Document:

MAG-2012 Ex10.1 0919

Exhibit 10.1
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (“Security Agreement”) is entered into as of September14, 2012 (“Effective Date”), by and among Magnetek, Inc. (“Magnetek” or “Grantor”), a Delaware corporation, and the Pension Benefit Guaranty Corporation (“PBGC” or “Secured Party”, and collectively with Magnetek, the “Parties”), a wholly-owned United States government corporation created by Title IV of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), acting on behalf of the Magnetek FlexCare Plus Retirement Pension Plan (the “Plan”).
Recitals
A.Magnetek, a Delaware corporation, which maintains its headquarters in Menomonee Falls, Wisconsin, is in the business of developing, manufacturing, and marketing digital power and motion control systems for material handling, people-moving, renewable energy, and mining applications.

B.Magnetek sponsors the Plan. 

C.Magnetek sought a waiver of the minimum funding standards for the Plan's plan year which began on January 1, 2011, pursuant to Section 412(c) of the Code (as defined below) and Section 302(c) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

D.By letter dated October 21, 2011 (the “Waiver Letter”), the Internal Revenue Service (“IRS”) granted such waiver for the Plan (the “Waiver”).

E.The IRS required that Magnetek provide collateral acceptable to the PBGC as a condition of granting the Waiver, and pursuant to Section 412(c)(4)(A) of the Code and Section 302(c)(4)(A) of ERISA, such security may be perfected and enforced only by the PBGC on behalf of the Plan.

F.The aggregate amount of the outstanding balance of the Waiver equals $16.4 million, which amount will be amortized over a five plan year period under Section 430(e) of the Code, payable in quarterly installments and other required payments with interest thereon as prescribed by Section 430 of the Code (the “Obligations”).

G.Magnetek has agreed to provide to PBGC as collateral security for the Obligations a lien on all of Magnetek's currently owned and after-acquired personal property as provided in this Security Agreement in order to satisfy the condition of the Waiver.

Operative Provisions
NOW, THEREFORE, for valuable consideration, receipt of which is acknowledged, the Parties agree as follows:
1.    Definitions
(a)    Capitalized Terms Not Defined Herein.  Capitalized terms defined in the UCC (as defined below) which are not otherwise defined in this Security Agreement have the meanings provided therein.
(b)    Definitions of Certain Terms Used Herein.  As used in this Security Agreement, the following terms shall have the following meanings:
 “Assigned Contracts” means, collectively, all of the Grantor's rights and remedies under, and all moneys and claims for money due or to become due to the Grantor under any material contracts, and any and all amendments, supplements, extensions, and renewals thereof including all rights and claims of the Grantor now or hereafter existing:  (a) under any insurance, indemnities, warranties, and guarantees provided for or arising out of or in connection with any of the foregoing agreements; (b) for any damages arising out of or for breach or default under or in connection with any of the foregoing contracts; (c) to all other amounts from time to time paid or payable under or in connection with any of the foregoing agreements; and (d) to exercise or enforce any and all covenants, remedies, powers and privileges thereunder.
 “Code” shall mean the Internal Revenue Code of 1986, as the same now exists or may from time to time hereafter be amended.
“Collateral” shall have the meaning set forth in Section 2.
“Commercial Tort Claim” means each currently existing “commercial tort claim”, as defined in the UCC, including each commercial tort claim specifically described in Schedule 3.
“Control” shall have the meaning set forth in Article 8 or, if applicable, in Section 9-104, 9-105, 9-106 or 9-107 of Article 9 of the UCC.
“Copyrights” means, with respect to any Person, all of such Person's right, title, and interest in and to the following:  (a) all copyrights, rights and interests in copyrights, works protectable by copyright, copyright registrations, and copyright applications; (b) all renewals of any of the foregoing; (c) all income, royalties, damages, and payments now or hereafter due and/or payable under any of the foregoing, including, without limitation, damages or payments for past or future infringements for any of the foregoing; (d) the right to sue for past, present, and future infringements of any of the foregoing; and (e) all rights corresponding to any of the foregoing throughout the world.
 “Disclosed Liens” shall have the meaning set forth in Section 3(a).
 “Licenses” means, with respect to any Person, all of such Person's right, title, and interest in and to (a) any and all licensing agreements or similar arrangements in and to its Patents, Copyrights, or Trademarks, (b) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future breaches thereof, and (c) all rights to sue for past, present, and future breaches thereof.

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“Material Adverse Change” means any act or circumstance or event which (a) causes a Default, (b) otherwise could reasonably be expected to be material and adverse to the business, operations, properties, financial condition or prospects of Grantor, or (c) in any manner whatsoever could adversely affect the validity or enforceability of any of this Security Agreement.
“Other Collateral” means any property of the Grantor, not included within the defined terms Account, Chattel Paper, Document, Equipment, Fixtures, General Intangible, Goods, Instrument, Inventory, Investment Property, Letter-of-Credit Right, Supporting Obligation, Deposit Account, Assigned Contracts, Receivables, and Commercial Tort Claim, including all cash on hand, letters of credit, Stock Rights or any other deposits (general or special, time or demand, provisional or final) with any bank or other financial institution, it being intended that the Collateral include all currently owned and after-acquired personal property of the Grantor.
 “Patents” means, with respect to any Person, all of such Person's right, title, and interest in and to: (a) any and all patents and patent applications; (b) all inventions and improvements described and claimed therein; (c) all reissues, divisions, continuations, renewals, extensions, and continuations-in-part thereof; (d) all income, royalties, damages, claims, and payments now or hereafter due or payable under and with respect thereto, including, without limitation, damages and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements thereof; and (f) all rights corresponding to any of the foregoing throughout the world.
 “Permitted Liens” means any of the following:  (1)  liens of carriers, warehousemen, bailors, suppliers, landlords, mechanics, laborers, materialmen, and other similar persons arising by law in the ordinary course of business securing obligations which are (i) not yet due or (ii) being diligently contested in good faith by appropriate proceedings, with adequate reserves having been established therefor in accordance with U.S. GAAP, which proceedings have the effect of preventing for the foreseeable future the forfeiture or sale of the Collateral subject to such liens; (2) liens for taxes which are (i) not yet delinquent or (ii) being diligently contested in good faith by appropriate proceedings and for which adequate reserves have been established in accordance with U.S. GAAP; (3) good faith pledges or grants of security interests to secure statutory obligations, surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of Grantor's business and not in connection with the borrowing of money, provided that in each case the obligation secured is not overdue or, if overdue, is being diligently contested in good faith by appropriate actions or proceedings and adequate reserves have been established in accordance with U.S. GAAP with respect to such obligation; (4) purchase-money security interests in, and capital leases with respect to, specific items of equipment and related software and the proceeds thereof; (5) judgments that have not become final and are being appealed in good faith and have been properly secured or bonded pending the resolution thereof; (6) Disclosed Liens; and (7) the Senior Liens.
“Person” shall have the meaning set forth in Article 1 of the UCC.
“Pledged Collateral” means all Instruments, Securities and other Investment Property of Grantor constituting Collateral, whether or not physically delivered to the Secured Party pursuant to this Security Agreement.
“Receivables” means the Accounts, Chattel Paper, Documents, Investment Property, Instruments and any other rights or claims to receive money which are General Intangibles or which are otherwise included as Collateral.
 “Secured Obligations” means (a) the Obligations, and (b) all of Grantor's obligations under this Security Agreement.

