Exhibit 10.41

FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT (this “Agreement”), dated as of September 22, 2006,
is entered into by and among the Lenders signatory hereto, WELLS FARGO FOOTHILL,
INC., a California corporation, in its capacity as agent for the Lenders and
Bank Product Providers (in such capacity “Agent”), MAGNETEK, INC., a Delaware
corporation (“Parent”), and each of Parent’s Subsidiaries identified on the
signature pages hereof (such Subsidiaries, together with Parent, are referred to
hereinafter as a “Borrower” and individually and collectively, jointly and
severally, as the “Borrowers”).  Terms used herein without definition shall have
the meanings ascribed to them in the Credit Agreement defined below.

RECITALS

 

A.            The Lenders, Agent and Borrowers have previously entered into that
certain Credit Agreement dated September 30, 2005, as amended by that certain
First Amendment to Credit Agreement and Waiver, dated November 29, 2005 and by
that certain Second Amendment to Credit Agreement and Waiver, dated April 20,
2006 (as amended, modified and supplemented from time to time, the “Credit
Agreement”), pursuant to which the Lenders have made certain loans and financial
accommodations available to Borrowers.

B.            Certain Events of Default have occurred and are continuing under
the Credit Agreement due to Borrowers’ failure to (i) achieve the minimum amount
of TTM EBITDA set forth in Section 6.16(a)(i) of the Credit Agreement for the
period ending June 30, 2006, (ii) maintain the minimum Fixed Charge Coverage
Ration set forth in Section 6.16(a)(iii) of the Credit Agreement as of June 30,
2006 and (iii) maintain a Leverage Ratio of no more than the amount set forth in
Section 6.16(a)(iv) of the Credit Agreement as of June 30, 2006 (collectively,
the “Known Existing Defaults”).

C.            Borrowers have requested that the Agent and Lenders forbear from
exercising their rights and remedies under the Credit Agreement and the other
Loan Documents in order to give Borrowers time to negotiate a sale of the Stock
of MagneTek S.p.A., a company organized under the laws of Italy and of certain
other assets of Parent associated with its “Power Electronics Group” division.

D.            Agent and the Lenders are willing, for a limited period of time
and on the terms and conditions set forth herein, to forbear from exercising
their rights and remedies under the Credit Agreement and the other Loan
Documents with respect to the Known Existing Defaults.

E.             Borrowers are entering into this Agreement with the understanding
and agreement that, except as specifically provided herein, none of the Lender
Group’s rights or remedies as set forth in the Credit Agreement or any other
Loan Document is being waived or modified by the terms of this Agreement.

AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.             Incorporation of Recitals.  Each of the above recitals is
expressly incorporated herein and is represented by each Borrower to be true and
correct.

2.             Reaffirmation of Obligations.  Each Borrower hereby acknowledges
that the Loan Documents and the Obligations constitute the valid and binding
obligations of such Borrower enforceable against such Borrower in accordance
with their respective terms, and each Borrower hereby reaffirms its obligations
under the Loan Documents.  Agent’s and the Lenders’ entry into this Agreement or
any of the documents referenced herein, their negotiations with any party with
respect to any Loan Document, their conduct of any analysis or

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investigation of any Collateral for the Obligations or any Loan Document, their
acceptance of any payment from any Borrower or any other party of any payments
made prior to the date hereof, or any other action or failure to act on the part
of any member of the Lender Group shall not constitute (a) a modification of any
Loan Document or (b) a waiver of any Default or Event of Default under the
Credit Agreement, including, without limitation, the Known Existing Defaults, or
a waiver of any term or provision of any Loan Document.

3.             Agreement to Forbear.  For the Forbearance Period (as defined
below), the Lender Group shall not take any action or commence any proceedings
with respect to the enforcement of any of its rights or remedies under the Loan
Documents as a result of the Known Existing Default.  The parties agree that
neither the foregoing agreement by the Lender Group nor the acceptance by any
member of the Lender Group of any of the payments provided for in the Loan
Documents, nor any payment prior to the date hereof shall, however, (a) excuse
any party from any of its obligations under the Loan Documents, or (b) toll the
running of any time periods applicable to any such rights and remedies,
including, without limitation, any grace periods with respect to Defaults under
the Loan Documents or otherwise.  Each Borrower agrees that it will not assert
laches, waiver or any other defense to the enforcement of any of the Loan
Documents based upon the foregoing agreement by the Lender Group to forbear or
the acceptance by any member of the Lender Group of any of the payments provided
for in the Loan Documents or any payment prior to the date hereof.  As used
herein, “Forbearance Period” shall mean the period commencing upon the
effectiveness of this Agreement and continuing until the earliest to occur of: 
(x) any Default or Event of Default under any of the Financing Agreements (other
than the Known Existing Default) or (y) October 31, 2006.

