EXHIBIT (e)(1)

                           ASSET PURCHASE AGREEMENT


         ASSET  PURCHASE  AGREEMENT  (this  "Agreement")  made as of January 30,
1997, by and between DOUGHTIE'S FOODS, INC., a Virginia corporation (hereinafter
referred to as "Seller"), THE SMITHFIELD HAM & PRODUCTS COMPANY, INCORPORATED, a
Virginia  corporation  (hereinafter  referred  to as  "Buyer"),  THE  SMITHFIELD
COMPANIES,  INC., a Virginia corporation (hereinafter referred to as "Company"),
VERNON  MULES,  individually  (hereinafter  referred to as  "Mules"),  and STEVE
HOUFEK, individually (hereinafter referred to as "Houfek").

                           R E C I T A L S:

         WHEREAS,  Seller  desires to sell  certain  of its  assets  used in the
manufacturing  division of Seller's  business for the production and sale of the
Products set forth on the attached Exhibit A which is incorporated in and made a
part of this Agreement (the "Products");

         WHEREAS,  Buyer  desires  to  purchase  said  assets  used in  Seller's
manufacturing  division  for  the  production  and  sale  of the  Products  (the
"Business") as more fully set forth in this Agreement;

         WHEREAS,  Seller desires to acquire and Company desires to sell certain
common stock of Seller as an integral part of the  transactions  provided for in
this Agreement; and

         WHEREAS, Mules and Houfek are entering into this Agreement for the sole
purpose of contractually  obligating themselves to the execution and delivery of
the  Non-Competition  Agreements  described herein,  which said  Non-Competition
Agreements  are  an  integral  part  of the  transaction  provided  for in  this
Agreement.

         NOW,  THEREFORE,   in  consideration  of  the  mutual  representations,
warranties,  covenants and  agreements,  and upon the terms,  and subject to the
conditions hereinafter set forth, the parties hereby agree as follows:

                           ARTICLE I.  PURCHASE OF ASSETS

         1.1 Purchase and Sale. Seller shall sell, convey, transfer,  assign and
deliver to Buyer,  and Buyer  shall  purchase  and accept  from  Seller,  at the
Closing (as that term is defined in Section 4.1), all of Seller's  right,  title
and  interest  in and to the assets  listed on Schedule  1.1A (the assets  being
purchased hereunder from Seller are hereinafter sometimes  collectively referred
to as the "Purchased Assets");  free and clear of any and all options,  pledges,
mortgages,  security interests,  liens, charges,  burdens and other encumbrances
whatsoever.  The  Purchased  Assets shall not include cash and  cashequivalents,
prepaid  expenses  (except  sales  and  marketing   prepaid   expenses),   notes
receivable,   accounts  receivable,  rent  receivable,  and  all  other  assets,
properties, rights, claims and contracts set forth on Schedule 1.1B (hereinafter
and hereinabove referred to as the "Excluded Assets").


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                           ARTICLE II.  PURCHASE PRICE

         2.1 Cash Purchase  Price.  The purchase price for the Purchased  Assets
shall be (a) $625,000 (the "Base Price");  (b) plus the value, as of the Closing
Date,  valued at the lower of cost or current  market as of the Closing Date, of
all good and useable raw materials and packaging  inventories,  and all saleable
finished goods inventories of Products.

         2.2  Non-Assumption  and Assumption of Certain  Obligations.  (a) Buyer
shall not be  obligated to hire any of Seller's  employees  and shall not assume
and shall not be liable for the payment,  performance or discharge of any debts,
contracts,  agreements,  liabilities,  obligations,  commitments,  restrictions,
disabilities  or  duties,  whether  direct or  indirect,  fixed,  contingent  or
otherwise,  of Sellers,  except that Buyer shall  assume the vendor and customer
purchase orders,  contract  packaging  agreements,  and private label agreements
related to the  Purchased  Assets,  entered  into by Seller prior to the Closing
Date in the  ordinary  course of  Business,  provided  such vendor and  customer
purchase orders, contract packaging agreements, and private label agreements are
set forth on Schedule 2.2 or have been entered into between the execution hereof
and the Closing Date and have been approved by Buyer,  in writing,  prior to the
Closing  Date.  Schedule  2.2 shall be updated on the Closing  Date to show each
vendor and customer purchase order that Buyer will assume at Closing.

         2.3  Allocation  of Purchase  Price.  (a) The Base Price for the Assets
shall be allocated among the Purchased Assets as follows:
<TABLE>
<S> <C>
         A.       Machinery and Equipment, Furniture and
                  Labels (Paragraphs A, C and D on
                  Schedule 1.1A excluding raw materials,
                  packaging inventories and finished goods)                                                       $ 323,000

         B.       Contracts, Customers Lists, Recipes
                  and Formulas, and Prepaid Expenses
                  (Paragraphs B and E on Schedule 1.1A)                                                           $ 290,000

         D.       Non-compete Seller                                                                              $  10,000

         E.       Non-compete Mules                                                                               $   1,000

         F.       Non-compete Houfek                                                                              $   1,000
</TABLE>

                           ARTICLE III.  PAYMENT OF PURCHASE PRICE

         3.1 Cash  Payable at Closing.  At the Closing,  Buyer shall  deliver to
Seller a cashier's check or wire transfer of immediately  available funds for an
amount  equal to the Base  Purchase  Price  (except  for  that  portion  thereof
allocated  in Section  2.3 to the Mules and Houfek  Non-Competition  Agreements,
which said portion shall be paid to them) plus the value of the inventory  taken
and determined pursuant to Section 3.2.

         3.2 Physical Inventory. At 5:00 P.M. on February 24, 1997, Seller shall
cease/terminate  the  manufacture  and processing of the Products.  An inventory
shall be taken on February 25 - 27, 1997, of all good


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and useable raw  materials  and packaging  materials  (excluding  labels) of the
Business and of all saleable  finished  goods and products of the Business.  The
good and useable raw materials and packaging  inventories  of the Business shall
be valued at the cost paid by Seller for same,  and the saleable  finished goods
so  inventoried  shall be  valued  at  Seller's  manufacturing  division  listed
wholesale price as shown on Schedule 3.2 less twenty-five percent (25%).

         For purposes of this Section 3.2,  good and useable raw  materials  and
packaging  materials  shall  include  only  those  raw  materials  that  are  in
quantities  reasonably required for the conduct of the Business and sufficiently
fresh for use in the  production of the Products by Buyer  following the Closing
Date and  saleable  finished  goods shall  include  only those goods that are of
sufficient  quality  and  freshness  for sale to Seller by Buyer  following  the
Closing Date under the terms of the Product Supply Agreement  attached hereto as
Exhibit B.

                      ARTICLE IV. DATE AND PLACE OF CLOSING

         4.1 Date and Place of Closing. Subject to satisfaction or waiver of the
conditions  to the  obligations  of the  parties,  the  purchase and sale of the
Purchased  Assets  pursuant to this Agreement  shall be consummated at a closing
(the "Closing") to be held in the offices of McGuire,  Woods, Battle & Boothe in
Norfolk,  Virginia or such other place as mutually agreed on by the parties,  at
10:00 A.M. on February 28, 1997,  or such other date as the parties may mutually
agree upon (the "Closing  Date").  Title to the Purchased Assets shall pass from
Seller to Buyer at the Closing.




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                           ARTICLE V.  CLOSING

         5.1 Seller's Performance. At the Closing, concurrently with performance
by Buyer of its obligations to be performed at the Closing:

         5.1.1  Conveyances.  (a) Seller shall execute and deliver to Buyer,  in
form and substance  acceptable to Buyer, (i) warranty bills of sale conveying to
Buyer all tangible  personal  property and other tangible assets owned by it and
included among the Purchased Assets, (ii) assignments of Seller's claims, rights
and benefits,  to and under the vendor and customer  purchase  orders,  contract
packaging  agreements,  and  private  label  agreements  to be  assumed by Buyer
pursuant to Section 2.2, and all transferable licenses,  permits,  certificates,
manufacturer  equipment  warranties,   and  authorizations   pertaining  to  the
Purchased Assets.

         (b) Seller  shall  execute and deliver to Buyer all other  conveyances,
bills of sale, assignments, endorsements and instruments of transfer as shall be
necessary or appropriate to carry out the intent of this Agreement, and as shall
be  sufficient  to vest in Buyer  title to all of the  Purchased  Assets and all
right,  title and  interest of Sellers  thereto.  If  requested  by Buyer,  such
documents shall be in a form suitable for recording.

         5.1.2 Records.  Seller shall deliver to Buyer all customer lists, sales
contracts, contract packaging agreements, private label agreements, sales lists,
licenses, and business files and records, formulas,  recipes, seasoning recipes,
processing procedures,  research and development records,  advertising materials
and labels relating to the Products,  including without limitation the contracts
set forth on Schedule 2.2 hereof (hereinafter sometimes collectively referred to
as the "Records").