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“Senior Obligations” means all obligations of the Grantor now or hereafter owing under the Senior Credit Agreement or any other document, record, instrument, or agreement executed in connection with the Senior Credit Agreement.
“Senior Credit Agreement” means the Credit Agreement between Magnetek and Associated Bank, National Association dated November 6, 2007, including all amendments thereto. 
“Senior Liens” means those liens in favor of Associated Bank, National Association, securing Senior Obligations.
“Stock Rights” means any Securities, dividends, Instruments or other distributions and any other right or property which Grantor shall receive or shall become entitled to receive for any reason whatsoever with respect to, in substitution for or in exchange for any Securities or other ownership interests in a corporation, partnership, joint venture or limited liability company constituting Collateral and any Securities, any right to receive Securities and any right to receive earnings, in which Grantor now has or hereafter acquires any right, issued by an Issuer of such Securities. 
 “Trademarks” means, with respect to any Person, all of such Person's right, title, and interest in and to the following:  (a) all trademarks (including service marks), trade names, trade dress, and trade styles and the registrations and applications for registration thereof and the goodwill of the business symbolized by the foregoing; (b) all licenses of the foregoing, whether as licensee or licensor; (c) all renewals of the foregoing; (d) all income, royalties, damages, and payments now or hereafter due or payable with respect thereto, including, without limitation, damages, claims, and payments for past and future infringements thereof; (e) all rights to sue for past, present, and future infringements of the foregoing, including the right to settle suits involving claims and demands for royalties owing; and (f) all rights corresponding to any of the foregoing throughout the world.
“UCC” means the Uniform Commercial Code, as in effect from time to time, of the State of Delaware or of any other state the laws of which are required as a result thereof to be applied in connection with the attachment, perfection or priority of, or remedies with respect to, Secured Party's lien on any Collateral.
2.    Grant of Security Interest.  Grantor hereby pledges, assigns and grants to PBGC a security interest in all of Grantor's right, title and interest in, to and under all personal property and other assets, whether now owned by or owing to, or hereafter acquired by or arising in favor of Grantor (including under any trade name or derivations thereof), and whether owned or consigned by or to, or leased from or to, Grantor, and regardless of where located (all of which will be collectively referred to as the “Collateral”), including:
		
	(a)
	all Accounts;

		
	(b)
	all Chattel Paper;

		
	(c)
	all Documents;

		
	(d)
	all Equipment;

		
	(e)
	all Fixtures;

		
	(f)
	all General Intangibles;

		
	(g)
	all Goods;

		
	(h)
	all Instruments;

		
	(i)
	all Inventory;

		
	(j)
	all Investment Property;

		
	(k)
	all cash or cash equivalents;

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	(l)
	all letters of credit, Letter-of-Credit Rights and Supporting Obligations;

		
	(m)
	 all Deposit Accounts with any bank or other financial institution;

		
	(n)
	all Assigned Contracts; 

		
	(o)
	all Receivables; 

		
	(p)
	all leases; 

		
	(q)
	all Commercial Tort Claims;

		
	(r)
	all Other Collateral; and

		
	(s)
	all accessions to, substitutions for and replacements, proceeds, insurance proceeds and products of the foregoing, together with all books and records, customer lists, credit files, computer files, programs, printouts and other computer materials and records related thereto and any General Intangibles at any time evidencing or relating to any of the foregoing;

to secure the prompt and complete payment and performance of the Secured Obligations.
3.    Representations and Warranties.  Grantor represents and warrants to the Secured Party that:
(a)    Title, Perfection and Priority.  It has good and valid rights in or the power to transfer the Collateral and title to the Collateral with respect to which it has purported to grant a security interest hereunder, free and clear of all liens except the Senior Liens and any other liens disclosed by it on Schedule 3(a) (the “Disclosed Liens”), and has full power and authority to grant to the Secured Party the security interest in such Collateral pursuant hereto.  When financing statements have been filed in the office of the Secretary of State of the state listed as Grantor's state of organization in Schedule 3(b), the Secured Party will have a fully perfected security interest in that Collateral of Grantor in which a security interest may be perfected by filing, subject only to the Senior Liens and any prior perfected Disclosed Liens.
(b)    Type and Jurisdiction of Organization, Organizational and Identification Numbers.  The type of entity of Grantor, its state of organization, the organizational number issued to it by its state of organization and its federal employer identification number are set forth in Schedule 3(b).

(c)    Principal Location.  Grantor's mailing address and the location of its place of business (if it has only one) or its chief executive office (if it has more than one place of business), are disclosed in Schedule 3(c); it has no other places of business except those set forth in Schedule 3(c).

(d)    Collateral Locations.  All of Grantor's locations where Collateral is located are listed in Schedule 3(d).

(e)    Deposit Accounts.  All of Grantor's Deposit Accounts are listed in Schedule 3(e).

(f)    Exact Names.  Grantor's name in which it has executed this Security Agreement is the exact name as it appears in its organizational documents, as amended, as filed with its state of organization.

(g)    Intellectual Property.  Grantor does not have any interest in, or title to, any Patent, Trademark or Copyright except as set forth in Schedule 3(g).

(h)    Commercial Tort Claims.  Grantor does not have any interest in, or title to, any Commercial Tort Claim except as set forth in Schedule 3(h).

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(i)    No Financing Statements, Security Agreements.  No financing statement or security agreement describing all or any portion of the Collateral which has not lapsed or been terminated naming Grantor as debtor has been filed or is of record in any jurisdiction, except for Disclosed Liens.

4.    Covenants.  From the date of this Security Agreement, and thereafter until this Security Agreement is terminated, Grantor agrees that:

(a)    General.

(1)    Collateral Records.  It shall maintain complete and accurate books and records with respect to the Collateral owned by it, and furnish to the Secured Party such reports relating to such Collateral as the Secured Party from time to time reasonably requests.
(2)    Authorization to File Financing Statements; Ratification.  Grantor hereby authorizes the Secured Party to file, and if requested shall deliver to the Secured Party, all financing statements and other documents and take such other actions as may from time to time be requested by the Secured Party in order to maintain a perfected security interest in the Collateral owned by Grantor subject only to the Senior Liens and any prior perfected Disclosed Liens.  Any financing statement filed by the Secured Party may be filed in any filing office in any UCC jurisdiction and may (A) indicate Grantor's Collateral (i) as all assets of the Grantor or words of similar effect, regardless of whether any particular asset comprised in the Collateral falls within the scope of Article 9 of the UCC or such jurisdiction, or (ii) by any other description which reasonably approximates the description contained in this Security Agreement, and (B) contain any other information required by Part 5 of Article 9 of the UCC for the sufficiency or filing or acceptance of any financing statement or amendment, including (i) whether Grantor is an organization, the type of organization and any organization identification number issued to Grantor, and (ii) in the case of a financing statement filed as a fixture filing or indicating Grantor's Collateral as as-extracted collateral or timber to be cut, a sufficient description of real property to which the Collateral relates.  Grantor shall furnish any such information to the Secured Party promptly upon request.  Grantor shall do and perform all acts and things necessary or appropriate (or which Grantor or the Secured Party reasonably deems necessary or appropriate) to perfect, or to give any necessary or any desirable notice of, the Secured Party's security interest in the Collateral.
(3)    Further Assurances.  Grantor shall, if so requested by the Secured Party, furnish to the Secured Party, as often as the Secured Party reasonably requests, statements and schedules further identifying and describing the Collateral owned by it and such other reports and information in connection with its Collateral as the Secured Party may reasonably request, all in such detail as the Secured Party may specify.  Grantor also shall take any and all actions necessary to defend title to the Collateral owned by it against all Persons and to defend the security interest of the Secured Party in its Collateral and the priority thereof against any lien except the Senior Liens and any prior perfected Disclosed Liens.
(4)    Liens.  Grantor shall not create, incur, or suffer to exist any lien on the Collateral owned by it, except (A) Permitted Liens, and (B) the security interests created by this Security Agreement.
(5)    Other Financing Statements.  Grantor shall not authorize the filing of any financing statement naming it as debtor covering all or any portion of the Collateral owned by it, except to any extent expressly permitted by Section 4(a)(4).
(6)    Locations.  Grantor shall not (A) maintain any Collateral owned by it at any location other than those locations listed on Schedule 3(d), (B) otherwise change, or add to, such locations without ten days' prior written notice to the Secured Party, or (C) change its principal place of business or 

