Exhibit 10.51
EMPLOYMENT
AGREEMENT
AGREEMENT, dated as of the 1st day
of July, 2008, by and among Michael Foods, Inc., a Delaware
corporation having its principal executive offices in Minnetonka,
Minnesota (the “Company”), and Mark Westphal (the
“Executive”).
WHEREAS, Executive currently serves
as a senior executive officer of the Company;
WHEREAS, the Company recognizes the
Executive’s substantial contribution to the growth and
success of the Company, desires to provide for the continued
employment of the Executive and to make certain changes in the
Executive’s employment arrangements with the Company, which
the Board has determined will reinforce and encourage the continued
attention and dedication to the Company of the Executive as a
member of the Company’s senior management in the best
interests of the Company and its shareholders; and
WHEREAS, the Executive is willing to
continue to serve the Company on the terms and conditions set forth
below.
NOW, THEREFORE, IT IS HEREBY AGREED
AS FOLLOWS:
1. Employment Period.
Subject to the terms and conditions
of this Agreement, including Section 3, the Company hereby
agrees to continue to employ the Executive, and the Executive
hereby agrees to continue in the employ of the Company, for the
period commencing on the date hereof (the “Effective
Date”) and ending on the first anniversary of such Effective
Date (the “Employment Period”), provided ,
however , that commencing on the first anniversary of the
Effective Date and each subsequent anniversary thereafter, the
Employment Period shall automatically be extended for one
additional year.
2. Terms of
Employment.
a. Position and Duties
.
i. During the Employment Period, the
Executive shall serve as Chief Financial Officer of the Company,
with the appropriate authority, duties and responsibilities
attendant to such position.
ii. During the Employment Period,
and excluding any periods of vacation and sick leave to which the
Executive is entitled, the Executive agrees to devote substantially
all of his attention and time during his normal business hours to
the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to the
Executive hereunder, to use the Executive’s reasonable best
efforts to perform faithfully and efficiently such
responsibilities.
b. Compensation .
i. Annual Base Salary .
Effective immediately, and during the Employment Period, the
Executive shall receive an annual base salary (“Annual Base
Salary”) of at least $300,000, the competitiveness of which
shall be periodically reviewed and adjusted in accordance with
Company policy. Any increase in Annual Base Salary shall not serve
to limit or reduce any other obligation to the Executive under this
Agreement. Annual Base Salary shall not be reduced after any such
increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so
increased.
ii. Annual Bonus . During the
Employment Period, the Executive shall participate in such bonus
arrangements as may be approved by the Compensation Committee of
the Board (the “Compensation Committee”) (the aggregate
of all payments made under such bonus arrangements being herein
referred to as the “Annual Bonus”). Executive’s
aggregate bonus opportunity will be no less than 75% of Annual Base
Salary and the “Target Bonus” will be no less than
46.875% of Annual Base Salary or greater as determined by the
Compensation Committee. The Annual Bonus shall be paid within two
and one-half months of the end of the fiscal year of the Company to
which it relates.
iii. Long-Term Incentive
Plans . The Executive shall participate in long-term incentive
plans including all stock option plans and other long-term
incentive plans the Company may adopt from time to time on a basis
no less favorable than that provided to any other executive officer
of the Company.
iv. Other Employee Benefit
Plans . During the Employment Period, except as otherwise
expressly provided herein, the Executive shall be entitled to
participate in all compensation, incentive, employee benefit,
welfare and other plans, practices, policies and programs and
fringe benefits on a basis no less favorable than that provided to
any other executive officer of the Company.
