<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM 10-K
(MARK ONE)
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended July 3, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
COMMISSION FILE NUMBER 1-10233
__________________
MAGNETEK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3917584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
26 CENTURY BOULEVARD
NASHVILLE, TENNESSEE 37229
(Address of Principal Executive Offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (615) 316-5100
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $.01 par value New York Stock Exchange
8% Convertible Subordinated Notes Due 2001 New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
- -
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. Yes No X
- -
The aggregate market value of the voting stock held by non-affiliates
of the Registrant (based on the closing price of such stock, as reported by the
New York Stock Exchange, on September 30, 1994) was $299,408,248.
The number of shares outstanding of the Registrant's Common Stock, as
of September 30, 1994, was 24,215,674 shares.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the MagneTek, Inc. 1994 Annual Report to Shareholders for
the year ended July 3, 1994 are incorporated by reference into Part II of this
Form 10-K. With the exception of those portions which are expressly
incorporated by reference in the Annual Report on Form 10-K, the MagneTek, Inc.
1994 Annual Report to Shareholders is not deemed filed as part of this Report.
Portions of the MagneTek, Inc. definitive Proxy Statement to be filed
with the Securities and Exchange Commission within 120 days after the close of
the fiscal year ended July 3, 1994 are incorporated by reference into Part III
hereof.
<PAGE>
MAGNETEK, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JULY 3, 1994(1)
Page
----
ITEM 1. BUSINESS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . . 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . . 9
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
ITEM 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . .11
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . .11
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . . .11
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.. . . . . . . . . . . . . . . . . . . . .11
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.. . . . . . . .12
ITEM 11. EXECUTIVE COMPENSATION.. . . . . . . . . . . . . . . . . . . . . .14
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . .14
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.. . . . . . . . . .14
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.. . . . . . . . . . . . . . . . . . . . . . . . . . . . .15
____________________
(1) The Company uses a 52-53 week fiscal year which ends on the Sunday nearest
June 30. Accordingly, the Company's 1994 fiscal year ended on July 3, 1994
and contained 53 weeks. For clarity of presentation, all periods are
presented and discussed as if each fiscal year ended on June 30. The years
ended June 27, 1993 and June 28, 1992 each contained 52 weeks.
ii
<PAGE>
PART I
ITEM 1. BUSINESS.
GENERAL
The electrical equipment industry is characterized by diversity of
markets, global competition and relatively high barriers to entry due to
intensive capital requirements and required access to market channels. From its
inception in 1984, MagneTek pursued a growth strategy designed to achieve the
size necessary to compete with domestic and foreign electrical equipment
manufacturers. During the late 1980s and early 1990s the Company grew rapidly,
primarily through acquisitions of electrical equipment businesses supplemented
by internal growth. While this growth enabled the Company to achieve a
significant share of several electrical product and service markets, and
enhanced efforts to reduce manufacturing costs through economies of scale and
vertical integration, the use of debt to finance the majority of the
acquisitions left the Company with a relatively high degree of financial
leverage in its balance sheet.
During the fiscal year ended June 30, 1994, MagneTek's Board of
Directors approved a plan to focus the Company's resources on fewer product
lines and reduce debt. Subsequent to fiscal year end, the Board of Directors
adopted a formal restructuring program including the sale of certain businesses
comprised primarily of the Company's utility, military, controls and custom
motor product lines (see Note 2 of Notes to Consolidated Financial Statements).
The discussion which follows focuses on the continuing operations of the
Company.
The Company operates in two business segments: Ballasts and
Transformers, including lighting products (magnetic and electronic lighting
ballasts), power supplies and small transformer products; and Motors and
Controls, which includes fractional and integral horsepower electric motors,
medium voltage generators and variable speed electronic drives.
BALLASTS AND TRANSFORMERS SEGMENT
GENERAL. The Ballasts and Transformers segment, which accounted for
58% of net sales in fiscal 1994, manufactures a broad range of equipment in the
United States and Europe in two general product groups: Lighting products,
including fluorescent (both magnetic and electronic) and high intensity
discharge ("HID") ballasts; and Transformer products, including electronic power
supplies, various small component and specialty transformers, and dry type
distribution transformers. The Company's European operations, concentrated
primarily in magnetic lighting ballasts and electronic power supplies, accounted
for 29% of the segment's total net sales in fiscal 1994. One customer, Lithonia
Lighting, a lighting fixture OEM, accounted for 10% of the segment's total net
sales in fiscal 1994.
LIGHTING PRODUCTS. For fiscal 1994, sales of Lighting products
represented 73% of the segment's total net sales. The Company is an industry
leader, measured by market share, in magnetic fluorescent ballasts both
domestically and in Europe, and in electronic fluorescent ballasts domestically.
Sales of magnetic ballasts (including HID) accounted for 44% (36% in the U.S.
and 8% in Europe) of the segment's total net sales in fiscal 1994. Magnetic
ballasts are used in standard fluorescent lighting fixtures in office,
1
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commercial and residential applications, and in various types of specialty
lighting applications, including indoor and outdoor displays and signs. HID
ballasts are used in lighting fixtures in industrial and municipal applications,
such as street lighting, outside security and parking lot lighting, factory and
warehouse indoor illumination and sports lighting. Electronic solid state
fluorescent ballasts offer savings in the form of reduced energy consumption but
have a higher initial cost than that of a standard magnetic ballast. Sales of
electronic ballasts, primarily in the U.S., accounted for 24% of the segment's
total net sales in fiscal 1994.
In the U.S., approximately 65% of the Company's fluorescent and HID
ballasts are sold through MagneTek's direct sales force to OEMs with the balance
sold through independent manufacturers' representatives to more than 4,000
independent electrical distributors nationwide. In Europe, sales are made
through a combination of the Company's direct sales force and sales agents,
primarily to OEMs.
TRANSFORMER PRODUCTS. Sales of Transformer products accounted for
27% of the segment's net sales for fiscal 1994. Sales of Transformer products
in Europe, primarily electronic power supplies which are custom designed for
use in electronic business machines, computers and industrial equipment,
accounted for 18% of the segment's net sales in fiscal 1994. The Company also
manufactures dry type distribution transformers used primarily in building
applications as well as various component and specialty transformers. The
Company markets its various Transformer products through its direct sales force
and independent manufacturers' representatives directly to OEMs and (in the
U.S.) through independent electrical distributors.
BACKLOG. The Company's backlog in the Ballasts and Transformers
segment as of June 30, 1994, was $98.6 million compared to $240.8 million as of
the end of fiscal 1993. The decrease in the backlog has resulted from decreased
backlog for electronic ballasts. Backlog in electronic ballasts was $15.1
million as of June 30, 1994 compared to $134.2 million as of June 30, 1993.
Backlog represents purchase orders received by the Company which are subject to
cancellation. During fiscal 1994, the Company experienced significant
cancellations of orders for electronic ballasts due to excess inventories at
the Company's electrical distributor customers. These cancellations occurred
primarily during the first half of fiscal 1994. The Company has not experienced
significant order cancellations since that time.
COMPETITION. The principal competitors of the Company in Lighting
products in the U.S. are Advance Transformer Company (a division of North
American Phillips Corp.), Electronic Ballast Technology (an affiliate of North
American Phillips Corp.), Valmont Industries and Motorola, and in Europe,
Schwabe, Helvar and Zumtobel. Competitors in Transformer products are Advance
Transformer Company and Astec. Certain of the Company's competitors in the
Ballasts and Transformers segment have substantially greater resources than the
Company. The Company competes principally on the basis of customer service and
engineering capabilities, quality and price.
MOTORS AND CONTROLS SEGMENT
GENERAL. The Motors and Controls segment, which accounted for 42% of
net sales in fiscal 1994, manufactures equipment in two product groups: Motors
and Generators, including fractional and integral horsepower electric motors
and medium voltage generators, and Drives and Systems, including electronic
adjustable speed drives and drive systems. The Company's European operations
are not significant to the
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segment, representing less than 2% of the segment's total net sales in fiscal
1994. One customer, Caterpillar, Inc., accounted for 12% of the segment's total
net sales in fiscal 1994.
MOTOR AND GENERATOR PRODUCTS. In fiscal 1994, Motor and Generator
products represented 84% of the segment's total net sales. The Company's
electric motors, most of which use AC power, range in size from 1/8 to 500
horsepower. Motors ranging in size from 1/8 to 5 horsepower (depending on frame
size) are designated fractional horsepower ("FHP") motors. FHP motors are used
both in residential applications, primarily in appliances such as room air
conditioners, dehumidifiers and ventilators, as well as pool and spa pumps, and
in commercial applications such as heating, ventilating and air conditioning
("HVAC"), food service and agribusiness. AC motors ranging in size from
1 to 500 horsepower, designated integral horsepower ("IHP") motors, are used
primarily in commercial HVAC, mining, petrochemical and commercial laundry
applications. The Company also manufactures DC motors, ranging in size
from 1/6 to 3 horsepower, used in variable speed applications such as
conveyors, material handling and packing equipment, exercise equipment and
machine tools. Approximately 70% of the Company's motors are sold to OEMs
primarily through the Company's direct sales force. The remaining motors are
marketed through a network of approximately 2,600 distributors, primarily for
replacement of worn motors.
Generators manufactured by the Company range in size from 50 kilowatt
("KW") to 2,250 KW. Over 90% of generator sales are to Caterpillar, Inc., which
manufactures and sells engine generator units for prime and standby power
applications.
DRIVES AND SYSTEMS PRODUCTS. Sales of Drives and Systems products
accounted for 16% of the segment's total net sales for fiscal 1994. The
Company's electronic adjustable speed drives and drive systems adjust and
control the speed and output of electric motors. They are used in
applications involving HVAC, paper converting, wire drawing, extrusion
elevators, machine tools and material handling equipment. Drives and drive
systems are sold primarily to OEMs and end users through a specialized
engineering oriented direct sales force as well as through electrical
distributors.
BACKLOG. The Company's backlog in the Motors and Controls segment as
of June 30, 1994 was $71.1 million compared to $69.9 million as of the end of
fiscal 1993. The increase is primarily in FHP motors offset by lower backlog in
IHP motors.
COMPETITION. The principal competitors of the Company in Motor and
Generator products are Emerson Electric Company, General Electric Company,
Franklin Electric Company, Baldor Electric Company, A.O. Smith and Onan. The
principal competitors in Drives and Systems are Reliance Electric Company,
Emerson Electric Company, Allen Bradley and Eaton Corporation. Some of these
competitors have substantially greater resources than the Company. The Company
competes principally on the basis of customer service and engineering
capabilities, quality and price.
INTERNATIONAL OPERATIONS
The Company conducts most of its international activities through its
MagneTek Europe operations. European operations include ballast and power
supply production in Italy and Germany and motor manufacturing in the United
Kingdom. The Company's international sales, including export sales from
domestic operations, in fiscal 1994 accounted for 23% of the Company's total net
sales.
3
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SUPPLIERS AND RAW MATERIALS
The Company manufactures many of the materials and components used in
its products, including ballast and motor laminations and capacitors. The
Company also draws its own magnet wire primarily for products in the Ballasts
and Transformers segment.
Virtually all materials and components purchased by the Company are
available from multiple suppliers. In fiscal 1994, approximately 56% of the
Company's total cost of sales was for the purchase of direct materials. Key
commodities used in production include steel, copper and aluminum, as well as
certain electronic components. The Company generally negotiates prices with
steel vendors on an annual basis. The Company purchases copper for the Ballasts
and Transformers segment primarily in rod form for drawing its own magnet wire
and for the Motors and Controls segment in the form of finished magnet wire.
The Company seeks to mitigate its exposure to fluctuations in copper prices
through short-term hedging programs as well as through forward contract
arrangements with magnet wire suppliers. The Company purchases its aluminum
requirements based upon the spot prices at delivery.
RESEARCH AND DEVELOPMENT
Research and development activities are conducted by the respective
operating divisions and are directed toward enhancement of existing products and
development of new products. Advanced technologies are being developed in four
main development centers and future development is sponsored by the Company
and conducted by leading Universities. The Company's recent product
development efforts have focused on the application of "state of the art"
technologies in the following areas: development of innovative integrated
electronic circuit architectures for lighting ballasts, power electronic based
designs and advanced microprocessor/DSP controls for adjustable speed drives and
fuel cell type inverters, superior design of energy efficient motors and cost-
effective power supplies. The Company has a number of design projects underway
relating to requirements for energy-efficient electrical products mandated by
legislation. New CAD/CAM/CAE tools were introduced to improve the designs and
reduce design time. The Company has also focused its research and development
activities on improvements in the manufacturing process through increased
factory automation and new improved computer systems. Through continued
integration of the Company's various operating units, the Company expects to
benefit from coordinated research and development efforts. Total research and
development expenditures were approximately $17.5 million, $17.4 million and
$13.8 million, respectively, for the 1994, 1993 and 1992 fiscal years.
TRADEMARKS AND PATENTS
The Company holds numerous patents which, although of value, are not
considered by management to be essential to the Company's business. The Company
believes that it holds all the patent, trademark and other intellectual property
rights necessary to conduct its business.
4
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EMPLOYEES
At the end of fiscal 1994, the Company had approximately 2,300
salaried employees and approximately 12,000 hourly employees, of whom
approximately 6,100 are covered by collective bargaining agreements with various
unions. The Company believes that its relationships with its employees are
favorable.
ENVIRONMENTAL MATTERS
GENERAL. The Company has from time to time discovered contamination
by hazardous substances at certain of its facilities. In response to such
discovery, the Company conducts remediation activities to bring the facility
into compliance with applicable laws and regulations. Except as described
below, the Company's remediation activities for fiscal 1994 did not entail
material expenditures, and its remediation activities for fiscal 1995 are not
expected to entail material expenditures. Future discoveries of contaminated
areas could entail material expenditures, depending upon the extent and nature
of the contamination.
UNIVERSAL MANUFACTURING (BRIDGEPORT). The Company's Universal
Manufacturing division has used certain hazardous materials, including PCBs, in
certain of its production processes. In particular, contaminated soil and
groundwater have been located at Universal Manufacturing's Bridgeport,
Connecticut facility. In connection with the February 1986 acquisition of
Universal Manufacturing, the Company and the seller, Farley Northwest
Industries, Inc. (the predecessor to Fruit of the Loom, Inc., hereinafter
collectively with such successor referred to as "FOL"), executed an
environmental agreement. Under this agreement, FOL agreed to perform certain
cleanup work at the Bridgeport facility and to indemnify and hold the Company
harmless for environmental claims attributable to FOL's or its predecessors'
activities at the Bridgeport facility. To date, FOL has undertaken
investigative actions and remedial work at Bridgeport as required by the
environmental agreement, and such remedial work is now substantially complete.
CENTURY ELECTRIC (MCMINNVILLE). Prior to its purchase by the Company
in 1986, Century Electric, Inc. ("Century Electric") acquired a business from
Gould Inc. ("Gould") in May 1983 which included a leasehold interest in a
fractional horsepower electric motor manufacturing facility located in
McMinnville, Tennessee. In connection with this acquisition, Gould agreed to
indemnify Century Electric from and against liabilities and expenses arising out
of the handling and cleanup of hazardous waste, including but not limited to
cleaning up any PCBs at the McMinnville facility (the "1983 indemnity").
Investigation revealed the presence of PCBs in portions of the soil and in the
groundwater underlying the facility and in certain offsite soil. Century
Electric has kept the Tennessee Department of Environment and Conservation,
Division of Superfund, apprised of test results from the investigation. The
McMinnville plant has been listed as a Tennessee Superfund Site, a report on
that site has been presented to the Tennessee legislature, and community
officials and plant employees have been notified of the presence of PCBs as
above described. In July 1993, Gould submitted to the State of Tennessee a
Feasibility Study recommending a cleanup of certain onsite soil with an
estimated cost of $4.7 million. This estimate does not include ancillary costs
of onsite cleanup, which are expected to be significant. Based upon currently
available information, the aggregate costs for cleanup of certain onsite soil,
including ancillary costs of onsite cleanup, are not expected to exceed
$15 million. Subsequent to June 30, 1994, Gould contracted for certain onsite
cleanup to be performed, at its own expense, during the period
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from September 1994 through December 1994. The necessity for any potential
offsite cleanup has not been studied, and no estimate or range of any potential
offsite cleanup costs has been developed. The Company believes that the costs
for certain onsite cleanup, including ancillary costs of onsite cleanup, and the
costs for any potential offsite cleanup are covered by the 1983 indemnity. In
August 1994, Gould requested that the Company consider bearing an unspecified
portion of each of these costs, and the Company declined. While the Company
believes that Gould will continue to perform under its indemnity obligations,
Gould's failure to perform such obligations could have a material adverse effect
on the Company.
OFFSITE LOCATIONS. The Company has been identified by the United
States Environmental Protection Agency and certain state agencies as a
potentially responsible party for cleanup costs associated with alleged past
waste disposal practices at several offsite locations. Due, in part, to the
existence of indemnification from the former owners of certain acquired
businesses for cleanup costs at certain of these sites, and except as described
below, the Company's estimated share in liability (if any) at the offsite
facilities is not expected to be material. It is possible that the Company will
be named as a potentially responsible party in the future with respect to other
sites.
CROWN INDUSTRIES SITE (PIKE COUNTY, PENNSYLVANIA). In March 1992, the
Company was informed by the Pennsylvania Department of Environmental Resources
("DER") that its Universal Manufacturing division is one of a number of
potentially responsible parties with respect to a planned environmental
investigation and cleanup at the Crown Industries site in Pike County,
Pennsylvania. The DER has provided a non-binding preliminary allocation of
liability in connection with the site that assigned the Company a 30 percent
share. The aggregate expense of cleaning up the site is not currently known,
but some preliminary indications suggest a range of $5 million to $15 million.
To date, the DER has sought reimbursement of approximately $500,000 in the
aggregate from the Company and the other potentially responsible parties. The
Company has concluded that at least 90 percent of any liability it may incur
relating to this site is covered by the indemnification provisions of its
environmental agreement with FOL, and FOL has acknowledged such indemnity and is
currently defending its own and the Company's interest in this site.
FOL's failure to perform its obligations with respect to the Crown
Industries site under the environmental agreement could have a material adverse
effect on the Company.
ITEM 2. PROPERTIES.
The Company's headquarters and each of its principal facilities for
the continuing operations of the Company are listed below, each of which is
owned by the Company unless indicated as being leased.
<TABLE>
<CAPTION>
Approximate
Location Lease Term Size (Sq. Ft.) Principal Use
- - -------- ---------- -------------- -------------
<S> <C> <C> <C>
Altavista, Virginia -- 108,000 Motor manufacturing
Blytheville, Arkansas 1998 plus options 114,000 Ballast manufacturing
to 2008
6
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<CAPTION>
Approximate
Location Lease Term Size (Sq. Ft.) Principal Use
- - -------- ---------- -------------- -------------
<S> <C> <C> <C>
Bridgeport, Connecticut 1999 100,000 Capacitor manufacturing
Gainsborough -- 44,000 Motor manufacturing
Lincolnshire,
England
Gallman, Mississippi 1999 plus options 130,000 Wire mill
to 2073
Goodland, Indiana -- 75,000 Component transformer manufacturing
Huntington, Indiana -- 211,000 Converter, power supply and
specialty ballast manufacturing
Huntington, Indiana -- 54,000 Technology center
Huntsville, Alabama -- 75,000 Electronic ballast manufacturing
Juarez, Mexico Various 150,000 Motor manufacturing
LaVergne, Tennessee 1999 188,000 Distribution center
Lexington, Tennessee -- 449,000 Motor and generator manufacturing
Mainaschaff, Germany -- 60,331 Administrative and ballast, ignition
coil and transformer manufacturing
Mainaschaff, Germany Various 209,257 Ballast, ignition coil and
transformer manufacturing
Matamoros, Mexico Various 251,000 Ballast, wiring harness and
transformer manufacturing
McMinnville, Tennessee Options to 2021 275,000 Motor manufacturing
Mendenhall, Mississippi 1997 251,600 Fluorescent ballast assembly and
distribution center
Milan, Italy -- 53,000 Ballast manufacturing
7
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<CAPTION>
Approximate
Location Lease Term Size (Sq. Ft.) Principal Use
- - -------- ---------- -------------- -------------
<S> <C> <C> <C>
Nashville, Tennessee 1996 plus option 29,000 Corporate headquarters
to 2001
New Berlin, Wisconsin 2008 115,000 Drives and systems manufacturing
Owosso, Michigan -- 198,000 Motor manufacturing
Ripley, Tennessee -- 84,000 Motor manufacturing
St. Louis, Missouri 1995 plus options 106,000 Administration, marketing and
to 2001 engineering personnel
Terranuova Bracciolini, -- 149,000 Power supply manufacturing
Italy
</TABLE>
The Company believes its facilities are in satisfactory condition and
are adequate for its present operations.
ITEM 3. LEGAL PROCEEDINGS.
PENSION MATTERS. Primarily in 1985, the Company entered into
agreements with Executive Life Insurance Company ("ELIC") under which ELIC
assumed accrued pension obligations under certain defined benefit retirement
plans (collectively, the "Plan") pursuant to an annuity purchase agreement. The
Plan paid approximately $25.3 million to ELIC under these agreements. In April
1991, the California Insurance Commissioner (the "Commissioner") was named
conservator of ELIC and the Los Angeles Superior Court issued orders providing
that ELIC would pay 70% of the monthly payments due to the Company's retirees
under the ELIC annuity contract.
Under the terms of a plan of rehabilitation, which includes an
enhancement agreement between the Commissioner and the National Organization of
Life and Health Guaranty Associations ("NOLHGA") to augment the benefits paid to
ELIC policyholders, individual annuitants with account values up to $100,000
will receive 100% of their benefits, resulting in the payment by the
rehabilitated ELIC and NOLHGA of substantially all of the required payments to
the Company's employees who are covered under the ELIC annuities. The
rehabilitation plan provides for reimbursement of shortfall payments the Company
had been providing from April 1991 to July 1992 and, accordingly, the Company
has reflected the anticipated reimbursement in other assets in its consolidated
financial statements.
Effective on July 22, 1992, the Company entered into agreements
settling all claims with respect to two complaints filed by the Department of
Labor and by a labor union against various defendants, including the Company.
The settlement agreements required the Company, among other things, to provide
back-up insurance coverage in the form of an annuity purchased from an approved
insurance company equal to 30% of the obligation to existing retirees. The
Company also agreed to purchase additional coverage
8
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in the event payments from third parties to annuitants fall below 70% of the
required amount. If annuity benefits under the back-up annuity are not needed
to provide full benefit payments to covered annuitants, the proceeds will be
remitted to the Company on an annual basis. On July 31, 1992, the Company
purchased such an annuity from Metropolitan Life Insurance Company for
approximately $9.8 million. Such annuity will only be used for retiree benefits
in the event the combined payments by the rehabilitated ELIC and NOLHGA fall
below 100% of the required benefits.
The Company does not expect that the above transactions will have a
material effect on the Company. However, should ELIC (or its successor) and/or
NOLHGA fail to make required annuity payments in the future, such transactions
could have a material adverse effect upon the Company.
STOCKHOLDER LITIGATION. Four substantially identical actions were
filed in 1993 against the Company and certain of its directors and officers.
The four actions were subsequently consolidated in a single amended complaint.
The suit purports to be a class action on behalf of purchasers of the Company's
common stock from October 22, 1992 through August 6, 1993. The complaint
asserts claims under the federal securities laws, and alleges that the Company
artificially inflated the price of its common stock during the class period by
failing to disclose adverse developments in the Company's business. The
complaint does not specify the amount of damages sought.
In July 1994, counsel for the Company defendants and the plaintiffs
reached an agreement in principle to settle the litigation. Final approval of
the settlement and dismissal of plaintiffs' claims is subject to a hearing
following notice to the class and an opportunity for class members to file any
objections to the settlement. The Consolidated Statement of Income for the year
ended June 30, 1994 reflects a pretax charge of $2.65 million representing
estimated costs to the Company including legal fees associated with the
settlement.
OTHER LITIGATION. The Company is a party to a number of product
liability lawsuits, many of which involve fires allegedly caused by defective
ballasts. All of these cases are being defended by the Company's insurers, and
management believes that its insurers will bear all legal costs and liability,
except for applicable deductibles, and that none of these proceedings
individually or in the aggregate will have a material adverse effect on the
Company. In addition, the Company is frequently named in asbestos-related
lawsuits which do not involve material amounts individually or in the aggregate.
The Company is one of numerous defendants in a suit filed in 1993 by
multiple plaintiffs claiming damages for personal injuries allegedly resulting
from exposure to emissions allegedly generated by the defendants' manufacturing
facilities in or near Brownsville, Texas. The plaintiffs have not specified the
damages sought nor the particular emissions they contend implicate the Company.
Discovery is ongoing and a trial has been set for May 1995, and the Company
intends to defend the litigation vigorously. The Company is not able to
estimate the potential exposure or range of exposure.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
No matters were submitted to the stockholders of the Company during
the quarter ended July 3, 1994.
9
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.
The following table sets forth the high and low sales prices of the
Company's Common Stock during each quarter of fiscal 1993 and 1994:
<TABLE>
<CAPTION>
QUARTER ENDING HIGH LOW
----------------------------------------------------
<S> <C> <C>
September 30, 1993 19-3/8 12-1/2
December 31, 1993 15-1/2 12-1/4
March 31, 1994 16-3/4 13-1/8
June 30, 1994 15-1/8 13-1/8
September 30, 1992 15-1/2 13-3/8
December 31, 1992 18-1/8 12-3/8
March 31, 1993 25-1/2 17-1/8
June 30, 1993 24-1/2 18
</TABLE>
The Company's Common Stock is traded on the New York Stock Exchange
under the ticker symbol "MAG." As of the date of this Annual Report, there were
approximately 375 record holders of its Common Stock. No cash dividends have
been paid on the Common Stock.
The Company has not paid any cash dividends on its Common Stock and
does not anticipate paying cash dividends in the near future. The ability of
the Company to pay dividends on its Common Stock is restricted by provisions in
the Company's loan agreements. Under the Company's 1993 bank loan agreement,
the Company may not declare or pay any dividend or make any distribution with
respect to its capital stock if any event of default exists or would result from
such declaration and payment, and the amount of all such distributions may not
exceed, in the aggregate, 25% of Net Income (as defined in the bank loan
agreement) earned subsequent to June 30, 1993. Under the Indenture relating to
the Company's 10-3/4% Senior Subordinated Debentures due 1998, the Company may
not declare or pay any dividend or make any distribution with respect to its
Common Stock (other than through the issuance of Qualified Capital Stock (as
defined in the 10-3/4% Indenture and which includes Common Stock)), unless after
giving effect to such dividend or distribution, (i) the Company is in compliance
with the covenants contained in the 10-3/4% Indenture and (ii) the aggregate
amount of all Restricted Payments (as defined in the 10-3/4% Indenture) declared
or made after September 30, 1991 would not exceed (a) 50% of the aggregate
Consolidated Net Income (as defined in the 10-3/4% Indenture) of the Company
subsequent to September 30, 1991 minus 100% of the amount of any write-downs,
write-offs, other negative revaluations and other negative extraordinary charges
not otherwise reflected in such Consolidated Net Income, plus (b) the aggregate
Net Proceeds (as defined in the 10-3/4% Indenture) to the Company from the sale
of Qualified Capital Stock subsequent to September 30, 1991 (excluding any such
Net Proceeds from the sale of Qualified Capital Stock by a Company subsidiary
and excluding Qualified Capital Stock paid as a dividend on, or issued upon or
in exchange for other Capital Stock (as defined in the 10-3/4% Indenture) or as
a payment of interest on indebtedness of the Company), plus (c) $25 million.
10
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
The information called for by Part II, items 5, 6, 7 and 8, except for
information regarding the Company's dividend policy and related matters, which
is provided in response to Item 5, above, is hereby incorporated by reference
to the Financial Statements and the Report of Ernst & Young LLP, Independent
Auditors, of the Company's 1994 Annual Report to Stockholders.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
11
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth certain information regarding the
current executive officers of the Company.
Name Age Position
- - ---- --- --------
Andrew G. Galef 61 Chairman of the Board of Directors
and Chief Executive Officer
Antonio Canova 52 Executive Vice President
C. Ore Davis 52 Executive Vice President
Brian R. Dundon 48 Executive Vice President
Ronald W. Mathewson 57 Executive Vice President
David P. Reiland 40 Executive Vice President and
Chief Financial Officer
John P. Colling, Jr. 38 Vice President and Treasurer
Thomas R. Kmak 44 Vice President and Controller
Alexander Levran, Ph.D. 44 Vice President, Technology
Samuel A. Miley 37 Vice President, General Counsel
and Secretary
Robert W. Murray 55 Vice President, Communications and
Public Relations
John E. Steiner 50 Vice President, Strategic Planning
and Business Development
Dennis L. Hatfield 46 Assistant Vice President,
Facilities and Environmental
Affairs
Mr. Galef has been the Chairman of the Board of Directors of the
Company since July 1984 and became Chief Executive Officer in September 1993.
He also is the Chairman of the Nominating Committee. He has been President of
The Spectrum Group, Inc. ("Spectrum"), a private investment and management firm,
since its incorporation in California in 1978 and Chairman and Chief Executive
Officer since 1987. Prior to the formation of Spectrum, Mr. Galef was engaged
in providing professional interim management services to companies with serious
operating and financial problems. Mr. Galef is presently a director of Warnaco,
Inc., a diversified apparel manufacturer, and its parent, The Warnaco Group,
Inc., and a director of Petco Animal Supplies, Inc., a company operating
specialty pet food and supply stores, and was formerly Chairman of Aviall, Inc.,
a company providing aircraft engine refurbishment and related products and
services, and Exide Corporation, a manufacturer of automotive and industrial
batteries. Mr. Galef was the Chairman of GranTree Corporation when, during the
1990 fiscal year, it filed a voluntary petition for reorganization under Federal
bankruptcy law. Mr. Galef also serves as chairman or a director of other
privately held companies.
12
<PAGE>
Mr. Canova has been Executive Vice President of the Company since
October 1993 and has served as managing director of MagneTek S.p.A. in Italy
since March 1991. He held the same position with Plessey S.p.A. from 1988 until
March 1991 when Plessey S.p.A. was acquired by the Company. From 1969 to 1988,
Mr. Canova served as general manager of Plessey S.p.A.
Mr. Davis has been Executive Vice President since July 1993 and served
as Senior Vice President and Chief Administrative Officer from July 1989 until
July 1993. He joined the Company in May 1987 as Senior Vice President, Human
Resources. From August 1974 until April 1987 he held various positions with
Santa Fe Southern Pacific Corporation, a transportation, natural resources and
real estate company, most recently as Vice President, Human Resources.
Mr. Dundon has been Executive Vice President since July 1993 and
served as Executive Vice President of the Company's Motors and Controls business
from November 1986 when Century Electric, Inc. was acquired by the Company until
July 1993. Prior to the acquisition Mr. Dundon had been with Century Electric
since 1971, serving in various capacities.
Mr. Mathewson joined the Company in June 1994 as Executive Vice
President. For more than five years prior to joining the Company, Mr. Mathewson
served in various executive officer positions with Manville Corporation, a
diversified holding company, and its subsidiary Schuller International, a
fiberglass manufacturing company. Prior to that Mr. Mathewson was with General
Electric for twenty-seven years, including six years in general management
positions in its lamp business.
Mr. Reiland has been Executive Vice President since July 1993 and
Chief Financial Officer of the Company since July 1988. Mr. Reiland was also a
Senior Vice President of the Company from July 1989 until July 1993. He has
been Controller of the Company since August 1986 and was Vice President, Finance
from July 1987 to July 1989. Prior to joining the Company, Mr. Reiland was an
Audit Manager with Arthur Andersen & Co. where he served in various capacities
since 1980.
Mr. Colling has been Vice President of the Company since July 1990,
Treasurer of the Company since June 1989 and was assistant treasurer of the
Company from July 1987 to June 1989. Prior to that, Mr. Colling was the
assistant treasurer of Century Electric, where he served in various capacities
since August 1981.
Mr. Kmak has been Vice President and Operations Controller since
October 1993. Mr. Kmak was the vice president, finance of the Company's Motors
and Controls business from November 1986 when Century Electric was acquired by
the Company until July 1992 and served as vice president, operational finance of
the Company's Motors and Controls business from July 1992 until October 1993.
Prior to the acquisition Mr. Kmak had been with Century Electric since 1976,
serving in various capacities.
Dr. Levran joined the Company in July 1993 as Vice President,
Technology. From 1991 to June 1993, Dr. Levran was employed by EPE
Technologies, Inc., a subsidiary of Groupe Schneider, as Vice President of
Engineering and Technology with worldwide engineering responsibilities. From
1981 to 1991, he held various engineering management positions with Teledyne
Inet, a subsidiary of Teledyne, Inc., most recently as Vice President of
Engineering. Dr. Levran received his Ph.D. in electrical engineering from the
Polytechnic Institute of New York in 1981.
13
<PAGE>
Mr. Miley joined the Company in February 1990 as Vice President,
General Counsel and Secretary. Prior to that time, he was an attorney with the
law firms of Sheppard, Mullin, Richter & Hampton in Los Angeles, California
(March 1986 to January 1990) and Sidley & Austin in Chicago, Illinois (May 1982
to March 1986).
Mr. Murray joined the Company in April 1987 and currently serves as
the Vice President, Communications and Public Relations. From 1976 until April
1987 he held various positions with Whittaker Corporation, a diversified
aerospace manufacturing company, most recently as Vice President, Corporate
Communications.
Mr. Steiner joined the Company in September 1987 and since July 1994
has been the Vice President, Strategic Planning and Business Development. He
has also served as vice president of the Company's Drives and Magnetics business
since November 1993, as vice president and general manager of the Company's
Drive Systems business from October 1990 to November 1993 and as vice president,
marketing of the Company's Systems and Technology business from September 1987
to October 1990. Prior to joining the Company in 1987, Mr. Steiner had been
with Westinghouse Electric Corporation, an electrical products manufacturing
company, where he served in various capacities since 1967.
Mr. Hatfield joined the Company in August 1992 as Assistant Vice
President, Facilities and Environmental Affairs. Prior to that he was a
principal in the industrial environmental consulting firms of Patterson Schafer,
Inc. (February 1989 to December 1990) and Schafer Environmental Associates, Inc.
(March 1991 to July 1992). From July 1985 to February 1989, Mr. Hatfield served
as Director of Environmental Affairs of the Specialty Chemicals Group at Morton
Thiokol, Inc.
ITEM 11. EXECUTIVE COMPENSATION.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
The information called for by Part III, Items 10, 11, 12 and 13, is
hereby incorporated by reference to the Company's definitive Proxy Statement to
be mailed to Stockholders in October, 1994, except for information regarding the
Executive Officers of the Company, which is provided in response to Item 10,
above.
14
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) Index to Consolidated Financial Statements, Consolidated
Financial Statement Schedules and Exhibits:
Annual
Report To
Form 10-K Stockholders
Page Page
--------- ------------
1. Consolidated Financial Statements
Consolidated Statements of Income for 13
Years Ended June 30, 1994, 1993 and 1992
Consolidated Balance Sheets at June 30, 14
1994 and 1993
Consolidated Statements of Stockholders' 16
Equity for Years ended June 30, 1994, 1993
and 1992
Consolidated Statements of Cash Flows for 17
Years Ended June 30, 1994, 1993 and 1992
Notes to Consolidated Financial Statements 18
Report of Ernst & Young LLP, Independent 32
Auditors
2. Consolidated Financial Statement Schedules
V -- Property, Plant and Equipment F-1
VI -- Accumulated Depreciation and F-2
Amortization of Property, Plant and
Equipment
VIII -- Valuation and Qualifying Accounts F-3
All other schedules have been omitted since the required information
is not present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
Consolidated Financial Statements and related notes.
3. Exhibit Index E-1 - E-7
15
<PAGE>
The following exhibits are filed as part of this Annual Report
Form 10-K, or are incorporated herein by reference. Where an exhibit is
incorporated by reference, the number which precedes the description of the
exhibit indicates the documents to which the cross-reference is made.
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBERS DESCRIPTION OF EXHIBIT PAGE
- - ------- ---------------------- ------------
3.1 (1) Restated Certificate of Incorporation of
the Company, as filed with the Delaware
Secretary of State on November 21, 1989.
3.2 (1) By-laws of the Company, as amended and
restated.
3.3 (2) Amendment to By-laws of the Company.
4.1 (3) Indenture between MagneTek, Inc. and The
Bank of New York, as Trustee, dated as of
September 15, 1991 for $75,000,000 in
principal amount of 8% Convertible
Subordinated Notes due 2001 including
form of Note.
4.2 (4) Form of Indenture between MagneTek, Inc.
and Union Bank, as Trustee, dated as of
November 15, 1991 for $125,000,000 Senior
Subordinated Debentures Due 1998
including form of Debenture.
4.3 (5) Specimen Common Stock Certificate.
4.4 (6) Form of Indemnification and Release
Agreements entered into between the
Company, MagTek Partners and Champlain
Associates as of January 30, 1991.
10.1 (7) Registration Rights Agreement dated as of
April 29, 1991 among the Company, Andrew
G. Galef, Frank Perna, Jr. and the other
entities named therein.
10.2 (8) Executive Management Agreement dated as
of July 1, 1994, by and between the
Company and The Spectrum Group, Inc.
10.3 (9) Lease on Mendenhall, Mississippi facility
of Universal Manufacturing.
10.4 (9) Lease on Gallman, Mississippi facility of
Universal Manufacturing.
16
<PAGE>
10.5 (9) Lease on Bridgeport, Connecticut facility
of Universal Manufacturing.
10.6 (10) Lease on McMinnville, Tennessee facility
of Century Electric.
10.7 (11) Security Agreement dated March 1, 1993
between the Industrial Development Board
of the City of Huntsville (the
"Huntsville IDB") and the Company
("Huntsville Security Agreement.")
10.8 (11) Equipment Lease Agreement of even date
with the Huntsville Security Agreement
among the parties thereto.
10.9 (9) Environmental Agreement among the
Company, Universal Manufacturing
Corporation and Farley Northwest
Industries, Inc., as amended.
10.10 (9) Letter Agreement dated as of January 9,
1986, between the Company and Farley
Northwest Industries, Inc., pursuant to
Stock Purchase Agreement.
10.11 (9) Tax Agreement dated as of February 12,
1986, between the Company and Farley
Northwest Industries, Inc.
10.12 (9) Agreement dated as of January 9, 1986,
between the Company and Farley/Northwest
Industries, Inc. relating to the Totowa
facility.
10.13 (12) 1987 Stock Option Plan of MagneTek, Inc.
("1987 Plan").
10.14 (7) Amendments No. 1 and 2 to 1987 Plan.
10.15 (13) Amendments No. 3 and 4 to 1987 Plan.
10.16 (14) Amended and Restated Incentive Stock
Compensation Plan of MagneTek, Inc. (the
"1989 Plan"), including Amendment No. 1
thereto.
10.17 (15) Standard Terms and Conditions Relating to
Non-Qualified Stock Options, revised as
of October 23, 1991, pertaining to the
1987 Plan and the 1989 Plan.
10.18 (13) Amendment No. 2 to 1989 Plan.
17
<PAGE>
10.19 (12) Senior Executive Medical Expense
Reimbursement Plan for the Company.
10.20 (16) Stock Purchase Agreement dated as of
January 9, 1986, between the Company and
Farley/Northwest Industries, Inc., with
list of omitted exhibits and schedules.
10.21 (16) Stock Purchase Agreement dated as of
June 20, 1986, between the Company and
Better Coil and Transformer Corporation,
with list of omitted exhibits.
10.22 (17) Purchase Agreement dated as of
October 22, 1986, by and among the
Company, Century and certain
Securityholders.
10.23 (18) Purchase Agreement dated as of
December 15, 1986, between the Company
and all the remaining Securityholders of
Century.
10.24 (18) Asset Purchase Agreement dated as of
December 30, 1986, between the Company
and Universal Electric.
10.25 (18) Agreement for the Sale of Stock dated as
of December 30, 1986, between the Company
and Cooper.
10.26 (19) Stock Purchase dated as of July 2, 1987,
by and between the Company, ALS, General
Power Corporation (Delaware), ALS
Electronics Corporation and the Selling
Securityholders.
10.27 (19) Stock Purchase Agreement dated as of
July 2, 1987, by and between Mr. John
W. Morse, ALS and General Power
Corporation (California).
10.28 (20) Lease of St. Louis, Missouri
administration, marketing and engineering
personnel facility dated January 1, 1988.
10.29 (20) Lease of Matamoros, Mexico fluorescent
ballast manufacturing facility dated
January 1, 1988.
10.30 (21) Lease and Agreement between the City of
Blytheville, Arkansas and the Company,
dated as of November 1, 1988.
18
<PAGE>
10.31 (7) First Supplemental Lease and Agreement
between City of Blytheville, Arkansas and
the Company dated as of December 1, 1989,
for the Blytheville, Arkansas facility.
