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Exhibit 4.3 AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT AMONG PREMIUM STANDARD FARMS, INC.
PREMIUM STANDARD FARMS OF NORTH CAROLINA, INC.
LUNDY INTERNATIONAL, INC. and
LPC TRANSPORT, INC. AND U.S. BANK NATIONAL ASSOCIATION,
as a Lender and as the Agent AND THE LENDERS FROM TIME TO TIME PARTIES HERETO DATED AS OF APRIL 9, 2004




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TABLE OF CONTENTS 1. DEFINITIONS.
    
    
    21.1 General Definitions
    
    
    21.2 Index to Other Definitions
    
    
    131.3 Accounting Terms
    
    
    141.4 Others Defined in Colorado Uniform Commercial Code
    
    
    142. LOANS, LETTERS OF
CREDIT AND FEES.
    
    
    142.1 Loans and Letters of Credit
    
    
    142.2 Payment of Principal and Interest; Default Rate
    
    
    192.3 Prepayments; Termination of the Commitments
    
    
    202.4 Purpose
    
    
    222.5 Fees
    
    
    222.6 Borrowers Loan Account
    
    
    232.7 Statements
    
    
    242.8 Termination of Agreement
    
    
    243. BORROWING BASE.
    
    
    243.1 Eligible Accounts
    
    
    243.2 Eligible Inventory
    
    
    254. CONDITIONS TO
ADVANCES
    
    
    264.1 Approval of the Agents Counsel
    
    
    264.2 Compliance
    
    
    264.3 Documentation
    
    
    264.4 Hedging Activities
    
    
    264.5 Appraisal
    
    
    265. SECURITY
    
    
    275.1 Security Interests and Liens
    
    
    275.2 Endorsement by the Agent
    
    
    295.3 Delivery of Warehouse Receipts to the Agent
    
    
    295.4 Preservation of Collateral and Perfection of Security Interests
    
    
    295.5 Loss of Value of Collateral
    
    
    305.6 Collection of Accounts; Power of Attorney
    
    
    305.7 Intentionally Omitted
    
    
    305.8 Account Records and Verification Rights
    
    
    305.9 Notice to Account Debtors
    
    
    315.10 Inventory Records
    
    
    315.11 Special Collateral
    
    
    315.12 Remittance of Proceeds to the Agent
    
    
    315.13 Safekeeping of Collateral
    
    
    315.14 Sales and Use of Collateral
    
    
    325.15 Margin Accounts
    
    
    325.16 Real Property
    
    
    325.17 Title Insurance
    
    
    336. WARRANTIES
    
    
    336.1 Litigation and Proceedings
    
    
    33
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6.2 Other Agreements
    
    
    336.3 Licenses, Patents, Copyrights, Trademarks and Trade Names
    
    
    336.4 Collateral
    
    
    346.5 Location of Assets; Chief Executive Office
    
    
    346.6 Tax Liabilities
    
    
    346.7 Indebtedness and Producer Payables
    
    
    346.8 Other Names
    
    
    356.9 Affiliates
    
    
    356.10 Environmental Matters
    
    
    356.11 Existence
    
    
    356.12 Authority
    
    
    356.13 Binding Effect
    
    
    366.14 Correctness of Financial Statements
    
    
    366.15 Employee Controversies
    
    
    366.16 Compliance with Laws and Regulations
    
    
    366.17 Account Warranties
    
    
    366.18 Inventory Warranties
    
    
    376.19 Solvency
    
    
    376.20 Pension Reform Act
    
    
    376.21 Margin Security
    
    
    376.22 Investment Company Act Not Applicable
    
    
    376.23 Public Utility Holding Company Act Not Applicable
    
    
    376.24 Full Disclosure
    
    
    386.25 Intellectual Property
    
    
    386.26 Survival of Warranties
    
    
    387. AFFIRMATIVE
COVENANTS
    
    
    387.1 Financial and Other Information
    
    
    387.2 Conduct of Business
    
    
    407.3 Maintenance of Properties
    
    
    407.4 Borrowers Liability Insurance
    
    
    407.5 Borrowers Property Insurance
    
    
    417.6 Financial Covenants and Ratios
    
    
    427.7 Benefit Plans
    
    
    427.8 Notice of Suit, Adverse Change in Business or Default
    
    
    437.9 Use of Proceeds
    
    
    437.10 Books and Records
    
    
    438. NEGATIVE COVENANTS
    
    
    438.1 Encumbrances
    
    
    438.2 Consolidations, Mergers, Acquisitions or Change in Ownership
    
    
    448.3 Deposits, Investments, Advances or Loans
    
    
    448.4 Indebtedness
    
    
    458.5 Guarantees and Other Contingent Obligations
    
    
    458.6 Disposition of Property
    
    
    468.7 Capital Investment Limitations
    
    
    468.8 Loans to Officers, Directors or Employees
    
    
    46
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8.9 Distributions in Respect of Equity, Prepayment of Debt
    
    
    468.10 Amendment of Organizational Documents
    
    
    468.11 Lease Limitations
    
    
    468.12 Use of Names or Trademarks
    
    
    479. DEFAULT AND
RIGHTS AND REMEDIES;
THE AGENT
    
    
    479.1 Liabilities
    
    
    479.2 Rights and Remedies
    
    
    479.3 Waiver of Demand
    
    
    499.4 Waiver of Notice
    
    
    499.5 Authorization and Action
    
    
    499.6 Agents Reliance, Etc.
    
    
    499.7 Notices of Defaults
    
    
    509.8 The Agent as a Lender, Affiliates
    
    
    519.9 Non-Reliance on Agent and Other Lenders
    
    
    519.10 Indemnification
    
    
    519.11 Successor Agent
    
    
    529.12 Verification of Borrowing Notices
    
    
    5210. MISCELLANEOUS
    
    
    5210.1 Timing of Payments
    
    
    5210.2 Attorneys Fees and Costs
    
    
    5310.3 Expenditures by the Agent
    
    
    5410.4 The Agents Costs and Expenses as Additional Liabilities
    
    
    5410.5 Claims and Taxes
    
    
    5410.6 Custody and Preservation of Collateral
    
    
    5510.7 Inspection
    
    
    5510.8 Examination of Banking Records
    
    
    5510.9 Governmental Reports
    
    
    5510.10 Reliance by the Agent, the Issuer and the Lenders
    
    
    5610.11 Parties
    
    
    5610.12 Applicable Law; Severability
    
    
    5610.13 SUBMISSION TO JURISDICTION; WAIVER OF BOND AND TRIAL BY JURY
    
    
    5610.14 Application of Payments; Waiver
    
    
    5610.15 Marshaling; Payments Set Aside
    
    
    5710.16 Section Titles
    
    
    5710.17 Continuing Effect
    
    
    5710.18 No Waiver
    
    
    5710.19 Notices
    
    
    5810.20 Regulatory Changes
    
    
    5910.21 LIBOR Rate Loans
    
    
    5910.22 Taxes
    
    
    6010.23 Assignments and Participation
    
    
    6110.24 Maximum Interest
    
    
    6410.25 Additional Advances
    
    
    6410.26 Loan Agreement Controls
    
    
    64
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10.27 Obligations Several
    
    
    6410.28 Pro Rata Treatment
    
    
    6510.29 Confidentiality
    
    
    6510.30 Independence of Covenants
    
    
    6610.31 Amendments and Waivers; Increase of Line of Credit Loan Commitment.
    
    
    6610.32 Replacement of a Lender
    
    
    6710.33 Representations by the Lenders
    
    
    6710.34 Counterparts and Facsimile Signatures
    
    
    6810.35 Set-off
    
    
    6810.36 Binding Effect
    
    
    6810.37 FINAL AGREEMENT
    
    
    68Schedule A to Loan and Security Agreement
    
    
    72Schedule B to Loan and Security Agreement
    
    
    73Exhibit 1A to Loan and Security Agreement
    
    
    74Exhibit 1B to Loan and Security Agreement
    
    
    75Exhibit 2A to Loan and Security Agreement
    
    
    76Exhibit 3A to Loan and Security Agreement
    
    
    77Exhibit 4A to Loan and Security Agreement
    
    
    78Exhibit 4B to Loan and Security Agreement
    
    
    79Exhibit 6A to Loan and Security Agreement
    
    
    80Exhibit 7A to Loan and Security Agreement
    
    
    84Exhibit 8A to Loan and Security Agreement
    
    
    85Exhibit 9A to Loan and Security Agreement
    
    
    86
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT(as amended,
modified, supplemented, renewed or restated from time to time, the Agreement)
is made as of April 9, 2004, by and among PREMIUM STANDARD FARMS, INC., a
Delaware corporation (Premium), PREMIUM STANDARD FARMS OF NORTH CAROLINA,
INC., a Delaware corporation, and a wholly-owned subsidiary of Premium
(PSF-NC), LUNDY INTERNATIONAL, INC., a North Carolina corporation and a
wholly owned subsidiary of PSF-NC (Lundy International), and LPC TRANSPORT,
INC., a Delaware corporation and a wholly-owned subsidiary of Premium (LPC,
and collectively with Premium, PSF-NC, and Lundy International, Borrower, or
if the context so requires, any of them), the financial institutions listed on
the signature pages hereof and each other financial institution that may
hereafter become a party hereto in accordance with the provisions hereof
(collectively the Lenders and individually a Lender) and U.S. BANK NATIONAL
ASSOCIATION, a national banking association (U.S. Bank), in its capacity as
Agent for the Lenders and for the Issuer (in such capacity, the Agent). RECITAL Borrower, the Agent and some of the Lenders have been parties to that
certain Credit Agreement dated as of August 27, 1997 (as the same has been
amended, replaced restated and/or supplemented from time to time), and the
Agent and Borrower have been parties to that certain Security Agreement dated
as of August 27, 1997, (as the same has been amended, replaced restated and/or
supplemented from time to time), said Credit Agreement and said Security
Agreement being collectively referred to herein as the Former Loan Agreement.
Borrower has requested that the Agent and the Lenders continue to make loans,
advances, extensions of credit and/or other financial accommodations to or for
the benefit of Borrower and to amend and restate the terms and conditions of
the Former Loan Agreement, and the Lenders are willing to do so on the terms
and conditions set forth in this Agreement. Each Borrower acknowledges that it
will derive a substantial benefit from the loans, advances, extensions of
credit and/or other financial accommodations to be provided by the Agent, the
Issuer and the Lenders hereunder and each Borrower acknowledges that it will
receive at least a reasonably equivalent value from the loans, advances,
extensions of credit and/or other financial accommodations to be provided by
the Agent, the Issuer and the Lenders hereunder in exchange for their various
obligations to the Agent, the Issuer and the Lenders and in exchange for the
various security interests and liens granted by them to the Agent, the Issuer
and the Lenders, all as set forth in this Agreement and the other Financing
Agreements (as defined below). May 27, 2004 - 1 -




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NOW, THEREFORE,in consideration of the foregoing and of the terms and
conditions contained in this Agreement, and of any loans or extensions of
credit or other financial accommodations at any time made to or for the benefit
of Borrower by the Agent and the Lenders, Borrower, the Agent and the Lenders
agree as follows: 1 DEFINITIONS. 1.1 General Definitions.When used herein, the following capitalized
terms shall have the meanings indicated, whether used in the singular or the
plural: Accountsshall mean all present and future rights (including without
limitation, rights under any Margin Accounts) of Borrower to payment for
Inventory or other Goods sold or leased or for services rendered, which rights
are not evidenced by Instruments or Chattel Paper, regardless of whether such
rights have been earned by performance and any other accounts (as defined in
the Code). Account Debtorshall mean any Person that is obligated on or under an
Account or a General Intangible. Affiliateshall mean any Person: (a) that directly or indirectly,
through one or more intermediaries, controls or is controlled by, or is under
common control with, Borrower; (b) that directly or beneficially owns or holds
ten percent (10%) or more of any class of the voting equity interest of
Borrower; (c) ten percent (10%) or more of the voting equity interest of which
is owned directly or beneficially or held by Borrower; or (d) that is a
director, officer, agent or employee of Borrower. Agenthas the meaning set forth in the introduction and shall include
any successor to the Agent that has been appointed in accordance with Section
9.11. Agents Lettershall mean the letter agreement between Borrower and the
Agent of substantially even date with this Agreement. Anniversary Dateshall mean April 9, 2005 and each April 9 thereafter. May 27, 2004 - 2 -




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Applicable Marginshall mean with respect to Swing Line Advances or Line
of Credit Advances, which are Base Rate Loans or LIBOR Rate Loans, or with
respect to Letters or fees for non-use of the Line of Credit Loan Commitments,
the rates per annum set forth below for the then applicable Financial
Performance Level: Financial
    
    
    
    
    
    LIBOR RatePerformance Level
    
    Base Rate
    
    Letters
    
    Non-Use FeeLevel 1
    
    
    1.50
    %
    
    
    3.00
    %
    
    
    0.625
    %Level 2
    
    
    1.25
    %
    
    
    2.75
    %
    
    
    0.500
    %Level 3
    
    
    1.00
    %
    
    
    2.50
    %
    
    
    0.375
    %Level 4
    
    
    0.75
    %
    
    
    2.25
    %
    
    
    0.375
    %Level 5
    
    
    0.50
    %
    
    
    2.00
    %
    
    
    0.250
    %Level 6
    
    
    0.25
    %
    
    
    1.75
    %
    
    
    0.250
    %Level 7
    
    
    0.00
    %
    
    
    1.50
    %
    
    
    0.250
    %
 The initial Financial Performance Level shall be Level 2. The Agent will
review Borrowers financial performance as of each fiscal quarter end,
beginning with fiscal quarter end March, 2004, after its receipt of Borrowers
financial statements and Compliance Certificate as of the end of such fiscal
quarter, and will confirm Borrowers determination as to Borrowers Financial
Performance Level based on such fiscal quarter. As so confirmed by the Agent,
Borrowers Financial Performance Level will determine the Applicable Margin
effective for Swing Line Advances or Line of Credit Advances, which are Base
Rate Loans or LIBOR Rate Loans, or with respect to fees for non-use of the Line
of Credit Loan Commitments for the three month period beginning on the tenth
day of the month following the month in which the Agent receives such quarter
end financial statements if the Agent receives such quarter end financial
statements prior to the last five (5) Business Days of the month following the
end of such fiscal quarter. If the Agent receives such quarter end financial
statements on or after fifth Business Day prior to the end of the month
following the end of such fiscal quarter but on or before the date they are due
in accordance with Section 7.1, any reduction in the Applicable Margin will be
delayed until the tenth day of the second month following the month in which
the Agent receives such quarter end financial statements, but any increase in
the Applicable Margin will be effective on the tenth day of the month following
the month in which the Agent receives such quarter end financial statements.
If the Agent does not receive such quarter end statements on or before the date
they are due in accordance with Section 7.1, Borrowers Financial Performance
Level shall be deemed to be Level 1 beginning with the tenth day of the second
month following the end of such fiscal quarter and shall remain at Level 1
until the 15th Business Day after such financial statements are received by the
Agent and a determination by the Agent that a different Financial Level shall
apply during the remainder of the three month period. May 27, 2004 - 3 -




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Available Amountshall mean, at any time, an amount equal to (a) the
Line of Credit Loan Commitments minus (b) the sum of (i) the aggregate
principal amount of the Line of Credit Loan Liabilities, and (ii) the aggregate
amount of the LC Obligations. Bank Productsmeans any of the following services or facilities extended
to Borrower by the Agent, any Lender or any of their Affiliates: (a) credit
cards; (b) cash management, including controlled disbursement services,
automatic clearing house transfer of funds and overdrafts; and (c) facilities
and services extended under Rate Protection Agreements. Bank Products Agreementsmeans all documents and agreements relating to
Bank Products. Bank Products Obligationsmeans, with respect to any Person, all
obligations and liabilities of such Person under any Bank Products Agreements. Base
Rate shall mean the greater of (a) the Prime Rate or (b) the
Federal Funds Rate plus one half of one percent (.5%). Base Rate Loanshall mean any Loan that bears interest at the Base Rate
plus the Applicable Margin. Borrowing Baseshall mean an amount determined and computed as set forth
in Exhibit 1A. Borrowing Base Certificateshall mean a certificate substantially in the
form of Exhibit 1B, signed as indicated thereon, setting forth the amount of
Borrowers Borrowing Base. Borrowing Base Limitshall mean, at any time, an amount equal to (a) the
Borrowing Base minus (b) the sum of (i) the aggregate principal amount of the
Line of Credit Loan Liabilities, and (ii) the aggregate amount of the LC
Obligations. Business Dayshall mean any day of the year on which commercial banks in
New York, New York are not required or authorized to close. CGCshall mean ContiGroup Companies, Inc., a Delaware Corporation,
which, as of the date of this Agreement, is the owner of 53% of the stock of
Parent. Closing Dateshall mean the date of this Agreement. Collateralshall mean any and all real or personal property in which the
Agent may at any time have a lien or security interest under or pursuant to
Section 5.1 or otherwise to secure the Liabilities. May 27, 2004 - 4 -




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Commitmentshall mean, as to any Lender, such Lenders Line of Credit
Loan Commitment and the Agents commitment to cause the issuance of Letters
under the Line of Credit, and Commitmentsshall mean collectively, such
Commitments for all the Lenders and the Agent. Defaultshall mean the occurrence or existence of: (a) an event which,
through the passage of time or the service of notice or both, would (assuming
no action is taken by Borrower or any other Person to cure the same) mature
into a Matured Default; or (b) an event which requires neither the passage of
time nor the service of notice to mature into a Matured Default. Deposit Accountsshall mean, (a) all deposit accounts (as defined in the
Code) of Borrower now or hereafter maintained with the Agent, and (b) deposit
accounts (as defined in the Code) at other banks or financial institutions as
identified or described in any other Financing Agreement, including but not
limited to any control agreement. Documentsshall mean any and all warehouse receipts, bills of lading or
similar Documents of title relating to Goods in which Borrower at any time has
an interest and any other documents (as defined in the Code). Dollarsand $shall mean lawful currency of the United States of
America. EBITDA shall mean for any period of determination, the net consolidated
income of Borrower before provision for income taxes, interest expense
(including without limitation, implicit interest expense on capitalized
leases), depreciation (including, without limitation, depreciation of breeding
stock), amortization and other noncash expenses or charges, excluding (to the
extent included): (a) nonoperating gains (including without limitation,
extraordinary or nonrecurring gains, gains from discontinuance of operations
and gains arising from the sale of assets other than Inventory) during the
applicable period; and (b) similar nonoperating losses during such period. Equipmentshall mean any and all Goods, other than Inventory (including
without limitation, equipment, machinery, motor vehicles, implements, tools,
parts and accessories) that are at any time owned by Borrower, together with
any and all accessions, parts and appurtenances and any other equipment (as
defined in the Code). Farm Productsshall mean all personal property of Borrower used or for
use in farming or livestock operations, including without limitation, seed and
harvested or un-harvested crops of all types and descriptions, whether annual
or perennial and including trees, vines and the crops growing thereon, native
grass, grain, feed, feed additives, feed ingredients, feed supplements,
fertilizer, hay, silage, supplies (including without limitation, chemicals,
veterinary supplies and related Goods), livestock of all types and descriptions
(including without limitation, the offspring of such livestock and livestock in
gestation) and any other farm products (as defined in the Code). May 27, 2004 - 5 -




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Federal Funds Rateshall mean, for any day, the rate of interest per
annum (rounded upward, if necessary, to the nearest whole multiple of 1/100th
of 1%) equal to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on such day, or if no such rate is so published on such day, on the most recent
day preceding such day on which such rate is so published. Financial Performance Levelshall mean the applicable level of
Borrowers financial performance determined in accordance with the table and
paragraph set forth below, with Leverage Ratio being determined using the
EBITDA calculations referred to in Section 7.6(c). FinancialPerformanceLevel
    
    Leverage RatioLevel 1
    
    Greater than or equal to 4.50 to 1.0Level 2
    
    Less than 4.50 to 1.0 but greater than or equal to 4.00 to 1.0Level 3
    
    Less than 4.00 to 1.0 but greater than or equal to 3.50 to 1.0Level 4
    
    Less than 3.50 to 1.0 but greater than or equal to 3.00 to 1.0Level 5
    
    Less than 3.00 to 1.0 but greater than or equal to 2.50 to 1.0Level 6
    
    Less than 2.50 to 1.0 but greater than or equal to 2.00 to 1.0Level 7
    
    Less than 2.00 to 1.0
 Financing Agreementsshall mean all agreements, instruments and
documents, including without limitation, this Agreement and all security
agreements, loan agreements, notes, letter of credit applications, guarantees,
mortgages, deeds of trust, subordination agreements, pledges, powers of
attorney, consents, assignments, contracts, notices, leases, financing
statements and all other written matter at any time executed by, on behalf of
or for the benefit of Borrower and delivered to the Agent, together with all
amendments and all agreements and documents referred to therein or contemplated
thereby and Bank Products Agreements. Fixed Asset Componentshall mean $55,000,000 in respect of Collateral
consisting of real property and equipment; minus $1,000,000 multiplied by the
number of Anniversary Dates that have passed, as an amortization factor related
to Collateral consisting of real property and equipment. GAAPshall mean generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board, or in such other
statements by such other entity as may be in general use by significant
segments of the accounting profession, which are applicable to the
circumstances as of the date of determination. General Intangiblesshall mean all of Borrowers present and future
right, title and interest in and to any customer deposit accounts, deposits,
rights related to prepaid expenses, May 27, 2004 - 6 -




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chose in action, causes of action and all other intangible personal property of every kind and nature (other than
Accounts), including without limitation, Payment Intangibles, beneficial
interests in trusts, corporate or other business records, inventions, designs,
patents, patent applications, trademarks, trade names, trade secrets, goodwill,
registrations, copyrights, licenses, franchises, customer lists, tax refunds,
tax refund claims, customs claims, guarantee claims, contract rights membership
interests, partnership interests, cooperative memberships or patronage
benefits, obligations payable to Borrower for capital stock or other claims
against any Owners, rights to any government subsidy, set aside, diversion,
deficiency or disaster payment or payment in kind, milk bases, brands and brand
registrations, water rights (including without limitation, water stock, ditch
rights, well permits, water permits, applications and the like), Commodity
Credit Corporation storage agreements or contracts, leasehold interests in real
and personal property and any security interests or other security held by or
granted to Borrower to secure payment by any Account Debtor of any of the
Accounts, and any other general intangibles (as defined in the Code). Governmental Authorityshall mean any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, including without limitation, any arbitration panel, any court,
any commission, any agency or any instrumentality of the foregoing. Governmental Requirementshall mean any material law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
of any federal, state, county, municipal, parish, provincial or other
Governmental Authority or any department, commission, board, court, agency or
any other instrumentality of any of them (including any of the foregoing that
relate to environmental standards or controls and occupational safety and
health standards or controls). Highest Lawful Ratemeans, with respect to each Lender, the maximum
non-usurious interest rate, if any, that at any time or from time to time may
be contracted for, taken, reserved, charged, or received with respect to the
Notes or on other amounts, if any, payable to such Lender pursuant to this
Agreement or any other Financing Agreement, under laws applicable to such
Lender which are presently in effect, or, to the extent allowed by law, under
such applicable laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow. Immediately Available Fundsshall mean: funds with good value on the
day and in the city in which payment is received. Interest Bearing Debtshall mean, for any date of determination,
Borrowers consolidated outstanding principal amount of all interest bearing
indebtedness for borrowed money (including without limitation, capitalized or
synthetic leases). Interest Periodshall mean: (a) with respect to LIBOR Rate Loans, the
period of time for which the LIBOR Rate shall be in effect as to any LIBOR Rate
Loan and which shall be a May 27, 2004 - 7 -




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one, two, three or six month period of time,
commencing with the borrowing date of the LIBOR Rate Loan or the expiration
date of the immediately preceding Interest Period, as the case may be,
applicable to and ending on the effective date of any rate change or rate
continuation made as provided in Section 2.2 as Borrower may specify in the
notice of borrowing delivered pursuant to Section 2.2 or the notice of interest
conversion delivered pursuant to Section 2.2; provided however: (b) any
Interest Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such Business Day
falls in another calendar month, in which case such Interest Period shall end
on the next preceding Business Day, (c) no Interest Period shall extend beyond
the Maturity Date; and (d) there shall be no more than ten (10) Interest
Periods for LIBOR Rate Loans at any one time. Inventoryshall mean any and all Goods which shall at any time
constitute inventory (as defined in the Code) or Farm Products of Borrower,
wherever located (including without limitation, Goods in transit and Goods in
the possession of third parties), or which from time to time are held for sale,
lease or consumption in Borrowers business, furnished under any contract of
service or held as raw materials, work in process, finished inventory or
supplies (including without limitation, packaging and/or shipping materials). IRCshall mean the Internal Revenue Code of 1986, as amended, as at any
time in effect, together with all regulations and rulings thereof or thereunder
issued by the Internal Revenue Service. Issuershall mean any party that issued a Letter under the Former Loan
Agreement or issues a Letter pursuant to this Agreement. LC Obligationsshall mean, at any time, an amount equal to the aggregate
undrawn and unexpired amount of the outstanding Letters. Letteror Lettersshall mean a documentary or standby letter of credit
issued for the account of Borrower under the Former Loan Agreement or pursuant
to Section 2.1.3 or all of such letters of credit, respectively. Leverage
Ratio shall mean for any period of determination, the ratio of:
(a) the amount of Borrowers Interest Bearing Debt outstanding at the end of
such period; divided by (b) EBITDA for such period. Liabilitiesshall mean any and all liabilities, obligations and
indebtedness of Borrower to any Lender or Issuer of any and every kind and
nature, at any time owing, arising, due or payable and howsoever evidenced,
created, incurred, acquired or owing, whether primary, secondary, direct,
contingent, fixed or otherwise (including without limitation LC Obligations,
Bank Products Obligations, fees, charges and obligations of performance)
and whether arising or existing under this Agreement or any of the other
Financing Agreements or by operation of law. May 27, 2004 - 8 -