3. Termination of
Employment.
a. Death or Disability . The
Executive’s employment shall terminate automatically upon the
Executive’s death during the Employment Period. If the
Company determines in good faith that the Disability of the
Executive has occurred during the Employment Period (pursuant to
the definition of Disability set forth below), it may give to the
Executive written notice in accordance with Section 11(b) of
this Agreement of its intention to terminate the Executive’s
employment. In such event, the Executive’s employment with
the Company shall terminate effective on the 30th day after receipt
of such notice by the Executive (the “Disability Effective
Date”), provided
that, within the 30 days after such
receipt, the Executive shall not have returned to full-time
performance of the Executive’s duties; provided
that , in the event the Executive has been unable to perform
his job responsibilities as a result of chronic illness, physical,
mental or any other disability for 240 or more days in any
consecutive 12 month period or 270 or more days in any consecutive
24 month period, then the Company shall be able to terminate the
Executive’s employment without providing the written notice
referred to above (and the “Disability Effective Date”
shall be the date of such termination). For purposes of this
Agreement, “Disability” shall mean a determination by
the Company in its sole discretion that Executive is unable to
perform his job responsibilities as a result of chronic illness,
physical, mental or any other disability for a period of six months
or more.
b. With or Without Cause .
The Company may terminate the Executive’s employment during
the Employment Period with or without Cause. For purposes of this
Agreement, “Cause” shall mean:
i. the continued failure of the
Executive to perform substantially the Executive’s duties
with the Company or one of its affiliates (other than any such
failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is
delivered to the Executive by the Board which specifically
identifies the manner in which the Board believes that the
Executive has not substantially performed the Executive’s
duties, or
ii. the willful engaging by the
Executive in illegal conduct or gross misconduct which is
materially and demonstrably injurious to the Company, or
iii. conviction of a felony or
guilty or nolo contendere plea by the Executive with respect
thereto.
iv. For purposes of this provision,
no act or failure to act, on the part of the Executive, shall be
considered “willful” unless it is done, or omitted to
be done, by the Executive in bad faith or without reasonable belief
that the Executive’s action or omission was in the best
interests of the Company. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board
or upon the instructions of the Chief Executive Officer (while the
Executive does not serve as such) or based upon the advice of
counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Executive in good faith and in the
best interests of the Company. The cessation of employment of the
Executive shall not be deemed to be for Cause unless and until
there shall have been delivered to the Executive a copy of a
resolution duly adopted by the affirmative vote of not less than
75% of the entire membership of the Board (excluding the Executive)
at a meeting of the Board called and held for such purpose (after
reasonable notice is provided to the Executive and the Executive is
given an opportunity, together with counsel, to be heard before the
Board) finding that, in the good faith opinion of the Board, the
Executive is guilty of the conduct described in subparagraph (i),
(ii) or (iii) above, and specifying the particulars
thereof in detail.
c. Good Reason . The
Executive’s employment may be terminated by the Executive for
Good Reason. For purposes of this Agreement, “Good
Reason” shall mean in the absence of a written consent of the
Executive:
i. the assignment to the Executive
of any duties inconsistent with the Executive’s title and
position (including status, offices and reporting requirements),
authority, duties or responsibilities as contemplated by
Section 2(a)(i) of this Agreement, or any other action by the
Company which results in a diminution in such position, authority,
duties or responsibilities, excluding for this purpose an isolated,
insubstantial and inadvertent action not taken in bad faith and
which is remedied by the Company promptly after receipt of notice
thereof given by the Executive; provided that it is specifically
understood that within six months of a Change in Control the
Company shall have the flexibility to appoint the Executive to a
reporting relationship different from that which existed prior to
the Change in Control, to make an immaterial change in
Executive’s duties, or to change the Executive’s title
provided that Executive shall not have a stature less than that of
Chief Financial Officer of a business unit of the size of the
Company, and it is understood that equivalent positions may have
different titles;
ii. any failure by the Company to
comply with any of the provisions of Section 2(b) of this
Agreement or, following a Change in Control, the failure by the
Company to review and provide increases in Annual Base Salary in a
manner that is consistent with the acquiror’s review and
compensation policy for other senior executives, in each case other
than an isolated, insubstantial and inadvertent failure not
occurring in bad faith and which is remedied by the Company
promptly after receipt of notice thereof given by the
Executive;
iii. the failure of the Company upon
a Change in Control to (A) continue in effect any employee
benefit plan, compensation plan, welfare benefit plan or material
fringe benefit plan in which Executive is participating immediately
prior to such Change in Control or the taking of any action by the
Company which would adversely affect Executive’s
participation in or reduce Executive’s benefits under any
such plan, unless Executive is permitted to participate in other
plans providing Executive with substantially equivalent benefits,
or (B) provide Executive with paid vacation in accordance with
the most favorable past practice of the Company as in effect for
Executive immediately prior to such Change in Control;
iv. any purported termination by the
Company of the Executive’s employment otherwise than as
expressly permitted by this Agreement for Cause, death or
Disability;
v. any failure by the Company to
comply with and satisfy Section 10(c) of this Agreement;
or
vi. any requirement that the
Executive (A) be based anywhere more than fifty
(50) miles from the office where the Executive is currently
located or (B) travel on Company business to an extent
substantially greater than the Executive’s current travel
obligations.
