Exhibit 10.15
[Execution Copy]
MANAGEMENT STOCK PURCHASE AND
UNIT SUBSCRIPTION AGREEMENT
THIS MANAGEMENT STOCK PURCHASE AND UNIT SUBSCRIPTION AGREEMENT (this
"Agreement") is made as of April 10, 2001, by and among MFoods Investors, LLC,
a Delaware limited liability company ("Investors"), Gregg A. Ostrander (the
"Executive"), for the purposes of Section 10.5 hereof, MFoods Holdings, Inc., a
Delaware corporation ("Holdings") and, for the purposes of Section 2.6 hereof,
Kristin Kjar Ostrander (the "Joint Tenant").
WHEREAS, the Executive is an employee and shareholder of Michael
Foods, Inc., a Minnesota corporation (the "Company"), and one of several persons
who are or will be key employees of Investors or one or more of its subsidiaries
and who will hold interests in Investors (collectively with the Executive, the
"Management Investors");
WHEREAS, the Company entered into an Agreement and Plan of Merger
with Holdings and Protein Acquisition Corp., a Minnesota corporation, and a
wholly owned subsidiary of Holdings (n/k/a Michael Foods Acquisition Corp.)
("Merger Sub"), dated as of December 21, 2000, as amended from time to time in
accordance with its terms (the "Merger Agreement"), pursuant to which Merger Sub
shall be merged with and into the Company (the "Acquisition"), in accordance
with the terms and conditions of the Merger Agreement and the relevant
provisions of the MBCA (as defined in the Merger Agreement), and the surviving
corporation shall be the Company;
WHEREAS, prior to the consummation of the transactions contemplated
by this Agreement and the Merger Agreement, the Executive is the record and
beneficial owner of the number of shares of the Company's common stock, par
value $0.01 per share (the "Shares"), set forth on Schedule I attached hereto;
WHEREAS, on the terms and subject to the conditions hereof,
Investors desires to acquire from the Executive, and the Executive desires to
sell to Investors, certain of the Shares, as set forth on Schedule I (the
"Purchased Shares"); and
WHEREAS, on the terms and subject to the conditions hereof and
pursuant to Section 721(a) of the Internal Revenue Code, the Executive also
desires to contribute certain of the Shares (the "Contributed Shares") in
exchange for Investors' Class B Units (the "Class B Units") and Class C Units
(the "Class C Units"), in each case in the amounts set forth on Schedule II
attached hereto.
NOW, THEREFORE, in order to implement the foregoing and in
consideration of the mutual representations, warranties, covenants and
agreements contained herein, the parties hereto agree as follows:
1. Definitions.
1.1 Acquisition. The term "Acquisition" shall have the meaning set forth
in the preface.
1.2 Agreement. The term "Agreement" shall have the meaning set forth in
the preface.
1.3 Applicable Percentage. Except as provided otherwise in the next
sentence, the term "Applicable Percentage" shall mean: (i) 0% during the
oneyear period commencing on the Closing Date (ii) 20% during the oneyear
period commencing on the first anniversary of the Closing Date; (iii) 40% during
the oneyear period commencing on the second anniversary of the Closing Date;
(iv) 60% during the oneyear period commencing on the third anniversary of the
Closing Date; (v) 80% during the oneyear period commencing on the fourth
anniversary of the Closing Date; and (vi) 100% on and after the fifth
anniversary of the Closing Date. Notwithstanding the foregoing, (A) immediately
prior to and after the occurrence of a Sale of the Company, such Applicable
Percentage shall mean 100%, and (B) in the case of a termination of employment
described in Section 7.2(a)(iii)(B), such Applicable Percentage in clauses (i),
(ii) and (iii) shall be 0%, and in clauses (iv) and (v) and (vi) shall be 40%,
75% and 100%, respectively.
1.4 Board. The "Board" shall mean Investors' Management Committee.
1.5 Cause. The term "Cause" used in connection with the termination of
employment of the Executive shall have the same meaning ascribed to such term in
any employment or severance agreement then in effect between Executive and
Investors or one of its subsidiaries or, if no such agreement containing a
definition of "Cause" is then in effect, shall mean (i) the continued failure of
the Executive to perform substantially the Executive's duties with Investors 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; (ii) the willful engaging by the
Executive in illegal conduct or gross misconduct which is materially and
demonstrably injurious to Investors or one of its subsidiaries; or (iii)
conviction of a felony or guilty or nolo contendere plea by the Executive with
respect thereto.
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 Investors or one of
its subsidiaries. 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 Investors shall be conclusively presumed to
be done, or omitted to be done, by the Executive in good faith and in the best
interests of Investors and its subsidiaries. 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
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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 (i), (ii) or (iii) above, and specifying the
particulars thereof in detail.
1.6 Change in Control. The term "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'slength
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, Vestar and its affiliates cease to have the ability to elect,
directly or by virtue of their interests in Investors, a majority of the Board
of Directors of the Company.
1.7 Class A Units. The term "Class A Units" means Investors' Class A
Units.
1.8 Class B Units. The term "Class B Units" shall have the meaning set
forth in the preface.
1.9 Class C Units. The term "Class C Units" shall have the meaning set
forth in the preface.
1.10 Closing. The "Closing" for the sale and purchase of the Shares and
the contribution of Shares in exchange for Units hereunder shall occur
immediately prior to the consummation of the Acquisition.
1.11 Closing Date. The term "Closing Date" shall mean the date on which
the Closing occurs.
1.12 Closing Transactions. The term "Closing Transactions" shall have the
meaning set forth in Section 2.4.
1.13 Company. The term "Company" shall have the meaning set forth in the
preface.
1.14 Contributed Shares. The term "Contributed Shares" shall have the
meaning set forth in the preface.
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1.15 Cost. The term "Cost" shall mean, with respect to Units, the cash or
fair market value of property per unit contributed by the Executive (as
proportionately adjusted for all subsequent distributions of units and other
recapitalizations).
1.16 Disability. The term "Disability" used in connection with the
termination of employment of the Executive shall have the same meaning ascribed
to such term in any employment or severance agreement then in effect between
Executive and Investors or one of its subsidiaries or, if no such agreement
containing a definition of "Disability" is then in effect, 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.
