Document:

Exhibit
10.8

 

PLEDGE
AND SECURITY AGREEMENT

(Non-Borrower)

 

THIS PLEDGE AND SECURITY
AGREEMENT (as it may be amended or modified from time to time, this “Security
Agreement”) is entered into as of August 15, 2003 by and between
MAGNETEK NATIONAL ELECTRIC COIL, INC., a Delaware corporation with an address
of 26 Century Boulevard, Suite
600, Nashville, Tennessee  37214 (the “Grantor”), and BANK ONE, NA, a
national banking association having its principal office in Chicago, Illinois
with an address of 8044 Montgomery Road, Cincinnati, Ohio 45236 (“Lender”).

 

PRELIMINARY STATEMENT

 

The Grantor, the Lender and the Loan Parties are
entering into a Credit Agreement dated of even date herewith (as it may be
amended or modified from time to time, the “Credit Agreement”).  The Grantor is entering into this Security
Agreement in order to induce the Lender to enter into and extend credit under
the Credit Agreement.

 

ACCORDINGLY, the Grantor and the Lender hereby agree
as follows:

 

 

ARTICLE I

DEFINITIONS

 

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

 

1.2.                              Terms
Defined in UCC.  Terms defined in
the UCC which are not otherwise defined in this Security Agreement are used
herein as defined in the UCC.

 

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

 

“Accounts” shall have the meaning set forth in
Article 9 of the UCC.

 

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

 

“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 contracts, and any and all
amendments, supplements, extensions, and renewals thereof including, without
limitation, 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 agreements; (c) to all other amounts from time to time
paid or payable under or in connection with any of the foregoing agreements; or
(d) to exercise or enforce any and all covenants, remedies, powers and
privileges thereunder.

 

“Chattel Paper” shall have the meaning set
forth in Article 9 of the UCC.

 

“Collateral” shall have the meaning set forth
in Article II.

 

 

“Collateral Report” means any certificate,
report or other document delivered by the Grantor to the Lender with respect to
the Collateral pursuant to any Loan Document.

 

“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.

 

“Copyright Collateral”
has the meaning set forth in Article II.

 

“Copyright License Rights”
means all right, title and interest of Grantor as licensor or licensee under,
and with respect to, any Copyrights, including under any Licenses.

 

“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 licenses of the foregoing, whether as licensee
or licensor; (c) all renewals of any of the foregoing; (d) 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; (e) the right to sue for past, present, and future infringements
of any of the foregoing; and (f) all rights corresponding to any of the
foregoing throughout the world.

 

“Default” means an event described in Section 5.1.

 

“Deposit Accounts” shall have the meaning set
forth in Article 9 of the UCC.

 

“Documents” shall have the meaning set forth in
Article 9 of the UCC.

 

“Equipment” shall have the meaning set forth in
Article 9 of the UCC.

 

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

 

“Farm Products” shall have the meaning set
forth in Article 9 of the UCC.

 

“Fixtures” shall have the meaning set forth in
Article 9 of the UCC.

 

“General Intangibles” shall have the meaning
set forth in Article 9 of the UCC.

 

“Goods” shall have the meaning set forth in
Article 9 of the UCC.

 

“Instruments” shall have the meaning set forth
in Article 9 of the UCC.

 

“Inventory” shall have the meaning set forth in
Article 9 of the UCC.

 

“Investment Property” shall have the meaning
set forth in Article 9 of the UCC.

 

“Letter-of-Credit Rights” shall have the
meaning set forth in Article 9 of the UCC.

 

“License Rights” means, collectively, all
Copyright License Rights, Patent License Rights and Trademark License Rights.

 

“Licenses” means, with respect to any Person,
all of such Person’s right, title, and interest in and to (a)

 

2

 

any and all licensing
agreements or similar arrangements in and to any 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.

 

“Patent Collateral”
has the meaning set forth in Article II.

 

“Patent License Rights”
means all right, title and interest of Grantor as licensor or licensee under,
and with respect to, any Patent, including under any Licenses.

 

“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 licenses of the foregoing, whether as
licensee or licensor; (e) 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; (f) all rights to sue for
past, present, and future infringements thereof; and (g) all rights
corresponding to any of the foregoing throughout the world.

 

“Pledged Collateral” means all Instruments,
Securities and other Investment Property physically delivered to the Lender
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.

 

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

 

“Security” has the meaning set forth in
Article 8 of the UCC.

 

“Stock Rights” means all dividends, instruments
or other distributions and any other right or property which the Grantor shall
receive or shall become entitled to receive for any reason whatsoever with
respect to, in substitution for or in exchange for any Capital Stock
constituting Collateral, any right to receive Capital Stock and any right to
receive earnings, in which the Grantor now has or hereafter acquires any right,
issued by an issuer of such Capital Stock.

 

“Trademark Collateral”
has the meaning set forth in Article II.

 

“Trademark License Rights”
means all right, title and interest of Grantor as licensor or licensee under,
and with respect to, any Trademark, including under any Licenses.

 

“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, without
limitation, 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, without limitation, 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; provided however, nothing in this Security
Agreement is intended to be,

 

3

 

or
may be construed to be, an assignment of any application to register any
trademark or service mark based on any intent to use filed by, or on behalf of,
Grantor (“Intent to Use Applications”), and any Intent to Use
Applications are specifically excluded from Trademark Collateral for purposes
of this Agreement.

 

“UCC” means the Uniform Commercial Code, as in
effect from time to time, of the State of Ohio  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,
Lender’s Liens on any Collateral.

 

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

 

 

ARTICLE II

GRANT OF SECURITY INTEREST

 

The Grantor hereby pledges, assigns and grants to the
Lender a continuing security interest in and Lien on, all of its 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 the
Grantor (including, without limitation, under any trade name or derivations
thereof), and whether owned or consigned by or to, or leased from or to, the
Grantor, and regardless of where located (all of which will be collectively
referred to as the “Collateral”), including, without limitation:

 

	
  (i)

  	
   

  	
  all Accounts;

  
	
   

  	
   

  	
   

  
	
  (ii)

  	
   

  	
  all Chattel
  Paper;

  
	
   

  	
   

  	
   

  
	
  (iii)

  	
   

  	
  all Goods;

  
	
   

  	
   

  	
   

  
	
  (iv)

  	
   

  	
  all Documents;

  
	
   

  	
   

  	
   

  
	
  (v)

  	
   

  	
  all Equipment;

  
	
   

  	
   

  	
   

  
	
  (vi)

  	
   

  	
  all Fixtures;

  
	
   

  	
   

  	
   

  
	
  (vii)

  	
   

  	
  all General
  Intangibles;

  
	
   

  	
   

  	
   

  
	
  (viii)

  	
   

  	
  all Instruments;

  
	
   

  	
   

  	
   

  
	
  (ix)

  	
   

  	
  all Inventory;

  
	
   

  	
   

  	
   

  
	
  (x)

  	
   

  	
  all Investment
  Property;

  
	
   

  	
   

  	
   

  
	
  (xi)

  	
   

  	
  all cash or cash
  equivalents;

  
	
   

  	
   

  	
   

  
	
  (xii)

  	
   

  	
  all letters of
  credit and Letter-of-Credit Rights;

  
	
   

  	
   

  	
   

  
	
  (xiii)

  	
   

  	
  all Deposit
  Accounts with any bank or other financial institution;

  
	
   

  	
   

  	
   

  
	
  (xiv)

  	
   

  	
  all Assigned
  Contracts;

  
	
   

  	
   

  	
   

  
	
  (xv)

  	
   

  	
  all Farm
  Products;

  
	
   

  	
   

  	
   

  
	
  (xvi)

  	
   

  	
  all Copyrights,
  Licenses with respect to Copyrights and Copyright License Rights (“Copyright
  Collateral”);

  
	
   

  	
   

  	
   

  
	
  (xvii)

  	
   

  	
  all Patents,
  Licenses with respect to Patents and Patent License Rights (“Patent
  Collateral”);

  

 

4

 

	
  (xviii)

  	
   

  	
  all Trademarks,
  Licenses with respect to Trademarks and Trademark License Rights (“Trademark
  Collateral”);

  
	
   

  	
   

  	
   

  
	
  (xix)

  	
   

  	
  and all
  accessions to, substitutions for and replacements, proceeds (including,
  without limitation, Stock Rights), 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;

  

 

to secure the prompt and complete payment and performance of the
Secured Obligations.

 

 

ARTICLE III

REPRESENTATIONS
AND WARRANTIES

 

The Grantor represents and warrants to the Lender
that:

 

3.1.                              Title,
Perfection and Priority.  The
Grantor 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 in, and Lien on, hereunder, free and clear of all Liens
except for Liens permitted under Section 4.1(e), and has full power
and authority to grant to the Lender the security interest in and Lien on such
Collateral pursuant hereto.  When
financing statements have been filed in the appropriate offices against the
Grantor in the locations listed on Exhibit H, the Lender will have a
fully perfected first priority security interest in that Collateral in which a
security interest may be perfected by filing, subject only to Liens permitted
under Section 4.1(e).

 

3.2.                              Type
and Jurisdiction of Organization, Organizational and Identification Numbers.  The type of entity of the Grantor, its
jurisdiction of organization, the organizational number issued to it by its
jurisdiction of organization and its federal employer identification number are
set forth on Exhibit A.

 

3.3.                              Principal
Location.  The 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), is, as of
the Closing Date, disclosed in Exhibit A; as of the Closing Date, the
Grantor has no other places of business except those set forth in Exhibit A.

 

3.4.                              Collateral
Locations.  All of Grantor’s locations
where Collateral is located, as of the Closing Date, are listed on Exhibit A.  All of said locations are owned by the
Grantor except for locations (i) which are leased by the Grantor as lessee and
designated in Part VII(b) of Exhibit A and (ii) at which
Inventory is held in a public warehouse or is otherwise held by a bailee or on
consignment as designated in Part VII(c) of Exhibit A.

 

3.5.                              Deposit
Accounts.  All of the Grantor’s
Deposit Accounts as of the Closing Date are listed on Exhibit B.

 

3.6.                              Exact
Names.  The Grantor’s name in which
it has executed this Security Agreement is the exact name as it appears in the
Grantor’s organizational documents, as amended, as filed with the Grantor’s
jurisdiction of organization.

 

3.7.                              Letter-of-Credit
Rights and Chattel Paper.  Exhibit
C lists as of the Closing Date all of Grantor’s Letter-of-Credit Rights and
Chattel Paper.  All action by the
Grantor necessary to protect and perfect the Lender’s security interest and
Liens on each item listed on Exhibit C (including, without limitation,
the delivery of all originals and the placement of a legend on all Chattel
Paper as required hereunder) has been duly

 

5

 

taken. The Lender
will have a fully perfected first priority security interest and Lien in the
Collateral listed on Exhibit C, subject only to Liens permitted under Section 4.1(e).

