Common use of Deferral of Certain Compensation Clause in Contracts

Deferral of Certain Compensation. In connection with the Employee's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee and the Company, the Company shall rollover an amount equal to $293,661 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the Employee, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 Class A Units (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit Employee's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the Employee's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. Employee's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. Employee's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Management Stock Purchase and Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Dairy Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Employee's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee 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 Holdings delivers its unfunded and unsecured promise.

Deferral of Certain Compensation. In connection with the EmployeeExecutive's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee Executive and the Company, the Company shall (a) pay to Executive an amount equal to $602,659 (the "Cancellation Payment") and (b) rollover an amount equal to $293,661 4,032,000 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the EmployeeExecutive, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. The Cancellation Payment shall be paid by the Company to the Executive on the Effective Date, or as soon as reasonably practicable thereafter. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 40,320 Class A Units of Investors (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 40,320 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit EmployeeExecutive's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the EmployeeExecutive's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit EmployeeExecutive's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit EmployeeExecutive's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. EmployeeExecutive's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit EmployeeExecutive's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit EmployeeExecutive's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit EmployeeExecutive's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. EmployeeExecutive's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit EmployeeExecutive's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee Executive (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee Executive shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee Executive shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee Executive shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of EmployeeExecutive's Class B Units pursuant to Section 7.2 of the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement, Employee Executive shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of EmployeeExecutive's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of EmployeeExecutive's Class B Units pursuant to Section 7.2 of the EmployeeExecutive's Dairy Unit Subscription Agreement, Employee Executive shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of EmployeeExecutive's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee Executive 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 Holdings delivers its unfunded and unsecured promise.

Deferral of Certain Compensation. In connection with the Employee's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee and the Company, the Company shall (a) pay to Employee an amount equal to $15,757.50 (the "Cancellation Payment") and (b) rollover an amount equal to $293,661 384,000 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the Employee, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. The Cancellation Payment shall be paid by the Company to the Employee on the Effective Date, or as soon as reasonably practicable thereafter. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 3,840 Class A Units (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 3,840 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit Employee's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the Employee's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. Employee's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. Employee's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Management Stock Purchase and Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Dairy Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Employee's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee 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 Holdings delivers its unfunded and unsecured promise.---------------

Deferral of Certain Compensation. In connection with the Employee's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee and the Company, the Company shall (a) pay to Employee an amount equal to $103,920 (the "Cancellation Payment") and (b) rollover an amount equal to $293,661 384,000 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the Employee, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. The Cancellation Payment shall be paid by the Company to the Employee on the Effective Date, or as soon as reasonably practicable thereafter. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 3,840 Class A Units (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 3,840 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit Employee's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the Employee's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. Employee's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. Employee's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Management Stock Purchase and Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Dairy Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Employee's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee 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 Holdings delivers its unfunded and unsecured promise.

Deferral of Certain Compensation. In connection with the EmployeeExecutive's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee Executive and the Company, the Company shall (a) pay to Executive an amount equal to $22,576.40 (the "Cancellation Payment") and (b) rollover an amount equal to $293,661 1,440,000 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the EmployeeExecutive, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. The Cancellation Payment shall be paid by the Company to the Executive on the Effective Date, or as soon as reasonably practicable thereafter. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 14,400 Class A Units of Investors (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 14,400 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit EmployeeExecutive's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the EmployeeExecutive's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit EmployeeExecutive's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit EmployeeExecutive's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. EmployeeExecutive's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit EmployeeExecutive's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit EmployeeExecutive's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit EmployeeExecutive's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. EmployeeExecutive's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit EmployeeExecutive's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee Executive (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee Executive shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee Executive shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee Executive shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of EmployeeExecutive's Class B Units pursuant to Section 7.2 of the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement, Employee Executive shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of EmployeeExecutive's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of EmployeeExecutive's Class B Units pursuant to Section 7.2 of the EmployeeExecutive's Dairy Unit Subscription Agreement, Employee Executive shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of EmployeeExecutive's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee Executive 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 Holdings delivers its unfunded and unsecured promise.

