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Agreement And Plan of Merger

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EXHIBIT 2.1


AGREEMENT AND PLAN OF MERGER


BY AND AMONG


ADS POWER RESOURCE, INC.,


THE SHAREHOLDERS THEREOF,


ADS ACQUISITION COMPANY, INC.


AND


MAGNETEK, INC.


DATED AS OF MARCH 2, 2001


TABLE OF CONTENTS


PAGE ARTICLE I DEFINITIONS.....................................................................................1
1.01 Certain Definitions.............................................................................1
1.02 Index of Other Defined Terms....................................................................1


ARTICLE II THE MERGER......................................................................................3


2.01 Closing.........................................................................................3
2.02 The Merger......................................................................................3
2.03 Consummation of the Merger; Effects of Merger...................................................3
2.04 Certificate of Incorporation; Bylaws; Directors and Officers of the Surviving
Corporation.....................................................................................4
2.05 Directors and Officers of the Surviving Corporation.............................................4
2.06 Conversion of Outstanding Capital Stock.........................................................4
2.07 Dissenter's Rights..............................................................................6
2.08 Exchange of Certificates........................................................................6
2.09 Calculation of Closing Equity...................................................................7
2.10 Post-Closing Purchase Price Adjustments.........................................................8


ARTICLE III REPRESENTATIONS REGARDING SHARES................................................................9


3.01 Title...........................................................................................9
3.02 Authority; Enforceability.......................................................................9


ARTICLE IV REPRESENTATIONS AND WARRANTIES REGARDING THE COMPANY...........................................10


4.01 Existence and Power............................................................................10
4.02 Authorization..................................................................................10
4.03 Capital Stock..................................................................................11
4.04 Subsidiaries...................................................................................11
4.05 Governmental Authorization.....................................................................11
4.06 Non-Contravention..............................................................................11
4.07 Financial Statements; Undisclosed Liabilities..................................................12
4.08 Absence of Certain Changes.....................................................................13
4.09 Properties; Material Leases; Tangible Assets...................................................14
4.10 Affiliates.....................................................................................14
4.11 Litigation.....................................................................................15
4.12 Material Contracts.............................................................................15
4.13 Permits; Required Consents.....................................................................17
4.14 Compliance with Applicable Laws................................................................17
4.15 Employment Agreements; Change in Control; and Employee Benefits................................17
4.16 Labor and Employment Matters...................................................................19


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4.17 Intellectual Property..........................................................................20
4.18 Advisory Fees..................................................................................20
4.19 Environmental Compliance.......................................................................20
4.20 Insurance......................................................................................21
4.21 Tax Matters....................................................................................21
4.22 Accuracy of Representations....................................................................23
4.23 Relations with Suppliers and Customers.........................................................23
4.24 Absence of Certain Business Practices..........................................................23
4.25 Condition of Tangible Assets and Inventories...................................................23
4.26 Bank Accounts..................................................................................23
4.27 Product Liability..............................................................................24


ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE PARENT AND ACQUISITION SUB...............................24


5.01 Organization and Existence.....................................................................24
5.02 Corporate Authorization........................................................................24
5.03 Governmental Authorization.....................................................................25
5.04 Non-Contravention..............................................................................25
5.05 Litigation.....................................................................................25


ARTICLE VI [INTENTIONALLY OMITTED]........................................................................25


ARTICLE VII COVENANTS OF ALL PARTIES.......................................................................25


7.01 Further Assurances.............................................................................25
7.02 Confidentiality; Public Announcements..........................................................26
7.03 HSR Act Compliance.............................................................................26
7.04 NYSE Listing...................................................................................25
7.05 Shareholders Agreement.........................................................................26


ARTICLE VIII CONDITIONS TO CLOSING..............................................................................26


8.01 Conditions to Obligation of the Parent and Acquisition Sub.....................................26
8.02 Conditions to Obligation of the Company and the Principal Shareholders.........................30


ARTICLE IX INDEMNIFICATION................................................................................31


9.01 Agreement to Indemnify.........................................................................31
9.02 Survival of Representations, Warranties and Covenants..........................................33
9.03 Claims for Indemnification.....................................................................33
9.04 Defense of Claims..............................................................................34
9.05 Appointment of the Representative..............................................................35


ARTICLE X TERMINATION....................................................................................36


10.01 Grounds for Termination........................................................................36


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10.02 Effect of Termination..........................................................................37


ARTICLE XI MISCELLANEOUS..................................................................................37


11.01 Notices........................................................................................37
11.02 Amendments; No Waivers.........................................................................38
11.03 Expenses.......................................................................................39
11.04 Successors and Assigns.........................................................................39
11.05 Governing Law..................................................................................39
11.06 Counterparts; Effectiveness....................................................................39
11.07 Entire Agreement...............................................................................39
11.08 Captions.......................................................................................39
11.09 Severability...................................................................................39
11.10 Construction...................................................................................40
11.11 Cumulative Remedies............................................................................40
11.12 Third Party Beneficiaries......................................................................40
11.13 Waiver of Trial by Jury........................................................................40