1.17 Employee and Employment. The term "employee" shall mean any employee
(as defined in accordance with the regulations and revenue rulings then
applicable under Section 3401(c) of the Internal Revenue Code of 1986, as
amended) of Investors or any of its subsidiaries, and the term "employment"
shall include service as a part or fulltime employee to Investors or any of its
subsidiaries.
1.18 Executive. The term "Executive" shall have the meaning set forth in
the preface.
1.19 Executive Group. The term "Executive Group" shall have the meaning
set forth in Section 7.2(a).
1.20 Fair Market Value. The term "Fair Market Value" used in connection
with the value of Units shall mean the fair value of the Units determined in
good faith by the Board (without taking into account the effect of any
contemporaneous repurchase of Units at less than Fair Market Value under Section
7); provided that, with respect its calculation of the Fair Market Value of any
class of Units, the Board shall assume, as of such calculation date, the sale of
all of the assets of Investors at fair value and the distribution of the
proceeds resulting therefrom in accordance with the distribution provisions set
forth in the LLC Agreement; provided further that if the Executive disagrees in
good faith with the Board's determination, the Executive shall promptly notify
the Company in writing of such disagreement, in which event an independent
appraiser, accountant or investment banking firm (the "Arbiter") selected by
mutual agreement of the Executive and the Board shall make a determination of
the fair market value thereof (disregarding any discount for minority interest
or marketability of units and assuming the prior conversion, exercise or
exchange of all securities convertible into or exchangeable or exercisable for
Units) solely by (i) reviewing a single written presentation timely made by each
of the Company and the Executive setting forth their respective resolutions of
the dispute and the bases therefor and (ii) accepting either the Executive's or
the Company's proposed resolution of the dispute. Promptly following the
Company's receipt of Executive's written notice of disagreement, the Company
shall make available to Executive all data (including reports of employees and
outside advisors) relied upon by the Board in making its determination. The
Executive's and the Company's written presentations must be submitted to the
Arbiter within 30 days of the Arbiter's engagement. The Arbiter shall notify the
Executive and the
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Company of its decision within 40 days of its engagement. The party whose
proposed resolution is not accepted shall pay all of the Arbiter's fees and
expenses. If the Executive's proposed resolution is accepted, the Company also
shall pay all of the Executive's reasonable outofpocket fees and expenses
(including reasonable fees and expenses of counsel and one appraiser, accountant
or investment banking firm) incurred in connection with the arbitration. Each of
the Company and the Executive agrees to execute, if requested by the Arbiter, a
reasonable engagement letter with the Arbiter.
1.21 Financing Default. The term "Financing Default" shall mean an event
which would constitute (or with notice or lapse of time or both would
constitute) an event of default under any of the following as they may be
amended from time to time: (i) (A) one or more debt facilities or commercial
paper facilities of the Company, in each case with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables financing
(including through the sale of receivables to such lenders or to special purpose
entities formed to borrow from such lenders against such receivables) or letters
or credit, in each case, as amended, restated, modified, renewed, refunded,
replaced or refinanced in whole or in part from time to time (the "Senior
Secured Credit Facilities") or (B) those certain 113/4% Senior Subordinated
Notes due 2011 in an aggregate principal amount of $200,000,000, issued by
Merger Sub on or about March 27, 2001, or any other similar notes or instruments
that the Company or its subsidiaries may issue from time to time (the "Senior
Subordinated Notes" and, together with the Senior Secured Credit Facilities, the
"Senior Financing Agreements"); (ii) any other agreement (other than an
agreement relating to the payment of trade payables in the ordinary course of
business and consistent with industry custom) under which an amount of
indebtedness of the Company or any of its subsidiaries in excess of $1,000,000
is outstanding as of the time of the aforementioned event, and any extensions,
renewals, refinancings or refundings thereof in whole or in part; (iii) any
provisions of the LLC Agreement (but not including amendments thereto after the
Closing Date) designating the terms of the Company's units or capital stock or
setting forth restrictive financial covenants; (iv) any amendment of, supplement
to or other modification of any of the instruments referred to in clauses (i)
through (iii) above; and (v) any of the securities issued pursuant to or whose
terms are governed by the terms of any of the agreements set forth in clauses
(i) through (iv) above, and any extensions, renewals, refinancings or refundings
thereof in whole or in part.
1.22 Good Reason. The term "Good Reason" shall have the same meaning
ascribed to such term in any employment or severance agreement then in effect
between Executive and Investors or one of its subsidiaries or, if no such
agreement containing a definition of "Good Reason" is then in effect, shall mean
(i) upon a Change in Control, 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, or any other
action by Investors or one of its subsidiaries (as applicable) 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 Investors or one of its subsidiaries promptly
after receipt of notice thereof given by the Executive; provided that after a
Change in Control, Investors or one of its subsidiaries (as applicable) shall
have the flexibility to appoint the Executive to a reporting
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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; (ii) any failure by Investors or one of its subsidiaries (as
applicable) to provide Executive with the annual base salary Executive had
previously received or the failure by Investors or one of its subsidiaries (as
applicable) to increase such annual each year after a Change in Control by an
amount which at least equals on a percentage basis, the mean average percentage
increase in base salary for all employees similarly situated during the two full
calendar years immediately preceding a Change in Control, other than an
isolated, insubstantial and inadvertent failure not occurring in bad faith and
which is remedied by Investors or one of its subsidiaries (as applicable)
promptly after receipt of notice thereof given by the Executive; (iii) the
failure of Investors or one of its subsidiaries (as applicable) 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 Investors or one of its subsidiaries 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 Investors or one
of its subsidiaries as in effect for Executive immediately prior to such Change
in Control; (iv) after a Change in Control, any purported termination by
Investors or one of its subsidiaries of the Executive's employment otherwise
than for Cause, death or Disability; or (v) after a Change in Control, any
requirement that the Executive (A) be based anywhere more than 50 miles from the
office where the Executive is currently located or (B) travel on Investor or its
subsidiaries' business to an extent substantially greater than the Executive's
current travel obligations.
1.23 Holdings. The term "Holdings" shall have the meaning set forth in the
preface.
