<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended: March 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________________________
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 Number)
26 Century Blvd.
P. O. Box 290159
Nashville, Tennessee 37229-0159
(Address of principal executive offices)
(Zip Code)
(615) 316-5100
(Registrant's telephone number, including area code)
____________________________________________________
(Former name, former address and former fiscal year,
if changed since last report)
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
--- ---
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the
Securities exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of Registrant's Common Stock, as of May
15 1995: 24,630,044 shares.
<PAGE>
PART I. FINANCIAL INFORMATION
In the opinion of management, the accompanying condensed consolidated
financial statements contain all adjustments necessary to fairly present
the financial position as of March 31, 1995 and the results of operations
and cash flows for the three-month and nine-month periods ended March 31,
1995 and 1994. It is suggested that these condensed consolidated
financial statements be read in conjunction with the consolidated
financial statements and notes included in the Company's latest annual
report on Form 10-K. Results for the three months and nine months ended
March 31, 1995 are not necessarily indicative of results which may be
experienced for the full fiscal year.
<PAGE>
ITEM 1
MAGNETEK, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1995 and JUNE 30 , 1994
(amounts in thousands)
<TABLE>
<CAPTION>
ASSETS March 31 June 30
------ -------- -------
(unaudited)
<S> <C> <C>
Current assets:
Cash $ 1,336 $ 7,013
Accounts receivable 224,120 217,106
Inventories 220,804 196,527
Prepaid expenses and other 33,526 32,970
--------- ---------
Total current assets 479,786 453,616
--------- ---------
Property, plant and equipment 383,956 379,208
Less-accumulated depreciation
and amortization 193,317 172,163
--------- ---------
190,639 207,045
--------- ---------
Net assets of discontinued
operations 115,931 197,217
Goodwill 32,687 35,391
Deferred financing costs,
intangible and other assets 35,140 38,089
--------- ---------
Total assets $ 854,183 $ 931,358
--------- ---------
--------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 106,726 $ 117,884
Accrued liabilities 72,209 80,287
Current portion of long-term debt 17,528 49,998
--------- ---------
Total current liabilities 196,463 248,169
--------- ---------
Long-term debt, net of current
portion 439,266 473,781
Other long-term obligations 76,258 77,316
Deferred income taxes 13,819 19,010
Commitments and contingencies
Stockholders' equity
Common stock 244 242
Other 128,133 112,840
--------- ---------
Total stockholders equity 128,377 113,082
--------- ---------
Total Liabilities and Stockholders'
Equity $ 854,183 $ 931,358
--------- ---------
--------- ---------
</TABLE>
See accompanying notes
<PAGE>
ITEM 1 (Continued)
MAGNETEK, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE THREE MONTHS ENDED
MARCH 31, 1995 AND 1994
(amounts in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net sales $ 318,652 $ 287,095
Cost of sales 254,266 231,336
---------- ---------
Gross profit 64,386 55,759
Selling, general and administrative 42,201 42,535
---------- ---------
Income from operations 22,185 13,224
Interest expense 9,224 7,978
Other expense, net 1,265 834
---------- ---------
Pretax income from continuing operations
before extraordinary item 11,696 4,412
Income taxes 4,795 1,355
---------- ---------
Income from continuing
operations before extraordinary
item 6,901 3,057
Discontinued operations --
Income (loss) from operations
(net of taxes) -- ( 1,374)
Extraordinary item (net of taxes) ( 4,820) --
---------- ---------
Net income $ 2,081 $ 1,683
---------- ---------
---------- ---------
EARNINGS PER COMMON SHARE
Primary:
Income (loss) from continuing
operations $ 0.28 $ 0.12
Income (loss) from discontinued
operations -- ( 0.05)
Extraordinary item ( 0.20) --
---------- ---------
Net income $ 0.08 $ 0.07
---------- ---------
---------- ---------
Fully diluted:
Income (loss) from continuing
operations $ 0.26 $ 0.12
Income (loss) from discontinued
operations -- (a)
Extraordinary item (a) --
---------- ---------
Net income (a) (a)
---------- ---------
---------- ---------
<FN>
(a) 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>
See accompanying notes
<PAGE>
(Continued)
MAGNETEK, INC.
CONDENSED CONSOLIDATED INCOME STATEMENTS
FOR THE NINE MONTHS ENDED
MARCH 31, 1995 AND 1994
(amounts in thousands except per share data)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
Net sales $ 884,034 $ 826,752
Cost of sales 709,241 687,362
---------- ---------
Gross profit 174,793 139,390
Selling, general and administrative 121,868 139,728
---------- ---------
Income (loss) from operations 52,925 ( 338)
Interest expense 25,418 23,906
Other expense, net 3,503 536
---------- ---------
Pretax income (loss) from continuing
operations before extraordinary item 24,004 ( 24,780)
Income taxes 9,965 ( 7,604)
---------- ---------
Income (loss) from continuing
operations before extraordinary item. 14,039 ( 17,176)
Discontinued operations --
Loss from operations -- ( 1,745)
(net of taxes)
Gain (loss) on disposal
(net of taxes) 3,100 ( 20,492)
Extraordinary item (net of taxes) ( 4,820) --
---------- ---------
Net (loss) income $ 12,319 $( 39,413)
---------- ---------
---------- ---------
EARNINGS PER COMMON SHARE
Primary:
Income (loss) from continuing
operations $ 0.57 $( 0.69)
Income (loss) from discontinued
operations 0.12 ( 0.90)
Extraordinary item ( 0.20) --
---------- ---------
Net (loss) income $ 0.49 $( 1.59)
---------- ---------
---------- ---------
Fully diluted:
Income (loss) from continuing
operations $ 0.55 (a)
Income (loss) on discontinued
operations 0.10 (a)
Extraordinary item (a) --
---------- ---------
Net (loss) income (a) (a)
---------- ---------
---------- ---------
<FN>
(a) 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>
See accompanying notes
<PAGE>
ITEM 1 (continued)
MAGNETEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
1995 1994
---- -----
<S> <C> <C>
Cash flows from operating activities:
Income (loss) from continuing operations $ 14,039 $( 17,176)
Adjustments to reconcile income (loss) from
continuing operations to net cash
provided by (used in) operating activities:
Depreciation and amortization 28,652 28,284
Provision for restructuring and other
charges -- 31,221
Changes in operating assets and
liabilities of continuing
operations ( 48,477) ( 19,492)
---------- ----------
Total adjustments ( 19,825) 40,013
---------- ----------
Net cash provided by (used in) operating
activities: ( 5,786) 22,837
---------- ----------
Cash flows from investing activities:
Proceeds from sale of businesses and assets 94,305 --
Capital expenditures ( 30,382) ( 33,705)
Annuity contract and other investments 2,630 902
---------- ----------
Net cash provided by (used in) investing
activities 66,553 ( 32,803)
---------- ----------
Cash flows from financing activities:
Borrowings under bank and other long-term
obligations 77,272 20,026
Proceeds from issuance of common stock 1,541 428
Repayment of bank and other long-term
obligations ( 149,527) ( 10,952)
Increase in deferred financing costs ( 5,275) ( 214)
---------- ----------
Net cash provided by (used in) financing
activities ( 75,989) 9,288
---------- ----------
Net cash provided by used in continuing
operations ( 15,222) ( 678)
---------- ----------
</TABLE>
(continued on next page)
<PAGE>
ITEM 1 (continued)
MAGNETEK, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
FOR THE NINE MONTHS ENDED MARCH 31, 1995 AND 1994
(amounts in thousands)
(unaudited)
<TABLE>
<CAPTION>
1994 1994
---- ----
<S> <C> <C>
Cash flows from discontinued operations:
Income (loss) from discontinued
operations $ 3,100 $( 22,237)
Adjustments to reconcile income (loss) to
net cash provided by (used in) discontinued
operations:
Depreciation and amortization 5,891 7,431
Provision for loss on disposal 27,341
Gain on sale of businesses ( 3,100) --
Changes in operating assets and
liabilities of discontinued operations 4,660 ( 9,686)
Capital expenditures ( 1,006) ( 4,540)
---------- ----------
Net cash provided by (used in)
discontinued operations 9,545 ( 1,691)
---------- ----------
Net decrease in cash ( 5,677) ( 2,369)
Cash at the beginning of period 7,013 7,606
---------- ----------
Cash at the end of period $ 1,336 $ 5,237
---------- ----------
---------- ----------
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 31,203 $ 35,080
Income Taxes $ 12,646 $ 6,477
</TABLE>
See accompanying notes
<PAGE>
ITEM 1 (continued)
MAGNETEK, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS,
MARCH 31, 1995
(All dollar amounts are in the thousands)
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
FISCAL PERIOD - The Company uses a fifty-two, fifty-three week
fiscal year. Fiscal periods end on the Sunday nearest the end of
the month. For clarity of presentation, all periods are presented
as if they ended on the last day of the calendar period. The three
month and nine month periods ended March 31, 1995 and 1994
contained thirteen weeks and thirty-nine weeks and thirteen weeks
and forty weeks, respectively.
2. INVENTORIES
Inventories at March 31, 1995 and June 30, 1994 consist of the
following:
<TABLE>
<CAPTION>
March 31 June 30
-------- --------
<S> <C> <C>
Raw materials and stock parts $ 69,198 $ 59,943
Work-in-process 43,584 43,198
Finished goods 108,022 93,386
---------- ---------
$ 220,804 $ 196,527
---------- ---------
---------- ---------
</TABLE>
3. DISCONTINUED OPERATIONS
During the first quarter of fiscal 1995, the Company's Board of
Directors adopted a formal plan of disposal for certain business in
connection with a restructuring program approved by the Board
during fiscal 1994. As a result, the company's consolidated
financial statements for the year ended June 30, 1994 reflected
continuing and discontinued operations, as do the condensed
consolidated financial statements included herein.
During the first nine months of fiscal year 1995, the Company sold
all of the assets, subject to certain liabilities of its Controls
business, Traction Motor Repair business, Utility Repair business
and Power Technology Systems (PTS) business, including all of the
capital stock of certain subsidiaries included in the PTS business.
Aggregate cash proceeds from sales of the above referenced business
(and the sale of Louis Allis in fiscal 1994) approximated $103,000
and are subject to certain post closing adjustments. The Company
expects to complete the remainder of the divestiture program during
fiscal 1995.
During the three month and nine month periods ending March 31,
1995, operating results of the discontinued operations reflected
net sales of approximately $53,000 and $194,400 with corresponding
net losses of $900 and $5,500 respectively. Losses have been
charged to reserves which were established in the prior fiscal year
for estimated losses on disposal.
<PAGE>
ITEM 1 (continued)
4. LONG TERM DEBT AND BANK BORROWING ARRANGEMENTS
On March 31, 1995, the Company entered into an agreement with a
group of banks whereby the banks have committed to lend up to
$225,000 million under a revolving credit facility and $75,000
million under a term loan facility (collectively "Bank Credit
Agreement") through September 30, 1998. Borrowings under these
facilities bear interest at the banks' prime lending rate plus .75
percent or, at the Company's option, the London Interbank Offered
rate plus 2.0 percent. These rates may be reduced by up to .75 and
1.25 percent respectively, based upon the achievement of specified
debt to earnings ratios. Borrowings under the Bank Credit
Agreement are secured by the Company's accounts receivable,
inventory and the stock of its subsidiaries.
The Bank Credit 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 term loan specifies amortization of principle at
increasing rates on a quarterly basis commencing September 30, 1995
through September 30, 1998. Mandatory prepayments of the term loan
are required with proceeds from certain asset sales and excess cash
flow, (as defined in the agreement) beginning on June 30, 1996.
Proceeds from the Bank Credit Agreement were used to fully redeem
$112,500 (representing all of the remaining balance) of the
Company's 11.45 percent Senior Notes and to repay all outstanding
indebtedness under the Company's former Revolving Credit Agreement.
Redemption of the Senior Notes resulted in a call premium of
approximately $5,200. This premium together with the unamortized
portion of debt issue costs for the Senior Notes and Revolving
Credit Agreement are reflected (net of applicable income tax
benefit) as an extraordinary item in the accompanying condensed
consolidated income statements.
<PAGE>
ITEM 2
MANAGEMENT DISCUSSION
RESULTS OF OPERATIONS:
THREE MONTHS ENDED MARCH 31, 1995 VS. 1994
Net Sales and Gross Profit.
MagneTek's net sales in the third quarter of fiscal 1995 were
$318.7 million, an 11% increase over third quarter fiscal 1994 net
sales of $287.1 million. Revenues in the Ballast and Transformer
segment increased 9% due to continued strong sales of electronic
ballasts. Transformer sales in Europe were lower than prior year
results. Sales in the Motors and Controls segment increased 13%
primarily due to increased sales of AC and DC drives, commercial
and residential fractional horsepower motors and large generators.
Gross profit increased to $64.4 million (20.2% of net sales) in the
third quarter of fiscal 1995 from $55.8 million (19.4% of net
sales) in the third quarter of fiscal 1994. Improved gross profits
were a result of increased volume, increased prices in both
ballasts and motors and the impact of higher production levels at
most manufacturing facilities improving fixed cost coverage.
Benefits from the recent peso devaluation have favorably impacted
labor costs at the Company's Mexican production facilities,
although these benefits may be temporary. Cost increases in
electronic components, packaging and base materials (e.g., copper
and aluminum) have offset to a significant degree the positive
effects of pricing and volume.
Operating Expenses.
Selling, general and administrative (SG&A) expense was $42.2
million (13.2% of net sales) in the third quarter of fiscal 1995
down from $42.5 million (14.8% of net sales) in the third quarter
of fiscal 1994. Fiscal 1995 SG&A expense reflects the increased
variable costs associated with the additional sales volume as
compared to the same quarter in the prior fiscal year. Third
quarter SG&A expense in fiscal 1995 also includes a $1.0 million
dollar charge related to the settlement of litigation associated
with the Company's Mexican operations. SG&A comparisons continue
to benefit from the administrative consolidations implemented at
the end of fiscal 1994 and continuing into fiscal 1995.
Interest and Other Expense.
Interest expense increased 15% to $9.2 million in the third quarter
of fiscal 1995 from $8.0 million in the third quarter of fiscal
1994. Higher interest expense was due to generally higher interest
rates and higher levels of debt associated with the Company's
continuing operations. The company is experiencing increased
levels of working capital requirements commensurate with revenue
expansion referenced above. Other expense increased slightly from
prior year levels due primarily to currency exchange losses
associated with the Company's Italian and German operations.
Net Income.
Income from continuing operations before extraordinary charges was
$6.9 million in the third quarter of fiscal 1995 compared to $3.1
million in the third quarter of fiscal 1994. An extraordinary
charge of $4.8 million was incurred in the third quarter of fiscal
1995 related to deferred financing costs associated with early debt
retirement. Net income was $2.1 million in the 1995 quarter
compared to $1.7 million in the same quarter of the prior year.
Net income for the third quarter of fiscal 1994 included $1.4
million in net losses from discontinued operations.
<PAGE>
ITEM 2 (continued)
NINE MONTHS ENDED MARCH 31, 1995 VS. 1994
Net Sales and Gross Profit.
MagneTek's net sales in the first nine months of fiscal 1995 were
$884.0 million, a 7% increase over the first nine months of fiscal
1994 at $826.8 million. Due to the Company's use of a fifty-two,
fifty-three week fiscal year, the first nine months of fiscal 1995
contained thirty-nine weeks compared to forty weeks in the first
nine months of fiscal 1994. On a pro forma basis, presuming that
both periods contained thirty-nine weeks, sales increased by 9.7%.
Revenues for the Ballast and Transformer segment increased 3.5% (6%
on a pro forma basis) due to increased sales of electronic ballasts
offset by lower sales of European transformers. Sales in the Motors
and Controls segment increased 11% (14.6% on a pro forma basis) due
to increased sales of adjustable speed drives, fractional
horsepower motors and large generators.
Gross profit increased to $174.8 million (19.8% of sales) in the
first nine months of fiscal 1995 from $139.4 million (16.9% of
sales) in the first nine months of fiscal 1994. Fiscal 1994
results included charges to income of $19.1 million relating
primarily to inventory and other write-downs in the electronic
ballast product line. Excluding these charges, gross profit in the
first nine months of fiscal 1994 would have been $158.5 million
(19.2% of sales). The gross profit increase in the first nine
months of 1995 was primarily the result of the increase in sales
and the production increases benefiting fixed cost coverage.
Pricing actions in both segments and cost improved electronic
ballasts designs also contributed to the margin improvement.
Favorable Mexican labor costs also resulted as the peso declined in
relation to the U.S. dollar. These factors were offset by higher
material costs primarily in steel, copper, electrical components
and packaging as compared to the first nine months of fiscal 1994.
Operating Expenses.
Selling, general and administrative (SG&A) expense was $121.9
million (13.8% of sales) in the first nine months of fiscal 1995,
down from $139.7 million (16.9% of sales) in the first nine months
of fiscal 1994. SG&A expense in the first nine months of fiscal
1994 included charges to income of $12.1 million relating primarily
to administrative consolidations, including severance and
relocation costs. Exclusive of these charges, SG&A expense for the
first nine months of fiscal 1994 was $127.6 million (15.4% of net
sales). Reduced SG&A expense in absolute dollars reflects
administrative reorganization and consolidation actions undertaken
in the prior fiscal year and current year activities. These
savings, to date, have more than offset the variable cost
associated with the increased sales experienced in the first nine
months of fiscal 1995.
Interest and Other Expense.
Interest expense was $25.4 million in the first nine months of
fiscal 1995 compared to $23.9 million in the first nine months of
1994. Interest rates have generally increased from the nine months
ending fiscal 1994 versus 1995. While the disposal of certain
discontinued operations has reduced borrowings, continuing
operations have experienced higher net working capital demands
consistent with increased sales volume. Other expense in the first
nine months of fiscal 1994 includes a $2.1 million gain from the
sale of an investment resulting in $.5 million of fiscal 1994
expense versus $3.5 million of expense for the same nine month
period in fiscal 1995.
<PAGE>
ITEM 2 (continued)
Net Income.
Income from continuing operations before extraordinary items was
$14.0 million in the first nine months of fiscal 1995 compared to a
loss of $17.2 million in the first nine months of fiscal 1994. As
indicated above, aggregate charges of $31.2 million on a pre-tax
basis were included in the fiscal 1994 period, reflecting costs
associated with the Company's restructuring and reorganization.
Excluding the effect of these charges, continuing operations
reflected income of approximately $4.5 million for the first nine
months of fiscal 1994. Net income was $12.3 million in the first
nine months of fiscal 1995 compared to a net loss of $39.4 million
in the first nine months of fiscal 1994. The fiscal 1995 period
includes a $3.1 million gain on the sale of the Controls business,
and a $4.8 million extraordinary charge primarily related to the
early retirement of $112.5 million of Senior Notes. The fiscal
1994 period includes charges of $22.2 million associated with
discontinued operations.
LIQUIDITY AND CAPITAL RESOURCES
During the first nine months of fiscal 1995, the Company sold
certain of its discontinued operations in cash transactions.
Aggregate proceeds, subject to certain post-closing adjustments,
were approximately $94 million and were used to repay debt
primarily under the Company's former Revolving Credit Agreement.
As of March 31, 1995, the Company entered into an agreement with a
group of banks to provide up to an aggregate of $300 million in
borrowings under revolving and term loan facilities. Borrowings
under these facilities were used to redeem $112.5 million
(representing all of the remaining balance) of the Company's 11.45%
Senior Notes and repay all of the borrowings outstanding under the
Company's former Reloving Credit Agreement (see Note 4 of Notes to
Condensed Consolidated Financial Statements).
The Company expects continued reductions in long-term debt through
net proceeds from future divestitures as well as a return to
positive net cash flow from continuing operations.
<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The Annual Meeting of Stockholders of the Company was held on
November 29, 1994.
(b) The following named persons were elected as directors,
such persons constituting all of the directors of the Company:
Andrew G. Galef
Dewain K. Cross
Charles H. Dean, Jr.
Paul J. Kofmehl
A. Carl Kotchian
Crocker Nevin
Kenneth A. Ruck
(c) The votes cast for and withheld with respect to each nominee
for director is a follows:
Nominee For Withheld
------- --- --------
Andrew G. Galef 17,750,758 130,426
Dewain K. Cross 17,734,065 147,119
Charles H. Dean, Jr. 17,740,946 140,238
Paul J. Kofmehl 17,742,603 138,581
A. Carl Kotchian 17,731,608 149,576
Crocker Nevin 17,733,069 148,115
Kenneth A. Ruck 17,736,566 144,618
The votes cast for, against or withheld (including abstentions
and broker non-votes) with respect to the matter of whether to
approve the adoption of the Company's second Amended and
Restated 1989 Incentive Stock Compensation Plan is as follows:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
11,129,570 2,823,264 1,599,187 2,329,163
The votes cast for, against or withheld (including abstentions
and broker non-votes) with respect to the matter of whether to
ratify the selection of Ernst & Young LLP as the Company's
independent auditors for the fiscal year ending July 2, 1995 is
as follows:
For Against Abstain Broker Non-Votes
--- ------- ------- ----------------
17,807,970 55,462 17,752 0
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
10.1 Severance and General Release Agreement dated as of April 21,
1995 by and between the Company and C. Ore Davis.
10.2 Credit Agreement (the "Credit Agreement") dated as of March
31, 1995 between the Company, Lenders, NationsBank of Texas,
N.A., CIBC Inc., The First National Bank of Chicago and LTCB
Trust Company.
10.3 Guaranty dated as of March 31, 1995 pertaining to the Credit
Agreement.
10.4 Security Agreement dated as of March 31, 1995 pertaining
to the Credit Agreement.
10.5 Amendment dated as of January 25, 1995 to the Executive
Management Agreement between the Company and The Spectrum
Group, Inc.
(b) REPORTS ON FORM 8-K
None.
<PAGE>
SIGNATURES
Pursuant to the requirements 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.
MAGNETEK, INC.
(Registrant)
Date: May 17, 1995 /s/ David P. Reiland
-----------------------
David P. Reiland
Executive Vice President
and Chief Financial Officer
(Duly authorized officer of the
registrant and principal
financial officer)
<PAGE>
PLEASE READ THIS AGREEMENT CAREFULLY.
IT INCLUDES A GENERAL RELEASE OF KNOWN AND UNKNOWN CLAIMS.
SEVERANCE AND GENERAL RELEASE AGREEMENT
THIS SEVERANCE AND GENERAL RELEASE AGREEMENT ("Agreement") is made and
entered into by and between MagneTek, Inc., a Delaware corporation (the
"Company"), and C. Ore Davis ("Executive") effective (subject to paragraph 9(b)
hereof) as of the 21st day of April, 1995.
RECITALS
A. Executive served as Executive Vice President of the Company until his
resignation from that position and from his employment with the Company
effective as of April 21, 1995.
B. The Company and Executive (collectively referred to as the "Parties")
desire to arrange for Executive's orderly separation as an employee of the
Company.
C. The Parties desire to delineate the terms and conditions regarding
Executive's separation as an employee of the Company as more fully set forth
below.
AGREEMENT
NOW, THEREFORE, the Company and Executive agree as follows:
1. Executive resigned his position as Executive Vice President and his
employment with the Company effective as of April 21, 1995 (the "Termination
Date").
2. (a) The Company will pay Executive for all accrued but unused
vacation eligibility and for all accrued but unpaid salary through the
Termination Date.
(b) Except as otherwise set forth immediately below, Executive
acknowledges that he has returned to the Company any and all Company-owned
assets in his possession or control.
3. (a) The period from April 21, 1995 through December 21, 1995 is
referred to herein as the "Severance Period."
(b) The Company shall, during the Severance Period but not
thereafter, continue to pay Executive at his regular base salary rate, and at
the same intervals, as in effect on the Termination Date.
<PAGE>
(c) The Company shall pay to Executive ten-twelfths (10/12) of the
bonus amount, if any, which otherwise would have been paid to Executive pursuant
to the Company's fiscal year 1995 executive incentive compensation plan. Such
amount, if any, will be paid at the time other executives in the Company receive
their respective bonus amounts, if any.
(d) The Company shall, during the Severance Period but not
thereafter, continue to cover Executive in accordance with the terms of any
Company health and welfare insurance programs and plans in which Executive was a
participant as of the Termination Date. (Such programs and plans are
collectively referred to herein as the "employee benefit plans.").
(e) The Company will pay for reasonable executive outplacement
services utilized by Executive in locating a new position through December 21,
1995.
(f) The Company will pay for reasonable office space, secretarial
support, telephone, fax and the like utilized by Executive in locating a new
position through December 21, 1995.
(g) Executive will retain the computer, software and related
equipment currently in his possession.
(h) All payments contemplated by paragraph 2 and this paragraph 3 of
this Agreement shall be subject to applicable withholding taxes.
4. (a) The Company's Chairman of the Board will provide employment
references for Executive, either in writing or by telephone, upon Executive's
request.
(b) Nothing in this Agreement is intended to limit Executive's rights
under any employee benefit plans to elect (at his sole cost and expense) to
continue medical coverage as a former employee to the extent he may do so under
applicable law.
5. (a) From and after April 30, 1995, Executive shall not vest in any
stock options under any employee benefit plans. However, Executive shall be
permitted to exercise those stock options that were vested as of April 30, 1995,
for the remainder of their respective terms. Executive acknowledges and
understands that: (i) it is completely within his discretion whether or not, or
when, to exercise any or all of the vested stock options; (ii) in the event he
decides to exercise any or all of the vested stock options, the Company is
required to withhold federal and state income taxes in connection with such
exercise and will do so at the applicable rates; and (iii) he
2
<PAGE>
should consider consulting his personal tax advisor to determine whether or not
he is required to make additional estimated tax payments to the federal and
state taxing authorities.
(b) Executive acknowledges and understands that he continues to
remain subject to the insider reporting obligations and potential liabilities of
Section 16 of the Securities Exchange Act of 1934, as amended, and Executive
represents that he will abide by all such reporting obligations.
6. Except as expressly described above, no other payments, benefits or
any other items of value whatever under any agreement, plan, program or
otherwise are due Executive from the Company and no further payments, benefits
or other items of value other than those expressly described above will be made
to Executive by the Company.
7. Executive acknowledges that the Company holds as confidential certain
trade secret information and knowledge concerning the intimate and confidential
affairs of the Company and the various phases of its business, including, for
example and without limitation, processes, formulae, data and know-how,
improvements, inventions, techniques, marketing plans, strategies, forecasts,
mailing lists, customer lists, pricing information, manufacturing processes,
distribution systems, computer systems or programs and other types of similar
information within Executive's knowledge by virtue of his employment with the
Company (collectively, the foregoing shall be referred to herein as
"Confidential Trade Secret and Proprietary Information"). Executive agrees that
all Confidential Trade Secret and Proprietary Information shall be the sole
property of the Company and its assigns and that the Company and its assigns
shall be and are the sole owners of all patents and other rights in connection
therewith. Executive further agrees to hold in strictest confidence and to
refrain from using or disclosing to any other person or entity any Confidential
Trade Secret and Proprietary Information.
8. Executive acknowledges and understands that neither the payment,
giving or promise of consideration under this Agreement nor any of the
discussions relating to, the terms contained within, or the execution of, this
Agreement is in any way intended to be nor shall it be construed as an admission
of any liability or wrongdoing whatsoever by the Company, and the Company
specifically disclaims any liability or wrongdoing to Executive.
3
<PAGE>
9. (a) As a material inducement to the Company entering into this
Agreement, Executive hereby irrevocably and unconditionally releases, acquits
and forever discharges the Company from any and all charges, complaints, claims,
liabilities, obligations, promises, agreements, controversies, damages, actions,
causes of action, suits, rights, demands, remedies, costs, losses, debts,
expenses and attorneys' fees including those arising out of or in connection
with Executive's employment with the Company or the termination thereof,
including, for example and without limitation, rights under federal, state or
local laws prohibiting age or other forms of discrimination, but not including
any Excluded Claim (as defined below). (All such charges, complaints, etc. are
collectively referred to herein as "Claims.") The Claims irrevocably and
unconditionally released, acquitted and forever discharged by Executive extend
to all such Claims by Executive against the Company's owners, stockholders,
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, attorneys, divisions, subsidiaries, affiliates (and the
directors, officers, employees, representatives and attorneys of such divisions,
subsidiaries and affiliates) and all other persons acting by, through, under or
in concert with them. (All such persons and entities and the Company are
collectively referred to herein as the "Releasees"). The Claims irrevocably and
unconditionally released, acquitted and forever discharged by Executive herein
also extend to all Claims which Executive now has, owns or holds, or contends to
have, own or hold or which Executive at any time heretofore had, owned or held
or which Executive at any time hereafter may have, own or hold, or contend to
have, own or hold against any of the Releasees. Executive represents that he
has not heretofore assigned or transferred or purported to have assigned or
transferred to any person or entity any Claims released, acquitted and forever
discharged herein. "Excluded Claims" shall mean any claims of indemnification
or contribution arising under or by reason of (i) the Company's bylaws, or (ii)
the laws of the State of Delaware.
(b) Executive specifically agrees to release any and all Claims (as
defined above) he may have against the Releasees under the federal Age
Discrimination in Employment Act of 1967, 29 U.S.C. Sections 621-634 ("ADEA").
In compliance with the terms of the ADEA, Executive has been given 21 calendar
days within which to review this Agreement before signing it. Executive
acknowledges his right to consult with his attorney before signing this
Agreement, that he has been so advised to consult with his attorney, prior to
signing this Agreement. Executive also understands that he may revoke this
Agreement within seven (7) calendar days after he signs it and that it is not
effective or enforceable until that seven (7) day revocation period has expired.
Notwithstanding anything to the contrary provided for
4
<PAGE>
herein, the Company and Executive acknowledge and agree that this Agreement does
not waive or release any rights or claims that Executive may have under ADEA
which arise after the date Executive executes this Agreement.
10. For the purpose of implementing a full and complete release and
discharge of the Releasees, Executive expressly acknowledges that this Agreement
is intended to include in its effect, without limitation, all Claims (as defined
above) which Executive does not know or suspect to exist in his favor at the
time of execution hereof and that this Agreement contemplates the extinguishment
of any and all such Claims. In this regard, Executive expressly waives the
provisions of Section 1542 of the California Civil Code, which states:
A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
RELEASE, WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS
SETTLEMENT WITH THE DEBTOR.
Furthermore, Executive hereby expressly waives and relinquishes any rights and
benefits he may have under other statutes or common law principles of similar
effect. Executive understands that the facts under which he gives this full and
complete release and discharge of the Releasees may hereafter prove to be
different than now known or believed by him and Executive hereby accepts and
assumes the risk thereof and agrees that his full and complete release and
discharge of Releasees shall remain effective in all respects and not be subject
to termination, rescission or modification by reason of any such difference in
facts.
11. Executive represents that he has not filed with any governmental
agency or court any complaints, charges or lawsuits involving any Claims against
any of the Releasees, and that he will not do so at any time hereafter;
provided, however, this paragraph shall not limit Executive from filing an
action for the purpose of enforcing his rights under this Agreement (including,
without limitation, his rights described in paragraph 9(b)) or under any
employee benefit plans described herein.
12. Executive represents and acknowledges that in executing this Agreement
he does not rely and has not relied upon any representation or statement not set
forth herein made by any of the Releasees or by any of the Releasees' agents,
representatives, or attorneys with regard to the subject matter, basis or effect
of this Agreement or otherwise.
5
<PAGE>
13. This Agreement sets forth the entire agreement of the parties hereto,
and completely supersedes any and all prior agreements and understandings
between the parties pertaining to the subject matter hereof.
14. This Agreement shall inure to the benefit of and be enforceable by the
respective successors of each party, including Executive's personal or legal
representatives, executors, administrators, heirs, distributees, devisees, and
legatees. If Executive should die while any amounts would still be payable to
him hereunder if he had continued to live, all such amounts, unless otherwise
provided herein or in the relevant employee benefit plans, shall be payable to
his heirs, distributees, devisees, legatees or designated beneficiaries.
15. The provisions of this Agreement are severable, and if any part of
this Agreement is found unenforceable, invalid, or illegal, the other parts of
this Agreement shall remain fully valid and enforceable.
16. This Agreement and any dispute concerning the validity, interpretation
or breach of any term or condition hereof shall be construed and interpreted
under and in conformance with the laws of the State of Tennessee applicable to
contracts negotiated and to be performed in the State of Tennessee.
17. Any dispute concerning the validity, interpretation or breach of this
Agreement or any term or condition hereof or any dispute concerning the Claims
released herein shall be resolved by arbitration. The arbitration shall be held
within the County of Davidson, Tennessee, in accordance with the then existing
rules for commercial arbitration of the American Arbitration Association. The
arbitrator shall have no authority in any such arbitration to award damages for
emotional distress or pain and suffering, and the arbitrator's decision and
award shall be final and binding on the Parties. Judgment upon any such
arbitration award may be entered by any state or federal court within the State
of Tennessee having jurisdiction thereof. The prevailing Party in any such
arbitration shall recover its reasonable attorneys' fees and costs incurred in
connection with the arbitration and in connection with enforcing the arbitration
award.
18. The Parties have had ample opportunity to make suggestions or changes
to the terms and language of this Agreement and agree that principles of
contract construction against the drafter shall have no application hereto. The
Parties agree that the Agreement should be construed fairly and not in favor of
or against either Party as the drafter.
6
<PAGE>
19. Executive represents and agrees that he fully understands his right to
discuss all aspects of this Agreement with his private attorney; that to the
extent, if any, he desired, he has availed himself of this right; THAT HE HAS
CAREFULLY READ AND FULLY UNDERSTANDS ALL OF THE PROVISIONS OF THIS AGREEMENT;
AND THAT HE IS VOLUNTARILY ENTERING INTO IT.
IN WITNESS WHEREOF, Executive and the Company acknowledge agreement with
the foregoing by the signatures set forth below.
MAGNETEK, INC.
By:
-------------------------------
EXECUTIVE
/S/ C. O. DAVIS 4/28/95
- ------------------------------------
7
<PAGE>
CONFORMED CREDIT AGREEMENT*
between
MAGNETEK, INC.
BORROWER
NATIONSBANK OF TEXAS, N.A.
AGENT
CIBC INC.,
THE FIRST NATIONAL BANK OF CHICAGO, and
LTCB TRUST COMPANY
CO-AGENTS
and
CERTAIN LENDERS
LENDERS
$300,000,000
MARCH 31, 1995
- -----------------------
* CONFORMED TO REFLECT SIGNATURES.
<PAGE>
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND TERMS . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Time References . . . . . . . . . . . . . . . . . . . . . . 14
1.3 Other References . . . . . . . . . . . . . . . . . . . . . . 14
1.4 Accounting Principles . . . . . . . . . . . . . . . . . . . 15
SECTION 2 COMMITMENT . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.1 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.2 Revolving Facility . . . . . . . . . . . . . . . . . . . . . 15
2.3 Borrowing Procedure . . . . . . . . . . . . . . . . . . . . 15
2.4 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 16
2.5 Borrowing Notices and LC Requests . . . . . . . . . . . . . 19
2.6 Termination . . . . . . . . . . . . . . . . . . . . . . . . 19
SECTION 3 TERMS OF PAYMENT . . . . . . . . . . . . . . . . . . . . . . 19
3.1 Notes and Payments . . . . . . . . . . . . . . . . . . . . . 19
3.2 Interest and Principal Payments . . . . . . . . . . . . . . 19
3.3 Interest Options . . . . . . . . . . . . . . . . . . . . . . 21
3.4 Quotation of Rates . . . . . . . . . . . . . . . . . . . . . 22
3.5 Default Rate . . . . . . . . . . . . . . . . . . . . . . . . 22
3.6 Interest Recapture . . . . . . . . . . . . . . . . . . . . . 22
3.7 Interest Calculations . . . . . . . . . . . . . . . . . . . 22
3.8 Maximum Rate . . . . . . . . . . . . . . . . . . . . . . . . 22
3.9 Interest Periods . . . . . . . . . . . . . . . . . . . . . . 23
3.10 Conversions . . . . . . . . . . . . . . . . . . . . . . . . 23
3.11 Order of Application . . . . . . . . . . . . . . . . . . . . 23
3.12 Sharing of Payments, Etc.. . . . . . . . . . . . . . . . . . 24
3.13 Offset . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
3.14 Booking Borrowings . . . . . . . . . . . . . . . . . . . . . 24
3.15 Basis Unavailable or Inadequate for LIBOR Rate . . . . . . . 24
3.16 Additional Costs . . . . . . . . . . . . . . . . . . . . . . 24
3.17 Change in Laws . . . . . . . . . . . . . . . . . . . . . . . 25
3.18 Funding Loss . . . . . . . . . . . . . . . . . . . . . . . . 26
3.19 Foreign Lenders, Participants, and Assignees . . . . . . . . 26
SECTION 4 FEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
4.1 Treatment of Fees . . . . . . . . . . . . . . . . . . . . . 26
4.2 Fees to Agent and Affiliates . . . . . . . . . . . . . . . . 26
4.3 LC Fees . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 5 SECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.1 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.2 Collateral . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.3 Other Collateral . . . . . . . . . . . . . . . . . . . . . . 27
5.4 Further Assurances . . . . . . . . . . . . . . . . . . . . . 28
5.5 Release of Collateral . . . . . . . . . . . . . . . . . . . 28
SECTION 6 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . 28
SECTION 7 REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . 29
7.1 Purpose and Regulation U . . . . . . . . . . . . . . . . . . 29
7.2 Corporate Existence, Good Standing, and Authority . . . . . 29
7.3 Subsidiaries and Names . . . . . . . . . . . . . . . . . . . 29
7.4 Authorization and Contravention . . . . . . . . . . . . . . 29
7.5 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . 30
7.6 Financials and Existing Debt . . . . . . . . . . . . . . . . 30
7.7 Projections . . . . . . . . . . . . . . . . . . . . . . . . 30
7.9 Litigation . . . . . . . . . . . . . . . . . . . . . . . . . 30
<PAGE>
7.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
7.11 Environmental Matters . . . . . . . . . . . . . . . . . . . 30
7.12 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . 31
7.13 Properties; Liens . . . . . . . . . . . . . . . . . . . . . 31
7.14 Government Regulations . . . . . . . . . . . . . . . . . . . 31
7.15 Transactions with Affiliates . . . . . . . . . . . . . . . . 31
7.16 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.17 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.18 Labor Matters . . . . . . . . . . . . . . . . . . . . . . . 31
7.19 Intellectual Property . . . . . . . . . . . . . . . . . . . 32
7.20 Full Disclosure . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 8 AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 32
8.1 Certain Items Furnished . . . . . . . . . . . . . . . . . . 32
8.2 Use of Credit . . . . . . . . . . . . . . . . . . . . . . . 33
8.3 Books and Records . . . . . . . . . . . . . . . . . . . . . 33
8.4 Inspections . . . . . . . . . . . . . . . . . . . . . . . . 33
8.5 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.6 Payment of Obligation . . . . . . . . . . . . . . . . . . . 34
8.7 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.8 Maintenance of Existence, Assets, and Business . . . . . . . 34
8.9 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.10 Environmental Matters . . . . . . . . . . . . . . . . . . . 34
8.11 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . 34
8.12 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 9 NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . 36
9.1 Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . 36
9.2 Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
9.3 [INTENTIONALLY BLANK] . . . . . . . . . . . . . . . . . . . 37
9.4 Capital Expenditures . . . . . . . . . . . . . . . . . . . . 37
9.5 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
9.6 Employee Plans . . . . . . . . . . . . . . . . . . . . . . . 37
9.7 Transactions with Affiliates . . . . . . . . . . . . . . . . 37
9.8 Compliance with Laws and Documents . . . . . . . . . . . . . 37
9.9 Investments . . . . . . . . . . . . . . . . . . . . . . . . 37
9.10 Distributions . . . . . . . . . . . . . . . . . . . . . . . 37
9.11 Disposition of Assets . . . . . . . . . . . . . . . . . . . 38
9.12 Mergers, Consolidations, and Dissolutions . . . . . . . . . 38
9.13 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 38
9.14 Fiscal Year and Accounting Methods . . . . . . . . . . . . . 38
9.15 New Businesses . . . . . . . . . . . . . . . . . . . . . . . 38
9.16 Government Regulations . . . . . . . . . . . . . . . . . . . 38
9.17 Strict Compliance . . . . . . . . . . . . . . . . . . . . . 38
SECTION 10 FINANCIAL COVENANTS . . . . . . . . . . . . . . . . . . . . 38
10.1 Tangible-Net Worth . . . . . . . . . . . . . . . . . . . . . 39
10.2 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . 39
10.3 Funded Debt/Capitalization . . . . . . . . . . . . . . . . . 39
10.4 Debt/EBITDA . . . . . . . . . . . . . . . . . . . . . . . . 39
10.5 Fixed-Charge Coverage . . . . . . . . . . . . . . . . . . . 39
SECTION 11 DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.1 Payment of Obligation . . . . . . . . . . . . . . . . . . . 40
11.2 Covenants . . . . . . . . . . . . . . . . . . . . . . . . . 40
11.3 Debtor Relief . . . . . . . . . . . . . . . . . . . . . . . 40
11.4 Judgments and Attachments . . . . . . . . . . . . . . . . . 40
11.5 Government Action . . . . . . . . . . . . . . . . . . . . . 40
11.6 Misrepresentation . . . . . . . . . . . . . . . . . . . . . 41
11.7 Ownership of Companies . . . . . . . . . . . . . . . . . . . 41
(ii)
<PAGE>
11.8 Change of Control of Borrower . . . . . . . . . . . . . . . 41
11.9 Other Funded Debt . . . . . . . . . . . . . . . . . . . . . 41
11.10 SEC Reporting Requirements . . . . . . . . . . . . . . . . . 41
11.11 Validity and Enforceability . . . . . . . . . . . . . . . . 41
11.12 LCs . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 12 RIGHTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . 42
12.1 Remedies Upon Default . . . . . . . . . . . . . . . . . . . 42
12.2 Company Waivers. . . . . . . . . . . . . . . . . . . . . . 42
12.3 Performance by Agent . . . . . . . . . . . . . . . . . . . . 42
12.4 Not in Control . . . . . . . . . . . . . . . . . . . . . . . 43
12.5 Course of Dealing . . . . . . . . . . . . . . . . . . . . . 43
12.6 Cumulative Rights . . . . . . . . . . . . . . . . . . . . . 43
12.7 Application of Proceeds . . . . . . . . . . . . . . . . . . 43
12.8 Certain Proceedings . . . . . . . . . . . . . . . . . . . . 43
12.9 Expenditures by Lenders . . . . . . . . . . . . . . . . . . 43
12.10 Diminution in Value of Collateral . . . . . . . . . . . . . 44
SECTION 13 AGENT AND LENDERS . . . . . . . . . . . . . . . . . . . . . 44
13.1 Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
13.2 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 45
13.3 Proportionate Absorption of Losses . . . . . . . . . . . . . 45
13.4 Delegation of Duties; Reliance . . . . . . . . . . . . . . . 45
13.5 Limitation of Agent's Liability . . . . . . . . . . . . . . 46
13.6 Default . . . . . . . . . . . . . . . . . . . . . . . . . . 47
13.7 Collateral Matters . . . . . . . . . . . . . . . . . . . . . 47
13.8 Limitation of Liability . . . . . . . . . . . . . . . . . . 48
13.9 Relationship of Lenders . . . . . . . . . . . . . . . . . . 48
13.10 Benefits of Agreement . . . . . . . . . . . . . . . . . . . 48
SECTION 14 MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 48
14.1 Nonbusiness Days . . . . . . . . . . . . . . . . . . . . . . 48
14.2 Communications . . . . . . . . . . . . . . . . . . . . . . . 48
14.3 Form and Number of Documents . . . . . . . . . . . . . . . . 48
14.4 Exceptions to Covenants . . . . . . . . . . . . . . . . . . 48
14.5 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 48
14.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . . 48
14.7 Invalid Provisions . . . . . . . . . . . . . . . . . . . . . 48
14.8 Amendments, Consents, Conflicts, and Waivers . . . . . . . . 49
14.9 Multiple Counterparts . . . . . . . . . . . . . . . . . . . 50
14.10 Parties . . . . . . . . . . . . . . . . . . . . . . . . . . 50
14.11 Venue, Service of Process, and Jury Trial . . . . . . . . . 51
14.12 Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . 52
(iii)
<PAGE>
SCHEDULES AND EXHIBITS
Schedule 2 - Lenders and Commitments
Schedule 6 - Closing Documents
Schedule 7.3 - Companies and Names
Schedule 7.9 - Litigation
Schedule 7.11 - Environmental Matters
Schedule 7.12 - Employee-Plan Matters
Schedule 7.15 - Affiliate Transactions
Schedule 9.2 - Permitted Debt
Schedule 9.5 - Permitted Liens
Schedule 9.9 - Permitted Investments
Schedule 9.11 - Divestiture Assets
Exhibit A-1 - Term Note
Exhibit A-2 - Revolving Note
Exhibit B - Guaranty
Exhibit C - Security Agreement
Exhibit D-1 - Borrowing Request
Exhibit D-2 - Conversion Notice
Exhibit D-3 - LC Request
Exhibit D-4 - Borrowing-Base Report
Exhibit D-5 - Compliance Certificate
Exhibit E-1 - Opinion of General Counsel to Companies
Exhibit E-2 - Opinion of Gibson, Dunn & Crutcher
Exhibit E-3 - Opinion of Ohio and Wisconsin Counsel
Exhibit E-4 - Opinion of Loeff Claeys Verbeke
Exhibit E-5 - Opinion of Haynes and Boone, L.L.P.
Exhibit F - Assignment and Assumption Agreement
(iv)
<PAGE>
CREDIT AGREEMENT
THIS AGREEMENT is entered into as of March 31, 1995, between MAGNETEK,
INC., a Delaware corporation ("BORROWER"), Lenders (defined below), NATIONSBANK
OF TEXAS, N.A., as agent for Lenders, and CIBC INC., THE FIRST NATIONAL BANK OF
CHICAGO, and LTCB TRUST COMPANY as Co-Agents for Lenders.
Borrower has requested that Lenders extend credit to Borrower not to exceed
a total outstanding principal amount of $300,000,000 (as that amount may be
reduced by certain Borrowing Base restrictions) to be used by Borrower as
provided in SECTION 7.1 and allocated as (A) a term loan of $75,000,000 (the
"TERM LOAN") to be funded by Lenders on the Closing Date, and (B) a revolving-
credit facility of $225,000,000 (the "REVOLVING FACILITY") to be funded by
Lenders from time to time in a combination of advances and letters of credit.
Lenders are willing to extend the requested credit on the terms and conditions
of this agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower, Lenders,
Agent, and Co-Agents agree as follows:
SECTION 1 DEFINITIONS AND TERMS.
1.1 DEFINITIONS. As used in the Loan Documents:
AFFILIATE of a Person means any other individual or entity who directly or
indirectly controls, is controlled by, or is under common control with that
Person. For purposes of this definition (a) "CONTROL," "CONTROLLED BY," and
"UNDER COMMON CONTROL WITH" mean possession, directly or indirectly, of power to
direct or cause the direction of management or policies (whether through
ownership of voting securities or other interests, by contract, or otherwise),
and (b) the Companies are "AFFILIATES" of each other.
AGENT means, at any time, NationsBank of Texas, N.A. -- or its successor or
assigns appointed under SECTION 13 -- acting as AGENT for Lenders under the Loan
Documents.
APPLICABLE MARGIN means, for any day, the margin of interest over the Base
Rate, or the LIBOR Rate, as the case may be, that is applicable when the Base
Rate or LIBOR Rate, as applicable, is determined under this agreement.
(a) The Applicable Margin is subject to adjustment (upwards or
downwards, as appropriate) based on the ratio of the Companies' Funded Debt
to EBITDA as stated in the table below.
(b) From the Closing Date through the date that Agent receives the
Current Financials and Compliance Certificate for the year ending June 30,
1995, the Applicable Margin is deemed to be 2.00% for LIBOR-Rate Borrowings
and 0.75% for Base-Rate Borrowings, and the Applicable Percentage is deemed
to be 0.375%.
