**Exhibit 10.3**

 

**SCHEDULE 1.1**

** **

Asused in the Agreement, the following terms shall have the followingdefinitions:

 

“Account”means an account as that term is defined in the Code and in the case of Mondel,in the PPSA.

 

“AccountDebtor” means any Person who is obligated on an Account, chattel paper, ora general intangible.

 

“ACHTransactions” means any cash management or related services (including theAutomated Clearing House processing of electronic fund transfers through thedirect Federal Reserve Fedline system) provided by a Bank Product Provider forthe account of Administrative Borrower or its Subsidiaries.

 

“AdministrativeBorrower” has the meaning specified therefor in Section 16.9.

 

“Advances”has the meaning specified therefor in Section 2.1(a).

 

“Affiliate”means, as applied to any Person, any other Person who controls, is controlledby, or is under common control with, such Person.  For purposes of this definition, “control”means the possession, directly or indirectly through one or more intermediaries,of the power to direct the management and policies of a Person, whether throughthe ownership of Stock, by contract, or otherwise; provided, however,that, for purposes of the definition of Eligible Accounts and Section 6.13hereof:  (a) any Person which ownsdirectly or indirectly 10% or more of the Stock having ordinary voting powerfor the election of directors or other members of the governing body of aPerson or 10% or more of the partnership or other ownership interests of aPerson (other than as a limited partner of such Person) shall be deemed anAffiliate of such Person, (b) each director (or comparable manager) of aPerson shall be deemed to be an Affiliate of such Person, and (c) eachpartnership or joint venture in which a Person is a partner or joint venturershall be deemed an Affiliate of such Person. Notwithstanding anything herein to the contrary, in no event shall anyAgent or any Lender be considered an “Affiliate” of any Borrower or anyGuarantor.

 

“AfterAcquired Property” means any fee interest in Real Property acquired by theParent or any of its Subsidiaries after the date hereof.

 

“Agent”has the meaning specified therefor in the preamble to the Agreement.

 

“Agent-RelatedPersons” means Agent, together with its Affiliates, officers, directors,employees, attorneys, and agents.

 

“Agent’sAccount” means the Deposit Account of Agent identified on Schedule A-1.

 

“Agent’sLiens” means the Liens granted by Borrowers and/or any of their respectiveSubsidiaries to Agent under the Loan Documents.

 

“Agreement”means the Credit Agreement to which this Schedule 1.1 is attached.

 

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

 

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“ApplicableLaws” means, with respect to any Person, those Laws that apply to suchPerson or its business, undertakings, property or securities.

 

“Assignee”has the meaning specified therefor in Section 13.1(a).

 

“Assignmentand Acceptance” means an Assignment and Acceptance Agreement substantiallyin the form of Exhibit A-1.

 

“AuthorizedPerson” means any officer or employee of Administrative Borrower.

 

“Availability”means, as of any date of determination, the amount that Borrowers are entitledto borrow as Advances hereunder (after giving effect to all then outstandingObligations (other than Bank Product Obligations) and all sublimits andreserves then applicable hereunder).

 

“AvailabilityBlock” means, as of any date of determination: the sum of: (a) (i) priorto Borrowers’ receipt of cash proceeds of the Second Lien Indebtedness in anaggregate amount of not less than $18,000,000, an amount equal to $4,600,000and (ii) upon and after Borrowers’ receipt of cash proceeds of the SecondLien Indebtedness in an aggregate amount of not less than $18,000,000, anamount equal to $0; *plus* (b) (i) priorto the consummation of the Magnetek ADS Sale, an amount equal to $0 and (ii) uponand at all times after the consummation of the Magnetek ADS Sale, an amountequal to $2,000,000.

 

“BankProduct” means any financial accommodation extended to AdministrativeBorrower or its Subsidiaries by a Bank Product Provider (other than pursuant tothe Agreement) including:  (a) creditcards, (b) credit card processing services, (c) debit cards, (d) purchasecards, (e) ACH Transactions, (f) cash management, includingcontrolled disbursement, accounts or services, or (g) transactions underHedge Agreements.

 

“BankProduct Agreements” means those agreements entered into from time to timeby Administrative Borrower or its Subsidiaries with a Bank Product Provider inconnection with the obtaining of any of the Bank Products.

 

“BankProduct Obligations” means all obligations, liabilities, contingentreimbursement obligations, fees, and expenses owing by Administrative Borroweror its Subsidiaries to any Bank Product Provider pursuant to or evidenced bythe Bank Product Agreements and irrespective of whether for the payment of money,whether direct or indirect, absolute or contingent, due or to become due, nowexisting or hereafter arising, and including all such amounts thatAdministrative Borrower or its Subsidiaries are obligated to reimburse to Agentor any member of the Lender Group as a result of Agent or such member of theLender Group purchasing participations from, or executing indemnities orreimbursement obligations to, a Bank Product Provider with respect to the BankProducts provided by such Bank Product Provider to Administrative Borrower orits Subsidiaries.

 

“BankProduct Provider” means Wells Fargo or any of its Affiliates.

 

“BankProduct Reserve” means, as of any date of determination, the lesser of (a) $3,000,000,and (b) the amount of reserves that Agent has established (based upon theBank Product Providers’ reasonable determination of the credit exposure ofAdministrative Borrower and its Subsidiaries in respect of Bank Products) inrespect of Bank Products then provided or outstanding; provided, thatin order to qualify as Bank Product Reserves such reserves must be establishedon or prior to the time that the Bank Product Provider first provides theapplicable Bank Product.

 

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“BankruptcyCode” means Title 11 of the United States Code, together with anybankruptcy or insolvency laws of Canada, to the extent they apply to Mondel,including without limitation, the Bankruptcy and Insolvency Act (Canada) andthe Companies’ Creditors Arrangement Act (Canada).

 

“BaseLIBOR Rate” means the rate per annum, determined by Agent in accordancewith its customary procedures, and utilizing such electronic or other quotationsources as it considers appropriate (rounded upwards, if necessary, to the next1/100%), to be the rate at which Dollar deposits (for delivery on the first dayof the requested Interest Period) are offered to major banks in the Londoninterbank market 2 Business Days prior to the commencement of the requestedInterest Period, for a term and in an amount comparable to the Interest Periodand the amount of the LIBOR Rate Loan requested (whether as an initial LIBORRate Loan or as a continuation of a LIBOR Rate Loan or as a conversion of aBase Rate Loan to a LIBOR Rate Loan) by Administrative Borrower in accordancewith the Agreement, which determination shall be conclusive in the absence ofmanifest error.

 

“BaseRate” means, the rate of interest announced, from time to time, withinWells Fargo at its principal office in San Francisco as its “prime rate,” withthe understanding that the “prime rate” is one of Wells Fargo’s base rates (notnecessarily the lowest of such rates) and serves as the basis upon whicheffective rates of interest are calculated for those loans making referencethereto and is evidenced by the recording thereof after its announcement insuch internal publications as Wells Fargo may designate; provided, however,for purposes of this Agreement only, the Base Rate shall at no time be lessthan 5.50%.

 

“BaseRate Loan” means the portion of the Advances that bears interest at a ratedetermined by reference to the Base Rate.

 

“BaseRate Margin” means 2.50 percentage points.

 

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

 

“Boardof Directors” means the board of directors (or comparable managers) ofParent or any committee thereof duly authorized to act on behalf of the boardof directors (or comparable managers).

 

“Borrower”and “Borrowers” have the respective meanings specified therefor in thepreamble to the Agreement.

 

“Borrowing”means a borrowing hereunder consisting of Advances made on the same day by theLenders (or Agent on behalf thereof), or by Swing Lender in the case of a SwingLoan, or by Agent in the case of a Protective Advance.

 

“BorrowingBase” means, as of any date of determination, the result of:

 

(a)                                  85% of the amount of Eligible Accounts, *less*the amount, if any, of the Dilution Reserve, *plus*

 

(b)                                 *the lowest of:*

 

(i)                                     $5,000,000,

 

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(ii)                                  the sum of (A) 50% of the value(calculated at the lower of cost (on a first-in-first-out basis) or marketvalue) of Eligible Inventory *plus* (B) 25%of the cost of Eligible Raw Materials Inventory,

 

(iii)                               85% *times* the NetLiquidation Percentage times the book value of Borrowers’ Inventory, and

 

(iv)                              35% of the amount of credit availabilitycreated by clause (a) above, *minus*

 

(c)                                  the sum of (i) the Bank Product Reserve,(ii) the Prior Claims Reserve and (iii) the aggregate amount ofreserves, if any, established by Agent under Section 2.1(b).

 

“BorrowingBase Certificate” means a certificate in the form of Exhibit B-1.

 

“BusinessDay” means any day that is not a Saturday, Sunday, or other day on whichbanks are authorized or required to close in the state of California, exceptthat, if a determination of a Business Day shall relate to a LIBOR Rate Loan,the term “Business Day” also shall exclude any day on which banks areclosed for dealings in Dollar deposits in the London interbank market.

 

“CanadianDocuments” means (a) the Canadian Guaranty, (b) the CanadianStock Pledge and (c) the Canadian Security Agreement.

 

“CanadianDollars” means the lawful currency of Canada.

 

“CanadianEmployee Benefits Legislation” means the Canadian Pension Plan Act(Canada), the Pension Benefits Standards Act (Canada), the Pension Benefits Act(Ontario), the Health Insurance Act (Ontario) and the Employment Standards Act(Ontario) and all similar legislation in any relevant Canadian jurisdiction.

 

“CanadianEmployee Plan” has the meaning specified therefore in Section 4.13(k).

 

“CanadianGuaranty” means a general continuing guaranty executed and delivered byMondel in favor of Agent, for the benefit of the Lender Group and the BankProduct Providers, in form and substance satisfactory to Agent.

 

“CanadianIncome Tax Act” means the Income Tax Act (Canada), R.S.C. 1985 c.1 (5thSupp.).

 

“CanadianSecurity Agreement” means a security agreement, in form and substancesatisfactory to Agent, executed and delivered by Mondel in favor of Agent, forthe benefit of the Lenders and the Bank Product Providers, together with allsupplements executed in connection therewith.

 

“CanadianStock Pledge” means a stock pledge agreement, in form and substancesatisfactory to Agent, executed and delivered by Mondel Holding in favor ofAgent, for the benefit of the Lenders and the Bank Product Providers, withrespect to the Stock of Mondel, together with all certificates representing the shares of Stock pledged thereunder alongwith Stock powers with respect thereto endorsed in blank.

 

“CapitalExpenditures” means, with respect to any Person for any period, theaggregate of all expenditures by such Person and its Subsidiaries during suchperiod that are capital expenditures as

 

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determined in accordance with GAAP (including capitalized softwarecosts), whether such expenditures are paid in cash or financed.

 

“CapitalLease” means, with respect to any Person, any lease of real or personalproperty by such Person as lessee which is required under GAAP to becapitalized on the balance sheet of such Person.

 

“CapitalizedLease Obligation” means, with respect to any Person, obligations of suchPerson and its Subsidiaries under Capital Leases, and, for purposes hereof, theamount of any such obligation shall be the capitalized amount thereofdetermined in accordance with GAAP.

