<PAGE>

                                                                    EXHIBIT 3.1
                                          
                           CERTIFICATE OF DESIGNATION OF
    PREFERENCES AND RELATIVE PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
                 SERIES C 6% CUMULATIVE CONVERTIBLE PREFERRED STOCK
                                         OF
                                ELGAR HOLDINGS, INC.
                                          
     (Pursuant to Section 151(g) of the General Corporation Law of the State of
                                     Delaware)

     Elgar Holdings, Inc., a corporation organized and existing under the 
laws of the State of Delaware (hereinafter the "Company"), DOES HEREBY 
CERTIFY THAT, pursuant to authority conferred upon the Board of Directors of 
the Company (the "Board of Directors") by the certificate of incorporation of 
the Company, as amended, the Board of Directors unanimously adopted the 
following resolutions on March 24, 1999 authorizing the issuance of the 
Series C 6% Cumulative Convertible Preferred Stock of the Company, which 
resolutions are still in full force and effect and are not in conflict with 
any provisions of the certificate of incorporation or bylaws of the Company:

     RESOLVED, that pursuant to the authority presently granted to and vested 
in the Board of Directors of this Company under the provisions of the 
Certificate of Incorporation of the Company and pursuant to the provisions of 
Section 151(g) of the General Corporation Law of the State of Delaware, this 
Board of Directors hereby creates a series of Preferred Stock to consist of 
4,000 shares, and hereby fixes the powers, preferences, relative 
participating, voting, optional and other special rights, and the 
qualifications, limitations and restrictions thereof, as follows:

     1.   DESIGNATION AND AMOUNT.  The shares of such series of Preferred 
Stock shall be designated as "Series C 6% Cumulative Convertible Preferred 
Stock" (the "Series C Preferred Stock"), and the number of shares 
constituting such series shall be 4,000.  The initial liquidation preference 
of the Series C Preferred Stock shall be $1,000 per share (the "Stated 
Liquidation Value").

     2.   RANK.  The Series C Preferred Stock shall, with respect to rights 
on bankruptcy, liquidation, winding up, dissolution and dividends, rank (i) 
junior to the Series A 10% Cumulative Redeemable Preferred Stock of the 
Company (the "Series A Preferred Stock"), (ii) on a parity with the Series B 
6% Cumulative Convertible Preferred Stock (the "Series B Preferred Stock") 
and (iii) senior to the Company's Common Stock, par value $0.01 per share 
(the "Common Stock"), and to all other classes and series of stock of the 
Company now or hereafter authorized, issued or outstanding, other than any 
class or series of stock of the Company expressly designated as being on a 
parity with ("Parity Securities") or senior to the Series C Preferred Stock.  
Such other classes or series of stock of the Company not expressly designated 
as being on a parity with or senior to the Series C Preferred Stock are 
referred to hereafter as "Junior Securities."  The rights of holders of 
shares of the Series C Preferred Stock are subordinate to the rights of the 
Company's general creditors, including the holders of the Company's 9-7/8% 
Senior Notes due 2008 (the "Senior Notes").


                                      1

<PAGE>

     3.   DIVIDENDS.

     (a)  The holders of shares of the Series C Preferred Stock shall be 
entitled to receive, when, as and if declared by the Board of Directors, out 
of funds legally available therefor, dividends payable semi-annually in 
arrears on March 31 and September 30 of each year (each such date, a 
"Dividend Payment Date"), except that if any Dividend Payment Date is not a 
Business Day (as defined below), then such semi-annual dividend shall be 
payable on the next succeeding Business Day and such next succeeding Business 
Day will be the Dividend Payment Date.  Dividends shall be payable to holders 
of the Series C Preferred Stock at the annual rate of 6% times the sum of (i) 
the Stated Liquidation Value and (ii) accrued but unpaid dividends as of the 
immediately preceding Dividend Payment Date, compounded semi-annually.  
Dividends shall be payable in cash only to holders of record at the close of 
business on the date specified by the Board of Directors at the time such 
dividend is declared (the "Record Date").  Any such Record Date shall be not 
less than 10 days and not more than 60 days prior to the relevant Dividend 
Payment Date.  All dividends paid with respect to shares of the Series C 
Preferred Stock shall be paid pro rata to the holders entitled thereto.

