercise by the Pledgee of any of its rights or remedies provided
herein; (v) the execution, delivery and performance of this Agreement by such
Pledgor will not violate any provision of any applicable law or regulation or
of any order, judgment, writ, award or decree of any court, arbitrator or
governmental authority, domestic or foreign, applicable to such Pledgor, or
of the certificate of incorporation or by-laws (or equivalent organizational
documents) of such Pledgor or of any securities issued by such Pledgor or any
of its Subsidiaries, or of any mortgage, indenture, lease, deed of trust,
loan agreement, credit agreement or other material contract, agreement or
instrument or undertaking to which such Pledgor or any of its Subsidiaries is
a party or which purports to be binding upon such Pledgor or any of its
Subsidiaries or upon any of their respective assets and will not result in
the creation or imposition of (or the obligation to create or impose) any
lien or encumbrance on any of the assets of such Pledgor or any of its
Subsidiaries except as contemplated by this Agreement; (vi) all the shares of
Stock have been duly and validly issued, are fully paid and non-assessable
and are subject to no options to purchase or similar rights; (vii) each of
the Intercompany Notes constitutes, or when executed by the obligor thereof
will constitute, the legal, valid and binding obligation of such obligor,
enforceable in accordance with its terms except to the extent that the
enforceability thereof 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); (viii) the pledge, assignment and
delivery to the Pledgee of the Securities (other than uncertificated
securities) pursuant to this Agreement creates a valid and perfected first
priority Lien in the Securities, and the proceeds thereof, subject to no
other Lien or to any agreement purporting to grant to any third party a Lien
on the property or assets of the Pledgor which would include the Securities;
(ix) each such Pledged Partnership Interest has been validly acquired and is
fully paid for (to the extent applicable) and is duly and validly pledged
hereunder; (x) each general or limited partnership agreement delivered to the
Pledgee is an original signed counterpart (or a copy thereof) of the complete
and entire such partnership agreement in effect on the date hereof; (xi) each
partnership agreement is the legal, valid and binding obligation of each
Pledgor, enforceable in accordance with its terms; (xii) no Pledgor is in
default in the payment of any portion of any mandatory capital contribution,
if any, required to be made under any general or limited partnership
agreement to which such Pledgor is a party, and no Pledgor is in violation of
any other material provisions of any partnership
11
agreement to which such Pledgor is a party, or otherwise in default or
violation thereunder; (xiii) no Pledged Partnership Interest is subject to
any defense, offset or counterclaim, nor have any of the foregoing been
asserted or alleged against such Pledgor by any Person with respect thereto;
(xiv) the pledge and assignment of the Pledged Partnership Interests pursuant
to this Agreement, together with the relevant filings or recordings under the
UCC (which filings and recordings have been or will be made), creates a
valid, perfected and continuing first priority security interest in such
Partnership Interests and the proceeds thereof, subject to no prior lien or
encumbrance or to any agreement purporting to grant to any third party a lien
or encumbrance on the property or assets of such Pledgor which would include
the Collateral; (xv) there are no currently effective financing statements
under the UCC covering any property which is now or hereafter may be included
in the Collateral and such Pledgor will not, without the prior written
consent of the Pledgee, execute and, until the Termination Date (as
hereinafter defined), there will not ever be on file in any public office any
enforceable financing statement or statements covering any or all of the
Collateral, except financing statements filed or to be filed in favor of the
Pledgee as secured party; (xvi) each Pledgor shall give the Pledgee prompt
notice of any written claim it receives relating to the Collateral; (xvii)
each Pledgor shall deliver to the Pledgee a copy of each other demand, notice
or document received by it which may adversely affect the Pledgee's interest
in the Collateral promptly upon, but in any event within 10 days after, such
Pledgor's receipt thereof; (xviii) a notice in the form set forth in Annex D
attached hereto and by this reference made a part hereof (such notice the
"Partnership Notice"), appropriately completed, notifying each Pledged
Partnership of the existence of this Agreement and a certified copy of this
Agreement have been delivered by each Pledgor to the relevant Pledged
Partnership, and to the extent obtainable by commercially reasonable efforts,
each such Pledgor has received and delivered to the Collateral Agent an
acknowledgment in the form set forth in Annex E attached hereto (such
acknowledgement, the "Partnership Acknowledgement"), duly executed by the
relevant Pledged Partnership; and (xix) the chief executive office of such
Pledgor is set forth on Annex F hereto or such other office as such Pledgor
may establish in accordance with the terms of the Security Agreement. Each
Pledgor covenants and agrees that it will defend the Pledgee's right, title
and security interest in and to the Collateral against the claims and demands
of all persons whomsoever; and such Pledgor covenants and agrees that it will
have like title to and right to pledge any other property at any time
hereafter pledged to the Pledgee as Collateral hereunder and will likewise
defend the right thereto and security interest therein of the Pledgee and the
other Secured Creditors.