 

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

 

3.9.                              Inventory.  With respect to any Inventory scheduled or
listed on the most recent Collateral Report, (a) such Inventory (other than
Inventory in transit) is located at one of the Grantor’s locations set forth on
Exhibit A as such Exhibit may be updated from time to time upon mutual
agreement of Grantor and Lender, (b) no Inventory (other than Inventory in
transit) is now, or shall at any time or times hereafter be stored at any other
location except as permitted by Section 4.1(g), (c) the Grantor has
good, indefeasible and merchantable title to such Inventory and such Inventory
is not subject to any Lien or document whatsoever except for the Liens granted
to the Lender, and except for Permitted Liens, (d) such Inventory is not
subject to any licensing, patent, royalty, trademark, trade name or copyright
agreements with any third parties which would require any consent of any third
party upon sale or disposition of that Inventory or the payment of any monies
to any third party upon such sale or other disposition, (e) such Inventory has
been produced in accordance with the Federal Fair Labor Standards Act of 1938,
as amended, and all rules, regulations and orders thereunder and (f) the
completion of manufacture, sale or other disposition of such Inventory by the
Lender following a Default shall not require the consent of any Person and
shall not constitute a breach or default under any contract or agreement to
which the Grantor is a party or to which such property is subject.

 

3.10.                        Intellectual Property.

 

(a)                                  The
Grantor does not have any interest in, or title to, any Patent Collateral,
Trademark Collateral or Copyright Collateral except as set forth in Exhibit
D.  This Security Agreement is
effective to create a valid and continuing Lien and, upon filing of this
Security Agreement (and, in the case of Copyright Collateral described in
Section 4.7(g), any amendments hereto) with the United States Copyright
Office and the filing of appropriate financing statements in the appropriate
filing offices, fully perfected first priority security interests in favor of
the Lender on the Grantor’s Patents, Trademarks and Copyrights (subject to
Permitted Liens), and, upon completion of the foregoing actions, all action
necessary or desirable to protect and perfect the Lender’s security interest and Liens on the Patent Collateral,
Trademark Collateral or Copyright Collateral shall have been duly taken.

 

(b)                                 Each registered Patent identified in Exhibit
D is subsisting and has not been adjudged invalid, unpatentable, or
unenforceable, in whole or in part, and is enforceable, except as otherwise set
forth on Exhibit D.  Grantor has
not granted any license, release, covenant not to sue, or non-assertion
assurance to any Person with respect to any part of the Patent Collateral except
as otherwise disclosed in Exhibit D. 
The Patent License Rights are in full force and effect, and Grantor is
not in default under any of the Patent License Rights, and, to Grantor’s
knowledge, no event has occurred which with notice, the passage of time, the
satisfaction of any other condition, or all of them, might constitute a default
by Grantor under the Patent License Rights.

 

(c)                                  Each registered Trademark identified in Exhibit
D is subsisting and has not been adjudged invalid, unregisterable or unenforceable,
in whole or in part, and each registered trademark and service mark and, to
Grantor’s knowledge, each application for trademark and service mark
registration is valid, registered or registrable and enforceable.  Grantor has notified Lender in writing of
all prior uses of any material item of Trademark Collateral of which Grantor is
aware which could lead to such item becoming

 

6

 

invalid or unenforceable, including prior unauthorized uses by third parties
and uses which were not supported by the goodwill of the business connected
with such item.  Grantor has not granted
any license, release, covenant not to sue, or non-assertion assurance to any
Person with respect to any part of the Trademark Collateral except as otherwise
disclosed in Exhibit D. 
Reasonable and proper statutory notice has been used in connection with
the use of each registered trademark and service mark.  The Trademark License Rights are in full
force and effect, and Grantor is not in default under any of the Trademark
License Rights and, to Grantor’s knowledge, no event has occurred which with
notice, the passage of time, the satisfaction of any other condition, or all of
them, might constitute a default by Grantor under the Trademark License Rights.

 

(d)                                 Each registered Copyright identified in Exhibit
D is subsisting and has not been adjudged invalid, unregisterable or
unenforceable, in whole or in part, and each registered Copyright and, to
Grantor’s knowledge, each application for copyright registration is valid,
registered or registrable and enforceable. 
Grantor has not granted any license, release, covenant not to sue, or
non-assertion assurance to any Person with respect to any part of the Copyright
Collateral except as otherwise disclosed in Exhibit D.  Reasonable and proper statutory notice has
been used in connection with the use of each registered copyright.  The Copyright License Rights are in full
force and effect, and Grantor is not in default under any of the Copyright License
Rights and, to Grantor’s knowledge, no event has occurred which with notice,
the passage of time, the satisfaction of any other condition, or all of them,
might constitute a default by Grantor under the Copyright License Rights.

 

3.11.                        Filing Requirements.  As of the Closing Date, none of the
Equipment is covered by any certificate of title, except for the vehicles
described in Part I of Exhibit E. 
None of the Collateral is of a type for which Liens may be perfected by
filing under any federal statute except for (a) the vehicles described in Part
II of Exhibit E and (b) Patents, Trademarks and Copyrights held by the
Grantor and described in Exhibit D. 
The county and street address of each property on which any Fixtures are
located is set forth in Exhibit F together with the name and address of
the record owner of each such property.

 

3.12.                        No Financing Statements,
Security Agreements.  No valid
financing statement or security agreement describing all or any portion of the
Collateral which has not lapsed or been terminated naming the Grantor as debtor
has been filed or is of record in any jurisdiction except (a) for financing
statements or security agreements naming the Lender as the secured party and
(b) as permitted by Section 4.1(e).

 

3.13.                        Pledged Collateral,
Instruments and Other Investment Property.

 

(a)                                  Exhibit
G sets forth, as of the Closing Date, a complete and accurate list of all
of the Pledged Collateral delivered to the Lender and all of the Instruments,
Securities and Investment Property owned by the Grantor.  The Grantor is the direct, sole beneficial
owner and sole holder of record of each Instrument, Security and other type of
Investment Property listed on Exhibit G as being owned by it, free and
clear of any Liens, except for the Liens granted to the Lender.  The Grantor further represents and warrants
that (i) all such Instruments, Securities or other types of Investment Property
which are Capital Stock of a Subsidiary have been (to the extent such concepts
are relevant with respect to such Instrument, Security or other type of
Investment Property) duly authorized, validly issued, are fully paid and
non-assessable, (ii) with respect to any certificates delivered to the Lender
representing Capital Stock, either such certificates are Securities as defined
in Article 8 of the UCC as a result of actions by the issuer or otherwise,
or, if such certificates are not Securities, the Grantor has so informed the
Lender so that the Lender may take steps to perfect its security interest
therein as a General Intangible, (iii) except as agreed by Lender, all such
Securities or other types of Investment Property held by a securities
intermediary are covered by a control agreement among the Grantor, the
securities intermediary and the Lender pursuant to which the Lender has Control
and (iv) all Instruments which represent Indebtedness owed to the Grantor by a
Subsidiary thereof have been duly authorized, authenticated or issued

 

7

 

and delivered by
the issuer of such Indebtedness, are the legal, valid and binding obligation of
such issuer and such issuer is not in default thereunder.

 

(b)                                 In
addition, (i) none of the Pledged Collateral has been issued or transferred in
violation of the securities registration, securities disclosure or similar laws
of any jurisdiction to which such issuance or transfer may be subject, (ii)
there are existing no options, warrants, calls or commitments of any character
whatsoever relating to the Pledged Collateral or which obligate the issuer of
any Capital Stock included in the Pledged Collateral to issue additional
Capital Stock, and (iii) no consent, approval, authorization, or other action
by, and no giving of notice, filing with, any governmental authority or any
other Person is required for the pledge by the Grantor of the Pledged
Collateral pursuant to this Security Agreement or for the execution, delivery
and performance of this Security Agreement by the Grantor, or for the exercise
by the Lender of the voting or other rights provided for in this Security
Agreement or for the remedies in respect of the Pledged Collateral pursuant to
this Security Agreement, except as may be required in connection with such
disposition by laws affecting the offering and sale of securities generally.

 

(c)                                  Except
as set forth in Exhibit G, the Grantor owns 100% of the issued and
outstanding Capital Stock which constitutes Pledged Collateral and none of the
Pledged Collateral which represents Indebtedness owed to the Grantor is
subordinated in right of payment to other Indebtedness or subject to the terms
of an indenture.

 

 

ARTICLE IV

COVENANTS

 

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

 

4.1.                              General.

 

(a)                                  Collateral
Records.  The Grantor will maintain
complete and accurate books and records with respect to the Collateral, and
furnish to the Lender such reports relating to the Collateral as the Lender
shall from time to time request.

 

(b)                                 Authorization
to File Financing Statements and Recordation Form Cover Sheets; Ratification.  The Grantor hereby authorizes the Lender to
file, and if requested will deliver to the Lender, all financing statements and
other documents and take such other actions as may from time to time be
requested by the Lender in order to maintain a first perfected security
interest in, Lien on and, if applicable, Control of, the Collateral.  Any financing statement filed by the Lender
may be filed in any filing office in any UCC jurisdiction and may (i) indicate
the Collateral (1) 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 (2) by
any other description which reasonably approximates the description contained
in this Security Agreement, and (ii) contain any other information required by
part 5 of Article 9 of the UCC for the sufficiency or filing office
acceptance of any financing statement or amendment, including, without
limitation, (A) whether the Grantor is an organization, the type of
organization and any organization identification number issued to the Grantor,
and (B) in the case of a financing statement filed as a fixture filing or
indicating Collateral as as-extracted collateral or timber to be cut, a
sufficient description of real property to which the Collateral relates.  The Grantor also agrees to furnish any such
information to the Lender promptly upon request.  The Grantor also ratifies its authorization for the Lender to
have filed in any UCC jurisdiction any initial financing statements or
amendments thereto if filed prior to the date hereof.  The Grantor hereby authorizes the Lender to complete, execute and
file any document cover sheets and recordation form cover sheets evidencing
security interests in the Copyright Collateral, the Trademark Collateral and
the Patent

 

8

 

Collateral,
permitted or required to evidence such security interests by the United States Copyright
Office or the United States Patent and Trademark Office (and the respective
regulations and laws governing the same), and this Security Agreement, any
extracts hereof and any amendments hereto (pursuant to Section 4.7(g)),
with the United States Copyright Office and the United States Patent and
Trademark Office.

 

(c)                                  Further
Assurances.  The Grantor will, if so
requested by the Lender, furnish to the Lender, as often as the Lender
requests, statements and schedules further identifying and describing the
Collateral and such other reports and information in connection with the
Collateral as the Lender may reasonably request, all in such detail as the
Lender may specify.  The Grantor also
agrees to take any and all actions necessary to defend title to the Collateral
against all Persons and to defend the Liens of the Lender in the Collateral and
the priority thereof against any Lien not expressly permitted hereunder.