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LIBOR Rateshall mean, with respect to each day during each Interest
Period applicable to a LIBOR Rate Advance, the one, two, three or six month
LIBOR rate quoted by the Agent from Telerate Page 3750 or any successor thereto
(which shall be the LIBOR rate in effect two Business Days prior to the LIBOR
Rate Loan) rounded up to the nearest one sixteenth of one percent. LIBOR Rate Loanshall mean any Loan that bears interest at the LIBOR
Rate plus the Applicable Margin. Line
of Credit Loan Commitment shall mean as to any Lender, such
Lenders Pro Rata Percentage of $175,000,000, as set forth opposite such
Lenders name under the heading Loan Commitments on Schedule A, subject to
Assignment and Acceptance in accordance with Section 10.23, as such amount may
be reduced or terminated from time to time pursuant to Sections 2.3(c), 2.8 or
9.1, and as such amount may be increased from time to time pursuant to Section
10.31(b); and Line of Credit Loan Commitmentsshall mean collectively, the
Line of Credit Loan Commitments for all the Lenders. Line of Credit Loan Liabilitiesshall mean all of the Liabilities other
than the LC Obligations and the Bank Products Obligations. Margin Accountsshall mean, collectively, all Commodity Accounts and all
Commodity Contracts. Matured Defaultshall mean the occurrence or existence of any one or
more of the following events: (a) Borrower fails to pay any principal or
interest pursuant to any of the Financing Agreements (other than the Bank
Products Agreement) at the time such principal or interest becomes due or is
declared due and such failure continues for a period of three (3) Business
Days; (b) Borrower fails to pay any of the Liabilities (other than the
Liabilities referred to in (a) above) on or before ten (10) Business Days after
the Agent has notified Borrower of the existence and amount of such
Liabilities; (c) Borrower fails or neglects to perform, keep or observe any of
the covenants, conditions, promises or agreements contained in Sections 8.1,
8.2 or 8.4; (d) Borrower fails or neglects to perform, keep or observe any of
the covenants, conditions, promises or agreements contained in this Agreement
or in any of the other Financing Agreements (other than those covenants,
conditions, promises and agreements referred to or covered in (a), (b), and (c)
above), and such failure or neglect continues for more than thirty (30) days
after the earlier of the date the Agent gives Borrower written notice thereof
or the date Borrower first learns of such failure or neglect, provided,
however, that such grace period shall not apply, and a Matured Default shall be
deemed to have occurred and to exist immediately if such failure or neglect may
not, in the Agents reasonable determination, be cured by Borrower during such
thirty (30) day grace period; (e) the Available Amount or the Borrowing Base
Limit, as calculated in accordance with the definitions thereof, result in a
negative amount; (f) any
warranty or representation at any time made by or on behalf of Borrower in
connection with this Agreement or any of the other Financing Agreements is
untrue or incorrect in any material respect, or any schedule, certificate,
statement, report, financial data, notice, or writing furnished May 27, 2004 - 9 -




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at any time by
or on behalf of Borrower to the Agent or any other Lender is untrue or
incorrect in any material respect on the date as of which the facts set forth
therein are stated or certified; (g) a judgment in excess of $5,000,000 is
rendered against Borrower and such judgment remains unsatisfied or
un-discharged and in effect for thirty (30) consecutive days without a stay of
enforcement or execution, provided, however, that this clause (g) shall not
apply to any judgment for which Borrower is fully insured and with respect to
which the insurer has admitted liability in writing for such judgment; (h) all
or any part of the assets of Borrower or any guarantor of any of the
Liabilities come within the possession of any receiver, trustee, custodian or
assignee for the benefit of creditors; (i) a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or
receivership law or statute is filed against Borrower or any guarantor of any
of the Liabilities and such proceeding is not dismissed within sixty (60) days
of the date of its filing, or a proceeding under any bankruptcy,
reorganization, arrangement of debt, insolvency, readjustment of debt or
receivership law or statute is filed by Borrower or any guarantor of any of the
Liabilities, or Borrower or any guarantor of any of the Liabilities makes an
assignment for the benefit of creditors; (j) Borrower or any guarantor of any
of the Liabilities voluntarily or involuntarily dissolves or is dissolved,
terminates or is terminated or dies; (k) Borrower is enjoined, restrained, or
in any way prevented by the order of any court or any administrative or
regulatory agency or by the termination or expiration of any permit or license,
from conducting all or any material part of Borrowers business affairs; (l)
Borrower or any guarantor of any of the Liabilities fails to make any payment
due or otherwise defaults on any other obligation for borrowed money in excess
of $10,000,000 and the effect of such failure or default is to cause or permit
the holder of such obligation or a trustee to cause such obligation to become
due prior to its date of maturity; (m) any guarantor of any of the Liabilities
asserts the invalidity of their guaranty, purports to terminate their guaranty
or purports to limit the application thereof to then existing Liabilities; (n)
the Agent makes an expenditure under Section 10.3; (o) the occurrence of a
non-curable breach or default or a matured default under any other agreement at
any time in existence between Borrower, an Affiliate (other than an agent or
employee) or a guarantor of any of the Liabilities, and the Agent; or (p) a
notice is received by the Agent regarding the termination of future optional
advances in accordance with North Carolina G.S. § 45-72. Maturity Dateshall mean, as applicable, the earlier of: (a) as to the
Swing Line or the Line of Credit, the Termination Date; (b) the earlier date of
termination in whole of the Commitments pursuant to Sections 2.8 or 9.1; or (c)
the termination in whole of the Commitments by Borrower and the payment and/or
satisfaction in full of the Liabilities. Net Capital Expendituresshall mean, during any period of determination,
Borrowers: (a) property, plant and equipment at the end of such period
(including that held under capitalized leases), less (b) property, plant and
equipment at the beginning of such period (including that held under
capitalized leases), plus (c) depreciation during such period. Noteor Notesshall mean any one of the Line of Credit Notes or all of
the Line of Credit Notes, respectively. May 27, 2004 - 10 -




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Ownershall mean any Person who is a holder of Borrowers capital stock
or holds a partnership or membership interest in Borrower. PASAshall mean the Packers and Stockyards Act of 1921, as amended from
time to time, and the regulations promulgated and the rulings issued
thereunder. Parentshall mean PSF Group Holdings, Inc., a Delaware Corporation,
which, as of the date of this Agreement, is the Owner of 100% of the stock of
Premium. Permitted Acquisitionshall mean an acquisition by Borrower of another
legal entity or entities (collectively the Target) by merger with the Target,
by acquisition of ownership interests in the Target or by acquisition of all or
substantially all of the assets of the Target, in a transaction or related
transactions, that meet the following criteria: (a) the aggregate purchase
price (including any indebtedness, other than the Liabilities, incurred or
assumed) does not exceed $5,000,000 and (i) the Target is in the same line of
business as Borrower, (ii) in the case of a merger a Borrower is the surviving
entity, (iii) in the case of an acquisition of ownership interests, 100% of
such ownership interests are owed by one or more of Borrowers and the Target
becomes a Borrower under this Agreement, and (iv) the acquisition would not
otherwise result in a Default or a Matured Default; or (b) the aggregate
purchase price (including any indebtedness, other than the Liabilities,
incurred or assumed) exceeds $5,000,0000 but does not exceed $25,000,000 and
(i) the criteria set forth in (a) (i) through (iv) above are met, (ii) not
later than 15 Business Days prior to the consummation of the acquisition,
Borrower has provided the Agent with acceptable pro forma financial statements
through the Termination Date, giving effect to the acquisition, which
demonstrate that the Leverage Ratio, using the EBITDA calculations referred to
in Section 7.6(c), will not at any time exceed 3.00 to 1.00 and which
demonstrate continuing compliance with the other terms of Section 7.6,
(relating to other Financial Covenants and Ratios). Personshall mean any individual, sole proprietorship, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association, corporation, institution, entity, party or government (whether
national, federal, state, provincial, county, city, municipal or otherwise,
including without limitation, any instrumentality, division, agency, body or
department thereof). Prime Rateshall mean the prime rate announced by the Agent from time to
time, which is a base rate that the Agent from time to time establishes and
which serves as the basis upon which effective rates of interest are calculated
for those loans which make reference thereto. The Prime Rate is not
necessarily the lowest rate offered by the Agent. With respect to Base Rate
Loans, each change in the rate of interest hereunder shall become effective on
the date each Prime Rate change is announced by the Agent or with each change
in the Federal Funds Rate, as the case may be. Producer Payablesshall mean all amounts at any time payable by Borrower
for the purchase of Inventory. May 27, 2004 - 11 -




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Propertyshall mean those premises owned or operated by Borrower,
including without limitation, the real property described in Borrowers
mortgage(s) and/or deed(s) of trust referred to in Section 5.1. Pro Rata Percentageshall mean with respect to any Lender, a fraction
(expressed as a percentage), the numerator of which shall be the amount of such
Lenders Line of Credit Loan Commitment, respectively, and the denominator of
which shall be the aggregate amount of all the Line of Credit Loan Commitments
of the Lenders, respectively, as adjusted from time to time in accordance with
Section 10.23, which percentages shall be applicable even in the event that the
commitments of the Lenders to make Advances have been suspended or terminated
in accordance with the terms of this Agreement. Rate Protection Agreementmeans, collectively, any currency or interest
rate swap, cap, collar or similar agreement or arrangements designed to protect
against fluctuations in interest rates or currency exchange rates entered into
by Borrower under which the counterparty to such agreement is (or at the time
such Rate Protection Agreement was entered into, was) a Lender or an Affiliate
of a Lender. Required Lendersshall mean, at any time Lenders holding in the
aggregate at least fifty one percent (51%) of the aggregate amount of all of
the Lenders Commitments, which percentage shall be applicable even in the
event that the commitments of the Lenders to make Advances have been suspended
or terminated in accordance with the terms of this Agreement. Tangible
Net Worth shall mean as of any particular date, the difference
between: (a) Borrowers consolidated total assets as they would normally be
shown on the balance sheet of Borrower, adjusted by deducting: (i) all values
attributable to General Intangibles, including without limitation, prepaid
expenses, except: bank deposit accounts; Margin Accounts; government subsidy;
set aside; diversion; deficiency or disaster payments receivable which are
properly assigned to the Agent; tax refunds; and tax refund claims, and by
deducting (ii) Accounts due from Affiliates with no further adjustment required
for Accounts due from Affiliates already eliminated in consolidation except
Accounts due from Affiliates which Borrower could legally collect by setoff
against Accounts due to Affiliates; and (b) Borrowers consolidated total
liabilities as they would normally be shown on the balance sheet of Borrower. Typeshall mean, with respect to any Loan, whether such Loan is a Base
Rate Loan or a LIBOR Rate Loan. Working
Capital shall mean as of any particular date, the amount of
Borrowers consolidated current assets (including the net book value of
breeding stock), adjusted by deducting prepaid expenses (excluding deferred
income taxes), less Borrowers combined current
liabilities, treating all amounts currently owing to Affiliates (except
amounts owing to Affiliates eliminated by consolidation) as current liabilities
and giving no value as assets to any amounts currently owing from Affiliates.
For purposes of this definition, and whether or not current May 27, 2004 - 12 -




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liabilities
according to GAAP, current liabilities shall include the amount of Line of
Credit Loan Liabilities in excess of the Fixed Asset Component and shall not
include the amount of Line of Credit Loan Liabilities less than or equal to the
Fixed Asset Component. 1.2 Index to Other Definitions.When used herein, the following
capitalized terms shall have the meanings given in the indicated portions of
this Agreement: Term
    
    LocationAdvance, Advances
    
    Section 2.1.4Agreement
    
    introductionApplication
    
    Section 2.1.3Assignee
    
    Section 10.23Assignment and Acceptance
    
    Section 10.23Beneficiary
    
    Section 2.1.3Benefit Plans
    
    Section 6.20Borrower
    
    introductionBroker
    
    Section 5.15Code
    
    Section 1.4Compliance Certificate
    
    Section 7.1Default Rate
    
    Section 2.2Eligible Accounts
    
    Section 3.1Eligible Inventory
    
    Section 3.2Environmental Laws
    
    Section 6.10Equalization Transfer
    
    Section 2.1.4ERISA
    
    Section 6.20Excess
    
    Section 10.24Former Loan Agreement
    
    RecitalLenders
    
    introductionLine of Credit
    
    Section 2.1.2Line of Credit Advances
    
    Section 2.1.2Line of Credit Notes
    
    Section 2.1.2Loan Account
    
    Section 2.6Loan, Loans
    
    Section 2.1.4Purchasing Lender
    
    Section 2.1.4Replacement Candidate
    
    Section 10.32Securities Act
    
    Section 10.33Selling Lender
    
    Section 2.1.4Swing Line
    
    Section 2.1.1Swing Line Advances
    
    Section 2.1.1Target
    
    Definition of Permitted AcquisitionTaxes
    
    Section 10.22Termination Date
    
    Section 2.1.1UCP
    
    Section 2.1.3U.S. Bank
    
    introduction
 May 27, 2004 - 13 -




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1.3 Accounting Terms.Any accounting terms used in this Agreement which
are not specifically defined in this Agreement shall have the meanings
customarily given them in accordance with GAAP, as consistently applied as of
the date of this Agreement. 1.4 Others Defined in Colorado Uniform Commercial Code.All other terms
contained in this Agreement (which are not specifically defined in this
Agreement) shall have the meanings set forth in the Uniform Commercial Code of
Colorado (Code)to the extent the same are used or defined therein,
specifically including, but not limited to the following: Chattel Paper,
Commercial Tort Claims, Commodity Accounts, Commodity Contracts, Electronic
Chattel Paper, Goods, Instruments, Investment Property, Letter of Credit
Rights, Payment Intangibles, Securities Accounts and Tangible Chattel Paper. 2 LOANS, LETTERS OF CREDIT AND FEES. 2.1 Loans and Letters of Credit.Subject to all of the terms and
conditions contained in this Agreement, the Agent and the Lenders severally and
not jointly agree to make the following extensions of credit to or for the
benefit of Borrower: 2.1.1 Swing Line.The Agent agrees to make advances (Swing Line
Advances)to Borrower from time to time on any one or more Business Days from
and after the date of this Agreement, upon Borrowers written (including
facsimile) notice given by Borrower to the Agent not later than 11:00 a.m.
(local time of Agent) on the date of any proposed Advance, through and
including the earlier of the Maturity Date or April 9, 2009 (Termination
Date),in amounts up to the lesser of: (a) Ten Million Dollars ($10,000,000)
minus the outstanding Swing Line Advances; (b) the Available Amount or (c) the
then current Borrowing Base Limit (Swing Line).The Swing Line Advances
shall be evidenced by and repayable in accordance with the terms of Borrowers
Line of Credit Note to the Agent. The Agent, upon the written approval of the
Required Lenders, may elect to make Swing Line Advances to Borrower in excess
of the dollar amount stated above (but not in excess of the Available Amount or
the Borrowing Base Limit), and any such Swing Line Advances shall also be
governed by the terms hereof. The Agent shall also have the option, in its
sole discretion and without any obligation to do so, to extend the Termination
Date for the making of Swing Line Advances, provided, however, any Lender that
does not give its written approval of such extension of the Termination date
shall have no obligation to make Equalization Transfers in respect of Swing
Line Advances made after the original Termination Date. In the event that the Agent
elects to extend such Termination Date, the Agent shall give notice to Borrower
pursuant to Section 10.19. 2.1.2 Line of Credit.Each Lender severally agrees to make advances
(Line of Credit Advances)to Borrower from time to time on any one or more
Business Days from and after the date of this Agreement (through the Agent as
set forth in Section 2.1.4), upon Borrowers written (including facsimile)
notice given by Borrower to May 27, 2004 - 14 -




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the Agent not later than 11:00 a.m. (local time of
Agent) on the third Business Day prior to the date of any proposed LIBOR Rate
Loan or upon Borrowers written (including facsimile) notice given by Borrower
to the Agent not later than 11:00 a.m. (local time of Agent) on the first
Business Day prior to the date of any proposed Base Rate Loan, up to an
aggregate principal amount not exceeding each such Lenders Pro Rata Percentage
of the Available Amount on such Business Day through and including the earlier
of the Termination Date or the Maturity Date, in aggregate amounts up to the
lesser of the Available Amount or the then current Borrowing Base Limit (Line
of Credit).The Line of Credit Advances shall be evidenced by and repayable
in accordance with the terms of Borrowers promissory notes to each of the
Lenders (Line of Credit Notes), the form of which is attached as Exhibit 2A.
The Lenders, in their sole and absolute discretion, may elect to make Line of
Credit Advances to Borrower in excess of the amounts available pursuant to the
terms of this Agreement, and any such Line of Credit Advances shall also be
governed by the terms hereof. The Lenders shall also have the option, in their
sole discretion and without any obligation to do so, to extend the Termination
Date for the making of Line of Credit Advances. In the event that the Lenders
elect to extend such Termination Date, the Agent shall give notice to Borrower
pursuant to Section 10.19. 2.1.3 Letters of Credit. (a) The Agent further agrees to issue or cause to be issued by a Lender,
Letters for Borrowers account for any purpose acceptable to the Agent in its
reasonable discretion (the Agent or such Lender thereby becoming an Issuer) in
amounts up to the lesser of: (a) Fifteen Million Dollars ($15,000,000) minus
the then outstanding LC Obligations; (b) the Available Amount or (c) the then
current Borrowing Base Limit, for the benefit of one or more beneficiaries to
be named by Borrower (the Beneficiary, whether one or more), in form and
substance acceptable to the Beneficiary. In order to effect the issuance of
each Letter, Borrower shall deliver to the Agent a letter of credit application
(the Application) not later than 11:00 a.m. (Denver time), five (5) Business
Days prior to the proposed date of issuance of the Letter. The Application
shall be duly executed by a responsible officer of Borrower, shall be
irrevocable and shall (i) specify the day on which such Letter is to be issued
(which shall be a Business Day), and (ii) be accompanied by a certificate
executed by a responsible officer setting forth calculations evidencing
availability for the Letter and stating that all conditions precedent to such
issuance have been satisfied. The Agent shall provide Borrower and each Lender
with a copy of the Letter that has been issued. Each Letter shall (i) provide
for the payment of drafts presented for honor thereunder by the beneficiary in
accordance with the terms thereof, when such drafts are accompanied by the
documents described in the Letter, if any, and (ii) to the extent not
inconsistent with the express terms hereof or the applicable Application, be
subject, as applicable, to the Uniform Customs and Practice for Documentary Credits
(1993 Revision), International Chamber of Commerce Publication No. 500 or the
International Standby Practices (ISP 98International Chamber Of Commerce
Publication Number 590) (in each case, together with any subsequent revisions
thereof approved by a Congress of the International Chamber of Commerce and
adhered to by the Issuer, the UCPand the
ISP98, respectively), and shall,
as to matters not governed by the UCP or the ISP98, be governed by, and
construed and interpreted in accordance with, the laws of the State in which
the Issuer resides. May 27, 2004 - 15 -




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(b) Upon the issuance date of each Letter, the Agent shall be deemed,
without further action by any party hereto, to have sold to each other Lender,
and each other Lender shall be deemed, without further action by any party
hereto, to have purchased from the Agent, a participation, to the extent of
such Lenders Pro Rata Percentage, in the Letter, the obligations thereunder
and in the reimbursement obligations of Borrower due in respect of drawings
made under the Letter. If requested by the Agent, the other Lenders will
execute any other documents reasonably requested by the Agent to evidence the
purchase of such participation. (c) If Issuer has received documents purporting to draw under a Letter
that Issuer believes conform to the requirements of the Letter, or if Issuer
has decided that it will comply with Borrowers written or oral request of
authorization to pay a drawing on any Letter that Issuer does not believe
conforms to the requirements of the Letter, Issuer or the Agent will notify
Borrower of that fact. An amount equal to the amount of such drawing shall be
paid by a Swing Line Advance or Line of Credit Advances initiated by the Agent
on the date such drawing is made. The obligation of Borrower to repay the
Agent for any Advance made to fund such reimbursement, shall be absolute,
unconditional and irrevocable, shall continue for so long as any LC Obligation
is outstanding notwithstanding any termination of this Agreement, and shall be
paid strictly in accordance with the terms of this Agreement, notwithstanding
any of the following:  (i)
    
    Any lack of validity or enforceability of any Letter or LC Obligation;(ii)
    
    The existence of any claim, setoff, defense or other right
which Borrower may have or claim at any time against any
beneficiary, transferee or holder of any Letter (or any Person for
whom any such beneficiary, transferee or holder may be acting),
Issuer or any other Person, whether in connection with a Letter,
this Agreement, the transactions contemplated hereby, or any
unrelated transaction; or(iii)
    
    Any statement or any other document presented under any
Letter proving to be forged, fraudulent, invalid or insufficient in
any respect or any statement therein being untrue or inaccurate in
any respect whatever so long as such statement or document appeared
to comply with the terms of the Letter. (d) None of Issuer, the Lenders or any of the officers, directors or
employees of any of them shall be liable or responsible for, and the
obligations of Borrower to Issuer and the Lenders shall not be impaired by:  (i)
    
    The use that may be made of any Letter or for any acts or
omissions of any beneficiary, transferee or holder thereof in
connection therewith;(ii)
    
    The validity, sufficiency or genuineness of documents, or of
any endorsements thereon, even if such documents or endorsements
should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged so long as such statement or
document appeared to comply with the terms of the Letter; May 27, 2004 - 16 -




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(iii)
    
    The acceptance by Issuer of documents that appear on their
face to be in order, without responsibility for further
investigation, regardless of any notice or information to the
contrary; or(iv)
    
    Any other action of Issuer in making or failing to make
payment under any Letter if in good faith and in conformity with
applicable U.S. or foreign laws, regulations or customs. (e) Notwithstanding the foregoing, Borrower shall have a claim against
Issuer and the Agent, and Issuer and/or the Agent shall be liable to Borrower,
to the extent, but only to the extent, of any direct, as opposed to
consequential, damages suffered by Borrower which Borrower proves were caused
by Issuers or the Agents willful misconduct or gross negligence in
determining whether documents presented under any Letter comply with the terms
thereof. (f) If any Letter is issued and outstanding on the Maturity Date, Borrower
shall deposit with the Agent, for the ratable benefit of the Lenders and the
Issuer, cash collateral in an amount equal to the LC Obligations relating to
such Letter. 2.1.4 Equalization Transfers. (a) The Swing Line Advances and the Line of Credit Advances (collectively
Advancesand individually, an
Advance) shall also sometimes collectively be
referred to in each case as a Loanand
collectively the Loans. It is
anticipated that on each Business Day Borrower may wish to borrow and repay
Loans. To the extent possible, these Loans will be made by under the Swing
Line. To minimize the number of transfers of funds to and from the Lenders
resulting from such borrowings and repayments, the Agent may fund daily Loans
for the accounts of the Lenders and apply daily repayments of Loans to the
accounts of the Lenders, other than according to the Lenders Pro Rata
Percentages (i.e., without receiving from the other Lenders their Pro Rata
Percentage of a Loan on the date of disbursement thereof or without paying the
other Lenders their Pro Rata Percentage of a repayment of a Loan on the date of
payment thereof), provided however, that no such Loan shall be made and no
repayment of a Loan shall be applied other than according to the Lenders Pro
Rata Percentages, if: (i) at the time of such Loan or repayment the Agent has
actual knowledge of a Matured Default, or (ii) after giving effect to the
requested Loan or after applying the repayment, the absolute value of the
amount that would have to be reallocated to make the Loans held according to
the Lenders Pro Rata Percentages, would exceed $10,000,000; or (iii) after giving effect
to the requested Loan, the Agent would hold at the end of any Business Day,
Loans under the Swing Line and the Line of Credit exceeding its Line of Credit
Loan Commitment plus $10,000,000. (b) At any time in the discretion of the Agent and in any event as of the
end of the first Business Day of each week if the outstanding Loans are not
held according to the Lenders Pro Rata Percentages, by reason of Swing Line
Advances by the Agent or otherwise, the Agent shall give notice to the Lenders
of the amount of funds to be transferred from the Agent to the May 27, 2004 - 17 -




