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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Schedule 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
MICHAEL FOODS, INC.
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(Name of Issuer)
Common Stock, $.01 par value
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(Title of Class of Securities)
5940741
-----------------------------
(CUSIP Number)
Arthur J. Papetti COPY TO: Robert. M. LaRose, Esq.
c/o Papetti's Hygrade Egg Products,Inc. THOMPSON COBURN
One Papetti Plaza One Mercantile Center
Elizabeth, New Jersey 07206 St. Louis, Missouri 63101
(908) 354-4844 (314) 552-6000
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 26, 1997
--------------------------------------------
(Date of Event which Requires Filing
of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box //.
Check the following box if a fee is being paid with the statement. // (See
Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
(Continued on following page(s))
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SCHEDULE 13D
CUSIP NO. 5940741
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================================================================================
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Arthur J. Papetti
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
Not applicable
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
SC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED / /
PURSUANT TO ITEMS 2(d) OR 2(e)
Not applicable
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
USA
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NUMBER OF 7 SOLE VOTING POWER
SHARES
BENEFICIALLY 1,597,727
OWNED BY ---------------------------------------------------------------
EACH 8 SHARED VOTING POWER
REPORTING
PERSON WITH -0-
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9 SOLE DISPOSITIVE POWER
1,597,727
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10 SHARED DISPOSITIVE POWER
-0-
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
1,597,727
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) / /
EXCLUDES CERTAIN SHARES*
Not applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
8.21 %
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14 TYPE OF REPORTING PERSON IN
IN
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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INTRODUCTORY STATEMENT
Arthur J. Papetti (the "Filing Person") is filing this Schedule 13D as a
result of the consummation on February 26, 1997, of the merger (the
"Reorganization") of Papetti's Hygrade Egg Products, Inc., a New Jersey
corporation ("Papetti's Hygrade"), with and into Michael Foods, Inc., a
Delaware corporation ("Michael"), pursuant to that certain Agreement and Plan
of Reorganization dated June 28, 1996 by and among Michael, M.G. Waldbaum
Company, a Nebraska corporation and a wholly owned subsidiary of Michael,
Papetti's Hygrade and other affiliated companies and partnerships of Papetti's
Hygrade, as amended by that certain Amendment No. 1 dated October 18, 1996 and
that certain Amendment No. 2 dated February 26, 1997 (as amended, the
"Reorganization Agreement"). Pursuant to the Reorganization, the business of
Papetti's Hygrade will be continued by Michael as successor to Papetti's
Hygrade. Under the terms of the Reorganization Agreement, upon consummation of
the Reorganization each outstanding share of the common stock of Papetti's
Hygrade, no par value (the "Papetti's Hygrade Common Stock"), was converted
into the right to receive (a) 1,510.57819 shares of common stock of Michael,
$.01 par value (the "Michael Common Stock"), and (b) a cash payment in the
amount of $7,546.14. Immediately prior to the consummation of the
Reorganization, the Filing Person beneficially owned an aggregate of
1,057.69235 shares of Papetti's Hygrade Common Stock. Upon consummation of the
Reorganization pursuant to the Reorganization Agreement, the Filing Person
received an aggregate cash payment of $7,981,497.56 and 1,597,727 shares of
Michael Common Stock.
ITEM 1. SECURITY AND ISSUER.
This Schedule 13D relates to the Michael Common Stock, $.01 par value.
The address of the principal executive offices of Michael is 5353 Wayzata
Boulevard, 324 Park National Bank Building, Minneapolis, Minnesota 55416.
ITEM 2. IDENTITY AND BACKGROUND
1. (a) Name: Arthur J. Papetti
(b) Residence address: 480 South Horizon Way, Neshanic
Station, NJ 08853.
(c) Present principal occupation and name, principal
business and address of any corporation or partnership in which such employment
is conducted: Executive Vice President, Papetti's Hygrade Egg Products, Inc.,
One Papetti Plaza, Elizabeth, New Jersey 07206.
(d) The Filing Person has not, during the last five years,
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors).
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(e) The Filing Person has not, during the last five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person has been or is subject
to any judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws of finding any violation with respect to such laws.
(f) Citizenship: United States
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
The shares of Michael Common Stock reported in this Schedule
13D as beneficially owned by the Filing Person were acquired in the
Reorganization pursuant to the terms and conditions of the Reorganization
Agreement in exchange for an aggregate of 1,057.69235 shares of Papetti's
Hygrade Common Stock beneficially owned by the Filing Person.
ITEM 4. PURPOSE OF TRANSACTION.
On February 26, 1997, Papetti's Hygrade was merged in the
Reorganization with and into Michael, pursuant to the Reorganization Agreement
Pursuant to the Reorganization, the business of Papetti's Hygrade will be
continued by Michael as successor to Papetti's Hygrade. Under the terms of the
Reorganization Agreement upon consummation of the Reorganization, each
outstanding share of the Papetti's Hygrade Common Stock was converted into the
right to receive (a) 1,510.57819 shares of Michael Common Stock and (b) a cash
payment in the amount of $7,546.14. Immediately prior to the consummation of
the Reorganization, the Filing Person beneficially owned an aggregate of
1,057.69235 shares of Papetti's Hygrade Common Stock. Upon consummation of the
Reorganization pursuant to the Reorganization Agreement, the Filing Person
received an aggregate cash payment of $7,981,497.56 and 1,597,727 shares of
Michael Common Stock.
Pursuant to the Reorganization Agreement, in connection with
the consummation of the Reorganization the number of directors constituting the
entire Board of Directors of Michael was increased by two, and Michael caused
the Filing Person and Stephen Papetti, a cousin of the Filing Person, to be
elected to the Michael Board of Directors. For each annual meeting of
stockholders of Michael prior to the third anniversary of the effective date of
the Reorganization, the former shareholders of Papetti's Hygrade shall be
entitled to nominate two persons to stand for election to the Michael Board of
Directors. In addition, as a condition to the consummation of the
Reorganization, Michael entered into employment agreements with each of the
Filing Person, Stephen Papetti, Alfred Papetti, Arthur N. Papetti, Anthony
Papetti and Tina Marie Noll, each currently an officer of Papetti's Hygrade,
pursuant to which such individuals will serve as officers of the Papetti's
Hygrade Food Division of Michael following the Reorganization. Arthur N.
Papetti is the father of the Filing Person, Tina Marie Noll is the sister of
the Filing Person, Anthony Papetti is the uncle of the Filing Person and
Stephen and Alfred Papetti are the cousins of the Filing Person.
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ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) The Filing Person is the beneficial owner of 1,597,727
shares of Michael Common Stock, representing 8.21% of the 19,459,731 shares of
Michael Common Stock issued and outstanding as of February 26, 1997.
(b) The Filing Person has sole voting and dispositive power
with respect to 1,597,727 shares of Michael Common Stock, representing 8.21% of
the 19,459,731 shares of Michael Common Stock issued and outstanding as of
February 26, 1997.
(c) Other than as described in this Schedule 13D, there have
been no other transactions relative to the Michael Common Stock by the Filing
Person.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
In connection with the Reorganization Agreement, Michael and
certain of the shareholders of Papetti's Hygrade and the other affiliated
entities of Papetti's Hygrade which Michael acquired pursuant to the
Reorganization Agreement (collectively, the "Papetti Holders") entered into a
Shareholder Agreement, dated February 26, 1997 (the "Shareholder Agreement").
Pursuant to the Shareholder Agreement, Michael agreed to grant to the Papetti
Holders certain demand and "piggyback" registration rights for a period of
three years from the consummation of the Reorganization with respect to the
Michael Common Stock received by such persons in the Reorganization. Pursuant
to the Shareholder Agreement, each of the Papetti Holders agreed, among other
things, (i) to refrain from acquiring or becoming the beneficial owner of
additional shares of Michael Common Stock if the effect of such action would
be to increase the aggregate voting power of the Papetti Holders to 20% or more
of the total voting power of all outstanding shares of Michael Common Stock,
(ii) to refrain from the formation of a voting trust with respect to the shares
of Michael Common Stock which the Papetti Holders own, and (iii) to refrain
from any proxy solicitation in opposition of the recommendation of the Board
of Directors of Michael, (iv) to refrain from the formation of a "group" as
that term is defined in the Shareholder Agreement, (v) to vote in favor of the
restructuring involving North Star Universal, Inc. and Michael as described in
the Reorganization Agreement, (vi) to refrain from selling in excess of 25,000
shares of Michael Common Stock in the aggregate during any period of three
consecutive months, (vii) to refrain from pledging, hypothecating or
encumbering any shares of Michael Common Stock except pursuant to a bona fide
pledge to a financial institution to secure a loan where the financial
institution has executed an agreement to be legally bound by the of the
Shareholder Agreement upon foreclosure; and (viii) to refrain from selling
shares of Michael Common Stock having five percent or more of the voting power
of
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the outstanding Michael Common Stock to any single person or group in any
single transaction or in a series of transactions or from selling any amount
of shares of Michael Common Stock to any person or group which, to
the actual knowledge of the Papetti Holders, owns at the time of sale, five
percent or more of the voting power of the outstanding Michael Common Stock,
each without first providing Michael with a right of first refusal having the
terms as set forth in the Shareholder Agreement. Each of the agreements
summarized above, are for a period of three years or until the Papetti
Shareholder beneficially own shares of Michael Common Stock aggregating less
than five percent of the voting power of the outstanding Michael Common Stock
(two years in the case of (vi) and (vii)).