 

“CashEquivalents” means (a) marketable direct obligations issued orunconditionally guaranteed by the United States Government or Canada or issued byany agency or instrumentality thereof and backed by the full faith and creditof the United States or constituting a charge on or being payable from theCanadian Consolidated Revenue Fund, in each case, maturing within six monthsfrom the date of acquisition thereof; (b) commercial paper, maturing notmore than 270 days after the date of issue rated P-1 by  Moody’s Investors Service, Inc. (“Moody’s”)or A-1 by Standard & Poor’s Rating Group (“S&P”) or anyequivalent rating agency in Canada; (c) certificates of deposit maturingnot more than 270 days after the date of issue, issued by commercialbanking institutions or a Canadian chartered bank and money market or demanddeposit accounts 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; (d) repurchase agreementshaving maturities of not more than 90 days from the date of acquisitionwhich are entered into with banks included in the commercial bankinginstitutions described in clause (c) above or a Canadian charteredbank and which are secured by marketable direct obligations of the United Statesgovernment or the government of Canada or any agency thereof, (e) moneymarket accounts maintained with mutual funds having assets in excess of$2,500,000,000; and (f) tax exempt securities rated A or better by Moody’sor A+ or better by S& P.

 

“CashManagement Account” has the meaning specified therefor in Section 2.7(a).

 

“CashManagement Agreements” means those certain cash management agreements, inform and substance satisfactory to Agent, each of which is among AdministrativeBorrower, Mondel or one of their respective Subsidiaries, Agent, Second LienAgent and one of the Cash Management Banks.

 

“CashManagement Bank” has the meaning specified therefor in Section 2.7(a).

 

“Changeof Control” means that (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 Parent having theright to vote for the election of members of the Board of Directors, (b) amajority of the members of the Board of Directors do not constitute ContinuingDirectors, (c) except with respect to Magnetek ADS in connection with theMagnetek ADS Sale, Parent or any Borrower fails to own and control, directly orindirectly, 100% of the Stock of each Person that is a Subsidiary of Parent orany Borrower as of the Closing Date or (d) (i) Parent consolidateswith or merges into another entity or conveys, transfers or leases all orsubstantially all of its property and assets to any Person, or (ii) anyentity consolidates with or merges into Parent, which in either event (i) or(ii) is pursuant to a transaction in which the outstanding voting Stock ofParent is reclassified or changed into or exchanged for cash, securities orother property, other than any such transaction in which the owners of Stock ofParent immediately beforehand have a beneficial ownership in the aggregate ofat least 50.1% of the aggregate voting power of all Stock of the resulting,surviving or transferee entity.

 

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“ClosingDate” means the date of the making of the initial Advance (or otherextension of credit) hereunder or the date on which Agent sends AdministrativeBorrower a written notice that each of the conditions precedent set forth in Section 3.1either have been satisfied or have been waived.

 

“Code”means the New York Uniform Commercial Code.

 

“Collateral”means all assets and interests in assets and proceeds thereof now owned orhereafter acquired by Administrative Borrower or its Subsidiaries in or uponwhich a Lien is granted under any of the Loan Documents.

 

“CollateralAccess Agreement” means a landlord waiver, bailee letter, oracknowledgement agreement of any lessor, warehouseman, processor, consignee, orother Person in possession of, having a Lien upon, or having rights orinterests in Administrative Borrower’s, Mondel’s or their respectiveSubsidiaries’ books and records, Equipment or Inventory, in each case, in formand substance satisfactory to Agent.

 

“Collections”means all cash, checks, notes, instruments, and other items of payment(including, without limitation, proceeds of Extraordinary Receipts and proceedsof the Magnetek ADS Sale or any other Disposition Involving Accounts orInventory).

 

“Commitment”means, with respect to each Lender, its Commitment, and, with respect to allLenders, the aggregate of the Commitments of each Lender, in each case as suchDollar amounts are set forth on Schedule C-1 or in the Assignment andAcceptance pursuant to which such Lender became a Lender hereunder, as suchamounts may be reduced or increased from time to time pursuant to the terms ofthis Agreement and assignments made in accordance with the provisions of Section 13.1.

 

“ComplianceCertificate” means a certificate substantially in the form of Exhibit C-1delivered by the chief financial officer of Parent to Agent.

 

“ConsolidatedEBITDA” means, with respect to Parent for any period, the Consolidated NetIncome of Parent and its Subsidiaries for such period, plus (i) withoutduplication, the sum of the following amounts of Parent and its Subsidiariesfor such period and to the extent deducted in determining Consolidated NetIncome of Parent and its Subsidiaries for such period:  (A) Consolidated Net Interest Expense, (B) netincome tax expense, (C) depreciation expense and (D) amortizationexpense.

 

“ConsolidatedFunded Indebtedness” means, with respect to Parent at any date, allIndebtedness for borrowed money of Parent and its Subsidiaries, determined on aconsolidated basis in accordance with GAAP, which by its terms matures morethan one year after the date of calculation, and any such Indebtedness maturingwithin one year from such date which is renewable or extendable at the optionof Parent or the applicable Subsidiary to a date more than one year from suchdate, including, in any event, but without duplication, with respect to Parentand its Subsidiaries, the Second Lien Indebtedness, the Obligations, and theamount of their Capitalized Lease Obligations.

 

“ConsolidatedNet Income” means, with respect to Parent for any period, the net income(loss) of Parent and its Subsidiaries for such period, determined on aconsolidated basis and in accordance with GAAP, but excluding from thedetermination of Consolidated Net Income (without duplication) (a) anynon-cash extraordinary or non-recurring gains or non-cash gains or losses fromDispositions, (b) non-cash restructuring charges, (c) non-casheffects of discontinued operations, (d) cash effects of discontinuedoperations in an aggregate amount not to exceed $1,500,000, (e) interestthat is paid-in-kind, (f) non-cash pension and non-cash stock compensationcharges and (f) any tax refunds, net operating losses or other net taxbenefits received during such period on account of any prior period.

 

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“ConsolidatedNet Interest Expense” means, with respect to Parent for any period, grosscash interest expense of Parent and its Subsidiaries for such period determinedon a consolidated basis and in accordance with GAAP (including interest expensepaid to Affiliates of Parent), less (i) the sum of (A) interestincome for such period and (B) gains for such period on Hedge Agreements(to the extent not included in interest income above and to the extent notdeducted in the calculation of gross interest expense), plus (ii) the sumof (A) losses for such period on Hedge Agreements (to the extent notincluded in such gross interest expense) and (B) the upfront costs or feesfor such period associated with Hedge Agreements (to the extent not included insuch gross interest expense), in each case, determined on a consolidated basisand in accordance with GAAP.

 

“ContingentObligation” means, with respect to any Person, any obligation of suchPerson guaranteeing or intended to guarantee any Indebtedness, leases,dividends or other obligations (“primary obligations”) of any other Person (the“primary obligor”) in any manner, whether directly or indirectly, including (i) thedirect or indirect guaranty, endorsement (other than for collection or depositin the ordinary course of business), co-making, discounting with recourse orsale with recourse by such Person of the obligation of a primary obligor, (ii) theobligation to make take-or-pay or similar payments, if required, regardless ofnonperformance by any other party or parties to an agreement, (iii) anyobligation of such Person, whether or not contingent, (A) to purchase anysuch primary obligation or any property constituting direct or indirectsecurity therefor, (B) to advance or supply funds (1) for thepurchase or payment of any such primary obligation or (2) to maintainworking capital or equity capital of the primary obligor or otherwise tomaintain the net worth or solvency of the primary obligor, (C) to purchaseproperty, assets, securities or services primarily for the purpose of assuringthe owner of any such primary obligation of the ability of the primary obligorto make payment of such primary obligation or (D) otherwise to assure orhold harmless the holder of such primary obligation against loss in respectthereof; provided, however, that the term “Contingent Obligation”shall not include any product warranties extended in the ordinary course ofbusiness.  The amount of any ContingentObligation shall be deemed to be an amount equal to the stated or determinableamount of the primary obligation with respect to which such ContingentObligation is made (or, if less, the maximum amount of such primary obligationfor which such Person may be liable pursuant to the terms of the instrumentevidencing such Contingent Obligation) or, if not stated or determinable, themaximum reasonably anticipated liability with respect thereto (assuming suchPerson is required to perform thereunder), as determined by such Person in goodfaith.

 

“ContinuingDirector” means (a) any member of the Board of Directors who was adirector (or comparable manager) of Parent on the Closing Date, and (b) anyindividual who becomes a member of the Board of Directors after the ClosingDate if such individual was appointed or nominated for election to the Board ofDirectors by a majority of the Continuing Directors, but excluding any suchindividual originally proposed for election in opposition to the Board ofDirectors in office at the Closing Date in an actual or threatened electioncontest relating to the election of the directors (or comparable managers) ofParent and whose initial assumption of office resulted from such contest or thesettlement thereof.

 

“ControlAgreement” means a control agreement, in form and substance satisfactory toAgent, executed and delivered by the Administrative Borrower, Mondel or one oftheir respective Subsidiaries, Agent, Second Lien Agent and the applicablesecurities intermediary (with respect to a Securities Account) or bank (withrespect to a Deposit Account).

 

“ControlledForeign Corporation” means a “controlled foreign corporation” as defined inthe IRC.

 

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“ControlledGroup ERISA Affiliates” has the meaning specified therefor in Section 7.12.

 

“DailyBalance” means, as of any date of determination and with respect to anyObligation, the amount of such Obligation owed at the end of such day.

 

“Default”means an event, condition, or default that, with the giving of notice, thepassage of time, or both, would be an Event of Default.

 

“DefaultingLender” means any Lender that fails to make any Advance (or other extensionof credit) that it is required to make hereunder on the date that it isrequired to do so hereunder.

 

“DefaultingLender Rate” means (a) for the first 3 days from and after the datethe relevant payment is due, the Base Rate, and (b) thereafter, theinterest rate then applicable to Advances that are Base Rate Loans (inclusiveof the Base Rate Margin applicable thereto).

 

“DepositAccount” means any deposit account as that term is defined in the Code and,in the case of Mondel, the PPSA.

 

“DesignatedAccount” means the Deposit Account of Administrative Borrower identified onSchedule D-1.

 

“DesignatedAccount Bank” has the meaning specified therefor in Schedule D-1.

 

“DesignatedPension Payment” means the payment in the estimated amount of $3,463,902that is due and payable on October 15, 2007 in respect of Parent’s and itsSubsidiaries’ Benefit Plans.

 

“Dilution”means, as of any date of determination, a percentage, based upon the experienceof the immediately prior 90 consecutive days, that is the result of dividingthe Dollar amount of (a) bad debt write-downs, discounts, advertisingallowances, credits, or other dilutive items with respect to Borrowers’Accounts during such period, by (b) Borrowers’ billings with respect tosuch Accounts during such period.

 

“DilutionReserve” means, as of any date of determination, an amount sufficient toreduce the advance rate against Eligible Accounts by 1 percentage point (and/orfraction thereof) for each percentage point (and/or fraction thereof) by whichDilution is in excess of 5.0%.

 

“Disposition”means any transaction, or series of related transactions, pursuant to which anyPerson or any of its Subsidiaries sells, assigns, transfers or otherwisedisposes of any property or assets (whether now owned or hereafter acquired) toany other Person, in each case, whether or not the consideration thereforconsists of cash, securities or other assets owned by the acquiring Person.

 

“Dollars”or “$” means United States dollars.

 

“DomesticEBITDA” means, for any period, the Domestic Net Income for such period,plus (i) without duplication, the sum of the following amounts of theBorrowers and the Guarantors for such period and to the extent deducted indetermining Domestic Net Income of the Borrowers and the Guarantors 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.