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EXHIBITS Exhibit A Certain Definitions Exhibit B Form of Letters of Transmittal Exhibit C Financial Statements Exhibit D Form of Noncompetition Agreement Exhibit E1 Form of Ratner Employment Agreement Exhibit E2 Form of Hogan Employment Agreement Exhibit F Form of Escrow Agreement Exhibit G Form of Opinion of Counsel to Company
and Shareholders Exhibit H Form of Opinion of General Counsel to Parent and Acquisition Sub Exhibit I Form of Registration Rights Agreement


SCHEDULES Schedule 2.06 Stock Portions, Cash Portions, Escrow Amounts Schedule 3.01 Share Encumbrances Schedule 3.02 Shareholders Schedule 4.01 Incorporation; Qualification to do Business Schedule 4.03 Capital Stock Schedule 4.05 Governmental Authorization Schedule 4.06 Non-Contravention Schedule 4.07(b) Accounting Policies Schedule 4.07(c) Undisclosed Liabilities Schedule 4.07(d) Closing Date Debt Schedule 4.07(e) Accounts Receivable Schedule 4.07(f) Accounts Payable and Inventory Schedule 4.07(h) Backlog of Orders Schedule 4.08 Absence of Certain Changes Schedule 4.08(h) Company Credit Card Policy Schedule 4.09(a) Encumbrances on Property Schedule 4.09(b) Real Property Schedule 4.10 Related Party Transactions Schedule 4.11 Litigation Schedule 4.12(a) Scheduled Contracts Schedule 4.12(b) Valid and Binding Contracts; Required Contractual Consents Schedule 4.13(a) Permits Schedule 4.13(b) Required Consents; Validity of Permits Schedule 4.14 Compliance with Applicable Law Schedule 4.15(a) Employment Agreements Schedule 4.15(b) Benefit Plans Schedule 4.15(c) Employee Pension Benefit Plans Schedule 4.16(a) Organizational Efforts Schedule 4.16(b) Labor Disputes


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Schedule 4.16(e) Employees Schedule 4.17 Intellectual Property Rights Schedule 4.18 Advisors Schedule 4.19(a) Environmental Permits Schedule 4.19(b) Compliance with Environmental Law Schedule 4.19(c) Continuing Compliance with Environmental Law Schedule 4.20 Insurance Policies Schedule 4.21 Tax Matters Schedule 4.26 Bank Accounts Schedule 4.27 Product Liability


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AGREEMENT AND PLAN OF MERGER


This AGREEMENT AND PLAN OF MERGER, dated as of March 2, 2001, is by and among ADS Power Resource, Inc., a Texas corporation (the "COMPANY"), the shareholders of the Company listed on the signature page hereto (each, a "SHAREHOLDER," and collectively, the "SHAREHOLDERS"), ADS Acquisition Company, Inc., a Delaware corporation ("ACQUISITION SUB"), and MagneTek, Inc., a Delaware corporation and owner of all of the issued and outstanding stock of Acquisition Sub (the "PARENT").


W I T N E S S E T H:


WHEREAS, the Parent has formed Acquisition Sub for the purposes of having the Company merge with and into Acquisition Sub (the "MERGER") and acquiring the Company as a wholly-owned subsidiary;


WHEREAS, the Boards of Directors of Acquisition Sub and the Company, and the Parent on its own behalf and as the sole shareholder of Acquisition Sub, have each approved the terms of the Merger; and


WHEREAS, the parties intend, by executing this Agreement, to adopt a plan of reorganization within the meaning of Section 368 of the Code and to cause the Merger to qualify as a reorganization under the provisions of Section 368(a) of the Code.


NOW, THEREFORE, in consideration of the premises, and the mutual representations, warranties, covenants and agreements hereinafter set forth, the parties hereto agree as follows:


ARTICLE I


DEFINITIONS


1.01 CERTAIN DEFINITIONS. The terms contained in EXHIBIT A, as used in this Agreement or in any exhibit or schedule hereto, shall have the meanings set forth in EXHIBIT A.