d. Notice of Termination .
Any termination by the Company or by the Executive shall be
communicated by Notice of Termination to the other party hereto
given in accordance with Section 11(b) of this Agreement. For
purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific
termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated and
(iii) if the Date of Termination (as defined below) is other
than the date of receipt of such notice, specifies the termination
date (which date shall be not more than thirty days after the
giving of such notice). The failure by the Executive or the Company
to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not
waive any right of the Executive or the Company, respectively,
hereunder or preclude the Executive or the Company, respectively,
from asserting such fact or circumstance in enforcing the
Executive’s or the Company’s rights
hereunder.
e. Date of Termination.
“Date of Termination” means (i) if the
Executive’s employment is terminated by the Company other
than for Disability, the date of receipt of the Notice of
Termination or any later date specified therein within 30 days of
such notice, (ii) if the Executive’s employment is
terminated by reason of death or Disability, the date of death of
the Executive or the Disability Effective Date, as the case may be,
and (iii) if the Executive’s employment is terminated by
the Executive, thirty days after the giving of such notice by the
Executive provided that the Company may elect to place the
Executive on paid leave for all or any part of such 30-day
period.
f. Change in Control .
“Change in Control” means 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.
4. Obligations of the Company
upon Termination.
a. Death or Disability . If,
during the Employment Period, the Executive’s employment
shall terminate on account of death or Disability:
i. the Company shall pay to the
Executive or his estate or beneficiaries in a lump sum in cash
within 30 days after the Date of Termination the sum of
(x) the Executive’s Annual Base Salary through the Date
of Termination to the extent not theretofore paid, and (y) the
product of (1) the Target Bonus and (2) a fraction, the
numerator of which is the number of whole and partial months in the
fiscal year in which the Date of Termination occurs through the
Date of Termination and the denominator of which is 12, to the
extent not theretofore paid (the sum of the amounts described in
clauses (x) and (y) shall be hereinafter referred to as
the “Accrued Obligations”);
ii. to the extent not theretofore
paid or provided, the Company shall timely pay or provide to the
Executive or his estate or beneficiaries any other amounts or
benefits required to be paid or provided or which the Executive is
eligible to receive under any plan, program, policy or practice of
or contract or agreement with the Company and its affiliated
companies through the Date of Termination (such other amounts and
benefits shall be hereinafter referred to as the “Other
Benefits”); and
iii. the Company shall pay to the
Executive or his estate or beneficiaries in a lump sum in cash
within 30 days after the Date of Termination an amount equal to the
sum of (x) Executive’s current Annual Base Salary and
(y) Executive’s current Target Bonus.
b. By the Company for Cause; By
the Executive Other than for Good Reason. If the
Executive’s employment is terminated for Cause or the
Executive terminates his employment without Good Reason during the
Employment Period, this Agreement shall terminate without further
obligations to the Executive other than the obligation to pay to
the Executive (i) his Annual Base Salary through the Date of
Termination to the extent theretofore unpaid and (ii) the
Other Benefits.
c. By the Company Other than for
Cause, Death or Disability; By the Executive for Good Reason .
If
