JFL-EEC MERGER SUB CO.
$90,000,000
9 7/8% Senior Notes due 2008
PURCHASE AGREEMENT
January 30, 1998
BT ALEX. ▇▇▇▇▇ INCORPORATED
One Bankers Trust Plaza
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
JFL-EEC Merger Sub Co., a Delaware corporation ("MERGERCO"), hereby
confirms its agreement with you (the "INITIAL PURCHASER"), as set forth below.
1. THE NOTES. Subject to the terms and conditions herein contained,
MergerCo proposes to issue and sell to the Initial Purchaser $90,000,000
aggregate principal amount of its 9 7/8% Senior Notes due 2008 (the "NOTES").
The Notes are being sold in connection with the recapitalization (the
"RECAPITALIZATION") of Elgar Holdings, Inc. ("EHI") pursuant to the Agreement
and Plan of Merger dated as of January 2, 1998 by and among JFL-EEC LLC, a
Delaware limited liability company, Carlyle-EEC Holdings, Inc., a Delaware
corporation ("CARLYLE-EEC"), TC Group, L.L.C., a Delaware limited liability
company, and MergerCo (as it may be amended through the date hereof and together
with all ancillary agreements entered into in connection therewith, the
"RECAPITALIZATION AGREEMENT"). The Recapitalization Agreement provides for the
merger (the "MERGER") of MergerCo with and into Carlyle-EEC with Carlyle-EEC
surviving the Merger and changing its name to EHI. The time of the consummation
of the Recapitalization and the Merger is referred to herein as the "EFFECTIVE
TIME."
Financing for the Recapitalization will be provided by (i)
approximately $19.0 million of new cash equity from JFL-EEC LLC (the "▇▇▇▇▇▇
INVESTMENT"), (ii) $10.0 million from the issuance of Series A 10% Cumulative
Redeemable Preferred Stock and Warrants and (iii) $90.0 million from the
offering of the
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Notes. Concurrently with the consummation of the Recapitalization, EHI and
Elgar Electronics Corporation, a California corporation and a wholly owned
subsidiary of EHI ("ELGAR"), will enter into a Credit Agreement (the "CREDIT
AGREEMENT") with Bankers Trust Company, as agent, and the other lending
institutions party thereto, pursuant to which Elgar will be provided with a
$15,000,000 revolving credit facility.
Immediately after the Effective Time, EHI and Elgar will execute an
assumption agreement (the "ASSUMPTION AGREEMENT"), substantially in the form
attached hereto as EXHIBIT A, pursuant to which EHI, as survivor of the Merger,
will assume all of the obligations of MergerCo under this Purchase Agreement,
and Elgar will become a party to this Purchase Agreement as a subsidiary
guarantor (the "SUBSIDIARY GUARANTOR") and unconditionally guarantee the Notes
(the "GUARANTEE") on a senior unsecured basis.
The Notes and the Guarantee are collectively referred to herein as the
"SECURITIES." The Notes are to be issued under an indenture (the "INDENTURE")
to be dated as of February 3, 1998 by and between MergerCo and United States
Trust Company, as Trustee (the "TRUSTEE"). Immediately after the Effective
Time, EHI, the Subsidiary Guarantor and the Trustee will enter into a first
supplemental indenture to the Indenture (the "SUPPLEMENTAL INDENTURE") providing
for the express assumption by EHI, as survivor of the Merger, of the covenants,
agreements and undertakings of MergerCo in the Indenture and under the Notes,
and the guarantee of the Notes by the Subsidiary Guarantor. EHI and the
Subsidiary Guarantor will issue the Securities pursuant to the Supplemental
Indenture. References to this Purchase Agreement as of and after the Effective
Time will refer to this Purchase Agreement together with the Assumption
Agreement and references to the Indenture as of and after the Effective Time
will refer to the Indenture and the Supplemental Indenture.
The Notes will be offered and sold to the Initial Purchaser without
being registered under the Securities Act of 1933, as amended (the "ACT"), in
reliance on exemptions therefrom.
In connection with the sale of the Securities, EHI has prepared a
preliminary offering memorandum dated January 19, 1998 (the "PRELIMINARY
MEMORANDUM") and a final offering memorandum dated January 30, 1998 (the "FINAL
MEMORANDUM"; the Preliminary Memorandum and the Final Memorandum each herein
being referred to as a "MEMORANDUM"), each setting forth or in-
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cluding a description of the terms of the Securities, the terms of the offering
of the Securities, a description of EHI and any material developments relating
to EHI occurring after the date of the most recent historical financial
statements included therein. Any references herein to the Preliminary
Memorandum, the Final Memorandum and a Memorandum shall be deemed to include all
amendments and supplements thereto, unless otherwise noted.
MergerCo understands that the Initial Purchaser proposes to make an
offering of the Notes only on the terms and in the manner set forth in the Final
Memorandum and Section 8 hereof, as soon as the Initial Purchaser deems
advisable after this Purchase Agreement has been executed and delivered, to
qualified institutional buyers ("QUALIFIED INSTITUTIONAL BUYERS" or "QIBS") as
defined in Rule 144A under the Act, as such rule may be amended from time to
time ("RULE 144A"), in transactions under Rule 144A, and outside the United
States to certain persons in reliance on Regulation S under the Act.
("REGULATION S")
The Initial Purchaser and its direct and indirect transferees of the
Securities will be entitled to the benefits of the Registration Rights
Agreement, substantially in the form attached hereto as EXHIBIT B (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date (as defined in
Section 3 below), pursuant to which MergerCo will agree, among other things, to
file a registration statement (the "REGISTRATION STATEMENT") with the Securities
and Exchange Commission (the "COMMISSION") registering the Notes or the Exchange
Notes (as defined in the Registration Rights Agreement) under the Act.
Immediately after the Effective Time, EHI, as survivor of the Merger, will
assume all of the obligations of MergerCo under the Registration Rights
Agreement, and Elgar will become a party to the Registration Rights Agreement as
the Subsidiary Guarantor, in each case, by executing the Assumption Agreement.
2. REPRESENTATIONS AND WARRANTIES. MergerCo and, at and as of the
Effective Time, the Subsidiary Guarantor, jointly and severally, represent and
warrant to and agree with the Initial Purchaser that:
(a) Neither the Preliminary Memorandum as of the date thereof nor the
Final Memorandum nor any amendment or supplement thereto as of the date
thereof and at all times subsequent thereto up to the Closing Date
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact necessary to make
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the statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and warranties
set forth in this Section 2(a) do not apply to statements or omissions made
in reliance upon and in conformity with information relating to the Initial
Purchaser furnished to MergerCo, EHI, Elgar, or any of the agents or
advisors of the foregoing in writing by or on behalf of the Initial
Purchaser expressly for use in the Preliminary Memorandum, the Final
Memorandum or any amendment or supplement thereto specified in Section 12
hereof.
(b) As of the Closing Date, EHI will have the authorized, issued and
outstanding capitalization set forth in the Final Memorandum; as of the
date hereof and at the Effective Time, the only subsidiaries of EHI will be
Elgar (the "SUBSIDIARY") and Elgar FSC Corporation; all of the outstanding
shares of capital stock of EHI and the Subsidiary have been, and as of the
Closing Date will be, duly authorized and validly issued, are fully paid
and nonassessable and were not issued in violation of any preemptive or
similar rights; except as set forth in the Final Memorandum, all of the
outstanding shares of capital stock of each of EHI and the Subsidiary will
be free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability (other than those imposed by the Act and
the securities or "Blue Sky" laws of certain jurisdictions) or voting;
except as set forth in the Final Memorandum, there are no (i) options,
warrants or other rights to purchase, (ii) agreements or other obligations
to issue or (iii) other rights to convert any obligation into, or exchange
any securities for, shares of capital stock of or ownership interests in
EHI or the Subsidiary outstanding. Except for the Subsidiary and Elgar FSC
Corporation, EHI does not own, directly or indirectly, any material
interests in the capital stock or any other equity or long-term debt
securities or have any equity interest in any firm, partnership, joint
venture or other entity.
(c) Each of MergerCo, EHI and the Subsidiary is duly incorporated and
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with all requisite corporate power and
authority to own its properties and conduct its business as now conducted
and as described in the Final Memorandum and each of MergerCo, EHI and the
Subsidiary is duly qualified to do business as a foreign corporation in
good standing in
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all other jurisdictions where the ownership or leasing of its properties or
the conduct of its business requires such qualification, except where the
failure to be so qualified could not reasonably be expected to have,
individually or in the aggregate, a material adverse effect on the
business, condition (financial or otherwise) or results of operations of
EHI and the Subsidiary, taken as a whole (any such event, a "MATERIAL
ADVERSE EFFECT").
