Exhibit 10.01
MAGNETEK, INC.
INCENTIVE BONUS AGREEMENT
This Incentive Bonus Agreement (this "Agreement") is entered into on
January 5, 2007 by and between Xxxxx X. Xxxxxxx, an individual (the
"Executive"), and Magnetek, Inc., a Delaware corporation (the "Company").
RECITALS
WHEREAS, the Compensation Committee of the Board of Directors of the
Company (the "Committee") desires to grant to Executive certain quarterly
bonuses pursuant to the terms and conditions of this Agreement, the amount of
which will be based upon the value of the Company's common stock (the "Common
Stock"); and
WHEREAS, Executive desires to accept such award subject to the terms
and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, the Company and Executive, intending
to be legally bound, hereby agree as follows:
1. Definitions. When used in this Agreement, the following terms have the
meanings set forth below:
(a) "Cause" means: (A) conviction of a felony or misdemeanor involving
moral turpitude, or (B) willful gross neglect or willful gross misconduct in
carrying out the Executive's duties, resulting in material economic harm to the
Company.
(b) "Change of Control" means (i) any event described in Section 13.2
of the Magnetek, Inc. 2004 Stock Incentive Plan 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 the date hereof or who
thereafter was appointed or nominated to the Board by a majority of continuing
directors.
(c) "Change of Control Date" means the date on which a Change of
Control is consummated.
(d) "Disability" means the inability of the Executive due to illness
(mental or physical), accident, or otherwise, to perform his or her duties for
any period of 180 consecutive days, as determined by a qualified physician.
(e) "Distress Sale" means a Change of Control occurring within 18
months of any of the following: (i) the Company's independent public accountants
shall have made a "going concern" qualification in their audit report (other
than by reason of extraordinary occurrences, such as material litigation, not
attributable to poor management practices); (ii) the Company shall lack
sufficient capital for its operations by reason of termination of its existing
credit lines or the Company's inability to secure credit facilities upon
acceptable terms; or (iii) the Company shall have voluntarily sought relief
under, consented to or acquiesced in the benefit of application to it of the
Bankruptcy Code of the United States of America or any other liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments or similar laws, or shall
have been the subject of proceedings under such laws (unless the applicable
involuntary petition is dismissed within 60 days after its filing).
(f) "Fair Market Value" on any date other than a Change of Control Date
means the closing price per share of Common Stock on the date in question, as
the price is reported by the New York Stock Exchange or any successor system;
provided, however, if there is no closing price for the Common Stock on the date
in question, then the Fair Market Value shall be the closing price on the last
preceding date for which such quotation exists. With respect to any Payment Date
that is a Change of Control Date, the term "Fair Market Value" shall mean the
total value (as determined by the Committee) of all consideration payable in
respect of each share of Common Stock in the Change of Control.
(g) "Payment Date" shall mean the first day following the end of each
calendar quarter beginning with the quarter ending March 31, 2007 and ending
with the quarter ending December 31, 2009 (for a total of 12 Payment Dates);
provided, however, that if the payment of any unpaid Quarterly Bonus Payments is
accelerated pursuant to Section 4(c), the term "Payment Date" shall mean the
Change of Control Date.
2. Quarterly Bonus Award. The Company and Executive hereby agree that subject to
Executive's continued employment with the Company through each applicable
Payment Date, on each Payment Date the Company will pay to the Executive
(subject to the deferral election referred to in Section 5 hereof) a cash bonus
("Quarterly Bonus Payment") in an amount equal to the Fair Market Value (as
defined above) of 6,250 shares of Common Stock (for a total of 12 payments with
a total value equal to 75,000 shares of Common Stock), less any applicable tax
withholdings as described in Section 6(a) hereof.
3. Effect of Termination of Employment. Except as set forth in this Section 3,
upon a termination of Executive's employment with the Company for any reason,
this Agreement shall automatically terminate and Executive shall automatically
forfeit the right to receive any then unpaid Quarterly Bonus Payments with
respect to Payment Dates that occur following such termination of employment.