     (b)  Dividends on the Series C Preferred Stock shall accrue and be 
cumulative on a semi-annual basis (whether or not declared and whether or not 
funds are legally available for the payment thereof) from the Issue Date (as 
defined below).  The semi-annual dividend period shall be computed on the 
basis of a 360-day year of twelve 30-day months.

     (c)  So long as any shares of the Series C Preferred Stock are 
outstanding, the Company shall not, without the prior consent of the holders 
of at least fifty-one percent (51%) of the shares of outstanding Series C 
Preferred Stock, (i) make any payment on account of, or set apart for payment 
money for a sinking or other similar fund for, the purchase, redemption or 
retirement of, any Junior Securities (other than dividends or distributions 
payable in additional shares of Junior Securities to holders of Junior 
Securities); (ii) permit any corporation or other entity directly or 
indirectly controlled by the Company to purchase or redeem any Junior 
Securities; (iii) declare, pay or set apart for payment, or permit any 
corporation or other entity directly or indirectly controlled by the Company 
to declare, pay or set apart for payment, any dividend or make any 
distribution or payment on any Junior Securities or Parity Securities, 
whether directly or indirectly and whether in cash, obligations or shares of 
the Company or other property (other than dividends or distributions payable 
in additional shares of Junior Securities to holders of Junior Securities); 
or (iv) make any payment on account of, or set apart for payment money for a 
sinking or other similar fund for, the purchase, redemption or retirement of, 
any Parity Securities, whether directly or indirectly, and whether in cash, 
obligations, shares of the Company or other property (other than payments 
solely of Junior Securities), and shall not permit any corporation or other 
entity directly or indirectly controlled by the Company to purchase or redeem 
any Parity Securities, unless prior to or at the time of such payment or 
setting apart for payment, the Company shall have repurchased, redeemed or 
retired shares of the Series C Preferred Stock on a pro rata basis, in 
proportion to the respective Liquidation Preferences (as defined in the 
Certificate of Incorporation or applicable Certificate of Designation) of the 
Series C Preferred Stock and the Parity Securities as to which such sinking 
fund or similar fund payment, or such purchase, redemption or retirement, is 
being effected.


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<PAGE>

     (d)  Notwithstanding anything contained herein to the contrary, no 
dividends on shares of Series C Preferred Stock shall be authorized or 
declared by the Board of Directors of the Company or paid or set apart for 
payment by the Company at such time as the terms and provisions of any 
agreement of the Company, including any agreement relating to its 
indebtedness, prohibits such authorization, declaration, payment or setting 
apart for payment or provides that such authorization, declaration, payment 
or setting apart for payment would constitute a breach thereof or a default 
thereunder, or to the extent such declaration or payment shall be restricted 
or prohibited by law.

     4.   LIQUIDATION PREFERENCE.

     (a)  In the event of any voluntary or involuntary liquidation, 
dissolution or winding up of the affairs of the Company, the holders of 
shares of Series C Preferred Stock then outstanding shall be entitled to be 
paid out of the assets of the Company available for distribution to its 
stockholders an amount in cash equal to 100% of the Stated Liquidation Value 
for each share outstanding, plus an amount in cash equal to all accrued but 
unpaid dividends thereon (whether or not declared) as provided in Section 
3(b) above, without interest, to the date of liquidation, dissolution or 
winding up (such amount the "Liquidation Preference"), before any payment 
shall be made or any assets distributed to the holders of any of the Junior 
Securities.  If the assets of the Company are not sufficient to pay in full 
the Liquidation Preference payable to the holders of outstanding shares of 
the Series C Preferred Stock and any Parity Securities, then the holders of 
all such shares shall share ratably in such distribution of assets in 
accordance with the amount which would be payable on such distribution if the 
amounts to which the holders of outstanding shares of Series C Preferred 
Stock and the holders of outstanding shares of such Parity Securities are 
entitled were paid in full.

     (b)  For the purposes of this Section 4, neither the voluntary sale, 
conveyance, exchange or transfer (for cash, shares of stock, securities or 
other consideration) of all or substantially all of the property or assets of 
the Company nor the consolidation or merger of the Company with any one or 
more other corporations shall be deemed to be a voluntary or involuntary 
liquidation, dissolution or winding up of the Company, unless such voluntary 
sale, conveyance, exchange or transfer shall be in connection with a plan of 
liquidation, dissolution or winding up of the Company.