10.32 (22) Lease of facility in New Berlin,
Wisconsin.
10.33 (7) Third Modification of Lease dated as of
December 31, 1990, for the New Berlin,
Wisconsin facility.
10.34 (23) Fourth Modification of Lease dated as of
February 12, 1993 for the New Berlin,
Wisconsin facility.
10.35 (5) Registration Rights and Stockholders
Holdback Agreement dated as of June 12,
1989, by and among the Company and the
other parties named therein.
10.36 (11) Loan Agreement dated as of April 28, 1993
among MagneTek, Inc., the Banks named
therein, Bank of America N.T. and S.A. as
Arranging Agent and Continental Bank N.A.
as Administrative Agent ("Bank
Agreement").
10.37 (11) Instructions and Consent dated as of
April 28, 1993 by and among the Majority
Lenders under the Credit Agreement to and
for the benefit of the Lenders' Agent,
Bankers Trust Company as Collateral Agent
under the Intercreditor Agreement and
Continental Bank N.A. as successor
Collateral Agent by virtue of the
Assignment.
10.38 (11) Assignment, Assumption and Acknowledgment
dated as of April 28, 1993 by and among
Bankers Trust Company as Collateral Agent
under the Intercreditor Agreement,
Bankers Trust Company as Agent for itself
and other lenders party to the Old Loan
Agreement, the holders of the Senior
Notes, Continental Bank N.A., the
Pledgors and the Guarantors ("Bank
Agreement").
10.39 (23) Amendments One through Six to Bank
Agreement.
10.40 (24) Loan Agreement dated July 21, 1992 among
MagneTek Europe N.V. and Dresdner
Bank A.G., et al.
19
<PAGE>
10.41 (25) Senior Note Purchase Agreement (without
exhibits) dated as of June 30, 1989, by
and among the Company and the Purchasers
listed therein ("Senior Note Agreement").
10.42 (7) First, Second and Third Amendments to
Senior Note Agreement.
10.43 (15) Fourth Amendment to Senior Note
Agreement.
10.44 (13) Fifth and Sixth Amendments to Senior Note
Agreement.
10.45 (23) Seventh Amendment to Senior Note
Agreement and Addendum thereto.
10.46 (26) Amendment to Equipment Lease Agreement
dated as of August 1, 1993 between The
Industrial Development Board of the City
of Huntsville (the "Huntsville IDB") and
the Company.
10.47 (26) First Supplemental Security Agreement
dated as of August 1, 1993 by and between
the Huntsville IDB and The CIT
Group/Equipment Financing, Inc. ("CIT").
10.48 (26) Second Amendment to Equipment Lease
Agreement dated as of October 1, 1993
between the Huntsville IDB and the
Company.
10.49 (26) Second Supplemental Security Agreement
dated as of October 1, 1993 by and
between the Huntsville IDB and CIT.
10.50 (23) Lease on Nashville, Tennessee
headquarters facility dated August, 1994.
10.51 (23) First Amendment dated August 28, 1991 and
Second Amendment dated February 5, 1993
to Lease on Lavergne, Tennessee facility.
10.52 (27) Stock Purchase Agreement dated as of
December 22, 1989, by and among
ABB Electric, Inc., the Company and
ABB Power Transmission, Inc.
10.53 (27) License Agreement by and between
ABB Transformers ABB and MagneTek
Electric, Inc.
20
<PAGE>
10.54 (7) 1991 Director Incentive Compensation Plan
of the Company.
10.55 (8) First Amendment to the 1991 Director
Incentive Compensation Plan of the
Company.
10.56 (13) 1991 Discretionary Director Incentive
Compensation Plan of the Company.
10.57 (27) Lease Agreement dated as of November 1,
1988 between the Huntsville IDB and
Burnett-Nickelson Investments ("Lease
Agreement") as to which the Registrant
succeeded to the lessee's obligations.
10.58 (28) First, Second and Third Amendments to
Lease Agreement.
10.59 (23) Fourth Amendment to Lease Agreement.
10.60 (28) Indenture dated as of November 1, 1988
relating to First Mortgage Industrial
Revenue Bonds (Burnett-Nickelson Project
Series 1988) between Huntsville IDB and
First Alabama Bank, as Trustee, relating
to the Huntsville facility (the
"Indenture").
10.61 (28) First, Second and Third Supplemental
Indentures to the Indenture.
10.62 (23) Fourth Supplemental Indenture to the
Indenture.
10.63 (28) Bond Guaranty Agreement between MagneTek,
Inc., as Guarantor and First Alabama Bank
dated as of February 1, 1993 relating to
the lease (see Item 10.72).
10.64 (26) Severance and General Release Agreement
between the Company and Frank Perna, Jr.
dated as of October 27, 1993.
10.65 (26) Severance and General Release Agreement
between the Company and John R. Scherzi
dated as of July 30, 1993.
10.66 (23) Restricted Stock Agreement pursuant to
1989 Plan entered into between Ronald W.
Mathewson and the Company as of July 27,
1994.
10.67 (25) Lease on Lavergne, Tennessee facility.
21
<PAGE>
13 (23) 1994 Annual Report to Stockholders (pp. 8-32).
22 (13) Subsidiaries of the Company, as revised.
23 (23) Consent of Ernst & Young LLP, independent
auditors.
27 (23) Financial Data Schedule.
____________________
(1) Previously filed with the Registration Statement on Form S-3 filed on
August 1, 1991, Commission File No. 33-41854.
(2) Previously filed with Form 8-K dated October 27, 1993.
(3) Previously filed with Form 10-Q for quarter ended September 30, 1991.
(4) Previously filed with Amendment No. 1 to Registration Statement filed on
November 8, 1991, Commission File NO. 43-43856.
(5) Previously filed with Amendment No. 1 to Registration Statement filed on
May 10, 1989.
(6) Previously filed with Form 8-K dated January 30, 1991.
(7) Previously filed with Form 10-K for Fiscal Year ended June 30, 1991.
(8) Previously filed with Form 10-Q for quarter ended March 31, 1994.
(9) Previously filed with Amendment No. 1 to Registration Statement filed on
February 14, 1986.
(10) Previously filed with Post-Effective Amendment No. 1 to Registration
Statement, filed on August 3, 1987.
(11) Previously filed with Form 10-Q for quarter ended March 31, 1993.
(12) Previously filed with Form 10-K for Fiscal Year ended June 30, 1987.
(13) Previously filed with Form 10-K for Fiscal Year ended June 30, 1992.
(14) Previously filed with Form S-8 Registration Statement filed on
December 13, 1991.
(15) Previously filed with Form 10-Q for quarter ended December 31, 1991.
(16) Previously filed with Form 10-K for Fiscal Year ended June 30, 1986.
(17) Previously filed with Form 10-Q for quarter ended September 30, 1986.
(18) Previously filed with Form 8-K dated December 30, 1986.
(19) Previously filed with Form 8-K dated July 20, 1987.
22
<PAGE>
(20) Previously filed with Form 10-K for Fiscal Year ended July 3, 1988.
(21) Previously filed with the Registration Statement filed on April 18,1989.
(22) Previously filed with the Registration Statement filed on May 3, 1985.
(23) Filed herewith.
(24) Previously filed with Form 10-Q for quarter ended September 30, 1992.
(25) Previously filed with Form 10-K for Fiscal Year ended July 2, 1989.
(26) Previously filed with Form 10-Q for quarter ended September 30, 1993.
(27) Previously filed with Form 8-K dated January 5, 1990.
(28) Previously filed with Form 10-K for fiscal year ended June 27, 1993.
(b) Reports on Form 8-K:
The Company filed no Reports on Form 8-K during the last quarter of
the 1994 fiscal year.
(c) Refer to (a) 3 above.
(d) Refer to (a) 2 above.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of Los
Angeles, State of California, on the 14th day of October, 1994.
MagneTek, Inc.
(Registrant)
/s/ ANDREW G. GALEF
----------------------------------------
Andrew G. Galef
Chairman of the Board and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
--------- ----- ----
/s/ ANDREW G. GALEF Chairman of the Board, October 14, 1994
- - ---------------------------- Chief Executive Officer and
Andrew G. Galef Director (Principal
Executive Officer)
/s/ DAVID P. REILAND Chief Financial Officer October 14, 1994
- - ---------------------------- (Principal Financial and
David P. Reiland Accounting Officer)
/s/ CHARLES H. DEAN, JR. Director October 14, 1994
- - ----------------------------
Charles H. Dean, Jr.
/s/ PAUL J. KOFMEHL Director October 14, 1994
- - ----------------------------
Paul J. Kofmehl
/s/ A. CARL KOTCHIAN Director October 14, 1994
- - ----------------------------
A. Carl Kotchian
/s/ CROCKER NEVIN Director October 14, 1994
- - ----------------------------
Crocker Nevin
Director October 14, 1994
- - ----------------------------
Frank Perna, Jr.
/s/ KENNETH A. RUCK Director October 14, 1994
- - ----------------------------
Kenneth A. Ruck
24
<PAGE>
Schedule V
MAGNETEK, INC.
PROPERTY, PLANT AND EQUIPMENT
Years ended June 30, 1992, 1993 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Balance at Transfers, Balance
beginning Additions Retirements at end
of year at cost or sales Other (a) of year
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JUNE 30, 1992
Land $3,212 $196 $0 $1,927 $5,335
Buildings and
improvements 44,457 2,737 (293) 6,887 53,788
Machinery and
equipment 201,022 25,077 (3,228) 22,193 245,064
-------------------------------------------------------------------------
$248,691 $28,010 ($3,521) $31,007 $304,187
-------------------------------------------------------------------------
-------------------------------------------------------------------------
JUNE 30, 1993
Land $5,335 $358 ($230) ($1,791) $3,672
Buildings and
improvements 53,788 10,453 (1,934) (4,308) 57,999
Machinery and
equipment 245,064 47,039 (14,224) (523) 277,356
-------------------------------------------------------------------------
$304,187 $57,850 ($16,388) ($6,622) $339,027
-------------------------------------------------------------------------
-------------------------------------------------------------------------
JUNE 30, 1994
Land $3,672 $589 $0 ($228) $4,033
Buildings and
improvements 57,999 5,595 (209) 126 63,511
Machinery and
equipment 277,356 37,154 (4,365) 1,519 311,664
-------------------------------------------------------------------------
$339,027 $43,338 ($4,574) $1,417 $379,208
-------------------------------------------------------------------------
-------------------------------------------------------------------------
<FN>
Note:
(a) Represents property, plant and equipment of acquired companies and
adjustments to various opening balance sheets and Foreign Translation
Adjustments.
</TABLE>
F-1
<PAGE>
Schedule VI
MAGNETEK, INC.
ACCUMULATED DEPRECIATION AND AMORTIZATION OF
PROPERTY, PLANT AND EQUIPMENT
Years ended June 30, 1992, 1993 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Balance at Transfers, Balance
beginning Depreciation Retirements at end
of year Expense or sales Other (a) of year
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JUNE 30, 1992
Buildings and
improvements $10,542 $3,684 ($138) ($449) $13,639
Machinery and
equipment 85,056 23,636 (2,393) 2,398 108,697
-------------------------------------------------------------------------
$95,598 $27,320 ($2,531) $1,949 $122,336
-------------------------------------------------------------------------
-------------------------------------------------------------------------
JUNE 30, 1993
Buildings and
improvements $13,639 $3,743 ($570) ($200) $16,612
Machinery and
equipment 108,697 25,924 (5,341) (2,271) 127,009
-------------------------------------------------------------------------
$122,336 $29,667 ($5,911) ($2,471) $143,621
-------------------------------------------------------------------------
-------------------------------------------------------------------------
JUNE 30, 1994
Buildings and
improvements $16,612 $3,012 ($206) ($1,376) $18,042
Machinery and
equipment 127,009 29,277 (3,541) 1,376 154,121
-------------------------------------------------------------------------
$143,621 $32,289 ($3,747) $0 $172,163
-------------------------------------------------------------------------
-------------------------------------------------------------------------
<FN>
Note:
(a) Represents primarily foreign translation adjustments and reclassifications
between gross property and Accumulated Depreciation.
</TABLE>
F-2
<PAGE>
Schedule VIII
MAGNETEK, INC.
VALUATION AND QUALIFYING ACCOUNTS
Years ended June 30, 1992, 1993 and 1994
(Amounts in thousands)
<TABLE>
<CAPTION>
Balance at Additions Deductions Balance
beginning charged to from at end
of year earnings Allowance Other (a) of year
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
JUNE 30, 1992
Allowance for
doubtful
receivables $3,358 $3,288 ($3,204) $521 $3,963
JUNE 30, 1993
Allowance for
doubtful
receivables $3,963 $3,070 ($3,294) $247 $3,986
JUNE 30, 1994
Allowance for
doubtful
receivables $3,986 $2,878 ($2,980) $861 $4,745
<FN>
(a) Represents primarily opening allowance for doubtful accounts balances of
acquired companies and Foreign Translation Adjustments.
</TABLE>
LC942340.064
F-3
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this Annual Report
Form 10-K, or are incorporated herein by reference. Where an exhibit is
incorporated by reference, the number which precedes the description of the
exhibit indicates the documents to which the cross-reference is made.
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBERS DESCRIPTION OF EXHIBIT PAGE
- - ------- ---------------------- ------------
3.1 (1) Restated Certificate of Incorporation of the
Company, as filed with the Delaware
Secretary of State on November 21, 1989.
3.2 (1) By-laws of the Company, as amended and
restated.
3.3 (2) Amendment to By-laws of the Company.
4.1 (3) Indenture between MagneTek, Inc. and The
Bank of New York, as Trustee, dated as of
September 15, 1991 for $75,000,000 in
principal amount of 8% Convertible
Subordinated Notes due 2001 including form
of Note.
4.2 (4) Form of Indenture between MagneTek, Inc. and
Union Bank, as Trustee, dated as of
November 15, 1991 for $125,000,000 Senior
Subordinated Debentures Due 1998 including
form of Debenture.
4.3 (5) Specimen Common Stock Certificate.
4.4 (6) Form of Indemnification and Release
Agreements entered into between the Company,
MagTek Partners and Champlain Associates as
of January 30, 1991.
10.1 (7) Registration Rights Agreement dated as of
April 29, 1991 among the Company, Andrew
G. Galef, Frank Perna, Jr. and the other
entities named therein.
10.2 (8) Executive Management Agreement dated as of
July 1, 1994, by and between the Company and
The Spectrum Group, Inc.
10.3 (9) Lease on Mendenhall, Mississippi facility of
Universal Manufacturing.
E-1
<PAGE>
10.4 (9) Lease on Gallman, Mississippi facility of
Universal Manufacturing.
10.5 (9) Lease on Bridgeport, Connecticut facility of
Universal Manufacturing.
10.6 (10) Lease on McMinnville, Tennessee facility of
Century Electric.
10.7 (11) Security Agreement dated March 1, 1993
between the Industrial Development Board of
the City of Huntsville (the "Huntsville
IDB") and the Company ("Huntsville Security
Agreement.")
10.8 (11) Equipment Lease Agreement of even date with
the Huntsville Security Agreement among the
parties thereto.
10.9 (9) Environmental Agreement among the Company,
Universal Manufacturing Corporation and
Farley Northwest Industries, Inc., as
amended.
10.10 (9) Letter Agreement dated as of January 9,
1986, between the Company and Farley
Northwest Industries, Inc., pursuant to
Stock Purchase Agreement.
10.11 (9) Tax Agreement dated as of February 12, 1986,
between the Company and Farley Northwest
Industries, Inc.
10.12 (9) Agreement dated as of January 9, 1986,
between the Company and Farley/Northwest
Industries, Inc. relating to the Totowa
facility.
10.13 (12) 1987 Stock Option Plan of MagneTek, Inc.
("1987 Plan").
10.14 (7) Amendments No. 1 and 2 to 1987 Plan.
10.15 (13) Amendments No. 3 and 4 to 1987 Plan.
10.16 (14) Amended and Restated Incentive Stock
Compensation Plan of MagneTek, Inc. (the
"1989 Plan"), including Amendment No. 1
thereto.
10.17 (15) Standard Terms and Conditions Relating to
Non-Qualified Stock Options, revised as of
October 23, 1991, pertaining to the 1987
Plan and the 1989 Plan.
10.18 (13) Amendment No. 2 to 1989 Plan.
E-2
<PAGE>
10.19 (12) Senior Executive Medical Expense
Reimbursement Plan for the Company.
10.20 (16) Stock Purchase Agreement dated as of
January 9, 1986, between the Company and
Farley/Northwest Industries, Inc., with list
of omitted exhibits and schedules.
10.21 (16) Stock Purchase Agreement dated as of
June 20, 1986, between the Company and
Better Coil and Transformer Corporation,
with list of omitted exhibits.
10.22 (17) Purchase Agreement dated as of October 22,
1986, by and among the Company, Century and
certain Securityholders.
10.23 (18) Purchase Agreement dated as of December 15,
1986, between the Company and all the
remaining Securityholders of Century.
10.24 (18) Asset Purchase Agreement dated as of
December 30, 1986, between the Company and
Universal Electric.
10.25 (18) Agreement for the Sale of Stock dated as of
December 30, 1986, between the Company and
Cooper.
10.26 (19) Stock Purchase dated as of July 2, 1987, by
and between the Company, ALS, General Power
Corporation (Delaware), ALS Electronics
Corporation and the Selling Securityholders.
10.27 (19) Stock Purchase Agreement dated as of July 2,
1987, by and between Mr. John W. Morse, ALS
and General Power Corporation (California).
10.28 (20) Lease of St. Louis, Missouri administration,
marketing and engineering personnel facility
dated January 1, 1988.
10.29 (20) Lease of Matamoros, Mexico fluorescent
ballast manufacturing facility dated
January 1, 1988.
10.30 (21) Lease and Agreement between the City of
Blytheville, Arkansas and the Company, dated
as of November 1, 1988.
10.31 (7) First Supplemental Lease and Agreement
between City of Blytheville, Arkansas and
the Company dated as of December 1, 1989,
for the Blytheville, Arkansas facility.
E-3
<PAGE>
10.32 (22) Lease of facility in New Berlin, Wisconsin.
10.33 (7) Third Modification of Lease dated as of
December 31, 1990, for the New Berlin,
Wisconsin facility.
10.34 (23) Fourth Modification of Lease dated as of
February 12, 1993 for the New Berlin,
Wisconsin facility.
10.35 (5) Registration Rights and Stockholders
Holdback Agreement dated as of June 12,
1989, by and among the Company and the other
parties named therein.
10.36 (11) Loan Agreement dated as of April 28, 1993
among MagneTek, Inc., the Banks named
therein, Bank of America N.T. and S.A. as
Arranging Agent and Continental Bank N.A. as
Administrative Agent ("Bank Agreement").
10.37 (11) Instructions and Consent dated as of
April 28, 1993 by and among the Majority
Lenders under the Credit Agreement to and
for the benefit of the Lenders' Agent,
Bankers Trust Company as Collateral Agent
under the Intercreditor Agreement and
Continental Bank N.A. as successor
Collateral Agent by virtue of the
Assignment.
10.38 (11) Assignment, Assumption and Acknowledgment
dated as of April 28, 1993 by and among
Bankers Trust Company as Collateral Agent
under the Intercreditor Agreement, Bankers
Trust Company as Agent for itself and other
lenders party to the Old Loan Agreement, the
holders of the Senior Notes, Continental
Bank N.A., the Pledgors and the Guarantors
("Bank Agreement").
10.39 (23) Amendments One through Six to Bank
Agreement.
10.40 (24) Loan Agreement dated July 21, 1992 among
MagneTek Europe N.V. and Dresdner Bank A.G.,
et al.
10.41 (25) Senior Note Purchase Agreement (without
exhibits) dated as of June 30, 1989, by and
among the Company and the Purchasers listed
therein ("Senior Note Agreement").
10.42 (7) First, Second and Third Amendments to Senior
Note Agreement.
E-4
<PAGE>
10.43 (15) Fourth Amendment to Senior Note Agreement.
10.44 (13) Fifth and Sixth Amendments to Senior Note
Agreement.
10.45 (23) Seventh Amendment to Senior Note Agreement
and Addendum thereto.
10.46 (26) Amendment to Equipment Lease Agreement dated
as of August 1, 1993 between The Industrial
Development Board of the City of Huntsville
(the "Huntsville IDB") and the Company.
10.47 (26) First Supplemental Security Agreement dated
as of August 1, 1993 by and between the
Huntsville IDB and The CIT Group/Equipment
Financing, Inc. ("CIT").
10.48 (26) Second Amendment to Equipment Lease
Agreement dated as of October 1, 1993
between the Huntsville IDB and the Company.
10.49 (26) Second Supplemental Security Agreement dated
as of October 1, 1993 by and between the
Huntsville IDB and CIT.
10.50 (23) Lease on Nashville, Tennessee headquarters
facility dated August, 1994.
10.51 (23) First Amendment dated August 28, 1991 and
Second Amendment dated February 5, 1993 to
Lease on Lavergne, Tennessee facility.
10.52 (27) Stock Purchase Agreement dated as of
December 22, 1989, by and among
ABB Electric, Inc., the Company and
ABB Power Transmission, Inc.
10.53 (27) License Agreement by and between
ABB Transformers ABB and MagneTek Electric,
Inc.
10.54 (7) 1991 Director Incentive Compensation Plan of
the Company.
10.55 (8) First Amendment to the 1991 Director
Incentive Compensation Plan of the Company.
10.56 (13) 1991 Discretionary Director Incentive
Compensation Plan of the Company.
E-5
<PAGE>
10.57 (27) Lease Agreement dated as of November 1, 1988
between the Huntsville IDB and Burnett-
Nickelson Investments ("Lease Agreement") as
to which the Registrant succeeded to the
lessee's obligations.
10.58 (28) First, Second and Third Amendments to Lease
Agreement.
10.59 (23) Fourth Amendment to Lease Agreement.
10.60 (28) Indenture dated as of November 1, 1988
relating to First Mortgage Industrial
Revenue Bonds (Burnett-Nickelson Project
Series 1988) between Huntsville IDB and
First Alabama Bank, as Trustee, relating to
the Huntsville facility (the "Indenture").
10.61 (28) First, Second and Third Supplemental
Indentures to the Indenture.
10.62 (23) Fourth Supplemental Indenture to the
Indenture.
10.63 (28) Bond Guaranty Agreement between MagneTek,
Inc., as Guarantor and First Alabama Bank
dated as of February 1, 1993 relating to the
lease (see Item 10.72).
10.64 (26) Severance and General Release Agreement
between the Company and Frank Perna, Jr.
dated as of October 27, 1993.
10.65 (26) Severance and General Release Agreement
between the Company and John R. Scherzi
dated as of July 30, 1993.
10.66 (23) Restricted Stock Agreement pursuant to 1989
Plan entered into between Ronald W.
Mathewson and the Company as of July 27,
1994.
10.67 (25) Lease on Lavergne, Tennessee facility.
13 (23) 1994 Annual Report to Stockholders (pp. 8-32).
22 (13) Subsidiaries of the Company, as revised.
23 (23) Consent of Ernst & Young LLP, independent
auditors.
27 (23) Financial Data Schedule.
E-6
<PAGE>
___________________
(1) Previously filed with the Registration Statement on Form S-3 filed on
August 1, 1991, Commission File No. 33-41854.
(2) Previously filed with Form 8-K dated October 27, 1993.
(3) Previously filed with Form 10-Q for quarter ended September 30, 1991.
(4) Previously filed with Amendment No. 1 to Registration Statement filed on
November 8, 1991, Commission File NO. 43-43856.
(5) Previously filed with Amendment No. 1 to Registration Statement filed on
May 10, 1989.
(6) Previously filed with Form 8-K dated January 30, 1991.
(7) Previously filed with Form 10-K for Fiscal Year ended June 30, 1991.
(8) Previously filed with Form 10-Q for quarter ended March 31, 1994.
(9) Previously filed with Amendment No. 1 to Registration Statement filed on
February 14, 1986.
(10) Previously filed with Post-Effective Amendment No. 1 to Registration
Statement, filed on August 3, 1987.
(11) Previously filed with Form 10-Q for quarter ended March 31, 1993.
(12) Previously filed with Form 10-K for Fiscal Year ended June 30, 1987.
(13) Previously filed with Form 10-K for Fiscal Year ended June 30, 1992.
(14) Previously filed with Form S-8 Registration Statement filed on December 13,
1991.
(15) Previously filed with Form 10-Q for quarter ended December 31, 1991.
(16) Previously filed with Form 10-K for Fiscal Year ended June 30, 1986.
(17) Previously filed with Form 10-Q for quarter ended September 30, 1986.
(18) Previously filed with Form 8-K dated December 30, 1986.
(19) Previously filed with Form 8-K dated July 20, 1987.
(20) Previously filed with Form 10-K for Fiscal Year ended July 3, 1988.
(21) Previously filed with the Registration Statement filed on April 18,1989.
(22) Previously filed with the Registration Statement filed on May 3, 1985.
(23) Filed herewith.
(24) Previously filed with Form 10-Q for quarter ended September 30, 1992.
(25) Previously filed with Form 10-K for Fiscal Year ended July 2, 1989.
(26) Previously filed with Form 10-Q for quarter ended September 30, 1993.
(27) Previously filed with Form 8-K dated January 5, 1990.
(28) Previously filed with Form 10-K for fiscal year ended June 27, 1993.
E-7
<PAGE>
EXHIBIT 10.34
FOURTH MODIFICATION OF LEASE
THIS AGREEMENT is made as of this 12th day of February, 1993 by and
between ALLIS-MILWAUKEE ASSOCIATES, a partnership, and STATE FARM LIFE INSURANCE
COMPANY, an Illinois corporation, hereinafter collectively referred to as
"Landlord", and MAGNETEK, INC., a Delaware corporation, hereinafter referred to
as "Tenant".
RECITALS
Under date of June 18, 1971, a predecessor of Landlord and a
predecessor of Tenant entered into a written lease for the premises (the "Leased
Premises") commonly known as 16555 West Ryerson Road in the City of New Berlin,
Wisconsin, as more particularly described in said lease. Said lease was amended
by a Modification of Lease dated December 30, 1971, and the commencement date
and expiration date of the initial term of said lease were set forth in a Short
Form Lease dated January 3, 1972. Said lease was further amended by instruments
dated May 22, 1973 and December 31, 1990. Said lease, as modified, is
hereinafter referred to as the "Lease". All of the landlord's interest in the
Lease is now vested in Landlord and all of the tenant's interest in the Lease is
now vested in Tenant. The term of the Lease expires on March 31, 1993.
Landlord and Tenant now desire to further extend the term of the Lease and to
modify certain of the terms and provisions of the Lease, all as more
particularly hereinafter set forth.
AGREEMENT
In consideration of the foregoing, the covenants and agreements
hereinafter contained, and other good and valuable consideration, the parties
hereto agree as follows:
1. Landlord shall construct an addition (the "Addition") to the
existing building on the Leased Premises and construct certain improvements to
said building in accordance with the plans and specifications identified on
Exhibit A attached hereto. Landlord's work as aforesaid is hereinafter referred
to as the "Project". Promptly after execution of this Agreement, Landlord shall
make application for all required permits from the appropriate governmental
authorities for the construction of the Project and shall use its good faith
efforts to secure such permits. Notwithstanding the foregoing, in the event that
Landlord has not obtained such permits within one hundred fifty (150) days after
the date of this Agreement, then either party shall have the right to terminate
and cancel this Agreement by written notice to the other party, in which event
neither party shall have any further rights or obligations to the other
hereunder and the Lease shall continue in full force and effect in accordance
with its terms until the expiration thereof. Tenant shall have the right to
review all bids received by Landlord for construction of the Project and, if
Tenant objects to the awarding of any bid as proposed by Landlord, to direct
that any portion of the work be rebid by written notice to Landlord received
within five (5) working days after Tenant's receipt of the bid. After Landlord
has obtained all necessary permits, Landlord shall diligently proceed with the
construction of the Project. Landlord's work on account of construction of the
Project shall be done in a good and workmanlike manner in compliance with the
plans and specifications identified on Exhibit A and all building codes and
regulations. Landlord shall keep Tenant informed on a regular basis as to the
progress of construction and Tenant shall at all times have access to the work
and the plans and specifications to inspect and review the same provided that
<PAGE>
any inspection or entry by Tenant shall not unreasonably interfere with or
unduly delay Landlord's construction work, and Tenant waives all claims against
Landlord for personal injury or property damages, and indemnifies and holds
Landlord harmless from all claims, liabilities, damages and expenses (including
reasonable attorneys' fees), resulting from any such inspection or entry.
Tenant expressly grants Landlord, its employees, agents and contractors the
right to enter the Leased Premises for construction of the Project. Tenant
expressly acknowledges that the construction work may result in dust, debris and
noise which may inconvenience Tenant and its employees and invitees and disrupt
Tenant's business operations in the Leased Premises. Landlord shall use
reasonable means to minimize such inconvenience and disruption, and Tenant
agrees that Landlord shall not be liable for any such inconvenience and
disruption, nor shall the same constitute an actual or constructive eviction of
Tenant or entitle Tenant to any deduction or offset in the payment of the rent
and other charges due pursuant to the terms of the Lease, as modified herein.
Tenant agrees to accept possession of the Leased Premises upon the date (the
"Project Completion Date") that Landlord advises Tenant in writing that the
Project has been substantially completed and from and after such date, the
Addition shall be deemed a part of the Leased Premises demised pursuant to the
Lease and shall be subject to all of the terms, covenants and provisions of the
Lease, as modified herein. Substantial completion, as used herein, shall mean
the issuance by the municipality of an occupancy permit and delivery of same to
Tenant. Within ten (10) days after the Project Completion Date, Tenant may
inspect the Project and generate a punch list of those portions of the work
which, in Tenant's reasonable estimation, are incomplete or not substantially in
conformance with the plans and specifications and Landlord shall thereafter
complete or remedy the same within a reasonable period of time after Landlord's
receipt of said punch list. By occupying the Addition, Tenant shall thereby
conclusively be deemed to have accepted the construction work performed by
Landlord and acknowledged that the Addition is in the condition required by this
Agreement except for the items listed on Tenant's punch list. Landlord further
agrees that it shall promptly repair and/or replace any defective workmanship
and/or materials of the Project of which Tenant advises Landlord in writing
within one (1) year from the Project Completion Date. Landlord shall assign to
Tenant any guarantees or warranties received by Landlord from the general
contractor and any subcontractor, supplier or materialmen with respect to the
construction of the Project. Except as specifically provided in this paragraph,
Landlord shall not be required to remodel, recondition, improve, repair or
replace the building and improvements located on the Leased Premises or any
item, facility or property located therein.
2. Landlord shall pay all "hard" and "soft" costs incurred by
Landlord for construction of the Project (the "Project Construction Costs")
provided that such costs do not exceed $2,907,464.00. The Project Construction
shall include, but are not limited to, all sums payable under the construction
contract for the Project and all other costs incurred for any labor and/or
material in connection with construction of the Project, sales, use and similar
taxes relating to the construction, the providing of utilities to the Project
during construction, the obtaining of all permits for the Project, legal and
accounting fees, fees and expenses for architectural and design services,
engineers' fees, surveying expenses and the costs of obtaining any soil tests,
builder's all-risk insurance during the period of construction, interest fees
and costs incurred by Landlord for the construction loan and permanent loan to
finance construction of the Project. Project Construction Costs shall
2
<PAGE>
be reduced by any credits, rebates or refunds received by Landlord in connection
with the construction of the Project including an estimated credit of $15,000.00
from Wisconsin Electric Power Company. If the Project Construction Costs exceed
$2,907,464.00, then the excess shall be paid by Tenant to Landlord within ten
(10) days after receipt by Tenant of Landlord's bill therefor together with
evidence of such costs.
3. The term of the Lease is hereby extended until the expiration of
the fifteenth (15th) Lease Year (as hereinafter defined) after the Project
Completion Date. Such extension of the term of the Lease shall be upon all of
the same terms, covenants, provisions and conditions as contained in the Lease,
except as expressly provided herein. As used herein, "Lease Year" shall mean a
period of twelve (12) full and consecutive calendar months. The initial Lease
Year shall begin on the Project Completion Date and end on the last day of the
month preceding the first anniversary of the Project Completion Date; provided,
however, if the Project Completion Date does not occur on the first day of a
calendar month, then the initial Lease Year shall end on the last day of the
month which contains the anniversary of the Project Completion Date. Each
succeeding Lease Year shall begin upon the termination of the preceding Lease
Year. The parties shall, at the request of either, execute and deliver an
instrument confirming the Project Completion Date and the expiration of the
extension period set forth in this paragraph 3 when determined.
4. Tenant shall have the option to extend the term of the Lease for
three (3) additional and consecutive periods of five (5) years each, the first
extension period commencing upon the expiration of the extension period set
forth in Paragraph 3 above, and the second and third extension periods
commencing on the expiration of the prior extension period. Each such option
shall be exercised only by Tenant giving Landlord written notice thereof which
is received by Landlord no later than twelve (12) months prior to the first day
of the extension period in question, provided, however, Tenant shall be entitled
to exercise the options granted herein and the term of the Lease shall, in fact,
be extended by reason of such exercise, only if the Lease is in full force and
effect and Tenant is not in default thereunder at the times set forth herein for
the exercise of the option and the commencement of the extension period. Time
shall be of the essence with respect to Tenant's notice(s) as aforesaid.
Tenant's failure to exercise any option granted herein in accordance with this
paragraph shall extinguish any subsequent options. In the event that the term
of the Lease is, in fact, extended pursuant to the foregoing, then any such
extension shall be upon all of the same terms and provisions contained in the
Lease, except that the annual basic rent payable by Tenant to Landlord during
each option period shall be as set forth in paragraph 5 below.
5. Commencing on April 1, 1993 and continuing thereafter throughout
the remainder of the term of the Lease, as extended herein, the annual basic
rent payable by Tenant shall be as follows:
3
<PAGE>
<TABLE>
<CAPTION>
Annual Monthly
Period Basic Rent Installments
------ ---------- ------------
<S> <C> <C>
4/1/93 to 9/30/93 $192,057.00 $16,004.75
10/1/93 to day prior
to Project
Completion Date 194,938.00 16,244.83
Project Completion Date
to end of the
4th Lease Year 400,142.00 33,345.17
Lease Years 5-8 436,155.00 36,346.23
Lease Years 9-12 475,409.00 39,617.39
Lease Years 13-16 518,195.00 43,182.96
Lease Years 17-20 564,833.00 47,069.42
Lease Years 21-24 615,668.00 51,305.67
Lease Years 25-28 671,078.00 55,923.18
Lease Years 29-30 731,475.00 60,956.27
</TABLE>
The basic rent is payable in advance on the first day of each calendar month
during such periods in successive monthly installments pursuant to the
foregoing.
6. In the event that at any time during the term of the Lease, as
the same is or may be extended herein, Tenant desires to develop a new facility
for the operation of Tenant's business in the State of Wisconsin, then Tenant
shall notify Landlord in writing thereof and Landlord shall have the right of
first refusal to develop such facility for Tenant. Tenant's notice to Landlord
shall specify Tenant's desire either (i) to acquire property for the
construction of a facility to be owned by Tenant or (ii) to lease a new facility
to be built to suit for Tenant. In the event that Tenant desires to acquire
property for the construction of a facility to be owned by Tenant, then Tenant
shall provide Landlord its goals and specifications for such new facility,
Landlord shall have the right to provide consulting services in connection with
the acquisition, zoning, construction and financing of such development and the
parties shall enter into a written agreement on terms mutually acceptable to
each party providing that Landlord shall furnish such services as may be
necessary to consummate such development and Tenant shall pay to Landlord a
usual and customary fee to be agreed upon by the parties therefor. In the event
that Tenant desires to lease a new facility to be built to suit for Tenant, then
Tenant shall provide Landlord with its goals and specifications for such
facility add Landlord shall have the right to enter into a new lease with Tenant
to construct a new facility for Tenant's use on land owned or acquired by
Landlord, on terms and conditions mutually acceptable to the parties. Landlord
and Tenant may enter into such other agreements with one another and/or with
third parties as may be necessary to accomplish the purpose set forth herein,
and the parties expressly agree that they shall at all times act and cooperate
with one another in good faith to enter into a mutually acceptable relationship.
The parties expressly acknowledge and agree that the provisions contained in
this Paragraph are a material consideration and inducement for Landlord to enter
into this Agreement and that since damages for breach of the provisions
contained herein will be difficult to ascertain, the provisions contained herein
shall be enforceable by injunction. The foregoing provisions shall survive the
expiration of the term of this Lease.
7. The second paragraph of paragraph 13 of the original Lease is
deleted. From and after the date hereof and continuing thereafter during the
entire Lease term, as the same is or may be extended herein, Tenant shall, at
its own cost and expense, carry commercial general public liability insurance
protecting Tenant, Landlord and the holder of any mortgage on the Leased
Premises (the "Mortgagee"), if any, and
4
<PAGE>
any other party designated by Landlord in an amount of not less than Three
Million Dollars ($3,000,000) combined single limit or such greater amount as may
be reasonably required by Landlord from time to time in accordance with prudent
real estate management practices. Such insurance shall include contractual
liability coverage for the indemnification obligations of Tenant contained in
the Lease, as modified herein. Such insurance shall be written as primary
policy coverage and not contributing with or in excess of any coverage which
Landlord may carry and shall be non-cancellable and non-amendable without thirty
(30) days written notice to all such parties. The original policies or
certificates thereof shall be furnished to Landlord with evidence of timely
payment of the premium therefor prior to the date hereof and not less than five
(5) days prior to the expiration of any coverage. Landlord may at any time and
from time to time inspect and/or copy any and all insurance policies required to
be procured by Tenant under the Lease, as modified herein.
8. Tenant hereby assigns, transfers and conveys to Landlord all of
Tenant's right, title and interest in and to the claim asserted by Tenant
against Winding Roof Company, Inc. with respect to work performed on the roof of
the building on the Leased Premises.
9. If Landlord shall fail to perform any covenant, term or condition
of the Lease, as amended herein, to be performed by Landlord, and if as a
consequence of such default, Tenant shall recover a money judgment against
Landlord, such judgment shall be satisfied only out of the proceeds of sale
received upon execution of such judgment and levied thereon against the right,
title, and interest of Landlord in the Leased Premises and out of rents or other
income from such property receivable by Landlord, or out of the consideration
received by Landlord from the sale or other disposition of all or any part of
Landlord's right, title and interest in the Leased Premises.
10. In the event Landlord desires to obtain mortgage financing and
Landlord's mortgagee or mortgagees request modifications or amendments to the
Lease, as amended herein, then Tenant, on demand, agrees to execute such
modifications or amendments as required. Notwithstanding the foregoing, Tenant
shall not be required to execute any modifications or amendments to the Lease
which shall modify the provisions of the Lease relating to the amount of rent
reserved, the size and location of the Leased Premises and the duration of the
term of the Lease or which shall otherwise materially increase Tenant's
obligations under the Lease or materially diminish Tenant's rights thereunder.
Tenant further agrees to furnish such financial information as may be required
or otherwise cooperate with Landlord's efforts in obtaining said mortgage
financing.
11. Except as expressly provided herein, all of the terms, provisions
and conditions of the Lease shall remain in full force and effect.
SIGNED AND SEALED as of the date first written above.
LANDLORD:
ALLIS-MILWAUKEE ASSOCIATES
By:
----------------------------
David Adashek, its agent and
attorney-in-fact
5
<PAGE>
STATE FARM LIFE INSURANCE
COMPANY
By:
----------------------------
Title:
-------------------------
By:
----------------------------
Title:
-------------------------
TENANT:
MAGNETEK, INC.
By:
----------------------------
Title:
-------------------------
6
<PAGE>
EXHIBIT A
Drawings entitled "Addition to and Remodeling of Existing Facility for MagneTek
Drives & Systems" identified as Proposal P-5083 consisting of fourteen (14)
sheets numbered, titled and with last revision date as follows: 1-Site
Plan-12/9/92; 2- Site Plan Grades-2/14/91; 3-Landscaping-12/9/92; 4-First
Floor*4/12/91; 4A-First Floor*-4/12/91; 5-Found. Plan- 12/2/92;
6-Elevations-l2/2/92; 7-Sections-4/1/91; 8-Sections- 4/10/91;
9-Sections-4/24/91; E1-First Floor-4/12/91; E2-First Floor*4/12/91; 4-First
Floor*-4/12/91; and 6-Elevations- 12/2/92, further indemnified as "Design/Build
MSI General".
Specifications in form of Proposal dated 12/9/92 from MSI General, Proposal
#5083C directed to MagneTek containing Section I (Two Story Office Addition pp.
1-17, inclusive); Section II (Refacing Existing Office Area pp. 1-5, inclusive);
Section III (Revise Shipping and Receiving Area pp. 1 and 2); Section IV (Revise
Area Between Existing Office and Plant pp. 1, 2 and 3); Bid Form (Request for
Final Bid Form with Alternatives and Checklists - 19 pages); Proposal Standards
(4 pages); and Room Finish and Door Schedule (9 pages).