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Lenders, or from
the Lenders to the Agent, or from one Lender to another, as the case may be
(each such transfer, an Equalization Transfer) required to cause the Loans to
be held by the Lenders according to their Pro Rata Percentages. On the next
Business Day following such notice the necessary Equalization Transfers shall
be made in Immediately Available Funds not later than 11:00 a.m. (local time of
Agent); provided, however, Equalization Transfers necessary to avoid the event
described in Section 2.1.4(a)(iii) shall be made on the same Business Day. (c) Except as provided in Section 2.1.4(d), any Equalization Transfer by
the Lenders to the Agent shall be deemed to constitute Loans by such Lenders to
Borrower and repayments by Borrower of Loans held by the Agent, and any
Equalization Transfer by the Agent to the Lenders shall be deemed to constitute
Loans by the Agent to Borrower and repayments of Loans held by the Lenders. (d) In the event that on the date on which any Equalization Transfer is
required to be made pursuant to Section 2.1.4(b), a Matured Default of the type
described in clause (i) of the definition thereof shall have occurred and be
continuing, any Equalization Transfer by the Lenders to the Agent, and any
Equalization Transfer by the Agent to the Lenders shall be deemed to constitute
a purchase by the Lenders or the Agent, as the case may be, of a direct
interest, in the amount of such Equalization Transfer, in outstanding Loans of
the Lenders to Borrower, to the end that each of the Lenders shall have an
interest therein equal to their respective Pro Rata Percentages as of the date
of occurrence of such Matured Default. (e) At
any time after any Lender (a Selling Lender) has received any
Equalization Transfer that constitutes a purchase by any other Lender (a
Purchasing Lender) of a direct interest in such Selling Lenders Loans
pursuant to Section 2.1.4(d), if such Selling Lender receives any payment on
account of its Loans, such Selling Lender will distribute to such Purchasing
Lender its proportionate share of such payment (appropriately adjusted in the
case of interest payments, to reflect the period of time during which such
Purchasing Lenders direct interest was outstanding and funded); provided
however, that in the event that such payment received by such Selling Lender is
required to be returned, such Purchasing Lender will return to such Selling
Lender any portion thereof previously distributed to it by such Selling Lender. (f) Each Lenders obligation to make Equalization Transfers pursuant to
Section 2.1.4(b) shall be absolute and unconditional and shall not be affected
by any circumstance, including without limitation, (i) any set-off,
counterclaim, recoupment, defense or other right which such Lender or any other
Person may have against the Agent or any other Person for any reason whatsoever; (ii) the occurrence or continuance of a
Default or a Matured Default or the termination of the Commitments; (iii) any
adverse change in the condition (financial or otherwise) of Borrower or any
other Person; (iv) any breach of this Agreement by Borrower or any other
Lender, including without limitation, any other Lenders failure to make any
Equalization Transfer; or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. May 27, 2004 - 18 -




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(h) Payments of principal, interest and non-use fees by Borrower and
Equalization Transfers between the Lenders, shall be made on the Closing Date:
(i) to cause the payment in full of the Lenders under the Former Loan Agreement
who are not Lenders under this Agreement (including the payment of all interest
and non-use fees to the date of closing), (ii) to cause the payment of the
principal and interest under the Term Loans, interest under the Revolving Loans
and non-use fees to the date of closing, to the Lenders under the Former Loan
Agreement who are Lenders under this Agreement; and (iii) to cause the Loans to
be held by the Lenders under this Agreement according to their respective Pro
Rata Percentage (adjusted in the reasonable discretion of the Agent for
anticipated Loans or repayments). Borrower acknowledges that, as a result of
Equalization Transfers on the Closing Date pursuant to this Section 2.1.4(h),
(i) that Loans or portions of Loans outstanding under the Former Loan Agreement
as a LIBOR Rate Loan may be converted to Base Rate Loans; and (ii) that
Borrower may have reimbursement obligations under Section 2.3(b). 2.2 Payment of Principal and Interest; Default Rate. Except as otherwise
provided in this Agreement the principal amount outstanding under the Line of
Credit Notes shall be due and payable on the Maturity Date. Loans under the
Swing Line shall be Base Rate Loans. Loans under the Line of Credit may, at
the option of Borrower, be Base Rate Loans or LIBOR Rate Loans. Each request
for LIBOR Rate Loans shall be in a minimum amount of $3,000,000 and an integral
multiple of $100,000 and shall be subject to the restrictions set forth in the
definition of Interest Period and the other restrictions set forth in this
Section 2.2. Borrower shall pay interest on the unpaid principal amount of
each Loan made by each Lender from the date of such Loan until such principal
amount shall be paid in full, at the times and at the rates per annum set forth
below: (a) So long as no Matured Default has occurred or is continuing, during
such periods as such Loan is a Base Rate Loan, a rate per annum equal to the
lesser of (i) the sum of the Base Rate in effect from time to time plus the
Applicable Margin and (ii) the Highest Lawful Rate, payable monthly in arrears
on the first day of each month commencing [Insert Date], 2004, and on the
Maturity Date, which interest shall be paid by an Agent initiated Advance
pursuant to Section 2.1, without prior demand by the Agent. (b) So long as no Matured Default has occurred or is continuing, during
such periods as such Loan is a LIBOR Rate Loan, a rate per annum during each
day of each Interest Period for such Loan equal to the lesser of (i) the sum of
the LIBOR Rate for such Interest Period for such Loan plus the Applicable
Margin and (ii) the Highest Lawful Rate, payable in arrears on the last
day of the Interest Period in respect of such LIBOR Rate Loan, and, if the
Interest Period with respect to such LIBOR Rate Loan exceeds three months, the
day which is three months after the making of such LIBOR Rate Loan, which
interest shall be paid by an Agent initiated Advance pursuant to Section 2.1,
without prior demand by the Agent. (c) After the occurrence of a Matured Default and for so long as such
Matured Default is continuing, the Agent may (upon the direction of the
Required Lenders) notify Borrower that any and all amounts due hereunder, under
the Notes or under any other Financing May 27, 2004 - 19 -




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Agreement, whether for principal,
interest (to the extent permitted by applicable law), fees, expenses or
otherwise, shall bear interest, from the date of such notice by the Agent and
for so long as such Matured Default continues, payable on demand, at a rate per
annum (the Default Rate) equal to the lesser of (i)(A) with respect to a Base
Rate Loan, the sum of two percent (2.0%) per annum plus the Base Rate in effect
from time to time plus the Applicable Margin; or (B) with respect to a LIBOR
Rate Loan, the sum of two percent (2.0%) per annum plus the LIBOR Rate then in
effect for such LIBOR Rate Loan plus the Applicable Margin; or (ii) the Highest
Lawful Rate. (d) All computations of interest pursuant to this Section 2.2 shall be
made by the Agent with respect to all Loans on the basis of a year of 360 days,
unless the foregoing would result in a rate exceeding the Highest Lawful Rate,
in which case such computations shall be based on a year of 365 or 366 days, as
the case may be. Interest with respect to all Loans, whether based on a year
of 360, 365 or 366 days, shall be charged for the actual number of days
(including the first day but excluding the last day) occurring in the period
for which such interest is payable. Each determination by the Agent of an
interest rate shall be conclusive and binding for all purposes, absent manifest
error. (e) Borrower may on any Business Day, upon Borrowers written (including
facsimile) notice given by Borrower to the Agent not later than 11:00 a.m.
(Denver time) on the third Business Day prior to the date of any proposed
interest conversion or rollover, (a) convert Loans of one Type into Loans of
another Type, or (b) continue or rollover existing LIBOR Rate Loans; provided
however, (i) with respect to any conversion into or rollover of a LIBOR Rate
Loan, no Default or Matured Default shall have occurred and be continuing, (ii)
with respect to any facsimile notice of interest conversion, Borrower shall
promptly confirm such notice by sending the original notice to the Agent and
(iii) any continuation or rollover of LIBOR Rate Loans for the same or a
different Interest Period or into Base Rate Loans, shall be made on, and only
on, the last day of an Interest Period for such LIBOR Rate Loans. Each such
notice of interest conversion shall specify therein the requested (x) date of
such conversion, (y) the Loans to be converted and whether such Loans
constitute LIBOR Rate Loans, and (z) if such interest conversion is into Loans
constituting LIBOR Rate Loans, the duration of the Interest Period for each
such Loan. The Agent shall promptly deliver a copy thereof to each Lender.
Each such notice shall be irrevocable and binding on Borrower. If Borrower
shall fail to give a notice of interest conversion with respect to any LIBOR
Rate Loan as set forth above, such Loan shall automatically convert to a Base
Rate Loan on the last day of the Interest Period with respect
thereto. The provisions of this Section 2.2(e) shall also apply to
initial Advances made as LIBOR Rate Loans. 2.3 Prepayments; Termination of the Commitments. (a) Borrower may at any time prepay the outstanding principal amount of
any Loan, in either case in whole or in part, in accordance with this Section
2.3. With respect to any prepayment other than prepayments made pursuant to
the Agents routine collection of Accounts in accordance with the provisions of
this Agreement, Borrower shall give prior written notice of any such prepayment
to the Agent, which notice shall state the proposed date of such prepayment May 27, 2004 - 20 -




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(which shall be a Business Day), the Loans to be prepaid and the aggregate
amount of the prepayment, and which notice shall be delivered to the Agent not
later than 11:00 a.m. (local time of Agent): (a) with respect to any Loan which
is a Base Rate Loan, on the date of the proposed prepayment, and (b) with
respect to any Loan which is a LIBOR Rate Loan, three (3) Business Days prior
to the date of the proposed prepayment. All prepayments of Base Rate Loans
shall be without premium. All prepayments of LIBOR Rate Loans shall be made
together with accrued and unpaid interest (if any) to the date of such
prepayment on the principal amount prepaid without premium thereon, provided
however, that losses, costs or expenses incurred by any Lender as described in
this Section 2.3 shall be payable with respect to each such prepayment. All
notices of prepayment shall be irrevocable and the payment amount specified in
each such notice shall be due and payable on the prepayment date described in
such notice, together with, in the case of LIBOR Rate Loans, accrued and unpaid
interest (if any) on the principal amount prepaid and any amounts due under
this Section 2.3. Borrower shall have no optional right to prepay the
principal amount of any LIBOR Rate Loan other than as provided in this Section
2.3. (b) Borrower will indemnify each Lender against, and reimburse each Lender
on demand for, any loss, cost or expense incurred or sustained by such Lender
(including without limitation, any loss or expense incurred by reason of the
liquidation or redeployment of deposits or other funds acquired by such Lender
to fund or maintain any LIBOR Rate Loan and/or loss of net yield) as a result
of (a) any payment, conversion, rollover, or prepayment of all or a portion of
any LIBOR Rate Loan on a day other than the last day of an Interest Period for
such LIBOR Rate Loan, (b) any payment, conversion, rollover or prepayment
(whether required hereunder or otherwise) of such Lenders Loan made after the
delivery of a notice of borrowing delivered pursuant to Section 2.2 (whether
oral or written) but before the proposed date for such LIBOR Rate Loan if such
payment or prepayment prevents the proposed borrowing from becoming fully
effective, (c) after receipt by the Agent of a notice of borrowing delivered
pursuant to Section 2.2, the failure of any Loan to be made or effected by such
Lender due to any condition precedent to a borrowing not being satisfied or due
to any other action or inaction of Borrower or (d) any rescission of a notice
of borrowing delivered pursuant to Section 2.2 or a notice of interest
conversion delivered pursuant to Section 2.2. Any Lender demanding payment
under this Section 2.3 shall deliver to Borrower and the Agent a statement
reasonably setting forth the amount and manner of determining such loss, cost
or expense, which statement shall be conclusive and binding for all purposes,
absent manifest error. Compensation owing to a Lender
as a result of any such loss, cost or expense resulting from a payment,
prepayment, conversion or rollover of a LIBOR Rate Loan shall include without
limitation, an amount equal to the sum of (i) the amount of the net yield that,
but for such event, such Lender would have earned for the remainder of the
applicable Interest Period plus (ii) any expense incurred by such Lender.
Notwithstanding any provision herein to the contrary, each Lender shall be
entitled to fund and maintain its funding of all of any part of the LIBOR Rate
Loans in any manner it elects; it being understood, however, that all
determinations hereunder shall be made as if the Lender had actually funded and
maintained each LIBOR Rate Loan during the Interest Period for such Advance
through the purchase of deposits having a term corresponding to such Interest
Period May 27, 2004 - 21 -




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and bearing an interest rate equal to the LIBOR Rate for such Interest
Period (whether or not the Lender shall have granted any participations in such
Loans). (c) Borrower shall have the right, upon at least five Business Days
written notice to the Lenders, to terminate the Line of Credit Loan
Commitments, (i) in whole, or (ii) in part, in a minimum amount of $5,000,000
and an integral multiple of $5,000,000, but not to an amount less than
$125,000,000. Provided, however, that any such termination shall be
accompanied, (i) in the case of a termination in whole, by payment of the Line
of Credit Loan Liabilities in full and the return or cash coverage of any
Letter then outstanding, or (ii) in the case of a partial termination, payment
of the Line of Credit Loan Liabilities to the extent necessary to cause the
Available Amount to be not less than zero. Any partial reduction of the Line
of Credit Loan Commitments pursuant to this Section 2.3(c) shall result in a
reduction pro-rata of the Line of Credit Loan Commitments of each of the
Lenders. 2.4 Purpose.The purpose of the Line of Credit shall be to pay principal,
interest and non-use fees in accordance with Section 2.1.4(h), provide working
capital for Borrowers hog production and processing operations and to provide
funds for Borrowers capital improvements and Permitted Acquisitions within the
covenant limitations. 2.5 Fees. (a) Agents Fee.Borrower agrees to pay to the Agent, in respect of its
administrative duties hereunder: a one time arranger fee on the Closing Date;
subsequent arranger fees at the time of any increase of the Commitments as
provided for in this Agreement, an annual agents fee; and one time fronting
fees from time to time in respect of the initial issuance of Letters, all in
amounts set forth in the Agents Letter. The annual Agents fee shall be due
and payable in advance on the date of this Agreement and on each Anniversary
Date as long as Advances are available or outstanding hereunder. Fronting fees
shall be payable to the Agent at the issuance of each Letter, computed at the
rate set forth in the Agents Letter on the face amount of such Letter. Each
of the Agents fees shall be fully earned on the date they become payable and,
at the option of the Agent, shall be paid by Advances pursuant to Section 2.1,
without prior demand by the Agent. The Agents Letter also covers the audit
fees referred to in Section 10.7. No Persons other than the Agent shall have
any interest in any such Agents fees. Borrower also agrees to reimburse the
Agent, for any fees and expenses incurred in connection with the syndication of
the Commitments as set forth in the Agents Letter. (b) Initial Commitment Fees.Borrower agrees to pay to the Agent for
distribution to the Lenders, including the Agent, fees equal to the percentages
agreed to and as described in the Agents Letter of their respective Line of
Credit Loan Commitments on or after the Closing Date. Each of the foregoing
fees shall be fully earned as they accrue and, at the option of the Agent,
shall be paid by Advances pursuant to Section 2.1, without prior demand by the
Agent. (c) Non-Use Fee.Borrower agrees to pay to the Agent for distribution to
the Lenders (based on their respective Pro Rata Percentages) a quarterly
non-use fee from the Closing Date to May 27, 2004 - 22 -




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the Maturity Date, calculated using the
applicable rate per annum set forth in the definition of Applicable Margin, and
applied to the daily average Available Amount. The quarterly non-use fee shall
be due and payable in arrears with respect to the prior quarter on the first
day of each January, April, July and October hereafter through the Maturity
Date. A pro-rated non-use fee shall be due and payable on the first day of the
quarter following the Closing Date and on the Maturity Date. Each quarterly
non-use fee shall be earned as it accrues and, at the option of the Agent,
shall be paid by Advances pursuant to Section 2.1, without prior demand by the
Agent. (d) Letter of Credit Fees.Borrower agrees to pay to the Agent, for
distribution to the Lenders (based on their respective Pro Rata Percentages), a
quarterly fee, payable in arrears with respect to the prior quarter on the
first day of each January, April, July and October, in respect of each Letter
issued hereunder, computed at a rate per annum equal to the then effective
Applicable Margin for Loans that are LIBOR Rate Loans on the aggregate daily
average face amounts of all Letters outstanding during such quarter. Borrower
shall also pay to the Agent for the account of the Issuer issuing any Letter,
the normal and customary processing fees charged by such Issuer in connection
with the issuance of or drawings under each such Letter. Each letter of credit
fee and processing fee shall be fully earned as it accrues and, at the option
of the Agent, shall be paid by Advances pursuant to Section 2.1, without prior
demand by the Agent. (e) Calculation of Fees.The fees payable under this Section 2.5 which
are based on an annual percentage rate shall be calculated by the Agent on the
basis of a 360-day year, for the actual days (including the first day but
excluding the last day) occurring in the period for which such fee is payable.
Each determination by the Agent of fees payable under this Section 2.5 shall be
conclusive and binding for all purposes, absent manifest error. (f) Fees Not Interest.The fees described in this Agreement represent
compensation for services rendered and to be rendered separate and apart from
the lending of money or the provision of credit and do not constitute
compensation for the use, detention, or forbearance of money, and the
obligation of Borrower to pay each fee described herein shall be in addition
to, and not in lieu of, the obligation of Borrower to pay interest, other fees
described in this Agreement, and expenses otherwise described in this
Agreement. Fees shall be payable when due in Dollars and in Immediately
Available Funds. All fees shall be non-refundable. 2.6 Borrowers Loan Account.The Agent shall maintain a loan account
(Loan Account)on its books in which shall be
recorded: (a) all Advances made by the Agent to Borrower pursuant to this
Agreement; (b) all receipts and disbursements from and to the other Lenders;
(c) all payments made by Borrower; and (d) all other appropriate debits and
credits as provided in this Agreement, including without limitation, all
receipts of cash proceeds of collateral, fees, charges, expenses and interest.
All entries in Borrowers Loan Account shall be made in accordance with the
Agents customary accounting practices as in effect from time to time.
Borrower promises to pay the amount reflected as owing by and under its Loan
Account and all other obligations hereunder as such amounts become due or are
declared due pursuant to the terms of this Agreement. May 27, 2004 - 23 -




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2.7 Statements.All Advances to Borrower, and all other debits and
credits provided for in this Agreement, shall be evidenced by entries made by
the Agent in its internal data control systems showing the date, amount and
reason for each such debit or credit. Until such time as the Agent shall have
rendered to Borrower and the Lenders written statements of account, the balance
in Borrowers Loan Account, as set forth on the Agents most recent printout,
shall be rebuttable presumptive evidence of the amounts due and owing the
Lenders by Borrower and, as the case may be, by the Lenders to each other. On
or about the last day of each calendar month, the Agent shall mail to Borrower
a statement setting forth the balance of Borrowers Loan Account, including
without limitation, principal, interest, expenses and fees. Each such
statement shall be subject to subsequent adjustment by the Agent but shall,
absent manifest errors or omissions, be presumed correct and binding upon
Borrower and shall constitute an account stated unless, within sixty (60) days
after receipt of any statement from the Agent, Borrower or a Lender shall
deliver to the Agent written objection specifying the error or errors, if any,
contained in such statement. 2.8 Termination of Agreement.Subject to and in accordance with Section
9.1, the Agent shall have the right, without notice to Borrower, to terminate
the Commitments immediately upon a Matured Default. In addition, the
Commitments shall be deemed immediately terminated and all of the Liabilities
shall be immediately due and payable, without notice to Borrower, on the
Termination Date if the Lenders elect not to extend the Termination Date of the
Swing Line and the Line of Credit pursuant to Sections 2.1.1 and 2.1.2. In the
event the Commitments are terminated, the remainder of this Agreement shall
remain in full force and effect until the payment in full of the Liabilities
and the termination of any Letters. Notwithstanding the foregoing, in the
event that a proceeding under any bankruptcy, reorganization, arrangement of
debt, insolvency, readjustment of debt or receivership law or statute is filed
by or against Borrower or any guarantor of the Liabilities, or Borrower or any
guarantor of the Liabilities makes an assignment for the benefit of creditors,
the Commitments shall be deemed to be terminated immediately, and all the
Liabilities shall be due and payable, without presentment, demand, protest or
further notice (including without limitation, notice of intent to accelerate
and notice of acceleration) of any kind, all of which are expressly waived by
Borrower, provided, however, that in the event a proceeding against Borrower or
any guarantor of the Liabilities is dismissed within thirty (30) days of the
date of its filing then the Commitments shall be deemed to be reinstated as of
the date the order of dismissal becomes final and the Agent is given notice
thereof, and provided, however, the automatic reimbursement of the Issuer by
the Lenders as provided for in this Agreement shall
continue with respect to any post-petition drawings under any Letters.
This Agreement shall terminate when the Commitments have terminated, any
Letters issued hereunder have terminated and the Liabilities have been
indefeasibly paid in full. 3 BORROWING BASE. 3.1 Eligible Accounts.The Agent shall have the right, in the exercise of
the Agents reasonable discretion, to determine whether Accounts are eligible
for inclusion in the Borrowing Base at any particular time (such eligible
accounts being referred to as Eligible Accounts). May 27, 2004 - 24 -




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Without limiting the
Agents right to determine that Accounts do not constitute Eligible Accounts,
the following Accounts shall not be Eligible Accounts: (a) any Account other
than an Account arising from a completed sale (not a bill-and-hold, undelivered
sale, sale or return, consignment or sale-on-approval basis) of livestock (as
defined in PASA) or of processed pork products by Borrower; (b) any Account
other than an Account denominated in U.S. Dollars; (c) all Accounts owing by an
Account Debtor that is a meat packer in connection with the sale of livestock
(as defined in PASA) which are at that time unpaid for a period exceeding seven
(7) days after the delivery date of the livestock related thereto; (d) all
Accounts other than those described in the preceding clause c, which are at
that time unpaid for a period exceeding twenty one days (21) days after the
original invoice date of the original invoice related thereto; (e) all Accounts
owing by an Account Debtor if more than ten percent (10%) of the Accounts owing
by such Account Debtor are at that time unpaid for a period exceeding that
permitted by the preceding clause c or clause d, respectively; (c) those
Accounts, except Accounts owing from the Account Debtors listed on Exhibit 3A,
of an Account Debtor, the aggregate face amount of which is in excess of five
percent (5%) of the aggregate face amount of all other Eligible Accounts of all
other Account Debtors; (d) those Accounts owing from the United States or any
department, agency or instrumentality thereof unless Borrower shall have
complied with the Assignment of Claims Act to the satisfaction of the Agent;
(e) Accounts which arise out of transactions with Affiliates; (f) Accounts of
an Account Debtor that is located outside the United States, unless such
Accounts are covered by a letter of credit issued or confirmed by a bank
acceptable to the Agent or are covered by foreign credit insurance acceptable
to the Agent; (g) Accounts which are or may be subject to rights of setoff or
counterclaim by the Account Debtor (to the extent of the amount of such setoff
or counterclaim); (h) Accounts in which the Agent does not, for any reason,
have a first priority perfected security interest; and (i) Accounts which in
the Agents opinion may be subject to liens or conflicting claims of ownership,
whether such liens or conflicting claims are asserted or could be asserted by
any Person. 3.2 Eligible Inventory.The Agent shall have the right, in the exercise
of the Agents reasonable discretion, to determine whether Inventory is
eligible for inclusion in the Borrowing Base at any particular time (such
eligible inventory being referred to as Eligible
Inventory). Without
limiting the Agents right to determine that Inventory does not constitute
Eligible Inventory, the following Inventory shall not be Eligible Inventory:
(a) Inventory reasonably determined by the Agent to be out-of-condition or
otherwise unmerchantable, including, without limitation, Inventory deemed to be
out-of-condition or otherwise unmerchantable by the United States
Department of Agriculture, any states Department of Agriculture, or any other
Governmental Authority having regulatory authority over Borrower or any of
Borrowers assets or activities; (b) Inventory for which a prepayment has been
received; (c) Inventory in the possession of third parties, unless it is
Inventory: (i) at a location disclosed to the Agent in accordance with Section
6.5 and/or Section 7.3 or (ii) covered by negotiable warehouse receipts or
negotiable bills of lading issued by either: (A) a warehouseman licensed and
bonded by the United States Department of Agriculture or any states Department
of Agriculture, or (B) a recognized carrier having an office in the United
States and in a financial condition reasonably acceptable to the Agent, which
receipts or bills of lading designate the Agent directly or by endorsement as
the only Person to which or to the order of which the warehouseman or carrier
is May 27, 2004 - 25 -