     5.   REDEMPTION.

     (a)  OPTIONAL REDEMPTION.  The Company may, at its option, redeem at any 
time, out of funds legally available therefor, in the manner provided in 
Section 6 hereof, all or any portion of the shares of the Series C Preferred 
Stock, at a redemption price per share equal to 100% of the Liquidation 
Preference thereof on the date of redemption, including dividends accrued 
through the Dividend Payment Date immediately preceding the redemption date, 
though not including any dividends for any period after such Dividend Payment 
Date; PROVIDED, HOWEVER, that any such optional redemption by the Company 
shall be on a pro rata basis and for whole shares of the Series C Preferred 
Stock; PROVIDED, FURTHER, HOWEVER, that the Company may redeem fractional 
shares of Series C Preferred Stock pursuant to this Section 5(a) in the event 
that after


                                      3

<PAGE>

such redemption a holder of Series C Preferred Stock would be left with less 
than one full share of Series C Preferred Stock.

     (b)  REDEMPTION UPON CHANGE OF CONTROL.  Upon the occurrence of a Change 
of Control (as defined below), the Series C Preferred Stock shall be 
redeemable at the option of the holders thereof, in whole or in part, at a 
redemption price per share equal to 100% of the Liquidation Preference on the 
date of redemption, including dividends accrued through the Dividend Payment 
Date immediately preceding the redemption date, though not including any 
dividends for any period after such Dividend Payment Date; PROVIDED, HOWEVER, 
that the Company will not be obligated to redeem, and will not redeem or call 
for redemption, any Series C Preferred Stock upon a Change of Control until 
it has repurchased or redeemed (x) such of the $90,000,000 original principal 
amount of Senior Notes then outstanding as the Company is required to 
repurchase in connection with a change of control pursuant to the terms of 
the Indenture, dated as of February 3, 1998, between the Company and United 
States Trust Company, relating to the Senior Notes and (y) such of the shares 
of Series A Preferred Stock then outstanding as the Company is required to 
repurchase pursuant to the Certificate of Designation relating thereto; 
PROVIDED, FURTHER, that any such redemption (and the Company's obligations 
with respect thereto) shall be subject in all respects to the applicable 
restrictions contained in the Amended and Restated Credit Agreement, dated as 
of February 3, 1998 and amended and restated as of May 29, 1998, among the 
Company, Elgar Electronics Corporation, a wholly owned subsidiary of the 
Company, and Bankers Trust Company, as agent, as such agreement may be 
amended or supplemented.  Subject to the foregoing provisos, the Company 
shall redeem, out of funds legally available therefor, the number of shares 
specified in the holders' notices of election to redeem pursuant to Section 
6(b) hereof on the date fixed for redemption.

     6.   PROCEDURE FOR REDEMPTION.

     (a)  In the event that the Company shall redeem shares of Series C 
Preferred Stock pursuant to Section 5(a) hereof, notice of such redemption 
shall be mailed by first-class mail, postage prepaid, and mailed not less 
than 30 days nor more than 60 days prior to the redemption date to the 
holders of record of the shares to be redeemed at their respective addresses 
as they shall appear in the records of the Company; PROVIDED, HOWEVER, that 
failure to give such notice or any defect therein or in the mailing thereof 
shall not affect the validity of the proceeding for the redemption of any 
shares so to be redeemed except as to the holder to whom the Company has 
failed to give such notice or except as to the holder to whom notice was 
defective.  Each such notice shall state:  (i) the redemption date; (ii) the 
number of shares of Series C Preferred Stock to be redeemed and, if less than 
all the shares held by such holders are to be redeemed, the number of such 
shares to be redeemed from such holders; (iii) the redemption price and form 
of consideration; (iv) the place or places where certificates for such shares 
are to be surrendered for payment of the redemption price; and (v) that 
dividends on the shares to be redeemed will cease to accrue on such 
redemption date.  Any redemption of less than all the shares of Series C 
Preferred Stock pursuant to Section 5(a) shall be made on a pro rata basis to 
all holders of Series C Preferred Stock.