 

“DomesticNet Income” means, with respect to the Borrowers and the Guarantors for anyperiod, the net income (loss) of the Borrowers and the Guarantors for suchperiod, determined in accordance with GAAP, but excluding from thedetermination of Domestic Net Income (without

 

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duplication) (a) any non-cash extraordinary or non-recurring gainsor non-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 Borrowers and the Guarantors.

 

“DomesticNet Interest Expense” means, with respect to the Borrowers and the Guarantorsfor any period, gross cash interest expense of the Borrowers and the Guarantorsfor such period determined in accordance with GAAP (including interest expensepaid to Affiliates of any Borrower or any Guarantor), less (i) the sum of (A) interestincome for such period and (B) gains for such period on Hedge Agreements(to the extent not included in interest income above and to the extent notdeducted in the calculation of gross interest expense), plus (ii) the sumof (A) losses for such period on Hedge Agreements (to the extent notincluded in such gross interest expense) and (B) the upfront costs or feesfor such period associated with Hedge Agreements (to the extent not included insuch gross interest expense), in each case, determined in accordance with GAAPwith respect to the Borrowers and the Guarantors.

 

“DomesticSubsidiaries” means, with respect to any Person, such Person’s Subsidiarieswhich are organized under the laws of the United States, any state thereof,Canada or any province thereof.

 

“EligibleAccounts” means those Accounts created by a Borrower or Mondel in theordinary course of its business, that arise out of its sale of goods orrendition of services, that comply with each of the representations andwarranties respecting Eligible Accounts made in the Loan Documents, and thatare not excluded as ineligible by virtue of one or more of the excludingcriteria set forth below; provided, however, that such criteria may be revisedfrom time to time by Agent in Agent’s Permitted Discretion to address theresults of any audit performed by Agent from time to time after the ClosingDate.  In determining the amount to beincluded, Eligible Accounts shall be calculated net of customer deposits andunapplied cash.  Eligible Accounts shallnot include the following:

 

(a)                                  Accounts that the Account Debtor has failedto pay within (i) 90 days of original invoice date or (ii) 60 days ofdue date,

 

(b)                                 Accounts owed by an Account Debtor (or itsAffiliates) where 50% or more of all Accounts owed by that Account Debtor (orits Affiliates) are deemed ineligible under clause (a) above,

 

(c)                                  Accounts with respect to which the AccountDebtor is an Affiliate of any Borrower or an employee or agent of any Borroweror any Affiliate of any Borrower,

 

(d)                                 Accounts arising in a transaction whereingoods are placed on consignment or are sold pursuant to a guaranteed sale, asale or return, a sale on approval, a bill and hold, or any other terms byreason of which the payment by the Account Debtor may be conditional,

 

(e)                                  Accounts that are not payable in Dollars orCanadian Dollars,

 

(f)                                    Accounts with respect to which the AccountDebtor either (i) does not maintain its chief executive office in theUnited States or Canada, or (ii) is not organized under the laws of theUnited States, any state thereof, Canada or any province thereof, or (iii) isthe government of any foreign country or sovereign state, or of any state,province, municipality, or other political subdivision thereof, or of anydepartment, agency, public corporation, or other instrumentality thereof,unless (y) the Account is supported by an irrevocable letter of creditsatisfactory to Agent (as to form, substance, and issuer or domestic confirmingbank) that has been delivered to Agent and is directly drawable by Agent, or(z) the Account is covered by credit insurance in form, substance, andamount, and by an insurer, satisfactory to Agent,

 

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(g)                                 Accounts with respect to which the AccountDebtor is either (i) the United States, Canada or any department, agency,or instrumentality thereof (exclusive, however, of Accounts with respect towhich the applicable Borrower or Mondel has complied, to the reasonablesatisfaction of Agent, with the Assignment of Claims Act, 31 USC § 3727 orthe Financial Administration Act (Canada), or (ii) any state of the UnitedStates or province of Canada,

 

(h)                                 Accounts with respect to which the AccountDebtor is a creditor of any Borrower or Mondel, has or has asserted a right of setoff,or has disputed its obligation to pay all or any portion of the Account, to theextent of such claim, right of setoff, or dispute,

 

(i)                                     Accounts with respect to an Account Debtorwhose total obligations owing to Borrowers and Mondel exceed 10% (suchpercentage, as applied to a particular Account Debtor, being subject toreduction by Agent in its Permitted Discretion if the creditworthiness of suchAccount Debtor deteriorates) of all Eligible Accounts, to the extent of theobligations owing by such Account Debtor in excess of such percentage;provided, however, that, in each case, the amount of Eligible Accounts that areexcluded because they exceed the foregoing percentage shall be determined byAgent based on all of the otherwise Eligible Accounts prior to giving effect toany eliminations based upon the foregoing concentration limit,

 

(j)                                     Accounts with respect to which the AccountDebtor is subject to an Insolvency Proceeding, is not Solvent, has gone out ofbusiness, or as to which a Borrower or Mondel has received notice of animminent Insolvency Proceeding or a material impairment of the financialcondition of such Account Debtor,

 

(k)                                  Accounts with respect to which the AccountDebtor is located in a state or other jurisdiction (e.g., New Jersey, Minnesota,and West Virginia) that requires, as a condition to access to the courts ofsuch jurisdiction, that a creditor qualify to transact business, file abusiness activities report or other report or form, or take one or more otheractions, unless the applicable Borrower or Mondel has so qualified, filed suchreports or forms, or taken such actions (and, in each case, paid any requiredfees or other charges), except to the extent that the applicable Borrower orMondel may qualify subsequently as a foreign entity authorized to transactbusiness in such state or jurisdiction and gain access to such courts, withoutincurring any cost or penalty viewed by Agent to be significant in amount, andsuch later qualification cures any access to such courts to enforce payment ofsuch Account,

 

(l)                                     Accounts, the collection of which, Agent, inits Permitted Discretion, believes to be doubtful by reason of the AccountDebtor’s financial condition,

 

(m)                               Accounts that are not subject to a valid andperfected first priority Agent’s Lien,

 

(n)                                 Accounts with respect to which (i) thegoods giving rise to such Account have not been shipped and billed to theAccount Debtor, or (ii) the services giving rise to such Account have notbeen performed and billed to the Account Debtor, or

 

(o)                                 Accounts that represent the right to receiveprogress payments or other advance billings that are due prior to thecompletion of performance by the applicable Borrower or Mondel of the subjectcontract for goods or services.

 

“EligibleInventory” means Inventory of a Borrower or Mondel consisting of firstquality finished goods held for sale in the ordinary course of such Person’sbusiness, that complies with each

 

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of the representations and warranties respecting Eligible Inventorymade in the Loan Documents, and that is not excluded as ineligible by virtue ofone or more of the excluding criteria set forth below; provided, however, thatsuch criteria may be revised from time to time by Agent in Agent’s PermittedDiscretion to address the results of any audit or appraisal performed by Agentfrom time to time after the Closing Date. In determining the amount to be so included, Inventory shall be valuedat the lower of cost or market on a basis consistent with Borrowers’ and Mondel’shistorical accounting practices.  An itemof Inventory shall not be included in Eligible Inventory if:

 

(a)                                  a Borrower or Mondel does not have good,valid, and marketable title thereto,

 

(b)                                 it is not located at one of the locations inthe continental United States or Canada set forth on Schedule E-1(or in-transit from one such location to another such location), ***{note, Schedule E-1 will list only theleased  locations set forth in item (n)of Schedule 3.1}***

 

(c)                                  it is located on real property leased by aBorrower or Mondel or in a contract warehouse, in each case, unless it issubject to a Collateral Access Agreement executed by the lessor, orwarehouseman, as the case may be, and unless it is segregated or otherwise separatelyidentifiable from goods of others, if any, stored on the premises,

 

(d)                                 it is not subject to a valid and perfectedfirst priority Agent’s Lien,

 

(e)                                  it consists of goods returned or rejected bythe applicable Borrower’s or Mondel’s customers,

 

(f)                                    it consists of goods that are obsolete orslow moving, restrictive or custom items, work-in-process, raw materials, orgoods that constitute spare parts, packaging and shipping materials, suppliesused or consumed in the applicable Borrower’s or Mondel’s business, bill andhold goods, defective goods, “seconds,” or Inventory acquired or for sale onconsignment, or

 

(g)                                 it consists of goods which are in thepossession of a processor or similar such Person.

 

“EligibleRaw Materials Inventory” means Inventory of a Borrower or Mondel whichwould constitute Eligible Inventory but for the fact that such Inventoryconsists of raw materials and components used to produce finished goodsInventory.

 

“EligibleTransferee” means (a) a commercial bank organized under the laws ofthe United States, or any state thereof, and having total assets in excess of$250,000,000, (b) a commercial bank organized under the laws of any othercountry which is a member of the Organization for Economic Cooperation andDevelopment or a political subdivision of any such country and which has totalassets in excess of $250,000,000, provided that such bank is acting through abranch or agency located in the United States, (c) a finance company,insurance company, or other financial institution or fund that is engaged inmaking, purchasing, or otherwise investing in commercial loans in the ordinarycourse of its business and having (together with its Affiliates and RelatedFunds) total assets in excess of $250,000,000, (d) any Lender or any Affiliate(other than individuals) or Related Fund of a Lender, (e) so long as noEvent of Default has occurred and is continuing, any other Person approved byAgent and Administrative Borrower (which approval of Administrative Borrowershall not be unreasonably withheld, delayed, or conditioned), and (f) duringthe continuation of an Event of Default, any other Person approved by Agent.

 

“EnvironmentalActions” means any complaint, summons, citation, notice, directive, order,claim, litigation, investigation, judicial or administrative proceeding,judgment, letter, or other communication from any Governmental Authority, orany third party involving violations of Environmental Laws or releases ofHazardous Materials from (a) any assets, properties, or businesses

 

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of any Borrower, any Guarantor, any of their respective Subsidiaries,or any of their respective predecessors in interest, (b) from adjoiningproperties or businesses, or (c) from or onto any facilities whichreceived Hazardous Materials generated by any Borrower, any Guarantor, any oftheir respective Subsidiaries, or any of their respective predecessors ininterest.

 

“EnvironmentalLaw” 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 of common law now orhereafter in effect and in each case as amended, or any judicial oradministrative interpretation thereof, including any judicial or administrativeorder, consent decree or judgment, in each case, to the extent binding on anyBorrower, any Guarantor or any of their respective Subsidiaries, relating tothe environment, the effect of the environment on employee health, or HazardousMaterials, in each case as amended from time to time.

 

“EnvironmentalLiabilities” means all liabilities, monetary obligations, losses, damages,punitive damages, consequential damages, treble damages, costs and expenses(including all reasonable fees, disbursements and expenses of counsel, experts,or consultants, and costs of investigation and feasibility studies), fines,penalties, sanctions, and interest incurred as a result of any claim or demand,or Remedial Action required, by any Governmental Authority or any third party,and which relate to any Environmental Action.

 

“EnvironmentalLien” means any Lien in favor of any Governmental Authority forEnvironmental Liabilities.

 

“Equipment”means equipment as that term is defined in the Code and, in the case of Mondel,the PPSA.

 

“ERISA”means the Employee Retirement Income Security Act of 1974, as amended, fromtime to time, and the regulations promulgated thereunder and any successorstatue or regulations.  References tosections of ERISA or such regulations shall be construed to refer to anysuccessor sections.

