**Exhibit 10.2**

 

 

**FINANCINGAGREEMENTDated as of September 30, 2005by and amongMAGNETEK, INC.as Borrower**

 

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**THE LENDERSFROM TIME TO TIME PARTY HERETO,**

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**ABLECO FINANCELLC,as Collateral Agent,andABLECO FINANCE LLCas Administrative Agent**

 

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TABLE OFCONTENTS

 
| ARTICLE I    | DEFINITIONS; CERTAIN TERMS                                                     |                                                          |
|-------------------|--------------------------------------------------------------------------------|---------------------------------------------------------------|
|              |                                                                           |                                                          |   |
|              | Section 1.01                                                              | Definitions                                                   |   |
|              | Section 1.02                                                              | Terms Generally                                               |   |
|              | Section 1.03                                                              | Accounting and Other Terms                                    |   |
|              | Section 1.04                                                              | Time References                                               |   |
|              |                                                                           |                                                          |   |
| ARTICLE II   | THE LOANS                                                                      |                                                          |
|              |                                                                           |                                                          |   |
|              | Section 2.01                                                              | Commitments                                                   |   |
|              | Section 2.02                                                              | Making the Loans                                              |   |
|              | Section 2.03                                                              | Repayment of Loans; Evidence  of Debt                         |   |
|              | Section 2.04                                                              | Interest                                                      |   |
|              | Section 2.05                                                              | Reduction of Commitment;  Prepayment of Loans                 |   |
|              | Section 2.06                                                              | Fees                                                          |   |
|              | Section 2.07                                                              | Securitization                                                |   |
|              | Section 2.08                                                              | Taxes.                                                        |   |
|              |                                                                           |                                                          |   |
| ARTICLE IV   | FEES,  PAYMENTS AND OTHER COMPENSATION                                         |                                                          |
|              |                                                                           |                                                          |   |
|              | Section 4.01                                                              | Audit and  Collateral Monitoring Fees                         |   |
|              | Section 4.02                                                              | Payments;  Computations and Statements                        |   |
|              | Section 4.03                                                              | Sharing of  Payments, Etc                                     |   |
|              | Section 4.04                                                              | Apportionment  of Payments.                                   |   |
|              | Section 4.05                                                              | Increased  Costs and Reduced Return.                          |   |
|              |                                                                           |                                                          |   |
| ARTICLE V    | CONDITIONS  TO LOANS                                                           |                                                          |
|              |                                                                           |                                                          |   |
|              | Section 5.01                                                              | Conditions  Precedent                                         |   |
|              | Section 5.02                                                              | Conditions  Precedent to All Loans                            |   |
|              |                                                                           |                                                          |   |
| ARTICLE VI   | REPRESENTATIONS  AND WARRANTIES                                                |                                                          |
|              |                                                                           |                                                          |   |
|              | Section 6.01                                                              | Representations  and Warranties                               |   |
|              |                                                                           |                                                          |   |
| ARTICLE VII  | COVENANTS  OF THE LOAN PARTIES                                                 |                                                          |
|              |                                                                           |                                                          |   |
|              | Section 7.01                                                              | Affirmative  Covenants                                        |   |
|              | Section 7.02                                                              | Negative  Covenants                                           |   |
|              | Section 7.03                                                              | Financial  Covenants                                          |   |
|              |                                                                           |                                                          |   |
| ARTICLE VIII | MANAGEMENT,  COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL |                                                          |
|              |                                                                           |                                                          |   |
|              | Section 8.01                                                              | Collection  of Accounts Receivable; Management of Collateral. |   |
|              | Section 8.02                                                              | Accounts  Receivable Documentation                            |   |
|              | Section 8.03                                                              | Status of  Accounts Receivable and Other Collateral           |   |
|              | Section 8.04                                                              | Collateral  Custodian                                         |   |
|              |                                                                           |                                                          |   |
| ARTICLE IX   | EVENTS OF  DEFAULT                                                             |                                                          |
|                   |                                                                                |                                                               |  |  |  |

 

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|             | Section 9.01  | Events of  Default                                     |   |
|------------------|--------------------|--------------------------------------------------------|--------|
|             |               |                                                   |   |
| ARTICLE X   | AGENTS             |                                                   |
|             |               |                                                   |   |
|             | Section 10.01 | Appointment                                            |   |
|             | Section 10.02 | Nature of  Duties                                      |   |
|             | Section 10.03 | Rights,  Exculpation, Etc                              |   |
|             | Section 10.04 | Reliance                                               |   |
|             | Section 10.05 | Indemnification                                        |   |
|             | Section 10.06 | Agents  Individually                                   |   |
|             | Section 10.07 | Successor  Agent                                       |   |
|             | Section 10.08 | Collateral  Matters                                    |   |
|             | Section 10.09 | Agency for  Perfection                                 |   |
|             |               |                                                   |   |
| ARTICLE XI  | GUARANTY           |                                                   |
|             |               |                                                   |
|             | Section 11.01 | Guaranty                                               |   |
|             | Section 11.02 | Guaranty  Absolute                                     |   |
|             | Section 11.03 | Waiver                                                 |   |
|             | Section 11.04 | Continuing  Guaranty; Assignments                      |   |
|             | Section 11.05 | Subrogation                                            |   |
|             |               |                                                   |   |
| ARTICLE XII | MISCELLANEOUS      |                                                   |
|             |               |                                                   |
|             | Section 12.01 | Notices,  Etc                                          |   |
|             | Section 12.02 | Amendments,  Etc                                       |   |
|             | Section 12.03 | No Waiver;  Remedies, Etc                              |   |
|             | Section 12.04 | Expenses;  Taxes; Attorneys’ Fees                 |   |
|             | Section 12.05 | Right of Set-off                                       |   |
|             | Section 12.06 | Severability                                           |   |
|             | Section 12.07 | Assignments  and Participations.                       |   |
|             | Section 12.08 | Counterparts                                           |   |
|             | Section 12.09 | GOVERNING  LAW                                         |   |
|             | Section 12.10 | CONSENT TO  JURISDICTION; SERVICE OF PROCESS AND VENUE |   |
|             | Section 12.11 | WAIVER OF  JURY TRIAL, ETC                             |   |
|             | Section 12.12 | Consent by  the Agents and Lenders                     |   |
|             | Section 12.13 | No Party  Deemed Drafter                               |   |
|             | Section 12.14 | Reinstatement;  Certain Payments                       |   |
|             | Section 12.15 | Indemnification                                        |   |
|             | Section 12.16 | Records                                                |   |
|             | Section 12.17 | Binding  Effect                                        |   |
|             | Section 12.18 | Interest                                               |   |
|             | Section 12.19 | Confidentiality                                        |   |
|             | Section 12.20 | Integration                                            |   |
|                  |                    |                                                        |        |  |

 

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**FINANCINGAGREEMENT**

 

Financing Agreement, dated as of September 30, 2005, by and among **MAGNETEK, INC.**, a Delaware corporation (the ”Borrower”),each subsidiary of the Borrower listed as a “Guarantor” on the signature pages hereto(each a “Guarantor” and collectively, jointly and severally, the “Guarantors”),the lenders from time to time party hereto (each a “Lender” andcollectively, the ”Lenders”), **ABLECO FINANCE LLC,**a Delaware limited liability company (“Ableco”), as collateral agent forthe Lenders (in such capacity, together with any successor collateral agent,the ”Collateral Agent”), and Ableco, as administrative agent forthe Lenders (in such capacity, together with any successor administrativeagent, the ”Administrative Agent” and together with the CollateralAgent, each an “Agent” and collectively, the “Agents”).

 

**RECITALS**

 

The Borrower has asked the Lenders to extend credit to the Borrowerconsisting of a delayed draw term loan in the aggregate principal amount of$18,000,000.  The proceeds of the termloan shall be held in the Designated Account and used to fund a portion of anypayments that are required to be made in connection with the litigationregarding the Arbitration Award in accordance with the terms of this Agreement,and to pay fees and expenses related to this Agreement (with any remainingproceeds to be released to Borrower for use for its general working capitalpurposes).  The Lenders are severally,and not jointly, willing to extend such credit to the Borrower subject to theterms and conditions hereinafter set forth.

 

In consideration of the premises and the covenants and agreementscontained herein, the parties hereto agree as follows:

 

**ARTICLE I**

 

**DEFINITIONS;CERTAIN TERMS**

** **

Section 1.01                                Definitions.  As used in this Agreement, thefollowing terms shall have the respective meanings indicated below, suchmeanings to be applicable equally to both the singular and plural forms of suchterms:

 

“Ableco” has the meaning specified therefor in the preamblehereto.

 

“Account Debtor” means any Person who is or who may becomeobligated under, with respect to, or on account of, an Account Receivable,chattel paper, or a general intangible.

 

“Account Receivable” means, with respect to any Person, all ofsuch Person’s now owned or hereafter acquired right, title, and interest withrespect to “accounts” (as that term is defined in Article 9 of the Code,and in the case of Mondel, in the PPSA), and any and all “supportingobligations” (as that term is defined in the Code) in respect thereof.

 

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“Action” has the meaning specified therefor in Section 12.12.

 

“additional amount” has the meaning specified therefor in Section 2.08(a)

 

“Administrative Agent” has the meaning specified therefor in thepreamble hereto.

 

“Administrative Agent’s Account” means an account at a bankdesignated by the Administrative Agent from time to time as the account intowhich the Borrower shall make all payments to the Administrative Agent for thebenefit of the Agents and the Lenders under this Agreement and the other LoanDocuments.

 

“Affiliate” means, with respect to any Person, any other Personthat directly or indirectly through one or more intermediaries, controls, iscontrolled by, or is under common control with, such Person.  For purposes of this definition, (a) anyPerson which owns directly or indirectly 10% or more of the Capital Stockhaving ordinary voting power for the election of directors or other members ofthe governing body of a Person or 10% or more of the partnership or otherownership interests of a Person (other than as a limited partner of suchPerson) shall be deemed an Affiliate of such Person, (b) each director (orcomparable manager) of a Person shall be deemed to be an Affiliate of suchPerson, and (c) each partnership or joint venture in which a Person is apartner or joint venturer shall be deemed an Affiliate of such Person.  Notwithstanding anything herein to thecontrary, in no event shall any Agent or any Lender be considered an “Affiliate”of any Loan Party.

 

“After Acquired Property” means any fee interest in realproperty acquired by the Borrower or any of its Subsidiaries after the datehereof.

 

“Agent” and “Agents” each has the meaning specifiedtherefor in the preamble hereto.

 

“Agreement” means this Financing Agreement, including allamendments, modifications and supplements and any exhibits or schedules to anyof the foregoing, and shall refer to the Agreement as the same may be in effectat the time such reference becomes operative.

 

“Applicable Corporate Overhead Amount” means (a) withrespect to any measurement period ending on or before June 30, 2006,$500,000, and (b) with respect to any measurement period ending after June 30,2006, $1,500,000.

 

“Applicable Laws” means, with respect to any Person, those Lawsthat apply to such Person or its business, undertakings, property orsecurities.

 

“Applicable LIBOR Rate Margin” means 8.50 percentage points; provided,however so long as a Triggering Event has not occurred and is notcontinuing, the Applicable LIBOR Rate Margin shall be reduced to the ApplicableLIBOR Discount Rate Margin.

 

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“Applicable LIBOR Discount Rate Margin” means, as of any date ofdetermination, the following margin based upon Borrower’s most recent DomesticLeverage Ratio calculation (determined as set forth in the followingparagraph); provided, however, that for the period from theEffective Date through the date the Agents receive the certified calculation ofthe Domestic Leverage Ratio in respect of the testing period ended with September 30,2005 delivered by Borrower pursuant to Section 7.01(a), theApplicable LIBOR Discount Rate Margin shall be set at Level I:

 
| **Level** | ** ** | **Domestic Leverage Ratio**                                | ** ** | **Applicable LIBOR Discount Rate  Margin** |
|-----------|------------|------------------------------------------------------------|------------|--------------------------------------------|
|      |       |                                                       |       |                                       |
| I         |       | less than 2.75:1.00                                        |       | 7.50 percentage points                     |
|      |       |                                                       |       |                                       |
| II        |       | greater than or equal to 2.75:100 and less  than 3.00:1.00 |       | 8.00 percentage  points                    |
|      |       |                                                       |       |                                       |
| III       |       | greater than or equal to 3.00:1.00                         |       | 8.50  percentage points                    |

 

Except as set forth in the foregoing proviso, the Applicable LIBORDiscount Rate Margin shall be based upon Borrower’s most recent DomesticLeverage Ratio calculation, which will be calculated monthly based upon the 12consecutive months then ended.  Except asset forth in the initial proviso in this definition, the Applicable LIBORDiscount Rate Margin shall be re-determined each month on the first day of themonth following the date Borrower delivers to the Agents the certifiedcalculation of its Domestic Leverage Ratio pursuant to Section 7.01(a) hereof;provided, however, that if Borrower fails to provide suchcertification when such certification is due, the Applicable LIBOR DiscountRate Margin shall be set at the margin in the row styled “Level III” as of thefirst day of the month following the date on which the certification wasrequired to be delivered until the date on which such certification isdelivered (on which date (but not retroactively), without constituting a waiverof any Default or Event of Default occasioned by the failure to timely deliversuch certification, the Applicable LIBOR Discount Rate Margin shall be set atthe margin based upon the Domestic Leverage Ratio calculation disclosed by suchcertification); provided, further, that if the Domestic LeverageRatio reported in any such certification is determined to be incorrect (whetherin connection with the delivery of the audited financial statements of Borrowerand its Subsidiaries pursuant to Section 7.01(a)(ii) hereof orotherwise), the Applicable LIBOR Discount Rate Margin for the month followingthe date on which the Agents receive such incorrect certification shall berecalculated (and the amount of accrued interest shall be adjusted) based onthe actual Domestic Leverage Ratio as of the applicable date with respect tosuch certification.

 

“Applicable Reference Rate Margin” means 6.00 percentage points;provided, however so long as a Triggering Event has not occurredand is not continuing, the Applicable Reference Rate Margin shall be reduced tothe Applicable Reference Discount Rate Margin.

 

“Applicable Reference Discount Rate Margin” means, as of anydate of determination, the following margin based upon Borrower’s most recentDomestic Leverage Ratio calculation (determined as set forth in the followingparagraph); provided, however, that for the period from theEffective Date through the date the Agents receive the certified

 

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calculation of the Domestic Leverage Ratio inrespect of the testing period ended with September 30, 2005 delivered byBorrower pursuant to Section 7.01(a), the Applicable ReferenceDiscount Rate Margin shall be set at Level I:

 
| **Level** | ** ** | **Domestic Leverage Ratio**                                | ** ** | **Applicable Reference Discount  Rate Margin** |
|-----------|------------|------------------------------------------------------------|------------|------------------------------------------------|
|      |       |                                                       |       |                                           |
| I         |       | less than 2.75:1.00                                        |       | 5.00 percentage points                         |
|      |       |                                                       |       |                                           |
| II        |       | greater than or equal to 2.75:100 and less  than 3.00:1.00 |       | 5.50  percentage points                        |
|      |       |                                                       |       |                                           |
| III       |       | greater than or equal to 3.00:1.00                         |       | 6.00  percentage points                        |

 

Except as set forth in the foregoing proviso, the Applicable ReferenceDiscount Rate Margin shall be based upon Borrower’s most recent DomesticLeverage Ratio calculation, which will be calculated monthly based upon the 12consecutive months then ended.  Except asset forth in the initial proviso in this definition, the Applicable ReferenceDiscount Rate Margin shall be re-determined each month on the first day of themonth following the date Borrower delivers to the Agents the certifiedcalculation of its Domestic Leverage Ratio pursuant to Section 7.01(a) hereof;provided, however, that if Borrower fails to provide suchcertification when such certification is due, the Applicable Reference DiscountRate Margin shall be set at the margin in the row styled “Level III” as of thefirst day of the month following the date on which the certification wasrequired to be delivered until the date on which such certification isdelivered (on which date (but not retroactively), without constituting a waiverof any Default or Event of Default occasioned by the failure to timely deliversuch certification, the Applicable Reference Discount Rate Margin shall be setat the margin based upon the Domestic Leverage Ratio calculation disclosed bysuch certification); provided, further, that if the DomesticLeverage Ratio reported in any such certification is determined to be incorrect(whether in connection with the delivery of the audited financial statements ofBorrower and its Subsidiaries pursuant to Section 7.01(a)(ii) hereofor otherwise), the Applicable Reference Discount Rate Margin for the monthfollowing the date on which the Agents receive such incorrect certificationshall be recalculated (and the amount of accrued interest shall be adjusted)based on the actual Domestic Leverage Ratio as of the applicable date withrespect to such certification.

 

“Arbitration Award” means that certain arbitration award, in theamount of $23,352,439.63, rendered against the Borrower on April 29, 2005in connection with the claims made by the Plaintiffs against the Borrower.

 

“Assignment and Acceptance” means an assignment and acceptanceentered into by an assigning Lender and an assignee, and accepted by theCollateral Agent, in accordance with Section 12.07 hereof andsubstantially in the form of Exhibit A-1 hereto or such other formacceptable to the Collateral Agent.

 

“Authorized Officer” means, with respect to any Person, thechief executive officer, chief financial officer, president or executive vicepresident of such Person.

 

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“Bankruptcy Code” means the United States Bankruptcy Code (11U.S.C. § 101, etseq.), as amended, and any successorstatute, together with any bankruptcy or insolvency laws of Canada, to theextent they apply to Mondel, including without limitation, the Bankruptcy andInsolvency Act (Canada) and the Companies’ Creditors Arrangement Act (Canada).

 

“Base LIBOR Rate” means the rate per annum, determined byAdministrative Agent in accordance with its customary procedures, and utilizingsuch electronic or other quotation sources as it considers appropriate (roundedupwards, if necessary, to the next 1/16%), on the basis of the rates at whichDollar deposits are offered to major banks in the London interbank market on orabout 11:00 a.m. (New York time) 2 Business Days prior to the commencementof the applicable Interest Period, for a term and in amounts comparable to theInterest Period and amount of the LIBOR Rate Loan requested by the Borrower inaccordance with this Agreement, which determination shall be conclusive in theabsence of manifest error.

 

“Benefit Plan” means a “defined benefit plan” (as defined in Section 3(35)of ERISA) for which Borrower, any Guarantor or any Subsidiary or ERISAAffiliate of Borrower or any Guarantor has been an “employer” (as defined in Section 3(5) ofERISA) within the past six years, and any equivalent Canadian Employee BenefitsLegislation.

 

“Board” means the Board of Governors of the Federal ReserveSystem of the United States.

 

“Borrower” has the meaning specified therefor in the preamblehereto.

 

“Borrowing Base” has the meaning set forth in the First LienCredit Agreement as such agreement is in effect on the Effective Date.

 

“Business Day” means any day that is not a Saturday, Sunday, orother day on which banks are authorized or required to close in the State ofNew York, except that, if a determination of a Business Day shall relate to aLIBOR Rate Loan, the term “Business Day” also shall exclude any day on whichbanks are closed for dealings in U.S. Dollar deposits in the London interbankmarket.

 

“Canadian Documents” means (a) the Canadian Guaranty, (b) theCanadian Stock Pledge and (c) the Canadian Security Agreement.

 

“Canadian Employee Benefits Legislation” means the CanadianPension Plan Act (Canada), the Pension Benefits Standards Act (Canada), thePension Benefits Act (Ontario), the Health Insurance Act (Ontario) and theEmployment Standards Act (Ontario) and all similar legislation in any relevantCanadian jurisdiction.

 

“Canadian Employee Plan” has the meaning specified therefore in Section 6.01(i)(xi).

 

“Canadian Guaranty” means a general continuing guaranty executedand delivered by Mondel in favor of Collateral Agent, for the benefit of theAgents and the Lenders, in form and substance satisfactory to Collateral Agent.

 

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“Canadian Income Tax Act” means the Income Tax Act (Canada),R.S.C. 1985 c.1 (5th Supp.).

 

“Canadian Security Agreement” means a security agreement, inform and substance satisfactory to Collateral Agent, executed and delivered byMondel in favor of Collateral Agent, for the benefit of the Agents and theLenders, together with all supplements executed in connection therewith.

 

“Canadian Stock Pledge” means a stock pledge agreement, in formand substance satisfactory to Collateral Agent, executed and delivered byMondel Holding in favor of Collateral Agent, for the benefit of the Agents andthe Lenders, with respect to the Stock of Mondel, together with  all certificates representing the shares ofStock pledged thereunder along with Stock powers with respect thereto endorsedin blank.

 

“Capital Expenditures” means, with respect to any Person for anyperiod, the aggregate of all expenditures by such Person and its Subsidiariesduring such period that are capital expenditures as determined in accordancewith GAAP (including capitalized software costs), whether such expenditures arepaid in cash or financed.

 

“Capital Guideline” means any law, rule, regulation, policy,guideline or directive (whether or not having the force of law and whether ornot the failure to comply therewith would be unlawful) (i) regardingcapital adequacy, capital ratios, capital requirements, the calculation of abank’s capital or similar matters, or (ii) affecting the amount of capitalrequired to be obtained or maintained by any Lender or any Person controllingany Lender or the manner in which any Lender or any Person controlling any Lender,allocates capital to any of its contingent liabilities, advances, acceptances,commitments, assets or liabilities.

 

“Capitalized Lease” means, with respect to any Person, any leaseof real or personal property by such Person as lessee which is required underGAAP to be capitalized on the balance sheet of such Person.

 

“Capitalized Lease Obligations” means, with respect to anyPerson, obligations of such Person and its Subsidiaries under CapitalizedLeases, and, for purposes hereof, the amount of any such obligation shall bethe capitalized amount thereof determined in accordance with GAAP.

 

“Capital Stock” means (i) with respect to any Person thatis a corporation, any and all shares, interests, participations or otherequivalents (however designated and whether or not voting) of corporate stock,and (ii) with respect to any Person that is not a corporation, any and allpartnership, membership or other equity interests of such Person.

 

“Cash and Cash Equivalents” means all cash, deposit orsecurities account balances, certificates of deposit or other financialinstruments properly classified as cash or cash equivalents under GAAP.

 

“Change of Control” means each occurrence of any of thefollowing:

 

(a)                                  any “person” or “group” (within the meaningof Sections 13(d) and 14(d) of the Exchange Act) becomes thebeneficial owner (as defined in Rule 13d-3 under the Exchange Act),directly or indirectly, of 30%, or more, of the Stock of Borrower having theright to vote for the election of members of the Board of Directors,

 

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(b)                                 except with respect to Magnetek ADSPower, Inc. in connection with Magnetek ADS Sale, Borrower ceases to own and control 100% of the shares of the CapitalStock of any Person that is a Subsidiary of Borrower as of the Effective Date,unless otherwise permitted hereunder,

 

(c)                                  a majority of the members of the Board ofDirectors do not constitute Continuing Directors, or

 

(d)                                 (i) the Borrower consolidates with ormerges into another entity or conveys, transfers or leases all or substantiallyall of its property and assets to any Person, or (ii) any entityconsolidates with or merges into the Borrower, which in either event (i) or(ii) is pursuant to a transaction in which the outstanding voting CapitalStock of the Borrower is reclassified or changed into or exchanged for cash,securities or other property, other than any such transaction in which theowners of Capital Stock of the Borrower immediately beforehand have abeneficial ownership in the aggregate of at least 50.1% of the aggregate votingpower of all Capital Stock of the resulting, surviving or transferee entity.

 

“Code” means the New York Uniform Commercial Code, as in effectfrom time to time; provided, however, that in the event that, byreason of mandatory provisions of law, any or all of the attachment,perfection, priority, or remedies with respect to Collateral Agent’s Liens onany Collateral is governed by the Uniform Commercial Code as enacted and ineffect in a jurisdiction other than the State of New York, the term “Code”shall mean the Uniform Commercial Code as enacted and in effect in such otherjurisdiction solely for purposes of the provisions thereof relating to suchattachment, perfection, priority, or remedies; and when used to define acategory or categories of Collateral owned or hereafter acquired by any LoanParty which may be subject to the provisions of the PPSA, then such term shallinclude the equivalent category or categories of Collateral under the PPSA.

 

“Collateral” means all of the property and assets and allinterests therein and proceeds thereof now owned or hereafter acquired by anyPerson upon which a Lien is granted or purported to be granted by such Personas security for all or any part of the Obligations.

 

“Collateral Agent” has the meaning specified therefor in thepreamble hereto.

 

“Collateral Agent Advances” has the meaning specified thereforin Section 10.08(a).

 

“Collection Account” and “Collection Accounts” have themeanings specified therefor in Section 8.01(a).

 

“Commitment” means, with respect to each Lender, such Lender’sTerm Loan Commitment.

 

“Commitment Termination Date” means the earlier to occur of (a) November 30,2005, and (b) the Final Maturity Date.

 

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“Consolidated EBITDA” means, with respect to Borrower for anyperiod, the Consolidated Net Income of Borrower and its Subsidiaries for suchperiod, plus (i) without duplication, the sum of the followingamounts of Borrower and its Subsidiaries for such period and to the extentdeducted in determining Consolidated Net Income of Borrower and itsSubsidiaries for such period:  (A) ConsolidatedNet Interest Expense, (B) net income tax expense, (C) depreciationexpense and (D) amortization expense.

 

“Consolidated Funded Indebtedness” means, with respect toBorrower at any date, all Indebtedness for borrowed money of Borrower and itsSubsidiaries, determined on a consolidated basis in accordance with GAAP, whichby its terms matures more than one year after the date of calculation, and anysuch Indebtedness maturing within one year from such date which is renewable orextendable at the option of Borrower or the applicable Subsidiary to a datemore than one year from such date, including, in any event, but withoutduplication, with respect to the Borrower and its Subsidiaries, theObligations, the First Lien Obligations, and the amount of their CapitalizedLease Obligations.

 

“Consolidated Net Income” means, with respect to Borrower forany period, the net income (loss) of Borrower and its Subsidiaries for suchperiod, determined on a consolidated basis and in accordance with GAAP, butexcluding from the determination of Consolidated Net Income (withoutduplication) (a) any non-cash extraordinary or non-recurring gains ornon-cash gains or losses from Dispositions, (b) non-cash restructuringcharges, (c) non-cash effects of discontinued operations, (d) casheffects of discontinued operations in an aggregate amount not to exceed$1,500,000, (e) interest that is paid-in-kind, (f) non-cash pensioncharges and non-cash stock compensation, and (g) any tax refunds, netoperating losses or other net tax benefits received during such period onaccount of any prior period.

 

“Consolidated Net Interest Expense” means, with respect toBorrower for any period, gross cash interest expense of Borrower and itsSubsidiaries for such period determined on a consolidated basis and inaccordance with GAAP (including interest expense paid to Affiliates ofBorrower), less (i) the sum of (A) interest income for suchperiod and (B) gains for such period on Hedging Agreements (to the extentnot included in interest income above and to the extent not deducted in thecalculation of gross interest expense), plus (ii) the sum of (A) lossesfor such period on Hedging Agreements (to the extent not included in such grossinterest expense) and (B) the upfront costs or fees for such periodassociated with Hedging Agreements (to the extent not included in such grossinterest expense), in each case, determined on a consolidated basis and inaccordance with GAAP.

 

“Contingent Obligation” means, with respect to any Person, anyobligation of such Person guaranteeing or intended to guarantee anyIndebtedness, leases, dividends or other obligations (“primary obligations”) ofany other Person (the ”primary obligor”) in any manner, whether directlyor indirectly, including (i) the direct or indirect guaranty, endorsement(other than for collection or deposit in the ordinary course of business),co-making, discounting with recourse or sale with recourse by such Person ofthe obligation of a primary obligor, (ii) the obligation to maketake-or-pay or similar payments, if required, regardless of nonperformance byany other party or parties to an agreement, (iii) any obligation of suchPerson, whether or not contingent, (A) to purchase any such primaryobligation or any property constituting direct or indirect security therefor, (B) toadvance or supply funds (1) for the purchase or payment of any

 

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such primary obligation or (2) tomaintain working capital or equity capital of the primary obligor or otherwiseto maintain the net worth or solvency of the primary obligor, (C) topurchase property, assets, securities or services primarily for the purpose ofassuring the owner of any such primary obligation of the ability of the primaryobligor to make payment of such primary obligation or (D) otherwise toassure or hold harmless the holder of such primary obligation against loss inrespect thereof; provided, however, that the term “ContingentObligation” shall not include any product warranties extended in the ordinarycourse of business.  The amount of anyContingent Obligation shall be deemed to be an amount equal to the stated ordeterminable amount of the primary obligation with respect to which suchContingent Obligation is made (or, if less, the maximum amount of such primaryobligation for which such Person may be liable pursuant to the terms of theinstrument evidencing such Contingent Obligation) or, if not stated ordeterminable, the maximum reasonably anticipated liability with respect thereto(assuming such Person is required to perform thereunder), as determined by suchPerson in good faith.

 

“Continuing Director” means (a) any member of the Board ofDirectors who was a director (or comparable manager) of the Borrower on theEffective Date, and (b) any individual who becomes a member of the Boardof Directors after the Effective Date if such individual was appointed ornominated for election to the Board of Directors by a majority of theContinuing Directors, but excluding any such individual originally proposed forelection in opposition to the Board of Directors in office at the EffectiveDate in an actual or threatened election contest relating to the election ofthe directors (or comparable managers) of the Borrower and whose initialassumption of office resulted from such contest or the settlement thereof.

 

“Control Agreement” means a control agreement, in form andsubstance satisfactory to Collateral Agent, executed and delivered by theBorrower or one of its Subsidiaries, Collateral Agent**,**FirstLien Agent, and the applicable securities intermediary (with respect to aSecurities Account) or bank (with respect to a Deposit Account).

 

“Controlled Group ERISA Affiliates” has the meaning specifiedtherefore in Section 7.12.

 

“Controlled Foreign Corporation” means a “controlled foreigncorporation” as defined in the IRC.

 

“Current Value” has the meaning specified therefor in Section 7.01(o).

 

“Default” means an event which, with the giving of notice or thelapse of time or both, would constitute an Event of Default.

 

“Deposit Account” means any deposit account as that term isdefined in the Code and, in the case of Mondel, the PPSA.

 

“Designated Account” means that certain Securities Accountidentified as account number 12862264 maintained by Borrower with Wells FargoBrokerage Services, LLC.

 

“Designated Account Control Agreement” means a four partyControl Agreement by and among Borrower, First Lien Agent, Collateral Agent andWells Fargo Brokerage Services, LLC, which, among other things, provides thatthe funds in such Designated Account may not be released without the priorwritten consent of the First Lien Agent and the Collateral Agent, such consentnot to be unreasonably withheld in connection with a request to release suchfunds to make any payment contemplated by Section 6.01(t).

 

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“Designated Pension Payment” means the payment in the estimatedamount of $3,463,902 that is due and payable on October 15, 2007 inrespect of Borrower’s and its Subsidiaries’ Benefit Plans.

 

“Disposition” means any transaction, or series of relatedtransactions, pursuant to which any Person or any of its Subsidiaries sells,assigns, transfers or otherwise disposes of any property or assets (whether nowowned or hereafter acquired) to any other Person, in each case, whether or notthe consideration therefor consists of cash, securities or other assets ownedby the acquiring Person.

 

“Dollar,” “Dollars” and the symbol “$” each meanslawful money of the United States of America.

 

“Domestic EBITDA” means, for any period, the Domestic Net Incomefor such period, plus (i) without duplication, the sum of thefollowing amounts of the Loan Parties for such period and to the extentdeducted in determining Domestic Net Income of the Loan Parties for suchperiod:  (A) Domestic Net InterestExpense, (B) net income tax expense, (C) depreciation expense, (D) amortizationexpense, and (E) corporate overhead expense, minus, (ii) theApplicable Corporate Overhead Amount.

 

“Domestic Funded Indebtedness” means, with respect to the LoanParties at any date, all Indebtedness for borrowed money of the Loan Parties,determined in accordance with GAAP, which by its terms matures more than oneyear after the date of calculation, and any such Indebtedness maturing withinone year from such date which is renewable or extendable at the option of theapplicable Loan Party to a date more than one year from such date, including,in any event, but without duplication, the Obligations, the First LienObligations, and the amount of their Capitalized Lease Obligations.

 

“Domestic Leverage Ratio” means, at any date of determination,the ratio of (a) the outstanding principal amount of the Domestic FundedIndebtedness at such date, to (b) TTM Domestic EBITDA for the mostrecently completed 12 consecutive month period most recently ended on or priorto the date of determination.

 

“Domestic Net Income” means, with respect to the Loan Partiesfor any period, the net income (loss) of the Loan Parties for such period,determined in accordance with GAAP, but excluding from the determination ofDomestic Net Income (without duplication) (a) any non-cash extraordinaryor non-recurring gains or non-cash gains or losses from Dispositions, (b) non-cashrestructuring charges, (c) non-cash effects of discontinued operations, (d) interestthat is paid-in-kind, and (e) any tax refunds, net operating losses orother net tax benefits received during such period on account of any priorperiod, in each case solely with respect to the Loan Parties.

 

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“Domestic Net Interest Expense” means, with respect to the LoanParties for any period, gross cash interest expense of the Loan Parties forsuch period determined in accordance with GAAP (including interest expense paidto Affiliates of the Loan Parties), less (i) the sum of (A) interestincome for such period and (B) gains for such period on Hedging Agreements(to the extent not included in interest income above and to the extent notdeducted in the calculation of gross interest expense), plus (ii) thesum of (A) losses for such period on Hedging Agreements (to the extent notincluded in such gross interest expense) and (B) the upfront costs or feesfor such period associated with Hedging Agreements (to the extent not includedin such gross interest expense), in each case, determined in accordance withGAAP with respect to the Loan Parties.

 

“Effective Date” means the date, on or before September 30,2005, on which all of the conditions precedent set forth in Section 5.01are first satisfied or waived.

 

“Environmental Actions” means any complaint, summons, citation,notice, directive, order, claim, litigation, investigation, judicial oradministrative proceeding, judgment, letter or other communication from anyGovernmental Authority involving violations of Environmental Laws or Releasesof Hazardous Materials (i) from any assets, properties or businesses ofany Loan Party or any of their respective Subsidiaries or any of theirrespective predecessors in interest; (ii) from adjoining properties orbusinesses; or (iii) onto any facilities which received HazardousMaterials generated by any Loan Party or any of their respective Subsidiariesor any of their respective predecessors in interest.

 

“Environmental Law” means any applicable federal, state,provincial, foreign or local statute, law, rule, regulation, ordinance, code,binding and enforceable guideline, binding and enforceable written policy or rule ofcommon law now or hereafter in effect and in each case as amended, or anyjudicial or administrative interpretation thereof, including any judicial oradministrative order, consent decree or judgment, in each case, to the extentbinding on any Borrower, any Guarantor or any of their respective Subsidiaries,relating to the environment, the effect of the environment on employee health,or Hazardous Materials, in each case as amended from time to time.

 

“Environmental Liabilities and Costs” means all liabilities,monetary obligations, Remedial Actions, losses, damages, punitive damages,consequential damages, treble damages, costs and expenses (including allreasonable fees, disbursements and expenses of counsel, experts and consultantsand costs of investigations and feasibility studies), fines, penalties,sanctions and interest incurred as a result of any claim or demand by anyGovernmental Authority or any third party, and which relate to the liability orpotential liability of any Loan Party with respect to any environmentalcondition or a Release of Hazardous Materials from or onto (i) anyproperty currently or formerly owned by any Loan Party or any of itsSubsidiaries or (ii) any Real Property which received Hazardous Materialsgenerated by any Loan Party or any of its Subsidiaries.

 

“Environmental Lien” means any Lien in favor of any GovernmentalAuthority for Environmental Liabilities and Costs.

 

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“ERISA” means the Employee Retirement Income Security Act of1974, as amended, and any successor statute of similar import, and regulationsthereunder, in each case, as in effect from time to time.  References to sections of ERISA shall beconstrued also to refer to any successor sections.

 

“ERISA Affiliate” means each business or entity which is or wasa member of a “controlled group of corporations”, under “common control” or an “affiliatedservice group” with Borrower or any of its Subsidiaries within the meaning of Section 414(b),(c) or (m) of the IRC, required to be aggregated with Borrower or any ofits Subsidiaries under Section 414(o) of the IRC, or is or was under “commoncontrol” with Borrower or any of its Subsidiaries, within the meaning of Section 4001(a)(14)of ERISA.

 

“ERISA Event” means (a) a reportable event as defined in Section 4043of ERISA and the regulations issued under such Section with respect to aPension Plan, excluding, however, such events as to which the PBGC byregulation has waived the requirement of Section 4043(a) of ERISAthat it be notified within 30 days of the occurrence of such event; (b) theapplicability of the requirements of Section 4043(b) of ERISA withrespect to a contributing sponsor, as defined in Section 4001(a)(13) ofERISA, to any Pension Plan where an event described in paragraph (9), (10),(11), (12) or (13) of Section 4043(c) of ERISA is reasonably expectedto occur with respect to such plan within the following 30 days; (c) awithdrawal by Borrower, any of its Subsidiaries, or any ERISA Affiliate from aPension Plan or the termination of any Pension Plan resulting in liabilityunder Sections 4063 or 4064 of ERISA; (d) the withdrawal of Borrower, anyof its Subsidiaries, or ERISA Affiliate in a complete or partial withdrawal(within the meaning of Section 4203 and 4205 of ERISA) from anyMultiemployer Plan if there is any potential liability therefor, or the receiptby Borrower, any of its Subsidiaries, or ERISA Affiliate of notice from anyMultiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241or 4245 of ERISA;  (e) the filing ofa notice of intent to terminate, the treatment of a plan amendment as atermination under Section 4041 or 4041A of ERISA, or the commencement ofproceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) theimposition of liability on Borrower, any of its Subsidiaries, or any ERISAAffiliate pursuant to Sections 4062(e) or 4069 of ERISA or by reason ofthe application of Section 4212(c) of ERISA; (g) the failure byBorrower, any of its Subsidiaries, or any ERISA Affiliate to timely make anyrequired contribution to a Pension Plan (or the failure to timely make arequired contribution in any material respect with respect to any Plan that isnot a Pension Plan or a Multiemployer Plan), or the failure to meet the minimumfunding standard of Section 412 of the IRC with respect to any PensionPlan (whether or not waived in accordance with Section 412(d) of theIRC) or the failure to make by its due date a required installment under Section 412(m)of the IRC with respect to any Pension Plan or the failure to timely make anyrequired contribution to a Multiemployer Plan; (h) an event or conditionwhich might reasonably be expected to constitute grounds under ERISA for thetermination of, or the appointment of a trustee to administer, any Pension Planor Multiemployer Plan; (i) the imposition of any material liability underERISA, other than PBGC premiums due but not delinquent under Section 4007of ERISA, upon Borrower, any of its Subsidiaries or any ERISA Affiliate; (j) anapplication for a funding waiver under Section 303 of ERISA or anextension of any amortization period pursuant to Section 412 of the IRCwith respect to any Pension Plan; (k) the occurrence of a non exempt prohibitedtransaction under Sections 406 or 407 of ERISA for which Borrower, or any ofits Subsidiaries, may be directly or indirectly liable and which is

 

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reasonably expected to result in a materialliability to Borrower or any of its Subsidiaries; (l) a material violation ofthe applicable requirements of Section 404 or 405 of ERISA or theexclusive benefit rule under Section 401(a) of the IRC by anyfiduciary or disqualified person for which Borrower, any of its Subsidiaries orany ERISA Affiliate may be directly or indirectly liable; (m) the occurrence ofan act, omission, event or condition which could give rise to the imposition onBorrower, any of its Subsidiaries, or any ERISA Affiliate of material fines,material penalties, material taxes, material related charges or materialliability under the IRC or under ERISA; (n) the assertion of a material claim(other than routine claims for benefits) against any Plan or the assets or anyfiduciary thereof, or against Borrower or any of its Subsidiaries in connectionwith any such Plan; (o) receipt from the Internal Revenue Service of notice ofthe failure of any Qualified Plan to qualify under Section 401(a) ofthe IRC, or the failure of any trust forming part of any Qualified Plan to failto qualify for exemption from taxation under Section 501(a) of theIRC; (p) the imposition of any lien on any of the rights, properties or assetsof Borrower, any of its Subsidiaries, or any ERISA Affiliate, in either casepursuant to ERISA or the IRC; or (q) the establishment or amendment by Borroweror any of its Subsidiaries, of any “welfare plan”, as such term is defined in Section 3(1) ofERISA, that provides post-employment health benefits in a manner that wouldmaterially increase the liability of Borrower or any of its Subsidiaries.

 

“Event of Default” means any of the events set forth in Section 9.01.

 

“Excess Availability” has the meaning set forth in the FirstLien Credit Agreement, as in effect on the date hereof.