(d) MergerCo has and, immediately after the Effective Time, EHI will
have all requisite corporate power and authority to execute, deliver and
perform their respective obligations under the Notes, the Exchange Notes
and the Private Exchange Notes (as defined in the Registration Rights
Agreement). The Notes, when issued, will be in the form contemplated by
the Indenture and the Supplemental Indenture. Each of the Notes, the
Exchange Notes and the Private Exchange Notes has been duly and validly
authorized by MergerCo and, immediately after the Effective Time, will have
been duly and validly authorized by EHI and, when executed by MergerCo and
EHI, as the case may be, and authenticated by the Trustee in accordance
with the provisions of the Indenture and, in the case of the Notes, when
delivered to and paid for by the Initial Purchaser in accordance with the
terms of this Purchase Agreement, will have been duly executed, issued and
delivered and will constitute valid and legally binding obligations of
MergerCo and, immediately after the Effective Time, of EHI, as the case may
be, entitled to the benefits of the Indenture and enforceable against
MergerCo and EHI, as the case may be, in accordance with their terms,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(e) Immediately after the Effective Time, the Subsidiary Guarantor
will have all requisite corporate power and authority to execute, deliver
and perform its obligations under the Guarantee. The Guarantee will have
been duly and validly authorized by the Subsidiary Guarantor and, when
executed and delivered by the Subsidiary Guarantor, will constitute the
valid and legally binding obligation of the Subsidiary Guarantor, entitled
to the benefits of the Indenture and enforceable against the Subsidiary
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Guarantor in accordance with its terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally, and (ii) general principles of
equity and the discretion of the court before which any proceeding therefor
may be brought.
(f) MergerCo has and, immediately after the Effective Time, each of
EHI and the Subsidiary Guarantor will have all requisite corporate power
and authority to execute, deliver and perform its respective obligations
under the Indenture. The Indenture meets the requirements for
qualification under the Trust Indenture Act of 1939, as amended (the
"TIA"). The Indenture has been duly and validly authorized by MergerCo.
Immediately after the Effective Time, the Supplemental Indenture will have
been duly and validly authorized by each of EHI and the Subsidiary
Guarantor. Assuming the due authorization, execution and delivery of the
Indenture and the Supplemental Indenture by the Trustee, each of the
Indenture and the Supplemental Indenture will have been duly executed and
delivered and, as applicable, will constitute valid and legally binding
agreements of MergerCo and, immediately after the Effective Time, EHI and
the Subsidiary Guarantor, enforceable against MergerCo and, at and as of
the Effective Time, EHI and the Subsidiary Guarantor, in accordance with
its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity and the
discretion of the court before which any proceeding therefor may be
brought.
(g) MergerCo has and, immediately after the Effective Time, EHI and
the Subsidiary Guarantor will have all requisite corporate power and
authority to execute, deliver and perform their respective obligations
under the Registration Rights Agreement. The Registration Rights Agreement
has been duly and validly authorized by MergerCo and, immediately after the
Effective Time, will have been duly and validly authorized by each of EHI
and the Subsidiary Guarantor and, when executed and delivered by MergerCo
and, immediately after the Effective Time, assumed by each of EHI and the
Subsidiary Guarantor, will have been duly executed and delivered and will
constitute a valid and legally binding agreement of MergerCo and, im-
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mediately after the Effective Time, each of EHI and the Subsidiary
Guarantor, enforceable against MergerCo and, immediately after the
Effective Time, each of EHI and the Subsidiary Guarantor in accordance with
its terms, except that (i) the enforcement thereof may be subject to
(A) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (B) general principles of equity and the
discretion of the court before which any proceeding therefor may be brought
and (ii) any rights to indemnity or contribution thereunder may be limited
by federal and state securities laws and public policy considerations.
(h) MergerCo has and, at and as of the Effective Time, EHI and the
Subsidiary Guarantor will have, all requisite corporate power and authority
to execute, deliver and perform their respective obligations under this
Purchase Agreement and to consummate the transactions contemplated hereby.
This Purchase Agreement and the transactions contemplated hereby have been
duly and validly authorized by MergerCo and, at and as of the Effective
Time, will have been duly and validly authorized by each of EHI and the
Subsidiary Guarantor. This Purchase Agreement has been duly and validly
executed and delivered by MergerCo.
(i) Immediately after the Effective Time, each of EHI and the
Subsidiary Guarantor will have all requisite corporate power and authority
to execute, deliver and perform its respective obligations under the
Assumption Agreement and to consummate the transactions contemplated
thereby. The Assumption Agreement and the transactions contemplated
thereby have been duly and validly authorized by each of EHI and the
Subsidiary Guarantor and, when executed and delivered by each of EHI and
the Subsidiary Guarantor, will have been duly executed and delivered and
will constitute a valid and legally binding agreement of each of EHI and
the Subsidiary Guarantor, enforceable against each of EHI and the
Subsidiary Guarantor in accordance with its terms, except that (i) the
enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws now
or hereafter in effect relating to creditors' rights generally and
(B) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (ii) any rights to
indemnity or contribution thereunder may be limited by fed-
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eral and state securities laws and public policy considerations.
(j) No consent, approval, authorization or order of any court,
governmental agency or body or third party is required for the issuance and
sale by MergerCo of the Notes to the Initial Purchaser or the consummation
by MergerCo, EHI and the Subsidiary of the other transactions contemplated
hereby, except such consents, approvals, authorizations or orders (i) as
have been or, prior to the Closing Date, will have been obtained, (ii) as
may be required under state securities or "Blue Sky" laws in connection
with the purchase and resale of the Notes by the Initial Purchaser, (iii)
as may be required by federal or state securities regulatory authorities in
connection with or pursuant to the Registration Rights Agreement or (iv)
that if not obtained could not reasonably be expected to have a Material
Adverse Effect. None of MergerCo or, to the knowledge of MergerCo after
due inquiry, EHI or the Subsidiary is (i) in violation of its certificate
of incorporation or bylaws, (ii) in breach or violation of any statute,
judgment, decree, order, rule or regulation applicable to any of them or
any of their respective properties or assets, except for any such breach or
violation that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, or (iii) in breach of or default
under (nor has any event occurred that, with notice or passage of time or
both, would constitute a default under) or in violation of any of the terms
or provisions of any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit, certificate, contract or
other agreement or instrument to which any of them is a party or to which
any of them or their respective properties or assets is subject
(collectively, "CONTRACTS"), except for any such breach, default, violation
or event that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(k) The execution, delivery and performance by MergerCo and,
immediately after the Effective Time, by EHI and the Subsidiary Guarantor
of this Purchase Agreement, the Registration Rights Agreement and the
Indenture and, in the case of EHI and the Subsidiary Guarantor, of the
Assumption Agreement and the Supplemental Indenture, and the consummation
by MergerCo and, immediately after the Effective Time, by EHI and the
Subsidiary Guarantor of the transactions contemplated hereby and thereby
(including,
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without limitation, the issuance and sale of the Securities to the Initial
Purchaser) and the fulfillment of the terms hereof and thereof will not
conflict with or constitute or result in a breach of or a default under (or
an event that with notice or passage of time or both would constitute a
default under) or violation of any of (i) to the knowledge of MergerCo
after due inquiry, the terms or provisions of any Contract, except for any
such conflict, breach, violation, default or event that could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, (ii) the certificate of incorporation or bylaws of
MergerCo, EHI or the Subsidiary, or (iii) (assuming (a) compliance with all
applicable state securities or "Blue Sky" laws, (b) the accuracy of the
representations and warranties of the Initial Purchaser in Section 8 hereof
and (c) compliance with the Act with respect to the exchange of the Notes
for Exchange Notes and the obligations of the parties hereto under the
Registration Rights Agreement) to the knowledge of MergerCo after due
inquiry, any statute, judgment, decree, order, rule or regulation
applicable to MergerCo, EHI or the Subsidiary or any of their respective
properties or assets, except for any such conflict, breach or violation
that could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(l) The audited consolidated financial statements of Carlyle-EEC
Holdings, Inc. and of Elgar and the related notes thereto included in the
Final Memorandum present fairly in all material respects the financial
position, results of operations and changes in shareholders' equity and
cash flows of Carlyle-EEC Holdings, Inc. and of Elgar at the dates and for
the periods to which they relate and have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis,
except as otherwise stated therein. The summary and selected financial and
statistical data in the Final Memorandum present fairly, in all material
respects, the information shown therein and have been prepared and compiled
on a basis consistent with the audited financial statements included
therein, except as otherwise stated therein. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP (the
"INDEPENDENT ACCOUNTANT") is an independent public accounting firm within
the meaning of the Act and the rules and regulations promulgated
thereunder.
