**Exhibit10.04**

 

**SECOND AMENDMENT TO**

**CREDITAGREEMENT**

 

THIS SECOND AMENDMENT TOCREDIT AGREEMENT (this “Amendment”) is made and entered into as ofFebruary 12, 2004, by BANK ONE, NA, a national banking association having itsprincipal office in Chicago, Illinois, as Lender; MAGNETEK, INC., a Delawarecorporation (“MagneTek”), MAGNETEK ADS POWER, INC., a Delawarecorporation and Subsidiary of MagneTek, and MAXTEC INTERNATIONAL CORP., aDelaware corporation and Subsidiary of MagneTek, as Borrowers; and MAGNETEKLEASING CORPORATION, a Delaware corporation, MAGNETEK MONDEL HOLDING, INC., aDelaware corporation, MAGNETEK NATIONAL ELECTRIC COIL, INC., a Delawarecorporation, MONDEL ULC, an unlimited liability corporation organized under the laws of NovaScotia, Canada, and MXT HOLDINGS, INC., an Illinois corporation, as Guarantors.

 

# Recitals

 

A.            The Borrowers, the Guarantors and the Lender have enteredinto a Credit Agreement dated as of August 15, 2003, as amended by the FirstAmendment to Credit Agreement dated as of November 25, 2003 (as amended, the “CreditAgreement”).  Capitalized terms used,but not defined, in this Amendment which are defined in the Credit Agreementwill have the meanings given to them in the Credit Agreement.

 

B.            The Borrowers and the Guarantors desire that the Lender(i) waive certain Defaults and (ii) agree to certain amendments to the CreditAgreement, all as contemplated by the terms, and subject to the conditions, ofthis Amendment.

 

C.            Lender is willing to amend the Credit Agreement as contemplatedby the terms, and subject to the conditions, of this Amendment.

 

# Statement ofAmendment

 

In consideration of themutual covenants and agreements and the conditions set forth in this Amendment,and for other good and valuable consideration, the receipt and sufficiency ofwhich are hereby acknowledged, Lender, the Borrowers, and the Guarantors herebyagree as follows:

 

1.             Waiver of Current Known Defaults.  Defaults have occurred under the CreditAgreement as a consequence of the violation of (i) Section 6.29.2 of theCredit Agreement with respect to the Fiscal Quarter beginning September 29,2003 and ending on December 28, 2003 resulting from the Fixed Charge CoverageRatio being less than 1.25:1.00 for such Test Period, (ii) Section 6.29.3of the Credit Agreement with respect to the Two Fiscal Quarters beginning June30, 2003 and ending on December 28, 2003 resulting from Consolidated EBITDAbeing less than $150,000 for such Test Period

 

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(collectively, the “Current Known Defaults”).  The Borrowers have requested that Lenderwaive the Current Known Defaults.  Lenderhereby waives the Current Known Defaults. The waiver provided by this Amendment will not apply to any otherDefault or Unmatured Default, whether past, present, or future.  The waiver provided by this Amendment, eitheralone or together with other waivers which Lender may give from time to time,shall not, by course of dealing, implication or otherwise, obligate Lender towaive any Default or Unmatured Default, past, present or future, other thanthose specifically waived by this Amendment, or reduce, restrict or in any wayaffect the discretion of Lender in considering any future waiver requested bythe Borrowers.

 

2.             Amendments to CreditAgreement.

 

2.1           Section 5.23 of the CreditAgreement is hereby amended in its entirety by substituting the following inits stead:

 

5.23.        Affiliate Transactions.  Except as set forth on Schedule 5.23,as of the Closing Date, there are no existing or proposed agreements,arrangements, understandings, or transactions between any Loan Party and any ofthe officers, members, managers, directors, stockholders, parents, otherinterest holders, employees, or Affiliates (other than Subsidiaries) of anyLoan Party or any members of their respective immediate families, any of whichmatters would be required to be disclosed in a proxy statement of MagneTek,other than matters which are disclosed in its 2002 proxy statement.  For the Fiscal Year of the Borrowers ending inJune, 2004 and each Fiscal Year ending thereafter, the Borrowers willallocate corporate and other overhead expenses of MagneTek to SPA.  The amount allocated to SPA (“AllocatedOverhead Amount”) will be at least $1,000,000 per Fiscal Quarter.  SPA will pay in cash, or accrue, each paymentof the quarterly Allocated Overhead Amount on October 1, 2003 and will continueto pay in cash, or accrue, each payment of the Allocated Overhead Amount on thefirst day of each calendar quarter thereafter occurring; *providedhowever*,  if, as of anyOctober 1, January 1, April 1 or July 1 occurring after February 12, 2004(each, a “SPA Payment Date”), the average daily principal amount of theLoans outstanding for the calendar quarter immediately preceding such SPAPayment Date is greater than $5,000,000, SPA will pay in cash, rather thanaccrue, the payment on the Allocated Overhead Amount due on such SPA PaymentDate and due on each SPA Payment Date thereafter occurring, even if the averagedaily principal amount of the Loans outstanding for any or all calendar quarter(s)thereafter occurring is less than $5,000,000. All payments of the Allocated Overhead Amount that are accrued shall bedue to MagneTek on MagneTek’s demand, and MagneTek shall not take any actions,or enter into any agreements, that would limit, restrict or defer its rights toreceive such payments.  All of theCapital Stock of J-Tec was sold, and the

 

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proceedsof such sale were received by MagneTek, on or before the Closing Date.

