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                                                                   EXHIBIT 10.49

                                                       LOAN & SECURITY AGREEMENT
                                                       (ACCOUNTS AND INVENTORY)

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<S>              <C>          <C>                  <C>               <C>
OBLIGOR #        NOTE#                             AGREEMENT DATE
6300285773                                         July 31, 2000
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CREDIT LIMIT                  INTEREST RATE                          OFFICER NO./INITIALS
$3,000,000.00                 Base Rate+ .75%                        48134, Stephen Moore
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     THIS AGREEMENT is entered into on July 31, 2000, between Comerica Bank-
                                       -------------          --------------
California ("Bank") as secured party, whose Headquarter Office is 333 West Santa
----------                                                        --------------
Clara Street, San Jose, CA and Provena Foods Inc. ("Borrower"), a Corporation
--------------------------     ------------------                 -----------
whose sole place of business (if it has only one), chief executive office (if it
has more than one place of business) or residence (if an individual) is located
at 5010 Eucalyptus Ave., Chino, CA. The parties agree as follows:
   -------------------------------

  1. DEFINITIONS
     -----------

     1.1 "Agreement" as used in this Agreement means and includes this Loan &
  Security Agreement (Accounts and Inventory), any concurrent or subsequent
  rider to this Loan & Security Agreement (Accounts and Inventory) and any
  extensions, supplements, amendments or modifications to this Loan & Security
  Agreement (Accounts and Inventory) and to any such rider.

     1.2 "Bank Expenses" as used in this Agreement means and includes: all costs
  or expenses required to be paid by Borrower under this Agreement which are
  paid or advanced by Bank; taxes and insurance premiums of every nature and
  kind of Borrower paid by Bank; filing, recording, publication and search fees,
  appraiser fees, auditor fees and costs, and title insurance premiums paid or
  incurred by Bank in connection with Bank's transactions with Borrower; costs
  and expenses incurred by Bank in collecting the Receivables (with or without
  suit) to correct any default or enforce any provision of this Agreement, or in
  gaining possession of, maintaining, handling, preserving, storing, shipping,
  selling, disposing of, preparing for sale and/or advertising to sell the
  Collateral, whether or not a sale is consummated; costs and expenses of suit
  incurred by Bank in enforcing or defending this Agreement or any portion
  hereof, including, but not limited to, expenses incurred by Bank in attempting
  to obtain relief from any stay, restraining order, injunction or similar
  process which prohibits Bank from exercising any of its rights or remedies;
  and attorneys' fees and expenses incurred by Bank in advising, structuring,
  drafting, reviewing, amending, terminating, enforcing, defending or concerning
  this Agreement, or any portion hereof or any agreement related hereto, whether
  or not suit is brought. Bank Expenses shall include Bank's in-house legal
  charges at reasonable rates.

     1.3 "Base Rate" as used in this Agreement means that variable rate of
  interest so announced by Bank at its headquarters office in San Jose,
  California as its "Base Rate" from time to time and which serves as the basis
  upon which effective rates of interest are calculated for those loans making
  reference thereto.

     1.4 "Borrower's Books" as used in this Agreement means and includes all of
  the Borrower's books and records including but not limited to: minute books;
  ledgers; records indicating, summarizing or evidencing Borrower's assets,
  liabilities, Receivables, business operations or financial condition, and all
  information relating thereto, computer programs; computer disk or tape files;
  computer printouts; computer runs; and other computer prepared information and
  equipment of any kind.

     1.5 "Borrowing Base" as used in this Agreement means the sum of: (1) Eighty
                                                                          ------
  percent (80.000%) of the net amount of Eligible Accounts after deducting
           ------
  therefrom all payments, adjustments and credits applicable thereto ("Accounts
  Receivable Borrowing Base"); and (2) the amount, if any, of the advances
  against Inventory agreed to be made pursuant to any Inventory Rider
  ("Inventory Borrowing Base"), or other rider, amendment or modification to
  this Agreement, that may now or hereafter be entered into by Bank and
  Borrower.

     1.6 "Cash Flow" as used in this Agreement means for any applicable period
  of determination, the Net Income (after deduction for income taxes and other
  taxes of such person determined by reference to income or profits of such
  person) for such period, plus, to the extent deducted in computation of such
  Net Income, the amount of depreciation and amortization expense and the amount
  of deferred tax liability during such period, all as determined in accordance
  with GAAP. The applicable period of determination will be N/A, beginning with
                                                            ---
  the period from __________________________ to ______________________________.

     1.7 "Collateral" as used in this Agreement means and includes each and all
  of the following: the Receivables; the Intangibles; the negotiable collateral,
  the Inventory; all money, deposit accounts and all other assets of Borrower in
  which Bank receives a security interest or which hereafter come into the
  possession, custody or control of Bank; and the proceeds of any of the
  foregoing, including, but not limited to, proceeds of insurance covering the
  collateral and any and all Receivables, Intangibles, negotiable collateral,
  Inventory, equipment, money, deposit accounts or other tangible and intangible
  property of borrower resulting from the sale or other disposition of the
  collateral, and the proceeds thereof. Notwithstanding anything to the contrary
  contained herein, collateral shall not include any waste or other materials
  which have been or may be designated as toxic or hazardous by Bank.

                                      1.
<PAGE>

                                        LOAN & SECURITY AGREEMENT
                                        (Accounts & Inventory)

     1.8 "Credit" as used in this Agreement means all Obligations, except those
obligations arising pursuant to any other separate contract, instrument, note,
or other separate agreement which, by its terms, provides for a specified
interest rate and term.

     1.9 "Current Assets" as used in this Agreement means, as of any applicable
date of determination, all cash, non-affiliated customer receivables, United
States government securities, claims against the United States government, and
inventories.

     1.10 "Current Liabilities" as used in this Agreement means, as of any
applicable date of determination, (i) all liabilities of a person that should be
classified as current in accordance with GAAP, including without limitation any
portion of the principal of the Indebtedness classified as current, plus (ii) to
the extent not otherwise included, all liabilities of the Borrower to any of its
affiliates whether or not classified as current in accordance with GAAP.

     1.11 "Daily Balance" as used in this Agreement means the amount determined
by taking the amount of the Credit owed at the beginning of a given day, adding
any new Credit advanced or incurred on such date, and subtracting any payments
or collections which are deemed to be paid and are applied by Bank in reduction
of the Credit on that date under the provisions of this Agreement.

     1.12 "Eligible Accounts" as used in this Agreement means and includes those
accounts of Borrower which are due and payable within Thirty (30) days, or less,
                                                      ------- --
from the date of invoice, have been validly assigned to Bank and strictly comply
with all of Borrower's warranties and representations to Bank; but Eligible
Accounts shall not include the following: (a) accounts with respect to which the
account debtor is an officer, employee, partner, joint venturer or agent of
Borrower; (b) accounts with respect to which goods are placed on consignment,
guaranteed sale or other terms by reason of which the payment by the account
debtor may be conditional; (c) accounts with respect to which the account debtor
is not a resident of the United States; (d) accounts with respect to which the
account debtor is the United States or any department, agency or instrumentality
of the United States; (e) accounts with respect to which the account debtor is
any State of the United States or any city, county, town, municipality or
division thereof; (f) accounts with respect to which the account debtor is a
subsidiary of, related to, affiliated or has common shareholders, officers or
directors with Borrower; (g) accounts with respect to which Borrower is or may
become liable to the account debtor for goods sold or services rendered by the
account debtor to Borrower; (h) accounts not paid by an account debtor within
ninety (90) days from the date of the invoice; (i) accounts with respect to
which account debtors dispute liability or make any claim, or have any defense,
crossclaim, counterclaim, or offset; a) accounts with respect to which any
Insolvency Proceeding is filed by or against the account debtor, or if an
account debtor becomes insolvent, fails or goes out of business; and (k)
accounts owed by any single account debtor which exceed twenty percent (20%) of
all of the Eligible Accounts; and (l) accounts with a particular account debtor
on which over twenty-five percent (25%) of the aggregate amount owing is greater
than ninety (90) days from the date of the invoice.

     1.13 "Event of Default" as used in this Agreement means those events
described in Section 7 contained herein below.

     1.14 "Fixed Charges" as used in this Agreement means and includes for any
applicable period of determination, the sum, without duplication, of (a) all
interest paid or payable during such period by a person on debt of such person,
plus (b) all payments of principal or other sums paid or payable during such
period by such person with respect to debt of such person having a final
maturity more than one year from the date of creation of such debt, plus (c) all
debt discount and expense amortized or required to be amortized during such
period by such person, plus (d) the maximum amount of all rents and other
payments paid or required to be paid by such person during such period under any
lease or other contract or arrangement providing for use of real or personal
property in respect of which such person is obligated as a lessee, use or
obligor, plus (e) all dividends and other distributions paid or payable by such
person or otherwise accumulating during such period on any capital stock of such
person, plus (f) all loans or other advances made by such person during such
period to any Affiliate of such person. The applicable period of determination
will be N/A, beginning with the period from _______________ to ________________.
        ---

     1.15 "GAAP" as used in this Agreement means as of any applicable period,
generally accepted accounting principles in effect during such period.

     1.16 "Insolvency Proceeding" as used in this Agreement means and includes
any proceeding or case commenced by or against the Borrower, or any guarantor of
Borrower's Obligations, or any of Borrower's account debtors, under any
provisions of the Bankruptcy Code, as amended, or any other bankruptcy or
insolvency law, including but not limited to assignments for the benefit of
creditors, formal or informal moratoriums, composition or extensions with some
or all creditors, any proceeding seeking a reorganization, arrangement or any
other relief under the Bankruptcy code, as amended, or any other bankruptcy or
insolvency law.

     1.17 "Intangibles" as used in this Agreement means and includes all of
Borrower's present and future general Intangibles and other personal property
(including, without limitation, any and all rights in any legal proceedings,
goodwill, patents, trade names, copyrights, trademarks, blueprints, drawings,
purchase orders, computer programs, computer disks, computer tapes, literature,
reports, catalogs and deposit accounts) other than goods and Receivables, as
well as Borrower's Books relating to any of the foregoing.

                                      2.
<PAGE>

                                        LOAN & SECURITY AGREEMENT
                                        (Accounts & Inventory)

     1.18 "Inventory" as used in this Agreement means and includes all present
and future inventory in which Borrower has any interest, including, but not
limited to, goods held by Borrower for sale or lease or to be furnished under a
contract of service and all of Borrower's present and future raw materials, work
in process, finished goods, advertising materials, and packing and shipping
materials, wherever located and any documents of title representing any of the
above, and any equipment, fixtures or other property used in the storing,
moving, preserving, identifying, accounting for and shipping or preparing for
the shipping of inventory, and any and all other items hereafter acquired by
Borrower by way of substitution, replacement, return, repossession or otherwise,
and all additions and accessions thereto, and the resulting product or mass, and
any documents of title respecting any of the above.

     1.19 "Net Income" as used in this agreement means the net income (or loss)
of a person for any period determined in accordance with GAAP but excluding in
any event:

          (a) any gains or losses on the sale or other disposition, not in the
          ordinary course of business, of investments or fixed or capital
          assets, and any taxes on the excluded gains and any tax deductions or
          credits on account on any excluded losses; and

          (b) in the case of the Borrower, net earnings of any Person in which
          Borrower has an ownership interest, unless such net earnings shall
          have actually been received by Borrower in the form of cash
          distributions.

     1.20 "Judicial Officer or Assignee" as used in this Agreement means and
includes any trustee, receiver, controller, custodian, assignee for the benefit
of creditors or any other person or entity having powers or duties like or
similar to the powers and duties of trustee, receiver, controller, custodian or
assignee for the benefit of creditors.

     1.21 "Obligations" as used in this Agreement means and includes any and all
loans, advances, overdrafts, debts, liabilities (including, without limitation,
any and all amounts charged to Borrower's account pursuant to any agreement
authorizing Bank to charge Borrower's account), obligations, lease payments,
guaranties, covenants and duties owing by Borrower to Bank of any kind and
description whether advanced pursuant to or evidenced by this Agreement; by any
note or other instrument; or by any other agreement between Bank and Borrower
and whether or not for the payment of money, whether direct or indirect,
absolute or contingent, due or to become due, now existing or hereafter arising,
and including, without limitation, any debt, liability or obligation owing from
Borrower to others which Bank may have obtained by assignment, participation,
purchase or otherwise, and further including, without limitation, all interest
not paid when due and all Bank Expenses which Borrower is required to pay or
reimburse by this Agreement, by law, or otherwise.

     1.22 "Person" or "person" as used in this Agreement means and includes any
individual, corporation, partnership, joint venture, association, trust,
unincorporated association, joint stock company, government, municipality,
political subdivision or agency or other entity.

     1.23 "Receivables" as used in this Agreement means and includes all
presently existing and hereafter arising accounts, instruments, documents,
chattel paper, general intangibles, all other forms of obligations owing to
Borrower, all of Borrower's rights in, to and under all purchase orders
heretofore or hereafter received, all moneys due to Borrower under all contracts
or agreements (whether or not yet earned or due), all merchandise returned to or
reclaimed by Borrower and the Borrower's books (except minute books) relating to
any of the foregoing.

     1.24 "Subordinated Debt" as used in this Agreement means indebtedness of
the Borrower to third parties which has been subordinated to the Obligations
pursuant to a subordination agreement in form and content satisfactory to the
Bank.

     1.25 "Subordination Agreement" as used in this Agreement a subordination
agreement in form satisfactory to Bank making all present and future
Indebtedness of the Borrower to N/A subordinate to the Obligations.
                                ---

     1.26 "Tangible Effective Net Worth" as used in this Agreement means net
worth as determined in accordance with GAAP consistently applied, increased by
Subordinated Debt if any, and decreased by the following: patents, licenses,
goodwill, subscription lists, organization expenses, trade receivables converted
to notes, and money due from affiliates (including officers, directors,
subsidiaries and commonly held companies.

     1.27 "Tangible Net Worth" as used in this Agreement means, as of any
applicable date of determination, the excess of:

          a. the net book value of all assets of a person (other than patents,
          patent rights, trademarks, trade names, franchises, copyrights,
          licenses, goodwill, and similar intangible assets) after all
          appropriate deductions in accordance with GAAP (including, without
          limitation, reserves for doubtful receivables, obsolescence,
          depreciation and amortization), over

          b. all total liabilities of such person.

     1.28 "Total Liabilities" as used in this Agreement means the total of all
items of indebtedness, obligation or liability which, in accordance with GAAP
consistently applied, would be included in determining the total liabilities of
the Borrower as of the date Total Liabilities is to be determined, including
without limitation (a) all obligations secured by any mortgage, pledge, security
interest or other lien on property owned or acquired, whether or not the
obligations secured thereby shall have been assumed; (b) all obligations which
are capitalized lease obligations; and (c) all guaranties, endorsements or other
contingent or surety obligations with respect to the indebtedness of others,
whether

                                      3.
<PAGE>

                                   LOAN & SECURITY AGREEMENT
                                   (Accounts & Inventory)

   or not reflected on the balance sheets of the Borrower, including any
   obligation to furnish funds, directly or indirectly through the purchase of
   goods, supplies, services, or by way of stock purchase, capital contribution,
   advance or loan or any obligation to enter into a contract for any of the
   foregoing.