(m) The pro forma financial statements (including the notes thereto)
and the other pro forma financial in-
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formation included in the Final Memorandum (i) comply as to form in all
material respects with the applicable requirements of Regulation S-X
promulgated under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), (ii) have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the basis described
therein. The assumptions used in the preparation of the pro forma
financial data and other pro forma financial information included in the
Final Memorandum are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(n) There is not pending or, to the knowledge of MergerCo after due
inquiry, threatened any action, suit, proceeding, inquiry or investigation
to which MergerCo or, immediately after the Effective Time, EHI or the
Subsidiary is a party, or to which the property or assets of MergerCo or,
immediately after the Effective Time, EHI or the Subsidiary are subject,
before or brought by any court, arbitrator or governmental agency or body
that could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect or that seeks to restrain, enjoin,
prevent the consummation of or otherwise challenge the issuance or sale of
the Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum.
(o) To the knowledge of MergerCo after due inquiry, EHI and the
Subsidiary own or possess and, as of the Effective Time, will own or
possess all licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights and know-how necessary to conduct
the businesses now or proposed to be operated, as described in the Final
Memorandum, except where the failure to own or possess such licenses or
other rights could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect and, to the knowledge of MergerCo
after due inquiry, neither EHI nor the Subsidiary has received any notice
of infringement of or conflict with (or knows of any such infringement of
or conflict with) asserted rights of others with respect to any patents,
trademarks, service marks, trade names, copyrights or know-how that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
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(p) To the knowledge of MergerCo after due inquiry, EHI and the
Subsidiary possess and, as of the Effective Time, will possess all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and have made all declarations and filings with, all
federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, presently
required or necessary to own or lease, as the case may be, and to operate
their respective properties and to carry on their respective businesses as
now or proposed to be conducted as set forth in the Final Memorandum
("PERMITS"), except where the failure to obtain or possess such Permits
could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect; and none of MergerCo, EHI or the Subsidiary has
received any notice of any proceeding relating to revocation or
modification of any such Permit except where such revocation or
modification could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect.
(q) Since the date of the most recent financial statements appearing
in the Final Memorandum, except as described therein, (i) none of MergerCo,
EHI or the Subsidiary has incurred any liabilities or obligations, direct
or contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business, which
liabilities, obligations, transactions or contracts could reasonably be
expected to be, individually or in the aggregate, material to the
management, business, condition (financial or otherwise), or results of
operations of EHI and the Subsidiary, taken as a whole, (ii) none of
MergerCo, EHI or the Subsidiary has purchased any of its outstanding
capital stock, or declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock and (iii) there shall not
have been any change in the capital stock or long-term indebtedness of
MergerCo, EHI or the Subsidiary (other than in the ordinary course of
business).
(r) Each of MergerCo, EHI and the Subsidiary has filed all necessary
federal, state and foreign income and franchise tax returns, except where
the failure to so file such returns could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect, and has
paid all material taxes shown as due thereon except for taxes for which
there is an accrual on EHI's books and records; and other than tax
deficiencies that
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EHI or the Subsidiary is contesting in good faith and for which EHI or the
Subsidiary has provided adequate reserves, there is no tax deficiency that
has been asserted against EHI or the Subsidiary that could reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
(s) The statistical and market-related data included in the Final
Memorandum are based on or derived from sources that MergerCo believes to
be reliable and accurate in all material respects.
(t) None of MergerCo, EHI or the Subsidiary or any agent acting on
any of their behalf has taken or will take any action that might cause this
Purchase Agreement or the sale of the Securities to violate Regulation G,
T, U or X of the Board of Governors of the Federal Reserve System, in each
case as in effect, or as the same may hereafter be in effect, on the
Closing Date.
(u) Each of EHI and the Subsidiary has and, at and as of the
Effective Time, will have good and marketable title to all real property
and good title to all personal property described in the Final Memorandum
as being owned by it and good and marketable title to a leasehold estate in
the real and personal property described in the Final Memorandum as being
leased by it free and clear of all liens, charges, encumbrances or
restrictions, except as described in the Final Memorandum or to the extent
the failure to have such title or the existence of such liens, charges,
encumbrances or restrictions could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect. All leases,
contracts and agreements to which MergerCo is or, at and as of the
Effective Time, EHI or the Subsidiary will be a party or by which any of
them is or will be bound are valid and enforceable against MergerCo, EHI or
the Subsidiary, as the case may be, and are valid and enforceable against
the other party or parties thereto and are in full force and effect except
where the failure to be valid and enforceable or be in full force and
effect could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(v) There are no legal or governmental proceedings involving or
affecting EHI or the Subsidiary or any of their respective properties or
assets that would be required to be described in a prospectus pursuant to
the Act
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that are not described in the Final Memorandum, nor are there any material
contracts or other documents that would be required to be described in a
prospectus pursuant to the Act that are not described in the Final
Memorandum.
(w) Except as described in the Final Memorandum or except as could
not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect, to the knowledge of MergerCo after due inquiry (i)
each of EHI and the Subsidiary immediately after the Effective Time will be
in compliance with and not subject to liability under applicable
Environmental Laws (as defined below), (ii) each of EHI and the Subsidiary,
at and as of the Effective Time, will have made all filings and provided
all notices required under any applicable Environmental Law, will have and
be in compliance with all Permits required under any applicable
Environmental Laws and each such Permit will be in full force and effect,
(iii) there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding, notice or
demand letter or request for information pending or threatened against EHI
or the Subsidiary under any Environmental Law, (iv) no lien, charge,
encumbrance or restriction will be recorded under any Environmental Law
with respect to any assets, facility or property owned, operated, leased or
controlled by EHI or the Subsidiary, (v) none of MergerCo, EHI or the
Subsidiary has received notice that it has been identified as a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any
comparable state law, (vi) no property or facility of MergerCo, EHI or the
Subsidiary is (A) listed or proposed for listing on the National Priorities
List under CERCLA or (B) listed in the Comprehensive Environmental
Response, Compensation, Liability Information System List promulgated
pursuant to CERCLA or any comparable list maintained by any state or local
governmental authority.
For purposes of this Purchase Agreement, "ENVIRONMENTAL LAWS" means
the common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions, discharges,
releases or threatened releases of hazardous materials, into the
environment
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(including, without limitation, ambient air, surface water, ground water,
land surface or subsurface strata), (ii) the manufacture, processing,
distribution, use, generation, treatment, storage, disposal, transport or
handling of hazardous materials and (iii) underground and above ground
storage tanks, and related piping, and emissions, discharges, releases or
threatened releases therefrom.
(x) There is no strike, labor dispute, slowdown or work stoppage with
the employees of EHI or the Subsidiary that is pending or, to the knowledge
of MergerCo or the Subsidiary Guarantor after due inquiry, threatened,
except for such strikes, labor disputes, slowdowns or work stoppages that
could not reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(y) EHI and the Subsidiary carry insurance in such amounts and
covering such risks as in their reasonable determination are adequate for
the conduct of their business and the value of their properties except
where the failure to carry such insurance could not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(z) None of MergerCo or, to the knowledge of MergerCo after due
inquiry, EHI or the Subsidiary has any liability for any prohibited
transaction or funding deficiency or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan that is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), to which any of them makes or ever has made a contribution and
in which any employee of any of them is or has ever been a participant,
except for such liabilities or deficiencies that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect. With respect to such plans, MergerCo, EHI and the Subsidiary is in
compliance in all material respects with all applicable provisions of
ERISA.
(aa) To the knowledge of MergerCo after due inquiry, EHI and the
Subsidiary (i) make and keep accurate books and records and (ii) maintain
internal accounting controls that provide reasonable assurance that (A)
transactions are executed in accordance with management's authorization,
(B) transactions are recorded as necessary to permit preparation of their
financial statements and to maintain
-15-
accountability for their assets, (C) access to their assets is permitted
only in accordance with management's authorization and (D) the reported
accountability for their assets is compared with existing assets at
reasonable intervals.
(bb) None of MergerCo, EHI or the Subsidiary will be an "investment
company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940,
as amended, and the rules and regulations thereunder.
(cc) The Notes, the Exchange Notes, the Indenture, the Registration
Rights Agreement, this Purchase Agreement and the Recapitalization
Agreement will conform in all material respects to the descriptions thereof
in the Final Memorandum.
(dd) No holder of securities of MergerCo, EHI or the Subsidiary will
be entitled to have such securities registered under any Registration
Statements required to be filed by EHI and the Subsidiary Guarantor
pursuant to the Registration Rights Agreement other than as expressly
permitted thereby.