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legally obligated to deliver such Goods; (d) Inventory in which the Agent
does not, for any reason, have a first priority perfected security interest;
and (e) Inventory which in the Agents opinion may be subject to liens or
conflicting claims of ownership (except with regard to Producer Payables
deducted in accordance with the Borrowing Base computation), whether such liens
or conflicting claims are asserted or could be asserted by any Person. 4 CONDITIONS TO ADVANCES. Notwithstanding any other provisions to the contrary contained in this
Agreement, the making of Advances or the issuance of Letters provided for in
this Agreement shall be conditioned upon the following: 4.1 Approval of the Agents Counsel.Legal matters, if any, relating to
any Advance shall have been reviewed by and shall be satisfactory to counsel
for the Agent. 4.2 Compliance.All representations and warranties contained in this
Agreement shall be true on and as of the date of the making of each Advance as
if such representations and warranties had been made on and as of such date
(unless such representations and warranties relate to a specific earlier date),
and no Default or Matured Default shall have occurred and be continuing or
shall exist. 4.3 Documentation.Prior to the initial Advance, Borrower shall have
executed and/or delivered to the Agent all of the documents listed on the List
of Closing Documents attached as Exhibit 4A, in form and substance acceptable
to the Agent. On or before June 9, 2004, Borrower shall have executed and/or
delivered to the Agent all of the documents listed on the List of Closing
Documents attached as Exhibit 4B, in form and substance acceptable to the
Agent. 4.4 Hedging Activities.With respect to each Advance, the Agent shall be
satisfied that Borrower is in compliance with Borrowers covenants and
agreements contained in Section 5.15 in all material respects. 4.5 Appraisal.Prior to the initial Advance, the Agent shall have
received updates or evaluations of the appraisals received by the Agent under
the Former Loan Agreement of real property, fixtures and equipment, acceptable
to the Agent, which will satisfy, to the extent applicable, the regulations
promulgated by the Office of the Comptroller of the Currency under Title XI of
the Federal Financial Institutions Reform, Recovery, and Enforcement Act of
1989, as well as the Uniform Standards of Professional Appraisal Practice and
indicating a combined market value of not less than $100,000,000. Expenses
incurred by the Agent associated with any required updates of the appraisals
shall be payable by Borrower in accordance with the terms of this Agreement.
If the Agent is able to complete satisfactory evaluations of the appraisals
whereby no formal updated appraisals are required, Borrower agrees to pay to
the Agent, an appraisal evaluation fee in an amount set forth in the Agents
Letter. The appraisal evaluation May 27, 2004 - 26 -




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fee shall be fully earned on the date it
becomes payable and, at the option of the Agent, shall be paid by Advances
pursuant to Section 2.1, without prior demand by the Agent. 5 SECURITY. 5.1 Security Interests and Liens.To secure the payment and performance
of the Liabilities, Borrower hereby grants to the Agent for the ratable benefit
of the Lenders (and Affiliates of the Lenders with respect to Bank Products)
and the Issuer a continuing security interest in and to the following property
and interests in property of Borrower, whether now owned or existing or
hereafter acquired or arising and wheresoever located: all Accounts, Inventory,
Equipment, Farm Products, Goods, General Intangibles, Payment Intangibles,
Commercial Tort Claims (specifically described as those Commercial Tort Claims
which are proceeds of any of the other herein described collateral), Deposit
Accounts, Margin Accounts, Commodity Accounts, Commodity Contracts, Securities
Accounts, Investment Property, Instruments, Letter of Credit Rights, Documents,
Chattel Paper, Electronic Chattel Paper, Tangible Chattel Paper, all accessions
to, substitutions for, and all replacements, products and proceeds of the
foregoing (including without limitation, proceeds of insurance policies
insuring any of the foregoing), all books and records pertaining to any of the
foregoing (including without limitation, customer lists, credit files, computer
programs, printouts and other computer materials and records), and all
insurance policies insuring any of the foregoing. Borrower has granted and
continues to agree to grant to the Agent for the ratable benefit of the
Lenders, liens against Borrowers interests in the Property, which liens are
and shall be evidenced by Borrowers (a) (i) Amended and Restated First Deed of
Trust from CGC Asset Acquisition Corp., dated and recorded as follows: dated
August 21, 2000 and recorded August 30, 2000, Book 183, Page 41; and (ii)
Amended and Restated First Deed of Trust from CGC Asset Acquisition Corp.,
dated and recorded as follows: dated August 21, 2000 and recorded August 30,
2000, Book 183, Page 42, (as amended, and as the same may be further amended,
restated, modified, supplemented or replaced from time to time) which encumber,
among other things, Borrowers fee estate real property in Daviess County,
Missouri, (b) Amended and Restated First Deed of Trust from Premium Standard
Farms, Inc., dated and
recorded as follows: dated August 21, 2000 and recorded August 29, 2000,
Book 231, Pages 352-395 (as amended, and as the same may be further amended,
restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Mercer
County, Missouri, (c) Amended and Restated First Deed of Trust from Premium
Standard Farms, Inc., dated and recorded as follows: dated August 21, 2000 and
recorded August 29, 2000 at Book 227, Page 515 (as amended, and as the same may
be further amended, restated, modified, supplemented or replaced from time to
time) which encumbers, among other things, Borrowers fee estate real property
in Sullivan County, Missouri, (d) Amended and Restated First Deed of Trust from
Premium Standard Farms, Inc., dated and recorded as follows: dated August 21,
2000 and recorded August 29, 2000 at Book 227, Pages 288-325 (as amended, and
as the same may be further amended, restated, modified, supplemented or
replaced from time to time) which encumbers, among other things, Borrowers fee
estate real property in Putnam County, Missouri, (e) Amended and Restated First
Deed of Trust from CGC Asset Acquisition Corp., dated and May 27, 2004 - 27 -




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recorded as follows:
dated August 21, 2000 and recorded August 29, 2000, Book 520, Page 233 (as
amended, and as the same may be further amended, restated, modified,
supplemented or replaced from time to time) which encumbers, among other
things, Borrowers fee estate real property in Grundy County, Missouri, (f)
Amended and Restated First Deed of Trust from CGC Asset Acquisition Corp.,
dated and recorded as follows: dated August 21, 2000 and recorded August 31,
2000, Book 166, Page 81 (as amended, and as the same may be further amended,
restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Worth
County, Missouri, (g) Amended and Restated First Deed of Trust from CGC Asset
Acquisition Corp., dated and recorded as follows: dated August 21, 2000 and
recorded August 31, 2000, Book 398, Page 12 (as amended, and as the same may be
further amended, restated, modified, supplemented or replaced from time to
time) which encumbers, among other things, Borrowers fee estate real property
in Gentry County, Missouri, (h) First Deed of Trust from Dogwood Farms, Inc.,
dated and recorded as follows: dated August 21, 2000 and recorded September 5,
2000, Book 1368, Page 111 (as amended, and as the same may be further amended,
restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Sampson
County, North Carolina, (i) First Deed of Trust from Tomahawk Farms, Inc.,
dated and recorded as follows: dated August 21, 2000 and recorded September 5,
2000, Book 1437, Pages 0741-0784 (as amended, and as the same may be further
amended, restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Harnett
County, North Carolina, (j) First Deed of Trust from Boneless Hams, Inc., dated
and recorded as follows: dated August 21, 2000 and recorded September 5, 2000,
Book 1437, Pages 0785-0827 (as amended, and as the same may be further amended,
restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Harnett
County, North Carolina, (k) First Deed of Trust from The Lundy Packing Company,
dated and recorded as follows: dated August 21, 2000 and recorded September 5,
2000, Book 1368, Page 55 (as amended, and as the same may be further amended,
restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Sampson
County, North Carolina, (l) First Deed of Trust from Dogwood Farms, Inc., dated
and recorded as follows: dated August 21, 2000 and recorded
September 5, 2000, Book 449, Page 587 (as amended, and as the same may be
further amended, restated, modified, supplemented or replaced from time to
time) which encumbers, among other things, Borrowers fee estate real property
in Hoke County, North Carolina, (m) First Deed of Trust from Dogwood Farms,
Inc., dated and recorded as follows: dated August 21, 2000 and recorded
September 5, 2000, Book 1323, Page 785 (as amended, and as the same may be
further amended, restated, modified, supplemented or replaced from time to
time) which encumbers, among other things, Borrowers fee estate real property
in Duplin County, North Carolina, (n) First Deed of Trust from Dogwood Farms,
Inc., dated and recorded as follows: dated August 21, 2000 and recorded
September 5, 2000, Book 1437, Pages 0828-0873 (as amended, and as the same may
be further amended, restated, modified, supplemented or replaced from time to
time) which encumbers, among other things, Borrowers fee estate real property
in Harnett County, North Carolina, (o) First Deed of Trust
from Premium
Standard Farms of North Carolina, Inc., dated and recorded as follows: dated
September 22, 2000 and recorded September 29, 2000 at Book 1068, Page 394 (as
amended, and as the same May 27, 2004 - 28 -




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may be further amended, restated, modified,
supplemented or replaced from time to time) which encumbers, among other
things, Borrowers fee estate real property in Pitt County, North Carolina, (p)
First Deed of Trust from Premium Standard Farms of North Carolina, Inc., dated
and recorded as follows: dated September 22, 2000 and recorded September 29,
2000 at Book 1279, Page 601 (as amended, and as the same may be further
amended, restated, modified, supplemented or replaced from time to time) which
encumbers, among other things, Borrowers fee estate real property in Edgecombe
County, North Carolina, (q) Amended and Restated Deed of Trust from Premium
Standard Farms, Inc., dated and recorded as follows: dated August 21, 2000 and
recorded August 30, 2000 at Volume 59, Pages 329-359 (as amended, and as the
same may be further amended, restated, modified, supplemented or replaced from
time to time) which encumbers, among other things, Borrowers fee estate real
property in Hartley County, Texas, and (r) Amended and Restated Deed of Trust
from Premium Standard Farms, Inc., dated and recorded as follows: dated August
21, 2000 and recorded August 30, 2000 at Volume 72, Pages 449-479 (as amended,
and as the same may be further amended, restated, modified, supplemented or
replaced from time to time) which encumbers, among other things, Borrowers fee
estate real property in Dallam County, Texas. Borrower agrees to maintain and
continue, for the ratable benefit of the Lenders, the Guaranty of Parent dated
May 13, 1998. In addition to the security interest granted in Borrowers
General Intangibles (including but not limited to Borrowers trademarks and
trade names) Borrower agrees to grant to the Agent for the ratable benefit of
the Lenders a license to use Borrowers trademarks and trade names as set forth
in an Amended and Restated Trademark License Agreement of even date with this
Agreement. Borrower agrees to grant to the Agent for the ratable benefit of
the Lenders, Assignments of Commodity Accounts and Commodity Contracts referred
to in Section 5.15. 5.2 Endorsement by the Agent.Borrower authorizes the Agent to endorse,
in Borrowers name, any item, however received by the Agent, representing
payment on or other proceeds of any of the Collateral. 5.3 Delivery of Warehouse Receipts to the Agent.In the event that any
Inventory becomes the subject of a negotiable or nonnegotiable warehouse receipt, said warehouse
receipt shall be promptly delivered to the Agent with such endorsements and
assignments as are necessary to vest title and possession in the Agent.
Provided that a Matured Default does not then exist and would not be created
thereby, the Agent shall return such warehouse receipts to Borrower within two
(2) Business Days of Borrowers request therefor, but only for purposes of
negotiation, delivery or exchange in the ordinary course of Borrowers
business, and provided, however, that Borrower shall comply with such terms and
conditions reasonably deemed appropriate by the Agent to secure the return to
the Agent of the proceeds of such warehouse receipts, where such return of
proceeds would be required in accordance with Borrowers obligations to the
Agent under the Financing Agreements. 5.4 Preservation of Collateral and Perfection of Security Interests.
Borrower shall execute and deliver to the Agent, concurrently with the
execution of this Agreement and at any time hereafter, all financing statements
or other documents (and pay the cost of filing or recording the same in all
public offices deemed necessary by the Agent), as the Agent may May 27, 2004 - 29 -




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request, in a
form satisfactory to the Agent, to perfect and keep perfected the security
interest in the Collateral granted by Borrower to the Agent and otherwise to
protect and preserve the Collateral and the Agents security interests. The
Agent is hereby irrevocably authorized to file (and sign on behalf of Borrower,
if necessary) UCC or effective financing statements on the Collateral at the
time of this Agreement or from time to time hereafter. Borrower further agrees
that an electronic, carbon, photographic, or other reproduction of a financing
statement is sufficient as a financing statement. 5.5 Loss of Value of Collateral.Borrower shall immediately notify the
Agent of any material loss or decrease in the value of the Collateral. 5.6 Collection of Accounts; Power of Attorney.Borrower shall take all
reasonable steps, including without limitation, the placement of such
designations on invoices as may be appropriate, to cause all Account Debtors to
make all payments to Borrower (or to Borrowers depository banks, including,
but not limited to U.S. Bank), in any case for Borrowers subsequent deposit in
account number 194311040266 at U.S. Bank. Upon and during the occurrence of a
Matured Default, Borrower agrees, upon the Agents demand, to use a lockbox
into which Account Debtors shall make payments. Upon a Matured Default,
Borrower designates, makes, constitutes and appoints the Agent (and all Persons
designated by the Agent) as Borrowers true and lawful attorney-in-fact, with
power, in Borrowers or the Agents name, to: (a) demand payment of Accounts;
(b) enforce payment of Accounts by legal proceedings or otherwise; (c) exercise
all of Borrowers rights and remedies with respect to proceedings brought to
collect an Account; (d) sell or assign any Account upon such terms, for such
amount and at such time or times as the Agent reasonably deems advisable; (e)
settle, adjust, compromise, extend or renew any Account; (f) discharge and
release any Account; (g) take control in any manner of any item of payment or
proceeds of any Account; (h) prepare, file and sign Borrowers name upon any
items of payment or proceeds and deposit the same to the Agents account on account of the
Liabilities; (i) endorse Borrowers name upon any Chattel Paper, Document,
Instrument, invoice, warehouse receipt, bill of lading, or similar Document or
agreement relating to any Account or any other Collateral; (j) sign Borrowers
name on any verification of Accounts and notices to Account Debtors; (k)
prepare, file and sign Borrowers name on any proof of claim in bankruptcy or
similar proceeding against any Account Debtor; and (l) do all acts and things
which are necessary, in the Agents reasonable discretion, to sell, transfer or
otherwise obtain the proceeds of any Collateral or otherwise to fulfill
Borrowers obligations under this Agreement. The foregoing power of attorney
is coupled with an interest and is therefore irrevocable. 5.7{Intentionally Omitted} 5.8 Account Records and Verification Rights.Borrower represents and
warrants to and covenants with the Agent that Borrower now keeps and at all
times shall keep records that are correct and accurate in all material respects
relating to the Accounts and the financial and payment records of the Account
Debtors, all of which records shall be available upon demand during Borrowers
usual business hours to any of the Agents officers, employees or agents. Any
of the Agents officers, employees or agents shall have the right at any time,
in the name of May 27, 2004 - 30 -




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Borrower, to verify the validity, amount or any other matter
relating to any Accounts, by mail, telephone, telegraph or otherwise, with any
requested return of verification to be to an address under the control of the
Agent. 5.9 Notice to Account Debtors.The Agent may (upon the direction of the
Required Lenders), at any time or times upon and during the occurrence of a
Matured Default, and without prior notice to Borrower, notify any or all
Account Debtors that the Accounts have been assigned to the Agent and that the
Agent has been granted a security interest therein and may direct any or all
Account Debtors to make all payments upon the Accounts directly to the Agent or
to a lockbox to be used pursuant to Section 5.6. The Agent shall furnish
Borrower with a copy of such notice. 5.10 Inventory Records.Borrower represents and warrants to and covenants
with the Agent that Borrower now keeps and at all times shall keep records that
are correct and accurate in all material respects, itemizing and describing the
kind, type, quality and quantity of Inventory, Borrowers costs and selling
prices of Inventory and daily withdrawals and additions of Inventory, all of
which records shall be available on demand during Borrowers usual business
hours to any of the Agents officers, employees or agents. 5.11 Special Collateral.Immediately upon Borrowers receipt thereof and
upon request by the Agent, Borrower shall (except as provided for in Section
5.3 with regard to warehouse receipts) deliver or cause to be delivered to the
Agent, with such endorsements and assignments as are necessary to vest title
and possession in the Agent, all Chattel Paper, Instruments and Documents which
Borrower now owns or which
Borrower may at any time acquire. Borrower shall promptly mark all copies
of such Chattel Paper, Instruments and Documents to show that they are subject
to the Agents security interest. 5.12 Remittance of Proceeds to the Agent.Except as otherwise provided in
Section 5.6, in the event any proceeds of any Collateral shall come into the
possession of Borrower (or any of Borrowers Owners, directors, officers,
managers, employees, agents or any Persons acting for or in concert with
Borrower), Borrower or such Person shall receive, as the sole and exclusive
property of the Agent, and as trustee for the Agent, all monies, checks, notes,
drafts and all other payments for and/or other proceeds of Collateral, and no
later than the first Business Day following receipt, Borrower shall remit the
same (or cause the same to be remitted), in kind, to the Agent or to such agent
or agents (at such agents or agents designated address or addresses) as are
appointed by the Agent for that purpose, to be applied to the Liabilities
pursuant to Section 10.14. 5.13 Safekeeping of Collateral.The Agent shall not be responsible for:
(a) the safekeeping of the Collateral; (b) any loss or damage to the
Collateral; (c) any diminution in the value of the Collateral; or (d) any act
or default of any carrier, warehouseman, bailee, forwarding agency or any other
Person relating to the Collateral. All risk of loss, damage, destruction or
diminution in value of the Collateral shall be borne by Borrower. May 27, 2004 - 31 -




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5.14 Sales and Use of Collateral.Except as set forth in this Section or
in Section 8.6, Borrower shall not sell, lease, transfer or otherwise dispose
of any Collateral. So long as there shall not have occurred and be continuing
a Matured Default, Inventory may be sold by Borrower in the ordinary course of
Borrowers business, but shall not otherwise be taken or removed from
Borrowers premises or approved third party locations, except for raw materials
or work in process for the purpose of conversion into finished Goods. Upon and
during the occurrence of a Matured Default and if the Agent so notifies
Borrower in writing, neither Inventory nor any other Collateral shall be sold
or taken or removed from Borrowers premises or approved third party locations,
except with the prior written consent of the Agent and upon payment of an
amount equivalent to the value of the Collateral to be sold or removed, such
amounts to be paid to the Agent to be applied upon the Liabilities. So long as
there shall not have occurred a Matured Default, Collateral may be used by
Borrower in the ordinary course of Borrowers business, subject to the Agents
continuing security interest. Upon and during the occurrence of a Matured
Default and if the Agent so notifies Borrower in writing, Collateral shall not
be used except with the prior written consent of the Agent. 5.15 Margin Accounts.All Margin Accounts shall be kept with ABN Amro
(Broker) unless the Agent shall otherwise consent in writing. Borrower
represents and warrants to the Agent that: (a) Borrower is now the owner, free
and clear of all liens, security interests and encumbrances, except for those
in favor of the Agent or Broker, of any and all Margin Accounts which are
listed in any financial statements or books and records of Borrower as being
the property of Borrower; and (b) except as otherwise
permitted by this Agreement, Borrower owns no open futures positions which
are not either covered by existing, unsold Inventory or covered by reciprocal
contracts for future delivery of the product by reliable sellers, or directly
related to Inventory which Borrower plans to purchase in the ordinary course of
Borrowers business. Concurrently with the execution of this Agreement,
Borrower, the Broker and the Agent have executed an Assignment of Commodity
Accounts and Commodity Contracts. With respect to any Margin Account opened
after the date of this Agreement, Borrower, the Broker and the Agent shall
execute an Assignment of Commodity Accounts and Commodity Contracts, in a
standard form reasonably acceptable to the Agent and the Broker. All of the
Agents rights under such Assignment of Commodity Accounts and Commodity
Contracts shall be in addition to the Agents rights hereunder, and shall also
apply to any Margin Accounts that are maintained, in violation of this
Agreement, with any Person other than the Broker, provided, however, the Agent
shall not exercise any rights, powers or remedies under any Assignment of
Commodity Accounts and Commodity Contracts except upon and during the
continuance of a Matured Default. Borrower warrants that the Margin Accounts
will be used solely for the hedging of Borrowers investments in Inventory and
not for speculative purposes. 5.16 Real Property.Borrower shall pay all costs associated with the
recording of the deeds of trust referred to in Section 5.1, together with any
subsequent amendments thereto, with the appropriate authorities, and shall take
all other actions reasonably requested by the Agent in order to vest in the
Agent a perfected lien on each such parcel of real property described therein,
subject to no other liens, claims or encumbrances, except those expressly
acknowledged thereby. May 27, 2004 - 32 -




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5.17 Title Insurance.Borrower shall cooperate with the Agent to obtain
delivery to the Agent of endorsed policies of title insurance, insuring the
Agents mortgagees interest, in accordance with the title insurance commitment
delivered to the Agent pursuant to Section 4.3, which cooperation shall be
deemed to include without limitation, doing all things reasonably necessary to
satisfy the requirements set forth in said title insurance commitment or other
requirements of the issuer thereof (including without limitation, the payment
of premiums). The Agent shall have no obligation to make any Advance hereunder
unless and until all requirements set forth in said title insurance commitment
or other requirements of the issuer thereof have been satisfied. The Agent
shall have the right to request such title insurance commitment updates at such
times as the Agent, in its sole discretion, shall deem appropriate, and shall
have the right to instruct the issuer of the title insurance commitment to set
forth as added requirements such things as would be necessary to eliminate
added exceptions to coverage. In the event the Agent reasonably determines
that a policy of title insurance will not be issued in accordance with said
title insurance commitment by reason of Borrowers failure to cooperate as
aforesaid, then the Agent shall have the right to terminate this Agreement
pursuant to Section 2.8 and Borrower shall remain obligated to the Agent for
all Liabilities incurred to date thereof (including without limitation, all
fees and cost reimbursements provided for herein). 6 WARRANTIES. Borrower represents and warrants to the Lenders that: 6.1 Litigation and Proceedings.Except as set forth on Part 1 of Exhibit
6A, no judgments are outstanding against Borrower, nor is there pending or
threatened any litigation, contested claim, or governmental proceeding by,
against or with respect to Borrower as of the date of this Agreement. After
the date of this Agreement, no judgments are outstanding against Borrower, nor
is there pending or threatened any litigation, contested claim, or governmental
proceeding by, against or with respect to Borrower, (a) except to the extent
they relate back to matters disclosed on Part 1 of Exhibit 6A (for example, a
disclosed claim results in a judgment that could be anticipated from the
description of a disclosed claim), and (b) except for judgments and pending or
threatened litigation, contested claims and governmental proceedings which are
not, in the aggregate, material to Borrowers financial condition, results of
operations or business. 6.2 Other Agreements.Except as set forth on part 2 of Exhibit 6A,
Borrower is not in default under any contract, lease or commitment to which
Borrower is a party or by which Borrower is bound except those defaults which
are not, in the aggregate, material to Borrowers financial condition, results
of operations or business. Borrower knows of no dispute, except as set forth
on part 2 of Exhibit 6A, relating to any contract, lease, or commitment except
those disputes which are not, in the aggregate, material to Borrowers
financial condition, results of operations or business. 6.3 Licenses, Patents, Copyrights, Trademarks and Trade Names.All of
Borrowers licenses, patents, copyrights, trademarks and trade names and all of
Borrowers applications for any of the foregoing are set forth on part 3 of
Exhibit 6A as updated from time to May 27, 2004 - 33 -




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time by Borrower. There is no action,
proceeding, claim or complaint pending or threatened to be brought against
Borrower by any Person which might jeopardize any of Borrowers interest in any
of the foregoing licenses, patents, copyrights, trademarks, trade names or
applications except those which are not, in the aggregate, material to
Borrowers financial condition, results of operations or business. 6.4 Collateral.Except as permitted under Section 8.1 and except as set
forth on part 4 of Exhibit 6A, all of the Collateral is free and clear of all
security interests, liens, claims and encumbrances. No Goods held by Borrower
on consignment or under sale or return contracts have been represented to be
Inventory and no amounts receivable by Borrower in respect of the sale of such
Goods (except markups or commissions which have been fully earned by Borrower)
have been represented to be Accounts. All Producer Payables which are owing to
suppliers of any of the Collateral have been paid when due, other than those
being contested in good faith by Borrower, and no Person to whom such Producer
Payables are owed has demanded turnover of any Collateral or proceeds thereof.
Borrower has adequate procedures in place to insure that Collateral purchased
by Borrower is free of security interests in favor of Persons other than the
Agent in accordance with the Federal Food Security
Act. Borrower will furnish, at the Agents request, the names and
addresses of all Persons who supply Inventory to Borrower or who deliver Goods
to Borrower on consignment or under sale or return contracts. 6.5 Location of Assets; Chief Executive Office.The chief executive
office of Borrower is located at 805 Pennsylvania Avenue, Suite 200, Kansas
City, Missouri 64105-1307 and Borrowers assets (including without limitation,
Inventory and Equipment) are all located in the locations set forth on part 5
of Exhibit 6A as updated from time to time by Borrower. As of the execution of
this Agreement, the books and records of Borrower, and all of Borrowers
Chattel Paper and records of account are located at the chief executive office
of Borrower. 6.6 Tax Liabilities.Borrower has filed all material federal, state and
local tax reports and returns required by any law or regulation to be filed by
Borrower and has either duly paid all taxes, duties and charges indicated to be
due on the basis of such returns and reports or has made adequate provision for
the payment thereof, and the assessment of any material amount of additional
taxes in excess of those paid and reported is not reasonably expected. The
reserves for taxes reflected on Borrowers balance sheet are adequate in amount
for the payment of all liabilities for all taxes (whether or not disputed) of
Borrower accrued through the date of such balance sheet. There are no material
unresolved questions or claims concerning any tax liability of Borrower, except
as described on part 6 of Exhibit 6A. 6.7 Indebtedness and Producer Payables.Except as contemplated by this
Agreement, as disclosed on part 7 of Exhibit 6A and as disclosed on the
financial statements identified in Section 6.14, Borrower has no other
indebtedness, contingent obligations or liabilities, outstanding bonds, letters
of credit or acceptances to any other Person or loan commitments from any other
Person, other than accounts payable incurred in the ordinary course of
business. May 27, 2004 - 34 -