ITEM 7. MATERIAL REQUIRED TO BE FILED AS EXHIBITS.
See Exhibit Index.
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SIGNATURE
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is true,
complete and correct.
/s/ Arthur J. Papetti
Dated: February 26, 1997 ------------------------
Arthur J. Papetti
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INDEX TO EXHIBITS
Exhibit A Agreement and Plan of Reorganization, and Amendment No. 1, by
and among Michael Foods, Inc., M.H. Waldbaum Company and
Papetti's Hygrade Egg Products, Inc., and Quaker State
Farms, Inc., Papetti's of Iowa Food Products, Inc., Monark Egg
Corporation, Egg Specialties, Inc., Papetti Foods, Inc., Casa
Trucking Limited Partnership, Papetti Transport Leasing
Limited Partnership, and Papetti Equipment Leasing
Partnership, filed as Exhibit 10.111 to Michael Foods,
Inc.'s Form 10-Q for the quarter ended September 30, 1996, is
incorporated herein by reference.
Exhibit B Amendment No. 2, dated February 26, 1997, to Agreement and
Plan of Reorganization by and among Michael Foods, Inc., M.G.
Waldbaum Company and Papetti's Hygrade Egg Products, Inc.,
and Quaker State Farms, Inc., Monark Egg Corporation, Egg
Specialties, Inc., Papetti Foods, Inc., Casa Trucking Limited
Partnership, Papetti Transport Leasing Limited Partnership,
and Papetti Equipment Leasing Limited Partnership.
Exhibit C Form of Employment Agreement, dated February 26, 1997, by and
between Arthur J. Papetti and Michael Foods, Inc.
Exhibit D Shareholder Agreement, dated February 26, 1997, by and
among Michael Foods, Inc. and Arthur N. Papetti as
Representative of and attorney-in-fact for the Shareholders
and Sellers Listed on Schedule I.
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EXHIBIT B
AMENDMENT NO. 2 TO AGREEMENT AND
PLAN OF REORGANIZATION
BY AND AMONG MICHAEL FOODS, INC.,
M.G. WALDBAUM COMPANY AND
PAPETTI'S HYGRADE EGG PRODUCTS,INC., AND
QUAKER STATE FARMS, INC.,
PAPETTI'S OF IOWA FOOD PRODUCTS, INC.,
MONARK EGG CORPORATION,
EGG SPECIALTIES, INC.,
PAPETTI FOODS, INC.,
CASA TRUCKING LIMITED PARTNERSHIP,
PAPETTI TRANSPORT LEASING LIMITED PARTNERSHIP, AND
PAPETTI EQUIPMENT LEASING LIMITED PARTNERSHIP
THIS AMENDMENT ("Amendment No. 2") is entered into as of February 26, 1997
(effective as of December 31, 1996) by and among MICHAEL FOODS, INC., a
Delaware corporation ("Michael"), M.G. WALDBAUM COMPANY, a Nebraska corporation
("Acquisition") and PAPETTI'S HYGRADE EGG PRODUCTS, INC., a New Jersey
corporation ("Papetti's Hygrade") and QUAKER STATE FARMS, INC., a Pennsylvania
corporation ("Quaker"), PAPETTI'S OF IOWA FOOD PRODUCTS, INC., an Iowa
corporation ("Papetti's of Iowa"), MONARK EGG CORPORATION, a Missouri
corporation ("Monark"), EGG SPECIALTIES, INC., a Pennsylvania corporation ("Egg
Specialties"), PAPETTI FOODS, INC., a New Jersey corporation ("Papetti Foods",
and collectively with Quaker, Papetti's of Iowa, Monark, and Egg Specialties,
the "Acquired Companies"), CASA TRUCKING LIMITED PARTNERSHIP, a New Jersey
limited partnership ("Casa Trucking"), PAPETTI TRANSPORT LEASING LIMITED
PARTNERSHIP, a New Jersey limited partnership ("Papetti Transport"), and
PAPETTI EQUIPMENT LEASING LIMITED PARTNERSHIP, a New Jersey limited partnership
("Papetti Equipment" and together with Casa Trucking and Papetti Transport, the
"Acquired Partnerships") (the Acquired Companies and the Acquired Partnerships
are collectively referred to herein as the "Acquired Entities").
R E C I T A L S:
As of June 28, 1996, Michael, Acquisition and Papetti's Hygrade and the
Acquired Entities executed and delivered an Agreement and Plan of
Reorganization which was amended and modified by Amendment No. 1 to the
Agreement and Plan of Reorganization dated October 18, 1996 (together, the
"Agreement") which the parties now desire to further modify and amend in
certain respects.
NOW, THEREFORE, the parties hereto covenant and agree as follows:
1. Unless the context otherwise requires, all capitalized terms used herein
shall have the meanings ascribed thereto in the Agreement.
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2. Schedules 2.1 and 2.2 are hereby amended in their entirety as provided in
Exhibit A attached hereto.
3. Section 4.4 shall be amended in its entirety to read as follows:
"4.4 Financial Statements. (i) The audited combined balance sheets of
Papetti's Hygrade and the Acquired Entities as of December 31, 1995 and 1994
and the unaudited balance sheets of Papetti's Hygrade as of July 31, 1996 and
of the Acquired Entities as of September 30, 1996 and (ii) the related
statements of income and retained earnings and the statements of cash flows
for the years and the periods then ended of Papetti's Hygrade and the
Acquired Entities, together with the notes thereto, in the case of the
audited financial statements for 1995 certified by Coopers & Lybrand, L.L.P.
and for 1994 certified by Ehrenkrantz & Company, in each case the independent
certified public accountants of Papetti's Hygrade and the Acquired Companies,
have been previously delivered by Papetti's Hygrade and the Acquired Entities
to Michael. Such audited financial statements and the notes thereto were
prepared in accordance with GAAP consistently applied during the years
covered by such audited financial statements, are in accordance with the
books and records of Papetti's Hygrade and the Acquired Entities, and present
fairly the financial condition and results of operations of Papetti's Hygrade
and the Acquired Entities as of such dates and for such years. All
transactions between Papetti's Hygrade and the Acquired Entities, on the one
hand, and any of their respective Shareholders or Partners or their
Affiliates, on the other hand, related to the business and operations of
Papetti's Hygrade and the Acquired Entities (other than as related to
compensation of any of the Shareholders or Partners, as applicable, who were
employed by Papetti's Hygrade or any Acquired Entity during the years covered
by the audited financial) have been included in the applicable audited
financial statements. Except as set forth in Schedule 4.4 hereto, the
unaudited financial statements of Papetti's Hygrade and the Acquired Entities
delivered pursuant to this Section 4.4 have been prepared by management of
Papetti's Hygrade and the Acquired Entities consistent with the accounting
principles utilized in the preparation of the audited financial statements
delivered pursuant to this Section 4.4 and, to the best knowledge of
Papetti's Hygrade and each of the Acquired Entities, present fairly the
financial condition and results of operations of Papetti's Hygrade and the
Acquired Entities as of the date and for such periods covered by such
unaudited financial statements, except for the lack of complete explanatory
footnote disclosures required by GAAP. All transactions between Papetti's
Hygrade and the Acquired Entities, on the one hand, and any of their
respective Shareholders or Partners or their Affiliates, on the other hand,
related to the business and operations of Papetti's Hygrade and the Acquired
Entities (other than as related to compensation of any of the Shareholders or
Partners, as applicable, who were employed by Papetti's Hygrade or any
Acquired Entity during the periods covered by the unaudited financial
statements) have been included in the applicable unaudited financial
statements. For purposes of this Agreement, the "Balance Sheet" shall mean
the combined balance sheets of Papetti's Hygrade at
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July 31, 1996 and of the Acquired Entities at September 30, 1996, and the
respective dates thereof are referred to in this Agreement as the "Balance
Sheet Dates." Michael further acknowledges that it has received an unaudited
monthly balance sheet and an unaudited monthly statement of income for
Papetti's Hygrade and each of the Acquired Entities for each month after the
Balance Sheet Dates through January 31, 1997."
4. Section 6.2.6 shall be amended in its entirety to read as follows:
"6.2.6 Enter into or modify any material contract or commitment, incur any
material liability, absolute or contingent, waive or fail to enforce any
material right or enter into any other material transaction, other than in
the ordinary course of business or in connection with this transaction, or
enter into any commitment after December 20, 1996, with respect to operating
leases or capital expenditures, including capital leases."
5. Section 6.2.8 shall be amended in its entirety to read as follows:
"6.2.8 Have made or become obligated to make any dividend payment or other
distribution to the Shareholders or Partners of Papetti's Hygrade or any
Acquired Entity other than dividends or distributions from the Acquired
Entities that are pass-through entities for tax purposes to the extent of any
federal, state or local income tax obligations of the Shareholders or
Partners with respect to the taxable income of such entities since the
Balance Sheet Date, provided that such dividends or distributions have not
previously been made."
6. The pre-existing language set forth in Section 6.11 shall be retained in
its entirety; provided, however, that Section 6.11 shall be amended by adding
thereto the following sentence to the end of the Section:
"Prior to the Closing Date, Papetti's Hygrade and the Acquired Entities shall
provide to Michael a complete list of salaries, bonuses, dividends and other
distributions paid to the Shareholders and/or Partners of Papetti's Hygrade
and the Acquired Entities during the period from September 30, 1996 through
the Closing Date."
