EXHIBIT 10
<PAGE>


                           FIRST AMENDMENT AND WAIVER
                               TO CREDIT AGREEMENT
                               -------------------

                  FIRST AMENDMENT AND WAIVER, dated as of September 14, 2001, to
the Credit Agreement  referred to below (this  "Amendment") among Agway, Inc., a
Delaware  corporation,  Feed Commodities  International  LLC, a Delaware limited
liability company, Brubaker Agronomic Consulting Service LLC, a Delaware limited
liability company,  Agway General Agency, Inc., a New York corporation,  Country
Best Adams, LLC, a Delaware limited liability company, Country Best-DeBerry LLC,
a Delaware  limited  liability  company,  Agway Energy  Products LLC, a Delaware
limited liability company ("AEP"),  Agway Energy  Services-PA,  Inc., a Delaware
corporation,  and Agway  Energy  Services,  Inc., a Delaware  corporation,  (the
foregoing  entities  are  sometimes  collectively  referred  to  herein  as  the
"Borrowers"  and  individually  as  a  "Borrower");  the  other  Credit  Parties
signatory hereto;  GENERAL ELECTRIC CAPITAL CORPORATION,  a Delaware corporation
(in its individual capacity, "GE Capital"),  for itself, as Lender, and as Agent
for Lenders, and the other Lenders signatory hereto from time to time.

                               W I T N E S S E T H
                               -------------------

                  WHEREAS,   Borrowers,   the  other  Credit  Parties  signatory
thereto, Agent, and Lenders signatory thereto are parties to that certain Credit
Agreement,  dated as of March 28, 2001  (including  all  annexes,  exhibits  and
schedules thereto, and as amended, restated,  supplemented or otherwise modified
from time to time, the "Credit Agreement"); and

                  WHEREAS,  Agent  and  Lenders  have  agreed to amend and waive
certain provisions of the Credit Agreement,  in the manner, and on the terms and
conditions, provided for herein;

                  NOW THEREFORE,  in consideration of the premises and for other
good and valuable consideration,  the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:

                  1.       Definitions.  Capitalized terms not otherwise defined
                           -----------
herein shall have the meanings ascribed to them in the Credit Agreement or Annex
                                                                           -----
A thereto.
-

                  2.       Waiver. The parties hereto acknowledge that Borrowers
                           ------
failed to comply  with the  following  covenants  set forth  in Section 6.10 and
Annex G of the Credit Agreement for the  period commencing December 23, 2000 and
ending June 30, 2001:


                          (a)  the Minimum Fixed Charge Coverage Ratio;

                          (b)  Minimum EBITDA (Agway Operations);
<PAGE>


                          (c)  Minimum EBITDA (Country Products); and

                          (d)  Minimum Senior Interest Coverage Ratio.

                  Agent and Lenders  hereby waive as of the Amendment  Effective
Date all Events of Default arising solely from Borrowers' failure to comply with
such covenants for the period  commencing  December 23, 2000 and ending June 30,
2001  based on the  preliminary  financial  statements  delivered  to Agent  and
Lenders on August 8, 2001.

                  3.  Section 1.4 of the Credit  Agreement is hereby  amended as
                      -----------
of  the  Amendment Effective  Date by  deleting  in clause (D) the phrase  "Four
Hundred and Forty Million Dollars  ($440,000,000)" and inserting in lieu thereof
"Four Hundred and Fifty Five Million Dollars ($455,000,000)".

                  4.  Section 1.5(a)  of the Credit  Agreement is hereby amended
                      -------------
as of the Amendment Effective Date by deleting  such section in its entirety and
inserting in lieu thereof the following new section to read as follows:

                  "(a)  Borrowers  shall pay interest to Agent,  for the ratable
                  benefit of Lenders in accordance  with the various Loans being
                  made by each Lender,  in arrears on each  applicable  Interest
                  Payment Date, at the following  rates: (i) with respect to the
                  Revolving Credit Advances,  the Index Rate plus the Applicable
                  Revolver  Index  Margin  per  annum  or,  at the  election  of
                  Borrower  Representative,  the applicable  LIBOR Rate plus the
                  Applicable  Revolver  LIBOR  Margin  per  annum,  based on the
                  aggregate  Revolving Credit Advances  outstanding from time to
                  time;  and (ii) with respect to the Swing Line Loan, the Index
                  Rate plus the Applicable Revolver Index Margin per annum:

                  The Applicable Margins are as follows:

                           Applicable Revolver Index Margin            2.00%

                           Applicable Revolver LIBOR Margin            3.50%

                           Applicable L/C Margin                       3.50%

                           Applicable Unused Line Fee Margin           0.375%"

                  5.  Section 1.6 of the Credit Agreement  is hereby  amended by
                      -----------
(i) deleting the word "or" that appears immediately prior to clause (t) thereof,
and (ii) inserting the following new clause (u) in  appropriate order thereto to
read as follows:

                  "; or (u) that is owned by Country Best-DeBerry LLC."
<PAGE>

                  6.  Section 1.7 of the Credit Agreement  is hereby  amended by
                      -----------
(i) deleting the word "or" that appears  immediately  prior  to clause p thereof
and (ii) inserting the following new clause  (q) in appropriate order thereto to
read as follows:

                  "; or (q) that is owned by Country Best-DeBerry LLC."

                  7.   Section 3 of the Credit Agreement is hereby amended as of
                       ---------
the Amendment Effective Date by inserting the following  new Section 3.27 in the
appropriate order:


                  "3.27  Telmark  Stock.  None of the  Stock of  Telmark  LLC is
                         --------------
                  subject to any Liens or encumbrances,  and there are no facts,
                  circumstances or conditions known to any Credit Party that may
                  result in any Liens or encumbrances against such Stock."

                  8. Section 5.11 of the Credit  Agreement is hereby  amended as
                     ------------
of the  Amendment  Effective  Date by deleting  such section in its entirety and
inserting in lieu thereof the following new section:

                  "Section 5.11  Subordinated  Indebtedness and Preferred Stock.
                   ------------------------------------------------------------
                  Borrowers  shall  have  at  the  following  times  outstanding
                  Preferred Stock, Subordinated Debt and outstanding notes under
                  the  Milford  Note  Program  no less  than,  in the  aggregate
                  principal amount,  (i) Four Hundred Sixty Five Million Dollars
                  ($465,000,000) for the period February 1 through October 31 of
                  any Fiscal Year,  (ii) Four Hundred Fifty Five Million Dollars
                  ($455,000,000)  for the period November 1 through  December 31
                  of any Fiscal  Year;  and (iii)  Four  Hundred  Sixty  Million
                  Dollars  ($460,000,000)  for the  period  January  1,  through
                  January 31 of any Fiscal Year."

                  9.  Section 5  of the Credit Agreement is hereby amended as of
                      ---------
Amendment  Effective  Date  by inserting  the  following new Section 5.15 in the
appropriate order:


                  "Section 5.15     Notes Receivable
                   ---------------------------------
                           Borrowers  shall make available to Agent originals of
                  all notes  receivable  executed  and  delivered by growers and
                  Account  Debtors to  Borrowers as of the  Amendment  Effective
                  Date for  purposes  of  allowing  Agent to legend  such  notes
                  identifying  Agent,  on behalf of itself and  Lenders,  as the
                  lienholder of such notes.  Borrowers  shall  include,  on each
                  such note  delivered to it after the Amendment  Effective Date
                  the following legend:
<PAGE>

                  "This writing and the obligations  evidenced or secured hereby
                  are  subject to the  security  interest  of  General  Electric
                  Capital  Corporation,  as Agent,  for the benefit of Agent and
                  certain  Lenders."  Agent  shall have the right,  from time to
                  time  during  Borrowers'  normal  business  hours to visit the
                  premises  of the  Borrowers  and to make  on-site  audits,  to
                  review such notes and the Borrowers'  records relating thereto
                  for the purpose of verifying Borrowers'  compliance with their
                  obligations  under this Section  5.15,  provided  that,  if no
                  Default or Event of Default has occurred,  such on-site audits
                  shall be  limited  to twice a year.  Upon the  occurrence  and
                  continuation of an Event of Default,  Borrowers,  upon Agent's
                  request, shall deliver all such notes receivable to Agent."

                  10.  Section 5 of the Credit  Agreement  is hereby  amended as
                       ---------
of the  Amendment Effective  Date by inserting the following  new Sections  5.16
and 5.17 in the appropriate order:

                  "5.16  Registration,   Use,  Maintenance,   Identification  of
                         -------------------------------------------------------
                   Vehicles.  AEP shall use and operate its Vehicles in a manner
                   --------
                  and  in  such  locations  as  is  in  compliance   with  AEP's
                  established  policies  as  of  the  Closing  Date,  with  such
                  subsequent  changes  thereto as would not result in a material
                  adverse  change in the  value,  or  enforceability  of, or any
                  change  in the  priority  of,  Agent's  Liens on the  Vehicles
                  subject to the  Vehicle  Collateral  Agreement  (the  "Vehicle
                  Collateral").  AEP at its own expense  shall  keep,  maintain,
                  service, repair, overhaul and furnish all parts, replacements,
                  mechanisms,  devices and  servicing  required  for each of its
                  Vehicles,  (or cause the same to be done),  in compliance with
                  AEP's  established  policies as of the Closing Date, with such
                  subsequent  changes  thereto as would not result in a material
                  adverse  change  in the  value or  enforceability  of,  or any
                  change  in the  priority  of,  Agent's  Liens  on the  Vehicle
                  Collateral.  All such repairs,  parts,  mechanisms and devices
                  shall  immediately,  without  further act,  become part of the
                  Vehicle  Collateral  and  subject  to the  security  interests
                  created  pursuant to the Loan  Documents.  Any part added to a
                  Vehicle in connection with any improvement,  change, addition,
                  or alteration shall  immediately,  without further act, become
                  part of the  Vehicle  and  subject to the  security  interests
                  created pursuant to the Loan Documents.

                  5.17  Vehicle  Collateral;  Appraisals.  Upon the purchase and
                        --------------------------------
                  sale of  Vehicles,  AEP  shall  comply  with the  terms of the
                  Vehicle  Collateral   Agreement.   Agent,  in  its  reasonable
                  discretion,  may require  new  appraisals  of the  Vehicles if
                  there  have  occurred  any  of  the  events  described  in the
                  definition  of  "Material  Adverse  Effect"  or if  there  has
                  occurred  an Event of  Default.  AEP will  cooperate  with all
                  reasonable  requests  and do all acts  reasonably  required by
                  Agent and any Person  employed by Agent as  appraiser in order
                  to assure the timely completion of such new appraisals.
<PAGE>

                  11.  Section 6.8  of the Credit Agreement is hereby amended as
                       -----------
of  the  Amendment Effective Date  by  deleting  clause (a) in its entirety  and
inserting in lieu thereof:

                  "(a) The sale of Inventory in the ordinary  course of business
                  and the sale of Vehicles  in the  ordinary  course  consistent
                  with prior practices."

                  12.  Section 6.14 of the Credit Agreement is hereby amended as
                       ------------
of the Amendment Effective  Date by deleting in clause (D) of the second proviso
the phrase "Four Hundred and Forty Million Dollars" ($440,000,000) and inserting
in lieu thereof "Four Hundred and Fifty Five Million Dollars ($455,000,000)".

                  13.  Section 6 of the Credit Agreement is hereby amended as of
                       ---------
the Amendment Effective Date by inserting the following new Section 6.21  in the
appropriate order:


                  "6.21    Telmark Stock.  No  Credit Party or Telmark LLC shall
                           -------------
                  create, incur, assume or permit to exist any lien on   or with
                  respect to the Stock of the Telmark Entities."

                  14.  Section 8.1 of the Credit Agreement is hereby  amended as
of the Amendment Effective  Date by inserting the following new clause   (o) in
appropriate  order thereto to read as follows:

                  "(o) Telmark LLC fails or neglects to perform, keep or observe
                  the  negative  pledge  covenant  set  out in the  side  letter
                  between  Telmark  LLC  and the  Agent,  dated  as of the  date
                  hereof.

                  15.  Annex A of  the  Credit Agreement is hereby amended as of
                       -------
the Amendment Effective Date by:

                (a)   amending and restating each definition from Annex A to the
Credit Agreement set forth on Schedule A attached hereto in its entirety to read
as set forth on Schedule A attached hereto;

                (b)   adding  the  following  defined  terms  in the appropriate
order:

                  `Deposit  Accounts' means all "deposit  accounts" as such term
                  ------------------
                  is defined in the Code,  now or hereafter  held in the name of
                  any Credit Party.
<PAGE>

                  "First Amendment' means this First Amendment and Waiver to the
                  -----------------
                  Credit Agreement,  dated as of September __, 2001 among Agent,
                  Lenders,  Borrowers  and the other  Credit  Parties  signatory
                  thereto.

                  `First  Amendment  Effective Date' has the meaning assigned to
                  ---------------------------------
                  the term "Amendment Effective Date" in the First Amendment.

                  `Letter-of-Credit  Rights'  means  letter-of-credit  rights as
                  --------------------------
                  such  term is  defined  in the Code,  now  owned or  hereafter
                  acquired by any Credit Party,  including  rights to payment or
                  performance  under a letter  of  credit,  whether  or not such
                  Credit Party, as  beneficiary,  has demanded or is entitled to
                  demand payment or performance.

                  `Software' means all "software" as such term is defined in the
                  ----------
                  Code,  now owned or  hereafter  acquired by any Credit  Party,
                  other  than  software  embedded  in  any  category  of  goods,
                  including all computer programs and all supporting information
                  provided  in  connection  with a  transaction  related  to any
                  program.

                  `Supporting  Obligations' means all supporting  obligations as
                  ------------------------
                  such term is defined in the Code,  including letters of credit
                  and guaranties  issued in support of Accounts,  Chattel Paper,
                  Documents,  General  Intangibles,  Instruments  or  Investment
                  Property.

