Document:

Exhibit
10.40

FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT (this “Agreement”), dated as of
September 22, 2006, is entered into by and among the Lenders signatory hereto, ABLECO FINANCE LLC, a Delaware limited
liability company, as collateral agent and administrative agent for the Lenders
(in such capacities, “Agent”), MAGNETEK,
INC., a Delaware corporation (“Borrower”), and each of Borrower’s
Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Borrower, are referred to hereinafter as a “Loan Party”
and individually and collectively, jointly and severally, as the “Loan
Parties”).  Terms used herein without
definition shall have the meanings ascribed to them in the Financing Agreement
defined below.

RECITALS

A.            The Lenders, Agent and Loan Parties
have previously entered into that certain Financing Agreement dated September
30, 2005, as amended by that certain Amendment No. 1 to Financing Agreement and
Waiver, dated November 29, 2005 and by that certain Amendment No. 2 to Financing
Agreement, dated April 24, 2006 (as amended, modified and supplemented from
time to time, the “Financing Agreement”), pursuant to which the Lenders
have made certain loans and financial accommodations available to the Loan
Parties.

B.            Certain Events of Default have
occurred and are continuing under the Financing Agreement due to Loan Parties’
failure to (i) achieve the minimum amount of TTM EBITDA set forth in Section 7.03(c)
of the Financing Agreement for the period ending June 30, 2006, (ii) maintain
the minimum Fixed Charge Coverage Ratio set forth in Section 7.03(b) of the Financing
Agreement as of June 30, 2006 and (iii) maintain a Leverage Ratio of no more
than the amount set forth in Section 7.03(a) of the Financing Agreement as of
June 30, 2006 (collectively, the “Known Existing Defaults”).

C.            The Loan Parties have requested that
the Agent and Lenders forbear from exercising their rights and remedies under
the Financing Agreement and the other Loan Documents in order to give the Loan
Parties time to negotiate a sale of the Stock of MagneTek S.p.A., a company
organized under the laws of Italy, and of certain other assets associated with
its “Power Electronics Group” division.

D.            Agent and the Lenders are willing,
for a limited period of time and on the terms and conditions set forth herein,
to forbear from exercising their rights and remedies under the Financing
Agreement and the other Loan Documents with respect to the Known Existing
Defaults.

E.             The Loan Parties are entering into
this Agreement with the understanding and agreement that, except as
specifically provided herein, none of the Agent’s or Lenders’ rights or
remedies as set forth in the Financing Agreement or any other Loan Document are
being waived or modified by the terms of this Agreement.

AGREEMENT

NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.             Incorporation of Recitals.  Each
of the above recitals is expressly incorporated herein and is represented by
each Loan Party to be true and correct.

2.             Reaffirmation of Obligations.  Each
Loan Party hereby acknowledges that the Loan Documents and the Obligations
constitute the valid and binding obligations of such Loan Party enforceable
against such Loan Party in accordance with their respective terms, and each Loan
Party hereby reaffirms its 

 1
 

 

obligations
under the Loan Documents.  Agent’s and
the Lenders’ entry into this Agreement or any of the documents referenced
herein, their negotiations with any party with respect to any Loan Document,
their conduct of any analysis or investigation of any Collateral for the
Obligations or any Loan Document, their acceptance of any payment from any Loan
Party or any other party of any payments made prior to the date hereof, or any
other action or failure to act on the part of Agent or any Lender shall not
constitute (a) a modification of any Loan Document or (b) a waiver of any
Default or Event of Default under the Financing Agreement, including, without
limitation, the Known Existing Defaults, or a waiver of any term or provision
of any Loan Document.

