EXHIBIT 10.2
CHANGE OF CONTROL
AGREEMENT
This Change of Control Agreement
(“Agreement”) is entered into on this
day of
,
2008 by and between
(Name), an individual (the “Officer”), and
Magnetek, Inc., a Delaware corporation (the
“Company”).
RECITALS
WHEREAS, the Board of Directors of
the Company (the “Board”) recognizes that the
possibility of a Change of Control (as hereinafter defined) exists
and that the threat or the occurrence of a Change of Control can
result in significant distractions of its key management personnel
because of the uncertainties inherent in such a
situation;
WHEREAS, the Board has determined
that it is essential and in the best interest of the Company and
its stockholders to retain the services of the Officer in the event
of a threat or occurrence of a Change of Control and to ensure the
Officer’s continued dedication and efforts in such event
without undue concern for personal financial and employment
security; and
WHEREAS, in order to induce the
Officer to remain in the employ of the Company, particularly in the
event of a threat or the occurrence of a Change of Control, the
Company desires to enter into this Agreement with the Officer to
provide the Officer with certain benefits in the event his or her
employment is terminated as a result of, or in connection with, a
Change of Control.
AGREEMENT
NOW THEREFORE, in consideration of
the mutual covenants set forth herein, and for other good and
valuable consideration, receipt of which is hereby acknowledged,
the parties do hereby agree as follows:
1.
Term of Agreement . This Agreement shall commence
as of the date hereof and shall continue in effect until
,
20 ; provided , however , that
on
,
20 and on each anniversary thereof, the
term of this Agreement shall automatically be extended for one year
unless either the Company or the Officer shall have given written
notice to the other prior thereto that the term of this Agreement
shall not be so extended; provided , further ,
however , that notwithstanding any such notice by the
Company or the Officer not to extend, the term of this Agreement
shall not expire prior to the second anniversary of a Change of
Control Date. The benefits payable pursuant to Section 2
hereof shall be due in all events if a Change of Control occurs
during the term of this Agreement, and a Change of Control will be
deemed to have occurred during the term hereof if an agreement for
a transaction resulting in a Change of Control is entered into
during the term hereof, notwithstanding that the Change of Control
Date occurs after the expiration of the term of this
Agreement.
2.
Benefits Upon Change of Control .
(a)
Events Giving Rise to Benefits . The Company
agrees to pay or cause to be paid to the Officer the benefits
specified in this Section 2 if (i) there is a Change of
Control, and (ii) within the Change of Control Period,
(a) the Company or the Successor terminates the employment of
the Officer for any reason other than Cause, death or Disability or
(b) the Officer voluntarily terminates employment for Good
Reason.
(b)
Benefits Upon Termination of Employment . If the
Officer is entitled to benefits pursuant to this Section 2,
the Company agrees to pay or provide to the Officer as severance
payment, the following:
(i)
A single lump sum payment, payable in cash within five days of the
Termination Date (or if later, the Change of Control Date), equal
to the sum of:
(A)
the accrued portion of any of the Officer’s unpaid base
salary and vacation through the Termination Date and any unpaid
portion of the Officer’s bonus for the prior fiscal year;
plus
(B)
a portion of the Officer’s bonus for the fiscal year in
progress, prorated based upon the number of days elapsed since the
commencement of the fiscal year and calculated assuming that 100%
of the target under the bonus plan is achieved; plus
(C)
an amount equal to the Officer’s Base Compensation times the
Compensation Multiplier.
(ii)
Continuation, on the same basis as if the Officer continued to be
employed by the Company, of Benefits for the Benefit Period
commencing on the Termination Date. The Company’s
obligation hereunder with respect to the foregoing Benefits shall
be limited to the extent that the Officer obtains any such benefits
pursuant to a subsequent employer’s benefit plans, in which
case the Company may reduce the coverage of any Benefits it is
required to provide the Officer hereunder as long as the aggregate
coverage and benefits of the combined benefit plans is no less
favorable to the Officer than the Benefits required to be provided
hereunder.
(iii)
Outplacement services to be provided by an outplacement
organization of national repute, which shall include the provision
of office space and equipment (including telephone and personal
computer) but in no event shall the Company be required to provide
such services for a value exceeding 17% of the Officer’s Base
Compensation.
