<PAGE>
As filed with the Securities and Exchange Commission on June 3, 1997
Registration No. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------------------
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 Boulevard
Nashville, Tennessee 37214
(615) 316-5100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
-----------------------------
SAMUEL A. MILEY, ESQ.
Vice President, General Counsel and Secretary
MagneTek, Inc.
26 Century Boulevard
Nashville, Tennessee 37214
(615) 316-5100
(Name, address, including zip code and telephone number,
including area code, of agent for service)
-----------------------------
COPY TO:
JENNIFER BELLAH, ESQ. PETER WALLACE, ESQ.
Gibson, Dunn & Crutcher LLP Morgan, Lewis & Bockius LLP
333 South Grand Avenue 801 S. Grand Avenue, Suite 2200
Los Angeles, California 90071-3197 Los Angeles, CA 90017
(213) 229-7000 (213) 612-2500
-----------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
FROM TIME TO TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box./ /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box./X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement from the same offering./ /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering./ /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box./ /
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
BE REGISTERED AMOUNT TO BE REGISTERED PER UNIT(1) PRICE(1) REGISTRATION FEE
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock
($.01 par value) 2,500,000 shares(2)(3) $17.125 $42,812,500 $12,974
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee.
Calculated on the basis of the average of the high and low reported prices of
the Registrant's Common Stock on the New York Stock Exchange on May 28, 1997.
(2) Maximum number of shares issuable upon conversion of (a) $35,000,000
in principal amount of Registrant's 8% Convertible Subordinated Notes due 2001
outstanding at the close of business on June 3, 1997 and (b) up to $5,000,000 in
principal amount of Notes that may be acquired by the Purchaser as described
herein.
(3) Includes 2,500,000 Preferred Stock Purchase Rights, one of which
attaches to each share of Common Stock issued during the term of, and pursuant
to, the Rights Agreement dated as of March 4, 1997 by and between MagneTek, Inc.
and The Bank of New York, as Rights Agent.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
MAGNETEK, INC.
COMMON STOCK
($.01 PAR VALUE)
2,500,000 SHARES
MagneTek, Inc. (the "Company") has caused The Bank of New York as Trustee
(the "Trustee") to call for redemption on June 23, 1997 (the "Redemption Date")
$35,000,000 in principal amount of its outstanding 8% Convertible Subordinated
Notes Due 2001 (the "Notes"), at a redemption price of $1,035.60, plus accrued
interest from March 15, 1997 to the Redemption Date of $21.78 for each $1,000
principal amount of Notes, for a total price of $1,057.38 (the "Redemption
Price") for each $1,000 principal amount of Notes. The Notes to be redeemed
have been selected by lot by the Trustee. From and after the Redemption Date,
holders of the Notes (the "Holders") that are not converted as hereinafter
described shall be entitled only to the Redemption Price, and no further
interest shall accrue.
This Prospectus covers the issuance of a maximum of 2,500,000 shares of
Common Stock, par value $.01 per share (the "Common Stock") (including 2,500,000
Preferred Stock Purchase Rights, one of which attaches to each share of Common
Stock issued during the term of, and pursuant to, the Rights Agreement dated as
of March 4, 1997 by and between the Company and The Bank of New York, as Rights
Agent), of the Company under the standby arrangements described herein under
"Standby Arrangement and Swap Agreement" and the reoffering of any Common Stock
issued upon conversion of the outstanding Notes into Common Stock by Lehman
Brothers Inc. (the "Purchaser") or pursuant to such standby arrangements.
The Notes are convertible into shares of Common Stock at a conversion price
of $16.00 per share or 62.5 shares for each $1,000 principal amount of Notes
until the close of business on June 18, 1997 (the "Conversion Termination
Date"). Cash will be paid for fractional shares of Common Stock, and no payment
or adjustment will be made on account of any interest accrued on Notes
surrendered for conversion or on account of dividends on the shares of Common
Stock issued on such conversion. The conversion right expires at the close of
business on the Conversion Termination Date. It is possible that the Company
will, in the future, call all or a portion of the remaining Notes for
redemption, although there can be no assurances as to whether or when the
Company will do so, nor whether any such redemption will be subject to standby
arrangements with a purchaser as described herein.
The Common Stock is listed on the New York Stock Exchange under the symbol
"MAG." On May 30, 1997, the last reported sale price per share of the Common
Stock, as quoted on the New York Stock Exchange, was $17.50.
The Company has made arrangements with the Purchaser pursuant to which the
Purchaser has agreed, subject to certain conditions, to purchase from the
Company a number of authorized but unissued shares of Common Stock, at a price
of $16.92 per share, equal to the total number of shares of Common Stock that
would have been delivered upon conversion of those Notes called for redemption
that are not duly surrendered for conversion prior to the close of business on
the Conversion Termination Date. The Purchaser may also purchase Notes in the
open market or otherwise prior to the Conversion Termination Date and has agreed
to convert all Notes so purchased into Common Stock. The Company has entered
into an equity swap agreement with the Purchaser pursuant to which the Company
will compensate the Purchaser for depreciation, if any, in the value of the
shares of Common Stock purchased by the Purchaser and the Purchaser will
compensate the Company for appreciation, if any, in the value of such shares,
plus amounts equal to any dividends paid thereon. See "Standby Arrangement and
Swap Agreement" for a description of the Purchaser's compensation and
indemnification arrangements with the Company. The Company does not anticipate
paying cash dividends on its Common Stock in the near future. See "Risk Factors
- -- Dividend Policy."
Prior to or after the Redemption Date, the Purchaser may offer to the
public any shares of Common Stock it acquires, including shares acquired through
conversion of Notes purchased by the Purchaser, at prices set by the Purchaser
from time to time. The Purchaser may also make sales to dealers at prices that
represent concessions from the prices at which such shares are then being
offered to the public. The amount of such concessions is to be determined from
time to time by the Purchaser. Such shares of Common Stock may be offered on
the New York Stock Exchange or otherwise from time to time by the Purchaser.
Any Common Stock so offered by the Purchaser will be subject to receipt and
acceptance by it and subject to its right to reject orders in whole or in part.
See "Standby Arrangement and Swap Agreement." This Prospectus does not
constitute an offer to sell any securities other than the Common Stock offered
by the Purchaser.
FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" COMMENCING
ON PAGE 4 HEREOF.
---------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------
LEHMAN BROTHERS
June 3, 1997
<PAGE>
IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY PURCHASE NOTES, WHICH MAY
MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SEE "STANDBY
ARRANGEMENT AND SWAP AGREEMENT."
PROSPECTUS SUMMARY
THE COMPANY
The Company manufactures and markets electrical equipment products. The
Company currently operates in three business segments: Motors & Controls, which
includes fractional and integral horsepower electric motors, medium voltage
generators and electronic variable speed drives and drive systems; Lighting
Products, including magnetic and electronic lighting ballasts; and Power
Supplies including electronic power supplies and small transformer products.
The Company was incorporated in Delaware in June, 1984. The principal
executive offices of the Company are located at 26 Century Boulevard, Nashville,
Tennessee 37214, telephone number (615) 316-5100.
USE OF PROCEEDS
The net proceeds, if any, received by the Company from the sale of Common
Stock to the Purchaser pursuant to the standby arrangements described herein
will be used to pay the Redemption Price for the Notes not surrendered for
conversion. Any other amounts received by the Company pursuant to the swap
arrangement described in "Standby Arrangement and Swap Agreement" will be used
for general corporate purposes. The amount of the proceeds to be received by the
Company from the Purchaser is not determinable at this time. The Company will
not receive any cash proceeds from the issuance of Common Stock upon the
conversion of the Notes called for Redemption.
RECENT DEVELOPMENTS
The Company has commenced a tender offer on May 29, 1997 for approximately
$109 million in principal amount of its outstanding 10-3/4% Senior Subordinated
Debentures Due 1998 (the "Senior Debentures") and has solicited consents from
holders of Senior Debentures to amend the Indenture under which the Senior
Debentures were issued. The Company expects to purchase the Senior Debentures
for their face amount together with a premium set with reference to the yield on
the U.S. Treasury Note of corresponding maturity, plus a fixed spread of
approximately 50 basis points. The purchase of Senior Debentures is expected to
be financed primarily by borrowings under the Company's credit facility.
The Company has called for redemption on June 23, 1997 $35,000,000 in
principal amount of its outstanding Notes, as described in detail on the first
page hereof. Pursuant to the terms of the Indenture relating to the Notes and
as a result of the call, Holders of Notes are entitled to receive from the
Company upon redemption the sum of $1,035.60, plus accrued interest from March
15, 1997 to the Redemption Date of $21.78 for each $1,000 principal amount of
Notes (for an aggregate redemption price of $1,057.38 for each $1,000 principal
amount of Notes). Holders of Notes may convert each $1,000 principal amount of
Notes into 62.5 shares of Common Stock prior to the close of business on June
18, 1997.
2
<PAGE>
AVAILABLE INFORMATION
The Company has filed a Registration Statement on Form S-3 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Securities
Act"), covering the Common Stock covered by this Prospectus. This Prospectus
omits certain information contained in the Registration Statement, and reference
is made to the Registration Statement and the exhibits thereto for further
information with respect to the Company and the Common Stock offered hereby.
Statements contained in this Prospectus as to the contents of any contract,
agreement or other documents filed as an exhibit to the Registration Statement
are not necessarily complete, and in each instance reference is made to the
exhibit for a more complete description of the matter involved, each such
statement being qualified in its entirety by such reference. The Registration
Statement and the exhibits thereto may be examined without charge at the public
reference section of the Commission at Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549, and copies of all or any part thereof may be obtained
from the Commission upon payment of prescribed fees.
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by the Company can be inspected and copied at the public reference
facilities maintained by the Commission at 450 Fifth Street, N.W., Room 1024,
Washington, D.C. 20549, and at the regional offices of the Commission located at
500 West Madison Street, Room 1400, Chicago, Illinois 60661 and at 75 Park
Place, 14th Floor, New York, New York 10007. Copies of such material can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549, at prescribed rates.
Electronic filings made through the Commission's Electronic Data Gathering,
Analysis, and Retrieval System are also publicly available through the
Commission's World Wide Web site at http://www.sec.gov. The Company's Common
Stock is listed on the New York Stock Exchange, and the reports, proxy and
information statements and other information filed by the Company with the New
York Stock Exchange can also be inspected at the offices of the New York Stock
Exchange at 20 Broad Street, New York, New York 10005.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission (File No.
1-10233) are by this reference incorporated in and made a part of this
Prospectus: (i) the Annual Report on Form 10-K for the fiscal year ended
June 30, 1996; (ii) the Current Reports on Form 8-K filed on August 8, 1996,
August 26, 1996 and March 14, 1997, and the Quarterly Reports on Form 10-Q for
the quarters ended September 30, 1996, December 31, 1996 and March 31, 1997;
(iii) the description of the Company's Common Stock contained in its
Registration Statements on Form 8-A filed April 21, 1989 and March 14, 1997; and
(iv) all documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and prior to the
filing of a post-effective amendment which indicates that all Common Stock
offered hereby has been sold or which deregisters all Common Stock then
remaining unsold. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
Copies of all documents that are incorporated herein by reference (not
including the exhibits to such documents, unless such exhibits are specifically
incorporated by reference into such documents or into this Prospectus) will be
provided without charge to each person, including any beneficial owner, to whom
this Prospectus is delivered, upon a written or oral request to MagneTek, Inc.,
Attention: Corporate Secretary, 26 Century Boulevard, Nashville, Tennessee
37214, telephone number (615) 316-5100.
3
<PAGE>
RISK FACTORS
CERTAIN INFORMATION SET FORTH IN, OR INCORPORATED BY REFERENCE INTO, THIS
PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE MEANING OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 AND IS SUBJECT TO CERTAIN RISKS
AND UNCERTAINTIES, INCLUDING THOSE IDENTIFIED UNDER THIS CAPTION. READERS ARE
CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH
SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY UNDERTAKES NO OBLIGATION TO
RELEASE PUBLICLY ANY REVISIONS TO THESE FORWARD-LOOKING STATEMENTS TO REFLECT
EVENTS OR CIRCUMSTANCES AFTER THE DATE HEREOF OR TO REFLECT UNANTICIPATED EVENTS
OR DEVELOPMENTS.
IN ADDITION TO THE OTHER INFORMATION INCLUDED ELSEWHERE IN THIS PROSPECTUS,
THE FOLLOWING FACTORS SHOULD BE CONSIDERED CAREFULLY IN EVALUATING AN INVESTMENT
IN THE COMMON STOCK OFFERED BY THIS PROSPECTUS.
LEVERAGE
During the late 1980s and early 1990s the Company grew rapidly, primarily
through acquisitions of electrical equipment businesses supplemented by internal
growth. The use of debt to finance the majority of the acquisitions left the
Company with a significant degree of financial leverage in its balance sheet.
This leverage increases the Company's sensitivity to fluctuations in operating
income and interest rates. Since March 1994, the Company's long-term debt has
been reduced by approximately $249 million. As of March 31, 1997 and after
giving effect to this transaction, the Company had long-term debt, including
current portion, of approximately $246 million and total stockholders' equity of
approximately $95 million.
RECENT REPOSITIONING ACTIONS
During the past four fiscal years, the Company has experienced substantial
volatility in sales and profits in its lighting products business, largely
related to its domestic electronic fluorescent ballast product line. During
fiscal 1996, the Company experienced lower demand and a significant
deterioration in operating results in this product line, due largely to a
substantial reduction in utility related incentive programs and increased
competition. Additionally, sales and profits had been steadily declining in the
global magnetic fluorescent ballast product lines, due to both the emergence in
the U.S. of electronic ballasts as a viable replacement and a weakening economy
in Europe. As a result of significant declines in sales and profit margins in
both electronic and magnetic ballast product lines during fiscal 1996, the
Company conducted a review and analysis of actions required to reduce costs and
improve future flexibility and profitability, largely focused on its lighting
products business. Upon completion of the review and approval by the Company's
Board of Directors, certain reserves were established and charges recorded in
the year ended June 30, 1996 to reflect costs associated with repositioning
operations, primarily for severance, termination benefits and asset write-downs
related to facility closures. Reserves were also established for estimated
increases in warranty (primarily related to the electronic ballast product line)
and other costs. Charges recorded in connection with these reserves and the
asset write-downs related primarily to the Lighting Products segment aggregated
$79.7 million, of which $43.3 million is included in costs of goods sold, $7.2
million in selling, general and administrative expense and $29.2 million in
other expense in the Company's Consolidated Statement of Income for the fiscal
year ended June 30, 1996. Asset write-downs for the impairment of long lived
assets and for long lived assets to be disposed of were determined in accordance
with Statement of Financial Accounting Standards ("SFAS") No. 121. See Note 2
of notes to the Company's Consolidated Financial Statements incorporated by
reference herein. A number of repositioning actions have been completed during
fiscal 1997 in the Lighting Products segment, and the results of the segment for
the first nine months of fiscal 1997 reflected a substantial increase in
operating profits and margins compared to the first nine months of fiscal 1996
($19.4 million and 5.4% of net sales compared to an operating loss of $7.2
million and 2.1% of net sales, respectively). Additional repositioning actions
are in process or will be initiated in future periods. Although the Company
believes the repositioning actions are appropriate, there can be no assurance
that such repositioning will enable the Company to achieve significant or
consistent improvements in profitability.
4
<PAGE>
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock and does
not anticipate paying cash dividends in the near future. The ability of the
Company to pay dividends on its Common Stock is restricted by provisions in the
Company's loan agreements.
ENVIRONMENTAL MATTERS
The Company manufactures its products at various facilities, some of which
have been in operation for many years. The Company has from time to time
discovered contamination by hazardous substances at certain of its facilities.
In selling certain business operations, the Company from time to time has
agreed, subject to various conditions and limitations, to indemnify buyers with
respect to environmental liabilities associated with the acquired operations.
For a more detailed discussion of the environmental risks to which the Company
may be subject, see "Business -- Environmental Matters" in the Company's Annual
Report on Form 10-K for the year ended June 30, 1996.
5
<PAGE>
PRICE RANGE OF COMMON STOCK
The Company has one class of common equity securities outstanding, its
Common Stock, par value $.01 per share. On May 8, 1997, 26,015,504 shares of
Common Stock were held by approximately 308 holders of record.
The Common Stock is traded on the New York Stock Exchange. The high and
low intraday sales prices of the Common Stock for each quarterly period of the
fiscal years presented as reported by the New York Stock Exchange are listed in
the chart below. The Company has not paid dividends on its Common Stock to
date. See "Risk Factors -- Dividend Policy."
QUARTER ENDING HIGH LOW
- --------------------------------------------- ----------- ----------
Fiscal Year 1995
Sept. 30, 1994 . . . . . . . . . . . . $14 7/8 $12 5/8
Dec. 31, 1994. . . . . . . . . . . . . 15 1/8 12 3/8
March 31, 1995 . . . . . . . . . . . . 14 7/8 12 5/8
June 30, 1995. . . . . . . . . . . . . 16 1/2 12 3/8
QUARTER ENDING HIGH LOW
- --------------------------------------------- ----------- ----------
Fiscal Year 1996
Sept. 30, 1995. . . . . . . . . . . . . $13 3/4 $12
Dec. 31, 1995 . . . . . . . . . . . . . 12 3/8 7 7/8
March 31, 1996. . . . . . . . . . . . . 8 3/8 6 7/8
June 30, 1996 . . . . . . . . . . . . . 10 3/4 7 3/4
QUARTER ENDING HIGH LOW
- --------------------------------------------- ----------- ----------
Fiscal Year 1997
Sept. 30, 1996. . . . . . . . . . . . . $11 5/8 $8 1/8
Dec. 31, 1996 . . . . . . . . . . . . . 14 1/8 10
March 31, 1997. . . . . . . . . . . . . 18 1/8 12 1/4
Fourth Quarter (through May 30, 1997) . 18 1/8 14 7/8
On May 30, 1997, the last reported sale price of the Common Stock as quoted
on the New York Stock Exchange was $17.50 per share.
6
<PAGE>
SELECTED FINANCIAL DATA
The following table sets forth selected consolidated financial data
regarding the Company as of and for each of the years in the five year period
ended June 30, 1996 and each of the nine month periods ending March 31, 1997 and
1996. The statement of operations data for interim periods is not necessarily
indicative of results for the full year. This data should be read in
conjunction with the Consolidated Financial Statements of the Company and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in the Company's Annual Report on Form 10-K for the year
ended June 30, 1996 and all Quarterly Reports on Form 10-Q and Current Reports
on Form 8-K filed since the filing of the Form 10-K.
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
------------------------------------------------------------------------
1992 1993 1994(1) 1995(1) 1996(1)
----------- ------------ ------------ ------------ ------------
INCOME STATEMENT DATA (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Net sales . . . . . . . . . . . . . . . . . . . . . $ 883,466 $ 1,119,392 $ 1,133,126 $ 1,202,536 $ 1,161,625
Cost of sales . . . . . . . . . . . . . . . . . . . 681,997 877,514 937,719 962,900 1,005,004
----------- ------------ ------------ ------------ ------------
Gross profit. . . . . . . . . . . . . . . . . . . . 201,469 241,878 195,407 239,636 156,621
Selling, general and administrative . . . . . . . . 143,700 172,259 185,509 164,280 164,930
Asset write-downs (2) . . . . . . . . . . . . . . . - - - - 29,212
----------- ------------ ------------ ------------ ------------
Income from operations. . . . . . . . . . . . . . . 57,769 69,619 9,898 75,356 (37,521)
Interest expense. . . . . . . . . . . . . . . . . . 26,774 31,542 32,018 34,398 31,591
Other expense (net) . . . . . . . . . . . . . . . . 4,683 5,614 2,322 4,562 5,652
----------- ------------ ------------ ------------ ------------
Income (loss) from continuing operations before
provision for income taxes and extraordinary
item . . . . . . . . . . . . . . . . . . . . . . 26,312 32,463 (24,442) 36,396 (74,764)
Provision (benefit) for income taxes. . . . . . . . 11,600 13,200 (7,500) 14,900 19,400
Income (loss) from continuing operations before
extraordinary item. . . . . . . . . . . . . . . . . 14,712 19,263 (16,942) 21,496 (94,164)
Discontinued operations (net of tax). . . . . . . . 10,331 7,770 (28,503) (14,400) -
Cumulative effect of changes in accounting for
post retirement medical benefits (net of tax). . - (48,734) - - -
Extraordinary item (net of tax) . . . . . . . . . . (2,857) - - (4,820) -
----------- ------------ ------------ ------------ ------------
Net Income. . . . . . . . . . . . . . . . . . . . . $ 22,186 $ (21,701) $ (45,445) $ 2,276 $ (94,164)
----------- ------------ ------------ ------------ ------------
Earnings (loss) per common share
Primary:
Income (loss) before extraordinary item . . . . . . $ 0.61 $ 0.78 $ (0.69) $ 0.87 $ (3.78)
Income (loss) from discontinued operations. . . . . 0.43 0.31 (1.15) (0.58) -
Extraordinary item (net of tax) . . . . . . . . . . - - - (0.20) -
Cumulative effect of accounting changes . . . . . . (0.12) (1.96) - - -
----------- ------------ ------------ ------------ ------------
Net income (loss) . . . . . . . . . . . . . . . . . $ 0.92 $ (0.87) $ (1.84) $ 0.09 $ (3.78)
----------- ------------ ------------ ------------ ------------
Fully diluted:
Income (loss) before extraordinary item . . . . . . $ 0.59 $ 0.73 $ * $ 0.84 *
Income (loss) from discontinued operations. . . . . 0.41 0.30 * * -
Extraordinary item (net of tax) . . . . . . . . . . - - - * -
Cumulative effect to accounting changes . . . . . . (0.10) * - - -
----------- ------------ ------------ ------------ ------------
Net income (loss) . . . . . . . . . . . . . . . . . $ 0.90 $ * $ * * *
----------- ------------ ------------ ------------ ------------
Other Data
Depreciation and amortization . . . . . . . . . . . $ 31,559 $ 33,581 $ 36,418 $ 38,680 $ 40,041
Capital expenditures. . . . . . . . . . . . . . . . 28,010 57,850 43,338 43,895 40,515
Proceeds from sale of businesses and assets . . . . 854 13,223 8,216 105,644 92,149
Restructuring charges / asset writedowns. . . . . . - - 31,221 - 79,717(1)
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
-------------------------
1996 1997
---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales . . . . . . . . . . . . . . . . . . . . . $ 856,460 $ 886,508
Cost of sales . . . . . . . . . . . . . . . . . . . 714,245 711,454
---------- ----------
Gross profit. . . . . . . . . . . . . . . . . . . . 142,215 175,054
Selling, general and administrative . . . . . . . . 117,600 117,651
Asset write-downs (2) . . . . . . . . . . . . . . . - -
---------- ----------
Income from operations. . . . . . . . . . . . . . . 24,615 57,393
Interest expense. . . . . . . . . . . . . . . . . . 24,097 21,682
Other expense (net) . . . . . . . . . . . . . . . . 3,589 3,211
---------- ----------
Income (loss) from continuing operations before
provision for income taxes and extraordinary
item . . . . . . . . . . . . . . . . . . . . . . (3,071) 32,500
Provision (benefit) for income taxes. . . . . . . . 573 13,231
Income (loss) from continuing operations before
extraordinary item . . . . . . . . . . . . . . . (3,644) 19,269
Discontinued operations (net of tax). . . . . . . . - -
Cumulative effect of changes in accounting for
post retirement medical benefits (net of tax). . - -
Extraordinary item (net of tax) . . . . . . . . . . - (170)
---------- ----------
Net Income. . . . . . . . . . . . . . . . . . . . . $ (3,644) $ 19,099
---------- ----------
Earnings (loss) per common share
Primary:
Income (loss) before extraordinary item . . . . . . $ (0.15) $ 0.74
Income (loss) from discontinued operations. . . . . - -
Extraordinary item (net of tax) . . . . . . . . . . - (0.01)
Cumulative effect of accounting changes . . . . . . - -
---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . . $ (0.15) $ 0.73
---------- ----------
Fully diluted:
Income (loss) before extraordinary item . . . . . . * $ 0.71
Income (loss) from discontinued operations. . . . . - -
Extraordinary item (net of tax) . . . . . . . . . . - (0.01)
Cumulative effect to accounting changes . . . . . . - -
---------- ----------
Net income (loss) . . . . . . . . . . . . . . . . . * $ 0.70
---------- ----------
Depreciation and amortization . . . . . . . . . . . $ 29,645 $ 28,987
Capital expenditures. . . . . . . . . . . . . . . . 28,265 25,111
Proceeds from sale of businesses and assets . . . . 75,883 2,017
Restructuring charges / asset writedowns. . . . . . - -
</TABLE>
*Per share amounts on a fully dilutive basis have been omitted since they are
anti-dilutive to primary share amounts.