 

“Excess Cash Flow” means, with respect to Borrower for anyperiod, (i) TTM EBITDA of such Borrower and its Subsidiaries for suchperiod, plus (ii) all non-cash items of such Borrower and itsSubsidiaries deducted in determining Consolidated Net Income for such period, less(iii) the sum of (A) all non-cash items of Borrower and itsSubsidiaries included in determining Consolidated Net Income for such period, (B) allscheduled cash principal payments on the Loans made during such period, and allscheduled cash principal payments on other Indebtedness of such Borrower or anyof its Subsidiaries during such period to the extent such other Indebtedness ispermitted to be incurred, and such payments are permitted to be made, underthis Agreement, and (C) the cash portion of Capital Expenditures made byBorrower and its Subsidiaries during such period to the extent permitted to bemade under this Agreement.

 

“Exchange Act” means the Securities Exchange Act of 1934, asamended.

 

“Excluded Foreign Subsidiary” means Magnetek de Mexico, S.A. deC.V., a corporation organized under the laws of Mexico; Manufacturas ElectricasDe Reynosa S. A.de C.V, a corporation organized under the laws of Mexico; MejorElectronica de Mexico, S.A. de C.V., a corporation organized under the laws ofMexico; Servicio de Guarderias, S. C., a partnership organized under the lawsof Mexico;  Magnetek DeteiligungsgesellschaftGmbh, a corporation   organized under thelaws of the Federal Republic of Germany; Magnetek Lighting Canada Limited, acorporation organized under the laws of Canada; Magnetek Industrials ControlsGroup (UK) Ltd., a corporation organized under the laws of Great Britain; andMagnetek Vertiebsgesellschaft GmbH, a corporation organized under the laws ofthe Federal Republic of Germany.

 

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“Existing Agent” means JPMorgan Chase Bank, N.A., a nationalbanking association, as administrative agent for certain lenders.

 

“Existing Credit Facility” means that certain Credit Agreementdated as of August 15, 2003, by and among Borrower, Magnetek Ads Power, Inc.and Maxtek International Corp., Existing Agent, and the lenders party thereto,as amended from time to time prior to the date hereof.

 

“Extraordinary Receipts” means any cash received by the Borroweror any of its Subsidiaries not in the ordinary course of business (and notconsisting of proceeds of Dispositions or Indebtedness), including (i) foreign,United States, state or local tax refunds, (ii) pension plan reversions, (iii) proceedsof insurance, (iv) judgments, proceeds of settlements or otherconsideration of any kind in connection with any cause of action, (v) condemnationawards (and payments in lieu thereof), (vi) indemnity payments and (vii) anypurchase price adjustment received in connection with any purchase agreementand any amounts received from escrow arrangements in connection with anypurchase agreement.

 

“Facility” means each of the parcels of real property identifiedon Schedule F-1 attached hereto, including all buildings and otherimprovements thereon, all fixtures located at or used in connection with suchfacility, all whether now or hereafter existing.

 

“Federal Funds Rate” means, for any period, a fluctuatinginterest rate per annum equal to, for each day during such period, the weightedaverage of the rates on overnight Federal funds transactions with members ofthe Federal Reserve System arranged by Federal funds brokers, as published onthe next succeeding Business Day by the Federal Reserve Bank of New York, or,if such rate is not so published for any day which is a Business Day, theaverage of the quotations for such day on such transactions received by theAdministrative Agent from three Federal funds brokers of recognized standingselected by it.

 

“Fee Letter” means that certain fee letter datedcontemporaneously herewith by and between Borrower and the Agents, which is inform and substance satisfactory to the Agents.

 

“Filing Authorization Letter” means a letter duly executed byeach Loan Party authorizing the Collateral Agent to file financing statementsin such office or offices as may be necessary or, in the opinion of theCollateral Agent, desirable to perfect the security interests purported to becreated by each Security Agreement.

 

“Final Maturity Date” means the earliest to occur of (a) December 31,2007, (b) November 30, 2005 (if the Term Loan is not made on orbefore such date), (c) the date on which the First Lien Credit Agreementis terminated for any reason, (d) the date on which all or any portion ofthe Obligations shall become due and payable pursuant to the terms of Section 9.01and (e) the date on which this Agreement is terminated in accordance withthe provisions hereof.

 

“Financial Statements” means (i) the audited consolidatedbalance sheet of the Borrower and its Subsidiaries for the Fiscal Year ended June 30,2005, and the related consolidated statement of operations, shareholders’equity and cash flows for the Fiscal Year then ended, and (ii) theunaudited consolidated balance sheet of the Borrower and its Subsidiaries forthe one month ended July 31, 2005, and the related consolidated statementof operations, shareholder’s equity and cash flows for the one month thenended.

 

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“First Lien Advances” means the Advances, as such term isdefined in the First Lien Credit Agreement, as in effect on the date hereof.

 

“First Lien Agent” means Wells Fargo Foothill, Inc., aCalifornia corporation, as administrative agent for certain lenders under theFirst Lien Credit Agreement, together with its successors and assigns in suchcapacity.

 

“First Lien Credit Agreement” means that certain CreditAgreement, dated as of even date herewith, by and among First Lien Agent, thelenders signatory thereto, Borrower, Magnetek Ads Power, Inc. and MaxtekInternational Corp., as the same may be amended, modified, or extended fromtime to time to the extent permitted hereunder.

 

“First Lien Letters of Credit” means the Letters of Credit, assuch term is defined in the First Lien Credit Agreement, as in effect on thedate hereof.

 

“First Lien Loan Documents” means the Loan Documents, as suchterm is defined in the First Lien Credit Agreement.

 

“First Lien Obligations” means, as of any date of determination,the outstanding principal amount of the First Lien Advances and the undrawnamount of the First Lien Letters of Credit.

 

“First Lien Revolver Usage” means the Revolver Usage, as suchterm is defined in the First Lien Credit Agreement, as in effect on the datehereof.

 

“First Lien Termination Date” means the date on which the “Dischargeof Priority First Lien Indebtedness” (as such term is defined in theIntercreditor Agreement) occurs.

 

“Fiscal Year” means the fiscal year of the Borrower and itsSubsidiaries ending on June 30th of each year.

 

“Fixed Charge Coverage Ratio” means, with respect to Borrowerand its Subsidiaries for any period, the ratio of (i) the ConsolidatedEBITDA for such period minus Capital Expenditures made during such period, to (ii) thesum of (A) all principal of Indebtedness of Borrower and its Subsidiariesscheduled to be paid or prepaid during such period, plus (B) ConsolidatedNet Interest Expense of Borrower and its Subsidiaries for such period, plus(C) all income tax liabilities of Borrower and its Subsidiaries thataccrued during such period (other than the non-cash increase in such period, ifany, in deferred tax liability attributable to amortization of goodwill over ashorter period for tax purposes than for financial reporting purposes), to theextent that the amount of such liabilities is greater than zero, plus (D) cashdividends or distributions paid by Borrower and its Subsidiaries (other thandividends or distributions paid to Borrower or its wholly-owned Subsidiaries)during such period, plus (E) the aggregate amount of cash paymentsmade by Borrower and its Subsidiaries during such period in respect of theirBenefit Plans.  In determining the FixedCharge Coverage Ratio for a particular period, the calculation of the incometax liabilities of Borrower and its Subsidiaries described in clause (ii)(C) ofthe immediately preceding sentence shall be made without giving effect to anytax refunds, tax receivables, net operating losses or other net tax benefitsthat were received or receivable during such period on account of any priorperiods.

 

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“Foreign Pledge Agreement” means that certain foreign stockpledge agreement with respect to the Capital Stock of Magnetek S.p.A., which isin form and substance satisfactory to Collateral Agent (including beinggoverned by Italian law).

 

“GAAP” means generally accepted accounting principles in effectfrom time to time in the United States, applied on a consistent basis, providedthat for the purpose of Section 7.03 hereof and the definitionsused therein, “GAAP” shall mean generally accepted accounting principles ineffect on the date hereof and consistent with those used in the preparation ofthe Financial Statements, provided, further, that if there occurs after thedate of this Agreement any change in GAAP that affects in any respect thecalculation of any covenant contained in Section 7.03 hereof, theCollateral Agent and the Borrower shall negotiate in good faith amendments tothe provisions of this Agreement that relate to the calculation of suchcovenant with the intent of having the respective positions of the Lenders andthe Borrower after such change in GAAP conform as nearly as possible to theirrespective positions as of the date of this Agreement and, until any suchamendments have been agreed upon, the covenants in Section 7.03hereof shall be calculated as if no such change in GAAP has occurred.

 

“Governmental Authority” means any nation or government, anyU.S. or foreign federal, state, provincial, city, town, municipality, county,local or other political subdivision thereof or thereto and any department,commission, board, bureau, instrumentality, agency or other entity exercisingexecutive, legislative, judicial, taxing, regulatory or administrative powersor functions of or pertaining to government.

 

“Guaranteed Obligations” has themeaning specified therefor in Section 11.01.

 

“Guarantor” (i) has the meaning specified therefor in thepreamble to this Agreement, and (ii) means each other Person whichguarantees, pursuant to Section 7.01(b) or otherwise, all orany part of the Obligations.

 

“Guaranty” means, individually and collectively, (i) theguaranty of each Guarantor party hereto contained in Article XI hereof, (ii) theCanadian Guaranty, and (iii) each other guaranty made by any otherGuarantor in favor of the Collateral Agent for the benefit of the Agents andthe Lenders pursuant to the requirements of Section 7.01(b) orotherwise.

 

“Hazardous Materials” means (a) any element, compound orchemical that is defined, listed or otherwise classified as a contaminant,pollutant, toxic pollutant, toxic or hazardous substance, extremely hazardous substanceor chemical, hazardous waste, special waste, or solid waste under EnvironmentalLaws or that is likely to cause immediately, or at some future time, harm to orhave an adverse effect on, the environment or risk to human health or safety,including any pollutant, contaminant, waste, hazardous waste, toxic substanceor dangerous good which is defined or identified in any Environmental Law andwhich is present in the environment in such quantity or state that itcontravenes any Environmental Law; (b) petroleum and its refined products;(c) polychlorinated biphenyls; (d) any substance

 

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exhibiting a hazardous waste characteristic,including corrosivity, ignitability, toxicity or reactivity as well as anyradioactive or explosive materials; and (e) any raw materials, buildingcomponents (including asbestos-containing materials) and manufactured productscontaining hazardous substances listed or classified as such underEnvironmental Laws.

 

“Hedging Agreement” means any interest rate, foreign currency,commodity or equity swap, collar, cap, floor or forward rate agreement, orother agreement or arrangement designed to protect against fluctuations ininterest rates or currency, commodity or equity values (including any optionwith respect to any of the foregoing and any combination of the foregoingagreements or arrangements), and any confirmation executed in connection withany such agreement or arrangement.

 

“Highest Lawful Rate” means, with respect to any Agent or anyLender, the maximum non-usurious interest rate, if any, that at any time orfrom time to time may be contracted for, taken, reserved, charged or receivedon the Obligations under laws applicable to such Agent or such Lender which arecurrently in effect or, to the extent allowed by law, under such ApplicableLaws which may hereafter be in effect and which allow a higher maximumnon-usurious interest rate than Applicable Laws now allow.

 

“Indebtedness” means, with respect to any Person, without duplication,(i) all indebtedness of such Person for borrowed money; (ii) allobligations of such Person for the deferred purchase price of property orservices (other than trade payables or other accounts payable incurred in theordinary course of such Person’s business and not outstanding for more than 90days after the date such payable was created); (iii) all obligations ofsuch Person evidenced by bonds, debentures, notes or other similar instrumentsor upon which interest payments are customarily made; (iv) allreimbursement, payment or other obligations and liabilities of such Personcreated or arising under any conditional sales or other title retentionagreement with respect to property used or acquired by such Person, even thoughthe rights and remedies of the lessor, seller or lender thereunder may belimited to repossession or sale of such property; (v) all CapitalizedLease Obligations of such Person; (vi) all obligations and liabilities,contingent or otherwise, of such Person, in respect of letters of credit,acceptances and similar facilities; (vii) all obligations and liabilities,calculated on a basis satisfactory to the Collateral Agent and in accordancewith accepted practice, of such Person under Hedging Agreements; (viii) allContingent Obligations; (ix) liabilities incurred under Title IV ofERISA with respect to any Pension Plan; (x) withdrawal liability incurredunder ERISA by such Person or any of its ERISA Affiliates with respect to anyMultiemployer Plan; (xi) all other items which, in accordance with GAAP, wouldbe included as liabilities on the liability side of the balance sheet of suchPerson; and (xii) all obligations referred to in clauses (i) through (xi)of this definition of another Person secured by (or for which the holder ofsuch Indebtedness has an existing right, contingent or otherwise, to be securedby) a Lien upon property owned by such Person, even though such Person has notassumed or become liable for the payment of such Indebtedness.  The Indebtedness of any Person shall includethe Indebtedness of any partnership or joint venture in which such Person is ageneral partner or a joint venturer.

 

“Indemnified Matters” has the meaning specified therefor in Section 12.15.

 

“Indemnitees” has the meaning specified therefor in Section 12.15.

 

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“Insolvency Proceeding” means any proceeding commenced by oragainst any Person under any provision of the Bankruptcy Code or under anyother state, provincial or federal bankruptcy or insolvency law, assignmentsfor the benefit of creditors, formal or informal moratoria, compositions,extensions generally with creditors, or proceedings seeking reorganization,arrangement, or other similar relief and including the appointment of a trustee,receiver, administrative receiver, administrator or similar Person.

 

“Intercompany Subordination Agreement” means the IntercompanySubordination Agreement, dated as of the Effective Date, duly executed by eachof the Loan Parties, substantially in the form of Exhibit I-1.

 

“Intercreditor Agreement” means an Intercreditor Agreement,substantially in the form of Exhibit I-2, by and among theCollateral Agent and the First Lien Agent.

 

“Interest Period” means, with respect to each LIBOR Rate Loan, aperiod commencing on the date of the making of such LIBOR Rate Loan and ending1, 2, or 3 months thereafter; provided, however, that (a) ifany Interest Period would end on a day that is not a Business Day, suchInterest Period shall be extended (subject to clauses (c)-(e) below) tothe next succeeding Business Day, (b) interest shall accrue at theapplicable rate based upon the LIBOR Rate from and including the first day ofeach Interest Period to, but excluding, the day on which any Interest Periodexpires, (c) any Interest Period that would end on a day that is not aBusiness Day shall be extended to the next succeeding Business Day unless suchBusiness Day falls in another calendar month, in which case such InterestPeriod shall end on the next preceding Business Day, (d) with respect toan Interest Period that begins on the last Business Day of a calendar month (oron a day for which there is no numerically corresponding day in the calendarmonth at the end of such Interest Period), the Interest Period shall end on thelast Business Day of the calendar month that is 1, 2, or 3 months after thedate on which the Interest Period began, as applicable, and (e) Borrowermay not elect an Interest Period which will end after the Final Maturity Date.

 

“IRC” means the Internal Revenue Code of 1986, as amended (orany successor statute thereto) and the regulations thereunder.

 

“Inventory” means all of each of the Loan Parties’ now owned orhereafter acquired right, title, and interest with respect to inventory asdefined in the Code and, in the case of Mondel, the PPSA.

 

“Italian Financing Transaction” means a financing transactionpursuant to which Magnetek S.p.A. receives Net Cash Proceeds of at least$3,000,000, which proceeds are distributed to Borrower.

 

“Laws” means, in respect of the United States, Canada and anyother country, all published laws, statutes, codes, ordinances, decrees, rules,regulations, by-laws, judicial, arbitral, administrative, ministerial,departmental or regulatory judgments, orders, decisions, rulings or awards,including general principals of common and civil law, and conditions of anygrant of approval, permission, authority or license of any court, GovernmentalAuthority, statutory body or self-regulatory authority.

 

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“Lease” means any lease of real property to which any Loan Partyor any of its Subsidiaries is a party as lessor or lessee.

 

“Lender” has the meaning specified therefor in the preamblehereto.

 

“Leverage Ratio” means, at any date of determination, the ratioof (a) the outstanding principal amount of the Consolidated FundedIndebtedness at such date, to (b) TTM EBITDA for the most recentlycompleted 12 consecutive month period most recently ended on or prior to thedate of determination.

 

“Liabilities” has the meaning specified therefor in Section 2.07.

 

“LIBOR Deadline” has the meaning set forth in Section 2.04(g)(ii)(A).

 

“LIBOR Notice” means a written notice in the form of Exhibit L-1.

 

“LIBOR Option” has the meaning specified therefor in Section 2.04(g)(i).

 

“LIBOR Rate” means, for each Interest Period for each LIBOR RateLoan, the greater of (x) the rate per annum determined by Administrative Agent(rounded upwards, if necessary, to the next 1/16%) by dividing (a) theBase LIBOR Rate for such Interest Period, by (b) 100% minus the ReservePercentage and (y) 2.50%.  The LIBOR Rateshall be adjusted on and as of the effective day of any change in the ReservePercentage.

 

“LIBOR Rate Loan” means each portion of a Loan that bears interestat a rate determined by reference to the LIBOR Rate.

 

“Lien” means any mortgage, deed of trust, pledge, lien(statutory or otherwise), security interest, charge or other encumbrance orsecurity or preferential arrangement of any nature, including any conditionalsale or title retention arrangement, any Capitalized Lease and any assignment,deposit arrangement or financing lease intended as, or having the effect of,security.

 

“Loan” means the Term Loan or any Collateral Agent Advance madepursuant hereto.

 

“Loan Account” means an account maintained hereunder by theAdministrative Agent on its books of account at the Payment Office, and withrespect to the Borrower, in which the Borrower will be charged with all Loansmade to, and all other Obligations incurred by, the Borrower.

 

“Loan Document” means this Agreement, the Canadian Documents,the Control Agreements (including the Designated Account Control Agreement),the Fee Letter, any Filing Authorization Letter, the Foreign Pledge Agreement,any Guaranty, the Intercompany Subordination Agreement, the IntercreditorAgreement, any Mortgage, any Security Agreement, and any other agreement,instrument, and other document executed and delivered pursuant hereto orthereto or otherwise evidencing or securing any Loan or any other Obligation.

 

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“Loan Party” means the Borrower or any Guarantor.

 

“Lockbox Bank” has the meaning specified therefor in Section 8.01(a).

 

“Lockboxes” has the meaning specified therefor in Section 8.01(a).

 

“Magnetek ADS Sale” means the sale of all or substantially allof the assets of or Capital Stock in Magnetek ADS Power, Inc. yielding noless than $3,000,000 in Net Cash Proceeds and which is otherwise on fair andreasonable terms pursuant to an arms-length transaction entered into with athird party.

 

“Magentek Electronics” means Magnetek Electronics Co. Ltd., acorporation organized under the laws of the People’s Republic of China.

 

“Material Adverse Effect” means a material adverse change in oreffect on any of (a) the operations, business, assets, properties,condition (financial or otherwise) or prospects of any Loan Party or the LoanParties taken as a whole, (b) the ability of any Loan Party to perform anyof its obligations under any Loan Document to which it is a party, (c) thelegality, validity or enforceability of this Agreement or any other LoanDocument, (d) the rights and remedies of any Agent or any Lender under anyLoan Document, or (e) the validity, perfection or priority of CollateralAgent’s Liens on any of the Collateral.

 

“Material Contract” means (a) the First Lien LoanDocuments, and (b) with respect to any Person (i) each contract oragreement to which such Person or any of its Subsidiaries is a party involvingaggregate consideration payable to or by such Person or such Subsidiary of$1,000,000 or more (other than purchase orders in the ordinary course of thebusiness of such Person or such Subsidiary, other than contracts that by theirterms may be terminated by such Person or Subsidiary in the ordinary course ofits business upon less than 60 days notice without penalty or premium) and (ii) allother contracts or agreements material to the business, operations, condition(financial or otherwise), performance, prospects or properties of such Personor such Subsidiary.

 

“Mondel” means Mondel ULC, a Nova Scotia unlimited liabilitycompany.

 

“Mondel Holding” means Magnetek Mondel Holding, Inc., aDelaware corporation.

 

“Moody’s” means Moody’s Investors Service, Inc. and anysuccessor thereto.

 

“Mortgage” means a mortgage, deed of trust or deed to securedebt, in form and substance satisfactory to the Collateral Agent, made by aLoan Party in favor of the Collateral Agent for the benefit of the Agents andthe Lenders, securing the Obligations and delivered to the Collateral Agentpursuant to the provisions hereof or otherwise.

 

“Multiemployer Plan” means a “multiemployer plan” (within themeaning of Section 3(37) of ERISA) to which Borrower, any of itsSubsidiaries, or any ERISA Affiliate makes, is making, is obligated, or withinthe last six years has been obligated, to make contributions.

 

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“Net Cash Proceeds” means, (i) with respect to anyDisposition by any Person or any of its Subsidiaries, the amount of cashreceived (directly or indirectly) from time to time (whether as initialconsideration or through the payment or disposition of deferred consideration)by or on behalf of such Person or such Subsidiary, in connection therewithafter deducting therefrom only (A) the amount of any Indebtedness securedby any Permitted Lien on any asset (other than Indebtedness assumed by thepurchaser of such asset) which is required to be, and is, repaid in connectionwith such Disposition (other than Indebtedness under this Agreement), (B) reasonableexpenses related thereto incurred by such Person or such Subsidiary inconnection therewith, (C) transfer taxes paid to any taxing authorities bysuch Person or such Subsidiary in connection therewith, and (D) net incometaxes to be paid in connection with such Disposition (after taking into accountany tax credits or deductions and any tax sharing arrangements) and (ii) withrespect to the issuance or incurrence of any Indebtedness by any Person or anyof its Subsidiaries, or the sale or issuance by any Person or any of itsSubsidiaries of any shares of its Capital Stock, the aggregate amount of cashreceived (directly or indirectly) from time to time (whether as initialconsideration or through the payment or disposition of deferred consideration)by or on behalf of such Person or such Subsidiary in connection therewith,after deducting therefrom only (A) reasonable expenses related theretoincurred by such Person or such Subsidiary in connection therewith, (B) transfertaxes paid by such Person or such Subsidiary in connection therewith and (C) netincome taxes to be paid in connection therewith (after taking into account anytax credits or deductions and any tax sharing arrangements); in each case ofclause (i) and (ii) to the extent, but only to the extent, that theamounts so deducted are (x) actually paid to a Person that, except in thecase of reasonable out-of-pocket expenses, is not an Affiliate of such Personor any of its Subsidiaries and (y) properly attributable to such transaction orto the asset that is the subject thereof.

 

“New Lending Office” meaning specified therefor in Section 2.08(d).

 

“Nilssen” means Ole K. Nilssen.

 

“Non-U.S. Lender” meaning specified therefor in Section 2.08(d).

 

“Notice of Borrowing” has the meaning specified therefor in Section 2.02(a).

 

“Obligations” means all present and future indebtedness,obligations, and liabilities of each Loan Party to the Agents and the Lenders,or any of them, under the Loan Documents, whether or not the right of paymentin respect of such claim is reduced to judgment, liquidated, unliquidated,fixed, contingent, matured, disputed, undisputed, legal, equitable, secured,unsecured, and whether or not such claim is discharged, stayed or otherwiseaffected by any proceeding referred to in Section 9.01.  Without limiting the generality of theforegoing, the Obligations of each Loan Party under the Loan Documents include (a) theobligation (irrespective of whether a claim therefor is allowed in anyInsolvency Proceeding) to pay principal, interest, charges, expenses, fees,attorneys’ fees and disbursements, indemnities and other amounts payable bysuch Person under the Loan Documents, and (b) the obligation of suchPerson to reimburse any amount in respect of any of the foregoing that anyAgent or any Lender (in its sole discretion) may elect to pay or advance onbehalf of such Person.

 

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“Operating Lease Obligations” means all obligations for thepayment of rent for any real or personal property under leases or agreements tolease, other than Capitalized Lease Obligations.

 

“Other Taxes” has the meaning specified therefor in Section 2.08(b).

 

“Participant Register” has the meaning specified therefor in Section 12.07(g).

 

“Payment Office” means the Administrative Agent’s office locatedat 299 Park Avenue, 24th Floor, New York, New York 10171, or at such otheroffice or offices of the Administrative Agent as may be designated in writingfrom time to time by the Administrative Agent to the Collateral Agent and theBorrower.

 

“PBGC” means the Pension Benefit Guaranty Corporation or anyentity succeeding to any or all of its functions under ERISA.

 

“Pension Plan” means an employee benefit plan (as defined in Section 3(3) ofERISA) other than a Multiemployer Plan (a) that is or was within the lastsix years maintained or sponsored by Borrower, any of its Subsidiaries, or anyERISA Affiliate or to which Borrower, any of its Subsidiaries, or any ERISAAffiliate has within the last six years made, or was obligated to make,contributions or with respect to which any of them have any actual orcontingent liability, and (b) that is or was subject to Section 412of the IRC, Section 302 of ERISA or Title IV of ERISA.

 

“Permits” has the meaning specified therefor in Section 6.01(n).

 

“Permitted Dispositions” means (a) sales or otherdispositions of Inventory to buyers in the ordinary course of business, (b) salesor other dispositions of obsolete or worn-out equipment in the ordinary courseof business, provided that the Net Cash Proceeds of such Dispositions inthe case of clause (b) do not exceed $100,000 in the aggregate in anytwelve-month period, (c) the use or transfer of money or Cash or Cash Equivalentsby the Borrower and its Subsidiaries in a manner that is not prohibited by theterms of this Agreement or the other Loan Documents, (d) the licensing bythe Borrower and its Subsidiaries, on a non-exclusive basis, of patents,trademarks, copyrights, and other intellectual property rights in the ordinarycourse of business, and (e) the Magnatek ADS Sale, so long as all Net CashProceeds of such sale are immediately remitted to First Lien Agent forapplication to the Senior Debt in accordance with the terms of Section 2.04(d).

 

“Permitted Indebtedness” means:

 

(a)                                  anyIndebtedness owing to any Agent and any Lender under this Agreement and theother Loan Documents;

 

(b)                                 Indebtedness listed on Schedule 7.02(b),and the extension of maturity, refinancing or modification of the terms thereofso long as (i) the terms and conditions of such refinancings, renewals, orextensions do not, in Agents’ reasonable judgment, materially impair theprospects of repayment of the Obligations by the Loan Parties or materiallyimpair Loan Parties’ creditworthiness, (ii) such refinancings, renewals,or extensions do not result in an

 

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increase in the principalamount of, or interest rate with respect to, the Indebtedness so refinanced,renewed, or extended or add one or more Loan Parties as liable with respectthereto if such additional Loan Parties were not liable with respect to theoriginal Indebtedness, (iii) such refinancings, renewals, or extensions donot result in a shortening of the average weighted maturity of the Indebtednessso refinanced, renewed, or extended, nor are they on terms or conditions, that,taken as a whole, are materially more burdensome or restrictive to the LoanParties, (iv) if the Indebtedness that is refinanced, renewed, or extendedwas subordinated in right of payment to the Obligations, then the terms andconditions of the refinancing, renewal, or extension Indebtedness must includesubordination terms and conditions that are at least as favorable to the Agentsand the Lenders as those that were applicable to the refinanced, renewed, orextended Indebtedness, (v) the Indebtedness that is refinanced, renewed,or extended is not recourse to any Person that is liable on account of theObligations other than those Persons which were obligated with respect to theIndebtedness that was refinanced, renewed, or extended, and (vi) suchrefinancing, renewal or extension does not contain terms that are lessfavorable to the Loan Parties or the Lenders than the terms of the Indebtednessbeing extended, refinanced or renewed;

 

(c)                                  Indebtedness evidenced by Capitalized LeaseObligations entered into in order to finance Capital Expenditures made by theLoan Parties in accordance with the provisions of Section 7.02(g),which Indebtedness, when aggregated with the principal amount of allIndebtedness incurred under this clause (c) and clause (d) of thisdefinition, does not exceed $5,000,000 at any time outstanding;

 

(d)                                 purchase money Indebtedness incurred to enablea Loan Party to acquire equipment in the ordinary course of its business, whichIndebtedness, when aggregated with the principal amount of all Indebtednessincurred under this clause (d) and clause (c) of this definition,does not exceed $5,000,000 at any time outstanding;

 

(e)                                  Indebtedness permitted under Section 7.02(e);

 

(f)                                    Indebtedness of the Borrower or any of itsSubsidiaries under any Hedging Agreement so long as such Hedging Agreements areused solely as a part of its normal business operations as a risk managementstrategy or hedge against changes resulting from market operations and not as ameans to speculate for investment purposes on trends and shifts in financial orcommodities markets;

 

(g)                                 subject to any restrictions set forth in theIntercreditor Agreement, the First Lien Obligations; and

 

(h)                                 unsecuredIndebtedness incurred by a Subsidiary of Borrower that is a Controlled ForeignCorporation in an aggregate amount, for all such Subsidiaries, not to exceed$5,000,000 at any time outstanding, provided, that, neither Borrower norany Subsidiary of Parent that is not a Controlled Foreign Corporation isobligated with respect to or has pledged any of its assets as collateral tosecure such Indebtedness, whether directly or indirectly.

 

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“Permitted Investments” means (i) marketable directobligations issued or unconditionally guaranteed by the United StatesGovernment or Canada or issued by any agency or instrumentality thereof andbacked by the full faith and credit of the United States or constituting acharge on or being payable from the Canadian Consolidated Revenue Fund, in eachcase, maturing within six months from the date of acquisition thereof; (ii) commercialpaper, maturing not more than 270 days after the date of issue rated P-1by Moody’s or A-1 by Standard & Poor’s or any equivalent rating agencyin Canada; (iii) certificates of deposit maturing not more than270 days after the date of issue, issued by commercial bankinginstitutions or a Canadian chartered bank and money market or demand depositaccounts maintained at commercial banking institutions or a Canadian charteredbank, each of which is a member of the Federal Reserve System in the case ofcommercial banking institutions and has a combined capital and surplus andundivided profits of not less than $500,000,000; (iv) repurchaseagreements having maturities of not more than 90 days from the date ofacquisition which are entered into with banks included in the commercialbanking institutions described in clause (iii) above or a Canadianchartered bank and which are secured by marketable direct obligations of theUnited States government or the government of Canada or any agency thereof, (v) moneymarket accounts maintained with mutual funds having assets in excess of$2,500,000,000; and (vi) tax exempt securities rated A or better by Moody’sor A+ or better by Standard & Poor’s.

 

“Permitted Liens” means:

 

(i)                                     Lienssecuring the Obligations;

 

(j)                                     Liens for taxes, assessments, levies, andgovernmental charges the payment of which is not required under Section 7.01(c);

 

(k)                                  Liens imposed by law, such as carriers’,warehousemen’s, mechanics’, materialmen’s and other similar Liens arising(provided they are subordinate to the Collateral Agent’s Liens on Collateral)in the ordinary course of business and securing obligations (other thanIndebtedness for borrowed money) that are not overdue or are being contested ingood faith and by appropriate proceedings promptly initiated and diligentlyconducted, and a reserve or other appropriate provision, if any, as shall berequired by GAAP shall have been made therefor;

 

(l)                                     Liens described on Schedule 7.02(a),but not the extension of coverage thereof to other property or assets

 

(m)                               Liens arising under Capitalized Leases orsecuring purchase money Indebtedness permitted under the definition ofPermitted Indebtedness; provided, however, that (A) no suchLien shall extend to or cover any other property of any Loan Party or any ofits Subsidiaries, and (B) the principal amount of the Indebtedness securedby any such Lien shall not exceed the lesser of 80% of the fair market value orthe cost of the property so held or acquired;

 

(n)                                 deposits and pledges of cash securing (i) obligationsincurred in respect of workers’ compensation, unemployment insurance or otherforms of governmental insurance or benefits, (ii) the performance of bids,tenders, leases, contracts (other than for the payment of money) and statutoryobligations or (iii) obligations on surety or appeal bonds, but only tothe extent such deposits or pledges are incurred or otherwise arise in theordinary course of business and secure obligations not past due;

 

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(o)                                 easements, zoning restrictions and similarencumbrances on real property and minor irregularities in the title theretothat do not (i) secure obligations for the payment of money or (ii) materiallyimpair the value of such property or its use by any Loan Party or any of itsSubsidiaries in the normal conduct of such Person’s business;

 

(p)                                 leases or subleases granted to other Personsnot materially interfering with the conduct of the business of the Borrower orany of its Subsidiaries;

 

(q)                                 precautionary financing statement filings regardingoperating leases;

 

(r)                                    Liens arising out of the existence ofjudgments or awards not giving rise to an Event of Default;

 

(s)                                  to the extent subject to the IntercreditorAgreement, Liens securing the First Lien Obligations; and

 

(t)                                    statutory and common law landlords’ liensunder leases to which the Borrower or any of its Subsidiaries is a party.

 

“Permitted Preferred Stock” means and refers to any PreferredStock issued by the Borrower (and not by one or more of its Subsidiaries) thatis not Prohibited Preferred Stock.

 

“Person” means an individual, corporation, limited liabilitycompany, partnership, association, joint-stock company, trust, unincorporatedorganization, joint venture or other enterprise or entity or GovernmentalAuthority.

 

“Plaintiffs” means Nilssen and Geo Foundation, Ltd.

 

“Plan” means (a) an employee benefit plan (as defined in Section 3(3) ofERISA) other than a Multiemployer Plan that is or was within the last six yearsmaintained or sponsored by any Borrower or any of its Subsidiaries or to whichany Borrower or any of its Subsidiaries has within the last six years made, orwas obligated to make, contributions or with respect to which any of them haveany actual or contingent liability, (b) a Pension Plan, or (c) aQualified Plan.

 

“Post-Default Rate” means a rate of interest per annum equal tothe rate of interest otherwise in effect from time to time pursuant to theterms of this Agreement plus 4.0 percentage points, or, if a rate of interestis not otherwise in effect, interest at the highest rate specified herein forany Loan prior to the Event of Default plus 4.0 percentage points.

 

“Power Systems Division” means, on a consolidated basis, the “powercontrol systems” operating division of Borrower, together with Mondel Holdingand its Subsidiaries.

 

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“Power Systems EBITDA” means, for any period, the Power SystemsNet Income for such period, plus (i) without duplication, the sumof the following amounts of the Power Systems Division for such period andto the extent deducted in determining Power Systems Net Income for suchperiod:  (A) Power Systems NetInterest Expense, (B) net income tax expense, (C) depreciationexpense, and (D) amortization expense.

 

“Power Systems Net Income” means, with respect to the PowerSystems Division for any period, the net income (loss) of the Power SystemsDivision for such period, determined on a consolidated basis in accordance withGAAP, but excluding from the determination of Power Systems Net Income (withoutduplication) (a) any non-cash extraordinary or non-recurring gains ornon-cash gains or losses from Dispositions, (b) non-cash restructuringcharges, (c) non-cash effects of discontinued operations, (d) interestthat is paid-in-kind, and (e) any tax refunds, net operating losses orother net tax benefits received during such period on account of any priorperiod, in each case solely with respect to the Power Systems Division.

 

“Power Systems Net Interest Expense” means, with respect to the PowerSystems Division for any period, gross cash interest expense of such Personsfor such period determined on a consolidated basis in accordance with GAAP(including interest expense paid to Affiliates of such Persons), less (i) thesum of (A) interest income for such period and (B) gains for suchperiod on Hedging Agreements (to the extent not included in interest incomeabove and to the extent not deducted in the calculation of gross interestexpense), plus (ii) the sum of (A) losses for such period onHedging Agreements (to the extent not included in such gross interest expense)and (B) the upfront costs or fees for such period associated with HedgingAgreements (to the extent not included in such gross interest expense), in eachcase, determined on a consolidated basis in accordance with GAAP with respectto the Power Systems Division.

 

“PPSA” means the Personal Property Security Act (Ontario) andthe Regulations thereunder, as from time to time in effect; provided, however,if attachment, perfection or priority of any Agent’s or Lender’s securityinterests in any Collateral are governed by the personal property security lawsor any jurisdiction other than Ontario, “PPSA” shall mean those personalproperty security laws in such other jurisdiction for the purposes of theprovisions hereof relating to such attachment, perfection or priority and forthe definitions related to such provisions.

 

“Preferred Stock” means, as applied to the Capital Stock of anyPerson, the Capital Stock of any class or classes (however designated) that ispreferred with respect to the payment of dividends, or as to the distributionof assets upon any voluntary or involuntary liquidation or dissolution of suchPerson, over shares of Capital Stock of any other class of such Person.

 

“Prohibited Preferred Stock” means any Preferred Stock that byits terms is mandatorily redeemable or subject to any other payment obligation(including any obligation to pay dividends, other than dividends of shares ofPreferred Stock of the same class and series payable in kind or dividends ofshares of common stock) on or before a date that is less than 2 years after theFinal Maturity Date, or, on or before the date that is less than 2 years afterthe Final Maturity Date, is redeemable at the option of the holder thereof forcash or assets or securities (other than distributions in kind of shares ofPreferred Stock of the same class and series or of shares of common stock).

 

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“property” means any right or interest in or to property of anykind whatsoever, whether real, personal or mixed and whether tangible orintangible.

 

“Pro Rata Share” means, with respect to any Lender, thepercentage obtained by dividing (i) before the time when the Term Loan isfunded, (A) the amount of such Lender’s Term Loan Commitment, by theaggregate amount of all Term Loan Commitments, or (ii) on or after thetime when the Term Loan is funded, (A) the unpaid principal amount of suchLender’s portion of the Term Loan, by (ii) the aggregate unpaid principalamount of the Term Loan.

 

 “Qualified Cash” means,as of any date of determination, the amount of unrestricted Cash and CashEquivalents of the Borrower and its Subsidiaries that is subject to a controlagreement in favor of Collateral Agent and that is on deposit with banks, or insecurities accounts with securities intermediaries, or any combination thereof.

 

“Qualified Plan” means an employee benefit plan (as defined in Section 3(3) ofERISA) other than a Multiemployer Plan (a) that is or was within the lastsix years maintained or sponsored by Borrower, any of its Subsidiaries or anyERISA Affiliate or to which Borrower, any of its Subsidiaries or any ERISAAffiliate has within the last six years made or was obligated to make,contributions, and (b) that is or was intended to be tax qualified under Section 401(a) ofthe IRC.

 

“Rating Agencies” has the meaning specified therefor in Section 2.07.

 

“Reference Bank” means JPMorgan Chase Bank, N.A., its successorsor any other commercial bank designated by the Administrative Agent to theBorrower from time to time.

 

“Reference Rate” means the greater of (x) the rate of interestpublicly announced by the Reference Bank in New York, New York from time totime as its reference rate, base rate or prime rate and (y) 5.50%.  The reference rate, base rate or prime rateis determined from time to time by the Reference Bank as a means of pricingsome loans to its borrowers and neither is tied to any external rate ofinterest or index nor necessarily reflects the lowest rate of interest actuallycharged by the Reference Bank to any particular class or category ofcustomers.  Each change in the ReferenceRate shall be effective from and including the date such change is publiclyannounced as being effective.

 

“Register” has the meaning specified therefor in Section 12.07(d).

 

“Registered Loan” has the meaning specified therefore in Section 12.07(d).

 

“Regulation T”, “Regulation U” and “Regulation X”mean, respectively, Regulations T, U and X of the Board or any successor, asthe same may be amended or supplemented from time to time.

 

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“Reinvestment Eligible Funds” means (a) Net Cash Proceedswhich, but for the application of Section 2.05(d)(iv), would berequired to be used to prepay the Loans pursuant to Section 2.05(c)(v) or(b) Extraordinary Receipts consisting of insurance or condemnationproceeds paid as the result of loss, destruction, casualty, condemnation orexpropriation which, but for the application of Section 2.05(d)(iv),  would be required to be used to prepay theLoans pursuant to Section 2.05(c)(vii).

 

“Reinvestment Notice” has the meaning specified therefore in Section 2.05(d).

 

“Related Party Assignment” has the meaning specified therefor inSection 12.07(b).

 

“Related PartyRegister” has the meaning specified therefore in Section 12.07(d).

 

“Release” means any spilling, leaking, pumping, pouring,emitting, emptying, discharging, injecting, escaping, leaching, seeping,migrating, dumping or disposing of any Hazardous Material (including theabandonment or discarding of barrels, containers and other closed receptaclescontaining any Hazardous Material) into the indoor or outdoor environment,including the movement of Hazardous Materials through or in the ambient air,soil, surface or ground water, or property.

 

“Remedial Action” means all actions taken to (i) clean up,remove, remediate, contain, treat, monitor, assess, evaluate or in any otherway address Hazardous Materials in the indoor or outdoor environment; (ii) preventor minimize a Release or threatened Release of Hazardous Materials so they donot migrate or endanger or threaten to endanger public health or welfare or theindoor or outdoor environment; (iii) perform pre-remedial studies andinvestigations and post-remedial operation and maintenance activities; or (iv) anyother actions authorized by 42 U.S.C. § 9601.

 

“Required Lenders” means Lenders whose Pro Rata Shares aggregateat least 50.1%.

 

“Reserve Percentage” means, on any day, for any Lender, themaximum percentage prescribed by the Board of Governors of the Federal ReserveSystem (or any successor Governmental Authority) for determining the reserverequirements (including any basic, supplemental, marginal, or emergencyreserves) that are in effect on such date with respect to Eurocurrency funding(currently referred to as “Eurocurrency liabilities”) of that Lender,but so long as such Lender is not required or directed under applicableregulations to maintain such reserves, the Reserve Percentage shall be zero.