     1.29 "Working Capital" as used in this Agreement means, as of any
   applicable date of determination, Current Assets less Current Liabilities.

     1.30 Any and all terms used in this Agreement shall be construed and
   defined in accordance with the meaning and definition of such terms under and
   pursuant to the California Uniform Commercial Code (hereinafter referred to
   as the "Code") as amended.

2. LOAN AND TERMS OF PAYMENT
   -------------------------
   For value received, Borrower promises to pay to the order of Bank such
   amount, as provided for below, together with interest, as provided for below.

     2.1 Upon the request of Borrower, made at any time and from time to time
   during the term hereof, and so long as no Event of Default has occurred, Bank
   shall lend to Borrower an amount equal to the Borrowing Base; provided,
   however, that in no event shall Bank be obligated to make advances to
   Borrower under this Section 2.1 whenever the Daily Balance exceeds, at any
   time, either the Borrowing Base or the sum of Three Million and no/100
                                                 ------------------------
   ($3,000,000.00), such amount being referred to herein as "Overadvance".
     ------------
     2.2 Except as hereinbelow provided, the Credit shall bear interest, on the
   Daily Balance owing, at a rate of 75/100 (*.75%) percentage points per annum
                                     ------  ----
   above the Base Rate (the "Rate"). The Credit shall bear interest, from and
   after the occurrence of an Event of Default and without constituting a waiver
   of any such Event of Default, on the Daily Balance owing, at a rate three (3)
   percentage points per annum above the Rate. All interest chargeable under
   this Agreement that is based upon a per annum calculation shall be computed
   on the basis of a three hundred sixty (360) day year for actual days elapsed.

   *SEE ADDENDUM ATTACHED HERETO AND MADE A PART HEREOF FOR RATE OPTION.

     The Base Rate as of the date of this Agreement is Nine and 5/10 (9.500 %)
                                                     -------------  -----
   per annum. In the event that the Base Rate announced is, from time to time
   hereafter, changed, adjustment in the Rate shall be made and based on the
   Base Rate in effect on the date of such change. The Rate, as adjusted, shall
   apply to the Credit until the Base Rate is adjusted again. The minimum
   interest payable by the Borrower under this Agreement shall in no event be
   less than N/A per month. All interest payable by Borrower under the Credit
             ---
   shall be due and payable on the first day of each calendar month during the
   term of this Agreement. A late payment charge equal to 5% of each late
   payment may be charged on any payment not received by the Bank within 10
   calendar days after the payment due date, but acceptance of payment of this
   charge shall not waive any Default under this Agreement.

     2.3 Without affecting Borrower's obligation to repay immediately any
   Overadvance in accordance with Section 2.1 hereof, all Overadvances shall
   bear additional interest on the amount thereof at a rate equal to N/A%)
                                                                     ---
   percentage points per month in excess of the interest rate set forth in
   Section 2.2, from the date incurred and for each month thereafter, until
   repaid in full.

3. TERM.
   ----

     3.1 This Agreement shall remain in full force and effect until terminated
   by notice, by either party. Notice of such termination shall be effectuated
   by mailing of a registered or certified letter not less than thirty (30) days
   prior to the effective date of such termination, addressed to the other party
   at the address set forth herein and the termination shall be effective as of
   the date so fixed in such notice. Notwithstanding the foregoing, should
   Borrower be in default of one or more of the provisions of this Agreement,
   Bank may terminate this Agreement at any time without notice. Notwithstanding
   the foregoing, should either Bank or Borrower become insolvent or unable to
   meet its debts as they mature, or fail, suspend, or go out of business, the
   other party shall have the right to terminate this Agreement at any time
   without notice. On the date of termination all Obligations shall become
   immediately due and payable without notice or demand; no notice of
   termination by Borrower shall be effective until Borrower shall have paid all
   Obligations to Bank in full. Notwithstanding termination, until all
   Obligations have been fully satisfied, Bank shall retain its security
   interest in all existing Collateral and Collateral arising thereafter, and
   Borrower shall continue to perform all of its Obligations.

     3.2 After termination and when Bank has received payment in full of
   Borrower's Obligations to Bank, Bank shall reassign to Borrower all
   Collateral held by Bank, and shall execute a termination of all security
   agreements and security interests given by Borrower to Bank, upon the
   execution and delivery of mutual general releases.

4. CREATION OF SECURITY INTEREST
   -----------------------------

     4.1 Borrower hereby grants to Bank a continuing security interest in all
   presently existing and hereafter arising Collateral in order to secure prompt
   repayment of any and all Obligations owed by Borrower to Bank and in order to
   secure prompt performance by Borrower of each and all of its covenants and
   Obligations under this Agreement and otherwise created. Bank's security
   interest in the Collateral shall attach to all Collateral without further act
   on the part of Bank or Borrower. In the event that any Collateral, including
   proceeds, is evidenced by or consists of a letter of credit,

                                      4.
<PAGE>

                                   LOAN & SECURITY AGREEMENT
                                   (Accounts & Inventory)

advice of credit, instrument, money, negotiable documents, chattel paper or
similar property (collectively, "Negotiable Collateral"), Borrower shall,
immediately upon receipt thereof, endorse and assign such Negotiable Collateral
over to Bank and deliver actual physical possession of the Negotiable Collateral
to Bank.

     4.2 Bank's security interest in Receivables shall attach to all Receivables
without further act on the part of Bank or Borrower. Upon request from Bank,
Borrower shall provide Bank with schedules describing all Receivables created or
acquired by Borrower (including without limitation agings listing the names and
addresses of, and amounts owing by date by account debtors), and shall execute
and deliver written assignments of all Receivables to Bank all in a form
acceptable to Bank, provided, however, Borrower's failure to execute and deliver
such schedules and/or assignments shall not affect or limit Bank's security
interest and other rights in and to the Receivables. Together with each
schedule, Borrower shall furnish Bank with copies of Borrower's customers'
invoices or the equivalent, and original shipping or delivery receipts for all
merchandise sold, and Borrower warrants the genuineness thereof. Bank or Bank's
designee may notify customers or account debtors of collection costs and
expenses to Borrower's account but, unless and until Bank does so or gives
Borrower other written instructions, Borrower shall collect all Receivables for
Bank, receive in trust all payments thereon as Bank's trustee, and, if so
requested to do so from Bank, Borrower shall immediately deliver said payments
to Bank in their original form as received from the account debtor and all
letters of credit, advices of credit, instruments, documents, chattel paper or
any similar property evidencing or constituting Collateral. Notwithstanding
anything to the contrary contained herein, if sales of Inventory are made for
cash, Borrower shall immediately deliver to Bank, in identical form, all such
cash, checks, or other forms of payment which Borrower receives. The receipt of
any check or other item of payment by Bank shall not be considered a payment on
account until such check or other item of payment is honored when presented for
payment, in which event, said check or other item of payment shall be deemed to
have been paid to Bank Two (2) calendar days after the date Bank actually
                       ---  -
receives such check or other item of payment.

     4.3 Bank's security interest in Inventory shall attach to all Inventory
without further act on the part of Bank or Borrower. Upon Bank's request
Borrower will from time to time at Borrower's expense pledge, assemble and
deliver such Inventory to Bank or to a third party as Bank's bailee; or hold the
same in trust for Bank's account or store the same in a warehouse in Bank's
name; or deliver to Bank documents of title representing said Inventory; or
evidence of Bank's security interest in some other manner acceptable to Bank.
Until a default by Borrower under this Agreement or any other Agreement between
Borrower and Bank, Borrower may, subject to the provisions hereof and consistent
herewith, sell the Inventory, but only in the ordinary course of Borrower's
business. A sale of Inventory in Borrower's ordinary course of business does not
include an exchange or a transfer in partial or total satisfaction of a debt
owing by Borrower.

     4.4 Borrower shall execute and deliver to Bank concurrently with Borrower's
execution of this Agreement, and at any time or times hereafter at the request
of Bank, all financing statements, continuation financing statements, security
agreements, mortgages, assignments, certificates of title, affidavits, reports,
notices, schedules of accounts, letters of authority and all other documents
that Bank may request, in form satisfactory to Bank, to perfect and maintain
perfected Bank's security interest in the Collateral and in order to fully
consummate all of the transactions contemplated under this Agreement. Borrower
hereby irrevocably makes, constitutes and appoints Bank (and any of Bank's
officers, employees or agents designated by Bank) as Borrower's true and lawful
attorney-in-fact with power to sign the name of Borrower on any financing
statements, continuation financing statements, security agreement, mortgage,
assignment, certificate of title, affidavit, letter of authority, notice of
other similar documents which must be executed and/or filed in order to perfect
or continue perfected Bank's security interest in the Collateral.

     Borrower shall make appropriate entries in Borrower's Books disclosing
Bank's security interest in the Receivables. Bank (through any of its officers,
employees or agents) shall have the right at any time or times hereafter during
Borrower's usual business hours, or during the usual business hours of any third
party having control over the records of Borrower, to inspect and verify
Borrower's Books in order to verify the amount or condition of, or any other
matter, relating to, said Collateral and Borrower's financial condition.

     4.5 Borrower appoints Bank or any other person whom Bank may designate as
Borrower's attorney-in-fact, with power: to endorse Borrower's name on any
checks, notes, acceptances, money order, drafts or other forms of payment or
security that may come into Bank's possession; to sign Borrower's name on any
invoice or bill of lading relating to any Receivables, on drafts against account
debtors, on schedules and assignments of Receivables, on verifications of
Receivables and on notices to account debtors; to establish a lock box
arrangement and/or to notify the post office authorities to change the address
for delivery of Borrower's mail addressed to Borrower to an address designated
by Bank, to receive and open all mail addressed to Borrower, and to retain all
mail relating to the Collateral and forward all other mail to Borrower; to send,
whether in writing or by telephone, requests for verification of Receivables;
and to do all things necessary to carry out this Agreement. Borrower ratifies
and approves all acts of the attorney-in-fact. Neither Bank nor its attorney-in-
fact will be liable for any acts or omissions or for any error of judgement or
mistake of fact or law. This power being coupled with an interest, is
irrevocable so long as any Receivables in which Bank has a security interest
remain unpaid and until the Obligations have been fully satisfied.

     4.6 In order to protect or perfect any security interest which Bank is
granted hereunder, Bank may, in its sole discretion, discharge any lien or
encumbrance or bond the same, pay any insurance, maintain guards, warehousemen,
or any personnel to protect the Collateral, pay any service bureau, or, obtain
any records, and all costs for the same shall be added to the Obligations and
shall be payable on demand.

     4.7 Borrower agrees that Bank may provide information relating to this
Agreement or relating to Borrower to Bank's parent, affiliates, subsidiaries and
service providers.

                                      5.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

5.   CONDITIONS PRECEDENT
     --------------------

          5.1  Conditions precedent to the making of the loans and the extension
     of the financial accommodations hereunder, Borrower shall execute, or cause
     to be executed, and deliver to Bank, in form and substance satisfactory to
     Bank and its counsel, the following:

               a. This Agreement and other documents required by Bank;

               b. Financing statements (Form UCC-1 ) in form satisfactory to
               Bank for filing and recording with the appropriate governmental
               authorities;

               c. If Borrower is a corporation, then certified extracts from the
               minutes of the meeting of its board of directors, authorizing the
               borrowings and the granting of the security interest provided for
               herein and authorizing specific officers to execute and deliver
               the agreements provided for herein;

               d. If Borrower is a corporation, then a certificate of good
               standing showing that Borrower is in good standing under the laws
               of the state of its incorporation and certificates indicating
               that Borrower is qualified to transact business and is in good
               standing in any other state in which it conducts business;

               e. If Borrower is a partnership, then a copy of Borrower's
               partnership agreement certified by each general partner of
               Borrower;

               f. UCC searches, tax lien and litigation searches, fictitious
               business statement filings, insurance certificates, notices or
               other similar documents which Bank may require and in such form
               as Bank may require, in order to reflect, perfect or protect
               Bank's first priority security interest in the Collateral and in
               order to fully consummate all of the transactions contemplated
               under this Agreement;

               g. Evidence that Borrower has obtained insurance and acceptable
               endorsements;

               h. Waivers executed by landlords and mortgagees of any real
               property on which any Collateral is located; and

               i. Warranties and representations of officers.

6.   WARRANTIES, REPRESENTATIONS AND COVENANTS.
     -----------------------------------------

          6.1  If so requested by Bank, Borrower shall, at such intervals
     designated by Bank, during the term hereof execute and deliver a Report of
     Accounts Receivable or similar report, in form customarily used by Bank.
     Borrower's Borrowing Base at all times pertinent hereto shall not be less
     than the advances made hereunder. Bank shall have the right to recompute
     Borrower's Borrowing Base in conformity with this Agreement.

          6.2  If any warranty is breached as to any account, or any account is
     not paid in full by an account debtor within Ninety ( 90 ) days from the
                                                  ------  ----
     date of invoice, or an account debtor disputes liability or makes any claim
     with respect thereto, or a petition in bankruptcy or other application for
     relief under the Bankruptcy Code or any other insolvency law is filed by or
     against an account debtor, or an account debtor makes an assignment for the
     benefit of creditors, becomes insolvent, fails or goes out of business,
     then Bank may deem ineligible any and all accounts owing by that account
     debtor, and reduce Borrower's Borrowing Base by the amount thereof. Bank
     shall retain its security interest in all Receivables and accounts, whether
     eligible or ineligible, until all Obligations have been fully paid and
     satisfied. Returns and allowances, if any, as between Borrower and its
     customers, will be on the same basis and in accordance with the usual
     customary practices of the Borrower, as they exist at this time. Any
     merchandise which is returned by an account debtor or otherwise recovered
     shall be set aside, marked with Bank's name, and Bank shall retain a
     security interest therein. Borrower shall promptly notify Bank of all
     disputes and claims and settle or adjust them on terms approved by Bank.
     After default by Borrower hereunder, no discount, credit or allowance shall
     be granted to any account debtor by Borrower and no return of merchandise
     shall be accepted by Borrower without Bank's consent. Bank may, after
     default by Borrower, settle or adjust disputes and claims directly with
     account debtors for amounts and upon terms which Bank considers advisable,
     and in such cases Bank will credit Borrower's account with only the net
     amounts received by Bank in payment of the accounts, after deducting all
     Bank Expenses in connection therewith.

