Exhibit 10.2


 


 


FINANCING
AGREEMENT



Dated as of September 30, 2005



by and among



MAGNETEK, INC.

as Borrower


 










 


THE LENDERS
FROM TIME TO TIME PARTY HERETO,












 


ABLECO FINANCE
LLC,



as Collateral Agent,



and



ABLECO FINANCE LLC



as Administrative Agent


 





















 


TABLE OF
CONTENTS


 


	
  ARTICLE I

  	
  DEFINITIONS; CERTAIN TERMS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 1.01

  	
  Definitions

  	
   

  
	
   

  	
  Section 1.02

  	
  Terms Generally

  	
   

  
	
   

  	
  Section 1.03

  	
  Accounting and Other Terms

  	
   

  
	
   

  	
  Section 1.04

  	
  Time References

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  THE LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 2.01

  	
  Commitments

  	
   

  
	
   

  	
  Section 2.02

  	
  Making the Loans

  	
   

  
	
   

  	
  Section 2.03

  	
  Repayment of Loans; Evidence
  of Debt

  	
   

  
	
   

  	
  Section 2.04

  	
  Interest

  	
   

  
	
   

  	
  Section 2.05

  	
  Reduction of Commitment;
  Prepayment of Loans

  	
   

  
	
   

  	
  Section 2.06

  	
  Fees

  	
   

  
	
   

  	
  Section 2.07

  	
  Securitization

  	
   

  
	
   

  	
  Section 2.08

  	
  Taxes.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  FEES,
  PAYMENTS AND OTHER COMPENSATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 4.01

  	
  Audit and
  Collateral Monitoring Fees

  	
   

  
	
   

  	
  Section 4.02

  	
  Payments;
  Computations and Statements

  	
   

  
	
   

  	
  Section 4.03

  	
  Sharing of
  Payments, Etc

  	
   

  
	
   

  	
  Section 4.04

  	
  Apportionment
  of Payments.

  	
   

  
	
   

  	
  Section 4.05

  	
  Increased
  Costs and Reduced Return.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  CONDITIONS
  TO LOANS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 5.01

  	
  Conditions
  Precedent

  	
   

  
	
   

  	
  Section 5.02

  	
  Conditions
  Precedent to All Loans

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  REPRESENTATIONS
  AND WARRANTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 6.01

  	
  Representations
  and Warranties

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  COVENANTS
  OF THE LOAN PARTIES

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 7.01

  	
  Affirmative
  Covenants

  	
   

  
	
   

  	
  Section 7.02

  	
  Negative
  Covenants

  	
   

  
	
   

  	
  Section 7.03

  	
  Financial
  Covenants

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  MANAGEMENT,
  COLLECTION AND STATUS OF ACCOUNTS RECEIVABLE AND OTHER COLLATERAL

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 8.01

  	
  Collection
  of Accounts Receivable; Management of Collateral.

  	
   

  
	
   

  	
  Section 8.02

  	
  Accounts
  Receivable Documentation

  	
   

  
	
   

  	
  Section 8.03

  	
  Status of
  Accounts Receivable and Other Collateral

  	
   

  
	
   

  	
  Section 8.04

  	
  Collateral
  Custodian

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  EVENTS OF
  DEFAULT

  	
   

  
						



 


i





















 


	
   

  	
  Section 9.01

  	
  Events of
  Default

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  AGENTS

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Section 10.01

  	
  Appointment

  	
   

  
	
   

  	
  Section 10.02

  	
  Nature of
  Duties

  	
   

  
	
   

  	
  Section 10.03

  	
  Rights,
  Exculpation, Etc

  	
   

  
	
   

  	
  Section 10.04

  	
  Reliance

  	
   

  
	
   

  	
  Section 10.05

  	
  Indemnification

  	
   

  
	
   

  	
  Section 10.06

  	
  Agents
  Individually

  	
   

  
	
   

  	
  Section 10.07

  	
  Successor
  Agent

  	
   

  
	
   

  	
  Section 10.08

  	
  Collateral
  Matters

  	
   

  
	
   

  	
  Section 10.09

  	
  Agency for
  Perfection

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  	
  GUARANTY

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 11.01

  	
  Guaranty

  	
   

  
	
   

  	
  Section 11.02

  	
  Guaranty
  Absolute

  	
   

  
	
   

  	
  Section 11.03

  	
  Waiver

  	
   

  
	
   

  	
  Section 11.04

  	
  Continuing
  Guaranty; Assignments

  	
   

  
	
   

  	
  Section 11.05

  	
  Subrogation

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  	
  MISCELLANEOUS

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Section 12.01

  	
  Notices,
  Etc

  	
   

  
	
   

  	
  Section 12.02

  	
  Amendments,
  Etc

  	
   

  
	
   

  	
  Section 12.03

  	
  No Waiver;
  Remedies, Etc

  	
   

  
	
   

  	
  Section 12.04

  	
  Expenses;
  Taxes; Attorneys’ Fees

  	
   

  
	
   

  	
  Section 12.05

  	
  Right of Set-off

  	
   

  
	
   

  	
  Section 12.06

  	
  Severability

  	
   

  
	
   

  	
  Section 12.07

  	
  Assignments
  and Participations.

  	
   

  
	
   

  	
  Section 12.08

  	
  Counterparts

  	
   

  
	
   

  	
  Section 12.09

  	
  GOVERNING
  LAW

  	
   

  
	
   

  	
  Section 12.10

  	
  CONSENT TO
  JURISDICTION; SERVICE OF PROCESS AND VENUE

  	
   

  
	
   

  	
  Section 12.11

  	
  WAIVER OF
  JURY TRIAL, ETC

  	
   

  
	
   

  	
  Section 12.12

  	
  Consent by
  the Agents and Lenders

  	
   

  
	
   

  	
  Section 12.13

  	
  No Party
  Deemed Drafter

  	
   

  
	
   

  	
  Section 12.14

  	
  Reinstatement;
  Certain Payments

  	
   

  
	
   

  	
  Section 12.15

  	
  Indemnification

  	
   

  
	
   

  	
  Section 12.16

  	
  Records

  	
   

  
	
   

  	
  Section 12.17

  	
  Binding
  Effect

  	
   

  
	
   

  	
  Section 12.18

  	
  Interest

  	
   

  
	
   

  	
  Section 12.19

  	
  Confidentiality

  	
   

  
	
   

  	
  Section 12.20

  	
  Integration

  	
   

  
					



 


ii





















 





 


FINANCING
AGREEMENT


 


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


 


RECITALS


 


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


 


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


 


ARTICLE I


 


DEFINITIONS;
CERTAIN TERMS


 


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


 


“Ableco” has the meaning specified therefor in the preamble
hereto.


 


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


 


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


 





















 


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


 


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


 


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


 


“Administrative Agent’s Account” means an account at a bank
designated by the Administrative Agent from time to time as the account into
which the Borrower shall make all payments to the Administrative Agent for the
benefit of the Agents and the Lenders under this Agreement and the other Loan
Documents.


 


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


 


“After Acquired Property” means any fee interest in real
property acquired by the Borrower or any of its Subsidiaries after the date
hereof.


 


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


 


“Agreement” means this Financing Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to the Agreement as the same may be in effect
at the time such reference becomes operative.


 


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


 


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


 


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


 


2





















 


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


 


	
  Level

  	
   

  	
  Domestic Leverage Ratio

  	
   

  	
  Applicable LIBOR Discount Rate
  Margin

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  less than 2.75:1.00

  	
   

  	
  7.50 percentage points

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  greater than or equal to 2.75:100 and less
  than 3.00:1.00

  	
   

  	
  8.00 percentage
  points

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  greater than or equal to 3.00:1.00

  	
   

  	
  8.50
  percentage points

  



 


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


 


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


 


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


 


3





















 


calculation of the Domestic Leverage Ratio in
respect of the testing period ended with September 30, 2005 delivered by
Borrower pursuant to Section 7.01(a), the Applicable Reference
Discount Rate Margin shall be set at Level I:


 


	
  Level

  	
   

  	
  Domestic Leverage Ratio

  	
   

  	
  Applicable Reference Discount
  Rate Margin

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  I

  	
   

  	
  less than 2.75:1.00

  	
   

  	
  5.00 percentage points

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  II

  	
   

  	
  greater than or equal to 2.75:100 and less
  than 3.00:1.00

  	
   

  	
  5.50
  percentage points

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  III

  	
   

  	
  greater than or equal to 3.00:1.00

  	
   

  	
  6.00
  percentage points

  



 


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


 


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


 


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


 


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


 


4





















 


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


 


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


 


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


 


“Board” means the Board of Governors of the Federal Reserve
System of the United States.


 


“Borrower” has the meaning specified therefor in the preamble
hereto.


 


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


 


“Business Day” means any day that is not a Saturday, Sunday, or
other day on which banks are authorized or required to close in the State of
New York, except that, 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 are closed for dealings in U.S. Dollar deposits in the London interbank
market.


 


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


 


“Canadian Employee 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.


 


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


 


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


 


5





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Change of Control” means each occurrence of any of the
following:


 


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


 


6





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


7





















 


“Consolidated EBITDA” means, with respect to Borrower for any
period, the Consolidated Net Income of Borrower and its Subsidiaries for such
period, plus (i) without duplication, the sum of the following
amounts of Borrower and its Subsidiaries for such period and to the extent
deducted in determining Consolidated Net Income of Borrower and its
Subsidiaries for such period:  (A) Consolidated
Net Interest Expense, (B) net income tax expense, (C) depreciation
expense and (D) amortization expense.


 


“Consolidated Funded Indebtedness” means, with respect to
Borrower at any date, all Indebtedness for borrowed money of Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, which
by its terms matures more than one year after the date of calculation, and any
such Indebtedness maturing within one year from such date which is renewable or
extendable at the option of Borrower or the applicable Subsidiary to a date
more than one year from such date, including, in any event, but without
duplication, with respect to the Borrower and its Subsidiaries, the
Obligations, the First Lien Obligations, and the amount of their Capitalized
Lease Obligations.


 


“Consolidated Net Income” means, with respect to Borrower for
any period, the net income (loss) of Borrower and its Subsidiaries for such
period, determined on a consolidated basis and in accordance with GAAP, but
excluding from the determination of Consolidated Net Income (without
duplication) (a) any non-cash extraordinary or non-recurring gains or
non-cash gains or losses from Dispositions, (b) non-cash restructuring
charges, (c) non-cash effects of discontinued operations, (d) cash
effects of discontinued operations in an aggregate amount not to exceed
$1,500,000, (e) interest that is paid-in-kind, (f) non-cash pension
charges and non-cash stock compensation, and (g) any tax refunds, net
operating losses or other net tax benefits received during such period on
account of any prior period.


 


“Consolidated Net Interest Expense” means, with respect to
Borrower for any period, gross cash interest expense of Borrower and its
Subsidiaries for such period determined on a consolidated basis and in
accordance with GAAP (including interest expense paid to Affiliates of
Borrower), less (i) the sum of (A) interest income for such
period and (B) gains for such period on Hedging Agreements (to the extent
not included in interest income above and to the extent not deducted in the
calculation of gross interest expense), plus (ii) the sum of (A) losses
for such period on Hedging Agreements (to the extent not included in such gross
interest expense) and (B) the upfront costs or fees for such period
associated with Hedging Agreements (to the extent not included in such gross
interest expense), in each case, determined on a consolidated basis and in
accordance with GAAP.


 


“Contingent Obligation” means, with respect to any Person, any
obligation of such Person 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) the direct or indirect guaranty, endorsement
(other than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of
the obligation of a primary obligor, (ii) the obligation to make
take-or-pay or similar payments, if required, regardless of nonperformance by
any other party or parties to an agreement, (iii) any obligation of such
Person, whether or not contingent, (A) to purchase any such primary
obligation or any property constituting direct or indirect security therefor, (B) to
advance or supply funds (1) for the purchase or payment of any


 


8





















 


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


 


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


 


“Control Agreement” means a control agreement, in form and
substance satisfactory to Collateral Agent, executed and delivered by the
Borrower or one of its Subsidiaries, Collateral Agent, First
Lien Agent, and the applicable securities intermediary (with respect to a
Securities Account) or bank (with respect to a Deposit Account).


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


9





















 


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


 


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


 


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


 


“Domestic EBITDA” means, for any period, the Domestic Net Income
for such period, plus (i) without duplication, the sum of the
following amounts of the Loan Parties for such period and to the extent
deducted in determining Domestic Net Income of the Loan Parties for such
period:  (A) Domestic Net Interest
Expense, (B) net income tax expense, (C) depreciation expense, (D) amortization
expense, and (E) corporate overhead expense, minus, (ii) the
Applicable Corporate Overhead Amount.


 


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


 


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


 


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


 


10





















 


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


 


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


 


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


 


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


 


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


 


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


 


11





















 


“ERISA” means the Employee Retirement Income Security Act of
1974, as amended, and any successor statute of similar import, and regulations
thereunder, in each case, as in effect from time to time.  References to sections of ERISA shall be
construed also to refer to any successor sections.


 


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


 


“ERISA Event” means (a) a reportable event as defined in Section 4043
of ERISA and the regulations issued under such Section with respect to a
Pension Plan, excluding, however, such events as to which the PBGC by
regulation has waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event; (b) the
applicability of the requirements of Section 4043(b) of ERISA with
respect to a contributing sponsor, as defined in Section 4001(a)(13) of
ERISA, to any Pension Plan where an event described in paragraph (9), (10),
(11), (12) or (13) of Section 4043(c) of ERISA is reasonably expected
to occur with respect to such plan within the following 30 days; (c) a
withdrawal by Borrower, any of its Subsidiaries, or any ERISA Affiliate from a
Pension Plan or the termination of any Pension Plan resulting in liability
under Sections 4063 or 4064 of ERISA; (d) the withdrawal of Borrower, any
of its Subsidiaries, or ERISA Affiliate in a complete or partial withdrawal
(within the meaning of Section 4203 and 4205 of ERISA) from any
Multiemployer Plan if there is any potential liability therefor, or the receipt
by Borrower, any of its Subsidiaries, or ERISA Affiliate of notice from any
Multiemployer Plan that it is in reorganization or insolvency pursuant to Section 4241
or 4245 of ERISA;  (e) the filing of
a notice of intent to terminate, the treatment of a plan amendment as a
termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan; (f) the
imposition of liability on Borrower, any of its Subsidiaries, or any ERISA
Affiliate pursuant to Sections 4062(e) or 4069 of ERISA or by reason of
the application of Section 4212(c) of ERISA; (g) the failure by
Borrower, any of its Subsidiaries, or any ERISA Affiliate to timely make any
required contribution to a Pension Plan (or the failure to timely make a
required contribution in any material respect with respect to any Plan that is
not a Pension Plan or a Multiemployer Plan), or the failure to meet the minimum
funding standard of Section 412 of the IRC with respect to any Pension
Plan (whether or not waived in accordance with Section 412(d) of the
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 any
required contribution to a Multiemployer Plan; (h) an event or condition
which might reasonably be expected to constitute grounds under ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan
or Multiemployer Plan; (i) the imposition of any material liability under
ERISA, other than PBGC premiums due but not delinquent under Section 4007
of ERISA, upon Borrower, any of its Subsidiaries or any ERISA Affiliate; (j) an
application for a funding waiver under Section 303 of ERISA or an
extension of any amortization period pursuant to Section 412 of the IRC
with respect to any Pension Plan; (k) the occurrence of a non exempt prohibited
transaction under Sections 406 or 407 of ERISA for which Borrower, or any of
its Subsidiaries, may be directly or indirectly liable and which is


 


12





















 


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


 


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


 


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


 


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


 


“Exchange Act” means the Securities Exchange Act of 1934, as
amended.


 


“Excluded Foreign Subsidiary” means Magnetek de Mexico, S.A. de
C.V., a corporation organized under the laws of Mexico; Manufacturas Electricas
De Reynosa S. A.de C.V, a corporation organized under the laws of Mexico; Mejor
Electronica de Mexico, 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
laws of the Federal Republic of Germany; Magnetek Lighting Canada Limited, a
corporation organized under the laws of Canada; Magnetek Industrials Controls
Group (UK) Ltd., a corporation organized under the laws of Great Britain; and
Magnetek Vertiebsgesellschaft GmbH, a corporation organized under the laws of
the Federal Republic of Germany.


 


13





















 


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


 


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


 


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


 


“Facility” means each of the parcels of real property identified
on Schedule F-1 attached hereto, including all buildings and other
improvements thereon, all fixtures located at or used in connection with such
facility, all whether now or hereafter existing.


 


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


 


“Fee Letter” means that certain fee letter dated
contemporaneously herewith by and between Borrower and the Agents, which is in
form and substance satisfactory to the Agents.


 


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


 


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


 


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


 


14





















 


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


 


“First Lien Agent” means Wells Fargo Foothill, Inc., a
California corporation, as administrative agent for certain lenders under the
First Lien Credit Agreement, together with its successors and assigns in such
capacity.


 


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


 


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


 


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


 


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


 


“First Lien Revolver Usage” means the Revolver Usage, as such
term is defined in the First Lien Credit Agreement, as in effect on the date
hereof.


 


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


 


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


 


“Fixed Charge Coverage Ratio” means, with respect to Borrower
and its Subsidiaries for any period, the ratio of (i) the Consolidated
EBITDA for such period minus Capital Expenditures made during such period, to (ii) the
sum of (A) all principal of Indebtedness of Borrower and its Subsidiaries
scheduled to be paid or prepaid during such period, plus (B) Consolidated
Net Interest Expense of Borrower and its Subsidiaries for such period, plus
(C) all income tax liabilities of Borrower and its Subsidiaries that
accrued during such period (other than the non-cash increase in such period, if
any, in deferred tax liability attributable to amortization of goodwill over a
shorter period for tax purposes than for financial reporting purposes), to the
extent that the amount of such liabilities is greater than zero, plus (D) cash
dividends or distributions paid by Borrower and its Subsidiaries (other than
dividends or distributions paid to Borrower or its wholly-owned Subsidiaries)
during such period, plus (E) the aggregate amount of cash payments
made by Borrower and its Subsidiaries during such 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 Borrower and its Subsidiaries described in clause (ii)(C) of
the immediately preceding sentence shall be made without giving effect to any
tax refunds, tax receivables, net operating losses or other net tax benefits
that were received or receivable during such period on account of any prior
periods.


 


15





















 


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


 


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


 


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


 


“Guaranteed Obligations” has the
meaning specified therefor in Section 11.01.


 


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


 


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


 


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


 


16





















 


exhibiting a hazardous waste characteristic,
including corrosivity, ignitability, toxicity or reactivity as well as any
radioactive or explosive materials; and (e) any raw materials, building
components (including asbestos-containing materials) and manufactured products
containing hazardous substances listed or classified as such under
Environmental Laws.


 


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


 


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


 


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


 


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


 


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


 


17





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


18





















 


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


 


“Lender” has the meaning specified therefor in the preamble
hereto.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


19





















 


“Loan Party” means the Borrower or any Guarantor.


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


20





















 


“Net Cash Proceeds” means, (i) with respect to any
Disposition by any Person or any of its Subsidiaries, the amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of such Person or such Subsidiary, in connection therewith
after deducting therefrom only (A) the amount of any Indebtedness secured
by any Permitted Lien on any asset (other than Indebtedness assumed by the
purchaser of such asset) which is required to be, and is, repaid in connection
with such Disposition (other than Indebtedness under this Agreement), (B) reasonable
expenses related thereto incurred by such Person or such Subsidiary in
connection therewith, (C) transfer taxes paid to any taxing authorities by
such Person or such Subsidiary in connection therewith, and (D) net income
taxes to be paid in connection with such Disposition (after taking into account
any tax credits or deductions and any tax sharing arrangements) and (ii) with
respect to the issuance or incurrence of any Indebtedness by any Person or any
of its Subsidiaries, or the sale or issuance by any Person or any of its
Subsidiaries of any shares of its Capital Stock, the aggregate amount of cash
received (directly or indirectly) from time to time (whether as initial
consideration or through the payment or disposition of deferred consideration)
by or on behalf of such Person or such Subsidiary in connection therewith,
after deducting therefrom only (A) reasonable expenses related thereto
incurred by such Person or such Subsidiary in connection therewith, (B) transfer
taxes paid by such Person or such Subsidiary in connection therewith and (C) net
income taxes to be paid in connection therewith (after taking into account any
tax credits or deductions and any tax sharing arrangements); in each case of
clause (i) and (ii) 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 reasonable out-of-pocket expenses, is not an Affiliate of such Person
or any of its Subsidiaries and (y) properly attributable to such transaction or
to the asset that is the subject thereof.


