Document:

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                                                                    Exhibit 10.3

                             M-FOODS HOLDINGS, INC.

                             2001 STOCK OPTION PLAN

                  SECTION 1. PURPOSE. The purposes of the M-Foods Holdings, Inc.
2001 Stock Option Plan (the "Plan") are to promote the interests of M-Foods
Holdings, Inc. and its direct and indirect stockholders by (i) attracting and
retaining exceptional officers and key employees to the Company and its
Subsidiaries and (ii) enabling such individuals to participate in the long-term
growth and financial success of the Company and its Subsidiaries. The Plan is a
compensatory benefit plan within the meaning of Rule 701 of the Securities Act
and, unless and until the Common Stock (as defined herein) is publicly traded,
the issuance of options to purchase Common Stock pursuant to the Plan and the
issuance of Common Stock pursuant to such options is intended to qualify for the
exemption from registration under the Securities Act provided by Rule 701.
Grants of "nonqualified stock options" or "incentive stock options" may be made
under the Plan.

                  SECTION 2. DEFINITIONS. As used in the Plan, the following
terms shall have the meanings set forth below:

                  "Affiliate" shall mean any entity that, directly or
         indirectly, is controlled by, controls or is under common control with,
         the Company.

                  "Award Agreement" shall mean any written agreement, contract,
         or other instrument or document evidencing any Option, which may, but
         need not, be executed or acknowledged by a Participant.

                  "Board" shall mean the Board of Directors of the Company.

                  "Cause" shall have the meaning set forth in a Participant's
         Management Stock Purchase and Unit Subscription Agreement. If the
         Participant has not entered into a Management Stock Purchase and Unit
         Subscription Agreement, "Cause" shall have the same meaning ascribed to
         such term in any employment or severance agreement then in effect
         between Participant and the Company or one of its Subsidiaries or, if
         no such agreement containing a definition of "Cause" is then in effect,
         shall mean (i) the continued failure of the Participant to perform
         substantially the Participant's duties with the Company or one of its
         Affiliates (other than any such failure resulting from incapacity due
         to physical or mental illness), after a written demand for substantial
         performance is delivered to the Participant by the Board which
         specifically identifies the manner in which the Board believes that the
         Participant has not substantially performed the Participant's duties;
         (ii) the engaging by the Participant in illegal conduct or gross
         misconduct which is materially and demonstrably injurious to the
         Company or one of its Affiliates; or (iii) the indictment, prosecution
         or

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         conviction of a felony or guilty or nolo contendere plea by the
         Participant with respect thereto.

                  "Code" shall mean the Internal Revenue Code of 1986, as
         amended from time to time.

                  "Committee" shall mean the compensation committee of the
         Board, or such other committee of the Board as may be designated by the
         Board to administer the Plan.

                  "Common Stock" shall mean shares of common stock of the
         Company, par value $.01 per share.

                  "Company" shall mean M-Foods Holdings, Inc., a Delaware
         corporation, and (except to the extent the context requires otherwise)
         any subsidiary company of M-Foods Holdings, Inc. as such term is
         defined in Section 424(f) of the Code.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
         as amended.

                  "Fair Market Value" unless otherwise defined in Participant's
         Award Agreement, shall mean the fair value of the Common Stock as
         determined in good faith by the Committee (without taking into account
         the effect of any contemporaneous repurchase of Common Stock at less
         than Fair Market Value under a Company repurchase right).

                  "Investors" shall mean M-Foods Investors, LLC, a Delaware
         limited liability company.

                  "Management Stock Purchase and Unit Subscription Agreement"
         shall mean any Management Stock Purchase and Unit Subscription
         Agreement between Investors and the Participant, unless the Participant
         has not entered into a Management Stock Purchase and Unit Subscription
         Agreement.

                  "Marathon" shall mean Marathon Fund Limited Partnership IV, a
         Delaware limited partnership, and any of its Affiliates.

                  "Option" shall mean a right to purchase Option Shares from the
         Company that is granted under Section 6 of the Plan.

                  "Option Shares" shall mean (i) shares of Common Stock granted
         pursuant to the Plan, (ii) all adjusted shares of Common Stock received
         as a result of adjustments pursuant to Section 4(b) hereof or (iii) all
         shares of Common Stock issued with respect to the Common Stock referred
         to in clause (i) above by way of stock dividend or stock split or in
         connection with any conversion, merger, consolidation or
         recapitalization or other reorganization affecting the Common Stock.
         Option Shares shall continue to be Option Shares in the hands

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         of any holder other than the Participant (except for the Company), and
         each such transferee thereof shall succeed to the rights and
         obligations of a holder of Option Shares hereunder.

                  "Participant" shall mean any officer or key employee of the
         Company or its Subsidiaries who has been selected to participate in the
         Plan by the Committee or the Board. A Person shall remain a Participant
         under this Plan as long as such Person holds Options or Option Shares.

                  "Person" shall mean any individual, corporation, partnership,
         limited liability company, association, joint-stock company, trust,
         unincorporated organization, government or political subdivision
         thereof or other entity.

                  "Plan" shall mean this M-Foods Holdings, Inc. 2001 Stock
         Option Plan.

                  "Public Offering" means a sale of Common Stock to the public
         in an offering pursuant to an effective registration statement filed
         with the SEC pursuant to the Securities Act, as then in effect,
         provided that a Public Offering shall not include an offering made in
         connection with a business acquisition or combination or an employee
         benefit plan.

                  "Rule 16b-3" shall mean Rule 16b-3 as promulgated and
         interpreted by the SEC under the Exchange Act, or any successor rule or
         regulation thereto as in effect from time to time.

                  "Sale of the Company" means the consummation of a transaction,
         whether in a single transaction or in a series of related transactions
         that are consummated contemporaneously (or consummated pursuant to
         contemporaneous agreements), with any other Person or group of related
         Persons on an arm's-length basis other than an affiliate of Vestar,
         pursuant to which such party or parties (a) acquire (whether by merger,
         stock purchase, recapitalization, reorganization, redemption, issuance
         of capital stock or otherwise) more than 50% of the voting stock of the
         Company or (b) acquire assets constituting all or substantially all of
         the assets of the Company and its Subsidiaries on a consolidated basis;
         provided, however, that in no event shall a Sale of the Company be
         deemed to include any transaction effected for the purpose of (i)
         changing, directly or indirectly, the form of organization or the
         organizational structure of the Company or any of its Subsidiaries or
         (ii) contributing stock to entities controlled by the Company.

                  "SEC" shall mean the Securities and Exchange Commission or any
         successor thereto and shall include the staff thereof.

                  "Securities Act" shall mean the Securities Act of 1933, as
         amended.

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                  "Subsidiary" shall mean any entity that, directly or
         indirectly, is controlled by the Company.

                  "Vestar" shall mean Vestar Capital Partners IV, L.P. and any
         of its Affiliates.

                  SECTION 3. ADMINISTRATION. (a) The Plan shall be administered
by the Committee. Subject to the terms of the Plan, any Award Agreement and
applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and
authority to: (i) designate Participants; (ii) determine the type or types of
Options to be granted to a Participant; (iii) determine the number of Option
Shares to be covered by, or with respect to which payments, rights, or other
matters are to be calculated in connection with, Options; (iv) determine the
terms and conditions of any Option; (v) determine whether, to what extent, and
under what circumstances Options may be settled or exercised in cash, Option
Shares, other securities, other Options or other property, or canceled,
forfeited, or suspended and the method or methods by which Options may be
settled, exercised, canceled, forfeited, or suspended; (vi) determine whether,
to what extent, and under what circumstances cash, Option Shares, other
securities, other Options, other property, and other amounts payable with
respect to an Option shall be deferred either automatically or at the election
of the holder thereof or of the Committee; (vii) interpret, administer,
reconcile any inconsistency, correct any default and/or supply any omission in
the Plan and any instrument or agreement relating to, or Option made under, the
Plan; (iv) establish, amend, suspend or waive such rules and regulations and
appoint such agents as it shall deem appropriate for the proper administration
of the Plan; and (ix) make any other determination and take any other action
that the Committee deems necessary or desirable for the administration of the
Plan.

