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

 

2

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

 

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 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.

 

3

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

 

“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 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 within the metropolitan area of the Officer’s
current place of business.

 

“Stay and Pay Agreement” means a “stay and pay” or retention agreement entered
into in contemplation of a sale by the Company of a division or business unit.

 

“Successor” means any acquiror of all or substantially all of the stock, assets
or business of the Company.

 

“Termination Date” means the last day of the Officer’s employment.

 

4.             Eligibility; Effect on Other Agreements and Plans.

 

(a)           In the event the Officer is also a party to a Stay and Pay
Agreement or severance agreement and becomes entitled to any payment thereunder,
this Agreement shall be null and void and the Officer shall not be entitled to
any payment or benefit hereunder.  Nothing in this Agreement shall prevent or
limit the Officer’s continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company and for which the
Officer may qualify, nor shall anything herein limit or reduce such rights as
the Officer may have under any other agreements with the Company.  Amounts that
are vested benefits or that the Officer is otherwise entitled to receive under
any plan or program of the Company shall be payable in accordance with such plan
or program, except as explicitly modified by this Agreement.

 

(b)           Plan Amendments.  The Company shall adopt such amendments to its
employee benefit plans and insurance policies, including, without limitation,
the Plans, as are necessary to effectuate the provisions of this Agreement.  If
and to the extent any benefits under Section 2 are not paid or payable or
otherwise provided to the Officer or his or her dependents or beneficiaries
under any such plan or policy (whether due to the terms of the plan or policy,
the termination thereof, applicable law, or otherwise), then the Company itself
shall pay or provide for such benefits (including any gross-up needed to account
for the less favorable tax treatment if the payments are made from the Company
and not from the Plans or other employee benefit plans).

 

4

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

 

5.             Golden Parachute Tax.

 

(a)           In the event that the Value (as hereinafter defined) attributable
to the payments and benefits provided in Section 2 above (“Agreement Payments”),
in combination with the Value attributable to other payments or benefits in the
nature of compensation to or for the benefit of the Executive (including but not
limited to the value attributable to accelerated vesting of options or other
equity or non-equity incentive compensation awards and, collectively with
Agreement Payments, “Payments”), would constitute an “excess parachute payment”
(within the meaning of Section 280G of the Code) such that the excise tax of
Section 4999 of the Code (the “Excise Tax”) is imposed on the Executive, the
Company shall provide to the Executive (either directly or through payment of
taxes via required withholding), in cash, an additional payment (the “Gross-up
Payment”) such that the net amount retained by the Executive from the Payments
and the Gross-up Payment, after reduction for any Excise Tax upon the Payments
and any federal, state and local income and employment taxes and Excise Tax on
the Gross-up Payment, and any interest, penalties or additions to tax payable by
Executive with respect thereto, shall be equal to the Payments at the time such
Payments are to be made.

 

(b)           For purposes of this Section 5, the Company and the Executive
hereby irrevocably appoint the persons who constituted the Compensation
Committee of the Board immediately prior to a Change of Control, or a three
person panel named by a majority of them, as arbitrators (the “Arbitrators”) to
make all determinations required under this Section 5, including but not limited
to the Value of all Payments (and the components thereof).  For purposes of this
Section 5, “Value” shall mean value as determined by the Arbitrators applying
the valuation procedures and methodologies established pursuant to the Code
section or sections applicable to “excess parachute payments,” including any
interpretive guidance (whether or not binding) as the Arbitrators determine
appropriate.  The determinations of the Arbitrators shall be final and binding
on both the Company and the Executive, and their successors, assignees, heirs
and beneficiaries, for purposes of determining the amount payable under this
Section 5.  All fees and expenses of the Arbitrators (including attorneys’ and
accountants’ fees) shall be borne by the Company.  The arbitrators will be
compensated, to the extent they are not then members of the Board’s Compensation
Committee, at the rates at which they would have been compensated for their work
as Committee members in effect immediately prior to the Change of Control Date.”

