Exhibit 10.1
RETENTION AGREEMENT
This Retention Agreement
(“Agreement”) is entered into on this
day of
,
2009 by and between
(Name), an individual who is an Officer (as hereinafter defined) of
the Company (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 first 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 bonus amount equal to the
Officer’s target annual incentive award percentage of base
salary under the bonus plan for the fiscal year in progress;
plus
(C)
an amount equal to one year of the
Officer’s Base Compensation;
(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 10% of
the Officer’s Base Compensation; and
(iv)
Accelerated vesting of all
outstanding stock options and of all previously granted restricted
stock awards, with any such vested stock options expiring at
5:00 p.m. (Central Time) on the first anniversary of the
Termination Date, to the extent not exercised before that
time.
(c)
Notwithstanding anything to the
contrary in this Agreement, if the Company determines (i) that
on the Termination Date, or at such other time that the Company
determines to be relevant, the Officer 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 Officer 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 time
otherwise required under this Agreement, then such payments shall
be delayed until the date that is six months after date of the
Officer’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
Officer’s incurrence of any Section 409A
Taxes.
2
3.
Definitions
. When used in this Agreement,
the following terms have the meanings set forth below:
“ Base Compensation
” means the Officer’s annual base salary in effect on
the earlier of the Change of Control Date and the Termination
Date.
“ Benefits ”
means benefits that would be available under any health and welfare
plan of the Company on the Termination Date other than Base
Compensation or incentive bonus.
“ Benefit Period
” means six months.
“ Cause ” means:
(i) conviction of a felony or misdemeanor involving moral
turpitude, or (ii) 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 first 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.
“ Disability ”
means the inability of the Officer due to illness (mental or
physical), accident, or otherwise, to perform his or her duties as
an employee of the Company or any Successor 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, 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
inabi
