Document:

Exhibit 10.1

 

Summary of
Additional Compensation for Lead Director, and for the Audit and Compensation
Committee Chairmen

 

	
  Lead Director:

  	
   

  	
  $1,500 per quarter

  	
   

  
	
  Audit Committee Chairman:

  	
   

  	
  $2,000 per quarter

  	
   

  
	
  Compensation Committee Chairman:

  	
   

  	
  $500 per quarterEXHIBIT 4.3

 

WARRANT REPURCHASE AGREEMENT

(2004
Series C2 Warrants)

 

 

                This
Warrant Repurchase Agreement (the “Agreement”)
is entered into by and between TGC Industries, Inc., a Texas corporation (“Company”), and                                  (“Seller”).

 

                WHEREAS, in December of 2004 Company issued
a series of warrants exercisable into Company’s Common Stock known as the 2004
Series C2 Warrants (the “Warrants”),
and Seller is at this time the owner of                       Warrants;

 

                AND WHEREAS, as a result of the “anti-dilution” clause
contained in the Agreement, each Warrant is currently exercisable into                     shares of the
Company’s Common Stock at an exercise price of $0.91 per share.

 

                AND WHEREAS, Company and the holders of the
Warrants have agreed that, in order to make Company a more attractive candidate
for acquisition by simplifying the Company’s capital structure and eliminating
the Warrant holders’ “piggy-back”
registration rights (which are objectionable to underwriters), such holders
will sell all of their Warrants to Company.

 

                NOW, THEREFORE, in consideration of the
foregoing and the covenants of the parties set forth herein, it is hereby
agreed as follows:

 

                Subject
to the terms and conditions set forth herein, Seller agrees to sell all of
Seller’s Warrants to Company, and Company agrees to repurchase and cancel all
of such Warrants.  Such Warrants
constitute all of the issued and outstanding 2004 Series C2 Warrants owned by
Seller.

 

                Seller
is entitled to receive that cash amount (the “Purchase
Price”) which is equal to: 
$9.16 [the average of the closing prices of the Company’s Common Stock
during the period beginning on September 18, 2007, and ending on October 1,
2007, minus the current exercise price per Warrant ($0.91)] times the number of
shares of Common Stock underlying the 
2004 Series C2 Warrants held by Seller. 
Accordingly, Company shall pay to Seller a total purchase price of $              .

 

                Within
thirty (30) days after the determination of the Purchase Price, Company shall
be obligated to pay to Seller the amount of the Purchase Price.

 

                Promptly
after the signing of this Agreement by Seller, Seller shall forward the
certificate or certificates representing the Warrants being repurchased by
Company to Ms. Julia Gardner, 201 Main Street, Suite 2200, Fort Worth, Texas
76102.

 

                Ms.
Gardner will deliver to Company such certificate or certificates with
instructions to Company to pay to Seller the amount of the Purchase Price.  Company covenants and agrees that 

 

 

 

 

 

upon receipt of such certificate or
certificates, Company shall cancel the Warrants so that they will no longer be
issued and outstanding.

 

                Seller
represents that:  (a) Seller has good and
valid title to the Warrants free and clear of any security interest, pledge,
lien, encumbrance, or other adverse claim; and (b) Seller has full legal right
and power to sell, transfer, and deliver the Warrants to Company.

 

                Company
represents that it has received specific authority from its Board of Directors
to carry out the proposed warrant purchase transaction.

 

                This
Agreement contains the entire understanding between the parties and supersedes
any prior understandings and agreements between them respecting the subject
matter of this Agreement.

 

                This
Agreement shall for all purposes be deemed to be made under, and shall be
construed in accordance with, the laws of the State of Texas.

 

                This
Agreement contains the entire agreement of the parties hereto with respect to
the subject matter hereof and, except as expressly provided herein, may not be
changed or modified except by an instrument in writing signed by the respective
parties hereto.

 

                This
Agreement may be executed in multiple counterparts, each of which will be
deemed an original, and all of which together will constitute one and the same
instrument.

 

                This
Agreement shall be binding upon and inure to the benefit of the respective
parties hereto and their legal representatives, successors, and assigns.

 

 

 

                IN WITNESS WHEREOF, the parties hereto have
executed this Agreement to be effective as of the 18th day of September, 2007.

 

	
  COMPANY:

  	
   

  	
   

  	
   

  	
   

  	
  SELLER:

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  TGC
  Industries, Inc.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
     Wayne Whitener,

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
     President and Chief

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
     Executive Officer

  	
   

  	
   

  

 

 

 

2Exhibit 10.1

CREDIT AGREEMENT

 

THIS CREDIT AGREEMENT, dated as of November 6, 2007,
is by and between ASSOCIATED BANK, NATIONAL ASSOCIATION, a national banking
association (the “Bank”), and MAGNETEK, INC., a Delaware corporation (the “Company”).

 

The Company and the Bank agree as follows:

 

1.                                       Definitions;
Rules of Interpretation.

 

1.1                                 Definitions. As used in
this Agreement, the following terms have the following meanings:

 

“Affiliate” means, as to any Person, any
other Person, directly or indirectly controlling, controlled by or under common
control with such Person. A Person shall be deemed to control another Person if
the controlling Person (a) owns 10% or more of any class of voting Equity
Interests of the controlled Person or (b) possesses, directly or indirectly,
the power to direct or cause the direction of the management or policies of the
controlled Person, whether by ownership of Equity Interests, by contract or
otherwise.

 

“Borrowing Base Availability” means an amount
equal to 80% of the face amount of Qualified Accounts as shown on the most
recent Borrowing Base Certificate furnished by the Company to the Bank.

 

“Borrowing Base Certificate” means a
certificate of the Company substantially in the form of Exhibit D.

 

“Borrowing Date” means each date on which (a)
a Loan is made by the Bank to the Company or (b) a Letter of Credit is issued
by the Bank.

 

“Business Day” means a day (other than
Saturday or Sunday) on which banks are open for business in Milwaukee,
Wisconsin.

 

“Capital Expenditures” means, as to any
Person and for any period, all expenditures (whether paid in cash or other
consideration) during such period, without duplication, that are or should be
included in additions to property, plant and equipment or similar items
reflected in such Person’s consolidated statement of cash flows for such
period; provided that Capital Expenditures shall not include, for
purposes hereof, expenditures of proceeds of insurance settlements,
condemnation awards and other settlements in respect of lost, destroyed,
damaged or condemned assets to the extent such expenditures are made to replace
or repair such assets or otherwise to acquire assets useful in the business of
the Person.

 

“Capitalized Lease” means, as to any Person,
any lease, the obligations under which have been, or are required to be,
recorded as a capital lease liability on the consolidated balance sheet of that
Person and its Consolidated Subsidiaries.

 

 

“Capitalized Lease Obligations” means, as to
any Person, at any date, the obligations of such Person or any of its
Consolidated Subsidiaries under Capitalized Leases.

 

“Change in Control” means at any time, any
one Person, together with such Person’s Affiliates, owns or controls at least
thirty-five percent (35%) of the issued and outstanding Equity Interests of the
Company.

 

“Closing Date” means the first Borrowing
Date.

 

“Code” means the Internal Revenue Code of
1986, as amended.

 

“Collateral Documents” means the documents
described in section 4.1(b) and any other document, instrument or agreement
furnished by a Person to the Bank which provides collateral for the
Obligations.

 

“Commitment” means the commitment of the Bank
to (a) make Loans to the Company pursuant to section 2.1 and (b) issue Letters
of Credit pursuant to section 2.8. The Commitment of the Bank is $10,000,000,
and is subject to reduction from time to time pursuant to section 2.4.

 

“Consolidated Subsidiaries” means, as to
any Person, Subsidiaries whose financial statements are required to be
consolidated with those of such Person.

 

“Contingent Obligation” means, as to any
Person, any direct or indirect liability of that Person, whether or not
contingent, with or without recourse, (a) with respect to any Indebtedness,
lease, dividend, letter of credit or other obligation (the “primary obligations”)
of another Person (the “primary obligor”), including any obligation of that
Person (i) to purchase, repurchase or otherwise acquire such primary
obligations or any security therefor, (ii) to advance or provide funds for the
payment or discharge of any such primary obligation, or to maintain working
capital or equity capital of the primary obligor or otherwise to maintain the
net worth or solvency or any balance sheet item, level of income or financial
condition of the primary obligor, (iii) to purchase property, 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 (iv) otherwise to assure or hold harmless the holder of
any such primary obligation against loss in respect thereof (each, a “Guaranty
Obligation”); (b) with respect to any letter of credit, banker’s acceptance,
bank guaranty, surety bond and other similar instruments issued for the account
of that Person or as to which that Person is otherwise liable for reimbursement
of drawings or payments; (c) to purchase any materials, supplies or other
property from, or to obtain the services of, another Person if the relevant
contract or other related document or obligation requires that payment for such
materials, supplies or other property, or for such services, shall be made
regardless of whether delivery of such materials, supplies or other property is
ever made or tendered, or such services are ever performed or tendered, or (d)
in respect of any Rate Management Transaction.

 

2

 

The amount of any Contingent Obligation shall (x) in
the case of Guaranty Obligations, be deemed equal to the stated or determinable
amount of the primary obligation in respect of which such Guaranty Obligation
is made or, if not stated or if indeterminable, the maximum reasonably
anticipated liability in respect thereof, (y) in the case of Rate Management
Transaction, equal the termination value in the case of Rate Management
Transaction under which a “termination event” or “event of default” has
occurred and, in all other cases, shall equal $0 and (z) in the case of other
Contingent Obligations, be deemed equal to the maximum reasonably anticipated
liability of the Person in respect thereof.

 

“Default” means any act, event, condition or
omission which, with the giving of notice or lapse of time, would constitute an
Event of Default if uncured or unremedied.

 

“Environmental Laws” means all federal, state
and local laws including statutes, regulations, ordinances, codes, rules and
other governmental restrictions and requirements relating to the discharge of
air pollutants, water pollutants or process waste water or otherwise relating
to the environment or hazardous substances including the Federal Solid Waste
Disposal Act, the Federal Clean Air Act, the Federal Clean Water Act, the
Federal Resource Conservation and Recovery Act of 1976, the Federal
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
regulations of the Environmental Protection Agency, regulations of the Nuclear
Regulatory Commission and regulations of any state department of natural
resources or state environmental protection agency now or at any time hereafter
in effect.

 

“Equity Interest” means, as to any Person,
any capital stock, limited liability company membership interest, partnership
interest or other interest representing equity in, or ownership of, such
Person.

 

“ERISA” means, at any date, the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder.