     (b)  If a Change of Control should occur, then, subject to Section 5(b) 
above, within 30 days of the occurrence of such Change of Control, the 
Company shall give written notice by


                                      4

<PAGE>

first-class mail, postage prepaid, to each holder of Series C Preferred Stock 
at its address as it appears in the records of the Company, which notice 
shall set forth (in addition to the information required by the next 
succeeding paragraph):  (i) each holder's right to require the Company to 
redeem shares of Series C Preferred Stock held by such holder as a result of 
such Change of Control; (ii) the redemption price; (iii) the redemption date 
(which date shall be no earlier than 30 days and no later than 60 days from 
the date the notice in respect of such Change of Control is mailed); (iv) the 
procedures to be followed by such holder in exercising its right of 
redemption, including the place or places where certificates for such shares 
are to be surrendered for payment of the redemption price; and (v) that 
dividends on the shares to be redeemed will cease to accrue on the redemption 
date.  In the event a holder of shares of Series C Preferred Stock shall 
elect to require the Company to redeem any or all of such shares of Series C 
Preferred Stock, such holder shall deliver, within 20 days of the mailing to 
it of the Company's notice described in this Section 6(b), a written notice 
stating such holder's election and specifying the number of shares to be 
redeemed pursuant to Section 5(b) hereof.

     (c)  Notice by the Company having been mailed as provided in Section 
6(a) hereof, or notice of election having been mailed by the holders as 
provided in Section 6(b) hereof, and provided that on or before the 
applicable redemption date funds necessary for such redemption shall have 
been set aside by the Company, separate and apart from its other funds, in 
trust for the pro rata benefit of the holders of the shares of Series C 
Preferred Stock so called for or entitled to redemption, so as to be and to 
continue to be available therefor, then, from and after the redemption date, 
dividends on the shares of Series C Preferred Stock so called for or entitled 
to redemption shall cease to accrue, and said shares shall no longer be 
deemed to be outstanding and shall not have the status of shares of Series C 
Preferred Stock, and all rights of the holders thereof as stockholders of the 
Company (except the right to receive the applicable redemption price and any 
accrued and unpaid dividends from the Company to the date of redemption) 
shall cease, unless the Company defaults in the payment of the redemption 
price, in which case all rights of the holders of Series C Preferred Stock 
shall continue until the redemption price is paid. Upon surrender of the 
certificates for any shares so redeemed (properly endorsed or assigned for 
transfer, if the Board of Directors of the Company shall so require and a 
notice by the Company shall so state), such shares shall be redeemed by the 
Company at the applicable redemption price as aforesaid.  In case fewer than 
all the shares represented by any such certificate are redeemed, a new 
certificate or certificates shall be issued representing the unredeemed 
shares without cost to the holder thereof.  Any funds set aside in trust for 
the holders of Series C Preferred Stock pursuant to this Section 6(c) which 
remain unclaimed on the second anniversary of the applicable redemption date 
shall be released or repaid to the Company, after which the holders of shares 
called for redemption shall be entitled to receive payment of the redemption 
price only from the Compan.

     7.   REACQUIRED SHARES.  Shares of Series C Preferred Stock that have 
been issued and reacquired in any manner, including shares reacquired by 
redemption or shares converted into Common Stock pursuant to Section 9 below, 
shall (upon compliance with any applicable provisions of the laws of the 
State of Delaware) have the status of authorized and unissued shares of the 
class of Preferred Stock undesignated as to series and may be redesignated 
and reissued as part of any series of Preferred Stock other than the Series C 
Preferred Stock.


                                      5

<PAGE>

     8.   VOTING RIGHTS.  Except as specifically provided in this Section 8 
and except for any additional voting rights provided by law, the holders of 
Series C Preferred Stock shall have no voting rights.  The Certificate of 
Incorporation of the Company shall not be amended in any manner that would 
adversely alter or change the powers, preferences or special rights of the 
Series C Preferred Stock as set forth herein without the affirmative vote of 
the holders of at least fifty-one percent (51%) of the outstanding shares of 
Series C Preferred Stock.

     9.   CONVERSION RIGHTS.  The rights of the holders of shares of Series C 
Preferred Stock to convert such shares into shares of Common Stock (the 
"Conversion Rights"), and the terms and conditions of such conversion, shall 
be as follows:

     (a)  RIGHT TO CONVERT.