4.             Termination of Agreement to Forbear.  Each Borrower acknowledges
and agrees that upon the termination of the Lender Group’s agreement to forbear
as provided in Section 3 hereof, Agent, on behalf of the Lender Group, shall be
entitled to exercise any or all of its remedies under the Loan Documents,
including, without limitation, the appointment of a receiver, the acceleration
of the Obligations and the enforcement under the Code of any liens in favor of
Agent, as a result of the Known Existing Defaults, and at any time the Lender
Group shall be entitled to exercise any or all of their remedies under the Loan
Documents as a result of any other Default or Event of Default under the Loan
Documents.

5.             Agreement to Defer October 1, 2006 Principal Payment.  Anything
in Section 2.03(b) of the Financing Agreement notwithstanding, the parties
hereby agree that the October 1, 2006 installment principal payment of
$1,000,000 shall not be due until the end of the Forbearance Period.

6.             Release; Covenant Not to Sue.

(a)           Each Borrower hereby absolutely and unconditionally releases and
forever discharges the Lender Group, and any and all of their respective
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing (each a “Released Party”), from any and all claims, demands
or causes of action of any kind, nature or description, whether arising in law
or equity or upon contract or tort or under any state or federal law or
otherwise, which such Borrower has had, now has or has made claim to have
against any such person for or by reason of any act, omission, matter, cause or
thing whatsoever arising from the beginning of time to and including the date of
this Agreement, whether such claims, demands and causes of action are matured or
unmatured or known or unknown.  It is the intention of each Borrower in
providing this release that the same shall be effective as a bar to each and
every claim, demand and cause of action specified, and in furtherance of this
intention it waives and relinquishes all rights and benefits under Section 1542
of the Civil Code of the State of California (or any comparable provision of any
other applicable law), which provides:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him might have materially affected his settlement with the debtor.”

Each Borrower acknowledges that it may hereafter discover facts different from
or in addition to those now known or believed to be true with respect to such
claims, demands, or causes of action and agree that this instrument shall be and
remain effective in all respects notwithstanding any such differences or
additional facts.  Each Borrower understands, acknowledges and agrees that the
release set forth above may be pleaded as

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a full and complete defense and may be used as a basis for an injunction against
any action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release.

(b)           Each Borrower, on behalf of itself and its successors, assigns,
and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party above
that it will not sue (at law, in equity, in any regulatory proceeding or
otherwise) any Released Party on the basis of any claim released, remised and
discharged by such Borrower pursuant to the above release.  If any Borrower or
any of its successors, assigns or other legal representations violates the
foregoing covenant, each Borrower, for itself and its successors, assigns and
legal representatives, agrees to pay, in addition to such other damages as any
Released Party may sustain as a result of such violation, all attorneys’ fees
and costs incurred by such Released Party as a result of such violation.

6.             Effectiveness of this Agreement.  Agent must have received the
following items, in form and content acceptable to Agent, before this Agreement
is effective and the Lenders are required to resume making extensions of credit
to Borrowers under the Credit Agreement.

(a)           Agreement; Acknowledgement and Release.  This Agreement and the
attached Acknowledgement and Release by Guarantors, each fully executed in a
sufficient number of counterparts for distribution to all parties.

(b)           Forbearance as to Second Lien Loan Agreement, etc.  Evidence that
the Borrowers, Second Lien Agent and the Second Lien Lenders have entered into a
forbearance agreement with respect to the Second Lien Loan Agreement reflecting
substantially the same terms set forth in this Agreement (the “Second Lien
Forbearance”) or otherwise satisfactory to Agent.

(c)           Representations and Warranties.  Except for the existence of the
Known Existing Defaults, the representations and warranties set forth herein and
in the Credit Agreement must be true and correct in all material respects
(except where any such representation and warranty is already subject to a
materiality standard, in which case such representation and warranty must be
true and correct in all respects) on and as of the date hereof as though made on
and as of the date hereof (other than any such representations and warranties
that, by their terms, are specifically made as of a date other than the date
hereof).