                  (b) Unless otherwise expressly provided in the Plan and
subject to the terms of any Award Agreement, all designations, determinations,
interpretations and other decisions under or with respect to the Plan or any
Option shall be within the sole discretion of the Committee, may be made at any
time and shall be final, conclusive and binding upon all Persons, including the
Company, any Affiliate, any Participant, any holder or beneficiary of any
Option, and any holder of Option Shares.

                  (c) No member of the Committee shall be liable for any action
or determination made in good faith with respect to the Plan or any Option
hereunder.

                  SECTION 4. SHARES AVAILABLE FOR OPTIONS. (a) Subject to
adjustment as provided in Section 4(b), the aggregate number of Option Shares
with respect to which Options may be granted under the Plan shall equal 25,000.
If, after the effective date of the Plan, any Option Shares covered by an Option
granted under the Plan, or to which such an Option relates, are forfeited, or if
an Option has expired, terminated or been cancelled for any reason whatsoever
(other than by reason of exercise or vesting), then the Option Shares covered by
such Option shall again be, or shall become, Option Shares with respect to which
Options may be granted hereunder.

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                  (b) ADJUSTMENTS. In the event that the Committee determines
that any Sale of the Company, dividend or other distribution (whether in the
form of cash, Option Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Option Shares or other securities of the Company, issuance of warrants (other
than to creditors) or other rights to purchase Option Shares or other securities
of the Company, or other similar corporate transaction or event affects the
Option Shares such that an adjustment is determined by the Committee in its
discretion to be necessary or appropriate in order to prevent dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it in good faith
deems equitable, adjust any or all of (i) the number of Option Shares or other
securities of the Company (or number and kind of other securities or property)
with respect to which Options may be granted, (ii) the number of Option Shares
or other securities of the Company (or number and kind of other securities or
property) subject to outstanding Options, and (iii) the exercise price with
respect to any Option.

                  (c) SUBSTITUTE OPTIONS. Options may be granted, in the
discretion of the Committee, under the Plan in assumption of, or in substitution
for, outstanding awards previously granted by a company acquired by the Company
or with which the Company combines ("Substitute Options"). The number of Option
Shares underlying any Substitute Options shall be counted against the aggregate
number of Option Shares available for Options under the Plan.

                  (d) SOURCES OF OPTION SHARES DELIVERABLE UNDER OPTIONS. Any
Option Shares delivered pursuant to an Option may consist, in whole or in part,
of authorized and unissued Common Stock or of treasury shares.

                  SECTION 5. ELIGIBILITY. Any officer or key employee of the
Company or any of its Subsidiaries shall be eligible to be designated a
Participant.

                  SECTION 6.  STOCK OPTIONS.

                  (a) GRANT. Subject to the provisions of this Plan, the
Committee shall have sole and complete authority to determine the Participants
to whom Options shall be granted, the number of Option Shares to be covered by
each Option, the exercise price therefor and the conditions and limitations
applicable to the exercise of the Option.

                  None of the Options granted under the Plan are intended to
meet the requirements of Section 422 of the Code or any successor provision
thereto unless such intent is stated explicitly in the Award Agreement;
PROVIDED, that the Committee shall have the authority to grant Options that are
intended to meet the requirements of Section 422 of the Code or any successor
provision thereto. Unless otherwise provided in the applicable Award Agreement,
all Options granted by the Committee shall expire ten years after the date such
Options are granted.

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                  (b) EXERCISE PRICE. The Committee shall establish the exercise
price at the time each Option is granted, which exercise price shall be set
forth in the applicable Award Agreement and shall be not less than the Fair
Market Value as of the date of grant.

                  (c) EXERCISE. Each Option shall be exercisable at such times
and subject to such terms and conditions as the Committee may, in its sole
discretion, specify in the applicable Award Agreement or, with the consent of
the Participant thereafter. The Committee may impose such conditions with
respect to the exercise of Options, including without limitation, any relating
to the application of federal or state securities laws, as it may deem necessary
or advisable.

                  (d) VESTING. Unless otherwise provided in the applicable Award
Agreement, all Options granted by the Committee shall vest over a five year
period, in five equal annual installments; PROVIDED that in no event shall such
Options vest over greater than a five year period. If, for any reason, a
Participant is terminated from employment by the Company or any of its
Subsidiaries, all unvested Options shall be cancelled. Unless otherwise provided
in the applicable Award Agreement, all vested Options not exercised within
ninety (90) days following termination shall be cancelled, unless such
Participant has been terminated by the Company for Cause, in which case such
vested Options shall immediately be cancelled upon termination. Unless otherwise
provided in the applicable Award Agreement, if the Participant's employment is
terminated other than by the Company for Cause, the Company will provide notice
to such Participant setting forth the Fair Market Value of the Common Stock
underlying such Options within ninety (90) days after such termination.

                  (e) PAYMENT. No Option Shares shall be delivered pursuant to
any exercise of an Option until payment in full of the aggregate exercise price
therefor is received by the Company. Such payment shall be made (i) in cash or
by bank check, (ii) after a Public Offering, through simultaneous sales of
underlying Option Shares by brokers, or (iii) in Option Shares or other shares
of Common Stock which have been owned by the Participant for at least six
months, such Option Shares and/or shares of Common Stock to be valued at their
Fair Market Value as of the date of exercise.

                  SECTION 7.  AMENDMENT AND TERMINATION.

                  (a) AMENDMENTS TO THE PLAN. The Board may amend, alter,
suspend, discontinue or terminate the Plan or any portion thereof at any time;
PROVIDED that any such amendment, alteration, suspension, discontinuance or
termination that would materially impair the rights of any Participant or any
holder or beneficiary of any Option theretofore granted shall not to that extent
be effective without the consent of the affected Participant, holder or
beneficiary.

                  (b) AMENDMENTS TO OPTIONS. The Committee may waive any
conditions or rights under, amend any terms of, or alter any Option theretofore
granted, prospectively or retroactively; PROVIDED that any such waiver,
amendment or alteration that would impair the rights of any

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Participant or any holder or beneficiary of any Option theretofore granted shall
not to that extent be effective without the consent of the affected Participant,
holder or beneficiary. In addition, with the consent of any Participant, holder
or beneficiary, the Company may suspend, discontinue, cancel or terminate any
Option theretofore granted, prospectively or retroactively

                  SECTION 8. SALE OF THE COMPANY. In the event of a Sale of the
Company, the Committee may (i) terminate without payment of any kind any Vested
Options that have an exercise price in excess of the Fair Market Value per share
of Common Stock (measured as of the date of such Sale of the Company), (ii)
terminate any Vested Options for a payment in such form and for such amount as
the Committee may determine over such Option's exercise price, multiplied by the
number of Options to be terminated, or (iii) immediately vest any unvested
Options, causing such Options to become immediately exercisable for, and,
subject to the provisions herein and in the applicable Award Agreement, relating
to, Option Shares.

                  SECTION 9.  GENERAL PROVISIONS.

                  (a) NONTRANSFERABILITY. Options may not be transferred other
than by will or the laws of descent and distribution and, during the lifetime of
the Participant, may be exercised only by such Participant (or his legal
guardian or legal representative). In the event of the death of a Participant,
exercise of Options granted hereunder shall be made only:

                            i.  by the executor or administrator of the estate
of the deceased Participant or the Person or Persons to whom the deceased
Participant's rights under the Option shall pass by will or the laws of descent
and distribution; and

                            ii. to the extent that the deceased Participant was
entitled thereto at the date of his death, unless otherwise provided by the
Committee in such Participant's Award Agreement.

                  (b) NO RIGHTS TO OPTIONS. No Participant or other Person shall
have any claim to be granted any Option, and there is no obligation for
uniformity of treatment of Participants, or holders or beneficiaries of Options.
The terms and conditions of Options and the Committee's determinations and
interpretations with respect thereto need not be the same with respect to each
Participant (whether or not such Participants are similarly situated).

