Standstill Agreement - PENNEXX FOODS INC - 7-9-2001 by PNNX-Agreements

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									STANDSTILL AGREEMENT THIS STANDSTILL AGREEMENT is made this 27th day of June, 2001, by and between SMITHFIELD FOODS, INC., a Virginia corporation ("Smithfield"), ELLIS M. SHORE, an individual ("Shore"), MICHAEL D. QUEEN, an individual ("Queen"), and PINNACLE FOODS, INC., a Pennsylvania corporation (the "Pinnacle"). BACKGROUND: WHEREAS, Smithfield purchased from Pinnacle and Pinnacle sold and issued to Smithfield 13,003,494 shares of Pinnacle Common Stock, par value $0.01 per share ("Common Stock") pursuant to that certain Stock Purchase Agreement dated as of May 31, 2001 (the "Stock Purchase Agreement"). WHEREAS, Pinnacle has granted to Smithfield the right to acquire additional shares of Common Stock pursuant to that certain Warrant issued by Pinnacle in favor of Smithfield dated the date hereof (the "Warrant"). NOW THEREFORE, for and in consideration of the premises and of the mutual covenants, agreements, representations and warranties set forth herein and in the Stock Purchase Agreement and the Warrant, the parties hereto, intending to be legally bound hereby, agree as follows: 1. Definitions. The following terms, as used in this Agreement, shall have the respective meanings given to such terms as set forth below: (a) "Affiliate," "Associate," and "Control" shall have the respective meanings set forth in Rule 405 promulgated under the Securities Act. (b) "Beneficial Owner" shall have the meaning set forth in Rule 13d-3 promulgated under the Exchange Act. (c) "Business Combination" means any acquisition, purchase, merger, consolidation, amalgamation, joint venture, contribution of assets, sale, lease, exchange, mortgage, pledge, transfer, or other disposition in one transaction or a series of related transactions by which the business of one entity is combined or put together with the business of another entity, directly or indirectly (such as through a subsidiary of the acquiring entity). (d) "Business Day" shall mean a day other than a Saturday, Sunday or Holiday. (e) "Confidential Information" means all confidential information of a party including, without limitation, scientific, commercial, technical, contractual, engineering, marketing and financial information, drawings, blueprints, descriptions, know-how, marketing plans, customer and vendor lists, and other proprietary information, whether or not patented or patentable. Any and all information derived from Confidential Information and all compilations 1

and copies of Confidential Information shall also be deemed to be Confidential Information pursuant to the terms of this Agreement. (f) "Exchange Act" means the Securities Exchange Act of 1934, as amended. (g) "GAAP" means generally accepted accounting principles consistently applied from period to period. (h) "Holiday" means a day, other than a Saturday or Sunday, on which national banks with branches in the Commonwealth of Pennsylvania are or may elect to be closed. (i) "Limitation Period" means the time period beginning on the date of this Agreement and ending on the first to occur of (i) the fifth anniversary of such date, (ii) the last day of the sixth consecutive calendar quarter in which Pinnacle had a net loss (computed in accordance with GAAP), (iii) the first date on which neither Shore nor Queen is a Beneficial Owner of any Voting Securities, or (iv) the last day of the calendar quarter on which the net worth of Pinnacle first falls below Two Million Dollars ($2,000,000). (j) "Matthews Agreement" means the agreement by and between Pinnacle and Robert V. Matthews dated November 22, 2000. (k) "Person" means any individual, trust, corporation, partnership, limited liability company, or other entity. (l) "SEC" means the Securities and Exchange Commission. (m) "Securities Act" means the Securities Act of 1933, as amended. (n) "Smithfield Group" means Smithfield and all of its Affiliates and Associates (regardless of whether such Affiliate or Associate is an Affiliate or Associate on the date hereof), both in their individual capacities and collectively, which own any Voting Securities. (o) "Subsidiary" shall mean any entity more than fifty percent (50%) of the equity interests of which are owned by Pinnacle or by another Subsidiary. (p) "13D Group" shall mean any group of Persons formed for the purpose of acquiring, holding, voting or disposing of Voting Securities which would be required under Section 13(d) of the Exchange Act or the rules and regulations promulgated thereunder to file a Statement on Schedule 13D or a Statement on Schedule 13G with the Securities and Exchange Commission as a "person" within the meaning of Section 13(d)(3) of the Exchange Act if such group beneficially owned more than five percent (5%) of any class of equity securities of Pinnacle then outstanding. 2

(q) "Voting Power" means, with respect to any Voting Security, the maximum number of votes which such Voting Security is or would be entitled to cast generally for the election of directors, and in the case of a convertible, exercisable or exchangeable Voting Security, considering such security both on an unconverted, unexercised or unexchanged basis and also on a converted, exercised or exchanged basis, as the case may be. (r) "Voting Securities" means Common Stock and any other securities of Pinnacle entitled to vote generally for the election of directors or any security convertible into or exchangeable or exercisable for the purchase of Common Stock or other securities of Pinnacle entitled to vote generally for the election of directors. 2. Restrictions on Resale or Other Disposition. (a) During the Limitation Period, Smithfield shall not, and shall cause each other member of the Smithfield Group not to, directly or indirectly, sell or transfer any beneficial interest in, pledge, hypothecate or otherwise dispose of, any Voting Securities beneficially owned by it, except pursuant to: (i) Any lien or encumbrance of all, but not less than all, of the Voting Securities then beneficially owned by such members, collectively, to an institutional lender to secure a bona fide loan, the foreclosure of such a lien or encumbrance, any other such lien or encumbrance which may be placed involuntarily on all such Voting Securities, or the subsequent sale or other disposition of all such Voting Securities by such lender or its agent; provided that such lender and any purchaser or other transferee of such Voting Securities, whether at foreclosure proceedings, from the lender, or by subsequent transfer or sale, is a Permitted Transferee (as hereinafter defined); (ii) a transfer, assignment, sale or disposition of such Voting Securities among members of the Smithfield Group, provided that all of the voting and equity interests of the transferee shall be, directly or indirectly, owned by Smithfield and such transferee also be a Permitted Transferee; (iii) a Business Combination not in violation of subparagraph 4(b)(x) of this Agreement; (iv) sales of Common Stock (A) to the public pursuant to and in compliance with the requirements of Rule 144 promulgated under the Securities Act or (B) pursuant to a distribution to the public under a registration statement filed under the Securities Act and declared effective by the SEC, provided that the Smithfield Group makes such distribution through a firm commitment underwriting and the underwriters agree to use all commercially reasonable efforts to effect as wide a distribution of such Common Stock as reasonably practicable and to prevent any Person or related group of Persons from purchasing through such sale or underwritten offering Common Stock having in the aggregate more than five percent (5%) of the total combined Voting Power of all Voting Securities then outstanding, without the prior express written consent of Pinnacle, and further provided, that Pinnacle shall 3

have approved the lead underwriter used by the selling members of the Smithfield Group, such approval not to be unreasonably withheld. (b) Notwithstanding the foregoing, members of the Smithfield Group may sell, subject to the terms of Paragraph 3, less than all of the Voting Securities then owned by the Smithfield Group to one or more Permitted Transferees pursuant to the terms of subparagraph 2(a)(i), provided that any breach of this Agreement or the taking of any other action under or with respect to this Agreement by any member of the Smithfield Group or any such Permitted Transferee shall constitute the action of, and shall be binding upon, Smithfield and all such Permitted Transferees. No sale, transfer, pledge, hypothecation or disposition of any or all of the Voting Securities held by the Smithfield Group shall relieve Smithfield of its obligations under this Agreement except as permitted under this Agreement. (c) A "Permitted Transferee" shall mean a person or entity who or which has delivered the written agreement of such person or entity to Pinnacle, satisfactory in form and substance to Pinnacle and its counsel, to be bound by the provisions of this Agreement to the same extent as if such Permitted Transferee were a member of the Smithfield Group hereunder, together with, in transactions referred to in subparagraphs 2(a) or 2(b), an opinion of counsel reasonably satisfactory to Pinnacle to the effect that the foregoing written agreement constitutes the valid and binding obligation of such Permitted Transferee, enforceable in accordance with its terms except (i) that such enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium, or similar laws now or hereafter in effect relating to creditors' rights and (ii) that the remedy of specific performance and injunctive and other forms of equitable relief is subject to certain equitable defenses and to the discretion of the court before which any proceeding therefor may be brought. Any Permitted Transferee shall be deemed to be a member of the Smithfield Group for all purposes of this Agreement. (d) A sale of all or substantially all of the capital stock or assets of a member of the Smithfield Group shall be deemed to be an indirect sale of Voting Securities within the meaning of this Agreement if such Voting Securities would be owned by a non-member of the Smithfield Group, directly or indirectly, after such sale; and as such, shall be prohibited except pursuant to the terms and subject to the conditions of this Agreement. 3. Pinnacle's Right of First Refusal. (a) If any member of the Smithfield Group (a "Selling Member") shall at any time desire to sell all or any Voting Securities (other than pursuant to and in accordance with the provisions of subparagraph 2(a)(iv)), Smithfield shall cause such Selling Member first to obtain a bona fide written offer which it desires to accept (hereinafter called the "Offer") to purchase such Voting Securities for a fixed cash price (which may be payable over time). The Offer shall set forth its date, the proposed price per Voting Security, the fact that the prospective purchaser is willing to deliver the written agreement of such prospective purchaser to be bound by the provisions of this Agreement, and the other terms and conditions upon which the purchase is proposed to be made, as well as the name and address of the Prospective Purchaser. "Prospective Purchaser" as used herein shall mean the prospective record owner or owners of the Voting Securities, which are the subject of the Offer and all other Persons proposed to be a 4

Beneficial Owner of such Voting Securities. Smithfield shall transmit copies of the Offer to Pinnacle within seven (7) days after receipt of the Offer. (b) Transmittal of the Offer to Pinnacle by Smithfield shall constitute an offer by such Selling Member and Smithfield to sell all, but not less than all, of the Voting Securities subject to such Offer at the price and upon the terms set forth in the Offer. For a period of thirty (30) days after the submission of the Offer to Pinnacle, Pinnacle shall have the option, exercisable by written notice to Smithfield and such Selling Member, to accept the offer of such Selling Member and Smithfield as to all or any part of the applicable Voting Securities. The right and option granted pursuant to this subparagraph (b) shall be assignable by Pinnacle in whole or in part. (c) If, at the end of the option period described in subparagraph 3(b), Pinnacle and its assignees have not exercised the option to purchase all the applicable Voting Securities given to it pursuant to the terms of such offer, then such Selling Member shall be free for a period of twenty (20) days thereafter to sell the Voting Securities which Pinnacle and its assignees have not agreed to purchase and which are subject to the Offer of the Prospective Purchaser at the price and upon the terms and conditions set forth in the Offer. If such Voting Securities are not so sold within such twenty-day period, then such Selling Member shall not be permitted to sell such Voting Securities without again complying with the terms of this Paragraph 3. (d) Settlement for the purchase of Voting Securities pursuant to the option granted in subparagraph 3(b) shall be made within forty-five (45) days following the date of exercise of such option. The purchase price and the terms of payment shall be those contained in the Offer, with settlement to be made as provided herein. Such settlement, unless otherwise agreed to by Pinnacle and such Selling Member shall be held at the principal executive offices of Pinnacle during regular business hours. The precise date and hour of settlement shall be fixed by Pinnacle (within the time limits allowed by the provisions of this Agreement) by notice in writing to such Selling Member given at least five (5) days in advance of the settlement date specified. (e) At settlement, the security certificate or certificates representing the Voting Securities being sold shall be delivered by such Selling Member to the purchaser(s), duly endorsed for transfer or with executed stock powers attached, with signatures guaranteed by a member of the Stock Transfer Agents Medallion Program, with any necessary documentary and transfer tax stamps affixed by such Selling Member, together with a certificate of the Secretary or an Assistant Secretary of such Selling Member that such sale has been approved by all necessary corporate action, and the purchaser shall deliver to the Selling Member the full consideration for such Voting Securities in immediately available funds. 4. Additional Covenants of Smithfield. (a) During the Limitation Period, Smithfield shall, and shall cause each other member of the Smithfield Group to, subject to the receipt of proper notice and the absence of a temporary restraining order or preliminary or permanent injunction barring such action, as a shareholder of Pinnacle, be present in person or by proxy, at all annual shareholder 5

meetings of Pinnacle and at up to one special meeting of shareholders per year of Pinnacle so that all Voting Securities beneficially owned by them may be counted for the purpose of determining the presence of a quorum at such meetings; (b) During the Limitation Period, Smithfield, shall refrain, and shall cause each other member of the Smithfield Group, to refrain, directly or indirectly, from: (i) soliciting proxies with respect to Voting Securities, or becoming a "participant" in a "solicitation" (as such terms are defined in Regulation 14A promulgated under the Exchange Act) in opposition to the recommendation of the Board of Directors of Pinnacle; (ii) depositing any Voting Securities in a voting trust or subjecting them to a voting agreement, shareholders' agreement, or other arrangement of similar effect; (iii) except pursuant to the Warrant or Paragraph 10 of this Agreement, permitting any entity under the control of any member of the Smithfield Group to acquire, offer to acquire, agree to acquire, or obtain an option or right to acquire, directly or indirectly, by purchase or otherwise, any Voting Securities; (iv) acquiring, offering to acquire, agreeing to acquire, or obtaining an option or right to acquire, directly or indirectly, by purchase or otherwise, any record or beneficial ownership of Voting Securities, except: (A) through stock splits, stock dividends or other pro rata distributions or offerings made by Pinnacle to holders of any class of Voting Securities generally; (B) if such acquisition is a result of the issuance by Pinnacle of Voting Securities pursuant to the terms of any merger, consolidation, or other means of acquisition not in violation of subparagraph 4(b)(x) of this Agreement, in exchange for securities of a corporation or other entity acquired in whole or in part by Pinnacle or any of its Subsidiaries which securities were owned by any member of the Smithfield Group prior to the time of the first public announcement of the acquisition or, if sooner, the time any member of the Smithfield Group learned of the acquisition; (C) pursuant to the terms of the Warrant or Paragraph 10 of this Agreement; or (D) with the express written consent of Pinnacle; (v) joining a partnership, limited partnership, syndicate, or 13D Group or other group (other than the Smithfield Group) for the purpose of acquiring, holding or disposing of Voting Securities; (vi) initiating or inducing or attempting to induce or give material support to any other Person to initiate any proposal or tender or exchange offer to acquire Voting Securities; (vii) acquiring or permitting any entity under their control (including but not limited to subsidiaries and employee pension, profit sharing or other trusts under investment management control of any member of the Smithfield Group) to acquire, by purchase or otherwise, more than five percent (5%), in the aggregate, of any class of equity 6

securities of any entity which, prior to the time the Smithfield Group acquires more than five percent (5%) of such class, is publicly disclosed (by filing with the Securities and Exchange Commission or otherwise) to be the record owner or Beneficial Owner of more than five percent (5%) of any class of Voting Securities; (viii) executing any written consent or demand in lieu of a meeting with respect to Voting Securities or otherwise taking any action in the nature of a vote with respect to Voting Securities except at a meeting of the shareholders of Pinnacle or pursuant to a unanimous consent or other unanimous action; or (ix) making or voting in favor of, directly, or indirectly, any proposal regarding a Business Combination or transaction involving Pinnacle on the one hand and a corporation, division, or other business entity or unit owned or controlled by Smithfield, on the other hand, or directly or indirectly, soliciting or inviting proposals from other parties for a Business Combination to which Pinnacle is or would be a party without the consent of a majority of the members of the Board of Directors of Pinnacle, other than the Smithfield Directors (as defined below). 5. Confidentiality. (a) During the Limitation Period and for a period of two (2) years thereafter, Smithfield shall, and shall cause each other member of the Smithfield Group to, use reasonable care to maintain the strict confidentiality of all Confidential Information received from Pinnacle, except insofar as written approval of Pinnacle is obtained; provided, however, that the foregoing obligation of confidentiality shall not apply to any portion of the Confidential Information which is or become public knowledge other than through the unauthorized disclosure of a member of the Smithfield Group; was known to Smithfield before receipt from Pinnacle; is received legally without restriction on disclosure from a third party who has the right to make such disclosure; or is required to be disclosed in order to comply with a judicial order, subpoena, or decree or with any law or regulation of any governmental authority. (b) Because any breach of this Paragraph 5 would have a material adverse effect on Pinnacle for many years, and the monetary impact of any such breach may be difficult or impossible to measure accurately in monetary terms, the parties recognize and acknowledge that irreparable damage may result if such provisions protecting Pinnacle are not specifically enforced. Accordingly, if any dispute arises regarding compliance with the terms of this Paragraph 5, the parties agree that Pinnacle shall be entitled, without having to demonstrate actual damage, to a temporary or permanent injunction, issuable by any court with appropriate jurisdiction, with respect to noncompliance with such provisions pending determination of such controversy and that no bond or other security shall be required to be posted by Pinnacle in connection with such action. If any dispute arises concerning the rights and obligations of any party under this Agreement, such right or obligation shall be enforceable by a decree of specific performance. The remedies provided in this subparagraph (b) are cumulative and not exclusive of any other remedies provided at law or equity, and are not intended to limit nor shall they be interpreted as limiting the generality of subparagraph 11(a) of this Agreement. Moreover, the 7

provisions of this Paragraph 5 shall not, and are not intended to, replace or nullify any fiduciary or other duty owed to Pinnacle by Smithfield or any other member of the Smithfield Group. (c) The Confidential Information of Pinnacle shall remain the property of Pinnacle, and Pinnacle may demand the return thereof at any time upon giving written notice to Smithfield. Within thirty (30) days of receipt of such notice, Smithfield shall return all of the original written Confidential Information or other written materials and all compilations and copies thereof received from Pinnacle and shall destroy all copies and reproductions (both written and electronic) in its possession and in the possession of persons to whom any such Confidential Information and other material which was disclosed to a member of the Smithfield Group. (d) Nothing contained in this Agreement shall be construed as conveying any license or right, express or implied, to Smithfield by Pinnacle for any invention, patent application, patent, copyright, know-how, trade secret, trademark, service mark, other intellectual property right or application owned by Pinnacle. 6. Furnishing Certain Information. During the Limitation Period, the Smithfield Group shall furnish to Pinnacle, in addition to copies of all filings required by law to be made in the event of any acquisition or sale of Pinnacle securities by it, a statement, within ten (10) calendar days after the end of each month in which any Voting Securities are acquired or disposed of, showing the number of Voting Securities acquired or disposed of during such month and the aggregate number of Voting Securities currently held by the Smithfield Group at the end of such month. 7. Legend and Stop Transfer Order. To assist in effectuating the provisions of this Agreement, Smithfield hereby consents: (a) to the placement, within ten (10) business days from the date hereof or the date any Voting Securities are acquired by any member of the Smithfield Group, of the following legend on all certificates representing ownership of Voting Securities of which any member of the Smithfield Group (or any Permitted Transferee) is the Beneficial Owner until such shares are sold, transferred or disposed of pursuant hereto and free from the restrictions on transfer imposed hereby: The shares represented by this certificate are subject to the provisions of an Agreement among Smithfield Foods, Inc., Pinnacle Foods, Inc., Ellis M. Shore, and Michael D. Queen, dated June __, 2001, as such agreement may be further amended, and may not be sold, transferred, pledged, hypothecated or otherwise disposed of except in accordance therewith. Copies of such agreement are on file at the office of the corporate secretaries of Smithfield Foods, Inc. and of Pinnacle Foods, Inc.; (b) to the entry of stop transfer orders with the transfer agent of Pinnacle against the transfer of Voting Securities except in compliance with the requirements of 8

this Agreement, or if Pinnacle acts as its own transfer agent, with respect to the refusal by Pinnacle to transfer any such securities except in compliance with the requirements of this Agreement. Pinnacle agrees to remove promptly all legends and stop transfer orders with respect to the proper transfer of Voting Securities being made in compliance with the provisions of this Agreement to a Person other than a Permitted Transferee. 8. Additional Agreements of the Parties. (a) During the Limitation Period, Pinnacle shall not oppose or interfere with any action by the Smithfield Group to acquire or dispose of Voting Securities in compliance with the provisions of the Warrant, nor commence any action against any member of the Smithfield Group arising out of or relating to its acquisition or holding of Voting Securities, except to enforce, or arising out of a breach of, the provisions of this Agreement. (b) During the Limitation Period, Pinnacle shall furnish to Smithfield such information as Smithfield reasonably requires. (c) During the Limitation Period, Pinnacle, Smithfield, Shore, and Queen shall and hereby agree to: (i) take no action to change the number of directors of Pinnacle from the five (5) directors now provided for in Pinnacle's By-laws without the consent of each of them who then hold Voting Securities; and (ii) vote all their shares of Common Stock in favor of electing as directors of Pinnacle, one (1) nominee of Queen, two (2) nominees of Shore, and two (2) nominees of Smithfield (the "Smithfield Directors"). If a vacancy occurs on the Pinnacle Board of Directors, the parties shall use their best efforts to cause the vacancy to be filled in a manner consistent with the intention of the preceding sentence. (d) During the Limitation Period, without the consent of one of the two Smithfield Directors, which consent may be withheld in the sole discretion of such directors, Pinnacle shall not and the parties to this Agreement shall use reasonable commercial efforts (including, without limitation, voting all their shares of Common Stock) to cause Pinnacle not to: (i) declare, pay, or set aside any funds for or in the nature of a dividend or other distribution on or with respect to the shares of Common Stock (other than dividends payable in shares of Common Stock); (ii) engage in any transaction to which Pinnacle is a party on the one hand, and any director, officer, or Affiliate or Associate of Pinnacle or of such director, officer, Affiliate or Associate is a party on the other hand; (iii) make any capital expenditures except for capital expenditures made pursuant to a budget approved in advance by a Smithfield Director, or in the absence of such an approved budget, capital expenditures of not more than One Hundred Thousand Dollars ($100,000) per year; 9

