Document:

Exhibit 10.2

 

CAPSTONE
TURBINE CORPORATION

 

CONSULTING
AGREEMENT

 

This Consulting Agreement
(“Agreement”) is entered into as of December 1,
2008, by and between Capstone Turbine Corporation (the “Company”)
and Leigh Estus (“Consultant”).  The Company desires to retain Consultant as
an independent contractor to perform consulting services for the Company, and
Consultant is willing to perform such services, on the terms described
below.  In consideration of the mutual promises
contained herein, the parties agree as follows:

 

1.     Services and
Compensation.  Consultant
agrees to perform for the Company the services described in Exhibit A
(the “Services”), and the Company agrees to
pay Consultant the compensation described in Exhibit A for
Consultant’s performance of the Services.

 

2.     Confidentiality.

 

A.    Definition.  “Confidential Information”
means any non-public information that relates to the actual or anticipated
business or research and development of the Company, technical data, trade
secrets or know-how, including, but not limited to, research, product plans or
other information regarding Company’s products or services and markets
therefor, customer lists and customers (including, but not limited to,
customers of the Company on whom Consultant called or with whom Consultant
became acquainted during the term of this Agreement), software, developments,
inventions, processes, formulas, technology, designs, drawings, engineering and
hardware configuration information, marketing, finances or other business information.  Confidential Information does not include
information that (i) is known to Consultant at the time of disclosure to
Consultant by the Company as evidenced by written records of Consultant, (ii) has
become publicly known and made generally available through no wrongful act of
Consultant or (iii) has been rightfully received by Consultant from a
third party who is authorized to make such disclosure.

 

B.    Nonuse and
Nondisclosure.  Consultant
will not, during or subsequent to the term of this Agreement, (i) use the
Confidential Information for any purpose whatsoever other than the performance
of the Services on behalf of the Company or (ii) disclose the Confidential
Information to any third party. 
Consultant agrees that all Confidential Information will remain the sole
property of the Company.  Consultant also
agrees to take all reasonable precautions to prevent any unauthorized
disclosure of such Confidential Information, including, but not limited to, informing each of Consultant’s employees
and contractors, if any, with access to any Confidential Information of the
terms of this provision.  Without
the Company’s prior written approval, Consultant will not directly or
indirectly disclose to anyone the existence of this Agreement or the fact that
Consultant has this arrangement with the Company.

 

1

 

C.    Former
Client Confidential Information. 
Consultant agrees that Consultant will not, during the term of this
Agreement, improperly use or disclose any proprietary information or trade
secrets of any former or current employer of Consultant or other person or
entity with which Consultant has an agreement or duty to keep in confidence
information acquired by Consultant, if any. 
Consultant also agrees that Consultant will not bring onto the Company’s
premises any unpublished document or proprietary information belonging to any
such employer, person or entity unless consented to in writing by such
employer, person or entity.

 

D.    Third Party
Confidential Information. 
Consultant recognizes that the Company has received and in the future
will receive from third parties their confidential or proprietary information
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes.  Consultant agrees that, during the term of
this Agreement and thereafter, Consultant owes the Company and such third
parties a duty to hold all such confidential or proprietary information in the
strictest confidence and not to disclose it to any person, firm or corporation
or to use it except as necessary in carrying out the Services for the Company
consistent with the Company’s agreement with such third party.

 

E.     Return of
Materials.  Upon the
termination of this Agreement, or upon Company’s earlier request, Consultant
will deliver to the Company all of the Company’s property, including but not
limited to all electronically stored information and passwords to access such
property, or Confidential Information that Consultant may have in Consultant’s
possession or control.

 

3.     Ownership.

 

A.    Assignment.  Consultant agrees that all copyrightable
material, notes, records, drawings, designs, inventions, improvements,
developments, discoveries and trade secrets conceived, discovered, developed or
reduced to practice by Consultant, solely or in collaboration with others,
during the term of this Agreement that relate in any manner to the business of
the Company that Consultant may be directed to undertake, investigate or experiment
with or that Consultant may become associated with in work, investigation or
experimentation in the Company’s line of business in performing the Services
under this Agreement (collectively, “Inventions”),
are the sole property of the Company. Consultant also agrees to assign (or
cause to be assigned) and hereby assigns fully to the Company all Inventions
and any copyrights, patents, mask work rights or other intellectual property
rights relating to all Inventions.