17. PLEDGORS' OBLIGATIONS ABSOLUTE, ETC. The obligations of each
Pledgor under this Agreement shall be absolute and unconditional and shall
remain in full force and effect without regard to, and shall not be released,
suspended, discharged, terminated or otherwise affected by, any circumstance
or occurrence whatsoever (other than for the indefeasible payment in full in
cash of all Obligations), including, without limitation: (i) any renewal,
extension, amendment or modification of or addition or supplement to or
deletion from any Secured Debt Agreement or any other instrument or agreement
referred to therein, or any assignment or transfer of any thereof; (ii) any
waiver, consent, extension, indulgence or other action or inaction under or
in respect of any such agreement or instrument including, without limitation,
this Agreement; (iii) any furnishing of any additional security to the
Pledgee or its assignee or any acceptance thereof or any release of any
security by the Pledgee or its assignee;
12
(iv) any limitation on any party's liability or obligations under any such
instrument or agreement or any invalidity or unenforceability, in whole or in
part, of any such instrument or agreement or any term thereof; or (v) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceeding relating to any Pledgor or any
Subsidiary of any Pledgor, or any action taken with respect to this Agreement
by any trustee or receiver, or by any court, in any such proceeding, whether
or not such Pledgor shall have notice or knowledge of any of the foregoing.
18. REGISTRATION, ETC. (a) If there shall have occurred and be
continuing an Event of Default then, and in every such case, upon receipt by
any Pledgor from the Pledgee of a written request or requests that such
Pledgor cause any registration, qualification or compliance under any Federal
or state securities law or laws to be effected with respect to all or any
part of the Pledged Stock of the Borrower, such Pledgor as soon as
practicable and at its expense will cause such registration to be effected
(and be kept effective) and will cause such qualification and compliance to
be declared effected (and be kept effective) as may be so requested and as
would permit or facilitate the sale and distribution of such Pledged Stock,
including, without limitation, registration under the Securities Act of 1933,
as then in effect (or any similar statute then in effect), appropriate
qualifications under applicable blue sky or other state securities laws and
appropriate compliance with any other government requirements, PROVIDED, that
the Pledgee shall furnish to such Pledgor such information regarding the
Pledgee as such Pledgor may reasonably request in writing and as shall be
required in connection with any such registration, qualification or
compliance. Such Pledgor will cause the Pledgee to be kept advised in
writing as to the progress of each such registration, qualification or
compliance and as to the completion thereof, will furnish to the Pledgee such
number of prospectuses, offering circulars or other documents incident
thereto as the Pledgee from time to time may reasonably request, and will
indemnify the Pledgee, each other Secured Creditor and all others
participating in the distribution of such Pledged Stock against all claims,
losses, damages and liabilities caused by any untrue statement (or alleged
untrue statement) of a material fact contained therein (or in any related
registration statement, notification or the like) or by any omission (or
alleged omission) to state therein (or in any related registration statement,
notification or the like) a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as
the same may have been caused by an untrue statement or omission based upon
information furnished in writing to such Pledgor by the Pledgee or such other
Secured Creditor expressly for use therein.
(b) If at any time when the Pledgee shall determine to exercise
its right to sell all or any part of the Pledged Securities or Pledged
Partnership Interests pursuant to Section 7 hereof, and such Pledged
Securities or Pledged Partnership Interests or the part thereof to be sold
shall not, for any reason whatsoever, be effectively registered under the
Securities Act of 1933, as then in effect, the Pledgee may, in its sole and
absolute discretion, sell such Pledged Securities or Pledged Partnership
Interests, as the case may be, or part thereof by private sale in such manner
and under such circumstances as the Pledgee may deem necessary or advisable
in order that such sale may legally be effected without such registration.