                  (c) SHARE CERTIFICATES. All certificates for Option Shares or
other securities of the Company delivered under the Plan pursuant to any Option
or the exercise thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the rules, regulations,
and other requirements of the SEC, any stock exchange upon which such Option
Shares or other securities are then listed, any applicable federal or state
laws, and any applicable written agreements between Vestar, Marathon, and/or the
Company and the Participants and the

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Committee may cause a legend or legends to be put on any such certificates to
make appropriate reference to such restrictions.

                  (d)       WITHHOLDING.

                        (i)  The Company shall be entitled, if necessary or
desirable, to withhold from any Participant, from any amounts due and payable by
the Company to such Participant (or secure payment from such Participant in lieu
of withholding), the statutory minimum amount of any withholding or other tax
due from the Company with respect to any securities issuable under the Options,
and the Company may defer the exercise of the Options or the issuance of the
Option Shares thereunder unless indemnified to its satisfaction.

                        (ii) Notwithstanding any provision of this Plan to the
contrary, in connection with the transfer of an Option to a transferee pursuant
to Section 9(a) of the Plan, the grantee shall remain liable for any withholding
taxes required to be withheld upon the exercise of such Option by the
transferee.

                  (e) AWARD AGREEMENTS. Each Option hereunder shall be evidenced
by an Award Agreement, which shall be delivered to the Participant and shall
specify the terms and conditions of the Option and any rules applicable thereto,
including but not limited to the effect on such Option of the death, disability
or termination of employment or service of a Participant, and the effect, if
any, of such other events as may be determined by the Committee.

                  (f) NO LIMIT ON OTHER COMPENSATION ARRANGEMENTS. Nothing
contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other compensation arrangements, which may, but need
not, provide for the grant of options (subject to stockholder approval if such
approval is required), and such arrangements may be either generally applicable
or applicable only in specific cases.

                  (g) NO RIGHT TO EMPLOYMENT. The grant of an Option shall not
be construed as giving a Participant the right to be retained in the employ of,
or in any consulting relationship to, the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment or
discontinue any consulting relationship, free from any liability or any claim
under the Plan, unless otherwise expressly provided in the Plan or in any Award
Agreement.

                  (h) NO RIGHTS AS STOCKHOLDER. Subject to the provisions of the
applicable Option, no Participant or holder or beneficiary of any Option shall
have any rights as a stockholder with respect to any Option Shares to be
distributed under the Plan until he or she has become the holder of such Option
Shares.

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                  (i) GOVERNING LAW. The validity, construction, and effect of
the Plan and any rules and regulations relating to the Plan and any Award
Agreement shall be determined in accordance with the laws of the State of
Delaware applicable to contracts made and to be performed therein.

                  (j) SEVERABILITY. If any provision of the Plan or any Option
is or becomes or is deemed to be invalid, illegal, or unenforceable in any
jurisdiction or as to any Person or Option, or would disqualify the Plan or any
Option under any law deemed applicable by the Committee, such provision shall be
construed or deemed amended to conform to the applicable laws, or if it cannot
be construed or deemed amended without, in the determination of the Committee,
materially altering the intent of the Plan or the Option, such provision shall
be stricken as to such jurisdiction, Person or Option and the remainder of the
Plan and any such Option shall remain in full force and effect.

                  (k) OTHER LAWS. The Committee may refuse to issue or transfer
any Option Shares or other consideration under an Option if, acting in its sole
discretion, it determines that the issuance or transfer of such Option Shares or
such other consideration will violate any applicable law or regulation or
entitle the Company to recover the same under Section 16(b) of the Exchange Act,
and any payment tendered to the Company by a Participant, other holder or
beneficiary in connection with the exercise of such Option shall be promptly
refunded to the relevant Participant, holder or beneficiary. Without limiting
the generality of the foregoing, no Option granted hereunder shall be construed
as an offer to sell securities of the Company, and no such offer shall be
outstanding, unless and until the Committee in its sole discretion has
determined that any such offer, if made, would be in compliance with all
applicable requirements of the U.S. federal and any other applicable securities
laws.

                  (l) NO TRUST OR FUND CREATED. Neither the Plan nor any Option
shall create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company or any Affiliate and a Participant or
any other Person. To the extent that any Person acquires a right to receive
payments from the Company or any Affiliate pursuant to an Option, such right
shall be no greater than the right of any unsecured general creditor of the
Company or any Affiliate.

                  (m) HEADINGS. Headings are given to the sections and
subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.

                  SECTION 10.  TERM OF THE PLAN.

                  (c) EFFECTIVE DATE. The Plan shall be effective as of the date
of its approval by the persons and/or entities who own more than 75% of the
voting power of all outstanding stock of the Company, determined in a manner
consistent with Section 280G(b)(5) of the Code, as amended,

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and the proposed regulations promulgated thereunder. If such approval is not
obtained, this Plan and any Options granted under the Plan shall be null and
void and of no force and effect.

                  (d) EXPIRATION DATE. No Option shall be granted under the Plan
after ten years. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, the authority of the Board or the Committee to
amend, alter, adjust, suspend, discontinue, or terminate any such Option or to
waive any conditions or rights under any such Option shall, continue after ten
years from December 21, 2000.

                  SECTION 11. INDEMNIFICATION. In addition to such other rights
of indemnification as they may have as members of the Board or the Committee,
the members of the Board and the Committee shall be indemnified by the Company
against all costs and expenses reasonably incurred by them in connection with
any action, suit or proceeding to which they or any of them may be party by
reason of any action taken or failure to act under or in connection with the
Plan or any Option granted hereunder, and against all amounts paid by them in
settlement thereof (provided such settlement is approved by independent legal
counsel selected by the Company) or paid by them in satisfaction of a judgment
in any such action, suit or proceeding; PROVIDED that any such Board or
Committee member shall be entitled to the indemnification rights set forth in
this Section 11 only if such member has acted in good faith and in a manner that
such member reasonably believed to be in or not opposed to the best interests of
the Company and, with respect to any criminal action or proceeding, had no
reasonable cause to believe that such conduct was unlawful, and further provided
that upon the institution of any such action, suit or proceeding a Board or
Committee member shall give the Company written notice thereof and an
opportunity, at its own expense, to handle and defend the same before such Board
or Committee member undertakes to handle and defend it on his own behalf.

                                     -10-<PAGE>
                                                                    Exhibit 10.4

                                     FORM OF
                  M-FOODS HOLDINGS, INC. 2001 STOCK OPTION PLAN
                          STOCK OPTION AWARD AGREEMENT

     THIS STOCK OPTION AWARD AGREEMENT (the "Agreement") is made effective as of
the __ day of __________, 2001, between M-Foods Holdings, Inc., a Delaware
corporation (hereinafter called the "Company"), and ______________ (hereinafter
called the "Participant"):

                                R E C I T A L S:
                                ---------------

     WHEREAS, the Company has adopted the M-Foods Holdings, Inc. 2001 Stock
Option Plan (the "Plan"), which Plan is incorporated herein by reference and
made a part of this Agreement. Capitalized terms not otherwise defined herein
shall have the same meaning as in the Plan; and

     WHEREAS, the Committee has determined that it would be in the best
interests of the Company and its stockholders to grant the option provided for
herein to the Participant pursuant to the Plan and the terms set forth herein.

     NOW THEREFORE, in consideration of the mutual covenants hereinafter set
forth, the parties agree as follows:

     1. GRANT OF THE OPTION. The Company hereby grants to the Participant the
right and option to purchase, on the terms and conditions hereinafter set forth,
all or any part of an aggregate of [ ] Option Shares, subject to adjustment as
set forth in the Plan. The per share purchase price of the Option Shares subject
to the Option (the "Exercise Price") shall be $469.27. The Option is intended to
be a non-qualified stock option, and is not intended to be treated as an option
that complies with Section 422 of the Internal Revenue Code of 1986, as amended.