3.             Agreement to Forbear.  For
the Forbearance Period (as defined below), the Agent and Lenders shall not take
any action or commence any proceedings with respect to the enforcement of any
of their rights or remedies under the Loan Documents as a result of the Known
Existing Defaults.  The parties agree
that neither the foregoing agreement by Agent and Lenders nor the acceptance by
Agent or Lenders of any of the payments provided for in the Loan Documents, nor
any payment prior to the date hereof shall, however, (a) excuse any party from
any of its obligations under the Loan Documents (other than as set forth in Section
5 below), or (b) toll the running of any time periods applicable to any
such rights and remedies, including, without limitation, any grace periods with
respect to Defaults under the Loan Documents or otherwise.  Each Loan Party agrees that it will not
assert laches, waiver or any other defense to the enforcement of any of the
Loan Documents based upon the foregoing agreement Agent and Lenders to forbear
or the acceptance by Agent or Lenders of any of the payments provided for in
the Loan Documents or any payment prior to the date hereof.  As used herein, “Forbearance Period”
shall mean the period commencing upon the effectiveness of this Agreement and
continuing until the earlier to occur of: (x) any Default or Event of Default
under any of the Loan Documents (other than any Known Existing Default) or (y)
October 31, 2006.

4.             Termination of Agreement to Forbear.  Each
Loan Party acknowledges and agrees that upon the termination of the Agent and
Lenders’ agreement to forbear as provided in Section 3 hereof, Agent, on
behalf of the Lenders, shall be entitled to exercise any or all of its remedies
under the Loan Documents, including, without limitation, the appointment of a
receiver, the acceleration of the Obligations and the enforcement under the
Code of any liens in favor of Agent, as a result of the Known Existing
Defaults, and at any time Agent and Lenders shall be entitled to exercise any
or all of their remedies under the Loan Documents as a result of any other
Default or Event of Default under the Loan Documents.

5.             Agreement to Defer October 1, 2006 Principal
Payment.  Anything in Section 2.03(b) of the
Financing Agreement notwithstanding, the parties hereby agree that the October
1, 2006 installment principal payment of $1,000,000 shall not be due until the
end of the Forbearance Period.

6.             Release; Covenant Not to Sue.

(a)           Each Loan Party hereby absolutely and unconditionally releases and
forever discharges Agent and Lenders, and any and all of their respective
participants, parent corporations, subsidiary corporations, affiliated
corporations, insurers, indemnitors, successors and assigns thereof, together
with all of the present and former directors, officers, agents and employees of
any of the foregoing (each a “Released Party”), from any and all claims,
demands or causes of action of any kind, nature or description, whether arising
in law or equity or upon contract or tort or under any state or federal law or
otherwise, which such Loan Party has had, now has or has made claim to have
against any such person for or by reason of any act, omission, matter, cause or
thing whatsoever arising from the beginning of time to and including the date
of this Agreement, whether such claims, demands and causes of action are
matured or unmatured or known or unknown. 
It is the intention of each Loan Party in providing this release that
the same shall be effective as a bar to each and every claim, demand and cause
of action specified, and in furtherance of this intention it waives and
relinquishes all rights and benefits under Section 1542 of the Civil Code of
the State of California (or any comparable provision of any other applicable
law), which provides:

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“A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him might have materially affected
his settlement with the debtor.”

Each Loan Party acknowledges that it may hereafter discover facts
different from or in addition to those now known or believed to be true with
respect to such claims, demands, or causes of action and agrees that this
instrument shall be and remain effective in all respects notwithstanding any
such differences or additional facts. 
Each Loan Party understands, acknowledges and agrees that the release
set forth above may be pleaded as a full and complete defense and may be used
as a basis for an injunction against any action, suit or other proceeding which
may be instituted, prosecuted or attempted in breach of the provisions of such
release.

(b)           Each Loan Party, on behalf of itself and its successors, assigns, and
other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party
above that it will not sue (at law, in equity, in any regulatory proceeding or
otherwise) any Released Party on the basis of any claim released, remised and
discharged by such Loan Party pursuant to the above release.  If any Loan Party or any of its successors,
assigns or other legal representations violates the foregoing covenant, each Loan
Party, for itself and its successors, assigns and legal representatives, agrees
to pay, in addition to such other damages as any Released Party may sustain as
a result of such violation, all attorneys’ fees and costs incurred by such
Released Party as a result of such violation.

7.             Effectiveness of this Agreement. 
Agent must have received the following items, in form and content
acceptable to Agent, before this Agreement is effective and the Lenders are
required to resume making extensions of credit to Loan Parties under the Financing
Agreement.