* These sheets contain drawings for both the first and second floors.
<PAGE>
EXHIBIT 10.39
FIRST AMENDMENT
Dated as of November 22, 1993
To
LOAN AGREEMENT
Dated as of April 28, 1993
This FIRST AMENDMENT, dated as of November 22, 1993 (this "Amendment")
is entered into by and among MagneTek, Inc., a Delaware corporation (the
"Borrower") and each of the undersigned banks or financial institutions
(collectively, the "Banks" and individually, a "Bank"), Continental Bank N.A.,
as Administrative Agent and Bank of America National Trust and Savings
Association, as Arranging Agent (collectively the "Agents").
WHEREAS, the Borrower (i) has entered into a Loan Agreement, dated as
of April 28, 1993, by and among the Borrower, the Banks and the Agents (the
"Loan Agreement"), and (ii) now desires to amend the Loan Agreement in certain
respects.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I - AMENDMENTS
1.1 AMENDMENT TO COVENANTS. Sections 6.15, 6.16 and 6.17 of the Loan
Agreement are amended to read in their entirety as follows:
6.15 LEVERAGE RATIO. Permit the Leverage Ratio, as of the last day
of each Fiscal Quarter ending during a period or at the date described below, to
be greater than the ratio set forth opposite such period or date:
Period Ratio
------ -----
Closing Date through June 29, 1993 .82 to 1.00
June 30, 1993 through September 30, .80 to 1.00
1994
December 31, 1994 through March 31, .76 to 1.00
1995
June 30, 1995 through September 30, .72 to 1.00
<PAGE>
1995
December 31, 1995 .70 to 1.00
March 31, 1996 .67 to 1.00
June 30, 1996 and thereafter .65 to 1.00
6.16 INTEREST CHARGE COVERAGE. Permit Interest Charge Coverage, as
of the last day of each Fiscal Quarter ending during a period described below,
to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date through June 30, 1993 2.20 to 1.00
September 30, 1993 2.30 to 1.00 (1)
December 31, 1993 through June 30, 1.40 to 1.00
1994
September 30, 1994 1.70 to 1.00
December 31, 1994 2.00 to 1.00
March 31, 1995 2.20 to 1.00
June 30, 1995 2.30 to 1.00
September 30, 1995 and thereafter 2.40 to 1.00
6.17 FIXED CHARGE COVERAGE. Permit the Fixed Charge Coverage, as of
the last day of each Fiscal Quarter ending during a period described below, to
be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date through June 30, 1993 1.80 to 1.00
- - ---------------
(1) Waived by waiver letter dated September 20, 1993.
-2-
<PAGE>
September 30, 1993 1.35 to 1.00
December 31, 1993 through June 30, .78 to 1.00
1994
September 30, 1994 .95 to 1.00
December 31, 1994 1.10 to 1.00
March 31, 1995 and thereafter 1.20 to 1.00
1.2 AMENDMENT FEE. Forthwith upon this Amendment becoming effective
pursuant to SECTION 2.3 below, the Borrower agrees to pay to the Administrative
Agent, for the respective accounts of the Banks, pro rata according to their Pro
Rata Share of the Commitment, in immediately available funds, an amendment fee
equal to 0.15% of the Commitment.
ARTICLE II - GENERAL
2.1 REPRESENTATIONS AND WARRANTIES. To induce the Banks to enter
into this Amendment, the Borrower represents and warrants to the Agents and the
Banks that the representations and warranties contained in SECTIONS 4.1 (first
sentence), 4.2, 4.3, 4.11, 4.12 (but only with respect to Events of Default) and
4.14 of the Loan Agreement are true and correct as of the date hereof as though
such representations and warranties were made on the date hereof.
2.2 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts of this Amendment when taken together will be deemed to be but one
and the same Amendment.
2.3 EFFECTIVENESS. When counterparts of this Amendment executed by
the Borrower and by the Majority Banks shall have been lodged with the
Administrative Agent (or, in the case of any party other than the Borrower as to
which an executed counterpart shall not have been so lodged, the Administrative
Agent shall have received telegraphic, telex or other written confirmation of
execution of a counterpart hereof by such party),
-3-
<PAGE>
this Amendment shall become effective as of the date hereof and the
Administrative Agent shall so inform all of the parties hereto.
2.4 REAFFIRMATION. As herein amended or modified, the Loan Agreement
shall remain in full force and effect and is hereby ratified, approved and
confirmed in all respects.
2.5 DEFINITIONS. Terms used but not otherwise defined herein are
used herein as defined in the Loan Agreement. On and after the effective date
hereof, each reference in the Loan Agreement and the related documents to "Loan
Agreement," "this Agreement" or words of like import, shall unless the context
otherwise requires, be deemed to refer to the Loan Agreement as amended hereby.
2.7 COSTS AND EXPENSES. The Borrower agrees to pay all reasonable
fees and out-of-pocket costs and expenses of McDermott, Will & Emery as counsel
to the Administrative Agent in connection with the preparation of this
Amendment, all pursuant to itemized statement(s) to be submitted to the Borrower
by McDermott, Will & Emery.
2.8 BINDING AGREEMENT. This Amendment shall be binding upon the
Borrower, the Banks and the Agents and the respective successors and assigns of
the Banks and the Agents.
* * *
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BORROWER:
MAGNETEK, INC.
By: ______________________________
Name:
Title:
THE BANKS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: ______________________________
Name:
Title:
CONTINENTAL BANK N.A., as a Bank
By: ______________________________
Name:
Title:
CIBC INC., as a Bank
By: ______________________________
Name:
Title:
-5-
<PAGE>
NATIONAL CITY BANK, as a Bank
By: ______________________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A., as a
Bank
By: ______________________________
Name:
Title:
THE BANK OF NEW YORK, as a Bank
By: ______________________________
Name:
Title:
CHEMICAL BANK, as a Bank
By: ______________________________
Name:
Title:
THE BANK OF CALIFORNIA, N.A., as a
Bank
By: ______________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By: ______________________________
Name:
Title:
-6-
<PAGE>
SECOND AMENDMENT AND WAIVER
Dated as of January 2, 1994
To
LOAN AGREEMENT
Dated as of April 28, 1993
This SECOND AMENDMENT AND WAIVER, dated as of January 2, 1994 (this
"Amendment and Waiver") is entered into by and among MagneTek, Inc., a Delaware
corporation (the "Borrower") and each of the undersigned banks or financial
institutions (collectively, the "Banks" and individually, a "Bank"), Continental
Bank N.A., as Administrative Agent and Bank of America National Trust and
Savings Association, as Arranging Agent (collectively the "Agents").
WHEREAS, the Borrower (i) has entered into a Loan Agreement, dated as
of April 28, 1993, by and among the Borrower, the Banks and the Agents, as
amended (the "Loan Agreement"), (ii) now desires to further amend the Loan
Agreement in certain respects, and (iii) further desires that the Majority Banks
waive compliance with certain covenants as set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I - AMENDMENTS
1.1 AMENDMENT TO DEFINITIONS. The following definitions are hereby
amended as follows:
1.1.1 "APPLICABLE ALTERNATE BASE RATE MARGIN" is amended by substituting
the following for the last line of the table set forth therein:
.80 to 1 or greater, 25.0
but less than .85 to 1
.85 to 1 or greater 50.0;
1.1.2 "APPLICABLE CD RATE MARGIN" is amended by substituting the following
for the last line of the table set forth therein:
.80 to 1 or greater, 162.5
<PAGE>
but less than .85 to 1
.85 to 1 or greater 187.5;
1.1.3 "APPLICABLE EURODOLLAR RATE MARGIN" is amended by substituting the
following for the last line of the table set forth therein:
.80 to 1 or greater, 150.0
but less than .85 to 1
.85 to 1 or greater 175.0;
1.1.4 "APPLICABLE FINANCIAL SLC FEE RATE" is amended by substituting the
following for the last line of the table set forth therein:
.80 to 1 or greater, 150.0
but less than .85 to 1
.85 to 1 or greater 175.0;
1.1.5 "APPLICABLE PERFORMANCE SLC FEE RATE" is amended by substituting the
following for the last line of the table set forth therein:
.80 to 1 or greater, 112.5
but less than .85 to 1
.85 to 1 or greater 137.5;
1.2 AMENDMENT OF COMMITMENT FEE. Section 3.4 of the Loan Agreement
is amended to read in its entirety as follows:
3.4 COMMITMENT FEES. From the date of execution and delivery of
this Agreement, Borrower shall pay to the Administrative Agent, for the
respective accounts of the Banks, pro rata according to their Pro Rata
Share of the Commitments, a commitment fee equal to a rate (the "Commitment
Fee Rate") of 1/4 of 1% (25 basis points) per annum TIMES the daily amount,
if any, by which the Commitment exceeds the SUM of (a) the principal
Indebtedness then evidenced by the Committed Advance Notes PLUS (b) the
Aggregate Effective Amount of all Standby Letters of Credit then
outstanding; PROVIDED, HOWEVER, that if with respect to any Pricing Period
the Leverage Ratio is .85 to 1 or greater
-2-
<PAGE>
as of the last day of the Related Fiscal Quarter then the Commitment Fee
Rate for such Pricing Period shall be 3/8 of 1% (37.5 basis points) per
annum. The commitment fees shall be payable quarterly in arrears on each
Quarterly Payment Date, and on the Maturity Date or earlier termination of
the Commitment.
1.3 AMENDMENT FEE. Forthwith upon this Amendment and Waiver becoming
effective pursuant to SECTION 3.3 below, the Borrower agrees to pay to the
Administrative Agent, for the respective accounts of the Banks, pro rata
according to their Pro Rata Share of the Commitment, in immediately available
funds, an amendment fee equal to 0.05% of the Commitment.
ARTICLE II - WAIVER
2.1 WAIVER OF COVENANTS. In reliance on the Borrower's warranties
set forth in SECTION 3.1 below, as of the date hereof the Banks shall hereby
waive compliance by the Borrower with the Tangible Net Worth and Leverage Ratio
covenants set forth in Sections 6.14 and 6.15, respectively, of the Loan
Agreement for the Fiscal Quarter ending January 2, 1994.
2.2 LIMITED WAIVER. The waiver set forth in SECTION 2.1 above
relates solely to the Fiscal Quarter ending January 2, 1994 and does not
constitute a waiver of such covenants for any subsequent period, or a waiver of
any other term or conditions under the Loan Agreement.
ARTICLE III - GENERAL
3.1 REPRESENTATIONS AND WARRANTIES. To induce the Banks to enter
into this Amendment and Waiver, the Borrower represents and warrants to the
Agents and the Banks that the representations and warranties contained in
Sections 4.1 (first sentence), 4.2, 4.3, 4.11, 4.12 (but only with respect to
Events of Default) and 4.14 of the Loan Agreement are true and correct as of the
date hereof as though such representations and warranties were made on the date
hereof.
3.2 COUNTERPARTS. This Amendment and Waiver may be executed in any
number of counterparts and any party hereto may execute any counterpart, each of
which when executed and delivered will be deemed to be an original and all of
which
-3-
<PAGE>
counterparts of this Amendment and Waiver when taken together will be deemed to
be but one and the same Amendment and Waiver.
3.3 EFFECTIVENESS. When counterparts of this Amendment and Waiver
executed by the Borrower and by the Majority Banks shall have been lodged with
the Administrative Agent (or, in the case of any party other than the Borrower
as to which an executed counterpart shall not have been so lodged, the
Administrative Agent shall have received telegraphic, telex or other written
confirmation of execution of a counterpart hereof by such party), this Amendment
and Waiver shall become effective as of the date hereof and the Administrative
Agent shall so inform all of the parties hereto.
3.4 REAFFIRMATION. As herein amended or modified, the Loan Agreement
shall remain in full force and effect and is hereby ratified, approved and
confirmed in all respects.
3.5 DEFINITIONS. Terms used but not otherwise defined herein are
used herein as defined in the Loan Agreement. On and after the effective date
hereof, each reference in the Loan Agreement and the related documents to "Loan
Agreement," "this Agreement" or words of like import, shall unless the context
otherwise requires, be deemed to refer to the Loan Agreement as amended hereby.
3.6 COSTS AND EXPENSES. The Borrower agrees to pay all reasonable
fees and out-of-pocket costs and expenses of McDermott, Will & Emery as counsel
to the Administrative Agent in connection with the preparation of this Amendment
and Waiver, all pursuant to itemized statement(s) to be submitted to the
Borrower by McDermott, Will & Emery.
3.7 BINDING AGREEMENT. This Amendment and Waiver shall be binding
upon the Borrower, the Banks and the Agents and the respective successors and
assigns of the Banks and the Agents.
* * *
-4-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BORROWER:
MAGNETEK, INC.
By: ______________________________
Name:
Title:
THE BANKS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: ______________________________
Name:
Title:
CONTINENTAL BANK N.A., as a Bank
By: ______________________________
Name:
Title:
CIBC INC., as a Bank
By: ______________________________
Name:
Title:
-5-
<PAGE>
NATIONAL CITY BANK, as a Bank
By: ______________________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A., as a
Bank
By: ______________________________
Name:
Title:
THE BANK OF NEW YORK, as a Bank
By: ______________________________
Name:
Title:
CHEMICAL BANK, as a Bank
By: ______________________________
Name:
Title:
THE BANK OF CALIFORNIA, N.A., as a
Bank
By: ______________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By: ______________________________
Name:
Title:
-6-
<PAGE>
THIRD AMENDMENT
Dated as of March 31, 1994
To
LOAN AGREEMENT
Dated as of April 28, 1993
This THIRD AMENDMENT, dated as of March 31, 1994 (this "Amendment") is
entered into by and among MagneTek, Inc., a Delaware corporation (the
"Borrower") and each of the undersigned banks or financial institutions
(collectively, the "Banks" and individually, a "Bank"), Continental Bank N.A.,
as Administrative Agent and Bank of America National Trust and Savings
Association, as Arranging Agent (collectively the "Agents").
WHEREAS, the Borrower has entered into a Loan Agreement, dated as of
April 28, 1993, by and among the Borrower, the Banks and the Agents, as amended
(the "Loan Agreement") and now desires to amend or modify the Loan Agreement in
certain respects.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I - AMENDMENTS
1.1 DIVESTITURE ASSETS. Section 1 of the Loan Agreement is amended
to add a definition of "Divestiture Assets" as follows:
"DIVESTITURE ASSETS" means the assets comprising the Borrower's six
business groups which were described as divestiture candidates in the
Borrower's press release dated January 6, 1994.
1.2 DEFINITION OF LEVERAGE RATIO. The definition of Leverage Ratio
is amended by adding the following at the end thereof:
Notwithstanding any provision in the Loan Agreement to the contrary, during
calendar year 1994 the designation by the Borrower of any one or more of
MagneTek Europe N.V. and its Subsidiaries as Restricted Subsidiaries shall
be disregarded in the determination of Leverage Ratio pursuant to SECTION
3.4 of the Loan Agreement and the definitions of "Applicable
<PAGE>
Alternate Base Rate Margin", "Applicable CD Rate Margin", "Applicable
Eurodollar Rate Margin", "Applicable Financial SLC Fee Rate" and
"Applicable Performance SLC Fee Rate", it being understood that, pursuant
to Section 7.1(b) of the Loan Agreement, following such designation, the
Borrower shall provide two calculations for calendar year 1994 of the
Leverage Ratio, one of which shall for purposes of SECTION 3.4 and such
definitions disregard such designation, and the other of which shall for
purposes of SECTION 6.15 of the Loan Agreement, give effect to such
designation.
1.3 DEFINITION OF FIXED CHARGE COVERAGE. The definition of "Fixed
Charge Coverage" is amended by adding the following at the end thereof.
Notwithstanding any provision in the Loan Agreement to the contrary,
the Fixed Charge Coverage shall be determined such that (i) in calculating
Available Cash Flow, Net Cash Proceeds received after December 31, 1993 in
respect of the Divestiture Assets shall not reduce Net Cash Capital
Expenditures, and (ii) the Senior Notes shall be excluded from the amount
of aggregate principal payments on Funded Debt scheduled to be made for any
applicable period.
1.4 DEFINITIONS OF FIXED CHARGE AND INTEREST COVERAGES. Each of the
definitions of "Fixed Charge Coverage" and "Interest Charge Coverage" is amended
by adding the following at the end thereof.
Notwithstanding any provision in the Loan Agreement to the contrary,
each of the Interest Charge Coverage and the Fixed Charge Coverage (i) for
the Fiscal Quarter ending March 31, 1994 shall be based solely on the
fiscal period consisting of the Fiscal Quarter ending March 31, 1994, (ii)
for the Fiscal Quarter ending June 30, 1994, shall be based solely on the
period consisting of the two consecutive Fiscal Quarters ending June 30,
1994 taken as a single fiscal period, (iii) for the Fiscal Quarter ending
September 30, 1994 shall be based solely on the period consisting of three
consecutive fiscal quarters ending September 30, 1994 taken as a single
fiscal period, and (iv) for any Fiscal Quarter ending on or after
December 31, 1994 shall be based on the period consisting of the four
consecutive Fiscal Quarters then ending, taken as a single fiscal period.
-2-
<PAGE>
1.5 DEFINITION OF TANGIBLE NET WORTH. The definition of Tangible Net
Worth is amended to read in its entirety as follows:
"TANGIBLE NET WORTH" means, as of any date of determination, the
Shareholders' Equity of Borrower and its Restricted Subsidiaries on that
date, PLUS the amount (if any) by which the after tax restructuring charge
applicable to the Borrower's fiscal quarter ending December 31, 1993
exceeds the net after tax gain from the sale of the Divestiture Assets,
MINUS the aggregate Intangible Assets of Borrower and its Restricted
Subsidiaries that were acquired or arose on or after the Closing Date.
1.6 DEFINITION OF TNW ADJUSTMENT AMOUNT. Section 1 of the Loan
Agreement is amended by adding a definition of "TNW Adjustment Amount" as
follows:
"TNW ADJUSTMENT AMOUNT" means the amount, if any, by which the actual
Tangible Net Worth as of the end of the Fiscal Quarter immediately
preceding the designation by the Borrower of any one or more of MagneTek
Europe N.V. and its Subsidiaries as Restricted Subsidiaries pursuant to
SECTION 1.7 exceeds the required Tangible Net Worth as of the end of such
Fiscal Quarter.
1.7 AMENDMENT OF TANGIBLE NET WORTH COVENANT. Section 6.14 of the
Loan Agreement is amended by adding thereto the following:
Notwithstanding the foregoing, after the designation by the Borrower
of any one or more of MagneTek Europe N.V. and its Subsidiaries as
Restricted Subsidiaries pursuant to SECTION 1.7, the Borrower shall not
permit Tangible Net Worth, as of the last day of each Fiscal Quarter, to be
less than the sum of (a) consolidated Shareholder's Equity of the Borrower
as of the end of the Fiscal Quarter immediately preceding such designation,
MINUS the TNW Adjustment Amount, PLUS (b) an amount equal to 50% of the Net
Income earned in each Fiscal Quarter subsequent to the Fiscal Quarter
immediately preceding such designation (with no deduction for a net loss in
any such Fiscal Quarter), PLUS (c) an amount equal to 75% of the aggregate
net cash proceeds received by the Borrower subsequent to the Fiscal Quarter
immediately preceding such designation from (i) the issuance and sale
(other than to a Subsidiary of Borrower) of capital
-3-
<PAGE>
stock (or warrants or options to purchase capital stock) other than
Disqualified Stock or (ii) the conversion or exchange of any debt or any
equity security into capital stock other than Disqualified Stock.
1.8 AMENDMENT OF LEVERAGE RATIO. Section 6.15 of the Loan Agreement
is amended to read in its entirety as follows:
6.15 LEVERAGE RATIO. Permit the Leverage Ratio, as of the last day
of each Fiscal Quarter ending during a period or at the date described
below, to be greater than the ratio set forth opposite such period or date:
Period Ratio
------ -----
Closing Date through June 29, 1993 .82 to 1.00
June 30, 1993 through December 31, .80 to 1.00
1994
March 31, 1994 .88 to 1.00
June 30, 1994 through September 30, .85 to 1.00
1994
December 31, 1994 .67 to 1.00
March 31, 1995 and thereafter .65 to 1.00
1.9 AMENDMENT OF INTEREST CHARGE COVERAGE. Section 6.16 of the Loan
Agreement is amended to read in its entirety as follows:
6.16 INTEREST CHARGE COVERAGE. Permit Interest Charge Coverage, as
of the last day of each Fiscal Quarter ending during a period described
below, to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date through June 30, 1993 2.20 to 1.00
September 30, 1993 2.30 to 1.00
-4-
<PAGE>
December 31, 1993 1.40 to 1.00
March 31, 1994 1.00 to 1.00
June 30, 1994 1.20 to 1.00
September 30, 1994 1.30 to 1.00
December 31, 1994 1.40 to 1.00
March 31, 1995 1.80 to 1.00
June 30, 1995 2.00 to 1.00
September 30, 1995 and thereafter 2.40 to 1.00
1.10 AMENDMENT OF FIXED CHARGE COVERAGE. Section 6.17 of the Loan
Agreement is amended to read in its entirety as follows:
6.17 FIXED CHARGE COVERAGE. Permit the Fixed Charge Coverage, as of
the last day of each Fiscal Quarter ending during a period described below,
to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date through June 30, 1993 1.80 to 1.00
September 30, 1993 1.35 to 1.00
December 31, 1993 0.78 to 1.00
March 31, 1994 0.95 to 1.00
June 30, 1994 1.10 to 1.00
September 30, 1994 1.30 to 1.00
December 31, 1994 1.40 to 1.00
March 31, 1995 1.65 to 1.00
June 30, 1995 1.85 to 1.00
-5-
<PAGE>
September 30, 1995 2.00 to 1.00
December 31, 1995 and thereafter 2.20 to 1.00
1.11 NET CASH PROCEEDS. The following new Section 5.13 shall be
added to the Loan Agreement:
5.13 NET CASH PROCEEDS. As soon as reasonably practicable following
receipt by the Borrower of any Net Cash Proceeds from the Divestiture
Assets, apply such Net Cash Proceeds to reduce the Notes and/or the Senior
Notes in accordance with the respective terms thereof.
ARTICLE II - CONSENT
2.1 CONSENT TO DESIGNATION OF RESTRICTED SUBSIDIARIES. Pursuant to
Section 1.7 of the Loan Agreement, the Banks consent to the designation by the
Borrower of any one or more of MagneTek Europe N.V. and its Subsidiaries listed
on Schedule I as Restricted Subsidiaries, the effectiveness of such consent and
designation to be subject, however, to the following conditions: (i) after the
effective date of this Amendment the Borrower shall have received not less than
$45,000,000 of Net Cash Proceeds from the sale of Divestiture Assets and shall
have so certified to the Administrative Agent, (ii) the Administrative Agent
shall have received a notice from the Borrower specifying which Subsidiaries of
MagneTek Europe N.V. shall, together with MagneTek Europe N.V., become
Restricted Subsidiaries (MagneTek Europe N.V. and such Subsidiaries being called
collectively the "Designated Subsidiaries"), (iii) no Default or Event of
Default shall have occurred or be continuing or result from such designation and
the Borrower shall have so certified to the Administrative Agent, and (iv) the
Borrower shall have furnished or cause to be furnished to the Collateral Agent
under the Intercreditor Agreement a first and prior perfected lien on all of the
stock or equity interest of (x) MagneTek Europe N.V. and (y) any Designated
Subsidiary which is then a Subsidiary of the Borrower but is not then a
Subsidiary of MagneTek Europe N.V., such pledge and security interest to be
accompanied by documentation (including pledge agreement, resolutions, and
opinion of counsel) in form and substance acceptable to the Administrative Agent
and its counsel.
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<PAGE>
It being understood that references in this Amendment to the
designation by the Borrower of any one or more of MagneTek Europe N.V. and its
Subsidiaries as Restricted Subsidiaries shall mean a designation in accordance
with this SECTION 2.1.
2.2 RESERVATION. Nothing in this Agreement constitutes a waiver by
the Banks of any right to consent to the disposition of assets pursuant to
Section 6.3, 6.8 or 6.10 of the Loan Agreement or to consent to the release of
any collateral pursuant to Section 11.2 of the Loan Agreement or Section 5 of
the Intercreditor Agreement, it being understood that the Banks expressly
reserve the right to consent to any such disposition or release, provided that
for this purpose the sale of the Divestiture Assets to the extent in compliance
with Section 6.3 of the Loan Agreement shall not be deemed a violation of
Section 6.8 of the Loan Agreement.
ARTICLE III - GENERAL
3.1 AMENDMENT FEE. In connection with this Amendment, the Borrower
agrees to pay to the Administrative Agent, for the respective accounts of the
Banks, pro rata according to their Pro Rata Share of the Commitment, in
immediately available funds, an amendment fee equal to 0.15% of the Commitment.
3.2 REPRESENTATIONS AND WARRANTIES. To induce the Banks to enter
into this Amendment, the Borrower represents and warrants to the Agents and the
Banks that (a) the representations and warranties contained in Sections 4.1,
4.2, 4.3, 4.8, 4.9, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.19 and 4.20 of the
Loan Agreement are true and correct as of the date hereof as though such
representations and warranties were made on the date hereof, and (b) the
Borrower is in the process of amending its Note Purchase Agreement relating to
the Senior Notes and upon execution thereof, the Borrower will furnish a
certified copy to the Agents and each Bank.
3.3 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts of this
-7-
<PAGE>
Amendment when taken together will be deemed to be but one and the same
Amendment.
3.4 EFFECTIVENESS. The effectiveness of this Amendment is subject to
receipt by the Administrative Agent of the following: (i) the amendment fee
referred to in Section 3.1, and (ii) counterparts of this Amendment executed by
the Borrower and by the Majority Banks (whether on the same or different
counterparts). Upon receipt by the Administrative Agent of the foregoing, this
Amendment shall become effective as of the date hereof and the Administrative
Agent shall so inform all of the parties hereto.
3.5 REAFFIRMATION. As herein amended or modified, the Loan Agreement
shall remain in full force and effect and is hereby ratified, approved and
confirmed in all respects.
3.6 DEFINITIONS. Terms used but not otherwise defined herein are
used herein as defined in the Loan Agreement. On and after the effective date
hereof, each reference in the Loan Agreement and the related documents to "Loan
Agreement," "this Agreement" or words of like import, shall unless the context
otherwise requires, be deemed to refer to the Loan Agreement as amended hereby.
3.7 COSTS AND EXPENSES. The Borrower agrees to pay all reasonable
fees and out-of-pocket costs and expenses of McDermott, Will & Emery as counsel
to the Administrative Agent in connection with the preparation of this
Amendment, all pursuant to itemized statement(s) to be submitted to the Borrower
by McDermott, Will & Emery.
3.8 BINDING AGREEMENT. This Amendment shall be binding upon the
Borrower, the Banks and the Agents and the respective successors and assigns of
the Banks and the Agents.
* * *
-8-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BORROWER:
MAGNETEK, INC.
By: ______________________________
Name:
Title:
THE BANKS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: ______________________________
Name:
Title:
CONTINENTAL BANK N.A., as a Bank
By: ______________________________
Name:
Title:
CIBC INC., as a Bank
By: ______________________________
Name:
Title:
NATIONAL CITY BANK, as a Bank
By: ______________________________
Name:
Title:
-9-
<PAGE>
NATIONSBANK OF TEXAS, N.A., as a
Bank
By: ______________________________
Name:
Title:
THE BANK OF NEW YORK, as a Bank
By: ______________________________
Name:
Title:
CHEMICAL BANK, as a Bank
By: ______________________________
Name:
Title:
THE BANK OF CALIFORNIA, N.A., as a
Bank
By: ______________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By: ______________________________
Name:
Title:
-10-
<PAGE>
FOURTH AMENDMENT AND WAIVER
Dated as of June 21, 1994
To
LOAN AGREEMENT
Dated as of April 28, 1993
This FOURTH AMENDMENT AND WAIVER dated as of June 21, 1994 (this
"Amendment") is entered into by and among MagneTek, Inc., a Delaware Corporation
(the "Borrower") and each of the banks or financial institutions listed below
(collectively, the "Banks" and each individually, a "Bank"), Continental Bank
N.A., as Administrative Agent and Bank of America National Trust and Savings
Association, as Arranging Agent (collectively the "Agents").
WHEREAS, the Borrower has entered into a Loan Agreement, dated as of
April 28, 1993, by and among the Borrower, the Banks and the Agents, as amended
(the "Loan Agreement");
WHEREAS, the Borrower and MagneTek Controls, Inc. ("MagneTek
Controls") have entered into an Agreement, pursuant to which (i) each has agreed
to sell, in the case of MagneTek Controls, all or substantially all of its
assets and in the case of the Borrower, substantially all of the assets of its
Transducers Division, and (ii) the purchaser has agreed to assume the
liabilities related to such assets, for an aggregate purchase price of
$46,000,000, subject to adjustment upward or downward based on the closing
balance sheet, as to which $43,700,000 is payable in cash on or about June 30,
1994 or such other date agreed to by the Borrower and MagneTek Controls (the
"Proposed Sale of MagneTek Controls");
WHEREAS, the Borrower now desires that the Banks amend, modify or
clarify the Loan Agreement in certain respects as set forth below.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I - AMENDMENTS, WAIVERS, CONFIRMATIONS, ETC.
In reliance on the Borrower's representations and warranties set forth
in SECTION 2.1 below, as of the date hereof the Majority Banks hereby:
1.1 DISPOSITION OF PROPERTY. (i) Waive the requirements of Section
6.3 of the Loan Agreement to the extent necessary to permit the Proposed Sale of
MagneTek Controls, and (ii) agree that the Net Cash Proceeds generated from such
sale shall be excluded from the calculation in Section 6.3(a)(ii).
1.2 CHANGE IN NATURE OF BUSINESS. Confirm that any Disposition of
Property permitted pursuant to Section 6.3 or consented to by a waiver of
Section 6.3 shall automatically constitute an acknowledgement that the
Disposition is not deemed to result in a material change in the nature of the
business of the Borrower and its Restricted Subsidiaries for purposes of Section
6.8.
1.3 SALE OF ACCOUNTS RECEIVABLE. Amend Section 6.10 of the Loan
Agreement by inserting the following in the second line immediately after the
words "accounts receivable":
(other than accounts receivable comprising part of a Disposition of
Property permitted pursuant to Section 6.3 or consented to by a waiver of
Section 6.3)
1.4 INVESTMENTS AND ACQUISITIONS. Confirm that nothing contained in
Section 6.18 of the Loan Agreement is deemed to prohibit the making of any loan
or advance to the Borrower by any of the Restricted Subsidiaries (including any
advance of the Net Cash Proceeds from any sale of Divestiture Assets, including,
without limitation, the Net Cash Proceeds of the Proposed Sale of MagneTek
Controls).
ARTICLE II - GENERAL
2.1 REPRESENTATIONS AND WARRANTIES. To induce the Banks to enter
into this Amendment, the Borrower represents and warrants to the Agents and the
Banks that the representations and warranties contained in Sections 4.1, 4.2,
4.3, 4.8, 4.9, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.19 and 4.20 of the Loan
Agreement are true and correct as of the date hereof as though such
representations and warranties were made on the date hereof.
-2-
<PAGE>
2.2 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts of this Amendment when taken together will be deemed to be but one
and the same Amendment.
2.3 EFFECTIVENESS. The effectiveness of this Amendment is subject to
receipt by the Administrative Agent of counterparts of this Amendment executed
by the Borrower and by the Majority Banks (whether on the same or different
counterparts). Upon receipt by the Administrative Agent of the foregoing, this
Amendment shall become effective as of the date hereof and the Administrative
Agent shall so inform all of the parties hereto.
2.4 REAFFIRMATION. As herein amended or modified, the Loan Agreement
shall remain in full force and effect and is hereby ratified, approved and
confirmed in all respects.
2.5 DEFINITIONS. Terms used but not otherwise defined herein are
used herein as defined in the Loan Agreement. On and after the effective date
hereof, each reference in the Loan Agreement and the related documents to "Loan
Agreement," "this Agreement" or words of like import, shall unless the context
otherwise requires, be deemed to refer to the Loan Agreement as amended hereby.
2.6 COSTS AND EXPENSES. The Borrower agrees to pay all reasonable
fees and out-of-pocket costs and expenses of McDermott, Will & Emery as counsel
to the Administrative Agent in connection with the preparation of this
Amendment, all pursuant to itemized statement(s) to be submitted to the Borrower
by McDermott, Will & Emery.
2.7 BINDING AGREEMENT. This Amendment shall be binding upon the
Borrower, the Banks and the Agents and the respective successors and assigns of
the Banks and the Agents.
* * *
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
BORROWER:
MAGNETEK, INC.
By: /s/ John P. Colling, Jr.
-------------------------------
Name: John P. Colling, Jr.
Title: Vice President and
Treasurer
THE BANKS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By: /s/ Yvonne C. Dennis
-------------------------------
Name: Yvonne C. Dennis
Title: Vice President
CONTINENTAL BANK N.A., as a Bank
By: /s/ Wyatt Ritchie
-------------------------------
Name: Wyatt Ritchie
Title: Vice President
CIBC INC., as a Bank
By: /s/ Paul J. Chakmak
-------------------------------
Name: Paul J. Chakmak
Title: Vice President
NATIONAL CITY BANK, as a Bank
By:
-------------------------------
Name:
Title:
-4-
<PAGE>
NATIONSBANK OF TEXAS, N.A., as a
Bank
By: /s/ Andrea Collias
-------------------------------
Name: Andrea Collias
Title: Assistant Vice President
THE BANK OF NEW YORK, as a Bank
By: /s/ Craig Rethmeyer
-------------------------------
Name: Craig Rethmeyer
Title: Vice President
CHEMICAL BANK, as a Bank
By: /s/ Elaine D. Grant
-------------------------------
Name: Elaine D. Grant
Title: Vice President
THE BANK OF CALIFORNIA, N.A., as a
Bank
By: /s/ Scott Lane
-------------------------------
Name: Scott Lane
Title: Vice President
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By: /s/ Genichi Imai
-------------------------------
Name: Gnichi Imai
Title: Joint General Manager
-6-
<PAGE>
FIFTH AMENDMENT AND LIMITED WAIVER
Dated as of September 12, 1994
To
LOAN AGREEMENT
Dated as of April 28, 1993
This FIFTH AMENDMENT AND LIMITED WAIVER dated as of September 12, 1994
(this "Amendment") is entered into by and among MagneTek, Inc., a Delaware
Corporation (the "Borrower"), each of the banks or financial institutions listed
below (collectively, the "Banks" and each individually, a "Bank") and Bank of
America Illinois (formerly known as Continental Bank), as Administrative Agent
and Bank of America National Trust and Savings Association, as Arranging Agent
(collectively the "Agents").
WHEREAS, the Borrower has entered into a Loan Agreement, dated as of
April 28, 1993, by and among the Borrower, the Banks and the Agents, as amended
(the "Loan Agreement");
WHEREAS, the Borrower now desires that each of the Banks (i) amend the
Loan Agreement so as to reduce the Commitment and amend Schedule 1.1A, and (ii)
waive a condition precedent under the Loan Agreement so as to permit the Banks
to make Advances under the Loan Agreement despite the existence of a Default or
Event of Default.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I - AMENDMENT AND LIMITED WAIVER
1.1 AMENDMENT. Pursuant to SECTION 2.6 of the Loan Agreement, the
Borrower hereby reduces permanently and irrevocably the Commitment from
$200,000,000 to $150,000,000, and the definition of Commitment is amended to
reflect such reduction. Schedule 1.1A to the Loan Agreement is amended by
substituting a new Schedule 1.1A which is attached hereto as EXHIBIT A.
1.2 LIMITED WAIVER. In connection with the making of an Advance,
the Banks hereby waive through September 30, 1994, only, the condition of
Section 8.2 of the Loan Agreement that the
<PAGE>
representations and warranties contained in Section 4.12 of the Loan Agreement
be true and correct as of the date of such Advance, it being understood that
such limited waiver is not to be considered a waiver generally or for any other
purpose or for any period after September 30, 1994. The limited waiver granted
hereby does not constitute a waiver of any Default or Event of Default existing
on the date of this Amendment, including, without limitation as described in
SECTION 2.1 hereof. The Banks hereby expressly reserve all rights and remedies
in law, equity or pursuant to the Loan Agreement they have as a consequence of
such Defaults or Events of Default. Upon the expiration of this limited waiver,
the Banks may exercise any of their rights, remedies, powers or privileges under
the Loan Agreement without limitation, including declaring an Event of Default
based upon the Borrower's failure to thereafter be in compliance with such
provisions as in effect prior to the modification set forth herein.
ARTICLE II - GENERAL
2.1 REPRESENTATIONS AND WARRANTIES. To induce the Banks to enter
into this Amendment, the Borrower (i) represents and warrants to the Agents and
the Banks that the representations and warranties contained in Sections 4.1,
4.2, 4.3, 4.8, 4.9, 4.11, 4.13, 4.14, 4.15, 4.16, 4.19 and 4.20 of the Loan
Agreement are true and correct as of the date hereof as though such
representations and warranties were made on the date hereof, and (ii)
acknowledges that a Default exists by reason of the Borrower's failure be in
compliance with SECTIONS 6.16 and 6.17 of the Loan Agreement.
2.2 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts of this Amendment when taken together will be deemed to be but one
and the same Amendment.
2.3 EFFECTIVENESS. The effectiveness of this Amendment is subject to
receipt by the Administrative Agent of counterparts of this Amendment executed
by the Borrower and by the Majority Banks (whether on the same or different
counterparts). Upon receipt by the Administrative Agent of the foregoing, this
Amendment shall become effective as of the date
-2-
<PAGE>
hereof and the Administrative Agent shall so inform all of the parties hereto.
2.4 REAFFIRMATION. As herein modified, the Loan Agreement shall
remain in full force and effect and is hereby ratified, approved and confirmed
in all respects.
2.5 DEFINITIONS. Terms used but not otherwise defined herein are
used herein as defined in the Loan Agreement. On and after the effective date
hereof, each reference in the Loan Agreement and the related documents to "Loan
Agreement," "this Agreement" or words of like import, shall unless the context
otherwise requires, be deemed to refer to the Loan Agreement as amended hereby.
2.6 COSTS AND EXPENSES. The Borrower agrees to pay all reasonable
fees and out-of-pocket costs and expenses of McDermott, Will & Emery as counsel
to the Administrative Agent in connection with the preparation of this
Amendment, all pursuant to itemized statement(s) to be submitted to the Borrower
by McDermott, Will & Emery.
2.7 BINDING AGREEMENT. This Amendment shall be binding upon the
Borrower, the Banks and the Agents and the respective successors and assigns of
the Banks and the Agents.
* * *
-3-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
BORROWER:
MAGNETEK, INC.
By:_______________________________
Name:
Title:
AGENT:
BANK OF AMERICA ILLINOIS, as Administrative Agent
By:_______________________________
Name:
Title:
THE BANKS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:_______________________________
Name:
Title:
BANK OF AMERICA ILLINOIS, as a Bank
By:_______________________________
Name:
Title:
-4-
<PAGE>
CIBC INC., as a Bank
By:_______________________________
Name:
Title:
NATIONAL CITY BANK, as a Bank
By: ______________________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A., as a
Bank
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK, as a Bank
By:_______________________________
Name:
Title:
CHEMICAL BANK, as a Bank
By:_______________________________
Name:
Title:
-5-
<PAGE>
THE BANK OF CALIFORNIA, N.A., as a
Bank
By:_______________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By:_______________________________
Name:
Title:
-6-
<PAGE>
Exhibit A to Fifth
Amendment and Waiver
Schedule 1.1A
to Loan Agreement
Bank Commitments
----------------
<TABLE>
<CAPTION>
COMMITMENT PRO RATA
BANK AMOUNT SHARE
- - ----------------------------------------------------------------------------
<S> <C> <C>
Bank of America National
Trust and Savings Association $ 20,625,000 13.7500%
- - ----------------------------------------------------------------------------
Bank of America Illinois 20,625,000 13.7500%
- - ----------------------------------------------------------------------------
CIBC Inc. 18,750,000 12.5000%
- - ----------------------------------------------------------------------------
National City Bank 18,750,000 12.5000%
- - ----------------------------------------------------------------------------
NationsBank of Texas, N.A. 18,750,000 12.5000%
- - ----------------------------------------------------------------------------
The Bank of New York 18,750,000 12.5000%
- - ----------------------------------------------------------------------------
Chemical Bank 11,250,000 7.5000%
- - ----------------------------------------------------------------------------
The Bank of California, N.A. 11,250,000 7.5000%
- - ----------------------------------------------------------------------------
The Long Term Credit Bank of
Japan, Ltd. 11,250,000 7.5000%
------------ --------
- - ----------------------------------------------------------------------------
Total Commitment $150,000,000 100.0000%
- - ----------------------------------------------------------------------------
- - ----------------------------------------------------------------------------
</TABLE>
-7-
<PAGE>
SIXTH AMENDMENT AND WAIVER
Dated as of September 29, 1994
To
LOAN AGREEMENT
Dated as of April 28, 1993
This SIXTH AMENDMENT AND WAIVER dated as of September 29, 1994 (this
"Amendment") is entered into by and among MagneTek, Inc., a Delaware Corporation
(the "Borrower"), each of the banks or financial institutions listed below
(collectively, the "Banks" and each individually, a "Bank") and Bank of America
Illinois (formerly known as Continental Bank), as Administrative Agent (the
"Administrative Agent") and Bank of America National Trust and Savings
Association, as Arranging Agent (together with the Administrative Agent, the
"Agents").