7. The first sentence of Section 6.10 is hereby deleted and the following
inserted in its place:
"Financial Statements Subsequent to Balance Sheet Date. Papetti's Hygrade
and the Acquired Entities shall deliver to Michael interim unaudited monthly
balance sheets and unaudited monthly statements of income for Papetti's
Hygrade and each of the Acquired Entities for each month after the Balance
Sheet Dates through December 31, 1996."
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8. Article 8 is amended by adding thereto a new Section 8.18 as follows:
"8.18 Papetti Farms Agreement. At Closing, Michael shall have executed and
delivered to the Representative the Papetti Farms Agreement (as defined in
Section 10.4 of this Agreement)."
9. Section 9.10 shall be amended by revising the first sentence thereof in
its entirety to read as follows:
"At the Effective Time, the aggregate indebtedness of Papetti's Hygrade, the
Acquired Companies and the Acquired Partnerships assumed by Michael shall not
exceed $24,600,000."
10. Section 9.12 shall be amended in its entirety to read as follows:
"9.12 Related Party Indebtedness. All amounts owing to Papetti's Hygrade
or the Acquired Entities from Affiliates other than Acquired Entities in
excess of $3,700,000 shall be repaid in cash at or prior to Closing and the
remaining $3,700,000 of such related party indebtedness shall be eliminated
or discharged."
11. Article 9 is amended by adding thereto a new Section 9.19 as follows:
"9.19 Papetti Farms Agreement. At Closing, Papetti's Hygrade and the
Acquired Entities shall have caused Papetti Farms, Inc. to execute and
deliver to Michael the Papetti Farms Agreement."
12. Section 10.4 is hereby amended in its entirety to read as follows:
"At Closing, Michael shall execute and deliver to the Representative, and
Papetti's Hygrade and the Acquired Entities shall cause Papetti Farms, Inc.
to execute and deliver to Michael an agreement, in substantially the form set
forth as Exhibit H to this Agreement (the "Papetti Farms Agreement"), with
respect to Michael's rights to acquire the ownership interest that Papetti
Farms, Inc. holds in Sunbest-Papetti Farms and Papetti Farms, Inc.'s
obligations to sell such ownership interest to Michael."
13. Section 13.1.5 is amended in its entirety to read as follows:
"13.1.5 Papetti's Hygrade and the Acquired Entities or Michael if the
transactions contemplated herein shall not have become effective on or before
March 15, 1997."
14. Notwithstanding any other provision in the Agreement to the contrary,
prior to Closing Papetti's Hygrade and the Acquired Entities shall pay all
professional fees incurred by them in connection with or as a result of the
Agreement or the transactions contemplated
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<PAGE> 5
thereby, including all legal, accounting and consulting fees. The fees of
Coopers & Lybrand LLP for investment banking advice and/or for estate or tax
planning for the Shareholders and Partners of Papetti's Hygrade and the
Acquired Entities shall be paid by such Shareholders or Partners, as the case
may be, as provided for in Section 4.17 of the Agreement.
15. M.G. Waldbaum Company may transfer the Acquired Companies and Acquired
Partnerships to a wholly-owned subsidiary of M.G. Waldbaum Company by having
the Mergers and Asset Acquisitions completed through such wholly-owned
subsidiary, but M.G. Waldbaum Company nevertheless shall for purposes of this
Agreement retain all of the rights and obligations of Acquisition under the
Agreement.
16. Except as otherwise provided for herein, the Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, each of the parties have caused this Amendment to the
Agreement to be executed and delivered as of the day and year first above
written.
PAPETTI'S HYGRADE EGG PRODUCTS, INC.
By:/s/ Arthur N. Papetti
----------------------
Arthur N. Papetti, President
QUAKER STATE FARMS, INC.
By:/s/ Arthur N. Papetti
----------------------
Arthur N. Papetti, Vice President
PAPETTI'S OF IOWA FOOD PRODUCTS, INC.
By:/s/ Arthur N. Papetti
-----------------------
Arthur N. Papetti, Vice President
MONARK EGG CORPORATION
By:/s/ Arthur N. Papetti
-----------------------
Arthur N. Papetti, Vice President
EGG SPECIALTIES, INC.
By:/s/ Arthur J. Papetti
-----------------------
Arthur J. Papetti, President
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PAPETTI FOODS, INC.
By:/s/ Stephen Papetti
-------------------------------
Stephen Papetti, President
CASA TRUCKING LIMITED PARTNERSHIP
BY CASA TRUCKING CORPORATION,
GENERAL PARTNER
By:/s/ Alfred Papetti
-------------------------------
Alfred Papetti, President
PAPETTI TRANSPORT LEASING
LIMITED PARTNERSHIP
BY PAPETTI TRANSPORT LEASING
CORPORATION, GENERAL PARTNER
By:/s/ Arthur J. Papetti
--------------------------------
Arthur J. Papetti, President
PAPETTI EQUIPMENT LEASING
LIMITED PARTNERSHIP
BY PAPETTI EQUIPMENT LEASING
CORPORATION, GENERAL PARTNER
By:/s/ Arthur J. Papetti
--------------------------------
Arthur J. Papetti, President
MICHAEL FOODS, INC.
By:/s/ Jeffrey M. Shapiro
------------------------
Jeffrey M. Shapiro,
Executive Vice President
M.G. WALDBAUM COMPANY
By:/s/ Jeffrey M. Shapiro
------------------------
Jeffrey M. Shapiro, Secretary
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EXHIBIT A
SCHEDULE 2.1 AND 2.2
PURCHASE PRICE AND CONSIDERATION CALCULATION AND ADJUSTMENTS
PURCHASE PRICE CALCULATION
Subject to the adjustments set forth in this Schedule 2.1 and 2.2, the
aggregate purchase price shall be Eighty Million Four Hundred Fifty Thousand
and no/100ths Dollars ($80,450,000).
CONSIDERATION PAYABLE TO THE SHAREHOLDERS/PARTNERS OF THE ACQUIRED ENTITIES
Subject to the adjustments set forth in this Schedule 2.1 and 2.2 or
in the Reorganization Agreement, the consideration to be paid at Closing shall
be payable as follows:
Three Million One Hundred Ninety Five Thousand Four Hundred
Fifty Five (3,195,455) Shares of Michael Common Stock shall be issued
by Michael ratably to the Common Shareholders of Papetti's Hygrade,
pursuant to the Papetti's Hygrade Reorganization in accordance with
this Schedule 2.1 and 2.2 and in the manner set forth in Section 2.3
of the Agreement;
Forty-Five Million Three Hundred Thousand Dollars
($45,300,000) shall be paid in cash by Michael to the Shareholders and
Partners of Papetti's Hygrade and the Acquired Entities in the amounts
determined in accordance with this Schedule 2.1 and 2.2 and in the
manner set forth in Section 2.4 of the Agreement.
CLOSING MARKET PRICE AND OTHER ADJUSTMENTS
To the extent that the average of the last transaction prices of
Michael Common Stock as reported by NASDAQ-NMS for the period of ten
consecutive trading days ending three days prior to the date of Closing (the
"Closing Date Average Price") is greater than or less than $11.00 per share,
the difference between $11.00 and the Closing Date Average Price shall be
multiplied by 3,195,455 (or such other number as shall equal the aggregate
number of shares of Michael Common Stock that are to be issued to the
Shareholders of Papetti's Hygrade) to determine the difference in value of the
consideration payable in shares of Michael Common Stock between the date of the
Agreement and the date of Closing (the "Stock Value Differential"). To the
extent that the Closing Date Average Price is greater than $11.00, the cash
portion of the consideration payable to the Shareholders of Papetti's Hygrade
shall be decreased by one-half of the Stock Value Differential. To the extent
that the Closing Date Average Price is less than $11.00, the cash portion of
the consideration payable to the Shareholders of Papetti's Hygrade shall be
increased by one-half of the Stock Value Differential. Except as set forth in
the next paragraph of this Schedule 2.1 and 2.2, there shall be no
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<PAGE> 8
adjustment to 3,195,455 shares of Michael Common Stock to be issued to the
Shareholders of Papetti's Hygrade at Closing based upon the Stock Value
Differential, if any.
In no event shall Michael be required to issue a number of shares of
Michael Common Stock at the Closing that will equal or exceed 20% of its Common
Stock then outstanding. To the extent that it is determined that the number of
shares of Michael Common Stock that Michael would be required to issue at
Closing will be 20% or more of the then-outstanding Common Stock without
considering the Michael Common Stock to be issued hereunder, the number of
shares required to be issued shall be reduced to the highest number of whole
shares that Michael can issue without exceeding such limitation. In such
event, the Shareholders of Papetti's Hygrade who would have been entitled to
receive such shares of Michael Common Stock shall become entitled to receive
the dollar amount of the shares of Michael Common Stock not issued on the basis
of the Closing Date Average Price plus or minus the Stock Value Differential
formula set forth in the immediately preceding paragraph. In no event shall
Michael be required to issue more than 3,195,455 shares of its Common Stock in
the transactions contemplated under the Agreement.
