Exhibit 10.29
M-Foods Holdings, Inc.
Deferred Compensation Plan
1.0 PURPOSE. M-Foods Holdings, Inc., f/k/a THL Food Products Holding Co., a
Minnesota corporation ("MF"), (herein, together with its successors,
referred to as the "Company") by means of this nonqualified deferred
compensation plan (the "Plan") desires to grant certain employees of MF
(the "Participants") the right to participate in a deemed investment in
Class A Units of THL-MF Investors, LLC ("Investors") in exchange for the
cancellation of certain stock options granted to Participants under the
M-Foods Holdings, Inc. 2001 Stock Option Plan ("Options") as reflected in
those certain Option Cancellation Agreements, dated as of November 20,
2003. In addition, in connection with the establishment of the Plan, all
deferred compensation obligations pursuant to applicable employment
agreements, each dated as of April 10, 2001 with MF (the "Employment
Agreements") and severance and deferred compensation agreements, each dated
as of April 10, 2001 (the "Deferred Compensation Agreements"), and certain
bonus payments made in connection with the sale of the dairy business of
Michael Foods, Inc. (the "Bonuses") shall be governed by the terms of this
Plan and deemed invested in Class A Units. The Plan shall be effective as
of November 20, 2003 (the "Effective Date").
2.0 DEFINITIONS
The following terms shall have the following meanings unless the context
indicates otherwise:
2.1 "Affiliate" shall mean, as to any Person, a person that directly, or
indirectly through one or more intermediaries, controls, or is controlled
by, or is under common control with, such Person.
2.2 "Board" shall mean the Board of Directors of the Company.
2.3 "Change in Control" shall mean the consummation of a transaction, whether
in a single transaction or in a series of related transactions that are
consummated contemporaneously (or consummated pursuant to contemporaneous
agreements), with any other party or parties on an arm's-length basis,
pursuant to which (a) such party or parties, directly or indirectly,
acquire (whether by merger, stock purchase, recapitalization,
reorganization, redemption, issuance of capital stock or otherwise) more
than 50% of the voting stock of the Company, (b) such party or parties,
directly or indirectly, acquire assets constituting all or substantially
all of the assets of the Company and its subsidiaries on a consolidated
basis, or (c) prior to an initial public offering of the Company common
stock pursuant to an offering registered under the 1933 Act, Thomas H. Lee
Equity Fund V, L.P., a Delaware limited partnership, and its affiliates
cease to have the ability to elect, directly or indirectly, a majority of
the Board of Directors of the Company.
2.4 "Class A Units" shall mean the Class A Units of Investors.
2.5 "Committee" shall mean, as the case may be, the Board of Directors of the
Company or a committee appointed by the Board of Directors of the Company.
2.6 "Deferred Amount" shall have the meaning set forth in Section 4.1.
2.7 "Deferred Compensation Account" shall mean a notional account established
and maintained by the Company for a Participant which shall record the
deemed investment in Class A Units with respect to each Participant under
Section 4.1 below. This notional account shall be established by the
Company for bookkeeping purposes only, and no separate funds shall be
segregated by the Company for the benefit of the Participant.
2.8 "Investors" shall have the meaning set forth in the preamble.
2.9 "Option" shall have the meaning set forth in the preamble.
2.10 "Option Cancellation Agreement" shall mean an agreement between a
Participant and the Company canceling Options pursuant to the Agreement and
Plan of Merger made as of October 10, 2003 (the "Merger Agreement"), by and
among THL Food Products Holding Co., a Delaware corporation, THL Food
Products Co., a Delaware corporation, M-Foods Holdings, Inc., a Delaware
corporation, and M-Foods Investors, LLC, a Delaware limited liability
company, as representative of certain stockholders, and providing for the
establishment of deferred compensation amounts resulting from the
cancellation of Options and deferral of the Bonuses and the transfer of
deferred compensation amounts under the Employment Agreements and the
Deferred Compensation Agreements to this Plan.
2.11 "Person" shall mean any person or entity of any nature whatsoever,
specifically including an individual, a firm, a company, a corporation, a
partnership, or a trust.
2.12 "Subsidiary" shall mean a corporation of which the Company directly or
indirectly owns more than 50 percent of the voting stock or any other
business entity in which the Company directly or indirectly has an
ownership interest of more than 50 percent.
3.0 ELIGIBILITY AND PARTICIPATION. Any employee of the Company or any of its
Subsidiaries as of the Effective Date who has entered into an Option
Cancellation Agreement.
