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Exhibit 10.49  

 
 

SUBSIDIARY GUARANTY    
  

        THIS SUBSIDIARY GUARANTY (this "Guaranty") is made as of the 17th day of June, 2002, by MAGNETEK ADS POWER, INC., a Delaware corporation; MAGNETEK LEASING
CORPORATION, a Delaware corporation, MAGNETEK MONDEL HOLDING, INC., a Delaware corporation; and J-TEC, INC., an Ohio corporation (collectively, the "Subsidiary Guarantors")
in favor of the Agent, for the benefit of the Lenders, under the Credit Agreement referred to below; 

WITNESSETH:  

        WHEREAS, MAGNETEK, INC., a Delaware corporation (the "Principal") and Bank One, Kentucky, NA, a national
banking association having an office in Louisville, Kentucky, as Agent (the "Agent"), and certain other Lenders from time to time party thereto have entered into a certain Credit Agreement dated as of
even date herewith (as same may be amended or modified from time to time, the "Credit Agreement"), providing, subject to the terms and conditions thereof, for extensions of credit to be made by the
Lenders to the Principal; 

        WHEREAS, it is a condition precedent to the Agent and the Lenders executing the Credit Agreement that each of the Subsidiary Guarantors
execute and deliver this Guaranty whereby each of the Subsidiary Guarantors shall guarantee the payment when due, subject to Section 9 hereof, of all Guaranteed Obligations, as defined below;
and 

        WHEREAS, in consideration of the financial and other support that the Principal has provided, and such financial and other support as the
Principal may in the future provide, to the Subsidiary Guarantors, and in order to induce the Lenders and the Agent to enter into the Credit Agreement, and the Lenders and their Affiliates to enter
into one or more Rate Management Transactions with the Principal, and because each Subsidiary Guarantor has determined that executing this Guaranty is in its interest and to its financial benefit,
each of the Subsidiary Guarantors is willing to guarantee the obligations of the Principal under the Credit Agreement, any Note, any Rate Management Transaction, and the other Loan Documents; 

        NOW, THEREFORE, in consideration of the premises and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows: 

        SECTION
1.1.    Selected Terms Used Herein.    

        "Guaranteed
Obligations" is defined in Section 3 below. 

        SECTION
1.2.    Terms in Credit Agreement.    Other capitalized terms used herein but not defined herein shall have
the meaning set forth in the Credit Agreement. 

        SECTION
2.1.    Representations and Warranties.    Each of the Subsidiary Guarantors represents and warrants (which
representations and warranties shall be deemed to have been renewed upon each Borrowing Date under the Credit Agreement) that: 

        (a)  It
is a corporation, partnership or limited liability company duly and properly incorporated or organized, as the case may be, validly existing and (to the extent such
concept applies to such entity) in good standing under the laws of its jurisdiction of incorporation or organization and has all requisite authority to conduct its business in each jurisdiction in
which its business is conducted. 

        (b)  It
has the power and authority and legal right to execute and deliver this Guaranty and to perform its obligations hereunder. The execution and delivery by it of this
Guaranty and the performance of its obligations hereunder have been duly authorized by proper corporate proceedings, and this Guaranty constitutes a legal, valid and binding obligation of such
Subsidiary Guarantor enforceable against it in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency or similar laws affecting the enforcement of creditors'
rights generally. 

 

        (c)  Neither
the execution and delivery by it of this Guaranty, nor the consummation of the transactions herein contemplated, nor compliance with the provisions hereof will
violate (i) any law, rule, regulation,
order, writ, judgment, injunction, decree or award binding on it or any of its subsidiaries or (ii) its articles or certificate of incorporation, partnership agreement, certificate of
partnership, articles or certificate of organization, by-laws, or operating or other management agreement, as the case may be, or (iii) the provisions of any indenture, instrument
or agreement to which it or any of its subsidiaries is a party or is subject, or by which it, or its Property, is bound, or conflict with or constitute a default thereunder, or result in, or require,
the creation or imposition of any Lien in, of or on the Property of such Subsidiary Guarantor or a subsidiary thereof pursuant to the terms of any such indenture, instrument or agreement. No order,
consent, adjudication, approval, license, authorization, or validation of, or filing, recording or registration with, or exemption by, or other action in respect of any governmental or public body or
authority, or any subdivision thereof, which has not been obtained by it or any of its subsidiaries, is required to be obtained by it or any of its subsidiaries in connection with the execution and
delivery of this Guaranty or the performance by it of its obligations hereunder or the legality, validity, binding effect or enforceability of this Guaranty. 

        SECTION
2.2.    Covenants.    Each of the Subsidiary Guarantors covenants that, so long as any Lender has any
Commitment outstanding under the Credit Agreement, any Rate Management Transaction remains in effect or any of the Guaranteed Obligations shall remain unpaid, that it will, and, if necessary, will
enable the Principal to, fully comply with those covenants and agreements set forth in the Credit Agreement. 

        SECTION
3.    The Guaranty.    Subject to Section 9 hereof, each of the Subsidiary Guarantors hereby absolutely
and unconditionally guarantees, as primary obligor and not as surety, the full and punctual payment (whether at stated maturity, upon acceleration or early termination or otherwise, and at all times
thereafter) and performance of the Obligations and the Rate Management Obligations with the Lenders, including without limitation any such Obligations or Rate Management Obligations incurred or
accrued during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, whether or not allowed or allowable in such proceeding (collectively, subject to the provisions of
Section 9 hereof, being referred to collectively as the "Guaranteed Obligations"). Upon failure by the Principal to pay punctually any such amount, each of the Subsidiary Guarantors agrees that
it shall forthwith on demand pay to the Agent for the benefit of the Lenders and, if applicable, their Affiliates, the amount not so paid at the place and in the manner specified in the Credit
Agreement, any Note, any Rate Management Transaction or the relevant Loan Document, as the case may be. This Guaranty is a guaranty of payment and not of collection. Each of the Subsidiary Guarantors
waives any right to require the Lender to sue the Principal, any other guarantor, or any other person obligated for all or any part of the Guaranteed Obligations, or otherwise to enforce its payment
against any collateral securing all or any part of the Guaranteed Obligations. 

        SECTION
4.    Guaranty Unconditional.    Subject to Section 9 hereof, the obligations of each of the Subsidiary
Guarantors hereunder shall be unconditional and absolute and, without limiting the generality of the foregoing, shall not be released, discharged or otherwise affected by: 

          (i)  any
extension, renewal, settlement, compromise, waiver or release in respect of any of the Guaranteed Obligations, by operation of law or otherwise, or any obligation
of any other guarantor of any of the Guaranteed Obligations, or any default, failure or delay, willful or otherwise, in the payment or performance of the Guaranteed Obligations; 

        (ii)  any
modification or amendment of or supplement to the Credit Agreement, any Note, any Rate Management Transaction or any other Loan Document; 

        (iii)  any
release, nonperfection or invalidity of any direct or indirect security for any obligation of the Principal under the Credit Agreement, any Note, the Security
Agreement, any Rate Management Transaction, any other Loan Document, or any obligations of any other guarantor of 

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any of the Guaranteed Obligations, or any action or failure to act by the Agent, any Lender or any Affiliate of any Lender with respect to any collateral securing all or any part of the Guaranteed
Obligations; 

        (iv)  any
change in the corporate existence, structure or ownership of the Principal or any other guarantor of any of the Guaranteed Obligations, or any insolvency,
bankruptcy, reorganization or other similar proceeding affecting the Principal, or any other guarantor of the Guaranteed Obligations, or its assets or any resulting release or discharge of any
obligation of the Principal, or any other guarantor of any of the Guaranteed Obligations; 

        (v)  the
existence of any claim, setoff or other rights which the Subsidiary Guarantors may have at any time against the Principal, any other guarantor of any of the
Guaranteed Obligations, the Agent, any Lender or any other Person, whether in connection herewith or any unrelated transactions; 

        (vi)  any
invalidity or unenforceability relating to or against the Principal, or any other guarantor of any of the Guaranteed Obligations, for any reason related to the
Credit Agreement, any Rate Management Transaction, any other Loan Document, or any provision of applicable law or regulation purporting to prohibit the payment by the Principal, or any other guarantor
of the Guaranteed Obligations, of the principal of or interest on any Note or any other amount payable by the Principal under the Credit Agreement, any Note, any Rate Management Transaction or any
other Loan Document; or 

      (vii)  any
other act or omission to act or delay of any kind by the Principal, any other guarantor of the Guaranteed Obligations, the Agent, any Lender or any other Person or
any other circumstance whatsoever which might, but for the provisions of this paragraph, constitute a legal or equitable discharge of any Subsidiary Guarantor's obligations hereunder. 