         5.1.3  Certificates  and Opinions.  Seller shall execute and deliver to
Buyer the  certificates  referred  to in  Sections  10.3 and 10.4 and deliver to
Buyer the opinions of counsel referred to in Section 10.8.

         5.1.4  Supply  Agreement.   Execute  and  deliver  the  Product  Supply
Agreement  between  Seller and Buyer,  the form of which is  attached  hereto as
Exhibit B (the "Supply Agreement").

         5.1.5  License  Agreement.  Execute and  deliver the License  Agreement
between Seller and Buyer, the form of which is attached hereto as Exhibit C (the
"License Agreement").

         5.1.6    Non-Competition    Agreement.    Execute   and   deliver   the
Non-Competition  Agreement  between  Seller  and  Buyer,  the  form of  which is
attached hereto as Exhibit D (the "Non-Competition Agreement").

         5.1.7 Other  Actions.  Seller shall take all such other steps as may be
necessary  or  appropriate  to put Buyer in actual and  complete  ownership  and
possession of the Purchased Assets.

         5.1.8 Stock  Purchase.  Seller shall  deliver to Company the  cashier's
check or wire transfer referred to in Section 9.2. for the purchase by Seller of
all of the shares of the common  stock of Seller owned by Company on the Closing
Date, up to but not exceeding 16,500 shares.


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         5.2  Buyer's  Performance.  At  the  Closing,   concurrently  with  the
performance by Seller of its obligations to be performed at the Closing:

         5.2.1 Purchase Price. Buyer shall deliver to Seller the cashier's check
or wire transfer specified in Section 3.1.

         5.2.2 Supply  Agreement.  Buyer shall execute and deliver to Seller the
Supply Agreement.

         5.2.3 Assumption  Agreement.  Buyer shall execute and deliver to Seller
an  agreement  to assume the  vendor  and  customer  purchase  orders,  contract
packaging agreements,  and private label agreements,  Buyer has agreed to assume
pursuant to Section 2.2. The form of the Assumption Agreement is attached hereto
as Exhibit E.

         5.2.4  Certificates  and  Opinions.  Buyer shall execute and deliver to
Seller the  certificates  referred to in Sections  11.3 and 11.4 and deliver the
opinions of counsel referred to in Section 11.6.

         5.2.5 License Agreement.  Buyer shall execute and deliver to Seller the
License Agreement.

         5.2.6  Non-Competition  Agreement.  Buyer shall  execute and deliver to
Seller the Non-Competition Agreement.

         5.3  Company's  Performance.  At the  Closing,  concurrently  with  the
performance by Seller of its obligations to be performed at the Closing:

         5.3.1  Transfer of Stock.  Company  shall endorse and deliver to Seller
all of the  shares of the  common  stock of Seller  and owned by  Company on the
Closing Date, up to but not exceeding 16,500 shares.

         5.4 Further  Action by  Parties.  In  addition  to the  foregoing,  the
parties agree as follows:

         5.4.1 Further  Action by Seller.  At any time and from time to time, at
or after  the  Closing,  upon  request  of  Buyer,  Seller  shall  do,  execute,
acknowledge and deliver or shall cause to be done,  executed,  acknowledged  and
delivered, all such further acts, assignments, transfers, conveyances, powers of
attorney and  assurances  as may  reasonably be required in order to vest in and
confirm to Buyer full and complete title to and, possession of, and the right to
use and enjoy, the Purchased Assets.

         5.4.2 Further Action by Buyer. At any time and from time to time, at or
after the Closing, upon request of Seller, Buyer shall do, execute,  acknowledge
and deliver or shall cause to be done, executed,  acknowledged and delivered all
such further acts and  assurances as may  reasonably be required to complete the
assumption  by Buyer  of its  obligations  assumed  by  Buyer  pursuant  to this
Agreement including without limitation the Assumption Agreement.



<PAGE>
              ARTICLE VI. REPRESENTATIONS AND WARRANTIES OF SELLER.

         Seller represents and warrants to Buyer that:

         6.1 Due  Organization and  Qualification.  Seller is a corporation duly
organized,  validly  existing,  qualified to do business,  and in good  standing
under the laws of the State of Virginia.

         6.2  Corporate  Power and  Authority.  The Board of Directors of Seller
have duly approved this Agreement and the transactions  contemplated hereby. The
execution and delivery of this  Agreement and the  performance  by Seller of its
obligations  hereunder  have been duly  authorized  by all  requisite  corporate
action,  and no further action or approval is required in order to permit Seller
to consummate the transactions  contemplated by this Agreement.  Seller has full
power,  authority and legal right to enter into this Agreement and to consummate
the  transactions  contemplated  hereby.  The  making  and  performance  of this
Agreement  and the  consummation  of the  transactions  contemplated  hereby  in
accordance  with the terms hereof will not (a) conflict with the  Certificate or
Articles of Incorporation  or the Bylaws of Seller,  (b) result in any breach or
termination  of, or constitute a default under, or constitute an event that with
notice or lapse of time, or both, would become a default under, or result in the
creation of any  Encumbrance  upon any of the  Purchased  Assets,  or create any
rights of  termination,  cancellation,  or  acceleration in any person under any
vendor or customer  purchase  order assumed by Buyer  hereunder,  or violate any
order,  writ,  injunction or decree by which any of the Purchased Assets, or the
Business may be bound or affected or under which any of the Purchased Assets, or
the Business receive benefits, (c) result in the loss or adverse modification of
any material license, permit or other authorization granted to or otherwise held
by Seller and related to the Purchased Assets, or the Business,  (d) violate any
provision of any law, ordinance, regulation, rule, requirement or order to which
Seller,  the  Purchased  Assets,  or  the  Business,  are  subject,  except  for
violations that, in the aggregate, would not have a material adverse affect upon
the  business,  operations,  condition  (financial  or  otherwise),  results  of
operations,  value or prospects of the Purchased  Assets,  or the  Business,  (a
"Material Adverse Effect").

         6.3 Title.  Seller has and upon conveyance,  transfer and assignment of
the Purchased  Assets to Buyer by Seller at the Closing,  Buyer will acquire and
hold, good and marketable title in fee simple to all of the Purchased Assets, in
each case, free and clear of any and all options,  rights,  pledges,  mortgages,
security interests,  liens, charges, burdens,  servitudes and other encumbrances
whatsoever  (herein  sometimes  collectively  referred  to  as  "Encumbrances").
Neither Seller,  any affiliate or subsidiary of Seller owns or holds under lease
any assets of any kind, character or description that are utilized in a material
way to the  Business or the  Purchased  Assets,  except as set forth on Schedule
6.3.

         6.4 Inventories.  The Inventories consist of current items of a quality
and  quantity  that are  usable  or  marketable  in the  ordinary  course of the
Business,  and  items  not so usable or  marketable  in the  Business  have been
written down in value to estimated net realizable  market values.  Since January
1, 1997, the  Inventories  have been  maintained at a level  consistent with the
operation  of the Business in its normal  course,  and no change has occurred in
such Inventories that materially  adversely affects or will materially adversely
affect their  usability or salability.  Orders for inventory items have not been
given for amounts  materially in excess of the amounts necessary to maintain the
Inventories of Seller for the Business at normal levels based on past practice.

         Notwithstanding the foregoing, Buyer acknowledges and agrees that, from
the date of the execution of this Agreement  until Closing,  Seller intends only
with


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Smithfield's  permission to be rendered on a weekly basis, to reduce Inventories
below its  historically  normal levels based on past practice.  Seller agrees to
keep Buyer  informed of its running  estimate as to the  expected  levels of the
Inventories at Closing. In addition, Seller will cooperate with and assist Buyer
during the pre-Closing  period to prepare for Buyer's production of the Products
as soon as practicable  after Closing,  provided that such assistance  shall not
require additional  out-of-pocket  expenses.  In the event that Closing does not
occur,  (i)  Buyer  agrees  that it will  promptly  return  to  Seller  and keep
confidential all formulas,  recipes,  and materials  provided by Seller and (ii)
Seller  agrees to purchase all Products  that Buyer may have  produced  provided
said Product is of reasonable quality and was produced according to the formulas
and recipes provided to Buyer by Seller,  the price for same to be calculated in
accordance  with the valuation  method of Doughtie's  compensible  product items
under the provisions of Section 3.2.

         6.5  Physical  Properties.  Schedule  6.5 sets  forth an  accurate  and
complete  listing of all tangible  personal  property and other tangible  assets
owned or leased by Seller and used in the  Business,  other than  Inventory  and
other than raw  materials  and other  similar  assets  used or  consumed  in the
ordinary  course of business  between the date hereof and the Closing Date.  All
equipment and  machinery  included  among the Purchased  Assets are sold "as is"
except  that  Seller  warrants  that  the  equipment  and  machinery  is in good
operating  condition  and  repair and  sufficient  to operate  the  Business  as
presently  conducted  and are not deemed  unsafe or  unsanitary.  Seller  enjoys
peaceful possession of the Purchased Assets.