(a)           Agreement; Acknowledgement and Release.  This
Agreement and the attached Acknowledgement and Release by Guarantors, each
fully executed in a sufficient number of counterparts for distribution to all
parties.

(b)           Forbearance as to First Lien Credit
Agreement, etc.  Evidence that the Loan Parties, First Lien
Agent and the Lenders (as defined in the First Lien Credit Agreement) have
entered into a forbearance agreement with respect to the First Lien Credit
Agreement reflecting substantially the same terms set forth in this Agreement
(the “First Lien Forbearance”) or otherwise satisfactory to Agent.

(c)           Representations and Warranties. 
Except for the existence of the Known Existing Defaults, the
representations and warranties set forth herein and in the Financing Agreement
must be true and correct in all material respects (except where any such
representation and warranty is already subject to a materiality standard, in
which case such representation and warranty is true and correct in all
respects) on and as of the date hereof as though made on and as of the date
hereof (other than any such representations and warranties that, by their
terms, are specifically made as of a date other than the date hereof).

(d)           Other Required Documentation.  All
other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered or executed or
recorded, as required by Agent.

8.             Representations and Warranties.  Each
Loan Party represents and warrants as follows:

(a)           Authority.  Each Loan Party has the
requisite corporate power and authority to execute and deliver this Agreement,
and to perform its obligations hereunder and under the Loan Documents to which
it is a party.  The execution, delivery
and performance by each Loan Party of this Agreement have been duly approved by
all necessary corporate action and no other corporate proceedings are necessary
to consummate such transactions.

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(b)           Enforceability.  This
Agreement has been duly executed and delivered by each Loan Party.  This Agreement and each Loan Document is the
legal, valid and binding obligation of each Loan Party, enforceable against
such Loan Party in accordance with its terms, and is in full force and effect.

(c)           Representations and Warranties.  The
representations and warranties contained in each Loan Document (other than any
such representations or warranties that, by their terms, are specifically made
as of a date other than the date hereof) are true and correct in all material
respects (except where any such representation and warranty is already subject
to a materiality standard, in which case such representation and warranty is
true and correct in all respects) on and as of the date hereof as though made
on and as of the date hereof.

(d)           Due Execution.  The
execution, delivery and performance of this Agreement are within the power of
each Loan Party, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval, if any, and do not
contravene any law or any contractual restrictions binding on such Loan Party.

(e)           No Default.  Other than the Known Existing
Defaults, no event has occurred and is continuing that constitutes a Default or
an Event of Default.

(f)            No Duress.  This Agreement has been
entered into without force or duress, of the free will of each Loan Party.  Each Loan Party’s decision to enter into this
Agreement is a fully informed decision and such Loan Party is aware of all
legal and other ramifications of such decision.

(g)           Counsel.  Each Loan Party has read and
understands this Agreement, has consulted with and been represented by legal
counsel in connection herewith, and has been advised by its counsel of its
rights and obligations hereunder and thereunder.

9.             Choice of Law.  The
validity of this Agreement, its construction, interpretation and enforcement,
the rights of the parties hereunder, shall be determined under, governed by,
and construed in accordance with the internal laws of the State of New York
governing contracts only to be performed in that State.

10.           Counterparts.  This
Agreement may be executed in any number of counterparts and by different parties
and separate counterparts, each of which when so executed and delivered, shall
be deemed an original, and all of which, when taken together, shall constitute
one and the same instrument.  Delivery of
an executed counterpart of a signature page to this Agreement by telefacsimile
or other similar method of electronic transmission shall be effective as
delivery of a manually executed counterpart of this Agreement.

11.           Reference to and Effect on the Loan Documents.

(a)           Upon and after the effectiveness of this Agreement, each reference in
the Financing Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import referring to the Financing Agreement, and each reference in the
other Loan Documents to “the Financing Agreement”, “thereof” or words of like
import referring to the Financing Agreement, shall mean and be a reference to
the Financing Agreement as supplemented hereby.

(b)           The Financing Agreement and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed and shall constitute the legal, valid, binding and enforceable
obligations of each Loan Party to Agent and Lenders.