          6.3  Borrower warrants, represents, covenants and agrees that:

               a. Borrower has good and marketable title to the Collateral. Bank
               has and shall continue to have a first priority perfected
               security interest in and to the Collateral. The Collateral shall
               at all times remain free and clear of all liens, encumbrances and
               security interests (except those in favor of Bank).

               b. All accounts are and will, at all times pertinent hereto, be
               bona fide existing obligations created by the sale and delivery
               of merchandise or the rendition of services to account debtors in
               the ordinary course of business, free of liens, claims,
               encumbrances and security interests (except as held by Bank and
               except as may be consented to, in writing, by Bank) and are
               unconditionally owed to Borrower without defenses, disputes,
               offsets, counterclaims, rights of return or cancellation, and
               Borrower shall have received no notice of actual or imminent
               bankruptcy or insolvency of any account debtor at the time an
               account due from such account debtor is assigned to Bank.

                                       6.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

               c. At the time each account is assigned to Bank, all property
               giving rise to such account shall have been delivered to the
               account debtor or to the agent for the account debtor for
               immediate shipment to, and unconditional acceptance by, the
               account debtor. Borrower shall deliver to Bank, as Bank may from
               time to time require, delivery receipts, customer's purchase
               orders, shipping instructions, bills of lading and any other
               evidence of shipping arrangements. Absent such a request by Bank,
               copies of all such documentation shall be held by Borrower as
               custodian for Bank.

          6.4  At the time each eligible account is assigned to Bank, all such
     eligible accounts will be due and payable on terms set forth in Section
     1.12, or on such other terms approved in writing by Bank in advance of the
     creation of such accounts and which are expressly set forth on the face of
     all invoices, copies of which shall be held by Borrower as custodian for
     Bank. and no such eligible account will then be past due.

          6.5  Borrower shall keep the Inventory only at the following
     locations: ________________________________________________________________
     and the owner or mortgagees of the respective locations are:
     __________________________________________________________________________.

               a. Borrower, immediately upon demand by Bank therefor, shall now
               and from time to time hereafter, at such intervals as are
               requested by Bank, deliver to Bank, designations of Inventory
               specifying Borrower's cost of Inventory, the wholesale market
               value thereof and such other matters and information relating to
               the Inventory as Bank may request;

               b. Borrower's Inventory, valued at the lower of Borrower's cost
               or the wholesale market value thereof, at all times pertinent
               hereto shall not be less than N/A Dollars ($ N/A) of which no
                                             ---           ----
               less than N/A Dollars ($ N/A) shall be in raw materials and
                         ---           ----
               finished goods;

               c. All of the Inventory is and shall remain free from all
               purchase money or other security interests, liens or
               encumbrances, except as held by Bank;

               d. Borrower does now keep and hereafter at all times shall keep
               correct and accurate records itemizing and describing the kind,
               type, quality and quantity of the Inventory, its cost therefor
               and selling price thereof, and the daily withdrawals therefrom
               and additions thereto, all of which records shall be available
               upon demand to any of Bank's officers, agents and employees for
               inspection and copying;

               e. All Inventory, now and hereafter at all times, shall be new
               Inventory of good and merchantable quality free from defects;

               f. Inventory is not now and shall not at any time or times
               hereafter be located or stored with a bailee, warehouseman or
               other third party without Bank's prior written consent, and, in
               such event, Borrower will concurrently therewith cause any such
               bailee, warehouseman or other third party to issue and deliver to
               Bank, in a form acceptable to Bank, warehouse receipts in Bank's
               name evidencing the storage of Inventory or other evidence of
               Bank's prior rights in the Inventory. In any event, Borrower
               shall instruct any third party to hold all such Inventory for
               Bank's account subject to Bank's security interests and its
               instructions; and

               g. Bank shall have the right upon demand now and/or at all times
               hereafter, during Borrower's usual business hours, to inspect and
               examine the Inventory and to check and test the same as to
               quality, quantity, value and condition and Borrower agrees to
               reimburse Bank for Bank's reasonable costs and expenses in so
               doing.

          6.6  Borrower represents, warrants and covenants with Bank that
     Borrower will not, without Bank's prior written consent:

               a. Grant a security interest in or permit a lien, claim or
               encumbrance upon any of the Collateral to any person,
               association, firm, corporation, entity or governmental agency or
               instrumentality;

               b. Permit any levy, attachment or restraint to be made affecting
               any of Borrower's assets;

               c. Permit any Judicial Officer or Assignee to be appointed or to
               take possession of any or all of Borrower's

               d. Other than sales of Inventory in the ordinary course of
               Borrower's business, to sell, lease, or otherwise dispose of,
               move, or transfer, whether by sale or otherwise, any of
               Borrower's assets;

               e. Change its name, business structure, corporate identity or
               structure; add any new fictitious names, liquidate, merge or
               consolidate with or into any other business organization;

               f. Move or relocate any Collateral;

               g. Acquire any other business organization;

                                       7.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

               h. Enter into any transaction not in the usual course of
               Borrower's business;

               i. Make any investment in securities of any person, association,
               firm, entity, or corporation other than the securities of the
               United States of America;

               j. Make any change in Borrower's financial structure or in any of
               its business objectives, purposes or operations which would
               adversely affect the ability of Borrower to repay Borrower's
               Obligations;

               k. Incur any debts outside the ordinary course of Borrower's
               business except renewals or extensions of existing debts and
               interest thereon;

               l. Make any advance or loan except in the ordinary course of
               Borrower's business as currently conducted;

               m. Make loans, advances or extensions of credit to any Person,
               except for sales on open account and otherwise in the ordinary
               course of business;

               n. Guarantee or otherwise, directly or indirectly, in any way be
               or become responsible for obligations of any other person,
               whether by agreement to purchase the indebtedness of any other
               Person, agreement for the furnishing of funds to any other Person
               through the furnishing of goods, supplies or services, by way of
               stock purchase, capital contribution, advance or loan, for the
               purpose of paying or discharging (or causing the payment or
               discharge of) the indebtedness of any other person, or otherwise,
               except for the endorsement of negotiable instruments by the
               Borrower in the ordinary course of business for deposit or
               collection;

               o. (a) Sell, lease, transfer or otherwise dispose of properties
               and assets having an aggregate book value of more than N/A
                                                                      ----------
               Dollars ($ N/A ) (whether in one transaction or in a series of
                         -----
               transactions) except as to the sale of Inventory in the ordinary
               course of business; (b) change its name, consolidate with or
               merge into any other corporation, permit another corporation to
               merge into it, acquire all or substantially all the properties or
               assets of any other Person, enter into any reorganization or
               recapitalization or reclassify its capital stock, or (c) enter
               into any sale-leaseback transaction;

               p. Purchase or hold beneficially any stock or other securities
               of, or make any investment or acquire any interest whatsoever in,
               any other Person, except for the common stock of the Subsidiaries
               owned by the Borrower on the date of this Agreement and except
               for certificates of deposit with maturities of one year or less
               of United States commercial banks with capital, surplus and
               undivided profits in excess of One Hundred Million Dollars
               ($100,000,000) and direct obligations of the United States
               Government maturing within one year from the date of acquisition
               thereof;

               q. Allow any fact, condition or event to occur or exist with
               respect to any employee pension or profit sharing plans
               established or maintained by it which might constitute grounds
               for termination of any such plan or for the court appointment of
               a trustee to administer any such plan.

          6.7  Borrower is not a merchant whose sales for resale of goods for
     personal, family or household purposes exceeded seventy-five percent (75 %)
     in dollar volume of its total sales of all goods during the twelve (12)
     months preceding the filing by Bank of a financing statement describing the
     Collateral. At no time hereafter shall Borrower's sales for resale goods
     for personal, family or household purposes exceed seventy-five percent (75
     %) in dollar volume of its total sales.

          6.8  Borrower's sole place of business or chief executive office or
     residence is located at the address indicated above and Borrower covenants
     and agrees that it will not, during the term of this Agreement, without
     prior written notification to Bank, relocate said sole place of business or
     chief executive office or residence.

          6.9  If Borrower is a corporation, Borrower represents, warrants and
     covenants as follows:

               a. Borrower will not make any distribution or declare or pay any
               dividend (in stock or in cash) to any shareholder or on any of
               its capital stock, of any class, whether now or hereafter
               outstanding, or purchase, acquire, repurchase, or redeem or
               retire any such capital stock;

               b. Borrower is and shall at all times hereafter be a corporation
               duly organized and existing in good standing under the laws of
               the state of its incorporation and qualified and licensed to do
               business in California or any other state in which it conducts
               its business;

                                       8.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

               c. Borrower has the right and power and is duly authorized to
               enter into this Agreement; and

               d. The execution by Borrower of this Agreement shall not
               constitute a breach of any provision contained in Borrower's
               articles of incorporation or by-laws.

          6.10 The execution of and performance by Borrower of all of the terms
     and provisions contained in this Agreement shall not result in a breach of
     or constitute an event of default under any agreement to which Borrower is
     now or hereafter becomes a party.

          6.11 Borrower shall promptly notify Bank in writing of its acquisition
     by purchase, lease or otherwise of any after acquired property of the type
     included in the Collateral, with the exception of purchases of Inventory in
     the ordinary course of business.

          6.12 All assessments and taxes, whether real, personal or otherwise,
     due or payable by, or imposed, levied or assessed against, Borrower or any
     of its property have been paid, and shall hereafter be paid in full, before
     delinquency. Borrower shall make due and timely payment or deposit of all
     federal, state and local taxes, assessments or contributions required of it
     by law, and will execute and deliver to Bank, on demand, appropriate
     certificates attesting to the payment or deposit thereof. Borrower will
     make timely payment or deposit of all F.I.C.A. payments and withholding
     taxes required of it by applicable laws, and will upon request furnish Bank
     with proof satisfactory to it that Borrower has made such payments or
     deposit. If Borrower fails to pay any such assessment, tax, contribution,
     or make such deposit, or furnish the required proof, Bank may, in its sole
     and absolute discretion and without notice to Borrower, (i) make payment of
     the same or any part thereof, or (ii) set up such reserves in Borrower's
     account as Bank deems necessary to satisfy the liability therefor, or both.
     Bank may conclusively rely on the usual statements of the amount owing or
     other official statements issued by the appropriate governmental agency.
     Each amount so paid or deposited by Bank shall constitute a Bank Expense
     and an additional advance to Borrower.

          6.13 There are no actions or proceedings pending by or against
     Borrower or any guarantor of Borrower before any court or administrative
     agency and Borrower has no knowledge of any pending, threatened or imminent
     litigation, governmental investigations or claims, complaints, actions or
     prosecutions involving Borrower or any guarantor of Borrower, except as
     heretofore specifically disclosed in writing to Bank. If any of the
     foregoing arise during the term of the Agreement, Borrower shall
     immediately notify Bank in writing.

          6.14 a. Borrower, at its expense, shall keep and maintain its assets
     insured against loss or damage by fire, theft, explosion, sprinklers and
     all other hazards and risks ordinarily insured against by other owners who
     use such properties in similar businesses for the full insurable value
     thereof. Borrower shall also keep and maintain business interruption
     insurance and public liability and property damage insurance relating to
     Borrower's ownership and use of the Collateral and its other assets. All
     such policies of insurance shall be in such form, with such companies, and
     in such amounts as may be satisfactory to Bank. Borrower shall deliver to
     Bank certified copies of such policies of insurance and evidence of the
     payments of all premiums therefor. All such policies of insurance (except
     those of public liability and property damage) shall contain an endorsement
     in a form satisfactory to Bank showing Bank as a loss payee thereof, with a
     waiver of warranties (Form 438-BFU), and all proceeds payable thereunder
     shall be payable to Bank and, upon receipt by Bank, shall be applied on
     account of the Obligations owing to Bank. To secure the payment of the
     Obligations, Borrower grants Bank a security interest in and to all such
     policies of insurance (except those of public liability and property
     damage) and the proceeds thereof, and Borrower shall direct all insurers
     under such policies of insurance to pay all proceeds thereof directly to
     Bank.

          b. Borrower hereby irrevocably appoints Bank (and any of Bank's
     officers, employees or agents designated by Bank) as Borrower's attorney
     for the purpose of making, selling and adjusting claims under such policies
     of insurance, endorsing the name of Borrower on any check, draft,
     instrument or other item of payment for the proceeds of such policies of
     insurance and for making all determinations and decisions with respect to
     such policies of insurance. Borrower will not cancel any of such policies
     without Bank's prior written consent. Each such insurer shall agree by
     endorsement upon the policy or policies of insurance issued by it to
     Borrower as required above, or by independent instruments furnished to
     Bank, that it will give Bank at least ten (10) days written notice before
     any such policy or policies of insurance shall be altered or cancelled, and
     that no act or default of Borrower, or any other person, shall affect the
     right of Bank to recover under such policy or policies of insurance
     required above or to pay any premium in whole or in part relating thereto.
     Bank, without waiving or releasing any Obligations or any Event of Default,
     may, but shall have no obligation to do so, obtain and maintain such
     policies of insurance and pay such premiums and take any other action with
     respect to such policies which Bank deems advisable. All sums so disbursed
     by Bank, as well as reasonable attorneys' fees, court costs, expenses and
     other charges relating thereto, shall constitute Bank Expenses and are
     payable on demand.

                                       9.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

     6.15 All financial statements and information relating to Borrower
which have been or may hereafter be delivered by Borrower to Bank are true and
correct and have been prepared in accordance with GAAP consistently applied and
there has been no material adverse change in the financial condition of Borrower
since the submission of such financial information to Bank.

