MAGNETEK INC, 10-K, 1998-09-28

MAGNETEK INC
10-K, 1998-09-28
POWER, DISTRIBUTION & SPECIALTY TRANSFORMERS

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549
__________________

FORM 10-K

(MARK ONE)
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 28, 1998

OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934

COMMISSION FILE NUMBER 1-10233

__________________

MAGNETEK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 95-3917584
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

26 CENTURY BOULEVARD 37214
NASHVILLE, TENNESSEE (Zip Code)
(Address of Principal Executive Offices)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (615) 316-5100
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
------------------- ---------------------
Common Stock, $.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. / /

The aggregate market value of the voting stock held by non-affiliates
of the Registrant (based on the closing price of such stock, as reported by the
New York Stock Exchange, on September 11, 1998) was $179,619,608.

The number of shares outstanding of the Registrant's Common Stock, as
of September 11, 1998, was 31,545,239 shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the MagneTek, Inc. 1998 Annual Report to Shareholders for
the year ended June 28, 1998 are incorporated by reference into Part II of this
Form 10-K. With the exception of those portions which are expressly
incorporated by reference in the Annual Report on Form 10-K, the MagneTek, Inc.
1998 Annual Report to Shareholders is not deemed filed as part of this Report.

Portions of the MagneTek, Inc. definitive Proxy Statement to be filed
with the Securities and Exchange Commission within 120 days after the close of
the fiscal year ended June 28, 1998 are incorporated by reference into Part III
hereof.

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MAGNETEK, INC.

ANNUAL REPORT ON FORM 10-K
FOR THE FISCAL YEAR ENDED JUNE 30, 1998 (1)

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<CAPTION>
PAGE
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<S> <C>
ITEM 1. BUSINESS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

ITEM 2. PROPERTIES.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . . . . . . . . .11

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. . . . . . . .12

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12

ITEM 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . . . . . . . . .13

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS. . . . . . . . . . . . . . . . . . . . . . .13

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . . . . . . . . .13

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.. . . . . . . . . . . . . . . . . . . . . . .13

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.. . . . . . . .13

ITEM 11. EXECUTIVE COMPENSATION.. . . . . . . . . . . . . . . . . . . . . .16

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.. .16

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.. . . . . . . . . .16

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K..16

</TABLE>
- ----------
(1) The Company uses a 52-53 week fiscal year which ends on the Sunday nearest
June 30. For clarity of presentation, all periods are presented as if the
year ended on June 30. Fiscal years 1998, 1997 and 1996 contained 52 weeks.

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PART I
ITEM 1. BUSINESS.

GENERAL

MagneTek, Inc. ("MagneTek" or the "Company") makes electronic and
electrical power products used in data processing and telecommunications,
building and factory automation, power generation, lighting and other global
growth markets. MagneTek's product lines include electronic power supplies,
motor drives, electric motors and generators, and lighting ballasts. They are
sold to equipment builders for incorporation into their products, to resellers
and to end-users. Founded in 1984, the Company operates 16 factories in North
America, seven in Europe and one in Asia, and employs approximately 14,000
associates worldwide.

The Company operates in three business segments: Motors and Controls,
Lighting Products and Power Supplies.

MOTORS AND CONTROLS SEGMENT

GENERAL. Electric motors and generators and electronic variable speed
drives are the principal products in the Company's Motors and Controls segment.
The segment accounted for approximately 49% of fiscal 1998 net sales. Sales are
concentrated in niche markets and specialized applications in which the Company
enjoys a significant market presence. International sales represented
approximately 10% of the segment's total net sales in fiscal 1998.
Manufacturing operations are conducted principally at the Company's Lexington
and McMinnille, Tennessee and New Berlin, Wisconsin facilities in the U.S. and
in Juarez, Mexico. In addition, there are three manufacturing facilities in
Europe, two of which are in Hungary. MagneTek also has a 55% interest in a
joint venture in China which produces generators for consumption in Asia.

MagneTek has close relationships with original equipment manufacturers
("OEMs") who purchase the Company's motors, generators and drives. In many
cases, MagneTek works with its OEM customers at the early stages of product
development to design customized products and solutions for particular needs.

During fiscal 1998, the Company completed a significant restructuring
of its motors production facility in McMinnville, Tennessee. Changes at this
facility include new plant management, the adoption of new manufacturing and
scheduling procedures, reduction of the workforce and increased outsourcing.
MagneTek is in the process of implementing Six Sigma, a well-recognized quality
improvement program designed to reduce defects to statistically insignificant
levels, throughout the Motors and Controls segment. In addition, the Company is
applying Demand Flow Technology ("DFT"), a system for organizing production to
improve responsiveness to changes in demand, increase speed in manufacturing
cycles and reduce inventories, throughout the segment's production facilities.
MagneTek intends to proceed with restructuring efforts at other production
facilities in this segment in future periods.

MOTOR AND GENERATOR PRODUCTS. During fiscal 1998, sales of motor and
generator products represented 83% of the Motors and Controls segment revenues.
MagneTek electric motors, most of which use alternating current power, range in
size from 1/8 to 500 horsepower. Based on frame sizes established by the
National Electric Manufacturers Association motors from 1/8 to 5 horsepower are
designated

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fractional-horsepower ("FHP") motors. FHP motors are used in applications
such as heating, ventilating and air-conditioning ("HVAC") fans, pool and spa
pumps, sprayers and farm-duty motors. MagneTek integral-horsepower motors
ranging up to 500 horsepower, are used primarily in conveyors, mixers, pumps,
mining, textile and paper processing equipment. MagneTek also manufactures
direct current motors, ranging in size from 1/6 to 3 horsepower, which are
used in variable speed applications such as exercise machines,
battery-powered mobile equipment and material handling equipment.

Approximately 69% of MagneTek's motors are sold to OEMs, primarily
through the Company's direct sales force. The rest are marketed through a
network of approximately 3,500 distributors, mostly for the purpose of
replacement. MagneTek's principal customers for its motors include Trane,
Carrier, York, Pac Fab and Jacuzzi.

Generators manufactured by the Company range in size from 50 kilowatts
("KW") to 2,250 KW. Over 95% of generator sales in fiscal 1998 (18% of the
segment's total net sales) were to Caterpillar, which manufactures and sells
engine generator sets for prime and standby power applications.

DRIVES AND SYSTEMS. Sales of drives and drive systems accounted for
17% of the Motors and Controls segment's total net sales for fiscal 1998. The
Company's electronic variable speed drives and drive systems adjust and control
the speed and torque of electric motors. They are used in applications such as
HVAC, pumping, conveyors, food and beverage, textile machines, machine tools,
material handling and automation control. MagneTek drives and drive systems are
sold primarily to OEMs and end users through a specialized engineering-oriented
sales force as well as through electrical distributors for industrial plant and
replacement purposes. MagneTek's principal customers for its drives and systems
include Otis Elevator, Trane and Joy Mining. Approximately 25% of MagneTek's
drives and drive systems are sold directly to OEMs, with the remainder marketed
through more than 175 distributors.

BACKLOG. The Company's backlog in the Motors and Control segment as
of June 30, 1998 was $76.4 million, compared to $69.6 million at the end of
fiscal 1997. Increased backlog in this segment was primarily a function of
increased demand for commercial fractional horsepower products.

COMPETITION. The Company's principal competitors in motor and
generator products are Emerson Electric Company, GE, Baldor Electric Company,
A.O. Smith and Onan. The principal competitors in drives and systems are
Emerson Electric Company, Allen Bradley, Asea Brown Boveri and GE. Certain of
these competitors have substantially greater resources than the Company.

LIGHTING PRODUCTS SEGMENT

GENERAL. MagneTek is the second largest producer in North America of
lighting ballasts, which are essential to start and operate fluorescent, neon
and similar gas-filled electric lamps. Lighting products accounted for
approximately 37% of net sales in fiscal 1998. International sales accounted
for 23% of the segment's total net sales in fiscal 1998; and Lithonia Lighting,
a domestic lighting fixture OEM, accounted for 13% of segment sales.

During fiscal 1998, MagneTek completed the substantial restructuring
efforts that have been underway in the Lighting Products segment in North
America and Europe for the past two years. In North America the restructuring
included closing the Company's production facilities in Mendenhall, Mississippi
and Huntington, Indiana and relocating those

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manufacturing operations to existing facilities in Matamoros, Mexico and a
new plant in Reynosa, Mexico. In Europe, the Company relocated production of
certain specialty product lines from Germany to Hungary. Restructuring in
this segment also included the implementation of DFT and Six Sigma at the
Company's lighting products plants, as well as increased outsourcing of
component production.

MAGNETIC AND HID BALLASTS. Sales of magnetic ballasts (including high
intensity discharge ("HID") ballasts) accounted for 52% (43% in the U.S. and 9%
internationally) of the segment's net sales in fiscal 1998. Magnetic
fluorescent ballasts are used primarily in standard fluorescent lighting
fixtures in commercial buildings, hospitals, schools, hotels, factories, homes,
warehouses and airports. Sales of HID ballasts accounted for 17% (13% in the
U.S. and 4% internationally) of the segment's net sales in fiscal 1998. HID
ballasts are used in lighting fixtures in industrial and municipal applications,
such as lighting for retail stores, manufacturing plants, warehouses, parking
facilities, roadways, sports arenas, security areas, tunnels and signs. In the
U.S. approximately 64% of the Company's magnetic fluorescent and HID ballasts
are sold directly to lighting fixture OEMs. The rest are sold through
independent manufacturers' representatives to more than 2,000 independent
distributors nationwide. In Europe, sales are made through a combination of the
Company's direct sales force and sales agents, primarily to OEMs. MagneTek's
principal customers for its magnetic and HID ballasts include Lithonia Lighting,
Cooper, Simkar and Genlyte.

ELECTRONIC BALLASTS. While their initial costs to consumers are
higher than magnetic ballasts, electronic fluorescent ballasts can provide
cost savings through reduced energy consumption. Sales of electronic
ballasts, primarily in the U.S., accounted for 33% of the segment's total net
sales in fiscal 1998. The Company anticipates a continuing shift in demand
toward electronic ballasts from magnetic products as more end-users focus on
long-term operating efficiency and as the cost of electronic ballasts
declines. Certain of the recent repositioning actions taken by the Company
are intended to accommodate this demand change. Electronic ballasts are sold
through the same channels as magnetic ballasts. Approximately 60% of
MagneTek's electronic ballasts were sold directly to OEMs in fiscal 1998 and
the remainder were sold through GE to more than 2,000 independent distributors.
MagneTek's principal customers for its electronic ballasts include Lithonia,
GE, Cooper, United States Industries and Genlyte.

In 1997, the Company announced an agreement with GE wherein GE became
the exclusive distributor in North America of the Company's linear electronic
ballasts. Products distributed by GE are co-branded with the MagneTek and GE
names. The Company continues to sell magnetic, HID and compact ballasts through
its traditional market channels and linear electronic ballasts directly to OEM
customers. The agreement also contemplates possible future joint product
development for electronic lighting products.

BACKLOG. Backlog in the Lighting Products segment as of June 30, l998
was $27 million compared to $29 million at the end of fiscal 1997. The decrease
in backlog in this segment is a reflection both of continued customer demand for
reduced lead times and the Company's increasing customer responsiveness.

COMPETITION. MagneTek's primary competitors in the lighting ballast
business in the U.S. are Advance Transformer (a division of North American
Philips) and Motorola, and in Europe, Schwabe, Helvar and Zumtobel. Some of
these companies have substantially greater resources than MagneTek.

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POWER SUPPLIES SEGMENT

GENERAL. The Power Supplies segment accounted for 14% of the
Company's net revenues in fiscal 1998. Three customers, IBM, Italtel and
Siemens (25%, 13% and 11%, respectively, of the segment's net sales in fiscal
year 1998), are especially important to the revenue base for the segment. The
Company's Italian subsidiary is the largest independent producer of power
supplies for data processing and telecommunications applications for the
European market. European sales accounted for 66% of the Power Supplies
segment's net sales in fiscal 1998. As a step toward increasing the segment's
North American presence, the Company acquired Omega Power Systems, Inc. in June
1998. In fiscal 1998, the Company completed the closure of its Huntington,
Indiana production facility and the consolidation of existing North American
power supplies production, research and development and sales in a new
headquarters located in Huntsville, Alabama.

This segment manufactures both custom power supplies and special
purpose power supplies, as well as magnetic components. Custom power
supplies are used primarily in computers, telecommunications equipment and
office machines. Special purpose power supplies are used in recreational
vehicles such as campers, mobile homes and boats. MagneTek's magnetic
components are used in a variety of electronic products.

BACKLOG. Backlog in the Power Supplies segment as of June 30, 1998
was $64.7 million compared to $57.5 million as of the end of fiscal 1997. The
increase in backlog in this segment reflects increased penetration of current
accounts and continued growth in the telecommunications markets.

COMPETITIVE STRENGTHS

The Company believes that it benefits from competitive advantages in
each of the following areas.

TECHNOLOGICAL CAPABILITIES. MagneTek emphasizes its ability to
combine electro-magnetic and power electronic technologies into custom solutions
for process and power control. Long a leader in providing innovative, energy
efficient products, MagneTek has used its technological expertise to pioneer
advances in lighting, motor and power supply applications. MagneTek's latest
lines of electronic ballasts and switch mode power supplies, for example, are
among the industry leaders in energy efficiency and power quality. To maintain
and enhance its technological capabilities, MagneTek has established advanced
development centers in each product segment.

ESTABLISHED CUSTOMER RELATIONSHIPS. Due to its reputation as a
reliable, high quality supplier with a well-recognized brand name in the
industry, MagneTek has extensive relationships with major original equipment
manufacturers and distributors such as Caterpillar, IBM, Lithonia Lighting,
United Technologies, GE and Hubbell. Many of these relationships have existed
for decades. Maintenance and development of close relationships with OEMs is an
important strategic priority of the Company.

LOW COST MANUFACTURING. MagneTek competes as a high quality, low cost
supplier of integrated electrical products. The Company has taken important
steps to enhance its position by relocating production to low cost labor areas,
restructuring manufacturing operations through DFT and implementing Six Sigma
throughout its operations.

STRENGTH OF MARKET CHANNELS AND BREADTH OF PRODUCT OFFERINGS.
MagneTek's distribution and OEM market channels have been developed over many
years, would be difficult and expensive to duplicate and constitute a valuable
asset. MagneTek provides a broad diversity of products in each of its product
lines. Since product breadth is an important

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consideration of customers in their selection of suppliers, MagneTek's
breadth of product has been an advantage in penetrating and maintaining both
OEM and distribution channels.

MANAGEMENT EXPERIENCE. The Company's senior management team benefits
from the diverse experience of individuals with long tenures at the Company and
a number of recent additions from other highly regarded corporations, such as
AlliedSignal, GE, Westinghouse and Northern Telecom.

REPOSITIONING AND CURRENT STRATEGY

Beginning in fiscal 1994, the Company undertook a series of strategic
initiatives to strengthen its financial position, increase management capability
and improve competitiveness. More than 12 non-core business units were divested
between 1994 and 1996, generating proceeds of over $200 million, which were
applied to reduce indebtedness. Significant repositioning reserves were
established and charges recorded, principally in connection with the Lighting
Products segment, in fiscal 1994 and fiscal 1996.

Key elements of MagneTek's repositioning and current business strategy
are the following:

STRENGTHENING OF PERSONNEL AT ALL LEVELS. MagneTek has
restructured its management through internal reorganization, reassignments
and promotions, and through recruitment of individuals with diverse
backgrounds outside the Company, commencing with the hiring of Ronald N. Hoge
from AlliedSignal in June 1996. MagneTek has undertaken to improve the
capabilities and performance of employees at all levels through enhanced
training and performance reviews and revised incentive compensation criteria,
all of which place strong emphasis on economic value added.

REDUCTION OF BALANCE SHEET LEVERAGE. From the end of fiscal 1994 to
the end of fiscal 1998, the Company reduced its debt-to-shareholders' equity
ratio from 4.6:1 to 1.3:1, using proceeds from business divestitures and
internally generated cash flow and through the conversion of outstanding
convertible debt securities. Interest costs were reduced from $32.0 million in
fiscal 1994 to $16.6 million in fiscal 1998.

RESTRUCTURING OPERATIONS. MagneTek has implemented a comprehensive
restructuring of operations, involving facility consolidations and closings,
relocation of production to lower labor cost areas and increased outsourcing.
MagneTek is in the process of implementing DFT and Six Sigma throughout the
Company's operations. In addition, MagneTek has implemented a global
procurement program to consolidate purchasing and maximize volume discounts and
other benefits from suppliers. During fiscal 1998, MagneTek closed three
significant manufacturing sites, opened a major new lighting plant in Reynosa,
Mexico, and expanded its Huntsville, Alabama facility to serve as the North
American center for operations of the Power Supplies segment.

GROWTH AND EXPANSION. Management believes that over the past several
years MagneTek has substantially improved its financial condition, management,
facilities and operational capabilities. In coming periods, MagneTek will seek
to complete its operational restructuring and achieve significant business
growth in North America and abroad. Attractive growth opportunities are
believed to exist through expansion of the power supplies business in North
America, especially in data processing and telecommunications applications where
MagneTek has achieved significant market presence in Europe. Management
believes opportunities also exist for significant expansion of MagneTek's motors
and electronic drives business, especially in markets outside of North America.
MagneTek will seek to leverage existing capabilities and customer relationships
through acquisitions of other companies and product lines where appropriate.

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INTERNATIONAL OPERATIONS

The Company's international sales accounted for 24% of its net sales
in fiscal 1998. The Company defines international sales to include sales of
products manufactured by its facilities outside the U.S., as well as sales of
products manufactured in the U.S. to purchasers outside of the U.S. The Company
has five production facilities in Mexico and employs more than 5,000 employees
in that country. In Europe, the Company has seven manufacturing facilities and
employs more than 2,000 people. The Company's European operations include
ballast and power supply production in Italy, Germany and Hungary and motor
manufacturing in the United Kingdom and Hungary. In China, the Company has a
55% interest in a joint venture for the production of generators, which has
three production facilities and more than 500 employees. Seeking to expand its
operations in Asia, the Company has established a headquarters for Asian
business development in Hong Kong. Continuing expansion of MagneTek's
international presence is an important element of its competitive strategy.

SUPPLIERS AND RAW MATERIALS

The Company has historically manufactured many of the materials and
components used in its products, including ballast and motor laminations and
capacitors. The Company also draws its own magnet wire primarily for products
in the Lighting Products segment. As described below, based upon an analysis of
the costs and benefits of the Company's historical level of vertical
integration, the Company is increasing its outsourcing of certain component
parts that were previously produced internally.

Virtually all materials and components purchased by the Company are
available from multiple suppliers. During fiscal 1998 approximately 58% of
the Company's cost of sales was for the purchase of raw materials.
Production requirements depend heavily on steel, copper and aluminum, as well
as certain electronic components. The Company generally negotiates prices
with steel vendors on an annual basis. The Company purchases copper for the
Lighting Products segment primarily in rod form for drawing its own magnet
wire and for the Motors and Controls segment in the form of finished magnet
wire. The Company seeks to mitigate its exposure to fluctuations in copper
prices through short-term hedging programs as well as through
forward-contract arrangements with magnet wire suppliers. The Company
purchases its aluminum requirements based upon the spot prices at delivery.

The Company has recently entered into agreements with third party
suppliers to provide certain component parts for its ballast products. The
Company believes that capitalizing on third party expertise in the production of
such components will result in cost savings and quality improvements. The
Company intends to continue to increase outsourcing of non-strategic production
activities in all of its business segments, focusing internal production on
those areas in which the Company has competitive advantages in cost, quality and
delivery.

RESEARCH AND DEVELOPMENT

Research and development activities are conducted by the respective
operating divisions and are directed toward enhancement of the existing
products and development of new products. Advanced technologies are being
developed in the Company's four main research centers in Huntsville, Alabama;
New Berlin, Wisconsin; St. Louis, Missouri; and Valdarno, Italy. Total
research and development expenditures were approximately $22.2 million, $23.6
million and $21.5 million, respectively for the 1998, 1997 and 1996 fiscal
years.

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TRADEMARKS AND PATENTS

The Company holds numerous patents and believes that it holds all the
patent, trademark and other intellectual property rights necessary to conduct
its business.

EMPLOYEES

At the end of fiscal 1998, the Company had approximately 2,200
salaried employees and approximately 12,700 hourly employees, of whom
approximately 5,300 were covered by collective bargaining agreements with
various unions. The Company believes that its relationships with its employees
are favorable.

ENVIRONMENTAL MATTERS

GENERAL. The Company has from time to time discovered contamination
by hazardous substances at certain of its facilities. In response to such a
discovery, the Company conducts remediation activities to bring the facility
into compliance with applicable laws and regulations. The Company's remediation
activities for fiscal 1998 did not entail material expenditures, and its
remediation activities for fiscal 1999 are not expected to entail material
expenditures. Future discoveries of contaminated areas could entail material
expenditures, depending upon the extent and nature of the contamination.

CENTURY ELECTRIC (MCMINNVILLE, TENNESSEE). Prior to its purchase
by the Company in 1986, Century Electric, Inc. ("Century Electric") acquired
a business from Gould Inc. ("Gould") in May 1983 which included a leasehold
interest in a fractional horsepower electric motor manufacturing facility
located in McMinnville, Tennessee. In connection with this acquisition,
Gould agreed to indemnify Century Electric from and against liabilities and
expenses arising out of the handling and cleanup of certain waste materials,
including but not limited to cleaning up any PCBs at the McMinnville facility
(the "1983 Indemnity"). Investigation has revealed the presence of PCBs and
other substances, including solvents, in portions of the soil and in the
groundwater underlying the facility and in certain offsite soil, sediment and
biota samples. Century Electric has kept the Tennessee Department of
Environment and Conservation, Division of Superfund, apprised of test results
from the investigation. The McMinnville plant has been listed as a Tennessee
Inactive Hazardous Substance Site, a report on that site has been presented
to the Tennessee legislature, and community officials and plant employees
have been notified of the presence of contaminants as above described. In
1995, Gould completed an interim remedial measure of excavating and disposing
onsite soil containing PCBs. Gould also conducted preliminary investigation
and cleanup of certain onsite and offsite contamination. The cost of any
further investigation and cleanup of onsite and offsite contamination cannot
presently be determined. The Company believes that the costs for further
onsite and offsite cleanup (including ancillary costs) are covered by the
1983 Indemnity. While the Company believes that Gould will continue to
perform substantially under its indemnity obligations, Gould's substantial
failure to perform such obligations could have a material adverse effect on
the Company.

OFFSITE LOCATIONS. The Company has been identified by the United
States Environmental Protection Agency and certain state agencies as a
potentially responsible party for cleanup costs associated with alleged past
waste disposal practices at several offsite locations. Due, in part, to the
existence of indemnification from the former owners of certain acquired
businesses for cleanup costs at certain of these sites, the Company's estimated
share in liability (if any) at the offsite facilities is not expected to be
material. It is possible that the Company will be named as a potentially
responsible party in the future with respect to other sites.

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INDEMNIFICATION OBLIGATIONS FROM RESTRUCTURING. 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. The
Company's indemnification obligations pursuant to such agreements did not entail
material expenditures for fiscal 1998, and its indemnification obligations for
fiscal 1999 are not expected to entail material expenditures. Future
expenditures pursuant to such agreements could be material, depending upon the
nature of any future asserted claims subject to indemnification.

CAUTIONARY STATEMENT

This document contains "forward-looking statements" as defined on the
Private Securities Litigation Reform Act of 1995, that are subject to risks and
uncertainties which, in many cases, are beyond the control of the Company.
These include but are not limited to economic conditions in general, business
conditions in electrical and electronic equipment markets, competitive factors
such as pricing and technology, and the risk that the Company's ultimate costs
of doing business exceed present estimates.

In addition, the Company's results of operations could be adversely
affected by general business and legal risks, as well as the following specific
risks.

SUCCESS OF RESTRUCTURING MEASURES. MagneTek is making significant
changes in its manufacturing facilities and procedures, with the objective of
increasing efficiency and reducing costs. The changes involve the incurrence of
significant costs. Unanticipated costs or delays, disruption of manufacturing
or the failure to realize expected cost reductions could reduce the benefit of
such changes and adversely affect results of operations. Future results of
operations will depend to a significant extent on the success of the
restructuring and business strategy initiatives described herein.

COMPETITION AND PRICING PRESSURES. MagneTek operates in an intensely
competitive environment and certain of its competitors are significantly larger
and have substantially greater resources than the Company. Other companies seek
to compete on the basis of competitive strengths which are similar to those
described herein, or in other areas in which they may have advantages. Certain
of such companies are seeking to employ competitive and management strategies
similar to those of MagneTek. As a result, MagneTek's competitive standing may
be expected to vary from time to time and among different markets. Pricing
pressures in the lighting ballast product line during fiscal 1998, and
continuing to the present, have adversely affected profitability of that
segment.

DEPENDENCE ON SIGNIFICANT CUSTOMERS. MagneTek's sales to its top five
customers represented approximately 23% of its net sales in fiscal 1998. The
loss of any such customers or significant decreases in any such customer's
levels of purchases from MagneTek could have a material adverse effect on the
Company's business.

SENSITIVITY TO GENERAL ECONOMIC AND INDUSTRY CONDITIONS. MagneTek's
markets are cyclical in nature and subject to general trends in the economy.
Profitability and cash flow availability could be adversely affected by any
prolonged economic downturn.

INTERNATIONAL SALES AND OPERATIONS; FOREIGN CURRENCY EXPOSURE.
International sales, including sales from domestic operations, accounted for
approximately 24% of MagneTek's net sales in fiscal 1998. As a result of its
international sales and operations, the Company is subject to the risk of
fluctuation in currency exchange rates. Further, MagneTek's international
operations are subject to risks associated with changes in

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local economic and political conditions, currency exchange restrictions,
regulatory requirements and taxes.

Approximately 18% of MagneTek's net sales in fiscal 1998 were
denominated in currencies other than the U.S. dollar, principally the Italian
lira and the German mark. Commencing January 1, 1999, 11 countries in the
European Union are scheduled to begin conversion to a common legal currency,
known as the "euro." Conversion to the euro is expected to have broad
implications to companies doing business in Europe, including MagneTek. Such
consequences may include significant changes in exposure to currency
fluctuations; changes in the competitive environment among participating
countries, including the potential of increased business consolidation;
requirements for changes in pricing policies and changes in information
technology requirements. At this time, MagneTek is unable to gauge the effect
on its business of the euro conversion, including whether such effect will be
positive or negative.

YEAR 2000 COMPLIANCE. MagneTek is currently operating certain
computer software and systems which are not year 2000 compliant. MagneTek has
purchased and is in the process of installing an Oracle "Enterprise Resource
Planning" software package which will, among other things, address year 2000
issues. Replacement and conversion of software to the new system is anticipated
to be completed early in calendar year 1999. Prior to the end of calendar year
1998, MagneTek will evaluate the progress of implementation and develop
contingency plans if this evaluation indicates that there will be delays in
implementation. MagneTek is currently contacting critical suppliers to
determine if the products and services they provide to the Company are year 2000
compliant. The failure of products or services supplied to the Company to be
year 2000 compliant could adversely affect the Company's operations. In
addition, MagneTek is subject to the risk that non-compliant software could
escape detection and correction, and thereby cause failures with unpredictable,
and potentially significant, consequences.

ENVIRONMENTAL MATTERS. MagneTek has from time to time discovered
contamination by hazardous substances at certain of its facilities and in
selling certain business operations. The Company has agreed, in some instances,
to provide indemnification against environmental liabilities associated with the
acquired operations.

RAW MATERIALS. MagneTek's raw material costs represented
approximately 47% of its net sales in fiscal 1998. The principal raw materials
used by the Company are copper, steel and aluminum. MagneTek attempts to hedge
against the risk of fluctuation in the prices of copper and aluminum by entering
into futures contracts. However, unanticipated increases in raw material
requirements or price increases not covered by hedging would increase production
costs and could adversely affect profitability.

RISKS ASSOCIATED WITH EXPANSION Strategy. MagneTek is seeking to
expand its business through joint ventures, strategic partnerships and
acquisitions of other business entities. Significant new acquisitions or
investments could reduce the Company's liquidity and result in the incurrence of
additional debt. Inability to successfully integrate future acquisitions or to
manage expanded operations effectively is an inherent risk of MagneTek's growth
strategy.

ITEM 2. PROPERTIES.

MagneTek's headquarters and each of its principal facilities for the
continuing operations of the Company are listed below, each of which is owned by
the Company unless shown as leased.