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(c)           The execution, delivery and effectiveness of this Agreement shall not
operate as a waiver of any right, power or remedy of the Agent or Lenders under
any of the Loan Documents, nor constitute a waiver of any provision of any of
the Loan Documents.

12.           Ratification.  Each
Loan Party hereby restates, ratifies and reaffirms each and every term and
condition set forth in the Financing Agreement and the Loan Documents effective
as of the date hereof.

13.           Integration.  This Agreement, together with
the other Loan Documents, incorporates all negotiations of the parties hereto
with respect to the subject matter hereof and is the final expression and
agreement of the parties hereto with respect to the subject matter hereof.

14.           Severability.  In
case any provision in this Agreement shall be invalid, illegal or
unenforceable, such provision shall be severable from the remainder of this
Agreement and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

15.           Submission of Amendment.  The
submission of this Agreement to the parties or their agents or attorneys for
review or signature does not constitute a commitment by Agent or the Lenders to
forbear from exercising any of their rights and remedies under the Loan
Documents, and this Agreement shall have no binding force or effect until all
of the conditions to the effectiveness of this Agreement have been satisfied as
set forth herein.

16.           Modification.  This
Agreement may not be amended, waived or modified in any manner without the
written consent of the party against whom the amendment, waiver or modification
is sought to be enforced.

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

 

	
  

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  MAGNETEK,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  Executive VP and
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GUARANTORS:

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  ADS POWER, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  Executive VP and
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  MONDEL HOLDING, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  Executive VP and
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MONDEL
  ULC

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  Executive VP and
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  NATIONAL ELECTRIC COIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  Executive VP and
  CFO

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  ALTERNATIVE ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  Executive VP and
  CFO

  
					

 

 

[MAGNETEK, INC.]

[SIGNATURE PAGE TO
FORBEARANCE AGREEMENT]

 

 

	
  

  	
  COLLATERAL
  AGENT AND

  
	
   

  	
  ADMINISTRATIVE
  AGENT:

  
	
   

  	
   

  
	
   

  	
  ABLECO
  FINANCE LLC

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  Grenier

  
	
   

  	
  Name:

  	
  Michael Grenier

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDERS:

  
	
   

  	
   

  
	
   

  	
  ABLECO
  FINANCE LLC,

  
	
   

  	
  on behalf of
  itself and its affiliate assigns

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  Grenier

  
	
   

  	
  Name:

  	
  Michael Grenier

  
	
   

  	
  Title:

  	
  Vice President

  
					

 

 

[MAGNETEK, INC.]

[SIGNATURE PAGE TO
FORBEARANCE AGREEMENT]Exhibit
10.41

FORBEARANCE AGREEMENT

THIS FORBEARANCE AGREEMENT (this “Agreement”), dated as of
September 22, 2006, is entered into by and among the Lenders signatory hereto, WELLS FARGO FOOTHILL, INC., a California
corporation, in its capacity as agent for the Lenders and Bank Product
Providers (in such capacity “Agent”), MAGNETEK,
INC., a Delaware corporation (“Parent”), and each of Parent’s
Subsidiaries identified on the signature pages hereof (such Subsidiaries,
together with Parent, are referred to hereinafter as a “Borrower” and
individually and collectively, jointly and severally, as the “Borrowers”).  Terms used herein without definition shall
have the meanings ascribed to them in the Credit Agreement defined below.

RECITALS

 

A.            The Lenders, Agent and Borrowers
have previously entered into that certain Credit Agreement dated September 30,
2005, as amended by that certain First Amendment to Credit Agreement and
Waiver, dated November 29, 2005 and by that certain Second Amendment to Credit
Agreement and Waiver, dated April 20, 2006 (as amended, modified and
supplemented from time to time, the “Credit Agreement”), pursuant to
which the Lenders have made certain loans and financial accommodations
available to Borrowers.

B.            Certain Events of Default have occurred
and are continuing under the Credit Agreement due to Borrowers’ failure to (i)
achieve the minimum amount of TTM EBITDA set forth in Section 6.16(a)(i) of the
Credit Agreement for the period ending June 30, 2006, (ii) maintain the minimum
Fixed Charge Coverage Ration set forth in Section 6.16(a)(iii) of the Credit
Agreement as of June 30, 2006 and (iii) maintain a Leverage Ratio of no more
than the amount set forth in Section 6.16(a)(iv) of the Credit Agreement as of
June 30, 2006 (collectively, the “Known Existing Defaults”).