         6.6  Contracts.  Schedule  6.6 sets  forth a brief  description  of all
material  contracts,   consulting  agreements,  contract  packaging  agreements,
private label  agreements,  employment  agreements,  other  agreements,  leases,
arrangements  and  commitments  (whether  oral or written) to which  Seller is a
party and by which any of the Purchased  Assets, or the Business are affected or
are bound,  except  vendor and  customer  purchase  orders,  contract  packaging
agreements,  and private label  agreements,  in the ordinary  course of business
consistent  with past  practice,  assumed by Buyer under this  Agreement and set
forth on Schedule 2.2.

         6.7  Contract  Defaults.  To the best of Seller's  knowledge,  no other
party thereto is, in default in any material respect under any of the contracts,
agreements,  leases, arrangements and commitments listed on Schedules 6.6 or the
contracts  described  in Section 2.2 to be assigned to and assumed by Buyer.  To
the best of Seller's knowledge, (a) there has not occurred any event which, with
the lapse of time or giving of notice or both,  would constitute such a material
default; (b) such contracts,  agreements,  leases, arrangements, and commitments
are legal,  valid, and binding  obligations of the respective parties thereto in
accordance with their terms and, except to the extent reflected in Schedules 6.6
have not been amended;  and (c) no defenses,  offsets, or counterclaims  thereto
have been asserted,  or to the best knowledge of Seller, may validly be made, by
any party thereto other than Seller.

         6.8   Litigation.   Schedule  6.8  sets  forth  all   actions,   suits,
proceedings,  investigations,  or grievances  pending against Seller to the best
knowledge of Seller,  threatened  against  Seller,  and  affecting the Purchased
Assets,  or the Business,  or involving  products  manufactured by Seller in its
manufacturing  division,  at law,  in equity or in  admiralty,  before or by any
court  or any  federal,  state,  municipal  or  other  governmental  department,
commission, board,


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bureau,  agency or instrumentality,  domestic or foreign (hereinafter  sometimes
collectively referred to as "Agencies"). None of the actions, suits, proceedings
or investigations  listed on Schedule 6.8, either (a) has resulted in, or would,
if  adversely  determined,  result in, a  Material  Adverse  Effect,  or (b) has
affected, affects or would, if adversely determined, affect the right or ability
of Seller to carry on the Business  substantially as now conducted.  To Seller's
knowledge,  Seller is neither subject to nor in default of any continuing  court
or Agency order, writ, injunction or decree,  applicable to the Purchased Assets
or the Business.

         6.9 Compliance with Laws.  Except as listed on Schedule 6.9 A., Seller,
to the best of its knowledge,  (a) has complied with, is in compliance with, and
has no basis to  believe  it is not in  compliance  with,  all  federal,  state,
county, and municipal laws,  ordinances,  regulations,  rules,  requirements and
orders  applicable to the  Purchased  Assets or the Business to the operation of
the  Business,  the breach or violation  of which could have a Material  Adverse
Effect,  (b) has filed with the proper  authorities  all  statements and reports
required  by all  laws,  ordinances,  regulations,  rules,  licensing  and other
requirements  and  orders to which the  Purchased  Assets  or the  Business,  is
subject the failure to file which could have a Material Adverse Effect, and none
of such statements and reports  contains  untrue  statements of material fact or
omits any  statement  of material  fact  necessary to make such  statements  and
reports not  misleading,  and (c) has  obtained  and  maintained  all  licenses,
permits and governmental  authorizations necessary for the present ownership and
use of the Purchased Assets and for the conduct of the Business in the manner in
which and in the  jurisdictions  and places where the Business is now  conducted
the failure to have which could have a Material  Adverse Effect.  Seller has not
received written notice of any violation of, or any pending investigation under,
any  of  such  laws,  ordinances,   regulations,   rules,  licensing  and  other
requirements and orders during the last three (3) years related to the Business.
Schedule 6.9B  correctly  lists all material  licenses,  permits,  certificates,
approvals,   memberships  and   authorizations,   and  all   registrations   and
applications  pending  before any agency or  authority  for the  issuance of any
licenses, permits, certificates, approvals, memberships or authorizations or the
renewal  thereof related to the Business.  Seller has no franchises  relating to
its Business, and none are presently required for the conduct thereof.

         6.10  Attachments  and Other  Proceedings.  There  are no  attachments,
executions,   assignments   for  the   benefit  of   creditors,   receiverships,
conservatorships  or voluntary  or  involuntary  proceedings  in  bankruptcy  or
pursuant to any debtor  relief laws  contemplated  or filed by Seller or pending
against Seller.

         6.11  Taxes.  Seller has duly  filed,  or has duly  obtained  effective
extensions for filing, all U.S. federal, foreign, state, county, local and other
excise, franchise,  property, payroll, income, profits, capital stock, sales and
use, and other tax returns which are required to be filed,  and all such returns
are true and correct in all  material  respects.  Seller has paid,  collected or
withheld and  remitted to the  appropriate  governmental  agency all taxes which
have become due or have been  assessed  against it and all taxes,  penalties and
interest  which any taxing  authority  has  proposed  or  asserted to be due and
owing.  All tax  liabilities  to which the Purchased  Assets have been subjected
have been  discharged  and there are no liens for taxes on the Purchased  Assets
except for  property  taxes  assessed  but not yet  payable or as  described  in
Schedule  6.11.  Except  as  described  in  Schedule  6.11,  there  are  no  tax
deficiencies or claims  presently  being  asserted,  or, to the best of Seller's
knowledge,  threatened,  against Seller and Seller has no knowledge of any basis
for such claims or deficiencies.


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Seller has not granted any extension to any taxing  authority of the  limitation
period during which any tax liability may be asserted.

         6.12  Consents.  Except  as set forth on  Schedule  6.12,  no  consent,
approval,  authorization  or order of any court,  Agency or any other  person is
required under any law, ordinance,  regulation, rule, requirement,  order, writ,
judgment,  decree,  contract,  agreement,  lease,  commitment,  charter or bylaw
applicable to or binding upon Seller in order to permit Seller to consummate the
transactions  contemplated  by this  Agreement  and to perform  its  obligations
hereunder and under the Supply Agreement, and the License Agreement.

         6.13 Patents,  Trademarks,  Etc. Seller neither has contracted for, nor
has  licenses  or  agreements  to use any trade  secrets,  know-how,  processes,
formulae,  royalties,  inventions,  discoveries,  improvements,  proprietary  or
technical  information,  proprietary  rights,  joint venture or joint  operating
interests,  copyrights,  patents,  tradenames,  trademarks,  service  marks  and
applications  for  copyright,  patent,  tradename,  trademark  and service  mark
registration  (hereinafter  sometimes  collectively  referred to as  "Intangible
Rights") for use at, or in connection with, the operation of the Business except
for its rights to the "Doughtie's"  trade name, and the Intangible  Rights among
the Purchased  Assets.  None of the Purchased Assets or activities or operations
of the Business infringe or involve or have resulted within three years prior to
the date hereof in (a) the infringement of, or (b) any claim of infringement of,
any  Intangible  Right  of  any  other  person,  firm  or  corporation;  and  no
proceedings have been instituted, are pending, or are threatened, that challenge
the rights of Seller in respect  thereof.  To the best knowledge of Seller,  the
"Doughtie's"  tradename  is not being  infringed  by the  products,  activities,
operations, patents, trade names, trademarks, service marks or copyrights of any
other person or persons and is not subject to any outstanding  order,  judgment,
decree, stipulation or agreement restricting the use thereof.

         6.14 Product Warranties. No shipment or other delivery of Products made
or to be made by Seller on or prior to the Closing Date was or as of the Closing
Date will be, and no food or food  ingredients  in inventory on the Closing Date
will be as of the Closing Date: (i) adulterated or misbranded within the meaning
of the Federal Food,  Drug and Cosmetic  Act, as amended;  (ii) an article which
may not under the provisions of ss.404 or ss.505 of such Act be introduced  into
interstate  commerce;  or (iii)  adulterated or misbranded within the meaning of
any pure food laws or ordinances of any state or city to which such articles are
shipped or to be shipped.  All such Inventory will meet the Seller's  reasonable
standards  of  quality  and  sanitation  and all  requirements  of the  laws and
regulations  enforced  by the  United  States  Department  of  Agriculture.  All
products  processed as of the Closing Date shall be labeled in  accordance  with
the requirements of the National Labeling and Education Act.

         6.15  Brokerage  Commissions.  There are no claims  for,  or rights to,
brokerage  commissions  or agent's or finder's  fees  resulting  from any action
taken by  Seller  in  connection  with  the  transactions  contemplated  by this
Agreement.

         6.16  Hart-Scott-Rodino.  Neither  Seller nor any "ultimate  parent" of
Seller have sales or assets of $100,000,000.00 or more.

         6.17 No  Affiliates.  Seller has no affiliates  or affiliated  business
entities  that have a material  effect on the Business or the  Purchased  Assets
except those set forth on Schedule 6.17.