          (i)    At any time following a Triggering Event (as defined below), 
each holder of shares of the Series C Preferred Stock shall have the right 
and option to convert all, but not less than all, of such shares into that 
number of fully paid and nonassessable shares of Common Stock determined in 
accordance with the provisions of this Section 9.  In order to convert shares 
of the Series C Preferred Stock into shares of Common Stock, the holder 
thereof shall surrender the certificate or certificates therefor, duly 
endorsed, at the office of the Company or to the transfer agent for the 
Series C Preferred Stock or the Common Stock, together with written notice to 
the Company stating that he, she or it elects to convert the same and setting 
forth the name or names in which he, she or it wishes the certificate or 
certificates for Common Stock to be issued (the "Conversion Notice").  In the 
event of a redemption of the Series C Preferred Stock pursuant to Section 5 
above, any holder that does not timely deliver such Conversion Notice and 
surrender such certificate or certificates prior to the date of redemption 
specified in any notice delivered pursuant to Section 6 above shall be deemed 
to have waived his, her or its right to conversion, and such shares shall be 
subject to the Company's right of redemption pursuant to Section 5 above.

          (ii)   The Company shall, as soon as practicable after the 
surrender of the certificate or certificates evidencing shares of Series C 
Preferred Stock for conversion at the office of the Company or the transfer 
agent for the Series C Preferred Stock or the Common Stock, issue to each 
holder of such shares, or such holder's nominee or nominees, a certificate or 
certificates evidencing the number of shares of Common Stock to which such 
holder shall be entitled.  Such conversion shall be deemed to have been made 
immediately prior to the close of business on the date of such surrender of 
the shares of Series C Preferred Stock to be converted, and the person or 
persons entitled to receive the shares of Common Stock issuable upon such 
conversion shall be treated for all purposes as the recordholder or holders 
of such shares of Common Stock at such date and shall, with respect to such 
shares, have only those rights of a holder of Common Stock of the Company.

     (b)  CONVERSION OF PREFERRED STOCK.  Each share of Series C Preferred 
Stock shall be convertible into the number of shares of Common Stock which 
results from dividing the Stated Liquidation Value (without any adjustment 
for the accrued but unpaid dividends thereon) by the Conversion Price per 
share in effect at the time of conversion; PROVIDED, HOWEVER, that any 
fractional number of shares of Common Stock shall be rounded up to the next 
whole share.  Upon


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<PAGE>

conversion of the Series C Preferred Stock, holders of shares of Series C 
Preferred Stock shall not be entitled to receive any accrued but unpaid 
dividends as of the conversion date.

     (c)  CONVERSION PRICE.  The conversion price of each share of Series C 
Preferred Stock shall initially be $1.50, which the Board of Directors of the 
Company has determined to be equal to or greater than the fair market value 
of the Common Stock on the Issue Date (the "Conversion Price"), and shall be 
subject to adjustment from time to time as provided herein.

     (d)  ADJUSTMENT FOR STOCK SPLITS AND COMBINATIONS.  If outstanding 
shares of the Common Stock of the Company shall be subdivided into a greater 
number of shares, or a dividend in Common Stock or other securities of the 
Company convertible into or exchangeable for Common Stock (in which latter 
event the number of shares of Common Stock issuable upon the conversion or 
exchange of such securities shall be deemed to have been distributed), shall 
be paid in respect of the Common Stock of the Company, the Conversion Price 
for each share of Series C Preferred Stock in effect immediately prior to 
such subdivision or at the record date of such dividend shall, simultaneously 
with the effectiveness of such subdivision or immediately after the record 
date of such dividend, be proportionately reduced, and conversely, if 
outstanding shares of the Common Stock of the Company shall be combined into 
a smaller number of shares, the Conversion Price for each share of Series C 
Preferred Stock in effect immediately prior to such combination shall 
simultaneously with the effectiveness of such combination, be proportionately 
increased. Notwithstanding the foregoing, no adjustment of the Conversion 
Price for the Series C Preferred Stock shall be required unless such 
adjustment would require an increase or decrease of at least 1% in such 
price; PROVIDED, HOWEVER, that any adjustments which by reason of this 
subparagraph (d) are not required to be made shall be carried forward and 
taken into account in any subsequent adjustment.  All calculations under this 
subparagraph (9)(d) shall be made to the nearest cent or to the nearest 
one-hundredth of a share, as the case may be. Any adjustment to the 
Conversion Price under this Section 9(d) shall become effective at the close 
of business on the date the subdivision, dividend or combination referred to 
herein becomes effective.