 

 “SEC” means theSecurities and Exchange Commission or any other similar or successor agency ofthe Federal government administering the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended,or any similar Federal statute, and the rules and regulations of the SECthereunder, all as the same shall be in effect from time to time.

 

“Securitization” has the meaning specified therefor in Section 2.07.

 

“Securitization Parties” has the meaning specified therefor in Section 2.07.

 

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“Security Agreement” means a Security Agreement, in form andsubstance reasonably satisfactory to Collateral Agent, made by a Loan Party infavor of the Collateral Agent for the benefit of the Agents and the Lenders,securing the Obligations and delivered to the Collateral Agent.

 

“Securities Account” means a securities account as that term isdefined in the Code and, in the case of Mondel, the PPSA.

 

“Senior Debt” means the Obligations and the First LienObligations.

 

“Settlement Period” has the meaning specified therefor in Section 2.02(d)(i) hereof.

 

“Solvent” means, with respect to any Person on a particulardate, that on such date (i) the fair value of the property of such Personis not less than the total amount of the liabilities of such Person, (ii) thepresent fair salable value of the assets of such Person is not less than theamount that will be required to pay the probable liability of such Person onits existing debts as they become absolute and matured, (iii) such Personis able to realize upon its assets and pay its debts and other liabilities,contingent obligations and other commitments as they mature in the normalcourse of business, (iv) such Person does not intend to, and does notbelieve that it will, incur debts or liabilities beyond such Person’s abilityto pay as such debts and liabilities mature, (v) such Person is notengaged in business or a transaction, and is not about to engage in business ora transaction, for which such Person’s property would constitute unreasonablysmall capital, and (vi) with respect to Mondel, that Mondel is not an “insolventperson” (as defined in the Bankruptcy and Insolvency Act (Canada) or a “debtorcompany” (as defined in the Companies’ Creditors Arrangement Act (Canada).

 

“Standard & Poor’s” means Standard & Poor’sRatings Services, a division of The McGraw-Hill Companies, Inc. andany successor thereto.

 

“Statutory Lien Payments” has the meaning specified therefor in Section 6.01(j).

 

“Subordinated Debt” means Indebtedness of the Borrower that ison terms and conditions (including payment terms, interest rates, covenants,remedies, defaults and other material terms) satisfactory to the CollateralAgent and the Required Lenders and which has been expressly subordinated inright of payment to all Indebtedness of the Borrower under the Loan Documentsby the execution and delivery of a subordination agreement, in form andsubstance satisfactory to the Collateral Agent and the Required Lenders.

 

“Subordination Agreements” means, collectively, the terms andconditions of any document governing Indebtedness of Borrower, any Guarantorand/or their respective Subsidiaries which provide that such Indebtedness issubordinated to the Obligations in right of payment.

 

“Subsidiary” means, with respect to any Person at any date, anycorporation, limited or general partnership, limited liability company, trust,estate, association, joint venture or other business entity (i) the accountsof which would be consolidated with those of such Person in such Person’sconsolidated financial statements if such financial statements were

 

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prepared in accordance with GAAP or (ii) ofwhich more than 50% of (A) the outstanding Capital Stock having (in theabsence of contingencies) ordinary voting power to elect a majority of theboard of directors or other managing body of such Person, (B) in the caseof a partnership or limited liability company, the interest in the capital orprofits of such partnership or limited liability company or (C) in thecase of a trust, estate, association, joint venture or other entity, thebeneficial interest in such trust, estate, association or other entity businessis, at the time of determination, owned or controlled directly or indirectlythrough one or more intermediaries, by such Person.

 

“Taxes” has the meaning specified therefor in Section 2.08(a).

 

“Term Loan” has the meaning specified therefor in Section 2.01(a)(ii).

 

“Term Loan Commitment” means, with respect to each Lender, thecommitment of such Lender to make its portion of the Term Loan to the Borrowerin the amount set forth in Schedule 1.01(A) hereto, as thesame may be terminated or reduced from time to time in accordance with theterms of this Agreement.

 

“Term Loan Lender” means a Lender with a Term Loan Commitment.

 

“Term Loan Obligations” means any Obligations with respect tothe Term Loan (including without limitation, the principal thereof, the interestthereon, and the fees and expenses specifically related thereto).

 

“Title Insurance Policy” means a mortgagee’s loan policy, inform and substance satisfactory to the Collateral Agent, together with allendorsements made from time to time thereto, issued by or on behalf of a titleinsurance company satisfactory to the Collateral Agent, insuring the Liencreated by a Mortgage in an amount and on terms satisfactory to the CollateralAgent, delivered to the Collateral Agent.

 

“Total Debt Limiter” means, as of any date of determination forthe 12 month period ending on such date of determination, (a) during theperiod commencing on the Effective Date and ending on June 30, 2006, 3.25times TTM Domestic EBITDA, (b) during the period commencing on July 1,2006 and ending on June 30, 2007, 3.00 times TTM Domestic EBITDA, and (c) atall times on or after July 1, 2007, 2.75 times TTM Domestic EBITDA.

 

“Total Debt Limiter Certificate” means a certificatesubstantially in the form of Exhibit T-1 delivered by the chief financialofficer of Parent to Agent.

 

“Total Term Loan Commitment” means $18,000,000, which amount isthe sum of the amounts of the Lenders’ Term Loan Commitments.

 

“Triggering Event” means (a) Borrower or any Guarantor isrequired to make any cash payments in respect of their Benefit Plans whicheither (i) exceed the amount of the Designated Pension Payment by morethan 10%, or (ii) are required to be paid more than 90 days earlier thanthe scheduled due date of the Designated Pension Payment, (b) theoccurrence and continuance of an ERISA Event, or (c) a court of competentjurisdiction determines any of the following in connection with the ULTLitigation (i) ULT has infringed on the patents held by

 

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any Plaintiff that are the subject of the ULTLitigation, (ii) the patents held by any Plaintiff that are the subject ofthe ULT Litigation are valid and enforceable, or (iii) ULT or Borrower orany of its Subsidiaries are liable to any Plaintiff for patent infringement, or(d) some other event or development occurs in connection with the ULTLitigation that is materially adverse to the interests of Borrower and itsSubsidiaries in connection with such litigation.

 

“TTM EBITDA” means, as of any date of determination, theConsolidated EBITDA for the 12 month period most recently ended; provided,that in calculating the TTM EBITDA for any period that includes a period priorto September 1, 2005, the Consolidated EBITDA for such prior period willbe deemed to be the applicable amount set forth on Schedule T-1with respect thereto.

 

“TTM Domestic EBITDA” means, as of any date of determination,the Domestic EBITDA for the 12 month period most recently ended; provided,that in calculating the TTM Domestic EBITDA for any period that includes aperiod prior to September 1, 2005, the Domestic EBITDA for such priorperiod will be deemed to be the applicable amount set forth on Schedule T-1with respect thereto.

 

“TTM Power Systems EBITDA” means, as of any date of determination,the Power Systems EBITDA for the 12 month period most recently ended; provided,that in calculating the TTM Power Systems EBITDA for any period that includes aperiod prior to September 1, 2005, the Power Systems EBITDA for such priorperiod will be deemed to be the applicable amount set forth on Schedule T-1with respect thereto.

 

“ULT” means Universal Lighting Technologies, Inc., aDelaware corporation.

 

“ULT Litigation” means the action styled *Nilssen, etal v. Universal Lighting*, Case No. 3:04-0080, pending in theU.S. District Court for the Middle District of Tennessee.

 

“WARN” has the meaning specified therefor in Section 6.01(z).

 

Section 1.02                                Terms Generally.  Thedefinitions of terms herein shall apply equally to the singular and plural formsof the terms defined.  Whenever thecontext may require, any pronoun shall include the corresponding masculine,feminine and neuter forms.  Thewords “include,” “includes” and “including” shall be deemed to be followed bythe phrase “without limitation,” whether or not so expressly stated in eachsuch instance and the term “or” has, except where otherwise indicated, theinclusive meaning represented by the phrase “and/or.”  The word “will” shall be construed to havethe same meaning and effect as the word “shall.”  Unless the context requires otherwise, (a) any definition of or reference toany agreement, instrument or other document herein shall be construed asreferring to such agreement, instrument or other document as from time to timeamended, supplemented or otherwise modified (subject to any restrictions onsuch amendments, supplements or modifications set forth herein), (b) anyreference herein to any Person shall be construed to include such Person’ssuccessors and assigns, (c) the words “herein”, “hereof” and “hereunder”,and words of similar import, shall be construed to refer to this Agreement inits entirety and not to any particular provision hereof, (d) allreferences herein to Articles, Sections, Exhibits and Schedules shall beconstrued to refer to Articles and Sections of, and Exhibits and Schedules to,this Agreement and

 

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(e) the words “asset”and “property” shall be construed to have the same meaning and effect and torefer to any and all tangible and intangible assets and properties, includingcash, securities, accounts and contract rights. References in this Agreement to “determination” by any Agent includeestimates honestly made by such Agent (in the case of quantitative determinations)and beliefs honestly held by such Agent (in the case of qualitativedeterminations).  References to statutesor regulations are to be construed as including all statutory and regulatoryprovisions consolidating, amending, supplementing, interpreting, or replacingthe statute or regulation referred to.

 

Section 1.03                                Accounting and Other Terms. Unless otherwise expressly provided herein, each accounting term usedherein shall have the meaning given it under GAAP.  All terms used in this Agreement which aredefined in Article 8 or Article 9 of the Code and which are nototherwise defined herein shall have the same meanings herein as set forththerein; and when used to define a category or categories of collateral ownedor hereafter acquired by any Borrower or Guarantor which may be subject to theprovisions of the PPSA, the such term shall include the equivalent category orcategories of collateral under the PPSA.

 

Section 1.04                                Time References. Unless otherwise indicated herein, all references to time of day referto Eastern Standard Time or Eastern daylight saving time, as in effect in NewYork City on such day.  For purposes ofthe computation of a period of time from a specified date to a later specifieddate, the word “from” means “from and including” and the words “to” and “until”each means “to but excluding”; provided, however, that withrespect to a computation of fees or interest payable to any Agent or anyLender, such period shall in any event consist of at least one full day.

 

**ARTICLE II**

** **

**THE LOANS**

** **

Section 2.01                                Commitments.  (a)  Subject to the termsand conditions and relying upon the representations and warranties herein setforth:

 

(i)                                     [intentionally omitted]; and

 

(ii)                                  (ii)                                  each Term Loan Lender severally agrees tomake a term loan (collectively, the “Term Loan”) to the Borrower on orafter the Effective Date and before the Commitment Termination Date, in anaggregate principal amount equal to the amount of such Lender’s Term LoanCommitment.

 

(b)                                 Notwithstanding the foregoing:

 

(i)                                     [intentionally omitted].

 

(ii)                                  The aggregate principal amount of the TermLoan shall not exceed the Total Term Loan Commitment.  Any principal amount of the Term Loan that isrepaid or prepaid may not be reborrowed.

 

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Section 2.02                                Making the Loans.  (a) The Borrower shall give the Administrative Agent prior telephonic notice(immediately confirmed in writing, in substantially the form of Exhibit 2.02(a) hereto(a “Notice of Borrowing”)), not later than 12:00 noon (New YorkCity time) on the date which is 5 Business Days prior to the date of theproposed Loan.  Such Notice of Borrowingshall be irrevocable and shall specify (i) the principal amount of theproposed Loan, (ii) the proposed borrowing date, which must be a BusinessDay, and, with respect to the Term Loan, must be on or before the CommitmentTermination Date.  The Administrative****Agent and the Lenders may act without liability upon thebasis of written, telecopied or telephonic notice believed by the AdministrativeAgent in good faith to be from the Borrower (or from any Authorized Officerthereof designated in writing purportedly from the Borrower to theAdministrative Agent).  The Borrowerhereby waives the right to dispute the Administrative Agent’s record of theterms of any such telephonic Notice of Borrowing.  The Administrative Agent and each Lendershall be entitled to rely conclusively on any Authorized Officer’s authority torequest a Loan on behalf of the Borrower until the Administrative Agent receiveswritten notice to the contrary.  TheAdministrative Agent and the Lenders shall have no duty to verify theauthenticity of the signature appearing on any written Notice of Borrowing.

 

(b)                                 Each Notice of Borrowing pursuant to this Section 2.02shall be irrevocable and the Borrower shall be bound to make a borrowing inaccordance therewith.

 

(c)                                  (i)                                     Except as otherwise provided in this Section 2.02(c),all Loans under this Agreement shall be made by the Lenders simultaneously andproportionately to their Pro Rata Shares of the Total Term Loan Commitment, itbeing understood that no Lender shall be responsible for any default by anyother Lender in that other Lender’s obligations to make a Loan requestedhereunder, nor shall the Commitment of any Lender be increased or decreased asa result of the default by any other Lender in that other Lender’s obligationto make a Loan requested hereunder, and each Lender shall be obligated to makethe Loans required to be made by it by the terms of this Agreement regardlessof the failure by any other Lender.  Inaddition, the Term Loan (if funded) shall be funded by Administrative Agent tothe Designated Account.

 

(ii)                                  [intentionally omitted]

 

(iii)                               [intentionally omitted]

 

(iv)                              [intentionally omitted]

 

(d)                                 (i)                                     [intentionally omitted].

 

(ii)                                  [intentionally omitted].

 

Section 2.03                                Repayment of Loans; Evidence of Debt.  (a) [intentionally omitted].

 

(b)                                 The outstanding principal of the Term Loanshall be repayable in consecutive quarterly installments, on the first day ofeach October, January, April and July commencing on October 1,2006 and ending on the Final Maturity Date, consisting of (i) five (5) installments,each in an amount equal to $1,000,000, followed by (ii) one (1) installment,in an

 

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amount equal to $13,000,000;provided, however, that the last such installment shall be in theamount necessary to repay in full the unpaid principal amount of the TermLoan.  The outstanding principal of theTerm Loan shall be repaid in full on the Final Maturity Date.

 

(c)                                  Each Lender shall maintain in accordance withits usual practice an account or accounts evidencing the Indebtedness of theBorrower to such Lender resulting from each Loan made by such Lender, includingthe amounts of principal and interest payable and paid to such Lender from timeto time hereunder.

 

(d)                                 The Administrative Agent shall maintainaccounts in which it shall record (i) the amount of each Loan madehereunder, (ii) the amount of any principal or interest due and payable orto become due and payable from the Borrower to each Lender hereunder and (iii) theamount of any sum received by the Administrative Agent hereunder for theaccount of the Lenders and each Lender’s share thereof.

 

(e)                                  The entries made in the accounts maintainedpursuant to paragraphs (c) or (d) of this Section 2.03shall be primafacie evidence of the existence and amounts of theobligations recorded therein; provided that the failure of any Lender orthe Administrative Agent to maintain such accounts or any error therein shallnot in any manner affect the obligation of the Borrower to repay the Loans inaccordance with the terms of this Agreement.

 

(f)                                    Any Lender may request that Loans made by itbe evidenced by a promissory note.  Insuch event, the Borrower shall execute and deliver to such Lender a promissorynote payable to the order of such Lender (or, if requested by such Lender, tosuch Lender and its registered assigns) in a form furnished by the CollateralAgent and reasonably satisfactory to the Borrower.  Thereafter, the Loans evidenced by suchpromissory note and interest thereon shall at all times (including afterassignment pursuant to Section 12.07) be represented by one or morepromissory notes in such form payable to the order of the payee named therein(or, if such promissory note is a registered note, to such payee and itsregistered assigns).

 

Section 2.04                                Interest.  (a)  [intentionallyomitted].

 

(b)                                 Term Loan.  The Term Loan shall bearinterest on the principal amount thereof from time to time outstanding, fromthe date of the making of the Term Loan until such principal amount is repaid,as follows: (i) if the relevant portion of the Term Loan is a LIBOR RateLoan, at a rate per annum equal to the LIBOR Rate plus the Applicable LIBORRate Margin, and (ii) otherwise, at a rate per annum equal to theReference Rate plus the Applicable Reference Rate Margin.

 

(c)                                  Default Interest.  Tothe extent permitted by law, upon the occurrence and during the continuance ofan Event of Default, the principal of, and all accrued and unpaid interest on,all Loans, fees, indemnities, or any other Obligations of the Loan Partiesunder this Agreement and the other Loan Documents, shall bear interest, fromthe date such Event of Default occurred until the date such Event of Default iscured or waived in writing in accordance herewith, at a rate per annum equal atall times to the Post-Default Rate.

 

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(d)                                 LIBOROption.

 

(i)                                     Interest and Interest Payment Dates.  Inlieu of having interest charged at the rate based upon the Reference Rate, theBorrower shall have the option (the “LIBOR Option”) to have interest onall or a portion of the Loans be charged at a rate of interest based upon theLIBOR Rate.  Interest on LIBOR Rate Loansshall be payable on the earliest of (A) the last day of the InterestPeriod applicable thereto, (B) the occurrence of an Event of Default inconsequence of which the Required Lenders or Collateral Agent on behalf thereofelect to accelerate the maturity of all or any portion of the Obligations, or (C) terminationof this Agreement pursuant to the terms hereof. Interest at the Post-Default Rate shall be payable on demand.  On the last day of each applicable InterestPeriod, unless the Borrower properly has exercised the LIBOR Option withrespect thereto, the interest rate applicable to such LIBOR Rate Loanautomatically shall convert to the rate of interest then applicable toReference Rate Loans of the same type hereunder.  At any time that an Event of Default hasoccurred and is continuing, the Borrower no longer shall have the option torequest that Loans bear interest at the LIBOR Rate and Administrative Agentshall have the right to convert the interest rate on all outstanding LIBOR RateLoans to the rate then applicable to Reference Rate Loans hereunder.

 

(ii)                                  LIBOR Election.

 

(A)                    The Borrower may, at any time and from timeto time, so long as no Event of Default has occurred and is continuing, electto exercise the LIBOR Option by notifying Administrative Agent prior to 11:00 a.m.(New York time) at least 3 Business Days prior to the commencement of theproposed Interest Period (the “LIBOR Deadline”).  Notice of the Borrower’s election of theLIBOR Option for a permitted portion of the Loans and an Interest Periodpursuant to this Section shall be made by delivery to Administrative Agentof a LIBOR Notice received by Administrative Agent before the LIBORDeadline.  Promptly upon its receipt ofeach such LIBOR Notice, Administrative Agent shall provide a copy thereof toeach of the Lenders having a Commitment of the type to which such LIBOR Noticerelates.

 

(B)                      Each LIBOR Notice shall be irrevocable andbinding on the Borrower.  In connectionwith each LIBOR Rate Loan, the Borrower shall indemnify, defend, and holdAdministrative Agent and the Lenders harmless against any loss, cost, orexpense incurred by Administrative Agent or any Lender as a result of (1) thepayment of any principal of any LIBOR Rate Loan other than on the last day ofan Interest Period applicable thereto (including as a result of an Event ofDefault), (2) the conversion of any LIBOR Rate Loan other than on the lastday of the Interest Period applicable thereto, or (3) the failure toborrow, convert, continue or prepay any LIBOR Rate Loan on the date specifiedin any LIBOR Notice delivered pursuant hereto (such losses, costs, andexpenses, collectively, “Funding Losses”).  Funding Losses shall, with respect toAdministrative Agent or any Lender, be deemed to equal the amount determined byAdministrative Agent or such Lender to be the excess, if any, of (x) the amountof interest that would have accrued on the principal amount of such LIBOR RateLoan had such event not occurred, at the LIBOR Rate that would

 

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havebeen applicable thereto, for the period from the date of such event to the lastday of the then current Interest Period therefor (or, in the case of a failureto borrow, convert or continue, for the period that would have been theInterest Period therefor), minus (y) the amount of interest that would accrueon such principal amount for such period at the interest rate whichAdministrative Agent or such Lender would be offered were it to be offered, atthe commencement of such period, Dollar deposits of a comparable amount andperiod in the London interbank market.  Acertificate of Administrative Agent or a Lender delivered to the Borrowersetting forth any amount or amounts that Administrative Agent or such Lender isentitled to receive pursuant to this Section shall be conclusive absentmanifest error.

 

(C)                      The Borrower shall have not more than 2 LIBORRate Loans in effect at any given time. The Borrower only may exercise the LIBOR Option for LIBOR Rate Loans ofat least $1,000,000 and integral multiples of $500,000 in excess thereof.

 

(iii)                               Prepayments.  The Borrower may prepay LIBORRate Loans at any time; provided, however, that in the event thatLIBOR Rate Loans are prepaid on any date that is not the last day of theInterest Period applicable thereto, including as a result of any automaticprepayment through the required application by Administrative Agent of proceedsof Collections in accordance with Section 4.04 or for any otherreason, including early termination of the term of this Agreement oracceleration of all or any portion of the Obligations pursuant to the termshereof, the Borrower shall indemnify, defend, and hold Administrative Agent andthe Lenders and their participants harmless against any and all Funding Lossesin accordance with subsection (ii) above.

 

(iv)                              Special Provisions Applicable to LIBOR Rate.

 

(A)                              TheLIBOR Rate may be adjusted by Administrative Agent with respect to any Lenderon a prospective basis to take into account any additional or increased coststo such Lender of maintaining or obtaining any eurodollar deposits or increasedcosts due to changes in applicable law occurring subsequent to the commencementof the then applicable Interest Period, including changes in tax laws (exceptchanges of general applicability in corporate income tax laws) and changes inthe reserve requirements imposed by the Board of Governors of the FederalReserve System (or any successor), excluding the Reserve Percentage, which additionalor increased costs would increase the cost of funding loans bearing interest atthe LIBOR Rate.  In any such event, theaffected Lender shall give the Borrower and Administrative Agent notice of sucha determination and adjustment and Administrative Agent promptly shall transmitthe notice to each other Lender and, upon its receipt of the notice from theaffected Lender, the Borrower may, by notice to such affected Lender (1) requiresuch Lender to furnish to the Borrower a statement setting forth the basis foradjusting such LIBOR Rate and the method for determining the amount of suchadjustment, or (2) repay the LIBOR Rate Loans with respect to which suchadjustment is made (together with any amounts due under subsection (ii)(B) above).

 

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(B) In the event that any change in market conditions or any law,regulation, treaty, or directive, or any change therein or in theinterpretation of application thereof, shall at any time after the date hereof,in the reasonable opinion of any Lender, make it unlawful or impractical forsuch Lender to fund or maintain LIBOR Rate Loans or to continue such funding ormaintaining, or to determine or charge interest rates at the LIBOR Rate, suchLender shall give notice of such changed circumstances to Administrative Agentand the Borrower and Administrative Agent promptly shall transmit the notice toeach other Lender and (1) in the case of any LIBOR Rate Loans of suchLender that are outstanding, the date specified in such Lender’s notice shallbe deemed to be the last day of the Interest Period of such LIBOR Rate Loans,and interest upon the LIBOR Rate Loans of such Lender thereafter shall accrueinterest at the rate then applicable to Reference Rate Loans, and (2) theBorrower shall not be entitled to elect the LIBOR Option until such Lenderdetermines that it would no longer be unlawful or impractical to do so.

 

(v)                                 No Requirement of Matched Funding. Anything to the contrary contained herein notwithstanding, neitherAdministrative Agent, nor any Lender, nor any of their participants, isrequired actually to acquire eurodollar deposits to fund or otherwise matchfund any Obligation as to which interest accrues at the LIBOR Rate.  The provisions of this Section shall applyas if each Lender or its participants had match funded any Obligation as towhich interest is accruing at the LIBOR Rate by acquiring eurodollar depositsfor each Interest Period in the amount of the LIBOR Rate Loans.

 

(e)                                  Interest Payment in respect of Reference RateLoans.  Interest on each Reference Rate Loan shall bepayable monthly, in arrears, on the first day of each month, commencing on thefirst day of the month following the month in which such Loan is made and atmaturity (whether upon demand, by acceleration or otherwise).  Interest at the Post-Default Rate shall bepayable on demand.  The Borrower herebyauthorizes the Administrative Agent to, and the Administrative Agent may, fromtime to time, charge the Loan Account pursuant to Section 4.02 withthe amount of any interest payment due hereunder.

 

(f)                                    General.  All interest shall be computedon the basis of a year of 360 days for the actual number of days, including thefirst day but excluding the last day, elapsed.

 

Section 2.05                                Reduction of Commitments; Prepayment of Loans.

 

(a)                                  Reduction of Commitments.

 

(i)                                     [intentionally omitted].

 

(ii)                                  Term Loan.  The Total Term Loan Commitmentshall terminate upon the earlier to occur of (A) the making of the TermLoan, and (B) the Commitment Termination Date.

 

(b)                                 Optional Prepayment.

 

(i)                                     [intentionally omitted].

 

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(ii)                                  Term Loan.  The Borrower may, upon atleast 5 Business Days prior written notice to the Administrative Agent, prepaythe principal of the Term Loan, in whole or in part.  Each prepayment made pursuant to this Section 2.05(b)(ii) shallbe accompanied by the payment of accrued interest to the date of such paymenton the amount prepaid.  Each suchprepayment shall be applied against the remaining installments of principal dueon the Term Loan in the inverse order of maturity.

 

(c)                                  Mandatory Prepayment.

 

(i)                                     [intentionally omitted]

 

(ii)                                  The Borrower will immediately prepay theoutstanding principal amount of the Term Loan in accordance with the provisionsof Section 2.05(d), in the event that the First Lien CreditAgreement is terminated for any reason.

 

(iii)                               If at any time, the outstanding principalbalance of the Senior Debt is greater than the Total Debt Limiter as of suchdate, Borrower will immediately prepay the Senior Debt in accordance with theprovisions of Section 2.05(d) in an aggregate amount equal tosuch excess.

 

(iv)                              Within 10 days of delivery to the Agents andthe Lenders of audited annual financial statements pursuant to Section 7.01(a)(ii),commencing with the delivery to the Agents and the Lenders of the financialstatements for the Fiscal Year ended June 30, 2006 or, if such financialstatements are not delivered to the Agents and the Lenders on the date suchstatements are required to be delivered pursuant to Section 7.01(a)(ii),10 days after the date such statements are required to be delivered to theAgents and the Lenders pursuant to Section 7.01(a)(ii), theBorrower shall prepay the outstanding principal amount of the Term Loans inaccordance with the provisions of Section 2.05(d), in an amount equal to50% of the Excess Cash Flow of the Borrower and its Subsidiaries for suchFiscal Year.

 

(v)                                 Immediately upon receipt of any proceeds ofany Disposition by any Loan Party or its Subsidiaries other than (x) aPermitted Disposition (other than a Permitted Disposition of the type describedin clause (b) of the definition of Permitted Dispositions) or (y) aDisposition described below in Section 2.05(c)(vi), the Borrower shallprepay the outstanding principal amount of the Senior Debt (or in the case ofsuch a Disposition of assets that does not include Accounts or Inventory, theoutstanding principal amount of the Term Loans) in accordance with theprovisions of Section 2.05(d), in an amount equal to 100% of the Net CashProceeds received by such Person in connection with such Disposition.  Nothing contained in this clause (v) shallpermit any Loan Party or any of its Subsidiaries to make a Disposition of anyproperty other than a Permitted Disposition.

 

(vi)                              Immediately upon receipt of any proceeds ofany Disposition by any Loan Party or its Subsidiaries of (x) all orsubstantially all of the Stock in any Subsidiary of Borrower, or (y) all orsubstantially all of the assets of any Loan Party or any of its 

 

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Subsidiaries (or one or morebusiness lines maintained by any Loan Party or any of its Subsidiaries)(including, without limitation, the Disposition described in clause (e) ofthe definition of Permitted Dispositions), the Borrower shall prepay theoutstanding principal amount of the Senior Debt in accordance with theprovisions of Section 2.05(d), in an amount equal to 100% of the Net CashProceeds received by such Person in connection with such Disposition. Nothingcontained in this clause (vi) shall permit any Loan Party or any of itsSubsidiaries to make a Disposition of any property other than a PermittedDisposition.

 

(vii)                           Upon (A) the issuance or incurrence byany Loan Party or any of its Subsidiaries of any Indebtedness (other thanIndebtedness referred to in clauses (a), (b), (c), (d), (e), (f) and (g) ofthe definition of Permitted Indebtedness), the Borrower shall prepay the TermLoan in accordance with the provisions of Section 2.05(d), in an amountequal to 100% of the Net Cash Proceeds received by such Person in connectiontherewith, and (B) the sale or issuance by any Loan Party or any of itsSubsidiaries of any shares of its Capital Stock, the Borrower shall prepay theTerm Loan in accordance with the provisions of Section 2.05(d), in anamount equal to 75% of the Net Cash Proceeds received by such Person inconnection therewith.  The provisions ofthis subsection (vii) shall not be deemed to be implied consentto any such issuance, incurrence or sale otherwise prohibited by the terms andconditions of this Agreement.

 

(viii)                        Upon the receipt by any Loan Party or any ofits Subsidiaries of any Extraordinary Receipts, the Borrower shall prepay theoutstanding principal of the Senior Debt (or in the case of ExtraordinaryReceipts that do not consist of proceeds of insurance or condemnation awards inrespect of Accounts or Inventory, the outstanding principal of the Term Loan)in accordance with the provisions of Section 2.05(d), in an amount equalto 100% of such Extraordinary Receipts, net of any reasonable expenses incurredin collecting such Extraordinary Receipts.

 

(d)                                 Application of Payments.

 

(i)                                     Each prepayment pursuant to subclauses (c)(viii) above(with respect to insurance proceeds and condemnation awards related to acasualty or loss of Collateral), (c)(vi) (other than with respect toproceeds of the Disposition described in clause (e) of the definition ofPermitted Dispositions) and (c)(v), shall be applied as follows:

 

(D)                     if theproceeds are solely from any Disposition of, or any insurance policy orcondemnation award with respect to, any Accounts Receivable or Inventory, suchproceeds shall be applied, first, to the outstanding principal amount of the FirstLien Advances, until paid in full, second, to cash collateralize the First LienLetters of Credit in an amount equal to 105% of the undrawn amount thereof,until paid in full, third to the outstanding principal amount of the Term Loan,until paid in full;

 

(E)                       subject toclause (C) below, if the proceeds are solely from any Disposition of, orany insurance policy or condemnation award with respect to, any other assets(other than assets described in clause (A) above), such proceeds shall beapplied to the outstanding principal amount of the Term Loan, until paid infull; and

 

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(F)                       if theproceeds are from a Disposition of all or substantially all of the assets orStock of any Person or any insurance, which sale, disposition or proceeds ofinsurance includes both Accounts Receivable or Inventory and other assets, suchproceeds shall be applied as follows: (x) an amount equal to the net book valueof such Accounts Receivable and Inventory that are the subject of such sale orother disposition or loss (determined at the time of such sale or dispositionor event resulting in such insurance proceeds), shall be applied first, to theoutstanding principal amount of the First Lien Advances, until paid in full, second,to cash collateralize the First Lien Letters of Credit in an amount equal to105% of the undrawn amount thereof, until paid in full, and (y) the remainingproceeds shall be applied to the outstanding principal amount of the Term Loan,until paid in full.

 

(ii)                                  Each prepayment pursuant to subclauses (vi) (withrespect to proceeds of the Disposition described in clause (e) of thedefinition of Permitted Dispositions) and (iii) shall be applied,first, to the outstanding principal amount of the First Lien Advances, untilpaid in full, second, to cash collateralize the First Lien Letters of Credit inan amount equal to 105% of the undrawn amount thereof, until paid in full (ineach case in accordance with the provisions of Section 2.4(c)(vi) ofthe First Lien Credit Agreement (as in effect on the date hereof)), and thirdto the outstanding principal amount of the Term Loan, until paid in full.

 

(iii)                               Each prepayment pursuant to subclauses (c)(viii) (exceptwith respect to insurance proceeds and condemnation awards related to acasualty or loss of Collateral), (c)(ii), (c)(iv) and (c)(vii) andshall be applied to the outstanding principal amount of the Term Loan,until paid in full.

 

(iv)                              Eachsuch prepayment of the Term Loan shall, to the extent applicable, be appliedagainst the remaining installments of principal of the applicable Term Loan inthe inverse order of maturity

 

(v)                                 The foregoing to the contrary notwithstanding,Borrower shall not be required to make a prepayment otherwise required pursuantto Section 2.05(c)(v) or Section 2.05(c)(viii) withReinvestment Eligible Funds so long as: (A) no Default or Event of Defaulthas occurred and is continuing on the date such Person receives suchReinvestment Eligible Funds or on the date such amounts are to be released toBorrower pursuant to this paragraph (viii), (B) the Borrower delivers anotice (a “Reinvestment Notice”) on or prior to the date that theapplicable Person receives the monies constituting such Reinvestment EligibleFunds notifying the Agents of the intent of the applicable Person to use suchReinvestment Eligible Funds (1) to repair, restore, or replace the assetsthat were the subject of the Disposition, casualty or condemnation giving riseto such amounts with assets of equal or greater fair market value which will beuseful in the conduct of their business in accordance with past practice, (2) withinthe period specified in such notice, which period shall not to exceed theearlier of (x) 180 days after the receipt of such Reinvestment Eligible Fundsby the applicable Loan Party or its Subsidiary and (y) the Final Maturity Date,and (C) pending the reinvestment described in clause

 

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(B)(1) above, such Reinvestment Eligible Amountsare deposited in a cash collateral account over which Collateral Agent (onbehalf of the Lenders) has a perfected Lien (subject in priority only to theLien granted in favor of the First Lien Agent). If all or any portion of such Reinvestment Eligible Funds are not usedin accordance with the preceding sentence within the period specified in theReinvestment Notice, the remaining portion shall be applied to the Loans inaccordance with Section 2.05(d) on the last day of suchspecified period.

 

(e)                                  Interest and Fees.  Anyprepayment made pursuant to this Section 2.05 (other thanprepayments made pursuant to subsection (c)(iv) of this Section 2.05)shall be accompanied by accrued interest on the principal amount being prepaidto the date of prepayment.

 

(f)                                    Cumulative Prepayments. Except as otherwise expressly provided in this Section 2.05,payments with respect to any subsection of this Section 2.05are in addition to payments made or required to be made under any other subsection ofthis Section 2.05.

 

Section 2.06                                Fees.  Borrower shall pay toCollateral Agent, as and when due and payable under the terms of the FeeLetter, the fees set forth in the Fee Letter.

 

Section 2.07                                Securitization.  TheBorrower hereby acknowledges that the Lenders and their Affiliates may sell orsecuritize the Loans (a ”Securitization”) through the pledge of theLoans as collateral security for loans to the Lenders or their Affiliates orthrough the sale of the Loans or the issuance of direct or indirect interestsin the Loans, which loans to the Lenders or their Affiliates or direct orindirect interests will be rated by Moody’s, Standard & Poor’s or oneor more other rating agencies (the “Rating Agencies”).  The Borrower shall cooperate with the Lendersand their Affiliates to effect the Securitization including by (a) amendingthis Agreement and the other Loan Documents, and executing such additionaldocuments, as reasonably requested by the Lenders in connection with theSecuritization, providedthat (i) any such amendment oradditional documentation does not impose material additional costs on theBorrower and (ii) any such amendment or additional documentation does notmaterially adversely affect the rights, or materially increase the obligations,of the Borrower under the Loan Documents or change or affect in a manneradverse to the Borrower the financial terms of the Loans, (b) providingsuch information as may be reasonably requested by the Lenders in connectionwith the rating of the Loans or the Securitization, and (c) providing inconnection with any rating of the Loans a certificate (i) agreeing toindemnify the Lenders and their Affiliates, any of the Rating Agencies, or anyparty providing credit support or otherwise participating in the Securitization(collectively, the “Securitization Parties”) for any losses, claims,damages or liabilities (the ”Liabilities”) to which the Lenders,their Affiliates or such Securitization Parties may become subject insofar asthe Liabilities arise out of or are based upon any untrue statement or allegeduntrue statement of any material fact contained in any Loan Document or in anywriting delivered by or on behalf of any Loan Party to any Agent or Lender inconnection with any Loan Document or arise out of or are based upon theomission or alleged omission to state therein a material fact required to bestated therein, or necessary in order to make the statements therein, in lightof the circumstances under which they were made, not misleading, and suchindemnity shall survive any transfer by the Lenders or their successors orassigns of the Loans and (ii) agreeing to reimburse the Agents, theLenders and their Affiliates for any legal or other expenses reasonablyincurred by such Persons in connection with defending the Liabilities.

 

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Section 2.08                                Taxes.

 

(a)                                  Anyand all payments by any Loan Party hereunder or under any other Loan Documentshall be made free and clear of and without deduction for any and all presentor future taxes, levies, imposts, deductions, charges or withholdings, and allliabilities with respect thereto, together with any and all Canadian federal,provincial and other taxes, levies, imposts, duties, fees, charges, claims andassessments which are or may become due in respect of any Loan Party, excludingtaxes imposed on the net income of any Agent or any Lender (or any transfereeor assignee thereof, including a participation holder (any such entity, a “Transferee”))by the jurisdiction in which such Person is organized or has its principallending office (all such nonexcluded taxes, levies, imposts, deductions,charges withholdings and liabilities, collectively or individually, “Taxes”).  If any Loan Party shall be required to deductany Taxes from or in respect of any sum payable hereunder to any Agent or anyLender (or any Transferee), (i) the sum payable shall be increased by theamount (an “additional amount”) necessary so that after making allrequired deductions (including deductions applicable to additional sums payableunder this Section 2.08) such Agent or such Lender (or suchTransferee) shall receive an amount equal to the sum it would have received hadno such deductions been made, (ii) such Loan Party shall make suchdeductions and (iii) such Loan Party shall pay the full amount deducted tothe relevant Governmental Authority in accordance with applicable law.

 

(b)                                 Inaddition, each Loan Party agrees to pay to the relevant Governmental Authorityin accordance with applicable law any present or future stamp or documentary taxesor any other excise or property taxes, charges or similar levies that arisefrom any payment made hereunder or from the execution, delivery or registrationof, or otherwise with respect to, this Agreement or any other Loan Document (“OtherTaxes”).  Each Loan Party shalldeliver to each Agent and each Lender official receipts in respect of any Taxesor Other Taxes payable hereunder promptly after payment of such Taxes or OtherTaxes.

 

(c)                                  TheLoan Parties hereby jointly and severally indemnify and agree to hold eachAgent and each Lender harmless from and against Taxes and Other Taxes(including, Taxes and Other Taxes imposed on any amounts payable under this Section 2.08)paid by such Person, whether or not such Taxes or Other Taxes were correctly orlegally asserted.  Such indemnificationshall be paid within 10 days from the date on which any such Person makeswritten demand therefore specifying in reasonable detail the nature and amountof such Taxes or Other Taxes.

 

(d)                                 EachLender that is organized under the laws of a jurisdiction outside the UnitedStates (a “Non-U.S. Lender”) agrees that it shall, no later than theEffective Date (or, in the case of a Lender which becomes a party heretopursuant to Section 12.07 after the Effective Date, promptly afterthe date upon which such Lender becomes a party hereto) deliver to the Agents(or, in the case of a participant, to the Lender granting the participationonly) two properly completed and duly executed copies of either U.S. InternalRevenue Service Form W-8BEN, W-8ECI or W-8IMY or any subsequent versionsthereof or successors thereto, in each case claiming complete exemption from,or reduced rate of, U.S. Federal withholding tax and

 

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payments of interest hereunder.  In addition, in the case of a Non-U.S. Lenderclaiming exemption from U.S. Federal withholding tax under Section 871(h) or881(c) of the Internal Revenue Code, such Non-U.S. Lender herebyrepresents to the Agents and the Borrower that such Non-U.S. Lender is not abank for purposes of Section 881(c) of the Internal Revenue Code, isnot a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) ofthe Internal Revenue Code) of the Borrower and is not a controlled foreigncorporation related to the Borrower (within the meaning of Section 864(d)(4) ofthe Internal Revenue Code), and such Non-U.S. Lender agrees that it shallpromptly notify the Agents in the event any such representation is no longeraccurate.  Such forms shall be deliveredby each Non-U.S. Lender on or before the date it becomes a party to thisAgreement and on or before the date, if any, such Non-U.S. Lender changes itsapplicable lending office by designating a different lending office (a “NewLending Office”).  In addition, suchNon-U.S. Lender shall deliver such forms within 20 days after receipt of awritten request therefor from any Agent, the assigning Lender or the Lendergranting a participation, as applicable. Notwithstanding any other provision of this Section 2.08, aNon-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.08(d) thatsuch Non-U.S. Lender is not legally able to deliver.