 

2.2           Section 6.29.3 of the CreditAgreement is hereby amended in its entirety by substituting the following inits stead:

 

6.29.3. Minimum EBITDA.  The Borrowers shall not permit ConsolidatedEBITDA (“EBITDA Covenant”) to be less than the amounts setopposite the Test Periods set forth below:

 
| **Test Period**                                                                                                   | ** ** | **Minimum EBITDA** |
|-------------------------------------------------------------------------------------------------------------------|------------|--------------------|
|                                                                                                              |       |               |
| Three Fiscal Quarters  beginning June 30, 2003 and ending on March 28, 2004                                       |       | $                  | 150,000 |
|                                                                                                              |       |               |
| Four Consecutive Fiscal  Quarters ending June 27, 2004                                                            |       | $                  | 1,100,000 |
|                                                                                                              |       |               |
| Four Consecutive Fiscal  Quarters ending September 26, 2004                                                       |       | $                  | 2,750,000 |
|                                                                                                              |       |               |
| Four Consecutive Fiscal  Quarters ending December 26, 2004                                                        |       | $                  | 3,400,000 |
|                                                                                                              |       |               |
| Four Consecutive Fiscal  Quarters ending March 27, 2005                                                           |       | $                  | 4,125,000 |
|                                                                                                              |       |               |
| Four Consecutive Fiscal  Quarters ending June 26, 2005                                                            |       | $                  | 4,800,000 |
|                                                                                                              |       |               |
| Four Consecutive Fiscal  Quarters ending September 25, 2005 and each Four Consecutive Fiscal Quarters  thereafter |       | $                  | 5,500,000 |

 

2.3           Section 6.34(b) of the CreditAgreement is hereby amended in its entirety by substituting the following inits stead:

 

(b)           PEG:

 

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| **Test Period**                                                                                                         | ** ** | **Minimum Operating Profit of PEG** |
|-------------------------------------------------------------------------------------------------------------------------|------------|-------------------------------------|
| ** **                                                                                                              | ** ** |                                |
| Three Fiscal Quarters beginning June 30, 2003 and  ending on March 28, 2003                                             |       | $                                   | (350,000) |
|                                                                                                                    |       |                                |
| Four Fiscal Quarters beginning June 30, 2003 and ending  on June 27, 2004                                               |       | $                                   | 25,000 |
|                                                                                                                    |       |                                |
| Four Consecutive Fiscal Quarters ending September  26, 2004 and each Four Consecutive Fiscal Quarters ending thereafter |       | $                                   | 400,000 |

 

3.             Representations. To induce Lender to accept this Amendment, the Borrowers and theGuarantors hereby represent and warrant to the Lender as follows:

 

3.1           Each Borrower and Guarantor has fullpower and authority to enter into, and to perform its obligations under, thisAmendment, and the execution and delivery of, and the performance of itsobligations under and arising out of, this Amendment have been duly authorizedby all necessary corporate action.

 

3.2           This Amendment constitutes the legal,valid and binding obligations of each Borrower and Guarantor enforceable inaccordance with its terms, except as such enforceability may be limited bybankruptcy, insolvency, reorganization or similar laws affecting creditors’rights generally.

 

3.3           Each of the Borrower’s and each ofthe Guarantor’s representations and warranties contained in the Loan Documentsare complete and correct as of the date of this Amendment (other than a representation or warranty thatis stated to relate solely to an earlier date) with the same effect asthough such representations and warranties had been made again on and as of thedate of this Amendment, subject to those changes as are not prohibited by, ordo not constitute a Default under, the Loan Documents.

 

3.4           No Default or Unmatured Default hasoccurred and is continuing, other than the Current Known Defaults.

 

4.             Costs and Expenses; Fee.  The Borrowers will promptly on demand pay orreimburse the Lender for the reasonable costs and expenses incurred by theLender in connection with this Amendment. The Borrowers will pay to Lender an amendment and waiver fee in theamount of $25,000 upon Lender’s execution of this Amendment.

 

5.             Release. The Borrowers and the Guarantors hereby release the Lender from any andall liabilities, damages and claims arising from or in any way related to theLoans,

 

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other than such liabilities, damages and claims which arise after theexecution of this Amendment.  Theforegoing release does not release or discharge, or operate to waiveperformance by, the Lender of its express agreements and obligations stated inthe Loan Documents on and after the date of this Amendment.

 

6.             Continuing Effect of Credit Agreement.  Except as expressly amended hereby, all ofthe provisions of the Credit Agreement are ratified and confirmed and remain infull force and effect.