(iv) issue any capital stock, or any right to receive or right convertible into capital stock except for any such issuances made pursuant to agreements outstanding on the date hereof and except as otherwise set forth in subsection (g) of this Section 8; (v) settle any dispute under the Matthews Agreement other than by issuance of stock and/or the repayment of $300,000 plus accrued interest, if any, lent by Mr. Matthews to the corporation as referenced in the Matthews Agreement; (vi) except pursuant to that certain Credit Agreement between Pinnacle as borrower and Smithfield as lender, borrow, create security interests, modify or prepay existing indebtedness for borrowed money, involving or securing in excess of $250,000 in the aggregate except as specifically set forth in a budget approved by the Board of Directors of Pinnacle (the "Budget"); (vii) change Pinnacle's accounting methods except for changes required to conform to GAAP; (viii) incur any obligation, including any contingent obligation, or assume any liability in excess of $250,000, except in accordance with the Budget; (ix) enter into new lines of business or new businesses; (x) execute any amendment to, or modify any provision of the Articles of Incorporation or the By-Laws; (xi) commence a voluntary case or consent to the entry of an order for relief against it in an involuntary case under Chapter 7 or Chapter 11 of the United States Bankruptcy Code; (xii) acquire (including by merger) stock or assets of another business (other than assets acquired in the ordinary course of business), from any seller or group of related sellers in one transaction or in a series of related transactions, for consideration having a fair market value in excess of $500,000, except as specifically set forth in the Budget; (xiii) sell or dispose of assets not in the ordinary course of business (including by merger or sale of stock of a subsidiary), to any buyer or group of related buyers in one transaction or in a series of related transactions, or for consideration having a fair market value in excess of $500,000, except as specifically set forth in the Budget; or (xiv) increase the compensation payable to any Pinnacle employee earning in excess of Seventy Five Thousand Dollars ($75,000) per year, except in accordance with a company - wide payroll increase of six percent (6%) or less per year. (e) Pinnacle shall, promptly following the date hereof, at its cost and expense, file a registration statement with the SEC under the Exchange Act and use reasonable commercial efforts to have such registration statement declared effective. 10

(f) Each party to this Agreement understands, acknowledges, and agrees that, each other party and its respective Affiliates and Associates may invest, participate, or engage in or may possess an interest in, other financial and business ventures and investment and professional activities of every kind and description, independently or with others. The parties hereto expressly agree that no party shall by reason of their relationship hereunder or of the execution of this Agreement have any rights in or to any such venture or activity, or to any fees, income, profits or goodwill derived therefrom or any right to limit or prevent, in any respect, any such venture or activity, regardless of its nature, including without limitation, Smithfield's competition with Pinnacle and Pinnacle's competition with Smithfield. (g) Notwithstanding the provisions of subsection 8(d)(iv) to the contrary, Pinnacle shall be entitled to issue stock options (and upon proper exercise of such options, the underlying shares) to two prospective employees of Pinnacle (the names of which have been provided to Smithfield) in an aggregate amount not to exceed Three Hundred Thousand (300,000) shares. 9. Smithfield Beneficial Ownership of Voting Securities. Smithfield hereby represents and warrants to the other parties to this Agreement that it is not, and no Affiliate or Associate of Smithfield is, the Beneficial Owner of any Voting Securities except pursuant to the Stock Purchase Agreement and the Warrant. 10. Smithfield's Right of First Offer. (a) If Shore or Queen shall at any time desire to sell all or any Voting Securities owned by either of them, respectively, he shall give the other parties to this Agreement notice of his intention to do so. Such notice shall contain the number and type of Voting Securities which he desires to sell, and the minimum price per Voting Security and in the aggregate which he is willing to accept for such Voting Securities. (b) Transmittal of such notice to Smithfield shall constitute an offer by such prospective seller to sell all or any portion of the Voting Securities referred to in such notice at the price set forth therein to Smithfield. For a period of five (5) days after receipt of such notice to Smithfield, Smithfield shall have the option, exercisable by written notice to such prospective seller, to accept the offer of such prospective seller as to all or any part of the applicable Voting Securities. (c) If, at the end of the five-day period described in subparagraph (b), Smithfield has not agreed to purchase all the applicable Voting Securities given to it pursuant to the terms of such notice, then such prospective seller shall be free for a period of ninety (90) days thereafter to sell the Voting Securities referred to in such notice which Smithfield has not agreed to purchase at a price not lower than that contained in such notice. If all such Voting Securities are not so sold within such ninety-day period, then such prospective seller shall not be permitted to sell any such Voting Securities which then remain unsold without again complying with the terms of this Paragraph 10. 11

(d) Settlement for the purchase of Voting Securities pursuant to the exercise of the right granted in subparagraph (b) shall be made within forty-five (45) days following the date of exercise of such right. The purchase price per Voting Security and the terms of payment shall be those contained in such notice, with settlement to be made as provided herein. Such settlement, unless otherwise agreed to by Smithfield and such prospective seller, shall be held at the principal executive offices of Pinnacle during regular business hours. The precise date and hour of settlement shall be fixed by Smithfield (within the time limits allowed by the provisions of this Agreement) by notice in writing to such prospective seller given at least ten (10) days in advance of the settlement date specified. (e) At settlement, the security certificate or certificates representing the Voting Securities being sold shall be delivered by such prospective seller to Smithfield, duly endorsed for transfer or with executed stock powers attached, with signatures guaranteed by a member of the Stock Transfer Agents Medallion Program, with any necessary documentary and transfer tax stamps affixed by such prospective seller, and Smithfield shall deliver the purchase price for the Voting Securities to be purchased in immediately available funds. 11. General (a) Specific Enforcement; Other Remedies. Smithfield and Pinnacle acknowledge and agree that the other would be irreparably damaged in the event any of the provisions of this Agreement were not performed in accordance with its specific terms or were otherwise breached. It is accordingly agreed that the non-breaching party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state thereof having jurisdiction, in addition to any other remedy to which such non-breaching party may be entitled at law or equity. If any party (or any transferee) breaches a material provision of this Agreement, in addition to any other rights and remedies (including money damages) available to it at law or in equity, the non-breaching party will be entitled to damages from the breaching party. The remedy contained in this subparagraph (a) shall not be deemed to be the exclusive remedy for material breach by a party to this Agreement (or any transferee) of this Agreement, nor shall such right be deemed to prejudice, or to operate as a waiver of, any remedy contained herein, or any other remedy to which Pinnacle or Smithfield may be entitled at law or equity. (b) Successors and Assigns. Except as provided herein, this Agreement shall be binding upon and inure to the benefit of and be enforceable by the successors and assigns of the parties hereto. (c) Indulgences, Etc. Neither the failure nor any delay on the part of any party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver. 12

(d) Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding any conflict-oflaws doctrines of such state or other jurisdiction to the contrary, and without the aid of any canon, custom or rule of law requiring construction against the draftsman. (e) Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered against receipt (personally, by courier service such as Federal Express, or by other messenger) or when deposited in the United States mails, registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below: (i) If to Pinnacle: 980 Glasgow Street Pottstown, PA 19464 Attention: President with a copy, given in the manner prescribed above, to: Steven B. King, Esquire Ballard Spahr Andrews & Ingersoll LLP 1735 Market Street, 51st Floor Philadelphia, Pennsylvania 19103 (ii) If to Queen: 3100 Old Limestone Road Wilmington, DE 19808 (iii) If to Shore: 1650 Oakwood Drive #102E Narberth, PA 19072 (iv) If to Smithfield: 200 Commerce Street Smithfield, VA 23430 Attention: Richard J.M. Poulson, Vice-President, General Counsel, and Senior Advisor to the Chairman 13

with a copy, given in the manner prescribed above, to: Michael H. Cole, Esquire Smithfield Foods, Inc. 200 Commerce Street Smithfield, VA 23430 In addition, notice by mail shall be by air mail if posted outside of the continental United States. Any party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this subparagraph (e) for the giving of notice. (f) Execution in Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original as against any party whose signature appears thereon, and all of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of all the parties reflected hereon as the signatories. (g) Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (h) Entire Agreement. This Agreement contains the entire understanding among the parties hereto with respect to the subject matter hereof except for related matters in the Stock Purchase Agreement, the Warrant, and the documents referred to therein, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (i) Paragraph Headings. The paragraph and subparagraph headings in this Agreement have been inserted for convenience of reference only; they form no part of this Agreement and shall not affect its interpretation. (j) Gender, Etc. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. (k) Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and Holidays; provided, 14

however, that if the final day of any time period falls on a Saturday, Sunday or Holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or Holiday. (l) Consent. Whenever consent or approval of Pinnacle is required under this Agreement, such consent or approval shall require the consent or approval of a majority of the Pinnacle Board of Directors other than directors nominated by Smithfield in accordance with subparagraph 8(c)(ii). IN WITNESS WHEREOF, the parties have caused this Agreement to be executed and delivered by their proper and duly authorized officers, as of the date first above written.
Attest: PINNACLE FOODS, INC.

By -----------------------------[Corporate Seal] -----------------------------------Title:

Attest:

SMITHFIELD FOODS, INC.

By -----------------------------[Corporate Seal] Witness: ----------------------------------------------------------------(SEAL) Ellis M. Shore -----------------------------------Title:

Witness: ----------------------------------------------------------------(SEAL) Michael D. Queen

15

REGISTRATION RIGHTS AGREEMENT This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered into this 27th day of June, 2001, by and between Pinnacle Foods, Inc., a Pennsylvania corporation (the "Company"), and Smithfield Foods, Inc., a Virginia corporation ("Smithfield"). Recitals The Company and Smithfield have entered into that certain Stock Purchase Agreement dated as of May 31, 2001 (the "Stock Purchase Agreement") whereby the parties agreed that Smithfield would purchase and the Company would issue and sell certain shares of common stock of the Company (the "Common Stock"), pursuant to the terms and conditions contained therein; and In consideration of the terms and conditions of the Stock Purchase Agreement and the Credit Agreement (as defined in the Stock Purchase Agreement), the Company has agreed to provide the registration rights set forth in this Agreement. Agreement NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, the parties hereto agree as follows: Section 1 Definitions. As used in this Agreement, the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission or any other Federal agency at the time administering the Securities Act. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Holders" means any holder or holders of shares of Common Stock of the Company. "Other Shares" means at any time those shares of Common Stock, which do not constitute Primary Shares or Registrable Shares. "Primary Shares" means at any time the authorized but unissued shares of Common Stock or shares of Common Stock held by the Company in its treasury. "Registrable Shares" means at any time, with respect to any Holder, the shares of Common Stock held by such Holder which constitute Restricted Shares. 1

"Restricted Shares" means at any time, with respect to any Holder, the shares of Common Stock, any other securities which by their terms are exercisable or exchangeable for or convertible into Common Stock, or other securities which are so exercisable or convertible, and any securities received in respect thereof, which are held by such Holder and which have not previously been sold to the public pursuant to a registration statement under the Securities Act or pursuant to Rule 144 or which are not (or would not be, upon any such exercise, exchange or conversion) eligible for sale by the holder thereof under Rule 144(k) or any successor rule thereto or any complementary rule thereto. "Rule 144" means Rule 144 promulgated by the Commission under the Securities Act as such rule may be amended from time to time, or any successor rule then in force. "Securities Act" means the Securities Act of 1933, as amended from time to time. "Selling Shareholders' Counsel" means one counsel selected by the Holders of a majority of the Registrable Shares being included in any registration. "Transfer" means any disposition of any Restricted Shares or of any interest therein which constitutes a sale within the meaning of the Securities Act, other than any disposition pursuant to an effective registration statement under the Securities Act and complying with all applicable state securities and "blue sky" laws. Section 2 Demand Registration. (a) Smithfield may at any time, after the Company has registered its Common Stock under the Exchange Act, make a written request for registration under the Securities Act of all or part of its Registrable Shares (a "Share Demand Registration"); provided, however, that (i) Smithfield and its successors, transferees and successive transferees shall be entitled to initiate only one (1) Share Demand Registration and (ii) such Registrable Shares shall be sold through a firm commitment underwriting. Such request shall specify the aggregate number of the Registrable Shares proposed to be sold, which aggregate number shall be greater than the number of shares of Common Stock which could be sold during a three-month period under Rule 144(e)(1). (b) A registration will count as a Share Demand Registration when it has become effective, unless a stop order is entered before the Registrable Shares included in such registration have been sold thereunder. In any registration initiated by Smithfield as a Share Demand Registration, Smithfield will pay all Demand Registration Expenses (as hereinafter defined) in connection therewith, whether or not it becomes effective, except as otherwise provided in Section 2(c) below. However, if prior to effectiveness, Smithfield withdraws its request for a Share Demand Registration other than pursuant to Section 2(c) below, it may not request another Share Demand Registration until it has paid all Demand Registration Expenses in connection with the withdrawn request. (c) The Company may postpone for up to ninety (90) days the filing or the effectiveness of a registration statement for a Share Demand Registration if the 2

Company determines that such Share Demand Registration would have a material adverse effect on any pending material financing, acquisition or corporate reorganization or other material corporate development or would require premature disclosure thereof; provided that in such event Smithfield shall be entitled to withdraw such request and, if such request is withdrawn, the Company will pay all Registration Expenses in connection with such requested registration incurred between the date of the demand and the date of the Company's decision to postpone such filing or effectiveness. The Company may delay a Share Demand Registration under this section only once during any twelve-month period. Section 3 Piggyback Registration. (a) If the Company at any time proposes for any reason to register Primary Shares, Restricted Shares or Other Shares under the Securities Act (other than a registration in connection with an exchange offer or offering solely to the Company's shareholders or filed in connection with an employee stock option or other benefit plan), the Company shall promptly give written notice to Smithfield of its intention to so register the Primary Shares, Restricted Shares or Other Shares and, upon the written request, given within ten (10) days after delivery of any such notice by the Company, of Smithfield to include in such registration Registrable Shares held by Smithfield (which request shall specify the number of Registrable Shares proposed to be included in such registration), the Company shall use its commercially reasonable efforts to cause all such Registrable Shares to be included in such registration on the same terms and conditions as the securities otherwise being sold in such registration; provided, however, that if the managing underwriter advises the Company that the inclusion of all Registrable Shares or Other Shares proposed to be included in such registration would interfere with the successful marketing (including pricing) of the Primary Shares, Restricted Shares or Other Shares proposed to be registered by the Company or Holders, then (A) if such registration is in part an underwritten primary registration on behalf of the Company, the Company will include in such registration (i) first, the Primary Shares, and (ii) second, the Registrable Shares requested to be included in such registration pro rata from among the Holders of such Registrable Shares according to the number of Registrable Shares requested by them to be so included, and (iii) third, any Other Shares in such manner as the Company may determine, and (B) if such registration is an underwritten secondary registration on behalf of Holders of the Company's securities, the Company will include in such registration (i) first, the Registrable Shares to be included therein by the Holders exercising demand registration rights with respect thereto, (ii) second, other Registrable Shares requested to be included in such registration, pro rata from among Holders of such Registrable Shares according to the number of Registrable Shares requested by them to be so included, and (iii) third, any Other Shares, in such manner as the Company may determine. In the event the Company determines not to pursue, or to withdraw, a registration as to which it has given notice pursuant to this section, the Holders of Registrable Securities requesting to be included in such registration shall have no further rights with respect to such proposed registration. Nothing contained in this Section 3 shall be or be deemed to be the creation of any registration right in any party other than Smithfield 3

(b) Smithfield may exercise its rights under this Section 3 on an unlimited number of occasions. The Company shall pay all Registration Expenses of any registration effected under this Section, except that Smithfield shall pay (or reimburse the Company for) the amount of registration, filing or listing fees relating to its Registrable Shares included in the registration and shall pay the fees of its counsel if different from Selling Shareholders' Counsel. (c) No Holder may participate in any registration under this section which is underwritten unless such Holder (a) agrees to sell such Holder's Registrable Shares on the basis provided in any underwriting agreement (with terms customary in underwriting agreements for secondary distributions) approved by the Company (including, without limitation, pursuant to the terms of any over-allotment or "green shoe" option requested by the managing underwriter(s), provided that no Holder of Registrable Shares will be required to sell more than the number of Registrable Shares that such Holder has requested the Company to include in any registration); provided, that no Holder of Registrable Shares included in any underwritten registration shall be required to make any representations or warranties to the Company or the underwriters (other than representations and warranties regarding such Holder and such Holder's intended method of distribution) or to undertake any indemnification or contribution obligations to the Company or the underwriters with respect thereto, except as otherwise provided in Section 6. Section 4 Preparation and Filing. If and whenever the Company is under an obligation pursuant to the provisions of this Agreement to use its commercially reasonable efforts to effect the registration of any Registrable Shares, the Company shall, as expeditiously as practicable: (a) file a registration statement with the Commission as soon as practicable, but in any event, within ninety (90) days after receipt of a request for registration, and use its commercially reasonable efforts to cause a registration statement that registers such Registrable Shares to become and remain effective for a period of ninety (90) days or until all of such Registrable Shares have been disposed of (if earlier); (b) furnish, at least ten business days before filing a registration statement that registers such Registrable Shares, a prospectus relating thereto or any amendments or supplements relating to such a registration statement or prospectus, to the Selling Shareholders' Counsel, copies of all such documents proposed to be filed (it being understood that such ten business-day period need not apply to successive drafts of the same document proposed to be filed so long as such successive drafts are supplied to such counsel in advance of the proposed filing by a period of time that is customary and reasonable under the circumstances); (c) prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for at least a period of 90 days or until all such Registrable Shares have been disposed of (if earlier) 4

and to comply with the provisions of the Securities Act with respect to the sale or other disposition of such Registrable Shares; (d) notify in writing the Selling Shareholders' Counsel promptly of the receipt by the Company of any notification with respect to: (i) any comments by the Commission with respect to such registration statement or prospectus or any amendment or supplement thereto or any request by the Commission for the amending or supplementing thereof or for additional information with respect thereto: (ii) the issuance by the Commission of any stop order suspending the effectiveness of such registration statement or prospectus or any amendment or supplement thereto or the initiation or threatening of any proceeding for that purpose; and (iii) the suspension of the qualification of such Registrable Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purposes; (e) use its commercially reasonable efforts to register or qualify such Registrable Shares under such other securities or blue sky laws of such jurisdictions as any seller of Registrable Shares reasonably requests and do any and all other acts and things which may be reasonably necessary or advisable to enable such seller of Registrable Shares to consummate the disposition in such jurisdictions of the Registrable Shares owned by such seller; provided, however, that the Company will not be required to qualify generally to do business, subject itself to general taxation or consent to general service of process in any jurisdiction where it would not otherwise be required so to do but for this Section; (f) furnish to each seller of such Registrable Shares such number of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as such seller of Registrable Shares may reasonably request in order to facilitate the public sale or other disposition of such Registrable Shares; (g) use its commercially reasonable efforts to cause such Registrable Shares to be registered with or approved by such other governmental agencies or authorities as may be necessary by virtue of the business and operations of the Company to enable the seller or sellers thereof to consummate the disposition of such Registrable Shares; (h) notify on a timely basis each seller of such Registrable Shares at any time when a prospectus relating to such Registrable Shares is required to be delivered under the Securities Act within the appropriate period mentioned in Section 4(a) the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements 5

therein not misleading in light of the circumstances then existing (and upon receipt of such notice such seller shall cease use of such prospectus until supplemented or amended) and, at the request of such seller, prepare and furnish to such seller a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the offerees of such shares, such prospectus shall not include an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; (i) make available for inspection by the Selling Shareholders' Counsel or any underwriter participating in any disposition pursuant to such registration statement and any attorney, accountant or other agent retained by any such, all pertinent financial and other records, pertinent corporate documents and properties of the Company, as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company's officers, directors and employees to supply all information reasonably requested in connection with such registration statement; (j) in any underwritten offering, use reasonable commercial efforts to obtain from its independent certified public accountants "cold comfort" letters in customary form and at customary times and covering matters of the type customarily covered by cold comfort letters; (k) in any underwritten offering, use reasonable commercial efforts to obtain from its counsel an opinion or opinions in customary form; (l) provide a transfer agent and registrar (which may be the same entity) for such Registrable Shares; (m) issue to any underwriter to which any seller of Registrable Shares may sell shares in such offering certificates evidencing such Registrable Shares; (n) list such Registrable Shares on any national securities exchange on which any shares of the Common Stock are then listed or, if the Common Stock is not listed on a national securities exchange, use commercially reasonable efforts to qualify such Registrable Shares for inclusion on the automated quotation system of the National Association of Securities Dealers, Inc. (the "NASD") or such national securities exchange as the Holders of a majority of such Registrable Shares shall request if such shares meet the listing requirements of such system or exchange, respectively; (o) otherwise comply with all applicable rules and regulations of the Commission and make available to its security holders, as soon as reasonably practicable, earnings statements (which need not be audited) covering a period of 12 months beginning within three months after the effective date of the registration statement, which earnings statements shall satisfy the provisions of Section 11(a) of the Securities Act; and (p) use its commercially reasonable efforts to take all other steps necessary to effect the registration of such Registrable Shares contemplated hereby. 6