(ee) Immediately after consummation of the transactions contemplated
by this Purchase Agreement and the Recapitalization, the fair value and
present fair saleable value of the assets of each of EHI and the Subsidiary
Guarantor will exceed the sum of its stated liabilities and identified
contingent liabilities; EHI and the Subsidiary Guarantor (on a consolidated
basis) are not, nor will EHI and the Subsidiary Guarantor (on a
consolidated basis) be, after giving effect to the execution, delivery and
performance of this Purchase Agreement, and the consummation of the
transactions contemplated hereby and the consummation of the
Recapitalization, (i) left with unreasonably small capital with which to
carry on their business as it is proposed to be conducted, (ii) unable to
pay their debts (contingent or otherwise) as they mature or (iii) otherwise
insolvent.
(ff) None of MergerCo, EHI, the Subsidiary or any of their respective
Affiliates (as defined in Rule 501(b) of Regulation D under the Act) has
directly, or through any agent (other than the Initial Purchaser and
persons acting on its behalf as to which no representation is made),
(i) sold, offered for sale, solicited offers to buy or
-16-
otherwise negotiated in respect of, any "security" (as defined in the Act)
that is or could be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the Securities or
(ii) engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with the
offering of the Securities or in any manner involving a public offering
within the meaning of Section 4(2) of the Act. Assuming the accuracy of
the representations and warranties of the Initial Purchaser in Section 8
hereof and compliance with all agreements contained therein, it is not
necessary in connection with the offer, sale and delivery of the Securities
to the Initial Purchaser in the manner contemplated by this Purchase
Agreement to register any of the Securities under the Act or to qualify the
Indenture under the TIA.
(gg) No securities of EHI are of the same class (within the meaning of
Rule 144A under the Act) as the Notes and listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated inter-dealer quotation system.
(hh) None of MergerCo, EHI or the Subsidiary has taken, nor will any
of them take, directly or indirectly, any action designed to, or that might
be reasonably expected to, cause or result in stabilization or manipulation
of the price of the Notes.
Any certificate signed by any officer of MergerCo, EHI or the
Subsidiary and delivered to the Initial Purchaser or to counsel for the Initial
Purchaser pursuant to this Purchase Agreement shall be deemed a joint and
several representation and warranty by MergerCo, EHI and the Subsidiary to the
Initial Purchaser as to the matters covered thereby.
3. PURCHASE, SALE AND DELIVERY OF THE NOTES. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, MergerCo and, at and as of
the Effective Time, EHI and the Subsidiary Guarantor agree to issue and sell to
the Initial Purchaser, and the Initial Purchaser agrees to purchase, the
Securities at 97% of their principal amount.
One or more certificates in definitive form for the Securities that
the Initial Purchaser has agreed to purchase hereunder, and in such denomination
or denominations and regis-
-17-
tered in such name or names as the Initial Purchaser requests upon notice to
MergerCo at least 36 hours prior to the Closing Date, shall be delivered by or
on behalf of MergerCo to the Initial Purchaser, against payment by or on behalf
of the Initial Purchaser of the purchase price therefor by wire transfer of
immediately available funds to such account or accounts as MergerCo shall
specify prior to the Closing Date, or by such means as the parties hereto shall
agree prior to the Closing Date. All certificates will be signed by EHI and
Elgar. Such delivery of and payment for the Securities shall be made at the
offices of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at
9:00 A.M., New York time, on February 3, 1998, or at such other place, time or
date as the Initial Purchaser, on the one hand, and MergerCo, on the other hand,
may agree upon, such time and date of delivery against payment being herein
referred to as the "CLOSING DATE." MergerCo will make such certificate or
certificates for the Notes available for checking and packaging by the Initial
Purchaser at the offices of BT Alex. ▇▇▇▇▇ Incorporated in New York, New York,
or at such other place as BT Alex. ▇▇▇▇▇ Incorporated may designate, at least 24
hours prior to the Closing Date.
4. OFFERING BY THE INITIAL PURCHASER. The Initial Purchaser
proposes to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Purchase
Agreement is entered into and as in the reasonable judgment of the Initial
Purchaser is advisable.
5. COVENANTS OF MERGERCO AND THE SUBSIDIARY GUARANTOR. MergerCo
and, at and as of the Effective Time, the Subsidiary Guarantor, covenant and
agree with the Initial Purchaser that:
(a) MergerCo will not and, at and after the Effective Time, EHI and
the Subsidiary Guarantor will not, amend or supplement the Final Memorandum
or any amendment or supplement thereto of which the Initial Purchaser shall
not previously have been advised and furnished a copy for a reasonable
period of time prior to the proposed amendment or supplement and as to
which the Initial Purchaser shall not have given its consent which consent
shall not unreasonably be withheld. MergerCo will and, at and after the
Effective Time, EHI and the Subsidiary Guarantor will, promptly, upon the
reasonable request of the Initial Purchaser or counsel for the Initial
Purchaser, make any amendments or supplements to the Final Memorandum that
may
-18-
be necessary or advisable in connection with the resale of the Securities
by the Initial Purchaser.
(b) MergerCo will and, at and after the Effective Time, EHI and the
Subsidiary Guarantor will, cooperate with the Initial Purchaser in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchaser may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the
Securities; PROVIDED, HOWEVER, that in connection therewith, MergerCo and
EHI shall not be required to qualify as a foreign corporation or to execute
a general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(c) If, at any time prior to the completion of the distribution by
the Initial Purchaser of the Notes or the Private Exchange Notes, any event
occurs or information becomes known as a result of which the Final
Memorandum as then amended or supplemented would include any untrue
statement of a material fact, or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Final Memorandum to comply with
applicable law, MergerCo will and, at and after the Effective Time, EHI
will, promptly notify the Initial Purchaser thereof and will prepare, at
their own expense, an amendment or supplement to the Final Memorandum that
corrects such statement or omission or effects such compliance.
(d) MergerCo will and, at and after the Effective Time, EHI will,
without charge, provide to the Initial Purchaser and to counsel for the
Initial Purchaser as many copies of the Preliminary Memorandum and the
Final Memorandum or any amendment or supplement thereto as the Initial
Purchaser may reasonably request.
(e) MergerCo will and, at and after the Effective Time, EHI will
apply the net proceeds from the sale of the Securities as set forth under
"Use of Proceeds" in the Final Memorandum.
-19-
(f) For so long as the Securities remain outstanding, MergerCo will
and, at and after the Effective Time, EHI will, furnish to the Initial
Purchaser copies of all reports and other communications (financial or
otherwise) furnished by MergerCo and, at and after the Effective Time, by
EHI, to the Trustee or the holders of the Securities and, as soon as
available, copies of any reports or financial statements furnished to or
filed by MergerCo or EHI with the Commission or any national securities
exchange on which any class of securities of MergerCo or EHI may be listed.
(g) None of MergerCo, EHI or the Subsidiary Guarantor nor any of
their respective affiliates will sell, offer for sale or solicit offers to
buy or otherwise negotiate in respect of any "security" (as defined in the
Act) that could be integrated with the sale of the Securities in a manner
that would require the registration under the Act of the Securities.
(h) MergerCo will not and, at and after the Effective Time, EHI and
the Subsidiary Guarantor will not engage in any form of general
solicitation or general advertising (as those terms are used in Regulation
D under the Act) in connection with the offering of the Securities or in
any manner involving a public offering within the meaning of Section 4(2)
of the Act.
(i) For so long as any of the Securities remain outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the Act,
EHI will make available at its expense, upon written request, to any holder
of such Securities and any prospective purchasers thereof the information
specified in Rule 144A(d)(4) under the Act, unless EHI is then subject to
Section 13 or 15(d) of the Exchange Act.
(j) Each of MergerCo and, at and after the Effective Time, EHI and
the Subsidiary Guarantor, will use its reasonable best efforts to
(i) permit the Securities to be designated PORTAL securities in accordance
with the rules and regulations adopted by the NASD relating to trading in
the Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL MARKET") and (ii) permit the Notes to be eligible for
clearance and settlement through The Depository Trust Company.