     6.16 a. Borrower at all times hereafter shall maintain a standard and
          modern system of accounting in accordance with GAAP consistently
          applied with ledger and account cards and/or computer tapes and
          computer disks, computer printouts and computer records pertaining to
          the Collateral which contain information as may from time to time be
          requested by Bank, not modify or change its method of accounting or
          enter into, modify or terminate any agreement presently existing, or
          at any time hereafter entered into with any third party accounting
          firm and/or service bureau for the preparation and/or storage of
          Borrower's accounting records without the written consent of Bank
          first obtained and without said accounting firm and/or service bureau
          agreeing to provide information regarding the Receivables and
          Inventory and Borrower's financial condition to Bank; permit Bank and
          any of its employees, officers or agents, upon demand, during
          Borrower's usual business hours, or the usual business hour of third
          persons having control thereof, to have access to and examine all of
          the Borrower's Books relating to the Collateral, Borrower's
          Obligations to Bank, Borrower's financial condition and the results of
          Borrower's operations and in connection therewith, permit Bank or any
          of its agents, employees or officers to copy and make extracts
          therefrom.

          b. Borrower shall deliver to Bank within twenty (20) days after the
          end of each Month, a COMPANY PREPARED balance sheet and profit and
                      -----    ----------------
          loss statement covering Borrower's operations and deliver to Bank
          within ninety (90) days after the end of each of Borrower's fiscal
          years a(n) AUDITED statement of the financial condition of the
                     -------
          Borrower for each such fiscal year, including but not limited to, a
          balance sheet and profit and loss statement and any other report
          requested by Bank relating to the Collateral and the financial
          condition of Borrower, and a certificate signed by an authorized
          employee of Borrower to the effect that all reports, statements,
          computer disk or tape files, computer printouts, computer runs, or
          other computer prepared information of any kind or nature relating to
          the foregoing or documents delivered or caused to be delivered to Bank
          under this subparagraph are complete, correct and thoroughly present
          the financial condition of Borrower and that there exists on the date
          of delivery to Bank no condition or event which constitutes a breach
          or Event of Default under this Agreement.

          c. In addition to the financial statements requested above, the
          Borrower agrees to provide Bank with the following schedules:

<TABLE>
          <S>                                               <C>
               xx         Accounts Receivable Agings        on a    Monthly           basis *
          ----------------                                       ---------------------

               xx         Accounts Payable Agings           on a    Monthly           basis *
          ----------------                                       ---------------------

          ________________Job Progress Reports              on a _____________________basis; and

               xx  Inventory                                on a    Monthly           basis
          -----------------------------------------              ---------------------
               Borrowing Base Certificate on a Monthly basis within 20 days of month end.
</TABLE>

             *Within 20 days of month end.
     6.17 Borrower shall maintain the following financial ratios and covenants
     on a consolidated and non-consolidated basis:

          a. Working Capital in an amount not less than    N/A
                                                       -------------------------
          ______________________________________________________________________
          b. Tangible Effective Net Worth in an amount not less than
          $9,000,000.00
          ----------------------------------------------------------------------
          ______________________________________________________________________
          c. a ratio of Current Assets to Current Liabilities of not less than
          N/A
          ----------------------------------------------------------------------
          ______________________________________________________________________
          d. a quick ratio of cash plus securities plus Receivables to Current
          liabilities of not less than 0.40:1.00 To step up 0.05 every 6 months
                                      ------------------------------------------
          beginning at December 31, 2000 to stop at 0.60:1.00 at December 31,
          ----------------------------------------------------------------------
          2001
          -------------------
          e. a ratio of Total liabilities (less debt subordinated to Bank) to
          Tangible Effective Net Worth of less than 2.00:1.00
                                                   -----------------------------
          ______________________________________________________________________
          f. a ratio of Cash Flow to Fixed Charges of not less than      N/A
                                                                   -------------
          ______________________________________________________________________
          g. Net Income after taxes of        N/A
                                      ------------------------------------------
          ______________________________________________________________________
          h. Borrower shall not without Bank's prior written consent acquire or
          expend for or commit itself to acquire or expend for fixed assets by
          lease, purchase or otherwise in an aggregate amount that exceeds N/A
                                                                          ------
          __________________________________________ Dollars ($________________)
          in any fiscal year; and
          i. ___________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________
          ______________________________________________________________________

     All financial covenants shall be computed in accordance with GAAP
consistently applied except as otherwise specifically set forth in this
Agreement. All monies due from affiliates (including officers, directors and
shareholders) shall be excluded from Borrower's assets for all purposes
hereunder.

                                      10.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

     6.18 Borrower shall promptly supply Bank (and cause any guarantor to supply
Bank) with such other information (including tax returns) concerning its
financial affairs (or that of any guarantor) as Bank may request from time to
time hereafter, and shall promptly notify Bank of any material adverse change in
Borrower's financial condition and of any condition or event which constitutes a
breach of or an event which constitutes an Event of Default under this
Agreement.

     6.19 Borrower is now and shall be at all times hereafter solvent and able
to pay its debts (including trade debts) as they mature.

     6.20 Borrower shall immediately and without demand reimburse Bank for all
sums expended by Bank in connection with any action brought by Bank to correct
any default or enforce any provision of this Agreement, including all Bank
Expenses; Borrower authorizes and approves all advances and payments by Bank for
items described in this Agreement as Bank Expenses.

     6.21 Each warranty, representation and agreement contained in this
Agreement shall be automatically deemed repeated with each advance and shall be
conclusively presumed to have been relied on by Bank regardless of any
investigation made or information possessed by Bank. The warranties,
representations and agreements set forth herein shall be cumulative and in
addition to any and all other warranties, representations and agreements which
Borrower shall give, or cause to be given, to Bank, either now or hereafter.

     6.22 Borrower shall keep all of its principal bank accounts with Bank and
shall notify the Bank immediately in writing of the existence of any other bank
account, deposit account, or any other account into which money can be
deposited.

     6.23 Borrower shall furnish to the Bank: (a) as soon as possible, but in no
event later than thirty (30) days after Borrower knows or has reason to know
that any reportable event with respect to any deferred compensation plan has
occurred, a statement of the chief financial officer of Borrower setting forth
the details concerning such reportable event and the action which Borrower
proposes to take with respect thereto, together with a copy of the notice of
such reportable event given to the Pension Benefit Guaranty Corporation, if a
copy of such notice is available to Borrower; (b) promptly after the filing
thereof with the United States Secretary of Labor or the Pension Benefit
Guaranty Corporation, copies of each annual report with respect to each deferred
compensation plan; (c) promptly after receipt thereof, a copy of any notice
Borrower may receive from the Pension Benefit Guaranty Corporation or the
Internal Revenue Service with respect to any deferred compensation plan;
provided, however, this subparagraph shall not apply to notice of general
application issued by the Pension Benefit Guaranty Corporation or the Internal
Revenue Service; and (d) when the same is made available to participants in the
deferred compensation plan, all notices and other forms of information from time
to time disseminated to the participants by the administrator of the deferred
compensation plan.

     6.24 Borrower is now and shall at all times hereafter remain in compliance
with all federal, state and municipal laws, regulations and ordinances relating
to the handling, treatment and disposal of toxic substances, wastes and
hazardous material and shall maintain all necessary authorizations and permits.

     6.25 Borrower shall maintain insurance on the life of N/A
                                                           ---------------------
in an amount not to be less than _______________________________________________
Dollars ($________________) under one or more policies issued by insurance
companies satisfactory to Bank, which policies shall be assigned to Bank as
security for the Indebtedness and on which Bank shall be named as sole
beneficiary.

     6.26 Borrower shall limit direct and indirect compensation paid to the
following employees: __________________________________________________________,
_________________________, _____________________________ to an aggregate of
 N/A                              Dollars ($          N/A    ) per N/A        .
---------------------------------           -----------------     ------------

     6.27 Borrower shall perform all acts reasonably necessary to ensure that:
(i) Borrower and any business in which Borrower holds a substantial interest,
and (ii) all customers, suppliers and vendors that are material to Borrower's
business, become Year 2000 Compliant in a timely manner. Such acts shall
include, without limitation, performing a comprehensive review and assessment of
all of Borrower's systems and adopting a detailed plan, with itemized budget for
the remediation, monitoring and testing of such systems. As used in this
paragraph, "Year 2000 Compliant" shall mean, in regard to any entity, that all
software, hardware, firmware, equipment, goods or systems utilized by or
material to the business operations or financial condition of such entity, will
properly perform date sensitive functions before, during and after the year
2000. Borrower shall, immediately upon request, provide to Bank such
certifications or other evidence of Borrower's compliance with terms of this
paragraph as Bank may from time to time require.

EVENTS OF DEFAULT  Any one or more of the following events shall constitute a
-----------------
default by Borrower under this Agreement:

a.   If Borrower fails or neglects to perform, keep or observe any term,
     provision, condition, covenant, agreement, warranty or representation
     contained in this Agreement, or any other present or future agreement
     between Borrower and Bank;

     b.   If any representation, statement, report or certificate made or
          delivered by Borrower, or any of its officers, employees or agents to
          Bank is not true and correct;

     c.   If Borrower fails to pay when due and payable or declared due and
          payable, all or any portion of the Borrower's Obligations (whether of
          principal, interest, taxes, reimbursement of Bank Expenses, or
          otherwise);

     d.   If there is a material impairment of the prospect of repayment of all
          or any portion of Borrower's Obligations or a material impairment of
          the value or priority of Bank's security interest in the Collateral;

     e.   If all or any of Borrower's assets are attached, seized, subject to a
          writ or distress warrant, or are levied upon, or come into the
          possession of any Judicial Officer or Assignee and the same are not
          released, discharged or bonded against within ten (10) days
          thereafter;

     f.   If any Insolvency Proceeding is filed or commenced by or against
          Borrower without being dismissed within ten (10) days thereafter;

                                      11.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

     g.   If any proceeding is filed or commenced by or against Borrower for its
     dissolution or liquidation;

     h.   If Borrower is enjoined, restrained or in any way prevented by court
     order from continuing to conduct all or any material part of its business
     affairs;

     i.   If a notice of lien, levy or assessment is filed of record with
     respect to any or all of Borrower's assets by the United States Government,
     or any department, agency or instrumentality thereof, or by any state,
     county, municipal or other government agency, or if any taxes or debts
     owing at any time hereafter to any one or more of such entities becomes a
     lien, whether choate or otherwise, upon any or all of the Borrower's assets
     and the same is not paid on the payment date thereof;

     j.   If a judgment or other claim becomes a lien or encumbrance upon any or
     all of Borrower's assets and the same is not satisfied, dismissed or bonded
     against within ten (10) days thereafter;

     k.   If Borrower's records are prepared and kept by an outside computer
     service bureau at the time this Agreement is entered into or during the
     term of this Agreement such an agreement with an outside service bureau is
     entered into, and at any time thereafter, without first obtaining the
     written consent of Bank, Borrower terminates, modifies, amends or changes
     its contractual relationship with said computer service bureau or said
     computer service bureau fails to provide Bank with any requested
     information or financial data pertaining to Bank's Collateral, Borrower's
     financial condition or the results of Borrower's operations;

     l.   If Borrower permits a default in any material agreement to which
     Borrower is a party with third parties so as to result in an acceleration
     of the maturity of Borrower's indebtedness to others, whether under any
     indenture, agreement or otherwise;

     m.   If Borrower makes any payment on account of indebtedness which has
     been subordinated to Borrower's Obligations to Bank;

     n.   If any misrepresentation exists now or thereafter in any warranty or
     representation made to Bank by any officer or director of Borrower, or if
     any such warranty or representation is withdrawn by any officer or
     director;

     o.   If any party subordinating its claims to that of Bank's or any
     guarantor of Borrower's Obligations dies or terminates its subordination or
     guaranty, becomes insolvent or an Insolvency Proceeding is commenced by or
     against any such subordinating party or guarantor;

     p.   If Borrower is an individual and Borrower dies;

     q.   If there is a change of ownership or control of N/A percent ( N/A %)
                                                          ---          -----
     or more of the issued and outstanding stock of Borrower; or

     r.   If any reportable event, which the Bank determines constitutes grounds
     for the termination of any deferred compensation plan by the Pension
     Benefit Guaranty Corporation or for the appointment by the appropriate
     United States District Court of a trustee to administer any such plan,
     shall have occurred and be continuing thirty (30) days after written notice
     of such determination shall have been given to Borrower by Bank, or any
     such Plan shall be terminated within the meaning of Title IV of the
     Employment Retirement Income Security Act ("ERISA"), or a trustee shall be
     appointed by the appropriate United States District Court to administer any
     such plan, or the Pension Benefit Guaranty Corporation shall institute
     proceedings to terminate any plan and in case of any event described in
     this Section 7.0, the aggregate amount of the Borrower's liability to the
     Pension Benefit Guaranty Corporation under Sections 4062,4063 or 4064 of
     ERISA shall exceed five percent (5%) of Borrower's Tangible Effective Net
     Worth.

          Notwithstanding anything contained in Section 7 to the contrary, Bank
     shall refrain from exercising its rights and remedies and Event of Default
     shall thereafter not be deemed to have occurred by reason of the occurrence
     of any of the events set forth in Sections 7.e, 7.f or 7.j of this
     Agreement if, within ten (10) days from the date thereof, the same is
     released, discharged, dismissed, bonded against or satisfied; provided,
     however, if the event is the institution of Insolvency Proceedings against
     Borrower, Bank shall not be obligated to make advances to Borrower during
     such cure period.

8. BANK'S RIGHTS AND REMEDIES
   --------------------------

          8.1  Upon the occurence of an Event of Default by Borrower under this
     Agreement, Bank may, at its election, without notice of its election and
     without demand, do any one or more of the following, all of which are
     authorized by Borrower:

     a.   Declare Borrower's Obligations, whether evidenced by this Agreement,
     installment notes, demand notes or otherwise, immediately due and payable
     to the Bank;

     b.   Cease advancing money or extending credit to or for the benefit of
     Borrower under this Agreement, or any other agreement between Borrower and
     Bank;

     c.   Terminate this Agreement as to any future liability or obligation of
     Bank, but without affecting Bank's rights and security interests in the
     Collateral, and the Obligations of Borrower to Bank;

                                      12.
<PAGE>

                                                       LOAN & SECURITY AGREEMENT
                                                       (Accounts & Inventory)

          d..  Without notice to or demand upon Borrower or any guarantor, make
          such payments and do such acts as Bank considers necessary or
          reasonable to protect its security interest in the Collateral.
          Borrower agrees to assemble the Collateral if Bank so requires and to
          make the Collateral available to Bank as Bank may designate. Borrower
          authorizes Bank to enter the premises where the Collateral is located,
          take and maintain possession of the Collateral and the premises (at no
          charge to Bank), or any part thereof, and to pay, purchase, contest or
          compromise any encumbrance, charge or lien which in the opinion of
          Bank appears to be prior or superior to its security interest and to
          pay all expenses incurred in connection therewith;

          e.   Without limiting Bank's rights under any security interest, Bank
          is hereby granted a license or other right to use, without charge,
          Borrower's labels, patents, copyrights, rights of use of any name,
          trade secrets, trade names, trademarks and advertising matter, or any
          property of a similar nature as it pertains to the Collateral, in
          completing production of, advertising for sale and selling any
          Collateral and Borrower's rights under all licenses and all franchise
          agreement shall inure to Bank's benefit, and Bank shall have the right
          and power to enter into sublicense agreements with respect to all such
          rights with third parties on terms acceptable to Bank;

          f.   Ship, reclaim, recover, store, finish, maintain, repair, prepare
          for sale, advertise for sales and sell (in the manner provided for
          herein) the Inventory;

          g.   Sell or dispose the Collateral at either a public or private
          sale, or both, by way of one or more contracts or transactions, for
          cash or on terms, in such manner and at such places (including
          Borrower's premises) as is commercially reasonable in the opinion of
          Bank. It is not necessary that the Collateral be present at any such
          sale;

          h.   Bank shall give notice of the disposition of the Collateral as
          follows:

               (1)  Bank shall give the Borrower and each holder of a security
               interest in the Collateral who has filed with Bank a written
               request for notice, a notice in writing of the time and place of
               public sale, or, if the sale is a private sale or some
               disposition other than a public sale is to be made of the
               Collateral, the time on or after which the private sale or other
               disposition is to be made;

               (2)  The notice shall be personally delivered or mailed, postage
               prepaid, to Borrower's address appearing in this Agreement, at
               least five (5) calendar days before the date fixed for the sale,
               or at least five (5) calendar days before the date on or after
               which the private sale or other disposition is to be made, unless
               the Collateral is perishable or threatens to decline speedily in
               value. Notice to persons other than Borrower claiming an interest
               in the Collateral shall be sent to such addresses as have been
               furnished to Bank;

               (3)  If the sale is to be a public sale, Bank shall also give
               notice of the time and place by publishing a notice one time at
               least five (5) calendar days before the date of the sale in a
               newspaper of general circulation in the county in which the sale
               is to be held; and

               (4)  Bank may credit bid and purchase at any public sale.

          i.   Borrower shall pay all Bank Expenses incurred in connection with
          Bank's enforcement and exercise of any of its rights and remedies as
          herein provided, whether or not suit is commenced by Bank;

          j.   Any deficiency which exists after disposition of the Collateral
          as provided above will be paid immediately by Borrower. Any excess
          will be returned, without interest and subject to the rights of third
          parties, to Borrower by Bank, or, in Bank's discretion, to any party
          who Bank believes, in good faith, is entitled to the excess; and

          k.   Without constituting a retention of Collateral in satisfaction of
          an obligation within the meaning of 9505 of the Uniform Commercial
          Code or an action under California Code of Civil Procedure 726, apply
          any and all amounts maintained by Borrower as deposit accounts (as
          that term is defined under 9105 of the Uniform Commercial Code) or
          other accounts that Borrower maintains with Bank against the
          Obligations.