WHEREAS, the Borrower has entered into a Loan Agreement, dated as of
April 28, 1993, by and among the Borrower, the Banks and the Agents, as amended
(the "Loan Agreement");
WHEREAS, the capital stock of the Guarantors (the "Pledged
Collateral") is pledged to the Collateral Agent for the benefit of the
Benefitted Parties (as defined in the Intercreditor Agreement) including but not
limited to the Banks and such Guarantors have also issued Subsidiary Guaranties
to the Collateral Agent for the benefit of the Benefitted Parties;
WHEREAS, the Borrower intends to enter into agreements pursuant to
which it will sell the Pledged Collateral of certain of the Guarantors and the
Borrower desires that such Pledged Collateral and certain Subsidiary Guaranties
be released to allow for such sales;
WHEREAS, the Borrower now desires that each of the Banks (i) amend the
Loan Agreement in certain respects, and (ii) release certain Pledged Collateral
and Subsidiary Guaranties of the Guarantors upon the terms and conditions set
forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
<PAGE>
ARTICLE I - AMENDMENTS
1.1 ADDITIONAL DEFINITIONS. Section 1 of the Loan Agreement is
amended by adding the following definitions in alphabetical order:
"EBITDA" means, with respect to any fiscal period, Net Income for such
fiscal period, PLUS (a) Interest Charges of Borrower and its Restricted
Subsidiaries, PLUS (b) taxes on or measured by net income of Borrower and
its Restricted Subsidiaries, PLUS (c) depreciation of Borrower and its
Restricted Subsidiaries, PLUS (d) amortization of Borrower and its
Restricted Subsidiaries, in each case as charged against revenues to arrive
at Net Income for such fiscal period; PROVIDED that, for purposes of the
foregoing (i) Net Income for any Fiscal Quarter during which Borrower
purchased or redeemed any Indebtedness at a premium over the face amount
thereof shall be adjusted by adding back the amount of such premium (but
not in excess of $10,000,000 for all Fiscal Quarters after the Closing Date
in the aggregate) and (ii) EBITDA for the Fiscal Quarter ending September
30, 1994 and thereafter shall be calculated based solely on continuing
operations in accordance with GAAP. Notwithstanding any provision in the
Loan Agreement to the contrary, EBITDA (i) for the Fiscal Quarter ending
June 30, 1994, shall be based solely on the period consisting of the two
consecutive Fiscal Quarters ending June 30, 1994 taken as a single fiscal
period, (ii) for the Fiscal Quarter ending September 30, 1994 shall be
based solely on the period consisting of three consecutive fiscal quarters
ending September 30, 1994 taken as a single fiscal period, and (iii) for
any Fiscal Quarter ending on or after December 31, 1994 shall be based on
the period consisting of the four consecutive Fiscal Quarters then ending,
taken as a single fiscal period.
"FUNDED DEBT/EBITDA RATIO" means, as of the last day of any Fiscal Quarter
(INCLUDING the last day of a Fiscal Quarter which is also the last day of a
Fiscal Year), the RATIO of (a) Funded Debt for the Fiscal Quarter then
ended to (b) EBITDA for the fiscal period consisting of that Fiscal Quarter
and the three immediately preceding Fiscal Quarters; PROVIDED, that if
EBITDA is based on any fiscal period consisting of less than four (4)
Fiscal Quarters, EBITDA shall be annualized by multiplying EBITDA by a
fraction the
-2-
<PAGE>
numerator of which is 4 and the denominator of which is the number of
Fiscal Quarters in such fiscal period.
1.2 AMENDMENT TO DEFINITIONS. The following definitions are hereby
amended to read in their entirety as follows:
"APPLICABLE ALTERNATE BASE RATE MARGIN" means, for each Pricing Period, the
interest rate set forth below (expressed in basis points) opposite the
Funded Debt/EBITDA Ratio as of the last day of the Related Fiscal Quarter:
Funded Debt/EBITDA Ratio Margin
------------------------ ------
Less than 2.0 to 1 0.0
2.0 to 1 or greater,
but less than 3.0 to 1 12.5
3.0 to 1 or greater,
but less than 4.0 to 1 25.0
4.0 to 1 or greater,
but less than 5.0 to 1 50.0
5.0 to 1 or greater 75.0
PROVIDED, however, that if on such last day of the Related Fiscal Quarter
an Event of Default existed and the Event of Default continues to exist on
the first day of the Pricing Period, then the Applicable Alternate Base
Rate Margin shall be the HIGHER of (a) the interest rate set forth above
opposite the Funded Debt/EBITDA Ratio for the Related Fiscal Quarter or (b)
the interest rate in effect for the immediately preceding Pricing Period.
"APPLICABLE CD RATE MARGIN" means, for each Pricing Period, the interest
rate set forth below (expressed in basis points) opposite the Funded
Debt/EBITDA Ratio as of the last day of the Related Fiscal Quarter:
Funded Debt/EBITDA Ratio Margin
------------------------ ------
Less than 2.0 to 1 137.5
-3-
<PAGE>
2.0 to 1 or greater,
but less than 3.0 to 1 150.0
3.0 to 1 or greater,
but less than 4.0 to 1 162.5
4.0 to 1 or greater,
but less than 5.0 to 1 187.5
5.0 to 1 or greater 212.5
PROVIDED, however, that if on such last day of the Related Fiscal Quarter
an Event of Default existed and the Event of Default continues to exist on
the first day of the Pricing Period, then the Applicable CD Rate Margin
shall be the HIGHER of (a) the interest rate set forth above opposite the
Funded Debt/EBITDA Ratio for the Related Fiscal Quarter or (b) the interest
rate in effect for the immediately preceding Pricing Period.
"APPLICABLE EURODOLLAR RATE MARGIN" means, for each Pricing Period, the
interest rate set forth below (expressed in basis points) opposite the
Funded Debt/EBITDA Ratio as of the last day of the Related Fiscal Quarter:
Funded Debt/EBITDA Ratio Margin
------------------------ ------
Less than 2.0 to 1 100.0
2.0 to 1 or greater,
but less than 3.0 to 1 125.0
3.0 to 1 or greater,
but less than 4.0 to 1 150.0
4.0 to 1 or greater,
but less than 5.0 to 1 175.0
5.0 to 1 or greater 200.0
PROVIDED, however, that if on such last day of the Related Fiscal Quarter
an Event of Default existed and the Event of Default continues to exist on
the first day of the Pricing Period, then the Applicable Eurodollar Rate
Margin shall be
-4-
<PAGE>
the HIGHER of (a) the interest rate set forth above opposite the Funded
Debt/EBITDA Ratio for the Related Fiscal Quarter or (b) the interest rate
in effect for the immediately preceding Pricing Period.
"APPLICABLE FINANCIAL SLC FEE RATE" means, for each Pricing Period, the
standby letter of credit fee rate set forth below (expressed in basis
points) opposite the Funded Debt/EBITDA Ratio as of the last day of the
Related Fiscal Quarter:
Funded Debt/EBITDA Ratio Margin
------------------------ ------
Less than 2.0 to 1 100.0
2.0 to 1 or greater,
but less than 3.0 to 1 125.0
3.0 to 1 or greater,
but less than 4.0 to 1 150.0
4.0 to 1 or greater,
but less than 5.0 to 1 175.0
5.0 to 1 or greater 200.0
PROVIDED, however, that if on such last day of the Related Fiscal Quarter
an Event of Default existed and the Event of Default continues to exist on
the first day of the Pricing Period, then the Applicable Financial SLC Fee
Rate shall be the HIGHER of (a) the fee rate set forth above opposite the
Funded Debt/EBITDA Ratio for the Related Fiscal Quarter or (b) the fee rate
in effect for the immediately preceding Pricing Period.
"APPLICABLE PERFORMANCE SLC FEE RATE" means, for each Pricing Period, the
standby letter of credit fee rate set forth below (expressed in basis
points) opposite the Funded Debt/EBITDA Ratio as of the last day of the
Related Fiscal Quarter:
Funded Debt/EBITDA Ratio Margin
------------------------ ------
Less than 2.0 to 1 87.5
-5-
<PAGE>
2.0 to 1 or greater,
but less than 3.0 to 1 112.5
3.0 to 1 or greater,
but less than 4.0 to 1 125.0
4.0 to 1 or greater,
but less than 5.0 to 1 137.5
5.0 to 1 or greater 162.5
PROVIDED, however, that if on such last day of the Related Fiscal Quarter
an Event of Default existed and the Event of Default continues to exist on
the first day of the Pricing Period, then the Applicable Performance SLC
Fee Rate shall be the HIGHER of (a) the fee rate set forth above opposite
the Funded Debt/EBITDA Ratio for the Related Fiscal Quarter or (b) the fee
rate in effect for the immediately preceding Pricing Period.
"EBIT" means, with respect to any fiscal period, Net Income for such fiscal
period, PLUS (a) Interest Charges of Borrower and its Restricted
Subsidiaries, PLUS (b) taxes on or measured by net income of Borrower and
its Restricted Subsidiaries, in each case as charged against revenues to
arrive at Net Income for such fiscal period; PROVIDED that, for purposes of
the foregoing (i) Net Income for any Fiscal Quarter during which Borrower
purchased or redeemed any Indebtedness at a premium over the face amount
thereof shall be adjusted by adding back the amount of such premium (but
not in excess of $10,000,000 for all Fiscal Quarters after the Closing Date
in the aggregate) and (ii) EBIT for the Fiscal Quarter ending September 30,
1994 and thereafter shall be calculated based solely on continuing
operations in accordance with GAAP. Notwithstanding any provision in the
Loan Agreement to the contrary, EBIT (i) for the Fiscal Quarter ending June
30, 1994, shall be based solely on the period consisting of the two
consecutive Fiscal Quarters ending June 30, 1994 taken as a single fiscal
period, (ii) for the Fiscal Quarter ending September 30, 1994 shall be
based solely on the period consisting of three consecutive fiscal quarters
ending September 30, 1994 taken as a single fiscal period, and (iii) for
any Fiscal Quarter ending on or after December 31, 1994 shall be based on
the period
-6-
<PAGE>
consisting of the four consecutive Fiscal Quarters then ending, taken as a
single fiscal period.
"PRICING PERIOD" means, with respect to any Fiscal Quarter, the three (3)
calendar month period commencing two (2) months after the end of such
Fiscal Quarter; PROVIDED, HOWEVER, that with respect to the Fiscal Quarter
ending June 30, 1994, Pricing Period means the two (2) calendar month
period commencing September 30, 1994.
1.3 AMENDMENT OF CERTAIN FINANCIAL COVENANTS. Sections 6.15, 6.16
and 6.17 of the Loan Agreement are amended to read in their entirety as follows:
6.15 LEVERAGE RATIO. Permit the Leverage Ratio, as of the last day
of each Fiscal Quarter ending during a period or at the date described
below, to be greater than the ratio set forth opposite such period or date:
Period Ratio
------ -----
Closing Date through June 29, 1993 .82 to 1.00
June 30, 1993 through December 31, .80 to 1.00
1994
March 31, 1994 .88 to 1.00
June 30, 1994 .85 to 1.00
September 30, 1994 .88 to 1.00
December 31, 1994 .81 to 1.00
March 31, 1995 .76 to 1.00
June 30, 1995 .74 to 1.00
September 30, 1995 and thereafter .65 to 1.00
6.16 INTEREST CHARGE COVERAGE. Permit Interest Charge Coverage, as
of the last day of each Fiscal Quarter ending
-7-
<PAGE>
during a period described below, to be less than the ratio set forth
opposite such period:
Period Ratio
------ -----
Closing Date through June 30, 1993 2.20 to 1.00
September 30, 1993 2.30 to 1.00
December 31, 1993 1.40 to 1.00
March 31, 1994 1.00 to 1.00
June 30, 1994 1.20 to 1.00
September 30, 1994 .93 to 1.00
December 31, 1994 .98 to 1.00
March 31, 1995 1.25 to 1.00
June 30, 1995 1.84 to 1.00
September 30, 1995 and thereafter 2.00 to 1.00
it being understood that the foregoing ratio shall be calculated using all
Interest Charges for both continuing and discontinued operations.
6.17 FIXED CHARGE COVERAGE. Permit the Fixed Charge Coverage, as of
the last day of each Fiscal Quarter ending during a period described below,
to be less than the ratio set forth opposite such period:
Period Ratio
------ -----
Closing Date through June 30, 1993 1.80 to 1.00
September 30, 1993 1.35 to 1.00
December 31, 1993 0.78 to 1.00
March 31, 1994 0.95 to 1.00
June 30, 1994 1.10 to 1.00
-8-
<PAGE>
September 30, 1994 .91 to 1.00
December 31, 1994 .91 to 1.00
March 31, 1995 1.02 to 1.00
June 30, 1995 1.45 to 1.00
September 30, 1995 and thereafter 1.50 to 1.00
it being understood that the foregoing ratio shall be calculated using all
Interest Charges for both continuing and discontinued operations.
1.4 AMENDMENT OF ADDITIONAL COVENANT. Section 5.13 of the Loan
Agreement is amended to read in its entirety as follows:
5.13 CASH CONSIDERATION. As soon as reasonably practicable following
receipt by the Borrower of any cash consideration from the Divestiture
Assets, apply such cash consideration as follows:
(a) The first $22,500,000 of cash consideration from Divestiture
Assets received after September 29, 1994 shall be used to repay the Notes;
(b) At least 50% of cash consideration from Divestiture Assets
received thereafter shall be used to repay the Notes and, notwithstanding
any restriction in Section 6.1 of the Loan Agreement, the remaining cash
consideration from Divestiture Assets shall be used to repurchase the
Senior Notes;
(c) Concurrent with each repayment of the Notes provided for above,
the Commitment shall permanently and irrevocably be reduced by the amount
of such repayment; PROVIDED that the Commitment shall not be reduced below
$100,000,000. Upon such reduction of the Commitment (i) the definition of
Commitment shall automatically be amended to reflect such reduction, (ii)
Schedule 1.1A to the Loan Agreement shall be amended to reflect a pro rata
reduction in each Bank's portion of the Commitment and (iii) the
Administrative Agent shall promptly thereafter distribute a revised
Schedule 1.1A to each of the Banks and the Company.
-9-
<PAGE>
(d) Notwithstanding the foregoing, if at the time of such repayment
the amount due under the Notes is reduced to zero the Borrower shall not be
required to further repay the Notes and the remaining cash consideration
from Divestiture Assets shall be used to repurchase the Senior Notes;
PROVIDED, HOWEVER, that the Commitment shall still be permanently and
irrevocably reduced by 50% of the cash consideration from such Divestiture
Assets, but in no event shall the Commitment be reduced below $100,000,000
1.5 ADDITION OF NEW COVENANT. The following new Section 6.20 is
hereby added to the Loan Agreement, as follows:
6.20 PREPAYMENT OF SENIOR NOTES. Make any redemption or other
prepayment on the Senior Notes or make any payment or deposit with any
Person that has the effect of providing for the satisfaction of all or any
portion of the Senior Notes ("Senior Note Prepayment") other than (i) a
scheduled payment or (ii) as provided in Section 5.13 of the Loan
Agreement; PROVIDED that, notwithstanding Section 5.9 of the Loan
Agreement, the Borrower may use proceeds of the Loans to make a Senior Note
Prepayment if and only if each of the following conditions is satisfied:
(a) immediately prior to such Senior Note Prepayment no Loans are
outstanding under the Loan Agreement;
(b) the Interest Charge Coverage as of the last day of the Fiscal
Quarter preceding such Senior Note Prepayment, is not less than the ratio
applicable to such Fiscal Quarter, as follows:
Fiscal Quarter Ending Ratio
--------------------- -----
December 31, 1994 1.50 to 1.00
March 31, 1995 and thereafter 2.25 to 1.00
it being understood that solely for purposes of this Section 6.20, Interest
Charge Coverage shall be calculated for the fiscal period consisting solely
of such Fiscal Quarter; and
(c) the Leverage Ratio, as of the last day of the Fiscal Quarter
preceding such Senior Note Prepayment, is not
-10-
<PAGE>
greater than the ratio applicable to such Fiscal Quarter, as follows:
Fiscal Quarter Ending Ratio
--------------------- -----
December 31, 1994 .73 to 1.00
March 31, 1995 and thereafter .70 to 1.00;
1.6 AMENDMENT OF FINANCIAL AND BUSINESS INFORMATION. Section 7.1(b)
of the Loan Agreement is amended to read in its entirety as follows:
(b) As soon as practicable, and in any event within 45 days after the
end of the fourth Fiscal Quarter in a Fiscal Year, a Certificate of a
Responsible Official setting forth the Funded Debt/EBITDA Ratio as of the
last day of such Fiscal Quarter, and providing reasonable detail as to the
calculation thereof, which calculation shall be based on the preliminary
unaudited financial statements of Borrower and its Subsidiaries for such
Fiscal Quarter;
ARTICLE II - WAIVERS AND CONSENTS
In reliance on the Borrower's representations and warranties set forth
in SECTION 3.2 below, as of the date hereof the Banks hereby:
2.1 WAIVER OF COVENANTS. Waive compliance by the Borrower with the
Leverage Ratio, Interest Charge Coverage and Fixed Charge Coverage covenants set
forth in Sections 6.15, 6.16 and 6.17, respectively, of the Loan Agreement for
the Fiscal Quarter ending June 30, 1994. The waiver set forth in this SECTION
2.1 relates solely to the Fiscal Quarter ending June 30, 1994 and does not
constitute a waiver of such covenants for any subsequent period, or a waiver of
any other term or conditions under the Loan Agreement.
2.2 DISPOSITION OF PROPERTY. (a) Waive the requirements of Section
6.3 of the Loan Agreement to the extent necessary to permit the following:
(i) the proposed sale of all of the capital stock or all or
substantially all of the assets of MagneTek Electric,
-11-
<PAGE>
Inc. owned by the Borrower; PROVIDED, HOWEVER, that this waiver shall only
apply to the extent that the cash consideration generated from such sale
shall be equal to or greater than $80,000,000;
(ii) the proposed sale of the Power Technology Group, including all
of the capital stock or all or substantially all of the assets of MagneTek
Power Technology Systems, Inc. owned by the Borrower; PROVIDED, HOWEVER,
that this waiver shall only apply to the extent that the cash consideration
generated from such sale shall be equal to or greater than $25,000,000;
(iii) the proposed sale of all of the capital stock or all or
substantially all of the assets of MagneTek National Electric Coil, Inc.
owned by the Borrower; PROVIDED, HOWEVER, that this waiver shall only apply
to the extent that the cash consideration generated from such sale shall be
equal to or greater than $20,000,000; and
(iv) the proposed sale of all of the capital stock or all or
substantially all of the assets of The Ohio Transformer Corporation owned
by the Borrower; PROVIDED, HOWEVER, that this waiver shall only apply to
the extent that the cash consideration generated from such sale shall be
equal to or greater than $5,000,000;
it being understood that the Borrower shall deliver to the Administrative
Agent and each Bank notice of any such sales within two business days
thereof, which notice shall include (i) the date of such sale, (ii) the
specific assets sold, (iii) the cash consideration generated from such
sale, (iv) the application of such cash consideration, and (v) such other
information as the Administrative Agent or any Bank may reasonably request.
(b) Agree that the cash consideration generated from such sales shall be
excluded from the calculation in Section 6.3(a)(ii) of the Loan Agreement.
2.3 CONSENT TO RELEASE OF SUBSIDIARY GUARANTIES AND PLEDGED
COLLATERAL. (a) In accordance with Section 11.2(c) of the Loan Agreement, but
subject to receipt by the Agent of assurances satisfactory to it that the
holders of the Senior Notes have consented to the release of the Subsidiary
Guaranties and the Pledged Collateral, the Banks hereby consent to the
-12-
<PAGE>
release of the Subsidiary Guaranties and the Pledged Collateral to the extent
required to permit the proposed sales referred to in SECTION 2.2 hereof; it
being understood that with respect to each such proposed sale: (i) such consent
to release shall apply to the extent the related waiver under SECTION 2.2 hereof
is then in effect; and (ii) such consent to release is subject to the condition
that concurrently with such release the Administrative Agent shall have directly
received from the related purchaser the portion of cash consideration related
thereto which are required to be applied to reduce the Notes pursuant to Section
5.13 of the Loan Agreement; PROVIDED, that such proceeds must be received by the
Administrative Agent by 3:00 p.m., Chicago time, on the date of such release.
(b) Concurrently with such release the Commitment shall be reduced in
accordance with Section 5.13 of the Loan Agreement and the Administrative Agent
shall deliver to the Borrower or its designee the Pledged Collateral which is
the subject of such release.
ARTICLE III - GENERAL
3.1 AMENDMENT FEE. Concurrent with the effectiveness of this
Amendment, the Borrower agrees to pay to the Administrative Agent, for the
respective accounts of the Banks, pro rata according to their Pro Rata Share of
the Commitment, in immediately available funds, an amendment fee equal to 0.15%
of the Commitment.
3.2 REPRESENTATIONS AND WARRANTIES. To induce the Banks to enter
into this Amendment, the Borrower represents and warrants to the Agents and the
Banks that (a) the representations and warranties contained in Sections 4.1,
4.2, 4.3, 4.8, 4.9, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.19 and 4.20 of the
Loan Agreement are true and correct as of the date hereof as though such
representations and warranties were made on the date hereof and (b) the holders
of the Senior Notes have consented to the release of the Subsidiary Guaranties
and the Pledged Collateral.
3.3 COUNTERPARTS. This Amendment may be executed in any number of
counterparts and any party hereto may execute any counterpart, each of which
when executed and delivered will be deemed to be an original and all of which
counterparts of this Amendment when taken together will be deemed to be but one
and the same Amendment.
-13-
<PAGE>
3.4 EFFECTIVENESS. The effectiveness of this Amendment is subject to
receipt by the Administrative Agent of counterparts of this Amendment executed
by the Borrower and by all of the Banks (whether on the same or different
counterparts). Upon receipt by the Administrative Agent of the foregoing, this
Amendment shall become effective as of the date hereof and the Administrative
Agent shall so inform all of the parties hereto.
3.5 REAFFIRMATION. As herein modified, the Loan Agreement shall
remain in full force and effect and is hereby ratified, approved and confirmed
in all respects.
3.6 DEFINITIONS. Terms used but not otherwise defined herein are
used herein as defined in the Loan Agreement. On and after the effective date
hereof, each reference in the Loan Agreement and the related documents to "Loan
Agreement," "this Agreement" or words of like import, shall unless the context
otherwise requires, be deemed to refer to the Loan Agreement as amended hereby.
3.7 COSTS AND EXPENSES. The Borrower agrees to pay all reasonable
fees and out-of-pocket costs and expenses of McDermott, Will & Emery as counsel
to the Administrative Agent in connection with the preparation of this
Amendment, all pursuant to itemized statement(s) to be submitted to the Borrower
by McDermott, Will & Emery.
3.8 BINDING AGREEMENT. This Amendment shall be binding upon the
Borrower, the Banks and the Agents and the respective successors and assigns of
the Banks and the Agents.
* * *
-14-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the date first above written.
BORROWER:
MAGNETEK, INC.
By:_______________________________
Name:
Title:
AGENT:
BANK OF AMERICA ILLINOIS, as Administrative Agent
By:_______________________________
Name:
Title:
THE BANKS:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as a Bank
By:_______________________________
Name:
Title:
BANK OF AMERICA ILLINOIS, as a Bank
By:_______________________________
Name:
Title:
CIBC INC., as a Bank
By: ______________________________
Name:
Title:
NATIONAL CITY BANK, as a Bank
By: ______________________________
Name:
Title:
-15-
<PAGE>
NATIONSBANK OF TEXAS, N.A., as a
Bank
By:_______________________________
Name:
Title:
THE BANK OF NEW YORK, as a Bank
By:_______________________________
Name:
Title:
CHEMICAL BANK, as a Bank
By:_______________________________
Name:
Title:
THE BANK OF CALIFORNIA, N.A., as a
Bank
By:_______________________________
Name:
Title:
THE LONG-TERM CREDIT BANK OF JAPAN,
LTD., as a Bank
By:_______________________________
Name:
Title:
-16-
<PAGE>
SEVENTH AMENDMENT
THIS SEVENTH AMENDMENT (this "Seventh Amendment") is entered into as
of March 31, 1994, by and among MAGNETEK, INC., a Delaware corporation (the
"Company"), and the insurance companies and institutions listed on the signature
pages hereof (each, a "Purchaser" and collectively, the "Purchasers"). All
capitalized terms used herein and not otherwise defined shall have the
respective meanings provided for such terms in the Senior Note Purchase
Agreement referred to below.
RECITALS
WHEREAS, the Purchasers and the Company are parties to the Note
Purchase Agreement dated as of June 30, 1989, as amended by a First Amendment
thereto dated June 29, 1990, by a Second Amendment thereto dated as of
December 28, 1990, by a Third Amendment thereto dated as of February 27, 1991,
by a Fourth Amendment thereto dated as of September 11, 1991, by a Fifth
Amendment thereto dated as of September 30, 1991 and by a Sixth Amendment
thereto dated as of November 26, 1991 (as so amended, the "Senior Note Purchase
Agreement");
WHEREAS, the Company desires to amend certain provisions of the Senior
Note Purchase Agreement and has requested certain consents and waivers
thereunder, and
WHEREAS, the Purchasers agree to enter into this Seventh Amendment.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. AMENDMENTS TO SENIOR NOTE PURCHASE AGREEMENT.
(a) Section 7.7C of the Senior Note Purchase Agreement is hereby
amended to delete the period at the end of the sentence and to insert the
following additional language:
"; provided, however, that (w) for the fiscal quarter ending
March 31, 1994, the aforesaid ratio shall not be less than .8 to
1; (x) for the two fiscal quarters ending June 30, 1994, the
aforesaid ratio shall not be less than .88 to 1; (y) for the
three fiscal quarters ending September 30, 1994, the aforesaid
ratio shall not be less than .9 to 1; (z) for the four fiscal
<PAGE>
quarters ending December 31, 1994, the aforesaid ratio shall not be
less than .92 to 1; and thereafter, at the last day of each fiscal
quarter ending on or after March 31, 1995, the aforesaid ratio shall
not be less than 1.50 to 1 for the period of four fiscal quarters
ending on such day."
(b) The following sentence shall be added at the end of the
definition of "CONSOLIDATED NET WORTH" in Section 8.2:
"Notwithstanding the foregoing, there shall be added to
Consolidated Net Worth, for purposes of calculating the amount
thereof at all times through and including the fiscal quarter
ending December 31, 1994, an amount equal to the difference, if
positive, between (i) the net, after-tax restructuring charge in
the amount of $42,156,000 incurred by the Company in the fiscal
quarter ended December 31, 1993 less (ii) the aggregate
cumulative amount of any net after-tax gain theretofore realized
by the Company in respect of dispositions of any of the
Subsidiaries or divisions selected by the Company as operations
for which divestiture is planned identified as such on Schedule l
attached hereto (collectively, the "Sold Businesses")."
(c) The definition of "Restricted Subsidiary" in Section 8.2 is
hereby amended by deleting in its entirety clause (a) thereof and substituting
in lieu thereof the following:
"(a) the depreciated book value of the total assets of all
Restricted Subsidiaries which at such time do not meet the
requirements of clause (ii)(x) of the foregoing subsection A
(collectively, the "Foreign Restricted Subsidiaries") shall
exceed 25% of Consolidated Total Assets or"
2. REDESIGNATION OF UNRESTRICTED SUBSIDIARIES. The Company and the
Purchasers hereby agree to the redesignation by the Company of all of its
Unrestricted Subsidiaries other than (i) MagneTek Leasing Corporation and
(ii) MagneTek Credit Corporation from "Unrestricted Subsidiaries" to "Restricted
Subsidiaries"; provided, however, that such redesignation shall not be effective
(A) prior to the effective date therefor indicated in the notice the Company
shall provide to the Purchasers and (B) unless and until, at the time thereof
and after giving effect thereto on a PRO FORMA basis (x) no Default or Event of
Default shall have occurred and be continuing or
2
<PAGE>
shall result from such redesignation and (y) the Company shall be in compliance
with the provisions of Sections 7.4B(3) and 7.5F as if the Funded Debt and Liens
of such newly Restricted Subsidiaries had been incurred on the date of such
redesignation. A list of all Subsidiaries which potentially may be so
redesignated as Restricted Subsidiaries is attached hereto as Schedule 2 to this
Seventh Amendment.
3. CERTAIN CONSENTS AND WAIVERS.
(a) The Purchasers hereby agree, notwithstanding any contrary
provision in Section 7.11 or 7.12 of the Senior Note Purchase Agreement, to the
disposition by the Company of the stock or assets of the Sold Businesses,
provided the net proceeds of each such disposition are applied as soon as is
reasonably practicable to the reduction of outstanding Debt of the Company under
(i) the Company's $200 Million Revolving Credit Agreement dated as of April 28,
1993 (the "Credit Agreement") or (ii) the Notes (in accordance with Section 4.2
of the Note Purchase Agreement), and in any event are so applied within two days
after receipt thereof, to the extent such proceeds are to be applied to repay
Debt outstanding under the Credit Agreement, and within 35 days after receipt
thereof, to the extent such proceeds are to be applied to prepay the Notes.
(b) To the extent the disposition of any Sold Business requires the
release of any Collateral, the Purchasers hereby agree and irrevocably consent
that such Collateral may be released without further action or consent by the
Purchasers, such consent and release to be effective only to the extent and at
such time as the Agent and the Banks under the Credit Agreement shall have
consented to such release. The Company agrees to notify the Purchasers promptly
following any such release.
(c) To the extent the sale of the Sold Businesses as described on
Schedule I or the redesignation of Unrestricted Subsidiaries necessitates such a
waiver, the Purchasers hereby grant any waiver necessitated by the provisions of
Section 7.8 (regarding change in the business of the Company and its Restricted
Subsidiaries).
4. ADDITIONAL INTEREST. In consideration of the amendments and
consents herein set forth and as a condition to the effectiveness hereof, the
Company will pay, ratably (based on the outstanding principal of the Notes held
by each Purchaser) to the Purchasers, a one-time additional interest payment in
the aggregate amount of $202,500. Additionally, from and after January 1, 1994,
the interest payable on the interest payment dates provided for in the Notes
shall be increased (in respect of all periods subsequent to December 31, 1993)
by .25% to a total of 11.45% per annum; provided, however, that in no
3
<PAGE>
event shall such additional .25% in interest be included in computing the
Maintenance Amount for any purpose hereunder including, without limitation, in
computing the amount payable in respect of any prepayment under Section 4.2 or
4.4 of the Note Purchase Agreement.
After the date hereof, any Note issued pursuant to Section 10 of the
Senior Note Purchase Agreement in substitution or exchange for any outstanding
note will be in such form as will reflect such increase in interest rate.
5. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to each Purchaser as follows:
(a) NO DEFAULTS. After giving effect hereto, no Default or Event of
Default shall have occurred and be continuing.
(b) POWER AND AUTHORITY. The Company has all requisite corporate
power and authority to execute and deliver this Seventh Amendment and to perform
the Senior Note Purchase Agreement and the Notes as amended hereby (the "Amended
Documents").
(c) ENFORCEABILITY. This Seventh Amendment has been duly executed
and delivered by the Company, and the Amended Documents constitute legal, valid
and binding obligations of the Company, enforceable against the Company in
accordance with their terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(d) NO CONFLICTS. The execution and delivery of this Seventh
Amendment and the performance of the Amended Documents do not and will not
(i) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any capital stock issued by the
Company or any property of the Company under, any indenture, mortgage, deed of
trust, bank loan or credit agreement, corporate charter or by-laws, or any other
material agreement or instrument to which the Company is a party or by which any
of its properties may be bound, (ii) conflict with or result in a breach of any
of the terms, conditions or provisions of any Order of any court, arbitrator or
Governmental Body applicable to the Company, (iii) violate any provision of any
statute or other rule or regulation of any Governmental Body applicable to the
Company or (iv) require any waivers, consents or approvals by any creditors of
the Company.
4
<PAGE>
(e) GOVERNMENTAL AUTHORIZATIONS. No consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Body is required for the validity of the execution and delivery of this Seventh
Amendment or for the performance by the Company of the Amended Documents.
6. REFERENCES TO SENIOR NOTE PURCHASE AGREEMENT. From and after the
date of this Seventh Amendment, all references in the Senior Note Purchase
Agreement, as amended by this Seventh Amendment, shall be deemed to be
references to the Senior Note Purchase Agreement as amended by this Seventh
Amendment.
7. GENERAL.
(a) This Seventh Amendment (i) shall be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed wholly within such state, without giving effect to any
conflict of laws principles thereof, and (ii) may not be amended, modified or
supplemented, except as set forth in Section 12 of the Senior Note Purchase
Agreement.
(b) The Senior Note Purchase Agreement (as herein amended) is hereby
ratified and confirmed and shall continue in full force and effect in accordance
with their respective terms.
(c) The execution, delivery and effectiveness of this Seventh
Amendment shall not, except as expressly provided herein, operate as a waiver of
any right, power or remedy of any Purchaser under, nor of any provision of, the
Senior Note Purchase Agreement. This Seventh Amendment may be executed in any
number of counterparts (which may be by facsimile transmission) and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
(d) Without limiting the generality of Section 17.1 of the Senior
Note Purchase Agreement, the Company agrees to pay all reasonable expenses of
the Purchasers incident to the making and performance of this Seventh Amendment
(including, without limitation, the fees and disbursements of one special
outside counsel to the Purchasers, which shall be Milbank, Tweed, Hadley &
McCloy).
5
<PAGE>
IN WITNESS WHEREOF, the parties hereto have entered into this Seventh
Amendment by their duly authorized representatives, all as of the year and date
first above written.
TEACHERS INSURANCE AND MUTUAL TRUST LIFE INSURANCE
ANNUITY ASSOCIATION OF COMPANY
AMERICA
By: MIMLIC ASSET MANAGEMENT
By:_________________________ COMPANY
Name:_____________________
Title:____________________ By:_________________________
Name:_____________________
Title:____________________
THE EQUITABLE LIFE ASSURANCE EQUITABLE VARIABLE LIFE
SOCIETY OF THE UNITED INSURANCE COMPANY
STATES
By:_________________________ By:_________________________
Name:_____________________ Name:_____________________
Title:____________________ Title:____________________
MINNESOTA FIRE & CASUALTY ORIX USA CORPORATION
COMPANY
By: MIMLIC ASSET MANAGEMENT
COMPANY By:______________________
Name:__________________
By:______________________ Title:_________________
Name:__________________
Title:_________________
PRINCIPAL MUTUAL LIFE THE PENN INSURANCE AND
INSURANCE COMPANY ANNUITY COMPANY
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
By:________________________
Name:____________________
Title:___________________
6
<PAGE>
PRINCIPAL NATIONAL LIFE NICHIBOSHIN USA, INC.
INSURANCE COMPANY
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
By:________________________
Name:____________________
Title:___________________
LIFE INVESTORS INSURANCE AUSA LIFE INSURANCE COMPANY
COMPANY OF AMERICA
By:
By:________________________ Name:____________________
Name:____________________ Title:___________________
Title:___________________
VAULT & CO. THE MINNESOTA MUTUAL LIFE
INSURANCE COMPANY
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
GENERAL SERVICES LIFE KELLY & CO.
INSURANCE COMPANY
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
THE PENN MUTUAL LIFE
INSURANCE COMPANY
By:________________________
Name:____________________
Title:___________________
7
<PAGE>
APPROVED:
MAGNETEK, INC. MAGNETEK NATIONAL ELECTRIC
COIL, INC.
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
CENTURY ELECTRIC, INC. MAGNETEK CONTROLS, INC.
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
MAGNETEK ALS CORPORATION THE OHIO TRANSFORMER
CORPORATION
By:________________________ By:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
8
<PAGE>
SCHEDULE 1
(AMOUNTS IN MILLIONS $)
<TABLE>
<CAPTION>
Proposed Divestitures FY 1993 Sales
--------------------- -------------
<S> <C>
Component Transformers $ 38
RV Converters 16
Controls 31
Power Technology Systems 102
Electrical Services 98
Electrical Insulation 10
Medium Power Transformers 107
Large Custom Motors 32
----
Total $434
----
----
</TABLE>
9
<PAGE>
SCHEDULE 2
SUBSIDIARIES WHICH MAY BE REDESIGNATED AS RESTRICTED SUBSIDIARIES
FRANCE
May & Christe France S.A.R.L. (a wholly-owned subsidiary of MagneTek May &
Christe GmbH)
GERMANY
Jovy-Atlas Specht Stromrichter GmbH (a wholly-owned subsidiary of MagneTek
Deteiligungsgesellschaft GmbH)
MagneTek Deteiligungsgesellschaft (Deutschland Holding) GmbH (a wholly-
owned subsidiary of MagneTek Europe N.V.)
MagneTek EuroAtlas GmbH (a wholly-owned subsidiary of MagneTek
Deteiligungsgesellschaft GmbH)
MagneTek Germann GmbH & Co. (a wholly-owned subsidiary of MagneTek
Deteiligungsgesellschaft GmbH)
MagneTek May & Christe GmbH (a wholly-owned subsidiary of MagneTek M & C
Electrotechnik GmbH)
MagneTek M & C Elektrotechnik GmbH (a 70% subsidiary of MagneTek
Deteiligungsgesellschaft (Deutschland Holding)) GmbH
Weltor GmbH (a wholly-owned subsidiary of MagneTek M & C Electrotechnik
GmbH)
ITALY
MagneTek Italia S.r.l.
MagneTek S.p.A. (a wholly-owned subsidiary of MagneTek Europe N.V.)
THE NETHERLANDS
MagneTek Europe N.V.
10
<PAGE>
UNITED KINGDOM
MagneTek Service (U.K.) Limited (a wholly-owned subsidiary of MagneTek
Europe N.V.)
Universal Electric Company (U.K.) Limited (a wholly-owned subsidiary of
MagneTek Service (U.K.) Limited)
Wortex (U.K.) Limited (a wholly-owned subsidiary of MagneTek Service (U.K.)
Limited)
11
<PAGE>
ADDENDUM TO THE SEVENTH AMENDMENT DATED
AS OF MARCH 31, 1994 (THE "AMENDMENT")
TO THE MAGNETEK, INC. 11.20% NOTE
Delete section 3(b) of the Amendment in its entirety, and insert the following
in its place:
To the extent the disposition of any Sold Business requires the release of any
lien on or security interest in any Collateral and/or the release of any
Guarantor from its obligations under the Limited Guaranty, the Purchasers hereby
agree and irrevocably consent that such release may be granted without further
action or consent by the Purchasers, such consent and release to be effective
only to the extent and at such time as the Agent and the Banks under the Credit
Agreement shall have consented to such release. The Company agrees to notify
the Purchasers promptly following any such release.
Acknowledged and consented to as of July 1, 1994.
TEACHERS INSURANCE AND EQUITABLE VARIABLE LIFE
ANNUITY ASSOCIATION OF AMERICA INSURANCE COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
THE EQUITABLE LIFE ASSURANCE MUTUAL TRUST LIFE INSURANCE
SOCIETY OF THE UNITED STATES COMPANY
BY: MIMLIC ASSET MANAGEMENT
COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
MINNESOTA FIRE & CASUALTY LIFE INVESTORS INSURANCE
COMPANY COMPANY OF AMERICA
BY: MIMLIC ASSET MANAGEMENT
COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
<PAGE>
THE MINNESOTA MUTUAL LIFE BANKERS UNITED LIFE ASSURANCE
INSURANCE COMPANY COMPANY AS A SUCCESSOR TO:
GENERAL SERVICES LIFE
INSURANCE COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
PRINCIPAL MUTUAL LIFE FIRST AUSA LIFE INSURANCE
INSURANCE COMPANY COMPANY (FKA): AUSA LIFE
INSURANCE COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
BY:________________________
Name:____________________
Title:___________________
PRINCIPAL NATIONAL LIFE ORIX USA CORPORATION
INSURANCE COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
NICHIBOSHIN USA, INC. THE PENN INSURANCE AND
ANNUITY COMPANY
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
2
<PAGE>
VAULT & CO. KELLY & CO.