(c) After receipt of the Current Financials and Compliance
Certificate for the year ending June 30, 1995, the Applicable Margin and
Applicable Percentage in effect at any time (whether in the middle of an
Interest Period or otherwise) are based upon the ratio of the Companies'
Funded Debt to EBITDA as determined from the Current Financials and related
<PAGE>
Compliance Certificate then most recently received by Agent, effective as
of the date received by Agent.
(d) For purposes of the definitions of APPLICABLE MARGIN and
APPLICABLE PERCENTAGE, EBITDA is calculated for the Companies' most
recently-completed-four-fiscal quarters, and Funded Debt is determined as
of the last day of that four-fiscal-quarter period.
(e) If Borrower fails to timely furnish to Agent any Financials and
related Compliance Certificate as required by this agreement, then the
maximum Applicable Margin and Applicable Percentage apply from the date
those Financials and related Compliance Certificate are required to be
delivered and remain in effect until Borrower furnishes them to Agent.
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
Applicable Applicable
Margin for Margin for
Ratio of Funded Debt to Base-Rate LIBOR-Rate
EBITDA Borrowings Borrowings
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
<S> <C> <C>
Greater than 4.00 to 1.00 0.75% 2.00%
- ---------------------------------------------------------------------------
Less than or equal to 4.00 to 1.00, 0.50% 1.75%
but greater than 3.50 to 1.00
- ---------------------------------------------------------------------------
Less than or equal to 3.50 to 1.00, 0.25% 1.50%
but greater than 3.00 to 1.00
- ---------------------------------------------------------------------------
Less than or equal to 3.00 to 1.00, 0.00% 1.25%
but greater than 2.50 to 1.00
- ---------------------------------------------------------------------------
Less than or equal to 2.50 to 1.00, 0.00% 1.00%
but greater than 2.00 to 1.00
- ---------------------------------------------------------------------------
Less than or equal to 2.00 to 1.00 0.00% 0.75%
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
</TABLE>
APPLICABLE PERCENTAGE means, for any day, a commitment-fee percentage
applicable under SECTION 4.4, subject to adjustment (upwards or downwards, as
appropriate), based on the ratio of the Companies' Funded Debt to EBITDA, as
follows:
<TABLE>
<CAPTION>
- -----------------------------------------------------------
- -----------------------------------------------------------
Ratio of Funded Debt to Applicable
EBITDA Percentage
- -----------------------------------------------------------
- -----------------------------------------------------------
<S> <C>
Greater than 3.00 to 1.00 0.375%
- -----------------------------------------------------------
Less than or equal to 3.00 to 1.00 0.250%
- -----------------------------------------------------------
- -----------------------------------------------------------
</TABLE>
The Applicable Percentage is calculated and determined as further provided in
the definition of the term APPLICABLE MARGIN.
ASSIGNEE is defined in SECTION 14.10(c).
ASSIGNMENTS is defined in SECTION 14.10(c).
2
<PAGE>
BASE RATE means, for any day, the greater of EITHER (a) the annual interest
rate most recently established by Agent as its general reference rate (which may
not necessarily represent the lowest or best rate actually charged to any
customer) in effect at its principal office in Dallas, Texas, automatically
fluctuating upward and downward without special notice to Borrower or any other
Person, OR (b) the SUM of the Federal-Funds Rate PLUS 0.5%.
BASE-RATE BORROWING means a Borrowing bearing interest at the SUM of the
Base Rate PLUS the Applicable Margin.
BORROWER is defined in the preamble to this agreement.
BORROWING means any amount disbursed under the Loan Documents by one or
more Lenders to or on behalf of Borrower under the Loan Documents, either as an
original disbursement of funds, a renewal, extension, or continuation of an
amount outstanding, or a payment under an LC.
BORROWING BASE means, at any time, the SUM of (a) 80% of Eligible Accounts
PLUS (b) 50% of Eligible Inventory.
a BORROWING-BASE CONDITION exists at any time when the Release Ratio has
not been achieved for the then-previous-two-consecutive-fiscal quarters,
regardless of whether the Release Ratio has ever been achieved or any Collateral
under SECTION 5.2(a) has been released.
BORROWING-BASE DEFICIENCY means -- at any time when a Borrowing-Base
Condition exists -- any amount by which the limitation in SECTION 2.2(c) is
exceeded, whether because the Commitments for the Revolving Facility have been
fully or partially terminated or cancelled or for any other reason.
BORROWING-BASE REPORT means a report substantially in the form of
EXHIBIT D-4.
BORROWING DATE is defined in SECTION 2.3(A).
BORROWING REQUEST means a request, subject to Section 2.3(a), substantially
in the form of EXHIBIT D-1.
BUSINESS DAY means (a) for purposes of any LIBOR-Rate Borrowing, a day when
commercial banks are open for international business in London, England, and (b)
for all other purposes, any day OTHER THAN Saturday, Sunday, and any other day
that commercial banks are authorized by Law to be closed in New York or Texas.
CAPITAL LEASE means any capital lease or sublease that is required by GAAP
to be capitalized on a balance sheet.
CAPITALIZATION means -- for any Person, at any time, and without
duplication -- the SUM of (a) its stockholders' equity PLUS (b) its Funded Debt.
CERCLA means the COMPREHENSIVE ENVIRONMENTAL RESPONSE, COMPENSATION AND
LIABILITY ACT OF 1980, 42 U.S.C. SECTIONS 9601 ET SEQ.
CLOSING DATE means the date agreed to by Borrower and Agent for the initial
Borrowing, which must be a Business Day occurring no later than April 30, 1995.
3
<PAGE>
CODE means the INTERNAL REVENUE CODE OF 1986.
COLLATERAL is defined in SECTION 5.2.
COMMITMENT means, at any time and for any Lender, the amounts stated beside
that Lender's name on the most-recently amended SCHEDULE 2 for the Revolving
Facility (which amount is subject to reduction and cancellation as provided in
this agreement) and the Term Loan.
COMMITMENT PERCENTAGE means, for any Lender, the proportion (stated as a
percentage) that its Commitment bears to the total Commitments of all Lenders.
COMMITMENT USAGE means, at any time, the SUM of (a) the Revolving
Facility's Principal Debt PLUS (b) the LC Exposure.
COMPANIES means (a) at any time, Borrower and each of its Subsidiaries, and
(b) where appropriate in respect of any period unless otherwise provided,
includes all of their operations during that period whether discontinued or not.
COMPLIANCE CERTIFICATE means a certificate substantially in the form of
EXHIBIT D-5 and signed by a Responsible Officer.
CONVERSION NOTICE means a request, subject to SECTION 3.10, substantially
in the form of EXHIBIT D-2.
CURRENT FINANCIALS, unless otherwise specified:
(a) means EITHER (i) the Companies' consolidated Financials for the
year ended June 30, 1994, TOGETHER WITH the Companies' Financials for the
six months ended on December 31, 1994, OR (ii) at any time after annual
Financials are first delivered under SECTION 8.1, the Companies' annual
Financials then most recently delivered to Lenders under SECTION 8.1(a),
TOGETHER WITH the Companies' quarterly Financials then most recently
delivered to Lenders under SECTION 8.1(b); but
(b) does not include the results of operation and cash flows for any
Company for the time period before it becomes a member of Borrower's
consolidated group.
DEBT means -- for any person, at any time, and without duplication -- the
SUM of (a) all obligations for borrowed money, (b) all obligations evidenced by
bonds, debentures, notes, or similar instruments, (c) all obligations to pay the
deferred purchase price of property or services except trade accounts payable
arising in the ordinary course of business, (d) all obligations arising under
acceptance facilities or facilities for the discount or sale of accounts
receivable, (e) all direct or contingent obligations in respect of letters of
credit, (f) liabilities secured (or for which the holder of the Debt has an
existing Right, contingent or otherwise, to be so secured) by any Lien existing
on property owned or acquired by that Person, (g) lease obligations that have
been (or under GAAP should be) capitalized for financial reporting purposes,
PLUS (h) all guaranties, endorsements, and other contingent obligations for Debt
of others.
DEBTOR LAWS means the BANKRUPTCY CODE OF THE UNITED STATES OF AMERICA and
all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments,
or similar Laws affecting creditors' Rights.
4
<PAGE>
DEFAULT is defined in SECTION 11.
DEFAULT RATE means, for any day, an annual interest rate equal from day to
day to the lesser of EITHER (a) the then-existing Base Rate PLUS 2% OR (b) the
Maximum Rate.
DETERMINING LENDERS means, at any time, any combination of Lenders holding
(directly or indirectly) AT LEAST EITHER (a) 51% of the total Commitments while
there is no Principal Debt or LC Exposure OR (b) 51% of the Principal Debt PLUS
the LC Exposure while there is any Principal Debt or LC Exposure.
DISTRIBUTION means, with respect to any shares of any capital stock or
other equity securities issued by a Person (a) the retirement, redemption,
purchase, or other acquisition for value of those securities, (b) the
declaration or payment of any dividend on or with respect to those securities,
(c) any loan or advance by that Person to, or other investment by that Person
in, the holder of any of those securities, and (d) any other payment by that
Person with respect to those securities.
DIVESTITURE ASSETS means the assets described by Company on SCHEDULE 9.11
as that schedule may be modified, dated, executed, and delivered by Borrower to
Agent from time to time and all Lenders to remove assets from it but not to add
assets to it.
DOMESTIC means, in respect of any Person, organized under the Laws of --
and domiciled in -- the United States of America or one of its states.
EBIT means -- for any Person, for any period, and without duplication --
the SUM of (a) Net Income (without regard to extraordinary items), PLUS (b) to
the extent actually deducted in calculating Net Income, Interest Expense and
income Taxes, and (c) MINUS or PLUS, respectively, any net gains or losses from
discontinued operations (exclusive of operating income or losses) that are not
extraordinary items.
EBITDA means -- for any Person, for any period, and without duplication --
the SUM of (a) EBIT PLUS (b) to the extent actually deducted in calculating Net
Income, depreciation and amortization.
ELIGIBLE ACCOUNTS means the enforceable and outstanding accounts of each
Domestic-Restricted Company that are subject to Lender Liens EXCEPT:
(a) the portion of any account not paid within 90 days after the
respective invoice's issue date;
(b) the portion of any account against the payment of which the
account debtor (i) is entitled to any allowable discount, (ii) owns a
corresponding account payable, or (iii) has asserted any defense, setoff or
counterclaim;
(c) any account on which the account debtor is Foreign and which
EITHER (i) has not been approved by Determining Lenders OR (ii) which is
not supported by one or more letters of credit that are in form and
substance (and are issued by one or more Persons) acceptable to Agent in
its reasonable judgment;
(d) any account on which the account debtor is the Affiliate of
any Company;
5
<PAGE>
(e) any account not arising out of the sale by that Domestic-
Restricted Company of inventory in the ordinary course of its trade or
business;
(f) unless all actions and documents deemed appropriate by Agent
under applicable Law have been respectively taken and delivered, any
account owed by the United States government or by the government of any
state, county, municipality, or other political subdivision as to which a
Lender Lien on it or Agent's ability to obtain direct payment of the
proceeds of it is governed by the FEDERAL ASSIGNMENT OF CLAIMS ACT OF 1940
or any other Law OTHER THAN the applicable UNIFORM COMMERCIAL CODE;
(g) any account owed by an account debtor that is not Solvent or is
subject to proceedings under any Debtor Laws;
(h) any account which either Agent or Determining Lenders elect -- in
their sole respective discretion and effective upon ten-days advance notice
to Borrower -- to exclude because of the account debtor's unsatisfactory
financial condition or payment record; and
(i) any account subject to a Lien that is not a Permitted Lien.
ELIGIBLE INVENTORY means the finished goods, work in progress, and raw
materials of each Domestic-Restricted Company that are subject to Lender Liens
SO LONG AS those items are:
(a) usable or saleable by that Domestic-Restricted Company in its
ordinary course of business;
(b) not subject to any Liens except Permitted Liens; and
(c) EITHER (i) in the possession of that Domestic-Restricted Company
and stored at property owned by it OR (ii) in the possession of that
Domestic-Restricted Company and stored at property leased by it if (A) no
default or other event or condition has occurred or exists beyond the
applicable grace or cure period, the effect of which is to cause or to
permit the landlord or lessor to cause (whether or not it elects to cause)
that lease to be terminated before its stated expiration date, and (B) as
required by PARAGRAPH 7(c) of the Security Agreement, unless waived by
Agent in its sole judgment, Borrower has delivered to Agent EITHER (1) a
landlord estoppel and subordination agreement from that landlord or lessor
in respect of that lease OR (2) a legal opinion or other evidence (in each
case that is reasonably satisfactory to Agent and its special counsel) that
neither the applicable lease nor the Laws of the jurisdiction in which that
location is situated provide for contractual, common Law, or statutory
landlord's Liens that could be in any respect senior or prior to any Lender
Lien.
EMPLOYEE PLAN means any employee-pension-benefit plan (a) covered by TITLE
IV of ERISA and established or maintained by Borrower or any ERISA Affiliate
(OTHER THAN a Multiemployer Plan) and (b) established or maintained by Borrower
or any ERISA Affiliate, or to which Borrower or any ERISA Affiliate contributes,
under the Laws of any foreign country.
ENVIRONMENTAL INVESTIGATION means any environmental site assessment,
investigation, audit, compliance audit, or compliance review conducted at any
time or from time to time -- whether at the request of Agent or any Lender, upon
the order or request of any Tribunal, or at the voluntary instigation of any
Company -- concerning any Real Property or the business operations or activities
of any Company, including, without limitation (a) air, soil, groundwater, or
surface-water sampling and monitoring, and (b) preparation and implementation of
any closure or remedial plans.
6
<PAGE>
ENVIRONMENTAL LAW means any applicable Law that relates to protection of
the environment or to the regulation of any Hazardous Substances, including,
without limitation, CERCLA, the HAZARDOUS MATERIALS TRANSPORTATION ACT (49
U.S.C. SECTION 1801 ET SEQ.), the RESOURCE CONSERVATION AND RECOVERY ACT (42
U.S.C. SECTION 6901 ET SEQ.), the CLEAN WATER ACT (33 U.S.C. SECTION 1251 ET
SEQ.), the CLEAN AIR ACT (42 U.S.C. SECTION 7401 ET SEQ.), the TOXIC SUBSTANCES
CONTROL ACT (15 U.S.C. SECTION 2601 ET SEQ.), the FEDERAL INSECTICIDE,
FUNGICIDE, AND RODENTICIDE ACT (7 U.S.C. SECTION 136 ET SEQ.), the EMERGENCY
PLANNING AND COMMUNITY RIGHT-TO-KNOW ACT (42 U.S.C. SECTION 11001 ET SEQ.), the
SAFE DRINKING WATER ACT (42 U.S.C. SECTION 201 AND SECTION 300f ET SEQ.), the
RIVERS AND HARBORS ACT (33 U.S.C. SECTION 401 ET SEQ.), the OIL POLLUTION ACT
(33 U.S.C. SECTION 2701 ET SEQ.), analogous state and local Laws, and any
analogous future enacted or adopted Law.
ENVIRONMENTAL LIABILITY means any liability, loss, fine, penalty, charge,
lien, damage, cost, or expense of any kind to the extent that it results (a)
from the violation of any Environmental Law, (b) from the Release or threatened
Release of any Hazardous Substance, or (c) from actual or threatened damages to
natural resources.
ENVIRONMENTAL PERMIT means any permit, or license, from any Person defined
in CLAUSE (a) of the definition of Tribunal that is required under any
Environmental Law for the lawful conduct of any business, process, or other
activity.
ERISA means the EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974.
ERISA AFFILIATE means any Person that, for purposes of TITLE IV of ERISA,
is a member of Borrower's controlled group or is under common control with
Borrower within the meaning of SECTION 414 of the Code (which provisions are
deemed by this agreement to apply to Foreign Persons).
EXCESS-CASH FLOW means -- for the Companies, for any period, and without
duplication -- EBITDA MINUS (a) Taxes actually paid in cash, MINUS (b) all
Permitted-Capital Expenditures actually spent, MINUS (c) cash dividends if
permitted under SECTION 9.10, MINUS (d) the scheduled portion of principal
(including, without limitation, the principal component of Capital Leases)
during that period on the Companies' Funded Debt, MINUS (e) Interest Expense
during that period on the Companies' Debt, MINUS (f) voluntary prepayments of
the Term Loan under SECTION 3.2(e), MINUS (g) net cash proceeds of any sale of
assets (OTHER THAN Divestiture Assets) to the extent of the lesser of EITHER (i)
the portion of those proceeds that has been applied as a mandatory prepayment of
the Term Loan under SECTION 3.2(f)(i) OR (ii) the gain on that sale, MINUS (h)
mandatory prepayments of principal of Funded Debt (OTHER THAN the Term Loan) of
any Company the subject of any Permitted Acquisition.
FEDERAL-FUNDS RATE means, for any day, the annual rate (rounded upwards, if
necessary, to the nearest 0.01%) determined (which determination is conclusive
and binding, absent manifest error) by Agent to be equal to (a) the weighted
average of the rates on overnight federal-funds transactions with member banks
of the Federal Reserve System arranged by federal-funds brokers on that day, as
published by the Federal Reserve Bank of New York on the next Business Day, or
(b) if those rates are not published for any day, the average of the quotations
at approximately 10:00 a.m. received by Agent from three federal-funds brokers
of recognized standing selected by Agent in its sole discretion.
FINANCIALS of a Person means balance sheets, profit and loss statements,
reconciliations of capital and surplus, and statements of cash flow prepared (a)
according to GAAP (subject to year end audit adjustments with respect to interim
Financials) and (b) except as stated in SECTION 1.4, in comparative form to
prior year-end figures or corresponding periods of the preceding fiscal year or
other relevant period, as applicable.
7
<PAGE>
FOREIGN means, in respect of any Person, organized under the Laws of a
jurisdiction OTHER THAN -- or domiciled outside of -- the United States of
America or one of its states.
FUNDED DEBT means -- for any Person, at any time, and without
duplication -- the SUM of (a) the principal amount of all Debt for borrowed
money, (b) the total amount capitalized on the balance sheet of that Person with
respect to Capital Leases, PLUS (c) Debt under acceptance facilities or
facilities for the discount or sale of accounts receivable.
FUNDING LOSS means any loss, expense, or reduction in yield (but not any
Applicable Margin) that any Lender reasonably incurs because (a) Borrower fails
or refuses (for any reason whatsoever OTHER THAN a default by Agent or that
Lender claiming that loss, expense, or reduction in yield) to take any Borrowing
that it has requested under this agreement, or (b) Borrower prepays or pays any
Borrowing or converts any Borrowing to a Borrowing of another Type, in each
case, other than on the last day of the applicable Interest Period.
GAAP means generally accepted accounting principles of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the Financial Accounting Standards Board that are applicable from time to time.
GUARANTY means a guaranty substantially in the form of the attached
EXHIBIT B.
HAZARDOUS SUBSTANCE means any substance that is designated, defined,
classified, or regulated as a hazardous waste, hazardous material, pollutant,
contaminant, explosive, corrosive, flammable, infectious, carcinogenic,
mutagenic, radioactive, or toxic or hazardous substance under any Environmental
Law, including, without limitation, any hazardous substance within the meaning
of SECTION 101(14) of CERCLA.
HEDGING AGREEMENT means, for any Person, any present or future, whether
master or single, agreement, document or instrument providing for -- or
constituting an agreement to enter into (a) commodity hedges in the normal
course of business in accordance with prior practices of that Person before the
date of this agreement for purposes of hedging material purchases, (b) foreign-
currency purchases and swaps never exceeding a total notional sum of
$50,000,000, (c) interest-rate swaps never exceeding a total notional sum of
$100,000,000, and (d) interest-rate-hedging products involving payment premium
for which that Person has no future liability.
INTEREST EXPENSE means -- for any Person, for any period, and without
duplication -- all interest on Funded Debt, whether paid in cash or accrued as a
liability and payable in cash during any subsequent period (including, without
limitation, the interest component of Capital Leases), as determined by GAAP,
and -- EXCEPT for purposes of calculating Interest Expense in SECTION 10.5 --
premium or penalty for repayment, redemption, or repurchase of Debt.
INTEREST PERIOD is determined under SECTION 3.9.
INVESTMENT means, in respect of any Person, any loan, advance, extension of
credit, or capital contribution to that Person, any investment in that Person,
or any purchase or commitment to purchase any equity securities or Debt issued
by that Person or substantially all of the assets or a division or other
business unit of that Person.
ISSUING LENDER means any Lender, or any of its Affiliates, that issues an
LC under this agreement.
8
<PAGE>
LAWS means all applicable statutes, laws, treaties, ordinances, rules,
regulations, orders, writs, injunctions, decrees, judgments, opinions, and
interpretations of any Tribunal.
LC means a documentary or standby letter of credit issued for the account
of Borrower by an Issuing Lender under this agreement and under an LC Agreement.
LC AGREEMENT means a letter of credit application and agreement (in form
and substance satisfactory to Agent) submitted and executed by Borrower to the
Issuing Lender for an LC for the account of Borrower.
LC EXPOSURE means, without duplication, the SUM of (a) the total face
amount of all undrawn and uncancelled LCs PLUS (b) the total unpaid
reimbursement obligations of Borrower under drawings under any LC.
LC REQUEST means a request substantially in the form of EXHIBIT D-3.
LC SUBFACILITY means a subfacility of the Revolving Facility for the
issuance of LCs, as described in SECTION 2.4, under which the LC Exposure may
never (a) collectively exceed $30,000,000 and (b) TOGETHER WITH Principal Debt
under the Revolving Facility MAY NEVER EXCEED the lesser of EITHER (i) the total
Commitments for the Revolving Facility OR (ii) the Borrowing Base if a
Borrowing-Base Condition exists.
LENDER LIEN means any present or future Lien (subject only to any
applicable Permitted Lien) securing the Obligation and assigned, conveyed, or
granted to or created in favor of Agent for the benefit of Lenders.
LENDERS means the financial institutions -- including, without limitation,
Agent (possibly acting through one or more of its Affiliates for LCs) in respect
of its share of Borrowings and LCs -- named on SCHEDULE 2 or on the most-
recently-amended SCHEDULE 2, if any, delivered by Agent under this agreement,
and, subject to this agreement, their respective successors and permitted
assigns (but not any Participant who is not otherwise a party to this
agreement).
LIBOR RATE means, for a LIBOR-Rate Borrowing and for the relevant Interest
Period, the annual interest rate (rounded upward, if necessary, to the nearest
0.01%) equal to the quotient obtained by DIVIDING (a) the rate that deposits in
United States dollars are offered to Agent in the London interbank market at
approximately 11:00 a.m. London time two Business Days before the first day of
that Interest Period in an amount comparable to that LIBOR-Rate Borrowing and
having a maturity approximately equal to that Interest Period, BY (b) one MINUS
the Reserve Requirement (expressed as a decimal) applicable to the relevant
Interest Period.
LIBOR-RATE BORROWING means a Borrowing bearing interest at the SUM of the
LIBOR Rate PLUS the Applicable Margin.
LIEN means any lien, mortgage, security interest, pledge, assignment,
charge, title retention agreement, or encumbrance of any kind and any other
arrangement for a creditor's claim to be satisfied from assets or proceeds prior
to the claims of other creditors or the owners (OTHER THAN title of the lessor
under an operating lease).
LITIGATION means any action by or before any Tribunal.
9
<PAGE>
LOAN DOCUMENTS means (a) this agreement, certificates and reports delivered
under this agreement, and exhibits and schedules to this agreement, (b) all
agreements, documents, and instruments in favor of Agent or Lenders (or Agent on
behalf of Lenders) ever delivered under this agreement or otherwise delivered in
connection with all or any part of the Obligation (OTHER THAN Assignments), (c)
all LCs and LC Agreements, (d) the letter agreement described in SECTION 4.2,
and (e) all renewals, extensions, and restatements of, and amendments and
supplements to, any of the foregoing.
MAGNETEK EUROPE means MagneTek Europe, N.V., a Netherlands corporation
that, except as reflected on SCHEDULE 7.3, directly or indirectly owns all of
the issued and outstanding capital stock or other equity securities of every
Subsidiary organized under the Laws of, or domiciled in, any European nation.
MATERIAL ADVERSE EVENT means any circumstance or event that, individually
or collectively, is reasonably expected to result (at any time before the
Commitments are fully cancelled or terminated and the Obligation is fully paid
and performed) in any (a) material impairment of (i) the ability of Borrower to
perform any of its payment or other material obligations under any Loan
Document, (ii) the Restricted Companies as a whole to perform any of their
payment or other material obligations under any Loan Document, or (iii) the
ability of Agent or any Lender to enforce any of those obligations or any of
their respective Rights under the Loan Documents, (b) material and adverse
effect on the financial condition of the Companies as a whole as represented to
Lenders in the Current Financials most recently delivered before the date of
this agreement or (c) Default or Potential Default.
MAXIMUM AMOUNT and MAXIMUM RATE respectively mean, for a Lender, the
maximum non-usurious amount and the maximum non-usurious rate of interest that,
under applicable Law, that Lender is permitted to contract for, charge, take,
reserve, or receive on the Obligation.
MULTIEMPLOYER PLAN means a multiemployer plan as defined in SECTIONS 3(37)
OR 4001(A)(3) of ERISA or SECTION 414(f) of the Code (or any similar type of
plan established or regulated under the Laws of any foreign country) to which
Borrower or any ERISA Affiliate is making, or has made, or is accruing, or has
accrued, an obligation to make contributions.
NET INCOME of any Person means that Person's profit or loss after deducting
its Tax expense.
1993 ACT means the SECURITIES ACT OF 1933.
1934 ACT means the SECURITIES AND EXCHANGE ACT OF 1934.
NOTES means the Revolving Notes and Term Notes.
OBLIGATION means all present and future (a) Debts, liabilities, and
obligations of any Company to Agent, any Lender, any Issuing Lender, or
NationsBanc Capital Markets, Inc., and related to any Loan Document, whether
principal, interest, fees, costs, attorneys' fees, or otherwise, (b) Debts,
liabilities, or obligations owed by any Company to any Lender or its one or more
Affiliates under any agreement, document, or instrument described in CLAUSES (c)
or (d) of the definition of Hedging Agreement to the extent relating to interest
payable under this agreement, and (c) renewals, extensions, and modifications of
any of the foregoing.
OSHA means the OCCUPATIONAL SAFETY AND HEALTH ACT OF 1970, 29 U.S.C.
SECTION 651 ET SEQ.
10
<PAGE>
PARTICIPANT is defined in SECTION 14.10(B).
PBGC means the Pension Benefit Guaranty Corporation.
PERMITTED ACQUISITION means EITHER the formation or acquisition (which,
subject to SECTION 9.12, may be by merger) by any Restricted Company of a
Subsidiary that is or is to become a Restricted Company OR the acquisition by
any Restricted Company of substantially all the assets or a division or other
business unit of another Person if in either case:
(a) no Default or Potential Default exists or would exist as a result
of that formation or acquisition;
(b) that formation or acquisition is within the Restricted Companies'
current line business of -- or directly or indirectly related to -- the
manufacture, marketing, and servicing of electrical equipment products;
(c) at least 15 days before that formation or acquisition, Borrower
gives to Agent and Lenders a written description of that formation or
acquisition, which includes a reasonably-detailed calculation of -- and
description of the funding sources, if applicable, for -- the total
investment or purchase price involved (including, without limitation all
Debt for which the acquired Person is to remain obligated and what portion
of it, if any, that is to be guaranteed, assumed, or paid -- through merger
or otherwise -- by any other Restricted Company);
(d) the total of all investments and purchase price involved in all
of those formations and acquisitions -- INCLUDING, without limitation or
duplication, any Funded Debt to be guaranteed, assumed, or paid by any
Restricted Company other than Debt owed by the Restricted Company being
formed for which no other Restricted Company has any obligation whatsoever
but EXCLUDING any portion of any purchase price paid through the issuance
of Borrower's equity that is not mandatorily redeemable -- during any
fiscal year of Borrower does not exceed the SUM of (i) $25,000,000, PLUS
(ii) the net cash proceeds received during that fiscal year for the
issuance of equity or Subordinated Debt to the extent that those proceeds
are not applied to prepay the Term Loan, PLUS (iii) the SUM of (A) 25% of
the cumulative Net Income of the Companies after the date of this agreement
MINUS (B) any amount under CLAUSE (A) preceding utilized during any prior
fiscal year for purposes of the calculation under this CLAUSE (d);
(e) the board of directors of the Person to be acquired has not
notified any Company that it opposes the offer by any Company to acquire
that Person and that opposition has not been withdrawn;
(f) any new Subsidiary resulting from that formation or acquisition
complies with SECTIONS 5.1 and 5.2 and its capital stock or other equity
securities become subject to Lender Liens as required by SECTION 5.2 EXCEPT
to the extent of any exceptions in those provisions;
(g) the Companies execute and deliver such other documents and take
such action as any Lender may reasonably request in order to effect the
provisions of the Loan Documents; and
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(h) concurrently with the closing of that formation or acquisition,
Borrower provides Agent and Lenders with a certificate of a Responsible
Officer certifying that all the conditions in this definition have been
fulfilled for that formation or acquisition to be -- and it is -- a
"PERMITTED ACQUISITION."
PERMITTED-CAPITAL EXPENDITURES means -- for any fiscal year of Borrower
beginning after June 30, 1994 -- a total amount that does not exceed the SUM of
(a) $54,000,000 for all Restricted Companies or $4,000,000 in respect of
Divestiture Assets, PLUS (b) amounts for previous fiscal years under CLAUSE (A)
above that were not utilized for "PERMITTED-CAPITAL EXPENDITURES."
PERMITTED DEBT means Debt described on SCHEDULE 9.2.
PERMITTED LIENS means the Liens described on SCHEDULE 9.5.
PERSON means any individual, entity, or Tribunal.
POTENTIAL DEFAULT means any event's occurrence or any circumstance's
existence that would -- upon any required notice, time lapse, or both -- become
a Default.
PREDECESSOR means any Person for whose obligations and liabilities any
Company is reasonably expected to be liable as the result of any merger, DE
FACTO merger, stock purchase, asset purchase or divestiture, combination, joint
venture, investment, reclassification, or other similar business transaction.
PRINCIPAL DEBT means, at any time, the unpaid principal balance of all
Borrowings.
PROJECTIONS means the financial projections for the Companies in the
Confidential Information Memorandum furnished to Lenders in March 1995.
PRO RATA and PRO RATA PART mean, at any time and for any Lender, the
proportion (stated as a percentage) that the Principal Debt owed to it bears to
the total Principal Debt owed to all Lenders.
REAL PROPERTY means any land, buildings, fixtures, and other improvements
to land now or in the future directly or indirectly owned by any Restricted
Company, leased to or otherwise operated by any Restricted Company, or subleased
by any Restricted Company to any other Person.
REFINANCED DEBT means Debt evidenced by or arising in connection with the
following and all renewals, extensions, or amendments to the following: (a) Note
Purchase Agreement dated as of June 30, 1989, between Borrower, Teachers
Insurance and Annuity Association of America, certain other purchasers of
Borrower's 11.45% Senior Notes due June 30, 1997, and certain Companies; (b)
Loan Agreement dated as of April 28, 1993, between Borrower, certain lenders
named in that agreement, Bank of America Illinois (the successor to Bank of
America National Trust and Savings Association and Continental Bank, N.A.) as
ARRANGING AGENT and ADMINISTRATIVE AGENT for those lenders; and (c) Revolving
Credit Agreement dated as of December 30, 1994, between Borrower and NationsBank
of Texas, N.A.
RELEASE means any "RELEASE" as defined under any Environmental Law.
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RELEASE RATINGS means that Borrower's Senior Debt has received an actual or
implied rating of BOTH (a) BBB- or better by Standard & Poors Corporation AND
(b) Baa3 or better by Moody's Investor Service, Inc.
RELEASE RATIO means the ratio of the Companies' Funded Debt to EBITDA
(calculated on a four-consecutive-quarter basis) has been LESS THAN 2.75 to 1.00
for two-consecutive-fiscal quarters.
REPRESENTATIVES means representatives, officers, directors, employees,
accountants, attorneys, and agents.
RESERVE REQUIREMENT means, for any LIBOR-Rate Borrowing and for the
relevant Interest Period, the total reserve requirements (including all basic,
supplemental, emergency, special, marginal, and other reserves required by
applicable Law) actually applicable to Agent's eurocurrency fundings or
liabilities as of the first day of that Interest Period.
RESPONSIBLE OFFICER means Borrower's chairman, president, chief executive
officer, chief financial officer, or treasurer.
RESTRICTED COMPANY means Borrower and each other Company that is not an
Unrestricted Company.
REVOLVING FACILITY is defined in the recitals to this agreement and
includes the LC Subfacility.
REVOLVING NOTE means one of the promissory notes substantially in the form
of EXHIBIT A-2.
RIGHTS means rights, remedies, powers, privileges, and benefits.
SEC means the Securities and Exchange Commission.
SECURITY AGREEMENT means a Security Agreement in substantially the form of
EXHIBIT C.
SENIOR DEBT means, at any time, the Companies' consolidated Funded Debt
OTHER THAN the Subordinated Debt.
SOLVENT means, as to any Person, that (a) the aggregate fair market value
of its assets exceeds its liabilities, (b) it has sufficient cash flow to enable
it to pay its Debts as they mature, and (c) it does not have unreasonably small
capital to conduct its businesses.
STATED-TERMINATION DATE means September 30, 1998.
SUBORDINATED DEBT, at any time, means (a) Borrower's 10-3/4% Senior
Subordinated Debentures Due 1998 in the principal amount of $125,000,000 and 8%
Convertible Subordinated Notes Due 2001 in the principal amount of $75,000,000
(the "EXISTING-SUBORDINATED DEBT"), and (b) Debt, whether to repurchase or
redeem any existing-Subordinated Debt or otherwise, SO LONG AS that Debt (i) is
subject to subordination, payment blockage, and standstill provisions at least
as favorable to Lenders as applicable to the existing-Subordinated Debt under
this agreement or otherwise, (ii) is subject to representations, covenants,
events of default, and other provision not significantly more onerous to
Borrower than the existing-Subordinated Debt, (iii) does not have any scheduled
or
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mandatory principal or sinking fund payment due before November 30, 1998, and
(iv) is upon terms and conditions otherwise reasonably acceptable to Determining
Lenders.
SUBSIDIARY of any Person means any entity of which more than 50% (in number
of votes) of the stock (or equivalent interests) is owned of record or
beneficially, directly or indirectly, by that Person. Unless otherwise specified
or the context otherwise requires, "SUBSIDIARY" refers to a Subsidiary of
Borrower.
TANGIBLE-NET WORTH means -- at any time and for any Person -- the SUM of
(i) its stockholders' equity, PLUS (ii) amounts excluded from stockholders'
equity under GAAP relating to the establishment of an employee stock ownership
plan, MINUS (iii) the total (without duplication of deductions already made in
arriving at stockholders' equity) of the book value of all assets acquired after
the Closing Date that would be treated as intangible assets under GAAP,
including, without limitation, goodwill, trademarks, trade names, copyrights,
patents, and unamortized debt discount and expense.
TAXES means, for any Person, taxes, assessments, or other governmental
charges or levies imposed upon it, its income, or any of its properties,
franchises, or assets.
TERMINATION DATE means the earlier of EITHER (a) the Stated-Termination
Date OR (b) the effective date that Lenders' commitments to lend and issue LCs
under this agreement are fully cancelled or terminated.
TERM LOAN is defined in the recitals to this agreement.
TERM NOTE means one of the promissory notes substantially in the form of
EXHIBIT A-1.
TRIBUNAL means any (a) local, state, territorial, federal, or foreign
judicial, executive, regulatory, administrative, legislative, or governmental
agency, board, bureau, commission, department, or other instrumentality, (b)
private arbitration board or panel, or (c) central bank.
TYPE means any type of Borrowing determined with respect to the applicable
interest option.
UNRESTRICTED COMPANY means (a) each Company that has no assets other than
its name and conducts no operations, (b) each of MagneTek Credit Corporation,
MagneTek Leasing Corporation, MagneTek Airport Systems, Inc., MagneTek Controls,
Inc., and MagneTek Tempe, Inc., (c) each Foreign Company OTHER THAN (i) MagneTek
Europe and (ii) each Company organized under the Laws of and located in Canada
or Mexico, and (d) Companies acquired by other Unrestricted Companies.
WORKING CAPITAL means -- for any Person and at any time -- the SUM of (a)
current assets MINUS (b) current liabilities.
1.2 TIME REFERENCES. Unless otherwise specified, in the Loan Documents
(a) time references (E.G., 10:00 a.m.) are to time in Dallas, Texas, and (b) in
calculating a period from one date to another, the word "FROM" means "FROM AND
INCLUDING" and the word "TO" or "UNTIL" means "TO BUT EXCLUDING."
1.3 OTHER REFERENCES. Unless otherwise specified, in the Loan Documents
(a) where appropriate, the singular includes the plural and VICE VERSA, and
words of any gender include each other gender, (b) heading and caption
references may not be construed in interpreting provisions, (c) monetary
references are to currency of the United States of America, (d) section,
paragraph, annex,
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schedule, exhibit, and similar references are to the particular Loan Document in
which they are used, (e) references to "TELECOPY," "FACSIMILE," "FAX," or
similar terms are to facsimile or telecopy transmissions, (f) references to
"INCLUDING" mean including without limiting the generality of any description
preceding that word, (g) the rule of construction that references to general
items that follow references to specific items are limited to the same type or
character of those specific items is not applicable in the Loan Documents, (h)
references to any Person include that Person's heirs, personal representatives,
successors, trustees, receivers, and permitted assigns, (i) references to any
Law include every amendment or supplement to it, rule and regulation adopted
under it, and successor or replacement for it, and (j) references to any Loan
Document or other document include every renewal and extension of it, amendment
and supplement to it, and replacement or substitution for it.
1.4 ACCOUNTING PRINCIPLES. Unless otherwise specified, in the Loan
Documents (a) GAAP determines all accounting and financial terms and compliance
with financial covenants, (b) GAAP in effect on the date of this agreement
determines compliance with financial covenants, (c) otherwise, all accounting
principles applied in a current period must be comparable in all material
respects to those applied during the preceding comparable period, and (d) while
Borrower has any consolidated Subsidiaries (i) all accounting and financial
terms and compliance with reporting covenants must be on a consolidated basis,
as applicable, and (ii) compliance with financial covenants must be on a
consolidated basis.
SECTION 2 COMMITMENT. Subject to the provisions in the Loan Documents, each
Lender severally but not jointly agrees to extend credit to Borrower under the
Term Loan and under the Revolving Facility in accordance with the following
provisions.
2.1 TERM LOAN. Each Lender severally but not jointly agrees to lend to
Borrower that Lender's Commitment Percentage of the Term Loan in a single
Borrowing on the Closing Date. If Borrower pays or prepays any portion of the
Term Loan under this agreement, that portion may not be reborrowed.
2.2 REVOLVING FACILITY. Each Lender severally but not jointly agrees to
lend to Borrower that Lender's Commitment Percentage of requested or required
Borrowings under the Revolving Facility which Borrower may borrow, repay, and
reborrow under this agreement SUBJECT TO the following conditions:
(a) Each Borrowing may only occur on a Business Day on or after the
Closing Date and before the Termination Date;
(b) Each Borrowing may only be $500,000 or a greater integral
multiple of $100,000 if a Base-Rate Borrowing or $5,000,000 or a greater
integral multiple of $1,000,000 if a LIBOR-Rate Borrowing;
(c) The Commitment Usage MAY NEVER EXCEED the lesser of EITHER the
total Commitments for the Revolving Facility OR, if a Borrowing-Base
Condition exists, the Borrowing Base; and
(d) The SUM of the Commitment Usage (whether direct or participated)
PLUS the Principal Debt of the Term Loan owed to any Lender MAY NEVER
EXCEED that Lender's total Commitments for the Term Loan and Revolving
Facility.
2.3 BORROWING PROCEDURE. The following procedures apply to Borrowings:
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(a) BORROWING REQUEST. Borrower may request a Borrowing by making or
delivering a Borrowing Request (that may be telephonic if confirmed in
writing within two Business Days) to Agent, which is irrevocable and
binding on Borrower, stating the Type, amount, and Interest Period for each
Borrowing and which must be received by Agent no later than (i) 10:00 a.m.
on the second Business Day before the date on which funds are requested
(the "BORROWING DATE") for any LIBOR-Rate Borrowing, or (ii) 11:00 a.m. on
the Borrowing Date for any Base-Rate Borrowing. Agent shall promptly on the
day received notify each Lender of any Borrowing Request.
(b) FUNDING. Each Lender shall remit its Commitment Percentage of
each requested Borrowing to Agent's principal office in Dallas, Texas, in
funds that are available for immediate use by Agent by 2:00 p.m. on the
applicable Borrowing Date. Subject to receipt of those funds, Agent shall
(unless to its actual knowledge any of the applicable conditions precedent
have not been satisfied by Borrower or waived by the requisite Lenders
under SECTION 14.8) make those funds available to Borrower by (at
Borrower's option) (i) wiring the funds to or for the account of Borrower
at the direction of Borrower or (ii) depositing the funds in Borrower's
account with Agent.
(c) FUNDING ASSUMED. Absent contrary written notice from a Lender,
Agent may assume that each Lender has made its Commitment Percentage of the
requested Borrowing available to Agent on the applicable Borrowing Date,
and Agent may, in reliance upon such assumption (but shall not be required
to), make available to Borrower a corresponding amount. If a Lender fails
to make its Commitment Percentage of any requested Borrowing available to
Agent on the applicable Borrowing Date, Agent may recover the applicable
amount on demand, (i) from that Lender TOGETHER WITH interest, commencing
on the Borrowing Date and ending on (but excluding) the date Agent recovers
the amount from that Lender, at an annual interest rate equal to the
Federal-Funds Rate, or (ii) if that Lender fails to pay its amount upon
demand, then from Borrower. No Lender is responsible for the failure of any
other Lender to make its Commitment Percentage of any Borrowing available
as required by Section 2.3(b); however, failure of any Lender to make its
Commitment Percentage of any Borrowing so available does not excuse any
other Lender from making its Commitment Percentage of any Borrowing so
available.
2.4 LETTERS OF CREDIT.
(a) CONDITIONS. Subject to the terms and conditions of this
agreement and only to the extent and total amount that a Lender is
indicated on SCHEDULE 2 as willing to issue LCs, each such Lender agrees,
if requested by Borrower, to issue LCs upon Borrower's making or delivering
an LC Request and delivering an LC Agreement, both of which must be
received by Agent and the Issuing Lender no later than the second Business
Day before the Business Day on which the requested LC is to be issued, SO
LONG AS (i) no LC may expire after a date three Business Days before the
Termination Date, (ii) the LC Exposure does not exceed the limitations in
the definition of LC Subfacility, and (iii) the limitations in SECTIONS
2.2(c) and (d) are not exceeded.
(b) PARTICIPATION. Immediately upon an Issuing Lender's issuance of
any LC, that Issuing Lender shall be deemed to have sold and transferred to
each other Lender, and each other Lender shall be deemed irrevocably and
unconditionally to have purchased and received from that Issuing Lender,
without recourse or warranty, an undivided interest and participation to
the extent of such Lender's Commitment Percentage under the Revolving
Facility in the LC and all applicable Rights of that Issuing Lender in the
LC -- OTHER THAN
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Rights to receive certain fees provided in SECTION 4.3 to be for that
Issuing Lender's sole account.
(c) REIMBURSEMENT OBLIGATION. To induce each Issuing Lender to issue
and maintain LCs, and to induce Lenders to participate in issued LCs,
Borrower agrees to pay or reimburse each Issuing Lender (i) on the first
Business Day after an Issuing Lender notifies Agent and Borrower that it
has made payment under a LC, the amount paid by that Issuing Lender and
(ii) within five Business Days after demand, the amount of any additional
fees Issuing Lender customarily charges for amending LCs Agreements, for
honoring drafts under LCs, and for taking similar action in connection with
letters of credit. If Borrower has not reimbursed that Issuing Lender for
any drafts paid by the date on which reimbursement is required under this
section, then Agent is irrevocably authorized to fund Borrower's
reimbursement obligations as a Base-Rate Borrowing under the Revolving
Facility if proceeds are available under the Revolving Facility and if the
conditions in this agreement for such a Borrowing (OTHER THAN any notice
requirements or minimum funding amounts) have, to Agent's knowledge, been
satisfied. The proceeds of that Borrowing shall be advanced directly to
that Issuing Lender to pay Borrower's unpaid reimbursement obligations. If
funds cannot be advanced under the Revolving Facility, then Borrower's
reimbursement obligation shall constitute a demand obligation. Borrower's
obligations under this section are absolute and unconditional under any and
all circumstances and irrespective of any setoff, counterclaim, or defense
to payment that Borrower may have at any time against any Issuing Lender or
any other Person. From the date that an Issuing Lender pays a draft under a
LC until Borrower either reimburses or is obligated to reimburse that
Issuing Lender for that draft under this section, the amount of that draft
bears interest payable to that Issuing Lender at the rate then applicable
to Base-Rate Borrowings. From the due date of the respective amounts due
under this section, to the date paid (including any payment from proceeds
of a Base-Rate Borrowing), unpaid reimbursement amounts accrue interest
that is payable on demand at the Default Rate.
(d) GENERAL. The applicable Issuing Lender shall promptly notify
Agent and Borrower of the date and amount of any draft presented for honor
under any LC (but failure to give notice will not affect Borrower's
obligations under this agreement). That Issuing Lender shall pay the
requested amount upon presentment of a draft unless presentment on its face
does not comply with the terms of the applicable LC. When making payment,
that Issuing Lender may disregard (i) any default or potential default that
exists under any other agreement and (ii) obligations under any other
agreement that have or have not been performed by the beneficiary or any
other Person (and that Issuing Lender is not liable for any of those
obligations). Borrower's reimbursement obligations to that Issuing Lender
and Lenders, and each Lender's obligations to that Issuing Lender, under
this section are absolute and unconditional irrespective of, and that
Issuing Lender is not responsible for, (i) the validity, enforceability,
sufficiency, accuracy, or genuineness of documents or endorsements (even if
they are in any respect invalid, unenforceable, insufficient, inaccurate,
fraudulent, or forged), (ii) any dispute by any Company with or any
Company's claims, setoffs, defenses, counterclaims, or other Rights against
that Issuing Lender, any Lender, or any other Person, or (iii) the
occurrence of any Potential Default or Default. However, nothing in this
agreement constitutes a waiver of Borrower's Rights to assert any claim or
defense based upon the gross negligence or willful misconduct of any
Lender. The Issuing Lender shall promptly pay to Agent for Agent to
promptly distribute reimbursement payments received from Borrower to all
Lenders according to their Pro Rata Part of the Revolving Facility.
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(e) OBLIGATION OF LENDERS. If Borrower fails to reimburse an Issuing
Lender as provided in SECTION 2.4(c) by the date on which reimbursement is
due under that section, and funds cannot be advanced under the Revolving
Facility to satisfy the reimbursement obligations, then Agent shall
promptly notify each Lender of Borrower's failure, of the date and amount
paid, and of each Lender's Commitment Percentage of the unreimbursed
amount. Each Lender shall promptly and unconditionally make available to
Agent in immediately available funds its Commitment Percentage of the
unpaid reimbursement obligation, subject to the limitations of SECTION
2.2(d). Funds are due and payable to Agent before the close of business on
the Business Day when Agent gives notice to each Lender of Borrower's
reimbursement failure (if notice is given before 1:00 p.m.) or on the next
succeeding Business Day (if notice is given after 1:00 p.m.). All amounts
payable by any Lender accrue interest after the due date at the Federal-
Funds Rate from the day the applicable draft or draw is paid by Agent to
(but not including) the date the amount is paid by the Lender to Agent.
Upon receipt of those funds, Agent shall make them available to the Issuing
Lender.