9
<PAGE>

<TABLE>
<CAPTION>
Approximate
Location Lease Term Size (Sq. Ft.) Principal Use
-------- ---------- -------------- ---------------------------------
<S> <C> <C> <C>
Altavista, Virginia -- 108,000 Motor manufacturing

Bridgeport, Connecticut 1999 100,000 Capacitor manufacturing

Budapest, Hungary 2002 154,000 Motor manufacturing

Cegled, Hungary -- 152,000 Motor manufacturing

Chatsworth, California 2003 44,000 Power supply manufacturing

Gainsborough -- 44,000 Motor manufacturing
Lincolnshire,
England

Gallman, Mississippi 1999 plus 130,000 Wire mill
options to 2073

Goodland, Indiana -- 75,000 Component transformer
manufacturing

Gordonsville, Tennessee 2004 68,000 Motor manufacturing

Huntsville, Alabama -- 125,000 Electronic ballast manufacturing;
power electronics and ballast
research and development center

Juarez, Mexico Various 282,000 Motor manufacturing

LaVergne, Tennessee 1999 188,000 Distribution center

Lexington, Tennessee -- 449,000 Motor and generator
manufacturing

Mainaschaff, Germany Various 209,000 Ballast, ignition coil
and transformer manufacturing

Matamoros, Mexico Various 320,000 Ballast, RV converter
and transformer manufacturing

McMinnville, Tennessee Options to 2021 275,000 Motor manufacturing

Milan, Italy -- 53,000 Ballast manufacturing

Nashville, Tennessee 2005 67,000 Corporate headquarters

New Berlin, Wisconsin 2008 122,400 Drives and systems
manufacturing

Owosso, Michigan -- 198,000 Motor manufacturing
</TABLE>

10
<PAGE>

<TABLE>
<CAPTION>
Approximate
Location Lease Term Size (Sq. Ft.) Principal Use
-------- ---------- -------------- ---------------------------------
<S> <C> <C> <C>
Pomaz, Hungary 2006, 2007 44,000 Power supply and ballast
manufacturing

Reynosa, Mexico 2008 151,000 Ballast and power supply
manufacturing

Ripley, Tennessee -- 84,000 Motor manufacturing

St. Louis, Missouri 2000 plus option 51,000 Administration, marketing and
to 2005 accounting personnel

Valdarno, Italy -- 149,000 Power supply manufacturing

</TABLE>

The Company believes its facilities are in satisfactory condition
and are adequate for its present operations.

ITEM 3. LEGAL PROCEEDINGS.

PRODUCT LIABILITY

The Company is a party to a number of product liability lawsuits,
many of which involve fires allegedly caused by defective ballasts. All of
these cases are being defended by the Company, and management believes that
its insurers will bear all liability, except for applicable deductibles, and
that none of these proceedings individually or in the aggregate will have a
material effect on the Company.

PATENT

In April 1998, Ole K. Nilssen filed a lawsuit in the U.S. District
Court for the Northern District of Illinois alleging the Company is
infringing on seven of his patents pertaining to electronic ballast
technology. The plaintiff seeks an unspecified amount of damages and an
injunction to preclude the Company from making, using or selling those
products allegedly infringing his patents. The Company denies that it has
infringed, or is infringing, any of the plaintiff's patents, and has asserted
several affirmative defenses. The Company also filed a counterclaim seeking
judicial declaration that it is not infringing (and has not infringed) the
patents asserted by the plaintiff, and that such asserted patents are
invalid. The Company intends to defend this matter vigorously. Due to the
early state of the litigation, it is difficult to predict the outcome of the
foregoing legal proceeding. However, management of the Company does not
believe that the financial impact of such litigation will be material.

ASBESTOS

<PAGE>

asbestos lawsuits. The Company has denied that it is obligated under the
agreement to defend and indemnify Cooper in connection with the asbestos
lawsuits, and has filed a counterclaim asserting that Cooper is obligated
under the agreement to defend and indemnify the Company in connection with
the asbestos lawsuits and that certain insurance coverage available to Cooper
should be applied to the asbestos lawsuits. The Company and Cooper have
engaged in settlement discussions. In July 1998, the Court granted partial
summary judgment in favor of the Company, ruling that the Company has no
obligation to indemnify Cooper in connection with the asbestos lawsuits.
Management of the Company does not believe that the financial impact of the
foregoing legal proceeding will be material.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

No matters were submitted to the stockholders of the Company during the
quarter ended June 30, 1998.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The following table sets forth the high and low sales prices of the
Company's Common Stock during each quarter of fiscal 1997 and 1998:

<TABLE>
<CAPTION>
QUARTER ENDING HIGH LOW
--------------------------------------------------------
<S> <C> <C>
September 30, 1997 23 15-7/8
December 31, 1997 24-5/16 17-7/8
March 31, 1998 20-1/2 16-1/16
June 30, 1998 20-11/16 14-5/16

September 30, 1996 11-5/8 8-1/8
December 31, 1996 14-1/8 10-5/8
March 31, 1997 18-1/8 12-1/4
June 30, 1997 18-3/8 14-7/8
</TABLE>

The Company's Common Stock is traded on the New York Stock Exchange
under the ticker symbol "MAG." As of September 11, 1998, there were
approximately 400 record holders of its Common Stock. No cash dividends have
been paid on the Common Stock.

MagneTek has not paid any cash dividends on its Common Stock and
does not anticipate paying cash dividends in the near future. The ability of
the Company to pay dividends on its Common Stock is restricted by provisions
in the Company's 1997 bank loan agreement, which provides that the Company
may not declare or pay any dividend or make any distribution with respect to
its capital stock except for (i) the repurchase of up to $15.0 million of the
Company's Common Stock so long as no event of default exists or would result
from such declaration and payment, and the ratio of the Company and certain
subsidiaries' Funded Debt to Capitalization (as such terms are defined in the
bank loan agreement) is not more than 0.65 to 1.00, or (ii) other
distributions so long as no event of default exists or would result from such
declaration and payment, and (ii) the ratio of the Company and certain
subsidiaries' Funded Debt to Capitalization is not more than 0.55 to 1.00.

<PAGE>

ITEM 6. SELECTED FINANCIAL DATA.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

The information called for by Part II, Items 6, 7 and 8 is hereby
incorporated by reference to the Management's Discussion and Analysis, the
Financial Statements and the Report of Ernst & Young LLP, Independent Auditors,
of the Company's 1998 Annual Report to Stockholders.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth certain information regarding the
current executive officers of the Company.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Andrew G. Galef 65 Chairman of the Board of Directors

Ronald N. Hoge 53 President, Chief Executive Officer and
Director

Antonio Canova 56 Executive Vice President

Brian R. Dundon 52 Executive Vice President

Gerard P. Gorman 46 Executive Vice President

James E. Schuster 45 Executive Vice President

Alexander Levran, Ph.D. 48 Senior Vice President, Technology

David P. Reiland 44 Senior Vice President and Chief Financial
Officer

John P. Colling, Jr. 42 Vice President and Treasurer

Nancy M. Falls 42 Vice President, Investor Relations

Thomas R. Kmak 48 Vice President and Controller

Samuel A. Miley 41 Vice President, General Counsel and
Secretary

Dennis L. Hatfield 50 Assistant Vice President, Facilities and
Environmental Affairs
</TABLE>

<PAGE>

Mr. Galef has been the Chairman of the Board of Directors since
July 1984. He also is the Chairman of the Nominating and Corporate
Governance Committee. Mr. Galef was the Chief Executive Officer of the
Company from September 1993 until June 1996. He has been President of The
Spectrum Group, Inc. ("Spectrum"), a private investment and management firm,
since its incorporation in California in 1978 and its Chairman and Chief
Executive Officer since 1987. Prior to the formation of Spectrum, Mr. Galef
was engaged in providing professional interim management services to
companies with serious operating and financial problems. Mr. Galef is
presently a director of Warnaco, Inc., a diversified apparel manufacturer,
and its parent, The Warnaco Group, Inc., and was formerly Chairman of Aviall,
Inc., a company providing aircraft engine refurbishment and related products
and services, and Exide Corporation, a manufacturer of automotive and
industrial batteries. Mr. Galef also currently serves as a director, and was
formerly the Chairman, of Petco Animal Supplies, Inc. In addition, Mr. Galef
serves as chairman or a director of other privately held Spectrum portfolio
companies.

Mr. Hoge was elected as the President and Chief Executive Officer
of the Company in June 1996. He became a Director of the Company in July
1996. From 1993 until May 1996, Mr. Hoge was President of the Aerospace
Equipment Systems Division of Allied Signal, Inc. From 1986 to 1993, he was
President and Chief Executive Officer of Onan Corporation, the generator
subsidiary of Cummins Engine Company. He also served as President of Cummins
Brasil S.A. for five years. From 1971, when he first joined Cummins, until
1978, he served in progressive staff positions, including Manager of
Corporate Responsibilities, and managed the start-up of Cummins' diesel
engine factory in Daventry, England. Mr. Hoge earned a Bachelor's degree in
Mathematics from Amherst College in 1967. He received his MBA in Marketing
from Stanford University in 1970, completing graduate studies in Public
Administration at the University of California, Berkeley, the same year. Mr.
Hoge has been serving as a director of Merrill Corporation since June 1989.
He was also a director of Graco Corporation from 1990 to 1993.

Mr. Canova has been Executive Vice President, with responsibility
for the Company's Power Supplies business since October 1993. He has served
as managing director of MagneTek S.p.A. in Italy since March 1991. He held
the same position with Plessey S.p.A. from 1988 until March 1991 when Plessey
S.p.A. was acquired by the Company. From 1969 to 1988, Mr. Canova served as
general manager of Plessey S.p.A.

Mr. Dundon has been Executive Vice President, with responsibility
for the Company's Lighting Products business since April 1998. From November
1986, when Century Electric, Inc. was acquired by the Company, until April
1998, Mr. Dundon served as Senior Vice President, Motors and Controls. Prior
to the acquisition Mr. Dundon had been with Gould Inc. and Century Electric
since 1971, serving in various capacities.

Mr. Gorman joined MagneTek in November 1996 as Senior Vice
President of Strategic Planning and since July 1997 has been Executive Vice
President with responsibility for the Company's Drives and Systems business.
From 1994 to 1996, Mr. Gorman was President of General Electric Environmental
Services, Inc., a wholly owned subsidiary of the General Electric Company,
which supplies air pollution control equipment and services to government,
utility and industrial customers worldwide. From 1991 to 1994, Mr. Gorman
was President of Woodward-Clyde International ("WCI"), a unit of
Woodward-Clyde Group, Inc., and prior to his association with WCI, he served
in positions of increasing responsibility with Ebasco Services, Inc. He holds
a BS degree in Industrial & Mechanical Engineering from Pratt Institute, New
York, and an MBA from New York University, and is a graduate of the
International Strategic Planning Program of the Wharton School of Business.

<PAGE>

Mr. Schuster has been Executive Vice President with responsibility
for the Company's Motors and Controls business since April 1998 and prior to
that was Senior Vice President of Operations since July 1996. From October
1995 to July 1996, Mr. Schuster was Vice President of Operations of the
Aerospace Equipment Systems Division at AlliedSignal Inc. where he was
responsible for 11 sites and approximately 6,000 employees. Before joining
AlliedSignal, Mr. Schuster spent 15 years working for the Naval Systems
Division of Westinghouse Electric Corporation in various positions, including
as Manager of Operations from July 1988 to July 1995. He was also appointed
to Westinghouse Electric's Corporate Engineering and Manufacturing Advisory
Council in 1992.

Dr. Levran has been Senior Vice President, Technology since January
1995. He served as Vice President, Technology from July 1993 until January
1995. From 1991 to June 1993, Dr. Levran was employed by EPE Technologies,
Inc., a subsidiary of Groupe Schneider, as Vice President of Engineering and
Technology with worldwide engineering responsibilities. From 1981 to 1991,
he held various engineering management positions with Teledyne Inet, a
subsidiary of Teledyne, Inc., most recently as Vice President of Engineering.
Dr. Levran received his Ph.D. in electrical engineering from the Polytechnic
Institute of New York in 1981.

Mr. Reiland has been Senior Vice President since July 1996 and
Chief Financial Officer of the Company since July 1988. Mr. Reiland was also
an Executive Vice President of the Company from July 1993 until July 1996 and
Senior Vice President from July 1989 until July 1993. He was Controller of
the Company from August 1986 to October 1993, and was Vice President, Finance
from July 1987 to July 1989. Prior to joining the Company, Mr. Reiland was
an Audit Manager with Arthur Andersen & Co. where he served in various
capacities since 1980.

Mr. Colling has been Vice President of the Company since July 1990,
Treasurer of the Company since June 1989 and was assistant treasurer of the
Company from July 1987 to June 1989. Prior to that, Mr. Colling was the
assistant treasurer of Century Electric, where he served in various
capacities since August 1981.

Ms. Falls has been Vice President, Investor Relations since July
1997. Prior to joining the Company, Ms. Falls spent 13 years with Shawmut
Bank where she served in positions of increasing responsibility, most
recently as Senior Vice President, Loan Syndications, a function which she
helped to establish. From 1981 to 1983, she was Assistant Vice President of
Allied Bank International, New York, following two years as International
Credit Manager of First Tennessee Bank.

Mr. Kmak has been Vice President of the Company since October 1993,
Controller since November 1994 and Operations Controller from October 1993 to
November 1994. Mr. Kmak was the vice president, finance of the Company's
Motors and Controls business from November 1986 when Century Electric was
acquired by the Company until July 1992 and served as vice president,
operational finance of the Company's Motors and Controls business from July
1992 until October 1993. Prior to the acquisition Mr. Kmak had been with
Century Electric since 1976, serving in various capacities.

Mr. Miley joined the Company in February 1990 as Vice President,
General Counsel and Secretary. Prior to that time, he was an attorney with
the law firms of Sheppard, Mullin, Richter & Hampton in Los Angeles,
California from March 1986 until January 1990 and Sidley & Austin in Chicago,
Illinois from May 1982 until March 1986.

Mr. Hatfield joined the Company in August 1992 as Assistant Vice
President, Facilities and Environmental Affairs. Prior to that he was a
principal in the industrial

<PAGE>

environmental consulting firms of Patterson Schafer, Inc. from February 1989
until December 1990 and Schafer Environmental Associates, Inc. from March
1991 until July 1992. From July 1985 to February 1989, Mr. Hatfield served
as Director of Environmental Affairs of the Specialty Chemicals Group at
Morton Thiokol, Inc.

ITEM 11. EXECUTIVE COMPENSATION.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

The information called for by Part III, Items 10, 11, 12 and 13, is
hereby incorporated by reference to the Company's definitive Proxy Statement
to be mailed to Stockholders in September 1998, except for information
regarding the Executive Officers of the Company, which is provided in
response to Item 10, above.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.

(a) Index to Consolidated Financial Statements, Consolidated
Financial Statement Schedules and Exhibits:

<TABLE>
<CAPTION>
Form 10-K Annual Report To
Page Stockholders Page
--------- -----------------
<S> <C> <C>
1. Consolidated Financial Statements 25

Consolidated Statements of Income for 31
Years Ended June 30, 1998, 1997, and 1996

Consolidated Balance Sheets at June 30, 32
1998 and 1997

Consolidated Statements of Stockholders' 34
Equity for Years Ended June 30, 1998, 1997
and 1996

Consolidated Statements of Cash Flows for 35
Years Ended June 30, 1998, 1997 and 1996

Notes to Consolidated Financial Statements 36

Report of Ernst & Young LLP, Independent inside back cover
Auditors

2. Consolidated Financial Statement Schedule
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
Form 10-K Annual Report To
Page Stockholders Page
--------- -----------------
<S> <C> <C>
Report of Ernst & Young LLP, Independent S-1
Auditors

Schedule II -- Valuation and Qualifying S-2
Accounts
</TABLE>

All other schedules have been omitted since the required information
is not present or is not present in amounts sufficient to require submission of
the schedule, or because the information required is included in the
Consolidated Financial Statements and related notes.

3. Exhibit Index 14

The following exhibits are filed as part of this Annual Report Form
10-K, or are incorporated herein by reference. Where an exhibit is incorporated
by reference, the number which precedes the description of the exhibit indicates
the documents to which the cross-reference is made.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
3.1 (1) Restated Certificate of Incorporation of the Company, as filed with the
Delaware Secretary of State on November 21, 1989.

3.2 (2) By-laws of the Company, as amended and restated.

4.1 (3) Specimen Common Stock Certificate.

10.1 (4) 1987 Stock Option Plan of MagneTek, Inc. ("1987 Plan").

10.2 (5) Amendments No. 1 and 2 to 1987 Plan.

10.3 (6) Amendments No. 3 and 4 to 1987 Plan.

10.4 (7) Amendment No. 5 to 1987 Plan.

10.5 (8) Second Amended and Restated 1989 Incentive Stock Compensation Plan of
MagneTek, Inc. ("1989 Plan").

10.6 (7) Amendment No. 1 to 1989 Plan.

10.7 (7) Standard Terms and Conditions Relating to Non-Qualified Stock Options,
revised as of July 24, 1996, pertaining to the 1987 Plan and the 1989 Plan.

10.8 (7) Form of Non-Qualified Stock Option Agreement Pursuant to the Second Amended
and Restated 1989 Incentive Stock Compensation Plan of the Company.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
10.9 (7) Form of Restricted Stock Agreement Pursuant to the Second Amended and
Restated 1989 Incentive Stock Compensation Plan of the Company.

10.10 (9) MagneTek, Inc. 1997 Non-Employee Director Stock Option Plan.

10.11 (4) Senior Executive Medical Expense Reimbursement Plan for the Company.

10.12 (6) 1991 Discretionary Director Incentive Compensation Plan of the Company.

10.13 (10) MagneTek, Inc. Deferral Investment Plan.

10.14 (10) MagneTek, Inc. Performance-Based Pension Restoration Plan.

10.15 (11) Form of Rights Agreement dated as of March 4, 1997 by and between the
Company and The Bank of New York, as Rights Agent.

10.16 (12) MagneTek, Inc. Amended and Restated Director Compensation and Deferral
Investment Plan.

10.17 (10) Employment Agreement dated as of June 1, 1996 between the Company and
Ronald N. Hoge.

10.18 (13) Unsecured Promissory Note and Loan Agreement dated July 29, 1996 of Ronald
N. Hoge.

10.19 (13) Form of Unsecured Promissory Note by Ronald N. Hoge, James E. Schuster and
Gerard P. Gorman, in the aggregate amounts of $1,317,243, $245,000 and
$283,938, respectively.

10.20 (14) Secured Promissory Note and Loan Agreement dated October 7, 1997 and Deed
of Trust dated October 7, 1997 of Ronald N. Hoge.

10.21 (15) Non-Qualified Stock Option Agreement between the Company and Ronald N.
Hoge.

10.22 (15) Non-Qualified Stock Option Agreement between the Company and David P.
Reiland.

10.23 (5) Registration Rights Agreement dated as of April 29, 1991 among the Company,
Andrew G. Galef, Frank Perna, Jr. and the other entities named therein.

10.24 (7) Registration Rights Agreement dated as of June 28, 1996 by and between the
Company and U.S. Trust Company of California, N.A.

10.25 (16) Executive Management Agreement dated as of July 1, 1994, by and between the
Company and The Spectrum Group, Inc.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
10.26 (17) Amendment dated as of January 25, 1995 to the Executive Management
Agreement between the Company and The Spectrum Group, Inc.

10.27 (18) Security Agreement dated March 1, 1993 between the Industrial Development
Board of the City of Huntsville ("the Huntsville IDB") and the Company (the
"Huntsville Security Agreement").

10.28 (19) First Supplemental Security Agreement dated as of August 1, 1993 by and
between the Huntsville IDB and The CIT Group/Equipment Financing, Inc.
("CIT").

10.29 (19) Second Supplemental Security Agreement dated as of October 1, 1993 by and
between the Huntsville IDB and CIT.

10.30 (18) Equipment Lease Agreement of even date with the Huntsville Security
Agreement among the parties thereto.

10.31 (19) Amendment to Equipment Lease Agreement dated as of August 1, 1993 between
the Huntsville IDB and the Company.

10.32 (19) Second Amendment to Equipment Lease Agreement dated as of October 1, 1993
between the Huntsville IDB and the Company.

10.33 (20) Lease Agreement dated as of November 1, 1988 between the Huntsville IDB and
Burnett-Nickelson Investments ("Lease Agreement") as to which the Company
succeeded to the lessee's obligations.

10.34 (21) First, Second and Third Amendments to Lease Agreement.

10.35 (22) Fourth Amendment to Lease Agreement.

10.36 (21) Bond Guaranty Agreement between the Company, as Guarantor and First Alabama
Bank dated as of February 1, 1993 relating to the Lease Agreement.

10.37 (21) Indenture dated as of November 1, 1988 relating to First Mortgage
Industrial Revenue Bonds (Burnett-Nickelson Project Series 1988) between
Huntsville IDB and First Alabama Bank, as Trustee, relating to the
Huntsville facility (the "Indenture").

10.38 (21) First, Second and Third Supplemental Indentures to the Indenture.

10.29 (22) Fourth Supplemental Indenture to the Indenture.

10.40 (23) Environmental Agreement among the Company, Universal Manufacturing
Corporation and Farley Northwest Industries, Inc., as amended.
</TABLE>

19
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
10.41 (23) Letter Agreement dated as of January 9, 1986, between the Company and
Farley Northwest Industries, Inc., pursuant to Stock Purchase Agreement.

10.42 (23) Tax Agreement dated as of February 12, 1986, between the Company and Farley
Northwest Industries, Inc.

10.43 (23) Agreement dated as of January 9, 1986, between the Company and
Farley/Northwest Industries, Inc. relating to the Totowa facility.

10.44 (13) Restated Credit Agreement dated as of June 20, 1997 between the Company, as
Borrower, NationsBank of Texas, N.A., as Agent, CIBC Inc., The First
National Bank of Chicago, The Long-Term Credit Bank of Japan, Ltd., Bankers
Trust Company, Credit Lyonnais -- New York Branch, and Union Bank of
California, N.A., as Co-Agents, and Certain Lenders (the "Restated Credit
Agreement").

10.45 (13) Guaranty dated as of December 29, 1996 by MagneTek Financial Services,
Inc., as Guarantor, for the benefit of NationsBank, in its capacity as
Agent for the Lenders now or in the future party to the Credit Agreement
dated as of March 31, 1995 between the Company, certain lenders and
NationsBank (the "1995 Credit Agreement").

10.46 (13) Security Agreement dated as of December 29, 1996 by the Company and
MagneTek Financial Services, Inc. for the benefit of NationsBank, in its
capacity as Agent for the Lenders now or in the future party to the 1995
Credit Agreement.

10.47 (13) Security Agreement dated as of March 31, 1995 by the Company and the other
debtors party thereto for the benefit of NationsBank, in its capacity as
Agent for the Lenders now or in the future party to the 1995 Credit
Agreement (the "1995 Security Agreement").

10.48 (13) Supplement to Security Agreement dated as of March 31, 1995 between the
Company and NationsBank, in its capacity as Agent for the Lenders now or in
the future party to the 1995 Credit Agreement, with reference to the 1995
Security Agreement.

10.49 (14) First Amendment dated as of March 27, 1998 to the Restated Credit
Agreement.

10.50 (24) Lease and Agreement between the City of Blytheville, Arkansas and the
Company, dated as of November 1, 1988.

10.51 (5) First Supplemental Lease and Agreement between City of Blytheville,
Arkansas and the Company dated as of December 1, 1989, for the Blytheville,
Arkansas facility.

10.52 (23) Lease on Bridgeport, Connecticut facility of Universal Manufacturing.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
10.53 (7) Lease Agreement dated March 18, 1996 between Fujian Fufa Company Limited
and MagneTek Fuzhou Generator Company Limited.

10.54 (23) Lease on Gallman, Mississippi facility of Universal Manufacturing.

10.55 (25) Lease of LaVergne, Tennessee facility.

10.56 (22) First Amendment dated August 28, 1991 and Second Amendment dated
February 5, 1993 to Lease on LaVergne, Tennessee facility.

10.57 (26) Lease of Matamoros, Mexico fluorescent ballast manufacturing facility dated
January 1, 1988.

10.58 (27) Lease on McMinnville, Tennessee facility of Century Electric.

10.59 (23) Lease on Mendenhall, Mississippi facility of Universal Manufacturing.

10.60 (2) Lease on Nashville, Tennessee headquarters facility dated as of June 30,
1995.

10.61 (14) Lease on Nashville, Tennessee headquarters facility dated as of March 2,
1998.

10.62 (28) Lease of facility in New Berlin, Wisconsin.

10.63 (5) Third Modification of Lease dated as of December 31, 1990, for the New
Berlin, Wisconsin facility.

10.64 (22) Fourth Modification of Lease dated as of February 12, 1993 for the New
Berlin, Wisconsin facility.

10.65 (27) Lease of St. Louis, Missouri administration, marketing and engineering
personnel facility dated January 1, 1988.

10.66 (29) Stock Purchase Agreement dated as of January 9, 1986, between the Company
and Farley/Northwest Industries, Inc., with list of omitted exhibits and
schedules.

10.67 (29) Stock Purchase Agreement dated as of June 20, 1986, between the Company and
Better Coil and Transformer Corporation, with list of omitted exhibits.

10.68 (30) Purchase Agreement dated as of October 22, 1986, by and among the Company,
Century and certain Securityholders.

10.69 (31) Purchase Agreement dated as of December 15, 1986, between the Company and
all the remaining Securityholders of Century.

10.70 (31) Asset Purchase Agreement dated as of December 30, 1986, between the Company
and Universal Electric.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
10.71 (31) Agreement for the Sale of Stock dated as of December 30, 1986, between the
Company and Cooper.

10.72 (2) Asset Purchase Agreement dated as of May 27, 1994, between the Company and
The Louis Allis Company.

10.73 (2) Asset Purchase Agreement dated as of June 17, 1994, among the Company,
MagneTek Controls, Inc. and Controls Acquisition Corporation.

10.74 (2) Asset Purchase Agreement dated as of October 31, 1994, among the Company,
MagneTek National Electric Coil, Inc. and Rail Products International, Inc.

10.75 (2) Asset Purchase Agreement dated as of November 8, 1994, between the Company
and MAS Acquiring Corp.

10.76 (2) Purchase and Sale Agreement dated November 18, 1994, by and among the
Company, MagneTek Tempe, Inc., MagneTek Deutschland Holding GmbH and PTS,
Inc.

10.77 (2) Asset Purchase Agreement dated as of March 6, 1995, by and between the
Company and GN Acquisition Partners, L.P.

10.78 (2) Asset Purchase Agreement dated as of March 13, 1995, among the Company,
MagneTek National Electric Coil, Inc. and 800 King Avenue Acquisition Corp.

10.79 (2) Asset Purchase Agreement dated as of May 31, 1995, between MagneTek
National Electric Coil, Inc. and The Guardian Resin Corporation.

10.80 (2) Agreement of Sale dated as of June 23, 1995, between General Signal
Corporation and the Company.

10.81 (2) Asset and Stock Purchase Agreement dated as of September 14, 1995, among
the Company, MagneTek National Electric Coil, Inc. and National Electric
Coil Company, L.P.

10.82 (7) Sino-American Equity Joint Venture Contract dated December 17, 1995 between
Fujian Fufa Company Limited and the Company for the Establishment of
MagneTek Fuzhou Generator Company Limited.

10.83 (7) Amended and Restated Asset Purchase Agreement dated as of February 27, 1996
among MagneTek National Electric Coil, Inc., the Company, Eastern Electric
Apparatus Repair Company, Inc. and Grand Eagle Companies Inc.
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- ------ ----------------------
<S> <C> <C>
10.84 (7) Stock Purchase Agreement dated as of June 28, 1996 among MagneTek National
Electric Coil, Inc., the Company, Grand Eagle Companies North America, Inc.
and Grand Eagle Companies, Inc.

10.85 (7) Amendment No. 1 dated as of June 28, 1996 to Amended and Restated Asset
Purchase Agreement among MagneTek National Electric Coil, Inc., the
Company, Eastern Electric Apparatus Repair Company, Inc. and Grand Eagle
Companies Inc. dated as of February 27, 1996.

10.86 (7) Asset Purchase Agreement dated as of August 30, 1996 between the Company
and Jefferson Electric, Inc.

13 (14) 1998 Annual Report to Stockholders (pp. 25-52 and inside back cover).

22 (13) Subsidiaries of the Company.

23 (14) Consent of Ernst & Young LLP, independent auditors.

27 (14) Financial Data Schedule.
</TABLE>
___________________

(1) Previously filed with the Registration Statement on Form S-3 filed on
August 1, 1991, Commission File No. 33-41854, and incorporated herein by
this reference.

(2) Previously filed with Form 10-K for Fiscal Year ended July 2, 1995 and
incorporated herein by this reference.

(3) Previously filed with Amendment No. 1 to Registration Statement filed on
May 10, 1989 and incorporated herein by this reference.

(4) Previously filed with Form 10-K for Fiscal Year ended June 30, 1987 and
incorporated herein by this reference.

(5) Previously filed with Form 10-K for Fiscal Year ended June 30, 1991 and
incorporated herein by this reference.

(6) Previously filed with Form 10-K for Fiscal Year ended June 30, 1992 and
incorporated herein by this reference.

(7) Previously filed with Form 10-K for Fiscal Year ended June 30, 1996 and
incorporated herein by this reference.

(8) Previously filed with Form 10-Q for quarter ended December 31, 1994 and
incorporated herein by this reference.

(9) Previously filed with the Registration Statement on Form S-8 filed on
February 10, 1998, Commission File No. 333-45935, and incorporated
herein by this reference.

(10) Previously filed with Form 10-Q for quarter ended December 31, 1996 and
incorporated herein by this reference.

<PAGE>

(11) Previously filed with Form 8-K dated March 3, 1997 and incorporated
herein by this reference.

(12) Previously filed with the Registration Statement on Form S-8 filed on
February 10, 1998, Commission File No. 333-45939, and incorporated
herein by this reference.

(13) Previously filed with Form 10-K for Fiscal Year ended June 30, 1997 and
incorporated herein by this reference.