 

B.    Further
Assurances.  Consultant agrees
to assist Company, or its designee, at the Company’s expense, in every proper
way to secure the Company’s rights in Inventions and any copyrights, patents,
mask work rights or other intellectual property rights relating to all
Inventions in any and all countries, including the disclosure to the Company of
all pertinent information and data with respect to all Inventions, the
execution of all applications, specifications, oaths, assignments and all other
instruments that the Company may deem necessary in order to apply for and
obtain such rights and in order to assign and convey to the Company, its
successors, assigns and nominees the sole and exclusive right, title and
interest in and to all Inventions, and any copyrights, patents, mask work
rights or other intellectual property rights relating to all Inventions.  Consultant also agrees that Consultant’s
obligation to execute or cause to be executed any such instrument or papers
shall continue after the termination of this Agreement.

 

2

 

C. Pre-Existing
Materials.  Subject to Section 3.A, Consultant agrees that if, in the course
of performing the Services, Consultant incorporates into any Invention
developed under this Agreement any pre-existing invention, improvement,
development, concept, discovery or other proprietary information owned by
Consultant or in which Consultant has an interest, (i) Consultant will
inform Company, in writing before incorporating such invention, improvement,
development, concept, discovery or other proprietary information into any
Invention, and (ii) the Company is hereby granted a nonexclusive,
royalty-free, perpetual, irrevocable, worldwide license to make, have made,
modify, use and sell such item as part of or in connection with such Invention.
Consultant will not incorporate any invention, improvement, development,
concept, discovery or other proprietary information owned by any third party
into any Invention without Company’s prior written permission.

 

D.    Attorney-in-Fact.  Consultant agrees that, if the Company is
unable because of Consultant’s unavailability, dissolution, mental or physical
incapacity, or for any other reason, to secure Consultant’s signature for the
purpose of applying for or pursuing any application for any United States or
foreign patents or mask work or copyright registrations covering the Inventions
assigned to the Company in Section 3.A,
then Consultant hereby irrevocably designates and appoints the Company and its
duly authorized officers and agents as Consultant’s agent and attorney-in-fact,
to act for and on Consultant’s behalf to execute and file any such applications
and to do all other lawfully permitted acts to further the prosecution and
issuance of patents, copyright and mask work registrations with the same legal
force and effect as if executed by Consultant.

 

4.     Conflicting Obligations.

 

A.    Conflicts.  Consultant certifies that Consultant has no
outstanding agreement or obligation that is in conflict with any of the
provisions of this Agreement or that would preclude Consultant from complying
with the provisions of this Agreement. 
Consultant will not enter into any such conflicting agreement during the
term of this Agreement.  Consultant’s
violation of this Section 4.A will be considered a material breach under Section 6.B.

 

B.    Substantially
Similar Designs.  In view of
Consultant’s access to the Company’s trade secrets and proprietary know-how,
Consultant agrees that Consultant will not, without Company’s prior written
approval, design identical or substantially similar designs as those developed
under this Agreement for any third party during the term of this Agreement and
for a period of 12 months after the termination of this Agreement. Consultant
acknowledges that the obligations in this Section 4
are ancillary to Consultant’s nondisclosure obligations under Section 2.

 

5.     Reports.  Consultant also agrees that Consultant will,
from time to time during the term of this Agreement or any extension thereof,
keep the Company advised as to Consultant’s progress in performing the Services
under this Agreement.  Consultant further
agrees that Consultant will, as requested by the Company, prepare written
reports with respect to such progress. 
The Company and Consultant agree that the time required to prepare such
written reports will be considered time devoted to the performance of the
Services.

 

3

 

6.     Term and
Termination.

 

A.    Term.  The term of this Agreement will begin on the
date of this Agreement and will continue until the earlier of (i) final
completion of the Services or (ii) termination as provided in Section 6.B.

 

B.    Termination.  Either party may terminate this Agreement
upon giving the other party 14 days’ prior written notice of such termination
pursuant to Section 11.E of this
Agreement.   The Company may terminate
this Agreement immediately and without prior notice if Consultant refuses to or
is unable to perform the Services or is in breach of any material provision of
this Agreement.