        SECTION
5.    Discharge Only Upon Payment In Full: Reinstatement In Certain Circumstances.    Each of the Subsidiary
Guarantor's obligations hereunder shall remain in full force and effect until all Guaranteed Obligations shall have been indefeasibly paid in full, the Commitments under the Credit Agreement shall
have terminated or expired and all Rate Management Transactions have terminated or expired. If at any time any payment of the principal of or interest on any Note or any other amount payable by
the Principal or any other party under the Credit Agreement, any Rate Management Transaction or any other Loan Document is rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Principal or otherwise, each of the Subsidiary Guarantor's obligations hereunder with respect to such payment shall be reinstated as though such payment had been
due but not made at such time. 

        SECTION
6.    Waivers.    Each of the Subsidiary Guarantors irrevocably waives acceptance hereof, presentment, demand,
protest and, to the fullest extent permitted by law, any notice not provided for herein, as well as any requirement that at any time any action be taken by any Person against the Principal, any other
guarantor of any of the Guaranteed Obligations, or any other Person. 

        SECTION
7.    Subrogation.    Each of the Subsidiary Guarantors hereby agrees not to assert any right, claim or cause
of action, including, without limitation, a claim for subrogation, reimbursement, indemnification or otherwise, against the Principal arising out of or by reason of this Guaranty or the obligations
hereunder, including, without limitation, the payment or securing or purchasing of any of the Guaranteed Obligations by any of the Subsidiary Guarantors unless and until the Guaranteed Obligations are
indefeasibly paid in full, any commitment to lend under the Credit Agreement and any other Loan Documents is terminated and all Rate Management Transactions have terminated or expired. 

        SECTION
8.    Stay of Acceleration.    If acceleration of the time for payment of any of the Guaranteed Obligations is
stayed upon the insolvency, bankruptcy or reorganization of the Principal, all 

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such amounts otherwise subject to acceleration under the terms of the Credit Agreement, any Note, any Rate Management Transaction or any other Loan Document shall nonetheless be payable by each of
the Subsidiary Guarantors hereunder forthwith on demand by the Agent made at the request of the Required Lenders. 

        SECTION
9.    Limitation on Obligations.    (a) The provisions of this Guaranty are severable, and in any
action or proceeding involving any state corporate law, or any state, federal or foreign bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if the
obligations of any Subsidiary Guarantor under this Guaranty would otherwise be held or determined to be avoidable, invalid or unenforceable on account of the amount of such Subsidiary Guarantor's
liability under this Guaranty, then, notwithstanding any other provision of this Guaranty to the contrary, the amount of such liability shall, without any further action by the Subsidiary Guarantors,
the Agent or any Lender, be automatically limited and reduced to the highest amount that is valid and enforceable as determined in such action or proceeding (such highest amount determined hereunder
being the relevant Subsidiary Guarantor's "Maximum Liability"). This Section 9(a) with respect to the Maximum Liability of the Subsidiary Guarantors is intended solely to preserve the rights of
the Agent hereunder to the maximum extent not subject to avoidance under applicable law, and neither the Subsidiary Guarantor nor any other person or entity shall have any right or claim under this
Section 9(a) with respect to the Maximum Liability, except to the extent necessary so that the obligations of the Subsidiary Guarantor hereunder shall not be rendered voidable under applicable
law. 

        (b)  Each
of the Subsidiary Guarantors agrees that the Guaranteed Obligations may at any time and from time to time exceed the Maximum Liability of each Subsidiary Guarantor,
and may exceed the aggregate Maximum Liability of all other Subsidiary Guarantors, without impairing this Guaranty or affecting the rights and remedies of the Agent hereunder. Nothing in this
Section 9(b) shall be construed to increase any Subsidiary Guarantor's obligations hereunder beyond its Maximum Liability. 

        (c)  In
the event any Subsidiary Guarantor (a "Paying Subsidiary Guarantor") shall make any payment or payments under this Guaranty or shall suffer any loss as a result of
any realization upon any collateral granted by it to secure its obligations under this Guaranty, each other Subsidiary Guarantor (each a "Non-Paying Subsidiary Guarantor") shall contribute
to such Paying Subsidiary Guarantor an amount equal to such Non-Paying Subsidiary Guarantor's "Pro Rata Share" of such payment or payments made, or losses suffered, by such Paying
Subsidiary Guarantor. For the purposes hereof, each Non-Paying Subsidiary Guarantor's "Pro Rata Share" with respect to any such payment or loss by a Paying Subsidiary Guarantor shall be
determined as of the date on which such payment or loss was made by reference to the ratio of (i) such Non-Paying Subsidiary Guarantor's Maximum Liability as of such date (without
giving effect to any right to receive, or obligation to make, any contribution hereunder) or, if such Non-Paying Subsidiary Guarantor's Maximum Liability has not been determined, the
aggregate amount of all monies received by such Non-Paying Subsidiary Guarantor from the Principal after the date hereof (whether by loan, capital infusion or by other means) to
(ii) the aggregate Maximum Liability of all Subsidiary Guarantors hereunder (including such Paying Subsidiary Guarantor) as of such date (without giving effect to any right to receive, or
obligation to make, any contribution hereunder), or to the extent that a Maximum Liability has not been determined for any Subsidiary Guarantors, the aggregate amount of all monies received by such
Subsidiary Guarantors from the Principal after the date hereof (whether by loan, capital infusion or by other means). Nothing in this Section 9 (c) shall affect any Subsidiary
Guarantor's several liability for the entire amount of the Guaranteed Obligations (up to such Subsidiary Guarantor's Maximum Liability). Each of the Subsidiary Guarantors covenants and agrees that its
right to receive any contribution under this Guaranty from a Non-Paying Subsidiary Guarantor shall be subordinate and junior in right of payment to all the Guaranteed Obligations. The
provisions of this Section 9(c) are for the benefit of both the Agent and the Subsidiary Guarantors and may be enforced by any one, or more, or all of them in accordance with the terms hereof. 

4

 

        SECTION
10.    Application of Payments.    All payments received by the Agent hereunder shall be applied by the Agent
to payment of the Guaranteed Obligations in the following order unless a court of competent jurisdiction shall otherwise direct: 

        (a)  FIRST,
to payment of all costs and expenses of the Agent incurred in connection with the collection and enforcement of the Guaranteed Obligations or of any security
interest granted to the Agent in connection with any collateral securing the Guaranteed Obligations; 

        (b)  SECOND,
to payment of that portion of the Guaranteed Obligations constituting accrued and unpaid interest and fees, pro rata among the Lenders and their Affiliates in
accordance with the amount of such accrued and unpaid interest and fees owing to each of them; 

        (c)  THIRD,
to payment of the principal of the Guaranteed Obligations and the net early termination payments and any other Rate Management Obligations then due and unpaid
from the Borrower to any of the Lenders or their Affiliates, pro rata among the Lenders and their Affiliates in accordance with the amount of such principal and such net early termination payments and
other Rate Management Obligations then due and unpaid owing to each of them; and 

        (d)  FOURTH,
to payment of any Guaranteed Obligations (other than those listed above) pro rata among those parties to whom such Guaranteed Obligations are due in accordance
with the amounts owing to each of them. 