     2. VESTING. At any time, the portion of the Option that has become vested
and exercisable as described in this Section 2 is hereinafter referred to as the
"Vested Portion."

        (a) Subject to the Participant's continued employment with the Company
and to paragraphs (b) and (c) of this Section 2, the Option shall vest over a
five year period, in five equal installments, with twenty percent (20%) of the
Option vesting on the first anniversary of the Closing Date and an additional
twenty percent (20%) of the Option vesting on each successive anniversary of the
Closing Date until such time as the Option is fully vested and exercisable.

        (b) TERMINATION OF EMPLOYMENT. If the Participant's employment with the
Company is terminated for any reason, the Option shall, to the extent not then
vested, be cancelled by the Company without consideration and only the Vested
Portion of the Option shall remain

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exercisable for the period set forth in Section 3(a). The Vested Portion of the
Option not exercised within the period set forth in Section 3(a) shall
immediately expire.

        (c) SALE OF THE COMPANY. Notwithstanding any other provisions of this
Agreement to the contrary, in the event of a Sale of the Company, the Option
shall, to the extent not previously cancelled, immediately become vested and
exercisable.

     3. EXERCISE OF OPTION.

        (a) PERIOD OF EXERCISE. Subject to the provisions of the Plan and this
Agreement, the Participant may exercise all or any part of the Vested Portion of
the Option at any time prior to the earliest to occur of:

            (i) the tenth anniversary of the Closing Date;

            (ii) ninety days following the date of the Participant's termination
     of employment by the Company without Cause (other than as a result of death
     or Disability), or by the Participant for Good Reason or as a result of
     death, Disability or Retirement;

            (iii) a Sale of the Company; and

            (iv) the date of the Participant's termination of employment by the
     Company for Cause or by the Participant without Good Reason.

        (b) METHOD OF EXERCISE.

            (i) Subject to Section 3(a), the Vested Portion of the Option may be
     exercised by delivering to the Company at its principal office written
     notice of intent to so exercise. Such notice shall specify the number of
     Option Shares for which the Option is being exercised and shall be
     accompanied by payment in full of the aggregate Exercise Price. The payment
     of the Exercise Price shall be made (x) in cash, (y) in Option Shares that
     have been owned by the Participant for at least six months, such Option
     Shares to be valued at their Fair Market Value as of the date of exercise,
     or (z) after a Public Offering, through simultaneous sales of underlying
     Option Shares by brokers.

            (ii) Notwithstanding any other provision of the Plan or this
     Agreement to the contrary, the Option may not be exercised prior to the
     completion of any registration or qualification of the Option or the Option
     Shares that is required to comply with applicable state and federal
     securities law or any ruling or regulation of any governmental body or
     national securities exchange that the Committee shall in its sole
     discretion determine in good faith to be necessary or advisable.

            (iii) Upon the Company's determination that the Option has been
     validly exercised as to any of the Option Shares, the Company shall issue
     certificates in the Participant's name for such Option Shares. However, the
     Company shall not be liable to the Participant for damages relating to any
     delays in issuing the certificates to him, any loss of

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     the certificates, or any mistakes or errors in the issuance of the
     certificates or in the certificates themselves.

            (iv) The Company shall be entitled, if necessary or desirable, to
     withhold from any Participant, from any amounts due and payable by the
     Company to such Participant (or secure payment from such Participant in
     lieu of withholding), the amount of any withholding or other tax due from
     the Company with respect to any securities issuable under the Options, and
     the Company may defer the exercise of the Options or the issuance of the
     Option Shares thereunder unless indemnified to its satisfaction.

            (v) As a condition to any exercise of an Option, a Participant will
     permit the Company to deliver to him or her all financial and other
     information regarding the Company and its Subsidiaries which it believes
     necessary to enable such Participant to make an informed investment
     decision.

     4. CERTAIN SALES UPON TERMINATION OF EMPLOYMENT. If the Participant's
employment is terminated under certain circumstances, the Participant shall have
a limited right to sell to the Company (pursuant to Section 4(a) below), and the
Company shall have certain rights (pursuant to Section 4(b) below) to purchase
from the Participant either (i) the Vested Portion of Participant's Options or
(ii) Option Shares acquired pursuant to the exercise of all or any part of the
Vested Option, as follows:

        (a) PUT RIGHT.

            (i) If the Participant's employment with the Company and
     Subsidiaries terminates due to the Disability or death of the Participant
     prior to the earlier of (x) a Public Offering or (y) a Sale of the Company,
     for (i) the Vested Portion of all Options and (ii) all Option Shares,
     within 120 days after such termination of employment the Participant shall
     have the right, subject to the provisions of SECTION 5 hereof, to sell to
     the Company and the Company shall be required to purchase (subject to the
     provisions of SECTION 5 hereof), on one occasion from the Participant and
     his Permitted Transferees, if applicable, all (but not less than all) of
     (i) Participant's Vested Portion of all Options and (ii) the number of
     Option Shares then held by the Participant and such other number of Option
     Shares or Vested Portions of Option Shares, to the extent transferrable,
     held by the Participant's Permitted Transferees as the Participant may
     request at a price per Option or Option Share equal to (i) in the case of
     the purchase of Options, the difference between the Fair Market Value of
     the Option Share underlying the Option (measured as of the delivery of the
     notice referred to in SECTION 4(a)(ii)) and the Exercise Price of such
     Option Shares and (ii) in the case of the purchase of Option Shares, the
     Fair Market Value of such Option Share (measured as of the delivery of the
     notice referred to in SECTION 4(a)(ii)). If the Participant's employment
     with the Company and Subsidiaries terminates due to Retirement of the
     Participant prior to (x) a Public Offering or (y) a Sale of the Company,
     for all Option Shares issued 181 days or more prior to the date of
     termination of employment of the Participant, within 90 days after such
     date of termination of employment (or in the case of Option Shares issued
     180 days or less prior to such date of termination or at any time after
     such date of termination of employment, no earlier than 181 days and no
     later than 271 days after the date of issuance of such Option

                                       -3-

<PAGE>

     Shares), the Participant shall have the right, subject to the
     provisions of SECTION 5 hereof, to sell to the Company and the Company
     shall be required to purchase (subject to the provisions of SECTION 5
     hereof), on one occasion from the Participant and his Permitted
     Transferees, if applicable, all (but not less than all) of the Option
     Shares then held by the Participant and such other number of Option Shares
     held by the Participant's Permitted Transferees as the Participant may
     request at a price per Option Share equal to the Fair Market Value of such
     Option Share (measured as of the delivery of the notice referred to in
     SECTION 4(a)(ii)).

            (ii) If the Participant desires to exercise his or her option to
     require the Company to repurchase Options and/or Option Shares pursuant to
     SECTION 4(a), the Participant shall send one written notice to the Company
     setting forth the intention of Participant and Permitted Transferees, if
     applicable, to collectively sell all Options and/or Option Shares pursuant
     to SECTION 4(a) within the period described above, which notice shall
     specify the number of Option Shares, or in the case of a sale of Options,
     the number of Option Shares underlying such Options, to be sold and shall
     include the signature of the Participant and each Permitted Transferee
     desiring to sell Options and Option Shares. Subject to the provisions of
     SECTION 5, the closing of the purchase shall take place at the principal
     office of the Company on the 30th day after the giving of such notice.
     Subject to the provisions of SECTION 5, the Participant and each Permitted
     Transferee, as applicable, shall deliver to the Company duly executed
     instruments transferring any and all rights, title and interest to and in
     the Options and Option Shares to the Company, against payment of the
     appropriate purchase price by cashier's or certified check payable to the
     Participant or by wire transfer of immediately available funds to an
     account designated by the Participant.

         b) CALL RIGHT.