 

7.             One Agreement; References; Fax Signature.  The Credit Agreement, as amended by thisAmendment, will be construed as one agreement. All references in any of the Loan Documents to the Credit Agreement willbe deemed to be references to the Credit Agreement as amended by thisAmendment.  This Amendment may be signedby facsimile signatures, and if so signed, (i) may be relied on by each partyas if the document were a manually signed original and (ii) will be binding oneach party for all purposes.

 

8.             Captions.** **The headings to the Sections ofthis Amendment have been inserted for convenience of reference only and shallin no way modify or restrict any provisions hereof or be used to construe anysuch provisions.

 

9.             Counterparts. This Amendment may be executed in multiple counterparts, each of whichshall be an original but all of which together shall constitute one and thesame instrument.

 

10.           Entire Agreement.  This Amendment, together with the CreditAgreement and the other Loan Documents, sets forth the entire agreement of theparties with respect to the subject matter of this Amendment and supersedes allprevious understandings, written or oral, in respect of this Amendment.

 

11.           Governing Law.  This Amendment shall be governed by andconstrued in accordance with the internal laws of the State of Ohio (withoutregard to Ohio conflicts of law principles).

 

12.**          **Reaffirmation ofGuaranties.  The Guarantors herebyeach reaffirm their respective Guaranty and acknowledge and agree that none ofthe Guarantors is released from its obligations under its Guaranty by reason ofthis Amendment and that the obligations of the Guarantors under theirrespective Guaranties extend to the Credit Agreement and the other LoanDocuments as amended by this Amendment. This reaffirmation of Guaranty shall not be construed, by implication orotherwise, as imposing any requirement that the Lender notify or seek theconsent of any of the Guarantors relative to any past or future extension ofcredit, or modification, extension or other action with respect thereto, inorder for any such extension of credit or modification, extension or otheraction with respect thereto to be subject to the Guaranties, it being expresslyacknowledged and reaffirmed that the Guarantors have under their respectiveGuaranty consented, among others things, to modifications, extensions and otheractions with respect thereto without any notice thereof or consent thereto.

 

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13.           Other Documents. With thesigning of this Amendment, the Borrowers will deliver to the Lender such otherdocuments, instruments, and agreements deemed necessary or desirable by theLender to effect the amendments to the Borrowers’ credit facilities with theLender contemplated by this Amendment.

 

[REMAINDERINTENTIONALLY LEFT BLANK]

 

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INWITNESS WHEREOF, the Borrowers and the Guarantors have executed this Amendmentto be effective as of the date set forth in the opening paragraph of thisAmendment.

 
|   | **THE  BORROWERS:**         |
|--------|-----------------------------|
|   |                        |
|   | MAGNETEK,  INC.             |
|   |                        |
|   | By:                         | /s/  David P. Reiland |   |
|   |                        | David  P. Reiland, Executive Vice |   |
|   |                        | President  and Chief Financial Officer |   |
|   |                        |
|   |                        |
|   | MAGNETEK  ADS POWER, INC.   |
|   |                        |
|   |                        |
|   | By:                         | /s/  David P. Reiland |   |
|   |                        | David  P. Reiland, President |   |
|   |                        |
|   |                        |
|   | MAXTEC  INTERNATIONAL CORP. |
|   |                        |
|   |                        |
|   | By:                         | /s/  David P. Reiland |   |
|   |                        | David  P. Reiland, President |   |

 

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|                           | **THE  GUARANTORS:**                   |
|--------------------------------|----------------------------------------|
|                           |                                   |
|                           | MXT  HOLDINGS, INC.                    |
|                           |                                   |
|                           |                                   |
|                           | By:                                    | /s/  David P. Reiland |   |
|                           |                                   | David  P. Reiland, President |   |
|                           |                                   |
|                           | MONDEL  ULC                            |
|                           |                                   |
|                           |                                   |
|                           | By:                                    | /s/  David P. Reiland |   |
|                           | Title:                                 | President |   |
|                           | Name:                                  | David  P. Reiland |   |
|                           |                                   |
|                           |                                   |
|                           | MAGNETEK  MONDEL HOLDING, INC.         |
|                           |                                   |
|                           | By:                                    | /s/  David P. Reiland |   |
|                           |                                   | David  P. Reiland, President |   |
|                           |                                   |
|                           |                                   |
|                           | MAGNETEK  LEASING CORPORATION          |
|                           |                                   |
|                           | By:                                    | /s/  David P. Reiland |   |
|                           |                                   | David  P. Reiland, President |   |
|                           |                                   |
|                           |                                   |
|                           | MAGNETEK  NATIONAL ELECTRIC COIL, INC. |
|                           |                                   |
|                           | By:                                    | /s/  David P. Reiland |   |
|                           |                                   | David  P. Reiland, President |   |
|                           |                                   |
|                           |                                   |
| Accepted at  Cincinnati, Ohio, |                                   |
| as of February  12, 2004       |                                   |
|                           |                                   |
| BANK ONE, NA                   |                                   |
|                           |                                   |
|                           |                                   |
| By:                            | /s/ Jeffrey W.  Swartz                 |   |   |
|                           | Jeffrey W.  Swartz, Associate Director |   |   |
|                                |                                        |  |  |  |  |  |  |  |

 

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