Deferral of Certain Compensation. In connection with the EmployeeExecutive's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee Executive and the Company, the Company shall (a) pay to Executive an amount equal to $64,448.50 (the "Cancellation Payment") and (b) rollover an amount equal to $293,661 1,152,000 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the EmployeeExecutive, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. The Cancellation Payment shall be paid by the Company to the Executive on the Effective Date, or as soon as reasonably practicable thereafter. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 11,520 Class A Units of Investors (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 11,520 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit EmployeeExecutive's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the EmployeeExecutive's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit EmployeeExecutive's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit EmployeeExecutive's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. EmployeeExecutive's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit EmployeeExecutive's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit EmployeeExecutive's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit EmployeeExecutive's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. EmployeeExecutive's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit EmployeeExecutive's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee Executive (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee Executive shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee Executive shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee Executive shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of EmployeeExecutive's Class B Units pursuant to Section 7.2 of the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement, Employee Executive shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of EmployeeExecutive's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the EmployeeExecutive's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of EmployeeExecutive's Class B Units pursuant to Section 7.2 of the EmployeeExecutive's Dairy Unit Subscription Agreement, Employee Executive shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of EmployeeExecutive's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Employee's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee 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 Holdings delivers its unfunded and unsecured promise.by