            (i) If the Participant's employment with the Company and
     Subsidiaries terminates for any of the reasons set forth in clauses (A),
     with the exception of termination due to Participant's Retirement, or (C)
     below prior to a Sale of the Company, within 120 days after such date, the
     Company shall have the right and option to purchase, and the Participant
     and the Participant's Permitted Transferees (hereinafter referred to as the
     "Participant Group") shall be required to sell to the Company, any or all
     of such Option Shares then held by such member of the Participant Group, at
     a price per Option Share equal to the applicable purchase price determined
     pursuant to SECTION 4(b)(iii). If the Participant's employment with the
     Company or any of its Subsidiaries terminates for any of the reasons set
     forth in clause (B) or due to Participant's Retirement, for any Option
     Shares issued 180 days or more prior to the date of Participant's
     termination of employment, within 90 days after such date (or in the case
     of Option Shares issued 180 days or less prior to such date or at any time
     after such date, no earlier than 181 days and no later than 271 days after
     the date of issuance of such Option Shares), the Company shall have the
     right and option to purchase, and the Participant and the Participant's
     Permitted Transferees (hereinafter referred to as the "Participant Group")
     shall be required to sell to the Company, any or all of such Option Shares
     then held by such member of the Participant Group, at a price per Option
     Share equal to the applicable purchase price determined pursuant to
     SECTION 4(b)(iii):

                                       -4-

<PAGE>

               (A) if the Participant's active employment the Company and/or its
          Subsidiaries is terminated due to the Disability, death or Retirement
          of the Participant;

               (B) if the Participant's active employment with the Company,
          and/or its Subsidiaries is terminated by the Company, and/or its
          Subsidiaries without Cause or by the Participant for Good Reason;

               (C) if the Participant's active employment with the Company
          and/or its Subsidiaries is terminated (x) by the Company or any of its
          Subsidiaries for Cause or (y) by the Participant for any other reason
          not set forth in SECTION 4(b)(i)(a) or SECTION 4(b)(i)(b);

PROVIDED THAT the Company's rights under this Section 4(b) shall not be
available in the event of the termination of Participant's employment by the
Company or its Subsidiaries without Cause or by Participant for Good Reason, in
either case following a sale by the Company or its subsidiaries of substantially
all of the line of business in which the Participant primarily performs his
services.

          If the Participant engages in "Competitive Activity" (as defined in
     SECTION 6 of this Agreement), the Company shall have the right and option
     to purchase within 90 days after such date as the Company receives notice
     that the Participant has engaged in Competitive Activity, and the
     Participant Group shall be required to sell to the Company, any or all of
     such Option Shares then held by such member of the Participant Group, at a
     price per Option Share equal to the applicable purchase price determined
     pursuant to SECTION 4(b)(iii)(a); PROVIDED THAT in the case of Option
     Shares issued 180 days or less prior to the date that the Company receives
     notice of Participant's engagement in Competitive Activity, the Participant
     shall be required to sell such Option Shares no earlier than 181 days and
     no later than 271 days after the date of issuance of such Option Shares.

               (ii) If the Company desires to exercise one of its options to
     purchase Option Shares pursuant to this SECTION 4(b), the Company shall,
     not later than the expiration of the applicable period described for such
     purchase in SECTION 4(b)(i), send written notice to each member of the
     Participant Group of its intention to purchase Option Shares, specifying
     the number of Option Shares to be purchased (the "CALL NOTICE"). Subject to
     the provisions of SECTION 5, the closing of the purchase shall take place
     at the principal office of the Company on the 30th day after the giving of
     the Call Notice. Subject to the provisions of SECTION 5, the Participant
     shall deliver to the Company duly executed instruments transferring title
     to Option Shares to the Company, against payment of the appropriate
     purchase price by cashier's or certified check payable to the Participant
     or by wire transfer of immediately available funds to an account designated
     by the Participant.

               (iii) In the event of a purchase by the Company pursuant to
     SECTION 4(b)(i), the purchase price shall be (in each case after taking
     account of any prior purchases pursuant to SECTION 4(b)(i)):

                                       -5-

<PAGE>

                    (A) if the Participant engages in "Competitive Activity" (as
               defined in SECTION 6 of this Agreement), a price per Option Share
               equal to the lesser of (A) Fair Market Value (measured as of the
               "Activity Date" (as defined in SECTION 6 of this Agreement)) and
               (B) Cost;

                    (B) in the case of a termination of employment described in
               SECTION 4(b)(i)(a), SECTION 4(b)(i)(b), the Fair Market Value of
               such Option Shares (measured as of the date of the Call Notice);
               and

                    (C) in the case of a termination of employment described in
               SECTION 4(b)(i)(c), a price per option Share equal to the lesser
               of (A) Fair Market Value (measured as of the date of the Call
               Notice) and (B) Cost.

               Notwithstanding anything in this SECTION 4(b) to the contrary, in
          the event that the Company purchases Option Shares at Fair Market
          Value pursuant to the terms of this SECTION 4(b) and within six months
          of the date of the determination of such Fair Market Value both (A) a
          Sale of the Company or a Public Offering occurs and (B) in connection
          with such transaction, the per share value of the Option Shares
          exceeds the per share purchase price paid by the Company to
          Participant under this SECTION 4(b), the Participant shall be entitled
          to receive from the Company the benefit of such higher valuation for
          the Option Shares purchased. The excess of (x) the net proceeds which
          the Participant would have received in such Sale of the Company or
          Public Offering from the sale in such transaction of all Option Shares
          repurchased by the Company under this SECTION 4(b), less (y) the
          amount which the Participant received from the purchase of such Option
          Shares by the Company, shall be paid by certified or cashier's check
          or wire transfer of funds to the Participant upon consummation of such
          transaction.

          5. CERTAIN LIMITATIONS ON THE COMPANY'S OBLIGATIONS TO PURCHASE
     OPTION SHARES.

             (a) PAYMENT OF SHARES. If at any time the Company elects or is
required to purchase any Option Shares pursuant to SECTION 4, the Company shall
pay the purchase price for the Option Shares it purchases (i) first, by
offsetting indebtedness, if any, owing from the Participant to Investors or the
Company (which indebtedness shall be applied pro rata against the proceeds
receivable by each member of the Participant Group receiving consideration in
such repurchase) and (ii) then, by the Company's delivery of a check or wire
transfer of immediately available funds for the remainder of the purchase price,
if any, against delivery of the certificates or other instruments representing
the Option Shares so purchased, duly endorsed; PROVIDED that if such cash
payment would result (A) in a violation of any law, statute, rule, regulation,
policy, order, writ, injunction, decree or judgment promulgated or entered by
any federal, state, local or foreign court or governmental authority applicable
to the Company or any of its Subsidiaries or any of its or their property or (B)
after giving effect thereto, in a Financing Default, or (C) if the Committee
determines in good faith that immediately prior to such purchase there shall
exist a Financing Default which prohibits such purchase, dividend or
distribution ((A) through (C) collectively the "Cash Deferral Conditions"), the
portion of the cash payment so affected may be made by the Company's delivery of
either (z) subordinated promissory notes of the Company (the "Notes") with a
principal equal to the balance of the purchase price or, at the option of the
Company, (y) preferred shares of the

                                       -6-

<PAGE>

Company (the "Preferred Shares") with a liquidation preference equal to the
balance of the purchase price; which Notes or Preferred Shares shall bear
interest or accrue yield, as appropriate, annually at the "prime rate" published
in The Wall Street Journal on the date of issuance, which interest or yield, as
appropriate, shall be payable at maturity or upon payment by the Company of
dividends on Company capital stock (for the purpose of clarity, distributions
made by the Company pursuant to Section 8.7(h) of that certain Credit Agreement,
dated April 10, 2001, by and among the Company and the other parties named
therein, shall not be deemed a payment by the Company of dividends on Company
capital stock as described in this sentence). Any such Notes or Preferred Shares
issued shall be promptly paid (i) when the Cash Deferral Condition which
prompted their issuance no longer exists, (ii) upon consummation of a Public
Offering of the Company or Michael Foods, Inc., a Minnesota corporation (or
their successors) (to the extent allowed by the underwriters of such Public
Offering), or (iii) upon a Sale of the Company from net cash proceeds, if any,
payable to the Company or its stockholders; to the extent that sufficient net
cash proceeds are not so payable, the Notes or Preferred Shares, as applicable,
shall be cancelled in exchange for such non-cash consideration received by
note-holders or shareholders, as applicable, in the Sale of the Company having a
fair market value equal to the principal of and accrued interest on the Notes or
the accrued yield on the Preferred Shares, as applicable. If interest or yield
is required to be paid on any Notes or Preferred Shares prior to maturity and
any Cash Deferral Conditions exist, such interest or yield may be cumulated and
accrued until and to the extent that such prohibition no longer exists.