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chief executive office from the location identified on Schedule 3(c), without ten days' prior written notice to the Secured Party.
(7)    Compliance with Terms.  Grantor shall perform and comply with all obligations in respect of the Collateral owned by it and all agreements to which it is a party or by which it is bound relating to such Collateral.
(8)    Notice of Action.  Grantor shall notify the Secured Party of any legal process levied against the Collateral or any other event which may affect the value, use or possession of the Collateral or any of the rights of the Secured Party in relation to the Collateral.
(9)    Disposition of Collateral.  Grantor shall not sell, lease or otherwise dispose of the Collateral owned by it outside the ordinary course of its business without the Secured Party's prior written consent. 
(10)    Change in Corporate Existence, Type or Jurisdiction of Organization, Location, Name.  Grantor shall: 

(A)    preserve its existence and corporate structure as in effect on the Effective Date; and

(B)    not change its jurisdiction of organization,

unless, in each such case, Grantor shall have given the Secured Party not less than 15 days' prior written notice of such event or occurrence (or such shorter period as may be acceptable to the Secured Party in its sole discretion).
(b)    Receivables.

(1)    Certain Agreements on Receivables.  Following the occurrence of a Default, Grantor shall not make or agree to make any discount, credit, rebate or other reduction in the original amount owing on a Receivable, or accept in satisfaction of a Receivable less than the original amount thereof.   Prior to the occurrence of a Default, Grantor may do so in the exercise of its reasonable commercial judgment in its ordinary course of business.
(2)    Collection of Receivables.  Except as otherwise provided in this Security Agreement, Grantor shall collect and enforce, at its sole expense, all amounts due or hereafter due to it under the Receivables owned by it.
(3)    Delivery of Invoices.  Grantor shall deliver to the Secured Party immediately upon its request after the occurrence and during the continuation of a Default, duplicate invoices with respect to each Account owned by it bearing such language of assignment as the Secured Party specifies.
(4)    Disclosure of Counterclaims on Receivables.  If after the occurrence and during the continuation of a Default (A) any discount, credit or agreement to make a rebate or to otherwise reduce the amount owing on any Receivable owned by Grantor exists, or (B) if, to the knowledge of Grantor, any dispute, setoff, claim, counterclaim or defense exists or has been asserted or threatened with respect to any such Receivable, Grantor shall promptly disclose such fact to the Secured Party in writing.

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(c)    Inventory and Equipment.  Grantor shall do all things necessary to maintain, preserve, protect and keep its Inventory and the Equipment in good repair and working and saleable condition, except for deteriorating or damaged or defective goods arising in the ordinary course of its business and except for ordinary wear and tear in respect of the Equipment.
(d)    Delivery of Instruments, Securities, Chattel Paper and Documents.  Immediately upon the payment in full of all Senior Obligations and the irrevocable release and termination of all Senior Liens, Grantor shall (1) deliver to the Secured Party the originals of all Chattel Paper, Securities and Instruments constituting Collateral owned by it (if any then exist), (2) hold in trust for the Secured Party upon receipt and immediately thereafter deliver to the Secured Party any such Chattel Paper, Securities and Instruments constituting Collateral, and (3) deliver to the Secured Party (and thereafter hold in trust for the Secured Party upon receipt and immediately deliver to the Secured Party) any Document evidencing or constituting Collateral.
(e)    Uncertificated Pledged Collateral.  Upon the payment in full of all Senior Obligations and the release and termination of all Senior Liens, Grantor shall permit the Secured Party from time to time to cause the appropriate issuers (and, if held with a securities intermediary, such securities intermediary) of uncertificated securities or other types of Pledged Collateral owned by it not represented by certificates to mark their books and records with the numbers and face amounts of all such uncertificated securities or other types of Pledged Collateral not represented by certificates and all rollovers and replacements therefor to reflect the lien of the Secured Party granted pursuant to this Security Agreement.  Upon the payment in full of all Senior Obligations and the release and termination of all Senior Liens, with respect to any Pledged Collateral owned by it, Grantor shall take any actions necessary to cause (1) the issuers of uncertificated securities which are Pledged Collateral, and (2) any securities intermediary which is the holder of any such Pledged Collateral, to cause the Secured Party to have and retain Control over such Pledged Collateral.  Without limiting the foregoing, upon the payment in full of all Senior Obligations and the release and termination of all Senior Liens, such Grantor shall, with respect to any such Pledged Collateral held with a securities intermediary, cause such securities intermediary to enter into a control agreement with the Secured Party, in form and substance satisfactory to the Secured Party, giving the Secured Party Control.
(f)    Intellectual Property.  If, after the date hereof, Grantor obtains ownership rights to (including filing and acceptance of a statement of use or an amendment to allege use with the United States Patent and Trademark Office, or applies for or seeks registration of (other than registration of an intent to use a Trademark)) any new patentable invention, Trademark or Copyright in addition to the Patents, Trademarks and Copyrights described in Schedule 3(g), then Grantor shall give the Secured Party notice thereof within ten days after obtaining such ownership rights.  Grantor shall promptly upon request by the Secured Party execute and deliver to the Secured Party any supplement to this Security Agreement or any other document reasonably requested by the Secured Party to evidence Secured Party's security interest in such new application or registration in a form appropriate for recording in the applicable federal office.  Grantor also hereby authorizes the Secured Party to modify this Security Agreement unilaterally (i) by amending Schedule 3(g) to include any future Patents, Trademarks and/or Copyrights of which the Secured Party receives notification from such Grantor pursuant hereto, and (ii) by recording, in addition to and not in substitution for this Security Agreement, a duplicate original of this Security Agreement containing in Schedule 3(g) a description of such future Patents, Trademarks and/or Copyrights.
(g)    No Interference.  Grantor shall not interfere with any right, power and remedy of the Secured Party provided for in this Security Agreement or now or hereafter existing at law or in equity or by statute or otherwise, or the exercise or beginning of the exercise by the Secured Party of any one or more of such rights, powers or remedies.

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5.    Defaults.  The occurrence of any one or more of the following events constitutes a “Default” hereunder:

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

(b)    Grantor fails to perform any of the covenants contained in Section 4 of this Security Agreement.

(c)    The breach by Grantor of any other term or provision of this Security Agreement.

(d)    (1) Grantor fails to (A) timely make any required contribution to the Plan, including any required installment under Section 430(j)(3) of the Code, (B) timely pay any Secured Obligation, or (C) satisfy any term or condition of the Waiver Letter, or (2) the Waiver is deemed void under applicable law or is declared void by the IRS.

(e)    A material provision of this Security Agreement shall for any reason cease to be valid, binding and enforceable with respect to any party hereto in accordance with its terms, or any such party challenges the enforceability hereof or thereof, or asserts in writing, or takes any action or fails to take any action based on the assertion that any provision hereof has ceased to be or is otherwise not valid, binding or enforceable in accordance with its terms, or any security interest, mortgage or lien provided for herein shall cease to be a valid and perfected first priority security interest in any of the Collateral (except as otherwise permitted under Section 4(a)(4)).