ALLOCATION OF CONSIDERATION AMONG PAPETTI'S HYGRADE REORGANIZATION, THE MERGERS
OF THE ACQUIRED ENTITIES AND THE ASSET ACQUISITIONS OF THE ACQUIRED
PARTNERSHIPS
Subject to the adjustments set forth in this Schedule 2.1 and 2.2, the
consideration to be paid at Closing shall be allocated among Papetti's Hygrade
Reorganization, the Mergers of the Acquired Companies and the Asset
Acquisitions of the Acquired Partnerships as follows:
<TABLE>
<CAPTION>
TRANSACTION MICHAEL FOODS
----------- COMMON STOCK CASH
------------ ------------
<S> <C> <C>
Papetti's Hygrade Reorganization 3,195,455 shares $18,350,000(1)
Quaker Merger -0- 9,150,000
Papetti's of Iowa Merger -0- 4,800,000
Monark Merger -0- 3,600,000
Egg Specialties Merger -0- 1,100,000
Papetti Foods Merger -0- 6,650,000
Casa Trucking Asset Acquisition -0- 1,650,000
Papetti Equipment Asset Acquisition -0- 0
Papetti Transport Asset Acquisition -0- 0
</TABLE>
- ---------------
(1) As adjusted pursuant to this Schedule 2.1 and 2.2.
- 8 -
<PAGE> 9
The shares or cash to be distributed to each Shareholder or Partner of
Papetti's Hygrade or an Acquired Entity shall be based on each Shareholder's or
Partner's pro rata interest in Papetti's Hygrade, the respective Acquired
Company or the respective Acquired Partnership as set forth on a schedule to be
provided by the Representative at or prior to Closing.
The description of the assets purchased and liabilities assumed in
each Acquired Partnership acquisition shall be as set forth in each Acquisition
Agreement.
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<PAGE> 1
EXHIBIT C
EMPLOYMENT AGREEMENT
THIS AGREEMENT made and entered into as of the 26th day of February,
1997, by and between MICHAEL FOODS, INC., a Delaware corporation (hereinafter
referred to as "Michael Foods") and Arthur J. Papetti (hereinafter referred to
as "Executive").
WHEREAS, Executive is an employee of Papetti's Hygrade Egg Products,
Inc. which will be merged as of the date hereof with and into Michael Foods
(the "Reorganization"); and
WHEREAS, Michael Foods desires to assure itself of the availability of
the services of the Executive following the Reorganization, and it is a
condition to the Reorganization that Executive and Michael Foods enter into
this Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the covenants and agreements
herein contained, the parties agree as follows:
1. EMPLOYMENT AND DUTIES. Michael Foods shall employ Executive
to serve as Chairman of the Papetti's Hygrade Foods Division and in such
capacity Executive shall perform such duties as were being performed prior to
and as of the date of this Agreement subject at all times to the direction of
the CEO of Michael Foods.
2. TERM. This Agreement shall be effective as of
February 26, 1997 and shall continue through February 25, 2000,
unless earlier terminated as provided herein. This Agreement may be extended
thereafter upon the written agreement of the parties hereto.
3. BASE SALARY. For all services rendered by Executive, Michael
Foods agrees to pay Executive an annual Base Salary for each year of this
Agreement from February 26, 1997 through February 25, 2000
of at least $180,000 payable in substantially equal semi-monthly installments.
4. ADDITIONAL BENEFITS AND WORKING FACILITIES.
a. Michael Foods shall provide Executive with medical
insurance and shall permit Executive to participate in other fringe
benefit plans as Michael Foods may from time to time provide for its
other executive officers. The terms
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<PAGE> 2
of said benefits in all cases shall be no less favorable to Executive
than those offered to other executive officers of Michael Foods.
b. Executive is entitled to take 4 weeks vacation per
annum at reasonable times and for customary and reasonable lengths of
time consistent with his overall responsibilities hereunder.
c. Michael Foods shall reimburse Executive for all
reasonable expenses incurred by Executive in connection with Michael
Foods' business, including but not limited to, expenses of travel and
entertainment, upon presentation of itemized statements therefor.
5. NON-COMPETE. During Executive's term of employment and for a
period of three years following termination of employment, Executive shall not
directly or indirectly, whether as an employee, agent, contractor, partner,
shareholder or otherwise, engage in the business of egg production, processing
or distribution in any geographic area where Michael Foods produces or
processes eggs or distributes egg products, except as specified in Schedule I
to this Agreement, nor shall Executive solicit the business of any customer of
Michael Foods on behalf of any company or business entity (other than Michael
Foods or its affiliates) which is engaged in the egg production, processing or
distribution business, whether or not such company or business directly
competes with Michael Foods.
6. EVENTS OF TERMINATION. The employment of Executive hereunder
shall terminate as follows:
a. Upon the Incapacity or death of Executive;
b. Upon thirty (30) days' written notice by either party
or by Executive if Executive's Duties Have Been Substantially Reduced
or Negatively Altered without Executive's prior written consent; or
c. Without notice by Michael Foods for Cause.
"Cause" for purposes hereof shall mean a determination by Michael
Foods that Executive has committed an illegal act that directly reflects upon
his fitness to act as an Executive of Michael Foods.
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<PAGE> 3
"Incapacity" for purposes hereof shall mean a determination by
Michael Foods in its sole discretion that Executive is unable to perform his
job responsibilities hereunder as a result of chronic illness, physical, mental
or any other disability for a period of six (6) months or more.
If Executive's employment is terminated under subsection (a) or by
Michael under subsection (b) or by Executive under subsection (b) based upon
the fact that Executive's Duties Have Been Substantially Reduced or Negatively
Altered without Executive's prior written consent, Executive shall receive as a
termination payment, an amount equal to the Base Salary for the remaining term
of this Agreement. The termination payments provided above shall be made in
substantially equal monthly installments beginning on the first day of the
month following termination of employment for the balance of the term of this
Agreement. If Executive's employment is terminated by Executive under
subsection (b) for any reason other than that Executive's Duties Have Been
Substantially Reduced or Negatively Altered without Executive's prior written
consent or by Michael under subsection (c), Executive shall receive no
termination payment.
"Duties are Substantially Reduced or Negatively Altered" means,
without Executive's express written consent:
(i) the assignment to Executive of any duties
inconsistent with Executive's positions, duties, responsibilities and
status with Michael Foods or a change in Executive's reporting
responsibilities, titles or offices, or any removal of Executive from,
or any failure to re-elect Executive to, any of such positions, except
in connection with the termination of Executive's employment for
Cause, upon the Incapacity or death of Executive, or upon the
voluntary termination by Executive;
(ii) a reduction in Executive's Base Salary below the
minimum Base Salary in Section 3 hereof;
(iii) Michael Foods requiring Executive to be based
anywhere other than the geographic location at which Executive was
based at the effective date of this Agreement except for required
travel on business to an extent substantially consistent with the
business travel obligations of Executive;
(iv) the failure by Michael Foods to continue in effect
benefit and compensation plans substantially equivalent to the benefit
or compensation plans or arrangements in effect at the effective date
of this Agreement; the taking of any action by Michael Foods not
required by law which would adversely affect Executive's participation
in or materially reduce Executive's benefits under any of such plans
or deprive Executive of any material fringe benefit enjoyed by
Executive; or the failure by Michael Foods to provide Executive with
the number of paid vacation days, holidays and personal days to which
Executive was then
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<PAGE> 4
entitled in accordance with Michael Foods' normal leave policy in
effect at the effective date of this Agreement.
7. ADDITIONAL DOCUMENTS. The parties shall each, without further
consideration, execute such additional documents as may be reasonably required
in order to carry out the purposes and intents of this agreement and to fulfill
the obligations of the respective parties hereunder.
8. WAIVER. Any waiver of any term or condition of this Agreement
shall not operate as a waiver of any other breach of such term or condition, or
of any other term or condition, nor shall any failure to enforce a provision
hereof operate as a waiver of such provisions or of any other provision hereof.
9. NOTICES. All communications with respect to this agreement
shall be considered given if delivered or sent as follows:
a. To Executive by first class, certified mail, postage prepaid,
return receipt requested, addressed as follows:
Arthur J. Papetti
c/o Papetti Hygrade Foods Division
100 Trumbell Street
Elizabeth, New Jersey 07206
Copy to:
Martin B. O'Connor, II
O'Connor, Morss & O'Connor
Liberty Hall Center
1085 Morris Avenue
Union, New Jersey 07083
b. To Michael Foods by first class, certified mail, postage
prepaid, return receipt requested, addressed as follows:
Michael Foods, Inc.
5353 Wayzata Boulevard
324 Park National Bank Building
Minneapolis, Minnesota 55416
or mailed to such other addresses as the parties hereto may designate by notice
given in like manner. Notice shall be effective three (3) days after mailing
or upon personal delivery.
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<PAGE> 5
10. ENTIRE AGREEMENT. This Agreement constitutes the entire
Agreement of the parties hereto with respect to the subject matter hereof and
no party shall be liable or bound to another in any manner by any warranties,
representations or guarantees, except as specifically set forth herein.
11. MODIFICATIONS, AMENDMENTS AND WAIVERS. The parties hereto at
any time may by written agreement extend or modify this Agreement. This
Agreement shall not be altered or otherwise amended except pursuant to an
instrument in writing executed by the parties hereto.
12. SEVERABILITY. No finding or adjudication that any provision
of this Agreement is invalid or enforceable shall affect the validity or
enforceability of the remaining provisions herein, and this Agreement shall be
construed as though such invalid or unenforceable provisions were omitted.
13. MISCELLANEOUS.
a. The terms and conditions of this Agreement shall
inure to the benefit of and be binding upon the respective legal
representatives, successors and assigns of the party thereto.
b. This Agreement is made pursuant to and shall be
construed under the laws of the State of Minnesota.
c. This Agreement may be executed in one or more
counterparts and each of such counterparts shall for all purposes be
deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
MICHAEL FOODS, INC.