 

“ERISA Affiliate” means each business orentity which is or was a member of a “controlled group of corporations”, under “commoncontrol” or an “affiliated service group” with any Borrower or any of theirrespective Subsidiaries within the meaning of Section 414(b), (c) or(m) of the IRC, required to be aggregated with any Borrower or any of theirrespective Subsidiaries under Section 414(o) of the IRC, or is or wasunder “common control” with any Borrower or any of their respectiveSubsidiaries, within the meaning of Section 4001(a)(14) of ERISA.

 

“ERISA Event”means (a) a reportable event as defined in Section 4043 of ERISA andthe regulations issued under such Section with respect to a Pension Plan,excluding, however, such events as to which the PBGC by regulation has waivedthe requirement of Section 4043(a) of ERISA that it be notifiedwithin 30 days of the occurrence of such event; (b) the applicability ofthe requirements of Section 4043(b) of ERISA with respect to acontributing sponsor, as defined in Section 4001(a)(13) of ERISA, to anyPension Plan where an event described in paragraph (9), (10), (11), (12) or(13) of Section 4043(c) of ERISA is reasonably expected to occur withrespect to such plan within the following 30 days; (c) a withdrawal by anyBorrower, any of their respective 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 anyBorrower, any of their respective Subsidiaries, or ERISA Affiliate in acomplete or partial withdrawal (within the meaning of Section 4203 and4205 of ERISA) from any Multiemployer Plan if there is any potential liabilitytherefor, or the receipt by any Borrower, any of their respective Subsidiaries,or ERISA Affiliate of notice from any Multiemployer Plan that it is inreorganization or insolvency pursuant to Section 4241 or 4245 of ERISA; (e) thefiling of a notice of intent to terminate, the treatment of a plan amendment

 

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as a terminationunder Section 4041 or 4041A of ERISA, or the commencement of proceedingsby the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) theimposition of liability on any Borrower, any of their respective Subsidiaries,or any ERISA Affiliate pursuant to Sections 4062(e) or 4069 of ERISA or byreason of the application of Section 4212(c) of ERISA; (g) thefailure by any Borrower, any of their respective Subsidiaries, or any ERISAAffiliate to timely make any required contribution to a Pension Plan (or thefailure to timely make a required contribution in any material respect withrespect to any Plan that is not a Pension Plan or a Multiemployer Plan), or thefailure to meet the minimum funding standard of Section 412 of the IRCwith respect to any Pension Plan (whether or not waived in accordance with Section 412(d) ofthe IRC) 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 could reasonably be expected to result in the termination of, or theappointment of a trustee to administer, any Pension Plan or Multiemployer Plan;(i) the imposition of any material liability under ERISA, other than PBGCpremiums due but not delinquent under Section 4007 of ERISA, upon anyBorrower, any of their respective Subsidiaries or any ERISA Affiliate;(j) an application for a funding waiver under Section 303 of ERISA oran extension of any amortization period pursuant to Section 412 of the IRCwith respect to any Pension Plan; (k) the occurrence of a non-exemptprohibited transaction under Sections 406 or 407 of ERISA for which anyBorrower, or any of their respective Subsidiaries, may be directly orindirectly liable and which is reasonably expected to result in a materialliability to any Borrower or any of their respective Subsidiaries; (l) amaterial violation of the applicable requirements of Section 404or 405 of ERISA or the exclusive benefit rule under Section 401(a) ofthe IRC by any fiduciary or disqualified person for which any Borrower, any oftheir respective Subsidiaries or any ERISA Affiliate may be directly orindirectly liable; (m) the occurrence of an act, omission, event or conditionwhich could give rise to the imposition on any Borrower, any of theirrespective Subsidiaries, or any ERISA Affiliate of material fines, materialpenalties, material taxes, material related charges or material liability underthe IRC or under ERISA; (n) the assertion of a material claim (other thanroutine claims for benefits) against any Plan or the assets or any fiduciarythereof, or against any Borrower or any of their respective Subsidiaries inconnection with any such Plan; (o) receipt from the Internal Revenue Service ofnotice of the 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 any Borrower, any of their respective Subsidiaries, or any ERISA Affiliate,in either case pursuant to ERISA or the IRC; or (q) the establishment oramendment by any Borrower or any of their respective Subsidiaries, of any “welfareplan”, as such term is defined in Section 3(1) of ERISA, that providespost-employment health benefits in a manner that would materially increase theliability of any Borrower or any of their respective Subsidiaries.

 

“Eventof Default” has the meaning specified therefor in Section 7.

 

“ExcessAvailability” means, as of any date of determination, the amount equal toAvailability *minus* the aggregate amount, ifany, of all trade payables of Borrowers, Guarantors and their respectiveSubsidiaries aged in excess of their historical levels with respect thereto andall book overdrafts of Borrowers, Guarantors and their respective Subsidiariesin excess of their historical practices with respect thereto, in each case asdetermined by Agent in its Permitted Discretion.

 

“ExchangeAct” means the Securities Exchange Act of 1934.

 

“ExcludedForeign Subsidiaries” means Magnetek de Mexico, S.A. de C.V., a corporationorganized under the laws of Mexico, Manufacturas Electricas de Reynosa S.A. deC.V., a corporation organized under the laws of Mexico, Mejor Electronica deMexico, S.A. de C.V., a corporation organized under the laws of Mexico,Servicio de Guarderias, S.C., a partnership organized under the laws of Mexico,Magnetek Deteiligungsgesellschaft Gmbh, a corporation organized under the alwsof the Federal Republic of Germany, Magnetek Lighting Canada Limited, acorporation organized under

 

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the laws of Canada, Magnetek Industrials Controls Group (UK) Ltd., acorporation organized under the laws of Great Britain, and Magnetek VertiebsgesellschaftGmbH, a corporation organized under the alws of the Federal Republic ofGermany.

 

“ExistingLender” means JPMorgan Chase Bank, N.A., a national banking association.

 

“ExtraordinaryReceipts” means any cash received by any Borrower, any Guarantor or any oftheir respective Subsidiaries that is not received in the ordinary course ofbusiness (and not consisting of proceeds of Dispositions or Indebtedness), tothe extent the foregoing consists of proceeds of insurance or condemnationawards in respect of Accounts or Inventory.

 

“FeeLetter” means that certain fee letter between Borrowers and Agent, in formand substance satisfactory to Agent.

 

“FinancialStatements” means (a) the audited consolidated balance sheet of theParent and its Subsidiaries for their fiscal year ended June 30, 2005, andthe related consolidated statement of operations, shareholders’ equity and cashflows for their fiscal year then ended, and (ii) the unauditedconsolidated balance sheet of the Parent and its Subsidiaries for the monthended July 31, 2005, and the related consolidated statement of operations,shareholder’s equity and cash flows for the month then ended.

 

“FixedCharge Coverage Ratio” means, with respect to Parent and its Subsidiariesfor any period, the ratio of (i) (A) the Consolidated EBITDA for suchperiod minus (B) Capital Expenditures made by Parent and itsSubsidiaries during such period, to (ii) the sum of (A) all principalof Indebtedness of Parent and its Subsidiaries scheduled to be paid or prepaidduring such period, plus (B) Consolidated Net Interest Expense ofParent and its Subsidiaries for such period, plus (C) all incometax liability of Parent and its Subsidiaries that accrued in such period (otherthan the increase in such period, if any, in non-cash deferred tax liabilityattributable to amortization of goodwill over a shorter period for tax purposesthan for financial reporting purposes), to the extent that the amount of suchliabilities is greater than zero, plus (D) cash dividends or distributionspaid by Parent and its Subsidiaries (other than dividends or distributions paidto Parent or its wholly-owned Subsidiaries) during such period, plus, (E) theaggregate amount of cash payments made by Parent and its Subsidiaries duringsuch period in respect of their Benefit Plans. In determining the Fixed Charge Coverage Ratio for a particular period,the calculation of the income tax liabilities of Parent and its Subsidiariesdescribed in clause (ii)(C) of the immediately preceding sentence shall bemade without giving effect to any tax refunds, tax receivables, net operatinglosses or other net tax benefits that were received or receivable during suchperiod on account of any prior periods.

 

“ForeignStock Pledge” means that certain stock pledge agreement with respect to thecapital Stock of Magnetek S.p.A., a company organized under the laws of Italy,which is in form and substance satisfactory to Agent (including being governedby the law of organization of such Person).

 

“FundingDate” means the date on which a Borrowing occurs.

 

“FundingLosses” has the meaning specified therefor in Section 2.13(b)(ii).

 

“GAAP”means generally accepted accounting principles as in effect from time to timein the United States, consistently applied.

 

“GoverningDocuments” means, with respect to any Person, the certificate or articlesof incorporation, by-laws, or other organizational documents of such Person.

 

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“GovernmentalAuthority” means any U.S. or foreign federal, state, provincial, local, orother governmental or administrative body, instrumentality, board, department,or agency or any court, tribunal, administrative hearing body, arbitrationpanel, commission, or other similar dispute-resolving panel or body.

 

“Guarantors”means (a) each Domestic Subsidiary of each Borrower and (b) any otherPerson at any time providing a guaranty in favor of Agent, for the benefit ofthe Lender Group and the Bank Product Providers, with respect to theObligations or whose assets are otherwise pledged as security for the repaymentof the Obligations; and “Guarantor” means any one of them.

 

“Guaranty”means, individually and collectively, (a) that certain general continuingguaranty executed and delivered by each Guarantor in favor of Agent, for thebenefit of the Lender Group and the Bank Product Providers, in form andsubstance satisfactory to Agent, (b) the Canadian Guaranty, and (c) anyother guaranty at any time executed and delivered by any other Guarantor infavor of Agent, for the benefit of the Lender Group and the Bank ProductProviders, whether by execution of a joinder to any guaranty described in theforegoing clauses (a) or (b) or otherwise.

 

“HazardousMaterials” means (a) substances that are defined or listed in, orotherwise classified pursuant to, any Applicable Laws or regulations as “hazardoussubstances,” “hazardous materials,” “hazardous wastes,” “toxic substances,” orany other formulation intended to define, list, or classify substances byreason of deleterious properties such as ignitability, corrosivity, reactivity,carcinogenicity, reproductive toxicity, or “EP toxicity”, (b) oil,petroleum, or petroleum derived substances, natural gas, natural gas liquids,synthetic gas, drilling fluids, produced waters, and other wastes associatedwith the exploration, development, or production of crude oil, natural gas, orgeothermal resources, (c) any flammable substances or explosives or anyradioactive materials, and (d) asbestos in any form or electrical equipmentthat contains any oil or dielectric fluid containing levels of polychlorinatedbiphenyls in excess of 50 parts per million.

 

“HedgeAgreement” means any interest rate, foreign currency, commodity or equityswap, collar, cap, floor or forward rate agreement, or other agreement orarrangement designed to protect against fluctuations in interest rates orcurrency, commodity or equity values (including any option with respect to anyof the foregoing and any combination of the foregoing agreements or arrangements),and any confirmation executed in connection with any such agreement orarrangement.

 

“HoldingAccount” means the deposit account specified on Schedule H-1.

 

“HoldoutLender” has the meaning specified therefor in Section 14.2(a).