(1) Losses from continuing operations for the years ended June 30, 1996 and
1994 include pretax charges aggregating $79,717 and $33,871, respectively.
Charges in fiscal 1996 reflect costs associated with repositioning
operations primarily for severance, termination benefits, warranty and
asset write-downs related to facility closures. Also, in review of the
Company's deferred tax asset in accordance with SFAS No. 109, a $14,700
charge was incurred in fiscal year 1996. Fiscal 1994 restructuring
reserves included costs related to potentially excess or obsolete
inventory, as well as severance and relocation costs related to the
Company's electronic ballast product line. In addition, those reserves
included expenses to relocate and consolidate operating and administrative
locations and certain other costs. Results of discontinued operations
include after tax charges of $14,400 and $25,041 for the years ended June
30, 1995 and 1994, respectively, reflecting estimated losses on
disposition.
(2) Asset write-downs were previously included in "Other expenses (net)."
7
<PAGE>
<TABLE>
<CAPTION>
YEARS ENDED JUNE 30,
----------------------------------------------------------------------
1992 1993 1994 1995 1996
---------- ---------- ---------- ---------- ----------
BALANCE SHEET DATA (AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Total assets. . . . . . . . . . . . . . . . . . . . $ 888,668 $ 995,359 $ 931,358 $ 857,168 $ 678,744
Long-term debt (including current portion). . . . . 428,880 523,301 523,779 448,467 322,023
Less current portion. . . . . . . . . . . . . . . . 13,887 7,588 49,998 17,580 2,895
---------- ---------- ---------- ---------- ----------
Long term debt (net of current portion) . . . . . . 414,993 515,713 473,781 430,887 319,128
Total liabilities . . . . . . . . . . . . . . . . . 692,205 832,330 818,276 739,890 637,216
Common stockholders' equity . . . . . . . . . . . . 196,463 163,029 113,082 117,278 41,558
<CAPTION>
NINE MONTHS ENDED
MARCH 31,
-------------------------
1996 1997
---------- ----------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
Total assets. . . . . . . . . . . . . . . . . . . . $ 744,157 $ 653,179
Long-term debt (including current portion). . . . . 359,889 284,087
Less current portion. . . . . . . . . . . . . . . . 2,691 2,935
---------- ----------
Long term debt (net of current portion) . . . . . . 357,198 281,152
Total liabilities . . . . . . . . . . . . . . . . . 629,800 592,565
Common stockholders' equity . . . . . . . . . . . . 114,357 60,614
</TABLE>
8
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of the Company as of
March 31, 1997, and as adjusted to give effect to the assumed conversion of
$35,000,000 in principal amount of the outstanding Notes through the issuance of
2,187,500 shares of Common Stock:
March 31, 1997
----------------------------
Actual As Adjusted(1)
----------- ---------------
(dollars in thousands)
Current portion of long-term debt. . . . . . . . . $ 2,935 $ 2,935
Long-term debt
Bank debt. . . . . . . . . . . . . . . . . . . . 73,762 73,762
10-3/4% Senior Subordinated Debentures Due 1998. 120,000 120,000
8% Convertible Subordinated Notes Due 2001 . . . 75,000 40,000
Other debt . . . . . . . . . . . . . . . . . . . 12,390 12,390
---------- ----------
Long-term debt (net of current portion). . . . . . 281,152 246,152
Stockholders' equity
Common stock, $.01 par value, 100,000,000 shares
authorized, 25,980,669 issued; 28,168,169 issued as
adjusted . . . . . . . . . . . . . . . . . . . . 258 280
Additional paid-in capital . . . . . . . . . . . . 92,829 127,002
Retained earnings. . . . . . . . . . . . . . . . . (15,115) (15,115)
Cumulative translation adjustment. . . . . . . . . (17,358) (17,358)
---------- ----------
Total stockholders' equity . . . . . . . . . . . . 60,614 94,809
Total capitalization . . . . . . . . . . . . . . . $ 344,701 $ 343,896
---------- ----------
---------- ----------
(1) Additional paid-in capital includes the write-off of deferred financing
costs of $545 and $260 for estimated transaction costs associated with the
distribution of the Common Stock. For purposes of this pro-forma
presentation, it is assumed that no pro-forma adjustments have been made
for the tender offer for $109,000 in principal amount of Senior Debentures
discussed under "Prospectus Summary -- Recent Developments," including
approximately $4,000 estimated for premiums to be incurred and the
write-off of deferred financing costs (net of taxes). Does not include up
to $5,000 in principal amount of Notes that may be acquired by the
Purchaser.
9
<PAGE>
STANDBY ARRANGEMENT AND SWAP AGREEMENT
Under a Standby Purchase Agreement (the "Standby Agreement") with the
Company, the Purchaser has agreed, subject to certain conditions, to purchase
from the Company, at $16.92 per share (the "Purchase Price"), the number of
shares of Common Stock (the "Purchased Shares") necessary to provide the
Company with proceeds which the Company will use to pay the aggregate
Redemption Price of Notes required to be redeemed by the Company on and after
the Redemption Date. The Notes to be redeemed have been selected by lot by
the Trustee. The Purchaser may also acquire up to $5 million in principal
amount of Notes (the "Acquired Notes") in the open market or otherwise prior
to the close of business on the Conversion Termination Date and has agreed to
convert all Notes so acquired by it into shares of Common Stock. Up to
2,500,000 shares of Company stock may be issued to the Purchaser pursuant to
the Standby Agreement. The number of shares purchased by the Purchaser will
be determined by the aggregate redemption price of Notes called for
redemption that are not converted into shares of the Company's Common Stock.
The issuance of such Purchased Shares and the reoffering of any Common Stock
issued upon conversion of any Acquired Notes by the Purchaser are the subject
of this Prospectus.
As compensation to the Purchaser for the commitment under the Standby
Agreement, the Company will pay to the Purchaser (i) a standby fee of $92,531
(the "Standby Fee") and (ii) an amount per share (the "Takeup Fee") equal to
$0.125 per Purchased Share (including Common Stock acquired by the Purchaser
upon conversion of Acquired Notes). In addition, the Company has agreed to
reimburse the Purchaser for certain reasonable out-of-pocket expenses (including
a maximum of $100,000 for reasonable legal fees and expenses in the aggregate
for both this transaction and the tender offer described under "Prospectus
Summary -- Recent Developments").
The Company will enter into an equity swap transaction (the "Swap
Transaction") with the Purchaser with respect to the price of the Purchased
Shares plus the number of shares of Common Stock into which any Acquired Notes
could be converted (collectively, the "Acquired Shares"). The Swap Transaction
will be governed by an ISDA Master Agreement, including a Schedule and a
Confirmation (the "Swap Agreement") containing various terms and conditions
governing the obligations of the Company and the Purchaser. A copy of the form
of Swap Agreement, including the Schedule and Confirmation, has been filed as an
exhibit to the registration statement of which this Prospectus forms a part, and
reference is made to the exhibit for the complete terms of the Swap Agreement.
Pursuant to the terms of the Swap Agreement, upon settlement thereof, the
Purchaser will pay to the Company the Capital Appreciation, if any, in the value
of the Acquired Shares, and the Company will pay to the Purchaser the Fixed
Amount plus the Capital Depreciation (each capitalized term as defined below).
At the election of the Company, in lieu of the payment described in the
preceding sentence, the Swap Agreement may be settled by delivery by the
Purchaser (subject to certain additional requirements) or, as applicable, the
Company, of the number of shares of Common Stock (which shall have been
registered pursuant to a valid resale registration statement under the
Securities Act), the value of which is equivalent to such payment. In addition,
the Purchaser will pay to the Company any Dividend Amount (as defined in the
Confirmation), with respect to dividends paid to holders of the Acquired Shares
(although the Company does not expect that any such dividends will be paid). In
the event that the value of the Acquired Shares is less than $12.00, the
Purchaser may require the Company to provide collateral to support its
obligations to the Company under the Swap Transaction and, if collateral
satisfactory to the Purchaser is not provided, the Purchaser may terminate the
Swap Agreement, and a payment would be due from the Company to the Purchaser.
The Company may elect to terminate the Swap Agreement at any time prior to the
stated term thereof, and the Swap Agreement also contains a number of other
Termination Events and Events of Default (each as defined therein) pursuant
which the Swap Agreement may be terminated prior to the stated term thereof.
Depending upon the value of the Acquired Shares (determined as provided in the
Confirmation) on the date of any early termination of the Swap Agreement, a
payment (in cash or stock) would be due from the Company or the Purchaser to the
other party. The Company and the Purchaser expect the maximum stated term of
the Swap Transaction would be for four months from the Redemption Date.
As used above, the following terms have the meanings given:
"CAPITAL APPRECIATION" and "CAPITAL DEPRECIATION" mean the amount
calculated according to the following formula which, if positive, shall be
"CAPITAL APPRECIATION" and, if negative, shall be "CAPITAL DEPRECIATION":
10
<PAGE>
Price(t+1) - Price(t) x Notional Amount
---------------------
Price(t)
where "Price(t + 1)" means the arithmetic average of the per share prices at
which the Acquired Shares are sold by the Purchaser during the Valuation Period
(as defined in the Confirmation), net of any withholding tax, stamp tax, or any
other tax, duties, fees or commissions payable in respect of such sale;
"Price(t)" means $16.92 and "Notional Amount" means the aggregate number of
Acquired Shares multiplied by Price(t).
"FIXED AMOUNT" means an amount equal to the four month LIBOR rate
(determined as provided in the Confirmation) plus 1.50%, times the Notional
Amount (as determined in the Confirmation), for the term of the Swap
Transaction.
The Company, a significant stockholder and certain directors and executive
officers, who in the aggregate hold approximately 2 million shares of Common
Stock (including approximately 700,000 shares subject to options exercisable for
shares of Common Stock), have agreed that for a period of the shorter of
140 days after the date of this Prospectus and the termination of the Swap
Agreement, they will not, without the prior written consent of the Purchaser,
issue, sell, offer to sell, or otherwise dispose of such securities.
Lehman Brothers Inc. is also acting as the dealer/manager for the tender
offer described under "Prospectus Summary -- Recent Developments."
The Company has agreed to indemnify the Purchaser against certain
liabilities, including liabilities under the Securities Act.
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
The following discussion of the consequences of the conversion, sale or
redemption of Notes is based on the provisions of the Internal Revenue Code
of 1986, as amended (the "Code"), the applicable regulations promulgated
thereunder, and published administrative and judicial decisions, all as they
exist at the date of this Prospectus. Changes in the law could effect the
federal income tax consequences discussed herein.
Certain Holders (including insurance companies, tax-exempt organizations,
financial institutions, brokers, dealers, nonresident aliens, foreign
corporations, foreign partnerships, foreign estates or trusts or the
Purchaser) may be subject to special rules not discussed below. No
information is provided herein with respect to foreign, state or local tax
laws or estate and gift tax considerations. No assurance can be given that
the treatment described herein of the conversion, sale or redemption of Notes
will be accepted by the IRS or, if challenged, by a court. EACH HOLDER IS
URGED TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING FEDERAL, STATE, LOCAL,
FOREIGN AND ANY OTHER TAX CONSEQUENCES OF CONVERTING THE NOTES INTO SHARES OF
COMMON STOCK OR SELLING OR SURRENDERING THE NOTES FOR REDEMPTION, ESPECIALLY
IN LIGHT OF THE HOLDER'S PARTICULAR CIRCUMSTANCES.
For federal income tax purposes, the conversion of Notes into Common
Stock generally will not result in a taxable gain or loss with respect to the
Common Stock received, except that gain must be recognized with respect to
cash received in lieu of fractional shares upon conversion. The amount of
such gain will be equal to the amount of cash received less the basis
attributable to such fractional shares and (with the exception of any portion
treated as ordinary income as discussed below) will be treated as capital
gain if the Notes are capital assets in the hands of the Holder. A Holder's
basis for the Common Stock received upon conversion of Notes will be equal to
the basis of the Notes surrendered and, assuming that the Notes are capital
assets in the Holder's hands, the holding period for that Common Stock will
include the holding period for those Notes. Any market discount that accrued
with respect to Notes converted into Common Stock should, under regulations
to be promulgated, carry over and be allocated to the Common Stock received
to the extent not previously included in the income of the Holder, and
should, to that extent, be treated as ordinary income to the extent of any
gain recognized on a subsequent disposition of such Common Stock.
11
<PAGE>
A Holder's adjusted tax basis in Notes generally will be the price such
Holder paid for the Notes increased by any market discount (or any amounts
treated as original issue discount as a result of an election by the Holder
to treat market discount and other amounts with respect to the Note as
original issue discount under the Code) to the extent such market discount
(or amounts treated as original issue discount) was previously included in
income by the Holder (including any such market discount or original issue
discount included in the taxable year of disposition prior to the
disposition), and reduced (but not below zero) by amortized premium and any
payments received by the Holder other than interest payments.
A surrender of Notes for redemption or a sale generally will be a taxable
transaction on which gain or loss, if any, will be recognized. The gain or
loss recognized upon surrender for redemption or sale of Notes will be the
difference between the Holder's basis in the Notes and the redemption price
(exclusive of interest, which generally will be treated as ordinary income to
the Holder to the extent not previously included in the Holder's income)
received in respect thereof. Any gain or loss recognized on the redemption of
a Note generally should be capital gain or loss and should be long-term
capital gain or loss if the Holder has held the Note for more than one year at
the time of redemption. However, a Holder who acquired a Note with market
discount generally will be required to treat a portion of any gain on the
redemption of the Note as ordinary income to the extent of the market
discount (including any market discount treated as original issue discount
pursuant to an election by the Holder) accrued to the date of the
disposition, less any such amounts previously reported as ordinary income.
If a Holder purchased the redeemed Note at a price in excess of the principal
amount of the Note, and the Holder elected to amortize and deduct bond
premium with respect to the Note, the Holder may be permitted to deduct any
remaining unamortized bond premium as an ordinary loss upon the surrender of
the redeemed Note.
PLAN OF DISTRIBUTION
Prior to or after the Redemption Date, the Purchaser may offer to the
public any shares of Common Stock it acquires, including shares acquired through
conversion of up to $5 million in principal amount of Notes purchased by the
Purchaser, at prices set by the Purchaser from time to time. The Purchaser may
also make sales to dealers at prices that represent concessions from the prices
at which such shares are then being offered to the public. The amount of such
concessions is to be determined from time to time by the Purchaser. Such shares
of Common Stock may be offered on the New York Stock Exchange or otherwise from
time to time by the Purchaser. Any Common Stock so offered by the Purchaser
will be subject to receipt and acceptance by it and subject to its right to
reject orders in whole or in part.
In connection with the sale of Common Stock to the Purchaser pursuant to
the Standby Agreement, the Purchaser may purchase Notes, which may result in the
maintenance of the price of the Common Stock at a level above that which might
otherwise prevail in the open market or may otherwise affect the market price of
the Common Stock. Such purchases are not required, and, if they are undertaken,
they may be discontinued at any time.
12
<PAGE>
LEGAL MATTERS
The legality of the issuance of the Common Stock offered hereby will be
passed upon for the Company by Gibson, Dunn & Crutcher LLP, Los Angeles,
California. Morgan, Lewis & Bockius LLP, Los Angeles, California will pass on
certain legal matters for the Purchaser.
EXPERTS
The consolidated financial statements and schedule of MagneTek, Inc.,
included or incorporated by reference in the Company's Annual Report on Form
10-K for the fiscal year ended June 30, 1996, have been audited by Ernst & Young
LLP, independent auditors, as set forth in their reports thereon included or
incorporated therein and incorporated herein by reference. Such consolidated
financial statements and schedule are incorporated herein by reference in
reliance upon such reports given upon the authority of such firm as experts in
accounting and auditing.
13
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
No dealer, salesperson, or other person has been authorized to give any
information or to make any representations in connection with this offering
other than those contained or incorporated by reference in this Prospectus, and,
if given or made, such other information or representations must not be relied
on as having been authorized by the Company of the Purchaser. This Prospectus
does not constitute an offer to sell or a solicitation of an offer to buy any
securities other than the registered securities to which it relates in any state
to any person to whom it is unlawful to make such an offer or solicitation in
such state. Neither the delivery of this Prospectus nor any sale made hereunder
or thereunder shall, under any circumstances, create any implication that there
has been no change in the affairs of the Company since the date hereof or that
the information contained or incorporated by reference herein or therein is
correct as of any time subsequent to its date.
---------------
TABLE OF CONTENTS
Page
----
Prospectus Summary . . . . . . . . . . . . . . . . . . . . . . . . .2
Available Information. . . . . . . . . . . . . . . . . . . . . . . .3
Incorporation of Certain Documents
by Reference . . . . . . . . . . . . . . . . . . . . . . . . . . .3
Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Price Range of Common Stock. . . . . . . . . . . . . . . . . . . . .6
Selected Financial Data. . . . . . . . . . . . . . . . . . . . . . .7
Capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . .9
Standby Arrangement and Swap Agreement . . . . . . . . . . . . . . 10
Certain Federal Income Tax Considerations. . . . . . . . . . . . . 11
Plan of Distribution . . . . . . . . . . . . . . . . . . . . . . . 12
Legal Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Experts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2,500,000 SHARES
MAGNETEK, INC.
COMMON STOCK
---------------
PROSPECTUS
June 3, 1997
---------------
LEHMAN BROTHERS
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the distribution of the Common Stock registered hereby. The expenses in
connection with the distribution contemplated by this Registration Statement
will be borne by the Registrant.
SEC Registration Fee $12,974
New York Stock Exchange Application Fee 8,750
Purchaser fees 92,531
Printing and engraving expenses* 20,000
Reimbursement of Purchaser's expenses, including legal fees* 45,000
Legal fees and expenses* 45,000
Accounting fees and expenses* 25,000
Blue sky fees and expenses* 5,000
Miscellaneous* 5,745
TOTAL* $260,000
- -----------
* Estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Registrant's Restated Certificate of Incorporation provides that a
director of the Registrant shall not be liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duty as a director,
including grossly negligent business judgments made in good faith, except for
liability (i) for breach of the duty of loyalty to the Registrant or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware General Corporation Law (governing distributions to stockholders),
or (iv) for any transaction for which a director derives an improper personal
benefit.
As permitted by Section 145 of the Delaware General Corporation Law, the
By-laws of the Registrant provide that the Registrant is required to indemnify
its directors, officers, employees and agents, and persons serving in such
capacities in other business enterprises at the Registrant's request, to the
fullest extent permitted by Delaware law, including those circumstances in which
indemnification would otherwise be discretionary (except that the Registrant is
not required to indemnify a person who (i) acted in bad faith, (ii) failed to
act in a manner such person reasonably believed to be in or not opposed to the
best interests of the Registrant, (iii) in the case of a criminal proceeding,
had reasonable cause to believe that such person's conduct was unlawful, or (iv)
in the case of an action or suit by or in the right of the Registrant, has been
adjudged liable for negligence or misconduct in the performance of such person's
duty to the Registrant unless an appropriate court determines that such person
is entitled to indemnity). Notwithstanding the foregoing, the Registrant is
required to indemnify the expenses incurred by any director, officer, employee
or agent who has been successful on the merits or otherwise in defense of any
action, suit or proceeding. The Registrant may, but is not required to, advance
expenses of a director of officer incurred in defending an action suit or
proceeding provided that the Registrant receives an undertaking that such
director or officer will repay the advanced funds in the event it is ultimately
determined that such person is not entitled to indemnification. Indemnification
under the Registrant's By-laws may only be made upon a determination by a quorum
of disinterested directors (or, in certain circumstances, by independent legal
counsel or the stockholders) that indemnification is proper in the circumstances
because the applicable standard of conduct has
II-1
<PAGE>
been met. The indemnification provisions contained in the Registrant's By-laws
may be sufficiently broad to permit indemnification of the Registrant's officers
and directors for liabilities arising under the Securities Act.