                  `Uniform  Commercial Code jurisdiction' means any jurisdiction
                  ---------------------------------------
                  that has  adopted  all or  substantially  all of  Article 9 as
                  contained in the 2000 Official Text of the Uniform  Commercial
                  Code,   as   recommended   by  the  National   Conference   of
                  Commissioners  on  Uniform  State  Laws and the  American  Law
                  Institute,   together  with  any   subsequent   amendments  or
                  modifications to the Official Text.

                  `Vehicles' means any motor vehicle, truck, automobile, tractor
                  ---------
                  or other type of vehicle owned by any Credit Party."

                  16.  Annex E  of  the  Credit  Agreement  is hereby amended by
                       -------
adding the following insert at the end of such Annex E:

                  "(p) To  Agent,  upon its  request,  and in any  event no less
                  frequently  than 5 Business  Days after the end of each Fiscal
                  Month,  an  updated  report  of all  Vehicles  owned  by  AEP,
                  including a schedule of the vehicle identification numbers for
                  such Vehicles and notations  identifying any Vehicles acquired
                  by AEP since the last such report was delivered to Agent."
<PAGE>

                  17.  Annex A of the  Credit  Agreement  is hereby  amended  as
                       -------
of  the   Amendment Effective  Date  by deleting the definition of "Agricultural
Restructuring  Plan" and inserting in lieu thereof:

                           "Agricultural Restructuring Plan' means that certain
                  restructuring  plan,  dated  November 17, 2000, as modified on
                  June 26, 2001 and approved by the Board of Directors of Agway,
                  as the same may be further  amended or modified  provided that
                  prior to any such amendment or modification,  Agent shall have
                  consented to such proposed amendment or modification."

                 18. Annex E is hereby amended by adding the following insert at
                     -------
the end of clause (c):

                           "Additionally,  Borrowers  shall deliver on or before
                  January 31, 2002 month-by-month  projections for Borrowers, on
                  a  consolidated  and  consolidating   basis,  for  the  period
                  beginning  on February 1, 2002 through  March 31, 2004,  which
                  (A) includes a statement of all of the material assumptions on
                  which such projections are based, (B) includes monthly balance
                  sheets,  income  statements and statements of cash flows,  and
                  (C)  integrates  sales,  gross  profits,  operating  expenses,
                  operating   profit,   cash  flow   projections  and  Borrowing
                  Availability  projections,  all prepared on the same basis and
                  in  similar  detail  as that on which  operating  results  are
                  reported (and in the case of cash flow projections, represents
                  management's   good  faith   estimates  of  future   financial
                  performance   based  on   historical   performance),   Capital
                  Expenditures and Facilities"

                19.  Annex  G  of the  Credit  Agreement  is hereby  amended  as
                     --------
of the   Amendment  Effective  Date by  deleting  such Annex in its entirety and
replacing it with a new Annex G attached hereto as Exhibit A.
                                                   ----------
                20. Disclosure Schedule (5.1) is hereby amended and supplemented
                    -------------------
by inserting as an assumed name  under  Agway,  Inc.  (i) the trade  name  "Apex
Bag  Company" registered  in the  state of Ohio,  (ii) the trade  name  "Central
Maine  Feed" registered in the state of Maine,  (iii) the  trade  name  "Milford
Fertilizer Company"  registered in the states of Delaware, Maryland, New Jersey,
Pennsylvania  and  Virginia,  and (iv) the trade name "Agway Feed and  Nutrition
Company" registered in the states of New York and Pennsylvania.

                21. Amendment Fee. To  induce  Agent  and  Lenders to enter into
                    -------------
this Amendment, Borrowers hereby agree to pay Agent, for the ratable  benefit of
Lenders, an amendment fee in the  amount  of  $300,000  in immediately available
funds, payable on the Amendment Effective Date.
<PAGE>

                22. Representations and Warranties.  To induce Agent and Lenders
                    ------------------------------
to enter into this Amendment, Borrowers make the following  representations  and
warranties to Agent and Lenders:

               (a) The execution, delivery and performance of this Amendment and
          the performance of the Credit Agreement,  as amended by this Amendment
          (the "Amended Credit  Agreement"),  by Borrowers:  (a) are within each
          Borrower's  organizational power; (b) have been duly authorized by all
          necessary  or proper  corporate  and  shareholder  action;  (c) do not
          contravene  any  provision  of any  Borrower's  charter  or  bylaws or
          equivalent  organizational  documents;  (d) do not  violate any law or
          regulation,  or any  order or  decree  of any  court  or  Governmental
          Authority;  (e) do not  conflict  with  or  result  in the  breach  or
          termination of, constitute a default under or accelerate or permit the
          acceleration of any performance required by, any indenture,  mortgage,
          deed of  trust,  lease,  agreement  or other  instrument  to which any
          Borrower is a party or by which any Borrower or any of its property is
          bound;  (f) do not result in the  creation or  imposition  of any Lien
          upon any of the property of any Borrower  other than those in favor of
          Agent  pursuant  to the Loan  Documents;  and (g) do not  require  the
          consent or approval of any Governmental Authority or any other Person.

               (b) This  Amendment has been duly executed and delivered by or on
          behalf of Borrowers.

               (c)  Each of this  Amendment  and the  Amended  Credit  Agreement
          constitutes a legal, valid and binding obligation of each Borrower and
          each of the other Credit  Parties party thereto,  enforceable  against
          each in accordance  with its terms,  except as  enforceability  may be
          limited  by   applicable   bankruptcy,   insolvency,   reorganization,
          moratorium or similar laws affecting  creditors'  rights generally and
          by general  equitable  principles  (whether  enforcement  is sought by
          proceedings in equity or at law).

               (d) No Default has occurred and is continuing after giving effect
          to this Amendment.

               (e)  No  action,   claim,  lawsuit,   demand,   investigation  or
          proceeding  is now pending or, to the  knowledge of any Credit  Party,
          threatened  against any Credit Party,  at law, in equity or otherwise,
          before any court, board, commission,  agency or instrumentality of any
          Governmental   Authority,   or  before  any  arbitrator  or  panel  of
          arbitrators,  (i) which  challenges  any  Borrower's or, to the extent
          applicable,  any other Credit Party's right,  power,  or competence to
          enter  into  this  Amendment  or  perform  any  of  their   respective
          obligations under this Amendment,  the Amended Credit Agreement or any
          other  Loan  Document,  or the  validity  or  enforceability  of  this
          Amendment,  the Amended Credit Agreement or any other Loan Document or
          any action taken under this Amendment, the Amended Credit Agreement or
          any  other  Loan  Document  or (ii)  except  for  items on  Disclosure
          Schedule (3.13) or notifications sent to Agent since the Closing Date,
          which if determined adversely,  is reasonably likely to have or result
          in a Material Adverse Effect.  Except for items on Disclosure Schedule
          (3.13) or  notifications  sent to Agent since the Closing Date, to the
          knowledge  of each  Borrower,  there  does not  exist a state of facts
          which is reasonably likely to give rise to such proceedings.
<PAGE>


               (f) The  representations  and warranties of each Borrower and the
          other Credit Parties  contained in the Credit Agreement and each other
          Loan  Document  shall be true and  correct on and as of the  Amendment
          Effective  Date with the same  effect as if such  representations  and
          warranties had been made on and as of such date,  except that any such
          representation  or  warranty  which  is  expressly  made  only as of a
          specified date need be true only as of such date.

          23.   Merger of Agway Financial Corporation, Agway Holdings, Inc., and
                ----------------------------------------------------------------
Milford Fertilizer Company LLC.
-------------------------------

          Notwithstanding  anything  to  the  contrary  contained  in the Credit
Agreement,  each of Agent,  Lenders and Borrowers hereby acknowledges and agrees
that  Agway  Holdings  Inc.  merged  into  Agway  Financial   Corporation,   and
thereafter,  Agway Financial Corporation and Milford Fertilizer Company LLC have
merged into Agway, Inc., with Agway, Inc. being the surviving entity. Commencing
as  of  the  Amendment   Effective  Date,  all  references  to  Agway  Financial
Corporation,  Agway Holdings Inc., and Milford  Fertilizer  Company LLC shall be
deemed to refer to Agway, Inc.

           24.  Change of Fiscal Year; Fiscal Months.
                ------------------------------------

           Agent and Lenders hereby consent to each of Borrowers'  change of (i)
its fiscal year end to June 30, and (ii) its fiscal month and quarter ends to be
calendar  month  ends.  Disclosure  Schedule  (6.15)  is hereby  deleted  in its
entirety and replaced with a new Disclosure  Schedule  (6.15) attached hereto as
Exhibit B.

           25. Consent.  Agent  and  Lenders  hereby  consent  to Agway,  Inc.'s
               -------
acquisition of the remaining twenty percent (20%) membership interest of Country
Best - DeBerry LLC currently held by Mr. Curtis DeBerry,  provided that the only
consideration paid for such  membership  interests is (i) the forgiveness of the
June 27,  2000  promissory  note given  by Curtis DeBerry to Agway,  Inc. in the
principal   amount  of $76,935.00  plus interest,  which  forgiveness  Agent and
Lenders also hereby  consent  to  provided  that  Curtis  DeBerry has  satisfied
certain   performance  criteria  described  in  Section  10.2  of the Membership
Interest Purchase  Agreement between Agway, Inc. and Curtis DeBerry,  a draft of
which has been provided to the Agent ("Membership Interest Purchase Agreement"),
and (ii) the other  consideration  set forth in  section  2.2 of the  Membership
Interest Purchase Agreement.

           26. No Other Amendments/Waivers.  Except as expressly amended herein,
               ---------------------------
the Credit  Agreement and the other Loan Documents shall be unmodified and shall
continue  to be in full force and effect in  accordance  with  their  terms.  In
addition,  except as specifically  provided herein,  this Amendment shall not be
deemed a waiver of any term or condition  of any Loan  Document and shall not be
deemed to prejudice any right or rights which Agent, for itself and Lenders, may
now have or may have in the future under or in connection with any Loan Document
or any of the instruments or agreements  referred to therein, as the same may be
amended from time to time.
<PAGE>

           27.  Outstanding Indebtedness;  Waiver of Claims.  Each  Borrower and
                -------------------------------------------
the other Credit Parties hereby acknowledges and agrees that as of September 13,
2001  the  aggregate  outstanding  principal  amount  of the  Revolving  Loan is
$19,702,940.16  and that such principal amount is payable pursuant to the Credit
Agreement without defense, offset, withholding, counterclaim or deduction of any
kind. Borrowers and each other Credit Party hereby waives, releases, remises and
forever discharges Agent, Lenders and each other Indemnified Person from any and
all claims, suits, actions,  investigations,  proceedings or demands arising out
of or in connection with the Credit Agreement (collectively,  "Claims"), whether
based in contract, tort, implied or express warranty, strict liability, criminal
or civil statute or common law of any kind or character, known or unknown, which
any Borrower or any other Credit Party ever had, now has or might hereafter have
against Agent or Lenders which relates,  directly or indirectly,  to any acts or
omissions of Agent,  Lenders or any other Indemnified  Person on or prior to the
Amendment Effective Date, provided,  that no Borrower nor any other Credit Party
waives any Claim  solely to the extent such Claim  relates to the Agent's or any
Lender's gross negligence or willful misconduct.

            28. Expenses.   Each  Borrower  and  the other Credit Parties hereby
                --------
reconfirms its respective  obligations  pursuant to Sections 1.9 and 11.3 of the
Credit Agreement and pursuant to the GE Capital Fee Letter, to pay and reimburse
Agent, for itself and Lenders, for all reasonable costs and expenses (including,
without limitation,  reasonable fees of counsel) incurred in connection with the
negotiation, preparation, execution and delivery of this Amendment and all other
documents and instruments delivered in connection herewith.

            29. Effectiveness.   This  Amendment  shall  become  effective as of
                -------------
September 14, 2001 (the "Amendment Effective Date") only  upon  satisfaction  in
full in the judgment of Agent of each of the following conditions:

                    (a)  Amendment.  Agent shall have  received six (6) original
copies of this  Amendment  duly executed and  delivered by Agent,  the Requisite
Lenders and Borrowers.

                    (b) Payment of Expenses.  Borrowers shall have paid to Agent
all costs,  fees and expenses  owing in connection  with this  Amendment and the
other Loan Documents and due to Agent (including, without limitation, reasonable
legal fees and expenses).
<PAGE>

                    (c) Agent shall have received a duly executed  original of a
vehicle collateral  agreement,  in form and substance  satisfactory to Agent, in
its sole  discretion,  executed by Agway  Energy  Products  LLC,  provided  that
certificates of title for all vehicles owned by such entities shall be delivered
to LexisNexis  Document  Solutions Inc., the vehicle collateral agent under such
agreement within five (5) Business Days of the Amendment Effective Date.

                    (d) Telmark Pledge  Agreement.  Agway,  Inc. and Agent shall
have   entered   into   a   pledge    amendment,    in   form   and    substance
satisfactory to Agent, in its sole discretion,  providing for a pledge of all of
the member  interests of Telmark LLC held by Agway,  Inc.,  and Agent shall have
received duly endorsed  certificates and member interest powers representing and
relating to such interests pledged by Agway, Inc.

                    (e) First Amendment to Security Agreement.  Agent shall have
received  a  First   Amendment   to  the   Security   Agreement,   in  form  and
substance satisfactory to Agent, in its sole discretion,  executed and delivered
by Borrowers and all Credit  Parties.

                    (f) Telmark LLC Side Letter.  Telmark LLC shall have entered
into a side letter,  in form and substance  satisfactory  to Agent,  in its sole
discretion,  providing  for,  among other things,  a negative  pledge of all the
membership interests of the Telmark Entities.

                    (g) Representations and Warranties.  The representations and
warranties  of or on behalf of the  Credit  Parties in this  Amendment  shall be
shall be true and correct on and as of the Amendment Effective Date.

           30. GOVERNING  LAW.  THIS   AMENDMENT  SHALL  BE  GOVERNED  BY,  AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

           31. Counterparts.   This  Amendment  may  be  executed by the parties
               ------------
hereto on any number of separate counterparts and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.