C.            Borrowers have requested that the
Agent and Lenders forbear from exercising their rights and remedies under the
Credit Agreement and the other Loan Documents in order to give Borrowers time
to negotiate a sale of the Stock of MagneTek S.p.A., a company organized under
the laws of Italy and of certain other assets of Parent associated with its “Power
Electronics Group” division.

D.            Agent and the Lenders are willing,
for a limited period of time and on the terms and conditions set forth herein,
to forbear from exercising their rights and remedies under the Credit Agreement
and the other Loan Documents with respect to the Known Existing Defaults.

E.             Borrowers are entering into this
Agreement with the understanding and agreement that, except as specifically
provided herein, none of the Lender Group’s rights or remedies as set forth in
the Credit Agreement or any other Loan Document is being waived or modified by
the terms of this Agreement.

AGREEMENT

NOW,
THEREFORE, in consideration of the foregoing and the mutual covenants herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:

1.             Incorporation of Recitals.  Each
of the above recitals is expressly incorporated herein and is represented by
each Borrower to be true and correct.

2.             Reaffirmation of Obligations.  Each
Borrower hereby acknowledges that the Loan Documents and the Obligations
constitute the valid and binding obligations of such Borrower enforceable
against such Borrower in accordance with their respective terms, and each
Borrower hereby reaffirms its obligations under the Loan Documents.  Agent’s and the Lenders’ entry into this
Agreement or any of the documents referenced herein, their negotiations with
any party with respect to any Loan Document, their conduct of any analysis or 

 

investigation
of any Collateral for the Obligations or any Loan Document, their acceptance of
any payment from any Borrower or any other party of any payments made prior to
the date hereof, or any other action or failure to act on the part of any
member of the Lender Group shall not constitute (a) a modification of any Loan
Document or (b) a waiver of any Default or Event of Default under the Credit
Agreement, including, without limitation, the Known Existing Defaults, or a
waiver of any term or provision of any Loan Document.

3.             Agreement to Forbear.  For
the Forbearance Period (as defined below), the Lender Group shall not take any
action or commence any proceedings with respect to the enforcement of any of
its rights or remedies under the Loan Documents as a result of the Known
Existing Default.  The parties agree that
neither the foregoing agreement by the Lender Group nor the acceptance by any
member of the Lender Group of any of the payments provided for in the Loan
Documents, nor any payment prior to the date hereof shall, however, (a) excuse
any party from any of its obligations under the Loan Documents, or (b) toll the
running of any time periods applicable to any such rights and remedies,
including, without limitation, any grace periods with respect to Defaults under
the Loan Documents or otherwise.  Each
Borrower agrees that it will not assert laches, waiver or any other defense to
the enforcement of any of the Loan Documents based upon the foregoing agreement
by the Lender Group to forbear or the acceptance by any member of the Lender
Group of any of the payments provided for in the Loan Documents or any payment
prior to the date hereof.  As used
herein, “Forbearance Period” shall mean the period commencing upon the
effectiveness of this Agreement and continuing until the earliest to occur
of:  (x) any Default or Event of Default
under any of the Financing Agreements (other than the Known Existing Default)
or (y) October 31, 2006.

4.             Termination of Agreement to Forbear.  Each
Borrower acknowledges and agrees that upon the termination of the Lender Group’s
agreement to forbear as provided in Section 3 hereof, Agent, on behalf
of the Lender Group, shall be entitled to exercise any or all of its remedies
under the Loan Documents, including, without limitation, the appointment of a
receiver, the acceleration of the Obligations and the enforcement under the
Code of any liens in favor of Agent, as a result of the Known Existing
Defaults, and at any time the Lender Group shall be entitled to exercise any or
all of their remedies under the Loan Documents as a result of any other Default
or Event of Default under the Loan Documents.

5.             Agreement to Defer October 1,
2006 Principal Payment.  Anything in Section
2.03(b) of the Financing Agreement notwithstanding, the parties hereby
agree that the October 1, 2006 installment principal payment of $1,000,000
shall not be due until the end of the Forbearance Period.