The Registrant's By-laws also provide that the rights to indemnification
provided for in the By-laws are not exclusive of any other rights to which those
seeking indemnification may be entitled under any by-law, agreement, vote of
stockholders or disinterested directors, and further provide, in accordance with
Section 145 of the Delaware General Corporation Law, that the Registrant may
purchase and maintain insurance which protects its officers, directors,
employees and agents, and persons serving in such capacities in other business
enterprises at the Registrant's request, against any liabilities incurred in
connection with their services in such capacities. Such an insurance policy has
been obtained by the Registrant.
The description of the Registrant's By-laws contained in the preceding
paragraphs is qualified in its entirety by reference to the Registrant's By-laws
(filed with the Commission as Exhibit 3.2 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended July 2, 1995, which is incorporated by
reference herein).
The Registrant has agreed to indemnify certain directors and officers of
the Registrant for any damages suffered in connection with the exercise of
certain registration rights.
ITEM 16. EXHIBITS
The Exhibit Index appears on page II-6.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered hereby and the offerings of such securities
at the time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of
II-2
<PAGE>
securities offered (if the total dollar value of securities offered would
not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the
form of prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement;
PROVIDED, HOWEVER, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the
Commission by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein,
and the offering of such securities at that time shall be deemed to be the
intial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Nashville, State of Tennessee, on this 3rd day of
June, 1997.
MAGNETEK, INC.
By: /s/ Ronald N. Hoge
---------------------------------------
Ronald N. Hoge
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Ronald N. Hoge and Samuel A. Miley, and each of
them, as his or her true and lawful attorney-in-fact and agent with full power
of substitution and resubstitution, for him or her and in his or her name, place
and stead, in any and all capacities to sign any or all amendments (including
post-effective amendments) to this Registration Statement, and to file the same,
with all exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he or she might or could do in person, lawfully do or
cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Andrew G. Galef Chairman of the Board June 3, 1997
- -----------------------------
Andrew G. Galef
/s/ Ronald N. Hoge President, Chief Executive June 3, 1997
- ----------------------------- Officer and Director (Principal
Ronald N. Hoge Executive Officer)
/s/ Dewain K. Cross Director June 3, 1997
- -----------------------------
Dewain K. Cross
/s/ Paul J. Kofmehl Director June 3, 1997
- -----------------------------
Paul J. Kofmehl
/s/ Crocker Nevin Director June 3, 1997
- -----------------------------
Crocker Nevin
/s/ Marguerite W. Sallee Director June 3, 1997
- -----------------------------
Marguerite W. Sallee
II-4
<PAGE>
/s/ Robert E. Wycoff Director June 3, 1997
- -----------------------------
Robert E. Wycoff
/s/ David P. Reiland Senior Vice President and Chief June 3, 1997
- ----------------------------- Financial Officer (Principal
David P. Reiland Financial Officer)
/s/ Thomas R. Kmak Vice President and Controller June 3, 1997
- ----------------------------- (Principal Accounting Officer)
Thomas R. Kmak
II-5
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
-------------- -----------
1.1 Form of Standby Purchase Agreement between the Company and
Lehman Brothers Inc.
1.2 Form of ISDA Master Agreement between the Company and
Lehman Brothers Finance S.A., with attached Schedule and
Confirmation.
4.1 Restated Certificate of Incorporation of the Company, as
filed with the Delaware Secretary of State on November 21,
1989, incorporated by reference to Exhibit 3.1 to the
Registration Statement on Form S-3 filed on August 21,
1991, Commission File No. 33-41854.
4.2 By-laws of the Company, as amended and restated,
incorporated by reference to Exhibit 3.2 to the Company's
Annual Report on Form 10-K for the fiscal year ended July
2, 1995, Commission File No. 1-10233.
4.3 Indenture between the Company and The Bank of New York, as
Trustee, dated as of September 15, 1991 for $75,000,000 in
principal amount of 8% Convertible Subordinated Notes due
2001 including form of Note, incorporated by reference to
Exhibit 10.1 to the Company's Form 10-Q for the quarter
ended September 30, 1991, Commission File No. 1-10233.
5.1 Opinion and consent of Gibson, Dunn & Crutcher LLP.
23.1 Consent of Gibson, Dunn & Crutcher LLP (contained in
Exhibit 5.1).
23.2 Consent of Ernst & Young LLP, independent auditors.
24.1 Power of Attorney (included on the signature page hereto).
II-6
<PAGE>
STANDBY PURCHASE AGREEMENT
May __, 1997
Lehman Brothers Inc.
3 World Financial Center
16th Floor
200 Vesey Street
New York, New York 10285
(212) 526-7000
(212) 528-6859 (fax)
Gentlemen and Ladies:
MagneTek, Inc., a Delaware corporation (the "Company"), proposes to
redeem on June 23, 1997 (the "Redemption Date") $35,000,000 aggregate principal
amount of its outstanding 8% Convertible Subordinated Notes due 2001 (the
"Notes") at 103.56% of the face amount, plus accrued and unpaid interest to and
including the Redemption Date (for an aggregate of $21.78 per each $1,000
principal amount) (the "Redemption Price"). The Notes are convertible into 62.5
shares of Common Stock, $.01 par value per share, of the Company (the "Common
Stock") per each $1,000 principal amount. The right to convert the Notes into
shares of Common Stock will terminate at the close of business (5:00 p.m., New
York City time) on June 16, 1997 (the "Conversion Termination Date").
The Company desires to make arrangements with you (the "Purchaser")
pursuant to which the Purchaser will purchase from the Company the number of
shares of Common Stock necessary to provide the Company with the funds required
to pay the aggregate redemption price of that portion of the $35,000,000
principal amount of the Notes called for redemption that remain outstanding on
the Redemption Date.
The Company wishes to confirm as follows its agreement with the
Purchaser in respect of such arrangement:
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to, and agrees with, the Purchaser as set forth below in this Section
1. Certain terms used in this Section 1 are defined in paragraph (c) hereof.
(a) The Company meets the requirements for use of Form S-3 under the
Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and
<PAGE>
Exchange Commission (the "Commission") a registration statement on such
Form, including a related Prospectus, for the registration under the Act of
the offering and sale of the Acquired Shares (as defined in Section 2
hereof). The registration statement has become effective (unless the
Execution Time precedes the effectiveness of the Registration Statement, in
which case the representation contained in this sentence shall be deemed
first to have been made upon the effectiveness of this Agreement in
accordance with Section 14 hereof).
(b) To the best of the Company's knowledge, no order preventing or
suspending the use of the Prospectus has been issued by the Commission. On
the Effective Date, the Registration Statement complied in all material
respects with the applicable requirements of the Act and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the respective
rules and regulations thereunder. On the Effective Date, the Registration
Statement did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein not misleading, and, at the time of
the filing of the Prospectus pursuant to Rule 424 (or, if no such filing is
required, on the Effective Date), the Prospectus did not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that the
Company makes no representations or warranties as to the information
contained in or omitted from the Registration Statement, or the Prospectus
(or any supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Purchaser specifically for inclusion in or omission from the Registration
Statement of the Prospectus (or any supplement thereto).
(c) The terms which follow, when used in this Agreement, shall have
the meanings indicated. The term the "Effective Date" shall mean the date
that the Registration Statement became effective. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by the
parties hereto. The "Preliminary Prospectus" shall mean any preliminary
prospectus, including incorporated documents, with respect to the offering
of the Acquired Shares included in the Registration Statement prior to the
Effective Date. "Registration Statement" shall mean the registration
statement referred to in paragraph (a) above, including incorporated
documents, exhibits and financial statements, as amended at the Effective
Date. "Rule 424" refers to such rule under the Act. "Prospectus" shall
mean the form of prospectus, including incorporated documents, relating to
the offering of the Acquired Shares (as defined in Section 2 below) as
first filed with the Commission under Rule 424, or (if no such filing is
required) as included in the Registration Statement. Any reference herein
to the Registration Statement, a Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the documents (or any portions
thereof) incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of
the Registration Statement or the issue date of the Preliminary Prospectus
or the Prospectus, as the case may be; and any
-2-
<PAGE>
reference herein to the terms "amend," "amendment" or "supplement" with
respect to the Registration Statement or the Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act
after the Effective Date of the Registration Statement, or the issue date
of the Prospectus, as the case may be, deemed to be incorporated therein by
reference.
(d) All corporate subsidiaries (each of which is referred to herein
as a "subsidiary" and all of which are collectively referred to herein as
the "subsidiaries") of the Company are listed on Schedule I attached
hereto, PROVIDED, that the names of particular subsidiaries may be omitted
from Schedule I if the unnamed subsidiaries, considered in the aggregate as
a single subsidiary, would not constitute a "significant subsidiary" of the
Company within the meaning of Rule 1-02(w) of Regulation S-X.
(e) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Delaware, and
each subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be, and each
has the corporate power and authority to own its properties and conduct its
business as described (if described) in the Prospectus and has been duly
qualified as a foreign corporation and is in good standing under the laws
of each other jurisdiction in which its ownership or leasing of its
properties or its conduct of its material business make such qualification
necessary, except to the extent that any failure to so qualify or be in
good standing would not have a material adverse effect on the condition
(financial or other), earnings, business or properties of the Company and
its subsidiaries, taken as a whole.
(f) The issuance and sale of Purchased Shares (as defined in
Section 2 hereof) to be sold by the Company under this Agreement and the
issuance of the Additional Shares (as defined in Section 2 hereof) do not
result in a breach of any of the terms or provisions of, or constitute a
default (or an event which, with notice or lapse of time or both, would
constitute a default) under, (i) the Restated Certificate of Incorporation
or Bylaws of the Company or its subsidiaries, (ii) any material bond,
debenture, note, loan agreement, indenture, mortgage, deed of trust, lease
or other agreement or instrument to which the Company or its subsidiaries
is now a party or by which any of them is bound, or (iii) any order of any
court or governmental agency or authority entered in any proceeding to
which the Company or its subsidiaries was or is now a party or by which
either of them is bound.
(g) Neither the Company, nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss to or
interruption with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of which
information is given in the Registration Statement and
-3-
<PAGE>
the Prospectus, there has not been any material increase in the long-term
debt of the Company and its subsidiaries taken as a whole.
(h) The Company has all requisite corporate power and authority to
enter into this Agreement, to issue, sell and deliver the Purchased Shares,
to issue the Additional Shares upon conversion of the Notes as provided in
the Indenture under which the Notes were issued, and to consummate the
transactions contemplated herein. This Agreement has been duly authorized,
executed and delivered by the Company. Each consent, approval,
authorization, order, declaration or filing by or with any governmental
agency or body necessary for the offer and sale of the Acquired Shares and
the execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated
hereby, have been made or obtained, except such as may be necessary (i) to
make the Registration Statement remain effective under the Act, (ii) to
qualify the Acquired Shares for public offering by you under state
securities or Blue Sky laws or (iii) with the National Association of
Securities Dealers, Inc. ("NASD") in connection with the purchase and
distribution of the Acquired Shares by the Purchaser.
(i) The actual and as adjusted capitalization of the Company is as
set forth under the heading "Capitalization" in the Prospectus; the issued
shares of capital stock of the Company conform to the description thereof
in the Prospectus and have been duly authorized and validly issued and are
fully paid and nonassessable; all outstanding shares of capital stock of
each of the subsidiaries have been duly authorized and validly issued, and
are fully paid and nonassessable and are owned directly by the Company or
by another subsidiary of the Company free and clear of any liens,
encumbrances, equities or claims other than those arising under the Credit
Agreement dated as of March 31, 1995, as thereafter amended by the First,
Second, Third and Fourth Amendments thereto, between the Company and the
Lenders named therein, for whom NationsBank of Texas, N.A. is Agent and
CIBC Inc., The First National Bank of Chicago and LTCB Trust Company are
Co-Agents (the "Credit Agreement").
(j) The Purchased Shares to be issued and sold by the Company to the
Purchaser hereunder, and the Additional Shares to be issued to the
Purchaser by the Company, have been duly authorized and, when issued and
paid for as contemplated herein, will be validly issued, fully paid and
nonassessable and will conform to the description thereof in the Prospectus
and will not have been issued in violation of or subject to any preemptive
or other similar rights to subscribe for the Acquired Shares.
(k) Except as described in the Registration Statement or issued after
June 30, 1996 pursuant to stock-based compensation plans described in the
Registration Statement, there are no options, warrants, agreements,
preemptive rights, conversion rights, contracts or other rights in
existence to purchase or acquire from the Company any shares of the capital
stock or securities or obligations convertible into, or any contracts or
commitments to issue or sell shares of capital stock or any such rights or
other securities of the Company.
-4-
<PAGE>
(l) There is no pending or, to the best of the Company's knowledge,
threatened action, suit or proceeding before any court or governmental
agency, authority or body or any arbitrator involving the Company or any of
its subsidiaries of a character required to be disclosed in the
Registration Statement which is not adequately disclosed in the Prospectus.
(m) All material agreements to which the Company or any of its
subsidiaries is a party and which are required to be described in the
Registration Statement or the Prospectus are described therein as required
by the Act or the Exchange Act. The Company is not in breach of or in
violation under any of the material terms or provisions of, or in default
under, (i) its Restated Certificate of Incorporation or Bylaws, or (ii)
except as set forth in the Prospectus, (A) any material contract,
indenture, mortgage, deed of trust, permit, license, note agreement or
other material agreement or material instrument to which the company is a
Party or by which any of its properties are bound, or (B) any order,
judgment, statute, rule or regulation of any court or governmental,
administrative or regulatory agency or body having jurisdiction over the
Company or any of its properties.
(n) The Company has obtained the agreement of each of the Company's
directors and executive officers and each entity believed by the Company to
own beneficially more than 5% of its outstanding shares of Common Stock
(the "Principal Shareholders") that, in the event the number of Purchased
Shares (as hereinafter defined) is greater than _______, such persons will
not, for a period of [___] days following the date of this Agreement, offer
to sell, contract to sell or otherwise sell (including without limitation
in a short sale), grant any option to purchase, or dispose of any shares of
any equity stock of the Company, any options or warrants to purchase any
shares of any equity stock of the Company, or any securities convertible
into or exchangeable for shares of any equity stock of the Company, without
the prior written consent of the Purchaser; EXCEPT THAT the Company may
issue securities to such persons pursuant to the Company's retirement
savings, stock option or other benefit or incentive plans maintained for
its officers, directors or employees, PROVIDED that the Company may only
issue up to 100,000 shares to such persons pursuant to such benefit or
incentive plans, and PROVIDED, FURTHER, that the Company will place such
appropriate restriction on any securities issued pursuant to any such
benefit or incentive plans so that they may not be resold during such [__]
day period.
(o) The Company has not taken and will not take any action designed
to stabilize or manipulate the price of any security of the Company, or
which caused or resulted in, or which might in the future reasonably be
expected to cause or result in, stabilization or manipulation of the price
of any security of the Company.
(p) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the Exchange Act and the rules and
regulations of the Commission thereunder.
-5-
<PAGE>
(q) The consolidated financial statements of the Company (including
the related notes and supporting schedules) filed as part of the
Registration Statement or included or incorporated by reference in the
Prospectus present fairly in all material respects the consolidated
financial position and the consolidated results of operations of the
Company, at the dates and for the periods indicated, and have been prepared
in conformity with generally accepted accounting principles except to the
extent that certain footnote disclosures regarding the unaudited financial
statements have been omitted in accordance with the applicable rules of the
Commission. The amounts included in the Registration Statement and the
amounts in the Prospectus under the caption "Selected Financial and
Operating Data" have been derived from and are consistent with the
financial statements included or incorporated by reference in the
Registration Statement.
2. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations and warranties herein
contained, but subject to all the terms and conditions herein set forth,
the Purchaser will purchase from the Company at $16.92 per share (the
"Purchase Price") the number of shares of Common Stock necessary to provide
the Company with the funds required to pay the aggregate redemption price
of that portion of the $35,000,000 principal amount of the Notes called for
redemption that remain outstanding on the Redemption Date. Shares acquired
by the Purchaser pursuant to this Section 2(a) are referred to herein as
"Purchased Shares." The Purchaser shall pay the Company for the Purchased
Shares in same day funds on June 23, 1997 (the "Closing Date").
(b) Until 5:00 p.m. New York City time on the Conversion Termination
Date, the Purchaser may (but shall have no obligation to) purchase Notes
("Acquired Notes") and Common Stock in the open market or otherwise in such
amounts and at such prices as the Purchaser may deem advisable. The
Purchaser agrees to surrender for conversion not later than 5:00 p.m. New
York City time on the Conversion Termination Date any Notes owned by the
Purchaser on such date. Purchased Shares and shares of Common Stock issued
to the Purchaser upon conversion of Acquired Notes may be sold by the
Purchaser at any time or from time to time pursuant to the Registration
Statement or an applicable exemption under the Act. Shares of Common Stock
acquired by the Purchaser upon conversion of Acquired Notes are referred to
herein as "Additional Shares." Purchased Shares and Additional Shares are
referred to in this Agreement as "Acquired Shares."
(c) As compensation to the Purchaser for its commitment hereunder,
the Company will pay to the Purchaser, in same day funds, (i) at the
Execution Time, a standby fee of $92,519, and (ii) on the Closing Date, an
amount equal to $0.125 per Acquired Share (the "Takeup Fee").
(d) Prior to the Closing Date, the Purchaser and the Company will
enter into an equity swap agreement (the "Swap") in substantially the form
attached hereto as Exhibit A.
-6-
<PAGE>
(e) The Purchaser agrees to inform the Company when all Acquired
Shares have been sold or if any offering of Acquired Shares is otherwise
terminated.
(f) The Purchaser agrees that it will not solicit conversions of
Notes by the holders of Notes.
3. OFFERING BY PURCHASER. It is understood that the Purchaser
proposes to offer the Acquired Shares for sale to the public as set forth in the
Prospectus.
4. AGREEMENTS. The Company agrees with the Purchaser that:
(a) Prior to the termination of the offering of the Acquired Shares,
the Company will not file any amendment to the Registration Statement or
supplement to the Prospectus without your prior consent, which consent
shall not be unreasonably withheld. The Company will promptly advise the
Purchaser (i) when any amendment to the Registration Statement shall have
been filed or become effective, (ii) when the Prospectus (if not included
in the Registration Statement), and any supplement thereto, shall have been
filed with the Commission pursuant to the Act, (iii) of any request by the
Commission for any amendment to the Registration Statement or supplement to
the Prospectus or for any additional information, (iv) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any proceeding
for that purpose, (v) of the receipt by the Company of any notification
with respect to the suspension of the qualification of the Acquired Shares
for sale in any jurisdiction or of the initiation or threatening of any
proceeding for such purpose, (vi) when an appropriate application for
additional listing has been filed with the New York Stock Exchange and
(vii) of the receipt of any notification or other communication from the
New York Stock Exchange with respect to such application for additional
listing. The Company will use its best efforts to prevent the issuance of
any such stop order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(b) If, at any time when a prospectus relating to the Acquired Shares
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then supplemented would include any untrue
statement of a material fact or omit to state any material act necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, or if it shall be necessary to amend the
Registration Statement or supplement the Prospectus to comply with the Act
or the Exchange Act or the respective rules thereunder, the Company
promptly will prepare and file with the Commission, subject to the first
sentence of paragraph (a) of this Section 4, an amendment or supplement
which will correct such statement or omission or effect such compliance.
(c) As soon as practicable, the Company will make generally available
to its security holders and to the Purchaser an earnings statement or
statements of the Company
-7-
<PAGE>
and its subsidiaries which will satisfy the provisions of Section 11(a) of
the Act and Rule 158 under the Act.
(d) The Company will furnish to the Purchaser and counsel for the
Purchaser, without charge, a signed copy of the Registration Statement
(including exhibits thereto) and, so long as delivery of a prospectus by
the Purchaser or dealer may be required by the Act, as many copies of each
Prospectus and any supplement thereto as the Purchaser may reasonably
request. The Company will pay the expenses of printing or other production
of all documents relating to the offering.
(e) The Company will take such actions as the Purchaser may request
to qualify the Acquired Shares for sale under the laws of such
jurisdictions as the Purchaser may designate, will maintain such
qualifications in effect so long as required for the distribution of the
Acquired Shares; PROVIDED, HOWEVER, that the Company shall not be required
to qualify to do business in any jurisdiction where it is not now qualified
or to file a general consent to service of process in any jurisdiction.
The Company will pay the fee of the NASD in connection with its review of
the offering, if any.
(f) In the event the number of Purchased Shares is greater than
[_________] the Company will not, for a period of [___] days following the
Execution Time, without the prior written consent of the Purchaser, offer,
sell or contract to sell, or otherwise dispose of, directly or indirectly,
or announce the offering of, any other shares of equity securities or any
securities convertible into, or exchangeable for, shares of equity
securities; EXCEPT THAT the Company may issue equity securities (i)
pursuant to this Agreement and (ii) pursuant to any stock option,
retirement savings or other benefit or incentive plans maintained for the
Company's officers, directors or employees, PROVIDED that the Company may
sell up to 100,000 shares pursuant to such benefit or incentive plans, and
PROVIDED, FURTHER, that the Company will place such appropriate restriction
on any securities issued pursuant to any such benefit or incentive plans so
that they may not be resold during such [__] day period.
(g) The Company will mail or cause to be mailed a notice of
redemption of $35,000,000 principal amount of Notes, by first class mail on
the effective date of the Registration Statement, to all holders of record
of Notes at the close of business on such date, such notice of redemption
to be in the form heretofore submitted to the Purchaser. The Company will
furnish to the Purchaser such number of copies of the notice of redemption
as the Purchaser reasonably may request.
(h) The Company will direct the depositary for the Notes to be
redeemed to advise the Purchaser daily of the aggregate principal amount of
Notes (i) surrendered for conversion into Common Stock and (ii) surrendered
for redemption, in each case through the close of business on the
immediately preceding business day.