(d)           Other Required Documentation.  All other documents and legal
matters in connection with the transactions contemplated by this Agreement shall
have been delivered or executed or recorded, as required by Agent.

7.             Representations and Warranties.  Each Borrower represents and
warrants as follows:

(a)           Authority.  Each Borrower has the requisite corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder and under the Loan Documents to which it is a party.  The execution,
delivery and performance by each Borrower of this Agreement have been duly
approved by all necessary corporate action and no other corporate proceedings
are necessary to consummate such transactions.

(b)           Enforceability.  This Agreement has been duly executed and
delivered by each Borrower.  This Agreement and each Loan Document is the legal,
valid and binding obligation of each Borrower, enforceable against such Borrower
in accordance with its terms, and is in full force and effect.

(c)           Representations and Warranties.  The representations and
warranties contained in each Loan Document (other than any such representations
or warranties that, by their terms, are specifically made as of a date other
than the date hereof) are true and correct in all material respects (except
where any such representation and warranty is already subject to a materiality
standard, in which case such representation

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and warranty is true and correct in all respects) on and as of the date hereof
as though made on and as of the date hereof.

(d)           Due Execution.  The execution, delivery and performance of this
Agreement are within the power of each Borrower, have been duly authorized by
all necessary corporate action, have received all necessary governmental
approval, if any, and do not contravene any law or any contractual restrictions
binding on such Borrower.

(e)           No Default.  Other than the Known Existing Defaults, no event has
occurred and is continuing that constitutes a Default or an Event of Default.

(f)            No Duress.  This Agreement has been entered into without force or
duress, of the free will of each Borrower.  Each Borrower’s decision to enter
into this Agreement is a fully informed decision and such Borrower is aware of
all legal and other ramifications of such decision.

(g)           Counsel.  Each Borrower has read and understands this Agreement,
has consulted with and been represented by legal counsel in connection herewith,
and has been advised by its counsel of its rights and obligations hereunder and
thereunder.

8.             Choice of Law.  The validity of this Agreement, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of New York governing contracts only to be performed in that
State.

9.             Counterparts.  This Agreement may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument.  Delivery of
an executed counterpart of a signature page to this Agreement by telefacsimile
or other similar method of electronic transmission shall be effective as
delivery of a manually executed counterpart of this Agreement.

10.           Reference to and Effect on the Loan Documents.

(a)           Upon and after the effectiveness of this Agreement, each reference
in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import referring to the Credit Agreement, and each reference in the other
Loan Documents to “the Credit Agreement”, “thereof” or words of like import
referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as supplemented hereby.

(b)           The Credit Agreement and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed and shall constitute the legal, valid, binding and enforceable
obligations of each Borrower to the Lender Group and Bank Product Providers.

(c)           The execution, delivery and effectiveness of this Agreement shall
not operate as a waiver of any right, power or remedy of the Lender Group under
any of the Loan Documents, nor constitute a waiver of any provision of any of
the Loan Documents.

11.           Ratification.  Each Borrower hereby restates, ratifies and
reaffirms each and every term and condition set forth in the Credit Agreement
and the Loan Documents effective as of the date hereof.

12.           Integration.  This Agreement, together with the other Loan
Documents, incorporates all negotiations of the parties hereto with respect to
the subject matter hereof and is the final expression and agreement of the
parties hereto with respect to the subject matter hereof.

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13.           Severability.  In case any provision in this Agreement shall be
invalid, illegal or unenforceable, such provision shall be severable from the
remainder of this Agreement and the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.

14.           Submission of Amendment.  The submission of this Agreement to the
parties or their agents or attorneys for review or signature does not constitute
a commitment by Agent or the Lenders to forbear from exercising any of the
Lender Group’s rights and remedies under the Loan Documents, and this Agreement
shall have no binding force or effect until all of the conditions to the
effectiveness of this Agreement have been satisfied as set forth herein.

15.           Modification.  This Agreement may not be amended, waived or
modified in any manner without the written consent of the party against whom the
amendment, waiver or modification is sought to be enforced.

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IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.