Section 5 Registration Expenses. All expenses incident to the Company's performance of or compliance with this Agreement, including without limitation all registration and filing fees, fees and expenses of compliance with securities or blue sky laws, rating agency fees, printing expenses, messenger and delivery expenses, internal expenses (including, without limitation, all salaries and expenses of its officers and employees), the fees and expenses incurred in connection with the listing of the securities to be registered on each securities exchange or on NASDAQ, the fees and disbursements of counsel for the Company and all independent certified public accountants (including the expenses of any annual audit, special audit, or "cold comfort" letters required by or incident to such performance), the fees and disbursements of one counsel retained for the Holders of the Registrable Shares being registered, securities acts liability insurance (if the Company elects to obtain such insurance), the reasonable fees and expenses of any special experts retained by the Company in connection with such registration and fees and expenses of any underwriters or other persons retained by the Company, including fees or expenses of any underwriter's counsel (but not including any underwriting discounts or commissions attributable to the sale of Registrable Shares, which shall be borne by the Holders of such Registrable Shares) are herein referred to as the "Registration Expenses". "Demand Registration Expenses" shall mean Registration Expenses other than securities act liability insurance and fees and disbursements of counsel for Holders of Registrable Securities being registered (other than Smithfield). Section 6 Indemnification. (a) In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless Smithfield, its officers, directors, partners and employees, each underwriter, broker or any other person acting on behalf of Smithfield and each other person, if any, who controls any of the foregoing persons within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, (or actions in respect thereof) to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation by the Company of any rule or regulation promulgated pursuant to any Federal, state or common law rule or regulation including, without limitation, the Securities Act, applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and shall reimburse Smithfield, such officer, director, partner or employee, such underwriter, such broker or such other person acting on behalf of such seller and each such controlling person for any legal or other expenses reasonably incurred by any 7

of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Company shall not be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, preliminary prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by Smithfield or underwriter which specifically provides that it is for use in the preparation thereof. (b) In connection with any registration of any Registrable Shares under the Securities Act pursuant to this Agreement, Smithfield shall indemnify and hold harmless the Company, its officers, directors, partners and employees, each underwriter, broker or any other person acting on behalf of the Company and each other person, if any, who controls any of the foregoing persons within the meaning of the Securities Act against any losses, claims, damages or liabilities, joint or several, (or actions in respect thereof) to which any of the foregoing persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in the registration statement under which such Registrable Shares were registered under the Securities Act, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and shall reimburse the Company, such officer, director, partner or employee, such underwriter, such broker or such other person acting on behalf of such seller and each such controlling person for any legal or other expenses reasonably incurred by any of them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that Smithfield shall only be liable in any such case to the extent that any such loss, claim, damage, liability or action arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in said registration statement, preliminary prospectus, final prospectus, amendment, supplement or document incident to registration or qualification of any Registrable Shares in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by Smithfield which specifically provides that it is for use in the preparation thereof. (c) In connection with any registration of Registrable Shares under the Securities Act pursuant to this Agreement, the Company shall procure that each Holder that sells Registrable Shares in such registration shall indemnify and hold harmless (in the same manner and to the same extent as set forth in the preceding paragraph of this Section) the Company and Smithfield, each director of the Company, each officer of the Company who shall sign such registration statement, each underwriter, broker or other person acting on behalf of such seller, each person who controls any of the foregoing persons within the meaning of the Securities Act and each other Holder that sells 8

Registrable Shares under such registration statement with respect to any statement or omission from such registration statement, any preliminary prospectus or final prospectus contained therein or otherwise filed with the Commission, any amendment or supplement thereto or any document incident to registration or qualification of any Registrable Shares, if such statement or omission was made in reliance upon and in conformity with written information furnished to the Company or such underwriter through an instrument duly executed by such indemnifying Holder or underwriter specifically for use in connection with the preparation of such registration statement, preliminary prospectus, final prospectus, amendment, supplement or document; provided, however, that the obligation to indemnify will be several, not joint and several, among such Holders of Registrable Shares, and the maximum amount of liability in respect of such indemnification shall be in proportion to and limited to, in the case of each Holder of Registrable Shares, an amount equal to the gross proceeds actually received by such Holder from the sale of Registrable Shares effected pursuant to such registration. (d) The indemnification required by this Section will be made by periodic payments during the course of the investigation or defense, as and when bills are received or expenses incurred, subject to prompt refund in the event any such payments are determined not to have been due and owing hereunder. (e) Promptly after receipt by an indemnified party of notice of the commencement of any action involving a claim referred to in this Section, such indemnified party shall give written notice to the party required to provide indemnification of the commencement of such action. In case any such action is brought against an indemnified party, the indemnifying party will be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be responsible for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; provided, however, that if any indemnified party shall have reasonably concluded that there may be one or more legal or equitable defenses available to such indemnified party which are additional to or conflict with those available to the indemnifying party, or that such claim or litigation involves or could have an effect upon matters beyond the scope of the indemnity agreement provided in this Section, the indemnifying party shall not have the right to assume the defense of such action on behalf of such indemnified party and such indemnifying party shall reimburse such indemnified party and any person controlling such indemnified party for that portion of the fees and expenses of any counsel retained by the indemnified party which is reasonably related to the matters covered by the indemnity agreement provided in this Section. The failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying parties of its obligations under this Section unless such failure shall have a material adverse effect on the indemnifying party's ability to defend such claim. Notwithstanding the foregoing, a party who is claimed to owe an indemnity obligation may defend a claim against a third party while reserving the right to contest the asserted indemnity obligation, and to the extent the party who is claimed to owe an indemnity obligation prevails in such contest, the party asserting the right to 9

indemnification shall reimburse the other party for all amounts incurred by such party in the defense thereof and all asserted losses, claims, damages or liabilities, if any, for which payment had been made. (f) The indemnification provided for under this Agreement will remain in full force and effect regardless of any investigation made by or on behalf of the indemnified party or any officer, director or controlling person of such indemnified party and will survive the transfer of securities. (g) If the indemnification provided for in this Section is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or action referred to herein, then the indemnifying party, in lieu of indemnifying such indemnified party hereunder, shall contribute to the amounts paid or payable by such indemnified party as a result of such loss, claim, damage, liability or action in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions which resulted in such loss, claim, damage or liability as well as any other relevant equitable considerations. The relative fault of the indemnifying party and of the indemnified party 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 the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holders that sell Registrable Shares agree that it would not be just and equitable if contributions pursuant to this Section 6 (g) were determined by pro rata allocation or by any other method of allocation which did not take into account the equitable considerations referred to herein. The amount paid or payable to an indemnified party as a result of the losses, claims, damages, liabilities or expenses referred to above shall be deemed to include, subject to the limitation set forth in this Section, any legal or other expenses reasonably incurred in connection with investigating or defending the same. Notwithstanding the foregoing, in no event shall the amount contributed by a Holder that sells Registrable Shares exceed the aggregate gross offering proceeds received by such seller from the sale of its Registrable Shares. (h) The indemnified party shall make no settlement of any claim or litigation which would give rise to liability on the part of the indemnifying parties under any indemnity contained in this Section without the written consent of the indemnifying parties, which consent shall not be unreasonably withheld or delayed, and no indemnifying party shall make any settlement of any such claim or litigation without the consent of the indemnified party, which consent shall not be unreasonably withheld or delayed. If a firm offer is made to settle a claim or litigation and the indemnifying party notifies the indemnified party in writing that the indemnifying party desires to accept and agree to such offer, but the indemnified party elects not to accept or agree to such offer within ten days after receipt of written notice from the indemnifying party of the terms of such offer, then, in such event, the party that is defending such claim shall continue to contest or defend such claim or litigation and, in such event, the total maximum liability of the indemnifying party to indemnify or otherwise reimburse the indemnified party with respect to such claim or 10

litigation shall be limited to and shall not exceed the amount of such settlement offer, plus reasonable out-ofpocket costs and expenses (including reasonable fees and disbursements of counsel) to the date of notice that the indemnifying party desired to accept such settlement offer and the balance of such liability shall be borne and paid for by such indemnified party. Section 7 Information by Holder. Each Holder selling Registrable Shares in a proposed registration shall furnish to the Company such written information regarding such Holder and the distribution proposed by such Holder as the Company may reasonably request in writing and as shall be reasonably required in connection with any registration, qualification or compliance referred to in this Agreement. Section 8 Exchange Act Compliance. From and after the date a registration statement filed by the Company pursuant to the Exchange Act relating to any class of the Company's securities shall have become effective, the Company shall comply with all of the reporting requirements of the Exchange Act and with all other public information reporting requirements of the Commission which are conditions to the availability of Rule 144 for the sale of the Common Stock. The Company shall supply upon request such information as may be necessary for such Holder to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability of Rule 144. Section 9 No Conflict of Rights. The Company represents and warrants to Smithfield that the registration rights granted to Smithfield hereby do not conflict with any other registration rights granted by the Company. The Company shall not, without the prior written consent of Smithfield after the date hereof, grant any registration rights which conflict with, or are superior to, the registration rights granted hereby. Section 10 Miscellaneous. (a) Termination. This Agreement shall terminate and be of no further force or effect upon the date on which there remain no Restricted Shares outstanding. The indemnification provisions of Section 6 shall survive the termination of this Agreement. (b) Successors and Assigns. This Agreement shall bind and inure to the benefit of the Company and Smithfield and, subject to Section 10(c), their respective successors and assigns. (c) Assignment. Smithfield may assign its rights hereunder to any persons or entities that acquire Restricted Shares from Smithfield (unless such transfer is made in violation of the terms of the Standstill Agreement); provided, however, that such person or entity shall, as a condition to the effectiveness of such assignment, be required 11

to execute a counterpart to this Agreement whereupon such person or entity shall have the benefits of, and shall be subject to the restrictions contained in, this Agreement with respect to such Restricted Shares. (d) Entire Agreement. This Agreement constitutes the entire agreement of the parties as to the subject matter herein contained, superseding any and all prior or contemporaneous oral and prior written agreements, understandings, letters of intent or commitment letters. (e) Notices. All notices, requests, consents and other communications hereunder to any party shall be deemed to be sufficient if contained in a written instrument and shall be deemed to have been duly given when delivered in person, by telecopy, by nationally-recognized overnight courier, or by first class registered or certified mail, postage prepaid, addressed to such party at the address set forth on the signature pages hereto or such other address as may hereafter be designated in writing by the addressee to the addressor at the address and telecopier numbers set forth in the Shareholders Agreement. All such notices, requests, consents and other communications shall be deemed to have been delivered (a) in the case of personal delivery or delivery by telecopy, on the date of such delivery, (b) in the case of nationally-recognized overnight courier, on the next business day and (c) in the case of mailing, on the third business day following such mailing if sent by certified mail, return receipt requested. (f) Modifications; Amendments; Waivers. The terms and provisions of this Agreement may not be modified or amended, except pursuant to a writing signed by the Company and Smithfield. (g) Counterparts. This Agreement may be executed in any number of counterparts, and each such counterpart hereof shall be deemed to be an original instrument, but all such counterparts together shall constitute but one agreement. (h) Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be a part of this Agreement. (i) Severability. It is the desire and intent of the parties that the provisions of this Agreement be enforced to the fullest extent permissible under the law and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any provision of this Agreement would be held in any jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. 12

(j) Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without giving effect to principles governing conflicts of laws. (k) Holdback Agreements. (i) Smithfield shall not and hereby agrees not to effect any sale or distribution of Common Stock during the seven days prior to and the 180-day period beginning on the effective date of any underwritten registration in which Smithfield had a right to participate in pursuant to the provisions of this Agreement (except as part of such underwritten registration), unless the underwriters managing such underwritten registration otherwise agree in writing. (ii) The Company will not effect any sale or distribution of its equity securities, or any securities convertible into or exchangeable or exercisable for such securities, during the seven days prior to and during the 180-day period beginning on the effective date of any underwritten Share Demand Registration (except or pursuant to (i) registrations on Forms S-4 or S-8 or any successor or similar form, or (ii) sales exempt from the registration requirements of the Securities Act), unless the underwriters managing such underwritten registration otherwise agree in writing. [Remainder of page intentionally left blank.] 13

IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by their authorized officers as of the day and year first above written. PINNACLE FOODS, INC. By Name: Title: Address: SMITHFIELD FOODS, INC. By: Name: Title: Address: 14

$30,000,000 CREDIT AGREEMENT, dated as of June 27, 2001, among PINNACLE FOODS, INC., as the Borrower, and SMITHFIELD FOODS, INC., as the Lender.

TABLE OF CONTENTS
Page

ARTICLE I SECTION SECTION SECTION SECTION 1.1 1.2 1.3 1.4

DEFINITIONS AND ACCOUNTING TERMS................................1 Defined Terms...................................................1 Use of Defined Terms...........................................13 Cross-References...............................................13 Accounting and Financial Determinations........................14 COMMITMENTS, BORROWING PROCEDURES, LETTERS OF CREDIT AND NOTES..........................................................14 Future Subsidiaries............................................14 Lenders Not Permitted or Required To Make Credit Extensions....14 Borrowing Procedures...........................................14 Notes..........................................................14 REPAYMENTS, PREPAYMENTS, INTEREST AND FEES.....................15

ARTICLE II

SECTION SECTION SECTION SECTION

2.1 2.2 2.4 2.7

ARTICLE III

SECTION 3.1 SECTION SECTION SECTION SECTION SECTION SECTION 3.1.1 3.1.2 3.2 3.2.1 3.2.1 3.2.3

Repayments and Prepayments.....................................15 Voluntary Prepayments..........................................15 Mandatory Repayments and Prepayments...........................15 Interest Provisions...........................................16 Rates.........................................................16 Post-Default Rates.............................................16 Payment Dates..................................................16 OTHER PROVISIONS...............................................16 Use of Proceeds................................................16 Taxes..........................................................16 Payments, Computations, etc....................................17 CONDITIONS TO CREDIT EXTENSIONS................................17 Initial Credit Extension.......................................17 Agreement......................................................17 Resolutions, Good Standing, etc................................17 Delivery of Note...............................................18 Required Consents and Approvals................................18 Consummation of the Acquisition................................18 Opinions of Counsel...........................................18 Borrowing Base Certificate....................................18 Evidence of Insurance..........................................18 UCC Search Results, etc........................................18 Security Agreement, Filings, etc...............................18 Solvency Certificate...........................................19 Closing Date Certificate.......................................19 Payment of Outstanding Indebtedness, etc.......................19 All Credit Extensions..........................................19 Compliance with Warranties, No Default, etc....................19 -ii-

ARTICLE IV SECTION 4.1 SECTION 4.2 SECTION 4.3 ARTICLE V SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.1.7 5.1.10 5.1.13 5.1.14 5.1.15 5.1.16 5.1.23 5.2 5.2.1

SECTION 5.2.2 SECTION 5.2.3 ARTICLE VI SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 6.1 6.2 6.3 6.4 6.5 6.6 6.7 6.8 6.9 6.10 6.11 6.12 6.13 6.14 6.15 6.16 6.17 6.18 6.19 6.20 6.21 6.22

Borrowing Request, etc........................................19 Satisfactory Legal Form........................................19 REPRESENTATIONS AND WARRANTIES.................................20 Organization, etc..............................................20 Due Authorization, Non-Contravention, etc......................20 Government Approval, Regulation, etc...........................20 Validity, etc..................................................21 Financial Information..........................................21 No Material Adverse Change.....................................21 Litigation, Labor Controversies, etc...........................21 Capitalization.................................................21 Ownership of Properties........................................22 Taxes..........................................................22 ERISA..........................................................22 Environmental Warranties.......................................22 Inventory......................................................23 Accuracy of Information.......................................23 Purchase Agreement, etc.......................................23 Absence of Default.............................................24 Regulations T, U and X.........................................24 Government Regulation..........................................24 Material Agreements............................................24 Solvency.......................................................24 Insurance.....................................................24 Compliance with Laws...........................................24 COVENANTS......................................................24 Affirmative Covenants..........................................24 Financial Information, Reports, Notices, etc...................25 Compliance with Laws; Payment of Obligations...................27 Maintenance of Properties......................................27 Insurance......................................................27 Books and Records; Inspections.................................28 Environmental Covenants........................................28 As to Intellectual Property Collateral.........................29 Furthur Assurances.............................................29 Negative Covenants.............................................29 Business Activities............................................29 Indebtedness...................................................29 Liens..........................................................30 Financial Condition............................................31 Investments....................................................31 Restricted Payments, etc......................................31 Capital Expenditures, etc......................................31 Take or Pay Contracts..........................................31 Consolidation, Merger, etc.....................................31 Asset Dispositions, etc........................................31 Modification of Certain Agreements.............................32 Transactions with Affiliates...................................32 Negative Pledges, Restrictive Agreements, etc..................32 -iii-

ARTICLE VII SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 7.1 7.1.1 7.1.2 7.1.3 7.1.4 7.1.5 7.1.6 7.1.8 7.1.10 7.2 7.2.1 7.2.2 7.2.3 7.2.4 7.2.5 7.2.6 7.2.7 7.2.8 7.2.9 7.2.10 7.2.11 7.2.12 7.2.13

SECTION 7.2.14 Management Fees, Expenses, etc.................................32 SECTION 7.2.15 Fiscal Year End................................................32 SECTION 7.2.16 Limitation on Sale and Leaseback Transactions..................33 ARTICLE VIII SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 8.1 8.1.1 8.1.2 8.1.3 8.1.4 8.1.5 8.1.6 8.1.7 8.1.10 8.1.9 8.1.11 8.1.12 8.2 8.3 8.4 EVENTS OF DEFAULT..............................................33 Listing of Events of Default...................................33 Non-Payment of Obligations.....................................33 Breach of Representations and Warranties.......................33 Non-Performance of Certain Covenants and Obligations...........33 Non-Performance of Other Covenants and Obligations.............33 Default on Other Indebtedness..................................33 Judgments......................................................33 Erisa Events...................................................34 Impairment of Loan Documents, Security, etc....................34 Bankruptcy, Insolvency, etc....................................34 Non-Payment of Taxes...........................................34 Impairment of Material Agreements..............................35 Action if Bankruptcy...........................................35 Action if Other Event of Default...............................35 Foreclosure on Collateral......................................35 MISCELLANEOUS PROVISIONS.......................................35 Waivers, Amendments, etc.......................................35 Notices........................................................35 Payment of Costs and Expenses..................................36 Survival.......................................................36 Severability...................................................36 Headings.......................................................36 Execution in Counterparts, Effectiveness, etc..................36 Governing Law; Entire Agreement................................36 Successors and Assigns.........................................37 Waiver of Jury Trial, etc......................................37 Waiver of Certain Claims.......................................37

ARTICLE IX SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION SECTION 9.1 9.2 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11

SCHEDULE I SCHEDULE II EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT EXHIBIT A B C D E F G H -

Disclosure Schedule Administrative Information Form Form Form Form Form Form Form Form of of of of of of of of Note Borrowing Request Borrowing Base Certificate Compliance Certificate Security Agreement Closing Date Certificate Solvency Certificate Opinion of Counsel to the Borrower

-iv-

CREDIT AGREEMENT CREDIT AGREEMENT, dated as of June 27, 2001, among PINNACLE FOODS, INC., a Pennsylvania corporation (the "Borrower") and SMITHFIELD FOODS, INC., a Virginia corporation (the "Lender"). W I T N E S S E T H: WHEREAS, the Borrower desires to obtain from the Lender the Commitment pursuant to which revolving loans will be made by the Lender from time and time in an aggregate principal amount at any one time outstanding not to exceed $30,000,000, provided that, in any event, the aggregate outstanding principal amount of all revolving Loans shall not at any one time exceed the Borrowing Base Amount in effect at such time; and WHEREAS, the Lender is willing, on the terms and subject to the conditions hereinafter set forth (including Article V), to extend such Commitment and make such Loans to the Borrower; NOW, THEREFORE, the parties hereto hereby agree as follows: Article I. DEFINITIONS AND ACCOUNTING TERMS SECTION 1.1 Defined Terms. The following terms (whether or not underscored) when used in this Agreement, including its preamble and recitals, shall, except where the context otherwise requires, have the following meanings (such meanings to be equally applicable to the singular and plural forms thereof): "Account" means any "account" (as that term is defined in Section 9-106 of the U.C.C.) of any Person. "Account Debtor" is defined in clause (e) of the definition of "Eligible Account". "Acquisition" means the acquisition by the Lender of 50% of the capital stock of the Borrower pursuant to the Purchase Agreement. "Affiliate" of any Person means any other Person which, directly or indirectly, controls, is controlled by or is under common control with such Person (excluding any trustee under, or any committee with responsibility for administering, any Plan). A Person shall be deemed to be "controlled by" any other Person if such other Person possesses, directly or indirectly, power to vote 5% or more of the securities (on a fully diluted basis) or other interests having ordinary voting power for the election of directors or managing general partners. "Agreement" means this Credit Agreement, as amended, supplemented, restated or otherwise modified from time to time. "Assigned Agreements" is defined in the Security Agreement.