 


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


 


“Nilssen” means Ole K. Nilssen.


 


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


 


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


 


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


 


21





















 


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


 


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


 


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


 


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


 


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


 


“Pension Plan” means an employee benefit plan (as defined in Section 3(3) of
ERISA) other than a Multiemployer Plan (a) that is or was within the last
six years maintained or sponsored by Borrower, any of its Subsidiaries, or any
ERISA Affiliate or to which Borrower, any of its Subsidiaries, or any ERISA
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 or
contingent liability, and (b) that is or was subject to Section 412
of the IRC, Section 302 of ERISA or Title IV of ERISA.


 


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


 


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


 


“Permitted Indebtedness” means:


 


(a)                                  any
Indebtedness owing to any Agent and any Lender under this Agreement and the
other Loan Documents;


 


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


 


22





















 


increase in the principal
amount of, or interest rate with respect to, the Indebtedness so refinanced,
renewed, or extended or add one or more Loan Parties as liable with respect
thereto if such additional Loan Parties were not liable with respect to the
original Indebtedness, (iii) such refinancings, renewals, or extensions do
not result in a shortening of the average weighted maturity of the Indebtedness
so refinanced, renewed, or extended, nor are they on terms or conditions, that,
taken as a whole, are materially more burdensome or restrictive to the Loan
Parties, (iv) if the Indebtedness that is refinanced, renewed, or extended
was subordinated in right of payment to the Obligations, then the terms and
conditions of the refinancing, renewal, or extension Indebtedness must include
subordination terms and conditions that are at least as favorable to the Agents
and the Lenders as those that were applicable to the refinanced, renewed, or
extended Indebtedness, (v) the Indebtedness that is refinanced, renewed,
or extended is not recourse to any Person that is liable on account of the
Obligations other than those Persons which were obligated with respect to the
Indebtedness that was refinanced, renewed, or extended, and (vi) such
refinancing, renewal or extension does not contain terms that are less
favorable to the Loan Parties or the Lenders than the terms of the Indebtedness
being extended, refinanced or renewed;


 


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


 


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


 


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


 


(f)                                    Indebtedness of the Borrower or any of its
Subsidiaries under any Hedging Agreement so long as such Hedging Agreements are
used solely as a part of its normal business operations as a risk management
strategy or hedge against changes resulting from market operations and not as a
means to speculate for investment purposes on trends and shifts in financial or
commodities markets;


 


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


 


(h)                                 unsecured
Indebtedness incurred by a Subsidiary of Borrower that is a Controlled Foreign
Corporation in an aggregate amount, for all such Subsidiaries, not to exceed
$5,000,000 at any time outstanding, provided, that, neither Borrower nor
any Subsidiary of Parent that is not a Controlled Foreign Corporation is
obligated with respect to or has pledged any of its assets as collateral to
secure such Indebtedness, whether directly or indirectly.


 


23





















 


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


 


“Permitted Liens” means:


 


(i)                                     Liens
securing the Obligations;


 


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


 


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


 


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


 


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


 


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


 


24





















 


(o)                                 easements, zoning restrictions and similar
encumbrances on real property and minor irregularities in the title thereto
that do not (i) secure obligations for the payment of money or (ii) materially
impair the value of such property or its use by any Loan Party or any of its
Subsidiaries in the normal conduct of such Person’s business;


 


(p)                                 leases or subleases granted to other Persons
not materially interfering with the conduct of the business of the Borrower or
any of its Subsidiaries;


 


(q)                                 precautionary financing statement filings regarding
operating leases;


 


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


 


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


 


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


 


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


 


“Person” means an individual, corporation, limited liability
company, partnership, association, joint-stock company, trust, unincorporated
organization, joint venture or other enterprise or entity or Governmental
Authority.


 


“Plaintiffs” means Nilssen and Geo Foundation, Ltd.


 


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


 


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


 


“Power Systems Division” means, on a consolidated basis, the “power
control systems” operating division of Borrower, together with Mondel Holding
and its Subsidiaries.


 


25





















 


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


 


“Power Systems Net Income” means, with respect to the Power
Systems Division for any period, the net income (loss) of the Power Systems
Division for such period, determined on a consolidated basis in accordance with
GAAP, but excluding from the determination of Power Systems Net Income (without
duplication) (a) any non-cash extraordinary or non-recurring gains or
non-cash gains or losses from Dispositions, (b) non-cash restructuring
charges, (c) non-cash effects of discontinued operations, (d) interest
that is paid-in-kind, and (e) any tax refunds, net operating losses or
other net tax benefits received during such period on account of any prior
period, in each case solely with respect to the Power Systems Division.


 


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


 


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


 


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


 


“Prohibited Preferred Stock” means any Preferred Stock that by
its terms is mandatorily redeemable or subject to any other payment obligation
(including any obligation to pay dividends, other than dividends of shares of
Preferred Stock of the same class and series payable in kind or dividends of
shares of common stock) on or before a date that is less than 2 years after the
Final Maturity Date, or, on or before the date that is less than 2 years after
the Final Maturity Date, is redeemable 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 same class and series or of shares of common stock).


 


26





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


27





















 


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


 


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


 


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


 


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


 


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


 


“Remedial Action” means all actions taken to (i) clean up,
remove, remediate, contain, treat, monitor, assess, evaluate or in any other
way address Hazardous Materials in the indoor or outdoor environment; (ii) prevent
or minimize a Release or threatened Release of Hazardous Materials so they do
not migrate or endanger or threaten to endanger public health or welfare or the
indoor or outdoor environment; (iii) perform pre-remedial studies and
investigations and post-remedial operation and maintenance activities; or (iv) any
other actions authorized by 42 U.S.C. § 9601.


 


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


 


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


 


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


 


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


 


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


 


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


 


28





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


“Subordination Agreements” means, collectively, the terms and
conditions of any document governing Indebtedness of Borrower, any Guarantor
and/or their respective Subsidiaries which provide that such Indebtedness is
subordinated to the Obligations in right of payment.


 


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


 


29





















 


prepared in accordance with GAAP or (ii) of
which more than 50% of (A) the outstanding Capital Stock having (in the
absence of contingencies) ordinary voting power to elect a majority of the
board of directors or other managing body of such Person, (B) in the case
of a partnership or limited liability company, the interest in the capital or
profits of such partnership or limited liability company or (C) in the
case of a trust, estate, association, joint venture or other entity, the
beneficial interest in such trust, estate, association or other entity business
is, at the time of determination, owned or controlled directly or indirectly
through one or more intermediaries, by such Person.


 


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


 


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


 


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


 


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


 


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


 


“Title Insurance Policy” means a mortgagee’s loan policy, in
form and substance satisfactory to the Collateral Agent, together with all
endorsements made from time to time thereto, issued by or on behalf of a title
insurance company satisfactory to the Collateral Agent, insuring the Lien
created by a Mortgage in an amount and on terms satisfactory to the Collateral
Agent, delivered to the Collateral Agent.


 


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


 


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


 


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


 


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


 


30





















 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


Section 1.02                                Terms Generally.  The
definitions of terms herein shall apply equally to the singular and plural forms
of the terms defined.  Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms.  The
words “include,” “includes” and “including” shall be deemed to be followed by
the phrase “without limitation,” whether or not so expressly stated in each
such instance and the term “or” has, except where otherwise indicated, the
inclusive meaning represented by the phrase “and/or.”  The word “will” shall be construed to have
the same meaning and effect as the word “shall.”  Unless the context requires otherwise, (a) any definition of or reference to
any agreement, instrument or other document herein shall be construed as
referring to such agreement, instrument or other document as from time to time
amended, supplemented or otherwise modified (subject to any restrictions on
such amendments, supplements or modifications set forth herein), (b) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (c) the words “herein”, “hereof” and “hereunder”,
and words of similar import, shall be construed to refer to this Agreement in
its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to,
this Agreement and


 


31





















 


(e) the words “asset”
and “property” shall be construed to have the same meaning and effect and to
refer to any and all tangible and intangible assets and properties, including
cash, securities, accounts and contract rights. 
References in this Agreement to “determination” by any Agent include
estimates honestly made by such Agent (in the case of quantitative determinations)
and beliefs honestly held by such Agent (in the case of qualitative
determinations).  References to statutes
or regulations are to be construed as including all statutory and regulatory
provisions consolidating, amending, supplementing, interpreting, or replacing
the statute or regulation referred to.


 


Section 1.03                                Accounting and Other Terms. 
Unless otherwise expressly provided herein, each accounting term used
herein shall have the meaning given it under GAAP.  All terms used in this Agreement which are
defined in Article 8 or Article 9 of the Code and which are not
otherwise defined herein shall have the same meanings herein as set forth
therein; and when used to define a category or categories of collateral owned
or hereafter acquired by any Borrower or Guarantor which may be subject to the
provisions of the PPSA, the such term shall include the equivalent category or
categories of collateral under the PPSA.


 


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


 


ARTICLE II


 


THE LOANS


 


Section 2.01                                Commitments.  (a)  Subject to the terms
and conditions and relying upon the representations and warranties herein set
forth:


 


(i)                                     [intentionally omitted]; and


 


(ii)                                  (ii)                                  each Term Loan Lender severally agrees to
make a term loan (collectively, the “Term Loan”) to the Borrower on or
after the Effective Date and before the Commitment Termination Date, in an
aggregate principal amount equal to the amount of such Lender’s Term Loan
Commitment.


 


(b)                                 Notwithstanding the foregoing:


 


(i)                                     [intentionally omitted].


 


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


 


32





















 


Section 2.02                                Making the Loans.  (a) 
The Borrower shall give the Administrative Agent prior telephonic notice
(immediately confirmed in writing, in substantially the form of Exhibit 2.02(a) hereto
(a “Notice of Borrowing”)), not later than 12:00 noon (New York
City time) on the date which is 5 Business Days prior to the date of the
proposed Loan.  Such Notice of Borrowing
shall be irrevocable and shall specify (i) the principal amount of the
proposed Loan, (ii) the proposed borrowing date, which must be a Business
Day, and, with respect to the Term Loan, must be on or before the Commitment
Termination Date.  The Administrative Agent and the Lenders may act without liability upon the
basis of written, telecopied or telephonic notice believed by the Administrative
Agent in good faith to be from the Borrower (or from any Authorized Officer
thereof designated in writing purportedly from the Borrower to the
Administrative Agent).  The Borrower
hereby waives the right to dispute the Administrative Agent’s record of the
terms of any such telephonic Notice of Borrowing.  The Administrative Agent and each Lender
shall be entitled to rely conclusively on any Authorized Officer’s authority to
request a Loan on behalf of the Borrower until the Administrative Agent receives
written notice to the contrary.  The
Administrative Agent and the Lenders shall have no duty to verify the
authenticity of the signature appearing on any written Notice of Borrowing.


 


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


 


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


 


(ii)                                  [intentionally omitted]


 


(iii)                               [intentionally omitted]


 


(iv)                              [intentionally omitted]


 


(d)                                 (i)                                     [intentionally omitted].


 


(ii)                                  [intentionally omitted].


 


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


 


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


 


33





















 


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


 


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


 


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


 


(e)                                  The entries made in the accounts maintained
pursuant to paragraphs (c) or (d) of this Section 2.03
shall be prima  facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or
the Administrative Agent to maintain such accounts or any error therein shall
not in any manner affect the obligation of the Borrower to repay the Loans in
accordance with the terms of this Agreement.


 


(f)                                    Any Lender may request that Loans made by it
be evidenced by a promissory note.  In
such event, the Borrower shall execute and deliver to such Lender a promissory
note payable to the order of such Lender (or, if requested by such Lender, to
such Lender and its registered assigns) in a form furnished by the Collateral
Agent and reasonably satisfactory to the Borrower.  Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 12.07) be represented by one or more
promissory notes in such form payable to the order of the payee named therein
(or, if such promissory note is a registered note, to such payee and its
registered assigns).


 


Section 2.04                                Interest.  (a)  [intentionally
omitted].


 


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


 


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


 


34





















 


(d)                                 LIBOR
Option.


 


(i)                                     Interest and Interest Payment Dates.  In
lieu of having interest charged at the rate based upon the Reference Rate, the
Borrower shall have the option (the “LIBOR Option”) to have interest on
all or a portion of the Loans be charged at a rate of interest based upon the
LIBOR Rate.  Interest on LIBOR Rate Loans
shall be payable on the earliest of (A) the last day of the Interest
Period applicable thereto, (B) the occurrence of an Event of Default in
consequence of which the Required Lenders or Collateral Agent on behalf thereof
elect to accelerate the maturity of all or any portion of the Obligations, or (C) termination
of this Agreement pursuant to the terms hereof. 
Interest at the Post-Default Rate shall be payable on demand.  On the last day of each applicable Interest
Period, unless the Borrower properly has exercised the LIBOR Option with
respect thereto, the interest rate applicable to such LIBOR Rate Loan
automatically shall convert to the rate of interest then applicable to
Reference Rate Loans of the same type hereunder.  At any time that an Event of Default has
occurred and is continuing, the Borrower no longer shall have the option to
request that Loans bear interest at the LIBOR Rate and Administrative Agent
shall have the right to convert the interest rate on all outstanding LIBOR Rate
Loans to the rate then applicable to Reference Rate Loans hereunder.


 


(ii)                                  LIBOR Election.


 


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


 


(B)                      Each LIBOR Notice shall be irrevocable and
binding on the Borrower.  In connection
with each LIBOR Rate Loan, the Borrower shall indemnify, defend, and hold
Administrative Agent and the Lenders harmless against any loss, cost, or
expense incurred by Administrative Agent or any Lender as a result of (1) the
payment of any principal of any LIBOR Rate Loan other than on the last day of
an Interest Period applicable thereto (including as a result of an Event of
Default), (2) the conversion of any LIBOR Rate Loan other than on the last
day of the Interest Period applicable thereto, or (3) the failure to
borrow, convert, continue or prepay any LIBOR Rate Loan on the date specified
in any LIBOR Notice delivered pursuant hereto (such losses, costs, and
expenses, collectively, “Funding Losses”).  Funding Losses shall, with respect to
Administrative Agent or any Lender, be deemed to equal the amount determined by
Administrative Agent or such Lender to be the excess, if any, of (x) the amount
of interest that would have accrued on the principal amount of such LIBOR Rate
Loan had such event not occurred, at the LIBOR Rate that would


 


35





















 


have
been applicable thereto, for the period from the date of such event to the last
day of the then current Interest Period therefor (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the
Interest Period therefor), minus (y) the amount of interest that would accrue
on such principal amount for such period at the interest rate which
Administrative Agent or such Lender would be offered were it to be offered, at
the commencement of such period, Dollar deposits of a comparable amount and
period in the London interbank market.  A
certificate of Administrative Agent or a Lender delivered to the Borrower
setting forth any amount or amounts that Administrative Agent or such Lender is
entitled to receive pursuant to this Section shall be conclusive absent
manifest error.


 


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


 


(iii)                               Prepayments.  The Borrower may prepay LIBOR
Rate Loans at any time; provided, however, that in the event that
LIBOR Rate Loans are prepaid on any date that is not the last day of the
Interest Period applicable thereto, including as a result of any automatic
prepayment through the required application by Administrative Agent of proceeds
of Collections in accordance with Section 4.04 or for any other
reason, including early termination of the term of this Agreement or
acceleration of all or any portion of the Obligations pursuant to the terms
hereof, the Borrower shall indemnify, defend, and hold Administrative Agent and
the Lenders and their participants harmless against any and all Funding Losses
in accordance with subsection (ii) above.


 


(iv)                              Special Provisions Applicable to LIBOR Rate.


 


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


 


36





















 


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


 


(v)                                 No Requirement of Matched Funding. 
Anything to the contrary contained herein notwithstanding, neither
Administrative Agent, nor any Lender, nor any of their participants, is
required actually to acquire eurodollar deposits to fund or otherwise match
fund any Obligation as to which interest accrues at the LIBOR Rate.  The provisions of this Section shall apply
as if each Lender or its participants had match funded any Obligation as to
which interest is accruing at the LIBOR Rate by acquiring eurodollar deposits
for each Interest Period in the amount of the LIBOR Rate Loans.


 


(e)                                  Interest Payment in respect of Reference Rate
Loans.  Interest on each Reference Rate Loan shall be
payable monthly, in arrears, on the first day of each month, commencing on the
first day of the month following the month in which such Loan is made and at
maturity (whether upon demand, by acceleration or otherwise).  Interest at the Post-Default Rate shall be
payable on demand.  The Borrower hereby
authorizes the Administrative Agent to, and the Administrative Agent may, from
time to time, charge the Loan Account pursuant to Section 4.02 with
the amount of any interest payment due hereunder.


 


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


 


Section 2.05                                Reduction of Commitments; Prepayment of Loans.


 


(a)                                  Reduction of Commitments.


 


(i)                                     [intentionally omitted].


 


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


 


(b)                                 Optional Prepayment.


 


(i)                                     [intentionally omitted].


 


37





















 


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


 


(c)                                  Mandatory Prepayment.


 


(i)                                     [intentionally omitted]


 


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


 


(iii)                               If at any time, the outstanding principal
balance of the Senior Debt is greater than the Total Debt Limiter as of such
date, Borrower will immediately prepay the Senior Debt in accordance with the
provisions of Section 2.05(d) in an aggregate amount equal to
such excess.


 


(iv)                              Within 10 days of delivery to the Agents and
the Lenders of audited annual financial statements pursuant to Section 7.01(a)(ii),
commencing with the delivery to the Agents and the Lenders of the financial
statements for the Fiscal Year ended June 30, 2006 or, if such financial
statements are not delivered to the Agents and the Lenders on the date such
statements are required to be delivered pursuant to Section 7.01(a)(ii),
10 days after the date such statements are required to be delivered to the
Agents and the Lenders pursuant to Section 7.01(a)(ii), the
Borrower shall prepay the outstanding principal amount of the Term Loans in
accordance with the provisions of Section 2.05(d), in an amount equal to
50% of the Excess Cash Flow of the Borrower and its Subsidiaries for such
Fiscal Year.


 


(v)                                 Immediately upon receipt of any proceeds of
any Disposition by any Loan Party or its Subsidiaries other than (x) a
Permitted Disposition (other than a Permitted Disposition of the type described
in clause (b) of the definition of Permitted Dispositions) or (y) a
Disposition described below in Section 2.05(c)(vi), the Borrower shall
prepay the outstanding principal amount of the Senior Debt (or in the case of
such a Disposition of assets that does not include Accounts or Inventory, the
outstanding principal amount of the Term Loans) in accordance with the
provisions of Section 2.05(d), in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such Disposition.  Nothing contained in this clause (v) shall
permit any Loan Party or any of its Subsidiaries to make a Disposition of any
property other than a Permitted Disposition.


 


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


 


38





















 


Subsidiaries (or one or more
business lines maintained by any Loan Party or any of its Subsidiaries)
(including, without limitation, the Disposition described in clause (e) of
the definition of Permitted Dispositions), the Borrower shall prepay the
outstanding principal amount of the Senior Debt in accordance with the
provisions of Section 2.05(d), in an amount equal to 100% of the Net Cash
Proceeds received by such Person in connection with such Disposition. Nothing
contained in this clause (vi) shall permit any Loan Party or any of its
Subsidiaries to make a Disposition of any property other than a Permitted
Disposition.


 


(vii)                           Upon (A) the issuance or incurrence by
any Loan Party or any of its Subsidiaries of any Indebtedness (other than
Indebtedness referred to in clauses (a), (b), (c), (d), (e), (f) and (g) of
the definition of Permitted Indebtedness), the Borrower shall prepay the Term
Loan in accordance with the provisions of Section 2.05(d), in an amount
equal to 100% of the Net Cash Proceeds received by such Person in connection
therewith, and (B) the sale or issuance by any Loan Party or any of its
Subsidiaries of any shares of its Capital Stock, the Borrower shall prepay the
Term Loan in accordance with the provisions of Section 2.05(d), in an
amount equal to 75% of the Net Cash Proceeds received by such Person in
connection therewith.  The provisions of
this subsection (vii) shall not be deemed to be implied consent
to any such issuance, incurrence or sale otherwise prohibited by the terms and
conditions of this Agreement.


 


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


 


(d)                                 Application of Payments.