-20-
6. EXPENSES. MergerCo agrees to pay and MergerCo will cause EHI to
pay all costs and expenses incident to the performance of their obligations
under this Purchase Agreement, whether or not the transactions contemplated
herein are consummated or this Purchase Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchaser of copies of the foregoing documents,
(iii) the fees and disbursements of counsel, accountants and any other experts
or advisors retained by MergerCo, (iv) preparation (including printing),
issuance and delivery to the Initial Purchaser of the Securities, (v) the
qualification of the Notes under state securities and "Blue Sky" laws, including
filing fees and reasonable fees and disbursements of counsel for the Initial
Purchaser relating thereto, (vi) expenses in connection with any meetings with
prospective investors in the Notes, (vii) reasonable fees and expenses of the
Trustee including fees and expenses of counsel, (viii) all expenses and listing
fees incurred in connection with the application for quotation of the Notes on
the Portal Market and (ix) any fees charged by investment rating agencies for
the rating of the Notes. In addition, if the sale of the Notes provided for
herein is not consummated because (i) any condition to the obligations of the
Initial Purchaser set forth in Section 7 hereof is not satisfied, (ii) this
Purchase Agreement is terminated by the Initial Purchaser or (iii) of any
failure, refusal or inability on the part of MergerCo, EHI or the Subsidiary
Guarantor to perform all obligations and satisfy all conditions on their part to
be performed or satisfied hereunder in all material respects (in each case,
other than by reason of a default by the Initial Purchaser of its obligations
hereunder, MergerCo agrees to promptly reimburse the Initial Purchaser upon
demand for all reasonable out-of-pocket expenses (including reasonable fees,
disbursements and charges of ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial
Purchaser) that shall have been incurred by the Initial Purchaser in connection
with the proposed purchase and sale of the Securities. Except as specifically
set forth herein, the Initial Purchaser shall pay its own costs and expenses
including the costs and expenses of its counsel.
7. CONDITIONS OF THE INITIAL PURCHASER'S OBLIGATIONS. The
obligation of the Initial Purchaser to purchase and pay for the Notes shall, in
its sole discretion, be subject to
-21-
the satisfaction or waiver of the following conditions on or prior to the
Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchaser, from ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for MergerCo, or, as to
such of the following matters as EHI may request, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel
for EHI and the Subsidiary Guarantor, in form and substance satisfactory to
counsel for the Initial Purchaser, to the effect that:
(i) MergerCo is duly incorporated and each of MergerCo, EHI and
the Subsidiary is a validly existing corporation in good standing
under the laws of its jurisdiction of incorporation, with all
requisite corporate power and authority to own its properties and
conduct its business as now conducted and as described in the Final
Memorandum; each of MergerCo, EHI and the Subsidiary is duly qualified
to do business as a foreign corporation and is in good standing in all
other jurisdictions where the ownership or leasing of its properties
or the conduct of its business requires such qualification, except
where the failure to be so qualified or be in good standing could not
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(ii) All of the outstanding shares of the Subsidiary are owned by
EHI.
(iii) MergerCo and EHI have all requisite corporate power and
authority to execute, deliver and perform their respective obligations
under the Notes, the Exchange Notes and the Private Exchange Notes.
The Notes are in the form contemplated by the Indenture and the
Supplemental Indenture. Each of the Notes, the Exchange Notes and the
Private Exchange Notes has been duly and validly authorized and, in
the case of the Notes, executed and delivered by EHI (assuming
authentication by the Trustee in accordance with the provisions of the
Indenture and, in the case of the Notes, delivery to and payment for
by the Initial Purchaser in accordance with the terms of this Purchase
Agreement) and constitute or, in the case of such Exchange Notes or
Private Exchange Notes, will constitute valid and legally binding
obligations of MergerCo and EHI, entitled to the benefits of the In-
-22-
denture and enforceable against MergerCo and EHI in accordance with
their terms, except that the enforcement thereof may be subject to
(A) bankruptcy, insolvency, reorganization, moratorium or other laws
affecting creditors' rights generally, including without limitation
the effect of statutory or other laws regarding fraudulent conveyances
or transfers, preferential transfers or distributions by corporations
to shareholders, or (B) general principles of equity, whether
considered at law or at equity, including, without limitation,
concepts of materiality, reasonableness, good faith and fair dealing.
(iv) The Subsidiary Guarantor has all requisite corporate power
and authority to execute, deliver and perform its obligations under
the Guarantee. The Guarantee has been duly and validly authorized,
executed and delivered by the Subsidiary Guarantor and constitutes the
valid and legally binding obligation of the Subsidiary Guarantor,
entitled to the benefits of the Indenture and enforceable against the
Subsidiary Guarantor in accordance with its terms, except that the
enforcement thereof may be subject to (A) bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally, including without limitation the effect of statutory or
other laws regarding fraudulent conveyances or transfers, preferential
transfers or distributions by corporations to shareholders, or (B)
general principles of equity, whether considered at law or at equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing.
(v) MergerCo and EHI and the Subsidiary Guarantor have all
requisite corporate power and authority to execute, deliver and
perform their respective obligations under the Indenture. The
Indenture conforms in all material respects with the provisions of the
TIA applicable to an indenture which is qualified thereunder. The
Indenture has been duly and validly authorized, executed and delivered
by MergerCo. The Supplemental Indenture has been duly and validly
authorized, executed and delivered by each of EHI and the Subsidiary
Guarantor. The Indenture as supplemented by the Supplemental
Indenture (assuming, in each case, the due authorization, execution
and delivery thereof by the Trustee), constitutes a valid
-23-
and legally binding agreement, in the case of the Indenture, of
MergerCo and, in the case of the Indenture and the Supplemental
Indenture, of EHI and the Subsidiary Guarantor, enforceable against
MergerCo, EHI and the Subsidiary Guarantor, respectively, in
accordance with their respective terms, except that the enforcement
thereof may be subject to (A) bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally,
including without limitation the effect of statutory or other laws
regarding fraudulent conveyances or transfers, preferential transfers
or distributions by corporations to shareholders, or (B) general
principles of equity, whether considered at law or at equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing.
(vi) MergerCo and EHI and the Subsidiary Guarantor have all
requisite corporate power and authority to execute, deliver and
perform their respective obligations under the Registration Rights
Agreement. The Registration Rights Agreement has been duly and
validly authorized by MergerCo and EHI and the Subsidiary Guarantor.
The Registration Rights Agreement has been duly and validly executed
and delivered by MergerCo and assumed by each of EHI and the
Subsidiary Guarantor, and constitutes a valid and legally binding
agreement of MergerCo, EHI and the Subsidiary Guarantor, enforceable
against MergerCo and EHI and the Subsidiary Guarantor, respectively,
in accordance with its terms, except that (A) the enforcement thereof
may be subject to (1) bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally,
including without limitation the effect of statutory or other laws
regarding fraudulent conveyances or transfers, preferential transfers
or distributions by corporations to shareholders, or (2) general
principles of equity, whether considered at law or at equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing and the discretion of the
court before which any proceeding therefor may be brought and (B) any
rights to indemnity or contribution thereunder may be limited by
federal and state securities laws and public policy considerations.
-24-
(vii) MergerCo and EHI and the Subsidiary Guarantor have all
requisite corporate power and authority to execute, deliver and
perform their obligations under this Purchase Agreement and to
consummate the transactions contemplated hereby. This Purchase
Agreement and the transactions contemplated hereby have been duly and
validly authorized by MergerCo and EHI and the Subsidiary Guarantor.
This Purchase Agreement has been duly and validly executed and
delivered by MergerCo.
(viii) EHI and the Subsidiary Guarantor have all requisite
corporate power and authority to execute, deliver and perform their
obligations under the Assumption Agreement and to consummate the
transactions contemplated thereby. The Assumption Agreement and the
transactions contemplated thereby have been duly and validly
authorized, executed and delivered by each of EHI and the Subsidiary
Guarantor and constitutes a valid and legally binding agreement of EHI
and the Subsidiary Guarantor, enforceable against EHI and the
Subsidiary Guarantor in accordance with its terms, except that (A) the
enforcement thereof may be subject to (1) bankruptcy, insolvency,
reorganization, moratorium or other laws affecting creditors' rights
generally, including without limitation the effect of statutory or
other laws regarding fraudulent conveyances or transfers, preferential
transfers or distributions by corporations to shareholders, or (2)
general principles of equity, whether considered at law or at equity,
including, without limitation, concepts of materiality,
reasonableness, good faith and fair dealing.
(ix) The statements set forth under the heading "Employment
Agreements" under the caption "Management," under the headings
"Management Agreement" and "Shareholders Agreement" under the caption
"Certain Relationships and Related Transactions," and under the
captions "Description of Notes," "Description of New Credit Facility,"
"Description of Redeemable Preferred Stock and Warrants," and
"Exchange Offer; Registration Rights" in the Final Memorandum, insofar
as such statements purport to summarize certain provisions of the
Employment Agreements, Management Agreement, Shareholders Agreement,
Indenture, Securities, Exchange Notes, Private Exchange Notes,
Registration Rights Agreement, Series A
-25-
10% Cumulative Redeemable Preferred Stock and Warrants, and Credit
Agreement, constitute a fair summary of such provisions.