Deferral of Certain Compensation. In connection with the Employee's agreement to cancel all of his options to acquire Company Common Stock pursuant to the terms of that certain Option Cancellation Agreement, dated as of the date hereof, by and between the Employee and the Company, the Company shall (a) pay to Employee an amount equal to $129,990 (the "Cancellation Payment") and (b) rollover an amount equal to $293,661 384,000 (the "Deferred Amount") to an unfunded, unsecured nonqualified deferred compensation arrangement established for this purpose (the "Deferred Account"). Each of the Employee, the Company and Holdings agrees that Holdings, through an intercompany transfer, shall assume all obligations associated with the Deferred Amount. The Cancellation Payment shall be paid by the Company to the Employee on the Effective Date, or as soon as reasonably practicable thereafter. With respect to the Deferred Account, the Deferred Amount shall be deemed to be invested (i.e., an actual investment will not be made), as of the Effective Date, in (A) 2,936.61 3,840 Class A Units (the "Investors A Units") of M-Foods Investors, LLC, a Delaware limited liability company ("Investors") and (B) 2,936.61 3,840 Class A Units (the "Dairy A Units") of M-Foods Dairy Holdings, LLC, a Delaware limited liability company ("Dairy Holdings"). Holdings shall credit Employee's Deferred Account with certain of the distributions that would be received by the Deferred Account if such Deferred Account were actually invested in the manner set forth in the preceding sentence in Investors A Units and Dairy A Units, the extent of such crediting to be in accordance with the calculations set forth in the following two paragraphs. All amounts in the Employee's Deferred Account shall be subject to the claims of the creditors of Holdings. With respect to the Investors A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Investors A Units pursuant to or in accordance with Sections 4.4(a)(i) and 4.4(a)(ii) of the Investors' Amended and Restated Limited Liability Company Agreement, dated April 10, 2001 (the "Investors LLC Agreement"). In the event Investors distributes non-cash property to holders of Investors A Units pursuant to Sections 4.4(a)(i) or 4.4(a)(ii) of the Investors LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Investors. Employee's Deferred Account shall not be credited with any distributions made in respect of Investors A Units pursuant to or in accordance with any subsections of Section 4.4 of the Investors LLC Agreement other than Sections 4.4(a)(i) and 4.4(a)(ii) thereof. In the event that Investors A Units are sold by one or more holders of Investors A Units to a buyer unrelated on the date hereof to the holders of Investors A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Investors A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Investors A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Investors A Units) multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Investors, received by holders of Investors A Units in exchange for an Investors A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement, dated as of the date hereof, by and between the Employee and Investors (the "Management Stock Purchase and Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Investors A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. With respect to the Dairy A Units, Holdings shall credit Employee's Deferred Account with any distributions made in respect of such Dairy A Units pursuant to or in accordance with Sections 4.4(a)(ii) and 4.4(a)(iii) of the Limited Liability Company Agreement of Dairy Holdings, dated April 10, 2001 (the "Dairy Holdings LLC Agreement"). In the event Dairy Holdings distributes non-cash property to holders of Dairy A Units pursuant to Sections 4.4(a)(ii) or 4.4(a)(iii) of the Dairy Holdings LLC Agreement, Holdings shall credit Employee's Deferred Account in an amount equal to the fair market value of such property, as determined by the Management Committee of Dairy Holdings. Employee's Deferred Account shall not be credited with any distributions made in respect of Dairy A Units pursuant to or in accordance with any subsections of Section 4.4 of the Dairy Holdings LLC Agreement other than Sections 4.4(a)(ii) and 4.4(a)(iii) thereof. In the event that Dairy A Units are sold by one or more holders of Dairy A Units to a buyer unrelated on the date hereof to the holders of Dairy A Units, Holdings shall credit Employee's Deferred Account with an amount equal to the result of (x) the percentage of outstanding Dairy A Units being purchased by an unrelated buyer (including, for purposes of this percentage calculation, the number of Dairy A Units deemed held by the Deferred Account and any other unfunded, unsecured nonqualified deferred compensation arrangements similarly established to be deemed to hold Dairy A Units) multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (i) the amount of cash or fair market value of any property, as determined by the Management Committee of Dairy Holdings, received by holders of Dairy A Units in exchange for a Dairy A Unit and (ii) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Dairy Unit Subscription Agreement, dated as of the date hereof, between Dairy Holdings and the Employee (the "Dairy Unit Subscription Agreement")); it being understood and agreed that any distribution made pursuant to this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of this sentence. Employee shall receive from Holdings distributions from his Deferred Account, in the amount indicated, upon the occurrence of the following events: (i) upon a Change in Control, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (ii) upon the tenth anniversary of the date hereof, Employee shall receive a total distribution of the amount then deemed held in the Deferred Account; (iii) upon the purchase by Investors of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Management Stock Purchase and Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Investors multiplied by (y) the number of Investors A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of an Investors 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 Investors LLC Agreement) of an Investors A Unit (assuming such Investors A Unit was issued on the Closing Date, as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement); 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 A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iii); and (iv) upon the purchase by Dairy Holdings of any of Employee's Class B Units pursuant to Section 7.2 of the Employee's Dairy Unit Subscription Agreement, Employee shall receive a distribution from the Deferred Account equal to the result of (x) the percentage of Employee's Class B Units being purchased by Dairy Holdings multiplied by (y) the number of Dairy A Units deemed held in the Deferred Account multiplied by (z) the lesser of (A) the fair market value of a Diary A Unit, as determined by the Management Committee of Dairy Holdings and (B) the sum of the Unreturned Capital and Unpaid Preferred Return (as such terms are defined in the Dairy Holdings LLC Agreement) of a Dairy A Unit (assuming such Dairy A Unit was issued on the Closing Date, as such term is defined in the Employee's Dairy Unit Subscription Agreement); it being understood and agreed that any distribution made pursuant to clause (iv) of this sentence shall, with respect to future distributions, reduce the number of Dairy A Units deemed held by the Deferred Account by the percentage described in subclause (x) of such clause (iv). 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 clause (iii) or (iv) above, if, with respect to Holdings, any of the Cash Deferral Conditions (as such term is defined in the Employee's Management Stock Purchase and Unit Subscription Agreement) exists, the portion of the cash payment so affected may be made by the delivery of Holdings' unfunded and unsecured promise to pay Employee 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 Holdings delivers its unfunded and unsecured promise.------------