(14) Filed herewith.

(15) Previously filed with Form 10-Q for quarter ended March 31, 1997 and
incorporated herein by this reference.

(16) Previously filed with Form 10-Q for quarter ended March 31, 1994 and
incorporated herein by this reference.

(17) Previously filed with Form 10-Q for quarter ended March 31, 1995 and
incorporated herein by this reference.

(18) Previously filed with Form 10-Q for quarter ended March 31, 1993 and
incorporated herein by this reference.

(19) Previously filed with Form 10-Q for quarter ended September 30, 1993 and
incorporated herein by this reference.

(20) Previously filed with Form 8-K dated January 5, 1990 and incorporated
herein by this reference.

(21) Previously filed with Form 10-K for fiscal year ended June 27, 1993 and
incorporated herein by this reference.

(22) Previously filed with Form 10-K for Fiscal Year ended July 3, 1994 and
incorporated herein by this reference.

(23) Previously filed with Amendment No. 1 to Registration Statement filed on
February 14, 1986 and incorporated herein by this reference.

(24) Previously filed with the Registration Statement filed on April 18, 1989
and incorporated herein by this reference.

(25) Previously filed with Form 10-K for Fiscal Year ended July 2, 1989 and
incorporated herein by this reference.

(26) Previously filed with Form 10-K for Fiscal Year ended July 3, 1988 and
incorporated herein by this reference.

(27) Previously filed with Post-Effective Amendment No. 1 to Registration
Statement, filed on August 3, 1987 and incorporated herein by this
reference.

(28) Previously filed with the Registration Statement filed on May 3, 1985
and incorporated herein by this reference.

(29) Previously filed with Form 10-K for Fiscal Year ended June 30, 1986 and
incorporated herein by this reference.

<PAGE>

(30) Previously filed with Form 10-Q for quarter ended September 30, 1986 and
incorporated herein by this reference.

(31) Previously filed with Form 8-K dated December 30, 1986 and incorporated
herein by this reference.

(b) Reports on Form 8-K:

The Company filed no Reports on Form 8-K during the last quarter of
the 1996 fiscal year.

(d) Refer to (a) 2 above.

<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized in the City of
Nashville, State of Tennessee, on the 28th of September, 1998.

MagneTek, Inc.
(Registrant)

/s/ RONALD N. HOGE
----------------------------------------
Ronald N. Hoge
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- -----
<S> <C> <C>
/s/ ANDREW G. GALEF Chairman of the Board of September 28, 1998
- --------------------------------- Directors
Andrew G. Galef

/s/ RONALD N. HOGE President, Chief Executive September 28, 1998
- --------------------------------- Officer and Director
Ronald N. Hoge (Principal Executive Officer)

/s/ THOMAS G. BOREN Director September 28, 1998
- ---------------------------------
Thomas G. Boren

/s/ DEWAIN K. CROSS Director September 28, 1998
- ---------------------------------
Dewain K. Cross

/s/ PAUL J. KOFMEHL Director September 28, 1998
- ---------------------------------
Paul J. Kofmehl

/s/ FREDERICK D. LAWRENCE Director September 28, 1998
- ---------------------------------
Frederick D. Lawrence

/s/ MARGUERITE W. SALLEE Director September 28, 1998
- ---------------------------------
Marguerite W. Sallee

/s/ ROBERT E. WYCOFF Director September 28, 1998
- ---------------------------------
Robert E. Wycoff

/s/ DAVID P. REILAND Senior Vice President and September 28, 1998
- --------------------------------- Chief Financial Officer
David P. Reiland (Principal Financial Officer)

/s/ THOMAS R. KMAK Vice President and Controller September 28, 1998
- --------------------------------- (Principal Accounting Officer)
Thomas R. Kmak
</TABLE>

26
<PAGE>

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We have audited the consolidated financial statements of MagneTek, Inc. as of
June 30, 1998 and 1997, and for each of the three years in the period ended
June 30, 1998, and have issued our report thereon dated August 18, 1998
(incorporated by reference elsewhere in this Annual Report on Form 10-K).
Our audits also included the financial statement schedule listed in Item
14(a) of this Annual Report on Form 10-K. This schedule is the
responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits.

In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly in all material respects the information set forth therein.

ERNST & YOUNG LLP

St. Louis, Missouri
August 18, 1998

S-1

<PAGE>

SCHEDULE II

MAGNETEK, INC.
VALUATION AND QUALIFYING ACCOUNTS
YEARS ENDED JUNE 30, 1996, 1997 AND 1998
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
BALANCE AT ADDITIONS DEDUCTIONS BALANCE
BEGINNING CHARGED TO FROM AT END
JUNE 30, 1996 OF YEAR EARNINGS ALLOWANCE OTHER(a) OF YEAR
- ------------- ---------- ---------- ---------- -------- --------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful
receivables $4,421 $5,422 ($4,450) $35 $5,428

JUNE 30, 1997
- -------------
Allowance for
doubtful
receivables $5,428 $1,102 ($1,203) $(159) $5,168

JUNE 30, 1998
- -------------
Allowance for
doubtful
receivables $5,168 $1,738 ($2,102) $19 $4,823
</TABLE>

(a) Represents primarily opening allowances for doubtful accounts balances of
acquired companies and Foreign Translation Adjustments.

S-2

<PAGE>

Exhibit 10.20

SECURED PROMISSORY NOTE
AND
LOAN AGREEMENT

OCTOBER 7, 1997
NASHVILLE, TENNESSEE

FOR VALUE RECEIVED, subject to the terms and conditions set forth below,
RONALD N. HOGE, an individual, (the "Executive"), whose address is 420
Elmington Avenue, Nashville, Tennessee 37215, hereby promises to pay to the
order of MAGNETEK, INC. (the "Holder"), whose address is 26 Century
Boulevard, Nashville, Tennessee 37214, the principal sum of $1,000,000
without interest. Payment of principal hereunder shall be made in lawful
money of the United States of America at the address of the Holder set forth
above, or at such other place as the Holder may from time to time designate
in writing to the Executive.

1. PURPOSE. The Executive, and by its acceptance of this Note, the
Holder, acknowledge and agree that the purpose of all advances to the
Executive evidenced by this Note is to enable the Executive to purchase or
construct a new principal residence in Nashville, Tennessee. The
indebtedness evidenced hereby shall be a no-interest mortgage loan, as
described in Treas. Reg. Section 1.7872-5T(c)(1)(i).

2. MATURITY DATE. The Executive shall repay the outstanding principal
balance of this Note on December 31, 2000.

3. PREPAYMENT. The Executive may prepay all or part of the
outstanding principal balance of this Note, without premium or penalty, at
any time.

4. INTEREST. In the event the employment of Executive by Holder shall
cease or be terminated for any reason, interest shall be due on the remaining
principal amount hereof from and after the date of such cessation or
termination at a rate equal to the "applicable federal rate", as determined
and applied in accordance with Section 7872(f)(2) of the Internal Revenue
Code of 1986, as amended.

5. SUBORDINATION. The indebtedness evidenced by this Note shall at
all times be subordinate to the indebtedness evidenced by that certain note
executed by the Executive in favor of First American National Bank dated
October 11, 1996 in the principal amount of $1,000,000.

6. PRIOR NOTE. The Executive, and by its acceptance of this Note, the
Holder, acknowledge that this Note shall supersede that certain "Unsecured
Promissory Note and Loan Agreement" executed by the Executive in favor of the
Holder dated July 29, 1996.

7. EVENTS OF DEFAULT; ACCELERATION. The term "Event of Default" shall
mean (i) a default in payment of principal when due, (ii) the Executive's
filing of a petition for bankruptcy relief under title 11 of the United
States Code and (iii) the cessation of the provision of substantial services
(including the cessation of employment) by Executive for the Holder. Upon
and after the occurrence of any Event of Default (whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation
of law or otherwise) and at any time so long as such Event of Default shall
be continuing, the Holder may, by notice to the Executive, declare this Note
to be immediately due and payable, whereupon this Note shall become and be
immediately due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by the
Executive.

<PAGE>

8. REPRESENTATIONS OF EXECUTIVE. The Executive represents and
warrants to the Holder that (i) he reasonably expects to be entitled to and
will itemize the deductions for each year this Note shall be outstanding and
(ii) the aggregate principal amount of this Note is not greater than the
amount of equity of the Executive and the Executive's spouse in the
Executive's former principal residence identified above.

9. CERTAIN COVENANTS OF EXECUTIVE. The Executive hereby covenants and
agrees that (i) the benefits of this Note, including the interest
arrangements hereunder, shall be transferable by the Executive, (ii) the
proceeds of this Note shall only be utilized to purchase or construct a new
principal residence in Nashville, Tennessee, and (iii) he will not convert
his former principal residence identified above to business or investment use.

10. CANCELLATION. Upon payment in full of all principal payable
hereunder, this Note shall be surrendered to the Executive for cancellation.

11. AMENDMENT AND WAIVER. Any provision of this Note may be amended or
waived by a written instrument signed by the Executive and by the Holder,
such amendment or waiver to be effective but only in the specific instance
and for the specific purpose for which the amendment or waiver is made or
given. No delay on the part of the Holder in exercising any right thereunder
shall operate as a waiver of such right.

12. ATTORNEYS' FEES. The Executive shall reimburse Holder for any
reasonable attorneys' fees and expenses incurred by the Holder in connection
with the enforcement of its rights under this Note.

13. NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed given upon personal delivery or five days
after deposit in the United States mail, by registered or certified mail,
postage prepaid, addressed (i) if to the Executive at the address set forth
above and (ii) if to the Holder at such Holder's address set forth above, or
at such other address as the Executive or the Holder may designate by notice
as provided herein.

9. SEVERABILITY. If any provision of this Note shall be
unenforceable, the remaining provisions of this Note shall not in any way be
affected or impaired thereby and shall continue in full force and effect.

10. GOVERNING LAW. This Note and the obligations of the Executive
hereunder shall be governed by and construed in accordance with the laws of
the State of Tennessee.

--------------------------------------
RONALD N. HOGE

2
<PAGE>

DEED OF TRUST

THIS DEED OF TRUST ("Security Instrument") is made on October 7, 1997.
The grantor is RONALD N. HOGE and wife, DIANNE HOGE ("Borrower"). The
trustee is H. WYNNE JAMES, III, a resident of Davidson County, Tennessee
("Trustee"). The beneficiary is MAGNETEK, INC., which is organized and
existing under the laws of Delaware, and whose address is 26 Century
Boulevard, Nashville, Tennessee 37214 ("Lender"). Borrower owes Lender the
principal sum of One Million Dollars ($l,000,000.00).

This debt is evidenced by Borrower's note dated the same date as this
Security Instrument ("Note"), which provides for monthly payments, with the
full debt, if not paid earlier, due and payable on December 31, 2000. This
Security Agreement secures to Lender: (a) the repayment of the debt
evidenced by the Note, with interest, and all renewals, extensions and
modifications of the Note; (b) the payment of all other sums, with interest,
advanced under paragraph 4 to protect the security of this Security
Instrument; and (c) the performance of Borrower's covenants and agreements
under this Security Instrument and the Note. For this purpose, Borrower
irrevocably grants and conveys to Trustee, in trust, with power of sale, the
following described property located in Davidson County, Tennessee:

Land in Davidson County, Tennessee, being Lot Nos. 12 and 13 on the
Plan of a Subdivision of Lot Nos. 19, 20 and 21 of Belle Meade Plan
No. 2, as of record in Book 421, page 172, Registers Office for
Davidson County, Tennessee.

Said Lot Nos. 12 and 13 front together 200 feet on the westerly side
of Belle Meade Boulevard and run back 294 feet 6 inches on the
northerly line, and 296 feet 3 inches on the southerly line, with the
northerly margin of a 5 foot walkway, to a dead line, measuring 200
feet thereon.

Being the same property conveyed to Ronald N. Hoge and wife, Dianne
Hoge by deed from Howard B. Hayes, unmarried, of record in Book 10146,
page 566, Register's Office for Davidson County, Tennessee.

which has the address of 605 Belle Meade Boulevard, Nashville, Tennessee 37205;

TOGETHER WITH all the improvements now or hereafter erected on the
property, and all easements, appurtenances, and fixtures now or hereafter a
part of the property. All replacements and additions shall also be covered
by this Security Instrument. All of the foregoing is referred to in this
Security Instrument as the "Property."

BORROWER COVENANTS that Borrower is lawfully seised of the estate hereby
conveyed and has the right to grant and convey the Property and that the
Property is unencumbered, except for encumbrances of record as of the date
hereof Borrower warrants and will defend generally the title to the Property
against all claims and demands, subject to any encumbrances of record as of
the date hereof.

1. PAYMENT OF PRINCIPAL AND INTEREST; PREPAYMENT AND LATE CHARGES.
Borrower shall promptly pay when due the principal of and interest on the
debt evidenced by the Note and any prepayment and late charges due under the
Note.

2. APPLICATION OF PAYMENTS. Unless applicable law provides otherwise,
all payments received by Lender under paragraph 1 shall be applied: first,
to any prepayment charges due under the Note; second, to amounts payable
under paragraph 2; third, to interest due; fourth, to principal due; and
last, to any late charges due under the Note.

3. CHARGES; LIENS. Borrower shall pay all taxes, assessments,
charges, fines and impositions attributable to the Property which may attain
priority over this Security Instrument, and leasehold payments or ground
rents, if any.

3
<PAGE>

Borrower shall pay those obligations on time directly to the person owed
payment. If Borrower makes these payments directly, Borrower shall promptly
furnish to Lender receipts evidencing the payments.

Borrower shall promptly discharge any lien which has priority over this
Security Instrument (except the lien of that certain deed of trust in favor
of First American National Bank of record at Book 10223, page 567, Register's
Office for Davidson County, Tennessee, which shall be paid in accordance with
the terms of its underlying note) unless Borrower: (a) agrees in writing to
the payment of the obligation secured by the lien in a manner acceptable to
Lender; (b) contests in good faith the lien by, or defends against
enforcement of the lien in, legal proceedings which in the Lender's opinion
operate to prevent the enforcement of the lien; of(c) secures from the holder
of the lien an agreement satisfactory to Lender subordinating the lien to
this Security Instrument. If Lender determines that any part of the Property
is subject to a lien which may attain priority over this Security Instrument,
Lender may give Borrower a notice identifying the lien. Borrower shall
satisfy the lien or take one or more of the actions set forth above within 10
days of the giving of notice.

4. PROTECTION OF LENDER'S RIGHTS IN THE PROPERTY. If Borrower fails
to perform the covenants and agreements contained in this Security
Instrument, or there is a legal proceeding that may significantly affect
Lender's rights in the Property (such as a proceeding in bankruptcy, probate,
for condemnation of forfeiture or to enforce laws or regulations), then
Lender may do and pay for whatever is necessary to protect the value of the
Property and Lender's rights in the Property. Lender's actions may include
paying any sums secured by a lien which has priority over this Security
Instrument, appearing in court, paying reasonable attorneys' fees and
entering on the Property to make repairs. Although Lender may take action
under this paragraph 4, Lender does not have to do so.

Any amounts disbursed by Lender under this paragraph 4 shall become
additional debt of Borrower secured by this Security Instrument. Unless
Borrower and Lender agree to other terms of payment, these amounts shall bear
interest from the date of disbursement at the Note rate and shall be payable,
with interest, upon notice from Lender to Borrower requesting payment.

5. BORROWER NOT RELEASED; FORBEARANCE BY LENDER NOT A WAIVER.
Extension of the time for payment or modification of amortization of the sums
secured by this Security Instrument granted by Lender to any successor in
interest of Borrower shall not operate to release the liability of the
original Borrower or Borrower's successors in interest. Lender shall not be
required to commence proceedings against any successor in interest or refuse
to extend time for payment or otherwise modify amortization of the sums
secured by this Security Instrument by reason of any demand made by the
original Borrower or Borrower's successors in interest. Any forbearance by
Lender in exercising any right or remedy shall not be a waiver of or preclude
the exercise of any right or remedy.

6. SUCCESSORS AND ASSIGNS BOUND; JOINT AND SEVERAL LIABILITY;
CO-SIGNERS. The covenants and agreements of this Security Instrument shall
bind and benefit the successors and assigns of Lender and Borrower.
Borrower's covenants and agreements shall be joint and several. Any Borrower
who co-signs this Security Instrument but does not execute the Note: (a) is
co-signing this Security Instrument only to mortgage, grant and convey that
Borrower's interest in the Property under the terms of this Security
Instrument; (b) is not personally obligated to pay the sums secured by this
Security Instrument; and (c) agrees that Lender and any other Borrower may
agree to extend, modify, forbear or make any accommodations with regard to
the terms of this Security Instrument or the Note without that Borrower's
consent.

7. NOTICES. Any notice to Borrower provided for in this Security
Instrument shall be given by delivering it or by mailing it by first class
mail unless applicable law requires use of another method. The notice shall
be directed to the Property Address or any other address Borrower designates
by notice to Lender. Any notice to Lender shall be given by first class mail
to Lender's address stated herein or any other address Lender designates by
notice to Borrower. Any notice provided for in this Security Instrument
shall be deemed to have been given to Borrower or Lender when given as
provided in this paragraph.

4
<PAGE>

8. ACCELERATION; REMEDIES. Lender shall give notice to Borrower prior
to acceleration following Borrower's breach of any covenant or agreement in
this Security Instrument. The notice shall specify: (a) the default; (b)
the action required to cure the default; (c) a date, not less than 30 days
from the date the notice is given to Borrower, by which the default must be
cured; and (d) that failure to cure the default on or before the date
specified in the notice may result in acceleration of the sums secured by
this Security Instrument and sale of the Property. The notice shall further
inform Borrower of the right to reinstate after acceleration and the right to
bring a court action to assert the nonexistence of a default or any other
defense of Borrower to acceleration and sale. If the default is not cured on
or before the date specified in the notice, Lender, at its option, may
require immediate payment in full of all sums secured by this Security
Instrument without further demand and may invoke the power of sale and any
other remedies permitted by applicable law. Lender shall be entitled to
collect all expenses incurred in pursuing the remedies provided in this
paragraph 8, including, but not limited to, reasonable attorney's fees and
costs of title evidence.

If Lender invokes the power of sale, Trustee shall give notice of sale
by public advertisement in the county in which the Property is located for
the time and in the manner provided by applicable law, and Lender or Trustee
shall mail a copy of the notice of sale to Borrower in the manner provided in
paragraph 7. Trustee, without demand on Borrower, shall sell the Property at
public auction to the highest bidder at the time and under the terms
designated in the notice of sale. Lender or its designee may purchase the
Property at any sale.

Trustee shall deliver to the purchaser Trustee's deed conveying the
Property without any covenant or warranty, expressed or implied. The
recitals in the trustee's deed shall be prima facie evidence of the truth of
the statements made therein. Trustee shall apply the proceeds of the sale of
the following order: (a) to all expenses of the sale, including, but not
limited to, reasonable Trustee's and attorneys' fees; (b) to all sums secured
by this Security Instrument; and (c) any excess to the person or persons
legally entitled to it. If the Property is sold pursuant to this paragraph
8, Borrower, or any person holding possession of the Property through
Borrower, shall immediately surrender possession of the Property to the
purchaser at the sale. If possession is not surrendered, Borrower or such
person shall be a tenant at will of the purchase and hereby agrees to pay the
purchaser the reasonable rental value of the Property after sale.

9. RELEASE. Upon payment of all sums secured by this Security
Instrument, Lender shall release this Security Instrument without charge to
Borrower.

10. SUBSTITUTE TRUSTEE. Lender, at its option, may from time to time
remove Trustee and appoint a successor trustee to any Trustee appointed
hereunder by an instrument recorded in the county in which this Security
Instrument is recorded. Without conveyance of the Property, the successor
Trustee shall succeed to all the title, power and duties covered upon Trustee
herein and by applicable law.

11. WAIVERS. Borrower waives all right of homestead, equity of
redemption, statutory right of redemption and relinquishes all other rights
and exemptions of every kind, including, but not limited to, a statutory
right to an elective share in the Property.

BY SIGNING BELOW, Borrower accepts and agrees to the terms and covenants
contained in this Security Instrument.

------------------------------------------
RONALD N. HOGE -Borrower

------------------------------------------
DIANNE HOGE -Borrower

<PAGE>

Exhibit 10.49

FIRST AMENDMENT TO RESTATED CREDIT AGREEMENT

THIS AMENDMENT is entered into as of March 27, 1998, between MAGNETEK,
INC., a Delaware corporation ("BORROWER"), certain Lenders, NATIONSBANK OF
TEXAS, N.A. ("AGENT"), as Agent for Lenders, and CIBC INC., THE FIRST
NATIONAL BANK OF CHICAGO, THE LONG-TERM CREDIT BANK OF JAPAN, BANKERS TRUST
COMPANY, CREDIT LYONNAIS - NEW YORK BRANCH, and UNION BANK OF CALIFORNIA,
N.A., as Co-Agents for Lenders.

Borrower, Agent, Co-Agents, and certain Lenders are party to the
Restated Credit Agreement (as renewed, extended, and amended, the "CREDIT
AGREEMENT") dated as of June 20, 1997, providing for a $350,000,000 revolving
credit facility. Borrower, Agent, and Lenders have agreed, upon the
following terms and conditions, to amend the Credit Agreement as provided in
PARAGRAPH 2 of this amendment.

Accordingly, for adequate and sufficient consideration, Borrower, Agent,
and Determining Lenders agree as follows:

1. TERMS AND REFERENCES. Unless otherwise stated in this amendment
(a) terms defined in the Credit Agreement have the same meanings when used in
this amendment and (b) references to "SECTIONS" are to the Credit Agreement's
sections.

2. AMENDMENT TO CREDIT AGREEMENT. The Credit Agreement is amended by
entirely amending SECTION 9.10, as follows:

9.10 DISTRIBUTIONS. No Restricted Company may declare, make, or
pay any Distribution EXCEPT (i) Distributions paid in the form of
additional equity that is not mandatorily redeemable, (ii) Distributions to
any other Restricted Company, (iii) Borrower's repurchase of its common
stock SO LONG AS (A) the aggregate amount of all Distributions paid under
this CLAUSE (III) never EXCEEDS $15,000,000, and (B) immediately after
giving effect to any such repurchase, no Default or Potential Default
exists and the ratio of the Companies' Funded Debt to Capitalization is not
MORE THAN 0.65 to 1.00, and (iv) other Distributions by Borrower SO LONG AS
immediately after giving effect to any such other Distribution, no Default
or Potential Default exists and the ratio of the Companies' Funded Debt to
Capitalization is not MORE THAN 0.55 to 1.00.

3. CONDITIONS PRECEDENT. PARAGRAPH 2 above is not effective until
Agent receives counterparts of this amendment executed by Borrower, each
Restricted Company, and Determining Lenders.

4. RATIFICATIONS. Borrower (a) ratifies and confirms all provisions
of the Loan Documents as amended by this amendment, (b) ratifies and confirms
that all guaranties, assurances, and Liens granted, conveyed, or assigned to
Agent under the Loan Documents are not released, reduced, or otherwise
adversely affected by this amendment and continue to guarantee, assure, and
secure full payment and performance of the present and future Obligation, and
(c) agrees to perform such acts and duly authorize, execute, acknowledge,
deliver, file, and record such additional documents and certificates as Agent
may request in order to create, perfect, preserve, and protect those
guaranties, assurances, and Liens.

5. REPRESENTATIONS. Borrower represents and warrants to Agent and
Lenders that as of the date of this amendment (a) all representations and
warranties in the Loan Documents are true and correct in all material
respects EXCEPT to the extent that (i) any of them speak to a different
specific date or (ii) the facts on which any of them were based have been
changed by transactions contemplated or permitted by the Credit Agreement,
and (b) no Material Adverse Event, Default or Potential Default exists.

<PAGE>

6. MISCELLANEOUS. All references in the Loan Documents to the "CREDIT
AGREEMENT" refer to the Credit Agreement as amended by this amendment. This
amendment is a "LOAN DOCUMENT" referred to in the Credit Agreement, and the
provisions relating to Loan Documents in SECTIONS 1 and 14 of the Credit
Agreement are incorporated in this amendment by reference. Except as
specifically amended and modified in this amendment, the Credit Agreement is
unchanged and continues in full force and effect. This amendment may be
executed in any number of counterparts with the same effect as if all
signatories had signed the same document. All counterparts must be construed
together to constitute one and the same instrument. This amendment binds and
inures to each of the undersigned and their respective successors and
permitted assigns, subject to the terms of the Credit Agreement. THIS
AMENDMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOLLOW.

2
<PAGE>

EXECUTED as of the date first stated above.

MAGNETEK, INC., NATIONSBANK OF TEXAS, N.A.,
as BORROWER as AGENT and a LENDER

By By
----------------------------------- ------------------------------------
John P. Colling, Jr., Charles F. Lilygren,
Vice President and Treasurer Senior Vice President

REMAINDER OF PAGE INTENTIONALLY BLANK.
SIGNATURE PAGES FOR OTHER LENDERS FOLLOW.

FIRST AMENDMENT SIGNATURE PAGE
ONE OF FOUR PAGES

<PAGE>

EXECUTED as of the date first stated above.

CIBC INC., CREDIT LYONNAIS - NEW YORK
as a CO-AGENT and a LENDER BRANCH, as a CO-AGENT and a LENDER

By: By:
------------------------------- -------------------------------
Name: Name:
------------------------ ---------------------------
Title: Title:
----------------------- --------------------------

THE FIRST NATIONAL BANK OF CHICAGO, UNION BANK OF CALIFORNIA, N.A.,
as a CO-AGENT and a LENDER as a CO-AGENT and a LENDER

THE LONG-TERM CREDIT BANK OF ARAB BANKING CORPORATION (B.S.C.),
JAPAN, LTD, as a CO-AGENT and a as a LENDER
LENDER

BANKERS TRUST COMPANY,
as a CO-AGENT and a LENDER

By:
-------------------------------
Name:
------------------------
Title:
-----------------------

FIRST AMENDMENT SIGNATURE PAGE
TWO OF FOUR PAGES

<PAGE>

NATEXIS BANQUE, formerly known as FUJI BANK, LIMITED, ATLANTA AGENCY,
Banque Francaise du Commerce as a LENDE
Extrieur, as a LENDE

By:
------------------------------- SOCIETE GENERALE, SOUTHWEST AGENCY,
Name: as a LENDER
------------------------
Title:
----------------------- By:
-------------------------------
Name:
CREDIT AGRICOLE INDOSUEZ, formerly ------------------------
known as Caisse Nationale de Credit Title:
Agricole, -----------------------
as a LENDER

By:
------------------------------- THE SUMITOMO BANK, LIMITED,
Name: as a LENDER
------------------------
Title:
----------------------- By:
-------------------------------
Name:
By: ------------------------
------------------------------- Title:
Name: -----------------------
------------------------
Title:
-----------------------

THE TOKAI BANK, LTD.,
as a LENDER

By:
CREDITANSTALT CORPORATE FINANCE, INC., -------------------------------
as a LENDER Name:
------------------------
By: Title:
------------------------------ -----------------------
Name:
------------------------
Title:
-----------------------

By:
-------------------------------
Name:
------------------------
Title:
-----------------------

FIRST UNION NATIONAL BANK OF
TENNESSEE, AS A LENDER

By:
-------------------------------
Name:
------------------------
Title:
-----------------------

FIRST AMENDMENT SIGNATURE PAGE
THREE OF FOUR PAGES

<PAGE>

To induce Agent and Lenders to enter into this amendment, the
undersigned consents and agrees (a) to its execution and delivery, (b) that
this amendment in no way releases, diminishes, impairs, reduces, or otherwise
adversely affects any Liens, guaranties, assurances, or other obligations or
undertakings of any of the undersigned under any Loan Documents, and (c)
waives notice of acceptance of this consent and agreement, which consent and
agreement binds the undersigned and its successors and permitted assigns and
inures to Agent and Lenders and their respective successors and permitted
assigns.

MAGNETEK FINANCIAL SERVICES, INC.,
as Guarantor

By:
-------------------------------------------
John Colling, Jr., Vice President and
Treasurer

FIRST AMENDMENT SIGNATURE PAGE
FOUR OF FOUR PAGES

<PAGE>

OFFICE LEASE AGREEMENT

Between

COLLEGE STREET, LLC

as Landlord

and

MAGNETEK, INC.

as Tenant

MAGNETEK BUILDING

NASHVILLE, TENNESSEE

<PAGE>

OFFICE BUILDING LEASE AGREEMENT

1. LEASE DATE.
March 2, 1998

2. LANDLORD.
College Street, LLC

3. NOTICE ADDRESS OF LANDLORD.

4. Post Office Box 22149 [zip code 37202] (if delivered by mail) 300 Broadway
[zip code 37201] (if personally delivered or delivered by overnight
delivery service or telegram) Nashville, Tennessee

Attention: Bert Mathews Telephone: (615) 244-2130
Facsimile: (615) 244-2957

5. TENANT.
MagneTek, Inc.

6. NOTICE ADDRESS OF TENANT.
26 Century Blvd.
Nashville, Tennessee 37214

Attention: Mr. Dennis Hatfield Telephone: (615) 316-5226
Facsimile: (615) 316-5178

7. TENANT'S CONTACT PERSON.
Mr. Dennis Hatfield

8. BUILDING.
Eleven (11) story office building known as The MagneTek Building located
on the Land at 211 Commerce Street, Nashville, Davidson County, Tennessee
37201 to be constructed by Landlord.