 

(e)                                  TheLoan Parties shall not be required to indemnify any Non-U.S. Lender, or pay anyadditional amounts to any Non-U.S. Lender, in respect of United States Federalwithholding tax pursuant to this Section 2.08 to the extent that (i) theobligation to withhold amounts with respect to United States Federalwithholding tax existed on the date such Non-U.S. Lender became a party to thisAgreement (or, in the case of a Transferee that is a participation holder, onthe date such participation holder became a Transferee hereunder) or, withrespect to payments to a New Lending Office, the date such Non-U.S. Lenderdesignated such New Lending Office with respect to a Loan; provided, however,that this clause (i) shall not apply to the extent the indemnity paymentor additional amounts any Transferee, or Lender (or Transferee) through a New LendingOffice, would be entitled to receive (without regard to this clause (i)) do notexceed the indemnity payment or additional amounts that the Person making theassignment, participation or transfer to such Transferee, or Lender (orTransferee) making the designation of such New Lending Office, would have beenentitled to receive in the absence of such assignment, participation, transferor designation, or (ii) the obligation to pay such additional amountswould not have arisen but for a failure by such Non-U.S. Lender to comply withthe provisions of clause (d) above.

 

(f)                                    Theobligations of the Loan Parties under this Section 2.08 shall survive thetermination of this Agreement and the payment of the Loans and all otheramounts payable hereunder.

 

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**ARTICLE III**

** **

**[INTENTIONALLYOMITTED]**

** **

**ARTICLE IV**

** **

**FEES,PAYMENTS AND OTHER COMPENSATION**

** **

Section 4.01                                Audit and Collateral Monitoring Fees.  TheBorrower acknowledges that pursuant to Section 7.01(f), representativesof the Agents may visit any Loan Party or conduct audits, inspections or fieldexaminations of any Loan Party and valuations or appraisals of any or all ofthe Collateral or business or enterprise valuations of the Loan Parties at anytime and from time to time in a manner so as to not unduly disrupt the businessof such Loan Party.  The Borrower agreesto pay (i) $1,000 per day per examiner plus the examiner’s out-of-pocketcosts and reasonable expenses incurred in connection with all such visits,audits, inspections, valuations, and field examinations and (ii) the costof all audits, appraisals and business valuations (including enterprisevaluation appraisals) conducted by third party auditors or appraisers on behalfof the Agents.

 

Section 4.02                                Payments; Computations and Statements.  (a) The Borrower will make each payment under this Agreement not later than12:00 noon (New York City time) on the day when due, in lawful money ofthe United States of America and in immediately available funds, to theAdministrative Agent’s Account.  Allpayments received by the Administrative Agent after 12:00 noon (New York Citytime) on any Business Day will be credited to the Loan Account on the nextsucceeding Business Day.  All paymentsshall be made by the Borrower without set-off, counterclaim, deduction or other defense to the Agents and theLenders.  Except as provided in Section 2.02,after receipt, the Administrative Agent will promptly thereafter cause to bedistributed like funds relating to the payment of principal ratably to theLenders in accordance with their Pro Rata Shares and like funds relating to thepayment of any other amount payable to any Lender to such Lender, in each caseto be applied in accordance with the terms of this Agreement, provided that theAdministrative Agent will cause to be distributed all interest and feesreceived from or for the account of the Borrower not less than once each monthand in any event promptly after receipt thereof.  The Lenders and the Borrower hereby authorizethe Administrative Agent to, and the Administrative Agent shall, from time totime, charge the Loan Account of the Borrower with any amount due and payableby the Borrower under any Loan Document. Each of the Lenders and the Borrower agrees that the AdministrativeAgent shall have the right to make such charges whether or not any Default orEvent of Default shall have occurred and be continuing or whether any of theconditions precedent in Section 5.02 have been satisfied.  Whenever any payment to be made under anysuch Loan Document shall be stated to be due on a day other than a BusinessDay, such payment shall be made on the next succeeding Business Day and suchextension of time shall in such case be included in the computation of interestor fees, as the case may be.  Allcomputations of fees shall be made by the Administrative Agent on the basis ofa year of 360 days for the actual number of days (including the first daybut excluding the last day) occurring in the period for which such fees arepayable.  Each determination by theAdministrative Agent of an interest rate or fees hereunder shall be conclusiveand binding for all purposes in the absence of manifest error.

 

(b)                                 The Administrative Agent shall provide theBorrower, promptly after the end of each calendar month, a summary statement(in the form from time to time used by the Administrative Agent) of the openingand closing daily balances in the Loan Account of the Borrower during suchmonth, the amounts and dates of all Loans made to the Borrower during suchmonth, the amounts and dates of all payments on account of the Loans to theBorrower during such month and the Loans to which such payments were applied,the amount of interest accrued on the Loans to the Borrower during such month,the amount of charges to the Loan Account, and the amount and nature of anycharges to the Loan Account made during such month on account of fees,commissions, expenses and other Obligations. All entries on any such statement shall be presumed to be correct and,30 days after the same is sent, shall be final and conclusive absent manifesterror.

 

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Section 4.03                                Sharing of Payments, Etc. Except as provided in Section 2.02 hereof, if any Lendershall obtain any payment (whether voluntary, involuntary, through the exerciseof any right of set-off, or otherwise) on account of any Obligation in excessof its ratable share of payments on account of similar obligations obtained byall the Lenders, such Lender shall forthwith purchase from the other Lenderssuch participations in such similar obligations held by them as shall benecessary to cause such purchasing Lender to share the excess payment ratablywith each of them; provided, however, that if all or any portionof such excess payment is thereafter recovered from such purchasing Lender,such purchase from each Lender shall be rescinded and such Lender shall repayto the purchasing Lender the purchase price to the extent of such recoverytogether with an amount equal to such Lender’s ratable share (according to theproportion of (i) the amount of such Lender’s required repayment to (ii) thetotal amount so recovered from the purchasing Lender of any interest or otheramount paid by the purchasing Lender in respect of the total amount sorecovered).  The Borrower agrees that anyLender so purchasing a participation from another Lender pursuant to this Section 4.03may, to the fullest extent permitted by law, exercise all of its rights(including the Lender’s right of set-off) with respect to such participation asfully as if such Lender were the direct creditor of the Borrower in the amountof such participation.

 

Section 4.04                                Apportionment of Payments.  Subject to Section 2.02hereof and to any written agreement among the Agents or the Lenders:

 

(a)                                  all payments of principal and interest inrespect of outstanding Loans, all payments of fees (other than the audit andcollateral monitoring fees provided for in Section 4.01) and allother payments in respect of any other Obligations, shall be allocated by theAdministrative Agent among such of the Lenders as are entitled thereto, inproportion to their respective Pro Rata Shares or otherwise as provided hereinor, in respect of payments not made on account of Loans as designated by thePerson making payment when the payment is made.

 

(b)                                 After the occurrence and during thecontinuance of an Event of Default, the Administrative Agent may, and upon thedirection of the Required Lenders shall, apply all payments in respect of anyObligations and all proceeds of the Collateral, subject to the provisions ofthis Agreement and the other Loan Documents, (i) first, ratably topay the Obligations in respect of any fees, expense reimbursements, indemnitiesand other amounts then due to the Agents until paid in full; (ii) second,ratably to pay interest due in respect of the Collateral Agent Advances untilpaid in full; (iii) third, ratably to pay principal of theCollateral Agent Advances until paid in full; (iv) fourth, ratably topay any fees and indemnities then due to the Term Loan Lenders until paid infull; (v) fifth, ratably to pay interest due in respect of the TermLoan until paid in full; (vi) sixth, ratably to pay principal ofthe Term Loan until paid in full, and (vii) seventh, to the ratablepayment of all other Obligations then due and payable.

 

(c)                                  In each instance, so long as no Event ofDefault has occurred and is continuing, Section 4.04(b) shallnot be deemed to apply to any payment by the Borrower specified by the Borrowerto the Administrative Agent to be for the payment of Term Loan Obligations thendue and payable under any provision of this Agreement or the prepayment of allor part of the principal of the Term Loan in accordance with the terms andconditions of Section 2.05.

 

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(d)                                 Forpurposes of Section 4.04(b), “paid in full” means with respect toany Obligations, payment of all amounts owing under the Loan Documents inrespect of such Obligations, including fees, interest, default interest,interest on interest, expense reimbursements and indemnities, specificallyincluding in each case any of the foregoing which would accrue after thecommencement of any Insolvency Proceeding irrespective of whether a claim isallowable in such Insolvency Proceeding.

 

(e)                                  In the event of a direct conflict between thepriority provisions of this Section 4.04 and other provisionscontained in any other Loan Document, it is the intention of the parties heretothat both such priority provisions in such documents shall be read together andconstrued, to the fullest extent possible, to be in concert with eachother.  In the event of any actual,irreconcilable conflict that cannot be resolved as aforesaid, the terms andprovisions of this Section 4.04 shall control and govern.

 

Section 4.05                                Increased Costs and Reduced Return.  (a)  If any Lender orany Agent shall have determined that the adoption or implementation of, or anychange in, any law, rule, treaty or regulation, or any policy, guideline ordirective of, or any change in, the interpretation or administration thereofby, any court, central bank or other administrative or Governmental Authority,or compliance by any Lender or any Agent or any Person controlling any such Lenderor any such Agent with any directive of, or guideline from, any central bank orother Governmental Authority or the introduction of, or change in, anyaccounting principles applicable to any Lender, any Agent or any Personcontrolling any such Lender, any such Agent (in each case, whether or nothaving the force of law), shall (i) subject any Lender, any Agent or anyPerson controlling any such Lender or any such Agent to any tax, duty or othercharge with respect to this Agreement or any Loan made by such Lender or suchAgent or change the basis of taxation of payments to any Lender, any Agent orany Person controlling any such Lender or any such Agent of any amounts payablehereunder (except for taxes on the overall net income of any Lender, any Agent orany Person controlling any such Lender or any such Agent), (ii) impose,modify or deem applicable any reserve, special deposit or similar requirementagainst any Loan, or against assets of or held by, or deposits with or for theaccount of, or credit extended by, any Lender, any Agent or any Personcontrolling any such Lender or any such Agent or (iii) impose on anyLender, any Agent or any Person controlling any such Lender or any such Agentany other condition regarding this Agreement or any Loan, and the result of anyevent referred to in clauses (i), (ii) or (iii) above shall be toincrease the cost to any Lender or any Agent of making any Loan, or agreeing tomake any Loan or to reduce any amount received or receivable by any Lender orany Agent hereunder, then, within three (3) Business Days of demand by anysuch Lender or any such Agent, the Borrower shall pay to such Lender or suchAgent such additional amounts as will compensate such Lender, or such Agent forsuch increased costs or reductions in amount.

 

(b)                                 If any Lender or any Agent shall havedetermined that any Capital Guideline or the adoption or implementation of, orany change in, any Capital Guideline by the Governmental Authority charged withthe interpretation or administration thereof, or compliance

 

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by any Lender, any Agent orany Person controlling such Lender or such Agent with any Capital Guideline orwith any request or directive of any such Governmental Authority with respectto any Capital Guideline, or the implementation of, or any change in, anyapplicable accounting principles (in each case, whether or not having the forceof law), either (i) affects or would affect the amount of capital requiredor expected to be maintained by any Lender, any Agent or any Person controllingsuch Lender or such Agent and any Lender or any Agent determines that theamount of such capital is increased as a direct or indirect consequence of anyLoans made or maintained, any Lender’s, any Agent’s or any such othercontrolling Person’s other obligations hereunder, or (ii) has or wouldhave the effect of reducing the rate of return on any Lender’s, any Agent’s orany such other controlling Person’s capital to a level below that which suchLender, such Agent or such controlling Person could have achieved but for suchcircumstances as a consequence of any Loans made or maintained, or anyagreement to make Loans, or such Lender’s, such Agent’s or such othercontrolling Person’s other obligations hereunder (in each case, taking intoconsideration, such Lender’s, or such Agent’s or such other controlling Person’spolicies with respect to capital adequacy), then, within three (3) BusinessDays of demand by any Lender or any Agent, the Borrower shall pay to such Lenderor such Agent from time to time such additional amounts as will compensate suchLender or such Agent for such cost of maintaining such increased capital orsuch reduction in the rate of return on such Lender’s or such Agent’s or suchother controlling Person’s capital.

 

(c)                                  All amounts payable under this Section 4.05shall bear interest from the date that is ten (10) days after the date ofdemand by any Lender or any Agent until payment in full to such Lender or suchAgent at the Reference Rate.  A certificateof such Lender or such Agent claiming compensation under this Section 4.05,specifying the event herein above described and the nature of such event shallbe submitted by such Lender or such Agent to the Borrower, setting forth theadditional amount due and an explanation of the calculation thereof, and suchLender’s or such Agent’s reasons for invoking the provisions of this Section 4.05,and shall be final and conclusive absent manifest error.

 

**ARTICLE V**

** **

**CONDITIONSTO LOANS**

** **

Section 5.01                                Conditions Precedent.  Theobligation of any Lender to make the initial Loans (or any other Person tootherwise to extend any credit provided for hereunder), is subject to thefulfillment, to the satisfaction of the Agents, of each of the conditionsprecedent set forth below:

 

(a)                                  Payment of Fees, Etc.  TheBorrower shall have paid all fees, costs, expenses and taxes then payablepursuant to Sections 2.06 or 12.04.

 

(b)                                 Representations and Warranties; No Event ofDefault.  The following statements shall be true andcorrect:  (i) the representationsand warranties contained in Article VI and in each other Loan Document,certificate or other writing delivered to any Agent or any Lender pursuanthereto or thereto on or prior to the Effective Date are true and correct in allmaterial respects (except that such materiality qualifier shall not beapplicable to any representations and warranties that already are qualified ormodified by materiality in the text

 

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thereof) on and as of theEffective Date as though made on and as of such date (it being understood andagreed that any representation or warranty which by its terms is made as of aspecified date shall be required to be true and correct in all materialrespects only as of such specified date) and (ii) no Default or Event ofDefault shall have occurred and be continuing on the Effective Date or wouldresult from this Agreement or the other Loan Documents becoming effective inaccordance with its or their respective terms.

 

(c)                                  Legality.  The making of the initialLoans shall not contravene any law, rule or regulation applicable to anyAgent or any Lender.

 

(d)                                 Delivery of Documents.  TheCollateral Agent shall have received on or before the Effective Date the following,each in form and substance satisfactory to the Collateral Agent and, unlessindicated otherwise, dated the Effective Date:

 

(i)                                     a Security Agreement, duly executed by eachLoan Party, together with such evidence as the Agents shall require to evidencethe delivery to First Lien Agent of all intercompany promissory notes of suchLoan Parties, accompanied by allonges endorsing such notes to First Lien Agent;

 

(ii)                                  theCanadian Documents,

 

(iii)                               the Designated AccountControl Agreement, duly executed by Borrower, First Lien Agent and Wells FargoBank, N.A.,

 

(iv)                              [intentionally omitted]

 

(v)                                 the Intercreditor Agreement, duly executed byFirst Lien Agent and acknowledged by each Loan Party,

 

(vi)                              the Intercompany Subordination Agreement,duly executed by each Loan Party;

 

(vii)                           a Filing Authorization Letter, duly executedby each Loan Party, together with appropriate financing statements duly filedin such office or offices as may be necessary or, in the opinion of theCollateral Agent, desirable to perfect the security interests purported to becreated by each Security Agreement;

 

(viii)                        the Fee Letter, duly executed and deliveredby Borrower;

 

(ix)                                certified copies of all effective financingstatements which name as debtor any Loan Party and which are filed, togetherwith copies of such financing statements, none of which, except as otherwiseagreed in writing by the Collateral Agent, shall cover any of the Collateraland the results of searches for any tax Lien and judgment Lien filed againstsuch Person or its property, which results, except as otherwise agreed to inwriting by the Collateral Agent, shall not show any such Liens;

 

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(x)                                   a copy of the resolutions of each Loan Party,certified as of the Effective Date by the secretary thereof, authorizing (A) thetransactions contemplated by the Loan Documents to which such Loan Party is orwill be a party, and (B) the execution, delivery and performance by suchLoan Party of each Loan Document to which such Loan Party is or will be a partyand the execution and delivery of the other documents to be delivered by suchPerson in connection herewith and therewith;

 

(xi)                                a certificate of the secretary of each LoanParty, certifying the names and true signatures of the representatives of suchLoan Party authorized to sign each Loan Document to which such Loan Party is orwill be a party and the other documents to be executed and delivered by suchLoan Party in connection herewith and therewith, together with evidence of theincumbency of such authorized officers;

 

(xii)                             a certificate of the appropriate official(s)of (A) the state of organization and (B) each state of foreignqualification of each Loan Party where the failure to be so qualified in suchjurisdiction described solely in this clause (B) would result in aMaterial Adverse Effect, in each case of clauses (A) (B) of thissubsection, certifying as to the subsistence in good standing of, and thepayment of taxes by, such Loan Party in such states;

 

(xiii)                          a true and complete copy of the charter,certificate of formation, certificate of limited partnership or other publiclyfiled organizational document of each Loan Party certified as of a recent datenot more than 30 days prior to the Effective Date by an appropriate official ofthe state of organization of such Loan Party which shall set forth the samecomplete name of such Loan Party as is set forth herein and the organizationalnumber of such Loan Party, if an organized number is issued in suchjurisdiction;

 

(xiv)                         a copy of the charter and by-laws, limitedliability company agreement, operating agreement, agreement of limitedpartnership or other organizational document of each Loan Party, together withall amendments thereto, certified as of the Effective Date by the secretary ofsuch Loan Party;

 

(xv)                            one or more opinions of counsel to each ofthe Loan Parties (including Canadian and other foreign counsel, as applicable),substantially in the form of Exhibit 5.01(d) and as to suchother matters as the Collateral Agent may reasonably request;

 

(xvi)                         a certificate of an Authorized Officer ofeach Loan Party, certifying as to the matters set forth in Section 5.01(b);

 

(xvii)                      a copy of the Financial Statements;

 

(xviii)                   a copy of the financial projections describedin Section 6.01(g)(ii) hereof, which projections shall besatisfactory in form and substance to the Agents;

 

(xix)                           a certificate of the chief financial officerof the Borrower, setting forth in reasonable detail the calculations requiredto establish compliance, on a pro forma basis after giving effect to thetransactions contemplated to occur on the Effective Date, with each of thefinancial covenants contained in Section 7.03;

 

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(xx)                              a certificate of the chief financial officerof Borrower, certifying as to the solvency of the Borrower individually and theLoan Parties on a consolidated basis, which certificate shall be satisfactoryin form and substance to the Collateral Agent;

 

(xxi)                           a certificate of the chief financial officerof Borrower, certifying the current status of the ULT Litigation, thelitigation regarding the Arbitration Award and the Loan Parties’ obligations inrespect of their Benefit Plans (including the currently expected date and amountof any cash payments required to be made on or before the Final Maturity Datein respect thereof);

 

(xxii)                        evidence of the insurance coverage requiredby Section 7.01 and the terms of each Security Agreement and suchother insurance coverage with respect to the business and operations of theLoan Parties as the Collateral Agent may reasonably request, in each case,where requested by the Collateral Agent, with such endorsements as to the namedinsureds or loss payees thereunder as the Collateral Agent may request andproviding that such policy may be terminated or canceled (by the insurer or theinsured thereunder) only upon 30 days prior written notice to theCollateral Agent and each such named insured or loss payee;

 

(xxiii)                     a certificate of the secretary of theBorrower, certifying the names and true signatures of the persons that areauthorized to provide Notices of Borrowing, and all other notices under thisAgreement and the other Loan Documents;

 

(xxiv)                    copies of the Material Contracts as in effecton the Effective Date, certified as true and correct copies thereof by thesecretary of the Borrower, together with a certificate of the secretary of theBorrower stating that such agreements remain in full force and effect and thatnone of the Loan Parties has breached or defaulted in any of its obligationsunder such agreements;

 

(xxv)                       a termination and release agreement withrespect to the Existing Credit Facility and all related documents, dulyexecuted by the Loan Parties and the Existing Agent, together with terminationstatements for all financing statements filed by the Existing Agent andcovering any portion of the Collateral;

 

(xxvi)                    such depository account, blocked account,lockbox account and similar agreements and other documents, each in form andsubstance satisfactory to the Agents, as the Agents may request with respect tothe Borrower’s cash management system; and

 

(xxvii)                 such other agreements, instruments,approvals, opinions and other documents, each satisfactory to the CollateralAgent in form and substance, as the Collateral Agent may reasonably request.

 

(e)                                  Material Adverse Effect.  TheCollateral Agent shall have determined, in its sole judgment, that no event ordevelopment shall have occurred since June 30, 2005 which could reasonablybe expected to result in a Material Adverse Effect.

 

(f)                                    Italian Financing Proceeds.  TheAgents shall have received such evidence as they shall require to evidence thatBorrower has received Net Cash Proceeds from the Italian Financing Transactionof any least $3,000,000 in immediately available funds.

 

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(g)                                 Proceedings; Receipt of Documents.  Allproceedings in connection with the making of the initial Loans and the othertransactions contemplated by this Agreement and the other Loan Documents, andall documents incidental hereto and thereto, shall be satisfactory to theCollateral Agent and its counsel, and the Collateral Agent and such counselshall have received all such information and such counterpart originals orcertified or other copies of such documents as the Collateral Agent or suchcounsel may reasonably request.

 

(h)                                 Management Reference Checks.  TheCollateral Agent shall have received satisfactory reference checks for keymanagement of each Loan Party.

 

(i)                                     Due Diligence.  TheAgents shall have completed their business and legal due diligence with respectto each Loan Party and the results thereof shall be acceptable to the Agents,in their sole and absolute discretion.

 

(j)                                     First Lien Loan Documents.  TheAgents shall have received copies of each First Lien Loan Document, togetherwith a certificate of the Secretary of Borrower certifying that as of theEffective Date (i) each such document is a true, correct, and completecopy thereof, (ii) such documents have been entered into by the Borrowerand Guarantors in compliance with all Applicable Laws and all necessaryapprovals and are in full force and effect, and (iii) there is no (A) litigation,investigation or proceeding (judicial or administrative) pending or, to thebest knowledge of Borrower, threatened, against Borrower or any Guarantor, orany of their respective Subsidiaries by any Governmental Authority arising outof the transactions contemplated by or effected in connection with the FirstLien Loan Documents or the Loan Documents, (B) injunction, writ orrestraining order restraining or prohibiting the transactions contemplated bythe First Lien Loan Documents or the consummation of the financing arrangementscontemplated under the Loan Documents, or (C) suit, action, investigationproceeding (judicial or administrative) or ERISA Event pending or, to the bestknowledge of Borrower, threatened against Borrower, any Guarantor or any oftheir respective Subsidiaries which could reasonably be expected to cause aMaterial Adverse Effect.  In addition,simultaneously with the extensions of the credit by the Lenders to the Borroweron the Effective Date, the parties to the First Lien Loan Documents shall haveconsummated all transactions contemplated thereby and furnished to the Agentsevidence thereof in form and substance satisfactory to the Agents.

 

(k)                                  Litigation.  In the opinion of the Agents,no claim, action, suit, investigation, litigation or proceeding is pending orthreatened in any court or before any Governmental Authority which relates tothe transactions contemplated hereby or which may have a material adverseeffect on the ability of Borrower or any Guarantor to perform the terms of theLoan Documents or the First Lien Loan Documents.

 

(l)                                     Total Debt Limiter. After giving effect to the Term Loan and the making of the First LienAdvances and First Lien Letters of Credit, the sum of the aggregate principalamount of the Term Loan, the First Lien Advances and First Lien Letters of Creditdoes not exceed the Total Debt Limiter when calculated as of the 12 monthperiod ending on August 31, 2005.

 

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(m)                               Excess Availability. After giving effect to all Loans to be made on the Effective Date andthe Excess Availability and Qualified Cash shall not be less than$5,000,000.  The Borrower shall deliverto the Collateral Agent a certificate of the chief financial officer of theBorrower certifying as to the calculation of Excess Availability.

 

Section 5.02                                Conditions Precedent to All Loans.  Theobligation of any Agent or any Lender to make any Loan is subject to thefulfillment of each of the following conditions precedent:

 

(a)                                  Payment of Fees, Etc.  TheBorrower shall have paid all fees, costs, expenses and taxes then payable bythe Borrower pursuant to this Agreement and the other Loan Documents, includingSections 2.06 and 12.04 hereof.

 

(b)                                 Representations and Warranties; No Event ofDefault.  The following statements shall be true andcorrect, and the submission by the Borrower to the Administrative Agent of aNotice of Borrowing with respect to each such Loan, and the Borrower’sacceptance of the proceeds of such Loan, shall each be deemed to be arepresentation and warranty by each Loan Party on the date of such Loanthat:  (i) the representations andwarranties contained in Article VI and in each other Loan Document,certificate or other writing delivered to any Agent or any Lender pursuanthereto or thereto on or prior to the date of such Loan are true and correct inall material respects (except that such materiality qualifier shall not beapplicable to any representations and warranties that already are qualified ormodified by materiality in the text thereof) on and as of such date as thoughmade on and as of such date (or to the extent that such representations andwarranties relate solely to an earlier date, on and as of such earlier date),and (ii) at the time of and after giving effect to the making of such Loanand the application of the proceeds thereof, no Default or Event of Default hasoccurred and is continuing or would result from the making of the Loan to bemade.

 

(c)                                  First Lien Proceeds. Concurrent with the funding thereof, First Lien Agent shall have fundedto the Designated Account, immediately available funds in an amount not lessthan $4,600,000.

 

(d)                                 Legality.  The making of such Loan shallnot contravene any law, rule or regulation applicable to any Agent or anyLender.

 

(e)                                  Notices.  The Administrative Agent shallhave received a Notice of Borrowing pursuant to Section 2.02hereof.

 

**ARTICLE VI**

** **

**REPRESENTATIONSAND WARRANTIES**

** **

Section 6.01                                Representations and Warranties.  EachLoan Party hereby represents and warrants to the Agents and the Lenders asfollows:

 

(a)                                  Organization, Good Standing, Etc.  EachLoan Party and each of their respective Subsidiaries (other than the ExcludedForeign Subsidiaries) (i) is a corporation, limited liability company orlimited partnership duly organized, validly existing and in good

 

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standing under the laws ofthe state or jurisdiction of its organization, (ii) has all requisitepower and authority to conduct its business as now conducted and as currentlycontemplated and, in the case of the Borrower, to make the borrowingshereunder, and to execute and deliver each Loan Document to which it is aparty, and to consummate the transactions contemplated thereby, and (iii) isduly qualified to do business and is in good standing in each jurisdiction inwhich the character of the properties owned or leased by it or in which thetransaction of its business makes such qualification necessary.

 

(b)                                 Authorization, Etc.  Theexecution, delivery and performance by each Loan Party of each Loan Document towhich it is or will be a party, (i) have been duly authorized and approvedby all necessary action (whether of the interestholders of any Loan Party, anyPerson under any material contractual obligation of any Loan Party, orotherwise), (ii) do not and will not contravene its charter or by-laws,its limited liability company or operating agreement or its certificate ofpartnership or partnership agreement, as applicable, or any applicableprovision of United States or foreign federal, state, provincial or local lawor regulation, any order, judgment or decree of any court or other GovernmentalAuthority binding on any Loan Party, or any contractual restriction binding onor otherwise affecting it or any of its properties, (iii) do not and willnot result in or require the creation of any Lien (other than pursuant to anyLoan Document) upon or with respect to any of its properties, and (iv) donot and will not result in any default, noncompliance, suspension, revocation,impairment, forfeiture or nonrenewal of any permit, license, authorization orapproval applicable to its operations or any of its properties.

 

(c)                                  Governmental Approvals.  Noauthorization or approval or other action by, and no notice to or filing with,any Governmental Authority is required in connection with the due execution,delivery and performance by any Loan Party of any Loan Document to which it isor will be a party.

 

(d)                                 Enforceability of Loan Documents.  ThisAgreement is, and each other Loan Document to which any Loan Party is or willbe a party, when delivered hereunder, will be, a legal, valid and bindingobligation of such Person, enforceable against such Person in accordance withits terms, except as may be limited by applicable bankruptcy, insolvency,reorganization, moratorium or other similar laws.

 

(e)                                  Subsidiaries.  Schedule 6.01(e) isa complete and correct description of the name, jurisdiction of incorporationand ownership of the outstanding Capital Stock of Borrower and each Subsidiaryof the Borrower (other than the Excluded Foreign Subsidiaries).  All of the issued and outstanding shares ofCapital Stock of such Subsidiaries have been validly issued and are fully paidand nonassessable, and the holders thereof are not entitled to any preemptive,first refusal or other similar rights. Except as indicated on such Schedule, all such Capital Stock is owned bythe Borrower or one or more of its wholly-owned Subsidiaries, free and clear ofall Liens.  There are no outstanding debtor equity securities of the Borrower or any of its Subsidiaries and nooutstanding obligations of the Borrower or any of its Subsidiaries convertibleinto or exchangeable for, or warrants, options or other rights for the purchaseor acquisition from the Borrower or any of its Subsidiaries, or otherobligations of any Subsidiary to issue, directly or indirectly, any shares ofCapital Stock of any Subsidiary of the Borrower.

 

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(f)                                    Litigation; Commercial Tort Claims. Except as set forth in Schedule 6.01(f), (i) there isno pending or, to the knowledge of any Loan Party or any of their respectiveSubsidiaries, threatened action, suit or proceeding affecting any Loan Party orany of their respective Subsidiaries before any court or other Governmental Authorityor any arbitrator that (A) if adversely determined, could reasonably beexpected to result in a Material Adverse Effect or (B) relates to thisAgreement or any other Loan Document or any transaction contemplated hereby orthereby and (ii) as of the Effective Date, none of the Loan Parties holdsany commercial tort claims in respect of which a claim has been filed in acourt of law or a written notice by an attorney has been given to a potentialdefendant.

 

(g)                                 Financial Condition.

 

(i)                                     The Financial Statements, copies of whichhave been delivered to each Agent and each Lender, fairly present, in allmaterial respects, the consolidated financial condition of the Borrower and itsSubsidiaries as at the respective dates thereof and the consolidated results ofoperations of the Borrower and its Subsidiaries for the fiscal periods ended onsuch respective dates, all in accordance with GAAP, and since June 30,2005, no event or development has occurred that has had or could reasonably beexpected to result in a Material Adverse Effect.

 

(ii)                                  The Borrower has heretofore furnished to eachAgent and each Lender (A) projected monthly balance sheets, incomestatements and statements of cash flows of the Borrower and its Subsidiariesfor the period from July 1, 2005 through June 30, 2006, and (B) projectedannual balance sheets, income statements and statements of cash flows of theBorrower and its Subsidiaries for the Fiscal Years ending in 2006 through 2008,which projected financial statements shall be updated from time to timepursuant to Section 7.01(a)(vii). Such projections, as so updated, are believed by the Borrower at thetime furnished to be reasonable, have been prepared on a reasonable basis andin good faith by the Borrower, and have been based on assumptions believed bythe Borrower to be reasonable at the time made and upon the best informationthen reasonably available to the Borrower, and the Borrower is not aware of anyfacts or information that would lead it to believe that such projections, as soupdated, are incorrect or misleading in any material respect.

 

(h)                                 Compliance with Law, Etc.  NoLoan Party or any of their respective Subsidiaries is in violation of itsorganizational documents, any law, rule, regulation, judgment or order of anyGovernmental Authority applicable to it or any of its property or assets, orany material term of any agreement or instrument (including any MaterialContract) binding on or otherwise affecting it or any of its properties.

 

(i)                                     ERISA.

 

(i)                                     Setforth on Schedule 6.01(i) is a complete and accurate list ofall Plans that meet the definition of an “employee pension benefit plan” under Section 3(2) ofERISA and that are currently maintained or contributed to by Borrower, any ofits Subsidiaries or any of their respective ERISA Affiliates as of theEffective Date.

 

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(ii)                                  Borrower,its Subsidiaries, and their respective ERISA Affiliates are in compliance inall material respects with all applicable provisions and requirements of ERISA,the IRC, and the regulations and published interpretations thereunder withrespect to each Plan, and have performed all their obligations in all materialrespects under each Plan.

 

(iii)                               No ERISA Event hasoccurred or could reasonably be expected to occur.

 

(iv)                              Exceptto the extent required under Section 4980B of the IRC, or as described on Schedule 6.01(i) hereto,no Plan provides welfare benefits (through the purchase of insurance orotherwise) for any retired or former employee of Borrower, any of itsSubsidiaries or any of their respective ERISA Affiliates.

 

(v)                                 Asof the most recent valuation date for any Pension Plan, the amount of unfundedbenefit liabilities (as defined in Section 4001(a)(18) of ERISA),individually or in the aggregate for all Pension Plans (excluding for purposesof such computation any Pension Plans with respect to which assets exceedbenefit liabilities), does not exceed $70,600,000.

 

(vi)                              Theexecution and delivery of this Agreement and the consummation of the transactionscontemplated hereunder will not involve any transaction that is subject to theprohibitions of Section 406 of ERISA or in connection with which taxescould be imposed pursuant to Section 4975(c)(1)(A)-(D) of the IRC.

 

(vii)                           All liabilities under eachPlan are (i) funded to at least the minimum level required by law or, ifhigher, to the level required by the terms governing the Plans, (ii) insuredwith a reputable insurance company, (iii) provided for or recognized inthe financial statements most recently delivered to Agent pursuant to Section 7.01(a) hereofto the extent required by GAAP or (iv) estimated in the formal notes tothe financial statements most recently delivered to Agent pursuant to Section 7.01(a) hereofto the extent required by GAAP.

 

(viii)                        To the best knowledge of eachLoan Party, there are no circumstances which may give rise to a materialliability in relation to any Plan which is not funded, insured, provided for,recognized or estimated in the manner described in clause (vii) above.

 

(ix)                                Borrowerand its Subsidiaries are not and will not be a “plan” within the meaning of Section 4975(e) ofthe IRC; (ii) the assets of Borrower and its Subsidiaries do not and willnot constitute “plan assets” within the meaning of the United States Departmentof Labor Regulations set forth in 29 C.F.R. §2510.3-101; (iii) Borrowerand its Subsidiaries are not and will not be a “governmental plan” within themeaning of Section 3(32) of ERISA; and (iv) transactions by or withBorrower and its Subsidiaries are not and will not be subject to state statutesapplicable to Borrower and its Subsidiaries regulating investments offiduciaries with respect to governmental plans.

 

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(x)                                   Exceptas set forth in Schedule 6.01(i), Mondel, has no, and is notsubject to, any present or future obligation or liability under, any pensionplan, deferred compensation plan, retirement income plan, stock option or stockpurchase plan, profit sharing plan, bonus plan or policy, employee groupinsurance plan, program policy or practice, formal or informal, with respect toits employees.

 

(xi)                                Schedule 6.01(i) listsall the employee benefit, health, welfare, supplemental unemployment benefit,bonus, pension, profit sharing, deferred compensation, stock compensation,stock purchase, retirement, hospitalization insurance, medical, dental, legal,disability and similar plans or arrangements or practices relating to theemployees or former employees of Mondel which are currently maintained or weremaintained at any time in the last five calendar years (the “CanadianEmployee Plans”).

 

(xii)                             All of the CanadianEmployee Plans are and have been established, registered, qualified, investedand administered in all respects in accordance with all Laws applicable to theCanadian Employee Plans.  No fact orcircumstance exists that could adversely affect the tax-exempt status of aCanadian Employee Plan.

 

(xiii)                          All obligations regarding theCanadian Employee Plans have been satisfied, there are no outstanding defaultsor violations by any part to any Canadian Employee Plan and no taxes, penaltiesor fees are owing or eligible under any of the Canadian Employee Plans.

 

(xiv)                         No amendments have been madeto any Canadian Employee Plan and no improvements to any Canadian Employee Planhave been promised and no amendments or improvements to a Canadian EmployeePlan will be made or promised by Mondel before the Effective Date.

 

(xv)                            Mondelhas furnished to the Agents true, correct and complete copies of all theCanadian Employee Plans as amended as of the date hereof together with allrelated documentation including funding agreements, actuarial reports, fundingand financial information returns and statements, all professional opinions(whether or not internally prepared) with respect to each Canadian EmployeePlan, all material internal memoranda concerning the Canadian Employee Plans,copies of material correspondence with all regulatory authorities with respectto each Canadian Employee Plan and plan summaries, booklets and personnelmanuals.  No material changes haveoccurred to the Canadian Employee Plans or are expected to occur which wouldaffect the actuarial reports or financial statements required to be provided toLenders pursuant to this Section 6.01(i).

 

(xvi)                         Each Canadian Employee Plan isfully funded or fully insured on both an ongoing and solvency basis pursuant tothe actuarial assumptions and methodology set out in Schedule 6.01(i).

 

(xvii)                      Except as disclosed in Schedule 6.01(i),none of the Canadian Employee Plans provides benefits to retired employees orto the beneficiaries or dependents of retired employees.

 

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(j)                                     Taxes, Etc.  All U.S. and foreign federal,state, provincial and local tax returns and other reports required byapplicable law to be filed by any Loan Party or any of their respectiveSubsidiaries have been filed, or extensions have been obtained, and all taxes,assessments and other governmental charges imposed upon any Loan Party or anyof their respective Subsidiaries or any property of any Loan Party or any oftheir respective Subsidiaries and which have become due and payable have beenpaid, except to the extent contested in good faith by proper proceedings whichstay the imposition of any penalty, fine or Lien resulting from the non-paymentthereof and with respect to which adequate reserves have been set aside for thepayment thereof in accordance with GAAP. Without limiting the generality of the foregoing, Mondel has withheldfrom each payment made to any of its present or former employees, officers anddirectors, and to all Persons who are non-residents of Canada for the purposesof the Canadian Income Tax Act all amounts required by law to be withheld, includingwithout limitation, all payroll deductions required to be withheld, andfurthermore, has remitted such withheld amounts within the prescribed periodsto the appropriate Governmental Authority. Mondel has remitted all municipal real estate taxes, Canadian PensionPlan contributions, provincial pension plan contributions, employment insurancepremiums, workers compensation assessments, employer health taxes and othertaxes and obligations payable under Applicable Law (“Statutory Lien Payments”)by it and has remitted such amounts to the proper Governmental Authority withinthe time required under Applicable Law.

 

(k)                                  Regulations T, U and X.  NoLoan Party or any of their respective Subsidiaries is or will be engaged in thebusiness of extending credit for the purpose of purchasing or carrying marginstock (within the meaning of Regulation T, U or X), and no proceeds of any Loanwill be used to purchase or carry any margin stock or to extend credit toothers for the purpose of purchasing or carrying any margin stock.

 

(l)                                     Nature of Business.  NoLoan Party or any of their respective Subsidiaries is engaged in any businessother than the manufacturing and distribution of electronic instruments,controls, components and systems.

 

(m)                               Adverse Agreements, Etc.  Exceptas set forth on Schedule 6.01(f), no Loan Party or any of theirrespective Subsidiaries is a party to any agreement or instrument, or subjectto any charter, limited liability company agreement, partnership agreement orother corporate, partnership or limited liability company restriction or anyjudgment, order, regulation, ruling or other requirement of a court or otherGovernmental Authority, which has, or could reasonably be expected to resultin, a Material Adverse Effect.

 

(n)                                 Permits, Etc.  EachLoan Party and each of their respective Subsidiaries (other than the ExcludedForeign Subsidiaries) has, and is in compliance with, all permits, licenses,authorizations, approvals, entitlements and accreditations required for suchPerson lawfully to own, lease, manage or operate, or to acquire, each businesscurrently owned, leased, managed or operated, or to be acquired, by suchPerson.  No condition exists or event hasoccurred which, in itself or with the giving of notice or lapse of time orboth, would result in the suspension, revocation, impairment, forfeiture ornon-renewal of any such permit, license, authorization, approval, entitlementor accreditation, and there is no claim that any thereof is not in full forceand effect.

 

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(o)                                 Properties.  (i)  Each Loan Party and each of theirrespective Subsidiaries has good and marketable title to, valid leaseholdinterests in, or valid licenses to use, all property and assets material to itsbusiness, free and clear of all Liens, except Permitted Liens.  All such properties and assets are in goodworking order and condition, ordinary wear and tear excepted.

 

(ii)                                  Schedule 6.01(o) sets forth a complete and accurate list, asof the Effective Date, of the location, by state and street address, of allreal property owned or leased by any Loan Party or any of their respectiveSubsidiaries.  Each Loan Party and eachof their respective Subsidiaries has valid leasehold interests in the Leasesdescribed on Schedule 6.01(o) to which it is a party.  Schedule 6.01(o) sets forth withrespect to each such Lease, the commencement date, termination date, renewaloptions (if any) and annual base rents. Each such Lease is valid and enforceable in accordance with its terms inall material respects and is in full force and effect.  No consent or approval of any landlord orother third party in connection with any such Lease is necessary for any LoanParty or any of their respective Subsidiaries to enter into and execute the LoanDocuments to which it is a party, except as set forth on Schedule 6.01(o).  To the knowledge of any Loan Party or any oftheir respective Subsidiaries, no other party to any such Lease is in defaultof its obligations thereunder, and no Loan Party or any of their respectiveSubsidiaries (or any other party to any such Lease) has at any time deliveredor received any notice of default which remains uncured under any such Leaseand, as of the Effective Date, no event has occurred which, with the giving ofnotice or the passage of time or both, would constitute a default under anysuch Lease.