(iv)
Accelerated vesting of all outstanding stock options and of all
previously granted restricted stock awards.
(c)
Notwithstanding anything to the contrary in this Agreement, if the
Company determines (i) that on the date the Executive’s
employment with the Company terminates, or at such other time that
the Company determines to be relevant, the Executive is a
“specified employee” (as such term is defined under
Section 409A of the Code) of the Company and (b) that any
payments to be provided to the Executive pursuant to this Agreement
are or may become subject to the additional tax under
Section 409A(a)(1)(B) of the Code or any other taxes or
penalties imposed under Section 409A of the Code
(“Section 409A Taxes”) if provided at
the
2
time otherwise required under this
Agreement, then such payments shall be delayed until the date that
is six months after date of the Executive’s “separation
from service” (as such term is defined under
Section 409A of the Code) with the Company, or such shorter
period that, as determined by the Company, is sufficient to avoid
the imposition of Section 409A Taxes. The provisions of
this Section 2(c) shall only apply to the minimum extent
required to avoid the Executive’s incurrence of any
Section 409A Taxes.
3.
Definitions . When used in this Agreement, the
following terms have the meanings set forth below:
“ Base Compensation
” means the sum of (i) the Officer’s annual salary
in effect on the earlier of the Change of Control Date and the
Termination Date and (ii) 100% of the target under the bonus
plan for the fiscal year during which the Change of Control Date
occurs.
“ Benefits ”
means benefits that would be available under any health and welfare
plan of the Company on the Termination Date.
“ Benefit Period
” means 18 months.
“ Cause ”
means: (A) conviction of a felony or misdemeanor
involving moral turpitude, or (B) willful gross neglect or
willful gross misconduct in carrying out the Officer’s
duties, resulting in material economic harm to the Company or any
Successor.
“ Change of Control
” means (i) any event described in Section 13.2 of
the 2004 Stock Incentive Plan of the Company or any event so
defined in any stock incentive or similar plan adopted by the
Company in the future unless, in either case, such event occurs in
connection with a Distress Sale and (ii) any event which
results in the Board ceasing to have at least a majority of its
members be “continuing directors.” For this
purpose, a “continuing director” means a director of
the Company who held such position on September 29, 2005 or
who thereafter was appointed or nominated to the Board by a
majority of continuing directors.
“ Change of Control
Date ” means the date on which a Change of Control is
consummated.
“ Change of Control
Period ” means the period commencing on the earlier of
(i) 180 days prior to the Change of Control Date and
(ii) the announcement of a transaction expected to result in a
Change of Control, and ending on the second anniversary of the
Change of Control Date.
“ Code ” means
the Internal Revenue Code of 1986, as amended. References
herein to a specific section of the Code shall be deemed to include
comparable or analogous provisions of state, local and foreign
law.
“ Compensation
Multiplier ” means 1.5.
“ Disability ”
means the inability of the Officer due to illness (mental or
physical), accident, or otherwise, to perform his or her duties for
any period of 180 consecutive days, as determined by a qualified
physician.
“ Distress Sale ”
means a Change of Control occurring within 18 months of any of the
following: (i) the Company’s independent public
accountants shall have made a “going concern”
qualification in their audit report (other than by reason of
extraordinary occurrences,
3
such as material litigation, not
attributable to poor management practices); (ii) the Company
shall lack sufficient capital for its operations by reason of
termination of its existing credit lines or the Company’s
inability to secure credit facilities upon acceptable terms; or
(iii) the Company shall have voluntarily sought relief under,
consented to or acquiesced in the benefit of application to it of
the Bankruptcy Code of the United States of America or any other
liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension
of payments or similar laws, or shall have been the subject of
proceedings under such laws (unless the applicable involuntary
petition is dismissed within 60 days after its filing).
“ Good Reason ”
means (A) without the Officer’s prior written consent,
assignment to the Officer of duties materially inconsistent in any
respect with his or her position immediately prior to the Change of
Control Date or any other action by a Successor that results in a
material diminution in the Officer’s position, authority,
duties, responsibilities, annual base salary or target bonus when
compared with the same immediately prior to the Change of Control
Date; or (B) assignment of the Officer, without his or her
prior written consent, to a place of business that is
not