 

“ERISA Affiliate” means any trade or business
(whether or not incorporated) under common control with the Company within the
meaning of Section 414(b) or (c) of the Code (and Sections 414(m) and (o)
of the Code for purposes of provisions relating to Section 412 of the Code).

 

“ERISA Event” means (a) a Reportable
Event with respect to a Pension Plan; (b) a withdrawal by the Company or
any ERISA Affiliate from a Pension Plan subject to Section 4063 of ERISA during
a plan year in which it was a substantial employer (as defined in Section
4001(a)(2) of ERISA) or a cessation of operations which is treated as such a
withdrawal under Section 4062(e) of ERISA; (c) a complete or partial
withdrawal by the Company or any ERISA Affiliate from a Multiemployer Plan or
notification that a Multiemployer Plan is in reorganization; (d) 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 

 

3

 

terminate a Pension Plan or
Multiemployer Plan; (e) an event or condition which might reasonably be
expected to constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, any Pension Plan or
Multiemployer Plan; or (f) the imposition of any liability under Title IV of
ERISA, other than PBGC premiums due but not delinquent under Section 4007 of
ERISA, upon the Company or any ERISA Affiliate.

 

“Escrow Account” means the escrow account of
the Company with a minimum daily balance of at least $22,000,000 maintained at
the Bank which is related to the Patent Arbitration Award.

 

“Event of Default” means the occurrence of
any of the events described in section 7.1.

 

“Financial Covenant Compliance Certificate”
means a certificate of the Company in the form of Exhibit C.

 

“GAAP” means generally accepted accounting
principles in effect in the United States from time to time.

 

“Governmental Authority” means any nation or
government, any state or other political subdivision thereof, any central bank
(or similar monetary or regulatory authority) thereof, any court or similar judicial
authority thereof, any entity exercising executive, legislative, regulatory or
administrative functions of or pertaining to government, and any corporation or
other entity owned or controlled, through Equity Interests or otherwise, by any
of the foregoing.

 

“Hazardous Materials” means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products
or any hazardous or toxic substances, materials or wastes, defined or regulated
as such in or under any Environmental Law, including asbestos, polychlorinated
biphenyls and urea-formaldehyde insulation.

 

“Indebtedness” means, as to any Person, (a)
all indebtedness for borrowed money, (b) Capitalized Lease Obligations, (c)
notes payable and drafts accepted representing extensions of credit, (d) any
obligation owed for all or any part of the deferred purchase price of property
or services (excluding trade payables incurred in the ordinary course of
business) and (e) all indebtedness secured by any Lien on any property of the
Person even though such Person has not assumed or become liable for the payment
of such Indebtedness, provided that for purposes of this clause (e) the
amount of such Indebtedness shall be limited to the greater of (i) the amount
of such Indebtedness as to which there is recourse to such Person and (ii) the
fair market value of the property which is subject to the Lien.

 

“IRS” means the Internal Revenue Service, and
any Governmental Authority succeeding to any of its principal functions under
the Code.

 

4

 

“Letter of Credit” means each letter of
credit issued by the Bank pursuant to section 2.8 hereof.

 

“LIBOR Rate” means the per annum rate
reported in the Money Rates
column or section of The Wall Street Journal (Midwest Edition) as the
London Interbank Offered Rates (LIBOR) for loans for a period of one month as
of the first Business Day of each month, rounded upward to the nearest 1/8th
of 1%, and the LIBOR Rate shall change on the first Business Day of each
month.  If The Wall Street Journal ceases publication of the LIBOR
Rate, the LIBOR Rate shall be determined by the Bank from such other source as
the Bank reasonably selects.  If the LIBOR Rate is not readily available
to the Bank from another source, the Bank shall have the right to choose a
reasonably comparable index.  If The Wall Street Journal or the
replacement source publishes:  (a) more than one LIBOR Rate, the higher or
highest of the rates shall apply; or (b) a retraction or correction of a
previously published LIBOR Rate, the LIBOR Rate reported in the retraction or
correction shall apply.  The LIBOR Rate determined by the Bank shall, in
the absence of manifest error, be conclusive.

 

 “LIBOR
Rate Loan” means a Loan bearing interest at a rate determined by reference
to the LIBOR Rate.

 

“Lien” means any security interest, mortgage,
deed of trust, pledge, hypothecation, assignment, charge or deposit
arrangement, encumbrance, lien (statutory or otherwise) or charge of any kind
including any agreement to give any of the foregoing, any conditional sale or
other title retention agreement or any financing or similar statement or notice
filed under the Uniform Commercial Code as adopted and in effect in the
relevant jurisdiction (or other similar recording or notice statute, and any
lease in the nature thereof), except a filing for precautionary purposes made
with respect to a true lease or other true bailment.

 

“Loan” means an extension of credit to the
Company by the Bank pursuant to section 2.1.

 

“Loan Documents” means this Agreement, the
Note, the Collateral Documents, all Permitted Rate Management Transactions, all
Letters of Credit, all applications for Letters of Credit and all other
documents, instruments, agreements and certificates related to or executed in connection
with this Agreement and the transactions contemplated hereby.

 

“LOC Exposure” means an amount equal to the
sum of (a) the aggregate amount available for drawing under all outstanding
Letters of Credit and (b) the aggregate amount of payments made by the Bank
resulting from drawings under Letters of Credit which have not been reimbursed
by the Company (either by payment by the Company or the making of Loans under
section 2.9 to satisfy such Reimbursement Obligation).

 

“Margin Stock” means “margin stock” as such
term is defined in Regulation G, T, U or X of the Federal Reserve Board.

 

5

 

“Material Adverse Effect” means, with respect
to the Company and each Subsidiary, (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or such Subsidiary; (b) a
material impairment of the ability of the Company or such Subsidiary to perform
under any Loan Document to which the Company or such Subsidiary is a party and
to avoid any Event of Default; or (c) a material adverse effect upon the
legality, validity, binding effect or enforceability against the Company or
such Subsidiary of any Loan Document to which the Company or such Subsidiary is
a party; provided that if the amount currently on deposit in the Escrow
Account is sufficient to satisfy a judgment, decree or award rendered against
the Company with respect to the Patent Arbitration Award, the entering of such
judgment, decree or award against the Company shall not be considered to have a
Material Adverse Effect.

 

“Maturity Date” means November 1, 2009
or such earlier date on which the Note becomes due and payable pursuant to
section 7.2 of this Agreement.

 

“Multiemployer Plan” means a “multiemployer
plan”, within the meaning of Section 4001(a)(3) of ERISA, to which the Company
or any ERISA Affiliate makes, is making, or is obligated to make contributions
or, during the preceding three calendar years, has made, or been obligated to
make, contributions.

 

“Net Income” means, as to any Person and for
any period as to which such amount is being determined, the excess of:

 

(a)                                  all revenues and income
derived from operations in the ordinary course of business (excluding
extraordinary gains and profits upon the disposition of investments and fixed
assets),

 

over

 

(b)                                 all expenses and other
proper charges against income (including payment or provision for all
applicable income and other taxes, but excluding extraordinary losses and
losses upon the disposition of investments and fixed assets),

 

all as determined for such Person and its
Consolidated Subsidiaries.

 

“Note” means the promissory note of the
Company in the form of Exhibit A.

 

“Obligations” means all obligations,
contingent or otherwise, whether now existing or hereafter arising, of the
Company from time to time owed to the Bank or an Affiliate of the Bank under
the Loan Documents, whether for principal, interest, reimbursement, fees,
expenses, indemnification or otherwise.

 

“Operating Profit” means, as to the Company
for any period as to which such amount is being determined, the amount reported
as operating profit in the Company’s financial statements for such period.

 

6

 

“Patent Arbitration Award” means patent
infringement arbitration decision issued May 3, 2005 against the Company,
awarding Ole K. Nilssen $23,400,000, which award is currently pending in the
United Stated District Court for the Northern District of Illinois, based on a
motion filed by Ole K. Nilssen to enter the award and a counter-motion filed by
the Company to vacate the award.

 

“PBGC” means the Pension Benefit Guaranty
Corporation, or any Governmental Authority succeeding to any of its principal
functions under ERISA.

 

“Pension Plan” means a pension plan (as
defined in Section 3(2) of ERISA) subject to Title IV of ERISA which the
Company sponsors, maintains, or to which it makes, is making, or is obligated
to make contributions, or in the case of a multiple employer plan (as described
in Section 4064(a) of ERISA) has made contributions at any time during the
immediately preceding five (5) plan years.

 

“Permitted Liens” means (a) Liens listed
on Schedule 1 attached hereto, provided that the Indebtedness
secured thereby shall not be renewed, extended or increased; (b) Liens for
taxes, assessments or governmental charges not delinquent or being contested in
good faith by the Company or any Subsidiary for which adequate reserves are
established and maintained; (c) other statutory Lien claims not delinquent
or being contested in good faith by the Company or any Subsidiary for which
adequate reserves are established and maintained, including, construction,
mechanic’s and warehousemen Liens; (d) purchase money Liens on any
property acquired after the date hereof to be used by the Company or a
Subsidiary in the normal course of its business, and created or incurred
simultaneously with the acquisition of such property, if such Lien is limited
to the property so acquired and the aggregate Indebtedness secured by all such
Liens does not exceed $500,000 at any time outstanding for the Company and all
Subsidiaries; (e) Liens or deposits in connection with worker’s
compensation or other insurance or to secure the performance of bids, trade
contracts (other than for borrowed money), leases, public or statutory
obligations, surety or appeal bonds or other obligations of like nature
incurred in the ordinary course of business; (f) Liens in favor of the Bank or
any Affiliate of the Bank; and (g) easements, restrictions, minor title
irregularities and similar matters which have no material adverse effect as a
practical matter upon the ownership or use of its property by the Company or
any Subsidiary.

 

“Permitted Rate Management Transaction” means
a Rate Management transaction between the Company and the Bank or an Affiliate
of the Bank.

 

“Person” means any natural person,
corporation, limited liability company, joint venture, limited liability
partnership, partnership, association, trust or other entity or any
Governmental Authority.

 

“Plan” means an employee benefit plan (as
defined in Section 3(3) of ERISA) which the Company sponsors or maintains or to
which the Company makes, is making, or is obligated to make contributions and
includes any Pension Plan.