        SECTION
11.    Notices.    All notices, requests and other communications to any party hereunder shall be given or
made by telecopier or other writing and telecopied, or mailed or delivered to the intended recipient at its address or telecopier number set forth on the signature pages hereof or such other address
or telecopy number as such party may hereafter specify for such purpose by notice to the Agent in accordance with the provisions of Article XIII of the Credit Agreement. Except as otherwise
provided in this Guaranty, all such communications shall be deemed to have been duly given when transmitted by telecopier, or personally delivered or, in the case of a mailed notice sent by certified
mail return-receipt requested, on the date set forth on the receipt (provided, that any refusal to accept any such notice shall be deemed to be notice thereof as of the time of any such refusal), in
each case given or addressed as aforesaid. 

        SECTION
12.    No Waivers.    No failure or delay by the Agent or any Lenders in exercising any right, power or
privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or
privilege. The rights and remedies provided in this Guaranty, the Credit Agreement, any Note, any Rate Management Transaction and the other Loan Documents shall be cumulative and not exclusive of any
rights or remedies provided by law. 

        SECTION
13.    No Duty to Advise.    Each of the Subsidiary Guarantors assumes all responsibility for being and
keeping itself informed of the Principal's financial condition and assets, and of all other circumstances bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and
extent of the risks that each of the Subsidiary Guarantors assumes and incurs under this Guaranty, and agrees that neither the Agent nor any Lender has any duty to advise any of the Subsidiary
Guarantors of information known to it regarding those circumstances or risks. 

        SECTION
14.    Successors and Assigns.    This Guaranty is for the benefit of the Agent and the Lenders and their
respective successors and permitted assigns and in the event of an assignment of any amounts payable under the Credit Agreement, any Note, any Rate Management Transaction, or the other Loan
Documents, the rights hereunder, to the extent applicable to the indebtedness so assigned, shall be transferred with such indebtedness. This Guaranty shall be binding upon each of the Subsidiary
Guarantors and their respective successors and permitted assigns. 

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        SECTION
15.    Changes in Writing.    Neither this Guaranty nor any provision hereof may be changed, waived,
discharged or terminated orally, but only in writing signed by each of the Subsidiary Guarantors and the Agent with the consent of the Required Lenders. 

        SECTION
16.    Costs of Enforcement.    Each of the Subsidiary Guarantors agrees to pay all costs and expenses
including, without limitation, all court costs and attorneys' fees and expenses paid or incurred by the Agent or any Lender or any Affiliate of any Lender in endeavoring to collect all or any part of
the Guaranteed Obligations from, or in prosecuting any action against, the Principal, the Subsidiary Guarantors or any other guarantor of all or any part of the Guaranteed Obligations. 

        SECTION
17.    GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL.    THIS GUARANTY SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK. EACH OF THE SUBSIDIARY GUARANTORS HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE WESTERN
DISTRICT OF KENTUCKY AND OF ANY KENTUCKY STATE COURT SITTING IN JEFFERSON COUNTY AND FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY (INCLUDING, WITHOUT LIMITATION,
ANY OF THE OTHER LOAN DOCUMENTS) OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH OF THE SUBSIDIARY GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH ANY OF THEM
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. EACH OF THE SUBSIDIARY GUARANTORS, AND THE AGENT AND THE LENDERS ACCEPTING THIS GUARANTY, HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THIS GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. 

        SECTION
18.    Taxes. etc.    All payments required to be made by any of the Subsidiary Guarantors hereunder shall be
made without setoff or counterclaim and free and clear of and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties or other charges of whatsoever
nature imposed by any government or any political or taxing authority thereof (but excluding Excluded Taxes), provided, however, that if any of the Subsidiary Guarantors is required by law to make
such deduction or withholding, such Subsidiary Guarantor shall forthwith (i) pay to the Agent or any Lender, as applicable, such additional amount as results in the net amount received by the
Agent or any Lender, as applicable, equaling the full amount which would have been received by the Agent or any Lender, as applicable, had no such deduction or withholding been made, (ii) pay
the
full amount deducted to the relevant authority in accordance with applicable law, and (iii) furnish to the Agent or any Lender, as applicable, certified copies of official receipts evidencing
payment of such withholding taxes within 30 days after such payment is made. 

        SECTION
19.    Setoff.    Without limiting the rights of the Agent or the Lenders under applicable law, if all or any
part of the Guaranteed Obligations is then due, whether pursuant to the occurrence of a Default or otherwise, then the Guarantor authorizes the Agent and the Lenders to apply any sums standing to the
credit of the Guarantor with the Agent or any Lender or any Lending Installation of the Agent or any Lender toward the payment of the Guaranteed Obligations. 

        SECTION
20.    Foreign Currency.    The specification of payment in a specific currency at a specific place and time
pursuant to the Credit Agreement, any Note, any Rate Management Transaction or any other Loan Document is essential. That currency or those currencies are also the currency of account and payment
under this Guaranty. If any Subsidiary Guarantor is unable for any reason to effect payment of a specific currency (other than United States currency) as required by the preceding 

6

 

sentence or if any Subsidiary Guarantor defaults in the payment when due of any payment of a specific currency (other than United States currency) under this Guaranty, the Agent may, at its option,
require such payment to be made to the Agent's principal office in the equivalent amount in United States currency at the Agent's then current selling rate for electronic transfers of that currency to
the place or places where the Guaranteed Obligations were payable. In the event that any payment, whether pursuant to a judgment or otherwise, does not result in payment of the amount of currency due
under this Guaranty, upon conversion to the currency of account and transfer to the place specified for payment, the Agent and the Lenders have an independent cause of action against the Subsidiary
Guarantors for the deficiency. 

        IN
WITNESS WHEREOF, each of the Subsidiary Guarantors has caused this Guaranty to be duly executed, under seal, by its authorized officer as of the day and year first above written. 

	 	 	MAGNETEK ADS POWER, INC.
	

 	
 	

By:	
 	

	

 	
 	

Title:	
 	

	

 	
 	

MAGNETEK LEASING CORPORATION
	

 	
 	

By:	
 	

	

 	
 	

Title:	
 	

	

 	
 	

MAGNETEK MONDEL HOLDING, INC.
	

 	
 	

By:	
 	

	

 	
 	

Title:	
 	

	

 	
 	

J-TEC, INC.
	

 	
 	

By:	
 	

	

 	
 	

Title:	
 	

7

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Exhibit 10.50  

 
 

SECURITY AGREEMENT    
  

        THIS SECURITY AGREEMENT is entered into as of June 17, 2002 by and between MAGNETEK, INC., a Delaware corporation (the "Borrower"), and Bank One,
Kentucky, NA, a national banking association having an office in Louisville, Kentucky, in its capacity as agent (the "Agent") for the lenders party to the Credit Agreement referred to below. 

PRELIMINARY STATEMENT  

        The Borrower, the Agent and the Lenders are entering into a Credit Agreement dated as of June 17, 2002 (as it may be amended or modified from time to time,
the "Credit Agreement"). The Borrower is entering into this Security Agreement (as it may be amended or modified from time to time, the "Security Agreement") in order to induce the Lenders to enter
into and extend credit to the Borrower under the Credit Agreement. 

        ACCORDINGLY,
the Borrower and the Agent, on behalf of the Lenders, hereby agree as follows: 

ARTICLE I

DEFINITIONS  

        1.1    Terms Defined in Credit Agreement.    All capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Credit Agreement. 

        1.2    Terms Defined in New York Uniform Commercial Code.    Terms defined in the New York UCC which are not otherwise
defined in this Security Agreement are used herein as defined in the New York UCC. 

        1.3    Definitions of Certain Terms Used Herein.    As used in this Security Agreement, in addition to the terms
defined in the Preliminary Statement, the following terms shall have the following meanings: 

        "Accounts"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "Article"
means a numbered article of this Security Agreement, unless another document is specifically referenced. 

        "Chattel
Paper" shall have the meaning set forth in Article 9 of the New York UCC. 

        "Collateral"
means all Receivables, Equipment, General Intangibles, Instruments, Goods, Inventory, and Other Collateral, wherever located, in which the Borrower now has or hereafter
acquires any right or interest, and the proceeds (including Stock Rights), insurance proceeds and products thereof, together with all books and records, customer lists, credit files, computer files,
programs, printouts and other computer materials and records related thereto. 