(f) DUTIES OF ISSUING LENDER. Each Issuing Lender agrees with each
Lender that it will exercise and give the same care and attention to each
LC as it gives to its other letters of credit. Each Lender and Borrower
agree that, in paying any draft under any LC, no Issuing Lender has any
responsibility to obtain any document (OTHER THAN any documents expressly
required by the respective LC) or to ascertain or inquire as to any
document's validity, enforceability, sufficiency, accuracy, or genuineness
or the authority of any Person delivering it. Neither any Issuing Lender
nor its Representatives will be liable to any Lender or any Company for any
LC's use or for any beneficiary's acts or omissions. Any action, inaction,
error, delay, or omission taken or suffered by any Issuing Lender or any of
its Representatives in connection with any LC, applicable drafts or
documents, or the transmission, dispatch, or delivery of any related
message or advice, if in good faith and in conformity with applicable Laws
and in accordance with the standards of care specified in the UNIFORM
CUSTOMS AND PRACTICES FOR DOCUMENTARY CREDITS (1993 REVISION),
INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION NO. 500 (as amended or
modified), is binding upon the Companies and Lenders and, except as
provided in Section 2.4(e), does not place that Issuing Lender or any of
its Representatives under any resulting liability to any Company or any
Lender. Agent is not liable to any Company or any Lender for any action
taken or omitted, in the absence of gross negligence or willful misconduct,
by that Issuing Lender or its Representative in connection with any LC.
(g) CASH COLLATERAL. On the Termination Date and if requested by
Determining Lenders while a Default exists, Borrower shall provide Agent,
for the benefit of Lenders, cash collateral in an amount to equal the then-
existing LC Exposure.
(h) INDEMNIFICATION. BORROWER SHALL PROTECT, INDEMNIFY, PAY, AND
SAVE AGENT, EACH ISSUING LENDER, AND EACH OTHER LENDER, AND THEIR
RESPECTIVE REPRESENTATIVES HARMLESS FROM AND AGAINST ANY AND ALL CLAIMS,
DEMANDS, LIABILITIES, DAMAGES, COSTS, CHARGES, AND EXPENSES (INCLUDING
REASONABLE ATTORNEYS' FEES) WHICH ANY OF THEM MAY INCUR OR BE SUBJECT TO AS
A CONSEQUENCE OF THE ISSUANCE OF ANY LC, ANY DISPUTE ABOUT IT, OR THE
FAILURE OF ANY ISSUING LENDER TO HONOR A DRAW REQUEST UNDER ANY LC AS A
RESULT OF ANY ACT OR OMISSION (WHETHER RIGHT OR WRONG) OF ANY PRESENT OR
FUTURE TRIBUNAL. HOWEVER, NO PERSON IS ENTITLED TO INDEMNITY UNDER THE
FOREGOING FOR ITS OWN GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. THE FOREGOING
INDEMNITY PROVISION IS SUBJECT TO THE PROVISIONS OF SECTION 8.12
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(i) LC AGREEMENTS. Although referenced in any LC, terms of any
particular agreement or other obligation to the beneficiary are not
incorporated into this agreement in any manner. The fees and other amounts
payable with respect to each LC are as provided in this agreement, drafts
under each LC are part of the Obligation, only the events specified in this
agreement as a Default shall constitute a default under any LC, and the
terms of this agreement control any conflict between the terms of this
agreement and any LC Agreement.
2.5 BORROWING NOTICES AND LC REQUESTS. Each Borrowing Request (whether
telephonic or written) and LC Request constitutes a representation and warranty
by Borrower that as of the Borrowing Date or the date of issuance of the
requested LC, as the case may be, that all of the conditions precedent in
SECTION 6 have been satisfied.
2.6 TERMINATION. Borrower may -- upon giving at least five Business Days
prior written and irrevocable notice to Agent -- terminate all or part of the
Revolving Facility. Each partial termination must be in an amount of not less
than $10,000,000 or a greater integral multiple of $1,000,000 and must be
ratable in accordance with each Lender's Commitment Percentage. At the time of
any termination, Borrower shall pay to Agent, for the account of each Lender, as
applicable, any amounts that may then be due under SECTION 3.2(c), all accrued
and unpaid fees under this agreement, the interest attributable to the amount of
that reduction, and any related Funding Loss. Any part of the Commitments for
the Revolving Facility that are terminated may not be reinstated.
SECTION 3 TERMS OF PAYMENT.
3.1 NOTES AND PAYMENTS.
(a) NOTES. The Term Loan is evidenced by the Term Notes, one payable
to each Lender in the stated amount of its Commitment for the Term Loan.
Principal Debt under the Revolving Facility is evidenced by the Revolving
Notes, one payable to each Lender in the stated amount of its Commitment
for the Revolving Facility.
(b) PAYMENT. Borrower must make each payment and prepayment on the
Obligation to Agent's principal office in Dallas, Texas in immediately
available funds by 1:00 p.m. on the day due; otherwise, but subject to
SECTION 3.8, those funds continue to accrue interest as if they were
received on the next Business Day. Agent shall promptly pay to each Lender
the part of any payment or prepayment to which that Lender is entitled
under this agreement on the same day Agent receives the funds from
Borrower.
(c) PAYMENT ASSUMED. Unless Agent has received notice from Borrower
prior to the date on which any payment is due under this agreement that
Borrower will not make that payment in full, Agent may assume that Borrower
has made the full payment due and Agent may, in reliance upon that
assumption, cause to be distributed to each Lender on that date the amount
then due to each Lender. If and to the extent Borrower does not make the
full payment due to Agent, each Lender shall repay to Agent on demand the
amount distributed to that Lender by Agent together with interest for each
day from the date that Lender received payment from Agent until the date
that Lender repays Agent (unless such repayment is made on the same day as
such distribution), at an interest rate equal to the Federal-Funds Rate.
3.2 INTEREST AND PRINCIPAL PAYMENTS.
(a) INTEREST. Accrued interest on each LIBOR-Rate Borrowing is due and
payable on the last day of its respective Interest Period. If any Interest
Period for a LIBOR-Rate
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Borrowing is greater than three months, then accrued interest is also due
and payable on the date three months after the commencement of the Interest
Period. Accrued interest on each Base-Rate Borrowing is due and payable on
the last day of each March, June, September, and December -- commencing on
the first of those dates that follows the Closing Date -- and on the
Termination Date.
(b) REVOLVING-FACILITY PRINCIPAL. The Principal Debt under the
Revolving Facility is due and payable on the Termination Date. Before that
date, Borrower may at any time prepay, without penalty and in whole or in
part, the Principal Debt under the Revolving Facility SO LONG AS (i) each
voluntary partial prepayment must be in a principal amount not less than
$1,000,000 or a greater integral multiple of $100,000 and (ii) Borrower
shall pay any related Funding Loss upon demand. Conversions under SECTION
3.10 are not prepayments.
(c) REVOLVING-FACILITY-MANDATORY PREPAYMENTS. At any time a
Borrowing-Base Deficiency exists, Borrower shall, within five (5) Business
Days, make a prepayment to Agent (with any related Funding Loss) under the
Revolving Facility so that a Borrowing-Base Deficiency no longer exists.
(d) TERM-LOAN PRINCIPAL. The Principal Debt under the Term Loan is
due and payable in installments on the last day of each March, June,
September, and December -- commencing September 30, 1995, and ending
September 30, 1998 -- in accordance with the following amortization table:
<TABLE>
<CAPTION>
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Quarter(s) Ending Quarterly Installment
- ------------------------------------------------------------------
- ------------------------------------------------------------------
<S> <C>
September 30, 1995, through $5,000,000
June 30, 1996
- ------------------------------------------------------------------
September 30, 1996, through $6,000,000
June 30, 1998
- ------------------------------------------------------------------
September 30, 1998 $7,000,000
- ------------------------------------------------------------------
- ------------------------------------------------------------------
</TABLE>
(e) TERM-LOAN-VOLUNTARY PREPAYMENTS. Borrower may, by giving notice
to Agent no later than five Business Days before the date of the
prepayment, prepay, without penalty and in whole or part, the Principal
Debt under the Term Loan SO LONG AS (i) the notice by Borrower specifies
the amount to be prepaid, (ii) each voluntary partial prepayment must be in
a principal amount of not less than $5,000,000, or a greater integral
multiple of $1,000,000, plus accrued interest, on the amount prepaid, to
the date of the prepayment, and (iii) Borrower shall pay any related
Funding Loss upon demand. Conversions under SECTION 3.10 are not
prepayments. No voluntary prepayment of the Term Loan may be reborrowed.
Voluntary prepayments of the Term Loan shall be applied ratably to reduce
each installment of Principal Debt of the Term Loan not yet due and
payable.
(f) TERM-LOAN-MANDATORY PREPAYMENTS. Until the Term Loan has been
fully paid, Borrower shall make a prepayment to Agent equal to a percentage
of the applicable amount in the table below in respect of:
(i) the sale (subject in all respects to SECTION 9.11) of any
assets of any Restricted Company (each a "SUBJECT ASSET SALE") OTHER
THAN (A) inventory or accounts sold in the ordinary course of
business, (B) sales of assets that are replaced with assets
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<PAGE>
acquired using the proceeds of the asset sold, (C) sales by a
Restricted Company to one or more other Restricted Companies, (D) any
asset or related group of assets for which the net proceeds are
$2,000,000 or less, and (E) any assets for which the for which the
total net proceeds during any 12-month period are $10,000,000 or less;
(ii) any issuance (OTHER THAN upon conversion or exchange of any
Subordinated Debt upon terms no less onerous to Borrower than those in
effect on the date of this agreement for Subordinated Debt and any
issuance pursuant to or to satisfy the obligations of any Restricted
Company in respect of any benefit plan of any Restricted Company or
the exercise of Rights to purchase or receive any interest issued
under such a plan) by Borrower of any equity in Borrower (a "SUBJECT
EQUITY ISSUANCE"); and
(iii) Excess-Cash Flow for the Companies for each fiscal year of
the Companies (commencing for the year ending June 30, 1996).
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
Source Percent
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
<S> <C>
net cash proceeds of subject asset sale 100%
- ---------------------------------------------------------------------
net cash proceeds of subject equity issuance 75%
- ---------------------------------------------------------------------
Excess-Cash Flow 50%
- ---------------------------------------------------------------------
- ---------------------------------------------------------------------
</TABLE>
For purposes of this section, "NET" means net of (i) amounts payable
to third parties with respect to the asset sold, (ii) amounts applied
to the repayment of Debt (other than any of the Obligation) secured by
assets sold, (iii) transfer, income, and other Taxes payable in
connection with an applicable transaction, and (iv) reasonable and
customary professional fees and expenses, commissions, underwriting
discounts and other expenses incurred in connection with that
transaction.
Mandatory prepayments from subject asset sales and subject equity
issuances are payable within ten days after the proceeds of sale or
issuance are received by any Company OTHER THAN when Borrower has
first notified Agent that the proceeds of a subject asset sale are to
be reinvested as provided in CLAUSE (f)(i)(B) above. Mandatory
prepayments from Excess-Cash Flow are payable annually -- commencing
with respect to the fiscal year ending on June 30, 1996 -- by the next
Business Day after the date on which Borrower's annual Financials are
EITHER actually delivered to Agent OR required to be delivered to
Agent under SECTION 8.1(a). All mandatory prepayments under this
CLAUSE (f) shall be applied ratably to reduce each installment of
Principal Debt of the Term Loan not yet due and payable.
3.3 INTEREST OPTIONS. Except that the LIBOR Rate may not be selected when
a Default or Potential Default exists and except as otherwise provided in this
agreement, Borrowings bear interest at an annual rate equal to the lesser of
EITHER (a) the Base Rate plus the Applicable Margin or the LIBOR Rate plus the
Applicable Margin (in each case as designated or deemed designated by Borrower),
as the case may be, OR (b) the Maximum Rate. Each change in the Base Rate and
Maximum Rate is effective, without notice to Borrower or any other Person, upon
the effective date of change.
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<PAGE>
3.4 QUOTATION OF RATES. Borrower may call Agent before delivering a
Borrowing Request to receive an indication of the interest rates then in effect,
but the indicated rates do not bind Agent or Lenders or affect the interest rate
that is actually in effect when Borrower makes a Borrowing Request or on the
Borrowing Date.
3.5 DEFAULT RATE. If permitted by Law, all past-due Principal Debt,
Borrower's past-due payment and reimbursement obligations in connection with
LCs, and past-due interest accruing on any of the foregoing bears interest from
the date due (stated or by acceleration) at the Default Rate until paid,
regardless whether payment is made before or after entry of a judgment.
3.6 INTEREST RECAPTURE. If the designated interest rate applicable to any
Borrowing exceeds the Maximum Rate, the interest rate on that Borrowing is
limited to the Maximum Rate, but any subsequent reductions in the designated
rate shall not reduce the interest rate thereon below the Maximum Rate until the
total amount of accrued interest equals the amount of interest that would have
accrued if that designated rate had always been in effect. If at maturity
(stated or by acceleration), or at final payment of the Notes, the total
interest paid or accrued is less than the interest that would have accrued if
the designated rates had always been in effect, then, at that time and to the
extent permitted by Law, Borrower shall pay an amount equal to the difference
between (a) the LESSER of the amount of interest that would have accrued if the
designated rates had always been in effect AND the amount of interest that would
have accrued if the Maximum Rate had always been in effect, and (b) the amount
of interest actually paid or accrued on the Notes.
3.7 INTEREST CALCULATIONS. Interest will be calculated on the basis of
actual number of days (including the first day but excluding the last day)
elapsed but computed as if each calendar year consisted of 360 days (unless the
calculation would result in an interest rate greater than the Maximum Rate or in
the case of interest on Base-Rate Borrowings in which event interest will be
calculated on the basis of a year of 365 or 366 days, as the case may be). All
interest rate determinations and calculations by Agent are conclusive and
binding absent manifest error.
3.8 MAXIMUM RATE. Regardless of any provision contained in any Loan
Document, no Lender is entitled to contract for, charge, take, reserve, receive,
or apply, as interest on all or any part of the Obligation, any amount in excess
of the Maximum Rate, and, if Lenders ever do so, then any excess shall be
treated as a partial prepayment of principal and any remaining excess shall be
refunded to Borrower. In determining if the interest paid or payable exceeds the
Maximum Rate, Borrower and Lenders shall, to the maximum extent permitted under
applicable Law, (a) treat all Borrowings as but a single extension of credit
(and Lenders and Borrower agree that is the case and that provision in this
agreement for multiple Borrowings is for convenience only), (b) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest, (c)
exclude voluntary prepayments and their effects, and (d) amortize, prorate,
allocate, and spread the total amount of interest throughout the entire
contemplated term of the Obligation. However, if the Obligation are paid in full
before the end of their full contemplated term, and if the interest received for
its actual period of existence exceeds the Maximum Amount, Lenders shall refund
any excess (and Lenders may not, to the extent permitted by Law, be subject to
any penalties provided by any Laws for contracting for, charging, taking,
reserving, or receiving interest in excess of the Maximum Amount). If the Laws
of the State of Texas are applicable for purposes of determining the "MAXIMUM
RATE" or the "MAXIMUM AMOUNT," then those terms mean the "INDICATED RATE
CEILING" from time to time in effect under ARTICLE 5069-1.04, TITLE 79, REVISED
CIVIL STATUTES OF TEXAS, as amended. Borrower agrees that CHAPTER 15, SUBTITLE
79, REVISED CIVIL STATUTES OF TEXAS, 1925, as amended (which regulates certain
revolving credit loan accounts and revolving triparty accounts), does not apply
to the Obligation.
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<PAGE>
3.9 INTEREST PERIODS. When Borrower requests any LIBOR-Rate Borrowing,
Borrower may elect the applicable interest period (each an "INTEREST PERIOD"),
which may be, at Borrower's option, one, two, three, or six months for LIBOR-
Rate Borrowings, subject to Section 14.1 and the following conditions: (a) the
initial Interest Period for a LIBOR-Rate Borrowing commences on the applicable
Borrowing Date or conversion date, and each subsequent Interest Period
applicable to any Borrowing commences on the day when the next preceding
applicable Interest Period expires; (b) if any Interest Period for a LIBOR-Rate
Borrowing begins on a day for which no numerically corresponding Business Day in
the calendar month at the end of the Interest Period exists, then the Interest
Period ends on the last Business Day of that calendar month; (c) if Borrower is
required to pay any portion of a LIBOR-Rate Borrowing before the end of its
Interest Period in order to comply with the payment provisions of the Loan
Documents, Borrower shall also pay any related Funding Loss; and (d) no more
than ten Interest Periods may be in effect at one time.
3.10 CONVERSIONS. Subject to the dollar limits of SECTION 2.2(b) and
provided that Borrower may not convert to or select a new Interest Period for a
LIBOR-Rate Borrowing at any time when a Default or Potential Default exists,
Borrower may (a) convert a LIBOR-Rate Borrowing on the last day of the
applicable Interest Period to a Base-Rate Borrowing, (b) convert a Base-Rate
Borrowing at any time to a LIBOR-Rate Borrowing, and (c) elect a new Interest
Period for a LIBOR-Rate Borrowing. That election may be made by telephonic
request to Agent no later than 10:00 a.m. on the second Business Day before the
conversion date or the last day of the Interest Period, as the case may be (for
conversion to a LIBOR-Rate Borrowing or election of a new Interest Period), and
no later than 11:00 a.m. on the last day of the Interest Period (for conversion
to a Base-Rate Borrowing). Borrower shall provide a Conversion Notice to Agent
no later than two days after the date of the conversion or election. Absent
Borrower's telephonic request for conversion or election of a new Interest
Period or if a Default or Potential Default exists, then, a LIBOR-Rate Borrowing
shall be deemed converted to a Base-Rate Borrowing effective when the applicable
Interest Period expires.
3.11 ORDER OF APPLICATION.
(a) NO DEFAULT. If no Default or Potential Default exists, any
payment shall be applied to the Obligation -- EXCEPT as otherwise
specifically provided in the Loan Documents -- in the order and manner as
Borrower directs.
(b) DEFAULT. If a Default or Potential Default exists or if
Borrower fails to give direction, any payment (including proceeds from the
exercise of any Rights) shall be applied in the following order: (i) To all
fees and expenses for which Agent or Lenders have not been paid or
reimbursed in accordance with the Loan Documents (and if such payment is
less than all unpaid or unreimbursed fees and expenses, then the payment
shall be paid against unpaid and unreimbursed fees and expenses in the
order of incurrence or due date); (ii) to accrued interest on the Principal
Debt; (iii) to any LC reimbursement obligations that are due and payable
and that remain unfunded by any Borrowing under the Revolving Facility;
(iv) to the remaining Principal Debt in the order as Determining Lenders
may elect (but Determining Lenders agree to apply proceeds in an order that
will minimize any Funding Loss); (v) to the remaining Obligation in the
order and manner Determining Lenders deem appropriate; and (vi) as a
deposit with Agent, for the benefit of Lenders, as security for and payment
of any subsequent LC reimbursement obligations.
(c) PRO RATA. Each payment or prepayment shall be distributed to
each Lender in accordance with its Pro Rata Part of that payment or
prepayment.
23
<PAGE>
3.12 SHARING OF PAYMENTS, ETC.. If any Lender obtains any payment or
prepayment with respect to the Obligation (whether voluntary, involuntary, or
otherwise, including, without limitation, as a result of exercising its Rights
under SECTION 3.13) that exceeds the part of that payment or prepayment that it
is then entitled to receive under the Loan Documents, then that Lender shall
purchase from the other Lenders participations that will cause the purchasing
Lender to share the excess payment or prepayment ratably with each other Lender.
If all or any portion of any excess payment or prepayment is subsequently
recovered from the purchasing Lender, then the purchase shall be rescinded and
the purchase price restored to the extent of the recovery. Borrower agrees that
any Lender purchasing a participation from another Lender under this section
may, to the fullest extent permitted by Law, exercise all of its Rights of
payment (including the Right of offset) with respect to that participation as
fully as if that Lender were the direct creditor of Borrower in the amount of
that participation.
3.13 OFFSET. If a Default exists, each Lender is entitled to exercise
(for the benefit of all Lenders in accordance with SECTION 3.12) the Rights of
offset and banker's Lien against each and every account and other property, or
any interest therein, that any Company may now or hereafter have with, or which
is now or hereafter in the possession of, that Lender to the extent of the full
amount of the Obligation owed (directly or participated) to it.
3.14 BOOKING BORROWINGS. To the extent permitted by Law, any Lender may
make, carry, or transfer its Borrowings at, to, or for the account of any of its
branch offices or the office or branch of any of its Affiliates. However, no
Affiliate or branch is entitled to receive any greater payment under SECTION
3.16 than the transferor Lender would have been entitled to receive with respect
to those Borrowings, and a transfer may not be made if, as a direct result of
it, SECTION 3.15 or 3.17 would apply to any of the Obligation. If any of the
conditions of SECTIONS 3.16 or 3.17 ever apply to a Lender, that Lender shall,
to the extent possible, carry or transfer its Borrowings at, to, or for the
account of any of its branch offices or the office or branch of any of its
Affiliates SO LONG AS the transfer is consistent with the other provisions of
this section, does not create any burden or adverse circumstance for that Lender
that would not otherwise exist, and eliminates or ameliorates the conditions of
SECTIONS 3.16 or 3.17 as applicable.
3.15 BASIS UNAVAILABLE OR INADEQUATE FOR LIBOR RATE. If, on or before any
date when a LIBOR Rate is to be determined for a Borrowing, Agent reasonably
determines that the basis for determining the applicable rate is not available
or any Lender reasonably determines that the resulting rate does not accurately
reflect the cost to that Lender of making or converting Borrowings at that rate
for the applicable Interest Period, then Agent shall promptly notify Borrower
and Lenders of that determination (which is conclusive and binding on Borrower
absent manifest error) and the applicable Borrowing shall bear interest at the
SUM of the Base Rate PLUS the Applicable Margin. Until Agent notifies Borrower
that those circumstances no longer exist, Lenders' commitments under this
agreement to make, or to convert to, LIBOR-Rate Borrowings, as the case may be,
are suspended.
3.16 ADDITIONAL COSTS. Each Lender severally and not jointly agrees to
notify Agent, the other Lenders, and Borrower within 180 days after it has
actual knowledge that any circumstances exist that would give rise to any
payment obligation by Borrower under CLAUSES (a) through (c) below. Although no
Lender shall have any liability to Agent, any other Lender, or any Company for
its failure to give that notice, Borrower is not obligated to pay any amounts
under those clauses that arise, accrue, or are imposed more than 180 days before
that notice to the extent it is applicable to those amounts. Any Lender
demanding payment of any additional costs under this section must generally be
making similar demand for similar additional costs under credit agreements to
which it is party that contain similar provisions to this section.
24
<PAGE>
(a) RESERVES. With respect to any LIBOR-Rate Borrowing (i) if any
change in any present Law, any change in the interpretation or application
of any present Law, or any future Law imposes, modifies, or deems
applicable (or if compliance by any Lender with any requirement of any
Tribunal results in) any requirement that any reserves (including, without
limitation, any marginal, emergency, supplemental, or special reserves) be
maintained (OTHER THAN any reserve included in the Reserve Requirement),
and if (ii) those reserves reduce any sums receivable by that Lender under
this agreement or increase the costs incurred by that Lender in advancing
or maintaining any portion of any LIBOR-Rate Borrowing, then (iii) that
Lender (through Agent) shall deliver to Borrower a certificate setting
forth in reasonable detail the calculation of the amount necessary to
compensate it for its reduction or increase (which certificate is
conclusive and binding absent manifest error), and (iv) Borrower shall pay
that amount to that Lender within five Business Days after demand. The
provisions of and undertakings and indemnification in this CLAUSE (a)
survive the satisfaction and payment of the Obligation and termination of
this agreement.
(b) CAPITAL ADEQUACY. With respect to any Borrowing or LC if any
change in any present Law, any change in the interpretation or application
of any present Law, or any future Law regarding capital adequacy, or if
compliance by any Issuing Lender or any Lender with any request, directive,
or requirement imposed in the future by any Tribunal regarding capital
adequacy, or if any change in its written policies or in the risk category
of this transaction, in any of the foregoing events or circumstances,
reduces the rate of return on its capital as a consequence of its
obligations under this agreement to a level below that which it otherwise
could have achieved (taking into consideration its policies with respect to
capital adequacy) by an amount deemed by it to be material (and it may, in
determining the amount, utilize reasonable assumptions and allocations of
costs and expenses and use any reasonable averaging or attribution method),
then (unless the effect is already reflected in the rate of interest then
applicable under this agreement) Agent or that Lender (through Agent) shall
notify Borrower and deliver to Borrower a certificate setting forth in
reasonable detail the calculation of the amount necessary to compensate it
(which certificate is conclusive and binding absent manifest error), and
Borrower shall pay that amount to Agent or that Lender within five Business
Days after demand. The provisions of and undertakings and indemnification
in this CLAUSE (b) shall survive the satisfaction and payment of the
Obligation and termination of this agreement.
(c) TAXES. Subject to SECTION 3.19, any Taxes payable by Agent or
any Lender or ruled (by a Tribunal) payable by Agent or any Lender in
respect of this agreement or any other Loan Document shall, if permitted by
Law, be paid by Borrower, together with interest and penalties, if any,
EXCEPT for Taxes payable on or measured by the overall net income of Agent
or that Lender (or Agent or that Lender, as the case may be, TOGETHER WITH
any other Person with whom Agent or that Lender files a consolidated,
combined, unitary, or similar Tax return) and except for interest and
penalties incurred as a result of the gross negligence or willful
misconduct of Agent or any Lender. Agent or that Lender (through Agent)
shall notify Borrower and deliver to Borrower a certificate setting forth
in reasonable detail the calculation of the amount of payable Taxes, which
certificate is conclusive and binding (absent manifest error), and Borrower
shall pay that amount to Agent for its account or the account of that
Lender, as the case may be within five Business Days after demand. If Agent
or that Lender subsequently receives a refund of the Taxes paid to it by
Borrower, then the recipient shall promptly pay the refund to Borrower.
3.17 CHANGE IN LAWS. If any Law makes it unlawful for any Lender to make
or maintain LIBOR-Rate Borrowings, then that Lender shall promptly notify
Borrower and Agent, and (a) as to
25
<PAGE>
undisbursed funds, that requested Borrowing shall be made as a Base-Rate
Borrowing, and (b) as to any outstanding Borrowing (i) if maintaining the
Borrowing until the last day of the applicable Interest Period is unlawful, the
Borrowing shall be converted to a Base-Rate Borrowing as of the date of notice,
in which event Borrower will not be required to pay any related Funding Loss, or
(ii) if not prohibited by Law, the Borrowing shall be converted to a Base-Rate
Borrowing as of the last day of the applicable Interest Period, or (iii) if any
conversion will not resolve the unlawfulness, Borrower shall promptly prepay the
Borrowing, without penalty but with related Funding Loss.
3.18 FUNDING LOSS. BORROWER SHALL INDEMNIFY EACH LENDER AGAINST, AND PAY
TO IT UPON DEMAND, ANY FUNDING LOSS OF THAT LENDER. WHEN ANY LENDER DEMANDS THAT
BORROWER PAY ANY FUNDING LOSS, THAT LENDER SHALL DELIVER TO BORROWER AND AGENT A
CERTIFICATE SETTING FORTH IN REASONABLE DETAIL THE BASIS FOR IMPOSING FUNDING
LOSS AND THE CALCULATION OF THE AMOUNT, WHICH CALCULATION IS CONCLUSIVE AND
BINDING ABSENT MANIFEST ERROR. THE PROVISIONS OF AND UNDERTAKINGS AND
INDEMNIFICATION IN THIS SECTION SURVIVE THE SATISFACTION AND PAYMENT OF THE
OBLIGATION AND TERMINATION OF THIS AGREEMENT.
3.19 FOREIGN LENDERS, PARTICIPANTS, AND ASSIGNEES. Each Lender,
Participant (by accepting a participation interest under this agreement), and
Assignee (by executing an Assignment) that is not organized under the Laws of
the United States of America or one of its states (a) represents to Agent and
Borrower that (i) no Taxes are required to be withheld by Agent or Borrower with
respect to any payments to be made to it in respect of the Obligation and (ii)
it has furnished to Agent and Borrower two duly completed copies of either U.S.
Internal Revenue Service FORM 4224, FORM 1001, FORM W-8, or any other form
acceptable to Agent and Borrower that entitles it to a complete exemption from
U.S. federal withholding Tax on all interest or fee payments under the Loan
Documents, and (b) covenants to (i) provide Agent and Borrower a new FORM 4224,
FORM 1001, FORM W-8, or other form acceptable to Agent and Borrower upon the
expiration or obsolescence according to Law of any previously delivered form,
duly executed and completed by it, entitling it to a complete exemption from
U.S. federal withholding Tax on all interest and fee payments under the Loan
Documents, and (ii) comply from time to time with all Laws with regard to the
withholding Tax exemption. If any of the foregoing is not true at any time or
the applicable forms are not provided, then Borrower and Agent (without
duplication) may deduct and withhold from interest and fee payments under the
Loan Documents any Tax at the maximum rate under the Code or other applicable
Law, and amounts so deducted and withheld shall be treated as paid to that
Lender, Participant, or assignee, as the case may be, for all purposes under the
Loan Documents.
SECTION 4 FEES.
4.1 TREATMENT OF FEES. The fees described in this SECTION 4 (a) are not
compensation for the use, detention, or forbearance of money, (b) are in
addition to, and not in lieu of, interest and expenses otherwise described in
this agreement, (c) are payable in accordance with SECTION 3.1, (d) are non-
refundable, (e) to the fullest extent permitted by Law, bear interest, if not
paid when due, at the Default Rate and (f) are calculated on the basis of a year
of 365 or 366 days, as the case may be.
4.2 FEES TO AGENT AND AFFILIATES. Borrower shall pay to Agent and its
Affiliates that Agent may designate the arrangement/structuring fee and annual
administrative fee described in the letter agreement (as it may be renewed,
extended, or modified) dated as of February 10, 1995, between Borrower, Agent,
and NationsBanc Capital Markets, Inc. Those fees are solely for the account of
Agent and its Affiliates EXCEPT to the extent that Agent may unilaterally agree
in writing with any Lender in respect of that arrangement/structuring fee.
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<PAGE>
4.3 LC FEES. As an inducement for the issuance (including, without
limitation, the extension) of each LC, Borrower agrees to pay to Agent:
(a) For the account of each Lender, according to each Lender's
Commitment Percentage on the day the fee is payable, an issuance fee,
payable quarterly in arrears, equal to a percentage of the average-face
amount of that LC during each applicable quarterly period, which percentage
is equal to 100% for standby LCs and 20% for documentary LCs of the
Applicable Margin in effect for LIBOR-Rate Borrowings on the first day of
the quarterly period for which a payment is payable; and
(b) For the account of the Issuing Lender, payable on the date of
issuance (i) an issuance fee of $100 for each documentary LC and (ii) a
fronting fee of 0.125% of the face amount of each Standby LC.
4.4 COMMITMENT FEE. From and after the Closing Date, Borrower shall pay
to Agent a commitment fee for Lenders according to each Lender's Commitment
Percentage. The fee is payable as it accrues on the last day of each March,
June, September, and December -- commencing on the first of those dates that
follows the date of this agreement -- and on the Termination Date. Each payment
of the fee is equal to the following, determined for the calendar quarter (or
portion of a calendar quarter commencing on the date of this agreement or ending
on the Termination Date) preceding and including the date it is due: From the
Closing Date until the Termination Date, the PRODUCT of (i) the Applicable
Percentage, TIMES (ii) the amount by which the average-daily total Commitments
for only the Revolving Facility EXCEED the SUM of the average-daily Principal
Debt under only the Revolving Notes PLUS the average-daily LC Exposure, TIMES
(iii) a fraction with the number of days in the applicable quarter or portion of
it as the numerator and 365 as the denominator.
SECTION 5 SECURITY.
5.1 GUARANTY. Borrower shall cause all of its present and future
Subsidiaries -- whether now existing or in the future formed or acquired as
permitted by the Loan Documents -- that are Domestic-Restricted Companies to
unconditionally guarantee the full payment and performance of the Obligation by
execution of a Guaranty.
5.2 COLLATERAL. Borrower shall cause full payment and performance of the
Obligation to be secured by Lender Liens on all of the items and types of
property -- (TOGETHER WITH the additional collateral described in SECTIONS
2.4(G) and 5.3, if any, and the cash and non-cash proceeds of all of the
foregoing, the "COLLATERAL") -- described in the present and future Loan
Documents creating Lender Liens, including, without limitation:
(a) Present and future accounts receivable and inventory of each
present and future Domestic-Restricted Company; and
(b) 100% of the present and future issued and outstanding capital
stock and other equity securities issued by all of its Domestic
Subsidiaries and 65% of the present and future issued and outstanding
capital stock and other equity securities issued by MagneTek Europe.
5.3 OTHER COLLATERAL. Upon 20 days earlier notice, Borrower shall cause
the full payment and performance of the Obligation to be secured by Lender Liens
on the maximum amount (but not less than 65%) of the issued and outstanding
capital stock and other equity securities of each Foreign Restricted Company
(OTHER THAN MagneTek Europe) owned now or in the future by any present or future
Domestic-Restricted Company.
27
<PAGE>
5.4 FURTHER ASSURANCES. Borrower covenants and agrees that the Lender
Liens otherwise described in SECTION 5.2 and, when required, SECTION 2.4(g) and
5.3 must be created and perfected as a condition to funding any Borrowings or
issuance of any LC. Furthermore, Borrower shall -- and shall cause each other
appropriate Company to -- perform the acts, duly authorize, execute,
acknowledge, deliver, file, and record any additional writings, and pay all
filings fees and costs as Agent or Determining Lenders may reasonably deem
appropriate or necessary to perfect and maintain the Lender Liens and preserve
and protect the Rights of Agent and Lenders under any Loan Document.
5.5 RELEASE OF COLLATERAL.
(a) Whenever no Lender has any commitment to extend credit under any
Loan Document, the Obligation has been fully paid and performed, and all
uncancelled and undrawn LCs have been either fully cash secured or backed
by letters of credit acceptable in the sole discretion of the applicable
Issuing Lenders, then Agent shall, upon Borrower's written request and at
Borrower's cost and expense, cause the Lender Liens on all Collateral to be
released.
(b) Whenever the Release Ratio has been achieved, Agent shall, upon
Borrower's written request and at Borrower's cost and expense, cause the
Lender Liens on all Collateral under SECTION 5.2(a) to be released.
(c) Whenever the Release Ratings have been attained, Agent shall,
upon Borrower's written request and at Borrower's cost and expense, cause
the Lender Liens on all Collateral under SECTION 5.2(b) to be released.
(d) In connection with any sale or other disposition of stock or
assets permitted by SECTION 9.11, Agent shall, upon Borrower's request and
at Borrower's cost and expense, release the Lender Liens on the assets sold
or disposed of.
SECTION 6 CONDITIONS PRECEDENT. No Lender is obligated to fund the initial
Borrowing or issue any LC unless Agent has received all of the items described
in PART A on SCHEDULE 6. In addition, no Lender is obligated to fund (as opposed
to continue or convert) any Borrowing or issue any LC unless on the applicable
Borrowing Date or issue date (and after giving effect to the requested Borrowing
or LC), as the case may be: (a) Agent (and the Issuing Lender, if applicable)
timely receives a Borrowing Request or LC Request (together with the applicable
LC Agreement), as the case may be; (b) the Issuing Lender receives any
applicable LC fee then due and payable; (c) all of the representations and
warranties of the Companies in the Loan Documents are true and correct in all
material respects (unless they speak to a specific date or are based on facts
which have changed by transactions contemplated or expressly permitted by this
agreement); (d) no Material Adverse Event, Default, or Potential Default exists;
(e) none of the matters disclosed in any amendments to SCHEDULES 7.9 or 7.11 are
objected to by Determining Lenders; (f) no Borrowing- Base Deficiency will exist
after giving effect to the Borrowing or LC issuance; and (g) no limitation in
SECTION 2.2 OR 2.4 is exceeded. Each Borrowing Request and LC Request, however
delivered, constitutes Borrower's representation and warranty that the
conditions in CLAUSES (c) through (g) above are satisfied. Upon Agent's or any
Lender's reasonable request, Borrower shall deliver to Agent or such Lender
evidence substantiating any of the matters in the Loan Documents that are
necessary to enable Borrower to qualify for the Borrowing or LC, as the case may
be. Each condition precedent in this agreement (including, without limitation,
those on SCHEDULE 6) is material to the transactions contemplated by this
agreement, and time is of the essence with respect to each condition precedent.
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SECTION 7 REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to
Agent and Lenders as follows:
7.1 PURPOSE AND REGULATION U.
(a) Borrower will use LCs for general corporate purposes and the
proceeds of the Term Loan and the Revolving Facility (OTHER THAN the LC
Subfacility) for (i) refinancing the Refinanced Debt, (ii) the Restricted
Companies' working capital and general corporate purposes, (iii) Permitted-
Capital Expenditures, and (iv) investments, purchase prices, payment of
Funded Debt, or any combination of them in connection with Permitted
Acquisitions.
(b) No Company is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of
purchasing or carrying any "MARGIN STOCK" within the meaning of REGULATION
U of the Board of Governors of the Federal Reserve System, as amended. No
part of the proceeds of any LC draft or drawing or Borrowing will be used,
directly or indirectly, for a purpose that violates any Law, including,
without limitation, REGULATION U.
7.2 CORPORATE EXISTENCE, GOOD STANDING, AND AUTHORITY. Each Restricted
Company is duly organized, validly existing, and in good standing under the Laws
of its jurisdiction of incorporation. Except where not a Material Adverse Event,
each Restricted Company is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction where the nature and
extent of its business and properties require due qualification and good
standing (each of which jurisdictions is identified on SCHEDULE 6, as
supplemented from time to time by an amendment to that schedule that is dated,
executed, and delivered by Borrower to Agent and Lenders to reflect changes in
that schedule as a result of transactions permitted by the Loan Documents). Each
Restricted Company possesses all requisite authority and power to conduct its
business as is now being conducted and as proposed under the Loan Documents to
be conducted and to own and operate its assets as now owned and operated and as
proposed to be owned and operated under the Loan Documents.
7.3 SUBSIDIARIES AND NAMES. SCHEDULE 7.3 -- as supplemented from time to
time by an amendment to that schedule that is dated, executed, and delivered by
Borrower to Agent and Lenders to reflect changes in that schedule as a result of
transactions permitted by the Loan Documents -- describes (a) all of Borrower's
direct and indirect Subsidiaries, (b) all Restricted Companies, (c) every name
or trade name used by each Restricted Company during the five-year period before
the date of this agreement, and (d) every change of each Restricted Subsidiary's
name during the four-month period before the date of this agreement. All of the
outstanding shares of capital stock (or similar voting interests) of Borrower's
Restricted Subsidiaries are (a) duly authorized, validly issued, fully paid, and
nonassessable, (b) owned of record and beneficially as described in that
schedule or those writings, free and clear of any Liens, EXCEPT Permitted Liens,
and (c) not subject to any warrant, option, or other acquisition Right of any
Person or subject to any transfer restriction EXCEPT restrictions imposed by
securities Laws and general corporate Laws.
7.4 AUTHORIZATION AND CONTRAVENTION. The execution and delivery by each
Restricted Company of each Loan Document to which it is a party and the
performance by it of its obligations under those Loan Documents (a) are within
its corporate power, (b) have been duly authorized by all necessary corporate
action, (c) require no action by or filing with any Tribunal (EXCEPT any action
or filing that has been taken or made on or before the Closing Date), (d) do not
violate any provision of its charter or bylaws, and (e) do not violate any
provision of Law applicable to it or any material agreement to which it is a
party EXCEPT violations that individually or collectively are not a Material
Adverse Event.
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7.5 BINDING EFFECT. Upon execution and delivery by all parties to it,
each Loan Document will constitute a legal and binding obligation of each
Restricted Company party to it, enforceable against it in accordance with that
Loan Document's terms EXCEPT as that enforceability may be limited by Debtor
Laws and general principles of equity.
7.6 FINANCIALS AND EXISTING DEBT. The Current Financials were prepared
in accordance with GAAP and present fairly, in all material respects, the
Companies' consolidated financial condition, results of operations, and cash
flows as of, and for the portion of the fiscal year ending on their dates
(subject only to normal year-end adjustments for interim statements). Except for
transactions directly related to, specifically contemplated by, or expressly
permitted by the Loan Documents or as disclosed in the reports filed by Borrower
pursuant to the SECURITIES AND EXCHANGE ACT OF 1934 and delivered to Agent and
Lenders after the date of the Current Financials, no material adverse changes
have occurred in the Companies' consolidated financial condition from that shown
in the Current Financials.
7.7 PROJECTIONS. Although Borrower cannot assure Agent or Lenders that
the Projections will be achieved, the Projections were reasonably based upon the
assumptions contained in the Projections, which were reasonable and consistent
with each other and with all material facts then known to Borrower and which did
not fail to include any other material assumption in order for the Projections
to be reasonable.
7.8 SOLVENCY. On each Borrowing Date and the date any LC is issued, each
Restricted Company is -- and after giving effect to the requested Borrowing or
LC will be -- Solvent.
7.9 LITIGATION. Except as disclosed on SCHEDULE 7.9 -- as supplemented
from time to time, subject to SECTION 6(e), by an amendment to that schedule
that is dated, executed, and delivered by Borrower to Agent and Lenders to
reflect changes in that schedule -- and matters covered (subject to reasonable
and customary deductible and retention) by insurance or indemnification
agreements (a) no Restricted Company is subject to, or aware of the threat of,
any Litigation that is reasonably likely to be determined adversely to any
Restricted Company and, if so adversely determined, is a Material Adverse Event,
and (b) no outstanding and unpaid judgments against any Restricted Company exist
that would be a Material Adverse Event.
7.10 TAXES. EXCEPT where not a Material Adverse Event (a) all Tax returns
of each Restricted Company required to be filed have been filed (or extensions
have been granted) before delinquency, and (b) all Taxes imposed upon each
Restricted Company that are due and payable have been paid before delinquency
except as being contested as permitted by SECTION 8.5.
7.11 ENVIRONMENTAL MATTERS. EXCEPT as disclosed on SCHEDULE 7.11 -- as
supplemented from time to time, subject to SECTION 6(E), by an amendment to that
schedule that is dated, executed, and delivered by Borrower to Agent and Lenders
to reflect changes in that schedule:
(a) No Company has received notice from any Tribunal that it has
actual or potential Environmental Liability and no Company has knowledge
that it has any Environmental Liability, which actual or potential
Environmental Liability in either case constitutes a Material Adverse
Event.
(b) No Company has received notice from any Tribunal that any Real
Property is affected by, and no Company has knowledge that any Real
Property is affected by, any Release of any Hazardous Substance which
constitutes a Material Adverse Event.
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7.12 EMPLOYEE PLANS. EXCEPT as disclosed on SCHEDULE 7.12 or where not a
Material Adverse Event (a) no Employee Plan subject to ERISA has incurred an
"ACCUMULATED FUNDING DEFICIENCY" (as defined in SECTION 302 of ERISA or SECTION
512 of the Code), (b) neither Borrower nor any ERISA Affiliate has incurred
liability -- EXCEPT for liabilities for premiums that have been paid or that are
not past due -- under ERISA to the PBGC in connection with any Employee Plan,
(c) neither Borrower nor any ERISA Affiliate has withdrawn in whole or in part
from participation in a Multiemployer Plan in a manner that has given rise to a
withdrawal liability under TITLE IV of ERISA, (d) neither Borrower nor any ERISA
Affiliate has engaged in any "PROHIBITED TRANSACTION" (as defined in SECTION 406
of ERISA or SECTION 4975 of the Code), (e) no "REPORTABLE EVENT" (AS DEFINED IN
SECTION 4043 of ERISA) has occurred excluding events for which the notice
requirement is waived under applicable PBGC regulations, (f) neither Borrower
nor any ERISA Affiliate has any liability, or is subject to any Lien, under
ERISA or the Code to or on account of any Employee Plan, (g) each Employee Plan
subject to ERISA and the Code complies in all material respects, both in form
and operation, with ERISA and the Code, and (h) no Multiemployer Plan subject to
the Code is in reorganization within the meaning of SECTION 418 of the Code.
None of the matters disclosed on SCHEDULE 7.12 give rise to any other
"REPORTABLE EVENTS," as defined above.
7.13 PROPERTIES; LIENS. Each Restricted Company has good and marketable
title to all its property reflected on the Current Financials as being owned by
it EXCEPT for property that is obsolete or that has been disposed of in the
ordinary course of business between the date of the Current Financials and the
date of this agreement or, after the date of this agreement, as permitted by
SECTION 9.11 or SECTION 9.12. No Lien exists on any property of any Restricted
Company EXCEPT Permitted Liens. No Restricted Company is party or subject to any
agreement, instrument, or order which in any way restricts any Restricted
Company's ability to allow Liens to exist upon any of its assets EXCEPT relating
to Permitted Liens.
7.14 GOVERNMENT REGULATIONS. No Restricted Company is subject to
regulation under the INVESTMENT COMPANY ACT OF 1940, as amended, or the PUBLIC
UTILITY HOLDING COMPANY ACT OF 1935, as amended.
7.15 TRANSACTIONS WITH AFFILIATES. EXCEPT for transactions with other
Restricted Companies and as otherwise disclosed on SCHEDULE 7.15 or permitted by
SECTION 9.7, no Restricted Company is a party to a material transaction with any
of its Affiliates.
7.16 DEBT. No Company has any Debt EXCEPT Permitted Debt.
7.17 LEASES. EXCEPT where not a Material Adverse Event (a) each
Restricted Company enjoys peaceful and undisturbed possession under all leases
necessary for the operation of its properties and assets, and (b) all material
leases under which any Restricted Company is a lessee are in full force and
effect.
7.18 LABOR MATTERS. EXCEPT where not a Material Adverse Event (a) no
actual or threatened strikes, labor disputes, slow downs, walkouts, work
stoppages, or other concerted interruptions of operations that involve any
employees employed at any time in connection with the business activities or
operations at the Real Property exist, (b) hours worked by and payment made to
the employees of any Restricted Company or any Predecessor have not been in
violation of the FAIR LABOR STANDARDS ACT or any other applicable Laws
pertaining to labor matters, (c) all payments due from any Restricted Company
for employee health and welfare insurance, including, without limitation,
workers compensation insurance, have been paid or accrued as a liability on its
books, (d) the business activities and operations of each Company are in
compliance with OSHA and other applicable health and safety Laws.
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7.19 INTELLECTUAL PROPERTY. EXCEPT where not a Material Adverse Event (a)
each Restricted Company owns or has the right to use all material licenses,
patents, patent applications, copyrights, service marks, trademarks, trademark
applications and trade names necessary to continue to conduct its businesses as
presently conducted by it and proposed to be conducted by it immediately after
the date of this agreement, (b) each Restricted Company is conducting its
business without infringement or claim of infringement of any license, patent,
copyright, service mark, trademark, trade name, trade secret or other
intellectual property right of others, and (c) no infringement or claim of
infringement by others of any material license, patent, copyright, service mark,
trademark, trade name, trade secret or other intellectual property of any
Restricted Company exists.
7.20 FULL DISCLOSURE. Borrower's reports filed pursuant to the 1934 Act
before the date of this agreement do not contain an untrue statements of
material fact and do not omit to state a material fact necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. All information previously furnished to Agent by or
at the direction of a Responsible Officer or the General Counsel of Borrower in
connection with the Loan Documents was -- and all information furnished to Agent
in the future by or at the direction of a Responsible Officer or the General
Counsel of Borrower will be -- true and accurate in all material respects or
based on reasonable estimates on the date the information is stated or
certified.
SECTION 8 AFFIRMATIVE COVENANTS. For so long as any Lender is committed to
lend or issue LCs under this agreement and until the Obligation has been fully
paid and performed, Borrower covenants and agrees with Agent and Lenders that,
without first obtaining Agent's written notice of Determining Lenders' consent
to the contrary:
8.1 CERTAIN ITEMS FURNISHED. Borrower shall furnish the following to
each Lender:
(a) ANNUAL FINANCIALS, ETC. Promptly after preparation but no later
than 90 days (subject to any extensions granted to Borrower by the SEC for
filing the related annual report under the 1933 Act and 1934 Act) after the
last day of each fiscal year of Borrower, Financials showing the Companies'
consolidated financial condition and results of operations as of, and for
the year ended on, that last day, accompanied by (i) the opinion, without
material qualification, of Ernst & Young or other firm of
nationally-recognized independent certified public accountants reasonably
acceptable to Determining Lenders, based on an audit using generally
accepted auditing standards, that the consolidated portion of those
Financials were prepared in accordance with GAAP and present fairly, in all
material respects, the Companies' consolidated financial condition and
results of operations, and (ii) a Compliance Certificate.