<PAGE>





         6.18  Employee  Benefit  Plans;  Employees.  "Plan"  means any employee
benefit plan as defined in Section  3(3) of ERISA.  All Plans  maintained  by or
contributed  to by Seller  ("Employee  Benefit  Plans")  fully  comply  with all
requirements of the Internal Revenue Code ("Code") and ERISA. All  contributions
required  to be made to any Plans for  employees  of Seller have been made on or
before their due dates,  and all amounts properly accrued to date as liabilities
of the Seller that have not been made have been  properly  recorded on the books
of  Seller.  No Plan has  applied  for or  obtained a waiver  from the  Internal
Revenue Service of any minimum funding requirement under Section 412 of the Code
which  could  have a  Material  Adverse  Effect.  Neither  Seller  nor any ERISA
Affiliate have terminated any employee  pension benefit plan (within the meaning
of Section 3(2) of ERISA) subject to Title IV of ERISA (herein  referred to as a
"Title IV Plan") under circumstances  giving rise to, or that could give rise to
any actual or potential  liability to the Pension Benefit  Guaranty  Corporation
("PBGC") or any other person which could have a Material Adverse Effect, (ii) no
event or condition  exists which  presents a risk of termination of any Title IV
Plan by the PBGC which could have a Material Adverse Effect,  and (iii) there is
no actual or potential liability to the PBGC or any other person expected by the
Seller or any ERISA  Affiliate to be incurred with respect to any Title IV Plan,
including,  but not  limited  to,  any  liability  for any  accumulated  funding
deficiency  as  defined  in  Section  302 of  ERISA or for any  minimum  funding
contribution  under  Section 302 of ERISA  which  could have a Material  Adverse
Effect. No lien imposed under Section  401(a)(29) or Section 412(n) of the Code,
Section  302(f) or Section  4068 of ERISA,  or arising  out of any action  filed
under ERISA Section 4301(b), exists upon any Purchased Assets.

         6.19 Full Disclosure.  No  representation or warranty of Seller made in
this Agreement,  nor any written statement,  schedule or certificate  heretofore
furnished  to  Buyer  by  Seller  pursuant  hereto,  or in  connection  with the
transactions contemplated hereby, contains, or will contain any untrue statement
of a material fact, or omits, or will omit to state a material fact necessary to
make the statement or facts contained  herein or therein not misleading.  Seller
has not  withheld  and will not  withhold  from Buyer  knowledge  of any events,
conditions or facts,  of which Seller has knowledge,  that could have a Material
Adverse Effect.


ARTICLE VII.  REPRESENTATIONS, WARRANTIES AND COVENANTS OF BUYER AND COMPANY

         A.       Buyer represents, warrants and covenants to Seller that:

         7.1 Due  Organization  and  Qualification.  Buyer is a corporation duly
organized,  validly  existing and in good  standing  under the laws of the State
Virginia. Buyer is qualified to do business and is in good standing in the State
of Virginia.

         7.2 Corporate Power and Authority.  The Board of Directors of Buyer has
duly  approved this  Agreement and the  transactions  contemplated  hereby.  The
execution  and delivery of this  Agreement and the  performance  by Buyer of its
obligations  hereunder  has been  duly  authorized  by all  requisite  corporate
action,  and no further  action or approval is required in order to permit Buyer
to consummate the  transactions  contemplated by this Agreement.  Buyer has full
power,  authority and legal right to enter into this Agreement and to consummate
the transactions contemplated hereby. The making and performance of this


<PAGE>



Agreement  and the  consummation  of the  transactions  contemplated  hereby  in
accordance  with the terms  hereof will not (a)  conflict  with the  Articles of
Incorporation  or the Bylaws of Buyer or (b) violate any  provision  of any law,
ordinance,   regulation,  rule,  requirement,  order,  writ,  judgment,  decree,
contract,  agreement, lease, arrangement or commitment to which Buyer is subject
or is a party  that,  individually  or in the  aggregate,  would have a Material
Adverse  Effect upon the ability of Buyer to perform its  obligations  hereunder
and under the Supply Agreement or the License Agreement.

         7.3 Actions,  Suits, Etc. There are no actions,  suits,  proceedings or
investigations  pending,  or to the  knowledge of Buyer,  threatened  against or
affecting Buyer at law or in equity or before any federal,  state,  municipal or
other  instrumentality  in which it is sought to  restrain or prohibit or obtain
damages in respect of the consummation of the purchase and sale of the Purchased
Assets or the other transactions contemplated hereby. Moreover, Buyer is, to the
best  knowledge  of Buyer,  not in default  with  respect  to any  order,  writ,
injunction or decree of any court, or Agency with respect to the consummation of
the  purchase  and  sale  of the  Purchased  Assets  or the  other  transactions
contemplated hereby.

         7.4  Consents.  No  consent,  approval,  authorization  or order of any
court,  Agency  or any  other  person  is  required  under  any law,  ordinance,
regulation,   rule,  requirement,   order,  writ,  judgment,  decree,  contract,
agreement,  lease,  commitment,  charter or bylaw  applicable to or binding upon
Buyer in order to permit Buyer to consummate the  transactions  contemplated  by
this  Agreement  and to perform its  obligations  hereunder and under the Supply
Agreement or the License Agreement.

         7.5  Brokerage  Commissions.  There are no claims  for,  or rights  to,
brokerage  commissions  or agent's or finder's  fees  resulting  from any action
taken  by  Buyer  in  connection  with  the  transactions  contemplated  by this
Agreement.

         7.6  Hart-Scott-Rodino.  Neither  Buyer nor any  "ultimate  parent"  of
Seller have sales or assets of $100,000,000.00 or more.

         7.7 Sophisticated  Purchaser. A. The transactions  contemplated in this
Agreement  are for the Buyer's own account  for the  purposes of  operating  the
Business as a going concern and not with a view towards resale or  distribution.
The Buyer  acknowledges  that, in reliance on the  foregoing,  the  transactions
contemplated  hereby  have  not  been  registered  under  any  federal  or state
securities laws.

         B. Company represents, warrants and covenants to Seller that the shares
of Doughtie's  Foods,  Inc. to be sold to Seller  pursuant to this Agreement are
free  and  clear  of  any  Encumbrances  and  will  be  free  and  clear  of any
Encumbrances at Closing.


                        ARTICLE VIII. COVENANTS OF SELLER

         8.1 Negative Covenants Regarding Conduct of Business.  Except as may be
otherwise  expressly provided herein,  from and after the date of this Agreement
and until the  Closing  Date,  with  respect  to the  Purchased  Assets  and the
Business, without the consent of Buyer, Seller covenants and agrees that it will
not in respect of the Business or the Purchased Assets:

<PAGE>





         8.1.1  Creation of  Obligations.  Incur any  obligation  or  liability,
absolute or contingent,  except current  liabilities  incurred,  and obligations
under contracts entered into, in the ordinary course of business consistent with
past practice.

         8.1.2  Encumbrances.  Execute,  grant, create or suffer any Encumbrance
upon the Purchased Assets.

         8.1.3 Disposition of Assets. Effect any sale, transfer,  Encumbrance or
other  disposition of assets and properties  that would otherwise be included in
the Purchased Assets,  except for sales of Inventories in the ordinary course of
business, except for machinery,  equipment, furniture and fixtures replaced with
items of equivalent or greater value,  and except for supplies and other similar
assets used or consumed in the ordinary course of business.

         8.1.4 Contracts,  Licenses, Etc. Amend, modify, assign, transfer, grant
or terminate any contract, agreement, lease, arrangement or commitment listed in
Schedule 6.6. and Schedule 2.2.

         8.1.5 Rights.  Waive, modify or release any rights of material value to
the Business or the Purchased Assets.

         8.1.6  Termination  of  Operations.  Terminate,  discontinue,  close or
dispose of any part of the operations of the Business.

         8.1.7 Other Transactions. Enter into any other transaction or series of
transactions  that have a material  effect on the Business or  Purchased  Assets
other than in the ordinary course of business.

         8.2 Affirmative Covenants Regarding Conduct of Business. From and after
the date of this  Agreement  and until the Closing  Date,  Seller  covenants and
agrees that it will:

         8.2.1 Ordinary Course of Business.  Carry on the operations of Business
only in the usual,  regular and ordinary  course  consistent  with good business
practices and with prior practices. 8.2.2 Maintenance of Relationships.  Use its
best  efforts to maintain  and preserve the Business and to maintain its present
relationships with customers, suppliers and others having business dealings with
the Business.

         8.2.3  Maintenance  of the  Purchased  Assets.  Maintain the  Purchased
Assets  in good  operating  repair  and  condition  and  maintain  the  level of
Inventories in accordance with past practices.,  except as otherwise provided in
this Agreement.