9. PREMISES USABLE AREA.
Suite 1100 in the Building, as more particularly described on EXHIBIT B
attached hereto and Incorporated herein by reference.

<PAGE>

10. PREMISES RENTABLE AREA.
87,643 square feet located on the following floor(s) in the Building and a
pro rata portion of the Common Area of such Floors and the Building:

Floors 8-11 (87,643 square feet)

11. PREMISES USABLE AREA.
78,633 square feet located on the following floor(s) in the Building:

Floors 8-11 (78,633 square feet)

12. BUILDING NET RENTABLE AREA.
225,276 square feet

13. LEASE TERM.
Fifteen (15) years, beginning on the Commencement Date. Provided,
however, if the Commencement Date is any day other than the first day of
a calendar month, the Lease Term, shall be extended automatically until
midnight on the last day of the calendar month in which the Lease Term
otherwise would expire. The term "Lease Year" shall mean a period
commencing with the Commencement Date and ending twelve (12) months
thereafter.

14. RENEWAL TERM(S).
Two (2) consecutive options. Tenant must give Landlord Three Hundred
Sixty (360) days notice of its exercise of its option to renew.
Tenant cannot exercise either option if an uncured default by Tenant
exists, or if the Lease is not in full force and effect at the time.
OPTION ONE - five (5) year term, rent adjusted as set forth in
Paragraph 30 of the Lease. Refurbishment allowance is provided for
in Paragraph 30 of the Lease.
OPTION TWO - five (5) year term, rent adjusted as set forth in Paragraph 30
of the Lease.

15. OCCUPANCY DATE.
Not later than September 1, 2000, but as soon after August 1, 2000 as
possible.

16. COMMENCEMENT DATE.
September 1, 2000

17. Basic Rent. *.

<TABLE>
<CAPTION>
ANNUAL RATE MONTHLY RATE RATE/RSF
----------- ------------ --------
<S> <C> <C>
$1,533,752.50 $127,812.71 $17.50
</TABLE>

<PAGE>

/ / *Base Rent shall be subject to adjustment in accordance with
Exhibit D.

18. ADJUSTMENT DATE.
March 1, 2002, and each March 1 thereafter during the Lease Term.

19. OPERATING COST EXPENSE STOP.
Base Year of 2001.

20. ADVANCE BASE RENTAL PAYMENT.
None - Dollars ($_____________)

21. SECURITY DEPOSIT.
None - Dollars ($_____________)

22. TENANT'S PROPORTIONATE SHARE.
Premises Rentable Area DIVIDED BY Building Rentable Area = 38.9%

23. TENANT IMPROVEMENTS ALLOWANCE.
One Million Seven Hundred Thirty Thousand Five Hundred Eighty-Six and
NO/100ths Dollars ($1,730,586.00) ($22.00 per usable square foot) plus an
additional Two Hundred Twenty Thousand and NO/100ths Dollars
($220,000.00).

24. PRELIMINARY TENANT PLANS AND SPECIFICATIONS.
Preliminary plans to be provided to Landlord by June 1, 1999.

<PAGE>

The foregoing summary (the "Lease Summary") is hereby incorporated
into and made a part of the Lease Agreement. In the event, however,
of a conflict between the terms of the Lease Summary and the terms of
the Lease Agreement, the latter shall control.

Initial: _______ (For Landlord)

Initial: _______ (For Tenant)

<PAGE>

TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<C> <S> <C>
1. Demise of Premises. . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
3. Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
4. Use of Premises; Compliance with Legal Requirements . . . . . . . . . . . 4
5. Taxes Payable by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . 7
6. Insurance Coverage; Waiver of Subrogation . . . . . . . . . . . . . . . . 7
7. Services Furnished by Landlord. . . . . . . . . . . . . . . . . . . . . . 7
8. Alterations and Improvements. . . . . . . . . . . . . . . . . . . . . . . 10
9. Trade Fixtures and Other Personal Property. . . . . . . . . . . . . . . . 10
10. Signs and Advertising . . . . . . . . . . . . . . . . . . . . . . . . . . 11
11. Landlord's Right of Entry . . . . . . . . . . . . . . . . . . . . . . . . 12
12. Casualty Damage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13. Condemnation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
14. Transfers by Tenant . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
15. Transfers by Landlord . . . . . . . . . . . . . . . . . . . . . . . . . . 14
16. Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
17. Estoppel Certificates; Financial Statements . . . . . . . . . . . . . . . 14
18. Events of Default by Tenant . . . . . . . . . . . . . . . . . . . . . . . 14
19. Landlord's Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
20. Landlord's Default. . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
21. Tenant's Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
22. Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
23. Protection Against Liens. . . . . . . . . . . . . . . . . . . . . . . . . 18
24. Holding Over. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
25. Attorneys' Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
26. Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
27. Leasing Commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
28. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
29. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
30. Extension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
31. Additional Space. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
32. Special Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
33. Energy Star Building. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
34. Access Between Floors . . . . . . . . . . . . . . . . . . . . . . . . . . 23
35. Purchase Option . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
36. Right of First Refusal to Purchase. . . . . . . . . . . . . . . . . . . . 25
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBITS PAGE
----
<C> <S> <C>
A Legal Description of Building Site. . . . . . . . . . . . . . . . . . . . .
B Floor Plan of Premises. . . . . . . . . . . . . . . . . . . . . . . . . . .
C Work Letter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
D Minimum Rent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
E Additional Rent Calculation . . . . . . . . . . . . . . . . . . . . . . . .
F Office Building Rules . . . . . . . . . . . . . . . . . . . . . . . . . . .
G Special Provisions. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Holidays
Parking
"Premises", Commencement Date
Lease Cancellation
H Cleaning Specifications . . . . . . . . . . . . . . . . . . . . . . . . . .
I Calculation of the Current Market Rental Rate . . . . . . . . . . . . . . .
J (Intentionally Deleted) . . . . . . . . . . . . . . . . . . . . . . . . . .
K Plans and Specifications. . . . . . . . . . . . . . . . . . . . . . . . . .
L Floor Area Measurement Method . . . . . . . . . . . . . . . . . . . . . . .
M Signage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
</TABLE>

<PAGE>

OFFICE LEASE AGREEMENT

THIS LEASE AGREEMENT (the "Lease"), made and entered into as of
_____________, 19__, by and between COLLEGE ST. LLC, a Tennessee limited
liability company) ("Landlord"), and MAGNETEK, INC., a Delaware corporation
("Tenant).

WITNESSETH:

1. DEMISE OF PREMISES. Landlord hereby, demises the Premises (as
hereafter described) to Tenant and covenants that Tenant shall peaceably and
quietly hold and enjoy the Premises throughout the term of this Lease on and
subject to all the provisions and conditions of this Lease; and Tenant hereby
accepts such demise of the Premises from Landlord.

(a) The "Premises" consist of the space containing approximately
87,643 rentable square feet on floors 8-11 located in the building containing
approximately 225,276 rentable square feet known as THE MAGNETEK BUILDING
(the "Building") on a tract of land (the "Land") located at 3RD AVENUE NORTH
& COMMERCE STREET in Nashville, Davidson County, Tennessee more particularly
described on EXHIBIT A attached hereto (the Land and the Building are
collectively referred to as, the "Property"). The Premises are shown
outlined in red on the floor plan attached hereto as EXHIBIT B.

(b) Landlord certified that the i) rentable area of the Building
used to determine Tenant's Proportionate Share of Operating Expenses and
Taxes is 225,276 rentable square feet, ii) the Tenant's proportionally share
of the Building is 38.9%, and iii) that the loss factor (difference between
rentable and usable square feet) shall not exceed 11.5% for full floors and
15.5% for partial floors. Landlord agrees that these figures and any future
measurements should be based on the BOMA standard of measurement (Exhibit L)
for rentable and usable square footage.

(c) As long as Tenant is entitled to possession of the Premises,
Tenant shall have the nonexclusive right to use any parking areas, driveways,
sidewalks, and other common facilities of the Property as they may exist from
time to time. Provided, however, use of parking area shall be in accordance
with Exhibit G.

2. TERM.

(a) The term of this Lease shall begin on the Commencement Date
(as hereinafter defined) and end on the last day of the ONE HUNDRED EIGHTY
(180th) full calendar month thereafter. Thus, unless the Commencement Date
falls on the first day of a calendar month, the term will also include the
initial partial calendar month immediately following the Commencement Date.
The "Commencement Date" shall be as provided for in Exhibit C Workletter.
Within thirty (30) days after the Commencement Date, Tenant and Landlord
shall execute a written agreement to confirm the actual calendar date on
which the Commencement Date and the Expiration Date occur. Tenant shall take
possession of the Premises on the Commencement Date and surrender the
Premises to Landlord at the expiration of the term or earlier termination of
this Lease free of waste and in as good a condition as on the

<PAGE>

Commencement Date except for reasonable wear and tear and repairs that are
Landlord's responsibility under this Lease. By taking possession of the
Premises, Tenant shall have agreed that the Premises are suitable for their
intended purpose and that the Premises are substantially free of material
visible defects, except for items on the Landlord's punch list.

(b) Landlord agrees to cause the Tenant Improvements to be
completed by September 1, 2000 subject to extensions of time equal to delays
resulting from Force Majeure matters and Tenant delay factors provided for in
Exhibit C Workletter.

(c) Tenant shall have the right to terminate this Office Lease
Agreement in the event Landlord falls to achieve the following milestones:
(1) commencement of construction of the Base.

(c) Tenant shall have the right to terminate this Office Lease
Agreement in the event Landlord fails to achieve the following milestones:
(1) commencement of construction of the Base Building (as defined in the Work
Letter) on or before August 31, 1998. Commencement of construction of the
Base Building shall be the date of the beginning of excavation.

(d) With 18 months notice, Tenant will have the right to cancel
this lease at the end of Ten (10) years under the terms and conditions as
specified in Special Provisions (Exhibit G).

3. RENT. Throughout the term of this Lease, Tenant shall pay rent to
Landlord in accordance with the following provisions:

(a) Commencing with the first full calendar month after the
Commencement Date, Tenant shall pay minimum annual rent (the "Minimum Rent")
in monthly installments in advance on or before the first day of each
calendar month as reflected in EXHIBIT D hereto.

(b) Additional Rent (herein so called) shall be calculated as
provided in EXHIBIT E hereto. For each calendar year after the year 2001,
Landlord shall furnish Tenant a written estimate of Additional Rent for the
applicable calendar year. Estimates of Additional Rent shall be made by
Landlord on a reasonable basis determined by Landlord. Throughout the term
of this Lease, Tenant shall pay estimated Additional Rent in advance on or
before the first day of each month in monthly installments equal to
one-twelfth (1/12) of the estimated Additional Rent for the applicable
calendar year. Pending receipt of Landlord's written estimate of Additional
Rent for any calendar year, monthly installments of estimated Additional Rent
shall continue to be paid in the same amount as in the prior calendar year.
By March 1 of each year or as soon thereafter as reasonably practical,
Landlord shall furnish to Tenant a statement of the actual Operating Expenses
for the preceding year. Within ninety (90) days after the delivery of that
statement, Tenant shall either (i) notify Landlord, in writing, that Tenant
objects to a component of the Operating Expenses or (ii) pay to Landlord a
lump sum payment equal to the amount, if any, by which Tenant's Proportionate
Share of the actual Operating Expenses exceeds the amount, if any, which
Tenant has paid toward the undisputed amount thereof. Should Tenant dispute
an Operating Expenses statement, Tenant shall nevertheless pay the disputed
amount to

2
<PAGE>

Landlord and thereafter, Tenant and Landlord shall in good faith attempt to
resolve such dispute. In any dispute between Landlord and Tenant regarding
Operating Expenses, the burden will be upon Landlord to justify any
expenditure challenged by Tenant which is included as part of the Operating
Expenses by producing invoices or other supportive data. If Landlord is
unable to produce invoices or other supportive data, then Landlord will not
be entitled to include such item in the Operating Expenses. If the
resolution of the dispute results in a determination that Tenant has overpaid
Tenant's Proportionate Share of Operating Expenses then Landlord shall credit
such to the next installment of Rent due hereunder. If Tenant's
Proportionate Share of the actual Operating Expenses is less than the amount
Tenant has paid toward the estimated Operating Expenses and there is no
monetary Default by Tenant hereunder, (i) Landlord shall apply such amount to
the next accruing installments of Rent due hereunder or (ii) if such excess
occurs after the Expiration Date, refund such amount to Tenant. If there is
a monetary Default by Tenant, Landlord shall apply such excess to cure the
monetary Default. If Landlord is unable to justify any expenditure as
described above, Tenant shall have the right to challenge the same
expenditure in the previous calendar year provided that Tenant notifies
Landlord in writing of its desire to challenge such expenditure for the
previous calendar within thirty (30) days after Landlord fails to justify
such expenditure in the applicable year. If Landlord is unable to justify
such expenditure in the previous year and as a result Tenant has overpaid
Tenant's Additional Rent, then Landlord shall either credit the overpayment
to the next installment of Rent due hereunder or refund such amount to Tenant
if the determination occurs after the Expiration Date. In the event the
overpayment by Tenant exceeds $10,000, Landlord shall pay interest to Tenant
at the rate provided for in 3(f) below on all overpayment amounts in excess
of $10,000 from the date of the overpayment until the date repaid by Landlord.

(c) The installments of Minimum Rent and Additional Rent for any
initial partial calendar month shall be prorated based on actual days elapsed
and shall be paid in advance on the Commencement Date.

(d) Except as expressly provided to the contrary in this Lease,
installments of Minimum Rent and Additional Rent shall be payable without
notice, demand, reduction, setoff, or other defense. Installments of Minimum
Rent and Additional Rent and payments of other sums owing to Landlord
pursuant to this Lease shall be made to Landlord at 300 BROADWAY, NASHVILLE,
TENNESSEE 37201, or at whatever other account or address that Landlord may
designate from time to time by written notice to Tenant.

(e) If any installment of Minimum Rent or Additional Rent, or any
other sum due and payable pursuant to this Lease, remains unpaid for more
than ten (10) days after the date Tenant receives notice of lateness, Tenant
shall pay Landlord a late payment charge equal to the greater of (i) Fifty
and No/100 Dollars ($50.00), or (ii) three percent (3%) of the unpaid
installment or other payment. The late payment charge is intended to
compensate Landlord for administrative expenses associated with responding to
late payment, and shall not be considered liquidated damages or interest.
All rent and other sums of whatever nature owed by Tenant to Landlord under
this Lease that remain unpaid for more than ten (10) days after the date
Tenant receives notice of lateness shall bear interest from the date due
until paid at the lesser of (iii) one percent (1%) in excess of the prime or
general reference rate of interest of NationsBank of North

3
<PAGE>

Carolina, N.A. (or its successors) in effect from time to time, or (iv) the
maximum interest rate per annum allowed by law.

(f) Landlord agrees to keep true and accurate records of all
Operating Expenses and Taxes. Landlord agrees to grant Tenant and Tenant's
agents reasonable access to Landlord's books and records during normal
business hours at Landlord's office for the purpose of verifying Operating
Expenses and Taxes incurred by Landlord and to make copies of any and all
bills and vouchers relating thereto, subject to reimbursement by Tenant for
the cost of such copies. Tenant shall keep all such information
confidential. In the event that a review of Landlord's books and records
pursuant to this Paragraph 3.F. reveals that Landlord has overstated its
Operating Expenses or Taxes for the applicable Calendar Year Landlord shall
refund the amount of such overstatement, with interest thereon at 1% per
annum above the Prime Rate of interest of NationsBank of North Carolina N.A.
(or its successors) in effect from time-to-time, and if such overstatement is
in excess of five percent (5%) of the Operating Expenses or Taxes incurred
for such Calendar year, Landlord shall also reimburse Tenant for the
reasonable expenses incurred by Tenant in conducting such review of
Landlord's books and records and for the amounts paid to any public
accounting firm reasonably acceptable to Land lord and Tenant.

(g) If Landlord fails to deliver to Tenant the written statement
setting the expense adjustment amount within six (6) months after the end of
each calendar year; Landlord shall be deemed to have waived its rights to
collect any increase in Tax and Operating Expenses for that particular year.

If Tenant does not request a review or audit of Landlord's books and
records relating to Additional Rent within ninety (90) days after Tenant's
receipt of Landlord's final calendar year-end actual final statement setting
forth the Additional Rent amount for such year, then such actual final
statement shall be deemed to be binding on Landlord and Tenant for the period
covered by such statement; provided however, that; Tenant shall have the
right after the expiration of any such 90-day period to contest any
individual component of Operating Expenses including Taxes if Tenant or any
auditor engaged by Tenant determines during any review or audit of Operating
Expenses including Taxes that an error has been made in Landlord's
calculation of Operating Expenses including Taxes for a period prior to the
period covered by such review or audit.

4. USE OF PREMISES; COMPLIANCE WITH LEGAL REQUIREMENTS. Tenant shall
use the Premises only for general office purposes that are permitted by
applicable zoning ordinances and land use requirements and for no other
purposes. Tenant shall not commit or allow waste to be committed in the
Premises or elsewhere on the Property, and shall not do or allow to be done
in the Premises or elsewhere on the Property anything that shall constitute a
nuisance or detract in any way from the reputation of the Property as a
first-class office building. Tenant shall allow no noxious or offensive
odors, fumes, gases, smoke, dust, steam or vapors, or any loud or disturbing
noise or vibrations to originate in or be emitted from the Premises. Tenant
shall comply with all laws, ordinances, and regulations of any governmental
authority relating to the Premises and to Tenant's use or occupancy of the
Premises, with the requirements of insurance underwriters or rating bureaus
applicable to Tenant's occupancy of the Premises Property, and with the
following requirements

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(a) Tenant may introduce to the Premises or Property Hazardous
Materials that are customarily located, stored or used in connection with
office buildings similar to the Premises or that are unique to Tenant's
business, provided that such Hazardous Materials are handled in compliance
with applicable law and that Tenant does not dispose of any Hazardous
Materials at the Property in a manner requiring any governmental license or
permit. Except as permitted in the preceding sentence, no use, generation,
storage, treatment, transportation, or disposal of any Hazardous Material
shall occur or be permitted to occur in connection with Tenant's use and
occupancy of the Premises or any other portion of the Property. "Hazardous
Material" shall mean (i) any "hazardous substance" as defined in the
Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"); (ii) any material identified or listed as "hazardous waste"
pursuant to the Resource Conservation and Recovery Act "RCRA"); and (iii) any
"regulated substance" as defined pursuant to 40 C.F.R. Part 280, including,
but not limited to, any petroleum, including crude oil or any fraction
thereof that is liquid at standard conditions of temperature and pressure.
Without limiting the generality of the foregoing, the term "Hazardous
Material" thus includes, but is not limited to, petroleum, asbestos and
polychlorinated biphenyls.

(b) Tenant shall not use or occupy any portion of the Premises or
the Property for anything that is extra hazardous on account of fire or other
risks, that causes (as the result of Tenant's act or omission, as
specifically determined by the underwriter) an increase in the premiums
payable by Landlord for any of its insurance with respect to the Property, or
that causes any underwriter to deny insurance coverage to Landlord.

(c) Tenant shall comply with all requirements of the Americans
with Disabilities Act and implementing regulations applicable to its use and
occupancy of the Premises other than requirements relating solely to the
physical structure of (i) the Tenant Improvements, (ii) the Base Building,
including the roof, foundation, and exterior walls of the Building, and (iii)
the common use areas of the Property. Landlord agrees to complete all Tenant
construction for the Premises to meet or exceed the requirements of the
Americans with Disabilities Act, as such Act may be amended from time to time
("ADA"). Landlord warrants that the Building common areas and parking areas
serving the Building shall meet or exceed all ADA requirements on the date of
substantial completion of the Premises. Landlord will comply with the more
stringent of local codes and all American National Standards Institute
Specifications for making the Building, and Premises accessible to and usable
by the physically handicapped (ANSI A-117.1 1961, Rev. 1987) as of date of
substantial completion and warrant that the Building, Garage and site
complies or Landlord shall make it comply with current Americans with
Disabilities Act (ADA) accessibilities guidelines. Any changes in the ADA
requirements that may be required in the future shall be Tenant's
responsibility and sole cost if such changes are required within the Premises
and, such changes shall be Landlord's responsibility and sole cost if they
are required elsewhere in the Building, Garage or elsewhere on the site.
Both parties agree to indemnify and hold harmless each other from and against
any and all claims, damages, costs, fines or penalties which either party
incurs as a result of their respective obligations or their failure to abide
by such ADA requirements. Both parties further agree to inform each other
within twenty-four (24) hours in the event they are notified of any
noncompliance with the provisions of the ADA.

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(d) Landlord shall have the right to prescribe and modify
reasonable rules for the use of the Property and leased premises within the
Building. A copy of Landlord's current Building rules is attached hereto as
EXHIBIT F. In the event of any conflict with the Building rules, the
provisions in the main body of this Lease control.

(e) Landlord shall provide building security and life safety
equipment, personnel, procedures and systems, as an operating expense of the
Building. Exhibit C sets forth building standard security and life safety
specifications, and systems. Landlord will inform Tenant of any violation
notices or waivers of building, OSHA or life safety codes and/or outstanding
insurance carrier recommendations with respect to the Building, parking, or
site and Landlord shall make all such reasonable improvements to correct any
such problems and meet all such recommendations which is not in keeping with
Paragraph 4.

(f) Tenant shall ensure that its agents, employees, and
contractors comply with this Paragraph, and shall use reasonable efforts to
ensure that its invitees and customers comply with this Paragraph.

(g) LANDLORD ENVIRONMENTAL OBLIGATIONS. Landlord represents,
warrants, covenants, and agrees with the Tenant that:

(1) No Hazardous Materials have been disposed of on or released at
the Property. On the Commencement Date, the Property will
contain no contamination or other environmental defect that
could reasonable be expected to result in any person
incurring any obligation, liability, or cost.

(2) Landlord shall not introduce or allow the introduction to the
Property or Premises of any Hazardous Material except as
found in generally available cleaning equipment and office
supplies that are properly used and stored.

(3) Landlord shall not allow any other tenant at the Property to do
anything that shall cause contamination or poor indoor air
quality, constitute a nuisance, or detract in any way from the
reputation of the Property as a first-class real estate
development.

(4) Landlord shall monitor and at all times maintain safe and
healthy indoor air quality within the Building and ensure
that the Building's HVAC system and other Building Systems
comply with ASHRAE Standard 62-1989, as amended from time
to time, and any and all local, state and Federal
regulations relating to indoor air quality. Landlord shall
immediately inform Tenant upon becoming aware of any
condition in the Building that could reasonably be
associated with poor indoor air quality, including without
limitation, complaints of chronic eye, nose and throat
irritation; respiratory problems; acquired allergies or
chemical sensitivities; usually high rates of occupant
absenteeism; or usually low rates of employee productivity.
At its sole cost and expense, Landlord shall promptly
investigate and properly correct any such condition.

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Landlord shall deliver to Tenant periodic reports
describing its progress in responding to any such condition.

5. TAXES PAYABLE BY TENANT. Intentionally Deleted.

6. INSURANCE COVERAGE; WAIVER OF SUBROGATION.

(a) Landlord shall maintain property and casualty insurance on the
Building, with extended coverage or such other additional coverage as
Landlord shall elect, in an amount of not less than one hundred percent
(100%) of the replacement cost of the Building; provided, however, if the
premium for any insurance carried by Landlord with respect to the Property
increases as the result of Tenant's use or occupancy or as the result of any
act or omission of Tenant or its agents, employees, or contractors, Tenant
shall pay Landlord the amount of any such increase on written demand.
Payment of such increased premiums shall not excuse any noncompliance with
this Lease by Tenant that may have caused the increased premiums.

(b) Tenant shall maintain and pay for property and casualty
insurance with extended coverage on all trade fixtures, equipment, machinery,
merchandise, or other personal property belonging to or in the custody of
Tenant in the Premises or otherwise on the Property. Tenant shall maintain
and pay for commercial general liability insurance (occurrence coverage) in
the amount of not less than $1,000,000.00, with a company licensed to do
business in the state in which the Property is located and reasonably
acceptable to Landlord, naming Landlord as an additional insured, providing
contractual liability coverage, and containing an undertaking by the insurer
not to cancel or materially reduce coverage without first giving thirty (30)
days' written notice to Landlord. Tenant shall furnish Landlord certificates
of insurance evidencing the required commercial general liability insurance
coverage prior to the Commencement Date and thereafter prior to each policy
renewal date.

(c) Each of Landlord and Tenant hereby waives all claims or other
rights of recovery against the other and its agents, employees, and
contractors for any loss or damage to the Premises or other portions of the
Property, or to any personal property or fixtures thereon, by reason of fire
or other insurable risk of loss (whether or not actually insured), regardless
of cause or origin, including negligence, gross negligence, or misconduct of
the other party or its agents, employees, or contractors, and covenants that
no insurer shall hold any right of subrogation against such other party.
Landlord and Tenant shall each advise its insurers of the foregoing waiver
and such waiver shall be a part of the respective policies of property and
casualty insurance maintained by Landlord and Tenant.

7. SERVICES FURNISHED BY LANDLORD. So long as Tenant is entitled to
possession of the Premises during the term, Landlord shall furnish the
following services, which shall be reasonably consistent in quality with
similar landlord services at first class office buildings in the same market
area as the Building:

(a) Heating and air conditioning in season to provide reasonably
comfortable temperature condition in the interior of the Premises (unless
mandated otherwise by law) Monday through Friday from 6:00 a.m. to 6:00 p.m.
and Saturdays from 7:00 a.m. to 1:00 p.m.,

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<PAGE>

exclusive of holidays as listed in Exhibit G. At other times, heating and
air conditioning will be furnished at a Building standard charge of $50/hour
(payable by Tenant to Landlord on written demand by Landlord) and on Building
standard terms relating to advance notice, minimum hours, minimum zones, and
other matters. If office machines, computers, or other equipment used in the
Premises adversely affect Landlord's ability to maintain reasonably
comfortable temperatures or require excessive use of air conditioning
equipment to maintain such temperatures, Landlord shall have the right to
install supplemental air conditioning units in the Premises, and the cost
thereof, including the cost of installation and the cost of operation and
maintenance, shall be paid by Tenant to Landlord on written demand. Tenant
shall have access to the Premises twenty-four (24) hours a day, seven (7)
days a week. Such access, including, but not limited to, elevator usage,
shall not constitute any additional expense to Tenant.

(b) Landlord's heating, ventilation, and air conditioning system
shall maintain a comfortable temperature condition and an environmentally
safe condition even if tenant were to fully utilize 7 watts 6 per usable
square feet and have an average population density of 1 person per 300 usable
square feet. As used in this Paragraph 7, the phrase "comfortable temperature
condition" shall mean that the temperature n the Premises shall be not less
than 65 degrees Fahrenheit or more than 78 degrees Fahrenheit, it being
understood and agreed that except for limited periods of extremely cold or
extremely hot weather, such temperature shall be maintained at an overall
uniform average of not less than 68 degrades Fahrenheit and not more than 75
degrees Fahrenheit.

(c) So long as the Premises are kept in reasonable order by
Tenant, reasonable janitorial and general cleansing services from Monday
through Friday, exclusive of holidays as listed in Exhibit G.

(d) Landlord will furnish up to 7 watts per square foot of power
in the Premises for routine lighting and the operation of general office
machines such as typewriters, dictating equipment, desk model adding
machines, personal computers, copying machines, and the like that use
110-volt, 20 ampere electrical supply, and any equipment using a higher
voltage or current shall not be connected to the electrical system in the
Building. Tenant shall not use heavy duty electrical equipment or machinery
that in Landlord's reasonable opinion, will overload or otherwise damage
electrical circuits or equipment in the Building, and Tenant shall make no
changes in fuses, circuit breakers, or other components of the electrical
system in the Building. If Tenant does so, Landlord may elect to install
electrical meters to measure such excessive power consumption, and all
associated costs including excess electrical power consumption, equipment and
installation costs, and maintenance, replacement, and repair costs) shall be
paid by Tenant to Landlord on written demand.

(e) Passenger elevator service to all floors of the Building on a
twenty-four (24) hour, seven (7) day per week basis. In addition, Landlord
shall provide Tenant at no additional charge, freight elevator and loading
area access as required by Tenant during building operating hours.

(f) Reasonable amounts of hot and cold running water to lavatories
and toilets in or appurtenant to the Premises.

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(g) Routine maintenance and repair of the structure of the
Building and general Building mechanical, electrical, and plumbing systems
and of the interior and exterior common areas of the Building, including the
Building ground floor lobby, exterior lighting, landscaping, and irrigation,
and parking, driveways, and sidewalks of the Property. If the Premises or
any other part of the Property is damaged by any act or omission of Tenant or
its agents, employees, or contractors, then Landlord shall repair such
damage. Any cost of such repairs in excess of insurance proceeds actually
received by Landlord shall be paid by Tenant to Landlord on written demand,
and Landlord shall not be obligated to begin or continue repair work until
funds for such purposes are received from insurance proceeds or from Tenant.

(h) Landlord shall provide access cards for all of Tenant's
personnel for the card key access system which is being installed as part of
Landlord's Work at the time of initial move-in at no charge to Tenant.
Tenant shall obtain replacement cards and additional cards from Landlord and
pay to Landlord the fee established from time to time for such cards.