-8-
<PAGE>
5. CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The obligations
of the Purchaser to purchase the Purchased Shares and to surrender for
conversion any Acquired Notes owned by it shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time and the Closing Date, to the accuracy of the statements
of the Company made in any certificates pursuant to the provisions hereof, to
the performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If filing of the Prospectus, or any supplement thereto, is
required pursuant to the Act, the Prospectus, and any such supplement, will
be filed in the manner and within the time period required by the Act; and
no stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(b) The Purchaser and the Company shall have entered into the Swap.
(c) At the Execution Time and on the Closing Date, the Company shall
have furnished to the Purchaser the opinion of Samuel A. Miley, Esq., Vice
President, General Counsel and Secretary for the Company, dated the date of
this Agreement or the Closing Date, as the case may be, to the effect that:
(i) each of the Company and its subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus,
and is duly qualified to do business as a foreign corporation and is
in good standing under the laws of each jurisdiction in which its
ownership or leasing of its material properties or its conduct of its
material business makes such qualification necessary, except to the
extent the failure, individually or in the aggregate to be so
qualified or in good standing could not have a material adverse effect
on the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, taken as a whole;
(ii) all the outstanding shares of capital stock of the
subsidiaries have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
subsidiaries are owned by the Company either directly or through
wholly owned subsidiaries free and clear of any perfected security
interest and, to the knowledge of such counsel, any other security
interests, claims, liens or encumbrances other than those arising
under the Credit Agreement;
(iii) the Company's authorized equity capitalization is as set
forth in the Prospectus; the description of the capital stock of the
Company contained in the Prospectus fairly summarizes the matters
referred to therein; all of the outstanding
-9-
<PAGE>
shares of capital stock have been duly authorized and validly issued
and are fully paid and nonassessable and were not issued in violation
of or subject to any preemptive or other rights to subscribe for the
capital stock, the Acquired Shares have been duly authorized, and,
when issued and delivered to and paid for by the Purchasers pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable; the Acquired Shares are duly authorized for trading on
the New York Stock Exchange; the certificates for the Acquired Shares
are in valid and sufficient form; and, except as otherwise set forth
in the Prospectus, the holders of outstanding shares of capital stock
of the Company are not entitled to preemptive or similar rights to
subscribe for the Acquired Shares;
(iv) to the best knowledge of such counsel, there is no pending
or overtly threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no contract, agreement,
lease, instrument, license or other document of a character required
to be described in the Registration Statement or the Prospectus, or to
be filed as an exhibit, which is not described or filed as required;
and the statements in the Company's most recently filed Form 10-K and
10-Q incorporated in the Registration Statement by reference under the
heading "Legal Proceedings" fairly summarize the matters therein
described;
(v) such counsel has no reason to believe that, at the
Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading:
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization, or order or any court
or governmental agency or body is required for the consummation of the
transactions contemplated herein and the distribution of the Acquired
Shares by the Purchaser, except such as have been obtained under the
Act and such as may be required under the blue sky or foreign laws of
any jurisdiction in connection with the purchase and distribution of
the Acquired Shares by the Purchaser, and such other approvals
(specified in such opinion) as have been obtained;
-10-
<PAGE>
(viii) neither the issuance, sale or delivery of the Purchased
Shares, nor the conversion of the Acquired Notes into Additional
Shares, nor the issuance or delivery of the Additional Shares, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under any law, rule or
regulation or the Restated Certificate of Incorporation or Bylaws of
the Company or the terms of any material indenture or other agreement
or instrument known to such counsel and to which the Company or any of
its subsidiaries is a party or bound or any judgment, order, or decree
known to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries;
(ix) no holders of securities of the Company have rights to the
registration of such securities under the Registration Statement; and
(x) (A) (in the opinion rendered at the Execution Time)
assuming that the notice of redemption is mailed by first class
mail on the effective date of the Registration Statement to all
holders of record of Notes at the close of business on such date,
and
(B) (in the opinion rendered on the Closing Date)
based upon the mailing of a notice of redemption by first class
mail on the effective date of the Registration Statement to all
holders of record of Notes at the close of business on such date
(as to which such counsel may rely upon an appropriate
certificate of mailing),
$35,000,000 aggregate principal amount of the outstanding Notes will
have been duly called for redemption on the Redemption Date.
References to the Prospectus in this paragraph (c) include any supplements
thereto at the Closing Date.
(d) At the Execution Time and on the Closing Date, the Company shall
have furnished to the Purchaser the opinion of Gibson, Dunn & Crutcher LLP,
counsel for the Company, dated the date of this Agreement or the Closing
Date, as the case may be, to the effect that:
(i) the Registration Statement has become effective under the
Act (which specific opinion may be omitted from the opinion letter to
be rendered at the Execution Time if the Execution Time precedes the
effectiveness of the Registration Statement and thereafter provided
separately on the Effective Date); any filing of the Prospectus and
any supplements thereto required to be made pursuant to Rule 424
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promulgated under the Act has been made in the manner and within the
time period required by that Rule; to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Prospectus (other than the financial statements and
other financial and statistical information contained therein as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of Form S-3, the
Act and the Exchange Act and the respective rules and regulations
thereunder; and such counsel has no reason to believe that, at the
Effective Date, the Registration Statement contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading or that the Prospectus includes any untrue
statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) no consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation or the
transactions contemplated herein, except such as have been obtained
under the Act and such as may be required under the blue sky or
foreign laws of any jurisdiction in connection with the purchase and
distribution of the Acquired Shares by the Purchaser, and such other
approvals (specified in such opinion) as have been obtained;
(iii) (A) (in the opinion rendered at the Execution Time)
assuming that the notice of redemption is mailed by first class
mail on the effective date of the Registration Statement to all
holders of record of Notes at the close of business on such date,
and
(B) (in the opinion rendered on the Closing Date) based
upon the mailing of a notice of redemption by first class mail on
the effective date of the Registration Statement to all holders
of record of Notes at the close of business on such date (as to
which such counsel may rely upon an appropriate certificate of
mailing),
$35,000,000 aggregate principal amount of the outstanding Notes will
have been duly called for redemption on the Redemption Date; and
(iv) neither the issuance, sale or delivery or the Purchased
Shares, nor the conversion of the Notes into Additional Shares, nor
the issuance or delivery of the Additional Shares, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict with, result in a
breach or violation of, or constitute a default under (A) any law,
rule or regulation, or (B) the Restated Certificate of Incorporation
or Bylaws of the Company, or (C) the
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terms of any indenture or other agreement or instrument specified in
or in an exhibit to such counsel's opinion and known to such counsel,
after inquiry only of the President and the Chief Financial Officer of
the Company, to be material and to which the Company or any of its
subsidiaries is a party or bound, or (D) any judgment, order or decree
known to such counsel to be applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction over the Company
or any of its subsidiaries.
References to the Prospectus in this paragraph (d) include any supplements
thereto at the Closing Date.
(e) At the Execution Time and on the Closing Date, the Purchaser
shall have received from Morgan, Lewis & Bockius LLP, counsel for the
Purchaser, such opinion or opinions, dated the date hereof, with respect to
the issuance and sale of the Acquired Shares, the Registration Statement,
the Prospectus (together with any supplement thereto) and other related
matters as the Purchaser may reasonably require, and the Company shall have
furnished to such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(f) At the Execution Time and prior to the Closing Date, the Company
shall have furnished to the Purchaser a certificate of the Company, signed
by the President or the Chief Financial Officer of the Company, dated the
date of this Agreement or the Closing Date, as the case may be, to the
effect that the signer of such certificate has carefully examined the
Registration Statement, the Prospectus, any supplement to the Prospectus
and this Agreement and that:
(i) the representations and warranties of the Company in this
Agreement are true and correct in all material respects on and as of
the date of this Agreement or the Closing Date, as the case may be,
with the same effect as if made on the date of this Agreement or on
the Closing Date, as the case may be, and the Company has complied
with all the agreements and satisfied all the conditions on its part
to be performed or satisfied at or prior to the Execution Time or the
Closing Date, as the case may be, pursuant to this Agreement;
(ii) no stop order suspending the effectiveness or the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
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transactions in the ordinary course of business, except as set forth
in or contemplated in the Prospectus (exclusive of any supplement
thereto).
(g) At the Execution Time and on the Closing Date, Ernst & Young LLP
shall have furnished to the Purchaser a letter or letters, dated the date
of this Agreement or the Closing Date, as the case may be, in form and
substance satisfactory to the Purchaser.
(h) Subsequent to the Execution Time or, if earlier, the dates as of
which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been any change, or any development
involving a prospective change, in or affecting the business or properties
or the Company and its subsidiaries, taken as a whole, the effect of which
is, in the judgment of the Purchaser, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of the
Acquired Shares as contemplated by the Registration Statement (exclusive of
any amendment thereof) and the Prospectus (exclusive of any supplement
thereto).
(i) Prior to the Execution Time, the Company shall have furnished to
the Purchaser a letter substantially in the form of Exhibit B hereto, from
each executive officer, director and the Principal Shareholders, addressed
to the Purchaser, in which, in the event the number of Purchased Shares is
greater than [_________], each such person agrees not to offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce an offering of, any shares of Company equity securities
beneficially owned by such person or any securities convertible into, or
exchangeable for, shares of Company equity securities for a period of [___]
days following the Execution Time without the prior consent of the
Purchaser.
(j) The Company shall have furnished to the Purchaser such further
information, certificates and documents as the Purchaser may reasonably
request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Purchaser and counsel for the Purchaser, this statement
and all obligations of the Purchaser hereunder may be canceled at, or at any
time prior to, the Closing Date by the Purchaser. Notice of such cancellation
shall be given to the Secretary of the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of Morgan, Lewis & Bockius LLP, counsel for the
Purchaser, at 801 S. Grand Avenue, Los Angeles, California, on the Closing Date.
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<PAGE>
6. REIMBURSEMENT OF PURCHASER'S EXPENSES. The Company will reimburse
the Purchaser on the Closing Date for all reasonable out-of-pocket expenses
(including reasonable fees and disbursements of counsel in connection with the
transactions contemplated by this Agreement and with the tender offer for the
Company's 10-3/4% Senior Subordinated Debentures due 1998, up to a maximum
reimbursement for such fees and disbursements of counsel of $100,000 in the
aggregate) incurred by the Purchaser in connection with the proposed purchase
and/or conversion and sale of the Acquired Shares.
7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless the Purchaser,
the directors, officers, employees and agents of the Purchaser and each
person who controls the Purchaser against all losses, claims, damages or
liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other federal or state statutory
law or regulation, at common law or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement for the registration
of the Acquired Shares as originally filed or in any amendment thereof, or
in any Preliminary Prospectus or in the Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not
misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses (not including the expenses of
in-house counsel for the Purchaser) reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable
in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or
alleged untrue statement or omission or alleged omission made therein in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Purchaser specifically for inclusion
therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) The Purchaser agrees to indemnify and hold harmless the Company,
the Company's directors, each of the Company's officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Act or the Exchange Act, to the same extent as the
foregoing indemnity from the Company to the Purchaser, but only with
reference to written information relating to the Purchaser furnished to the
Company by or on behalf of the Purchaser specifically for inclusion in the
documents referred to in the foregoing indemnity, it being understood that,
for purposes of this Agreement, the only such information furnished to the
Company by or on behalf of the Purchaser consists of the following
information in the Prospectus:
(i) the sixth paragraph on the cover page of the Prospectus;
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<PAGE>
(ii) the legend at the top of page 2 of the Prospectus, which
precedes the caption "Prospectus Summary;"
(iii) the fourth paragraph under the caption "Standby Arrangement
and Swap Agreement" on page 10 of the Prospectus; and
(iv) the fifth paragraph under the caption "Standby Arrangement
and Swap Agreement" on pages 10-11 of the Prospectus.
This indemnity agreement will be in addition to any liability which the
Purchaser may otherwise have.
(c) Promptly after receipt by an indemnified party, under this
Section 7, of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of
such action and the indemnifying party has been prejudiced in any material
respect by such failure and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than
the indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of separate counsel retained by the indemnified party
or parties; except as set forth below); PROVIDED, HOWEVER, that such
counsel shall be satisfactory to the indemnified party. Notwithstanding
the indemnifying party's election to appoint counsel to represent the
indemnified party in an action, the indemnified party shall bear the right
to employ separate counsel (including local counsel), and the indemnifying
party shall bear the reasonable fees, costs and expenses or such separate
counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict
of interest, (ii) the actual or potential defendants in, or targets of any
such action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there may be
legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party,
(iii) the indemnifying party shall not have employed counsel satisfactory
to the indemnified party to represent the indemnified party within a
reasonable time after notice of the institution of such action or (iv) the
indemnifying party shall authorize the indemnified party to employ separate
counsel at the expense of the indemnifying party. An indemnifying party
will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect
to any pending or threatened claim, action, suit or proceeding in respect
of which indemnification or
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<PAGE>
contribution may be sought hereunder (whether or not the indemnified
parties are actual or potential parties to such claim or action) unless
such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim,
action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or (b)
of this Section 7 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Purchaser agree to
contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "Losses") to which the
Company and the Purchaser may be subject in such proportion as is
appropriate to reflect the relative benefits received by the Company on the
one hand and by the Purchaser on the other from the offering of the
Acquired Shares; PROVIDED, HOWEVER, that in no case shall the Purchaser be
responsible for any amount in excess of the aggregate fees and expenses
payable pursuant to Section 2(c) hereof. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company
and the Purchaser shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company on the one hand and of the Purchaser on the other in connection
with the statements or omissions which resulted in such Losses as well as
any other relevant equitable considerations. Benefits received by the
Company shall be deemed to be equal to (i) the product of the Purchase
Price multiplied by the number of Acquired Shares (ii) minus the aggregate
fees and expenses payable pursuant to Section 2(c), and benefits received
by the Purchaser shall be deemed to be equal to the aggregate fees and
expenses payable pursuant to Section 2(c). Relative fault shall be
determined by reference to whether any alleged untrue statement or omission
relates to information provided by the Company or the Purchaser. The
Company and the Purchaser agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this paragraph (d), no
person guilty of fraudulent misrepresentation (within the meaning of
Section ll(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 7, each person who controls the Purchaser within the meaning
of either the Act or the Exchange Act and each director, officer, employee
and agent of the Purchaser shall have the same rights to contribution as
the Purchaser, and each person who controls the Company within the meaning
of either the Act or the Exchange Act, each officer of the Company who
shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
8. TERMINATION. This Agreement shall be subject to termination in
the absolute discretion of the Purchaser, by notice given to the Company prior
to delivery of any payment for the Acquired Shares, if prior to such time (i)
trading in the Common Stock or trading in securities generally on the New York
Stock Exchange or the Nasdaq National Market (or on the principal
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<PAGE>
exchange or market on which the Common Stock is then traded) shall have been
suspended or limited or minimum prices shall have been established on either of
such exchange or market, (ii) a banking moratorium shall have been declared
either by federal or New York State authorities or (iii) there shall have
occurred any outbreak or escalation of hostilities, declaration by the United
States of a national emergency or war or other calamity or crisis the effect of
which on financial markets is such as to make it, in the judgment of the
Purchaser, impracticable or inadvisable to proceed with the offering or delivery
of the Acquired Shares as contemplated by the Prospectus (exclusive of any
supplement thereto).
9. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Purchaser set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Purchaser or the Company or any of the
officers, directors or controlling persons referred to in Section 7 hereof, and
will survive delivery of and payment for the Acquired Shares. The provisions of
Sections 6 and 7 hereof shall survive the termination or cancellation of this
Agreement.
10. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchaser, will be mailed,
delivered or telegraphed and confirmed to it, at the address set forth in this
Standby Purchase Agreement; or, if sent to the Company, will be mailed,
delivered, or telegraphed and confirmed to it at 26 Century Boulevard, P.O. Box
290159, Nashville, Tennessee 37229-0159, Attention: Samuel A. Miley, Esq.
11. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 7 hereof, and no
other person will have any right or obligation hereunder.
12. APPLICABLE LAW. This Agreement will be governed by and construed
with the laws of the State of New York, without regard to the principles of
conflicts of laws.
13. COUNTERPARTS. This Agreement may be executed in more than one
counterpart each of which shall be deemed an original and each of which shall
constitute one and the same instrument.
14. EFFECTIVENESS. This Agreement shall become effective upon the
later of (a) the Execution Time and (b) the release of notification of the
effectiveness of the Registration Statement by the Commission.
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If the foregoing is in accordance with your understanding of our
agreement, please so indicate in the space provided below, whereupon this letter
and your acceptance shall represent a binding agreement among the Company and
you.
Very truly yours,
MAGNETEK, INC.
By: ______________________________
Name:
Title:
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
LEHMAN BROTHERS INC.
By: _________________________________
Name:
Title:
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<PAGE>
(MULTICURRENCY-CROSS BORDER)
ISDA-Registered Trademark-
International Swap Dealers Association, Inc.
MASTER AGREEMENT
dated as of May 20, 1997
LEHMAN BROTHERS FINANCE S.A. AND MAGNETEK, INC.
and
- --------------------------------------------------------------------------------
have entered and/or anticipate entering into one or more transactions (each a
"Transaction") that are or will be governed by this Master Agreement, which
includes the schedule (the "Schedule"), and the documents and other confirming
evidence (each a "Confirmation") exchanged between the parties confirming those
Transactions.
Accordingly, the parties agree as follows:-
1. INTERPRETATION
(a) DEFINITIONS. The terms defined in Section 14 and in the Schedule will
have the meanings therein specified for the purpose of this Master Agreement.
(b) INCONSISTENCY. In the event of any inconsistency between the provisions
of the Schedule and the other provisions of this Master Agreement, the Schedule
will prevail. In the event of any inconsistency between the provisions of any
Confirmation and this Master Agreement (including the Schedule), such
Confirmation will prevail for the purposes of the relevant Transaction.
(c) SINGLE AGREEMENT. All Transactions are entered into in reliance on the
fact that this Master Agreement and all Confirmation form a single agreement
between the parties (collectively referred to as this "Agreement"), and the
parties would not otherwise enter into any Transactions.
2. OBLIGATIONS
(a) GENERAL CONDITIONS.
(i) Each party will make each payment or delivery specified in each
Confirmation to be made by it, subject to the other provisions of this
Agreement.
(ii) Payments under this Agreement will be made on the due date for
value on that date in the place of the account specified in the relevant
Confirmation or otherwise pursuant to this Agreement, in freely
transferable funds and in the manner customary for payments in the
required currency. Where settlement is by delivery (that is, other than
by payment), such delivery will be made for receipt on the due date in
the manner customary for the relevant obligation unless otherwise
specified in the relevant Confirmation or elsewhere in this Agreement.
(iii) Each obligation of each party under Section 2(a)(i) is subject to
(1) the condition precedent that no Event of Default or Potential Event
of Default with respect to the other party has occurred and is
continuing, (2) the condition precedent that no Early Termination Date
in respect of the relevant Transaction has occurred or been effectively
designated and (3) each other applicable condition precedent specified
in this Agreement.
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(b) CHANGE OF ACCOUNT. Either party may change its account for receiving a
payment or delivery by giving notice to the other party at least five Local
Business Days prior to the scheduled date for the payment or delivery to which
such change applies unless such other party gives timely notice of a reasonable
objection to such change.
(c) NETTING. If on any date amounts would otherwise be payable:-
(i) in the same currency; and
(ii) in respect of the same Transaction.
by each party to the other, then, on such date, each party's obligation to make
payment of any such amount will be automatically satisfied and discharged and,
if the aggregate amount that would otherwise have been payable by one party
exceeds the aggregate amount that would otherwise have been payable by the other
party, replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable to pay to the other party the excess of the
larger aggregate amount over the smaller aggregate amount.
The parties may elect in respect of two or more Transactions that a net amount
will be determined in respect of all amounts payable on the same date in the
same currency in respect of such Transactions, regardless of whether such
amounts are payable in respect of the same Transaction. The election may be
made in the Schedule or a Confirmation by specifying that subparagraph (ii)
above will not apply to the Transactions identified as being subject to the
election, together with the starting date (in which case subparagraph (ii) above
will not, or will cease to, apply to such Transactions from such date). This
election may be made separately for different groups of Transactions and will
apply separately to each pairing of Offices through which the parties make and
receive payments or deliveries.
(d) DEDUCTION OR WITHHOLDING FOR TAX.
(i) GROSS-UP. All payments under this Agreement will be made without
any deduction or withholding for or on account of any Tax unless such
deduction or withholding is required by any applicable law, as modified
by the practice of any relevant governmental revenue authority, then in
effect. If a party is so required to deduct or withhold, then that
party ("X") will:-
(1) promptly notify the other ("Y") of such requirement;
(2) pay to the relevant authorities the full amount required to
be deducted or withheld (including the full amount required to be
deducted or withheld from any additional amount paid by X to Y
under this Section 2(d)) promptly upon the earlier of determining
that such deduction or withholding is required or receiving
notice that such amount has been assessed against Y;
(3) promptly forward to Y an official receipt (or a certified
copy), or other documentation reasonably acceptable to Y,
evidencing such payment to such authorities; and
(4) if such Tax is an Indemnifiable Tax, pay to Y, in addition
to the payment to which Y is otherwise entitled under this
Agreement, such additional amount as is necessary to ensure that
the net amount actually received by Y (free and clear of
Indemnifiable Taxes, whether assessed against X or Y) will equal
the full amount Y would have received had no such deduction or
withholding been required. However, X will not be required to
pay any additional amount to Y to the extent that it would not be
required to be paid but for:-
(A) the failure by Y to comply with or perform any
agreement contained in Section 4(a)(i), 4(a)(iii) or 4(d);
or
(B) the failure of a representation made by Y pursuant to
Section 3(f) to be accurate and true unless such failure
would not have occurred but for (I) any action taken by a
taxing authority, or brought in a court of competent
jurisdiction, on or after the date on which a Transaction is
entered into (regardless of whether such action is taken or
brought with respect to a party to this Agreement) or (II) a
Change in Tax Law.
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<PAGE>
(ii) LIABILITY. If:-
(1) X is required by any applicable law, as modified by the
practice of any relevant governmental revenue authority, to make
any deduction or withholding in respect of which X would not be
required to pay an additional amount to Y under Section
2(d)(i)(4);
(2) X does not so deduct or withhold; and
(3) a liability resulting from such Tax is assessed directly
against X,
then, except to the extent Y has satisfied or then satisfies the
liability resulting from such Tax, Y will promptly pay to X the amount
of such liability (including any related liability for interest, but
including any related liability for penalties only if Y has failed to
comply with or perform any agreement contained in Section 4(a)(i),
4(a)(iii) or 4(d)).