(x) To the knowledge of such counsel, no legal or governmental
proceedings are pending or threatened to which MergerCo, EHI or the
Subsidiary is a party or to which the property or assets of MergerCo,
EHI or the Subsidiary are subject that could reasonably be expected to
result, individually or in the aggregate, in a Material Adverse
Effect, or that seek to restrain, enjoin, prevent the consummation of
or otherwise challenge the issuance or sale of the Securities to be
sold hereunder or the consummation of the other transactions described
in the Final Memorandum.
(xi) To the knowledge of such counsel, no consent, approval,
authorization or order of any court or governmental body is required
for the issuance and sale by MergerCo and, at and as of the Effective
Time, by EHI, as guaranteed by the Subsidiary Guarantor, of the Notes
to the Initial Purchaser or the consummation by MergerCo, EHI and the
Subsidiary of the other transactions contemplated hereby, except such
(i) as have been obtained, (ii) as may be required under state
securities or "Blue Sky" laws in connection with the sale to or
purchase and resale of the Notes by the Initial Purchaser, (iii) as
may be required by federal or state securities regulatory authorities
in connection with or pursuant to the Registration Rights Agreement,
or (iv) that if not obtained could not reasonably be expected to have
a Material Adverse Effect.
(xii) The execution, delivery and performance by each of
MergerCo, EHI and the Subsidiary Guarantor as is a party thereto of
this Purchase Agreement, the Registration Rights Agreement, the
Assumption Agreement, the Indenture and the Supplemental Indenture
will not constitute or result in a breach of or a default under (or an
event that with notice or passage of time or both would constitute a
default under) or violation of any of (i) the terms or provisions of
any Contracts that have been identified to such counsel by EHI as
being the only such Contracts that are material to MergerCo, EHI
and/or Elgar, as the case may be, except for any such breach,
violation, default or event that could not reasonably be expected
-26-
to have, individually or in the aggregate, a Material Adverse Effect,
(ii) the certificate of incorporation or bylaws of MergerCo, EHI or
the Subsidiary, or (iii) (assuming compliance with all applicable
state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8
hereof and compliance with the Act with respect to the exchange of the
Notes for Exchange Notes and Private Exchange Notes and the
obligations of the parties hereto under the Registration Rights
Agreement) any statute, rule or regulation that in the experience of
such counsel is generally applicable to transactions of the type
contemplated by the Final Memorandum or, to the knowledge of such
counsel, any judgment, order or decree applicable to MergerCo, EHI or
the Subsidiary or any of their respective properties or assets, except
for any such conflict, breach or violation that could not reasonably
be expected to have, individually or in the aggregate, a Material
Adverse Effect, and except as rights to indemnity and contribution may
be limited by federal or state securities laws or public policy.
(xiii) The execution, delivery and performance by MergerCo,
EHI or the Subsidiary of this Purchase Agreement or the sale of the
Securities does not violate Regulation G, T, U or X of the Board of
Governors of the Federal Reserve System, in each case as in effect, or
as the same may hereafter be in effect, on the Closing Date.
(xiv) None of MergerCo, EHI or the Subsidiary will be an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended, and the rules and regulations thereunder.
(xv) Assuming the accuracy of the representations and
warranties and compliance with the agreements of MergerCo, EHI, the
Subsidiary Guarantor and the Initial Purchaser contained in this
Purchase Agreement, no registration of the Securities under the
Securities Act or qualification of the Indenture under the Trust
Indenture Act is required in connection with the issuance and sale
of the Securities by MergerCo, EHI, and the Subsidiary Guarantor to
the Initial Purchaser and the offer, resale and delivery
-27-
of the Securities by the Initial Purchaser in the manner contemplated
by this Purchase Agreement.
(xvi) The Recapitalization Agreement has been duly
authorized, executed and delivered by MergerCo and Carlyle-EEC
Holdings, Inc.
(xvii) The Credit Agreement has been duly authorized, executed
and delivered by EHI and Elgar.
In rendering such opinion, such counsel may (A) rely as to matters of
fact, to the extent they deem proper, on certificates of officers of
MergerCo, EHI and the Subsidiary and public officials, (B) state that they
express no opinion with respect to the laws of any jurisdiction other than
the laws of the State of California, the State of New York, the General
Corporation Law of the State of Delaware and the federal laws of the United
States and (C) subject such opinion to such exceptions, qualifications and
limitations as are reasonably acceptable to the Initial Purchaser.
At the time the foregoing opinion is delivered, ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
LLP shall additionally state that it has participated in conferences with
officers and other representatives of MergerCo, EHI and the Subsidiary,
representatives of the Independent Accountant for Carlyle-EEC Holdings,
Inc. and Elgar, representatives of the Initial Purchaser and counsel for
the Initial Purchaser, at which conferences the contents of the Final
Memorandum and related matters were discussed, and, although it has not
independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the statements
contained in the Final Memorandum (except to the extent specified in
subsection 7(a)(ix)), no facts have come to its attention that lead it to
believe that the Final Memorandum, on the date thereof or at the Closing
Date, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements contained therein, in the light of the circumstances under which
they were made, not misleading (it being understood that such firm need
express no opinion with respect to the financial statements and related
notes thereto and the other financial, statistical and accounting data
included in the Final Memorandum). The opinion of ▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇,
LLP described in this Section shall be rendered
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to the Initial Purchaser at the request of MergerCo and shall so state
therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Purchase Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have received
the opinion, in form and substance satisfactory to the Initial Purchaser,
dated as of the Closing Date and addressed to the Initial Purchaser, of
▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchaser, with respect to
certain legal matters relating to this Purchase Agreement and such other
related matters as the Initial Purchaser may reasonably require. In
rendering such opinion, ▇▇▇▇▇▇ ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall have received and may
rely upon such certificates and other documents and information as it may
reasonably request to pass upon such matters.
(c) The Initial Purchaser shall have received from the Independent
Accountant a "comfort letter" dated the date hereof and the Closing Date,
in form and substance reasonably satisfactory to counsel for the Initial
Purchaser. The Initial Purchaser shall also have received from Price
Waterhouse LLP a letter relating to its procedures with respect to Elgar
for the fiscal years ended September 30, 1995, October 1, 1994 and October
2, 1993, which letter shall be in form and substance reasonably
satisfactory to the Initial Purchaser.
(d) The representations and warranties of MergerCo contained in this
Purchase Agreement shall be true and correct on and as of the date hereof
and the representations and warranties of MergerCo and the Subsidiary
Guarantor contained in this Purchase Agreement shall be true and correct on
and as of the Closing Date as if made on and as of the Closing Date; the
statements of the officers of MergerCo, EHI and the Subsidiary Guarantor
made pursuant to any certificate delivered in accordance with the
provisions hereof shall be true and correct on and as of the date made and
on and as of the Closing Date; MergerCo and EHI and the Subsidiary
Guarantor in all material respects shall have performed all covenants and
agreements and satisfied all conditions on their part to be performed or
satisfied hereunder at or prior to the Closing Date; and, except as
described in the Final Memorandum
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(exclusive of any amendment or supplement thereto after the date hereof),
subsequent to the date of the most recent financial statements in such
Final Memorandum, there shall have been no event or development that,
individually or in the aggregate, has or could reasonably be expected to
have a Material Adverse Effect.
(e) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(f) The Initial Purchaser shall have received a certificate of
MergerCo, dated the Closing Date, signed on behalf of MergerCo by its
President and Secretary, to the effect that:
(i) The representations and warranties of MergerCo contained in
this Purchase Agreement are true and correct in all material respects
as of the date hereof and as of the Closing Date, and MergerCo in all
material respects has performed all covenants and agreements and
satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since the date
of the most recent financial statements in the Final Memorandum
(exclusive of any amendment or supplement thereto after the date
hereof), no event or events have occurred, no information has become
known nor does any condition exist that, individually or in the
aggregate, could reasonably be expected to have a Material Adverse
Effect; and
(iii) The sale of the Notes hereunder has not been enjoined
(temporarily or permanently).
(g) The Initial Purchaser shall have received a certificate of each
of EHI and the Subsidiary Guarantor, dated the Closing Date, signed on
behalf of EHI by its President and Secretary and of the Subsidiary
Guarantor by its Chairman of the Board, President and Chief Executive
Officer or any Vice President and the Chief Financial Officer, to the
effect that:
(i) The representations and warranties of EHI or the
Subsidiary Guarantor contained in this Pur-
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chase Agreement are true and correct in all material respects as of
the Closing Date, and EHI by the Subsidiary Guarantor in all material
respects has performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied hereunder at or
prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or since
the date of the most recent financial statements in the Final
Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), no event or events have occurred, no information
has become known nor does any condition exist that, individually or
in the aggregate, could reasonably be expected to have a Material
Adverse Effect; and
(iii) The sale of the Notes hereunder has not been
enjoined (temporarily or permanently).