Notwithstanding anything herein to the contrary, upon a termination of the
Executive's employment with the Company by the Company without Cause or by
reason of the Executive's death or Disability, in each case prior to the final
Payment Date, the vesting and payment of the Quarterly Bonus Payment that would
have otherwise become payable for the calendar quarter during which such
termination of employment occurs shall automatically accelerate so that such
Quarterly Bonus Payment shall be paid to Executive within 5 days following such
termination of employment.
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4. Certain Transactions and Events.
(a) In General. Except as provided in this Section 4, no change in the
capital structure of the Company, merger, sale or other disposition of assets or
a subsidiary, change in control, issuance by the Company of shares of any class
of securities or securities convertible into shares of any class of securities,
exchange or conversion of securities, or other transaction or event shall
require or be the occasion for any adjustments of the type described in this
Section 4. In addition, the existence of this Agreement shall in no way affect
the right of the Company to adjust, reclassify, reorganize or otherwise change
its capital or business structure or to merge, consolidate, dissolve, liquidate
or sell or transfer all or any part of its business or assets.
(b) Changes in Capital Structure. If any change is made to the Common
Stock by reason of any stock split, stock dividend, recapitalization,
combination of shares, exchange of shares or other change affecting the
outstanding Common Stock as a class without the Company's receipt of
consideration, appropriate adjustments shall be made by the Committee to the
number and/or class of securities with respect to which the value of the then
unpaid Quarterly Bonus Payments is based. Such adjustments are to be effected in
a manner which shall preclude the enlargement or dilution of rights and benefits
under this Agreement.
(c) Change of Control. In the event of any Change of Control, the
vesting and payment of any then unpaid Quarterly Bonus Payment shall
automatically accelerate so that all remaining unpaid Quarterly Bonus Payment
shall be paid to Executive on or immediately prior to the Change of Control
Date, and the Fair Market Value for such accelerated payment shall be determined
as set forth in the last sentence of the definition of Fair Market Value.
5. Deferral Election. The Company and the Executive acknowledge and agree that
the Executive has elected to defer the receipt all payments under this Agreement
pursuant to the terms of the Company's Amended and Restated Director
Compensation and Deferral Investment Plan.
6. General.
(a) Tax Withholding. The Company shall deduct from all payments
pursuant to this Agreement any federal, state or local withholding taxes, social
security contributions and any other amounts which may be required to be
deducted or withheld by the Company pursuant to any federal, state or local
laws, rules or regulations.
(b) 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.
(c) Successors and Assigns. This Agreement is intended to bind and
inure to the benefit of and be enforceable by the Executive and the Company, and
their respective successors and assigns, except that the Executive may not
assign any of his duties hereunder.
(d) 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.
(e) 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.
(f) Tax Treatment. Executive acknowledges that the Company has made no
warranties or representations to Executive with respect to the income tax
consequences of the transactions contemplated by this Agreement, and Executive
is not relying on the Company or its representatives for an assessment of such
tax consequences. Executive has had adequate opportunity to consult with
Executive's personal tax advisor before submitting this Agreement to the
Company. Executive further acknowledges that Xxxxxx, Xxxx & Xxxxxxxx represents
the Company and not Executive.
(g) Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, and all of which, taken together, shall
constitute one and the same instrument.
(h) No Right to Continued Employment. THIS IS NOT AN EMPLOYMENT
CONTRACT. THIS AGREEMENT IS NOT TO BE INTERPRETED AS A GUARANTEE OR CONTRACT OF
CONTINUING EMPLOYMENT WITH THE COMPANY OR ANY SUBSIDIARY OR AFFILIATE.
[signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
MAGNETEK, INC.
/s/ Xxxxx X. Xxxxxxx By: /s/ Xxxxx X. Xxxxxxxxx
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XXXXX X. XXXXXXX Name: Xxxxx X. Xxxxxxxxx
Title: Vice President and Chief Financial
Officer
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