 

“Indebtedness”means, with respect to any Person, without duplication, (a) allindebtedness of such Person for borrowed money; (b) all obligations ofsuch Person for the deferred purchase price of property or services (other thantrade payables or other accounts payable incurred in the ordinary course ofsuch Person’s business and not outstanding for more than 90 days after the datesuch payable was created); (c) all obligations of such Person evidenced bybonds, debentures, notes or other similar instruments or upon which interestpayments are customarily made; (d) all reimbursement, payment or otherobligations and liabilities of such Person created or arising under anyconditional sales or other title retention agreement with respect to propertyused or acquired by such Person, even though the rights and remedies of thelessor, seller or lender thereunder may be limited to repossession or sale ofsuch property; (e) all Capitalized Lease Obligations of such Person; (f) allobligations and liabilities, contingent or otherwise, of such Person, inrespect of letters of credit, acceptances and similar facilities; (g) allobligations and liabilities, calculated on a basis satisfactory to theCollateral Agent and in accordance with accepted practice, of such Person underHedge Agreements; (h) all Contingent Obligations; (i) liabilitiesincurred under Title IV of ERISA with respect to any Pension Plan;(j) withdrawal liability incurred under ERISA by such Person or any of itsERISA Affiliates

 

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with respect to any Multiemployer Plan; (k) all other items which, inaccordance with GAAP, would be included as liabilities on the liability side ofthe balance sheet of such Person; and (l) all obligations referred to inclauses (a) through (k) of this definition of another Person secured by(or for which the holder of such Indebtedness has an existing right, contingentor otherwise, to be secured by) a Lien upon property owned by such Person, eventhough such Person has not assumed or become liable for the payment of suchIndebtedness.  The Indebtedness of anyPerson shall include the Indebtedness of any partnership or joint venture inwhich such Person is a general partner or a joint venturer.

 

“IndemnifiedLiabilities” has the meaning specified therefor in Section 10.3.

 

“IndemnifiedPerson” has the meaning specified therefor in Section 10.3.

 

“InsolvencyProceeding” means any proceeding commenced by or against any Person underany provision of the Bankruptcy Code, or under any other state, provincial orfederal bankruptcy or insolvency law, assignments for the benefit of creditors,formal or informal moratoria, compositions, extensions generally withcreditors, or proceedings seeking reorganization, arrangement, or other similarrelief and including the appointment of a trustee, receiver, administrativereceiver, administrator or similar Person.

 

“IntercompanySubordination Agreement” means a subordination agreement executed anddelivered to Agent on the Closing Date by Borrowers, Guarantors and each oftheir respective Subsidiaries, the form and substance of which is satisfactoryto Agent, together with the Joinder to Intercompany Subordination Agreement, asthe same may be further amended, modified or supplemented from time to time.

 

“InterestPeriod” means, with respect to each LIBOR Rate Loan, a period commencing onthe date of the making of such LIBOR Rate Loan (or the continuation of a LIBORRate Loan or the conversion of a Base Rate Loan to a LIBOR Rate Loan) andending 1, 2, or 3 months thereafter; provided, however, that (a) if anyInterest Period would end on a day that is not a Business Day, such InterestPeriod shall be extended (subject to clauses (c)-(e) below) to the nextsucceeding Business Day, (b) interest shall accrue at the applicable ratebased upon the LIBOR Rate from and including the first day of each InterestPeriod to, but excluding, the day on which any Interest Period expires, (c) anyInterest Period that would end on a day that is not a Business Day shall beextended to the next succeeding Business Day unless such Business Day falls inanother calendar month, in which case such Interest Period shall end on thenext preceding Business Day, (d) with respect to an Interest Period thatbegins on the last Business Day of a calendar month (or on a day for whichthere is no numerically corresponding day in the calendar month at the end ofsuch Interest Period), the Interest Period shall end on the last Business Dayof the calendar month that is 1, 2, or 3 months after the date on which theInterest Period began, as applicable, and (e) Borrowers (or AdministrativeBorrower on behalf thereof) may not elect an Interest Period which will endafter the Maturity Date.

 

“Inventory”means inventory as that term is defined in the Code and, in the case of Mondel,the PPSA.

 

“Investment”means, with respect to any Person, any investment by such Person in any otherPerson (including Affiliates) in the form of loans, guarantees, advances, orcapital contributions (excluding (a) commission, travel, and similaradvances to officers and employees of such Person made in the ordinary courseof business, and (b) bona fide Accounts arising in the ordinary course ofbusiness consistent with past practice), purchases or other acquisitions ofIndebtedness, Stock, or all or substantially all of the assets of such otherPerson (or of any division or business line of such other Person), and anyother items that are or would be classified as investments on a balance sheetprepared in accordance with GAAP.

 

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“IRC”means the Internal Revenue Code of 1986.

 

“IssuingLender” means WFF or any other Lender that, at the request ofAdministrative Borrower and with the consent of Agent, agrees, in such Lender’ssole discretion, to become an Issuing Lender for the purpose of issuing L/Cs orL/C Undertakings pursuant to Section 2.12.

 

“Joinderto Intercompany Subordination Agreement” means a joinder to theIntercompany Subordination Agreement, substantially in the form of Exhibit J-1hereto, or otherwise satisfactory to Agent in form and substance, executed anddelivered by the Subsidiaries of the Borrowers described therein.

 

“Laws”means, in respect of the United States, Canada and any other country, allpublished laws, statutes, codes, ordinances, decrees, rules, regulations,by-laws, judicial, arbitral, administrative, ministerial, departmental orregulatory judgments, orders, decisions, rulings or awards, including generalprincipals of common and civil law, and conditions of any grant of approval,permission, authority or license of any court, Governmental Authority,statutory body or self-regulatory authority.

 

“L/C”has the meaning specified therefor in Section 2.12(a).

 

“L/CDisbursement” means a payment made by the Issuing Lender pursuant to aLetter of Credit.

 

“L/CUndertaking” has the meaning specified therefor in Section 2.12(a).

 

“Lease”means any lease of real property to which any Borrower, any Guarantor or theirrespective Subsidiaries is a party as lessor or lessee.

 

“Lender”and “Lenders” have the respective meanings set forth in the preamble tothe Agreement, and shall include any other Person made a party to the Agreementin accordance with the provisions of Section 13.1.

 

“LenderGroup” means, individually and collectively, each of the Lenders (includingthe Issuing Lender) and Agent.

 

“LenderGroup Expenses” means all (a) costs or expenses (including taxes, andinsurance premiums) required to be paid by a Borrower, a Guarantor or any oftheir respective Subsidiaries under any of the Loan Documents that are paid,advanced, or incurred by the Lender Group, (b) fees or charges paid orincurred by Agent in connection with the Lender Group’s transactions withBorrowers, Guarantors or their respective Subsidiaries, including, fees orcharges for photocopying, notarization, couriers and messengers,telecommunication, public record searches (including tax lien, litigation, andUniform Commercial Code and PPSA searches and including searches with thepatent and trademark office, the copyright office, or the department of motorvehicles), filing, recording, publication, appraisal (including periodiccollateral appraisals or business valuations to the extent of the fees andcharges (and up to the amount of any limitation) contained in the Agreement orthe Fee Letter, real estate surveys, real estate title policies andendorsements, and environmental audits, (c) costs and expenses incurred byAgent in the disbursement of funds to Borrowers or other members of the LenderGroup (by wire transfer or otherwise), (d) charges paid or incurred byAgent resulting from the dishonor of checks, (e) reasonable costs andexpenses paid or incurred by the Lender Group to correct any default or enforceany provision of the Loan Documents, or in gaining possession of, maintaining,handling, preserving, storing, shipping, selling, preparing for sale, oradvertising to sell the Collateral, or any portion thereof, irrespective ofwhether a sale is consummated, (f) audit fees and expenses of Agentrelated to any inspections or audits to the extent of the fees and charges (andup to the amount of any limitation) contained in the Agreement or the FeeLetter, (g) reasonable costs and 

 

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expenses of third party claims or any other suit paid or incurred bythe Lender Group in enforcing or defending the Loan Documents or in connectionwith the transactions contemplated by the Loan Documents or the Lender Group’srelationship with any Borrower, any Guarantor or any Subsidiary of a Borroweror Guarantor, including, without limitation, any amounts paid by Agent toExisting Lender in connection with the termination and release of ExistingLender’s Liens and agreements with respect to any Borrower, Guarantor or any oftheir respective Subsidiaries, (h) Agent’s and each Lender’s reasonablecosts and expenses (including attorneys fees) incurred in advising,structuring, drafting, reviewing, administering, syndicating, or amending theLoan Documents, and (i) Agent’s and each Lender’s reasonable costs andexpenses (including attorneys, accountants, consultants, and other advisorsfees and expenses) incurred in terminating, enforcing (including attorneys,accountants, consultants, and other advisors fees and expenses incurred inconnection with a “workout,” a “restructuring,” or an Insolvency Proceedingconcerning any Borrower, any Guarantor or any Subsidiary of a Borrower orGuarantor or in exercising rights or remedies under the Loan Documents), ordefending the Loan Documents, irrespective of whether suit is brought, or intaking any Remedial Action concerning the Collateral.

 

“Lender-RelatedPerson” means, with respect to any Lender, such Lender, together with suchLender’s Affiliates, Related Funds, officers, directors, employees, attorneys,and agents.

 

“Letterof Credit” means an L/C or an L/C Undertaking, as the context requires.

 

“Letterof Credit Usage” means, as of any date of determination, the aggregateundrawn amount of all outstanding Letters of Credit.

 

“LeverageRatio” means, at any date of determination, the ratio of (a) theoutstanding principal amount of the Consolidated Funded Indebtedness at suchdate, to (b) TTM EBITDA for the most recently completed 12 consecutivemonth period most recently ended on or prior to the date of determination.

 

“LIBORDeadline” has the meaning specified therefor in Section 2.13(b)(i).

 

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

 

“LIBOROption” has the meaning specified therefor in Section 2.13(a).

 

“LIBORRate” means, for each Interest Period for each LIBOR Rate Loan, the rateper annum determined by Agent (rounded upwards, if necessary, to the next1/100%) by dividing (a) the Base LIBOR Rate for such Interest Period, by (b) 100%*minus* the Reserve Percentage; provided,however, for purposes of this Agreement only, the LIBOR Rate shall at notime be less than 2.50%.  The LIBOR Rateshall be adjusted on and as of the effective day of any change in the ReservePercentage.

 

“LIBORRate Loan” means each portion of an Advance that bears interest at a ratedetermined by reference to the LIBOR Rate.

 

“LIBORRate Margin” means 4.00 percentage points.

 

“Lien”means any interest in an asset securing an obligation owed to, or a claim by,any Person other than the owner of the asset, irrespective of whether (a) suchinterest is based on the common law, statute, or contract, (b) suchinterest is recorded or perfected, and (c) such interest is contingentupon the occurrence of some future event or events or the existence of somefuture circumstance or circumstances. Without limiting the generality of the foregoing, the term “Lien”includes the lien or security interest arising from a mortgage, deed of trust,encumbrance, notice of

 

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Lien, levy or assessment, pledge, hypothecation, assignment, depositarrangement, security agreement, conditional sale or trust receipt, or from alease, consignment, or bailment for security purposes and also includesreservations, exceptions, encroachments, easements, rights-of-way, covenants,conditions, restrictions, leases, and other title exceptions and encumbrancesaffecting Real Property.

 

“LoanAccount” has the meaning specified therefor in Section 2.10.