"Authorized Officer" means those of Borrower's officers whose signatures and incumbency shall have been certified to the Lender pursuant to Section 5.1.2. "Base Rate" shall mean, for any day, a rate per annum equal to the prime rate of interest announced from time to time by JP Morgan Chase & Co. (or such other reference bank as the Lender may select (in good faith)), which rate of interest may not, in any event, be the lowest rate of interest charged by such bank for extensions of credit, plus 1%. Any change in the Base Rate due to a change in such prime rate shall be effective from and including the effective date of such change in such prime rate. "Base Rate Loan" means a Loan bearing interest at a fluctuating interest rate determined by reference to the Base Rate. "Borrower" is defined in the preamble. "Borrowing" means the Loans made by the Lender on the same Business Day and pursuant to the same Borrowing Request in accordance with Section 2.1. "Borrowing Base Amount" means, at any time, an amount equal to the sum of (a) 100% of the aggregate amount of Net Amount of Eligible Accounts at such time; plus (b) 100% of the aggregate amount of Net Amount of Eligible Inventory at such time; plus (c) such other amounts for such period of time as Lender shall have allowed pursuant to the proviso contained in Section 2.1. Clause (a) of the definition of Borrowing Base Amount shall initially be computed by the Borrower in each Borrowing Base Certificate delivered from time to time to the Lender pursuant to clause (i) of Section 7.1.1. The Lender shall have the right to review such computations and, if such computations have not been computed in accordance with the terms of this Agreement, the Lender shall have the right to adjust such computations after consultation with the Borrower, such adjustment to be binding on the Borrower absent manifest error. "Borrowing Base Certificate" means the Borrowing Base Certificate duly completed and executed by a Financial Officer, substantially in the form of Exhibit C hereto, together with such changes in form as the Lender may from time to time reasonably request for the purpose of monitoring the Borrower's compliance therewith. "Borrowing Request" means a Borrowing Request, duly executed by an Authorized Officer of the Borrower, in substantially the form of Exhibit B hereto. "Business Day" means any day on which the Lender is open for business and is neither a Saturday or Sunday nor a legal holiday on which banks are authorized or required to be closed in New York, New York. "Capital Expenditures" means, for any period, the sum of (a) the aggregate amount of all expenditures of the Borrower for fixed or capital assets or additions to plant, property or equipment (including replacements and capitalized -2-

repairs) made during such period which, in accordance with GAAP, would be classified as capital expenditures; and (b) the aggregate amount of all Capitalized Lease Liabilities payments during such period. "Capitalized Lease Liabilities" means all monetary obligations of the Borrower under any leasing or similar arrangement with respect to any real or personal property which, in accordance with GAAP, would be classified as capitalized leases, and, for purposes of this Agreement and each other Loan Document, the amount of such obligations shall be the capitalized amount thereof, determined in accordance with GAAP, and the stated maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. "Cash Equivalent Investment" means, at any time: (a) any evidence of Indebtedness, maturing not more than one year after the date of issuance, issued or guaranteed by the United States Government; (b) commercial paper, maturing not more than nine months from the date of issuance and rated at least A-1 by Standard & Poor's Corporation or P-1 by Moody's Investors Service, Inc., which is issued by a corporation (other than an Affiliate of the Borrower) organized under the laws of any state of the United States or of the District of Columbia. (c) any certificate of deposit or bankers acceptance, maturing not more than one year after such time, which is issued by a commercial banking institution that is a member of the Federal Reserve System and has a combined capital and surplus and undivided profits of not less than $500,000,000; or (d) any repurchase agreement entered into with any commercial banking institution of the stature referred to in clause (c) secured by a fully perfected Lien in any securities of the type described in any of clauses (a) through (c), having a market value at the time such repurchase agreement is entered into of not less than 100% of the repurchase obligation thereunder of such commercial banking institution. "CERCLA" means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended from time to time. "CERCLIS" means the Comprehensive Environmental Response Compensation, and Liability Information System as the same may be amended from time to time. "Code" means the Internal Revenue Code of 1986, as amended, reformed or otherwise modified from time to time. "Collateral" means any assets of the Borrower that are subject to a Lien pursuant to any Loan Document. "Commitment" is defined in Section 2.1. "Commitment Amount" means $30,000,000. -3-

"Commitment Termination Date" means the earliest of (a) the Stated Maturity Date; and (b) the date on which a Commitment Termination Event occurs. Upon the occurrence of any Commitment Termination Event, the Commitment shall terminate automatically and without any further action. "Commitment Termination Event" means (a) the occurrence of any Default described in clauses (a) through (d) of Section 8.1.9; or (b) the occurrence and continuance of any other Event of Default and either (i) the declaration of the Loans to be due and payable pursuant to Section 8.3, or (ii) the giving of notice by the Lender to the Borrower that the Commitment has been terminated. "Compliance Certificate" means a Compliance Certificate duly executed by a Financial Officer, substantially in the form of Exhibit D hereto, together with such changes thereto as the Lender may from time to time reasonably request for the purpose of monitoring the Borrower's compliance with the financial covenants contained herein. "Contingent Liability" means any agreement, undertaking or arrangement by which any Person guarantees, endorses or otherwise becomes or is contingently liable upon (by direct or indirect agreement, contingent or otherwise, to provide funds for payment, to supply funds to, or otherwise to invest in, a debtor, or otherwise to assure a creditor against loss) the indebtedness, obligation or any other liability of any other Person (other than by endorsements of instruments in the course of collection), or guarantees the payment of dividends or other distributions upon the shares of any other Person. The principal amount of any Person's obligation under any Contingent Liability shall (subject to any limitation set forth therein) be deemed to be the outstanding principal amount (or maximum principal amount, if larger) of the debt, obligation or other liability guaranteed thereby. "Default" means any Event of Default or any condition, occurrence or event which, after notice or lapse of time or both, would constitute an Event of Default. "Disclosure Schedule" means the Disclosure Schedule attached hereto as Schedule I, as it may be amended, supplemented or otherwise modified from time to time by the Borrower with the written consent of the Lender. "Dollar" and the symbol "$" mean lawful money of the United States. "Effective Date" means the date this Agreement becomes effective pursuant to Section 9.7. "Eligible Account" means, at any time of determination thereof, any Account (or part thereof) of the Borrower which meet each of the following requirements: (a) the Borrower has lawful and absolute title to such Account, free and clear of all Liens, other than the Liens in favor of the Lender; (b) the Lender has a legal, valid, binding, perfected and first priority security interest in such Account under the U.C.C.; -4-

(c) (i) with regard to an Account as to which any United States federal or state governmental agency or instrumentality is the Account Debtor, the Borrower has complied with the Assignment of Claims Act of 1940, as amended (31 U.S.C.ss. 3727; 41 U.S.C.ss. 15), by delivering to the Lender a notice of assignment in favor of the Lender under such act and in compliance with applicable provisions of 31 C.F.R.ss. 7-103.8 and 41 C.F.R.ss.1-30.7, or with similar state law; and (ii) such Account is not an Account as to which any other government or agency of the United States federal or state governmental agency or instrumentality is the Account Debtor. (d) the Borrower has the full and unqualified right to assign and grant a security interest in such Account to the Lender; (e) such Account is (i) payable in Dollars, (ii) the legal, valid, binding and enforceable obligation of the Person who is obligated under such Account (the "Account Debtor") and (iii) payable within 30 days after the invoice date; (f) such Account is not subject to any dispute, setoff, counterclaim or other claim or defense on the part of the Account Debtor denying liability under such Account, in whole or in part; (g) such Account is evidenced by an invoice rendered to the Account Debtor and evidences monetary obligations; (h) such Account is a bona fide Account which arose in the ordinary course of business, and with respect to which such goods have been shipped or delivered to and accepted by the Account Debtor, such Account was created as a result of a sale on an absolute basis and not on a consignment, approval, bill-and-hold or sale-andreturn basis and all other actions necessary to create a binding obligation on the part of the Account Debtor for such Account have been taken. (i) with respect to such Account, the Account Debtor is not (i) an Affiliate, officer, director, employee, supplier or creditor of the Borrower, except as set forth on Item 1.1 ("Eligible Accounts") of the Disclosure Schedule; (ii) organized or located in a jurisdiction other than the United States; (iii) a domestic or foreign government or any agency, department or instrumentality thereof (except to the extent clause (c) is complied with); (iv) the subject of any reorganization, bankruptcy, receivership, custodianship or insolvency or any other condition of the type described in clauses (a) through (d) of Section 8.1.9; or (v) an Account Debtor more than 25% of the aggregate dollar amount of whose Accounts is classified as ineligible under the criteria set forth herein; (j) such Account is not outstanding more than 30 days past the original invoice date with respect thereto; -5-

(k) if payment with respect to such Account is evidenced by a promissory note, draft, trade acceptance or other instrument for the payment of money, the Lender has possession thereof; (l) such Account has not been placed with a lawyer or other agent for collection; (m) except as set forth on Item 1.1 ("Eligible Accounts") of the Disclosure Schedule, the Borrower has not made any agreement with the Account Debtor of such Account for any deduction therefrom, except a discount or allowance allowed by the Borrower in the ordinary course of its business; (n) such Account complies with all material requirements of all applicable laws, rules and regulations; (o) such Account is not with respect to an Account Debtor located in New Jersey, Minnesota or another State or jurisdiction denying creditors access to its courts in the absence of a Notice of Business Activities Report or other similar filing, unless the Borrower is duly qualified as a foreign corporation in each such State or jurisdiction or has duly filed and has a currently effective Notice of Business Activities Report or other similar filing; and (p) to the Borrower's knowledge, there are no facts, events or occurrences which in any material respect may impair the validity or enforceability of such Account or may reduce materially the amount payable thereunder as shown on the Borrower's aged trial balance delivered pursuant to Section 7.1.1, the Borrower's books and records and invoices and statements delivered to Lender with respect thereto. If any Account at any time ceases to be an Eligible Account, such Account shall promptly be excluded from the calculation of Eligible Accounts. "Eligible Inventory" means, at any time of determination thereof, any Inventory of the Borrower which arose in the ordinary course of business of the Borrower which meet each of the following requirements: (a) such Inventory is located in the United States on real property that is owned or leased by the Borrower, free and clear of any Liens other than of the nature referred to in clause (a) of Section 7.2.3; (b) the Borrower has full and unqualified right to assign and grant a Lien in such Inventory to the Lender for the benefit of the Lender; (c) the Borrower has full and lawful title to such Inventory, free and clear of all Liens, other than any Liens in favor of the Lender for the benefit of the Lender; (d) the Lender has a legal, valid, binding, perfected and first priority security interest in such Inventory under the U.C.C.; (e) none of such Inventory shall consist of (i) items in the custody of third parties for processing or manufacture; -6-

(ii) items in the Borrower's possession but intended by the Borrower for return to the suppliers thereof; (iii) items belonging to third parties that have been consigned to the Borrower; or (iv) items in the Borrower's custody and possession on a sale-on-approval or sale-or-return basis or subject to any other repurchase or return agreement; and (f) none of such Inventory (i) is obsolete, unsalable, damaged or otherwise unfit for sale or further processing in the ordinary course of the Borrower's business; or (ii) has remained unsold in inventory for over 14 days in the case of meat inventory and 45 days for all other inventory. If any Inventory ceases at any time to be Eligible Inventory, such Inventory shall promptly be excluded from the calculation of Eligible Inventory. "Environmental Laws" means all applicable federal, state or local statutes, laws, ordinances, codes, rules, regulations and guidelines (including consent decrees and administrative orders) relating to public health and safety and protection of the environment, the preservation or reclamation of natural resources, Release of any Hazardous Material or to health and safety matters, including CERCLA, the Resource Conservation and Recovery Act, the Federal Water Pollution Control Act, as amended by the Clean Water Act of 1977, 33 U.S.C.ss.ss.1251 et seq., the Clean Air Act of 1970, 42 U.S.C.ss.ss.7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C.ss.ss. 2601 et seq., the Occupational Safety and Health Act of 1970, as amended, 29 U.S.C.,ss.ss.651 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C.ss.ss.11001 et seq., the Safe Drinking Water Act of 1974, as amended, 42 U.S.C.ss.ss.300(f) et seq., the Hazardous Materials Transportation Act, 49 U.S.C.ss.ss. 5101 et seq., and any similar or implementing state or local law, and all amendments or regulations promulgated under any of the foregoing. "ERISA" means the Employee Retirement Income Security Act of 1974, as amended, and any successor statute of similar import, together with the regulations thereunder, in each case as in effect from time to time. "ERISA Affiliate" means any trade or business (whether or not incorporated) that, together with the Borrower, is treated as a single employer under Section 414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as a single employer under Section 414 of the Code. "ERISA Event" means (a) any "reportable event", as defined in Section 4043 of ERISA or the regulations issued thereunder with respect to a Plan (other than an event for which the 30-day notice period is waived); (b) the existence with respect to any Plan of an "accumulated funding deficiency" (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section 412 (d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (d) the incurrence by the Borrower or any of it ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the Borrower or any of its ERISA Affiliates of any liability with respect to the withdrawal -7-

or partial withdrawal from any Plan or Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA. "Event of Default" is defined in Section 8.1. "Financial Officer" means the chief financial officer, president or principal accounting officer of the Borrower. "Fiscal Month" means any month of a Fiscal Year. "Fiscal Quarter" means any quarter of a Fiscal Year. "Fiscal Year" means any period of twelve consecutive calendar months ending on December 31. References to a Fiscal Year with a number corresponding to any calendar year (e.g., "Fiscal Year 2001") refer to the Fiscal Year ending during such calendar year. "F.R.S. Board" means the Board of Governors of the Federal Reserve System or any successor thereto. "GAAP" is defined in Section 1.4. "Hazardous Material" means (a) any "hazardous substance" as defined by CERCLA; (b) any "hazardous waste" as defined by the Resource Conservation and Recovery Act; (c) any petroleum product; or (d) any pollutant or contaminant or hazardous, dangerous or toxic chemical, material or substance within the meaning of any applicable federal, state or local law, regulation, ordinance or requirement (including consent decrees and administrative orders) relating to or imposing liability or standards of conduct concerning any hazardous, toxic or dangerous waste, substance or material, all as amended or hereafter amended. "Herein", "hereof", "hereto", "hereunder" and similar terms contained in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular Section, paragraph or provision of this Agreement or such other Loan Document. "Including" means including without limiting the generality of any description preceding such term, and, for purposes of this Agreement and each other Loan Document, the parties hereto agree that where general words are followed by a specific listing of items, the general words shall be given their widest meaning, and shall not be limited by an enumeration of specific matters. "Indebtedness" of any Person means, without duplication: -8-

(a) all obligations of such Person for borrowed money, including all obligations of such Person evidenced by bonds, debentures, notes or other similar instruments (including, without limitation, the Loans); (b) all obligations, contingent or otherwise, relative to the face amount of all letters of credit, whether or not drawn, and banker's acceptances issued for the account of such Person; (c) all obligations of such Person as lessee under leases which have been or should be, in accordance with GAAP, recorded as Capitalized Lease Liabilities; (d) net liabilities of such Person with respect to any interest rate cap agreement, interest rate collar agreement or similar arrangement designed to protect a Person against fluctuations in interest rates; (e) whether or not so included as liabilities in accordance with GAAP, all obligations of such Person to pay the deferred purchase price of property or services (excluding trade accounts payable arising in the ordinary course of business), and indebtedness (excluding prepaid interest thereon) secured by a Lien on property owned or being purchased by such Person (including indebtedness arising under conditional sales or other title retention agreements), whether or not such indebtedness shall have been assumed by such Person or is limited in recourse; (f) all obligations of such Person to purchase, redeem, retire or otherwise acquire for value any capital stock or other equity interest of such Person; (g) the liquidation value of any preferred capital stock or similar equity interest of such Person or its Subsidiaries held by any Person other than such Person and its Wholly-Owned Subsidiaries; (h) all obligations and liabilities secured by any Lien on such Person's property or assets, even though such Person shall not have assumed or become liable for the payment thereof; (i) all accrued and unfunded obligations and liabilities under any Plan; and (j) all Contingent Liabilities of such Person in respect of any of the foregoing. For all purposes of this Agreement, the Indebtedness of any Person shall include the Indebtedness of any partnership or joint venture in which such Person is a general partner or a joint venturer. "Intellectual Property Collateral" has the meaning provided for such term in the Security Agreement. "Interest Expense" means, for any period, the aggregate consolidated interest expense of the Borrower for such period, as determined in accordance with GAAP, including, without duplication, the portion of any Capitalized Lease Liabilities of the Borrower allocable to interest expense, all commissions, discounts and other fees charged with respect to letters of credit and bankers' acceptance financing, the amortization of debt discounts and the net costs under Rate Protection Agreements, in each case paid or payable during such period. "Inventory" means all present and future inventory, merchandise and goods intended for sale, lease or other disposition, including, without limitation, all raw materials, work in process, finished -9-

goods, returned goods and materials and supplies of any kind, nature or description which are or might be used in connection with the manufacture, packing, shipping, advertising, selling or finishing of any such goods, all documents of title or documents representing the same and all records, files and writings with respect thereto. "Investment" means, relative to any Person, (a) any loan or advance made by such Person to any other Person (excluding commission, travel and similar advances to officers and employees made in the ordinary course of business); (b) any Contingent Liability of such Person incurred in connection with loans or advances described in clause (a); and (c) any ownership or similar interest held by such Person in any other Person. The amount of any Investment shall be the original principal or capital amount thereof less all returns of principal or equity thereon (and without adjustment by reason of the financial condition of such other Person) and shall, if made by the transfer or exchange of property other than cash, be deemed to have been made in an original principal or capital amount equal to the fair market value of such property. "Lender" is defined in the preamble. "Lien" means any security interest, mortgage, pledge, hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or otherwise), charge against or interest in property to secure payment of a debt or performance of an obligation or other priority or preferential arrangement of any kind or nature whatsoever. "Loan is defined in Section 2.1. "Loan Documents" means, collectively, this Agreement, the Notes, the Security Agreement, and each other instrument or document executed and delivered pursuant to or in connection with this Agreement and the other Loan Documents. "Material Adverse Effect" shall mean a material adverse effect on (a) the business, assets, operations, properties, condition (financial or otherwise) or prospects of the Borrower, (b) the ability of the Borrower to perform or pay its Obligations in accordance with the terms hereof or of any other Loan Document, (c) the Lender's security interest on the Collateral or the priority of such security interest, (d) the value of the Collateral or the amount the Lender would be likely to receive (after giving consideration to delays in payment and costs of enforcement) in the liquidation of the Collateral or (e) the validity or enforceability of any Loan Document or the rights and remedies available to the Lender under any Loan Document. "Material Agreements" is defined in Section 6.19. "Material Environmental Amount" means an amount payable by the Borrower in excess of $100,000 for remedial costs, compliance costs, compensatory damages, punitive damages, fines, penalties or any combination thereof, in each case with respect to Environmental Laws. "Monthly Payment Date" means the last day of each month, or, if any such day is not a Business Day, the next succeeding Business Day. -10-

"Multiemployer Plan" means a Plan which is a multiemployer plan as defined in Section 4001(a)(3) of ERISA. "Net Amount of Eligible Accounts" means the gross amount of Eligible Accounts less reserves, returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed in respect of such Eligible Accounts (including, without limitation, as a result of the return by an Account Debtor to the Borrower of goods giving rise to an Eligible Account). "Net Amount of Eligible Inventory" means the value of Eligible Inventory, computed at the lower of cost (computed on a "first in, first out" basis) or market, less reserves, returns, discounts, claims, credits and allowances of any nature at any time issued, owing, granted, outstanding, available or claimed in respect of such Eligible Inventory. "Net Income" means, for any period, the sum of all amounts (exclusive of all amounts in respect of any extraordinary gains or losses) which, in accordance with GAAP, would be included as net income on the statements of income of the Borrower at such time; provided that there shall be excluded from Net Income the income of any Person in which any other Person has a joint interest, except to the extent of the amount of dividends or other distributions (i) that the Borrower has the power to cause such Person to make to the Borrower or during such period and such dividend or other distribution is not prohibited by the terms of any agreement binding upon such Person or otherwise or (ii) were actually paid to the Borrower by such Person during such period. "Note" a promissory note of the Borrower that is payable to the Lender, substantially in the form of Exhibit A hereto, evidencing the aggregate Indebtedness of the Borrower to the Lender resulting from outstanding Loans, and also means all other promissory notes accepted from time to time in substitution therefor or renewal thereof. "Obligations" means all obligations (monetary or otherwise) of the Borrower arising under or in connection with this Agreement, the Notes and each other Loan Document, including principal, interest (including post-default interest and interest accruing after the commencement of any bankruptcy, insolvency or similar proceeding referred to in Section 8.1.9, whether or not a claim for post-filing or post-petition interest is allowed in any such proceeding), reimbursement obligations, fees, indemnities, costs and expenses (including the fees and disbursements of counsel to the Lender required to be paid by the Borrower) that are owing under this Agreement and the other Loan Documents, in each case whether now existing or hereafter incurred, direct or indirect, absolute or contingent, and due or to become due. "Organic Document" means the Borrower's articles of incorporation, by-laws and all shareholder agreements, voting trusts and similar arrangements applicable to any of the Borrower's authorized shares of capital stock or other equity interest, as amended, supplemented, restated or otherwise modified from time to time in accordance with Section 7.2.11. "PBGC" means the Pension Benefit Guaranty Corporation and any entity succeeding to any or all of its functions under ERISA. "Permitted Disposition" means any sale, lease, transfer or other disposition of assets (including without limitation capital stock, other equity interests and receivables) of the Borrower not otherwise permitted by clause (a) or (c) of Section 7.2.10, provided that (a) the Borrower shall receive only cash consideration therefor, (b) the aggregate fair market value of all such dispositions shall not exceed $100,000 in any Fiscal Year, (c) the Borrower shall have received fair value therefor and (d) both immediately before and after giving effect to each such disposition no Default or Event of Default shall have occurred and be continuing. -11-

