Exhibit 10.1

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, dated as of November 6, 2007, is by and between
ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking association (the
“Bank”), and MAGNETEK, INC., a Delaware corporation (the “Company”).

 

The Company and the Bank agree as follows:

 

1.                                       Definitions; Rules of Interpretation.

 

1.1                                 Definitions. As used in this Agreement, the
following terms have the following meanings:

 

“Affiliate” means, as to any Person, any other Person, directly or indirectly
controlling, controlled by or under common control with such Person. A Person
shall be deemed to control another Person if the controlling Person (a) owns 10%
or more of any class of voting Equity Interests of the controlled Person or
(b) possesses, directly or indirectly, the power to direct or cause the
direction of the management or policies of the controlled Person, whether by
ownership of Equity Interests, by contract or otherwise.

 

“Borrowing Base Availability” means an amount equal to 80% of the face amount of
Qualified Accounts as shown on the most recent Borrowing Base Certificate
furnished by the Company to the Bank.

 

“Borrowing Base Certificate” means a certificate of the Company substantially in
the form of Exhibit D.

 

“Borrowing Date” means each date on which (a) a Loan is made by the Bank to the
Company or (b) a Letter of Credit is issued by the Bank.

 

“Business Day” means a day (other than Saturday or Sunday) on which banks are
open for business in Milwaukee, Wisconsin.

 

“Capital Expenditures” means, as to any Person and for any period, all
expenditures (whether paid in cash or other consideration) during such period,
without duplication, that are or should be included in additions to property,
plant and equipment or similar items reflected in such Person’s consolidated
statement of cash flows for such period; provided that Capital Expenditures
shall not include, for purposes hereof, expenditures of proceeds of insurance
settlements, condemnation awards and other settlements in respect of lost,
destroyed, damaged or condemned assets to the extent such expenditures are made
to replace or repair such assets or otherwise to acquire assets useful in the
business of the Person.

 

“Capitalized Lease” means, as to any Person, any lease, the obligations under
which have been, or are required to be, recorded as a capital lease liability on
the consolidated balance sheet of that Person and its Consolidated Subsidiaries.

 

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“Capitalized Lease Obligations” means, as to any Person, at any date, the
obligations of such Person or any of its Consolidated Subsidiaries under
Capitalized Leases.

 

“Change in Control” means at any time, any one Person, together with such
Person’s Affiliates, owns or controls at least thirty-five percent (35%) of the
issued and outstanding Equity Interests of the Company.

 

“Closing Date” means the first Borrowing Date.

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral Documents” means the documents described in section 4.1(b) and any
other document, instrument or agreement furnished by a Person to the Bank which
provides collateral for the Obligations.

 

“Commitment” means the commitment of the Bank to (a) make Loans to the Company
pursuant to section 2.1 and (b) issue Letters of Credit pursuant to section 2.8.
The Commitment of the Bank is $10,000,000, and is subject to reduction from time
to time pursuant to section 2.4.

 

“Consolidated Subsidiaries” means, as to any Person, Subsidiaries whose
financial statements are required to be consolidated with those of such Person.

 

“Contingent Obligation” means, as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the “primary obligations”) of another Person (the “primary
obligor”), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a “Guaranty Obligation”); (b) with respect to any letter of
credit, banker’s acceptance, bank guaranty, surety bond and other similar
instruments issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; (c) to purchase any
materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered, or (d) in respect of any Rate Management Transaction.

 

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The amount of any Contingent Obligation shall (x) in the case of Guaranty
Obligations, be deemed equal to the stated or determinable amount of the primary
obligation in respect of which such Guaranty Obligation is made or, if not
stated or if indeterminable, the maximum reasonably anticipated liability in
respect thereof, (y) in the case of Rate Management Transaction, equal the
termination value in the case of Rate Management Transaction under which a
“termination event” or “event of default” has occurred and, in all other cases,
shall equal $0 and (z) in the case of other Contingent Obligations, be deemed
equal to the maximum reasonably anticipated liability of the Person in respect
thereof.

 

“Default” means any act, event, condition or omission which, with the giving of
notice or lapse of time, would constitute an Event of Default if uncured or
unremedied.

 

“Environmental Laws” means all federal, state and local laws including statutes,
regulations, ordinances, codes, rules and other governmental restrictions and
requirements relating to the discharge of air pollutants, water pollutants or
process waste water or otherwise relating to the environment or hazardous
substances including the Federal Solid Waste Disposal Act, the Federal Clean Air
Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery
Act of 1976, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, regulations of the Environmental Protection Agency,
regulations of the Nuclear Regulatory Commission and regulations of any state
department of natural resources or state environmental protection agency now or
at any time hereafter in effect.

 

“Equity Interest” means, as to any Person, any capital stock, limited liability
company membership interest, partnership interest or other interest representing
equity in, or ownership of, such Person.

 

“ERISA” means, at any date, the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereunder.

 

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Company within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Company or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations which
is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete
or partial withdrawal by the Company or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to

 

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terminate a Pension Plan or Multiemployer Plan; (e) an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not delinquent under Section
4007 of ERISA, upon the Company or any ERISA Affiliate.

 

“Escrow Account” means the escrow account of the Company with a minimum daily
balance of at least $22,000,000 maintained at the Bank which is related to the
Patent Arbitration Award.

 

“Event of Default” means the occurrence of any of the events described in
section 7.1.

 

“Financial Covenant Compliance Certificate” means a certificate of the Company
in the form of Exhibit C.

 

“GAAP” means generally accepted accounting principles in effect in the United
States from time to time.

 

“Governmental Authority” means any nation or government, any state or other
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any court or similar judicial authority thereof,
any entity exercising executive, legislative, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through Equity Interests or otherwise, by any of the
foregoing.

 

“Hazardous Materials” means any gasoline or petroleum (including crude oil or
any fraction thereof) or petroleum products or any hazardous or toxic
substances, materials or wastes, defined or regulated as such in or under any
Environmental Law, including asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.

 

“Indebtedness” means, as to any Person, (a) all indebtedness for borrowed money,
(b) Capitalized Lease Obligations, (c) notes payable and drafts accepted
representing extensions of credit, (d) any obligation owed for all or any part
of the deferred purchase price of property or services (excluding trade payables
incurred in the ordinary course of business) and (e) all indebtedness secured by
any Lien on any property of the Person even though such Person has not assumed
or become liable for the payment of such Indebtedness, provided that for
purposes of this clause (e) the amount of such Indebtedness shall be limited to
the greater of (i) the amount of such Indebtedness as to which there is recourse
to such Person and (ii) the fair market value of the property which is subject
to the Lien.

 

“IRS” means the Internal Revenue Service, and any Governmental Authority
succeeding to any of its principal functions under the Code.

 

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“Letter of Credit” means each letter of credit issued by the Bank pursuant to
section 2.8 hereof.

 

“LIBOR Rate” means the per annum rate reported in the Money Rates column or
section of The Wall Street Journal (Midwest Edition) as the London Interbank
Offered Rates (LIBOR) for loans for a period of one month as of the first
Business Day of each month, rounded upward to the nearest 1/8th of 1%, and the
LIBOR Rate shall change on the first Business Day of each month.  If The Wall
Street Journal ceases publication of the LIBOR Rate, the LIBOR Rate shall be
determined by the Bank from such other source as the Bank reasonably selects. 
If the LIBOR Rate is not readily available to the Bank from another source, the
Bank shall have the right to choose a reasonably comparable index.  If The Wall
Street Journal or the replacement source publishes:  (a) more than one LIBOR
Rate, the higher or highest of the rates shall apply; or (b) a retraction or
correction of a previously published LIBOR Rate, the LIBOR Rate reported in the
retraction or correction shall apply.  The LIBOR Rate determined by the Bank
shall, in the absence of manifest error, be conclusive.

 

 “LIBOR Rate Loan” means a Loan bearing interest at a rate determined by
reference to the LIBOR Rate.

 

“Lien” means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or otherwise) or charge of any kind including any agreement to give
any of the foregoing, any conditional sale or other title retention agreement or
any financing or similar statement or notice filed under the Uniform Commercial
Code as adopted and in effect in the relevant jurisdiction (or other similar
recording or notice statute, and any lease in the nature thereof), except a
filing for precautionary purposes made with respect to a true lease or other
true bailment.

 

“Loan” means an extension of credit to the Company by the Bank pursuant to
section 2.1.

 

“Loan Documents” means this Agreement, the Note, the Collateral Documents, all
Permitted Rate Management Transactions, all Letters of Credit, all applications
for Letters of Credit and all other documents, instruments, agreements and
certificates related to or executed in connection with this Agreement and the
transactions contemplated hereby.

 

“LOC Exposure” means an amount equal to the sum of (a) the aggregate amount
available for drawing under all outstanding Letters of Credit and (b) the
aggregate amount of payments made by the Bank resulting from drawings under
Letters of Credit which have not been reimbursed by the Company (either by
payment by the Company or the making of Loans under section 2.9 to satisfy such
Reimbursement Obligation).

 

“Margin Stock” means “margin stock” as such term is defined in Regulation G, T,
U or X of the Federal Reserve Board.