(f)    Grantor (1) becomes insolvent; or (2) is unable, or admits in writing its inability to pay debts as they generally mature; or (3) makes a general assignment for the benefit of creditors or to an agent authorized to liquidate any substantial amount or it property; or (4) makes or sends notice of a bulk transfer; or (5) files or, consents to the filing against it, of a petition or other papers commencing a proceeding under Title 11 of the United States Code or any similar type of insolvency proceeding (“Insolvency Proceeding”); or (6) has an Insolvency Proceeding filed or instituted against it which has not been dismissed within 60 days after its commencement, or in which an order for relief has been entered against it, or (7) applies to a court for appointment of a receiver, trustee or custodian for any of its assets; or (8) has a receiver, trustee or custodian appointed for any of its assets (with or without its consent).

(g)    Grantor dissolves, suspends, or discontinues doing business.

(h)    Any default in respect of any indebtedness of Grantor, in any case in an amount in excess of $250,000, which default continues for more than the applicable cure period, if any, with respect thereto, and such indebtedness has been accelerated.  

(i)    The sale, transfer, assignment, pledge, mortgage, encumbrance or hypothecation of all or any portion of the Collateral by Grantor outside of the ordinary course of Grantor's business without the prior express written consent of Secured Party.

(j)    PBGC receives a notice of Grantor's intent to terminate the Plan in a distress termination pursuant to 29 U.S.C. § 1341(c).

(k)    PBGC determines under 29 U.S.C. § 1342(a) that the Plan must or should be terminated.

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(l)    A Material Adverse Change occurs after the Effective Date.

6.    Remedies.  PBGC shall have the following rights and remedies:
(a)    At any time after a Default has occurred, PBGC shall have all rights and remedies provided in this Security Agreement, the UCC, and other applicable law, all of which rights and remedies may be exercised without  notice to or consent by Grantor, except to any extent that such notice or consent is expressly provided for hereunder or required by applicable law and not waivable under such law (it being understood and agreed by Grantor that, to the fullest extent permitted by applicable law, it hereby waives all such notice not expressly provided for hereunder).  All rights, remedies and powers granted to PBGC hereunder, under the UCC or other applicable law, are cumulative, not exclusive, and enforceable, in PBGC's sole discretion, alternatively, successively, or concurrently on any one or more occasions, and shall include, without limitation, the right to apply to a court of equity for an injunction to restrain a breach or threatened breach by Grantor of this Security Agreement.  
(b)    Without limiting the foregoing, at any time after a Default has occurred, PBGC may, in its sole discretion and without limitation: (1) accelerate the payment of all Secured Obligations and demand immediate payment thereof to PBGC (provided, that, upon the occurrence of a Default under Section 5(i) above, all Secured Obligations shall automatically become immediately due and payable) whereupon the Secured Obligations shall be immediately due and payable without presentment, demand, protest or formalities of any kind, all of which Grantor hereby waives, (2) with or without judicial process or the aid or assistance of others, enter upon any premises on or in which any of the Collateral may be located and take possession of the Collateral or any portion of the Collateral, (3) require Grantor, at its expense, to assemble and make available to PBGC any part or all of the Collateral at any place and time designated by PBGC, (4) collect, foreclose, receive, appropriate, setoff and realize upon any and all Collateral, (5) remove any or all of the Collateral from any premises on or in which the same may be located for the purpose of effecting the sale, foreclosure or other disposition thereof or for any other purpose, (6) sell, lease, transfer, assign, deliver or otherwise dispose of any and all Collateral (including entering into contracts with respect thereto, public or private sales at any exchange, broker's board, office of PBGC or elsewhere) at such prices or terms as PBGC may deem reasonable, for cash, upon credit or for future delivery, with the PBGC having the right to purchase the whole or any part of the Collateral at any such public sale, all of the foregoing being free from any right or equity of redemption of Grantor, which right or equity of redemption is hereby expressly waived and released by Grantor.  If any of the Collateral is sold or leased by PBGC upon credit terms or for future delivery, the Secured Obligations shall not be reduced as a result thereof until payment therefor is finally collected by PBGC.  If notice of disposition of Collateral is required by law, ten days prior notice by PBGC to Grantor designating the time and place of any public sale or the time after which any private sale or other intended disposition of Collateral is to be made, shall be deemed to be reasonable notice thereof and Grantor waives any other notice.  In the event PBGC institutes an action to recover any Collateral or seeks recovery of any Collateral by way of prejudgment remedy, Grantor waives the posting of any bond which might otherwise be required.
(c)    At any time after a Default has occurred, PBGC may, in its sole discretion, enforce Grantor's rights against any account debtor, in respect of any accounts or other Receivables.  Without limiting the generality of the foregoing, PBGC may at such time (1) notify any or all account debtors, secondary obligors or other obligors in respect thereof that Receivables have been assigned to PBGC and that PBGC has a security interest therein and PBGC may direct any or all accounts debtors to make payment of receivables directly to PBGC, (2) extend the time of payment of, compromise, settle or adjust for cash, credit, return of merchandise or otherwise, and upon any terms or conditions, any and all receivables or other obligations included in the Collateral and thereby discharge or release the account 

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debtor or any secondary obligors or other obligors in respect thereof without affecting any of the Secured Obligations, (3) demand, collect or enforce payment of any receivables or such other obligations, but without any duty to do so, and PBGC shall not be liable for its failure to collect or enforce the payment thereof nor for the negligence of its agents or attorneys with respect thereto, and (4) take whatever other action PBGC may deem necessary or desirable for the protection of its interests.  At any time after a Default has occurred, at PBGC's request, Grantor shall cause all invoices and statements sent to any account debtor to state that the accounts and such other obligations have been assigned to PBGC and are payable directly and only to PBGC, and Grantor shall deliver to PBGC such originals of documents evidencing the sale and delivery of goods or the performance of services giving rise to any accounts as PBGC may require.
(d)    To the extent that applicable law imposes duties on PBGC to exercise remedies in a commercially reasonable manner (and such duties cannot be waived under such law), Grantor acknowledges and agrees that it is not commercially unreasonable for PBGC: (1) to fail to incur expenses reasonably deemed significant by PBGC to prepare Collateral for disposition or otherwise to complete raw material or work in process into finished goods or other finished products for disposition, (2) to fail to obtain third party consents for access to Collateral to be disposed of, or to obtain or, if not required by other law, to fail to obtain consents of any governmental authority or other third party for the collection or disposition of Collateral to be collected or disposed of, (3) to fail to exercise collection remedies against account debtors, secondary obligors or other persons obligated on Collateral or to remove liens or encumbrances on or any adverse claims against Collateral, (4) to exercise collection remedies against account debtors and other persons obligated on Collateral directly or through the use of collection agencies and other collection specialists, (5) to advertise dispositions of Collateral through publications or media of general circulation, whether or not the Collateral is of a specialized nature, (6) to contact other persons, whether or not in the same business as Grantor, for expressions of interest in acquiring all or any portion of the Collateral, (7) to hire one or more professional auctioneers to assist in the disposition of Collateral, whether or not such Collateral is of a specialized nature, (8) to dispose of Collateral by utilizing Internet sites that provide for the auction of assets of the types included in the Collateral or that have the reasonable capability of doing so, or that match buyers and sellers of assets, (9) to dispose of assets in wholesale rather than retail markets, (10) to disclaim disposition warranties, (11) to purchase insurance or credit enhancements to insure PBGC against risks of loss, collection or disposition of Collateral or to provide to PBGC a guaranteed return from the collection or disposition of Collateral, or (12) to the extent deemed appropriate by PBGC, to obtain the services of other brokers, investment bankers, consultants and other professionals to assist PBGC in the collection or disposition of any of the Collateral.  Grantor acknowledges that the purpose of this Section is to provide non-exhaustive indications of actions and omissions by the PBGC which would not be commercially unreasonable in PBGC's exercise of remedies against the Collateral and that other actions or omissions by PBGC shall not be deemed commercially unreasonable solely or partly on account of not being indicated in this Section.  Without limitation of the foregoing, nothing contained in this Section shall be construed to grant any rights to Grantor or to impose any duties on PBGC that would not have been granted or imposed by this Security Agreement or by applicable law in the absence of this Section.
(e)    At any time after a Default has occurred, PBGC shall apply the cash proceeds of Collateral actually received by PBGC from any sale, lease, foreclosure or other disposition of the Collateral to payment of the Secured Obligations, in whole or in part and in accordance with the terms hereof, whether or not then due or may hold such proceeds as cash collateral for the Secured Obligations.  PBGC may, without any liability to Grantor or any other Person, deposit such cash proceeds into the Plan's trust. Grantor shall remain liable to PBGC for the payment of any deficiency, with interest as provided by law, and for all costs and expenses of collection or enforcement, including attorneys' fees and expenses.