     (e)  REORGANIZATIONS, MERGERS AND CONSOLIDATIONS.  In the event of any 
capital reorganization, or the consolidation or merger of the Company with or 
into another entity (collectively referred to hereinafter as 
"Reorganizations"), unless the Company exercises its right to redeem the 
Series C Preferred Stock pursuant to Section 5(a) above, the holders of the 
Series C Preferred Stock shall thereafter be entitled to receive upon 
conversion of the Series C Preferred Stock the kind and number of shares of 
Common Stock or other securities or property (including cash) of the Company 
(or other corporation resulting from such consolidation or surviving such 
merger or to which such properties and assets shall have been sold or 
otherwise transferred), that the holders would have been entitled to receive 
had such holders converted their Series C Preferred Stock into shares of 
Common Stock immediately prior to such Reorganization.  In addition, upon the 
occurrence of such a Reorganization, appropriate adjustment shall be made in 
the application of the provisions set forth herein with respect to the rights 
and interests thereafter of the holders of the Series C Preferred Stock, to 
the end that the provisions set forth herein (including the specified changes 
and other adjustments to the Conversion Price) shall thereafter be 
applicable, as nearly as reasonably may be, in relation to any shares, other 
securities or property thereafter receivable upon conversion of the Series C 
Preferred Stock.  The provisions of this Section 9(e) shall similarly apply 
to successive Reorganizations.  Any agreement entered into by


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the Company relating to any Reorganization shall make appropriate provision 
for the conversions described herein.

     (f)  CONVERSION PRICE ADJUSTMENT CERTIFICATE.  Whenever the Conversion 
Price is adjusted as herein provided, the Company shall promptly file with 
the Secretary or transfer agent an officer's certificate setting forth the 
Conversion Price after such adjustment and setting forth a brief statement of 
the facts requiring such adjustment, which certificate shall be conclusive 
evidence of the correctness of such adjustment absent manifest error.  
Promptly after delivery of such certificate, the Company shall prepare a 
notice of such adjustment of the Conversion Price setting forth the adjusted 
Conversion Price and the effective date of such adjustment and shall mail 
such notice of such adjustment of the Conversion Price to the holder of each 
share of Series C Preferred Stock at such holder's last address as shown on 
the stock records of the Company.

     (g)  TRIGGERING EVENTS.  A Triggering Event shall mean (i) a Change of 
Control, (ii) an initial public offering of any class of equity securities of 
the Company pursuant to the Securities Act of 1933, as amended, (iii) the 
delivery of a notice of redemption pursuant to Section 6(a) above and (iv) 
the fifth anniversary of the Issue Date.

     10.  RESERVATION OF STOCK ISSUABLE UPON CONVERSION.  The Company shall 
at all times reserve and keep available out of its authorized but unissued 
shares of Common Stock, solely for the purpose of effecting the conversion of 
the shares of Series C Preferred Stock, such numbers of its shares of Common 
Stock as shall from time to time be sufficient to effect a conversion of all 
outstanding shares of the Series C Preferred Stock, and if at any time the 
number of authorized but unissued shares of Common Stock shall not be 
sufficient to effect the conversion of all the outstanding shares of the 
Series C Preferred Stock, the Company shall promptly seek such corporate 
action as may, in the opinion of its counsel, be necessary to increase its 
authorized but unissued shares of Common Stock to such number of shares as 
shall be sufficient for such purpose.  In the event of the consolidation or 
merger of the Company with another corporation where the Company is not the 
surviving corporation, effective provisions shall be made in the articles or 
certificate of incorporation, merger or consolidation, or otherwise of the 
surviving corporation so that such corporation will at all times reserve and 
keep available a sufficient number of shares of Common Stock or other 
securities or property to provide for the conversion of the Series C 
Preferred Stock in accordance with the provisions of this Section 10.

     11.  NOTICES.  All notices referred to herein, except as otherwise 
expressly provided, shall be made by registered or certified mail, return 
receipt requested, postage prepaid and shall be deemed to have been given 
when so mailed to the holder at the address for such holder maintained by the 
Company.

     12.  REMEDIES.  Any holder of Series C Preferred Stock may proceed to 
protect and enforce his, her or its rights and the rights of other holders by 
any available remedy by proceeding at law or in equity to protect and enforce 
any such rights, whether for the specific enforcement of any provision in 
this Certificate of Designation or in aid of the exercise of any power 
granted herein, or to enforce any other proper remedy.