 

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“Material Adverse Effect” means, with respect to the Company and each
Subsidiary, (a) a material adverse change in, or a material adverse effect upon,
the operations, business, properties, condition (financial or otherwise) or
prospects of the Company or such Subsidiary; (b) a material impairment of the
ability of the Company or such Subsidiary to perform under any Loan Document to
which the Company or such Subsidiary is a party and to avoid any Event of
Default; or (c) a material adverse effect upon the legality, validity, binding
effect or enforceability against the Company or such Subsidiary of any Loan
Document to which the Company or such Subsidiary is a party; provided that if
the amount currently on deposit in the Escrow Account is sufficient to satisfy a
judgment, decree or award rendered against the Company with respect to the
Patent Arbitration Award, the entering of such judgment, decree or award against
the Company shall not be considered to have a Material Adverse Effect.

 

“Maturity Date” means November 1, 2009 or such earlier date on which the Note
becomes due and payable pursuant to section 7.2 of this Agreement.

 

“Multiemployer Plan” means a “multiemployer plan”, within the meaning of Section
4001(a)(3) of ERISA, to which the Company or any ERISA Affiliate makes, is
making, or is obligated to make contributions or, during the preceding three
calendar years, has made, or been obligated to make, contributions.

 

“Net Income” means, as to any Person and for any period as to which such amount
is being determined, the excess of:

 

(a)                                  all revenues and income derived from
operations in the ordinary course of business (excluding extraordinary gains and
profits upon the disposition of investments and fixed assets),

 

over

 

(b)                                 all expenses and other proper charges
against income (including payment or provision for all applicable income and
other taxes, but excluding extraordinary losses and losses upon the disposition
of investments and fixed assets),

 

all as determined for such Person and its Consolidated Subsidiaries.

 

“Note” means the promissory note of the Company in the form of Exhibit A.

 

“Obligations” means all obligations, contingent or otherwise, whether now
existing or hereafter arising, of the Company from time to time owed to the Bank
or an Affiliate of the Bank under the Loan Documents, whether for principal,
interest, reimbursement, fees, expenses, indemnification or otherwise.

 

“Operating Profit” means, as to the Company for any period as to which such
amount is being determined, the amount reported as operating profit in the
Company’s financial statements for such period.

 

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“Patent Arbitration Award” means patent infringement arbitration decision issued
May 3, 2005 against the Company, awarding Ole K. Nilssen $23,400,000, which
award is currently pending in the United Stated District Court for the Northern
District of Illinois, based on a motion filed by Ole K. Nilssen to enter the
award and a counter-motion filed by the Company to vacate the award.

 

“PBGC” means the Pension Benefit Guaranty Corporation, or any Governmental
Authority succeeding to any of its principal functions under ERISA.

 

“Pension Plan” means a pension plan (as defined in Section 3(2) of ERISA)
subject to Title IV of ERISA which the Company sponsors, maintains, or to which
it makes, is making, or is obligated to make contributions, or in the case of a
multiple employer plan (as described in Section 4064(a) of ERISA) has made
contributions at any time during the immediately preceding five (5) plan years.

 

“Permitted Liens” means (a) Liens listed on Schedule 1 attached hereto, provided
that the Indebtedness secured thereby shall not be renewed, extended or
increased; (b) Liens for taxes, assessments or governmental charges not
delinquent or being contested in good faith by the Company or any Subsidiary for
which adequate reserves are established and maintained; (c) other statutory Lien
claims not delinquent or being contested in good faith by the Company or any
Subsidiary for which adequate reserves are established and maintained,
including, construction, mechanic’s and warehousemen Liens; (d) purchase money
Liens on any property acquired after the date hereof to be used by the Company
or a Subsidiary in the normal course of its business, and created or incurred
simultaneously with the acquisition of such property, if such Lien is limited to
the property so acquired and the aggregate Indebtedness secured by all such
Liens does not exceed $500,000 at any time outstanding for the Company and all
Subsidiaries; (e) Liens or deposits in connection with worker’s compensation or
other insurance or to secure the performance of bids, trade contracts (other
than for borrowed money), leases, public or statutory obligations, surety or
appeal bonds or other obligations of like nature incurred in the ordinary course
of business; (f) Liens in favor of the Bank or any Affiliate of the Bank; and
(g) easements, restrictions, minor title irregularities and similar matters
which have no material adverse effect as a practical matter upon the ownership
or use of its property by the Company or any Subsidiary.

 

“Permitted Rate Management Transaction” means a Rate Management transaction
between the Company and the Bank or an Affiliate of the Bank.

 

“Person” means any natural person, corporation, limited liability company, joint
venture, limited liability partnership, partnership, association, trust or other
entity or any Governmental Authority.

 

“Plan” means an employee benefit plan (as defined in Section 3(3) of ERISA)
which the Company sponsors or maintains or to which the Company makes, is
making, or is obligated to make contributions and includes any Pension Plan.

 

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“Prime Rate” means a rate per annum equal to the prime rate of interest
announced from time to time by the Bank (which is not necessarily the lowest
rate charged to any customer), changing when and as said prime rate changes

 

“Qualified Account” means an account owing to the Company (a) by an account
debtor, other than an Affiliate of the Company, located in the United
States;     (b) which arose out of the performance of services by the Company or
from a bona fide sale of goods which have been delivered or shipped to the
account debtor and for which the Company has genuine invoices, shipping
documents or receipts; (c) which is not more than 90 days past due from the
original due date of the relevant invoice or 150 days past due from the date of
the relevant invoice and which original due date is not more than 60 days after
the date of the relevant invoice; (d) in which the Bank has a valid, perfected
first priority Lien and which is subject to no other Lien; (e) which, together
with the transactions out of which it arose, complies with all applicable laws
and regulations;      (f) as to which the Company has no knowledge of anything
which might cause the account debtor to be unable to pay the account; (g) as to
which the account debtor has not disputed its liability or returned or
threatened to return the goods; (h) the existence and amount of which have been
certified to the Bank by the Company in the most recent Borrowing Base
Certificate; (i) by an account debtor other than a federal Governmental
Authority; and (j) as to which the Bank has not notified the Company that the
account or account debtor is unsatisfactory. Any Qualified Account which ceases
to meet any of the foregoing requirements shall cease to be a Qualified Account
at such time.

 

“Rate Management Transaction” means any transaction (including an agreement with
respect thereto) now existing or hereafter entered into between the Company and
the Bank or an Affiliate of the Bank which is a rate swap, basis swap, forward
rate transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, collar transaction, forward transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other, similar transaction (including any option to enter into any of
these transactions) or any combination of the foregoing, whether linked to one
or more interest rates, foreign currencies, commodity prices, equity prices or
other financial measures.

 

“Reimbursement Obligation” means the obligation of the Company to reimburse the
Bank for drawings under Letters of Credit pursuant to section 2.9.

 

“Reportable Event” means any of the events set forth in Section 4043(c) of ERISA
or the regulations thereunder, other than any such event for which the 30-day
notice requirement under ERISA has been waived in regulations issued by the
PBGC.

 

“Requirement of Law” means, as to any Person, any law (statutory or common),
treaty, rule or regulation of a Governmental Authority applicable to or binding
upon the Person or any of its property or any ruling, order, judgment or
determination of an arbitrator or a Governmental Authority to which the Person
or any of its property is subject.

 

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“Restricted Payments” means dividends or other distributions by the Company or
any Subsidiary based upon the Equity Interests of the Company or any Subsidiary
(except dividends payable to the Company and dividends payable solely in Equity
Interests of the Company) and purchases, redemptions and other acquisitions,
direct or indirect, by the Company or any Subsidiary, of Equity Interests of the
Company or any Subsidiary.

 

“Solvent” means, with respect to any Person, that as of the date of
determination both:

 

(a) (i) the then fair saleable value of the property of such Person is (y)
greater than the Total Liabilities (including Contingent Obligations) of such
Person and (z) not less than the amount that will be required to pay the
probable liabilities on such Person’s then existing debts as they become
absolute and matured considering all financing alternatives and potential asset
sales reasonably available to such Person; (ii) such Person’s capital is not
unreasonably small in relation to its business or any contemplated or undertaken
transaction; and (iii) such Person does not intend to incur, or believe (nor
should it reasonably believe) that it will incur, debts beyond its ability to
pay such debts as they become due; and

 

(b) such Person is “solvent” within the meaning given that term and similar
terms under applicable laws relating to fraudulent transfers and conveyances.

 

“Subsidiary” of a Person means any other Person, as of a particular date, which
it directly, or indirectly through one or more of its Subsidiaries, owns at
least 50% of the outstanding Equity Interests of such other Person.

 

“Total Liabilities” means, as to any Person, all items which would be classified
as liabilities on the consolidated balance sheet of such Person and its
Consolidated Subsidiaries.

 

“Unfunded Pension Liability” means the excess of a Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Plan’s
assets, determined in accordance with the assumptions used for funding the
Pension Plan pursuant to Section 412 of the Code for the applicable plan year.

 

1.2                                 Rules of Interpretation. Except as otherwise
explicitly specified to the contrary or unless the context clearly requires
otherwise:  (a) all references to a particular statute or regulation include all
rules and regulations promulgated thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect; (b) accounting
terms shall be construed, and all financial computations required under this
Agreement shall be made, in accordance with GAAP consistently
applied;               (c) references to agreements (including this Agreement)
and other contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the extent such
amendments and other modifications are not prohibited by the terms of any Loan
Document; (d) in the computation of periods of time from a specified

 

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date to a later specified date, the word “from” means “from and including”, the
words “to” and “until” each mean “to but excluding” and the word “through” means
“to and including”; (e) the word “including” shall be construed as “including
without limitation”; (f) references to a fiscal year or fiscal quarter mean the
fiscal year or fiscal quarter of the Company; and (g) references to the word
“Subsidiary” shall mean a Subsidiary of the Company.