     6. COMPETITIVE ACTIVITY.

             (a) COMPETITIVE ACTIVITY. Participant shall be deemed to have
engaged in "Competitive Activity" if, during the period commencing on the date
hereof and ending on the second anniversary of the date Participant's employment
with Investors, the Company, and/or its Subsidiaries terminates, (i)
Participant, for himself or on behalf of any other person, firm, partnership,
corporation, or other entity, engages, directly or indirectly, as an executive,
agent, representative, consultant, partner, shareholder or holder of any other
financial interest, in any business that competes with Investors, the Company or
its Subsidiaries in the line of business Participant is employed in by
Investors, the Company and/or its Subsidiaries (as applicable) (a "Competing
Business"), it being understood and agreed that Participant's activities shall
not satisfy this clause (i) where Participant is employed by a person, firm,
partnership, corporation, limited liability company, or other entity engaged in
a variety of activities, including the Competing Business, and Participant is
not engaged in or responsible for the Competing Business of such entity.
Participant may also, without satisfying clause (i) be a passive owner of not
more than 2% of the outstanding publicly traded stock of any class of a
Competing Business so long as Participant has no active participation in the
business of such entity, except to the extent permitted above; or (ii)
Participant (A) directly or indirectly through another entity, induces or
attempts to induce any employee of the Company or its Subsidiaries to leave the
employ of the Company or its Subsidiaries, or in any way interfere with the
relationship between the Company or any of its Subsidiaries and any employee
thereof, (B) knowingly hires any person who was an employee of the Company or
any of its Subsidiaries within 180 days prior to the time such employee was
hired by Participant, (C) induces or attempts to induce any customer, supplier,
licensee or other business relation of the Company or any of its Subsidiaries to
cease doing business with the Company or its Subsidiaries or in any way
interfere with the relationship between any such customer, supplier, licensee or
business relation and the Company or any Subsidiary or (D) directly or
indirectly acquires or attempt to

                                       -7-

<PAGE>

acquire an interest in any business relating to the business of the Company or
any of its Subsidiaries and with which the Company or any of its Subsidiaries
has entertained discussions or has requested and received information relating
to the acquisition of such business by the Company or its Subsidiaries in the
one-year period immediately preceding Participant's termination of employment
with the Company.

             (b) ACTIVITY DATE. If Participant engages in Competitive Activity,
the "Activity Date" shall be the first date on which Participant engages in such
Competitive Activity.

             (c) REPAYMENT OF PROCEEDS. If Participant engages in Competitive
Activity, then Participant shall be required to pay to the Company, within ten
business days following the Activity Date, an amount equal to the excess, if
any, of (A) the aggregate proceeds Participant received upon the sale or other
disposition of Participant's Option Shares, over (B) the aggregate Cost of such
Option Shares, it being understood that in the event that the aggregate proceeds
Participant received upon the sale or other distribution of Participant's Option
Shares consisted of cash (or have since been converted into cash), such
repayment to the Company will be made first in cash up to the amount of such
cash proceeds with the remainder to be paid to the Company by reducing the
outstanding principal amount of any non-cash consideration received by
Participant.

         7.       TAKE-ALONG RIGHTS ON SALE OF THE COMPANY.

             (a) If Investors elects to consummate a transaction constituting a
Sale of the Company, Investors shall notify the Company and Participant in
writing of that election, Participant will consent to and raise no objections to
the proposed transaction, and Participant and the Company will take all other
actions reasonably necessary or desirable to cause the consummation of such Sale
of the Company on the terms proposed by Investors. Without limiting the
foregoing, (i) if the proposed Sale of the Company is structured as a sale of
assets or a merger or consolidation, or otherwise requires approval of
Participant, Participant and all of Participant's Permitted Transferees will
vote or cause to be voted all Option Shares, whether granted pursuant to this
Plan or otherwise, that he holds or with respect to which Participant has the
power to direct the voting and which are entitled to vote on such transaction in
favor of such transaction and will waive any appraisal rights which he may have
in connection therewith and (ii) if the proposed Sale of the Company is
structured as or involves a sale or redemption of Option Shares, Participant
will agree to sell his Option Shares in such Sale of the Company on the terms
and conditions approved by Investors, and Participant will execute any merger,
asset purchase, security purchase, recapitalization or other sale agreement
approved by Investors in connection with such Sale of the Company.

             (b) The obligations of Participant with respect to the Sale of the
Company are subject to the satisfaction of the following conditions: (i) upon
the consummation of the Sale of the Company, all of the holders of Option Shares
shall receive the same form and amount of consideration per share or amount of
Option Shares, or if any holders of Option Shares are given an option as to the
form and amount of consideration to be received, all holders of Option Shares
will be given the same option and (ii) all holders of Options, without regard to
vesting or exercise restrictions, will be given an opportunity to either (A)
exercise such Options, prior to the consummation of the Sale of the Company and
participate in such sale as holders of Option Shares or (B) upon the
consummation of the Sale of the Company, receive, in exchange for such

                                       -8-

<PAGE>

Options, the same form and amount of consideration per Option Share as received
by all other holders of Option Shares in connection with the Sale of the
Company, less the exercise price per share of such Options which must be
exercised to acquire Option Shares, it being understood that the exercise price
shall be paid first with any cash consideration to be distributed to Participant
in connection with the Sale of the Company.

             (c) Participant will bear his pro-rata share (based upon the
relative amount of Option Shares sold) of the reasonable and customary costs of
any sale of Option Shares pursuant to a Sale of the Company to the extent such
costs are incurred for the benefit of Participant and are not otherwise paid by
the Company or the acquiring party. Costs incurred by or on behalf of
Participant for his sole benefit will not be considered costs of the transaction
hereunder.

         8.       TAG-ALONG RIGHTS.

             (a) Prior to making any Transfer of Common Stock (other than a
Transfer described in SECTION 8(b)), Investors shall give at least 30 days prior
written notice to Participant and the Company, which notice (for purposes of
this SECTION 8, the "SALE NOTICE") shall identify the type and amount of Common
Stock to be sold (for purposes of this SECTION 8, the "OFFERED SECURITIES"),
describe in reasonable detail the terms and conditions of such proposed Transfer
and identify each prospective Transferee. Participant may, within 15 days of the
receipt of the Sale Notice, give written notice (the "TAG-ALONG NOTICE") to
Investors that Participant wishes to participate in such proposed Transfer upon
the terms and conditions set forth in the Sale Notice, which Tag-Along Notice
shall specify the Option Shares such Participant desires to include in such
proposed Transfer; provided, however, that (1) none of Participant's rights to
Option Shares subject to the exercise of Options shall be entitled to be sold
pursuant to this SECTION 8(a) unless such Options have fully vested and the
Options have been exercised and (2) to exercise its tag-along rights hereunder,
Participant must agree to make to the Transferee the same representations,
warranties, covenants, indemnities and agreements as Investors agrees to make in
connection with the Transfer of the Offered Securities (except that in the case
of representations and warranties pertaining specifically to, or covenants made
specifically by, Investors, Participant shall make comparable representations
and warranties pertaining specifically to (and, as applicable, covenants by)
himself), and must agree to bear his ratable share (which shall be proportionate
based on the value of Option Shares and Offered Securities that are Transferred
but shall not exceed the amount of proceeds received in connection with such
Transfer) of all liabilities to the Transferees arising out of representations,
warranties and covenants (other than those representations, warranties and
covenants that pertain specifically to a given stockholder, who shall bear all
of the liability related thereto), indemnities or other agreements made in
connection with the Transfer. Each stockholder will bear (x) its or his own
costs of any sale of shares of Common Stock pursuant to this SECTION 8(a) and
(y) its or his pro- rata share (based upon the relative amount of shares of
Common Stock sold) of any of the other costs of any reasonable and customary
sale of shares of Common Stock pursuant to this SECTION 8(a) to the extent such
costs are incurred for the benefit of all stockholders and are not otherwise
paid by the Transferee.