 

MAGNETEK, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ David P. Reiland

 

 

Name:

David P. Reiland

 

 

Title:

Executive Vice President

 

 

 

 

 

 

 

 

 

 

MAGNETEK ADS POWER, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ David P. Reiland

 

 

Name:

David P. Reiland

 

 

Title:

Executive Vice President

 

 

 

 

 

 

 

 

 

 

MAGNETEK MONDEL HOLDING, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ David P. Reiland

 

 

Name:

David P. Reiland

 

 

Title:

Executive Vice President

 

 

 

 

 

 

 

 

 

 

WELLS FARGO FOOTHILL, INC.,

 

a California corporation,

 

as Agent and as sole Lender

 

 

 

 

 

By:

/s/ Jeffrey P. Royston

 

 

Name:

Jeffrey P. Royston

 

 

Title:

Vice President

 

 

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ACKNOWLEDGEMENT AND RELEASE BY GUARANTORS

In connection with the foregoing Forbearance Agreement (the “Agreement”), each
of the undersigned, being a Guarantor (as defined in the Credit Agreement
referenced in the Agreement) under their respective Guaranties (as defined in
the Credit Agreement referenced in the Agreement), hereby acknowledges and
agrees to the Agreement and confirms and agrees that its Guaranty is and shall
continue to be, in full force and effect and is hereby ratified and confirmed in
all respects.  Although Agent and the Lenders have informed Guarantors of the
matters set forth above, and Guarantors have acknowledged the same, each
Guarantor understands and agrees that neither the Lender Group nor the Bank
Product Providers have any duty under the Credit Agreement, any Guaranty or any
other agreement with any Guarantor to so notify any Guarantor or to seek such an
acknowledgement, and nothing contained herein is intended to or shall create
such a duty as to any transaction hereafter.

Each Guarantor hereby absolutely and unconditionally releases and forever
discharges each Released Party (as defined in the Agreement), from any and all
claims, demands or causes of action of any kind, nature or description, whether
arising in law or equity or upon contract or tort or under any state or federal
law or otherwise, which such Guarantor has had, now has or has made claim to
have against any such person for or by reason of any act, omission, matter,
cause or thing whatsoever arising from the beginning of time to and including
the date hereof, whether such claims, demands and causes of action are matured
or unmatured or known or unknown.  It is the intention of each Guarantor in
providing this release that the same shall be effective as a bar to each and
every claim, demand and cause of action specified, and in furtherance of this
intention it waives and relinquishes all rights and benefits under Section 1542
of the Civil Code of the State of California (or any comparable provision of any
other applicable law), which provides:

“A general release does not extend to claims which the creditor does not know or
suspect to exist in his favor at the time of executing the release, which if
known by him might have materially affected his settlement with the debtor.”

Each Guarantor acknowledges that it may hereafter discover facts different from
or in addition to those now known or believed to be true with respect to such
claims, demands, or causes of action and agree that this instrument shall be and
remain effective in all respects notwithstanding any such differences or
additional facts.  Each Guarantor understands, acknowledges and agrees that the
release set forth above may be pleaded as a full and complete defense and may be
used as a basis for an injunction against any action, suit or other proceeding
which may be instituted, prosecuted or attempted in breach of the provisions of
such release.  Each Guarantor, on behalf of itself and its successors, assigns,
and other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party above
that it will not sue (at law, in equity, in any regulatory proceeding or
otherwise) any Released Party on the basis of any claim released, remised and
discharged by such Guarantor pursuant to the above release.  If any Guarantor or
any of its successors, assigns or other legal representations violates the
foregoing covenant, such Guarantor, for itself and its successors, assigns and
legal representatives, agrees to pay, in addition to such other damages as any
Released Party may sustain as a result of such violation, all attorneys’ fees
and costs incurred by such Released Party as a result of such violation.

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MAGNETEK NATIONAL ELECTRIC COIL, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ David P. Reiland

 

 

Name:

David P. Reiland

 

 

Title:

Executive Vice President

 

 

 

 

 

 

 

 

 

 

MAGNETEK ALTERNATIVE ENERGY, INC.,

 

a Delaware corporation

 

 

 

 

 

By:

/s/ David P. Reiland

 

 

Name:

David P. Reiland

 

 

Title:

Executive Vice President

 

 

 

 

 

 

 

 

 

 

MONDEL ULC,

 

a Nova Scotia unlimited liability company

 

 

 

 

 

By:

/s/ David P. Reiland

 

 

Name:

David P. Reiland

 

 

Title:

Executive Vice President

 

 

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