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.


 


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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
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 


 


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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 (i) 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 (ii) 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.


 


“Officer”
means an employee who holds the position or office of vice president of the
Company, whether elected or appointed to such position or office.


 


“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 with the Company or
any Successor.


 


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.


 


5.                                       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.


 


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6.                                       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.


 


(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 


 


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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.


 


(j)                                     Mutual
Non-Disparagement.  The Company and
its subsidiaries agree, and the Company shall use its best efforts to cause its
and their 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.


 


7.                                       Arbitration.


 


(a)                                  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.


 


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(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 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:

  



 


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