11

(f)    For the purpose of enabling PBGC to exercise its rights and remedies hereunder, Grantor hereby grants to PBGC, to the extent assignable, an irrevocable, non-exclusive license (exercisable at any time after a Default has occurred) without payment of royalty or other compensation to Grantor, to sue, assign, license or sublicense any of the trademarks, service-marks, trade names, business names, trade styles, designs, logos and other source of business identifiers and other intellectual property and general intangibles now owned or hereafter acquired by Grantor, wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof.
(g)    For the purpose of enabling the Secured Party to exercise the rights and remedies hereunder at such time as the Secured Party becomes lawfully entitled to exercise such rights and remedies, Grantor hereby (1) grants to the Secured Party an irrevocable, nonexclusive license (exercisable without payment of royalty or other compensation to Grantor) to use, license or sublicense any Copyrights, Patents, Trademarks or Licenses now owned or hereafter acquired by Grantor, and wherever the same may be located, and including in such license access to all media in which any of the licensed items may be recorded or stored and to all computer software and programs used for the compilation or printout thereof, and (2) irrevocably agrees that the Secured Party may sell any of Grantor's Inventory directly to any Person including Persons who have previously purchased Grantor's Inventory from Grantor in connection with any such sale or other enforcement of the Secured Party's rights under this Security Agreement, may sell Inventory which bears any Trademark owned by or licensed to Grantor and any Inventory that is covered by any Copyright owned by or licensed to Grantor and the Secured Party may finish any work in process and affix any Trademark owned by or licensed to Grantor and sell such Inventory as provided herein.
7.    No Responsibility.  Grantor acknowledges that the PBGC has no responsibility for, and does not assume any of, Grantor's obligations or duties under any agreement, instrument, general intangible or other contract or obligation which is part of the Collateral or any obligation relating to the acquisition, preparation or holding of the Collateral.
8.    Reinstatement.  This Security Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against Grantor for liquidation or reorganization, should Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of Grantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment and performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made.  In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned (any payment or part thereof so rescinded, reduced, restored or returned, an “Avoided Payment”), the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned. 
9.    Termination.  This Security Agreement shall continue in effect, and the security interest granted hereby, the duties, covenants and liabilities of Grantor hereunder and all the terms, conditions and provisions hereof shall continue to be fully operative until all of the Secured Obligations, including any Avoided Payments, have been paid in full.  Upon termination of this Security Agreement, PBGC shall, within 20 days after receiving from Grantor a Notice of Termination of the UCC-1 Financing Statement prepared by Grantor at its sole expense, file said document, or otherwise file appropriate documents to withdraw liens, where appropriate.

12

10.    Indemnity.  Grantor assumes liability for, and agrees to indemnify PBGC (and each of its employees, directors, and agents) against, and on written demand to pay, or to reimburse PBGC for the payment of any or all liabilities, obligations, losses, damages, penalties, claims, suits, actions, costs, expenses, and disbursements, including reasonable legal fees and expenses of any kind and nature imposed on, incurred by, or asserted against PBGC directly or principally relating to or arising out of this Security Agreement; provided, that Grantor shall not be required to indemnify PBGC against any of the foregoing that results from the gross negligence or willful misconduct of PBGC (or any employee, director, or agent thereof).

11.    Miscellaneous.

(a)    Amendments.  This Security Agreement cannot be changed or terminated orally and can only be modified upon the written consent of both Parties.

(b)    Counterparts.  This Security Agreement may be executed in one or more counterparts, all of which taken together shall constitute one and the same instrument.

(c)    Choice of Law.  The validity, interpretation and enforcement of this Security Agreement and any dispute arising out of the relationship between the Parties in connection with this Security Agreement, whether in contract, tort, equity or otherwise, shall be governed by the laws of the state of Delaware without giving effect to its principles of conflicts of law), to the extent that such laws are not preempted by federal law.  
(d)    Consent to Jurisdiction.  In the event of any action brought under or arising out of this Security Agreement, the Parties hereby consent to the jurisdiction of the federal courts sitting in the District of Delaware and the District of Columbia.
(e)    Waiver of Jury Trial.  Grantor hereby waives trial by jury in any judicial proceeding involving, directly or indirectly, any matter (whether sounding in tort, contract, or otherwise) in any way arising out of, related to, or connected with the Secured Obligations, this Security Agreement, or the relationship established hereunder.
(f)    Integration.  Except to the extent of any references herein to the Waiver Letter, this Security Agreement and schedules hereto contain the entire and exclusive agreement of the Parties with respect to the matters contemplated herein, and supersede any and all prior negotiations relating thereto.
(g)    Notices.  All notices, demands, instructions and other communications required or permitted under this Security Agreement shall be in writing and shall be delivered to the intended recipient at the Address for Notices specified below or at such other address as shall be designated by any of them in a notice to the other Party provided under this Section.  All notices and other communications shall be deemed to have been duly given, in the case of transmission by facsimile, when received at the recipient's facsimile machine; in the case of hand delivery, when received; or in the case of overnight express mail by a nationally recognized carrier, the following business day.  

13

Address for Notices:
To PBGC:        Corporate Finance and Restructuring Department
Pension Benefit Guaranty Corporation
1200 K Street, N.W.
Washington, D.C.  20005-4026
Telephone: (202) 326-4070
Facsimile: (202) 842-2643
        
Office of the Chief Counsel
Pension Benefit Guaranty Corporation
1200 K Street, N.W.
Washington, D.C.  20005-4026
Telephone: (202) 326-4020
Facsimile: (202) 326-4112

To Magnetek, Inc.:    Marty Schwenner
Vice President and CFO
Magnetek, Inc.
N49 W13650 Campbell Drive
Menomonee, WI  53051
Telephone:  (262) 252-6922
Facsimile:  (800) 298-3503

(h)    Authority to Enter Agreement.  The signatory for each Party hereby represents and warrants that such Party has full power and authority to enter into this Security Agreement, that all necessary corporate approvals or other appropriate action has been taken to cause it to possess such power and authority and that this Security Agreement constitutes a legal, valid and binding obligation of such Party enforceable against it by the other Party.

(i)    In this Security Agreement, unless specifically otherwise provided or the context otherwise requires, the singular includes the plural and the plural the singular; the word “or” shall be deemed to include “and/or”, the words “including”, “includes” and “include” shall be deemed to be followed by the words “without limitation”; and references to sections or schedules are to those of this Security Agreement.  Headings in this Security Agreement are included for convenience of reference only and shall not constitute a part of this Security Agreement for any other purpose.  A reference to any statute will be deemed also to refer to all rules and regulations promulgated under the statute, unless the context requires otherwise.