"Permitted Encumbrances" means Liens permitted under Section 7.2.3. "Person" means any natural person, corporation, partnership, firm, association, trust, government, governmental agency or any other entity, whether acting in an individual, fiduciary or other capacity. "Plan" means any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA, and in respect of which any Borrower or any ERISA Affiliate is (or, if such plan were terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA. "Purchase Agreement" means that certain Stock Purchase Agreement dated as of May 31, 2001, among the Borrower, the Lender, and Ellis Shore and Michael Queen, as amended, restated or otherwise modified from time to time in accordance with Section 7.2.11. "Receivables" means with respect to any Person all of such Person's now owned and hereafter arising or acquired Accounts (whether or not earned by performance), including Accounts owed to such Person by any of its Subsidiaries or Affiliates, together with all interest, late charges, penalties, collection fees and other sums which shall be due and payable in connection with any Account; proceeds of any letters of credit naming such Person as beneficiary; contract rights, chattel paper, instruments, documents, investment property, general intangibles (including without limitation choses in action, causes of action, tax refunds, tax refund claims and other amounts payable to such Person from or with respect to any Plan) and all forms of obligations owing to such Person (including without limitation, in respect of loans, advances, and extensions of credit by such Person to its Subsidiaries and Affiliates); guarantees and other security for any of the foregoing; goods represented by or the sale, lease of delivery of which gave rise to any of the foregoing; rights of stoppage in transit, replevin, and reclamation; and other rights or remedies of an unpaid vendor, lienor or secured party. "Release" means a "release" or "threatened release" as such terms are defined in CERCLA. "Reportable Event" means (a) any of the events set forth in Section 4043(b) of ERISA, other than those events as to which the thirty day notice period is waived under subsection .13, .14, .16, .18, .19 or .20 of PBGC Reg ss. 4043, (b) withdrawal from a Plan described in Section 4063 of ERISA, (c) a cessation of operations described in Section 4062(e) of ERISA, (d) an amendment to a Plan necessitating the posting of security under Section 401 (a)(29) of the Code, or (e) a failure to make a payment required by Section 412(m) of the Code or Section 302(e) of ERISA when due. "Resource Conservation and Recovery Act" means collectively the Resource Conservation and Recovery Act of 1976 as amended by the Hazardous and Solid Waste Amendments of 1984, as amended, 42 U.S.C. ss.ss.6901, et seq., as it may be amended from time to time. "Security Agreement" means the Security Agreement substantially in the form of Exhibit E hereto, as amended, supplemented, restated or otherwise modified from time to time. "Single Employer Plan" means any Pension Plan which is covered by Title IV of ERISA, but which is not a Multiemployer Plan. "Solvent" means, when used with respect to any Person, that, as of any date of determination, (a) the amount of the "present fair saleable value" of the assets of such Person will, as of such date, exceed the amount of all "liabilities of such Person, contingent or otherwise", as of such date, as such value is established and such liabilities are evaluated in accordance with Section 101(32) of the Federal -12-

Bankruptcy Code and the state laws governing determinations of the insolvency of debtors of Pennsylvania and each state where such Person is doing business or has its principal place of business, (b) such Person will not have, as of such date, an unreasonably small amount of capital with which to conduct its business and (c) such Person will be able to pay its debts as they mature. For purposes of this definition, (i) "debt" means liability on a "claim" and (ii) "claim" means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured or (y) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured. "Stated Maturity Date" means June 26, 2006. "Subsidiary" means, with respect to any Person, (a) any corporation of which more than 50% of the outstanding capital stock having ordinary voting power to elect a majority of the board of directors or other governing body of such corporation (irrespective of whether at the time capital stock of any other class or classes of such corporation shall or might have voting power upon the occurrence of any contingency) is at the time directly or indirectly owned by such Person, or by one or more Subsidiaries of such Person, or (b) any partnership, joint venture, limited liability company, or other entity as to which such Person, or one or more Subsidiaries of such Person owns more than a 50% ownership, equity or similar interest or has power to direct or cause the direction of management and policies, or the power to elect the managing partner (or the equivalent), of such partnership, joint venture or other entity, as the case may be. "Taxes" is defined in Section 4.2. "U.C.C." means the Uniform Commercial Code as from time to time in effect in the Commonwealth of Pennsylvania. "United States" or "U.S." means the United States of America, its fifty States and the District of Columbia. "Wholly-Owned Subsidiary" means any Subsidiary of a Person of which the securities (except for directors' qualifying shares) or other ownership interests representing 100% of the equity is, at the time any determination is being made, owned, controlled or held by such Person or one or more Wholly-Owned Subsidiaries of such Person. "Withdrawal Liability" means liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA. SECTION 1.2 Use of Defined Terms. Unless otherwise defined or the context otherwise requires, terms for which meanings are provided in this Agreement shall have such meanings when used in the Disclosure Schedule and each other Loan Document. SECTION 1.3 Cross-References. Unless otherwise specified, references in this Agreement and in each other Loan Document to any Article or Section are references to such Article or Section of this Agreement or such other Loan Document, as the case may be, and, unless otherwise specified, references in any Article, Section or definition to any clause are references to such clause of such Article, Section or definition. -13-

SECTION 1.4 Accounting and Financial Determinations. Unless otherwise specified, all accounting terms used herein or in any other Loan Document shall be interpreted, all accounting determinations and computations hereunder or thereunder (including under Section 7.2.4) shall be made, and all financial statements required to be delivered hereunder or thereunder shall be prepared in accordance with, those generally accepted accounting principles ("GAAP") applied in the preparation of the most recently dated financial statements referred to in clause (a) of Section 6.5. In the event that any "Accounting Change" (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, the Borrower and the Lender shall enter into negotiations in order to amend such provisions of this Agreement so as to equitably reflect such Accounting Changes with the desired result that the criteria for evaluating the Borrower's financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by the Borrower and the Lender, all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred. "Accounting Change" refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board of the American Institute of Certified Public Accountants or, if applicable, the Securities and Exchange Commission. Article II. COMMITMENTS, BORROWING PROCEDURES AND NOTES SECTION 2.1 Commitment. On the terms and subject to the conditions of this Agreement (including Article V), from time to time on any Business Day occurring prior to the Commitment Termination Date, the Lender shall and hereby agrees to make loans (the "Loans") to the Borrower. The agreement of the Lender to make Loans described in this Section 2.1 is herein referred to as the "Commitment". On the terms and subject to the conditions hereof, the Borrower may from time to time borrow, prepay and reborrow the Loans. SECTION 2.2 Lender Not Required To Make Loans. No Borrowing of Loans shall be made if, after giving effect thereto, the aggregate outstanding principal amount of all the Loans would exceed the lesser of (i) the Commitment Amount or (ii) the then existing Borrowing Base Amount, plus such advances requested by the Borrower that Lender may, in its reasonable discretion, allow in excess of the then existing Borrowing Base Amount on such terms and conditions as Lender may reasonably require, including restrictions on the use of proceeds of any such Borrowing or required amortization payments for the principal amount of any such Borrowing. SECTION 2.3 Borrowing Procedures. (a) Borrowing Requests. By delivering a duly completed and executed Borrowing Request to the Lender on or before 10:00 a.m. (New York City time), on a Business Day, the Borrower may from time to time irrevocably request that advances be made pursuant hereto one Business Day thereafter. All Loans shall be made in a minimum amount of $100,000 and an integral multiple of $100,000 or, if less, in the unused amount of the Commitment. The proceeds of all Loans shall be used solely for the purposes described in Section 4.1. SECTION 2.4 Notes. The Loans under the Commitment shall be evidenced by the Note payable to the order of the Lender. The Borrower hereby irrevocably authorizes the Lender to make -14-

(or cause to be made) appropriate notations on the grid attached to the Note (or on any continuation of such grid), which notations, if made, shall evidence, inter alia, the date of, the outstanding principal of, and the interest rate applicable to, the Loans evidenced thereby. Such notations shall be conclusive and binding on the Borrower absent Borrower proving error; provided, however, that the failure of the Lender to make any such notations shall not limit or otherwise affect any Obligations of the Borrower or any other Obligor. Article III. REPAYMENTS, PREPAYMENTS, INTEREST AND FEES SECTION 3.1 Repayments and Prepayments The Borrower shall repay in full the unpaid principal amount of each Loan upon the Stated Maturity Date therefor and pursuant to Sections 8.2 and 8.3. Prior thereto, repayments and prepayments of Loans shall be made as set forth in this Section. SECTION 3.1.1 Voluntary Prepayments. Prior to the Stated Maturity Date, the Borrower may, from time to time on any Business Day, make a voluntary prepayment, in whole or in part, of the outstanding principal amount of the Loans; provided, however, that (a) all such voluntary prepayments shall require notice on or before 10:00 a.m. one Business Day in advance of any prepayment; provided, that not more than five Business Days' prior notice shall be provided in any event; and (b) all such voluntary partial prepayments shall be in an aggregate minimum amount of $100,000 and an integral multiple of $100,000 or, if less, the aggregate principal amount of the Loans outstanding hereunder. (c) in the event such prepayment is accompanied by the Borrower's written notice to terminate this Agreement and the Lender's commitment to make Loans hereunder, the Lender shall, upon receipt of payment in full of all amounts due at such time, release all liens against the Borrower's assets and execute and deliver to the Borrower all documents, instruments and agreements in connection therewith that the Borrower may reasonably request, all at the expense of the Borrower. Each prepayment of any Loans made pursuant to this Section shall be without premium or penalty. SECTION 3.1.2 Mandatory Repayments and Prepayments. (a) Loans. The Borrower shall, on each date when the aggregate outstanding principal amount of all Loans exceeds the lesser of (i) the Commitment Amount, or (ii) the then existing Borrowing Base Amount, make a mandatory prepayment of Loans in an amount equal to such excess, unless the Lender shall, in its sole discretion, otherwise agree in writing. (b) Stated Maturity Date. On the Stated Maturity Date of the Loans, the Borrower shall repay in full the aggregate principal amount of the Loans then outstanding. (c) Acceleration. The Borrower shall, immediately upon any acceleration of the Stated Maturity Date of any Loans pursuant to Section 8.2 or Section 8.3, repay all (or if only a portion is accelerated thereunder, such portion of) the Loans then outstanding. -15-

Each prepayment of any Loans made pursuant to this Section shall be made without premium or penalty. SECTION 3.2 Interest Provisions Interest on the outstanding principal amount of Loans shall accrue and be payable in accordance with this Section. SECTION 3.2.1 Rates. The Loans shall accrue interest at a rate per annum equal to the Base Rate from time to time in effect. SECTION 3.2.2 Post-Default Rates. Upon the occurrence and during the continuation of any Event of Default, or after any other monetary Obligation of the Borrower shall have become due and payable, the Borrower shall pay, but only to the extent permitted by law, interest (after as well as before judgment) on such amounts at a rate per annum equal to the rate per annum otherwise in effect plus 2% per annum from the date of such non-payment until such amount is paid in full (as well after as before judgment). SECTION 3.2.3 Payment Dates. Interest accrued on each Loan shall be payable, without duplication: (a) on the Stated Maturity Date therefor; (b) on the date of any payment or prepayment, in whole or in part, of principal outstanding on such Loan on the principal amount so paid or prepaid; (c) on each Monthly Payment Date occurring after the Effective Date; (d) on that portion of any Loans the Stated Maturity Date of which is accelerated pursuant to Section 8.2 or Section 8.3, immediately upon such acceleration. Interest accrued on Loans or other monetary Obligations arising under this Agreement or any other Loan Document after the date such amount is due and payable (whether on the Stated Maturity Date, upon acceleration or otherwise) shall be payable upon demand. Article IV. OTHER PROVISIONS SECTION 4.1 Use of Proceeds. The Borrower shall apply the proceeds of the Loans to finance Inventory or Receivables or for general corporate purposes of the Borrower. SECTION 4.2 Taxes. All payments by the Borrower of principal of, and interest on, the Loans and all other amounts payable hereunder shall be made free and clear of and without deduction for any present or future income, excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or other charges of any nature whatsoever imposed by any taxing authority, but excluding franchise taxes and taxes imposed on or measured by the Lender's net income or receipts by the United States and by the jurisdiction under the laws of which the Lender is organized or any political subdivision thereof (such non-excluded items being called "Taxes"). In the event that any withholding or deduction from any payment to be made by the Borrower hereunder is required in respect of any Taxes pursuant to any applicable law, rule or regulation, then the Borrower will (a) pay directly to the relevant authority the full amount required to be so withheld or deducted; -16-

(b) promptly forward to the Lender an official receipt, if any is received by the Borrower, or other documentation reasonably satisfactory to the Lender evidencing such payment to such authority; and (c) pay to the Lender such additional amount or amounts as is necessary to ensure that the amount actually received by the Lender will equal the full amount the Lender would have received had no such withholding or deduction been required (including penalties, interest, additional taxes and expenses (including reasonable attorney's fees and expenses) arising therefrom or with respect thereto). Moreover, if any Taxes are directly asserted against the Lender with respect to any payment received by the Lender hereunder, the Lender may pay such Taxes and the Borrower will promptly pay such additional amounts (including any penalties, interest or expenses) as is necessary in order that the net amount received by the Lender after the payment of such Taxes (including any Taxes on such additional amount) shall equal the amount the Lender would have received had not such Taxes been asserted. A certificate from the Lender as to the amount of such Taxes that are owing, absent manifest error, shall be final, conclusive and binding for all purposes. If the Borrower fails to pay any Taxes when due to the appropriate taxing authority or fails to remit to the Lender the required receipts or other required documentary evidence, the Borrower shall indemnify the Lender for any incremental Taxes, interest or penalties that may become payable by the Lender as a result of any such failure. SECTION 4.3 Payments, Computations, etc. All such payments required to be made to the Lender shall be made, without setoff, deduction or counterclaim, not later than 11:00 a.m. (New York City time), on the date due, in same day or immediately available funds, to such account as the Lender shall specify from time to time by notice to the Borrower. Funds received after that time shall be deemed to have been received by the Lender on the next succeeding Business Day. All interest and fees shall be computed on the basis of the actual number of days (including the first day but excluding the last day) occurring during the period for which such interest or fee is payable over a year comprised of 360 days. Whenever any payment to be made shall otherwise be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest and fees, if any, in connection with such payment. Article V. CONDITIONS TO LOANS SECTION 5.1 Initial Loan. The obligations of the Lender to fund the initial Loan shall be subject to the prior or concurrent fulfillment of each of the conditions precedent set forth in this Section to the satisfaction of the Lender. SECTION 5.1.1 Agreement. The Lender shall have received this Agreement duly executed by the Lender and an Authorized Officer of the Borrower. SECTION 5.1.2 Resolutions, Good Standing, etc. The Lender shall have received from the Borrower a certificate, dated the date of the initial Loan, of its Secretary or Assistant Secretary as to (a) resolutions of its Board of Directors then in full force and effect authorizing the execution, delivery and performance of this Agreement, the Notes and each other Loan Document to be -17-

executed by it; (b) each Organic Document of the Borrower; and (c) the incumbency and signatures of each officer (including each Financial Officer) of the Borrower authorized to act with respect to this Agreement, the Notes and each other Loan Document executed by it, upon which certificate the Lender may conclusively rely until it shall have received a further certificate of the Secretary or Assistant Secretary of the Borrower canceling or amending such prior certificate. In addition, the Lender shall have received satisfactory subsistence certificates from the Commonwealth of Pennsylvania with respect to the Borrower. SECTION 5.1.3 Delivery of Note. The Lender shall have received the Note, dated the date of the initial Loan and duly executed and delivered by an Authorized Officer of the Borrower. SECTION 5.1.4 Required Consents and Approvals. All required consents and approvals shall have been obtained and be in full force and effect with respect to the transactions contemplated hereby and the Acquisition from all relevant governmental authorities and regulatory bodies. SECTION 5.1.5 Consummation of the Acquisition. The Lender shall have received evidence reasonably satisfactory to it that all the conditions precedent to the consummation of the transactions contemplated by the Purchase Agreement have been fully satisfied or, with the prior written consent of the Lender, waived, and that the Acquisition has been consummated in accordance with all the terms of the Purchase Agreement. SECTION 5.1.6 Opinions of Counsel. The Lender shall have received a legal opinion, dated the date of the initial Loan and addressed to the Lender, from counsel to the Borrower, substantially in the form of Exhibit H. SECTION 5.1.7 Borrowing Base Certificate. The Lender shall have received an initial Borrowing Base Certificate from the Borrower, dated the date of the initial Loan and calculated as of a recent date reasonably satisfactory to the Lender, duly executed and delivered by a Financial Officer. SECTION 5.1.8 Evidence of Insurance. The Lender shall have received evidence of the insurance coverage required to be maintained pursuant to Section 7.1.4. SECTION 5.1.9 UCC Search Results, etc. The Lender shall have received certified copies of Uniform Commercial Code Requests for Information or Copies (Form UCC-11) or similar search reports certified by a party acceptable to the Lender, dated a date reasonably near (but prior to) the date of the initial Loan, listing all effective U.C.C. financing statements, tax liens and judgment liens which name the Borrower, as the debtor, and which are filed in the jurisdictions in which filings are to be made pursuant to this Agreement and the other Loan Documents, and in such other jurisdictions as the Lender may reasonably request, which reports shall indicate no Liens other than those permitted by Section 7.2.3. SECTION 5.1.10 Security Agreement, Filings, etc. The Lender shall have received the Security Agreement, dated as of the date hereof, duly executed by the Borrower, together with acknowledgment copies of U.C.C. financing statements naming the Borrower as the debtor and the Lender as the secured party, such U.C.C. financing statements to have been filed under the U.C.C. of all jurisdictions as may be necessary or, in the opinion of the Lender, desirable to perfect the first priority -18-

security interest of the Lender pursuant to the Security Agreement, together with evidence satisfactory to the Lender of the filing (or delivery for filing) of appropriate trademark, copyright and patent security supplements with the United States Patent and Trademark Office and United States Copyright Office to the extent relevant. SECTION 5.1.11 Solvency Certificate. The Lender shall have received a solvency certificate in substantially the form of Exhibit G attached hereto, duly executed by a Financial Officer, dated the date of the initial Loan and expressly permitting the Lender to rely thereon. SECTION 5.1.12 Closing Date Certificate. The Lender shall have received a Closing Date Certificate in substantially the form of Exhibit F attached hereto, duly executed by a Financial Officer and dated the date of the initial Loan, in which certificate the Borrower shall agree and acknowledge that the statements made therein shall be true and correct representations and warranties of the Borrower as of such date. All documents and agreements appended to such Closing Date Certificate shall be in form and substance reasonably satisfactory to the Lender. SECTION 5.1.13 Payment of Outstanding Indebtedness, etc. The Lender shall have received satisfactory evidence that all the Indebtedness, if any, identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule, together with all interest, all prepayment premiums and other amounts due and payable with respect thereto, have been paid in full and all obligations with respect thereto have been terminated, and that all Liens securing payment of any such Indebtedness have been released. In addition, the Lender shall have received termination agreements and Uniform Commercial Code Form UCC-3 termination statements or other instruments as may be suitable or appropriate in connection with the foregoing. SECTION 5.2 All Loans. The obligation of the Lender to make any Loan (including the initial Loan) shall be subject to the fulfillment of each of the conditions precedent set forth in this Section to the reasonable satisfaction of the Lender. SECTION 5.2.1 Compliance with Warranties, No Default, etc. Both before and after giving effect to any Loan: (a) the representations and warranties set forth in Article VI and in the other Loan Documents shall be true and correct in all material respects with the same effect as if then made (unless stated to relate solely to an earlier date, in which case such representations and warranties shall be true and correct as of such earlier date); and (b) no Default or Event of Default shall have then occurred and be continuing or would result therefrom. SECTION 5.2.2 Borrowing Request, etc. The Lender shall have received, as herein provided, a duly completed and executed Borrowing Request. Each of the delivery of a Borrowing Request and the acceptance by the Borrower of the proceeds of such Loan shall constitute a representation and warranty by the Borrower that on the date of such Loan (both immediately before and after giving effect to such Loan and the application of the proceeds thereof) the statements made in Section 5.2.1 are true and correct. SECTION 5.2.3 Satisfactory Legal Form. All documents executed or submitted pursuant hereto by or on behalf of the Borrower shall be reasonably satisfactory in form and substance to the Lender and its legal counsel. In addition, the Lender and its counsel shall have received all -19-

information, approvals, opinions, documents or instruments as the Lender or its counsel may reasonably request. Article VI. REPRESENTATIONS AND WARRANTIES In order to induce the Lender to enter into this Agreement and to make Loans hereunder, the Borrower represents and warrants to the Lender as set forth in this Article. SECTION 6.1 Organization, etc. The Borrower is a corporation duly organized and validly existing and subsisting under the laws of the jurisdiction of its organization, is duly qualified to do business and is in good standing as a foreign corporation in each jurisdiction where the nature of its business requires such qualification, and has full power and authority and holds all requisite governmental licenses, permits and other approvals to enter into and perform its Obligations under this Agreement, the Notes and each other Loan Document and to own and hold under lease its property and to conduct its business substantially as currently conducted by it. SECTION 6.2 Due Authorization, Non-Contravention, etc. The execution, delivery and performance by the Borrower of each Loan Document executed or to be executed by it, are within its corporate powers, have been duly authorized by all necessary corporate action, and do not (a) contravene or result in a default under its Organic Documents; (c) contravene or result in a default under any law or governmental regulation or court decree or order binding on it; (d) (i) contravene any material provision of any indenture, agreement or other instrument to which it is a party or by which it, or any of its property, is or may be bound or (ii) conflict with, result in a breach of or constitute (along or with notice or lapse of time or both) a default under, or give rise to any right to accelerate or to require the prepayment, repurchase or redemption of any obligation under any such indenture, agreement or other instrument; or (e) result in, or require the creation or imposition of, any Lien on its properties (other than in favor of the Lender) SECTION 6.3 Government Approval, Regulation, etc. Except for UCC financing statements to perfect the security interests under the Security Agreement, no authorization or approval or other action by, and no notice to or filing with, any governmental authority or regulatory body or other Person is required for (a) the due execution, delivery or performance by the Borrower of this Agreement, the Notes or any other Loan Document to which it is a party; (b) the grant by the Borrower of the security interests, pledges and Liens granted by the Loan Documents; or (c) the perfection of or the exercise by the Lender of its rights and remedies under this Agreement or any other Loan Document. -20-