1.24 Investors. The term "Investors" shall have the meaning set forth in
the preface.
1.25 LLC Agreement. The term "LLC Agreement" shall mean the Amended and
Restated Limited Liability Company Agreement of Investors, dated as of April 10,
2001, entered into by and among the members of Investors, as amended from time
to time in accordance with its terms.
1.26 Management Investors. The term "Management Investors" shall have the
meaning set forth in the preface.
1.27 Merger Agreement. The term "Merger Agreement" shall have the meaning
set forth in the preface.
1.28 Merger Sub. The term "Merger Sub" shall have the meaning set forth in
the preface.
1.29 Permitted Transferee. The term "Permitted Transferee" means any
transferee of Units pursuant to clauses (e) or (f) of the definition of "Exempt
Transfer" as defined in the Securityholders Agreement.
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1.30 Person. The term "Person" shall mean any individual, corporation,
partnership, limited liability company, trust, joint stock company, business
trust, unincorporated association, joint venture, governmental authority or
other entity of any nature whatsoever.
1.31 Public Offering. The term "Public Offering" shall have the meaning
set forth in the Securityholders Agreement.
1.32 Purchased Shares. The term "Purchased Shares" shall have the meaning
set forth in the preface.
1.33 Retirement. The term "Retirement" shall mean, with respect to the
Executive, the Executive's retirement as an employee of Investors or any of its
subsidiaries on or after reaching age 65, or such earlier age as may be
otherwise determined by the Board, after at least three years employment with
Investors after the Closing Date.
1.34 Sale of the Company. The term "Sale of the Company" shall have the
meaning set forth in the Securityholders Agreement.
1.35 Securities Act. The term "Securities Act" shall mean the Securities
Act of 1933, as amended, and all rules and regulations promulgated thereunder,
as the same may be amended from time to time.
1.36 Securityholders Agreement. The term "Securityholders Agreement" shall
mean the Securityholders Agreement dated as of the Closing Date, among
Investors, Vestar, the Management Investors, and the other securityholders a
party thereto, as it may be amended or supplemented thereafter from time to
time.
1.37 Shares. The term "Shares" shall have the meaning set forth in the
preface.
1.38 Share Purchase Price. The term "Share Purchase Price" shall have the
meaning set forth in Section 2.2.
1.39 Termination Date. The term "Termination Date" means the date upon
which Executive's employment with Investors and its subsidiaries is terminated.
1.40 Transaction Documents. The term "Transaction Documents" means,
collectively, the LLC Agreement, (ii) the Securityholders Agreement and (iii)
each of the other agreements, documents and instruments executed in connection
with the Merger Agreement and the transactions contemplated thereby.
1.41 Units. The term "Units" shall mean the Class A Units, Class B Units,
Class C Units and any other class of equity securities issued by Investors,
whether pursuant to this Agreement or any other arrangement.
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1.42 Unvested Percentage. The term "Unvested Percentage" shall mean the
result of one minus the Applicable Percentage.
1.43 Vestar. The term "Vestar" means, collectively, Vestar Capital
Partners IV, L.P., a Delaware limited partnership, and Vestar/Michael Foods
CoInvest, LLC, a Delaware limited liability company.
2. Purchase and Sale of Shares; Contribution.
2.1 Purchase and Sale of the Shares. At the Closing, upon the terms and
subject to the conditions set forth in this Agreement, the Executive shall sell,
assign, transfer and convey to Investors, and Investors shall purchase and
acquire from the Executive, the Purchased Shares against payment at the Closing
of an aggregate amount equal to the Share Purchase Price by wire transfer of
immediately available funds to one or more accounts specified by the Executive
in a written notice to Investors prior to the Closing Date.
2.2 Share Purchase Price. The aggregate purchase price for the Purchased
Shares (the "Share Purchase Price") will consist of the payment of an amount of
cash, equal to $30.10 per Purchased Share, as set forth on Schedule I.
2.3 Contribution of Shares. Pursuant to the terms and subject to the
conditions set forth in this Agreement, the Executive hereby agrees to
contribute, and Investors hereby agrees to receive, the Contributed Shares in
exchange for the number of Units set forth on Schedule II.
2.4 Closing Events. At the Closing, subject to the terms and conditions
set forth in this Agreement, the parties hereto shall consummate the following
"Closing Transactions":
(a) The Executive shall deliver to Investors stock certificates
representing the Purchased Shares duly endorsed for transfer or accompanied by
duly executed stock powers or forms of assignment;
(b) Investors shall deliver to the Executive the amount of the Share
Purchase Price by wire transfer of immediately available funds to one or more
accounts designated by the Executive in writing to Investors prior to the
Closing;
(c) The Executive shall deliver to Investors stock certificates
representing the Contributed Shares duly endorsed for transfer or accompanied by
duly executed stock powers or forms of assignment; and
(d) Investors shall deliver to the Executive unit certificates
representing the number of Class B Units and Class C Units set forth on Schedule
II.
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2.5 Section 83(b) Election. With respect to the Units received by
Executive, within 30 days after the Closing, Executive shall make a timely
election with the Internal Revenue Service under Section 83(b) of the Internal
Revenue Code of 1986, as amended, and the regulations promulgated thereunder in
the form of Exhibit A attached hereto.
2.6 Joint Tenancy. As a joint tenant with respect to some or all of the
Shares subject to this Agreement, the Joint Tenant hereby represents and
acknowledges that she has read and understands the terms and provisions set
forth herein. In furtherance of the consummation of the transactions described
in this Agreement, the Joint Tenant hereby expressly gifts and transfers to the
Executive all right, title and interests in such of the Shares held in joint
tenancy, such gift and transfer taking effect immediately prior to and in
connection with the consummation of the transactions described herein. The Joint
Tenant hereby agrees and acknowledges that the effect of this Section 2.6 is to
terminate her joint tenancy interest in any of the Shares held in joint tenancy
as of the date hereof.
3. [Reserved]
4. Representations and Warranties of the Executive and Investors.
4.1 Stock Purchase Representations of the Executive. The Executive
represents and warrants to Investors that the statements contained in this
Section 4.1 are correct and complete as of the date of this Agreement and will
be correct and complete as of the Closing Date, with respect to himself:
(a) Power and Authority. The Executive has full power and authority
to execute and deliver this Agreement and perform his obligations hereunder.