By: /s/ Gregg Ostrander
---------------------------------
Its: President
----------------------
/s/ Arthur J. Papetti
-------------------------------------
Executive
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<PAGE> 1
EXHIBIT D
SHAREHOLDER AGREEMENT
This Agreement dated as of February 26, 1997 by and between Michael
Foods, Inc., a Delaware corporation ("Michael"); the Shareholders of Michael
listed on Schedule I (individually "Shareholder" and collectively
"Shareholders"); the other former shareholders and partners of Papetti's
Hygrade Egg Products, Inc. ("Papetti's Hygrade") and the Acquired Entities
identified in the Reorganization Agreement described below and listed on
Schedule I (the "Sellers") and the Representative of the Shareholders and
Sellers;
WHEREAS, Michael is a publicly-held corporation whose common stock is traded
on the NASDAQ National Market System ("NASDAQ-NMS"); and
WHEREAS, under date of June 29, 1996 Michael, M.G. Waldbaum
Company, a Nebraska corporation ("Acquisition"), Papetti's Hygrade and the
Acquired Entities defined therein entered into an Agreement and Plan of
Reorganization (the "Reorganization Agreement") whereby Michael was to acquire
Papetti's Hygrade by merger (the "Papetti's Hygrade Reorganization") and
Acquisition was to acquire each of the Acquired Entities by mergers (the
"Mergers") or through asset purchases and liability assumption (the "Asset
Acquisitions"), as the case may be (the "Reorganization"); and
WHEREAS, as a condition to the completion of Papetti's Hygrade
Reorganization, the Mergers and the Asset Acquisitions, Michael required that
the Shareholders and Sellers enter into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the terms and
conditions hereinafter set forth, the parties agree as follows:
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<PAGE> 2
SECTION 1. CERTAIN DEFINITIONS.
Capitalized terms not otherwise defined herein shall have the meaning
ascribed to them in the Reorganization Agreement. As used in this Agreement,
the following terms shall have the following meanings:
(a) "Affiliate" shall mean, as applied to a specified Person, any other
Person that directly or indirectly through one or more intermediaries,
Controls, or is Controlled by, or is under common Control with, such specified
Person.
(b) "Associate" when used to indicate a relationship with any Person, shall
mean: (i) any corporation or organization of which such Person is an officer or
partner or is, directly or indirectly, the beneficial owner of 10 percent or
more of any class of equity securities; (ii) any trust or other estate in which
such Person has a substantial beneficial interest or as to which such Person
serves as trustee or in a similar fiduciary capacity; and (iii) any relative or
spouse of such person, or any relative of such spouse, who has the same primary
residence as such Person or who is a director or officer of the Person or any
of its parents or subsidiaries.
(c) "Beneficially Own" or "Beneficial Ownership" with respect to any
securities shall mean having "Beneficial Ownership" of such securities in
accordance with the provisions of Rule 13d-3 under the Exchange Act, except
that a Person shall be deemed to be the Beneficial Owner of a security if that
Person has the right to acquire Beneficial Ownership of such security without
giving effect to the 60-day provision provided under such rule. Without
duplicative counting of the same securities by the same holder, securities
Beneficially Owned by a Person shall include securities Beneficially Owned by
all other Persons with whom such Person would constitute a Group.
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<PAGE> 3
(d) "Business Day" shall mean any day that is not a Saturday, a Sunday, a
bank holiday or any other day on which commercial banking institutions in
Minneapolis, Minnesota, are not generally open for business.
(e) "Control" shall mean, with respect to a specified Person, the position
or the possession, directly or indirectly, of the power to direct, cause the
direction of, or substantially influence the management and policies of such
Person, whether through the ownership of voting securities, partnership
interests or other ownership interests, or by contract or otherwise; provided
that, in any event, any Person who owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of directors or
other governing body of a corporation or 10% or more of the partnership
interests or other ownership interests of any other Person shall be deemed to
control such corporation or other Person.
(f) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
SEC thereunder, all as the same shall be in effect from time to time.
(g) "Equity Securities" shall mean: (i) any and all shares of capital stock
of Michael; and (ii) any other securities, warrants, options or rights of any
nature (whether or not issued by Michael) that are convertible into any,
exchangeable for, or exercisable for the purchase of, or otherwise give the
holder thereof any rights in respect of, shares of capital stock of Michael.
(h) "Governmental Authority" shall mean any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
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<PAGE> 4
(i) "Group" shall mean two or more Persons acting together for the purpose
of acquiring, holding, voting or disposing of Equity Securities, which Persons
would be required to file a statement on Schedule 13D or 13G with the SEC as a
"person" within the meaning of Section 13(d)(3) of the Exchange Act if such
Persons Beneficially Owned sufficient securities to require such a filing under
the Exchange Act.
(j) "Holder" shall mean any Shareholder that owns of record Registrable
Securities.
(k) "Person" shall mean an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint venture or
other entity of whatever nature.
(l) "Registrable Securities" means common stock of Michael acquired by a
Shareholder in the Papetti's Hygrade Reorganization and any securities of
Michael issued in respect thereof as a result of a stock dividend, stock split,
recapitalization, merger or other similar transaction with respect to such
common stock so acquired.
(m) "Requirement of Law" shall mean, as to any specified Person, any law,
treaty, rule or regulation of any Governmental Authority applicable to such
Person or any of its property or to which such Person or any of its property is
subject.
(n) "Schedule 13G Person" shall mean any Person or Group eligible to file a
statement on Schedule 13G with respect to Equity Securities pursuant to Rule
13d-1(b) under the Exchange Act.
(o) "SEC" shall mean the Securities and Exchange Commission or its
successor.
(p) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in
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<PAGE> 5
effect from time to time, and a reference to a particular section thereof shall
be deemed to include a reference to the comparable section, if any, of any
similar federal statute.
(q) The "Total Voting Power" at any measurement date shall mean the total
number of votes which could have been cast in an election of directors of
Michael had a meeting of the shareholders of Michael been duly held based upon
a record date as of the measurement date if all Equity Securities then
outstanding and entitled to vote at such meeting were present and voted to the
fullest extent possible at such meeting.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF MICHAEL
Michael represents and warrants to the Shareholders and Sellers that:
(a) Michael has been duly incorporated and is validly existing and in good
standing as a corporation under the laws of the State of Delaware, with
corporate power to transact in all material respects its business as now
conducted by it, to enter into this Agreement, and to perform its obligations
hereunder.
(b) This Agreement has been duly authorized, executed and delivered by
Michael and constitutes a legal, valid and binding agreement of Michael,
enforceable against Michael in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors generally,
by general equity principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by an implied covenant of
good faith and fair dealing.
(c) Except as otherwise contemplated in this Agreement, no consent, approval
or authorization of, or filing, registration, qualification, declaration or
designation with, any Governmental Authority is required on the part of Michael
as a condition to the valid execution,
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<PAGE> 6
delivery and performance of this Agreement by Michael, except where the absence
of any such consent, approval or authorization of, or the failure to make any
such filing, registration, qualification, declaration or designation with any
Governmental Authority would not have a material adverse effect on Michael and
its subsidiaries taken as a whole or materially impair Michael's ability to
perform its obligations hereunder.
(d) The execution, delivery and performance by Michael of this Agreement
will not: (i) conflict with the Articles of Incorporation or Bylaws of Michael,
as amended; (ii) conflict with, result in a violation or breach of, or
constitute (with or without notice or lapse of time or both) a default (or give
rise to any third-party right of termination, cancellation, material
modification or acceleration) under, any of the terms, conditions or provisions
of any trust agreement, voting agreement, stockholders agreement, voting trust,
note, bond, mortgage, indenture, license, contract, commitment, arrangement,
understanding, agreement or other instrument or obligation of any kind
affecting Michael or to which Michael is a party or by which any of its
properties or assets are or may be bound; (iii) violate any Requirement of Law
applicable to Michael; or (iv) violate any order, injunction, judgment or
decree of any court or other Governmental Authority or any determination of an
arbitrator applicable to Michael or any of Michael's properties or assets,
except where such conflict, breach or other default under clause (ii) or any
such violation under clauses (iii) or (iv) would not have a material adverse
effect on Michael and its subsidiaries taken as a whole or materially impair
Michael's ability to perform its obligations hereunder.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS AND SELLERS
Each Shareholder and Seller jointly and severally represents and warrants to
Michael that:
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(a) Each Shareholder and Seller has the legal capacity, power and authority
to enter into and perform all of such Shareholder's and Seller's obligations
under this Agreement. This Agreement has been duly executed and delivered by
each Shareholder and Seller and constitutes a legal, valid and binding
agreement of each Shareholder and Seller, enforceable against each Shareholder
and Seller in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors generally, by general equity principles
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and fair dealing. If
any Shareholder is married and such Shareholder's Equity Securities constitute
community property, this Agreement has been duly authorized, executed and
delivered by, and constitutes a legal, valid and binding agreement of such
Shareholder's spouse, enforceable against such Person in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors generally, by general equity principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or by an
implied covenant of good faith and fair dealing.
(b) No consent, approval or authorization of, or filing, registration,
qualification, declaration or designation with, any Governmental Authority is
required on the part of any Shareholder or Seller as a condition to the valid
execution, delivery and performance of this Agreement by any Shareholder.