 


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


 


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


 


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


 


39





















 


(F)                       if the
proceeds are from a Disposition of all or substantially all of the assets or
Stock of any Person or any insurance, which sale, disposition or proceeds of
insurance includes both Accounts Receivable or Inventory and other assets, such
proceeds shall be applied as follows: (x) an amount equal to the net book value
of such Accounts Receivable and Inventory that are the subject of such sale or
other disposition or loss (determined at the time of such sale or disposition
or event resulting in such insurance proceeds), shall be applied first, to the
outstanding principal amount of the First Lien Advances, until paid in full, second,
to cash collateralize the First Lien Letters of Credit in an amount equal to
105% of the undrawn amount thereof, until paid in full, and (y) the remaining
proceeds shall be applied to the outstanding principal amount of the Term Loan,
until paid in full.


 


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


 


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


 


(iv)                              Each
such prepayment of the Term Loan shall, to the extent applicable, be applied
against the remaining installments of principal of the applicable Term Loan in
the inverse order of maturity


 


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


 


40





















 


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


 


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


 


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


 


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


 


Section 2.07                                Securitization.  The
Borrower hereby acknowledges that the Lenders and their Affiliates may sell or
securitize the Loans (a ”Securitization”) through the pledge of the
Loans as collateral security for loans to the Lenders or their Affiliates or
through the sale of the Loans or the issuance of direct or indirect interests
in the Loans, which loans to the Lenders or their Affiliates or direct or
indirect interests will be rated by Moody’s, Standard & Poor’s or one
or more other rating agencies (the “Rating Agencies”).  The Borrower shall cooperate with the Lenders
and their Affiliates to effect the Securitization including by (a) amending
this Agreement and the other Loan Documents, and executing such additional
documents, as reasonably requested by the Lenders in connection with the
Securitization, provided  that (i) any such amendment or
additional documentation does not impose material additional costs on the
Borrower and (ii) any such amendment or additional documentation does not
materially adversely affect the rights, or materially increase the obligations,
of the Borrower under the Loan Documents or change or affect in a manner
adverse to the Borrower the financial terms of the Loans, (b) providing
such information as may be reasonably requested by the Lenders in connection
with the rating of the Loans or the Securitization, and (c) providing in
connection with any rating of the Loans a certificate (i) agreeing to
indemnify the Lenders and their Affiliates, any of the Rating Agencies, or any
party providing credit support or otherwise participating in the Securitization
(collectively, the “Securitization Parties”) for any losses, claims,
damages or liabilities (the ”Liabilities”) to which the Lenders,
their Affiliates or such Securitization Parties may become subject insofar as
the Liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Loan Document or in any
writing delivered by or on behalf of any Loan Party to any Agent or Lender in
connection with any Loan Document or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading, and such
indemnity shall survive any transfer by the Lenders or their successors or
assigns of the Loans and (ii) agreeing to reimburse the Agents, the
Lenders and their Affiliates for any legal or other expenses reasonably
incurred by such Persons in connection with defending the Liabilities.


 


41





















 


Section 2.08                                Taxes.


 


(a)                                  Any
and all payments by any Loan Party hereunder or under any other Loan Document
shall be made free and clear of and without deduction for any and all present
or future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, together with any and all Canadian federal,
provincial and other taxes, levies, imposts, duties, fees, charges, claims and
assessments which are or may become due in respect of any Loan Party, excluding
taxes imposed on the net income of any Agent or any Lender (or any transferee
or assignee thereof, including a participation holder (any such entity, a “Transferee”))
by the jurisdiction in which such Person is organized or has its principal
lending office (all such nonexcluded taxes, levies, imposts, deductions,
charges withholdings and liabilities, collectively or individually, “Taxes”).  If any Loan Party shall be required to deduct
any Taxes from or in respect of any sum payable hereunder to any Agent or any
Lender (or any Transferee), (i) the sum payable shall be increased by the
amount (an “additional amount”) necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 2.08) such Agent or such Lender (or such
Transferee) shall receive an amount equal to the sum it would have received had
no such deductions been made, (ii) such Loan Party shall make such
deductions and (iii) such Loan Party shall pay the full amount deducted to
the relevant Governmental Authority in accordance with applicable law.


 


(b)                                 In
addition, each Loan Party agrees to pay to the relevant Governmental Authority
in accordance with applicable law any present or future stamp or documentary taxes
or any other excise or property taxes, charges or similar levies that arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this Agreement or any other Loan Document (“Other
Taxes”).  Each Loan Party shall
deliver to each Agent and each Lender official receipts in respect of any Taxes
or Other Taxes payable hereunder promptly after payment of such Taxes or Other
Taxes.


 


(c)                                  The
Loan Parties hereby jointly and severally indemnify and agree to hold each
Agent and each Lender harmless from and against Taxes and Other Taxes
(including, Taxes and Other Taxes imposed on any amounts payable under this Section 2.08)
paid by such Person, whether or not such Taxes or Other Taxes were correctly or
legally asserted.  Such indemnification
shall be paid within 10 days from the date on which any such Person makes
written demand therefore specifying in reasonable detail the nature and amount
of such Taxes or Other Taxes.


 


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


 


42





















 


payments of interest hereunder.  In addition, in the case of a Non-U.S. Lender
claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Internal Revenue Code, such Non-U.S. Lender hereby
represents to the Agents and the Borrower that such Non-U.S. Lender is not a
bank for purposes of Section 881(c) of the Internal Revenue Code, is
not a 10-percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Internal Revenue Code) of the Borrower and is not a controlled foreign
corporation related to the Borrower (within the meaning of Section 864(d)(4) of
the Internal Revenue Code), and such Non-U.S. Lender agrees that it shall
promptly notify the Agents in the event any such representation is no longer
accurate.  Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement and on or before the date, if any, such Non-U.S. Lender changes its
applicable lending office by designating a different lending office (a “New
Lending Office”).  In addition, such
Non-U.S. Lender shall deliver such forms within 20 days after receipt of a
written request therefor from any Agent, the assigning Lender or the Lender
granting a participation, as applicable. 
Notwithstanding any other provision of this Section 2.08, a
Non-U.S. Lender shall not be required to deliver any form pursuant to this Section 2.08(d) that
such Non-U.S. Lender is not legally able to deliver.


 


(e)                                  The
Loan Parties shall not be required to indemnify any Non-U.S. Lender, or pay any
additional amounts to any Non-U.S. Lender, in respect of United States Federal
withholding tax pursuant to this Section 2.08 to the extent that (i) the
obligation to withhold amounts with respect to United States Federal
withholding tax existed on the date such Non-U.S. Lender became a party to this
Agreement (or, in the case of a Transferee that is a participation holder, on
the date such participation holder became a Transferee hereunder) or, with
respect to payments to a New Lending Office, the date such Non-U.S. Lender
designated such New Lending Office with respect to a Loan; provided, however,
that this clause (i) shall not apply to the extent the indemnity payment
or additional amounts any Transferee, or Lender (or Transferee) through a New Lending
Office, would be entitled to receive (without regard to this clause (i)) do not
exceed the indemnity payment or additional amounts that the Person making the
assignment, participation or transfer to such Transferee, or Lender (or
Transferee) making the designation of such New Lending Office, would have been
entitled to receive in the absence of such assignment, participation, transfer
or designation, or (ii) the obligation to pay such additional amounts
would not have arisen but for a failure by such Non-U.S. Lender to comply with
the provisions of clause (d) above.


 


(f)                                    The
obligations of the Loan Parties under this Section 2.08 shall survive the
termination of this Agreement and the payment of the Loans and all other
amounts payable hereunder.


 


43





















 


ARTICLE III


 


[INTENTIONALLY
OMITTED]


 


ARTICLE IV


 


FEES,
PAYMENTS AND OTHER COMPENSATION


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(c)                                  In each instance, so long as no Event of
Default has occurred and is continuing, Section 4.04(b) shall
not be deemed to apply to any payment by the Borrower specified by the Borrower
to the Administrative Agent to be for the payment of Term Loan Obligations then
due and payable under any provision of this Agreement or the prepayment of all
or part of the principal of the Term Loan in accordance with the terms and
conditions of Section 2.05.


 


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(d)                                 For
purposes of Section 4.04(b), “paid in full” means with respect to
any Obligations, payment of all amounts owing under the Loan Documents in
respect of such Obligations, including fees, interest, default interest,
interest on interest, expense reimbursements and indemnities, specifically
including in each case any of the foregoing which would accrue after the
commencement of any Insolvency Proceeding irrespective of whether a claim is
allowable in such Insolvency Proceeding.


 


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


 


Section 4.05                                Increased Costs and Reduced Return.  (a)  If any Lender or
any Agent shall have determined that the adoption or implementation of, or any
change in, any law, rule, treaty or regulation, or any policy, guideline or
directive of, or any change in, the interpretation or administration thereof
by, any court, central bank or other administrative or Governmental Authority,
or compliance by any Lender or any Agent or any Person controlling any such Lender
or any such Agent with any directive of, or guideline from, any central bank or
other Governmental Authority or the introduction of, or change in, any
accounting principles applicable to any Lender, any Agent or any Person
controlling any such Lender, any such Agent (in each case, whether or not
having the force of law), shall (i) subject any Lender, any Agent or any
Person controlling any such Lender or any such Agent to any tax, duty or other
charge with respect to this Agreement or any Loan made by such Lender or such
Agent or change the basis of taxation of payments to any Lender, any Agent or
any Person controlling any such Lender or any such Agent of any amounts payable
hereunder (except for taxes on the overall net income of any Lender, any Agent or
any Person controlling any such Lender or any such Agent), (ii) impose,
modify or deem applicable any reserve, special deposit or similar requirement
against any Loan, or against assets of or held by, or deposits with or for the
account of, or credit extended by, any Lender, any Agent or any Person
controlling any such Lender or any such Agent or (iii) impose on any
Lender, any Agent or any Person controlling any such Lender or any such Agent
any other condition regarding this Agreement or any Loan, and the result of any
event referred to in clauses (i), (ii) or (iii) above shall be to
increase the cost to any Lender or any Agent of making any Loan, or agreeing to
make any Loan or to reduce any amount received or receivable by any Lender or
any Agent hereunder, then, within three (3) Business Days of demand by any
such Lender or any such Agent, the Borrower shall pay to such Lender or such
Agent such additional amounts as will compensate such Lender, or such Agent for
such increased costs or reductions in amount.


 


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


 


46





















 


by any Lender, any Agent or
any Person controlling such Lender or such Agent with any Capital Guideline or
with any request or directive of any such Governmental Authority with respect
to any Capital Guideline, or the implementation of, or any change in, any
applicable accounting principles (in each case, whether or not having the force
of law), either (i) affects or would affect the amount of capital required
or expected to be maintained by any Lender, any Agent or any Person controlling
such Lender or such Agent and any Lender or any Agent determines that the
amount of such capital is increased as a direct or indirect consequence of any
Loans made or maintained, any Lender’s, any Agent’s or any such other
controlling Person’s other obligations hereunder, or (ii) has or would
have the effect of reducing the rate of return on any Lender’s, any Agent’s or
any such other controlling Person’s capital to a level below that which such
Lender, such Agent or such controlling Person could have achieved but for such
circumstances as a consequence of any Loans made or maintained, or any
agreement to make Loans, or such Lender’s, such Agent’s or such other
controlling Person’s other obligations hereunder (in each case, taking into
consideration, such Lender’s, or such Agent’s or such other controlling Person’s
policies with respect to capital adequacy), then, within three (3) Business
Days of demand by any Lender or any Agent, the Borrower shall pay to such Lender
or such Agent from time to time such additional amounts as will compensate such
Lender or such Agent for such cost of maintaining such increased capital or
such reduction in the rate of return on such Lender’s or such Agent’s or such
other controlling Person’s capital.


 


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


 


ARTICLE V


 


CONDITIONS
TO LOANS


 


Section 5.01                                Conditions Precedent.  The
obligation of any Lender to make the initial Loans (or any other Person to
otherwise to extend any credit provided for hereunder), is subject to the
fulfillment, to the satisfaction of the Agents, of each of the conditions
precedent set forth below:


 


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


 


(b)                                 Representations and Warranties; No Event of
Default.  The following statements shall be true and
correct:  (i) the representations
and warranties contained in Article VI and in each other Loan Document,
certificate or other writing delivered to any Agent or any Lender pursuant
hereto or thereto on or prior to the Effective Date are true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text


 


47





















 


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


 


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


 


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


 


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


 


(ii)                                  the
Canadian Documents,


 


(iii)                               the Designated Account
Control Agreement, duly executed by Borrower, First Lien Agent and Wells Fargo
Bank, N.A.,


 


(iv)                              [intentionally omitted]


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


(xiii)                          a true and complete copy of the charter,
certificate of formation, certificate of limited partnership or other publicly
filed organizational document of each Loan Party certified as of a recent date
not more than 30 days prior to the Effective Date by an appropriate official of
the state of organization of such Loan Party which shall set forth the same
complete name of such Loan Party as is set forth herein and the organizational
number of such Loan Party, if an organized number is issued in such
jurisdiction;


 


(xiv)                         a copy of the charter and by-laws, limited
liability company agreement, operating agreement, agreement of limited
partnership or other organizational document of each Loan Party, together with
all amendments thereto, certified as of the Effective Date by the secretary of
such Loan Party;


 


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


 


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


 


(xvii)                      a copy of the Financial Statements;


 


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


 


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


 


49





















 


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


 


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


 


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


 


(xxiii)                     a certificate of the secretary of the
Borrower, certifying the names and true signatures of the persons that are
authorized to provide Notices of Borrowing, and all other notices under this
Agreement and the other Loan Documents;


 


(xxiv)                    copies of the Material Contracts as in effect
on the Effective Date, certified as true and correct copies thereof by the
secretary of the Borrower, together with a certificate of the secretary of the
Borrower stating that such agreements remain in full force and effect and that
none of the Loan Parties has breached or defaulted in any of its obligations
under such agreements;


 


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


 


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


 


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


 


(e)                                  Material Adverse Effect.  The
Collateral Agent shall have determined, in its sole judgment, that no event or
development shall have occurred since June 30, 2005 which could reasonably
be expected to result in a Material Adverse Effect.


 


(f)                                    Italian Financing Proceeds.  The
Agents shall have received such evidence as they shall require to evidence that
Borrower has received Net Cash Proceeds from the Italian Financing Transaction
of any least $3,000,000 in immediately available funds.


 


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


 


(h)                                 Management Reference Checks.  The
Collateral Agent shall have received satisfactory reference checks for key
management of each Loan Party.


 


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


 


(j)                                     First Lien Loan Documents.  The
Agents shall have received copies of each First Lien Loan Document, together
with a certificate of the Secretary of Borrower certifying that as of the
Effective Date (i) each such document is a true, correct, and complete
copy thereof, (ii) such documents have been entered into by the Borrower
and Guarantors in compliance with all Applicable Laws and all necessary
approvals and are in full force and effect, and (iii) there is no (A) litigation,
investigation or proceeding (judicial or administrative) pending or, to the
best knowledge of Borrower, threatened, against Borrower or any Guarantor, or
any of their respective Subsidiaries by any Governmental Authority arising out
of the transactions contemplated by or effected in connection with the First
Lien Loan Documents or the Loan Documents, (B) injunction, writ or
restraining order restraining or prohibiting the transactions contemplated by
the First Lien Loan Documents or the consummation of the financing arrangements
contemplated under the Loan Documents, or (C) suit, action, investigation
proceeding (judicial or administrative) or ERISA Event pending or, to the best
knowledge of Borrower, threatened against Borrower, any Guarantor or any of
their respective Subsidiaries which could reasonably be expected to cause a
Material Adverse Effect.  In addition,
simultaneously with the extensions of the credit by the Lenders to the Borrower
on the Effective Date, the parties to the First Lien Loan Documents shall have
consummated all transactions contemplated thereby and furnished to the Agents
evidence thereof in form and substance satisfactory to the Agents.


 


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


 


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


 


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


 


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


 


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


 


(b)                                 Representations and Warranties; No Event of
Default.  The following statements shall be true and
correct, and the submission by the Borrower to the Administrative Agent of a
Notice of Borrowing with respect to each such Loan, and the Borrower’s
acceptance of the proceeds of such Loan, shall each be deemed to be a
representation and warranty by each Loan Party on the date of such Loan
that:  (i) the representations and
warranties contained in Article VI and in each other Loan Document,
certificate or other writing delivered to any Agent or any Lender pursuant
hereto or thereto on or prior to the date of such Loan are true and correct in
all material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) on and as of such date as though
made on and as of such date (or to the extent that such representations and
warranties relate solely to an earlier date, on and as of such earlier date),
and (ii) at the time of and after giving effect to the making of such Loan
and the application of the proceeds thereof, no Default or Event of Default has
occurred and is continuing or would result from the making of the Loan to be
made.


 


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


 


(d)                                 Legality.  The making of such Loan shall
not contravene any law, rule or regulation applicable to any Agent or any
Lender.


 


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


 


ARTICLE VI


 


REPRESENTATIONS
AND WARRANTIES


 


Section 6.01                                Representations and Warranties.  Each
Loan Party hereby represents and warrants to the Agents and the Lenders as
follows:


 


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


 


52





















 


standing under the laws of
the state or jurisdiction of its organization, (ii) has all requisite
power and authority to conduct its business as now conducted and as currently
contemplated and, in the case of the Borrower, to make the borrowings
hereunder, and to execute and deliver each Loan Document to which it is a
party, and to consummate the transactions contemplated thereby, and (iii) is
duly qualified to do business and is in good standing in each jurisdiction in
which the character of the properties owned or leased by it or in which the
transaction of its business makes such qualification necessary.


 


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


 


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


 


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


 


(e)                                  Subsidiaries.  Schedule 6.01(e) is
a complete and correct description of the name, jurisdiction of incorporation
and ownership of the outstanding Capital Stock of Borrower and each Subsidiary
of the Borrower (other than the Excluded Foreign Subsidiaries).  All of the issued and outstanding shares of
Capital Stock of such Subsidiaries have been validly issued and are fully paid
and nonassessable, and the holders thereof are not entitled to any preemptive,
first refusal or other similar rights. 
Except as indicated on such Schedule, all such Capital Stock is owned by
the Borrower or one or more of its wholly-owned Subsidiaries, free and clear of
all Liens.  There are no outstanding debt
or equity securities of the Borrower or any of its Subsidiaries and no
outstanding obligations of the Borrower or any of its Subsidiaries convertible
into or exchangeable for, or warrants, options or other rights for the purchase
or acquisition from the Borrower or any of its Subsidiaries, or other
obligations of any Subsidiary to issue, directly or indirectly, any shares of
Capital Stock of any Subsidiary of the Borrower.


 


53





















 


(f)                                    Litigation; Commercial Tort Claims. 
Except as set forth in Schedule 6.01(f), (i) there is
no pending or, to the knowledge of any Loan Party or any of their respective
Subsidiaries, threatened action, suit or proceeding affecting any Loan Party or
any of their respective Subsidiaries before any court or other Governmental Authority
or any arbitrator that (A) if adversely determined, could reasonably be
expected to result in a Material Adverse Effect or (B) relates to this
Agreement or any other Loan Document or any transaction contemplated hereby or
thereby and (ii) as of the Effective Date, none of the Loan Parties holds
any commercial tort claims in respect of which a claim has been filed in a
court of law or a written notice by an attorney has been given to a potential
defendant.


 


(g)                                 Financial Condition.


 


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


 


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


 


(h)                                 Compliance with Law, Etc.  No
Loan Party or any of their respective Subsidiaries is in violation of its
organizational documents, any law, rule, regulation, judgment or order of any
Governmental Authority applicable to it or any of its property or assets, or
any material term of any agreement or instrument (including any Material
Contract) binding on or otherwise affecting it or any of its properties.


 


(i)                                     ERISA.


 


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


 


54





















 


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


 


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


 


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


 


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


 


(vi)                              The
execution and delivery of this Agreement and the consummation of the transactions
contemplated hereunder will not involve any transaction that is subject to the
prohibitions of Section 406 of ERISA or in connection with which taxes
could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the IRC.


 


(vii)                           All liabilities under each
Plan are (i) funded to at least the minimum level required by law or, if
higher, to the level required by the terms governing the Plans, (ii) insured
with a reputable insurance company, (iii) provided for or recognized in
the financial statements most recently delivered to Agent pursuant to Section 7.01(a) hereof
to the extent required by GAAP or (iv) estimated in the formal notes to
the financial statements most recently delivered to Agent pursuant to Section 7.01(a) hereof
to the extent required by GAAP.