This Agreement constitutes the valid and legally binding obligation of the
Executive, enforceable in accordance with its terms and conditions. To the best
of his knowledge, the Executive need not give any notice to, make any filing
with, or obtain any authorization, consent or approval of any government or
governmental agency in order to consummate the transactions contemplated by this
Agreement.
(b) Noncontravention. To the best of his knowledge, neither the
execution and the delivery of this Agreement, nor the consummation of the
transactions contemplated hereby, will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which the
Executive is subject or conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
the Executive is a party or by which he is bound or to which any of his assets
is subject.
(c) Brokers' Fees. The Executive has no liability or obligation to
pay any fees or commissions to any broker, finder, or agent with respect to the
transactions contemplated by this Agreement for which Investors could become
liable or obligated.
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(d) Capital Stock. The Executive holds of record and owns
beneficially the number of Shares set forth next to his name on Schedule I, free
and clear of any restrictions on transfer (other than any restrictions under the
Securities Act, state securities laws, joint tenancy laws or other Transaction
Documents), taxes, security interests, options, warrants, purchase rights,
contracts, commitments, equities, claims, and demands. In the event the
Executive owns the Shares in joint tenancy, the joint tenant of the Executive
has executed this Agreement on the signature page attached hereto and Executive
has informed such joint tenant of the transactions set forth in this Agreement.
The Executive is not a party to any option, warrant, purchase right, or other
contract or commitment that could require the Executive to sell, transfer, or
otherwise dispose of any capital stock of the Company (other than this
Agreement). Except as set forth in other Transaction Documents, the Executive is
not a party to any voting trust, proxy, or other agreement or understanding with
respect to the voting of any capital stock of the Company. The Executive
acknowledges and represents that the Paying Agent (as defined in the Merger
Agreement) will not make any payment to Executive in connection with the Shares
subject to this Agreement and that such shares will be cancelled upon
consummation of the Acquisition.
4.2 Units Unregistered. The Executive acknowledges and represents that
Executive has been advised by Investors that:
(a) the offer and sale of the Units have not been registered under
the Securities Act;
(b) the Units must be held indefinitely and the Executive must
continue to bear the economic risk of the investment in the Units unless
the offer and sale of such Units are subsequently registered under the
Securities Act and all applicable state securities laws or an exemption
from such registration is available;
(c) there is no established market for the Units and it is not
anticipated that there will be any public market for the Units in the
foreseeable future;
(d) a restrictive legend in the form set forth below and the legends
set forth in Section 8.2(a) and (b) of the Securityholders Agreement shall
be placed on the certificates representing the Units:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN REPURCHASE OPTIONS AND OTHER
PROVISIONS SET FORTH IN A MANAGEMENT STOCK PURCHASE
AND UNIT SUBSCRIPTION AGREEMENT BETWEEN THE ISSUER
AND THE EXECUTIVE DATED AS OF APRIL 10, 2001, AS
AMENDED AND MODIFIED FROM TIME TO TIME, A COPY OF
WHICH MAY BE OBTAINED BY THE HOLDER HEREOF AT THE
ISSUER'S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE";
and
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(e) a notation shall be made in the appropriate records of Investors
indicating that the Units are subject to restrictions on transfer and, if
Investors should at some time in the future engage the services of a
securities transfer agent, appropriate stoptransfer instructions will be
issued to such transfer agent with respect to the Units.
4.3 [Reserved]
4.4 Representations of Investors. Investors represents to the Executive
that the statements contained in this Section 4.4 are correct and complete as of
the date of this Agreement and will be correct and complete as of the Closing
Date, with respect to itself:
(a) Organization and Power. Investors is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware with full power and authority to enter into this Agreement and
perform its obligations hereunder.
(b) Authorization. The execution, delivery and performance of this
Agreement by Investors and the consummation of the transactions contemplated
hereby by Investors have been duly and validly authorized by all requisite
limited liability company action on the part of Investors, and no other
proceedings on its part are necessary to authorize the execution, delivery or
performance of this Agreement. This Agreement has been duly executed and
delivered by Investors, and this Agreement constitutes a valid and binding
obligation of Investors, enforceable in accordance with its terms and
conditions. Investors need not give any notice to, make any filing with, or
obtain any authorization, consent or approval of any government or governmental
agency in order to consummate the transactions contemplated by this Agreement.
(c) Noncontravention. Neither the execution and the delivery of this
Agreement, nor the consummation of the transactions contemplated hereby, will
violate any constitution, statute, regulation, rule, injunction, judgment,
order, decree, ruling, charge, or other restriction of any government,
governmental agency, or court to which Investors is subject or any provision of
its charter or bylaws or conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument, or other arrangement to which
Investors is a party or by which it is bound or to which any of its assets is
subject.
(d) Investment. Investors is not acquiring the Shares with a view to
or for sale in connection with any distribution thereof within the meaning of
the Securities Act.
(e) Capitalization. All of the issued and outstanding Units have
been duly authorized and are validly issued. Except as set forth in the
Transaction Documents, there are no outstanding or authorized options, warrants,
purchase rights, subscription rights, conversion rights, exchange rights, or
other contracts or commitments that could require Investors to issue, sell, or
otherwise cause to become outstanding any of its Units. Except as set forth in
the Transaction Documents, there are no outstanding or authorized stock
appreciation, phantom stock, profit
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participation, or similar rights with respect to Investors. Except as set forth
in the Transaction Documents, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Investors.
5. Covenants of the Executive and Investors
5.1 Covenants. The Executive and/or Investors each agree as follows with
respect to the period between the execution of this Agreement and the Closing:
(a) General. The Executive and Investors each will use his or its
commercially reasonable efforts to take all action and to do all things
necessary, proper, or advisable in order to consummate and make effective the
transactions contemplated by this Agreement.
(b) Notification. Each of the parties hereto shall disclose to the
other parties hereto in writing any material breach by such party of the
representations and warranties of such party contained in Section 4 hereof
promptly upon discovery thereof.