(c) The execution, delivery and performance by each Shareholder and Seller
of this Agreement will not: (i) conflict with, result in a violation or breach
of, or constitute (with or
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without notice or lapse of time or both) a default (or give rise to any
third-party right of termination, cancellation, material modification or
acceleration) under, any of the terms, conditions or provisions of any trust
agreement, voting agreement, stockholders agreement, voting trust, note, bond,
mortgage, indenture, license, contract, commitment, arrangement, understanding,
agreement or other instrument or obligation of any kind affecting such
Shareholder or Seller or to which such Shareholder or Seller is a party or by
which any of such Shareholder's or Seller's properties or assets are or may be
bound; (ii) violate any Requirement of Law applicable to such Shareholder or
Seller; or (iii) violate any order, injunction, judgment or decree of any court
or other Governmental Authority or any determination of an arbitrator
applicable to such Shareholder or Seller or any of such Shareholder's or
Seller's properties or assets.
SECTION 4. COVENANTS OF THE SHAREHOLDERS AND SELLERS
(a) Acquisition of Equity Securities. For a period of three years from the
date of this Agreement or until the time that the Shareholders and Sellers as a
Group Beneficially Own Equity Securities representing in the aggregate less
than 5% of the Total Voting Power, whichever is earlier, no Shareholder or
Seller shall, directly or indirectly, acquire, offer to acquire, agree to
acquire, become the Beneficial Owner of, or obtain any rights in respect of,
any Equity Securities, by purchase or otherwise, or take any action in
furtherance thereof, if the effect of such acquisition, agreement or other
action would be (either immediately or upon consummation of any such
acquisition, agreement or other action, or expiration of any period of time
provided in any such acquisition, agreement or other action) to increase the
aggregate voting power in the election of directors of all Equity Securities
then Beneficially Owned by all
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<PAGE> 9
Shareholders and Sellers (such aggregate voting power, (the "Aggregate Voting
Power") to 20% or more of the Total Voting Power (such maximum percentage
limitation, the "Maximum Percentage"). Notwithstanding anything to the
contrary in this Section 4(a), the Maximum Percentage may be exceeded if, and
solely to the extent that, the Aggregate Voting Power is or will be increased
solely as a result of a repurchase of any Voting Securities by Michael or any
of its subsidiaries or any other change in Michael's capitalization or by
reason of the issuance of stock options by Michael to any of the Shareholders
pursuant to any stock option plan maintained by Michael.
(b) No Voting Trusts. For a period of three years from the date of this
Agreement or unitl the time that the Shareholders and Sellers as a Group
Beneficially Own Equity Securities representing in the aggregate less than 5%
of the Total Voting Power, whichever is earlier, no Shareholder or Seller shall
deposit any Equity Securities in a voting trust or subject any Equity
Securities to any arrangement or agreement with respect to the voting of such
Equity Securities except for a voting trust or other arrangement among the
Shareholders or Sellers or any of their Affiliates.
(c) No Proxy Solicitation Adverse to Board Recommendation. For a period of
three years from the date of this Agreement or until the time that the
Shareholders and Sellers as a Group Beneficially Own Equity Securities
representing in the aggregate less than 5% of the Total Voting Power, whichever
is earlier, no Shareholder or Seller shall solicit proxies or become a
"participant" in a "solicitation" (as such terms are defined in Regulation 14A
under the Exchange Act) in opposition to the recommendation of the Board of
Directors of Michael with respect to any matter.
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<PAGE> 10
(d) No Formation of Group. For a period of three years from the date of
this Agreement or until the time that the Shareholders and Sellers as a Group
Beneficially Own Equity Securities representing in the aggregate less than 5%
of the Total Voting Power, whichever is earlier, no Shareholder or Seller shall
join a partnership, limited partnership, syndicate or other Group, or otherwise
act in concert with any other Person, for the purpose of acquiring, holding,
voting or disposing of Equity Securities, or otherwise become a "Person" within
the meaning of Section 13(d)(3) of the Exchange Act (in each case other than
solely with other Shareholders or Sellers or their Affiliates or with such
Shareholders', Sellers' or Affiliates' representatives for estate planning
purposes).
(e) Vote For Restructuring. Each Shareholder will vote all of his Equity
Securities in favor of the Restructuring as described in the Reorganization
Agreement at any meeting of the stockholders of Michael called for such purpose
or at any adjournment thereof.
SECTION 5. ADDITIONAL COVENANTS OF SHAREHOLDERS
(a) Two Year Restrictions on Disposition. For a period of two years from
the date of this Agreement, the Shareholders, individually or collectively,
shall not:
(i) sell or offer to sell Equity Securities in excess of 45,000
shares, as adjusted for any share dividend, stock split or other
recapitalization of Equity Securities, during any period of three
consecutive months;
(ii) pledge, hypothecate or encumber any Equity Securities Beneficially
Owned by such Shareholder, except to a financial institution pursuant to a
bona fide pledge, hypothecation or encumbrance to secure a bona fide loan for
money borrowed to one or more Shareholders, provided that, upon foreclosure
on such Equity Securities, such
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financial institution has executed and delivered to Michael an agreement
whereby such financial institution agrees to be legally bound by the terms of
this Agreement as a "Shareholder" as if such financial institution were an
original signatory hereto; or
(iii) take or cause to be taken any action or actions which will
disqualify the Papetti's Hygrade Reorganization as contemplated in the
Reorganization Agreement, as a reorganization within the meaning of Section
368(a) of the Code.
(b) Three Year Restrictions on Disposition. For a period of three
years from the date of this Agreement or until the time that the
Shareholders and Sellers as a Group Beneficially Own Equity Securities
representing in the aggregate less than 5% of the Total Voting Power, whichever
is earlier, the Shareholders, individually or collectively, shall not:
(i) sell or offer to sell Equity Securities having five percent (5%) or
more of the Total Voting Power of Michael to any Person or Group in any single
transaction or series of transactions without providing Michael the first
right to buy such shares as provided in Section 5(c) below;
(ii) sell or offer to sell Equity Securities to any Person or Group
which the Shareholders have actual knowledge at time of the sale to
Beneficially Own five percent (5%) or more of the total Voting Power of
Michael or, to any Person or Group who, by virtue of the sale or offer, would
Beneficially Own, five percent (5%) or more of the Total Voting Power of
Michael, without in either case, providing to Michael a first right to buy
such shares as provided in Section 5(c) below.
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(c) Michael's First Right to Purchase. Upon the occurrence of any event
described in Section 5(b)(i) or (ii), the Shareholder or Shareholders proposing
to sell or offer Equity Securities shall provide written notice thereof to
Michael and shall offer to Michael the right to purchase such Equity Securities.
The notice shall state the number of shares offered and the price per share and
any other conditions of the proposed sale or offer and shall include a copy of
any written document setting forth the terms of the proposed sale or offer
between the Shareholder or Shareholders and the purchaser or offeree. Michael
shall have * from its receipt of such notice within which to purchase the Equity
Securities so offered. In the event that Michael does not complete the purchase
within such * period, the Shareholder or Shareholders sending the notice shall
be permitted for a period of * thereafter to sell Equity Securities equal in
number to the shares offered in such notice free of any restrictions under this
Agreement at a price not less than the purchase price per share set forth in
such notice and under terms and conditions no more favorable to the purchaser
than the terms and conditions offered to Michael in such notice.
(d) Tender Offers. The restrictions set forth in Section 5(b) and the first
right to buy set forth in Section 5(c) shall not apply if a tender offer is
made for all or substantially all of the outstanding shares of Michael Common
Stock and the Board of Directors of Michael does not, within seven days of the
commencement of such tender offer, announce its opposition to the tender offer.
Notwithstanding the foregoing, the following additional terms and conditions
shall apply in the event of the commencement of a tender offer:
(i) In the event that one or more of the Shareholders has given
notice to Michael pursuant to Section 5(c) of this Agreement and, prior to
the exercise
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* The confidential portion has been so omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24(b)2 of the Securities Act of 1934.
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<PAGE> 13
of Michael's right to buy, a tender offer is commenced for all or
substantially all of the outstanding shares of Michael Common Stock, Michael
shall, within 20 days of the date that such Shareholder or Shareholders have
given such notice, have the right to acquire the Equity Securities subject to
the notice at the higher of the price offered by the Shareholder or
Shareholders in the notice or the tender offer price, regardless of whether
Michael's Board of Directors has announced its opposition to such tender
offer.
(ii) In the event that one or more of the Shareholders has given
notice to Michael pursuant to Section 5(c) of this Agreement and, subsequent
to the exercise of Michael's right to buy, either a tender offer is commenced
for all or substantially all of the outstanding shares of Michael Common Stock
or the Board of Directors rescinds its earlier opposition to such tender
offer, Michael shall have the option of (A) rescinding its agreement to
purchase the shares from the Shareholder or Shareholders within two days after
the commencement of such tender offer or the announcement by the Board of the
rescission of opposition to the tender offer, or (B) acquiring such shares at
the higher of the price offered by the Shareholder or Shareholders in the
notice or the tender office price.
SECTION 6. LEGEND.
All certificates representing shares of common stock of Michael which are
subject to this Agreement shall bear the following legend:
"The shares represented by this certificate are subject to certain
restrictions on the transfer, sale or other disposition of the shares pursuant
to an agreement dated February 26, 1997 between the issuer and the
registered
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<PAGE> 14
owner hereof, a copy of which may be obtained from the secretary of the
corporation."
Any shareholder receiving common stock of Michael which is subject to this
Agreement shall promptly deliver the certificate for such shares to the
secretary of Michael who shall place the foregoing legend on the certificate.
The Secretary of Michael shall promptly return the legended certificates to the
Shareholders.
SECTION 7. - DIRECTORS.