          8.2  Bank's rights and remedies under this Agreement and all other
     agreements shall be cumulative. Bank shall have all other rights and
     remedies not inconsistent herewith as provided by law or in equity. No
     exercise by Bank of one right or remedy shall be deemed an election, and no
     waiver by Bank of any default on Borrower's part shall be deemed a
     continuing waiver. No delay by Bank shall constitute a waiver, election or
     acquiescence by Bank..

     9. TAXES AND EXPENSES REGARDING BORROWER'S PROPERTY
        ------------------------------------------------

If Borrower fails to pay promptly when due to another person or entity. monies
which Borrower is required to pay by reason of any provision in this Agreement,
Bank may. but need not, pay the same and charge Borrower's account therefor, and
Borrower shall promptly reimburse Bank. All such sums shall become additional
indebtedness owing to Bank, shall bear interest at the rate hereinabove
provided, and shall be secured by all Collateral. Any payments made by Bank
shall not constitute (i) an agreement by it to make similar payments in the
future, or (ii) a waiver by Bank of any default under this Agreement. Bank need
not inquire as to, or contest the validity of, any such expense, tax, security
interest, encumbrance or lien and the receipt of the usual official notice of
the payment thereof shall be conclusive evidence that the same was validly due
and owing. Such payments shall constitute Bank Expenses and additional advances
to Borrower.

                                      13.
<PAGE>

                                             LOAN & SECURITY AGREEMENT
                                             (Accounts & Inventory)

10. WAIVERS
    -------

          10.1 Borrower agrees that checks and other instruments received by
     Bank in payment or on account of Borrower's Obligations constitute only
     conditional payment until such items are actually paid to Bank and Borrower
     waives the right to direct the application of any and all payments at any
     time or times hereafter received by Bank on account of Borrower's
     Obligations and Borrower agrees that Bank shall have the continuing
     exclusive right to apply and reapply such payments in any manner as Bank
     may deem advisable, notwithstanding any entry by Bank upon its books.

          10.2 Borrower waives demand, protest, notice of protest, notice of
     default or dishonor, notice of payment and nonpayment, notice of any
     default, nonpayment at maturity, release, compromise, settlement, extension
     or renewal of any or all commercial paper, accounts, documents, instruments
     chattel paper, and guarantees at any time held by Bank on which Borrower
     may in any way be liable.

          10.3 Bank shall not in any way or manner be liable or responsible for
     (a) the safekeeping of the Inventory; (b) any loss or damage thereto
     occurring or arising in any manner or fashion from any cause; (c) any
     diminution in the value thereof; or (d) any act or default of any carrier,
     warehouseman, bailee, forwarding agency or other person whomsoever. All
     risk of loss, damage or destruction of Inventory shall be borne by
     Borrower.

          10.4 Borrower waives the right and the right to assert a confidential
     relationship, if any, it may have with any accountant, accounting firm
     and/or service bureau or consultant in connection with any information
     requested by Bank pursuant to or in accordance with this Agreement, and
     agrees that a Bank may contact directly any such accountants, accounting
     firm and/or service bureau or consultant in order to obtain such
     information.

          10.5 BORROWER AND BANK EACH WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY
     ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY TRANSACTION
     HEREUNDER, OR CONTEMPLATED HEREUNDER, OR ANY OTHER CLAIM (INCLUDING TORT OR
     BREACH OF DUTY CLAIMS) OR DISPUTE HOWSOEVER ARISING BETWEEN BANK AND
     BORROWER.

          10.6 In the event that Bank elects to waive any rights or remedies
     hereunder, or compliance with any of the terms hereof, or delays or fails
     to pursue or enforce any term, such waiver, delay or failure to pursue or
     enforce shall only be effective with respect to that single act and shall
     not be construed to affect any subsequent transactions or Bank's right to
     later pursue such rights and remedies.

11.  ONE CONTINUING LOAN TRANSACTION  All loans and advances heretofore, now or
     -------------------------------
at any time or times hereafter made by Bank to Borrower under this Agreement or
any other agreement between Bank and Borrower, shall constitute one loan secured
by Bank's security interests in the Collateral and by all other security
interests, liens, encumbrances heretofore, now or from time to time hereafter
granted by Borrower to Bank.

Notwithstanding the above, (i) to the extent that any portion of the Obligations
are a consumer loan, that portion shall not be secured by any deed of trust or
mortgage on or other security interest in the Borrower's principal dwelling
which is not a purchase money security interest as to that portion, unless
expressly provided to the contrary in another place, or (ii) if the Borrower (or
any of them) has (have) given or give(s) Bank a deed of trust or mortgage
covering real property, that deed of trust or mortgage shall not secure the loan
and any other Obligation of the Borrower (or any of them), unless expressly
provided to the contrary in another place.

12.  NOTICES  Unless otherwise provided in this Agreement, all notices or
     -------
demands by either party on the other relating to this Agreement shall be in
writing and sent by regular United States mail, postage prepaid, properly
addressed to Borrower or to Bank at the addresses stated in this Agreement, or
to such other addresses as Borrower or Bank may from time to time specify to the
other in writing. Requests to Borrower by Bank hereunder may be made orally.

13.  AUTHORIZATION TO DISBURSE  Bank is hereby authorized to make loans and
     -------------------------
advances hereunder upon telephonic or other instructions received from anyone
purporting to be an officer, employee, or representative of Borrower, or at the
discretion of Bank if said loans and advances are necessary to meet any
Obligations of Borrower to Bank. Bank shall have no duty to make inquiry or
verify the authority of any such party, and Borrower shall hold Bank harmless
from any damage, claims or liability by reason of Bank's honor of, or failure to
honor, any such instructions.

14.  DESTRUCTION OF BORROWER'S DOCUMENTS  Any documents, schedules, invoices or
     -----------------------------------
other papers delivered to Bank, may be destroyed or otherwise disposed of by
Bank six (6) months after they are delivered to or received by Bank, unless
Borrower requests, in writing, the return of the said documents, schedules,
invoices or other papers and makes arrangements, at Borrower's expense, for
their return.

15.  CHOICE OF LAW  The validity of this Agreement, its construction,
     -------------
interpretation and enforcement, and the rights of the parties hereunder and
concerning the Collateral, shall be determined according to the laws of the
State of California. The parties agree that all actions or proceedings arising
in connection with this Agreement shall be tried and litigated only in the state
and federal courts in the Northern District of California or the County of Santa
Clara.

16.  GENERAL PROVISIONS
     ------------------

     16.1 This Agreement shall be binding and deemed effective when executed by
   the Borrower and accepted and executed by Bank at its headquarter office.

                                      14.
<PAGE>

                                             LOAN & SECURITY AGREEMENT
                                             (Accounts & Inventory)

          16.2 This Agreement shall bind and inure to the benefit of the
     respective successors and assigns of each of the parties, provided,
     however, that Borrower may not assign this Agreement or any rights
     hereunder without Bank's prior written consent and any prohibited
     assignment shall be absolutely void. No consent to an assignment by Bank
     shall release Borrower or any guarantor from their Obligations to Bank.
     Bank may assign this Agreement and its rights and duties hereunder. Bank
     reserves the right to sell, assign, transfer, negotiate or grant
     participations in all or any part of, or any interest in Bank's rights and
     benefits hereunder. In connection therewith, Bank may disclose all
     documents and information which Bank now or hereafter may have relating to
     Borrower or Borrower's business.

          16.3 Paragraph headings and paragraph numbers have been set forth
     herein for convenience only; unless the contrary is compelled by the
     context, everything contained in each paragraph applies equally to this
     entire Agreement.

          16.4 Neither this Agreement nor any uncertainty or ambiguity herein
     shall be construed or resolved against Bank or Borrower, whether under any
     rule of construction or otherwise; on the contrary, this Agreement has been
     reviewed by all parties and shall be construed and interpreted according to
     the ordinary meaning of the words used so as to fairly accomplish the
     purposes and intentions of all parties hereto. When permitted by the
     context, the singular includes the plural and vice versa.

          16.5 Each provision of this Agreement shall be severable from every
     other provision of this Agreement for the purpose of determining the legal
     enforceability of any specific provision.

          16.6 This Agreement cannot be changed or terminated orally. Except as
     to currently existing Obligations owing by Borrower to Bank, all prior
     agreements, understandings, representations, warranties, and negotiations,
     if any, with respect to the subject matter hereof, are merged into this
     Agreement.

          16.7 The parties intend and agree that their respective rights,
     duties, powers, liabilities, obligations and discretions shall be
     performed, carried out, discharged and exercised reasonably and in good
     faith.

          16.8 In addition, if this Agreement is secured by a deed of trust or
     mortgage covering real property, then the trustor or mortgagor shall not
     mortgage or pledge the mortgaged premises as security for any other
     indebtedness or obligations. This Agreement, together with all other
     indebtedness secured by said deed of trust or mortgage, shall become due
     and payable immediately, without notice, at the option of Bank, (a) if said
     trustor or mortgagor shall mortgage or pledge the mortgaged premises for
     any other indebtedness or obligations or shall convey, assign or transfer
     the mortgaged premises by deed, installment sale contract or other
     instrument; (b) if the title to the mortgaged premises shall become vested
     in any other person or party in any manner whatsoever, or (c) if there is
     any disposition (through one or more transactions) of legal or beneficial
     title to a controlling interest of said trustor or mortgagor.

     IN WITNESS WHEREOF, the parties hereto have caused this Loan & Security
Agreement (Accounts and Inventory) to be executed as of the date first
hereinabove written.

ATTEST:

__________________________________________
Title:

                                             BORROWER: Provena Foods Inc.

Accepted and effective as of July 31, 2000   By: /s/ Thomas J. Mulroney
                             -------------       -------------------------------
at Bank's Headquarter Office                     Signature of

                                             Title:  CFO
                                                   -----------------------------

Comerica Bank-California                     By:________________________________
------------------------------------------      Signature of

By:                                          Title:_____________________________
   ---------------------------------------
   Signature of Stephen Moore

Title: Corporate Banking Officer             By:________________________________
      ------------------------------------      Signature of

                                             Title:_____________________________

                                             By:________________________________
                                                Signature of

                                             Title:_____________________________

                                      15.
<PAGE>

                                 COST OF FUNDS
                                 -------------
                    Addendum To Loan and Security Agreement
                    ---------------------------------------

This Addendum to Loan and Security Agreement (this "Addendum") is entered into
as of this 31st day of July, 2001, by and between Comerica Bank-California
           ----        ----  ----
("Bank") and Provena Foods Inc. ("Borrower"). This Addendum supplements the
             ------------------
terms of the Loan and Security Agreement of even date herewith.

1.   Definitions.
     -----------

     a.   Advance. As used herein, "Advance" means a borrowing requested by
          -------                   -------
Borrower and made by Bank under the Note, including a COST OF FUNDS Option
Advance and/or a Base Rate Option Advance.

     b.   Business Day. As used herein, "Business Day" means any day except a
          ------------                   ------------
Saturday, Sunday or any other day designated as a holiday under Federal or
California statute or regulation.

     c.   COST OF FUNDS. As used herein, "COST OF FUNDS" means the rate
          -------------                   -------------
determined by Bank, in its sole discretion, from time to time as its cost of
funds, as such rate may change from time to time.

     d.   COST OF FUNDS Period. As used herein, "COST OF FUNDS Period" means,
          --------------------                   --------------------
with respect to a COST OF FUNDS Option Advance:

          (1)  initially, the period commencing on, as the case may be, the date
               the Advance is made or the date on which the Advance is converted
               to a COST OF FUNDS Option Advance, and continuing for, in every
               case, a minimum of thirty (30) but no greater than one hundred &
                       --------------------------------------------------------
               eigthy (180) days thereafter so long as the COST OF FUNDS Option
               -----------------
               is quoted for such period in the applicable interbank COST OF
               FUNDS market, as such period is selected by Borrower in the
               notice of Advance as provided in the Note or in the notice of
               conversion as provided in this Addendum; and

          (2)  thereafter, each period commencing on the last day of the next
               preceding COST OF FUNDS Period applicable to such COST OF FUNDS
               Option Advance and continuing or, in every case, a minimum of
                                                                  ----------
               thirty (30) but no greater than one hundred & eigthy (180) days
               ---------------------------------------------------------------
               thereafter so long as the COST OF FUNDS Option is quoted for such
               period in the applicable interbank COST OF FUNDS market, as such
               period is selected by Borrower in the notice of continuation as
               provided in this Addendum.

     e.   Note. As used herein, "Note" means the Loan and Security Agreement of
          ----                   ----
even date herewith.

     f.   Regulation D. As used herein, "Regulation D" means Regulation D of the
          ------------                   ------------
Board of Governors of the Federal Reserve System as amended or supplemented from
time to time.

     g.   Regulatory Development. As used herein, "Regulatory Development" means
          ----------------------                   ----------------------
any or all of the following: (i) any change in any law, regulation or
interpretation thereof by any public authority (whether or not having the force
of law); (ii) the application of any existing law, regulation or the
interpretation thereof by any public authority (whether or not having the force
of law); and (iii) compliance by Bank with any request or directive (whether or
not having the force of law) of any public authority.