6.             Release; Covenant Not to Sue.

(a)           Each Borrower hereby absolutely and unconditionally releases and
forever discharges the Lender Group, and any and all of their respective
participants, parent corporations, subsidiary corporations, affiliated corporations,
insurers, indemnitors, successors and assigns thereof, together with all of the
present and former directors, officers, agents and employees of any of the
foregoing (each a “Released Party”), from any and all claims, demands or
causes of action of any kind, nature or description, whether arising in law or
equity or upon contract or tort or under any state or federal law or otherwise,
which such Borrower has had, now has or has made claim to have against any such
person for or by reason of any act, omission, matter, cause or thing whatsoever
arising from the beginning of time to and including the date of this Agreement,
whether such claims, demands and causes of action are matured or unmatured or
known or unknown.  It is the intention of
each Borrower in providing this release that the same shall be effective as a
bar to each and every claim, demand and cause of action specified, and in
furtherance of this intention it waives and relinquishes all rights and
benefits under Section 1542 of the Civil Code of the State of California (or
any comparable provision of any other applicable law), which provides:

“A general release does not extend to claims which the creditor does
not know or suspect to exist in his favor at the time of executing the release,
which if known by him might have materially affected his settlement with the
debtor.”

Each Borrower acknowledges that it may hereafter discover facts
different from or in addition to those now known or believed to be true with
respect to such claims, demands, or causes of action and agree that this
instrument shall be and remain effective in all respects notwithstanding any
such differences or additional facts. 
Each Borrower understands, acknowledges and agrees that the release set
forth above may be pleaded as 

 2
 

 

a full and complete defense and may be used as a basis for an
injunction against any action, suit or other proceeding which may be
instituted, prosecuted or attempted in breach of the provisions of such
release.

(b)           Each Borrower, on behalf of itself and its successors, assigns, and
other legal representatives, hereby absolutely, unconditionally and
irrevocably, covenants and agrees with and in favor of each Released Party
above that it will not sue (at law, in equity, in any regulatory proceeding or
otherwise) any Released Party on the basis of any claim released, remised and
discharged by such Borrower pursuant to the above release.  If any Borrower or any of its successors,
assigns or other legal representations violates the foregoing covenant, each
Borrower, for itself and its successors, assigns and legal representatives,
agrees to pay, in addition to such other damages as any Released Party may
sustain as a result of such violation, all attorneys’ fees and costs incurred
by such Released Party as a result of such violation.

6.             Effectiveness of this Agreement. 
Agent must have received the following items, in form and content
acceptable to Agent, before this Agreement is effective and the Lenders are
required to resume making extensions of credit to Borrowers under the Credit
Agreement.

(a)           Agreement; Acknowledgement and Release.  This
Agreement and the attached Acknowledgement and Release by Guarantors, each
fully executed in a sufficient number of counterparts for distribution to all
parties.

(b)           Forbearance as to Second Lien Loan Agreement,
etc.  Evidence that the Borrowers, Second Lien
Agent and the Second Lien Lenders have entered into a forbearance agreement
with respect to the Second Lien Loan Agreement reflecting substantially the
same terms set forth in this Agreement (the “Second Lien Forbearance”)
or otherwise satisfactory to Agent.

(c)           Representations and Warranties. 
Except for the existence of the Known Existing Defaults, the
representations and warranties set forth herein and in the Credit Agreement
must be true and correct in all material respects (except where any such
representation and warranty is already subject to a materiality standard, in
which case such representation and warranty must be true and correct in all
respects) on and as of the date hereof as though made on and as of the date
hereof (other than any such representations and warranties that, by their
terms, are specifically made as of a date other than the date hereof).

(d)           Other Required Documentation.  All
other documents and legal matters in connection with the transactions
contemplated by this Agreement shall have been delivered or executed or
recorded, as required by Agent.

7.             Representations and Warranties.  Each
Borrower represents and warrants as follows:

(a)           Authority.  Each Borrower has the
requisite corporate power and authority to execute and deliver this Agreement,
and to perform its obligations hereunder and under the Loan Documents to which
it is a party.  The execution, delivery
and performance by each Borrower of this Agreement have been duly approved by
all necessary corporate action and no other corporate proceedings are necessary
to consummate such transactions.