 

2.                                       The Credit Facilities; Interest Rates;
Fees.

 

2.1                                 The Loans. The Bank agrees to lend to the
Company, subject to the terms and conditions hereof, during the period from the
date of this Agreement to the Maturity Date up to the maximum amount at any time
outstanding equal to the lesser of (a) an amount equal to (i) the Commitment
minus (ii) the LOC Exposure and (b) an amount equal to (i) the Borrowing Base
Availability minus (ii) the LOC Exposure. Within such maximum amount Loans may
be made, repaid and made again. All Loans shall be evidenced by the Note and
shall be payable on the Maturity Date. Although the Note shall be expressed to
be payable in the maximum amount specified above, the Company shall be obligated
to pay only the amount actually disbursed to or for the account of the Company,
together with interest on the unpaid balance of the sums so disbursed, which
remain outstanding from time to time as shown on the records of the Bank.

 

2.2                                 Borrowing Procedures for Loans. The Company
shall request Loans by written notice, or by telephonic notice confirmed in
writing to the Bank, not later than 11:00 a.m., Milwaukee, Wisconsin time on the
requested Borrowing Date (which must be a Business Day). In the event of any
inconsistency between the telephonic notice and the written confirmation
thereof, the telephonic notice shall control. Each request for a Loan shall be
irrevocable and shall constitute a certification by the Company that the
borrowing conditions specified in section 4.2 will be satisfied on the specified
Borrowing Date. Upon fulfillment of the applicable borrowing conditions set
forth in Article 4, the Bank shall deposit the Loan proceeds in the Company’s
account maintained with the Bank or as the Company may otherwise direct in
writing.

 

2.3                                 Commitment Fee. As consideration for the
Commitment, the Company agrees to pay to the Bank, annually, commencing on the
Closing Date and on the same date each year thereafter, a fee equal to $1,000.

 

2.4                                 Reduction or Termination of Commitment. The
Company may, on any interest payment date and upon three (3) days’ prior written
notice to the Bank, permanently reduce or terminate the Commitment; provided
that no such reduction shall reduce the amount of the Commitment to an amount
less than the sum of (a) the unpaid principal balance of the Note on the date of
such reduction and (b) the LOC Exposure on the date of such reduction; and
provided, further, that in the event of a termination, the Company shall pay to
the Bank, on or before the effective date of the termination, (w) the unpaid
principal balance of the Note, (x) all interest accrued thereon, (y) all
commitment

 

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fees, other fees and expenses payable by the Company accrued or incurred through
the termination date and (z) the cash collateral required by section 2.11.

 

2.5                                 Interest Rates.

 

(a)                                  The unpaid principal balance of the Loans
outstanding from time to time shall bear interest for the period commencing on
the Borrowing Date of such Loan until such Loan is paid in full. Each Loan shall
bear interest at the higher of (i) five percent (5.00%) per annum or (ii) the
LIBOR Rate plus one and one-half percent (1.50%) and shall change on each date
on which the LIBOR Rate changes. Accrued interest on the Note shall be due on
the first day of each month, commencing on December 1, 2007, and on the Maturity
Date.

 

(b)                                 Notwithstanding the provisions of section
2.5(a), upon the occurrence and during the continuance of an Event of Default,
the unpaid principal balance of the Note shall, upon notice from the Bank to the
Company, bear interest at an annual rate equal to the rate otherwise in effect
under section 2.5(a), plus three percent (3.00%) payable upon demand (the
“Default Rate”). On and after the Maturity Date, the unpaid principal balance of
the Note and all accrued interest thereon shall bear interest at the Default
Rate and shall be payable upon demand.

 

(c)                                  Interest shall be calculated for the actual
number of days elapsed on the basis of a 360-day year.

 

2.6                                 Payments. All payments of principal and
interest on the Note and of all fees due hereunder shall be made at the office
of the Bank in immediately available funds not later than 2:00 p.m., Milwaukee,
Wisconsin time on the date due; funds received after that time shall be deemed
to have been received on the next Business Day. Whenever any payment hereunder
or under the Note is stated to be due on a day which is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in computing any interest or fee then due. The Bank may
charge any account of the Company at the Bank for any payment due under the Note
(including prepayments), or any fee or other amount payable hereunder, on or
after the date due.

 

2.7                                 Prepayments.

 

(a)                                  Mandatory. In addition to other payments
required hereunder, including, without limitation, any payments required under
section 2.4, if the outstanding principal balance of the Note exceeds the lesser
of (i) an amount equal to    [a] Borrowing Base Availability minus [b] the LOC
Exposure or (ii) an amount equal to [a] the Commitment minus [b] the LOC
Exposure, the Company shall immediately repay the excess.

 

(b)                                 Optional. The Company may prepay Loans
without premium or penalty. Any optional prepayments of the Note shall be
applied first to any

 

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fees the Company owes the Bank, then to any accrued and unpaid interest the
Company owes the Bank and then to the remaining Obligations in such order and
manner as the Company specifies.

 

2.8                                 Letters of Credit.

 

(a)                                  Issuance of New Letters of Credit. Upon
receipt of a duly executed application therefor, and such other documents,
agreements and instructions as the Bank shall require, and subject to
fulfillment of the conditions set forth in sections 4.2(b), 4.2(c) and 4.2(d),
the Bank will issue a Letter of Credit for the account of the Company, provided
that:

 

(i)                                     the requested Letter of Credit will not
be issued if, upon issuance, the sum of [a] the unpaid principal balance of the
Note and [b] the LOC Exposure would exceed the lesser of [y] the Commitment or
[z] the Borrowing Base Availability; and

 

(ii)                                  each Letter of Credit shall be
satisfactory in form and content to the Bank and no Letter of Credit shall have
an initial expiry date later than one year from the date of issuance thereof;
provided that any Letter of Credit with a one-year tenor may provide for the
renewal thereof for additional one-year periods; provided, further that no
Letter of Credit shall have an expiry date later than thirty (30) days prior to
the Maturity Date.

 

(b)                                 Letter of Credit Existing on the Closing
Date. Any outstanding letter of credit issued by the Bank prior to the Closing
Date shall be considered a Letter of Credit issued pursuant to this Agreement
and shall be subject to the terms and conditions applicable to Letters of Credit
herein.

 

2.9                                 Reimbursement Obligation of the Company. The
Company agrees to pay to the Bank the amount paid by the Bank resulting from a
drawing under a Letter of Credit on the date the Bank honors such drawing. If
the Company can satisfy the conditions precedent set forth in sections
4.2(b)-4.2(d), the Company shall be deemed to have elected to borrow from the
Bank, Loans in an aggregate amount equal to the amount drawn which shall be used
to satisfy the Company’s reimbursement obligation under this section. The
obligation of the Company to pay to the Bank the amount of any payment made by
the Bank under any Letter of Credit shall be absolute, unconditional and
irrevocable and shall remain in full force and effect until all amounts owed by
the Company to the Bank hereunder and under any Loan Document shall have been
paid in full and such obligation of the Company shall not be affected, modified
or impaired upon the happening of any event, including, any of the following,
whether or not with notice to, or the consent of, the Company:

 

(a)                                  any lack of validity or enforceability of
this Agreement, or any other document or instrument executed in connection with
this Agreement or in connection with a Letter of Credit (collectively, the
“Operative Documents”);

 

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(b)                                 any amendment, modification, waiver,
consent, or any substitution, exchange or release of or failure to perfect any
interest in collateral or security, with respect to any of the Operative
Documents;

 

(c)                                  the existence of any claim, setoff, defense
or other right which the Company may have at any time against any beneficiary or
any transferee of any Letter of Credit (or any persons for whom any such
beneficiary or any such transferee may be acting), the Bank or any other Person,
whether in connection with this Agreement, any of the Operative Documents, the
transaction contemplated hereby or any unrelated transactions;

 

(d)                                 any draft or other statement or document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;

 

(e)                                  payment by the Bank to the beneficiary
under any Letter of Credit against presentation of documents which do not
strictly comply with the terms of the Letter of Credit, including failure of any
documents to bear any reference or adequate reference to such Letter of Credit;

 

(f)                                    any failure, omission or delay on the
part of the Bank or any party to any of the Operative Documents in enforcing,
asserting or exercising any right, power or remedy conferred upon the Bank or
any such other party under this Agreement or any of the Operative Documents;

 

(g)                                 the voluntary or involuntary liquidation,
dissolution, sale or other disposition of all or substantially all of the assets
of the Company, the receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition with creditors or
readjustment or other similar proceedings affecting the Company or its assets,
or any allegation or contest of the validity of this Agreement or any of the
Operative Documents in any such proceedings; or

 

(h)                                 any other event or action that would, in the
absence of this clause, result in the release or discharge by operation of law
of the Company for the performance or observance of any allegation, covenant or
agreement contained herein.

 

No set-off, reduction or diminution of any obligation, or any defense of any
kind or nature which the Company has or may have against the beneficiary shall
be available hereunder to the Company.