 


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


 


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


 


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(x)                                   Except
as set forth in Schedule 6.01(i), Mondel, has no, and is not
subject to, any present or future obligation or liability under, any pension
plan, deferred compensation plan, retirement income plan, stock option or stock
purchase plan, profit sharing plan, bonus plan or policy, employee group
insurance plan, program policy or practice, formal or informal, with respect to
its employees.


 


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


 


(xii)                             All of the Canadian
Employee Plans are and have been established, registered, qualified, invested
and administered in all respects in accordance with all Laws applicable to the
Canadian Employee Plans.  No fact or
circumstance exists that could adversely affect the tax-exempt status of a
Canadian Employee Plan.


 


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


 


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


 


(xv)                            Mondel
has furnished to the Agents true, correct and complete copies of all the
Canadian Employee Plans as amended as of the date hereof together with all
related documentation including funding agreements, actuarial reports, funding
and financial information returns and statements, all professional opinions
(whether or not internally prepared) with respect to each Canadian Employee
Plan, all material internal memoranda concerning the Canadian Employee Plans,
copies of material correspondence with all regulatory authorities with respect
to each Canadian Employee Plan and plan summaries, booklets and personnel
manuals.  No material changes have
occurred to the Canadian Employee Plans or are expected to occur which would
affect the actuarial reports or financial statements required to be provided to
Lenders pursuant to this Section 6.01(i).


 


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


 


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


 


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


 


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


 


(l)                                     Nature of Business.  No
Loan Party or any of their respective Subsidiaries is engaged in any business
other than the manufacturing and distribution of electronic instruments,
controls, components and systems.


 


(m)                               Adverse Agreements, Etc.  Except
as set forth on Schedule 6.01(f), no Loan Party or any of their
respective Subsidiaries is a party to any agreement or instrument, or subject
to any charter, limited liability company agreement, partnership agreement or
other corporate, partnership or limited liability company restriction or any
judgment, order, regulation, ruling or other requirement of a court or other
Governmental Authority, which has, or could reasonably be expected to result
in, a Material Adverse Effect.


 


(n)                                 Permits, Etc.  Each
Loan Party and each of their respective Subsidiaries (other than the Excluded
Foreign Subsidiaries) has, and is in compliance with, all permits, licenses,
authorizations, approvals, entitlements and accreditations required for such
Person lawfully to own, lease, manage or operate, or to acquire, each business
currently owned, leased, managed or operated, or to be acquired, by such
Person.  No condition exists or event has
occurred which, in itself or with the giving of notice or lapse of time or
both, would result in the suspension, revocation, impairment, forfeiture or
non-renewal of any such permit, license, authorization, approval, entitlement
or accreditation, and there is no claim that any thereof is not in full force
and effect.


 


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(o)                                 Properties.  (i)  Each Loan Party and each of their
respective Subsidiaries has good and marketable title to, valid leasehold
interests in, or valid licenses to use, all property and assets material to its
business, free and clear of all Liens, except Permitted Liens.  All such properties and assets are in good
working order and condition, ordinary wear and tear excepted.


 


(ii)                                  Schedule 6.01(o) sets forth a complete and accurate list, as
of the Effective Date, of the location, by state and street address, of all
real property owned or leased by any Loan Party or any of their respective
Subsidiaries.  Each Loan Party and each
of their respective Subsidiaries has valid leasehold interests in the Leases
described on Schedule 6.01(o) to which it is a party.  Schedule 6.01(o) sets forth with
respect to each such Lease, the commencement date, termination date, renewal
options (if any) and annual base rents. 
Each such Lease is valid and enforceable in accordance with its terms in
all material respects and is in full force and effect.  No consent or approval of any landlord or
other third party in connection with any such Lease is necessary for any Loan
Party or any of their respective Subsidiaries to enter into and execute the Loan
Documents to which it is a party, except as set forth on Schedule 6.01(o).  To the knowledge of any Loan Party or any of
their respective Subsidiaries, no other party to any such Lease is in default
of its obligations thereunder, and no Loan Party or any of their respective
Subsidiaries (or any other party to any such Lease) has at any time delivered
or received any notice of default which remains uncured under any such Lease
and, as of the Effective Date, no event has occurred which, with the giving of
notice or the passage of time or both, would constitute a default under any
such Lease.


 


(p)                                 Full Disclosure.  Each
Loan Party and each of their respective Subsidiaries has disclosed to the
Agents all agreements, instruments and corporate or other restrictions to which
it is subject, and all other matters known to it, that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse
Effect.  None of the other reports,
financial statements, certificates or other information furnished by or on
behalf of any Loan Party or any of their respective Subsidiaries to the Agents
in connection with the negotiation of this Agreement, the Loan Documents, or
any First Lien Loan Document, or delivered hereunder or thereunder (as modified
or supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which it was made,
not misleading.  There is no contingent
liability or fact that could reasonably be expected to result in a Material
Adverse Effect which has not been set forth in a footnote included in the
Financial Statements or a Schedule hereto.


 


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


 


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


 


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Effect; (iii) no
Environmental Action has been asserted against Borrower or any of its
Subsidiaries or any predecessor in interest nor does any Loan Party have
knowledge or notice of any threatened or pending Environmental Action against
Borrower or any of its Subsidiaries or any predecessor in interest which could
reasonably be expected to result in a Material Adverse Effect; (iv) no
Environmental Actions have been asserted against any facilities that may have
received Hazardous Materials generated by Borrower or any of its Subsidiaries
or any predecessor in interest which could reasonably be expected to result in
a Material Adverse Effect; (v) no property now or formerly owned or
occupied by Borrower or any of its Subsidiaries has been used as a treatment or
disposal site for any Hazardous Material; (vi) neither Borrower nor any of
its Subsidiaries has failed to report to the proper Governmental Authority the
occurrence of any Release which is required to be so reported by any
Environmental Laws which could reasonably be expected to result in a Material
Adverse Effect; (vii) Borrower and each of its Subsidiaries holds all
licenses, permits and approvals required under any Environmental Laws in
connection with the operation of the business carried on by it, except for such
licenses, permits and approvals as to which Borrower’s or the applicable
Subsidiary’s failure to maintain or comply with could not reasonably be
expected to result in a Material Adverse Effect; (viii) neither Borrower
nor any of its Subsidiaries has received any notification pursuant to any
Environmental Laws that (A) any work, repairs, construction or Capital
Expenditures are required to be made in respect as a condition of continued
compliance with any Environmental Laws, or any license, permit or approval
issued pursuant thereto or (B) any license, permit or approval referred to
above is about to be reviewed, made subject to limitations or conditions,
revoked, withdrawn or terminated, in each case, except as could not reasonably
be expected to result in a Material Adverse Effect; and (ix) neither
Borrower nor any of its Subsidiaries has received notice that a Lien arising
under any Environmental Law has attached to any revenues or to any Real
Property owned or operated by Borrower or any of its Subsidiaries.


 


(s)                                  Insurance.  Each Loan Party and each of
its Subsidiaries (other than the Excluded Foreign Subsidiaries) keeps its
property adequately insured and maintains (i) insurance to such extent and
against such risks, including fire, as is customary with companies in the same
or similar businesses, (ii) worker’s compensation insurance in the amount
required by applicable law, (iii) public liability insurance, which shall
include product liability insurance, in the amount customary with companies in
the same or similar business against claims for personal injury or death on
properties owned, occupied or controlled by it, and (iv) such other
insurance as may be required by law or as may be reasonably required by the
Collateral Agent (including against larceny, embezzlement or other criminal
misappropriation).  Schedule 6.01(s)
sets forth a list of all insurance maintained by each Loan Party on the
Effective Date.


 


(t)                                    Use of Proceeds.  The
proceeds of the Loans shall be used, if necessary, to (i) fund a portion
of any payments that are made in connection with a full and final resolution of
the litigation regarding the Arbitration Award or any full and final settlement
in respect thereof in accordance with the terms of this Agreement and (ii) pay
fees and expenses in connection with the transactions contemplated hereby (with
any proceeds remaining after the full and final satisfaction of the Arbitration
Award to be released to Borrower for use for its general working capital
purposes in accordance with the terms of this Agreement).


 


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


 


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


 


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


 


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


 


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(y)                                 Holding Company and Investment Company Acts.  None
of the Loan Parties is (i) a “holding company” or a “subsidiary company”
of a “holding company” or an “affiliate” of a “holding company”, as such terms
are defined in the Public Utility Holding Company Act of 1935, as amended, or (ii) an
“investment company” or an “affiliated person” or “promoter” of, or “principal
underwriter” of or for, an “investment company”, as such terms are defined in
the Investment Company Act of 1940, as amended.


 


(z)                                   Employee and Labor Matters. 
There is (i) no unfair labor practice complaint pending or, to the
knowledge of any Loan Party or any of its Subsidiaries, threatened against any
Loan Party or any of its Subsidiaries before any Governmental Authority and no
grievance or arbitration proceeding pending or threatened against any Loan
Party or any of its Subsidiaries which arises out of or under any collective
bargaining agreement, (ii) no strike, labor dispute, slowdown, stoppage or
similar action or grievance pending or threatened against any Loan Party or any
of its Subsidiaries or (iii) to the knowledge of any Loan Party or any of
its Subsidiaries, no union representation question existing with respect to the
employees of any Loan Party or any of its Subsidiaries and no union organizing
activity taking place with respect to any of the employees of any Loan Party or
any of its Subsidiaries.  No Loan Party,
any of its Subsidiaries or any of their respective ERISA Affiliates has
incurred any liability or obligation under the Worker Adjustment and Retraining
Notification Act (“WARN”) or similar state law, which remains unpaid or
unsatisfied.  The hours worked and payments
made to employees of any Loan Party or any of its Subsidiaries have not been in
violation of the Fair Labor Standards Act or any other applicable legal
requirements, except to the extent such violations could not, individually or
in the aggregate, reasonably be expected to result in a Material Adverse
Effect.  All material payments due from
any Loan Party or any of its Subsidiaries on account of wages and employee
health and welfare insurance and other benefits have been paid or accrued as a
liability on the books of such Loan Party or such Subsidiary, except where the
failure to do so could not, individually or in the aggregate, reasonably be
expected to result in a Material Adverse Effect.


 


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


 


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


 


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(cc)                            Separate Existence.


 


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


 


(ii)                                  Each Loan Party and each of their respective
Subsidiaries has at all times since its formation accurately maintained its
financial statements, accounting records and other organizational documents
separate from those of any Affiliate of such Loan Party or such Subsidiary and
any other Person.  No Loan Party or any
of their respective Subsidiaries has at any time since its formation commingled
its assets with those of any of its Affiliates or any other Person.  Each Loan Party and each of their respective
Subsidiaries has at all times since its formation accurately maintained its own
bank accounts and separate books of account.


 


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


 


(iv)                              Each Loan Party and each of their respective
Subsidiaries has at all times since its formation identified itself in all
dealings with the public, under its own name and as a separate and distinct
Person.  No Loan Party or any of its
Subsidiaries has at any time since its formation identified itself as being a
division or a part of any other Person.


 


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


 


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


 


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


 


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


 


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security interest in the
Collateral covered thereby.  Upon the
filing of the financing statements described in Section 5.01(d)(iv),
such security interests in and Liens on the Collateral granted thereby shall be
perfected, first priority security interests (subject to Permitted Liens), and
no further recordings or filings are or will be required in connection with the
creation, perfection or enforcement of such security interests and Liens.


 


(hh)                          Indebtedness.  Set
forth on Schedule 6.01(hh) is a true and complete list of all
Indebtedness of Borrower, each Guarantor and each of their respective
Subsidiaries outstanding immediately prior to the Effective Date that is to
remain outstanding after the Effective Date and such Schedule accurately
reflects the holder of, the aggregate outstanding principal amount of, the
interest rate applicable to, the maturity date of, and any guaranties of or
collateral securing, (in each case) such Indebtedness, and accurately lists the
date, title and parties to any and all written documents or agreements
evidencing such Indebtedness.


 


(ii)                                  First Lien Loan Documents. 
Borrower has delivered to each Agent true and correct copies of the
First Lien Loan Documents.  The
transactions contemplated by the First Lien Loan Documents will be consummated (a) contemporaneously
with the making of the initial Loan hereunder and (b) in accordance with
their respective terms.  All of the
representations and warranties of the Loan Parties contained in the First Lien
Loan Documents are true and correct in all material respects (except that such
materiality qualifier shall not be applicable to any representations and
warranties that already are qualified or modified by materiality in the text
thereof) as of the Effective Date or, to the extent that any such
representation or warranty relates solely to an earlier date, as of such
earlier date.


 


(jj)                                  Schedules.  All of the information which
is required to be scheduled to this Agreement is set forth on the Schedules
attached hereto, is correct and accurate in all material respects and does not
omit to state any information material thereto.


 


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


 


(ll)                                  Representations and Warranties in Documents;
No Default.  All representations and warranties set forth
in this Agreement and the other Loan Documents are true and correct in all
material respects (except that such materiality qualifier shall not be
applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof) at the time as of which such representations
were made and on the Effective Date or, to the extent that any such
representation or warranty relates solely to an earlier date, as of such
earlier date.  No Event of Default has occurred and is
continuing and no condition exists which constitutes a Default or an Event of
Default.


 


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ARTICLE VII


 


COVENANTS
OF THE LOAN PARTIES


 


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


 


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


 


(i)                                     as soon as available and in any event within
45 days after the end of each fiscal quarter of the Borrower, consolidated and
consolidating balance sheets, consolidated and consolidating statements of
operations and retained earnings and consolidated and consolidating statements
of cash flows of the Borrower and its Subsidiaries as at the end of such
quarter, and for the period commencing at the end of the immediately preceding
Fiscal Year and ending with the end of such quarter, setting forth in each case
in comparative form the figures for the corresponding date or period of the
immediately preceding Fiscal Year, all in reasonable detail and certified by an
Authorized Officer of the Borrower as fairly presenting, in all material
respects, the financial position of the Borrower and its Subsidiaries as of the
end of such quarter and the results of operations and cash flows of the
Borrower and its Subsidiaries for such quarter, in accordance with GAAP applied
in a manner consistent with that of the most recent audited financial
statements of the Borrower and its Subsidiaries furnished to the Agents and the
Lenders, subject to normal year-end audit adjustments and the absence of
footnotes;


 


(ii)                                  as soon as available, and in any event within
90 days after the end of each Fiscal Year of the Borrower and its Subsidiaries,
consolidated and consolidating balance sheets, consolidated and consolidating
statements of operations and retained earnings and consolidated and
consolidating statements of cash flows of the Borrower and its Subsidiaries as
at the end of such Fiscal Year, setting forth in each case in comparative form
the corresponding figures for the immediately preceding Fiscal Year, all in
reasonable detail and prepared in accordance with GAAP, and accompanied by a
report and an unqualified opinion, prepared in accordance with generally
accepted auditing standards, of independent certified public accountants of
recognized standing selected by the Borrower and satisfactory to the Agents
(which opinion shall be without (A) a “going concern” or like qualification
or exception, (B) any qualification or exception as to the scope of such
audit, or (C) any qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 7.03),
together with a written statement of such accountants (1) to the effect
that, in making the examination necessary for their audit of such financial
statements, they have not obtained any knowledge of the existence of an Event
of Default or a Default under Section 7.03 and (2) if such
accountants shall have obtained any knowledge of the existence of an Event of
Default or such Default under Section 7.03, describing the nature
thereof;


 


(iii)                               as soon as available, and in any event within
30 days after the end of each fiscal month of the Borrower and its
Subsidiaries, internally prepared consolidated and consolidating balance
sheets, consolidated and consolidating statements of operations and retained
earnings and consolidated and consolidating statements of cash flows as at the
end of such fiscal month, and for the period commencing at the end of the
immediately preceding Fiscal Year and ending with the end of such fiscal month,
all in reasonable detail and certified by an Authorized Officer of the Borrower
as fairly presenting, in all material respects,


 


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


 


(iv)                              simultaneously with the delivery of the
financial statements of the Borrower and its Subsidiaries required by clauses
(i), (ii) and (iii) of this Section 7.01(a), a
certificate of an Authorized Officer of the Borrower (A) stating that such
Authorized Officer has reviewed the provisions of this Agreement and the other
Loan Documents and has made or caused to be made under his or her supervision a
review of the condition and operations of the Borrower and its Subsidiaries
during the period covered by such financial statements with a view to
determining whether the Borrower and its Subsidiaries were in compliance with
all of the provisions of this Agreement and such Loan Documents at the times
such compliance is required hereby and thereby, and that such review has not
disclosed, and such Authorized Officer has no knowledge of, the existence
during such period of an Event of Default or Default or, if an Event of Default
or Default existed, describing the nature and period of existence thereof and
the action which the Borrower and its Subsidiaries propose to take or have
taken with respect thereto, (B) attaching a schedule showing the
calculation of the financial covenants specified in Section 7.03
and the calculation of the Domestic Leverage Ratio for the twelve month period
ending on the last day of the period covered by such financial statements, and (C) attaching
a report containing a management discussion and analysis from Borrower
of the current status of (i) the ULT Litigation, (ii) the litigation
regarding the Arbitration Award, and (iii) the aggregate outstanding
benefit liabilities of Borrower and its Subsidiaries (as defined in Section 4001(a)(18)
of ERISA) for all Pension Plans (excluding for the purposes of such computation
any Pension Plans with respect to which assets exceed benefit liabilities) and
payment obligations of Borrower and its Subsidiaries in respect of their
Pension Plans which are expected to be due and payable on or before the Final
Maturity Date, together, in each case, with a detailed explanation of the
change in such status since the last report delivered to the Agents pursuant to
this Section 7.01(a)(iv)(C);


 


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


 


(vi)                              no
later than 30 days before the commencement of each Fiscal Year,
financial projections, supplementing and superseding the financial projections
for the  period referred to in Section 6.01(g)(ii)(A),
displayed on a month by month basis and otherwise in form and substance
reasonably satisfactory to the Agents for such Fiscal Year for the Borrower and
its Subsidiaries, all such financial projections to be prepared on a reasonable
basis and in good faith, and to be based on assumptions believed by the
Borrower to be reasonable at the time made and from the best information then
available to the Borrower;


 


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


 


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


 


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


 


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


 


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


 


(xii)                             promptly upon receipt thereof, copies of all
financial reports (including management letters), if any, submitted to any Loan
Party by its auditors in connection with any annual or interim audit of the
books thereof;


 


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


 


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


 


(b)                                 Additional Guaranties and Collateral Security. 
Cause:


 


(i)                                     each Subsidiary of any Loan Party formed or
acquired after the date hereof to execute and deliver to the Collateral Agent
promptly and in any event within 3 Business Days after the formation or
acquisition thereof (A) a Guaranty guaranteeing the Obligations, (B) a
Security Agreement, together with (x) certificates evidencing all of the Capital
Stock of any Person owned by such Subsidiary, (y) undated stock powers executed
in blank with signature guaranteed, and (z) such opinion of counsel and such
approving certificate of such Subsidiary as the Collateral Agent may reasonably
request in respect of complying with any legend on any such certificate or any
other matter relating to such shares, (C) one or more Mortgages creating
on the real property of such Subsidiary a perfected, first priority Lien on
such real


 


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


 


(ii)                                  each owner of the Capital Stock of any such
Subsidiary to execute and deliver promptly and in any event within 3 Business
Days after the formation or acquisition of such Subsidiary a Security
Agreement, together with (A) certificates evidencing all of the Capital
Stock of such Subsidiary, (B) undated stock powers or other appropriate
instruments of assignment executed in blank with signature guaranteed, (C) such
opinion of counsel and such approving certificate of such Subsidiary as the
Collateral Agent may reasonably request in respect of complying with any legend
on any such certificate or any other matter relating to such shares and (D) such
other agreements, instruments, approvals, legal opinions or other documents
requested by the Collateral Agent.


 


Notwithstanding the foregoing, if a
Subsidiary that is so formed or acquired is a Controlled Foreign Corporation
and if Borrower can reasonably demonstrate to each Agent that the granting of a
Lien in the assets of such Subsidiary would result in an increase in tax
liability of Borrower and its Subsidiaries (based on the amount of retained
earnings at the time of such formation or acquisition) in excess of $50,000 per
fiscal year, then clause (i) of the immediately preceding sentence shall
not be applicable and, with respect to clause (ii) of the immediately
preceding sentence, such pledge shall be limited to 66% of the voting power of
all classes of Capital Stock of such Subsidiary entitled to vote; provided,
that immediately upon any amendment of the IRC that would allow the pledge of a
greater percentage of the voting power of Capital Stock in such Subsidiary
without adverse tax consequences, such pledge shall include such greater
percentage of capital Stock of such Subsidiary from that time forward.