 

“LoanDocuments” means the Agreement, the Bank Product Agreements, the CanadianDocuments, the Cash Management Agreements, the Control Agreements, the FeeLetter, the Foreign Stock Pledge, the Guaranty, the Intercompany SubordinationAgreement, the Letters of Credit, the Mortgages, the Perfection Certificates,the Second Lien Intercreditor Agreement, the Security Agreement and any otherSecurity Document, any note or notes executed by a Borrower in connection withthe Agreement and payable to a member of the Lender Group, the SubordinationAgreements and any other agreement entered into, now or in the future, by anyBorrower or Guarantor and any member of the Lender Group in connection with theAgreement.

 

“MagnetekADS” means Magnetek ADS Power, Inc., a Delaware corporation.

 

“MagnetekADS Sale” means the sale of all or substantially all of the assets orcapital Stock of Magnetek ADS yielding no less than $3,000,000 in Net CashProceeds and which is otherwise on fair and reasonable terms pursuant to anarms-length transaction entered into with a third party.

 

“MagnetekElectronics” means Magnetek Electronics Co. Ltd., a corporation organizedunder the laws of the People’s Republic of China.

 

“MaterialAdverse Change” means a material adverse change in or effect on any of (a) theoperations, business, assets, properties, condition (financial or otherwise) orprospects of any Borrower or Guarantor or the Borrowers and Guarantors taken asa whole, (b) the ability of any Borrower or Guarantor to perform any ofits 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 Agent or any Lender under anyLoan Document, or (e) the validity, perfection or priority of Agent’sLiens on any of the Collateral.

 

“MaterialContracts” means (a) the Second Lien Loan Documents and (b) withrespect to any Person, (i) each contract or agreement to which such Personor any of its Subsidiaries is a party involving aggregate consideration payableto or by such Person or such Subsidiary of $1,000,000 or more (other thanpurchase orders in the ordinary course of the business of such Person or suchSubsidiary and other than contracts that by their terms may be terminated bysuch Person or Subsidiary in the ordinary course of its business upon less than60 days notice without penalty or premium) and (ii) all other contracts oragreements material to the business, operations, condition (financial orotherwise), performance, prospects or properties of such Person or suchSubsidiary.

 

“MaturityDate” has the meaning specified therefor in Section 3.3.

 

“MaximumRevolver Amount” means $13,000,000.

 

“Mondel”means Mondel ULC, a Nova Scotia unlimited liability company.

 

“MondelHolding” means Magnetek Mondel Holding, Inc., a Delaware corporation.

 

“MortgagePolicy” means a mortgagee’s loan policy, in form and substance satisfactoryto the Agent, together with all endorsements made from time to time thereto,issued by or on behalf of a title

 

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insurance company satisfactory to the Agent, insuring the Lien createdby a Mortgage in an amount and on terms satisfactory to the Agent, delivered tothe Agent.

 

“Mortgages”means, individually and collectively, one or more mortgages, deeds of trust, ordeeds to secure debt, executed and delivered by a Borrower or a Subsidiary of aBorrower in favor of Agent, in form and substance satisfactory to Agent, thatencumber any Real Property.

 

“MultiemployerPlan” means a “multiemployer plan” (within the meaning of Section 3(37)of ERISA) to which any Borrower, any of its Subsidiaries, or any ERISAAffiliate makes, is making, is obligated, or within the last six years has beenobligated, to make contributions.

 

“NetCash Proceeds” means (a) with respect to the issuance or incurrence ofany Indebtedness by any Person or any of its Subsidiaries, or the sale orissuance by any Person or any of its Subsidiaries of any shares of its Stock,the aggregate amount of cash or Cash Equivalents received (directly orindirectly) from time to time (whether as initial consideration or through thepayment or disposition of deferred consideration) by or on behalf of suchPerson or such Subsidiary in connection therewith, after deducting therefromonly (i) reasonable expenses related thereto incurred by such Person orsuch Subsidiary in connection therewith, (ii) transfer taxes paid to anytaxing authorities by such Person or such Subsidiary in connection therewithand (iii) net income taxes to be paid in connection therewith (aftertaking into account any tax credits or deductions and any tax sharingarrangements), and (b) with respect to any Extraordinary Receipts orproceeds of Dispositions received by any Person or any of its Subsidiaries, theaggregate amount of cash or Cash Equivalents received (directly or indirectly)from time to time (whether as initial consideration or through the payment ordisposition of deferred consideration) by or on behalf of such Person or suchSubsidiary in connection therewith, after deducting therefrom only (i) reasonableexpenses related to the collection thereof incurred by such Person or suchSubsidiary, (ii) net income taxes to be paid in connection therewith(after taking into account any tax credits or deductions and any tax sharingarrangements) and (iii) the amount required to satisfy any Permitted Liensattaching to such Extraordinary Receipts or proceeds of Dispositions to theextent such Permitted Liens are senior to Agent’s Lien and not assumed by thepurchaser in any such Disposition; in the case of each of clauses (a) and(b), to the extent, but only to the extent, that the amounts so deducted are(x) actually paid to a Person that, except in the case of reasonableout-of-pocket expenses, is not an Affiliate of such Person or any of itsSubsidiaries and (y) properly attributable to such transaction or asset that isthe subject thereof.

 

“NetLiquidation Percentage” means the percentage of the book value of Borrowers’Inventory that is estimated to be recoverable in an orderly liquidation of suchInventory net of all associated costs and expenses of such liquidation, suchpercentage to be as determined from time to time by a qualified appraisalcompany selected by Agent.

 

“NilssenAward” means the arbitration award of $23,400,000 issued April 29,2005 in favor of Ole K. Nilssen and Geo Foundation, Ltd. with regard to thematter styled Ole K. Nilssen and Geo Foundation, Ltd. v. Magnetek, Inc.,originally filed as Case No. 05C 2933 in the United States District Courtfor the Northeastern District of Illinois, Eastern Division.

 

“Obligations”means (a) all loans, Advances, debts, principal, interest (including anyinterest that accrues after the commencement of an Insolvency Proceedingregardless of whether allowed or allowable in whole or in part as a claim inany such Insolvency Proceeding), contingent reimbursement obligations withrespect to outstanding Letters of Credit, premiums, liabilities (including allamounts charged to Borrowers’ Loan Account pursuant hereto), obligations(including indemnification obligations), fees (including the fees provided forin the Fee Letter), charges, costs, Lender Group Expenses (including any feesor expenses that accrue after the commencement of an Insolvency Proceeding,regardless of whether allowed or allowable in whole or in part as a claim inany such Insolvency Proceeding), lease payments, guaranties, covenants, andduties of any kind and

 

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description owing by Borrowers to the Lender Group pursuant to orevidenced by the Loan Documents and irrespective of whether for the payment ofmoney, whether direct or indirect, absolute or contingent, due or to becomedue, now existing or hereafter arising, and including all interest not paidwhen due and all Lender Group Expenses that Borrowers are required to pay orreimburse by the Loan Documents, by law, or otherwise, and (b) all BankProduct Obligations.  Any reference inthe Agreement or in the Loan Documents to the Obligations shall include all orany portion thereof and any extensions, modifications, renewals, or alterationsthereof, both prior and subsequent to any Insolvency Proceeding.

 

“OperatingLease Obligations” means all obligations for the payment of rent for anyreal or personal property under leases or agreements to lease, other thanCapitalized Lease Obligations.

 

“OriginatingLender” has the meaning specified therefor in Section 13.1(e).

 

“Overadvance”has the meaning specified therefor in Section 2.5.

 

“Parent”has the meaning specified therefor in the preamble to the Agreement.

 

“Participant”has the meaning specified therefor in Section 13.1(e).

 

“PatriotAct” means the Uniting and Strengthening America by Providing AppropriateTools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of2001, as amended from time to time.

 

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

 

“PensionPlan” 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 any Borrower, any of its Subsidiaries, orany ERISA Affiliate or to which any Borrower, any of its Subsidiaries, or anyERISA Affiliate 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.

 

“PerfectionCertificates” means the representations and warranties of officers formsubmitted by Agent to Administrative Borrower, together with the otherBorrowers’ and Guarantors’ completed responses to the inquiries set forth therein,the form and substance of such responses to be satisfactory to Agent.

 

“PermittedCapitalized Lease Obligations” means Indebtedness evidenced by CapitalizedLease Obligations entered into in order to finance Capital Expenditures made bya Borrower or an operating Subsidiary of a Borrower in accordance with theprovisions of Section 6.16(b)(i), which Indebtedness does notexceed the amount provided for in clause (c) of the definition ofPermitted Indebtedness.

 

“PermittedDiscretion” means a determination made in the exercise of reasonable (fromthe perspective of a secured asset-based lender) business judgment.

 

“PermittedDispositions” means (a) sales or other dispositions of Equipment thatis substantially worn, damaged, or obsolete in the ordinary course of business,providedthat the Net Cash Proceeds of such dispositions do notexceed $100,000 in the aggregate in any twelve-month period, (b) sales ofInventory to buyers in the ordinary course of business, (c) the use ortransfer of money or Cash Equivalents in a manner that is not prohibited by theterms of the Agreement or the

 

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other Loan Documents, (d) the licensing, on a non-exclusive basis,of patents, trademarks, copyrights, and other intellectual property rights inthe ordinary course of business and (e) the Magnetek ADS Sale so long asall Net Cash Proceeds of such sale are immediately remitted to Agent forapplication to the Senior Debt in accordance with the terms of Section 2.4(b).

 

“PermittedIndebtedness” means:

 

(a)                                  Indebtedness evidenced by this Agreementand the other Loan Documents, together with Indebtedness owed to UnderlyingIssuers with respect to Underlying Letters of Credit,

 

(b)                                 Indebtedness set forth on Schedule 4.19,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 Agent’s reasonable judgment, materially impair theprospects of repayment of the Obligations by Borrowers and the Guarantors ormaterially impair any Borrower’s or any Guarantor’s creditworthiness, (ii) suchrefinancings, renewals, or extensions do not result in an increase in theprincipal amount of, or interest rate with respect to, the Indebtedness sorefinanced, renewed, or extended or add one or more Borrowers or Guarantors asliable with respect thereto if such additional Borrowers or Guarantors were notliable with respect to the original Indebtedness, (iii) such refinancings,renewals, or extensions do not result in a shortening of the average weightedmaturity of the Indebtedness so refinanced, renewed, or extended, nor are theyon terms or conditions, that, taken as a whole, are materially more burdensomeor restrictive to any Borrower or any Guarantor, (iv) if the Indebtednessthat is refinanced, renewed, or extended was subordinated in right of paymentto the Obligations, then the terms and conditions of the refinancing, renewal,or extension Indebtedness must include subordination terms and conditions thatare at least as favorable to the Lender Group as those that were applicable tothe refinanced, renewed, or extended Indebtedness, (v) the Indebtednessthat is refinanced, renewed, or extended is not recourse to any Person that isliable on account of the Obligations other than those Persons which wereobligated with respect to the Indebtedness that was refinanced, renewed, orextended, and (vi) such refinancing, renewal or extension does not containterms that are less favorable to the Borrowers, the Guarantors or the LenderGroup than the terms of the Indebtedness being extended, refinanced or renewed,

 

(c)                                  Permitted Purchase Money Indebtedness andPermitted Capitalized Lease Obligations to the extent the aggregate of suchIndebtedness does not exceed $5,000,000 at any time outstanding,

 

(d)                                 Indebtedness permitted under Section 6.12,

 

(e)                                  Indebtedness of the Parent or any of itsSubsidiaries under any Hedge Agreement so long as such Hedge 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,

 

(f)                                    to the extent the Second LienIntercreditor Agreement remains in effect with respect thereto and subject toany restrictions set forth in the Second Lien Intercreditor Agreement, theSecond Lien Indebtedness, and

 

(g)                                 unsecured Indebtedness incurred by aSubsidiary of Parent that is a Controlled Foreign Corporation in an aggregateamount, for all such Subsidiaries, not to exceed $5,000,000 at any timeoutstanding, provided, that, neither Parent nor any Subsidiary of Parent thatis not a Controlled Foreign Corporation is obligated with respect to or haspledged any of its assets as collateral to secure Indebtedness, whetherdirectly or indirectly.