 

7

 

“Prime Rate” means a rate per annum equal to
the prime rate of interest announced from time to time by the Bank (which is
not necessarily the lowest rate charged to any customer), changing when and as
said prime rate changes

 

“Qualified Account” means an account
owing to the Company (a) by an account debtor, other than an Affiliate of
the Company, located in the United States;    
(b) which arose out of the performance of services by the Company
or from a bona fide sale of goods which have been delivered or shipped to the
account debtor and for which the Company has genuine invoices, shipping
documents or receipts; (c) which is not more than 90 days past due
from the original due date of the relevant invoice or 150 days past due from
the date of the relevant invoice and which original due date is not more than
60 days after the date of the relevant invoice; (d) in which the Bank has
a valid, perfected first priority Lien and which is subject to no other Lien;
(e) which, together with the transactions out of which it arose, complies with
all applicable laws and regulations;     
(f) as to which the Company has no knowledge of anything which
might cause the account debtor to be unable to pay the account; (g) as to
which the account debtor has not disputed its liability or returned or
threatened to return the goods; (h) the existence and amount of which have
been certified to the Bank by the Company in the most recent Borrowing Base
Certificate; (i) by an account debtor other than a federal Governmental
Authority; and (j) as to which the Bank has not notified the Company that the
account or account debtor is unsatisfactory. Any Qualified Account which ceases
to meet any of the foregoing requirements shall cease to be a Qualified Account
at such time.

 

“Rate Management Transaction” means any
transaction (including an agreement with respect thereto) now existing or
hereafter entered into between the Company and the Bank or an Affiliate of the
Bank which is a rate swap, basis swap, forward rate transaction, commodity
swap, commodity option, equity or equity index swap, equity or equity index
option, bond option, interest rate option, foreign exchange transaction, cap
transaction, collar transaction, forward transaction, currency swap
transaction, cross-currency rate swap transaction, currency option or any
other, similar transaction (including any option to enter into any of these
transactions) or any combination of the foregoing, whether linked to one or
more interest rates, foreign currencies, commodity prices, equity prices or
other financial measures.

 

“Reimbursement Obligation” means the
obligation of the Company to reimburse the Bank for drawings under Letters of
Credit pursuant to section 2.9.

 

“Reportable Event” means any of the
events set forth in Section 4043(c) of ERISA or the regulations thereunder,
other than any such event for which the 30-day notice requirement under ERISA
has been waived in regulations issued by the PBGC.

 

“Requirement of Law” means, as to any Person,
any law (statutory or common), treaty, rule or regulation of a Governmental
Authority applicable to or binding upon the Person or any of its property or
any ruling, order, judgment or determination of an arbitrator or a Governmental
Authority to which the Person or any of its property is subject.

 

8

 

“Restricted Payments” means dividends or
other distributions by the Company or any Subsidiary based upon the Equity
Interests of the Company or any Subsidiary (except dividends payable to the
Company and dividends payable solely in Equity Interests of the Company) and
purchases, redemptions and other acquisitions, direct or indirect, by the
Company or any Subsidiary, of Equity Interests of the Company or any
Subsidiary.

 

“Solvent” means, with respect to any Person,
that as of the date of determination both:

 

(a) (i) the then fair saleable value of the property
of such Person is (y) greater than the Total Liabilities (including Contingent
Obligations) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person’s then existing debts
as they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person’s
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend
to incur, or believe (nor should it reasonably believe) that it will incur,
debts beyond its ability to pay such debts as they become due; and

 

(b) such Person is “solvent” within the meaning
given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances.

 

“Subsidiary” of a Person means any other
Person, as of a particular date, which it directly, or indirectly through one
or more of its Subsidiaries, owns at least 50% of the outstanding Equity
Interests of such other Person.

 

“Total Liabilities” means, as to any Person,
all items which would be classified as liabilities on the consolidated balance
sheet of such Person and its Consolidated Subsidiaries.

 

“Unfunded Pension Liability” means the excess
of a Plan’s benefit liabilities under Section 4001(a)(16) of ERISA, over the
current value of that Plan’s assets, determined in accordance with the
assumptions used for funding the Pension Plan pursuant to Section 412 of the
Code for the applicable plan year.

 

1.2                                 Rules of
Interpretation. Except as otherwise explicitly specified to the
contrary or unless the context clearly requires otherwise:  (a) all references to a particular statute or
regulation include all rules and regulations promulgated thereunder and any
successor statute, regulation or rules, in each case as from time to time in
effect; (b) accounting terms shall be construed, and all financial computations
required under this Agreement shall be made, in accordance with GAAP
consistently applied;               (c)
references to agreements (including this Agreement) and other contractual
instruments shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document; (d) in the
computation of periods of time from a specified 

 

9

 

date to a later specified
date, the word “from” means “from and including”, the words “to” and “until”
each mean “to but excluding” and the word “through” means “to and including”;
(e) the word “including” shall be construed as “including without limitation”;
(f) references to a fiscal year or fiscal quarter mean the fiscal year or
fiscal quarter of the Company; and (g) references to the word “Subsidiary”
shall mean a Subsidiary of the Company.

 

2.                                       The Credit Facilities;
Interest Rates; Fees.

 

2.1                                 The Loans. The Bank
agrees to lend to the Company, subject to the terms and conditions hereof,
during the period from the date of this Agreement to the Maturity Date up to
the maximum amount at any time outstanding equal to the lesser of (a) an amount
equal to (i) the Commitment minus (ii) the LOC Exposure and (b) an amount equal
to (i) the Borrowing Base Availability minus (ii) the LOC Exposure. Within such
maximum amount Loans may be made, repaid and made again. All Loans shall be
evidenced by the Note and shall be payable on the Maturity Date. Although the
Note shall be expressed to be payable in the maximum amount specified above,
the Company shall be obligated to pay only the amount actually disbursed to or
for the account of the Company, together with interest on the unpaid balance of
the sums so disbursed, which remain outstanding from time to time as shown on
the records of the Bank.

 

2.2                                 Borrowing
Procedures for Loans. The Company shall request Loans by written notice,
or by telephonic notice confirmed in writing to the Bank, not later than 11:00
a.m., Milwaukee, Wisconsin time on the requested Borrowing Date (which must be
a Business Day). In the event of any inconsistency between the telephonic
notice and the written confirmation thereof, the telephonic notice shall
control. Each request for a Loan shall be irrevocable and shall constitute a
certification by the Company that the borrowing conditions specified in
section 4.2 will be satisfied on the specified Borrowing Date. Upon
fulfillment of the applicable borrowing conditions set forth in Article 4,
the Bank shall deposit the Loan proceeds in the Company’s account maintained
with the Bank or as the Company may otherwise direct in writing.

 

2.3                                 Commitment Fee. As
consideration for the Commitment, the Company agrees to pay to the Bank,
annually, commencing on the Closing Date and on the same date each year
thereafter, a fee equal to $1,000.

 

2.4                                 Reduction or
Termination of Commitment. The Company may, on any interest payment
date and upon three (3) days’ prior written notice to the Bank,
permanently reduce or terminate the Commitment; provided that no such
reduction shall reduce the amount of the Commitment to an amount less than the
sum of (a) the unpaid principal balance of the Note on the date of such
reduction and (b) the LOC Exposure on the date of such reduction; and provided,
further, that in the event of a termination, the Company shall pay to
the Bank, on or before the effective date of the termination, (w) the unpaid
principal balance of the Note, (x) all interest accrued thereon, (y) all
commitment 

 

10

 

fees, other fees and
expenses payable by the Company accrued or incurred through the termination
date and (z) the cash collateral required by section 2.11.

 

2.5                                 Interest Rates.

 

(a)                                  The unpaid
principal balance of the Loans outstanding from time to time shall bear
interest for the period commencing on the Borrowing Date of such Loan until
such Loan is paid in full. Each Loan shall bear interest at the higher of (i)
five percent (5.00%) per annum or (ii) the LIBOR Rate plus one and one-half
percent (1.50%) and shall change on each date on which the LIBOR Rate changes. Accrued
interest on the Note shall be due on the first day of each month, commencing on
December 1, 2007, and on the Maturity Date.

 

(b)                                 Notwithstanding
the provisions of section 2.5(a), upon the occurrence and during the continuance
of an Event of Default, the unpaid principal balance of the Note shall, upon
notice from the Bank to the Company, bear interest at an annual rate equal to
the rate otherwise in effect under section 2.5(a), plus three percent (3.00%)
payable upon demand (the “Default Rate”). On and after the Maturity Date, the
unpaid principal balance of the Note and all accrued interest thereon shall
bear interest at the Default Rate and shall be payable upon demand.

 

(c)                                  Interest shall
be calculated for the actual number of days elapsed on the basis of a 360-day
year.

 

2.6                                 Payments. All payments
of principal and interest on the Note and of all fees due hereunder shall be
made at the office of the Bank in immediately available funds not later than
2:00 p.m., Milwaukee, Wisconsin time on the date due; funds received after that
time shall be deemed to have been received on the next Business Day. Whenever
any payment hereunder or under the Note is stated to be due on a day which is
not a Business Day, such payment shall be made on the next succeeding Business
Day and such extension of time shall be included in computing any interest or
fee then due. The Bank may charge any account of the Company at the Bank for
any payment due under the Note (including prepayments), or any fee or other
amount payable hereunder, on or after the date due.

 

2.7                                 Prepayments.

 

(a)                                  Mandatory. In addition
to other payments required hereunder, including, without limitation, any
payments required under section 2.4, if the outstanding principal balance of
the Note exceeds the lesser of (i) an amount equal to    [a] Borrowing Base Availability minus [b]
the LOC Exposure or (ii) an amount equal to [a] the Commitment minus [b] the
LOC Exposure, the Company shall immediately repay the excess.

 

(b)                                 Optional. The Company
may prepay Loans without premium or penalty. Any optional prepayments of the
Note shall be applied first to any 

 

11

 

fees the Company owes the
Bank, then to any accrued and unpaid interest the Company owes the Bank and
then to the remaining Obligations in such order and manner as the Company
specifies.

 

2.8                                 Letters of
Credit.

 

(a)                                  Issuance of New
Letters of Credit. Upon receipt of a duly executed application
therefor, and such other documents, agreements and instructions as the Bank
shall require, and subject to fulfillment of the conditions set forth in
sections 4.2(b), 4.2(c) and 4.2(d), the Bank will issue a Letter of Credit for
the account of the Company, provided that:

 

(i)                                     the requested
Letter of Credit will not be issued if, upon issuance, the sum of [a] the
unpaid principal balance of the Note and [b] the LOC Exposure would exceed the
lesser of [y] the Commitment or [z] the Borrowing Base Availability;
and

 

(ii)                                  each Letter of
Credit shall be satisfactory in form and content to the Bank and no Letter of
Credit shall have an initial expiry date later than one year from the date of
issuance thereof; provided that any Letter of Credit with a one-year
tenor may provide for the renewal thereof for additional one-year periods; provided,
further that no Letter of Credit shall have an expiry date later than
thirty (30) days prior to the Maturity Date.