(b) QUARTERLY FINANCIALS, ETC. Promptly after preparation but no
later than 45 days (subject to any extensions granted to Borrower by the
SEC for filing the related quarterly report under the 1933 Act and 1934
Act) after the last day of each of the first three fiscal quarters of
Borrower each year, Financials showing the Companies' consolidated
financial condition and results of operations for that fiscal quarter and
for the period from the beginning of the current fiscal year to the last
day of that fiscal quarter, accompanied by (i) a Compliance Certificate
(ii) a summary form, reasonably acceptable to Agent, of the Companies'
accounts-receivable aging, and (iii) a report of revenues, gross margins,
and operating profits of the Companies for the prior fiscal quarter on a
business-segment basis.
(c) BORROWING-BASE REPORT. At anytime when a Borrowing-Base
Condition exists, promptly after preparation but no later than 30 days
after the last day of each calendar month, a Borrowing-Base Report.
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(d) FINANCIAL PROJECTIONS. No later than 120 days after the last
day of each fiscal year of the Companies, financial projections of the
Companies for the next-succeeding-two-year period following that last day,
in the form reasonably satisfactory to Agent, setting forth management's
projections for each fiscal quarter of the next-succeeding-fiscal year and
on a yearly basis thereafter.
(e) OTHER REPORTS. Promptly after preparation and distribution,
accurate and complete copies of all reports and other material
communications about material financial matters or material corporate plans
or projections by or for any Company for distribution to any Tribunal or
any creditor (i) including, without limitation, each FORM 10-K, 10-Q, and
S-8 filed with the Securities and Exchange Commission but (ii) excluding
(A) credit, trade, and other reports prepared and distributed in the
ordinary course of business, and (B) information otherwise furnished to
Agent and Lenders under this agreement.
(f) EMPLOYEE PLANS. As soon as possible and within 30 days after
Borrower knows that any event which would constitute a reportable event
under SECTION 4043(b) of TITLE IV of ERISA with respect to any Employee
Plan subject to ERISA has occurred, or that the PBGC has instituted or will
institute proceedings under ERISA to terminate that plan, deliver a
certificate of a Responsible Officer of Borrower setting forth details as
to that reportable event and the action which Borrower or an ERISA
Affiliate, as the case may be, proposes to take with respect to it,
together with a copy of any notice of that reportable event which may be
required to be filed with the PBGC, or any notice delivered by the PBGC
evidencing its intent to institute those proceedings or any notice to the
PBGC that the plan is to be terminated, as the case may be. For all
purposes of this section, Borrower is deemed to have all knowledge of all
facts attributable to the plan administrator under ERISA.
(g) OTHER NOTICES. Notice -- promptly after Borrower knows -- of
(i) the existence and status of any Litigation that is reasonably likely to
be adversely determined and, if determined adversely to any Company, would
be a Material Adverse Event, (ii) any change in any material fact or
circumstance represented or warranted by any Company in any Loan Document,
(iii) a Default or Potential Default, specifying the nature thereof and
what action the Companies have taken, are taking, or propose to take.
(h) PART B ON SCHEDULE 6. Promptly as they become available
(subject to the other requirements of this agreement), the items, if any,
described in PART B on SCHEDULE 6.
(i) OTHER INFORMATION. Promptly when reasonably requested by Agent
or any Lender, such information (not otherwise required to be furnished
under this agreement) about any Company's business affairs, assets, and
liabilities.
8.2 USE OF CREDIT. Borrower shall use LCs and the proceeds of Borrowings
only for the purposes represented in this agreement.
8.3 BOOKS AND RECORDS. Each Company shall maintain books, records, and
accounts necessary to prepare Financials in accordance with GAAP.
8.4 INSPECTIONS. Upon reasonable request, each Company shall allow Agent
or any Lender (or their respective Representatives) to inspect any of its
properties, to review reports, files, and other records and to make and take
away copies, to conduct tests or investigations, and to discuss any of its
affairs, conditions, and finances with its other creditors, directors, officers,
employees, or representatives from time to time, during reasonable business
hours. Any reviews and investigations
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shall be limited to matters relevant to the present or future financial
condition of the Companies and their compliance with -- or ability to comply
with -- the Loan Documents.
8.5 TAXES. Each Restricted Company shall promptly pay when due any and
all Taxes EXCEPT Taxes that are being contested in good faith by lawful
proceedings diligently conducted, against which reserve or other provision
required by GAAP has been made, and in respect of which levy and execution of
any Lien sufficient to be enforced has been and continues to be stayed.
8.6 PAYMENT OF OBLIGATION. Each Restricted Company shall promptly pay
(or renew and extend) all of its material obligations as they become due (unless
the obligations are being contested in good faith by appropriate proceedings).
8.7 EXPENSES. Within ten Business Days after demand accompanied by an
invoice describing the costs, fees, and expenses in reasonable detail, Borrower
shall pay (a) all costs, fees, and expenses paid or incurred by Agent incident
to any Loan Document (including, without limitation, the reasonable fees and
expenses of Agent's counsel in connection with the negotiation, preparation,
delivery, and execution of the Loan Documents and any related amendment, waiver,
or consent) and (b) all reasonable costs and expenses incurred by Agent or any
Lender in connection with the enforcement of the obligations of any Restricted
Company under the Loan Documents or the exercise of any Rights under the Loan
Documents (including, without limitation, reasonable allocated costs of in-house
counsel, other reasonable attorneys' fees, and court costs), all of which are
part of the Obligation, bearing interest, (if not paid within ten Business Days
after demand accompanied by an invoice describing the costs, fees, and expenses
in reasonable detail) at the Default Rate until paid.
8.8 MAINTENANCE OF EXISTENCE, ASSETS, AND BUSINESS. Each Restricted
Company shall (a) EXCEPT in connection with dispositions permitted under SECTION
9.11 and mergers, consolidations, and dissolutions permitted under SECTION 9.12,
maintain its corporate existence and good standing in its state of
incorporation, and (b) EXCEPT where not a Material Adverse Event (i) maintain
its authority to transact business and good standing in all other states, (ii)
maintain all licenses, permits, and franchises (including, without limitation,
Environmental Permits) necessary for its business, and (iii) keep all of its
material assets that are useful in and necessary to its business in good working
order and condition (ordinary wear and tear excepted) and make all necessary
repairs and replacements.
8.9 INSURANCE. Each Restricted Company shall, at its cost and expense,
maintain with financially sound, responsible, and reputable insurance companies
or associations -- or, as to workers' compensation or similar insurance, with an
insurance fund or by self-insurance authorized by the jurisdictions in which it
operates -- insurance concerning its properties and businesses against
casualties and contingencies and of types and in amounts (and with co-insurance
and deductibles) as is customary in the case of similar businesses.
8.10 ENVIRONMENTAL MATTERS. Each Restricted Company shall (a) operate and
manage its businesses and otherwise conduct its affairs in compliance with all
Environmental Laws and Environmental Permits except to the extent noncompliance
does not constitute a Material Adverse Event, (b) promptly deliver to Agent a
copy of any notice received from any Tribunal alleging that any Restricted
Company is not in compliance with any Environmental Law or Environmental Permit
if the allegation constitutes a Material Adverse Event, and (c) promptly deliver
to Agent a copy of any notice received from any Tribunal alleging that any
Restricted Company has any potential Environmental Liability if the allegation
constitutes a Material Adverse Event.
8.11 SUBSIDIARIES. In respect of each present and future Subsidiary,
Borrower shall cause each of its present and future Subsidiaries (whether as a
result of acquisition, creation, or otherwise)
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to promptly and fully comply with SECTIONS 5.1 and 5.2 and its capital stock or
other equity securities to become subject to Lender Liens as required by SECTION
5.2 EXCEPT to the extent that it is subject to any exceptions in those
provisions.
8.12 INDEMNIFICATION.
(a) AS USED IN THIS SECTION: (I) "INDEMNITOR" MEANS BORROWER AND
(PURSUANT TO ITS GUARANTY) EACH OTHER RESTRICTED COMPANY; (II) "INDEMNITEE"
MEANS AGENT, EACH LENDER, EACH PRESENT AND FUTURE AFFILIATE OF AGENT OR ANY
LENDER, EACH PRESENT AND FUTURE REPRESENTATIVE OF AGENT, ANY LENDER, OR ANY
OF THOSE AFFILIATES, AND EACH PRESENT AND FUTURE SUCCESSOR AND ASSIGN OF
AGENT, ANY LENDER, OR ANY OF THOSE AFFILIATES OR REPRESENTATIVES; AND (III)
"INDEMNIFIED LIABILITIES" MEANS ALL PRESENT AND FUTURE, KNOWN AND UNKNOWN,
FIXED AND CONTINGENT, ADMINISTRATIVE, INVESTIGATIVE, JUDICIAL, AND OTHER
CLAIMS, DEMANDS, ACTIONS, CAUSES OF ACTION, INVESTIGATIONS, SUITS,
PROCEEDINGS, AMOUNTS PAID IN SETTLEMENT, DAMAGES, JUDGMENTS, PENALTIES,
COURT COSTS, LIABILITIES, AND OBLIGATIONS -- AND ALL PRESENT AND FUTURE
COSTS, EXPENSES, AND DISBURSEMENTS (INCLUDING, WITHOUT LIMITATION, ALL
REASONABLE ATTORNEYS' FEES AND EXPENSES WHETHER OR NOT SUIT OR OTHER
PROCEEDING EXISTS OR ANY INDEMNITEE IS PARTY TO ANY SUIT OR OTHER
PROCEEDING) IN ANY WAY RELATED TO ANY OF THE FOREGOING -- THAT MAY AT ANY
TIME BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST ANY INDEMNITEE AND IN
ANY WAY RELATING TO OR ARISING OUT OF ANY (A) LOAN DOCUMENT, TRANSACTION
CONTEMPLATED BY ANY LOAN DOCUMENT, COLLATERAL, OR REAL PROPERTY, (B)
ENVIRONMENTAL LIABILITY IN ANY WAY RELATED TO ANY COMPANY, PREDECESSOR,
COLLATERAL, REAL PROPERTY, OR ACT, OMISSION, STATUS, OWNERSHIP, OR OTHER
RELATIONSHIP, CONDITION, OR CIRCUMSTANCE CONTEMPLATED BY, CREATED UNDER, OR
ARISING PURSUANT TO OR IN CONNECTION WITH ANY LOAN DOCUMENT, OR (C)
INDEMNITEE'S SOLE OR CONCURRENT ORDINARY NEGLIGENCE.
(b) EACH INDEMNITOR SHALL JOINTLY AND SEVERALLY INDEMNIFY EACH
INDEMNITEE FROM AND AGAINST, PROTECT AND DEFEND EACH INDEMNITEE FROM AND
AGAINST, HOLD EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND ON DEMAND PAY
OR REIMBURSE EACH INDEMNITEE FOR, ALL INDEMNIFIED LIABILITIES.
(c) THE FOREGOING PROVISIONS (I) ARE NOT LIMITED IN AMOUNT EVEN IF
THAT AMOUNT EXCEEDS THE OBLIGATION, (II) INCLUDE, WITHOUT LIMITATION,
REASONABLE FEES AND EXPENSES OF ATTORNEYS AND OTHER COSTS AND EXPENSES OF
LITIGATION OR PREPARING FOR LITIGATION AND DAMAGES OR INJURY TO PERSONS,
PROPERTY, OR NATURAL RESOURCES ARISING UNDER ANY STATUTORY OR COMMON LAW,
PUNITIVE DAMAGES, FINES, AND OTHER PENALTIES, AND (III) ARE NOT AFFECTED BY
THE SOURCE OR ORIGIN OF ANY HAZARDOUS SUBSTANCE, AND (IV) ARE NOT AFFECTED
BY ANY INDEMNITEE'S INVESTIGATION, ACTUAL OR CONSTRUCTIVE KNOWLEDGE, COURSE
OF DEALING, OR WAIVER.
(d) However, no Indemnitee is entitled to be indemnified under the
Loan Documents for its own fraud, gross negligence, or wilful misconduct.
(e) Although failure to do so does not reduce or impair any
Indemnitor's obligations under this section (except to the extent that
failure prejudices Indemnitors' ability to perform their obligations under
this Section) each Indemnitee shall promptly notify Borrower of any event
about which the Indemnitee has received written notice and that is
reasonably likely to result in any Indemnified Liability. Each Indemnitor
may, at its own cost and expense, participate in the defense in any
proceeding involving any Indemnified Liability. If no Default
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or Potential Default exists, Indemnitors may assume the defense in that
proceeding on behalf of the applicable Indemnitees, including the
employment of counsel if first approved (which approval may not be
unreasonably withheld) by the applicable Indemnitees. If Indemnitors assume
any defense, they shall keep the applicable Indemnitees fully advised of
the status of, and shall consult with those Indemnitees before taking any
material position in respect of, that proceeding. If Indemnitors consent or
if any Indemnitee reasonably determines that an actual conflict of
interests exists between Indemnitors and that Indemnitee with respect to
the subject matter of the proceeding or that Indemnitors are not diligently
pursuing the defense, then (i) that Indemnitee may -- at Indemnitors' joint
and several expense -- employ counsel to represent that Indemnitee that is
separate from counsel for Indemnitors or any other Person in that
proceeding and (ii) Indemnitors are no longer entitled to assume the
defense on behalf of that Indemnitee. However, Indemnitors shall not then
be required to pay for more than one counsel for all Indemnitees at any
time. No Indemnitor may agree to the settlement of any Indemnified
Liability without the prior written consent of the applicable Indemnitees
unless that settlement fully relieves those Indemnitees of any liability
whatsoever for that Indemnified Liability. If an Indemnitee agrees to the
settlement of any Indemnified Liability without the prior written consent
-- which may not be unreasonably withheld -- of Indemnitors, then
Indemnitors are no longer obligated for that Indemnified Liability in
respect of that Indemnitee.
(f) THE PROVISIONS OF AND INDEMNIFICATION AND OTHER UNDERTAKINGS
UNDER THIS SECTION SURVIVE THE FORECLOSURE OF ANY LENDER LIEN OR ANY
TRANSFER IN LIEU OF THAT FORECLOSURE, THE SALE OR OTHER TRANSFER OF ANY
COLLATERAL OR REAL PROPERTY TO ANY PERSON, THE SATISFACTION OF THE
OBLIGATION, THE TERMINATION OF THE LOAN DOCUMENTS, AND THE RELEASE OF ANY
OR ALL LENDER LIENS.
SECTION 9 NEGATIVE COVENANTS. For so long as any Lender is committed to lend
or issue LCs under this agreement and until the Obligation has been fully paid
and performed, Borrower covenants and agrees with Agent and Lenders that,
without first obtaining Agent's written notice of Determining Lenders' consent
to the contrary:
9.1 PAYROLL TAXES. No Company may use any proceeds of any Borrowing to
pay the wages of employees unless a timely payment to or deposit with the United
States of America of all amounts of Tax required to be deducted and withheld
with respect to such wages is also made.
9.2 DEBT. No Company may:
(a) Have any Debt EXCEPT Permitted Debt.
(b) Prepay or cause to be prepaid any principal of, or any interest
on, any of its Funded Debt EXCEPT (i) the Obligation, (ii) the Refinanced
Debt, (iii) any of its other Senior Debt if no Default or Potential Default
exists, (iv) conversions of Subordinated Debt to equity of Borrower that is
not mandatorily redeemable, (v) exchanges of Subordinated Debt for
Subordinated Debt, (vi) prepayment of Subordinated Debt with the proceeds
of the issuance of additional Subordinated Debt or common stock issued by
Borrower, and (vii) any of the Subordinated Debt if (A) no Default or
Potential Default exists and (B) in respect of principal prepayments,
immediately after giving effect to any principal prepayment, the ratio of
the Companies' Senior Debt to EBITDA as of the date of prepayment
(calculated on a four-consecutive-quarter basis) would be not MORE THAN
2.75 to 1.00.
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(c) Amend or modify the terms of any Subordinated Debt to any extent
that (i) any of the applicable subordination, payment blockage, or
standstill provisions are less favorable to Lenders than exist for the
Subordinated Debt on the date of this agreement, (ii) the applicable
representations, covenants, events of default, and other provisions are
significantly more onerous to Borrower than exist for the Subordinated Debt
on the date of this agreement, or (iii) scheduled or mandatory principal or
sinking fund payment obligations before November 30, 1998, are made
applicable to any Subordinated Debt.
9.3 [INTENTIONALLY BLANK]
9.4 CAPITAL EXPENDITURES. No Restricted Company may make expenditures
for the acquisition, construction, improvement, or replacement of land,
buildings, equipment, or other fixed or capital assets or leaseholds (excluding
expenditures properly chargeable to repairs or maintenance) EXCEPT (a)
Permitted-Capital Expenditures, and (b) to the extent applicable, Permitted
Acquisitions and transactions permitted under SECTION 9.9.
9.5 LIENS. No Company may (a) create, incur, or suffer or permit to be
created or incurred or to exist any Lien upon any of its assets except Permitted
Liens or (b) enter into or permit to exist any arrangement or agreement that
directly or indirectly prohibits any Company from creating or incurring any Lien
on any of its assets (i) EXCEPT the Loan Documents, (ii) any lease that places a
Lien prohibition on only the property subject to that lease, and (iii)
arrangements and agreements that apply only to property subject to Permitted
Liens.
9.6 EMPLOYEE PLANS. EXCEPT as disclosed on SCHEDULE 7.12 or where not a
Material Adverse Event, no Restricted Company may permit any of the events or
circumstances described in SECTION 7.12 to exist or occur.
9.7 TRANSACTIONS WITH AFFILIATES. No Restricted Company may enter into
any material transaction with any of its Affiliates EXCEPT (a) those described
on SCHEDULE 7.15, (b) transactions between one or more Restricted Companies, (c)
transactions (other than Investments) between Restricted Companies and
Unrestricted Companies in the ordinary course of business and on terms
consistent with past practices, (d) transactions permitted under SECTIONS 9.2 or
9.9, (e) transactions in the ordinary course of business and upon fair and
reasonable terms not materially less favorable than it could obtain or could
become entitled to in an arm's-length transaction with a Person that was not its
Affiliate, (f) transactions specifically approved by Borrower's shareholders,
and (g) compensation arrangements in the ordinary course of business with
directors and officers of the Companies.
9.8 COMPLIANCE WITH LAWS AND DOCUMENTS. No Restricted Company may (a)
violate the provisions of any Laws (including, without limitation, OSHA and
Environmental Laws) applicable to it or of any material agreement to which it is
a party if that violation alone, or when aggregated with all other violations,
would be a Material Adverse Event, (b) violate in any material respect any
provision of its charter or bylaws, or (c) repeal, replace, or amend any
provision of its charter or bylaws if that action would be a Material Adverse
Event.
9.9 INVESTMENTS. EXCEPT those described on SCHEDULE 9.9, no Restricted
Company may make any Investments.
9.10 DISTRIBUTIONS. No Restricted Company may declare, make, or pay any
Distribution EXCEPT (i) Distributions paid in the form of additional equity that
is not mandatorily redeemable, (ii) Distributions to any other Restricted
Company, and (iii) other Distributions by Borrower SO LONG AS
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immediately after giving effect to any such other Distribution, no Default or
Potential Default exists and the ratio of the Companies' Funded Debt to
Capitalization is not MORE THAN 0.55 to 1.00.
9.11 DISPOSITION OF ASSETS. No Restricted Company may sell, assign,
lease, transfer, or otherwise dispose of any of its assets (including, without
limitation, equity interests in any other Company) EXCEPT (a) sales and
dispositions in the ordinary course of business for a fair and adequate
consideration, (b) sales of assets which are obsolete or are no longer in use
and which are not significant to the continuation of that Restricted Company's
business, (c) sales of assets (i) obtained as the result of mergers and
consolidations permitted under this agreement and Permitted Acquisitions and
(ii) which are unnecessary to that Restricted Companies' business operations,
(d) sales and dispositions from any Restricted Company to any other Restricted
Company, (e) sales and dispositions of Divestiture Assets, (f) dispositions of
assets where substantially similar assets have been or are being acquired, (g)
dispositions of equity interest of any Company that is not a Restricted Company,
and (h) dispositions of assets, the net proceeds of which do not exceed
$20,000,000 in any fiscal year.
9.12 MERGERS, CONSOLIDATIONS, AND DISSOLUTIONS. No Restricted Company may
merge or consolidate with any other Person or dissolve EXCEPT:
(a) if no Default or Potential Default exists or will exist as a
result of it, any merger or consolidation (i) between Restricted Companies (SO
LONG AS, if Borrower is involved, it is the survivor), or (ii) in connection
with any Permitted Acquisition if the survivor is, or concurrently with that
Permitted Acquisition becomes, a Restricted Company; and
(b) dissolution of any Restricted Company (OTHER THAN Borrower) if
substantially all of its assets have been conveyed to any other Restricted
Company or disposed of as permitted in SECTION 9.11.
9.13 ASSIGNMENT. No Restricted Company may assign or transfer any of its
Rights, duties, or obligations under any of the Loan Documents.
9.14 FISCAL YEAR AND ACCOUNTING METHODS. No Restricted Company may change
its fiscal year for accounting purposes or any material aspect of its method of
accounting EXCEPT to conform any new Subsidiary's accounting methods to
Borrower's accounting methods.
9.15 NEW BUSINESSES. No Restricted Company may engage in any business
EXCEPT the businesses in which it is presently engaged and any other reasonably
related business.
9.16 GOVERNMENT REGULATIONS. No Restricted Company may conduct its
business in a way that it becomes regulated under the INVESTMENT COMPANY ACT OF
1940, as amended, or the PUBLIC UTILITY HOLDING COMPANY ACT OF 1935, as amended.
9.17 STRICT COMPLIANCE. No Restricted Company may indirectly do anything
that it may not directly do under any covenant in any Loan Document.
SECTION 10 FINANCIAL COVENANTS. For so long as any Lender is committed to lend
or issue LCs under this agreement and until the Obligation has been fully paid
and performed, Borrower covenants and agrees with Agent and Lenders that,
without first obtaining Agent's written notice of Determining Lenders' consent
to the contrary, it may not directly or indirectly permit:
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10.1 TANGIBLE-NET WORTH. The Companies' Tangible-Net Worth -- determined
as of the last day of each fiscal quarter of Borrower -- to be LESS than the SUM
of (a) $100,000,000, PLUS (b) 50% of the Companies' cumulative Net Income
(without deduction for losses) after December 31, 1994, PLUS (c) 75% of the net
(I.E., gross less usual and customary underwriting, placement, and other related
costs and expenses) proceeds of the issuance of any equity securities by
Borrower after the date of this agreement.
10.2 CURRENT RATIO. The ratio -- determined as of the last day of each
fiscal quarter of Borrower -- of the Companies' consolidated current assets to
current liabilities (EXCLUDING current maturities of term Funded Debt) to be
LESS than 1.75 to 1.00.
10.3 FUNDED DEBT/CAPITALIZATION. The ratio -- determined as of the last
day of each fiscal quarter of Borrower -- of the Companies' Funded Debt to
Capitalization to EXCEED (a) after the Release Ratio has been achieved and Agent
has released the Collateral under SECTION 5.2(a), 0.65 to 1.00 and (b)
otherwise:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Quarters Ending Ratio
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
<S> <C>
3/31/95 through 12/31/95 0.80 to 1.00
- -------------------------------------------------------------------------
3/31/96 through 9/30/96 0.75 to 1.00
- -------------------------------------------------------------------------
12/31/96 through 9/30/97 0.70 to 1.00
- -------------------------------------------------------------------------
12/31/97 and each fiscal quarter after that 0.65 to 1.00
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
10.4 DEBT/EBITDA.
(a) The ratio of the Companies' Funded Debt as of the last day of
each fiscal quarter (commencing with the quarter of Borrower ending June
30, 1995) to EBITDA (calculated only in respect of assets owned by the
Companies at the end of the applicable period) for the 12-month period
ending on that last day to EXCEED (i) after the Release Ratio has been
achieved and Agent has released the Collateral under SECTION 5.2(a), 3.25
to 1.00 and (ii) otherwise, 4.25 to 1.00.
(b) The ratio of the Companies' Senior Debt as of the last day of
each fiscal quarter of Borrower (commencing with the quarter ending June
30, 1995) to EBITDA (calculated only in respect of assets owned by the
Companies at the end of the applicable period) for the 12-month period
ending on that last day to EXCEED 2.75 to 1.00.
10.5 FIXED-CHARGE COVERAGE.
(a) The ratio -- determined as of the last day of each fiscal
quarter (commencing June 30, 1995) of Borrower for the four quarters then
ended -- of the Companies' EBIT to Interest Expense to be LESS THAN:
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
Quarters Ending Ratio
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
<S> <C>
6/30/95 through 9/30/95 1.55 to 1.00
- -------------------------------------------------------------------------
12/31/95 through 3/31/96 1.60 to 1.00
- -------------------------------------------------------------------------
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<PAGE>
- -------------------------------------------------------------------------
6/30/96 and each quarter ending after that 1.80 to 1.00
- -------------------------------------------------------------------------
- -------------------------------------------------------------------------
</TABLE>
(b) Until the Term Loan has been fully paid, the ratio -- determined
as of the last day of each fiscal quarter (commencing June 30, 1995) of
Borrower for the four quarters then ended -- of the Companies' (i) EBIT to
(ii) the SUM of Interest Expense PLUS scheduled maturities of Debt for that
period (including, without limitation, the principal component of Capital
Leases but excluding Refinanced Debt and amounts prepaid on Funded Debt
permitted by this agreement to be prepaid) to be LESS THAN 1.20 to 1.00.
SECTION 11 DEFAULT. The term "DEFAULT" means the occurrence of any one or
more of the following:
11.1 PAYMENT OF OBLIGATION. Borrower's failure or refusal to pay (a)
principal of any Note or any LC Exposure or any part thereof on or before the
date due or (b) any other part of the Obligation on or before three Business
Days after the date due.
11.2 COVENANTS. Any Company's failure or refusal to punctually and
properly perform, observe, and comply with any covenant (OTHER THAN covenants to
pay the Obligation) applicable to it:
(a) In SECTIONS 8.2, 8.8(a), 9.1, 9.2, 9.4 through 9.7, 9.9 through
9.13, 9.16, 9.17 (to the extent related to any of the foregoing), or 10; or
(b) In SECTIONS 8.1 or 8.11, and that failure or refusal continues
for ten days after the earlier of EITHER any Company knows of it OR any
Company is notified of it by Agent or any Lender; or
(c) In any other provision of any Loan Document, and that failure or
refusal continues for 30 days after the earlier of EITHER any Company knows
of it OR any Company is notified of it by Agent or any Lender; or
11.3 DEBTOR RELIEF. Any Restricted Company (a) is not Solvent, (b) fails
to pay its Debts generally as they become due, (c) voluntarily seeks, consents
to, or acquiesces in the benefit of any Debtor Relief Law, or (d) becomes a
party to or is made the subject of any proceeding provided for by any Debtor
Relief Law -- EXCEPT as a creditor or claimant -- that could suspend or
otherwise adversely affect the Rights of Agent or any Lender granted in the Loan
Documents (UNLESS, if the proceeding is involuntary, the applicable petition is
dismissed within 60 days after its filing).
11.4 JUDGMENTS AND ATTACHMENTS. Where the amounts in controversy or of
any judgments, as the case may be, exceed -- from and after the Closing Date and
individually or collectively for all of the Restricted Companies -- $5,000,000,
the Restricted Companies fail (a) to have discharged, within 60 days after its
commencement, any attachment, sequestration, or similar proceeding against any
assets of any Restricted Company or (b) to pay any money judgment against any
Restricted Company within ten days before the date on which any Restricted
Company's assets may be lawfully sold to satisfy that judgment.
11.5 GOVERNMENT ACTION. Where EITHER it is a Material Adverse Event OR
the fair value of the assets involved exceed -- from and after the Closing Date
and individually or collectively for all of the Restricted Companies -- (a)
$50,000,000 in respect of a final non-appealable order is issued by any Tribunal
(including, but not limited to, the United States Justice Department) seeking to
cause
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<PAGE>
any Company to divest a significant portion of its assets under any antitrust,
restraint of trade, unfair competition, industry regulation, or similar Laws, or
(b) $5,000,000 in respect of any Tribunal condemning, seizing, or otherwise
appropriating, or taking custody or control of all or any substantial portion of
any Restricted Company's assets.
11.6 MISREPRESENTATION. Any material representation or warranty made by
any Company in any Loan Document at any time proves to have been materially
incorrect when made.
11.7 OWNERSHIP OF COMPANIES. EXCEPT as a result of transactions permitted
by this agreement and to the extent ownership by third parties is required by
applicable Law in respect of any Foreign-Restricted Company, one or more
Restricted Companies fail to own, beneficially and of record, with power to
vote, 100% of the issued and outstanding shares of capital stock of each other
Restricted Company OTHER THAN Borrower.
11.8 CHANGE OF CONTROL OF BORROWER. The individuals who, as of the date
of this agreement, constitute the members of Borrower's board of directors (for
purposes of this SECTION 11.8, the "INCUMBENT BOARD") do not constitute or cease
for any reason to constitute at least 50% of:
(a) Borrower's board of directors; or
(b) The surviving corporation's board of directors in the event of
any merger or consolidation (if permitted by SECTION 9.12) involving
Borrower; or
(c) The controlling entity's board of directors, the comparable body
if there is no board of directors, or voting control if there is no
comparable body, in the event that the surviving corporation under CLAUSE
(B) above is directly or indirectly controlled by that entity.
For purposes of this SECTION 11.8, any individual who becomes a member of the
board of directors or comparable body or who obtains a voting interest, as
applicable under CLAUSES (a), (b), or (c) above, after the date of this
agreement and whose appointment to the board, or nomination for election, was
approved or ratified by a vote of the individuals comprising at least 50% of the
incumbent board shall be deemed to be a member of the incumbent board.
11.9 OTHER FUNDED DEBT. In respect of any Funded Debt (OTHER THAN the
Obligation) individually or collectively of at least $10,000,000 (a) any
Restricted Company fails to make any payment when due, or (b) any default or
other event or condition occurs or exists (OTHER THAN a mandatory prepayment as
a result of disposition of assets if permitted by the Loan Documents) beyond the
applicable grace or cure period, the effect of which is to cause or to permit
any holder of that Funded Debt to cause -- whether or not it elects to cause --
any of that Funded Debt to become due before its stated maturity or regularly
scheduled payment dates, or (c) any of that Funded Debt is declared to be due
and payable or required to be prepaid by any Restricted Company before its
stated maturity (OTHER THAN a mandatory prepayment as a result of disposition of
assets or "CASH SWEEP" provisions to the extent, in each case, permitted by the
Loan Documents).
11.10 SEC REPORTING REQUIREMENTS. Borrower fails to comply with any
applicable reporting requirements of the SECURITIES EXCHANGE ACT OF 1934, as
amended, for which the failure to report would constitute a Material Adverse
Event.
11.11 VALIDITY AND ENFORCEABILITY. Once executed, this agreement, any
Note, any LC Agreement, any Guaranty, or any Security Agreement ceases to be in
full force and effect in any material respect or is declared to be null and void
or its validity or enforceability is contested in
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<PAGE>
writing by any Restricted Company party to it or any Restricted Company party to
it denies in writing that it has any further liability or obligations under it
EXCEPT in accordance with that document's express provisions or as the
appropriate parties under SECTION 14.8 below may otherwise agree in writing.
11.12 LCs. Agent is served with, or becomes subject to, a court order,
injunction, or other process or decree restraining or seeking to restrain it
from paying any amount under any LC and EITHER (a) a drawing has occurred under
the LC, and Borrower has refused to reimburse the Issuing Lender for payment, OR
(b) the expiration date of the LC has occurred, but the Right of the beneficiary
to draw under the LC has been extended past the Stated-Termination Date in
connection with the pendency of the related court action or proceeding, and
Borrower has failed to deposit with Agent cash collateral in an amount equal to
the Issuing Lender's maximum exposure under the LC.
SECTION 12 RIGHTS AND REMEDIES.
12.1 REMEDIES UPON DEFAULT.
(a) DEBTOR RELIEF. If a Default exists under SECTION 11.3, the
commitment to extend credit under this agreement automatically terminates,
the entire unpaid balance of the Obligation automatically becomes due and
payable without any action of any kind whatsoever.
(b) OTHER DEFAULTS. If any Default exists, subject to the terms of
SECTION 13.5(B), Agent may (with the consent of, and must, upon the request
of, Determining Lenders), do any one or more of the following: (i) If the
maturity of the Obligation has not already been accelerated under SECTION
12.1(A), declare the entire unpaid balance of all or any part of the
Obligation immediately due and payable, whereupon it is due and payable;
(ii) terminate the commitments of Lenders to extend credit under this
agreement; (iii) reduce any claim to judgment; (iv) demand payment of an
amount equal to the LC Exposure then existing and retain as collateral for
the LC Exposure any amounts received from any Company, from any property of
any Company, through offset, or otherwise; and (v) exercise any and all
other legal or equitable Rights afforded by the Loan Documents, by
applicable Laws, or in equity.
(c) OFFSET. If a Default exists, to the extent permitted by
applicable Law, each Lender may exercise the Rights of offset and banker's
lien against each and every account and other property, or any interest
therein, which any Restricted Company may now or hereafter have with, or
which is now or hereafter in the possession of, that Lender to the extent
of the full amount of the Obligation owed to that Lender.
12.2 COMPANY WAIVERS. To the extent permitted by Law, Borrower and
(pursuant to its Guaranty) each other Restricted Company waives presentment and
demand for payment, protest, notice of intention to accelerate, notice of
acceleration, and notice of protest and nonpayment, and agrees that its
liability with respect to all or any part of the Obligation is not affected by
any renewal or extension in the time of payment of all or any part of the
Obligation, by any indulgence, or by any release or change in any security for
the payment of all or any part of the Obligation.
12.3 PERFORMANCE BY AGENT. If any Company's covenant, duty, or agreement
is not performed in accordance with the terms of the Loan Documents, Agent may,
while a Default exists, at its option (but subject to the approval of
Determining Lenders), perform or attempt to perform that covenant, duty, or
agreement on behalf of that Company (and any amount expended by Agent in its
performance or attempted performance is payable by the Companies, jointly and
severally, to Agent on demand, becomes part of the Obligation, and bears
interest at the Default Rate from the date of
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<PAGE>
Agent's expenditure until paid). However, Agent does not assume and shall never
have, except by its express written consent, any liability or responsibility for
the performance of any Company's covenants, duties, or agreements.
12.4 NOT IN CONTROL. Nothing in any Loan Documents gives or may be deemed
to give to Agent or any Lender the Right to exercise control over any Company's
Real Property, other assets, affairs, or management or to preclude or interfere
with any Company's compliance with any Law or require any act or omission by any
Company that may be harmful to Persons or property. Any "MATERIAL ADVERSE EVENT"
or other materiality or substantiality qualifier of any representation,
warranty, covenant, agreement, or other provision of any Loan Document is
included for credit documentation purposes only and does not imply or be deemed
to mean that Agent or any Lender acquiesces in any non-compliance by any Company
with any Law, document, or otherwise or does not expect the Companies to
promptly, diligently, and continuously carry out all appropriate removal,
remediation, compliance, closure, or other activities required or appropriate in
accordance with all Environmental Laws. Agent's and Lenders' power is limited to
the Rights provided in the Loan Documents. All of those Rights exist solely --
and may be exercised in manner calculated by Agent or Lenders in their
respective good faith business judgment -- to preserve and protect the
Collateral and to assure payment and performance of the Obligation.
12.5 COURSE OF DEALING. The acceptance by Agent or Lenders of any partial
payment on the Obligation is not a waiver of any Default then existing. No
waiver by Agent, Determining Lenders, or Lenders of any Default is a waiver of
any other then-existing or subsequent Default. No delay or omission by Agent,
Determining Lenders, or Lenders in exercising any Right under the Loan Documents
impairs that Right or is a waiver thereof or any acquiescence therein, nor will
any single or partial exercise of any Right preclude other or further exercise
thereof or the exercise of any other Right under the Loan Documents or
otherwise.
12.6 CUMULATIVE RIGHTS. All Rights available to Agent, Determining
Lenders, and Lenders under the Loan Documents are cumulative of and in addition
to all other Rights granted to Agent, Determining Lenders, and Lenders at law or
in equity, whether or not the Obligation are due and payable and whether or not
Agent, Determining Lenders, or Lenders have instituted any suit for collection,
foreclosure, or other action in connection with the Loan Documents.
12.7 APPLICATION OF PROCEEDS. Any and all proceeds ever received by Agent
or Lenders from the exercise of any Rights pertaining to the Obligation shall be
applied to the Obligation according to SECTION 3.
12.8 CERTAIN PROCEEDINGS. Borrower shall promptly execute and deliver, or
cause the execution and delivery of, all applications, certificates,
instruments, registration statements, and all other documents and papers Agent
or Determining Lenders reasonably request in connection with the obtaining of
any consent, approval, registration (OTHER THAN securities Law registrations),
qualification, permit, license, or authorization of any Tribunal or other Person
necessary or appropriate for the effective exercise of any Rights under the Loan
Documents. Because Borrower agrees that Agent's and Determining Lenders'
remedies at Law for failure of Borrower to comply with the provisions of this
section would be inadequate and that failure would not be adequately compensable
in damages, Borrower agrees that the covenants of this section may be
specifically enforced.
12.9 EXPENDITURES BY LENDERS. Any sums spent by Agent or any Lender in
the exercise of any Right under any Loan Document is payable by the Companies to
Agent within five Business Days after demand, becomes part of the Obligation,
and bears interest at the Default Rate from the date spent until the date
repaid.
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<PAGE>
12.10 DIMINUTION IN VALUE OF COLLATERAL. Neither Agent nor any Lender has
any liability or responsibility whatsoever for any diminution in or loss of
value of any collateral now or in the future securing payment or performance of
any of the Obligation (OTHER THAN diminution in or loss of value caused by its
own gross negligence or willful misconduct).
SECTION 13 AGENT AND LENDERS.
13.1 AGENT.
(a) APPOINTMENT. Each Lender appoints Agent (including, without
limitation, each successor Agent in accordance with this SECTION 13) as its
nominee and agent to act in its name and on its behalf (and Agent and each
such successor accepts that appointment): (i) To act as its nominee and on
its behalf in and under all Loan Documents; (ii) to arrange the means
whereby its funds are to be made available to Borrower under the Loan
Documents; (iii) to take any action that it properly requests under the
Loan Documents (subject to the concurrence of other Lenders as may be
required under the Loan Documents); (iv) to receive all documents and items
to be furnished to it under the Loan Documents; (v) to be the secured
party, mortgagee, beneficiary, recipient, and similar party in respect of
any collateral for the benefit of Lenders; (vi) to promptly distribute to
it all material information, requests, documents, and items received from
Borrower under the Loan Documents; (vii) to promptly distribute to it its
ratable part of each payment or prepayment (whether voluntary, as proceeds
of collateral upon or after foreclosure, as proceeds of insurance thereon,
or otherwise) in accordance with the terms of the Loan Documents; and
(viii) to deliver to the appropriate Persons requests, demands, approvals,
and consents received from it. However, Agent may not be required to take
any action that exposes it to personal liability or that is contrary to any
Loan Document or applicable Law.
(b) SUCCESSOR. Agent may assign all of its Rights and obligations
as Agent under the Loan Documents to any of its Affiliates, which Affiliate
shall then be the successor Agent under the Loan Documents. Agent may also
voluntarily resign and shall resign upon the request of Determining Lenders
for cause (I.E., Agent is continuing to fail to perform its
responsibilities as Agent under the Loan Documents). If the initial or any
successor Agent ever ceases to be a party to this agreement or if the
initial or any successor Agent ever resigns (whether voluntarily or at the
request of Determining Lenders), then Determining Lenders shall (which, if
no Default or Potential Default exists, is subject to Borrower's approval
that may not be unreasonably withheld) appoint the successor Agent from
among Lenders (OTHER THAN the resigning Agent). If Determining Lenders fail
to appoint a successor Agent within 30 days after the resigning Agent has
given notice of resignation or Determining Lenders have removed the
resigning Agent, then the resigning Agent may, on behalf of Lenders,
appoint a successor Agent, which must be a commercial bank having a
combined capital and surplus of at least $1,000,000,000 (as shown on its
most recently published statement of condition). Upon its acceptance of
appointment as successor Agent, the successor Agent succeeds to and becomes
vested with all of the Rights of the prior Agent, and the prior Agent is
discharged from its duties and obligations of Agent under the Loan
Documents, and each Lender shall execute the documents that any Lender, the
resigning or removed Agent, or the successor Agent reasonably request to
reflect the change. After any Agent's resignation or removal as Agent under
the Loan Documents, the provisions of this section inure to its benefit as
to any actions taken or not taken by it while it was Agent under the Loan
Documents.
(c) RIGHTS AS LENDER. Agent, in its capacity as a Lender, has the
same Rights under the Loan Documents as any other Lender and may exercise
those Rights as if it were
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not acting as Agent. The term "LENDER", unless the context otherwise
indicates, includes Agent. Agent's resignation or removal does not impair
or otherwise affect any Rights that it has or may have in its capacity as
an individual Lender. Each Lender and Borrower agree that Agent is not a
fiduciary for Lenders or for Borrower but is simply acting in the capacity
described in this agreement to alleviate administrative burdens for
Borrower and Lenders, that Agent has no duties or responsibilities to
Lenders or Borrower except those expressly set forth in the Loan Documents,
and that Agent in its capacity as a Lender has the same Rights as any other
Lender.
(d) OTHER ACTIVITIES. Agent or any Lender may now or in the future
be engaged in one or more loan, letter of credit, leasing, or other
financing transactions with Borrower, act as trustee or depositary for
Borrower, or otherwise be engaged in other transactions with Borrower
(collectively, the "OTHER ACTIVITIES") not the subject of the Loan
Documents. Without limiting the Rights of Lenders specifically set forth in
the Loan Documents, neither Agent nor any Lender is responsible to account
to the other Lenders for those other activities, and no Lender shall have
any interest in any other Lender's activities, any present or future
guaranties by or for the account of Borrower that are not contemplated by
or included in the Loan Documents, any present or future offset exercised
by Agent or any Lender in respect of those other activities, any present or
future property taken as security for any of those other activities, or any
property now or hereafter in Agent's or any other Lender's possession or
control that may be or become security for the obligations of Borrower
arising under the Loan Documents by reason of the general description of
indebtedness secured or of property contained in any other agreements,
documents, or instruments related to any of those other activities (but, if
any payments in respect of those guaranties or that property or the
proceeds thereof is applied by Agent or any Lender to reduce the
Obligation, then each Lender is entitled to share ratably in the
application as provided in the Loan Documents).
13.2 EXPENSES. Each Lender shall pay its Pro Rata Part of any reasonable
expenses (including, without limitation, court costs, reasonable attorneys' fees
and other costs of collection) incurred by Agent or any Issuing Lender (while
acting in such capacity) in connection with any of the Loan Documents if Agent
or the Issuing Lender is not reimbursed from other sources within 30 days after
incurrence. Each Lender is entitled to receive its Pro Rata Part of any
reimbursement that it makes to Agent or an Issuing Lender if Agent or the
Issuing Lender is subsequently reimbursed from other sources.
13.3 PROPORTIONATE ABSORPTION OF LOSSES. Except as otherwise provided in
the Loan Documents, nothing in the Loan Documents gives any Lender any advantage
over any other Lender insofar as the Obligation is concerned or relieves any
Lender from ratably absorbing any losses sustained with respect to the
Obligation (except to the extent unilateral actions or inactions by any Lender
result in Borrower or any other obligor on the Obligation having any credit,
allowance, setoff, defense, or counterclaim solely with respect to all or any
part of that Lender's Pro Rata Part of the Obligation).
13.4 DELEGATION OF DUTIES; RELIANCE. Lenders may perform any of their
duties or exercise any of their Rights under the Loan Documents by or through
Agent, and Lenders and Agent may perform any of their duties or exercise any of
their Rights under the Loan Documents by or through their respective
Representatives. Agent, Lenders, and their respective Representatives (a) are
entitled to rely upon (and shall be protected in relying upon) any written or
oral statement believed by it or them to be genuine and correct and to have been
signed or made by the proper Person and, with respect to legal matters, upon
opinion of counsel selected by Agent or that Lender (but nothing in this CLAUSE
(a) permits Agent to rely on (i) oral statements if a writing is required by
this agreement or
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(ii) any other writing if a specific writing is required by this agreement), (b)
are entitled to deem and treat each Lender as the owner and holder of its
portion of the Obligation for all purposes until, written notice of the
assignment or transfer is given to and received by Agent (and any request,
authorization, consent, or approval of any Lender is conclusive and binding on
each subsequent holder, assignee, or transferee of or Participant in that
Lender's portion of the Obligation until that notice is given and received), (c)
are not deemed to have notice of the occurrence of a Default unless a
responsible officer of Agent, who handles matters associated with the Loan
Documents and transactions thereunder, has actual knowledge or Agent has been
notified by a Lender or Borrower, and (d) are entitled to consult with legal
counsel (including counsel for Borrower), independent accountants, and other
experts selected by Agent and are not liable for any action taken or not taken
in good faith by it in accordance with the advice of counsel, accountants, or
experts.
13.5 LIMITATION OF AGENT'S LIABILITY.
(a) EXCULPATION. Neither Agent nor any of its Affiliates or
Representatives will be liable for any action taken or omitted to be taken
by it or them under the Loan Documents in good faith and believed by it or
them to be within the discretion or power conferred upon it or them by the
Loan Documents or be responsible for the consequences of any error of
judgment (except for fraud, gross negligence, or willful misconduct), and
neither Agent nor any of its Affiliates or Representatives has a fiduciary
relationship with any Lender by virtue of the Loan Documents (but nothing
in this agreement negates the obligation of Agent to account for funds
received by it for the account of any Lender).
(b) INDEMNITY. Unless indemnified to its satisfaction against loss,
cost, liability, and expense, Agent may not be compelled to do any act
under the Loan Documents or to take any action toward the execution or
enforcement of the powers thereby created or to prosecute or defend any
suit in respect of the Loan Documents. If Agent requests instructions from
Lenders, or Determining Lenders, as the case may be, with respect to any
act or action in connection with any Loan Document, Agent is entitled to
refrain (without incurring any liability to any Person by so refraining)
from that act or action unless and until it has received instructions. In
no event, however, may Agent or any of its Representatives be required to
take any action that it or they determine could incur for it or them
criminal or onerous civil liability. Without limiting the generality of the
foregoing, no Lender has any right of action against Agent as a result of
Agent's acting or refraining from acting under this agreement in accordance
with instructions of Determining Lenders.
(c) RELIANCE. Agent is not responsible to any Lender or any
Participant for, and each Lender represents and warrants that it has not
relied upon Agent in respect of, (i) the creditworthiness of any Company
and the risks involved to that Lender, (ii) the effectiveness,
enforceability, genuineness, validity, or the due execution of any Loan
Document (EXCEPT by Agent), (iii) any representation, warranty, document,
certificate, report, or statement made therein (EXCEPT by Agent) or
furnished thereunder or in connection therewith, (iv) the adequacy of any
collateral now or hereafter securing the Obligation or the existence,
priority, or perfection of any Lien now or hereafter granted or purported
to be granted on the collateral under any Loan Document, or (v) observation
of or compliance with any of the terms, covenants, or conditions of any
Loan Document on the part of any Company. EACH LENDER AGREES TO INDEMNIFY
AGENT AND ITS REPRESENTATIVES AND HOLD THEM HARMLESS FROM AND AGAINST (BUT
LIMITED TO SUCH LENDER'S COMMITMENT PERCENTAGE OF) ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
REASONABLE EXPENSES, AND REASONABLE DISBURSEMENTS OF ANY KIND OR NATURE
WHATSOEVER THAT MAY BE IMPOSED ON, ASSERTED AGAINST, OR INCURRED BY THEM IN
ANY
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WAY RELATING TO OR ARISING OUT OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR
OMITTED BY THEM UNDER THE LOAN DOCUMENTS IF AGENT AND ITS REPRESENTATIVES
ARE NOT REIMBURSED FOR SUCH AMOUNTS BY ANY COMPANY. ALTHOUGH AGENT AND ITS
REPRESENTATIVES HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR
ITS OR THEIR OWN ORDINARY NEGLIGENCE, AGENT AND ITS REPRESENTATIVES DO NOT
HAVE THE RIGHT TO BE INDEMNIFIED UNDER THIS AGREEMENT FOR ITS OR THEIR OWN
FRAUD, GROSS NEGLIGENCE, OR WILLFUL MISCONDUCT.