 

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“PermittedInvestments” means Investments in Cash Equivalents.

 

“PermittedLiens” means (a) Liens held by Agent to secure the Obligations, (b) Liensfor unpaid taxes, assessments, or other governmental charges or levies thateither (i) are not yet delinquent, or (ii) do not have priority overthe Agent’s Liens and the underlying taxes, assessments, or charges or leviesare the subject of Permitted Protests, (c) judgment Liens that do notconstitute an Event of Default under Section 7.7 of the Agreement, (d) Liensset forth on Schedule P-1, (e) the interests of lessors underoperating leases, (f) purchase money Liens or the interests of lessorsunder Capital Leases to the extent that such Liens or interests securePermitted Purchase Money Indebtedness and so long as (i) such Lienattaches only to the asset purchased or acquired and the proceeds thereof, and (ii) theprincipal amount of the Indebtedness secured thereby shall not exceed thelesser of 80% of the fair market value or the cost of the property so held oracquired, (g) Liens arising by operation of law in favor of warehousemen,landlords, carriers, mechanics, materialmen, laborers, or suppliers, incurredin the ordinary course of Borrowers’ business and not in connection with theborrowing of money, and which Liens either (i) are for sums not yetdelinquent, or (ii) are the subject of Permitted Protests, (h) Lienson amounts deposited in connection with obtaining worker’s compensation orother unemployment insurance, (i) Liens on amounts deposited in connectionwith the making or entering into of bids, tenders, or leases in the ordinarycourse of business and not in connection with the borrowing of money,(j) Liens on amounts deposited as security for surety or appeal bonds inconnection with obtaining such bonds in the ordinary course of business,(k) with respect to any Real Property, easements, rights of way, andzoning restrictions that do not materially interfere with or impair the use oroperation thereof and (l) to the extent subject to the Second LienIntercreditor Agreement, the Liens of the Second Lien Agent securing the SecondLien Indebtedness.

 

“PermittedPreferred Stock” means any Preferred Stock that by its terms is mandatorilyredeemable or subject to any other payment obligation (including any obligationto pay dividends, other than dividends of shares of Preferred Stock of the sameclass and series payable in kind or dividends of shares of common stock) on orbefore a date that is less than 2 years after the Maturity Date, or, on orbefore the date that is less than 2 years after the Maturity Date, isredeemable at the option of the holder thereof for cash or assets or securities(other than distributions in kind of shares of Preferred Stock of the sameclass and series or of shares of common stock).

 

“PermittedProtest” means the right of Administrative Borrower or any of itsSubsidiaries to protest any Lien (other than any Lien that secures theObligations), taxes (other than payroll taxes or taxes that are the subject ofa United States federal tax lien), or rental payment, provided that (a) areserve with respect to such obligation is established on a Borrower’s or anyof its Subsidiaries’ books and records in such amount as is required underGAAP, (b) any such protest is instituted promptly and prosecuteddiligently by Administrative Borrower or any of its Subsidiaries, asapplicable, in good faith, and (c) Agent is satisfied that, while any suchprotest is pending, there will be no impairment of the enforceability,validity, or priority of any of the Agent’s Liens.

 

“PermittedPurchase Money Indebtedness” means purchase money Indebtedness incurred toenable a Borrower or any of its operating Subsidiaries to acquire Equipment inthe ordinary course of its business, which Indebtedness does not exceed theamount provided for in clause (c) of the definition of Permitted Indebtedness.

 

“Person”means natural persons, corporations, limited liability companies, limitedpartnerships, general partnerships, limited liability partnerships, jointventures, trusts, land trusts, business trusts, or other organizations,irrespective of whether they are legal entities, and governments and agenciesand political subdivisions thereof.

 

“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

 

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or any of its Subsidiaries or to which any Borrower or any of itsSubsidiaries 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, (b) a Pension Plan, or (c) a Qualified Plan.

 

“PowerSystems Division” means, on a combined basis, the “power control systems”operating division of Parent together with Mondel Holding and its Subsidiaries.

 

“PowerSystems EBITDA” means, for any period, the Power Systems Net Income forsuch period, plus (i) without duplication, the sum of the followingamounts of the Power Systems Division for such period and to the extentdeducted in determining Power Systems Net Income for such period:  (A) Power Systems Net Interest Expense, (B) netincome tax expense, (C) depreciation expense, and (D) amortizationexpense.

 

“PowerSystems Net Income” means, with respect to the Power Systems Division forany period, the net income (loss) of the Power Systems Division for suchperiod, determined on a consolidated basis in accordance with GAAP, butexcluding 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.

 

“PowerSystems Net Interest Expense” means, with respect to the Power SystemsDivision for any period, gross cash interest expense of such Persons for suchperiod determined on a consolidated basis in accordance with GAAP (includinginterest expense paid to Affiliates of such Persons), less (i) the sum of (A) interestincome for such period and (B) gains for such period on Hedge Agreements(to the extent not included in interest income above and to the extent notdeducted in the calculation of gross interest expense), plus (ii) the sumof (A) losses for such period on Hedge Agreements (to the extent notincluded in such gross interest expense) and (B) the upfront costs or feesfor such period associated with Hedge Agreements (to the extent not included insuch gross interest expense), in each case, determined on a consolidated basisin accordance with GAAP with respect to the Power Systems Division.

 

“PPSA”means the Personal Property Security Act (Ontario) and the Regulationsthereunder, as from time to time in effect; provided, however, ifattachment, 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.

 

“PreferredStock” means, as applied to the capital Stock of any Person, the capitalStock of any class or classes (however designated) that is preferred withrespect to the payment of dividends, or as to the distribution of assets uponany voluntary or involuntary liquidation or dissolution of such Person, overshares of capital Stock of any other class of such Person.

 

“PriorClaims” means all Liens created by Applicable Law (in contrast with Liensvoluntarily granted) which rank or are capable of ranking prior to or paripassu with the Agent’s Liens against all or part of the Collateral, includingfor amounts owing for wages, employee source deductions, goods and servicestaxes, sales taxes, municipal taxes, workers’ compensation, Quebec corporatetaxes, pension fund obligations and overdue rents.

 

“PriorClaims Reserve” means, as of any date of determination, the fulloutstanding amount of all Prior Claims which relate to Accounts of any Borroweror Mondel.

 

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“ProhibitedPreferred Stock” means any Preferred Stock that by its terms is mandatorilyredeemable or subject to any other payment obligation (including any obligationto pay dividends, other than dividends of shares of Preferred Stock of the sameclass and series payable in kind or dividends of shares of common Stock) on orbefore a date that is less than 2 years after the Maturity Date, or, on orbefore the date that is less than 2 years after the Maturity Date, isredeemable at the option of the holder thereof for cash or assets or securities(other than distributions in kind of shares of Preferred Stock of the sameclass and series or of shares of common Stock).

 

“Projections”means Parent’s forecasted (a) balance sheets, (b) profit and lossstatements, and (c) cash flow statements, all prepared on a basisconsistent with Parent’s historical financial statements, together withappropriate supporting details and a statement of underlying assumptions.

 

“ProRata Share” means, as of any date of determination:

 

(a)                                  with respect to a Lender’s obligation to makeAdvances and right to receive payments of principal, interest, fees, costs, andexpenses with respect thereto, (i) prior to the Commitments beingterminated or reduced to zero, the percentage obtained by dividing(y) such Lender’s Commitment, by (z) the aggregate Commitments of allLenders, and (ii) from and after the time that the Commitments have beenterminated or reduced to zero, the percentage obtained by dividing (y) theaggregate outstanding principal amount of such Lender’s Advances by(z) the aggregate outstanding principal amount of all Advances,

 

(b)                                 with respect to a Lender’s obligation toparticipate in Letters of Credit, to reimburse the Issuing Lender, and right toreceive payments of fees with respect thereto, (i) prior to theCommitments being terminated or reduced to zero, the percentage obtained bydividing (y) such Lender’s Commitment, by (z) the aggregateCommitments of all Lenders, and (ii) from and after the time that theCommitments have been terminated or reduced to zero, the percentage obtained bydividing (y) the aggregate outstanding principal amount of such Lender’sAdvances by (z) the aggregate outstanding principal amount of allAdvances, and

 

(c)                                  with respect to all other matters as to aparticular Lender (including the indemnification obligations arising under Section 15.7),the percentage obtained by dividing (i) such Lender’s Commitment, by (ii) theaggregate amount of Commitments of all Lenders; provided, however,that in the event the Commitments have been terminated or reduced to zero, ProRata Share under this clause shall be the percentage obtained by dividing (A) theoutstanding principal amount of such Lender’s Advances *plus*such Lender’s ratable portion of the Risk Participation Liability with respectto outstanding Letters of Credit, by (B) the outstanding principal amountof all Advances *plus* the aggregate amount of theRisk Participation Liability with respect to outstanding Letters of Credit.

 

“ProtectiveAdvance” has the meaning specified therefor in Section 2.3(d).

 

“PurchaseMoney Indebtedness” means Indebtedness (other than the Obligations, butincluding Capitalized Lease Obligations), incurred at the time of, or within 20days after, the acquisition of any fixed assets for the purpose of financingall or any part of the acquisition cost thereof.

 

“QualifiedCash” means, as of any date of determination, the amount of unrestricted cashand Cash Equivalents of Borrowers and their respective Subsidiaries that is inDeposit Accounts or in Securities Accounts, or any combination thereof, andwhich such Deposit Account or Securities Account is the subject of a ControlAgreement and is maintained by a branch office of the bank or securitiesintermediary located within the United States or Canada.

 

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“QualifiedPlan” 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 any Borrower, any of its Subsidiaries orany ERISA Affiliate or to which any Borrower, any of its Subsidiaries or anyERISA Affiliate has within the last six years made or was obligated to make,contributions, and (b) that is intended to be tax-qualified under Section 401(a) ofthe IRC.

 

“RealProperty” means any estates or interests in real property now owned orhereafter acquired by any Borrower, any Guarantor or any of their respectiveSubsidiaries and the improvements thereto.

 

“RealProperty Collateral” means any Real Property of any Borrower, any Guarantoror any of their respective Subsidiaries which is subject to Agent’s Lien.

 

“Record”means information that is inscribed on a tangible medium or which is stored inan electronic or other medium and is retrievable in perceivable form.

 

“ReinvestmentEligible Funds” means (a) Net Cash Proceeds which, but for theapplication of Section 2.4(c)(v), would be required to be used toprepay the Obligations pursuant to Section 2.4(c)(i) or (b) ExtraordinaryReceipts which, but for the application of Section 2.4(c)(v), wouldbe required to be used to prepay the Obligations pursuant to Section 2.4(c)(iii).