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6.8 Other Names.Borrower has not, during the preceding five (5) years,
been known by or used any names other than those disclosed on part 8 of Exhibit
6A. 6.9 Affiliates.Borrower has no Affiliates, other than its directors,
officers, agents and employees and those Persons disclosed on part 9 of Exhibit
6A as updated from time to time by Borrower, and the legal relationships of
Borrower to each such Affiliate are accurately and completely described
thereon. 6.10 Environmental Matters.Except as disclosed on part 10 of Exhibit 6A,
(a) Borrower has not received any notice to the effect, or has any knowledge,
that the Property or its operations are not in compliance with any of the
requirements of applicable federal, state and local environmental, health and
safety statutes and regulations (Environmental Laws)or are the subject of
any federal or state investigation evaluating whether any remedial action is
needed to respond to a release of any
toxic or hazardous waste or substance into the environment, which
noncompliance or remedial action could have a material adverse effect on the
business, operations, Property, assets or conditions (financial or otherwise)
of Borrower; (b) there have been no releases of hazardous materials at, on or
under the Property that, singly or in the aggregate could have a material
adverse effect on the business, operations, Property, assets or conditions
(financial or otherwise) of Borrower; (c) there are no underground storage
tanks, active or abandoned, including without limitation petroleum storage
tanks, on or under the Property that, singly or in the aggregate could have a
material adverse effect on the business, operations, Property, assets or
conditions (financial or otherwise) of Borrower; (d) Borrower has not directly
transported or directly arranged for the transportation of any hazardous
material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA 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 material claims against Borrower for any
remedial work, damage to natural resources or personal injury, including
without limitation, claims under CERCLA; and (e) no conditions exist at, on or
under the Property which, with the giving of notice, would rise to any material
liability under any Environmental Laws. 6.11 Existence.Each Borrower, except Lundy International, is a
corporation duly organized and in good standing under the laws of the State of
Delaware and is duly qualified to do business and is in good standing in all
states where such qualification is necessary, except for those jurisdictions in
which the failure so to qualify would not, in the aggregate, have a material
adverse effect on Borrowers financial condition, results of operations or
business. Lundy International is a corporation duly organized and in good
standing under the laws of the State of North Carolina and is duly qualified to
do business and is in good standing in all states where such qualification is
necessary, except for those jurisdictions in which the failure so to qualify
would not, in the aggregate, have a material adverse effect on Borrowers
financial condition, results of operations or business. 6.12 Authority.The execution and delivery by Borrower of this Agreement
and all of the other Financing Agreements and the performance of Borrowers
obligations hereunder and thereunder: (a) are within Borrowers powers; (b) are
duly authorized by Borrowers board of May 27, 2004 - 35 -




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directors or board of managers (as
applicable) and, if necessary, Borrowers Owners (and their respective
governing boards, members or governing persons, as applicable); (c) are not in
contravention of the terms of Borrowers articles or certificate of
incorporation or bylaws; (d) are not in contravention of any law or laws, or of
the terms of any indenture, agreement or undertaking to which Borrower is a
party or by which Borrower or any of Borrowers property is bound; (e) do not
require any consent, registration or approval of any Governmental Authority or
of any other Person, except such consents or approvals as have been obtained;
(f) do not contravene any contractual restriction or Governmental Requirement
binding upon Borrower; and (g) will not, except as contemplated or permitted by
this Agreement, result in the imposition of any lien, charge, security interest
or encumbrance upon any property of Borrower under any existing indenture,
mortgage, deed of trust, loan or credit agreement or other material agreement
or instrument to which Borrower is a party or by which Borrower or any of
Borrowers property may be bound or affected. Borrower
shall deliver to the Agent, upon the Agents request therefor, a written
opinion of counsel as to the matters described in the foregoing clauses (a)
through (g). 6.13 Binding Effect.This Agreement and all of the other Financing
Agreements set forth the legal, valid and binding obligations of Borrower and
are enforceable against Borrower in accordance with their respective terms,
subject to the effect of bankruptcy and other laws and judicial decisions
relating to or affecting the rights of creditors or secured creditors
generally. 6.14 Correctness of Financial Statements.The financial statements
delivered from time to time by Borrower to the Lenders present fairly the
financial condition of Borrower, and have been prepared in accordance with GAAP
consistently applied. Since the date of the most recent financial statements
delivered to the Lenders, there has been no materially adverse change in the
condition or operation of Borrower. 6.15 Employee Controversies.There are no controversies pending or
threatened between Borrower or any of Borrowers employees, other than employee
grievances arising in the ordinary course of Borrowers business or which are
not, in the aggregate, material to Borrowers financial condition, results of
operations or business. 6.16 Compliance with Laws and Regulations.Borrower is in compliance with
all Governmental Requirements relating to the business operations and the
assets of Borrower, except for violations of Governmental Requirements which
would not have a material adverse effect on the value of the Collateral or the
Lenders interest in any of the Collateral and, in the aggregate, would not
have a material adverse effect on Borrowers financial condition, results of
operations or business. 6.17 Account Warranties.Borrower warrants and represents to the Agent
that: (a) except as disclosed to the Agent from time to time in writing, all
Accounts which are at any time included in the Borrowing Base or which are
reflected on Borrowers financial statements delivered to the Agent pursuant to
Section 7.1 are genuine, in all respects what they purport to be, have not been
reduced to any judgment, are evidenced by not more than one executed May 27, 2004 - 36 -




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original
agreement, contract or document, and represent undisputed, bona fide
transactions completed in accordance with the terms and conditions of any
related document; (b) the Accounts have not been pledged, sold or assigned to
any Person other than the Agent; and (c) except as disclosed to the Agent from
time to time in writing, Borrower has no knowledge of any fact or circumstance
which would impair the validity or collectibility of any of the Accounts that
in the aggregate are material in amount. 6.18 Inventory Warranties.Borrower warrants and represents to the Agent
that: (a) except for Goods covered by Documents
which have been delivered to the Agent, and except as promptly disclosed
to the Agent from time to time in writing, all Inventory is located on the
premises described in Section 6.5 or is in transit; and (b) except as promptly
disclosed to the Agent from time to time in writing, all Inventory shall be of
good and merchantable quality, free from any defects which might materially
affect the market value of such Inventory. 6.19 Solvency.Borrower is solvent, able to pay Borrowers debts
generally as such debts mature, and has capital sufficient to carry on
Borrowers business and all businesses in which Borrower is about to engage.
The saleable value of Borrowers total assets at a fair valuation, and at a
present fair saleable value, is greater than the amount of Borrowers total
obligations to all Persons (taking into account, as applicable, rights of
contribution, subrogation and indemnity with regard to obligations shared with
others). Borrower will not be rendered insolvent by the execution or delivery
of this Agreement or of any of the other Financing Agreements or by the
transactions contemplated hereunder or thereunder. 6.20 Pension Reform Act.No events, including without limitation, any
reportable event or prohibited transactions, as those terms are defined in
the Employee Retirement Income Security Act of 1974 as the same may be amended
from time to time (ERISA), have occurred in connection with any type of plan,
arrangement, association or fund covered by ERISA in which any personnel of
Borrower or an Affiliate which is under common control with Borrower (within
the meaning of applicable provisions of the IRC) participate
(Benefit Plans).
The Benefit Plans are otherwise in compliance with all applicable provisions
of ERISA and the IRC and meet the minimum funding standards of ERISA and the
IRC. 6.21 Margin Security.Borrower does not own any margin security and none
of the loans advanced hereunder shall be used for the purpose of purchasing or
carrying any margin securities or for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase any margin securities or
for any other purpose not permitted by Regulations T, U or X of the Board of
Governors of the Federal Reserve System. 6.22 Investment Company Act Not Applicable.Borrower is not an
investment company, or a company controlled by an investment company,
within the meaning of the Investment Company Act of 1940, as amended. 6.23 Public Utility Holding Company Act Not Applicable.Borrower is not a
holding company, or a subsidiary company of a holding company, or an
affiliate of a May 27, 2004 - 37 -




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holding company:, or an affiliate of a subsidiary company
of a holding company, or a public utility, as such terms are defined in the
Public Utility Holding Company Act of 1935, as amended. 6.24 Full Disclosure.All factual information taken as a whole in the
materials furnished by or on behalf of Borrower to the Agent or any Lender for
purposes of or in connection with the transactions contemplated under this
Agreement and the other Financing Agreements, does not contain any untrue
statement of a material fact or omit to state any material fact necessary to
keep the statements contained therein from being misleading as of the date of
this Agreement, and thereafter as supplemented by information provided to the
Agent or the Lenders in writing pursuant to this Agreement. The financial
projections and other financial information furnished to the Agent and the
Lenders by Borrower and to be delivered under this Agreement, were prepared in
good faith on the basis of information and assumptions that Borrower believed
to be reasonable as of the date of such information. 6.25 Intellectual Property. Borrower owns or possesses (or will be
licensed or otherwise have the full right to use) all intellectual property
that is necessary for the operation of its business, without any known conflict
with the rights of others. No product of Borrower infringes upon any
intellectual property owned by any other Person and no claim or litigation is
pending or (to the knowledge of Borrower) threatened against or affecting such
Person, contesting its right to sell or to use any product or material, in any
case which could have a material adverse effect on the business, operations,
Property, assets or conditions (financial or otherwise) of Borrower. There is
no violation by Borrower of any right of Borrower with respect to any material
patent, trademark, trade name, service mark, copyright or license owned or used
by Borrower. 6.26 Survival of Warranties.All representations and warranties contained
in this Agreement or any of the other Financing Agreements shall survive the
execution and delivery of this Agreement and shall continue to be true and
correct (subject to the qualifications set forth therein) from the date of this
Agreement until the Liabilities shall be paid in full and the Lenders shall
cease to be committed to make Loans or issue Letters under this Agreement. 7 AFFIRMATIVE COVENANTS. Borrower covenants and agrees that so long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
the Lenders remain committed to make Loans or issue Letters under this
Agreement: 7.1 Financial and Other Information.Except as otherwise expressly
provided for in this Agreement, Borrower shall keep proper books of record and
account in which full and true entries will be made of all dealings and
transactions of or in relation to the business and affairs of Borrower, in
accordance with GAAP consistently applied, and Borrower shall cause to be
furnished to the Agent (with copies to the other Lenders) from time to time and
in a form May 27, 2004 - 38 -




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reasonably acceptable to the Agent, such information as the Agent may
reasonably request, including without limitation, the following: (a) as soon as practicable and in any event within ninety (90) days after
the end of each fiscal year of Borrower, (i) audited statements of income,
retained earnings and cash flow of Borrower for each year, and a balance sheet
of Borrower for such year, setting forth in each case, in comparative form,
corresponding figures as of the end of the preceding fiscal year, all in
reasonable detail and reasonably satisfactory in scope to the Agent and
certified to Borrower by such independent public accountants as are selected by
Borrower and reasonably satisfactory to the Agent, whose opinion shall be in
scope and substance reasonably satisfactory to the Required Lenders; (ii) a
management discussion and analysis of operations as included in the annual
report; and (iii) detailed annual operating and capital budgets for the next
(then current) Fiscal Year, commencing with Fiscal Year 2005; (b) (i) as soon as practicable and in any event within forty five (45)
days after the end of each fiscal quarter of Borrower except the last fiscal
quarter of each Fiscal Year of Borrower, a management discussion and analysis
of operations, and (ii) as soon as practicable and in any event within thirty
(30) days after the end of each fiscal quarter of Borrower, a compliance
certificate of the chief financial officer or controller of Borrower in
substantially the form attached as Exhibit 7A (Compliance Certificate); (c) as soon as practicable and in any event within thirty (30) days after
the end of each monthly accounting period in each fiscal year of Borrower: (i)
statements of income and retained earnings of Borrower for such monthly period
and for the period from the beginning of the then current fiscal year to the
end of such monthly period, and a balance sheet of Borrower as of the end of
such monthly period, setting forth in each case, in comparative form, figures
for the corresponding periods in the preceding fiscal year, all in reasonable
detail and certified as materially accurate by the chief financial officer or
controller of Borrower, subject to changes resulting from normal year-end
adjustments; (d) as soon as practicable and in any event within thirty (30) days after
the end of each monthly accounting period in each Fiscal Year of Borrower, a
Borrowing Base Certificate for Borrower computed as of the last day of such
month, signed by the chief financial officer or controller of Borrower
(however, monthly Borrowing Base Certificates will not be required so long as
the then most recent Compliance Certificate shows (a) Borrowers Leverage
Ratio, using the EBITDA calculations referred to in Section 7.6(c), is less
than 2.50 to 1.0 and (b) the Borrowing Base Limit is greater than or equal to
$50,000,000); (e) at the time of the delivery of the financial statements as required by
Section 7.1(a), and in the event that a Compliance Certificate previously
delivered as of the last fiscal quarter of the Fiscal Year of Borrower is
incorrect in any material respect based on such financial statements, a
corrected Compliance Certificate. May 27, 2004 - 39 -




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7.2 Conduct of Business.Except as contemplated by this Agreement,
Borrower shall: (a) maintain Borrowers existence and maintain in full force
and effect all material licenses, bonds, franchises, leases, patents, contracts
and other rights necessary to the conduct of Borrowers business; (b)
continue in, and limit Borrowers operations to, the same general line of
business as that presently conducted by Borrower; (c) comply with all
Governmental Requirements, except for such violations of Governmental
Requirements which would not, in the aggregate, have a material adverse effect
on Borrowers financial condition, results of operations or business; (d) keep
and conduct Borrowers business separate and apart from the business of
Borrowers Affiliates; and (e) otherwise do all things necessary to make the
Representations and Warranties set forth in Section 6 of this Agreement true
and correct (subject to the qualifications set forth therein) at all times. 7.3 Maintenance of Properties.Borrower shall keep Borrowers real
estate, leaseholds, equipment and other fixed assets in good condition, repair
and working order, normal wear and tear excepted. Borrower shall not allow
Collateral to be placed on consignment without the written consent of the
Agent, which consent shall not be unreasonably withheld, provided that in
connection therewith Borrower shall execute and deliver all financing
statements or other documents and pay the cost of filing or recording the same
in all public offices as deemed necessary by the Agent to perfect and keep
perfected the security interest in the Collateral granted by Borrower to the
Agent and otherwise to protect and preserve the Collateral and the Agents
security interests therein. Borrower shall keep the Inventory in good and
merchantable condition and shall, as applicable, clean, feed, shelter, store,
secure, refrigerate, water, medicate, fumigate, fertilize, cultivate, irrigate,
prune, process and otherwise maintain the Inventory in accordance with the
standards and practices adhered to generally by others in the same businesses
as Borrower. If Borrower shall intend to make any change in the location of
its chief executive office or the location of Collateral other than Collateral
in the hands of third parties, Borrower shall notify the Agent at least 30 days
prior to such change. Borrower shall, as soon as practicable and in no event
later than thirty (30) days after the end of each calendar quarter of Borrower,
if any change in the location of Collateral in the hands of third parties has
occurred during the calendar quarter, deliver to the Agent written notice of
each such change, which shall include, at a minimum (i) the name of the third
party who has possession of the Collateral, (ii) the address of such third
party location, (iii) the name of a contact person at such third party
location, (iv) the telephone number of such contact person, and (v) the total
capacity of the facility where the Collateral is located. With regard to
Collateral in the hands of third parties, Borrower shall execute and deliver
such financing statements or other documents and pay the cost of filing or
recording the same in all public offices as deemed necessary by the Agent to
perfect and keep perfected the security interest in the Collateral granted by
Borrower to the Agent and otherwise to protect and preserve the Collateral and
the Agents security interests therein. 7.4 Borrowers Liability Insurance.Borrower shall maintain, at
Borrowers expense, such liability insurance (including as applicable
commercial general liability insurance, products liability insurance and
workmans compensation insurance) as is ordinarily maintained by other
companies in similar businesses, provided, however, that in no event shall such
liability May 27, 2004 - 40 -




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insurance provide for coverage less than $1,000,000 per occurrence
for personal injury and $1,000,000 per occurrence for property damage.
Borrowers liability insurance may provide for a deductible of not more than
$500,000 per occurrence. All such policies of insurance shall be in form and with
insurers reasonably acceptable to the Agent and copies thereof, together with
all amendments and schedules, shall be provided to the Agent within ten (10)
days of Borrowers receipt of the same. 7.5 Borrowers Property Insurance.Borrower shall bear the full risk of
loss from any cause of any nature whatsoever in respect to the Collateral. At
Borrowers own cost and expense, Borrower shall keep all Collateral fully
insured, with carriers, and in amounts acceptable to the Agent, against the
hazards of fire, theft, collision, spoilage, hail, those covered by extended or
all risk coverage insurance and such others as may be reasonably required by
the Agent. Borrower shall cause to be delivered to the Agent the insurance
policies therefor or proper certificates evidencing the same. Such policies
shall provide, in a manner reasonably satisfactory to the Agent, that any
losses under such policies shall be payable first to the Agent, for the ratable
benefit of the Lenders, as the Agents interest may appear. Each such policy
shall include a provision for written notice to the Agent not less than thirty
(30) days prior to any cancellation or expiration and show the Agent, as agent
for the benefit of the Lenders, as mortgagee and loss payee as provided in a
form of loss payable endorsement in form and substance reasonably satisfactory
to the Agent. In the event of any loss covered by any such policy, the carrier
named in such policy is directed by Borrower to make payment for such loss to
the Agent, for the ratable benefit of the Lenders, and not to Borrower.
Borrower makes, constitutes and appoints the Agent (and all Persons designated
by the Agent) as Borrowers true and lawful agent and attorney-in-fact, with
power to make, settle or adjust claims under such policies of insurance
(provided, however, that so long as there shall not have occurred a Matured
Default, the Agent shall consult with Borrower prior to finally making,
settling or adjusting claims under such policies of insurance and will not
settle such claims without Borrowers consent, which consent will not be
unreasonably withheld). The foregoing power of attorney is coupled with an
interest and is therefore irrevocable. If payment as a result of any insurance
losses shall be paid by check, draft or other Instrument payable to Borrower,
or to Borrower and the Agent jointly, the Agent may endorse the name of
Borrower on such check, draft or other Instrument, and may do such other things
as the Agent may deem advisable to reduce the same to cash. All loss
recoveries received by the Agent on account of any such insurance may be
applied and credited by the Agent to the Liabilities, provided however, in any
event, if the payment as a result of any insurance loss is less than
$12,000,000, in the absence of a Matured Default, Borrower may apply the
payment to the cost of restoring or replacing the Collateral or the portions
thereof so damaged or destroyed. The Agent shall pay to Borrower any unapplied
or unused surplus of insurance proceeds. Borrower shall pay to the Agent, on
demand, the amount of any deficiency in the Collateral reasonably determined by
the Agent to exist after the application of insurance proceeds to the
Liabilities. If Borrower fails to procure insurance as provided in this
Agreement, or to keep the same in force, or fails to perform any of Borrowers
other obligations hereunder, then the Agent may, at the option of the Agent or
the Required Lenders, and without obligation to do so, obtain such insurance
and pay the premium thereon for the account of Borrower, or make whatever other
payments the Agent or the Required Lenders May 27, 2004 - 41 -




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may deem appropriate to protect the
Lenders security for the Liabilities. Any such payments shall be additional
Liabilities of Borrower to the Lenders, payable on demand and secured by the
Collateral. To the extent the provisions relating to insurance in a mortgage,
deed of trust, leasehold mortgage or leasehold deed of trust are different from the
provisions relating to insurance in this Section 7.5, the provisions relating
to insurance in the mortgage, deed of trust, leasehold mortgage or leasehold
deed of trust shall be controlling with respect to the Property covered
thereby. 7.6 Financial Covenants and Ratios.Borrower shall maintain: (a) As of the end of fiscal year 2004 of Borrower (March 27, 2004) and
each fiscal quarter of Borrower thereafter, a minimum Tangible Net Worth of not
less than $200,000,000, plus 75% of the positive cumulative fiscal year end
audited net income for Fiscal Year 2005 and each Fiscal Year thereafter (with
said 75% of positive cumulative fiscal year end audited net income to be
applicable at the end of each quarter end calculation in the following fiscal
year without regard to quarterly net income earned in that following fiscal
year); (b) As of the end of each fiscal quarter of Borrower, a minimum Working
Capital of not less than $75,000,000; (c) As of the end of each fiscal quarter of Borrower, a minimum EBITDA, as
follows: (i) a four (4) quarter minimum rolling EBITDA average during the most
recent five (5) quarters of $50,000,000 as of the end of the first quarter of
fiscal year 2005; (ii) a four (4) quarter minimum rolling EBITDA average during
the most recent six (6) quarters of $50,000,000 as of the end of the second
quarter of fiscal year 2005; (iii) a four (4) quarter minimum rolling EBITDA
average during the most recent seven (7) quarters of $50,000,000 as of the end
of the third quarter of fiscal year 2005; (iv) a four (4) quarter minimum
rolling EBITDA average during the most recent eight (8) quarters of $50,000,000
as of the fiscal year ended March 2005; (v) a four (4) quarter minimum rolling
EBITDA average during the most recent eight (8) quarters of $55,000,000 through
the fiscal year ending March 2006, and; (vi) a four (4) quarter minimum rolling
EBITDA average during the most recent eight (8) quarters of $60,000,000 as of
the end of the first quarter of fiscal year 2007 and as of the end of each
quarter of each fiscal year thereafter; (d) As of the end of each fiscal quarter of Borrower, a maximum Leverage
Ratio, using the EBITDA calculations referred to in the preceding Section
7.6(c), as follows: (i) 6.00 to 1.00 through the fiscal year ended March 2006;
(ii) 5.00 to 1.00 through the fiscal year ended March 2007, and (iii) 4.00 to
1.00 thereafter. 7.7 Benefit Plans.Borrower shall: (a) keep in full force and effect any
and all Benefit Plans which are presently in existence or may, from time to
time, come into existence under ERISA, unless such Benefit Plans can be
terminated without material liability to Borrower in connection with such
termination (as distinguished from any continuing funding obligation); (b) make
contributions to all Benefit Plans in a timely manner and in an amount
sufficient to May 27, 2004 - 42 -




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comply in all material respects with the requirements of ERISA;
(c) comply in all material respects with all requirements of ERISA
which relate to such Benefit Plans; and (d) notify the Agent immediately
upon receipt by Borrower of any notice of the institution of any proceeding or
other action relating to any Benefit Plans that would reasonably be expected to
have a material adverse effect on Borrower or its financial condition. 7.8 Notice of Suit, Adverse Change in Business or Default.Borrower
shall, as soon as possible, and in any event within five (5) days after
Borrower learns of the following, give written notice to the Agent of: (a) any
proceeding being instituted or threatened to be instituted by or against
Borrower in any federal, state, local or foreign court or before any commission
or other regulatory body (federal, state, local or foreign) for which claimed
damages exceed $5,000,000; (b) any material adverse change in the business,
assets or condition, financial or otherwise, of Borrower; and (c) the
occurrence of any Default. 7.9 Use of Proceeds.Borrower shall use Advances only for the purposes
stated in Section 2.4 and for no other purpose. 7.10 Books and Records.Borrower shall maintain proper books of record
and account in accordance with GAAP consistently applied in which true, full
and correct entries will be made of all their respective dealings and business
affairs. If any changes in accounting principles are hereafter required or
permitted by GAAP and are adopted by Borrower with the concurrence of its
independent certified public accountants and such changes in GAAP result in a
change in the method of calculation or the interpretation of any of the
financial covenants, standards or terms found in Section 7.6 or any other
provision of this Agreement, Borrower and the Required Lenders agree to amend
any such affected terms and provisions so as to reflect such changes in GAAP
with the result that the criteria for evaluating Borrowers financial condition
shall be the same after such changes in GAAP as if such changes in GAAP had not
been made. 8 NEGATIVE COVENANTS. Borrower covenants and agrees that so long as any Liabilities remain
outstanding, and (even if there shall be no Liabilities outstanding) so long as
the Lenders remain committed to make Loans or issue Letters under this
Agreement (unless the Agent, with the written approval of the Required Lenders,
shall give the Agents prior written consent): 8.1 Encumbrances.Except for those liens, security interests and
encumbrances presently in existence and reflected in Borrowers financial
statements referred to in Section 6.14 and disclosed in Exhibit 6A under
Section 6.4, Borrower shall not create, incur, assume or suffer to exist any
security interest, mortgage, pledge, lien, capitalized lease, levy, assessment,
attachment, seizure, writ, distress warrant, or other encumbrance of any nature
whatsoever on or with regard to any of Borrowers assets (including without
limitation, the Collateral) other than: (a) liens securing the payment of
taxes, either not
yet due or the validity of which is being contested in good faith by
appropriate proceedings, and as to which Borrower shall, if appropriate under
GAAP, have set aside on Borrowers books and records adequate reserves; (b) May 27, 2004 - 43 -