Without limiting the generality of the foregoing, in any such event the
Pledgee, in its sole and absolute discretion (i) may proceed to make such
private sale notwithstanding that a registration statement for the purpose of
13
registering such Pledged Securities or Pledged Partnership Interests or part
thereof shall have been filed under such Securities Act, (ii) may approach
and negotiate with a single possible purchaser to effect such sale, and (iii)
may restrict such sale to a purchaser who will represent and agree that such
purchaser is purchasing for its own account, for investment, and not with a
view to the distribution or sale of such Pledged Securities or Pledged
Partnership Interests or part thereof. In the event of any such sale, the
Pledgee shall incur no responsibility or liability for selling all or any
part of the Pledged Securities or Pledged Partnership Interests at a price
which the Pledgee, in its sole and absolute discretion, in good xxxxx xxxxx
reasonable under the circumstances, notwithstanding the possibility that a
substantially higher price might be realized if the sale were deferred until
after registration as aforesaid.
19. TERMINATION; RELEASE. (a) After the Termination Date (as
defined below), this Agreement and the security interest created hereby shall
terminate (provided that all indemnities set forth herein including, without
limitation, in Section 11 hereof shall survive any such termination), and the
Pledgee, at the request and expense of any Pledgor, will execute and deliver
to such Pledgor a proper instrument or instruments acknowledging the
satisfaction and termination of this Agreement, and will duly assign,
transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral as has not theretofore
been sold or otherwise applied or released pursuant to this Agreement,
together with any moneys at the time held by the Pledgee or any of its
sub-agents hereunder. As used in this Agreement, "Termination Date" shall
mean the date upon which the Total Commitment and all Interest Rate
Protection Agreements or Other Hedging Agreements have been terminated, all
Loans have been repaid in full, all Letters of Credit have been terminated
and all Obligations then owing have been paid in full.
(b) In the event that any part of the Collateral is sold in
connection with a sale permitted by Section 9.02 of the Credit Agreement
(other than a sale to any Pledgor or any Subsidiary thereof) or is otherwise
released at the direction of the Required Secured Creditors and the proceeds
of such sale or sales or from such release are applied in accordance with the
provisions of the Credit Agreement, to the extent required to be so applied,
the Pledgee, at the request and expense of any Pledgor, will duly assign,
transfer and deliver to such Pledgor (without recourse and without any
representation or warranty) such of the Collateral (and releases therefor) as
is then being (or has been) so sold or released and has not theretofore been
released pursuant to this Agreement.
(c) At any time that a Pledgor desires that the Pledgee assign,
transfer and deliver Collateral (and releases therefor) as provided in
Section 19(a) or (b) hereof, it shall deliver to the Pledgee a certificate
signed by a principal executive officer of such Pledgor stating that the
release of the respective Collateral is permitted pursuant to such Section
19(a) or (b).
(d) The Pledgee shall have no liability whatsoever to any other
Secured Creditor as the result of any release of Collateral by it in
accordance with this Section 19.
20. NOTICES, ETC. All such notices and communications hereunder
shall be sent or delivered by mail, telegraph, telex, telecopy, cable or
overnight courier service and all
14
such notices and communications shall, when mailed, telegraphed, telexed,
telecopied, or cabled or sent by overnight courier, be effective when
delivered, or sent by telex or telecopier and shall be effective upon
receipt. All notices and other communications shall be in writing and
addressed as follows:
(a) if to any Pledgor, at the address set forth opposite such
Pledgor's signature below;
(b) if to the Pledgee, at:
Bankers Trust Company
One Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(c) if to any Bank Creditor, either (x) to the Agent, at the
address of the Agent specified in the Credit Agreement or (y) at such address
as such Bank Creditor shall have specified in the Credit Agreement;
(d) if to any Other Creditor at such address as such Other
Creditor shall have specified in writing to the Pledgors and the Pledgee;
or at such other address as shall have been furnished in writing by any
Person described above to the party required to give notice hereunder.