(b)           Enforceability.  This
Agreement has been duly executed and delivered by each Borrower.  This Agreement and each Loan Document is the
legal, valid and binding obligation of each Borrower, enforceable against such
Borrower in accordance with its terms, and is in full force and effect.

(c)           Representations and Warranties.  The
representations and warranties contained in each Loan Document (other than any
such representations or warranties that, by their terms, are specifically made
as of a date other than the date hereof) are true and correct in all material
respects (except where any such representation and warranty is already subject
to a materiality standard, in which case such representation 

 3
 

 

and
warranty is true and correct in all respects) on and as of the date hereof as
though made on and as of the date hereof.

(d)           Due Execution.  The
execution, delivery and performance of this Agreement are within the power of
each Borrower, have been duly authorized by all necessary corporate action,
have received all necessary governmental approval, if any, and do not
contravene any law or any contractual restrictions binding on such Borrower.

(e)           No Default.  Other than the Known Existing
Defaults, no event has occurred and is continuing that constitutes a Default or
an Event of Default.

(f)            No Duress.  This Agreement has been
entered into without force or duress, of the free will of each Borrower.  Each Borrower’s decision to enter into this
Agreement is a fully informed decision and such Borrower is aware of all legal
and other ramifications of such decision.

(g)           Counsel.  Each Borrower has read and understands
this Agreement, has consulted with and been represented by legal counsel in
connection herewith, and has been advised by its counsel of its rights and
obligations hereunder and thereunder.

8.             Choice of Law.  The
validity of this Agreement, its construction, interpretation and enforcement,
the rights of the parties hereunder, shall be determined under, governed by,
and construed in accordance with the internal laws of the State of New York
governing contracts only to be performed in that State.

9.             Counterparts.  This
Agreement may be executed in any number of counterparts and by different
parties and separate counterparts, each of which when so executed and
delivered, shall be deemed an original, and all of which, when taken together,
shall constitute one and the same instrument. 
Delivery of an executed counterpart of a signature page to this
Agreement by telefacsimile or other similar method of electronic transmission
shall be effective as delivery of a manually executed counterpart of this
Agreement.

10.           Reference to and Effect on the Loan Documents.

(a)           Upon and after the effectiveness of this Agreement, each reference in
the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of
like import referring to the Credit Agreement, and each reference in the other
Loan Documents to “the Credit Agreement”, “thereof” or words of like import
referring to the Credit Agreement, shall mean and be a reference to the Credit
Agreement as supplemented hereby.

(b)           The Credit Agreement and all other Loan Documents, are and shall
continue to be in full force and effect and are hereby in all respects ratified
and confirmed and shall constitute the legal, valid, binding and enforceable
obligations of each Borrower to the Lender Group and Bank Product Providers.

(c)           The execution, delivery and effectiveness of this Agreement shall not
operate as a waiver of any right, power or remedy of the Lender Group under any
of the Loan Documents, nor constitute a waiver of any provision of any of the
Loan Documents.

11.           Ratification.  Each
Borrower hereby restates, ratifies and reaffirms each and every term and
condition set forth in the Credit Agreement and the Loan Documents effective as
of the date hereof.

12.           Integration.  This Agreement, together with
the other Loan Documents, incorporates all negotiations of the parties hereto
with respect to the subject matter hereof and is the final expression and
agreement of the parties hereto with respect to the subject matter hereof.

 4
 

 

13.           Severability.  In
case any provision in this Agreement shall be invalid, illegal or
unenforceable, such provision shall be severable from the remainder of this
Agreement and the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

14.           Submission of Amendment.  The
submission of this Agreement to the parties or their agents or attorneys for
review or signature does not constitute a commitment by Agent or the Lenders to
forbear from exercising any of the Lender Group’s rights and remedies under the
Loan Documents, and this Agreement shall have no binding force or effect until
all of the conditions to the effectiveness of this Agreement have been
satisfied as set forth herein.