14

(j)    Savings Clause.  NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN, THIS SECURITY AGREEMENT AND THE RIGHTS AND OBLIGATIONS EVIDENCED HEREBY AND PROVIDED HEREIN AND ANY SECURITY INTERESTS OR OTHER LIENS SECURING SUCH OBLIGATIONS ARE SUBORDINATE IN THE MANNER AND TO THE EXTENT SET FORTH THE SUBORDINATION AGREEMENT DATED AS OF SEPTEMBER XX, 2012 (THE “SUBORDINATION AGREEMENT') BY AND BETWEEN ASSOCIATED BANK, NATIONAL ASSOCIATION (THE “SENIOR LENDER”) AND PGBC.  TO THE EXTENT THAT MAGNETEK IS SUBJECT TO REQUIREMENTS HEREUNDER THAT ARE INCONSISTENT WITH THE SUBORDINATION AGREEMENT (AN “INCONSISTENCY”), THE PROVISIONS OF THE SUBORDINATION AGREEMENT WILL CONTROL.  BUT MAGNETEK ACKNOWLEDGES AND AGREES THAT IT HAS NO RIGHTS WHATESOEVER UNDER THE SUBORDINATION AGREEMENT AND THAT CONSEQUENTLY ONLY SENIOR LENDER MAY ASSERT ANY INCONSISTENCY.

15

IN WITNESS WHEREOF, the Parties have executed this Security Agreement as of the Effective Date.

	
					
	MAGNETEK, INC.    
	 
	PENSION BENEFIT GUARANTY CORPORATION

	 
	 
	 
	 
	 

	By:
	/s/ Marty Schwenner
	 
	By:
	/s/ Robert Bacon

	Name:
	Marty Schwenner
	 
	Name:
	Robert Bacon

	Title:
	Vice President and Chief Financial Officer
	 
	Title:
	Deputy Director, Corporate Finance and Restructuring Department

16mm09-1912_8ke101.htm

EXHIBIT 10.1

 

 

 

Execution Version

	  
	  
	
DEED OF RELEASE, TERMINATION AND SETTLEMENT

	
 

 

 

DATED 19 SEPTEMBER 2012

	
 

 

BETWEEN

 

 

FORTESCUE METALS GROUP LTD

(Fortescue)

 

AND

 

CHICHESTER METALS PTY LTD

 (Chichester)

 

AND

 

JOHN ANDREW HENRY FORREST

(Forrest)

 

AND

 

LEUCADIA NATIONAL CORPORATION

(Leucadia)

 

AND

 

BALDWIN ENTERPRISES INC

(Baldwin)

 

 

  

  

  

 

 THIS DEED OF RELEASE, TERMINATION AND SETTLEMENT is dated 19 September 2012

 

 BETWEEN:

 

	
(1)  

	
Fortescue Metals Group Ltd (ABN 57 002 594 872) of Level 2, 87 Adelaide Terrace, East Perth, WA 6004 (Fortescue);

 

	
(2)  

	
Chichester Metals Pty Ltd (ABN 83 109 264 262) of Level 2, 87 Adelaide Terrace, East Perth, WA 6004 (Chichester);

 

	
(3)  

	
John Andrew Henry Forrest of Level 2, 87 Adelaide Terrace, East Perth, WA 6004 (Forrest);

 

	
(4)  

	
Leucadia National Corporation of 315 Park Avenue South, New York, NY 10010 United States of America (Leucadia); and

 

	
(5)  

	
Baldwin Enterprises Inc of 315 Park Avenue South, New York, NY 10010 United States of America (Baldwin).

 

 BACKGROUND

 

	
(A)  

	
By a subscription agreement executed on or about 15 July 2006 between Fortescue, Chichester and Leucadia (Subscription Agreement) amongst other things, Leucadia agreed that it or one of its Related Entities would subscribe for certain shares in Fortescue and Notes to be issued in accordance with the Note Deed Poll.

 

	
(B)  

	
On or about 18 July 2006 Baldwin, a Related Entity of Leucadia, subscribed for and was issued Notes together with Note Certificates for a principal amount of US$100 million and was entered in the Register as the holder of those Notes (Baldwin Notes).

 

	
(C)  

	
The Baldwin Notes are repayable in full on 18 August 2019.

 

	
(D)  

	
The parties hereto now desire

 

	
(i)  

	
to effect the early redemption of the Baldwin Notes in accordance with this deed;

 

	
(ii)  

	
to release each other absolutely from all claims in relation to the Baldwin Notes, the Note Deed Poll and Subscription Agreement;

 

	
(iii)  

	
to settle the Court Proceedings in accordance with the terms of this Deed;

 

	
(iv)  

	
to release each other absolutely from all Released Claims.

 

THIS DEED WITNESSES AND IT IS AGREED as follows:

 

	
1.  

	
DEFINITIONS

 

	
1.1  

	
Capitalised terms defined or incorporated in the Note Deed Poll have, unless expressly defined in this Deed, the same meaning in this Deed.  In this Deed:

 

Business Day means a day on which banks are open for business in Perth, Australia and New York, New York excluding a Saturday, Sunday or public holiday.

 

 Condition means the condition referred to in clause 2.1.

  

1

  

 

 

 

 Court Proceedings means the proceedings in the Supreme Court of Western Australian between Leucadia, Baldwin, Chichester, Fortescue and Forrest having case book number CIV/2365/2010.

 

 Disputes means (i) the dispute between the parties which is the subject of the Court Proceedings, (ii) any disputes, disagreements or claims related to, connected with or incidental to the subject matter of the Court Proceedings or arising out of similar facts to the facts relating to the claim the subject of the Court Proceedings and (iii) any disputes, disagreements or claims related to, connected with or incidental to the subject matter of the Baldwin Note, the Note Deed Poll or the Subscription Agreement.

 

 End Date means 25 November 2012.

 

 Facility Agreement means the senior secured credit facility to be entered into in accordance with the commitment letter entered into on 16 September 2012 between Credit Suisse Securities (USA) LLC, Credit Suisse AG, JPMorgan Chase Bank, N.N., J.P. Morgan Securities LLC, Fortescue and FMG Resources (August 2006) Pty Ltd, and with respect to an aggregate amount of up to US$4.5 billion, or any alternative financing effected in lieu thereof.

 

 Financial Close means the date on which sufficient funds first become available for use by Fortescue or its Related Entity under the Facility Agreement to pay its obligations hereunder, which is expected to occur by 15 October 2012 and which, pursuant to clause 2.2 hereof, Fortescue and Chichester shall use its reasonable best endeavours to achieve as soon as reasonably practical following the date hereof.

 

 Note Deed Poll means the note deed poll dated 18 August 2006 between Chichester, as issuer, and Fortescue, as guarantor.

 

 Related Entity includes:

 

	
(a)  

	
the definition of "Related Entity" as defined or incorporated in the Note Deed Poll;

 

	
(b)  

	
the present and former directors, officers, servants, contractors and agents of each Related Entity jointly and severally; and

 

	
(c)  

	
the present and former directors, officers, servants, contractors and agents of each of Fortescue, Chichester, Forrest, Leucadia and Baldwin jointly and severally.

 

 Settlement means payment and receipt of the Settlement Sum to redeem the Baldwin Notes (including the related loan break fee), delivery of the Note Certificate and redemption of the Baldwin Notes in accordance with clause 4.