13.6 DEFAULT. While a Default exists, Lenders agree to promptly confer in
order that Determining Lenders or Lenders, as the case may be, may agree upon a
course of action for the enforcement of the Rights of Lenders. Agent is entitled
to act or refrain from taking any action (without incurring any liability to any
Person for so acting or refraining) unless and until it has received
instructions from Determining Lenders. In actions with respect to any Company's
property, Agent is acting for the ratable benefit of each Lender.
13.7 COLLATERAL MATTERS.
(a) Each Lender authorizes and directs Agent to enter into the Loan
Documents for the Lender Liens and agrees that any action taken by Agent
concerning any Collateral (with the consent or at the request of
Determining Lenders) in accordance with any Loan Document, that Agent's
exercise (with the consent or at the request of Determining Lenders) of
powers concerning the Collateral in any Loan Document, and that all other
reasonably incidental powers are authorized and binding upon all Lenders.
(b) Agent is authorized on behalf of all Lenders, without the
necessity of any notice to or further consent from any Lender, from time to
time before a Default or Potential Default, to take any action with respect
to any Collateral or Loan Documents related to Collateral that may be
necessary to perfect and maintain perfected the Lender Liens upon the
Collateral.
(c) Except to use the same standard of care that it ordinarily uses
for collateral for its sole benefit, Agent has no obligation whatsoever to
any Lender or to any other Person to assure that the Collateral exists or
is owned by any Company or is cared for, protected, or insured or has been
encumbered or that the Lender Liens have been properly or sufficiently or
lawfully created, perfected, protected, or enforced or are entitled to any
particular priority.
(d) Agent shall exercise the same care and prudent judgment with
respect to the Collateral and the Loan Documents as it normally and
customarily exercises in respect of similar collateral and security
documents.
(e) Lenders irrevocably authorize Agent, at its option and in its
discretion, to release any Lender Lien upon any Collateral (i) in
accordance with SECTION 5.5, (ii) constituting property being disposed of
as permitted under any Loan Document, (iii) constituting property in which
no Company owned any interest at the time the Lender Lien was granted or at
any time after that, (iv) constituting property leased to any Company under
a lease that has expired or been terminated in a transaction permitted
under the Loan Documents or is about to expire and that has not been, and
is not intended by that Company to be, renewed, (v) consisting of an
instrument evidencing Debt pledged to Agent (for the benefit of Lenders),
if the underlying Debt has been paid in full, or (vi) if approved,
authorized, or ratified in writing by Lenders. Upon request by Agent at any
time, Lenders shall confirm in writing Agent's authority to release
particular types or items of Collateral under this CLAUSE (e).
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13.8 LIMITATION OF LIABILITY. No Lender or any Participant will incur any
liability to any other Lender or Participant except for acts or omissions in bad
faith, and neither Agent nor any Lender or Participant will incur any liability
to any other Person for any act or omission of any other Lender or any
Participant.
13.9 RELATIONSHIP OF LENDERS. The Loan Documents do not create a
partnership or joint venture among Agent and Lenders or among Lenders.
13.10 BENEFITS OF AGREEMENT. None of the provisions of this section inure
to the benefit of any Company or any other Person EXCEPT Agent and Lenders.
Therefore, no Company or any other Person is responsible or liable for, entitled
to rely upon, or entitled to raise as a defense -- in any manner whatsoever --
the failure of Agent or any Lender to comply with these provisions.
SECTION 14 MISCELLANEOUS.
14.1 NONBUSINESS DAYS. Any payment or action that is due under any Loan
Document on a non-Business Day may be delayed until the next-succeeding Business
Day (but interest shall continue to accrue on any applicable payment until
payment is in fact made) unless the payment concerns a LIBOR-Rate Borrowing, in
which case if the next-succeeding Business Day is in the next calendar month,
then such payment shall be made on the next-preceding Business Day.
14.2 COMMUNICATIONS. Unless otherwise specifically provided, whenever any
Loan Document requires or permits any consent, approval, notice, request, or
demand from one party to another, communication must be in writing (which may be
by telex or fax) to be effective and shall be deemed to have been given (a) if
by telex, when transmitted to the appropriate telex number and the appropriate
answer back is received, (b) if by fax, when transmitted to the appropriate fax
number (and all communications sent by fax must be confirmed promptly thereafter
by telephone; but any requirement in this parenthetical shall not affect the
date when the fax shall be deemed to have been delivered), (c) if by mail, on
the third Business Day after it is enclosed in an envelope and properly
addressed, stamped, sealed, and deposited in the appropriate official postal
service, or (d) if by any other means, when actually delivered. Until changed by
notice pursuant to this agreement, the address (and fax number) for Borrower and
Agent is stated beside their respective signatures to this agreement and for
each Lender is stated beside its name on SCHEDULE 2.
14.3 FORM AND NUMBER OF DOCUMENTS. The form, substance, and number of
counterparts of each writing to be furnished under this agreement must be
satisfactory to Agent and its counsel.
14.4 EXCEPTIONS TO COVENANTS. No Company may take or fail to take any
action that is permitted as an exception to any of the covenants contained in
any Loan Document if that action or omission would result in the breach of any
other covenant contained in any Loan Document.
14.5 SURVIVAL. All covenants, agreements, undertakings, representations,
and warranties made in any of the Loan Documents survive all closings under the
Loan Documents and, except as otherwise indicated, are not affected by any
investigation made by any party.
14.6 GOVERNING LAW. Unless otherwise stated in any Loan Document, the
Laws of the State of Texas and of the United States of America govern the Rights
and duties of the parties to the Loan Documents and the validity, construction,
enforcement, and interpretation of the Loan Documents.
14.7 INVALID PROVISIONS. Any provision in any Loan Document held to be
illegal, invalid, or unenforceable is fully severable; the appropriate Loan
Document shall be construed and enforced as
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if that provision had never been included; and the remaining provisions shall
remain in full force and effect and shall not be affected by the severed
provision. Agent, Lenders, and each Company party to the affected Loan Document
agree to negotiate, in good faith, the terms of a replacement provision as
similar to the severed provision as may be possible and be legal, valid, and
enforceable.
14.8 AMENDMENTS, CONSENTS, CONFLICTS, AND WAIVERS.
(a) DETERMINING LENDERS. Unless otherwise specifically provided (i)
the provisions of this agreement may be amended, modified, or waived, only
by an instrument in writing executed by Borrower, Agent, and Determining
Lenders and supplemented only by documents delivered or to be delivered in
accordance with the express terms of this agreement, and (ii) the other
Loan Documents may only be the subject of an amendment, modification, or
waiver that has been approved by Determining Lenders and Borrower.
(b) ALL LENDERS. EXCEPT as specifically otherwise provided in this
SECTION 14.8, any amendment to or consent or waiver under this agreement or
any Loan Document that purports to accomplish any of the following must be
by an instrument in writing executed by Borrower and Agent and executed (or
approved, as the case may be) by each Lender: (i) Extends the due date or
decreases the amount of any scheduled payment or amortization of the
Obligation beyond the date specified in the Loan Documents; (ii) decreases
any rate or amount of interest, fees, or other sums payable to Agent or
Lenders under this agreement (except such reductions as are contemplated by
this agreement); (iii) changes the definition of "COMMITMENT," "COMMITMENT
PERCENTAGE," "DETERMINING LENDERS," "PRO RATA PART," "RELEASE RATINGS," or
"RELEASE RATIO" or the percentages in the definition of "BORROWING BASE;"
(iv) increases any one or more Lenders' Commitment; (v) waives compliance
with, amends, or fully or partially releases -- EXCEPT as expressly
provided by SECTION 5.5 or any other Loan Documents or for when a Company
merges into another Person or dissolves when specifically permitted in the
Loan Documents -- any Guaranty or Collateral; or (vi) changes this CLAUSE
(b) or any other matter specifically requiring the consent of all Lenders
under this agreement.
(c) AGENCY FEES. Any amendment or consent or waiver with respect to
fees payable solely to Agent under a separate letter agreement must be
executed in writing only by Agent and Borrower.
(d) LCs. Any LC may be renewed, extended, amended, replaced, or
cancelled consistent with the terms of this agreement by writing executed
by the Issuing Lender and Borrower that is first approved by Agent.
(e) ISSUING LENDER'S LC EXPOSURE. Any Lender may from time to time
amend the amount, if any, stated beside its name on SCHEDULE 2 as its
"MAXIMUM LC EXPOSURE" in respect of LCs yet to be issued by giving written
notice to Agent and Borrower. Agent shall then correct and circulate a new
copy of SCHEDULE 2 to Borrower and Lenders.
(f) CONFLICTS. Any conflict or ambiguity between the terms and
provisions of this agreement and terms and provisions in any other Loan
Document is controlled by the terms and provisions of this agreement.
(g) WAIVERS. No course of dealing or any failure or delay by Agent,
any Lender, or any of their respective Representatives with respect to
exercising any Right of Agent or any Lender under this agreement operates
as a waiver thereof. A waiver must be in writing and signed by Agent and
Lenders (or Determining Lenders, if permitted under this agreement) to
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be effective, and a waiver will be effective only in the specific instance
and for the specific purpose for which it is given.
14.9 MULTIPLE COUNTERPARTS. Any Loan Document may be executed in a number
of identical counterparts (including, at Agent's discretion, counterparts or
signature pages executed and transmitted by fax) with the same effect as if all
signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument.
14.10 PARTIES.
(a) PARTIES BOUND. Each Loan Document binds and inures to the
parties to it, any intended beneficiary of it, and each of their respective
successors and permitted assigns. No Company may assign or transfer any
Rights or obligations under any Loan Document without first obtaining all
Lenders' consent, and any purported assignment or transfer without Lenders'
consent is void. No Lender may transfer, pledge, assign, sell any
participation in, or otherwise encumber its portion of the Obligation
EXCEPT as permitted by CLAUSES (b) or (c) below.
(b) PARTICIPATIONS. Any Lender may (subject to the provisions of
this section, in accordance with applicable Law, in the ordinary course of
its business, and at any time) sell to one or more Persons (each a
"PARTICIPANT") participating interests in its portion of the Obligation.
The selling Lender remains a "LENDER" under the Loan Documents, the
Participant does not become a "LENDER" under the Loan Documents, and the
selling Lender's obligations under the Loan Documents remain unchanged. The
selling Lender remains solely responsible for the performance of its
obligations and remains the holder of its share of the Principal Debt for
all purposes under the Loan Documents. Borrower and Agent shall continue to
deal solely and directly with the selling Lender in connection with that
Lender's Rights and obligations under the Loan Documents, and each Lender
must retain the sole right and responsibility to enforce due obligations of
the Companies. Participants have no Rights under the Loan Documents EXCEPT
as provided below. Subject to the following, each Lender may obtain (on
behalf of its Participants) the benefits of SECTION 3 with respect to all
participations in its part of the Obligation outstanding from time to time
SO LONG AS Borrower is not obligated to pay any amount in excess of the
amount that would be due to that Lender under SECTION 3 calculated as
though no participations have been made. No Lender may sell any
participating interest under which the Participant has any Rights to
approve any amendment, modification, or waiver of any Loan Document EXCEPT
as to matters in SECTION 14.8(b)(i) and (ii).
(c) ASSIGNMENTS. Each Lender may make assignments to the Federal
Reserve Bank. Each Lender may also assign to one or more assignees (each an
"ASSIGNEE") all or any part of its Rights and obligations under the Loan
Documents SO LONG AS (i) the assignor Lender and Assignee execute and
deliver to Agent and Borrower for their consent and acceptance (that may
not be unreasonably withheld in any instance and is not required if the
Assignee is an Affiliate of the assigning Lender) an assignment and
assumption agreement in substantially the form of EXHIBIT F (an
"ASSIGNMENT") and pay to Agent a processing fee of $2,500, (ii) the
assignment is for an identical percentage of the assignor Lender's Rights
and obligations under the Term Loan and the Revolving Facility, (iii) the
assignment must be for a minimum total Commitment of $10,000,000 and, if
the assigning Lender retains any Commitment, it must be a minimum total
Commitment of $10,000,000, and (iv) the conditions for that assignment set
forth in the applicable Assignment are satisfied. The EFFECTIVE DATE in
each Assignment must (unless a shorter period is agreeable to Borrower and
Agent) be at least five Business Days after it is executed and delivered by
the assignor Lender and the Assignee to Agent and
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Borrower for acceptance. Once that Assignment is accepted by Agent and
Borrower, and subject to all of the following occurring, then, on and after
the EFFECTIVE DATE stated in it (i) the Assignee automatically becomes a
party to this agreement and, to the extent provided in that Assignment, has
the Rights and obligations of a Lender under the Loan Documents, (ii) the
assignor Lender, to the extent provided in that Assignment, is released
from its obligations to fund Borrowings under this agreement and its
reimbursement obligations under this agreement and, in the case of an
Assignment covering all of the remaining portion of the assignor Lender's
Rights and obligations under the Loan Documents, that Lender ceases to be a
party to the Loan Documents, (iii) Borrower shall execute and deliver to
the assignor Lender and the Assignee the appropriate Notes in accordance
with this agreement following the transfer, (iv) upon delivery of the Notes
under CLAUSE (iii) preceding, the assignor Lender shall return to Borrower
all Notes previously delivered to that Lender under this agreement, and (v)
SCHEDULE 2 is automatically deemed to be amended to reflect the name,
address, telecopy number, and Commitment of the Assignee and the remaining
Commitment (if any) of the assignor Lender, and Agent shall prepare and
circulate to Borrower and Lenders an amended SCHEDULE 2 reflecting those
changes. Notwithstanding the foregoing, no Assignee may be recognized as a
party to the Loan Documents (and the assigning Lender shall continue to be
treated for all purposes as the party to the Loan Documents) with respect
to the Rights and obligations assigned to that Assignee until the actions
described in CLAUSES (iii) and (iv) have occurred. The Obligation is
registered on the books of Borrower as to both principal and any stated
interest, and transfers of (as opposed to participations in) principal and
interest of the Obligation may only be made in accordance with this SECTION
14.10.
14.11 VENUE, SERVICE OF PROCESS, AND JURY TRIAL. BORROWER AND (PURSUANT
TO ITS GUARANTY) EACH RESTRICTED COMPANY, IN EACH CASE FOR ITSELF AND ITS
SUCCESSORS AND ASSIGNS, IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION
OF THE STATE AND FEDERAL COURTS IN TEXAS, (B) WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR IN THE FUTURE HAVE TO THE
LAYING OF VENUE OF ANY LITIGATION ARISING OUT OF OR IN CONNECTION WITH ANY LOAN
DOCUMENT AND THE OBLIGATION BROUGHT IN THE DISTRICT COURTS OF DALLAS COUNTY,
TEXAS, OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF
TEXAS, DALLAS DIVISION, (C) WAIVES ANY CLAIMS THAT ANY LITIGATION BROUGHT IN ANY
OF THE FOREGOING COURTS HAS BEEN BROUGHT IN AN INCONVENIENT FORUM, (D) CONSENTS
TO THE SERVICE OF PROCESS OUR OF ANY OF THOSE COURTS IN ANY LITIGATION BY THE
MAILING OF COPIES OF THAT PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
POSTAGE PREPAID, BY HAND DELIVERY, OR BY DELIVERY BY A NATIONALLY-RECOGNIZED
COURIER SERVICE, AND SERVICE SHALL BE DEEMED COMPLETE UPON DELIVERY OF THE LEGAL
PROCESS AT ITS ADDRESS FOR PURPOSES OF THIS AGREEMENT, (E) AGREES THAT ANY LEGAL
PROCEEDING AGAINST ANY PARTY TO ANY LOAN DOCUMENT ARISING OUT OF OR IN
CONNECTION WITH THE LOAN DOCUMENTS OR THE OBLIGATION MAY BE BROUGHT IN ONE OF
THE FOREGOING COURTS, AND (F) WAIVES TO THE FULLEST EXTENT PERMITTED BY LAW, ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUR OF ANY LOAN DOCUMENT. The scope of each of the foregoing waivers is
intended to be all encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims, and all
other common law and statutory claims. BORROWER AND (PURSUANT TO ITS GUARANTY)
EACH OTHER RESTRICTED COMPANY ACKNOWLEDGES THAT THESE WAIVERS ARE A MATERIAL
INDUCEMENT TO AGENT'S AND EACH LENDER'S AGREEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT AGENT AND EACH LENDER HAS ALREADY RELIED ON THESE WAIVERS IN
ENTERING INTO THIS AGREEMENT, AND THAT AGENT AND EACH LENDER WILL CONTINUE TO
RELY ON EACH OF THESE WAIVERS IN RELATED FUTURE DEALINGS. BORROWER AND (PURSUANT
TO ITS GUARANTY) EACH OTHER RESTRICTED COMPANY FURTHER WARRANTS AND REPRESENTS
THAT IT HAS REVIEWED THESE WAIVERS WITH ITS LEGAL COUNSEL, AND THAT IT KNOWINGLY
AND VOLUNTARILY AGREES TO EACH WAIVER FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
The waivers in this section are
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irrevocable, meaning that they may not be modified either orally or in writing,
and these waivers apply to any future renewals, extensions, amendments,
modifications, or replacements in respect of the applicable Loan Document. In
connection with any Litigation, this agreement may be filed as a written consent
to a trial by the court.
14.12 ENTIRETY. THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
BORROWER, LENDERS, AND AGENT AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.
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EXECUTED as of the date first stated above.
26 Century Blvd. MAGNETEK, INC., as BORROWER
Nashville, TN 37229-0159
Attn: Mr. John P. Colling, Jr.,
Vice President and Treasurer
Fax: (615) 316-5192 By /s/ JOHN P. COLLING, JR.
---------------------------------
John P. Colling, Jr.,
Vice President and Treasurer
Agency Services NATIONSBANK OF TEXAS, N.A.,
901 Main Street, 13th Floor as AGENT and a LENDER
Dallas, Texas 75202
Attn: Ms. Molly Oxford,
Vice President and Manager
Fax: (214) 508-2515 or By /s/ ANDREA P. COLLIAS
(214) 508-0944 ---------------------------------
Andrea P. Collias, Vice President
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOR OTHER LENDERS FOLLOW.
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EXECUTED as of the date first stated above.
THE FIRST NATIONAL BANK OF CIBC INC., as a CO-AGENT and a LENDER
CHICAGO, as a CO-AGENT and a LENDER
By /s/ STEVEN B. FARLEY By /s/ PAUL J. CHAKMAK
----------------------------------- ------------------------------
Steven B. Farley, Vice President Paul J. Chakmak, Vice President
LTCB TRUST COMPANY, as a LENDER FIRST UNION NATIONAL BANK OF
TENNESSEE, as a LENDER
By /s/ JOHN J. SULLIVAN By /s/ TIMOTHY B. FOUTS
----------------------------------- ------------------------------
John J. Sullivan, Timothy B. Fouts,
Executive Vice President Vice President
CREDIT LYONNAIS - CAYMAN ISLAND FLEET BANK OF MASSACHUSETTS, N.A.,
BRANCH, as a LENDER as a LENDER
By /s/ FREDERICK HADDAD By /s/ THOMAS J. BULLARD
----------------------------------- ------------------------------
Frederick Haddad, Thomas J. Bullard, Vice
Authorized Signature President
SOCIETE GENERALE, SOUTHWEST THE BANK OF CALIFORNIA, N.A., as a
AGENCY, as a LENDER LENDER
By /s/ MARK A. COX By /s/ SCOTT LANE
----------------------------------- ------------------------------
Mark A. Cox, Vice President Scott Lane, Vice President
UNION BANK, as a LENDER ARAB BANKING CORPORATION,
as a LENDER
By /s/ ALI PASHA MOGHADDAM
-----------------------------------
Ali Pasha Moghaddam, Vice By /s/ LOUISE BILBRO
President -------------------------------
Louise Bilbro, Vice President
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BANQUE FRANCAISE DU COMMERCE THE BOATMEN'S NATIONAL BANK OF
EXTERIEUR, as a LENDER ST. LOUIS, as a LENDER
By /s/ KEN COULTER By /s/ DWIGHT D. ERDBRUEGGER
----------------------------------- ------------------------------
Ken Coulter, Vice President Dwight D. Erdbruegger,
Vice President
By /s/ IAIN WHITE
----------------------------------
Iain White, Assistant Vice President
COMMERZBANK AG, ATLANTA AGENCY, CREDITANSTALT CORPORATE
as a LENDER FINANCE, INC., as a LENDER
By /s/ HARRY YERGEY By /s/ ROBERT M. BIRINGER
----------------------------------- ------------------------------
Harry Yergey, Robert M. Biringer,
Vice President Senior Vice President
By /s/ ERIC KAGERER By /s/ JOSEPH P. LONGOSZ
----------------------------------- ------------------------------
Eric Kagerer, Joseph P. Longosz,
Assistant Vice President Vice President
FIRST AMERICAN NATIONAL BANK,
as a LENDER
By /s/ COREY NAPIER
---------------------------------------
Corey Napier, Vice President
55
<PAGE>
EXHIBIT A-1
TERM NOTE
$__________________ March 31, 1995
FOR VALUE RECEIVED, MAGNETEK, INC., a Delaware corporation ("MAKER"),
promises to pay to the order of______________________ ("PAYEE"), $______________
_________, TOGETHER WITH interest.
This note is a "TERM NOTE" under the Credit Agreement (as renewed,
extended, amended, or restated, the "CREDIT AGREEMENT") dated as of March 31,
1995, between Maker as BORROWER, Payee, certain other "LENDERS," and NationsBank
of Texas, N.A., as "AGENT" for Lenders. All of the terms defined in the Credit
Agreement have the same meanings when used -- unless otherwise defined -- in
this note.
This note incorporates by reference the principal and interest payment
terms in the Credit Agreement for this note, including, without limitation, the
final maturity date for this note, which is September 30, 1998. Principal and
interest are payable to the holder of this note through Agent at its offices at
901 Main Street, Dallas, Texas 75202, or at any other address of which Agent may
notify Maker in writing.
This note also incorporates by reference all other provisions in the Credit
Agreement applicable to this note -- such as provisions for disbursement of
principal, applicable-interest rates before and after Default, voluntary and
mandatory prepayments, acceleration of maturity, exercise of Rights, payment of
attorney's fees, courts costs, and other costs of collection, certain waivers by
Maker and other obligors, assurances and security, choice of Texas and United
States federal Law, usury savings, and other matters applicable to Loan
Documents under the Credit Agreement.
MAGNETEK, INC., as MAKER
By ____________________________________________
John P. Colling, Jr., Vice President and
Treasurer
d-0186152.02 EXHIBIT A-1
<PAGE>
EXHIBIT A-2
REVOLVING NOTE
$____________________ March 31, 1995
FOR VALUE RECEIVED, MAGNETEK, INC., a Delaware corporation ("MAKER"),
promises to pay to the order of________________________ ("PAYEE"), that portion
of the principal amount of $_________ that may from time to time be disbursed
and outstanding under this note, TOGETHER WITH interest.
This note is a "REVOLVING NOTE" under the Credit Agreement (as renewed,
extended, amended, or restated, the "CREDIT AGREEMENT") dated as of March 31,
1995, between Maker as BORROWER, Payee, certain other "LENDERS," and NationsBank
of Texas, N.A., as "AGENT" for Lenders. All of the terms defined in the Credit
Agreement have the same meanings when used -- unless otherwise defined -- in
this note.
This note incorporates by reference the principal and interest payment
terms in the Credit Agreement for this note, including, without limitation, the
final maturity date for this note, which is the Termination Date. Principal and
interest are payable to the holder of this note through Agent at its offices at
901 Main Street, Dallas, Texas 75202, or at any other address of which Agent may
notify Maker in writing.
This note also incorporates by reference all other provisions in the Credit
Agreement applicable to this note -- such as provisions for disbursement of
principal, applicable-interest rates before and after Default, voluntary and
mandatory prepayments, acceleration of maturity, exercise of Rights, payment of
attorney's fees, courts costs, and other costs of collection, certain waivers by
Maker and other obligors, assurances and security, choice of Texas and United
States federal Law, usury savings, and other matters applicable to Loan
Documents under the Credit Agreement.
MAGNETEK, INC., as MAKER
By _____________________________________________
John P. Colling, Jr., Vice President and
Treasurer
d-0186148.02 EXHIBIT A-2
<PAGE>
GUARANTY
THIS GUARANTY is executed as of March 31, 1995, by each of the undersigned
(collectively, "GUARANTORS"), for the benefit of NATIONSBANK OF TEXAS, N.A. (in
its capacity as Agent for the Lenders now or in the future party to the Credit
Agreement described below, "AGENT").
MAGNETEK, INC., a Delaware corporation ("BORROWER"), Agent, and Lenders
have executed the Credit Agreement (as renewed, extended, amended, or restated,
the "CREDIT AGREEMENT") dated as of March 31, 1995. Borrower, directly or
through other Guarantors, owns all of the issued and outstanding capital stock
of each Guarantor. The execution and delivery of this guaranty are requirements
to Agent's and Lenders' execution of the Credit Agreement and other Loan
Documents, are integral to the transactions contemplated by the Loan Documents,
and are conditions precedent to Lenders' obligations to extend any credit under
the Credit Agreement.
ACCORDINGLY, for adequate and sufficient consideration, each Guarantor
jointly and severally guarantees to Agent and Lenders the prompt payment of the
Guaranteed Debt (defined below) at -- and at all times after -- its maturity (by
acceleration or otherwise) as follows:
1. DEFINITIONS. Terms defined in the Credit Agreement have the same
meanings when used -- unless otherwise defined -- in this guaranty. As used in
this guaranty:
AGENT is defined in the preamble to this guaranty and includes its
successor appointed under SECTION 13 of the Credit Agreement and acting as AGENT
for Lenders under the Loan Documents.
BORROWER is defined in the recitals to this guaranty and includes, without
limitation, Borrower, Borrower as a debtor-in-possession, and any receiver,
trustee, liquidator, conservator, custodian, or similar party appointed for
Borrower or for all or substantially all of Borrower's assets under any Debtor
Law.
CREDIT AGREEMENT is defined in the recitals to this guaranty.
GUARANTEED DEBT means the Obligation, as defined in the Credit Agreement,
and all present and future costs, attorneys' fees, and expenses reasonably
incurred by Agent or any Lender to enforce Borrower's, any Guarantor's, or any
other obligor's payment of any of the Obligation, including, without limitation,
all present and future amounts that would become due but for the operation of
SECTIONS 502 or 506 or any other provision of TITLE 11 of the UNITED STATES CODE
and all present and future accrued and unpaid interest (including, without
limitation, all post-petition interest if Borrower or any Guarantor voluntarily
or involuntarily becomes subject to any Debtor Law).
GUARANTORS is defined in the preamble to this guaranty.
SUBORDINATED DEBT means all present and future obligations of Borrower to
any Guarantor, whether those obligations are (a) direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several, (b)
due or to become due to any Guarantor, (c) held by or are to be held by any
Guarantor, (d) created directly or acquired by assignment or otherwise, or (e)
evidenced in writing.
2. GUARANTY. This is an absolute, irrevocable, and continuing guaranty,
and the circumstance that at any time or from time to time the Guaranteed Debt
may be paid in full does not affect the obligation of any Guarantor with respect
to the Guaranteed Debt incurred after that. This guaranty remains in effect
until the Guaranteed Debt is fully paid and performed, each LC has expired or
been cancelled, and all commitments to lend or issue LCs under the Credit
Agreement have terminated. Agent, in its own discretion or at the direction of
the Determining Lenders, shall have sole and exclusive authority to enforce this
guaranty. No Guarantor may rescind
d-0184923.07
<PAGE>
or revoke its obligations with respect to the Guaranteed Debt. Notwithstanding
any contrary provision in this guaranty, however, each Guarantor's maximum
liability under this guaranty is limited, to the extent, if any, required so
that its liability is not subject to avoidance under any Debtor Law.
3. CONSIDERATION. Each Guarantor represents and warrants that (a) the
value of the consideration received and to be received by it is reasonably worth
at least as much as its liability under this guaranty and (b) that liability may
reasonably be expected to directly or indirectly benefit it.
4. CUMULATIVE RIGHTS. If any Guarantor becomes liable for any
indebtedness owing by Borrower to Agent or any Lender, OTHER THAN under this
guaranty, that liability may not be in any manner impaired or affected by this
guaranty. The Rights of Agent or Lenders under this guaranty are cumulative of
any and all other Rights that Agent or Lenders may ever have against each
Guarantor. The exercise by Agent or Lenders of any Right under this guaranty or
otherwise does not preclude the concurrent or subsequent exercise of any other
Right.
5. PAYMENT UPON DEMAND. If a Default exists, each Guarantor shall -- on
demand and without further notice of dishonor and without any notice having been
given to any Guarantor previous to that demand of either the acceptance by Agent
or Lenders of this guaranty or the creation or incurrence of any Guaranteed
Debt -- pay the amount of the Guaranteed Debt then due and payable to Agent for
Lenders. It is not necessary for Agent or Lenders, in order to enforce that
payment by any Guarantor, first or contemporaneously to institute suit or
exhaust remedies against Borrower or others liable on any Guaranteed Debt or to
enforce Rights against any collateral securing any Guaranteed Debt.
6. SUBORDINATION. The Subordinated Debt is expressly subordinated to the
full and final payment of the Guaranteed Debt. Each Guarantor agrees not to
accept any payment of any Subordinated Debt from Borrower if a Default or
Potential Default exists. If any Guarantor receives any payment of any
Subordinated Debt in violation of the foregoing, that Guarantor shall hold that
payment in trust for Agent and Lenders and promptly turn it over to Agent, in
the form received (with any necessary endorsements), to be applied to the
Guaranteed Debt.
7. SUBROGATION AND CONTRIBUTION. Until no Lender is obligated to lend or
issue LCs under the Credit Agreement, all LCs have expired or been cancelled,
and the Guaranteed Debt has been fully paid and performed (the "DEFERMENT DATE")
(a) no Guarantor may assert, enforce, or otherwise exercise any Right of
subrogation to any of the Rights or Liens of Agent or Lenders or any other
beneficiary against Borrower or any other obligor on the Guaranteed Debt or any
collateral or other security or any Right of recourse, reimbursement,
subrogation, contribution, indemnification, or similar Right against Borrower or
any other obligor on any Guaranteed Debt or any guarantor of it, (b) each
Guarantor defers all of the foregoing Rights (whether they arise in equity,
under contract, by statute, under common Law, or otherwise) until the Deferment
Date, and (c) each Guarantor defers the benefit of, and any Right to participate
in, any collateral or other security given to Agent or Lenders or any other
beneficiary to secure payment of any Guaranteed Debt until the Deferment Date.
8. NO RELEASE. No Guarantor's obligations under this guaranty may be
released, diminished, or affected by the occurrence of any one or more of the
following events: (a) Any taking or accepting of any other security or
assurance for any Guaranteed Debt; (b) any release, surrender, exchange,
subordination, impairment, or loss of any collateral securing any Guaranteed
Debt; (c) any full or partial release of the liability of any other obligor on
the Obligation; (d) the modification of, or waiver of compliance with, any terms
of any other Loan Document; (e) the insolvency, bankruptcy, or lack of corporate
or partnership power of any other obligor at any time liable for any Guaranteed
Debt, whether now existing or occurring in the future; (f) any renewal,
extension, or rearrangement of any Guaranteed Debt or any adjustment,
indulgence, forbearance, or compromise that may be granted or given by Agent or
any Lender to any other obligor on the Obligation; (g) any neglect, delay,
omission, failure, or refusal of Agent or any Lender to take or prosecute any
action in connection with the Guaranteed Debt; (h) any failure of Agent or any
Lender to notify any Guarantor of any renewal, extension, or assignment of any
Guaranteed Debt, or
d-0184923.07 2
<PAGE>
the release of any security or of any other action taken or refrained from being
taken by Agent or any Lender against Borrower or any new agreement between
Agent, any Lender, and Borrower, it being understood that neither Agent nor any
Lender is required to give any Guarantor any notice of any kind under any
circumstances whatsoever with respect to or in connection with any Guaranteed
Debt, OTHER THAN any notice required to be given to Guarantors by Law or
elsewhere in this guaranty; (i) the unenforceability of any Guaranteed Debt
against any other obligor because it exceeds the amount permitted by Law, the
act of creating it is ULTRA VIRES, the officers creating it exceeded their
authority or violated their fiduciary duties in connection with it, or
otherwise; or (j) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Law or for any other reason Agent or
any Lender is required to refund that payment or make payment to someone else
(and in each such instance this guaranty will be reinstated in an amount equal
to that payment).
9. WAIVERS. Each Guarantor waives (a) all defenses to the enforcement
of this guaranty (and Rights which may be asserted as defenses to the
enforcement of this guaranty), other than payment, including, but not limited
to, (i) any Right to revoke this Guaranty with respect to future indebtedness;
(ii) any Right to require Agent or Lenders to do any of the following before any
Guarantor is obligated to pay the Guaranteed Debt or before Agent or Lenders may
proceed against that Guarantor: (A) sue or exhaust remedies against Borrower and
other guarantors or obligors, (B) sue on an accrued right of action in respect
of any of the Guaranteed Debt or bring any other action, exercise any other
right, or exhaust all other remedies, or (C) enforce rights against Borrower's
assets or the collateral pledged by Borrower to secure the Guaranteed Debt;
(iii) any right relating to the timing, manner, or conduct of Agent's or
Lenders' enforcement of rights against Borrower's assets or the collateral
pledged by Borrower to secure the Guaranteed Debt; (iv) if Guarantors and
Borrower (or a third party) have each pledged assets to secure the Guaranteed
Debt, any right to require Agent and Lenders to proceed first against the other
collateral before proceeding against collateral pledged by any Guarantor;
(v) notice that this Guaranty has been accepted by Agent and Lenders and notice
of any indebtedness to which this Guaranty may apply; (vi) any right of any
Guarantor to receive notice from Agent or Lenders of changes which affect the
creditworthiness of Borrower, and (vii) except as required hereby, presentation,
presentment, demand for payment, protest, notice of protest, notice of dishonor
or nonpayment of any indebtedness, notice of intent to accelerate, notice of
acceleration, notice of any suit or other action by Lender against Borrower, any
Guarantor or any other Person and any notice to any party liable for the
obligation which is the subject of the suit or action, and (b) each of the
foregoing rights or defenses regardless whether they arise under (i) Section
34.01 ET SEQ. of the Texas Business and Commerce Code, as amended,
(ii) Section 17.001 of the Texas Civil Practice and Remedies Code, as amended,
(iii) Rule 31 of the Texas Rules of Civil Procedure, as amended, or (iv) common
law, in equity, under contract, by statute, or otherwise.
10. CREDIT AGREEMENT PROVISIONS. Each Guarantor acknowledges that certain
(a) representations and warranties in the Credit Agreement are applicable to it
and confirms that each such representation and warranty is true and correct, (b)
covenants, agreements, and other provisions in the Credit Agreement (INCLUDING,
WITHOUT LIMITATION, INDEMNIFICATION AND RELATED PROVISIONS IN SECTION 8.12 OF
THE CREDIT AGREEMENT) are applicable to it or are imposed upon it and agrees to
promptly and properly comply with or be bound by each of them, AND (C) IT
IRREVOCABLY CONSENTS AND APPROVES TO THE VENUE, SERVICE OF PROCESS, AND WAIVER
OF JURY TRIAL PROVISIONS OF SECTION 14.11 OF THE CREDIT AGREEMENT.
11. RELIANCE AND DUTY TO REMAIN INFORMED. Each Guarantor confirms that it
has executed and delivered this guaranty after reviewing the terms and
conditions of the Loan Documents and such other information as it has deemed
appropriate in order to make its own credit analysis and decision to execute
and deliver this guaranty. Each Guarantor confirms that it has made its own
independent investigation with respect to Borrower's creditworthiness and is not
executing and delivering this guaranty in reliance on any representation or
warranty by Agent or any Lender as to that creditworthiness. Each Guarantor
expressly assumes all responsibilities to remain informed of the financial
condition of Borrower and any circumstances affecting Borrower's ability to
perform under the Loan Documents to which it is a party or any collateral
securing any Guaranteed Debt.
d-0184923.07 3
<PAGE>
12. NO REDUCTION. The Guaranteed Debt may not be reduced, discharged, or
released because or by reason of any existing or future offset, claim, or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other obligor against Agent or Lenders or against
payment of the Guaranteed Debt, whether that offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Those claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, bankruptcy, incapacity/infancy, statute of limitations, lender liability,
accord and satisfaction, usury, forged signatures, mistake, impossibility,
frustration of purpose, and unconscionability.
13. LOAN DOCUMENT. This guaranty is a Loan Document and is subject to the
applicable provisions of SECTIONS 1 and 14 of the Credit Agreement, all of which
are incorporated into this guaranty by reference the same as if set forth in
this guaranty verbatim.
14. COMMUNICATIONS. For purposes of SECTION 14.2 of the Credit Agreement,
each Guarantor's address and telecopy number are the same as Borrower's.
15. AMENDMENTS, ETC. No amendment, waiver, or discharge to or under this
guaranty is valid unless it is in writing and is signed by the party against
whom it is sought to be enforced and is otherwise in conformity with the
requirements of SECTION 14.8 of the Credit Agreement.
16. ENTIRETY. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS TO WHICH ANY
GUARANTOR IS A PARTY REPRESENT THE FINAL AGREEMENT BETWEEN THAT GUARANTOR,
AGENT, AND LENDERS WITH RESPECT TO THE SUBJECT MATTER OF THIS GUARANTY AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
17. AGENT AND LENDERS. Agent is the agent for each Lender under the
Credit Agreement. All Rights granted to Agent under or in connection with this
guaranty are for each Lender's ratable benefit. Agent may, without the joinder
of any Lender, exercise any Rights in Agent's or Lenders' favor under or in
connection with this guaranty. Agent's and each Lender's Rights and obligations
VIS-A-VIS each other may be subject to one or more separate agreements between
those parties. However, no Guarantor is required to inquire about any such
agreement or is subject to any terms of it. Therefore, neither any Guarantor
nor its successors or assigns is entitled to any benefits or provisions of any
such separate agreement or is entitled to rely upon or raise as a defense any
party's failure or refusal to comply with the provisions of it.
18. PARTIES. This guaranty benefits Agent, Lenders, and their respective
successors and assigns and binds each Guarantor and its successors and assigns.
Upon appointment of any successor Agent under the Credit Agreement, all of the
Rights of Agent under this guaranty automatically vests in that new Agent as
successor Agent on behalf of Lenders without any further act, deed, conveyance,
or other formality OTHER THAN that appointment. The Rights of Agent and Lenders
under this guaranty may be transferred with any assignment of the Guaranteed
Debt. The Credit Agreement contains provisions governing assignments of the
Guaranteed Debt and of Rights and obligations under this guaranty.
EXECUTED as of the date first stated above.
MAGNETEK CENTURY ELECTRIC, INC., MAGNETEK
ELECTRIC, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC., and
MAGNETEK OHIO TRANSFORMER, INC.,
AS GUARANTORS
d-0184923.07 4
<PAGE>
By ____________________________________________
John Colling, Jr. Vice President and
Treasurer of all of the foregoing companies
Agent executes this guaranty in acknowledgement of PARAGRAPH 16 above.
NATIONSBANK OF TEXAS, N.A., AS AGENT
By ____________________________________________
Andrea P. Collias, Vice President
d-0184923.07 5
<PAGE>
EXHIBIT C
SECURITY AGREEMENT
THIS AGREEMENT is executed as of March 31, 1995, by MAGNETEK, INC., a
Delaware corporation ("BORROWER/DEBTOR"), and the other undersigned debtors
("SUBSIDIARY/DEBTORS"), for the benefit of NATIONSBANK OF TEXAS, N.A., a
national banking association (in its capacity as Agent for the Lenders now or in
the future party to the Credit Agreement described below "SECURED PARTY").
Borrower/Debtor, Secured Party, and Lenders have executed the Credit
Agreement (as renewed, extended, amended, or restated, the "CREDIT AGREEMENT")
dated as of March 31, 1995, and certain other Loan Documents. Borrower/Debtor
owns all of the issued and outstanding capital stock of each Subsidiary/Debtor,
except as disclosed on SCHEDULE 7.3 to the Credit Agreement. The execution and
delivery of this agreement are requirements to Secured Party's and Lenders'
execution of the Credit Agreement and other Loan Documents, are integral to the
transactions contemplated by the Loan Documents, and are conditions precedent to
Lenders' obligations to extend credit under the Credit Agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower/Debtor and
Subsidiary/Debtors jointly and severally agree with Secured Party for the
benefit of Lenders as follows:
1. DEFINITIONS. Terms defined in the Credit Agreement or the UCC have
the same meanings when used -- unless otherwise defined -- in this agreement.
If the definition given a term in the Credit Agreement conflicts with the
definition given that term in the UCC, then the Credit Agreement definition
controls to the extent allowed by Law. If the definition given a term in
CHAPTER 9 of the UCC conflicts with the definition given that term in any other
chapter of the UCC, then the CHAPTER 9 definition controls. Furthermore, as
used in this agreement:
ACCOUNTS means, for each Debtor, all of its present and future accounts,
instruments, receivables, accounts receivable, chattel paper, documents, and
book debts arising from its sale or lease of goods or rendition of services,
including, without limitation, all present and future (a) amounts due to it from
a factor, (b) returned, reclaimed, refused, or repossessed goods, and (c) books
and records pertaining to, and security and guaranties for, any of the
foregoing.
BORROWER/DEBTOR is defined in the preamble to this agreement and includes,
without limitation, Borrower/Debtor, Borrower/Debtor as a debtor-in-possession,
and any receiver, trustee, liquidator, conservator, custodian, or similar party
appointed for Borrower or for all or substantially all of Borrower/Debtor's
assets under any Debtor Law.
COLLATERAL is defined in PARAGRAPH 4 below.
CREDIT AGREEMENT is defined in the recitals to this agreement.
DEBTORS means Borrower/Debtor and Subsidiary/Debtors.
FINANCING STATEMENT means a financing statement executed by each Debtor and
Secured Party for filing in the jurisdictions listed in SCHEDULE 6 to the Credit
Agreement, and in substantially the form of ANNEX 2 to this agreement.
INVENTORY means, for each Debtor, all of its present and future inventory,
including, without limitation, all present and future (a) materials, goods and
work-in-process, finished goods, and other tangible property held for sale or
lease or being processed for sale or lease in its present or future business,
whether to be furnished under contracts or used or consumed in that Debtor's
business, (b) documents (including documents of title) covering any of the
foregoing, and (c) such property the sale or other disposition of which has
given rise to accounts and which has not been returned to or repossessed or
stopped in transit by that Debtor.
d-0184190.09 EXHIBIT C
<PAGE>
OBLIGOR means any Person obligated with respect to any of the Collateral,
whether as a party to a contract, an account debtor, issuer of any securities,
or otherwise.
OBLIGATION means the "OBLIGATION," as defined in the Credit Agreement,
including, without limitation, all present and future indebtedness, liabilities,
and obligations of each Debtor arising under this agreement, and all present and
future costs, attorneys' fees, and expenses reasonably incurred by Secured Party
or any Lender to enforce any Debtor's or any other obligor's payment of any of
the Obligation, including, without limitation (to the extent lawful), all
present and future amounts that would become due but for the operation of
SECTIONS 502 or 506 or any other provision of TITLE 11 of the UNITED STATES CODE
and all present and future accrued and unpaid interest (including, without
limitation, all post-petition interest if any Debtor voluntarily or
involuntarily becomes subject to any Debtor Law).
PLEDGED SECURITIES means, whether now owned or acquired in the future by
any Debtor, (a) all present and future shares of capital stock issued by any of
the following subsidiaries and (b) 65% of all present and future shares of
capital stock issued by MagneTek Europe, N.V., and in either case, including,
without limitation, all present and future increases, profits, combinations,
reclassifications, dividends, and substitutes and replacements for any of the
foregoing (SO LONG AS the Pledged Securities do not include more than the number
of voting shares required to be pledged under the Credit Agreement):
MagneTek Century Electric, Inc., MagneTek National Electric Coil,
Inc., MagneTek Ohio Transformer, Inc., MagneTek Electric, Inc.,
MagneTek Controls, Inc., MagneTek Tempe, Inc., MagneTek Credit
Corporation, MagneTek Leasing Corporation and MagneTek Airport
Systems, Inc.,
SECURED PARTY is defined in the preamble to this agreement and includes its
successor appointed under SECTION 13 of the Credit Agreement and acting as AGENT
for Lenders under the Loan Documents.
SECURITY INTEREST means the security interests granted and the transfers,
pledges, and assignments made under PARAGRAPH 2 below, which is a "LENDER LIEN,"
as defined in the Credit Agreement.
SUBSIDIARY/DEBTORS is defined in the preamble to this agreement.
UCC means the UNIFORM COMMERCIAL CODE as adopted in Texas or any other
applicable jurisdiction.
2. SECURITY INTEREST. To secure the prompt, unconditional, and complete
payment and performance of the Obligation when due, each Debtor jointly and
severally grants to Secured Party a security interest in the Collateral
identified for it in PARAGRAPH 4 below and jointly and severally pledges and
collaterally transfers and assigns that Collateral to Secured Party, all upon
and subject to the terms and conditions of this agreement. If the grant,
pledge, or collateral transfer or assignment of any specific item of the
Collateral is expressly prohibited by any contract, then the Security Interest
nonetheless remains effective to the extent allowed by UCC Section 9.318 or
other applicable Law but is otherwise limited by that prohibition.
3. NO ASSUMPTION OR MODIFICATION. The Security Interest is given as
security only in order to secure the prompt, unconditional, and complete payment
and performance of the Obligation when due. Neither Secured Party nor any
Lender assumes or may become liable for any Debtors' liabilities, duties, or
obligations under or in connection with the Collateral. Neither Secured Party's
acceptance of this agreement nor its taking any action in carrying out this
agreement, constitutes Secured Party's approval of the Collateral or Secured
Party's assumption of any obligation under or in connection with the Collateral.
This agreement does not affect or modify any Debtors' obligations with respect
to any Collateral.
4. COLLATERAL. The term "COLLATERAL" means the following items and types
of property -- wherever located and now or in the future acquired or existing:
d-0184190.09 2 Exhibit C
<PAGE>
- For each Debtor, all of its Accounts, Inventory, and Pledged
Securities; and
- All cash and noncash proceeds of any other Collateral, including,
without limitation, all cash, accounts, general intangibles,
documents, instruments, chattel paper, goods, and any other property
received upon the sale or disposition of any other Collateral and all
insurance proceeds of any kind paid at any time in connection with any
other Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding any contrary provision, each
Debtor agrees that, if -- but for the application of this paragraph -- any of
the Obligation or the Security Interest would constitute a preferential transfer
under 11 U.S.C. SECTION 547, a fraudulent conveyance under 11 U.S.C. SECTION
548, or a fraudulent conveyance or transfer under any state fraudulent
conveyance, fraudulent transfer, or similar Law in effect from time to time
(each a "FRAUDULENT CONVEYANCE"), then the Obligation and Security Interest
remains enforceable to the maximum extent possible without causing any of the
Obligation or the Security Interest to be a fraudulent conveyance, and this
agreement is automatically amended to carry out the intent of this paragraph.