6. [Reserved]
7. Certain Sales Upon Termination of Employment.
7.1 Put Option.
(a) If the Executive's employment with Investors and its
subsidiaries terminates due to the Disability, death or Retirement of the
Executive prior to the earlier of (i) a Public Offering or (ii) a Sale of the
Company, for any Units issued 181 days or more prior to the date of termination
of employment of the Executive, within 120 days after such date of termination
of employment (or in the case of Units issued 180 days or less prior to such
date of termination or at any time after such date of termination of employment,
no earlier than 181 days and no later than 271 days after the date of issuance
of such Units), the Executive shall have the right, subject to the provisions of
Section 8 hereof, to sell to Investors, and Investors shall be required to
purchase (subject to the provisions of Section 8 hereof), on one occasion from
the Executive and his Permitted Transferees, if applicable, all (but not less
than all) of the number of Units then held by the Executive and such other
number of Units held by the Executive's Permitted Transferees as the Executive
may request provided that in the aggregate such number does not exceed the
product of (x) the total number of Units collectively held by the Executive and
all of his Permitted Transferees and (y) the Applicable Percentage (measured as
of the Termination Date), at a price per unit equal to the Fair Market Value of
such unit (measured as of the delivery of the notice referred to in Section
7.1(b)).
(b) If the Executive desires to exercise its option to require
Investors to repurchase Units pursuant to Section 7.1(a), the Executive shall
send one written notice to Investors setting forth the intention of Executive
and Permitted Transferees, if applicable, to collectively sell all Units
pursuant to Section 7.1(a) within the period described above, which notice shall
specify the number of Units to be sold and shall include the signature of the
Executive and each Permitted Transferee
12
desiring to sell Units. Subject to the provisions of Section 8.1, the closing of
the purchase shall take place at the principal office of Investors on the later
of the 30th day after the giving of such notice and the date that is 10 business
days after the final determination of Fair Market Value. Subject to the
provisions of Section 8.1, the Executive shall deliver to Investors duly
executed instruments transferring title to units to Investors, against payment
of the appropriate purchase price by cashier's or certified check payable to the
Executive or by wire transfer of immediately available funds to an account
designated by the Executive.
7.2 Call Options.
(a) If the Executive's employment with Investors or any of its
subsidiaries terminates for any of the reasons set forth in clauses (i), (ii) or
(iii) below prior to a Sale of the Company, or if the Executive engages in
Competitive Activity (as defined in Section 9.1 of this Agreement), for any
Units issued 181 days or more prior to the date of Executive's termination of
employment or engagement in Competitive Activity, within 120 days after such
date (or in the case of Units issued 180 days or less prior to such date or at
any time after such date, no earlier than 181 days and no later than 271 days
after the date of issuance of such Units), Investors shall have the right and
option to purchase, and the Executive and the Executive's Permitted Transferees
(hereinafter referred to as the "Executive Group") shall be required to sell to
Investors, any or all of such Units then held by such member of the Executive
Group (it being understood that if Units of any class subject to repurchase
hereunder may be repurchased at different prices, Investors may elect to
repurchase only the portion of the Units of such class subject to repurchase
hereunder at the lower price), at a price per unit equal to the applicable
purchase price determined pursuant to Section 7.2(c):
(i) if the Executive's active employment with Investors and its
subsidiaries is terminated due to the Disability, death or Retirement of
the Executive;
(ii) if the Executive's active employment with Investors and its
subsidiaries is terminated by Investors and its subsidiaries without Cause
or by the Executive for Good Reason;
(iii) if the Executive's active employment with Investors and its
subsidiaries is terminated (A) by Investors or any of its subsidiaries for
Cause or (B) by the Executive for any other reason not set forth in
Section 7.2(a)(i) or Section 7.2(a)(ii);
provided that Investors' rights under this Section 7.2(a) shall not be available
in the event of the termination of Executive's employment by Investors or its
subsidiaries without Cause or by Executive for Good Reason, in either case
following a sale by Investors or its subsidiaries of substantially all of the
line of business in which Executive primarily performs his services.
(b) If Investors desires to exercise one of its options to purchase
Units pursuant to this Section 7.2, Investors shall, not later than the
expiration of the applicable period described
13
for such purchase in Section 7.2(a), send written notice to each member of the
Executive Group of its intention to purchase Units, specifying the number of
Units to be purchased (the "Call Notice"). Subject to the provisions of Section
8, the closing of the purchase shall take place at the principal office of
Investors on the later of the 30th day after the giving of the Call Notice and
the date that is 10 business days after the final determination of Fair Market
Value. Subject to the provisions of Section 8.1, the Executive shall deliver to
Investors duly executed instruments transferring title to units to Investors,
against payment of the appropriate purchase price by cashier's or certified
check payable to the Executive or by wire transfer of immediately available
funds to an account designated by the Executive.
(c) In the event of a purchase by Investors pursuant to Section
7.2(a), the purchase price shall be (in each case after taking account of any
prior purchases pursuant to Section 7.2(a)):
(i) if the Executive engages in any Competitive Activity (as defined
in Section 9.1 of this Agreement), a price per unit equal to the
lesser of (A) Fair Market Value (measured as of the Activity Date
(as defined in Section 9.2 of this Agreement)) and (B) Cost;
(ii) in the case of a termination of employment described in Section
7.2(a)(i), Section 7.2(a)(ii), or Section 7.2(a)(iii)(B), (i) if the
number of Units of any class to be purchased from the Executive
Group by Investors is less than or equal to the Unvested Percentage
of such class, the purchase price for each Unit shall be the lesser
of (x) the Fair Market Value (measured as of the date of the Call
Notice) and (y) the Cost of such Unit (the "Unvested Unit Purchase
Price"), and (ii) if the number of such Units exceeds the Unvested
Percentage of such class, the purchase price for each Unit shall be
(A) for a number of Units of such class equal to the result of (x)
the Unvested Percentage and (y) the total number of Units of such
class held by the Executive Group, the Unvested Unit Purchase Price,
and (B) for the remainder of the Units of such class being
repurchased, the Fair Market Value of such Unit (measured as of the
date of the Call Notice); and
(iii) in the case of a termination of employment described in
Section 7.2(a)(iii)(A), a price per unit equal to the lesser of (A)
Fair Market Value (measured as of the date of the Call Notice) and
(B) Cost.