(e) DEFAULT INTEREST; OTHER AMOUNTS. Prior to the occurrence or effective
designation of an Early Termination Date in respect of the relevant Transaction,
a party that defaults in the performance of any payment obligation will, to the
extent permitted by law and subject to Section 6(c), be required to pay interest
(before as well as after judgment) on the overdue amount to the other party on
demand in the same currency as such overdue amount, for the period from (and
including) the original due date for payment to (but excluding) the date of
actual payment, at the Default Rate. Such interest will be calculated on the
basis of daily compounding and the actual number of days elapsed. If, prior to
the occurrence or effective designation of an Early Termination Date in respect
of the relevant Transaction, a party defaults in the performance of any
obligation required to be settled by delivery, it will compensate the other
party on demand if and to the extent provided for in the relevant Confirmation
or elsewhere in this Agreement.
3. REPRESENTATIONS
Each party represents to the other party (which representations will be deemed
to be repeated by each party on each date on which a Transaction is entered into
and, in the case of the representations in Section 3(f), at all times until the
termination of this Agreement) that:-
(a) BASIC REPRESENTATIONS.
(i) STATUS. It is duly organised and validly existing under the laws
of the jurisdiction of its organisation or incorporation and, if
relevant under such laws, in good standing;
(ii) POWERS. It has the power to execute this Agreement and any other
documentation relating to this Agreement to which it is a party, to
deliver this Agreement and any other documentation relating to this
Agreement that it is required by this Agreement to deliver and to
perform its obligations under this Agreement and any obligations it has
under any Credit Support Document to which it is a party and has taken
all necessary action to authorise such execution, delivery and
performance;
(iii) NO VIOLATION OR CONFLICT. Such execution, delivery and
performance do not violate or conflict with any law applicable to it,
any provision of its constitutional documents, any order or judgment of
any court or other agency of government applicable to it or any of its
assets or any contractual restriction binding on or affecting it or any
of its assets;
(iv) CONSENTS. All governmental and other consents that are required
to have been obtained by it with respect to this Agreement or any Credit
Support Document to which it is a party have been obtained and are in
full force and effect and all conditions of any such consents have been
complied with; and
(v) OBLIGATIONS BINDING. Its obligations under this Agreement and
any Credit Support Document to which it is a party constitute its legal,
valid and binding obligations, enforceable in accordance with their
respective terms (subject to applicable bankruptcy, reorganisation,
insolvency, moratorium or similar laws affecting creditors' rights
generally and subject, as to enforceability, to equitable principles of
general application (regardless of whether enforcement is sought in a
proceeding in equity or at law)).
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(b) ABSENCE OF CERTAIN EVENTS. No Event of Default or Potential Event of
Default or, to its knowledge, Termination Event with respect to it has occurred
and is continuing and no such event or circumstance would occur as a result of
its entering into or performing its obligations under this Agreement or any
Credit Support Document to which it is a party.
(c) ABSENCE OF LITIGATION. There is not pending or, to its knowledge,
threatened against it or any of its Affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency or
official or any arbitrator that is likely to affect the legality, validity or
enforceability against it of this Agreement or any Credit Support Document to
which it is a party or its ability to perform its obligations under this
Agreement or such Credit Support Document.
(d) ACCURACY OF SPECIFIED INFORMATION. All applicable information that is
furnished in writing by or on behalf of it to the other parry and is identified
for the purpose of this Section 3(d) in the Schedule is, as of the date of the
information, true, accurate and complete in every material respect.
(e) PAYER TAX REPRESENTATION. Each representation specified in the Schedule
as being made by it for the purpose of this Section 3(e) is accurate and true.
(f) PAYEE TAX REPRESENTATIONS. Each representation specified in the
Schedule as being made by it for the purpose of this Section 3(f) is accurate
and true.
4. AGREEMENTS
Each party agrees with the other that, so long as either party has or may have
any obligation under this Agreement or under any Credit Support Document to
which it is a party:-
(a) FURNISH SPECIFIED INFORMATION. It will deliver to the other party or,
in certain cases under subparagraph (iii) below, to such government or taxing
authority as the other party reasonably directs:-
(i) any forms, documents or certificates relating to taxation
specified in the Schedule or any Confirmation;
(ii) any other documents specified in the Schedule or any
Confirmation; and
(iii) upon reasonable demand by such other party, any form or document
that may be required or reasonably requested in writing in order to
allow such other party or its Credit Support Provider to make a payment
under this Agreement or any applicable Credit Support Document without
any deduction or withholding for or on account of any Tax or with such
deduction or withholding at a reduced rate (so long as the completion,
execution or submission of such form or document would not materially
prejudice the legal or commercial position of the party in receipt of
such demand), with any such form or document to be accurate and
completed in a manner reasonably satisfactory to such other party and to
be executed and to be delivered with any reasonably required
certification,
in each case by the date specified in the Schedule or such Confirmation or, if
none is specified, as soon as reasonably practicable.
(b) MAINTAIN AUTHORISATIONS. It will use all reasonable efforts to maintain
in full force and effect all consents of any governmental or other authority
that are required to be obtained by it with respect to this Agreement or any
Credit Support Document to which it is a party and will use all reasonable
efforts to obtain any that may become necessary in the future.
(c) COMPLY WITH LAWS. It will comply in all material respects with all
applicable laws and orders to which it may be subject if failure so to comply
would materially impair its ability to perform its obligations under this
Agreement or any Credit Support Document to which it is a party.
(d) TAX AGREEMENT. It will give notice of any failure of a representation
made by it under Section 3(f) to be accurate and true promptly upon learning of
such failure.
(e) PAYMENT OF STAMP TAX. Subject to Section 11, it will pay any Stamp Tax
levied or imposed upon it or in respect of its execution or performance of this
Agreement by a jurisdiction in which it is incorporated,
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organised, managed and controlled, or considered to have its seat, or in which a
branch or office through which it is acting for the purpose of this Agreement is
located ("Stamp Tax Jurisdiction") and will indemnify the other party against
any Stamp Tax levied or imposed upon the other party or in respect of the other
party's execution or performance of this Agreement by any such Stamp Tax
Jurisdiction which is not also a Stamp Tax Jurisdiction with respect to the
other party.
5. EVENTS OF DEFAULT AND TERMINATION EVENTS
(a) EVENTS OF DEFAULT. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any of the following events constitutes an event of
default (an "Event of Default") with respect to such party:-
(i) FAILURE TO PAY OR DELIVER. Failure by the party to make, when
due, any payment under this Agreement or delivery under Section 2(a)(i)
or 2(e) required to be made by it if such failure is not remedied on or
before the third Local Business Day after notice of such failure is
given to the party;
(ii) BREACH OF AGREEMENT. Failure by the party to comply with or
perform any agreement or obligation (other than an obligation to make
any payment under this Agreement or delivery under Section 2(a)(i) or
2(e) or to give notice of a Termination Event or any agreement or
obligation under Section 4(a)(i), 4(a)(iii) or 4(d)) to be complied with
or performed by the party in accordance with this Agreement if such
failure is not remedied on or before the thirtieth day after notice of
such failure is given to the party;
(iii) CREDIT SUPPORT DEFAULT.
(1) Failure by the party or any Credit Support Provider of such
party to comply with or perform any agreement or obligation to be
complied with or performed by it in accordance with any Credit
Support Document if such failure is continuing after any
applicable grace period has elapsed;
(2) the expiration or termination of such Credit Support
Document or the failing or ceasing of such Credit Support
Document to be in full force and effect for the purpose of this
Agreement (in either case other than in accordance with its
terms) prior to the satisfaction of all obligations of such party
under each Transaction to which such Credit Support Document
relates without the written consent of the other party; or
(3) the party or such Credit Support Provider disaffirms,
disclaims, repudiates or rejects, in whole or in part, or
challenges the validity of, such Credit Support Document;
(iv) MISREPRESENTATION. A representation (other than a representation
under Section 3(e) or (f)) made or repeated or deemed to have been made
or repeated by the party or any Credit Support Provider of such party in
this Agreement or any Credit Support Document proves to have been
incorrect or misleading in any material respect when made or repeated or
deemed to have been made or repeated.
(v) DEFAULT UNDER SPECIFIED TRANSACTION. The party, any Credit
Support Provider of such party or any applicable Specified Entity of
such party (1) defaults under a Specified Transaction and, after giving
effect to any applicable notice requirement or grace period, there
occurs a liquidation of, an acceleration of obligations under, or an
early termination of, that Specified Transaction, (2) defaults, after
giving effect to any applicable notice requirement or grace period, in
making any payment or delivery due on the last payment, delivery or
exchange date of, or any payment on early termination of, a Specified
Transaction (or such default continues for at least three Local Business
Days if there is no applicable notice requirement or grace period) or
(3) disaffirms, disclaims, repudiates or rejects, in whole or in part, a
Specified Transaction (or such action is taken by any person or entity
appointed or empowered to operate it or act on its behalf);
(vi) CROSS DEFAULT. If "Cross Default" is specified in the Schedule
as applying to the party, the occurrence or existence of (1) a default,
event of default or other similar condition or event (however
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described) in respect of such party, any Credit Support Provider of such
party or any applicable Specified Entity of such party under one or more
agreements or instruments relating to Specified Indebtedness of any of
them (individually or collectively) in an aggregate amount of not less
than the applicable Threshold Amount (as specified in the Schedule)
which has resulted in such Specified Indebtedness becoming, or becoming
capable at such time of being declared, due and payable under such
agreements or instruments, before it would otherwise have been due and
payable or (2) a default by such party, such Credit Support Provider or
such Specified Entity (individually or collectively) in making one or
more payments on the due date thereof in an aggregate amount of not less
than the applicable Specified Amount under such agreements or
instruments (after giving effect to any applicable notice requirement or
grace period);
(vii) BANKRUPTCY. The party, any Credit Support Provider of such party
or any applicable Specified Entity of such party:-
(1) is dissolved (other than pursuant to a consolidation,
amalgamation or merger); (2) becomes insolvent or is unable to
pay its debts or fails or admits in writing its inability
generally to pay its debts as they become due; (3) makes a
general assignment, arrangement or composition with or for the
benefit of its creditors; (4) institutes or has instituted
against it a proceeding seeking a judgment of insolvency or
bankruptcy or any other relief under any bankruptcy or insolvency
law or other similar law affecting creditors' rights, or a
petition is presented for its winding-up or liquidation, and, in
the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results in
a judgment of insolvency or bankruptcy or the entry of an order
for relief or the making of an order for its winding-up or
liquidation or (B) is not dismissed, discharged, stayed or
restrained in each case within 30 days of the institution or
presentation thereof; (5) has a resolution passed for its
winding-up, official management or liquidation (other than
pursuant to a consolidation, amalgamation or merger); (6) seeks
or becomes subject to the appointment of an administrator,
provisional liquidator, conservator, receiver, trustee, custodian
or other similar official for it or for all or substantially all
its assets; (7) has a secured party take possession of all or
substantially all its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced
or sued on or against all or substantially all its assets and
such secured party maintains possession, or any such process is
not dismissed, discharged, staved or restrained, in each case
within 30 days thereafter; (8) causes or is subject to any event
with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events
specified in clauses (1) to (7) (inclusive); or (9) takes any
action in furtherance of, or indicating its consent to, approval
of, or acquiescence in, any of the foregoing acts; or
(viii) MERGER WITHOUT ASSUMPTION. The party or any Credit Support
Provider of such party consolidates or amalgamates with, or merges with
or into, or transfers all or substantially all its assets to, another
entity and, at the time of such consolidation, amalgamation, merger or
transfer:-
(1) the resulting, surviving or transferee entity fails to
assume all the obligations of such party or such Credit Support
Provider under this Agreement or any Credit Support Document to
which it or its predecessor was a party by operation of law or
pursuant to an agreement reasonably satisfactory to the other
party to this Agreement; or
(2) the benefits of any Credit Support Document fail to extend
(without the consent of the other party) to the performance by
such resulting, surviving or transferee entity of its obligations
under this Agreement.
(b) TERMINATION EVENTS. The occurrence at any time with respect to a party
or, if applicable, any Credit Support Provider of such party or any Specified
Entity of such party of any event specified below constitutes an Illegality if
the event is specified in (i) below, a Tax Event if the event is specified in
(ii) below or a Tax Event Upon Merger if the event is specified in (iii) below,
and, if specified to be applicable, a Credit Event
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Upon Merger if the event is specified pursuant to (iv) below or an Additional
Termination Event if the event is specified pursuant to (v) below:-
(i) ILLEGALITY. Due to the adoption of, or any change in, any
applicable law after the date on which a Transaction is entered into, or
due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of
any applicable law after such date, it becomes unlawful (other than as a
result of a breach by the party of Section 4(b)) for such party (which
will be the Affected Party):-
(1) to perform any absolute or contingent obligation to make a
payment or delivery or to receive a payment or delivery in
respect of such Transaction or to comply with any other material
provision of this Agreement relating to such Transaction; or
(2) to perform, or for any Credit Support Provider of such party
to perform, any contingent or other obligation which the party
(or such Credit Support Provider) has under any Credit Support
Document relating to such Transaction;
(ii) TAX EVENT. Due to (x) any action taken by a tax authority, or
brought in a court of competent jurisdiction, on or after the date on
which a Transaction is entered into (regardless of whether such action
is taken or brought with respect to a party to this Agreement) or (y) a
Change in Tax Law, the party (which will be the Affected Party) will, or
there is a substantial likelihood that it will, on the next succeeding
Scheduled Payment Date (1) be required to pay to the other party an
additional amount in respect of an Indemnifiable Tax under Section
2(d)(i)(4) (except in respect of interest under Section 2(e), 6(d)(ii)
or 6(e)) or (2) receive a payment from which an amount is required to be
deducted or withheld for or on account of a Tax (except in respect of
interest under Section 2(e), 6(d)(ii) or 6(e)) and no additional amount
is required to be paid in respect of such Tax under Section 2(d)(i)(4)
(other than by reason of Section 2(d)(i)(4)(A) or (B));
(iii) TAX EVENT UPON MERGER. The party (the "Burdened Party") on the
next succeeding Scheduled Payment Date will either (1) be required to
pay an additional amount in respect of an Indemnifiable Tax under
Section 2(d)(i)(4) (except in respect of interest under Section 2(e),
6(d)(ii) or 6(e)) or (2) receive a payment from which an amount has been
deducted or withheld for or on account of any Indemnifiable Tax in
respect of which the other party is not required to pay an additional
amount (other than by reason of Section 2(d)(i)(4)(A) or (B)), in either
case as a result of a party consolidating or amalgamating with, or
merging with or into, or transferring all or substantially all its
assets to, another entity (which will be the Affected Party) where such
action does not constitute an event described in Section 5(a)(viii);
(iv) CREDIT EVENT UPON MERGER. If "Credit Event Upon Merge" is
specified in the Schedule as applying to the party, such party ("X"),
any Credit Support Provider of X or any applicable Specified Entity of X
consolidates or amalgamates with, or merges with or into, or transfers
all or substantially all its assets to, another entity and such action
does not constitute an event described in Section 5(a)(viii) but the
creditworthiness of the resulting, surviving or transferee entity is
materially weaker than that of X, such Credit Support Provider or such
Specified Entity, as the case my be, immediately prior to such action
(and, in such event, X or its successor or transferee, as appropriate,
will be the Affected Party); or
(v) ADDITIONAL TERMINATION EVENT. If any "Additional Termination
Event" is specified in the Schedule or any Confirmation as applying, the
occurrence of such event (and, in such event, the Affected Party or
Affected Parties shall be as specified for such Additional Termination
Event in the Schedule or such Confirmation).
(c) EVENT OF DEFAULT AND ILLEGALITY. If an event or circumstance which
would otherwise constitute or give rise to an Event of Default also constitutes
an Illegality, it will be treated is an Illegality and will not constitute an
Event of Default.
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6. EARLY TERMINATION
(a) RIGHT TO TERMINATE FOLLOWING EVENT OF DEFAULT. If at any time an Event
of Default with respect to a party (the "Defaulting Party") has occurred and is
then continuing, the other party (the "Non-defaulting Party") may, by not more
than 20 days notice to the Defaulting Party specifying the relevant Event of
Default, designate a day not earlier than the day such notice is effective as an
Early Termination Date in respect of all outstanding Transactions. If, however,
"Automatic Early Termination" is specified in the Schedule as applying to a
party, then an Early Termination Date in respect of all outstanding Transactions
will occur immediately upon the occurrence with respect to such party of an
Event of Default specified in Section 5(a)(vii)(l), (3), (5), (6) or, to the
extent analogous thereto, (8), and as of the time immediately preceding the
institution of the relevant proceeding or the presentation of the relevant
petition upon the occurrence with respect to such party of an Event of Default
specified in Section 5(a)(vii)(4) or, to the extent analogous thereto, (8).
(b) RIGHT TO TERMINATE FOLLOWING TERMINATION EVENT.
(i) NOTICE. If a Termination Event occurs, an Affected Party will,
promptly upon becoming aware of it, notify the other party, specifying
the nature of that Termination Event and each Affected Transaction and
will also give such other information about that Termination Event as
the other party may reasonably require.
(ii) TRANSFER TO AVOID TERMINATION EVENT. If either an Illegality
under Section 5(b)(i)(1) or a Tax Event occurs and there is only one
Affected Party, or if a Tax Event Upon Merger occurs and the Burdened
Party is the Affected Party, the Affected Party will, as a condition to
its right to designate an Early Termination Date under Section 6(b)(iv),
use all reasonable efforts (which will not require such party to incur a
loss, excluding immaterial, incidental expenses) to transfer within 20
days after it gives notice under Section 6(b)(i) all its rights and
obligations under this Agreement in respect of the Affected Transactions
to another of its Offices or Affiliates so that such Termination Event
ceases to exist.
If the Affected Party is not able to make such a transfer it will give
notice to the other party to that effect within such 20 day period,
whereupon the other party may effect such a transfer within 30 days
after the notice is given under Section 6(b)(i).
Any such transfer by a party under this Section 6(b)(ii) will be subject
to and conditional upon the prior written consent of the other party,
which consent will not be withheld if such other party's policies in
effect at such time would permit it to enter into transactions with the
transferee on the terms proposed.
(iii) TWO AFFECTED PARTIES. If an Illegality under Section 5(b)(i)(1)
or a Tax Event occurs and there are two Affected Parties, each party
will use all reasonable efforts to reach agreement within 30 days after
notice thereof is given under Section 6(b)(i) on action to avoid that
Termination Event.
(iv) RIGHT TO TERMINATE. If:-
(1) a transfer under Section 6(b)(ii) or an agreement under
Section 6(b)(iii), as the case may be, has not been effected with
respect to all Affected Transactions within 30 days after an
Affected Party gives notice under Section 6(b)(i); or
(2) an Illegality under Section 5(b)(i)(2), a Credit Event Upon
Merger or an Additional Termination Event occurs, or a Tax Event
Upon Merger occurs and the Burdened Party is not the Affected
Party,
either party in the case of an Illegality, the Burdened Party in the
case of a Tax Event Upon Merger, any Affected Party in the case of a Tax
Event or an Additional Termination Event if there is more than one
Affected Party, or the party which is not the Affected Party in the case
of a Credit Event Upon Merger or an Additional Termination Event if
there is only one Affected Party may, by not more than 20 days notice to
the other party and provided that the relevant Termination Event is then
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continuing, designate a day not earlier than the day such notice is
effective as an Early Termination Date in respect of all Affected
Transactions.
(c) EFFECT OF DESIGNATION.
(i) If notice designating an Early Termination Date is given under
Section 6(a) or (b), the Early Termination Date will occur on the date
so designated, whether or not the relevant Event of Default or
Termination Event is then continuing.
(ii) Upon the occurrence or effective designation of an Early
Termination Date, no further payments or deliveries under Section
2(a)(i) or 2(e) in respect of the Terminated Transactions will be
required to be made, but without prejudice to the other provisions of
this Agreement. The amount, if any, payable in respect of an Early
Termination Date shall be determined pursuant to Section 6(e).
(d) CALCULATIONS.
(i) STATEMENT. On or as soon as reasonably practicable following the
occurrence of an Early Termination Date, each party will make the
calculations on its part, if any, contemplated by Section 6(e) and will
provide to the other party a statement (1) showing, in reasonable
detail, such calculations (including all relevant quotations and
specifying any amount payable under Section 6(e)) and (2) giving details
of the relevant account to which any amount payable to it is to be paid.
In the absence of written confirmation from the source of a quotation
obtained in determining a Market Quotation, the records of the party
obtaining such quotation will be conclusive evidence of the existence
and accuracy of such quotation.
(ii) PAYMENT DATE. An amount calculated as being due in respect of
any Early Termination Date under Section 6(e) will be payable on the day
that notice of the amount payable is effective (in the case of an Early
Termination Date which is designated or occurs as a result of an Event
of Default) and on the day which is two Local Business Days after the
day on which notice of the amount payable is effective (in the case of
an Early Termination Date which is designated as a result of a
Termination Event). Such amount will be paid together with (to the
extent permitted under applicable law) interest thereon (before as well
as after judgment) in the Termination Currency, from (and including) the
relevant Early Termination Date to (but excluding) the date such amount
is paid, at the Applicable Rate. Such interest will be calculated on
the basis of daily compounding and the actual number of days elapsed.
(e) PAYMENTS ON EARLY TERMINATION. If an Early Termination Date occurs, the
following provisions shall apply based on the parties' election in the Schedule
of a payment measure, either "Market Quotation" or "Loss", and a payment method,
either the "First Method" or the "Second Method". If the parties fail to
designate a payment measure or payment method in the Schedule, it will be deemed
that "Market Quotation" or the "Second Method", as the case may be, shall apply.
The amount, if any, payable in respect of an Early Termination Date and
determined pursuant to this Section will be subject to any Set-off.
(i) EVENTS OF DEFAULT. If the Early Termination Date results from an
Event of Default:-
(1) First Method and Market Quotation. If the First Method and
Market Quotation apply, the Defaulting Party will pay to the
Non-defaulting Party the excess, if a positive number, of (A) the
sum of the Settlement Amount (determined by the Non-defaulting
Party) in respect of the Terminated Transactions and the
Termination Currency Equivalent of the Unpaid Amounts owing to
the Non-defaulting Party over (B) the Termination Currency
Equivalent of the Unpaid Amounts owing to the Defaulting Party.