                  If Participant does not give Investors a Tag-Along Notice
prior to the expiration of the 15-day period for giving Tag-Along Notices with
respect to the Transfer proposed in the Sale Notice, then (notwithstanding the
first sentence of this SECTION 8(a)) Investors may Transfer such

                                       -9-

<PAGE>

Offered Securities on the terms and conditions set forth, to or among any of the
Transferees identified (or Affiliates of Transferees identified), in the Sale
Notice at any time within 180 days after expiration of the 15-day period for
giving Tag-Along Notices with respect to such Transfer. Any such Offered
Securities not Transferred by Investors during such 180-day period will again be
subject to the provisions of this SECTION 8(a) upon subsequent Transfer. If
Participant gives Investors a timely Tag-Along Notice, then Investors shall use
all reasonable efforts to obtain the agreement of the prospective Transferee(s)
to the participation of Participant in any contemplated Transfer, on the same
terms and conditions as are applicable to the Offered Securities, and Investors
shall not transfer any of its shares to any prospective Transferee if such
prospective Transferee(s) declines to allow the participation of Participant. If
the prospective Transferee(s) is unwilling or unable to acquire all of the
Offered Securities and all of the Option Shares specified in a timely Tag-Along
Notice upon such terms, then Investors may elect either to cancel such proposed
Transfer or to allocate the maximum number of shares of Common Stock that the
prospective Transferees are willing to purchase (the "ALLOCABLE SHARES") among
Investors, Participant and such other participants giving timely Tag-Along
Notices as follows:

          (i) each participating Person (including Investors) shall be entitled
     to sell a number of shares of Common Stock (not to exceed, for Participant,
     the number of shares of Common Stock identified in such Participant's
     Tag-Along Notice) equal to the product of (A) the number of Allocable
     Shares of Common Stock and (B) a fraction, the numerator of which is such
     stockholder's Ownership Percentage of shares of Common Stock and the
     denominator of which is the aggregate Ownership Percentage for all
     participating Persons; and

          (ii) if after allocating the Allocable Shares of Common Stock to such
     stockholders in accordance with clause (i) above, there are any Allocable
     Shares that remain unallocated, then they shall be allocated (in one or
     more successive allocations on the basis of the allocation method specified
     in clause (i) above) among Investors and each Participant that has elected
     in its Tag-Along Notice to sell a greater number of shares of Common Stock
     than previously has been allocated to it pursuant to clause (i) and this
     clause (ii) (all of whom (but no others) shall, for purposes of clause (i)
     above, be deemed to be the participating Persons) until all such Allocable
     Shares have been allocated in accordance with this clause (ii).

     (b) EXCLUDED TRANSFERS. The rights and restrictions contained in SECTION
8(a) shall not apply with respect to any of the following Transfers of shares of
Common Stock:

          (i) any Transfer of Common Stock by Investors in a Public Offering;

          (ii) any Transfer of Common Stock to and among the members of
     Investors and the partners, securityholders, employees, affiliates or
     family group of such members; and

          (iii) any Transfer of Common Stock incidental to the exercise,
     conversion or exchange of such Common Stock in accordance with their terms,
     any combination of

                                      -10-

<PAGE>

         shares (including any reverse stock split) or any recapitalization,
         reorganization or reclassification of, or any merger or consolidation
         involving, the Company.

          (c) EXCLUDED SHARES. No shares of Common Stock that have been
transferred by Investors or Participant in a Transfer pursuant to the provisions
of SECTION 8(a) ("EXCLUDED SHARES") shall be subject again to the restrictions
set forth in SECTION 8(a), nor shall Participant, if Participant holds Excluded
Shares, be entitled to exercise any rights under SECTION 8(a) with respect to
such Excluded Shares, and no Excluded Shares held by Investors or Participant
shall be counted in determining the respective participation rights of such
Persons in a Transfer subject to SECTION 8(a).

          (d) Upon the occurrence of any event which gives rise to Participant's
ability or requirement to transfer (including by operation of law) Participant's
interests in the Company or a Subsidiary of the Company to a third party in
exchange for consideration pursuant to this Agreement, at the election of
Participant, the Company shall take, and shall cause its Subsidiaries to take,
all actions necessary to convert Option Shares then held by Participant into the
appropriate type of security to permit Participant to transfer such Shares to
such third party.

          (e) The provisions of this SECTION 8 shall remain in effect following
the first Public Offering.

     9. DEFINITIONS. For purposes of this Agreement:

          (a) "Allocable Shares" shall have the meaning set forth in SECTION 8
of this Agreement.

          (b) "Closing Date" shall mean April 10, 2001.

          (c) "Cost" shall mean, with respect to Option Shares, the price per
Option Share paid by the Participant (as proportionately adjusted for all
subsequent stock splits, stock dividends and other recapitalizations).

          (d) "Date of Exercise" shall mean the date the Participant exercises
the Option.

          (e) "Disability" shall mean the inability of the Participant to
perform the essential functions of the Participant's job, with or without
reasonable accommodation, by reason of a physical or mental infirmity, for a
continuous period of six months. The period of six months shall be deemed
continuous unless Participant returns to work for at least 30 consecutive
business days during such period and performs during such period at the level
and competence that existed prior to the beginning of the six-month period. The
date of such termination for Disability shall be on the first day of such
six-month period.

          (f) "Excluded Shares" shall have the meaning set forth in SECTION 8 of
this Agreement.

          (g) "Fair Market Value" used in connection with the value of Option
Shares shall mean the fair value of the Option Shares determined in good faith
by the Board (without taking into

                                      -11-

<PAGE>

account the effect of any contemporaneous repurchase of Units at less than Fair
Market Value under SECTION 4).

          (h) "Family Group" means, with respect to any individual, such
individual's spouse and descendants (whether natural or adopted) and any trust,
partnership, limited liability company or similar vehicle established and
maintained solely for the benefit of (or the sole members or partners of which
are) such individual, such individual's spouse and/or such individual's
descendants.

          (i) "Financing Default" shall mean an event which would constitute (or
with notice or lapse of time or both would constitute) an event of default under
any of the following as they may be amended from time to time: (i) the Senior
Secured Credit Facilities or Senior Subordinated Notes (collectively the "Senior
Financing Agreements"), and any extensions, renewals, refinancings or refundings
thereof in whole or in part; (ii) any other agreement (other than an agreement
relating to the payment of trade payables in the ordinary course of business and
consistent with industry custom) under which an amount of indebtedness of
Investors, the Company or any of its subsidiaries in excess of $1,000,000 is
outstanding as of the time of the aforementioned event, and any extensions,
renewals, refinancings or refundings thereof in whole or in part; (iii) any
provisions of the Company's articles of incorporation or bylaws designating the
terms of the Company's capital stock or setting forth restrictive financial
covenants; (iv) any amendment of, supplement to or other modification of any of
the instruments referred to in clauses (i) through (iii) above; or (v) any of
the securities issued pursuant to or whose terms are governed by the terms of
any of the agreements set forth in clauses (i) through (iv) above, and any
extensions, renewals, refinancings or refundings thereof in whole or in part.

          (j) "Good Reason" shall have the meaning ascribed to such term in any
management stock purchase and unit subscription agreement, employment or
severance agreement then in effect between Participant and the Company or one of
its Subsidiaries or, if no such agreement containing a definition of "Good
Reason" is then in effect, shall mean either (i) the imposition upon Participant
of substantial additional or different duties which are inconsistent with
Participant's current position and, in the case of such duties which do not
constitute a diminution of duties, without a commensurate increase in
compensation, or (ii) either the reduction of Participant's salary or a material
reduction of other benefits under any employee benefit plan, program or
arrangement of the Company (other than a change that affects all senior
executives of the Company) from the level in effect upon Participant's
commencement of participation in the Plan.