 

(b)                                 Letter of
Credit Existing on the Closing Date. Any outstanding letter of
credit issued by the Bank prior to the Closing Date shall be considered a
Letter of Credit issued pursuant to this Agreement and shall be subject to the
terms and conditions applicable to Letters of Credit herein.

 

2.9                                 Reimbursement
Obligation of the Company. The Company agrees to pay to the Bank the
amount paid by the Bank resulting from a drawing under a Letter of Credit on
the date the Bank honors such drawing. If the Company can satisfy the
conditions precedent set forth in sections 4.2(b)-4.2(d), the Company shall be
deemed to have elected to borrow from the Bank, Loans in an aggregate amount
equal to the amount drawn which shall be used to satisfy the Company’s
reimbursement obligation under this section. The obligation of the Company to
pay to the Bank the amount of any payment made by the Bank under any Letter of
Credit shall be absolute, unconditional and irrevocable and shall remain in
full force and effect until all amounts owed by the Company to the Bank
hereunder and under any Loan Document shall have been paid in full and such
obligation of the Company shall not be affected, modified or impaired upon the
happening of any event, including, any of the following, whether or not with
notice to, or the consent of, the Company:

 

(a)                                  any lack of
validity or enforceability of this Agreement, or any other document or
instrument executed in connection with this Agreement or in connection with a
Letter of Credit (collectively, the “Operative Documents”);

 

12

 

(b)                                 any amendment,
modification, waiver, consent, or any substitution, exchange or release of or
failure to perfect any interest in collateral or security, with respect to any
of the Operative Documents;

 

(c)                                  the existence
of any claim, setoff, defense or other right which the Company may have at any
time against any beneficiary or any transferee of any Letter of Credit (or any
persons for whom any such beneficiary or any such transferee may be acting),
the Bank or any other Person, whether in connection with this Agreement, any of
the Operative Documents, the transaction contemplated hereby or any unrelated
transactions;

 

(d)                                 any draft or
other statement or document presented under any Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect;

 

(e)                                  payment by the
Bank to the beneficiary under any Letter of Credit against presentation of
documents which do not strictly comply with the terms of the Letter of Credit,
including failure of any documents to bear any reference or adequate reference
to such Letter of Credit;

 

(f)                                    any failure,
omission or delay on the part of the Bank or any party to any of the Operative
Documents in enforcing, asserting or exercising any right, power or remedy
conferred upon the Bank or any such other party under this Agreement or any of
the Operative Documents;

 

(g)                                 the voluntary
or involuntary liquidation, dissolution, sale or other disposition of all or
substantially all of the assets of the Company, the receivership, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition with creditors or readjustment or other similar
proceedings affecting the Company or its assets, or any allegation or contest
of the validity of this Agreement or any of the Operative Documents in any such
proceedings; or

 

(h)                                 any other event
or action that would, in the absence of this clause, result in the release or
discharge by operation of law of the Company for the performance or observance
of any allegation, covenant or agreement contained herein.

 

No set-off, reduction or diminution of any
obligation, or any defense of any kind or nature which the Company has or may
have against the beneficiary shall be available hereunder to the Company.

 

2.10                           Liability of
the Bank. The Company assumes all risk of the acts or
omissions of the beneficiary with respect to its use of a Letter of Credit. Neither
the Bank nor any of its officers or directors shall be liable or responsible
for (a) the use which may be made of a Letter of Credit or for any acts or
omissions of the beneficiary in connection therewith; (b) the validity,
sufficiency or genuineness of documents, or of any endorsement(s) thereon, even
if such documents should in fact prove to be in any or all 

 

13

 

respects invalid, fraudulent
or forged; (c) payment by the Bank to the beneficiary against presentation of
documents which contain immaterial discrepancies or deviations from the terms
of a Letter of Credit, including failure of any documents to bear any reference
or adequate reference to such Letter of Credit; or (d) any other circumstances
whatsoever in making or failing to make payment under the Letter of Credit; provided
that the Bank shall be liable to the Company to the extent, but only to the
extent, of any direct as opposed to consequential, damages suffered by the
Company which the Company proves were caused by (y) the Bank’s willful
misconduct in determining whether documents presented under a Letter of Credit
substantially comply with the terms of such Letter of Credit or (z) the Bank’s
failure to pay under a Letter of Credit after presentation to it of documents
strictly complying with the terms and conditions of such Letter of Credit. In
furtherance and not in limitation of the foregoing, the Bank may accept the
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary.

 

2.11                           Cash Collateral. If on the
Maturity Date any Letter of Credit remains outstanding, the Company shall
either make arrangements satisfactory to the Bank for the assumption of
liabilities created by any such issued and unexpired Letter of Credit or, in
the absence of such satisfactory arrangements, the Company shall deliver to the
Bank, cash collateral in an aggregate principal amount equal to 100% of the LOC
Exposure. The unapplied balance of such cash collateral shall be paid by the
Bank to the extent the Bank has not been reimbursed for drafts honored by it,
and, to the extent the Letters of Credit expire without draw, any excess shall
be first applied to the Company’s obligations then due and outstanding under
the Loan Documents, if any, with any excess returned to the Company.

 

2.12                           Letter of
Credit Fees. On the Borrowing Date of each Letter of Credit
(and on the date of any renewal thereof), the Company shall pay to the
Bank   (a) the
normal negotiation, presentation, transfer, amendment and other processing
fees, and other standard costs and charges of the Bank relating to letters of
credit as in effect from time to time and (b) the ordinary and customary fees
of the Bank for letters of credit as in effect from time to time.

 

2.13                           Yield
Protection. If any law or any governmental rule, regulation,
policy, guideline, court decision or directive (whether or not having the force
of law), or any interpretation thereof, or the compliance of the Bank
therewith,

 

(a)                                  subjects the
Bank to any tax, duty, charge or withholding on or from payments due from the
Company (excluding taxation of the net income of the Bank and any such tax,
duty, charge or withholding in effect as of the date of this Agreement), or
changes the basis of taxation of payments to the Bank in respect of its Loans
or other amounts due it hereunder (excluding taxation of the net income of the
Bank);

 

(b)                                 imposes or
increases or deems applicable any reserve, assessment, insurance charge,
special deposit or similar requirement against assets of, 

 

14

 

deposits with or for the
account of, or credit extended by, the Bank (other than reserves and
assessments taken into account in determining the LIBOR Rate) with respect to
the Loans; or

 

(c)                                  affects the
treatment of any Loan or commitment of the Bank hereunder as an asset or other
item included for the purpose of calculating the appropriate amount of capital
to be maintained by the Bank or any corporation controlling the Bank; or

 

(d)                                 imposes any
other condition the result of which is to increase the cost to the Bank of
making, funding or maintaining the Loans or reduces any amount received by the
Bank in connection with the Loans or requires the Bank to make any payment
calculated by reference to the amount of Loans held or interest received by it,
by an amount deemed material by the Bank;

 

then, within ten days after written demand by the
Bank (accompanied by an explanation of such increased expense or reduction in
amount received), the Company shall pay the Bank that portion of such increased
expense incurred or reduction in an amount received which the Bank determines
is attributable thereto. Such written notice shall, in the absence of manifest
error, be conclusive and binding on the Company.

 

2.14                           Additional
LIBOR Rate Loan Provisions.

 

(a)                                  If the Bank
determines that the making or maintaining of a LIBOR Rate Loan would violate
any applicable law, rule regulation or directive, whether or not having the
force of law, then the obligation of the Bank to make, continue, maintain or
convert any LIBOR Rate Loan shall be suspended until the Bank notifies the
Company that the circumstances causing such suspension no longer exist. During
any such period, each LIBOR Rate Loan shall automatically bear interest at the
Prime Rate.

 

(b)                                 If the Bank is
unable to determine the LIBOR Rate or is unable to obtain deposits of United
States dollars in the London interbank market in the applicable amounts and for
a period of one month, then, upon notice from the Bank to the Company, the obligation
of the Bank to make any LIBOR Rate Loan, shall be suspended until the Bank
notifies the Company that the circumstances causing such suspension no longer
exist. During any such period, each LIBOR Rate Loan shall automatically bear
interest at the Prime Rate.

 

2.15                           Use of Proceeds. The Company
will not use, directly or indirectly, any part of the proceeds of any Loan for
the purpose of purchasing or carrying, or to extend credit to others for the
purpose of purchasing or carrying, any Margin Stock. The Company will not use,
directly or indirectly, any part of the proceeds of any Loan to purchase
ineligible securities, as defined by applicable regulations of the Federal
Reserve Board, underwritten by any Affiliate of Associated Banc Corp. during
the underwriting period and for 30 days thereafter.

 

15

 

3.                                       Representations and Warranties. In order to
induce the Bank to make the Loans and issue Letters of Credit, the Company
represents and warrants to the Bank:

 

3.1                                 Organization; Subsidiaries;
Corporate Power. The Company is a corporation validly existing and
in good standing under the laws of the State of Delaware. The Company is duly
qualified as a foreign corporation to do business and is in good standing in
every jurisdiction in which the nature of its business or the ownership of its
properties requires such qualification and in which the failure to so qualify
could result in a material adverse change in, or could have a material adverse
effect upon, the operations, business, properties, condition (financial or
otherwise) or prospects of the Company. Set forth on Schedule 3.1 is the name,
jurisdiction of organization, authorized, issued and outstanding Equity
Interests of each Subsidiary of the Corporation and the number and percentage
of the outstanding Equity Interests of each Subsidiary owned by the Company. Each
Subsidiary is (a) validly existing under the laws of such Subsidiary’s
jurisdiction of organization and (b) duly qualified as a foreign entity to do
business and is in good standing in every jurisdiction in which the nature of
such Subsidiary’s business or the ownership of such Subsidiary’s properties
requires such qualification and in which the failure to so qualify could result
in a material adverse change in, or could have a material adverse effect upon,
the operations, business, properties, condition (financial or otherwise) or
prospects of such Subsidiary. The Company and each Subsidiary has the power to
own its properties and carry on its business as currently being conducted.

 

3.2                                 Authorization and Binding Effect. The execution
and delivery by the Company of the Loan Documents to which it is a party, and
the performance by the Company of its obligations thereunder:  (a) are within its corporate power,
(b) have been duly authorized by proper corporate action on the part of
the Company, (c) are not in violation of any Requirement of Law, the
Certificate of Incorporation or By-Laws of the Company or the terms of any
agreement, restriction or undertaking to which the Company is a party or by
which it is bound, and (d) do not require the approval or consent of the
stockholders of the Company, any Governmental Authority or any other Person,
other than those obtained and in full force and effect. The Loan Documents to
which the Company is a party, when executed and delivered, will constitute the
valid and binding obligations of the Company enforceable in accordance with
their terms, except as limited by bankruptcy, insolvency or similar laws of
general application affecting the enforcement of creditors’ rights and except
to the extent that general principles of equity might affect the specific
enforcement of such Loan Documents.