         8.2.4 Payment of Obligations in Ordinary Course.  Pay and discharge all
costs  and  expenses  of  carrying  on the  operations  of the  Business  and of
maintaining  and operating  the Purchased  Assets as they become due and pay and
discharge  any such  costs and  expenses  that at the date  hereof are past due,
unless contested in good faith.




<PAGE>


         8.2.5  Representations and Warranties.  Use its best efforts to prevent
the   occurrence  of  any  change  or  event  that  would  prevent  any  of  the
representations and warranties of Seller contained herein from being true in all
material  respects at and as of the Closing  Date with the same effect as though
such  representations  and warranties  (in the exact language  contained in this
Agreement with appropriate  modification of tense in the case of representations
and  warranties  relating to statements  of fact as of specific  dates) had been
made at and as of the Closing Date.

         8.2.6 Maintenance of Records. Maintain its books, accounts, and records
relating to the  Business  and the  Purchased  Assets in the usual,  regular and
customary manner on a basis consistently applied.

         8.2.7 Access to and Updating of Information. During reasonable business
hours,  afford to the officers,  attorneys,  accountants,  and other  authorized
representatives  of Buyer,  free and full access to the Purchased Assets and the
Business,  in order that Buyer may have full  opportunity  to make a  reasonable
investigation with respect to the Purchased Assets, the Business, the contracts,
leases,  arrangements and commitments  listed in Schedule 6.6 hereto,  the books
and records of the Business and their operations, including, without limitation,
fixed asset  records,  sales records  relating to the customers of the Business,
purchase records,  and inventory records.  Seller will furnish to Buyer all such
further  information  concerning the Purchased  Assets and the Business as Buyer
may reasonably  request.  Seller will update by amendment or supplement  each of
the Schedules  referred to herein and any other  disclosures  made in writing to
Buyer  forthwith upon any material  change in the  information set forth in said
Schedules or other  disclosure,  and Seller  represents  and warrants  that such
Schedules and such written disclosures, as so amended or supplemented,  shall be
true,  correct and complete in all material  respects as of the date or dates of
such amendments or  supplements;  provided,  however,  that the inclusion of any
information in any such  amendment or  supplement,  not included in the original
Schedule  at or prior to the date of this  Agreement,  shall not limit or impair
any rights that Buyer might  otherwise have  respecting the  representations  or
warranties of Seller contained in this Agreement.

                   ARTICLE IX. AGREEMENTS OF SELLER AND BUYER

         9.1 Delivery of Purchased Assets.  Buyer shall supervise and assist and
Seller shall, at Seller's cost, have the Purchased  Assets ready for shipment on
its docks in Portsmouth,  Virginia,  on the Closing Date. Seller shall cooperate
with  Buyer in the  orderly  transfer  of the  Purchased  Assets  from  Seller's
facility in Portsmouth,  Virginia, to Buyer's facility in Smithfield,  Virginia.
Buyer shall bear the cost of shipment from  Seller's  dock to its  facilities in
Smithfield,  Virginia.  For purposes of this Section 9.1,  "ready for  shipment"
shall mean secured on skids and ready for shipment in a commercially  reasonable
manner.

         9.2 Sale of Stock.  Company  owns 16,500  shares of the common stock of
Seller.  On the Closing Date,  Company  shall sell and Seller shall  purchase so
much of said 16,500 shares of Doughtie's  Foods,  Inc. stock owned by Company on
the Closing Date (but not to exceed 16,500  shares) for $4.25 per share.  At the
Closing,  Seller shall deliver to Company a cashier's  check or wire transfer of
immediately  available  funds for the purchase  price for said stock and Company
shall in  exchange  therefore  deliver  the shares of stock to  Seller.  Company
reserves  and shall  have the right to sell any or all of such  stock to another
person or entity before the Closing Date.


<PAGE>



         9.3 Public  Disclosures.  Seller and Buyer  shall  cooperate  with each
other and give each other advance notice in respect of any public  announcements
or disclosures pertaining to the transaction described herein. Buyer shall draft
the form of public  announcement  or disclosure  pertaining to this  transaction
which  shall be  approved  by  Seller  prior  to  release.  Notwithstanding  the
foregoing,  nothing in the Section  will  preclude  either party from making any
disclosures required by law or regulation or necessary and proper in conjunction
with the compliance  with all applicable  federal and state  securities laws and
the filing of any tax  return or other  document  required  to be filed with any
federal, state, or local governmental body, authority, or agency.

         9.4 Promotion/Damaged Goods Allowances.  In the event that customers of
the Business  bill Buyer or make  deductions  against  Buyer's  otherwise  valid
invoices for promotional pricing allowances or damaged goods applicable to sales
of Products  produced or sold by Seller,  which said  bill-backs  or  deductions
shall be the  liability  of Seller,  Buyer will  promptly  forward  such bill to
Seller and Seller will, in turn, promptly pay all such bills or compensate Buyer
for any  bill-back or deduction  made by such  customer and Seller shall resolve
directly  any  dispute  over  such  bill-back  or  deduction  directly  with its
customer.

         9.5 Return of Inventories and Damaged Goods. From and after the Closing
Date,  Buyer shall settle in good faith any claims for returns or damaged  goods
relating to Products  shipped prior to the Closing Date and made by customers of
the Business on or after the Closing Date.  Seller shall reimburse Buyer for all
costs  incurred by Buyer as a result of such  returned  Products.  Buyer's costs
shall include the invoice price for any Products  shipped to a customer in place
and  stead  of  the  returned   Product,   plus  any  reasonable  and  customary
transportation and handling costs incurred by Buyer.

         9.6 Consumer Claims and Complaints. The parties shall assure that their
respective  Consumer  Affairs  Departments  cooperate  and assist  each other to
assure the expeditious handling of customer claims and complaints.  All customer
claims and complaints  made with respect to Products sold by Seller prior to the
Closing Date or Products  acquired by Buyer from Seller at the Closing  shall be
the responsibility of the Seller.

         9.7 Due Diligence Investigation.  Buyer may, prior to the Closing Date,
make or cause to be made such  investigation  of the Business and  properties of
the Business and of its financial and legal  condition as Buyer deems  necessary
or  advisable.   Seller  will  permit  Buyer  and  its   authorized   agents  or
representatives,  including its independent accountants,  to have full access to
the properties, books, and records of the Business at reasonable hours to review
information  and  documentation  relative to the properties,  books,  contracts,
commitments, and other records of the Business and Assets. If for any reason the
transactions  contemplated by this Agreement are not consummated,  Buyer and its
representatives  will  promptly  return to Seller all  materials  and  documents
provided  by Seller  and all copies  thereof,  and will hold in  confidence  all
confidential   information   obtained  from  Seller,   its   officers,   agents,
representatives, or employees; provided, however, that information which (i) was
in the public domain or (ii) was, in fact, known to Buyer prior to disclosure by
Seller or its respective  officers,  agents,  representatives  or employees,  or
(iii)  becomes  known  to Buyer  from or  through  a third  party  not  under an
obligation of  non-disclosure  to Seller shall not be deemed to be  confidential
information.

                  ARTICLE X. CONDITIONS TO OBLIGATIONS OF BUYER


<PAGE>



         The  obligations  of Buyer  under  this  Agreement  are  subject to the
satisfaction,  or  the  written  waiver  thereof  by  Buyer,  of  the  following
conditions on or prior to the Closing Date:

         10.1   Representations   and   Warranties   of   Seller.   All  of  the
representations  and warranties of Seller contained in this Agreement shall have
been true and correct  when made,  and shall be true and correct in all material
respects on and as of the Closing Date,  except to the extent that changes shall
have been approved in writing by Buyer.

         10.2 Covenants of Seller. All of the covenants and agreements herein on
the part of Seller to be  complied  with or  performed  on or before the Closing
Date, shall have been fully complied with and performed.

         10.3  Seller's  Certificates.  There  shall  be  delivered  to  Buyer a
certificate  dated as of the Closing Date and signed by Seller to the effect set
forth in  Sections  10.1 and 10.2 as they  relate to Seller,  which  certificate
shall have the effect of a representation  and warranty made by Seller on and as
of the Closing Date.

         10.4  Certificates of Authorities;  Corporate  Documents.  Seller shall
have  furnished to Buyer (a) a certificate of the State  Corporation  Commission
dated  as of a date  not more  than  twenty  days  prior  to the  Closing  Date,
attesting to the organization and good standing of Seller, (b) copies, certified
by the Secretary or an Assistant  Secretary of Seller as of the Closing Date, of
Seller's  Certificate of Incorporation and all amendments  thereto and Bylaws as
amended  and in  effect  at the  Closing  Date,  (c) a  copy,  certified  by the
Secretary or Assistant  Secretary of Seller,  of resolutions duly adopted by the
Board of  Directors  of Seller  duly  authorizing  this  Agreement,  the  Supply
Agreement, and the transactions contemplated hereby.