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4.0 DEFERRED COMPENSATION ACCOUNT
4.1 Establishment of Deferred Compensation Account. In connection with a
Participant's entering into an Option Cancellation Agreement, the Company
shall credit in the form of deemed investment in Class A Units to the
Participant's Deferred Compensation Account an amount equal to that as set
forth in Participant's Option Cancellation Agreement as a result of (i) the
cancellation of Options, (ii) the transferred amount of Bonuses and (iii)
the transferred amount of any deferred compensation obligations arising
under an Employment Agreement or Deferred Compensation Agreement, as
applicable (collectively, the "Deferred Amount").
4.2 Amount of Payout. (a) With respect to the Deferred Compensation Account,
the Deferred Amount shall be deemed invested (i.e., an actual investment
will not be made), as of the Effective Date, in Class A Units of the
Company. The Company shall credit a Participant's Deferred Compensation
Account with certain of the distributions that would be received by the
Deferred Compensation Account if such Deferred Compensation Account were
actually invested in the manner set forth in the preceding sentence in
Class A Units, the extent of such crediting to be in accordance with the
calculations set forth in the following paragraph. All amounts in a
Participant's Deferred Compensation Account shall be subject to the claims
of the creditors of the Company.
(b) The Company shall credit the Participant's Deferred Compensation
Account with any distributions made in respect of such Class A Units
pursuant to or in accordance with the Sections 4.4(a)(i) and 4.4(a)(ii) of
Investor's Amended and Restated Limited Liability Agreement, dated November
20, 2003 (the "LLC Agreement"). In the event the Company distributes
non-cash property to holders of Class A Units pursuant to Sections
4.4(a)(i) or 4.4(a)(ii) of the LLC Agreement, the Company shall credit a
Participant's Deferred Compensation Account in the amount equal to the fair
market value of such property, as determined by the Management Committee of
Investors. A Participant's Deferred Compensation Account shall not be
credited with any distributions made in respect of Class A Units pursuant
to or in accordance with any subsections of Section 4.4 of the LLC
Agreement other than Section 4.4(a)(i) and 4.4(a)(ii) thereof. In the event
that Class A Units are sold by one or more holders of Class A Units to a
buyer unrelated on the date hereof to the holders of Class A Units, the
Company shall credit a Participant's Deferred Compensation Account with an
amount equal to the result of (x) the percentage of outstanding Class A
Units being purchased by an unrelated buyer (including, for purposes of
this percentage calculation, the number of Class A Units deemed held in all
Deferred Compensation Accounts and any other unfunded, unsecured
nonqualified deferred compensation arrangements similarly established to be
deemed to hold Class A Units) multiplied by (y) the number of Class A Units
deemed held in such Participant's Deferred Compensation Account multiplied
by (z) the lesser of (i) the amount per Unit of cash or fair market value
of any property, as determined by the Management Committee of Investors,
received by holders of Class A Units
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in exchange of such holder's Class A Units and (ii) the sum of the
Unreturned Capital and Unpaid Preferred Return (as such terms are defined
in the LLC Agreement) of a Class A Unit (assuming such Class A Unit was
issued on the date hereof; it being understood and agreed that any credit
made pursuant to this sentence shall, with respect to future distributions,
reduce the number of Class A Units deemed held by the Deferred Compensation
Account by the percentage described in subclause (x) of this sentence.
(c) Participant shall receive from the Company distributions from his or
her Deferred Compensation Account, in the amount indicated, upon the
occurrence of the following events: (i) upon a Change in Control,
Participant shall receive a total distribution of the amount then deemed
held in the Deferred Compensation Account; (ii) upon the tenth anniversary
of the date hereof, Participant shall receive a total distribution of the
amount then deemed held in the Deferred Compensation Account; and (iii)
upon the purchase by Investors of any of Participant's Class B Units of
Investors pursuant to Section 5.2 of the Participant's Management Unit
Subscription Agreement, Participant shall receive a distribution from the
Deferred Compensation Account equal to the result of (x) the percentage of
Participant's Class B Units being purchased by Investors multiplied by (y)
the number of Investors' Class A Units deemed held in the Deferred
Compensation Account multiplied by (z) the lesser of (A) the fair market
value of an Investors' Class A Unit, as determined by the Management
Committee of Investors and (B) the sum of the Unreturned Capital and Unpaid
Preferred Return (as such terms are defined in the LLC Agreement) of an
Investors' Class A Unit (assuming such Investors' Class A Unit was issued
on the date hereof; it being understood and agreed that any distribution
made pursuant to clause (iii) of this sentence shall, with respect to
future distributions, reduce the number of Investors' Class A Units deemed
held by the Deferred Compensation Account of such Participant by the
percentage described in subclause (x) of such clause (iii).