                         [SIGNATURE PAGES FOLLOW]



<PAGE>



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

                                    BORROWERS

                                    AGWAY, INC.
                                    FEED COMMODITIES INTERNATIONAL LLC
                                    BRUBAKER AGRONOMIC CONSULTING SERVICE LLC
                                    COUNTRY BEST-DEBERRY LLC
                                    AGWAY ENERGY PRODUCTS LLC
                                    AGWAY ENERGY SERVICES-PA, INC.
                                    AGWAY ENERGY SERVICES, INC.


                                    By:     /s/  KAREN J. OHLIGER
                                            ------------------------------------
                                    Name:        Karen J. Ohliger
                                            ------------------------------------
                                    Title:       Treasurer
                                            ------------------------------------



                                    AGWAY GENERAL AGENCY, INC.
                                    COUNTRY BEST ADAMS, LLC


                                    By:     /s/  KAREN J. OHLIGER
                                            ------------------------------------
                                    Name:        Karen J. Ohliger
                                            ------------------------------------
                                    Title:       Asst. Treasurer
                                            ------------------------------------



                                    LENDERS

                                    COBANK, ACB


                                    By:      /s/   KENNETH E. HIDE
                                            ------------------------------------
                                    Name:          Kenneth E. Hide
                                            ------------------------------------
                                    Title:         Vice President
                                            ------------------------------------


<PAGE>




                                    COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEEN
                                      BANK B.A., "Rabobank Nederland"
                                      New York Branch


                                    By:      /s/ BETTY H. MILLS
                                            ------------------------------------
                                    Name:        Betty H. Mills
                                            ------------------------------------
                                    Title:       Executive Director
                                            ------------------------------------


                                    GMAC BUSINESS CREDIT, LLC


                                    By:      /s/   RAY ZILKE
                                            ------------------------------------
                                    Name:          Ray Zilke
                                            ------------------------------------
                                    Title:         Asst. Vice President
                                            ------------------------------------


                                    GENERAL ELECTRIC CAPITAL CORPORATION, as
                                     Agent and Lender


                                    By:      /s/   PIETER SMIT
                                            ------------------------------------
                                    Name:          Pieter Smit
                                            ------------------------------------
                                    Title:  Its Duty Authorized Signatory








<PAGE>


                                                                       EXHIBIT A
                                                                       ---------

                             ANNEX G (SECTION 6.10)
                                       TO
                                CREDIT AGREEMENT
                                ----------------
                               FINANCIAL COVENANTS
                               -------------------

                  Borrowers  shall not breach or fail to comply  with any of the
following financial  covenants,  each of which shall be calculated in accordance
with GAAP consistently applied:

                 (a)  Maximum  Capital   Expenditures.   Borrowers  and  their
                      -------------------------------
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective  Subsidiaries)  on a consolidated  basis shall not make Capital
Expenditures  during the  following  periods  that exceed in the  aggregate  the
amounts set forth opposite each of such periods:

         Period                          Maximum Capital Expenditures per Period
         ------                          ---------------------------------------
December 23, 2000 through June 30, 2001             $ 12,000,000
Fiscal Year ending June 30, 2002                      17,000,000
Fiscal Year ending June 30, 2003                      13,100,000
June 30, 2003 through March 31, 2004                  12,000,000


                (b) Minimum  Fixed  Charge  Coverage Ratio.  Borrowers and their
                    --------------------------------------
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective  Subsidiaries) shall have on a consolidated basis at the end of
each Fiscal  Quarter set forth  below,  a Fixed  Charge  Coverage  Ratio for the
12-month period then ended not less than the following:

         0.50x for the Fiscal Quarter ending  September 30, 2002;
         0.55x for the Fiscal Quarter ending  December 31, 2002;
         0.60x for the Fiscal Quarter ending March 31,  2003;
         0.65x for the Fiscal Quarter  ending June 30, 2003;
         0.65x for the Fiscal Quarter ending September 30, 2003;
         0.65x for the Fiscal Quarter  ending  December 31, 2003; and
         0.70x for the Fiscal Quarter ending March 31, 2004.

               (c)  Minimum  EBITDA  (Agway  Operations).  Borrowers  and  their
                    -----------------------------------
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective Subsidiaries) on a consolidated basis shall have, at the end of
each Fiscal Quarter set forth below,  EBITDA for the 12-month  period then ended
(except for any period  commencing  December  23, 2000 and ending on or prior to
December 31, 2001,  which shall be for the periods  described below) of not less
than the following:
<PAGE>

             Period                                             EBITDA
             ------                                             -------
December 23, 2000 through June 30, 2001                      $16,000,000
December 23, 2000 through September 30, 2001                   3,400,000
December 23, 2000 through December 31, 2001                    8,300,000
March 31, 2002                                                14,600,000
June 30, 2002                                                 27,500,000
September 30, 2002                                            32,300,000
December 31, 2002                                             35,600,000
March 31, 2003                                                38,000,000
June 30, 2003                                                 41,000,000
September 30, 2003                                            40,800,000
December 31, 2003                                             41,800,000
March 31, 2004                                                44,300,000

               (d) Minimum EBITDA (Agriculture).  The Agway Agriculture Business
                   ---------------------------
Unit  (as  designated  on  the  Agway  Operations  financial  statements)  on  a
consolidated  basis  shall  have,  at the end of each  Fiscal  Quarter set forth
below,  EBITDA  for the  12-month  period  then  ended  (except  for any  period
commencing  December 23, 2000 and ending on or prior to December 31, 2001, which
shall be for the periods described below) of not less than the following:

          Period                                               EBITDA
          ------                                               ------
December 23, 2000 through June 30, 2001                    $ 10,500,000
December 23, 2000 through September30, 2001                   4,200,000
December 23, 2000 through December 31, 2001                   1,600,000
March 31, 2002                                                5,000,000
June 30, 2002                                                 8,000,000
September 30, 2002                                           11,100,000
December 31, 2002                                            12,400,000
March 31, 2003                                               13,400,000
June 30, 2003                                                12,600,000
September 30, 2003                                           12,800,000
December 31, 2003                                            13,000,000
March 31, 2004                                               13,400,000


               (e) Minimum EBITDA (Country Products). The Agway Country Products
                   --------------------------------
Group Business Unit (as designated on the Agway Operations financial statements)
on a consolidated  basis shall have, at the end of each Fiscal Quarter set forth
below,  EBITDA  for the  12-month  period  then  ended  (except  for any  period
commencing  December 23, 2000 and ending on or prior to December 31, 2001, which
shall be for the periods described below) of not less than the following:
<PAGE>

            Period                                             EBITDA
            ------                                            --------
December 23, 2000 through June 30, 2001                   $ (5,400,000)
December 23, 2000 through September 30, 2001                (6,300,000)
December 23, 2000 through December 31, 2001                 (5,300,000)
March 31, 2002                                              (3,700,000)
June 30, 2002                                                2,900,000
September 30, 2002                                           8,600,000
December 31, 2002                                            9,400,000
March 31, 2003                                               9,800,000
June 30, 2003                                               10,600,000
September 30, 2003                                          10,500,000
December 31, 2003                                           11,200,000
March 31, 2004                                              12,400,000


               (f) Minimum EBITDA  (Energy).  The Agway Energy Business Unit (as
                   ------------------------
designated on the Agway Operations  financial statements on a consolidated basis
shall have,  at the end of each Fiscal  Quarter set forth below,  EBITDA for the
12-month period then ended (except for any period  commencing  December 23, 2000
and ending on or prior to  December  31,  2001,  which  shall be for the periods
described below) of not less than the following:

           Period                                              EBITDA
           ------                                              ------
December 23, 2000 through June 30, 2001                     $20,000,000
December 23, 2000 through September 30, 2001                 11,800,000
December 23, 2000 through December 31, 2001                  20,300,000
March 31, 2002                                               20,500,000
June 30, 2002                                                22,100,000
September 30, 2002                                           18,600,000
December 31, 2002                                            19,000,000
March 31, 2003                                               19,400,000
June 30, 2003                                                21,700,000
September 30, 2003                                           21,400,000
December 31, 2003                                            21,500,000
March 31, 2004                                               22,100,000


               (g) Minimum Senior Interest  Coverage Ratio.  Borrowers and their
                   ---------------------------------------
Subsidiaries (excluding all Telmark Entities, Agway Insurance Company and all of
their respective  Subsidiaries) on a consolidated basis shall have at the end of
each Fiscal  Quarter set forth below, a Senior  Interest  Coverage Ratio for the
12-month period then ended (except for any period  commencing  December 23, 2000
and ending on or prior to  December  31,  2001,  which  shall be for the periods
described below) of not less than the following:
<PAGE>

          3.0x for  the  period  of  two Fiscal Quarters commencing December 23,
          ----
          2000 and ending June 30, 2001
          .40x  for  the period of three Fiscal Quarters commencing December 23,
          ----
          2000 and ending September 30, 2001
          .80x for  the  period  of four Fiscal Quarters commencing December 23,
          ----
          2000 and ending December 31, 2001
          1.4x for the Fiscal  Quarter ending March 31, 2002 2.7x for the Fiscal
          ----
          Quarter ending  June 30,  2002
          4.0x  for the  Fiscal  Quarter  ending September 30, 2002 4.2x for the
          ----
          Fiscal Quarter ending December 31, 2002
          4.3x for the Fiscal Quarter  ending March 31, 2003 4.8x for the Fiscal
          ----
          Quarter  ending  June 30,  2003
          4.8x  for the  Fiscal  Quarter  ending September 30, 2003
          ----
          4.9x for the Fiscal Quarter ending December 31, 2003
          ----
          5.0x for the Fiscal Quarter ending March 31, 2004
          ----

               (h) Minimum Excess Availability. Borrowers and their Subsidiaries
                   ---------------------------
(excluding  all  Telmark  Entities,  Agway  Insurance  Company  and all of their
respective  Subsidiaries) at all times shall have Borrowing Availability,  after
giving  effect to Eligible  Accounts,  Eligible  Deferred  Accounts and Eligible
Inventory of Borrowers  supporting  Revolving  Credit Advances and all Letter of
Credit  Obligations (on a pro forma basis, with trade payables being paid in the
ordinary course,  and expenses and liabilities being paid in the ordinary course
of business and without  acceleration  of sales) of at least Ten Million Dollars
($10,000,000).

                  Unless otherwise  specifically provided herein, any accounting
term used in the Agreement shall have the meaning customarily given such term in
accordance with GAAP, and all financial computations hereunder shall be computed
in accordance with GAAP consistently applied. That certain items or computations
are explicitly  modified by the phrase "in accordance with GAAP" shall in no way
be construed to limit the  foregoing.  If any  "Accounting  Changes" (as defined
below)  occur and such  changes  result in a change  in the  calculation  of the
financial covenants,  standards or terms used in the Agreement or any other Loan
Document, then Borrowers,  Agent and Lenders agree to enter into negotiations in
order to amend such provisions of the Agreement so as to equitably  reflect such
Accounting  Changes with the desired  result that the  criteria  for  evaluating
Borrowers' and their  Subsidiaries'  financial condition shall be the same after
such  Accounting  Changes  as if such  Accounting  Changes  had not  been  made;
provided,  however,  that the  agreement  of  Requisite  Lenders to any required
amendments  of  such  provisions  shall  be  sufficient  to  bind  all  Lenders.
"Accounting Changes" means (i) changes in accounting  principles required by the
promulgation of any rule, regulation,  pronouncement or opinion by the Financial
Accounting  Standards  Board  of the  American  Institute  of  Certified  Public
Accountants (or successor  thereto or any agency with similar  functions),  (ii)
changes in accounting principles concurred in by any Borrower's certified public
accountants;  (iii) purchase  accounting  adjustments  under A.P.B. 16 or 17 and

<PAGE>

EITF 88-16,  and the application of the accounting  principles set forth in FASB
109, including the establishment of reserves pursuant thereto and any subsequent
reversal  (in whole or in part) of such  reserves;  and (iv) the reversal of any
reserves  established as a result of purchase accounting  adjustments.  All such
adjustments  resulting  from  expenditures  made  subsequent to the Closing Date
(including  capitalization  of costs and expenses or payment of pre-Closing Date
liabilities)  shall be treated as  expenses in the period the  expenditures  are
made and deducted as part of the calculation of EBITDA in such period. If Agent,
Borrowers and Requisite Lenders agree upon the required  amendments,  then after
appropriate  amendments have been executed and the underlying  Accounting Change
with respect  thereto has been  implemented,  any reference to GAAP contained in
the  Agreement or in any other Loan Document  shall,  only to the extent of such
Accounting Change,  refer to GAAP,  consistently  applied after giving effect to
the implementation of such Accounting Change. If Agent,  Borrowers and Requisite
Lenders cannot agree upon the required  amendments  within 30 days following the
date of implementation of any Accounting Change,  then all Financial  Statements
delivered and all  calculations  of financial  covenants and other standards and
terms in accordance  with the Agreement  and the other Loan  Documents  shall be
prepared, delivered and made without regard to the underlying Accounting Change.
For purposes of Section 8.1, a breach of a Financial  Covenant contained in this
Annex G shall be  deemed to have  occurred  as of any date of  determination  by
Agent or as of the last day of any specified  measurement period,  regardless of
when the Financial Statements reflecting such breach are delivered to Agent.



<PAGE>


                                                                       EXHIBIT B
                                                                       ---------

Schedule 6.15
Accounting Periods

Agway Fiscal Month Ends - as of 7/1/01

March Quarter Ends

           3/31/01
           3/31/02
           3/31/03
           3/31/04

June Quarter Ends

           6/30/01
           6/30/02
           6/30/03

September Quarter Ends

           9/30/01
           9/30/02
           9/30/03

December Quarter Ends

           12/31/01
           12/31/02
           12/31/03



<PAGE>



                                   SCHEDULE A
                                   ----------


         "Account  Debtor"  means any  Person who may  become  obligated  to any
          ---------------
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).