 

3.3                                 Financial Statements. The Company
has furnished to the Bank   (a) the consolidated
balance sheet of the Company and its Consolidated Subsidiaries as of June 30,
2007, and related consolidated statements of income, retained earnings and cash
flows of the Company and its Consolidated Subsidiaries for the year ended on
that date, audited by Ernst & Young LLP and (b) the consolidated balance
sheet of the Company and its Consolidated Subsidiaries dated September 30, 2007
and related consolidated statements of income for the period ended on such
date, prepared by the Company. Such financial statements were prepared in
accordance with GAAP consistently applied throughout the periods involved, are
correct and complete and fairly present the financial 

 

16

 

condition of the Company and
its Consolidated Subsidiaries as of such dates and the results of its
operations and cash flows for the periods ended on such dates, subject, in the
case of the interim statements, to footnote disclosure and normal year-end
adjustments. There has been no material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Company or any of its Consolidated
Subsidiaries and no event, act or failure to act which could reasonably be
expected to result in a material adverse change in, or a material adverse
effect upon, the operations, business, properties, condition (financial or
otherwise) or prospects of the Company or any of its Consolidated Subsidiaries
has occurred, since the date of the most recent financial statement furnished
to the Bank.

 

3.4                                 Litigation. Except for
the matters described on (a) the financial statements referred to in section
3.3, (b) Schedule 3.4 or (c) the Patent Arbitration Award, there is no
litigation or administrative proceeding pending or, to the knowledge of the
Company, threatened against or affecting the Company or the properties of the
Company which involves a claim in excess of $1,500,000.

 

3.5                                 Restricted Payments. Neither the
Company nor any Subsidiary, has since the date of the most recent financial
statements furnished to the Bank, made any Restricted Payments.

 

3.6                                 Indebtedness;
No Default. Neither the Company nor any Subsidiary has any
outstanding Indebtedness or Contingent Obligations, except those permitted
under sections 6.2 and 6.3 and Indebtedness referred to in section 4.1(g)
which will be paid in full on the Closing Date. There exists no default nor has
any act or omission occurred which, with the giving of notice or the passage of
time, would constitute a default under the provisions of (a) any instrument
evidencing such Indebtedness or Contingent Obligation or any agreement relating
thereto or (b) any other agreement or instrument to which the Company is a
party, and which could reasonably be expected to have a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company.

 

3.7                                 Ownership of
Properties; Liens and Encumbrances. The Company has good and
marketable title to all of its property, real and personal, reflected on the
most recent financial statement of the Company and its Consolidated
Subsidiaries furnished to the Bank, and all property purported to have been
acquired since the date of such financial statement, except property
subsequently sold or otherwise disposed of in compliance with section 6.8
subsequent to such date. All such property is free of any Lien, except
Permitted Liens. All owned and leased buildings and equipment of the
Company  are in good condition, repair
and working order, ordinary wear and tear excepted, and conform to all
Requirements of Law.

 

3.8                                 Tax Returns Filed. The Company
has filed when due all federal and state income and other tax returns which are
required to be filed. The Company has paid or made provision for all taxes
shown on said returns and on all assessments 

 

17

 

received by it to the extent
that such taxes have become due except any such taxes which are being contested
in good faith by appropriate proceedings and for which adequate reserves have
been established. The Company has no knowledge of any liabilities which may be
asserted against it upon audit of its federal or state tax returns.

 

3.9                                 Margin Stock. The Company
is not engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying Margin
Stock.

 

3.10                           Regulated
Entities. The Company is not an “investment company” or a
company controlled by an “investment company” within the meaning of the
Investment Company Act of 1940, as amended. The Company is not subject to any
Requirement of Law limiting its ability to incur Indebtedness.

 

3.11                           ERISA Compliance.

 

(a)                                  Each Plan is in
compliance in all material respects with the applicable provisions of ERISA,
the Code and other Requirements of Law. Each Plan which is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter
from the IRS and to the Company’s knowledge, nothing has occurred which would
cause a loss of such qualification. The Company and each ERISA Affiliate has
made all required contributions to any Plan subject to Section 412 of the Code,
and no application for a funding waiver or an extension of any amortization
period pursuant to Section 412 of the Code has been made with respect to any
Plan.

 

(b)                                 There are no
pending or, to the Company’s knowledge, threatened claims, actions or lawsuits,
or action by any Governmental Authority, with respect to any Plan which has
resulted, or could reasonably be expected to result in, a material adverse
change in, or a material adverse effect upon, the operations, business,
properties, condition (financial or otherwise) or prospects of the Company. There
has been no prohibited transaction or other violation of the fiduciary
responsibility rules with respect to any Plan which has resulted, or could
reasonably be expected to result, in a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company.

 

(c)                                  (i) No ERISA
Event has occurred or is reasonably expected to occur; (ii) except as disclosed
on Schedule 3.11, no Pension Plan has any Unfunded Pension Liability; (iii)
neither the Company nor any ERISA Affiliate has incurred, or reasonably expects
to incur, any liability under Title IV of ERISA with respect to any Pension
Plan (other than premiums due and not delinquent under Section 4007 of ERISA);
(iv) neither the Company nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which, with the
giving of notice under Section 4219 of ERISA, would result in such liability)
under Section 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and
(v) neither the Company nor any ERISA Affiliate has engaged in a transaction
that could be subject to Section 4069 or 4212(c) of ERISA.

 

18

 

3.12                           No Burdensome
Restrictions. The Company is not a party to and is not bound by
any agreement, instrument, undertaking, any Requirement of Law, or subject to
any other restriction (a) which could reasonably be expected to have a
material adverse change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or prospects of the
Company or may in the future have a material adverse change in, or a material
adverse effect upon, the operations, business, properties, condition (financial
or otherwise) or prospects of the Company or (b) under or pursuant to
which the Company is or will be required to place (or under which any other
Person may place) a Lien upon any of its properties securing Indebtedness either
upon demand or upon the happening of a condition, with or without such demand.

 

3.13                           Intellectual
Property. The Company possesses adequate trademarks, trade
names, copyrights, patents, permits, service marks and licenses, or rights
thereto, for the present and planned future conduct of its businesses
substantially as now conducted, without any known conflict with the rights of
others which could reasonably be expected to have a material adverse change in,
or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Company.

 

3.14                           Environmental
Matters. Excluding those items disclosed on (y) the financial statements
referred to in section 3.3 and (z) Schedule 3.14, the following, in the aggregate,
could not reasonably be expected to have material adverse change in, or
material adverse effect upon the operations, business, properties, condition
(financial or otherwise) or prospects of the Company  (for purposes of this section 3.14, “material
adverse” means a change in, or effect, in excess of $1,500,000):

 

(a)                                  The facilities
and properties owned, leased or operated by the Company (the “Properties”) do
not contain any Hazardous Materials in amounts or concentrations which
(i) constitute a violation of or (ii) could give rise to liability
under, any Environmental Law.

 

(b)                                 With respect to
the period during which the Company owned or occupied the Properties, and to
the Company’s knowledge after reasonable investigation, with respect to the time
before the Company owned or occupied the Properties, there has been no
unremediated release or threat of release of Hazardous Materials at or from the
Properties, or arising from or related to the operations of the Company (the “Business”),
in violation of or in amounts or in a manner that could give rise to liability
under Environmental Laws.

 

(c)                                  The Properties
and all operations at the Properties are in compliance in all material respects
with all applicable Environmental Laws, and there is no violation of any
Environmental Law with respect to the Properties or the Business. The
Company  has all permits, licenses and
approvals required under Environmental Laws.

 

19

 

(d)                                 With respect to
the period during which the Company owned or occupied the Properties, and to
the Company’s knowledge after reasonable investigation, with respect to the
time before the Company owned or occupied the Properties, (i) Hazardous
Materials have not been transported or disposed of from the Properties in
violation of, or in a manner or to a location which could give rise to
liability under, any Environmental Law, and (ii) Hazardous Materials have not
been generated, treated, stored or disposed of at, on or under any of the Properties
in violation of, or in a manner that could give rise to liability under, any
applicable Environmental Law.

 

(e)                                  The Company has
not received any notice of violation, alleged violation, noncompliance,
liability or potential liability regarding environmental matters or compliance
with Environmental Laws with regard to any of the Properties or the Business,
nor does the Company have knowledge or reason to believe that any such notice
will be received or is being threatened.

 

(f)                                    No judicial
proceeding or governmental or administrative action is pending or, to the
knowledge of the Company, threatened under any Environmental Law to which the
Company is or will be named as a party with respect to the Properties or the
Business, nor are there any consent decrees or other decrees, consent orders,
administrative orders or other orders, or other administrative or judicial
requirements outstanding under any Environmental Law with respect to the
Properties or the Business.

 

3.15                           Solvency. The Company
is and, upon the incurrence of any Obligations by the Company on any date on
which this representation is made, will be Solvent.

 

3.16                           Accuracy of
Information. All information furnished by the Company to the
Bank is true, correct and complete in all material respects as of the date
furnished and does not contain any untrue statement of a material fact or omit
to state a material fact necessary to make such information not misleading.

 

4.                                       Conditions for Borrowing. The Bank’s
obligation to make any Loan or issue any Letter of Credit is subject to the
satisfaction, on or before the following Borrowing Dates, of the following
conditions:

 

4.1                                 On or Before
the Closing Date. The Bank shall have received the following, all in
form, detail and content satisfactory to the Bank:

 

(a)                                  Notes. The Note,
duly executed by the Company.

 

(b)                                 Collateral
Documents.

 

(i)                                     A security
agreement, granting the Bank a Lien in all of the accounts and inventory of the
Company; and

 

20

 

(ii)                                  All financing
statements and other instruments required to perfect the Lien granted to the
Bank by the Company;

 

Each of the Collateral Documents shall be duly executed by the Persons
party thereto.

 

(c)                                  Company Charter
Documents. A certificate of the Company, dated the Closing
Date and executed by its Secretary or Assistant Secretary, which shall
(i) certify the resolutions of its Board of Directors authorizing the
execution, delivery and performance of the Loan Documents to which it is a
party, (ii) identify by name and title and bear the signatures of the
officers of the Company authorized to sign the Loan Documents to which it is a
party, and (iii) contain appropriate attachments, including the
Certificate of Incorporation of the Company certified by the Delaware Secretary
of State, a true and correct copy of its By-Laws and long form good standing
certificate for the Company from the Delaware Secretary of State.