(i) Tenant shall not be deemed to have been evicted as the result
of, nor shall Landlord be liable for any loss or damage to the property of
Tenant located in the Premises or for any loss of business or profits of
Tenant or other damages of any kind arising from (i) any failure of Landlord
to provide any of the services to be furnished by Landlord pursuant to this
Paragraph as the result of circumstances outside of Landlord's reasonable
control, (ii) any interruption or unavailability of utilities or any
stoppage, leaking, bursting, or other defect or failure in the utility lines,
pipes, wires, and other facilities serving the Premises as the result of
circumstances outside of Landlord's reasonable control, or (iii) any repairs,
maintenance, alterations, or improvements to any portion of the Property made
in connection with correcting any of the foregoing circumstances or providing
the services to be furnished by Landlord pursuant to this Paragraph.
Notwithstanding the foregoing, if such malfunction or interruption in service
(i) continues for three (3) consecutive business days and (ii) makes it
reasonably impossible for Tenant's continued use and Occupancy of the
Premises (or a Substantial portion thereof), then Tenant shall be entitled to
an abatement of Base Rent and/or Adjusted Rent and any Additional Rent
payable under Sections 3(a) and 3(b) for the portion of the Premises vacated
for the period commencing on the date of the malfunction or interruption of
services, and continuing until the earlier of the following (i) the date such
service is corrected or restored or (ii) the date Tenant uses and occupies
Premises or any part of the Premises which was rendered unusable because of
the interruption in service, notwithstanding the fact that the malfunction or
interruption in service has not been corrected. In the event that any of the
services described in this Paragraph 7 (other than cleaning and janitorial
services) is interrupted or otherwise not furnished as specified in this
Paragraph 7 as the case may be, or if at least one elevator is not available
serving the Premises, for more than eight (8) nonconsecutive days during any
twelve (12) consecutive month period and each such interruption is for a
period of not less than one (1) day, in each case after actual knowledge of
Landlord or its managing agent for the Building, or in absence of such
knowledge, after written notice to Landlord, then in any such instance
monthly installments of Minimum Rent, Additional Rent including Operating
Expenses and Taxes and all other Rent and other amounts due from Tenant to
Landlord under the Lease shall abate and Tenant shall have no obligation
whatsoever to pay Landlord any such monthly installments of Minimum Rent,
Additional Rent including Operating Expenses and Taxes or any other Rent or
other sums whatsoever which are or become due for the period during which
such service is interrupted or

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<PAGE>

otherwise not furnished as specified in this Paragraph 7 or at least one
elevator is not available serving the Premises, as the case may be.

(j) In the event of a casualty to the Premises or the Building, in
addition to the foregoing and without limiting the rental abatement remedy
provided for in the preceding sentence, if any interruption in any of the
services, or any failure to furnish services, described in Paragraph 7 (other
than cleaning or janitorial services) or if at least one elevator is not
available serving the Demised Premises, as the case may be, lasts longer than
thirty (30) consecutive days after actual knowledge of Landlord or its
managing agent for the Building or, in absence of such knowledge after notice
to Landlord, Tenant, in addition to all other rights or remedies available to
Tenant at Law or in Equity, shall have the right prior to the time such
services are restored, upon written notice to Landlord, to terminate the term
of the Lease and all of Tenant's duties and obligations under the Lease.
Tenant's exercise of its right to terminate the Lease shall in no way
prejudice Tenant's rights to peruse any other rights or remedies available at
Law or in Equity. For purposes of this Paragraph 7, a services shall be
deemed to be restored when such service has been temporarily restored to a
commercially reasonable level or quality, as the case may be, so long as such
temporary restoration continues and Landlord thereafter continues to
diligently pursue a permanent cure.

8. ALTERATIONS AND IMPROVEMENTS. Tenant shall make no alterations,
additions, or improvements to the Premises or the Property without the prior
written consent of Landlord in each instance, which consent shall not be
unreasonably withhold. Tenant shall comply with all reasonable requirements
of Landlord relating to approval of plans and specifications, compliance with
building codes and other laws, protection of the integrity, condition, and
proper functioning of the roof, walls, foundations, and other structural
elements of the Building and of the Building's mechanical, electrical, and
plumbing systems and equipment, employment and bonding of contractors,
insurance, aesthetic considerations, and other relevant matters as reasonably
determined by Landlord. All alterations, additions or improvements,
including without limitation all partitions, walls, railings, carpeting,
floor and wall coverings, and other fixtures (excluding Tenant's trade
fixtures) made by, for, or at the direction of Tenant shall become the
property of Landlord when made, and shall remain upon the Premises at the
expiration or earlier termination of this Lease. Landlord reserves the right
to make structural and nonstructural alterations, additions, and improvements
to the Property, to re-stripe parking areas and otherwise control parking and
traffic movement on the Property, and, provided Tenant is not occupying the
Premises or Tenant is in default, to change the name or street address of the
property. Notwithstanding the foregoing, Tenant shall have the right to
perform decorating (painting, wall covering, carpeting) without Landlord's
approval. Tenant shall also have the right to make alterations and
improvements of a minor nature (less than $5,000 in each case) without
Landlord's approval provided such work does not include more than minor
changes to building system (e.g., add electrical outlets).

9. TRADE FIXTURES AND OTHER PERSONAL PROPERTY. Any trade fixtures
installed in the Premises at Tenant's expense shall remain Tenant's personal
property, and Tenant shall have the right at any time during the term of this
Lease to remove such trade fixtures (provided that any damage to the Building
or Premises caused by such removal shall immediately be repaired by Tenant).
On or before the expiration of the term or earlier termination of this Lease,
Tenant shall

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<PAGE>

remove all trade fixtures and other personal property of Tenant from the
Premises, repair any damage to the Building or Premises caused by removal of
its trade fixtures and other personal property, and leave the Premises in a
clean condition free of waste, refuse, or debris. If Tenant fails to do so,
Landlord may retain, store, or dispose of such trade fixtures and other
personal property however Landlord chooses without liability of any kind to
Tenant, repair any damage to the Building or Premises caused by removal of
such trade fixtures and other personal property, and clean the Premises and
properly dispose of all such waste, refuse, or debris; and all costs and
expenses incurred by Landlord in connection with the foregoing shall be
payable by Tenant to Landlord on written demand. The following property
shall be considered part of the permanent improvements to the Building owned
by Landlord, not trade fixtures of Tenant, and shall not be removed from the
Premises by Tenant under any circumstances: (a) HVAC systems, fixtures, or
equipment; (b) lighting fixtures or equipment; (c) carpeting, other permanent
floor coverings, or raised flooring; (d) paneling or other wall coverings;
(e) plumbing fixtures and equipment; and (f), permanent shelving.

10. SIGNS AND ADVERTISING.

(a) Tenant and the Nashville Chamber shall have the exclusive
rights to install signage on the outside of the Building. Such signage for
Tenant and the Nashville Chamber shall be at the locations and in accordance
with the plans and specifications shown in Exhibit(s) K attached hereto.
Tenant's signage per Exhibit M shall appear at the top of the Building and at
the main entrance to the Building. In addition to outside signage, Tenant
will have the right to install signage in the main lobby of the Building at
the locations and in accordance with the plans and specifications shown in
Exhibit M attached hereto. Tenant shall bear all cost to design and install
and maintain the above referenced Tenant signs. In the event Tenant changes
its name or logo, Tenant shall have the right to replace or alter the
referenced signs at Tenant's sole cost. Tenant shall also have the right to
remove all such signs at any time by giving notice to Landlord. All signs
must be approved by Landlord which shall not be unreasonably withheld.

(b) The use of the Tenant's name in association with any
advertising or promotional material for the Building by Landlord or its
agents shall be in each case approved by Tenant. The Building shall not be
named after any other tenant. Tenant shall have the right at any time in
Tenant's sole discretion to have Landlord cease using the Name MagneTek
Building in reference to the Building upon giving Landlord notice to cease.
All public elevators off the main lobby shall contain a button for Tenant's
reception floor displaying the name "MagneTek" or, at the option of the
Tenant, a plaque adjacent to said button displaying the name "MagneTek" which
shall be an exclusive right of Tenant.

(c) Landlord agrees to display in the main lobby of the Building,
a building directory listing the Tenant and a reasonable number of Tenant's
key personnel as specified by Tenant. Such directory shall be maintained and
updated at no cost to Tenant throughout the term of this Lease and any
extension thereof.

(d) Landlord represents to Tenant that there are no known
governmental restrictions of any kind that would prohibit or restrict the
exterior signage shown in Exhibit M from being installed and maintained.
Landlord shall use reasonable best efforts to insure

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<PAGE>

construction, installation and operation of such signage to the extent of
matters within Landlord's reasonable control and will cooperate with Tenant
to establish and approve alternative signage if required. Landlord has
received from the appropriate governmental authorities written confirmation
that the proposed signage (see Exhibit M) is in accordance with all
requirements.

11. LANDLORD'S RIGHT OF ENTRY. Landlord and persons authorized by
Landlord may enter the Premises it any time without notice to Tenant in the
event of emergency involving possible injury to property or persons in or
around the Premises or the Building or to provide routine janitorial
services. Landlord and persons authorized by Landlord shall also have the
right to enter the Premises at all reasonable times and upon reasonable
notice for the purposes of making repairs or connections, making alterations,
additions, or improvements to the Building, installing utilities, providing
services to the Premises other than routine janitorial service, providing
services for other tenants, making inspections, or showing the Premises to
prospective purchasers or lenders of the Property. Landlord shall make all
reasonable efforts not to disturb Tenant's use of Premises and shall restrict
all worker's tools and equipment to the minimum area necessary, keeping the
Premises as neat and orderly as reasonably possible. During the last twelve
(12) months of the term, Landlord and persons authorized by Landlord shall
have the right at reasonable times and upon reasonable notice to show the
Premises to prospective tenants.

12. CASUALTY DAMAGE. Tenant shall give prompt notice to Landlord of
any damage to the Building which affects the Premises. If, in Tenant's
reasonable opinion, damage by fire or other casualty renders any substantial
part of the Premises untenantable and the repair time to restore the Premises
to a tenantable condition will exceed one hundred twenty (120) days (or will
exceed thirty (30) days in the case of damage occurring during the last
twelve (12) months of the term), Landlord or Tenant may, at its option,
terminate this Lease by so notifying Tenant in writing within sixty (60) days
after the date of the casualty. Thereupon Rent and any other payments for
which Tenant is liable under this Lease shall be apportioned and paid to the
date of such damage, and Tenant shall immediately vacate the Premises. If
the Lease is not so terminated by Landlord or Tenant, Landlord shall use its
best efforts to promptly begin and diligently pursue the work of restoring
the Premises (including the initial Tenant Improvements) to substantially
their prior to casualty condition as soon as reasonably possible. Landlord
shall abate the Minimum Rent and Additional Rent during the time and to the
extent the Premises are untenantable as the result of fire, or other
casualty, but such abatement shall not extend the term, unless the Lease is
terminated as set forth above.

13. CONDEMNATION. If all or substantially, all of the Property is
condemned or is sold in lieu of condemnation, then this Lease shall terminate
on the date the condemning authority takes possession. If less than all of
the Property is so condemned or sold (whether or not the Premises are
affected) and in Landlord's reasonable judgment, the Property cannot be
restored to an economically viable condition, Landlord may terminate this
Lease by written notice to Tenant effective on the date the condemning
authority takes possession. If the condemnation will render any substantial
part of the Premises untenantable, Tenant may terminate this Lease by written
notice to Landlord effective on the date the condemning authority takes
possession of the affected part of the Premises. If this Lease is not so
terminated by Landlord or Tenant, Landlord shall, to the extent feasible,
restore the Premises (including the Initial Tenant Improvements) to
substantially their former condition. Landlord shall not, however, be
required to restore any

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alterations, additions, or improvements other than the condition of the
Tenant Improvements prior to the condemnation or to spend any amount in
excess of the condemnation proceeds actually received by Landlord. Landlord
shall allow Tenant an equitable abatement of Minimum Rent and Additional Rent
during the time and to the extent the Premises are untenantable as the result
of any condemnation, but such abatement shall not extend the term. All
condemnation awards and proceeds shall belong exclusively to Landlord, and
Tenant shall not be entitled to, and expressly waives and assigns to
Landlord, all claims for any compensation for condemnation; provided,
however, if Tenant is permitted by applicable law to maintain a separate
action that will not reduce condemnation awards or proceeds to Landlord,
Tenant shall be permitted to pursue such separate action, but only for loss
of business, value of unexpired term of this Lease moving expenses, and
Tenant's trade fixtures.

14. TRANSFERS BY TENANT.

(a) Without the prior written consent of Landlord in each
instance, which consent will not be unreasonably withheld or delayed, Tenant
shall not do any of the following (as used in this Paragraph, a "Transfer"):
(i) assign this Lease or any estate or interest therein, whether absolutely
or collaterally as security for any obligation; (ii) sublease any part of the
Premises; (iii) permit any assignment of this Lease or any estate or interest
therein by operation of law; (iv) grant any license, concession, or other
right of occupancy for any part of the Premises; or (v) permit the use of the
Premises by any person other than Tenant and its agents and employees.
Permissible reasons for Landlord's withholding consent include (but are not
limited to) the following: (vi) the proposed use of the Premises is not
permitted by this Lease, would negatively affect insurance or environmental
risks, (viii) the proposed use or occupancy would require alterations or
additions to of the Property to comply with applicable laws, ordinances, and
regulations; (ix) the proposed transferee is a tenant or occupant of the
Property ; and (x) if the consent of any mortgagee is required, such
mortgagee refuses to consent after good faith efforts by Landlord to obtain
such consent. Any attempted Transfer without Landlord's prior written
consent shall be void. Notwithstanding the above, Tenant may transfer this
Lease to an Affiliate without the consent of Landlord. "Affiliate" shall
have the meaning set forth in Rule 12b-2 promulgated under the Exchange Act
by the SEC, as in effect on the date hereof.

(b) If Tenant requests Landlord's consent to a Transfer, Landlord
may approve or disapprove the Transfer. In connection with each Transfer
request by Tenant, Tenant shall obtain and furnish to Landlord all documents,
financial reports, and other information Landlord reasonably requires in
order to evaluate the proposed Transfer. Landlord shall advise Tenant of
Landlord's decision with respect to the requested Transfer within ten (10) )
days after receipt of Tenant's written Transfer request and all requested
supporting materials. If Landlord refuses to consent to a requested
Transfer, this Lease shall nonetheless remain in full force and effect. The
consent of Landlord to one requested Transfer shall never be construed to
waive the requirement for Landlord's consent to other Transfers, nor shall
any consent by Landlord or Transfer by Tenant discharge or release Tenant
from any obligations or liabilities to Landlord.

(c) No transferee of less than the entire Premises or this Lease
shall ever be entitled to exercise any extension, expansion, or other option
provided in this Lease. If an Event of Default by Tenant occurs after any
Transfer, Landlord may, at its option, collect rent directly

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<PAGE>

from the transferee, and Tenant hereby authorizes any transferee to pay rent
directly to Landlord at all times after receipt of written notice from
Landlord. No direct collection by Landlord from any transferee shall
constitute a novation or release Tenant from its obligations and liabilities
under this Lease. Such payments shall be credited to Tenant's rental
obligations hereunder.

15. TRANSFERS BY LANDLORD. Landlord shall have the unrestricted right
to sell, assign, mortgage, encumber, or otherwise dispose of all or any part
of the Property or any interest therein. Upon sale or other disposition of
the Property to a party who assumes the obligations of Landlord under this
Lease, Landlord shall be released and discharged from obligations and
liabilities thereafter accruing under this Lease and Tenant shall look solely
to Landlord's successor for performance of the Lease thereafter. Tenant's
obligations under this Lease shall riot be affected by any sale, assignment,
mortgage, encumbrance, or other disposition of the Property by Landlord, and
Tenant shall attorn to anyone who thereby becomes the successor to Landlord's
interest in this Lease, provided Tenant receives a Nondisturbance Agreement
from Landlord's successor assuring Tenant that their tenancy and lease shall
not be disturbed or affected so long as Tenant meets its leasehold
obligations.

16. SUBORDINATION. Upon written request by Landlord, and subject to
conditions set forth herein, Tenant shall subordinate its rights under this
Lease to the lien of any mortgage and to any and all advances to be made
thereunder and all renewals and extensions thereof, provided, however, that
the mortgagee named in such mortgage shall recognize this Lease and
acknowledge that a foreclosure or acceptance of a deed in lieu of foreclosure
or the exercise of any other rights under such mortgage shall not extinguish
or otherwise diminish or disturb the rights of Tenant as set forth in this
Lease, provided Tenant receives a Nondisturbance Agreement from Landlord's
successor assuring Tenant that their tenancy and lease shall not be disturbed
or affected so long as Tenant meets its leasehold obligations.

17. ESTOPPEL CERTIFICATES; FINANCIAL STATEMENTS. Within ten (10) days
after a written request by Landlord, Tenant shall deliver an estoppel
certificate certifying the following or indicating why any such statement is
not true as of the date of the certificate: that this Lease is in full force
and effect, that no default then exists on the part of Landlord or Tenant,
that Tenant is in possession of the Premises, that Tenant has commenced
payment of rent, and that Tenant presently claims no defenses or offsets with
respect to payment of rent under this Lease. Likewise, within thirty (30)
clays after a written request by Tenant, Landlord shall deliver to Tenant an
estoppel certificate covering such matters of fact with respect to Landlord's
obligations under the Lease as are reasonably requested by Tenant. If
Landlord has entered into a binding agreement to sell the Property or obtain
a loan secured by the Property, then within ten (10) days of Landlord's
written request, Tenant shall furnish Landlord its most recent available
Annual Report and 10K.

18. EVENTS OF DEFAULT BY TENANT. Each of the following constitutes an
Event of Default by Tenant (herein so called):

(a) Tenant fails to pay any installment of Minimum Rent,
Additional Rent, or any other sum payable under this Lease when due, and the
failure or refusal continues for at least

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five (5) days after Tenant's receipt of notice of such default. Provided,
however, in no event shall Landlord be required to give more than three (3)
such notices within any Lease Year.

(b) Tenant fails or refuses to comply with any provision of this
Lease not requiring the payment of money, and the failure or refusal
continues for at least thirty (30) days after receipt of written notice from
Landlord; provided, however, if any failure by Tenant to comply with this
Lease cannot be corrected within such 30-day period and if Tenant has
commenced substantial corrective actions within such 30-day period and is
diligently pursuing such corrective actions, such 30-day period shall be
extended for such additional time as is reasonably necessary to allow
completion of actions to correct Tenant's noncompliance.

(d) Tenant or any guarantor of this Lease files a petition under
any chapter of the United States Bankruptcy Code, as amended, or under any
similar law or statute of the United States or any state, or a petition is
filed against Tenant or any such guarantor under any such statute and not
dismissed with prejudice within ninety (90) days of filing, or a receiver or
trustee is appointed for Tenant's leasehold estate or for any substantial
part of the assets of Tenant or any such guarantor and such appointment is
not dismissed with prejudice within ninety (90) days, or Tenant or any such
guarantor makes an assignment for the benefit of creditors.

19. LANDLORD'S REMEDIES. If an Event of Default by Tenant occurs,
Landlord (after Tenant has exhausted all cure periods) shall be entitled then
or at any time thereafter to do any one or more of the following at
Landlord's option:

(a) Enter the Premises if need be, and take whatever curative
actions are necessary to rectify Tenant's noncompliance with this Lease; and
in that event Tenant shall reimburse Landlord on written demand for any
expenditures by Landlord to effect compliance with Tenant's obligations under
this Lease.

(b) Terminate this Lease, in which event Tenant shall immediately
surrender possession of the Premises to Landlord, or without terminating this
Lease, terminate Tenant's right to possession of the Premises; and in either
case, Landlord may re-enter and take possession of the Premises, evict Tenant
and all parties then in occupancy or possession, and if permitted under
applicable law, change the locks on the doors of the Premises without making
keys to the changed locks available to Tenant.

(c) If Landlord has terminated this Lease, recover all Minimum
Rent, Additional Rent, and other sums owing and unpaid under this Lease as of
the date of termination plus damages measured by the difference in the rental
value of the Premises if this Lease had been fully performed for the balance
of the term and the rental value of the Premises following the Event of
Default by Tenant (taking into account probable remodeling, lease commission,
allowance, inducement, and other costs of reletting).

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<PAGE>

(d) If Landlord has not terminated this Lease (whether or not
Landlord has terminated Tenant's right to possession of the Premises or
actually retaken possession), recover (in one or more suits from time to time
or at any time before or after the end of the term) all Minimum Rent,
Additional Rent, and other sums then or thereafter owing and unpaid under
this Lease, together with all costs, if any, incurred in relenting the
Premises (including remodeling, lease commission, allowance, inducement, and
other costs), less all rent, if any, actually received from any reletting of
the Premises during the remainder of the term. Landlord shall have the right
following an Event of Default by Tenant to relet the Premises on Tenant's
account without terminating the Lease, any such reletting to be on such terms
as Landlord considers reasonable under the circumstances.

(e) Recover all costs of retaking possession of the Premises and
any other damages incidental to the Event of Default by Tenant.

(f) Terminate all of Tenant's rights to any allowances or under
any renewal, extension, expansion, refusal, or other options granted to
Tenant by this Lease.

(g) Exercise any and all other remedies available to Landlord at
law or in equity, including injunctive relief of all varieties.

If Landlord elects to retake possession of the Premises without
terminating this Lease, it may nonetheless at any subsequent time elect to
terminate this Lease and exercise the remedies provided above on termination
of the Lease. Nothing done by Landlord or its agents shall be considered an
acceptance of any attempted surrender of the Premises unless Landlord
specifically so agrees in writing. No re-entry or taking of possession of
the Premises by Landlord, nor any reletting of the Premises, shall be
considered an election by Landlord to terminate this Lease unless Landlord
gives Tenant written notice of termination.

(h) Whether or not this Lease is terminated by reason of Tenant's
Default, Landlord shall be obligated to relet the Premises for such rent and
upon such terms as is commercially reasonable.

20. LANDLORD'S DEFAULT. It shall be an Event of Default by Landlord
(herein so called) only if Landlord fails to comply with any provision of
this Lease and the failure continues for at least thirty (30) days after
written notice from Tenant to Landlord (with a copy to Landlord's mortgagees
if Tenant has been notified in writing of the identities and addresses of
such mortgagees); provided, however, if any failure by Landlord to comply
with this Lease cannot be corrected within such 30-day period solely as a
result of nonfinancial circumstances outside of the control of Landlord, and
if substantial corrective actions have commenced within such 30-day period
and are being diligently pursued, such 30-day period shall be extended for
such additional time as is reasonably necessary to allow completion of
actions to correct Landlord's noncompliance.

21. TENANT'S REMEDIES. Except as otherwise provided in this Lease, in
the Event of Default by Landlord, Tenant shall be entitled to any remedies
available at law or in equity. Notwithstanding anything in this Lease to the
contrary, Landlord shall never be liable in the

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<PAGE>

Event of Default by Landlord, under any promise of indemnity in this Lease,
or under any other provision of this Lease for any loss of business or
profits of Tenant or other consequential damages or for punitive or special
damages of any kind. None of Landlord's officers, employees, agents,
directors, shareholders, or partners shall ever have any liability to Tenant
under or in connection with this Lease. Tenant agrees to look solely to
Landlord's interest in the Property and all commercial real estate holdings
of Landlord for the recovery of any judgment against Landlord, and Landlord
shall never be personally liable for any judgment.

(a) In the event that Landlord shall breach any of its duties,
obligations or agreements contained in the Lease or otherwise default in the
performance of its duties, obligations or agreements contained in the Lease,
Tenant shall have the right to exercise all legal and equitable remedies
available. Notwithstanding the foregoing, nothing shall limit or restrict
any other rights and remedies granted to Tenant, including but not limited
to, those set forth below in subparagraph (b).

(b) Notwithstanding anything to the contrary, if Landlord breaches
any of the following agreements and obligations of Landlord set forth below
in items (1) through (4) and such breach is not cured within 15 days after
written notice thereof from Tenant to Landlord, Tenant shall have the right
to cure such breach and in addition to any other remedies, to set-off against
all Rent and other amounts from time to time due from Tenant to Landlord (in
the order of maturity of such amounts) an amount equal to 100% of the
Tenant's actual cost and expense (including, without limitation, court costs
and attorneys' fees) of curing such breach. Landlord's 15 day opportunity to
cure any breaches shall be extended only (excluding a breach of a monetary
nature) wherein: the nature of breach or default is such that it cannot be
cured within 15 days despite due diligence; and Landlord commences to cure
with due diligence within a reasonable time upon receipt of Tenant's notice
and continues to cure in a due diligent manner. Under no circumstances,
despite the preceding sentence, shall Landlord be permitted more than 45 days
to cure; and where the nature of breach threatens Tenant's occupant's life
and safety, Tenant shall be permitted to cure such breach immediately.

(1) Landlord's obligation to pay the Tenant Improvement Allowance;
(2) Landlord's obligation to furnish Tenant with services as set
forth herein which renders the Premises untenantable;
(3) Landlord's obligation to complete all work per the Workletter.
(4) Landlord's indemnification obligation.

22. INDEMNIFICATION.

(a) Tenant shall indemnify and hold Landlord and its officers,
employees, agents, directors, shareholders, and partners harmless against any
loss, liability, damage, fine or other governmental penalty, cost, or expense
(including reasonable attorneys' fees and costs of litigation), or any claim
therefor, resulting from: (i) Tenant's noncompliance with or violation of
any law, ordinance, or other governmental regulation applicable to Tenant or
its use and occupancy of the Premises but only to the extent such
noncompliance or violation is not caused by act or omission of Landlord or
its employees; (ii) the use, generation, storage, treatment, or
transportation, or the disposal or other release into the environment, of any
Hazardous Material

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<PAGE>

by Tenant or its employees, agents, or contractors or as the result of
Tenant's use and occupancy of the Premises but only to the extent such
noncompliance or violation is not caused by act or omission of Landlord or
its employees; or (iii) injury to persons or loss or damage to property to
the extent caused by any negligent or wrongful act or omission of Tenant or
its employees, agents, and contractors, but only to the extent the loss or
damage would not be covered by property and casualty insurance of the type
and amount required to be carried by Landlord pursuant to this Lease (whether
or not actually so carried) but only to the extent such noncompliance or
violation is not caused by act or omission of Landlord or its employees.

(b) Landlord shall indemnify and hold Tenant and its officers,
employees, agents, directors, shareholders, and partners harmless against any
loss, liability, damage, fine or other governments penalty, cost, or expense
(including reasonable attorneys' fees and costs of litigation), or any claim
therefor, resulting from: (i) noncompliance with or violation of any law,
ordinance, or other governmental regulation applicable to Landlord, but only
to the extent such noncompliance or violation is not caused by the use or
occupancy of the Premises by Tenant or on any other act or omission of Tenant
or its employees, agents, or contractors; (ii) the use, generation, storage,
treatment, or transportation, or the disposal or other release at, from or to
the Property or the Premises, of any Hazardous Material at the Property , but
only to the extent not caused by an act or omission of Tenant or its
employees, agents, or contractors; or (iii) injury to persons or loss or
damage to property (other than trade fixtures or personal property owned by,
or in the custody of Tenant) except to the extent caused by any negligent or
wrongful act or omission of Tenant or its employees, agents, and contractors.

23. PROTECTION AGAINST LIENS. Tenant shall do all things necessary to,
prevent the filing of any mechanics', materialmen's, or other type of lien or
claim against Landlord or the Property by, against, through, or under Tenant
or its contractors. If any such lien or claim is filed, Tenant shall either
cause the same to be discharged within thirty (30) days after Tenant receives
written notice of the filing thereof, or if Tenant in its discretion and in
good faith determines that such lien or claim should be contested and if all
required consents or approvals of Landlord's mortgagee are obtained, Tenant
shall furnish such security as may be necessary to prevent any foreclosure
proceedings against the Property during the pendency of such contest. If
Tenant fails to discharge such lien or claim within such 20-day period or
fails to furnish such security, then Landlord may at its election, in
addition to any other right or remedy available to it, discharge the lien or
claim by paying the amount alleged to be due or by giving appropriate
security. If Landlord discharges or secures such lien or claim, then Tenant
shall reimburse Landlord on written demand for all sums paid and all costs
and expenses (including reasonable attorneys' fees and costs of litigation)
so incurred by Landlord.

24. HOLDING OVER. If Tenant remains in possession of any part of the
Premises after the expiration of the term of this Lease, whether with or
without Landlord's consent, Tenant shall be only a tenant at will, the
monthly installments of Minimum Rent payable during such holdover period
shall be one hundred twenty-five percent (125%) of the monthly installments
of Minimum Rent payable immediately preceding such expiration, and all
Additional Rent and other sums payable under this Lease shall continue to be
due and payable. The acceptance of any rent or other

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<PAGE>

payments from Tenant with respect to any holdover period shall not serve to
extend the term or waive any rights of Landlord, but Landlord may at any time
refuse to accept rent or other payments from Tenant, and may re-enter the
Premises, evict Tenant and all parties then in occupancy or possession, take
possession of the Premises, and if permitted under applicable law, change the
locks on the doors of the Premises without making keys to the changed locks
available to Tenant. Tenant shall indemnify and hold Landlord harmless
against any loss, liability, damage, cost, or expense (including reasonable
attorneys' fees and costs of litigation), or any claim therefor, related to
Tenant's holding over, including liabilities to any person to whom Landlord
may have leased any part of the Premises.