 

 Settlement Date means the date for Settlement being the 3rd Business Day after the date of Financial Close or such other date as agreed in writing by the parties.

 

 Settlement Sum means US$715,000,000, which represents a US$100,000,000 return of principal on the Baldwin Notes and a US$615,000,000 loan break fee in full satisfaction of all Fortescue and Chichester obligations under the Baldwin Notes.

 

 Settlement Time means the time at which Settlement is completed in accordance with the terms of this Deed.

 

	
1.2  

	
The provisions of clause 1.2 (Interpretation) of the Note Conditions apply to this Deed as though they were set out in full in this Deed except that references to the Note Conditions are to be construed as references to this Deed.

  

2

  

 

 

	
2.  

	
CONDITION PRECEDENT

 

	
2.1  

	
Condition

 

Clauses 3 through 11 (other than the first sentence of clause 7) do not become binding on the parties and Settlement must not take place unless and until Financial Close has occurred.  For the avoidance of doubt, upon the occurrence of the Financial Close, the parties shall be obligated to effect the Settlement as set forth herein.

 

	
2.2  

	
Satisfaction of Condition

 

To the extent that it is within its power to do so, each of Fortescue and Chichester will use its reasonable best endeavours to procure that the Condition is satisfied as soon as reasonably practicable following the date hereof and in any event by not later than the End Date.  Fortestcue and Chichester shall notify Leucadia and Baldwin in writing immediately upon satisfaction of the Financial Close.

 

	
2.3  

	
Waiver of Condition

 

	
(a)  

	
The parties agree that the Condition is for the benefit of Fortescue and Chichester and can only be waived by Fortescue and Chichester by notice in writing to the other parties.

 

	
(b)  

	
Where the Condition is waived in accordance with this clause 2.3, the Condition will be taken to have been satisfied by such waiver.

 

	
2.4  

	
Termination

 

Subject to clause 2.5, if the Condition has not been satisfied on or before 5.00pm (Perth time) on the End Date, either party may serve notice on the other terminating this agreement and in that event:

 

	
(a)  

	
except for this clause 2.4, clause 12 and clauses 14 through 17, all the provisions of this agreement will lapse and cease to have effect; and

 

	
(b)  

	
neither the lapsing of those provisions nor their ceasing to have effect will affect any accrued rights or liabilities of either party in respect of specific performance or damages for non-performance of any obligation under this agreement falling due for performance before such lapse and cessation.

 

	
2.5  

	
Conditions for termination

 

 A party may only terminate this Deed under clause 2.4 if:

 

	
(a)  

	
that party has given at least 3 Business Days' notice to the other party of its intention to terminate this Deed; and

 

	
(b)  

	
the Condition has not been waived in accordance with clause 2.3 prior to the termination of this Deed.

 

	
3.  

	
REDEMPTION OF NOTE AND PAYMENT OF SETTLEMENT SUM

 

In consideration for releases, covenants and agreements given by Leucadia and Baldwin in accordance with this Deed and return of the Note Certificate in accordance with clause 4, Chichester undertakes to redeem the Notes in full by paying the Settlement Sum to Baldwin on the Settlement Date in accordance with clause 4.

  

3

  

 

 

 

	
4.  

	
SETTLEMENT OF NOTES

 

	
4.1  

	
Time and place

 

 Settlement must take place at the offices of Fortescue at Level 2, 87 Adelaide Terrace, East Perth, WA 6004 at 12.00pm (Perth time) on the Settlement Date.

 

	
4.2  

	
Baldwin's obligations

 

On the Settlement Date, Baldwin must deliver, and Leucadia must procure that Baldwin delivers, to Chichester the Note Certificate for all of the Baldwin Notes registered in Baldwin's name in the Register.  Such delivery shall take place at the offices of Chichester’s agent in New York, New York as notified in writing by Chichester not later than 3 Business Days prior to the Settlement Date.

 

	
4.3  

	
Chichester's obligations

 

 On the Settlement Date Chichester must pay, and Fortescue must procure Chichester to pay, the Settlement Sum in immediately available funds to Baldwin by wire transfer to such account as designated in writing by Baldwin not later than 3 Business Days prior to the Settlement Date.

 

	
4.4  

	
Conditions of Completion

 

	
(a)  

	
Settlement of the Notes is conditional on each of Leucadia, Baldwin, Fortescue and Chichester complying with all of their respective obligations under this clause 4.

 

	
(b)  

	
If a party (Defaulting Party) fails to satisfy its obligations under this clause 4 on the day and at the place and time for Settlement then any other party (Notifying Party) may give the Defaulting Party a notice requiring the Defaulting Party to satisfy those obligations within a period of 3 Business Days from the date of the notice and declaring time to be of the essence.

 

	
(c)  

	
If the Defaulting Party fails to satisfy those obligations within those 3 Business Days the Notifying Party may, without limitation to any other rights it may have, terminate this agreement by giving written notice to the Defaulting Party.

 

	
4.5  

	
Completion simultaneous

 

The actions to take place under this clause 4 are interdependent and must take place, as nearly as possible, simultaneously.  If one action does not take place, then without prejudice to any rights available to any party as a consequence:

 

	
(a)  

	
there is no obligation on any party to undertake or perform any of the other actions;

 

	
(b)  

	
to the extent that such actions have already been undertaken, the parties must do everything reasonably required to reverse those actions; and

 

	
(c)  

	
each party must return to the other all documents delivered to it under this clause 4, and must each repay to the other all payments received by it under this clause 4, without prejudice to any other rights any party may have in respect of that failure.

  

4

  

 

 

	
5.  

	
AMENDMENT AND REDEMPTION

 

	
5.1  

	
Amendment

 

Notwithstanding the terms of clause 7 of the Note Conditions, the parties agree that Chichester may redeem the Baldwin Notes prior to the End Date in accordance with this Deed, including payment of the Settlement Sum, and to the extent required Chichester and Baldwin (being the holder of all of the Notes on issue under the terms of the Note Deed Poll) agree that clause 7 of the Note Conditions is hereby amended to permit Chichester to redeem the Baldwin Notes prior to the End Date in accordance with this Deed, including payment of the Settlement Sum.

 

	
5.2  

	
Redemption

 

With effect from the Settlement Time, in accordance with clause 4 all of the Baldwin Notes held by Baldwin prior to such Settlement shall be redeemed and are automatically cancelled.

 

	
6.  

	
TERMINATION

 

	
6.1  

	
Termination

 

With effect from the Settlement Time, the parties to this Deed agree that:

 

	
(a)  

	
the financial accommodation which was the subject of the Note Certificate having been repaid in full, the Baldwin Note, Note Deed Poll and Note Conditions are each terminated and each party releases each other party from all liability and obligations in connection with or arising under the Baldwin Note, Note Deed Poll and Note Conditions;

 

	
(b)  

	
the Subscription Agreement is terminated and each party releases each other party from all liability and obligations in connection with or arising under the Subscription Agreement.

 

	
7.  

	
DISCONTINUANCE OF COURT PROCEEDINGS

 

With effect from the date hereof until the Settlement Time, the parties hereby agree that no further steps will be taken in the Court Proceedings other than to seek orders that the Court Proceedings be adjourned indefinitely with liberty to apply.   With effect from the Settlement Time, the parties hereby agree to discontinue the Court Proceedings with no order as to costs and consent to, and shall take all necessary steps to obtain, an order from the court to this effect as expeditiously as possible after the date hereof. 

 

	
8.  