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK AS
TRUSTEE OF A COMMINGLED
PENSION TRUST:
BY:________________________ BY:________________________
Name:____________________ Name:____________________
Title:___________________ Title:___________________
THE PENN MUTUAL LIFE
INSURANCE COMPANY
BY:________________________
Name:____________________
Title:___________________
APPROVED:
MAGNETEK, INC. MAGNETEK NATIONAL ELECTRIC
COIL, INC.
BY:_________________________________ BY:_________________________________
Name: John P. Colling, Jr. Name: John P. Colling, Jr.
Title: Vice President & Treasurer Title: Vice President
CENTURY ELECTRIC, INC. MAGNETEK CONTROLS, INC.
BY:_________________________________ BY:_________________________________
Name: John P. Colling, Jr. Name: John P. Colling, Jr.
Title: Vice President Title: Vice President
MAGNETEK ALS CORPORATION THE OHIO TRANSFORMER
CORPORATION
BY:_________________________________ BY:_________________________________
Name: John P. Colling, Jr. Name: John P. Colling, Jr.
Title: Vice President Title: Vice President
3
<PAGE>
EXHIBIT 10.50
LEASE AGREEMENT
THIS AGREEMENT made this _____ day of August, 1994, by and between
WILLIS CORROON CORPORATION, whose address is 26 Century Boulevard, Nashville,
Tennessee 37214, hereinafter called "Lessor", and MAGNETEK, INC., whose address
is 26 Century Boulevard, P.O. Box 290159, Nashville, Tennessee 37229-0159,
hereinafter called "Lessee".
WHEREAS, Lessor is the owner of the Willis Corroon Plaza Building,
with the entire Willis Corroon Plaza hereinafter called "Building", located at
26 Century Boulevard, Nashville, Davidson County, Tennessee;
WHEREAS, subject to the terms, conditions and limitations contained
herein, Lessor agrees to lease to Lessee certain space in such Building;
W I T N E S S E T H:
1. PREMISES. Lessor hereby leases to Lessee and Lessee hereby
leases from Lessor certain space located on Floor 6 North of the Building
("Premises") which is described as shown on Exhibit A attached hereto, subject
to the provisions herein contained. The Lessor and Lessee agree that the
rentable area of the Premises is set forth in Exhibit D and that the rentable
area of the Building is 559,860 square feet. The parties agree that such square
footage shall be final for the purposes of this Lease, whether such areas shall
be more or less as a result of variations in measurement, methods of
measurement, or construction and that such square footage shall not be subject
to later proration or change. Lessee has inspected the Premises and agrees to
accept the same without any agreements, representations, understandings or
obligations on the part of Lessor to perform any alterations, repairs or
improvements except as expressly provided herein. There is reserved from the
demise of the Premises the right to utilize, maintain, repair, alter and/or
replace all facilities or components of facilities that may be located therein
that provide common service for the operation and maintenance of the Building,
including, for example, but not by way of limitation, electrical conduit,
heating and air conditioning duct work, water and discharge piping, fire control
devices and space elevators and stairways, provided that Lessor shall use its
best efforts not to interfere with Lessee's use and enjoyment of the premises
when exercising its rights under this provision.
1.1 Lessor also grants to Lessee, together with and subject to the
same rights granted from time to time by Lessor
<PAGE>
to other lessees and occupants of the Building, the right to use the common
parking area and/or parking garage adjoining the Building and any other
facilities intended for common use by all lessees within the Building. The area
designated for parking is P4 North.
2. TERM. The term of this Lease shall commence on September 1, 1994
and shall end on August 31, 1996, unless sooner terminated as provided herein.
3. COMMENCEMENT DATE. Unless otherwise provided herein, rental
shall commence on the date above stated as the commencement of the term. If
possession of the Premises for any purpose other than the completion of tenant
improvements and furnishing the premises is taken by Lessee before the date
stated above for the Commencement of the term of this Lease, rent shall commence
on the date possession is taken for such purpose.
3.1 Upon the expiration or earlier termination of this Lease, or upon
the exercise by Lessor of its right to re-enter the Premises without terminating
this Lease, Lessee shall immediately surrender the Premises to Lessor together
with all alterations, improvements and furnishings and other property as
provided elsewhere herein, in broom-clean condition and in good order, condition
and repair, ordinary wear and tear excepted, failing which Lessor may restore
the Premises to such condition at Lessee's expense. Upon such expiration or
termination, Lessee shall have the right to remove its personal property.
Tenant shall promptly repair any damage caused by any such removal, and shall
restore the Premises to the condition existing prior to the installation of the
items so removed. This provision shall survive the expiration or earlier
termination of this Lease for a period of sixty (60) days unless there is
expressed written notification.
4. BASE RENTAL. Lessee shall and hereby agrees to pay to Lessor at
Lessor's office or at such place as Lessor may from time to time designate in
writing an annual base rental at the rate set forth in Exhibit C which is
attached hereto and incorporated herein by reference (the "Base Rent"). Both
Lessor and Lessee have signed Exhibit C for the purpose of identification. Base
Rent shall be paid without demand, on the first day of each month, in advance.
In the event the term of this Lease commences on a day other than the first day
of a calendar month, then the Base Rent for the first and last fractional month
of the term hereof shall be proportionately reduced.
4.1 The rentals shall be absolute rent inclusion (without deduction
by way of commissions of other collection
2
<PAGE>
expenses) to the Lessor so that this Lease shall yield to the Lessor the full
amount of base rental and the full amount of installments thereof throughout the
lease term or extensions thereof including Base Rent, Additional Rent, Operating
Expenses and all other sums payable by Lessee hereunder which shall be paid
without notice or demand (except as expressly provided herein)
4.2 The burden of proof of payment of rent in case of controversy
shall be upon the Lessee.
4.3 It is expressly agreed that the covenant by the Lessee to make
payment of rent when due is independent of any and all other covenants contained
in this agreement and the Lessee may not withhold rent for any alleged default
by the Lessor.
4.4 f rent is not paid within fifteen (15) days after the date due,
and Lessor elects not to exercise its rights under paragraph 17.2 hereinafter,
Lessor may collect as a late charge one and one-half percent (1-1/2%) per month
of the delinquent accounts.
5. LESSOR'S RESPONSIBILITIES. Lessor agrees that it shall provide
automatic elevator service, furnish water in the common areas for lavatory and
drinking purposes, electric current, heating, ventilating and air conditioning
to provide a temperature required in Lessor's reasonable judgment, for
comfortable occupancy of the Premises and all public or common areas under
normal business operations, between the hours of 8:00 a.m. and 6:00 p.m. on
Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturday of each week,
Sundays and holidays are excepted. Lessor will make available, on an exception
basis, electric current, HVAC and elevator services beyond normal business
hours. The cost of such items shall be included in the term Base Rent, as
defined herein. Whenever heat generating machines or equipment are used in the
Premises which materially affect the temperature otherwise maintained by the air
conditioning system, Lessor reserves the right, at Lessee's option, either to
require Lessee to discontinue use of such heat generating machine or equipment,
or to install supplementary air conditioning equipment in the Premises and the
cost of such installation shall be paid by the Lessee to Lessor promptly on
being billed therefor, and the cost of operation and maintenance of said
supplementary equipment shall be paid by Lessee to Lessor on the monthly rent
payment dates, at such rates as may be agreed upon, but in no event at a rate
less than Lessor's actual costs therefor for labor, steam, electricity and
water. The Lessor agrees to provide janitorial service in and about the
Premises, and all public and common areas, Saturdays, Sundays and holidays
excepted,
3
<PAGE>
which service will include daily trash removal, vacuuming, and cleaning of
bathrooms.
5.1 Lessor does not warrant that any services or utilities will be
free from shortages, failures, variations, or interruptions caused by repairs,
maintenance, replacements, improvements, alterations, changes of service,
strikes, lockouts, labor controversies, accidents, inability to obtain services,
fuel, steam, water or supplies, governmental requirements or requests, or other
causes beyond Lessor's reasonable control. No such failure or interruption of
services or utilities shall be deemed an eviction or disturbance of Lessee's use
and possession of the Premises or any part thereof, or render Lessor liable to
Lessee for damages, or abatement of Rent, or relieve Lessee from performance of
Lessee's obligations under this Lease. Lessor in no event shall be liable for
damages by reason of loss of profits, business interruption or other
consequential damages. Lessor shall exert due and diligent efforts to resume
services. Should services be interrupted for five (5) consecutive business
days, Lessor shall abate Base Rent for the interrupted period of time.
5.2 Lessor shall not be liable or responsible to Lessee for any
inconvenience or any loss or damage either to Lessee or Lessee's property or to
any other person or his property occasioned by any matter either: (1) which is
beyond the control of Lessor; or (2) which may arise through or in any way may
be connected with repair of any part of the demised premises or failure to make
such repairs or from any other cause whatsoever unless caused solely by Lessor's
failure to effect repairs, which are its responsibility, within a reasonable
time following notice by Lessee to Lessor of need of same.
6. LESSEE'S RESPONSIBILITIES. Lessee agrees that its employees,
invitees and licensees shall:
6.1 Observe the rules and regulations hereto attached as Exhibit B
and such further rules and regulations as from time to time may be put in effect
by Lessor for the general safety, comfort and convenience of Lessor, occupants
and tenants of the Building. Any failure by Lessor to enforce any rules and
regulations against either Lessee or any other tenant in the Building shall not
constitute a waiver thereof.
6.2 Give Lessor, its agents and employees, its mortgagees (including
Mortgagee) and any other person or persons authorized by Lessor, including
persons who may be interested in renting or buying the Premises of Building
access to the Premises at all reasonable times after reasonable notice to
Lessee, without charge or diminution of
4
<PAGE>
the rent, to enable Lessor and/or the others hereinbefore mentioned to examine
the same and/or to make such repairs, additions and alterations as Lessor may
deem advisable without diminution of rent or liability on the part of Lessor
unless expressly provided herein.
6.3 Except for the customary cleaning and trash removal provided for
herein, and damage by casualty provided for in Article 8, Lessee shall keep the
Premises in good and sanitary condition, working order and repair. In the event
any repairs, maintenance or replacements are required, Lessee shall promptly
arrange for the same through Lessor for such reasonable charge as Lessor may
from time to time establish. All such repairs, maintenance or replacements must
be approved in advance by Lessor in writing and shall be performed in a first
class, workmanlike manner. If Lessee does not promptly make arrangements for
necessary repairs, maintenance or replacements, the Lessor may, but shall not be
obligated to, perform such work and the costs paid or incurred by Lessor there
for shall be reimbursed by Lessee promptly after request by Lessor. Lessee
shall indemnify Lessor and pay for any repairs, maintenance or replacements to
areas of the Building outside the Premises, caused, in whole or in part, as a
result of moving any furniture, fixtures or other property to or from the
Premises by Lessee or its agents, employees, contractors or visitors.
6.4 Upon termination of this Lease in any manner whatsoever, remove
Lessee's personal property, goods and effects and those of any other persons
claiming under Lessee, and quit and deliver up the Premises to Lessor peaceably
and quietly in as good order and condition as the same are now, or hereafter may
be improved by Lessor or Lessee, reasonable use and wear and thereof and repairs
which are Lessor's obligations excepted. Except for Lessee's personal property,
all alterations, installments, fixtures, additions, improvements and floor
covering made, installed or attached to or on the Premises either at the expense
of Lessee or Lessor or both, shall be Lessor's property, whether movable or not,
and Lessee shall be responsible for the maintenance thereof, normal wear and
tear excepted, and Lessee shall not remove but may replace said property either
during the term of this Lease or at the expiration thereof without the written
consent of Lessor. In no event shall Lessor be obligated to reimburse Lessee or
otherwise pay for any of such property. If prior to termination of this Lease
or within ten (10) days thereafter Lessor so directs by written notice, Lessee,
at Lessee's sole cost, shall promptly remove such of the foregoing items as are
designated in such notice and restore the Premises to the condition prior to the
date of this Lease, and repair any damage to the Premises caused by such removal
of any such items. If Lessee fails to perform any repairs or restoration,
5
<PAGE>
or fails to remove any items from the Premises, required hereunder, Lessor may
do so, and Lessee shall pay Lessor the cost thereof on demand. All property
removed from the Premises by Lessor pursuant to any provision of this Lease or
any law may be handled or stored by the Lessor at the cost and expense of the
Lessee, and the Lessor shall in no event be responsible for the value,
preservation or safekeeping thereof. Lessee shall pay Lessor for all expenses
incurred by Lessor in such handling and storage, including Lessor's reasonable
storage charges for so long as the same shall be in Lessor's possession or under
Lessor's control. All property not removed from the Premises or retaken from
storage by Lessee within thirty (30) days after the end of the Term, or
termination of Lessee's right to possession, whichever shall first occur, shall
at Lessor's option be conclusively deemed to have been conveyed by Lessee to
Lessor as by bill of sale without further payment or credit by Lessor to Lessee.
To the extent permitted by applicable law, Lessor shall have a lien against such
property for the costs incurred in removing and storing the same.
6.5 Not overload, damage or deface the Premises or do any act to
bring or keep anything thereof which may make void or voidable any insurance on
the Premises or the Building or which may render an increased risk and/or extra
premium payable for insurance or violate any codes, ordinances or laws of any
governmental body or agency.
6.6 Not make any alteration of or addition to the Premises without
the written approval of Lessor. At Lessor's option, at the termination of the
Lease term, Lessee may be directed to remove all such changes, alterations and
additions and restore the Premises to their original condition prior to the end
of the term of this Lease.
6.7 At its own expense, cause to be discharged or removed by bond,
within fifteen (15) days of the filing thereof, any mechanic's lien filed
against the Premises or the Building for work claimed to have been done for, or
materials claimed to have been furnished to, Lessee.
6.8 Not create or allow any nuisance to exist on said Premises, and
abate any nuisance which may arise promptly and free of expense to Lessor.
7. DAMAGE TO PREMISES. In case of damage to the Premises or the
Building by fire or other casualty, Lessee shall give immediate notice to
Lessor, who may thereupon cause the damage to be repaired with reasonable speed
at the expense of Lessor subject to delays which may arise by reason of
adjustment of loss under insurance policies and for delays beyond the reasonable
control of Lessor, and to the extent
6
<PAGE>
that the Premises are rendered untenantable, the rent shall proportionately
abate, provided, however, in the event that such damage resulted from or was
contributed to by the act, fault or neglect of Lessee, Lessee's employees,
invitees, licensees, or agents, there shall be no abatement of rent and Lessee
shall be liable to Lessor for all damage, loss and expense suffered or incurred
by Lessor as a result of such damage. In the event or if Lessor shall decide
not to repair or rebuild, this Lease shall, at the option of either Lessee or
Lessor, be terminated as of the date of such damage by written notice from
Lessor to Lessee given within ninety (90) days after the date of such damage,
and the rent shall be adjusted to the date of such damage and Lessee shall
thereupon promptly vacate the Premises.
8. LESSEE'S PERSONAL PROPERTY. All property of Lessee or Lessee's
invitees or guests kept or stored on the Premises shall be so kept at the risk
of Lessee only and Lessor or Lessor's agents shall not be liable for any damage
to property of Lessee nor for the loss of property of Lessee by theft or
otherwise unless caused by Lessor's negligent act.
9. CONDEMNATION. If the whole or substantially the whole of the
Building or the Premises shall be lawfully condemned or taken in any manner for
any public or quasi-public use or purpose, this Lease and the term and estate
hereby granted shall forthwith cease and terminate as of the date of taking
possession of such use or purpose. If less than the whole or substantially the
whole of the Building or the Premises shall be so condemned or taken, then
Lessor (whether or not the Premises be affected) may, at its option, terminate
this Lease and the term and estate hereby granted as of the date of the taking
of possession for such use or purpose by notifying Lessee in writing of such
termination. Upon any such taking or condemnation and the continuing in force
of this Lease as to any part of the Premises, the base rental shall be
diminished by an amount representing the part of the said rent properly
applicable to the portion of the Premises which may be so condemned or taken and
Lessor shall, at its expense, proceed with reasonable diligence to repair, alter
and restore the remaining part of the Building and the Premises to substantially
their former condition to the extent that the same may be feasible. Lessor
shall be entitled to receive the entire award in any condemnation proceeding,
including any award for the value of any unexpired term of this Lease and Lessee
shall have no claim against the proceeds of condemnation.
10. QUIET ENJOYMENT. Lessor covenants that upon Lessee's paying rent
and rent adjustments and observing and performing all the terms, covenants and
conditions of this Lease on its part to be observed and performed, Lessee may
7
<PAGE>
peaceably and quietly possess and enjoy the Premises. To the extent of Lessor's
interest in such areas, Lessor hereby grants to Lessee such reasonable access to
and through the common area in and around the Building as may be necessary for
Lessee to reasonably enjoy its rights under this Lease.
11. LESSOR ADVANCE TO CURE DEFAULT. If Lessee shall default in the
observance or performance of any term or covenant on its part to be observed or
performed under or by virtue of any of the terms and provisions in any paragraph
of this Lease, Lessor without being under any obligation to do so and without
hereby waiving such default, may remedy such default for the account and at the
expense of Lessee, immediately and without notice in case of emergency, or in
any other case only provided that the Lessee shall fail to remedy such default
with all reasonable dispatch under the circumstances after notice as provided in
17.1.2 hereof. If Lessor makes any expenditures or incurs any obligations for
the payment of money in connection therewith including, but not limited to,
attorney's fees in instituting, prosecuting or defending any action or
proceeding, such sums paid or obligations incurred with interest at the highest
legal rate and costs shall be paid to it by Lessee on demand.
12. CERTIFICATE OF LESSEE. Lessee agrees at any time, and from time
to time, upon not less than fifteen (15) business days prior notice by Lessor,
to execute, acknowledge and deliver to Lessor, a statement in writing certifying
that this Lease is unmodified and in full force and effect if such is the case
(or if there have been modifications, that the same is in full force and effect
as modified and stating the modifications), and the dates to which the rent,
rent adjustments and other charges have been paid, and stating whether or not to
the best knowledge of the signer of such certificate, Lessor is in default in
performance of any covenants, agreement, term, provision or condition contained
in this Lease and, if so, specifying each such default of which the signer may
have knowledge, it being intended that any such statement delivered pursuant
hereto may be relied upon by any prospective purchaser or lessee of the Premises
or of the Building and the land upon which it is erected, any mortgagee or
prospective mortgagee thereof, or any prospective assignee of any mortgagee
thereof.
13. DEFAULT AND REMEDIES.
13.1 EVENTS OF DEFAULT. The occurrence of any of the events described
in Subsections 13.1.1 through 13.1.5 inclusive, of this Subsection 13.1 shall be
and constitute an Event of Default under this Agreement.
8
<PAGE>
13.1.1 Failure by Lessee to pay in full any Rent or other sum
payable hereunder within fifteen (15) days after the date such payment is due.
13.1.2 Default by Lessee in the observance or performance of any of
the material terms, covenants, agreements or conditions contained in this Lease,
other than as specified in Paragraph 13.1.1 of this Subsection 13, for a period
of thirty (30) days after notice thereof to Lessee by Lessor; provided, however,
that if the term, condition, covenant or obligation to be performed by Lessee is
of such nature that the same cannot reasonably be performed within such thirty
(30) day period, such default shall be deemed to have been cured if Tenant
commence such performance within said thirty (30) day period and thereafter
diligently undertakes to complete the same and does so complete the required
action within a time deemed to be reasonable by Lessor.
13.1.3 Filing by Lessee of a voluntary petition in bankruptcy or a
voluntary petition or answer seeking reorganization, arrangement, readjustment
of the debts of Lessee or for any other insolvency act, law, rule or regulation,
State or Federal, now or hereafter existing, or any action by Lessee, indicating
consent to, approval of or acquiescence in, any such petition or proceeding; the
application by Lessee for, or the appointment by consent or acquiescence of, a
receiver or trustee of Lessee, or for all or a substantial part of the property
of Lessee; the making by Lessee of any general assignment for the benefit of
creditors of Lessee; or the inability of Lessee, or the admission of Lessee of
the inability thereof, to pay the debts of Lessee as they mature; or the filing
of any involuntary petition against Lessee in bankruptcy or seeking
reorganization, arrangement, readjustment of the debts of Lessee or for any
other relief under the Bankruptcy Act, as amended, or under any other insolvency
act, law, rule or regulation, State or Federal, now or hereafter existing, of
the involuntary appointment of a receiver or trustee of Lessee or for all or a
substantial part of the property of Lessee; or the issuance of attachment,
execution or other similar process against any substantial part of the property
of Lessee and the continuation of any such for a period of ninety (90) days
undismissed, unbonded, or undischarged.
13.1.4 This Lease shall not be assigned, subleased, or transferred
by Lessee, whether by operation of law or otherwise under any circumstances.
13.1.5 Any construction, changes or alterations on the Premises,
(without the prior written consent of Lessor, as herein provided).
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<PAGE>
13.2 REMEDIES. Whenever any Event of Default shall have happened and
be subsisting after the applicable cure period has expired, Lessor may, to the
extent permitted by law, take any one or more of the remedial steps described in
Paragraph 13.2.1 through 13.2.5, inclusive, of this Subsection 13.2, subject,
however, to the rights, title and interest of any mortgagee.
13.2.1 Lessor may at its option, declare all installments of Base
Rent as adjusted at the time of default payable under Section 4 of this Lease,
for remainder of the lease term to be immediately due and payable whereupon the
same shall become immediately due and payable.
13.2.2 Lessor may re-enter and take possession of the Premises and
improvements without terminating this Lease, and sublease in their entirety the
same for the account of Lessee, holding Lessee liable for the difference in the
rent and other amounts actually paid by such sublessee in such subleasing and
the rents and other amounts payable by Lessee hereunder.
13.2.3 Lessor, as Lessee's agent, without terminating this Lease,
may at Lessor's option enter upon and operate the Premises, including
improvements, and in this connection, Lessee authorizes Lessor upon such entry,
to take over and assume the management, operation and maintenance of such
improvements and in general to perform all actions necessary in connection
therewith in the same manner and to the same extent as Lessee might so act,
using Lessor's best efforts to operate the Premises and improvements for the
account of Lessee, holding Lessee liable for all rent and other amounts payable
by Lessee hereunder.
13.2.4 Lessor may terminate the lease term, exclude Lessee from
possession of the Premises and improvements and will use Lessor's best efforts
to lease the same to another for the account of Lessee, holding Lessee liable
for all rent and other amounts payable by Lessee hereunder.
13.2.5 Lessor may take whatever action at law or in equity may
appear necessary or desirable to collect the rent and other amounts then due and
thereafter to become due or to enforce performance and observance of any
obligation, agreement or covenant of Lessee under this Agreement, and in
connection with such actions to recover any or all damages to Lessor for
Lessee's violation or breach of this Lease.
13.3 APPLICATION OF FUNDS. If any statute or rule of law shall
validly limit the amount of any final
10
<PAGE>
damages described in Subsection 13.2 of this Section 13 to less than the amount
agreed upon, Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law. In the event Lessor elects to proceed under the
authority of Subsection 13.2.1, 13.2.2, 13.2.3 or 13.2.4 of Subsection 13.2 of
this Section 13, Lessor shall make reasonable effort to collect rentals from
sublessees or new lessees of the entire Premises or portions thereof reserving,
however, within Lessor's own discretion, the right to determine the method of
collection and the extent to which enforcement of collection of delinquent rents
shall be prosecuted, and Lessor shall not be liable for failure to collect
rents. All rents, and all other income derived from operation of the
improvements by Lessor, to the extent such are not paid and applied, by any
sublessee or new lessee of the Premises, shall be applied, first, to the payment
of all sums of money due and owing from time to time under any mortgage and any
other permitted encumbrance upon the Premises superior to the interests of
Lessor; third, to the cost of operating the Premises and improvements; fourth,
to the cost of administration and collection of rents by Lessor; and fifth, to
the payment of rent due and owing Lessor hereunder. Lessee shall be liable to
Lessor for the deficiency, of any, between Lessee's rent hereunder, and that
applied by Lessor to said rents in the manner hereby authorized. No action
taken pursuant to Subsection 13.2 of this Section 13 (including repossession of
the Premises or termination of the lease term) shall relieve Lessee from
Lessee's obligations pursuant to Section 4 of this Lease and Paragraph 13.2.1 of
this Section 13, all of which shall survive any such action, and Lessor may take
whatever action at law or in equity as may appear necessary and desirable to
collect the rent and other amounts then due and thereafter to become due and/or
to enforce the performance and observance of any obligation, agreement or
covenant of Lessee hereunder.
13.4 NO REMEDY EXCLUSIVE. No remedy herein conferred upon or reserved
to Lessor is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative, and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law or in equity or by statute. No delay or omission to exercise any right or
power accruing upon any default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right and power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
Lessor to exercise any remedy reserved to it in this Section 13, it shall not be
necessary to give any notice, other than such notice as is herein expressly
required by this Agreement.
11
<PAGE>
13.5 AGREEMENT TO PAY ATTORNEY'S FEES AND EXPENSES. In the event
Lessee should default under any of the provisions of this Agreement and the
Lessor should employ attorneys or incur other expenses for the collection of
rent or the enforcement of performance or observance of any obligation or
agreement herein contained, the Lessee agrees that it will on demand therefor
pay to the Lessor the reasonable fee of such attorneys and such other expenses
so incurred by Lessor.
14. FORCE MAJEURE. For the purposes of any of the provisions of this
Agreement other than Section 4 hereof, and during the term or any extension
hereof, neither Lessor nor Lessee, as the case may be, nor any successor in
interest, shall be considered in breach of, or default in, the obligations
thereof with respect to the Lease (except for the payment of rent on Lessee's
part to be performed) in the event of enforced delay in the performance of or
inability to perform such obligations due to unforeseeable causes beyond the
control and without the fault or negligence thereof, including, but not
restricted to, acts of God, acts of the public enemy, acts of the Federal, State
or local Government, acts of the other party, fires, floods, epidemics,
quarantine restrictions, strikes, freight embargoes, and unusually severe
weather or delays of the contractor or subcontractors due to such causes; it
being the purpose and intent of this Section 14 that in the event of the
concurrences of any such enforced delay, the time or times for performance of
the obligations of Lessor or Lessee, as the case may be, with respect to this
Lease shall be extended for the period of the enforced delay; provided, that the
party seeking the benefit of the provisions of this Section 14 shall be
obligated to remedy a failure to perform caused by force majeure in a diligent
manner in order to avail themselves of this form of relief.
15. RELOCATION OF PREMISES. Anything contained in this Lease to the
contrary notwithstanding the Lessor shall have the option to substitute the
equivalent amount and quality of space elsewhere in Building of the Premises
hereinabove provided for if Lessee occupies less than one-half (1/2) of a full
floor, by giving Lessee ninety (90) days written notice of its intention to do
so at any time prior to the date possession of the Premises is delivered to
Lessee. After such possession is delivered, Lessor reserves the right, at its
option and upon giving thirty (30) days' written notice in advance to the
Lessee, to remove the Lessee from the premises herein specified to any other
available rooms and offices of substantially equal size and quality and area and
equivalent rental located in the Building. Lessor shall bear the expense of
said removal as well as the expense of any renovations or alteration necessary
to make the new space conform generally in arrangement and decor with the
original space covered by this Lease. If Lessor exercises either of
12
<PAGE>
its options as aforesaid, then and in such event, the substituted space shall
for all intents and purposes be deemed and shall constitute the Premises
hereunder and all the other terms, covenants, conditions, provisions and
agreements of this Lease shall continue in full force and effect and shall apply
to the substituted space.
16. PURPOSE, USE.
16.1 The Premises are to be used for any general office purpose. Use
for any other purpose shall constitute a breach of this Agreement.
16.2 The Lessee further covenants that the Premises shall during the
term of this Lease be used only for lawful and moral purposes, and no part of
the Premises shall be used in any manner whatsoever in violation of the laws of
the United States, State of Tennessee, or the ordinances and laws of the City of
Nashville, and the County of Davidson.
16.3 Lessee agrees to maintain a going business on the Premises
throughout the full term of the lease or any extension thereof.
16.4 Lessee agrees not to display any signs or any other advertising
material either outside the Premises, or which may be visible from outside the
Premises.
17. INSURANCE AND DAMAGES.
17.1 Lessee shall obtain and maintain appropriate amounts of insurance
on leasehold improvements and contents owned or under the responsibility of
Lessee, such insurance shall be for the joint benefit of the Lessor and Lessee,
shall name Lessor and such other persons having an interest in the Premises as
Lessor directs as additional insureds, and shall provide that Lessor shall be
given at least ten (10) days' advance written notice in the event of
cancellation. Lessee will furnish proof of such insurance as Lessor may direct.
17.2 Lessee agrees to carry at its own expense both public liability
and property damage insurance with minimum limits for the public liability
insurance for personal injury (including death) for each person of $1,QOO,000
and $1,000,000 for each occurrence, and for property damage insurance a combined
single limit of not less than $1,000,000 for each occurrence; such policy of
insurance shall be for the joint benefit of the Lessor and the Lessee, shall
name each party as insureds; and shall provide that both Lessor and Lessee shall
be given at least ten (10) days' advance written notice in the event of
cancellation. Lessee will furnish Lessor proof of such insurance.
13
<PAGE>
17.3 Lessee agrees that it will not cause or permit any use or
vacation of the Premises which will cause the insurance costs of any other
party, including Lessor and other lessees adjacent to the Premises, to increase,
or said insurance to be invalidated. Should such occur, Lessor is empowered to
obtain such insurance on behalf of Lessee and charge its costs to Lessee.
17.4 Lessee agrees not to use the Premises in any fashion which will
endanger the Premises or cause the likelihood of any casualty occurring to be
unusually high.
17.5 Lessee agrees to carry adequate plate glass insurance on all
interior plate glass on the Premises in a company satisfactory to the Lessor
with loss clause payable to the Lessor and Lessee or to promptly replace any
glass on the Premises which may be broken, all without expense to the Lessor.
17.6 The Lessor and Lessee agree that insurance carried by either of
them against loss or damage by fire or other casualty will contain, if available
without additional costs, a clause whereby the insurer waives its right to
subrogation against the other party and other collectible insurance policies to
the extent of any recovery collectible under such insurance policies.
18. TRANSFER OF LESSOR'S RIGHTS. Lessor shall have the right to
transfer and assign, in whole or in part, all and every feature of its rights
and obligations hereunder and in Building and property referred to herein. Such
transfers or assignments may be made either to a corporation, partnership, trust
company, individual or group of individuals, and, howsoever made, are to be in
all things respected and recognized by Lessee and upon assumption of Lessor's
obligations hereunder by said transferees or assignee, the Lessor immediately
prior to said transfer or assignment shall be relieved of all liabilities and
obligations hereunder.
19. DEFINITIONS. As used in this Lease, the following terms shall
have the following meanings:
19.1 "Lessor" and "Lessee" shall be applicable to one or more Persons
as the case may be, and the singular shall include the plural, and the neuter
shall include the masculine and feminine; and if there be more than one, the
obligations thereof shall be joint and several.
19.2 "Person shall mean individuals, trusts, partnerships, joint
ventures, associations, corporations, and any other entities.
14
<PAGE>
19.3 "Law" shall mean all federal, state, county and local
governmental and municipal laws, statutes, ordinances rules, regulations, codes,
decrees, orders and other such requirements, applicable equitable remedies and
decisions by courts in cases where such decisions are considered binding
precedents in the state in which the Property is located, and decisions of
federal courts applying the laws of such State.
19.4 "Property" shall mean the Building, and any common or public
areas or facilities, easements, corridors, lobbies, sidewalks, loading areas,
driveways, landscaped areas, skywalks, parking garages and lots, and any and all
other structures or facilities operated or maintained in connection with or for
the benefit of the Building, and all parcels or tracts of land on which all or
any portion of the Building or any of the other foregoing items are located, and
any fixtures, machinery, equipment, apparatus, furniture and other personal
property located thereon or therein and used in connection therewith, whether
title is held by Lessor or its affiliates.
20. SAFETY AND SECURITY DEVICES, SERVICES AND PROGRAMS. The parties
acknowledge that safety and security devices, services and programs provided by
Lessor, while intended to deter crime and ensure safety, may not in given
instances prevent theft or other criminal acts, or ensure safety of person or
property. The risk that any safety or security device, service or program may
not be effective, or may malfunction, or be circumvented by a criminal, is
assumed by Lessee, and Lessee shall obtain insurance coverage to the extent
Lessee desires protection against such criminal acts and other losses. Lessee
agrees to cooperate in any reasonable safety or security program developed by
Lessor.
21. HAZARDOUS SUBSTANCES. Lessor represents and warrants to Lessee
that as of the date hereof there are no hazardous substances present in, or
about the Building which are of a type or in an amount, or which are used or
stored in a manner, which violates any Legal Requirements or Insurance
Requirements (such representation and warranty being limited to Lessor's best
knowledge as it relates to the activities of existing lessees of the Building.
22. HOLDING OVER. Unless Lessor expressly agrees otherwise in
writing, Lessee shall pay Lessor 150% of the amount of Rent then applicable, or
the highest amount permitted by Law, whichever shall be less, for each month
(and the full such monthly amount for any partial month) Lessee shall retain
possession of the Premises or any part thereof after expiration or earlier
termination of this Lease, together with all damages sustained by Lessor on
account thereof. The foregoing provisions shall not serve to extend
15
<PAGE>
the Term (although Lessee shall remain bound to comply with all provisions of
this Lease until Lessee vacates the Premises). Notwithstanding the foregoing,
at any time before or after expiration or earlier termination of the Lease,
Lessor may serve notice advising Lessee of the amount of Rent and other terms
required, should Lessee desire to enter a month-to-month tenancy (and if Lessee
shall hold over more than one full calendar month after such notice, Lessee
shall thereafter be deemed a month-to month tenant, on the terms and provisions
of this lease then in effect, as modified by Lessor' notices, and except that
Lessee shall not be entitled to any renewal or expansion rights contained in
this Lease or any amendments hereto).
23. NOTICES. All notices or communications which this instrument
requires or permits to be given shall be in writing and shall be mailed or
delivered to the respective addresses set forth below, and to such other address
as may be designated in writing by either party. When notice is by mail, it
shall be sent certified with postage prepaid and shall be complete upon its
deposit in the U.S. Mail:
To Lessor as follows: WILLIS CORROON CORPORATION
Attention: Corporate Real Estate and Facilities
Planning
P.O. Box 305026
Nashville, TN 37230-5026
To Lessee as follows: MAGNETEK, INC.
26 Century Boulevard, 6 North
P.O. Box 290159
Nashville, TN 37229-0159
24. MISCELLANEOUS. This Lease contains the entire contract between
the parties and may be amended only by written agreement signed by Lessor and
Lessee. This Lease shall inure to the benefit of and shall be binding upon
Lessor, Lessee and their respective heirs, legatees, legal representatives,
successors and assigns, subject to all the terms, conditions and contingencies
set forth. This Lease shall be governed by the laws of the State of Tennessee.
If any provision of this Lease be invalid or unenforceable by any court of
competent jurisdiction, such holding shall not operate to invalidate any other
provision hereof.
25. RECORDING. It is agreed between the parties that this Lease will
not be recorded in its present form, but at the request of either party, the
parties will execute a Memorandum of Lease which may be recorded by either
party. Except for the recording of such Memorandum of Lease, nothing contained
in this document shall empower the Lessee to do any act which can, shall, or may
encumber the interest or title of
16
<PAGE>
the Lessor, its successors and assigns, in and to the ground and building which
the leased premises are a part.
IN WITNESS WHEREOF, the parties have hereunto set their hands and
seals in triplicate the day and year first above written.
LESSOR:
WILLIS CORROON CORPORATION
By:
--------------------------
Its:
-------------------------
LESSEE:
MAGNETEK, INC.
By:
---------------------------
Its:
---------------------------
17
<PAGE>
EXHIBIT A
(Floor Plan to be Attached)
<PAGE>
EXHIBIT B
RULES AND REGULATIONS
l. No signs, placards, pictures, advertisements, names or notices shall be
displayed on any part of the outside or inside of the Premises without the
written consent of Lessor, except for the building directory.
2. Lessee shall not operate any machinery or apparatus other than usual small
business machines. A business machine of any unusual type with regard to
size, weight, energy requirements, noise, or climate control shall not be
used without the prior written consent of Lessor which will not be
unreasonably withheld.
3. No article deemed hazardous because of flammability and no explosives shall
be brought into the Building.
4. No additional locks shall be placed upon doors of Premises without written
consent of Lessor. Upon termination of this Lease the Lessee shall
surrender to Lessor all keys and security cards to Premises and security
cards, which will not be unreasonably withheld.
5. Safes, furniture, boxes or other bulky articles shall be brought into and
placed in Building only with written consent of Lessor. Only those
elevators designated by Lessor as freight elevators shall be used to
transport such articles.
6. Window coverings other than those which may be provided by Lessor, either
inside or outside may only be installed with the Lessor's written consent.
7. Lessee shall not attempt or cause to be attempted any additional plumbing
or electrical work including telephone wiring without the prior written
consent of Lessor, which will not be unreasonably withheld.
8. The sidewalks, entrances, lobbies, corridors and stairways of the project
shall not be obstructed or used for storage or for any purpose other than
ingress and egress. Lessee shall move furniture and office furnishings
into or out of the Building only during the hours of 5:30 p.m. to 8:00 a.m.
and on Saturday and Sunday.
9. Lessee shall not make or permit any noise or odor that is objectionable to
other occupants or tenants of this or any adjoining premises to emanate
from Premises and shall
<PAGE>
not create or maintain a nuisance thereon, and shall not disturb, solicit
or canvass any occupant of Building and shall not do any act tending to
injure the reputation of Building.
10. Except as provided in Section 8 of the Lease, Lessee agrees that all
personal property brought into the Building and/or Premises shall be at the
risk of the Lessee only and that Lessor shall not be liable for theft
thereof or any other loss of or damage thereto occasioned from any act of
co-tenants, or other occupants of the Building or any other person.
11. Lessor reserves the right to make such other and further reasonable rules
and regulations as in its judgment may from time to time be necessary for
the safety, care and cleanliness of the Building and Premises, and for the
preservation of good order therein, and any such other or further rules and
regulations shall be binding upon the parties.
12. Landlord reserves the right to exclude from the Building between the hours
of 6 p.m. and 8 a.m. and at all hours on Sunday and legal holidays all
persons who do not present a pass to the Building approved by Landlord.
Landlord will furnish passes to persons for whom any tenant requests in
writing. Each tenant shall be responsible for all persons for whom he
requests passes and shall be liable to Landlord for all acts of such
persons. Landlord shall in no case be liable for damages for any error
with regard to the admission to or exclusion from the Building of any
person. In case of an invasion, mob riot, public excitement or other
circumstances rendering such action advisable in Landlord's opinion,
Landlord reserves the right without any abatement of rent to require all
persons to vacate the Building and to prevent access to the Building during
the continuance of the same for the safety of the Tenants and the
protection of the Building and the property in the Building.
<PAGE>
EXHIBIT C
August 4, 1994
Mr. C. Ore Davis
Executive Vice President
MagneTek, Inc.
26 Century Boulevard
P.O. Box 290159
Nashville, TN 37229-0159
Dear Ore:
In order to induce Willis Corroon Corporation of Nashville ("Lessor"), to allow
work to commence in the area designated as 6 North of the building known as
Willis Corroon Plaza ("Building"), MagneTek, Inc. ("Lessee"), acknowledges its
intent to enter into a lease under the following basic terms, subject to a
mutually accepted Lease document:
Term: 9/1194 - 10/31/94
Square Footage: 14,309 square feet
Monthly Base Rental: $25,040.75
------------------------------------------------
Term: 11/1194 - 8/31196
Square Footage: 28,618 square feet
Monthly Base Rental: $50,081.50
In the event the lease is not executed within thirty (30) days of this letter,
any costs incurred by Willis Corroon Corporation of Nashville will be reimbursed
by MagneTek, Inc. upon presentation of invoices.
Yours sincerely,
Richard S. Vernale
First Vice President
Real Estate and Facilities Planning
ACKNOWLEDGED AND ACCEPTED:
MAGNETEK, INC. WILLIS C0RROON CORPORATION OF NASHVILLE
By: By:
--------------------------- ----------------------------------
Date: Date:
-------------------------- ------------------------------
<PAGE>
EXHIBIT D
REFERENCE DATA AND DEFINITIONS
1. INITIAL PREMISES
The initial premises shall consist of the entire 6th Floor North area and
the Bridge area (including rooms 601 and 602). The total tenantable area
of these defined areas is 28,618 square feet. There is no available
storage area in the building.
2. BASE RENTAL
The proposed lease rental rate shall be a "rent inclusion. " It will
include utilities, taxes, janitorial services, maintenance, security,
operating expenses, and mail service to Lessee's designated floor. The
rental rate will be $21.00 per square foot, inclusive. The rate will be
held flat for the initial three (3) years of the lease. Telecommunications
will be the responsibility of the Lessee.
3. PARKING
Included in the proposed rental rate will be available "structured parking"
for up to 100 vehicles. In addition, Lessor will provide ten (10) reserved
spaces (to be named) for Lessee's exclusive use, at no additional charge.