6. REPRESENTATIONS AND WARRANTIES. Debtors jointly and severally
represent and warrant to Secured Party on behalf of Lenders that:
(a) CREDIT AGREEMENT. Each Debtor acknowledges that certain (a)
representations and warranties in the Credit Agreement are applicable to it or
its assets or operations and confirms that each such representation and warranty
is true and correct, (b) covenants, agreements, and other provisions in the
Credit Agreement (INCLUDING, WITHOUT LIMITATION, INDEMNIFICATION AND RELATED
PROVISIONS IN SECTION 8.12 OF THE CREDIT AGREEMENT) are applicable to it or are
imposed upon it and agrees to promptly and properly comply with or be bound by
each of them, AND (C) IT IRREVOCABLY CONSENTS AND APPROVES TO THE VENUE, SERVICE
OF PROCESS, AND WAIVER OF JURY TRIAL PROVISIONS OF SECTION 14.11 OF THE CREDIT
AGREEMENT.
(b) BORROWING BASE. Any item of Collateral submitted or represented
to Secured Party as being eligible under the Credit Agreement to be included in
the Borrowing Base fully meets the requirements for eligibility provided in the
Credit Agreement.
(c) BINDING OBLIGATION. This agreement creates a legal, valid, and
binding Lender Lien in and to the Collateral (subject to delivery to Secured
Party of the stock certificates for the Pledged Securities) in favor of Secured
Party and enforceable against the Debtor owning that Collateral. For Collateral
in which the Security Interest may be perfected by the filing of Financing
Statements, once those Financing Statements have been property filed in the
jurisdictions described on SCHEDULE 6 to the Credit Agreement, the Security
Interest in that Collateral will be fully perfected. For the Pledged
Securities, the taking by Secured Party of physical possession in Texas of the
stock certificates representing the Pledged Securities will perfect the Security
Interest in that Collateral. Once perfected, the Security Interest will
constitute a first-priority Lender Lien on the Collateral, subject only to
Permitted Liens. The creation of the Security Interest does not require the
consent of any Person that has not been obtained.
(d) LOCATIONS. The attached ANNEX 1 accurately describes (i) the
location of each Debtor's principal place of business and chief executive
office, (ii) if different from CLAUSE (I), the one or more locations of its
books and records concerning its Accounts, (iii) the locations where any of its
Inventory (EXCEPT when temporarily in the hands of a third-party contractor for
processing and until sold in the ordinary course of business) is currently and
will -- SUBJECT TO PARAGRAPH 7(B) below -- in the future be maintained. EXCEPT
as stated in CLAUSE (III) above, each Debtor's Inventory is currently and will
be in its possession.
(e) ACCOUNTS. Each Debtor's Accounts (i) arise from its sales or
rendition of services, (ii) are due to that Debtor, and (iii) are not, if
represented to be eligible for inclusion in the Borrowing Base, subject to any
material setoff, counterclaim, defense, allowance, adjustment (OTHER THAN
discounts for prompt payment shown on the invoice), or material dispute,
objection, or complaint by any Obligor.
d-0184190.09 3 Exhibit C
<PAGE>
(f) SECURITIES. All Pledged Securities are duly authorized, validly
issued, fully paid, and non-assessable, and the transfer of them is not subject
to any restrictions OTHER THAN restrictions imposed by applicable Laws. The
Pledged Securities are approximately the maximum number of shares of each
Subsidiary that may be pledged without creating a material Tax obligation for
the Companies that would not otherwise exist. Copies of the certificates
evidencing the Pledged Securities of MagneTek Europe are annexed to this
agreement as ANNEX 4 (however, the failure of those copies to be accurate or
complete does not affect or impair the Security Interest in them).
(g) ADDITIONAL COLLATERAL. The foregoing representations and
warranties will be true and correct in all respects with respect to any
additional Collateral or additional specific descriptions of certain Collateral
delivered to Secured Party in the future by any Debtor.
The failure of any of these representations or warranties to be accurate and
complete does not impair the Security Interest in any Collateral.
7. COVENANTS. While any Lender is committed to lend or extend credit
under the Credit Agreement and until the Obligation are fully paid and
performed, each Debtor jointly and severally covenants and agrees with Secured
Party on behalf of Lenders that, without first obtaining Secured Party's written
notice of Determining Lenders' consent to the contrary:
(a) CREDIT AGREEMENT. Each Debtor shall promptly and fully comply
with and perform all covenants and agreements in the Credit Agreement that are
applicable to it or its assets or operations, each of which is ratified and
confirmed.
(b) CERTAIN RELOCATIONS AND CHANGES. Each Debtor shall give Secured
Party 30-days-written notice before any proposed (i) relocation of its principal
place of business or chief executive office, (ii) change of its name, (iii)
relocation of the place where its books and records concerning its Accounts are
kept, and (iv) relocation of any Collateral (OTHER THAN delivery of Inventory in
the ordinary course of business to third-party contractors for processing and
sales of Inventory in the ordinary course of business or as permitted by the
Credit Agreement) to a location not described on the attached ANNEX 1.
(c) ESTOPPEL AND OTHER AGREEMENTS AND MATTERS. Each Debtor shall:
(i) Within 30 days after the date of this agreement and at all
times after that time -- with respect to any of its Inventory having a
value of at least $1,500,000 that is from time to time delivered to any
third-party contractor for processing in the ordinary course of business --
deliver to Secured Party a bailee, estoppel, and subordination agreement
providing that such third-party contractor holds that Inventory as Secured
Party's bailee, subordinates to the Security Interest all right, title, and
interest it may have in and to that Inventory, and covenants to keep that
Inventory segregated and clearly marked as being owned by that Debtor,
which agreement must otherwise be in form and substance reasonably
acceptable to Secured Party and its special counsel; and
(ii) EITHER (unless waived by Secured Party in its sole judgment
without requiring approval of any other Lender) (A) cause the landlord or
lessor for each location where any of its Inventory (OTHER THAN Inventory
with a fair market value not to exceed $1,500,000) is maintained to execute
and deliver to Secured Party an estoppel and subordination agreement in
substantially the form of the attached ANNEX 3 or such other form as may be
reasonably acceptable to Secured Party and its special counsel, OR (B)
deliver to Secured Party a legal opinion or other evidence (in each case
that is reasonably satisfactory to Secured Party and it special counsel)
that neither the applicable lease nor the Laws of the jurisdiction in which
that location is situated provide for contractual, common Law, or statutory
landlord's Liens that is senior to the Security Interest.
d-0184190.09 4 EXHIBIT C
<PAGE>
(d) OTHER NOTICES AND ACTIONS. Each Debtor shall promptly notify
Secured Party of (i) any change in any material fact or circumstance represented
or warranted by any Debtor with respect to any of the Collateral, and (ii) any
claim, action, or proceeding challenging the Security Interest or affecting
title to all or any material portion of the Collateral or the Security Interest
(and, at Secured Party's request, that Debtor shall appear in and defend any
such action or proceeding at that Debtor's expense). In case of any default or
event of default by any other party under or in connection with any material
portion (individually or collectively) of the Collateral, Debtor shall
immediately use reasonable efforts to remedy the same or immediately demand that
the same be remedied),
(e) RECORD OF COLLATERAL. Each Debtor shall maintain at its chief
executive office a current record of where all of its Collateral is located and
permit Secured Party or its representatives to inspect and make copies from
those records pursuant to the Credit Agreement and furnish to Secured Party upon
request, from time to time, such documents, lists, descriptions, certificates,
and other information necessary or helpful to keep Secured Party informed with
respect to the identity, location, status, condition, terms of, parties to, and
value of the Collateral.
(f) COLLATERAL IN TRUST. While a Default or Potential Default
exists, each Debtor shall upon request of Secured Party (unless prevented by
operation of Law from making that request, in which event each Debtor shall) (i)
hold in trust (and not commingle with its other assets) for Secured Party all of
its Collateral that is chattel paper, instruments, or documents of title at any
time received by it, (ii) promptly deliver that Collateral to Secured Party
unless Secured Party at its option gives Debtor written permission to retain any
of it, and (iii) cause each chattel paper, instrument, or document of title so
retained to be marked to state that it is assigned to Secured Party and each
instrument to be endorsed to the order of Secured Party (but failure to be so
marked or endorsed may not impair the Security Interest in any such Collateral).
(g) PERFORM OBLIGATION. Each Debtor shall perform all of its
material obligations under or in connection with all of its Collateral in
accordance with customary business practices.
(h) IMPAIRMENT OF COLLATERAL. No Debtor may do or permit any act
that is reasonably likely to adversely impair the value or usefulness any
material portion of any Collateral.
8. REMEDIES UPON DEFAULT. While a Default exists, Secured Party is,
subject to Credit Agreement, entitled to exercise any one or more of the
following Rights.
(a) RIGHTS. Secured Party may exercise any and all Rights available
to a secured party under the UCC, in addition to any and all other Rights
afforded by this agreement and the other Loan Documents, at law, in equity, or
otherwise, including, without limitation (i) requiring Debtors to assemble
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to the applicable Debtor and
Secured Party, (ii) applying by appropriate judicial proceedings for appointment
of a receiver for Collateral, (iii) applying to the Obligation any cash held by
Secured Party under this agreement, (iv) reducing any claim to judgment, (v)
exercising the Rights of offset or banker's Lien against the interest of each
Debtor in and to every account and other property of each Debtor in Secured
Party's possession to the extent of the full amount of the Obligation, (vi)
foreclosing the Security Interest and any other Liens Secured Party may have or
otherwise realize upon any and all of the Rights Secured Party may have in and
to Collateral, and (vii) bringing suit or other proceedings before any Tribunal
either for specific performance of any covenant or condition contained in any of
the Loan Documents or in aid of the exercise of any Right granted to Secured
Party in any Loan Document.
(b) NOTICE. If any Collateral threatens to decline speedily in value
or is of the type customarily sold on a recognized market, Secured Party may
sell or otherwise dispose of that Collateral without notification,
advertisement, or other notice of any kind. Otherwise, reasonable notice of the
time and place of any public sale of the Collateral -- or reasonable
notification of the time after which any private sale or other intended
disposition of the Collateral is to be made -- shall be sent to Debtor and to
any other Person entitled to notice under
d-0184190.09 5 EXHIBIT C
<PAGE>
the UCC. Notice sent or given not less than ten calendar days prior to the
taking of the action to which the notice relates is reasonable notice. It is
not necessary that the Collateral be at the location of the sale.
(c) SALES OF SECURITIES. In connection with the sale of any
Collateral that is securities, Secured Party is authorized, but not obligated,
to limit prospective purchasers to the extent deemed necessary or desirable by
Secured Party to render that sale exempt from the registration and similar
requirements under applicable Laws, and no sale so made in good faith by Secured
Party may be deemed not to be "COMMERCIALLY REASONABLE" because so made.
(d) OTHER SALES. Secured Party's sale of less than all Collateral
does not exhaust Secured Party's Rights under this agreement and Secured Party
is specifically empowered to make successive sales until all Collateral is sold.
If the proceeds of a sale of less than all Collateral is less than the
Obligation, then this agreement and the Security Interest remain in full force
and effect as to the unsold portion of the Collateral just as though no sale had
been made. In the event any sale under this agreement is not completed or is,
in Secured Party's opinion, defective, that sale does not exhaust Secured
Party's Rights under this agreement, and Secured Party is entitled to cause a
subsequent sale or sales to be made. All statements of fact or other recitals
made in any bill of sale or assignment or other instrument evidencing any
foreclosure sale under this agreement -- whether about nonpayment of the
Obligation, the occurrence of any Default, Secured Party's having declared all
of the Obligation to be due and payable, notice of time, place, and terms of
sale and the properties to be sold having been duly given, or any other act or
thing having been duly done by Secured Party -- shall be taken as PRIMA FACIE
evidence of the truth of the facts so stated and recited. Secured Party may
appoint or delegate any one or more Persons as agent to perform any act or acts
necessary or incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but such acts must be done in the name and
on behalf of Secured Party.
(e) OBLIGORS. While a Default exists, Secured Party may notify or
require each Obligor to make payment directly to Secured Party, and Secured
Party may take control of the proceeds paid to Secured Party. Until Secured
Party elects to exercise these Rights, each Debtor is authorized to collect and
enforce the Collateral and to retain and expend all payments made on Collateral.
While Secured Party is entitled to and elects to exercise these Rights, Secured
Party has the Right in its own name or in the name of the applicable Debtor to
(i) compromise or extend time of payment with respect to Collateral for such
amounts and upon such terms as Secured Party may reasonably determine, (ii)
demand, collect, receive, receipt for, sue for, compound, and give acquittance
for any and all amounts due or to become due with respect to Collateral, (iii)
take control of cash and other proceeds of any Collateral, (iv) endorse the
applicable Debtor's name on any notes, acceptances, checks, drafts, money
orders, or other evidences of payment on Collateral that may come into Secured
Party's possession, (v) sign the applicable Debtor's name on any invoice or bill
of lading relating to any Collateral, on any drafts against Obligors or other
Persons making payment with respect to Collateral, on assignments and
verifications of accounts or other Collateral, and on notices to Obligors making
payment with respect to Collateral, (vi) send requests for verification of
obligations to any Obligor, and (vii) do all other acts and things reasonably
necessary to carry out the intent of this agreement. If any Obligor fails to
make payment on any Collateral when due while a Default exists, Secured Party is
authorized, in its sole discretion, either in its own name or in the applicable
Debtor's name, to take such action as Secured Party reasonably shall deem
appropriate for the collection of any amounts owed with respect to Collateral or
upon which a delinquency exists. However, Secured Party is NEITHER (x) liable
for its failure to collect, or for its failure to exercise diligence in the
collection of, any amounts owed with respect to Collateral (EXCEPT for its own
fraud, gross negligence, willful misconduct, or violation of any Law), NOR (y)
under any duty whatever to anyone except the applicable Debtor and Lenders to
account for funds that it shall actually receive under this agreement. A
receipt given by Secured Party to any Obligor is a full and complete release,
discharge, and acquittance to that Obligor, to the extent of any amount so paid
to Secured Party. While a Default exists, Secured Party may apply or set off
amounts paid and the deposits against any liability of the applicable Debtor to
Secured Party. Regarding the existence of any Default for purposes of this
agreement, each Debtor agrees that the Obligors on any Collateral may rely upon
written certification from Secured Party that a Default exists.
(f) POWER-OF-ATTORNEY. Secured Party is deemed to be irrevocably
appointed as each Debtor's agent and attorney-in-fact with all Right to enforce
all of that Debtor's Rights under or in connection with the
d-0184190.09 6 EXHIBIT C
<PAGE>
Collateral effective and operable at all times while a Default exists. All
reasonable costs, expenses and liabilities incurred and all payments made by
Secured Party as that Debtor's agent and attorney-in-fact (including, without
limitation, reasonable attorney's fees and expenses) are considered a loan by
Secured Party to that Debtor that is repayable on demand, accrues interest at
the Default Rate until paid, and is part of the Obligation.
(g) APPLICATION OF PROCEEDS. While a Default exists, Secured Party
shall apply the proceeds of any sale or other disposition of Collateral in the
following order: (i) Payment of all its reasonable expenses incurred in
retaking, holding, and preparing any Collateral for disposition, in arranging
for such disposition, and in actually disposing of the same (all of which are
part of the Obligation); (ii) repayment of amounts reasonably expended by
Secured Party under PARAGRAPH 9 below; (iii) payment of the balance of the
Obligation in the order and manner specified in the Credit Agreement; and (iv)
delivery EITHER (A) to Borrower/Debtor for the account of all Debtors OR (B) as
a court of competent jurisdiction may direct.
9. OTHER RIGHTS.
(a) PERFORMANCE. If any Debtor fails to preserve the priority
(subject to Permitted Liens) of the Security Interest in any Collateral or
otherwise fails to perform any of its obligations under any Loan Document with
respect to any Collateral, then Secured Party may, at its option, but without
being required to do so, after five Business Days or earlier, if Secured Party
in its reasonable judgment deems it necessary, prosecute or defend any suits in
relation to the Collateral or take any other action that such Debtor is required
- -- but has failed -- to take. Any amount that is reasonably expended or paid by
Secured Party in connection with the foregoing (including, without limitation,
court costs and reasonable attorneys' fees and expenses) bears interest at the
Default Rate from the date spent or incurred until repaid and is payable (with
that interest) by Debtors to Secured Party upon demand and is part of the
Obligation.
(b) COLLATERAL IN SECURED PARTY'S POSSESSION. If, while a Default
exists, any Collateral comes into Secured Party's possession, Secured Party may
use that Collateral for the purpose of preserving it or its value pursuant to
the order of a court of appropriate jurisdiction or in accordance with any other
Rights held by Secured Party in respect of that Collateral. Debtors jointly and
severally covenant to promptly reimburse and pay to Secured Party, at Secured
Party's request, the amount of all reasonable expenses, costs, Taxes, and other
charges incurred by Secured Party in connection with its custody and
preservation of that Collateral, all of which bear interest at the Default Rate
from the date spent or incurred until repaid and are (with that interest)
payable by Debtors to Secured Party upon demand and are part of the Obligation.
EXCEPT for Secured Party's own fraud, gross negligence, or willful misconduct
(i) the risk of accidental loss or damage to, or diminution in value of, any
Collateral is on Debtors, (ii) Secured Party has no liability for failure to
obtain or maintain insurance or to determine whether any insurance in effect is
adequate as to amount or risks insured, (iii) Secured Party has no duty to fix
or preserve Rights against any Obligors in respect of any Collateral and is
never liable for any failure to use diligence to collect any amount payable in
respect of any Collateral (OTHER THAN to account to Debtors and Lenders for what
Secured Party may actually collect or receive).
(c) RECORD OWNERSHIP OF SECURITIES. While a Default exists, Secured
Party may have any Collateral that is securities and that is in the possession
of Secured Party, or its nominee or nominees, registered in its name, or in the
name of its nominee or nominees, as pledgee.
(d) VOTING OF SECURITIES. As long as no Default exists, the
applicable Debtor may exercise all voting Rights pertaining to any Collateral
that is securities. While a Default exists, the Right to vote any Collateral
that is securities is vested exclusively in Secured Party. Accordingly, each
applicable Debtor irrevocably constitutes and appoints Secured Party as that
Debtor's proxy and attorney-in-fact -- effective only after notice to the
applicable Debtor while a Default exists but with full power of substitution --
to vote, and to act with respect to, any Collateral that is securities standing
in the name of that Debtor or with respect to which that Debtor is entitled to
vote and act. That proxy is coupled with an interest, is irrevocable, and
continues until the Obligation are fully paid and performed.
d-0184190.09 7 EXHIBIT C
<PAGE>
(e) CERTAIN PROCEEDS. The provisions of this CLAUSE (E) are
applicable only while a Default exists. Notwithstanding any contrary provision,
all dividends or distributions of property in respect of, and all proceeds of,
any Collateral that is securities -- whether those dividends, distributions, or
proceeds result from a subdivision, combination, or reclassification of the
outstanding capital stock of any issuer or as a result of any merger,
consolidation, acquisition, or other exchange of assets to which any issuer may
be a party, or otherwise -- are part of the Collateral, shall, if received by
any Debtor, be held in trust for Secured Party's benefit, and shall immediately
be delivered to Secured Party (accompanied by proper instruments of assignment
or stock or bond powers executed by the applicable Debtor in accordance with
Secured Party's instructions) to be held subject to the terms of this agreement.
Any cash proceeds of any Collateral that come into Secured Party's possession
(including, without limitation, insurance proceeds) may, at Secured Party's
option, be applied in whole or in part to the Obligation (to the extent then
due), be fully or partially released to or under the written instructions of
that applicable Debtor for any general or specific purpose, or be fully or
partially retained by Secured Party as additional Collateral. Any cash
Collateral in Secured Party's possession may be invested by Secured Party in
certificates of deposit issued by Secured Party, any Lender, or any other state
or national bank having combined capital and surplus greater than $100,000,000
or in securities issued or guaranteed by the United States of America or any of
its agencies. Secured Party is never obligated to make any investment and never
has any liability to any Debtor or any Lender for any loss that may result from
any investment or non-investment. All interest and other amounts earned from
any investment may be dealt with by Secured Party in the same manner as other
cash Collateral.
(f) INDEMNIFICATION. DEBTORS JOINTLY AND SEVERALLY ASSUME ALL
LIABILITY FOR ALL COLLATERAL, FOR THE SECURITY INTEREST, AND FOR ANY USE,
POSSESSION, MAINTENANCE, AND MANAGEMENT OF, ALL COLLATERAL (INCLUDING, WITHOUT
LIMITATION, ANY TAXES ARISING AS A RESULT OF, OR IN CONNECTION WITH, THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT) AND JOINTLY AND SEVERALLY AGREE TO
ASSUME LIABILITY FOR, AND TO INDEMNIFY AND HOLD SECURED PARTY, EACH LENDER, AND
THEIR RESPECTIVE REPRESENTATIVE (THE "INDEMNIFIED PARTIES") HARMLESS FROM AND
AGAINST, AND DEFEND EACH INDEMNIFIED PARTY AGAINST, ALL CLAIMS, CAUSES OF
ACTION, OR LIABILITY, FOR INJURIES TO OR DEATHS OF PERSONS AND DAMAGE TO
PROPERTY HOWSOEVER ARISING FROM OR INCIDENT TO SUCH USE, POSSESSION,
MAINTENANCE, AND MANAGEMENT (WHETHER SUCH PERSONS BE AGENTS OR EMPLOYEES OF
DEBTOR OR OF THIRD PARTIES, OR SUCH DAMAGE BE TO PROPERTY OF DEBTOR OR OF
OTHERS) AND ALL CLAIMS, COSTS, PENALTIES, LIABILITIES, AND EXPENSES, INCLUDING,
WITHOUT LIMITATION, COURT COSTS AND ATTORNEYS' FEES, HOWSOEVER ARISING OR
INCURRED BECAUSE OF, INCIDENT TO, OR WITH RESPECT TO COLLATERAL OR ANY USE,
POSSESSION, MAINTENANCE, OR MANAGEMENT OF IT. (THE "INDEMNIFIED LIABILITIES").
HOWEVER, NO INDEMNIFIED PARTY IS ENTITLED TO INDEMNITY UNDER THIS PARAGRAPH FOR
ITS OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD OR FOR ANY INDEMNIFIED
LIABILITY ARISING FROM ITS ACTIONS AFTER SECURED PARTY HAS FORECLOSED THE
SECURITY INTEREST OR ACCEPTED CONVEYANCE IN LIEU OF FORECLOSURE OR (EXCEPT FOR
THE PLEDGED SECURITIES) TAKEN POSSESSION OF ANY COLLATERAL. The provisions of
this paragraph survive the payment and performance of the Obligation and the
release of the Security Interest. The foregoing indemnity shall be subject to
the provisions of SECTION 8.12 of the Credit Agreement.
10. MISCELLANEOUS.
(a) TERM. This agreement terminates when no Lender has any
commitment to lend or extend credit under the Credit Agreement and the
Obligation are fully paid and performed. No Obligor on any Collateral is
obligated to inquire about the termination of this agreement and is fully
protected in making payments directly to Secured Party if SECTION 8(E) applies,
which payments Secured Party shall pay to Borrower/Debtor on behalf of Debtors
after termination of this agreement.
(b) NO RELEASE. Neither the Security Interest, any Debtor's
obligations, nor Secured Party's or any Lenders' Rights under this agreement are
released, diminished, impaired, or adversely affected by the occurrence of any
one or more of the following events: (i) The taking or accepting of any other
security or assurance for any Obligation; (ii) any release, surrender, exchange,
subordination, or loss of any security or assurance at any time existing in
connection with any Obligation; (iii) the modification of, amendment to, or
waiver of
d-0184180.09 8 EXHIBIT C
<PAGE>
compliance with any terms of any other Loan Document without the consent of
Debtors EXCEPT as required in that Loan Document; (iv) any present or future
insolvency, bankruptcy, or lack of corporate or trust power of any party at any
time liable for the payment of any Obligation; (v) EXCEPT as specifically
required by any other Loan Document, any renewal, extension, or rearrangement of
the payment of any Obligation (either with or without notice to or consent of
any Debtor) or any adjustment, indulgence, forbearance, or compromise that may
be granted or given by Secured Party or any Lender to any Debtor; (vi) any
neglect, delay, omission, failure, or refusal of Secured Party or any Lender to
take or prosecute any action in connection with any agreement, document,
guaranty, or instrument evidencing, securing, or assuring the payment of any
Obligation; (vii) any failure of Secured Party or any Lender to notify any
Debtor of any renewal, extension, or assignment of any Obligation, or the
release of any security under any other document or instrument, or of any other
action taken or refrained from being taken by Secured Party or any Lender
against any Debtor, or any new agreement between Secured Party, any Lender, and
any Debtor, it being understood that, except as expressly required by the Credit
Agreement, neither Secured Party nor any Lender is required to give any Debtor
any notice of any kind under any circumstances whatsoever with respect to or in
connection with the Obligation, including, without limitation, notice of
acceptance of this agreement or any Collateral ever delivered to or for the
account of Secured Party under this agreement; (viii) the illegality,
invalidity, or unenforceability of any Obligation against any third party
obligated with respect to it by reason of the fact that the Obligation, or the
interest paid or payable with respect to any of it, exceeds the amount permitted
by Law, the act of creating any of it is ULTRA VIRES, or the officers, partners,
or trustees creating any of it acted in excess of their authority, or for any
other reason; or (ix) if any payment by any party obligated with respect to any
Obligation is held to constitute a preference under applicable Laws or for any
other reason Secured Party or any Lender is required to refund any payment on
any Obligation or pay the amount of it to someone else.
(c) WAIVERS. To the maximum extent lawful, except to the extent
expressly otherwise provided in this agreement or in any other Loan Document,
Debtors jointly and severally waive (i) any Right to require Secured Party or
any Lender to proceed against any other Person, to exhaust Rights in Collateral,
or to pursue any other Right that Secured Party or any Lender may have; (ii)
with respect to the Obligation, presentment and demand for payment, protest,
notice of protest and nonpayment, notice of acceleration, and notice of intent
to accelerate; and (iii) all Rights of marshaling in respect of any Collateral.
(d) FINANCING STATEMENT. Secured Party may at any time file this
agreement (or a carbon, photographic, or other reproduction of this agreement)
as a financing statement, but the failure of Secured Party to do so does not
impair the validity or enforceability of this agreement.
(e) INFORMATION. Except as otherwise provided by Law, Secured Party's
charge for furnishing each statement of account or each list of Collateral is
$10.00.
(f) LOAN DOCUMENT. This agreement is a Loan Document and is subject
to the applicable provisions of SECTIONS 1 and 14 of the Credit Agreement, all
of which are incorporated in this agreement by reference the same as if set
forth in this agreement verbatim.
(g) COMMUNICATIONS. For purposes of SECTION 14.2 of the Credit
Agreement, each Debtor's address and telecopy number are the same as
Borrower/Debtor's.
(h) AMENDMENTS, ETC. No amendment, waiver, or discharge to or under
this agreement is valid unless it is in writing and is signed by the party
against whom it is sought to be enforced and is otherwise in conformity with the
requirements of SECTION 14.8 of the Credit Agreement.
(i) ENTIRETY. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH
ANY DEBTOR IS PARTY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
d-0184190.09 9 EXHIBIT C
<PAGE>
(j) SECURED PARTY AND LENDERS. Secured Party is the agent for each
Lender under the Credit Agreement. The Security Interest and all Rights granted
to Secured Party under or in connection with this agreement are for each
Lender's ratable benefit. Secured Party may, without the joinder of any Lender,
exercise any Rights in Secured Party's or Lenders' favor under or in connection
with this agreement, including, without limitation, conducting any foreclosure
sales and executing full or partial releases of, amendments or modifications to,
or consents or waivers under this agreement. Secured Party's and each Lender's
Rights and obligations VIS-A-VIS each other may be subject to one or more
separate agreements between those parties. However, no Debtor need inquire
about any such agreement or is subject to any terms of it. Therefore, neither
any Debtor nor its successors or assigns is entitled to any benefits or
provisions of any such separate agreement or is entitled to rely upon or raise
as a defense any party's failure or refusal to comply with the provisions of it.
(k) PARTIES. This agreement benefits Secured Party, Lenders, and
their respective successors and assigns and binds each Debtor and its successors
and assigns. Upon appointment of any successor AGENT under the Credit
Agreement, all of the Rights of Secured Party under this agreement automatically
vests in that new AGENT as successor Secured Party on behalf of Lenders without
any further act, deed, conveyance, or other formality OTHER THAN that
appointment. The Rights of Secured Party and Lenders under this agreement may
be transferred with any assignment of the Obligation. The Credit Agreement
contains provisions governing assignments of the Obligation and of Rights and
obligations under this agreement.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.
d-0184190.09 10 Exhibit C
<PAGE>
EXECUTED as of the date first stated above.
MAGNETEK, INC., AS BORROWER/DEBTOR
MAGNETEK CENTURY ELECTRIC, INC.,
MAGNETEK ELECTRIC, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.,
MAGNETEK OHIO TRANSFORMER, INC.,
AS SUBSIDIARY/DEBTORS
By --------------------------------------------
John Colling, Jr., Vice President and
Treasurer of all of the foregoing Companies
Secured Party executes this agreement in acknowledgement of PARAGRAPH 10(I)
above.
NATIONSBANK OF TEXAS, N.A., as Agent for Lenders
as SECURED PARTY
By ____________________________________________
Andrea P. Collias, Vice President
The undersigned agree that to the extent that any of the stock certificates
evidencing any of the capital stock that is included in the Collateral bear any
restrictive legend in respect of the transfer of those certificates, then, in
each case, the undersigned waive the requirements of those restrictive legends
in respect of the pledge of those shares of capital stock to Secured Party.
MAGNETEK CENTURY ELECTRIC, INC.,
MAGNETEK ELECTRIC, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.,
MAGNETEK OHIO TRANSFORMER, INC.,
MAGNETEK CONTROLS, INC.,
MAGNETEK TEMPE, INC.,
MAGNETEK CREDIT CORPORATION,
MAGNETEK EUROPE, N.V.,
MAGNETEK LEASING CORPORATION,
MAGNETEK AIRPORT SYSTEMS, INC.
AS SUBSIDIARY/DEBTORS
By ____________________________________________
John Colling, Jr., Vice President and
Treasurer of all of the foregoing Companies
d-0184190.09 11 EXHIBIT C
<PAGE>
ANNEX 1
LOCATIONS
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MagneTek, Inc. 26 Century 1881 Pine Street AL Mayor - City of Blytheville, City
Boulevard St. Louis, MO 63103 Madison (2) Hall Second & Walnut,
Nashville, TN Blytheville, AR 72315
37229-0159 ----------------------------
26 Century Boulevard AK
Nashville, TN 37229- Mississippi(1) Sergy Trusts, 202 North Avenue
0159 East, Cranford, NJ 07016
--------------------
Clay (1) Elca Enterprises, Inc., 210
Platte Valley Drive, Riverside,
---------------------------- MO 64150
CA
Alameda (3)
Steve Schlader, Centerpoint
-------------------- Properties, 650 E. Devon, Suite
153, Itasca, IL 60143
Los Angeles (3)
---------------------------- Goodrich Fairfield Assoc., 560
CO Sylvan Blvd., Englewood Cliffs,
Denver (2) NJ 07632
----------------------------
CT Clerk, Copiah County, 100
Fairfield (1) Caldwell, Hazelhurst, MS 39083
----------------------------
FL Five Star Investments, 2617
Dade (1) Grandview Ave, Nashville, TN
37211
</TABLE>
d-0184190.09 EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MagneTek, Inc. (cont.) FL Orange (2) Elizabeth Oman, Trammell Crow,
-------------------- The Ramparts of Brentwood, 155
Franklin Road, Suite 225,
Seminole (1) Brentwood, TN 07027
----------------------------
GA
Fulton/DeKalb (2) WNBC Realty, Inc., United Bank
-------------------- Building, 220 Market Ave. South,
Suite 1190, Canton, OH 64702
Cobb (1)
----------------------------
HI James Dempster, City of
Honolulu (1) McMinnville, 118 E. Main St.,
---------------------------- P.O. Box 332, McMinnville, TN
IL 37110-0332
Cook (4)
----------------------------
IN Clerk, Mendenhall
Newton (1)
---------------------
State Farm Insurance Co., One
Huntington (3) State Farm Plaza, Bloomington, IL
--------------------- 61701
Marion (1)
-----------------------------
LA M.T. Monson, SIBAG
Jefferson (1) Investments, 5335 Wisconsin
----------------------------- Ave, NW, Suite 490, Washington,
MD DC 20015
Anne Arundel (1)
-----------------------------
MA J.W. Mitchell Co., 2 Corporate
Middlesex (2) Park, Suite 108, Irvine, CA 92714
</TABLE>
d-0184190.09 2 EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MagneTek, Inc. (cont.) MI Hamburg Assoc, c/o Gerden State
Wayne (2) Land Group
--------------------
Jadow Realty Co., Carnegie Hall
Kalamazoo (1) Tower, 152 W. 57th St., New
---------------------------- York, NY 10019
MS
Copiah (1) T.R. Paul, 800 Martha St.,
-------------------- Munhall, PA 14120
Simpson (2)
---------------------------- Charlotte Lumber & Mfg., P.O.
MO Box 36094, Charlotte, NC 28236-
Jackson (1) 6094
----------------------------
NJ Phyllis Palis c/o The RREEF
Middlesex (1) Funds, Dallas Property
-------------------- Management Office, 930 One
Main Place, Dallas, TX 75202
Camden (1)
-------------------- Steve Schlader, Centerpoint
Properties, 650 E. Devon, Suite
Passaic (3) 153, Itasca, IL 60143
----------------------------
NC Terry Kriley, SI Johnson Star
Guilford (1) Bank, 425 Walnut Street,
----------------------------- Cincinnati, OH 45201
OH
Cuyahoga (1) Ed Diller, Taft Stettinius &
--------------------- Hollister, 1800 Star Bank Center,
425 Walnut Street, Cincinnati,
Franklin (1) OH 45202
</TABLE>
d-0184190.09 3 EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MagneTek, Inc. (cont.) PA Jasper Engines, P.O. Box 650,
Lansdowne (1) Jasper, IN 47546
--------------------
Charles Hawkins, 401 Union St.,
Philadelphia (1) Nashville, TN 37219
----------------------------
PA The Battery Shop, 3015 S. 163rd
Allegheny (2) St., New Berlin, WI 53151
----------------------------
TN
Rutherford (7) Luterbach Construction, 2880 S.
-------------------- 171st Street, New Berlin, WI
53151
Henderson (1)
-------------------- Maxin R. Dann Trust, 4813
Squires Dr., Titusville, FL 32796
Warren (1)
---------------------------- R.J. Casey Industrial Park,
TX Columbus & Preble Ave.,
Cameron (2) Pittsburgh, PA 15233
--------------------
Nancy R. Haines, c/o
Dallas (3) Westinghouse, 11 Stanwix Street
--------------------- Pittsburgh, PA 15222-1384
Harris (1) TAG Investment Co., 4143 N.
----------------------------- 12th Street, Suite 1100, Phoenix,
UT AZ 85014
Salt Lake (1)
- ------------------------------------------------------------------------------------------------------------------------------------
MagnaTek, Inc. (cont.) WA King (1)
-----------------------------
WI Waukesha (2)
</TABLE>
d-0184190.09 4 EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MagneTek Century 1881 Pine Street 1881 Pine Street AR Washington (1)
Electric, Inc. St. Louis, MO St. Louis, MO 63103 -----------------------------
63103 CA San Bernadino (1)
---------------------
26 Century Boulevard Los Angeles (3)
Nashville, TN 37229- ---------------------
0159 Ventura (1)
---------------------
Sacramento (1)
-----------------------------
FL Orange (1)
-----------------------------
GA Fulton/DeKalb (1)
---------------------
Bibb (1)
-----------------------------
IL Cook (1)
-----------------------------
IL Peoria (1)
-----------------------------
KY Boone (1)
---------------------
Fayette (1)
-----------------------------
MI Shiawassee (1)
-----------------------------
MN Hennepin (1)
-----------------------------
MO Jackson (1)
-----------------------------
NJ Fort Wayne (city) (1)
- ------------------------------------------------------------------------------------------------------------------------------------
MagneTek Century Electric, Inc. NC
(cont.) Mecklenburg (1)
---------------------
Lee (1)
-----------------------------
OH Huron/Sandusky (1)
---------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
d-0184190.09 5 EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Licking (1)
-----------------------------
OR Multinomah (1)
-----------------------------
PA Mercer (1)
---------------------
Allegheny (1)
-----------------------------
TN Henderson (1)
---------------------
Warren (1)
---------------------
Davidson (2)
---------------------
Lauderdale (1)
-----------------------------
TX Tarrant (1)
-----------------------------
TX Harris (1)
---------------------
Smith (1)
-----------------------------
VA Campbell (1)
-----------------------------
IN Tippecanoe (1)
- ------------------------------------------------------------------------------------------------------------------------------------
MagneTek Electric, Inc. 400 S. Prairie 1881 Pine Street WI
Avenue St. Louis, MO 63103
Waukesha, Waukesha (1)
Wisconsin 53186 26 Century Boulevard
Nashville, TN 37229-
0159
</TABLE>
d-0184190.09 6 EXHIBIT C
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Location(s) of Inventory
Principal Place of Location of Books ---------------------------- Owner/Manager of Premises
Debtor Business and Chief and Records County Where Inventory Located
Executive Office Concerning Accounts State (Number of Sites)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
MagneTek National 800 King Avenue 1881 Pine Street AZ
Electric Coil, Inc. Columbus, Ohio St. Louis, MO 63103 Tucson (1)
43212
26 Century Boulevard -----------------------------
Nashville, TN 37229- CA Los Angeles (1)
0159 -----------------------------
FL Orange (1)
-----------------------------
IL Will (1)
-----------------------------
LA Orleans (1)
-----------------------------
NJ Essex (1)
-----------------------------
OH Summit (1)
-----------------------------
PA Allegheny (2)
-----------------------------
TN Blount (1)
---------------------
Davidson (1)
-----------------------------
TX Cameron (3)
-----------------------------
TX Harris
-----------------------------
WA Spokane (1)
- ------------------------------------------------------------------------------------------------------------------------------------
MagneTek Ohio 1776 Constitution 1881 Pine Street CA Los Angeles (1)
Transformer, Inc. Ave. St. Louis, MO 63103 -----------------------------
P.O. Box 191 FL Manatee (1)
Louisville, Ohio 26 Century Boulevard -----------------------------
44641 Nashville, TN 37229- NJ Hudson (1)
0159 -----------------------------
OH Stark (1)
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
d-0184190.09 7 EXHIBIT C
<PAGE>
ANNEX 2
THIS DOCUMENT Haynes and Boone, L.L.P.
PREPARED BY AND WHEN 3100 NationsBank Plaza
FILED RETURN TO: 901 Main Street
Dallas, Texas 75202
Attention: Kathy A. Kazmierczak
FINANCING STATEMENT
THIS FINANCING STATEMENT IS PRESENTED TO A FILING OFFICER
FOR FILING UNDER THE UNIFORM COMMERCIAL CODE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
DEBTOR'S NAME AND MAILING ADDRESS: _______________________
FED TAX ID NO. ____________________
- -------------------------------------------------------------------------------
SECURED PARTY'S NAME AND MAILING NationsBank of Texas, N.A., as Agent
ADDRESS: for Lenders
*
901 Main Street
Dallas, Texas 75202
FED TAX ID NO. 75-2238693
- -------------------------------------------------------------------------------
FOR FILING OFFICER:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
THIS FINANCING STATEMENT COVERS THE FOLLOWING TYPES OR
ITEMS OF PROPERTY AND INTERESTS (THE "COLLATERAL"):
All of the following items and types of property -- wherever located and
now or in the future acquired or existing:
1. All of Debtor's present and future accounts, instruments,
receivables, accounts receivable, chattel paper, documents, and book debts
arising from its sale or lease of goods or rendition of services,
including, without limitation, all present and future (a) amounts due to it
from a factor, (b) returned, reclaimed, refused, or repossessed goods, and
(c) books and records pertaining to, and security and guaranties for, any
of the foregoing.
2. All of its present and future inventory, including, without
limitation, all present and future (a) materials, goods and work-in-
process, finished goods, and other tangible property held for sale or lease
or being processed for sale or lease in its present or future business,
whether to be furnished under contracts or used or consumed in that
Debtor's business, (b) documents (including documents of title) covering
any of the foregoing, and (c) such property the sale or other disposition
of which has given rise to accounts and which has not been returned to or
repossessed or stopped in transit by that Debtor.
3. Whether now owned or acquired in the future by Debtor, (a) all
present and future shares of capital stock issued by any of the following
entities and (b) 65% of all present and future shares of capital stock
issued by MagneTek Europe, N.V., and in either case, including, without
limitation, all present and future increases, profits, combinations,
reclassifications, dividends, and substitutes and replacements for any of
the foregoing (subject to any limitations in the Security Agreement to
which this Financing Statement relates).
MagneTek Century Electric, Inc., MagneTek National Electric Coil,
Inc., MagneTek Ohio Transformer, Inc., MagneTek Electric, Inc.,
MagneTek Controls, Inc., MagneTek Tempe, Inc., MagneTek Credit
Corporation, MagneTek Leasing Corporation and MagneTek Airport
Systems, Inc.,
- ---------------------------------
* Secured Party is serving as AGENT under the Credit Agreement (as renewed,
extended, amended, or restated from time to time) dated as of March 31,
1995, between MagneTek, Inc. as BORROWER, Secured Party as AGENT, certain
CO-AGENTS,and certain LENDERS from time to time party to it. The security
interest evidenced and perfected by this financing statement, as amended or
continued from time to time, is granted to Secured Party in that capacity
on behalf of those CO-AGENTS and LENDERS (whether as ISSUING LENDERS or
otherwise).
d-0184190.09 EXHIBIT C
<PAGE>
4. All cash and noncash proceeds of any other Collateral, including,
without limitation, all cash, accounts, general intangibles, documents,
instruments, chattel paper, goods, and any other property received upon the
sale or disposition of any other Collateral and all insurance proceeds of
any kind paid at any time in connection with any other Collateral.
___________________________, as DEBTOR NATIONSBANK OF TEXAS, N.A., as Agent
for Lenders as SECURED PARTY*
By _______________________________ By _____________________________
John P. Colling, Jr., _____________, Vice President
Vice President and Treasurer
d-0184190.09 2 EXHIBIT C
<PAGE>
ANNEX 3
Dated as of March __, 1995
NationsBank of Texas, N.A., Agent
444 South Flower Street, Suite 1500
Los Angeles, CA 990071-2901
Attn: Andrea P. Collias
Re: LESSEE: _______________________________________
PREMISES: _______________described on the attached EXHIBIT A
The undersigned is the landlord ("LANDLORD") under a lease (as
renewed, extended, amended, or substituted, the "LEASE") covering the Premises.
Landlord understands that Lessee is or will be party to, or a guarantor under, a
Credit Agreement (as renewed, extended, amended, or restated, the "CREDIT
AGREEMENT") with you and certain lenders (collectively, "LENDERS") which
requires (a) granting to you on behalf of Lenders security interests in, among
other things, all of Lessee's present and future inventory now or in the future
located at the Premises (together with all cash and non-cash proceeds, the
"COLLATERAL") and (b) subordinating in your favor on behalf of Lenders any
liens, security interests, and other rights to which Landlord might be entitled
in the Collateral.
To satisfy those requirements and induce you and Lenders to extend
credit under the Credit Agreement, Landlord agrees that, notwithstanding
anything to the contrary in the Lease, until all of Lessee's obligations to you
and Lenders have been paid and performed in full (a) all liens, security
interests, and other rights to which Landlord might be entitled in the
Collateral are subordinate and inferior to any present or future security
interests granted to you on behalf of Lenders in the Collateral, regardless of
the order in which any liens, security interests, and rights in the Collateral
were or will be created, attached, pledged, filed, recorded, registered, or
perfected, (b) Landlord intends that the Collateral will not become fixtures and
will be and remain personal property, notwithstanding the manner of their
annexation to the Premises, their adaptability to the uses and purposes for
which the Premises are used, and the intentions of the party making the
annexation, (c) Landlord will notify you in writing by Certified Mail, Return
Receipt Requested, at the above address, if Lessee defaults on its lease
obligations and grant to you the right but not the obligation to cure those one
or more defaults within a reasonable amount of time after your receipt of such
notice, (d) if Lessee defaults on its obligations under or as guarantor under
the Credit Agreement, you and your representatives are entitled to enter upon
the Premises and to remain in possession of the Premises for a reasonable period
and assemble, appraise, display, sever, remove, maintain, prepare for sale or
lease, repair, lease, transfer, or sell at one or more public auctions or
private sales any Collateral, provided that such entry occurs within a
reasonable period of time from the date on which you declare such default and
give notice of such default to the Landlord, and (e) you may, without notice to
Landlord or Landlord's consent and without affecting the validity of this
agreement, increase, extend the times of payment of, or otherwise modify any of
Lessee's debts to you or the performance of any of the terms and conditions of
the Credit Agreement or related documents. This agreement inures to you,
Lenders, and the respective successors and assigns of each and binds Landlord
and Landlord's heirs, personal representatives, successors, and assigns.
Landlord waives notice of acceptance of this agreement.
Very truly yours,
__________________________________ ____________________________________
(address)
__________________________________
__________________________________ By ___________________________
(telephone) (Name)______________________________
__________________________________ (Title) ___________________________
(telecopy)
d-0184190.09 EXHIBIT C
<PAGE>
EXHIBIT D-1
BORROWING REQUEST
AGENT: NationsBank of Texas, N.A. DATE: __________, 19__
BORROWER: MagneTek, Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This notice is delivered under SECTION 2.3(a) of the Credit Agreement
(as renewed, extended, and amended, the "CREDIT AGREEMENT") dated as of March
31, 1995, between Borrower, Agent, and certain lenders. Terms defined in the
Credit Agreement have the same meanings when used -- unless otherwise defined --
in this request.
Borrower requests a Borrowing under the Credit Agreement as follows:
Borrowing Date(1) ______________________, 199__
Amount of Borrowing(2) $_______________________
Type of Borrowing(3) ________________________
For LIBOR-Rate Borrowing, the Interest
Period(4) _______________________months
Borrower certifies that on the above Borrowing Date -- after giving
effect to the requested Borrowing -- (a) all of the representations and
warranties in the Loan Documents will be true and correct in all material
respects -- UNLESS they speak to a specific date or the facts on which they are
based have been changed by transactions contemplated or permitted by the Credit
Agreement -- and (b) no Material Adverse Event, Default, or Potential Default
will exist.
MAGNETEK, INC., as BORROWER
By ____________________________________
(Name) _____________________________________
(5)(Title) _________________________________
- ----------------------------------
(1) Business Day of request for Base-Rate Borrowing or at least second
Business Day after request for LIBOR-Rate Borrowing.
(2) Not less than $500,000 or a $100,000 greater multiple if a Base-Rate
Borrowing, and not less than $5,000,000 or a $1,000,000 greater multiple
if a LIBOR-Rate Borrowing.
(3) LIBOR-Rate Borrowing or Base-Rate Borrowing.
(4) 1, 2, 3, or 6 months.
(5) Must be a Responsible Officer.
d-0187194.02 EXHIBIT D-1
<PAGE>
EXHIBIT D-2
NOTICE OF CONVERSION
AGENT: NationsBank of Texas, N.A. DATE: ___________________
BORROWER: MagneTek, Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This notice is delivered under SECTION 3.10 of the Credit Agreement (as
renewed, extended, amended, or restated, the "CREDIT AGREEMENT") dated as of
March 31, 1995, between Borrower, Agent, and certain lenders. Terms defined in
the Credit Agreement have the same meanings when used -- unless otherwise
defined -- in this notice.
