**Exhibit 10.2**

 

# **CHANGE OF CONTROL AGREEMENT**

# ** **

This Change of ControlAgreement (“Agreement”) is entered into on this         day of                                 ,2008 by and between                                                                     (Name), an individual (the “Officer”), and Magnetek, Inc., a Delawarecorporation (the “Company”).

 

RECITALS

 

WHEREAS, the Board ofDirectors of the Company (the “Board”) recognizes that the possibility of aChange of Control (as hereinafter defined) exists and that the threat or theoccurrence of a Change of Control can result in significant distractions of itskey management personnel because of the uncertainties inherent in such asituation;

 

WHEREAS, the Board hasdetermined that it is essential and in the best interest of the Company and itsstockholders to retain the services of the Officer in the event of a threat oroccurrence of a Change of Control and to ensure the Officer’s continueddedication and efforts in such event without undue concern for personalfinancial and employment security; and

 

WHEREAS, in order toinduce the Officer to remain in the employ of the Company, particularly in theevent of a threat or the occurrence of a Change of Control, the Company desiresto enter into this Agreement with the Officer to provide the Officer withcertain benefits in the event his or her employment is terminated as a resultof, or in connection with, a Change of Control.

 

AGREEMENT

 

NOW THEREFORE, inconsideration of the mutual covenants set forth herein, and for other good andvaluable consideration, receipt of which is hereby acknowledged, the parties dohereby agree as follows:

 

1.             Term of Agreement.  This Agreement shall commence as of the datehereof and shall continue in effect until                             ,20    ; *provided*, *however*, that on                               ,20     and on each anniversary thereof, the term of thisAgreement shall automatically be extended for one year unless either theCompany or the Officer shall have given written notice to the other priorthereto that the term of this Agreement shall not be so extended; *provided*, *further*, *however*, that notwithstanding any such notice by the Companyor the Officer not to extend, the term of this Agreement shall not expire priorto the second anniversary of a Change of Control Date.  The benefits payable pursuant to Section 2hereof shall be due in all events if a Change of Control occurs during the termof this Agreement, and a Change of Control will be deemed to have occurredduring the term hereof if an agreement for a transaction resulting in a Changeof Control is entered into during the term hereof, notwithstanding that theChange of Control Date occurs after the expiration of the term of thisAgreement.

 

 

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2.             Benefits Upon Change of Control.

 

(a)           Events Giving Rise to Benefits.  The Company agrees to pay or cause to be paidto the Officer the benefits specified in this Section 2 if (i) thereis a Change of Control, and (ii) within the Change of Control Period, (a) theCompany or the Successor terminates the employment of the Officer for anyreason other than Cause, death or Disability or (b) the Officervoluntarily terminates employment for Good Reason.

 

(b)           Benefits Upon Termination ofEmployment.  If the Officer isentitled to benefits pursuant to this Section 2, the Company agrees to payor provide to the Officer as severance payment, the following:

 

(i)            A single lump sum payment, payablein cash within five days of the Termination Date (or if later, the Change ofControl Date), equal to the sum of:

 

(A)          the accrued portion of any of theOfficer’s unpaid base salary and vacation through the Termination Date and anyunpaid portion of the Officer’s bonus for the prior fiscal year; plus

 

(B)           a portion of the Officer’s bonus forthe fiscal year in progress, prorated based upon the number of days elapsedsince the commencement of the fiscal year and calculated assuming that 100% ofthe target under the bonus plan is achieved; plus

 

(C)           an amount equal tothe Officer’s Base Compensation times the Compensation Multiplier.

 

(ii)           Continuation, onthe same basis as if the Officer continued to be employed by the Company, ofBenefits for the Benefit Period commencing on the Termination Date.  The Company’s obligation hereunder withrespect to the foregoing Benefits shall be limited to the extent that theOfficer obtains any such benefits pursuant to a subsequent employer’s benefitplans, in which case the Company may reduce the coverage of any Benefits it isrequired to provide the Officer hereunder as long as the aggregate coverage andbenefits of the combined benefit plans is no less favorable to the Officer thanthe Benefits required to be provided hereunder.