 

(d)                                 Disposition
of Collateral.  The Grantor will not
sell, lease or otherwise dispose of the Collateral except for dispositions
specifically permitted pursuant to Section 6.20 of the Credit Agreement.

 

(e)                                  Liens.  The Grantor will not create, incur, or
suffer to exist any Lien on the Collateral except (i) the Liens created by this
Security Agreement, and (ii) other Permitted Liens.

 

(f)                                    Other
Financing Statements.  The Grantor
will not authorize the filing of any financing statement naming it as debtor
covering all or any portion of the Collateral, except as permitted by Section 4.1(e).  The Grantor acknowledges that it is not
authorized to file any financing statement or amendment or termination
statement with respect to any financing statement without the prior written
consent of the Lender, subject to the Grantor’s rights under Section 9-509(d)(2)
of the UCC.

 

(g)                                 Locations.
The Grantor will not (i) maintain any Collateral at any location other than
those locations listed on Exhibit A (as the same may be updated from
time to time), (ii) otherwise change, or add to, such locations without the
Lender’s prior written consent, and if the Lender gives such consent, the
Grantor will concurrently therewith obtain, to the extent required by the
Credit Agreement, a Collateral Access Agreement for each such location, or
(iii) change the location of its place of business or chief executive office
from the location identified in Exhibit A, unless it gives the Lender at
least ten (10) days’ prior written notice thereof and executes any documents
that the Lender may reasonably request in connection therewith.

 

(h)                                 Compliance
with Terms.  The Grantor will
perform and comply with all obligations in respect of the Collateral and all
agreements to which it is a party or by which it is bound relating to the
Collateral.

 

(i)                                     Jurisdiction
of Organization.  The Grantor will
not change its jurisdiction of organization without the prior written consent
of Lender.

 

4.2.                              Receivables.

 

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

 

(b)                                 Collection
of Receivables.  Except as otherwise
provided in this Security Agreement, the Grantor will collect and enforce, at
the Grantor’s sole expense, all amounts due or hereafter due to the Grantor
under the Receivables.

 

9

 

(c)                                  Delivery
of Invoices.  The Grantor will
deliver to the Lender immediately upon its request after the occurrence and
during the continuation of a Default duplicate invoices with respect to each
Account bearing such language of assignment as the Lender shall specify.

 

(d)                                 Disclosure
of Counterclaims on Receivables.  If
(i) any discount, credit or agreement to make a rebate or to otherwise reduce
the amount owing on a Receivable exists or (ii) if, to the knowledge of the
Grantor, any dispute, setoff, claim, counterclaim or defense exists or has been
asserted or threatened with respect to a Receivable, the Grantor will promptly
disclose such fact to the Lender in writing. 
The Grantor shall send the Lender a copy of each credit memorandum in
excess of $25,000 as soon as issued, and the Grantor shall promptly report each
credit memorandum.

 

(e)                                  Electronic
Chattel Paper.  The Grantor shall
take all steps necessary to grant the Lender Control of all electronic chattel
paper in accordance with the UCC and all “transferable records” as defined in
each of the Uniform Electronic Transactions Act and the Electronic Signatures
in Global and National Commerce Act.

 

4.3.                              Inventory
and Equipment.

 

(a)                                  Maintenance
of Goods.  The Grantor will do all
things necessary to maintain, preserve, protect and keep the Inventory and the
Equipment in good repair and working and saleable condition, except for damaged
or defective goods arising in the ordinary course of the Grantor’s business and
except for ordinary wear and tear in respect of the Equipment.

 

(b)                                 Returned
Inventory.  If an Account Debtor
returns any Inventory to the Grantor when no Default exists, then the Grantor
shall promptly determine the reason for such return and shall issue a credit
memorandum to the Account Debtor in the appropriate amount.  The Grantor shall immediately report to the
Lender any return involving an amount in excess of $25,000.  Each such report shall indicate the reasons
for the returns and the locations and condition of the returned Inventory.  In the event any Account Debtor returns
Inventory to the Grantor when a Default exists, the Grantor, upon the request
of the Lender, shall: (i) hold the returned Inventory in trust for the Lender;
(ii) segregate all returned Inventory from all of its other property; (iii)
dispose of the returned Inventory solely according to the Lender’s written
instructions; and (iv) not issue any credits or allowances with respect thereto
without the Lender’s prior written consent. 
All returned Inventory shall be subject to the Lender’s Liens thereon.

 

(c)                                  Inventory
Count; Perpetual Inventory System. 
The Grantor will conduct a physical count of the Inventory at least once
per Fiscal Year, and after and during the continuation of a Default, at such
other times as the Lender requests.  The
Grantor will maintain a perpetual inventory reporting system at all times. The
Grantor, at its own expense, shall deliver to the Lender the results of each
physical verification, which the Grantor may in its discretion have made, or
caused any other Person to have made on its behalf, of all or any portion of
its Inventory.

 

(d)                                 Equipment.  The Grantor shall promptly inform the Lender
of any additions to or deletions from the Equipment which individually exceed
$50,000.  The Grantor shall not permit
any Equipment to become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to which real or
personal property the Lender does not have a Lien.  The Grantor will not, without the Lender’s prior written consent,
alter or remove any identifying symbol or number on any of the Grantor’s
Equipment constituting Collateral.

 

(e)                                  Titled
Vehicles.  The Grantor will give the
Lender notice of its acquisition of any vehicle covered by a certificate of
title and deliver to the Lender, upon request, the original of any vehicle
title

 

10

 

certificate and provide
and/or file all other documents or instruments necessary to have the Lien of
the Lender noted on any such certificate or with the appropriate state office.

 

4.4.                              Delivery
of Instruments, Securities, Chattel Paper and Documents. The Grantor will
(a) deliver to the Lender immediately upon execution of this Security Agreement
the originals of all Chattel Paper, Securities and Instruments constituting
Collateral (if any then exist), (b) hold in trust for the Lender upon receipt
and immediately thereafter deliver to the Lender any Chattel Paper, Securities
and Instruments constituting Collateral, (c) upon the Lender’s request, deliver
to the Lender (and thereafter hold in trust for the Lender upon receipt and
immediately deliver to the Lender) any Document evidencing or constituting
Collateral and (d) upon the Lender’s request, deliver to the Lender a duly
executed amendment to this Security Agreement, in the form of Exhibit I-1
hereto, pursuant to which the Grantor will pledge such additional Collateral.  The Grantor hereby authorizes the Lender to
attach each such amendment to this Security Agreement and agrees that all
additional Collateral set forth in such amendments shall be considered to be
part of the Collateral.

 

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

 

4.6.                              Pledged
Collateral.

 

(a)                                  Changes
in Capital Structure of Issuers. 
Except as permitted by Section 6.19 of the Credit Agreement, the
Grantor will not (i) permit or suffer any issuer of Capital Stock constituting
Pledged Collateral to dissolve, merge, liquidate, retire any of its Capital
Stock or other Instruments or Securities evidencing ownership, reduce its
capital, sell or encumber all or substantially all of its assets (except for
Permitted Liens and sales of assets permitted pursuant to Section 4.1(d))
or merge or consolidate with any other Person, or (ii) vote any Pledged
Collateral in favor of any of the foregoing.

 

(b)                                 Issuance
of Additional Securities.  The
Grantor will not permit or suffer the issuer of Capital Stock constituting
Pledged Collateral to issue additional Capital Stock, any right to receive the
same or any right to receive earnings, except to the Grantor.

 

(c)                                  Registration
of Pledged Collateral.  The Grantor
will permit any registerable Pledged Collateral to be registered in the name of
the Lender or its nominee at any time at the option of the Lender.

 

(d)                                 Exercise
of Rights in Pledged Collateral.

 

(i)                                     Without
in any way limiting the foregoing and subject to clause (ii) below, the Grantor
shall have the right to exercise all voting rights or other rights relating to
the Pledged Collateral for all purposes not inconsistent with this Security
Agreement, the Credit Agreement or any other Loan Document; provided
however, that no vote or

 

11

 

other right shall be exercised or action taken which
would have the effect of impairing the rights of the Lender in respect of the
Pledged Collateral.

 

(ii)                                  The
Grantor will permit the Lender or its nominee at any time after the occurrence
of a Default, without notice, to exercise all voting rights or other rights
relating to Pledged Collateral, including, without limitation,  exchange, subscription or any other rights,
privileges, or options pertaining to any Capital Stock or Investment Property
constituting Pledged Collateral as if it were the absolute owner thereof.

 

(iii)                               The Grantor shall be
entitled to collect and receive for its own use all cash dividends and interest
paid in respect of the Pledged Collateral to the extent not in violation of the
Credit Agreement other than any of the following distributions and
payments (collectively referred to as the “Excluded Payments”): (A)
dividends and interest paid or payable other than in cash in respect of any
Pledged Collateral, and instruments and other property received, receivable or
otherwise distributed in respect of, or in exchange for, any Pledged
Collateral;  (B) dividends and other
distributions paid or payable in cash in respect of any Pledged Collateral in
connection with a partial or total liquidation or dissolution or in connection
with a reduction of capital, capital surplus or paid-in capital of an issuer;
and (C) cash paid, payable or otherwise distributed, in respect of principal
of, or in redemption of, or in exchange for, any Pledged Collateral; provided
however, that until actually paid, all rights to such distributions
shall remain subject to the Liens created by this Security Agreement; and

 

(iv)                              All
Excluded Payments and all other distributions in respect of any of the Pledged
Collateral, whenever paid or made, shall be delivered to the Lender to hold as
Pledged Collateral and shall, if received by the Grantor, be received in trust
for the benefit of the Lender, be segregated from the other property or funds
of the Grantor, and be forthwith delivered to the Lender as Pledged Collateral
in the same form as so received (with any necessary endorsement).

 

4.7.                              Intellectual
Property.

 

(a)                                  The
Grantor will use its best efforts to secure all consents and approvals
necessary or appropriate for the assignment to or benefit of the Lender of any
License or any License Right held by the Grantor and to enforce the security
interests granted hereunder.

 

(b)                                 The
Grantor shall notify the Lender immediately if it knows or has reason to know
that any application or registration relating to any material Patent, Trademark
or Copyright (now or hereafter existing) may become abandoned or dedicated, or
of any adverse determination or development (including, without limitation, the
institution of, or any such determination or development in, any proceeding in
the United States Patent and Trademark Office, the United States Copyright
Office or any court) regarding the Grantor’s ownership of any Patent, Trademark
or Copyright, its right to register the same, or to keep and maintain the same.

 

(c)                                  In
no event shall the Grantor, either directly or through any employee, licensee
or designee, file an application for the registration of any Patent, Trademark
or Copyright with the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency without giving the
Lender prior written notice thereof, and, upon request of the Lender, the
Grantor shall execute and deliver any and all security agreements as the Lender
may request to evidence the Lender’s first priority security

 

12

 

interest on such
Patent, Trademark or Copyright, and the General Intangibles of the Grantor
relating thereto or represented thereby.