Parking accommodations will be used on P4 North.
4. TENANT IMPROVEMENTS
Lessor will provide for tenant improvements using the standard demountable
wall system for construction.
In addition, workstations will be included in the rental rate as reflected
in the drawings received with the Request for Proposal (RFP).
5. LEASE TERM
Initial lease term will be for a period of three (3) years commencing on
the date the space is substantially ready for occupancy. MagneTek will be
provided with one (1) five (5)-year renewal option, subject solely to the
consent of Lessee. Lessee shall provide in writing to Lessor its intent to
renew the lease at least six (6) months prior to the initial lease
expiration date.
<PAGE>
Lessor shall respond in writing to Lessee within thirty (30) days.
6. EXPANSION OPTION
Lessee shall be granted an expansion option for the area designated as 5
North, effective January 1, 1995. However, in no event shall the space
designated "expansion" be less than one-half the floor. Lessee shall
provide in writing to Lessor at least thirty (30) days prior to January 1,
1995, a notice to exercise the expansion option. Lessor will respond in
writing within thirty (30) days outlining the terms and conditions.
7. SIGNAGE
Subject to Lessor approval, Lessee will be allowed to place appropriate
signage in the areas designated under Item 1 - "Initial Premises."
8. ESCALATION
During the initial term of the lease, there will be no escalation to the
lease rental rate.
9. SECURITY DEPOSIT
The requirement for a security deposit is waived.
10. MISCELLANEOUS
A. HOLDOVER
Any holdover shall, after expiration of lease term, be calculated at
150% of the existing rate and shall be month-to-month.
B. AMENITIES
In addition to structured parking as stated above, Lessee's employees
will be allowed to enjoy the use of the cafeteria, which is subsidized
by Lessor.
C. VENDING
Each of the floor areas has soft drink and snack vending machines. The
soft drink and snack vending machines will continue to be maintained
and supplied by Lessor.
D. SECURITY
<PAGE>
Lessor has a very high standard of security sensitivity and maintains
a 24-hour on-site security force.
E. CONFERENCE CENTER
The center is available for use at a nominal client rate, subject to
availability.
F. VAN SERVICE
Lessee will be allowed use of van service to and from the Building and
the airport at no additional charge.
<PAGE>
FIRST AMENDMENT TO LEASE
------------------------
This Amendment to Lease Agreement made and entered into as
of the 28th day of August, 1991 by and between THE TRUSTEES Of
LASALLE FUND II, a Group Trust organized and existing under the
laws of the State of Illinois (Landlord), and MAGNETEK, INC.,
a Delaware corporation, (Tenant), formally CENTURY ELECTRIC,
INC., a Delaware corporation;
WITNESSETH:
-----------
WHEREAS, Landlord and Tenant entered into a lease agreement
for approximately 183,130 square feet of warehouse and office space
(the "Primary Space") at 1325 Heil Quaker Boulevard (Premises) in
Rutherford County, Tennessee and;
WHEREAS, Landlord and Tenant agree that the said Primary
Space be expanded by an additional 5,114 square feet (the "Expansion
Space") and;
NOW THEREFORE, Landlord and Tenant agree that the said
Lease shall be and the same is hereby amended as follows:
1. PREMISES: Paragraph 1 of the Lease is amended to
reflect that the size of the Primary Space shall be increased by
the Expansion Space as shown in Exhibit A-I which is attached
hereto and incorporated herein for all purposes. Accordingly,
commencing upon the earlier to occur of (a) substantial
completion (as hereinafter defined) of the Finish Work (as
hereinafter defined) for the Expansion Space and (b) Tenant's
occupancy of the Expansion Space, the size of the Premises
covered by the Lease shall be increased from 183,130 square
feet to 188,244 square feet. Final determination of the square
footage shall be made upon completion of construction drawings
and this Paragraph 1 of this Amendment and any subsequent
Paragraph hereinafter affected by the calculation of the square
footage shall also be amended accordingly. The term "substantial
completion" shall mean that the Expansion Space is completed in
accordance with the approved construction drawings as reasonably
determined by Landlord's architect except for punch list items.
The Expansion Space is hereby subject to all the terms and
conditions of the Lease as amended by this Amendment.
2. TERM: Paragraph 2 of the Lease is hereby
modified to read as follows: The Term of this Lease shall be
eight (8) years commencing on September 1, 1991 and shall
expire August 31, 1999.
<PAGE>
3. BASE RENTAL RATE: Commencing on September 1, 1991
and continuing throughout the term of the Lease as modified by this
Amendment, the Base Rental due and payable will be as follows:
<TABLE>
<CAPTION>
From To Rate/Sf Monthly Annually
---- --- ------- ------- ---------
<S> <C> <C> <C> <C>
9-1-91 8-31-92 $2.40 $36,626.00 $439,512.00
9-1-92 8-31-93 $2.45 $37,389.04 $448,668.50
9-1-93 8-31-94 $2.55 $38,915.13 $466,981.50
9-1-94 8-31-95 $2.60 $39,678.17 $476,138.00
9-1-95 8-31-96 $2.70 $41,204.25 $494,451.00
9-1-96 8-31-97 $2.80 $42,730.33 $512,764.00
9-1-97 8-31-98 $2.90 $44,256.42 $531,077.00
9-1-98 8-31-99 $3.00 $45,782.50 $549,390.00
</TABLE>
4. TENANT IMPROVEMENTS: Landlord agrees to construct
and/or install leasehold improvements in and upon the Expansion Space
and the pedestrian lighting (the "Finish Work") in a good and
workmanlike manner at its sole cost and expense which shall not
exceed $262,813.00 (the "Finish Allowance") in accordance with
construction drawings approved by Landlord and Tenant. Change
orders requested by Tenant which increase the cost of construction
of the Finish Work to an amount in excess of the Finish Allowance
shall be payable by Tenant upon demand. Change orders requested
by Tenant which reduce the cost of construction of the Finish Work
shall reduce the Base Rental Rate. Such reduction shall be
calculated by amortizing at ten percent (10%) over the term of
the Lease. For example, if the cost of the Finish Work is reduced
by $50,000, consequently, the reduction in Base Rental per year
would be $9,104.50. Landlord agrees to promptly commence
construction of the finish Work (a) upon mutual execution
of this Amendment and (b) after construction drawings have
been approved by Landlord and Tenant and to proceed with
construction thereof with due diligence until completed. The
failure of Tenant to take possession of the Expansion Space on
or before substantial completion of the Finish Work shall
not relieve Tenant from its obligation to pay any sums required.
5. EXPANSION OPTION: As long as this Lease is in
full force and effect without default by Tenant, Landlord agrees
that, upon written notice from Tenant or prior to Landlord selling
and/or constructing improvements upon the approximate 2.3 acres
contiguous to the Premises, Tenant shall have the right to expand
the Premises up to the amount of 70,000 square feet. If for
any reason, Tenant fails to exercise its right to expand upon
notification from Landlord of its intent to sell or construct
improvements, and does not timely enter into an agreement for the
expansion of the Premises, Landlord will be free to enter into an
agreement to sell or improve the approximate 2.3 acres and Landlord's
obligations as to this paragraph shall be null and void. Should Landlord
fail to enter into an agreement to sell or make improvements following
notice to Tenant, Tenant's rights as to this paragraph shall be reinstated.
The terms and conditions of the expansion shall be negotiated at the
time such Expansion Option is exercised.
All other terms and conditions of the Lease except as modified
herein shall remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed the foregoing
Lease of the 28th day of August, 1991.
Tenant: Landlord:
MAGNETEK, INC., La Salle Fund II
a Delaware corporation By: La Salle Partners Asset
Management Limited, its
Authorized agent:
By:_______________________________ By:_____________________________
Title:____________________________ Title:__________________________
Date:___________________________
Attest:___________________________
Title:____________________________
Attestation required if
not executed by President
of corporation
<PAGE>
SECOND AMENDMENT TO LEASE
-------------------------
This Amendment to Lease Agreement made and entered into as of the
5th day of February, 1993 by and between THE TRUSTEES OF LASALLE FUND II,
a Group Trust Organized and existing under the laws of the State of Illinois
(Landlord), and MAGNETEK, INC., a Delaware corporation, (Tenant);
WITNESSETH:
-----------
WHEREAS, Landlord and Tenant entered into a lease agreement for
approximately 183,130 square feet of warehouse and office space (the "Primary
Space") at 1325 Heil Quaker Boulevard (Premises) in Rutherford County,
Tennessee, as amended by 1) First Amendment to Lease dated August 28, 1991,
hereinafter collectively referred to as the "Lease", the premises-being more
particularly described therein; and
WHEREAS, Landlord and Tenant wish to amend said Lease;
NOW THEREFORE, in consideration of these presents and the agreement
of each other, Lessor and Lessee agree that said Lease shall be and the same is
hereby amended as of the day first written above, as follows:
1. PREMISES: The size of the Premises covered by the Lease is
hereby increased from 183,130 square feet to 187,930 square feet.
2. BASE RENTAL RATE: Commencing on January 1, 1992 and
continuing throughout the term of the Lease as modified by this Amendment, the
Base Rental due and payable will be as follows:
<TABLE>
<CAPTION>
From To Rate/Sf Monthly Annually
---- --- ------- ------- --------
<S> <C> <C> <C> <C>
1-1-92 8-31-92 $2.40 $37,586.00 $300,688.00
9-1-92 8-31-93 $2.45 $38,369.04 $460,428.50
9-1-93 8-31-94 $2.55 $39,935.13 $479,221.50
9-1-94 8-31-95 $2.60 $40,718.17 $488,618.00
9-1-95 8-31-96 $2.70 $42,284.25 $507,411.00
9-1-96 8-31-97 $2.80 $43,850.33 $526,204.00
9-1-97 8-31-98 $2.90 $45,416.42 $544,997.00
9-1-98 8-31-99 $3.00 $46,982.50 $375,860.00
</TABLE>
All other terms, conditions and covenants of the
Lease not specifically amended by this Second Amendment to
Lease, are hereby deemed to remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed
the foregoing Lease of the 5th day of February, 1993.
Tenant: Landlord:
MAGNETEK, INC., La Salle Fund II
a Delaware corporation By: La Salle Partners Asset
Management Limited, its
Authorized agent:
By:_______________________________ By:____________________________
Title:____________________________ Title:_________________________
Date:__________________________
Attest:___________________________
Title:___________________________
Attestation required if
not executed by President
of corporation
<PAGE>
EXHIBIT 10.59
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF HUNTSVILLE
AND
MAGNETEK, INC.
________________________________________
FOURTH AMENDMENT TO LEASE AGREEMENT
________________________________________
Prepared by:
Johnnie F. Vann
SIROTE & PERMUTT, P.C.
200 Clinton Avenue West
Suite 1000
P. O. Box 18248
Huntsville, Alabama 35804
DATED AS OF OCTOBER 1, 1993
<PAGE>
THIS FOURTH AMENDMENT TO LEASE AGREEMENT dated as of October 1, 1993 (the
"Fourth Amendment to Lease Agreement") supplementing and amending that certain
Lease Agreement dated as of November 1, 1988, recorded in Deed Book 7250, page
1127 ET SEQ. in the Office of the Judge of Probate of Madison County, Alabama
(the "Lease"), between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF
HUNTSVILLE, a public corporation duly organized and existing under the
Constitution and laws of the State of Alabama (the "Board"), and BURNETT-
NICKELSON INVESTMENTS which transferred all of its right, title and interest
under the Lease to MAGNETEK, INC., a Delaware corporation (the "Lessee"),
pursuant to that certain Assignment of Lease and Equity in Project dated January
19, 1993, recorded in Deed Book 806, page 483 ET SEQ. in the Office of the Judge
of Probate of Madison County, Alabama, which Original Lease was amended by that
certain Amendment to Lease Agreement dated as of February 1, 1993, recorded in
Deed Book 808, page 134 ET SEQ. in the Office of the Judge of Probate of Madison
County, Alabama (the "Amendment to Lease Agreement"), between the Board and the
Lessee, and which was further amended by that certain Second Amendment to Lease
Agreement dated as of March 1, 1993 recorded in Deed Book 810, page 602 ET SEQ.
in the Office of the Judge of Probate of Madison County, Alabama (the "Second
Amendment to Lease Agreement"), between the Board and the Lessee, and which was
further amended by that certain Third Amendment to Lease Agreement dated as of
May 1, 1993, recorded in Deed Book 813 at page 891 ET SEQ. in the Office of the
Judge of Probate of Madison County, Alabama (the "Third Amendment to Lease
Agreement") between the Board and Lessee (the Original Lease, Amendment to Lease
Agreement, the Second Amendment to Lease Agreement, and the Third Amendment to
Lease Agreement are hereinafter referred to as the "Lease").
W I T N E S S E T H:
WHEREAS, the Board was organized pursuant to the provisions of Act No. 648
adopted at the 1949 Regular Session of the Legislature of the State of Alabama,
approved September 19, 1949, as amended (said Act being codified as CODE OF
ALABAMA 1975, Section 11-54-80, ET SEQ., and hereinafter referred to as the
"Act"); and
WHEREAS, the Board has heretofore executed and delivered to First Alabama
Bank, as trustee (hereinafter referred to as the "Trustee"), that certain
Mortgage and Indenture of Trust dated as of November 1, 1988, recorded in
Mortgage Book 1593, page 713 ET SEQ. in the Office of the Judge of Probate of
Madison County, Alabama (hereinafter referred to as the "Original Indenture")
pursuant to which the Board issued its First Mortgage Industrial Revenue Bonds
(Burnett-Nickelson Project) Series 1988 in the principal amount of $1,400,000
(the "Original Bond") to finance the cost of acquiring real property and
constructing and equipping thereon an industrial facility (the said real
property, equipment and improvements being hereinafter referred to as the
"Project"); and
1
<PAGE>
WHEREAS, the Board refunded the Original Bond with part of the proceeds of
its Series 1993A Bond issued pursuant to that certain First Supplemental
Mortgage and Indenture of Trust between the Board and the Trustee dated as of
February 1, 1993 and recorded in Mortgage Book 1885 at page 138 ET SEQ. in the
Office of the Judge of Probate of Madison County, Alabama (the "First
Supplemental Indenture"); and
WHEREAS, the Board issued additional Bonds with the proceeds of its Series
1993B Bond issued pursuant to that certain Second Supplemental Mortgage and
Indenture of Trust between the Board and the Trustee dated as of March 1, 1993
and recorded in Mortgage Book 1897 at page 435 ET SEQ. in the Office of the
Judge of Probate of Madison County, Alabama (the "Second Supplemental
Indenture") and;
WHEREAS, the Board amended and supplemented the Original Indenture by a
Third Supplemental Mortgage and Indenture of Trust between the Board and the
Trustee dated as of May 1, 1993 and recorded in Mortgage Book 1916 at page 717
ET SEQ. in the Office of the Judge of Probate of Madison County, Alabama (the
"Third Supplemental Indenture") (the Original Indenture, the First Supplemental
Indenture and the Second Supplemental Indenture hereinafter referred to as the
"Indenture").
WHEREAS, the Board is leasing the Project to the Lessee under and pursuant
to the Lease; and
WHEREAS, the Board and the Lessee now desire that the Lease be Amended to
include additional real property in the Project and for the expansion and
further developing the Project as provided in the Act; and
WHEREAS, the execution and delivery of this Fourth Amendment to Lease
Agreement has been duly approved by the Board of Directors of the Board;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter set forth and the sum of Ten Dollars ($10.00) paid to the
Board by the Lessee, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto formally covenant, agree and bind themselves as
follows:
Section 1. DEFINITIONS. In addition to the terms defined in the preamble
hereto, terms defined in the Lease shall have the same meaning when used herein.
Section 2. REPRESENTATIONS BY THE BOARD. The Board represents and
warrants that:
(a) Under the provisions of the Act, the Board has the power to enter
into the transactions contemplated by the Lease as amended by this Fourth
Amendment to Lease Agreement and to carry out its obligations hereunder and
the Board is not in default
2
<PAGE>
under the Lease or the Indenture or otherwise under any of the laws of the
State of Alabama.
(b) The Board of Directors of the Board has duly authorized the
execution and delivery of this Fourth Amendment to Lease Agreement, the
Fourth Supplemental Indenture and all other instruments and documents
previously or contemporaneously executed and delivered by the Board in
connection with the addition of the real property to the Project.
Section 3. REPRESENTATIONS BY THE LESSEE. The Lessee represents and
warrants that:
(a) Neither the execution and delivery of this Fourth Amendment to
Lease Agreement, nor the consummation of the transactions contemplated
hereby, nor the fulfillment of or compliance with the terms and conditions
of this Fourth Amendment to Lease Agreement will conflict with or
constitute a breach of or default under any agreement or instrument to
which the Lessee is a party or by which the Lessee is bound.
(b) No event of default or any event which, with the giving of notice
or the lapse of time, or both, would constitute an event of default under
Section 10.1 of the Lease has occurred or is occurring.
(c) The Board of Directors of the Lessee has duly authorized the
execution and delivery of this Fourth Amendment to Lease Agreement and all
other instruments and documents previously or contemporaneously executed
and delivered by the Lessee in connection with the addition of the real
property to the Project.
Section 4. ACKNOWLEDGEMENTS CONCERNING AD VALOREM TAXES.
The Lessee and the Board acknowledge that under present law the Project (as
it exists prior to the addition of the real property pursuant to this Fourth
Amendment to Lease Agreement) is entirely exempt from ad valorem taxes levied by
the City because the record title holder of the Project is the Board. The
Lessee and the Board acknowledge that under present law the real estate added by
this Lease Agreement is exempt from non-educational ad valorem taxes levied by
the City because the record title holder of the Project is the Board.
Section 5. DEMISE OF REAL PROPERTY. The Board hereby, in confirmation of
the Lease, demises and leases to the Lessee, and the Lessee leases from the
Board, the Leased Land which shall include, but is not limited to, the property
and the improvements thereon and to be constructed thereon, more particularly
described in Exhibit "A" hereto, as well as the property more particularly
described in Exhibit "A" to the Lease.
3
<PAGE>
Section 6. ZONING AND ENVIRONMENTAL LAWS. Lessee covenants and warrants
that all applicable zoning laws, ordinances and regulations affecting the
Project permit the use and occupancy of the Project by the Lessee, and Lessee
further covenants and warrants to comply with all environmental and ecological
laws, ordinances and regulations affecting the Project and to indemnify Board
and Trustee from any and all losses, damages, and liability resulting from
Lessee's failure to comply with such environmental and ecological laws,
ordinances and regulations.
Section 7. NOTICES. All notices required by Section 12.5 of the Lease
should be sent to the Lessee at: MagneTek, Inc., 11150 Santa Monica Blvd., Los
Angeles, CA 90025, Attention: Sam Miley.
Section 8. CONFIRMATION. As amended by this Fourth Amendment to Lease
Agreement, the Lease is, in all respects, ratified and confirmed, and the Lease
and this Fourth Amendment to Lease Agreement shall be read, taken and construed
as one and the same instrument so that all of the rights, remedies, terms,
conditions, covenants and agreements of the Lease shall apply and remain in full
force and effect with respect to this Fourth Amendment to Lease Agreement.
IN WITNESS WHEREOF, the Lessee has caused this Fourth Amendment to Lease
Agreement to be executed in its name by its duly authorized officers this the
___ day of October, 1993, and the Board has caused this Fourth Amendment to
Lease Agreement to be executed in its name and its corporate seal to be hereunto
affixed, attested and witnessed by its duly authorized officers, this the ___
day of October, 1993 all effective as of the date first above written.
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF HUNTSVILLE
By:
---------------------------------------
Its: Chairman
ATTEST:
- - ------------------------------
Its: Secretary
[S E A L]
MAGNETEK, INC.
By:
----------------------------------------
Its:
----------------------------------------
ATTEST:
By:
---------------------------
Its:
---------------------------
4
<PAGE>
CONSENT
First Alabama Bank, as Holder of 70% of the outstanding Series 1988 bonds
as defined in the Indenture, and MagneTek, Inc., hereby consent to the above
Fourth Supplemental Indenture.
FIRST ALABAMA BANK,
as Series 1988, 1993A and
1993B Bondholder
By:
--------------------------------
Its:
----------------------------
FIRST ALABAMA BANK, as Trustee
By:
--------------------------------
Its:
----------------------------
5
<PAGE>
ACKNOWLEDGMENT OF LESSOR
STATE OF ALABAMA )
)
COUNTY OF MADISON )
I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that ___________________________________, whose name as Chairman
of The Industrial Development Board of the City of Huntsville a public
corporation, is signed to the foregoing Fourth Amendment to Lease Agreement and
who is known to me, acknowledged before me on this day that, being informed of
the contents of this Fourth Amendment to Lease Agreement, he, as such officer
and with full authority, executed the same voluntarily for and as the act of
said corporation.
Given under my hand and official seal this the _______ day of October,
1993.
------------------------------------
Notary Public
My commission expires
----------------
ACKNOWLEDGMENT OF LESSEE
STATE OF ______________ )
)
COUNTY OF ______________ )
I, the undersigned, a Notary Public in and for said County in said State,
hereby certify that _________________________ as _________________________ of
MagneTek, Inc., a Delaware corporation, whose name is signed to the foregoing
Fourth Amendment to Lease Agreement and who is known to me, acknowledged before
me on this day that, being informed of the contents of this Fourth Amendment to
Lease Agreement, he, as such officer and with full authority, executed the same
voluntarily for and as the act of said corporation.
Given under my hand and official seal this the ______ day of October, 1993.
------------------------------------
Notary Public
My commission expires
----------------
6
<PAGE>
EXHIBIT "A"
TO THAT CERTAIN FOURTH AMENDMENT TO LEASE AGREEMENT
BY AND BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF HUNTSVILLE
AND
MAGNETEK, INC.
__________________________________________________________
All that part of the northeast quarter of Section 17, Township 5 South, Range 2
West, Madison County, Alabama and particularly described as:
Commencing at the northeast corner of Lot 2, Block 1 of Gateway Industrial Park
as recorded in Plat Book 19, Page 5 in the Office of the Judge of the Probate
Court of Madison County, Alabama; thence S 01 DEG.03'54" E along the west right-
of-way line of Wall-Triana Highway and the east boundary of said Lot 2 a
distance of 585.00 feet to the point of beginning; thence continue S 01
DEG.03'54" E along the said west right-of-way of Wall-Triana Highway a distance
of 160.00 feet; thence northwesterly a distance of 78.54 feet along a curve to
the left which has a radius of 50.00 feet and a chord bearing N 43 DEG.56'06" W
a distance of 70.71 feet; thence N 88 DEG.56'06" W a distance of 955.00 feet to
the beginning of a curve to the left; thence southwesterly a distance of 100.93
feet along said curve to the left which has a radius of 120.00 feet and a chord
bearing S 66 DEG.58'13" W a distance of 97.98 feet to the beginning of a curve
to the right; thence a distance of 238.96 feet along said curve to the right
which has a radius of 60.00 feet and a chord bearing N 23 DEG.01'47" W a
distance of 109.54 feet; thence S 88 DEG.56'06" E a distance of 1089.16 feet to
the beginning of a curve to the left; thence northeasterly a distance of 78.54
feet along said curve to the left which has a radius of 50.00 feet and which has
a chord bearing N 46 DEG.03'54" E a distance of 70.71 feet to the point of
beginning and containing 1.804 acres, more or less.
ALSO KNOWN AS: East Gate Drive
7
<PAGE>
EXHIBIT 10.62
THE INDUSTRIAL DEVELOPMENT BOARD OF THE
CITY OF HUNTSVILLE
TO
FIRST ALABAMA BANK,
TRUSTEE
__________________________________________
FOURTH SUPPLEMENTAL INDENTURE
__________________________________________
Dated as of October 1, 1993
Prepared by:
Johnnie F. Vann
SIROTE & PERMUTT, P.C.
200 Clinton Avenue West
Suite 1000
P. O. Box 18248
Huntsville, Alabama 35804
<PAGE>
THIS FOURTH SUPPLEMENTAL INDENTURE made and entered into as of October 1,
1993, by and between THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF HUNTSVILLE,
a public corporation duly organized and existing under the Constitution and laws
of the State of Alabama (the "Board"), and FIRST ALABAMA BANK, a national
banking association duly organized, existing and authorized to accept and
execute trusts of the character herein set out, with its principal office
located in the City of Huntsville, Alabama (the "Trustee"), as Trustee under the
Mortgage and Indenture of Trust dated as of November 1, 1988 and recorded in
Mortgage Book 1593 at page 713 ET SEQ. in the Office of the Judge of Probate of
Madison County, Alabama (the "Original Indenture") between the Board and the
Trustee, securing Bonds issued and to be issued as provided therein; and also
under that certain First Supplemental Mortgage and Indenture of Trust dated as
of February 1, 1993 and recorded in Mortgage Book 1885 at page 138 ET SEQ. in
the Office of the Judge of Probate of Madison County, Alabama (the "First
Supplemental Indenture") between the Board and the Trustee; and also under that
certain Second Supplemental Mortgage and Indenture of Trust dated as of March 1,
1993 and recorded in Mortgage 1897 at page 435 ET SEQ. in the Office of the
Judge of Probate of Madison County, Alabama (the "Second Supplemental
Indenture") between the Board and the Trustee; and also under that certain Third
Supplemental Mortgage and Indenture of Trust dated as of May 1, 1993 and
recorded in Mortgage Book 1916 at page 717 ET SEQ. in the Office of the Judge of
Probate of Madison County, Alabama (the "Third Supplemental Indenture") between
the Board and the Trustee.
W I T N E S S E T H
WHEREAS, the Board has been organized under, and is authorized by Act No.
648, adopted at the 1949 Regular Session of the Legislature of the State of
Alabama, approved September 19, 1949, as amended (said Act being codified as
CODE OF ALABAMA 1975, Sections 11-54-80, ET SEQ., hereinafter referred to as the
"Act"), to acquire land and buildings and other improvements thereon and
machinery and equipment in order to promote industry, develop trade and further
the use of the agricultural products and natural resources of the State of
Alabama (the "State") by inducing manufacturing, industrial, commercial and
research enterprises to establish new projects in the State or to enlarge and
expand existing projects located in the State; and
WHEREAS, the Board is further authorized by the Act to issue industrial
development revenue bonds payable solely from the revenues and receipts derived
from the leasing or sale of the land and other improvements so constructed or
acquired; and
WHEREAS, the Board has made the necessary arrangements with MagneTek, Inc.,
a Delaware corporation (hereinafter called the "Lessee"), for acquiring,
expanding and further developing an existing industrial facility which was
leased by the Board to Burnett-Nickelson Investments ("BNI") pursuant to that
certain Lease Agreement dated as of November , 1988, between the Board and BNI
and recorded in Deed Book 725 at page 1127 in the Office of the
1
<PAGE>
Judge of Probate of Madison County, Alabama (the "Original Lease"), as further
amended by that certain Amendment to Lease Agreement dated as of February 1,
1993, between the Board and Lessee and recorded in Deed Book 808 at page 134 in
the Office of the Judge of Probate of Madison County, Alabama (the "First
Amended Lease") and as further amended by that certain Second Amendment to Lease
Agreement dated as of March 1, 1993 between the Board and Lessee and recorded in
Deed Book 810 at page 602 in the Office of the Judge of Probate of Madison
County, Alabama (the "Second Amended Lease") and as further amended by that
certain Third Amendment to Lease Agreement dated as of May 1, 1993 between the
Board and Lessee and recorded in Deed Book 813 at page 891 ET SEQ. in the Office
of the Judge of Probate of Madison County, Alabama (the "Third Amended
Lease")(the Original Lease, First Amended Lease, the Second Amended Lease, and
the Third Amended Lease hereinafter referred to as the "Lease"); and
WHEREAS, BNI assigned all of its right, title and interest under the
Original Lease to the Lessee pursuant to that certain Assignment of Lease and
Equity in Project dated January 19, 1993, between BNI, as assignor, and the
Lessee, as assignee, and recorded in Deed Book 806 at page 483 in the Office of
the Judge of Probate of Madison County, Alabama; and
WHEREAS, the execution and delivery of this Fourth Supplemental Indenture
(the "Fourth Supplemental Indenture") (the Original Indenture, First
Supplemental Indenture, the Second Supplemental Indenture, the Third
Supplemental Indenture and the Fourth Supplemental Indenture hereinafter
collectively referred to as the "Indenture") has been, in all respects, duly and
validly authorized by resolution adopted by the Board; and
WHEREAS, Sections 12.01 and 13.01 of the Original Indenture authorizes the
supplementing and or modification of the Indenture, with the prior written
consent of 70% in aggregate principal amount of the Bonds outstanding, for
purposes of identifying more precisely the real estate of equipment, furniture,
fixtures or other personal property comprising the Project or any substitutions
thereof or additions thereto; and
WHEREAS, the Board and the Lessee now desire to include additional real
property in the Project to further expand and further develop the existing
manufacturing facility which will be of the character and accomplish the
purposes provided in the Act, the Board has entered into a Fourth Amendment to
Lease Agreement dated as of October 1, 1993 (the Lease as further amended by
said Fourth Amendment to Lease Agreement is herein called the "Lease"), with the
Lessee to allow for the inclusion of additional real property to the Project to
further expand and further develop and lease the Project to the Lessee; and
WHEREAS, the Board and the Lessee have obtained the approval of 70% of the
holders of the outstanding bonds authorizing this Fourth Supplemental Indenture;
and
2
<PAGE>
WHEREAS, all acts, conditions and things required by the Constitution and
laws of the State of Alabama to happen, exist and be performed precedent to and
in the execution and delivery of this Fourth Supplemental Indenture have
happened, exist and have been performed as so required, in order to make the
Indenture a valid and binding trust indenture for the security of the Bonds in
accordance with its terms; and
WHEREAS, the Trustee has accepted the trusts created by this Fourth
Supplemental Indenture and in evidence thereof has joined in the execution
hereof; and
NOW, THEREFORE, THIS FOURTH SUPPLEMENTAL INDENTURE WITNESSETH:
That in consideration of the premises, of the acceptance by the Trustee of
the Trusts hereby created, and to secure the payment of all of the Bonds from
time to time outstanding under the Indenture and all indentures supplemental
thereto, including this Supplemental Indenture, according to their tenor and
effect, and to secure the performance and observance of all the covenants and
conditions set forth in the Original Indenture, the First Supplemental
Indenture, the Second Supplemental Indenture, the Third Supplemental Indenture
and in this Fourth Supplemental Indenture, the Board has executed and delivered
this Fourth Supplemental Indenture; the Board does hereby grant, bargain, sell,
convey, grant a security interest in, and assign to the Trustee and unto its
successors in trust, and to its assigns forever for the securing of the
performance of the obligations of the Board hereinafter set forth:
I.
The real property and premises more particularly described on Exhibit "A"
attached hereto and made a part hereof, situated in the County of Madison and
State of Alabama;
II.
The Building and all other buildings and improvements now or hereafter
constructed or situated on the real property described on Exhibit "A" attached
hereto and made a part hereof, and all permits, easements, rights-of-way,
contracts, leases, privileges, immunities and hereditaments pertaining or
applicable thereto, and all fixtures now or hereafter installed on such real
property or in the Building or in any other building or improvement now or
hereafter located thereon and owned by the Board, together with all plans and
specifications and contracts with architects, contractors and others pertaining
to the construction, operation and maintenance thereof.
III.
3
<PAGE>
All building materials, machinery, equipment, fixtures, fencing, fittings,
and personal property of every kind and character used by the Board in the
construction of the industrial facility leased to the Lessee and to be located
upon the real property located in Madison County, Alabama as more particularly
described on Exhibit "A" hereto.
IV.
All rights, title and interest of the Board in the Lease, and all rentals,
revenues and receipts derived or to be derived thereunder (except for payments
for indemnification under Section 5.5 of the Lease);
V.
The moneys on deposit in the Construction Fund and the Bond Fund
established under the Indenture and held by the Trustee pursuant to the terms of
this Indenture and all earnings derived from such moneys;
VI.
Any and all other real property of every kind and nature from time to time
hereafter by delivery or by writing of any kind conveyed, mortgaged, pledged,
hypothecated, assigned or transferred, as and for additional security hereunder
by the Board or by anyone in its behalf, or with its written consent to the
Trustee which is hereby authorized to receive any and all such property at any
and all times and to hold and apply the same subject to the terms hereof;
VII.
All proceeds, rentals, income, profits, condemnation awards, insurance
proceeds, cash or non-cash, received from any of the foregoing described
properties or from insurance and tort claims of any of the foregoing described
properties.
SUBJECT, HOWEVER, to Permitted Encumbrances as defined in the Original
Indenture.
TO HAVE AND TO HOLD all the privileges and appurtenances hereby and
hereafter conveyed and assigned, or agreed or intended so to be, to the Trustee
and its respective successors in said Trust and assigns forever;
IN TRUST, NEVERTHELESS, upon the terms and conditions herein set forth for
the equal and proportionate benefit, security and protection of the holders and
owners of the Bonds issued under and secured by the Indenture without privilege,
priority or distinction as to the
4
<PAGE>
lien or otherwise of any one Bond over any other Bond by reason or priority in
the issue, sale or negotiation thereof or otherwise;
PROVIDED, HOWEVER, that if the Board, its successors or assigns shall pay
or cause to be paid, the principal, interest, and premium, if any, on the Bonds
due or to become due thereon, at the times and in the manner mentioned in the
Bonds, and shall cause the payments to be made into the Bond Fund as required
under Article 9 of the Original Indenture, and shall perform all of the
covenants and conditions required of it by the Indenture, and shall pay or cause
to be paid to the Trustee all sums of money due or to become due to it in
accordance with the terms and provisions of the Indenture, then upon such final
payments the Indenture and the rights hereby and thereby granted shall
terminate; otherwise, the Indenture to be and remain in full force and effect.
THIS FOURTH SUPPLEMENTAL INDENTURE FURTHER WITNESSETH, and it is expressly
declared, that all Bonds from time to time issued and secured hereunder are to
be issued, authenticated and delivered, and all said property, rights and
interest, including, without limitation, the amounts hereby assigned and
pledged, are to be dealt with and disposed of subject to the terms of the
Indenture as supplemented.
ARTICLE I
DEFINITIONS
All words and phrases defined in Article 1 of the Lease and in the Original
Indenture shall have the same meaning in this Fourth Supplemental Indenture.
All terms used herein which are defined in the recitals hereto shall have the
meaning there given to them unless the context otherwise requires.
ARTICLE II
CONFIRMATION
Section 201. CONFIRMATION OF ORIGINAL INDENTURE. As supplemented by this
Fourth Supplemental Indenture, the Original Indenture is in all respects
ratified and confirmed, and the Original Indenture and this Fourth Supplemental
Indenture shall be read, taken and construed as one and the same instrument so
that all of the rights, remedies, terms and conditions, covenants and agreements
of the Original Indenture shall apply and remain in full force and effect with
respect to this Fourth Supplemental Indenture.
ARTICLE III
COVENANTS
5
<PAGE>
Section 301. PERFORMANCE OF COVENANTS. The Board covenants that it will
faithfully perform at all times any and all covenants, undertakings,
stipulations and provisions set forth in this Fourth Supplemental Indenture and
in all of its proceedings pertaining hereto. The Board covenants that it is
duly authorized under the Constitution and laws of the State of Alabama,
including particularly and without limitation the Act and authorized hereby and
to execute this Fourth Supplemental Indenture, and the execution and delivery of
this Fourth Supplemental Indenture has been duly and effectively taken.
ARTICLE IV
CONSENTS
Section 401. TRUSTEE'S CONSENT. The Trustee hereby consents to the
execution and delivery of this Fourth Supplemental Indenture and of the Fourth
Amendment to Lease Agreement.
ARTICLE V
MISCELLANEOUS
Section 501. NOTICES. All notices required by Section 14.03 of the
Original Indenture should be sent to the Lessee at: MagneTek, Inc., 11150 Santa
Monica Blvd., Suite 1500, Los Angeles, CA 90025, Attention: Sam Miley.
IN WITNESS WHEREOF, The Industrial Development Board of the City of
Huntsville has caused these presents to be signed in its name and behalf by the
Chairman of its Board of Directors, and its corporate seal to be hereunto
affixed and attested by its Secretary, this ____ day of October, 1993, and First
Alabama Bank, has caused these presents to be signed in its name and on its
behalf as Trustee by its duly authorized officer and its official seal to be
affixed and the same to be attested,this _____ day of October, 1993, to evidence
its consent to this Fourth Supplemental Indenture, this ____ day of October,
1993, all as effective of the 1st day of October, 1993.
THE INDUSTRIAL DEVELOPMENT BOARD
OF THE CITY OF HUNTSVILLE
By:_______________________________________
ATTEST: Its: Chairman
____________________________________
6
<PAGE>
Its: Secretary
FIRST ALABAMA BANK, Trustee
By:_______________________________________
ATTEST: Its: ______________________________________
By: _________________________________
Its: _________________________________
CONSENT
First Alabama Bank, as Holder of 70% of the outstanding Series 1988 bonds
as defined in the Indenture, and MagneTek, Inc.,
hereby consent to the above Fourth Supplemental Indenture.
FIRST ALABAMA BANK,
as Series 1988, Series 1993A and
Series 1993B Bondholder
By: ________________________________
Its: ________________________________
MAGNETEK, INC.
By: ________________________________
Its: ____________________________
STATE OF ALABAMA )
)
MADISON COUNTY )
I, the undersigned, a Notary Public in and for said County in said State,
do hereby certify that _________________________________, whose name as
Chairman of the Board of Directors of The Industrial Development Board of the
City of Huntsville is signed to the foregoing Fourth Supplemental Indenture, and
who is known to me, and known to be such officer, acknowledged before me on this
day that being informed of the contents of said Fourth
7
<PAGE>
Supplemental Indenture, he, in his capacity as such officer and with full
authority, executed the same voluntarily for and as the act of said Board.
Given under my hand and official seal this the _______ day of October,
1993.
____________________________________
Notary Public
My commission expires ________________
STATE OF ALABAMA )
)
MADISON COUNTY )
I, the undersigned, a Notary Public in and for said County in said State,
do hereby certify
that __________________________________, whose name as ______________________
of First Alabama Bank, a national banking association, is signed to the
foregoing Fourth Supplemental Indenture, and who is known to me, and known to
me to be such person, acknowledged before me on this day that, being informed
of the contents of the said Fourth Supplemental Indenture, (s)he as such
officer, and with full authority, executed the same voluntarily for and as the
act of the said Bank.
Given under my hand and official seal this the ________ day of October, 1993.
____________________________________
Notary Public
My commission expires ________________
8
<PAGE>
EXHIBIT "A"
TO THAT CERTAIN FOURTH SUPPLEMENTAL INDENTURE
DATED AS OF OCTOBER 1, 1993, BY AND BETWEEN
THE INDUSTRIAL DEVELOPMENT BOARD OF THE CITY OF HUNTSVILLE
AND FIRST ALABAMA BANK,
AS TRUSTEE
__________________________________________________________
All that part of the northeast quarter of Section 17, Township 5 South, Range
2 West, Madison County, Alabama and particularly described as:
Commencing at the northeast corner of Lot 2, Block 1 of Gateway Industrial Park
as recorded in Plat Book 19, Page 5 in the Office of the Judge of the Probate
Court of Madison County, Alabama; thence S 01DEG.03'54" E along the west
right-of-way line of Wall-Triana Highway and the east boundary of said Lot 2 a
distance of 585.00 feet to the point of beginning; thence continue S0
1DEG.03'54" E along the said west right-of-way of Wall-Triana Highway a
distance of 160.00 feet; thence northwesterly a distance of 78.54 feet along a
curve to the left which has a radius of 50.00 feet and a chord bearing N
43DEG.56'06" W a distance of 70.71 feet; thence N 88DEG.56'06" W a distance of
955.00 feet to the beginning of a curve to the left; thence southwesterly a
distance of 100.93 feet along said curve to the left which has a radius of
120.00 feet and a chord bearing S 66DEG.58'13" W a distance of 97.98 feet to
the beginning of a curve to the right; thence a distance of 238.96 feet along
said curve to the right which has a radius of 60.00 feet and a chord bearing
N 23DEG.01'47" W a distance of 109.54 feet; thence S 88DEG.56'06" E a distance
of 1089.16 feet to the beginning of a curve to the left; thence northeasterly
a distance of 78.54 feet along said curve to the left which has a radius of
50.00 feet and which has a chord bearing N 46DEG.03'54" E a distance of 70.71
feet to the point of beginning and containing 1.804 acres, more or less.
ALSO KNOWN AS: East Gate Drive
A-2
<PAGE>
EXHIBIT 10.66
RESTRICTED STOCK AGREEMENT
PURSUANT TO THE
AMENDED AND RESTATED
1989 INCENTIVE COMPENSATION PLAN
OF MAGNETEK, INC.
This Restricted Stock Agreement (this "Agreement") is made and
entered into as of the Date of Award indicated below by and between MagneTek,
Inc., a Delaware corporation (the "Company"), and the person named below as
Employee.