 

2.10                           Liability of the Bank. The Company assumes all
risk of the acts or omissions of the beneficiary with respect to its use of a
Letter of Credit. Neither the Bank nor any of its officers or directors shall be
liable or responsible for (a) the use which may be made of a Letter of Credit or
for any acts or omissions of the beneficiary in connection therewith; (b) the
validity, sufficiency or genuineness of documents, or of any endorsement(s)
thereon, even if such documents should in fact prove to be in any or all

 

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respects invalid, fraudulent or forged; (c) payment by the Bank to the
beneficiary against presentation of documents which contain immaterial
discrepancies or deviations from the terms of a Letter of Credit, including
failure of any documents to bear any reference or adequate reference to such
Letter of Credit; or (d) any other circumstances whatsoever in making or failing
to make payment under the Letter of Credit; provided that the Bank shall be
liable to the Company to the extent, but only to the extent, of any direct as
opposed to consequential, damages suffered by the Company which the Company
proves were caused by (y) the Bank’s willful misconduct in determining whether
documents presented under a Letter of Credit substantially comply with the terms
of such Letter of Credit or (z) the Bank’s failure to pay under a Letter of
Credit after presentation to it of documents strictly complying with the terms
and conditions of such Letter of Credit. In furtherance and not in limitation of
the foregoing, the Bank may accept the documents that appear on their face to be
in order, without responsibility for further investigation, regardless of any
notice or information to the contrary.

 

2.11                           Cash Collateral. If on the Maturity Date any
Letter of Credit remains outstanding, the Company shall either make arrangements
satisfactory to the Bank for the assumption of liabilities created by any such
issued and unexpired Letter of Credit or, in the absence of such satisfactory
arrangements, the Company shall deliver to the Bank, cash collateral in an
aggregate principal amount equal to 100% of the LOC Exposure. The unapplied
balance of such cash collateral shall be paid by the Bank to the extent the Bank
has not been reimbursed for drafts honored by it, and, to the extent the Letters
of Credit expire without draw, any excess shall be first applied to the
Company’s obligations then due and outstanding under the Loan Documents, if any,
with any excess returned to the Company.

 

2.12                           Letter of Credit Fees. On the Borrowing Date of
each Letter of Credit (and on the date of any renewal thereof), the Company
shall pay to the Bank   (a) the normal negotiation, presentation, transfer,
amendment and other processing fees, and other standard costs and charges of the
Bank relating to letters of credit as in effect from time to time and (b) the
ordinary and customary fees of the Bank for letters of credit as in effect from
time to time.

 

2.13                           Yield Protection. If any law or any governmental
rule, regulation, policy, guideline, court decision or directive (whether or not
having the force of law), or any interpretation thereof, or the compliance of
the Bank therewith,

 

(a)                                  subjects the Bank to any tax, duty, charge
or withholding on or from payments due from the Company (excluding taxation of
the net income of the Bank and any such tax, duty, charge or withholding in
effect as of the date of this Agreement), or changes the basis of taxation of
payments to the Bank in respect of its Loans or other amounts due it hereunder
(excluding taxation of the net income of the Bank);

 

(b)                                 imposes or increases or deems applicable any
reserve, assessment, insurance charge, special deposit or similar requirement
against assets of,

 

14

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deposits with or for the account of, or credit extended by, the Bank (other than
reserves and assessments taken into account in determining the LIBOR Rate) with
respect to the Loans; or

 

(c)                                  affects the treatment of any Loan or
commitment of the Bank hereunder as an asset or other item included for the
purpose of calculating the appropriate amount of capital to be maintained by the
Bank or any corporation controlling the Bank; or

 

(d)                                 imposes any other condition the result of
which is to increase the cost to the Bank of making, funding or maintaining the
Loans or reduces any amount received by the Bank in connection with the Loans or
requires the Bank to make any payment calculated by reference to the amount of
Loans held or interest received by it, by an amount deemed material by the Bank;

 

then, within ten days after written demand by the Bank (accompanied by an
explanation of such increased expense or reduction in amount received), the
Company shall pay the Bank that portion of such increased expense incurred or
reduction in an amount received which the Bank determines is attributable
thereto. Such written notice shall, in the absence of manifest error, be
conclusive and binding on the Company.

 

2.14                           Additional LIBOR Rate Loan Provisions.

 

(a)                                  If the Bank determines that the making or
maintaining of a LIBOR Rate Loan would violate any applicable law, rule
regulation or directive, whether or not having the force of law, then the
obligation of the Bank to make, continue, maintain or convert any LIBOR Rate
Loan shall be suspended until the Bank notifies the Company that the
circumstances causing such suspension no longer exist. During any such period,
each LIBOR Rate Loan shall automatically bear interest at the Prime Rate.

 

(b)                                 If the Bank is unable to determine the LIBOR
Rate or is unable to obtain deposits of United States dollars in the London
interbank market in the applicable amounts and for a period of one month, then,
upon notice from the Bank to the Company, the obligation of the Bank to make any
LIBOR Rate Loan, shall be suspended until the Bank notifies the Company that the
circumstances causing such suspension no longer exist. During any such period,
each LIBOR Rate Loan shall automatically bear interest at the Prime Rate.

 

2.15                           Use of Proceeds. The Company will not use,
directly or indirectly, any part of the proceeds of any Loan for the purpose of
purchasing or carrying, or to extend credit to others for the purpose of
purchasing or carrying, any Margin Stock. The Company will not use, directly or
indirectly, any part of the proceeds of any Loan to purchase ineligible
securities, as defined by applicable regulations of the Federal Reserve Board,
underwritten by any Affiliate of Associated Banc Corp. during the underwriting
period and for 30 days thereafter.

 

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3.                                       Representations and Warranties. In
order to induce the Bank to make the Loans and issue Letters of Credit, the
Company represents and warrants to the Bank:

 

3.1                                 Organization; Subsidiaries; Corporate Power.
The Company is a corporation validly existing and in good standing under the
laws of the State of Delaware. The Company is duly qualified as a foreign
corporation to do business and is in good standing in every jurisdiction in
which the nature of its business or the ownership of its properties requires
such qualification and in which the failure to so qualify could result in a
material adverse change in, or could have a material adverse effect upon, the
operations, business, properties, condition (financial or otherwise) or
prospects of the Company. Set forth on Schedule 3.1 is the name, jurisdiction of
organization, authorized, issued and outstanding Equity Interests of each
Subsidiary of the Corporation and the number and percentage of the outstanding
Equity Interests of each Subsidiary owned by the Company. Each Subsidiary is (a)
validly existing under the laws of such Subsidiary’s jurisdiction of
organization and (b) duly qualified as a foreign entity to do business and is in
good standing in every jurisdiction in which the nature of such Subsidiary’s
business or the ownership of such Subsidiary’s properties requires such
qualification and in which the failure to so qualify could result in a material
adverse change in, or could have a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or prospects of such
Subsidiary. The Company and each Subsidiary has the power to own its properties
and carry on its business as currently being conducted.

 

3.2                                 Authorization and Binding Effect. The
execution and delivery by the Company of the Loan Documents to which it is a
party, and the performance by the Company of its obligations thereunder: 
(a) are within its corporate power, (b) have been duly authorized by proper
corporate action on the part of the Company, (c) are not in violation of any
Requirement of Law, the Certificate of Incorporation or By-Laws of the Company
or the terms of any agreement, restriction or undertaking to which the Company
is a party or by which it is bound, and (d) do not require the approval or
consent of the stockholders of the Company, any Governmental Authority or any
other Person, other than those obtained and in full force and effect. The Loan
Documents to which the Company is a party, when executed and delivered, will
constitute the valid and binding obligations of the Company enforceable in
accordance with their terms, except as limited by bankruptcy, insolvency or
similar laws of general application affecting the enforcement of creditors’
rights and except to the extent that general principles of equity might affect
the specific enforcement of such Loan Documents.

 

3.3                                 Financial Statements. The Company has
furnished to the Bank   (a) the consolidated balance sheet of the Company and
its Consolidated Subsidiaries as of June 30, 2007, and related consolidated
statements of income, retained earnings and cash flows of the Company and its
Consolidated Subsidiaries for the year ended on that date, audited by Ernst &
Young LLP and (b) the consolidated balance sheet of the Company and its
Consolidated Subsidiaries dated September 30, 2007 and related consolidated
statements of income for the period ended on such date, prepared by the Company.
Such financial statements were prepared in accordance with GAAP consistently
applied throughout the periods involved, are correct and complete and fairly
present the financial

 

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condition of the Company and its Consolidated Subsidiaries as of such dates and
the results of its operations and cash flows for the periods ended on such
dates, subject, in the case of the interim statements, to footnote disclosure
and normal year-end adjustments. There has been no material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company or any of its
Consolidated Subsidiaries and no event, act or failure to act which could
reasonably be expected to result in a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Company or any of its Consolidated
Subsidiaries has occurred, since the date of the most recent financial statement
furnished to the Bank.

 

3.4                                 Litigation. Except for the matters described
on (a) the financial statements referred to in section 3.3, (b) Schedule 3.4 or
(c) the Patent Arbitration Award, there is no litigation or administrative
proceeding pending or, to the knowledge of the Company, threatened against or
affecting the Company or the properties of the Company which involves a claim in
excess of $1,500,000.

 

3.5                                 Restricted Payments. Neither the Company nor
any Subsidiary, has since the date of the most recent financial statements
furnished to the Bank, made any Restricted Payments.

 

3.6                                 Indebtedness; No Default. Neither the
Company nor any Subsidiary has any outstanding Indebtedness or Contingent
Obligations, except those permitted under sections 6.2 and 6.3 and Indebtedness
referred to in section 4.1(g) which will be paid in full on the Closing Date.
There exists no default nor has any act or omission occurred which, with the
giving of notice or the passage of time, would constitute a default under the
provisions of (a) any instrument evidencing such Indebtedness or Contingent
Obligation or any agreement relating thereto or (b) any other agreement or
instrument to which the Company is a party, and which could reasonably be
expected to have a material adverse change in, or a material adverse effect
upon, the operations, business, properties, condition (financial or otherwise)
or prospects of the Company.