Notwithstanding anything to the contrary contained in this Agreement, if
the Fair Market Value of Units subject to a Call Notice is finally determined to
be an amount at least 10% greater than the per Unit repurchase price for such
Unit in the Call Notice, Investors shall have the right to revoke the exercise
of its option pursuant to this Section 7.2 for all or any portion of the Units
elected to be repurchased by it by delivering notice of such revocation in
writing to the Executive Group during the tenday period beginning on the date
that Investors is given written notice that the Fair Market Value of a Unit was
finally determined to be an amount at least 10% greater than the per Unit
repurchase price set forth in the Call Notice.
14
Notwithstanding anything in this Section 7.2 to the contrary, in the event
that Investors purchases Units at Fair Market Value pursuant to the terms of
this Section 7.2 and within six months of the date of the determination of such
Fair Market Value both (A) a Sale of the Company or a Public Offering occurs and
(B) in connection with such transaction, the per share value of the Units
exceeds the per share purchase price paid by Investors to Executive under this
Section 7.2, the Executive shall be entitled to receive from Investors the
benefit of such higher valuation for the Units purchased. The excess of (x) the
net proceeds which the Executive would have received in such Sale of the Company
or Public Offering from the sale in such transaction of all Units repurchased by
Investors under this Section 7.2, less (y) the amount which the Executive
received from the purchase of such Units by Investors, shall be paid by
certified or cashier's check or wire transfer of funds to Executive upon
consummation of such transaction; provided that, Executive shall have no rights
under this paragraph if, in connection with the determination of Fair Market
Value of the repurchased Units, the Arbiter was used.
7.3 Obligation to Sell Several. If there is more than one member of the
Executive Group, the failure of any one member thereof to perform its
obligations hereunder shall not excuse or affect the obligations of any other
member thereof, and the closing of the purchases from such other members by
Investors shall not excuse, or constitute a waiver of its rights against, the
defaulting member.
8. Certain Limitations on Investors's Obligations to Purchase Units.
8.1 Payment for Units. If at any time Investors elects or is required to
purchase any Units pursuant to Section 7, Investors shall pay the purchase price
for the Units it purchases (i) first, by offsetting indebtedness, if any, owing
from the Executive to Investors (which indebtedness shall be applied pro rata
against the proceeds receivable by each member of the Executive Group receiving
consideration in such repurchase) and (ii) then, by Investors' delivery of a
check or wire transfer of immediately available funds for the remainder of the
purchase price, if any, against delivery of the certificates or other
instruments representing the Units so purchased, duly endorsed; provided that if
such cash payment would result (A) in a violation of any law, statute, rule,
regulation, policy, order, writ, injunction, decree or judgment promulgated or
entered by any federal, state, local or foreign court or governmental authority
applicable to Investors or any of its subsidiaries or any of its or their
property or (B) after giving effect thereto, a Financing Default, or (C) if the
Board determines in good faith that immediately prior to such purchase there
shall exist a Financing Default which prohibits such purchase, dividend or
distribution ((A) through (C) collectively the "Cash Deferral Conditions"), the
portion of the cash payment so affected may be made by Investors' delivery of
preferred units of Investors with a liquidation preference equal to the balance
of the purchase price; which preferred units shall accrue yield annually at the
"prime rate" published in The Wall Street Journal on the date of issuance, which
yield shall be payable at maturity or upon payment of distributions by Investors
(other than tax distributions). Each such preferred unit shall as of its
issuance be deemed to have basic contributions made with respect to such unit
equal to (A) the portion of the cash payment paid by the issuance of such
preferred units divided by (B) the number of preferred units so issued in the
repurchase. Any such preferred units issued shall be promptly
15
redeemed (i) when the Cash Deferral Condition which prompted their issuance no
longer exists, (ii) upon consummation of an IPO of the Company or Holdings (or
their successors) (to the extent allowed by the underwriters of such IPO), or
(iii) upon a Sale of the Company from net cash proceeds, if any, payable to
Investors or its unitholders; to the extent that sufficient net cash proceeds
are not so payable, the preferred units shall be cancelled in exchange for such
noncash consideration received by unitholders in the Sale of the Company having
a fair market value equal to the principal of and accrued yield on the preferred
units. If a yield is required to be paid on any preferred units prior to
maturity and any Cash Deferral Conditions exist, such yield may be cumulated and
accrued until and to the extent that such prohibition no longer exists.
9. Noncompetition.
9.1 Competitive Activity. Executive shall be deemed to have engaged in
"Competitive Activity" if, during the period commencing on the date hereof and
ending on the second anniversary of the date Executive's employment with
Investors or its subsidiaries terminates, (i) Executive, for himself or on
behalf of any other person, firm, partnership, corporation, or other entity,
engages, directly or indirectly, as an executive, agent, representative,
consultant, partner, shareholder or holder of any other financial interest, in
any business that competes with Investors or its subsidiaries in the line of
business Executive is employed in by Investors or its subsidiaries (as
applicable), as such business is described in any employment or severance
agreement then in effect between Executive and Investors or one of its
subsidiaries or, if no such agreement is then in effect, as described on
Schedule III attached hereto (a "Competing Business"), it being understood and
agreed that Executive's activities shall not satisfy this clause (i) where
Executive is employed by a person, firm, partnership, corporation, or other
entity engaged in a variety of activities, including the Competing Business, and
Executive is not engaged in or responsible for the Competing Business of such
entity. Executive may also, without satisfying clause (i) be a passive owner of
not more than 2% of the outstanding publicly traded stock of any class of a
Competing Business so long as Executive has no active participation in the
business of such entity, except to the extent permitted above; or (ii) Executive
(A) directly or indirectly through another entity, induces or attempts to induce
any employee of the Company or its subsidiaries to leave the employ of the
Company or its subsidiaries, or in any way interfere with the relationship
between the Company or any of its subsidiaries and any employee thereof, (B)
knowingly hires any person who was an employee of the Company or any of its
subsidiaries within 180 days prior to the time such employee was hired by
Executive, (C) induces or attempts to induce any customer, supplier, licensee or
other business relation of the Company or any of its subsidiaries to cease doing
business with the Company or its subsidiaries or in any way interfere with the
relationship between any such customer, supplier, licensee or business relation
and the Company or any subsidiary or (D) directly or indirectly acquires or
attempt to acquire an interest in any business relating to the business of the
Company or any of its subsidiaries and with which the Company or any of its
subsidiaries has entertained discussions or has requested and received
information relating to the acquisition of such business by the Company or its
subsidiaries in the oneyear period immediately preceding Executive's termination
of employment with the Company.