WHEREAS, Employee is an employee of the Company and/or one or more of
its subsidiaries; and
WHEREAS, pursuant to the Company's Amended and Restated 1989 Incentive
Compensation Plan (the "Plan"), the committee of the Board of Directors of the
Company administering the Plan (the "Committee") has approved the award to
Employee of the right to purchase shares of the Common Stock, par value $.01 per
share, of the Company (the "Common Stock"), on the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the
covenants set forth herein, the parties hereto hereby agree as follows:
1. Award; Certain Terms and Conditions. The Company hereby awards
to Employee, and Employee hereby accepts, as of the Date of Award, the right to
purchase the number of shares of Common Stock indicated below (the "Restricted
Shares") for the Cash Purchase Price per share indicated below (which shall be
equal to at least $.01). The aggregate Cash Purchase Price must be paid to the
Company on or prior to 5:00 o'clock p.m. (local time at the Company's principal
executive office) on the 60th day following the Date of Award. The Restricted
Shares shall be subject to all of the terms and conditions set forth in this
Agreement, including the restrictions imposed pursuant to Section 3 hereof;
provided, however, that on each anniversary of the Date of Award, such
restrictions shall terminate with respect to that number of Restricted Shares
(rounded to the nearest whole share) equal to the total number of Restricted
Shares multiplied by the Annual Vesting Rate indicated below (the termination of
such restrictions with respect to any Restricted Share, for any reason, shall be
referred to herein as the "vesting" of such share).
Employee: Ronald W. Mathewson
Date of Award: July 27, 1994
<PAGE>
Number of shares purchasable:20,000
Cash Purchase Price per share:$.01
Annual Vesting Rate: 25%
2. Consideration for Shares; Method of Payment.
(a) The consideration for the issuance and sale of Restricted Shares
contemplated hereby may include, in addition to the Cash Purchase Price per
share indicated in Section 1 hereof, consideration in the form of past services
to the Company and/or one or more of its subsidiaries. In addition, subject to
Section 11 hereof, Employer agrees to remain in the employ of the Company, a
Parent Corporation or Subsidiary, at least until the first anniversary of the
Date of Award.
(b) Subject to Section 2(a), the aggregate Cash Purchase Price must
be paid to the Company in cash or by check payable to the Company. Upon payment
to the Company in full of the aggregate Cash Purchase Price as provided herein
on or prior to 5:00 o'clock p.m. (local time at the Company's principal
executive office) on the 60th day following the Date of Award, Employee shall be
deemed to have purchased the Restricted Shares effective as of the Date of
Award.
3. Restrictions. Until a Restricted Share vests, it shall not be
liable for the debts, contracts or engagements of Employee or successors in
interest nor subject to disposition by transfer, alienation, anticipation,
pledge, encumbrance, assignment or any other means whether such disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted disposition thereof shall be null and void and of no effect;
provided, however, that nothing in this Section 3 shall prevent transfers by
will or by the applicable laws of descent and distribution, but without limiting
the operation of the other provisions of this Agreement, including Section 5.
4. Acceleration of Vesting.
(a) Acceleration of Vesting by Committee. The Committee, in its sole
discretion, may accelerate the vesting of any or all of the Restricted Shares at
any time and for any reason.
(b) Certain Events Causing Acceleration of Vesting. Notwithstanding
anything to the contrary in this Agreement, the Restricted Shares shall become
fully vested immediately prior to the consummation of any of the following
events:
(i) the liquidation of the Company;
<PAGE>
(ii) a merger or consolidation of the Company with or into
another corporation not effected solely to reincorporate the Company in a
different state;
(iii) the acquisition by another corporation or person of 40%
or more of the Company's then outstanding voting stock not effected solely to
reincorporate the Company in a different state; or
(iv) the acquisition by another corporation or person of all or
substantially all of the Company's assets.
(c) Acceleration Upon Normal Retirement, Etc. Notwithstanding
anything to the contrary in this Agreement, the Restricted Shares shall become
fully vested immediately upon the Employee's normal retirement, death, total
disability or early retirement with the consent of the Committee.
5. Repurchase of Restricted Shares. Notwithstanding anything to the
contrary in this Agreement, if Employee shall cease to be employed by the
Company, a Parent Corporation or a Subsidiary for any reason other than
Employee's normal retirement, death, total disability or early retirement with
the consent of the Committee, or for no reason, then, unless the Committee shall
determine otherwise, the Company shall repurchase each then unvested Restricted
Share at a purchase price equal to the Cash Purchase Price per share.
6. Payment of Withholding Taxes. If the Company becomes obligated to
withhold an amount on account of any federal, state or local tax imposed as a
result of the sale of the Restricted Shares to Employee pursuant to this
Agreement or the termination of the restrictions imposed upon the Restricted
Shares hereunder, including, without limitation, any federal, state or other
income tax, or any F.I.C.A., state disability insurance tax or other employment
tax (the date upon which the Company becomes so obligated shall be referred to
herein as the "Withholding Date"), then Employee shall pay such amount (the
"Withholding Liability") to the Company on the Withholding Date in cash or by
check payable to the Company. Employee hereby consents to the Company
withholding the full amount of the Withholding Liability from any compensation
or other amounts otherwise payable to Employee if Employee does not pay the
Withholding Liability to the Company on the Withholding Date, and Employee
agrees that the withholding and payment of any such amount by the Company to the
relevant taxing authority shall constitute full satisfaction of the Company's
obligation to pay such compensation or other amounts to Employee.
7. Taxable Income and Section 83(b) Election. Employee understands
that the taxable income recognized by Employee as a result of the award of
Restricted Shares hereunder, and the Withholding Liability and Withholding Date
with respect thereto, would be affected by a decision by Employee to make an
election under Section 83(b) of the Internal Revenue Code (an "83(b) Election")
with respect to the Restricted Shares within 30 days of the Date of Award.
Employee understands and
<PAGE>
agrees that he or she will have the sole responsibility for determining whether
to make an 83(b) Election with respect to the Restricted Shares, and for
properly making such election and filing the election with the relevant taxing
authorities on a timely basis. Employee will not rely on the Company for any
advice in connection with the decision whether to make, or procedures for
making, the 83(b) Election, and acknowledges that the Company has urged Employee
to consult Employee's own tax advisor with respect to the desirability of and
procedures for making an 83(b) Election with respect to the Restricted Shares.
Employee agrees to submit to the Company a copy of any 83(b) Election with
respect to the Restricted Shares immediately upon filing such election with the
relevant taxing authority.
8. Escrow.
(a) Until a Restricted Share vests, (i) the record address of the
holder of record of such Restricted Share shall be c/o the Secretary of the
Company at the address of the Company's principal executive office, (ii) the
stock certificate representing such Restricted Share shall be held in escrow in
the custody of the Secretary of the Company, duly endorsed in blank or
accompanied by a duly executed stock powers, and (iii) such stock certificate
shall contain the following legend:
"THE TRANSFER AND REGISTRATION OF TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS AS
PROVIDED IN A RESTRICTED STOCK AGREEMENT DATED AS OF JULY 27, 1994 BY
AND BETWEEN THE CORPORATION AND RONALD W. MATHEWSON."
(b) From and after the date upon which a Restricted Share vests, the
holder of record of such Restricted Share shall be entitled (provided that
Employee shall have paid the Withholding Liability to the Company pursuant to
Section 6 hereof) to receive the stock certificate representing such Restricted
Share, which stock certificate shall not contain the legend set forth in
subsection (a)(iii) above.
9. Voting; Dividends. The holder of record of any Restricted Share
shall be entitled to exercise all voting rights with respect to such share and
to receive all dividends or distributions paid or made with respect thereto.
10. Plan. The Restricted Shares are being sold pursuant to the Plan,
as in effect on the Date of Award, and are subject to all the terms and
conditions of the Plan, as the same may be amended from time to time; provided,
however, that no such amendment shall deprive Employee, without his or her
consent, of the Restricted Shares or of any of Employee's rights under this
Agreement. Capitalized terms used without definition herein have the meanings
ascribed to them in the Plan. The interpretation and construction by the
Committee of the Plan, this Agreement and such rules and regulations as may be
adopted by the Committee for the purpose of
<PAGE>
administering the Plan shall be final and binding upon Employee. Until the
Restricted Shares shall vest or be forfeited, the Company shall, upon written
request therefor, send a copy of the Plan, in its then current form, to the
holder of record of the Restricted Shares.
11. Employment Rights. No provision of this Agreement shall (a)
confer upon Employee any right to continue in the employ of the Company, a
Parent Corporation or any Subsidiary, (b) affect the right of the Company, a
Parent Corporation or any Subsidiary to terminate the employment of Employee,
with or without cause, or (c) confer upon Employee any right to participate in
any employee welfare or benefit plan or other program of the Company, a Parent
Corporation or any Subsidiary other than the Plan. Employee hereby acknowledges
and agrees that the Company, a Parent Corporation or any Subsidiary may
terminate the employment of Employee at any time and for any reason, or for no
reason, unless Employee and the Company or a Parent Corporation or a Subsidiary
are parties to a written employment agreement that expressly provides otherwise.
12. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the Company and Employee have duly executed
this Agreement as of the Date of Award.
MAGNETEK, INC.
By:
--------------------------------
Name:
Title:
EMPLOYEE
-----------------------------------
Signature
-----------------------------------
Street Address
-----------------------------------
City, State and Zip Code
-----------------------------------
Social Security Number
<PAGE>
EXHIBIT 13
FINANCIAL STATEMENTS
SELECTED FINANCIAL DATA
STATEMENT OF INCOME DATA
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30.
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA. 1994** 1993 1992 1991 1990
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net sales $1,133,126 $1,119,392 $883,466 $779,137 $756,357
Income (loss):
Continuing operations (16,942) 19,263 14,712 10,582 13,741
Discontinued operations (28,503) 7,770 10,331 24,065 19,487
Extraordinary item -- -- (2,857) -- --
Cumulative effect of accounting changes -- (48,734) -- -- --
Net income (loss) (45,445) (21,701) 22,186 34,647 33,228
- - ------------------------------------------------------------------------------------------------------------------------------
Per common share -- primary:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting changes $(0.69) $0.78 $0.61 $0.45 $0.57
Net income (loss) $(1.84) $(0.87) $0.92 $1.47 $1.40
Per common share -- fully diluted:
Income (loss) from continuing operations before
extraordinary item and cumulative effect of
accounting changes * $0.73 $0.59 $0.45 $0.57
Net income (loss) * * $0.90 $1.47 $1.40
- - ------------------------------------------------------------------------------------------------------------------------------
<FN>
* PER SHARE AMOUNTS ON A FULLY DILUTED BASIS ARE OMITTED AS SUCH AMOUNTS ARE ANTI-DILUTIVE IN RELATION TO PRIMARY PER SHARE
AMOUNTS.
** LOSS FROM CONTINUING OPERATIONS FOR THE YEAR ENDED JUNE 30, 1994 INCLUDES PRETAX CHARGES AGGREGATING $33,871 REFLECTING
RESTRUCTURING AND OTHER COSTS. LOSS FROM DISCONTINUED OPERATIONS INCLUDES AFTER TAX CHARGES OF $25,041 REFLECTING ESTIMATED
LOSSES ON DISPOSITION (SEE NOTES 2 AND 7 OF NOTES TO CONSOLIDATED FINANCIAL STATEMENTS).
</FN>
<CAPTION>
BALANCE SHEET DATA
AS OF JUNE 30. AMOUNTS IN THOUSANDS. 1994 1993 1992 1991 1990
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total assets $931,358 $995,359 $888,668 $739,142 $660,619
Long-term debt, including current portion 523,779 523,301 428,880 403,071 388,227
Common stockholders' equity 113,082 163,029 196,463 158,651 131,876
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
During the fiscal year ended June 30, 1994, MagneTek's Board of Directors
approved a plan to focus the Company's resources on fewer product lines and
reduce debt. Subsequent to fiscal year end, the Board of Directors adopted a
formal restructuring program for selling businesses comprised primarily of the
Company's utility, military, controls and custom motor product lines (see Note
2). The results of operations and net assets of these businesses are included as
"discontinued operations" in the accompanying consolidated financial statements.
Accordingly, the discussion which follows concerns only the results of
continuing operations.
The Company operates in two business segments: BALLASTS AND TRANSFORMERS
including primarily lighting products (magnetic and electronic lighting
ballasts), power supplies and small transformer products; and MOTORS AND
CONTROLS which includes fractional and integral horsepower electric motors,
medium voltage generators and variable speed electronic drives.
During fiscal 1993, sales of electronic lighting ballasts, of which MagneTek is
a leading supplier, almost tripled to more than $200 million. Sales were almost
exclusively in the United States and were driven by utility rebates on
electronic ballasts. Lighting ballasts historically have been "off-the-shelf"
products commanding little, if any, order backlog. As demand for electronic
ballasts began to exceed the industry's capacity to deliver the product,
backlogs developed and grew. In response, the Company and the industry added
significant capacity. MagneTek's sales of electronic ballasts peaked in the
fourth quarter of fiscal 1993 at over $70 million. Capacity additions enabled
supply to exceed end-user demand during the early part of fiscal 1994, when many
electrical distributors already held substantial inventories. As a result, the
Company experienced a significant drop in order rates, a high level of requests
from distributors to return unsold product (many of which were granted) and
severe price erosion throughout the industry. The combination of increased costs
associated with the added capacity, weak demand levels and decreasing prices
resulted in significantly reduced sales and margins for the product line in
fiscal 1994 compared to fiscal 1993. The rapid capacity expansion also
contributed to increased debt levels at the end of the first quarter of fiscal
1994.
As a result of the strengthening U.S. economy, demand for the Company's motor
and drive product lines grew throughout fiscal 1993 and 1994. Demand was
particularly strong for fractional horsepower motors with commercial and
residential applications, as well as for AC variable speed electronic drives.
However, margin expansion was gradual because cost increases largely offset
modest price increases in the MOTORS AND CONTROLS segment.
On January 5, 1994, the Board of Directors approved the restructuring plan
referenced above, including reductions in electronic ballast capacity, as well
as cost reductions in other product lines and administrative consolidations
throughout the Company. In connection with this plan, the Company recorded
pretax charges to income in the BALLASTS AND TRANSFORMERS segment aggregating
$28.8 million, largely for excess electronic ballast inventory, severance costs
associated with capacity reductions, and severance and relocation costs
associated with administrative consolidations. Pretax charges aggregating $2.4
million were recorded in the MOTORS AND CONTROLS segment, reflecting mainly
severance and relocation costs associated with administrative consolidations.
RESULTS OF OPERATIONS
NET SALES AND GROSS PROFIT
MagneTek's sales were $1.133 billion in fiscal 1994, an increase of 1% over
fiscal 1993's $1.119 billion. This followed a 27% increase in fiscal 1993 sales
over fiscal 1992's $883.4 million. The small increase in fiscal 1994 sales
reflects the impact of lower electronic ballast net sales discussed above. U.S.
electronic ballast sales dropped almost 30% from 1993 levels, which had grown
280% from 1992. Thus, net sales in the BALLASTS AND TRANSFORMERS segment
decreased 7% in 1994 to $660.5 million from $712.6 million in 1993. In Europe,
an increase in power supply sales was offset by decreased sales of transformer
products, while sales of most other product lines in the segment were fairly
comparable year-to-year. Net sales in the segment increased 33% in 1993 from
1992 due to increased sales of electronic ballasts, as well as to the inclusion
of a full year's results of a European business acquired in 1992. In the MOTORS
AND CONTROLS segment, net sales increased 16% to $472.6 million in 1994 from
$406.8 million in 1993. Sales of fractional horsepower motors increased 16%
while sales of electronic drives increased 24%. Net sales for the segment in
1993 increased 16% over 1992, with fractional horsepower motors increasing 11%
and electronic drives 32%. These sales increases generally reflect the
strengthening U.S. economy.
The Company's gross profit dropped to $204.1 million in fiscal 1994 from $245.4
million in fiscal 1993, while its gross margin declined to 18% of sales in 1994
from 21.9% of sales in 1993. Gross profit in 1994 includes charges aggregating
$19.1 million for inventory and other reserves provided in conjunction with
MagneTek's restructuring. Excluding these charges, gross margin was 19.7% of
sales. The decline in gross profit resulted from lower sales and increased costs
in the electronic ballast business. Electronic ballast gross profit in the U.S.
fell approximately $25 million in 1994 from 1993, and the product line lost
almost 10 percentage points in gross margin. Gross margins in other BALLASTS AND
TRANSFORMER product lines were down somewhat due to a difficult pricing
environment and modest cost increases. Gross margins in most MOTORS AND CONTROLS
product lines were up year-to-year with modest price increases and efficiency
gains offset somewhat by labor and material cost increases. From 1992 to 1993,
gross profit increased approximately $44 million largely due to increased gross
profit in the electronic ballast business and most MOTORS AND CONTROLS product
lines. However, gross margin as a percent of sales dropped slightly, reflecting
a greater proportion of European sales with lower overall margins than U.S.
sales.
<PAGE>
OPERATING EXPENSES
Selling, general and administrative (SG&A) expense was $194.2 million (17.1% of
net sales) in fiscal 1994, up from $175.8 million (15.7% of net sales) in fiscal
1993 and $143.7 million (16.2% of net sales) in fiscal 1992. In all three fiscal
years, general corporate expenses are fully included in continuing operations'
SG&A with no allocation of corporate overhead to discontinued operations. SG&A
expense in 1994 also includes charges associated with the Company's
restructuring aggregating $12.1 million, as well as a charge of $2.7 million
reflecting estimated costs to settle pending litigation (see Note 7). Excluding
these charges, SG&A expense was 15.8% of sales in 1994. As part of its
restructuring program, the Company is undertaking a number of actions to reduce
overall SG&A expense. These actions include consolidation of continuing
operations' administrative functions and a substantial reduction in general
corporate expense.
INTEREST AND OTHER EXPENSES
Interest expense of $32 million in fiscal 1994 was up slightly over fiscal
1993's $31.5 million. Year-to-year overall debt levels were comparable, with
higher rates on variable-rate debt in 1994. Fiscal 1994 and 1993 interest
expense levels were up almost 20% from fiscal 1992's $26.8 million, reflecting
an increase of over 20% in debt levels. This was due primarily to MagneTek's
substantial investments in electronic ballast capacity and working capital. The
Company intends to use proceeds from the sale of discontinued operations to
repay debt, and therefore expects interest expense to decrease significantly in
future periods as divestitures are completed. Other expense includes primarily
amortization costs associated with deferred financing and goodwill. Other
expense in 1994 declined to $2.3 million from $5.6 million in 1993 and $4.7
million in 1992. This was due in part to a gain of approximately $2.2 million on
the sale of an investment in a limited partnership in 1994.
NET INCOME (LOSS)
In fiscal 1994, the Company recorded a loss of $16.9 million or $.69 per share
from continuing operations before extraordinary items and the cumulative effect
of accounting changes. Charges associated with the Company's restructuring
program and the litigation settlement discussed above represented over $20
million or $.84 per share after tax. Income from continuing operations before
extraordinary items and the cumulative effect of accounting changes was $19.3
million, or $.78 per share primary and $.73 per share fully diluted, in fiscal
1993. The corresponding amounts in fiscal 1992 were $14.7 million, or $.61 per
share primary and $.59 fully diluted. During 1994, the Company recorded
aggregate losses from discontinued operations of $28.5 million, including $25
million for estimated losses on the disposal of businesses expected to be sold
at a loss and approximately $2 million more in anticipated losses from these
operations in fiscal 1995 prior to their sale. Discontinued operations generated
income of $7.8 million in 1993 and $10.3 million in 1992.
In fiscal 1993, the Company adopted Statement of Financial Accounting Standards
(SFAS) No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" and SFAS No. 109 "Accounting for Income Taxes." The cumulative effect
of the adoption of these two accounting standards resulted in a one-time charge
of $48.7 million (see Notes 6 and 9). Fiscal 1992 results reflect an
extraordinary item related to early extinguishment of debt (see Note 4).
Net income, taking into account the results of both continuing and discontinued
operations, extraordinary items and the cumulative effect of accounting changes,
was: a loss of $45.4 million or $1.84 per share in 1994; a loss of $21.7 million
or $.87 per share in 1993; and income of $22.2 million or $.92 per share in
1992.
LIQUIDITY AND CAPITAL RESOURCES
The amount outstanding under long-term borrowings (including current portion)
was comparable at the end of fiscal 1994 to the amount at the end of fiscal 1993
- - -- approximately $524 million. Between the end of fiscal 1992 and fiscal 1993,
long-term borrowings increased approximately $94 million, primarily under bank
lines of credit, due to increases in capital spending and working capital to
support capacity increases in the electronic ballast business. Net cash provided
from operating activities in 1994 was $30.1 million in spite of the loss from
continuing operations, reflecting the largely noncash nature of restructuring
and other charges recorded during the fiscal year. Although accounts receivable
dropped by almost $30 million, the decrease was more than offset by a reduction
in current liabilities related to reduced purchases associated with the
decreased production of electronic ballasts. In spite of reduced electronic
ballast production during 1994, overall inventory did not decrease due to
correspondingly lower electronic ballast sales volume and product returns, as
well as to modest inventory increases in certain MOTORS AND CONTROLS segment
product lines. Cash generated by operating activities was offset by cash used
for investments, primarily capital expenditures, which was partially offset by
the sale of the Company's custom motor business.
The custom motor business was sold in May 1994 for a cash price of $8.3 million.
In July 1994, the Company sold its controls business for a cash purchase price
of $46 million. Both prices were subject to certain post-closing adjustments.
These divestitures are part of the Company's overall restructuring program,
which will be completed during fiscal 1995 (see Note 2). MagneTek anticipates
aggregate net proceeds from all planned divestitures to exceed $200 million. Net
proceeds will be used to redeem debt. Other actions associated with the
restructuring program, including the relocation and consolidation of
administrative offices, will entail cash outflow approximating $13.7 million
during fiscal 1995.
Due to charges recorded in connection with the restructuring program and
litigation settlement, as well as to lower than anticipated operating results,
MagneTek was in violation of certain covenants under its Revolving Loan
Agreement at June 30, 1994. The Company has received a waiver of the violations
from its banks and has negotiated amendments to its Revolving Loan Agreement to
adjust the covenants prospectively based upon future projected operating
performance. As a result of the amendments, the lending commitment under the
Revolving Loan Agreement was reduced to $150 million from $200 million, and the
lending rate was increased by one quarter percent (see Note 4). The banks'
lending commitment will be further reduced upon required repayment of currently
outstanding borrowings with proceeds received from the sale of discontinued
operations. Such commitment will not be reduced below $100 million.
The Company may be subject to certain potential environmental and legal
liabilities (see Note 7).
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30.
AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA. 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,133,126 $1,119,392 $883,466
Cost of sales 928,994 873,976 681,997
- - ------------------------------------------------------------------------------------------------------------------------------
Gross profit 204,132 245,416 201,469
Selling, general and administrative expenses 194,234 175,797 143,700
- - ------------------------------------------------------------------------------------------------------------------------------
Income from operations 9,898 69,619 57,769
Interest expense 32,018 31,542 26,774
Other expense, net 2,322 5,614 4,683
- - ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before provision (benefit)
for income taxes, extraordinary item and cumulative effect
of accounting changes (24,442) 32,463 26,312
Provision (benefit) for income taxes (7,500) 13,200 11,600
- - ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from continuing operations before extraordinary item and
cumulative effect of accounting changes (16,942) 19,263 14,712
Discontinued operations --
Income (loss) from operations (net of taxes) (3,462) 7,770 10,331
Loss on disposal (net of tax benefit) (25,041) -- --
Extraordinary item -- loss on early extinguishment of debt
(net of tax benefit) -- -- (2,857)
Cumulative effect of changes in accounting for postretirement medical
benefits (net of tax benefit) and income taxes -- (48,734) --
- - ------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (45,445) $ (21,701) $ 22,186
- - ------------------------------------------------------------------------------------------------------------------------------
Per common share -- primary:
Income (loss) from continuing operations before extraordinary item and
cumulative effect of accounting changes $ (.69) $ .78 $ .61
Income (loss) from discontinued operations (1.15) .31 .43
Extraordinary item -- -- (.12)
Cumulative effect of accounting changes -- (1.96) --
- - ------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ (1.84) $ (.87) $ .92
- - ------------------------------------------------------------------------------------------------------------------------------
Per common share -- fully diluted:
Income (loss) from continuing operations before extraordinary item and
cumulative effect of accounting changes $ * $ .73 $ .59
Income (loss) from discontinued operations * .30 .41
Extraordinary item -- -- (.10)
Cumulative effect of accounting changes -- * --
- - ------------------------------------------------------------------------------------------------------------------------------
Net income (loss) $ * $ * $ .90
- - ------------------------------------------------------------------------------------------------------------------------------
<FN>
* PER SHARE AMOUNTS ON A FULLY DILUTED BASIS HAVE BEEN OMITTED AS SUCH AMOUNTS ARE ANTI-DILUTIVE IN RELATION TO PRIMARY PER SHARE
AMOUNTS.
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
AS OF JUNE 30. AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA. 1994 1993
<S> <C> <C>
- - ----------------------------------------------------------------------------------------------------------------
ASSETS
- - ----------------------------------------------------------------------------------------------------------------
CURRENT ASSETS:
Cash $ 7,013 $ 7,606
Accounts receivable, less allowance for doubtful accounts of $4,745 in 1994
and $3,986 in 1993 217,106 253,133
Inventories 196,527 207,370
Deferred income taxes 20,688 10,063
Prepaids and other current assets 12,282 9,277
- - ----------------------------------------------------------------------------------------------------------------
Total current assets 453,616 487,449
- - ----------------------------------------------------------------------------------------------------------------
PROPERTY, PLANT AND EQUIPMENT:
Land 4,033 3,672
Buildings and improvements 63,511 57,999
Machinery and equipment 311,664 277,356
- - ----------------------------------------------------------------------------------------------------------------
379,208 339,027
Less accumulated depreciation and amortization 172,163 143,621
- - ----------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 207,045 195,406
- - ----------------------------------------------------------------------------------------------------------------
Net assets of discontinued operations 197,217 233,716
Cost in excess of fair value of net assets acquired, less accumulated
amortization of $6,005 in 1994 and $4,987 in 1993 35,391 36,663
Deferred financing costs, intangible and other assets, less accumulated
amortization of $12,927 in 1994 and $9,989 in 1993 38,089 42,125
- - ----------------------------------------------------------------------------------------------------------------
$931,358 $995,359
- - ----------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
<TABLE>
<CAPTION>
1994 1993
<S> <C> <C>
- - ------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------------------------------------------------------------------
CURRENT LIABILITIES:
Accounts payable $117,884 $133,973
Accrued liabilities 80,287 94,672
Current portion of long-term debt 49,998 7,588
- - ------------------------------------------------------------------------------------------------
Total current liabilities 248,169 236,233
- - ------------------------------------------------------------------------------------------------
Long-term debt, net of current portion 473,781 515,713
Other long-term obligations 77,316 67,215
Deferred income taxes 19,010 13,169
Commitments and contingencies
STOCKHOLDERS' EQUITY
Common stock, $.01 par value, 100,000,000 shares authorized
24,205,000 and 24,122,000 shares issued and outstanding 242 241
Additional paid-in capital 76,364 75,494
Retained earnings 57,674 103,119
Cumulative translation adjustment (16,561) (15,825)
Minimum pension liability (4,637) --
- - ------------------------------------------------------------------------------------------------
Total stockholders' equity 113,082 163,029
- - ------------------------------------------------------------------------------------------------
$931,358 $995,359
- - ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CUMULATIVE MINIMUM
--------------------- PAID-IN RETAINED TRANSLATION PENSION
AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA. SHARES AMOUNT CAPITAL EARNINGS ADJUSTMENT LIABILITY
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
- - ------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1991 23,014,000 $230 $62,051 $102,634 $ (6,264) $ --
- - ------------------------------------------------------------------------------------------------------------------------------
Sale of common stock 650,000 6 9,008 -- -- --
Exercise of stock options 180,000 2 829 -- -- --
Translation adjustment -- -- -- -- 5,781 --
Net income -- -- -- 22,186 -- --
- - ------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1992 23,844,000 238 71,888 124,820 (483) --
- - ------------------------------------------------------------------------------------------------------------------------------
Exercise of stock options 278,000 3 3,606 -- -- --
Translation adjustment -- -- -- -- (15,342) --
Net loss -- -- -- (21,701) -- --
- - ------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1993 24,122,000 241 75,494 103,119 (15,825) --
Exercise of stock options 83,000 1 870 -- -- --
Translation adjustment -- -- -- -- (736) --
Minimum pension liability -- -- -- -- -- (4,637)
Net loss -- -- -- (45,445) -- --
- - ------------------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1994 24,205,000 $242 $76,364 $ 57,674 $(16,561) $(4,637)
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30. AMOUNTS IN THOUSANDS 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Income (loss) from continuing operations $(16,942) $19,263 $14,712
- - ------------------------------------------------------------------------------------------------------------------------------
Adjustments to reconcile income (loss) from continuing operations to net
cash provided by operating activities:
Depreciation and amortization 36,418 33,581 31,559
(Gain) loss on sale of assets (2,236) (2,584) 412
Restructuring and other noncash charges 31,221 -- (969)
Changes in operating assets and liabilities of continuing operations, net of
effects from acquired companies (18,331) (78,644) (35,344)
- - ------------------------------------------------------------------------------------------------------------------------------
Total adjustments 47,072 (47,647) (4,342)
- - ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) operating activities 30,130 (28,384) 10,370
- - ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of and investment in companies, net of cash acquired -- (24,540) (18,773)
Proceeds from sale of businesses and assets 8,216 13,223 854
Capital expenditures (43,338) (57,850) (28,010)
Annuity contract and other investments 3,085 (9,787) --
- - ------------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (32,037) (78,954) (45,929)
- - ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Borrowings under bank and other long-term obligations 15,238 110,213 --
Proceeds from issuance of 10-3/4% Senior Subordinated Debentures -- -- 125,000
Proceeds from issuance of 8% Convertible Subordinated Notes -- -- 75,000
Proceeds from issuance of common stock 871 3,609 9,845
Repayment of bank and other long-term obligations (15,090) (9,157) (185,900)
Increase in deferred financing costs (703) (2,553) (6,664)
- - ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 316 102,112 17,281
- - ------------------------------------------------------------------------------------------------------------------------------
Net cash used in continuing operations (1,591) (5,226) (18,278)
- - ------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM DISCONTINUED OPERATIONS:
Income (loss) from discontinued operations (28,503) 7,770 10,331
Adjustments to reconcile income (loss) to net cash provided by
discontinued operations:
Depreciation and amortization 11,211 12,154 11,737
Loss on disposal and other noncash charges 27,341 -- 4,259
Changes in operating assets and liabilities of discontinued operations (2,994) (210) (6,014)
Capital expenditures (6,057) (9,951) (7,076)
- - ------------------------------------------------------------------------------------------------------------------------------
Net cash provided by discontinued operations 998 9,763 13,237
- - ------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (593) 4,537 (5,041)
Cash at beginning of year 7,606 3,069 8,110
- - ------------------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 7,013 $ 7,606 $ 3,069
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ALL AMOUNTS IN THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE EXPRESSED IN
THOUSANDS, EXCEPT SHARE AND PER SHARE DATA.
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of MagneTek, Inc. and
its subsidiaries (the Company). All significant intercompany accounts and
transactions have been eliminated.
REVENUE RECOGNITION AND CHANGE IN ACCOUNTING FOR LONG-TERM CONTRACTS
Substantially all revenues are recognized when shipments are made. Prior to
fiscal year 1992, sales and anticipated profits under certain fixed-price
contracts were accounted for under the percentage-of-completion (cost-to-cost)
method. During the year ended June 30, 1992, the Company changed its method of
accounting for long-term contracts to the percentage-of-completion (units of
delivery) method. The Company believed this change was preferable because it
provides a more accurate measurement of the stage of completion for its current
and anticipated future contracts. This resulted in a charge to income in 1992 of
$4,259, net of tax benefit, reflecting the cumulative effect of applying the
units of delivery method as of the beginning of the fiscal year. Estimated
losses on contracts are recorded when identified. The Company increased its
reserve for contract losses by approximately $4,000 and $3,500 during the last
two quarters of fiscal 1993 and the fourth quarter of fiscal 1992, respectively.
All of the above referenced amounts relate to, and are included in, the results
of discontinued operations for the periods indicated.
INVENTORIES
Inventories are stated at the lower of cost (first-in, first-out method) or
market.
PROPERTY, PLANT AND EQUIPMENT
Additions and improvements are capitalized at cost, whereas expenditures for
maintenance and repairs ($22,784, $22,243 and $16,889 for the years ended June
30, 1994, 1993 and 1992, respectively) are charged to expense as incurred.
Depreciation is provided over the estimated useful lives of the respective
assets principally by the straight-line method.
DEFERRED FINANCING COSTS, INTANGIBLE AND OTHER ASSETS
Costs incurred to obtain financing are deferred and amortized principally on a
debt-outstanding method over the term of financing acquired. Amortization
expense relating to deferred financing costs was $2,358, $2,006 and $1,845 for
the years ended June 30, 1994, 1993 and 1992, respectively. Cost in excess of
fair value of net assets acquired (goodwill) is being amortized using the
straight-line method over a forty-year period. The Company assesses the
recoverability of goodwill based upon several factors, including management's
intention with respect to the operations to which the goodwill relates and those
operations' projected future income and undiscounted flows. Write-downs of
goodwill are recognized when it is determined that the value of such asset has
been impaired. Amortization expense relating to goodwill was $1,018, $1,050 and
$1,219 for the years ended June 30, 1994, 1993 and 1992, respectively.
Amortization expense relating to deferred financing costs and goodwill is
included in the Consolidated Statements of Income as other expense.
INCOME TAXES
Income taxes are provided based upon the results of operations for financial
reporting purposes and include deferred income taxes applicable to timing
differences between financial and taxable income. Tax credits are accounted for
under the flow-through method as reductions of the income tax provision in the
year in which the credits are realized.
Effective July 1, 1992, the Company adopted Statement of Financial Accounting
Standards No. 109 "Accounting for Income Taxes." As a result, the Company
recorded a one-time charge to income of $13,000 or $.52 per share on a primary
basis as the cumulative effect of the accounting change (see Note 6).
Federal income taxes are not provided currently on undistributed earnings of
foreign subsidiaries since the Company presently intends to reinvest these
earnings overseas indefinitely. At June 30, 1994 the Company had unremitted
foreign earnings of approximately $600.
EARNINGS PER SHARE
Primary earnings per share are computed based upon the weighted average number
of common and common equivalent (principally stock options) shares outstanding.
Fully diluted earnings per share are computed based upon the weighted average
number of common and common equivalent shares outstanding including the effect
of additional shares related to the Company's Convertible Notes as if conversion
to common shares had occurred at the beginning of the fiscal year. Earnings have
also been adjusted for interest expense on the Convertible Notes.
FISCAL YEAR
The Company uses a fifty-two, fifty-three week fiscal year which ends on the
Sunday nearest June 30. For clarity of presentation, all periods are presented
as if the year ended on June 30. Fiscal year 1994 contained 53 weeks. Fiscal
years 1993 and 1992 contained 52 weeks.
<PAGE>
2. DISCONTINUED OPERATIONS AND RESTRUCTURING COSTS
On January 5, 1994, the Company's Board of Directors approved a restructuring
program with the objective of focusing the Company's resources on its core
product lines and reducing debt. In connection with the program, the Company
identified certain businesses for potential divestiture. Subsequent to fiscal
1994 year end, the Board of Directors adopted a formal plan of disposal
resulting in the classification of substantially all of the divestiture
candidates as discontinued operations in the accompanying consolidated financial
statements.
The segments to be disposed of are comprised primarily of the Company's utility,
military, controls and custom motor businesses. Substantially all of the assets,
subject to certain liabilities, of the custom motor business were sold on May
27, 1994 to the management of the business for a cash purchase price of $8,300
subject to certain post-closing adjustments. In July 1994, the Company sold
substantially all of the assets, subject to certain liabilities, of the controls
business for a cash purchase price of $46,000. Aggregate net sales of these
businesses (included in the results below) were $51,831, $62,895 and $56,112 in
the years ended June 30, 1994, 1993 and 1992, respectively. The Company expects
to complete the remainder of the divestiture program during the fiscal year
ended June 30, 1995, and intends to use the net proceeds to repay debt.
The following results for the businesses to be divested are reported separately
as discontinued operations in the accompanying Consolidated Statements of
Income.
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1994 1993 1992
- - -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $365,609 $392,773 $346,345
Income (loss) before provision for income taxes and cumulative effect of
an accounting change (3,362) 13,170 26,090
Provision for income taxes 100 5,400 11,500
Cumulative effect of a change in accounting for long-term contracts,
net of taxes -- -- (4,259)
- - -------------------------------------------------------------------------------------------------------------------------
Income (loss) of discontinued operations $ (3,462) $ 7,770 $ 10,331
- - -------------------------------------------------------------------------------------------------------------------------
</TABLE>
The Company has provided for estimated losses on disposal of the discontinued
operations, net of tax benefit of $2,300, in the amount of $25,041 which
includes a provision for anticipated operating losses prior to disposal. The tax
benefit is less than the benefit computed using statutory tax rates due to the
disallowance (for tax purposes) of losses on the anticipated sales of certain
discontinued operations. Net assets of discontinued operations have been
segregated in the accompanying Consolidated Balance Sheets and consist primarily
of accounts receivable, inventories, fixed assets and goodwill offset by
accounts payable and accrued liabilities (including the provisions for estimated
losses on disposal and anticipated operating losses prior to disposal).
A portion of the Company's consolidated interest expense has been allocated to
the results of discontinued operations based upon the ratio of the net assets of
discontinued operations to the total net assets of the Company. Total interest
expense allocated to discontinued operations and included in the results above
was $15,806, $16,414 and $16,249 for the years ended June 30, 1994, 1993 and
1992, respectively.
In connection with the restructuring program, the Company has also undertaken a
review of its core product lines with the objective of developing actions to
reduce costs and improve future profitability. The Company identified a
substantial amount of potentially obsolete or excess inventory related to the
Company's electronic ballast product line based upon current and projected
demand and production rates for this product line. The Company is also
relocating and consolidating a number of operating and administrative locations
as part of the overall restructuring program.
As a result of this review, the Company has recorded charges to income
aggregating $31,221 related to potentially obsolete or excess inventory,
severance and relocation costs associated with the restructuring. Of this
amount, $19,135 is included in Cost of sales and $12,806 is included in selling,
general and administrative expense in the Consolidated Statement of Income for
the year ended June 30, 1994. Approximately $13,700 will require future cash
outflows, which will occur primarily during fiscal 1995.
3. INVENTORIES
Inventories at June 30, consist of the following:
<TABLE>
<CAPTION>
1994 1993
- - ----------------------------------------------------------------------------
<S> <C> <C>
Raw materials and stock parts $ 59,943 $ 72,111
Work-in-process 43,198 38,785
Finished goods 93,386 96,474
- - ----------------------------------------------------------------------------
$196,527 $207,370
- - ----------------------------------------------------------------------------
</TABLE>
<PAGE>
4. LONG-TERM DEBT AND BANK BORROWING ARRANGEMENTS
Long-term debt at June 30, consists of the following:
<TABLE>
<CAPTION>
1994 1993
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving bank loans $173,549 $164,223
11.45 percent Senior Notes, interest payable semi-annually, due June 30, 1997 135,000 135,000
10-3/4 percent Senior Subordinated Debentures, interest payable semi-annually, due November 15, 1998 125,000 125,000
8 percent Convertible Subordinated Notes, interest payable semi-annually, convertible into 4,687,500
shares of common stock, due September 15, 2001 75,000 75,000
Miscellaneous installment notes, capital leases and other obligations at rates ranging from 5.0 percent to
10.6 percent, due through 1997 15,230 24,078
- - -----------------------------------------------------------------------------------------------------------------------------------
523,779 523,301
Less current portion 49,998 7,588
- - -----------------------------------------------------------------------------------------------------------------------------------
$473,781 $515,713
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
BANK BORROWING ARRANGEMENTS
At June 30, 1994, the Company had an agreement with a group of banks whereby the
banks have committed to lend on a domestic basis up to $200,000 through April
30, 1996. Under the agreement, as amended (the "Revolving Credit Agreement")
borrowings under the credit facility bear interest at the banks' prime lending
rate plus one-half percent or, at the Company's option, the London Interbank
Offered Rate plus one and three quarters percent. These rates may be reduced by
up to one-half and one and one-eighth percent, respectively, based upon the
achievement of specified leverage ratios. At June 30, 1994, borrowings
outstanding under the Revolving Loan Agreement bore interest at a weighted
average rate of approximately 7.4 percent. The Company is required to pay a
commitment fee of three-eighths percent on the unused commitment.