        "Control"
shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of
Article 9 of the New York UCC. 

        "Default"
means an event described in Section 5.1. 

        "Deposit
Accounts" shall have the meaning set forth in Article 9 of the New York UCC. 

        "Documents"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "Equipment"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "Exhibit"
refers to a specific exhibit to this Security Agreement, unless another document is specifically referenced. 

        "Fixtures"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "General
Intangibles" shall have the meaning set forth in Article 9 of the New York UCC. 

 

        "Goods"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "Instruments"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "Inventory"
shall have the meaning set forth in Article 9 of the New York UCC. 

        "Investment
Property" shall have the meaning set forth in Article 9 of the New York UCC. 

        "Lenders"
means the lenders party to the Credit Agreement and their successors and assigns. 

        "Lien"
means any lien (statutory or other), security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance or preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever (including, without limitation, the interest of a vendor or lessor under any conditional sale, capitalized lease or other title
retention agreement). " 

        New
York UCC" means the New York Uniform Commercial Code as in effect from time to time. 

        "Obligations"
means any and all existing and future indebtedness, obligation and liability of every kind, nature and character, direct or indirect, absolute or contingent (including all
renewals, extensions and modifications thereof and all fees, costs and expenses incurred by the Agent or the Lenders in connection with the preparation, administration, collection or enforcement
thereof), of the Borrower to the Agent or any Lender or any branch, subsidiary or affiliate thereof, arising under or pursuant to this Security Agreement, the Credit Agreement and any promissory note
or notes now or hereafter issued under the Credit Agreement; and "Obligations" for purposes of this Security Agreement also means and includes all obligations, liabilities, promises, duties and
amounts arising from time to time in connection with that certain Subsidiary Guaranty executed by Borrower and various other parties in connection with the debt of Borrower to Lenders, direct or
contingent, matured or unmatured, and all modifications and restatements and replacements of, to and for said Subsidiary Agreement (collectively, the "Guaranty"). 

        "Other
Collateral" means any personal property of the Borrower not included within the defined terms Accounts, Chattel Paper, Documents, Equipment, General Intangibles, Instruments,
Inventory, Investment Property and Pledged Deposits, including, without limitation, all cash on hand, letter-of-credit rights, letters of credit, Stock Rights and Deposit
Accounts or other deposits (general or special, time or demand, provisional or final) with any bank or other financial institution, it being intended that the Collateral include all property of the
Borrower other than real estate. 

        "Pledged
Deposits" means all time deposits of money (other than Deposit Accounts and Instruments), whether or not evidenced by certificates, which the Borrower may from time to time
hereafter designate as pledged to the Agent or to any Lender as security for any Obligation, and all rights to receive interest on said deposits. 

        "Receivables"
means the Accounts, Chattel Paper, Documents, Investment Property, Instruments and Pledged Deposits, and any other rights or claims to receive money which are General
Intangibles or which are otherwise included as Collateral. 

        "Required
Secured Parties" means (x) prior to an acceleration of the obligations under the Credit Agreement, the Required Lenders, (y) after an acceleration of the
obligations under the Credit Agreement but prior to the date upon which the Credit Agreement has terminated by its terms and all of the obligations thereunder have been paid in full, Lenders and their
Affiliates holding in the aggregate at least 66.7% of the total of (i) the unpaid principal amount of outstanding Advances and (ii) the aggregate net early termination payments and all
other amounts then due and unpaid from the Borrower to the Lenders or their Affiliates under Rate Management Transactions, as determined by the Agent in its reasonable discretion, and (z) after
the Credit Agreement has terminated by its terms and all of the obligations thereunder have been paid in full (whether or not the obligations under the Credit Agreement were ever accelerated), Lenders
and their Affiliates holding in the aggregate at least 

2

 

66.7% of the aggregate net early termination payments and all other amounts then due and unpaid from the Borrower to the Lenders or their Affiliates under Rate Management Transactions, as determined
by the Agent in its reasonable discretion. 

        "Section"
means a numbered section of this Security Agreement, unless another document is specifically referenced. 

        "Secured
Obligations" means the Obligations and Rate Management Obligations entered into with one or more of the Lenders or their Affiliates. 

        "Security"
has the meaning set forth in Article 8 of the New York UCC. 

        "Stock
Rights" means any securities, dividends or other distributions and any other right or property which the Borrower shall receive or shall become entitled to receive for any reason
whatsoever with respect to, in substitution for or in exchange for any securities or other ownership interests in a corporation, partnership, joint venture or limited liability company constituting
Collateral and any securities, any right to receive securities and any right to receive earnings, in which the Borrower now has or hereafter acquires any right, issued by an issuer of such securities. 

        "Unmatured
Default" means an event which but for the lapse of time or the giving of notice, or both, would constitute a Default. 

        The
foregoing definitions shall be equally applicable to both the singular and plural forms of the defined terms. 

ARTICLE II

GRANT OF SECURITY INTEREST  

        The Borrower hereby pledges, assigns and grants to the Agent, on behalf of and for the ratable benefit of the Lenders and (to the extent specifically provided
herein) their Affiliates, a security interest in all of the Borrower's right, title and interest in and to the Collateral to secure the prompt and complete payment and performance of the Secured
Obligations. 

ARTICLE III

REPRESENTATIONS AND WARRANTIES  

        The Borrower represents and warrants to the Agent and the Lenders that: 

        3.1    Title, Authorization, Validity and Enforceability.    The Borrower has good and valid rights in or the power to
transfer the Collateral and title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all Liens except for Liens permitted under the
Credit Agreement, and has full power and authority to grant to the Agent the security interest in such Collateral pursuant hereto. The execution and delivery by the Borrower of this Security Agreement
has been duly authorized by proper corporate proceedings, and this Security Agreement constitutes a legal, valid and binding obligation of the Borrower and creates a security interest which is
enforceable against the Borrower in all now owned and hereafter acquired Collateral. When financing statements have been filed in the appropriate offices against the Borrower in the filing office(s)
listed for the Borrower in the Credit Agreement, the Agent will have a fully perfected first priority security interest in that Collateral in which a security interest may be perfected by filing,
subject only to Liens permitted under the Credit Agreement. 

        3.2    Conflicting Laws and Contracts.    Neither the execution and delivery by the Borrower of this Security
Agreement, the creation and perfection of the security interest in the Collateral granted hereunder, nor compliance with the terms and provisions hereof will violate any law, rule, regulation, order,
writ, judgment, injunction, decree or award binding on the Borrower or the Borrower's articles 

3

 

or certificate of incorporation or by-laws, the provisions of any indenture, instrument or agreement to which the Borrower is a party or is subject, or by which it, or its property, is
bound, or conflict with or constitute a default thereunder, or result in the creation or imposition of any Lien pursuant to the terms of any such indenture, instrument or agreement (other than any
Lien of the Agent on behalf of the Lenders). 

        3.3    Type and Jurisdiction of Organization.    The Borrower is a corporation organized under the laws of the State
of Delaware. 

        3.4    Principal Location.    The Borrower's mailing address and the locations of all its places of business are
disclosed in Exhibit "A". 

        3.5    Property Locations.    The Inventory, Equipment and Fixtures are located solely at (i) premises leased
by the Debtor as lessee and designated in Part B of Exhibit "A", and/or (ii) premises where Inventory is held in a public warehouse or is otherwise held by a bailee or on consignment.
For all such Inventory in excess of an aggregate of $500,000 in value held in a public warehouse or by a bailee or on
consignment, the Debtor has delivered bailment agreements, warehouse receipts, financing statements or other documents satisfactory to the Lenders to protect the Agent's and the Lenders' security
interest in such Inventory. 

        3.6    No Other Names.    The Borrower has not conducted business under any name except the name in which it has
executed this Security Agreement, which is the exact name as it appears in the Borrower's organizational documents, as amended, as filed with the Borrower's jurisdiction of organization. 