         "Accounts"  means all  "accounts," as such term is defined in the Code,
          --------
now owned or hereafter acquired by any Credit Party,  including (a) all accounts
receivable, other receivables,  book debts and other forms of obligations (other
than  forms  of  obligations   evidenced  by  Chattel  Paper,  or  Instruments),
(including  any such  obligations  that may be  characterized  as an  account or
contract right under the Code), (b) all of each Credit Party's rights in, to and
under all purchase  orders or receipts  for goods or  services,  (c) all of each
Credit  Party's  rights  to any  goods  represented  by  any  of  the  foregoing
(including  unpaid  sellers'  rights of rescission,  replevin,  reclamation  and
stoppage in transit and rights to returned, reclaimed or repossessed goods), (d)
all  rights to  payment  due to any  Credit  Party for  property  sold,  leased,
licensed, assigned or otherwise disposed of, for a policy of insurance issued or
to be issued, for a secondary obligation incurred or to be incurred,  for energy
provided or to be  provided,  for the use or hire of a vessel under a charter or
other  contract,  arising out of the use of a credit card or charge card, or for
services  rendered or to be rendered by such Credit Party or in connection  with
any other  transaction  (whether or not yet earned by performance on the part of
such  Credit  Party),  (e) all health  care  insurance  receivables  and (f) all
collateral security of any kind, given by any Account Debtor or any other Person
with respect to any of the foregoing.

                  "Chattel  Paper"  means any  "chattel  paper," as such term is
                   --------------
defined in the Code,  including electronic chattel paper, now owned or hereafter
acquired by any Credit Party.

                  "Code" means the Uniform Commercial Code as the same may, from
                  ------
time to time, be enacted and in effect in the State of New York; provided,  that
to the  extent  that the Code is used to define  any term  herein or in any Loan
Document and such term is defined differently in different Articles or Divisions
of the Code,  the  definition  of such term  contained  in Article or Division 9
shall govern;  provided further,  that in the event that, by reason of mandatory
provisions of law, any or all of the  attachment,  perfection or priority of, or
remedies  with respect to,  Agent's or any Lender's  Lien on any  Collateral  is
governed  by  the  Uniform  Commercial  Code  as  enacted  and  in  effect  in a
jurisdiction  other than the State of New York,  the term "Code"  shall mean the
Uniform  Commercial  Code as enacted  and in effect in such  other  jurisdiction
solely for  purposes of the  provisions  thereof  relating  to such  attachment,
perfection, priority or remedies and for purposes of definitions related to such
provisions.
<PAGE>

                  "Documents"  means all "documents," as such term is defined in
                   ---------
the Code, now owned or hereafter acquired by any Credit Party, wherever located.

                  "Fixtures" means all "fixtures" as such term is defined in the
                   --------
Code, now owned or hereafter acquired by any CreditParty.

                  "General Intangibles" means all "general intangibles," as such
                   -------------------
term is  defined  in the Code,  now owned or  hereafter  acquired  by any Credit
Party, including all right, title and interest that such Credit Party may now or
hereafter  have in or under any  Contract,  all  payment  intangibles,  customer
lists, Licenses, Copyrights,  Trademarks, Patents, and all applications therefor
and reissues,  extensions or renewals thereof,  rights in Intellectual Property,
interests  in  partnerships,  joint  ventures and other  business  associations,
licenses,  permits,  copyrights,  trade  secrets,  proprietary  or  confidential
information,  inventions  (whether  or not  patented or  patentable),  technical
information,  procedures,  designs, knowledge,  know-how,  software, data bases,
data, skill, expertise,  experience,  processes, models, drawings, materials and
records,  goodwill  (including  the goodwill  associated  with any  Trademark or
Trademark  License),  all  rights  and  claims  in or under  insurance  policies
(including  insurance  for fire,  damage,  loss and casualty,  whether  covering
personal  property,  real property,  tangible rights or intangible  rights,  all
liability,  life, key man and business interruption insurance,  and all unearned
premiums),  uncertificated  securities,  choses in action, deposit, checking and
other bank accounts, rights to receive tax refunds and other payments, rights to
receive  dividends,  distributions,  cash,  Instruments  and other  property  in
respect of or in exchange for pledged Stock and Investment  Property,  rights of
indemnification,  all books and records, correspondence,  credit files, invoices
and other papers,  including without limitation all tapes, cards,  computer runs
and other papers and  documents in the  possession  or under the control of such
Credit Party or any computer  bureau or service company from time to time acting
for such Credit Party.

                  "Goods" means all "goods" as defined in the Code, now owned or
                   -----
hereafter  acquired by any Credit Party,  wherever located,  including  embedded
software to the extent included in "goods" as defined in the Code,  manufactured
homes,  standing  timber that is cut and  removed  for sale and unborn  young of
animals.

                  "Instruments" means all "instruments," as such term is defined
                   -----------
in the Code,  now owned or  hereafter  acquired  by any Credit  Party,  wherever
located,  and,  in  any  event,  including  all  certificated  securities,   all
certificates  of  deposit,  and all  promissory  notes  and other  evidences  of
indebtedness,  other than instruments that constitute,  or are a part of a group
of writings that constitute, Chattel Paper.

                  "Inventory"  means all "inventory," as such term is defined in
                   ---------
the Code, now owned or hereafter acquired by any Credit Party, wherever located,
and in any event  including  inventory,  merchandise,  goods and other  personal
property  that are held by or on behalf of any Credit Party for sale or lease or
are  furnished  or are to be  furnished  under a contract  of  service,  or that

<PAGE>

constitute raw materials,  work in process,  finished goods,  returned goods, or
materials or supplies of any kind,  nature or description used or consumed or to
be used or  consumed  in such  Credit  Party's  business  or in the  processing,
production,  packaging,  promotion,  delivery or shipping of the same, including
all supplies and embedded software.

                  "Investment  Property" means all "investment property" as such
                   --------------------
term is defined in the Code now owned or hereafter acquired by any Credit Party,
wherever  located,  including  (i)  all  securities,   whether  certificated  or
uncertificated,   including  stocks,  bonds,   interests  in  limited  liability
companies,  partnership  interests,  treasuries,  certificates  of deposit,  and
mutual  fund  shares;  (ii) all  securities  entitlements  of any Credit  Party,
including  the  rights of any Credit  Party to any  securities  account  and the
financial  assets held by a securities  intermediary in such securities  account
and any free credit balance or other money owing by any securities  intermediary
with respect to that account; (iii) all securities accounts of any Credit Party;
(iv) all commodity contracts of any Credit Party; and (v) all commodity accounts
held by any Credit Party.

                  "Proceeds"  means  "proceeds,"  as such term is defined in the
                   --------
Code, including (a) any and all proceeds of any insurance,  indemnity,  warranty
or guaranty payable to any Credit Party from time to time with respect to any of
the Collateral,  (b) any and all payments (in any form  whatsoever)  made or due
and  payable  to any  Credit  Party  from  time to time in  connection  with any
requisition,  confiscation,  condemnation,  seizure or  forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of  governmental  authority),  (c) any claim of any Credit  Party  against
third  parties  (i) for past,  present or future  infringement  of any Patent or
Patent License,  or (ii) for past, present or future infringement or dilution of
any Copyright,  Copyright License, Trademark or Trademark License, or for injury
to the goodwill  associated  with any  Trademark or Trademark  License,  (d) any
recoveries  by any  Credit  Party  against  third  parties  with  respect to any
litigation or dispute concerning any of the Collateral  including claims arising
out of the loss or nonconformity  of,  interference with the use of, defects in,
or  infringement  of rights  in,  or  damage  to,  Collateral,  (e) all  amounts
collected  on,  or  distributed  on  account  of,  other  Collateral,  including
dividends,  interest,  distributions  and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other  property  acquired upon the sale,  lease,  license,  exchange or other
disposition of Collateral and all rights arising out of Collateral.

                  "Equipment"  means all "equipment," as such term is defined in
                   ---------
the Code, now owned or hereafter acquired by any Credit Party,  wherever located
and, in any event,  including all such Credit  Party's  machinery and equipment,
including processing  equipment,  conveyors,  machine tools, data processing and
computer equipment, including embedded software and peripheral equipment and all
engineering,   processing  and   manufacturing   equipment,   office  machinery,
furniture,  materials  handling  equipment,  tools,  attachments,   accessories,
automotive equipment,  trailers,  trucks, forklifts,  molds, dies, stamps, motor
vehicles,  rolling  stock and other  equipment  of every kind and nature,  trade

<PAGE>

fixtures  and fixtures not forming a part of real  property,  together  with all
additions and accessions thereto, replacements therefor, all parts therefor, all
substitutes for any of the foregoing, fuel therefor, and all manuals,  drawings,
instructions,  warranties and rights with respect thereto,  and all products and
proceeds  thereof and  condemnation  awards and insurance  proceeds with respect
thereto.

<PAGE>



                      FIRST AMENDMENT TO SECURITY AGREEMENT

         This FIRST  AMENDMENT  to  Security  Agreement  (this  "Amendment")  is
entered into as of this 14th day of September, 2001, by and among Agway, Inc., a
Delaware  corporation  ("Agway")  (successor by merger of Agway  Holdings  Inc.,
Agway  Financial   Corporation  and  Milford   Fertilizer   Company  LLC),  Feed
Commodities  International  LLC, a limited liability company organized under the
laws of the state of Delaware ("FCI"),  Brubaker  Agronomic  Consulting  Service
LLC,  a  limited  liability  company  organized  under  the laws of the state of
Delaware ("BACS"),  Agway General Agency,  Inc. a New York corporation  ("AGA"),
Country Best Adams, LLC, a limited liability company organized under the laws of
the state of Delaware  ("CBA"),  Country  Best-Deberry  LLC, a limited liability
company organized under the laws of the state of Delaware ("CBD"),  Agway Energy
Products LLC, a limited  liability company organized under the laws of the state
of Delaware  ("AEP"),  Agway Energy  Services-PA,  Inc., a Delaware  corporation
("AESPA"),  and Agway Energy  Services,  Inc., a Delaware  corporation  ("AES");
(Agway, FCI, BACS, AGA, CBA, CBD, AEP, AESPA and AES are sometimes  collectively
referred to herein as "Grantors"  and  individually  as a "Grantor") and General
Electric Capital Corporation,  a Delaware corporation,  in its capacity as Agent
for Lenders ("Agent").

         WHEREAS,  pursuant to that certain Credit  Agreement  dated as of March
28,  2001,  by and among  Grantors,  Agent and Lenders  (including  all annexes,
exhibits  and  schedules  thereto,  as  from  time to  time  amended,  restated,
supplemented or otherwise modified,  the "Credit Agreement"),  Lenders have made
Loans to, and incurred Letter of Credit Obligations on behalf of, the Grantors;

         WHEREAS,  Grantors  have entered into a Security  Agreement  with Agent
dated as of March 28, 2001,  whereby  Grantors  have  granted  Liens to Agent to
secure payment of the obligations (the "Security Agreement");

         WHEREAS,  Grantors and Agent have agreed to amend certain provisions of
the Security Agreement on the terms and conditions, provided for herein;

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of  which  are  hereby  acknowledged,  and  in  furtherance  of the
Grantors' duties to give further assurances to the Agent and Lenders pursuant to
the terms of the Credit Agreement and the Security Agreement, the parties hereto
agree as follows:

        1.  Amendments to Security Agreement.  The  Security Agreement is hereby
            --------------------------------
amended as of the Amendment Effective Date by:

               (a) amending  Section 2(a) of the Security  Agreement by deleting
such  section in its entirety and  inserting in lieu thereof the  following  new
section to read as follows:
<PAGE>

               "(a) To secure the prompt and complete  payment,  performance and
observance  of  all  of  the  Obligations   (specifically   including,   without
limitation,   each  Grantor's   Obligations  arising  under  the  cross-guaranty
provisions of Section 12 of the Credit  Agreement),  each Grantor hereby grants,
assigns, conveys, mortgages,  pledges,  hypothecates and transfers to Agent, for
itself and the  benefit  of  Lenders,  a Lien upon all of its  right,  title and
interest  in, to and under all personal  property  and other assets  whether now
owned by or owing to,  or  hereafter  acquired  by or  arising  in favor of such
Grantor (including under any trade names,  styles or derivations  thereof),  and
whether  owned or  consigned by or to, or leased from or to, such  Grantor,  and
regardless  of  where  located  (all of  which  being  hereinafter  collectively
referred to as the "Collateral"), including:

               (i)    all Accounts;

               (ii)   all Chattel Paper;

               (iii)  all Documents;

               (iv)   all Farm Products;

               (v)    all General Intangibles (including payment intangibles and
                      Software);

               (vi)   all  Goods  (including   Inventory,   all  Energy  Product
                      Inventory, Equipment and Fixtures);

               (vii)  all Instruments;

               (viii) all Investment Property;

               (ix)   all  Deposit  Accounts,  of  any  Grantor,   including all
                      Blocked  Accounts,  Concentration  Accounts,    depository
                      accounts,   Disbursement  Accounts,  and  all  other  bank
                      accounts and all deposits therein;

               (x)    all money, cash or cash equivalents of any Grantor;

               (xi)   all Supporting Obligations and Letter-of-Credit  Rights of
                      any Grantor;

               (xii)  any Commercial Tort Claims; and

               (xiii) to the extent not otherwise included,  all Proceeds,  tort
                      claims, insurance  claims and other rights to payments not
                      otherwise included in the foregoing  and  products  of the
                      foregoing  and  all  accessions   to,  substitutions   and
                      replacements  for,  and rents and  profits of, each of the
                      foregoing (including insurance proceeds)."
<PAGE>

               (b) amending  Section 3(b) of the Security  Agreement by deleting
such  section in its entirety and  inserting in lieu thereof the  following  new
section to read as follows:

                  "(b)  Agent  may at any time  after a  Default  or an Event of
         Default has  occurred  and be  continuing  (or if any rights of set-off
         (other  than  set-off  against an Account  arising  under the  Contract
         giving  rise to the same  Account) or contra  accounts  may be asserted
         with respect to the  following),  without  prior notice to any Grantor,
         notify  Account  Debtors and other Persons  obligated on the Collateral
         that Agent has a security interest therein,  and that payments shall be
         made directly to Agent.  Upon the request of Agent,  each Grantor shall
         so notify  Account  Debtors and other Persons  obligated on Collateral.
         Once any such  notice  has been  given to any  Account  Debtor or other
         Person obligated on the Collateral, the affected Grantor shall not give
         any  contrary  instructions  to such  Account  Debtor  or other  Person
         without Agent's prior written consent."