 


(c)                                  Compliance with Laws, Etc. 
Comply, and cause each of its Subsidiaries to comply, in all material
respects with all Applicable Laws, rules, regulations and orders (including all
Environmental Laws), such compliance to include, without limitation, (i) paying
before the same become delinquent all taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or upon any of
its properties, and (ii) paying all other lawful claims, including the
Statutory Lien Payments, which if unpaid might become a Lien or charge upon any
of its properties, except, in each case, to the extent contested in good faith
by proper proceedings which stay the imposition of any penalty, fine or Lien
resulting from the non-payment thereof and with respect to which adequate
reserves have been set aside for the payment thereof in accordance with GAAP.


 


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(d)                                 Preservation of Existence, Etc. 
Maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, its existence, rights and privileges, and become or remain, and
cause each of its Subsidiaries to become or remain, duly qualified and in good
standing in each jurisdiction in which the character of the properties owned or
leased by it or in which the transaction of its business makes such
qualification necessary.


 


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


 


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


 


(g)                                 Maintenance of Properties, Etc. 
Maintain and preserve, and cause each of its Subsidiaries to maintain
and preserve, all of its properties which are necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear and
tear excepted, and comply, and cause each of its Subsidiaries to comply, at all
times with the provisions of all leases to which it is a party as lessee or
under which it occupies property, so as to prevent any loss or forfeiture
thereof or thereunder.


 


(h)                                 Maintenance of Insurance. 
Maintain, and cause each of its Subsidiaries (other than the Excluded
Foreign Subsidiaries) to maintain, insurance with responsible and reputable
insurance companies or associations (including comprehensive general liability,
hazard, rent and business interruption insurance) with respect to its
properties (including all real properties leased or owned by it) and business,
in such amounts and covering such risks as is required by any Governmental
Authority having jurisdiction with respect thereto or as is carried generally
in accordance with sound business practice by companies in similar businesses
similarly situated and in any event in amount, adequacy and scope reasonably
satisfactory to the Collateral Agent. 
All policies covering the Collateral are to be made payable to the
Collateral Agent for the benefit of the Agents and the Lenders, as its
interests may appear, in case of loss, under a standard non-contributory “lender”
or “secured party” clause and are to contain such other provisions as the
Collateral Agent may require to fully protect the Lenders’ interest in the
Collateral and to any payments to be made under such policies.  All certificates of insurance are to be
delivered to the Collateral Agent and the policies are to be premium prepaid,
with the loss payable and additional insured endorsement in favor of the
Collateral Agent and such other Persons as the Collateral Agent may designate
from time to time, and shall provide for not less than 30 days prior written
notice to the Collateral Agent of the exercise of any right of
cancellation.  Borrower shall deliver
certified copies of such insurance policies and endorsements to the Agents
within 30 days of the Effective Date.  If
any Loan Party or any of its Subsidiaries (other than the Excluded Foreign
Subsidiaries) fails to maintain such insurance, the Collateral Agent may
arrange for such insurance, but at the Borrower’s expense and without any
responsibility on the Collateral Agent’s part for obtaining the insurance, the
solvency of the insurance companies, the adequacy of the coverage, or the
collection of claims.  Borrower shall


 


68





















 


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


 


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


 


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


 


(k)                                  Further Assurances.  Take
such action and execute, acknowledge and deliver, and cause each of its
Subsidiaries to take such action and execute, acknowledge and deliver, at its
sole cost and expense, such agreements, instruments or other documents as any
Agent may require from time to time in order (i) to carry out more
effectively the purposes of this Agreement and the other Loan Documents, (ii) to
subject to valid and perfected Liens (subject in priority only to Liens
described in clauses (e), (f) and (k) of the definition of Permitted
Liens) any of the Collateral or any other property of any Loan Party and its
Subsidiaries, (iii) to establish and maintain the validity and
effectiveness of any of the Loan


 


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Documents and the validity,
perfection and priority of the Liens intended to be created thereby, and (iv) to
better assure, convey, grant, assign, transfer and confirm unto each Agent and
each Lender the rights now or hereafter intended to be granted to it under this
Agreement or any other Loan Document.  In
furtherance of the foregoing, to the maximum extent permitted by applicable
law, each Loan Party (A) authorizes each Agent to execute any such
agreements, instruments or other documents in such Loan Party’s name and to
file such agreements, instruments or other documents in any appropriate filing
office, (B) authorizes each Agent to file any financing statement required
hereunder or under any other Loan Document, and any continuation statement or
amendment with respect thereto, in any appropriate filing office without the
signature of such Loan Party, and (C) ratifies the filing of any financing
statement, and any continuation statement or amendment with respect thereto,
filed without the signature of such Loan Party prior to the date hereof.


 


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


 


(m)                               Landlord Waivers; Collateral Access
Agreements.


 


(i)                                     At any time any Collateral is located on any
real property of the Borrower or any other Loan Party which is not owned by the
Borrower or any other Loan Party (other than the locations of the Loan Parties
at which Collateral is located on the Effective Date), obtain written
subordinations or waivers, in form and substance satisfactory to the Collateral
Agent, of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral; and


 


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


 


(n)                                 Subordination. Cause all Indebtedness and other
obligations now or hereafter owed by it to any of its Affiliates, to be
subordinated in right of payment and security to the Indebtedness and other
Obligations owing to the Agents and the Lenders in accordance with a
subordination agreement in form and substance satisfactory to the Agents.


 


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(o)                                 After Acquired Real Property.  Upon
the acquisition by it or any of its Subsidiaries of any After Acquired
Property, immediately so notify the Collateral Agent, setting forth with
specificity a description of the interest acquired, the location of the real property,
any structures or improvements thereon and either an appraisal or such Loan
Party’s good-faith estimate of the current value of such real property (for
purposes of this Section, the ”Current Value”).  The Collateral Agent shall notify such Loan
Party whether it intends to require a Mortgage and the other documents referred
to below or in the case of leasehold, a leasehold Mortgage or landlord’s waiver
(pursuant to Section 7.01(m) hereof); provided that the
Collateral Agent shall not require a Mortgage or a leasehold Mortgage upon the
acquisition of any After Acquired Property by a Subsidiary that is a Controlled
Foreign Corporation and is not a Loan Party. 
Upon receipt of such notice requesting a Mortgage, the Person which has
acquired such After Acquired Property shall immediately furnish to the
Collateral Agent the following, each in form and substance satisfactory to the
Collateral Agent:  (i) a Mortgage
with respect to such real property and related assets located at the After
Acquired Property, each duly executed by such Person and in recordable form; (ii) evidence
of the recording of the Mortgage referred to in clause (i) above in such
office or offices as may be necessary or, in the opinion of the Collateral
Agent, desirable to create and perfect a valid and enforceable first priority
lien on the property purported to be covered thereby or to otherwise protect
the rights of the Agents and the Lenders thereunder, (iii) a Title
Insurance Policy, (iv) a survey of such real property, certified to the
Collateral Agent and to the issuer of the Title Insurance Policy by a licensed
professional surveyor reasonably satisfactory to the Collateral Agent, (v) Phase
I Environmental Site Assessments with respect to such real property, certified
to the Collateral Agent by a company reasonably satisfactory to the Collateral
Agent, and (vi) such other documents or instruments (including guarantees
and opinions of counsel) as the Collateral Agent may reasonably require.  The Borrower shall pay all fees and expenses,
including reasonable attorneys’ fees and expenses, and all title insurance
charges and premiums, in connection with each Loan Party’s obligations under
this Section 7.01(o).


 


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


 


(q)                                 ERISA.


 


(i)                                     (A) maintain
each Plan in compliance in all material respects with the applicable provisions
of ERISA, the IRC and each other applicable federal or state law; (B) cause
each Qualified Plan to maintain its qualified status under Section 401(a) of
the IRC; (C) make all required contributions to each Plan; (D) not
become a party to any Multiemployer Plan; (E) ensure that all liabilities
under each Plan are (X) funded to at least the minimum level required by law
or, if higher, to the level required by the terms governing such Plan; (Y)
insured with a reputable insurance company with respect to fiduciary liability;
and (Z) provided for or recognized in the financial statements most recently
delivered to each Agent under Section 7.01(a) (to the extent
required by GAAP); and (F) ensure that the contributions or premium
payments to or in respect of each Plan are and continue to be promptly paid at
no less than the rates required under the rules of such Plan and in
accordance with the most recent actuarial advice received in relation to such
Plan and applicable law.


 


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(ii)                                  Deliver
to each Agent such certifications or other evidence of compliance with the
provisions of Section 6.01(i) as either Agent may from time to
time reasonably request.


 


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


 


(A)                              an ERISA Event;


 


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


 


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


 


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


 


(iv)                              Promptly
deliver to each Agent copies of (A) each Schedule B (Actuarial
Information) to the annual report (Form 5500 Series) filed by Borrower,
any of its Subsidiaries or any ERISA Affiliates with the Internal Revenue
Service with respect to each Pension Plan; (B) all notices received by
Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates
from a Multiemployer Plan sponsor concerning an ERISA Event; and (C) such
other documents or governmental reports or filings relating to any Plan as
either Agent shall reasonably request.


 


(r)                                    Disclosure
Updates.  Promptly and in no event
later than 5 Business Days after obtaining knowledge thereof, notify each Agent
if any written information, exhibit, or report furnished to either Agent or any
Lender contained, at the time it was furnished, any untrue statement of a
material fact or omitted to state any material fact necessary to make the
statements contained therein not misleading in light of the circumstances in
which made.  The foregoing to the
contrary notwithstanding, any notification pursuant to the foregoing provision
will not cure or remedy the effect of the prior untrue statement of a material
fact or omission of any material fact nor shall any such notification have the
effect of amending or modifying this Agreement or any of the Schedules hereto.


 


(s)                                  Control
Agreements.  Take all reasonable
steps in order for Collateral Agent to obtain control in accordance with
Sections 8-106, 9-104, 9-105, 9-106, and 9-107 of the Code with respect to
(subject to the proviso contained in Section 7.02(e)) all of its
Securities Accounts, Deposit Accounts, electronic chattel paper, investment
property, and letter of credit rights.


 


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(t)                                    First
Lien Loan Documents.


 


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


 


(ii)                                  Promptly
provide each Agent with true and complete copies of any and all material
documents delivered to any Person pursuant to, or in connection with the First
Lien Loan Documents.


 


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


 


(v)                                 Post-Closing
Requirements.


 


(i)                                     Within
10 days after the Effective Date, deliver to Collateral Agent all original
certificates representing the shares of Capital Stock pledged under the Security
Agreement along with Capital Stock powers with respect thereto endorsed in
blank.


 


(ii)                                  Within
20 days after the Effective Date, deliver to Collateral Agent a landlord waiver, duly executed and
delivered by each party thereto and in form and substance satisfactory to the
Collateral Agent, with respect to each of the 
following locations and Persons: (i) 8966 Mason Avenue, Chatsworth,
CA; (ii) N49 W13650 Campbell Drive, Menomonee Falls, WI; (iii) N50
W13605 Overview Drive, Menomonee Falls, WI; (iv) W136 N4863 Campbell
Drive, Menomonee Falls, WI; and (v)  MTI Electronics, Inc..


 


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


 


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


 


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


 


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(vi)                              Within
30 days after the Effective Date, deliver to each Agent consolidated and
consolidating financial statements of Borrower and its Subsidiaries for their
Fiscal Year ended June 30, 2005, audited by independent certified public
accountants reasonably acceptable to each Agent and certified, without any
qualifications (including any (i) “going concern” or like qualification or
exception, (ii) qualification or exception as to the scope of such audit,
or (iii) qualification which relates to the treatment or classification of
any item and which, as a condition to the removal of such qualification, would
require an adjustment to such item) by such accountants to have been prepared
in accordance with GAAP (such audited financial statements to include a balance
sheet, income statement, and statement of cash flow and, if prepared, such
accountants’ letter to management), with such financial statements being materially
consistent, as determined by each Agent, with the preliminary set of such
financial statements previously provided by Borrower to each Agent.


 


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


 


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


 


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


 


(c)                                  Fundamental
Changes; Dispositions.  Wind-up,
liquidate, dissolve, or suffer any liquidation or dissolution, suspend or go
out of a substantial part of its or their business, or merge, consolidate or
amalgamate with any Person, enter into any reorganization or reclassify its
Capital Stock, or convey, sell, lease or sublease, license, assign, transfer or
otherwise dispose of, whether in one transaction or a series of related
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired (or agree to do any of the foregoing), or purchase
or otherwise acquire, whether in one transaction or a series of related
transactions, all or substantially all of the assets of any Person (or any
division thereof) (or agree to do any of the foregoing), or permit any of its
Subsidiaries to do any of the foregoing; provided, however, that
any Loan Party and its Subsidiaries may make Permitted Dispositions.


 


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


 


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


 


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


 


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


 


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


 


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


 


(j)                                     Transactions with Affiliates. 
Enter into, renew, extend or be a party to, or permit any of its
Subsidiaries to enter into, renew, extend or be a party to, any transaction or
series of related transactions (including the purchase, sale, lease, transfer
or exchange of property or assets of any kind or the rendering of services of
any kind) with any Affiliate, except (i) in the ordinary course of
business in a manner and to an extent consistent with past practice and
necessary or desirable for the prudent operation of its business, for fair
consideration and on terms no less favorable to it or its Subsidiaries than
would be obtainable in a comparable arm’s length transaction with a Person that
is not an Affiliate thereof, (ii) if such transactions involve one or more
payments by Borrower or any of its Subsidiaries in excess of $100,000 and are
fully disclosed to each Agent, and (iii) transactions permitted by Section 7.02(e) or
(h).


 


(k)                                  Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries.  Create or otherwise cause,
incur, assume, suffer or permit to exist or become effective any consensual
encumbrance or restriction of any kind on the ability of any Subsidiary of any
Loan Party (i) to pay dividends or to make any other distribution on any
shares of Capital Stock of such Subsidiary owned by any Loan Party or any of
its Subsidiaries, (ii) to pay or prepay or to subordinate any Indebtedness
owed to any Loan Party or any of its Subsidiaries, (iii) to make loans or
advances to any Loan Party or any of its Subsidiaries or


 


76





















 


(iv) to transfer any of
its property or assets to any Loan Party or any of its Subsidiaries, or permit
any of its Subsidiaries to do any of the foregoing; provided, however, that nothing
in any of clauses (i) through (iv) of this Section 7.02(k)
shall prohibit or restrict compliance with:


 


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


 


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


 


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


 


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


 


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


 


(l)                                     Limitation on Issuance of Capital Stock. Except for the issuance or sale of common
stock or Permitted Preferred Stock by the Borrower, issue or sell or enter into
any agreement or arrangement for the issuance and sale of, or permit any of its
Subsidiaries to issue or sell or enter into any agreement or arrangement for
the issuance and sale of, any shares of its Capital Stock, any securities
convertible into or exchangeable for its Capital Stock or any warrants.


 


(m)                               Modifications of Indebtedness, Organizational
Documents and Certain Other Agreements; Etc.  (i) Amend, modify or
otherwise change (or permit the amendment, modification or other change in any
manner of) any of the provisions of any of its or its Subsidiaries’
Indebtedness (other than the First Lien Obligations and the Subordinated Debt)
or of any instrument or agreement (including any purchase agreement, indenture,
loan agreement or security agreement) relating to any such Indebtedness, if
such amendment, modification or change would shorten the final maturity or
average life to maturity of, or require any payment to be made earlier than the
date originally scheduled on, such Indebtedness, would increase the interest
rate applicable to such Indebtedness, would change the subordination
provisions, if any, of such Indebtedness, or would otherwise be adverse to the
Lenders or the issuer of such Indebtedness in any respect, (ii) amend,
modify or otherwise change (or permit the amendment, modification or other
change in any manner of) any Subordinated Debt unless expressly permitted under
the terms of any Subordination Agreement which is an agreement to which either
Agent is a party, (iii) amend, modify or otherwise change (or permit the
amendment, modification or other change in any manner of) any of the provisions
of the First Lien Credit Agreement or any other First Lien Loan Document to the
extent such amendment, modification or waiver is prohibited pursuant to the
terms of the Intercreditor Agreement, (iv) except for the Obligations and
payments of (A) the Subordinated Debt expressly permitted pursuant to the


 


77





















 


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


 


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


 


(o)                                 [Intentionally Omitted]


 


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


 


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


 


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


 


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


 


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


 


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


 


	
  Leverage Ratio

  	
   

  	
  Fiscal Quarter End

  
	
   

  	
   

  	
   

  
	
  4.10:1.00

  	
   

  	
  September 30, 2005

  
	
   

  	
   

  	
   

  
	
  4.40:1.00

  	
   

  	
  December 31, 2005

  
	
   

  	
   

  	
   

  
	
  3.75:1.00

  	
   

  	
  March 31, 2006

  
	
   

  	
   

  	
   

  
	
  3.25:1.00

  	
   

  	
  June 30, 2006 and the last day of each
  fiscal quarter thereafter

  



 


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


 


	
  Fixed Charge Coverage Ratio

  	
   

  	
  Fiscal Quarter End

  
	
   

  	
   

  	
   

  
	
  2.00:1.00

  	
   

  	
  3 months ending September 30, 2005

  
	
   

  	
   

  	
   

  
	
  2.00:1.00

  	
   

  	
  6 months ending December 31, 2005

  
	
   

  	
   

  	
   

  
	
  1.75:1.00

  	
   

  	
  9 months ending March 31, 2006

  
	
   

  	
   

  	
   

  
	
  1.75:1.00

  	
   

  	
  12 months ending June 30, 2006 and the
  12 months ending on the last day of each fiscal quarter thereafter

  



 


79





















 


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


 


	
  Consolidated EBITDA

  	
   

  	
  Fiscal Quarter End

  
	
   

  	
   

  	
   

  
	
  $

  	
  13,000,000

  	
   

  	
  September 30, 2005

  
	
   

  	
   

  	
   

  
	
  $

  	
  12,400,000

  	
   

  	
  December 31, 2005

  
	
   

  	
   

  	
   

  
	
  $

  	
  14,700,000

  	
   

  	
  March 31, 2006

  
	
   

  	
   

  	
   

  
	
  $

  	
  17,000,000

  	
   

  	
  June 30, 2006 and the last day of each
  fiscal quarter thereafter

  



 


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


 


	
  Consolidated EBITDA

  	
   

  	
  Fiscal Quarter End

  
	
   

  	
   

  	
   

  
	
  $

  	
  8,500,000

  	
   

  	
  September 30, 2005

  
	
   

  	
   

  	
   

  
	
  $

  	
  8,500,000

  	
   

  	
  December 31, 2005

  
	
   

  	
   

  	
   

  
	
  $

  	
  8,500,000

  	
   

  	
  March 31, 2006

  
	
   

  	
   

  	
   

  
	
  $

  	
  8,500,000

  	
   

  	
  June 30, 2006 and the last day of each
  fiscal quarter thereafter

  



 


ARTICLE VIII


 


MANAGEMENT,
COLLECTION AND STATUS OF

ACCOUNTS RECEIVABLE AND OTHER COLLATERAL


 


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


 


80





















 


“Lockboxes”) with the
financial institutions set forth on Schedule 8.01 hereto or such
other financial institutions selected by the Borrower and acceptable to the
Administrative Agent in its sole discretion (each being referred to as a “Lockbox
Bank”), and (ii) establishing, and during the term of this Agreement,
maintaining an account (a “Collection Account” and, collectively, the “Collection
Accounts”) in the name of the First Lien Agent (or after the First Lien
Termination Date, in the name of Administrative Agent) with each Lockbox
Bank.  The Loan Parties shall irrevocably
instruct its Account Debtors, with respect to Accounts Receivable of the Loan
Parties, to remit all payments to be made by checks or other drafts to the
Lockboxes and to remit all payments to be made by wire transfer or by Automated
Clearing House, Inc. payment as directed by the First Lien Agent and shall
instruct each Lockbox Bank to deposit all amounts received in its Lockbox to
the Collection Account at such Lockbox Bank on the day received or, if such day
is not a Business Day, on the next succeeding Business Day.  Until the Administrative Agent has advised
the Borrower to the contrary after the occurrence and during the continuance of
an Event of Default, the Loan Parties may and will enforce, collect and receive
all amounts owing on the Accounts Receivable of the Loan Parties for the
Administrative Agent’s benefit and on the Administrative Agent’s behalf, but at
the Borrower’s expense; such privilege shall terminate, at the election of any
Agent, upon the occurrence and during the continuance of an Event of
Default.  All checks, drafts, notes,
money orders, acceptances, cash and other evidences of Indebtedness received
directly by any Loan Party from any Account Debtor, as proceeds from Accounts
Receivable of the Loan Parties, or as proceeds of any other Collateral, shall
be held by such Loan Party in trust for the Agents and the Lenders and upon
receipt be deposited by such Loan Party in original form and no later than the
next Business Day after receipt thereof into a Collection Account.  The Loan Parties shall not commingle such
collections with such Loan Party’s own funds or the funds of any Subsidiary or
Affiliate of such Loan Party or with the proceeds of any assets not included in
the Collateral.  All funds received in
the Collection Account shall be sent by wire transfer or Automated Clearing
House, Inc. payment to First Lien Agent.  No
checks, drafts or other instruments received by the Administrative Agent shall
constitute final payment to the Administrative Agent unless and until such
checks, drafts or instruments have actually been collected.