 

(d)                                 The
Grantor shall take all actions necessary or requested by the Lender to maintain
and pursue each application, to obtain the relevant registration and to
maintain the registration and enforceability of each of the Patents, Trademarks
and Copyrights (now or hereafter existing), including, without limitation, the
filing of applications for renewal, affidavits of use, affidavits of
noncontestability and opposition and interference and cancellation proceedings,
unless the Grantor, in its reasonable judgment shall determine that such
Patent, Trademark or Copyright is not material to the conduct of Grantor’s
business.

 

(e)                                  The
Grantor shall, unless it shall reasonably determine that such Patent
Collateral, Trademark Collateral or Copyright Collateral is in no way material
to the conduct of its business or operations, promptly sue for infringement,
misappropriation or dilution and to recover any and all damages for such
infringement, misappropriation or dilution, and shall take such other actions
as the Lender shall deem appropriate under the circumstances to protect such Patent
Collateral, Trademark Collateral or Copyright Collateral.  In the event that the Grantor institutes
suit because any of the Patents Collateral, Trademark Collateral or Copyright
Collateral constituting Collateral is infringed upon, or misappropriated or
diluted by a third party, the Grantor shall comply with Section 4.8.

 

(f)                                    The Grantor shall not enter into any
Licenses, as licensor or licenses, except in the ordinary course of business
without the prior written consent of Bank. 
Grantor will continue to use, and will cause the use of, reasonable and
proper statutory notice in connection with its use of each Patent, Trademark
and Copyright.

 

(g)                                 The Grantor agrees that, should it obtain any
right, title or interest in any material Copyright Collateral, Patent
Collateral, or Trademark Collateral which is not now identified in Exhibit D,
(i) Grantor shall give prompt written notice to Lender, (ii) the provisions of Article II
will automatically apply to the Copyright Collateral, Patent Collateral, or
Trademark Collateral acquired or obtained, and (iii) each of such Copyright
Collateral, Patent Collateral, or Trademark Collateral will automatically
become part of the Collateral.  Upon
the Lender’s request, Grantor shall to deliver to the Lender a duly executed
amendment to this Security Agreement in the form of Exhibit I-2 hereto,
and Grantor authorizes Lender to modify
this Security Agreement, to amend Exhibit D to include any Copyright
Collateral, Patent Collateral, or Trademark Collateral which becomes part of
the Collateral under this Section 4.7(g). 
The Grantor hereby authorizes the Lender to attach each such
amendment to this Security Agreement and agrees that all additional Collateral
set forth in such amendments shall be considered to be part of the Collateral.

 

4.8.                              Commercial
Tort Claims.  The Grantor shall
promptly, and in any event within two Business Days after the same is acquired
by it, notify the Lender of any commercial tort claim (as defined in the UCC)
acquired by it and, unless the Lender otherwise consents, the Grantor shall
enter into a supplement to this Security Agreement, granting to Lender a first
priority security interest in such commercial tort claim.

 

4.9.                              Letter-of-Credit
Rights.  If the Grantor is or
becomes the beneficiary of a letter of credit, the Grantor shall promptly, and
in any event within two Business Days after becoming a beneficiary, notify the
Lender thereof and cause the issuer and/or confirmation bank to (i) consent to
the assignment of any Letter-of-Credit Rights to the Lender and (ii) agree to
direct all payments thereunder to a Deposit Account at the Lender or subject to
a Deposit Account Control Agreement for application to the Secured Obligations,
in accordance with Section 2.16 of the Credit Agreement, all in form and
substance reasonably satisfactory to the Lender.

 

4.10.                        Federal, State or Municipal
Claims.  The Grantor will promptly
notify the Lender of any Collateral which constitutes a claim against the
United States government or any state or local government or

 

13

 

any
instrumentality or agency thereof, the assignment of which claim is restricted
by federal, state or municipal law.

 

4.11.                        No Interference.  The Grantor agrees that it will not
interfere with any right, power and remedy of the Lender 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
Lender of any one or more of such rights, powers or remedies.

 

4.12.                        Assigned Contracts.  The Grantor shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment.  Without limiting the
generality of the foregoing, the Grantor shall take all action necessary or
appropriate to permit, and shall not take any action which would have any
materially adverse effect upon, the full enforcement of all indemnification rights
under its Assigned Contracts. The Grantor shall notify the Lender in writing,
promptly after the Grantor becomes aware thereof, of any event or fact which
could give rise to a material claim by it for indemnification under any of its
material Assigned Contracts, and shall diligently pursue such right and report
to the Lender on all further developments with respect thereto.  The Grantor shall deposit into a Deposit
Account at the Lender or subject to a Deposit Account Control Agreement for
application to the Secured Obligations, in accordance with Section 2.16 of
the Credit Agreement, all amounts received by the Grantor as indemnification or
otherwise pursuant to its Assigned Contracts. 
If the Grantor shall fail after the Lender’s demand to pursue diligently
any right under its material Assigned Contracts, or if a Default then exists,
the Lender may directly enforce such right in its own or the Grantor’s name and
may enter into such settlements or other agreements with respect thereto as the
Lender shall determine.  In any suit,
proceeding or action brought by the Lender under any material Assigned Contract
for any sum owing thereunder or to enforce any provision thereof, the Grantor
shall indemnify and hold the Lender and Lender harmless from and against all
expense, loss or damage suffered by reason of any defense, setoff,
counterclaims, recoupment, or reduction of liability whatsoever of the obligor
thereunder arising out of a breach by the Grantor of any obligation thereunder
or arising out of any other agreement, indebtedness or liability at any time
owing from the Grantor to or in favor of such obligor or its successors.  All such obligations of the Grantor shall be
and remain enforceable only against the Grantor and shall not be enforceable
against the Lender.  Notwithstanding any
provision hereof to the contrary, the Grantor shall at all times remain liable
to observe and perform all of its duties and obligations under its Assigned
Contracts, and the Lender’s exercise of any of its rights with respect to the
Collateral shall not release the Grantor from any of such duties and
obligations.  The Lender shall not be
obligated to perform or fulfill any of the Grantor’s duties or obligations
under its Assigned Contracts or to make any payment thereunder, or to make any
inquiry as to the nature or sufficiency of any payment or property received by
it thereunder or the sufficiency of performance by any party thereunder, or to
present or file any claim, or to take any action to collect or enforce any
performance, any payment of any amounts, or any delivery of any property.

 

 

ARTICLE V

DEFAULT

 

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

 

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

 

(b)                                 The
breach by the Grantor of any of the terms or provisions of Article IV
or Article VII.

 

14

 

(c)                                  The
breach by the Grantor (other than a breach which constitutes a Default under
any other Section of this Article V) of any of the terms or
provisions of this Security Agreement which is not remedied within ten days
after such breach.

 

(d)                                 The
occurrence of any “Default” under, and as defined in, the Credit Agreement.

 

(e)                                  Any
Capital Stock which is included within the Collateral shall at any time
constitute a Security or the issuer of any such Capital Stock shall take any
action to have such interests treated as a Security unless (i) all certificates
or other documents constituting such Security have been delivered to the Lender
and such Security is properly defined as such under Article 8 of the UCC
of the applicable jurisdiction, whether as a result of actions by the issuer
thereof or otherwise, or (ii) the Lender has entered into a control agreement
with the issuer of such Security or with a securities intermediary relating to
such Security and such Security is defined as such under Article 8 of the
UCC of the applicable jurisdiction, whether as a result of actions by the
issuer thereof or otherwise.

 

5.2.             Remedies.

 

(a)                                  Upon
the occurrence of a Default, the Lender may exercise any or all of the
following rights and remedies:

 

(i)                                     those
rights and remedies provided in this Security Agreement, the Credit Agreement,
or any other Loan Document; provided that this Section 5.2(a)
shall not be understood to limit any rights or remedies available to the Lender
prior to a Default;

 

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

 

(iii)                               give notice of sole
control or any other instruction under any Deposit Account Control Agreement or
and other control agreement with any securities intermediary and take any
action therein with respect to such Collateral;

 

(iv)                              without
notice (except as specifically provided in Section 8.1 or elsewhere
herein), demand or advertisement of any kind to Grantor or any other Person,
enter the premises of the Grantor where any Collateral is located (through
self-help and without judicial process) to collect, receive, assemble, process,
appropriate, sell, lease, assign, grant an option or options to purchase or
otherwise dispose of, deliver, or realize upon, the Collateral or any part
thereof in one or more parcels at public or private sale or sales (which sales
may be adjourned or continued from time to time with or without notice and may
take place at the Grantor’s premises or elsewhere), for cash, on credit or for
future delivery without assumption of any credit risk, and upon such other
terms as the Lender may deem commercially reasonable; and

 

(v)                                 concurrently
with written notice to the Grantor, transfer and register in its name or in the
name of its nominee the whole or any part of the Pledged Collateral, to
exchange certificates or instruments representing or evidencing Pledged
Collateral for certificates or instruments of smaller or larger denominations,
to exercise the voting and all other rights as a holder with respect thereto,
to collect and receive all cash

 

15

 

dividends, interest, principal and other distributions
made thereon and to otherwise act with respect to the Pledged Collateral as
though the Lender was the outright owner thereof.

 

(b)                                 The
Lender may comply with any applicable state or federal law requirements in
connection with a disposition of the Collateral and compliance will not be
considered to adversely affect the commercial reasonableness of any sale of the
Collateral.

 

(c)                                  The
Lender shall have the right upon any such public sale or sales and, to the
extent permitted by law, upon any such private sale or sales, to purchase for
the benefit of the Lender, the whole or any part of the Collateral so sold,
free of any right of equity redemption, which equity redemption the Grantor
hereby expressly releases.

 

(d)                                 Until
the Lender is able to effect a sale, lease, or other disposition of Collateral,
the Lender shall have the right to hold or use Collateral, or any part thereof,
to the extent that it deems appropriate for the purpose of preserving
Collateral or its value or for any other purpose deemed appropriate by the
Lender. The Lender may, if it so elects, seek the appointment of a receiver or
keeper to take possession of Collateral and to enforce any of the Lender’s
remedies, with respect to such appointment without prior notice or hearing as
to such appointment.

 

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

 

(f)                                    Notwithstanding
the foregoing, the Lender shall not be required to (i) make any demand upon, or
pursue or exhaust any of its rights or remedies against, the Grantor, any other
obligor, guarantor, pledgor or any other Person with respect to the payment of
the Secured Obligations or to pursue or exhaust any of its rights or remedies
with respect to any Collateral therefor or any direct or indirect guarantee
thereof, (ii) marshal the Collateral or any guarantee of the Secured
Obligations or to resort to the Collateral or any such guarantee in any
particular order, or (iii) effect a public sale of any Collateral.