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liens securing deposits under workmens compensation, unemployment insurance,
social security and other similar laws, or securing the performance of bids,
tenders, contracts (other than for the repayment of borrowed money) or leases,
or securing indemnity, performance or other similar bonds for the performance
of bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or securing statutory obligations or surety bonds, or securing
indemnity, performance or other similar bonds in the ordinary course of
Borrowers business, which are not past due; (c) liens securing appeal bonds
securing judgments not in excess of $5,000,000; (d) liens and security
interests in favor of the Agent for the ratable benefit of the Lenders; (e)
liens securing the interests of Broker in any Margin Account; (f) zoning
restrictions, easements, licenses, covenants and other restrictions affecting
the use of Borrowers real property, and other liens, security interests and
encumbrances on property which are subordinate to the liens and security
interests of the Lenders and which do not, in the Agents sole determination:
(i) materially impair the use of such property, or (ii) materially lessen the
value of such property for the purposes for which the same is held by Borrower;
(g) purchase money security interests securing (i) up to $10,000,000 in the
aggregate in existence at any one time for the purpose of constructing or
making improvements to Borrowers fertilizer plant in Missouri, and (ii)
indebtedness permitted under Section 8.4(e) (provided, in each case, that no
such purchase money security interests shall extend to or cover other property
of Borrower other than the items of property constructed, acquired or
improved); (h) liens existing under Section 4-210 of the Code; (i) liens being
contested in good faith by appropriate proceedings and as to which Borrower has
established adequate reserves in accordance with GAAP, but in no event
exceeding $5,000,000 in the aggregate in existence at any one time; and (j)
liens on property acquired in a Permitted Acquisition to secure indebtedness
permitted under Section 8.4(d). 8.2 Consolidations, Mergers, Acquisitions or Change in Ownership.
Borrower shall not recapitalize or consolidate with, merge with, or otherwise
acquire all or substantially all of the assets or properties of any other
Person, or acquire or create new subsidiaries except that: (a) Borrower may
make Permitted Acquisitions, (b) Premium may enter into any transaction to
raise equity capital which transaction does not result in a change of ownership
of Premium by CGC as described below, (c) Premium may merge with Parent or
another Borrower, provided that Premium is the survivor of the merger, and (d)
subject to the foregoing, any Borrower may merge with any other Borrower. CGC
shall at all times maintain, directly or indirectly, ownership of not less than
25% of Premiums stock. 8.3 Deposits, Investments, Advances or Loans.Borrower shall not make or
permit to exist deposits, investments, advances or loans (other than loans
existing on the date of the execution of this Agreement and disclosed to the
Agent in writing on or prior to such date) in or to Affiliates or any other
Person, except: (a) investments in short term direct obligations of the United
States Government; (b) investments in obligations of any state or political
subdivision thereof or any agency or instrumentality of such state or political subdivision; (c)
investments in negotiable certificates of deposit or time or demand deposits
issued by a bank, bank holding company, savings and loan association, trust
company, or other financial institution satisfactory to the Agent in the
Agents reasonable discretion, made payable to the order of Borrower or to
bearer; (d) bonds, notes or other obligations of any publicly held company
which at the time of May 27, 2004 - 44 -




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their purchase are rated in either of the two highest
rating categories by a nationally recognized rating service; (e) money market
mutual funds that are registered with the federal Securities and Exchange
Commission and that invest only in bonds, notes or other similar obligations
that are rated in either of the two highest rating categories by a nationally
recognized rating service; (f) secured loans to Persons that are finishing hogs
under written contracts with Borrower, provided however, that said secured
loans together with any guaranties permitted under Section 10.5(c) shall not
exceed $3,000,000 in the aggregate at any one time outstanding, and provided
further, that the collateral for each such loan shall be reasonably acceptable
to the Agent, and that Borrower shall promptly after the request of the Agent,
execute such agreements, instruments and/or documents and/or take such actions
as may be necessary to assign the lenders interest in such secured loans and
such collateral to the Agent as additional Collateral for the ratable benefit
of the Lenders; (g) loans to officers, directors or employees as and when
permitted by Section 8.8; (h) demand deposits not to exceed $100,000 in the
aggregate at any one time outstanding; (i) investments incidental to Permitted
Acquisitions; and (j) deposits, investments, advances or loans in or to
Affiliates or shareholders of Borrower not in excess of $5,000,000 in the
aggregate at any one time outstanding. This Section 8.3 shall not restrict
deposits, investments, advances or loans by a Borrower in or to another
Borrower. 8.4 Indebtedness.Except for those obligations and that indebtedness
presently in existence and reflected in Borrowers financial statements
referred to in Section 6.14 or referred to in Section 6.7, Borrower shall not
incur, create, assume, become or be liable in any manner with respect to, or
permit to exist, any obligations or indebtedness, direct or indirect fixed or
contingent, including obligations under capitalized leases, except: (a) the
Liabilities; (b) obligations secured by liens or security interests permitted
under Section 8.1 or contingent obligations permitted under Section 8.5; and
(c) trade obligations, Producer Payables and normal accruals in the ordinary
course of Borrowers business not yet due and payable, or with respect to which
Borrower is contesting in good faith the amount or validity thereof by
appropriate proceedings, and then only to the extent that Borrower has set
aside on Borrowers books adequate reserves therefor, if appropriate under
GAAP; (d) indebtedness incurred or assumed as part of a Permitted Acquisition;
and (e) other indebtedness not exceeding $10,000,000 in the aggregate at any
one time outstanding. 8.5 Guarantees and Other Contingent Obligations.Except as permitted
under Section 8.4, Borrower shall not guarantee, endorse or otherwise in any
way become or be responsible for obligations of any other Person, whether by
agreement to purchase the indebtedness of such Person or through the purchase
of Goods, supplies or services, or maintenance of working capital or other
balance sheet covenants or conditions, or by way of stock purchase, capital
contribution, advance or loan for the purpose of paying or discharging any
indebtedness or obligation of such Person or
otherwise, except: (a) for endorsements of negotiable Instruments for
collection in the ordinary course of business; (b) that Borrower may indemnify
Borrowers officers, directors and managers to the extent permitted under the
laws of the State in which Borrower is organized and may indemnify (in the
customary manner) underwriters and any selling shareholders in connection with
any public offering of Borrowers securities; (c) guaranties by one Borrower of
indebtedness of another Borrower that is permitted May 27, 2004 - 45 -




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under Section 8.4; (d)
guaranties of secured loans to Persons that are finishing hogs under written
contracts with Borrower, provided however, that said guaranties together with
any secured loans permitted under Section 10.3(e) shall not exceed $3,000,000
in the aggregate at any one time outstanding; and (e) other guaranties not
exceeding $5,000,000 in the aggregate at any one time outstanding. 8.6 Disposition of Property.Except as set forth on Exhibit 8A, as
permitted by Section 5.14, and except for the disposition of obsolete or worn
out property in the ordinary course of business, Borrower shall not sell,
lease, transfer or otherwise dispose of any of Borrowers properties, assets or
rights. 8.7 Capital Investment Limitations.Borrower shall not purchase, invest
in or otherwise acquire additional real estate, equipment or other fixed assets
(other than the replacement of breeding animals in the ordinary course of
business or relating to Permitted Acquisitions) which would cause its Net
Capital Expenditures in any Fiscal Year to exceed the lesser of (a) $30,000,000
plus 75% of EBITDA in excess of $60,000,000 during the Fiscal Year or (b) 125%
of depreciation during the Fiscal Year, excluding depreciation of breeding
stock. Provided, however 50% of the unused amount of the limit for Borrowers
2005 Fiscal Year and Borrowers Fiscal Years thereafter (in each case without
giving effect to this carryover provision) may be carried forward into
Borrowers 2006 Fiscal Year and into the following Fiscal Years, respectively. 8.8 Loans to Officers, Directors or Employees.Except for advances for
travel and expenses to Borrowers officers, directors or employees in the
ordinary course of Borrowers business, Borrower shall not make any loans to
any officers or directors of Borrower in excess of $500,000 in the aggregate
outstanding at any one time. 8.9 Distributions in Respect of Equity, Prepayment of Debt.Borrower
shall not directly or indirectly: (a) redeem any of Borrowers shares of
capital stock; (b) declare any dividends in any year on any class of Borrowers
capital stock, provided however, that a Borrower may pay dividends to another
Borrower in any amount and Premium may pay dividends to Parent in any one
Fiscal Year of not more than $500,000 in the aggregate; or (c) prepay any
principal, interest or other payments on or in connection with any Interest
Bearing Debt of Borrower other than the Liabilities. 8.10 Amendment of Organizational Documents.Borrower shall not amend
Borrowers articles or certificate of incorporation, bylaws or any other agreement, instrument or
document affecting Borrowers organization, management or governance or form
any subsidiaries except to the extent permitted in Section 8.2. 8.11 Lease Limitations.Borrowers financial obligations under all
operating leases, synthetic leases and similar agreements, other than
capitalized leases, shall not exceed $12,000,000 in the aggregate for any
fiscal year of Borrower. May 27, 2004 - 46 -




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8.12 Use of Names or Trademarks.Except as set forth in this Section
8.12, Borrower shall not use any trademarks or trade names with respect to
Inventory except for such trademarks or trade names as have been properly
licensed to the Agent for the ratable benefit of the Lenders. Borrower may
package Inventory for sale to customers using those customers trademarks or
trade names provided that: (a) the customer is creditworthy, in the reasonable
determination of the Borrower; and (b) the Inventory so packaged is covered by
a purchase order from the customer (or is reasonably expected by Borrower to be
covered by a purchase order from the customer within 10 days of the date the
Inventory is ready to be sold). 9 DEFAULT AND RIGHTS AND REMEDIES; THE AGENT. 9.1 Liabilities.Upon a Matured Default, the Agent may with the consent
of the Required Lenders, and shall at the request of the Required Lenders, by
notice to Borrower and the Lenders, (i) declare the Commitments to be
terminated, whereupon such obligations and the Commitments of each Lender shall
terminate, and (ii) declare all of the Liabilities to be due and payable,
whereupon the Liabilities shall become and be due and payable, without
presentment, demand, protest or further notice (including without limitation,
notice of intent to accelerate and notice of acceleration) of any kind, all of
which are expressly waived by Borrower. Anything herein to the contrary
notwithstanding, it is understood that (i) no Lender shall have the individual
right upon the occurrence of a Default or a Matured Default to terminate or
suspend the funding of its Commitments or accelerate any Liabilities owed to it
(such termination, suspension of funding and/or acceleration to occur, if at
all, only upon action by the Agent as provided in this Agreement), and (ii) no
Lender shall have the right to individually enforce any Financing Agreement
which is entered into with or for the Agent, such enforcement residing with the
Agent as contemplated by the following Section 9.2 of this Agreement and by the
applicable provisions of the other Financing Agreements. 9.2 Rights and Remedies.Upon the occurrence and during the continuance
of any Matured Default, the Agent may with the consent of the Required Lenders
(subject to the provisions of the other Financing Agreements), and shall at the
direction of the Required Lenders, proceed to protect and enforce the rights of
the Lenders as set forth in this Section 9.2. (a) Rights and Remedies Generally.The Agent may proceed by suit in
equity, by action at law or both, whether for the specific performance of any
covenant or agreement contained in this Agreement or in any other Financing
Agreement or in aid of the exercise of any power granted in this Agreement or
any other Financing Agreement, (i) to enforce the payment of the Liabilities,
or (ii) to foreclose upon any liens, claims, security interests and/or
encumbrances granted pursuant to this Agreement and other Financing Agreements
in the manner set forth therein; it being intended that no remedy conferred
herein or in any of the other Financing Agreements is to be exclusive of any
other remedy, and each and every remedy contained herein or in any other
Financing Agreement shall be cumulative and shall be in addition to every other
remedy given hereunder and under the other Financing Agreements, or at any time
existing at law or in equity or by statute or otherwise. Agent shall have, in
addition to any other rights and remedies contained in this Agreement or in any
of the other Financing May 27, 2004 - 47 -




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Agreements, all of the rights and remedies of a secured
party under the Code or other applicable laws. In addition to all such rights
and remedies, the sale, lease or other disposition of all or any part of the
Collateral by the Agent after a Matured Default, may be for cash, credit or
both, and the Agent may purchase all or any part of the Collateral at public
or, if permitted by law, private sale, and in lieu of actual payment of such
purchase price, may setoff the amount of such purchase price against the
Liabilities then owing. Any sales of the Collateral may involve the sale of
portions of the Collateral at different times, and at different locations, and
may, at the Agents option, be held at a site or sites different from the site
at which all or any part of the Collateral is located. Any such sales, at the
Agents option, may be in conjunction with or separate from the foreclosure of
any mortgage or deed of trust on any Collateral consisting of real property,
and may be adjourned from time to time with or without notice. The Agent may,
in its sole discretion, cause the Collateral to remain on Borrowers premises,
at Borrowers expense, pending sale or other disposition of the Collateral.
The Agent shall have the right to conduct such sales on Borrowers premises, at
Borrowers expense, or elsewhere, on such occasion or occasions as the Agent
may see fit. With regard to Collateral in the possession of third Persons, the
Agent shall have the right to deliver to each such Person at such address as is
provided to the Agent in accordance with Section 6.5 and/or Section 7.3, the
notice letter executed by Borrower in connection herewith in the form attached
hereto as Exhibit 9A (Notice Letter). (b) Entry upon Premises.The Agent shall have the right to enter upon the
premises of Borrower at which any of the Collateral is located (or is believed
to be located) without incurring any obligation to pay rent to Borrower, or any
other place or places where the Collateral is located (or is believed to be
located) and kept, and remove the Collateral therefrom to the premises of the
Agent or any agent of the Agent, for such time as the Agent may desire, in
order to effectively collect or liquidate the Collateral, or the Agent may
require Borrower to assemble the Collateral and make it available to the Agent
at a place or places to be designated by the Agent which is reasonably
convenient to both parties. Borrower expressly agrees that the Agent may, if
necessary to gain occupancy to the premises at which Collateral is located (or
is believed to be located), without further notice to Borrower: (a) hire
Borrowers employees to assist in the loading and transportation of such
Collateral; (b) utilize Borrowers equipment for use in such operation; (c) cut
or otherwise temporarily move or remove any barbed wire or other
fencing or similar boundary-maintenance devices; and (d) pick or otherwise
render inoperative any locks on any property not customarily inhabited by
people. Borrower agrees that any such actions authorized by this Section shall
be authorized and not a breach of the peace if the Agent takes reasonable
efforts to safeguard all of Borrowers property. (c) Sale or Other Disposition of Collateral by the Agent.Any notice
required to be given by the Agent of a sale, lease or other disposition or
other intended action by the Agent with respect to any of the Collateral which
is deposited in the United States mail, postage prepaid and duly addressed to
Borrower at the address specified in Section 10.19, at least ten (10) business
days prior to such proposed action, shall constitute fair and commercially
reasonable notice to Borrower of any such action. The net proceeds realized by
the Agent upon any such sale or other disposition, after deduction for the
expense of retaking, holding, preparing for sale, May 27, 2004 - 48 -




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selling or the like, and the
reasonable legal fees and expenses and other proper fees and expenses incurred
by the Agent in connection therewith, shall be applied toward satisfaction of
the Liabilities. The Agent shall account to Borrower for any surplus realized
upon such sale or other disposition, and Borrower shall remain liable for any
deficiency. The commencement of any action, legal or equitable, or the
rendering of any judgment or decree for any deficiency, shall not affect the
Agents security interest in the Collateral until the Liabilities shall have
been paid in full. 9.3 Waiver of Demand.Borrower expressly waives demand, presentment,
protest, and notice of nonpayment, notice of intent to accelerate and notice of
acceleration. Borrower also waives the benefit of all valuation, appraisal and
exemption laws. 9.4 Waiver of Notice.Upon the occurrence and during the continuance of
any Matured Default, Borrower waives, to the fullest extent permitted by
applicable law, all rights to notice and hearing of any kind prior to the
exercise by the Agent of the Agents rights to repossess the Collateral without
judicial process or to replevy, attach or levy upon the Collateral. 9.5 Authorization and Action.Each Lender appoints the Agent as its Agent
under, and irrevocably authorizes the Agent (subject to Section 9.11) to take
such action on its behalf and to exercise such powers under any Financing
Agreement as are delegated to the Agent by the terms thereof, together with
such powers as are reasonably incidental thereto. Without limitation of the
foregoing, each Lender expressly authorizes the Agent to execute, deliver, and
perform its obligations under each of the Financing Agreements to which the
Agent is a party, and to exercise all rights, powers, and remedies that the
Agent may have thereunder. As to any matters not expressly provided for by this
Agreement, the Agent shall not be required to exercise any discretion or take
any action, but shall be required to act, or to refrain from acting (and shall
be fully protected in so acting or refraining from acting), upon the
instructions of the Required Lenders, and such instructions shall be binding
upon all the Lenders and all holders of any Note; provided however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable law. The Agent agrees to
give to each Lender prompt notice of each notice given to it by Borrower
pursuant to the terms of any Financing Agreement. Without limiting the right
of the Agent (and designated Persons) to conduct inspections at any reasonable
time in accordance with Section 10.7, it is expected that the Agent shall
conduct examinations of the collateral, including a review of the Companys
books and records and will perform these periodic inspections no less
frequently than annually. However, these periodic collateral inspections shall
not be conducted unless they are requested in a writing signed by the Required
Lenders or deemed appropriate by the Agent, so long as the then most recent
Compliance Certificate shows (a) Borrowers Leverage Ratio (with EBITDA
calculated based on the then prior four fiscal quarters of Borrower) is less
than 3.00 to 1.0 and (b) the Borrowing Base Limit is greater than or equal to
$50,000,000. 9.6 Agents Reliance, Etc.Neither the Agent nor any of its directors,
officers, agents or employees shall be liable to any Lender for any action
taken or omitted to be taken by it or them under or in connection with any
Financing Agreement, except for its or their own gross May 27, 2004 - 49 -




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negligence or willful
misconduct. Without limiting the generality of the foregoing, the Agent: (a)
may treat the original or any successor holder of any Note as the holder
thereof until it receives notice from the Lender which is the payee of such
Note concerning the assignment of such Note; (b) may employ and consult with
legal counsel (including counsel for Borrower), independent public accountants,
and other experts selected by it and shall not be liable to any Lender for any
action taken, or omitted to be taken, in good faith by it or them in accordance
with the advice of such counsel, accountants, or experts received in such
consultations and shall not be liable for any negligence or misconduct of any
such counsel, accountants or other experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
opinions, certifications, statements, warranties or representations made in or
in connection with any Financing Agreement; (d) shall not have any duty to any
Lender to ascertain or to inquire as to the performance or observance of any of
the terms, covenants, or conditions of any Financing Agreement or any other
instrument or document furnished pursuant thereto or to satisfy itself that all
conditions to and requirements for any Loan have been met or that Borrower is
entitled to any Loan or to inspect the property (including the books and
records) of Borrower; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or
value of any Financing Agreement or any other instrument or document furnished
pursuant thereto; and (f) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate, or other instrument
or writing (which may be by telegram, cable, telex, or otherwise) believed by
it to be genuine and signed or sent by the proper party or parties. 9.7 Notices of Defaults.Except as provided in this Section 9.7, the
Agent shall not be deemed to have knowledge of the occurrence of a Default or a
Matured Default unless the Agent has received written notice from a Lender or
Borrower specifying such Default or Matured Default and stating that such
notice is a Notice of Default. Notwithstanding the foregoing, the Agent
shall be deemed to have knowledge of the occurrence of a Default or a Matured
Default: (a) consisting of the non-payment of principal or interest, on the due
date of such principal or interest, (b) on the date the Agent has received a
Compliance Certificate of Borrower as required by Section 7.1, which
Compliance Certificate discloses (without review of any financial statements
attached thereto) the existence of any Default or Matured Default, and (c) ten
(10) Business Days after the date the Agent has received a Compliance
Certificate of Borrower as required by Section 7.1, which Compliance
Certificate (after review of any financial statements attached thereto) would
disclose the existence of any Default or Matured Default. In the event that
the Agent obtains such knowledge of the occurrence of a Default or a Matured
Default, the Agent shall within three (3) Business Days thereafter, give prompt
notice thereof to the Lenders. The Agent shall (subject to Sections 9.1 and
9.2) take such action with respect to such Default or Matured Default as may be
directed by the Required Lenders; provided that, unless and until the Agent
shall have received the directions referred to in Sections 9.1 and 9.2, the
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Matured Default as it shall
deem advisable and in the best interest of the Lenders. May 27, 2004 - 50 -




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9.8 The Agent as a Lender, Affiliates.With respect to its Commitment,
any Loan made by it, and the Note issued to it, the Agent shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not the Agent; and the term Lender or Lenders shall,
unless otherwise expressly indicated, include the Agent in its individual
capacity. The Agent and its Affiliates may accept deposits from, lend money to,
act as trustee under indentures of, and generally engage in any kind of
business with, Borrower, any of its respective Affiliates and any Person who
may do business with or own securities of Borrower or any such Affiliate, all
as if the Agent were not the Agent and without any duty to account therefor to
the Lenders. 9.9 Non-Reliance on Agent and Other Lenders.Each Lender agrees that it
has, independently and without reliance on the Agent or any other Lender, and
based on such documents and information as it has deemed appropriate, made its
own credit analysis of Borrower and its decision to enter into the transactions
contemplated by the Financing Agreements and that it will, independently and
without reliance upon the Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own analysis and decisions in taking or not taking action under any
Financing Agreement. The Agent shall not be required to keep itself informed as
to the performance or observance by Borrower or any other Person of any
Financing Agreement or to inspect the properties or books of Borrower. Except
for notices, reports, and other documents and information expressly required to
be furnished to the Lenders by the Agent hereunder, the Agent shall not have
any duty or responsibility to provide any Lender with any credit or other
information concerning the affairs, financial condition or business of Borrower
(or any of their Affiliates) which may come into the possession of the Agent or
any of its Affiliates. Notwithstanding the foregoing, the Agent will, upon the
request of any Lender, provide to such Lender, at such Lenders expense, copies
of any and all written information provided to the Agent by Borrower. 9.10 Indemnification.Notwithstanding anything to the contrary herein
contained, the Agent shall be fully justified in failing or refusing
to take any action unless it shall first be indemnified to its
satisfaction by the Lenders against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses, and
disbursements of any kind or nature whatsoever which may be imposed on,
incurred by or asserted against the Agent in any way relating to or arising out
of its taking or continuing to take any action. Each Lender agrees to indemnify
the Agent (to the extent not reimbursed by Borrower), on a pro-rata basis
according to such Lenders Commitments, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever which
may be imposed on, incurred by, or asserted against the Agent in any way
relating to or arising out of any Financing Agreement or any action taken or
omitted by the Agent under any Financing Agreement; provided that no Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, or
disbursements resulting from the gross negligence or willful misconduct of the
Agent; and provided further, that it is the intention of each Lender to
indemnify the Agent against the consequences of the Agents own negligence,
whether such negligence be sole, joint, concurrent, May 27, 2004 - 51 -




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active or passive. Without
limiting the foregoing, each Lender agrees to reimburse the Agent promptly upon
demand for its pro-rata share, according to such Lenders Commitments of any
out-of-pocket expenses (including attorneys fees) incurred by the Agent in
connection with the preparation, administration, or enforcement of, or legal
advice in respect of rights or responsibilities under, any Financing Agreement,
to the extent that the Agent is not reimbursed for such expenses by Borrower. 9.11 Successor Agent.The Agent may resign at any time as Agent under the
Financing Agreements by giving written notice thereof to the Lenders and
Borrower and may be removed at any time with or without cause by the Required
Lenders. Upon any such resignation or removal, the Required Lenders shall have
the right to appoint a successor Agent with, provided that no Default has
occurred and is continuing hereunder, the prior written consent of Borrower,
such consent not to be unreasonably withheld. If no successor Agent shall have
been so appointed by the Required Lenders or shall have accepted such
appointment within sixty (60) days after the retiring Agents giving of notice
of resignation or the Required Lenders removal of the Agent, then the retiring
Agent may, on behalf of the Lenders, appoint a successor Agent with, provided
that no Default has occurred and is continuing hereunder, the prior written
consent of Borrower, such consent not to be unreasonably withheld, which shall
be a commercial bank or other financial institution organized under the laws of
the United States of America or of any State thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After the retiring
Agents resignation or removal as Agent, the provisions of Section 9.10 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement. 9.12 Verification of Borrowing Notices.The natural Person signing this
Agreement on behalf of Borrower (or any
one of them, if more than one), or any natural Person designated by them
(or any one of them) shall be presumed to have the authority to request
Advances or request the issuance of Letters under this Agreement. The Agent
shall have no duty to verify the authenticity of the signature appearing on any
notice of borrowing or request for the issuance of a Letter, and with respect
to any oral request for an Advance or request for the issuance of a Letter, the
Agent shall have no duty to verify the identity of any Person representing
himself as one of the natural Persons authorized to make such request on behalf
of Borrower. Neither the Agent nor any Lender shall incur any liability to
Borrower in acting upon any telephonic notice referred to above which the Agent
or such Lender believes in good faith to have been given by a duly authorized
Person authorized to borrow on behalf of Borrower or for otherwise acting in
good faith. 10 MISCELLANEOUS. 10.1 Timing of Payments.For purposes of determining the outstanding
balance of the Liabilities, including without limitation, the computations of
interest which may from time to May 27, 2004 - 52 -