25. ATTORNEYS' FEES. If an Event of Default by Tenant or an Event of
Default by Landlord occurs, the prevailing party shall be entitled to recover
reasonable attorneys' fees and any costs of litigation incurred in exercising
and enforcing its remedies under this Lease.

26. WAIVER. The failure of a party to insist upon the strict
performance of any provision of this Lease or to exercise any remedy for an
event of default shall not be construed as a waiver. The waiver of any
noncompliance with this Lease shall not prevent subsequent similar
noncompliance from being or becoming an event of default. No waiver shall be
effective unless expressed in writing signed by the waiving party. No waiver
shall affect any condition other than the one specified in the waiver and
then only for the time and in the manner stated. Landlord's receipt of any
rent or other sums with knowledge of noncompliance with this Lease by Tenant
shall not be considered a waiver of the noncompliance. No payment by Tenant
of a lesser amount than the full amount then due shall be considered to be
other than on account of the earliest amount due. No endorsement or
statement on any check or any letter accompanying any check or payment shall
be considered an accord and satisfaction, and Landlord may accept any check
or payment without prejudice to Landlord's right to recover the balance owing
and to pursue any other available remedies.

27. LEASING COMMISSIONS. Each of Landlord and Tenant represents and
warrants to the other that it has not dealt with anyone claiming any
entitlement to any commission in connection with this leasing transaction.
Each of Landlord and Tenant agrees to indemnify and hold the other harmless
against any loss, liability, damage, cost, or expense (including reasonable
attorneys' fees and costs of litigation), or any claim therefor, for any
leasing or other commissions, fees, charges, or payments resulting from or
arising out of their respective actions in connection with this Lease.
Landlord shall indemnify and hold Tenant harmless against payment of any
leasing commission due Broker in connection with this Lease. Landlord
represents and warrants that no commission has been included in the rental
rate charge to Tenant.

28. NOTICES. Any notice may be given by (a) depositing written notice
in the United States mail, postpaid and certified and addressed to the party
at its notification address under this Lease with return receipt requested,
(b) delivering written notice in person or by commercial messenger or
overnight private delivery service to the party at its notification address
under this Lease, or (c) by facsimile transmission of written notice to the
party at its notification address under this Lease. Written notice given in
person or by commercial messenger, overnight private delivery, or facsimile
transmission in the manner described above shall be effective as of the time
of receipt at the destination address as evidenced by a receipt signed by an
employee of Tenant, by any confirmation of delivery provided by the messenger
or delivery service, or by facsimile confirmation of transmission. The
notification addresses of the parties are specified on the

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<PAGE>

signature page(s) of this Lease. Each party shall have the right to change
its address by not less then least ten (10) days' prior written notice to the
other party.

29. MISCELLANEOUS.

(a) If requested by Landlord, Tenant shall furnish appropriate
evidence of the valid existence and good standing of Tenant and the authority
of any parties signing this Lease to act for Tenant. If requested by Tenant,
Landlord shall furnish appropriate evidence of the valid existence and good
standing of Landlord and the authority of any parties signing this Lease to
act for Landlord.

(b) This document embodies the entire contract between the
parties, and supersedes all prior agreements and understandings between the
parties related to the Premises, including all lease proposals, letters of
intent, and similar documents. All representations, warranties, or
agreements of an inducement nature, if any, are merged with, and stated in
this document. This Lease may be amended only by a written instrument
executed by both Landlord and Tenant.

(c) The relationship created by this Lease is that of landlord and
tenant. Landlord and Tenant are not partners or joint venturers, and neither
has any agency powers on behalf of the other. Tenant is not a beneficiary of
any other contract or agreement relating to the Property to which Landlord
may be a party, and Tenant shall have no right to enforce any such other
contract or agreement on behalf of itself, Landlord, or any other party.

(d) No consent or approval by Landlord shall be effective unless
given in writing signed by Landlord or its duly authorized representative.
Any consent or approval by Landlord shall extend only to the matter
specifically stated in writing.

(e) Whenever this Lease requires Landlord's consent to or approval
of any item, Landlord may condition such consent or approval on payment or
reimbursement of all costs and expenses incurred by Landlord.

(f) The captions appearing in this Lease are included solely for
convenience and shall never be given any effect in construing this Lease.

(g) This Lease is being executed in multiple counterparts, each of
which shall be considered an original for all purposes.

(h) If any provision of this Lease is invalid or unenforceable,
the remainder of this Lease shall not be affected. Each separate provision
of this Lease shall be valid and enforceable to the fullest extent permitted
by law.

(i) This Lease binds not only Landlord and Tenant, but also their
respective heirs, personal representatives, successors, and assigns (to the
extent assignment is permitted by this Lease).

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<PAGE>

(j) This Lease is governed by the laws of the state in which the
Property is located.

(k) All references to "business days" in this Lease shall refer to
days that national banks are open for business in the city where the Property
is located. Time is of the essence of this Lease.

(l) All references to "mortgage(s)" in this Lease shall include
deeds of trust, deeds to secure debt, other security instruments, and any
ground or other lease under which Landlord may hold title to the Property as
lessee. All references to "mortgagee(s)" in this Lease shall include
trustees, secured parties, ground or other lessors, and other parties holding
any lien, security, or other interest in the Property pursuant to any
mortgage.

(m) Any liability or obligation of Landlord or Tenant arising
during or accruing with respect to the term of this Lease shall survive the
expiration or earlier termination of this Lease, including without
limitation, obligations and liabilities relating to (i) the final adjustment
of estimated installments of Additional Rent to actual Additional Rent owed,
(ii) the condition of the Premises or the removal of Tenant's property, and
(iii) indemnity and hold harmless provisions of this Lease.

(n) Tenant agrees not to record this Lease. Tenant may record a
memorandum of this Lease in a form approved by Landlord in writing prior to
recording provided Tenant pays all taxes, recording fees, or other
governmental charges incident to such recording. The memorandum shall not
disclose the rent payable under this Lease and shall expressly provide that
it shall be of no further force or effect after the last day of the term or
on filing by Landlord of an affidavit that this Lease has expired or been
terminated. Additionally, Tenant shall not disclose the terms of this Lease
to any third party except (i) legal counsel to or independent accountants of
Tenant, (ii) any assignee Affiliate or of Tenant's interest in this Lease or
sublessee of Tenant, (iii) as required by applicable law or by subpoena or
other similar legal process, or (iv) for financial reporting purposes.

(o) Landlord has delivered a copy of this Lease solely for
Tenant's review, and such delivery does not constitute an offer to Tenant or
an option reserving the Premises. This Lease shall not be effective until a
counterpart executed by both Landlord and Tenant is delivered by Landlord to
Tenant.

30. EXTENSION. By giving notice to Landlord of its intention to extend
at least 360 days prior to the appropriate expiration date, Tenant may extend
the original term for two consecutive further terms of 5 years each
(individually, an "Extended Term"). Each Extended Term shall be upon the
same terms and conditions as are contained in this Lease (including an
increase of two percent (2%) per annum in the annual Minimum Rent for the
second and each succeeding year of each Extended Term), except that (i) the
Minimum Rent payable for the first year of each Extended Term shall be the
lesser of: (x) ninety-five percent (95%) of the then Current Market Rental
Rate, as of the date of commencement of the Extended Term, as determined
pursuant to Exhibit I hereto, or (y) the Minimum Rent during the final year
of the initial term of the Lease or the first Extended Term, as the case may
be; and (ii) Landlord shall

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<PAGE>

provide a tenant improvement allowance equal to the amount which is the
product of Ten Dollars ($10.00) multiplied by the ratio of the CPI index
(Nashville, Tennessee area) as of the third calendar month immediately
preceding the beginning of the 15th year of the lease term to the index as of
the third calendar month immediately preceding the Commencement Date
multiplied by the number of usable square feet in the Premises.

31. ADDITIONAL SPACE.

(a) Until October 1, 1 999, Tenant may, by giving notice to
Landlord, lease the balance of the rentable Square feet of area on the
seventh floor of the Building (the "Additional Space"). The lease of the
Additional Space shall be upon the same terms and conditions as the lease of
the initial Premises, including that the rent for the Additional Space shall
be in accordance with the rent schedule set forth in Paragraph 3 of this
Lease and the construction allowance shall be as provided in this Lease for
the initial space. Tenant shall submit its plans and specifications for the
Additional Space within thirty (30) days after it gives notice exercising
this option. Promptly after Tenant exercises this option, the parties shall
enter into a supplemental agreement to this Lease incorporating the
Additional Space as part of the Premises.

(b) Subject to Tenant's rights to lease the Additional Space set
forth in (a) above, and provided that this Lease is then in full force and
effect, and further provided that Tenant is not then in default under any of
the terms, covenants or conditions in this Lease on Tenant's part to be
observed or perform beyond any applicable notice or grace period provided
herein, Tenant shall have an on-going right of first offer on any space that
becomes available at any time on the sixth and seventh floors of the Building
("Other Space"). In the event Other Space is available in the Building,
Landlord shall give Tenant written notice ("Other Space Notice") . During the
fifteen (15) day period commencing on the date of Tenant's receipt of the
Other Space Notice, Tenant shall have the option (the "Other Space Option")
to lease the Other Space from Landlord, upon the terms and conditions set
forth in this Lease for the initial Premises (except that the rent and
construction allowance shall be at the Current Market Rental Rate per Exhibit
I as of the date Landlord provides the Other Space Notice) by giving Landlord
notice (the "Lease Exercise Notice") of Tenant's exercise of the Other Space
Option. In no event will Landlord be required to provide a construction
allowance when the lease term is less than three (3) years. If Tenant elects
not to lease the Other Space or fails to give the Exercise Notice to Landlord
within such fifteen (15) day period, the Other Space Option shall be deemed
revoked, null and void, and of no further force or effect, and Landlord may
thereafter proceed with the leasing of the Other Space to any third party,
provided that Landlord and such third party execute a lease agreement on such
terms within one hundred eighty (180) days thereafter or Tenant's right of
first refusal (as set forth hereinabove) shall be reinstated. If Tenant
elects to lease the Other Space within such fifteen (15) day period, Landlord
and Tenant shall enter into a supplemental agreement to this Lease
incorporating the Additional Space as part of the Premises.

32. SPECIAL PROVISIONS. Any special provisions are attached to this
Lease as EXHIBIT G.

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<PAGE>

33. ENERGY STAR BUILDING. Landlord agrees to use its best efforts to
1) utilize MagneTek products throughout the Building and 2) design, construct
and maintain the Building to meet or exceed the standards as established by
the United States Environmental Protection Agency as of October 1, 1 998 for
an Energy Star Building. Landlord will make reasonable best efforts to
include any additional standard established after October 1, 1998. Landlord
shall also cooperate with Tenant in the promotion by Tenant of the Building's
Energy Star Building status. Such promotion shall include but shall not be
limited to the use in MagneTek's promotional and advertising materials of the
name MagneTek Building, photographs and video of the Building and interviews
with the Landlord and Building staff, architects and engineers. Tenant shall
also be allowed to conduct tours of the Building (not to interfere with other
tenant's use of their premises) including mechanical rooms at times and in a
manner reasonable acceptable to Landlord.

34. ACCESS BETWEEN FLOORS. Landlord agrees that Tenant shall have free
access 24 hours per day, 7 days per week to use the fire stairs in the
Building by Tenant's employees to access the various floors of the Premises.
Stairwell security can include but shall not be limited to security
monitoring cameras panic buttons, security telephones, and adequate security
lighting. A computerized cardkey system with readers on each floor shall be
provided allowing only authorized persons to enter MagneTek floors from the
firestairs. All costs above normal building requirements will be at Tenant's
expense.

35. PURCHASE OPTION. Tenant or Tenant's assignee shall have an option
to purchase the Property including the Garage at any time prior to the end of
the eighteenth (18th) month following the Commencement Date ("Option Period")
by delivery to Landlord of a Notice to Purchase not later than the end of the
Fifteenth (15th) month following the Commencement Date under the following
terms:

If said option is exercised as aforesaid, Landlord shall be obligated to
sell, and Tenant shall be obligated to purchase the Property including the
Parking Garage for a Purchase Price of Forty-Four Million Five Hundred
Thousand and NO/100ths Dollars ($44,500,000.00) plus any costs (including
prepayment penalties or assumption fees) incurred in paying off any or
assuming any existing indebtedness which is a lien on the property and
garage.

The closing date for the purchase of the Premises, pursuant to the
exercise of the option, shall be a date to be mutually agreed upon by
Landlord and Tenant, but in no event later than 90 days nor less than 30
days after the date of delivery of the Notice of Purchase.

Tenant shall signify its intent to exercise the option if at all by
delivering to Landlord, within the applicable Option Period, its written
notice of exercise of such option, accompanied by its certified check in
the sum of One Hundred Thousand and 00/100 Dollars ($100,000.00).

The Option Price for the Property including the Garage hereof shall be
paid to Landlord by Tenant in the following manner, to-wit.

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<PAGE>

(a) $100,000.00 by application against such Purchase Price of the
aforesaid certified check in such sum, accompanying Tenant's
written notice of exercise of the option. Such earnest money
shall be delivered to an escrow agent which shall be Landlord's
title insurance company or other institutional escrow agent
appointed by Landlord and reasonably acceptable to Tenant to be
held in accordance with the provisions hereof. The escrow agent
shall be instructed to invest such funds in investments
reasonably acceptable to Landlord and Tenant. Interest shall
accrue for the benefit of Tenant.

(b) The balance of such Purchase Price by wire transfer to
Landlord's designated bank account, providing "good funds" on
the date of closing.

Landlord shall, within a reasonable time after receipt of notice of
exercise of such option accompanied by said $100,000.00 payment, furnish
to Tenant a commitment for an Owner's policy of Title Insurance (current
ALTA form) issued by a title insurance company selected by Landlord and
reasonably acceptable to Tenant showing title to the Property including
the Garage in Landlord's name and subject only to the exceptions described
herein, and the standard exceptions to an ALTA Form B policy. Tenant
shall pay all costs of issuance of said commitment and any policy issued
in connection therewith. Tenant shall be allowed thirty (30) days to make
such title insurable. Pending correction of title, the payments hereunder
required shall be postponed, but upon correction of title and within ten
(10) days after written notice to Tenant, Tenant shall perform its
obligations in accordance with the terms, covenants and conditions of this
Paragraph.

If said title is not insurable and is not made so within thirty (30) days
from the date of written objection thereto, as above provided, any
agreement of purchase resulting from the exercise of such option shall, at
the written election of Tenant, shall be null and void. In such event
Landlord and Tenant shall instruct the escrow agent to return the earnest
money to Tenant along with accrued interest and neither party shall be
liable for damage under such resulting purchase agreement to the other
party. Tenant shall exercise its election by declaring such resulting
purchase agreement null and void by delivering to Landlord a written
notice to such effect within twenty (20) days after the expiration of the
aforesaid thirty (30) day period. In the event Tenant fails to deliver to
Landlord, in writing, the aforesaid election to declare the resulting
purchase agreement null and void within the period of time above set
forth, Tenant shall proceed to close subject to the then existing title
conditions.

Subject to the performance by Tenant, Landlord agrees to execute and
deliver a Special Deed conveying title to the Property including the
Garage to Tenant or Tenant's nominee, subject only to the following
exceptions:

(a) Building, zoning and subdivision laws, ordinances and State and
Federal regulations;

24
<PAGE>

(b) Easements, encumbrances, restrictions and other matters (i) set
forth in Exhibit "A" attached hereto, or (ii) to which Tenant
may have consented;

(c) Real Estate Taxes and annual installment of special assessments
payable subsequent to closing. An estimated proration shall be
made as of closing and an appropriate readjustment made when
final tax bills are available;

(d) Matters created or caused by Tenant (not required to be removed
by Landlord);

(e) Such other reasonable easements and restrictions as may be
requested by utilities or governmental authorities provided same
do not materially adversely affect the Property including the
Garage;

(f) Such other easements, restrictions or encumbrances as may have
been consented to by Tenant;

(g) Any mortgage assumed by Tenant.

(h) right of any sublessee or Lessee of the garage.

(i) rights of other tenants in the building including any
sublessees.

Tenant shall be required to assume any obligation of Landlord (as owner of
the Property including the Garage) under such foregoing "exceptions"
listed in (a) through (i) above.

Assumption of any mortgage indebtedness shall be at the election of
Tenant. If Tenant elects to pay all cash at closing, the Landlord
shall satisfy all such mortgagee and convey the Premises to Tenant
free and clear of all such mortgage indebtedness.

Tenant's rights under Paragraph 35 shall be subject and subordinate
to the lien of any mortgage (and collateral mortgage documents) on
the Property including the Garage, so long as no such mortgage would
preclude Tenant's purchase of the Premises as provided herein.

Landlord's obligations to complete the Property including the Garage
in the manner provided for in this Lease and Landlord's guarantee
relative to said Property including the Garage shall survive closing
and shall not be merged into any deed.

36. RIGHT OF FIRST REFUSAL TO PURCHASE. The Landlord may not sell,
exchange or otherwise dispose of all or substantially all of the Property
including the Garage without first offering, in writing (the "Offer Notice")
the Property including the Garage to the Tenant upon the same terms and
conditions, including manner and time of payment, as set forth in a bona fide
contract to purchase offer (the "Purchase Offer") made by a financially
competent offeror. A copy of the complete Purchase Offer must accompany the
Offer Notice given to the Tenant. The Tenant has ten (10) days after receipt
of the Offer Notice in which to notify the Landlord of the acceptance by the
Tenant of the Offer Notice.

25
<PAGE>

IN WITNESS WHEREOF, the parties have caused this Lease to be executed
pursuant to authority duly given as of the day and year first above written.

TENANT: LANDLORD:

MAGNETEK, INC. COLLEGE ST., LLC
a corporation a Tennessee limited liability
-------------------- corporation

By: David P. Reiland By: Robert C. Mathews, Jr.
Signature: Signature:
--------------------------- ---------------------------
Title: Chief Financial Officer Title: Chief Manager
[SEAL] [SEAL]

Witnesses to Tenant: Witnesses to Landlord:

- ------------------------------------- -------------------------------------
Printed Name: Printed Name:
------------------------ ------------------------

Tenant's Notification Address: Landlord's Notification Address:

MagneTek, Inc. College St., LLC
Attn: Dennis L. Hatfield Attn: Robert C. Mathews, III
26 Century Blvd. 300 Broadway
Nashville, Tennessee 37214 Nashville, Tennessee 37201
Facsimile: (615) 316-5178 Facsimile:
--------------------------

Copy to:

c/o Mathews Management
300 Broadway
Nashville, Tennessee 37201
Attn: Dede Scott

<PAGE>

- -----FINANCIALS----------------------------------------------------------------

SELECTED FINANCIAL DATA

STATEMENT OF INCOME DATA

FOR THE YEARS ENDED JUNE 30,
(AMOUNTS IN THOUSANDS,
EXCEPT PER SHARE DATA) 1998 1997 1996** 1995** 1994**
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>

Net sales $1,197,189 $1,190,540 $1,161,625 $1,202,536 $1,133,126

Income (loss):
Continuing operations 37,876 28,751 (94,164) 21,496 (16,942)
Discontinued operations -- -- -- (14,400) (28,503)
Extraordinary item -- (4,676) -- (4,820) --
Net income (loss) 37,876 24,075 (94,164) 2,276 (45,445)
- --------------------------------------------------------------------------------------------------------------
Per common share--basic:
Income (loss) from continuing
operations before extraordinary
item $ 1.25 $ 1.12 $ (3.81) $ 0.88 $ (0.70)
Net income (loss) 1.25 $ 0.94 $ (3.81) $ 0.09 $ (1.88)
Per common share--diluted:
Income (loss) from continuing
operations before extraordinary
item $ 1.20 $ 1.04 $ * $ 0.85 $ *
Net income (loss) 1.20 $ 0.89 $ * $ * $ *

- --------------------------------------------------------------------------------------------------------------

</TABLE>

** PER SHARE AMOUNTS ON A DILUTED BASIS ARE OMITTED AS SUCH AMOUNTS ARE
ANTI-DILUTIVE IN RELATION TO BASIC PER SHARE AMOUNTS.

** LOSSES FROM CONTINUING OPERATIONS FOR THE YEARS ENDED JUNE 30, 1996 AND
1994 INCLUDE PRETAX CHARGES AGGREGATING $79,717 AND $33,871. CHARGES IN
FISCAL 1996 REFLECT COSTS ASSOCIATED WITH REPOSITIONING OPERATIONS
PRIMARILY FOR SEVERANCE, TERMINATION BENEFITS, WARRANTY AND ASSET
WRITE-DOWNS RELATED TO FACILITY CLOSURES AND CONSOLIDATIONS. ALSO, IN
REVIEW OF THE COMPANY'S DEFERRED TAX ASSET IN ACCORDANCE WITH FASB NO.109,
A $14,700 CHARGE WAS INCURRED IN FISCAL YEAR 1996. FISCAL 1994
RESTRUCTURING RESERVES RELATED TO COSTS FOR 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. LOSS FROM DISCONTINUED OPERATIONS INCLUDES AFTER TAX CHARGES OF
$14,400 AND $25,041 FOR THE YEARS ENDED JUNE 30, 1995 AND 1994,
RESPECTIVELY, REFLECTING ESTIMATED LOSSES ON DISPOSITION.

BALANCE SHEET DATA

AS OF JUNE 30,
(AMOUNTS IN THOUSANDS) 1998 1997** 1996** 1995** 1994
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Total assets $ 730,738 $ 654,548 $ 678,774 $ 857,168 $ 931,358

Long-term debt,
including current portion 245,104 243,945 322,023 448,467 523,779
Common stockholders' equity 186,721 102,223 41,558 117,278 113,082

</TABLE>

MagneTek Report - 1998 25

<PAGE>

- -----FINANCIALS----------------------------------------------------------------

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONSW

GENERAL

Fiscal 1998 was a year of significant operational transition for MagneTek,
Inc. Repositioning activity was most noticeable in the Company's Lighting
Products segment where a major manufacturing operation was closed during the
course of the year. Production of a primary component (electrical steel
laminations) was outsourced to a third party, and the remaining assembly
operations were transferred to lower production cost facilities, including a
newly opened facility in Reynosa, Mexico. Additionally, the Company entered
into an agreement with General Electric Company ("GE") wherein GE became the
exclusive distributor in North America of the Company's linear electronic
ballasts.Although the Company continued to sell magnetic and high intensity
discharge ballasts through its traditional distribution channel, the Company
did encounter certain transition issues and related costs. While not as
expansive as in the Lighting Products segment, certain repositioning actions
were also undertaken in the Company's other business segments. In the Motors
andControls segment, investments were made at major manufacturing facilities
to convert them to a Demand Flow Technology environment. Certain motor
product lines were also relocated to lower production cost facilities.
Repositioning activity in the Motors and Controls segment, primarily product
line relocation, is expected to continue and probably accelerate in fiscal
1999. In the Power Supplies segment, the Company began to position its North
American operations for future growth. The Huntsville, Alabama location was
expanded and enhanced to become the North American design and development
center for power electronic products. This facility also converted its
production capability from primarily electronic lighting ballasts to power
supplies. In Europe, capacity was increased in both Valdarno, Italy and
Pomaz, Hungary. The Company continues to move the more labor-intensive
elements of its production processes to lower cost facilities in both Europe
and North America.

[BAR GRAPH]

As compared to fiscal 1997, net sales were higher in the Motors and Controls
and Power Supplies segments but lower in the Lighting Products segment. Net
sales in the Power Supplies segment, and to a lesser extent in the Lighting
Products segment, were adversely impacted by translation rates of foreign
currencies. From a consolidated profitability standpoint, and as previously
anticipated, the benefits of repositioning actions in fiscal 1998 were more
than offset by the related costs. Manufacturing inefficiencies and start-up
expenses coupled with greater than planned price erosion in the Lighting
Products segment resulted in relatively flat operating profit performance for
the Company as compared to fiscal 1997. The Company believes it is well
positioned to realize the benefits of fiscal 1998 repositioning activity with
higher profit margins in fiscal 1999. The Company continues to invest in
quality programs and upgraded information systems to further support margin
increases.

[BAR GRAPH]

26 MagneTek Report - 1998

<PAGE>

- -------------------------------------------------------------------------------

Despite flat operating profits, the Company posted a 32 percent increase in
income before extraordinary items and a 57 percent increase in net income.
Diluted earnings per share were up 15 percent before extraordinary items and
35 percent on a net basis.The increase was due to lower interest expense and
a lower effective income tax rate in fiscal 1998. Lower interest expense was
due to the redemption of the Company's 103/4% Senior Subordinated Debentures
in fiscal 1997 and the conversion to common shares of its 8% Convertible
Subordinated Notes in fiscal 1997 and early fiscal 1998 (see Note 5).

On June 12, 1998 the Company purchased the assets of Omega Power Systems, a
manufacturer of custom power supplies. Omega's products serve to further
expand the offerings and capabilities in the Power Supplies segment. The
combination of the Company's foreign power supplies base in Europe and a
larger domestic presence will increase the breadth of product offerings and
the ability to use combined purchasing to reduce material costs.

The Company is currently operating certain computer software and systems
which are not Year 2000 compliant. In the event internal systems do not
correctly recognize date information when the year changes to 2000, this
could result in an adverse impact to the Company's operations. In fiscal
1997, the Company initiated a comprehensive systems review which resulted in
the purchase of an Oracle "Enterprise Resource Planning" software package.
While the primary purpose of the software was to improve business processes,
it also enables the Company to resolve Year 2000 issues.Replacement and
conversion of software to eliminate Year 2000 problems is anticipated to be
complete early in calendar year 1999. Capitalized costs in fiscal 1998 to
implement the Oracle system were approximately $10 million dollars with a
total cost of the project estimated at $16 million dollars. Management
believes that the likelihood of a material adverse impact due to problems
with internal systems is remote. The Company is contacting critical suppliers
to determine that the products and services they provide are Year 2000
compliant. The Company has not yet formally developed Year 2000-specific
contingency plans in the event implementation of the Oracle system is
delayed. In addition to normal periodic reviews, a formal assessment prior to
the end of calendar year 1998 will re-evaluate implementation plans. In the
event this review would indicate the Company's implementation dates are at
risk, contingency plans will be established. Notwithstanding those efforts,
there can be no assurance that another company's failure to ensure Year 2000
capability would not have an adverse effect on the Company.

[BAR GRAPH]

The Company is exposed to various types of market risks. These risks include
raw material price fluctuations most notably in copper and aluminum.
Additional risks exist with interest rate movements and foreign currency
fluctuations in relation to the U.S. dollar. The Company attempts to lower
these risks within established guidelines. Futures contracts for copper and
aluminum are purchased over time periods and at volume levels which
approximate expected usage. Interest rate swaps limit the Company's exposure
to upward movements in interest rates which would increase the cost of
variable rate debt. Foreign currency contracts mitigate exposure from the
Company's foreign operations and changes in exchange rates of foreign
currencies. TheCompany does not speculate on futures prices and has
established limitations on the dollar magnitude and time frames for these
transactions.

MagneTek Report - 1998 27

<PAGE>

- -----FINANCIALS----------------------------------------------------------------

In the fourth quarter of fiscal 1996, the Company established reserves
reflecting anticipated costs associated with operational repositioning as
well as estimated increases in warranty and other costs (see Note 3). In
fiscal 1998, charges to these reserves were consistent with the Company's
original expectations and remaining reserves appear adequate to meet the
projected future charges.

The Company currently operates in three business segments:Motors and
Controls, which includes fractional and integral horsepower electric motors,
medium voltage generators and electronic variable speed drives; Lighting
Products, including magnetic and electronic lighting ballasts; and Power
Supplies, including electronic power supplies and small transformer products.

RESULTS OF OPERATIONS

NET SALES AND GROSS PROFIT

Net sales for the Company increased slightly in fiscal 1998, to $1.197 billion
from $1.191 billion in fiscal 1997. The relatively flat sales followed an
increase of 2.5% in fiscal 1997 versus fiscal 1996. Net sales in Motors and
Controls increased 7% in fiscal 1998 due primarily to increased generator,
commercial fractional and integral horsepower motor sales. Segment revenues
increased 3% in fiscal 1997 due to improved generator and drive sales. Net sales
in the Lighting Products segment declined 7% due to lower magnetic and
electronic ballast sales. Lower magnetic unit sales, competitive pricing in both
magnetic and electronic ballasts and weaker foreign demand all contributed to
the decline. Net sales in Lighting Products in fiscal 1997 increased 5% due to
growing compact fluorescent sales. Net sales in the Power Supplies segment
increased 1% in fiscal 1998 due to increased sales of custom power supplies,
offset by lower sales of certain transformer products. Foreign revenues were
unfavorably impacted by approximately 9% or $20 million dollars due to weaker
currencies in Europe. In fiscal 1997, Power Supplies sales declined 5% primarily
due to the sale of a small transformer business. Adjusting for the sale, Power
Supplies revenues in fiscal 1997 were comparable to the year earlier results.

[BAR GRAPH]

The Company's gross profit fell to $233.1 million in fiscal 1998 from $239.9
million in fiscal 1997. While Motors and Controls and Power Supplies improved
from the year earlier period, Lighting Products results were lower.The
combination of lower selling prices as well as costs associated with
manufacturing moves and start-up negatively impacted results. Gross profit
levels in fiscal 1997 improved over the $156.6 million in fiscal 1996. Gross
profit in fiscal 1996 included charges aggregating $43.3 million reflecting
costs associated with repositioning operations and estimated warranty and
other costs.