               (c) amending Section 3(c) of the Security  Agreement by inserting
the phrase "and/or payment intangibles" after each reference to "Chattel Paper".

               (d) amending  Section 4(a) of the Security  Agreement by deleting
such  section in its entirety and  inserting in lieu thereof the  following  new
section to read as follows:

               "(a) Each  Grantor has rights in and the power to  transfer  each
          item  of the  Collateral  upon  which  it  purports  to  grant  a Lien
          hereunder  free and clear of any and all Liens  other  than  Permitted
          Encumbrances."

               (e) amending  Section 4(c) of the Security  Agreement by deleting
the second  sentence  of such  section in its  entirety  and  inserting  in lieu
thereof the following new sentence to read as follows:

                  "Such  Lien is  prior to all  other  Liens,  except  Permitted
         Encumbrances  that  would be  prior to Liens in favor of Agent  for the
         benefit of Agent and Lenders as a matter of law, and is  enforceable as
         such as  against  any and all  creditors  of and  purchasers  from  any
         Grantor (other than purchasers and lessees of Inventory in the ordinary
         course of business and non-exclusive  licensees of General  Intangibles
         in the ordinary course of business)."

               (f) amending  Section 4(d) of the Security  Agreement by deleting
such  section in its entirety and  inserting in lieu thereof the  following  new
section to read as follows:

                  "(d)  Schedule  II  hereto  lists all  Instruments,  Letter of
                        ------------
         Credit  Rights and  Chattel  Paper of each  Grantor.  All action by any
         Grantor necessary or desirable to protect and perfect the Lien of Agent
         on each item set forth on Schedule II  (including  the  delivery of all
         originals  thereof to Agent and the  legending of all Chattel Paper and
         Instruments  as required by Section  5(b)  hereof) has been duly taken.
         The Lien of  Agent,  for the  benefit  of  Agent  and  Lenders,  on the
         Collateral  listed on Schedule  II hereto is prior to all other  Liens,
         except Permitted Encumbrances that would be prior to the Liens in favor
         of Agent as a matter of law, and is enforceable as such against any and
         all creditors of and purchasers from any Grantor."
<PAGE>

               (g) amending  Section 4(e) of the Security  Agreement by deleting
such  section in its entirety and  inserting in lieu thereof the  following  new
section to read as follows:

                  "(e) Each Grantor's name as it appears in official  filings in
         the  state  of its  incorporation  or other  organization,  the type of
         entity of each Grantor  (including  corporation,  partnership,  limited
         partnership    or   limited    liability    company),    organizational
         identification  number issued by each Grantor's state of  incorporation
         or  organization  or a statement  that no such number has been  issued,
         each Grantor's state of organization or incorporation,  the location of
         each Grantor's  chief  executive  office,  principal place of business,
         offices,  all  warehouses  and premises  where  Collateral is stored or
         located,  and the  locations  of its books and records  concerning  the
         Collateral are set forth on Schedule III-A,  Schedule  III-B,  Schedule
         III-C,  Schedule III-D, Schedule III-E, Schedule III-F, Schedule III-G,
         Schedule III-H and Schedule III-I,  respectively,  hereto. Each Grantor
         has only one state of incorporation or organization."

               (h) amending Section 5 of the Security Agreement by deleting such
section in its entirety and  inserting in lieu thereof the following new section
to read as follows:

                "5.    COVENANTS.  Each Grantor covenants and agrees with Agent,
                       ---------
          for the benefit of  Agent and Lenders, that from and after the date of
          this Security Agreement and until the Termination Date:

                           (a)   Further   Assurances:   Pledge  of Instruments;
                 Chattel Paper.

                                    (i) At any time and from time to time,  upon
                           the written  request of Agent and at the sole expense
                           of  Grantors,  each Grantor  shall  promptly and duly
                           execute  and   deliver  any  and  all  such   further
                           instruments  and  documents  and  take  such  further
                           actions  as Agent may deem  desirable  to obtain  the
                           full benefits of this  Security  Agreement and of the
                           rights and powers herein granted, including (A) using
                           its best efforts to secure all consents and approvals
                           necessary or appropriate for the assignment to or for
                           the benefit of Agent of any License or Contract  held
                           by such Grantor and to enforce the security interests
                           granted  hereunder;  and (B) filing any  financing or
                           continuation  statements  under the Code with respect
                           to the  Liens  granted  hereunder  or under any other
                           Loan Document as to those  jurisdictions that are not
                           Uniform Commercial Code jurisdictions.
<PAGE>

                                    (ii) Unless Agent shall otherwise consent in
                           writing (which consent may be revoked),  each Grantor
                           shall deliver to Agent all  Collateral  consisting of
                           negotiable   Documents,    certificated   securities,
                           Chattel   Paper  and   Instruments   (in  each  case,
                           accompanied  by  stock  powers,   allonges  or  other
                           instruments of transfer  executed in blank)  promptly
                           after such Credit Party  receives the same other than
                           the  Instruments  which shall remain in possession of
                           Agway,  Inc.  pursuant  to  section  4 of the  Pledge
                           Agreement.

                                    (iii) Each Grantor shall, in accordance with
                           the terms of the Credit Agreement,  obtain or use its
                           best efforts to obtain waivers or  subordinations  of
                           Liens from landlords and mortgagees,  and each Credit
                           Party  shall  in all  such  instances  obtain  signed
                           acknowledgements of Agent's Liens from bailees having
                           possession of any Grantor's  Goods that they hold for
                           the benefit of Agent.

                                    (iv) If  required by the terms of the Credit
                           Agreement  and not waived by Agent in writing  (which
                           waiver may be  revoked),  each  Grantor  shall obtain
                           authenticated  Control  Letters  from each  issuer of
                           uncertificated  securities,  securities intermediary,
                           or  commodities  intermediary  issuing or holding any
                           financial   assets  or  commodities  to  or  for  any
                           Grantor.

                                    (v) In accordance with Annex C to the Credit
                           Agreement,   each  Grantor  shall  obtain  a  blocked
                           account,  lockbox or similar agreement with each bank
                           or financial  institution  holding a Deposit  Account
                           for such Grantor.

                                    (vi) Each  Grantor  that is or  becomes  the
                           beneficiary  of a  letter  of  credit  that  is not a
                           Supporting  Obligation  shall  promptly,  and  in any
                           event within two (2) Business  Days after  becoming a
                           beneficiary,  notify  Agent  thereof and enter into a
                           tri-party  agreement with Agent and the issuer and/or
                           confirmation  bank (which form of  agreement  will be
                           provided    by   the   Agent)    with    respect   to
                           Letter-of-Credit      Rights      assigning      such
                           Letter-of-Credit  Rights to Agent and  directing  all
                           payments thereunder to the Collection Account, all in
                           form and substance reasonably  satisfactory to Agent.
                           Notwithstanding  the foregoing,  Borrowers shall only
                           be  required  to  utilize   commercially   reasonable
                           efforts to obtain such tri-party agreement.

                                    (vii)  Each  Grantor  shall  take all  steps
                           necessary   to  grant  the  Agent   control   of  all
                           electronic  chattel paper in accordance with the Code
                           and all "transferable  records" as defined in each of
                           the  Uniform  Electronic  Transactions  Act  and  the
                           Electronic Signatures in Global and National Commerce
                           Act.
<PAGE>

                                    (viii)  Each  Grantor   hereby   irrevocably
                           authorizes  the  Agent at any  time and from  time to
                           time to  file in any  filing  office  in any  Uniform
                           Commercial Code  jurisdiction  any initial  financing
                           statements and  amendments  thereto that (a) indicate
                           the  Collateral  (i) as all assets of such Grantor or
                           words of similar  effect,  regardless  of whether any
                           particular  asset  comprised in the Collateral  falls
                           within  the  scope of  Article  9 of the Code or such
                           jurisdiction,  or (ii) as being of an equal or lesser
                           scope or with  greater  detail,  and (b)  contain any
                           other information  required by part 5 of Article 9 of
                           the  Code  for  the   sufficiency  or  filing  office
                           acceptance of any  financing  statement or amendment,
                           including    (i)   whether   such   Grantor   is   an
                           organization,   the  type  of  organization  and  any
                           organization  identification  number  issued  to such
                           Grantor,   and  (ii)  in  the  case  of  a  financing
                           statement  filed as a fixture  filing  or  indicating
                           Collateral as as-extracted collateral or timber to be
                           cut, a  sufficient  description  of real  property to
                           which the Collateral relates.  Each Grantor agrees to
                           furnish any such  information  to the Agent  promptly
                           upon   request.   Each  Grantor  also   ratifies  its
                           authorization  for the  Agent  to have  filed  in any
                           Uniform  Commercial  Code  jurisdiction  any  initial
                           financing  statements or amendments  thereto if filed
                           prior to the date hereof.

                                    (ix) Each Grantor shall promptly, and in any
                           event within two (2) Business  Days after the same is
                           acquired by it, notify Agent of any  commercial  tort
                           claim (as  defined  in the Code)  acquired  by it and
                           unless  otherwise  consented  by Agent,  such Grantor
                           shall  enter  into  a  supplement  to  this  Security
                           Agreement,   granting   to   Agent  a  Lien  in  such
                           commercial tort claim.

                           (b)  Maintenance of Records.  Grantors shall keep and
                                ----------------------
                  maintain,  at their  own cost and  expense,  satisfactory  and
                  complete records of the Collateral,  including a record of any
                  and all payments received and any and all credits granted with
                  respect  to the  Collateral  and all other  dealings  with the
                  Collateral.  Grantors  shall  mark  their  books  and  records
                  pertaining  to  the   Collateral  to  evidence  this  Security
                  Agreement and the Liens granted hereby. If any Grantor retains
                  possession  of any Chattel Paper or  Instruments  with Agent's
                  consent,  such Chattel Paper and  Instruments  shall be marked
                  with the following  legend:  "This writing and the obligations

<PAGE>


                  evidenced  or  secured  hereby  are  subject  to the  security
                  interest of General  Electric Capital  Corporation,  as Agent,
                  for the benefit of Agent and certain Lenders."

                           (c)  Covenants   Regarding   Patent,   Trademark  and
                                ------------------------------------------------
                  Copyright Collateral.
                  --------------------
                                    (i) Grantors shall notify Agent  immediately
                           if  they  know  or  have  reason  to  know  that  any
                           application or  registration  relating to any Patent,
                           Trademark  or Copyright  (now or hereafter  existing)
                           material to the operation of such Grantor's  business
                           may become abandoned, or of any adverse determination
                           or development  (including the institution of, or any
                           such  determination or development in, any proceeding
                           in the United States Patent and Trademark Office, the
                           United   States   Copyright   Office  or  any  court)
                           regarding any Grantor's ownership of any such Patent,
                           Trademark  or  Copyright,  its right to register  the
                           same, or to keep and maintain the same.

                                    (ii)  Within  45 days  after the end of each
                           Fiscal  Quarter,  Grantors shall provide Agent a list
                           of  any  applications  for  the  registration  of any
                           Patent,  Trademark or  Copyright  filed by any Credit
                           Party with the  United  States  Patent and  Trademark
                           Office,  the United  States  Copyright  Office or any
                           similar office or agency in the prior Fiscal Quarter,
                           and, upon request of Agent, Grantor shall execute and
                           deliver  any  and  all  Patent  Security  Agreements,
                           Copyright  Security  Agreements or Trademark Security
                           Agreements  as Agent may request to evidence  Agent's
                           Lien on such Patent,  Trademark or Copyright, and the
                           General  Intangibles of such Grantor relating thereto
                           or represented thereby.

                                    (iii)   Grantors   shall  take  all  actions
                           necessary  or  requested  by  Agent to  maintain  and
                           pursue  each  application,  to  obtain  the  relevant
                           registration and to maintain the registration of each
                           of the Patents,  Trademarks  and  Copyrights  (now or
                           hereafter existing) material to the operation of such
                           Grantor's   business,   including   the   filing   of
                           applications   for   renewal,   affidavits   of  use,
                           affidavits of  noncontestability  and  opposition and
                           interference and cancellation proceedings.

                                    (iv) In the  event  that any of the  Patent,
                           Trademark or Copyright  Collateral is infringed upon,
                           or  misappropriated or diluted by a third party, such
                           Grantor  shall comply with  Section  5(a)(ix) of this
                           Security  Agreement.  Such Grantor shall, unless such
                           Grantor shall reasonably  determine that such Patent,
                           Trademark  or  Copyright  Collateral  is  in  no  way
                           material   to  the   conduct  of  its   business   or
<PAGE>


                           operations,    promptly    sue   for    infringement,
                           misappropriation  or dilution  and to recover any and
                           all damages for such  infringement,  misappropriation
                           or  dilution,  and shall take such  other  actions as
                           Agent shall deem appropriate  under the circumstances
                           to  protect  such  Patent,   Trademark  or  Copyright
                           Collateral.