For a period of three (3) years following the date of this Agreement, the
Board of Directors of Michael shall include representatives of the Shareholders
as provided below. If the Shareholders collectively own * or more of the
outstanding common stock of Michael, they shall be entitled to nominate two (2)
directors. If the Shareholders own less than * of the outstanding common
stock of Michael, they shall be entitled to nominate one (1) director. Within
thirty (30) days following the end of each calendar year the Representative (as
defined in the Reorganization Agreement) shall give notice to Michael of the
nominees of the Shareholders.
SECTION 8. REGISTRATION RIGHTS.
(a) Piggyback Rights. If at any time prior to the third anniversary date of
this Agreement, Michael proposes to register Equity Securities under the
Securities Act, in connection with a public offering of Equity Securities for
its own account solely for cash (other than a registration on Form S-4 or S-8
or any successor form thereof) in a manner that would permit registration of
all or a portion of the Registrable Securities owned by the Shareholders,
Michael will give prompt notice thereof to the Shareholders. Upon written
notice of any Shareholder to Michael received within fifteen (15) days after
delivery of notice of the proposed
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* The confidential portion has been so omitted and filed separately with
the Securities and Exchange Commission pursuant to a request for confidential
treatment under Rule 24(b)-2 of the Securities Act of 1934.
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<PAGE> 15
offering by Michael, Michael will use its best efforts to effect the
registration of the Registrable Securities covered by such notice under the
Securities Act; provided, however, that Michael shall have the right to abandon
the registration in its entirety at any time and shall not be required to
register Registrable Securities if the underwriters in any underwritten
offering reasonably object to the inclusion of such shares in the registration,
and provided further, that in any underwritten offering, the Shareholders
participating in the registration agree to sell their Registrable Securities to
the underwriters on the same terms and conditions as apply to Michael, with
such differences as customarily apply in combined primary and secondary
offerings of Equity Securities.
(b). Requested Registration. If, at any time prior to the third
anniversary date of this Agreement, Michael shall receive a written request
from one or more Shareholders that Michael effect the registration under the
Securities Act of all or a part of such Shareholders' Registrable Securities,
then Michael will, within ten (10) days after receipt thereof, give notice to
all other Shareholders of the receipt of such request and each such holder may
elect by written notice received by Michael within ten (10) days from the date
of the notice by Michael to have all or part of his Registrable Securities
included in such registration. Upon receipt of such notice, Michael will, as
soon as practicable, use reasonable efforts to effect the registration on Form
S-3 and pursuant to Rule 415 (the "Resale Registration Statement") under the
Securities Act of all Registrable Securities which it has been so requested to
register covering resales from time to time of such Registrable Securities and
Michael shall use its reasonable best efforts to: (i) cause the Resale
Registration Statement to be declared effective by the SEC as soon as
practicable thereafter; and (ii) maintain the effectiveness of the Resale
Registration Statement
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<PAGE> 16
continuously until the earliest of: (A) the date on which the Shareholders no
longer hold Registrable Securities registered under the Resale Registration
Statement or (B) the third anniversary of this Agreement or such lesser time as
may be permitted under Rule 144 under the Securities Act to enable the
Shareholders to sell the Registrable Securities under the Securities Act
without such registration. Michael: (i) shall not be obligated to cause any
special audit to be undertaken in connection with any such registration; (ii)
shall be entitled to postpone for a reasonable period of time, but not in
excess of ninety (90) days, the filing of any registration statement otherwise
required to be prepared pursuant to this section if Michael is, at such time,
conducting or about to conduct an underwritten public offering of equity
securities (or securities convertible into equity securities) and is advised in
writing by its managing underwriter that such underwritten public offer would,
in its opinion, be adversely effected by the registration so requested; and
(iii) shall be entitled to postpone such requested registration for up to 90
days if Michael determines, in view of the advisability of deferring public
disclosure of material corporate developments or other information, that such
registration and the disclosure required to be made pursuant thereto would not
be in the best interest of Michael at such time.
(c) Effective Registration. A registration pursuant to this
Section 9 will not be deemed to have been effected unless the Registration
Statement has been declared effective by the SEC; provided, however, that if
after such Registration Statement has been declared effective, the offering of
Registrable Securities pursuant to such Registration Statement is interfered
with by any stop order, injunction or other order or requirement of the SEC or
any other Governmental Authority or court, such Registration Statement will be
deemed not to have
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<PAGE> 17
been effected during the period of such interference until the offering of
Registrable Securities pursuant to such Registration Statement may legally
resume.
(d) Registration Expenses. Michael shall bear all expenses
incurred in connection with the registration of the Registrable Securities
pursuant to this Section 9. Such expenses shall include, without limitation,
all printing, legal and accounting expenses incurred by Michael and all
registration and filing fees imposed by the SEC, any state securities
commission or the NASDAQ-NMS. Each Shareholder shall be responsible for any
brokerage fees or commissions and any taxes of any kind (including, without
limitation, transfer taxes) with respect to any disposition, sale or transfer
of Registrable Securities and for any legal, accounting and other expenses
incurred by such Shareholder.
(e) Selection of Underwriter and Investment Manager. If a
requested registration pursuant to this Section 9 involves an underwritten
offering, Michael shall have the exclusive right to select an investment banker
or bankers and managers to administer the offering.
(f) Registration Procedures. If and whenever Michael is required
to use its reasonable efforts to cause the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, Michael
will, as expeditiously as reasonably possible: (i) prepare and file with the
SEC such amendments and supplements to such Resale Registration Statement and
the prospectus used in connection therewith and shall timely file with the SEC
all required filings under the Exchange Act as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
Registrable Securities covered by such Resale Registration Statement and to
keep the Resale Registration Statement effective, but only while it shall be
required under the provisions of this Agreement to cause the Registration
Statement
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<PAGE> 18
to remain current; (ii) furnish to each Shareholder seeking registration
hereunder such number of copies of the prospectus included in such Resale
Registration Statement (including each preliminary prospectus and summary
prospectus), and such other documents as each such Shareholder may reasonably
request in order to facilitate the disposition of the Registrable Securities by
such Shareholder but only while it shall be required under the provisions
hereof to cause the Registration Statement to remain current; (iii) use its
reasonable efforts to register or qualify such Registrable Securities covered
by such Resale Registration Statement under such other securities or blue sky
laws of such jurisdictions as the Shareholders shall reasonably request, except
that Michael shall not, for any purpose, be required to qualify generally to do
business as a foreign corporation in any jurisdiction where, but for the
requirements of this clause, it would not be obligated to be so qualified, to
subject itself to taxation in any such jurisdiction, or consent to general
service of process in any such jurisdiction; (iv) use its reasonable efforts
to list the Registrable Securities on the NASDAQ-NMS, if such Registrable
Securities are not already so listed.
(g) Post-Registration Notices. Michael shall promptly notify the
Shareholders: (i) when a prospectus or any prospectus supplement or
post-effective amendment (including any required filings under the Exchange
Act) has been filed and, with respect to the Resale Registration Statement or
any post-effective amendment, when the same has become effective; (ii) of any
request by the SEC or any state securities authority for amendments or
supplements to the Resale Registration Statement and prospectus or for
additional information after the Resale Registration Statement has become
effective; (iii) of the issuance by the SEC of any stop order suspending the
effectiveness of the Resale Registration Statement; (iv) of the issuance by any
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<PAGE> 19
state securities commission or other regulatory authority of any order
suspending the qualification or exemption from qualification of any of the
Registrable Securities under such state's securities or "blue sky" laws; and
(v) of the happening of any event which makes any statement made in the Resale
Registration Statement or related prospectus untrue or which requires the
making of changes in such Resale Registration Statement or prospectus so that
they will not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As soon as practicable, following the expiration of the
Suspension Period (as defined below), Michael shall prepare and file with the
SEC and furnish a supplement or amendment to such prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Securities, such
prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Upon receipt of any notice (a "Suspension Notice") by the Shareholders
from Michael of the happening of any event of the kind described in this
Section 9(g), the Shareholders shall forthwith discontinue disposition of the
Registrable Securities pursuant to the Resale Registration Statement until the
Shareholders' receipt of the copies of the supplemental or amended prospectus
contemplated by this Section 9(g) or until the Shareholders have been advised
in writing (the "Advice") by Michael that the use of the prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in the prospectus, and, if so directed by
Michael, will, or will request any broker or dealer acting as the Shareholders'
agent(s) to deliver to Michael (at Michael's expense) all copies, other
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<PAGE> 20
than permanent file copies then in the Shareholders' or their brokers' or
dealers' possession of the prospectus covering such Registrable Securities
current at the time of receipt of such notice; provided, however, that in no
event shall the period from the date on which the Shareholders receive a
Suspension Notice to the date which the Shareholders receive either the Advice
or copies of the supplemental or amended prospectus contemplated in this
Section 9(g) (the "Suspension Period") exceed 60 calendar days.
(h) Information. Michael may require each selling Shareholder to
furnish it with such information regarding such selling Shareholder and
pertinent to the disclosure requirements relating to the registration and the
distribution of such securities as Michael may from time to time reasonably
request in writing.
(i) Underwriting Agreement. The selling Shareholders shall
execute and deliver an underwriting agreement in customary form in connection
with any underwritten offering made pursuant to a registration hereunder.