[BAR GRAPH]

28 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

OPERATING EXPENSES

Selling, general and administrative (SG&A) expense was $154.7 million (12.9% of
net sales) in fiscal 1998 compared to $159.9 million (13.4% of net sales) in
fiscal 1997. Fiscal 1998 costs included increased expenses to enhance
information systems, quality programs and organizational capabilities. These
increases were offset by lower employee benefit costs.

INTEREST AND OTHER EXPENSES

Interest expense was $16.6 million in fiscal 1998 compared to $27.8 million in
fiscal 1997 and $31.6 million in fiscal 1996. Interest expense was lower due to
the Company's repurchase of almost all of its 103/4% Senior Subordinated
Debentures and conversion to common stock of its $75 million 8% Convertible
Subordinated Notes in the fourth quarter of fiscal 1997 and the first quarter of
fiscal 1998. The Senior Subordinated Debentures were repurchased using the
available capacity under its Bank Loan Agreement with lower interest rates (see
Note 5). Other expense in fiscal 1998 was $2.7 million compared to $4.3 million
in fiscal 1997 and $5.7 million in fiscal 1996. The reduction in other expense
is related to the extinguishment of debt and resulting lower amortization of
deferred financing costs.

[BAR GRAPH]

NET INCOME (LOSS)

In fiscal 1998, the Company recorded income of $37.9 million or $1.25 per share
(basic) and $1.20 on a diluted basis. Comparable results for fiscal 1997 include
net income of $28.8 million or $1.12 basic earnings per share before an
extraordinary charge of $4.7 million associated with the extinguishment of the
Senior Subordinated Debentures. Including the extraordinary charge, the Company
reported net income in fiscal 1997 of $24.1 million or $.94 per share
(basic).Results on a diluted basis for 1997 were $1.04 per share and $.89 per
share respectively. In fiscal 1996, the Company recorded a net loss of $94.2
million or $3.81 per share. Fiscal 1996 results were adversely affected by
charges for repositioning operations, warranty and other expense and asset
write-downs. Exclusive of the repositioning charges in fiscal 1996, a pre-tax
profit would have been achieved. The effective tax rate for fiscal 1996 was
impacted by a variety of factors, including the inability to reflect tax
benefits for losses incurred at the Company's German operation and a $38.9
million increase to the valuation reserve for deferred taxes.

MagneTek Report - 1998 29

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 1998, long-term borrowings (including the current portion) were
$245 million, compared to $244 million as of June 30, 1997 and $322 million as
of June 30, 1996. Long-term borrowings were favorably impacted by the conversion
of $39.6 million of Convertible Subordinated Notes to equity in the first
quarter of FY 1998. Investment in working capital and capital equipment
increased over fiscal 1997 levels as the Company completed its repositioning
actions in the Lighting Products segment and added capacity in certain motor and
power supply product lines. Additionally, the Company had capital expenditures
of approximately $10 million related to its program to upgrade its information
systems. During the last quarter of FY 1998, the Company also made investments
totaling $31 million with the acquisition of Omega Power Systems and a minority
equity interest in the MyTech Corporation.

In June 1997, the Company entered into a Bank Loan Agreement which provides up
to $350 million of borrowings under a revolving loan facility. As of June 30,
1998, the Company had approximately $103 million in available capacity under
this agreement. The Company believes its internally generated cash flows along
with the Bank Loan Agreement which expires in 2002 and its access to external
capital resources provides adequate financial flexibility to meet its near-term
financial requirements.

Cash outflow in connection with the repositioning and other reserves established
in fiscal 1996 approximated $19 million in fiscal 1998 and is not expected to
exceed $10 million in fiscal 1999. In addition, the Company may be subject to
certain potential environmental and legal liabilities (see Note 10).

30 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF INCOME

FOR THE YEARS ENDED JUNE 30,
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net sales $1,197,189 $1,190,540 $1,161,625
Cost of sales 964,079 950,617 1,005,004
- -------------------------------------------------------------------------------------------------------------
Gross profit 233,110 239,923 156,621
Selling, general and administrative expenses 154,679 159,859 164,930
Provision for impairment of long-lived assets -- -- 29,212
- -------------------------------------------------------------------------------------------------------------
Income (loss) from operations 78,431 80,064 (37,521)
Interest expense 16,559 27,825 31,591
Other expense, net 2,696 4,288 5,652
- -------------------------------------------------------------------------------------------------------------
Income (loss) before provision for income taxes
and extraordinary item 59,176 47,951 (74,764)
Provision for income taxes 21,300 19,200 19,400
- -------------------------------------------------------------------------------------------------------------
Income (loss) before extraordinary item 37,876 28,751 (94,164)
Extraordinary item--loss on early extinguishment of debt
(net of tax benefit) -- (4,676) --
- -------------------------------------------------------------------------------------------------------------
Net income (loss) $ 37,876 $ 24,075 $ (94,164)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Per common share basic:
Income (loss) before extraordinary item $ 1.25 $ 1.12 $ (3.81)
Extraordinary item - (.18) -
- -------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1.25 $ 0.94 $ (3.81)
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
Per common share diluted:
Income (loss) before extraordinary item $ 1.20 $ 1.04 $ *
Extraordinary item - (.15) -
- -------------------------------------------------------------------------------------------------------------
Net income (loss) $ 1.20 $ .89 $ *
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

* PER SHARE AMOUNTS ON A DILUTED BASIS HAVE BEEN OMITTED AS SUCH AMOUNTS ARE
ANTI-DILUTIVE IN RELATION TO BASIC PER SHARE AMOUNTS.

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

MagneTek Report - 1998 31

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30,
AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
- -------------------------------------------------------------------------------------------------------------
Current assets:
Cash $ 5,976 $ 6,138
Accounts receivable, less allowance for doubtful accounts of $4,823 in 1998
and $5,168 in 1997 197,284 191,011
Inventories 196,830 181,014
Deferred income taxes 6,791 12,888
Prepaids and other assets 10,673 7,331
- -------------------------------------------------------------------------------------------------------------
Total current assets 417,554 398,382
- -------------------------------------------------------------------------------------------------------------
Property, plant and equipment:
Land 3,069 3,139
Buildings and improvements 56,628 56,264
Machinery and equipment 380,430 348,594
- -------------------------------------------------------------------------------------------------------------
440,127 407,997
Less accumulated depreciation and amortization 243,657 231,627
- -------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 196,470 176,370
- -------------------------------------------------------------------------------------------------------------
Goodwill, less accumulated amortization of $9,930 in 1998 and $8,952 in 1997 53,576 30,741
Deferred financing costs, intangible and other assets
less accumulated amortization of $23,136 in 1998 and $22,395 in 1997 63,138 49,055
- -------------------------------------------------------------------------------------------------------------
$730,738 $654,548
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

1997 AMOUNTS HAVE BEEN RESTATED TO CONFORM TO THE 1998 PRESENTATION FOR PREPAID
PENSION VALUES.

32 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
AS OF JUNE 30,
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 1998 1997
- -------------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Current liabilities:
Accounts payable $113,377 $ 97,060
Accrued liabilities 107,539 119,755
Current portion of long-term debt 5,527 3,109
- -------------------------------------------------------------------------------------------------------------
Total current liabilities 226,443 219,924
- -------------------------------------------------------------------------------------------------------------
Long-term debt, net of current portion 239,577 240,836
Other long-term obligations 66,213 71,273
Deferred income taxes 11,784 20,292

Commitments and contingencies

Stockholders' Equity:
Common stock, $0.01 par value, 100,000,000 shares authorized
31,484,000 and 28,259,000 shares issued and outstanding in 1998 and 1997 313 282
Additional paid-in capital 176,464 129,151
Retained earnings (deficit) 27,737 (10,139)
Cumulative translation adjustment (17,793) (17,071)
- -------------------------------------------------------------------------------------------------------------
Total stockholders' equity 186,721 102,223
- -------------------------------------------------------------------------------------------------------------
$730,738 $654,548
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

MagneTek Report - 1998 33

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL RETAINED CUMULATIVE MINIMUM
(AMOUNTS IN THOUSANDS, ------------------- PAID-IN EARNINGS TRANSLATION PENSION
EXCEPT SHARE DATA) SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT LIABILITY
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JUNE 30, 1995 24,680,000 $247 $ 81,142 $ 59,950 $(15,127) $(8,934)
- --------------------------------------------------------------------------------------------------------------------
Exercise of stock options 32,000 -- 172 -- -- --
Restricted stock grant -- -- 1,834 -- -- --
Pension Plan contribution 750,000 8 6,461 -- -- --
Translation adjustment -- -- -- -- 1,035 --
Minimum pension liability -- -- -- -- -- 8,934
Net loss -- -- -- (94,164) -- --
- --------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30,1996 25,462,000 $255 $ 89,609 $(34,214) $(14,092) --
- --------------------------------------------------------------------------------------------------------------------
Exercise of stock options 332,000 3 3,434 -- -- --
Restricted stock grants 252,000 2 634 -- -- --
Debt conversion 2,213,000 22 35,474 -- -- --
Translation adjustment -- -- -- -- (2,979) --
Net income -- -- -- 24,075 -- --
- --------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1997 28,259,000 $282 $129,151 $(10,139) $(17,071) --
- --------------------------------------------------------------------------------------------------------------------
Exercise of stock options 513,000 5 7,057 -- -- --
Restricted stock grants 40,000 -- 1,216 -- -- --
Debt conversion 2,472,000 24 38,945 -- -- --
Share value trust 200,000 2 3,055 -- -- --
Unearned employee compensation -- -- (2,960) -- -- --
Translation adjustment -- -- -- -- (722) --
Net income -- -- -- 37,876 -- --
- --------------------------------------------------------------------------------------------------------------------
BALANCE, JUNE 30, 1998 31,484,000 $313 $176,464 $ 27,737 $(17,793) --
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

34 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
FOR THE YEARS ENDED JUNE 30,
(AMOUNTS IN THOUSANDS) 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash flows from operating activities:
Income (loss) from continuing operations before extraordinary item $ 37,876 $28,751 $(94,164)
Adjustments to reconcile income (loss) from continuing operations
before extraordinary items to net cash provided by operating activities:
Depreciation and amortization 38,405 38,431 40,041
Restructuring charges -- -- 50,505
Provision for impairment of long-lived assets -- -- 29,212
Changes in operating assets and liabilities of continuing operations (40,709) 22,558 43,494
- ----------------------------------------------------------------------------------------------------------------------------
Total adjustments (2,304) 60,989 163,252
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 35,572 89,740 69,088
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Purchase of and investment in companies, net of cash acquired (31,001) -- --
Proceeds from sale of businesses and assets 1,897 2,679 92,149
Capital expenditures (58,861) (33,245) (40,515)
Other investments 4,527 (2,382) 37
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) investing activities (83,438) (32,948) 51,671
- ----------------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Borrowings under bank and other long-term obligations 40,749 80,594 --
Proceeds from issuance of common stock 7,057 3,413 172
Repayment of bank and other long-term obligations -- (129,985) (126,444)
Increase in deferred financing costs (102) (1,323) (500)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 47,704 (47,301) (126,772)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) continuing operations (162) 9,491 (6,013)
- ----------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) discontinued operations $ -- $ (4,224) $ 6,573
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash (162) 5,267 560
Cash at beginning of year 6,138 871 311
- ----------------------------------------------------------------------------------------------------------------------------
Cash at end of year $ 5,976 $ 6,138 $ 871
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL
STATEMENTS.

MagneTek Report - 1998 35

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(ALL AMOUNTS IN THE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS ARE EXPRESSED IN
THOUSANDS, EXCEPT SHARE AND PER SHARE DATA.)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of MagneTek, Inc. and
its subsidiaries (the Company). All significant intercompany accounts and
transactions have been eliminated. Certain reclassifications have been made to
the fiscal 1997 financial statements to conform to the current year
presentation.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company's policy is to record and recognize sales only upon shipment.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market.

PROPERTY, PLANT AND EQUIPMENT

Additions and improvements are capitalized at cost, whereas expenditures for
maintenance and repairs are charged to expense as incurred. Depreciation is
provided over the estimated useful lives of the respective assets principally on
the straight-line method (normally five to ten years).

ACCOUNTING FOR STOCK OPTIONS

As permitted under Statement of Financial Accounting Standards No. 123 (SFAS
123), "Accounting for Stock-Based Compensation," the Company has elected to
follow Accounting Principles Board Opinion No. 25 "Accounting for Stock Issued
to Employees" (APB25), and related interpretations, in accounting for stock
based awards to employees. Under APB 25, the Company recognizes no compensation
expense with respect to such awards. The Company has adopted the disclosure-only
option under SFAS No.123.

RECENT ACCOUNTING PRONOUNCEMENTS

The Company intends to adopt SFASNo. 130, "Reporting Comprehensive Income," and
SFASNo. 131, "Disclosures about Segments of an Enterprise and Related
Information," in fiscal 1999. Each will require additional disclosure but will
not have a material effect on the Company's financial position or results of
operations. SFAS No. 130 will first be reflected in the Company's first quarter
of fiscal 1999 interim financial statements. SFASNo. 131 requires segments to be
determined based upon how management measures performance and makes decisions
about allocating resources. SFAS No. 131 will first be reflected in the
Company's 1999 Annual Report.

36 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

RESEARCH AND DEVELOPMENT

Expenditures for research and development are charged to expense as incurred and
aggregated $22,200, $23,600 and $21,500 for the years ended June 30, 1998, 1997,
and 1996, respectively.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company utilizes derivative financial instruments to reduce commodity and
financial market risks. These instruments are used to hedge copper material
purchases, foreign currency and interest rate market exposures.The Company does
not use derivative financial instruments for speculative or trading purposes.
The accounting policies for these instruments are based on the Company's
designation of such instruments as hedging transactions.The criteria the Company
uses for designating an instrument as a hedge include the instrument's
effectiveness in risk reduction and the matching of the derivative to the
underlying transaction. The resulting gains or losses are accounted for as part
of the transactions being hedged, except that losses not expected to be
recovered upon the completion of the hedge transaction are expensed.

DEFERRED FINANCING COSTS, INTANGIBLE AND OTHER ASSETS

Costs incurred to obtain financing are deferred and amortized principally on a
debt-outstanding method over the term of financing acquired. Amortization
expense relating to deferred financing costs was $741, $2,874 and $2,351 for the
years ended June 30, 1998, 1997 and 1996, respectively. Goodwill is being
amortized using the straight-line method over a forty-year period. The Company
assesses the recoverability of goodwill based upon several factors, including
management's intention with respect to the operations to which the goodwill
relates and those operations' projected future income and undiscounted cash
flows. Write-downs of goodwill are recognized when it is determined that the
value of such asset has been impaired. Amortization expense relating to goodwill
was $978, $967, and $995 for the years ended June 30, 1998, 1997, and 1996,
respectively. In fiscal 1997, the Company began a multi-year project to
implement an "Enterprise Resource Planning" software package. Capitalized costs
will be amortized over the estimated useful life of 7 years beginning when each
site installation or module is complete and ready for its intended use.

INCOME TAXES

Income taxes are provided based upon the results of operations for financial
reporting purposes and include deferred income taxes applicable to timing
differences between financial and taxable income.

Federal income taxes are not provided currently on undistributed earnings of
foreign subsidiaries since the Company presently intends to reinvest any
earnings overseas indefinitely.

EARNINGS PER SHARE

The consolidated financial statements are presented in accordance with SFAS No.
128, "Earnings Per Share." Basic earnings per share are computed using the
weighted average number of common shares outstanding during the period. Diluted
earnings per common share incorporate the incremental shares issuable upon the
assumed exercise of stock options and common equivalent shares outstanding
including the effect of additional shares related to the Company's Convertible
Notes as if conversion to common shares had occurred at the beginning of the
fiscal year. Earnings have also been adjusted for interest expense on the
Convertible Notes.

MagneTek Report - 1998 37

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

FISCAL YEAR

The Company uses a fifty-two, fifty-three week fiscal year which ends on Sunday
nearest June 30. For clarity of presentation, all periods are presented as if
the year ended on June 30. Fiscal years 1998, 1997 and 1996 contained 52 weeks.

2. ACQUISITIONS

On June 12, 1998, the Company purchased the assets of Omega Power Systems
(Omega) for cash of approximately $29 million. Omega is a manufacturer of custom
power supplies. The acquisition was accounted for under the purchase method of
accounting and, accordingly, the purchase price was allocated to the net assets
acquired based on their estimated fair market value. The purchase price exceeded
the fair value of net assets acquired by approximately $23 million, which is
being amortized on a straight-line basis over 40 years. Operating results of
Omega are included in the Company's consolidated results since the acquisition
date, such results were immaterial in fiscal 1998.

3. REPOSITIONING COSTS

In fiscal 1996, as a result of significant declines in sales and profit margins
in both electronic and magnetic ballasts, the Company initiated a review and
analysis of actions to reduce costs and improve future flexibility and
profitability, focused to a large extent in its lighting products business.
Subsequent to review and approval by the Company's Board of Directors, certain
reserves were established and charges recorded in the year ended June 30, 1996.
These charges were associated with a variety of repositioning actions and
included 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 asset write-downs
related primarily to the Lighting Products segment and aggregated $79,717 of
which $43,337 was included in cost of goods sold and $7,168 in selling, general
and administrative expense. Asset write-downs of $29,212 were included
separately within the caption "Provision for impairment of long-lived assets"
and were determined in accordance with FASB No. 121. Of the $50,505 included in
cost of goods sold and SG&A expense, approximately $28,700 related to warranty,
$17,900 to severance and termination benefits and $3,900 in other costs. In
fiscal 1998, cash outflows associated with these charges aggregated $18,800 with
$3,800 related to warranty, $12,000 in severance and termination benefits and
$3,000 in plant and other repositioning charges. In fiscal 1997, total cash
outflows were $11,000 which included $4,900 related to warranty, $3,700 in
severance and termination benefits and $2,400 in plant and other repositioning
charges. The Company estimates that cash requirements will not exceed $10,000 in
fiscal 1999. At this time the Company believes that the reserves established in
1996 are adequate to cover the remaining liabilities. Remaining reserves are
included in warranty reserves (see Note 14).

4. INVENTORIES

Inventories at June 30, consists of the following:

<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials and stock parts $ 64,714 $ 55,584
Work-in-process 38,620 40,343
Finished goods 93,496 85,087
- -------------------------------------------------------------------------------------------------------------
$196,830 $181,014
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

38 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

5. LONG-TERM DEBT AND BANK BORROWING ARRANGEMENTS

Long-term debt at June 30, consists of the following:

<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Revolving bank loans $231,890 $184,026
10.75 percent Senior Subordinated Debentures, interest payable
semi-annually, due November 15, 1998 3,035 3,035
8 percent Convertible Subordinated Notes, interest payable semi-annually,
convertible into 2,474,375 shares of common stock in fiscal 1997,
due September 2001 -- 39,590
Miscellaneous installment notes, capital leases and other obligations at rates
ranging from 5.75 percent to 9.25 percent, due through 2003 10,179 17,294
- -------------------------------------------------------------------------------------------------------------
$245,104 243,945
Less current portion 5,527 3,109
- -------------------------------------------------------------------------------------------------------------
$239,577 $240,836
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

BANK BORROWING ARRANGEMENTS

On June 20, 1997, the Company entered into an amended agreement with a group of
banks (Bank Loan Agreement) that have committed to lend up to $350,000 under a
revolving loan facility through June, 2002. Borrowings under the credit facility
bear interest at the bank's prime lending rate or, at the Company's option, the
London Interbank Offered Rate plus five-eights percent. These rates may be
reduced or increased based upon the level of certain debt-to-cash flow ratios.
At June 30, 1998, borrowings under the Bank Loan Agreement bore interest at a
weighted average rate of approximately 6.4%. The Company is required to pay a
commitment fee of .20% percent on unused commitments.

Borrowings under the Bank Loan Agreement are secured by domestic accounts
receivable and inventories and by the capital stock of certain of the Company's
subsidiaries. The Bank Loan Agreement contains certain provisions and convenants
which, among other things, restrict the payment of cash dividends on common
stock, limit the amount of future indebtedness and require the Company to
maintain specific levels of net worth and cash flow.

The Company's European subsidiaries have certain limited local borrowing
arrangements to finance working capital needs. Borrowings under these
arrangements are secured by accounts receivable and inventories of the
respective subsidiaries. The Company has provided parent guarantees to the local
banks which provide the related financing.

SENIOR SUBORDINATED DEBENTURES

On June 27, 1997, the Company completed a tender for its 103/4 percent Senior
Subordinated Debentures ("Debentures") leaving $3,035 of the Debentures
outstanding. The Debentures are not redeemable by the Company prior to maturity
in November, 1998 and are subordinated to borrowings under the Bank Loan
Agreement.

As a result of the tender offer, the indenture governing the remaining
Debentures was modified to eliminate substantially all restrictive covenants.

MagneTek Report - 1998 39

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

CONVERTIBLE SUBORDINATED NOTES

On June 23, 1997, holders of the Convertible Notes converted $35,410 of the
Convertible Notes to 2,213,067 shares of common stock as a result of a partial
call of the Convertible Notes by the Company. On September 22, 1997, the Company
redeemed the remaining $39,590 of the Convertible Notes with holders converting
their Notes into 2,471,898 shares of common stock.

Aggregate principal maturities on long-term debt outstanding at June 30, 1998
are as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30
---------------------------------------------------
<S> <C>
1999 $ 5,527
2000 3,401
2001 2,175
2002 233,116
2003 150
Thereafter 735
---------------------------------------------------
</TABLE>

6. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per
share.

<TABLE>
<CAPTION>
1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Basic earnings per share:
Income (loss) before extraordinary item $37,876 $28,751 $(94,164)
Extraordinary item (net of taxes) -- (4,676) --
- -------------------------------------------------------------------------------------------------------------
Net income (loss) $37,876 $24,075 $(94,164)
Weighted average shares for basic earnings per share 30,417 25,692 24,698
Basic earnings per share $ 1.25 $ 0.94 $ (3.81)
- -------------------------------------------------------------------------------------------------------------
Diluted earnings per share:
Income (loss) before extraordinary item $37,876 $28,751 $(94,164)
Interest savings on convertible debt after-tax 466 3,452 3,540
Extraordinary item (net of taxes) -- (4,676) --
- -------------------------------------------------------------------------------------------------------------
Net income (loss) $38,342 $27,527 $(90,624)
Weighted average shares for basic earnings per share 30,417 25,692 24,698
Effect of dilutive employee stock options 1,017 740 868
Effect of convertible debt to equity 571 4,651 4,688
- -------------------------------------------------------------------------------------------------------------
Weighted average shares for diluted earnings per share 32,005 31,083 30,254
Diluted earnings per share $ 1.20 $ 0.89 *
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

*PER SHARE AMOUNTS ON A DILUTED BASIS HAVE BEEN OMITTED AS SUCH AMOUNTS ARE
ANTI-DILUTIVE IN RELATION TO BASIC PER SHARE AMOUNTS.

40 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

7. FAIR VALUES OF FINANCIAL INSTRUMENTS

The carrying amounts of certain financial instruments such as cash, annuity
contracts and borrowings under short term revolving credit agreements
approximate their fair values.

8. DERIVATIVE FINANCIAL INSTRUMENTS

The Company enters into futures contracts to provide an economic hedge against
fluctuations in copper and aluminum prices. Gains and losses are recorded in
cost of sales as the related materials are purchased. The Company also uses
certain foreign exchange contracts to minimize its risk of loss from
fluctuations in exchange rates. The majority of these contracts relate to
hedging peso fluctuations as the Company has significant Mexican manufacturing
operations. Gains and losses from these transactions are recorded in cost of
sales as the contracts are liquidated. In combination with the amended Bank Loan
Agreement (see Note 5), the Company has entered into certain interest rate swaps
in connection with the management of its exposure to fluctuation in interest
rates. Gains or losses from the interest rate swaps are amortized over the
period of the original contract. The Company does not use derivative financial
instruments for speculative or trading purposes.

Outstanding notional amounts for derivative financial instruments at fiscal
year-ends were as follows:

<TABLE>
<CAPTION>
1998 1997
- --------------------------------------------------------------------------------
<S> <C> <C>
Interest rate swaps $100,000 $75,000
Currency forward contracts 59,257 33,985
Copper forward contracts 29,674 20,372
Aluminum forward contracts 5,469 1,349
- --------------------------------------------------------------------------------
</TABLE>

Weighted average pay and receive rates, average maturities and range of
maturities on swaps as of June 30, 1998 were as follows:

<TABLE>
<CAPTION>
Weighted
Weighted Weighted average Range of
average average maturity maturity
pay rate receive rate (in years) (in years)
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Swaps hedging debt 6.4% 5.7% 5.9 4.0 - 9.5
</TABLE>

As of June 30, 1998 the Company had approximately 36 million pounds of copper
under futures contracts with an average cost per pound of $0.82. Copper under
contract represents 77% of the Company's fiscal 1999 estimated requirements and
no contract extends beyond the end of fiscal year 1999. As of the end of fiscal
1998, the Company had approximately 8 million pounds of aluminum under contract
at an average cost per pound of $0.67. Aluminum under contract represents 80% of
the Company's fiscal 1999 requirements and no contracts extend beyond the end of
fiscal 1999. The Company has purchased forward contracts equal to 91% of its
peso requirements for fiscal 1999 at an average rate of 9.5 pesos to the dollar.
No contracts extend beyond the end of fiscal 1999. Unrealized losses as of June
30, 1998 on copper, aluminum and pesos were not material to the Company.

MagneTek Report - 1998 41

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

9. INCOME TAXES

Income tax expense (benefit) is allocated in the financial statements as
follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Income from continuing operations before extraordinary item $21,300 $19,200 $19,400
Extraordinary item -- (3,250) --
- ----------------------------------------------------------------------------------------------------------------------------
Income tax expense attributable to continuing operations $21,300 $15,950 $19,400
- ----------------------------------------------------------------------------------------------------------------------------
Total $21,300 $15,950 $19,400
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

The expense for income taxes applicable to continuing operations is as follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Current:
Federal $ 9,030 $ 1,279 $ 899
State 2,009 1,184 1,172
Foreign 12,672 6,083 3,444
Deferred:
Federal (2,936) 4,786 10,358
State and Foreign 525 2,618 3,527
- ----------------------------------------------------------------------------------------------------------------------------
$21,300 $15,950 $19,400
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

A reconciliation of the Company's effective tax rate to the statutory Federal
tax rate for income from continuing operations before extraordinary items is
as follows:

<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------------------------------------------
YEAR ENDED JUNE 30 AMOUNT % AMOUNT % AMOUNT %
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Provision (benefit) computed at the statutory rate $ 20,714 35.0 $ 16,783 35.0 $(26,167) (35.0)
State income taxes, net of federal benefit 2,245 3.8 1,338 2.7 1,990 2.7
Foreign tax rates in excess of federal statutory rate 6,652 11.2 4,434 9.3 4,283 5.7
Increase (decrease) in valuation allowance for
deferred tax assets (10,030) (16.9) (11,904) (24.8) 38,908 52.0
Provision for additional taxes 757 1.3 7,933 16.5 - -
Other--net 962 1.6 616 1.3 386 0.5
- -------------------------------------------------------------------------------------------------------------------------------
$ 21,300 36.0 $ 19,200 40.0 $19,400 25.9
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Income before provision for income taxes of the Company's foreign subsidiaries
was approximately $11,428, $9,703 and $50 for the years ended June 30, 1998,
1997 and 1996.

42 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets for continuing operations as
of June 30, 1998 and 1997 follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Deferred tax liabilities:
Depreciation and amortization (including differences
in the basis of acquired assets) $ 24,064 $30,530
Inventory methods and other -- --
- -------------------------------------------------------------------------------
Total deferred tax liabilities 24,064 30,530
- -------------------------------------------------------------------------------
Deferred tax assets:
Postretirement medical benefit obligation 20,006 21,654
Warranty reserves 13,302 11,601
Inventory and other reserves (including restructuring) 2,737 16,875
- -------------------------------------------------------------------------------
Total gross deferred tax assets 36,045 50,130
- -------------------------------------------------------------------------------
Less valuation allowance (16,974) (27,004)
- -------------------------------------------------------------------------------
Net deferred tax liability $ 4,993 $ 7,404
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>

The Company has established the above valuation allowance for deferred tax
assets based upon a review and determination that the company is not assured of
fully realizing the deferred tax assets.

10. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases certain facilities and machinery and equipment primarily
under operating lease arrangements. Future minimum rental payments under
noncancelable operating leases as of June 30, 1998 total $53,359 and are payable
in future fiscal years as follows: $12,533 in 1999; $11,303 in 2000; $7,919 in
2001; $6,762 in 2002; $4,502 in 2003 and $10,340 thereafter.

Rent expense for the years ended June 30, 1998, 1997 and 1996, was $15,930,
$14,988 and $15,766 respectively.

LITIGATION--PRODUCT LIABILITY

The Company is a party to a number of product liability lawsuits, many of which
involve fires allegedly caused by defective ballasts. All of these cases are
being defended by the Company, and management believes that its insurers will
bear all liability, except for applicable deductibles, and that none of these
proceedings individually or in the aggregate will have a material effect on the
Company.