         10.5 No Material  Adverse  Changes.  There shall not have  occurred any
change in the  Business,  or the  Purchased  Assets  that  could have a Material
Adverse  Effect,  and Seller shall not have  suffered  any loss  (whether or not
insured) by reason of physical damage caused by fire,  earthquake,  flood, wind,
accident  or other  calamity,  or by reason of any taking by  eminent  domain or
condemnation, which could have a Material Adverse Effect.

         10.6  Litigation.  At the Closing  Date,  there shall not be pending or
threatened any  litigation in any court or any proceeding  before any Agency (a)
in which it is sought to restrain  or  prohibit or obtain  damages in respect of
the  consummation of the purchase and sale of the Purchased  Assets or the other
transactions  contemplated  hereby,  (b) that could,  if  adversely  determined,
result in a Material  Adverse Effect,  (c) that could, if adversely  determined,
affect the right or ability to carry on the Business as now conducted, or (d) as
a result of which, in the reasonable  judgment of Buyer, Buyer could be deprived
of the material benefits of its ownership of the Purchased Assets.

         10.7  Satisfactory  to  Buyer's  Counsel.  All  actions,   proceedings,
instruments  and  documents  required to carry out this  Agreement or incidental
thereto, and all other related matters shall have been satisfactory to Edmunds &
Williams (A Professional Corporation), counsel for Buyer.

         10.8 Opinion of Seller's Counsel.  Buyer shall have received an opinion
of McGuire, Woods, Battle, and Boothe, counsel for Seller,


         <PAGE>



dated the Closing  Date, to the effect that:  (a) Seller is a  corporation  duly
organized,  validly existing and in good standing under the laws of the State of
Virginia and is qualified to carry on its business and is in good standing under
the laws of the State of  Virginia,  (b) Seller has full  power,  authority  and
legal right to enter into this Agreement and the Supply Agreement to which it is
a party and to consummate the transactions  contemplated hereby and thereby; (c)
all corporate  actions required to be taken by Seller to approve this Agreement,
the Supply Agreement, the License Agreement,  and the Non-Competition  Agreement
(Exhibit D), to which it is a party,  and the transactions  contemplated  hereby
and thereby and to  authorize  execution  and  delivery of this  Agreement,  the
Supply  Agreement,  the License  Agreement,  and the  Non-Competition  Agreement
(Exhibit  D),  to which  it is a party  and the  performance  by  Seller  of its
obligations hereunder and thereunder,  have been duly and properly taken, and no
further  action or approval is required in order to permit  Seller to consummate
the  transactions  contemplated by this  Agreement,  the Supply  Agreement,  the
License Agreement, and the Non-Competition  Agreement (Exhibit D) to which it is
a party; (d) this Agreement,  the Supply Agreement,  the License Agreement,  and
the Non-Competition  Agreement (Exhibit D) have been duly executed and delivered
by  Seller  and  constitute  legal,  valid  and  binding  obligations  of Seller
enforceable in accordance  with their terms (subject to the  availability of the
discretionary remedy of specific performance and, as to enforcement of remedies,
to applicable  bankruptcy,  insolvency,  reorganization,  moratorium and similar
laws from time to time in effect but excluding any presently pending proceedings
and  the  exercise  by a  court  of its  general  powers  of  equity);  (e)  the
instruments  of transfer of the Purchased  Assets from Seller to Buyer have been
duly  authorized,  executed  and  delivered,  and are legal,  valid and  binding
instruments   enforceable  in  accordance  with  their  terms  (subject  to  the
availability  of the  discretionary  remedy of specific  performance  and, as to
enforcement of remedies, to applicable bankruptcy,  insolvency,  reorganization,
moratorium  and  similar  laws  from time to time in effect  but  excluding  any
presently pending  proceedings and the exercise by a court of its general powers
of  equity);  (f) the  execution  and  delivery  of this  Agreement,  the Supply
Agreement, the License Agreement, and the Non-Competition  Agreement (Exhibit D)
by Seller and the  performance  by Seller of its  obligations  thereunder do not
constitute  a violation  of or a default  under its  certificate  or articles of
incorporation  or bylaws;  and (g) such  counsel has no knowledge of any action,
suit, proceeding or investigation that would be required by the terms of Section
6.8 to be listed in Schedule 6.8 that is not listed in Schedule 6.8.

         10.9 Supply  Agreement.  Seller shall have  executed  and  delivered to
Buyer the Supply Agreement.

         10.10  Non-Competition  Agreements.  Seller  shall  have  executed  and
delivered to Buyer the  Non-Competition  Agreement  and each of Vernon Mules and
Steve  Houfek  shall  have  executed  and  delivered  to Buyer a  NonCompetition
Agreement in the form attached hereto as Exhibits D-1 and D-2.

         10.11  License  Agreement.  Seller shall have executed and delivered to
Buyer the License Agreement.

         10.12 Customer and Supplier  Accounts.  Buyer shall not have reasonable
cause to believe  that any of the top five (5)  customers of Seller (in terms of
sales for the  Seller's  last  previous  fiscal year) or any of the top five (5)
suppliers  of raw material  (in terms of sales for the  Seller's  last  previous
fiscal  year) to  Seller  intends  to cease  doing  business  with the  Business
following the Closing.


<PAGE>



         10.13 Release of Encumbrances. All Encumbrances on the Purchased Assets
(other  than any  imposed or  permitted  by  lenders  to Buyer)  shall have been
released.

         10.14 Due  Diligence  Investigation.  The results of any due  diligence
investigations  by Buyer  of the  Business  and the  Purchased  Assets  shall be
satisfactory to Buyer in its reasonable discretion.

                 ARTICLE XI. CONDITIONS TO OBLIGATIONS OF SELLER

         The  obligations  of Seller  under this  Agreement  are  subject to the
satisfaction,  or the  written  waiver  thereof  by  Seller,  of  the  following
conditions on or prior to the Closing Date:

         11.1   Representations   and   Warranties   of   Buyer.   All   of  the
representations  and warranties of Buyer  contained in this Agreement shall have
been true and correct  when made,  and shall be true and correct in all material
respects on and as of the Closing Date,  except to the extent that changes shall
have been approved in writing by Seller.

         11.2 Covenants of Buyer. All of the covenants and agreements  herein on
the part of the Buyer to be complied  with or performed on or before the Closing
Date shall have been fully complied with and performed.

         11.3  Buyer's  Certificates.  There  shall  be  delivered  to  Seller a
certificate dated as of the Closing Date and signed by the President of Buyer to
the effect set forth in Sections  11.1 and 11.2 as they  relate to Buyer,  which
certificate shall have the effect of a representation and warranty made by Buyer
on and as of the Closing Date.

         11.4 Certificates of Authorities.  Buyer shall have furnished to Seller
(a) a certificate of the State Corporation  Commission dated as of not more than
twenty days prior to the Closing Date,  attesting to the  organization  and good
standing of Buyer,  (b)  copies,  certified  by the  Secretary  or an  Assistant
Secretary  of  Buyer  as  of  the  Closing  Date,  of  Buyer's   Certificate  of
Incorporation and all amendments  thereto and Bylaws as amended and in effect at
the Closing  Date,  and (c) a copy,  certified by the  Secretary or an Assistant
Secretary  of Buyer,  of  resolutions  duly adopted by the Board of Directors of
Buyer duly authorizing this Agreement, the Supply Agreement and the transactions
contemplated hereby and thereby.

         11.5 Injunctions. At the Closing Date, there shall not be in effect any
injunctions or restraining orders restraining or prohibiting the consummation of
the  purchase  and  sale  of the  Purchased  Assets  or the  other  transactions
contemplated hereby.

         11.6  Satisfactory  to  Seller's  Counsel.  All  actions,  proceedings,
instruments  and  documents  required to carry out this  Agreement or incidental
thereto and all other  related legal  matters  shall have been  satisfactory  to
McGuire, Woods, Battle & Boothe.

         11.7 Opinion of Counsel to Buyer. Seller shall have received an opinion
from Edmunds & Williams (A Professional  Corporation),  counsel for Buyer, dated
the Closing Date, to the effect that (a) Buyer is a corporation  duly organized,
validly existing and in good standing under the laws of


<PAGE>



the State of Virginia;  (b) Buyer has full power,  authority  and legal right to
enter into this Agreement,  the Supply Agreement,  the License Agreement and the
NonCompetition  Agreement  (Exhibit  D),  and  to  consummate  the  transactions
contemplated  hereby  and  thereby;  (c)  the  execution  and  delivery  of this
Agreement,  the Supply Agreement, the License Agreement, and the Non-Competition
Agreement (Exhibit D), and the performance by Buyer of its obligations hereunder
and thereunder, have been duly authorized by all requisite corporate action, and
no further action or approval is required in order to permit Buyer to consummate
the  transactions  contemplated by this  Agreement,  the Supply  Agreement,  the
License Agreement,  and the Non-Competition  Agreement (Exhibit D); and (d) this
Agreement,  the Supply Agreement, the License Agreement, and the Non-Competition
Agreement  (Exhibit D) have been duly  executed by Buyer,  this  Agreement,  the
Supply  Agreement,  the  License  Agreement,  and the  NonCompetition  Agreement
(Exhibit D) constitute  valid and binding  obligations of Buyer,  enforceable in
accordance with their terms (subject to the  availability  of the  discretionary
remedy of  specific  performance  and, as to the  enforcement  of  remedies,  to
applicable bankruptcy, insolvency,  reorganization,  moratorium and similar laws
from time to time in effect but excluding any presently pending  proceedings and
the exercise by a court of its general powers of equity);  and (e) the execution
and delivery of this Agreement, the Supply Agreement, the License Agreement, and
the Non-Competition  Agreement (Exhibit D) by Buyer and the performance by Buyer
of its  obligations  thereunder  do not  constitute  a violation of or a default
under their respective  certificates or articles of incorporation or bylaws,  or
any writs, orders, judgments or decrees by which either of them are bound and of
which counsel has actual knowledge.