                           (d)  Indemnification.  In  any  suit,  proceeding  or
                                ---------------
                  action  brought  by  Agent  or  any  Lender  relating  to  any
                  Collateral  for any  sum  owing  with  respect  thereto  or to
                  enforce  any  rights  or claims  with  respect  thereto,  each
                  Grantor  will  save,  indemnify  and keep  Agent  and  Lenders
                  harmless  from and against all expense  (including  reasonable
                  attorneys'  fees and  expenses),  loss or damage  suffered  by
                  reason of any defense,  setoff,  counterclaim,  recoupment  or
                  reduction of  liability  whatsoever  of the Account  Debtor or
                  other  Person  obligated on the  Collateral,  arising out of a
                  breach by any Grantor of any obligation  thereunder or arising
                  out of any other  agreement,  indebtedness or liability at any
                  time owing to, or in favor of, such obligor or its  successors
                  from such Grantor,  except in the case of Agent or any Lender,
                  to the extent such expense,  loss,  or damage is  attributable
                  solely to the gross negligence or willful  misconduct of Agent
                  or such Lender as finally  determined  by a court of competent
                  jurisdiction.  All such  obligations  of Grantors shall be and
                  remain enforceable against and only against Grantors and shall
                  not be enforceable against Agent or any Lender.

                           (e)  Compliance  with Terms of Accounts,  etc. In all
                                ----------------------------------
                  material  respects,  each Grantor will perform and comply with
                  all  obligations  in respect of the  Collateral  and all other
                  agreements  to  which  it is a party  or by  which it is bound
                  relating to the Collateral.

                           (f)  Limitation  on Liens on  Collateral.  No Grantor
                                -----------------------------------
                  will create,  permit or suffer to exist, and each Grantor will
                  defend the Collateral  against,  and take such other action as
                  is  necessary  to remove,  any Lien on the  Collateral  except
                  Permitted  Encumbrances,  and will defend the right, title and
                  interest of Agent and Lenders in and to any of such  Grantor's
                  rights under the Collateral  against the claims and demands of
                  all Persons whomsoever.

                           (g) Limitations on Disposition. No Grantor will sell,
                               --------------------------
                  license,  lease,  transfer or otherwise  dispose of any of the
                  Collateral,  or  attempt  or  contract  to  do  so  except  as
                  permitted by the Credit Agreement.

                           (h) Further  Identification  of Collateral.  Grantors
                               --------------------------------------
                  will, if so requested by Agent,  furnish to Agent, as often as
                  Agent requests,  statements and schedules further  identifying
                  and  describing  the  Collateral  and such  other  reports  in
<PAGE>

                  connection   with  the  Collateral  as  Agent  may  reasonably
                  request, all in such detail as Agent may specify.

                           (i) Notices.  Grantors will advise Agent promptly, in
                               -------
                  reasonable  detail,  (i) of any  Lien  (other  than  Permitted
                  Encumbrances)  or claim made or  asserted  against  any of the
                  Collateral,  and (ii) of the  occurrence  of any  other  event
                  which would have a material  adverse  effect on the  aggregate
                  value of the  Collateral or on the Liens created  hereunder or
                  under any other Loan Document.

                           (j) Good Standing  Certificates.  Not less frequently
                               ---------------------------
                  than once during each calendar  quarter,  each Grantor  shall,
                  unless  Agent  shall  otherwise  consent,  provide  to Agent a
                  certificate  of good standing from its state of  incorporation
                  or organization.

                           (k)  No   Reincorporation.   Without   limiting   the
                                --------------------
                  prohibitions  on mergers  involving the Grantors  contained in
                  the  Credit  Agreement,  no  Grantor  shall  reincorporate  or
                  reorganize  itself  under the laws of any  jurisdiction  other
                  than the jurisdiction in which it is incorporated or organized
                  as of the date  hereof  without the prior  written  consent of
                  Agent.

                           (l)  Terminations;  Amendments Not  Authorized.  Each
                                -----------------------------------------
                  Grantor  acknowledges  that it is not  authorized  to file any
                  financing statement or amendment or termination statement with
                  respect to any financing  statement  without the prior written
                  consent of Agent and agrees that it will not do so without the
                  prior  written  consent of Agent,  subject  to such  Grantor's
                  rights under Section 9-509(d)(2) of the Code.

                           (m)  Authorized Terminations.   Agent  will  promptly
                                -----------------------
                  deliver to each Grantor  for  filing or authorize each Grantor
                  to prepare and  file  termination  statements  and releases in
                  accordance with Section 11.2(e) of the Credit Agreement."

               (i) amending Section 6 of the Security Agreement by deleting such
section in its entirety and  inserting in lieu thereof the following new section
to read as follows:

                  "6.   AGENT'S APPOINTMENT AS ATTORNEY -IN- FACT.

                           On the Closing  Date each Grantor  shall  execute and
         deliver  to  Agent  a power  of  attorney  (the  "Power  of  Attorney")
         substantially  in the form  attached  hereto as Exhibit A. The power of
         attorney  granted  pursuant to the Power of Attorney is a power coupled
         with an interest and shall be irrevocable  until the Termination  Date.
         The powers  conferred  on Agent,  for the benefit of Agent and Lenders,
         under the Power of  Attorney  are solely to protect  Agent's  interests
         (for the benefit of Agent and Lenders) in the  Collateral and shall not
         impose any duty upon Agent or any Lender to exercise  any such  powers.
         Agent  agrees  that (a) except for the powers  granted in clause (h) of
         the Power of  Attorney,  it shall not  exercise  any power or authority
<PAGE>

         granted  under the Power of  Attorney  unless an Event of  Default  has
         occurred and is continuing,  and (b) Agent shall account for any moneys
         received by Agent in respect of any  foreclosure  on or  disposition of
         Collateral  pursuant  to the Power of  Attorney  provided  that none of
         Agent or any Lender shall have any duty as to any Collateral, and Agent
         and Lenders  shall be  accountable  only for amounts that they actually
         receive  as a result of the  exercise  of such  powers.  NONE OF AGENT,
         LENDERS OR THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS, EMPLOYEES,
         AGENTS OR  REPRESENTATIVES  SHALL BE RESPONSIBLE TO ANY GRANTOR FOR ANY
         ACT OR FAILURE TO ACT UNDER ANY POWER OF ATTORNEY OR OTHERWISE,  EXCEPT
         IN RESPECT OF DAMAGES ATTRIBUTABLE SOLELY TO THEIR OWN GROSS NEGLIGENCE
         OR WILLFUL  MISCONDUCT  AS FINALLY  DETERMINED  BY A COURT OF COMPETENT
         JURISDICTION,   NOR   FOR  ANY   PUNITIVE,   EXEMPLARY,   INDIRECT   OR
         CONSEQUENTIAL DAMAGES."

               (j) amending Section 7 of the Security Agreement by deleting such
section in its entirety and  inserting in lieu thereof the following new section
to read as follows:

                   "7.   REMEDIES:  RIGHTS UPON DEFAULT.
                         ----------------------

                    (a)    In  addition  to   all  other  rights   and  remedies
         granted to it under this Security Agreement,  the Credit Agreement, the
         other  Loan  Documents  and  under any other  instrument  or  agreement
         securing,  evidencing  or  relating to any of the  Obligations,  if any
         Event of  Default  shall have  occurred  and be  continuing,  Agent may
         exercise  all rights and  remedies  of a secured  party under the Code.
         Without  limiting  the  generality  of  the  foregoing,   each  Grantor
         expressly  agrees  that in any such  event  Agent,  without  demand  of
         performance  or  other  demand,  advertisement  or  notice  of any kind
         (except  the  notice  specified  below of time and  place of  public or
         private sale) to or upon such Grantor or any other Person (all and each
         of which  demands,  advertisements  and  notices  are hereby  expressly
         waived to the maximum extent permitted by the Code and other applicable
         law),  may forthwith  enter upon the premises of such Grantor where any
         Collateral is located  through  self-help,  without  judicial  process,
         without first  obtaining a final judgment or giving such Grantor or any
         other Person notice and  opportunity  for a hearing on Agent's claim or
         action and may collect,  receive,  assemble,  process,  appropriate and
         realize upon the  Collateral,  or any part  thereof,  and may forthwith
         sell, lease, license, assign, give an option or options to purchase, or
         sell or otherwise  dispose of and deliver said  Collateral (or contract
         to do so), or any part  thereof,  in one or more parcels at a public or
         private  sale or sales,  at any  exchange at such prices as it may deem
         acceptable,  for  cash or on  credit  or for  future  delivery  without
         assumption of any credit risk. Agent or any Lender shall have the right
         upon any such public sale or sales and, to the extent permitted by law,
         upon any such  private  sale or sales,  to purchase  for the benefit of
         Agent and Lenders,  the whole or any part of said  Collateral  so sold,
         free of any right or equity of  redemption,  which equity of redemption
         each Grantor hereby releases. Such sales may be adjourned and continued
         from time to time with or without notice. Agent shall have the right to
         conduct such sales on any  Grantor's  premises or  elsewhere  and shall
         have the right to use any Grantor's  premises  without  charge for such
         time or times as Agent deems necessary or advisable.
<PAGE>

                           If any Event of Default  shall have  occurred  and be
         continued, each Grantor further agrees, at Agent's request, to assemble
         the  Collateral  and make it  available  to Agent at a place or  places
         designated by Agent which are  reasonably  convenient to Agent and such
         Grantor,  whether at such Grantor's premises or elsewhere.  Until Agent
         is able to effect a sale,  lease,  or other  disposition of Collateral,
         Agent  shall  have  the  right to hold or use  Collateral,  or any part
         thereof,  to the extent  that it deems  appropriate  for the purpose of
         preserving  Collateral  or its  value or for any other  purpose  deemed
         appropriate by Agent.  Agent shall have no obligation to any Grantor to
         maintain  or  preserve  the rights of such  Grantor  as  against  third
         parties  with  respect  to  Collateral   while  Collateral  is  in  the
         possession of Agent.  Agent may, if it so elects,  seek the appointment
         of a receiver or keeper to take possession of Collateral and to enforce
         any of Agent's  remedies (for the benefit of Agent and  Lenders),  with
         respect to such appointment  without prior notice or hearing as to such
         appointment. Agent shall apply the net proceeds of any such collection,
         recovery,   receipt,   appropriation,   realization   or  sale  to  the
         Obligations  as  provided  in the Credit  Agreement,  and only after so
         paying  over such net  proceeds,  and after the payment by Agent of any
         other amount  required by any  provision of law, need Agent account for
         the surplus, if any, to any Grantor. To the maximum extent permitted by
         applicable  law, each Grantor waives all claims,  damages,  and demands
         against Agent or any Lender arising out of the repossession,  retention
         or sale of the Collateral  except such as arise solely out of the gross
         negligence  or willful  misconduct  of Agent or such  Lender as finally
         determined by a court of competent  jurisdiction.  Each Grantor  agrees
         that ten (10) days  prior  notice by Agent of the time and place of any
         public sale or of the time after which a private sale may take place is
         reasonable  notification of such matters.  Grantors shall remain liable
         for any  deficiency if the proceeds of any sale or  disposition  of the
         Collateral  are  insufficient  to pay all  Obligations,  including  any
         reasonable  attorneys' fees and other expenses incurred by Agent or any
         Lender to collect such deficiency.

                           (b) Except as otherwise specifically provided herein,
         each Grantor hereby waives presentment,  demand,  protest or any notice
         (to the maximum  extent  permitted  by  applicable  law) of any kind in
         connection with this Security Agreement or any Collateral.

                           (c) To the extent that  applicable law imposes duties
         on the Agent to exercise remedies in a commercially  reasonable manner,
         each  Grantor  acknowledges  and  agrees  that  it is not  commercially
         unreasonable  for the  Agent (i) to fail to incur  expenses  reasonably
         deemed  significant by the Agent to prepare  Collateral for disposition
         or otherwise to complete raw material or work in process into  finished
         goods or  other  finished  products  for  disposition,  (ii) to fail to
         obtain third party consents for access to Collateral to be disposed of,
         or to  obtain  or,  if not  required  by other  law,  to fail to obtain
         governmental  or third party consents for the collection or disposition
         of Collateral to be collected or disposed of, (iii) to fail to exercise
         collection  remedies against Account Debtors or other Persons obligated
         on  Collateral  or to remove  Liens on or any  adverse  claims  against
         Collateral,  (iv)  to  exercise  collection  remedies  against  Account
         Debtors and other Persons  obligated on Collateral  directly or through
         the use of collection agencies and other collection specialists, (v) to
         advertise  dispositions of Collateral through  publications or media of
         general circulation,  whether or not the Collateral is of a specialized
<PAGE>

         nature,  (vi) to  contact  other  Persons,  whether  or not in the same
         business as the Grantor,  for  expressions of interest in acquiring all
         or  any  portion  of  such  Collateral,  (vii)  to  hire  one  or  more
         professional  auctioneers  to assist in the  disposition of Collateral,
         whether or not the  Collateral  is of a specialized  nature,  (viii) to
         dispose of Collateral by utilizing  internet sites that provide for the
         auction of assets of the types  included in the Collateral or that have
         the  reasonable  capacity of doing so, or that match buyers and sellers
         of assets,  (ix) to dispose of assets in  wholesale  rather than retail
         markets,  (x)  to  disclaim  disposition  warranties,  such  as  title,
         possession  or quiet  enjoyment,  (xi) to purchase  insurance or credit
         enhancements  to insure the Agent against risks of loss,  collection or
         disposition  of  Collateral  or to  provide  to the Agent a  guaranteed
         return from the collection or  disposition  of Collateral,  or (xii) to
         the extent deemed  appropriate by the Agent,  to obtain the services of
         other brokers, investment bankers,  consultants and other professionals
         to assist  the Agent in the  collection  or  disposition  of any of the
         Collateral.  Each Grantor acknowledges that the purpose of this Section
         7(c)  is to  provide  non-exhaustive  indications  of what  actions  or
         omissions by the Agent would not be  commercially  unreasonable  in the
         Agent's  exercise of remedies  against  the  Collateral  and that other
         actions  or  omissions  by the Agent  shall not be deemed  commercially
         unreasonable  solely on account of not being  indicated in this Section
         7(c). Without limitation upon the foregoing,  nothing contained in this
         Section  7(c) shall be  construed to grant any rights to any Grantor or
         to impose  any  duties on Agent  that  would not have been  granted  or
         imposed by this Security  Agreement or by applicable law in the absence
         of this Section 7(c).