2.   Selection of Interest Rate Options. Borrower shall have the following
     ----------------------------------
     options regarding the interest rate to be paid by Borrower on advances
     under the Note:

     a.   A rate equal to Three and a quarter percent (3.250%) above Bank's COST
                          -------------------          -----
          OF FUNDS, (the "COST OF FUNDS Option"), which COST OF FUNDS Option
          shall be in effect during the relevant COST OF FUNDS Period; or

     b.   A rate equal to One and a quarter percent (.75%) above the "Base Rate"
                          -----------------          ---
          as referenced in the Note and quoted from time to time by Comerica
          Bank-California, as such rate may change from time to time (the "Base
          Rate Option").

3.   COST OF FUNDS Option Advance. The minimum COST OF FUNDS option advance will
     ----------------------------
be not less than Five Hundred Thousand for any COST OF FUNDS Option Advance.
                 ---------------------

                                       1
<PAGE>

4.   Payment of COST OF FUNDS Option. Interest on each COST OF FUNDS Option
     -------------------------------
Advance shall be payable pursuant to the terms of the Note. Interest on such
COST OF FUNDS Option Advance shall be computed on the basis of a 360-day year
and shall be assessed for the actual number of days elapsed from the first day
of the COST OF FUNDS Period applicable thereto but not including the last day
thereof.

5.   Bank's Records Re: COST OF FUNDS Option Advances. With respect to each COST
     ------------------------------------------------
OF FUNDS-Option Advance, Bank is hereby authorized to note the date, principal
amount, interest rate and COST OF FUNDS Period applicable thereto and any
payments made thereon on Bank's books and records (either manually or by
electronic entry) and/or on any schedule attached to the Note, which notations
shall be prima facie evidence of the accuracy of the information noted.

6.   Conversion of Interest Rate Options. At any time the COST OF FUNDS Option
     -----------------------------------
is in effect, Borrower may, at the end of the applicable COST OF FUNDS Period,
convert to the Base Rate Option. At any time the Base Rate Option is in effect,
Borrower may convert to the COST OF FUNDS Period designated by Borrower. At the
time each advance is requested under the Note and/or Borrower wishes to select
the COST OF FUNDS Option for all or a portion of the outstanding principal
balance of the Note, and at the end of each COST OF FUNDS Period, Borrower shall
give Bank notice specifying (a) the interest rate option selected by Borrower;
(b) the principal amount subject thereto; and (c) if the COST OF FUNDS Option is
selected, the length of the applicable COST OF FUNDS Period. Any such notice may
be given by telephone so long as, with respect to each COST OF FUNDS Option
selected by Borrower, (i) Bank receives written confirmation from Borrower not
later than three (3) Business Days after such telephone notice is given; and
(ii) such notice is given to Bank prior to 10:00 a.m., California time, on the
first day of the COST OF FUNDS Period. For each COST OF FUNDS Option requested
hereunder, Bank will quote the applicable fixed COST OF FUNDS rate to Borrower
at approximately 10:00 a.m., California time, on the first day of the COST OF
FUNDS Period. If Borrower does not immediately accept the rate quoted by Bank,
any subsequent acceptance by Borrower shall be subject to a redetermination by
Bank; provided however, that if Borrower fails to accept any such quotation is
given, then the quoted rate shall expire and Bank shall have no obligation to
permit a COST OF FUNDS Option to be selected on such day. If no specific
designation of interest is made at the time any advance is requested under the
Note or at the end of any COST OF FUNDS Period, Borrower shall be deemed to have
selected the Base Rate Option for such advance or the principal amount to which
such COST OF FUNDS Period applied.

7.   Default Interest. From and after the maturity date of the Note, or such
     ----------------
earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of the Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed) equal to THREE percent (3.0%)
                                                       -----          ---
above the rate of interest from time to time applicable to the Note.

8.   Prepayment. Bank is not under any obligation to accept any prepayment of
     ----------
any COST OF FUNDS Option Advance except as described below or as required under
applicable law. Borrower may prepay a Base Rate Option Advance at any time,
without paying any Prepayment Amount, as defined below. Borrower may prepay a
COST OF FUNDS Option Advance in increments of Five Hundred Dollars ($500.00)
prior to the end of the COST OF FUNDS Period, as long as (i) Bank is provided
written notice of such prepayment at least five (5) COST OF FUNDS Business Days
prior to the date thereof (the "Prepayment Date"); and (ii) Borrower pays the
Prepayment Amount. The notice of prepayment shall contain the following
information: (a) the Prepayment Date; and (b) the COST OF FUNDS Option Advance
which will be prepaid. On the Prepayment Date, Borrower shall pay to Bank, in
addition to any other amount that may then be due on the Note, the Prepayment
Amount. Bank, in its sole discretion, may accept any prepayment of a COST OF
FUNDS Option Advance even if not required to do so under the Note and may deduct
from the amount to be applied against the COST OF FUNDS Option Advance any other
amounts required to be paid as part of the Prepayment Amount.

     The Prepaid Principal Amount (as defined below) will be applied to the COST
OF FUNDS Option Advance being prepaid as Bank shall determine in its sole
discretion.

     If Bank exercises its right to accelerate the payment of the Note prior to
maturity based upon an Event of Default under the Note, Borrower shall pay to
Bank, in addition to any other amounts that may then be due on the Note, on the
date specified by Bank as the Prepayment Date, the Prepayment Amount.

                                       2
<PAGE>

     Bank's determination of the Prepayment Amount will be conclusive in the
absence of obvious error or fraud. If requested in writing by Borrower, Bank
will provide Borrower a written statement specifying the Prepayment Amount.

     The following (the "Prepayment Amount") shall be due and payable in full on
the Prepayment Date:

     a.   If the principal amount of the COST OF FUNDS Option Advance being
prepaid exceeds Seven Hundred Fifty Thousand Dollars ($750,000), then the
Prepayment Amount is the sum of: (i) the amount of the principal balance of the
COST OF FUNDS Option Advance which Borrower has elected to prepay or the amount
of the principal balance of the COST OF FUNDS Option Advance which Bank has
required Borrower to prepay because of acceleration, as the case may be (the
"Prepaid Principal Amount"); (ii) interest accruing on the Prepaid Principal
Amount up to, but not including, the Prepayment Date; (iii) Five Hundred Dollars
($500.00); plus (iv) the present value, discounted at the Reinvestment Rates (as
defined below) of the positive amount by which (A) the interest Bank would have
earned had the Prepaid Principal Amount not been paid prior to the end of the
COST OF FUNDS Period at the Note's interest rate exceeds (B) the interest Bank
would earn by reinvesting the Prepaid Principal Amount at the Reinvestment
Rates.

     b.   If the principal amount of the COST OF FUNDS Option Advance being
prepaid is Seven Hundred Fifty Thousand Dollars ($750,000) or less, then the
Prepayment Amount is the sum of: (i) the principal amount of the COST OF FUNDS
Option Advance which Borrower has elected to prepay or the principal amount of
the COST OF FUNDS Option Advance which Bank has required Borrower to prepay
because of acceleration due to an Event of Default under the Note, as the case
may be (the "Prepaid Principal Amount"); (ii) interest accruing on the Prepaid
Principal Amount up to, but not including, the Prepayment Date; plus (iii) an
amount equal to two percent (2%) of the Prepaid Principal Amount.

     "Reinvestment Rates" mean the per annum rates of interest equal to one half
percent (1/2%) above the rates of interest reasonably determined by Bank to be
in effect not more than seven (7) days prior to the Prepayment Date in the
secondary market for United States Treasury Obligations in amount(s) and with
maturity(ies) which correspond (as closely as possible) to the COST OF FUNDS
Option Advance being prepaid.

     BY INITIALING BELOW, BORROWER ACKNOWLEDGE(S) AND AGREE(S) THAT: (A) THERE
IS NO RIGHT TO PREPAY THE NOTE, IN WHOLE OR IN PART, WITHOUT PAYING THE
PREPAYMENT AMOUNT, EXCEPT AS OTHERWISE REQUIRED UNDER APPLICABLE LAW; (B)
BORROWER SHALL BE LIABLE FOR PAYMENT OF THE PREPAYMENT AMOUNT IF BANK EXERCISES
ITS RIGHT TO ACCELERATE PAYMENT OF THE NOTE, INCLUDING WITHOUT LIMIT,
ACCELERATION UNDER A DUE-ON-SALE PROVISION; (C) BORROWER WAIVES(S) ANY RIGHTS
UNDER SECTION 2954.10 OF THE CALIFORNIA CIVIL CODE, OR ANY SUCCESSOR STATUTE;
AND (D) BANK HAS MADE THE LOAN EVIDENCED BY THE NOTE IN RELIANCE ON THESE
AGREEMENTS.

T.M.
---------------
BORROWER'S INITIALS

9.   Hold Harmless and Indemnification. Borrower agrees to indemnify Bank and to
     ---------------------------------
hold Bank harmless from, and to reimburse Bank on demand for, all losses and
expenses which Bank sustains or incurs as a result of (i) any payment of a COST
OF FUNDS Option Advance prior to the last day of the COST OF FUNDS Period for
such COST OF FUNDS Option Advance for any reason, including termination of the
Note, whether pursuant to this Addendum or the occurrence of an Event of Default
for any reason; (ii) any termination of a COST OF FUNDS Period in accordance
with this Addendum; or (iii) any failure by Borrower, for any reason, to borrow
any portion of a COST OF FUNDS Option Advance.

10.  Funding Losses. The indemnification and hold harmless provisions set forth
     --------------
in this Addendum shall include, without limitation, all losses and expenses
arising from interest and fees that Bank pays to lenders of funds it obtained in
order to fund the loans to Borrower on the basis of the COST OF FUNDS Option(s)
and all losses incurred in liquidating or re-deploying deposits from which such
funds were obtained and loss of profit for the period after termination. A
written statement by Bank to Borrower of such losses and expenses shall be
conclusive and binding, absent manifest error, for all purposes. This obligation
shall survive the termination of this Addendum and the payment of the Note.

                                       3
<PAGE>

11.  Regulatory Developments Or Other Circumstances Relating To Illegality or
     ------------------------------------------------------------------------
Impracticality of COST OF FUNDS. If any Regulatory Development or other
-------------------------------
circumstances relating to the interbank Euro-dollar markets shall, at any time,
in Bank's reasonable determination, make it unlawful or impractical for Bank to
fund or maintain, during any COST OF FUNDS Period, to determine or charge
interest rates based upon COST OF FUNDS, Bank shall give notice of such
circumstances to Borrower and:

     (i)    In the case of a COST OF FUNDS Period in progress, Borrower shall,
            if requested by Bank, promptly pay any interest which had accrued
            prior to such request and the date of such request shall be deemed
            to be the last day of the term of the COST OF FUNDS Period; and

     (ii)   No COST OF FUNDS Period may be designated thereafter until Bank
            determines that such would be practical.

12.  Additional Costs. Borrower shall pay to Bank from time to time, upon Bank's
     ----------------
request, such amounts as Bank determines are needed to compensate Bank for any
costs it incurred which are attributable to Bank having made or maintained a
COST OF FUNDS Option Advance or to Bank's obligation to make a COST OF FUNDS
Option Advance, or any reduction in any amount receivable by Bank hereunder with
respect to any COST OF FUNDS Option or such obligation (such increases in costs
and reductions in amounts receivable being herein called "Additional Costs"),
                                                          ----------------
resulting from any Regulatory Developments, which (i) change the basis of
taxation of any amounts payable to Bank hereunder with respect to taxation of
any amounts payable to Bank hereunder with respect to any COST OF FUNDS Option
Advance (other than taxes imposed on the overall net income of Bank for any COST
OF FUNDS Option Advance by the jurisdiction where Bank is headquartered or the
jurisdiction where Bank extends the COST OF FUNDS Option Advance; (ii) impose or
modify any reserve, special deposit, or similar requirements relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities of, Bank (including any COST OF FUNDS Option Advance or any deposits
referred to in the definition of COST OF FUNDS); or (iii) impose any other
condition affecting this Addendum (or any of such extension of credit or
liabilities). Bank shall notify Borrower of any event occurring after the date
hereof which entitles Bank to compensation pursuant to this paragraph as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation. Determinations by Bank for purposes of this
paragraph, shall be conclusive, provided that such determinations are made on a
reasonable basis.

13.  Legal Effect. Except as specifically modified hereby, all of the terms and
     ------------
conditions of the Note remain in full force and effect.

     IN WITNESS WHEREOF, the parties have agreed to the foregoing as of the date
first set forth above.

Provena Foods Inc.                   COMERICA BANK-CALIFORNIA
-----------------------------------
Borrower

By: /s/ Thomas J. Mulroney           By:
    -------------------------------     ----------------------------------------
Title:   CFO                            Stephen Moore, Corporate Banking Officer
      -----------------------------
                                       4
<PAGE>

[LOGO OF COMERICA]

                                             INVENTORY RIDER
                                           (REVOLVING ADVANCE)

Borrower(s): Provena Foods Inc.

     Borrower has entered into a certain Revolving Credit and Security Agreement
(Accounts and Inventory) or a certain Loan and Security Agreement (Accounts and
Inventory) (either hereinafter referred to as "Agreement") dated July 31, 2000
                                                                 -------------
with Bank (Secured Party). This INVENTORY RIDER (hereinafter referred to as this
Rider) dated July 31, 2000 is hereby made a part of and incorporated into that
             -------------
agreement.

     1. At the request of Borrower, made at any time and from time to time
during the term of the Agreement, and so long as no event of default under the
Agreement has occurred and Borrower is in full, faithful and timely compliance
with each and all of the covenants, conditions, warranties and representations
contained in the Agreement, this Rider and/or any other agreement between Bank
and Borrower, Bank agrees to lend Borrower Thirty Percent percent ( 30.000 %) of
                                           --------------           ------
the lower of cost or market value of Borrower's raw materials and finished goods
Inventory, and as may be adjusted by Bank, in Bank's discretion, for age and
seasonality or other factors affecting the value of the Inventory, up to a
maximum advance outstanding at any one time of One Million and no/100 Dollars
                                               ----------------------
($1,000,000.00) upon Borrower's concurrent execution and delivery to bank of a
  ------------
Designation of inventory, or Certification of Borrowing Base, in form
customarily used by Bank. All advances made and to be made pursuant to this
Rider are solely and exclusively to enable Borrower to acquire rights in and
purchase new Inventory, and Borrower represents and warrants that all advances
by Bank pursuant to this Rider will be used solely and exclusively for such
purpose; and since such advances will be used for the foregoing purposes, Bank's
security interest in Borrower's Inventory is and shall be at all times a
purchase money security interest as that term is described in Section 9107 of
the California Uniform Commercial Code.