         11.8 Supply  Agreement.  Buyer shall have  executed  and  delivered  to
Seller the Supply Agreement.

         11.9 License  Agreement.  Buyer shall have  executed  and  delivered to
Seller the License Agreement.

         11.10  Non-Competition   Agreement.   Buyer  shall  have  executed  and
delivered to Seller the Non-Competition Agreement.

         11.11 Assumption Agreement.  Buyer shall have executed and delivered to
Seller the Assumption Agreement.

                           ARTICLE XII.  INDEMNIFICATION

         12.1 Buyer's Losses. Seller agrees to indemnify Buyer and save and hold
it harmless  from,  against  and in respect of any and all  damages  (including,
without limitation,  amounts paid in settlement with Seller's consent),  losses,
obligations,  liabilities,  liens, deficiencies,  costs and expenses, including,
without limitation, reasonable attorney's fees and costs incurred to comply with
injunctions  and other court and Agency  orders,  and other  costs and  expenses
incident to any suit, action, investigation, claim or proceeding or to establish
Buyer's right to  indemnification  hereunder (herein referred to collectively as
the "Buyer's Losses")  suffered,  sustained,  incurred or required to be paid by
Buyer by reason of (a) the  failure  by Seller to comply  with  applicable  laws
relating to bulk transfers, including, without limitation, the provisions of the
Uniform  Commercial  Code of the State of Virginia;  (b) any  representation  or
warranty  made by  Seller  in or  pursuant  to this  Agreement  being  untrue or
incorrect  in any  respect;  (c) any failure by Seller to observe or perform its
covenants  and  agreements  set forth in this  Agreement;  (d) any liability for
product  warranties or defective  products  arising from sales of finished goods
manufactured and sold by


<PAGE>



Seller  prior to the  Closing  Date;  (e) any  failure by Seller to perform  its
obligations in connection  with any of its Employee  Benefit Plans as defined in
Section 3(3) of ERISA; or (f) any failure by Seller to satisfy and discharge any
other debt, contract, agreement, liability, obligation, commitment, restriction,
disability or duty, whether direct or indirect,  fixed, contingent or otherwise,
not expressly assumed by Buyer pursuant to this Agreement.

         12.2  Sellers'  Losses.  Buyer agrees to indemnify  Seller and save and
hold it  harmless  from,  against,  for and in  respect  of any and all  damages
(including,   without  limitation,  amounts  paid  in  settlement  with  Buyer's
consent), losses,  obligations,  liabilities,  claims,  deficiencies,  costs and
expenses,  including,  without limitation,  reasonable attorneys' fees and costs
incurred to comply with injunctions and other court and Agency orders, and other
costs  and  expenses  incident  to any  suit,  action,  investigation,  claim or
proceeding or to establish Seller's right to  indemnification  hereunder (herein
referred to collectively as "Seller's Losses") suffered,  sustained, incurred or
required  to be paid by Seller by reason of (a) any  representation  or warranty
made by Buyer in or pursuant to this Agreement  being untrue or incorrect in any
respect,  (b) any  failure  by Buyer to observe or  perform  its  covenants  and
agreements set forth in this Agreement, (c) any liability for product warranties
or defective  products arising from sales of finished goods manufactured or sold
by Buyer  after the  Closing  Date,  or (d) any  failure by Buyer to satisfy and
discharge  any liability or obligation  expressly  assumed by Buyer  pursuant to
this Agreement.

         12.3 Notice of Loss;  Indemnified Party's  Negligence.  Notwithstanding
anything herein  contained,  the Indemnifying  Party (as hereinafter  defined in
Section  12.4) shall not have any liability  under the  indemnity  provisions of
this Agreement with respect to a particular matter unless a notice setting forth
in  reasonable  detail  the  breach  that is  asserted  has  been  given  to the
Indemnifying  Party  and,  in  addition,  if such  matter  arises out of a suit,
action,  investigation  or  proceeding,  such notice is given promptly after the
Indemnified Party (as hereinafter defined in Section 12.4) shall have been given
notice of the  commencement of the suit,  action,  investigation  or proceeding.
Notwithstanding the preceding sentence, failure of the Indemnified Party to give
notice hereunder shall not release the  Indemnifying  Party from its obligations
under this Article XII, except to the extent the  Indemnified  Party is actually
prejudiced  by such failure to give notice.  With respect to Buyer's  Losses (as
defined below),  Seller shall be the  Indemnifying  Party and Buyer shall be the
Indemnified  Party.  With  respect  to  Seller's  Losses,  Buyer  shall  be  the
Indemnifying  Party and Seller shall be the  Indemnified  Party.  An Indemnified
Party's failure to investigate or lack of due diligence occurring for any reason
whatsoever,  shall not (a)  constitute  a defense  to any  action or  proceeding
brought by the Indemnified Party to enforce his or its rights under this Article
XII, (b) excuse  performance by the Indemnifying  Party of its obligations under
this Article XII, or (c) entitle the  Indemnifying  Party to any right of setoff
or counterclaim against amounts owed under this Article XII.

         12.4  Right to  Defend.  Upon  receipt  of notice of any suit,  action,
investigation, claim or proceeding for which indemnification might be claimed by
an  Indemnified  Party,  the  Indemnifying  Party shall be entitled  promptly to
defend,   contest  or  otherwise   protect   against  any  such  suit,   action,
investigation,  claim or proceeding at its own cost and expense. The Indemnified
Party shall have the right,  but not the  obligation,  to participate at its own
expense  in  a  defense  thereof  by  counsel  of  its  own  choosing,  but  the
Indemnifying  Party  shall  be  entitled  to  control  the  defense  unless  the
Indemnified Party has


<PAGE>



relieved the  Indemnifying  Party from  liability with respect to the particular
matter or the Indemnifying  Party fails to assume the defense of the matter.  If
the Indemnifying Party fails to defend, contest or otherwise protect in a timely
manner against any such suit, action,  investigation,  claim or proceeding,  the
Indemnified  Party  shall have the  right,  but not the  obligation,  to defend,
contest or  otherwise  protect  against  the same,  and make any  compromise  or
settlement  thereof and recover the entire cost  thereof  from the  Indemnifying
Party including reasonable  attorneys' fees,  disbursements and all amounts paid
as a result of such suit,  action,  investigation,  claim or  proceeding  or the
compromise or settlement thereof.  However, if the Indemnifying Party undertakes
the defense of such  matters,  the  Indemnified  Party shall not, so long as the
Indemnifying Party does not abandon the defense thereof,  be entitled to recover
from the Indemnifying Party any legal or other expenses subsequently incurred by
the  Indemnified  Party in  connection  with the defense  thereof other than the
reasonable costs of investigation  undertaken by the Indemnified  Party with the
prior written consent of the Indemnifying Party.

         12.5  Cooperation.  Seller  and  Buyer,  and each of their  affiliates,
successors  and assigns  shall  cooperate  with each other in the defense of any
suit,  action,  investigation,  proceeding or claim by a third party and, during
normal business hours, shall afford each other access to their books and records
and employees relating to such suit, action, investigation,  proceeding or claim
and shall  furnish  each other all such further  information  that they have the
right and power to furnish as may  reasonably  be necessary to defend such suit,
action, investigation, proceeding or claim.

                            ARTICLE XIII. TERMINATION

         13.1 Termination. This Agreement may be terminated and abandoned at any
time prior to or on the Closing Date:

         13.1.1 Mutual  Consent.  By the mutual  consent in writing of Buyer and
Seller.

         13.1.2 By Buyer.  By Buyer in writing if any of the  conditions  to the
obligations  of Buyer  contained  herein  shall not have been  satisfied  or, if
unsatisfied, waived as of the Closing Date.

         13.1.3 By Seller.  By Seller in writing if any of the conditions to the
obligations  of Seller  herein  contained  shall not have been  satisfied or, if
unsatisfied, waived as of the Closing Date.