1.02 INDEX OF OTHER DEFINED TERMS. In addition to the terms defined in EXHIBIT A, the following terms shall have the respective meanings given thereto in the sections indicated below:


DEFINED TERM SECTION DEFINED TERM SECTION 2000 Balance Sheet 4.07(a) Closing Date 2.01(a) Acquisition Sub Preamble Company Preamble Annual Statements 4.07(a) Company Indemnitees 9.01(b) Buyer Indemnitees 9.01(a) Deductible 9.01(e) Cash Consideration 2.06(a) Dissenting Shares 2.07 Cash Escrow Amount 2.06(a) (ii) Effective Time 2.03 Cash Portion 2.06 Employees 4.16(e) Certificates 2.06(a) Employment Agreements 4.15(a) Closing 2.01(a) Encumbrances 4.09(a)


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DEFINED TERM SECTION Equity Securities 4.03(b) Excluded Shares 2.06 Final Calculation 2.10 Financial Statements 4.07(a) First Choice 2.10 Intellectual Property Rights 4.17 Interim Statements 4.07(a) Letter of Transmittal 2.08(a) Merger Recitals NYSE 5.06 Option 2.09 Outside Date 10.01(d) Overlap Period 9.01(a)(3) Parent Preamble Parent Common Stock 2.06 Permits 4.13(a) Post-Closing Payment Date 2.11(a) Shareholder(s) Preamble Stock Escrow Amount 2.06(a)(ii) Proceedings 4.11 Proposed Calculation 2.10 Real Property 4.09(b) Recalls 4.27(b) Representative 9.05(a) Required Consents 4.13(b) Required Governmental Approval 4.13(b) Scheduled Contracts 4.12(a) Selected Firm 2.10 Share Encumbrances 3.01 Shares 4.03(a) Stock Consideration 2.06(a) Stock Portion 2.06 Surviving Corporation 2.02


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ARTICLE II


THE MERGER


2.01 CLOSING.


(a) Upon the terms and subject to the conditions of this Agreement, the closing (the "CLOSING") of the transactions contemplated by this Agreement shall take place at the offices of Gibson, Dunn & Crutcher LLP, 2100 McKinney Avenue, Suite 1100, Dallas, Texas, effective on the commencement of business on the second Business Day after the last of the conditions to Closing set forth in Sections 8.01 and 8.02 have been satisfied or waived by the party or parties entitled to waive the same or such other date and time as to which Parent, the Company, the Representative and Acquisition Sub may agree in writing (the "CLOSING DATE").


(b) At the Closing, Parent shall deliver to the Escrow Agent, to be held pursuant to the terms of the Escrow Agreement, the Escrowed Shares and the Escrowed Cash. The parties hereto agree that the Escrowed Shares and the Escrowed Cash shall be deposited with the Escrow Agent pursuant to the terms of the Escrow Agreement and shall be released in accordance with the terms of the Escrow Agreement. The shares of Parent Common Stock constituting the Escrowed Shares shall be registered in the name of the Escrow Agent as nominee for the Shareholders, beneficially owned by such Shareholders and held in escrow pursuant to the Escrow Agreement.


2.02. THE MERGER. Subject to the terms and conditions of this Agreement and the Agreement of Merger, and in accordance with the DGCL and the Texas Code, at the Effective Time, the Company shall be merged with and into Acquisition Sub pursuant to the Agreement of Merger, with Acquisition Sub as the surviving corporation (in such capacity, the "SURVIVING CORPORATION"), the separate existence of the Company shall thereupon cease and Acquisition Sub, as the Surviving Corporation in the Merger, shall continue its corporate existence under the laws of the State of Delaware.


2.03 CONSUMMATION OF THE MERGER; EFFECTS OF MERGER. Pursuant to the DGCL and the Texas Code, the parties hereto shall cause the Agreement of Merger to be filed on the Closing Date in the offices of the Secretaries of State for the States of Delaware and Texas. The Merger shall become effective immediately upon the filing of the Agreement of Merger and related certificates with the office of the Secretaries of State for the States of Delaware and Texas in accordance with the DGCL and the Texas Code (the date and time of such filing being the "EFFECTIVE TIME") or such later time as is specified in the Agreement of Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL and the Texas Code. Without limiting the generality of the foregoing, and subject thereto, at the Effective Time all the property, rights, privileges, powers and franchises of the Company and Acquisition Sub shall vest in the Surviving Corporation, and all debts, liabilities, obligations, restrictions, disabilities and duties of the Company and Acquisition Sub shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation.


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2.04 CERTIFICATE OF INCORPORATION; BYLAWS OF THE SURVIVING CORPORATION. The certificate of incorporation and bylaws of Acquisition Sub, as in effect on the Effective Time, shall be (until amended or repealed as provided by law) the certificate of incorporation and bylaws of the Surviving Corporation, respectively, as of the Effective Time.


2.05 DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION. The directors and officers of the Surviving Corporation as of the Effective Time shall be the directors and officers of Acquisition Sub immediately prior to the Effective Time until their successors are elected or appointed and qualified in accordance with the certificate of incorporation and bylaws of the Surviving Corporation.