 

3.7                                 Ownership of Properties; Liens and
Encumbrances. The Company has good and marketable title to all of its property,
real and personal, reflected on the most recent financial statement of the
Company and its Consolidated Subsidiaries furnished to the Bank, and all
property purported to have been acquired since the date of such financial
statement, except property subsequently sold or otherwise disposed of in
compliance with section 6.8 subsequent to such date. All such property is free
of any Lien, except Permitted Liens. All owned and leased buildings and
equipment of the Company  are in good condition, repair and working order,
ordinary wear and tear excepted, and conform to all Requirements of Law.

 

3.8                                 Tax Returns Filed. The Company has filed
when due all federal and state income and other tax returns which are required
to be filed. The Company has paid or made provision for all taxes shown on said
returns and on all assessments

 

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received by it to the extent that such taxes have become due except any such
taxes which are being contested in good faith by appropriate proceedings and for
which adequate reserves have been established. The Company has no knowledge of
any liabilities which may be asserted against it upon audit of its federal or
state tax returns.

 

3.9                                 Margin Stock. The Company is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying Margin Stock.

 

3.10                           Regulated Entities. The Company is not an
“investment company” or a company controlled by an “investment company” within
the meaning of the Investment Company Act of 1940, as amended. The Company is
not subject to any Requirement of Law limiting its ability to incur
Indebtedness.

 

3.11                           ERISA Compliance.

 

(a)                                  Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other
Requirements of Law. Each Plan which is intended to qualify under Section 401(a)
of the Code has received a favorable determination letter from the IRS and to
the Company’s knowledge, nothing has occurred which would cause a loss of such
qualification. The Company and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.

 

(b)                                 There are no pending or, to the Company’s
knowledge, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted, or could reasonably be
expected to result in, a material adverse change in, or a material adverse
effect upon, the operations, business, properties, condition (financial or
otherwise) or prospects of the Company. There has been no prohibited transaction
or other violation of the fiduciary responsibility rules with respect to any
Plan which has resulted, or could reasonably be expected to result, in a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or prospects of the
Company.

 

(c)                                  (i) No ERISA Event has occurred or is
reasonably expected to occur; (ii) except as disclosed on Schedule 3.11, no
Pension Plan has any Unfunded Pension Liability; (iii) neither the Company nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability
under Title IV of ERISA with respect to any Pension Plan (other than premiums
due and not delinquent under Section 4007 of ERISA); (iv) neither the Company
nor any ERISA Affiliate has incurred, or reasonably expects to incur, any
liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multiemployer Plan; and (v) neither the Company
nor any ERISA Affiliate has engaged in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.

 

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3.12                           No Burdensome Restrictions. The Company is not a
party to and is not bound by any agreement, instrument, undertaking, any
Requirement of Law, or subject to any other restriction (a) which could
reasonably be expected to have a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Company or may in the future have a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the Company or
(b) under or pursuant to which the Company is or will be required to place (or
under which any other Person may place) a Lien upon any of its properties
securing Indebtedness either upon demand or upon the happening of a condition,
with or without such demand.

 

3.13                           Intellectual Property. The Company possesses
adequate trademarks, trade names, copyrights, patents, permits, service marks
and licenses, or rights thereto, for the present and planned future conduct of
its businesses substantially as now conducted, without any known conflict with
the rights of others which could reasonably be expected to have a material
adverse change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the Company.

 

3.14                           Environmental Matters. Excluding those items
disclosed on (y) the financial statements referred to in section 3.3 and (z)
Schedule 3.14, the following, in the aggregate, could not reasonably be expected
to have material adverse change in, or material adverse effect upon the
operations, business, properties, condition (financial or otherwise) or
prospects of the Company  (for purposes of this section 3.14, “material adverse”
means a change in, or effect, in excess of $1,500,000):

 

(a)                                  The facilities and properties owned, leased
or operated by the Company (the “Properties”) do not contain any Hazardous
Materials in amounts or concentrations which (i) constitute a violation of or
(ii) could give rise to liability under, any Environmental Law.

 

(b)                                 With respect to the period during which the
Company owned or occupied the Properties, and to the Company’s knowledge after
reasonable investigation, with respect to the time before the Company owned or
occupied the Properties, there has been no unremediated release or threat of
release of Hazardous Materials at or from the Properties, or arising from or
related to the operations of the Company (the “Business”), in violation of or in
amounts or in a manner that could give rise to liability under Environmental
Laws.

 

(c)                                  The Properties and all operations at the
Properties are in compliance in all material respects with all applicable
Environmental Laws, and there is no violation of any Environmental Law with
respect to the Properties or the Business. The Company  has all permits,
licenses and approvals required under Environmental Laws.

 

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(d)                                 With respect to the period during which the
Company owned or occupied the Properties, and to the Company’s knowledge after
reasonable investigation, with respect to the time before the Company owned or
occupied the Properties, (i) Hazardous Materials have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could give rise to liability under, any Environmental Law, and (ii)
Hazardous Materials have not been generated, treated, stored or disposed of at,
on or under any of the Properties in violation of, or in a manner that could
give rise to liability under, any applicable Environmental Law.

 

(e)                                  The Company has not received any notice of
violation, alleged violation, noncompliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of the Properties or the Business, nor does the Company have
knowledge or reason to believe that any such notice will be received or is being
threatened.

 

(f)                                    No judicial proceeding or governmental or
administrative action is pending or, to the knowledge of the Company, threatened
under any Environmental Law to which the Company is or will be named as a party
with respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business.

 

3.15                           Solvency. The Company is and, upon the incurrence
of any Obligations by the Company on any date on which this representation is
made, will be Solvent.

 

3.16                           Accuracy of Information. All information
furnished by the Company to the Bank is true, correct and complete in all
material respects as of the date furnished and does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
such information not misleading.

 

4.                                       Conditions for Borrowing. The Bank’s
obligation to make any Loan or issue any Letter of Credit is subject to the
satisfaction, on or before the following Borrowing Dates, of the following
conditions:

 

4.1                                 On or Before the Closing Date. The Bank
shall have received the following, all in form, detail and content satisfactory
to the Bank:

 

(a)                                  Notes. The Note, duly executed by the
Company.

 

(b)                                 Collateral Documents.

 

(i)                                     A security agreement, granting the Bank
a Lien in all of the accounts and inventory of the Company; and

 

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(ii)                                  All financing statements and other
instruments required to perfect the Lien granted to the Bank by the Company;

 

Each of the Collateral Documents shall be duly executed by the Persons party
thereto.

 

(c)                                  Company Charter Documents. A certificate of
the Company, dated the Closing Date and executed by its Secretary or Assistant
Secretary, which shall (i) certify the resolutions of its Board of Directors
authorizing the execution, delivery and performance of the Loan Documents to
which it is a party, (ii) identify by name and title and bear the signatures of
the officers of the Company authorized to sign the Loan Documents to which it is
a party, and (iii) contain appropriate attachments, including the Certificate of
Incorporation of the Company certified by the Delaware Secretary of State, a
true and correct copy of its By-Laws and long form good standing certificate for
the Company from the Delaware Secretary of State.

 

(d)                                 Personal Property Searches. Searches of the
appropriate public offices demonstrating that no Lien is of record affecting the
Company or its properties except Permitted Liens.

 

(e)                                  No Default Certificate. A certificate
signed by the Vice President and Chief Financial Officer of the Company to the
effect that the representations and warranties contained in Article 3 hereof and
in the other Loan Documents are true and correct on and as of the Closing Date
and no Default or Event of Default exists on the Closing Date.

 

(f)                                    Closing Fee. The commitment fee referred
to in section 2.3.

 

(g)                                 Retirement of Debt; Termination Statements.
Evidence satisfactory to the Bank that, on the Closing Date, all Indebtedness of
the Company to Wells Fargo Foothill, Inc. shall be paid in full out of the
Loans, if any, made on the Closing Date together with a release of Liens and an
agreement by such creditor to promptly furnish executed termination statements,
satisfactions and other documents, in form sufficient for filing or recording,
evidencing the termination of such creditor’s Liens on assets of the Company.

 

(h)                                 Opinion of Counsel. An opinion from Snell &
Wilmer L.L.P., counsel to the Company, in the form of Exhibit B attached hereto.

 

(i)                                     Proceedings Satisfactory. Such other
documents as the Bank may reasonably request; and all proceedings taken in
connection with the transactions contemplated by this Agreement, and all
instruments, authorizations and other documents applicable thereto, shall be
satisfactory to the Bank.

 

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4.2                                 On or Before Each Subsequent Borrowing Date:

 

(a)                                  Borrowing Procedure. The Company shall have
complied with the borrowing procedure specified in section 2.2.

 

(b)                                 Representations and Warranties True and
Correct. The representations and warranties contained in Article 3 hereof and in
the other Loan Documents shall be true and correct on and as of the relevant
Borrowing Date except     (i) that the representations and warranties contained
in section 3.3 shall apply to the most recent financial statements delivered
pursuant to section 5.1 and (ii) for changes permitted by this Agreement.

 

(c)                                  No Default. There shall exist on that
Borrowing Date no Default or Event of Default.

