ex10_1.htm


    
      

      

    

     

    
Exhibit
10.1

     

    SECOND
AMENDMENT TO CREDIT AGREEMENT

     

    THIS
SECOND AMENDMENT TO CREDIT AGREEMENT (this "Amendment"), dated effective as of
February 19, 2010, amends and supplements that certain Credit Agreement dated as
of November 6, 2007, as amended to date (as so amended and as the same may be
further amended, restated or supplemented from time to time, the "Credit
Agreement"), by and between ASSOCIATED BANK, NATIONAL ASSOCIATION, a national
banking association (the "Bank"), and MAGNETEK, INC., a Delaware corporation
(the "Company").

     

    RECITAL

     

    The
Company and the Bank desire to amend and supplement the Credit Agreement as
provided below.

     

    AGREEMENTS

     

    In
consideration of the Recital and the promises and agreements set forth in the
Credit Agreement, as amended hereby, the parties agree as follows:

     

    1. Definitions and
References.  Capitalized terms not otherwise defined herein
have the meanings assigned in the Credit Agreement.  All references to
the Credit Agreement contained in the Collateral Documents and the other Loan
Documents, as amended or amended and restated, shall, upon the execution of this
Amendment, mean the Credit Agreement as amended by this Amendment.

     

    2. Amendments to Credit
Agreement.

     

    (a) Section 1
of the Credit Agreement is hereby amended by adding the following definitions
which shall be placed in alphabetical order:

     

    "Adjusted EBITDA"
shall mean, as to the Company for any period as to which such amount is being
determined, the sum of (a) Net Income, plus (b) depreciation
expense, plus (c)
amortization of intangibles, plus (d) deferred income tax
expense, plus (e)
non-cash stock compensation expense, plus (f) to the extent taken
into account in determining net income, pension expense, all as determined
without duplication for the Company and its Consolidated
Subsidiaries.

     

    "Qualified Inventory"
shall mean inventory of the Company which is saleable in the ordinary course of
business (other than inventory which is

     


    
      


    

    
      
         


      

      
         


        
          

        

      

      
         


      

    


    defective
but including inventory which is work in process) which is new, unused and which
meets the following requirements and continues to meet the same until it is sold
or otherwise disposed of as permitted by this Agreement: (a) it is not subject
to any assignment, claim, Lien or security interest whatsoever, other than the
Lien of the Bank hereunder; (b) it is not obsolete and it is merchantable,
saleable in the ordinary course of the Company's business, in good condition and
currently usable; (c) it is not inventory located on premises other than
premises owned by the Company that are located in the United States; (d) it is
not inventory which the Bank at its sole and absolute discretion, determines in
good faith to be unacceptable due to age, type, category or quantity; (e) it is
inventory on which the Bank has a valid, enforceable, perfected first Lien; and
(f) it is not Inventory sold to, returned to, or repossessed by the Company from
a dealer or purchaser of inventory from the Company.  Inventory of the
Company which is at any time Qualified Inventory, but which subsequently fails
to meet any of the foregoing requirements shall forthwith cease to be Qualified
Inventory.

     

    (b) The
defined term "Borrowing Base Availability" in section 1 of the Credit Agreement
is amended in its entirety to read as follows:

     

    "Borrowing Base
Availability" means an amount equal to the sum of (a) 80% of the
face amount of Qualified Accounts, plus (b) 40% of the lower of the Company's
cost or the wholesale market value, determined on a first in first out basis in
accordance with GAAP, of Qualified Inventory, in each case as shown on the most
recent Borrowing Base Certificate furnished by the Company to the
Bank.

     

    (c) The
second sentence of the defined term "Commitment" in section 1 of the Credit
Agreement is amended in its entirety to read as follows:

     

    "The
Commitment of the Bank is $7,500,000, and is subject to reduction from time to
time pursuant to section 2.4."

     

    (d) The first
sentence of the defined term "LIBOR Rate" in section 1 of the Credit Agreement
is hereby amended in its entirety to read as follows:

     

    "LIBOR Rate" means the
greater of: (a) three percent (3.0%) per annum; or (b) 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.

     

    (e) The
defined term "Maturity Date" in section 1 of the Credit Agreement is amended by
deleting the date "November 1, 2010" contained therein and inserting the date
"December 15, 2010" in its place.

     

    (f) The first
two sentences of Section 2.5(a) of the Credit Agreement are hereby amended in
their entirety to read as follows:

     

    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 LIBOR Rate
plus two percent (2.0%) and shall change on each date on which the LIBOR Rate
changes.