(h) On the Closing Date, the Initial Purchaser shall have received
the Registration Rights Agreement executed by MergerCo and such agreement
shall be in full force and effect at all times from and after the Closing
Date.
(i) The Indenture shall have been duly executed and delivered by
MergerCo and the Trustee. The Supplemental Indenture shall have been duly
executed and delivered by EHI and the Subsidiary Guarantor and the
Securities shall have been duly executed and delivered by EHI and the
Subsidiary Guarantor and duly authenticated by the Trustee.
(j) The Assumption Agreement shall have been duly authorized,
executed and delivered by EHI and the Subsidiary Guarantor and such
agreement shall be in full force and effect at all times from and after the
Closing Date.
(k) The Initial Purchaser shall have received a true and correct copy
of the Recapitalization Agreement and any amendments thereto, and there
shall have been no material amendments, alterations, modifications or
waivers of any provisions of the Recapitalization Agreement since the date
of this Purchase Agreement; all conditions to effect the Merger shall have
been satisfied without waiver; the Certificate of Merger with respect to
the Merger shall have been filed with the Office of the Secretary of the
State of Delaware and the Merger shall have become effective.
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(l) The Initial Purchaser shall have received a true and correct
copy of an opinion from Houlihan, Lokey, ▇▇▇▇▇▇ & ▇▇▇▇▇ Financial
Advisors, Inc., regarding the solvency, at and as of the Effective Time,
of Elgar immediately after the consummation of the Recapitalization.
(m) The Initial Purchaser shall have received a true and correct copy
of the Credit Agreement, dated the Closing Date, and there exists as of the
Closing Date (after giving effect to the transactions contemplated by the
Recapitalization and the financing thereof) no condition that would
constitute a Default or an Event of Default (each as defined in the Credit
Agreement) under the Credit Agreement.
(n) All conditions to effect the consummation of the Recapitalization
shall have been satisfied without waiver, including without limitation, the
▇▇▇▇▇▇ Investment and the issuance of the Series A 10% Cumulative
Redeemable Preferred Stock and Warrants, concurrently with the sale of the
Securities.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Purchase Agreement will comply with the
provisions hereof only if they are reasonably satisfactory in all material
respects to the Initial Purchaser and counsel for the Initial Purchaser.
MergerCo and EHI shall furnish to the Initial Purchaser such conformed copies of
such documents, opinions, certificates, letters, schedules and instruments in
such quantities as the Initial Purchaser shall reasonably request.
8. OFFERING OF NOTES; RESTRICTIONS ON TRANSFER.
(a) The Initial Purchaser represents and warrants to MergerCo, EHI,
and Elgar that it is a QIB. The Initial Purchaser represents, warrants and
agrees that (i) it or any person acting for its benefit has not and will
not solicit offers for, or offer or sell, the Securities by any form of
general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act; and (ii) its acquisition of
the Notes does not constitute a "prohibited transaction" (as defined in
ERISA); and (iii) it or any person acting for its benefit has solicited and
will solicit offers for the Securities only from, and will offer the
Securities only to (A) in the case of offers inside the United
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States, persons whom the Initial Purchaser reasonably believes to be QIBs
or, if any such person is buying for one or more institutional accounts for
which such person is acting as fiduciary or agent, only when such person
has represented to the Initial Purchaser that each such account is a QIB to
whom notice has been given that such sale or delivery is being made in
reliance on Rule 144A, and, in each case, in transactions under Rule 144A;
and (B) in the case of offers outside the United States, to persons other
than U.S. persons ("FOREIGN PURCHASER," which term shall include dealers or
other professional fiduciaries in the United States acting on a
discretionary basis for foreign beneficial owners (other than an estate or
trust)) in reliance on Regulation S; PROVIDED, HOWEVER, that, in the case
of clause (A) or (B), in purchasing such Securities such persons are deemed
to have represented and agreed as provided under the caption "Transfer
Restrictions" contained in the Final Memorandum.
(b) The Initial Purchaser represents and warrants with respect to
offers and sales outside the United States that (i) it has and will comply
with all applicable laws and regulations in each jurisdiction in which it
acquires, offers, sells or delivers Notes or has in its possession or
distributes any Memorandum or any such other material, in all cases at its
own expense; (ii) the Notes have not been and will not be offered or sold
within the United States or to, or for the account or benefit of U.S.
persons except in accordance with Regulation S or pursuant to an exemption
from the registration requirements of the Act; (iii) it has offered the
Notes and will offer and sell the Notes (A) as part of its distribution at
any time and (B) otherwise until 40 days after the later of the
commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S and, accordingly, neither it nor any persons
acting on its behalf have engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the Notes, and
any such persons have complied and will comply with the offering
restrictions requirement of Regulation S; and (iv) it agrees that, at or
prior to confirmation of sales of the Notes, it will have sent to each
distributor, dealer or person receiving a selling concession, fee or other
remuneration that purchases Notes from it during the restricted period a
confirmation or notice to substantially the following effect:
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"The Securities covered hereby have not been registered under the
United States Securities Act of 1933 (the "Securities Act") and may not be
offered and sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of the distribution of the Securities
at any time or (ii) otherwise until 40 days after the later of the
commencement of the offering and the closing date of the offering, except
in either case in accordance with Regulation S (or Rule 144A if available)
under the Securities Act. Terms used above have the meaning given to them
in Regulations S."
(c) The Initial Purchaser agrees that prior to or simultaneously with
the confirmation of sale by it to any purchaser of any of the Notes
purchased by such Initial Purchaser from MergerCo pursuant hereto, it shall
furnish to that purchaser a copy of the Final Memorandum.
(d) In addition to the foregoing, the Initial Purchaser acknowledges
and agrees that MergerCo, EHI and Elgar and for purposes of delivering
their opinions pursuant to Sections 7(a) and (b), counsel for MergerCo and
for the Initial Purchaser, respectively, may rely upon the accuracy and
truth of the representations, warranties and agreements of the Initial
Purchaser and its compliance with its agreements contained in this Section
8, and the Initial Purchaser hereby consents to such reliance.
9. INDEMNIFICATION AND CONTRIBUTION. (a) MergerCo and the
Subsidiary Guarantor, jointly and severally, agree to indemnify and hold
harmless the Initial Purchaser, and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to which
the Initial Purchaser or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in (A) any Memorandum or any amendment or supplement thereto
or (B) any application or other document, or any amendment or supplement
thereto, executed by MergerCo, EHI or the Subsidiary Guarantor or based
upon written information furnished by or on behalf of MergerCo, EHI or the
Subsidiary Guarantor filed in any jurisdiction in order to qualify the
Securities under the securities or "Blue Sky" laws thereof or filed with
any
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securities association or securities exchange (each, an "APPLICATION"); or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto, or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading,
and will reimburse, as incurred, the Initial Purchaser and each such controlling
person for any reasonable legal or other reasonable expenses incurred by the
Initial Purchaser or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that MergerCo
and the Subsidiary Guarantor will not be liable (i) in any such case to the
extent that any such loss, claim, damage, or liability arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made in any Memorandum or any amendment or supplement thereto, or any
Application, in reliance upon and in conformity with written information
concerning the Initial Purchaser furnished to MergerCo, EHI, Elgar or their
agents by or on behalf of the Initial Purchaser specifically for use therein or
(ii) with respect to the Preliminary Memorandum, to the extent that any such
loss, claim, damage or liability arises solely from the fact that the Initial
Purchaser sold Securities to a person to whom there was not sent or given a copy
of the Final Memorandum (as amended or supplemented) at or prior to the written
confirmation of such sale if MergerCo and, at and after the Effective Time, EHI
shall have previously furnished copies thereof to the Initial Purchaser in
accordance with Section 5(d) hereof and the Final Memorandum (as amended or
supplemented) would have corrected any such untrue statement or omission. This
indemnity agreement will be in addition to any liability that MergerCo and the
Subsidiary Guarantor may otherwise have to the indemnified parties. MergerCo
and the Subsidiary Guarantor shall not be liable under this Section 9 for any
settlement of any claim or action effected without its prior written consent,
which shall not be unreasonably withheld.