 

(d)                                 Personal
Property Searches. Searches of the appropriate public offices
demonstrating that no Lien is of record affecting the Company or its properties
except Permitted Liens.

 

(e)                                  No Default
Certificate. A certificate signed by the Vice President and
Chief Financial Officer of the Company to the effect that the representations
and warranties contained in Article 3 hereof and in the other Loan
Documents are true and correct on and as of the Closing Date and no Default or
Event of Default exists on the Closing Date.

 

(f)                                    Closing Fee. The
commitment fee referred to in section 2.3.

 

(g)                                 Retirement of
Debt; Termination Statements. Evidence satisfactory to
the Bank that, on the Closing Date, all Indebtedness of the Company to Wells
Fargo Foothill, Inc. shall be paid in full out of the Loans, if any, made on
the Closing Date together with a release of Liens and an agreement by such
creditor to promptly furnish executed termination statements, satisfactions and
other documents, in form sufficient for filing or recording, evidencing the
termination of such creditor’s Liens on assets of the Company.

 

(h)                                 Opinion of Counsel. An opinion
from Snell & Wilmer L.L.P., counsel to the Company, in the form of
Exhibit B attached hereto.

 

(i)                                     Proceedings
Satisfactory. Such other documents as the Bank may reasonably
request; and all proceedings taken in connection with the transactions
contemplated by this Agreement, and all instruments, authorizations and other
documents applicable thereto, shall be satisfactory to the Bank.

 

21

 

4.2                                 On or Before
Each Subsequent Borrowing Date:

 

(a)                                  Borrowing
Procedure. The Company shall have complied with the borrowing
procedure specified in section 2.2.

 

(b)                                 Representations
and Warranties True and Correct. The representations and
warranties contained in Article 3 hereof and in the other Loan Documents
shall be true and correct on and as of the relevant Borrowing Date except     (i) that the representations and
warranties contained in section 3.3 shall apply to the most recent
financial statements delivered pursuant to section 5.1 and (ii) for
changes permitted by this Agreement.

 

(c)                                  No Default. There shall
exist on that Borrowing Date no Default or Event of Default.

 

(d)                                 Proceedings and
Documentation. The Bank shall have received such instruments and
other documents as it may reasonably request in connection with the making of
such Loan, and all such instruments and documents shall be in form and content
satisfactory to the Bank.

 

5.                                       Affirmative Covenants. The Company
covenants that it will, until the 
Commitment has terminated or expired, all Permitted Rate Management
Transactions have terminated or expired, all Letters of Credit have expired or
been returned to the Bank, and the Note, and all fees and expenses payable
hereunder, have been paid in full:

 

5.1                                 Financial
Reporting.

 

(a)                                  Annual Financial Statements. Furnish to
the Bank within 105 days after the end of each fiscal year a balance sheet of
the Company and its as of the close of such fiscal year and related statements
of income, retained earnings and cash flows for such year, setting forth in each
case in comparative form corresponding figures from the preceding annual audit,
all in reasonable detail and satisfactory in scope to the Bank, audited by
Ernst & Young LLP or by a firm of independent certified public accountants
selected by the Company and satisfactory to the Bank. Such annual statements
shall be accompanied by (i) the unqualified opinion of such accountants to
the effect that such audited financial statements were prepared in accordance
with GAAP and fairly present the financial condition and results from
operations of the Company as of such date and for such fiscal year, (ii) a
written statement from such accountants containing the computations showing
whether or not the Company is in compliance with the financial covenants
contained in sections 6.10 and 6.11 and certifying that in making the
examination necessary for their certification of such financial statement, they
obtained no knowledge of any Default or Event of Default or, if such
accountants shall have obtained knowledge of any Default or Event of Default,
they shall disclose in such statement the Default or Event of Default and (iii)
any management letter prepared by such accountants. All such financial
statements, and the financial statements described in 

 

22

 

section 5.1(b), shall
be furnished in consolidated and consolidating form for the Company and all
Consolidated Subsidiaries which it may at the time have.

 

(b)                                 Interim
Financial Statements. Furnish to the Bank within 35 days after
the end of each fiscal quarter of each fiscal year of the Company a balance
sheet of the Company as of the end of each such period and related statements
of income for the period from the beginning of the fiscal year through the end
of such quarter, prepared in the manner set forth in section 5.1(a) hereof
for the annual statements, certified, subject to audit and normal year-end
adjustments and footnote disclosure, by an authorized officer of the Company
and accompanied by (i) a certificate of such officer to the effect that there
exists no Default or Event of Default or, if any Default or Event of Default
exists, specifying the nature thereof, the period of existence thereof and what
action the Company proposes to take with respect thereto and (ii) detailed
accounts receivable aging reports.

 

(c)                                  Financial
Compliance Certificate. Furnish to the Bank, along with the
financial statements referred to in section 5.1(b), a Financial Covenant
Compliance Certificate, duly executed by an authorized officer of the Company.

 

(d)                                 Filings. Promptly upon
its becoming available, furnish to the Bank one copy of each financial
statement, report, notice, or proxy statement sent by the Company to the
holders of Equity Interests of the Company generally and of each regular or
periodic report, registration statement or prospectus filed by the Company with
any securities exchange or the Securities and Exchange Commission or any
successor agency, and of any order issued by any Governmental Authority in any
proceeding to which the Company is a party.

 

(e)                                  Other Financial Information. Promptly
furnish to the Bank such other financial information as the Bank may from time
to time reasonably request.

 

(f)                                    Borrowing Base Certificates. Furnish to
the Bank, not more frequently than two (2) times per calendar month at Borrower’s
election, upon request by the Bank not more frequently than once per calendar
month, and, in the absence of a request from the Bank, within 30 days after the
end of each calendar month, a Borrowing Base Certificate as of the end of that
month or the date of the request by the Bank.

 

5.2                                 Books and Records;
Inspections; Field Exam. (a) Keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities; and (b) if a
Default or Event of Default exists, or if the outstanding principal balance of
the Note exceeds $250,000 for thirty (30) days (which days do not need to be
consecutive) during any twelve (12) month period, permit representatives of the
Bank (including employees of the Bank or any consultants, accountants, lawyers
and appraisers retained by the Bank), at the Bank’s option upon reasonable
prior notice to the Company and at the Company’s expense, to visit and inspect
its properties, to conduct field examinations, to examine and 

 

23

 

make extracts from its books
and records, including to examine and make extracts from environmental
assessment reports and Phase I or Phase II studies, and to discuss the Company’s
affairs, finances and condition with its officers and independent accountants; provided,
however, unless a Default or Event of Default exists, the maximum
aggregate amount that the Company shall be required to reimburse the Bank for
field exams, inspections and audits during any six (6) calendar month period
shall not exceed $2,500.

 

5.3                                 Insurance. Maintain
insurance coverage as may be required by law or the Collateral Documents but in
any event not less than insurance coverage, in the forms, amounts and with
companies, which would be carried by prudent management in connection with
similar properties and businesses. Without limiting the foregoing, the Company
will (a) keep all its physical property insured against fire and extended
coverage risks in amounts at least equal to, and with deductibles no greater
than, those generally maintained by businesses engaged in similar activities in
similar geographic areas; (b) maintain all such worker’s compensation and
similar insurance as may be required by law; and (c) maintain, in amounts
and with deductibles at least equal to those generally maintained by businesses
engaged in similar activities in similar geographic areas, general public
liability insurance against claims for bodily injury, death or property damage
occurring on, in or about the properties of the Company, business interruption
insurance and product liability insurance.

 

5.4                                 Condition of Property. Keep its
properties (whether owned or leased) in good condition, repair and working
order.

 

5.5                                 Payment of Taxes. Pay and
discharge all lawful taxes, assessments and governmental charges upon it or
against its properties prior to the date on which penalties are attached
thereto, unless and to the extent only that the same shall be contested in good
faith and by appropriate proceedings by the Company and appropriate reserves
with respect thereto are established and maintained.

 

5.6                                 Compliance with
Law. Do and, except as permitted under section 6.5, cause each Subsidiary
to do all things necessary to (a) maintain its existence in its
jurisdiction of organization and obtain and maintain its qualification to
transact business as a foreign entity in any other jurisdiction where the
ownership of property or the conduct of business make qualification necessary
and where the failure to so qualify would have a material adverse change in, or
a material adverse effect upon, the operations, business, properties, condition
(financial or otherwise) or prospects of the Company or such Subsidiary,
(b) preserve and keep in full force and effect its rights and franchises
necessary to continue its business and (c) comply with all Requirements of
Law, writs, judgments, injunctions, decrees and awards to which it may be subject
including all applicable Environmental Laws, except those being contested in
good faith and involving no possibility of criminal liability.

 

5.7                                 Compliance with
ERISA. The Company shall, and shall cause each of its ERISA Affiliates
to:  (a) maintain each Plan in compliance
in all material respects with the applicable provisions of ERISA, the Code and
other federal or state law; 

 

24

 

(b) cause each Plan which is
qualified under Section 401(a) of the Code to maintain such qualification; and
(c) make all required contributions to any Plan subject to Section 412 of the
Code.

 

5.8                                 Compliance with
Other Loan Documents. Timely comply with all of its obligations under
the other Loan Documents, subject to any applicable cure period therein for
compliance.

 

5.9                                 Notices. Promptly, and
in any event within 3 Business Days after the Company has become aware of the
applicable event, notify the Bank in writing of:

 

(a)                                  any Default or
Event of Default;

 

(b)                                 any notice
given, or any action taken with respect to a claimed default, by any holder of
any other Indebtedness issued or assumed by the Company or any Subsidiary, or
the lessor under any lease as to which the Company or any Subsidiary is the
lessee or under any agreement under which any such Indebtedness was issued or
secured;

 

(c)                                  any
correspondence, notice, pleading, citation, indictment, complaint, order,
decree or other document received by the Company from any Person asserting or
alleging a circumstance or condition which requires or may require a financial
contribution by the Company or a cleanup, removal, remedial action or other
response by or on the part of the Company under Environmental Laws or which
seeks damages or civil, criminal or punitive penalties from the Company for an
alleged violation of Environmental Laws and which, in any such circumstance is
in excess of $250,000;

 

(d)                                 the
commencement or non-frivolous threat of, or any material development in, any
action, suit, arbitration or other proceeding affecting the Company which
involves a claim in excess of $250,000;

 

(e)                                  a Reportable
Event has occurred with respect to any Plan; and

 

(f)                                    any condition
or event which would make any warranty contained in Article 3 inaccurate.