                           (d)  Neither  the  Agent  nor the  Lenders  shall  be
         required  to make any demand  upon,  or pursue or exhaust  any of their
         rights or remedies against, any Grantor, any other obligor,  guarantor,
         pledgor  or  any  other  Person  with  respect  to the  payment  of the
         Obligations  or to pursue or exhaust  any of their  rights or  remedies
         with  respect to any  Collateral  therefor  or any  direct or  indirect
         guarantee thereof.  Neither the Agent nor the Lenders shall be required
         to marshal the  Collateral  or any guarantee of the  Obligations  or to
         resort to the Collateral or any such guarantee in any particular order,
         and all of its and their  rights  hereunder  or under  any  other  Loan
         Document shall be cumulative. To the extent it may lawfully do so, each
         Grantor  absolutely and irrevocably waives and relinquishes the benefit
         and advantage of, and covenants not to assert  against the Agent or any
         Lender, any valuation,  stay,  appraisement,  extension,  redemption or
         similar laws and any and all rights or defenses it may have as a surety
         now or  hereafter  existing  which,  but for this  provision,  might be
         applicable to the sale of any Collateral made under the judgment, order
         or decree of any court,  or privately under the power of sale conferred
         by this Security Agreement, or otherwise."

               (k) amending Schedules II, III-A,  III-B,  III-C,  III-D,  III-E,
III-F,  III-G, III-H, III-I, III-J, III-K and III-L to the Security Agreement by
deleting  such  Schedules in their  entirety  and  inserting in lieu thereof the
following new Schedules to read as set out on Schedules II, III-A, III-B, III-C,
III-D, III-E, III-F, III-G, III-H and III-I attached hereto. Attached as Exhibit
A hereto is a revised  form Power of  Attorney  to be  executed,  notarized  and
delivered by each Grantor in connection herewith.
<PAGE>

               2.  Effectiveness.  This Amendment  shall become  effective as of
                   -------------
September 14, 2001 (the "Amendment Effective  Date") only upon  satisfaction  in
full in the judgment of Agent of each of the following conditions on or prior to
September 19, 2001:

                      (a) Amendment. Agent shall have received ten (10) original
                          ---------
copies of this Amendment duly executed and delivered by Agent and each  Grantor.

                      (b) Representations and  Warranties.  The  representations
                          -------------------------------
and warranties of or on behalf of the Grantors in this  Amendment shall be  true
and correct on and as of the Amendment Effective Date.

               3. Effect on Security  Agreement.  All  references  in the Credit
                  -----------------------------
Agreement and the other Loan Documents to the Security Agreement shall be deemed
to refer to the Security  Agreement as amended  hereby.  This Amendment does not
evidence a  termination  of the granting of the Liens  contained in the Security
Agreement.  The Liens  granted  pursuant to the Security  Agreement as in effect
prior to the date  hereof  shall  remain in full  force and  effect and shall be
continuing in all respects.

               4. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY THE LAWS OF
                  -------------
THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ITS CONFLICTS OF LAW RULES).

               5. Counterparts.  This Amendment may be executed in any number of
                  ------------
several counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.



<PAGE>


         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Amendment to be executed and delivered by its duly authorized  officer as of the
date first set forth above.

                             AGWAY, INC. (SUCCESSOR BY MERGER TO AGWAY
                             HOLDINGS INC.,  AGWAY FINANCIAL CORPORATION AND
                             MILFORD FERTILIZER COMPANY LLC)
                             FEED COMMODITIES INTERNATIONAL LLC
                             BRUBAKER AGRONOMIC CONSULTING SERVICE LLC,
                             COUNTRY BEST-DEBERRY LLC
                             AGWAY ENERGY PRODUCTS LLC
                             AGWAY ENERGY SERVICES-PA, INC.
                             AGWAY ENERGY SERVICES, INC.


                             By:  /s/ KAREN J. OHLIGER
                                 -----------------------------------------------
                             Name:    Karen J. Ohliger
                             Title:   Treasurer



                             AGWAY GENERAL AGENCY, INC.
                             COUNTRY BEST ADAMS, LLC


                             By:  /s/ KAREN J. OHLIGER
                                ------------------------------------------------
                             Name:    Karen J. Ohliger
                             Title:   Asst. Treasurer



                             GENERAL ELECTRIC CAPITAL CORPORATION, AS AGENT

                             By:  /s/  PIETER SMIT
                                ------------------------------------------------
                             Name:     Peter Smit
                                  ----------------------------------------------
                             Title:   Its Duly Authorized Signatory


                                PLEDGE AMENDMENT


          This Pledge Amendment,  dated September 14, 2001 is delivered pursuant
to Section 6(d) of the Pledge  Agreement  referred to below.  All defined  termS
herein shall have the meanings  ascribed thereto or incorporated by reference in
the Pledge Agreement.  The undersigned hereby certifies that the representations
and warranties in Section 5 of the Pledge  Agreement are and continue to be true
and correct,  both as to the promissory notes,  instruments,  shares and limited
liability company interests pledged prior to this Pledge Amendment and as to the
promissory  notes,  instruments,  shares and limited liability company interests
pledged pursuant to this Pledge Amendment.  The undersigned  further agrees that
this Pledge  Amendment may be attached to that certain Pledge  Agreement,  dated
March  28,  2001,  between  undersigned,  as one of the  Pledgors,  and  General
Electric Capital  Corporation,  as Agent, (the "Pledge  Agreement") and that the
Pledged Shares, Pledged Interests and Pledged Indebtedness listed on this Pledge
Amendment  shall be and become a part of the Pledged  Collateral  referred to in
said Pledge  Agreement and shall secure all Secured  Obligations  referred to in
said Pledge Agreement.  The undersigned  acknowledges that any promissory notes,
instruments  shares or limited  liability  company interests not included in the
Pledged  Collateral  at the  discretion of Agent may not otherwise be pledged by
Pledgor or to any other Person or otherwise used as security for any obligations
other than the Secured Obligations.


                                                AGWAY, INC (SUCCESSOR BY MERGER
                                                -------------------------------
                                                TO AGWAY HOLDINGS INC.)
                                                ----------------------


                                                BY:/S/ Karen J. Ohliger
                                                   ----------------------------
                                                NAME:  Karen J. Ohliger
                                                     --------------------------
                                                TITLE: Treasurer
                                                      -------------------------
<TABLE>
<CAPTION>
                                PLEDGED INTERESTS
                               -----------------

<S>                      <C>               <C>                       <C>
Name and                                   Description of            Description of
Address of Pledgor       Pledged Entity    Pledged Interests         Operating Agreements
------------------       --------------    -----------------         --------------------
Agway, Inc.              Telmark LLC       100% Membership           Limited Liability Company
333 Butternut Drive                        Interest (Membership      Agreement of Telmark LLC,
Dewitt, New York  13214                    Certificate No. 2 for --  dated as of July 1, 1998
                                           Units)
</TABLE>





<PAGE>

                           ACKNOWLEDGMENT AND CONSENT
                           --------------------------

General Electric Capital Corporation,
   as Agent
800 Connecticut Avenue, Two North
Norwalk, Connecticut 06854
Attn: Agway - Account Manager


                  Telmark LLC ("Company")  hereby (i) acknowledges  receipt of a
fully  executed  copy of the Pledge  Agreement,  dated as of March 28, 2001,  as
amended by the Pledge Amendment dated as of September 14, 2001 (the "Agreement";
capitalized  terms used herein  without  definition  have the meanings  provided
therein), made by Agway, Inc., Agway Financial Corporation, Agway Holdings Inc.,
Feed Commodities  International  LLC, Milford  Fertilizer  Company LLC, Brubaker
Agronomic  Consulting  Service LLC,  Agway General  Agency,  Inc.,  Country Best
Adams,  LLC, Country  Best-DeBerry  LLC, Agway Energy Products LLC, Agway Energy
Services-PA,   Inc.,  and  Agway  Energy  Services,  Inc.   (collectively,   the
"Pledgors")  in  favor  of  General  Electric  Capital  Corporation,   as  Agent
("Agent");  (ii)  consents  and agrees to the pledge by  Pledgors of the Pledged
Collateral  pursuant  to  the  Agreement  and to all  of  the  other  terms  and
provisions  of the  Agreement;  (iii)  agrees  to comply  with all  instructions
received by it from Agent without further consent by Pledgors;  (iv) irrevocably
waives any breach or default under the Limited  Liability Company Agreement as a
result of the execution,  delivery and  performance by Pledgors and Agent of the
Agreement; (v) advises Pledgors and Agent that a pledge of the Pledged Interests
set  forth  on the  Pledge  Amendment  dated  as of  September  14,  2001 to the
Agreement  has been  registered  on the books of Company  and in the name of the
Agent  and  agrees  to  so  register  any  additional  Pledged  Interests;  (vi)
represents and warrants that, except for the pledge in favor of Agent, there are
no liens,  restrictions or adverse claims to which the Pledged  Collateral is or
may be  subject  as of the date  hereof;  (vii)  except  with the prior  written
consent of Agent,  agrees not to admit any new  Members to  Company;  and (viii)
consents  and agrees to any  transfer  of the  Pledged  Collateral  pursuant  to
Section 8 of the Agreement.

                  IN  WITNESS  WHEREOF,   a  duly  authorized   officer  of  the
undersigned  has executed and delivered  this  Acknowledgment  and Consent as of
this 14th day of September, 2001.

                                           TELMARK LLC


                                           By:     JENNIFER L. HICKS
                                              ----------------------------------
                                           Name:   Jennifer L. Hicks
                                           Title:  Secretary & Treasurer





<PAGE>



September 14, 2001

General Electric Capital Corporation
800 Connecticut Avenue, Two North
Norwalk, Connecticut 06854
Attention:  Agway Account Manager

Re:  Credit Agreement,  dated as of March 28, 2001 (as amended,  supplemented or
     otherwise  modified  from  time to time,  the  "Credit  Agreement"),  among
     General  Electric Capital  Corporation,  as Agent and Lender (the "Agent"),
     Agway,  Inc.,  Agway  Holdings  Inc.,  Agway  Financial  Corporation,  Feed
     Commodities  International  LLC, Milford  Fertilizer  Company LLC, Brubaker
     Agronomic  Consulting Service LLC, Agway General Agency, Inc., Country Best
     Adams,  LLC,  Country  Best-DeBerry  LLC, Agway Energy  Products LLC, Agway
     Energy  Services-PA,  Inc., and Agway Energy  Services,  Inc., as borrowers
     (the "Borrowers"), and the lenders signatory thereto from time to time

Ladies and Gentlemen:

                  This letter,  when accepted by you, will reflect our agreement
with respect to (i) a  representation  and warranty and (ii) a certain  negative
covenant  regarding the Telmark Entities.  Capitalized terms used herein and not
otherwise defined are used as defined in the Credit Agreement.

                  Telmark LLC  represents  and warrants to Agent and each Lender
that  none of the  stock of the  Telmark  Entities  is  subject  to any Liens or
encumbrances,  and there  are no facts,  circumstances  or  conditions  known to
Telmark  LLC that may result in any Liens or  encumbrances  against  such Stock.
Telmark LLC hereby covenants and agrees that it shall not create,  incur, assume
or  permit  to exist any lien on or with  respect  to the  Stock of the  Telmark
Entities.

                  This  letter  may  be  executed  in  any  number  of  separate
counterparts,  each of which shall, collectively and separately,  constitute one
agreement.



<PAGE>

General Electric Capital Corporation
September 14,2001

Page 2




                  Please  indicate  your consent to the terms and  conditions of
this letter by signing in the space provided below,  whereupon this letter shall
become an  agreement  among the  parties  to be  governed  by and  construed  in
accordance with the laws of the State of New York.

                                      Very truly yours,

                                      TELMARK LLC

                                      By:      JENNIFER L. HICKS
                                          --------------------------------
                                      Name:    Jennifer L. Hicks
                                      Title:   Secretary & Treasurer

Accepted and Agreed to:

GENERAL ELECTRIC CAPITAL
CORPORATION, as Agent

By:    PIETER SMIT
   ---------------------------
Name:  Pieter Smit
Its: Duly Authorized Signatory


<PAGE>






<PAGE>



[For 13 Directors]

                       DIRECTOR DEFERRED PAYMENT AGREEMENT


           AGREEMENT made this       day of               ,  2000, between AGWAY
                               -----        -------------

INC., a Delaware  corporation,  with its principal  office in De Witt,  New York
(hereinafter called "AGWAY"), and                                    residing at
                                  ----------------------------------

--------------------------------------------------------------------------------
(hereinafter called "Director").

                                    RECITALS:

           A.    AGWAY has established a deferred payment program for Directors.

           B.    Director  desires  to  participate  in  the  program  upon  the
                 following terms and conditions.

                                   WITNESSETH:

           For good and valuable  consideration,  the  parties,  intending to be
legally bound, hereby agree as follows:

           1.        Director hereby designates (check one)

                             % of  retainer (or  $           of  retainer)  only
                     ---  ---                    -----------
                               %  of per diem and all other  payments other than
                     ---    ---
                     expense reimbursements (or  $           of per diem and all
                                                  ----------
                     other  payments  other  than expense reimbursements)  only
                             % of  both  retainer  and  per  diem  and all other
                     ---  ----
                     payments other than expense reimbursements (or $         of
                                                                     ---------
                     both retainer and per diem)

                                       -1-

<PAGE>




for the  period  beginning  January  1, 2001 and  ending  December  31,  2001 be
credited to Director's Reserve Account.

           2.  AGWAY shall maintain in its accounting records a separate account
(herein called "Director's Reserve Account") for each Director electing deferral
of any amount under this  agreement and shall credit to the  Director's  Reserve
Account  the item or items  designated  by  Director  in  Section  1 above.  The
Director's  Reserve Account shall also be credited at the close of each calendar
quarter with an amount computed by applying the average cost-of-debt  percentage
as hereinafter defined to the total average accumulated credit of the Director's
Reserve Account. "Average cost-of-debt" as used in this agreement shall mean the
average cost to AGWAY of the debt employed by AGWAY during each calendar quarter
in the conduct of AGWAY's  business,  and this  average  cost-of-  debt shall be
determined by the Treasurer of AGWAY.