     

    (g) Section
2.8(a)(i) of the Credit Agreement is hereby amended in its entirety to read as
follows:

     

    (i) the
requested Letter of Credit will not be issued if, upon issuance, either: [a] the
sum of [i] the unpaid principal balance of the Note and [ii] the LOC Exposure
would exceed the lesser of [A] the Commitment or [B] the Borrowing
Base Availability, or [b] after issuance of the requested Letter of Credit, the
LOC Exposure would exceed $2,000,000; and

     

    (h) Section
2.12 of the Credit Agreement is hereby amended in its entirety to read as
follows:

     

    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 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.  In addition, the Company shall pay the
following fees with respect to Letters of Credit: (a) if a Letter of Credit is
an international letter of credit (i.e., a letter of credit which provides for
payment to a beneficiary located outside the United States), the Company shall
pay on the Borrowing Date of the Letter of Credit (and on the date of any
renewal thereof), the ordinary and customary fees of the Bank for international
letters of credit as in effect from time to time; or (b) if the Letter of Credit
is a domestic letter of credit (i.e., a letter of credit which provides for
payment to a beneficiary located inside the United States), the Company shall
pay a per annum fee equal to 1.5%

     


    
      
        
          
                                                            

        

         


      

      
         


        
          

        

      

      
         


      

    


    multiplied
by the amount available for drawing under the Letter of Credit, payable
quarterly in advance on the Borrowing Date of the Letter of Credit and on the
same day of each third month thereafter.

     

    (i) Section 2
of the Credit Agreement is hereby amended by adding a section thereto as
follows:

     

    2.16. Commitment Fee.  As
consideration for the commitment of the Bank to make Loans, the Company agrees
to pay to the Bank, on the last Business Day of each calendar quarter commencing
with the quarter ending March 31, 2010, and on the Maturity Date, a commitment
fee equal to 0.25% per year on the daily average unused amount of the Bank's
commitment to make Loans hereunder during the quarter or other applicable
period; provided that for purposes of computing the commitment fee due on March
31, 2010, the applicable period shall be January 1, 2010, through March 31,
2010.  Commitment fees shall be calculated for the actual number of
days elapsed on the basis of a 360-day year.

     

    (j) Section
5.1(f) of the Credit Agreement is hereby amended in its entirety to read as
follows:

     

          (f) Borrowing Base Certificates.  Furnish
to the Bank, within thirty (30) days after the end of each calendar month, a
Borrowing Base Certificate as of the end of that calendar month.

     

    (k) The
proviso in Section 5.2 of the Credit Agreement is hereby amended in its entirety
to read as follows:

     

    provided, however, unless a
Default or Event of Default exists, the Company shall only be required to
reimburse the Bank for the cost of field exams, inspections or audits during any
calendar year if Loans are outstanding for 15 days total (whether consecutive or
non-consecutive) during the calendar year and then only in an amount not to
exceed $5,000 for the calendar year

     

    (l) Section
6.6 of the Credit Agreement is amended in its entirety to read as
follows:

     

    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) were

     


    
      
        
          
                                                         

        

         


      

      
         


        
          

        

      

      
         


      

    


    disclosed
to the Bank by the Company in writing prior to December 15, 2009, or (ii)
exclusive of the acquisitions described in the previous clause, 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 Standard and
Poor's Ratings Service; (f) investments in money market funds which invest
principally in obligations described in (b) or (e) 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) demand deposits in a bank which is organized under
the laws of the United States or of any State and which has a combined capital
and surplus in excess of $50,000,000 (subject to section 5.10).

     

    (m) Section
6.10 of the Credit Agreement is amended in its entirety to read as
follows:

     

    6.10.
Maximum Pension
Payments.  The Company shall not make cash contributions to the
defined benefit retirement plan maintained by it, except for payments during the
following months not exceeding the amounts (measured on a cash basis) for those
months as follows:

     

    
      	
              Month

            	 	
              Maximum Contribution

            	 
	
              January,
      2010

            	 	$	2,700,000	 
	
              April,
      2010

            	 	$	3,200,000	 
	
              July,
      2010

            	 	$	3,200,000	 
	
              September,
      2010

            	 	$	2,600,000	 
	
              October,
      2010

            	 	$	3,200,000	 


    

     

    (n) Section
6.11 of the Credit Agreement is amended by deleting the amount "$2,500,000"
contained in clause (b) thereof and inserting the amount "$2,000,000" in its
place.