                                      8

<PAGE>

     13.  DEFINITIONS.  For the purposes of this Certificate of Designation, 
the following terms shall have the meanings indicated:

     "Affiliate" shall mean, with respect to any specified person, (a) any 
other person directly or indirectly controlling or controlled by or under 
direct or indirect common control with such specified person or (b) any other 
person that owns, directly or indirectly, 10% or more of such specified 
person's capital stock or any executive officer or director of any such 
specified person or other person or, with respect to any natural person, any 
person having a relationship with such person by blood, marriage or adoption 
not more remote than first cousin.  For the purposes of this definition, 
"control," when used with respect to any specified person, means the power to 
direct the management and policies of such person, directly or indirectly, 
whether through the ownership of voting securities, by contract or otherwise; 
and the terms "controlling" and "controlled" have meanings correlative to the 
foregoing.

     "Beneficial Owner" shall have the meaning ascribed to such term or the 
term "beneficial ownership" in Rule 13d-3 and Rule 13d-5 under the Securities 
Exchange Act of 1934, as amended, except that a person shall be deemed have 
"beneficial ownership" of all securities that such person has the right to 
acquire, whether such right is currently exercisable or is exercisable only 
upon the occurrence of a subsequent condition.

     "Business Day" shall mean any day other than a Saturday, Sunday or a day 
on which banking institutions in New York, New York are authorized or 
obligated by law or executive order to close.

     "Change of Control" shall mean such time after the Issue Date as either:

     (i)   prior to the initial public offering by the Company of any class 
of its Common Stock, the consummation of any transaction the result of which 
is that the Principals and their Related Parties become the Beneficial 
Owners, in the aggregate, of less than 50% of the Common Stock of the 
Company; 

     (ii)  after the initial public offering by the Company of any class of 
its Common Stock, any "person" (as such term is used in Section 13(d)(3) of 
the Exchange Act), other than the Principals and their Related Parties, 
becomes, directly or indirectly, the Beneficial Owner, by way of merger, 
consolidation or otherwise, of 51% or more of the Common Stock of the Company 
and such person is or becomes, directly or indirectly, the Beneficial Owner 
of a greater percentage of the voting power of the Common Stock of the 
Company, calculated on a fully diluted basis, than the percentage 
Beneficially Owned by the Principals and their Related Parties; or

     (iii) the Company (A) effects the sale, lease or transfer of all or 
substantially all of the assets of the Company to any person or group, or (B) 
any wholly-owned subsidiary of the Company effects the sale, lease or 
transfer of all or substantially all of the assets of such subsidiary to any 
person or group, if such assets constitute substantially all of the assets of 
the Company and its subsidiaries, taken as a whole.

     "Junior Securities" shall have the meaning set forth in Section 2 hereof.


                                      9

<PAGE>

     "Issue Date" shall mean the first date on which shares of Series C 
Preferred Stock are issued.

     "Liquidation Preference" shall have the meaning set forth in Section 4 
hereof.

     "Parity Securities" shall have the meaning set forth in Section 2 hereof.

     "Person" shall mean any individual, firm, corporation or other entity, 
and shall include any successor (by merger or otherwise) of such entity.

     "Principals" shall mean (i) J.F. Lehman & Company ("Lehman"), (ii) each 
Affiliate of Lehman as of the Issue Date, (iii) J.F. Lehman Equity Investors 
I., L.P., (iv) JFL-EEC LLC and (v) each officer or employee (including their 
respective immediate family members) of Lehman as of the Issue Date.

     "Related Party" shall mean with respect to any Principal (A) any
controlling stockholder or 80% (or more) owned subsidiary of such Principal or
(B) any trust, corporation, partnership or other entity, the beneficiaries,
stockholders, partners, owners or Persons beneficially holding an 80% or more
controlling interest of which consist of such Principal and/or such other
Persons referred to in the immediately preceding clause (A).


                                      10

<PAGE>

     IN WITNESS WHEREOF, Elgar Holdings, Inc. has caused this Certificate to 
be executed by its Secretary this 24th day of March, 1999.

                                       ELGAR HOLDINGS, INC.

                                       By: /s/Keith Oster
                                           -----------------------------------
                                           Keith Oster, Secretary










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