Borrowings under the Revolving Loan Agreement are secured by the stock of the
Company's domestic subsidiaries. The Revolving Loan Agreement contains certain
provisions and covenants which, among other things, restrict the payment of cash
dividends on common stock, limit the amount of future indebtedness and require
the Company to maintain specified levels of net worth and cash flow. The Company
has received a waiver from the banks related to certain covenants for which the
Company was not in compliance at June 30, 1994. Subsequent to June 30, 1994, the
Company amended the Revolving Credit Agreement to adjust the financial covenants
prospectively based upon a review of expected future operating performance and
the effects of the Company's restructuring program (see Note 2). As a result of
these amendments, the banks' lending commitment was reduced to $150,000 and the
interest rate on borrowings was increased by one-quarter percent. The banks'
lending commitment will be further reduced upon required repayment of currently
outstanding borrowings with proceeds received from the sale of discontinued
operations. Such commitment will not be reduced below $100,000. The amendments
also restrict the Company's ability to repay other indebtedness under certain
circumstances.
The Company's European subsidiaries have an agreement (the "European Loan
Agreement") with five banks wherein the banks have agreed to lend DM 26,000
(approximately $16,400) under a Term Loan and DM 57,500 (approximately $36,000)
under a Revolving Loan. Borrowings under this agreement may be denominated in
multiple currencies and bear interest at the related country's Interbank Offered
Rate plus one and five-eighths percent. The Term Loan is repayable in quarterly
installments of DM 1,500 during calendar 1995 and quarterly installments of DM
2,500 thereafter until repaid. Borrowings under the Revolving Loan are due
January, 1995, which date may be extended for an additional year on an annual
basis. The Company intends to repay all borrowings outstanding under the
European Loan Agreement by January, 1995.
Borrowings under the European Loan Agreement are secured by substantially all of
the assets of the Company's European subsidiaries with no recourse to the
parent. The European Loan Agreement contains certain provisions and covenants
with respect to the European subsidiaries which, among other things, limit the
amount of future indebtedness and capital expenditures and require the
maintenance of specified levels of working capital, net worth and cash flow.
SENIOR NOTES
The 11.45 percent Senior Notes ("Senior Notes") are currently redeemable at the
option of the Company in whole or in part including a prepayment charge, if any,
based upon the terms of the Note Purchase Agreement. Mandatory repayment of the
Senior Notes is in six semi-annual installments of $22,500 beginning December
31, 1994 with the final payment due June 30, 1997. During fiscal 1992, the
Company repurchased $15,000 of Senior Notes in market transactions at between
102 and 103 percent of the face value. The premium paid in excess of the face
value, together with the unamortized portion of deferred financing costs
associated with the repurchased Senior Notes are included in the extraordinary
loss on early extinguishment of debt in the accompanying Consolidated Statement
of Income for the year ended June 30, 1992.
The Senior Notes are secured by the stock of the Company's subsidiaries. The
Note Purchase Agreement contains certain provisions and covenants which, among
other things, prohibit the payment of cash dividends on common stock, limit the
amount of future indebtedness and require the Company to maintain specified
levels of working capital, net worth and cash flow. Effective March 31, 1994,
the Note Purchase Agreement was amended to adjust certain covenants and allow
the Company to divest certain business units under its restructuring program
(see Note 2). The amendment also provided for an increase of one-quarter percent
(from 11.2 percent to 11.45 percent) in the interest rate on the Senior Notes.
<PAGE>
SENIOR SUBORDINATED DEBENTURES
The 10-3/4 percent Senior Subordinated Debentures ("Subordinated Debentures")
are not redeemable by the Company prior to maturity in November, 1998. The
Subordinated Debentures are subordinated to the Senior Notes and borrowings
under the Revolving Loan Agreement. Proceeds from the issuance of the
Subordinated Debentures were used to fully redeem all of the Company's 11-7/8
percent First Senior Subordinated Notes at a price of 101.5 percent of the face
amount plus accrued interest and to repay bank borrowings. The redemption
premium together with the unamortized deferred financing costs and original
issue discount are included in the extraordinary loss on early extinguishment of
debt in the accompanying Consolidated Statement of Income for the year ended
June 30, 1992.
The indenture related to the Subordinated Debentures contains certain covenants
which, among other things, limit the nature and amount of future indebtedness
and restrict the payment of dividends on common stock.
CONVERTIBLE SUBORDINATED NOTES
The 8 percent Convertible Subordinated Notes ("Convertible Notes") are
redeemable at the option of the Company, in whole or in part, beginning in
September 1994 at redemption prices set forth in the indenture, and, at the
option of the holder, are convertible into common stock of the Company at $16.00
per share at any time prior to maturity in September, 2001.
Aggregate principal maturities on long-term debt outstanding at June 30, 1994
are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
- - ----------------------------------------------------------------------------
<S> <C>
1995 $ 49,998
1996 209,846
1997 54,042
1998 5,147
1999 126,762
Thereafter 77,984
- - ----------------------------------------------------------------------------
</TABLE>
5. FAIR VALUES OF FINANCIAL INSTRUMENTS
The recorded amounts and estimated fair values of the Company's significant
financial instruments as of June 30, 1994 were as follows:
<TABLE>
<CAPTION>
CARRYING FAIR
AMOUNT VALUE
- - ----------------------------------------------------------------------------
<S> <C> <C>
11.45 percent Senior Notes $135,000 $144,450
10-3/4 percent Senior Subordinated Debentures $125,000 $128,125
8 percent Convertible Subordinated Notes $ 75,000 $ 76,875
- - ----------------------------------------------------------------------------
</TABLE>
The fair values of long-term debt were estimated based on quoted market prices
or through broker quotations. The carrying amounts of certain financial
instruments such as cash, annuity contract and borrowings under short-term
revolving credit agreements approximate their fair values.
The Company enters into futures contracts to provide an economic hedge against
fluctuations in copper prices. Gains and losses are recorded in cost of sales as
the related purchased copper is incorporated into finished products and sold.
Unrealized losses on open contracts at June 30, 1994 were not material to the
Company's results of operations.
6. INCOME TAXES
Effective July 1, 1992, the Company changed its method of accounting for income
taxes to the liability method of accounting for deferred income taxes with the
adoption of Statement of Financial Accounting Standards No. 109 "Accounting for
Income Taxes" (SFAS No. 109). As permitted under the new rules, prior years'
financial statements have not been restated. The cumulative effect of adopting
SFAS No. 109 was a charge to income of $13,000, or $.52 per share on a primary
basis in the year ended June 30, 1993.
Income tax expense (benefit) is allocated in the financial statements as
follows:
<TABLE>
<CAPTION>
DEFERRED
LIABILITY METHOD METHOD
--------------------- --------
YEAR ENDED JUNE 30 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income (loss) from continuing operations before extraordinary item and cumulative
effect of accounting changes $(7,500) $13,200 $11,600
Extraordinary item -- -- (2,245)
Cumulative effect of accounting changes -- (22,370) --
- - ------------------------------------------------------------------------------------------------------------------------------
Income tax expense (benefit) attributable to continuing operations (7,500) (9,170) 9,355
Discontinued operations (2,200) 5,400 8,154
- - ------------------------------------------------------------------------------------------------------------------------------
$(9,700) $(3,770) $17,509
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
The expense (benefit) for income taxes applicable to continuing operations is as
follows:
<TABLE>
<CAPTION>
DEFERRED
LIABILITY METHOD METHOD
--------------------- --------
YEAR ENDED JUNE 30 1994 1993 1992
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
CURRENT:
Federal $(3,836) $11,869 $6,108
State 178 3,125 2,196
Foreign 942 (2,418) 557
DEFERRED:
Federal (4,046) (19,689) 89
State and Foreign (738) (2,057) 405
- - ----------------------------------------------------------------------------
$(7,500) $(9,170) $9,355
- - ----------------------------------------------------------------------------
</TABLE>
A reconciliation of the Company's effective tax rate to the statutory Federal
tax rate for income from continuing operations before extraordinary item and
cumulative effect of accounting changes is as follows:
<TABLE>
<CAPTION>
1994 1993 1992
----------------- ----------------- -----------------
YEARS ENDED JUNE 30 AMOUNT % AMOUNT % AMOUNT %
- - -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision (benefit) computed at the statutory rate $(8,555) (35.0) $11,038 34.0 $ 8,946 34.0
State income taxes, net of federal benefit (371) (1.5) 1,937 6.0 1,736 6.6
Foreign tax rates in excess of federal statutory rate 1,213 5.0 (173) (.5) 451 1.7
Tax credits -- -- -- -- (148) (.6)
Permanent differences arising from application of purchase accounting 141 .6 153 .5 705 2.7
Other 72 .2 245 .7 (90) (.3)
- - -----------------------------------------------------------------------------------------------------------------------------------
$(7,500) 30.7 $13,200 40.7 $11,600 44.1
- - -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
Income (loss) before provision for income taxes of the Company's foreign
subsidiaries was approximately $1,500, $1,300 and $700 for the years ended June
30, 1994, 1993 and 1992.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets for continuing operations as
of June 30, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30 1994 1993
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation and amortization (including differences in the basis of acquired assets) $41,406 $36,024
Pension costs 775 781
Inventory methods 2,616 2,300
Other -- 658
- - ------------------------------------------------------------------------------------------------------------------------------
Total deferred tax liabilities 44,797 39,763
- - ------------------------------------------------------------------------------------------------------------------------------
Deferred tax assets:
Postretirement medical benefit obligation 23,076 23,513
Inventory and other reserves (including Restructuring) 23,399 13,144
- - ------------------------------------------------------------------------------------------------------------------------------
Total deferred tax assets 46,475 36,657
- - ------------------------------------------------------------------------------------------------------------------------------
Net deferred tax (assets) liabilities $(1,678) $ 3,106
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The components of the provision for deferred income taxes for the year ended
June 30, 1992 are as follows:
<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1992
- - ----------------------------------------------------------------------------
<S> <C>
Depreciation and amortization $(1,071)
Pension costs 1,607
Inventory and other reserves (979)
Other 937
- - ----------------------------------------------------------------------------
$494
- - ----------------------------------------------------------------------------
</TABLE>
<PAGE>
7. COMMITMENTS AND CONTINGENCIES
LEASES
The Company leases certain facilities and machinery and equipment primarily
under operating lease arrangements. Future minimum rental payments under
noncancelable operating leases as of June 30, 1994 total $46,546 and are payable
in future fiscal years as follows: $12,450 in 1995; $9,654 in 1996; $6,700 in
1997; $5,452 in 1998; $4,156 in 1999 and $8,134 thereafter.
Rent expense for the years ended June 30, 1994, 1993 and 1992 was $18,673,
$16,715 and $14,211, respectively.
LITIGATION
PENSION MATTERS
Primarily in 1985, the Company entered into agreements with Executive Life
Insurance Company ("ELIC") under which ELIC assumed accrued pension obligations
under certain defined benefit retirement plans (collectively, the "Plan")
pursuant to an annuity purchase agreement. The Plan paid approximately $25,300
to ELIC under these agreements. In April 1991, the California Insurance
Commissioner (the "Commissioner") was named conservator of ELIC and the Los
Angeles Superior Court issued orders providing that ELIC would pay 70% of the
monthly payments due to the Company's retirees under the ELIC annuity contract.
Under the terms of a plan of rehabilitation, which includes an enhancement
agreement between the Commissioner and the National Organization of Life and
Health Guaranty Associations ("NOLHGA") to augment the benefits paid to ELIC
policyholders, individual annuitants with account values up to $100 will receive
100% of their benefits, resulting in the payment by the rehabilitated ELIC and
NOLHGA of substantially all of the required payments to the Company's employees
who are covered under the ELIC annuities. The rehabilitation plan provides for
reimbursement of shortfall payments the Company had been providing from April
1991 to July 1992 and, accordingly, the Company has reflected the anticipated
reimbursement in other assets in its consolidated financial statements.
Effective on July 22, 1992, the Company entered into agreements settling all
claims with respect to two complaints filed by the Department of Labor and by a
labor union against various defendants including the Company. The settlement
agreements required the Company, among other things, to provide back-up
insurance coverage in the form of an annuity purchased from an approved
insurance company equal to 30% of the obligation to existing retirees. The
Company also agreed to purchase additional coverage in the event payments from
third parties to annuitants fall below 70% of the required amount. If annuity
benefits under the back-up annuity are not needed to provide full benefit
payments to covered annuitants, the proceeds will be remitted to the Company on
an annual basis. On July 31, 1992, the Company purchased such an annuity from
Metropolitan Life Insurance Company for approximately $9,800. Such annuity will
only be used for retiree benefits in the event the combined payments by the
rehabilitated ELIC and NOLHGA fall below 100% of the required benefits.
The Company does not expect that the above transactions will have a material
effect on the Company. However, should ELIC (or its successor) and/or NOLHGA
fail to make required annuity payments in the future, such transactions could
have a material adverse effect upon the Company.
STOCKHOLDER LITIGATION
Four substantially identical actions were filed in 1993 against the Company and
certain of its directors and officers. The four actions were subsequently
consolidated in a single amended complaint. The suit purports to be a class
action on behalf of purchasers of the Company's common stock from October 22,
1992 through August 6, 1993. The complaint asserts claims under the federal
securities laws, and alleges that the Company artificially inflated the price of
its common stock during the class period by failing to disclose adverse
developments in the Company's business. The complaint does not specify the
amount of damages sought.
In July 1994, counsel for the Company defendants and the plaintiffs reached an
agreement in principle to settle the litigation. Final approval of the
settlement and dismissal of plaintiffs' claims is subject to a hearing following
notice to the class and an opportunity for class members to file any objections
to the settlement. The Consolidated Statement of Income for the year ended June
30, 1994 reflects a pretax charge of $2,650 representing estimated costs to the
Company including legal fees associated with the settlement.
OTHER LITIGATION
The Company is a party to a number of product liability lawsuits, many of which
involve fires allegedly caused by defective ballasts. All of these cases are
being defended by the Company's insurers, and management believes that its
insurers will bear all legal costs and liability, except for applicable
deductibles, and that none of these proceedings individually or in the aggregate
will have a material adverse effect on the Company. In addition, the Company is
frequently named in asbestos-related lawsuits which do not involve material
amounts individually or in the aggregate.
The Company is one of numerous defendants in a suit filed in 1993 by multiple
plaintiffs claiming damages for personal injuries allegedly resulting from
exposure to emissions allegedly generated by the defendants' manufacturing
facilities in or near Brownsville, Texas. The plaintiffs have not specified the
damages sought nor the particular emissions they contend implicate the Company.
Discovery is ongoing and a trial has been set for May 1995, and the Company
intends to defend the litigation vigorously. The Company is not able to estimate
the potential exposure or range of exposure.
ENVIRONMENTAL MATTERS
GENERAL
The Company has from time to time discovered contamination by hazardous
substances at certain of its facilities. In response to such a discovery, the
Company conducts remediation activities to bring the facility into compliance
with applicable laws and regulations. Except as described below, the Company's
remediation activities for fiscal 1994 did not entail material expenditures, and
its remediation activities for fiscal 1995 are not expected to entail material
expenditures. Future discoveries of contaminated areas could entail material
expenditures, depending upon the extent and nature of the contamination.
<PAGE>
UNIVERSAL MANUFACTURING (BRIDGEPORT)
The Company's Universal Manufacturing division has used certain hazardous
materials, including PCBs, in certain of its production processes. In
particular, contaminated soil and groundwater have been located at Universal
Manufacturing's Bridgeport, Connecticut facility. In connection with the
February 1986 acquisition of Universal Manufacturing, the Company and the
seller, Farley Northwest Industries, Inc. (the predecessor to Fruit of the Loom,
Inc., hereinafter collectively with such successor referred to as "FOL"),
executed an environmental agreement. Under this agreement, FOL agreed to perform
certain cleanup work at the Bridgeport facility and to indemnify and hold the
Company harmless for environmental claims attributable to FOL's or its
predecessors' activities at the Bridgeport facility. To date, FOL has undertaken
investigative actions and remedial work at Bridgeport as required by the
environmental agreement, and such remedial work is now substantially complete.
CENTURY ELECTRIC (MCMINNVILLE)
Prior to its purchase by the Company in 1986, Century Electric, Inc. ("Century
Electric") acquired a business from Gould Inc. in May 1983 which included a
leasehold interest in a fractional horsepower electric motor manufacturing
facility located in McMinnville, Tennessee. In connection with this acquisition,
Gould agreed to indemnify Century Electric from and against liabilities and
expenses arising out of the handling and cleanup of hazardous waste, including
but not limited to cleaning up any PCBs at the McMinnville facility (the "1983
indemnity"). Investigation revealed the presence of PCBs in portions of the soil
and in the groundwater underlying the facility and in certain offsite soil.
Century Electric has kept the Tennessee Department of Environment and
Conservation, Division of Superfund, apprised of test results from the
investigation. The McMinnville plant has been listed as a Tennessee Superfund
Site, a report on that site has been presented to the Tennessee legislature, and
community officials and plant employees have been notified of the presence of
PCBs as above described. In July 1993, Gould submitted to the State of Tennessee
a Feasibility Study recommending a cleanup of certain onsite soil with an
estimated cost of $4,700. This estimate does not include ancillary costs of
onsite cleanup, which are expected to be significant. Based upon currently
available information, the aggregate costs for cleanup of certain onsite soil,
including ancillary costs of onsite cleanup, are not expected to exceed $15,000.
Subsequent to June 30, 1994, Gould contracted for certain onsite cleanup to be
performed, at its own expense, during the period from September 1994 through
December 1994. The necessity for any potential offsite cleanup has not been
studied, and no estimate or range of any potential offsite cleanup costs has
been developed. The Company believes that the costs for certain onsite cleanup,
including ancillary costs of onsite cleanup, and the costs for any potential
offsite cleanup are covered by the 1983 indemnity. In August 1994, Gould
requested that the Company consider bearing an unspecified portion of each of
these costs, and the Company declined. While the Company believes that Gould
will continue to perform under its indemnity obligations, Gould's failure to
perform such obligations could have a material adverse effect on the Company.
OFFSITE LOCATIONS
The Company has been identified by the United States Environmental Protection
Agency and certain state agencies as a potentially responsible party for cleanup
costs associated with alleged past waste disposal practices at several offsite
locations. Due, in part, to the existence of indemnification from the former
owners of certain acquired businesses for cleanup costs at certain of these
sites, and except as described below, the Company's estimated share in liability
(if any) at the offsite facilities is not expected to be material. It is
possible that the Company will be named as a potentially responsible party in
the future with respect to other sites.
CROWN INDUSTRIES SITE (PIKE COUNTY, PENNSYLVANIA)
In March 1992, the Company was informed by the Pennsylvania Department of
Environmental Resources ("DER") that its Universal Manufacturing division is one
of a number of potentially responsible parties with respect to a planned
environmental investigation and cleanup at the Crown Industries site in Pike
County, Pennsylvania. The DER has provided a non-binding preliminary allocation
of liability in connection with the site that assigned the Company a 30 percent
share. The aggregate expense of cleaning up the site is not currently known, but
some preliminary indications suggest a range of $5,000 to $15,000. To date, the
DER has sought reimbursement of approximately $500 in the aggregate from the
Company and the other potentially responsible parties. The Company has concluded
that at least 90 percent of any liability it may incur relating to this site is
covered by the indemnification provisions of its environmental agreement with
FOL, and FOL has acknowledged such indemnity and is currently defending its own
and the Company's interest in this site.
FOL's failure to perform its obligations with respect to the Crown Industries
site under the environmental agreement could have a material adverse effect on
the Company.
LETTERS OF CREDIT
The Company has approximately $24,000 of outstanding letters of credit as of
June 30, 1994.
8. STOCK OPTION AGREEMENTS
The Company has two stock option plans (the "Plans") which provide for the
issuance of both incentive stock options (under Section 422A of the Internal
Revenue Code of 1986) and non-qualified stock options at exercise prices not
less than fair market value at the date of grant. One of the plans also provides
for the issuance of stock appreciation rights, restricted stock, unrestricted
stock, restricted stock rights and performance units. The total number of shares
of the Company's common stock authorized to be issued upon exercise of the stock
options and other stock rights under the Plans is 3,605,280. As of June 30, 1994
and 1993 shares available for grant were approximately 473,000 and 514,000,
respectively. Options granted under the Plans generally vest in four equal
annual installments.
<PAGE>
A summary of certain information with respect to options under the Plans
follows:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30 1994 1993 1992
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, beginning of year 1,983,143 2,020,088 1,474,236
Options granted 903,000 368,000 764,900
Options exercised (83,389) (278,320) (179,765)
Weighted average exercise price $ 7.69 $ 8.60 $ 4.42
Options cancelled (499,700) (126,625) (39,283)
- - ----------------------------------------------------------------------------
Options outstanding, end of year 2,303,054 1,983,143 2,020,088
Weighted average price $12.30 $11.02 $10.15
- - ----------------------------------------------------------------------------
Exerciseable 963,107 909,318 748,913
- - ----------------------------------------------------------------------------
</TABLE>
The Company has also granted options in prior years under certain non-qualified
stock option agreements, terms of which are similar to the Plans. No such
options were granted, exercised or cancelled during the three years ended June
30, 1994. As of June 30, 1994, options for 142,835 shares with a weighted
average price per share of $4.74 were outstanding, all of which were
exerciseable.
The Company has granted stock appreciation rights (SARs) to certain of its
directors under director incentive compensation plans. As of June 30, 1994, SARs
with respect to 298,750 shares, with a weighted average exercise price of $10.38
were outstanding under these plans.
9. EMPLOYEE BENEFIT PLANS
PENSION PLANS
The Company has defined benefit retirement plans which, collectively, cover
substantially all of its non-union employees and those union employees whose
collective bargaining agreements specifically provide for coverage. Effective
January 1, 1988, the Company merged all of its plans covering non-union domestic
employees into a single defined benefit plan (the "Plan"). The Plan provides
benefits based upon career average pay as defined in the Plan.
The net pension cost for the years ended June 30, 1994, 1993 and 1992 is as
follows:
<TABLE>
<CAPTION>
1994 1993 1992
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Service cost-benefits earned during the period $ 8,169 $ 7,615 $ 7,924
Interest cost on projected benefit obligation 8,195 7,415 6,309
Investment return on plan assets (1,180) (8,945) (5,482)
Net amortization and deferral (7,103) 888 (1,314)
- - ----------------------------------------------------------------------------
Net pension cost $ 8,081 $ 6,973 $ 7,437
- - ----------------------------------------------------------------------------
</TABLE>
The projected benefit obligation was determined using an assumed discount rate
of 8.25% for the year ended June 30, 1994 and 8.5% for the year ended June 30,
1993 and a 6% increase in the rate of compensation in both years. The average
expected long-term rate of return on plan assets is 8.5% for both years.
The funded status of the Company's defined benefit plans at June 30, 1994 and
1993 is as follows:
<TABLE>
<CAPTION>
1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
ACTUARIAL PRESENT VALUE OF:
Vested benefit obligation $103,257 $ 91,373
Non-vested benefits 4,134 4,006
Projected benefit obligation 112,301 100,516
Market value of plan assets 100,163 92,055
Plan assets less than projected benefit obligation (12,138) (8,461)
Unrecognized net loss 15,242 10,020
Unrecognized prior service income relating to merged plans (2,778) (2,947)
Unrecognized net asset (2,917) (3,282)
Minimum pension liability (4,637) --
Accrued pension cost 7,228 4,670
- - -------------------------------------------------------------------------------
</TABLE>
Pursuant to SFAS No. 87, "Employers' Accounting for Pensions," the Company has
recorded an additional minimum pension liability of $4,637 at June 30, 1994,
representing the difference between the Company's unfunded accumulated benefit
obligation and the recorded pension liability. The additional minimum pension
liability has been recorded as a reduction of equity.
It is the Company's policy to fund pension costs annually. Plan assets are
primarily invested in equity and government securities. The Company also has
benefit plans for certain of its foreign subsidiaries which are not reflected
above. These plans are not material to the Company's benefit plans as a whole.
<PAGE>
In addition to the defined benefit retirement plans, most of the Company's
non-union employees participate in a defined contribution savings plan which
provides for employee contributions of up to 6% of compensation as defined in
the plan with a Company contribution equal to 20% of the first 3% of the
employee's contribution. Company contributions were $936, $828 and $817 during
the plan years ended March 31, 1994, 1993 and 1992, respectively. Company
contributions vest over a five-year period.
POSTRETIREMENT MEDICAL BENEFIT PLANS
The Company provides certain health care benefits for certain eligible retired
employees. Approximately 25% of the currently active (but not retired) employees
are eligible for benefits under these contributory plans under which the
Company's subsidy varies by the employee group. However, for employees retiring
after December 31, 1991, the amount of subsidy to be paid by the Company will be
"capped" at the 1991 plan cost levels and all future trend increases will be
borne by the employees. Employees hired after December 31, 1991 will not receive
any Company subsidy.
Effective July 1, 1992, the Company adopted Statement of Financial Accounting
Standards No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" (SFAS No. 106), changing to the accrual method of accounting for
certain postretirement benefits other than pensions, primarily health care
benefits. SFAS No. 106 requires the expected cost of future benefits to be
charged to expense during the periods in which the employees render service.
Previously, the Company recognized these costs on a "pay-as-you-go," or cash
basis.
The Company implemented SFAS No. 106 on the immediate recognition basis
effective July 1, 1992, and, as a result, recognized a one-time pretax charge of
$58,104 ($35,734 or $1.44 per share on a primary basis, after tax). The change
in accounting resulted in an increase in the annual expense recognized for these
postretirement benefits of approximately $2,400.
The accumulated postretirement benefit obligation as of June 30, 1994 and 1993
consisted of unfunded obligations related to the following:
<TABLE>
<CAPTION>
1994 1993
- - -------------------------------------------------------------------------------
<S> <C> <C>
Retirees $47,195 $48,822
Fully eligible active plan participants 4,129 6,228
Other active participants 6,098 5,063
Unrecognized gain 2,408 --
- - -------------------------------------------------------------------------------
$59,830 $60,113
- - -------------------------------------------------------------------------------
</TABLE>
Net periodic postretirement benefit costs for the years ended June 30, 1994 and
1993 include the following components:
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30 1994 1993
- - ------------------------------------------------------------------------------------------------
<S> <C> <C>
Service cost -- benefits earned during period $ 515 $ 432
Interest cost on accumulated postretirement benefit obligation 4,472 4,833
- - ------------------------------------------------------------------------------------------------
$4,987 $5,265
- - ------------------------------------------------------------------------------------------------
</TABLE>
The Company's current policy is to fund the cost of the postretirement health
care benefits on a "pay-as-you-go" basis as in prior years.
For measurement purposes, an 11% and 10% annual rate of increase (9% and 8% for
HMO plans) in the per capita cost of covered health care claims was assumed for
fiscal 1994 and fiscal 1995, respectively; the rate of increase was assumed to
decrease to 6.25% by 2008 and remain at that level thereafter. The health care
cost trend rate assumption has a significant effect on the amounts reported. To
illustrate, increasing the assumed health care cost trend by 1 percentage point
in each year would increase the accumulated postretirement benefit obligation by
approximately $5,500 and the aggregate of service and interest cost components
of the annual net postretirement health care cost by approximately $450. The
weighted average discount rate used in determining the accumulated
postretirement benefit obligation was 8.25% for the year ended June 30, 1994 and
8.5% for the year ended June 30, 1993.
10. RELATED PARTY TRANSACTIONS
The Company has an agreement with the Spectrum Group, Inc. whereby Spectrum will
provide management services to the Company from fiscal 1995 through fiscal 1999
at a current annual fee of $732 plus out-of-pocket expenses which amounted to
$37, $6 and $32 for the years ended June 30, 1994, 1993 and 1992, respectively.
The Company's chairman is also the chairman of Spectrum. The services provided
include consultation and direct management assistance with respect to
operations, strategic planning and other aspects of the business of the Company.
Fees paid to Spectrum for these services under the agreement were $678 in each
of the three years ended June 30, 1994.
During the years ended June 30, 1994 and 1993, the Company paid approximately
$914 and $500, respectively, in fees to charter an aircraft owned by a company
in which the chairman is the principal shareholder. The Company believes the
fees paid were equivalent to those that would be paid under an arm's-length
transaction.
<PAGE>
11. ACCRUED LIABILITIES
Accrued liabilities consist of the following at June 30:
<TABLE>
<CAPTION>
1994 1993
- - ----------------------------------------------------------------------------
<S> <C> <C>
Salaries, wages and related items $28,790 $40,704
Warranty 13,865 11,134
Interest 3,906 11,265
Income taxes 2,537 4,446
Restructuring reserves (see Notes 2 and 13) 8,236 12,520
Other 22,953 14,603
- - ----------------------------------------------------------------------------
$80,287 $94,672
- - ----------------------------------------------------------------------------
</TABLE>
12. SUPPLEMENTAL CASH FLOW INFORMATION
Changes in operating assets and liabilities of continuing operations, net of
effects from acquired companies, follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30 1994 1993 1992
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(Increase) decrease in accounts receivable $ 29,927 $(56,661) $(17,823)
(Increase) decrease in inventories (10,640) (8,425) (10,390)
(Increase) decrease in prepaids and other current assets (3,258) (889) (4,652)
(Increase) decrease in other operating assets (1) 9,837 (7,405)
Increase (decrease) in accounts payable (14,180) 2,912 5,029
Increase (decrease) in accrued liabilities (20,858) (24,106) 3,554
Increase (decrease) in deferred income taxes (4,785) 1,796 (2,794)
Increase (decrease) in other operating liabilities 5,464 (3,108) (863)
- - ------------------------------------------------------------------------------------------------------------------------------
$(18,331) $(78,644) $(35,344)
- - ------------------------------------------------------------------------------------------------------------------------------
Cash paid for interest and income taxes follows:
Interest $54,841 $46,471 $36,429
Income taxes $5,335 $16,481 $23,500
Reconciliation of assets acquired and liabilities assumed:
Fair value of assets acquired -- $44,477 $72,915
Liabilities assumed -- 19,937 54,142
- - ------------------------------------------------------------------------------------------------------------------------------
Cash paid for acquisitions -- $24,540 $18,773
- - ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
13. ACQUISITIONS
In October, 1992, the Company acquired substantially all of the assets subject
to certain liabilities of the INET division of Teledyne, Inc. (included in
discontinued operations) for a cash price of approximately $15,500 including
post closing adjustments. INET manufactures electrical and electronic power
products for military and commercial applications and engineers ground support
systems for use by aircraft parked at airport terminals.
In March, 1992, the Company acquired the capital stock of May & Christe GmbH, a
manufacturer of lighting ballasts, transformers and other electrical equipment
based in Germany. The original purchase price aggregated approximately $42,400
which included cash, a deferred payment and the assumption of certain long-term
liabilities. At the time of the acquisition, the Company also sold 650,000
shares of the Company's common stock to the former owner of May & Christe for
approximately $9,000. During fiscal 1993, in resolution of certain liabilities
for which the Company was indemnified by the former owner, the original purchase
price was renegotiated to approximately $35,200 resulting in the elimination of
the deferred payment. In connection with this acquisition, the Company accrued
restructuring reserves aggregating approximately $20,000, principally consisting
of severance pay and plant closure costs. The plant closures were substantially
completed and the related severance costs paid during fiscal years 1993 and
1994.
These acquisitions were accounted for as purchases, and, accordingly, the
purchase prices and direct costs of the acquisitions have been allocated to the
respective assets and liabilities of the acquired companies based upon their
estimated fair market values at the dates of acquisition. The results of
operations of the acquired companies are included in the Company's financial
statements since the effective dates of the acquisitions. Pro forma results of
operations, which give effect to the transactions as if they had occurred at the
beginning of the periods presented, are not materially different from actual
results included herein.
14. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in two business segments: Ballasts and Transformers and
Motors and Controls.
The Ballasts and Transformers segment produces electrical conversion products,
including magnetic and electronic ballasts for various lighting applications,
transformers for power transmission in commercial and industrial buildings and a
wide range of electronic and industrial equipment, power supplies for use in
computer and office equipment and power converters for recreational vehicles.
The Motors and Controls segment designs, manufactures and markets a broad range
of high quality, fractional and integral electric motors, medium output
generators and electronic adjustable speed drives and systems.
<PAGE>
The Company sells its products primarily to large original equipment
manufacturers and distributors. The Company performs ongoing credit evaluations
of its customers' financial condition and generally requires no collateral. The
Company has no significant concentration of credit risk.
Financial information by business segment for continuing operations follows:
<TABLE>
<CAPTION>
BALLASTS AND MOTORS AND
FOR THE YEAR ENDED JUNE 30, 1994 TRANSFORMERS CONTROLS TOTAL
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $660,524 $472,602 $1,133,126
Operating income (loss) (16,821) 26,719 9,898
Identifiable assets* 510,314 421,044 931,358
Capital expenditures 28,887 14,451 43,338
Depreciation and amortization 22,841 13,577 36,418
- - ----------------------------------------------------------------------------
</TABLE>
Operating income (loss) for the year ended June 30, 1994, reflects pretax
charges of $28,822 and $2,399 in the Ballasts and Transformers and Motors and
Controls segments, respectively, related to restructuring and other costs
primarily in the electronic ballast business (see Note 2).
<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30, 1993
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $712,568 $406,824 $1,119,392
Operating income 45,064 24,555 69,619
Identifiable assets* 565,500 429,859 995,359
Capital expenditures 46,529 11,321 57,850
Depreciation and amortization 20,531 13,050 33,581
- - ----------------------------------------------------------------------------
FOR THE YEAR ENDED JUNE 30, 1992
- - ----------------------------------------------------------------------------
Sales $534,159 $349,307 $883,466
Operating income 39,741 18,028 57,769
Identifiable assets* 474,001 414,667 888,668
Capital expenditures 17,192 10,818 28,010
Depreciation and amortization 18,213 13,346 31,559
- - ----------------------------------------------------------------------------
</TABLE>
*IDENTIFIABLE ASSETS INCLUDE NET ASSETS OF DISCONTINUED OPERATIONS OF $197,217,
$233,716 AND $235,179 FOR 1994, 1993 AND 1992, RESPECTIVELY.
Geographic information with respect to the Company's European Subsidiaries
follows:
<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30 1994 1993 1992
- - ----------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $202,593 $215,323 $161,361
Operating income 10,004 11,651 7,961
Identifiable assets 174,736 179,688 190,664
Capital expenditures 9,723 10,095 6,318
Depreciation and amortization 8,689 8,266 6,572
- - ----------------------------------------------------------------------------
</TABLE>
The Company's foreign operations outside of Europe are not material. Export
sales were $60,143, $55,075 and $36,344 in 1994, 1993 and 1992, respectively.
<PAGE>
15. QUARTERLY RESULTS (UNAUDITED)
During fiscal 1994, the Company's Board of Directors approved a restructuring
program with the objective of focusing the Company's resources on its core
product lines and reducing debt (see Note 2). Subsequent to fiscal year end, the
Board of Directors adopted a formal plan of disposal for certain businesses
which have been classified as discontinued operations in the accompanying
consolidated financial statements. Accordingly, the quarterly results included
below have been restated from those originally reported to reflect the results
of continuing operations.
<TABLE>
<CAPTION>
1994 QUARTER ENDED SEPT. 30 DEC. 31 MAR. 31 JUNE 30
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $280,361 $259,296 $287,095 $306,374
Gross profit 58,893 28,101 57,878 59,260
Provision (benefit) for income taxes 1,134 (10,093) 1,355 104
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting changes 1,567 (21,800) 3,057 234
Net income (loss) 1,406 (42,502) 1,683 (6,032)
PER COMMON SHARE:
Primary:
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting changes $0.06 $(0.88) $0.12 $0.01
Net income (loss) $0.06 $(1.72) $0.07 $(0.24)
Fully diluted:
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting changes $0.06 * $0.12 $0.01
Net income (loss) $0.06 * $0.07 *
- - ------------------------------------------------------------------------------------------------------------------------------
<FN>
*PER SHARE AMOUNTS ON A FULLY DILUTED BASIS ARE OMITTED AS SUCH AMOUNTS ARE ANTI-DILUTIVE IN RELATION TO PRIMARY PER SHARE AMOUNTS.
</TABLE>
In the second quarter of fiscal 1994, Gross profit and income (loss) from
continuing operations before extraordinary item and cumulative effect of
accounting changes include pretax charges of $19,135 and $31,221, respectively,
reflecting restructuring and other costs primarily related to the electronic
ballast business (see Note 2). In the fourth quarter of fiscal 1994, Income
(loss) from continuing operations before extraordinary item and cumulative
effect of accounting changes includes a pretax charge of $2,650 reflecting the
estimated costs to the Company to settle pending litigation (see Note 7).
<TABLE>
<CAPTION>
1993 QUARTER ENDED SEPT. 30 DEC. 31 MAR. 31 JUNE 30
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $250,665 $273,651 $287,203 $307,873
Gross profit 54,129 63,349 67,946 59,992
Provision (benefit) for income taxes 2,281 3,108 5,250 2,561
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting changes 3,284 4,472 7,552 3,955
Net income (loss) (41,980) 8,243 8,933 3,103
PER COMMON SHARE:
Primary:
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting changes $0.14 $0.18 $0.30 $0.15
Net income (loss) $(1.69) $0.34 $0.35 $0.12
Fully diluted:
Income (loss) from continuing operations before extraordinary
item and cumulative effect of accounting changes $0.13 $0.17 $0.27 $0.15
Net income (loss) * $0.31 $0.33 $0.12
- - ------------------------------------------------------------------------------------------------------------------------------
<FN>
*PER SHARE AMOUNT ON A FULLY DILUTED BASIS IS OMITTED AS SUCH AMOUNT IS ANTI-DILUTIVE IN RELATION TO PRIMARY PER SHARE AMOUNT.
</TABLE>
During fiscal 1993, the Company adopted SFAS Nos. 106 and 109 resulting in an
after tax charge to income of $48,734, or $1.96 per share on a primary basis
(see Notes 6 and 9). The changes in accounting were effective July 1, 1992,
resulting in a restatement of originally reported results for the quarter ended
September 30, 1992. During the fourth quarter of fiscal 1993, the Company
incurred significant additional costs in connection with the expansion of its
electronic ballast business.
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
THE BOARD OF DIRECTORS AND STOCKHOLDERS
MAGNETEK, INC.
We have audited the accompanying consolidated balance sheets of MagneTek, Inc.
as of June 30, 1994 and 1993, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended June 30, 1994. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of MagneTek, Inc. at
June 30, 1994 and 1993, and the consolidated results of its operations and its
cash flows for each of the three years in the period ended June 30, 1994, in
conformity with generally accepted accounting principles.
As discussed in Notes 1 and 9 to the financial statements, the Company changed
its method of accounting for income taxes and postretirement medical benefits in
1993.
/s/ Ernst & Young LLP
Woodland Hills, California
August 18, 1994,
except for the second paragraph of Note 4, as to which the date is
September 29, 1994
<PAGE>
EXHIBIT 23
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the incorporation by reference of the Registration Statements
(Form S-3 Nos. 33-31932, 33-40222, 33-41854 and 33-43856) and in the related
Prospectuses, and in the Registration Statements (Form S-8 Nos. 33-31439,
33-33887, 33-34112, 33-34834 and 33-44519) pertaining to the 1987 Stock
Option Plan of MagneTek, Inc., the MagneTek Flexcare Plus Savings Plan,
1989 Incentive Stock Compensation Plan of MagneTek, Inc., the MagneTek
Unionized Employee Savings Plan, and the Amended and Restated 1989 Incentive
Stock Compensation Plan of MagneTek, Inc., of our report dated August 18, 1994,
except for the second paragraph of Note 4, as to which the date is September 29,
1994, with respect to the consolidated financial statements and schedules of
MagneTek, Inc included in this Annual Report (Form 10-K) for the year ended
June 30, 1994.
/s/ ERNST & YOUNG LLP
Woodland Hills, California
October 12, 1994
LC942860.033/-1+
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1994
<PERIOD-START> JUL-01-1993
<PERIOD-END> JUN-30-1994
<CASH> 7,013
<SECURITIES> 0
<RECEIVABLES> 221,851
<ALLOWANCES> 4,745
<INVENTORY> 196,527
<CURRENT-ASSETS> 453,616
<PP&E> 379,208
<DEPRECIATION> 172,163
<TOTAL-ASSETS> 931,358
<CURRENT-LIABILITIES> 248,169
<BONDS> 523,779
<COMMON> 242
0
0
<OTHER-SE> 112,840
<TOTAL-LIABILITY-AND-EQUITY> 931,358
<SALES> 1,133,126
<TOTAL-REVENUES> 1,133,126
<CGS> 928,994
<TOTAL-COSTS> 928,994
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 2,878
<INTEREST-EXPENSE> 32,018
<INCOME-PRETAX> (24,442)
<INCOME-TAX> (7,500)
<INCOME-CONTINUING> (16,942)
<DISCONTINUED> (28,503)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (45,445)
<EPS-PRIMARY> (.69)
<EPS-DILUTED> 0
</TABLE>