     2. Advances made by Bank to Borrower pursuant to this Rider shall be
included as part of the Obligations of Borrower to Bank as the term
"Obligations" is defined in the Agreement; and at Bank's option, advances
pursuant to this Rider may be evidenced by promissory note(s), in form and on
terms satisfactory to Bank. All such advances shall bear interest at the rate
and be payable in the manner specified in said promissory note(s) in the event
Bank exercises the aforementioned option, and in the event Bank does not, such
advances shall bear interest at the rate and be payable in the manner specified
in the Agreement.

     3. All of the terms, covenants, warranties, conditions, agreements and
representations of the Agreement are incorporated herein as though set forth in
their entirety and are hereby reaffirmed by Borrower and Bank as though fully
set forth herein.

BORROWER(S): Provena Foods Inc.

/s/ Thomas J. Mulroney
------------------------------------    ________________________________________
By:                                     By:

____________________________________    ________________________________________
By:                                     By:

Accepted this 31st day of July, 2000 at Bank's place of business in San Jose, CA
              ----        ----------                                ------------
95113.
-----

                                        ----------------------------------------
                                        By: Stephen Moore, Corporate Banking
                                            Officer
<PAGE>

[LOGO OF COMERICA]

                                                  EQUIPMENT
                                                    RIDER

Borrower(s): Provena Foods Inc.

     Borrower has entered into a certain Revolving Credit and Security Agreement
(Accounts and Inventory) or a certain Loan and Security Agreement (Accounts and
Inventory) (either hereinafter referred to as "Agreement", dated July 31, 2000
                                                                 -------------
with Bank (Secured Party). This EQUIPMENT RIDER (hereinafter referred to as this
Rider) dated July 31, 2000 is hereby made a pan of and Incorporated Into that
             -------------
Agreement.

1. Borrower grants to Bank a security interest in the following (hereinafter
referred to as "Equipment"):

   (a) All of Borrower's present machinery, equipment, fixtures, vehicles,
       office equipment, furniture, furnishings, tools, dies, jigs and
       attachments, wherever located, (including but not limited to, the items
       listed and described on the Schedule of Equipment attached hereto and
       marked Exhibit "A" and by this reference made a part hereof as though
       fully set forth hereat);

   (b) all of Borrower's additional equipment, wherever located, of like or
       unlike nature, to be acquired hereafter, and all replacements,
       substitutes, accessions, additions and improvements to any of the
       foregoing; and

   (c) all of Borrowers general Intangibles, including without limitation,
       computer programs, computer disks, computer tapes, literature, reports,
       catalogs, drawings, blueprints and other proprietary items.

2. Bank's security interest in the Equipment as set forth above shall secure
each, any and all of Borrower's Obligations to Bank as the term "Obligations" is
defined in the Agreement; and, the payment of Borrower's indebtedness in the
principal amount of Ten Million Six Hundred Forty One Thousand One Hundred and
                    ----------------------------------------------------------
no/100 Dollars ($10,641,100.00) and Interest evidenced by Various Notes.
------           -------------                            -------------

3. Bank may, in its sole discretion, from time to time hereafter, make loans to
Borrower. Loans made by Bank to Borrower pursuant to this Rider shall be
included as part of the Obligations of Borrower to Bank and at Bank's option,
may be evidenced by promissory note(s), in form satisfactory to Bank. Such loans
shall bear interest at the rate and be payable in the manner specified in said
promissory note(s) in the event Bank exercises the aforementioned option, and in
the event Bank does not, such loans shall bear interest at the rate and be
payable in the manner specified in the Agreement.

4. Borrower represents and warrants to Bank that:

   (a) it has good and indefeasible title to the Equipment;

   (b) the Equipment is and will be free and clear of all liens, security
       interests, encumbrances and claims, except as held by Bank,

   (c) the equipment shall be kept only at the following locations: 5010 & 5060
                                                                    -----------
       Eucalyptus Ave., Chino, CA. & 251 Darcy Parkway, Lathrup, CA.
       ------------------------------------------------------------

   (d) the owners or mortgagees of the respective locations are: Provena Foods
                                                                 -------------
       Inc.
       ---

   (e) Bank shall have the right upon demand now and/or at all times hereafter,
       during Borrower's usual business hours to inspect and examine the
       Equipment and Borrower agrees to reimburse Bank for its reasonable costs
       and expenses in so doing,

5. Borrower shall keep and maintain the Equipment in good operating condition
and repair, make all necessary replacements thereto so that the value and
operating efficiency thereof shall at all times be maintained and preserved.
Borrower shall not permit any items of Equipment to become a fixture to real
estate or accession to other property, and the Equipment is now and shall at all
times remain and be personal property.

6. Borrower at its expense, shall keep and maintain: the Equipment insured
against loss or damage by fire, theft, explosion, sprinklers and all other
hazards and risks ordinarily insured against by other owners who use such
properties and interest in properties in similar businesses for the full
insurable value thereof; and business interruption insurance and public
liability and property damage insurance relating to Borrowers ownership and use
of its assets. All such policies of insurance shall be in such form, with such
companies and in such amounts as may be satisfactory to Bank. Borrower shall
deliver to Bank certified copies of such policies of insurance and evidence of
the payment of all premiums thereof. All such policies of insurance (except
those of public liability and property damage) shall contain an endorsement in a
form satisfactory to Bank showing loss payable to Bank and all proceeds payable
thereunder shall be payable to Bank and upon receipt by Bank shall be applied on
the account of Borrower's Obligations, To secure the payment of Borrower's
Obligations, Borrower grants Bank a security interest in and to all such
policies of insurance (except those of public liability and property damage) and
the proceeds thereof and directs all insurers under such policies of insurance
to pay all proceeds thereof directly to Bank. Borrower hereby irrevocably
appoints Bank (and any of Bank's officers, employees or agents designated by
Bank) as Borrower's attorney-in-fact for the purpose of making, settling and
adjusting claims under such policies of insurance and for making all
determinations and decisions with respect to such policies of insurance, Each
such insurer shall agree by endorsement upon the policy or policies of insurance
issued by it to Borrower as required above, or by independent instruments
furnished to Bank that it will give Bank at least ten (10) days written notice
before any such policy or policies of insurance shall be altered or canceled,
and that no act or default of Borrower, or any other person, shall affect the
right of Bank to recover under such policy or policies of insurance required
above or to pay any premium in whole or in part relating thereto. Bank, without
waiving or releasing any obligations or defaults by Borrower hereunder, may at
any time or times hereafter, but shall have no obligations to do so, obtain and
maintain such policies of insurance and pay such premiums and take any other
action with respect to such policies which Bank deems advisable. All sums so
disbursed by Bank, including reasonable attorney's fees, court costs, expenses
and other charges relating thereto, shall be a part of Borrower's Obligations
and payable on demand.

7. Until default by Borrower under the Agreement or this Rider, Borrower may,
subject to the provisions of the Agreement and this Rider and consistent
therewith, remain in possession thereof and use the Equipment referred to herein
in the ordinary course of business at the location or locations hereinabove
designated.

8. All of the terms, conditions, warranties, covenants, agreements and
representations of the Agreement are incorporated herein and reaffirmed.

9. Upon a default by Borrower under the Agreement or this Rider, Borrower upon
request of Bank to do so, agrees to assemble and make the Equipment or any part
thereof available to Bank at a place designated by Bank.

10. Borrower shall upon demand by Bank immediately deliver to Bank and properly
endorse, any and all evidences of ownership, certificates of title or
applications for titles to any of the aforesaid items of Equipment.

11. Bank shall not in any way or manner be liable or responsible for (a) the
safekeeping of the Equipment; (b) any loss or damage thereto occurring or
arising in any manner or fashion from any cause; (c) any diminution in the value
thereof or (d) any act or default by any person whomsoever. All risk of Loss,
damage or destruction of the Equipment shall be borne by Borrower.

Borrower(s): Provena Foods Inc.

/s/ Thomas J. Mulroney
------------------------------------        ____________________________________
By:                                         By:

____________________________________        ____________________________________
By:                                         By:

Accepted this 31st day of July, 2000 at Bank's place of business in San Jose, CA
              ----        ----------                                ------------
95113
-----

                                           By:
                                               ---------------------------------
                                               Stephen Moore, Corporate Banking
                                               Officer
<PAGE>

[LOGO OF COMERICA]

                         Borrower's Authorization
================================================================================

                                                  Date: July 31, 2000

I (we) hereby authorize and direct Comerica Bank-California ("Bank") to pay
                                   ------------------------

to Payoff and Close #6300285773/#18 & #26             $ ________________________
   -------------------------------------------------
to _________________________________________________  $ ________________________

to _________________________________________________  $ ________________________

to _________________________________________________  $ ________________________

of the proceeds of my (our) loan from the Bank evidenced by a note in the
original principal amount of:

$ 3,000,000.00, dated July 31, 2000.
  ------------        -------------

  Borrower(s):

Provena Foods Inc.

By:  /s/ Thomas J. Mulroney        Its:     CFO
   ---------------------------------------------------------------------
   SIGNATURE OF                                   TITLE<PAGE>

                                                                   Exhibit 10.50
================================================================================

                                   AGREEMENT

                                    BETWEEN

                           PROVENA FOODS INC., dba.
                          ROYAL ANGELUS MACARONI CO.

                                      AND

                           UNITED FOOD & COMMERCIAL
                           WORKERS UNION LOCAL 1428

                  October 2, 2000 Through September 29, 2002

================================================================================

<PAGE>

--------------------------------------------------------------------------------
                                     INDEX

                            PROVENA FOODS INC., dba
                        ROYAL ANGELUS MACARONI COMPANY
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
PREAMBLE                                                                      1
--------

WITNESSETH                                                                    1
----------

SECTION 1 - RECOGNITION AND JURISDICTION                                      1
----------------------------------------
1.1  UNION RECOGNITION                                                        1
1.2  CLASSIFICATION DEFINITIONS                                               1
     1.2.1     Mixer Operator                                                 1
     1.2.2     Press Operator                                                 1
     1.2.3     Packing Operator                                               2
     1.2.4     General Packer                                                 2
     1.2.5     Maintenance Mechanic                                           2
     1.2.6     Maintenance Helper                                             2
     1.2.7     Quality Control Employee                                       2
     1.2.8     Shipping/Receiving Employee                                    2
     1.2.9     Sanitation Sanitor                                             2
     1.2.10    Supervisors                                                    2
1.3  PERFORMANCE OF BARGAINING UNIT WORK                                      3
1.4  EMPLOYEE STATUS                                                          3
     1.4.1     Regular Employee                                               3
     1.4.2     Extra Employee                                                 3
     1.4.3     Probationary Employee                                          3
     1.4.4     Promotion/Demotion                                             3
1.5  MANAGEMENT RIGHTS                                                        3

SECTION 2 - UNION SECURITY                                                    4
--------------------------
2.1  UNION MEMBERSHIP                                                         4
2.2  MAINTENANCE OF MEMBERSHIP                                                4
2.3  APPLICANTS FOR MEMBERSHIP                                                4
2.4  DUES CHECK-OFF                                                           4

SECTION 3 - EMPLOYMENT                                                        4
----------------------
3.1  NO DISCRIMINATION                                                        4
3.2  HIRING CONSIDERATION                                                     5
3.3  UNION NOTIFICATION                                                       5

SECTION 4 - DISCHARGE                                                         5
---------------------
4.1  PROHIBITION AGAINST DISCHARGE                                            5
4.2  NOTICE FROM INSURANCE CARRIER                                            5
4.3  RIGHT OF APPEAL                                                          5
4.4  NOTIFICATION OF DISCHARGE                                                6
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
                                                                            PAGE
                                                                            ----
<S>                                                                         <C>
SECTION 5 - HOURS                                                            6
-----------------
5.1    HOURS OF OPERATION                                                    6
5.2    POSTING REQUIREMENTS                                                  6
5.3    SCHEDULE OF SHIFT                                                     6
5.4    GUARANTEED WORKWEEK                                                   6
5.5    EXTRA EMPLOYEES WORKWEEK                                              6
5.6    REGULAR WORKWEEK                                                      7
5.7    ADDITIONAL SHIFTS                                                     7
5.8    JOB AND SHIFT BIDDING                                                 7
5.9    CALL BACK                                                             7
5.10   MEAL PERIODS                                                          7
5.11   REST PERIODS                                                          7

SECTION 6 - OVERTIME                                                         7
--------------------
6.1    OVERTIME PAY                                                          7
6.2    DAILY OVERTIME                                                        8

SECTION 7 - HOLIDAYS                                                         8
--------------------
7.1    HOLIDAYS PAID                                                         8
7.2    HOLIDAY PAY ELIGIBILITY                                               8
7.3    HOLIDAYS FALLING ON SATURDAY/SUNDAY                                   8

SECTION 8 - VACATIONS                                                        9
---------------------
8.1    VACATION BENEFITS                                                     9
       8.1.1 First Year of Service                                           9
       8.1.2 Third Year of Service                                           9
       8.1.3 Fifth Year of Service                                           9
       8.1.4 Sixteenth Year of Service                                       9
8.2    MULTIPLE WEEK VACATION SCHEDULES                                      9
8.3    SENIORITY APPLIES IN SELECTION OF VACATION SCHEDULES                  9
       8.3.1 Not Cumulative                                                  9
8.4    PRORATED VACATION PAY UPON SEPARATION FROM EMPLOYMENT                 9
       8.4.1 First Six (6) Months                                            9
       8.4.2 After Six (6) Months                                            9
       8.4.3 After One (1) Year                                              10
       8.4.4 After Two (2) Years                                             10
       8.4.5 After Four (4) Years                                            10
       8.4.6 After Fifteen (15) Years                                        10
8.5    PRORATED VACATION FORMULA FOR EMPLOYEES WORKING
       LESS THAN A FULL YEAR                                                 10
8.6    HOLIDAY DURING VACATION                                               10

SECTION 9 - LEAVES OF ABSENCE                                                10
-----------------------------
9.1    APPROVED LEAVE OF ABSENCE                                             10
9.2    UNION BUSINESS                                                        10
9.3    NON-PAID FUNERAL LEAVE                                                10
9.4    FUNERAL LEAVE                                                         11
       9.4.1 Notification to Employer                                        11
       9.4.2 Absence Occurs                                                  11
       9.4.3 Day of Absence                                                  11
       9.4.4 Proof of Relationship                                           11
       9.4.5 Immediate Family                                                11
</TABLE>
                                      ii
<PAGE>

<TABLE>
<CAPTION>

                                                                        PAGE
                                                                        ----
<S>                                                                     <C>
SECTION 10 - WAGES                                                      11
------------------
10.1  NIGHT PREMIUMS                                                    11
10.2  LEAD PERSON                                                       11
10.3  MINIMUM WAGE INCREASE                                             11
10.4  RECORDS                                                           11
10.5  WAGE INCREASES                                                    11
10.6  JOB CLASSIFICATION STARTING RATES                                 12
10.7  PROMOTION - WAGE INCREASES                                        12