Borrower presently has a ____________________(1) Borrowing (the
"EXISTING BORROWING") under the ____________________(2) in the amount of
$____________________ -- which, if a Libor-Rate Borrowing, has an Interest
Period of ____________________(5) ending on ____________________. On
________________________ (the "CONVERSION DATE"), Borrower shall partially pay,
continue in full or part as the same Type of Borrowing, or convert in full or
part to another Type of Borrowing and -- if applicable -- with the Interest
Period(d) designated below [CHECK APPLICABLE BOXES]:
/ / Amount to be paid, if any, $_____________
/ / Balance to be in the following Types of Borrowings with -- if
applicable -- the following Interest Period(s):
-------------------------------------------------------------
-------------------------------------------------------------
Type(1) Amount(9) Interest Period(3)
-------------------------------------------------------------
-------------------------------------------------------------
$
-------------------------------------------------------------
$
-------------------------------------------------------------
$
-------------------------------------------------------------
$
-------------------------------------------------------------
-------------------------------------------------------------
Borrower certifies that on the Conversion Date -- and after giving
effect to the above action(s) -- (a) all of the representations and warranties
in the Loan Documentss will be true and correct in all material respects --
UNLESS they speak to a specific date or the facts on which they are based have
been changed by transactions contemplated or expressly permitted by the Credit
Agreement -- and (b) no Material Adverse Event, Default, or Potential Default
will exist.
MAGNETEK, INC.
By ______________________________________
Name ______________________________________
Title(5) ______________________________________
- ---------------------------------
1 Base-Rate or LIBOR-Rate
2 Revolving Facility or Term Loan
3 1, 2, 3, or 6 months
4 Must be $500,000 or $100,000 greater multiple for a Base-Rate Borrowing and
$5,000,000 or $1,000,000 greater multiple for a LIBOR-Rate Borrowing
5 Must be a Responsible Officer
d-0187199.02 EXHIBIT D-2
<PAGE>
EXHIBIT D-3
LC REQUEST
AGENT: NationsBank of Texas, N.A. DATE: ____________________, 19__
ISSUING LENDER:
BORROWER: MagneTek, Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This notice is delivered under SECTION 2.4(a) of the Credit Agreement
(as renewed, extended, and amended, the "CREDIT AGREEMENT") dated as of March
31, 1995, between Borrower, Agent, Issuing Lender, and certain other lenders.
Terms defined in the Credit Agreement have the same meanings when used -- unless
otherwise defined -- in this request.
Borrower requests Issuing Lender to issue a LC under the Credit
Agreement as follows:
Issue Date ____________________________, 19___
Beneficiary ___________________________________
Expiry Date ___________________________________(1)
Face Amount $__________________________________
Borrower certifies that on the above Issue Date -- after giving effect
to the requested LC -- (a) all of the representations and warranties in the Loan
Documents will be true and correct in all material respects -- UNLESS they speak
to a specific date or the facts on which they are based have been changed by
transactions contemplated or permitted by the Credit Agreement -- and (b) no
Material Adverse Event, Default, or Potential Default will exist.
MAGNETEK, INC., as BORROWER
By ______________________________________
(Name) ______________________________________
(2)(Title) ______________________________________
- -------------------------------
1 Must be at least three Business Days before the Termination Date.
2 Must be a Responsible Officer.
d-0187203.03 EXHIBIT D-3
<PAGE>
EXHIBIT D-4
BORROWING-BASE REPORT
FOR MONTH ENDED _________, 199_ (the "SUBJECT MONTH")
AGENT: NationsBank of Texas, N.A. DATE: ___________________
BORROWER: MagneTek, Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This report is delivered under the Credit Agreement (as renewed,
extended, amended, or restated, the "CREDIT AGREEMENT") dated as of March 31,
1995, between Borrower, Agent, and certain lenders, all of the defined terms of
which have the same meanings when used -- unless otherwise defined -- in this
report.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Line At End of Subject Month
- -------------------------------------------------------------------------------
1. Total Eligible Accounts $
- -------------------------------------------------------------------------------
2. 80% of LINE 1 $
- -------------------------------------------------------------------------------
3. Total Eligible Inventory $
- -------------------------------------------------------------------------------
4. 50% of LINE 3 $
- -------------------------------------------------------------------------------
5. Borrowing Base -- LINE 2 PLUS LINE 4 $
- -------------------------------------------------------------------------------
6. Total Commitments for Revolving Facility $
- -------------------------------------------------------------------------------
7. Principal Debt of Revolving Facility $
- -------------------------------------------------------------------------------
8. LC Exposure $
- -------------------------------------------------------------------------------
9. Commitment Usage -- LINE 7 PLUS LINE 8 $
- -------------------------------------------------------------------------------
10. Does a Borrowing Base-Condition exist? Yes No
--------------
- -------------------------------------------------------------------------------
11. SECTION 2.2(c) CALCULATION -- (a) if $
answer in LINE 10 is "yes," then LINE 5 or
LINE 6 (whichever amount is smaller),
MINUS LINE 9 or (b) if answer in LINE 10
is "no," then LINE 6 MINUS LINE 9
- -------------------------------------------------------------------------------
12. Availability -- EITHER $
(a) If LINE 11 is negative -- the
negative is amount to be repaid; or
- -------------------------------------------------------------------------------
(b) If LINE 11 is positive, that is the $
amount available.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
In my capacity as a Responsible Officer of -- and on behalf of --
Borrower, I certify to Agent and Lenders on the date of this report that (a) I
am a Responsible Officer of Borrower, (b) no Default or Potential Default
exists, (c) a review of the activities of the Companies during the Subject Month
has been made under my supervision with a view to determining the amount of the
current Borrowing Base, (d) the accounts receivable and inventory of the
Companies included in the Borrowing Base above meet all conditions in the Credit
Agreement to qualify for that
d-0187197.02 EXHIBIT D-4
<PAGE>
inclusion, (e) all of the representations and warranties in the Loan Documents
are true and correct in all material respects -- UNLESS they speak to a specific
date or the facts on which they are based have changed by transactions
contemplated or expressly permitted by the Credit Agreement -- and (f) the
information above is true and correct as of the last day of the Subject Month.
By ________________________________________
Name ________________________________________
Title(1) ________________________________________
- -----------------------------------
Must be a Responsible Officer
d-0187197.02 EXHIBIT D-4
<PAGE>
EXHIBIT D-5
COMPLIANCE CERTIFICATE
FOR THE FISCAL QUARTER/YEAR ENDED ______________ (the "SUBJECT PERIOD")
AGENT: NationsBank of Texas, N.A. DATE: ___________________
BORROWER: MagneTek, Inc.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
This certificate is delivered under the Credit Agreement (as renewed,
extended, amended, or restated, the "CREDIT AGREEMENT") dated as of March 31,
1995, between Borrower, Agent, and certain lenders, all defined terms in which
have the same meanings when used -- unless otherwise defined -- in this
certificate.
In my capacity as a Responsible Officer of -- and on behalf of --
Borrower, I certify to Agent and Lenders on the date of this certificate that
(a) I am a Responsible Officer of Borrower, (b) Borrower's Financial Statements
attached to this certificate were prepared in accordance with GAAP and present
fairly the Companies' consolidated financial condition and results of operations
as of, and for the fiscal quarter or year, as the case may be, ended on, the
last day of the Subject Period, (c) a review of the activities of the Companies
during the Subject Period has been made under my supervision with a view to
determining whether, during the Subject Period, the Companies performed and
complied with all of their obligations under the Loan Documents, and, during the
Subject Period, to my knowledge (i) the Companies performed, and complied with
all of their obligations under the Loan Documents (EXCEPT for the deviations, if
any, described on a schedule to this certificate) in all material respects, and
(ii) no Default (nor any Potential Default) has occurred which has not been
cured or waived (EXCEPT the Defaults or Potential Defaults, if any, described on
the schedule to this certificate), and (d) to my knowledge, the status of
compliance by the Companies with SECTIONS 9.4, 10.1, 10.2, 10.3, 10.4, and 10.5
of the Credit Agreement at the end of the Subject Period is as described on the
schedule to this certificate.
By _______________________________________
Name _______________________________________
Title(1) _______________________________________
- -----------------------------------
Must be a Responsible Officer
d-0194313.02 EXHIBIT D-5
<PAGE>
SCHEDULE TO COMPLIANCE CERTIFICATE
(For Fiscal Quarter/Year Ended ___________________________)
A. Describe deviations from performance or compliance with covenants, if
any, pursuant to CLAUSE (c)(i) of the attached certificate. If none, so state.
B. Describe Potential Defaults and Defaults, if any, pursuant to CLAUSE
(c)(ii) of the attached certificate. If none, so state.
C. Reflect compliance with SECTIONS 9.4, 10.1, 10.2, 10.3, 10.4, and 10.5
at the end of the Subject Period on a consolidated basis pursuant to CLAUSE (d)
of the attached certificate.
TABLE 1
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
COVENANT AT END OF SUBJECT PERIOD
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SECTION 9.4 CAPITAL EXPENDITURES -- FOR EACH FISCAL YEAR BEGINNING AFTER JUNE 30,
1994
- -----------------------------------------------------------------------------------------------------------------------
(a) Capital expenditures during this fiscal year for or related to $
non-Divestiture Assets
- -----------------------------------------------------------------------------------------------------------------------
(b) Capital expenditures during this fiscal year for or related to $
Divestiture Assets
- -----------------------------------------------------------------------------------------------------------------------
(c) MAXIMUM amount permitted in LINE (b) during each fiscal year $4,000,000
- -----------------------------------------------------------------------------------------------------------------------
(d) Capital expenditures during this fiscal year that constitute Permitted $
Acquisitions
- -----------------------------------------------------------------------------------------------------------------------
(e) Net capital expenditures -- LINE (a) PLUS LINE (b) MINUS LINE (d) $
- -----------------------------------------------------------------------------------------------------------------------
(f) MAXIMUM non-carryover this year $54,000,000
- -----------------------------------------------------------------------------------------------------------------------
(g) Permitted-Capital Expenditures not utilized in previous years $
- -----------------------------------------------------------------------------------------------------------------------
(h) MAXIMUM amount permitted in LINE (e) IN THIS YEAR -- LINE (f) PLUS $
LINE (g)
</TABLE>
d-0194313.02 EXHIBIT D-5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
COVENANT AT END OF SUBJECT PERIOD
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
SECTION 10.1 TANGIBLE NET WORTH
- -----------------------------------------------------------------------------------------------------------------------
(a) Stockholders' equity $
- -----------------------------------------------------------------------------------------------------------------------
(b) Amounts excluded regarding ESOP $
- -----------------------------------------------------------------------------------------------------------------------
(c) Book value of intangible assets $
- -----------------------------------------------------------------------------------------------------------------------
(d) Tangible-Net Worth -- LINE (a) MINUS LINES (b) and (c) $
- -----------------------------------------------------------------------------------------------------------------------
(e) $100,000,000 $100,000,000
- -----------------------------------------------------------------------------------------------------------------------
(f) 50% of Cumulative Net Income (without deduction for losses) after $
December 31, 1994
- -----------------------------------------------------------------------------------------------------------------------
(g) 75% of net equity proceeds after date of Credit Agreement $
- -----------------------------------------------------------------------------------------------------------------------
(h) MINIMUM TANGIBLE-NET WORTH -- TOTAL of LINES (e), (f), and (g) $
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SECTION 10.2 CURRENT RATIO
- -----------------------------------------------------------------------------------------------------------------------
(a) Current assets $
- -----------------------------------------------------------------------------------------------------------------------
(b) Current liabilities $
- -----------------------------------------------------------------------------------------------------------------------
(c) RATIO of LINE (a) to LINE (b) ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(d) MINIMUM 1.75 to 1.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SECTION 10.3 FUNDED DEBT/CAPITALIZATION
- -----------------------------------------------------------------------------------------------------------------------
(a) Funded Debt $
- -----------------------------------------------------------------------------------------------------------------------
(b) Stockholders' equity $
- -----------------------------------------------------------------------------------------------------------------------
(c) LINE (a) PLUS LINE (b) $
- -----------------------------------------------------------------------------------------------------------------------
(d) RATIO of LINE (a) to LINE (c) ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(e) MAXIMUM -- if Release RATIO has been achieved 0.65 to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(f) MAXIMUM -- if Release RATIO has not been achieved -- SEE TABLE 2 ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SECTION 10.4(a) FUNDED DEBT/EBITDA
- -----------------------------------------------------------------------------------------------------------------------
(a) Funded Debt $
- -----------------------------------------------------------------------------------------------------------------------
(b) Net Income for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(c) Interest expense (including capitalized interest) for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(d) Income Taxes for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(e) Depreciation for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(f) Amortization for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(g) EBIDTA -- TOTAL OF LINES (b), (c), (d), (e), PLUS (f) $
</TABLE>
d-0194313.02 2 EXHIBIT D-5
<PAGE>
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
COVENANT AT END OF SUBJECT PERIOD
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(h) RATIO of LINE (a) to LINE (g) ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(i) MAXIMUM -- if Release Ratio has been achieved 3.25 to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(j) MAXIMUM -- if Release Ratio has not been achieved 4.25 to 1.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SECTION 10.4(B) SENIOR DEBT/EBITDA
- -----------------------------------------------------------------------------------------------------------------------
(a) Senior Debt $
- -----------------------------------------------------------------------------------------------------------------------
(b) Net Income for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(c) Interest expense (including capitalized interest) for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(d) Income Taxes for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(e) Depreciation for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(f) Amortization for last 12 months $
- -----------------------------------------------------------------------------------------------------------------------
(g) EBITDA -- TOTAL of LINES (b), (c), (d), (e), PLUS (f) $
- -----------------------------------------------------------------------------------------------------------------------
(h) RATIO of LINE (a) to LINE (g) _____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(i) MAXIMUM 2.75 to 1.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
SECTION 10.6 FIXED-CHARGE COVERAGE
- -----------------------------------------------------------------------------------------------------------------------
(a) Net Income for last twelve months $
- -----------------------------------------------------------------------------------------------------------------------
(b) Interest expense (including capitalized interest) for period in that $
applicable period
- -----------------------------------------------------------------------------------------------------------------------
(c) Income Taxes for that applicable period $
- -----------------------------------------------------------------------------------------------------------------------
(d) Net gains or losses on discontinued operations (exclusive of operating $
results)
- -----------------------------------------------------------------------------------------------------------------------
(e) EBIT that applicable period -- TOTAL of LINES (a), (b), (c) PLUS (d) $
- -----------------------------------------------------------------------------------------------------------------------
(f) RATIO of LINE (d) to LINE (b) ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(g) MINIMUM -- SEE TABLE 3 ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(h) Has the Term Loan been paid in full? (Circle answer) yes no
- -----------------------------------------------------------------------------------------------------------------------
(i) -- If answer in LINE (g) is "YES" -- ignore LINES (h), (i), and (j) $
-- If answer in LINE (g) is "NO" -- enter Scheduled maturities of Debt for
the Subject Period and complete LINES (i) and (j)
- -----------------------------------------------------------------------------------------------------------------------
(j) TOTAL of LINE (b) PLUS LINE (h) $
- -----------------------------------------------------------------------------------------------------------------------
(k) RATIO of LINE (d) to LINE (i) ____ to 1.00
- -----------------------------------------------------------------------------------------------------------------------
(l) MINIMUM 1.20 to 1.00
- -----------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------
</TABLE>
d-0194313.02 3 EXHIBIT D-5
<PAGE>
TABLE 2 -- FUNDED DEBT/CAPITALIZATION
---------------------------------------------------------------
---------------------------------------------------------------
QUARTER(S) ENDING RATIO
---------------------------------------------------------------
---------------------------------------------------------------
3/31/95 through 12/31/95 0.80 to 1.00
---------------------------------------------------------------
3/31/96 through 9/30/96 0.75 to 1.00
---------------------------------------------------------------
12/31/96 through 9/30/97 0.70 to 1.00
---------------------------------------------------------------
12/31/97 and each fiscal 0.65 to 1.00
quarter after that
---------------------------------------------------------------
---------------------------------------------------------------
TABLE 3 -- FIXED-CHARGE COVERAGE RATIO
---------------------------------------------------------------
---------------------------------------------------------------
QUARTER(S) ENDED RATIO
---------------------------------------------------------------
---------------------------------------------------------------
6/30/95 through 9/30/95 1.55 to 1.00
---------------------------------------------------------------
12/31/95 through 3/31/96 1.60 to 1.00
---------------------------------------------------------------
6/30/96 and each quarter ending after that 1.80 to 1.00
---------------------------------------------------------------
---------------------------------------------------------------
d-0194313.02 4 EXHIBIT D-5
<PAGE>
EXHIBIT E-1
FORM OF OPINION OF GENERAL COUNSEL
[Letterhead of MagneTek, Inc.]
March 31, 1995
To the Lenders listed on Schedule 1 hereto
c/o NationsBank of Texas, N.A.,
as Agent for such Lenders
901 Main Street,
Dallas, Texas 75202
Re: MagneTek, Inc. - Credit Agreement dated as of March 31,
1995
Ladies and Gentlemen:
I am General Counsel of MagneTek, Inc., a Delaware corporation
(the "COMPANY"), and have acted as counsel to the Company and the Company's
subsidiaries listed on Schedule 2 hereto (the "GUARANTORS") in connection with
the following:
(i) the Credit Agreement dated as of March 31, 1995 (the
"CREDIT AGREEMENT") by and among the Company, as borrower, the Lenders
listed on the signature pages thereof (the "LENDERS"), NationsBank of
Texas, N.A. ("NATIONSBANK"), as agent for the Lenders, (in such capacity
and in its capacity as agent or collateral agent under the other Loan
Documents (as defined below) NationsBank is referred to herein as the
"AGENT") and CIBC Inc., The First National Bank of Chicago, and LTCB
Trust Company, as co-agents;
(ii) the Revolving Notes and Term Notes made by the Company
in favor of the Lenders (collectively, the "NOTES");
(iii) the Guaranty dated as of March 31, 1995 (the
"GUARANTY") by each of the Guarantors for the benefit of the Agent on
behalf of the Lenders; and
(iv) the Security Agreement dated as of March 31, 1995 (the
"SECURITY AGREEMENT") between the Company, the Guarantors and the Agent
on behalf of the Lenders.
This opinion is being rendered pursuant to Section 6 of the Credit
Agreement. The Credit Agreement, the Notes, the Guaranty and the Security
Agreement are collectively referred to herein as the "LOAN DOCUMENTS."
Each capitalized term used and not defined herein shall have the
meaning assigned to that term in the Credit Agreement.
I have assumed with your permission that (i) the signatures
(other than signatures of individuals signing on behalf of the Company or any
Guarantor) on all documents examined by me are genuine, (ii) all individuals
executing such documents have the requisite legal capacity and competency and,
in the case of individuals executing documents on behalf of Persons other than
the Company and the Guarantors, were duly authorized, (iii)
d-0195699.01 EXHIBIT E-1
<PAGE>
March 31, 1995
Page 2
the documents submitted to me as originals are authentic and (iv) the documents
submitted to me as certified or reproduction copies conform to the originals.
In rendering this opinion, I have made such inquiries and examined, among other
things, originals or copies, certified or otherwise identified to my
satisfaction, of such records, agreements, certificates, instruments and other
documents as I have considered necessary or appropriate for purposes of this
opinion. As to certain factual matters, I have relied upon the representations
and warranties of the Company and the Guarantors in the Loan Documents,
certificates of officers of the Company and its Subsidiaries or certificates
obtained from public officials.
Based on the foregoing and in reliance thereon, and subject to
the assumptions, exceptions, qualifications and limitations set forth herein, I
am of the opinion that:
1. The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified as a foreign corporation under the laws of each other state of
the United States of America in which the conduct of its business or the
ownership or leasing of its properties makes such qualification or registration
necessary, EXCEPT where the failure so to qualify or register and to be in good
standing would not constitute a Material Adverse Event.
2. The Company has all requisite corporate power and authority
to execute, deliver and perform its obligations under the Loan Documents to
which it is a party, to conduct its business as presently conducted and to own
its properties.
3. Each Guarantor (other than MagneTek Ohio Transformer, Inc.,
an Ohio corporation ("MOTI")) and MagneTek Electric, Inc., a Wisconsin
corporation (together with MOTI, the "EXCLUDED GUARANTORS")), is a validly
existing corporation in good standing under the laws of its state of
incorporation. To the best of my knowledge, each Guarantor is duly qualified as
a foreign corporation under the laws of each state of the United States of
America in which the conduct of its business or the ownership or leasing of its
properties makes such qualification or registration necessary, EXCEPT where the
failure so to qualify or register and to be in good standing would not
constitute a Material Adverse Event.
4. Each Guarantor (other than the Excluded Guarantors) has all
requisite corporate power and authority to execute, deliver and perform its
obligations under the Guaranty and the Security Agreement, to conduct its
business as presently conducted and to own its properties.
5. The execution and delivery by the Company of the Loan
Documents to which it is a party and the performance of its obligations
thereunder have been duly authorized by all necessary corporate action of the
Company, and such Loan Documents have been duly executed and delivered by the
Company.
6. The execution and delivery by each Guarantor (other than
the Excluded Guarantors) of the Guaranty and the Security Agreement and the
performance of its Obligations thereunder have been duly authorized by all
necessary corporate action of such Guarantor, and the Guaranty has been duly
executed and delivered by each Guarantor (including the Excluded Guarantors).
7. To the best of my knowledge, neither the execution and
delivery by the Company of the Loan Documents to which it is a party, nor the
making of the payments required by the Loan Documents to which the Company is a
party, does or will (A) violate any material order, judgment or decree of any
court or other agency of government (a "GOVERNMENTAL AGENCY") in the United
States of America binding on the Company, or (B) conflict with, result in a
breach of, constitute a default under, or result in or require the creation or
imposition of any Lien
d-0195699.01 EXHIBIT E-1
<PAGE>
March 31, 1995
Page 3
upon any of the Company's assets (other than Liens permitted by the Credit
Agreement) under, any material agreement of the Company.
8. To the best of my knowledge, neither the execution or
delivery by any Guarantor of the Guaranty and the Security Agreement, nor the
making of the payments required by the Guaranty or the granting of the security
interest in Collateral under the Security Agreement, does or will (A) violate
any material order, judgment or decree of any Governmental Agency in the United
States of America binding on such Guarantor, or (B) conflict with, result in a
breach of, constitute a default under, or result in or require the creation or
imposition of any Lien upon any of such Guarantor's assets (other than Liens
permitted by the Credit Agreement) under, any material agreement of such
Guarantor.
9. Except for (a) any matter covered (subject to applicable
deductibles and retentions) by insurance or indemnification agreements, (b)
matters normally incident to the business of the Company and its Restricted
Subsidiaries in which there is no reasonable possibility of an adverse
determination that would, in the aggregate for all such matters, constitute a
Material Adverse Event, and (c) matters referenced in SCHEDULE 7.9 to the Credit
Agreement, to the best of my knowledge, there are no actions, suits, proceedings
or investigations pending before any Governmental Agency in the United States of
America against the Company or any of its Restricted Companies as to which the
Company or any of its Restricted Companies has been served.
10. Based solely upon a review of the minute books of the
Guarantors, the Pledged Securities (as defined in the Security Agreement)
constitute all of the issued and outstanding shares of capital stock of the
Guarantors that are owned by the Company or any of its Restricted Companies,
except as set forth on Schedule 7.3 to the Credit Agreement
11. All issued and outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully paid and non-
assessable.
12. To the best of my knowledge, the Company is not in material
default or violation of the terms of the existing Subordinated Debt.
The foregoing opinions are subject to the following
qualifications and limitations:
A. I am not admitted to practice in the State of Delaware;
however, I am generally familiar with the Delaware General Corporation Law as
presently in effect and have made such inquiries as I consider necessary to
render the opinions contained in paragraphs 1 through 6 with respect to Delaware
corporations. This opinion is limited to the effect of the present state of the
laws of the State of Tennessee, the United States of America and, to the limited
extent set forth above, the State of Delaware and the facts as they presently
exist. I assume no obligation to revise or supplement this opinion in the event
of future changes in such laws or the interpretations thereof or such facts.
Without limitation, no opinion is expressed under paragraphs 3, 4 or 6 with
respect to the Excluded Guarantors, except as expressly set forth therein.
This opinion is rendered to the Agent and the Lenders, their
respective successors and permitted assigns, and the law firm of Haynes and
Boone, L.L.P., in its role as special counsel to the Agent (it being understood
that the undersigned assumes no duty to such law firm) in connection with the
Loan Documents and may not be relied upon by any person other than the foregoing
or by any of the foregoing in any other context, provided that the Agent and the
Lenders may provide this opinion (i) to bank examiners and other regulatory
authorities should
d-0195699.01 EXHIBIT E-1
<PAGE>
March 31, 1995
Page 4
they so request or in connection with their normal examinations, (ii) to the
independent auditors and attorneys of the Agent and the Lenders, (iii) pursuant
to order or legal process of any court or governmental agency, (iv) in
connection with any legal action to which the Agent or any Lender is a party
arising out of the transactions contemplated by the Loan Documents, or (v) to
any proposed assignee of or participant in the Commitment or the Loan Documents.
This opinion may not be quoted without my prior written consent.
Very truly yours,
Samuel A. Miley, Esq.
d-0195699.01 EXHIBIT E-1
<PAGE>
SCHEDULE 1
LENDERS
NationsBank of Texas, N.A., as a Lender and as Agent
CIBC Inc., as a Lender and as Co-Agent
The First National Bank of Chicago, as a Lender and as Co-Agent
LTCB Trust Company, as a Lender and as Co-Agent
First Union National Bank of Tennessee, as a Lender
Credit Lyonnais - Cayman Island Branch, as a Lender
Fleet Bank of Massachusetts, N.A., as a Lender
Societe Generale, Southwest Agency, as a Lender
The Bank of California, N.A., as a Lender
Union Bank, as a Lender
Arab Banking Corporation, as a Lender
Banque Francaise du Commerce Exterieur, as a Lender
The Boatmen's National Bank of St. Louis, as a Lender
Commerzbank A.G., Atlanta Agency, as a Lender
Creditanstalt Corporate Finance, Inc., as a Lender
First American National Bank, as a Lender
d-0195699.01 EXHIBIT E-1
<PAGE>
SCHEDULE 2
GUARANTORS
MagneTek National Electric Coil, Inc.
MagneTek Century Electric, Inc.
MagneTek Ohio Transformer, Inc.
MagneTek Electric, Inc.
d-0195699.01 EXHIBIT E-1
<PAGE>
EXHIBIT E-5
FORM OF OPINION OF SPECIAL COUNSEL TO AGENT
March 31, 1995
NationsBank of Texas, N.A., Agent
and the Lenders described below
c/o NationsBank of Texas, N.A., Agent
901 Main Street, 67th Floor
Dallas, Texas 75202
Re: Credit Agreement dated as of March 31, 1995 (the "CREDIT
AGREEMENT"), between MagneTek, Inc. ("BORROWER"), NationsBank of
Texas, N.A. (as Agent for the Lenders, "AGENT"), CIBC Inc., The
First National Bank of Chicago, and LTCB Trust Company (as
Co-Agents for the Lenders), and the lenders party to it
("LENDERS")
We have acted as special counsel to Agent in connection with the
negotiation and preparation of the Credit Agreement and the related documents
described in ITEMS 2, 3, 4, and 5 on SCHEDULE 6 to the Credit Agreement (the
"SUBJECT DOCUMENTS"). Terms defined in the Credit Agreement have the same
meanings when used -- unless otherwise defined -- in this opinion. This opinion
is delivered to Agent and Lenders as required by SECTION 6 of the Credit
Agreement.
A. In reaching the conclusions expressed in this opinion:
(1) We have examined the Subject Documents and the opinions
described below.
(2) We have assumed (a) the applicable and appropriate due
organization, existence, good standing, power, and authority of Agent
and each Lender, (b) that each Subject Document has been duly
authorized, executed, and delivered by -- and is a valid, binding, and
enforceable obligation of -- Agent and each Lender, (c) signature
authenticity, (d) the authenticity of documents submitted to us as
originals, and (e) the conformity to authentic originals of documents
submitted to us as copies.
(3) We have relied without further investigation upon the
opinions (the "OPINIONS") dated the date of this opinion and addressed
and delivered to Agent and Lenders as required by SECTION 6 of the
Credit Agreement by (a) Samuel A. Miley, General Counsel to the
Companies, (b) Gibson, Dunn & Crutcher, as special counsel to the
Companies, (c) Squire, Sanders & Dempsey as Ohio counsel to MagneTek
Ohio Transformers, Inc., (d) Foley & Lardner as Wisconsin counsel to
MagneTek Electric, Inc., and (e) Loeff Claeys Verbeke as The Netherlands
counsel to MagneTek Europe, N.V.
B. Based upon the above, subject to the qualifications and exceptions
that follow and that are set forth in the Opinions, and limited in all respects
to the Laws of Texas and the United States of America, it is our opinion that
each of the Subject Documents constitutes a legal and binding obligation of each
Company party to it, enforceable against that Company in accordance with that
Subject Document's terms.
C. The enforceability of each Subject Document is subject to (1)
Debtor Laws, (2) general principles of equity, whether applied in a proceeding
in equity or at law, (3) Rights of the United States under the FEDERAL TAX
d-0186981.03 EXHIBIT E-1
<PAGE>
LIEN ACT OF 1966, as amended, (4) standards of commercial reasonableness and
good faith, (5) public policy, and (6) other applicable Laws of Texas or the
United States of America that may limit or affect the exercise of remedies. Any
limitations under CLAUSE (6) preceding should not materially interfere with
Agent and Lenders realizing the practical benefits intended to be conferred by
the Subject Documents, but they may result in delays in those benefits. We
express no opinion about the economic consequences of any of those delays.
D. We express no opinion with respect to (1) the status of title to
any Collateral or the perfection or relative priority of any Lender Liens
intended to be created by any Subject Document, (2) the enforceability of
provisions in the Subject Documents relating to delay or omission of enforcement
of Rights, provisions regarding the exercise of ownership or other corporate
rights in respect of any pledged securities before foreclosure in respect of
those securities, waivers of defenses, or waivers of benefits of usury,
appraisement, valuation, stay, extension, moratorium, redemption, statutes of
limitation, or other non-waivable benefits bestowed by operation of Law, (3) the
lawfulness or enforceability of exculpation clauses, clauses relating to
releases of unmatured claims, clauses purporting to waive unmatured Rights,
severability clauses, and clauses similar in substance or nature to those
expressed in CLAUSE (2) preceding and this CLAUSE (3), insofar as any of them
are in any Subject Document, (4) the effect of any fraudulent transfer or
fraudulent conveyance Laws, or (4) the enforceability of the indemnification or
contribution provisions in any Subject Document to the extent they purport to
relate to liabilities resulting from or based upon negligence or other tortious
acts or any violation of federal or state securities or blue sky Laws.
E. This opinion may not, without our permission, be (1) relied upon by
any Person OTHER THAN Agent, Lenders, and Participants, or (2) be circulated to
any Person OTHER THAN (a) Agent, Lenders, Participants, and their respective
counsel, supervisory authorities, and prospective participants and assignees and
(b) as required by Law.
Respectfully submitted,
HAYNES AND BOONE, L.L.P.
d-0186981.03 2 EXHIBIT E-5
<PAGE>
EXHIBIT F
ASSIGNMENT AND ASSUMPTION AGREEMENT
THIS AGREEMENT is entered into as of______________, between____________
___________("ASSIGNOR") and_______________________("ASSIGNEE").
MAGNETEK, INC., a Delaware corporation ("BORROWER"), certain lenders
("LENDERS"), and NATIONSBANK OF TEXAS, N.A., a national banking association (in
its capacity as Agent for Lenders, "AGENT"), are party to the Credit Agreement
(as renewed, extended, amended, or restated, the "CREDIT AGREEMENT") dated as of
March 31, 1995, all of the defined terms in which have the same meanings when
used -- unless otherwise defined -- in this agreement. This agreement is
entered into as required by SECTION 14.10(C) of the Credit Agreement and is not
effective until consented to by Borrower and Agent, which consents may not under
the Credit Agreement be unreasonably withheld.
ACCORDINGLY, for adequate and sufficient consideration, Assignor and
Assignee agree as follows:
1. ASSIGNMENT AND ASSUMPTION. By this agreement, and effective as
of____________________(which must be at least five Business Days after the
execution and delivery of this agreement to both Borrower and Agent for consent,
the "EFFECTIVE DATE"), Assignor sells and assigns to Assignee (without recourse
to Assignor) and Assignee purchases and assumes from Assignor a ___% interest
(the "ASSIGNED INTEREST"), which, if not equal to 100%, must be a percentage,
when computed as an aggregate dollar amount, that is at least $10,000,000, in
and to all of Assignor's Rights and obligations under the Credit Agreement as of
the Effective Date, including, without limitation, the Assigned Interest in (a)
Assignor's Commitment as of the Effective Date, (b) Notes held by Assignor as of
the Effective Date, (c) all Principal Debt owed to Assignor on the Effective
Date, (d) all unpaid reimbursement obligations under drawings or drafts under
any LC on the Effective Date, (e) all outstanding participations owned by
Assignor under SECTION 2.4(B) of the Credit Agreement on the Effective Date, (f)
all interest accruing in respect of the Assigned Interest after the Effective
Date, (g) all LC fees paid in advance before the Effective Date under SECTION
4.3(A) of the Credit Agreement in respect of the Assigned Interest and in
respect of any period or periods after the Effective Date, and (h) all
commitment fees accruing in respect of the Assigned Interest under SECTION 4.4
of the Credit Agreement after the Effective Date.
2. ASSIGNOR PROVISIONS. Assignor (a) represents and warrants to
Assignee that as of the Effective Date (i) the following principal amounts and
LC liabilities are owed to it without reduction for any assignments that have
not yet become effective:
-------------------------------------------------------------------
-------------------------------------------------------------------
Item Amount
-------------------------------------------------------------------
-------------------------------------------------------------------
Principal Debt of Term Loan $
-------------------------------------------------------------------
Principal Debt of Revolving Facility $
-------------------------------------------------------------------
LC reimbursables $
-------------------------------------------------------------------
SECTION 2.4(B) participations $
-------------------------------------------------------------------
-------------------------------------------------------------------
and (ii) Assignor is the legal and beneficial owner of the Assigned Interest,
which is free and clear of any adverse claim, and (b) makes no representation or
warranty to Assignee and assumes no responsibility to Assignee with
d-0187209.01 EXHIBIT F
<PAGE>
respect to (i) any statements, warranties, or representations made in or in
connection with any Loan Document, (ii) the execution, legality, validity,
enforceability, genuineness, sufficiency, or value of any Loan Document, or
(iii) the financial condition of any Company or the performance or observance by
any Company of any of its obligations under any Loan Document.
3. ASSIGNEE PROVISIONS. Assignee (a) represents and warrants to
Assignor, Borrower, and Agent that Assignee is legally authorized to enter into
this agreement, (b) confirms that it has received a copy of the Credit
Agreement, copies of the Current Financials, and such other documents and
information as it deems appropriate to make its own credit analysis and decision
to enter into this agreement, (c) agrees with Assignor, Borrower, and Agent that
Assignee shall -- independently and without reliance upon Agent, Assignor, or
any other Lender and based on such documents and information as Assignee deems
appropriate at the time -- continue to make its own credit decisions in taking
or not taking action under the Loan Documents, (d) appoints and authorizes Agent
to take such action as agent on its behalf and to exercise such powers under the
Loan Documents as are delegated to Agent by the terms of the Loan Documents and
all other reasonably-incidental powers, (e) agrees with Assignor, Borrower, and
Agent that Assignee shall perform and comply with all provisions of the Loan
Documents applicable to Lenders in accordance with their respective terms, and
(f) if Assignee is not organized under the Laws of the United States of America
or one of its states, it (i) represents and warrants to Assignor, Agent, and
Borrower that no Taxes are required to be withheld by Assignor, Agent, or
Borrower with respect to any payments to be made to it in respect of the
Obligations, and it has furnished to Agent and Borrower two duly completed
copies of either U.S. Internal Revenue Service FORM 4224, FORM 1001, FORM W-8,
or any other form acceptable to Agent that entitles Assignee to exemption from
U.S. federal withholding Tax on all interest payments under the Loan Documents,
(ii) covenants to provide Agent and Borrower a new FORM 4224, FORM 1001, FORM W-
8, or other form acceptable to Agent upon the expiration or obsolescence of any
previously delivered form according to Law, duly executed and completed by it,
and to comply from time to time with all Laws with regard to the withholding Tax
exemption, and (iii) agrees with Agent and Borrower that, if any of the
foregoing is not true or the applicable forms are not provided, then Agent and
Borrower (without duplication) may deduct and withhold from interest payments
under the Loan Documents any United States federal-income Tax at the full rate
applicable under the Code.
4. CREDIT AGREEMENT AND COMMITMENTS. From and after the Effective
Date (a) Assignee shall be a party to the Credit Agreement and (to the extent
provided in this agreement) have the Rights and obligations of a Lender under
the Loan Documents and (b) Assignor shall (to the extent provided in this
agreement) relinquish its Rights and be released from its obligations under the
Loan Documents. On the Effective Date, after giving effect to this agreement,
but without giving effect to any other assignments that have not yet become
effective, Assignor's total Commitment (which, if positive, must be at least
$10,000,000) and Assignee's total Commitment will be as follows:
---------------------------------------------------------------------
---------------------------------------------------------------------
Lender Term Loan Revolving Facility Total
---------------------------------------------------------------------
---------------------------------------------------------------------
Assignor $ $ $
---------------------------------------------------------------------
Assignee $ $ $
---------------------------------------------------------------------
---------------------------------------------------------------------
5. NOTES. Assignor and Assignee request Borrower to issue new Notes
to Assignor and Assignee in the amounts of their respective Commitments under
PARAGRAPH 4 above and otherwise issued in accordance with the Credit Agreement.
Upon delivery of those Notes, Assignor shall return to Borrower all Notes
previously delivered to Assignor under the Credit Agreement.
6. PAYMENTS AND ADJUSTMENTS. From and after the Effective Date,
Agent shall make all payments in respect of the Assigned Interest (including
payments of principal, interest, fees, and other amounts) to Assignee.
d-0187209.01 2 EXHIBIT F
<PAGE>
Assignor and Assignee shall make all appropriate adjustments in payments for
periods before the Effective Date by Agent or with respect to the making of this
assignment directly between themselves.
7. CONDITIONS PRECEDENT. PARAGRAPHS 1 through 5 above are not
effective until (a) counterparts of this agreement are executed and delivered by
Assignor and Assignee to -- and are executed in the spaces below by -- Borrower
and Agent and (b) Agent receives from Assignor or Assignee a $2,500 processing
fee.
8. INCORPORATED PROVISIONS. Although this agreement is not a Loan
Document, the provisions of SECTIONS 1 and 14 of the Credit Agreement applicable
to Loan Documents are incorporated into this instrument by reference the same as
if this agreement were a Loan Document and those provisions were set forth in
this agreement verbatim.
9. COMMUNICATIONS. For purposes of SECTION 14.2 of the Credit
Agreement, Assignee's address and telecopy number -- until changed under that
section -- are beside its signature below.
10. AMENDMENTS, ETC. No amendment, waiver, or discharge to or under
this agreement is valid unless in writing that is signed by the party against
whom it is sought to be enforced and is otherwise in conformity with the
requirements of the Credit Agreement.
11. ENTIRETY. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
ASSIGNOR AND ASSIGNEE ABOUT ITS SUBJECT MATTER AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF ASSIGNOR
AND ASSIGNEE. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN ASSIGNOR AND
ASSIGNEE.
12. PARTIES. This agreement binds and benefits Assignor, Assignee,
and their respective successors and assigns that are permitted under the Credit
Agreement.
EXECUTED as of the date first stated above.
[ASSIGNOR] [ASSIGNEE]
By ___________________________ By _______________________________
(Name) ___________________________ (Name) _______________________________
(Title) ___________________________ (Title) _______________________________
(Address) _____________________________
_______________________________________
_______________________________________
(Telecopy No.)_________________________
d-0187209.01 3 EXHIBIT F
<PAGE>
As of the Effective Date, Borrower and Agent consent to this agreement
and the transactions contemplated in it.
MAGNETEK, INC., as BORROWER NATIONSBANK OF TEXAS, N.A., as AGENT
By _________________________________ By ______________________________
John Colling, Jr., Vice President Andrea Collias, Vice President
d-0187209.01 4 EXHIBIT F
<PAGE>
EXHIBIT B
GUARANTY
THIS GUARANTY is executed as of March 31, 1995, by each of the undersigned
(collectively, "GUARANTORS"), for the benefit of NATIONSBANK OF TEXAS, N.A. (in
its capacity as Agent for the Lenders now or in the future party to the Credit
Agreement described below, "AGENT").
MAGNETEK, INC., a Delaware corporation ("BORROWER"), Agent, and Lenders
have executed the Credit Agreement (as renewed, extended, amended, or restated,
the "CREDIT AGREEMENT") dated as of March 31, 1995. Borrower, directly or
through other Guarantors, owns all of the issued and outstanding capital stock
of each Guarantor. The execution and delivery of this guaranty are requirements
to Agent's and Lenders' execution of the Credit Agreement and other Loan
Documents, are integral to the transactions contemplated by the Loan Documents,
and are conditions precedent to Lenders' obligations to extend any credit under
the Credit Agreement.
ACCORDINGLY, for adequate and sufficient consideration, each Guarantor
jointly and severally guarantees to Agent and Lenders the prompt payment of the
Guaranteed Debt (defined below) at -- and at all times after -- its maturity (by
acceleration or otherwise) as follows:
1. DEFINITIONS. Terms defined in the Credit Agreement have the same
meanings when used -- unless otherwise defined -- in this guaranty. As used in
this guaranty:
AGENT is defined in the preamble to this guaranty and includes its
successor appointed under SECTION 13 of the Credit Agreement and acting as AGENT
for Lenders under the Loan Documents.
BORROWER is defined in the recitals to this guaranty and includes, without
limitation, Borrower, Borrower as a debtor-in-possession, and any receiver,
trustee, liquidator, conservator, custodian, or similar party appointed for
Borrower or for all or substantially all of Borrower's assets under any Debtor
Law.
CREDIT AGREEMENT is defined in the recitals to this guaranty.
GUARANTEED DEBT means the Obligation, as defined in the Credit Agreement,
and all present and future costs, attorneys' fees, and expenses reasonably
incurred by Agent or any Lender to enforce Borrower's, any Guarantor's, or any
other obligor's payment of any of the Obligation, including, without limitation,
all present and future amounts that would become due but for the operation of
SECTIONS 502 or 506 or any other provision of TITLE 11 of the UNITED STATES CODE
and all present and future accrued and unpaid interest (including, without
limitation, all post-petition interest if Borrower or any Guarantor voluntarily
or involuntarily becomes subject to any Debtor Law).
GUARANTORS is defined in the preamble to this guaranty.
SUBORDINATED DEBT means all present and future obligations of Borrower to
any Guarantor, whether those obligations are (a) direct, indirect, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and several, (b)
due or to become due to any Guarantor, (c) held by or are to be held by any
Guarantor, (d) created directly or acquired by assignment or otherwise, or (e)
evidenced in writing.
<PAGE>
2. GUARANTY. This is an absolute, irrevocable, and continuing guaranty,
and the circumstance that at any time or from time to time the Guaranteed Debt
may be paid in full does not affect the obligation of any Guarantor with respect
to the Guaranteed Debt incurred after that. This guaranty remains in effect
until the Guaranteed Debt is fully paid and performed, each LC has expired or
been cancelled, and all commitments to lend or issue LCs under the Credit
Agreement have terminated. Agent, in its own discretion or at the direction of
the Determining Lenders, shall have sole and exclusive authority to enforce this
guaranty. No Guarantor may rescind or revoke its obligations with respect to
the Guaranteed Debt. Notwithstanding any contrary provision in this guaranty,
however, each Guarantor's maximum liability under this guaranty is limited, to
the extent, if any, required so that its liability is not subject to avoidance
under any Debtor Law.
3. CONSIDERATION. Each Guarantor represents and warrants that (a) the
value of the consideration received and to be received by it is reasonably worth
at least as much as its liability under this guaranty and (b) that liability may
reasonably be expected to directly or indirectly benefit it.
4. CUMULATIVE RIGHTS. If any Guarantor becomes liable for any
indebtedness owing by Borrower to Agent or any Lender, OTHER THAN under this
guaranty, that liability may not be in any manner impaired or affected by this
guaranty. The Rights of Agent or Lenders under this guaranty are cumulative of
any and all other Rights that Agent or Lenders may ever have against each
Guarantor. The exercise by Agent or Lenders of any Right under this guaranty or
otherwise does not preclude the concurrent or subsequent exercise of any other
Right.
5. PAYMENT UPON DEMAND. If a Default exists, each Guarantor shall -- on
demand and without further notice of dishonor and without any notice having been
given to any Guarantor previous to that demand of either the acceptance by Agent
or Lenders of this guaranty or the creation or incurrence of any Guaranteed
Debt -- pay the amount of the Guaranteed Debt then due and payable to Agent for
Lenders. It is not necessary for Agent or Lenders, in order to enforce that
payment by any Guarantor, first or contemporaneously to institute suit or
exhaust remedies against Borrower or others liable on any Guaranteed Debt or to
enforce Rights against any collateral securing any Guaranteed Debt.
6. SUBORDINATION. The Subordinated Debt is expressly subordinated to the
full and final payment of the Guaranteed Debt. Each Guarantor agrees not to
accept any payment of any Subordinated Debt from Borrower if a Default or
Potential Default exists. If any Guarantor receives any payment of any
Subordinated Debt in violation of the foregoing, that Guarantor shall hold that
payment in trust for Agent and Lenders and promptly turn it over to Agent, in
the form received (with any necessary endorsements), to be applied to the
Guaranteed Debt.
7. SUBROGATION AND CONTRIBUTION. Until no Lender is obligated to lend or
issue LCs under the Credit Agreement, all LCs have expired or been cancelled,
and the Guaranteed Debt has been fully paid and performed (the "DEFERMENT DATE")
(a) no Guarantor may assert, enforce, or otherwise exercise any Right of
subrogation to any of the Rights or Liens of Agent or Lenders or any other
beneficiary against Borrower or any other obligor on the Guaranteed Debt or any
collateral or other security or any Right of recourse, reimbursement,
subrogation, contribution, indemnification, or similar Right against Borrower or
any other obligor on any Guaranteed Debt or any guarantor of it, (b) each
Guarantor defers all of the foregoing Rights (whether they arise in equity,
under contract, by statute, under common Law, or otherwise) until the Deferment
Date, and (c) each Guarantor defers the benefit of, and any Right to participate
in, any collateral or other security given to Agent or Lenders or any other
beneficiary to secure payment of any Guaranteed Debt until the Deferment Date.
2
<PAGE>
8. NO RELEASE. No Guarantor's obligations under this guaranty may be
released, diminished, or affected by the occurrence of any one or more of the
following events: (a) Any taking or accepting of any other security or
assurance for any Guaranteed Debt; (b) any release, surrender, exchange,
subordination, impairment, or loss of any collateral securing any Guaranteed
Debt; (c) any full or partial release of the liability of any other obligor on
the Obligation; (d) the modification of, or waiver of compliance with, any terms
of any other Loan Document; (e) the insolvency, bankruptcy, or lack of corporate
or partnership power of any other obligor at any time liable for any Guaranteed
Debt, whether now existing or occurring in the future; (f) any renewal,
extension, or rearrangement of any Guaranteed Debt or any adjustment,
indulgence, forbearance, or compromise that may be granted or given by Agent or
any Lender to any other obligor on the Obligation; (g) any neglect, delay,
omission, failure, or refusal of Agent or any Lender to take or prosecute any
action in connection with the Guaranteed Debt; (h) any failure of Agent or any
Lender to notify any Guarantor of any renewal, extension, or assignment of any
Guaranteed Debt, or the release of any security or of any other action taken or
refrained from being taken by Agent or any Lender against Borrower or any new
agreement between Agent, any Lender, and Borrower, it being understood that
neither Agent nor any Lender is required to give any Guarantor any notice of any
kind under any circumstances whatsoever with respect to or in connection with
any Guaranteed Debt, OTHER THAN any notice required to be given to Guarantors by
Law or elsewhere in this guaranty; (i) the unenforceability of any Guaranteed
Debt against any other obligor because it exceeds the amount permitted by Law,
the act of creating it is ULTRA VIRES, the officers creating it exceeded their
authority or violated their fiduciary duties in connection with it, or
otherwise; or (j) any payment of the Obligation to Agent or Lenders is held to
constitute a preference under any Debtor Law or for any other reason Agent or
any Lender is required to refund that payment or make payment to someone else
(and in each such instance this guaranty will be reinstated in an amount equal
to that payment).