 

(d)                                 Proceedings and Documentation. The Bank
shall have received such instruments and other documents as it may reasonably
request in connection with the making of such Loan, and all such instruments and
documents shall be in form and content satisfactory to the Bank.

 

5.                                       Affirmative Covenants. The Company
covenants that it will, until the  Commitment has terminated or expired, all
Permitted Rate Management Transactions have terminated or expired, all Letters
of Credit have expired or been returned to the Bank, and the Note, and all fees
and expenses payable hereunder, have been paid in full:

 

5.1                                 Financial Reporting.

 

(a)                                  Annual Financial Statements. Furnish to the
Bank within 105 days after the end of each fiscal year a balance sheet of the
Company and its as of the close of such fiscal year and related statements of
income, retained earnings and cash flows for such year, setting forth in each
case in comparative form corresponding figures from the preceding annual audit,
all in reasonable detail and satisfactory in scope to the Bank, audited by Ernst
& Young LLP or by a firm of independent certified public accountants selected by
the Company and satisfactory to the Bank. Such annual statements shall be
accompanied by (i) the unqualified opinion of such accountants to the effect
that such audited financial statements were prepared in accordance with GAAP and
fairly present the financial condition and results from operations of the
Company as of such date and for such fiscal year, (ii) a written statement from
such accountants containing the computations showing whether or not the Company
is in compliance with the financial covenants contained in sections 6.10 and
6.11 and certifying that in making the examination necessary for their
certification of such financial statement, they obtained no knowledge of any
Default or Event of Default or, if such accountants shall have obtained
knowledge of any Default or Event of Default, they shall disclose in such
statement the Default or Event of Default and (iii) any management letter
prepared by such accountants. All such financial statements, and the financial
statements described in

 

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section 5.1(b), shall be furnished in consolidated and consolidating form for
the Company and all Consolidated Subsidiaries which it may at the time have.

 

(b)                                 Interim Financial Statements. Furnish to the
Bank within 35 days after the end of each fiscal quarter of each fiscal year of
the Company a balance sheet of the Company as of the end of each such period and
related statements of income for the period from the beginning of the fiscal
year through the end of such quarter, prepared in the manner set forth in
section 5.1(a) hereof for the annual statements, certified, subject to audit and
normal year-end adjustments and footnote disclosure, by an authorized officer of
the Company and accompanied by (i) a certificate of such officer to the effect
that there exists no Default or Event of Default or, if any Default or Event of
Default exists, specifying the nature thereof, the period of existence thereof
and what action the Company proposes to take with respect thereto and (ii)
detailed accounts receivable aging reports.

 

(c)                                  Financial Compliance Certificate. Furnish
to the Bank, along with the financial statements referred to in section 5.1(b),
a Financial Covenant Compliance Certificate, duly executed by an authorized
officer of the Company.

 

(d)                                 Filings. Promptly upon its becoming
available, furnish to the Bank one copy of each financial statement, report,
notice, or proxy statement sent by the Company to the holders of Equity
Interests of the Company generally and of each regular or periodic report,
registration statement or prospectus filed by the Company with any securities
exchange or the Securities and Exchange Commission or any successor agency, and
of any order issued by any Governmental Authority in any proceeding to which the
Company is a party.

 

(e)                                  Other Financial Information. Promptly
furnish to the Bank such other financial information as the Bank may from time
to time reasonably request.

 

(f)                                    Borrowing Base Certificates. Furnish to
the Bank, not more frequently than two (2) times per calendar month at
Borrower’s election, upon request by the Bank not more frequently than once per
calendar month, and, in the absence of a request from the Bank, within 30 days
after the end of each calendar month, a Borrowing Base Certificate as of the end
of that month or the date of the request by the Bank.

 

5.2                                 Books and Records; Inspections; Field Exam.
(a) Keep proper books of record and account in which full, true and correct
entries are made of all dealings and transactions in relation to its business
and activities; and (b) if a Default or Event of Default exists, or if the
outstanding principal balance of the Note exceeds $250,000 for thirty (30) days
(which days do not need to be consecutive) during any twelve (12) month period,
permit representatives of the Bank (including employees of the Bank or any
consultants, accountants, lawyers and appraisers retained by the Bank), at the
Bank’s option upon reasonable prior notice to the Company and at the Company’s
expense, to visit and inspect its properties, to conduct field examinations, to
examine and

 

23

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make extracts from its books and records, including to examine and make extracts
from environmental assessment reports and Phase I or Phase II studies, and to
discuss the Company’s affairs, finances and condition with its officers and
independent accountants; provided, however, unless a Default or Event of Default
exists, the maximum aggregate amount that the Company shall be required to
reimburse the Bank for field exams, inspections and audits during any six (6)
calendar month period shall not exceed $2,500.

 

5.3                                 Insurance. Maintain insurance coverage as
may be required by law or the Collateral Documents but in any event not less
than insurance coverage, in the forms, amounts and with companies, which would
be carried by prudent management in connection with similar properties and
businesses. Without limiting the foregoing, the Company will (a) keep all its
physical property insured against fire and extended coverage risks in amounts at
least equal to, and with deductibles no greater than, those generally maintained
by businesses engaged in similar activities in similar geographic areas;
(b) maintain all such worker’s compensation and similar insurance as may be
required by law; and (c) maintain, in amounts and with deductibles at least
equal to those generally maintained by businesses engaged in similar activities
in similar geographic areas, general public liability insurance against claims
for bodily injury, death or property damage occurring on, in or about the
properties of the Company, business interruption insurance and product liability
insurance.

 

5.4                                 Condition of Property. Keep its properties
(whether owned or leased) in good condition, repair and working order.

 

5.5                                 Payment of Taxes. Pay and discharge all
lawful taxes, assessments and governmental charges upon it or against its
properties prior to the date on which penalties are attached thereto, unless and
to the extent only that the same shall be contested in good faith and by
appropriate proceedings by the Company and appropriate reserves with respect
thereto are established and maintained.

 

5.6                                 Compliance with Law. Do and, except as
permitted under section 6.5, cause each Subsidiary to do all things necessary to
(a) maintain its existence in its jurisdiction of organization and obtain and
maintain its qualification to transact business as a foreign entity in any other
jurisdiction where the ownership of property or the conduct of business make
qualification necessary and where the failure to so qualify would have a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or prospects of the
Company or such Subsidiary, (b) preserve and keep in full force and effect its
rights and franchises necessary to continue its business and (c) comply with all
Requirements of Law, writs, judgments, injunctions, decrees and awards to which
it may be subject including all applicable Environmental Laws, except those
being contested in good faith and involving no possibility of criminal
liability.

 

5.7                                 Compliance with ERISA. The Company shall,
and shall cause each of its ERISA Affiliates to:  (a) maintain each Plan in
compliance in all material respects with the applicable provisions of ERISA, the
Code and other federal or state law;

 

24

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(b) cause each Plan which is qualified under Section 401(a) of the Code to
maintain such qualification; and (c) make all required contributions to any Plan
subject to Section 412 of the Code.

 

5.8                                 Compliance with Other Loan Documents. Timely
comply with all of its obligations under the other Loan Documents, subject to
any applicable cure period therein for compliance.

 

5.9                                 Notices. Promptly, and in any event within 3
Business Days after the Company has become aware of the applicable event, notify
the Bank in writing of:

 

(a)                                  any Default or Event of Default;

 

(b)                                 any notice given, or any action taken with
respect to a claimed default, by any holder of any other Indebtedness issued or
assumed by the Company or any Subsidiary, or the lessor under any lease as to
which the Company or any Subsidiary is the lessee or under any agreement under
which any such Indebtedness was issued or secured;

 

(c)                                  any correspondence, notice, pleading,
citation, indictment, complaint, order, decree or other document received by the
Company from any Person asserting or alleging a circumstance or condition which
requires or may require a financial contribution by the Company or a cleanup,
removal, remedial action or other response by or on the part of the Company
under Environmental Laws or which seeks damages or civil, criminal or punitive
penalties from the Company for an alleged violation of Environmental Laws and
which, in any such circumstance is in excess of $250,000;

 

(d)                                 the commencement or non-frivolous threat of,
or any material development in, any action, suit, arbitration or other
proceeding affecting the Company which involves a claim in excess of $250,000;

 

(e)                                  a Reportable Event has occurred with
respect to any Plan; and

 

(f)                                    any condition or event which would make
any warranty contained in Article 3 inaccurate.

 

Each notice under this section shall be accompanied by a written statement by an
officer of the Company setting forth details of the occurrence referred to
therein, stating what action the Company or any affected Subsidiary proposes to
take with respect thereto and at what time and accompanied by all documents and
correspondences from and to third parties relating to the occurrence referred to
therein.

 

5.10                           Maintenance of Accounts. Maintain all of its
primary operating, deposit and other bank accounts, and all treasury management
services, at the Bank. In addition the Company shall maintain at the Bank, the
Escrow Account until such time as,

 

25

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in connection with the Patent Arbitration Award, the applicable United States
District Court either enters or vacates the Patent Arbitration Award, at which
time the funds in the Escrow Account will be distributed either to Ole K.
Nilssen or the Company, as the case may be, respectively.

 

6.                                       Negative Covenants. The Company
covenants that, without the prior written consent of the Bank, it will not,
until the Commitment has terminated or expired, all Permitted Rate Management
Transactions have terminated or expired, all Letters of Credit have expired or
been returned to the Bank, and the Note, and all fees and expenses payable
hereunder, have been paid in full:

 

6.1                                 Restricted Payments. Make, or permit any
Subsidiary to make, any Restricted Payments.