         13.1.4  Closing  Delayed.  By Buyer or Seller in writing if the Closing
shall not have occurred by March 15, 1997.

         13.2 No  Further  Force or  Effect.  In the  event of  termination  and
abandonment of this Agreement  pursuant to the provisions of Section 12.1,  this
Agreement  shall be of no further force or effect,  except for Sections 13.1 and
13.2 and the  post-termination  provisions  of Section  9.7,  which shall not be
affected by termination of this Agreement.

                           ARTICLE XIV.  MISCELLANEOUS

         14.1  Expenses.  Except for the parties  agreement to share equally the
attorneys'  fees and costs  associated with the preparation of the initial draft
of this Agreement, the initial draft of the Supply Agreement, the


<PAGE>



initial   draft  of  the  License   Agreement  and  the  initial  draft  of  the
Non-Competition  Agreement  (which  fee and  cost  shall  not  exceed a total of
$10,000) or as otherwise expressly provided herein, Seller and Buyer, shall each
pay its own expenses in connection with the  preparation of this Agreement,  and
the consummation of the transactions  contemplated  hereby,  including,  without
limitation,  fees of its own counsel, auditors and other experts, whether or not
such transactions be consummated.

         14.2 Notices. All notices,  requests or other communications  hereunder
shall be in writing, addressed to Seller or Buyer, at the following addresses:

                  (i)      If to Doughtie's Foods, Inc.:

                           Mr. Vernon Mules, Chairman
                           Doughtie's Foods, Inc.
                           P. O. Box 7229
                           115 Chautauqua Avenue
                           Portsmouth,  VA  23707

                           Telephone:   (757) 399-6007




<PAGE>



                           with copy to:

                           William R. Waddell, Esquire
                           McGuire, Woods, Battle and Boothe, L.L.P.
                           World Trade Center - Suite 9000
                           101 West Main Street
                           Norfolk,  VA  23510-1655

                           Telephone:  (757) 640-3700
                           Telecopier:  (757) 640-3701


                  (ii)     If to Buyer:

                           Mr. Peter D. Pruden, III, President
                           The Smithfield Ham & Products Co., Inc.
                           P. O. Box 487
                           Smithfield,  VA  23430

                           Telephone:  (757) 357-2121
                           Telecopier: (757) 357-5407


                           with copy to

                           Bernard C. Baldwin, III, Esquire
                           Edmunds & Williams, P.C.
                           801 Main Street  (24504)
                           P. O. Box 958  (24505)
                           Lynchburg,  VA

                           Telephone:       (804) 846-9000
                           Telecopier:      (804) 846-0337

The  address of either  party may be changed by giving  notice in writing at any
time to the other party.  Any notice to be given under this  Agreement  shall be
deemed  duly  given if (i)  delivered  personally,  (ii)  sent by  telecopy  and
acknowledged by recipient, (iii) delivered by overnight express, or (iv) sent by
United States registered or certified mail, postage prepaid.  Any notice that is
delivered  personally,  or sent by telecopy or  overnight  express in the manner
provided  herein shall be deemed to have been duly given to the party to whom it
is directed upon actual receipt (and, in the case of telecopy acknowledgment) by
such  party.  Any notice  that is  addressed  and mailed in the manner  provided
herein shall be  conclusively  presumed to have been given to the party to which
it is addressed at the close of business,  local time of the  recipient,  on the
third day after it is so placed in the mail.

         14.3 Entire  Agreement;  Modification  and Waiver.  This Agreement sets
forth all of the promises, covenants, agreements,  conditions and understandings
between  the  parties  hereto  and  supersedes  all  prior  and  contemporaneous
agreements and understandings,  inducements or conditions, expressed or implied,
oral  or  written.  This  Agreement  may be  amended,  modified,  superseded  or
cancelled  and  any of the  terms,  covenants,  representations,  warranties  or
conditions  hereof or any breach thereof may be waived only in writing signed by
Sellers and Buyer, or in the case of a waiver, by the party waiving  compliance.
No waiver by


<PAGE>



any party of any condition, or the breach of any term, covenant,  representation
or warranty contained in this Agreement, whether by conduct or otherwise, in any
one or more instances,  shall be construed as a further or continuing  waiver of
any such condition or breach or a waiver of any other condition or of the breach
of any  other  term,  covenant,  representation  or  warranty  set forth in this
Agreement.

         14.4 Governing Law. This Agreement  shall be governed by, and construed
and enforced in accordance with, the laws of the State of Virginia.

         14.5  Captions.  The captions of the various  Articles and Sections are
for convenience of reference only and shall not affect the interpretation of the
provisions hereof.

         14.6  Successors  and  Assigns.  This  Agreement,  and the  rights  and
obligations  hereunder of Buyer,  may be assigned by Buyer to an  "Affiliate" of
The Smithfield  Companies,  Inc. or Buyer,  provided,  however,  any agreements,
waivers,  or consents made or given by Buyer hereunder shall be binding upon any
such  assignee  and any such  assignee  shall  assume the  obligations  of Buyer
hereunder.  No such  assignment  shall  relieve the assignor of its  obligations
hereunder.  For purposes of this Section,  the term  "Affiliate"  shall mean any
corporation,  partnership, association, trust or other legal entity in which The
Smithfield  Companies,  Inc. or Buyer has a direct or indirect  majority  equity
interest.  Except as set forth above,  this Agreement may not be assigned by any
party  except  with  the  prior  written  consent  of the  other  parties.  This
Agreement,  and all of the terms,  covenants and representations,  or warranties
and  conditions  hereof,  shall be binding upon, and inure to the benefit and be
enforceable by, the parties hereto and their successors and assigns.  Nothing in
this Agreement,  express or implied,  is intended to confer or shall confer upon
any person other than the parties hereto, their successors and permitted assigns
any rights or remedies under or by reason of this Agreement.

         14.7  Survival.   All  covenants  and  agreements  set  forth  in  this
Agreement, or any agreement furnished pursuant hereto, shall survive the Closing
and  any  investigation   made  by  or  in  behalf  of  any  party  hereto.  All
representations  and warranties set forth in this Agreement,  or any schedule or
document  furnished   pursuant  hereto,   shall  survive  the  Closing  and  any
investigation  made by or in behalf of any party hereto for a period of one year
from  the  Closing  Date;  provided,   however,  that  the  representations  and
warranties  in the first  sentence  of Section 6.3 shall  survive  indefinitely,
Section 6.12 shall survive until the statutes of  limitations  applicable to the
matters covered by such Section have expired, running from the Closing Date.

         14.8  Schedules  and  Certificates.  All  statements  contained  in any
disclosure  schedule,  certificate or other instrument delivered by or on behalf
of the parties  hereto,  or in  connection  with the  transactions  contemplated
hereby,   are  an  integral  part  of  this  Agreement,   and  shall  be  deemed
representations and warranties hereunder.

         14.9 Facts  "Known" to a  Corporation.  Whenever  a  representation  or
warranty is made herein as being "to the best of  knowledge,"  "to the knowledge
of," or "known" to a party,  it is understood and agreed that an individual will
be deemed to have  "knowledge" of a particular fact or other matter if: (a) such
individual  is  actually  aware of such fact or other  matter;  or (b) a prudent
individual could be expected to discover or otherwise become aware of such


<PAGE>



fact or other  matter in the course of  conducting  a  reasonably  comprehensive
investigation  concerning  the existence of such fact or other matter.  A party,
person,  or entity (other than an individual) will be deemed to have "knowledge"
of a particular  fact or other matter if any individual  who is serving,  or who
has at any time served, as a director, officer, partner, executor, or trustee of
such party,  person,  or entity (or in any similar capacity) has, or at any time
had, knowledge of such fact or other matter.

         14.10 Severability. If any provision or provisions of this Agreement or
any portion of any provision  hereof,  shall be deemed invalid or  unenforceable
pursuant to a final determination of any court of competent jurisdiction or as a
result of future  legislative  action,  such  determination  or action  shall be
construed  so as not to affect the validity or  enforceability  hereof and shall
not affect the validity or effect of any other portion hereof.

         14.11 Bulk  Transfer  Laws.  Buyer  acknowledges  that  Seller will not
comply with the  provisions  of any bulk transfer  laws of any  jurisdiction  in
connection with the transactions contemplated by this Agreement.




<PAGE>



         IN WITNESS  WHEREOF,  the parties have duly caused this Agreement to be
executed as of the day and year first above written.

                                    DOUGHTIE'S FOODS, INC.

                                    By: Steven C. Houfek
                                       (signature)

                                    President

ATTEST:

Marion S. Whitfield, Jr.
   (signature)


                                    THE SMITHFIELD HAM & PRODUCTS
                                    COMPANY, INCORPORATED

                                    By: Peter D. Pruden, III
                                       (Signature)

                                    President

ATTEST:

Richard S. Fuller
 (signature)


                                    THE SMITHFIELD COMPANIES, INC.

                                    By: Richard S. Fuller
                                        (signature)

                                    President

ATTEST:

Peter D. Pruden, III
 (signature)


                                    Vernon Mules
                                   (signature)


                                    Steve Houfek
                                   (signature)