        3.7    No Default.    No Default or Unmatured Default exists. 

        3.8    Accounts and Chattel Paper.    The names of the obligors, amounts owing, due dates and other information with
respect to the Accounts and Chattel Paper are and will be correctly stated in all records of the Borrower relating thereto and in all invoices and reports with respect thereto furnished to the Agent
by the Borrower from time to time. As of the time when each Account or each item of Chattel Paper arises, the Borrower shall be deemed to have represented and warranted that such Account or Chattel
Paper, as the case may be, and all records relating thereto, are genuine and in all respects what they purport to be. 

        3.9    Filing Requirements.    None of the Collateral (other than motor vehicles) is of a type for which security
interests or liens may be perfected by filing under any federal statute except for patents, trademarks and copyrights held by the Borrower and described in Exhibit "B". 

        3.10    No Financing Statements.    No financing statement describing all or any portion of the Collateral which has
not lapsed or been terminated naming the Borrower as debtor has been filed in any jurisdiction except (i) financing statements naming the Agent on behalf of the Lenders as the secured party and
(ii) on financing statements reflecting liens permitted by the Credit Agreement. 

        3.11    Federal Employer Identification Number.    The Borrower's Federal employer identification number is
    -                        . 

        3.12    State Organization Number.    If the Borrower is a registered organization, the Borrower's state organization
number is                        . 

4

   
        3.13    Pledged Securities and Other Investment Property.    The Borrower is the direct and beneficial owner of
each
Instrument, Security and other type of Investment Property delivered to the Agent on Borrower's behalf, free and clear of any Liens, except for the security interest granted to the Agent for the
benefit of the Lenders hereunder or as otherwise permitted in the Credit Agreement. The Borrower further represents and warrants that (i) all such Instruments, Securities or other types of
Investment Property which are shares of stock in a corporation or ownership interests in a partnership or limited liability company have been (to the extent such concepts are relevant with respect to
such Instrument, Security or other type of Investment Property) duly and validly issued, are fully paid and non-assessable and (ii) with respect to any certificates delivered to the
Agent representing an ownership interest in a partnership or limited liability company, either such certificates are Securities as defined in Article 8 of the Uniform Commercial Code of the
applicable jurisdiction as a result of actions by the issuer or otherwise, or, if such certificates are not Securities, the Borrower has so informed the Agent so that the Agent may take steps to
perfect its security interest therein as a General Intangible. 

ARTICLE IV

COVENANTS  

        From the date of this Security Agreement, and thereafter until this Security Agreement is terminated: 

        4.1    General.    

        4.1.1    Inspection.    The Borrower will permit the Agent or any Lender, by its representatives and agents
(i) to inspect the Collateral, (ii) to examine and make copies of the records of the Borrower relating to the Collateral and (iii) to discuss the Collateral and the related
records of the Borrower with, and to be advised as to the same by, the Borrower's officers (and, in the case of any Receivable, after the occurrence and during the continuance of a Default, with any
person or entity which is or may be obligated thereon), all at such reasonable times and intervals as the Agent or such Lender may determine, and all at the Borrower's expense. 

        4.1.2    Taxes.    The Borrower will pay when due all taxes, assessments and governmental charges and levies upon the
Collateral, except those which are being contested in good faith by appropriate proceedings and as to which adequate reserves are being maintained. 

        4.1.3    Records and Reports; Notification of Default.    The Borrower will maintain complete and accurate books and
records with respect to the Collateral, and furnish to the Agent, with sufficient copies for each of the Lenders, such reports relating to the Collateral as the Agent shall from time to time
reasonably request. The Borrower will give prompt notice in writing to the Agent and the Lenders of the occurrence of any Default or Unmatured Default and of any other development, financial or
otherwise, which might materially and adversely affect the Collateral. 

        4.1.4    Financing Statements and Other Actions; Defense of Title.    The Borrower hereby authorizes the Agent to
file, and if requested will execute and deliver to the Agent, all financing statements and other documents and take such other actions as may from time to time be requested by the Agent in order to
maintain a first perfected security interest in the Collateral. The Borrower will take any and all actions necessary to defend title to the Collateral against all persons and to defend the security
interest of the Agent in the Collateral and the priority thereof against any Lien not expressly permitted hereunder. 

        4.1.5    Disposition of Collateral.    Except as permitted under the Credit Agreement, the Borrower will not sell,
lease or otherwise dispose of the Collateral except (i) prior to the occurrence of a Default or Unmatured Default, sales of inventory in the ordinary course of business, and (ii) until
such time following the occurrence of a Default as the Borrower receives a notice from the Agent instructing the Borrower to cease such transactions, sales or leases of 

5

 

Inventory in the ordinary course of business, and (iii) until such time as the Borrower receives a notice from the Agent pursuant to Article VII, proceeds of Inventory and Accounts
collected in the ordinary course of business. 

        4.1.6    Liens.    The Borrower will not create, incur, or suffer to exist any Lien on the Collateral except
(i) the security interest created by this Security Agreement, and (ii) Liens permitted by the Credit Agreement 

        4.1.7    Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name.    The Borrower will: 

	(a)
	preserve
its existence as a corporation and not, in one transaction or a series of related transactions, merge into or consolidate with any other entity, or sell all or substantially
all of its assets;

	(b)
	not
change its state of organization;

	(c)
	not
(i) change its name or taxpayer identification number or (ii) change its mailing address, 

unless
the Borrower shall have given the Agent not less than 30 days' prior written notice of such event or occurrence and the Agent shall have taken such steps (with the cooperation of the
Borrower to the extent necessary or advisable) as are necessary or advisable to properly maintain the validity, perfection and priority of the Agent's security interest in the Collateral. 

        4.1.8    Other Financing Statements.    The Borrower will not sign or authorize the signing on its behalf or the
filing of any financing statement naming it as debtor covering all or any portion of the Collateral, except as permitted by Section 4.1.6. 

        4.2    Receivables.    

        4.2.1    Certain Agreements on Receivables.    The Borrower will not make or agree to make any discount, credit,
rebate or other reduction in the original amount owing on a Receivable or accept in satisfaction of a Receivable less than the original amount thereof, except that, prior to the occurrence and except
during the continuance of a Default the Borrower may reduce the amount of Accounts arising from the sale of Inventory in accordance with its present policies and in the ordinary course of business. 

        4.2.2    Collection of Receivables.    Except as otherwise provided in this Security Agreement, the Borrower will use
reasonable efforts to collect and enforce, at the Borrower's sole expense, all amounts due or hereafter due to the Borrower under the Receivables. 

        4.2.3    Delivery of Invoices.    The Borrower will deliver to the Agent promptly upon its request after the
occurrence of and during the continuance of a Default duplicate invoices with respect to each Account bearing such language of assignment as the Agent shall reasonably specify. 

        4.2.4    Disclosure of Counterclaims on Receivables.    If (i) any discount, credit or agreement to make a
rebate or to otherwise reduce the amount owing on a Receivable exists or (ii) if, to the knowledge of the Borrower, any dispute, setoff, claim, counterclaim or defense exists or has been
asserted or threatened with respect to a Receivable, the Borrower will disclose such fact to the Agent in writing in connection with the inspection by the Agent of any record of the Borrower relating
to such Receivable and in connection with any invoice or report furnished by the Borrower to the Agent relating to such Receivable. 

6

 

        4.3    Inventory and Equipment.    

        4.3.1    Maintenance of Goods.    The Borrower will do all things necessary to maintain, preserve, protect and keep
the Inventory and the Equipment in good repair and working and saleable condition. 

        4.3.2    Insurance.    The Borrower will (i) maintain fire and extended coverage insurance on the Inventory and
Equipment containing a lender's loss payable clause in favor of the Agent, on behalf of the Lenders, and providing that said insurance will not be terminated except after at least 30 days'
written notice from the insurance company to the Agent, (ii) maintain such other insurance on the Collateral for the benefit of the Agent as the Agent shall from time to time request,
(iii) furnish to the Agent upon the request of the Agent from time to time the originals of all policies of insurance on the Collateral and certificates with respect to such insurance and
(iv) maintain general liability insurance. 