 

(p)                                 Full Disclosure.  EachLoan Party and each of their respective Subsidiaries has disclosed to theAgents all agreements, instruments and corporate or other restrictions to whichit is subject, and all other matters known to it, that, individually or in theaggregate, could reasonably be expected to result in a Material AdverseEffect.  None of the other reports,financial statements, certificates or other information furnished by or onbehalf of any Loan Party or any of their respective Subsidiaries to the Agentsin connection with the negotiation of this Agreement, the Loan Documents, orany First Lien Loan Document, or delivered hereunder or thereunder (as modifiedor supplemented by other information so furnished) contains any materialmisstatement of fact or omits to state any material fact necessary to make thestatements therein, in the light of the circumstances under which it was made,not misleading.  There is no contingentliability or fact that could reasonably be expected to result in a MaterialAdverse Effect which has not been set forth in a footnote included in theFinancial Statements or a Schedule hereto.

 

(q)                                 Operating Lease Obligations.  Onthe Effective Date, none of the Loan Parties or any of their respectiveSubsidiaries has any Operating Lease Obligations other than the Operating LeaseObligations set forth on Schedule 6.01(q).

 

(r)                                    Environmental Matters. Except as set forth on Schedule 6.01(r), (i) theoperations of Borrower and each of its Subsidiaries are in compliance with allEnvironmental Laws; (ii) there has been no Release at any of theproperties owned or operated by Borrower or any of its Subsidiaries or apredecessor in interest, or at any disposal or treatment facility whichreceived Hazardous Materials generated by Borrower or any of its Subsidiariesor any predecessor in interest which could reasonably be expected to result ina Material Adverse

 

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Effect; (iii) noEnvironmental Action has been asserted against Borrower or any of itsSubsidiaries or any predecessor in interest nor does any Loan Party haveknowledge or notice of any threatened or pending Environmental Action againstBorrower or any of its Subsidiaries or any predecessor in interest which couldreasonably be expected to result in a Material Adverse Effect; (iv) noEnvironmental Actions have been asserted against any facilities that may havereceived Hazardous Materials generated by Borrower or any of its Subsidiariesor any predecessor in interest which could reasonably be expected to result ina Material Adverse Effect; (v) no property now or formerly owned oroccupied by Borrower or any of its Subsidiaries has been used as a treatment ordisposal site for any Hazardous Material; (vi) neither Borrower nor any ofits Subsidiaries has failed to report to the proper Governmental Authority theoccurrence of any Release which is required to be so reported by anyEnvironmental Laws which could reasonably be expected to result in a MaterialAdverse Effect; (vii) Borrower and each of its Subsidiaries holds alllicenses, permits and approvals required under any Environmental Laws inconnection with the operation of the business carried on by it, except for suchlicenses, permits and approvals as to which Borrower’s or the applicableSubsidiary’s failure to maintain or comply with could not reasonably beexpected to result in a Material Adverse Effect; (viii) neither Borrowernor any of its Subsidiaries has received any notification pursuant to anyEnvironmental Laws that (A) any work, repairs, construction or CapitalExpenditures are required to be made in respect as a condition of continuedcompliance with any Environmental Laws, or any license, permit or approvalissued pursuant thereto or (B) any license, permit or approval referred toabove is about to be reviewed, made subject to limitations or conditions,revoked, withdrawn or terminated, in each case, except as could not reasonablybe expected to result in a Material Adverse Effect; and (ix) neitherBorrower nor any of its Subsidiaries has received notice that a Lien arisingunder any Environmental Law has attached to any revenues or to any RealProperty owned or operated by Borrower or any of its Subsidiaries.

 

(s)                                  Insurance.  Each Loan Party and each ofits Subsidiaries (other than the Excluded Foreign Subsidiaries) keeps itsproperty adequately insured and maintains (i) insurance to such extent andagainst such risks, including fire, as is customary with companies in the sameor similar businesses, (ii) worker’s compensation insurance in the amountrequired by applicable law, (iii) public liability insurance, which shallinclude product liability insurance, in the amount customary with companies inthe same or similar business against claims for personal injury or death onproperties owned, occupied or controlled by it, and (iv) such otherinsurance as may be required by law or as may be reasonably required by theCollateral Agent (including against larceny, embezzlement or other criminalmisappropriation).  Schedule 6.01(s)sets forth a list of all insurance maintained by each Loan Party on theEffective Date.

 

(t)                                    Use of Proceeds.  Theproceeds of the Loans shall be used, if necessary, to (i) fund a portionof any payments that are made in connection with a full and final resolution ofthe litigation regarding the Arbitration Award or any full and final settlementin respect thereof in accordance with the terms of this Agreement and (ii) payfees and expenses in connection with the transactions contemplated hereby (withany proceeds remaining after the full and final satisfaction of the ArbitrationAward to be released to Borrower for use for its general working capitalpurposes in accordance with the terms of this Agreement).

 

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(u)                                 Solvency.  After giving effect to thetransactions contemplated by this Agreement and before and after giving effectto each Loan, the Borrower is, and the Loan Parties on a consolidated basisare, Solvent.  No transfer of property isbeing made by Borrower, any Guarantor or any Subsidiary of Borrower or aGuarantor and no obligation is being incurred by Borrower or any Subsidiary ofBorrower in connection with the transactions contemplated by this Agreement orthe other Loan Documents with the intent to hinder, delay, or defraud eitherpresent or future creditors of Borrower or its Subsidiaries.

 

(v)                                 Location of Bank Accounts.  Schedule 6.01(v) setsforth a complete and accurate list as of the Effective Date of all deposit,checking and other bank accounts, all securities and other accounts maintainedwith any broker dealer and all other similar accounts maintained by each LoanParty and their respective Subsidiaries, together with a description thereof (i.e.,the bank or broker dealer at which such deposit or other account is maintainedand the account number and the purpose thereof).

 

(w)                               Intellectual Property. Except as set forth on Schedule 6.01(w), each Loan Party andeach of their respective Subsidiaries owns or licenses or otherwise has theright to use all licenses, permits, patents, patent applications, trademarks,trademark applications, service marks, tradenames, copyrights, copyrightapplications, franchises, authorizations, non-governmental licenses and permitsand other intellectual property rights that are necessary for the operation ofits business, without infringement upon or conflict with the rights of anyother Person with respect thereto, except for such infringements and conflictswhich, individually or in the aggregate, could not reasonably be expected toresult in a Material Adverse Effect.  Setforth on Schedule 6.01(w) is a complete and accurate list as of theEffective Date of all such material licenses, permits, patents, patentapplications, trademarks, trademark applications, service marks, tradenames,copyrights, copyright applications, franchises, authorizations,non-governmental licenses and permits and other intellectual property rights ofeach Loan Party and their respective Subsidiaries.  No slogan or other advertising device,product, process, method, substance, part or other material now employed, ornow contemplated to be employed, by any Loan Party or any of their respectiveSubsidiaries infringes upon or conflicts with any rights owned by any otherPerson, and no claim or litigation regarding any of the foregoing is pending orthreatened, except for such infringements and conflicts which could notreasonably be expected to result in, individually or in the aggregate, aMaterial Adverse Effect.  To theknowledge of each Loan Party and their respective Subsidiaries, no patent,invention, device, application, principle or any statute, law, rule,regulation, standard or code is pending or proposed, which, individually or inthe aggregate, could reasonably be expected to result in a Material AdverseEffect.

 

(x)                                   Material Contracts.  Setforth on Schedule 6.01(x) (which Borrowers may supplement from timeto time) is a complete and accurate list of all Material Contracts of each LoanParty, showing the parties and subject matter thereof and amendments andmodifications thereto.  Each suchMaterial Contract (i) is in full force and effect and is binding upon andenforceable against each Loan Party that is a party thereto and, to theknowledge of such Loan Party, all other parties thereto in accordance with itsterms, (ii) has not been otherwise amended or modified, and (iii) isnot in default due to the action of any Loan Party or, to the knowledge of anyLoan Party, any other party thereto.

 

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(y)                                 Holding Company and Investment Company Acts.  Noneof the Loan Parties is (i) a “holding company” or a “subsidiary company”of a “holding company” or an “affiliate” of a “holding company”, as such termsare defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) an“investment company” or an “affiliated person” or “promoter” of, or “principalunderwriter” of or for, an “investment company”, as such terms are defined inthe Investment Company Act of 1940, as amended.

 

(z)                                   Employee and Labor Matters. There is (i) no unfair labor practice complaint pending or, to theknowledge of any Loan Party or any of its Subsidiaries, threatened against anyLoan Party or any of its Subsidiaries before any Governmental Authority and nogrievance or arbitration proceeding pending or threatened against any LoanParty or any of its Subsidiaries which arises out of or under any collectivebargaining agreement, (ii) no strike, labor dispute, slowdown, stoppage orsimilar action or grievance pending or threatened against any Loan Party or anyof its Subsidiaries or (iii) to the knowledge of any Loan Party or any ofits Subsidiaries, no union representation question existing with respect to theemployees of any Loan Party or any of its Subsidiaries and no union organizingactivity taking place with respect to any of the employees of any Loan Party orany of its Subsidiaries.  No Loan Party,any of its Subsidiaries or any of their respective ERISA Affiliates hasincurred any liability or obligation under the Worker Adjustment and RetrainingNotification Act (“WARN”) or similar state law, which remains unpaid orunsatisfied.  The hours worked and paymentsmade to employees of any Loan Party or any of its Subsidiaries have not been inviolation of the Fair Labor Standards Act or any other applicable legalrequirements, except to the extent such violations could not, individually orin the aggregate, reasonably be expected to result in a Material AdverseEffect.  All material payments due fromany Loan Party or any of its Subsidiaries on account of wages and employeehealth and welfare insurance and other benefits have been paid or accrued as aliability on the books of such Loan Party or such Subsidiary, except where thefailure to do so could not, individually or in the aggregate, reasonably beexpected to result in a Material Adverse Effect.

 

(aa)                            Customers and Suppliers. There exists no actual or threatened termination, cancellation orlimitation of, or modification to or change in, the business relationshipbetween (i) any Loan Party or any of its Subsidiaries, on the one hand,and any customer or any group thereof, on the other hand, whose agreements withany Loan Party or any of its Subsidiaries are individually or in the aggregatematerial to the business or operations of such Loan Party or such Subsidiary,or (ii) any Loan Party or any of its Subsidiaries, on the one hand, andany material supplier thereof, on the other hand.

 

(bb)                          No Bankruptcy Filing.  NoLoan Party or any of its Subsidiaries is contemplating either the filing of apetition by it under any state, federal or foreign bankruptcy or insolvencylaws or the liquidation of all or a major portion of such Loan Party’s or suchSubsidiary’s assets or property, and no Loan Party or any of their respectiveSubsidiaries has any knowledge of any Person contemplating the filing of anysuch petition against it.

 

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(cc)                            Separate Existence.

 

(i)                                     All customary formalities regarding theseparate existence of each Loan Party or any of their respective Subsidiarieshave been at all times since its formation observed.

 

(ii)                                  Each Loan Party and each of their respectiveSubsidiaries has at all times since its formation accurately maintained itsfinancial statements, accounting records and other organizational documentsseparate from those of any Affiliate of such Loan Party or such Subsidiary andany other Person.  No Loan Party or anyof their respective Subsidiaries has at any time since its formation commingledits assets with those of any of its Affiliates or any other Person.  Each Loan Party and each of their respectiveSubsidiaries has at all times since its formation accurately maintained its ownbank accounts and separate books of account.

 

(iii)                               Each Loan Party and each of their respectiveSubsidiaries has at all times since its formation paid its own liabilities fromits own separate assets.

 

(iv)                              Each Loan Party and each of their respectiveSubsidiaries has at all times since its formation identified itself in alldealings with the public, under its own name and as a separate and distinctPerson.  No Loan Party or any of itsSubsidiaries has at any time since its formation identified itself as being adivision or a part of any other Person.

 

(dd)                          Name; Jurisdiction of Organization;Organizational ID Number; Chief Place of Business; Chief Executive Office; FEIN.  Schedule 6.01(dd)sets forth a complete and accurate list as of the date hereof of (i) theexact legal name of each Loan Party and each of its Subsidiaries, (ii) thejurisdiction of organization of each Loan Party and each of its Subsidiaries, (iii) theorganizational identification number of each Loan Party (or indicates that suchLoan Party has no organizational identification number) (or, in the case ofMondel, the business number assigned by the Canadian Revenue Agency), (iv) eachplace of business of each Loan Party, (v) the chief executive office ofeach Loan Party and (vi) the federal employer identification number ofeach Loan Party.

 

(ee)                            Tradenames.  Schedule 6.01(ee)hereto sets forth a complete and accurate list as of the Effective Date of alltradenames used by each Loan Party.

 

(ff)                                Locations of Collateral. There is no location at which any Loan Party has any Collateral (exceptfor Inventory in transit and except for Inventory with a value at any onelocation not to exceed $100,000 and an aggregate value at all such locationsnot to exceed $300,000) other than (i) those locations listed on Schedule 6.01(ff)and (ii) any other locations approved in writing by the Collateral Agentfrom time to time.  Schedule 6.01(ff)hereto contains a true, correct and complete list, as of the Effective Date, ofthe legal names and addresses of each warehouse at which Collateral of eachLoan Party is stored.  None of thereceipts received by any Loan Party from any warehouse states that the goodscovered thereby are to be delivered to bearer or to the order of a named Personor to a named Person and such named Person’s assigns.

 

(gg)                          Security Interests.  EachSecurity Agreement creates in favor of the Collateral Agent, for the benefit ofthe Agents and the Lenders, a legal, valid and enforceable

 

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security interest in theCollateral covered thereby.  Upon thefiling of the financing statements described in Section 5.01(d)(iv),such security interests in and Liens on the Collateral granted thereby shall beperfected, first priority security interests (subject to Permitted Liens), andno further recordings or filings are or will be required in connection with thecreation, perfection or enforcement of such security interests and Liens.

 

(hh)                          Indebtedness.  Setforth on Schedule 6.01(hh) is a true and complete list of allIndebtedness of Borrower, each Guarantor and each of their respectiveSubsidiaries outstanding immediately prior to the Effective Date that is toremain outstanding after the Effective Date and such Schedule accuratelyreflects the holder of, the aggregate outstanding principal amount of, theinterest rate applicable to, the maturity date of, and any guaranties of orcollateral securing, (in each case) such Indebtedness, and accurately lists thedate, title and parties to any and all written documents or agreementsevidencing such Indebtedness.

 

(ii)                                  First Lien Loan Documents. Borrower has delivered to each Agent true and correct copies of theFirst Lien Loan Documents.  Thetransactions contemplated by the First Lien Loan Documents will be consummated (a) contemporaneouslywith the making of the initial Loan hereunder and (b) in accordance withtheir respective terms.  All of therepresentations and warranties of the Loan Parties contained in the First LienLoan Documents are true and correct in all material respects (except that suchmateriality qualifier shall not be applicable to any representations andwarranties that already are qualified or modified by materiality in the textthereof) as of the Effective Date or, to the extent that any suchrepresentation or warranty relates solely to an earlier date, as of suchearlier date.

 

(jj)                                  Schedules.  All of the information whichis required to be scheduled to this Agreement is set forth on the Schedulesattached hereto, is correct and accurate in all material respects and does notomit to state any information material thereto.

 

(kk)                            Excluded Foreign Subsidiaries. None of the Excluded Foreign Subsidiaries (i) haveany assets, (ii) have any liabilities that are recourse to any Loan Party,or (iii) engage in any activity or business of any kind.

 

(ll)                                  Representations and Warranties in Documents;No Default.  All representations and warranties set forthin this Agreement and the other Loan Documents are true and correct in allmaterial respects (except that such materiality qualifier shall not beapplicable to any representations and warranties that already are qualified ormodified by materiality in the text thereof) at the time as of which such representationswere made and on the Effective Date or, to the extent that any suchrepresentation or warranty relates solely to an earlier date, as of suchearlier date.  No Event of Default has occurred and iscontinuing and no condition exists which constitutes a Default or an Event ofDefault.

 

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**ARTICLE VII**

** **

**COVENANTSOF THE LOAN PARTIES**

** **

Section 7.01                                Affirmative Covenants.  Solong as any principal of or interest on any Loan, or any other Obligation(whether or not due) shall remain unpaid or any Lender shall have anyCommitment hereunder, each Loan Party will and will cause each of itsSubsidiaries to:

 

(a)                                  Reporting Requirements. Furnish to each Agent and each Lender:

 

(i)                                     as soon as available and in any event within45 days after the end of each fiscal quarter of the Borrower, consolidated andconsolidating balance sheets, consolidated and consolidating statements ofoperations and retained earnings and consolidated and consolidating statementsof cash flows of the Borrower and its Subsidiaries as at the end of suchquarter, and for the period commencing at the end of the immediately precedingFiscal Year and ending with the end of such quarter, setting forth in each casein comparative form the figures for the corresponding date or period of theimmediately preceding Fiscal Year, all in reasonable detail and certified by anAuthorized Officer of the Borrower as fairly presenting, in all materialrespects, the financial position of the Borrower and its Subsidiaries as of theend of such quarter and the results of operations and cash flows of theBorrower and its Subsidiaries for such quarter, in accordance with GAAP appliedin a manner consistent with that of the most recent audited financialstatements of the Borrower and its Subsidiaries furnished to the Agents and theLenders, subject to normal year-end audit adjustments and the absence offootnotes;

 

(ii)                                  as soon as available, and in any event within90 days after the end of each Fiscal Year of the Borrower and its Subsidiaries,consolidated and consolidating balance sheets, consolidated and consolidatingstatements of operations and retained earnings and consolidated andconsolidating statements of cash flows of the Borrower and its Subsidiaries asat the end of such Fiscal Year, setting forth in each case in comparative formthe corresponding figures for the immediately preceding Fiscal Year, all inreasonable detail and prepared in accordance with GAAP, and accompanied by areport and an unqualified opinion, prepared in accordance with generallyaccepted auditing standards, of independent certified public accountants ofrecognized standing selected by the Borrower and satisfactory to the Agents(which opinion shall be without (A) a “going concern” or like qualificationor exception, (B) any qualification or exception as to the scope of suchaudit, or (C) any qualification which relates to the treatment orclassification of any item and which, as a condition to the removal of suchqualification, would require an adjustment to such item, the effect of whichwould be to cause any noncompliance with the provisions of****Section 7.03),together with a written statement of such accountants (1) to the effectthat, in making the examination necessary for their audit of such financialstatements, they have not obtained any knowledge of the existence of an Eventof Default or a Default under Section 7.03 and (2) if suchaccountants shall have obtained any knowledge of the existence of an Event ofDefault or such Default under Section 7.03, describing the naturethereof;

 

(iii)                               as soon as available, and in any event within30 days after the end of each fiscal month of the Borrower and itsSubsidiaries, internally prepared consolidated and consolidating balancesheets, consolidated and consolidating statements of operations and retainedearnings and consolidated and consolidating statements of cash flows as at theend of such fiscal month, and for the period commencing at the end of theimmediately preceding Fiscal Year and ending with the end of such fiscal month,all in reasonable detail and certified by an Authorized Officer of the Borroweras fairly presenting, in all material respects,

 

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the financial position ofthe Borrower and its Subsidiaries as at the end of such fiscal month and theresults of operations, retained earnings and cash flows of the Borrower and itsSubsidiaries for such fiscal month, in accordance with GAAP applied in a mannerconsistent with that of the most recent audited financial statements furnishedto the Agents and the Lenders, subject to normal year-end audit adjustments andthe absence of footnotes;

 

(iv)                              simultaneously with the delivery of thefinancial statements of the Borrower and its Subsidiaries required by clauses(i), (ii) and (iii) of this Section 7.01(a), acertificate of an Authorized Officer of the Borrower (A) stating that suchAuthorized Officer has reviewed the provisions of this Agreement and the otherLoan Documents and has made or caused to be made under his or her supervision areview of the condition and operations of the Borrower and its Subsidiariesduring the period covered by such financial statements with a view todetermining whether the Borrower and its Subsidiaries were in compliance withall of the provisions of this Agreement and such Loan Documents at the timessuch compliance is required hereby and thereby, and that such review has notdisclosed, and such Authorized Officer has no knowledge of, the existenceduring such period of an Event of Default or Default or, if an Event of Defaultor Default existed, describing the nature and period of existence thereof andthe action which the Borrower and its Subsidiaries propose to take or havetaken with respect thereto, (B) attaching a schedule showing thecalculation of the financial covenants specified in Section 7.03and the calculation of the Domestic Leverage Ratio for the twelve month periodending on the last day of the period covered by such financial statements, and (C) attachinga report containing a management discussion and analysis from Borrowerof the current status of (i) the ULT Litigation, (ii) the litigationregarding the Arbitration Award, and (iii) the aggregate outstandingbenefit liabilities of Borrower and its Subsidiaries (as defined in Section 4001(a)(18)of ERISA) for all Pension Plans (excluding for the purposes of such computationany Pension Plans with respect to which assets exceed benefit liabilities) andpayment obligations of Borrower and its Subsidiaries in respect of theirPension Plans which are expected to be due and payable on or before the FinalMaturity Date, together, in each case, with a detailed explanation of thechange in such status since the last report delivered to the Agents pursuant tothis Section 7.01(a)(iv)(C);

 

(v)                                 monthly, no later than the 10th day of eachmonth, a Total Debt Limiter Certificate;

 

(vi)                              nolater than 30 days before the commencement of each Fiscal Year,financial projections, supplementing and superseding the financial projectionsfor the  period referred to in Section 6.01(g)(ii)(A),displayed on a month by month basis and otherwise in form and substancereasonably satisfactory to the Agents for such Fiscal Year for the Borrower andits Subsidiaries, all such financial projections to be prepared on a reasonablebasis and in good faith, and to be based on assumptions believed by theBorrower to be reasonable at the time made and from the best information thenavailable to the Borrower;

 

(vii)                           promptly after submission to any GovernmentalAuthority, all documents and information furnished to such GovernmentalAuthority in connection with any investigation of any Loan Party other thanroutine inquiries by such Governmental Authority;

 

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(viii)                        as soon as possible, and in any event within3 Business Days of an Authorized Officer’s knowledge of an Event of Default orDefault or the occurrence of any event or development that could reasonably beexpected to result in a Material Adverse Effect, the written statement of anAuthorized Officer of the Borrower setting forth the details of such Event ofDefault or Default or other event or development having a Material AdverseEffect and the action which the affected Loan Party proposes to take withrespect thereto;

 

(ix)                                promptly after the commencement thereof butin any event not later than 5 Business Days after service of process withrespect thereto on, or the obtaining of knowledge thereof by, any Loan Party,notice of each action, suit or proceeding before any court or otherGovernmental Authority or other regulatory body or any arbitrator which, ifadversely determined, could reasonably be expected to result in a MaterialAdverse Effect;

 

(x)                                   as soon as possible and in any event within 5Business Days after execution, receipt or delivery thereof, copies of anymaterial notices that any Loan Party executes or receives in connection withany Material Contract;

 

(xi)                                promptly after the sending or filing thereof,copies of all statements, reports and other information any Loan Party sends toany holders of its Indebtedness or its securities or files with the SEC or anynational (domestic or foreign) securities exchange;

 

(xii)                             promptly upon receipt thereof, copies of allfinancial reports (including management letters), if any, submitted to any LoanParty by its auditors in connection with any annual or interim audit of thebooks thereof;

 

(xiii)                          to the extent not already provided to theAgents, copies of any notices, reports, certificates or other documentation asto the assets, financial condition or affairs of Borrower and its Subsidiariesthat are required to be delivered to First Lien Agent (collectively, the “FirstLien Reports”), in each case on or before the date when such First LienReports are required to be delivered to First Lien Agent pursuant to the FirstLien Credit Agreement, as in effect on the date hereof (including Schedules 5.2and 5.3 thereof); provided, that the First Lien Reports described inclauses (a), (b) and (c) of Schedule 5.3 to the First LienCredit Agreement (as in effect on the date hereof) shall only be required to bedelivered to the Agents on a weekly basis; and

 

(xiv)                         promptly upon request, such other informationconcerning the condition or operations, financial or otherwise, of any LoanParty as any Agent may from time to time may reasonably request.

 

(b)                                 Additional Guaranties and Collateral Security. Cause:

 

(i)                                     each Subsidiary of any Loan Party formed oracquired after the date hereof to execute and deliver to the Collateral Agentpromptly and in any event within 3 Business Days after the formation oracquisition thereof (A) a Guaranty guaranteeing the Obligations, (B) aSecurity Agreement, together with (x) certificates evidencing all of the CapitalStock of any Person owned by such Subsidiary, (y) undated stock powers executedin blank with signature guaranteed, and (z) such opinion of counsel and suchapproving certificate of such Subsidiary as the Collateral Agent may reasonablyrequest in respect of complying with any legend on any such certificate or anyother matter relating to such shares, (C) one or more Mortgages creatingon the real property of such Subsidiary a perfected, first priority Lien onsuch real

 

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property, a Title InsurancePolicy covering such real property, a current ALTA survey thereof and asurveyor’s certificate, each in form and substance satisfactory to theCollateral Agent, together with such other agreements, instruments anddocuments as the Collateral Agent may require whether comparable to thedocuments required under Section 7.01(o) or otherwise, and (D) suchother agreements, instruments, approvals, legal opinions or other documentsreasonably requested by the Collateral Agent in order to create, perfect,establish the priority of or otherwise protect any Lien purported to be coveredby any such Security Agreement, or Mortgage (which Liens shall be subject inpriority only to the Liens securing the First Lien Obligations), or otherwiseto effect the intent that such Subsidiary shall become bound by all of theterms, covenants and agreements contained in the Loan Documents and that allproperty and assets of such Subsidiary shall become Collateral for the Obligations;and

 

(ii)                                  each owner of the Capital Stock of any suchSubsidiary to execute and deliver promptly and in any event within 3 BusinessDays after the formation or acquisition of such Subsidiary a SecurityAgreement, together with (A) certificates evidencing all of the CapitalStock of such Subsidiary, (B) undated stock powers or other appropriateinstruments of assignment executed in blank with signature guaranteed, (C) suchopinion of counsel and such approving certificate of such Subsidiary as theCollateral Agent may reasonably request in respect of complying with any legendon any such certificate or any other matter relating to such shares and (D) suchother agreements, instruments, approvals, legal opinions or other documentsrequested by the Collateral Agent.

 

Notwithstanding the foregoing, if aSubsidiary that is so formed or acquired is a Controlled Foreign Corporationand if Borrower can reasonably demonstrate to each Agent that the granting of aLien in the assets of such Subsidiary would result in an increase in taxliability of Borrower and its Subsidiaries (based on the amount of retainedearnings at the time of such formation or acquisition) in excess of $50,000 perfiscal year, then clause (i) of the immediately preceding sentence shallnot be applicable and, with respect to clause (ii) of the immediatelypreceding sentence, such pledge shall be limited to 66% of the voting power ofall classes of Capital Stock of such Subsidiary entitled to vote; provided,that immediately upon any amendment of the IRC that would allow the pledge of agreater percentage of the voting power of Capital Stock in such Subsidiarywithout adverse tax consequences, such pledge shall include such greaterpercentage of capital Stock of such Subsidiary from that time forward.

 

(c)                                  Compliance with Laws, Etc. Comply, and cause each of its Subsidiaries to comply, in all materialrespects with all Applicable Laws, rules, regulations and orders (including allEnvironmental Laws), such compliance to include, without limitation, (i) payingbefore the same become delinquent all taxes, assessments and governmentalcharges or levies imposed upon it or upon its income or profits or upon any ofits properties, and (ii) paying all other lawful claims, including theStatutory Lien Payments, which if unpaid might become a Lien or charge upon anyof its properties, except, in each case, to the extent contested in good faithby proper proceedings which stay the imposition of any penalty, fine or Lienresulting from the non-payment thereof and with respect to which adequatereserves have been set aside for the payment thereof in accordance with GAAP.

 

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(d)                                 Preservation of Existence, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintainand preserve, its existence, rights and privileges, and become or remain, andcause each of its Subsidiaries to become or remain, duly qualified and in goodstanding in each jurisdiction in which the character of the properties owned orleased by it or in which the transaction of its business makes suchqualification necessary.

 

(e)                                  Keeping of Records and Books of Account. Keep, and cause each of its Subsidiaries to keep, adequate recordsand books of account, with complete entries made to permit the preparation offinancial statements in accordance with GAAP.

 

(f)                                    Inspection Rights. Permit, and cause each of its Subsidiaries to permit, the agents andrepresentatives of any Agent at any time and from time to time during normalbusiness hours, at the expense of the Borrower, to examine and make copies ofand abstracts from its records and books of account, to visit and inspect itsproperties, to verify leases, notes, accounts receivable, deposit accounts andits other assets, to conduct audits, physical counts, valuations, appraisals orexaminations and to discuss its affairs, finances and accounts with any of itsdirectors, officers, managerial employees, independent accountants or any ofits other representatives.

 

(g)                                 Maintenance of Properties, Etc. Maintain and preserve, and cause each of its Subsidiaries to maintainand preserve, all of its properties which are necessary or useful in the properconduct of its business in good working order and condition, ordinary wear andtear excepted, and comply, and cause each of its Subsidiaries to comply, at alltimes with the provisions of all leases to which it is a party as lessee orunder which it occupies property, so as to prevent any loss or forfeiturethereof or thereunder.

 

(h)                                 Maintenance of Insurance. Maintain, and cause each of its Subsidiaries (other than the ExcludedForeign Subsidiaries) to maintain, insurance with responsible and reputableinsurance companies or associations (including comprehensive general liability,hazard, rent and business interruption insurance) with respect to itsproperties (including all real properties leased or owned by it) and business,in such amounts and covering such risks as is required by any GovernmentalAuthority having jurisdiction with respect thereto or as is carried generallyin accordance with sound business practice by companies in similar businessessimilarly situated and in any event in amount, adequacy and scope reasonablysatisfactory to the Collateral Agent. All policies covering the Collateral are to be made payable to theCollateral Agent for the benefit of the Agents and the Lenders, as itsinterests may appear, in case of loss, under a standard non-contributory “lender”or “secured party” clause and are to contain such other provisions as theCollateral Agent may require to fully protect the Lenders’ interest in theCollateral and to any payments to be made under such policies.  All certificates of insurance are to bedelivered to the Collateral Agent and the policies are to be premium prepaid,with the loss payable and additional insured endorsement in favor of theCollateral Agent and such other Persons as the Collateral Agent may designatefrom time to time, and shall provide for not less than 30 days prior writtennotice to the Collateral Agent of the exercise of any right ofcancellation.  Borrower shall delivercertified copies of such insurance policies and endorsements to the Agentswithin 30 days of the Effective Date.  Ifany Loan Party or any of its Subsidiaries (other than the Excluded ForeignSubsidiaries) fails to maintain such insurance, the Collateral Agent mayarrange for such insurance, but at the Borrower’s expense and without anyresponsibility on the Collateral Agent’s part for obtaining the insurance, thesolvency of the insurance companies, the adequacy of the coverage, or thecollection of claims.  Borrower shall

 

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give the Agents promptnotice of any loss exceeding $250,000 covered by such insurance.  So long as no Event of Default has occurredand is continuing, Borrower shall have the exclusive right to adjust any lossespayable under any such insurance policies which are less than $250,000.  Following the occurrence and during thecontinuation of an Event of Default, or in the case of any losses payable undersuch insurance exceeding $250,000, Collateral Agent shall have the exclusiveright (subject to the rights of the First Lien Agent pursuant to theIntercreditor Agreement) to adjust any losses payable under any such insurancepolicies, without any liability to any Loan Party whatsoever in respect of suchadjustments.

 

(i)                                     Obtaining of Permits, Etc. Obtain, maintain and preserve, and cause each of its Subsidiaries (otherthan the Excluded Foreign Subsidiaries) to obtain, maintain and preserve, andtake all necessary action to timely renew, all permits, licenses,authorizations, approvals, entitlements and accreditations which are necessaryor useful in the proper conduct of its business.

 

(j)                                     Environmental.  (i)  Keepany property either owned or operated by it or any of its Subsidiaries free ofany Environmental Liens; (ii) comply, and cause each of its Subsidiariesto comply, in all material respects with Environmental Laws and provide to theCollateral Agent any documentation of such compliance which the CollateralAgent may reasonably request; (iii) immediately notify the Agents of anyRelease of a Hazardous Material in excess of any reportable quantity from oronto property owned or operated by it or any of its Subsidiaries and take anyRemedial Actions required to abate said Release; (iv) promptly provide theAgents with written notice within 5 days of the receipt of any of thefollowing:  (A) notice that anEnvironmental Lien has been filed against any property of any Loan Party or anyof its Subsidiaries; (B) commencement of any Environmental Action ornotice that an Environmental Action will be filed against any Loan Party or anyof its Subsidiaries; and (C) notice of a violation, citation or otheradministrative order which could reasonably be expected to result in a MaterialAdverse Effect and (v) defend, indemnify and hold harmless the Agents andthe Lenders and their transferees, and their respective employees, agents,officers and directors, from and against any claims, demands, penalties, fines,liabilities, settlements, damages, costs or expenses (including attorney andconsultant fees, investigation and laboratory fees, court costs and litigationexpenses) arising out of (A) the presence, disposal, release or threatenedrelease of any Hazardous Materials on any property at any time owned oroccupied by any Loan Party or any of its Subsidiaries (or its predecessors ininterest or title), (B) any personal injury (including wrongful death) orproperty damage (real or personal) arising out of or related to such HazardousMaterials, (C) any investigation, lawsuit brought or threatened,settlement reached or government order relating to such Hazardous Materials, (D) anyviolation of any Environmental Law or (E) any Environmental Action filedagainst any Agent or any Lender.

 

(k)                                  Further Assurances.  Takesuch action and execute, acknowledge and deliver, and cause each of itsSubsidiaries to take such action and execute, acknowledge and deliver, at itssole cost and expense, such agreements, instruments or other documents as anyAgent may require from time to time in order (i) to carry out moreeffectively the purposes of this Agreement and the other Loan Documents, (ii) tosubject to valid and perfected Liens (subject in priority only to Liensdescribed in clauses (e), (f) and (k) of the definition of PermittedLiens) any of the Collateral or any other property of any Loan Party and itsSubsidiaries, (iii) to establish and maintain the validity andeffectiveness of any of the Loan

 

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Documents and the validity,perfection and priority of the Liens intended to be created thereby, and (iv) tobetter assure, convey, grant, assign, transfer and confirm unto each Agent andeach Lender the rights now or hereafter intended to be granted to it under thisAgreement or any other Loan Document.  Infurtherance of the foregoing, to the maximum extent permitted by applicablelaw, each Loan Party (A) authorizes each Agent to execute any suchagreements, instruments or other documents in such Loan Party’s name and tofile such agreements, instruments or other documents in any appropriate filingoffice, (B) authorizes each Agent to file any financing statement requiredhereunder or under any other Loan Document, and any continuation statement oramendment with respect thereto, in any appropriate filing office without thesignature of such Loan Party, and (C) ratifies the filing of any financingstatement, and any continuation statement or amendment with respect thereto,filed without the signature of such Loan Party prior to the date hereof.

 

(l)                                     Change in Collateral; Collateral Records.  (i) Give the Collateral Agent not less than 30 days prior written notice ofany change in the location of any Collateral, other than to (or in-transitbetween) locations set forth on Schedule 6.01(ff) (or locationswhere the value of the Collateral located thereon does not exceed $100,000 atany one location or $300,000 at all such locations) and with respect to whichthe Collateral Agent has filed financing statements and otherwise fullyperfected its Liens thereon, (ii) advise the Collateral Agent promptly, insufficient detail, of any material adverse change relating to the type,quantity or quality of the Collateral or the Lien granted thereon and (iii) executeand deliver, and cause each of its Subsidiaries to execute and deliver, to theCollateral Agent for the benefit of the Agents and the Lenders from time totime, solely for the Collateral Agent’s convenience in maintaining a record ofCollateral, such written statements and schedules as the Collateral Agent mayreasonably require, designating, identifying or describing the Collateral.

 

(m)                               Landlord Waivers; Collateral AccessAgreements.

 

(i)                                     At any time any Collateral is located on anyreal property of the Borrower or any other Loan Party which is not owned by theBorrower or any other Loan Party (other than the locations of the Loan Partiesat which Collateral is located on the Effective Date), obtain writtensubordinations or waivers, in form and substance satisfactory to the CollateralAgent, of all present and future Liens to which the owner or lessor of suchpremises may be entitled to assert against the Collateral; and

 

(ii)                                  Obtain written access agreements, in form andsubstance satisfactory to the Collateral Agent, providing access to Collaterallocated on any premises not owned by the Borrower or any other Loan Party inorder to remove such Collateral from such premises during an Event of Default(other than the locations of the Loan Parties at which Collateral is located onthe Effective Date).

 

(n)                                 Subordination. Cause all Indebtedness and otherobligations now or hereafter owed by it to any of its Affiliates, to besubordinated in right of payment and security to the Indebtedness and otherObligations owing to the Agents and the Lenders in accordance with asubordination agreement in form and substance satisfactory to the Agents.

 

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(o)                                 After Acquired Real Property.  Uponthe acquisition by it or any of its Subsidiaries of any After AcquiredProperty, immediately so notify the Collateral Agent, setting forth withspecificity a description of the interest acquired, the location of the real property,any structures or improvements thereon and either an appraisal or such LoanParty’s good-faith estimate of the current value of such real property (forpurposes of this Section, the ”Current Value”).  The Collateral Agent shall notify such LoanParty whether it intends to require a Mortgage and the other documents referredto below or in the case of leasehold, a leasehold Mortgage or landlord’s waiver(pursuant to Section 7.01(m) hereof); provided that theCollateral Agent shall not require a Mortgage or a leasehold Mortgage upon theacquisition of any After Acquired Property by a Subsidiary that is a ControlledForeign Corporation and is not a Loan Party. Upon receipt of such notice requesting a Mortgage, the Person which hasacquired such After Acquired Property shall immediately furnish to theCollateral Agent the following, each in form and substance satisfactory to theCollateral Agent:  (i) a Mortgagewith respect to such real property and related assets located at the AfterAcquired Property, each duly executed by such Person and in recordable form; (ii) evidenceof the recording of the Mortgage referred to in clause (i) above in suchoffice or offices as may be necessary or, in the opinion of the CollateralAgent, desirable to create and perfect a valid and enforceable first prioritylien on the property purported to be covered thereby or to otherwise protectthe rights of the Agents and the Lenders thereunder, (iii) a TitleInsurance Policy, (iv) a survey of such real property, certified to theCollateral Agent and to the issuer of the Title Insurance Policy by a licensedprofessional surveyor reasonably satisfactory to the Collateral Agent, (v) PhaseI Environmental Site Assessments with respect to such real property, certifiedto the Collateral Agent by a company reasonably satisfactory to the CollateralAgent, and (vi) such other documents or instruments (including guaranteesand opinions of counsel) as the Collateral Agent may reasonably require.  The Borrower shall pay all fees and expenses,including reasonable attorneys’ fees and expenses, and all title insurancecharges and premiums, in connection with each Loan Party’s obligations underthis Section 7.01(o).

 

(p)                                 Fiscal Year.  Cause the fiscal year of theBorrower and its Subsidiaries (other than Magnetek Electronics) to end on June 30thof each calendar year unless the Agents consent to a change in such fiscal yearof Borrower and its Subsidiaries (and appropriate related changes to thisAgreement).

 

(q)                                 ERISA.

 

(i)                                     (A) maintaineach Plan in compliance in all material respects with the applicable provisionsof ERISA, the IRC and each other applicable federal or state law; (B) causeeach Qualified Plan to maintain its qualified status under Section 401(a) ofthe IRC; (C) make all required contributions to each Plan; (D) notbecome a party to any Multiemployer Plan; (E) ensure that all liabilitiesunder each Plan are (X) funded to at least the minimum level required by lawor, if higher, to the level required by the terms governing such Plan; (Y)insured with a reputable insurance company with respect to fiduciary liability;and (Z) provided for or recognized in the financial statements most recentlydelivered to each Agent under Section 7.01(a) (to the extentrequired by GAAP); and (F) ensure that the contributions or premiumpayments to or in respect of each Plan are and continue to be promptly paid atno less than the rates required under the rules of such Plan and inaccordance with the most recent actuarial advice received in relation to suchPlan and applicable law.

 

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(ii)                                  Deliverto each Agent such certifications or other evidence of compliance with theprovisions of Section 6.01(i) as either Agent may from time totime reasonably request.