 

(g)                                 The
Grantor recognizes that the Lender may be unable to effect a public sale of any
or all the Pledged Collateral and may be compelled to resort to one or more
private sales thereof in accordance with clause (a) above.  The Grantor also acknowledges that any
private sale may result in prices and other terms less favorable to the seller
than if such sale were a public sale and, notwithstanding such circumstances,
agrees that any such private sale shall not be deemed to have been made in a
commercially unreasonable manner solely by virtue of such sale being private.  The Lender shall be under no obligation to
delay a sale of any of the Pledged Collateral for the period of time necessary
to permit the Grantor or the issuer of the Pledged Collateral to register such
securities for public sale under the Securities Act of 1933, as amended, or
under applicable state securities laws, even if the Grantor and the issuer
would agree to do so.

 

5.3.                              Grantor’s
Obligations Upon Default.  Upon the
request of the Lender after the occurrence of a Default, the Grantor will:

 

(a)                                  assemble
and make available to the Lender the Collateral and all books and records
relating thereto at any place or places specified by the Lender, whether at the
Grantor’s premises or elsewhere;

 

16

 

(b)                                 permit
the Lender, by the Lender’s representatives and agents, to enter any premises
where all or any part of the Collateral, or the books and records relating
thereto, or both, are located, to take possession of all or any part of the
Collateral or the books and records relating thereto, or both, to remove all or
any part of the Collateral or the books and records relating thereto, or both,
and to conduct sales of the Collateral;

 

(c)                                  prepare
and file, or cause an issuer of Pledged Collateral to prepare and file, with
the Securities and Exchange Commission or any other applicable government
agency, registration statements, a prospectus and such other documentation in
connection with the Pledged Collateral as the Lender may request, all in form
and substance satisfactory to the Lender, and furnish to the Lender, or cause
an issuer of Pledged Collateral to furnish to the Lender, any information
regarding the Pledged Collateral in such detail as the Lender may specify;

 

(d)                                 take,
or cause an issuer of Pledged Collateral to take, any and all actions necessary
to register or qualify the Pledged Collateral to enable the Lender to
consummate a public sale or other disposition of the Pledged Collateral; and

 

(e)                                  at
its own expense, cause the independent certified public accountants then engaged
by the Grantor to prepare and deliver to the Lender and each Lender, at any
time, and from time to time, promptly upon the Lender’s request, the following
reports with respect to the Grantor: (i) a reconciliation of all Accounts; (ii)
an aging of all Accounts; (iii) trial balances; and (iv) a test verification of
such Accounts as the Lender may request.

 

5.4.                              Grant
of Intellectual Property License. 
For the purpose of enabling the Lender to exercise the rights and
remedies under this Article V at such time as the Lender shall be
lawfully entitled to exercise such rights and remedies, the Grantor hereby (a)
grants to the Lender an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantor) to use, license or
sublicense any Intellectual Property Rights now owned or hereafter acquired by
the Grantor, and wherever the same may be located, and including, without
limitation, 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 (b) irrevocably agrees that the
Lender may sell any of the Grantor’s Inventory directly to any Person,
including, without limitation, Persons who have previously purchased the
Grantor’s Inventory from the Grantor and in connection with any such sale or
other enforcement of the Lender’s rights under this Security Agreement, may
sell Inventory which bears any Trademark owned by or licensed to the Grantor and
any Inventory that is covered by any Copyright owned by or licensed to the
Grantor and the Lender may finish any work in process and affix any Trademark
owned by or licensed to the Grantor and sell such Inventory as provided herein.

 

 

ARTICLE VI

ATTORNEY IN FACT; PROXY

 

6.1.                              Authorization
for Secured Party to Take Certain Action.

 

(a)                                  The
Grantor irrevocably authorizes the Lender at any time and from time to time in
the sole discretion of the Lender and appoints the Lender as its attorney in
fact (i) to execute on behalf of the Grantor as debtor and to file financing
statements and document cover sheets and recordation form cover sheets (and
this Security Agreement, any extracts hereof and any amendments hereto
(pursuant to Section 4.7(g)), necessary or desirable in the Lender’s sole
discretion to perfect and to maintain the perfection and priority of the
Lender’s security interest in the Collateral, (ii) to endorse and collect any
cash proceeds of the Collateral,

 

17

 

(iii) to file a
carbon, photographic or other reproduction of this Security Agreement or any
financing statement with respect to the Collateral as a financing statement and
to file any other financing statement or amendment of a financing statement
(which does not add new collateral or add a debtor) in such offices as the
Lender in its sole discretion deems necessary or desirable to perfect and to
maintain the perfection and priority of the Lender’s security interest in the
Collateral, (iv) to contact and enter into one or more agreements with the
issuers of uncertificated securities which are Collateral and which are
Securities or with securities intermediaries holding other Investment Property
as may be necessary or advisable to give the Lender Control over such
Securities or other Investment Property, (v) to apply the proceeds of any
Collateral received by the Lender to the Secured Obligations as provided in the
Credit Agreement, (vi) to discharge past due taxes, assessments, charges, fees
or Liens on the Collateral (except for such Liens as are specifically permitted
hereunder), and the Grantor agrees to reimburse the Lender on demand for any
payment made or any expense incurred by the Lender in connection therewith; provided
that, this authorization shall not relieve the Grantor of any of its
obligations under this Security Agreement or under the Credit Agreement, (vii)
to demand payment or enforce payment of the Receivables in the name of the
Lender or the Grantor and to endorse any and all checks, drafts, and other
instruments for the payment of money relating to the Receivables, (viii) to
sign the Grantor’s name on any invoice or bill of lading relating to the
Receivables, drafts against any Account Debtor of the Grantor, assignments and
verifications of Receivables, (ix) to exercise all of the Grantor’s rights and
remedies with respect to the collection of the Receivables and any other
Collateral, (x) to settle, adjust, compromise, extend or renew the Receivables,
(xi) to settle, adjust or compromise any legal proceedings brought to collect
Receivables, (xii) to prepare, file and sign the Grantor’s name on a proof of
claim in bankruptcy or similar document against any Account Debtor of the
Grantor, (xiii) to prepare, file and sign the Grantor’s name on any notice of
Lien, assignment or satisfaction of Lien or similar document in connection with
the Receivables, (xiv) to change the address for delivery of mail addressed to
the Grantor to such address as the Lender may designate and to receive, open
and dispose of all mail addressed to the Grantor, and (xv) to do all other acts
and things necessary to carry out this Security Agreement.  In addition, the Lender may at any time, in
the Lender’s own name (if a Default exists), in the name of a nominee of the
Lender (if a Default exists), or in the name of the Grantor communicate (by
mail, telephone, facsimile or otherwise) with the Account Debtors of such
Grantor, parties to contracts with the Grantor and obligors in respect of
Instruments of the Grantor to verify with such Persons, to the Lender’s
satisfaction, the existence, amount, terms of, and any other matter relating
to, Accounts, Instruments, Chattel Paper, payment intangibles and/or other
Receivables.

 

(b)                                 All
acts of said attorney or designee are hereby ratified and approved. The powers
granted pursuant to this Section 6.1(a) are coupled with an
interest and shall be irrevocable until the termination of this Security
Agreement pursuant to the terms of Section 8.15.  The powers conferred on the Lender under
this Section 6.1(a) are solely to protect the Lender’s interests in
the Collateral and shall not impose any duty upon the Lender to exercise any
such powers.  NONE OF THE LENDER OR ITS
AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS OR REPRESENTATIVES SHALL BE
RESPONSIBLE TO THE GRANTOR FOR ANY ACT OR FAILURE TO ACT UNDER ANY POWER
GRANTED HEREUNDER OR OTHERWISE, EXCEPT 
IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT AS FINALLY DETERMINED BY A COURT OF COMPETENT
JURISDICTION, NOR FOR ANY PUNITIVE, EXEMPLARY, INDIRECT OR CONSEQUENTIAL
DAMAGES.

 

6.2.                              PROXY.
THE GRANTOR HEREBY IRREVOCABLY CONSTITUTES AND APPOINTS THE LENDER AS THE PROXY
AND ATTORNEY-IN-FACT OF THE GRANTOR WITH RESPECT TO THE PLEDGED COLLATERAL,
SECURITIES, INSTRUMENTS AND OTHER INVESTMENT PROPERTY, INCLUDING THE RIGHT TO
VOTE SUCH COLLATERAL, WITH FULL POWER OF SUBSTITUTION TO DO SO.  THE APPOINTMENT OF THE LENDER AS PROXY AND
ATTORNEY-IN-FACT IS COUPLED WITH AN INTEREST AND SHALL BE IRREVOCABLE UNTIL THE
DATE ON WHICH THIS SECURITY AGREEMENT IS TERMINATED IN ACCORDANCE WITH SECTION 8.15.  IN

 

18

 

ADDITION TO THE
RIGHT TO VOTE ANY SUCH COLLATERAL, THE APPOINTMENT OF THE LENDER AS PROXY AND
ATTORNEY-IN-FACT SHALL INCLUDE THE RIGHT TO EXERCISE ALL OTHER RIGHTS, POWERS,
PRIVILEGES AND REMEDIES TO WHICH A HOLDER OF SUCH COLLATERAL WOULD BE ENTITLED
(INCLUDING GIVING OR WITHHOLDING WRITTEN CONSENTS OF SHAREHOLDERS, CALLING
SPECIAL MEETINGS OF SHAREHOLDERS AND VOTING AT SUCH MEETINGS). SUCH PROXY SHALL
BE EFFECTIVE, AUTOMATICALLY AND WITHOUT THE NECESSITY OF ANY ACTION (INCLUDING
ANY TRANSFER OF ANY SUCH COLLATERAL ON THE RECORD BOOKS OF THE ISSUER THEREOF)
BY ANY PERSON (INCLUDING THE ISSUER OF SUCH COLLATERAL OR ANY OFFICER OR THE
AGENT THEREOF), UPON THE OCCURRENCE OF A DEFAULT.  NOTWITHSTANDING THE FOREGOING, THE LENDER SHALL NOT HAVE ANY DUTY
TO EXERCISE ANY SUCH RIGHT OR TO PRESERVE THE SAME AND SHALL NOT BE LIABLE FOR
ANY FAILURE TO DO SO OR FOR ANY DELAY IN DOING SO.

 

 

ARTICLE VII

DEPOSIT
ACCOUNTS

 

7.1.                              Covenant
Regarding New Deposit Accounts; Lock Boxes.  Before opening or replacing any Deposit Account, or establishing
a new lock box, the Grantor shall (a) obtain the Lender’s consent in writing to
the opening of such Deposit Account or lock box, and (b) cause each bank or
financial institution in which it seeks to open (i) a Deposit Account, to enter
into a Deposit Account Control Agreement with the Lender in order to give the
Lender Control of such Deposit Account, or (ii) a lock box, to enter into a
lock box Agreement with the Lender in order to give the Lender Control of the
lock box.  In the case of Deposit
Accounts or a lock box maintained with Lender, the terms of such letter shall
be subject to the provisions of the Credit Agreement regarding setoffs.