(2) First Method and Loss. If the First Method and Loss apply,
the Defaulting Party will pay to the Non-defaulting Party, if a
positive number, the Non-defaulting Party's Loss in respect of
this Agreement.
(3) Second Method and Market Quotation. If the Second Method
and Market Quotation apply, an amount will be payable equal to
(A) the sum of the Settlement Amount (determined by the
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Non-defaulting Party) in respect of the Terminated Transactions
and the Termination Currency Equivalent of the Unpaid Amounts
owing to the Non-defaulting Party less (B) the Termination
Currency Equivalent of the Unpaid Amounts owing to the Defaulting
Party. If that amount is a positive number, the Defaulting Party
will pay it to the Non-defaulting Party; if it is a negative
number, the Non-defaulting Party will pay the absolute value of
that amount to the Defaulting Party.
(4) Second Method and Loss. If the Second Method and Loss
apply, an amount will be payable equal to the Non-defaulting
Party's Loss in respect of this Agreement. If that amount is a
positive number, the Defaulting Party will pay it to the
Non-defaulting Party; if it is a negative number, the
Non-defaulting Party will pay the absolute value of that amount
to the Defaulting Party.
(ii) TERMINATION EVENTS. If the Early Termination Date results from a
Termination Event:-
(1) ONE AFFECTED PARTY. If there is one Affected Party, the
amount payable will be determined in accordance with Section
6(e)(i)(3), if Market Quotation applies, or Section 6(e)(i)(4),
if Loss applies, except that, in either case, references to the
Defaulting Party and to the Non-defaulting Party will be deemed
to be references to the Affected Party and the party which is not
the Affected Party, respectively, and, if Loss applies and fewer
than all the Transactions are being terminated, Loss shall be
calculated in respect of all Terminated Transactions.
(2) TWO AFFECTED PARTIES. If there are two Affected Parties:-
(A) if Market Quotation applies, each party will determine
a Settlement Amount in respect of the Terminated
Transactions, and an amount will be payable equal to (I) the
sum of (a) one-half of the difference between the Settlement
Amount of the party with the higher Settlement Amount ("X")
and the Settlement Amount of the party with the lower
Settlement Amount ("Y") and (b) the Termination Currency
Equivalent of the Unpaid Amounts owing to X less (II) the
Termination Currency Equivalent of the Unpaid Amounts owing
to Y; and
(B) if Loss applies, each party will determine its Loss in
respect of this Agreement (or, if fewer than all the
Transactions are being terminated, in respect of all
Terminated Transactions) and an amount will be payable equal
to one-half of the difference between the Loss of the party
with the higher Loss ("X") and the Loss of the party with
the lower Loss ("Y").
If the amount payable is a positive number, Y will pay it to X;
if it is a negative number, X will pay the absolute value of that
amount to Y.
(iii) ADJUSTMENT FOR BANKRUPTCY. In circumstances where an Early
Termination Date occurs because "Automatic Early Termination" applies in
respect of a party, the amount determined under this Section 6(e) will
be subject to such adjustments as are appropriate and permitted by law
to reflect any payments or deliveries made by one party to the other
under this Agreement (and retained by such other party) during the
period from the relevant Early Termination Date to the date for payment
determined under Section 6(d)(ii).
(iv) PRE-ESTIMATE. The parties agree that if Market Quotation applies
an amount recoverable under this Section 6(e) is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the
loss of bargain and the loss of protection against future risks and
except as otherwise provided in this Agreement neither party will be
entitled to recover any additional damages as a consequence of such
losses.
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7. TRANSFER
Subject to Section 6(b)(ii), neither this Agreement nor any interest or
obligation in or under this Agreement may be transferred (whether by way of
security or otherwise) by either party without the prior written consent of the
other party, except that:-
(a) a party may make such a transfer of this Agreement pursuant to a
consolidation or amalgamation with, or merger with or into, or transfer of all
or substantially all its assets to, another entity (but without prejudice to any
other right or remedy under this Agreement); and
(b) a party may make such a transfer of all or any part of its interest in
any amount payable to it from a Defaulting Party under Section 6(e).
Any purported transfer that is not in compliance with this Section will be void.
8. CONTRACTUAL CURRENCY
(a) PAYMENT IN THE CONTRACTUAL CURRENCY. Each payment under this Agreement
will be made in the relevant currency specified in this Agreement for that
payment (the "Contractual Currency"). To the extent permitted by applicable
law, any obligation to make payments under this Agreement in the Contractual
Currency will not be discharged or satisfied by any tender in any currency other
than the Contractual Currency, except to the extent such tender results in the
actual receipt by the party to which payment is owed, acting in a reasonable
manner and in good faith in converting the currency so tendered into the
Contractual Currency, of the full amount in the Contractual Currency of all
amounts payable in respect of this Agreement. If for any reason the amount in
the Contractual Currency so received falls short of the amount in the
Contractual Currency payable in respect of this Agreement, the party required to
make the payment will, to the extent permitted by applicable law, immediately
pay such additional amount in the Contractual Currency as may be necessary to
compensate for the shortfall. If for any reason the amount in the Contractual
Currency so received exceeds the amount in the Contractual Currency payable in
respect of this Agreement, the party receiving the payment will refund promptly
the amount of such excess.
(b) JUDGMENTS. To the extent permitted by applicable law, if any judgment
or order expressed in a currency other than the Contractual Currency is rendered
(i) for the payment of any amount owing in respect of this Agreement, (ii) for
the payment of any amount relating to any early termination in respect of this
Agreement or (iii) in respect of a judgment or order of another court for the
payment of any amount described in (i) or (ii) above, the party seeking
recovery, after recovery in full of the aggregate amount to which such party is
entitled pursuant to the judgment or order, will be entitled to receive
immediately from the other party the amount of any shortfall of the Contractual
Currency received by such party as a consequence of sums paid in such other
currency and will refund promptly to the other party any excess of the
Contractual Currency received by such party as a consequence of sums paid in
such other currency if such shortfall or such excess arises or results from any
variation between the rate of exchange at which the Contractual Currency is
converted into the currency of the judgment or order for the purposes of such
judgment or order and the rate of exchange at which such party is able, acting
in a reasonable manner and in good faith in converting the currency received
into the Contractual Currency, to purchase the Contractual Currency with the
amount of the currency of the judgment or order actually received by such party.
The term "rate of exchange" includes, without limitation, any premiums and costs
of exchange payable in connection with the purchase of or conversion into the
Contractual Currency.
(c) SEPARATE INDEMNITIES. To the extent permitted by applicable law, these
indemnities constitute separate and independent obligations from the other
obligations in this Agreement, will be enforceable as separate and independent
causes of action, will apply notwithstanding any indulgence granted by the party
to which any payment is owed and will not be affected by judgment being obtained
or claim or proof being made for any other sums payable in respect of this
Agreement.
(d) EVIDENCE OF LOSS. For the purpose of this Section 8, it will be
sufficient for a party to demonstrate that it would have suffered a loss had an
actual exchange or purchase been made.
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9. MISCELLANEOUS
(a) ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and
understanding of the parties with respect to its subject matter and supersedes
all oral communication and prior writings with respect thereto.
(b) AMENDMENTS. No amendment, modification or waiver in respect of this
Agreement will be effective unless in writing (including a writing evidenced by
a facsimile transmission) and executed by each of the parties or confirmed by an
exchange of telexes or electronic messages on an electronic messaging system.
(c) SURVIVAL OF OBLIGATIONS. Without prejudice to Sections 2(a)(iii) and
6(c)(ii), the obligations of the parties under this Agreement will survive the
termination of any Transaction.
(d) REMEDIES CUMULATIVE. Except as provided in this Agreement, the rights,
powers, remedies and privileges provided in this Agreement are cumulative and
not exclusive of any rights, powers, remedies and privileges provided by law.
(e) COUNTERPARTS AND CONFIRMATIONS.
(i) This Agreement (and each amendment, modification and waiver in
respect of it) may be executed and delivered in counterparts (including
by facsimile transmission), each of which will be deemed an original.
(ii) The parties intend that they are legally bound by the terms of
each Transaction from the moment they agree to those terms (whether
orally or otherwise). A Confirmation shall be entered into as soon as
practicable and may be executed and delivered in counterparts (including
by facsimile transmission) or be created by an exchange of telexes or by
an exchange of electronic messages on an electronic messaging system,
which in each case will be sufficient for all purposes to evidence a
binding supplement to this Agreement. The parties will specify therein
or through another effective means that any such counterpart, telex or
electronic message constitutes a Confirmation.
(f) NO WAIVER OF RIGHTS. A failure or delay in exercising any right, power
or privilege in respect of this Agreement will not be presumed to operate as a
waiver, and a single or partial exercise of any right, power or privilege will
not be presumed to preclude any subsequent or further exercise, of that right,
power or privilege or the exercise of any other right, power or privilege.
(g) HEADINGS. The headings used in this Agreement are for convenience of
reference only and are not to affect the construction of or to be taken into
consideration in interpreting this Agreement.
10. OFFICES; MULTIBRANCH PARTIES
(a) If Section 10(a) is specified in the Schedule as applying, each party
that enters into a Transaction through an Office other than its head or home
office represents to the other party that, notwithstanding the place of booking
office or jurisdiction of incorporation or organisation of such party, the
obligations of such party are the same as if it had entered into the Transaction
through its head or home office. This representation will be deemed to be
repeated by such party on each date on which a Transaction is entered into.
(b) Neither party may change the Office through which it makes and receives
payments or deliveries for the purpose of a Transaction without the prior
written consent of the other party.
(c) If a party is specified as a Multibranch Party in the Schedule, such
Multibranch Party may make and receive payments or deliveries under any
Transaction through any Office listed in the Schedule, and the Office through
which it makes and receives payments or deliveries with respect to a Transaction
will be specified in the relevant Confirmation.
11. EXPENSES
A Defaulting Party will, on demand, indemnify and hold harmless the other party
for and against all reasonable out-of-pocket expenses, including legal fees and
Stamp Tax, incurred by such other party by reason of the enforcement and
protection of its rights under this Agreement or any Credit Support Document
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<PAGE>
to which the Defaulting Party is a party or by reason of the early termination
of any Transaction, including, but not limited to, costs of collection.
12. NOTICES
(a) EFFECTIVENESS. Any notice or other communication in respect of this
Agreement may be given in any manner set forth below (except that a notice or
other communication under Section 5 or 6 may not be given by facsimile
transmission or electronic messaging system) to the address or number or in
accordance with the electronic messaging system details provided (see the
Schedule) and will be deemed effective as indicated:-
(i) if in writing and delivered in person or by courier, on the date
it is delivered;
(ii) if sent by telex, on the date the recipient's answerback is
received;
(iii) if sent by facsimile transmission, on the date that transmission
is received by a responsible employee of the recipient in legible form
(it being agreed that the burden of proving receipt will be on the
sender and will not be met by a transmission report generated by the
sender's facsimile machine);
(iv) if sent by certified or registered mail (airmail, if overseas) or
the equivalent (return receipt requested), on the date that mail is
delivered or its delivery is attempted; or
(v) if sent by electronic messaging system, on the date that
electronic message is received,
unless the date of that delivery (or attempted delivery) or that receipt, as
applicable, is not a Local Business Day or that communication is delivered (or
attempted) or received, as applicable, after the close of business on a Local
Business Day, in which case that communication shall be deemed given and
effective on the first following day that is a Local Business Day.
(b) CHANGE OF ADDRESSES. Either party may by notice to the other change the
address, telex or facsimile number or electronic messaging system details at
which notices or other communications are to be given to it.
13. GOVERNING LAW AND JURISDICTION
(a) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the law specified in the Schedule.
(b) JURISDICTION. With respect to any suit, action or proceedings relating
to this Agreement ("Proceedings"), each party irrevocably:-
(i) submits to the jurisdiction of the English courts, if this
Agreement is expressed to be governed by English law, or to the
non-exclusive jurisdiction of the courts of the State of New York and
the United States District Court located in the Borough of Manhattan in
New York City, if this Agreement is expressed to be governed by the laws
of the State of New York; and
(ii) waives any objection which it may have at any time to the laying
of venue of any Proceedings brought in any such court, waives any claim
that such Proceedings have been brought in an inconvenient forum, and
further waives the right to object, with respect to such Proceedings,
that such court does not have any jurisdiction over such party.
Nothing in this Agreement precludes either party from bringing Proceedings in
any other jurisdiction (outside, if this Agreement is expressed to be governed
by English law, the Contracting States, as defined in Section 1(3) of the Civil
Jurisdiction and Judgments Act 1982 or any modification, extension or
re-enactment thereof for the time being in force) nor will the bringing of
Proceedings in any one or more jurisdictions preclude the bringing of
Proceedings in any other jurisdiction.
(c) SERVICE OF PROCESS. Each party irrevocably appoints the Process Agent
(if any) specified opposite its name in the Schedule to receive, for it and on
its behalf, service of process in any Proceedings. If for any
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<PAGE>
reason any party's Process Agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a substitute process
agent acceptable to the other party. The parties irrevocably consent to service
of process given in the manner provided for notices in Section 12. Nothing in
this Agreement will affect the right of either party to serve process in any
other manner permitted by law.
(d) WAIVER OF IMMUNITIES. Each party irrevocably waives, to the fullest
extent permitted by applicable law, with respect to itself and its revenues and
assets (irrespective of their use or intended use), all immunity on the grounds
of sovereignty or other similar grounds from (i) suit, (ii) jurisdiction of any
court, (iii) relief by way of injunction, order for specific performance or for
recovery of property, (iv) attachment of its assets (whether before or after
judgment) and (v) execution or enforcement of any judgment to which it or its
revenues or assets might otherwise be entitled in any Proceedings in the courts
of any jurisdiction and irrevocably agrees, to the extent permitted by
applicable law, that it will not claim any such immunity in any Proceedings.
14. DEFINITIONS
As used in this Agreement:-
"ADDITIONAL TERMINATION EVENT" has the meaning specified in Section 5(b).
"AFFECTED PARTY" has the meaning specified in Section 5(b).
"AFFECTED TRANSACTIONS" means (a) with respect to any Termination Event
consisting of an Illegality, Tax Event or Tax Event Upon Merger, all
Transactions affected by the occurrence of such Termination Event and (b) with
respect to any other Termination Event, all Transactions.
"AFFILIATE" means, subject to the Schedule, in relation to any person, any
entity controlled, directly or indirectly, by the person, any entity that
controls, directly or indirectly, the person or any entity directly or
indirectly under common control with the person. For this purpose, "control" of
any entity or person means ownership of a majority of the voting power of the
entity or person.
"APPLICABLE RATE" means:-
(a) in respect of obligations payable or deliverable (or which would have
been but for Section 2(a)(iii)) by a Defaulting Party, the Default Rate;
(b) in respect of an obligation to pay an amount under Section 6(e) of
either party from and after the date (determined in accordance with Section
6(d)(ii)) on which that amount is payable, the Default Rate;
(c) in respect of all other obligations payable or deliverable (or which
would have been but for Section 2(a)(iii)) by a Non-defaulting Party, the
Non-default Rate; and
(d) in all other cases, the Termination Rate.
"BURDENED PARTY" has the meaning specified in Section 5(b).
"CHANGE IN TAX LAW" means the enactment, promulgation, execution or ratification
of, or any change in or amendment to any law (or in the application or official
interpretation of any law) that occurs on or after the date on which the
relevant Transaction is entered into.
"CONSENT" includes a consent, approval, action, authorisation, exemption,
notice, filing, registration or exchange control consent.
"CREDIT EVENT UPON MERGER" has the meaning specified in Section 5(b).
"CREDIT SUPPORT DOCUMENT" means any agreement or instrument that is specified as
such in this Agreement.
"CREDIT SUPPORT PROVIDER" has the meaning specified in the Schedule.
"DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the relevant payee (as certified by it) if it
were to fund or of funding the relevant amount plus l% per annum.
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"DEFAULTING PARTY" has the meaning specified in Section 6(a).
"EARLY TERMINATION DATE" means the date determined in accordance with Section
6(a) or 6(b)(iv).
"EVENT OF DEFAULT" has the meaning specified in Section 5(a) and, if applicable,
in the Schedule.
"ILLEGALITY" has the meaning specified in Section 5(b).
"INDEMNIFIABLE TAX" means any Tax other than a Tax that would not be imposed in
respect of a payment under this Agreement but for a present or former connection
between the jurisdiction of the government or taxation authority imposing such
Tax and the recipient of such payment or a person related to such recipient
(including, without limitation, a connection arising from such recipient or
related person being or having been a citizen or resident of such jurisdiction,
or being or having been organised, present or engaged in a trade or business in
such jurisdiction, or having or having had a permanent establishment or fixed
place of business in such jurisdiction, but excluding a connection arising
solely from such recipient or related person having executed, delivered,
performed its obligations or received a payment under, or enforced, this
Agreement or a Credit Support Document).
"LAW" includes any treaty, law, rule or regulation (as modified, in the case of
tax matters, by the practice of any relevant governmental revenue authority) and
"LAWFUL" and "UNLAWFUL" will be construed accordingly.
"LOCAL BUSINESS DAY" means, subject to the Schedule, a day on which commercial
banks are open for business (including dealings in foreign exchange and foreign
currency deposits) (a) in relation to any obligation under Section 2(a)(i), in
the place(s) specified in the relevant Confirmation or, if not so specified, as
otherwise agreed by the parties in writing or determined pursuant to provisions
contained, or incorporated by reference, in this Agreement, (b) in relation to
any other payment, in the place where the relevant account is located and. if
different. in the principal financial centre, if any, of the currency of such
payment, (c) in relation to any notice or other communication, including notice
contemplated under Section 5(a)(i), in the city specified in the address for
notice provided by the recipient and, in the case of a notice contemplated by
Section 2(b), in the place where the relevant new account is to be located and
(d) in relation to Section 5(a)(v)(2), in the relevant locations for performance
with respect to such Specified Transaction.
"LOSS" means, with respect to this Agreement or one or more Terminated
Transactions, as the case may be, and a party, the Termination Currency
Equivalent of an amount that party reasonably determines in good faith to be its
total losses and costs (or gain, in which case expressed as a negative number)
in connection with this Agreement or that Terminated Transaction or group of
Terminated Transactions, as the case may be, including any loss of bargain, cost
of funding or, at the election of such party but without duplication, loss or
cost incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position (or any gain resulting from
any of them). Loss includes losses and costs (or gains) in respect of any
payment or delivery required to have been made (assuming satisfaction of each
applicable condition precedent) on or before the relevant Early Termination Date
and not made, except, so as to avoid duplication, if Section 6(e)(i)(1) or (3)
or 6(e)(ii)(2)(A) applies. Loss does not include a party's legal fees and
out-of-pocket expenses referred to under Section 11. A party will determine its
Loss as of the relevant Early Termination Date, or, if that is not reasonably
practicable, as of the earliest date thereafter as is reasonably practicable. A
party may (but need not) determine its Loss by reference to quotations of
relevant rates or prices from one or more leading dealers in the relevant
markets.
"MARKET QUOTATION" means, with respect to one or more Terminated Transactions
and a party making the determination, an amount determined on the basis of
quotations from Reference Market-makers. Each quotation will be for an amount,
if any, that would be paid to such party (expressed as a negative number)
or by such party (expressed as a positive number) in consideration of an
agreement between such party (taking into account any existing Credit Support
Document with respect to the obligations of such party) and the quoting
Reference Market-maker to enter into a transaction (the "Replacement
Transaction") that would have the effect of preserving for such party the
economic equivalent of any payment or delivery (whether the underlying
obligation was absolute or contingent and assuming the satisfaction of each
applicable condition precedent) by the parties under Section 2(a)(i) in respect
of such Terminated Transaction or group of Terminated Transactions that would,
but for the occurrence of the relevant Early Termination Date, have
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<PAGE>
been required after that date. For this purpose, Unpaid Amounts in respect of
the Terminated Transaction or group of Terminated Transactions are to be
excluded but, without limitation, any payment or delivery that would, but for
the relevant Early Termination Date, have been required (assuming satisfaction
of each applicable condition precedent) after that Early Termination Date is to
be included. The Replacement Transaction would be subject to such documentation
as such party and the Reference Market-maker may, in good faith, agree. The
party making the determination (or its agent) will request each Reference
Market-maker to provide its quotation to the extent reasonably practicable as of
the same day and time (with regard to different time zones) on or as soon as
reasonably practicable after the relevant Early Termination Date. The day and
time as of which those quotations are to be obtained will be selected in good
faith by the party obliged to make a determination under Section 6(e), and, if
each party is so obliged, after consultation with the other. If more than three
quotations are provided, the Market Quotation will be the arithmetic mean of the
quotations, without regard to the quotations having the highest and lowest
values. If exactly three such quotations are provided, the Market Quotation
will be the quotation remaining after disregarding the highest and lowest
quotations. For this purpose, if more than one quotation has the same highest
value or lowest value, then one of such quotations shall be disregarded. If
fewer than three quotations are provided, it will be deemed that the Market
Quotation in respect of such Terminated Transaction or group of Terminated
Transactions cannot be determined.
"NON-DEFAULT RATE" means a rate per annum equal to the cost (without proof or
evidence of any actual cost) to the Non-defaulting Party (as certified by it) if
it were to fund the relevant amount.
"NON-DEFAULTING PARTY" has the meaning specified in Section 6(a).
"OFFICE" means a branch or office of a party, which may be such party's head or
home office.
"POTENTIAL EVENT OF DEFAULT" means any event which, with the giving of notice or
the lapse of time or both, would constitute an Event of Default.
"REFERENCE MARKET-MAKERS" means four leading dealers in the relevant market
selected by the party determining a Market Quotation in good faith (a) from
among dealers of the highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to offer or to make
an extension of credit and (b) to the extent practicable, from among such
dealers having an office in the same city.
"RELEVANT JURISDICTION" means, with respect to a party, the jurisdictions (a) in
which the party is incorporated, organised, managed and controlled or considered
to have its seat, (b) where an Office through which the party is acting for
purposes of this Agreement is located, (c) in which the party executes this
Agreement and (d) in relation to any payment, from or through which such payment
is made.