 

(iii)                               Promptly notify eachAgent of each of the following ERISA events affecting Borrower, any of itsSubsidiaries or any ERISA Affiliates (but in no event more than ten (10) daysafter such event), together with a copy of each notice with respect to suchevent that may be required to be filed with a Governmental Authority and eachnotice delivered by a Governmental Authority to Borrower, any of itsSubsidiaries or any ERISA Affiliates with respect to such event:

 

(A)                              an ERISA Event;

 

(B)                                the adoption of any newPension Plan by Borrower, any of its Subsidiaries or any ERISA Affiliates;

 

(C)                                the adoption of anyamendment to a Pension Plan, if such amendment will result in a materialincrease in benefits or unfunded benefit liabilities (as defined in Section 4001(a)(18)of ERISA); or

 

(D)                               the commencement ofcontributions by Borrower, any of its Subsidiaries or any ERISA Affiliate toany Plan that is subject to Title IV of ERISA or section 412 of the IRC,other than the plans listed on Schedule 6.01(q);

 

(iv)                              Promptlydeliver to each Agent copies of (A) each Schedule B (ActuarialInformation) to the annual report (Form 5500 Series) filed by Borrower,any of its Subsidiaries or any ERISA Affiliates with the Internal RevenueService with respect to each Pension Plan; (B) all notices received byBorrower, any of its Subsidiaries or any of their respective ERISA Affiliatesfrom a Multiemployer Plan sponsor concerning an ERISA Event; and (C) suchother documents or governmental reports or filings relating to any Plan aseither Agent shall reasonably request.

 

(r)                                    DisclosureUpdates.  Promptly and in no eventlater than 5 Business Days after obtaining knowledge thereof, notify each Agentif any written information, exhibit, or report furnished to either Agent or anyLender contained, at the time it was furnished, any untrue statement of amaterial fact or omitted to state any material fact necessary to make thestatements contained therein not misleading in light of the circumstances inwhich made.  The foregoing to thecontrary notwithstanding, any notification pursuant to the foregoing provisionwill not cure or remedy the effect of the prior untrue statement of a materialfact or omission of any material fact nor shall any such notification have theeffect of amending or modifying this Agreement or any of the Schedules hereto.

 

(s)                                  ControlAgreements.  Take all reasonablesteps in order for Collateral Agent to obtain control in accordance withSections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to(subject to the proviso contained in Section 7.02(e)) all of itsSecurities Accounts, Deposit Accounts, electronic chattel paper, investmentproperty, and letter of credit rights.

 

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(t)                                    FirstLien Loan Documents.

 

(i)                                     Contemporaneouslywith the initial extensions of credit hereunder: (A) cause alltransactions contemplated by the First Lien Loan Documents to be consummated;and (B) furnish to each Agent evidence thereof in form and contentsatisfactory to each Agent, as well as certified (as of the Effective Date)true and complete copies of the First Lien Loan Documents which shall be incompliance with all Applicable Laws and all necessary approvals shall have beenobtained in connection therewith.

 

(ii)                                  Promptlyprovide each Agent with true and complete copies of any and all materialdocuments delivered to any Person pursuant to, or in connection with the FirstLien Loan Documents.

 

(u)                                 Completionof Magnetek ADS Sale.  On or before December 31,2005, the Loan Parties shall have consummated the Magnetek ADS Sale, providedsatisfactory evidence thereof to each Agent and remitted all Net Cash Proceedsthereof to First Lien Agent for application to the Senior Debt in accordancewith Section 2.4(c)(vi) of the First Lien Credit Agreement (as ineffect on the date hereof).

 

(v)                                 Post-ClosingRequirements.

 

(i)                                     Within10 days after the Effective Date, deliver to Collateral Agent all originalcertificates representing the shares of Capital Stock pledged under the SecurityAgreement along with Capital Stock powers with respect thereto endorsed inblank.

 

(ii)                                  Within20 days after the Effective Date, deliver to Collateral Agent a landlord waiver, duly executed anddelivered by each party thereto and in form and substance satisfactory to theCollateral Agent, with respect to each of the following locations and Persons: (i) 8966 Mason Avenue, Chatsworth,CA; (ii) N49 W13650 Campbell Drive, Menomonee Falls, WI; (iii) N50W13605 Overview Drive, Menomonee Falls, WI; (iv) W136 N4863 CampbellDrive, Menomonee Falls, WI; and (v)  MTI Electronics, Inc..

 

(iii)                               Within20 days after the Effective Date, deliver to Collateral Agent: (A) a Foreign Pledge Agreement, duly executed anddelivered by Borrower, and (B) an opinion of Italian counsel to Borroweras to such Foreign Pledge Agreement and such other matters as Collateral Agentmay reasonably request.

 

(iv)                              Within20 days after the Effective Date, deliver to Collateral Agent a joinder to theIntercompany Subordination Agreement substantially in the form of Exhibit J-1,duly executed and delivered by eachparty thereto.

 

(v)                                 Onor before November 30, 2005, deliver to Collateral Agent either (i) aCollateral Access Agreement, in form and substance satisfactory to CollateralAgent, with respect to the Loan Parties’ facility located at 10900 WilshireBoulevard, Suite 850, Los Angeles, California (the “Wilshire Facility”)or (ii) evidence, in form and substance satisfactory to Collateral Agent,of the closure of the Wilshire Facility and the Loan Parties’ having vacatedsuch premises.

 

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(vi)                              Within30 days after the Effective Date, deliver to each Agent consolidated andconsolidating financial statements of Borrower and its Subsidiaries for theirFiscal Year ended June 30, 2005, audited by independent certified publicaccountants reasonably acceptable to each Agent and certified, without anyqualifications (including any (i) “going concern” or like qualification orexception, (ii) qualification or exception as to the scope of such audit,or (iii) qualification which relates to the treatment or classification ofany item and which, as a condition to the removal of such qualification, wouldrequire an adjustment to such item) by such accountants to have been preparedin accordance with GAAP (such audited financial statements to include a balancesheet, income statement, and statement of cash flow and, if prepared, suchaccountants’ letter to management), with such financial statements being materiallyconsistent, as determined by each Agent, with the preliminary set of suchfinancial statements previously provided by Borrower to each Agent.

 

Section 7.02                                Negative Covenants.  Solong as any principal of or interest on any Loan, or any other Obligation(whether or not due) shall remain unpaid or any Lender shall have anyCommitment hereunder, each Loan Party shall not and shall not permit any of itsSubsidiaries to:

 

(a)                                  Liens, Etc.  Create, incur, assume or sufferto exist, or permit any of its Subsidiaries to create, incur, assume or sufferto exist, any Lien upon or with respect to any of its properties, whether nowowned or hereafter acquired; file or suffer to exist under the UniformCommercial Code, the PPSA or any similar law or statute of any jurisdiction, afinancing statement (or the equivalent thereof) that names it or any of itsSubsidiaries as debtor; sign or suffer to exist any security agreementauthorizing any secured party thereunder to file such financing statement (orthe equivalent thereof); sell any of its property or assets subject to anunderstanding or agreement, contingent or otherwise, to repurchase suchproperty or assets (including sales of accounts receivable) with recourse to itor any of its Subsidiaries or assign or otherwise transfer, or permit any ofits Subsidiaries to assign or otherwise transfer, any account or other right toreceive income; other than, as to all of the above, Permitted Liens; provided,that, no Liens shall be permitted on any assets included in the Borrowing Base(as such term is defined in the First Lien Credit Agreement) other than Agent’sLiens and the Liens securing the First Lien Obligations.

 

(b)                                 Indebtedness. Create, incur, assume, guarantee or suffer to exist, or otherwise becomeor remain liable with respect to, or permit any of its Subsidiaries to create,incur, assume, guarantee or suffer to exist or otherwise become or remainliable with respect to, any Indebtedness other than Permitted Indebtedness.

 

(c)                                  FundamentalChanges; Dispositions.  Wind-up,liquidate, dissolve, or suffer any liquidation or dissolution, suspend or goout of a substantial part of its or their business, or merge, consolidate oramalgamate with any Person, enter into any reorganization or reclassify itsCapital Stock, or convey, sell, lease or sublease, license, assign, transfer orotherwise dispose of, whether in one transaction or a series of relatedtransactions, all or any part of its business, property or assets, whether nowowned or hereafter acquired (or agree to do any of the foregoing), or purchaseor otherwise acquire, whether in one transaction or a series of relatedtransactions, all or substantially all of the assets of any Person (or anydivision thereof) (or agree to do any of the foregoing), or permit any of itsSubsidiaries to do any of the foregoing; provided, however, thatany Loan Party and its Subsidiaries may make Permitted Dispositions.

 

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(d)                                 Change in Nature of Business. Make, or permit any of its Subsidiaries to make, any change in thenature of its business as described in Section 6.01(l).

 

(e)                                  Loans, Advances, Investments, Etc.  Makeor commit or agree to make any loan, advance guarantee of obligations, otherextension of credit or capital contributions to, or hold or invest in or commitor agree to hold or invest in, or purchase or otherwise acquire or commit oragree to purchase or otherwise acquire any shares of the Capital Stock, bonds,notes, debentures or other securities of, or make or commit or agree to makeany other investment in, any other Person, or purchase or own any futurescontract or otherwise become liable for the purchase or sale of currency orother commodities at a future date in the nature of a futures contract, or permitany of its Subsidiaries to do any of the foregoing, except for:  (i) investments existing on the datehereof, as set forth on Schedule 7.02(e) hereto, but not anyincrease in the amount thereof as set forth in such Schedule or any othermodification of the terms thereof, (ii) temporary loans and advances bythe Borrower to its Subsidiaries and by such Subsidiaries to the Borrower, madein the ordinary course of business and not exceeding in the aggregate at anyone time outstanding $100,000, and (iii) Permitted Investments.  Without limiting the foregoing: (x) Borrower,Guarantors and their respective Subsidiaries shall not have Cash or CashEquivalents and other Permitted Investments (other than in the Lockbox Accountsor Collection Accounts) in Deposit Accounts or Securities Accounts (i) locatedin the United States or Canada in an amount in excess of $10,000 at any onetime with respect to any one such account unless Borrower, such Guarantor orsuch Subsidiary, as applicable, and the applicable securities intermediary orbank have entered into a Control Agreement governing such Cash and CashEquivalents and other Permitted Investments in order to perfect (and furtherestablish) the Collateral Agent’s Liens therein or (ii) located outsidethe United States or Canada in an amount in excess of $5,000,000 in theaggregate at any one time unless Borrower, such Guarantor or such Subsidiary,as applicable, and the applicable securities intermediary or bank have enteredinto a Control Agreement governing such Cash and Cash Equivalents and otherPermitted Investments in order to perfect (and further establish) theCollateral Agent’s Liens therein; and (y) subject to the foregoing clause (x),Borrower and Guarantors shall not and shall not permit their respective Subsidiariesto establish or maintain any Deposit Account or Securities Account unless theAgents shall have received a Control Agreement in respect of such DepositAccount or Securities Account.

 

(f)                                    Lease Obligations. Create, incur or suffer to exist, or permit any of its Subsidiaries tocreate, incur or suffer to exist, any obligations as lessee (i) for thepayment of rent for any real or personal property in connection with any saleand leaseback transaction, or (ii) for the payment of rent for any real orpersonal property under leases or agreements to lease other than (A) CapitalizedLease Obligations which would not cause the aggregate amount of all obligationsunder Capitalized Leases entered into after the Effective Date owing by allLoan Parties and their Subsidiaries in any Fiscal Year to exceed the amountsset forth in subsection (g) of this Section 7.02,and (B) Operating Lease Obligations which would not cause the aggregateamount of all Operating Lease Obligations owing by all Loan Parties and theirSubsidiaries in any Fiscal Year to exceed $5,000,000.

 

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(g)                                 Capital Expenditures.  Makeor commit or agree to make, or permit any of its Subsidiaries to make or commitor agree to make, any Capital Expenditure (by purchase or Capitalized Lease)that would cause the aggregate amount of all Capital Expenditures made by theLoan Parties and their Subsidiaries to exceed (i) $7,500,000 in Borrower’sFiscal Year ending June 30, 2006, (ii) $9,600,000 in Borrower’sFiscal Year ending June 30, 2007, and (iii) $5,200,000 during the 6month period commencing on July 1, 2007 and ending December 31, 2007.

 

(h)                                 Restricted Payments.  (i)  Declare or payany dividend or other distribution, direct or indirect, on account of anyCapital Stock of any Loan Party or any of its Subsidiaries, now or hereafteroutstanding, (ii) make any repurchase, redemption, retirement, defeasance,sinking fund or similar payment, purchase or other acquisition for value,direct or indirect, of any Capital Stock of any Loan Party or any direct orindirect parent of any Loan Party, now or hereafter outstanding, (iii) makeany payment to retire, or to obtain the surrender of, any outstanding warrants,options or other rights for the purchase or acquisition of shares of any classof Capital Stock of any Loan Party, now or hereafter outstanding, or (iv) payany management fees or any other fees or expenses (including the reimbursementthereof by any Loan Party or any of its Subsidiaries) pursuant to anymanagement, consulting or other services agreement to any of the shareholdersor other equityholders of any Loan Party or any of its Subsidiaries or otherAffiliates, or to any other Subsidiaries or Affiliates of any Loan Party; provided,however, that so long as no Default or Event of Default has occurred andis continuing or would result therefrom (A) any Subsidiary of the Borrowermay pay dividends to the Borrower, and (B) the Borrower may pay dividendsin the form of common Capital Stock.

 

(i)                                     Federal Reserve Regulations. Permit any Loan or the proceeds of any Loan under this Agreement to beused for any purpose that would cause such Loan to be a margin loan under theprovisions of Regulation T, U or X of the Board.

 

(j)                                     Transactions with Affiliates. Enter into, renew, extend or be a party to, or permit any of itsSubsidiaries to enter into, renew, extend or be a party to, any transaction orseries of related transactions (including the purchase, sale, lease, transferor exchange of property or assets of any kind or the rendering of services ofany kind) with any Affiliate, except (i) in the ordinary course ofbusiness in a manner and to an extent consistent with past practice andnecessary or desirable for the prudent operation of its business, for fairconsideration and on terms no less favorable to it or its Subsidiaries thanwould be obtainable in a comparable arm’s length transaction with a Person thatis not an Affiliate thereof, (ii) if such transactions involve one or morepayments by Borrower or any of its Subsidiaries in excess of $100,000 and arefully disclosed to each Agent, and (iii) transactions permitted by Section 7.02(e) or(h).

 

(k)                                  Limitations on Dividends and Other PaymentRestrictions Affecting Subsidiaries.  Create or otherwise cause,incur, assume, suffer or permit to exist or become effective any consensualencumbrance or restriction of any kind on the ability of any Subsidiary of anyLoan Party (i) to pay dividends or to make any other distribution on anyshares of Capital Stock of such Subsidiary owned by any Loan Party or any ofits Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtednessowed to any Loan Party or any of its Subsidiaries, (iii) to make loans oradvances to any Loan Party or any of its Subsidiaries or

 

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(iv) to transfer any ofits property or assets to any Loan Party or any of its Subsidiaries, or permitany of its Subsidiaries to do any of the foregoing; provided,**however,**that nothingin any of clauses (i) through (iv) of this Section 7.02(k)shall prohibit or restrict compliance with:

 

(G)                      thisAgreement, the other Loan Documents and the First Lien Loan Documents;

 

(H)                     any agreements in effect on the date of thisAgreement and described on Schedule 7.02(k);

 

(I)                          any applicable law, rule or regulation(including applicable currency control laws and applicable state corporatestatutes restricting the payment of dividends in certain circumstances);

 

(J)                         in the case of clause (iv), any agreementsetting forth customary restrictions on the subletting, assignment or transferof any property or asset that is leased or licensed; or

 

(K)                     in the case of clause (iv), any agreement,instrument or other document evidencing a Permitted Lien that restricts, on customaryterms, the transfer of any property or assets subject thereto.

 

(l)                                     Limitation on Issuance of Capital Stock. Except for the issuance or sale of commonstock or Permitted Preferred Stock by the Borrower, issue or sell or enter intoany agreement or arrangement for the issuance and sale of, or permit any of itsSubsidiaries to issue or sell or enter into any agreement or arrangement forthe issuance and sale of, any shares of its Capital Stock, any securitiesconvertible into or exchangeable for its Capital Stock or any warrants.

 

(m)                               Modifications of Indebtedness, OrganizationalDocuments and Certain Other Agreements; Etc.  (i) Amend, modify orotherwise change (or permit the amendment, modification or other change in anymanner of) any of the provisions of any of its or its Subsidiaries’Indebtedness (other than the First Lien Obligations and the Subordinated Debt)or of any instrument or agreement (including any purchase agreement, indenture,loan agreement or security agreement) relating to any such Indebtedness, ifsuch amendment, modification or change would shorten the final maturity oraverage life to maturity of, or require any payment to be made earlier than thedate originally scheduled on, such Indebtedness, would increase the interestrate applicable to such Indebtedness, would change the subordinationprovisions, if any, of such Indebtedness, or would otherwise be adverse to theLenders or the issuer of such Indebtedness in any respect, (ii) amend,modify or otherwise change (or permit the amendment, modification or otherchange in any manner of) any Subordinated Debt unless expressly permitted underthe terms of any Subordination Agreement which is an agreement to which eitherAgent is a party, (iii) amend, modify or otherwise change (or permit theamendment, modification or other change in any manner of) any of the provisionsof the First Lien Credit Agreement or any other First Lien Loan Document to theextent such amendment, modification or waiver is prohibited pursuant to theterms of the Intercreditor Agreement, (iv) except for the Obligations andpayments of (A) the Subordinated Debt expressly permitted pursuant to the

 

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applicable SubordinationAgreement and (B) the First Lien Obligations, make any voluntary oroptional payment, prepayment, redemption, defeasance, sinking fund payment orother acquisition for value of any of its or its Subsidiaries’ Indebtedness(including by way of depositing money or securities with the trustee thereforbefore the date required for the purpose of paying any portion of suchIndebtedness when due), or refund, refinance, replace or exchange any otherIndebtedness for any such Indebtedness (except to the extent such Indebtednessis otherwise expressly permitted by the definition of “Permitted Indebtedness”),or make any payment, prepayment, redemption, defeasance, sinking fund paymentor repurchase of any outstanding Indebtedness as a result of any asset sale,change of control, issuance and sale of debt or equity securities or similarevent, or give any notice with respect to any of the foregoing, (v) amend,modify or otherwise change its name, jurisdiction of organization,organizational identification number or FEIN, (vi) amend, modify orotherwise change its certificate of incorporation or bylaws (or other similarorganizational documents), including by the filing or modification of anycertificate of designation, or any agreement or arrangement entered into by it,with respect to any of its Capital Stock (including any shareholders’agreement), or enter into any new agreement with respect to any of its CapitalStock, except any such amendments, modifications or changes or any such newagreements or arrangements pursuant to this clause (vi) that eitherindividually or in the aggregate, could not reasonably be expected to result ina Material Adverse Effect, or (vii) agree to any material amendment orother material change to or material waiver of its rights under any MaterialContract (other than any First Lien Loan Document).

 

(n)                                 Investment Company Act of 1940. Engage in any business, enter into any transaction, use any securitiesor take any other action or permit any of its Subsidiaries to do any of theforegoing, that would cause it or any of its Subsidiaries to become subject tothe registration requirements of the Investment Company Act of 1940, asamended, by virtue of being an “investment company” or a company “controlled”by an “investment company” not entitled to an exemption within the meaning of suchAct.

 

(o)                                 [Intentionally Omitted]

 

(p)                                 ERISA.  (i) Terminate or permitany of their ERISA Affiliates to terminate any Pension Plan so as to result inany material liability to Borrower, its Subsidiaries or any ERISA Affiliate, (ii) permitto exist any ERISA Event, or any other event or condition, which presents therisk of a material liability to any ERISA Affiliate, (c) make a completeor partial withdrawal (within the meaning of ERISA Section 4201) from anyMultiemployer Plan so as to result in any material liability to Borrower, itsSubsidiaries or any ERISA Affiliate, (d) enter into any new Plan or modifyany existing Plan so as to increase its obligations thereunder which couldresult in any material liability to any ERISA Affiliate, (e) permit the presentvalue of all nonforfeitable accrued benefits under any Plan (using theactuarial assumptions utilized by the PBGC upon termination of a Plan)materially to exceed the fair market value of Plan assets allocable to suchbenefits, all determined as of the most recent valuation date for each suchPlan, or (f) engage in any transaction which would cause any obligation,or action taken or to be taken, hereunder (or the exercise by any Agent or anyLender of any of their rights under this Agreement or the other Loan Documents)to be a non-exempt (under a statutory or administrative class exemption)prohibited transaction under ERISA or Section 4975 of the IRC.

 

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(q)                                 Consignments. Consign any of their Inventory with a value at any one location ofgreater than $100,000 and with an aggregate value at all such locations ofgreater than $300,000 or sell any of their Inventory on bill and hold, sale orreturn, sale on approval, or other conditional terms of sale.

 

(r)                                    Excluded Foreign Subsidiaries. Permit any Excluded Foreign Subsidiary to (i) haveor acquire any assets, (ii) incur any liabilities with recourse to anyLoan Party, or (iii) engage in any other activity or business of any kindother than the dissolution thereof.

 

(s)                                  Environmental. Permit the use, handling, generation, storage, treatment, release ordisposal of Hazardous Materials at any property owned or leased by it or any ofits Subsidiaries, except in compliance with Environmental Laws and so long assuch use, handling, generation, storage, treatment, release or disposal ofHazardous Materials does not result in a Material Adverse Effect.

 

Section 7.03                                Financial Covenants.  Solong as any principal of or interest on any Loan, or any other Obligation(whether or not due) shall remain unpaid or any Lender shall have anyCommitment hereunder, each Loan Party shall not:

 

(a)                                  Leverage Ratio. Permit the Leverage Ratio as of any date below to be greater than theapplicable ratio set forth below opposite such date:

 
| **Leverage Ratio** | ** ** | **Fiscal Quarter End**                                                 |
|--------------------|------------|------------------------------------------------------------------------|
|               |       |                                                                   |
| 4.10:1.00          |       | September 30, 2005                                                |
|               |       |                                                                   |
| 4.40:1.00          |       | December 31, 2005                                                 |
|               |       |                                                                   |
| 3.75:1.00          |       | March 31, 2006                                                    |
|               |       |                                                                   |
| 3.25:1.00          |       | June 30, 2006 and the last day of each  fiscal quarter thereafter |

 

(b)                                 Fixed Charge Coverage Ratio. Permit the Fixed Charge Coverage Ratio asof the last day of any period set forth below to be less than the amount setforth opposite such date for such period:

 
| **Fixed Charge Coverage Ratio** | ** ** | **Fiscal Quarter End**                                                                                          |
|---------------------------------|------------|-----------------------------------------------------------------------------------------------------------------|
|                            |       |                                                                                                            |
| 2.00:1.00                       |       | 3 months ending September 30, 2005                                                                         |
|                            |       |                                                                                                            |
| 2.00:1.00                       |       | 6 months ending December 31, 2005                                                                          |
|                            |       |                                                                                                            |
| 1.75:1.00                       |       | 9 months ending March 31, 2006                                                                             |
|                            |       |                                                                                                            |
| 1.75:1.00                       |       | 12 months ending June 30, 2006 and the  12 months ending on the last day of each fiscal quarter thereafter |

 

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(c)                                  TTM EBITDA.  Permit the TTM EBITDA at theend of any fiscal quarter set forth below to be less than the applicable amountset forth below opposite such date:

 
| **Consolidated EBITDA** | ** ** | **Fiscal Quarter End** |
|-------------------------|------------|------------------------|
|                    |       |                   |
| $                       | 13,000,000 |                   | September 30, 2005 |
|                    |       |                   |
| $                       | 12,400,000 |                   | December 31, 2005 |
|                    |       |                   |
| $                       | 14,700,000 |                   | March 31, 2006 |
|                    |       |                   |
| $                       | 17,000,000 |                   | June 30, 2006 and the last day of each  fiscal quarter thereafter |

 

(d)                                 TTM Power Systems EBITDA. Permit TTM Power Systems EBITDA at the end of any fiscal quarter setforth below to be less than the applicable amount set forth below opposite suchdate:

 
| **Consolidated EBITDA** | ** ** | **Fiscal Quarter End** |
|-------------------------|------------|------------------------|
|                    |       |                   |
| $                       | 8,500,000  |                   | September 30, 2005 |
|                    |       |                   |
| $                       | 8,500,000  |                   | December 31, 2005 |
|                    |       |                   |
| $                       | 8,500,000  |                   | March 31, 2006 |
|                    |       |                   |
| $                       | 8,500,000  |                   | June 30, 2006 and the last day of each  fiscal quarter thereafter |

 

**ARTICLE VIII**

** **

**MANAGEMENT,COLLECTION AND STATUS OFACCOUNTS RECEIVABLE AND OTHER COLLATERAL**

** **

Section 8.01                                Collection of Accounts Receivable; Managementof Collateral.  (a) On or prior to the Effective Date, the Loan Parties shall assist theAdministrative Agent in (i) establishing, and, during the term of thisAgreement, maintaining one or more lockboxes in the name of the AdministrativeAgent and identified on Schedule 8.01 hereto (collectively, the

 

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“Lockboxes”) with thefinancial institutions set forth on Schedule 8.01 hereto or suchother financial institutions selected by the Borrower and acceptable to theAdministrative Agent in its sole discretion (each being referred to as a “LockboxBank”), and (ii) establishing, and during the term of this Agreement,maintaining an account (a “Collection Account” and, collectively, the “CollectionAccounts”) in the name of the First Lien Agent (or after the First LienTermination Date, in the name of Administrative Agent) with each LockboxBank.  The Loan Parties shall irrevocablyinstruct its Account Debtors, with respect to Accounts Receivable of the LoanParties, to remit all payments to be made by checks or other drafts to theLockboxes and to remit all payments to be made by wire transfer or by AutomatedClearing House, Inc. payment as directed by the First Lien Agent and shallinstruct each Lockbox Bank to deposit all amounts received in its Lockbox tothe Collection Account at such Lockbox Bank on the day received or, if such dayis not a Business Day, on the next succeeding Business Day.  Until the Administrative Agent has advisedthe Borrower to the contrary after the occurrence and during the continuance ofan Event of Default, the Loan Parties may and will enforce, collect and receiveall amounts owing on the Accounts Receivable of the Loan Parties for theAdministrative Agent’s benefit and on the Administrative Agent’s behalf, but atthe Borrower’s expense; such privilege shall terminate, at the election of anyAgent, upon the occurrence and during the continuance of an Event ofDefault.  All checks, drafts, notes,money orders, acceptances, cash and other evidences of Indebtedness receiveddirectly by any Loan Party from any Account Debtor, as proceeds from AccountsReceivable of the Loan Parties, or as proceeds of any other Collateral, shallbe held by such Loan Party in trust for the Agents and the Lenders and uponreceipt be deposited by such Loan Party in original form and no later than thenext Business Day after receipt thereof into a Collection Account.  The Loan Parties shall not commingle suchcollections with such Loan Party’s own funds or the funds of any Subsidiary orAffiliate of such Loan Party or with the proceeds of any assets not included inthe Collateral.  All funds received inthe Collection Account shall be sent by wire transfer or Automated ClearingHouse, Inc. payment to First Lien Agent.  Nochecks, drafts or other instruments received by the Administrative Agent shallconstitute final payment to the Administrative Agent unless and until suchchecks, drafts or instruments have actually been collected.

 

(b)                                 After the occurrence and during thecontinuance of an Event of Default, the Collateral Agent may send a notice ofassignment or notice of the Lenders’ security interest to any and all AccountDebtors and, thereafter, the Collateral Agent (subject to the terms of theIntercreditor Agreement) shall have the sole right to collect the AccountsReceivable and payment intangibles of the Loan Parties and their respectiveSubsidiaries or take possession of the Collateral and the books and recordsrelating thereto.  After the occurrenceand during the continuation of an Event of Default, the Loan Parties and theirrespective Subsidiaries shall not, without prior written consent of theCollateral Agent, grant any extension of time of payment of any AccountReceivable or payment intangible, compromise or settle any Account Receivableor payment intangible for less than the full amount thereof, release, in wholeor in part, any Person or property liable for the payment thereof, or allow anycredit or discount whatsoever thereon.

 

(c)                                  The Loan Parties hereby appoint each Agent orits designee on behalf of such Agent as the Loan Parties’ attorney-in-fact withpower exercisable during the continuance of an Event of Default to (i) endorsethe applicable Loan Party’s name upon any notes, acceptances, checks, drafts,money orders or other evidences of payment relating to the Accounts Receivableor payment intangibles of such Loan Party, (ii) sign the applicable Loan

 

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Party’s name on any invoiceor bill of lading relating to any of the Accounts Receivable or paymentintangibles of the such Loan Party, drafts against Account Debtors with respectto Accounts Receivable or payment intangibles of such Loan Party, assignmentsand verifications of Accounts Receivable or payment intangibles and notices toAccount Debtors with respect to Accounts Receivable or payment intangibles ofsuch Loan Party, (iii) send verification of Accounts Receivable of theLoan Parties, and (iv) notify the Postal Service authorities to change theaddress for delivery of mail addressed to the Loan Parties to such address assuch Agent may designate and to do all other acts and things necessary to carryout this Agreement; provided that such Agent or designee, simultaneouslywith such notification, shall provide a copy of such notification to theBorrower.  All acts of said attorney ordesignee are hereby ratified and approved, and said attorney or designee shallnot be liable for any acts of omission or commission (other than acts ofomission or commission constituting gross negligence or willful misconduct asdetermined by a final judgment of a court of competent jurisdiction), or forany error of judgment or mistake of fact or law; this power being coupled withan interest is irrevocable until all of the Loans and other Obligations underthe Loan Documents are paid in full and all of the Commitments are terminated.

 

(d)                                 Nothing herein contained shall be construedto constitute any Agent as agent of any Loan Party for any purpose whatsoever,and the Agents shall not be responsible or liable for any shortage,discrepancy, damage, loss or destruction of any part of the Collateral whereverthe same may be located and regardless of the cause thereof (other than fromacts of omission or commission constituting gross negligence or willfulmisconduct as determined by a final judgment of a court of competentjurisdiction).  The Agents shall not,under any circumstance or in any event whatsoever, have any liability for anyerror or omission or delay of any kind occurring in the settlement, collectionor payment of any of the Accounts Receivable of the Loan Parties or anyinstrument received in payment thereof or for any damage resulting therefrom(other than acts of omission or commission constituting gross negligence orwillful misconduct as determined by a final judgment of a court of competentjurisdiction).  The Agents, by anythingherein or in any assignment or otherwise, do not assume any of the obligationsunder any contract or agreement assigned to any Agent and shall not beresponsible in any way for the performance by the Loan Parties of any of theterms and conditions thereof.

 

(e)                                  If any Account Receivable of any Loan Partyincludes a charge for any tax payable to any Governmental Authority, each Agentis hereby authorized (but in no event obligated) in its discretion to pay theamount thereof to the proper taxing authority for such Loan Party’s account andto charge the Loan Parties therefor.  TheLoan Parties shall notify the Agents if any Account Receivable of the LoanParties includes any taxes due to any such Governmental Authority and, in theabsence of such notice, the Agents shall have the right to retain the fullproceeds of such Account Receivable and shall not be liable for any taxes thatmay be due by reason of the sale and delivery creating such Account Receivable.

 

(f)                                    Notwithstanding any other terms set forth inthe Loan Documents, the rights and remedies of the Agents and the Lendersherein provided, and the obligations of the Loan Parties set forth herein, arecumulative of, may be exercised singly or concurrently with, and are notexclusive of, any other rights, remedies or obligations set forth in any otherLoan Document or as provided by law.

 

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Section 8.02                                Accounts Receivable Documentation.  TheLoan Parties will at such intervals as the Agents may require, execute anddeliver confirmatory written assignments of the Accounts Receivable to theAgents and furnish such further schedules or information as any such Agent mayrequire relating to the Accounts Receivable, including sales invoices or theequivalent, credit memos issued, remittance advices, reports and copies ofdeposit slips and copies of original shipping or delivery receipts for all merchandisesold.  In addition, the Loan Partiesshall notify the Agents of any non-compliance in respect of therepresentations, warranties and covenants contained in Section 8.03.  The items to be provided under this Section 8.02are to be in form reasonably satisfactory to the Agents and are to be executedand delivered to the Agents from time to time solely for their convenience inmaintaining records of the Collateral. The Loan Parties’ failure to give any of such items to the Agents shallnot affect, terminate, modify or otherwise limit the Collateral Agent’s Lien onthe Collateral.  The Loan Parties shallnot re-date any invoice or sale or make sales on extended dating beyond thatcustomary in the Loan Parties’ industry, and shall not re-bill any AccountsReceivable without promptly disclosing the same to the Agents and providing theAgents with a copy of such re-billing, identifying the same as such.  If the Loan Parties become aware of anythingmaterially detrimental to any of the Loan Parties’ customers’ credit, the LoanParties will promptly advise the Agents thereof.

 

Section 8.03                                Status of Accounts Receivable and OtherCollateral.  Status of Accounts Receivable and OtherCollateral.  With respect toCollateral of any Loan Party at the time the Collateral becomes subject to theCollateral Agent’s Lien, each Loan Party covenants, represents andwarrants:  (a) such Loan Party shallbe the sole owner, free and clear of all Liens (except for the Liens granted inthe favor of the Collateral Agent for the benefit of the Agents and the Lendersand Permitted Liens), and shall be fully authorized to sell, transfer, pledgeor grant a security interest in each and every item of said Collateral; (b) [intentionallyomitted]; (c) [intentionally omitted]; (d) [intentionally omitted]; (e) [intentionallyomitted]; (f) [intentionally omitted]; (g) [intentionally omitted]; (h) suchLoan Party shall maintain books and records pertaining to said Collateral insuch detail, form and scope as the Agents shall reasonably require; (i) suchLoan Party shall immediately notify the Agents if any Account Receivable arisesout of contracts with any Governmental Authority, and will execute anyinstruments and take any steps required by the Agents in order that all moniesdue or to become due under any such contract shall be assigned to theCollateral Agent and notice thereof given to such Governmental Authority underthe Federal Assignment of Claims Act or any similar state or local law;(j) such Loan Party will, immediately upon learning thereof, report to theAgents any material loss or destruction of, or substantial damage to, any ofthe Collateral, and any other matters affecting the value, enforceability orcollectability of any of the Collateral; (k) if any amount payable under or inconnection with any Account Receivable is evidenced by a promissory noteor other instrument, such promissory note or instrument shall beimmediately pledged, endorsed, assigned and delivered to the Collateral Agentfor the benefit of the Agents and the Lenders as additional Collateral; (l)such Loan Party shall not re-date any invoice or sale or make sales on extendeddating beyond that which is customary in the ordinary course of its businessand in the industry; (m) such Loan Party shall conduct a physical count of itsInventory at such intervals as any Agent may request and such Loan Party shallpromptly supply the Agents with a copy of such count accompanied by a report ofthe value (based on the lower of cost (on a first in first out basis) and marketvalue) of such Inventory; and (n) such Loan Party is not and shall not beentitled to pledge any Agent’s or any Lender’s credit on any purchases or forany purpose whatsoever.

 

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Section 8.04                                Collateral Custodian.  Uponthe occurrence and during the continuance of any Event of Default, theCollateral Agent may at any time and from time to time employ and maintain onthe premises of any Loan Party a custodian selected by the Collateral Agent whoshall have full authority to do all acts necessary to protect the Agents’ andthe Lenders’ interests.  Each Loan Partyhereby agrees to, and to cause its Subsidiaries to, cooperate with any suchcustodian and to do whatever the Collateral Agent may reasonably request topreserve the Collateral.  All costs andexpenses incurred by the Collateral Agent by reason of the employment of thecustodian shall be the responsibility of the Loan Parties and charged to theLoan Account.

 

**ARTICLE IX**

** **

**EVENTSOF DEFAULT**

** **

Section 9.01                                Events of Default.  Ifany of the following Events of Default shall occur and be continuing:

 

(a)                                  the Borrower shall fail to pay any principalof or interest on any Loan, any Collateral Agent Advance, or any fee, indemnityor other amount payable under this Agreement or any other Loan Document whendue (whether by scheduled maturity, required prepayment, acceleration, demandor otherwise);

 

(b)                                 any representation or warranty made or deemedmade by or on behalf of any Loan Party or by any officer of the foregoing underor in connection with any Loan Document or under or in connection with anyreport, certificate, or other document delivered to any Agent, any Lenderpursuant to any Loan Document shall have been incorrect in any material respect(except where any such representation or warranty is already subject to amateriality standard, in which case such representation or warranty proves tobe untrue in any respect) when made or deemed made;

 

(c)                                  any Loan Party shall fail to perform orcomply with any covenant or agreement contained in Article VII or Article VIII,or any Loan Party shall fail to perform or comply with any covenant oragreement contained in any Security Agreement to which it is a party or anyMortgage to which it is a party;

 

(d)                                 any Loan Party shall fail to perform orcomply with any other term, covenant or agreement contained in any LoanDocument to be performed or observed by it and, except as set forth in subsections(a), (b) and (c) of this Section 9.01, such failure,if capable of being remedied, shall remain unremedied for 15 days after theearlier of the date a senior officer of any Loan Party becomes aware of suchfailure and the date written notice of such default shall have been given byany Agent to such Loan Party;

 

(e)                                  Borrower or any of its Subsidiaries shallfail to pay any principal of or interest on any of its Indebtedness (excludingthe Obligations) in excess of $100,000, or any premium thereon, when due(whether by scheduled maturity, required prepayment,

 

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acceleration, demand orotherwise) and such failure shall continue after the applicable grace period,if any, specified in the agreement or instrument relating to such Indebtedness,or any other default under any agreement or instrument relating to any suchIndebtedness, or any other event, shall occur and shall continue after theapplicable grace period, if any, specified in such agreement or instrument, ifthe effect of such default or event is to accelerate, or to permit theacceleration of, the maturity of such Indebtedness; or any such Indebtednessshall be declared to be due and payable, or required to be prepaid (other thanby a regularly scheduled required prepayment), redeemed, purchased or defeasedor an offer to prepay, redeem, purchase or defease such Indebtedness shall berequired to be made, in each case, prior to the stated maturity thereof;

 

(f)                                    the Borrower or any of its Subsidiaries (i) shallinstitute any proceeding or voluntary case seeking to adjudicate it a bankruptor insolvent, or seeking dissolution, liquidation, winding up, reorganization,arrangement, adjustment, protection, relief or composition of it or its debtsunder any law relating to bankruptcy, insolvency, reorganization or relief of debtors,or seeking the entry of an order for relief or the appointment of a receiver,trustee, custodian or other similar official for any such Person or for anysubstantial part of its property, (ii) shall be generally not paying itsdebts as such debts become due or shall admit in writing its inability to payits debts generally, (iii) shall make a general assignment for the benefitof creditors, or (iv) shall take any action to authorize or effect any ofthe actions set forth above in this subsection (f);

 

(g)                                 any proceeding shall be instituted againstthe Borrower or any of its Subsidiaries seeking to adjudicate it a bankrupt orinsolvent, or seeking dissolution, liquidation, winding up, reorganization,arrangement, adjustment, protection, relief of debtors, or seeking the entry ofan order for relief or the appointment of a receiver, trustee, custodian orother similar official for any such Person or for any substantial part of itsproperty, and either such proceeding shall remain undismissed or unstayed for aperiod of 30 days or any of the actions sought in such proceeding (includingthe entry of an order for relief against any such Person or the appointment ofa receiver, trustee, custodian or other similar official for it or for anysubstantial part of its property) shall occur;

 

(h)                                 any provision of any Loan Document shall atany time for any reason (other than pursuant to the express terms thereof)cease to be valid and binding on or enforceable against any Loan Party intendedto be a party thereto, or the validity or enforceability thereof shall becontested by any party thereto, or a proceeding shall be commenced by any LoanParty or any Governmental Authority having jurisdiction over any of them,seeking to establish the invalidity or unenforceability thereof, or any LoanParty shall deny in writing that it has any liability or obligation purportedto be created under any Loan Document;

 

(i)                                     any Security Agreement, any Mortgage or anyother security document, after delivery thereof pursuant hereto, shall for anyreason fail or cease to create a valid and perfected and, except to the extentpermitted by the terms hereof or thereof, first priority Lien in favor of theCollateral Agent for the benefit of the Agents and the Lenders on anyCollateral purported to be covered thereby;

 

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(j)                                     one or more judgments or orders for thepayment of money exceeding $100,000 in the aggregate shall be rendered againstBorrower or any of its Subsidiaries and remain unsatisfied, or the Borrower orany of its Subsidiaries shall agree to the settlement of any one or morepending or threatened actions, suits or proceedings affecting any Loan Partybefore any court or other Governmental Authority or any arbitrator or mediator,providing for the payment of money exceeding $100,000 in the aggregate, and inthe case of any such judgment or order either (i) enforcement proceedingsshall have been commenced by any creditor upon any such judgment or order, or (ii) thereshall be a period of 10 consecutive days after entry thereof during which astay of enforcement of any such judgment or order, by reason of a pendingappeal or otherwise, shall not be in effect; provided, however,that any such judgment, order or settlement shall not give rise to an Event ofDefault under this subsection (k) if and for so long as (A) theamount of such judgment, order, or settlement is covered by a valid and bindingpolicy of insurance between the defendant and the insurer covering full paymentthereof (subject to customary deductibles) and (B) such insurer has beennotified, and has not disputed the claim made for payment, of the amount ofsuch judgment, order or settlement; provided, further, that the ArbitrationAward shall not give rise to an Event of Default under this clause (k) so longas the Arbitration Award is paid in accordance with the terms of this Agreementor vacated pursuant to a final non-appealable court order by a court ofcompetent jurisdiction.