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time be owing to the Agent or the Lenders, the
receipt by the Agent of any check or any other item of payment whether through
an account described in Section 5.6 or otherwise, shall not be treated as a
payment on account of the Liabilities until such check or other item of payment
is actually received by the Agent and is paid to the Agent in cash or a cash
equivalent. Notwithstanding the terms of this Agreement or any other Financing
Agreement, if the due date of any payment falls on a day that is not a Business
Day, such payment may be made and shall not be considered late if made on the
next succeeding Business Day. 10.2 Attorneys Fees and Costs.If at any time the Agent employs counsel
in connection with protecting or perfecting the Agents security interest in
the Collateral or in connection with any matters contemplated by or arising out
of this Agreement, whether: (a) to commence, defend, or intervene in any
litigation or to file a petition, complaint, answer, motion or other pleading;
(b) to take any other action in or with respect to any suit or proceeding
(bankruptcy or otherwise); (c) to consult with officers of the Agent to advise
the Agent or to draft documents for the Agent in connection with any of the
foregoing or in connection with any release of the Agents claims or security
interests or any proposed extension, amendment or refinancing of the
Liabilities; (d) to protect, collect, lease, sell, take possession of, or
liquidate any of the Collateral; or (e) to attempt to enforce or to enforce any
security interest in any of the Collateral, or to enforce any rights of the
Agent to collect any of the Liabilities; then in any of such events, all of the
reasonable attorneys fees arising from such services, and any related
expenses, costs and charges, including without limitation, all fees of all
paralegals, legal assistants and other staff employed by such attorneys whether
outside the Agent or in the Agents legal department, together with interest at
the highest interest rate then payable by Borrower under this Agreement or any
other Financing Agreement, shall constitute additional Liabilities, payable on
demand and secured by the Collateral. In addition, if a Matured Default has occurred and is continuing, and
thereafter any Lender employs counsel: (a) in connection with, arising out of,
or any way related to, protecting, exercising or enforcing such Lenders interest in the Collateral or this
Agreement or the other Financing Agreements; (b) to commence, defend or
intervene in any litigation or to file a petition, complaint, answer, motion or
other pleading; (c) to take any other action in or with respect to any suit or
proceeding (bankruptcy or otherwise); (d) to protect, collect, lease, sell,
take possession of, or liquidate any of the Collateral; or (e) to attempt to
enforce or to enforce any security interest in any of the Collateral, or to
enforce any rights of such Lender to collect any of the Liabilities; then in
any of such events, all of the reasonable attorneys fees arising from such
services, and any expenses, costs and charges relating thereto, including
without limitation, all fees of all paralegals, legal assistants and other
staff employed by such attorneys whether outside the Lender or in the Lenders
legal department, together with interest at the highest interest rate then
payable by Borrower under this Agreement or any other Financing Agreement,
shall constitute additional Liabilities, payable on demand and secured by the
Collateral. This Section 10.2 shall survive the termination of this Agreement. May 27, 2004 - 53 -




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10.3 Expenditures by the Agent.In the event that Borrower shall fail to
pay taxes, insurance, assessments, costs or expenses which Borrower is, under
any of the terms hereof or of any of the other Financing Agreements, required
to pay, or fails to keep the Collateral free from other security interests,
liens or encumbrances, except as permitted herein, the Agent may, in the
Agents sole discretion and without obligation to do so, upon not less than ten
(10) days written notice to Borrower (except when circumstances do not allow
for such notice), make expenditures for any or all of such purposes, and the
amount so expended, together with interest at the highest interest rate then
payable by Borrower under this Agreement or any other Financing Agreement,
shall constitute additional Liabilities, payable on demand and secured by the
Collateral. 10.4 The Agents Costs and Expenses as Additional Liabilities.Borrower
shall reimburse the Agent for all expenses and fees paid or incurred in
connection with the documentation, negotiation and closing of the Loans and
other financial accommodations described in this Agreement (including without
limitation, filing fees, recording fees, document or recording taxes, search
fees, appraisal fees and expenses, and the fees and expenses of the Agents
attorneys, paralegals, and legal assistants, whether outside the Agent or in
the Agents legal department, and whether such expenses and fees are incurred
prior to or after the Closing Date). Borrower further agrees to reimburse the
Agent for all expenses and fees paid or incurred in connection with the
documentation of any renewal or extension of the Loans, any additional
financial accommodations, or any other amendments to this Agreement. All costs
and expenses incurred by the Agent with respect to such negotiation and
documentation shall constitute additional Liabilities, payable on demand and
secured by the Collateral, and if not paid when due shall be payable together
with interest at the highest interest rate then payable by Borrower under this
Agreement or any other Financing Agreement,. 10.5 Claims and Taxes.Borrower agrees to indemnify and hold the Agent
and the Lenders harmless from and against any and all claims, demands,
liabilities, losses, damages, penalties, costs, obligations, actions,
judgments, suits, disbursements and expenses (including without limitation,
reasonable attorneys fees) relating to or in any way arising out of the
possession, use, operation or control of any of Borrowers assets, or in any
way arising out of or related to this Agreement or the other Financing
Agreements (except those which Borrower proves were caused by the Agents or a
Lenders willful misconduct or gross negligence), which agreement to indemnify
and hold the Agent and the Lenders harmless shall survive the termination of
this Agreement. Borrower shall pay or cause to be paid all license fees,
bonding premiums and related taxes and charges, and shall pay or cause to be
paid all of Borrowers real and personal property taxes, assessments and
charges and all of Borrowers franchise, income, unemployment, use, excise, old
age benefit, withholding, sales and other taxes and other governmental charges
assessed against Borrower, or payable by Borrower, at such times and in such
manner as to prevent any penalty from accruing or any lien or charge from
attaching to Borrowers property, provided, however, that Borrower shall have
the right to contest in good faith, by an appropriate proceeding promptly
initiated and diligently conducted, the validity, amount or imposition of any
such tax, and upon such good faith contest to delay or refuse payment thereof,
if: (a) Borrower establishes adequate reserves to cover such contested taxes;
and (b) such contest does not have a material adverse effect on the financial
condition of May 27, 2004 - 54 -




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Borrower, the ability of Borrower to pay any of the Liabilities,
or the priority or value of the Lenders security interests in the Collateral. 10.6 Custody and Preservation of Collateral.The Agent shall be deemed to
have exercised reasonable care in the custody and preservation of any of the
Collateral in the Agents possession if the Agent takes such action for that
purpose as Borrower shall request in writing, but failure by the Agent to
comply with any such request shall not of itself be deemed a failure to
exercise reasonable care, and no failure by the Agent or any Lender to preserve
or protect any right with respect to such Collateral against prior parties, or
to do any act with respect to the preservation of such Collateral not so
requested by Borrower, shall of itself be deemed a failure to exercise
reasonable care in the custody or preservation of such Collateral. 10.7 Inspection.The Agent (by and through its officers and employees),
or any Person designated by the Agent in writing (including officers and
employees of the other Lenders), shall have the right from time to time, to
call at Borrowers place or places of business (or any other place where
Collateral or any information as to Collateral is kept or located) during
reasonable business hours, and, without hindrance or delay, to: (a) inspect,
audit, check and make copies of and extracts from Borrowers books, records,
journals, orders, receipts and any correspondence and other data relating to
Borrowers business or to any transactions between the parties to this
Agreement; (b) make such verification concerning the Collateral as the Agent
may consider reasonable under the circumstances; and (c) review operating
procedures, review maintenance of property and discuss the affairs, finances
and business of Borrower with Borrowers officers, employees or directors.
Borrower agrees to pay to the Agent audit fees as set forth in the Agents
Letter, which fees shall be fully earned on
each date they become payable and which fees, if any, shall be paid by an
Agent initiated Advance pursuant to Section 2.1, without prior demand by the
Agent. 10.8 Examination of Banking Records.Borrower consents to the examination
by the Agent (by and through its officers and employees), or any Person
designated by the Agent in writing (including officers and employees of the
other Lenders), whether or not there shall have occurred a Default or a Matured
Default, of any and all of Borrowers banking records, wherever they may be
found, and directs any Person which may be in control or possession of such
records (including without limitation, any bank, other financial institution,
accountant or lawyer) to provide such records to the Agent and the Agents
officers, employees and agents, upon their request. Such examination may be
conducted by the Agent with or without notice to Borrower at the option of the
Agent, any such notice being waived by Borrower. 10.9 Governmental Reports.Borrower will furnish to the Agent, upon the
reasonable request of the Agent, copies of the reports of examinations or
inspections of Borrower by all Governmental Authorities, and if Borrower fails
to furnish such copies to the Agent, Borrower authorizes all such Government
Authorities to furnish to the Agent copies of their reports of examinations or
inspections of Borrower. May 27, 2004 - 55 -




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10.10 Reliance by the Agent, the Issuer and the Lenders.All covenants,
agreements, representations and warranties made herein by Borrower shall,
notwithstanding any investigation by the Agent or any of the Lenders, be deemed
to be material to and to have been relied upon by the Agent, the Issuer and the
Lenders. 10.11 Parties.Whenever in this Agreement there is reference made to any
of the parties, such reference shall be deemed to include, wherever applicable,
a reference to the respective successors and assigns of Borrower, the Agent,
the Lenders and the Issuer. Borrower shall not assign any of it rights or
delegate any of its duties under this Agreement or any of the other Financing
Agreements without the prior written consent of the Lenders. 10.12 Applicable Law; Severability.This Agreement shall be construed in
all respects in accordance with, and governed by, the laws and decisions of the
State of Colorado and the laws, regulations and decisions of the United States
applicable to national banks. Wherever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provisions or the remaining provisions of
this Agreement. 10.13 SUBMISSION TO JURISDICTION; WAIVER OF BOND AND TRIAL BY JURY.WITH
RESPECT TO ANY AND ALL ACTIONS, CAUSES OF ACTION, SUITS, CLAIMS, DEMANDS,
DEBTS, DAMAGES, COSTS AND EXPENSES, WHATSOEVER, WHETHER BASED ON STATUTE,
COMMON LAW, PRINCIPLES OF EQUITY OR OTHERWISE, ARISING OUT OF ANY MATTER, THING
OR EVENT WHICH IS DIRECTLY OR INDIRECTLY RELATED TO THIS AGREEMENT, BORROWER
CONSENTS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED
WITHIN THE CITY AND COUNTY OF DENVER, COLORADO AND WAIVES ANY OBJECTION WHICH
BORROWER MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE
CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND WAIVES PERSONAL SERVICE OF ANY
AND ALL PROCESS UPON BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE
MADE BY MAIL OR MESSENGER DIRECTED TO BORROWER AT THE ADDRESS SET FORTH IN
SECTION 10.19. SERVICE, SO MADE, SHALL BE DEEMED TO BE COMPLETE UPON THE
EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE SAME SHALL HAVE BEEN
POSTED. AT THE OPTION OF THE AGENT, BORROWER WAIVES, TO THE EXTENT PERMITTED
BY LAW, TRIAL BY JURY, AND WAIVES ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE AGENT. 10.14 Application of Payments; Waiver.Payments made by Borrower under
this Agreement shall generally be applied first to any costs or fees owing by
Borrower to the Agent or any Lender, shall be applied second to any interest
payments owing hereunder which are due and unpaid, shall be applied third to
any outstanding principal owing hereunder, and shall be May 27, 2004 - 56 -




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applied fourth to
interest accrued but not yet due. Unless otherwise specified in this
Agreement, prepayments of principal made by Borrower on any Loans repayable in
installments shall be applied to the most remote installment then due (which
shall be deemed to include, as applicable, any balloon payment due at
maturity). Notwithstanding any contrary provision contained in this Agreement
or in any of the other Financing Agreements, Borrower irrevocably waives the
right to direct the application of any and all payments at any time received by
the Agent from Borrower or with respect to any of the Collateral, and Borrower
irrevocably agrees that the Agent shall have the continuing exclusive right to
apply and reapply any and all payments received at any time, whether with
respect to the Collateral or otherwise, against the Liabilities, in such manner
as the Agent may deem advisable, notwithstanding any entry by the Agent upon
any of the Agents books and records. Provided, however, this Section 10.14
shall not apply to any transactions unrelated to this Agreement in which the
Agent or its affiliates may have accepted deposits from, lent money to, acted
as trustee under indentures of, or generally engaged in business with Borrower,
any Affiliates or any Person who may do business with or own securities of
Borrower or any such Affiliate. 10.15 Marshaling; Payments Set Aside.The Agent shall be under no
obligation to marshal any assets in favor of
Borrower or against or in payment of any or all of the Liabilities. To
the extent that Borrower makes a payment or payments to the Agent or the Agent
receives any payment or proceeds of the Collateral for Borrowers benefit or
enforces the Agents security interests or exercises the Agents rights of
setoff, and such payment or payments or the proceeds of such Collateral,
enforcement or setoff or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside and/or required to be
repaid to a trustee, receiver or any other party under any bankruptcy law,
state or federal law, common law or equitable cause, then to the extent of such
recovery, the obligation or part thereof originally intended to be satisfied
shall be revived and continued in full force and effect as if such payment had
not been made or such enforcement or setoff had not occurred. 10.16 Section Titles.The section titles contained in this Agreement
shall be without substantive meaning or content of any kind whatsoever and are
not a part of the agreement between the parties. 10.17 Continuing Effect.This Agreement, the Agents security interests
in the Collateral, and all of the other Financing Agreements shall continue in
full force and effect so long as any Liabilities shall be owed to the Agent
and/or any of the Lenders and (even if there shall be no Liabilities
outstanding) so long as the Agent and/or any of the Lenders remains committed
to make Loans or issue Letters under this Agreement. 10.18 No Waiver.The Agents or the Required Lenders failure, at any
time or times hereafter, to require strict performance by Borrower of any
provision of this Agreement or the other Financing Agreements shall not waive,
affect or diminish any right of the Agent or the Required Lenders thereafter to
demand strict compliance and performance therewith. Any suspension or waiver
by the Agent or the Required Lenders of any Default or Matured Default under
this Agreement or any of the other Financing Agreements, shall not suspend,
waive or May 27, 2004 - 57 -




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10.19 Notices.Except as otherwise expressly provided herein, any notice
required or desired to be served, given or delivered pursuant to this Agreement
shall be in writing, and shall be sent by manual delivery, facsimile
transmission, overnight courier or United States mail (postage prepaid)
addressed to the party to be notified as follows: (a) If to the Agent at:U.S. Bank National Association950 Seventeenth Street, Suite 350Denver, Colorado 80202Attn: Alan Schulerwith a copy to:Campbell Bohn Killin Brittan & Ray, LLC270 St. Paul Street, Suite 200Denver, Colorado 80206Attn: Michael D. Killin(b) If to Borrower at:Premium Standard Farms, Inc.805 Pennsylvania Avenue, Suite 200Kansas City, Missouri 64105-1307Attn: Steve Lightstone, Chief Financial Officerwith a copy to:Shook, Hardy & Bacon L.L.P.2555 Grand Blvd.Kansas City, Missouri 64108Attn: Mark Hargrave
 May 27, 2004 - 58 -




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10.20 Regulatory Changes.In the event any Governmental Authority (i)
subjects the Lenders or any of them or any of their respective lending offices
to any new or additional charge, fee, withholding, duty or tax of any kind with
respect to any Loans, Letters, LC Obligations or other Liabilities hereunder,
(ii) changes the method or basis of taxation of such Loans, Letters, LC
Obligations or other Liabilities, except for changes in the rate of tax on the
overall net income of such Lender or its lending office imposed by the
jurisdiction in which such Lenders principal executive office or lending
office is located, or (iii) changes the reserve or deposit requirements
applicable to such Loans, Letters, LC Obligations or other Liabilities
(including, without limitation, the imposition, modification or deemed
application of any reserve, special deposit or similar requirement
(including, without limitation, any such requirement imposed by the Board
of Governors of the Federal Reserve System, including any such requirement with
respect to any LIBOR Rate Loans) against assets of, deposits with or for the
account of any Lender, or its lending office, and including without limitation,
the issuance of a request or directive regarding capital adequacy (whether or
not having the force of law) that has the effect of reducing the rate of return
on such Lenders capital as a consequence of its obligations under this
Agreement to a level below that which such Lender could have achieved but for
such adoption, change or compliance (taking into consideration such Lenders
policies with respect to capital adequacy)), then in any such event, Borrower
shall pay to such Lender such additional amounts as will compensate such Lender
for such costs or lost income resulting thereby as reasonably determined by
such Lender. Any Lender demanding payment under this Section 10.2 shall
deliver to Borrower and the Agent a statement reasonably setting forth the
amount and manner of determining such loss, cost or expense, which statement
shall be conclusive and binding for all purposes, absent manifest error. 10.21 LIBOR Rate Loans.Without limiting the generality of Section 10.20,
anything in this Agreement to the contrary notwithstanding, if any Lender shall
notify the Agent that: (i) the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or that any central
bank or other Governmental Authority asserts that it is unlawful to fund or
maintain LIBOR Rate Loans (whether or not such assertion carries the force of
law), (ii) deposits in U.S. Dollars (in the applicable amounts) are not being
offered to it in the interbank eurodollar market for any requested Interest
Period, (iii) by reason of circumstances affecting the interbank eurodollar
market adequate and reasonable means do not exist for ascertaining the
applicable LIBOR Rate; (iv) that the applicable LIBOR Rate will not adequately
and fairly reflect the cost to such Lender of funding their LIBOR Rate Loans
for such Interest Period or (v) that the making or funding of LIBOR Rate Loans
is impracticable for such Lender, the obligation of such Lender to make,
rollover or to convert Loans into LIBOR Rate Loans shall be suspended until
such Lender shall notify the Agent and Borrower that the circumstances causing
such suspension no longer exist, and the existing LIBOR Rate Loans of such
Lender shall May 27, 2004 - 59 -




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automatically convert, on and as of the date of such notification,
into Base Rate Loans; provided that each Lender represents and warrants to
Borrower that as of the later of (i) the Closing Date or (ii) the date on which
it shall have executed an Assignment and Acceptance pursuant to Section 10.23,
it has no actual knowledge that any of the circumstances set forth above exist. 10.22 Taxes.Without limiting the generality of Section 10.20: (a) Except as otherwise provided in Section 10.22(d), any and all payments
by Borrower hereunder or under the Notes shall be made free and clear of and
without deduction for any and all present or future taxes, deductions, charges
or withholdings, and all liabilities with respect thereto, including without
limitation, such taxes, deductions, charges, withholdings or liabilities
whatsoever imposed, assessed, levied or collected by any taxing authority and
all (other than to the extent due to the gross negligence or willful misconduct
of any Lender) interest, penalties, expenses or similar liabilities with
respect thereto (Taxes), excluding,
however, from the definition of Taxes, in the case of each Lender and the
Agent, taxes imposed on its income (including penalties and interest payable in
respect thereof), and franchise taxes imposed on it, by the jurisdiction under
the laws of which such Lender or the Agent (as the case may be) is organized or
any political subdivision thereof. If Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Lender or the Agent (other than payments for which taxes are
withheld pursuant to the last sentence of Section 10.22(d)), (i) the sum
payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this Section 10.22) such Lender or the Agent (as the case may be)
receives an amount equal to the sum it would have received had no such
deductions been made and (ii) Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in accordance with
applicable law, less any credits due to Borrower. (b) In addition, Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter included within the definition of
Taxes). (c) Borrower will indemnify each Lender and the Agent for the full amount
of Taxes (including without limitation, any Taxes imposed by any jurisdiction
on amounts payable under this Section 10.22) paid by such Lender or the Agent
(as the case may be) and any liability arising therefrom or with respect
thereto, whether or not such Taxes were correctly or legally asserted. This
indemnification shall be made within five (5) days from the date such Lender or
the Agent (as the case may be) makes written demand therefor; provided however,
to the extent that any Lender is reimbursed for any Taxes that were incorrectly
or illegally asserted with respect to Borrower, such Lender shall promptly
return to Borrower the amount of such reimbursement net of any costs of
recovery incurred by such Lender and/or the Agent, together with any interest
that may have been paid by the taxing jurisdiction with respect thereto, to the
extent Borrower has actually paid such Lender with respect thereto. May 27, 2004 - 60 -




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(d) Prior to the date of any Lender becoming a Lender hereunder, and from
time to time thereafter if requested by Borrower or the Agent each Lender
organized outside the United States shall provide the Agent and Borrower with
the forms prescribed by the Internal Revenue Service of the United States
(including, without limitation, Form W-8 BEN, Form W-8 ECI, or Form W-8 IMY)
certifying such Lenders exemption from United States withholding taxes with
respect to all payments to be made to such Lender hereunder and under the
Notes. Unless Borrower and the Agent have received forms or other documents
satisfactory to them indicating that payments hereunder or under any Note are
not subject to United States withholding tax or are subject to such tax at a
rate reduced by an applicable tax treaty, Borrower or the Agent shall withhold
taxes from such payments for the account and benefit of Borrower at the
applicable statutory rate in the case of payments to or for any Lender
organized under the laws of a jurisdiction outside the United States; provided
however, that all such withholding for such Lender shall cease upon delivery by
such Lender of the applicable forms to Borrower and Agent. (e) Promptly after the date on which payment of any Taxes are due pursuant
to applicable law, Borrower will, at the request of the Agent or any Lender,
furnish to the Agent or such Lender evidence in form and substance satisfactory
to the Agent or such Lender, that Borrower has met its obligations under this
Section 10.22. (f) Without prejudice to the survival of any other agreement of Borrower,
the agreement and obligations of Borrower contained in this Section 10.22 shall
survive the payment in full of the Liabilities. 10.23 Assignments and Participation. (a) After the Closing Date (and, provided that no Default has occurred and
is continuing, subject to the prior written consent of Borrower, such consent
not to be unreasonably withheld) each Lender may assign to any Person, other
than a Person that is, or has any affiliate that is, in the same line of
business as Borrower, (the Assignee) all or a portion of its rights and
obligations under this Agreement (including without limitation, all or a
portion of its Commitments and the Notes held by it); provided however, that
(i) each such assignment shall be of a constant, and not a varying, percentage
of all of the assigning Lenders rights and obligations under this Agreement,
(ii) the total amount of the Commitment or Commitments (based on the original
Commitment or Commitments without giving effect to any repayments or
prepayments) so assigned to an Assignee or to an Assignee and its Affiliates
taken as a whole shall equal or exceed the lesser of the total amount of the
Commitment or Commitments held by the assigning Lender or $10,000,000, (iii)
the remaining Commitment or Commitments (based on the original Commitment or
Commitments without giving effect to any repayments or prepayments) held by the
assigning Lender and its Affiliates after giving effect to any such assignment
shall equal or exceed $10,000,000, (iv) the assignment will not cause Borrower
to incur any additional liability or expense and (v) the parties to each such
assignment shall execute and deliver to the Agent for its acceptance an
Assignment and Acceptance in substantially the form attached as Schedule B
(Assignment and Acceptance), together with any Note or Notes May 27, 2004 - 61 -




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subject to such
assignment and a processing and recordation fee of $3,500 (which fee shall not
be passed on to the Borrower). Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be the date on which such Assignment and
Acceptance is accepted by the Agent, (vi) the Assignee thereunder shall be a
party hereto and, to the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender under the Financing Agreements and (vii) the Lender
assignor thereunder shall be deemed to have relinquished its rights and to be
released from its obligations under the Financing Agreements, to the extent
(and only to the extent) that its rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of an
assigning Lenders rights and obligations under the Financing Agreements, such
Lender shall cease to be a party thereto). (b) By executing and delivering an Assignment and Acceptance, the Lender
assignor thereunder and the Assignee thereunder confirm to and agree with each
other and the other parties hereto as follows: (i) other than as provided in
such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with the Financing
Agreements or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Financing Agreements or any other instrument or
document furnished pursuant thereto; (ii) such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance or observance by Borrower of
any of its obligations under the Financing Agreements or any other instrument
or document furnished pursuant hereto; (iii) such Assignee confirms that it has
received a copy of the Financing Agreements, together with copies of the
financial statements referred to in Section 7.16 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Agent, such assigning Lender or any
other Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement; (v) such Assignee appoints and
authorizes the Agent to take such action as the Agent on its behalf and to
exercise such powers under the Financing Agreements as are delegated to the
Agent by the terms thereof, together with such powers as are reasonably
incidental thereto; and (vi) such Assignee agrees that it will perform in
accordance with their terms all of the obligations which by the terms of the
Financing Agreements are required to be performed by it as a Lender. (c) The Agent shall maintain at its address referred to in Section 10.19 a
copy of each Assignment and Acceptance delivered to and accepted by it. (d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender, together with any Note or Notes subject to such assignment,
the Agent shall, if such Assignment and Acceptance has been completed, (i)
accept such Assignment and Acceptance May 27, 2004 - 62 -