9. WAIVERS. Each Guarantor waives (a) all defenses to the enforcement
of this guaranty (and Rights which may be asserted as defenses to the
enforcement of this guaranty), other than payment, including, but not limited
to, (i) any Right to revoke this Guaranty with respect to future indebtedness;
(ii) any Right to require Agent or Lenders to do any of the following before any
Guarantor is obligated to pay the Guaranteed Debt or before Agent or Lenders may
proceed against that Guarantor: (A) sue or exhaust remedies against Borrower and
other guarantors or obligors, (B) sue on an accrued right of action in respect
of any of the Guaranteed Debt or bring any other action, exercise any other
right, or exhaust all other remedies, or (C) enforce rights against Borrower's
assets or the collateral pledged by Borrower to secure the Guaranteed Debt;
(iii) any right relating to the timing, manner, or conduct of Agent's or
Lenders' enforcement of rights against Borrower's assets or the collateral
pledged by Borrower to secure the Guaranteed Debt; (iv) if Guarantors and
Borrower (or a third party) have each pledged assets to secure the Guaranteed
Debt, any right to require Agent and Lenders to proceed first against the other
collateral before proceeding against collateral pledged by any Guarantor;
(v) notice that this Guaranty has been accepted by Agent and Lenders and notice
of any indebtedness to which this Guaranty may apply; (vi) any right of any
Guarantor to receive notice from Agent or Lenders of changes which affect the
creditworthiness of Borrower, and (vii) except as required hereby, presentation,
presentment, demand for payment, protest, notice of protest, notice of dishonor
or nonpayment of any indebtedness, notice of intent to accelerate, notice of
acceleration, notice of any suit or other action by Lender against Borrower, any
Guarantor or any other Person and any notice to any party liable for the
obligation which is the subject of the suit or action, and (b) each of the
foregoing rights or defenses regardless whether they arise under (i) Section
34.01 ET SEQ. of the Texas Business and Commerce Code, as amended,
(ii) Section 17.001 of the Texas Civil Practice and Remedies Code, as amended,
(iii) Rule 31 of the Texas Rules of Civil Procedure, as amended, or (iv) common
law, in equity, under contract, by statute, or otherwise.
3
<PAGE>
10. CREDIT AGREEMENT PROVISIONS. Each Guarantor acknowledges that certain
(a) representations and warranties in the Credit Agreement are applicable to it
and confirms that each such representation and warranty is true and correct, (b)
covenants, agreements, and other provisions in the Credit Agreement (INCLUDING,
WITHOUT LIMITATION, INDEMNIFICATION AND RELATED PROVISIONS IN SECTION 8.12 OF
THE CREDIT AGREEMENT) are applicable to it or are imposed upon it and agrees to
promptly and properly comply with or be bound by each of them, AND (C) IT
IRREVOCABLY CONSENTS AND APPROVES TO THE VENUE, SERVICE OF PROCESS, AND WAIVER
OF JURY TRIAL PROVISIONS OF SECTION 14.11 OF THE CREDIT AGREEMENT.
11. RELIANCE AND DUTY TO REMAIN INFORMED. Each Guarantor confirms that it
has executed and delivered this guaranty after reviewing the terms and
conditions of the Loan Documents and such other information as it has deemed
appropriate in order to make its own credit analysis and decision to execute
and deliver this guaranty. Each Guarantor confirms that it has made its own
independent investigation with respect to Borrower's creditworthiness and is not
executing and delivering this guaranty in reliance on any representation or
warranty by Agent or any Lender as to that creditworthiness. Each Guarantor
expressly assumes all responsibilities to remain informed of the financial
condition of Borrower and any circumstances affecting Borrower's ability to
perform under the Loan Documents to which it is a party or any collateral
securing any Guaranteed Debt.
12. NO REDUCTION. The Guaranteed Debt may not be reduced, discharged, or
released because or by reason of any existing or future offset, claim, or
defense (except for the defense of complete and final payment of the Guaranteed
Debt) of Borrower or any other obligor against Agent or Lenders or against
payment of the Guaranteed Debt, whether that offset, claim, or defense arises in
connection with the Guaranteed Debt or otherwise. Those claims and defenses
include, without limitation, failure of consideration, breach of warranty,
fraud, bankruptcy, incapacity/infancy, statute of limitations, lender liability,
accord and satisfaction, usury, forged signatures, mistake, impossibility,
frustration of purpose, and unconscionability.
13. LOAN DOCUMENT. This guaranty is a Loan Document and is subject to the
applicable provisions of SECTIONS 1 and 14 of the Credit Agreement, all of which
are incorporated into this guaranty by reference the same as if set forth in
this guaranty verbatim.
14. COMMUNICATIONS. For purposes of SECTION 14.2 of the Credit Agreement,
each Guarantor's address and telecopy number are the same as Borrower's.
15. AMENDMENTS, ETC. No amendment, waiver, or discharge to or under this
guaranty is valid unless it is in writing and is signed by the party against
whom it is sought to be enforced and is otherwise in conformity with the
requirements of SECTION 14.8 of the Credit Agreement.
16. ENTIRETY. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS TO WHICH ANY
GUARANTOR IS A PARTY REPRESENT THE FINAL AGREEMENT BETWEEN THAT GUARANTOR,
AGENT, AND LENDERS WITH RESPECT TO THE SUBJECT MATTER OF THIS GUARANTY AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
17. AGENT AND LENDERS. Agent is the agent for each Lender under the
Credit Agreement. All Rights granted to Agent under or in connection with this
guaranty are for each Lender's ratable benefit. Agent may, without the joinder
of any Lender, exercise any Rights in Agent's or Lenders' favor under or in
connection with this guaranty. Agent's and each Lender's Rights and obligations
VIS-A-VIS each other may be subject to one or more separate agreements between
those parties.
4
<PAGE>
However, no Guarantor is required to inquire about any such agreement or is
subject to any terms of it. Therefore, neither any Guarantor nor its successors
or assigns is entitled to any benefits or provisions of any such separate
agreement or is entitled to rely upon or raise as a defense any party's failure
or refusal to comply with the provisions of it.
18. PARTIES. This guaranty benefits Agent, Lenders, and their respective
successors and assigns and binds each Guarantor and its successors and assigns.
Upon appointment of any successor Agent under the Credit Agreement, all of the
Rights of Agent under this guaranty automatically vests in that new Agent as
successor Agent on behalf of Lenders without any further act, deed, conveyance,
or other formality OTHER THAN that appointment. The Rights of Agent and Lenders
under this guaranty may be transferred with any assignment of the Guaranteed
Debt. The Credit Agreement contains provisions governing assignments of the
Guaranteed Debt and of Rights and obligations under this guaranty.
EXECUTED as of the date first stated above.
MAGNETEK CENTURY ELECTRIC, INC.,
MAGNETEK ELECTRIC, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.,
and MAGNETEK OHIO TRANSFORMER, INC.,
AS GUARANTORS
By
--------------------------------------------
John Colling, Jr. Vice President and
Treasurer of all of the foregoing companies
Agent executes this guaranty in acknowledgement of PARAGRAPH 16 above.
NATIONSBANK OF TEXAS, N.A., AS AGENT
By
--------------------------------------------
Andrea P. Collias, Vice President
5
<PAGE>
EXHIBIT C
SECURITY AGREEMENT
THIS AGREEMENT is executed as of March 31, 1995, by MAGNETEK, INC., a
Delaware corporation ("BORROWER/DEBTOR"), and the other undersigned debtors
("SUBSIDIARY/DEBTORS"), for the benefit of NATIONSBANK OF TEXAS, N.A., a
national banking association (in its capacity as Agent for the Lenders now or in
the future party to the Credit Agreement described below "SECURED PARTY").
Borrower/Debtor, Secured Party, and Lenders have executed the Credit
Agreement (as renewed, extended, amended, or restated, the "CREDIT AGREEMENT")
dated as of March 31, 1995, and certain other Loan Documents. Borrower/Debtor
owns all of the issued and outstanding capital stock of each Subsidiary/Debtor,
except as disclosed on SCHEDULE 7.3 to the Credit Agreement. The execution and
delivery of this agreement are requirements to Secured Party's and Lenders'
execution of the Credit Agreement and other Loan Documents, are integral to the
transactions contemplated by the Loan Documents, and are conditions precedent to
Lenders' obligations to extend credit under the Credit Agreement.
ACCORDINGLY, for adequate and sufficient consideration, Borrower/Debtor and
Subsidiary/Debtors jointly and severally agree with Secured Party for the
benefit of Lenders as follows:
1. DEFINITIONS. Terms defined in the Credit Agreement or the UCC have
the same meanings when used -- unless otherwise defined -- in this agreement.
If the definition given a term in the Credit Agreement conflicts with the
definition given that term in the UCC, then the Credit Agreement definition
controls to the extent allowed by Law. If the definition given a term in
CHAPTER 9 of the UCC conflicts with the definition given that term in any other
chapter of the UCC, then the CHAPTER 9 definition controls. Furthermore, as
used in this agreement:
ACCOUNTS means, for each Debtor, all of its present and future accounts,
instruments, receivables, accounts receivable, chattel paper, documents, and
book debts arising from its sale or lease of goods or rendition of services,
including, without limitation, all present and future (a) amounts due to it from
a factor, (b) returned, reclaimed, refused, or repossessed goods, and (c) books
and records pertaining to, and security and guaranties for, any of the
foregoing.
BORROWER/DEBTOR is defined in the preamble to this agreement and includes,
without limitation, Borrower/Debtor, Borrower/Debtor as a debtor-in-possession,
and any receiver, trustee, liquidator, conservator, custodian, or similar party
appointed for Borrower or for all or substantially all of Borrower/Debtor's
assets under any Debtor Law.
COLLATERAL is defined in PARAGRAPH 4 below.
CREDIT AGREEMENT is defined in the recitals to this agreement.
DEBTORS means Borrower/Debtor and Subsidiary/Debtors.
FINANCING STATEMENT means a financing statement executed by each Debtor and
Secured Party for filing in the jurisdictions listed in SCHEDULE 6 to the Credit
Agreement, and in substantially the form of ANNEX 2 to this agreement.
INVENTORY means, for each Debtor, all of its present and future inventory,
including, without limitation, all present and future (a) materials, goods and
work-in-process, finished goods, and other tangible property held for sale or
lease or being processed for sale or lease in its present or future
<PAGE>
business, whether to be furnished under contracts or used or consumed in that
Debtor's business, (b) documents (including documents of title) covering any of
the foregoing, and (c) such property the sale or other disposition of which has
given rise to accounts and which has not been returned to or repossessed or
stopped in transit by that Debtor.
OBLIGOR means any Person obligated with respect to any of the Collateral,
whether as a party to a contract, an account debtor, issuer of any securities,
or otherwise.
OBLIGATION means the "OBLIGATION," as defined in the Credit Agreement,
including, without limitation, all present and future indebtedness, liabilities,
and obligations of each Debtor arising under this agreement, and all present and
future costs, attorneys' fees, and expenses reasonably incurred by Secured Party
or any Lender to enforce any Debtor's or any other obligor's payment of any of
the Obligation, including, without limitation (to the extent lawful), all
present and future amounts that would become due but for the operation of
SECTIONS 502 or 506 or any other provision of TITLE 11 of the UNITED STATES CODE
and all present and future accrued and unpaid interest (including, without
limitation, all post-petition interest if any Debtor voluntarily or
involuntarily becomes subject to any Debtor Law).
PLEDGED SECURITIES means, whether now owned or acquired in the future by
any Debtor, (a) all present and future shares of capital stock issued by any of
the following subsidiaries and (b) 65% of all present and future shares of
capital stock issued by MagneTek Europe, N.V., and in either case, including,
without limitation, all present and future increases, profits, combinations,
reclassifications, dividends, and substitutes and replacements for any of the
foregoing (SO LONG AS the Pledged Securities do not include more than the number
of voting shares required to be pledged under the Credit Agreement):
MagneTek Century Electric, Inc., MagneTek National Electric Coil,
Inc., MagneTek Ohio Transformer, Inc., MagneTek Electric, Inc.,
MagneTek Controls, Inc., MagneTek Tempe, Inc., MagneTek Credit
Corporation, MagneTek Leasing Corporation and MagneTek Airport
Systems, Inc.,
SECURED PARTY is defined in the preamble to this agreement and includes its
successor appointed under SECTION 13 of the Credit Agreement and acting as AGENT
for Lenders under the Loan Documents.
SECURITY INTEREST means the security interests granted and the transfers,
pledges, and assignments made under PARAGRAPH 2 below, which is a "LENDER LIEN,"
as defined in the Credit Agreement.
SUBSIDIARY/DEBTORS is defined in the preamble to this agreement.
UCC means the UNIFORM COMMERCIAL CODE as adopted in Texas or any other
applicable jurisdiction.
2. SECURITY INTEREST. To secure the prompt, unconditional, and complete
payment and performance of the Obligation when due, each Debtor jointly and
severally grants to Secured Party a security interest in the Collateral
identified for it in PARAGRAPH 4 below and jointly and severally pledges and
collaterally transfers and assigns that Collateral to Secured Party, all upon
and subject to the terms and conditions of this agreement. If the grant,
pledge, or collateral transfer or assignment of any specific item of the
Collateral is expressly prohibited by any contract, then the Security Interest
nonetheless remains effective to the extent allowed by UCC SECTION 9.318 or
other applicable Law but is otherwise limited by that prohibition.
2
<PAGE>
3. NO ASSUMPTION OR MODIFICATION. The Security Interest is given as
security only in order to secure the prompt, unconditional, and complete payment
and performance of the Obligation when due. Neither Secured Party nor any Lender
assumes or may become liable for any Debtors' liabilities, duties, or
obligations under or in connection with the Collateral. Neither Secured Party's
acceptance of this agreement nor its taking any action in carrying out this
agreement, constitutes Secured Party's approval of the Collateral or Secured
Party's assumption of any obligation under or in connection with the Collateral.
This agreement does not affect or modify any Debtors' obligations with respect
to any Collateral.
4. COLLATERAL. The term "COLLATERAL" means the following items and types
of property -- wherever located and now or in the future acquired or existing:
- For each Debtor, all of its Accounts, Inventory, and Pledged
Securities; and
- All cash and noncash proceeds of any other Collateral, including,
without limitation, all cash, accounts, general intangibles,
documents, instruments, chattel paper, goods, and any other property
received upon the sale or disposition of any other Collateral and all
insurance proceeds of any kind paid at any time in connection with any
other Collateral.
5. FRAUDULENT CONVEYANCE. Notwithstanding any contrary provision, each
Debtor agrees that, if -- but for the application of this paragraph -- any of
the Obligation or the Security Interest would constitute a preferential transfer
under 11 U.S.C. SECTION 547, a fraudulent conveyance under 11 U.S.C. SECTION
548, or a fraudulent conveyance or transfer under any state fraudulent
conveyance, fraudulent transfer, or similar Law in effect from time to time
(each a "FRAUDULENT CONVEYANCE"), then the Obligation and Security Interest
remains enforceable to the maximum extent possible without causing any of the
Obligation or the Security Interest to be a fraudulent conveyance, and this
agreement is automatically amended to carry out the intent of this paragraph.
6. REPRESENTATIONS AND WARRANTIES. Debtors jointly and severally
represent and warrant to Secured Party on behalf of Lenders that:
(a) CREDIT AGREEMENT. Each Debtor acknowledges that certain (a)
representations and warranties in the Credit Agreement are applicable to it or
its assets or operations and confirms that each such representation and warranty
is true and correct, (b) covenants, agreements, and other provisions in the
Credit Agreement (INCLUDING, WITHOUT LIMITATION, INDEMNIFICATION AND RELATED
PROVISIONS IN SECTION 8.12 OF THE CREDIT AGREEMENT) are applicable to it or are
imposed upon it and agrees to promptly and properly comply with or be bound by
each of them, AND (C) IT IRREVOCABLY CONSENTS AND APPROVES TO THE VENUE, SERVICE
OF PROCESS, AND WAIVER OF JURY TRIAL PROVISIONS OF SECTION 14.11 OF THE CREDIT
AGREEMENT.
(b) BORROWING BASE. Any item of Collateral submitted or represented
to Secured Party as being eligible under the Credit Agreement to be included in
the Borrowing Base fully meets the requirements for eligibility provided in the
Credit Agreement.
(c) BINDING OBLIGATION. This agreement creates a legal, valid, and
binding Lender Lien in and to the Collateral (subject to delivery to Secured
Party of the stock certificates for the Pledged Securities) in favor of Secured
Party and enforceable against the Debtor owning that Collateral. For Collateral
in which the Security Interest may be perfected by the filing of Financing
Statements, once those Financing Statements have been property filed in the
jurisdictions described on SCHEDULE 6 to the Credit Agreement, the Security
Interest in that Collateral will be fully perfected. For the Pledged
Securities, the taking by Secured Party of physical possession in Texas of the
stock certificates representing the Pledged Securities will perfect the Security
Interest in that Collateral.
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Once perfected, the Security Interest will constitute a first-priority Lender
Lien on the Collateral, subject only to Permitted Liens. The creation of the
Security Interest does not require the consent of any Person that has not been
obtained.
(d) LOCATIONS. The attached ANNEX 1 accurately describes (i) the
location of each Debtor's principal place of business and chief executive
office, (ii) if different from CLAUSE (I), the one or more locations of its
books and records concerning its Accounts, (iii) the locations where any of its
Inventory (EXCEPT when temporarily in the hands of a third-party contractor for
processing and until sold in the ordinary course of business) is currently and
will -- SUBJECT TO PARAGRAPH 7(b) below -- in the future be maintained. EXCEPT
as stated in CLAUSE (iii) above, each Debtor's Inventory is currently and will
be in its possession.
(e) ACCOUNTS. Each Debtor's Accounts (i) arise from its sales or
rendition of services, (ii) are due to that Debtor, and (iii) are not, if
represented to be eligible for inclusion in the Borrowing Base, subject to any
material setoff, counterclaim, defense, allowance, adjustment (OTHER THAN
discounts for prompt payment shown on the invoice), or material dispute,
objection, or complaint by any Obligor.
(f) SECURITIES. All Pledged Securities are duly authorized, validly
issued, fully paid, and non-assessable, and the transfer of them is not subject
to any restrictions OTHER THAN restrictions imposed by applicable Laws. The
Pledged Securities are approximately the maximum number of shares of each
Subsidiary that may be pledged without creating a material Tax obligation for
the Companies that would not otherwise exist. Copies of the certificates
evidencing the Pledged Securities of MagneTek Europe are annexed to this
agreement as ANNEX 4 (however, the failure of those copies to be accurate or
complete does not affect or impair the Security Interest in them).
(g) ADDITIONAL COLLATERAL. The foregoing representations and
warranties will be true and correct in all respects with respect to any
additional Collateral or additional specific descriptions of certain Collateral
delivered to Secured Party in the future by any Debtor.
The failure of any of these representations or warranties to be accurate and
complete does not impair the Security Interest in any Collateral.
7. COVENANTS. While any Lender is committed to lend or extend credit
under the Credit Agreement and until the Obligation are fully paid and
performed, each Debtor jointly and severally covenants and agrees with Secured
Party on behalf of Lenders that, without first obtaining Secured Party's written
notice of Determining Lenders' consent to the contrary:
(a) CREDIT AGREEMENT. Each Debtor shall promptly and fully comply
with and perform all covenants and agreements in the Credit Agreement that are
applicable to it or its assets or operations, each of which is ratified and
confirmed.
(b) CERTAIN RELOCATIONS AND CHANGES. Each Debtor shall give Secured
Party 30-days-written notice before any proposed (i) relocation of its principal
place of business or chief executive office, (ii) change of its name, (iii)
relocation of the place where its books and records concerning its Accounts are
kept, and (iv) relocation of any Collateral (OTHER THAN delivery of Inventory in
the ordinary course of business to third-party contractors for processing and
sales of Inventory in the ordinary course of business or as permitted by the
Credit Agreement) to a location not described on the attached ANNEX 1.
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(c) ESTOPPEL AND OTHER AGREEMENTS AND MATTERS. Each Debtor shall:
(i) Within 30 days after the date of this agreement and at all
times after that time -- with respect to any of its Inventory having a
value of at least $1,500,000 that is from time to time delivered to any
third-party contractor for processing in the ordinary course of business --
deliver to Secured Party a bailee, estoppel, and subordination agreement
providing that such third-party contractor holds that Inventory as Secured
Party's bailee, subordinates to the Security Interest all right, title, and
interest it may have in and to that Inventory, and covenants to keep that
Inventory segregated and clearly marked as being owned by that Debtor,
which agreement must otherwise be in form and substance reasonably
acceptable to Secured Party and its special counsel; and
(ii) EITHER (unless waived by Secured Party in its sole judgment
without requiring approval of any other Lender) (A) cause the landlord or
lessor for each location where any of its Inventory (OTHER THAN Inventory
with a fair market value not to exceed $1,500,000) is maintained to execute
and deliver to Secured Party an estoppel and subordination agreement in
substantially the form of the attached ANNEX 3 or such other form as may be
reasonably acceptable to Secured Party and its special counsel, OR (B)
deliver to Secured Party a legal opinion or other evidence (in each case
that is reasonably satisfactory to Secured Party and it special counsel)
that neither the applicable lease nor the Laws of the jurisdiction in which
that location is situated provide for contractual, common Law, or statutory
landlord's Liens that is senior to the Security Interest.
(d) OTHER NOTICES AND ACTIONS. Each Debtor shall promptly notify
Secured Party of (i) any change in any material fact or circumstance represented
or warranted by any Debtor with respect to any of the Collateral, and (ii) any
claim, action, or proceeding challenging the Security Interest or affecting
title to all or any material portion of the Collateral or the Security Interest
(and, at Secured Party's request, that Debtor shall appear in and defend any
such action or proceeding at that Debtor's expense). In case of any default or
event of default by any other party under or in connection with any material
portion (individually or collectively) of the Collateral, Debtor shall
immediately use reasonable efforts to remedy the same or immediately demand that
the same be remedied),
(e) RECORD OF COLLATERAL. Each Debtor shall maintain at its chief
executive office a current record of where all of its Collateral is located and
permit Secured Party or its representatives to inspect and make copies from
those records pursuant to the Credit Agreement and furnish to Secured Party upon
request, from time to time, such documents, lists, descriptions, certificates,
and other information necessary or helpful to keep Secured Party informed with
respect to the identity, location, status, condition, terms of, parties to, and
value of the Collateral.
(f) COLLATERAL IN TRUST. While a Default or Potential Default
exists, each Debtor shall upon request of Secured Party (unless prevented by
operation of Law from making that request, in which event each Debtor shall) (i)
hold in trust (and not commingle with its other assets) for Secured Party all of
its Collateral that is chattel paper, instruments, or documents of title at any
time received by it, (ii) promptly deliver that Collateral to Secured Party
unless Secured Party at its option gives Debtor written permission to retain any
of it, and (iii) cause each chattel paper, instrument, or document of title so
retained to be marked to state that it is assigned to Secured Party and each
instrument to be endorsed to the order of Secured Party (but failure to be so
marked or endorsed may not impair the Security Interest in any such Collateral).
(g) PERFORM OBLIGATION. Each Debtor shall perform all of its
material obligations under or in connection with all of its Collateral in
accordance with customary business practices.
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(h) IMPAIRMENT OF COLLATERAL. No Debtor may do or permit any act
that is reasonably likely to adversely impair the value or usefulness any
material portion of any Collateral.
8. REMEDIES UPON DEFAULT. While a Default exists, Secured Party is,
subject to Credit Agreement, entitled to exercise any one or more of the
following Rights.
(a) RIGHTS. Secured Party may exercise any and all Rights available
to a secured party under the UCC, in addition to any and all other Rights
afforded by this agreement and the other Loan Documents, at law, in equity, or
otherwise, including, without limitation (i) requiring Debtors to assemble
Collateral and make it available to Secured Party at a place to be designated by
Secured Party which is reasonably convenient to the applicable Debtor and
Secured Party, (ii) applying by appropriate judicial proceedings for appointment
of a receiver for Collateral, (iii) applying to the Obligation any cash held by
Secured Party under this agreement, (iv) reducing any claim to judgment, (v)
exercising the Rights of offset or banker's Lien against the interest of each
Debtor in and to every account and other property of each Debtor in Secured
Party's possession to the extent of the full amount of the Obligation, (vi)
foreclosing the Security Interest and any other Liens Secured Party may have or
otherwise realize upon any and all of the Rights Secured Party may have in and
to Collateral, and (vii) bringing suit or other proceedings before any Tribunal
either for specific performance of any covenant or condition contained in any of
the Loan Documents or in aid of the exercise of any Right granted to Secured
Party in any Loan Document.
(b) NOTICE. If any Collateral threatens to decline speedily in value
or is of the type customarily sold on a recognized market, Secured Party may
sell or otherwise dispose of that Collateral without notification,
advertisement, or other notice of any kind. Otherwise, reasonable notice of the
time and place of any public sale of the Collateral -- or reasonable
notification of the time after which any private sale or other intended
disposition of the Collateral is to be made -- shall be sent to Debtor and to
any other Person entitled to notice under the UCC. Notice sent or given not
less than ten calendar days prior to the taking of the action to which the
notice relates is reasonable notice. It is not necessary that the Collateral be
at the location of the sale.
(c) SALES OF SECURITIES. In connection with the sale of any
Collateral that is securities, Secured Party is authorized, but not obligated,
to limit prospective purchasers to the extent deemed necessary or desirable by
Secured Party to render that sale exempt from the registration and similar
requirements under applicable Laws, and no sale so made in good faith by Secured
Party may be deemed not to be "COMMERCIALLY REASONABLE" because so made.
(d) OTHER SALES. Secured Party's sale of less than all Collateral
does not exhaust Secured Party's Rights under this agreement and Secured Party
is specifically empowered to make successive sales until all Collateral is sold.
If the proceeds of a sale of less than all Collateral is less than the
Obligation, then this agreement and the Security Interest remain in full force
and effect as to the unsold portion of the Collateral just as though no sale had
been made. In the event any sale under this agreement is not completed or is,
in Secured Party's opinion, defective, that sale does not exhaust Secured
Party's Rights under this agreement, and Secured Party is entitled to cause a
subsequent sale or sales to be made. All statements of fact or other recitals
made in any bill of sale or assignment or other instrument evidencing any
foreclosure sale under this agreement -- whether about nonpayment of the
Obligation, the occurrence of any Default, Secured Party's having declared all
of the Obligation to be due and payable, notice of time, place, and terms of
sale and the properties to be sold having been duly given, or any other act or
thing having been duly done by Secured Party -- shall be taken as PRIMA FACIE
evidence of the truth of the facts so stated and recited. Secured Party may
appoint or delegate any one or more Persons as agent to perform any act or acts
necessary or incident to any sale held by Secured Party, including the sending
of notices and the conduct of sale, but such acts must be done in the name and
on behalf of Secured Party.
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(e) OBLIGORS. While a Default exists, Secured Party may notify or
require each Obligor to make payment directly to Secured Party, and Secured
Party may take control of the proceeds paid to Secured Party. Until Secured
Party elects to exercise these Rights, each Debtor is authorized to collect and
enforce the Collateral and to retain and expend all payments made on Collateral.
While Secured Party is entitled to and elects to exercise these Rights, Secured
Party has the Right in its own name or in the name of the applicable Debtor to
(i) compromise or extend time of payment with respect to Collateral for such
amounts and upon such terms as Secured Party may reasonably determine, (ii)
demand, collect, receive, receipt for, sue for, compound, and give acquittance
for any and all amounts due or to become due with respect to Collateral, (iii)
take control of cash and other proceeds of any Collateral, (iv) endorse the
applicable Debtor's name on any notes, acceptances, checks, drafts, money
orders, or other evidences of payment on Collateral that may come into Secured
Party's possession, (v) sign the applicable Debtor's name on any invoice or bill
of lading relating to any Collateral, on any drafts against Obligors or other
Persons making payment with respect to Collateral, on assignments and
verifications of accounts or other Collateral, and on notices to Obligors making
payment with respect to Collateral, (vi) send requests for verification of
obligations to any Obligor, and (vii) do all other acts and things reasonably
necessary to carry out the intent of this agreement. If any Obligor fails to
make payment on any Collateral when due while a Default exists, Secured Party is
authorized, in its sole discretion, either in its own name or in the applicable
Debtor's name, to take such action as Secured Party reasonably shall deem
appropriate for the collection of any amounts owed with respect to Collateral or
upon which a delinquency exists. However, Secured Party is NEITHER (x) liable
for its failure to collect, or for its failure to exercise diligence in the
collection of, any amounts owed with respect to Collateral (EXCEPT for its own
fraud, gross negligence, willful misconduct, or violation of any Law), NOR (y)
under any duty whatever to anyone except the applicable Debtor and Lenders to
account for funds that it shall actually receive under this agreement. A
receipt given by Secured Party to any Obligor is a full and complete release,
discharge, and acquittance to that Obligor, to the extent of any amount so paid
to Secured Party. While a Default exists, Secured Party may apply or set off
amounts paid and the deposits against any liability of the applicable Debtor to
Secured Party. Regarding the existence of any Default for purposes of this
agreement, each Debtor agrees that the Obligors on any Collateral may rely upon
written certification from Secured Party that a Default exists.
(f) POWER-OF-ATTORNEY. Secured Party is deemed to be irrevocably
appointed as each Debtor's agent and attorney-in-fact with all Right to enforce
all of that Debtor's Rights under or in connection with the Collateral effective
and operable at all times while a Default exists. All reasonable costs,
expenses and liabilities incurred and all payments made by Secured Party as that
Debtor's agent and attorney-in-fact (including, without limitation, reasonable
attorney's fees and expenses) are considered a loan by Secured Party to that
Debtor that is repayable on demand, accrues interest at the Default Rate until
paid, and is part of the Obligation.
(g) APPLICATION OF PROCEEDS. While a Default exists, Secured Party
shall apply the proceeds of any sale or other disposition of Collateral in the
following order: (i) Payment of all its reasonable expenses incurred in
retaking, holding, and preparing any Collateral for disposition, in arranging
for such disposition, and in actually disposing of the same (all of which are
part of the Obligation); (ii) repayment of amounts reasonably expended by
Secured Party under PARAGRAPH 9 below; (iii) payment of the balance of the
Obligation in the order and manner specified in the Credit Agreement; and (iv)
delivery EITHER (A) to Borrower/Debtor for the account of all Debtors OR (B) as
a court of competent jurisdiction may direct.
9. OTHER RIGHTS.
(a) PERFORMANCE. If any Debtor fails to preserve the priority
(subject to Permitted Liens) of the Security Interest in any Collateral or
otherwise fails to perform any of its obligations under any Loan Document with
respect to any Collateral, then Secured Party may, at its option, but
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without being required to do so, after five Business Days or earlier, if Secured
Party in its reasonable judgment deems it necessary, prosecute or defend any
suits in relation to the Collateral or take any other action that such Debtor is
required -- but has failed -- to take. Any amount that is reasonably expended
or paid by Secured Party in connection with the foregoing (including, without
limitation, court costs and reasonable attorneys' fees and expenses) bears
interest at the Default Rate from the date spent or incurred until repaid and is
payable (with that interest) by Debtors to Secured Party upon demand and is part
of the Obligation.
(b) COLLATERAL IN SECURED PARTY'S POSSESSION. If, while a Default
exists, any Collateral comes into Secured Party's possession, Secured Party may
use that Collateral for the purpose of preserving it or its value pursuant to
the order of a court of appropriate jurisdiction or in accordance with any other
Rights held by Secured Party in respect of that Collateral. Debtors jointly and
severally covenant to promptly reimburse and pay to Secured Party, at Secured
Party's request, the amount of all reasonable expenses, costs, Taxes, and other
charges incurred by Secured Party in connection with its custody and
preservation of that Collateral, all of which bear interest at the Default Rate
from the date spent or incurred until repaid and are (with that interest)
payable by Debtors to Secured Party upon demand and are part of the Obligation.
EXCEPT for Secured Party's own fraud, gross negligence, or willful misconduct
(i) the risk of accidental loss or damage to, or diminution in value of, any
Collateral is on Debtors, (ii) Secured Party has no liability for failure to
obtain or maintain insurance or to determine whether any insurance in effect is
adequate as to amount or risks insured, (iii) Secured Party has no duty to fix
or preserve Rights against any Obligors in respect of any Collateral and is
never liable for any failure to use diligence to collect any amount payable in
respect of any Collateral (OTHER THAN to account to Debtors and Lenders for what
Secured Party may actually collect or receive).
(c) RECORD OWNERSHIP OF SECURITIES. While a Default exists, Secured
Party may have any Collateral that is securities and that is in the possession
of Secured Party, or its nominee or nominees, registered in its name, or in the
name of its nominee or nominees, as pledgee.
(d) VOTING OF SECURITIES. As long as no Default exists, the
applicable Debtor may exercise all voting Rights pertaining to any Collateral
that is securities. While a Default exists, the Right to vote any Collateral
that is securities is vested exclusively in Secured Party. Accordingly, each
applicable Debtor irrevocably constitutes and appoints Secured Party as that
Debtor's proxy and attorney-in-fact -- effective only after notice to the
applicable Debtor while a Default exists but with full power of substitution --
to vote, and to act with respect to, any Collateral that is securities standing
in the name of that Debtor or with respect to which that Debtor is entitled to
vote and act. That proxy is coupled with an interest, is irrevocable, and
continues until the Obligation are fully paid and performed.
(e) CERTAIN PROCEEDS. The provisions of this CLAUSE (E) are
applicable only while a Default exists. Notwithstanding any contrary provision,
all dividends or distributions of property in respect of, and all proceeds of,
any Collateral that is securities -- whether those dividends, distributions, or
proceeds result from a subdivision, combination, or reclassification of the
outstanding capital stock of any issuer or as a result of any merger,
consolidation, acquisition, or other exchange of assets to which any issuer may
be a party, or otherwise -- are part of the Collateral, shall, if received by
any Debtor, be held in trust for Secured Party's benefit, and shall immediately
be delivered to Secured Party (accompanied by proper instruments of assignment
or stock or bond powers executed by the applicable Debtor in accordance with
Secured Party's instructions) to be held subject to the terms of this agreement.
Any cash proceeds of any Collateral that come into Secured Party's possession
(including, without limitation, insurance proceeds) may, at Secured Party's
option, be applied in whole or in part to the Obligation (to the extent then
due), be fully or partially released to or under the written instructions of
that applicable Debtor for any general or specific purpose, or be fully or
partially retained by Secured Party as additional Collateral. Any cash
Collateral in Secured
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Party's possession may be invested by Secured Party in certificates of deposit
issued by Secured Party, any Lender, or any other state or national bank having
combined capital and surplus greater than $100,000,000 or in securities issued
or guaranteed by the United States of America or any of its agencies. Secured
Party is never obligated to make any investment and never has any liability to
any Debtor or any Lender for any loss that may result from any investment or
non-investment. All interest and other amounts earned from any investment may
be dealt with by Secured Party in the same manner as other cash Collateral.
(f) INDEMNIFICATION. DEBTORS JOINTLY AND SEVERALLY ASSUME ALL
LIABILITY FOR ALL COLLATERAL, FOR THE SECURITY INTEREST, AND FOR ANY USE,
POSSESSION, MAINTENANCE, AND MANAGEMENT OF, ALL COLLATERAL (INCLUDING, WITHOUT
LIMITATION, ANY TAXES ARISING AS A RESULT OF, OR IN CONNECTION WITH, THE
TRANSACTIONS CONTEMPLATED IN THIS AGREEMENT) AND JOINTLY AND SEVERALLY AGREE TO
ASSUME LIABILITY FOR, AND TO INDEMNIFY AND HOLD SECURED PARTY, EACH LENDER, AND
THEIR RESPECTIVE REPRESENTATIVE (THE "INDEMNIFIED PARTIES") HARMLESS FROM AND
AGAINST, AND DEFEND EACH INDEMNIFIED PARTY AGAINST, ALL CLAIMS, CAUSES OF
ACTION, OR LIABILITY, FOR INJURIES TO OR DEATHS OF PERSONS AND DAMAGE TO
PROPERTY HOWSOEVER ARISING FROM OR INCIDENT TO SUCH USE, POSSESSION,
MAINTENANCE, AND MANAGEMENT (WHETHER SUCH PERSONS BE AGENTS OR EMPLOYEES OF
DEBTOR OR OF THIRD PARTIES, OR SUCH DAMAGE BE TO PROPERTY OF DEBTOR OR OF
OTHERS) AND ALL CLAIMS, COSTS, PENALTIES, LIABILITIES, AND EXPENSES, INCLUDING,
WITHOUT LIMITATION, COURT COSTS AND ATTORNEYS' FEES, HOWSOEVER ARISING OR
INCURRED BECAUSE OF, INCIDENT TO, OR WITH RESPECT TO COLLATERAL OR ANY USE,
POSSESSION, MAINTENANCE, OR MANAGEMENT OF IT. (THE "INDEMNIFIED LIABILITIES").
HOWEVER, NO INDEMNIFIED PARTY IS ENTITLED TO INDEMNITY UNDER THIS PARAGRAPH FOR
ITS OWN GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD OR FOR ANY INDEMNIFIED
LIABILITY ARISING FROM ITS ACTIONS AFTER SECURED PARTY HAS FORECLOSED THE
SECURITY INTEREST OR ACCEPTED CONVEYANCE IN LIEU OF FORECLOSURE OR (EXCEPT FOR
THE PLEDGED SECURITIES) TAKEN POSSESSION OF ANY COLLATERAL. The provisions of
this paragraph survive the payment and performance of the Obligation and the
release of the Security Interest. The foregoing indemnity shall be subject to
the provisions of SECTION 8.12 of the Credit Agreement.
10. MISCELLANEOUS.
(a) TERM. This agreement terminates when no Lender has any
commitment to lend or extend credit under the Credit Agreement and the
Obligation are fully paid and performed. No Obligor on any Collateral is
obligated to inquire about the termination of this agreement and is fully
protected in making payments directly to Secured Party if SECTION 8(E) applies,
which payments Secured Party shall pay to Borrower/Debtor on behalf of Debtors
after termination of this agreement.
(b) NO RELEASE. Neither the Security Interest, any Debtor's
obligations, nor Secured Party's or any Lenders' Rights under this agreement are
released, diminished, impaired, or adversely affected by the occurrence of any
one or more of the following events: (i) The taking or accepting of any other
security or assurance for any Obligation; (ii) any release, surrender, exchange,
subordination, or loss of any security or assurance at any time existing in
connection with any Obligation; (iii) the modification of, amendment to, or
waiver of compliance with any terms of any other Loan Document without the
consent of Debtors EXCEPT as required in that Loan Document; (iv) any present or
future insolvency, bankruptcy, or lack of corporate or trust power of any party
at any time liable for the payment of any Obligation; (v) EXCEPT as specifically
required by any other Loan Document, any renewal, extension, or rearrangement of
the payment of any Obligation (either with or without notice to or consent of
any Debtor) or any adjustment, indulgence, forbearance, or compromise that may
be granted or given by Secured Party or any Lender to any Debtor; (vi) any
neglect, delay, omission, failure, or refusal of Secured Party or any Lender to
take or prosecute any action in connection with any agreement, document,
guaranty, or instrument evidencing, securing, or
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assuring the payment of any Obligation; (vii) any failure of Secured Party or
any Lender to notify any Debtor of any renewal, extension, or assignment of any
Obligation, or the release of any security under any other document or
instrument, or of any other action taken or refrained from being taken by
Secured Party or any Lender against any Debtor, or any new agreement between
Secured Party, any Lender, and any Debtor, it being understood that, except as
expressly required by the Credit Agreement, neither Secured Party nor any Lender
is required to give any Debtor any notice of any kind under any circumstances
whatsoever with respect to or in connection with the Obligation, including,
without limitation, notice of acceptance of this agreement or any Collateral
ever delivered to or for the account of Secured Party under this agreement;
(viii) the illegality, invalidity, or unenforceability of any Obligation against
any third party obligated with respect to it by reason of the fact that the
Obligation, or the interest paid or payable with respect to any of it, exceeds
the amount permitted by Law, the act of creating any of it is ULTRA VIRES, or
the officers, partners, or trustees creating any of it acted in excess of their
authority, or for any other reason; or (ix) if any payment by any party
obligated with respect to any Obligation is held to constitute a preference
under applicable Laws or for any other reason Secured Party or any Lender is
required to refund any payment on any Obligation or pay the amount of it to
someone else.
(c) WAIVERS. To the maximum extent lawful, except to the extent
expressly otherwise provided in this agreement or in any other Loan Document,
Debtors jointly and severally waive (i) any Right to require Secured Party or
any Lender to proceed against any other Person, to exhaust Rights in Collateral,
or to pursue any other Right that Secured Party or any Lender may have; (ii)
with respect to the Obligation, presentment and demand for payment, protest,
notice of protest and nonpayment, notice of acceleration, and notice of intent
to accelerate; and (iii) all Rights of marshaling in respect of any Collateral.
(d) FINANCING STATEMENT. Secured Party may at any time file this
agreement (or a carbon, photographic, or other reproduction of this agreement)
as a financing statement, but the failure of Secured Party to do so does not
impair the validity or enforceability of this agreement.
(e) INFORMATION. Except as otherwise provided by Law, Secured
Party's charge for furnishing each statement of account or each list of
Collateral is $10.00.
(f) LOAN DOCUMENT. This agreement is a Loan Document and is subject
to the applicable provisions of SECTIONS 1 and 14 of the Credit Agreement, all
of which are incorporated in this agreement by reference the same as if set
forth in this agreement verbatim.
(g) COMMUNICATIONS. For purposes of SECTION 14.2 of the Credit
Agreement, each Debtor's address and telecopy number are the same as
Borrower/Debtor's.
(h) AMENDMENTS, ETC. No amendment, waiver, or discharge to or under
this agreement is valid unless it is in writing and is signed by the party
against whom it is sought to be enforced and is otherwise in conformity with the
requirements of SECTION 14.8 of the Credit Agreement.
(i) ENTIRETY. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS TO WHICH
ANY DEBTOR IS PARTY REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT
ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
(j) SECURED PARTY AND LENDERS. Secured Party is the agent for each
Lender under the Credit Agreement. The Security Interest and all Rights granted
to Secured Party under or in connection with this agreement are for each
Lender's ratable benefit. Secured Party may, without the
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joinder of any Lender, exercise any Rights in Secured Party's or Lenders' favor
under or in connection with this agreement, including, without limitation,
conducting any foreclosure sales and executing full or partial releases of,
amendments or modifications to, or consents or waivers under this agreement.
Secured Party's and each Lender's Rights and obligations VIS-A-VIS each other
may be subject to one or more separate agreements between those parties.
However, no Debtor need inquire about any such agreement or is subject to any
terms of it. Therefore, neither any Debtor nor its successors or assigns is
entitled to any benefits or provisions of any such separate agreement or is
entitled to rely upon or raise as a defense any party's failure or refusal to
comply with the provisions of it.
(k) PARTIES. This agreement benefits Secured Party, Lenders, and
their respective successors and assigns and binds each Debtor and its successors
and assigns. Upon appointment of any successor AGENT under the Credit
Agreement, all of the Rights of Secured Party under this agreement automatically
vests in that new AGENT as successor Secured Party on behalf of Lenders without
any further act, deed, conveyance, or other formality OTHER THAN that
appointment. The Rights of Secured Party and Lenders under this agreement may
be transferred with any assignment of the Obligation. The Credit Agreement
contains provisions governing assignments of the Obligation and of Rights and
obligations under this agreement.
REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.
11
<PAGE>
EXECUTED as of the date first stated above.
MAGNETEK, INC., AS BORROWER/DEBTOR
MAGNETEK CENTURY ELECTRIC, INC., MAGNETEK
ELECTRIC, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.,
MAGNETEK OHIO TRANSFORMER, INC.,
AS SUBSIDIARY/DEBTORS
By
---------------------------------------------
John Colling, Jr., Vice President and
Treasurer of all of the foregoing Companies
Secured Party executes this agreement in acknowledgement of PARAGRAPH 10(i)
above.
NATIONSBANK OF TEXAS, N.A., as Agent for Lenders
as SECURED PARTY
By
---------------------------------------------
Andrea P. Collias, Vice President
The undersigned agree that to the extent that any of the stock certificates
evidencing any of the capital stock that is included in the Collateral bear any
restrictive legend in respect of the transfer of those certificates, then, in
each case, the undersigned waive the requirements of those restrictive legends
in respect of the pledge of those shares of capital stock to Secured Party.
MAGNETEK CENTURY ELECTRIC, INC.,
MAGNETEK ELECTRIC, INC.,
MAGNETEK NATIONAL ELECTRIC COIL, INC.,
MAGNETEK OHIO TRANSFORMER, INC.,
MAGNETEK CONTROLS, INC.,
MAGNETEK TEMPE, INC.,
MAGNETEK CREDIT CORPORATION,
MAGNETEK EUROPE, N.V.,
MAGNETEK LEASING CORPORATION,
MAGNETEK AIRPORT SYSTEMS, INC.
AS SUBSIDIARY/DEBTORS
By
---------------------------------------------
John Colling, Jr., Vice President and
Treasurer of all of the foregoing Companies
12
<PAGE>
EXHIBIT A
AMENDMENT TO
EXECUTIVE MANAGEMENT AGREEMENT
This Amendment (this "Amendment") to the Executive Management Agreement
dated as of July 1, 1994 (the "Agreement") by and between MagneTek, Inc. (the
"Company") a Delaware corporation, and The Spectrum Group, Inc. ("Spectrum"), a
California corporation, is effective as of January 25, 1995.
W I T N E S S E T H:
WHEREAS, the Company and Spectrum entered into the Agreement dated as of
July 1, 1994; and
WHEREAS, the Company and Spectrum now desire to amend the Agreement on the
terms and conditions set forth herein.
A G R E E M E N T
NOW, THEREFORE, the Company and Spectrum, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
agree as follows:
1. Section 2.A. of the Agreement is hereby amended in its entirety and
restated to read as follows:
A. In consideration for the executive management services
to be provided by Spectrum to the Company, during the term of
this Agreement the
<PAGE>
Company shall pay and Spectrum shall be entitled to receive $732,000
per Company fiscal year, payable in monthly installments of $61,000,
such monthly payments to be made in advance commencing on the date
hereof and continuing thereafter and on the first day of each
succeeding month. In addition, Spectrum shall also be entitled to
reimbursement for all reasonable and allocable costs (including but
not limited to office rent and secretarial support) and all reasonable
out-of-pocket expenses (including but not limited to telephone, fax,
overnight delivery, postage, meals and travel) incurred by Spectrum or
its personnel, payable by the Company when billed by Spectrum, in
connection with the performance of Spectrum's duties hereunder. The
fee payable to Spectrum hereunder shall be adjusted at the
commencement of each of the Company's fiscal years (July 1st)
subsequent to the effective date hereof to reflect the cumulative
increase in the Consumer Price Index for the metropolitan Los Angeles-
Long Beach area, as reported by the U.S. Department of Labor, Bureau
of Labor Statistics, during the directly preceding fiscal year and
thereafter shall be adjusted at the commencement of each renewal
2
<PAGE>
period to reflect the cumulative increase in such Consumer Price Index
during the prior renewal period.
2. Except as set forth herein, the Agreement remains unaffected and in
full force and effect.
3. Section 5 of the Agreement is hereby incorporated into this Amendment
by reference, except that the address for notice to the Company pursuant to
Section 5.A. shall be:
MagneTek, Inc.
26 Century Boulevard
P.O. Box 290159
Nashville, TN 37229-0159
Attention: General Counsel
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of
the date above written.
MAGNETEK, INC.
By:
---------------------------
THE SPECTRUM GROUP, INC.
By:
---------------------------
3
A5010
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<PAGE>
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<S> <C>
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<PERIOD-START> JUL-01-1994
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