 

(k)                                  the Borrower or any of its Subsidiaries isenjoined, restrained or in any way prevented by the order of any court or anyGovernmental Authority from conducting all or any material part of its businessfor more than 15 days;

 

(l)                                     any material damage to, or loss, theft ordestruction of, any Collateral, whether or not insured, or any strike, lockout,labor dispute, embargo, condemnation, act of God or public enemy, or othercasualty which causes, for more than 15 days, the cessation or substantialcurtailment of revenue producing activities at any facility of any Loan Party,if any such event or circumstance could reasonably be expected to result in aMaterial Adverse Effect;

 

(m)                               any cessation of a substantial part of thebusiness of any Loan Party for a period which materially and adversely affectsthe ability of any Loan Party to continue its business on a profitable basis;

 

(n)                                 the loss, suspension or revocation of, orfailure to renew, any license or permit now held or hereafter acquired by theBorrower or any of its Subsidiaries, if such loss, suspension, revocation orfailure to renew could reasonably be expected to result in a Material AdverseEffect;

 

(o)                                 the indictment, or the threatened indictmentof the Borrower or any of its Subsidiaries under any criminal statute, orcommencement or threatened commencement of criminal or civil proceedingsagainst any Loan Party, pursuant to which statute or proceedings the penaltiesor remedies sought or available include forfeiture to any GovernmentalAuthority of any material portion of the property of such Person;

 

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(p)                                 If there occurs one or more ERISA Eventswhich individually or in the aggregate results in or otherwise is associatedwith liability of Borrower, any of its Subsidiaries, or any of their respectiveERISA Affiliates that is a member of a “controlled group of corporations”,under “common control” or an “affiliated service group” with Borrower or any ofits Subsidiaries within the meaning of Section 414(b), (c) or (m) ofthe IRC (collectively, the “Controlled Group ERISA Affiliates”) (or isreasonably likely, as determined in the reasonable discretion of Agent, toresult in liability to Borrower, any of its Subsidiaries or any of theirrespective Controlled Group ERISA Affiliates in the case of liability of any oftheir respective ERISA Affiliates that are not Controlled Group ERISAAffiliates) in excess of $100,000 during the term of this Agreement; or thereexists, an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18)of ERISA), individually or in the aggregate for all Pension Plans maintained,sponsored or obligated to be contributed by Borrower, any of its Subsidiariesor any of their Controlled Group ERISA Affiliates (excluding for purposes ofsuch computation any Pension Plans with respect to which assets exceed benefitliabilities) which exceeds $100,000 during the term of this Agreement; or thereexists, an amount of unfunded benefit liabilities (as defined in Section 4001(a)(18)of ERISA), individually or in the aggregate for all Pension Plans maintained,sponsored or obligated to be contributed by ERISA Affiliate that are notControlled Group ERISA Affiliates (excluding for purposes of such computationany Pension Plans with respect to which assets exceed benefit liabilities)which exceeds $70,600,000 and which is reasonably likely, as determined in thereasonable discretion of either Agent, to result in liability of Borrower, anyof its Subsidiaries, or any of their respective Controlled Group ERISA Affiliates;

 

(q)                                 the Borrower or any of its Subsidiaries shallbe liable for any Environmental Liabilities and Costs the payment of whichcould reasonably be expected to result in a Material Adverse Effect;

 

(r)                                    (i) any default or event of defaultoccurs under or with respect to any Material Contract (other than any FirstLien Loan Document) which is not cured or waived upon such occurrence, (ii) anyEvent of Default (as defined in any First Lien Loan Document) occurs under anyFirst Lien Loan Document, or (iii) any Material Contract is terminated andsuch termination could reasonably be expected to result in a Material AdverseEffect;

 

(s)                                  (i) there shall occur and be continuingany “Event of Default” (or any comparable term) by Borrower, any Guarantor ortheir respective Subsidiaries under, and as defined in any document evidencingor governing any Subordinated Debt, (ii) any of the Obligations for anyreason shall cease to be “Permitted Indebtedness,” “Senior Indebtedness” or “DesignatedSenior Indebtedness” (or any comparable terms) under, and as defined in anydocument evidencing or governing any Subordinated Debt, (iii) anyIndebtedness other than the Obligations or the First Lien Obligations shallconstitute “Senior Indebtedness” or “Designated Senior Indebtedness” (or anycomparable term) under, and as defined in, any document evidencing or governingany Subordinated Debt, or (iv) any Subordination Agreement shall, in wholeor in part, terminate, cease to be effective or cease to be legally valid,binding and enforceable against any holder of the Indebtedness related thereto;

 

(t)                                    a Triggering Event has occurred and iscontinuing;

 

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(u)                                 Borrower has not received and remitted to theDesignated Account, cash proceeds of the First Lien Indebtedness in anaggregate amount of not less than $4,600,000 on or before the date when theTerm Loan is made;

 

(v)                                 a Change of Control shall have occurred; or

 

(w)                               an event or development occurs which couldreasonably be expected to result in a Material Adverse Effect;

 

then, and in any such event, the Collateral Agent may, and shall at therequest of the Required Lenders, by notice to the Borrower, (i) terminateall Commitments, whereupon all Commitments shall immediately be so terminated, (ii) declareall or any portion of the Loans then outstanding to be due and payable,whereupon all or such portion of the aggregate principal of all Loans, allaccrued and unpaid interest thereon, all fees and all other amounts payableunder this Agreement and the other Loan Documents shall become due and payableimmediately, without presentment, demand, protest or further notice of anykind, all of which are hereby expressly waived by each Loan Party and (iii) exerciseany and all of its other rights and remedies under applicable law, hereunderand under the other Loan Documents; provided, however, that uponthe occurrence of any Event of Default described in subsection (f) or(g) of this Section 9.01, without any notice to any LoanParty or any other Person or any act by any Agent or any Lender, allCommitments shall automatically terminate and all Loans then outstanding,together with all accrued and unpaid interest thereon, all fees and all otheramounts due under this Agreement and the other Loan Documents shall become dueand payable automatically and immediately, without presentment, demand, protestor notice of any kind, all of which are expressly waived by each Loan Party.

 

**ARTICLE X**

** **

**AGENTS**

** **

Section 10.01                          Appointment.  Each Lender (and each subsequentmaker of any Loan by its making thereof) hereby irrevocably appoints andauthorizes the Administrative Agent and the Collateral Agent to perform theduties of each such Agent as set forth in this Agreement including:  (i) to receive on behalf of each Lenderany payment of principal of or interest on the Loans outstanding hereunder andall other amounts accrued hereunder for the account of the Lenders and paid tosuch Agent, and, subject to Section 2.02 of this Agreement, todistribute promptly to each Lender its Pro Rata Share of all payments soreceived; (ii) to distribute to each Lender copies of all material noticesand agreements received by such Agent and not required to be delivered to eachLender pursuant to the terms of this Agreement, provided that the Agents shallnot have any liability to the Lenders for any Agent’s inadvertent failure todistribute any such notices or agreements to the Lenders; (iii) tomaintain, in accordance with its customary business practices, ledgers andrecords reflecting the status of the Obligations, the Loans, and relatedmatters and to maintain, in accordance with its customary business practices,ledgers and records reflecting the status of the Collateral and relatedmatters; (iv) to execute or file any and all financing or similarstatements or notices, amendments, renewals, supplements, documents,instruments, proofs of claim, notices and other written agreements with respectto this Agreement or any other Loan Document; (v) to make the Loans

 

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and Collateral AgentAdvances, for such Agent or on behalf of the applicable Lenders as provided inthis Agreement or any other Loan Document; (vi) to perform, exercise, andenforce any and all other rights and remedies of the Lenders with respect tothe Loan Parties, the Obligations, or otherwise related to any of same to theextent reasonably incidental to the exercise by such Agent of the rights andremedies specifically authorized to be exercised by such Agent by the terms ofthis Agreement or any other Loan Document; (vii)  to incur and pay suchfees necessary or appropriate for the performance and fulfillment of itsfunctions and powers pursuant to this Agreement or any other Loan Document; and(viii) subject to Section 10.03 of this Agreement, to takesuch action as such Agent deems appropriate on its behalf to administer theLoans and the Loan Documents and to exercise such other powers delegated tosuch Agent by the terms hereof or the other Loan Documents (including the powerto give or to refuse to give notices, waivers, consents, approvals andinstructions and the power to make or to refuse to make determinations andcalculations) together with such powers as are reasonably incidental thereto tocarry out the purposes hereof and thereof. As to any matters not expressly provided for by this Agreement and theother Loan Documents (including enforcement or collection of the Loans), theAgents shall not be required to exercise any discretion or take any action, butshall be required to act or to refrain from acting (and shall be fullyprotected in so acting or refraining from acting) upon the instructions of theRequired Lenders, and such instructions of the Required Lenders shall bebinding upon all Lenders and all makers of Loans.

 

Section 10.02                          Nature of Duties.  TheAgents shall have no duties or responsibilities except those expressly setforth in this Agreement or in the other Loan Documents.  The duties of the Agents shall be mechanicaland administrative in nature.  The Agentsshall not have by reason of this Agreement or any other Loan Document afiduciary relationship in respect of any Lender.  Nothing in this Agreement or any other LoanDocument, express or implied, is intended to or shall be construed to imposeupon the Agents any obligations in respect of this Agreement or any other LoanDocument except as expressly set forth herein or therein.  Each Lender shall make its own independentinvestigation of the financial condition and affairs of the Loan Parties inconnection with the making and the continuance of the Loans hereunder and shallmake its own appraisal of the creditworthiness of the Loan Parties and thevalue of the Collateral, and the Agents shall have no duty or responsibility,either initially or on a continuing basis, to provide any Lender with anycredit or other information with respect thereto, whether coming into theirpossession before the initial Loan hereunder or at any time or timesthereafter, provided that, upon the reasonable request of a Lender, each Agentshall provide to such Lender any documents or reports delivered to such Agentby the Loan Parties pursuant to the terms of this Agreement or any other LoanDocument.  If any Agent seeks the consentor approval of the Required Lenders to the taking or refraining from taking anyaction hereunder, such Agent shall send notice thereof to each Lender.  Each Agent shall promptly notify each Lenderany time that the Required Lenders have instructed such Agent to act or refrainfrom acting pursuant hereto.

 

Section 10.03                          Rights, Exculpation, Etc.  TheAgents and their directors, officers, agents or employees shall not be liablefor any action taken or omitted to be taken by them under or in connection withthis Agreement or the other Loan Documents, except for their own grossnegligence or willful misconduct as determined by a final judgment of a courtof competent jurisdiction.  Withoutlimiting the generality of the foregoing, the Agents (i) may treat thepayee of any Loan as the owner thereof until the Collateral Agent receiveswritten notice of the

 

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assignment or transferthereof, pursuant to Section 12.07 hereof, signed by such payee andin form satisfactory to the Collateral Agent; (ii) may consult with legalcounsel (including counsel to any Agent or counsel to the Loan Parties),independent public accountants, and other experts selected by any of them andshall not be liable for any action taken or omitted to be taken in good faithby any of them in accordance with the advice of such counsel or experts; (iii) makeno warranty or representation to any Lender and shall not be responsible to anyLender for any statements, certificates, warranties or representations made inor in connection with this Agreement or the other Loan Documents; (iv) shallnot have any duty to ascertain or to inquire as to the performance orobservance of any of the terms, covenants or conditions of this Agreement orthe other Loan Documents on the part of any Person, the existence or possibleexistence of any Default or Event of Default, or to inspect the Collateral orother property (including the books and records) of any Person; (v) shallnot be responsible to any Lender for the due execution, legality, validity,enforceability, genuineness, sufficiency or value of this Agreement or theother Loan Documents or any other instrument or document furnished pursuanthereto or thereto; and (vi) shall not be deemed to have made anyrepresentation or warranty regarding the existence, value or collectability ofthe Collateral, the existence, priority or perfection of the Collateral Agent’sLien thereon, or any certificate prepared by any Loan Party in connectiontherewith, nor shall the Agents be responsible or liable to the Lenders for anyfailure to monitor or maintain any portion of the Collateral. The provisions ofthis Section 10.03 are subject to, and shall not limit in any respect, theprovisions of Section 12.07.  TheAgents shall not be liable for any apportionment or distribution of paymentsmade in good faith pursuant to Section 4.04, and if any suchapportionment or distribution is subsequently determined to have been made inerror the sole recourse of any Lender to whom payment was due but not made,shall be to recover from other Lenders any payment in excess of the amountwhich they are determined to be entitled. The Agents may at any time request instructions from the Lenders withrespect to any actions or approvals which by the terms of this Agreement or ofany of the other Loan Documents the Agents are permitted or required to take orto grant, and if such instructions are promptly requested, the Agents shall beabsolutely entitled to refrain from taking any action or to withhold anyapproval under any of the Loan Documents until they shall have received suchinstructions from the Required Lenders. Without limiting the foregoing, no Lender shall have any right of actionwhatsoever against any Agent as a result of such Agent acting or refrainingfrom acting under this Agreement or any of the other Loan Documents inaccordance with the instructions of the Required Lenders.

 

Section 10.04                          Reliance.  Each Agent shall be entitledto rely upon any written notices, statements, certificates, orders or otherdocuments or any telephone message believed by it in good faith to be genuineand correct and to have been signed, sent or made by the proper Person, andwith respect to all matters pertaining to this Agreement or any of the otherLoan Documents and its duties hereunder or thereunder, upon advice of counselselected by it.

 

Section 10.05                          Indemnification.  Tothe extent that any Agent is not reimbursed and indemnified by any Loan Party,the Lenders will reimburse and indemnify such Agent from and against any andall liabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses, advances or disbursements of any kind or naturewhatsoever which may be imposed on, incurred by, or asserted against such Agentin any way relating to or arising out of this Agreement or any of the otherLoan Documents or any action taken or omitted by such Agent under thisAgreement or any of the other Loan Documents, in proportion to each Lender’s

 

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Pro Rata Share, includingadvances and disbursements made pursuant to Section 10.08; provided,however, that no Lender shall be liable for any portion of suchliabilities, obligations, losses, damages, penalties, actions, judgments,suits, costs, expenses, advances or disbursements for which there has been afinal judicial determination that such liability resulted from such Agent’sgross negligence or willful misconduct. The obligations of the Lenders under this Section 10.05shall survive the payment in full of the Loans and the termination of thisAgreement.

 

Section 10.06                          Agents Individually.  Withrespect to its Pro Rata Share of the Total Term Loan Commitment hereunder andthe Loans made by it, each Agent shall have and may exercise the same rightsand powers hereunder and is subject to the same obligations and liabilities asand to the extent set forth herein for any other Lender or maker of aLoan.  The terms “Lenders” or “RequiredLenders” or any similar terms shall, unless the context clearly otherwise indicates,include each Agent in its individual capacity as a Lender or one of theRequired Lenders.  Each Agent and itsAffiliates may accept deposits from, lend money to, and generally engage in anykind of banking, trust or other business with the Borrower as if it were notacting as an Agent pursuant hereto without any duty to account to the otherLenders.

 

Section 10.07                          Successor Agent.  (a)  EachAgent may resign from the performance of all its functions and duties hereunderand under the other Loan Documents at any time by giving at least 30 BusinessDays prior written notice to the Borrower and each Lender.  Such resignation shall take effect upon theacceptance by a successor Agent of appointment pursuant to clauses (b) and(c) below or as otherwise provided below.

 

(b)                                 Upon any such notice of resignation, theRequired Lenders shall appoint a successor Agent.  Upon the acceptance of any appointment asAgent hereunder by a successor Agent, such successor Agent shall thereuponsucceed to and become vested with all the rights, powers, privileges and dutiesof the retiring Agent, and the retiring Agent shall be discharged from itsduties and obligations under this Agreement and the other Loan Documents.  After any Agent’s resignation hereunder as anAgent, the provisions of this Article X shall inure to its benefit as toany actions taken or omitted to be taken by it while it was an Agent under thisAgreement and the other Loan Documents.

 

(c)                                  If a successor Agent shall not have been soappointed within said thirty (30) Business Day period, the retiring Agent, withthe consent of the other Agent shall then appoint a successor Agent who shallserve as an Agent until such time, if any, as the Required Lenders, with theconsent of the other Agent, appoint a successor Agent as provided above.

 

Section 10.08                          Collateral Matters.

 

(a)                                  The Collateral Agent may from time to timemake such disbursements and advances (“Collateral Agent Advances”) whichthe Collateral Agent, in its sole discretion, deems necessary or desirable topreserve, protect, prepare for sale or lease or dispose of the Collateral orany portion thereof, to enhance the likelihood or maximize the amount ofrepayment by the Borrower of the Loans, and other Obligations or to pay anyother amount chargeable to the Borrower pursuant to the terms of thisAgreement, including costs, fees and expenses as described in Section 12.04.  The Collateral Agent Advances shall berepayable

 

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on demand and be secured bythe Collateral.  The Collateral AgentAdvances shall constitute Obligations hereunder which may be charged to theLoan Account in accordance with Section 4.02.  The Collateral Agent shall notify each Lenderand the Borrower in writing of each such Collateral Agent Advance, which noticeshall include a description of the purpose of such Collateral AgentAdvance.  Without limitation to itsobligations pursuant to Section 10.05, each Lender agrees that itshall make available to the Collateral Agent, upon the Collateral Agent’sdemand, in Dollars in immediately available funds, the amount equal to suchLender’s Pro Rata Share of each such Collateral Agent Advance.  If such funds are not made available to theCollateral Agent by such Lender, the Collateral Agent shall be entitled torecover such funds on demand from such Lender, together with interest thereonfor each day from the date such payment was due until the date such amount ispaid to the Collateral Agent, at the Federal Funds Rate for 3 Business Days andthereafter at the Reference Rate.

 

(b)                                 The Lenders hereby irrevocably authorize theCollateral Agent, at its option and in its discretion, to release any Liengranted to or held by the Collateral Agent upon any Collateral upon terminationof the Total Term Loan Commitment and payment and satisfaction of all Loans,and all other Obligations which have matured and which the Collateral Agent hasbeen notified in writing are then due and payable; or constituting propertybeing sold or disposed of in compliance with the terms of this Agreement andthe other Loan Documents; or constituting property in which the Loan Partiesowned no interest at the time the Lien was granted or at any time thereafter;or if approved, authorized or ratified in writing by the Lenders.  Upon request by the Collateral Agent at anytime, the Lenders will confirm in writing the Collateral Agent’s authority torelease particular types or items of Collateral pursuant to this Section 10.08(b).

 

(c)                                  Without in any manner limiting the CollateralAgent’s authority to act without any specific or further authorization orconsent by the Lenders (as set forth in Section 10.08(b)), eachLender agrees to confirm in writing, upon request by the Collateral Agent, theauthority to release Collateral conferred upon the Collateral Agent under Section 10.08(b).  Upon receipt by the Collateral Agent ofconfirmation from the Lenders of its authority to release any particular itemor types of Collateral, and upon prior written request by any Loan Party, theCollateral Agent shall (and is hereby irrevocably authorized by the Lenders to)execute such documents as may be necessary to evidence the release of the Liensgranted to the Collateral Agent for the benefit of the Agents and the Lendersupon such Collateral; provided, however, that (i) theCollateral Agent shall not be required to execute any such document on termswhich, in the Collateral Agent’s opinion, would expose the Collateral Agent toliability or create any obligations or entail any consequence other than therelease of such Liens without recourse or warranty, and (ii) such releaseshall not in any manner discharge, affect or impair the Obligations or any Lienupon (or obligations of any Loan Party in respect of) all interests in theCollateral retained by any Loan Party.

 

(d)                                 The Collateral Agent shall have no obligationwhatsoever to any Lender to assure that the Collateral exists or is owned bythe Loan Parties or is cared for, protected or insured or has been encumberedor that the Lien granted to the Collateral Agent pursuant to this Agreement orany other Loan Document has been properly or sufficiently or lawfully created,perfected, protected or enforced or is entitled to any particular priority, orto exercise at all or in any particular manner or under any duty of care,disclosure or fidelity, or to

 

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continue exercising, any ofthe rights, authorities and powers granted or available to the Collateral Agentin this Section 10.08 or in any other Loan Document, it beingunderstood and agreed that in respect of the Collateral, or any act, omissionor event related thereto, the Collateral Agent may act in any manner it maydeem appropriate, in its sole discretion, given the Collateral Agent’s own interestin the Collateral as one of the Lenders and that the Collateral Agent shallhave no duty or liability whatsoever to any other Lender, except as otherwiseprovided herein.

 

Section 10.09                          Agency for Perfection.  EachLender hereby appoints each Agent and each other Lender as agent and bailee forthe purpose of perfecting the security interests in and liens upon theCollateral in assets which, in accordance with Article 9 of the Code (orunder the equivalent section of the PPSA), can be perfected only bypossession or control (or where the security interest of a secured party withpossession or control has priority over the security interest of anothersecured party) and each Agent and each Lender hereby acknowledges that it holdspossession or control of any such Collateral for the benefit of the CollateralAgent as secured party.  Should anyLender obtain possession or control of any such Collateral, such Lender shallnotify the Collateral Agent thereof, and, promptly upon the Collateral Agent’srequest therefor shall deliver possession or control of such Collateral to theCollateral Agent or in accordance with the Collateral Agent’sinstructions.  Each Loan Party byits execution and delivery of this Agreement hereby consents to the foregoing.

 

**ARTICLE XI**

** **

**GUARANTY**

** **

Section 11.01                          Guaranty.  Each Guarantor herebyunconditionally and irrevocably, jointly and severally guarantees the punctualpayment when due, whether at stated maturity, by acceleration or otherwise, ofall Obligations of the Borrower now or hereafter existing under any LoanDocument, whether for principal, interest (including all interest that accruesafter the commencement of any Insolvency Proceeding irrespective of whether aclaim therefor is allowed in such case or proceeding), fees, expenses orotherwise (such obligations, to the extent not paid by the Borrower, beingthe ”Guaranteed Obligations”), and agrees to pay any and all expenses(including reasonable counsel fees and expenses) incurred by the Agents or theLenders (or any of them) in enforcing any rights under the guaranty set forthin this Article.  Without limiting thegenerality of the foregoing, each Guarantor’s liability shall extend to allamounts that constitute part of the Guaranteed Obligations and would be owed bythe Borrower to the Agents or the Lenders under any Loan Document but for thefact that they are unenforceable or not allowable due to the existence of abankruptcy, reorganization or similar proceeding involving any Loan Party.

 

Section 11.02                          Guaranty Absolute.  EachGuarantor guarantees that the Guaranteed Obligations will be paid strictly inaccordance with the terms of the Loan Documents, regardless of any law,regulation or order now or hereafter in effect in any jurisdiction affectingany of such terms or the rights of the Agents, the Lenders with respectthereto.  The obligations of eachGuarantor under this Article are primary and original obligations (andthis Article is not merely the creation of a surety relationship) and areindependent of the Guaranteed Obligations, and a separate action or actions maybe brought and

 

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prosecuted against eachGuarantor to enforce such obligations, irrespective of whether any action isbrought against any Loan Party or whether any Loan Party is joined in any suchaction or actions.  The liability of eachGuarantor under this Article shall be irrevocable, absolute andunconditional irrespective of, and each Guarantor hereby irrevocably waives anydefenses it may now or hereafter have in any way relating to, any or all of thefollowing:

 

(a)                                  any lack of validity or enforceability of anyLoan Document or any agreement or instrument relating thereto;

 

(b)                                 any change in the time, manner or place ofpayment of, or in any other term of, all or any of the Guaranteed Obligations,or any other amendment or waiver of or any consent to departure from any LoanDocument, including any increase in the Guaranteed Obligations resulting fromthe extension of additional credit to any Loan Party or otherwise;

 

(c)                                  any taking, exchange, release ornon-perfection of any Collateral, or any taking, release or amendment or waiverof or consent to departure from any other guaranty, for all or any of theGuaranteed Obligations;

 

(d)                                 any change, restructuring or termination ofthe corporate, limited liability company or partnership structure or existenceof any Loan Party; or

 

(e)                                  any other circumstance (including any statuteof limitations) or any existence of or reliance on any representation by the Agents,the Lenders that might otherwise constitute a defense available to, or adischarge of, any Loan Party or any other guarantor or surety.

 

This Article shallcontinue to be effective or be reinstated, as the case may be, if at any timeany payment of any of the Guaranteed Obligations is rescinded or must otherwisebe returned by the Agents, the Lenders, or any other Person upon theinsolvency, bankruptcy or reorganization of the Borrower or otherwise, all asthough such payment had not been made.

 

Section 11.03                          Waiver.

 

(a)                                  EachGuarantor hereby waives promptness, diligence, notice of presentment forpayment, demand, protest, and notice thereof as to any instrument among theLoan Documents, notice of any Default or Event of Default, notice of acceptance,notice of the creation, existence or amount of the Guaranteed Obligations(subject, however, to such Guarantor’s rights to make inquiry of the Agents toascertain the amount of the Guaranteed Obligations at any reasonable time),notice of any adverse change in the financial condition of the Borrower or ofany other fact that might increase such Guarantor’s risk hereunder, and anyother notice with respect to any of the Guaranteed Obligations and this Article andany requirement that the Agents, the Lenders exhaust any right or take anyaction against any Loan Party or any other Person or any Collateral.  Each Guarantor acknowledges that it willreceive direct and indirect benefits from the financing arrangements contemplatedherein and that the waiver set forth in this Section 11.03 isknowingly made in contemplation of such benefits.

 

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(b)                                 EachGuarantor hereby waives any right to revoke this Article, and acknowledges thatthis Article is continuing in nature and applies to all GuaranteedObligations, whether existing now or in the future.  If such a revocation is effectivenotwithstanding the foregoing waiver, each Guarantor acknowledges and agreesthat (a) no such revocation shall be effective until written noticethereof has been received by each Agent, (b) no such revocation shallapply to any Guaranteed Obligations in existence on such date (including anysubsequent continuation, extension, or renewal thereof, or change in theinterest rate, payment terms, or other terms and conditions thereof), (c) nosuch revocation shall apply to any Guaranteed Obligations made or created aftersuch date to the extent made or created pursuant to a legally bindingcommitment of any Agent or any Lender in existence on the date of suchrevocation, (d) no payment by any Guarantor, Borrower, or from any othersource, prior to the date of such revocation shall reduce the maximumobligation of such Guarantor hereunder in respect of the GuaranteedObligations, and (e) any payment by Borrower or from any source other thanGuarantors subsequent to the date of such revocation shall first be applied tothat portion of the Guaranteed Obligations as to which the revocation iseffective and which are not, therefore, guarantied hereunder, and to the extentso applied shall not reduce the maximum obligation of the Guarantors hereunder.

 

(c)                                  Tothe fullest extent permitted by applicable law, each Guarantor hereby waivesthe right by statute or otherwise to require any Agent or any Lender, toinstitute suit against Borrower or to exhaust any rights and remedies which anyAgent or any Lender has or may have against Borrower.  In this regard, each Guarantor agrees that itis bound to the payment of each and all Guaranteed Obligations, whether nowexisting or hereafter arising, as fully as if the Guaranteed Obligations weredirectly owing to the Agents and the Lenders by each Guarantor.  Each Guarantor further waives any defensearising by reason of any disability or other defense (other than the defensethat the Guaranteed Obligations shall have been performed and paid in themanner provided for by the applicable Loan Documents, to the extent of any suchpayment) of Borrower or by reason of the cessation from any cause whatsoever ofthe liability of Borrower in respect thereof.

 

(d)                                 Tothe fullest extent permitted by applicable law, each Guarantor hereby waives: (i) anyright to assert against any Agent or any Lender, any defense (legal orequitable), set-off, counterclaim, or claim which such Guarantor may now or atany time hereafter have against Borrower or any other party liable to any Agentor any Lender; (ii) any defense, set-off, counterclaim, or claim, of anykind or nature, arising directly or indirectly from the present or future lack ofperfection, sufficiency, validity, or enforceability of the GuaranteedObligations or any security therefor; (iii) any right or defense arisingby reason of any claim or defense based upon an election of remedies by anyAgent or any Lender; and (iv) the benefit of any statute of limitationsaffecting such Guarantor’s liability hereunder or the enforcement thereof, andany act which shall defer or delay the operation of any statute of limitationsapplicable to the Guaranteed Obligations shall similarly operate to defer ordelay the operation of such statute of limitations applicable to Guarantor’sliability hereunder.

 

(e)                                  Ifany of the Guaranteed Obligations or the obligations of any Guarantor underthis Article at any time are secured by a mortgage or deed of trust uponreal property, in accordance with the provisions of this Agreement, theCollateral Agent may elect, upon a default with respect to the GuaranteedObligations or the obligations of the Guarantors under this Article, toforeclose such mortgage or deed of trust judicially or nonjudicially in anymanner permitted by law, before or after enforcing this Article, withoutdiminishing or affecting

 

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the liability of such Guarantor hereunder.  Each Guarantor understands that (a) byvirtue of the operation of antideficiency law applicable to nonjudicialforeclosures, an election by Collateral Agent to nonjudicially foreclose onsuch a mortgage or deed of trust probably would have the effect of impairing ordestroying rights of subrogation, reimbursement, contribution, or indemnity ofthe Guarantors against Borrower or other guarantors or sureties, and (b) absentthe waiver given by Guarantors herein, such an election would estop theCollateral Agent from enforcing this Article against such Guarantor.  Understanding the foregoing, andunderstanding that each Guarantor hereby is relinquishing a defense to theenforceability of this Article, each Guarantor hereby waives any right toassert against Collateral Agent any defense to the enforcement of this Article,whether denominated “estoppel” or otherwise, based on or arising from anelection by Collateral Agent to nonjudicially foreclose on any such mortgage ordeed of trust.  Each Guarantorunderstands that the effect of the foregoing waiver may be that such Guarantormay have liability hereunder for amounts with respect to which such Guarantormay be left without rights of subrogation, reimbursement, contribution, orindemnity against the Borrower, the other Guarantors, or other guarantors orsureties.  Each Guarantor also agreesthat the “fair market value” provisions of Section 580a of the CaliforniaCode of Civil Procedure or any similar laws of any other applicablejurisdiction shall have no applicability with respect to the determination ofsuch Guarantor’s liability under this Article.

 

(f)                                    Withoutlimiting the generality of any other waiver or other provision set forth inthis Article, each Guarantor waives all rights and defenses that such Guarantormay have if all or part of the Guaranteed Obligations are secured by realproperty.  This means, among otherthings:

 

(i)                                     Inaccordance with the provisions of this Agreement, Collateral Agent may collectfrom such Guarantor without first foreclosing on any real or personal propertycollateral that may be pledged by such Guarantor, the Borrower, the otherGuarantors, or any other guarantor.

 

(ii)                                  If,in accordance with the provisions of this Agreement, Collateral Agentforecloses on any real property collateral that may be pledged by suchGuarantor, the Borrower, the other Guarantors, or any other guarantor:

 

(1)                                  The amount of theGuaranteed Obligations or any obligations of any Guarantor in respect thereofmay be reduced only by the price for which that collateral is sold at theforeclosure sale, even if the collateral is worth more than the sale price.

 

(2)                                  Collateral Agent maycollect from such Guarantor even if Collateral Agent, by foreclosing on thereal property collateral, has destroyed any right such Guarantor may have tocollect from the Borrower, the other Guarantors, or any other guarantor.

 

(g)                                 Thisis an unconditional and irrevocable waiver of any rights and defenses anyGuarantor may have if all or part of the Guaranteed Obligations are secured by realproperty.

 

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(h)                                 WITHOUTLIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH INTHIS ARTICLE, EACH GUARANTOR HEREBY WAIVES, TO THE MAXIMUM PERMITTED BY LAW,ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONEOR MORE OF CALIFORNIA CIVIL CODE §§ 2787 THROUGH AND INCLUDING § 2855,CALIFORNIA CODE OF CIVIL PROCEDURE §§ 580a, 580b, 580c, 580d, AND 726, ANDCHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR LAWS OF ANYOTHER APPLICABLE JURISDICTION.

 

(i)                                     WITHOUTLIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH INTHIS ARTICLE, EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF ANELECTION OF REMEDIES BY COLLATERAL AGENT, EVEN THOUGH SUCH ELECTION OFREMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THEGUARANTEED OBLIGATIONS, HAS DESTROYED SUCH GUARANTOR’S RIGHTS OF SUBROGATIONAND REIMBURSEMENT AGAINST BORROWER BY THE OPERATION OF APPLICABLE LAW INCLUDING§580d OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR ANY SIMILAR LAWS OF ANYOTHER APPLICABLE JURISDICTION.

 

(j)                                     Withoutlimiting the generality of any other waiver or other provision set forth inthis Article, each Guarantor hereby agrees as follows:

 

(i)                                     CollateralAgent’s right to enforce this Article is absolute and is not contingentupon the genuineness, validity or enforceability of any of the LoanDocuments.  Each Guarantor waives allbenefits and defenses it may have under California Civil Code Section 2810or any similar laws in any other applicable jurisdiction and agrees thatCollateral Agent’s rights under this Article shall be enforceable even ifBorrower had no liability at the time of execution of the Loan Documents orlater ceases to be liable.

 

(ii)                                  EachGuarantor waives all benefits and defenses it may have under California CivilCode Section 2809 or any similar laws in any other applicable jurisdictionwith respect to its obligations under this Article and agrees that eachAgent’s rights under the Loan Documents will remain enforceable even if theamount secured by the Loan Documents is larger in amount and more burdensomethan that for which the Borrower is responsible.  The enforceability of this Article againsteach Guarantor shall continue until such Guarantor is released from theprovisions of this Article pursuant to the provisions of this Agreement oruntil all sums due under the Loan Documents have been paid in full and shallnot be limited or affected in any way by any impairment or any diminution orloss of value of any security or collateral for the Borrower’s obligationsunder the Loan Documents, from whatever cause, the failure of any securityinterest in any such security or collateral or any disability or other defenseof Borrower, any other Guarantor, or any other guarantor of Borrower’sobligations under any other Loan Document, any pledgor of collateral for anyPerson’s obligations to the Agents and the Lenders or any other Person inconnection with the Loan Documents.

 

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(iii)                               Each Guarantor waivesthe right to require Collateral Agent to (A) proceed against Borrower, anyother Guarantor, or any guarantor of Borrower’s obligations under any LoanDocument, any other pledgor of collateral for any Person’s obligations to theAgents and the Lenders or any other Person in connection with the GuaranteedObligations, (B) proceed against or exhaust any other security orcollateral Collateral Agent may hold, or (C) pursue any other right orremedy for such Guarantor’s benefit, and agrees that Collateral Agent mayexercise its right under this Article without taking any action againstBorrower, any other  Guarantor, or anyother guarantor of Borrower’s obligations under the Loan Documents, any pledgorof collateral for any Person’s obligations to the Agents and the Lenders or anyother Person in connection with the Guaranteed Obligations, and withoutproceeding against or exhausting any security or collateral Collateral Agent holds.

 

(iv)                              EachGuarantor’s liability with respect to the Guaranteed Obligations shall remainin full force and effect without regard to, and shall not be impaired oraffected by, nor shall the Guarantor be exonerated or discharged by, any actsof any Governmental Authority of or in any jurisdiction affecting Borrower,such Guarantor, any other Guarantor, or any other guarantor of Borrower’sobligations under the Loan Documents, any pledgor of collateral for any Person’sobligations to the Agents and the Lenders or any other Person, including anyrestrictions on the conversion or exchange of currency or repatriation orcontrol of funds, a declaration of banking moratorium or any suspension ofpayments by banks in any jurisdiction or the imposition by any jurisdiction orany Governmental Authority thereof or therein of any moratorium on, therequired rescheduling or restructuring of, or required  approval of payments on, any indebtedness insuch jurisdiction, or any total or partial expropriation, confiscation,nationalization or requisition of any such Person’s property; any war (whetheror not declared), insurrection, revolution, hostile act, civil strife orsimilar events occurring in any jurisdiction; or any economic, political,regulatory or other events in any jurisdiction. The paragraphs in this Article whichrefer to certain sections of the California Civil Code and the California Codeof Civil Procedure are included in this Article solely out of an abundanceof caution and shall not be construed to mean that any of the above-referencedprovisions of California law are in any way applicable to this Article.

 

Section 11.04                          Continuing Guaranty; Assignments.  ThisArticle is a continuing guaranty and shall (a) remain in full forceand effect until the later of (i) the cash payment in full of theGuaranteed Obligations (other than indemnification obligations as to which noclaim has been made) and all other amounts payable under this Article and (ii) theFinal Maturity Date, (b) be binding upon each Guarantor, its successorsand assigns and (c) inure to the benefit of and be enforceable by theAgents and the Lenders and their successors, pledgees, transferees andassigns.  Without limiting the generalityof the foregoing clause (c), any Lender may pledge, assign or otherwisetransfer all or any portion of its rights and obligations under this Agreement(including all or any portion of its Commitments or its Loans) to any otherPerson, and such other Person shall thereupon become vested with all thebenefits in respect thereof granted such Lender herein or otherwise, in eachcase as provided in Section 12.07.

 

Section 11.05                          Canadian Obligors.

 

(a)                                  InterestAct (Canada); Criminal Rate of Interest; Nominal Rate of Interest.

 

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(i)                                     Notwithstandinganything to the contrary contained in this Article or in any LoanDocument, solely to the extent that a court of competent jurisdiction finallydetermines that the calculation or determination of interest payable by anyGuarantor that is an entity organized under the laws of Canada or any provinceof Canada (a “Canadian Obligor”) in respect of the Obligations pursuantto this Article and the Loan Documents shall be governed by the laws ofthe province of Ontario or the federal laws of Canada.

 

(ii)                                  Wheneverinterest payable by any Canadian Obligor is calculated on the basis of a periodwhich is less than the actual number of days in a calendar year, each rate ofinterest determined pursuant to such calculation is, for the purposes of theInterest Act (Canada), equivalent to such rate multiplied by the actual numberof days in the calendar year in which such rate is to be ascertained anddivided by the number of days used as the basis of such calculation.

 

(iii)                               In no event shall theaggregate “interest” (as defined in Section 347 of the Criminal Code,R.S.C. 1985, c. C-46, as the same shall be amended, replaced or re-enacted fromtime to time) payable by any Canadian Obligor to any Agent or any Lender underthis Article or any Loan Document exceed the effective annual rate ofinterest on the “credit advances” (as defined in that section) under this Article orsuch Loan Document lawfully permitted under that section and, if anypayment, collection or demand pursuant to this Article or any LoanDocument in respect of “interest” (as defined in that section) is determined tobe contrary to the provisions of that section, such payment, collection ordemand shall be deemed to have been made by mutual mistake of the Agents, theLenders and the Canadian Obligor making such payment and the amount of suchpayment or collection shall be refunded by the Agents and the Lenders to suchCanadian Obligor.  For the purposes ofthis Article and each other Loan Document to which a Canadian Obligor is aparty, the effective annual rate of interest payable by such Canadian Obligorshall be determined in accordance with generally accepted actuarial practicesand principles over the term of the Obligations, on the basis of annualcompounding for the lawfully permitted rate of interest and, in the event of adispute, a certificate of a Fellow of the Canadian Institute of Actuariesappointed by Agent for the account of such Canadian Obligor will be conclusivefor the purpose of such determination in the absence of evidence to thecontrary.

 

(iv)                              Allcalculations of interest payable by any Canadian Obligor under this Article orany other Loan Document are to be made on the basis of the nominal interestrate described herein and therein and not on the basis of effective yearlyrates or on any other basis which gives effect to the principle of deemedreinvestment of interest.  The partiesacknowledge that there is a material difference between the stated nominalinterest rates and the effective yearly rates of interest and that they arecapable of making the calculations required to determine such effective yearlyrates of interest.

 

(b)                                 JudgmentCurrency.  The specification underthis Article of Dollars and payment in the United States is of theessence.  Each Guarantor’s obligationshereunder and under the other Loan Documents to make payments in Dollars andshall not be discharged or satisfied by any tender or recovery pursuant to anyjudgment expressed in or converted into any currency other than Dollars, exceptto the extent that such tender or recovery results in the effective receipt byeach Agent and each Lender of the full amount of Dollars

 

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expressed to be payable to such Agent or such Lenderunder this Article or the other Loan Documents.  If, for the purpose of obtaining or enforcingjudgment in any court, it is necessary to convert into or from any currencyother than Dollars (such other currency being hereinafter referred to as the “JudgmentCurrency”) an amount due in Dollars, the rate of exchange used shall bethat at which the Agents and the Lenders could, in accordance with normalbanking procedures, purchase Dollars with the Judgment Currency on the BusinessDay preceding that on which final judgment is given.  The obligation of each Guarantor in respectof any such sum due from it to the applicable Agent or Lender hereunder shall,notwithstanding any judgment in such Judgment Currency, be discharged only tothe extent that, on the Business Day immediately following the date on whichthe applicable Agent or Lender receives any sum adjudged to be so due in theJudgment Currency, the applicable Agent or Lender may, in accordance withnormal banking procedures, purchase Dollars with the Judgment Currency.  If the Dollars so purchased are less than thesum originally due to the applicable Agent or Lender in Dollars, each Guarantoragrees, as a separate obligation and notwithstanding any such judgment, toindemnify the Agents and the Lenders against such loss, and if the Dollars sopurchased exceed the sum originally due to the applicable Agent or Lender inDollars, the applicable Agent or Lender agrees to remit to the applicableGuarantor such excess.