 

“ReinvestmentNotice” has the meaning specified therefore in Section 2.4(c)(v).

 

“RelatedFund” means a fund or account managed by any Lender or an Affiliate of anyLender or its investment manager.

 

“Release”means any spilling, leaking, pumping, pouring, emitting, emptying, discharging,injecting, escaping, leaching, seeping, migrating, dumping or disposing of anyHazardous Material (including the abandonment or discarding of barrels,containers and other closed receptacles containing any Hazardous Material) intothe indoor or outdoor environment, including the movement of HazardousMaterials through or in the ambient air, soil, surface or ground water, orproperty.

 

“RemedialAction” means all actions taken to (a) clean up, remove, remediate,contain, treat, monitor, assess, evaluate, or in any way address HazardousMaterials in the indoor or outdoor environment, (b) prevent or minimize arelease or threatened release of Hazardous Materials so they do not migrate orendanger or threaten to endanger public health or welfare or the indoor oroutdoor environment, (c) restore or reclaim natural resources or theenvironment, (d) perform any pre-remedial studies, investigations, or post-remedialoperation and maintenance activities, or (e) conduct any other actionswith respect to Hazardous Materials authorized by Environmental Laws.

 

“ReplacementLender” has the meaning specified therefor in Section 14.2(a).

 

“Report”has the meaning specified therefor in Section 15.17.

 

“RequiredAvailability” means that the sum of (a) Excess Availability, *plus* (b) Qualified Cash exceeds $5,000,000.

 

“RequiredLenders” means, at any time, Lenders whose aggregate Pro Rata Shares(calculated under clause (d) of the definition of Pro Rata Shares) equalor exceed 67%.

 

“ReservePercentage” means, on any day, for any Lender, the maximum percentageprescribed by the Board of Governors of the Federal Reserve System (or anysuccessor Governmental Authority) for determining the reserve requirements(including any basic, supplemental, marginal, or

 

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emergency reserves) that are in effect on such date with respect toEurocurrency funding (currently referred to as “Eurocurrency liabilities”)of that Lender, but so long as such Lender is not required or directed underapplicable regulations to maintain such reserves, the Reserve Percentage shallbe zero.

 

“RevolverUsage” means, as of any date of determination, the sum of (a) theamount of outstanding Advances, *plus* (b) theamount of the Letter of Credit Usage.

 

“RiskParticipation Liability” means, as to each Letter of Credit, allreimbursement obligations of Borrowers to the Issuing Lender with respect to anL/C Undertaking, consisting of (a) the amount available to be drawn orwhich may become available to be drawn, (b) all amounts that have beenpaid by the Issuing Lender to the Underlying Issuer to the extent notreimbursed by Borrowers, whether by the making of an Advance or otherwise, and (c) allaccrued and unpaid interest, fees, and expenses payable with respect thereto.

 

“SEC”means the United States Securities and Exchange Commission and any successorthereto.

 

“SecondLien Agent” means Ableco Finance LLC, a Delaware limited liability company,in its capacity as agent for the Second Lien Lenders, together with itssuccessors and assigns acting in such capacity.

 

“SecondLien Indebtedness” means any and all Indebtedness of any Borrower, anyGuarantor or their respective Subsidiaries arising under or in connection withany Second Lien Loan Documents.

 

“SecondLien Intercreditor Agreement” means an intercreditor agreement executed anddelivered by Agent and Second Lien Agent, and acknowledged and consented to byeach Borrower and each Guarantor, as amended, modified, supplemented orrestated from time to time.

 

“SecondLien Lenders” means the Persons from time to time party to the Second LienLoan Agreement as lenders.

 

“SecondLien Loan Agreement” means that certain Financing Agreement, dated as ofthe date hereof, by and among Second Lien Agent, Second Lien Lenders, andBorrowers pursuant to which the Second Lien Lenders agree to provide toBorrowers a term loan in the original principal amount of $18,000,000, asamended, modified, supplemented, restated, renewed, extended, refinanced orreplaced from time to time in accordance with the terms thereof and the termsof the Agreement.

 

“SecondLien Loan Documents” means (a) the Second Lien Loan Agreement and (b) andthe other “Loan Documents” as such term is defined in the Second Lien LoanAgreement, in each case, as amended, modified, supplemented, restated, renewed,extended, refinanced or replaced from time to time in accordance with the termsthereof and the terms of the Agreement.

 

“SecondLien Prepayment Event” means any transaction or event, other than theMagnetek ADS Sale, a Disposition of Accounts or Inventory of a Borrower orGuarantor or the receipt of Extraordinary Receipts which, pursuant to the termsof the Second Lien Loan Agreement, as in effect on the Closing Date, gives riseto a mandatory prepayment of the Second Lien Indebtedness.

 

“Secretary”means, with respect to any Person, the duly elected or appointed secretary orother officer of such Person charged with keeping the corporate records of suchPerson.

 

“SecuritiesAccount” means a securities account as that term is defined in the Codeand, in the case of Mondel, the PPSA.

 

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“SecurityAgreement” means a security agreement, in form and substance satisfactoryto Agent, executed and delivered by the Borrowers and Guarantors in favor ofAgent, together with all supplements executed in connection therewith.

 

“SecurityDocuments” means the Security Agreement, the Canadian Security Agreement,the Canadian Stock Pledge, the Foreign Stock Pledge, the Mortgages, the ControlAgreements and all other Loan Documents that purport to create a Lien.

 

“SeniorDebt” means the Obligations and the Second Lien Indebtedness.

 

“Settlement”has the meaning specified therefor in Section 2.3(e)(i).

 

“SettlementDate” has the meaning specified therefor in Section 2.3(e)(i).

 

“Solvent”means, with respect to any Person on a particular date, that on such date (i) thefair value of the property of such Person is not less than the total amount ofthe liabilities of such Person, (ii) the present fair salable value of theassets of such Person is not less than the amount that will be required to paythe probable liability of such Person on its existing debts as they becomeabsolute and matured, (iii) such Person is able to realize upon its assetsand pay its debts and other liabilities, contingent obligations and othercommitments as they mature in the normal course of business, (iv) suchPerson does not intend to, and does not believe that it will, incur debts orliabilities beyond such Person’s ability to pay as such debts and liabilitiesmature, (v) such Person is not engaged in business or a transaction, andis not about to engage in business or a transaction, for which such Person’sproperty would constitute unreasonably small capital, and (vi) withrespect to Mondel, that Mondel is not an “insolvent person” (as defined in theBankruptcy and Insolvency Act (Canada)) or a “debtor company” (as defined inthe Companies’ Creditors Arrangement Act (Canada)).

 

“StatutoryLien Payments” has the meaning specified therefor in Section 4.23.

 

“Stock”means all shares, options, warrants, interests, participations, or otherequivalents (regardless of how designated) of or in a Person, whether voting ornonvoting, including common stock, preferred stock, or any other “equitysecurity” (as such term is defined in Rule 3a11-1 of the General Rules andRegulations promulgated by the SEC under the Exchange Act).

 

“SubordinatedIndebtedness” means any Indebtedness that is subordinated to the Obligationsin right of payment pursuant to a Subordination Agreement and any Indebtednesswith respect to which any Lien securing such Indebtedness is subordinated toAgent’s Liens pursuant to a Subordination Agreement, provided, that,the Second Lien Indebtedness shall not be deemed Subordinated Indebtedness forpurposes of this definition.

 

“SubordinationAgreements” means, collectively, the terms and conditions of any documentgoverning Indebtedness of any Borrower, any Guarantor and/or their respective Subsidiarieswhich provide that such Indebtedness is subordinated to the Obligations inright of payment and/or that any Liens securing such Indebtedness aresubordinate to Agent’s Liens and all other subordination or intercreditoragreements at any time entered into by any Person in favor of Agent and theLenders with respect to Indebtedness owed or Liens granted to such Person byany Borrower, any Guarantor and/or their respective Subsidiaries, provided,that, the Second Lien Intercreditor Agreement shall not be deemed aSubordination Agreement for purposes of this definition.

 

“Subsidiary”of a Person means a corporation, partnership, limited liability company, orother entity in which that Person directly or indirectly owns or controls theshares of Stock having ordinary voting power to elect a majority of the boardof directors (or appoint other comparable managers) of such corporation,partnership, limited liability company, or other entity.

 

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“SwingLender” means WFF or any other Lender that, at the request ofAdministrative Borrower and with the consent of Agent agrees, in such Lender’ssole discretion, to become the Swing Lender under Section 2.3(d).

 

“SwingLoan” has the meaning specified therefor in Section 2.3(d)(i).

 

“Taxes”has the meaning specified therefor in Section 15.11.

 

“TotalDebt Limiter” means, as of any date of determination for the 12 monthperiod ending on such date of determination, (a) during the periodcommencing on the Closing Date and ending on June 30, 2006, 3.25 times TTMDomestic EBITDA, (b) during the period commencing on July 1, 2006 andending 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.

 

“TotalDebt Limiter Certificate” means a certificate substantially in the form of Exhibit T-1delivered by the chief financial officer of Parent to Agent.

 

“TriggeringEvent” means (a) any Borrower or any Guarantor is required to make anycash payments in respect of their Benefit Plans which either (i) exceedthe amount of the Designated Pension Payment by more than 10%, or (ii) arerequired to be paid more than 90 days earlier than the scheduled due date ofthe Designated Pension Payment, (b) the occurrence and continuance of anERISA Event, or (c) a court of competent jurisdiction determines any ofthe following in connection with the ULT Litigation (i) ULT has infringedon the patents held by Ole K. Nilssen or Geo Foundation, Ltd. that are thesubject of the ULT Litigation, (ii) the patents held by Ole K. Nilssen orGeo Foundation, Ltd. that are the subject of the ULT Litigation are valid andenforceable, or (iii) ULT is liable to Ole K. Nilssen or Geo Foundation,Ltd. for patent infringement, or (d) some other event or developmentoccurs in connection with the ULT Litigation that is materially adverse to theinterests of Parent and its Subsidiaries in connection with such litigation.

 

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

 

“TTMDomestic EBITDA” means, as of any date of determination, the DomesticEBITDA for the 12 month period most recently ended; provided, that incalculating the TTM Domestic EBITDA for any period that includes a period priorto September 1, 2005, the Domestic EBITDA for such prior period will bedeemed to be the applicable amount set forth on Schedule T-1 withrespect thereto.

 

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

 

“ULT”means Universal Lighting Technologies, Inc., a Delaware corporation.

 

“ULTLitigation” means the action styled **Nilssen, et al v. Universal Lighting**,Case No. 3:04-0080, pending in the U.S. District Court for the MiddleDistrict of Tennessee.

 

“UnderlyingIssuer” means a third Person which is the beneficiary of an L/C Undertakingand which has issued a letter of credit at the request of the Issuing Lenderfor the benefit of Borrowers.

 

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“UnderlyingLetter of Credit” means a letter of credit that has been issued by anUnderlying Issuer.

 

“UnitedStates” and “U.S.” means the United States of America.

 

“VoidableTransfer” has the meaning specified therefor in Section 16.6.

 

“WARN”has the meaning specified therefor in Section 4.31.

 

“WellsFargo” means Wells Fargo Bank, National Association, a national bankingassociation.

 

“WFF”means Wells Fargo Foothill, Inc., a California corporation.

 

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