 

6.             Employment At-Will.  Notwithstanding anything to the contrary
contained herein, the Officer’s employment with the Company is not for any
specified term and may be terminated by the Officer or by the Company at any
time, for any reason, with or without cause, without liability except with
respect to the payments provided hereunder or as required by law or any other
contract or employee benefit plan.

 

7.             General.

 

(a)           Entire Agreement.  This document constitutes the final, complete,
and exclusive embodiment of the entire agreement and understanding between the
parties related to the subject matter hereof and supersedes and preempts any
prior or contemporaneous understandings, agreements, or representations by or
between the parties, written or oral.

 

5

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

 

(b)           Successors and Assigns.  This Agreement is intended to bind and
inure to the benefit of and be enforceable by the Officer and the Company, and
their respective successors and assigns, except that the Officer may not assign
any of his or her duties hereunder and he or she may not assign any of his or
her rights hereunder without the prior written consent of the Company.

 

(c)           Amendments.  No amendments or other modifications to this
Agreement may be made except by a writing signed by both parties.  No amendment
or waiver of this Agreement requires the consent of any individual, partnership,
corporation or other entity not a party to this Agreement.  Nothing in this
Agreement, express or implied, is intended to confer upon any third person any
rights or remedies under or by reason of this Agreement.

 

(d)           No Amounts Due.  The Officer acknowledges that no payments or
benefits whatsoever shall become due hereunder in the absence of a Change of
Control.

 

(e)           No Mitigation Obligation.  The parties hereto expressly agree that
the payment of the benefits by the Company to the Officer in accordance with the
terms of this Agreement will be liquidated damages, and that the Officer shall
not be required to mitigate the amount of any payment provided for in this
Agreement by seeking other employment or otherwise, nor shall any profits,
income, earnings or other benefits from any source whatsoever create any
mitigation, offset, reduction or any other obligation on the part of the Officer
hereunder or otherwise except as expressly provided in Sections 2(b)(ii) and
4(a).

 

(f)            Changes to Benefits.  In the event that, within 90 days of the
execution of this Agreement, the Company enters into an agreement for a Change
of Control in connection with a merger to be accounted for as a “pooling of
interests,” the Board will be entitled to modify or reduce the payments or
benefits due hereunder, or to abrogate this Agreement entirely, if and to the
extent that Ernst & Young opines to the Board such measures are necessary in
order to ensure that the proposed merger will be accounted for as a “pooling of
interests.”  The Board will have no such authority after such 90-day period and,
in the event such merger does not eventuate or is ultimately not accounted for
as a “pooling of interests,” this Agreement, with or without any action by the
Board or the Officer, shall be automatically reinstated.

 

(g)           Choice of Law.  All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of Delaware without giving effect to principles of conflicts of law.

 

(h)           ERISA.  This Agreement is pursuant to the Company’s severance plan
for Officers (the “Plan”) which is unfunded and maintained by the Company
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees.  The Plan constitutes an employee
welfare benefit plan (“Welfare Plan”) within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  Any
payments pursuant to this Agreement which could cause the Plan not to constitute
a Welfare Plan shall be deemed instead to be made pursuant to a separate
“employee pension benefit plan” within the meaning of Section 3(2) of ERISA as
to which the applicable portions of the document constituting the Plan shall be
deemed to be incorporated by reference.  None of the benefits hereunder may be
assigned in any way.

 

(i)            Representation.  The Officer acknowledges that neither the
Company’s counsel nor its outside counsel law firms have represented the Officer
in connection with this Agreement and that he or she has had the opportunity to
consult with counsel before executing this Agreement.

 

6

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

 

(j)            Mutual Non-Disparagement.  The Company and subsidiaries agree,
and the Company shall use its best efforts to cause its respective officers and
directors to agree, that they will not make or publish any statement critical of
the Officer, or in any way adversely affecting or otherwise maligning the
Officer’s reputation.  The Officer agrees that he or she will not make or
publish any statement critical of the Company, its affiliates and their
respective officers and directors, or in any way adversely affecting or
otherwise maligning the business or reputation of the Company, its affiliates
and subsidiaries and their respective officers, directors and employees.

 

 (k)          Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be considered an original, and all of which
shall be deemed one and the same instrument.