	
RELEASE

 

With effect from the Settlement Time this Deed is in full and final settlement of, and, in accordance with the terms of this Deed, each party hereby releases and forever discharges, all and/or any actions, claims, rights, demands and set-offs, whether in this jurisdiction or any other, whether or not presently known to the parties or to the law, and whether in law or equity, that it, its Related Entities or any of them ever had, may have or hereafter can, shall or may have against any other party to this Deed or any of its Related Entities arising out of or connected with:

 

 

	
(a)  

	
the Disputes;

 

	
(b)  

	
the underlying facts relating to the Disputes;

 

	
(c)  

	
the Court Proceedings;

  

5

  

 

 

	
(d)  

	
the Baldwin Note, Note Deed Poll and the Subscription Agreement;

 

	
(e)  

	
the circumstances relating to Baldwin's subscription for the Baldwin Notes; and

 

	
(f)  

	
Any other matters regarding the relationships between the parties or the investments by Leucadia and Baldwin in Fortescue or Chichester.

 

(Collectively the Released Claims).

 

The parties acknowledge that this Deed operates as a deed poll with respect to the Related Entities referred to in this clause who are not a party to this Deed and that each party enters into this Deed for itself and for and on behalf of each of its Related Entities.

 

 

	
9.  

	
AGREEMENT NOT TO SUE

 

	
(a)  

	
With effect from the Settlement Time, each party hereby agrees, on behalf of itself and on behalf of its Related Entities not to sue, commence, voluntarily aid in any way, prosecute or cause to be commenced or prosecuted against the other party or its Related Entities any action, suit or other proceeding arising out of or in connection with or concerning the Released Claims, in this jurisdiction or any other, except for the sole purpose of enforcing the terms of this Deed.

 

	
(b)  

	
This Deed may be pleaded as a full and complete defence by any party to this Deed or their Related Entities to any action arising out of or in connection with or concerning the Released Claims commenced by any other party to this Deed or their Related Entities.

 

	
10.  

	
INDEMNITIES

 

With effect from the Settlement Time, each party hereby indemnifies, and shall keep indemnified, the other party against all costs and damages (including the entire legal expenses of the parties) incurred in all future actions, claims and proceedings in respect of any of the Released Claims which it or its Related Entities or any of them may bring against the other party or its Related Entities or any of them.

 

 

	
11.  

	
NO ADMISSION AND RETRACTION OF DISPARAGING STATEMENTS

 

	
(a)  

	
This deed is entered into in connection with the compromise of disputed matters and in the light of other considerations. It is not, and shall not be represented or construed by any party as, an admission of liability or wrongdoing on the part of any party to this deed or any other person or entity.

 

	
(b)  

	
Each of Leucadia and Baldwin, on the one hand, and Fortescue, Chichester and Forrest, on the other hand, hereby agree to issue, at the Settlement Time, a public retraction of any and all previous disparaging, accusatory and negative statements and comments made publicly or privately regarding the conduct or good character of the other party with respect to the entry into the Subscription Agreement, the Note Deed Poll and the matters subject of the Disputes and Court Proceedings, and each party hereby agrees that the other may make a public statement regarding such retraction after the Settlement Time.

  

6

  

 

 

	
12.  

	
REPRESENTATIONS AND WARRANTIES

 

	
12.1  

	
General representations and warranties

 

On the date of this Deed and with effect from the Settlement Time, each party represents and warrants in respect of itself that:

 

	
(a)  

	
other than Forrest, it is a corporation registered (or taken to be registered) and validly existing under the laws of its place of incorporation;

 

	
(b)  

	
it has the power and authority to enter into and perform its obligations under this Deed;

 

	
(c)  

	
it has taken all necessary action to authorise the execution, delivery and performance of this Deed; and

 

	
(d)  

	
the execution, delivery and performance by it of this Deed does not and will not violate, breach, or result in a contravention of any law, regulation or authorisation, or its constitution.

 

	
12.2  

	
Baldwin representation and warranty

 

On the date of this Deed and with effect from the Settlement Time, Leucadia and Baldwin each represents and warrants that Baldwin is the legal and beneficial owner of the Baldwin Notes.

 

	
12.3  

	
Survival of representations and warranties

 

The representations and warranties in clauses 12.1 and 12.2 survive the termination of this Deed.

 

	
13.  

	
FURTHER ASSURANCES

 

Each party must take all reasonable steps, execute all reasonable documents and do anything reasonably required by any other party to give effect to the Settlement and the terminations, releases and other undertakings given in or contemplated by clauses 6, 7, 8 and 11 of this Deed.

 

	
14.  

	
EXPENSES

 

Each party shall bare their own costs and expenses incurred by them in connection with the Court Proceedings, Released Claims, negotiation, preparation and execution of this Deed and any related documentation (including the fees and expenses of legal advisors and any applicable value added taxes).

 

	
15.  

	
COUNTERPARTS

 

This Deed may be executed in any number of counterparts.  This has the same effect as if the signatures on the counterparts were on a single copy of this Deed.

 

	
16.  

	
SEVERANCE

 

The invalidity of any clause contained in this Deed shall not affect the validity of the remaining clauses of this Deed.

 

	
17.  

	
GOVERNING LAW

 

This Deed and any non-contractual obligations arising out of or in connection with it are governed by the laws of Western Australia.

  

7

  

 

 

 

	
18.  

	
AMENDMENTS

 

This Deed may only be amended if the amendment is set forth in a writing executed by the parties.

 

 THIS DEED has been entered into as a deed on the date stated at the beginning of this Deed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

8

  

 

SIGNATORIES

 

 

 

	
EXECUTED by FORTESCUE METALS GROUP LIMITED in accordance with section 127 of the Corporations Act 2001 (Cth):

	
)

)

)

	  
	
 

 

Neville J. Power

	  	
 

 

Mark Thomas

	
Name of director

	
Name of company secretary

	
 

 

/s/ Neville J. Power

	
 

 

/s/ Mark Thomas

	
Signature of director

	  	
Signature of company secretary

 

 

	
EXECUTED by CHICHESTER METALS PTY LIMITED in accordance with section 127 of the Corporations Act 2001 (Cth):

	
)

)

)

	  
	
 

 

Neville Power

	  	
 

 

Mark Thomas

	
Name of director

	
Name of company secretary

	
 

 

/s/ Neville Power

	
 

 

/s/ Mark Thomas

	
Signature of director

	  	
Signature of company secretary

 

	
EXECUTED by JOHN ANDREW HENRY FORREST in the presence of:

	
)

)

)

	  
	
 

 

/s/ Christine Nicolau

	  	
 

 

/s/ John Andrew Henry Forrest

	
Signature of witness

	
John Andrew Henry Forrest

	
 

 

Christine Nicolau

	  
	
Name of witness

	  	  

 

  

9

  

 

	
SIGNED for and on behalf of LEUCADIA NATIONAL CORPORATION by its duly authorised officer in the presence of:

	
)

)

)

)

)

)

)

)

	  
	
 

 

/s/ Laura Ulbrandt DiPierro

	  	
 

 

/s/ Joseph A. Orlando

	
Signature of witness

	
Signature of authorised officer

	
 

 

Laura Ulbrandt DiPierro

	
 

 

Joseph A. Orlando

	
Name of witness

	  	
Name of authorised officer

 

 

	
SIGNED for and on behalf of BALDWIN ENTERPRISES INC by its duly authorised officer in the presence of:

	
)

)

)

)

)

)

)

)

	  
	
 

 

/s/ Laura Ulbrandt DiPierro

	  	
 

 

/s/ Joseph A. Orlando

	
Signature of witness

	
Signature of authorised officer

	
 

 

Laura Ulbrandt DiPierro

	
 

 

Joseph A. Orlando

	
Name of witness

	  	
Name of authorised officer

 

 

 

 

 

 

10

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