2.06 CONVERSION OF SHARES.


(a) CONVERSION. (i) At the Effective Time, the issued and outstanding shares of Common Stock held by a Shareholder immediately prior to the Effective Time (other than (i) shares of Common Stock held by Parent, Acquisition Sub or any other subsidiary of Parent, and (ii) Dissenting Shares as to which the right to demand payment of fair value has been perfected under Texas Code (collectively, the "EXCLUDED SHARES")) shall, by virtue of the Merger and without any action on the part of Acquisition Sub, Company or the Shareholder, be converted into the right to receive such Shareholder's Pro Rata Portion of the total "MERGER CONSIDERATION", which Merger Consideration shall in the aggregate comprise:


(A) 597,691 shares of Parent's common stock ("PARENT COMMON STOCK"),
$0.01 par value per share (the "STOCK CONSIDERATION"); and


(B) cash, without interest, an amount equal to Eight Million Eight
Hundred Twenty-Seven Thousand Seven Hundred Dollars ($8,827,700) (the "CASH
CONSIDERATION"). Each Shareholder will receive its Pro Rata Portion of the
remainder which results when the amounts to be paid to holders of Options
pursuant to Section 2.09 hereof is subtracted from the Cash Consideration.


Each Shareholder's Pro Rata Portion of the Merger Consideration shall be payable to the Shareholder in a number of shares of Parent Common Stock (the "STOCK PORTION") and an amount of cash (the "CASH PORTION") as set forth opposite such Shareholder's name on SCHEDULE 2.06. The sum of a Shareholder's Stock Portion and such Shareholder's Cash Portion shall equal such Shareholder's Pro Rata Portion of the Merger Consideration as nearly as possible. To the extent a precise allocation on the basis of a Shareholder's Pro Rata Portion would result in fractional shares of Common Stock being issued to such Shareholder, the number of shares constituting a Shareholder's Stock Portion shall be rounded to the nearest full share.


(ii) Each share of Common Stock issued and outstanding immediately prior to the Effective Time (excluding the Excluded Shares) shall at the Effective Time no longer be outstanding and shall automatically be canceled and retired and shall cease to exist, and each certificate previously evidencing any such shares of Common Stock ("CERTIFICATES") shall thereafter represent the right to receive only the portion of the Merger Consideration allocable to such share. The Shareholders shall cease to have any rights with respect to the shares of Common Stock previously represented by Certificates, except as otherwise provided herein or by


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law. Such Shareholders shall exchange Certificates previously evidencing such shares of Common Stock for (A) certificates evidencing that number of shares of Parent Common Stock equal to the remainder that results when (1) such Shareholder's Stock Escrow Amount (as defined below), if any, is subtracted from (2) such Shareholder's Stock Portion and (B) an amount of cash equal to the remainder that results when (1) such Shareholder's Cash Escrow Amount (as defined below), if any, is subtracted from (2) such Shareholder's Cash Portion calculated in accordance with this Section 2.06, without interest, and in each case upon the surrender of and as consideration for such Certificates in accordance with the provisions of Section 2.08.


The "CASH ESCROW AMOUNT" means the portion of a Shareholder's Cash Portion that will be deposited with the Escrow Agent as Escrowed Cash as set forth on SCHEDULE 2.06. The "STOCK ESCROW AMOUNT" means the portion of a Shareholder's Stock Portion that will be deposited with the Escrow Agent as Escrowed Shares as set forth on SCHEDULE 2.06.


(b) Each share of Common Stock that is issued and outstanding immediately prior to the Effective Time and owned by the Company immediately prior to the Effective Time shall be canceled without any conversion thereof, and no payment shall be made with respect thereto.


(c) Each share of the common stock, par value $0.01 per share, of Acquisition Sub that is issued and outstanding immediately prior to the Effective Time shall remain outstanding and continue to be one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation, so that after the Effective Time Parent shall be the holder of all of the issued and outstanding shares of the Surviving Corporation's common stock.


(d) No other shares of capital stock of the Company shall be issued in, or shall be outstanding immediately after, the Merger. Except as provided in Section 2.06(c), no shares of stock of Acquisition Sub shall be issued in, or shall be outstanding after, the Merger.


(e) The Shareholders and the Representative acknowledge that the shares of Parent Common Stock to be issued in the Merger shall be characterized as "restricted securities" for purposes of Rule 144 under the Securities Act of 1933, as amended, and each certificate representing any of such shares shall bear a legend identical or similar in effect to the following legend (together with any other legend or legends required by applicable state securities laws or otherwise):


"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS IS AVAILABLE.


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2.07 DISSENTER'S RIGHTS. Notwithstanding any provision of this Agreement to the contrary, any shares of Common Stock held by a Shareholder who has demanded and perfected such Shareholder's right to demand payment of the fair value of such shares in accordance with the Texas Code and who, as of the Effective Time, has not effectively withdrawn or lost such right to demand payment of the fair value of such shares (the "DISSENTING SHARES"),
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