4.3 Method of Payment. The form of payment made with respect to any of the
foregoing distributions shall be a cash payment except that (1) in the
event of a Change in Control in which the consideration effecting such
Change in Control is non-cash consideration, such distribution may be made
in the form of such non-cash consideration, the fair market value of which
shall be determined by the Management Committee of Investors, and (2) in
the event of a distribution of the type described in Section 4.2(c)(iii)
above, if, with respect to the Company, any of the Cash Deferral Conditions
(as such term is defined in the Participant's Management Unit Subscription
Agreement) exists, the portion of the cash payment so affected may be made
by the delivery of the Company's unfunded and unsecured promise to pay
Participant the portion of the cash payment so affected in cash, together
with interest, at the first date on which the Cash Deferral Conditions no
longer exist. The interest on such delayed cash payment will accrue
annually at the "prime rate" published by The Wall Street Journal on the
date the Company delivers its unfunded and unsecured promise.
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4.4 Award Agreement. The establishment of a Deferred Compensation Account for
any Participant shall be evidenced by an Option Cancellation Agreement that
shall be signed by the Committee or its authorized delegate and the
Participant. Such Option Cancellation Agreement shall set forth the deemed
investment in Class A Units initially credited to the Participant's
Deferred Compensation Account.
5.0 ADMINISTRATION
5.1 Responsibility. The Committee shall have the responsibility to administer
the Plan in accordance with its terms and shall have the authority that may
be necessary or helpful to enable it to discharge its responsibilities with
respect to the Plan.
5.2 Delegation of Authority. The Committee may delegate to one or more of its
members, or to one or more agents, such administrative duties as it may
deem advisable; provided, however, that any such delegation shall be in
writing. In addition, the Committee, or any person to whom it has delegated
duties under this Section 5.2, may employ one or more persons to render
advice with respect to any responsibility the Committee or such person may
have under the Plan. The Committee may employ such legal or other counsel,
consultants and agents as it may deem desirable for the administration of
the Plan and may rely upon any opinion or computation received from any
such counsel, consultant or agent.
6.0 WITHHOLDING TAXES. The Company may require a Participant to reimburse the
Company for any taxes required by any governmental authority to be withheld
or otherwise deducted and paid by the Company or any Subsidiary in respect
of the payment of any amounts paid under the Plan. In lieu thereof, the
Company or Subsidiary shall have the right to withhold the amount of such
taxes from any other payments due or to become due from the Company or the
Subsidiary to the Participant upon such terms and conditions as the
Committee shall prescribe.
7.0 AMENDMENT AND TERMINATION
7.1 Termination and Amendment of Plan. The Board may amend, suspend or
terminate the Plan at any time with or without prior notice; provided,
however, that no action authorized by this Section 7.1 shall be effective
with respect to any Participant without such Participant's express written
consent.
8.0 MISCELLANEOUS
8.1 Transferability. Each Deferred Compensation Account under the Plan and any
interest therein shall not be transferable otherwise than by will or the
laws of descent and distribution. Any purported transfer of an award or any
interest therein to a creditor of a Participant shall be void.
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8.2 No Right, Title, or Interest in Company Assets. Participants shall have no
right, title, or interest whatsoever in or to any investments that the
Company may make to aid it in meeting its obligations under the Plan.
Nothing contained in the Plan, and no action taken pursuant to its
provisions, shall create a trust of any kind, or a fiduciary relationship
between the Company and any Participant, beneficiary, legal representative
or any other person. Unless otherwise agreed in writing by the Company, a
Participant shall not take any position inconsistent with such treatment by
the Company. All payments to be made hereunder shall be paid from the
general funds of the Company, and participants' right to payment is
unsecured. The Plan is not intended to be subject to the Employee
Retirement Income Security Act of 1974, as amended.
8.3 No Right to Continued Employment or Service. The Participant's rights, if
any, to continue to serve the Company as an employee shall not be enlarged
or otherwise affected by his or her designation as a Participant under the
Plan, and the Company or the applicable Subsidiary reserves the right to
terminate the employment of any employee at any time.
8.4 Governing Law. The Plan, all awards granted hereunder, and all actions
taken in connection herewith shall be governed by and construed in
accordance with the laws of the State of Delaware without reference to
principles of conflict of laws, except as superseded by applicable federal
law.
8.5 Other Benefits. No award granted under the Plan shall be considered
compensation for purposes of computing benefits under any retirement plan
of the Company or any Subsidiary nor affect any benefits or compensation
under any other benefit or compensation plan of the Company or any
Subsidiary now or subsequently in effect.
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