          (k) "Investors" shall mean M-Foods Investors, LLC, a Delaware limited
liability company, as well as all affiliates of Investors.

          (l) "Offered Securities" shall have the meaning set forth in
SECTION 8.

          (m) "Ownership Percentage" shall mean, for each stockholder and with
respect to the Common Stock, the percentage obtained by dividing the number of
shares of such Common Stock held by such stockholder by the total number of
shares of Common Stock outstanding.

                                      -12-

<PAGE>

          (n) "Retirement" shall mean, with respect to the Participant, the
Participant's retirement as an employee of the Company or any of its
Subsidiaries on or after reaching age 65 or such earlier age as may be otherwise
determined by the Board after at least three years employment with the Company
or one of its Subsidiaries after the date of this Agreement.

          (o) "Sale Notice" shall have the meaning set forth in SECTION 8 of
this Agreement.

          (p) "Senior Secured Credit Facilities" shall mean that certain Credit
Agreement, dated April 10, 2001, by and among the Company and the other parties
named therein, and one or more other debt facilities or commercial paper
facilities, in each case with banks or other institutional lenders providing for
revolving credit loans, term loans, receivables financing (including through the
sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.

          (q) "Senior Subordinated Notes" shall mean those certain 11-3/4%
Senior Subordinated Notes due 2011 in an aggregate principal amount of
$200,000,000, issued by Michael Foods Acquisition Corp., a Minnesota
corporation, on March 26, 2001, or any other similar notes or instruments that
the Company or its Subsidiaries may issue from time to time.

          (r) "Tag-Along Notice" shall have the meaning set forth in SECTION 8
of this Agreement.

     10. NO RIGHT TO CONTINUED EMPLOYMENT. Nothing contained in the Plan or this
Agreement shall be deemed to obligate the Company or any Subsidiary of the
Company to employ the Participant in any capacity whatsoever or to prohibit or
restrict the Company (or any such subsidiary) from terminating the employment of
the Participant at any time or for any reason whatsoever, with or without Cause.

     11. LEGEND ON CERTIFICATES. A restrictive legend in the form set forth
below and other legends reasonably requested by the Company shall be placed on
the certificates representing Option Shares issued upon exercise of the Option:

          "THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
          CERTAIN REPURCHASE OPTIONS AND OTHER PROVISIONS SET FORTH IN A
          STOCK OPTION AWARD AGREEMENT BETWEEN THE ISSUER AND
          ______________ DATED AS OF _____________, 2001, AS AMENDED
          FROM TIME TO TIME, A COPY OF WHICH MAY BE OBTAINED BY THE
          HOLDER HEREOF AT THE ISSUER'S PRINCIPAL PLACE OF BUSINESS
          WITHOUT CHARGE."

     12. TRANSFERABILITY. Except as set forth in this SECTION 12, Participant
may not transfer his Option or Option Shares. Participant may transfer Option
Shares, subject to the terms and conditions of this Agreement and the Plan, to:

                                      -13-

<PAGE>

          (a) the Participant's Family Group;

          (b) a trust solely for the benefit of the Participant and his or her
Family Group; or

          (c) a partnership or limited liability company whose only members or
partners are the Participant and members of his or her Family Group; (each
transferee in clauses (i), (ii), and (iii) above, a "Permitted Transferee");
PROVIDED that the Participant, prior to the transfer of Option Shares to a
Permitted Transferee (other than a transfer in connection with or subsequent to
a Sale of the Company), the Participant shall deliver to the Company a written
agreement of the proposed transferee (a) evidencing such person's undertaking to
be bound by the terms of this Agreement and (b) acknowledging that the Option
Shares transferred to such person will continue to be Option Shares for purposes
of this Agreement in the hands of such person. Any transfer or attempted
transfer of Option Shares in violation of any provision of this Agreement shall
be void, and the Company shall not record such transfer on its books or treat
any purported transferee of such Option Shares as the owner of such Option
Shares for any purpose.

         13. CONFIDENTIALITY. Participant recognizes and acknowledges that he
may receive certain confidential and proprietary information and trade secrets
of the Company and its Subsidiaries, including but not limited to confidential
information of the Company and its Subsidiaries regarding their financial
condition (the "CONFIDENTIAL INFORMATION"). Participant agrees that he will not,
whether through an Affiliate or otherwise, disclose Confidential Information to
any Person for any reason or purpose whatsoever, except (i) to authorized
representatives and employees of the Company or the Subsidiaries and as
otherwise may be proper in the course of performing Participant's obligations,
or enforcing Participant's rights, under this Agreement, or (ii) as is required
to be disclosed by order of a court of competent jurisdiction, administrative
body or governmental body, or by subpoena, summons or legal process, or by law,
rule or regulation, PROVIDED that the Participant shall provide to the Board
prompt notice of such disclosure. For purposes of this SECTION 13, Confidential
Information shall not include any information (w) that has been published in a
form generally available to the public or becomes generally available to the
public prior to the date Participant discloses such information (such
information shall not be deemed to have been published merely because individual
portions of the information have been separately published, but only if all
material features constituting such information have been published in
combination), (x) of which Participant became aware prior to its affiliation
with the Company, (y) Participant learns from sources other than the Company or
its Subsidiaries, (PROVIDED that Participant does not know or have reason to
know, at the time of Participant's disclosure of such information, that such
information was acquired by such source through violation of law, breach of
contractual confidentiality obligations or breach of fiduciary duties) or (z)
which is disclosed by the Company in a prospectus or other documents for
dissemination to the public or is otherwise required to be disclosed by law or
legal process (subject to reasonable advance notice to the Company to permit the
Company to seek a protective order or otherwise protect its information).

          14. SECURITIES LAWS. Upon the acquisition of any Option Shares
pursuant to the exercise of the Option, the Participant will make or enter into
such written representations, warranties and

                                      -14-

<PAGE>

agreements as the Committee may reasonably request in order to comply with
applicable securities laws or with this Agreement.

          15. NOTICES. Any notice necessary under this Agreement shall be
addressed to the Company in care of its Secretary at the principal executive
office of the Company and to the Participant at the address appearing in the
personnel records of the Company for the Participant or to either party at such
other address as either party hereto may hereafter designate in writing to the
other. Any such notice shall be deemed effective upon receipt thereof by the
addressee.

          16. CHOICE OF LAW. The interpretation, performance and enforcement of
this Agreement shall be governed by the laws of the State of Delaware applicable
to contracts made and to be performed therein.

          17. BINDING EFFECT. The provisions of this Agreement shall be binding
upon and accrue to the benefit of the parties hereto and their respective heirs,
legal representatives, successors and assigns; provided that Vestar and Marathon
are third party beneficiaries of this Agreement and shall have the right to
enforce the provisions hereof.

          18. AMENDMENT; WAIVER. This Agreement may be amended only by a written
instrument signed by the parties hereto. No waiver by any party hereto of any of
the provisions hereof shall be effective unless set forth in writing executed by
the party so waiving.

          19. OPTION SUBJECT TO PLAN. By entering into this Agreement the
Participant agrees and acknowledges that the Participant has received and read a
copy of the Plan. The Option and the Option Shares are subject to the Plan. The
terms and provisions of the Plan as it may be amended from time to time in
accordance with its respective terms are hereby incorporated herein by
reference. In the event of a conflict between any term or provision contained
herein and a term or provision of the Plan, the applicable terms and provisions
of the Plan will govern and prevail.

          20. SIGNATURE IN COUNTERPARTS. This Agreement may be signed in
counterparts (including by means of telecopied signature pages), each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.

                                      -15-

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement.

                                     M-FOODS HOLDINGS, INC.

                                     By:___________________________________
                                     Its:

Agreed and acknowledged as of the date first above written:

-------------------------
[NAME]

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