 


(b)                                 After the occurrence and during the
continuance of an Event of Default, the Collateral Agent may send a notice of
assignment or notice of the Lenders’ security interest to any and all Account
Debtors and, thereafter, the Collateral Agent (subject to the terms of the
Intercreditor Agreement) shall have the sole right to collect the Accounts
Receivable and payment intangibles of the Loan Parties and their respective
Subsidiaries or take possession of the Collateral and the books and records
relating thereto.  After the occurrence
and during the continuation of an Event of Default, the Loan Parties and their
respective Subsidiaries shall not, without prior written consent of the
Collateral Agent, grant any extension of time of payment of any Account
Receivable or payment intangible, compromise or settle any Account Receivable
or payment intangible for less than the full amount thereof, release, in whole
or in part, any Person or property liable for the payment thereof, or allow any
credit or discount whatsoever thereon.


 


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


 


81





















 


Party’s name on any invoice
or bill of lading relating to any of the Accounts Receivable or payment
intangibles of the such Loan Party, drafts against Account Debtors with respect
to Accounts Receivable or payment intangibles of such Loan Party, assignments
and verifications of Accounts Receivable or payment intangibles and notices to
Account Debtors with respect to Accounts Receivable or payment intangibles of
such Loan Party, (iii) send verification of Accounts Receivable of the
Loan Parties, and (iv) notify the Postal Service authorities to change the
address for delivery of mail addressed to the Loan Parties to such address as
such Agent may designate and to do all other acts and things necessary to carry
out this Agreement; provided that such Agent or designee, simultaneously
with such notification, shall provide a copy of such notification to the
Borrower.  All acts of said attorney or
designee are hereby ratified and approved, and said attorney or designee shall
not be liable for any acts of omission or commission (other than acts of
omission or commission constituting gross negligence or willful misconduct as
determined by a final judgment of a court of competent jurisdiction), or for
any error of judgment or mistake of fact or law; this power being coupled with
an interest is irrevocable until all of the Loans and other Obligations under
the Loan Documents are paid in full and all of the Commitments are terminated.


 


(d)                                 Nothing herein contained shall be construed
to constitute any Agent as agent of any Loan Party for any purpose whatsoever,
and the Agents shall not be responsible or liable for any shortage,
discrepancy, damage, loss or destruction of any part of the Collateral wherever
the same may be located and regardless of the cause thereof (other than from
acts of omission or commission constituting gross negligence or willful
misconduct as determined by a final judgment of a court of competent
jurisdiction).  The Agents shall not,
under any circumstance or in any event whatsoever, have any liability for any
error or omission or delay of any kind occurring in the settlement, collection
or payment of any of the Accounts Receivable of the Loan Parties or any
instrument received in payment thereof or for any damage resulting therefrom
(other than acts of omission or commission constituting gross negligence or
willful misconduct as determined by a final judgment of a court of competent
jurisdiction).  The Agents, by anything
herein or in any assignment or otherwise, do not assume any of the obligations
under any contract or agreement assigned to any Agent and shall not be
responsible in any way for the performance by the Loan Parties of any of the
terms and conditions thereof.


 


(e)                                  If any Account Receivable of any Loan Party
includes a charge for any tax payable to any Governmental Authority, each Agent
is hereby authorized (but in no event obligated) in its discretion to pay the
amount thereof to the proper taxing authority for such Loan Party’s account and
to charge the Loan Parties therefor.  The
Loan Parties shall notify the Agents if any Account Receivable of the Loan
Parties includes any taxes due to any such Governmental Authority and, in the
absence of such notice, the Agents shall have the right to retain the full
proceeds of such Account Receivable and shall not be liable for any taxes that
may be due by reason of the sale and delivery creating such Account Receivable.


 


(f)                                    Notwithstanding any other terms set forth in
the Loan Documents, the rights and remedies of the Agents and the Lenders
herein provided, and the obligations of the Loan Parties set forth herein, are
cumulative of, may be exercised singly or concurrently with, and are not
exclusive of, any other rights, remedies or obligations set forth in any other
Loan Document or as provided by law.


 


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


 


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


 


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Section 8.04                                Collateral Custodian.  Upon
the occurrence and during the continuance of any Event of Default, the
Collateral Agent may at any time and from time to time employ and maintain on
the premises of any Loan Party a custodian selected by the Collateral Agent who
shall have full authority to do all acts necessary to protect the Agents’ and
the Lenders’ interests.  Each Loan Party
hereby agrees to, and to cause its Subsidiaries to, cooperate with any such
custodian and to do whatever the Collateral Agent may reasonably request to
preserve the Collateral.  All costs and
expenses incurred by the Collateral Agent by reason of the employment of the
custodian shall be the responsibility of the Loan Parties and charged to the
Loan Account.


 


ARTICLE IX


 


EVENTS
OF DEFAULT


 


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


 


(a)                                  the Borrower shall fail to pay any principal
of or interest on any Loan, any Collateral Agent Advance, or any fee, indemnity
or other amount payable under this Agreement or any other Loan Document when
due (whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise);


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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


 


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(j)                                     one or more judgments or orders for the
payment of money exceeding $100,000 in the aggregate shall be rendered against
Borrower or any of its Subsidiaries and remain unsatisfied, or the Borrower or
any of its Subsidiaries shall agree to the settlement of any one or more
pending or threatened actions, suits or proceedings affecting any Loan Party
before any court or other Governmental Authority or any arbitrator or mediator,
providing for the payment of money exceeding $100,000 in the aggregate, and in
the case of any such judgment or order either (i) enforcement proceedings
shall have been commenced by any creditor upon any such judgment or order, or (ii) there
shall be a period of 10 consecutive days after entry thereof during which a
stay of enforcement of any such judgment or order, by reason of a pending
appeal or otherwise, shall not be in effect; provided, however,
that any such judgment, order or settlement shall not give rise to an Event of
Default under this subsection (k) if and for so long as (A) the
amount of such judgment, order, or settlement is covered by a valid and binding
policy of insurance between the defendant and the insurer covering full payment
thereof (subject to customary deductibles) and (B) such insurer has been
notified, and has not disputed the claim made for payment, of the amount of
such judgment, order or settlement; provided, further, that the Arbitration
Award shall not give rise to an Event of Default under this clause (k) so long
as the Arbitration Award is paid in accordance with the terms of this Agreement
or vacated pursuant to a final non-appealable court order by a court of
competent jurisdiction.


 


(k)                                  the Borrower or any of its Subsidiaries is
enjoined, restrained or in any way prevented by the order of any court or any
Governmental Authority from conducting all or any material part of its business
for more than 15 days;


 


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


 


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


 


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


 


(o)                                 the indictment, or the threatened indictment
of the Borrower or any of its Subsidiaries under any criminal statute, or
commencement or threatened commencement of criminal or civil proceedings
against any Loan Party, pursuant to which statute or proceedings the penalties
or remedies sought or available include forfeiture to any Governmental
Authority of any material portion of the property of such Person;


 


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


 


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


 


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


 


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


 


(t)                                    a Triggering Event has occurred and is
continuing;


 


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


 


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


 


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


 


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


 


ARTICLE X


 


AGENTS


 


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


 


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and Collateral Agent
Advances, for such Agent or on behalf of the applicable Lenders as provided in
this Agreement or any other Loan Document; (vi) to perform, exercise, and
enforce any and all other rights and remedies of the Lenders with respect to
the Loan Parties, the Obligations, or otherwise related to any of same to the
extent reasonably incidental to the exercise by such Agent of the rights and
remedies specifically authorized to be exercised by such Agent by the terms of
this Agreement or any other Loan Document; (vii)  to incur and pay such
fees necessary or appropriate for the performance and fulfillment of its
functions and powers pursuant to this Agreement or any other Loan Document; and
(viii) subject to Section 10.03 of this Agreement, to take
such action as such Agent deems appropriate on its behalf to administer the
Loans and the Loan Documents and to exercise such other powers delegated to
such Agent by the terms hereof or the other Loan Documents (including the power
to give or to refuse to give notices, waivers, consents, approvals and
instructions and the power to make or to refuse to make determinations and
calculations) together with such powers as are reasonably incidental thereto to
carry out the purposes hereof and thereof. 
As to any matters not expressly provided for by this Agreement and the
other Loan Documents (including enforcement or collection of the Loans), the
Agents shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully
protected in so acting or refraining from acting) upon the instructions of the
Required Lenders, and such instructions of the Required Lenders shall be
binding upon all Lenders and all makers of Loans.


 


Section 10.02                          Nature of Duties.  The
Agents shall have no duties or responsibilities except those expressly set
forth in this Agreement or in the other Loan Documents.  The duties of the Agents shall be mechanical
and administrative in nature.  The Agents
shall not have by reason of this Agreement or any other Loan Document a
fiduciary relationship in respect of any Lender.  Nothing in this Agreement or any other Loan
Document, express or implied, is intended to or shall be construed to impose
upon the Agents any obligations in respect of this Agreement or any other Loan
Document except as expressly set forth herein or therein.  Each Lender shall make its own independent
investigation of the financial condition and affairs of the Loan Parties in
connection with the making and the continuance of the Loans hereunder and shall
make its own appraisal of the creditworthiness of the Loan Parties and the
value of the Collateral, and the Agents shall have no duty or responsibility,
either initially or on a continuing basis, to provide any Lender with any
credit or other information with respect thereto, whether coming into their
possession before the initial Loan hereunder or at any time or times
thereafter, provided that, upon the reasonable request of a Lender, each Agent
shall provide to such Lender any documents or reports delivered to such Agent
by the Loan Parties pursuant to the terms of this Agreement or any other Loan
Document.  If any Agent seeks the consent
or approval of the Required Lenders to the taking or refraining from taking any
action hereunder, such Agent shall send notice thereof to each Lender.  Each Agent shall promptly notify each Lender
any time that the Required Lenders have instructed such Agent to act or refrain
from acting pursuant hereto.


 


Section 10.03                          Rights, Exculpation, Etc.  The
Agents and their directors, officers, agents or employees shall not be liable
for any action taken or omitted to be taken by them under or in connection with
this Agreement or the other Loan Documents, except for their own gross
negligence or willful misconduct as determined by a final judgment of a court
of competent jurisdiction.  Without
limiting the generality of the foregoing, the Agents (i) may treat the
payee of any Loan as the owner thereof until the Collateral Agent receives
written notice of the


 


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assignment or transfer
thereof, pursuant to Section 12.07 hereof, signed by such payee and
in form satisfactory to the Collateral Agent; (ii) may consult with legal
counsel (including counsel to any Agent or counsel to the Loan Parties),
independent public accountants, and other experts selected by any of them and
shall not be liable for any action taken or omitted to be taken in good faith
by any of them in accordance with the advice of such counsel or experts; (iii) make
no warranty or representation to any Lender and shall not be responsible to any
Lender for any statements, certificates, warranties or representations made in
or in connection with this Agreement or the other Loan Documents; (iv) shall
not have any duty to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement or
the other Loan Documents on the part of any Person, the existence or possible
existence of any Default or Event of Default, or to inspect the Collateral or
other property (including the books and records) of any Person; (v) shall
not be responsible to any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the
other Loan Documents or any other instrument or document furnished pursuant
hereto or thereto; and (vi) shall not be deemed to have made any
representation or warranty regarding the existence, value or collectability of
the Collateral, the existence, priority or perfection of the Collateral Agent’s
Lien thereon, or any certificate prepared by any Loan Party in connection
therewith, nor shall the Agents be responsible or liable to the Lenders for any
failure to monitor or maintain any portion of the Collateral. The provisions of
this Section 10.03 are subject to, and shall not limit in any respect, the
provisions of Section 12.07.  The
Agents shall not be liable for any apportionment or distribution of payments
made in good faith pursuant to Section 4.04, and if any such
apportionment or distribution is subsequently determined to have been made in
error the sole recourse of any Lender to whom payment was due but not made,
shall be to recover from other Lenders any payment in excess of the amount
which they are determined to be entitled. 
The Agents may at any time request instructions from the Lenders with
respect to any actions or approvals which by the terms of this Agreement or of
any of the other Loan Documents the Agents are permitted or required to take or
to grant, and if such instructions are promptly requested, the Agents shall be
absolutely entitled to refrain from taking any action or to withhold any
approval under any of the Loan Documents until they shall have received such
instructions from the Required Lenders. 
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against any Agent as a result of such Agent acting or refraining
from acting under this Agreement or any of the other Loan Documents in
accordance with the instructions of the Required Lenders.


 


Section 10.04                          Reliance.  Each Agent shall be entitled
to rely upon any written notices, statements, certificates, orders or other
documents or any telephone message believed by it in good faith to be genuine
and correct and to have been signed, sent or made by the proper Person, and
with respect to all matters pertaining to this Agreement or any of the other
Loan Documents and its duties hereunder or thereunder, upon advice of counsel
selected by it.


 


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


 


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


 


Section 10.06                          Agents Individually.  With
respect to its Pro Rata Share of the Total Term Loan Commitment hereunder and
the Loans made by it, each Agent shall have and may exercise the same rights
and powers hereunder and is subject to the same obligations and liabilities as
and to the extent set forth herein for any other Lender or maker of a
Loan.  The terms “Lenders” or “Required
Lenders” or any similar terms shall, unless the context clearly otherwise indicates,
include each Agent in its individual capacity as a Lender or one of the
Required Lenders.  Each Agent and its
Affiliates may accept deposits from, lend money to, and generally engage in any
kind of banking, trust or other business with the Borrower as if it were not
acting as an Agent pursuant hereto without any duty to account to the other
Lenders.


 


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


 


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


 


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


 


Section 10.08                          Collateral Matters.


 


(a)                                  The Collateral Agent may from time to time
make such disbursements and advances (“Collateral Agent Advances”) which
the Collateral Agent, in its sole discretion, deems necessary or desirable to
preserve, protect, prepare for sale or lease or dispose of the Collateral or
any portion thereof, to enhance the likelihood or maximize the amount of
repayment by the Borrower of the Loans, and other Obligations or to pay any
other amount chargeable to the Borrower pursuant to the terms of this
Agreement, including costs, fees and expenses as described in Section 12.04.  The Collateral Agent Advances shall be
repayable


 


91





















 


on demand and be secured by
the Collateral.  The Collateral Agent
Advances shall constitute Obligations hereunder which may be charged to the
Loan Account in accordance with Section 4.02.  The Collateral Agent shall notify each Lender
and the Borrower in writing of each such Collateral Agent Advance, which notice
shall include a description of the purpose of such Collateral Agent
Advance.  Without limitation to its
obligations pursuant to Section 10.05, each Lender agrees that it
shall make available to the Collateral Agent, upon the Collateral Agent’s
demand, in Dollars in immediately available funds, the amount equal to such
Lender’s Pro Rata Share of each such Collateral Agent Advance.  If such funds are not made available to the
Collateral Agent by such Lender, the Collateral Agent shall be entitled to
recover such funds on demand from such Lender, together with interest thereon
for each day from the date such payment was due until the date such amount is
paid to the Collateral Agent, at the Federal Funds Rate for 3 Business Days and
thereafter at the Reference Rate.


 


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


 


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


 


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


 


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continue exercising, any of
the rights, authorities and powers granted or available to the Collateral Agent
in this Section 10.08 or in any other Loan Document, it being
understood and agreed that in respect of the Collateral, or any act, omission
or event related thereto, the Collateral Agent may act in any manner it may
deem appropriate, in its sole discretion, given the Collateral Agent’s own interest
in the Collateral as one of the Lenders and that the Collateral Agent shall
have no duty or liability whatsoever to any other Lender, except as otherwise
provided herein.


 


Section 10.09                          Agency for Perfection.  Each
Lender hereby appoints each Agent and each other Lender as agent and bailee for
the purpose of perfecting the security interests in and liens upon the
Collateral in assets which, in accordance with Article 9 of the Code (or
under the equivalent section of the PPSA), can be perfected only by
possession or control (or where the security interest of a secured party with
possession or control has priority over the security interest of another
secured party) and each Agent and each Lender hereby acknowledges that it holds
possession or control of any such Collateral for the benefit of the Collateral
Agent as secured party.  Should any
Lender obtain possession or control of any such Collateral, such Lender shall
notify the Collateral Agent thereof, and, promptly upon the Collateral Agent’s
request therefor shall deliver possession or control of such Collateral to the
Collateral Agent or in accordance with the Collateral Agent’s
instructions.  Each Loan Party by
its execution and delivery of this Agreement hereby consents to the foregoing.


 


ARTICLE XI


 


GUARANTY


 


Section 11.01                          Guaranty.  Each Guarantor hereby
unconditionally and irrevocably, jointly and severally guarantees the punctual
payment when due, whether at stated maturity, by acceleration or otherwise, of
all Obligations of the Borrower now or hereafter existing under any Loan
Document, whether for principal, interest (including all interest that accrues
after the commencement of any Insolvency Proceeding irrespective of whether a
claim therefor is allowed in such case or proceeding), fees, expenses or
otherwise (such obligations, to the extent not paid by the Borrower, being
the ”Guaranteed Obligations”), and agrees to pay any and all expenses
(including reasonable counsel fees and expenses) incurred by the Agents or the
Lenders (or any of them) in enforcing any rights under the guaranty set forth
in this Article.  Without limiting the
generality of the foregoing, each Guarantor’s liability shall extend to all
amounts that constitute part of the Guaranteed Obligations and would be owed by
the Borrower to the Agents or the Lenders under any Loan Document but for the
fact that they are unenforceable or not allowable due to the existence of a
bankruptcy, reorganization or similar proceeding involving any Loan Party.


 


Section 11.02                          Guaranty Absolute.  Each
Guarantor guarantees that the Guaranteed Obligations will be paid strictly in
accordance with the terms of the Loan Documents, regardless of any law,
regulation or order now or hereafter in effect in any jurisdiction affecting
any of such terms or the rights of the Agents, the Lenders with respect
thereto.  The obligations of each
Guarantor under this Article are primary and original obligations (and
this Article is not merely the creation of a surety relationship) and are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and


 


93





















 


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


 


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


 


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


 


(c)                                  any taking, exchange, release or
non-perfection of any Collateral, or any taking, release or amendment or waiver
of or consent to departure from any other guaranty, for all or any of the
Guaranteed Obligations;


 


(d)                                 any change, restructuring or termination of
the corporate, limited liability company or partnership structure or existence
of any Loan Party; or


 


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


 


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


 


Section 11.03                          Waiver.


 


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


 


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(b)                                 Each
Guarantor hereby waives any right to revoke this Article, and acknowledges that
this Article is continuing in nature and applies to all Guaranteed
Obligations, whether existing now or in the future.  If such a revocation is effective
notwithstanding the foregoing waiver, each Guarantor acknowledges and agrees
that (a) no such revocation shall be effective until written notice
thereof has been received by each Agent, (b) no such revocation shall
apply to any Guaranteed Obligations in existence on such date (including any
subsequent continuation, extension, or renewal thereof, or change in the
interest rate, payment terms, or other terms and conditions thereof), (c) no
such revocation shall apply to any Guaranteed Obligations made or created after
such date to the extent made or created pursuant to a legally binding
commitment of any Agent or any Lender in existence on the date of such
revocation, (d) no payment by any Guarantor, Borrower, or from any other
source, prior to the date of such revocation shall reduce the maximum
obligation of such Guarantor hereunder in respect of the Guaranteed
Obligations, and (e) any payment by Borrower or from any source other than
Guarantors subsequent to the date of such revocation shall first be applied to
that portion of the Guaranteed Obligations as to which the revocation is
effective and which are not, therefore, guarantied hereunder, and to the extent
so applied shall not reduce the maximum obligation of the Guarantors hereunder.