16
9.2 Activity Date. If Executive engages in Competitive Activity, the
"Activity Date" shall be the first date on which Executive engages in such
Competitive Activity.
9.3 Repayment of Proceeds. If Executive engages in Competitive Activity,
then Executive shall be required to pay to Investors, within ten business days
following the Activity Date, an amount equal to the excess, if any, of (A) the
aggregate proceeds Executive received upon the sale or other disposition of
Executive's Units, over (B) the aggregate Cost of such Units.
10. Miscellaneous.
10.1 Transfers to Permitted Transferees. Prior to the transfer of Units to
a Permitted Transferee (other than a transfer in connection with or subsequent
to a Sale of the Company), the Executive shall deliver to Investors a written
agreement of the proposed transferee (a) evidencing such Person's undertaking to
be bound by the terms of this Agreement and (b) acknowledging that the Units
transferred to such Person will continue to be Units for purposes of this
Agreement in the hands of such Person. Any transfer or attempted transfer of
Units in violation of any provision of this Agreement or the Securityholders
Agreement shall be void, and Investors shall not record such transfer on its
books or treat any purported transferee of such Units as the owner of such Units
for any purpose.
10.2 Deemed Transfer of Units. If Investors shall deliver, at the time and
place and in the amount and form provided in this Agreement, the consideration
for the Units to be repurchased in accordance with the provisions of this
Agreement, then from and after such time, the Person from whom such units are to
be repurchased shall no longer have any rights as a holder of such units (other
than the right to receive payment of such consideration in accordance with this
Agreement), and such Units shall be deemed purchased in accordance with the
applicable provisions hereof and Investors shall be deemed the owner and holder
of such Units, whether or not certificates therefor have been delivered as
required by this Agreement.
10.3 Recapitalizations, Exchanges, Etc., Affecting Units. The provisions
of this Agreement shall apply, to the full extent set forth herein with respect
to Units, to any and all securities of Investors or any successor or assign of
Investors (whether by merger, consolidation, sale of assets or otherwise) which
may be issued in respect of, in exchange for, or in substitution of the Units,
by reason of any dividend payable in units, issuance of units, combination,
recapitalization, reclassification, merger, consolidation or otherwise.
10.4 Executive's Employment by Investors. Nothing contained in this
Agreement shall be deemed to obligate Investors or any subsidiary of Investors
to employ the Executive in any capacity whatsoever or to prohibit or restrict
Investors (or any such subsidiary) from terminating the employment of the
Executive at any time or for any reason whatsoever, with or without Cause.
10.5 Indemnification by Executive. Executive agrees to indemnify and hold
harmless Investors against any and all losses, liabilities, damages, judgments,
fines, fees or expenses,
17
including, without limitation, attorneys' fees (for purposes of this Section
10.5, hereinafter "Losses"), incurred in connection with any failure to withhold
amounts relating to the Units acquired herein by the Management Investors. In
the event there is a determination within the meaning of Section 1313 of the
Internal Revenue Code of 1986, as amended, that Investors properly failed to
withhold amounts relating to the Units acquired herein by Executive, Executive
shall provide Investors with a Form 4669 or other suitable evidence of payment
of taxes (which will include a cancelled check or a copy of the relevant signed
tax return) with respect to the receipt of any distributions relating to the
Units acquired herein by Executive. To the extent either Investors and/or any of
its affiliates is entitled to any tax deduction with respect to the issuance of
Units, (i) Investors shall specially allocate such deduction to the Executive
and/or (ii) Holdings shall pay, or cause any affiliate to pay, as the case may
be, Executive an amount equal to 40% of such deduction, such amount to be
grossed up to reflect any additional deduction to Holdings and/or any of its
affiliates (as the case may be) provided that if any Cash Deferral Condition
exists at the time such payment is required, such payment shall be deferred
until no such Cash Deferral Condition exists. Each of Executive and Investors
shall notify the other (in a manner described in Section 10.10 of this
Agreement) within 20 days of first receiving notice of an audit or other
proceeding being conducted by the Internal Revenue Service or any state or local
taxing authority relating to the Units acquired herein by the Management
Investors, and both Executive and Investors shall assist each other during the
course of such audit or other proceeding to the extent that such assistance is
reasonably requested.
10.6 Binding Effect. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided, however, that no
Permitted Transferee shall derive any rights under this Agreement unless and
until such Permitted Transferee has executed and delivered to Investors a valid
undertaking and becomes bound by the terms of this Agreement.
10.7 Amendment; Waiver. This Agreement may be amended only by a written
instrument signed by the parties hereto. No waiver by any party hereto of any of
the provisions hereof shall be effective unless set forth in a writing executed
by the party so waiving.
10.8 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein.
10.9 Jurisdiction. Any suit, action or proceeding with respect to this
Agreement, or any judgment entered by any court in respect of any thereof, shall
be brought in any court of competent jurisdiction in the State of Delaware, and
each of Investors and the members of the Executive Group hereby submits to the
exclusive jurisdiction of such courts for the purpose of any such suit, action,
proceeding or judgment. Each of the members of the Executive Group and Investors
hereby irrevocably waives any objections which it may now or hereafter have to
the laying of the venue of any suit, action or proceeding arising out of or
relating to this Agreement brought in any court of competent jurisdiction in the
State of Delaware, and hereby further irrevocably waives any claim that
18
any such suit, action or proceeding brought in any such court has been brought
in any inconvenient forum.
10.10 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given when personally delivered,
telecopied (with confirmation of receipt), one day after deposit with a
reputable overnight delivery service (charges prepaid) and three days after
deposit in the U.S. Mail (postage prepaid and return receipt requested) to the
address set forth below or such other address as the recipient party has
previously delivered notice to the sending party.