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and (ii) give prompt notice thereof to
Borrower. Within five (5) Business Days after its receipt of such notice,
Borrower, at its own expense, shall execute and deliver to the Agent in
exchange for the surrendered Note or Notes, a new Note or new Notes to the
order of such Assignee in an amount equal to the Commitment or Commitments
assumed by it pursuant to such Assignment and Acceptance and, if the assigning
Lender has retained a Commitment or Commitments, a portion of which has been
assigned, a new Note or New Notes to the order of the assigning Lender in an
amount equal to the Commitment or Commitments retained by it hereunder. Such
new Note or Notes shall be in an aggregate principal amount equal to the
aggregate principal amount of such surrendered Note or Notes, shall be dated
the effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit 2A. Upon receipt by the Agent of such new
Note or Notes conforming to the requirements set forth in the preceding
sentences, the Agent shall return to Borrower such surrendered Note or Notes,
marked to show
that such surrendered Note or Notes has (have) been replaced, renewed and
extended by such new Note or Notes. (e) Each Lender may sell participations to one or more banks or other
entities, other than to Persons that are, or have any affiliates that are, in
the same line of business as Borrower, in or to all or a portion of its rights
and obligations under this Agreement (including without limitation, all or a
portion of its Commitments and the Note held by it); provided however, that (i)
such Lenders obligations under this Agreement (including without limitation,
its Commitments to Borrower hereunder) shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance
of such obligations, (iii) such Lender shall remain the holder of any such Note
for all purposes of this Agreement, (iv) the sale of the participation will not
cause Borrower to incur any additional liability, and (v) Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lenders rights and obligations under this
Agreement, provided that no participant shall be entitled to recover under the
above-described provisions an amount in excess of the proportionate share which
such participant holds of the original aggregate principal amount hereunder to
which the assigning Lender would otherwise be entitled. (f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 10.23, disclose
to the assignee or participant or proposed assignee or participant, any
information relating to Borrower furnished to such Lender by or on behalf of
Borrower; provided that, prior to any such disclosure, the assignee or
participant or proposed assignee or participant shall agree in writing to
preserve the confidentiality of any confidential information relating to
Borrower received by it from such Lender. (g) Any Lender may assign and pledge all or any of the instruments held by
it as collateral security; provided that any payment made by Borrower for the
benefit of such assigning and/or pledging Lender in accordance with the terms
of the Financing Agreements shall satisfy Borrowers obligations under the
Financing Agreements in respect thereof to the extent of such payment. No such
assignment and/or pledge shall release the assigning and/or pledging Lender
from its obligations hereunder. May 27, 2004 - 63 -




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10.24 Maximum Interest.No agreements, conditions, provisions or
stipulations contained in this Agreement or in any of the other Financing
Agreements, or any Default or Matured Default, or any exercise by the Agent of
the right to accelerate the payment of the maturity of principal and interest,
or to exercise any option whatsoever, contained in this Agreement or any of the
other Financing Agreements, or the arising of any contingency whatsoever, shall
entitle the Agent to collect, in any event, interest exceeding the maximum
authorized by law, and in no event shall Borrower be obligated to pay interest
exceeding such rate, and all agreements, conditions or stipulations, if any,
which may in any event or contingency whatsoever operate to bind, obligate or
compel Borrower to pay a rate of interest exceeding the maximum allowed by law,
shall be without binding force or effect, at law or in equity, to the extent
only of the excess of interest over such maximum interest allowed
by law. In the event any interest is charged in excess of the maximum
allowed by law (Excess), Borrower acknowledges and stipulates that any such
charge shall be the result of an accidental and bona fide error, and such
Excess shall be, first, applied to reduce the principal of any Liabilities due,
and, second, returned to Borrower, it being the intention of the parties not to
enter at any time into a usurious or otherwise illegal relationship. Borrower
and the Agent both recognize that, with fluctuations of index rates and
applicable margins, such an unintentional result could inadvertently occur. By
the execution of this Agreement, Borrower covenants that: (a) the credit or
return of any Excess shall constitute the acceptance by Borrower of such
Excess; and (b) Borrower shall not seek or pursue any other remedy, legal or
equitable, against the Agent based, in whole or in part, upon the charging or
receiving of any interest in excess of the maximum authorized by law. For the
purpose of determining whether or not any Excess has been contracted for,
charged or received by the Agent, all interest at any time contracted for,
charged or received by the Agent in connection with the Liabilities shall be
amortized, prorated, allocated and spread in equal parts during the entire term
of this Agreement. 10.25 Additional Advances.All fees, charges, expenses, costs,
expenditures, obligations, liabilities, losses, penalties and damages incurred
or suffered by the Agent and for which Borrower is bound to indemnify or
reimburse the Agent under this Agreement (other than those which may be paid
without demand therefor, by the Agent initiated Advances pursuant to Section
2.1) may, at the option of the Agent, be paid by Agent-initiated Advances
pursuant to Section 2.1 if such amounts remain unpaid for a period of ten (10)
days after the Agent has made demand therefor. 10.26 Loan Agreement Controls.If there are any conflicts or
inconsistencies among this Agreement and any of the other Financing Agreements,
the provisions of this Agreement shall prevail and control. 10.27 Obligations Several.The obligations of each Lender under each
Financing Agreement to which it is a party are several, and no Lender shall be
responsible for any obligation or Commitment of any other Lender under any
Financing Agreement to which it is a party. Nothing contained in any Financing
Agreement to which it is a party, and no action taken May 27, 2004 - 64 -




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by any Lender pursuant
thereto, shall be deemed to constitute the Lenders to be a partnership, an
association, a joint venture, or any other kind of entity. 10.28 Pro Rata Treatment.All Loans under, and all payments and other
amounts received in connection with, this Agreement (including, without
limitation, amounts received as a result of the exercise by any Lender of any
right of set-off), shall be effectively shared by the Lenders ratably in
accordance with the respective Pro Rata Percentages of the Lenders. If any
Lender shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of the principal of,
or interest on, or fees in respect of, any Note held by it (other than pursuant
to Section 2.3(b), 2.5(a), 10.20, 10.21 or 10.22 or the normal and customary
processing fees charged by an Issuer in connection with the issuance of or
drawings under a Letter) in
excess of its Pro Rata Percentage of payments on account of similar Notes
obtained by all the Lenders, such Lender shall purchase from the other Lenders
such participation in the Notes or Loans made by them as shall be necessary to
cause such purchasing Lender to share the excess payment ratably with each of
them; provided however, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Lender, such purchase from each
Lender shall be rescinded and such Lender shall repay to the purchasing Lender
the purchase price to the extent of such recovery together with an amount equal
to such Lenders ratable share (according to the proportion of (a) the amount
of such Lenders required repayment to (b) the total amount so recovered from
the purchasing Lender) of any interest or other amount paid or payable by the
purchasing Lender in respect of the total amount so recovered. Disproportionate
payments of interest shall be shared by the purchase of separate participation
in unpaid interest obligations, disproportionate payments of fees shall be
shared by the purchase of separate participation in unpaid fee obligations, and
disproportionate payments of principal shall be shared by the purchase of
separate participation in unpaid principal obligations. Borrower agrees that
any Lender so purchasing a participation from another Lender pursuant to this
Section 10.28 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Lender were the direct creditor of Borrower
in the amount of such participation. Notwithstanding the foregoing, a Lender
may receive and retain an amount in excess of its Pro Rata Percentage to the
extent, but only to the extent, that such excess results from such Lenders
Highest Lawful Rate exceeding another Lenders Highest Lawful Rate. 10.29 Confidentiality.Each of the Agent and the Lenders agrees that it
will use its best efforts to keep confidential, in accordance with its
customary procedures for handling confidential information and in accordance
with safe and sound banking practices any proprietary information of Borrower,
designated in writing by Borrower, as being proprietary and confidential;
provided that the Agent or any Lender may disclose any such information (a) to
enable it to comply with any Governmental Requirement applicable to it, (b) in
connection with the defense of any litigation or other proceeding brought
against it arising out of the transactions contemplated by this Agreement and
the other Financing Agreements, (c) in connection with the supervision and
enforcement of the rights and remedies of the Agent and Lenders under any
Financing Agreement and (d) as set forth in Section 10.23. May 27, 2004 - 65 -




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10.30 Independence of Covenants.All covenants under this Agreement and
the other Financing Agreements shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or be otherwise within the
limitations of, another covenant shall not avoid the occurrence of a Default or
a Matured Default if such action is taken or condition exists. 10.31 Amendments and Waivers; Increase of Line of Credit Loan Commitment. (a) Except as provided in the following Sections 10.31(b) and (c), any
term, covenant, agreement or condition of this Agreement or the other Financing
Agreements may be amended by a written amendment executed by Borrower, the
Required Lenders and, if the rights or duties of the Agent are affected
thereby, the Agent, or compliance therewith may be waived (either generally or
in a particular instance and either retroactively or prospectively), if
Borrower shall have obtained the consent in writing of the Required Lenders
and, if the rights or duties of the Agent are affected thereby, the Agent,
provided however, that without the consent in writing of the holders of all
outstanding Notes and LC Obligations, or of all Lenders if no Notes or Letters
are outstanding, no such amendment or waiver shall (i) change the amount or
postpone the date of payment of any scheduled payment or required payment of
principal of the Notes or LC Obligations or reduce the rate or extend the time
of payment of interest on the Notes, or reduce the amount of principal thereof,
or modify any of the provisions with respect to the payment or prepayment
thereof, (ii) give to any Note any preference over any other Notes, (iii) amend
the definition of Required Lenders, (iv) alter, modify or amend the provisions
of Section 10.28 or of this Section 10.31, (v) extend the term of any of the
Commitments (vi) amend the definition of Borrowing Base (including any
amendment of the definitions used therein and including any amendment of the
advance rates included in that definition) that would have the effect of
increasing the Borrowing Base Limit (vii) reduce the fees required under
Section 2.5, (viii) alter, modify or amend the provisions of Sections 9.1 or
9.2 of this Agreement, or (ix) release Collateral having an aggregate value in
excess of twenty percent (20%) of the aggregate book value of all Collateral or
release any guarantor of any of the Liabilities, unless such release is
permitted by the Financing Agreements. (b) Provided that there have not been any reductions or a termination of
the Line of Credit Loan Commitment pursuant to Sections 2.3(c), 2.8 or 9.1, (i)
this Agreement may be amended from time to time to increase the total amount of
the Line of Credit Loan Commitment up to the amount of $200,000,000 by one or
more written amendments executed by Borrower and the Agent (together with new
Notes and other Financing Agreements as may be reasonably required by the
Agent); and/or (ii) this Agreement may be amended from time to time to increase
the total amount of the Line of Credit Loan Commitment to any amount exceeding
$175,000,000 by one or more written amendments executed by Borrower and the
Required Lenders (together with new Notes and other Financing Agreements as may
be reasonably required by the Agent). Subject to the following Section
10.31(c), any such increase shall be allocated to new or existing Lenders at
the discretion of the Agent and Borrower. May 27, 2004 - 66 -




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(c) Without the consent in writing of the affected Lender, no amendment or
waiver shall increase the amount of or the Pro Rata Percentage of any
Commitment of such Lender (but the amount of or the Pro Rata Percentage of any
Commitment of such Lender may be decreased without the consent of such Lender). (d) Any amendment or waiver made in accordance with this Section 10.31
shall apply equally to all Lenders and all the holders of the Notes and/or LC
Obligations and shall be binding upon them, upon each future holder of any Note
or LC Obligation and upon Borrower, whether or not such Note or Letter shall
have been marked to indicate such amendment or
waiver. No such amendment or waiver shall extend to or affect any
obligation not expressly amended or waived. 10.32 Replacement of a Lender. If a Lender (other than the Agent as a
Lender) becomes a Replacement Candidate (as defined below), Borrower shall have
the right to require such Lender to assign to another lender or other
institution selected by Borrower and reasonably satisfactory to the Agent
(which may be one or more of the Lenders) the Commitments and the Notes held by
such Lender pursuant to the terms of an appropriately completed Assignment and
Acceptance in accordance with Section 10.23; provided, that neither the Agent
nor any Lender shall have any obligation to Borrower to find any such lender or
other institution and in order for Borrower to replace a Lender, Borrower must
require such replacement within three (3) months of the date the Lender became
a Replacement Candidate. Each Lender (other than the Agent as a Lender) agrees
to its replacement at the option of Borrower pursuant to this Section 10.32;
provided, that the assignee selected by Borrower shall purchase such Lenders
interest in the Loans and Liabilities owed to such Lender for cash in an
aggregate amount equal to the aggregate unpaid principal thereof, all unpaid
interest accrued thereon, all unpaid fees accrued for the account of such
Lender and all other amounts then owing to such Lender hereunder or under any
other Financing Agreement. A Lender will become a
Replacement Candidate if
(i) it has made a demand under Sections 10.20, 10.21 or 10.22, (ii) it has
defaulted on any obligation under this Agreement or (iii) it has become
insolvent and its assets become subject to a receiver, liquidator, trustee,
custodian, or other officer having similar powers. The rights of Borrower
under this Section 10.32 shall be in addition to any other rights or remedies
Borrower may have at law or in equity as a result of the events described in
the definition of Replacement Candidate. 10.33 Representations by the Lenders.Each Lender represents that it is
the present intention of such Lender, as of the date of its acquisition of the
Notes, to acquire the Notes for its account or for the account of its
Affiliates, and not with a view to the distribution or sale thereof that would
be in violation of any applicable laws, and, subject to any applicable laws,
the disposition of such Lenders property shall at all times be within its
control. The Notes have not been registered under the Securities Act of 1933,
as amended (the Securities Act), and may not be transferred, sold or
otherwise disposed of except (a) in a registered offering under the Securities
Act; (b) pursuant to an exemption from the registration provisions of the
Securities Act; or (c) if the Securities Act shall not apply to the Notes or
the transactions contemplated by May 27, 2004 - 67 -




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the Financing Agreements. Nothing in this
Section 10.33 shall affect the characterization of the Loans and the
transactions contemplated hereunder as commercial lending transactions. 10.34 Counterparts and Facsimile Signatures.This Agreement, any other
Financing Agreement and any subsequent amendment to any of them may be executed
in several counterparts, each of which shall be construed together as one
original. Facsimile signatures on this Agreement, any other Financing
Agreement and any subsequent amendment to any of them shall be considered as
original signatures. 10.35 Set-off.Borrower gives and confirms to each Lender a right of
set-off of all moneys, securities and other property of Borrower (whether
special, general or limited) and the proceeds thereof, at any time delivered to
remain with or in transit in any manner to such Lender, its correspondent or
its agents from or for Borrower, whether for safekeeping, custody, pledge,
transmission, collection or otherwise or coming into possession of such Lender
in any way, and also, any balance of any deposit accounts and credits of
Borrower with, and any and all claims of security for the payment of the
Liabilities owed by Borrower to such Lender, contracted with or acquired by the
Lender, whether such liabilities and obligations be joint, several, absolute,
contingent, secured, unsecured, matured or unmatured, and Borrower authorizes
such Lender at any time or times during the continuance of a Matured Default,
without prior notice, to apply such money, securities, other property,
proceeds, balances, credits of claims, or any part of the foregoing, to such
liabilities in such amounts as it may select, whether such Liabilities be
contingent, unmatured or otherwise, and whether any collateral security
therefor is deemed adequate or not. The rights described herein shall be in
addition to any collateral security described in any separate agreement
executed by Borrower. 10.36 Binding Effect.This Agreement and all of the other Financing
Agreements set forth the legal, valid and binding obligations of Borrower, the
Agent and the Lenders and are enforceable against Borrower in accordance with
their respective terms. Should more than one Person be a Borrower under this
Agreement or any Note, the obligations of each such Person shall be joint and
several. The Lenders may settle, release, compromise, collect or otherwise
liquidate the obligations of any Borrower, any guarantor of such obligations,
and any security or collateral for such obligations or for any such guaranty,
in any manner, without affecting or impairing the obligations of any Borrower. 10.37 FINAL AGREEMENT.THIS WRITTEN AGREEMENT AND THE OTHER FINANCING
AGREEMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. {Signature Pages to Follow} May 27, 2004 - 68 -




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IN WITNESS WHEREOF,this Agreement has been duly executed as of the day
and year first above written. PREMIUM STANDARD FARMS, INC., a
Delaware corporationATTEST:By: /s/ John M. Meyer
    
    By: /s/ Stephen A. LightstoneIts: CEO
    
    Its: EVPLUNDY INTERNATIONAL, INC., a
North Carolina corporationATTEST:By: /s/ John M. Meyer
    
    By: /s/ Stephen A. LightstoneIts: CEO
    
    Its: EVPPREMIUM STANDARD FARMS OF NORTH
CAROLINA, INC., a Delaware
corporationATTEST:By: /s/ John M. Meyer
    
    By: /s/ Stephen A. LightstoneIts: CEO
    
    Its: EVPLPC TRANSPORT, INC., a Delaware
corporationATTEST:By: /s/ John M. Meyer
    
    By: /s/ Stephen A. LightstoneIts: CEO
    
    Its: EVPU.S. BANK NATIONAL
ASSOCIATION, as
Agent and as a Lender
950 17th Street, Suite 350
Denver, Colorado 80202By: /s/ Alan SchulerIts: Vice President
 {Signature Page to Amended and Restated Loan and Security Agreement Dated as of April 9, 2004} May 27, 2004 - 69 -




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FARM CREDIT SERVICES OF
MISSOURI, PCABy: /s/ Terry EidsonIts: Sr. Vice PresidentHARRIS TRUST AND SAVINGS BANKBy: /s/ John R. CarleyIts: Vice PresidentFARM CREDIT SERVICES OF AMERICA, FLCABy: /s/ Tim HealyIts: Vice PresidentFIRST NATIONAL BANK OF OMAHABy: /s/ Brian FrevertIts: Vice PresidentCOOPERATIEVE CENTRALE
RAIFFEISEN-BOERENLEENBANK
B.A., RABOBANK INTERNATIONAL, NEW YORK
BRANCHBy: /s/ Rebecca O. MorrowIts: Executive DirectorBy: /s/ James V. KenwoodIts: Vice President
 {Signature Page to Amended and Restated Loan and Security Agreement Dated as of April 9, 2004} May 27, 2004 - 70 -




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ACKNOWLEDGMENT OF GUARANTOR The undersigned Guarantor acknowledges the foregoing Amended and Restated
Loan and Security Agreement, consents to all of the terms and provisions
thereof, and hereby reaffirms its Guaranty dated as of May 13, 1998, and agrees
that each and every term and condition of the Guaranty shall continue with the
same force and effect with regard to the foregoing Amended and Restated Loan
and Security Agreement as they did with regard to the original Credit Agreement
as referred to in the Guaranty. PSF GROUP HOLDINGS, INC., a
Delaware corporationATTEST:By: /s/ John M. Meyer
    
    By: /s/ Stephen A. LightstoneIts: CEO
    
    Its: EVP
 May 27, 2004 - 71 -




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Schedule A to
Loan and Security Agreement Lenders Commitments Line of Credit Loan Commitments Name of Lender
    
    Pro Rata Percentage
    
    Maximum $U.S. Bank National Association
    
    
    25.714285713
    %
    
    $
    45,000,000Farm Credit Services of Missouri, PCA
    
    
    16.428571429
    %
    
    $
    28,750,000Farm Credit Services of America, FLCA
    
    
    16.428571429
    %
    
    $
    28,750,000Harris Trust and Savings Bank
    
    
    16.428571429
    %
    
    $
    28,750,000Rabobank International
    
    
    16.428571429
    %
    
    $
    28,750,000First National Bank of Omaha
    
    
    8.571428571
    %
    
    $
    15,000,000TOTAL:
    
    
    100
    %
    
    $
    175,000,000
 May 27, 2004 - 72 -




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Schedule B to
Loan and Security Agreement Form of Assignment and Acceptance Attached May 27, 2004 - 73 -




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Exhibit 1A to
Loan and Security Agreement Borrowing Base Computation The Borrowing Base shall be determined by calculating the sum of: 85% of Eligible Accounts, as defined in Section 3.1, as reported on
Borrowers monthly and fiscal year end consolidated financial
statements; plus 80% of Eligible Inventory (including breeding stock), as defined in
Section 3.2, as reported on Borrowers monthly and fiscal year end
consolidated financial statements valued at the lower of cost or market
in accordance with GAAP; plus the Fixed Asset Component; minus 100% of all accounts payable and all uncleared checks related to Eligible
Accounts and Eligible Inventory. May 27, 2004




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Exhibit 1B to
Loan and Security Agreement Borrowing Base Certificate Attached May 27, 2004




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Exhibit 2A to
Loan and Security Agreement Form of Line of Credit Note Attached May 27, 2004




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Exhibit 3A to
Loan and Security Agreement Account Debtors Not Subject to Limitations May 27, 2004




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Exhibit 4A to
Loan and Security Agreement List of Closing Documents to be Delivered Prior to the Initial Advance  1.
    
    This Amended and Restated Loan and Security Agreement.2.
    
    Line of Credit Notes.3.
    
    Guaranty of Parent. (Received under Former Loan Agreement)4.
    
    Assignments of Commodity Accounts and Commodity Contracts.5.
    
    Deeds of Trust. (Received under Former Loan Agreement)6.
    
    Mortgagees Title Insurance Policies. (Received under Former Loan
Agreement)7.
    
    ALTA Surveys with Flood Plain Certifications. (Received under Former
Loan Agreement)8.
    
    Phase I Environmental Assessment Report(s). (Received under Former Loan
Agreement)9.
    
    Appraisals. (Received under Former Loan Agreement)10.
    
    Amended and Restated Trademark License Agreement.11.
    
    Secretarys Certificates as to Directors Resolutions.13.
    
    Articles of Incorporation. (Received under Former Loan Agreement)14.
    
    Bylaws. (Received under Former Loan Agreement)15.
    
    UCC Searches. (Received under Former Loan Agreement)16.
    
    UCC-1 Financing Statements. (Received under Former Loan Agreement)17.
    
    Opinion of Legal Counsel (As to matters other than those relating to
Amendments to Deeds of Trust): Shook, Hardy & Bacon.18.
    
    Certificates of Insurance and Loss Payee Designation. (Received under
Former Loan Agreement) May 27, 2004




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Exhibit 4B to
Loan and Security Agreement List of Closing Documents to be Delivered After the Initial Advance
(On or Before June 9, 2004)  1.
    
    Amendments to Deeds of Trust.2.
    
    Commitment(s) for Date Down and Modification Endorsements of Mortgagees
Title Insurance Policies.3.
    
    Opinions of Legal Counsel (As to matters relating to Amendments to Deeds
of Trust): Shook, Hardy & Bacon (Missouri and Texas); and Poyner &
Spruill (North Carolina)4.
    
    Amendments to UCC-1 Financing Statements. May 27, 2004




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Exhibit 6A to
Loan and Security Agreement Disclosure Schedule Part 1: Judgments, Litigation, Claims and Proceedings Part 2: Defaults and Disputes Part 3: Licenses, Patents, Copyrights, Trademarks, Trade Names and Applications May 27, 2004




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Continuation of Exhibit 6A to
Loan and Security Agreement Disclosure Schedule (Continued) Part 4: Security Interests, Liens, Claims and Encumbrances Part 5: Locations of Borrowers Assets Part 6: Tax Liability Claims May 27, 2004




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Continuation of Exhibit 6A to
Loan and Security Agreement Disclosure Schedule (Continued) Part 7: Other Indebtedness Part 8: Other Names Used by Borrower Part 9: Affiliates May 27, 2004




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Continuation of Exhibit 6A to
Loan and Security Agreement Disclosure Schedule (Continued) Part 10: Environmental Matters May 27, 2004




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Exhibit 7A to
Loan and Security Agreement Compliance Certificate Attached May 27, 2004




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Exhibit 8A to
Loan and Security Agreement Permitted Dispositions of Property Upon the prior written consent of the Agent, property with a cumulative book
value of up to $2,000,000 in any Fiscal Year of Borrower. Boneless Hams Plant in Dunn, North Carolina. May 27, 2004




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Exhibit 9A to
Loan and Security Agreement Form of Notice Letter Attached May 27, 2004