 

(l)            Severability.          If any part of this Agreement shall for
any reason be found or held invalid or unenforceable by any court or
governmental agency of competent jurisdiction, such invalidity or
unenforceability shall not affect the remainder of this Agreement, which shall
survive and be construed as if such invalid or unenforceable part was not
included in this Agreement.

 

8.             Arbitration.

 

(a)           Except as provided in Section 5 hereof, any disputes or claims
arising out of or concerning the Officer’s employment or termination by the
Company, whether arising under theories of liability or damages based upon
contract, tort or statute, will be determined exclusively by arbitration before
a single arbitrator in accordance with the employment arbitration rules of the
American Arbitration Association, except as modified by this Agreement.  The
arbitrator’s decision will be final and binding on both parties.  Judgment upon
the award rendered by the arbitrator may be entered in any court of competent
jurisdiction.  In recognition of the fact that resolution of any disputes or
claims in the courts is rarely timely or cost effective for either party, the
Company and the Officer enter this mutual agreement to arbitrate in order to
gain the benefits of a speedy, impartial and cost-effective dispute resolution
procedure.  The parties further intend that the arbitration hereunder be
conducted in as confidential a manner as is practicable under the circumstances,
and intend for the award to be confidential unless that confidentiality would
frustrate the purpose of the arbitration or render the remedy awarded
ineffective.

 

(b)           Any arbitration will be held in Menomonee Falls, Wisconsin.  The
arbitrator must be an attorney with substantial experience in employment
matters, selected by the parties alternately striking names from a list of five
such persons provided by the American Arbitration Association (AAA) office
located nearest to the place of employment, following a request by the party
seeking arbitration for a list of five such attorneys with substantial
professional experience in employment matters.  If either party fails to strike
names from the list, the arbitrator will be selected from the list by the other
party.

 

(c)           Each party will have the right to take the deposition of one
individual and any expert witness designated by the other party.  Each party
will also have the right to propound requests for production of documents to any
party and the right to subpoena documents and

 

7

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

 

witnesses for the arbitration.  Additional discovery may be made only where the
arbitrator selected so orders upon a showing of substantial need.  The
arbitrator will have the authority to entertain a motion to dismiss and/or a
motion for summary judgment by any party and will apply the standards governing
such motions under the Federal Rules of Civil Procedure.

 

(d)           The Company and the Officer agree that they will attempt, and they
intend that they and the arbitrator should use their best efforts in that
attempt, to conclude the arbitration proceeding and have a final decision from
the arbitrator within 120 days from the date of selection of the arbitrator;
provided, however, that the arbitrator will be entitled to extend such 120-day
period for one additional 120-day period.  The arbitrator will deliver a written
award with respect to the dispute to each of the parties, who must promptly act
in accordance therewith.

 

(e)           The Company will pay any and all reasonable fees and expenses
incurred by the Officer in seeking to obtain or enforce any rights or benefits
provided by this Agreement, including all reasonable attorneys’ and experts’
fees and expenses, accountants’ fees and expenses, and court costs (if any) that
may be incurred by the Officer in pursuing a claim for payment of compensation
or benefits or other right or entitlement under this Agreement, provided that
the Officer is successful as to material issues, resulting in an award of at
least $50,000.  In addition, the Company will pay without regard to the results
of the arbitration all costs and fees not normally associated with a civil
proceeding, such as any fees charged by the arbitrator or any room rental
charges.

 

(f)            In a contractual claim under this Agreement, the arbitrator must
act in accordance with the terms and provisions of this Agreement and applicable
legal principles and will have no authority to add, delete or modify any term or
provision of this Agreement.  In addition, the arbitrator will have no authority
to award punitive damages under any circumstances unless repudiating the
arbitrator’s authority to do so would cause this arbitration clause to be ruled
ineffective under applicable law.

 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date it is last executed below by either party.

 

 

 

 

[Officer Name]

 

 

 

 

 

 

 

 

 

 

 

 

 

MAGNETEK, INC.

 

 

 

 

By:

 

 

Name:

 

Title:

 

8

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