 

Each notice under this section shall be accompanied
by a written statement by an officer of the Company setting forth details of
the occurrence referred to therein, stating what action the Company or any
affected Subsidiary proposes to take with respect thereto and at what time and
accompanied by all documents and correspondences from and to third parties
relating to the occurrence referred to therein.

 

5.10                           Maintenance of
Accounts. Maintain all of its primary operating, deposit and
other bank accounts, and all treasury management services, at the Bank. In
addition the Company shall maintain at the Bank, the Escrow Account until such
time as, 

 

25

 

in connection with the
Patent Arbitration Award, the applicable United States District Court either enters
or vacates the Patent Arbitration Award, at which time the funds in the Escrow
Account will be distributed either to Ole K. Nilssen or the Company, as the
case may be, respectively.

 

6.                                       Negative Covenants. The Company
covenants that, without the prior written consent of the Bank, it will not,
until the Commitment has terminated or expired, all Permitted Rate Management
Transactions have terminated or expired, all Letters of Credit have expired or
been returned to the Bank, and the Note, and all fees and expenses payable
hereunder, have been paid in full:

 

6.1                                 Restricted Payments. Make, or
permit any Subsidiary to make, any Restricted Payments.

 

6.2                                 Indebtedness. Create,
incur, assume or permit to exist, or permit any Subsidiary to create, incur,
assume or permit to exist, any Indebtedness except         (a) Indebtedness owed to the Bank
or to an Affiliate of the Bank; (b) Indebtedness secured by Permitted
Liens; (c) Indebtedness existing on the date hereof and set forth on
Schedule 6.2; provided that such Indebtedness is not extended, renewed
or increased;    (d) Indebtedness
permitted under section 6.6; and (e) trade debt acquired in the ordinary
course of business.

 

6.3                                 Contingent
Obligations. Create, incur, assume or suffer to exist, or
permit any Subsidiary to create, incur, assume or suffer to exist, any
Contingent Obligations except (a) endorsements for collection or deposit in the
ordinary course of business; (b) obligations under Permitted Rate Management
Transactions; and (c) Contingent Obligations existing as of the Closing Date
and listed in Schedule 6.3.

 

6.4                                 Liens. Create,
assume or permit to exist, or permit any Subsidiary to create, assume or permit
to exist, any Lien  upon any of its
property or assets, whether now owned or hereafter acquired, except Permitted
Liens.

 

6.5                                 Mergers. Merge or
consolidate, or permit any Subsidiary to merge or consolidate with or into any
other Person, except that any Subsidiary of the Company may merge into the
Company or into a Subsidiary wholly owned by the Company.

 

6.6                                 Acquisitions, Advances and
Investments. Acquire any other business or partnership or joint
venture interest or make any loans, advances or extensions of credit to, or any
investments in, any Person except (a) the acquisitions of assets or stock of
a third Party which (i) have previously been disclosed to the Bank or  (ii) exclusive of the acquisitions described
in clause 6.6 of section 6.66.6 do not exceed, in the aggregate, $500,000 in
any calendar year, (b) the purchase of United States government obligations
maturing within one year of the date of acquisition; (c) extensions of
credit to customers in the ordinary course of business; (d) the purchase
of certificates of deposit at the Bank; (e) commercial paper having a maturity
not exceeding 90 days which is rated not less than P-1 by Moody’s Investors
Service, Inc. or A-1 by

 

26

 

Standard and Poor’s Ratings
Service; (f) investments in money market funds which invest principally in
obligations described in 6.6 or 6.6 above; (g) existing investments of the
Company in and existing advances by the Company to wholly owned Subsidiaries of
the Company; (h) investments in repurchase agreements at the Bank;
(i) loans and advances to employees and agents in the ordinary course of
business for travel and entertainment expenses and similar items; and (j)
deposits in deposit accounts (subject to section  5.10).

 

6.7                                 Lines of Business. Engage in any
business other than those in which it is now engaged and any business directly
related thereto.

 

6.8                                 Disposition of
Assets. Sell, lease, sell and lease back, transfer or otherwise dispose of
any of its assets (or become obligated to do so), except for the following: (a)
sales of inventory in the ordinary course of business; (b) dispositions of
tangible assets to be replaced in the ordinary course of business within 12
months by other tangible assets of equal or greater value; (c) dispositions of
tangible assets that are no longer used or useful in the business of the Company,
provided that the aggregate lesser of fair market or book value of such
dispositions shall not exceed $1,000,000 in any fiscal year; and (d) licensing
of products and intangible assets in the ordinary course of business.

 

6.9                                 Subsidiaries. Permit any
Subsidiary of the Company to issue any Equity Interests, or any security or
instrument convertible into Equity Interests, except to the Company or to a
Subsidiary wholly owned by the Company.

 

6.10                           Operating
Profit. Permit the Operating Profits of the Company and its Consolidated
Subsidiaries calculated for the four (4) fiscal quarter period ending on the
date of determination to be less than the following amounts as of the last day
of the following fiscal quarters:

 

	
  Fiscal Quarter

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Second fiscal quarter for the 2008 fiscal
  year

  	
   

  	
  $

  	
  2,750,000

  	
   

  
	
  Fourth fiscal quarter for the 2008 fiscal
  year

  	
   

  	
  $

  	
  3,000,000

  	
   

  
	
  Second fiscal quarter for the 2009 fiscal
  year

  	
   

  	
  $

  	
  3,250,000

  	
   

  
	
  Fourth fiscal quarter for the 2009 fiscal
  year

  	
   

  	
  $

  	
  3,500,000

  	
   

  

 

6.11                           Capital Expenditures. Make or
commit to make, directly or indirectly, any Capital Expenditure if, after
giving effect thereto, the aggregate amount of all Capital Expenditures by the
Company and its Consolidated Subsidiaries would exceed (a) $2,500,000 for the
Company’s 2008 fiscal year or (b) $2,000,000 for the Company’s 2009 fiscal
year.

 

6.12                           Transactions
with Affiliates. Enter into or be a party to any transaction with
any of its Affiliates except as otherwise provided herein or in the ordinary
course of business and upon fair and reasonable terms which are no less 

 

27

 

favorable than a comparable
arm’s length transaction with an entity which is not an Affiliate of the
Company.

 

7.                                       Event of
Default; Remedies.

 

7.1                                 Events of Default. The
occurrence of any of the following shall constitute an Event of Default:

 

(a)                                  Failure to Pay
Note. The Company fails to pay (i) principal on the Note when the same
becomes due and payable, whether at a stated payment date, or a date fixed by
the Company for prepayment or by acceleration or (ii) interest on the Note, or
any fee or other amount payable hereunder, when the same becomes payable and
such failure to timely pay interest, such fee or other amount continues uncured
for a period of ten (10) days; or

 

(b)                                 Falsity of Representations and Warranties. Any
representation or warranty made in any Loan Document is false in any material
respect on the date as of which it is made or as of which the same is to be
effective; or

 

(c)                                  Breach of
Covenants. The Company fails to comply with any term,
covenant or agreement contained in (i) sections 5.1(a), 5.1(b), 5.1(c), 5.1(f),
5.2, 5.5, 5.8, 5.9, 5.10 or any section of Article 6 hereof or (ii) any term,
covenant or agreement contained in section 5.3 and such failure continues for a
period of five (5) days after the earlier of (y) the Company should have
known of such failure or (z) the date upon which written notice thereof is
given to the Company by the Bank; or

 

(d)                                 Breach of Other
Provisions. The Company fails to comply with any other
agreement contained herein and such default continues for a period of 30 days
after written notice to the Company from the Bank or, in the event the failure
cannot reasonably be cured within thirty (30) days, within such longer period
of time, not to exceed sixty (60) days, as is reasonably necessary to cure such
failure; provided that the Company is using reasonable efforts to cure such
failure during such period of time; or

 

(e)                                  Default Under Other Agreements. The Company
or any Subsidiary (i) fails to pay when due any other Indebtedness or
Contingent Obligation in excess of $250,000 issued or assumed by the Company or
such Subsidiary, as the case may be or (ii) fails to comply with the terms of
any agreement executed in connection with such Indebtedness or Contingent
Obligation  and such default continues
beyond any applicable cure period if the effect of such failure is (y) to
cause, or permit the holder or holders of such Indebtedness or the beneficiary
or beneficiaries of such Indebtedness (or a trustee or agent on behalf of such
holder or holders or beneficiary or beneficiaries) to cause, such Indebtedness
to be declared to be due and payable prior to its stated maturity, or
(z) to cause such Contingent Obligation to become payable or cash
collateral in respect thereof to be demanded; or

 

28

 

(f)                                    Entry of Final Judgments. A final
judgment, decree or arbitration award is entered against the Company or any
Subsidiary which (i) could reasonably be expected to have a Material Adverse
Effect; or (ii) together with all unsatisfied final judgments, decrees and
awards entered against the Company or any Subsidiary, exceeds the sum of
$1,500,000, and such judgment, decree or award shall remain unsatisfied or
unstayed pending appeal for a period of 30 days after the entry thereof; or

 

(g)                                 ERISA Liability. Any event in
relation to any Plan which the Bank determines in good faith could result in
any of the occurrences set forth in section 3.11 above; or

 

(h)                                 Default Under
Other Loan Documents. An “Event of Default” (as defined therein)
including a “Termination Event” or other default under any Rate Management
Transaction, shall occur under any other Loan Document or the party to any
other Loan Document (other than the Bank) fails to timely comply with any term,
covenant or agreement contained therein; or

 

(i)                                     Material
Adverse Effect. The occurrence of a Material Adverse Effect; or

 

(j)                                     Change in
Control. The occurrence of a Change in Control; or

 

(k)                                  Insolvency,
Failure to Pay Debts or Appointment of Receiver, Etc. The Company
or any Subsidiary becomes insolvent or the subject of state insolvency
proceedings, fails generally to pay its debts as they become due or makes an
assignment for the benefit of creditors; or voluntarily ceases to conduct
business in the ordinary course; or a receiver, trustee, custodian or other
similar official is appointed for, or takes possession of any substantial part
of the property of, the Company or any Subsidiary; or

 

(l)                                     Subject of
United States Bankruptcy Proceedings. The taking of action by
the Company or any Subsidiary to authorize such organization to become the
subject of proceedings under the United States Bankruptcy Code; or the
execution by the Company or any Subsidiary of a petition to become a debtor
under the United States Bankruptcy Code; or the filing of an involuntary
petition against the Company or any Subsidiary under the United States
Bankruptcy Code which remains undismissed for a period of 30 days; or the
entry of an order for relief under the United States Bankruptcy Code against
the Company or any Subsidiary.