     

    (o) Section 6
of the Credit Agreement is hereby amended by adding a section thereto as
follows:

     


    
      
        
          
                                                             

        

         


      

      
         


        
          

        

      

      
         


      

    


    (p) 6.13 Adjusted
EBITDA.  Permit the Adjusted EBITDA of the Company and its
Consolidated Subsidiaries to be less than the following amounts for the
following periods:

     

    
      	
              Period

            	 	
              Minimum Amount

            	 
	
              The
      nine month period ending March 31, 2010

            	 	$	3,000,000	 
	
              The
      Company's fiscal year ending on or about June 30, 2010

            	 	$	5,500,000	 
	
              The
      twelve month period ending September 30, 2010

            	 	$	6,500,000	 


    

     

    (q) The
"Borrowing Base Certificate" shall be amended to be in the form attached hereto
as Exhibit
A.

     

    3. Closing
Conditions.  This Amendment shall become effective upon the
execution and delivery by the parties of this Amendment and receipt by the Bank
of:

     

    (a) a
certificate of good standing of the Company issued by the Delaware Secretary of
State, dated within ten (10) days of the date hereof;

     

    (b) a General
Business Security Agreement in form satisfactory to the Bank duly executed by
the Company;

     

    (c) an
updated certificate of insurance covering the Collateral added by the
aforementioned General Business Security Agreement; and

     

    (d) such
other forms, certificates, agreements, documents and instruments as the Bank may
reasonably requests.

     

    4. No
Waiver.   The Company agrees that nothing contained herein
shall be construed by the Company as a waiver by the Bank of the Company's
compliance with each representation, warranty and/or covenant contained in the
Credit Agreement, the Collateral Documents and the other Loan Documents and that
no waiver of any provision of the Credit Agreement, the Collateral Documents or
the other Loan Documents by the Bank has occurred.  The Company
further agrees that nothing contained herein shall impair the right of the Bank
to require strict performance by the Company of the Credit
Agreement.

     


    
      
        
          
                                                         

        

         


      

      
         


        
          

        

      

      
         


      

    


    5. Representations and
Warranties.  The Company represents and warrants to the Bank
that:

     

    (a) The
execution and delivery of this Amendment is within its corporate power, has been
duly authorized by proper corporate action on the part of the Company, is not in
violation of any existing law, rule or regulation of any governmental agency or
authority, any order or decision of any court, 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 does
not require the approval or consent of the members of the Company, any
governmental body, agency or authority or any other person or entity, except for
those approvals and consents which have already been obtained and are in full
force and effect; and

     

    (b) The
representations and warranties of the Company contained in the Loan Documents
are true and correct in all material respects as of the date of this Amendment
(except to the extent such representations and warranties relate to an earlier
date in which case they are true and correct in all material respects as of such
earlier date).

     

    6. Miscellaneous.

     

    (a) Charges, Expenses and
Fees.  The Company agrees to pay on demand all reasonable
out-of-pocket costs and expenses paid or incurred by the Bank in connection with
the negotiation, preparation, execution and delivery of this Amendment and all
forms, certificates, agreements, documents and instruments hereto or otherwise
contemplated hereby, including the reasonable fees and expenses of the Bank's
counsel.

     

    (b) Amendments and
Waivers.  This Amendment may not be changed or amended orally,
and no waiver hereunder may be oral, and any change or amendment hereto or any
waiver hereunder must be in a writing which is identified as an amendment or
waiver of this Amendment and signed by the party or parties against whom such
change, amendment or waiver is sought to be enforced.

     

    (c) Headings.  The
headings in this Amendment are intended solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Amendment.

     

    (d) Affirmation.  Each
party hereto affirms and acknowledges that the Credit Agreement as amended
by this Amendment remains in full force and effect in accordance with its
terms.

     


    
      
        
          
                                                          

        

         


      

      
         


        
          

        

      

      
         


      

    


    (e) Counterparts.  This
Amendment may be executed in one or more counterparts, each of which shall
constitute an original, but all of which when taken together shall constitute
one and the same instrument.  Delivery of an executed counterpart by
facsimile or by e-mail of a portable document file (PDF) shall be as effective
as delivery of an original counterpart hereof.

     

    IN
WITNESS WHEREOF, the parties have executed this Second Amendment 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