 

 

ARTICLE VIII

GENERAL PROVISIONS

 

8.1.                              Waivers.  The Grantor hereby waives notice of the time
and place of any public sale or the time after which any private sale or other
disposition of all or any part of the Collateral may be made.  To the extent such notice may not be waived
under applicable law, any notice made shall be deemed reasonable if sent to the
Grantor, addressed as set forth in Article IX, at least ten days
prior to (i) the date of any such public sale or (ii) the time after which any
such private sale or other disposition may be made.  To the maximum extent permitted by applicable law, the Grantor
waives all claims, damages, and demands against the Lender arising out of the
repossession, retention or sale of the Collateral, except such as arise solely
out of the gross negligence or willful misconduct of the Lender as finally
determined by a court of competent jurisdiction. To the extent it may lawfully
do so, the Grantor absolutely and irrevocably waives and relinquishes the
benefit and advantage of, and covenants not to assert against the Lender, any
valuation, stay, appraisal, extension, moratorium, redemption or similar laws
and any and all rights or defenses it may have as a surety now or hereafter
existing which, but for this provision, might be applicable to the sale of any
Collateral made under the judgment, order or decree of any court, or privately
under the power of sale conferred by this Security Agreement, or otherwise.  Except as otherwise specifically provided
herein, the Grantor hereby waives presentment, demand, protest or any notice
(to the maximum extent permitted by applicable law) of any kind in connection
with this Security Agreement or any Collateral.

 

8.2.                              Limitation
on Lender’s Duty with Respect to the Collateral.  The Lender shall have no obligation to clean-up or otherwise
prepare the Collateral for sale. The Lender shall use reasonable care with
respect to the Collateral in its possession or under its control.  The Lender shall not have any other duty as
to

 

19

 

any Collateral in
its possession or control or in the possession or control of any agent or
nominee of the Lender, or any income thereon or as to the preservation of
rights against prior parties or any other rights pertaining thereto. To the
extent that applicable law imposes duties on the Lender to exercise remedies in
a commercially reasonable manner, the Grantor acknowledges and agrees that it is
commercially reasonable for the Lender (i) to fail to incur expenses deemed
significant by the Lender to prepare Collateral for disposition or otherwise to
transform raw material or work in process into finished goods or other finished
products for disposition, (ii) 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 governmental or third party consents for the
collection or disposition of Collateral to be collected or disposed of, (iii)
to fail to exercise collection remedies against Account Debtors or other
Persons obligated on Collateral or to remove Liens on or any adverse claims
against Collateral, (iv) 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, (v) to advertise
dispositions of Collateral through publications or media of general
circulation, whether or not the Collateral is of a specialized nature, (vi) to
contact other Persons, whether or not in the same business as the Grantor, for
expressions of interest in acquiring all or any portion of such Collateral,
(vii) to hire one or more professional auctioneers to assist in the disposition
of Collateral, whether or not the Collateral is of a specialized nature, (viii)
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 capacity of doing so, or that match buyers and sellers of assets,
(ix) to dispose of assets in wholesale rather than retail markets, (x) to
disclaim disposition warranties, such as title, possession or quiet enjoyment,
(xi) to purchase insurance or credit enhancements to insure the Lender against
risks of loss, collection or disposition of Collateral or to provide to the
Lender a guaranteed return from the collection or disposition of Collateral, or
(xii) to the extent deemed appropriate by the Lender, to obtain the services of
other brokers, investment bankers, consultants and other professionals to
assist the Lender in the collection or disposition of any of the
Collateral.  The Grantor acknowledges
that the purpose of this Section 8.2 is to provide non-exhaustive
indications of what actions or omissions by the Lender would  be commercially reasonable in the Lender’s
exercise of remedies against the Collateral and that other actions or omissions
by the Lender shall not be deemed commercially unreasonable solely on account
of not being indicated in this Section 8.2.  Without limitation upon the foregoing,
nothing contained in this Section 8.2 shall be construed to grant
any rights to the Grantor or to impose any duties on the Lender that would not
have been granted or imposed by this Security Agreement or by applicable law in
the absence of this Section 8.2.

 

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

 

8.4.                              Secured
Party Performance of Debtor Obligations. 
Without having any obligation to do so, the Lender may perform or pay
any obligation which the Grantor has agreed to perform or pay in this Security
Agreement and the Grantor shall reimburse the Lender for any amounts paid by
the Lender pursuant to this Section 8.4.  The Grantor’s obligation to reimburse the Lender pursuant to the
preceding sentence shall be a Secured Obligation payable on demand.

 

8.5.                              Specific
Performance of Certain Covenants. 
The Grantor acknowledges and agrees that a breach of any of the
covenants contained in Sections 4.1(d), 4.1(e), 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10, 4.12, 5.3,
or

 

20

 

8.7
or in Article VII will cause irreparable injury to the Lender, that
the Lender and Lender have no adequate remedy at law in respect of such
breaches and therefore agrees, without limiting the right of the Lender to seek
and obtain specific performance of other obligations of the Grantor contained
in this Security Agreement, that the covenants of the Grantor contained in the
Sections referred to in this Section 8.5 shall be specifically
enforceable against the Grantor.

 

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

 

8.7.                              Dispositions
Not Authorized.  The Grantor is not
authorized to sell or otherwise dispose of the Collateral except as set forth
in Section 4.1(d) and notwithstanding any course of dealing between
the Grantor and the Lender or other conduct of the Lender, no authorization to
sell or otherwise dispose of the Collateral (except as set forth in Section 4.1(d))
shall be binding upon the Lender unless such authorization is in writing signed
by the Lender.

 

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

 

8.9.                              Limitation
by Law; Severability of Provisions. 
All rights, remedies and
powers provided in this Security Agreement may be exercised only to the extent
that the exercise thereof does not violate any applicable provision of law, and
all the provisions of this Security Agreement are intended to be subject to all
applicable mandatory provisions of law that may be controlling and to be
limited to the extent necessary so that they shall not render this Security
Agreement invalid, unenforceable or not entitled to be recorded or registered,
in whole or in part.  Any provision in
any this Security Agreement that is held to be inoperative, unenforceable, or
invalid in any jurisdiction shall, as to that jurisdiction, be inoperative,
unenforceable, or invalid without affecting the remaining provisions in that
jurisdiction or the operation, enforceability, or validity of that provision in
any other jurisdiction, and to this end the provisions of this Security
Agreement are declared to be severable.

 

8.10.                        Reinstatement.  This Security Agreement shall remain in full
force and effect and continue to be effective should any petition be filed by
or against the Grantor for liquidation or reorganization, should the 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 the 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, the Secured Obligations shall be reinstated and deemed reduced only
by such amount paid and not so rescinded, reduced, restored or returned.

 

8.11.                        Benefit of Agreement.  The terms and provisions of this Security
Agreement shall be binding upon and inure to the benefit of the Grantor, the
Lender and its successors and assigns (including, without

 

21

 

limitation, all
Persons who become bound as a debtor to this Security Agreement), except that
the Grantor shall not have the right to assign its rights or delegate its
obligations under this Security Agreement or any interest herein, without the
prior written consent of the Lender.  No
sales of participations, assignments, transfers, or other dispositions of any
agreement governing the Secured Obligations or any portion thereof or interest
therein shall in any manner impair the Liens granted to the Lender hereunder.

 

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

 

8.13.                        Taxes and Expenses.  Any taxes (including, without limitation,
income taxes) payable or ruled payable by Federal or State authority in respect
of this Security Agreement shall be paid by the Grantor, together with interest
and penalties, if any.  The Grantor
shall reimburse the Lender for any and all out-of-pocket expenses and internal
charges (including, without limitation, reasonable attorneys’, auditors’ and
accountants’ fees and reasonable time charges of attorneys, paralegals,
auditors and accountants who may be employees of the Lender) paid or incurred
by the Lender in connection with the preparation, execution, delivery,
administration, collection and enforcement of this Security Agreement and in
the audit, analysis, administration, collection, preservation or sale of the
Collateral (including, without limitation, the expenses and charges associated
with any periodic or special audit of the Collateral).  Any and all costs and expenses incurred by
the Grantor in the performance of actions required pursuant to the terms hereof
shall be borne solely by the Grantor.

 

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

 

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

 

8.16.                        Entire Agreement.  This Security Agreement embodies the entire
agreement and understanding between the Grantor and the Lender relating to the
Collateral and supersedes all prior agreements and understandings between the
Grantor and the Lender relating to the Collateral.

 

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

 

8.18.                        CONSENT TO JURISDICTION.  THE GRANTOR HEREBY IRREVOCABLY SUBMITS TO
THE NON-EXCLUSIVE JURISDICTION OF ANY U.S. FEDERAL OR OHIO STATE COURT SITTING
IN CINCINNATI, OHIO IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT AND THE GRANTOR HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY SUCH COURT AND IRREVOCABLY WAIVES ANY
OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH SUIT,
ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM.  NOTHING HEREIN
SHALL LIMIT THE RIGHT OF THE LENDER TO BRING PROCEEDINGS AGAINST THE GRANTOR IN
THE

 

22

 

COURTS OF ANY OTHER
JURISDICTION.  ANY JUDICIAL PROCEEDING
BY THE GRANTOR AGAINST THE LENDER OR ANY AFFILIATE OF THE LENDER INVOLVING,
DIRECTLY OR INDIRECTLY, ANY MATTER IN ANY WAY ARISING OUT OF, RELATED TO, OR
CONNECTED WITH THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE
BROUGHT ONLY IN A COURT IN CINCINNATI, OHIO.

 

8.19.                        WAIVER OF JURY TRIAL. THE
GRANTOR AND THE LENDER HEREBY WAIVE 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
THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE RELATIONSHIP
ESTABLISHED THEREUNDER.

 

8.20.                        Indemnity.  The Grantor hereby agrees to indemnify the
Lender and its successors, assigns, agents and employees, from and against any
and all liabilities, damages, penalties, suits, costs, and expenses of any kind
and nature (including, without limitation, 
all expenses of litigation or preparation therefor (including, without limitation,
reasonable attorneys’ fees) whether or not the Lender is a party thereto)
imposed on, incurred by or asserted against the Lender, or its successors,
assigns, agents and employees, in any way relating to or arising out of this
Security Agreement, or the manufacture, purchase, acceptance, rejection,
ownership, delivery, lease, possession, use, operation, condition, sale, return
or other disposition of any Collateral (including, without limitation, latent
and other defects, whether or not discoverable by the Lender or the Grantor,
and any claim for Patent, Trademark or Copyright infringement).