(b) The Initial Purchaser agrees to indemnify and hold harmless
MergerCo and the Subsidiary Guarantor, their respective directors, officers and
each person, if any, who controls MergerCo or the Subsidiary Guarantor within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities to which
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MergerCo or the Subsidiary Guarantor, or any such director, officer or
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any Memorandum or any
amendment or supplement thereto, or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in any Memorandum or any
amendment or supplement thereto, or any Application, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning the Initial Purchaser, furnished to MergerCo, EHI, Elgar
or their agents by or on behalf of the Initial Purchaser specifically for use
therein; and subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any reasonable legal or other expenses
incurred by MergerCo or the Subsidiary Guarantor, or any such director, officer
or controlling person in connection with investigating or defending against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action in respect thereof. This indemnity agreement will
be in addition to any liability that the Initial Purchaser may otherwise have to
the indemnified parties. The Initial Purchaser shall not be liable under this
Section 9 for any settlement of any claim or action effected without its
consent, which shall not be unreasonably withheld. MergerCo, EHI and the
Subsidiary Guarantor shall not, without the prior written consent of the Initial
Purchaser which shall not be unreasonably withheld, effect any settlement or
compromise of any pending or threatened proceeding in respect of which the
Initial Purchaser is or could have been a party, or indemnity could have been
sought hereunder by the Initial Purchaser, unless such settlement (A) includes
an unconditional written release of the Initial Purchaser, in form and substance
reasonably satisfactory to the Initial Purchaser, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of the Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of
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the commencement thereof in writing; but the omission to so notify the
indemnifying party (i) will not relieve the indemnifying party from any
liability under paragraph (a) or (b) above unless and to the extent such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraphs (a) and (b) above. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; PROVIDED, HOWEVER, that if (i) the use
of counsel chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the defendants in
any such action include both the indemnified party and the indemnifying party
and the indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it and/or other indemnified parties that
are different from or additional to those available to the indemnifying party,
or (iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party within
a reasonable time after receipt by the indemnifying party of notice of the
institution of such action, then, in each such case, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to defend such action on behalf of such
indemnified party or parties. After notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof and approval
by such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under this
Section 9 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof, unless (i) the indemnified party shall have employed
separate counsel in accordance with the proviso to the immediately preceding
sentence (it being understood, however, that in connection with such action the
indemnifying party shall not be liable for the expenses of more than one
separate counsel (in addition to local counsel) in any one action or separate
but substantially similar actions in the same jurisdiction arising out of the
same general allegations or circumstances, designated by the Initial Purchaser
in the
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case of paragraph (a) of this Section 9 or MergerCo in the case of paragraph (b)
of this Section 9, representing the indemnified parties under such paragraph (a)
or paragraph (b), as the case may be, who are parties to such action or actions)
or (ii) the indemnifying party has authorized in writing the employment of
counsel for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified party, the
indemnifying party will not be liable for the costs and expenses of any
settlement of such action effected by such indemnified party without the prior
written consent of the indemnifying party (which consent shall not be
unreasonably withheld), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided for in
the preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contribution, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one hand
and the indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof). The relative
benefits received by MergerCo, EHI and the Subsidiary Guarantor on the one hand
and the Initial Purchaser on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting expenses)
received by MergerCo bear to the total discounts and commissions received by the
Initial Purchaser. The relative fault of the parties shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by MergerCo, EHI and the Subsidiary Guarantor on
the one hand, or the Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or pre-
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vent such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances. MergerCo, EHI, the
Subsidiary Guarantor and the Initial Purchaser agree that it would not be
equitable if the amount of such contribution were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of this
paragraph (d). Notwithstanding any other provision of this paragraph (d), the
Initial Purchaser shall not be obligated to make contributions hereunder that in
the aggregate exceed the total discounts, commissions and other compensation
received by the Initial Purchaser under this Purchase Agreement, less the
aggregate amount of any damages that such Initial Purchaser has otherwise been
required to pay by reason of the untrue or alleged untrue statements or the
omissions or alleged omissions to state a material fact, and no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchaser, and each director and officer of
MergerCo, EHI and the Subsidiary Guarantor, and each person, if any, who
controls MergerCo, EHI or the Subsidiary Guarantor within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as MergerCo.
10. SURVIVAL CLAUSE. The respective representations, warranties,
agreements, covenants, indemnities and other statements of MergerCo, EHI and the
Subsidiary Guarantor, their respective officers and the Initial Purchaser set
forth in this Purchase Agreement or made by or on behalf of them pursuant to
this Purchase Agreement shall survive the delivery of and payment for the
Securities and shall remain in full force and effect, regardless of any
investigation made by or on behalf of MergerCo, EHI or the Subsidiary Guarantor,
any of its officers or directors, the Initial Purchaser or any controlling
person referred to in Section 9 hereof. The respective agreements, covenants,
indemnities and other statements set forth in Sections 6, 9 and 15 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Purchase Agreement.
11. TERMINATION. (a) This Purchase Agreement may be terminated in
the sole discretion of the Initial Purchaser
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by written notice to MergerCo given prior to the Closing Date in the event that
any of MergerCo, EHI or the Subsidiary Guarantor shall have failed, refused or
been unable to perform in all material respects all obligations and satisfy all
conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) Any of MergerCo, EHI or the Subsidiary Guarantor shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity, whether
or not covered by insurance, or from any strike, labor dispute, slow down
or work stoppage or any legal or governmental proceeding, which loss or
interference, in the sole judgment of the Initial Purchaser, has had or has
a Material Adverse Effect, or there shall have been, in the sole judgment
of the Initial Purchaser, any event or development that, individually or in
the aggregate, has or could be reasonably likely to have a Material Adverse
Effect (including without limitation a change in control of MergerCo, EHI
or the Subsidiary Guarantor), except in each case as described in the Final
Memorandum (exclusive of any amendment or supplement thereto);
(ii) trading in securities generally on the New York Stock
Exchange, American Stock Exchange or the Nasdaq National Market shall have
been suspended or minimum or maximum prices shall have been established on
any such exchange or market;
(iii) a banking moratorium shall have been declared by New York or
United States authorities;
(iv) there shall have been (A) a significant outbreak or
escalation of hostilities between the United States and any foreign power,
or (B) a significant outbreak or escalation of any other insurrection or
armed conflict involving the United States or any other significant
national or international calamity or emergency or (C) any material change
in the financial markets of the United States which, in the case of (A),
(B) or (C) above and in the sole judgment of the Initial Purchaser, makes
it impracticable or inadvisable to proceed with the offering or the
delivery of the Securities as contemplated by the Final Memorandum; or
(v) any securities of MergerCo, EHI or the Subsidiary Guarantor
shall have been downgraded or placed on any
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"watch list" for possible downgrading by any nationally recognized
statistical rating organization.
(b) Termination of this Purchase Agreement pursuant to this
Section 11 shall be without liability of any party to any other party except as
provided in Section 10 hereof.
12. INFORMATION SUPPLIED BY THE INITIAL PURCHASER. The statements
set forth in the last paragraph on the front cover page, the legend on the
inside front cover of the Final Memorandum, the third sentence of the fifth
paragraph and the sixth and seventh paragraphs under the heading "Private
Placement" in the Final Memorandum (to the extent such statements relate to the
Initial Purchaser) constitute the only information furnished by the Initial
Purchaser or on its behalf to MergerCo, EHI, Elgar or their agents for the
purposes of Sections 2(a) and 9 hereof.
13. NOTICES. All communications hereunder shall be in writing and,
if sent to the Initial Purchaser, shall be mailed or delivered to BT Alex. ▇▇▇▇▇
Incorporated, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Finance Department; if sent to MergerCo, EHI or the Subsidiary
Guarantor, shall be mailed or delivered to Elgar Holdings, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with copies to
▇.▇. ▇▇▇▇▇▇ & Company, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; and one business
day after being timely delivered to a next-day courier.
14. SUCCESSORS. This Purchase Agreement shall inure to the benefit
of and be binding upon the Initial Purchaser and MergerCo, EHI and the
Subsidiary Guarantor and their successors and legal representatives, and nothing
expressed or mentioned in this Purchase Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim
under or in respect of this Purchase Agreement, or any provisions herein
contained; this Purchase Agreement and all conditions and provisions hereof
being intended to be and being for the sole and exclusive benefit of such
persons and for the benefit of no other person except that (i) the indemnities
of MergerCo, EHI and the Subsidiary Guarantor contained in Sec-
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tion 9 of this Purchase Agreement shall also be for the benefit of any person or
persons who control the Initial Purchaser within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act and (ii) the indemnities of the
Initial Purchaser contained in Section 9 of this Purchase Agreement shall also
be for the benefit of the directors and officers of MergerCo, EHI and the
Subsidiary Guarantor, and any person or persons who control MergerCo, EHI or the
Subsidiary Guarantor within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Securities from the Initial Purchaser will
be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS PURCHASE
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
16. COUNTERPARTS. This Purchase Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement by and between
MergerCo and the Initial Purchaser.
Very truly yours,
JFL-EEC Merger Sub Co.,
as Issuer
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇
Title: Secretary
BT ALEX. ▇▇▇▇▇ INCORPORATED,
as Initial Purchaser
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President