           3.  AGWAY and Director hereby agree that payment from the  Director's
Reserve Account shall begin on the first January 1 or July 1 that follows the 15
month  anniversary  of the Director's  attainment of age fifty-five  (55) or the
date on which Director's  service as Director of AGWAY terminates,  whichever is
earlier.

This agreement by the Director shall be irrevocable;  provided, however, that at
least  twelve (12)  months  prior to January 1 or July 1  described  above,  the
Director may request,  by notice in writing to Agway,  that the  commencement of
payments be deferred to a specified  January 1 or July 1 date later than that on
which commencement was previously  scheduled.  Whether to approve such a request
shall be within the  discretion  of the Chief  Financial  Officer  of AGWAY,  or
his/her  designee.  Approval  of  such a  request  shall  be in  writing.  After
approval,  Director shall have no right to payment at any date earlier than that
specified in the written  approval.  In any event,  payments  shall commence not
later than the

                                       -2-

<PAGE>



January  following  the calendar  year when  Director  reaches age seventy (70).
AGWAY may impose a thirty (30) day waiting  period  before the first  payment is
made.

           4.   Payment will be  either  (a) a lump sum  payment  of the  entire
balance in the Director's  Reserve  Account;  or (b) in an amount  determined by
multiplying  the balance in the Director's  Reserve  Account at the beginning of
each  calendar  year  during  which a payment is to be made by a  fraction,  the
numerator of which is one (1) and the denominator of which will be the number of
years  remaining  during which the  Director's  Reserve  Account will be paid to
Director. The payment election must be made at least twelve (12) months prior to
the commencement of payment in writing to the chief financial  officer of AGWAY,
or his/her designee, to have the payments made:
                                (A) over 3 years;
                                (B) over 5 years;
                                (C) over 10 years;
                                (D) over 15 years; or
                                (E) over 20 years.

If a timely  election  is not made,  the entire  balance in  Director's  Reserve
Account will be paid in a single lump sum.

If the  initial  annual  payment  computed  for the  applicable  payment  period
described  above  would  be less  than ten  thousand  dollars  ($10,000),  then,
notwithstanding the prior provisions of this Section, AGWAY may make payment (at
the  sole  discretion  of  AGWAY)  either  in one  (1)  lump  sum  or in  annual
installments  over the longest period  resulting in an initial annual payment of
at least ten thousand dollars ($10,000).


                                       -3-

<PAGE>



           5.  Upon furnishing AGWAY with proper evidence of financial hardship,
Director  may  request  a  withdrawal  of all or  part  of  the  balance  in the
Director's  Reserve  Account.  Whether to approve such a request shall be within
the discretion of the Chief  Financial  Officer of AGWAY,  or his/her  designee.
Approval of such a request shall be in writing.

           6.  In the event of  Director's  death,  either  before  or after the
payments to Director have begun,  the amount  payable,  as provided in Section 4
above, shall be paid to the beneficiary or beneficiaries  designated by Director
in the most recent  notice in writing to AGWAY in  installments  computed in the
same  manner  as if  Director  was  still  living.  If no  beneficiary  has been
designated, the amount payable, as provided in Section 4 above, shall be paid in
installments  computed  in the same manner as if  Director  was still  living to
Director's  estate or, at the sole discretion of AGWAY, the remaining balance in
the Director's  Reserve Account may be paid in a lump sum to Director's  estate.
In the event that after  payments have  commenced to the  beneficiary  or to the
beneficiaries   designated  by  Director  the  sole   beneficiary  dies  or  all
beneficiaries die, then, any remaining balance in the Director's Reserve Account
will  be  paid  in a  lump  sum  to  the  sole  beneficiary's  estate  or to the
beneficiaries'  estates.  In the absence of clear  written  instructions  to the
contrary, a designation of multiple  beneficiaries will be deemed to provide for
payment to the designated  beneficiaries in equal shares, and for the payment to
Director's estate of the share of any beneficiary who predeceases  Director.  In
the event of Director's  death before the payments to Director  have begun,  the
payments  will  commence on the January 1 or July 1, next  following the date of
Director's death.

           7.  Director  agrees  that  AGWAY's  liability to make any payment as
provided in this agreement shall be contingent upon Director's:


                                       -4-

<PAGE>



               (a)    being available to AGWAY for consultation and advice after
termination of service as a director of AGWAY, unless Director is disabled or
deceased; and

               (b)    retaining  unencumbered any interest or benefit under this
agreement.

                If  Director  fails  to  fulfill  any  one  or  more  of   these
contingencies, AGWAY's obligation under this  agreement  may  be  terminated  by
AGWAY as to Director.

            8.  Director also agrees that AGWAY's  obligations  to make deferred
payments  under this  agreement  are merely  contractual;  and that AGWAY is the
outright  beneficial  owner of,  and does not hold for  Director  as  trustee or
otherwise,  the amounts credited to Director's  Reserve  Account;  and that such
amounts are subject to the rights of AGWAY's creditors in the same manner and to
the same extent as all assets owned by AGWAY.

            9.  Neither Director nor Director's  beneficiary/ies  shall have the
right to encumber,  commute,  borrow against,  dispose of or assign the right to
receive payments under this agreement.

            IN WITNESS  WHEREOF,  AGWAY and  Director  have duly  executed  this
agreement the day and year first above written.

                                         AGWAY INC.


                                  By: /s/
                                      -----------------------
                                           Secretary


                                  By: /s/
                                      -----------------------
                                          (Director)

                                       -5-

<PAGE>


                                 * * * * * * * *

                         DESIGNATION OF BENEFICIARY/IES


Pursuant  to the  provisions  of  this  Deferred  Payment  Agreement,  I  hereby
designate as my beneficiary/ies hereunder:



--------------------------------------------------------------------------------
                          (Name of beneficiary/ies)


This  designation  is also  effective  with  respect  to any and all  amounts of
deferred  compensation accrued for my benefit under any and all Deferred Payment
Agreements executed by me in previous years.


                                                  /s/
                                                  ------------------------------
                                                         (Director)

Date:                , 2000
      ---------------


                                       -6-

<PAGE>


[For 2 Board officers]

                       DIRECTOR DEFERRED PAYMENT AGREEMENT

           AGREEMENT  made this      day of              ,  2000,  between AGWAY
                                ---         -------------
INC., a Delaware  corporation,  with its principal  office in De Witt,  New York
(hereinafter   called   "AGWAY"),   and                            residing   at
                                          ---------------------
                                                            (hereinafter  called
----------------------------------------------------------
"Director").

                                    RECITALS:

           A.   AGWAY  has established a deferred payment program for Directors.

           B.   Director  desires  to  participate  in  the  program  upon  the
                following terms and conditions.

                                   WITNESSETH:

           For good and valuable  consideration,  the  parties,  intending to be
legally bound, hereby agree as follows:

           1.  Director  hereby  designates      %  (or  $         )  of  annual
                                             ----         ---------
retainer for the period  beginning  January 1, 2001 and ending December 31, 2001
be credited to Director's Reserve Account.

           2.  AGWAY shall maintain in its accounting records a separate account
(herein called "Director's Reserve Account") for each Director electing deferral
of any amount under this  agreement and shall credit to the  Director's  Reserve
Account the amount  designated  by Director in Section 1 above.  The  Director's
Reserve  Account  shall also be credited at the close of each  calendar  quarter
with  an  amount  computed  by  applying  the average cost-of-debt percentage as

                                       -1-

<PAGE>



hereinafter  defined to the total average  accumulated  credit of the Director's
Reserve Account. "Average cost-of-debt" as used in this agreement shall mean the
average cost to AGWAY of the debt employed by AGWAY during each calendar quarter
in the conduct of AGWAY's  business,  and this  average  cost-of-  debt shall be
determined by the Treasurer of AGWAY.

           3.  AGWAY and Director hereby agree that payment from the  Director's
Reserve Account shall begin on the first January 1 or July 1 that follows the 15
month  anniversary  of the Director's  attainment of age fifty-five  (55) or the
date on which Director's  service as Director of AGWAY terminates,  whichever is
earlier.

This agreement by the Director shall be irrevocable;  provided, however, that at
least  twelve (12)  months  prior to January 1 or July 1  described  above,  the
Director may request,  by notice in writing to Agway,  that the  commencement of
payments be deferred to a specified  January 1 or July 1 date later than that on
which commencement was previously  scheduled.  Whether to approve such a request
shall be within the  discretion  of the Chief  Financial  Officer  of AGWAY,  or
his/her  designee.  Approval  of  such a  request  shall  be in  writing.  After
approval,  Director shall have no right to payment at any date earlier than that
specified in the written  approval.  In any event,  payments  shall commence not
later than the January  following the calendar  year when  Director  reaches age
seventy (70). AGWAY may impose a thirty (30) day waiting period before the first
payment is made.

           4.  Payment  will be  either  (a) a lump sum  payment  of the  entire
balance in the Director's  Reserve  Account;  or (b) in an amount  determined by
multiplying  the balance in the Director's  Reserve  Account at the beginning of
each  calendar  year  during  which a payment is to be made by a  fraction,  the
numerator of which is one (1) and the denominator of which will be the number of
years remaining

                                       -2-

<PAGE>



during  which the  Director's  Reserve  Account  will be paid to  Director.  The
payment  election  must  be  made at  least  twelve  (12)  months  prior  to the
commencement of payment in writing to the chief  financial  officer of AGWAY, or
his/her designee, to have the payments made:
                                (A) over 3 years;
                                (B) over 5 years;
                                (C) over 10 years;
                                (D) over 15 years; or
                                (E) over 20 years.

If a timely  election  is not made,  the entire  balance in  Director's  Reserve
Account will be paid in a single lump sum.

If the  initial  annual  payment  computed  for the  applicable  payment  period
described  above  would  be less  than ten  thousand  dollars  ($10,000),  then,
notwithstanding the prior provisions of this Section, AGWAY may make payment (at
the  sole  discretion  of  AGWAY)  either  in one  (1)  lump  sum  or in  annual
installments  over the longest period  resulting in an initial annual payment of
at least ten thousand dollars ($10,000).

           5.  Upon furnishing AGWAY with proper evidence of financial hardship,
Director  may  request  a  withdrawal  of all or  part  of  the  balance  in the
Director's  Reserve  Account.  Whether to approve such a request shall be within
the discretion of the Chief  Financial  Officer of AGWAY,  or his/her  designee.
Approval of such a request shall be in writing.

           6.  In the event of  Director's  death,  either  before  or after the
payments to Director have begun,  the amount  payable,  as provided in Section 4
above, shall be paid to the beneficiary or beneficiaries  designated by Director
in the most

                                       -3-

<PAGE>



recent notice in writing to AGWAY in installments computed in the same manner as
if Director was still living. If no beneficiary has been designated,  the amount
payable, as provided in Section 4 above, shall be paid in installments  computed
in the same manner as if Director was still living to  Director's  estate or, at
the sole discretion of AGWAY,  the remaining  balance in the Director's  Reserve
Account may be paid in a lump sum to Director's  estate. In the event that after
payments have commenced to the beneficiary or to the beneficiaries designated by
Director the sole beneficiary dies or all beneficiaries die, then, any remaining
balance in the Director's Reserve Account will be paid in a lump sum to the sole
beneficiary's  estate or to the beneficiaries'  estates. In the absence of clear
written  instructions to the contrary,  a designation of multiple  beneficiaries
will be deemed to provide for payment to the designated  beneficiaries  in equal
shares, and for the payment to Director's estate of the share of any beneficiary
who predeceases  Director.  In the event of Director's death before the payments
to Director  have begun,  the payments will commence on the January 1 or July 1,
next following the date of Director's death.

           7.  Director  agrees  that  AGWAY's  liability to make any payment as
provided in this agreement shall be contingent upon Director's:

              (a)   being  available  to AGWAY for consultation and advice after
termination  of  service  as a director of AGWAY, unless Director is disabled or
deceased; and

              (b)   retaining  unencumbered  any  interest or benefit under this
agreement.


                                       -4-

<PAGE>



           If  Director fails to fulfill any one or more of these contingencies,
AGWAY's  obligation  under  this  agreement  may be  terminated  by  AGWAY as to
Director.

           8.  Director  also agrees that AGWAY's  obligations  to make deferred
payments  under this  agreement  are merely  contractual;  and that AGWAY is the
outright  beneficial  owner of,  and does not hold for  Director  as  trustee or
otherwise,  the amounts credited to Director's  Reserve  Account;  and that such
amounts are subject to the rights of AGWAY's creditors in the same manner and to
the same extent as all assets owned by AGWAY.

           9.  Neither Director nor  Director's  beneficiary/ies  shall have the
right to encumber,  commute,  borrow against,  dispose of or assign the right to
receive payments under this agreement.

           IN  WITNESS  WHEREOF,  AGWAY and  Director  have duly  executed  this
agreement the day and year first above written.

                                   AGWAY INC.


                                   By: /s/
                                       -----------------------
                                            Secretary

                                       /s/
                                       -----------------------
                                           (Director)




                                       -5-

<PAGE>


                                 * * * * * * * *

                         DESIGNATION OF BENEFICIARY/IES

Pursuant  to the  provisions  of  this  Deferred  Payment  Agreement,  I  hereby
designate as my beneficiary/ies hereunder:

--------------------------------------------------------------------------------
                            (Name of beneficiary/ies)


This  designation  is also  effective  with  respect  to any and all  amounts of
deferred  compensation accrued for my benefit under any and all Deferred Payment
Agreements executed by me in previous years.

                                              /s/
                                             -----------------------------------
                                                         (Director)


Date:               , 2000
      -------------

                                       -6-

<PAGE>