 

6.2                                 Indebtedness. Create, incur, assume or
permit to exist, or permit any Subsidiary to create, incur, assume or permit to
exist, any Indebtedness except         (a) Indebtedness owed to the Bank or to
an Affiliate of the Bank; (b) Indebtedness secured by Permitted Liens;
(c) Indebtedness existing on the date hereof and set forth on Schedule 6.2;
provided that such Indebtedness is not extended, renewed or increased;   
(d) Indebtedness permitted under section 6.6; and (e) trade debt acquired in the
ordinary course of business.

 

6.3                                 Contingent Obligations. Create, incur,
assume or suffer to exist, or permit any Subsidiary to create, incur, assume or
suffer to exist, any Contingent Obligations except (a) endorsements for
collection or deposit in the ordinary course of business; (b) obligations under
Permitted Rate Management Transactions; and (c) Contingent Obligations existing
as of the Closing Date and listed in Schedule 6.3.

 

6.4                                 Liens. Create, assume or permit to exist, or
permit any Subsidiary to create, assume or permit to exist, any Lien  upon any
of its property or assets, whether now owned or hereafter acquired, except
Permitted Liens.

 

6.5                                 Mergers. Merge or consolidate, or permit any
Subsidiary to merge or consolidate with or into any other Person, except that
any Subsidiary of the Company may merge into the Company or into a Subsidiary
wholly owned by the Company.

 

6.6                                 Acquisitions, Advances and Investments.
Acquire any other business or partnership or joint venture interest or make any
loans, advances or extensions of credit to, or any investments in, any Person
except (a) the acquisitions of assets or stock of a third Party which (i) have
previously been disclosed to the Bank or  (ii) exclusive of the acquisitions
described in clause 6.6 of section 6.66.6 do not exceed, in the aggregate,
$500,000 in any calendar year, (b) the purchase of United States government
obligations maturing within one year of the date of acquisition; (c) extensions
of credit to customers in the ordinary course of business; (d) the purchase of
certificates of deposit at the Bank; (e) commercial paper having a maturity not
exceeding 90 days which is rated not less than P-1 by Moody’s Investors Service,
Inc. or A-1 by

 

26

--------------------------------------------------------------------------------

 

Standard and Poor’s Ratings Service; (f) investments in money market funds which
invest principally in obligations described in 6.6 or 6.6 above; (g) existing
investments of the Company in and existing advances by the Company to wholly
owned Subsidiaries of the Company; (h) investments in repurchase agreements at
the Bank; (i) loans and advances to employees and agents in the ordinary course
of business for travel and entertainment expenses and similar items; and (j)
deposits in deposit accounts (subject to section  5.10).

 

6.7                                 Lines of Business. Engage in any business
other than those in which it is now engaged and any business directly related
thereto.

 

6.8                                 Disposition of Assets. Sell, lease, sell and
lease back, transfer or otherwise dispose of any of its assets (or become
obligated to do so), except for the following: (a) sales of inventory in the
ordinary course of business; (b) dispositions of tangible assets to be replaced
in the ordinary course of business within 12 months by other tangible assets of
equal or greater value; (c) dispositions of tangible assets that are no longer
used or useful in the business of the Company, provided that the aggregate
lesser of fair market or book value of such dispositions shall not exceed
$1,000,000 in any fiscal year; and (d) licensing of products and intangible
assets in the ordinary course of business.

 

6.9                                 Subsidiaries. Permit any Subsidiary of the
Company to issue any Equity Interests, or any security or instrument convertible
into Equity Interests, except to the Company or to a Subsidiary wholly owned by
the Company.

 

6.10                           Operating Profit. Permit the Operating Profits of
the Company and its Consolidated Subsidiaries calculated for the four (4) fiscal
quarter period ending on the date of determination to be less than the following
amounts as of the last day of the following fiscal quarters:

 

Fiscal Quarter

 

Amount

 

 

 

 

 

Second fiscal quarter for the 2008 fiscal year

 

$

2,750,000

 

Fourth fiscal quarter for the 2008 fiscal year

 

$

3,000,000

 

Second fiscal quarter for the 2009 fiscal year

 

$

3,250,000

 

Fourth fiscal quarter for the 2009 fiscal year

 

$

3,500,000

 

 

6.11                           Capital Expenditures. Make or commit to make,
directly or indirectly, any Capital Expenditure if, after giving effect thereto,
the aggregate amount of all Capital Expenditures by the Company and its
Consolidated Subsidiaries would exceed (a) $2,500,000 for the Company’s 2008
fiscal year or (b) $2,000,000 for the Company’s 2009 fiscal year.

 

6.12                           Transactions with Affiliates. Enter into or be a
party to any transaction with any of its Affiliates except as otherwise provided
herein or in the ordinary course of business and upon fair and reasonable terms
which are no less

 

27

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favorable than a comparable arm’s length transaction with an entity which is not
an Affiliate of the Company.

 

7.                                       Event of Default; Remedies.

 

7.1                                 Events of Default. The occurrence of any of
the following shall constitute an Event of Default:

 

(a)                                  Failure to Pay Note. The Company fails to
pay (i) principal on the Note when the same becomes due and payable, whether at
a stated payment date, or a date fixed by the Company for prepayment or by
acceleration or (ii) interest on the Note, or any fee or other amount payable
hereunder, when the same becomes payable and such failure to timely pay
interest, such fee or other amount continues uncured for a period of ten (10)
days; or

 

(b)                                 Falsity of Representations and Warranties.
Any representation or warranty made in any Loan Document is false in any
material respect on the date as of which it is made or as of which the same is
to be effective; or

 

(c)                                  Breach of Covenants. The Company fails to
comply with any term, covenant or agreement contained in (i) sections 5.1(a),
5.1(b), 5.1(c), 5.1(f), 5.2, 5.5, 5.8, 5.9, 5.10 or any section of Article 6
hereof or (ii) any term, covenant or agreement contained in section 5.3 and such
failure continues for a period of five (5) days after the earlier of (y) the
Company should have known of such failure or (z) the date upon which written
notice thereof is given to the Company by the Bank; or

 

(d)                                 Breach of Other Provisions. The Company
fails to comply with any other agreement contained herein and such default
continues for a period of 30 days after written notice to the Company from the
Bank or, in the event the failure cannot reasonably be cured within thirty (30)
days, within such longer period of time, not to exceed sixty (60) days, as is
reasonably necessary to cure such failure; provided that the Company is using
reasonable efforts to cure such failure during such period of time; or

 

(e)                                  Default Under Other Agreements. The Company
or any Subsidiary (i) fails to pay when due any other Indebtedness or Contingent
Obligation in excess of $250,000 issued or assumed by the Company or such
Subsidiary, as the case may be or (ii) fails to comply with the terms of any
agreement executed in connection with such Indebtedness or Contingent
Obligation  and such default continues beyond any applicable cure period if the
effect of such failure is (y) to cause, or permit the holder or holders of such
Indebtedness or the beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, such Indebtedness to be declared to be due and payable
prior to its stated maturity, or (z) to cause such Contingent Obligation to
become payable or cash collateral in respect thereof to be demanded; or

 

28

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(f)                                    Entry of Final Judgments. A final
judgment, decree or arbitration award is entered against the Company or any
Subsidiary which (i) could reasonably be expected to have a Material Adverse
Effect; or (ii) together with all unsatisfied final judgments, decrees and
awards entered against the Company or any Subsidiary, exceeds the sum of
$1,500,000, and such judgment, decree or award shall remain unsatisfied or
unstayed pending appeal for a period of 30 days after the entry thereof; or

 

(g)                                 ERISA Liability. Any event in relation to
any Plan which the Bank determines in good faith could result in any of the
occurrences set forth in section 3.11 above; or

 

(h)                                 Default Under Other Loan Documents. An
“Event of Default” (as defined therein) including a “Termination Event” or other
default under any Rate Management Transaction, shall occur under any other Loan
Document or the party to any other Loan Document (other than the Bank) fails to
timely comply with any term, covenant or agreement contained therein; or

 

(i)                                     Material Adverse Effect. The occurrence
of a Material Adverse Effect; or

 

(j)                                     Change in Control. The occurrence of a
Change in Control; or

 

(k)                                  Insolvency, Failure to Pay Debts or
Appointment of Receiver, Etc. The Company or any Subsidiary becomes insolvent or
the subject of state insolvency proceedings, fails generally to pay its debts as
they become due or makes an assignment for the benefit of creditors; or
voluntarily ceases to conduct business in the ordinary course; or a receiver,
trustee, custodian or other similar official is appointed for, or takes
possession of any substantial part of the property of, the Company or any
Subsidiary; or

 

(l)                                     Subject of United States Bankruptcy
Proceedings. The taking of action by the Company or any Subsidiary to authorize
such organization to become the subject of proceedings under the United States
Bankruptcy Code; or the execution by the Company or any Subsidiary of a petition
to become a debtor under the United States Bankruptcy Code; or the filing of an
involuntary petition against the Company or any Subsidiary under the United
States Bankruptcy Code which remains undismissed for a period of 30 days; or the
entry of an order for relief under the United States Bankruptcy Code against the
Company or any Subsidiary.