(a) If to Investors
MFoods Investors, LLC
c/o Vestar Capital Partners IV, L.P.
1225 Seventeenth Street
Suite 1660
Denver, CO 80202
Attention: James P. Kelley
Facsimile: (303) 2926639
with copies to:
Vestar Capital Partners IV, L.P.
245 Park Avenue, 41st Floor
New York, NY 10167
Attention: General Counsel
Facsimile: (212) 8084922
Kirkland & Ellis
200 East Randolph Drive
Chicago, IL 60601
Attention: Stephen L. Ritchie
Facsimile: (312) 8612200
(b) If to the Executive, to the address as shown on the unit
register of Investors.
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, NY 100366522
Attention: Eric L. Cochran
19
10.11 Integration. This Agreement and the documents referred to herein or
delivered pursuant hereto which form a part hereof contain the entire
understanding of the parties with respect to the subject matter hereof and
thereof. There are no restrictions, agreements, promises, representations,
warranties, covenants or undertakings with respect to the subject matter hereof
other than those expressly set forth herein and therein. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
10.12 Counterparts. This Agreement may be executed in separate
counterparts (including by means of telecopied signature pages), and by
different parties on separate counterparts each of which shall be deemed an
original, but all of which shall constitute one and the same instrument.
10.13 Rights Cumulative; Waiver. The rights and remedies of the Executive
and Investors under this Agreement shall be cumulative and not exclusive of any
rights or remedies which either would otherwise have hereunder or at law or in
equity or by statute, and no failure or delay by either party in exercising any
right or remedy shall impair any such right or remedy or operate as a waiver of
such right or remedy, nor shall any single or partial exercise of any power or
right preclude such party's other or further exercise or the exercise of any
other power or right. The waiver by any party hereto of a breach of any
provision of this Agreement shall not operate or be construed as a waiver of any
preceding or succeeding breach and no failure by either party to exercise any
right or privilege hereunder shall be deemed a waiver of such party's rights or
privileges hereunder or shall be deemed a waiver of such party's rights to
exercise the same at any subsequent time or times hereunder.
* * * * *
20
IN WITNESS WHEREOF, the parties have executed this Management Stock
Purchase and Unit Subscription Agreement as of the date first above written.
MFOODS INVESTORS, LLC
By:
---------------------------------
Its:
---------------------------------
MFOODS HOLDINGS, INC.
By:
---------------------------------
Its:
---------------------------------
EXECUTIVE
------------------------------------
Gregg A. Ostrander
JOINT TENANT
------------------------------------
Kristin Kjar Ostrander
CONSENT OF SPOUSE
I, ____________, the undersigned spouse of Executive, hereby
acknowledge that I have read the foregoing Management Stock Purchase and Unit
Subscription Agreement (the "Agreement") and that I understand its contents. I
am aware that the Agreement provides for the repurchase of my spouse's Units (as
defined in the Agreement) under certain circumstances and imposes other
restrictions on the transfer of such Units. I agree that my spouse's interest in
the Units is subject to the Agreement and any interest I may have in such Units
shall also be irrevocably bound by the Agreement and, further, that my community
property interest in such Units, if any, shall be similarly bound by the
Agreement.
I am aware that the legal, financial and other matters contained in
the Agreement are complex and I am encouraged to seek advice with respect
thereto from independent legal and/or financial counsel. I have either sought
such advice or determined after carefully reviewing the Agreement that I hereby
waive such right.
Acknowledged and agreed this ___ day of
_____________, 2001.
------------------------------------------------
Name:
-------------------------------------------
------------------------------------------------
Witness
SCHEDULE I
- --------------------------------------------------------------------------------
Shares Purchased Shares Share Purchase Price
- --------------------------------------------------------------------------------
34,768 29,199 $878,889.93
- --------------------------------------------------------------------------------
SCHEDULE II
- --------------------------------------------------------------------------------
Contributed Shares Units
- --------------------------------------------------------------------------------
5,569 42,000 Class B Units
42,000 Class C Units
- --------------------------------------------------------------------------------
SCHEDULE III
Competing Business: Production, distribution or sale of eggs or egg products
EXHIBIT A
ELECTION TO INCLUDE UNITS IN GROSS
INCOME PURSUANT TO SECTION 83(b) OF THE
INTERNAL REVENUE CODE
The undersigned purchased units (the "Units") of MFoods Investors, LLC
("Investors") on ________, 2001. The undersigned desires to make an election to
have the Units taxed under the provision of Section 83(b) of the Internal
Revenue Code of 1986, as amended ("Code ss.83(b)"), at the time the undersigned
purchased the Units.
Therefore, pursuant to Code ss.83(b) and Treasury Regulation
ss.1.832 promulgated thereunder, the undersigned hereby makes an election, with
respect to the Units (described below), to report as taxable income for calendar
year 2001 the excess, if any, of the Units' fair market value on ______, 2001
over the purchase price thereof.
The following information is supplied in accordance with Treasury
Regulation ss.1.83-2(e):
1. The name, address and social security number of the undersigned:
------------------------------------
------------------------------------
------------------------------------
SSN:
--------------------------------
2. A description of the property with respect to which the election
is being made: ________ Class A Units ____ Class B Units ____ and Class C Units.
3. The date on which the property was transferred: _________, 2001.
The taxable year for which such election is made: calendar year 2001.
4. The restrictions to which the property is subject: The Units are
subject to a timebased vesting schedule. If the undersigned ceases to be
employed by Investors or any of its subsidiaries under certain circumstances,
all or a portion of the Units may be subject to repurchase by Investors at a
price per Unit equal to the lesser of (x) fair market value (measured as of the
date of such repurchase) and (y) cost. The Units are also subject to transfer
restrictions.
5. The aggregate fair market value on ______ __, 2001 of the
property with respect to which the election is being made, determined without
regard to any lapse restrictions: $______________.
6. The aggregate amount paid for such property: $_______. A copy of
this election has been furnished to the Secretary of Investors pursuant to
Treasury Regulations ss.1.832(e)(7).
Dated: ________, 2001 -------------------------------
[Name]