"SCHEDULED PAYMENT DATE" means a date on which a payment or delivery is to be
made under Section 2(a)(i) with respect to a Transaction.
"SET-OFF" means set-off, offset, combination of accounts, right of retention or
withholding or similar right or requirement to which the payer of an amount
under Section 6 is entitled or subject (whether arising under this Agreement,
another contract, applicable law or otherwise) that is exercised by, or imposed
on, such payer.
"SETTLEMENT AMOUNT" means, with respect to a party and any Early Termination
Date, the sum of:-
(a) the Termination Currency Equivalent of the Market Quotations (whether
positive or negative) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation is determined; and
(b) such party's Loss (whether positive or negative and without reference to
any Unpaid Amounts) for each Terminated Transaction or group of Terminated
Transactions for which a Market Quotation cannot be determined or would not (in
the reasonable belief of the party making the determination) produce a
commercially reasonable result.
"SPECIFIED ENTITY" has the meaning specified in the Schedule.
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"SPECIFIED INDEBTEDNESS" means, subject to the Schedule, any obligation (whether
present or future, contingent or otherwise, as principal or surety or otherwise)
in respect of borrowed money.
"SPECIFIED TRANSACTION" means, subject to the Schedule, (a) any transaction
(including an agreement with respect thereto) now existing or hereafter entered
into between one party to this Agreement (or any Credit Support Provider of such
party or any applicable Specified Entity of such party) and the other party to
this Agreement (of any Credit Support Provider of such other parry or any
applicable Specified Entity of such other party) which is a rate swap
transaction, basis swap, forward rate transaction, commodity swap, commodity
option, equity or equity index swap, equity or equity index option, bond option,
interest rate option, foreign exchange transaction, cap transaction, floor
transaction, collar transaction, currency swap transaction, cross-currency rate
swap transaction, currency option or any other similar transaction (including
any option with respect to any of these transactions), (b) any combination of
these transactions and (c) any other transaction identified as a Specified
Transaction in this Agreement or the relevant confirmation.
"STAMP TAX" means any stamp, registration, documentation or similar tax.
"TAX" means any present or future tax, levy, impost, duty, charge, assessment or
fee of any nature (including interest, penalties and additions thereto) that is
imposed by any government or other taxing authority in respect of any payment
under this Agreement other than a stamp, registration, documentation or similar
tax.
"TAX EVENT" has the meaning specified in Section 5(b).
"TAX EVENT UPON MERGER" has the meaning specified in Section 5(b).
"TERMINATED TRANSACTIONS" means with respect to any Early Termination Date (a)
if resulting from a Termination Event, all Affected Transactions and (b) if
resulting from an Event of Default, all Transactions (in either case) in effect
immediately before the effectiveness of the notice designating that Early
Termination Date (or, if "Automatic Early Termination" applies, immediately
before that Early Termination Date).
"TERMINATION CURRENCY" has the meaning specified in the Schedule.
"TERMINATION CURRENCY EQUIVALENT" means, in respect of any amount denominated in
the Termination Currency, such Termination Currency amount and, in respect of
any amount denominated in currency other than the Termination Currency (the
"Other Currency"), the amount in the Termination Currency determined by the
party making the relevant determination as being required to purchase such
amount of such Other Currency as at the relevant Early Termination Date, or, if
the relevant Market Quotation or Loss (as the case may be), is determined as of
a later date, that later date, with the Termination Currency at the rate equal
to the spot exchange rate of the foreign exchange agent (selected as provided
below) for the purchase of such Other Currency with the Termination Currency at
or about 11:00 a.m. (in the city in which such foreign exchange agent is
located) on such date as would be customary for the determination of such a rate
for the purchase of such Other Currency for value on the relevant Early
Termination Date or that later date. The foreign exchange agent will, if only
one party is obliged to make a determination under Section 6(e), be selected in
good faith by that party and otherwise will be agreed by the parties.
"TERMINATION EVENT" means an Illegality, a Tax Event or a Tax Event Upon Merger
or, if specified to be applicable, a Credit Event Upon Merger or an Additional
Termination Event.
"TERMINATION RATE" means a rate per annum equal to the arithmetic mean of the
cost (without proof or evidence of any actual cost) to each party (as certified
by such party) if it were to fund or of funding such amounts.
"UNPAID AMOUNTS" owing to any party means, with respect to an Early Termination
Date the aggregate of (a) in respect of all Terminated Transactions, the amounts
that became payable (or that would have become payable but for Section
2(a)(iii)) to such party under Section 2(a)(i) on or prior to such Early
Termination Date and which remain unpaid as at such Early Termination Date
and (b) in respect of each Terminated Transaction, for each obligation under
Section 2(a)(i) which was (or would have been but for Section 2(a)(iii))
required to be settled by delivery to, such party on or prior to such Early
Termination Date and which has not been so settled as at such Early
Termination Date an amount equal to the fair market
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value of that which was (or would have been) required to be delivered as of the
originally scheduled date for delivery, in each case together with (to the
extent permitted under applicable law) interest, in the currency of such
amounts, from (and including) the date such amounts or obligations were or would
have been required to have been paid or performed to (but excluding) such Early
Termination Date, at the Applicable Rate. Such amounts of interest will be
calculated on the basis of daily compounding and the actual number of days
elapsed. The fair market value of any obligation referred to in clause (b)
above shall be reasonably determined by the party obliged to make the
determination under Section 6(e) or, if each party is so obliged, it shall be
the average of the Termination Currency Equivalents of the fair market values
reasonably determined by both parties.
IN WITNESS WHEREOF the parties have executed this document on the respective
dates specified below with effect from the date specified on the first page of
this document.
LEHMAN BROTHERS FINANCE S.A. MAGNETEK, INC.
(Name of Party)................... .........(Name of Party)...........
By: By:
............................. .........................
Name: Name:
Title: Title:
Date: Date:
By:
.............................
Name:
Title:
Date:
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<PAGE>
SCHEDULE
TO THE
MASTER AGREEMENT
dated as of May 20, 1997
between LEHMAN BROTHERS FINANCE S.A., a Swiss corporation ("Party A")
and MAGNETEK, INC., a Delaware corporation ("Party B").
PART 1
TERMINATION PROVISIONS
In this Agreement:-
(a) SPECIFIED ENTITY means in relation to Party A for the purpose of:-
SECTION 5(a)(V), Not applicable.
SECTION 5(a)(VI), Not applicable.
SECTION 5(a)(VII), Not applicable.
SECTION 5(b)(IV), Not applicable.
in relation to Party B for the purpose of:-
SECTION 5(a)(V), Not applicable.
SECTION 5(a)(VI), Not applicable.
SECTION 5(a)(VII), Not applicable.
SECTION 5(b)(IV), Not applicable.
(b) SPECIFIED TRANSACTION will have the meaning specified in SECTION 14 of
this Agreement.
(c) The CROSS DEFAULT provisions of SECTION 5(A)(VI) will apply to Party A and
Party B.
The following provisions apply:-
<PAGE>
SPECIFIED INDEBTEDNESS will have the meaning specified in SECTION 14.
THRESHOLD AMOUNT means the lesser of (i) USD40,000,000 and (ii) two percent
(2%) of the Stockholders' Equity of Lehman Brothers Holdings Inc.
("Holdings"), in the case of Party A and Holdings (or its equivalent in any
other currency), and the lesser of (i) USD40,000,000 and (ii) two percent
(2%) of the Stockholders' Equity of Party B, in the case of Party B (or its
equivalent in any other currency).
(d) The CREDIT EVENT UPON MERGER provisions of SECTION 5(hB)(IV) will apply to
Party A and Party B.
(e) The AUTOMATIC EARLY TERMINATION provision of SECTION 6(a) will NOT apply to
either Party A or Party B, provided that where there is an Event of Default
under Section 5(a)(vii)(1), (3), (4), (5), (6) or, to the extent analogous
thereto, (8), and the Defaulting Party is governed by a system of law that
does not permit termination to take place after the occurrence of such
Event of Default, then the Automatic Early Termination provisions of
Section 6(a) will apply.
(f) PAYMENTS ON EARLY TERMINATION. For the purpose of SECTION 6(E) of this
Agreement, Market Quotation and the Second Method will apply.
(g) TERMINATION CURRENCY means United States Dollars ("USD").
PART 2
TAX REPRESENTATIONS
PAYER REPRESENTATIONS. For the purpose of SECTION 3(E) of this Agreement, Party
A will make the following representation and Party B will make the following
representation:-
It is not required by any applicable law, as modified by the practice of any
relevant governmental revenue authority, of any Relevant Jurisdiction to make
any deduction or withholding for or on account of any Tax from any payment
(other than interest under SECTION 2(e), 6(d)(II) OR 6(e) of this Agreement) to
be made by it to the other party under this Agreement. In making this
representation, it may rely on:-
(i) the accuracy of any representation made by the other party
pursuant to SECTION 3(f) of this Agreement;
(ii) the satisfaction of the agreement contained in SECTION 4(a)(i) or
4(a)(III) of this Agreement and the accuracy and effectiveness of
any document provided by the other party pursuant to SECTION
4(a)(I) or 4(a)(III) of this Agreement; and
(iii) the satisfaction of the agreement of the other party contained in
SECTION 4(D) of this Agreement,
<PAGE>
PROVIDED that it shall not be a breach of this representation where reliance is
placed on clause (ii) and the other party does not deliver a form or document
under SECTION 4(A)(III) of this Agreement by reason of material prejudice to its
legal or commercial position.
PAYEE REPRESENTATIONS. For the purpose of SECTION 3(f) of this Agreement, Party
A will make the following representations:
It is fully eligible for the benefits of the "Business Profits" or
"Industrial and Commercial Profits" provision, as the case may be, the
"Interest" provision or the "Other Income" provision (if any) of the Specified
Treaty with respect to any payment described in such provisions and received or
to be received by it in connection with this Agreement and no such payment is
attributable to a trade or business carried on by it through a permanent
establishment in the Specified Jurisdiction.
If such representation applies, then:-
"SPECIFIED TREATY" means, with respect to a Transaction, the tax treaty
applicable between the United States of America and Switzerland; and
"SPECIFIED JURISDICTION" means, with respect to each Transaction, the United
States of America.
PART 3
DOCUMENTS TO BE DELIVERED
For the purpose of SECTION 4(a):-
(a) Tax forms, documents or certificates to be delivered are:-
PARTY REQUIRED
TO DELIVER DATE BY WHICH
DOCUMENT FORM/DOCUMENT/CERTIFICATE TO BE DELIVERED
- -------------- ------------------------- ----------------
Party A Tax Forms Promptly upon the earlier of (i)
reasonable demand by Party B or
(ii) learning that the form or
document is required.
Party B Tax Forms Promptly upon the earlier of (i)
reasonable demand by Party A or
(ii) learning that the form or
document is required.
<PAGE>
(b) Other documents to be delivered are:-
PARTY
REQUIRED COVERED BY
TO DELIVER DATE BY WHICH SECTION 3(d)
DOCUMENT FORM/DOCUMENT/CERTIFICATE TO BE DELIVERED REPRESENTATION
- ---------- ------------------------- --------------- --------------
Party A The Credit Support Document Upon execution No
listed in Part 4, of this Agreement
Section(f).
Party A An incumbency certificate Upon execution of Yes
with respect to the this Agreement
signatory of this Agreement.
Party B An incumbency certificate Upon execution of Yes
with respect to the this Agreement
signatory of this Agreement.
Party B An opinion of Party B's Promptly after Yes
counsel substantially in the execution of this
form of Exhibit B to this Agreement.
Schedule.
Party B A certified copy of the Upon execution of Yes
resolution or resolutions this Agreement
(the Authorizing Resolution) (unless an Authorizing
of the board of directors of Resolution has
Party B, certified by a previously been
secretary, or an assistant furnished by Party B
secretary of Party B, to Party A), and,
pursuant to which Party B is with respect to
authorized to enter into each Transaction
this Agreement and each not covered by a
Transaction entered into previously furnished
under this Agreement. Authorizing Resolution,
within five (5)
Business Days of the
Trade Date.
Party B Unaudited quarterly Within 45 days after Yes
financial statements of each fiscal quarter
Party B end of Party B or,
if publicly available,
when publicly available.
<PAGE>
Party B Audited annual financial Within 60 days after Yes
statements of Party B each fiscal year end
of Party B or, if
publicly available,
when publicly available.
PART 4
MISCELLANEOUS
(a) ADDRESSES FOR NOTICES. For the purpose of SECTION 12(a) of this Agreement:
Address for notices or communications to Party A:-
Address: GENFERSTRASSE 24, P.O. BOX 311, CH-8002 ZURICH, SWITZERLAND
Attention: FINANCIAL CONTROLLER
Telex No: 812 906 Answerback: LBFS CH
Facsimile No.: 411-287-8825 Telephone No.: 411-287-8842
(For all purposes)
Address for notices or communications to Party B:-
Address: 9116 Brentmeade Blvd., Brentwood, TN 37027
Attention: John Colling, Jr.
Telex No.: Answerback:
Facsimile No.: (615) 316-5192 Telephone No.: (615) 316-5255
(For all purposes)
(b) PROCESS AGENT. For the purpose of SECTION 13(c):-
Party A appoints as its Process Agent - Lehman Brothers Inc.
3 World Financial Center
New York, NY 10285
Party B appoints as its Process Agent - Not applicable.
(c) OFFICES. The provisions of SECTION 10(a) will apply to this Agreement.
(d) MULTIBRANCH PARTY. For the purpose of SECTION 10(c):
<PAGE>
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) CALCULATION AGENT. The Calculation Agent is Party A, unless otherwise
specified in a Confirmation in relation to the relevant Transaction.
(f) CREDIT SUPPORT DOCUMENT. Details of any Credit Support Document:-
In the case of Party A, a guarantee of Party A's obligations hereunder in
the form annexed hereto as Exhibit A to Schedule.
(g) CREDIT SUPPORT PROVIDER.
Credit Support Provider means in relation to Party A: Holdings.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) GOVERNING LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of New York (without reference to
choice of law doctrine).
(i) NETTING OF PAYMENTS. SUBPARAGRAPH (ii) of SECTION 2(c) of this Agreement
will not apply to any Transactions (in each case starting from the date of
this Agreement).
(j) AFFILIATE will have the meaning specified in SECTION 14 of this Agreement.
PART 5
OTHER PROVISIONS
(a) CONFIRMATIONS. Party A shall send to Party B its standard form of
Confirmation for each Transaction entered into hereunder, the terms of
which shall be deemed to be agreed to by Party B unless, within three (3)
Local Business Days of Party B's receipt thereof, Party B notifies Party A
of any disagreement thereto.
(b) STOCKHOLDERS' EQUITY means with respect to an entity, at any time, the sum
at such time of (i) its capital stock (including preferred stock)
outstanding, taken at par value, (ii) its capital surplus and (iii) its
retained earnings, minus (iv) treasury stock, each to be determined in
accordance with generally accepted accounting principles.
(c) TAX FORMS means any form or document that may be required or reasonably
requested in order to allow the other party to make a payment under the
Transaction without any deduction or withholding for or on account of any
Tax or with such deduction or withholding at a reduced rate.
(d) TRANSFER. For the purposes of Section 7, the following phrase "which
consent shall not be unreasonably withheld" shall be inserted on the third
line thereof, after the word "party," and before the word "except". In
addition, either party may assign a Transaction to an affiliated entity of
such party whose obligations in respect of such assignment are guaranteed
by the transferor party, or, if the transferor's obligations under the
Transaction are guaranteed, by the guarantor of such transferor party's
obligations. Notwithstanding the foregoing, any assignment hereunder shall
not be permitted if, as a result thereof, a
<PAGE>
payment becomes subject to any deduction or withholding for or on account
of any tax which would not have arisen had such assignment not been
effected.
(e) TRIAL BY JURY. Each party irrevocably waives any and all rights to trial
by jury in any legal proceeding in connection with this Agreement or any
Transaction.
(f) ACCURACY OF SPECIFIED INFORMATION. Section 3(d) is hereby amended by
adding in the third line thereof after the word "respect" and before the
period the words "or, in the case of audited or unaudited financial
statements or balance sheets, a fair presentation of the financial
condition of the relevant person".
(g) DEFINITIONS. This Agreement, each Confirmation, and each Transaction are
subject to the 1991 ISDA Definitions and the 1994 ISDA Equity Option
Definitions, each as published by the International Swaps and Derivatives
Association, as amended, supplemented, updated, restated and superseded
from time to time (collectively, the "Definitions"), and will be governed
in all respects by the Definitions (except that references to "Swap
Transactions" in the Definitions will be deemed to be references to
"Transactions"). The Definitions as so modified, are incorporated by
reference in, and made part of, this Agreement and each Confirmation as if
set forth in full in this Agreement and such Confirmations. Subject to
Section 1(b), in the event of any inconsistency between the provisions of
this Agreement and the Definitions, this Agreement will prevail. Also,
subject to Section 1(b), in the event of any inconsistency between the
provisions of any Confirmation and this Agreement, or the Definitions, such
Confirmation will prevail for the purpose of the relevant Transaction.
(h) NOTICES. For the purposes of subsections (iii) and (v) of Section 12(a),
the date of receipt shall be presumed to be the date sent if sent on a
Local Business Day or, if not sent on a Local Business Day, the date of
receipt shall be presumed to be the first Local Business Day following the
date sent.
(i) SERVICE OF PROCESS. The penultimate sentence of Section 13(c) shall be
amended by adding the following language at the end thereof: "if permitted
in the jurisdiction where the proceedings are initiated and in the
jurisdiction where service is to be made."
(j) SET-OFF.
(1) In addition to any rights of set-off a party may have as a matter of
law or otherwise, upon the occurrence of an Event of Default or an
Additional Termination Event with respect to a party ("X"), the other
party ("Y") will have the right (but not be obliged) without prior
notice to X or any other person to set-off or apply any obligation of
X owed to Y (and to any Affiliate of Y) (whether or not matured or
contingent and whether or not arising under this Agreement, and
regardless of the currency, place of payment or booking office of the
obligation) against any obligation of Y (and to any Affiliate of Y)
owed to X (whether or not matured or contingent and whether or not
arising under this Agreement, and regardless of the currency, place of
payment or booking office of the obligation.)
<PAGE>
(2) For the purpose of cross-currency set-off, Y may convert either
obligation at the applicable market exchange rate selected by Y on the
relevant date.
(3) If the amount of an obligation is unascertained, Y may in good faith
estimate that amount and set-off in respect of the estimate, subject
to the relevant party accounting to the other when the amount of the
obligation is ascertained.
(4) This clause (j) shall not constitute a mortgage, charge, lien or other
security interest upon any of the property or assets of either party
to this Agreement.(k)
ADDITIONAL REPRESENTATIONS. Section 3 is hereby amended by
adding the following additional subsections:
(g) NO AGENCY. It is entering into this Agreement and each
Transaction as principal (and not as agent or in any other capacity,
fiduciary or otherwise).
(h) ELIGIBLE SWAP PARTICIPANT. It is an "eligible swap participant"
as defined in the Part 35 Regulations of the U.S. Commodity Futures Trading
Commission.
(i) LINE OF BUSINESS. It has entered into this Agreement (including
each Transaction evidenced hereby) in conjunction with its line of business
(including financial intermediation services) or the financing of its
business. It represents and warrants that all transactions effected under
this Agreement (i) will be appropriate in the conduct and management of its
business, (ii) will be entered into for non-speculative purposes, and (iii)
constitute transactions entered into for purposes of hedging or managing
risks related to its assets or liabilities as currently owned or incurred,
or likely to be owned or incurred in the conduct of its business.
(j) NO RELIANCE. In connection with the negotiation of, the entering
into, and the confirming of the execution of, this Agreement, any Credit
Support Document to which it is a party, and each Transaction: (i) the
other party is acting for its own account and is not acting as a fiduciary
or financial or investment advisor for it; (ii) it is not relying upon any
communications (whether written or oral) of the other party as investment
advice or as a recommendation to enter into this Agreement, any Credit
Support Document to which it is a party and each Transaction (other than
the representations expressly set forth in this Agreement and in such
Credit Support Document), it being understood that information and
explanations related to the terms and conditions of a Transaction shall not
be considered investment advice or a recommendation to enter into that
Transaction; (iii) it has not received from the other party any assurance
or guarantee as to the expected results of any Transaction; and (iv) it has
consulted with its own legal, regulatory, tax, business, investment,
financial, and accounting advisors to the extent it has deemed necessary,
and it has made its own independent investment, hedging, and trading
decisions based upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any view expressed by the
other party.
<PAGE>
(l) ADDITIONAL REPRESENTATIONS OF PARTY B. Party B represents to Party A (at
all times until termination of this Agreement) that:
(i) It understands that the Transactions contemplated
hereunder are subject to complex risks which may arise without
warning, may at times be volatile, and that losses may occur quickly
and in unanticipated magnitude.
(ii) It is a sophisticated investor able to evaluate the terms,
conditions and risks of the Transactions contemplated hereunder and
accepts such terms, conditions and risks.
(iii) It is capable of assuming and assumes, all risks
(financial and otherwise) associated with the Transactions
contemplated hereunder.
(iv) This Agreement and each Transaction have been, and will
be, entered into not for the purpose of speculation but solely in
connection with the portfolio management, asset, risk, and liability
management and hedging activities of Party B.
(m) TRANSACTIONS. With respect to any Option Transaction that may be entered
into hereunder, Party B represents to Party A (at all times until
termination of this Agreement) that Party B:
(i) understands that the Option Transactions have not been
registered under the Securities Act of 1933, as amended (the
"Securities Act") and are being offered and sold in reliance on the
exemption to the registration requirements of the Securities Act
provided under Section 4(2) thereof:
(ii) understands and acknowledges that Party A has no
obligation to register the Option Transactions under the Securities
Act or any other United States federal or state securities law, and
that the Option Transactions must be held indefinitely by the
purchaser thereof unless subsequently registered under such securities
laws or an exemption from such registration is available;
(iii) agrees that in the event that at some future time it
wishes to dispose of the Option Transactions in whole or in part (such
disposition currently not being foreseen or contemplated), it will not
transfer the same except in a transaction exempt from or not subject
to the registration requirements of the Securities Act; and
<PAGE>
(iv) understands that each Confirmation may bear a legend to
substantially the following effect:
THE SECURITIES REPRESENTED BY THE CONFIRMATION HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED, OR ANY OTHER UNITED STATES FEDERAL OR STATE
SECURITIES LAWS; AND SUCH SECURITIES MAY NOT BE SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF APPROPRIATE REGISTRATION UNDER SUCH
SECURITIES LAWS OR EXCEPT IN A TRANSACTION EXEMPT FROM OR NOT SUBJECT TO
THE REGISTRATION REQUIREMENTS OF SUCH SECURITIES LAWS
The parties executing this Schedule have executed the Agreement and have
agreed as to the contents of this Schedule.