15.           Modification.  This
Agreement may not be amended, waived or modified in any manner without the
written consent of the party against whom the amendment, waiver or modification
is sought to be enforced.

 5
 

 

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

	
   

  	
  MAGNETEK, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAGNETEK
  ADS POWER, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAGNETEK
  MONDEL HOLDING, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  WELLS
  FARGO FOOTHILL, INC.,

  
	
   

  	
  a California
  corporation,

  
	
   

  	
  as Agent and as
  sole Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey P.
  Royston

  	
   

  
	
   

  	
  Name:

  	
  Jeffrey P.
  Royston

  	
   

  
	
   

  	
  Title:

  	
  Vice President

  	
   

  
								

 

 6
 

 

ACKNOWLEDGEMENT
AND RELEASE BY GUARANTORS

In
connection with the foregoing Forbearance Agreement (the “Agreement”),
each of the undersigned, being a Guarantor (as defined in the Credit Agreement
referenced in the Agreement) under their respective Guaranties (as defined in
the Credit Agreement referenced in the Agreement), hereby acknowledges and
agrees to the Agreement and confirms and agrees that its Guaranty is and shall
continue to be, in full force and effect and is hereby ratified and confirmed
in all respects.  Although Agent and the
Lenders have informed Guarantors of the matters set forth above, and Guarantors
have acknowledged the same, each Guarantor understands and agrees that neither
the Lender Group nor the Bank Product Providers have any duty under the Credit
Agreement, any Guaranty or any other agreement with any Guarantor to so notify any
Guarantor or to seek such an acknowledgement, and nothing contained herein is
intended to or shall create such a duty as to any transaction hereafter.

Each Guarantor hereby absolutely and unconditionally
releases and forever discharges each Released Party (as defined in the
Agreement), from any and all claims, demands or causes of action of any kind,
nature or description, whether arising in law or equity or upon contract or
tort or under any state or federal law or otherwise, which such Guarantor has had,
now has or has made claim to have against any such person for or by reason of
any act, omission, matter, cause or thing whatsoever arising from the beginning
of time to and including the date hereof, whether such claims, demands and
causes of action are matured or unmatured or known or unknown.  It is the intention of each Guarantor in
providing this release that the same shall be effective as a bar to each and
every claim, demand and cause of action specified, and in furtherance of this
intention it waives and relinquishes all rights and benefits under Section 1542
of the Civil Code of the State of California (or any comparable provision of
any other applicable law), which provides:

“A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time
of executing the release, which if known by him might have materially affected
his settlement with the debtor.”

Each
Guarantor acknowledges that it may hereafter discover facts different from or
in addition to those now known or believed to be true with respect to such
claims, demands, or causes of action and agree that this instrument shall be
and remain effective in all respects notwithstanding any such differences or
additional facts.  Each Guarantor understands,
acknowledges and agrees that the release set forth above may be pleaded as a
full and complete defense and may be used as a basis for an injunction against
any action, suit or other proceeding which may be instituted, prosecuted or
attempted in breach of the provisions of such release.  Each Guarantor, on behalf of itself and its
successors, assigns, and other legal representatives, hereby absolutely,
unconditionally and irrevocably, covenants and agrees with and in favor of each
Released Party above that it will not sue (at law, in equity, in any regulatory
proceeding or otherwise) any Released Party on the basis of any claim released,
remised and discharged by such Guarantor pursuant to the above release.  If any Guarantor or any of its successors,
assigns or other legal representations violates the foregoing covenant, such
Guarantor, for itself and its successors, assigns and legal representatives,
agrees to pay, in addition to such other damages as any Released Party may
sustain as a result of such violation, all attorneys’ fees and costs incurred
by such Released Party as a result of such violation.

 7
 

 

 

	
   

  	
  MAGNETEK NATIONAL ELECTRIC COIL, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MAGNETEK
  ALTERNATIVE ENERGY, INC.,

  
	
   

  	
  a Delaware
  corporation

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  MONDEL
  ULC,

  
	
   

  	
  a Nova Scotia
  unlimited liability company

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  	
   

  
	
   

  	
  Title:

  	
  Executive Vice
  President

  	
   

  
							

 

 8

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