 

C.    Survival.  Upon such termination, all rights and duties
of the Company and Consultant toward each other shall cease except:

 

(1)   The Company will pay, within 30
days after the effective date of termination, all amounts owing to Consultant
for Services completed and accepted by the Company prior to the termination
date and related expenses, if any, submitted in accordance with the Company’s
policies and in accordance with the provisions of Section 1 of this
Agreement; and

 

(2)   Section 2
(Confidentiality), Section 3 (Ownership), Section 4 (Conflicting
Obligations), Section 7 (Independent Contractor; Benefits), Section 8 (Indemnification),
Section 9 (Nonsolicitation) and Section 10 (Arbitration and Equitable
Relief) will survive termination of this Agreement.

 

7.     Independent
Contractor; Benefits.

 

A.    Independent
Contractor.  It is the express
intention of the Company and Consultant that Consultant perform the Services as
an independent contractor to the Company. 
Nothing in this Agreement shall in any way be construed to make
Consultant an agent, employee or representative of the Company.  Without limiting the generality of the
foregoing, Consultant is not authorized to bind the Company to any liability or
obligation or to represent that Consultant has any such authority.  Consultant agrees to furnish (or reimburse
the Company for) all tools and materials necessary to accomplish this Agreement
and shall incur all expenses associated with performance, except as expressly
provided in Exhibit A. 
Consultant acknowledges and agrees that Consultant is obligated to
report as income all compensation received by Consultant pursuant to this
Agreement.  Consultant agrees to and
acknowledges the obligation to pay all self-employment and other taxes on such
income.

 

B.    Benefits.
 The Company and Consultant agree that
Consultant will receive no Company-sponsored benefits from the Company.  If Consultant is reclassified by a state or
federal agency or court as Company’s employee, Consultant will become a
reclassified employee and will receive no benefits from the Company, except
those mandated by state or federal law, even if by the terms of the Company’s
benefit plans or programs of the Company in effect at the time of such
reclassification, Consultant would otherwise be eligible for such benefits.

 

4

 

8.     Indemnification.  Consultant agrees to indemnify and hold
harmless the Company and its directors, officers and employees from and against
all taxes, losses, damages, liabilities, costs and expenses, including
attorneys’ fees and other legal expenses, arising directly or indirectly from
or in connection with (i) any negligent, reckless or intentionally
wrongful act of Consultant or Consultant’s assistants, employees or agents, (ii) a
determination by a court or agency that the Consultant is not an independent
contractor, (iii) any breach by the Consultant or Consultant’s assistants,
employees or agents of any of the covenants contained in this Agreement, (iv) any
failure of Consultant to perform the Services in accordance with all applicable
laws, rules and regulations, or (v) any violation or claimed
violation of a third party’s rights resulting in whole or in part from the
Company’s use of the work product of Consultant under this Agreement.

 

9.     Nonsolicitation.  From the date of this Agreement until 12
months after the termination of this Agreement (the “Restricted
Period”), Consultant will not, without the Company’s prior written
consent, directly or indirectly, solicit or encourage any employee or
contractor of the Company or its affiliates to terminate employment with, or
cease providing services to, the Company or its affiliates.  During the Restricted Period, Consultant will
not, whether for Consultant’s own account or for the account of any other
person, firm, corporation or other business organization, intentionally
interfere with any person who is or during the period of Consultant’s
engagement by the Company was a partner, supplier, customer or client of the
Company or its affiliates.