        4.3.3    Titled Vehicles.    The Borrower will give the Agent notice of its acquisition of any vehicle covered by a
certificate of title and deliver to the Agent, upon request, the original of any vehicle title certificate and do all things necessary to have the Lien of the Agent noted on any such certificate. 

        4.4    Instruments, Securities, Chattel Paper, Documents and Pledged Deposits.    The Borrower will (i) deliver
to the Agent immediately upon execution of this Security Agreement the originals of all Chattel Paper, Securities and Instruments constituting Collateral (if any then exist), (ii) hold in trust
for the Agent upon receipt and immediately thereafter deliver to the Agent any Chattel Paper, Securities and Instruments constituting Collateral, (iii) upon the designation of any Pledged
Deposits (as set forth in the definition thereof), deliver to the Agent such Pledged Deposits which are evidenced by certificates included in the Collateral endorsed in blank, marked with such legends
and assigned as the Agent shall specify, and (iv) upon the Agent's request, after the occurrence and during the continuance of a Default, deliver to the Agent (and thereafter hold in trust for
the Agent upon receipt and immediately deliver to the Agent) any Document evidencing or constituting Collateral. 

        4.5    Uncertificated Securities and Certain Other Investment Property.    The Borrower will permit the Agent from
time to time to cause the appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of Investment Property not
represented by certificates which are Collateral to mark their books and records with the numbers and face amounts of all such uncertificated securities or other types of Investment Property not
represented by certificates and all rollovers and replacements therefor to reflect the Lien of the Agent granted pursuant to this Security Agreement. The Borrower will take any actions necessary to
cause (i) the issuers of uncertificated securities which are Collateral and which are Securities and (ii) any financial intermediary which is the holder of any Investment Property, to
cause the Agent to have and retain Control over such Securities or other Investment Property. Without limiting the foregoing, the Borrower will, with respect to Investment Property held with a
financial intermediary, cause such financial intermediary to enter into a control agreement with the Agent in form and substance satisfactory to the Agent. 

        4.6    Stock and Other Ownership Interests.    

        4.6.1    Changes in Capital Structure of Issuers.    Except as permitted under the Credit Agreement, the Borrower will
not (i) permit or suffer any issuer of privately held corporate securities or other ownership interests in a corporation, partnership, joint venture or limited liability company constituting
Collateral to dissolve, liquidate, retire any of its capital stock or other Instruments or Securities evidencing ownership, reduce its capital or merge or consolidate with any other entity, or
(ii) vote any of the Instruments, Securities or other Investment Property in favor of any of the foregoing. 

7

 

        4.6.2    Issuance of Additional Securities.    The Borrower will not permit or suffer the issuer of privately held
corporate securities or other ownership interests in a corporation, partnership, joint venture or limited liability company constituting Collateral to issue any such securities or other ownership
interests, any right to receive the same or any right to receive earnings, except to the Borrower. 

        4.6.3    Registration of Pledged Securities and other Investment Property.    The Borrower will permit any
registerable Collateral to be registered in the name of the Agent or its nominee at any time at the option of the Required Secured Parties. 

        4.6.4    Exercise of Rights in Pledged Securities and other Investment Property.    The Borrower will permit the Agent
or its nominee at any time after the occurrence of a Default, without notice, to exercise all voting and corporate rights relating to the Collateral, including, without limitation, exchange,
subscription or any other rights, privileges, or options pertaining to any corporate securities or other ownership interests or Investment Property in or of a corporation, partnership, joint venture
or limited liability company constituting Collateral and the Stock Rights as if it were the absolute owner thereof. 

        4.7    Pledged Deposits.    The Borrower will not withdraw all or any portion of any Pledged Deposit or fail to
rollover said Pledged Deposit without the prior written consent of the Agent. 

        4.8    Deposit Accounts.    The Borrower will (i) upon the Agent's request, cause each bank or other financial
institution in which it maintains (a) a Deposit Account to enter into a control agreement with the Agent, in form and substance satisfactory to the Agent in order to give the Agent Control of
the Deposit Account or (b) other deposits (general or special, time or demand, provisional or final) to be notified of the security interest granted to the Agent hereunder and cause each such
bank or other financial institution to acknowledge such notification in writing and (ii) upon the Agent's request after the occurrence of a Default, deliver to each such bank or other financial
institution a letter, in form and substance acceptable to the Agent, transferring ownership of the Deposit Account to the Agent or
transferring dominion and control over each such other deposit to the Agent. In the case of deposits maintained with Lenders, the terms of such letter shall be subject to the provisions of the Credit
Agreement regarding setoffs. 

        4.9    Letter-of-Credit Rights.    The Borrower will upon the Agent's request, cause each
issuer of a letter of credit, to consent to the assignment of proceeds of the letter of credit in order to give the Agent Control of the letter-of-credit rights to such letter
of credit. 

        4.10    Federal, State or Municipal Claims.    The Borrower will notify the Agent of any Collateral which constitutes
a claim against the United States government or any state or local government or any instrumentality or agency thereof, the assignment of which claim is restricted by federal, state or municipal law. 

ARTICLE V

DEFAULT  

        5.1  The
occurrence of any one or more of the following events shall constitute a Default: 

        5.1.1    Any
representation or warranty made by or on behalf of the Borrower under or in connection with this Security Agreement shall be materially false as of the date on
which made. 

        5.1.2    The
breach by the Borrower of any of the terms or provisions of Article IV or Article VII. 

8

 

        5.1.3    The
breach by the Borrower (other than a breach which constitutes a Default under Section 5.1.1 or 5.1.2) of any of the terms or provisions of this Security
Agreement which is not remedied within 10 days after the giving of written notice to the Borrower by the Agent. 

        5.1.4    Any
material portion of the Collateral shall be transferred or otherwise disposed of, either voluntarily or involuntarily, in any manner not permitted by
Section 4.1.5 or 8.7 or shall be lost, stolen, damaged or destroyed. 

        5.1.5    Any
Secured Obligation shall not be paid when due, whether at stated maturity, upon acceleration, or otherwise. 

        5.1.6    The
occurrence of any "Default" under, and as defined in, the Credit Agreement. 

        5.1.7    The
occurrence of any breach or default under the Guaranty. 

        5.2    Acceleration and Remedies.    Upon the acceleration of the obligations under the Credit Agreement pursuant to
Section 8.1 thereof, the Obligations and, to the extent provided for under the Rate Management Transactions evidencing the same, the Rate Management Obligations, shall immediately become due
and payable without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and the Agent may, with the concurrence or at the direction of the Required Secured
Parties, exercise any or all of the following rights and remedies: 

        5.2.1    Those
rights and remedies provided in this Security Agreement, the Credit Agreement, or any other Loan Document, provided  that this Section 5.2.1 shall not be understood to limit any rights or remedies
available to the Agent and the Lenders prior to a Default. 

        5.2.2    Those
rights and remedies available to a secured party under the New York UCC (whether or not the New York UCC applies to the affected Collateral) or under any other
applicable law (including, without limitation, any law governing the exercise of a bank's right of setoff or bankers' lien) when a debtor is in default under a security agreement. 

        5.2.3    Without
notice except as specifically provided in Section 8.1 or elsewhere herein, sell, lease, assign, grant an option or options to purchase or otherwise
dispose of the Collateral or any part thereof in one or more parcels at public or private sale, for cash, on credit or for future delivery, and upon such other terms as the Agent may deem commercially
reasonable. 

The
Agent, on behalf of the secured parties, may comply with any applicable state or federal law requirements in connection with a disposition of the Collateral and compliance will not be considered
to adversely affect the commercial reasonableness of any sale of the Collateral. 

        If,
after the Credit Agreement has terminated by its terms and all of the Obligations have been paid in full, there remain Rate Management Obligations outstanding, the Required Secured
Parties may exercise the remedies provided in this Section 5.2 upon the occurrence of any event which would allow
or require the termination or acceleration of any Rate Management Obligations pursuant to the terms of the agreement governing any Rate Management Transaction. 