 

8.21.                        Counterparts.  This Security Agreement may be executed in
any number of counterparts, all of which taken together shall constitute one
agreement, and any of the parties hereto may execute this Security Agreement by
signing any such counterpart.

 

ARTICLE IX

NOTICES

 

9.1.                              Sending
Notices.  Any notice required or
permitted to be given under this Security Agreement shall be sent by United
States mail, telecopier, personal delivery or nationally established overnight
courier service, and shall be deemed received (a) when received, if sent by
hand or overnight courier service, or mailed by certified or registered mail
notices or (b) when sent, if sent by telecopier (except that, if not given
during normal business hours for the recipient, shall be deemed to have been
given at the opening of business on the next Business Day for the recipient),
in each case addressed to the Grantor at the address set forth on Exhibit A
as its principal place of business, and to the Lender at the address set forth
in the Credit Agreement.

 

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

 

[Signature Page Follows]

 

23

 

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

 

	
   

  	
  GRANTOR:

  
	
   

  	
   

  
	
   

  	
  MAGNETEK
  NATIONAL ELECTRIC COIL, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David P.
  Reiland

  	
   

  
	
   

  	
  Name:

  	
  David P. Reiland

  
	
   

  	
  Title:

  	
  President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  BANK ONE, NA

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ David L.
  Carey

  	
   

  
	
   

  	
  Name:

  	
  David L. Carey

  
	
   

  	
  Title:

  	
  Director

  
					

 

 

EXHIBIT
I-1

(See Section 4.4 of Security Agreement)

 

AMENDMENT

 

 

This Amendment,
dated                    ,
     is delivered pursuant to Section 4.4 of
the Security Agreement referred to below. 
All defined terms herein shall have the meanings ascribed thereto or
incorporated by reference in the Security Agreement.  The undersigned hereby certifies that the representations and
warranties in Article III of the Security Agreement are and
continue to be true and correct.  The
undersigned further agrees that this Amendment may be attached to that certain
Security Agreement, dated August 15, 2003, between the undersigned, as the
Grantor, and Bank One, NA, as the Lender, (the “Security Agreement”) and that
the Collateral listed on Schedule I to this Amendment shall be and
become a part of the Collateral referred to in said Security Agreement and shall
secure all Secured Obligations referred to in said Security Agreement.

 

	
   

  	
  MAGNETEK NATIONAL ELECTRIC COIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

SCHEDULE  I TO
AMENDMENT

 

 

EXHIBIT I-2

(See Section 4.7(g) of Security Agreement)

 

AMENDMENT

 

 

This Amendment,
dated
                   ,
     is delivered pursuant to Section 4.7(g) of
the Security Agreement referred to below. 
All defined terms herein shall have the meanings ascribed thereto or
incorporated by reference in the Security Agreement.  The undersigned hereby certifies that the representations and
warranties in Article III of the Security Agreement are and
continue to be true and correct.  The
undersigned further agrees that this Amendment may be attached to that certain
Security Agreement, dated August 15, 2003, between the undersigned, as the
Grantor, and Bank One, NA, as the Lender, (the “Security Agreement”) and that
the Collateral listed on Schedule I to this Amendment shall be and
become a part of the Collateral referred to in said Security Agreement and
shall secure all Secured Obligations referred to in said Security Agreement.

 

	
   

  	
  MAGNETEK NATIONAL ELECTRIC COIL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  
	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						

 

 

SCHEDULE I TO
AMENDMENTExhibit
10.9

CHANGE OF CONTROL AGREEMENT

This Change of Control Agreement (“Agreement”) is entered into on July
29, 2003 by and between Marty J. Schwenner, an individual (the “Officer”), and
Magnetek, Inc., a Delaware corporation (the “Company”).

RECITALS

WHEREAS, the Board of Directors of the Company (the “Board”) recognizes
that the possibility of a Change of Control (as hereinafter defined) exists and
that the threat or the occurrence of a Change of Control can result in
significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;

WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to retain the services of the
Officer in the event of a threat or occurrence of a Change of Control and to
ensure the Officer’s continued dedication and efforts in such event without
undue concern for personal financial and employment security; and

WHEREAS, in order to induce the Officer to remain in the employ of the
Company, particularly in the event of a threat or the occurrence of a Change of
Control, the Company desires to enter into this Agreement with the Officer to
provide the Officer with certain benefits in the event his or her employment is
terminated as a result of, or in connection with, a Change of Control.

AGREEMENT

NOW THEREFORE, in consideration of the mutual
covenants set forth herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties do hereby agree as
follows:

1.             Term of
Agreement.  This Agreement shall
commence as of the date hereof and shall continue in effect until December 31,
2004; provided,
however,
that on December 31, 2004 and on each anniversary thereof, the term of this
Agreement shall automatically be extended for one year unless either the
Company or the Officer shall have given written notice to the other prior
thereto that the term of this Agreement shall not be so extended; provided,
further,
however,
that notwithstanding any such notice by the Company or the Officer not to
extend, the term of this Agreement shall not expire prior to the second
anniversary of a Change of Control Date. 
The benefits payable pursuant to Section 2 hereof shall be due in
all events if a Change of Control occurs during the term of this Agreement, and
a Change of Control will be deemed to have occurred during the term hereof if
an agreement for a transaction resulting in a Change of Control is entered into
during the term hereof, notwithstanding that the Change of Control Date occurs
after the expiration of the term of this Agreement.

2.             Benefits Upon Change of Control.

(a)           Events Giving Rise to Benefits.  The Company agrees to pay or cause to be
paid to the Executive the benefits specified in this Section 2 if
(i) there is a Change of Control, and (ii) within the Change of
Control Period, (a) the Company or the Successor terminates the employment
of the Executive for any reason other than Cause, death or Disability or
(b) the Executive voluntarily terminates employment for Good Reason.

 

 

(b)           Benefits Upon Termination of
Employment.  If the Executive is
entitled to benefits pursuant to this Section 2, the Company agrees to pay
or provide to the Executive as severance payment, the following:

(i)            A single lump sum payment, payable
in cash within five days of the Termination Date (or if later, the Change of
Control Date), equal to the sum of:

(A)          the accrued portion of any of the
Executive’s unpaid base salary and vacation through the Termination Date and
any unpaid portion of the Executive’s bonus for the prior fiscal year; plus

(B)           a portion of the Executive’s bonus
for the fiscal year in progress, prorated based upon the number of days elapsed
since the commencement of the fiscal year and calculated assuming that 100% of
the target under the bonus plan is achieved; plus

(C)           an amount equal to the Executive’s
Base Compensation times the Compensation Multiplier.

(ii)           Continuation, on the same basis as if
the Executive continued to be employed by the Company, of Benefits for the
Benefit Period commencing on the Termination Date.  The Company’s obligation hereunder with respect to the foregoing
Benefits shall be limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer’s benefit plans, in which case the
Company may reduce the coverage of any Benefits it is required to provide the
Executive hereunder as long as the aggregate coverage and benefits of the
combined benefit plans is no less favorable to the Executive than the Benefits
required to be provided hereunder.

(iii)          Outplacement services to be provided
by an outplacement organization of national repute, which shall include the
provision of office space and equipment (including telephone and personal
computer) but in no event shall the Company be required to provide such
services for a value exceeding 17% of the Executive’s Base Compensation.

(iv)          Accelerated vesting of all outstanding
stock options and of all previously granted restricted stock awards.

3.             Definitions. 
When used in this Agreement, the following terms have the meanings set
forth below:

“Base Compensation”
means the sum of (i) the Executive’s annual salary in effect on the
earlier of the Change of Control Date and the Termination Date and
(ii) 100% of the target under the bonus plan for the fiscal year during
which the Change of Control Date occurs.

“Benefits” means
benefits that would be available under any health and welfare plan of the
Company on the Termination Date.

“Benefit Period”
means 18 months.

 

 

“Cause”
means:  (A) conviction of a felony
or misdemeanor involving moral turpitude, or (B) willful gross neglect or
willful gross misconduct in carrying out the Executive’s duties, resulting in
material economic harm to the Company or any Successor.

“Change of Control”
means (i) any event described in Section 11.2 of the 1999 Stock
Incentive Plan of the Company or any event so defined in any stock incentive or
similar plan adopted by the Company in the future unless, in either case, such
event occurs in connection with a Distress Sale and (ii) any event which
results in the Board ceasing to have at least a majority of its members be
“continuing directors.”  For this
purpose, a “continuing director” means a director of the Company who held such
position on July 29, 2003 or who thereafter was appointed or nominated to
the Board by a majority of continuing directors.

“Change of Control
Date” means the date on which a Change of Control is consummated.

“Change of Control Period” means the period
commencing on the earlier of (i) 180 days prior to the Change of Control
Date and (ii) the announcement of a transaction expected to result in a
Change of Control, and ending on the second anniversary of the Change of
Control Date.

“Code” means the Internal Revenue Code of 1986,
as amended.  References herein to a
specific section of the Code shall be deemed to include comparable or analogous
provisions of state, local and foreign law.

“Compensation
Multiplier” means 1.5.

“Disability” means
the inability of the Executive due to illness (mental or physical), accident,
or otherwise, to perform his or her duties for any period of 180 consecutive
days, as determined by a qualified physician.

“Distress
Sale” means a Change of Control occurring within 18 months of any of the
following:  (i) the Company’s
independent public accountants shall have made a “going concern” qualification
in their audit report (other than by reason of extraordinary occurrences, such
as material litigation, not attributable to poor management practices); (ii) the
Company shall lack sufficient capital for its operations by reason of
termination of its existing credit lines or the Company’s inability to secure
credit facilities upon acceptable terms; or (iii) the Company shall have
voluntarily sought relief under, consented to or acquiesced in the benefit of
application to it of the Bankruptcy Code of the United States of America or any
other liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments or similar
laws, or shall have been the subject of proceedings under such laws (unless the
applicable involuntary petition is dismissed within 60 days after its filing).

“Good Reason”
means (A) without the Executive’s prior written consent, assignment to the
Executive of duties materially inconsistent in any respect with his or her
position immediately prior to the Change of Control Date or any other action by
a Successor that results in a material diminution in the Executive’s position,
authority, duties, responsibilities, annual base salary or target bonus when
compared with the same immediately prior to the Change of Control Date; or
(B) assignment of the Executive, without his or her prior written 

consent,
to a place of business that is not within the metropolitan area of the
Executive’s current place of business.

“Stay and Pay
Agreement” means a “stay and pay” or retention agreement entered into in
contemplation of a sale by the Company of a division or business unit.

“Successor” means
any acquiror of all or substantially all of the stock, assets or business of
the Company.

“Termination Date”
means the last day of the Executive’s employment.