 

7.2                                 Remedies. Upon the occurrence of an Event of
Default, the Commitment shall terminate and (a) as to an Event of Default
described in sections 7.1(a) through 7.1(j), inclusive, the holder of the Note
may, at its option and without notice, declare the Note to be, and the Note
shall thereupon become, immediately due and payable, together with accrued
interest thereon, and the Company shall deliver to the

 

29

--------------------------------------------------------------------------------

 

Bank cash collateral as required by section 2.11; and (b) as to an Event of
Default described in sections 7.1(k) and 7.1(l), the Note shall, without action
on the part of the Bank or any notice or demand, become automatically due and
payable, together with accrued interest thereon and the Company shall deliver to
the Bank cash collateral as required by section 2.11. Presentment, demand,
protest and notice of acceleration, nonpayment and dishonor are hereby expressly
waived.

 

8.                                       Miscellaneous.

 

8.1                                 Survival of Representations and Warranties.
The representations and warranties contained in Article 3 hereof and in the
other Loan Documents shall survive closing and execution and delivery of the
Note.

 

8.2                                 Indemnification. Except as incurred as a
result of the Bank’s willful misconduct, the Company agrees to defend, indemnify
and hold harmless the Bank, its directors, officers, employees and agents from
and against any and all loss, cost, expense or liability (including reasonable
attorneys’ fees) incurred in connection with any and all claims or proceedings
(whether brought by a private party or Governmental Authority) as a result of,
or arising out of or relating to:

 

(a)                                  bodily injury, property damage, abatement
or remediation, environmental damage or impairment or any other injury or damage
resulting from or relating to any Hazardous Materials located on or migrating
into, from or through property previously, now or hereafter owned or occupied by
the Company, which the Bank may incur due to the making of the Loans, the
exercise of any of its rights under the Collateral Documents, or otherwise;

 

(b)                                 any transaction financed or to be financed,
in whole or in part, directly or indirectly, with the proceeds of any Loan; or

 

(c)                                  the entering into, performance of and
exercise of its rights under any Loan Document by the Bank.

 

This indemnity will survive foreclosure of any security interest or mortgage or
conveyance in lieu of foreclosure and the repayment of the Notes and the
discharge and release of any Collateral Documents.

 

8.3                                 Expenses. The Company agrees, whether or not
the transaction hereby contemplated shall be consummated, to pay on demand
(a) all out-of-pocket expenses incurred by the Bank in connection with the
negotiation, execution, administration, amendment or enforcement of any Loan
Document including the reasonable fees and expenses of the Bank’s counsel,
(b) any taxes (including any interest and penalties relating thereto) payable by
the Bank (other than taxes based upon the Bank’s net income) on or with respect
to the transactions contemplated by this Agreement (the Company hereby agreeing
to indemnify the Bank with respect thereto) and (c) all out-of-pocket expenses,
including the reasonable fees and expenses of the Bank’s counsel,

 

30

--------------------------------------------------------------------------------

 

incurred by the Bank in connection with any litigation, proceeding or dispute in
any way related to the Bank’s relationship with the Company, including, without
limitation, the fees and expenses set forth in section 5.2, whether arising
hereunder or otherwise. The obligations of the Company under this section will
survive payment of the Note.

 

8.4                                 Notices. Except as otherwise provided in
section 2.2, all notices provided for herein shall be in writing and shall be
(a) delivered; (b) sent by express or first class mail; or (c) sent by facsimile
transmission and confirmed in writing provided to the recipient in a manner
described in 8.4 or 8.4, and addressed as follows, or to such other address with
respect to either party as such party shall notify the other in writing; such
notices shall be deemed given when delivered, mailed or so transmitted:

 

If to the Bank:

 

Associated Bank, National Association

401 East Kilbourn Avenue

Milwaukee, WI 53202

Facsimile No.:  (414) 283-2287

e-mail address:  gregory.larson@associatedbank.com

Attention:  Gregory A. Larson, Senior Vice President

 

If to the Company:

 

Magnetek, Inc.

N49 W13650 Campbell Drive

Menomonee Falls, WI 53051

Facsimile No.:  (262) 790-4147

e-mail address:  mschwenner@magnetek.com

Attention:  Marty Schwenner, Vice President and Chief Financial Officer

 

8.5                                 Setoff. As security for payment of the
Obligations, the Company grants to the Bank a security interest in and lien on
any credit balance or other money now or hereafter owed the Company by the Bank.
In addition, the Company agrees that the Bank may, at any time after the
occurrence of an Event of Default, without prior notice, set off against any
such credit balance or other money all or any part of the Obligations,
irrespective of whether the Bank shall have made demand under this Agreement or
any Loan Document and although such Obligations may be contingent or unmatured.
The Bank hereby agrees to provide the Company with written notice of such setoff
within ten (10) days thereafter or as otherwise required by applicable law;
provided that failure to provide such notice shall not impair or affect such
setoff, or the Bank’s ability to exercise its right of setoff under this
section.

 

8.6                                 Participations. The Company agrees that the
Bank may, at its option, sell to another financial institution or institutions
interests in the Note and, in connection with each such sale and thereafter,
disclose to the purchaser or prospective purchaser of each such interest
financial and other information concerning the Company.

 

31

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The Company agrees that if any portion of the Obligations are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each such purchaser shall be deemed to have,
to the extent permitted by applicable law, the right of setoff in respect of its
participating interest to the same extent as if the amount of its participating
interest were owed directly to it. The Company further agrees that each such
purchaser shall be entitled to the benefits of section 2.13 with respect to its
participation in the Bank’s obligation to make Loans; provided that no such
purchaser shall be entitled to receive any greater amount pursuant to that
section than the Bank would have been entitled to receive if no such sale had
occurred.

 

8.7                                 Titles. The titles of sections in this
Agreement are for convenience only and do not limit or construe the meaning of
any section.

 

8.8                                 Severability. In case any provision or
obligation under this Agreement or the Note shall be invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining provisions or obligations, or of such provision or obligation in
any other jurisdiction, shall not in any way be affected or impaired thereby.

 

8.9                                 Parties Bound; Waiver. The provisions of
this Agreement shall inure to the benefit of and be binding upon any successor
of any of the parties hereto; except that the Company may not assign or transfer
its rights hereunder or any interest herein or delegate its duties hereunder.
Any purported assignment of rights or delegation of duties in violation of this
section is void. No delay on the part of the Bank in exercising any right, power
or privilege hereunder, or in requiring the satisfaction of any covenant or
condition hereunder, shall operate as a waiver thereof, and no single or partial
exercise of any right, power or privilege hereunder shall preclude other or
future exercise thereof or the exercise of any other right, power or privilege.
A waiver made on one occasion is effective only in that instance and only for
the purpose stated. A waiver once given is not to be construed as a waiver on
any future occasion or against any other Person. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by law or in equity,
or under any other instrument, documents or agreement now existing or hereafter
arising.

 

8.10                           Governing Law. This Agreement is being delivered
in and shall be deemed to be a contract governed by the laws of the State of
Wisconsin and shall be interpreted and the rights and obligations of the parties
hereunder enforced in accordance with the internal laws of that state without
regard to the principles of conflicts of laws.

 

8.11                           Submission to Jurisdiction; Service of Process.
ALL JUDICIAL PROCEEDINGS IN ANY MANNER RELATING TO OR ARISING OUT OF THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS, OR ANY OBLIGATIONS THEREUNDER, MAY BE
BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF
WISCONSIN LOCATED IN

 

32

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MILWAUKEE COUNTY. BY EXECUTING AND DELIVERING THIS AGREEMENT, THE COMPANY
IRREVOCABLY:

 

(a)                                  ACCEPTS GENERALLY AND UNCONDITIONALLY THE
NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS;

 

(b)                                 WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;

 

(c)                                  AGREES THAT SERVICE OF ALL PROCESS IN ANY
SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL,
RETURN RECEIPT REQUESTED, TO THE COMPANY AT ITS ADDRESS SPECIFIED IN SECTION
8.4;

 

(d)                                 AGREES THAT SERVICE AS PROVIDED IN CLAUSE
(c) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE COMPANY IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT; AND

 

(e)                                  AGREES THAT THE BANK RETAINS THE RIGHT TO
SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST THE COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.

 

8.12                           Waiver of Trial by Jury. THE COMPANY AND THE BANK
HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this
waiver is intended to be all encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. The Company and the Bank each  acknowledge that
this waiver is a material inducement for the Company and the Bank to enter into
a business relationship, that the Company and the Bank have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. The Company and the Bank
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 8.12 AND EXECUTED BY EACH
OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.

 

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8.13                           Limitation of Liability. THE COMPANY AND THE BANK
HEREBY WAIVE ANY RIGHT EITHER OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE
OTHER PARTY ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY
DAMAGES, OF WHATEVER NATURE, OTHER THAN ACTUAL DAMAGES.

 

8.14                           Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signatures pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.

 

8.15                           Entire Agreement. This Agreement and the other
Loan Documents shall constitute the entire agreement of the parties pertaining
to the subject matter hereof and supersede all prior or contemporaneous
agreements and understandings of the parties in connection therewith.

 

[remainder of page intentionally left blank; signature page follows]

 

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

 

 

COMPANY:

 

 

 

MAGNETEK, INC.

 

 

 

BY:

/s/ Marty J. Schwenner

 

 

 

Marty J. Schwenner, Vice President and

 

 

Chief Financial Officer

 

 

 

BANK:

 

 

 

ASSOCIATED BANK, NATIONAL ASSOCIATION

 

 

 

BY:

/s/ Gregory A. Larson

 

 

 

Gregory A. Larson, Senior Vice President

 

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