<PAGE>

                                                                   EXHIBIT 10.3

                     AMENDED AND RESTATED CAPITAL CALL AGREEMENT

          AMENDED AND RESTATED CAPITAL CALL AGREEMENT (as amended, 
supplemented or modified from time to time, this "Agreement"), dated as of 
May 29, 1998, and amended and restated as of February 12, 1999, made by and 
among J.F. Lehman 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 a substantial 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, JFLEI, Holdings, the Borrower and the Agent entered into 
the Capital Call Agreement, dated as of May 29, 1998 (the "Original Capital 
Call Agreement"), in connection with the Credit Agreement;

          WHEREAS, it is a condition precedent to the effectiveness of the 
First Amendment and Waiver, dated as of February 12, 1999, to the Credit 
Agreement that JFLEI, Holdings and the Borrower shall have executed and 
delivered this Agreement;

          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 and to amend and restate the 
Original Capital Call Agreement; and

          WHEREAS, JFLEI, Holdings and the Borrower also will obtain benefits 
as a result of the effectiveness of the First Amendment and Waiver referred 
to above and, accordingly, desire to execute and deliver this Agreement in 
order to satisfy the condition described in the second preceding paragraph 
and to amend and restate the Original Capital Call Agreement;

          NOW, THEREFORE, it is agreed:

                                       
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          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 $5,000,000.

          "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) the failure of 
Holdings to achieve at least $8,500,000 of Consolidated EBITDA for any Test 
Period (I.E., any period of four consecutive fiscal quarters of Holdings) 
ending after the date 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 cash equity capital contribution to 
Holdings by JFLEI.

          "Original Capital Call Agreement" shall have the meaning provided 
in the third recital of this Agreement.

          "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, as soon as practicable, 
but in any event within 45 days thereafter,  make an Investment in Holdings 
in an amount equal to the 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' 

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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 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.

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          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 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

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          (j)  take any other action which would, under otherwise applicable 
principles of 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 First Amendment and Waiver to 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, 

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(x) the execution, delivery and performance of this Agreement or (y) the 
legality, validity, 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 

                                        6
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or privilege hereunder and no course of dealing between JFLEI, the Agent, any 
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 earlier 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 THE COURTS OF THE STATE OF NEW YORK 

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AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF JFLEI, 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 
COPES 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.

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          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:

450 Park Avenue                    J.F. LEHMAN EQUITY INVESTORS I, L.P.
Sixth Floor
New York, New York 10022           By: J.F.L. Investors, L.L.C., its general
                                       partner

Telephone: (212) 634-0100
Telecopier: (212) 634-1155         By: /s/ Donald Glickman
Attention: Donald Glickman            ---------------------------------------
                                         Title:

                                   ELGAR HOLDINGS, INC.

                                   By: /s/ Christopher W. Kelford
                                      ---------------------------------------
                                        Chief Financial Officer

                                   ELGAR ELECTRONICS CORPORATION

                                   By: /s/ Christopher W. Kelford
                                      ---------------------------------------
                                        Chief Financial Officer

Accepted and Agreed to:

BANKERS TRUST COMPANY,
as Agent for the Banks

By: /s/ G. Andrew Keith
   -------------------------
    Vice President