SECTION 9 INDEMNIFICATION AND CONTRIBUTION
(a) Indemnification by Michael. Michael agrees to indemnify and
hold harmless to the full extent permitted by law, each Shareholder from and
against all losses, claims, damages, liabilities and expenses (including,
without limitation, reasonable legal fees and expenses incurred by shareholders
(collectively, the "Damages") to which the Shareholders may become subject
under the Securities Act or otherwise, insofar as such Damages (or proceedings
in respect thereof) arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in the Resale Registration Statement (or
any supplement or amendment thereto, including filings under the Exchange Act)
pursuant to which Registrable Securities were
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<PAGE> 21
registered under the Securities Act, or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in light of the circumstances under which they were made, not
misleading, or caused by any untrue statement or alleged untrue statement of a
material fact contained in any prospectus (as amended or supplemented if
Michael shall have furnished any amendments or supplements thereto), or caused
by any omission or alleged omission to state therein a material fact necessary
to make the statements therein in light of the circumstances under which they
were made, not misleading, except insofar as such Damages arise out of or are
based upon any such untrue statement or omission based upon information
relating to the Shareholders furnished in writing to Michael by the
Shareholders specifically for use therein; provided, however, that Michael
shall not be liable to the Shareholders under this Section 10(a) to the extent
that any such Damages were caused by the fact that the Shareholders sold
Registrable Securities to a Person as to who it shall be established that there
was not sent or given, at or prior to written confirmation of such sale, a copy
of the prospectus as then amended or supplemented if, but only if: (i) Michael
has previously furnished copies of such amended or supplemented prospectus to
the Shareholders; and (ii) such Damages were caused by any untrue statement or
omission or alleged untrue statement or omission contained in the prospectus so
delivered which was corrected in such amended or supplemented prospectus.
(b) Indemnification by Shareholders. The Shareholders agree to
indemnify, jointly and severally, and hold harmless Michael, its stockholders,
directors, officers and each Person, if any, who controls Michael within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from Michael to
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<PAGE> 22
the Shareholders in Section 10(a) of this Agreement but only with reference to
information relating to the Shareholders furnished in writing to Michael by the
Shareholders specifically for use in the Resale Registration Statement (or any
amendment thereto) or any prospectus (or any amendment or supplement thereto);
provided, however, that the Shareholders shall not be obligated to provide such
indemnity to the extent that such Damages result from a failure of Michael to
promptly amend or take action to correct or supplement any such Resale
Registration Statement or prospectus on the basis of corrected or supplemental
information provided in writing by the Shareholders to Michael expressly for
such purpose. In no event shall the liability of the Shareholders hereunder be
greater in amount than the amount of the proceeds received by the Shareholders
upon the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Contribution. To the extent that the indemnification provided
for in Section 10(a) or (b) is unavailable to an indemnified party or
insufficient in respect of any Damages, then each indemnifying party under such
Section, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Damages in such proportion as is appropriate to reflect the relative
fault of Michael, on the one hand, and the Shareholders, on the other hand, in
connection with the statements or omissions that resulted in such Damages, as
well as any other relevant equitable considerations. The relative fault of
Michael, on the one hand, and the Shareholders, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by Michael or by the
Shareholders and the parties' relative intent,
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<PAGE> 23
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
If indemnification is available under Section 10(a) or (b), the
indemnifying parties shall indemnify each indemnified party to the full extent
provided in such sections without regard to the relative fault of said
indemnifying party or the indemnified party or any other equitable
considerations provided for in this Section 10(c). Michael and the
Shareholders agree that it would not be just or equitable if contribution
pursuant to this Section 10(c) were determined by pro rata allocation or by any
other method of allocation that does not take into account the equitable
considerations referred to in this section.
SECTION 10. GENERAL PROVISIONS
(a) Governing Law. This agreement shall be governed by and
interpreted and enforced in accordance with the laws of the State of Delaware
without giving effect to any conflicts of law provisions.
(b) Remedies. Michael, on the one hand, and the Shareholders and
Sellers, on the other, acknowledge and agree that the other would not have an
adequate remedy at law for money damages in the event that any of the covenants
or agreements in this Agreement of such party were not performed in accordance
with its terms, and it is therefore agreed that in addition to and without
limiting any other remedy or right such party may have, any party will have the
right to an injunction or other equitable relief (including specific
performance) in any court of competent jurisdiction, enjoining any such breach
and enforcing specifically the terms and provisions hereof. All rights, powers
and remedies provided under this Agreement or otherwise available in respect
hereof at law or in equity shall be cumulative and not alternative.
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<PAGE> 24
(c) Notices. All notices, demands and other communications which
may or are required to be given hereunder or with respect hereto shall be given
by the Representative on behalf of the Shareholders and Sellers and by Michael
on behalf of itself. All such notices, demands and other communications shall
be in writing, shall be given either by personal delivery or by nationally
recognized overnight courier or by telecopier, and shall be deemed to have been
given or made when personally delivered, one business day after delivered to a
nationally recognized overnight courier, postage prepaid, and receipt
requested, or one business day after transmission by facsimile, receipt
confirmed, addressed as follows:
(i) IF TO MICHAEL:
Jeffrey M. Shapiro
Executive Vice President
Michael Foods, Inc.
5353 Wayzata Boulevard
324 Park National Bank Building
Minneapolis, Minnesota 55416
Telephone: 612-546-1500
Facsimile No.: 612-546-3711
with a copy to:
Albert A. Woodward
Maun & Simon, PLC
2000 Midwest Plaza Building West
801 Nicollet Mall
Minneapolis, Minnesota 55402
Telephone: 612-338-1113
Facsimile No.: 612-338-2271
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<PAGE> 25
(ii) IF TO THE SHAREHOLDERS OR SELLERS:
Arthur N. Papetti
c/o Papetti's Hygrade Egg Products, Inc.
100 Trumbull Street
Elizabeth, New Jersey 07206
Telephone: 908-351-0477
Facsimile No.: 908-354-0136
As Representative
with a copy to:
Martin B. O'Connor, II Robert M. LaRose
O'Connor, Morss & O'Connor Thompson Coburn
Liberty Hall Center One Mercantile Center
1085 Morris Avenue Suite 3400
Union, New Jersey 07083 St. Louis, Missouri 63101
Telephone: 908-354-5660 Telephone: 314-552-6000
Facsimile No.: 908-354-5786 Facsimile No.: 314-552-7000
or to such other address as any such person or entity may from time to time
designate by notice to the others.
(d) Severability. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void, or unenforceable, the remainder of the terms, provisions, covenants and
restrictions shall remain in full force and effect and shall in no way be
affected, impaired or invalidated. The parties agree that they will use their
best efforts at all times to support and defend this Agreement.
(e) Amendments. This Agreement may be amended only by an
agreement in writing signed by all of the parties hereto.
(f) Descriptive Headings. Descriptive headings are for
convenience only and shall not control or affect the meaning or construction of
any provision of this Agreement.
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<PAGE> 26
(g) Counterparts. This Agreement shall become binding when one or
more counterparts hereof, individually or taken together, bears the signatures
of each of the parties hereto. This Agreement may be executed in any number of
counterparts, each of which shall be an original as against the party whose
signature appears thereon, or on whose behalf such counterpart is executed, but
all of which when taken together shall be one and the same statement.
(h) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto, provided that a Shareholder may not assign any of his
rights or obligations hereunder to any person without the prior written consent
of Michael. Notwithstanding the foregoing, the consent of Michael shall not be
required in connection with the assignment of this Agreement to the estate of a
Shareholder.
IN WITNESS WHEREOF, the parties hereto intending to be legally bound
have duly executed this Agreement, all as of the day and year first above
written.
MICHAEL FOODS, INC.
By: /s/ Gregg Ostrander
-------------------------
Its: President
-----------------------
/s/ Arthur N. Papetti
----------------------------------
Arthur N. Papetti
As Representative of and
attorney-in-fact for the Shareholders
and Sellers listed on Schedule I
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<PAGE> 27
SCHEDULE I
LIST OF SHAREHOLDERS AND SELLERS
A. SHAREHOLDERS
Stephen Papetti
Alfred Papetti
Arthur J. Papetti
B. SELLERS
Arthur N. Papetti
Anthony Papetti
The Alfred Papetti S Corporation Stock Trust
The Stephen Papetti S Corporation Stock Trust
The Tina Marie Noll S Corporation Stock Trust
The Arthur J. Papetti S Corporation Stock Trust
The Mary Barbara Papetti S Corporation Stock Trust
Declaration of Irrevocable Living Trust by Anthony Papetti FBO Stephen
Papetti U/D 2/1/95
Declaration of Irrevocable Living Trust by Anthony Papetti FBO Alfred
Papetti U/D 2/1/95
Declaration of Irrevocable Living Trust by Arthur N. Papetti FBO
Arthur J. Papetti U/D 12/1/93
Declaration of Irrevocable Living Trust by Arthur N. Papetti FBO Tina
Marie Papetti-Noll U/D 12/1/93
Declaration of Irrevocable Living Trust by Arthur N. Papetti FBO Mary
Barbara Papetti U/D 12/1/93
Arthur J. Papetti Family Limited Partnership
Stephen Papetti Family Limited Partnership
Tina Marie Noll Family Limited Partnership
Alfred Papetti Family Trust
Stephen Papetti Family Trust
Arthur J. Papetti Family Trust
Tina Marie Noll Family Trust
1995 Irrevocable Living GSTE Trust by Barbara Papetti FBO Arthur J.
Papetti U/D 8/10/95
1995 Irrevocable Living GSTE Trust by Lillian Papetti FBO Alfred
Papetti U/D 8/10/95
1995 Irrevocable Living GSTE Trust by Lillian Papetti FBO Stephen
Papetti U/D 8/10/95
1995 Irrevocable Living Trust by Tina Marie Noll FBO Tina Marie Noll
U/D 8/10/95 Mary Barbara Papetti
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