LEHMAN BROTHERS FINANCE S.A. MAGNETEK, INC.
By: By:
------------------------- -------------------------
Title: Title:
---------------------- ----------------------
Date: Date:
----------------------- -----------------------
By:
-------------------------
Title:
----------------------
Date:
-----------------------
<PAGE>
EXHIBIT A TO SCHEDULE
GUARANTEE OF LEHMAN BROTHERS HOLDINGS INC.
LEHMAN BROTHERS FINANCE S.A. ("Party A") and ("Party B")
have entered into a Master Agreement dated as of , 19 , pursuant to
which Party A and Party B have entered and/or anticipate entering into one or
more transactions (each a "Transaction"), the Confirmation of each of which
supplements, forms part of, and will be read and construed as one with, the
Master Agreement (collectively referred to as the "Agreement"). This Guarantee
is a Credit Support Document as contemplated in the Agreement. For value
received, and in consideration of the financial accommodation accorded to Party
A by Party B under the Agreement, LEHMAN BROTHERS HOLDINGS INC., a corporation
organized and existing under the laws of the State of Delaware ("Guarantor"),
hereby agrees to the following:
(a) Guarantor hereby unconditionally guarantees to Party B the due and
punctual payment of all amounts payable by Party A under each Transaction when
and as Party A's obligations thereunder shall become due and payable in
accordance with the terms of the Agreement. In case of the failure of Party A
to pay punctually any such amounts, Guarantor hereby agrees, upon written demand
by Party B, to pay or cause to be paid any such amounts punctually when and as
the same shall become due and payable.
(b) Guarantor hereby agrees that its obligations under the Guarantee
constitute a guarantee of payment when due and not of collection.
(c) Guarantor hereby agrees that its obligations under the Guarantee shall
be unconditional, irrespective of the validity, regularity or enforceability of
the Agreement against Party A (other than as a result of the unenforceability
thereof against Party B), the absence of any action to enforce Party A's
obligations under the Agreement, any waiver or consent by Party B with respect
to any provisions thereof, the entry by Party A and Party B into additional
Transactions under the Agreement or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a guarantor (excluding
the defense of payment or statute of limitations, neither of which are waived);
PROVIDED, HOWEVER, that Guarantor shall be entitled to exercise any right that
Party A could have exercised under the Agreement to cure any default in respect
of its obligations under the Agreement or to setoff, counterclaim or withhold
payment in respect of any Event of Default or Potential Event of Default in
respect of Party B or any Affiliate, but only to the extent such right is
provided to Party A under the Agreement. The Guarantor acknowledges that Party A
and Party B may from time to time enter into one or more Transactions pursuant
to the Agreement and agrees that the obligations of the Guarantor under this
Guarantee will upon the execution of any such Transaction by Party A and Party B
extend to all such Transactions without the taking of further action by the
Guarantor.
(d) This Guarantee shall remain in full force and effect until such time
as Party B shall receive written notice of termination. Termination of this
Guarantee shall not affect Guarantor's liability hereunder as to obligations
incurred or arising out of Transactions entered into prior to the termination
hereof.
(e) Guarantor further agrees that this Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time, payment, or any
part thereof, of any obligation or interest thereon is rescinded or must
otherwise be restored by Party B upon an Event of Default as set forth in
Section 5(a)(vii) of the Agreement affecting Party A or Guarantor.
(f) Guarantor hereby waives (i) promptness, diligence, presentment, demand
of payment, protest, order and, except as set forth in paragraph (a) hereof,
notice of any kind in connection with the Agreement and this Guarantee, or (ii)
any requirement that Party B exhaust any right to take any action against Party
A or any other person prior to or contemporaneously with proceeding to exercise
any right against Guarantor under this Guarantee.
<PAGE>
This Guarantee shall be governed by and construed in accordance with the
laws of the State of New York, without reference to choice of law doctrine. All
capitalized terms not defined in this Guarantee are defined in the Agreement.
Any notice hereunder will be sufficiently given if given in accordance with
the provisions for notices under the Agreement and will be effective as set
forth therein. All notices hereunder shall be delivered to Lehman Brothers
Holdings Inc., Attention: Treasurer, at 200 Vesey Street, 24th Floor, New York,
New York 10285 (Telex No: 175636 Answerback: SLB, Facsimile No. 212-526-1467)
with a copy to Lehman Brothers Finance S.A., Attention: Financial Controller at
Genferstrasse 24, P.O. Box 311, CH-8002 Zurich, Switzerland (Telex No: 812 096
Answerback: LBFS CH, Facsimile No. 411-287-8825).
IN WITNESS WHEREOF, Guarantor has caused this Guarantee to be executed in
its corporate name by its duly authorized officer as of the date of the
Agreement.
LEHMAN BROTHERS HOLDINGS INC.
By:
-------------------------
Name:
Title:
<PAGE>
DRAFT - DISCUSSION PURPOSES ONLY
[DRAFT DATE MAY 28, 1997]
____________, 1997
TRANSACTION
MagneTek, Inc.
Master Number:
LBF Reference Number:
Dear Sir or Madam:
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Swap Transaction entered into between us on the
Trade Date specified below (the "Transaction"). This letter agreement
constitutes a "Confirmation" as referred to in the ISDA Master Agreement
specified below.
The definitions and provisions contained in the 1994 ISDA Equity Option
Definitions (the "Equity Option Definitions") and the 1991 ISDA Definitions
(each as published by the International Swaps and Derivatives Association, Inc.
("ISDA")) are incorporated into this Confirmation. In the event of any
inconsistency between any of those definitions and provisions and this
Confirmation, this Confirmation will govern. Notwithstanding anything therein
to the contrary, the definition of "Transaction" in Section 1.1 of the Equity
Option Definitions shall be deemed to include an over-the-counter equity swap
transaction relating to any of a single share, a basket of shares or an index (a
"Swap Transaction").
1. This Confirmation evidences a complete binding agreement between
Lehman Brothers Finance S.A. ("Party A") and MagneTek, Inc. ("Party B") as to
the terms of the Transaction to which this Confirmation relates. In addition,
you and we agree to use all reasonable efforts promptly to negotiate, execute
and deliver an agreement (the "Master Agreement") in the form of the ISDA Master
Agreement (Multicurrency-Cross Border) (the "ISDA Form"), with such
modifications as you and we will in good faith agree. Upon the execution by you
and us of such an agreement, this Confirmation will supplement, form a part of,
and be subject to that agreement. All provisions contained or incorporated by
reference in that agreement upon its execution will govern this Confirmation
except as expressly modified below. Until we execute and deliver that
agreement, this Confirmation, together with all other documents (each a
"Confirmation") confirming transactions entered into between us and referring to
the ISDA Form, shall supplement, form a part of, and be subject to an agreement
in the form of the ISDA Form as if we had executed an agreement in such form
(but without any Schedule) on the Trade Date of the first such transaction
between us. In the event of any inconsistency between the provisions of that
agreement, or the Master Agreement when executed, and this Confirmation, this
Confirmation will prevail for the purpose of this Transaction.
2. The terms of the Transaction to which this Confirmation relates are as
follows:
Agent: Lehman Brothers Inc. ("LBI") is confirming
this Transaction for both Party A and Party B.
LBI has no obligations, by guarantee,
endorsement or otherwise, with respect to the
performance of this Transaction by either
party hereto.
Notional Amount: USD[Number of Shares x USD16.92]
Trade Date: [June 23], 1997
Effective Date: [3 Business Days following Trade Date]
Termination Date: [123 calendar days following Trade Date]
Elected Termination: Party B may terminate this Transaction on any
day prior to the scheduled Termination Date
by providing five (5) Business Days' written
or telephonic notice to Party A. For
purposes of calculating Capital Appreciation
or Capital Depreciation, Price(t+1) shall be
the price at which the Shares are sold by
Party A.
Net Payments: Applicable
Settlement Currency: USD
Business Day Convention: Modified Following
1
<PAGE>
PARTY A EQUITY FLOATING AMOUNT:
Final Valuation Date: Three Exchange Business Days prior to the
Termination Date.
Equity Calculation Period: The Equity Calculation Period shall commence
on and include the Effective Date and will
end on but exclude the Termination Date.
Equity Payment Date: The Termination Date
Shares: MagneTek, Inc. ("the Issuer") (NYSE symbol:
MAG)
Number of Shares: [Aggregate Number of Acquired Shares (as
defined in the Standby Agreement between
Party A and Party B dated________)
Party A Capital Appreciation On the Equity Payment Date, Party A shall
Amount: pay to Party B the Capital Appreciation, as
defined below, if any. Party B shall notify
Party A not later than 60 Business Days prior
to the Termination Date whether such payment
shall be made in USD cash or via Alternative
Settlement.
"Alternative Settlement" means that on the
Termination Date, Party B's Fixed Amount
(plus Capital Depreciation, if any) shall be
netted against Party A's Equity Floating
Amount (resulting in a USD sum hereinafter
referred to as the "Net Payment"). If the
Net Payment is owed to Party B, then on the
Termination Date Party A shall deliver to
Party B, in lieu of the Net Payment, the
number of freely tradable, fully registered
shares of the Issuer, the value of which is
equivalent to the Net Payment (the
"Equivalent Shares"). If the Net Payment is
owed to Party A, then on the Termination Date
Party B shall deliver the Equivalent Shares
to Party A, in lieu of the Net Payment.
Alternative Settlement Execution If Party B is entitled to receive the Net
Make-Whole: Payment and Party B elects Alternative
Settlement, and if the aggregate cost to
Party A of purchasing the Equivalent Shares
exceeds the Net Payment due to changes in the
market price of the shares of the Issuer
during the period from the close of trading
on the Valuation Date to the time that Party
A's activities to purchase the Equivalent
Shares is fully executed, then Party B shall
pay the difference in cash to Party A on the
Business Day immediately following Party B's
receipt of Party A's demand setting forth the
amount of the difference.
If Party A is entitled to receive the Net
Payment and Party B elects Alternative
Settlement, and Party A, in selling the
Equivalent Shares, obtains an aggregate sale
price that is less than the Net Payment due
to changes in the market price of the shares
of the Issuer during the period from the
close of trading on the Valuation Date to the
time that Party A's activities to sell the
Equivalent Shares is fully executed, then
Party B shall pay the difference in cash to
Party A on the Business Day immediately
following Party B's receipt of Party A's
demand setting forth the amount of the
difference.
Dividends: Party A shall pay to Party B, the Dividend
Amount, if any, within two (2) Exchange
Business Days of such amount being paid by
the Issuer to holders of record of the
Shares.
PARTY B FIXED AMOUNT:
Fixed Calculation Period: The Equity Calculation Period
Fixed Payment Date: The Equity Payment Date
2
<PAGE>
Fixed Rate: [Four month LIBOR as determined two London
Banking Days prior to the Effective Date
using Telerate page 3750] (exclusive of
Spread)
Spread: Plus 1.50%
Fixed Rate Day Count
Fraction: Actual/360
Reset Dates: Inapplicable
Business Day: New York and London
Compounding: Inapplicable
Party B Capital Depreciation Party B will pay to Party A on the Equity
Amounts: Payment Date the Capital Depreciation (as
defined below), if any.
Early Termination: If the value of the Shares falls below USD12
on any day during the Transaction, then Party
A shall have the right to terminate this
Transaction unless Party B shall, within one
Business Day of Party A's notice thereof,
(a) deliver to Party A credit support in an
amount that will fully collateralize the risk
of loss to Party A hereunder should Party B
default, (b) execute a 1994 ISDA Credit
Support Document (or its successor or other
similar industry standard document) in form
and substance satisfactory to Party A
obligating Party B to maintain credit support
in such an amount from time to time and (c)
execute such amendments to the Master
Agreement as may be appropriate to make that
document a Credit Support Document for
purposes of the Master Agreement.
Governing Law: New York
Transfer: Neither party may transfer this Transaction,
in whole or in part, without the prior
written consent of the non-transferring
party, which consent shall not be
unreasonably withheld. In addition, either
party may assign this Transaction to an
affiliated entity of such party whose
obligations in respect of such assignment are
guaranteed by the transferor party, or, if
the transferor's obligations under this
Transaction are guaranteed, by the guarantor
of such transferor party's obligations.
Notwithstanding the foregoing, any assignment
hereunder shall not be permitted if, as a
result thereof, a payment becomes subject to
any deduction or withholding for or on
account of any tax which would not have
arisen had such assignment not been effected.
3
<PAGE>
Party B Representations: Party B represents that (i) it is not
entering into this Transaction on behalf of
or for the accounts of any other person or
entity, and will not transfer or assign its
obligations under this Transaction or any
portion of such obligations to any other
person or entity except in compliance with
applicable laws and the terms of this
Transaction; (ii) it has provided to LBI, as
agent for Party A, financial and other
information concerning its investment
objectives and risk tolerance, which
information is contained in its LBI account
documentation, and has not been rendered
misleading or obsolete; (iii) it understands
that this Transaction is subject to complex
risks which may arise without warning, may at
times be volatile, and that losses may occur
quickly and in unanticipated magnitude; (iv)
it is authorized to enter into this
Transaction and such action does not violate
any laws of its jurisdiction of organization
or residence or the terms of any agreement to
which it is a party; (v) it has consulted
with its legal advisor(s) and has reached its
own conclusions about this Transaction, and
any legal, regulatory, tax, accounting or
economic consequences arising from this
Transaction; and (vi) it has concluded that
this Transaction is suitable in light of its
own investment objectives, financial
capabilities and expertise.
NEITHER PARTY A NOR ANY OF ITS AFFILIATES HAS
ADVISED PARTY B WITH RESPECT TO ANY LEGAL,
REGULATORY, TAX, ACCOUNTING OR ECONOMIC
CONSEQUENCES ARISING FROM THIS TRANSACTION,
AND NEITHER PARTY A NOR ANY OF ITS AFFILIATES
IS ACTING AS AGENT (OTHER THAN LBI AS DUAL
AGENT IF SPECIFIED ABOVE), OR ADVISOR FOR
PARTY B IN CONNECTION WITH THIS TRANSACTION.
Party B further represents that it is not
entering into this Transaction while in
possession of material non-public information
concerning the business, operations or
prospects of the Issuer(s).
"Material" information for these purposes is
any information to which an investor would
reasonably attach importance in reaching a
decision to buy, sell or hold any securities
of the Issuer(s).
3. CERTAIN DEFINITIONS. For purposes of this Transaction, the following
terms shall have the indicated meanings:
"Capital Appreciation" and "Capital Depreciation" are defined by the
following formula:
PRICE(T+1) - PRICE(T) X NOTIONAL AMOUNT
-------------------------
PRICE(T)
Where:
"Price(t+1)" means the arithmetic average of the per share prices at which
the Shares are sold by Party A during the Valuation Period, net of any
withholding tax, stamp tax, or any other tax, duties, fees or commissions
payable in respect of such sale.
"Price(t)" means USD[16.92]
If the amount calculated under the formula above is a positive amount, then
such amount is the "CAPITAL APPRECIATION," and if such amount is a negative
amount, then the absolute value of such amount is the "CAPITAL DEPRECIATION."
"Dividend Amount" means the cash dividends to which holders of record of
the Shares during the period from, and including, the Effective Date to, but
excluding, the Termination Date would be entitled, net of any withholding tax,
stamp tax, or any other tax, duties, fees or commissions payable in respect of
such dividend payment.
4
<PAGE>
"Exchange Business Day" means a day that is (or, but for the occurrence of
a Market Disruption Event, would have been) a trading day on each of the
Exchange and each Related Exchange(s) other than a day on which trading on any
such exchange is scheduled to close prior to its regular weekday closing time.
"Exchange" means the New York Stock Exchange.
"Related Exchange(s)" shall not be applicable to this Transaction.
"Valuation Period" means the period from and including the ninetieth
calendar day immediately preceding the Final Valuation Date to and including the
Final Valuation Date (each Exchange Business Day therein referred to as a
"Valuation Date"), subject to Section 4.
"Valuation Time" means at [the close of trading on the Exchange.] [ :00
a.m./p.m. (local time in ).]
4. MARKET DISRUPTION EVENT. If there is a Market Disruption Event on any
Valuation Date, then the Valuation Date shall be the first succeeding Exchange
Business Day on which there is no Market Disruption Event, unless there is a
Market Disruption Event on each of the five Exchange Business Days immediately
following the original date that, but for the Market Disruption Event, would
have been the Valuation Date. In that case, (a) that fifth Exchange Business
Day shall be deemed to be the Valuation Date notwithstanding the Market
Disruption Event, and (b) the Calculation Agent shall determine the market value
as of the Valuation Time on that fifth Exchange Business Day on the basis of its
good faith estimate of the Exchange traded price that would have prevailed but
for the occurrence of the Market Disruption Event.
"Market Disruption Event" means the occurrence or existence on any Exchange
Business Day during the one-half hour period immediately before the Valuation
Time of any suspension of or limitation imposed on trading (by reason of
movements in price exceeding limits permitted by the relevant Exchange or
otherwise) in (a) the Share on the Exchange, or (b) any options contracts or
futures contracts relating to the Share on any Related Exchange if, in any such
case, that suspension or limitation is material, in the determination of the
Calculation Agent.
The Calculation Agent shall as soon as reasonably practicable under the
circumstances notify the parties or other party, as the case may be, of the
existence of a Market Disruption Event on any day that but for the occurrence or
existence of a Market Disruption Event would have been a Valuation Date.
5. ADJUSTMENTS. For purposes of Article 10 of the Equity Option
Definitions, any reference to the term "Share Transaction" shall be deemed to
mean "Swap Transaction".
Method of Adjustment: Calculation Agent Adjustment
EXTRAORDINARY EVENTS:
Consequences of Merger Events:
(a) Share-for-Share: "Cancellation and Payment," which means
that (i) the Merger Date shall be deemed
the final Valuation Date with respect to
this Transaction and (ii) Price(t+1)
shall be equal to the execution price at
which Party A unwinds its hedge with
respect to the Shares.
(b) Share-for-Other: "Cancellation and Payment," which means
that (i) the Merger Date shall be deemed
the final Valuation Date with respect to
this Transaction and (ii) Price(t+1)
shall be equal to the execution price at
which Party A unwinds its hedge with
respect to the Shares
(c) Share-for-Combined: "Cancellation and Payment," which means
that (i) the Merger Date shall be deemed
the final Valuation Date with respect to
this Transaction and (ii) Price(t+1)
shall be equal to the execution price at
which Party A unwinds its hedge with
respect to the Shares.
5
<PAGE>
NATIONALIZATION OR INSOLVENCY: Repurchase; provided that such quotation
shall be determined by the Calculation
Agent in a fair and commercially
reasonable manner.
6. Calculation Agent: LBI, whose determinations and calculations shall
be binding in the absence of manifest error.
7. Party A agrees to provide the following Credit Support Document:
Guarantee of Lehman Brothers Holdings Inc. (unconditional guarantee to Party B
of the due and punctual payment of all amounts payable by Party A under this
Transaction as such payments become due and payable).
Party B agrees to execute the following Credit Support Document:
Credit Support Annex
8. Account Details:
Party A's payment instructions: First Chicago International Bank,
New York, New York
ABA Number: 026-009-797
Account Number: 103-1753-50-01
For Account of: Lehman Brothers
Holdings plc
Favour: Lehman Brothers Finance
S.A.
Party B's payment instructions: Please provide
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us or by sending to us a letter or telex substantially
similar to this letter, which letter or telex sets forth the material terms of
the Transaction to which this Confirmation relates and indicates agreement to
those terms.
Yours sincerely, Confirmed as of the date first above written:
LEHMAN BROTHERS FINANCE S.A. MAGNETEK, INC.
By: By:
--------------------------- ---------------------------
Name: Name:
Title: Title:
By:
---------------------------
Name:
Title:
Execution time will be furnished upon counterparty's written request.
6
<PAGE>
June 3, 1997
C 57241-00064
MagneTek, Inc.
26 Century Boulevard
Nashville, TN 37229-0159
Re: MAGNETEK, INC. - FORM S-3 REGISTRATION STATEMENT
Ladies and Gentlemen:
We have acted as counsel for MagneTek, Inc., a Delaware corporation (the
"Company"), in connection with the registration by the Company of 2,500,000
shares of the Company's Common Stock, $0.01 par value (the "Shares") and
associated rights, on a Form S-3 Registration Statement (the "Registration
Statement") under the Securities Act of 1933, as amended. The Shares will be
acquired and distributed to the public by Lehman Brothers (the "Underwriters")
pursuant to the terms of a Standby Agreement between the Company and the
Underwriters relating to the call for redemption of the Company's 8% Convertible
Subordinated Notes due 2001 (the "Standby Agreement"), substantially in the form
filed as an exhibit to the Registration Statement.
On the basis of such investigation as we have deemed necessary, we are of
the opinion that (i) the Shares have been duly authorized and (ii) when issued
and sold in accordance with the terms of the Registration Statement and the
Standby Agreement the Shares will be legally issued, fully paid and
nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to this firm under the heading
"Legal Matters" contained in the prospectus that forms part of the Registration
Statement.
Very truly yours,
GIBSON, DUNN & CRUTCHER LLP
JB/LYK/FEA
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of MagneTek, Inc. for
the registration of 2,500,000 shares of its common stock in connection with the
call of up to $40 million of 8% Convertible Subordinated Notes and to the
incorporation by reference therein of our reports dated August 20, 1996, except
for the second paragraph of Note 4, as to which the date is September 16, 1996,
with respect to the consolidated financial statements of MagneTek, Inc.,
incorporated by reference in its Annual Report (Form 10-K) for the year ended
June 30, 1996 and the related financial statement schedule included therein,
filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
St. Louis, Missouri
May 30, 1997