 

(iii)          Outplacementservices to be provided by an outplacement organization of national repute,which shall include the provision of office space and equipment (includingtelephone and personal computer) but in no event shall the Company be requiredto provide such services for a value exceeding 17% of the Officer’s BaseCompensation.

 

(iv)          Accelerated vestingof all outstanding stock options and of all previously granted restricted stockawards.

 

(c)           Notwithstandinganything to the contrary in this Agreement, if the Company determines (i) thaton the date the Executive’s employment with the Company terminates, or at suchother time that the Company determines to be relevant, the Executive is a “specifiedemployee” (as such term is defined under Section 409A of the Code) of theCompany and (b) that any payments to be provided to the Executive pursuantto this Agreement are or may 

 

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become subject to the additional tax under Section 409A(a)(1)(B) ofthe Code or any other taxes or penalties imposed under Section 409A of theCode (“Section 409A Taxes”) if provided at the time otherwise requiredunder this Agreement, then such payments shall be delayed until the date thatis six months after date of the Executive’s “separation from service” (as suchterm is defined under Section 409A of the Code) with the Company, or suchshorter period that, as determined by the Company, is sufficient to avoid theimposition of Section 409A Taxes. The provisions of this Section 2(c) shall only apply to theminimum extent required to avoid the Executive’s incurrence of any Section 409ATaxes.

 

3.             Definitions.  When used in this Agreement, the followingterms have the meanings set forth below:

 

“Base Compensation” means the sum of (i) the Officer’sannual salary in effect on the earlier of the Change of Control Date and theTermination Date and (ii) 100% of the target under the bonus plan for thefiscal year during which the Change of Control Date occurs.

 

“Benefits” means benefits that would be available under anyhealth and welfare plan of the Company on the Termination Date.

 

“Benefit Period” means 18 months.

 

“Cause” means:  (A) convictionof a felony or misdemeanor involving moral turpitude, or (B) willful grossneglect 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 13.2of the 2004 Stock Incentive Plan of the Company or any event so defined in anystock incentive or similar plan adopted by the Company in the future unless, ineither case, such event occurs in connection with a Distress Sale and (ii) anyevent which results in the Board ceasing to have at least a majority of itsmembers be “continuing directors.”  Forthis purpose, a “continuing director” means a director of the Company who heldsuch position on September 29, 2005 or who thereafter was appointed ornominated to the Board by a majority of continuing directors.

 

“Change of Control Date” means the date on which a Change ofControl is consummated.

 

“Change of ControlPeriod” means the period commencing on the earlier of (i) 180 daysprior to the Change of Control Date and (ii) the announcement of atransaction expected to result in a Change of Control, and ending on the secondanniversary of the Change of Control Date.

 

“Code” means theInternal Revenue Code of 1986, as amended. References herein to a specific section of the Code shall be deemed toinclude 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 forany period of 180 consecutive days, as determined by a qualified physician.

 

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“Distress Sale”means a Change of Control occurring within 18 months of any of thefollowing:  (i) the Company’sindependent public accountants shall have made a “going concern” qualificationin their audit report (other than by reason of extraordinary occurrences, suchas material litigation, not attributable to poor management practices); (ii) theCompany shall lack sufficient capital for its operations by reason oftermination of its existing credit lines or the Company’s inability to securecredit facilities upon acceptable terms; or (iii) the Company shall havevoluntarily sought relief under, consented to or acquiesced in the benefit ofapplication to it of the Bankruptcy Code of the United States of America or anyother liquidation, conservatorship, bankruptcy, moratorium, rearrangement,receivership, insolvency, reorganization, suspension of payments or similarlaws, or shall have been the subject of proceedings under such laws (unless theapplicable involuntary petition is dismissed within 60 days after its filing).

 

“GoodReason” means (A) without the Officer’s prior written consent,assignment to the Officer of duties materially inconsistent in any respect withhis or her position immediately prior to the Change of Control Date or anyother action by a Successor that results in a material diminution in theOfficer’s position, authority, duties, responsibilities, annual base salary ortarget bonus when compared with the same immediately prior to the Change ofControl Date; or (B) assignment of the Officer, without his or her priorwritten consent, to a place of business that is not within the metropolitanarea of the Officer’s current place of business.