 

10.   Arbitration
and Equitable Relief.

 

A.    Arbitration.  Consultant agrees that any and all
controversies, claims or disputes with anyone (including the Company and any
employee, officer, director, shareholder or benefit plan of the Company, in its
capacity as such or otherwise) arising out of, relating to or resulting from
Consultant’s performance of the Services under this Agreement or the
termination of this Agreement, including any breach of this Agreement, shall be
subject to binding arbitration under the Arbitration Rules set forth in
California Code of Civil Procedure Section 1280 through 1294.2, including Section 1283.05
(the  “Rules”) and
pursuant to California law.  CONSULTANT
AGREES TO ARBITRATE, AND THEREBY AGREES TO WAIVE ANY RIGHT TO A TRIAL BY JUDGE
OR JURY WITH RESPECT TO, ALL DISPUTES ARISING FROM OR RELATED TO THIS
AGREEMENT, INCLUDING BUT NOT LIMITED TO: ANY STATUTORY CLAIMS UNDER STATE OR
FEDERAL LAW, CLAIMS UNDER TITLE VII OF THE CIVIL RIGHTS ACT OF 1964, THE
AMERICANS WITH DISABILITIES ACT OF 1990, THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, THE OLDER WORKERS BENEFIT PROTECTION ACT, THE CALIFORNIA FAIR
EMPLOYMENT AND HOUSING ACT, THE CALIFORNIA LABOR CODE, CLAIMS OF HARASSMENT,
DISCRIMINATION OR WRONGFUL TERMINATION AND ANY STATUTORY CLAIMS.  Consultant understands that this Agreement to
arbitrate also applies to any disputes that the Company may have with
Consultant.

 

B.    Procedure.   Consultant agrees that any arbitration will
be administered by the American Arbitration Association (“AAA”),
and that a neutral arbitrator will be selected in a manner consistent with its
National Rules for the Resolution of Employment Disputes.  Consultant agrees that the arbitrator will
have the power to decide any motions brought by any party to the arbitration,
including discovery motions, motions for summary judgment and/or adjudication
and motions to dismiss and demurrers, prior to any arbitration hearing.  Consultant agrees that the arbitrator will
issue a written decision on the merits. 
Consultant also agrees that the arbitrator will have the power to award
any remedies, including attorneys’ fees and costs, available under applicable
law.  

 

5

 

Consultant understands
that the Company will pay for any administrative or hearing fees charged by the
arbitrator or AAA, except that Consultant shall pay the first $200.00 of any
filing fees associated with any arbitration Consultant initiates.  Consultant agrees that the arbitrator will
administer and conduct any arbitration in a manner consistent with the Rules and
that, to the extent that the AAA’s National Rules for the Resolution of
Employment Disputes conflict with the Rules, the Rules will take
precedence.

 

C.    Remedy.  Except as provided by the Rules, arbitration
will be the sole, exclusive and final remedy for any dispute between the
Company and Consultant.  Accordingly,
except as provided for by the Rules, neither the Company nor Consultant will be
permitted to pursue court action regarding claims that are subject to
arbitration.  Notwithstanding the
foregoing, the arbitrator will not have the authority to disregard or refuse to
enforce any lawful Company policy, and the arbitrator shall not order or
require the Company to adopt a policy not otherwise required by law which the
Company has not adopted.

 

D.    Availability
of Injunctive Relief.  In
addition to the right under the Rules to petition the court for
provisional relief, Consultant agrees that any party may also petition the
court for injunctive relief where either party alleges or claims a violation of
Sections 2 (Confidentiality), 3 (Ownership) or 4 (Conflicting Obligations) of
this Agreement or any other agreement regarding trade secrets, confidential
information, nonsolicitation or Labor Code §2870 (Inventions).  In the event either the Company or Consultant
seeks injunctive relief, the prevailing party will be entitled to recover
reasonable costs and attorneys’ fees.

 

E.     Administrative
Relief.  Consultant
understands that this Agreement does not prohibit Consultant from pursuing an
administrative claim with a local, state or federal administrative body such as
the Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission or the workers’ compensation board. 
This Agreement does, however, preclude Consultant from pursuing court
action regarding any such claim.

 

F.     Voluntary
Nature of Agreement. 
Consultant acknowledges and agrees that Consultant is executing this
Agreement voluntarily and without any duress or undue influence by the Company
or anyone else. Consultant further acknowledges and agrees that Consultant has
carefully read this Agreement and has asked any questions needed to understand
the terms, consequences and binding effect of this Agreement and fully understand
it, including that Consultant is waiving its right to a jury trial.  Finally, Consultant agrees that Consultant
has been provided an opportunity to seek the advice of an attorney of its
choice before signing this Agreement.