SECTION 6.4 Validity, etc. This Agreement constitutes, and the Notes and each other Loan Document will, on the due execution and delivery thereof, constitute, the legal, valid and binding obligations of the Borrower enforceable in accordance with their respective terms, subject in each case to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium or similar law affecting creditors' rights generally, and subject to the effect of general principles of equity (regardless of whether considered in a proceeding in equity or at law). Each of the Loan Documents which purports to create a security interest creates a valid first priority registered or possessory security interest in the Collateral subject thereto (in the case of non-possessory security interests) only to Liens permitted by Section 7.2.3, securing the payment of the Obligations, and all filings and other actions necessary or desirable to perfect and protect such security interest have been duly taken. SECTION 6.5 Financial Information. (a) The Borrower has previously furnished the Lender with true and complete copies of its audited financial statements, including the notes thereto, for the years ending December 31, 1999 and 2000, together with the reports on such statements of the Borrower's auditors, and its unaudited balance sheet as of March 31, 2001. Such financial statements present fairly the financial position of the Borrower as of their respective dates (and with respect to income statements, the results of its operations and changes in financial position for such periods) and have been prepared in accordance with generally accepted accounting principles applied on a consistent basis, subject in the case of interim statements to normal year end audit adjustments. (b) Except as disclosed in the financial statements referred to above or the notes thereto and for the items disclosed in the Disclosure Schedule, after giving effect to the Acquisition, the Borrower does not have, as of the date of the initial Loan, any material contingent liabilities, unusual long-term commitments or unrealized losses. SECTION 6.6 No Material Adverse Change. (a) There has been no material adverse change in the condition (financial or otherwise), operations, assets, business, properties or prospects of the businesses or companies of the Borrower since December 31, 2000. (b) From and after the date of the initial Loan, there has been no material adverse change in the condition (financial or otherwise), operations, assets, business, properties or prospects of the Borrower. SECTION 6.7 Litigation, Labor Controversies, etc. Except as set forth in Item 6.7 ("Litigation, Labor Controversies") of the Disclosure Schedule, there is no pending or, to the knowledge of the Borrower, threatened litigation, action, proceeding, or labor controversy affecting the Borrower, or any of its properties, businesses, assets or revenues, (a) with respect to this Agreement, the Notes or any other Loan Document or (b) which could reasonably be expected to have a Material Adverse Effect. The hours worked by and payments made to employees of the Borrower have not been in violation of the Fair Labor Standards Act or any other applicable Federal, state, local or other law dealing with such matters. The consummation of the Acquisition will not give rise to any right of termination or right of renegotiation on the part of any union under any collective bargaining agreement to which the Borrower is bound. SECTION 6.8 Capitalization. As of the date of the initial Loan, the authorized capital of the Borrower consists of 50,000,000 shares of common stock, $0.01 par value. The Borrower will not establish after the Effective Date (a) any Subsidiaries without (i) obtaining the prior consent of the Lender, or (b) make any Investments in any other Person without complying with the applicable terms of this Agreement. Subject to the receipt of cash proceeds pursuant to the Acquisition, the outstanding shares of capital stock of the Borrower are fully paid and non-assessable. -21-

SECTION 6.9 Ownership of Properties. The Borrower has good title to all of its properties and assets, real and personal, tangible and intangible, of any nature whatsoever (including patents, trademarks, trade names, service marks and copyrights), free and clear of all Liens, charges or claims (including infringement claims with respect to patents, trademarks, copyrights and the like) except as permitted pursuant to Section 7.2.3. The Borrower has complied in all material respects with all obligations under all material leases to which it is a party and all such leases are in full force and effect. The Borrower enjoys peaceful and undisturbed possession under all such material leases. Item 6.9 ("Realty") of the Disclosure Schedule sets forth the address of each real property that is owned or leased by the Borrower as of the date of the initial Loan. SECTION 6.10 Taxes. The Borrower has filed all tax returns and reports required by law to have been filed by it and have paid all taxes and governmental charges thereby shown to be owing, except any such taxes or charges which are being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 6.11 ERISA. The Borrower has no Plans. SECTION 6.12 Environmental Warranties. Except as set forth in Item 6.12 ("Environmental Matters") of the Disclosure Schedule: (a) all facilities and property (including underlying groundwater) owned, operated or leased by the Borrower have been, and continue to be, owned, operated or leased by the Borrower in compliance with all Environmental Laws, except for such violations that, singly or in the aggregate, would not reasonably be expected to result in a liability exceeding a Material Environmental Amount; (b) there have been no past, and there are no pending or, to the Borrower's knowledge, threatened (i) claims, complaints, notices or requests for information received by the Borrower with respect to any alleged violation of any Environmental Law that, singly or in the aggregate, would reasonably be expected to result in a liability exceeding a Material Environmental Amount; or (ii) complaints, notices or inquiries to the Borrower regarding potential liability under any Environmental Law that, singly or in the aggregate, would reasonably be expected to result in a liability exceeding a Material Environmental Amount; (c) there have been no Releases of Hazardous Materials at, on or under any property now or previously owned, operated or leased by the Borrower that, singly or in the aggregate, has, or would reasonably be expected to result in having, a liability exceeding a Material Environmental Amount; (d) the Borrower has been issued and is in compliance with all permits, certificates, approvals, licenses and other authorizations relating to Environmental Laws and necessary or desirable for its businesses, except as would not, singly or in the aggregate, reasonably be expected to result in a liability in excess of a Material Environmental Amount; (e) no property now owned, operated or leased by the Borrower and, to the Borrower's knowledge, no property previously owned, operated or leased by it is listed or (to its knowledge) proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list of sites requiring investigation or clean-up; -22-

(f) there are no underground storage tanks, active or abandoned, including petroleum storage tanks, on or under any property now owned or leased by the Borrower or to Borrower's knowledge on or under any property previously owned or leased by it; (g) neither the Borrower, nor any other Person (to its knowledge) has transported or arranged for the transportation of any Hazardous Material to any location which is listed or (to the best of its knowledge) proposed for listing on the National Priorities List pursuant to CERCLA, on the CERCLIS or on any similar state list or which is the subject of federal, state or local enforcement actions or other investigations which may lead to claims against the Borrower for any remedial work, damage to natural resources or personal injury (including claims under CERCLA) which, singly or in the aggregate, would reasonably be expected to result in a liability exceeding a Material Environmental Amount; (h) there are no polychlorinated biphenyls or friable asbestos present at any property now owned, operated or leased by the Borrower, or to the Borrower's knowledge, at any property previously owned, operated or leased by it, that, singly or in the aggregate, may reasonably be expected to result in a liability exceeding a Material Environmental Amount; and (i) no conditions exist at, on or under any property now owned, operated or leased by the Borrower, or to the Borrower's knowledge at, on or under any property previously owned, operated or leased by it, which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law which would reasonably be expected to result in a liability exceeding a Material Environmental Amount. SECTION 6.13 Inventory. All Inventory of the Borrower is located on or is in transit to the premises described in Item 6.13 ("Inventory Locations") of the Disclosure Schedule, as the same may hereafter be supplemented from time to time. The Borrower shall at all times hereafter keep correct and accurate records itemizing and describing generally the kind, type and quantity of Inventory, the cost therefor and daily withdrawals therefrom and additions thereto, all of which records shall be available during the Borrower's usual business hours at the request of the Lender. SECTION 6.14 Accuracy of Information. (a) All factual information heretofore or contemporaneously furnished by or on behalf of the Borrower and any of its Affiliates in writing to the Lender for purposes of or in connection with this Agreement or any transaction contemplated hereby is, and all other such factual information hereafter furnished by or on behalf of the Borrower, and any of its Affiliates to the Lender will be, true and accurate in every material respect on the date as of which such information is dated or certified, and such information is not, or shall not be, as the case may be, incomplete by omitting to state any material fact necessary to make such information not misleading. (b) All written information prepared by any consultant or professional advisor on behalf of the Borrower, or any of its Affiliates which was furnished to the Lender in connection with the preparation, execution and delivery of this Agreement has been reviewed by the Borrower, and nothing has come to the attention of the Borrower in the context of such review which would lead it to believe that such information (or the assumptions on which such information is based) is not true and correct in all material respects or that such information omits to state any material fact necessary to make such information not misleading in any material respect. SECTION 6.15 Purchase Agreement, etc. (a) All representations and warranties made by the Borrower in the Purchase Agreement are true and correct in all material respects as of the date hereof as if made on the date hereof. (b) All governmental approvals that are necessary to consummate the Acquisition -23-

and operate the business of the Borrower on the Effective Date have been duly obtained and are in full force and effect. SECTION 6.16 Absence of Default. The Borrower is not in default in the payment of (or in the performance of any obligation applicable to) any Indebtedness, or in violation of any law or governmental regulation or court decree or order in any material respect. SECTION 6.17 Regulations T, U and X. The Borrower is not engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying "margin stock". None of the proceeds of any Loan will be used for the purpose of, or be made available by the Borrower in any manner to any other Person to enable or assist such Person in, directly or indirectly purchasing or carrying "margin stock". Terms for which meanings are provided in F.R.S. Board Regulation T, U or X or any regulations substituted therefor, as from time to time in effect, are used in this Section with such meanings. SECTION 6.18 Government Regulation. The Borrower is not an "investment company" nor a "company controlled by an investment company" within the meaning of the Investment Company Act of 1940, as amended, or a "holding company," or a "subsidiary company" of a "holding company," or an "affiliate" of a "holding company" or of a "subsidiary company" of a "holding company," within the meaning of the Public Utility Holding Company Act of 1935, as amended. SECTION 6.19 Material Agreements. Set forth on Item 6.19 ("Material Agreements") of the Disclosure Schedule is a listing, as of the date of the initial Loan, of all the agreements, documents and instruments the breach, nonperformance, cancellation or failure to renew may have a Material Adverse Effect (collectively, the "Material Agreements"). The Borrower is in material compliance with all the terms contained in each Material Agreement and all consents required thereby to duly assign each such Material Agreement from the Borrower to the Lender have been obtained and are in full force and effect. SECTION 6.20 Solvency. The Borrower is, and after giving effect to the Acquisition and the incurrence of all Indebtedness and obligations being incurred in connection herewith and therewith pursuant to the Loan Documents or otherwise will be Solvent. SECTION 6.21 Insurance. Item 6.21 ("Insurance") of the Disclosure Schedule sets forth a true, complete and correct description of all insurance maintained by the Borrower as of the date of the initial Loan. As of such date, such insurance is in full force and effect and all premiums have been duly paid. SECTION 6.22 Compliance with Laws. The Borrower is in material compliance with all laws, rules, regulations and orders of governmental authorities applicable to it and its properties. Article VII. COVENANTS SECTION 7.1 Affirmative Covenants. The Borrower agrees with the Lender that, until all Commitments have terminated and all Obligations have been paid in cash and performed in full, the Borrower will perform the obligations set forth in this Section. -24-

SECTION 7.1.1 Financial Information, Reports, Notices, etc. The Borrower will furnish, or will cause to be furnished, to the Lender copies of the following financial statements, reports, notices and information: (a) as soon as available and in any event within 45 days after the end of each of the first three Fiscal Quarters of the Borrower, the balance sheet of the Borrower as of the end of such Fiscal Quarter and the statements of earnings and cash flow of the Borrower for such Fiscal Quarter and for the period commencing at the end of the previous Fiscal Year and ending with the end of such Fiscal Quarter, together with (i) comparable information at the close of and for the corresponding Fiscal Quarter of the prior Fiscal Year and for the corresponding portion of the previous Fiscal Year and (ii) a comparison of such financial condition with the projections for the applicable period provided pursuant to clause (p), in each case certified by a Financial Officer as fairly presenting the financial position of the Borrower as of the date thereof and for the period then ended; (b) as soon as available and in any event within 90 days after the end of each Fiscal Year of the Borrower, a copy of the annual audit report for such Fiscal Year for the Borrower, including therein the balance sheet of the Borrower as of the end of such Fiscal Year and the statement of earnings and the statement of cash flow of the Borrower for such Fiscal Year, in each case with an unqualified certification (or a certification containing only qualifications deemed immaterial by the Lender) by Kronick Kalada Berdy & Co. or other independent public accountants reasonably acceptable to the Lender, together with a certificate from such accountants containing a computation of, and showing compliance with, each of the financial ratios and restrictions contained in Section 7.2.4 and to the effect that, in making the examination necessary for the signing of such annual report by such accountants, they have not become aware of any Default or Event of Default that has occurred and is continuing, or, if they have become aware of such Default or Event of Default, describing such Default or Event of Default and the steps, if any, being taken to cure it, together with a comparison of such financial condition with the projections for the applicable period provided pursuant to clause (p) , such comparison certified as complete and correct by a Financial Officer; (c) concurrently with the delivery of the financial statements pursuant to clauses (a) and (b), a certificate from a Financial Officer that, to the best of his or her knowledge, the Borrower during the period covered by such financial statements has observed or performed all of its covenants and other agreements contained in this Agreement and the other Loan Documents required to be observed, performed or satisfied by it, and that such Financial Officer has obtained no knowledge of any Default or Event of Default except as specified in such certificate; (d) as soon as available and in any event within 45 days after the end of each Fiscal Quarter, a Compliance Certificate, executed by a Financial Officer, showing (in reasonable detail and with appropriate calculations and computations in all respects satisfactory to the Lender) compliance with the financial covenants set forth in Section 7.2.4; (e) as soon as possible and in any event within three Business Days after the occurrence of each Default, Event of Default or event which is reasonably likely to result in a Material Adverse Effect, a statement of an Authorized Officer of the Borrower setting forth reasonably detailed information regarding such Default, Event of Default, or event and the action which the Borrower has taken and proposes to take with respect thereto; (f) as soon as possible and in any event within three Business Days after (i) the occurrence of any adverse development with respect to any litigation, action, proceeding, or labor controversy described in Section 6.7 or (ii) the commencement of any labor controversy, litigation, action, proceeding of the type described in Section 6.7, notice thereof by an Authorized Officer of the Borrower -25-

and copies of all documentation relating thereto; (g) concurrently after the sending or filing thereof, copies of (i) all reports and documents which the Borrower sends to any of its security holders and (ii) all reports, financial statements and registration statements which the Borrower files with the Securities and Exchange Commission or any securities exchange, except that the Borrower shall not be required to deliver any of the foregoing which has previously been delivered hereunder or which are publicly available in electronic form the availability of which the Borrower has notified the Lender in writing; (h) immediately upon becoming aware of any events which would give rise to a mandatory prepayment under clause (c) of Section 3.1.2.; (i) within seven days after the end of each Fiscal Month (or less frequently as may be reasonably requested by the Lender) a Borrowing Base Certificate, calculated as of the last day of the immediately preceding Fiscal Month, all certified as being true, accurate and complete in all material respects by a Financial Officer; (j) concurrently with the delivery of the financial statements pursuant to clause (b), the management letter, if any, with respect to internal audit and financial controls of the Borrower prepared by the independent public accountants who certified the financial statements; (k) all such notices and documents required to be delivered pursuant to the Security Agreement, including, pursuant to Section 4.1.7 thereof; (l) promptly after the receipt thereof, copies of any notice of non-payment or underpayment of taxes or other governmental charges by the Borrower that is received from any relevant governmental authority; (m) without limiting Section 7.2.11, promptly, and in any event within three Business Days after any Material Agreement is terminated or amended or any new Material Agreement is entered into, a written statement describing such event and copies of any such new contract, and (ii) promptly following the receipt (and in any event within three Business Days of receipt), and concurrently with the delivery of, all material notices under any Material Agreement; (n) concurrently with the delivery of the financial statements pursuant to clause (b), a certificate of a Financial Officer setting forth the information required pursuant to the disclosure schedules of the Security Agreement or confirming that there has been no change in such information since the date of the initial Loan or the date of the most recent certificate delivered pursuant to this clause; (o) promptly after obtaining knowledge that any statement contained in any representation or warranty in any Loan Document is not true and correct in all material respects, a statement of Authorized Officer of the Borrower setting forth reasonably detailed information regarding the same; (p) promptly when available and, in any event, prior to the last day of each Fiscal Year a budget in form and scope satisfactory to the Lender for the next succeeding Fiscal Year (including a projected balance sheet of the Borrower as of the end of the following Fiscal Year, and the related statement of projected cash flow, projected changes in financial position and projected income), which projections shall be accompanied by a certificate of a Financial Officer stating that such projections are based on reasonable estimates, information and assumptions as of such date and that such Authorized Officer has no reason to believe that such projections are incorrect or misleading in any material respect; -26-

(q) as soon as possible and in any event within three days after the occurrence thereof, notice of any ERISA Event that, alone or together with any other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower in an aggregate amount exceeding $100,000; and (r) such other information respecting the condition or operations, financial or otherwise, of the Borrower as the Lender may from time to time reasonably request. SECTION 7.1.2 Compliance with Laws; Payment of Obligations. The Borrower will comply in all material respects with all governmental rules and regulations and all other material applicable laws, rules, regulations and orders, such compliance to include (without limitation): (a) the maintenance and preservation of its corporate existence and qualification as a foreign corporation in any jurisdiction where the Borrower has assets or conducts business, except where failure to maintain and preserve such existence or qualification would not reasonably be expected to have a Material Adverse Effect; and (b) the payment, before the same become delinquent, of (i) all its Indebtedness and other obligations, including all taxes, assessments and governmental charges imposed upon it or upon its property, and (ii) all lawful claims for labor, materials and supplies or otherwise that, if unpaid, could reasonably be expected to give rise to a Lien upon any of its properties, except, in each case, to the extent being diligently contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. SECTION 7.1.3 Maintenance of Properties. The Borrower will maintain, preserve, protect and keep its properties in good repair, working order and condition, and make necessary and proper repairs, renewals and replacements so that its business carried on in connection therewith may be properly conducted at all times. SECTION 7.1.4 Insurance. (a) The Borrower shall maintain insurance policies and coverage with respect to all their property and assets at least as expansive as set forth on Item 6.21 ("Insurance") of the Disclosure Schedule. In addition, the Borrower shall maintain such other additional insurance coverage in such amounts and with respect to such risks as the Lender may reasonably request from time to time. All such insurance shall be provided (i) by insurers authorized by Lloyds of London to underwrite such risks, (ii) by insurers having an A.M. Best policyholders rating of not less than "A" or (iii) by such other insurers as the Lender may approve in writing. (b) All premiums on insurance policies required under this Section shall be paid by the Borrower. All insurance policies relating to "key man" life insurance, business interruption and any loss or damage sustained in respect of any item constituting a part of the Collateral shall contain a loss payable endorsement, in form and substance reasonably satisfactory to the Lender, in favor of the Lender. All insurance policies relating to general liability, umbrella and excess insurance coverages shall contain an additional insured endorsement, in form and substance reasonably satisfactory to the Lender, in favor of the Lender. All such insurance policies shall provide that neither the Borrower nor Lender shall be a coinsurer thereunder. All such insurance policies shall provide that the insurer shall, simultaneously with the delivery to the Borrower of any notice under such policy, deliver to the Lender a copy of such notice. All such insurance policies and loss payable clauses shall provide that they may not be canceled, amended or terminated unless the Lender is given at least the same number of days' notice that the insurance company which issued such policies is required to give the Borrower but in no event less than 30 days' prior written notice. -27-

(c) If the Borrower fails to maintain any of the policies of insurance required by this Section the Lender may (but shall not be required), at the sole cost and expense of the Borrower, obtain and maintain such policies of insurance, pay the related premiums and take such other action as it deems reasonably advisable. All costs related to the foregoing shall be charged to the Borrower's loan account as a Loan. SECTION 7.1.5 Books and Records; Inspections. (a) The Borrower will keep books and records which accurately reflect all of its business affairs and transactions. The Borrower shall maintain at all times books and records pertaining to the Collateral in such detail, form, and scope as the Lender shall reasonably require, including without limitation, records of: (i) all payments received and all credits and extensions granted with respect to the Accounts; (ii) the return, rejection, repossession, stoppage in transit, loss, damage or destruction of all Inventory; and (iii) all other dealings affecting the Collateral. (b) The Borrower will permit the Lender or any of its representatives (including outside auditors), at reasonable times and intervals, to visit all of its offices, to discuss its financial matters with its officers and independent public accountant (and the Borrower hereby authorizes such independent public accountant to discuss the Borrower's financial matters with the Lender or its representatives if a representative of the Borrower is present) and to examine (and, at the expense of the Borrower, copy extracts from) and conduct audits of any of its Inventory, Receivables, other assets and books or other corporate records (including computer records). (c) During the continuancy of an Event of Default, the Borrower shall pay any fees of such independent public accountant incurred in connection with the Lender's exercise of its rights pursuant to this Section. During the continuancy of an Event of Default, the Lender, in its sole discretion and at the sole expense of the Borrower, may conduct such audits and examinations of the Accounts as the Lender reasonably deems necessary or advisable. SECTION 7.1.6 Environmental Covenants. The Borrower will, and will use its commercially reasonable efforts to cause each of its lessees and other Persons occupying any of its properties to, (i) use and operate all of its facilities and properties in compliance with all Environmental Laws, keep all permits, approvals, certificates, licenses and other authorizations relating to environmental matters in effect and remain in compliance therewith, and handle all Hazardous Materials in compliance with all applicable Environmental Laws, except where the failure to do any of the foregoing would not, singly or in the aggregate, reasonably be expected to result in a liability exceeding a Material Environmental Amount; (ii) take all such actions as are necessary and appropriate so that no liability with respect to the Environmental Laws may arise which could reasonably be expected to result in a liability exceeding a Material Environmental Amount; (iii) immediately notify the Lender and provide copies upon receipt of all written claims, complaints, notices or inquiries relating to the condition of its facilities and properties or compliance with Environmental Laws, and shall promptly cure and have dismissed with prejudice to the reasonable satisfaction of the Lender any actions and proceedings relating to compliance with or liability pursuant to Environmental Laws which, singly or in the aggregate, could reasonably be expected to result in a liability exceeding a Material Environmental Amount; -28-