 

“Stayand Pay Agreement” means a “stay and pay” or retention agreement enteredinto 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 businessof the Company.

 

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

 

4.             Eligibility;Effect on Other Agreements and Plans.

 

(a)           Inthe event the Officer is also a party to a Stay and Pay Agreement or severanceagreement and becomes entitled to any payment thereunder, this Agreement shallbe null and void and the Officer shall not be entitled to any payment orbenefit hereunder.  Nothing in thisAgreement shall prevent or limit the Officer’s continuing or futureparticipation in any benefit, bonus, incentive or other plan or programprovided by the Company and for which the Officer may qualify, nor shallanything herein limit or reduce such rights as the Officer may have under anyother agreements with the Company. Amounts that are vested benefits or that the Officer is otherwiseentitled to receive under any plan or program of the Company shall be payablein accordance with such plan or program, except as explicitly modified by thisAgreement.

 

(b)           PlanAmendments.  The Company shall adoptsuch amendments to its employee benefit plans and insurance policies,including, without limitation, the Plans, as are necessary to effectuate theprovisions of this Agreement.  If and tothe extent any benefits under Section 2 are not paid or payable orotherwise provided to the Officer or his or her dependents or beneficiariesunder 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 itselfshall pay or provide for such benefits (including any gross-up needed toaccount for the less favorable tax treatment if the payments are made from theCompany and not from the Plans or other employee benefit plans).

 

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5.             GoldenParachute Tax.

 

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

 

(b)           For purposes of thisSection 5, the Company and the Executive hereby irrevocably appoint thepersons who constituted the Compensation Committee of the Board immediatelyprior to a Change of Control, or a three person panel named by a majority ofthem, as arbitrators (the “Arbitrators”) to make all determinations requiredunder this Section 5, including but not limited to the Value of allPayments (and the components thereof). For purposes of this Section 5, “Value” shall mean value asdetermined by the Arbitrators applying the valuation procedures andmethodologies established pursuant to the Code section or sections applicableto “excess parachute payments,” including any interpretive guidance (whether ornot binding) as the Arbitrators determine appropriate.  The determinations of the Arbitrators shallbe final and binding on both the Company and the Executive, and theirsuccessors, assignees, heirs and beneficiaries, for purposes of determining theamount payable under this Section 5. All fees and expenses of the Arbitrators (including attorneys’ andaccountants’ fees) shall be borne by the Company.  The arbitrators will be compensated, to theextent they are not then members of the Board’s Compensation Committee, at therates at which they would have been compensated for their work as Committeemembers in effect immediately prior to the Change of Control Date.”

 

6.             EmploymentAt-Will.  Notwithstanding anything tothe contrary contained herein, the Officer’s employment with the Company is notfor any specified term and may be terminated by the Officer or by the Companyat any time, for any reason, with or without cause, without liability exceptwith respect to the payments provided hereunder or as required by law or anyother contract or employee benefit plan.

 

7.             General.

 

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

 

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

 

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

 

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

 

(e)           No Mitigation Obligation.  The parties hereto expressly agree that thepayment of the benefits by the Company to the Officer in accordance with theterms of this Agreement will be liquidated damages, and that the Officer shallnot be required to mitigate the amount of any payment provided for in thisAgreement by seeking other employment or otherwise, nor shall any profits,income, earnings or other benefits from any source whatsoever create anymitigation, offset, reduction or any other obligation on the part of theOfficer hereunder or otherwise except as expressly provided inSections 2(b)(ii) and 4(a).

 

(f)            Changes to Benefits.  In the event that, within 90 days of theexecution of this Agreement, the Company enters into an agreement for a Changeof Control in connection with a merger to be accounted for as a “pooling ofinterests,” the Board will be entitled to modify or reduce the payments orbenefits due hereunder, or to abrogate this Agreement entirely, if and to theextent that Ernst & Young opines to the Board such measures arenecessary in order to ensure that the proposed merger will be accounted for asa “pooling of interests.”  The Board willhave no such authority after such 90-day period and, in the event such mergerdoes not eventuate or is ultimately not accounted for as a “pooling ofinterests,” this Agreement, with or without any action by the Board or theOfficer, 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 ofthe State of Delaware without giving effect to principles of conflicts of law.