 

7.2                                 Remedies. Upon the
occurrence of an Event of Default, the Commitment shall terminate and
(a) as to an Event of Default described in sections 7.1(a) through
7.1(j), inclusive, the holder of the Note may, at its option and without
notice, declare the Note to be, and the Note shall thereupon become,
immediately due and payable, together with accrued interest thereon, and the
Company shall deliver to the 

 

29

 

Bank cash collateral as
required by section 2.11; and (b) as to an Event of Default described in
sections 7.1(k) and 7.1(l), the Note shall, without action on the part of the
Bank or any notice or demand, become automatically due and payable, together
with accrued interest thereon and the Company shall deliver to the Bank cash
collateral as required by section 2.11. Presentment, demand, protest and notice
of acceleration, nonpayment and dishonor are hereby expressly waived.

 

8.                                       Miscellaneous.

 

8.1                                 Survival of Representations and Warranties. The
representations and warranties contained in Article 3 hereof and in the
other Loan Documents shall survive closing and execution and delivery of the
Note.

 

8.2                                 Indemnification. Except as
incurred as a result of the Bank’s willful misconduct, the Company agrees to
defend, indemnify and hold harmless the Bank, its directors, officers,
employees and agents from and against any and all loss, cost, expense or
liability (including reasonable attorneys’ fees) incurred in connection with
any and all claims or proceedings (whether brought by a private party or
Governmental Authority) as a result of, or arising out of or relating to:

 

(a)                                  bodily injury,
property damage, abatement or remediation, environmental damage or impairment
or any other injury or damage resulting from or relating to any Hazardous
Materials located on or migrating into, from or through property previously,
now or hereafter owned or occupied by the Company, which the Bank may incur due
to the making of the Loans, the exercise of any of its rights under the
Collateral Documents, or otherwise;

 

(b)                                 any transaction
financed or to be financed, in whole or in part, directly or indirectly, with
the proceeds of any Loan; or

 

(c)                                  the entering
into, performance of and exercise of its rights under any Loan Document by the
Bank.

 

This indemnity will survive foreclosure of any
security interest or mortgage or conveyance in lieu of foreclosure and the
repayment of the Notes and the discharge and release of any Collateral
Documents.

 

8.3                                 Expenses. The Company
agrees, whether or not the transaction hereby contemplated shall be
consummated, to pay on demand (a) all out-of-pocket expenses incurred by
the Bank in connection with the negotiation, execution, administration,
amendment or enforcement of any Loan Document including the reasonable fees and
expenses of the Bank’s counsel, (b) any taxes (including any interest and
penalties relating thereto) payable by the Bank (other than taxes based upon
the Bank’s net income) on or with respect to the transactions contemplated by
this Agreement (the Company hereby agreeing to indemnify the Bank with respect
thereto) and (c) all out-of-pocket expenses, including the reasonable fees
and expenses of the Bank’s counsel,

 

30

 

incurred by the Bank in
connection with any litigation, proceeding or dispute in any way related to the
Bank’s relationship with the Company, including, without limitation, the fees
and expenses set forth in section 5.2, whether arising hereunder or otherwise. The
obligations of the Company under this section will survive payment of the Note.

 

8.4                                 Notices. Except as
otherwise provided in section 2.2, all notices provided for herein
shall be in writing and shall be (a) delivered; (b) sent by express
or first class mail; or (c) sent by facsimile transmission and confirmed
in writing provided to the recipient in a manner described in 8.4 or 8.4, and
addressed as follows, or to such other address with respect to either party as
such party shall notify the other in writing; such notices shall be deemed
given when delivered, mailed or so transmitted:

 

If to the Bank:

 

Associated Bank, National
Association

401 East Kilbourn Avenue

Milwaukee, WI 53202

Facsimile No.:  (414)
283-2287

e-mail address:  gregory.larson@associatedbank.com

Attention:  Gregory A. Larson, Senior Vice President

 

If to the Company:

 

Magnetek, Inc.

N49 W13650 Campbell Drive

Menomonee Falls, WI 53051

Facsimile No.:  (262)
790-4147

e-mail address:  mschwenner@magnetek.com

Attention:  Marty Schwenner, Vice President and Chief
Financial Officer

 

8.5                                 Setoff. As security
for payment of the Obligations, the Company grants to the Bank a security
interest in and lien on any credit balance or other money now or hereafter owed
the Company by the Bank. In addition, the Company agrees that the Bank may, at
any time after the occurrence of an Event of Default, without prior notice, set
off against any such credit balance or other money all or any part of the
Obligations, irrespective of whether the Bank shall have made demand under this
Agreement or any Loan Document and although such Obligations may be contingent
or unmatured. The Bank hereby agrees to provide the Company with written notice
of such setoff within ten (10) days thereafter or as otherwise required by
applicable law; provided that failure to provide such notice shall not
impair or affect such setoff, or the Bank’s ability to exercise its right of
setoff under this section.

 

8.6                                 Participations. The Company
agrees that the Bank may, at its option, sell to another financial institution
or institutions interests in the Note and, in connection with each such sale
and thereafter, disclose to the purchaser or prospective purchaser of each such
interest financial and other information concerning the Company. 

 

31

 

The Company agrees that if
any portion of the Obligations are due and unpaid, or shall have been declared
or shall have become due and payable upon the occurrence of an Event of
Default, each such purchaser shall be deemed to have, to the extent permitted
by applicable law, the right of setoff in respect of its participating interest
to the same extent as if the amount of its participating interest were owed
directly to it. The Company further agrees that each such purchaser shall be
entitled to the benefits of section 2.13 with respect to its participation
in the Bank’s obligation to make Loans; provided that no such purchaser
shall be entitled to receive any greater amount pursuant to that section than
the Bank would have been entitled to receive if no such sale had occurred.

 

8.7                                 Titles. The titles of
sections in this Agreement are for convenience only and do not limit or
construe the meaning of any section.

 

8.8                                 Severability. In case any
provision or obligation under this Agreement or the Note shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and enforceability
of the remaining provisions or obligations, or of such provision or obligation
in any other jurisdiction, shall not in any way be affected or impaired
thereby.

 

8.9                                 Parties Bound; Waiver. The
provisions of this Agreement shall inure to the benefit of and be binding upon
any successor of any of the parties hereto; except that the Company may not
assign or transfer its rights hereunder or any interest herein or delegate its
duties hereunder. Any purported assignment of rights or delegation of duties in
violation of this section is void. No delay on the part of the Bank in
exercising any right, power or privilege hereunder, or in requiring the
satisfaction of any covenant or condition hereunder, shall operate as a waiver
thereof, and no single or partial exercise of any right, power or privilege
hereunder shall preclude other or future exercise thereof or the exercise of
any other right, power or privilege. A waiver made on one occasion is effective
only in that instance and only for the purpose stated. A waiver once given is
not to be construed as a waiver on any future occasion or against any other
Person. The rights provided for in this Agreement and the other Loan Documents
are cumulative and are not exclusive of any other rights, powers, privileges or
remedies provided by law or in equity, or under any other instrument, documents
or agreement now existing or hereafter arising.

 

8.10                           Governing Law. This
Agreement is being delivered in and shall be deemed to be a contract governed
by the laws of the State of Wisconsin and shall be interpreted and the rights
and obligations of the parties hereunder enforced in accordance with the
internal laws of that state without regard to the principles of conflicts of
laws.

 

8.11                           Submission to
Jurisdiction; Service of Process. ALL JUDICIAL PROCEEDINGS
IN ANY MANNER RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS, OR ANY OBLIGATIONS THEREUNDER, MAY BE BROUGHT IN ANY STATE OR
FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE OF WISCONSIN LOCATED IN 

 

32

 

MILWAUKEE COUNTY. BY
EXECUTING AND DELIVERING THIS AGREEMENT, THE COMPANY IRREVOCABLY:

 

(a)                                  ACCEPTS
GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH
COURTS;

 

(b)                                 WAIVES ANY
DEFENSE OF FORUM NON CONVENIENS;

 

(c)                                  AGREES THAT
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO THE COMPANY AT ITS
ADDRESS SPECIFIED IN SECTION 8.4;

 

(d)                                 AGREES THAT
SERVICE AS PROVIDED IN CLAUSE (c) ABOVE IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE COMPANY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND
OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND

 

(e)                                  AGREES THAT THE
BANK RETAINS THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
TO BRING PROCEEDINGS AGAINST THE COMPANY IN THE COURTS OF ANY OTHER
JURISDICTION.

 

8.12                           Waiver of Trial
by Jury. THE COMPANY AND THE BANK HEREBY
AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of
this waiver is intended to be all encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims and
all other common law and statutory claims. The Company and the Bank each
 acknowledge that this waiver is a material inducement for the Company and
the Bank to enter into a business relationship, that the Company and the Bank
have already relied on this waiver in entering into this Agreement and that
each will continue to rely on this waiver in their related future dealings. The
Company and the Bank further warrant and represent that each has reviewed this
waiver with its legal counsel, and that each knowingly and voluntarily waives
its jury trial rights following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE
MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL WRITTEN WAIVER
SPECIFICALLY REFERRING TO THIS SECTION 8.12 AND EXECUTED BY EACH OF THE PARTIES
HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.

 

33

 

8.13                           Limitation of
Liability. THE COMPANY AND THE BANK HEREBY WAIVE ANY RIGHT
EITHER OF THEM MAY HAVE TO CLAIM OR RECOVER FROM THE OTHER PARTY ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES, OF WHATEVER
NATURE, OTHER THAN ACTUAL DAMAGES.

 

8.14                           Counterparts. This
Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts together shall
constitute but one and the same instrument; signatures pages may be detached
from multiple separate counterparts and attached to a single counterpart so
that all signature pages are physically attached to the same document.

 

8.15                           Entire Agreement. This
Agreement and the other Loan Documents shall constitute the entire agreement of
the parties pertaining to the subject matter hereof and supersede all prior or
contemporaneous agreements and understandings of the parties in connection
therewith.

 

[remainder
of page intentionally left blank; signature page follows]

 

34

 

IN WITNESS WHEREOF, the parties have executed this
Credit Agreement as of the date first written above.

 

	
   

  	
  COMPANY:

  
	
   

  	
   

  
	
   

  	
  MAGNETEK, INC.

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Marty J. Schwenner

  	
   

  
	
   

  	
   

  	
  Marty J. Schwenner, Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
  BANK:

  
	
   

  	
   

  
	
   

  	
  ASSOCIATED BANK, NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Gregory A. Larson

  	
   

  
	
   

  	
   

  	
  Gregory A. Larson, Senior Vice President

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