        5.3    Borrower's Obligations Upon Default.    Upon the request of the Agent after the occurrence of and during the
continuance of a Default, the Borrower will: 

        5.3.1    Assembly of Collateral.    Assemble and make available to the Agent the Collateral and all records relating
thereto at any place or places specified by the Agent. 

        5.3.2    Secured Party Access.    Permit the Agent, by the Agent's representatives and agents, to enter any premises
where all or any part of the Collateral, or the books and records relating thereto, or both, are located, to take possession of all or any part of the Collateral and to remove all or any part of the
Collateral. 

9

   
        5.4    License.    The Agent is hereby granted a license or other right to use, following the occurrence and during
the continuance of a Default, without charge, the Borrower's labels, patents, copyrights, rights of use of any name, trade secrets, trade names, trademarks, service marks, customer lists and
advertising matter, or any property of a similar nature, as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral, and, following the occurrence
and during the continuance of a Default, the Borrower's rights under all licenses and all franchise agreements shall inure to the Agent's benefit. In addition, the Borrower hereby irrevocably agrees
that the Agent may, following the occurrence and during the continuance of a Default, sell any of the Borrower's Inventory directly to any person, including without limitation persons who have
previously purchased the Borrower's Inventory from the Borrower and in connection with any such sale or other enforcement of the Agent's rights under this Agreement, may sell Inventory which bears any
trademark owned by or licensed to the Borrower and any Inventory that is covered by any copyright owned by or licensed to the Borrower and the Agent may finish any work in process and affix any
trademark owned by or licensed to the Borrower and sell such Inventory as provided herein. 

ARTICLE VI

WAIVERS, AMENDMENTS AND REMEDIES  

        No delay or omission of the Agent or any Lender to exercise any right or remedy granted under this Security Agreement shall impair such right or remedy or be
construed to be a waiver of any Default or an acquiescence therein, and any single or partial exercise of any such right or remedy shall not preclude any other or further exercise thereof or the
exercise of any other right or remedy. No waiver, amendment or other variation of the terms, conditions or provisions of this Security Agreement whatsoever shall be valid unless in writing signed by
the Agent with the concurrence or at the direction of the Lenders required under Section 8.2 of the Credit Agreement and then only to the extent in such writing specifically set forth. All
rights and remedies contained in this Security Agreement or by law afforded shall be cumulative and all shall be available to the Agent and the Lenders until the Secured Obligations have been paid in
full. 

ARTICLE VII

PROCEEDS; COLLECTION OF RECEIVABLES  

        7.1    Lockboxes.    Upon request of the Agent at any time after the occurrence and during the continuance of a
Default, the Borrower shall execute and deliver to the Agent irrevocable lockbox agreements in the form provided by or otherwise acceptable to the Agent. 

        7.2    Collection of Receivables.    The Agent may at any time after the occurrence and during the continuance of a
Default, by giving the Borrower written notice, elect to require that the Receivables be paid directly to the Agent for the benefit of the Lenders. In such event, the Borrower shall, and shall permit
the Agent to, promptly notify the account debtors or obligors under the Receivables of the Lenders' interest therein and direct such account debtors or obligors to make payment of all amounts then or
thereafter due under the Receivables directly to the Agent. Upon receipt of any such notice from the Agent, the Borrower shall thereafter hold in trust for the Agent, on behalf of the Lenders, all
amounts and proceeds received by it with respect to the Receivables and Other Collateral and immediately and at all times thereafter deliver to the Agent all such amounts and proceeds in the same form
as so received, whether by cash, check, draft or otherwise, with any necessary endorsements. The Agent shall hold and apply funds so received as provided by the terms of Sections 7.3 and 7.4. 

        7.3    Special Collateral Account.    The Agent may require all cash proceeds of the Collateral to be deposited in a
special non-interest bearing account with the Agent and the proceeds of such account shall be applied in accordance with the provisions of Section 7.4. 

10

 

        7.4    Application of Proceeds.    The proceeds of any exercise of remedies in respect of the Collateral pursuant to
Section 5.2 shall be applied by the Agent to payment of the Secured Obligations in the following order unless a court of competent jurisdiction shall otherwise direct: 

        (a)  FIRST,
to payment of all costs and expenses of the Agent incurred in connection with the collection and enforcement of the Secured Obligations or of the security
interest granted to the Agent pursuant to this Security Agreement; 

        (b)  SECOND,
to payment of that portion of the Secured Obligations constituting accrued and unpaid interest and fees, pro rata among the Lenders and their Affiliates in
accordance with the amount of such accrued and unpaid interest and fees owing to each of them; 

        (c)  THIRD,
to payment of the principal of the Secured Obligations and the net early termination payments and any other Rate Management Obligations then due and unpaid from
the Borrower to any of the Lenders or their Affiliates, pro rata among the Lenders and their Affiliates in accordance with the amount of such principal and such net early termination payments and
other Rate Management Obligations then due and unpaid owing to each of them; 

        (d)  FOURTH,
to payment of any Secured Obligations (other than those listed above) pro rata among those parties to whom such Secured Obligations are due in accordance with
the amounts owing to each of them; and 

        (e)  FIFTH,
the balance, if any, after all of the Secured Obligations have been satisfied, shall be deposited by the Agent into the Borrower's general operating account with
the Agent. 

ARTICLE VIII

GENERAL PROVISIONS  

        8.1    Notice of Disposition of Collateral; Condition of Collateral.    The Borrower hereby waives notice of the time
and place of any public sale or the time after which any private sale or other disposition of all or any part of the Collateral may be made. To the extent such notice may not be waived under
applicable law, any notice made shall be deemed reasonable if sent to the Borrower, addressed as set forth in Article IX, at least ten days prior to (i) the date of any such public sale
or (ii) the time after which any such private sale or other disposition may be made. Agent shall have no obligation to clean-up or otherwise prepare the Collateral for sale. 

        8.2    Compromises and Collection of Collateral.    The Borrower and the Agent recognize that setoffs, counterclaims,
defenses and other claims may be asserted by obligors with respect to certain of the Receivables, that certain of the Receivables may be or become uncollectible in whole or in part and that the
expense and probability of success in litigating a disputed Receivable may exceed the amount that reasonably may be expected to be recovered with respect to a Receivable. In view of the foregoing, the
Borrower agrees that the Agent may at any time and from time to time, if a Default has occurred and is continuing, compromise with the obligor on any Receivable, accept in full payment of any
Receivable such amount as the Agent in its sole discretion shall determine or abandon any Receivable, and any such action by the Agent shall be commercially reasonable so long as the Agent acts in
good faith based on information known to it at the time it takes any such action. 

        8.3    Secured Party Performance of Borrower Obligations.    Without having any obligation to do so, the Agent may
perform or pay any obligation which the Borrower has agreed to perform or pay in this Security Agreement and the Borrower shall reimburse the Agent for any amounts paid by the Agent pursuant to this
Section 8.3. The Borrower's obligation to reimburse the Agent pursuant to the preceding sentence shall be a Secured Obligation payable on demand. 

        8.4    Authorization for Secured Party to Take Certain Action.    The Borrower irrevocably authorizes the Agent at any
time and from time to time in the sole discretion of the Agent and appoints the 

11

 

Agent as its attorney in fact (i) to execute on behalf of the Borrower as debtor and to file financing statements necessary or desirable in the Agent's sole discretion to perfect and to
maintain the perfection and priority of the Agent's security interest in the Collateral, (ii) to indorse and collect any cash proceeds of the Collateral, (iii) to file a carbon,
photographic or other reproduction of this Security Agreement or any financing statement with respect to the Collateral as a financing statement and to file any other financing statement or amendment
of a financing statement (which does not add new collateral or add a debtor) in such offices as the Agent in its sole discretion deems necessary or desirable to perfect and to maintain the perfection
and priority of the Agent's security interest in the Collateral, (iv) to contact and enter into one or more agreements with the issuers of uncertificated securities which are Collateral and
which are Securities or with financial intermediaries holding other Investment Property as may be necessary or advisable to give the Agent Control over such Securities or other Investment Property,
(v) subject to the terms of Section 4.1.5, from and after the occurrence and during the continuance of a Default, to enforce payment of the Receivables in the name of the Agent or the
Borrower, (vi) to apply the proceeds of any Collateral received by the Agent to the Secured Obligations as provided in Article VII and (vii) to discharge past due taxes,
assessments, charges, fees or Liens on the Collateral (except for such Liens as are specifically permitted hereunder), and the Borrower agrees to reimburse the Agent on demand for any payment made or
any expense incurred by the Agent in connection therewith, provided that this authorization shall not relieve the Borrower of any of its obligations
under this Security Agreement or under the Credit Agreement. 