4.             Eligibility; Effect on Other
Agreements and Plans.

(a)           In the event the Executive is also a party
to a Stay and Pay Agreement or severance agreement and becomes entitled to any
payment thereunder, this Agreement shall be null and void and the Executive
shall not be entitled to any payment or benefit hereunder.  Nothing in this Agreement shall prevent or
limit the Executive’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company and for which the
Executive may qualify, nor shall anything herein limit or reduce such rights as
the Executive may have under any other agreements with the Company.  Amounts that are vested benefits or that the
Executive is otherwise entitled to receive under any plan or program of the
Company shall be payable in accordance with such plan or program, except as explicitly
modified by this Agreement.

(b)           Plan Amendments.  The Company shall adopt such amendments to
its employee benefit plans and insurance policies, including, without
limitation, the Plans, as are necessary to effectuate the provisions of this
Agreement.  If and to the extent any
benefits under Section 2 are not paid or payable or otherwise provided to
the Executive or his or her dependents or beneficiaries under any such plan or
policy (whether due to the terms of the plan or policy, the termination thereof,
applicable law, or otherwise), then the Company itself shall pay or provide for
such benefits (including any gross-up needed to account for the less favorable
tax treatment if the payments are made from the Company and not from the Plans
or other employee benefit plans).

5.             Golden Parachute Tax.

(a)           If
the Value (as hereinafter defined) attributable to the payments and benefits
provided in Section 2 above, without regard to this Section 5
(“Agreement Payments”), in combination with the Value attributable to other
payments or benefits in the nature of compensation to or for the benefit of
Executive (including but not limited to the value attributable to accelerated
vesting of options and, collectively with Agreement Payments, “Payments”)
would, but for this Section 5, constitute an “excess parachute payment”
under Code Section 280G, then Agreement Payments will be made to the
Executive under Section 2 hereof only to the extent provided in this
Section 5.  If (i) the excess of
the Value of all Payments over the sum of all taxes (including but not limited
to income and excise taxes under Code Section 4999) that would be payable
by the Executive with respect to such Payments, is equal to or greater than
110% of (ii) the excess of the greatest Value of all such Payments that
could be paid to or for the benefit of the Executive and not result in an
“excess parachute payment” (the “Cap”), over the amount of taxes that would be
payable by Executive thereon, then the full amount of Agreement Payments shall
be paid to the Executive.  Otherwise,
Agreement Payments 

 

 

shall be made only to the extent that such payments
cause the Value of all Payments to equal the Cap.

(b)           For
purposes of this Section 5, the Company and the Executive hereby
irrevocably appoint the persons who constituted the Compensation Committee of
the Board immediately prior to the Change of Control, or a three person panel
named by a majority of them, as arbitrators (the “Arbitrators”) to make all
determinations required under this Section 5, including but not limited to
the Value of all Payments (and the components thereof) and the amount and
nature of any reduction of Agreement Payments required by this
Section 5.  For purposes of this
Section 5, “Value” shall mean value as determined by the Arbitrators applying
the valuation procedures and methodologies established pursuant to Code
Section 280G, including any non-binding interpretive guidance as the
Arbitrators determine appropriate.  The
determinations of the Arbitrators shall be final and binding on both the
Company and Executive, and their successors, assignees, heirs and
beneficiaries, for purposes of determining the amount payable under
Section 2.  All fees and expenses
of the Arbitrators (including attorneys’ and accountants’ fees) shall be borne
by the Company.  The arbitrators will be
compensated, to the extent they are not then members of the Board’s
Compensation Committee, at the rates at which they would have been compensated
for their work as Committee members in effect immediately prior to the Change
of Control Date.

6.             Employment At-Will.  Notwithstanding anything to the contrary contained herein, the
Executive’s employment with the Company is not for any specified term and may
be terminated by the Executive or by the Company at any time, for any reason,
with or without cause, without liability except with respect to the payments
provided hereunder or as required by law or any other contract or employee
benefit plan.

7.             General.

(a)           Entire Agreement.  This document constitutes the final,
complete, and exclusive embodiment of the entire agreement and understanding
between the parties related to the subject matter hereof and supersedes and
preempts any prior or contemporaneous understandings, agreements, or
representations by or between the parties, written or oral.

(b)           Successors and Assigns.  This Agreement is intended to bind and inure
to the benefit of and be enforceable by the Executive and the Company, and
their respective successors and assigns, except that the Executive may not assign
any of his or her duties hereunder and he or she may not assign any of his or
her rights hereunder without the prior written consent of the Company.

(c)           Amendments.  No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties.  No amendment or waiver of this Agreement
requires the consent of any individual, partnership, corporation or other
entity not a party to this Agreement. 
Nothing in this Agreement, express or implied, is intended to confer
upon any third person any rights or remedies under or by reason of this
Agreement.

(d)           No Amounts Due.  The Executive acknowledges that no payments
or benefits whatsoever shall become due hereunder in the absence of a Change of
Control.

(e)           No Mitigation Obligation.  The parties hereto expressly agree that the
payment of the benefits by the Company to the Executive in accordance with the
terms of this 

 

Agreement
will be liquidated damages, and that the Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by seeking
other employment or otherwise, nor shall any profits, income, earnings or other
benefits from any source whatsoever create any mitigation, offset, reduction or
any other obligation on the part of the Executive hereunder or otherwise except
as expressly provided in Sections 2(b)(ii) and 4(a).

(f)            Changes to Benefits.  In the event that, within 90 days of the
execution of this Agreement, the Company enters into an agreement for a Change
of Control in connection with a merger to be accounted for as a “pooling of
interests,” the Board will be entitled to modify or reduce the payments or
benefits due hereunder, or to abrogate this Agreement entirely, if and to the
extent that Ernst & Young opines to the Board such measures are necessary
in order to ensure that the proposed merger will be accounted for as a “pooling
of interests.”  The Board will have no
such authority after such 90-day period and, in the event such merger
does not eventuate or is ultimately not accounted for as a “pooling of
interests,” this Agreement, with or without any action by the Board or the
Executive, shall be automatically reinstated.

(g)           Choice of Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of Tennessee without giving effect to principles of conflicts of law.

(h)           ERISA.  This Agreement is pursuant to the Company’s
severance plan for Executives (the “Plan”) which is unfunded and maintained by the
Company primarily for the purpose of providing deferred compensation for a
select group of management or highly compensated employees.  The Plan constitutes an employee welfare
benefit plan (“Welfare Plan”) within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  Any payments pursuant to this Agreement
which could cause the Plan not to constitute a Welfare Plan shall be deemed
instead to be made pursuant to a separate “employee pension benefit plan”
within the meaning of Section 3(2) of ERISA as to which the applicable
portions of the document constituting the Plan shall be deemed to be
incorporated by reference.  None of the
benefits hereunder may be assigned in any way.

(i)            Representation.  The Executive acknowledges that he has had
the opportunity to consult with counsel before executing this Agreement.

(j)            Mutual Non-Disparagement.  The Company and subsidiaries agree, and the
Company shall use its best efforts to cause its respective executive officers
and directors to agree, that they will not make or publish any statement
critical of the Executive, or in any way adversely affecting or otherwise
maligning the Executive’s reputation. 
The Executive agrees that he or she will not make or publish any
statement critical of the Company, its affiliates and their respective
executive officers and directors, or in any way adversely affecting or
otherwise maligning the business or reputation of the Company, its affiliates
and subsidiaries and their respective officers, directors and employees.

8.             Arbitration.

(a)           Except as provided in Section 5
hereof, any disputes or claims arising out of or concerning the Executive’s
employment or termination by the Company, whether arising under theories of
liability or damages based upon contract, tort or statute, will be determined
exclusively by arbitration before a single arbitrator in accordance with the
employment arbitration rules of the American Arbitration Association, except as
modified by this Agreement.  

The
arbitrator’s decision will be final and binding on both parties.  Judgment upon the award rendered by the
arbitrator may be entered in any court of competent jurisdiction.  In recognition of the fact that resolution
of any disputes or claims in the courts is rarely timely or cost effective for
either party, the Company and the Executive enter this mutual agreement to
arbitrate in order to gain the benefits of a speedy, impartial and
cost-effective dispute resolution procedure. 
The parties further intend that the arbitration hereunder be conducted
in as confidential a manner as is practicable under the circumstances, and
intend for the award to be confidential unless that confidentiality would
frustrate the purpose of the arbitration or render the remedy awarded
ineffective.

(b)           Any arbitration will be held in Los
Angeles, California.  The arbitrator
must be an attorney with substantial experience in employment matters, selected
by the parties alternately striking names from a list of five such persons provided
by the American Arbitration Association (AAA) office located nearest to the
place of employment, following a request by the party seeking arbitration for a
list of five such attorneys with substantial professional experience in
employment matters.  If either party
fails to strike names from the list, the arbitrator will be selected from the
list by the other party.

(c)           Each party will have the right to
take the deposition of one individual and any expert witness designated by the
other party.  Each party will also have
the right to propound requests for production of documents to any party and the
right to subpoena documents and witnesses for the arbitration.  Additional discovery may be made only where
the arbitrator selected so orders upon a showing of substantial need.  The arbitrator will have the authority to
entertain a motion to dismiss and/or a motion for summary judgment by any party
and will apply the standards governing such motions under the Federal Rules of
Civil Procedure.

(d)           The Company and the Executive agree
that they will attempt, and they intend that they and the arbitrator should use
their best efforts in that attempt, to conclude the arbitration proceeding and
have a final decision from the arbitrator within 120 days from the date of
selection of the arbitrator; provided, however, that the arbitrator
will be entitled to extend such 120-day period for one additional 120-day
period.  The arbitrator will deliver a
written award with respect to the dispute to each of the parties, who must
promptly act in accordance therewith.

(e)           The Company will pay any and all
reasonable fees and expenses incurred by the Executive in seeking to obtain or
enforce any rights or benefits provided by this Agreement, including all
reasonable attorneys’ and experts’ fees and expenses, accountants’ fees and
expenses, and court costs (if any) that may be incurred by the Executive in
pursuing a claim for payment of compensation or benefits or other right or
entitlement under this Agreement, provided that the Executive is successful
as to material issues, resulting in an award of at least $50,000.  In addition, the Company will pay without
regard to the results of the arbitration all costs and fees not normally
associated with a civil proceeding, such as any fees charged by the arbitrator
or any room rental charges.

(f)            In a contractual claim under this
Agreement, the arbitrator must act in accordance with the terms and provisions
of this Agreement and applicable legal principles and will have no authority to
add, delete or modify any term or provision of this Agreement.  In addition, the arbitrator will have no
authority to award punitive damages under any circumstances unless repudiating
the arbitrator’s authority to do so would cause this arbitration clause to be
ruled ineffective under applicable law.

IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date it is last executed below by either party.

 

 

 

 

	
  /s/ Marty J. Schwenner

  
	
   

  	
  Marty J. Schwenner

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  MAGNETEK,
  INC.

  
	
   

  	
   

  
	
  By:

  	
  /s/
  Andrew G. Galef

  
	
  Name: Andrew G. Galef

  
	
  Title:   Chairman and Chief Executive Officer

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