MagneTek Report - 1998 43

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

LITIGATION--PATENT

In April 1998, Ole K. Nilssen filed a lawsuit in the U.S. District Court for the
Northern District of Illinios alleging the Company is infringing on seven of his
patents pertaining to electronic ballast technology. The plaintiff seeks an
unspecified amount of damages and an injunction to preclude the Company from
making, using or selling those products allegedly infringing his patents. The
Company denies that it has infringed, or is infringing, any of the plaintiff's
patents, and has asserted several affirmative defenses. The Company also filed a
counterclaim seeking judicial declaration that it is not infringing (and has not
infringed) the patents asserted by the plaintiff, and that such asserted patents
are invalid. The Company intends to defend this matter vigorously. Due to the
early state of the litigation, it is difficult to predict the outcome of the
foregoing legal proceeding. However, management of the Company does not believe
that the financial impact of such litigation will be material.

LITIGATION--ASBESTOS

In December 1996, the Company and certain of its subsidiaries were named as
defendants in a suit filed by Cooper Industries, Inc. ("Cooper") in the U.S.
District Court for the Southern District of Texas, alleging breach of the 1986
agreement by which the Company acquired certain businesses from Cooper. At issue
in the litigation is the question of which party has responsibility in
connection with pending lawsuits (the "asbestos lawsuits") involving numerous
plaintiffs who allege injurious exposure to asbestos contained in products
manufactured by current or former subsidiaries and divisions of Cooper. Cooper
claims that the Company is obligated to defend and indemnify Cooper in
connection with the asbestos lawsuits. The Company has denied that it is
obligated under the agreement to defend and indemnify Cooper in connection with
the asbestos lawsuits, and has filed a counterclaim asserting that Cooper is
obligated under the agreement to defend and indemnify the Company in connection
with the asbestos lawsuits and that certain insurance coverage available to
Cooper should be applied to the asbestos lawsuits. The Company and Cooper have
engaged in settlement discussions. In July 1998, the Court granted partial
summary judgement in favor of the Company, ruling that the Company has no
obligation to indemnify Cooper in connection with the asbestos lawsuits.
Management of the Company does not believe that the financial impact of the
foregoing legal proceeding will be material.

ENVIRONMENTAL MATTERS--GENERAL

The Company has from time to time discovered contamination by hazardous
substances at certain of its facilities. In response to such a discovery, the
Company conducts remediation activities to bring the facility into compliance
with applicable laws and regulations. The Company's remediation activities for
fiscal 1998 did not entail material expenditures, and its remediation activities
for fiscal 1999 are not expected to entail material expenditures. Future
discoveries of contaminated areas could entail material expenditures, depending
upon the extent and nature of the contamination.

ENVIRONMENTAL MATTERS--MCMINNVILLE, TENNESSEE

Prior to its purchase by the Company in 1986, Century Electric, Inc. ("Century
Electric") acquired a business from Gould Inc. ("Gould") in May 1983 which
included a leasehold interest in a fractional horsepower electric motor
manufacturing facility located in McMinnville, Tennessee. In connection with
this acquisition, Gould agreed to indemnify Century Electric from and against
liabilities and expenses arising out of the handling and cleanup of certain
waste materials, including but not limited to cleaning up any PCBs at the
McMinnville facility (the "1983 Indemnity"). Investigation has revealed the
presence of PCBs and other substances, including solvents, in portions of the
soil and in the groundwater underlying the facility and in certain offsite soil,
sediment and biota samples. Century Electric has kept the Tennessee

44 MagneTek Report - 1998

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

Department of Environment and Conservation, Division of Superfund, apprised of
test results from the investigation. The McMinnville plant has been listed as a
Tennessee Inactive Hazardous Substance Site, a report on that site has been
presented to the Tennessee legislature, and community officials and plant
employees have been notified of the presence of contaminants as above described.
In 1995, Gould completed an interim remedial measure of excavating and disposing
onsite soil containing PCBs. Gould also conducted preliminary investigation and
cleanup of certain onsite and offsite contamination. The cost of any further
investigation and cleanup of onsite and offsite contamination cannot presently
be determined. The Company believes that the costs for further onsite and
offsite cleanup (including ancillary costs) are covered by the 1983 Indemnity.
While the Company believes that Gould will continue to perform substantially
under its indemnity obligations, Gould's substantial failure to perform such
obligations could have a material adverse effect on the Company.

ENVIRONMENTAL MATTERS--OFFSITE LOCATIONS

The Company has been identified by the United States Environmental Protection
Agency and certain state agencies as a potentially responsible party for cleanup
costs associated with alleged past waste disposal practices at several offsite
locations. Due, in part, to the existence of indemnification from the former
owners of certain acquired businesses for cleanup costs at certain of these
sites, the Company's estimated share in liability (if any) at the offsite
facilities is not expected to be material. It is possible that the Company will
be named as a potentially responsible party in the future with respect to other
sites.

ENVIRONMENTAL MATTERS--INDEMNIFICATION OBLIGATIONS FROM RESTRUCTURING

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.
The Company's indemnification obligations pursuant to such agreements did not
entail material expenditures for fiscal 1998, and its indemnification
obligations for fiscal 1999 are not expected to entail material expenditures.
Future expenditures pursuant to such agreements could be material, depending
upon the nature of any future asserted claims subject to indemnification.

LETTERS OF CREDIT

The Company has approximately $15,427 of outstanding letters of credit as of
June 30, 1998.

11. STOCK OPTION AGREEMENTS

The Company has three stock option plans (the "Plans"), two of which provide for
the issuance of both incentive stock options (under Section 422A of the Internal
Revenue Code of 1986) and non-qualified stock options at exercise prices not
less than the fair market value at the date of grant, and one of which only
provides for the issuance of non-qualified stock options at exercise prices not
less than the fair market value at the date of grant. One of the Plans also
provides for the issuance of stock appreciation rights, restricted stock,
unrestricted stock, restricted stock rights and performance units. The total
number of shares of the Company's common stock authorized to be issued upon
exercise of the stock options and other stock rights under the Plans is
6,337,399. As of June 30, 1998 and 1997 shares available for grant were
approximately 1,014,814 and 972,802 respectively. Options granted under two of
the Plans vest in three or four equal annual installments, and options under the
third Plan vest in two equal annual installments.

MagneTek Report - 1998 45

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

A summary of certain information with respect to options under the Plans
follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30 1998 1997 1996
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Options outstanding, beginning of year 3,650,485 3,155,820 1,939,585
Options granted 1,605,424 1,045,810 1,498,000
Options exercised (512,534) (334,770) (32,170)
Weighted average exercise price $ 9.95 $ 10.85 $ 5.35
- ----------------------------------------------------------------------------------------------
Options cancelled (396,754) (216,375) (249,595)
- ----------------------------------------------------------------------------------------------
Options outstanding, end of year 4,346,621 3,650,485 3,155,820
Weighted average price $ 14.08 $ 11.78 $ 12.16
- ----------------------------------------------------------------------------------------------
Exercisable options 1,964,593 1,541,135 1,463,045
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>

The following table provides information regarding exercisable and outstanding
options as of June 30, 1998.

<TABLE>
<CAPTION>
EXERCISABLE OUTSTANDING
-----------------------------------------------------------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE REMAINING
OPTIONS PRICE OPTIONS PRICE CONTRACTUAL
RANGE OF EXERCISE PRICE PER SHARE EXERCISABLE PER SHARE OUTSTANDING PER SHARE LIFE (YEARS)
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Under $10.00 465,198 $8.83 959,612 $8.666.47 6.47
$10.00-$12.50 211,710 10.25 353,860 10.864.63 4.68
$12.51-$15.00 626,725 13.79 1,074,725 13.536.39 6.39
Over $15.00 660,960 16.97 1,958,424 17.627.79 7.79
- --------------------------------------------------------------------------------------------------------------
Total 1,964,593 $13.30 4,346,621 $14.086.90 6.90
- --------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------
</TABLE>

The Company has also granted options in prior years under certain non-qualified
stock option agreements, terms of which are similar to the Plans. No such
options were granted, exercised or cancelled during the four years ended June
30, 1998. As of June 30, 1998, options for 46,375 shares with a weighted average
price per share of $7.55 were outstanding, all of which were exercisable.

As permitted under Statement of Financial Accounting Standards No. 123 (SFAS
123), "Accounting for Stock-Based Compensation," the Company has elected to
follow Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued
to Employees" (APB 25) in accounting for stock-based awards to employees. Under
APB 25, the Company generally recognizes no compensation expense with respect to
such awards.

Pro forma information regarding net income (loss) and net income (loss) per
share is required by SFAS 123 for awards granted in fiscal years after December
31, 1994 as if the Company had accounted for its stock-based awards to employees
under the fair value method of SFAS 123. The fair value of the Company's
stock-based awards to employees was estimated using a Black-Scholes option
pricing model. The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting restrictions
and are fully transferable. In addition, the Black-Scholes model requires the
input of highly subjective assumptions including the expected stock price
volatility. Because the Company's stock-based awards to employees have
characteristics significantly different from those of traded options, and
because changes in the subjective input assumptions can materially affect the
fair value estimate, in management's

46 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its stock-based awards to employees. The fair value
of the Company's stock-based awards to employees was estimated assuming no
expected dividends and the following assumptions:

<TABLE>
<CAPTION>
OPTIONS
-------------------
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Expected life (years) 5.1 5.4
Expected stock price volatility 37% 35%
Risk-free interest rate 6.0% 6.5%
- -------------------------------------------------------------------------------
</TABLE>

For pro forma purposes, the estimated fair value of the Company's stock-based
awards to employees is amortized over the options' vesting period. The Company's
pro forma information follows:

<TABLE>
<CAPTION>
(THOUSANDS EXCEPT PER SHARE AMOUNTS) 1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Net income--as reported $37,876 $24,075
Net income--pro forma $34,597 $22,792
Basic net income per share--as reported $ 1.25 $ 0.94
Basic net income per share--pro forma $ 1.17 $ 0.91
Diluted net income per share--as reported $ 1.20 $ 0.89
Diluted net income per share--pro forma $ 1.12 $ 0.86
- -------------------------------------------------------------------------------
</TABLE>

Because SFAS 123 is applicable only to awards granted subsequent to fiscal years
beginning after December 31, 1994, its pro forma effect will not be fully
reflected until approximately 1999. A total of 1,498,000 options were granted
during fiscal year 1996 with exercise prices equal to the market price of the
stock on the grant date. The weighted-average exercise price and
weighted-average fair value of these options were $12.91 and $3.98 respectively.
A total of 1,045,810 options were granted during fiscal year 1997 with exercise
prices equal to the market price of the stock on the grant date. The weighted
average exercise price and weighted average fair value of these options were
$9.75 and $4.29 respectively. In fiscal year 1998 a total of 1,605,424 options
were granted with exercise prices equal to the market price of the stock on the
grant date. The weighted average exercise price and weighted average fair value
of these options were $17.56 and $7.49 respectively.

The Company has granted stock appreciation rights (SARs) to certain of its
directors under director incentive compensation plans. As of June 30, 1998 SARs
with respect to 54,000 shares, with a weighted average exercise price of $14.92
were outstanding under these plans. In July of 1995, the Board of Directors
approved the conversion of SARs with respect to 265,000 shares of common stock
into stock options with comparable vesting, share amounts and exercise prices.
In April of 1997, the Board of Directors approved the conversion of SARs with
respect to an additional 491,500 shares of common stock into stock options with
comparable vesting, share amounts and exercise prices.

12. EMPLOYEE BENEFIT PLANS

The Company has elected early disclosure as permitted under Statement of
Financial Accounting Standards No. 132, "Employers' Disclosure about Pensions
and Other Postretirement Benefits". Benefit obligations, at year-end, fair value
of plan assets and prepaid (accrued) benefit costs for the years ended June 30,
1998 and 1997 are as follows:

MagneTek Report - 1998 47

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
- -------------------------------------------------------------------------------------------------------------
1998 1997 1998 1997
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CHANGE IN BENEFIT OBLIGATION
Benefit obligation at beginning of year $140,065 $127,864 $ 22,606 $ 25,921
Service cost 4,542 4,500 143 162
Interest cost 11,179 9,920 1,682 1,806
Plan participants' contributions 114 104 489 182
Amendments 386 10 -- --
Actuarial (gain)/loss 27,757 3,616 1,230 (2,518)
Curtailment (gain)/loss (552) (22) 69 --
Benefits paid (7,715) (5,927) (2,471) (2,947)
- -------------------------------------------------------------------------------------------------------------
Benefit obligation at end of year $175,776 $140,065 $ 23,748 $ 22,606

CHANGE IN PLAN ASSETS
Fair value of plan assets at beginning of year $160,329 $129,409 N/A N/A
Actual return on plan assets 21,876 29,139 N/A N/A
Employer contributions 15,000 7,604 N/A N/A
Plan participants' contributions 114 104 N/A N/A
Benefits paid (7,715) (5,927) N/A N/A
- -------------------------------------------------------------------------------------------------------------
Fair value of plan assets at end of year $189,604 $160,329 N/A N/A

Funded status $ 13,828 $ 20,264 (23,748) $(22,606)
Unrecognized transition amount (1,290) (1,612) - -
Unrecognized net actuarial (gain)/loss 12,383 (9,426) (20,071) (23,089)
Unrecognized prior service cost (277) (469) (7,611) (9,972)
- -------------------------------------------------------------------------------------------------------------
Prepaid/(accrued) benefit cost $ 24,644 $ 8,757 $(51,430) $(55,667)

WEIGHTED-AVERAGE ASSUMPTIONS AS OF JUNE 30
Discount rate 7.00% 8.00% 7.00% 8.00%
Expected return on plan assets 9.50% 8.50% N/A N/A
Rate of compensation increase 6.00% 6.00% N/A N/A
</TABLE>

For measurement purposes, an 8.00% (7.00% for HMOPlans) annual rate of increase
in the per capita cost of covered health benefits was assumed for fiscal 1998 to
fiscal year 1999. The rate was assumed to decrease to 6.75% for fiscal year
1999, to 5.75% by fiscal year 2009 and remain at 5.75% per year thereafter.

Pension plan assets include $11,813 in company stock.

48 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

Net periodic postretirement benefit costs (income) for pension and other
benefits for the years ended June 30, 1998, 1997 and 1996 are as follows:

<TABLE>
<CAPTION>
PENSION BENEFITS OTHER BENEFITS
- ----------------------------------------------------------------------------------------------------------------------------
1998 1997 1996 1998 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
COMPONENTS OF NET
PERIODIC BENEFIT COST (INCOME)
Service cost $4,542 $4,500 $5,504 $143 $162 $304
Interest cost 11,179 9,920 9,592 1,682 1,806 4,292
Expected return on plan assets (15,927) (11,007) (9,649) -- -- --
Amortization of transition amount (322) (322) (365) -- -- --
Amortization of prior service cost (335) (332) (333) (1,024) (1,129) (855)
Recognized net actuarial (gain)/loss -- 5 176 (1,719) (1,705) --
- ----------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $(863) $2,764 $4,925 $(918) $(866) $3,741
Curtailment/settlement (gain)/loss (24) 106 (682) (1,337) -- (2,639)
- ----------------------------------------------------------------------------------------------------------------------------
Net benefit cost $(887) $2,870 $4,243 $(2,255) $(866) $1,102
</TABLE>

MagneTek recognized curtailment/settlement gain or loss in each of the fiscal
years resulting from the following:

1998 Fiscal Year: The closing of the Mendenhall and Huntington facilities.

1997 Fiscal Year: The sale of Jefferson Electric and the closing of the
Blytheville facility.

1996 Fiscal Year: The sale of MagneTek Electric, National Electric Coil and Ohio
Transformers Corporation.

The health care plans are contributory, with participants' contributions
adjusted annually. The life insurance plans are noncontributory. The accounting
for the health care plans anticipates future cost-sharing changes.

Assumed health care cost trend rates have a significant effect on the amounts
reported for the health care plans. A one-percentage-point change in assumed
health care cost trend rates would have the following effects for Fiscal Year
1998:

<TABLE>
<CAPTION>
1-PERCENTAGE POINT 1-PERCENTAGE POINT
INCREASE DECREASE
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
Effect of total service and interest cost components
-based on 8.0% discount rate $ 116 $ (102)
Effect on postretirement benefit obligation
-based on 7.0% discount rate $1,707 $(1,493)
</TABLE>

In addition to the defined benefit retirement plans and health care plans, the
Company contributes to a defined contribution savings plan. Company
contributions were $1,083, $1,184 and $1,427 during the plan years ending March
1998, 1997 and 1996, respectively. The Company contributions were affected by
the closing of the Mendenhall and Huntington facilities for the plan year ending
March 1998, the sale of National Electric Coil, Ohio Transformers Corporation
and Jefferson Electric and the closing of the Blytheville facility for the plan
year endingMarch 1997 and the sale of MagneTek Electric for the plan year ending
March 1996.

MagneTek Report - 1998 49

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

13. RELATED PARTY TRANSACTIONS

The Company has an agreement with the Spectrum Group, Inc. whereby Spectrum will
provide management services to the company through fiscal 1999 at an annual fee
plus certain allocated and out of pocket expenses. The Company's chairman is
also the chairman of Spectrum. The services provided include consultation and
direct management assistance with respect to operations, strategic planning and
other aspects of the business of the Company. Fees and expenses paid to Spectrum
for these services under the agreement amounted to $772, $907 and $865 for the
years ended June 30, 1998, 1997 and 1996 respectively.

During the years ended June 30, 1998, 1997 and 1996, the Company paid
approximately $270, $399 and $952, respectively in fees to charter an aircraft
owned by a company in which the chairman is the principal shareholder. The
Company believes the fees paid were equivalent to those that would be paid under
an arm's-length transaction.

14. ACCRUED LIABILITIES

Accrued liabilities consist of the following at June 30:

<TABLE>
<CAPTION>
1998 1997
- -------------------------------------------------------------------------------
<S> <C> <C>
Salaries, wages and related items $ 31,028 $ 33,449
Warranty 34,641 39,253
Interest 1,850 1,576
Income taxes 10,753 (1,658)
Repositioning reserves (see Note 3) -- 14,890
Other 29,267 32,245
- -------------------------------------------------------------------------------
$107,539 $119,755
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>

15. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in operating assets and liabilities of continuing operations follows:

<TABLE>
<CAPTION>
YEAR ENDED JUNE 30, 1998 1997 1996
- -------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
(Increase) decrease in accounts receivable $(4,207) $ 14,368 $ 33,023
(Increase) decrease in inventories (12,314) 23,273 21,782
(Increase) decrease in prepaids and other current assets (3,243) 2,776 19,050
(Increase) decrease in other operating assets (17,432) (11,218) (4,942)
Increase (decrease) in accounts payable 14,804 (9,316) (13,729)
Increase (decrease) in accrued liabilities (10,665) (3,452) 938
Increase (decrease) in deferred income taxes (2,411) 7,404 (12,645)
Increase (decrease) in other operating liabilities (5,241) (1,277) 17
- -------------------------------------------------------------------------------------------------------------
$(40,709) $ 22,558 $ 43,494
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
CASH PAID FOR INTEREST AND INCOME TAXES FOLLOWS:
Interest $ 15,938 $28,255 $ 31,626
Income taxes $ 8,134 $ 3,463 $ 4,614
- -------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------
</TABLE>

1996 AND 1997 AMOUNTS HAVE BEEN RESTATED TO CONFORM TO 1998 PRESENTATION FOR
PREPAID PENSION VALUES AND NET DEFERRED TAX LIABILITIES.

During the year ending June 30, 1997, 2,213,067 shares of common stock were
issued upon the conversion of $35,410 of Convertible Notes. On September 22,
1997, the Company redeemed the remaining $39,590 of Convertible Notes with
holders converting their Notes into 2,471,898 shares of common stock.

50 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

16. BUSINESS SEGMENT AND GEOGRAPHIC INFORMATION

The Company currently operates in three business segments: Motors and Controls;
Lighting Products; and Power Supplies.

The Motors and Controls segment designs, manufactures and markets a broad range
of high quality fractional and integral electric motors, medium output
generators and electronic adjustable speed drives and systems.

The Lighting Products segment produces magnetic and electronic ballasts for
various lighting applications.

The Power Supplies segment produces electronic power supplies primarily for
computer and telecommunications applications, as well as industrial equipment;
component transformers for a wide range of electronic equipment; and power
converters for recreational vehicles.

The Company sells its products primarily to large original equipment
manufacturers and distributors. The Company performs ongoing credit evaluations
of its customers' financial conditions and generally requires no collateral. The
Company has no significant concentration of credit risk.

Financial information by business segment for continuing operations follow:

<TABLE>
<CAPTION>
MOTORS AND LIGHTING POWER
FOR THE YEAR ENDED JUNE 30, 1998 CONTROLS PRODUCTS SUPPLIES TOTAL
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $585,399 $445,930 $165,860 $1,197,189
Operating income 48,381 18,441 11,609 78,431
Identifiable assets 321,914 215,142 193,682 730,738
Capital expenditures 25,915 14,479 18,467 58,861
Depreciation and amortization 17,898 11,524 8,983 38,405
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------

MOTORS AND LIGHTING POWER
FOR THE YEAR ENDED JUNE 30, 1977 CONTROLS PRODUCTS SUPPLIES TOTAL
- ----------------------------------------------------------------------------------------------
Sales $548,008 $477,958 $164,574 $1,190,540
Operating income 43,785 25,138 11,141 80,064
Identifiable assets 293,315 222,288 138,945 654,548
Capital expenditures 15,441 7,095 10,709 33,245
Depreciation and amortization 17,111 12,594 8,726 38,431
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------

MOTORS AND LIGHTING POWER
FOR THE YEAR ENDED JUNE 30, 1976 CONTROLS PRODUCTS SUPPLIES TOTAL
- ----------------------------------------------------------------------------------------------
Sales $530,718 $456,804 $174,103 $1,161,625
Operating income (loss) 36,794 (78,600) 4,285 (37,521)
Identifiable assets 280,464 241,818 156,492 678,774
Capital expenditures 18,523 11,737 10,255 40,515
Depreciation and amortization 16,407 15,572 8,062 40,041
- ----------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------
</TABLE>

MagneTek Report - 1998 51

<PAGE>

- -----FINANCIALS-----------------------------------------------------------------

Operating income (loss) for the year ended June 30, 1996, reflects pretax
charges of $2,891, $47,131 and $483 in the Motors and Controls, Lighting
Products and Power Supplies segments respectively, related to repositioning,
warranty, and other charges (see Note 3). Asset write-downs included in
operating income are $1,333 in Motors and Controls, $24,702, in Lighting
Products and $3,177 in Power Supplies.

Geographic information with respect to the Company's foreign subsidiaries
follows:

<TABLE>
<CAPTION>
FOR THE YEAR ENDED JUNE 30 1998 1997 1996
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Sales $211,891 $202,124 $206,701
Operating income 16,726 16,605 3,471
Identifiable assets 180,823 154,345 172,636
Capital expenditures 18,123 11,852 10,011
Depreciation and amortization 8,952 7,810 8,197
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
</TABLE>

The Company's foreign operations outside of Europe are not material. Export
sales were $69,960, $61,036 and $61,520 in 1998, 1997 and 1996 , respectively.

17. QUARTERLY RESULTS (UNAUDITED)

<TABLE>
<CAPTION>
1998 QUARTER ENDED SEPT. 30 DEC. 31 MAR. 31 JUNE 30
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $286,487 $298,507 $303,215 $308,980
Gross profit 57,455 58,266 57,875 59,514
Provision for income taxes 4,207 5,054 5,705 6,334
Net income $ 7,479 $ 8,985 $ 10,141 $ 11,271
Per common share:
Basic:
Net income $ .26 $ .29 $ .33 $ .36
Diluted:
Net income $ .25 $ .28 $ .32 $ .35
- ----------------------------------------------------------------------------------------------------------------------------

1997 QUARTER ENDED SEPT. 30 DEC. 31 MAR. 31 JUNE 30
- ----------------------------------------------------------------------------------------------------------------------------
Net sales $291,410 $293,707 $301,391 $304,032
Gross profit 54,842 55,540 64,672 64,869
Provision (benefit) for income taxes 2,996 3,839 6,396 5,969
Income (loss) from continuing operations before extraordinary item $ 4,315 $ 5,756 $ 9,198 $ 9,482
Net income (loss) $ 4,315 $ 5,756 $ 9,028 $ 4,976
Per common share:
Basic:
Income before extraordinary item $ .17 $ .22 $ .36 $ .36
Net income $ .17 $ .22 $ .35 $ .19
Diluted:
Income before extraordinary item $ .17 $ .22 $ .32 $ .33
Net income $ .17 $ .22 $ .32 $ .19
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>

In the third and fourth quarters of 1997, the Company recorded extraordinary
charges of $170 and $4,506 respectively, associated with the extinguishment of
the majority of its 103/4% Subordinated Debentures. The charges (net of tax)
included the unamortized portion of original issuance costs and premium in
excess of face value.

52 MagneTek Report - 1998

<PAGE>

- --------------------------------------------------------------------------------

Report of Ernst & Young LLP, Independent Auditors

The Board of Directors and Stockholders
MagneTek, Inc.

We have audited the accompanying consolidated balance sheets of MagneTek, Inc.
as of June 30, 1998 and 1997, and the related consolidated statements of income,
stockholders' equity, and cash flows for each of the three years in the period
ended June 30, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of MagneTek, Inc. at
June 30, 1998 and 1997 and the consolidated results of its operations and its
cash flows for each of the three years in the period ended June 30, 1998, in
conformity with generally accepted accounting principles.

/s/ Ernst & Young LLP

St. Louis, Missouri
August 18, 1998

SHAREHOLDER INFORMATION

10-K REPORT

MagneTek's Annual Report on Form 10-K for the fiscal year ended June 30, 1998,
is available upon request without charge. To receive a copy, direct your request
to:

INVESTOR RELATIONS DEPARTMENT

MagneTek, Inc.
26 Century Blvd.
Suite 600
Nashville TN, 37214
Telephone: 1-888-NYSEMAG
1-615-316-5289

ANNUAL STOCKHOLDERS' MEETING

The Annual Stockholders' meeting of MagneTek, Inc. will be held at the Company's
headquarters office, 26 Century Boulevard, Nashville, Tennessee, on Tuesday,
October 20, 1998.

STOCKHOLDERS' INFORMATION

The following table sets forth the high and low sales prices of the Company's
Common Stock on the New York Stock Exchange during each quarter of fiscal 1998.

QUARTER ENDING HIGH LOW
Sept. 30,1997 23 15 7/8
Dec. 31,1997 24 5/16 17 7/8
March 31,1998 20 1/2 16 1/16
June 30,1998 20 11/16 14 5/16

The Company's Common Stock is listed on the New York Stock Exchange under the
ticker symbol "MAG." As of the date of this Annual Report there were
approximately 400 direct accounts holding Common Stock. No dividends have been
paid on the Common Stock. The Registrar and Transfer Agent for the Common Stock
is The Bank of New York. Telephone inquiries: 1-800-524-4458

MagneTek Report - 1998 53

<PAGE>

Exhibit 23

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
(Form S-3 Nos. 33-31932, 33-40222, 333-15933, 333-24187, and 333-28415) and
in the related Prospectuses, and in the Registration Statements (Form S-8
Nos. 33-31439, 33-33887, 33-34112, 33-34834, 33-44519, 33-58929, 333-04021,
333-17889, 333-45935, and 333-45939) pertaining to the 1987 Stock Option Plan
of MagneTek, Inc., the MagneTek, Inc. FlexCare Plus Retirement Savings Plan,
the 1989 Incentive Stock Compensation Plan of MagneTek, Inc., the MagneTek
Unionized Employee Savings Plan, the Amended and Restated 1989 Incentive
Stock Compensation Plan of MagneTek, Inc., the Second Amended and Restated
1989 Incentive Stock Compensation Plan of MagneTek, Inc., the MagneTek, Inc.
Non-Employee Director Stock Option Plan, the MagneTek, Inc. Deferral
Investment Plan, the MagneTek, Inc. 1997 Non-Employee Director Stock Option
Plan, and the MagneTek, Inc. Director Compensation and Deferral Investment
Plan, of our reports dated August 18, 1998, with respect to the consolidated
financial statements and schedule of MagneTek, Inc. included or incorporated
by reference in the Annual Report (Form 10-K) for the year ended June 30,
1998.

ERNST & YOUNG LLP

St. Louis, Missouri
September 25, 1998

<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 5,976
<SECURITIES> 0
<RECEIVABLES> 202,107
<ALLOWANCES> 4,823
<INVENTORY> 196,830
<CURRENT-ASSETS> 417,554
<PP&E> 440,127
<DEPRECIATION> 243,657
<TOTAL-ASSETS> 736,738
<CURRENT-LIABILITIES> 226,443
<BONDS> 239,577
0
0
<COMMON> 313
<OTHER-SE> 176,464
<TOTAL-LIABILITY-AND-EQUITY> 730,738
<SALES> 1,197,189
<TOTAL-REVENUES> 1,197,189
<CGS> 964,079
<TOTAL-COSTS> 964,079
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,559
<INCOME-PRETAX> 59,176
<INCOME-TAX> 21,300
<INCOME-CONTINUING> 37,876
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 37,876
<EPS-PRIMARY> 1.25
<EPS-DILUTED> 1.20

</TABLE>