 


(c)                                  To
the fullest extent permitted by applicable law, each Guarantor hereby waives
the right by statute or otherwise to require any Agent or any Lender, to
institute suit against Borrower or to exhaust any rights and remedies which any
Agent or any Lender has or may have against Borrower.  In this regard, each Guarantor agrees that it
is bound to the payment of each and all Guaranteed Obligations, whether now
existing or hereafter arising, as fully as if the Guaranteed Obligations were
directly owing to the Agents and the Lenders by each Guarantor.  Each Guarantor further waives any defense
arising by reason of any disability or other defense (other than the defense
that the Guaranteed Obligations shall have been performed and paid in the
manner provided for by the applicable Loan Documents, to the extent of any such
payment) of Borrower or by reason of the cessation from any cause whatsoever of
the liability of Borrower in respect thereof.


 


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


 


(e)                                  If
any of the Guaranteed Obligations or the obligations of any Guarantor under
this Article at any time are secured by a mortgage or deed of trust upon
real property, in accordance with the provisions of this Agreement, the
Collateral Agent may elect, upon a default with respect to the Guaranteed
Obligations or the obligations of the Guarantors under this Article, to
foreclose such mortgage or deed of trust judicially or nonjudicially in any
manner permitted by law, before or after enforcing this Article, without
diminishing or affecting


 


95





















 


the liability of such Guarantor hereunder.  Each Guarantor understands that (a) by
virtue of the operation of antideficiency law applicable to nonjudicial
foreclosures, an election by Collateral Agent to nonjudicially foreclose on
such a mortgage or deed of trust probably would have the effect of impairing or
destroying rights of subrogation, reimbursement, contribution, or indemnity of
the Guarantors against Borrower or other guarantors or sureties, and (b) absent
the waiver given by Guarantors herein, such an election would estop the
Collateral Agent from enforcing this Article against such Guarantor.  Understanding the foregoing, and
understanding that each Guarantor hereby is relinquishing a defense to the
enforceability of this Article, each Guarantor hereby waives any right to
assert against Collateral Agent any defense to the enforcement of this Article,
whether denominated “estoppel” or otherwise, based on or arising from an
election by Collateral Agent to nonjudicially foreclose on any such mortgage or
deed of trust.  Each Guarantor
understands that the effect of the foregoing waiver may be that such Guarantor
may have liability hereunder for amounts with respect to which such Guarantor
may be left without rights of subrogation, reimbursement, contribution, or
indemnity against the Borrower, the other Guarantors, or other guarantors or
sureties.  Each Guarantor also agrees
that the “fair market value” provisions of Section 580a of the California
Code of Civil Procedure or any similar laws of any other applicable
jurisdiction shall have no applicability with respect to the determination of
such Guarantor’s liability under this Article.


 


(f)                                    Without
limiting the generality of any other waiver or other provision set forth in
this Article, each Guarantor waives all rights and defenses that such Guarantor
may have if all or part of the Guaranteed Obligations are secured by real
property.  This means, among other
things:


 


(i)                                     In
accordance with the provisions of this Agreement, Collateral Agent may collect
from such Guarantor without first foreclosing on any real or personal property
collateral that may be pledged by such Guarantor, the Borrower, the other
Guarantors, or any other guarantor.


 


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


 


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


 


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


 


(g)                                 This
is an unconditional and irrevocable waiver of any rights and defenses any
Guarantor may have if all or part of the Guaranteed Obligations are secured by real
property.


 


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(h)                                 WITHOUT
LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN
THIS ARTICLE, EACH GUARANTOR HEREBY WAIVES, TO THE MAXIMUM PERMITTED BY LAW,
ANY AND ALL BENEFITS OR DEFENSES ARISING DIRECTLY OR INDIRECTLY UNDER ANY ONE
OR MORE OF CALIFORNIA CIVIL CODE §§ 2787 THROUGH AND INCLUDING § 2855,
CALIFORNIA CODE OF CIVIL PROCEDURE §§ 580a, 580b, 580c, 580d, AND 726, AND
CHAPTER 2 OF TITLE 14 OF THE CALIFORNIA CIVIL CODE OR ANY SIMILAR LAWS OF ANY
OTHER APPLICABLE JURISDICTION.


 


(i)                                     WITHOUT
LIMITING THE GENERALITY OF ANY OTHER WAIVER OR OTHER PROVISION SET FORTH IN
THIS ARTICLE, EACH GUARANTOR WAIVES ALL RIGHTS AND DEFENSES ARISING OUT OF AN
ELECTION OF REMEDIES BY COLLATERAL AGENT, EVEN THOUGH SUCH ELECTION OF
REMEDIES, SUCH AS A NONJUDICIAL FORECLOSURE WITH RESPECT TO SECURITY FOR THE
GUARANTEED OBLIGATIONS, HAS DESTROYED SUCH GUARANTOR’S RIGHTS OF SUBROGATION
AND REIMBURSEMENT AGAINST BORROWER BY THE OPERATION OF APPLICABLE LAW INCLUDING
§580d OF THE CALIFORNIA CODE OF CIVIL PROCEDURE OR ANY SIMILAR LAWS OF ANY
OTHER APPLICABLE JURISDICTION.


 


(j)                                     Without
limiting the generality of any other waiver or other provision set forth in
this Article, each Guarantor hereby agrees as follows:


 


(i)                                     Collateral
Agent’s right to enforce this Article is absolute and is not contingent
upon the genuineness, validity or enforceability of any of the Loan
Documents.  Each Guarantor waives all
benefits and defenses it may have under California Civil Code Section 2810
or any similar laws in any other applicable jurisdiction and agrees that
Collateral Agent’s rights under this Article shall be enforceable even if
Borrower had no liability at the time of execution of the Loan Documents or
later ceases to be liable.


 


(ii)                                  Each
Guarantor waives all benefits and defenses it may have under California Civil
Code Section 2809 or any similar laws in any other applicable jurisdiction
with respect to its obligations under this Article and agrees that each
Agent’s rights under the Loan Documents will remain enforceable even if the
amount secured by the Loan Documents is larger in amount and more burdensome
than that for which the Borrower is responsible.  The enforceability of this Article against
each Guarantor shall continue until such Guarantor is released from the
provisions of this Article pursuant to the provisions of this Agreement or
until all sums due under the Loan Documents have been paid in full and shall
not be limited or affected in any way by any impairment or any diminution or
loss of value of any security or collateral for the Borrower’s obligations
under the Loan Documents, from whatever cause, the failure of any security
interest in any such security or collateral or any disability or other defense
of Borrower, any other Guarantor, or any other guarantor of Borrower’s
obligations under any other Loan Document, any pledgor of collateral for any
Person’s obligations to the Agents and the Lenders or any other Person in
connection with the Loan Documents.


 


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(iii)                               Each Guarantor waives
the right to require Collateral Agent to (A) proceed against Borrower, any
other Guarantor, or any guarantor of Borrower’s obligations under any Loan
Document, any other pledgor of collateral for any Person’s obligations to the
Agents and the Lenders or any other Person in connection with the Guaranteed
Obligations, (B) proceed against or exhaust any other security or
collateral Collateral Agent may hold, or (C) pursue any other right or
remedy for such Guarantor’s benefit, and agrees that Collateral Agent may
exercise its right under this Article without taking any action against
Borrower, any other  Guarantor, or any
other guarantor of Borrower’s obligations under the Loan Documents, any pledgor
of collateral for any Person’s obligations to the Agents and the Lenders or any
other Person in connection with the Guaranteed Obligations, and without
proceeding against or exhausting any security or collateral Collateral Agent holds.


 


(iv)                              Each
Guarantor’s liability with respect to the Guaranteed Obligations shall remain
in full force and effect without regard to, and shall not be impaired or
affected by, nor shall the Guarantor be exonerated or discharged by, any acts
of any Governmental Authority of or in any jurisdiction affecting Borrower,
such Guarantor, any other Guarantor, or any other guarantor of Borrower’s
obligations under the Loan Documents, any pledgor of collateral for any Person’s
obligations to the Agents and the Lenders or any other Person, including any
restrictions on the conversion or exchange of currency or repatriation or
control of funds, a declaration of banking moratorium or any suspension of
payments by banks in any jurisdiction or the imposition by any jurisdiction or
any Governmental Authority thereof or therein of any moratorium on, the
required rescheduling or restructuring of, or required  approval of payments on, any indebtedness in
such jurisdiction, or any total or partial expropriation, confiscation,
nationalization or requisition of any such Person’s property; any war (whether
or not declared), insurrection, revolution, hostile act, civil strife or
similar events occurring in any jurisdiction; or any economic, political,
regulatory or other events in any jurisdiction. The paragraphs in this Article which
refer to certain sections of the California Civil Code and the California Code
of Civil Procedure are included in this Article solely out of an abundance
of caution and shall not be construed to mean that any of the above-referenced
provisions of California law are in any way applicable to this Article.


 


Section 11.04                          Continuing Guaranty; Assignments.  This
Article is a continuing guaranty and shall (a) remain in full force
and effect until the later of (i) the cash payment in full of the
Guaranteed Obligations (other than indemnification obligations as to which no
claim has been made) and all other amounts payable under this Article and (ii) the
Final Maturity Date, (b) be binding upon each Guarantor, its successors
and assigns and (c) inure to the benefit of and be enforceable by the
Agents and the Lenders and their successors, pledgees, transferees and
assigns.  Without limiting the generality
of the foregoing clause (c), any Lender may pledge, assign or otherwise
transfer all or any portion of its rights and obligations under this Agreement
(including all or any portion of its Commitments or its Loans) to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted such Lender herein or otherwise, in each
case as provided in Section 12.07.


 


Section 11.05                          Canadian Obligors.


 


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


 


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(i)                                     Notwithstanding
anything to the contrary contained in this Article or in any Loan
Document, solely to the extent that a court of competent jurisdiction finally
determines that the calculation or determination of interest payable by any
Guarantor that is an entity organized under the laws of Canada or any province
of Canada (a “Canadian Obligor”) in respect of the Obligations pursuant
to this Article and the Loan Documents shall be governed by the laws of
the province of Ontario or the federal laws of Canada.


 


(ii)                                  Whenever
interest payable by any Canadian Obligor is calculated on the basis of a period
which is less than the actual number of days in a calendar year, each rate of
interest determined pursuant to such calculation is, for the purposes of the
Interest Act (Canada), equivalent to such rate multiplied by the actual number
of days in the calendar year in which such rate is to be ascertained and
divided by the number of days used as the basis of such calculation.


 


(iii)                               In no event shall the
aggregate “interest” (as defined in Section 347 of the Criminal Code,
R.S.C. 1985, c. C-46, as the same shall be amended, replaced or re-enacted from
time to time) payable by any Canadian Obligor to any Agent or any Lender under
this Article or any Loan Document exceed the effective annual rate of
interest on the “credit advances” (as defined in that section) under this Article or
such Loan Document lawfully permitted under that section and, if any
payment, collection or demand pursuant to this Article or any Loan
Document in respect of “interest” (as defined in that section) is determined to
be contrary to the provisions of that section, such payment, collection or
demand shall be deemed to have been made by mutual mistake of the Agents, the
Lenders and the Canadian Obligor making such payment and the amount of such
payment or collection shall be refunded by the Agents and the Lenders to such
Canadian Obligor.  For the purposes of
this Article and each other Loan Document to which a Canadian Obligor is a
party, the effective annual rate of interest payable by such Canadian Obligor
shall be determined in accordance with generally accepted actuarial practices
and principles over the term of the Obligations, on the basis of annual
compounding for the lawfully permitted rate of interest and, in the event of a
dispute, a certificate of a Fellow of the Canadian Institute of Actuaries
appointed by Agent for the account of such Canadian Obligor will be conclusive
for the purpose of such determination in the absence of evidence to the
contrary.


 


(iv)                              All
calculations of interest payable by any Canadian Obligor under this Article or
any other Loan Document are to be made on the basis of the nominal interest
rate described herein and therein and not on the basis of effective yearly
rates or on any other basis which gives effect to the principle of deemed
reinvestment of interest.  The parties
acknowledge that there is a material difference between the stated nominal
interest rates and the effective yearly rates of interest and that they are
capable of making the calculations required to determine such effective yearly
rates of interest.


 


(b)                                 Judgment
Currency.  The specification under
this Article of Dollars and payment in the United States is of the
essence.  Each Guarantor’s obligations
hereunder and under the other Loan Documents to make payments in Dollars and
shall not be discharged or satisfied by any tender or recovery pursuant to any
judgment expressed in or converted into any currency other than Dollars, except
to the extent that such tender or recovery results in the effective receipt by
each Agent and each Lender of the full amount of Dollars


 


99





















 


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


 


Section 11.06                          Subrogation.  No Guarantor will exercise any
rights that it may now or hereafter acquire against any Loan Party or any other
guarantor that arise from the existence, payment, performance or enforcement of
such Guarantor’s obligations under this Article, including any right of
subrogation, reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of the Agents and the Lenders
against any Loan Party or any other guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including the right to take or receive from any Loan Party or any
other guarantor, directly or indirectly, in cash or other property or by
set-off or in any other manner, payment or security solely on account of such
claim, remedy or right, unless and until all of the Guaranteed Obligations and
all other amounts payable under this Article shall have been paid in full
in cash and the Final Maturity Date shall have occurred.  If any amount shall be paid to any Guarantor
in violation of the immediately preceding sentence at any time prior to the
later of the payment in full in cash of the Guaranteed Obligations and all
other amounts payable under this Article and the Final Maturity Date, such
amount shall be held in trust for the benefit of the Agents and the Lenders and
shall forthwith be paid to the Agents and the Lenders to be credited and
applied to the Guaranteed Obligations and all other amounts payable under this
Article, whether matured or unmatured, in accordance with the terms of this
Agreement, or to be held as Collateral for any Guaranteed Obligations or other
amounts payable under this Article thereafter arising.  If (i) any Guarantor shall make payment
to the Agents and the Lenders of all or any part of the Guaranteed Obligations,
(ii) all of the Guaranteed Obligations and all other amounts payable under
this Article shall be paid in full in cash and (iii) all Commitments
have been terminated, the Agents and the Lenders will, at such Guarantor’s
request and expense, execute and deliver to such Guarantor appropriate
documents, without recourse and without representation or warranty, necessary
to evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by such Guarantor.


 


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ARTICLE XII


 


MISCELLANEOUS


 


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


 


MAGNETEK,
INC.

8966 Mason Avenue

Chatsworth, California 91311

Attention:  Tina McKnight

Telecopier:  818-727-2219


 


with a copy
to:


 


GIBSON,
DUNN & CRUTCHER LLP

333 South Grand Avenue

Los Angeles, CA  90071

Attention: Jennifer Bellah Maguire, Esq.

Telecopier:  213-229-7520


 


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


 


ABLECO
FINANCE LLC

299 Park Avenue, 23rd Floor

New York, New York  10171

Attention:  Kevin Genda

Telecopier:  212-891-1541


 


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


 


ABLECO
FINANCE LLC

299 Park Avenue, 23rd Floor

New York, New York  10171

Attention:  Kevin Genda

Telecopier:  212-891-1541


 


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in each case
for each Agent, with copies to:


 


CERBERUS
CALIFORNIA, INC.
11812 San Vicente Boulevard, Suite 300

Los Angeles, California  90049

Attention: Michael B. Grenier

Telecopier:  310-826-9203


 


and


 


PAUL,
HASTINGS, JANOFSKY & WALKER LLP
515 South Flower Street

Los Angeles, CA 90071

Attention:  John Francis Hilson, Esq.

Telecopier:  213-996-3300


 


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


 


Section 12.02                          Amendments, Etc.  No
amendment or waiver of any provision of this Agreement or any other Loan
Document, and no consent to any departure by any Loan Party or any of their
respective Subsidiaries therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Required Lenders or by the
Collateral Agent with the consent of the Required Lenders, and then such waiver
or consent shall be effective only in the specific instance and for the
specific purpose for which given, provided, however, that no
amendment, waiver or consent shall (i) increase the Commitment of any
Lender, reduce the principal of, or interest on, the Loans payable to any
Lender, reduce the amount of any fee payable for the account of any Lender, or
postpone or extend any date fixed for any payment of principal of, or interest
or fees on, the Loans payable to any Lender, in each case without the written
consent of any Lender affected thereby, (ii) increase the Total Term Loan
Commitment without the written consent of each Lender, (iii) change the
percentage of the Commitments or of the aggregate unpaid principal amount of
the Loans that is required for the Lenders or any of them to take any action
hereunder, (iv) amend the definition of “Required Lenders”, “Pro Rata
Share” or “Total Debt Limiter”, (v) release all or a substantial portion
of the Collateral (except as otherwise provided in this Agreement and the other
Loan Documents), subordinate any Lien granted in favor of the Collateral Agent
for the benefit of the Agents and the Lenders, or release the Borrower or any
Guarantor or (vi) amend, modify or waive Section 4.04 or this Section 12.02
of this Agreement, in each case, without the written consent of each
Lender.  Notwithstanding the foregoing,
no amendment, waiver or consent shall, unless in writing and signed by an
Agent, affect the rights or duties of such Agent (but not in its capacity as a
Lender) under this Agreement or the other Loan Documents.


 


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Section 12.03                          No Waiver; Remedies, Etc.  No
failure on the part of any Agent or any Lender to exercise, and no delay in
exercising, any right hereunder or under any other Loan Document shall operate
as a waiver thereof; nor shall any single or partial exercise of any right
under any Loan Document preclude any other or further exercise thereof or the
exercise of any other right.  The rights
and remedies of the Agents and the Lenders provided herein and in the other
Loan Documents are cumulative and are in addition to, and not exclusive of, any
rights or remedies provided by law.  The
rights of the Agents and the Lenders under any Loan Document against any party
thereto are not conditional or contingent on any attempt by the Agents and the
Lenders to exercise any of their rights under any other Loan Document against
such party or against any other Person.


 


Section 12.04                          Expenses; Taxes; Attorneys’ Fees.  The
Borrower will pay on demand, all costs and expenses incurred by or on behalf of
each Agent (and, in the case of clauses (b) through (m) below, each
Lender), regardless of whether the transactions contemplated hereby are
consummated, including reasonable fees, costs, client charges and expenses of
counsel for each Agent (and, in the case of clauses (b) through (m) below,
each Lender), accounting, due diligence, periodic field audits, physical
counts, valuations, investigations, searches and filings, monitoring of assets,
appraisals of Collateral, title searches and reviewing environmental
assessments, miscellaneous disbursements, examination, travel, lodging and
meals, arising from or relating to:  (a) the
negotiation, preparation, execution, delivery, performance and administration
of this Agreement and the other Loan Documents (including the preparation of
any additional Loan Documents pursuant to Section 7.01(b) or
the review of any of the agreements, instruments and documents referred to in Section 7.01(f)),
(b) any requested amendments, waivers or consents to this Agreement or the
other Loan Documents whether or not such documents become effective or are
given, (c) the preservation and protection of any of the Lenders’ rights
under this Agreement or the other Loan Documents, (d) the defense of any
claim or action asserted or brought against any Agent or any Lender by any
Person that arises from or relates to this Agreement, any other Loan Document,
the Agents’ or the Lenders’ claims against any Loan Party, or any and all
matters in connection therewith, (e) the commencement or defense of, or
intervention in, any court proceeding arising from or related to this Agreement
or any other Loan Document, (f) the filing of any petition, complaint,
answer, motion or other pleading by any Agent or any Lender, or the taking of
any action in respect of the Collateral or other security, in connection with
this Agreement or any other Loan Document, (g) the protection, collection,
lease, sale, taking possession of or liquidation of, any Collateral or other
security in connection with this Agreement or any other Loan Document, (h) any
attempt to enforce any Lien or security interest in any Collateral or other
security in connection with this Agreement or any other Loan Document, (i) any
attempt to collect from any Loan Party, (j) all liabilities and costs arising
from or in connection with the past, present or future operations of any Loan
Party involving any damage to real or personal property or natural resources or
harm or injury alleged to have resulted from any Release of Hazardous Materials
on, upon or into such property, (k) any Environmental Liabilities and Costs
incurred in connection with the investigation, removal, cleanup or remediation
of any Hazardous Materials present or arising out of the operations of any
facility owned or operated by any Loan Party, (l) any Environmental Liabilities
and Costs incurred in connection with any Environmental Lien, or (m) the
receipt by any Agent or any Lender of any advice from professionals with
respect to any of the foregoing.  Without
limitation of the foregoing or any other provision of any Loan Document:  (x) the Borrower agrees to pay all stamp,
document, transfer, recording or filing taxes or fees and


 


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similar impositions now or
hereafter determined by any Agent or any Lender to be payable in connection
with this Agreement or any other Loan Document, and the Borrower agrees to save
each Agent and each Lender harmless from and against any and all present or
future claims, liabilities or losses with respect to or resulting from any
omission to pay or delay in paying any such taxes, fees or impositions, (y) the
Borrower agrees to pay all broker fees that may become due in connection with
the transactions contemplated by this Agreement and the other Loan Documents,
and (z) if the Borrower fails to perform any covenant or agreement contained
herein or in any other Loan Document, any Agent may itself perform or cause
performance of such covenant or agreement, and the expenses of such Agent
incurred in connection therewith shall be reimbursed on demand by the Borrower.