21. WAIVER; AMENDMENT. None of the terms and conditions of this
Agreement may be changed, waived, modified or varied in any manner whatsoever
unless in writing duly signed by each Pledgor directly affected thereby and
the Pledgee (with the written consent of the Required Secured Creditors);
PROVIDED, that any change, waiver, modification or variance affecting the
rights and benefits of a single Class (as defined below) of Secured Creditors
(and not all Secured Creditors in a like or similar manner) shall also
require the written consent of the Requisite Creditors (as defined below) of
such affected Class. For the purpose of this Agreement, the term "Class"
shall mean each class of Secured Creditors, I.E., whether (i) the Bank
Creditors as holders of the Credit Document Obligations or (ii) the Other
Creditors as the holders of the Other Obligations. For the purpose of this
Agreement, the term "Requisite Creditors" of any Class shall mean each of (i)
with respect to the Credit Document Obligations, the Required Banks and (ii)
with respect to the Other Obligations, the holders of at least a majority
amount of all obligations outstanding from time to time under the Interest
Rate Protection Agreements or Other Hedging Agreements.
22. MISCELLANEOUS. This Agreement shall be binding upon the
parties
15
hereto and their respective successors and assigns and shall inure to the
benefit of and be enforceable by each of the parties hereto and its
successors and assigns, provided that no Xxxxxxx may assign any of its rights
or obligations under this Agreement without the prior consent of the
Collateral Agent. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAW OF THE STATE OF NEW YORK.
The headings in this Agreement are for purposes of reference only and shall
not limit or define the meaning hereof. This Agreement may be executed in
any number of counterparts, each of which shall be an original, but all of
which shall constitute one instrument. In the event that any provision of
this Agreement shall prove to be invalid or unenforceable, such provision
shall be deemed to be severable from the other provisions of this Agreement
which shall remain binding on all parties hereto.
23. RECOURSE. This Agreement is made with full recourse to the
Pledgors and pursuant to and upon all the representations, warranties,
covenants and agreements on the part of the Pledgors contained herein and in
the other Secured Debt Agreements and otherwise in writing in connection
herewith or therewith.
24. ADDITIONAL PLEDGORS. It is understood and agreed that any
Subsidiary of Holdings that is required to execute a counterpart of this
Agreement after the date hereof pursuant to the Credit Agreement shall
automatically become a Pledgor hereunder by executing a counterpart hereof
and delivering the same to the Pledgee, at which time the Annexes to this
Agreement shall be approximately modified to reflect the Collateral then
owned by such additional Pledgor.
25. MISCELLANEOUS. Notwithstanding anything to the contrary
contained herein or in the Credit Agreement, each Pledgor hereby covenants
and agrees that with respect to any Pledged Partnership Interest pledged by
it hereunder, such Pledgor will deliver to the respective Pledged
Partnerships (with copies to the Pledgee) a Partnership Notice (appropriately
completed) and such Pledgor will deliver to the Pledgee a Partnership
Acknowledgement signed by the respective Pledged Partnerships, in each case
within 15 days following the date any such Pledged Partnership Interests are
pledged hereunder.
* * * *
16
IN WITNESS WHEREOF, each Pledgor and the Pledgee have caused this
Agreement to be executed by their duly elected officers duly authorized as of
the date first above written.
ADDRESS:
c/o X.X. Xxxxxx & Company, Inc. ELGAR HOLDINGS, INC.,
000 Xxxx Xxxxxx as a Pledgor
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000 By /s/ XXXXX XXXXX
Telecopier No.: (000) 000-0000 -------------------------
and Title:
0000 Xxxxx Xxxx Xxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
0000 Xxxxx Xxxx Xxxx XXXXX ELECTRONICS CORPORATION,
Xxx Xxxxx, Xxxxxxxxxx 00000 as a Pledgor
Attn: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000 By /s/ XXXXX XXXXX
and -------------------------
c/o X.X. Xxxxxx & Company, Inc. Title:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (212) 634-1155
000 Xxxxxxx Xxxxx XXXXX XXX,
Xxx Xxxxx, Xxxxxxxxxx 00000 as a Pledgor
Attn:
Telephone No.:
Telecopier No.: By /s/ XXXXX XXXXX
and -------------------------
c/o X.X. Xxxxxx & Company, Inc. Title:
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx Xxxxxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
17
Accepted and Agreed to:
BANKERS TRUST COMPANY,
as Pledgee, Collateral Agent
By /s/ XXXXXX XXXXX
---------------------------
Title:
18