        8.5    Specific Performance of Certain Covenants.    The Borrower acknowledges and agrees that a breach of any of the
covenants contained in Sections 4.1.5, 4.1.6, 4.4, 5.3, or 8.7 or in Article VII will cause irreparable injury to the Agent and the Lenders, that the Agent and Lenders have no adequate remedy
at law in respect of such breaches and therefore agrees, without limiting the right of the Agent or the Lenders to seek and obtain specific performance of other obligations of the Borrower contained
in this Security Agreement, that the covenants of the Borrower contained in the Sections referred to in this Section 8.5 shall be specifically enforceable against the Borrower. 

        8.6    Use and Possession of Certain Premises.    Upon the occurrence and during the continuance of a Default, the
Agent shall be entitled to occupy and use any premises owned or leased by the Borrower where any of the Collateral or any records relating to the Collateral are located until the Secured Obligations
are paid or the Collateral is removed therefrom, whichever first occurs, without any obligation to pay the Borrower for such use and occupancy. 

        Dispositions Not Authorized. The Borrower is not authorized to sell or otherwise dispose of the Collateral except as set forth in
Section 4.1.5 and notwithstanding any course of dealing between the Borrower and the Agent or other conduct of the Agent, no authorization to sell or otherwise dispose of the Collateral (except
as set forth in Section 4.1.5) shall be binding upon the Agent or the Lenders unless such authorization is in writing signed by the Agent with the consent or at the direction of the Required
Lenders. 

        Benefit of Agreement. The terms and provisions of this Security Agreement shall be binding upon and inure to the benefit of the Borrower,
the Agent and the Lenders and their respective successors and assigns (including all persons who become bound as a debtor to this Security Agreement), except that the Borrower shall not have the right
to assign its rights or delegate its obligations under this Security Agreement or any interest herein, without the prior written consent of the Agent. 

        Survival of Representations. All representations and warranties of the Borrower contained in this Security Agreement shall survive the
execution and delivery of this Security Agreement. 

        8.7    Taxes and Expenses.    Any taxes (including income taxes) payable or ruled payable by Federal or State
authority in respect of this Security Agreement shall be paid by the Borrower, together with interest and penalties, if any. The Borrower shall reimburse the Agent for any and all reasonable
out-of-pocket expenses and internal charges (including reasonable attorneys', auditors' and accountants' 

12

 

fees and reasonable time charges of attorneys, paralegals, auditors and accountants who may be employees of the Agent) paid or incurred by the Agent in connection with the preparation, execution,
delivery, administration, collection and enforcement of this Security Agreement and in the audit, analysis, administration, collection, preservation or sale of the Collateral (including the expenses
and charges associated with any periodic or special audit of the Collateral). Any and all costs and expenses incurred by the Borrower in the performance of actions required pursuant to the terms
hereof shall be borne solely by the Borrower. 

        8.8    Headings.    The title of and section headings in this Security Agreement are for convenience of reference
only, and shall not govern the interpretation of any of the terms and provisions of this Security Agreement. 

        8.9    Termination.    This Security Agreement shall continue in effect (notwithstanding the fact that from time to
time there may be no Secured Obligations outstanding) until (i) the Credit Agreement has terminated pursuant to its express terms and (ii) all of the Secured Obligations have been
indefeasibly paid and performed in full and no commitments of the Agent or the Lenders which would give rise to any Secured Obligations are outstanding. 

        8.10    Entire Agreement.    This Security Agreement embodies the entire agreement and understanding between the
Borrower and the Agent relating to the Collateral and supersedes all prior agreements and understandings between the Borrower and the Agent relating to the Collateral. 

        8.11    CHOICE OF LAW.    THIS SECURITY AGREEMENT SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF NEW YORK, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.

        8.12    Distribution of Reports.    The Borrower authorizes the Agent, as the Agent may elect in its sole discretion,
to discuss with and furnish to its affiliates and to the Lenders or to any other person or entity having an interest in the Secured Obligations (whether as a guarantor, pledgor of collateral,
participant or otherwise) all financial statements, audit reports and other information pertaining to the Borrower and its Subsidiaries whether such information was provided by the Borrower or
prepared or obtained by the Agent. Neither the Agent nor any of its employees, officers, directors or agents makes any representation or warranty regarding any audit reports or other analyses of the
Borrower's and its Subsidiaries' condition which the Agent may in its sole discretion prepare and elect to distribute, nor shall the Agent or any of its employees, officers, directors or agents be
liable to any person or entity receiving a copy of such reports or analyses for any inaccuracy or omission contained in or relating thereto. 

        8.13    Indemnity.    The Borrower hereby agrees to indemnify the Agent and the Lenders, and their respective
successors, assigns, agents and employees, from and against any and all liabilities, damages, penalties, suits, costs, and expenses of any kind and nature (including, without limitation, all expenses
of litigation or preparation therefor whether or not the Agent or any Lender is a party thereto) imposed on, incurred by or asserted against the Agent or the Lenders, or their respective successors,
assigns, agents and employees, in any way relating to or arising out of this Security Agreement, or the manufacture, purchase, acceptance, rejection, ownership, delivery, lease, possession, use,
operation, condition, sale, return or other disposition of any Collateral (including, without limitation, latent and other defects, whether or not discoverable by the Agent or the Lenders or the
Borrower, and any claim for patent, trademark or copyright infringement), except to the extent any such liability, damage, penalty, suit, cost or expense results from Agent's or any Lender's gross
negligence or willful misconduct. 

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ARTICLE IX

NOTICES  

        9.1    Sending Notices.    Any notice required or permitted to be given under this Security Agreement shall be sent by
United States mail, telegraph, telex, FAX or nationally established overnight courier service, and shall be deemed received (i) when received by the addressee if sent via the United States
mail, postage prepaid, (ii) when delivered to the appropriate office or machine operator for transmission, charges prepaid, if sent by telegraph or telex (answerback confirmed in the case of
telexes), (iii) when receipt thereof by the addressee is confirmed by telephone if sent by FAX and (iv) one business day after delivery to an overnight courier service, if sent by such
service, in each case addressed to the Borrower at the address set forth on Exhibit "A" as its principal place of business, and to the Agent and the Lenders at the addresses set forth in the Credit
Agreement. 

        9.2    Change in Address for Notices.    Each of the Borrower, the Agent and the Lenders may change the address for
service of notice upon it by a notice in writing to the other parties. 

ARTICLE X

THE AGENT  

        Bank One, Kentucky, NA has been appointed Agent for the Lenders hereunder pursuant to Article X of the Credit Agreement. It is expressly understood and
agreed by the parties to this Security Agreement that any authority conferred upon the Agent hereunder is subject to the terms of the delegation of authority made by the Lenders to the Agent pursuant
to the Credit Agreement, and that the Agent has agreed to act (and any successor Agent shall act) as such hereunder only on the express conditions contained in such Article X. Any successor
Agent appointed pursuant to Article X of the Credit Agreement shall be entitled to all the rights, interests and benefits of the Agent hereunder. 

[continued on following page]

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        IN WITNESS WHEREOF, the Borrower and the Agent have executed this Security Agreement as of the date first above written. 

	 	 	MAGNETEK, INC.
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	

Title:	
 	

 
	 	 	 	 	

	

 	
 	

BANK ONE, KENTUCKY, NA,

    as Agent
	

 	
 	

By:	
 	

 
	 	 	 	 	

	

 	
 	

Title:	
 	

 
	 	 	 	 	

15

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SECURITY AGREEMENT

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