 


Section 12.05                          Right
of Set-off.


 


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


 


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


 


Section 12.06                          Severability.  Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
portions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.


 


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Section 12.07                          Assignments and
Participations.  (a)  This
Agreement and the other Loan Documents shall be binding upon and inure to the
benefit of each Loan Party and each Agent and each Lender and their respective
successors and assigns; provided, however, that none of the Loan Parties may
assign or transfer any of its rights hereunder or under the other Loan
Documents without the prior written consent of each Lender and any such
assignment without the Lenders’ prior written consent shall be null and void.


 


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


 


(c)                                  By
executing and delivering an Assignment and Acceptance, the assigning Lender and
the assignee thereunder confirm to and agree with each other and the other
parties hereto as follows:  (i) other
than as provided in such Assignment and Acceptance, the assigning Lender makes
no representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement or any other Loan Document or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any
other Loan Document furnished pursuant hereto; (ii) the assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to the financial condition of any Loan Party or any of its Subsidiaries or the
performance or observance by any Loan Party of any of its obligations under
this Agreement or any other Loan Document furnished pursuant hereto; (iii) such
assignee confirms that it has received a copy of this Agreement and the other
Loan Documents, together with such other documents and information it has
deemed appropriate to make its own credit analysis and decision to enter into
such Assignment and Acceptance; (iv) such assignee will, independently and
without reliance upon the assigning Lender, any Agent or any Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement and the other Loan Documents; (v) such assignee appoints
and authorizes the Agents to take such action as agents on its behalf and to
exercise such powers under this Agreement and the other Loan Documents as are
delegated to the Agents by the terms hereof and thereof, together with such
powers as are reasonably incidental hereto and thereto; and (vi) such
assignee agrees that it will perform in accordance with their terms all of the
obligations which by the terms of this Agreement and the other Loan Documents
are required to be performed by it as a Lender.


 


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(d)                                 The
Collateral Agent shall, acting solely for this purpose as a non-fiduciary agent
of the Borrower, maintain, or cause to be maintained at the Payment Office, a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register (the “Register”) for the recordation of the names and addresses
of the Lenders and the Commitments of, and the principal amount of the Loans
(and stated interest thereon) (the “Registered Loans”).  The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and the
Borrower, the Agents and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes of this
Agreement.  The Register shall be
available for inspection by the Administrative Borrower and any Lender at any
reasonable time and from time to time upon reasonable prior notice.


 


(e)                                  Upon
receipt by the Collateral Agent of an Assignment and Acceptance, and subject to
any consent required from the Collateral Agent pursuant to Section 12.07(b) (which
consent of the Collateral Agent must be evidenced by the Collateral Agent’s
execution of an acceptance to such Assignment and Acceptance), the Collateral
Agent shall accept the Assignment and Acceptance and record the information
contained therein in the Register.


 


(f)                                    A
Registered Loan (and the registered note, if any, evidencing the same) may be
assigned or sold in whole or in part only by registration of such assignment or
sale on the Register (and each registered note shall expressly so
provide).  Any assignment or sale of all
or part of such Registered Loan (and the registered note, if any, evidencing
the same) may be effected only by registration of such assignment or sale on
the Register, together with the surrender of the registered note, if any,
evidencing the same duly endorsed by (or accompanied by a written instrument of
assignment or sale duly executed by) the holder of such registered note,
whereupon, at the request of the designated assignee(s) or transferee(s), one
or more new registered notes in the same aggregate principal amount shall be
issued to the designated assignee(s) or transferee(s).  Prior to the registration of assignment or sale
of any Registered Loan (and the registered note, if any, evidencing the same),
the Agents shall treat the Person in whose name such Registered Loan (and the
registered note, if any, evidencing the same) is registered as the owner
thereof for the purpose of receiving all payments thereon, notwithstanding
notice to the contrary.


 


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


 


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


 


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


 


Section 12.07                          Counterparts.  This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which taken together shall constitute one and the same
agreement.  Delivery of an executed
counterpart of this Agreement by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart
of this Agreement by telefacsimile also shall deliver an original executed
counterpart of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect
of this Agreement.  The foregoing shall
apply to each other Loan Document mutatis mutandis.


 


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


 


Section 12.09                          CONSENT TO JURISDICTION;
SERVICE OF PROCESS AND VENUE.  ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE
BROUGHT IN THE COURTS OF THE STATE OF NEW YORK, IN THE COUNTY OF NEW YORK AND
THE BOROUGH OF MANHATTAN OR OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
AGREEMENT, EACH LOAN PARTY HEREBY IRREVOCABLY ACCEPTS IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. EACH LOAN PARTY HEREBY IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND
ALL LEGAL PROCESS, SUMMONS, NOTICES, AND DOCUMENTS IN ANY SUIT, ACTION, OR
PROCEEDING BROUGHT IN THE UNITED STATES OF


 


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AMERICA
ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS BY THE MAILING (BY REGISTERED MAIL OR CERTIFIED MAIL, POSTAGE
PREPAID) OR DELIVERING OF A COPY OF SUCH PROCESS TO SUCH LOAN PARTY, C/O THE
BORROWER, AT THE BORROWER’S ADDRESS FOR NOTICES AS SET FORTH IN SECTION 12.01.  THE LOAN PARTIES AGREE THAT A FINAL JUDGMENT
IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED
IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED
BY LAW.  NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENTS AND THE LENDERS TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
ANY LOAN PARTY IN ANY OTHER JURISDICTION. 
EACH LOAN PARTY HEREBY EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE
TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN ANY
SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM.  TO THE
EXTENT THAT ANY LOAN PARTY HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR
NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, EACH LOAN PARTY HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS.


 


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


 


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


 


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


 


Section 12.13                          Reinstatement; Certain Payments.  If
any claim is ever made upon any Agent or any Lender for repayment or recovery
of any amount or amounts received by such Agent or such Lender in payment or on
account of any of the Obligations, such Agent or such Lender shall give prompt
notice of such claim to each other Agent and Lender and the Borrower, and if
such Agent or such Lender repays all or part of such amount by reason of (i) any
judgment, decree or order of any court or administrative body having
jurisdiction over such Agent or such Lender or any of its property, or (ii) any
good faith settlement or compromise of any such claim effected by such Agent,
such Lender with any such claimant, then and in such event each Loan Party
agrees that (A) any such judgment, decree, order, settlement or compromise
shall be binding upon it notwithstanding the cancellation of any Indebtedness
hereunder or under the other Loan Documents or the termination of this
Agreement or the other Loan Documents, and (B) it shall be and remain
liable to such Agent or such Lender hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by such Agent or such Lender.


 


Section 12.14                          Indemnification.  In
addition to each Loan Party’s other Obligations under this Agreement, each Loan
Party agrees to, jointly and severally, defend, protect, indemnify and hold
harmless each Agent, each Lender and all of their respective officers,
directors, employees, attorneys, consultants and agents (collectively called
the ”Indemnitees”) from and against any and all losses, damages,
liabilities, obligations, penalties, fees, reasonable costs and expenses
(including reasonable attorneys’ fees, costs and expenses) incurred by such
Indemnitees, whether prior to or from and after the Effective Date, whether
direct, indirect or consequential, as a result of or arising from or relating
to or in connection with any of the following: 
(i) the negotiation, preparation, execution or performance or
enforcement of this Agreement, any other Loan Document or of any other document
executed in connection with the transactions contemplated by this Agreement, (ii) any
Agent’s or any Lender’s furnishing of funds to the Borrower under this
Agreement or the other Loan Documents, including the management of any such
Loans, (iii) any matter relating to the financing transactions
contemplated by this Agreement or the other Loan Documents or by any document
executed in connection with the transactions contemplated by this Agreement or
the other Loan Documents, or (iv) any claim, litigation, investigation or
proceeding relating to any of the foregoing, whether or not any Indemnitee is a
party thereto (collectively, the ”Indemnified Matters”); provided,
however, that the Loan Parties shall not have any obligation to any
Indemnitee under this Section 12.15 for any Indemnified Matter
caused by the gross negligence or willful misconduct of such Indemnitee, as
determined by a final judgment of a court of competent jurisdiction.  Such indemnification for all of the foregoing
losses, damages, fees, costs and expenses of the Indemnitees are chargeable
against the Loan Account.  To the extent
that the undertaking to indemnify, pay and hold harmless set forth in this Section 12.15
may be


 


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unenforceable because it is
violative of any law or public policy, each Loan Party shall, jointly and
severally, contribute the maximum portion which it is permitted to pay and
satisfy under applicable law, to the payment and satisfaction of all
Indemnified Matters incurred by the Indemnitees.  This Indemnity shall survive the repayment of
the Obligations and the discharge of the Liens granted under the Loan
Documents.


 


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


 


Section 12.16                          Binding Effect.  This
Agreement shall become effective when it shall have been executed by each Loan
Party, each Agent and each Lender and thereafter shall be binding upon and
inure to the benefit of each Loan Party, each Agent and each Lender, and their
respective successors and assigns, except that the Loan Parties shall not have
the right to assign their rights hereunder or any interest herein without the
prior written consent of each Lender, and any assignment by any Lender shall be
governed by Section 12.07 hereof.


 


Section 12.17                          Interest.  It is the intention of the
parties hereto that each Agent and each Lender shall conform strictly to usury
laws applicable to it.  Accordingly, if
the transactions contemplated hereby or by any other Loan Document would be
usurious as to any Agent or any Lender under laws applicable to it (including
the laws of the United States of America and the State of New York or any other
jurisdiction whose laws may be mandatorily applicable to such Agent or such
Lender notwithstanding the other provisions of this Agreement), then, in that
event, notwithstanding anything to the contrary in this Agreement or any other
Loan Document or any agreement entered into in connection with or as security
for the Obligations, it is agreed as follows: 
(i) the aggregate of all consideration which constitutes interest
under law applicable to any Agent or any Lender that is contracted for, taken,
reserved, charged or received by such Agent or such Lender under this Agreement
or any other Loan Document or agreements or otherwise in connection with the
Obligations shall under no circumstances exceed the maximum amount allowed by
such applicable law, any excess shall be canceled automatically and if
theretofore paid shall be credited by such Agent or such Lender on the
principal amount of the Obligations (or, to the extent that the principal
amount of the Obligations shall have been or would thereby be paid in full,
refunded by such Agent or such Lender, as applicable, to the Borrower); and (ii) in
the event that the maturity of the Obligations is accelerated by reason of any
Event of Default under this Agreement or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest under law applicable to any Agent or any Lender may never include more
than the maximum amount allowed by such applicable law, and excess interest, if
any, provided for in this Agreement or otherwise shall be canceled
automatically by such Agent or such Lender, as applicable, as of the date of
such acceleration or prepayment and, if theretofore paid, shall be credited by
such Agent or such Lender, as applicable, on the principal amount of the
Obligations (or, to the extent that the principal amount of the Obligations
shall have been or would thereby be paid in full, refunded by such Agent or
such Lender to the Borrower).  All sums
paid or agreed to be paid to any Agent or any Lender for the use, forbearance
or detention of sums due hereunder shall, to the extent


 


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permitted by law applicable
to such Agent or such Lender, be amortized, prorated, allocated and spread
throughout the full term of the Loans until payment in full so that the rate or
amount of interest on account of any Loans hereunder does not exceed the
maximum amount allowed by such applicable law. 
If at an time and from time to time (i) the amount of interest
payable to any Agent or any Lender on any date shall be computed at the Highest
Lawful Rate applicable to such Agent or such Lender pursuant to this Section 12.18
and (ii) in respect of any subsequent interest computation period the
amount of interest otherwise payable to such Agent or such Lender would be less
than the amount of interest payable to such Agent or such Lender computed at
the Highest Lawful Rate applicable to such Agent or such Lender, then the
amount of interest payable to such Agent or such Lender in respect of such
subsequent interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to such Agent or such Lender until the total
amount of interest payable to such Agent or such Lender shall equal the total
amount of interest which would have been payable to such Agent or such Lender
if the total amount of interest had been computed without giving effect to this
Section 12.18.


 


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


 


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


 


Section 12.18                          Confidentiality.  Each
Agent and each Lender agrees (on behalf of itself and each of its affiliates,
directors, officers, employees and representatives) to use reasonable
precautions to keep confidential, in accordance with its customary procedures
for handling confidential information of this nature and in accordance with
safe and sound practices of comparable companies, any material non-public
information supplied to it by the Loan Parties pursuant to this Agreement or
the other Loan Documents which is identified in writing by the Loan Parties as
being confidential at the time the same is delivered to such Person (and which
at the time is not, and does not thereafter become, publicly available or
available to such Person from another source not known to be subject to a
confidentiality obligation to such Person not to disclose such information), provided
that nothing herein shall limit the disclosure of any such information (i) to
the extent required by statute, rule, regulation or judicial process, (ii) to
counsel for any Agent or any Lender, (iii) to examiners, auditors,
accountants or Securitization Parties, (iv) in connection with any
litigation to which any Agent or any Lender is a party or (v) to any
assignee or participant (or prospective assignee or participant) so long as
such assignee or participant (or prospective assignee or participant) first
agrees, in writing, to be bound by confidentiality provisions similar in
substance to this Section 12.19. 
Each Agent and each Lender agrees that, upon receipt of a request or
identification of the requirement for disclosure pursuant to clause (iv) hereof,
it will make reasonable efforts to keep the Loan Parties informed of such
request or identification; provided that each Loan Party acknowledges
that each Agent and each Lender may make disclosure as required or requested by
any Governmental Authority or representative thereof and that each Agent and
each Lender may be subject to review by Securitization Parties or other
regulatory agencies and may be required to provide to, or otherwise make
available for review by, the representatives of such parties or agencies any
such non-public information.


 


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Section 12.19                          Waiver of Consequential Damages, Etc.  To
the fullest extent permitted by applicable law, no Loan Party shall assert, and
each Loan Party hereby waives, any claim against any Indemnitee, on any theory
of liability, for special, indirect, consequential or punitive damages (as
opposed to direct or actual damages) arising out of, in connection with, or as
a result of, this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby, the transactions contemplated hereby or
thereby, any Loan or the use of the proceeds thereof.  No Indemnitee shall be liable for any damages
arising from the use by unintended recipients of any information or other
materials distributed by it through telecommunications, electronic or other
information transmission systems in connection with this Agreement or the other
Loan Documents or the transactions contemplated hereby or thereby.


 


Section 12.20                          Public Disclosure. 
Borrower and each of its Subsidiaries agrees that neither they nor any
of their respective Affiliates will issue any press release or other public
disclosure using the name of any Agent, any Lender or any of their respective
Affiliates or referring to this Agreement or any other Loan Document without
the prior written consent of each Agent and such Lender, except to the extent
that such Person is required to do so under applicable law (in which event,
such Person will consult with each Agent and such Lender before issuing such
press release or other public disclosure). 
Borrower and each of its Subsidiaries hereby authorizes each Agent and
each Lender, after consultation with Borrower, to advertise the closing of the
transactions contemplated by this Agreement, and to make appropriate
announcements of the financial arrangements entered into among the parties
hereto, as the Agents and the Lenders shall deem appropriate, including
announcements commonly known as tombstones, in such trade publications, business
journals, newspapers of general circulation and to such selected parties as
such Agent or such Lender shall deem appropriate.


 


Section 12.21                          Section Headings. 
Headings and numbers have been set forth herein for convenience
only.  Unless the contrary is compelled
by the context, everything contained in each Section applies equally to
this entire Agreement.


 


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


 


112





















 


IN WITNESS WHEREOF, the parties hereto have
caused this Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.


 


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  MAGNETEK,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Reiland

  	
   

  
	
   

  	
  Name: David
  P. Reiland

  
	
   

  	
  Title:
  Executive VP & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  ADS POWER, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Reiland

  	
   

  
	
   

  	
  Name: David
  P. Reiland

  
	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  MONDEL HOLDING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Reiland

  	
   

  
	
   

  	
  Name: David
  P. Reiland

  
	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONDEL
  ULC

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Reiland

  	
   

  
	
   

  	
  Name: David
  P. Reiland

  
	
   

  	
  Title:
  President

  



 





















 


	
   

  	
  MAGNETEK
  NATIONAL ELECTRIC COIL,

  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Reiland

  	
   

  
	
   

  	
  Name: David
  P. Reiland

  
	
   

  	
  Title:
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  ALTERNATIVE ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P. Reiland

  	
   

  
	
   

  	
  Name: David
  P. Reiland

  
	
   

  	
  Title: VP
  & Chief Financial Officer

  



 


114





















 


	
   

  	
  COLLATERAL
  AGENT AND LENDER:

  
	
   

  	
   

  
	
   

  	
  ABLECO
  FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin
  Genda

  	
   

  
	
   

  	
   

  	
  Name: Kevin
  Genda

  
	
   

  	
   

  	
  Title: Senior
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  ADMINISTRATIVE
  AGENT AND LENDER:

  
	
   

  	
   

  
	
   

  	
  ABLECO
  FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kevin
  Genda

  	
   

  
	
   

  	
   

  	
  Name: Kevin
  Genda

  
	
   

  	
   

  	
  Title:
  Senior Vice President

  



 


115





















 


SCHEDULE AND EXHIBITS


 


 


	
  Schedule F-1

  	
   

  	
  Facilities

  
	
  Schedule T-1

  	
   

  	
  TTM EBITDA

  
	
  Schedule 1.01(A)

  	
   

  	
  Commitments

  
	
  Schedule 6.01(e)

  	
   

  	
  Subsidiaries

  
	
  Schedule 6.01(f)

  	
   

  	
  Litigation; Commercial Tort Claims

  
	
  Schedule 6.01(i)

  	
   

  	
  ERISA

  
	
  Schedule 6.01(o)

  	
   

  	
  Real Property

  
	
  Schedule 6.01(q)

  	
   

  	
  Operating Leases

  
	
  Schedule 6.01(r)

  	
   

  	
  Environmental Matters

  
	
  Schedule 6.01(s)

  	
   

  	
  Insurance

  
	
  Schedule 6.01(v)

  	
   

  	
  Bank Accounts

  
	
  Schedule 6.01(w)

  	
   

  	
  Intellectual Property

  
	
  Schedule 6.01(x)

  	
   

  	
  Material Contracts

  
	
  Schedule 6.01(dd)

  	
   

  	
  Name; Jurisdiction of Organization;
  Organizational ID Number; Chief Place of Business; Chief Executive Office;
  FEIN

  
	
  Schedule 6.01(ee)

  	
   

  	
  Tradenames

  
	
  Schedule 6.01(ff)

  	
   

  	
  Collateral Locations

  
	
  Schedule 6.01(hh)

  	
   

  	
  Indebtedness

  
	
  Schedule 7.02(a)

  	
   

  	
  Existing Liens

  
	
  Schedule 7.02(b)

  	
   

  	
  Existing Indebtedness

  
	
  Schedule 7.02(e)

  	
   

  	
  Existing Investments

  
	
  Schedule 7.02(k)

  	
   

  	
  Limitations on Dividends and Other Payment
  Restrictions

  
	
  Schedule 8.01

  	
   

  	
  Lockbox Banks and Lockbox Accounts

  
	
   

  	
   

  	
   

  
	
  Exhibit A-1

  	
   

  	
  Form of Assignment and Acceptance

  
	
  Exhibit I-1

  	
   

  	
  Form of Intercompany Subordination
  Agreement

  
	
  Exhibit I-2

  	
   

  	
  Form of Intercreditor Agreement

  
	
  Exhibit L-1

  	
   

  	
  Form of LIBOR Notice

  
	
  Exhibit T-1

  	
   

  	
  Form of Total Debt Limiter Certificate

  
	
  Exhibit 2.02(a)

  	
   

  	
  Form of Notice of Borrowing

  
	
  Exhibit 5.01(d)

  	
   

  	
  Form of Opinion of Counsel