 

Section 11.06                          Subrogation.  No Guarantor will exercise anyrights that it may now or hereafter acquire against any Loan Party or any otherguarantor that arise from the existence, payment, performance or enforcement ofsuch Guarantor’s obligations under this Article, including any right ofsubrogation, reimbursement, exoneration, contribution or indemnification andany right to participate in any claim or remedy of the Agents and the Lendersagainst any Loan Party or any other guarantor or any Collateral, whether or notsuch claim, remedy or right arises in equity or under contract, statute orcommon law, including the right to take or receive from any Loan Party or anyother guarantor, directly or indirectly, in cash or other property or byset-off or in any other manner, payment or security solely on account of suchclaim, remedy or right, unless and until all of the Guaranteed Obligations andall other amounts payable under this Article shall have been paid in fullin cash and the Final Maturity Date shall have occurred.  If any amount shall be paid to any Guarantorin violation of the immediately preceding sentence at any time prior to thelater of the payment in full in cash of the Guaranteed Obligations and allother amounts payable under this Article and the Final Maturity Date, suchamount shall be held in trust for the benefit of the Agents and the Lenders andshall forthwith be paid to the Agents and the Lenders to be credited andapplied to the Guaranteed Obligations and all other amounts payable under thisArticle, whether matured or unmatured, in accordance with the terms of thisAgreement, or to be held as Collateral for any Guaranteed Obligations or otheramounts payable under this Article thereafter arising.  If (i) any Guarantor shall make paymentto the Agents and the Lenders of all or any part of the Guaranteed Obligations,(ii) all of the Guaranteed Obligations and all other amounts payable underthis Article shall be paid in full in cash and (iii) all Commitmentshave been terminated, the Agents and the Lenders will, at such Guarantor’srequest and expense, execute and deliver to such Guarantor appropriatedocuments, without recourse and without representation or warranty, necessaryto evidence the transfer by subrogation to such Guarantor of an interest in theGuaranteed Obligations resulting from such payment by such Guarantor.

 

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**ARTICLE XII**

** **

**MISCELLANEOUS**

** **

Section 12.01                          Notices, Etc.  Allnotices and other communications provided for hereunder shall be in writing andshall be mailed, telecopied or delivered, if to any Loan Party, at thefollowing address:

 

**MAGNETEK,INC.**8966 Mason AvenueChatsworth, California 91311Attention:  Tina McKnightTelecopier:  818-727-2219

 

with a copyto:

 

**GIBSON,DUNN & CRUTCHER LLP**333 South Grand AvenueLos Angeles, CA  90071Attention: Jennifer Bellah Maguire, Esq.Telecopier:  213-229-7520

 

if to theAdministrative****Agent, to it at the followingaddress:

 

**ABLECOFINANCE LLC**299 Park Avenue, 23rd FloorNew York, New York  10171Attention:  Kevin GendaTelecopier:  212-891-1541

 

if to theCollateral Agent, to it at the following address:

 

**ABLECOFINANCE LLC**299 Park Avenue, 23rd FloorNew York, New York  10171Attention:  Kevin GendaTelecopier:  212-891-1541

 

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in each casefor each Agent, with copies to:

 

**CERBERUSCALIFORNIA, INC.**11812 San Vicente Boulevard, Suite 300Los Angeles, California  90049Attention: Michael B. GrenierTelecopier:  310-826-9203

 

and

 

**PAUL,HASTINGS, JANOFSKY & WALKER LLP**515 South Flower StreetLos Angeles, CA 90071Attention:  John Francis Hilson, Esq.Telecopier:  213-996-3300

 

or, as to each party, at such other address as shall be designated bysuch party in a written notice to the other parties complying as to deliverywith the terms of this Section 12.01.  All such notices and other communicationsshall be effective, (i) if mailed, when received or 3 days after depositedin the mails, whichever occurs first, (ii) if telecopied, when transmittedand confirmation received, or (iii) if delivered, upon delivery, exceptthat notices to any Agent pursuant to Articles II and III shall not beeffective until received by such Agent , as the case may be.

 

Section 12.02                          Amendments, Etc.  Noamendment or waiver of any provision of this Agreement or any other LoanDocument, and no consent to any departure by any Loan Party or any of theirrespective Subsidiaries therefrom, shall in any event be effective unless thesame shall be in writing and signed by the Required Lenders or by theCollateral Agent with the consent of the Required Lenders, and then such waiveror consent shall be effective only in the specific instance and for thespecific purpose for which given, provided, however, that noamendment, waiver or consent shall (i) increase the Commitment of anyLender, reduce the principal of, or interest on, the Loans payable to anyLender, reduce the amount of any fee payable for the account of any Lender, orpostpone or extend any date fixed for any payment of principal of, or interestor fees on, the Loans payable to any Lender, in each case without the writtenconsent of any Lender affected thereby, (ii) increase the Total Term LoanCommitment without the written consent of each Lender, (iii) change thepercentage of the Commitments or of the aggregate unpaid principal amount ofthe Loans that is required for the Lenders or any of them to take any actionhereunder, (iv) amend the definition of “Required Lenders”, “Pro RataShare” or “Total Debt Limiter”, (v) release all or a substantial portionof the Collateral (except as otherwise provided in this Agreement and the otherLoan Documents), subordinate any Lien granted in favor of the Collateral Agentfor the benefit of the Agents and the Lenders, or release the Borrower or anyGuarantor or (vi) amend, modify or waive Section 4.04 or this Section 12.02of this Agreement, in each case, without the written consent of eachLender.  Notwithstanding the foregoing,no amendment, waiver or consent shall, unless in writing and signed by anAgent, affect the rights or duties of such Agent (but not in its capacity as aLender) under this Agreement or the other Loan Documents.

 

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Section 12.03                          No Waiver; Remedies, Etc.  Nofailure on the part of any Agent or any Lender to exercise, and no delay inexercising, any right hereunder or under any other Loan Document shall operateas a waiver thereof; nor shall any single or partial exercise of any rightunder any Loan Document preclude any other or further exercise thereof or theexercise of any other right.  The rightsand remedies of the Agents and the Lenders provided herein and in the otherLoan Documents are cumulative and are in addition to, and not exclusive of, anyrights or remedies provided by law.  Therights of the Agents and the Lenders under any Loan Document against any partythereto are not conditional or contingent on any attempt by the Agents and theLenders to exercise any of their rights under any other Loan Document againstsuch party or against any other Person.

 

Section 12.04                          Expenses; Taxes; Attorneys’ Fees.  TheBorrower will pay on demand, all costs and expenses incurred by or on behalf ofeach Agent (and, in the case of clauses (b) through (m) below, eachLender), regardless of whether the transactions contemplated hereby areconsummated, including reasonable fees, costs, client charges and expenses ofcounsel for each Agent (and, in the case of clauses (b) through (m) below,each Lender), accounting, due diligence, periodic field audits, physicalcounts, valuations, investigations, searches and filings, monitoring of assets,appraisals of Collateral, title searches and reviewing environmentalassessments, miscellaneous disbursements, examination, travel, lodging andmeals, arising from or relating to:  (a) thenegotiation, preparation, execution, delivery, performance and administrationof this Agreement and the other Loan Documents (including the preparation ofany additional Loan Documents pursuant to Section 7.01(b) orthe review of any of the agreements, instruments and documents referred to in Section 7.01(f)),(b) any requested amendments, waivers or consents to this Agreement or theother Loan Documents whether or not such documents become effective or aregiven, (c) the preservation and protection of any of the Lenders’ rightsunder this Agreement or the other Loan Documents, (d) the defense of anyclaim or action asserted or brought against any Agent or any Lender by anyPerson that arises from or relates to this Agreement, any other Loan Document,the Agents’ or the Lenders’ claims against any Loan Party, or any and allmatters in connection therewith, (e) the commencement or defense of, orintervention in, any court proceeding arising from or related to this Agreementor any other Loan Document, (f) the filing of any petition, complaint,answer, motion or other pleading by any Agent or any Lender, or the taking ofany action in respect of the Collateral or other security, in connection withthis Agreement or any other Loan Document, (g) the protection, collection,lease, sale, taking possession of or liquidation of, any Collateral or othersecurity in connection with this Agreement or any other Loan Document, (h) anyattempt to enforce any Lien or security interest in any Collateral or othersecurity in connection with this Agreement or any other Loan Document, (i) anyattempt to collect from any Loan Party, (j) all liabilities and costs arisingfrom or in connection with the past, present or future operations of any LoanParty involving any damage to real or personal property or natural resources orharm or injury alleged to have resulted from any Release of Hazardous Materialson, upon or into such property, (k) any Environmental Liabilities and Costsincurred in connection with the investigation, removal, cleanup or remediationof any Hazardous Materials present or arising out of the operations of anyfacility owned or operated by any Loan Party, (l) any Environmental Liabilitiesand Costs incurred in connection with any Environmental Lien, or (m) thereceipt by any Agent or any Lender of any advice from professionals withrespect to any of the foregoing.  Withoutlimitation of the foregoing or any other provision of any Loan Document:  (x) the Borrower agrees to pay all stamp,document, transfer, recording or filing taxes or fees and

 

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similar impositions now orhereafter determined by any Agent or any Lender to be payable in connectionwith this Agreement or any other Loan Document, and the Borrower agrees to saveeach Agent and each Lender harmless from and against any and all present orfuture claims, liabilities or losses with respect to or resulting from anyomission to pay or delay in paying any such taxes, fees or impositions, (y) theBorrower agrees to pay all broker fees that may become due in connection withthe transactions contemplated by this Agreement and the other Loan Documents,and (z) if the Borrower fails to perform any covenant or agreement containedherein or in any other Loan Document, any Agent may itself perform or causeperformance of such covenant or agreement, and the expenses of such Agentincurred in connection therewith shall be reimbursed on demand by the Borrower.

 

Section 12.05                          Rightof Set-off.

 

(a)                                  Eachof the Lenders agrees that it shall not, without the express written consent ofthe Collateral Agent, and that it shall, to the extent it is lawfully entitledto do so, upon the written request of the Collateral Agent, set off against theObligations, any amounts owing by such Lender to Borrower or any depositaccounts of Borrower now or hereafter maintained with such Lender.  Each of the Lenders further agrees that itshall not, unless specifically requested to do so in writing by the CollateralAgent, take or cause to be taken any action, including, the commencement of anylegal or equitable proceedings, to foreclose any Lien on, or otherwise enforceany security interest in, any of the Collateral.

 

(b)                                 If,at any time or times any Lender shall receive (i) by payment, foreclosure,setoff, or otherwise, any proceeds of Collateral or any payments with respectto the Obligations, except for any such proceeds or payments received by suchLender from Administrative Agent pursuant to the terms of this Agreement, or (ii) paymentsfrom Administrative Agent in excess of such Lender’s ratable portion of allsuch distributions by Administrative Agent, such Lender promptly shall (1) turnthe same over to Administrative Agent, in kind, and with such endorsements asmay be required to negotiate the same to Administrative Agent, or inimmediately available funds, as applicable, for the account of all of theLenders and for application to the Obligations in accordance with theapplicable provisions of this Agreement, or (2) purchase, without recourseor warranty, an undivided interest and participation in the Obligations owed tothe other Lenders so that such excess payment received shall be applied ratablyas among the Lenders in accordance with their Pro Rata Shares; provided,however, that to the extent that such excess payment received by thepurchasing party is thereafter recovered from it, those purchases ofparticipations shall be rescinded in whole or in part, as applicable, and theapplicable portion of the purchase price paid therefor shall be returned tosuch purchasing party, but without interest except to the extent that suchpurchasing party is required to pay interest in connection with the recovery ofthe excess payment.

 

Section 12.06                          Severability.  Anyprovision of this Agreement which is prohibited or unenforceable in anyjurisdiction shall, as to such jurisdiction, be ineffective to the extent ofsuch prohibition or unenforceability without invalidating the remainingportions hereof or affecting the validity or enforceability of such provisionin any other jurisdiction.

 

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Section 12.07                          Assignments andParticipations.  (a)  ThisAgreement and the other Loan Documents shall be binding upon and inure to thebenefit of each Loan Party and each Agent and each Lender and their respectivesuccessors and assigns; provided, however, that none of the Loan Parties mayassign or transfer any of its rights hereunder or under the other LoanDocuments without the prior written consent of each Lender and any suchassignment without the Lenders’ prior written consent shall be null and void.

 

(b)                                 EachLender may with the written consent of the Collateral Agent, assign to one ormore other lenders or other entities all or a portion of its rights andobligations under this Agreement with respect to all or a portion of itsCommitment and Loans made by it; provided, however, that (i) suchassignment is in an amount which is at least $5,000,000 or a multiple of$1,000,000 in excess thereof (or the remainder of such Lender’s Commitment) and(ii) the parties to each such assignment shall execute and deliver to theCollateral Agent, for its acceptance, an Assignment and Acceptance, togetherwith any promissory note subject to such assignment and such parties shalldeliver to the Collateral Agent, for the benefit of the Collateral Agent, aprocessing and recordation fee of $5,000. Upon such execution, delivery and acceptance, from and after theeffective date specified in each Assignment and Acceptance, which effectivedate shall be at least 3 Business Days after the delivery thereof to theCollateral Agent (or such shorter period as shall be agreed to by theCollateral Agent and the parties to such assignment), (A) the assigneethereunder shall become a “Lender” hereunder and, in addition to the rights andobligations hereunder held by it immediately prior to such effective date, havethe rights and obligations hereunder that have been assigned to it pursuant tosuch Assignment and Acceptance and (B) the assigning Lender thereundershall, to the extent that rights and obligations hereunder have been assignedby it pursuant to such Assignment and Acceptance, relinquish its rights and bereleased from its obligations under this Agreement (and, in the case of anAssignment and Acceptance covering all or the remaining portion of an assigningLender’s rights and obligations under this Agreement, such Lender shall ceaseto be a party hereto).

 

(c)                                  Byexecuting and delivering an Assignment and Acceptance, the assigning Lender andthe assignee thereunder confirm to and agree with each other and the otherparties hereto as follows:  (i) otherthan as provided in such Assignment and Acceptance, the assigning Lender makesno representation or warranty and assumes no responsibility with respect to anystatements, warranties or representations made in or in connection with thisAgreement or any other Loan Document or the execution, legality, validity,enforceability, genuineness, sufficiency or value of this Agreement or anyother Loan Document furnished pursuant hereto; (ii) the assigning Lendermakes no representation or warranty and assumes no responsibility with respectto the financial condition of any Loan Party or any of its Subsidiaries or theperformance or observance by any Loan Party of any of its obligations underthis Agreement or any other Loan Document furnished pursuant hereto; (iii) suchassignee confirms that it has received a copy of this Agreement and the otherLoan Documents, together with such other documents and information it hasdeemed appropriate to make its own credit analysis and decision to enter intosuch Assignment and Acceptance; (iv) such assignee will, independently andwithout reliance upon the assigning Lender, any Agent or any Lender and basedon such documents and information as it shall deem appropriate at the time,continue to make its own credit decisions in taking or not taking action underthis Agreement and the other Loan Documents; (v) such assignee appointsand authorizes the Agents to take such action as agents on its behalf and toexercise such powers under this Agreement and the other Loan Documents as aredelegated to the Agents by the terms hereof and thereof, together with suchpowers as are reasonably incidental hereto and thereto; and (vi) suchassignee agrees that it will perform in accordance with their terms all of theobligations which by the terms of this Agreement and the other Loan Documentsare required to be performed by it as a Lender.

 

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(d)                                 TheCollateral Agent shall, acting solely for this purpose as a non-fiduciary agentof the Borrower, maintain, or cause to be maintained at the Payment Office, acopy of each Assignment and Acceptance delivered to and accepted by it and aregister (the “Register”) for the recordation of the names and addressesof the Lenders and the Commitments of, and the principal amount of the Loans(and stated interest thereon) (the “Registered Loans”).  The entries in the Register shall beconclusive and binding for all purposes, absent manifest error, and theBorrower, the Agents and the Lenders may treat each Person whose name isrecorded in the Register as a Lender hereunder for all purposes of thisAgreement.  The Register shall beavailable for inspection by the Administrative Borrower and any Lender at anyreasonable time and from time to time upon reasonable prior notice.

 

(e)                                  Uponreceipt by the Collateral Agent of an Assignment and Acceptance, and subject toany consent required from the Collateral Agent pursuant to Section 12.07(b) (whichconsent of the Collateral Agent must be evidenced by the Collateral Agent’sexecution of an acceptance to such Assignment and Acceptance), the CollateralAgent shall accept the Assignment and Acceptance and record the informationcontained therein in the Register.

 

(f)                                    ARegistered Loan (and the registered note, if any, evidencing the same) may beassigned or sold in whole or in part only by registration of such assignment orsale on the Register (and each registered note shall expressly soprovide).  Any assignment or sale of allor part of such Registered Loan (and the registered note, if any, evidencingthe same) may be effected only by registration of such assignment or sale onthe Register, together with the surrender of the registered note, if any,evidencing the same duly endorsed by (or accompanied by a written instrument ofassignment or sale duly executed by) the holder of such registered note,whereupon, at the request of the designated assignee(s) or transferee(s), oneor more new registered notes in the same aggregate principal amount shall beissued to the designated assignee(s) or transferee(s).  Prior to the registration of assignment or saleof any Registered Loan (and the registered note, if any, evidencing the same),the Agents shall treat the Person in whose name such Registered Loan (and theregistered note, if any, evidencing the same) is registered as the ownerthereof for the purpose of receiving all payments thereon, notwithstandingnotice to the contrary.

 

(g)                                 Inthe event that any Lender sells participations in a Registered Loan, suchLender shall maintain a register for this purpose as a non-fiduciary agent ofthe Borrower on which it enters the name of all participants in the RegisteredLoans held by it and the principal amount (and stated interest thereon) of theportion of the Registered Loan that is the subject of the participation (the “ParticipantRegister”). A Registered Loan (and the registered note, if any, evidencingthe same) may be participated in whole or in part only by registration of suchparticipation on the Participant Register (and each registered note shallexpressly so provide).  Any participationof such Registered Loan (and the registered note, if any, evidencing the same)may be effected only by the registration of such participation on theParticipant Register.

 

(h)                                 AnyNon-U.S. Lender who is assigned an interest in any portion of such RegisteredLoan pursuant to an Assignment and Acceptance shall comply with Section 2.08(d).

 

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(i)                                     EachLender may sell participations to one or more banks or other entities in or toall or a portion of its rights and obligations under this Agreement and theother Loan Documents (including, all or a portion of its Commitments or theLoans made by it); provided, that (i) such Lender’s obligations under thisAgreement (including without limitation, its Commitments hereunder) and theother Loan Documents shall remain unchanged; (ii) such Lender shall remainsolely responsible to the other parties hereto for the performance of suchobligations, and the Borrower, the Agents and the other Lenders shall continueto deal solely and directly with such Lender in connection with such Lender’srights and obligations under this Agreement and the other Loan Documents; and (iii) aparticipant shall not be entitled to require such Lender to take or omit totake any action hereunder except (A) action directly effecting anextension of the maturity dates or decrease in the principal amount of theLoans, (B) action directly effecting an extension of the due dates or adecrease in the rate of interest payable on the Loans or the fees payable underthis Agreement, or (C) actions directly effecting a release of all or asubstantial portion of the Collateral or any Loan Party (except as set forth inSection 10.08 of this Agreement or any other Loan Document).  The Loan Parties agree that each participantshall be entitled to the benefits of Section 2.08 and Section 4.05of this Agreement with respect to its participation in any portion of theCommitments and the Loans as if it was a Lender.

 

Section 12.07                          Counterparts.  ThisAgreement may be executed in any number of counterparts and by differentparties hereto in separate counterparts, each of which shall be deemed to be anoriginal, but all of which taken together shall constitute one and the sameagreement.  Delivery of an executedcounterpart of this Agreement by telefacsimile shall be equally as effective asdelivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpartof this Agreement by telefacsimile also shall deliver an original executedcounterpart of this Agreement but the failure to deliver an original executedcounterpart shall not affect the validity, enforceability, and binding effectof this Agreement.  The foregoing shallapply to each other Loan Document mutatis mutandis.

 

Section 12.08                          **GOVERNING LAW****.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS(UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER LOAN DOCUMENT IN RESPECTOF SUCH OTHER LOAN DOCUMENT) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCEWITH, THE LAW OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BEPERFORMED IN THE STATE OF NEW YORK.**

 

Section 12.09                          **CONSENT TO JURISDICTION;SERVICE OF PROCESS AND VENUE****.  ANY LEGALACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BEBROUGHT IN THE COURTS OF THE STATE OF NEW YORK, IN THE COUNTY OF NEW YORK ANDTHE BOROUGH OF MANHATTAN OR OF THE UNITED STATES DISTRICT COURT FOR THESOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THISAGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITSPROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAIDCOURTS. EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY ANDALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, ORPROCEEDING BROUGHT IN THE UNITED STATES OF**

 

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**AMERICAARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOANDOCUMENTS BY THE MAILING (BY REGISTERED MAIL OR CERTIFIED MAIL, POSTAGEPREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO SUCH LOAN PARTY, C/O THEBORROWER, AT THE BORROWER’S ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01.  THE LOAN PARTIES AGREE THAT A FINAL JUDGMENTIN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCEDIN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDEDBY LAW.  NOTHING HEREIN SHALL AFFECT THERIGHT OF THE AGENTS AND THE LENDERS TO SERVE PROCESS IN ANY OTHER MANNERPERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINSTANY LOAN PARTY IN ANY OTHER JURISDICTION. EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLESTEXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVETO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANYSUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEENBROUGHT IN AN INCONVENIENT FORUM.  TO THEEXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROMJURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE ORNOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OROTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBYIRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THISAGREEMENT AND THE OTHER LOAN DOCUMENTS.**

 

Section 12.10                          **WAIVER OF JURY TRIAL, ETC.****  EACH LOAN PARTY, EACH AGENT AND EACH LENDERHEREBY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING ORCOUNTERCLAIM CONCERNING ANY RIGHTS UNDER THIS AGREEMENT OR THE OTHER LOANDOCUMENTS, OR UNDER ANY AMENDMENT, WAIVER, CONSENT, INSTRUMENT, DOCUMENT OROTHER AGREEMENT DELIVERED OR WHICH IN THE FUTURE MAY BE DELIVERED INCONNECTION THEREWITH, OR ARISING FROM ANY FINANCING RELATIONSHIP EXISTING INCONNECTION WITH THIS AGREEMENT, AND AGREES THAT ANY SUCH ACTION, PROCEEDINGS ORCOUNTERCLAIM SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.  EACH LOAN PARTY CERTIFIES THAT NO OFFICER,REPRESENTATIVE, AGENT OR ATTORNEY OF ANY AGENT OR ANY LENDER HAS REPRESENTED,EXPRESSLY OR OTHERWISE, THAT ANY AGENT OR ANY LENDER WOULD NOT, IN THE EVENT OFANY ACTION, PROCEEDING OR COUNTERCLAIM, SEEK TO ENFORCE THE FOREGOINGWAIVERS.  EACH LOAN PARTY HEREBYACKNOWLEDGES THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE AGENTS ANDTHE LENDERS ENTERING INTO THIS AGREEMENT.**

 

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Section 12.11                          Consent by the Agents and Lenders. Except as otherwise expressly set forth herein to the contrary, if theconsent, approval, satisfaction, determination, judgment, acceptance or similaraction (an “Action”) of any Agent or any Lender shall be permitted orrequired pursuant to any provision hereof or any provision of any otheragreement to which any Loan Party is a party and to which any Agent or anyLender has succeeded thereto, such Action shall be required to be in writingand may be withheld or denied by such Agent or such Lender, in its solediscretion, with or without any reason, and without being subject to questionor challenge on the grounds that such Action was not taken in good faith.

 

Section 12.12                          No Party Deemed Drafter.  Eachof the parties hereto agrees that no party hereto shall be deemed to be thedrafter of this Agreement.

 

Section 12.13                          Reinstatement; Certain Payments.  Ifany claim is ever made upon any Agent or any Lender for repayment or recoveryof any amount or amounts received by such Agent or such Lender in payment or onaccount of any of the Obligations, such Agent or such Lender shall give promptnotice of such claim to each other Agent and Lender and the Borrower, and ifsuch Agent or such Lender repays all or part of such amount by reason of (i) anyjudgment, decree or order of any court or administrative body havingjurisdiction over such Agent or such Lender or any of its property, or (ii) anygood faith settlement or compromise of any such claim effected by such Agent,such Lender with any such claimant, then and in such event each Loan Partyagrees that (A) any such judgment, decree, order, settlement or compromiseshall be binding upon it notwithstanding the cancellation of any Indebtednesshereunder or under the other Loan Documents or the termination of thisAgreement or the other Loan Documents, and (B) it shall be and remainliable to such Agent or such Lender hereunder for the amount so repaid orrecovered to the same extent as if such amount had never originally beenreceived by such Agent or such Lender.

 

Section 12.14                          Indemnification.  Inaddition to each Loan Party’s other Obligations under this Agreement, each LoanParty agrees to, jointly and severally, defend, protect, indemnify and holdharmless each Agent, each Lender and all of their respective officers,directors, employees, attorneys, consultants and agents (collectively calledthe ”Indemnitees”) from and against any and all losses, damages,liabilities, obligations, penalties, fees, reasonable costs and expenses(including reasonable attorneys’ fees, costs and expenses) incurred by suchIndemnitees, whether prior to or from and after the Effective Date, whetherdirect, indirect or consequential, as a result of or arising from or relatingto or in connection with any of the following: (i) the negotiation, preparation, execution or performance orenforcement of this Agreement, any other Loan Document or of any other documentexecuted in connection with the transactions contemplated by this Agreement, (ii) anyAgent’s or any Lender’s furnishing of funds to the Borrower under thisAgreement or the other Loan Documents, including the management of any suchLoans, (iii) any matter relating to the financing transactionscontemplated by this Agreement or the other Loan Documents or by any documentexecuted in connection with the transactions contemplated by this Agreement orthe other Loan Documents, or (iv) any claim, litigation, investigation orproceeding relating to any of the foregoing, whether or not any Indemnitee is aparty thereto (collectively, the ”Indemnified Matters”); provided,however, that the Loan Parties shall not have any obligation to anyIndemnitee under this Section 12.15 for any Indemnified Mattercaused by the gross negligence or willful misconduct of such Indemnitee, asdetermined by a final judgment of a court of competent jurisdiction.  Such indemnification for all of the foregoinglosses, damages, fees, costs and expenses of the Indemnitees are chargeableagainst the Loan Account.  To the extentthat the undertaking to indemnify, pay and hold harmless set forth in this Section 12.15may be

 

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unenforceable because it isviolative of any law or public policy, each Loan Party shall, jointly andseverally, contribute the maximum portion which it is permitted to pay andsatisfy under applicable law, to the payment and satisfaction of allIndemnified Matters incurred by the Indemnitees.  This Indemnity shall survive the repayment ofthe Obligations and the discharge of the Liens granted under the LoanDocuments.

 

Section 12.15                          Records.  The unpaid principal of andinterest on the Loans, the interest rate or rates applicable to such unpaidprincipal and interest, the duration of such applicability, the Commitments,and the accrued and unpaid fees payable pursuant to Section 2.06hereof, including the Closing Fee, the Loan Servicing Fee, the Anniversary Fee,the Unused Line Fee, the Commitment Fee, shall at all times be ascertained fromthe records of the Agents, which shall be conclusive and binding absentmanifest error.

 

Section 12.16                          Binding Effect.  ThisAgreement shall become effective when it shall have been executed by each LoanParty, each Agent and each Lender and thereafter shall be binding upon andinure to the benefit of each Loan Party, each Agent and each Lender, and theirrespective successors and assigns, except that the Loan Parties shall not havethe right to assign their rights hereunder or any interest herein without theprior written consent of each Lender, and any assignment by any Lender shall begoverned by Section 12.07 hereof.

 

Section 12.17                          Interest.  It is the intention of theparties hereto that each Agent and each Lender shall conform strictly to usurylaws applicable to it.  Accordingly, ifthe transactions contemplated hereby or by any other Loan Document would beusurious as to any Agent or any Lender under laws applicable to it (includingthe laws of the United States of America and the State of New York or any otherjurisdiction whose laws may be mandatorily applicable to such Agent or suchLender notwithstanding the other provisions of this Agreement), then, in thatevent, notwithstanding anything to the contrary in this Agreement or any otherLoan Document or any agreement entered into in connection with or as securityfor the Obligations, it is agreed as follows: (i) the aggregate of all consideration which constitutes interestunder law applicable to any Agent or any Lender that is contracted for, taken,reserved, charged or received by such Agent or such Lender under this Agreementor any other Loan Document or agreements or otherwise in connection with theObligations shall under no circumstances exceed the maximum amount allowed bysuch applicable law, any excess shall be canceled automatically and iftheretofore paid shall be credited by such Agent or such Lender on theprincipal amount of the Obligations (or, to the extent that the principalamount of the Obligations shall have been or would thereby be paid in full,refunded by such Agent or such Lender, as applicable, to the Borrower); and (ii) inthe event that the maturity of the Obligations is accelerated by reason of anyEvent of Default under this Agreement or otherwise, or in the event of anyrequired or permitted prepayment, then such consideration that constitutesinterest under law applicable to any Agent or any Lender may never include morethan the maximum amount allowed by such applicable law, and excess interest, ifany, provided for in this Agreement or otherwise shall be canceledautomatically by such Agent or such Lender, as applicable, as of the date ofsuch acceleration or prepayment and, if theretofore paid, shall be credited bysuch Agent or such Lender, as applicable, on the principal amount of theObligations (or, to the extent that the principal amount of the Obligationsshall have been or would thereby be paid in full, refunded by such Agent orsuch Lender to the Borrower).  All sumspaid or agreed to be paid to any Agent or any Lender for the use, forbearanceor detention of sums due hereunder shall, to the extent

 

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permitted by law applicableto such Agent or such Lender, be amortized, prorated, allocated and spreadthroughout the full term of the Loans until payment in full so that the rate oramount of interest on account of any Loans hereunder does not exceed themaximum amount allowed by such applicable law. If at an time and from time to time (i) the amount of interestpayable to any Agent or any Lender on any date shall be computed at the HighestLawful Rate applicable to such Agent or such Lender pursuant to this Section 12.18and (ii) in respect of any subsequent interest computation period theamount of interest otherwise payable to such Agent or such Lender would be lessthan the amount of interest payable to such Agent or such Lender computed atthe Highest Lawful Rate applicable to such Agent or such Lender, then theamount of interest payable to such Agent or such Lender in respect of suchsubsequent interest computation period shall continue to be computed at theHighest Lawful Rate applicable to such Agent or such Lender until the totalamount of interest payable to such Agent or such Lender shall equal the totalamount of interest which would have been payable to such Agent or such Lenderif the total amount of interest had been computed without giving effect to thisSection 12.18.

 

For purposes of this Section 12.18, the term “applicablelaw” shall mean that law in effect from time to time and applicable to the loantransaction between the Borrower, on the one hand, and the Agents and theLenders, on the other, that lawfully permits the charging and collection of thehighest permissible, lawful non-usurious rate of interest on such loantransaction and this Agreement, including laws of the State of New York and, tothe extent controlling, laws of the United States of America.

 

The right to accelerate the maturity of the Obligations does notinclude the right to accelerate any interest that has not accrued as of thedate of acceleration.

 

Section 12.18                          Confidentiality.  EachAgent and each Lender agrees (on behalf of itself and each of its affiliates,directors, officers, employees and representatives) to use reasonableprecautions to keep confidential, in accordance with its customary proceduresfor handling confidential information of this nature and in accordance withsafe and sound practices of comparable companies, any material non-publicinformation supplied to it by the Loan Parties pursuant to this Agreement orthe other Loan Documents which is identified in writing by the Loan Parties asbeing confidential at the time the same is delivered to such Person (and whichat the time is not, and does not thereafter become, publicly available oravailable to such Person from another source not known to be subject to aconfidentiality obligation to such Person not to disclose such information), providedthat nothing herein shall limit the disclosure of any such information (i) tothe extent required by statute, rule, regulation or judicial process, (ii) tocounsel for any Agent or any Lender, (iii) to examiners, auditors,accountants or Securitization Parties, (iv) in connection with anylitigation to which any Agent or any Lender is a party or (v) to anyassignee or participant (or prospective assignee or participant) so long assuch assignee or participant (or prospective assignee or participant) firstagrees, in writing, to be bound by confidentiality provisions similar insubstance to this Section 12.19. Each Agent and each Lender agrees that, upon receipt of a request oridentification of the requirement for disclosure pursuant to clause (iv) hereof,it will make reasonable efforts to keep the Loan Parties informed of suchrequest or identification; provided that each Loan Party acknowledgesthat each Agent and each Lender may make disclosure as required or requested byany Governmental Authority or representative thereof and that each Agent andeach Lender may be subject to review by Securitization Parties or otherregulatory agencies and may be required to provide to, or otherwise makeavailable for review by, the representatives of such parties or agencies anysuch non-public information.

 

111

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Section 12.19                          Waiver of Consequential Damages, Etc.  Tothe fullest extent permitted by applicable law, no Loan Party shall assert, andeach Loan Party hereby waives, any claim against any Indemnitee, on any theoryof liability, for special, indirect, consequential or punitive damages (asopposed to direct or actual damages) arising out of, in connection with, or asa result of, this Agreement, any other Loan Document or any agreement orinstrument contemplated hereby, the transactions contemplated hereby orthereby, any Loan or the use of the proceeds thereof.  No Indemnitee shall be liable for any damagesarising from the use by unintended recipients of any information or othermaterials distributed by it through telecommunications, electronic or otherinformation transmission systems in connection with this Agreement or the otherLoan Documents or the transactions contemplated hereby or thereby.

 

Section 12.20                          Public Disclosure. Borrower and each of its Subsidiaries agrees that neither they nor anyof their respective Affiliates will issue any press release or other publicdisclosure using the name of any Agent, any Lender or any of their respectiveAffiliates or referring to this Agreement or any other Loan Document withoutthe prior written consent of each Agent and such Lender, except to the extentthat such Person is required to do so under applicable law (in which event,such Person will consult with each Agent and such Lender before issuing suchpress release or other public disclosure). Borrower and each of its Subsidiaries hereby authorizes each Agent andeach Lender, after consultation with Borrower, to advertise the closing of thetransactions contemplated by this Agreement, and to make appropriateannouncements of the financial arrangements entered into among the partieshereto, as the Agents and the Lenders shall deem appropriate, includingannouncements commonly known as tombstones, in such trade publications, businessjournals, newspapers of general circulation and to such selected parties assuch Agent or such Lender shall deem appropriate.

 

Section 12.21                          Section Headings. Headings and numbers have been set forth herein for convenienceonly.  Unless the contrary is compelledby the context, everything contained in each Section applies equally tothis entire Agreement.

 

Section 12.22                          Integration.  This Agreement, together withthe other Loan Documents, reflects the entire understanding of the parties withrespect to the transactions contemplated hereby and shall not be contradictedor qualified by any other agreement, oral or written, before the date hereof.

 

112

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**IN WITNESS WHEREOF,** the parties hereto havecaused this Agreement to be executed by their respective officers thereuntoduly authorized, as of the date first above written.

 

 
|   | **BORROWER:**                                           |
|--------|---------------------------------------------------------|
|   |                                                    |
|   | **MAGNETEK,  INC.**                                     |
|   | ** **                                              |
|   |                                                    |   |
|   | By:                                                     | /s/ David P. Reiland |   |
|   | Name: David  P. Reiland                                 |
|   | Title:  Executive VP & Chief Financial Officer |
|   |                                                    |
|   | **GUARANTORS:**                                         |
|   |                                                    |
|   | **MAGNETEK  ADS POWER, INC.**                           |
|   |                                                    |   |
|   | By:                                                     | /s/ David P. Reiland |   |
|   | Name: David  P. Reiland                                 |
|   | Title:  President                                       |
|   |                                                    |
|   |                                                    |
|   | **MAGNETEK  MONDEL HOLDING, INC.**                      |
|   |                                                    |   |
|   | By:                                                     | /s/ David P. Reiland |   |
|   | Name: David  P. Reiland                                 |
|   | Title:  President                                       |
|   |                                                    |
|   |                                                    |
|   | **MONDEL  ULC**                                         |
|   |                                                    |
|   | By:                                                     | /s/ David P. Reiland |   |
|   | Name: David  P. Reiland                                 |
|   | Title:  President                                       |

 

----

 
|   | **MAGNETEK  NATIONAL ELECTRIC COIL,  INC.** |
|--------|---------------------------------------------|
|   |                                        |
|   | By:                                         | /s/ David P. Reiland |   |
|   | Name: David  P. Reiland                     |
|   | Title:  President                           |
|   |                                        |
|   |                                        |
|   | **MAGNETEK  ALTERNATIVE ENERGY, INC.**      |
|   |                                        |
|   | By:                                         | /s/ David P. Reiland |   |
|   | Name: David  P. Reiland                     |
|   | Title: VP  & Chief Financial Officer    |

 

114

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|   | **COLLATERAL  AGENT AND LENDER:**     |
|--------|---------------------------------------|
|   |                                  |
|   | **ABLECO  FINANCE LLC**               |
|   |                                  |
|   |                                  |
|   | By:                                   | /s/ Kevin  Genda |   |
|   |                                  | Name: Kevin  Genda |
|   |                                  | Title: Senior  Vice President |
|   |                                  |
|   |                                  |
|   | **ADMINISTRATIVE  AGENT AND LENDER:** |
|   |                                  |
|   | **ABLECO  FINANCE LLC**               |
|   |                                  |
|   |                                  |
|   | By:                                   | /s/ Kevin  Genda |   |
|   |                                  | Name: Kevin  Genda |
|   |                                  | Title:  Senior Vice President |

 

115

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SCHEDULE AND EXHIBITS

 

 
| Schedule F-1      |   | Facilities                                                                                                            |
|------------------------|--------|-----------------------------------------------------------------------------------------------------------------------|
| Schedule T-1      |   | TTM EBITDA                                                                                                            |
| Schedule 1.01(A)  |   | Commitments                                                                                                           |
| Schedule 6.01(e)  |   | Subsidiaries                                                                                                          |
| Schedule 6.01(f)  |   | Litigation; Commercial Tort Claims                                                                                    |
| Schedule 6.01(i)  |   | ERISA                                                                                                                 |
| Schedule 6.01(o)  |   | Real Property                                                                                                         |
| Schedule 6.01(q)  |   | Operating Leases                                                                                                      |
| Schedule 6.01(r)  |   | Environmental Matters                                                                                                 |
| Schedule 6.01(s)  |   | Insurance                                                                                                             |
| Schedule 6.01(v)  |   | Bank Accounts                                                                                                         |
| Schedule 6.01(w)  |   | Intellectual Property                                                                                                 |
| Schedule 6.01(x)  |   | Material Contracts                                                                                                    |
| Schedule 6.01(dd) |   | Name; Jurisdiction of Organization;  Organizational ID Number; Chief Place of Business; Chief Executive Office;  FEIN |
| Schedule 6.01(ee) |   | Tradenames                                                                                                            |
| Schedule 6.01(ff) |   | Collateral Locations                                                                                                  |
| Schedule 6.01(hh) |   | Indebtedness                                                                                                          |
| Schedule 7.02(a)  |   | Existing Liens                                                                                                        |
| Schedule 7.02(b)  |   | Existing Indebtedness                                                                                                 |
| Schedule 7.02(e)  |   | Existing Investments                                                                                                  |
| Schedule 7.02(k)  |   | Limitations on Dividends and Other Payment  Restrictions                                                              |
| Schedule 8.01     |   | Lockbox Banks and Lockbox Accounts                                                                                    |
|                   |   |                                                                                                                  |
| Exhibit A-1       |   | Form of Assignment and Acceptance                                                                                |
| Exhibit I-1       |   | Form of Intercompany Subordination  Agreement                                                                    |
| Exhibit I-2       |   | Form of Intercreditor Agreement                                                                                  |
| Exhibit L-1       |   | Form of LIBOR Notice                                                                                             |
| Exhibit T-1       |   | Form of Total Debt Limiter Certificate                                                                           |
| Exhibit 2.02(a)   |   | Form of Notice of Borrowing                                                                                      |
| Exhibit 5.01(d)   |   | Form of Opinion of Counsel                                                                                       |

 

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