(iv) provide such information and certifications which the Lender may reasonably request from time to time to evidence compliance with this Section. SECTION 7.1.7 Intellectual Property Collateral. The Borrower shall not, unless the Borrower shall reasonably and in good faith determine that any of the Intellectual Property Collateral is of negligible economic value to the Borrower, do any act, or omit to do any act, whereby any of the Intellectual Property Collateral may lapse or become abandoned or dedicated to the public or unenforceable. SECTION 7.1.8 Further Assurances. (a) The Borrower will execute any and all further documents, financing statements, agreements and instruments, and take all such further actions (including the filing and recording of financing statements, fixture filings, mortgages, deeds of trust and other documents), which may be required under any applicable law, or which the Lender may reasonably request, to comply with the terms of this Agreement and the other Loan Documents, including causing the Collateral to be subject to a first priority security interest in favor of the Lender (subject, in the case of non-possessory security interests, to the Liens permitted by Section 7.2.3) securing all the Obligations, all at the expense of the Borrower. The Borrower also agrees to provide to the Lender, from time to time upon request, evidence reasonably satisfactory to the Lender as to the perfection and priority of the Liens created or intended to be created by the Loan Documents. (b) If any property or asset is acquired or leased by the Borrower after the date of the initial Loan, the Borrower will notify the Lender thereof (except, in the case of personal property, such notice shall not be required if the Lender has a valid first-priority perfected security interest in such Property and assets by virtue of any actions previously taken by or on behalf of the Lender), and will cause such property to be subjected to a first priority security interest in favor of the Lender (subject, in the case of non-possessory security interests, to the Liens permitted by Section 7.2.3) and will take such actions as shall be necessary or reasonably requested by the Lender to grant and perfect such Liens. SECTION 7.2 Negative Covenants. The Borrower agrees with the Lender that, until the Commitment has terminated and all Obligations have been paid in cash and performed in full, the Borrower will perform the obligations set forth in this Section. SECTION 7.2.1 Business Activities. The Borrower will not engage in any business activity, other than the caseready meat business and related activities. SECTION 7.2.2 Indebtedness. The Borrower will not create, incur, assume or suffer to exist or otherwise become or be liable in respect of any Indebtedness, other than, without duplication, the following: (a) Indebtedness in respect of the Loans and other Obligations; (b) until the date of the initial Loan, Indebtedness identified in Item 7.2.2(b) ("Indebtedness to be Paid") of the Disclosure Schedule; (c) Indebtedness existing on the date hereof and identified in Item 7.2.2(c) ("Ongoing Indebtedness") of the Disclosure Schedule; (d) Indebtedness that is incurred to purchase a capital asset and is secured by the Liens referred to in clause (b) of Section 7.2.3 in an aggregate principal amount not to exceed $100,000 at any time outstanding; and -29-

(e) any extensions, renewals or replacements of Indebtedness described in clause (c) above to the extent that (i) the aggregate principal amount of such Indebtedness is not at any time increased and neither the maturity nor the average life of such Indebtedness is shortened, (ii) if the Indebtedness being refinanced is subordinated to the Obligations, the refinancing Indebtedness shall be subordinated to the Obligations and the Loan Documents in all respects at least to the same extent and shall not be less favorable to the Lender in any respect and (iii) no terms applicable to such Indebtedness shall be less favorable to the Lender or more onerous to the Borrower in any material respect than the terms of the Indebtedness being refinanced; provided, however, that no Indebtedness otherwise permitted by clauses (d) through (e) may be incurred if, immediately before or after giving effect to the incurrence thereof, any Default or Event of Default shall have occurred and be continuing. The Borrower will, prior to entering into any agreement evidencing any extension, renewal or replacement of Indebtedness as provided in clause (e), deliver to the Lender with copies for the Lender reasonably in advance of the execution thereof, any final or execution form copy of such agreement. SECTION 7.2.3 Liens. The Borrower will not create, incur, assume or suffer to exist any Lien upon any of its property, revenues or assets, whether now owned or hereafter acquired, except: (a) Liens securing payment of the Obligations, granted pursuant to any Loan Document; (b) purchase money Liens existing on the date hereof as set forth on Item 7.2.3 ("Purchase Money Liens") of the Disclosure Schedule and purchase money Liens granted to secure payment of the Indebtedness permitted pursuant to clauses (d) or (e) of Section 7.2.2, provided that (i) each such Lien covers only those capital assets acquired with the proceeds of such Indebtedness, (ii) each such Lien attaches to the relevant capital asset concurrently with the acquisition thereof and (iii) the principal amount of such Indebtedness does not exceed the lesser of the cost or fair market value of the relevant capital asset; (c) Liens for taxes, assessments or other governmental charges or levies not at the time delinquent or being diligently contested in good faith by appropriate proceedings which suspends enforcement of such Liens and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (d) Liens of carriers, warehousemen, mechanics, materialmen and landlords incurred in the ordinary course of business for sums not overdue or being diligently contested in good faith by appropriate proceedings which suspends enforcement of such Liens and for which adequate reserves in accordance with GAAP shall have been set aside on its books; (e) Liens incurred in the ordinary course of business in connection with worker's compensation, unemployment insurance or other forms of governmental insurance or benefits, or to secure performance of tenders, statutory obligations, leases and contracts (other than for borrowed money) entered into in the ordinary course of business or to secure obligations on surety or appeal bonds; (f) judgment Liens in existence less than 10 days after the entry thereof or with respect to which execution has been stayed or the payment of which is covered in full (subject to a customary deductible) by insurance maintained with insurance companies in accordance with the terms of Section 7.1.4; and (g) easements, rights-of-way, zoning and similar restrictions and other similar encumbrances or title defects which, in the aggregate, are not substantial in amount, and which do not in -30-

any case materially detract from the value of the property subject thereto or interfere with the ordinary conduct of the business of the Borrower. SECTION 7.2.4 Net Worth. The Borrower will not permit its stockholders' equity determined in accordance with GAAP to be $0 or less. SECTION 7.2.5 Investments. The Borrower will not make, incur, assume or suffer to exist any Investment in any other Person, except: (a) Investments existing on the Effective Date and identified in Item 7.2.5(a) ("Ongoing Investments") of the Disclosure Schedule; (b) Cash Equivalent Investments; or (c) without duplication, Investments permitted as Capital Expenditures pursuant to Section 7.2.7; provided, however, that any Investment which when made complies with the requirements of the definition of the term "Cash Equivalent Investment" may continue to be held notwithstanding that such Investment if made thereafter would not comply with such requirements. SECTION 7.2.6 Restricted Payments, etc. The Borrower will not (notwithstanding the terms of any Organic Document) declare, pay or make on any of its equity interests (or any warrants, options or other rights with respect thereto) any dividend or distribution, whether in cash, property or obligations (other than dividends or distributions payable in its common stock or other equity interests, warrants to purchase its common stock or other equity interests or split-ups or reclassifications of its stock or other equity interests into additional or other shares of its common stock), or apply any of its funds, property or assets to the purchase, redemption, sinking fund or other retirement of, any such equity interests (or any options, warrants or other rights with respect thereto). SECTION 7.2.7 Capital Expenditures, etc. The Borrower will not make or commit to make Capital Expenditures in any Fiscal Year, except Capital Expenditures which do not aggregate in any Fiscal Year in excess of $100,000; provided, however, that no such Capital Expenditure shall be made if any Default or Event of Default shall have occurred and be continuing immediately prior to or after giving effect to the making of any such Capital Expenditure. SECTION 7.2.8 Take or Pay Contracts. The Borrower will not enter into or be a party to any arrangement for the purchase of materials, supplies, other property or services if such arrangement by its express terms requires that payment be made by the Borrower regardless of whether such materials, supplies, other property or services are delivered or furnished to it. SECTION 7.2.9 Consolidation, Merger, etc. The Borrower will not liquidate or dissolve, consolidate or amalgamate with, or merge into or with, any other Person, or purchase, lease or otherwise acquire (in each case in one transaction or series of transactions) all or any substantial part of the assets, stock or other equity interests of any Person (or of any division thereof). SECTION 7.2.10 Asset Dispositions, etc. The Borrower will not sell, transfer, lease, contribute or otherwise convey or dispose of (in each case in one transaction or series of transactions), or grant options, warrants or other rights with respect to (in each case in one transaction or series of related transactions), all or any part of its assets to any Person, except (a) if such sale, transfer, lease, contribution or conveyance is of Inventory in the -31-

ordinary course of its business; (b) if such disposition is a Permitted Disposition; or (c) if such assets are worn out or obsolete and are sold or disposed of in the ordinary course of business. SECTION 7.2.11 Modification of Certain Agreements. The Borrower will not consent to any amendment, supplement, waiver or other modification of any of the terms or provisions contained in, or applicable to, any Organic Document of the Borrower, the Purchase Agreement or any Material Agreement which in any case (a) is contrary to the terms of this Agreement or any other Loan Document, (b) may be adverse to the rights, interests or privileges of the Lender or its ability to enforce the same, (c) results in the imposition or expansion in any material respect of any restriction or burden on the Borrower or (d) reduces in any material respect any rights or benefits of the Borrower (it being understood and agreed that any such determination shall be made in the reasonable discretion of the Lender). The Borrower will, prior to entering into any amendment, addition or other modification of any of the foregoing documents deliver to the Lender reasonably in advance of the execution thereof, any final or execution form copy of amendments, supplements, additions or other modifications to such documents, and agrees not to take any such action with respect to any such documents without the approval of the Lender. SECTION 7.2.12 Transactions with Affiliates. The Borrower will not enter into, or cause, suffer or permit to exist any arrangement or contract with, any of its other Affiliates unless such arrangement or contract (a) is not otherwise prohibited by this Agreement, (b) is in the ordinary course of business of the Borrower and (c) is on fair and reasonable terms and is an arrangement or contract of the kind which would be entered into by a prudent Person in the position of the Borrower with a Person which is not one of its Affiliates or is in effect on the Effective Date and disclosed in the schedules to the Purchase Agreement. SECTION 7.2.13 Negative Pledges, Restrictive Agreements, etc. The Borrower will not enter into any agreement (excluding this Agreement, any other Loan Document and the Purchase Agreement and other agreements contemplated thereby) prohibiting the creation or assumption of any Lien upon its properties, revenues or assets, whether now owned or hereafter acquired, or the ability of the Borrower to amend or otherwise modify this Agreement or any other Loan Document. SECTION 7.2.14 Management Fees, Expenses, etc. The Borrower will not: (a) pay management, advisory, consulting or other similar fees, other than (i) fees payable to the Lender or any of its Affiliates; (ii) fees payable to non-Affiliate consultants engaged on arm's-length basis as approved by the Board of Directors of the Borrower; and (iii) fees payable pursuant to agreements in effect on the Effective Date and disclosed in the schedules to the Purchase Agreement. (b) reimburse employees or any Affiliates for any expenses unless the same shall be incurred in the ordinary course of business and be reasonable. SECTION 7.2.15 Fiscal Year End. The Borrower shall not change its Fiscal Year. -32-

SECTION 7.2.16 Limitation on Sale and Leaseback Transactions. The Borrower will not enter into any arrangement with any Person whereby in a substantially contemporaneous transaction the Borrower sells or transfers all or substantially all of its right, title and interest in an asset and, in connection therewith, acquires or leases back the right to use such asset. Article VIII. EVENTS OF DEFAULT SECTION 8.1 Listing of Events of Default. Each of the following events or occurrences described in this Section shall constitute an "Event of Default". SECTION 8.1.1 Non-Payment of Obligations. The Borrower shall default in the payment or prepayment when due or within two Business Days thereafter of any monetary Obligation hereunder or under any other Loan Document (including, without limitation, any principal of, or interest on, any Loan, any fees or any other amounts payable hereunder or thereunder). SECTION 8.1.2 Breach of Representations and Warranties. Any representation or warranty of the Borrower made or deemed to be made hereunder or in any other Loan Document executed by it or any other writing or certificate furnished by or on behalf of the Borrower to the Lender for the purposes of or in connection with this Agreement or any such other Loan Document (including any certificates delivered pursuant to Article V) is or shall be incorrect when made in any material respect. SECTION 8.1.3 Non-Performance of Certain Covenants and Obligations. The Borrower shall default in the due performance and observance of any of its obligations under clause (e) of Section 7.1.1, or Sections 4.1, 7.1.8 or 7.2 (other than Section 7.2.1, Section 7.2.15 and solely to the extent a commercial banking institution shall fail to meet the standards specified in clause (c) of the definition of Cash Equivalent Investment after the date of investment, Section 7.2.5). SECTION 8.1.4 Non-Performance of Other Covenants and Obligations. The Borrower shall default in the due performance and observance of any other agreement contained herein or in any other Loan Document (other than items covered by Sections 8.1.1 or 8.1.3) executed by it, and such default shall continue unremedied for a period of 30 days after the Borrower has actual knowledge thereof or notice thereof shall have been given to the Borrower by the Lender. SECTION 8.1.5 Default on Other Indebtedness. A default shall occur in the payment when due, whether by acceleration or otherwise, of any Indebtedness (other than Indebtedness described in Section 8.1.1) of the Borrower having a principal amount, individually or in the aggregate, in excess of $100,000, or a default shall occur in the performance or observance of any obligation or condition with respect to such Indebtedness if the effect of such default is to accelerate the maturity of any such Indebtedness or such default shall continue unremedied for any applicable period of time sufficient to permit the holder or holders of such Indebtedness, or any trustee or agent for such holders, to cause such Indebtedness to become due and payable prior to its expressed maturity. SECTION 8.1.6 Judgments. (a) Any judgment or order for the payment of money (not paid or fully covered by insurance maintained in accordance with the requirements of this Agreement and as to which the relevant insurance company has acknowledged coverage) in excess of $100,000 shall be rendered against the -33-

Borrower and either (b) enforcement proceedings shall have been commenced by any creditor upon such judgment or order or (c) there shall be any period of 15 consecutive days during which a stay of enforcement of such judgment or order, by reason of a pending appeal, bond or otherwise, shall not be in effect. SECTION 8.1.7 ERISA Events. An ERISA Event shall have occurred that, in the opinion of the Lender, when taken together with all other ERISA Events that have occurred, could reasonably be expected to result in liability of the Borrower in an aggregate amount exceeding (i) $100,000 in any year. SECTION 8.1.8 Impairment of Loan Documents, Security, etc. Any Loan Document, or any Lien granted thereunder, shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the Borrower party thereto; the Borrower, or any other party shall, directly or indirectly, contest in any manner such effectiveness, validity, binding nature or enforceability; or any Lien securing (or required to secure) any Obligation shall, in whole or in part, cease to be a perfected first registered priority Lien. SECTION 8.1.9 Bankruptcy, Insolvency, etc. The Borrower shall (a) generally fail to pay debts as they become due, or admit in writing its inability to pay debts as they become due; (b) apply for, consent to, or acquiesce in, the appointment of a trustee, receiver, sequestrator, or other custodian for the Borrower or any of its property, or make a general assignment for the benefit of creditors; (c) in the absence of such application, consent or acquiescence, permit or suffer to exist the involuntary appointment of a trustee, receiver, sequestrator or other custodian for the Borrower or for a substantial part of its property, and such trustee, receiver, sequestrator or other custodian shall not be discharged within 60 days; (d) permit or suffer to exist the involuntary commencement of, or voluntarily commence, any bankruptcy, reorganization, debt arrangement, or other case or proceeding under any bankruptcy or insolvency laws, or permit or suffer to exist the involuntary commencement of, or voluntarily commence, any dissolution, winding up or liquidation proceeding, in each case, by or against the Borrower, provided that if not commenced by the Borrower such proceeding shall be consented to or acquiesced in by the Borrower, or shall result in the entry of an order for relief or shall remain for 60 days undismissed; or (e) take any corporate action authorizing, or in furtherance of, any of the foregoing. SECTION 8.1.10 Non-Payment of Taxes. The Borrower shall have failed to pay when due any taxes or other governmental charges in excess of $100,000, except any such taxes or other governmental charges which are being diligently contested by it in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP shall have been set aside on its books. -34-

SECTION 8.1.11 Impairment of Material Agreements. Any Material Agreement shall (except in accordance with its terms), in whole or in part, terminate, cease to be effective or cease to be the legally valid, binding and enforceable obligation of the Borrower party thereto; or there shall be any material event of default by the Borrower under any Material Agreement. SECTION 8.2 Action if Bankruptcy. If any Event of Default described in clauses (a) through (d) of Section 8.1.9 shall occur, the Commitments (if not theretofore terminated) shall automatically terminate and the outstanding principal amount of all outstanding Loans and all other Obligations shall automatically be and become immediately due and payable, without notice or demand. SECTION 8.3 Action if Other Event of Default. If any Event of Default (other than any Event of Default described in clauses (a) through (d) of Section 8.1.9) shall occur for any reason, whether voluntary or involuntary, and be continuing, the Lender, may, by notice to the Borrower declare all or any portion of the outstanding principal amount of the Loans and other Obligations to be due and payable and/or the Commitment (if not theretofore terminated) to be terminated, whereupon the full unpaid amount of such Loans and other Obligations which shall be so declared due and payable shall be and become immediately due and payable, without further notice, demand or presentment, and/or, as the case may be, the Commitment shall terminate. SECTION 8.4 Foreclosure on Collateral. If any Event of Default shall occur, the Lender shall have, in addition to all rights and remedies provided for in the U.C.C., all such rights (including the right of foreclosure) with respect to the Collateral as provided in the Security Agreement. Article IX. MISCELLANEOUS PROVISIONS SECTION 9.1 Waivers, Amendments, etc. The provisions of this Agreement and of each other Loan Document may from time to time be amended, modified or waived, if such amendment, modification or waiver is in writing and consented to by the Borrower and the Lender No failure or delay on the part of the Lender in exercising any power or right under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any such power or right preclude any other or further exercise thereof or the exercise of any other power or right. No notice to or demand on the Borrower in any case shall entitle it to any notice or demand in similar or other circumstances. No waiver or approval by the Lender or any other Loan Document shall, except as may be otherwise stated in such waiver or approval, be applicable to subsequent transactions. No waiver or approval hereunder shall require any similar or dissimilar waiver or approval thereafter to be granted hereunder. The remedies provided in this Agreement are cumulative, and not exclusive of remedies provided by law. SECTION 9.2 Notices. All notices and other communications provided to any party hereto under this Agreement or any other Loan Document shall be in writing and addressed, delivered or transmitted to such party at its address or telecopy number set forth on Schedule II hereto or at such other address or telecopy number as may be designated by such party in a notice to the other parties given in accordance with this Section. Any notice, if mailed and properly addressed with postage prepaid, shall be deemed given three Business Days after posting; any notice, if sent by prepaid overnight express shall be deemed delivered on the next Business Day; any notice, if transmitted by telecopy, shall be deemed given when sent, with confirmation of receipt; any notice, if transmitted by hand, shall be deemed received when delivered. -35-

SECTION 9.3 Payment of Costs and Expenses. The Borrower agrees to pay on demand all expenses of the Lender (including, without limitation, the fees and out-of-pocket expenses of counsel to the Lender and consultants, if any, who may be retained in connection with the transactions contemplated hereby by the Lender) in connection with (a) the filing, recording, refiling or rerecording of the Loan Documents and any other security instruments executed in connection with the transactions contemplated hereby; and (b) sums paid or incurred to pay any amount or take any action required by the Borrower under the Loan Documents that the Borrower fails to pay or take. The Borrower further agrees to pay, and to save the Lender harmless from all liability for, any stamp or other taxes which may be payable in connection with the execution or delivery of this Agreement, the Loans hereunder, or the issuance of the Notes or any other Loan Documents. The Borrower also agrees to reimburse the Lender upon demand for all reasonable expenses (including, without limitation, the fees and out-of-pocket expenses of counsel and consultants, if any, who may be retained by such persons) incurred by the Lender in connection with (i) the negotiation of any restructuring or "work-out", whether or not consummated, of any Obligations and (ii) the enforcement of any Obligations. The Borrower further agrees to reimburse the Lender on demand for all reasonable administration, audit and monitoring expenses incurred in connection with the Eligible Accounts and Eligible Inventory and determinations in respect thereof which are incurred during the continuance of an Event of Default. SECTION 9.4 Survival. The obligations of the Borrower under Sections 4.2 and 9.3, shall in each case survive any termination of this Agreement, the payment in full of all the Obligations and the termination of all the Commitments. All covenants, agreements, representations and warranties made by the Borrower in the Loan Documents and in the certificates or other instruments delivered in connection with or pursuant to this Agreement or any other Loan Document shall be considered to have been relied upon by the Lender and shall survive the execution and delivery of the Loan Documents and the making of any Loan, regardless of any investigation made by any such other party or on its behalf and notwithstanding that the Lender may have had notice or knowledge of any Default or incorrect representation or warranty at the time any credit is extended hereunder. SECTION 9.5 Severability. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall, as to such provision and such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or such Loan Document or affecting the validity or enforceability of such provision in any other jurisdiction. SECTION 9.6 Headings. The various headings of this Agreement and of each other Loan Document are inserted for convenience only and shall not affect the meaning or interpretation of this Agreement or such other Loan Document or any provisions hereof or thereof. SECTION 9.7 Execution in Counterparts, Effectiveness, etc. This Agreement may be executed by the parties hereto in several counterparts, each of which shall be deemed to be an original and all of which shall constitute together but one and the same agreement. This Agreement shall become effective when counterparts hereof executed on behalf of the Borrower and the Lender. SECTION 9.8 Governing Law; Entire Agreement. THIS AGREEMENT AND THE NOTES SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA. This Agreement, the Notes and the -36-

other Loan Documents constitute the entire understanding among the parties hereto with respect to the subject matter hereof and supersede any prior agreements, written or oral, with respect thereto. SECTION 9.9 Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that the Borrower may not assign or transfer its rights or obligations hereunder without the prior written consent of the Lender. SECTION 9.10 Waiver of Jury Trial, etc. THE LENDER AND THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDER, OR THE BORROWER. THE BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN DOCUMENT. SECTION 9.11 Waiver of Certain Claims. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE BORROWER SHALL NOT ASSERT, AND HEREBY WAIVES, ANY CLAIM AGAINST THE LENDER, ON ANY THEORY OF LIABILITY FOR SPECIAL, INDIRECT, CONSEQUENTIAL OR PUNITIVE DAMAGES (AS OPPOSED TO DIRECT OR ACTUAL DAMAGES) ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF, ANY LOAN DOCUMENT, ANY LOAN OR THE USE OF THE PROCEEDS THEREOF. -37-

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the day and year first above written. PINNACLE FOODS, INC. By: Name:

Title: SMITHFIELD FOODS, INC. By: Name:

Title: -38-

SCHEDULE I DISCLOSURE SCHEDULE ITEM 1.1 Eligible Accounts. ITEM 6.7 Litigation, Labor Controversies. ITEM 6.9 Realty. ITEM 6.12 Environmental Matters. ITEM 6.13 Inventory Locations. ITEM 6.19 Material Agreements. ITEM 6.21 Insurance. ITEM 7.2.2(b) Indebtedness to be Paid. ITEM 7.2.2(c) Ongoing Indebtedness. ITEM 7.2.3 Purchase Money Liens ITEM 7.2.5(a) Ongoing Investments.