 

11.   Miscellaneous.

 

A.    Governing
Law.  This Agreement shall be
governed by the laws of California without regard to California’s conflicts of
law rules.

 

B.    Assignability.  Except as otherwise provided in this
Agreement, Consultant may not sell, assign or delegate any rights or obligations
under this Agreement.

 

6

 

C.    Entire
Agreement.  This Agreement
constitutes the entire agreement between the parties with respect to the
subject matter of this Agreement and supersedes all prior written and oral
agreements between the parties regarding the subject matter of this Agreement.

 

D.    Headings.  Headings are used in this Agreement for
reference only and shall not be considered when interpreting this Agreement.

 

7

 

E.     Notices.  Any notice or other communication required or
permitted by this Agreement to be given to a party shall be in writing and
shall be deemed given if delivered personally or by commercial messenger or
courier service, or mailed by U.S. registered or certified mail (return receipt
requested), or sent via facsimile (with receipt of confirmation of complete
transmission) to the party at the party’s address or facsimile number written
below or at such other address or facsimile number as the party may have
previously specified by like notice.  If
by mail, delivery shall be deemed effective three business days after mailing
in accordance with this Section 11(E).

 

	
  (1)

  	
  If to the Company, to:

  	
   

  
	
   

  	
  21211 Nordhoff Street, Chatsworth, CA 91311

  	
   

  
	
   

  	
  Attention:

  	
   

  
	
   

  	
  Telephone:

  	
  (818) 734-5300

  	
   

  
	
   

  	
  Facsimile:

  	
  (818)
  734-5320

  	
   

  

 

(2)        If
to Consultant, to the address for notice on the signature page to this
Agreement or, if no such address is provided, to the last address of Consultant
provided by Consultant to the Company. 

 

F.     Severability.  If any provision of this Agreement is found
to be illegal or unenforceable, the other provisions shall remain effective and
enforceable to the greatest extent permitted by law.

 

(Remainder of page intentionally
left blank.)

 

8

 

IN WITNESS WHEREOF, the parties hereto have executed this Consulting
Agreement as of the date first written above.

 

 

	
  CONSULTANT

  	
   

  	
  CAPSTONE
  TURBINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
    /s/ LEIGH ESTUS

  	
   

  	
  By:

  	
    /s/ LARRY COLSON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
    Leigh
  Estus

  	
   

  	
  Name: Larry
  Colson, Sr. VP Human Resources

  
	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  By:

  	
    /s/ DARREN JAMISON

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Tax ID #:

  	
   

  	
   

  	
  Name: Darren
  Jamison, President & CEO

  
									

 

	
  Address for
  Notice:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

9

 

EXHIBIT
A

 

Services and Compensation

 

1.     Contact.  Consultant’s principal Company contact:

 

Name: Larry Colson

 

                        Title:
Sr. Vice President, Human Resources

 

2.     Services.  The Services shall include, but shall not be
limited to, the following:

 

Operations
consulting services as requested by Larry Colson, or his designee, not to
exceed 8 hours on average per month.

 

3.     Consultant
will provide services at the rate of $1,000 per month for seven months.  Consultant will receive payment for services
at the end of each month beginning December 31, 2008 with the last payment
being June 30, 2009.

 

4.     During the consultancy
period, consultant will continue to vest in the stock options and restricted
stock units (RSU) previously granted. 
All vesting will end on June 30, 2009 at which time the consultant
is responsible for contacting the company for a closing statement.  Consultant may exercise stock options
throughout the consultancy period or within 90 days from the end of the consultancy
agreement, in accordance with the Plan documentation.  Consultant will receive RSU’s as applicable
during the term of the consultancy period.

 

 

	
  CONSULTANT

  	
   

  	
  CAPSTONE
  TURBINE CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   /s/ LEIGH ESTUS

  	
   

  	
  By:

  	
    /s/
  LARRY COLSON 

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Name:

  	
   Leigh Estus

  	
   

  	
  Name: Larry
  Colson, Sr. VP Human Resources

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  By:

  	
    /s/ Darren Jamison

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Name: Darren
  Jamison, President & CEO

  
								

 

10Exhibit 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
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 

 

3

 

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.

 

4

 

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 

 

5

 

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.

 

6

 

(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:

  

 

7

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