 

(h)           ERISA.  This Agreement is pursuant to the Company’sseverance plan for Officers (the “Plan”) which is unfunded and maintained bythe Company primarily for the purpose of providing deferred compensation for aselect group of management or highly compensated employees.  The Plan constitutes an employee welfarebenefit plan (“Welfare Plan”) within the meaning of Section 3(1) ofthe Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  Any payments pursuant to this Agreement whichcould cause the Plan not to constitute a Welfare Plan shall be deemed insteadto be made pursuant to a separate “employee pension benefit plan” within themeaning of Section 3(2) of ERISA as to which the applicable portionsof the document constituting the Plan shall be deemed to be incorporated byreference.  None of the benefitshereunder may be assigned in any way.

 

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

 

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

 

 (k)          Counterparts. This Agreementmay be executed in any number of counterparts, each of which shall beconsidered an original, and all of which shall be deemed one and the sameinstrument.

 

(l)            Severability.          If any part of this Agreement shallfor any reason be found or held invalid or unenforceable by any court orgovernmental agency of competent jurisdiction, such invalidity orunenforceability shall not affect the remainder of this Agreement, which shallsurvive and be construed as if such invalid or unenforceable part was notincluded in this Agreement.

 

8.             Arbitration.

 

(a)           Except as provided in Section 5hereof, any disputes or claims arising out of or concerning the Officer’semployment or termination by the Company, whether arising under theories ofliability or damages based upon contract, tort or statute, will be determinedexclusively by arbitration before a single arbitrator in accordance with theemployment arbitration rules of the American Arbitration Association,except as modified by this Agreement. The arbitrator’s decision will be final and binding on bothparties.  Judgment upon the awardrendered by the arbitrator may be entered in any court of competentjurisdiction.  In recognition of the factthat resolution of any disputes or claims in the courts is rarely timely orcost effective for either party, the Company and the Officer enter this mutualagreement to arbitrate in order to gain the benefits of a speedy, impartial andcost-effective dispute resolution procedure. The parties further intend that the arbitration hereunder be conductedin as confidential a manner as is practicable under the circumstances, andintend for the award to be confidential unless that confidentiality wouldfrustrate the purpose of the arbitration or render the remedy awardedineffective.

 

(b)           Any arbitration will be held inMenomonee Falls, Wisconsin.  Thearbitrator must be an attorney with substantial experience in employmentmatters, selected by the parties alternately striking names from a list of fivesuch persons provided by the American Arbitration Association (AAA) officelocated nearest to the place of employment, following a request by the partyseeking arbitration for a list of five such attorneys with substantialprofessional experience in employment matters. If either party fails to strike names from the list, the arbitrator willbe selected from the list by the other party.

 

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

 

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

 

(d)           The Company and the Officer agreethat they will attempt, and they intend that they and the arbitrator should usetheir best efforts in that attempt, to conclude the arbitration proceeding andhave a final decision from the arbitrator within 120 days from the date ofselection of the arbitrator; *provided, however*,that the arbitrator will be entitled to extend such 120-day period for oneadditional 120-day period.  Thearbitrator will deliver a written award with respect to the dispute to each ofthe parties, who must promptly act in accordance therewith.

 

(e)           The Company will pay any and allreasonable fees and expenses incurred by the Officer in seeking to obtain orenforce any rights or benefits provided by this Agreement, including allreasonable attorneys’ and experts’ fees and expenses, accountants’ fees andexpenses, and court costs (if any) that may be incurred by the Officer inpursuing a claim for payment of compensation or benefits or other right orentitlement under this Agreement, *provided* thatthe Officer is successful as to material issues, resulting in an award of atleast $50,000.  In addition, the Companywill pay without regard to the results of the arbitration all costs and feesnot normally associated with a civil proceeding, such as any fees charged bythe arbitrator or any room rental charges.

 

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

 

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

 
|   |               |
|--------|--------------------|
|   | [Officer Name]     |
|   |               |   |
|   |               |   |
|   |               |   |
|   |               |   |
|   | **MAGNETEK, INC.** |
|   |               |   |
|   | By:                |   |
|   | Name:              |
|   | Title:             |
|        |                    |  |  |

 

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