SCHEDULE II ADMINISTRATIVE INFORMATION Borrower Pinnacle Foods, Inc. 980 Glasgow Street Pottstown, Pennsylvania 19464 Attention: Michael D. Queen Telephone No.: (610) 705-3620 Facsimile No.: (610) 705-4894 Lender Smithfield Foods, Inc. 200 Commerce Street Smithfield, Virginia 23430 Attention: Richard J.M. Poulson, Esq. Telephone No.: (757) 365-3024 Facsimile No.: (757) 365-3025

INDEMNIFICATION AGREEMENT THIS INDEMNIFICATION AGREEMENT is made this 27th day of June, 2001, by and between PINNACLE FOOS, INC., a Pennsylvania corporation (the "Company" or the "Indemnitor"), and ELLIS M. SHORE (the "Indemnitee"). WHEREAS, the Indemnitee serves as a consultant and agent of the Company in connection with various Company matters, including but not limited to, the negotiation of the transactions contemplated by the Stock Purchase Agreement, dated as of May 31, 2001, among the Company, Smithfield Foods, Inc. and certain shareholders of the Company, and the Credit Agreement, dated as of June 27, 2001, between the Company and Smithfield Foods, Inc. (together with the transactions contemplated thereby, the "Smithfield Transactions") WHEREAS, the Company wishes the Indemnitee to continue his service with the Company as a consultant and agent and the Indemnitee is willing, under certain circumstances, to serve the Company in such capacity. WHEREAS, Section 1741 of the Pennsylvania Business Corporation Law, under which law the Company is organized, empowers corporations to indemnify a person serving as a representative of the Company against expenses (including attorneys' fees), judgments, fines, and amounts in connection with certain actions and proceedings. NOW, THEREFORE, in order to induce the Indemnitee to continue his service with the Company and in consideration of his continued service, and intending to be legally bound hereby, the Company and Indemnitee hereby agree as follows: 1. Indemnity. The Company shall and hereby agrees to indemnify, defend, save and hold harmless the Indemnitee, his heirs, personal representatives, successors and assigns, jointly and severally, for any Expenses (as defined below) which the Indemnitee or any such heir, personal representative, successor or assign, is or becomes legally obligated to pay in connection with any Proceeding to the extent permitted by the Company's Bylaws as of the date of this Agreement and to the fullest extent of the Pennsylvania Business Corporation Law as in effect on the date hereof. As used in this Agreement, the term "Proceeding" shall include any threatened, pending or completed claim, action, suit or proceeding (including any appeals), whether brought by or in the name or right of the Company or otherwise and whether of a civil, criminal, administrative or investigative nature, in which the Indemnitee or any such heir, personal representative, successor or assign, may be or may have been involved as a party or otherwise, (i) by reason of the fact that Indemnitee was, or has agreed to continue to be, a consultant and agent of the Company, (ii) by reason of any actual or alleged error or misstatement or misleading statement made or suffered by the Indemnitee, (iii) by reason of any action taken by him or of any inaction on his part while acting as such consultant or agent, (iv) by reason of the negotiation of the Smithfield Transactions and the documents and agreements entered into in connection therewith, or (v) by reason of any claim that the sale of stock under the Stock Purchase Agreement was unlawful; provided, that in each such case Indemnitee acted in good faith and in a manner which he reasonably believed to be in or not 1

opposed to the best interests of the Company, and, in the case of a criminal proceeding, in addition had no reasonable cause to believe that his conduct was unlawful; and further provided that no indemnity by the Company shall be required under this Agreement for any breach or alleged breach of any representation, warranty or covenant given by Indemnitee in the Stock Purchase Agreement. As used in this Agreement, the term "fines" shall include (without limitation) any excise tax assessed with respect to any employee benefit plan. 2. Expenses. As used in this Agreement, the term "Expenses" shall include (without limitation) damages, judgments, fines, penalties, settlements and costs, attorneys' fees and disbursements and costs of attachment or similar bonds, of investigating and defending against any claim, and all expenses of establishing a right to indemnification under this Agreement. 3. Enforcement. If a claim or request under this Agreement is not paid by the Company, or on its behalf, within thirty (30) days after a written claim or request has been received by the Company, the Indemnitee may at any time thereafter bring suit against the Company to recover the unpaid amount of the claim or request and if successful in whole or in part, the Indemnitee shall also be entitled to be paid all the Expenses of prosecuting such suit. The Company shall have the right to recoup from the Indemnitee the amount of any item or items of Expenses theretofore paid by the Company pursuant to this Agreement, to the extent such Expenses are not reasonable in nature or amounts; provided, however, that the Company shall have the burden of proving such Expenses to be unreasonable. The burden of proving that the Indemnitee is not entitled to indemnification for any other reason shall be on the Company. 4. Subrogation. In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of the Indemnitee, who shall execute all documents required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights. 5. Exclusions. The Company shall not be liable under this Agreement to pay any Expenses in connection with any claim made against the Indemnitee: (a) to the extent that payment is actually made to the Indemnitee under a valid, enforceable and collectible insurance policy; (b) to the extent that the Indemnitee is indemnified and actually paid otherwise than pursuant to this Agreement; (c) brought about or contributed to by the intentional and deliberate dishonesty of the Indemnitee seeking payment hereunder; however, notwithstanding the foregoing, the Indemnitee shall be protected under this Agreement as to any claims upon which suit may be brought against him by reason of any alleged dishonesty on his part, unless a judgment or other final adjudication thereof adverse to the Indemnitee shall establish that he committed (i) acts of active and deliberate dishonesty, (ii) with actual dishonest purpose and intent, (iii) which acts were material to the cause of action so adjudicated; or 2

(d) for any judgment, fine or penalty which the Company is prohibited by applicable law from paying as indemnity or for any other reason. 6. Defense of Claims and Indemnification of Expenses. The Indemnitee shall permit the Indemnitor (at its expense) to assume the defense of any claim or any litigation for which the Indemnitee seeks indemnification pursuant to this Agreement; provided, however, that (i) counsel for the Indemnitor, who shall conduct the defense of such claim or litigation shall be reasonably satisfactory to the Indemnitee and the Indemnitee may participate in such defense at the Indemnitee's expense, and (ii) the failure by the Indemnitee to give notice as provided in Section 11 of this Agreement shall not relieve the Indemnitor of its indemnification obligations under this Agreement, except to the extent the Indemnitor is actually prejudiced as a result of such failure to give notice. In the event that (i) the Indemnitor does not promptly assume the defense of any matter as above provided, (ii) counsel for the Indemnitee reasonably believes and advises Indemnitee in writing that there are issues that raise conflicts of interest between the Indemnitor and the Indemnitee, or (iii) if additional defenses are available to Indemnitee which are not available to Indemnitor, then the Indemnitee may engage its own counsel to defend itself in such claim or litigation and the Indemnitor shall pay all reasonable fees and expenses of counsel incurred in such defense. The Indemnitor shall not, in the defense of any such claim or litigation, except with the consent of the Indemnitee (which consent shall not be unreasonably withheld), consent to entry of any judgment or enter into any settlement that provides for injunctive or other nonmonetary relief affecting the Indemnitee or that does not include as an unconditional term thereof the provision of a release from all liability with respect to such claim or litigation from the claimant or plaintiff to the Indemnitee. 7. Plea of Nolo Contendere. The termination of any Proceeding which is covered by this Agreement by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not of itself create a presumption for the purposes of this Agreement that Indemnitee did not (a) act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Company or, with respect to any criminal action or proceeding, (b) have reasonable cause to believe that his conduct was unlawful. 8. Partial Indemnification. If the Indemnitee is entitled under any provision of this Agreement to indemnification by the Company for some or a portion of Expenses, but not, however, for the total amount thereof, the Company shall nevertheless indemnify the Indemnitee for the portion of such Expenses to which the Indemnitee is entitled. 9. Advance of Expenses. Expenses incurred by the Indemnitee in connection with any Proceeding, except the amount of any settlement, shall be paid by the Company in advance upon request of the Indemnitee that the Company pay such Expenses. The Indemnitee hereby undertakes to repay to the Company the amount of any Expenses theretofore paid by the Company to the extent that it is ultimately determined that such Expenses were not reasonable or that the Indemnitee is not entitled to indemnification. 10. Approval of Expenses. No Expenses for which indemnity shall be sought under this Agreement, other than those in respect of judgments and verdicts actually rendered, 3

shall be incurred without the prior consent of the Company, which consent shall not be unreasonably withheld. 11. Notice of Claim. The Indemnitee, as a condition precedent to his or her right to be indemnified under this Agreement, shall give to the Company notice in writing as soon as practicable of any claim made against him for which indemnity will or could be sought under this Agreement. Notice to the Company shall be given at its principal office and shall be directed to the Corporate Secretary (or such other address as the Company shall designate in writing to the Indemnitee); notice shall be deemed received if sent by prepaid mail properly addressed, the date of such notice being the date postmarked. In addition, the Indemnitee shall give the Company such information and cooperation as it may reasonably require and as shall be within the Indemnitee's power. 12. Counterparts. This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one instrument. 13. Indemnification Hereunder Not Exclusive. Nothing herein shall be deemed to diminish or otherwise restrict the Indemnitee's right to indemnification under any provision of the Articles of Incorporation or By-laws of the Company and amendments thereto or under law. 14. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to the conflicts of law provisions thereof. 15. Saving Clause. Wherever there is conflict between any provision of this Agreement and any applicable present or future statute, law or regulation contrary to which the Company and the Indemnitee have no legal right to contract, the latter shall prevail, but in such event the affected provisions of this Agreement shall be curtailed and restricted only to the extent necessary to bring them within applicable legal requirements. 16. Coverage. The provisions of this Agreement shall apply with respect to the Indemnitee's past service as a consultant, director, officer, or employee of the Company for all periods prior to the date of this Agreement and with respect to all periods of service as a consultant or agent after the date of this Agreement. 4

IN WITNESS WHEREOF, the parties hereto have caused this Indemnification Agreement to be duly executed and signed as of the day and year first above written. PINNACLE FOODS, INC. By: Michael D. Queen, President INDEMNITEE Ellis M. Shore 5

CONSULTING AGREEMENT THIS CONSULTING AGREEMENT is made this 1st day of March 2001, by and between PINNACLE FOODS, INC., a Pennsylvania corporation (hereinafter called "Company") and ELLIS M. SHORE, an individual (hereinafter called "Consultant"). W I T N E S S E T H: Company wishes to engage Consultant and Consultant wishes to consult with Company on the terms and conditions contained in this Agreement. NOW, THEREFORE, in consideration of the facts, mutual promises and covenants contained herein and intending to be legally bound hereby, Company and Consultant agree as follows: 1. Engagement. Company hereby engages Consultant and Consultant hereby accepts engagement by Company as a consultant for the period and upon the terms and conditions contained in this Agreement. 2. Duties. (a) Consultant shall serve Company as a general business consultant on all matters affecting the operations and capitalization of the Company and shall have such authority and such responsibilities as Company reasonably may determine from time to time. Consultant shall perform any other duties reasonably required by Company. (b) Throughout the term of this Agreement, Consultant shall devote not less than one hundred (100) hours per month of working time and his energy, skill and best efforts to the performance of his duties hereunder in a manner which will faithfully and diligently further the business and interests of Company. The parties acknowledge that Consultant shall be free, except as otherwise limited hereby, to engage in any other business of his choice. 3. Term. This Agreement shall be for a term of five (5) years, commencing on March 1, 2001, and ending on February 28, 2006, unless sooner terminated as hereinafter provided. Unless either party elects to terminate this Agreement at the end of the original or any renewal term by giving the other party notice of such election at least ninety (90) days before the expiration of the then current term, this Agreement shall be deemed to have been renewed for an additional term of one (1) year commencing on the day after the expiration of the then current term. 4. Compensation. For all of the services rendered and to be rendered by Consultant to Company, Consultant shall receive an annual compensation of One Hundred Fifty Thousand Dollars ($150,000), payable in reasonable periodic installments in accordance with Company's regular disbursement practices in effect from time to time. If and to the extent that 1

the Company believes it is necessary or appropriate, Company shall withhold from payments owed to Consultant hereunder and any and all necessary payroll and wage taxes. 5. Expenses. Company will reimburse Consultant for all reasonable expenses incurred by Consultant in connection with the performance of Consultant's duties hereunder upon receipt of vouchers therefor and in accordance with Company's regular reimbursement procedures and practices in effect from time to time. 6. Death. If Consultant dies, all payments hereunder shall cease at the end of the month in which Consultant's death shall occur and Company shall have no further obligations or liabilities hereunder to Consultant's estate or legal representative or otherwise. 7. Termination for Cause. Company may terminate this Agreement at any time for the conviction of a crime related to Consultant's engagement hereunder, repeated intoxication, drug addiction, any violation of any reasonable rule or regulation established by Company from time to time regarding the conduct of its business and communicated to Consultant in writing, or any material violation by Consultant of the terms of this Agreement, in which event Company shall have no further obligations or liabilities hereunder after the date of such termination. 8. Company Property. All advertising, sales, manufacturers' and other materials or articles or information, including without limitation data processing reports, customer sales analyses, invoices, price lists or information, samples, budgets, business plans, strategic plans, financing applications, reports, memoranda, correspondence, financial statements, and any other materials or data of any kind furnished to Consultant by Company or developed by Consultant on behalf of Company or at Company's direction or for Company's use or otherwise in connection with Consultant's engagement hereunder, are and shall remain the sole and confidential property of Company; if Company requests the return of any such materials at any time during or at or after the termination of Consultant's engagement hereunder, Consultant shall immediately deliver the same to Company. 9. Noncompetition, Trade Secrets, Etc. (a) During the term of this Agreement and for a period of one year after the termination of his engagement with Company for any reason whatsoever, Consultant shall not, directly or indirectly, induce or attempt to influence any employee or consultant of Company to terminate his employment or consultancy with Company and shall not engage in (as a principal, partner, director, officer, agent, employee, consultant or otherwise) or be financially interested in any business operating within the states of Maryland, Virginia, Delaware, Pennsylvania, New Jersey, New York, Connecticut or Massachusetts, which is involved in business activities which are the same as, similar to, or in competition with business activities carried on by Company, at the time of the termination of Consultant's engagement hereunder. However, nothing contained in this Paragraph 9 shall prevent Consultant from holding for investment no more than five percent (5%) of any class of equity securities of a company whose securities are traded on a national securities exchange or on the NASDAQ System. (b) During the term of this Agreement and at all times thereafter, Consultant shall not use for his personal benefit, or disclose, communicate or divulge to, or use for the direct 2

or indirect benefit of any person, firm, association or company other than the Company, any material referred to in Paragraph 8 or any information regarding the business methods, business policies, procedures, techniques, research or development projects or results, trade secrets, or other knowledge or processes of or developed by the Company or any names and addresses of customers or clients, any data on or relating to past, present or prospective customers or clients, or any other confidential information relating to or dealing with the business operations or activities of Company, made known to Consultant or learned or acquired by Consultant while consulting for the Company. (c) Any and all reports, plans, budgets, writings, inventions, improvements, processes, procedures and/or techniques which Consultant may make, conceive, discover or develop, either solely or jointly with any other person or persons, at any time during the term of this Agreement, whether during working hours or at any other time and whether at the request or upon the suggestion of the Company or otherwise, which relate to or are useful in connection with any business now or hereafter carried on by the Company, including developments or expansions of its present fields of operations, shall be the sole and exclusive property of Company. Consultant shall make full disclosure to Company of all such reports, plans, budgets, writings, inventions, improvements, processes, procedures and techniques, and shall do everything reasonably necessary or desirable at Company's cost and expense to vest the absolute title thereto in Company. Consultant shall write and prepare all specifications and procedures regarding such inventions, improvements, processes, procedures and techniques and otherwise aid and assist Company so that Company can prepare and present applications for copyright or Letters Patent therefor and can secure such copyright or Letters Patent wherever possible, as well as reissues, renewals, and extensions thereof, and can obtain the record title to such copyright or patents so that Company shall be the sole and absolute owner thereof in all countries in which it may desire to have copyright or patent protection. Consultant shall not be entitled to any additional or special compensation or reimbursement regarding any and all such writings, inventions, improvements, processes, procedures and techniques. (d) Consultant acknowledges that the restrictions contained in the foregoing subparagraphs (a), (b) and (c) of this Paragraph 9, in view of the nature of the business in which Company is engaged, are reasonable and necessary in order to protect the legitimate interests of Company, and that any violation thereof would result in irreparable injuries to Company, and Consultant therefore acknowledges that, in the event of his violation of any of these restrictions, Company shall be entitled to obtain from any court of competent jurisdiction preliminary and permanent injunctive relief as well as damages and an equitable accounting of all earnings, profits and other benefits arising from such violation, which rights shall be cumulative and in addition to any other rights or remedies to which Company may be entitled. (e) If the period of time or the area specified in subparagraph (a) above should be adjudged unreasonable in any proceeding, then the period of time shall be reduced by such number of months or the area shall be reduced by the elimination of such portion thereof or both so that such restrictions may be enforced in such area and for such time as is adjudged to be reasonable. If Consultant violates any of the restrictions contained in such subparagraph (a), the restrictive period shall not run in favor of Consultant from the time of the commencement of any 3

such violation until such time as such violation shall be cured by Consultant to the reasonable satisfaction of Company. 10. Prior Agreements. Consultant represents to Company (a) that there are no restrictions, agreements or understandings whatsoever to which Consultant is a party which would prevent or make unlawful his execution of this Agreement or his engagement hereunder, (b) that his execution of this Agreement and his engagement hereunder shall not constitute a breach of any contract, agreement or understanding, oral or written, to which he is a party or by which he is bound and (c) that he is free and able to execute this Agreement. 11. Miscellaneous. (a) Indulgences, Etc. Neither the failure nor any delay on the part of either party to exercise any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power or privilege preclude any other or further exercise of the same, or of any other right, remedy, power or privilege, nor shall any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver shall be effective unless it is in writing and is signed by the party asserted to have granted such waiver. (b) Controlling Law. This Agreement and all questions relating to its validity, interpretation, performance and enforcement (including, without limitation, provisions concerning limitations of actions), shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania, notwithstanding any conflict-oflaws doctrines of any jurisdiction to the contrary, and without the aid of any canon, custom or rule of law requiring construction against the draftsman. (c) Notices. All notices, requests, demands and other communications required or permitted under this Agreement shall be in writing and shall be deemed to have been duly given, made and received only when delivered (personally, by courier service such FedEx or by other messenger) against receipt or upon actual receipt of registered or certified mail, postage prepaid, return receipt requested, addressed as set forth below: (i) If to Company: Pinnacle Foods, Inc. 980 Glasgow Street Pottstown, PA 19484 Attention: President (ii) If to Consultant: Ellis M. Shore 1650 Oakwood Drive, No. 102 E Narberth, PA 19072 4

In addition, notice by mail shall be sent by courier service such as FedEx if sent from a location outside of the continental United States. Either party may alter the address to which communications or copies are to be sent by giving notice of such change of address in conformity with the provisions of this subparagraph (c) for the giving of notice. (d) Binding Nature of Agreement; No Assignment. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, personal representatives, successors and assigns, except that neither party may assign or transfer its rights nor delegate its obligations under this Agreement without the prior written consent of the other party hereto. (e) Execution in Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original as against either party whose signature appears thereon, and both of which shall together constitute one and the same instrument. This Agreement shall become binding when one or more counterparts hereof, individually or taken together, shall bear the signatures of both of the parties reflected hereon as the signatories. (f) Provisions Separable. The provisions of this Agreement are independent of and separable from each other, and no provision shall be affected or rendered invalid or unenforceable by virtue of the fact that for any reason any other or others of them may be invalid or unenforceable in whole or in part. (g) Entire Agreement. This Agreement contains the entire understanding between the parties hereto with respect to the subject matter hereof, and supersedes all prior and contemporaneous agreements and understandings, inducements or conditions, express or implied, oral or written, except as herein contained. The express terms hereof control and supersede any course of performance and/or usage of the trade inconsistent with any of the terms hereof. This Agreement may not be modified or amended other than by an agreement in writing. (h) Paragraph Headings. The Paragraph and subparagraph headings in this Agreement have been inserted for convenience of reference only; they form no part of this Agreement and shall not affect its interpretation. (i) Gender, Etc. Words used herein, regardless of the number and gender specifically used, shall be deemed and construed to include any other number, singular or plural, and any other gender, masculine, feminine or neuter, as the context indicates is appropriate. (j) Number of Days. In computing the number of days for purposes of this Agreement, all days shall be counted, including Saturdays, Sundays and Holidays; provided, however, that if the final day of any time period falls on a Saturday, Sunday or Holiday, then the final day shall be deemed to be the next day which is not a Saturday, Sunday or Holiday. For purposes of this Agreement, the term "Holiday" shall mean a day, other than a Saturday or Sunday, on which national banks with branches in the Commonwealth of Pennsylvania are or may elect to be closed. 5

IN WITNESS WHEREOF, the parties have executed and delivered this Agreement as of the date first above written. PINNACLE FOODS, INC. By: Michael Queen, President -----------------------------------(SEAL) Ellis M. Shore 6


								
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