SECTION 1l - HEALTH AND WELFARE
-------------------------------                                          12
11.1  HEALTH AND WELFARE                                                12
      11.1.1 Contribution Amount/Qualifying Hours                       12
      11.1.2 Maintenance of Benefits                                    12
      11.1.3 Monthly Contribution Payment Date                          12
      11.1.4 Vacation, Holiday and Sick Leave Pay Counted               12
      11.1.5 Loss of Eligibility Self-Payments                          12
      11.1.6 Death Benefit                                              13
11.2  DENTAL PLAN                                                       13
      11.2.1 Contribution Amount Qualifying Hours                       13
      11.2.2 Maintenance of Benefits                                    13
      11.2.3 Monthly Contribution Payment Date                          13
      11.2.4 Vacation, Holiday and Sick Leave Pay Counted               13
      11.2.5 Loss of Eligibility Self-Payments                          13
11.3  VISION PLAN                                                       13
      11.3.1 Contribution Amount/Qualifying Hours                       14
      11.3.2 Maintenance of Benefits                                    14
      11.3.3 Monthly Contribution Payment Date                          14
      11.3.4 Vacation, Holiday and Sick Leave Pay Counted               14
      11.3.5 Loss of Eligibility Self-Payments                          14

SECTION 12 - SICK LEAVE                                                 14
-----------------------
12.1  ELIGIBILITY                                                       14
12.2  UNUSED SICK LEAVE PAY                                             14
12.3  INTEGRATION WITH WORKER'S COMPENSATION OR
      UNEMPLOYMENT DISABILITY INSURANCE                                 15
12.4  PROOF OF ILLNESS                                                  15
12.5  JOB INJURY                                                        15
12.6  MEDICAL APPOINTMENTS                                              15

SECTION 13 - PENSIONS/RETIREMENT BENEFITS                              15
-----------------------------------------
13.1  CONTRIBUTIONS                                                     15
13.2  TERMINATION PRIOR TO YEAR-END                                     16
13.3  WAITING PERIOD                                                    16
13.4  PREVIOUS PLAN                                                     16

SECTION 14 - JURY DUTY                                                  16
----------------------
14.1  JURY DUTY                                                         16

SECTION 15 - GENERAL BENEFITS                                           16
-----------------------------
15.1  HEALTH/SAFETY EQUIPMENT & APPAREL                                 16
15.2  COMPUTING OVERTIME                                                16
15.3  COMPANY MEETINGS                                                  16
15.4  NO REDUCTION                                                      16
</TABLE>

                                      iii
<PAGE>

<TABLE>
<CAPTION>
                                                                 PAGE
                                                                 ----
<S>                                                              <C>
SECTION 16- SENIORITY                                              17
---------------------
16.1  POSTING                                                      17
16.2  ACQUISTION OF SENIORITY                                      17
16.3  TERMINATION OF SENIORITY                                     17
16.4  APPLICATION OF SENIORITY                                     17
16.5  LAYOFF/RECALL                                                17
16.6  NOTIFICATION OF RECALL                                       18
16.7  REPORTING AFTER RECALL                                       18
16.8  SENIORITY LIST                                               18
16.9  EFFECT OF LEAVE ON SENIORITY                                 18

SECTION 17- GRIEVANCE AND ARBITRATION                              18
-------------------------------------
17.1  GRIEVANCES                                                   18
17.2  GRIEVANCE PROCEDURE                                          18
      Step 1:                                                      18
      Step 2:                                                      18
      Step 3:                                                      18
17.3  TIME LIMITS                                                  19
17.4  ARBITRATION                                                  19
17.5  ARBITRATOR'S LIMITATIONS                                     19
17.6  EXPENSES                                                     19
17.7  STATUS QUO                                                   19
17.8  FINAL AND BINDING                                            19
17.9  WAGE CLAIM LIMITS                                            20

SECTION 18- UNION AFFAIRS                                          20
-------------------------
18.1  UNION VISITATION                                             20
18.2  UNION ACTIVITY                                               20
18.3  STEWARDS                                                     20
18.4  BULLETIN BOARDS                                              20

SECTION 19-WORKING CONDITIONS AND SAFETY                           20
----------------------------------------
19.1  FIRST AID EQUIPMENT                                          20
19.2  GOVERNMENTAL REGULATIONS                                     20
19.3  INJURIOUS WORKING CONDITIONS                                 20

SECTION 20- JOB SECURITY                                           21
------------------------
20.1  NEW METHODS OF OPERATION                                     21

SECTION 21- SEPARABILITY                                           21
------------------------
21.1  PROVISIONS OF AGREEMENT                                      21

SECTION 22- TRANSFER OF OWNERSHIP                                  21
---------------------------------
22.1  SALE OR TRANSFER                                             21
22.2  CHANGE OF OWNERSHIP                                          21

SECTION 23- SAVINGS CLAUSE                                         21
--------------------------
23.1  SAVINGS CLAUSE                                               21

SECTION 24- NO STRIKE OR LOCKOUT                                   22
--------------------------------
24.1  NO STRIKE OR LOCKOUT                                         22
24.2  72-HOUR NOTICE                                               22

SECTION 25- EXTENTION AND SCOPE                                    22
-------------------------------
25.1  EXTENSION AND SCOPE
</TABLE>

                                      iv
<PAGE>

                        COLLECTIVE BARGAINING AGREEMENT
                                    Between
           Provena Foods Inc., d.b.a. Royal Angelus Macaroni Company
                                      And
               United Food & Commercial Workers Union Local 1428

                  October 2, 2000 Through September 29, 2002

                                   PREAMBLE
                                   --------

     THIS AGREEMENT is made and entered into between PROVENA FOODS INC., d.b.a.,
ROYAL ANGELUS MACARONI CO., located at 5010 Eucalyptus Avenue, Chino, CA 91710,
hereinafter referred to as the "Employer" and UNITED FOOD AND COMMERCIAL WORKERS
UNION LOCAL 1428, chartered by the UNITED FOOD AND COMMERCIAL WORKERS
INTERNATIONAL UNION, AFL-CIO-CLC, hereinafter referred to as the "Union."

                                  WITNESSETH
                                  ----------

     In order to establish working conditions, which are fair and equitable to
the Employer and all Employees, the parties agree to the following:

"The parties to this Agreement recognize the competitive nature of the industry
and further agree that no Employee will be required to work hours in excess of
the working hours established in this Agreement."

                   SECTION 1 - RECOGNITION AND JURISDICTION
                   ----------------------------------------

1.1  UNION RECOGNITION.  The Employer hereby recognizes the Union as the
     -----------------
exclusive bargaining agent for all Employees employed in the classifications set
forth in Section 10 hereof working in the plant of the Employer located in
Chino, California, County of San Bernardino.

1.2  CLASSIFICATION DEFINITIONS.  It is understood and agreed that the following
     --------------------------
groups of Employees shall be recognized as:

     1.2.1  Mixer Operator.  A Mixer Operator is responsible for all equipment
in the mixing room, and for transferring flour and running all equipment located
in the mixing room. The Mixer Operator will assist in the training and safety of
others assigned to this job. The Mixer Operator needs to know and understand the
general responsibilities as listed in the Employer job description.

     1.2.2  Press Operator.  A Press Operator is responsible for all equipment
and the operation of such equipment located in the Press Room. The Lead Press
Operator will be responsible for the training and safety of others assigned to
this job. The Press Operator needs to know and understand the general
responsibilities as listed in the Employer job description.

                                       1
<PAGE>

     1.2.3  Packing Operator.  A Packing Operator is required to operate all of
the equipment in all areas of the Packing Department. He is responsible for all
products made on his machine, and will assist in the training of all the
Employees that are working on his machine. Each Packing Operator Employee needs
to know and understand the general responsibilities of this position as listed
in the Employer job description.

     1.2.4  General Packer.  A General Packer will be responsible for all tasks
performed in all areas of the Packing Department, except for the duties of a
Packing Operator. The General Packer may also be required to perform
miscellaneous labor as needed to assist in the operation throughout the plant as
long as Employees in that specific job class are not displaced. Each General
Packer Employee needs to know and understand the general responsibilities of
this position as listed in the Employer job description.

     1.2.5  Maintenance Mechanic.  These Employees will be considered non-
Bargaining unit.

     1.2.6  Maintenance Helper.  A Maintenance Helper is to maintain the overall
condition of the building, internal and external. Helping also in maintenance
areas as needed to maintain the operation and the performance of each piece of
production equipment, or any piece of equipment that affects the plant's
operation. Each Maintenance Helper Employee needs to know and understand the
general responsibilities of this position as listed in the Employer job
description.

     1.2.7  Quality Control Employee.  A Quality Control Employee is responsible
for enforcing such quality standards established by the Employer. A Quality
Control Employee needs to know and understand the general responsibilities of
this position as listed in the Employer job description.

     1.2.8  Shipping/Receiving Employee.  A Shipping/Receiving Employee is
responsible for the warehouse, and its total daily operation. A
Shipping/Receiving Employee will be responsible for all incoming and outgoing
shipments, loading and unloading of trucks as needed, driving and/or delivering
of orders as may be required, the stacking of product on pallets, and general
organizing of the warehouse area, product labeling and inventory as required,
and all other work related to the warehouse operation. The Shipping/Receiving
Employee position needs to know and understand the general responsibilities of
this position as listed in the Employer job description.

     1.2.9  Sanitation Sanitor.  A Sanitation Sanitor is responsible for the
cleaning of all areas inside and outside the plant. The Sanitation Sanitor may
also be required to perform miscellaneous labor as needed to assist in the
operation throughout the plant as long as Employees in that specific job class
are not displaced. The Sanitation Sanitor needs to know and understand the
general responsibilities of this position as listed in the Employer job
description.

     1.2.10 Supervisors.  Supervisors will not be part of the bargaining unit,
will not be required to join the Union, and will be permitted to perform
whatever work the Employer assigns; provided, however, that the total number of
Supervisors shall be limited to nine (9). The Employer agrees that the maximum
number of Supervisors per shift will be five (5).

                                       2
<PAGE>

1.3  PERFORMANCE OF BARGAINING UNIT WORK.  The Employer agrees that only
     -----------------------------------
Employees included in the bargaining unit shall perform any of the work coming
within the jurisdiction of this Agreement, provided, however, that non-
bargaining unit Employees may perform bargaining unit work, where necessary or
for emergencies beyond the control of the Employer or work in the instruction or
training of Employees and testing materials in production.

1.4  EMPLOYEE STATUS.
     ---------------

     1.4.1  Regular Employee.  A regular Employee is one who has completed the
probationary period for all new Employees in accordance with Section 1.4.3
hereof.

     1.4.2  Extra Employee.  An Extra Employee is any Employee hired through an
Employment Agency either to relieve a Regular Employee or to supplement the
existing workforce. Extra Employees shall not be employed to displace Regular
Employees. An Extra Employee, who is employed for ninety (90) calendar days for
the Employer within a twelve (12) month period, shall become a Regular Employee
for the purposes of benefit eligibility and Union affiliation. Upon completion
of their ninety (90) day period, an Extra Employee will have completed their
probationary period. Extra Employees may be scheduled less than thirty-two (32)
hours per week. Regular Employees on layoff shall be hired first. No Extra
Employees will be hired when Regular Employees in the same classification are on
layoff or reduced in hours. It is agreed and understood that assignment of
Employees to work less than thirty-two (32) hours per week within the meaning of
this provision shall not operate to replace any existing Employees and, further,
the hiring of Employees to work less than thirty-two (32) hours per week shall
not be done for the purpose of permanently replacing full-time positions. In the
event of a reduction in force, those Employees regularly scheduled to work less
than thirty-two (32) hours per week shall be laid off prior to the layoff of any
Regular Employees.

     1.4.3  Probationary Employee.  The first sixty (60) calendar days of
employment shall be considered a trial period, during which time an Employee may
be terminated for any reason, and he/she shall have no recourse to the grievance
procedure set forth in this Agreement concerning such termination, provided,
however, such sixty (60) day period may be extended for an additional thirty
(30) days at the option of the Employer so long as prior notification, in
writing, is given to the Union and the Employee.

     1.4.4  Promotion/Demotion.  If an Employee is promoted to a higher
classification, the Employer shall have the right to demote said Employee during
the first sixty (60) calendar days from the date of promotion. Promotions shall
be done in accordance with Section 5.8 of this Agreement.

1.5  MANAGEMENT RIGHTS.  The Employer shall have the right to the general
     -----------------
management of all operations and the direction of the workforce, including, but
not limited to, the right to hire, transfer, promote, maintain discipline and
efficiency, layoff, establish new processes or use new equipment, establish
schedules of production, and to extend, limit or curtail its operations. Nothing
in this Agreement shall be construed, by any manner or means, to preclude the
subcontracting of work by the Employer or to require the Employer to perform
work at this plant, rather than elsewhere, so long as the rights specified
herein are not exercised in a manner inconsistent with this Agreement.

                                       3
<PAGE>

                          SECTION 2 - UNION SECURITY
                          --------------------------

2.1  UNION MEMBERSHIP.  Every person performing work covered by this Agreement
     ----------------
who is a member of the Union on the effective date of this Section, shall, as a
condition of employment or continued employment, remain a member of the Union.
Every person employed to perform work covered by this Agreement, shall, as a
condition of employment, be a member of the Union or shall, within a period of
thirty-one (31) days after the effective or execution date of this Agreement,
whichever is later, become a member of the Union.

2.2  MAINTENANCE OF MEMBERSHIP.  The Employer shall discharge every person,
     -------------------------
who has failed to comply with the provisions of Subsection 2.1 above, at the end
of the workday during which notice of such non-compliance is received. The
Employer further agrees not to again employ or re-employ any person(s) so
discharged until he/she is a member of the Union; provided, however, in the
event that the Labor Management Relations Act, as amended, is applicable to this
Agreement, the provisions of this sentence of this Subsection 2.2 shall not be
applied until a final administrative or judicial decision has been rendered,
which would permit its application under the Act.

2.3  APPLICANTS FOR MEMBERSHIP.  Membership in the Union shall be available to
     -------------------------
persons employed in work covered by this Agreement upon terms and qualifications
not more burdensome than those applicable generally to other applicants for such
membership.

2.4  DUES CHECK-OFF.  The Employer agrees to deduct Initiation Fees and Union
     --------------
Dues from the wages of the Employees in the bargaining unit who provide the
Employer with a voluntary, written authorization for such deductions. Such
deductions, when authorized, shall be made from each weekly pay period and will
be transmitted to the office of UFCW Local 1428, no later than the twelfth
(12th) day of the month following the month in which such deductions were made.
The monthly deduction will be based on the number of weeks in that month at the
established weekly dues rate.

                            SECTION 3 - EMPLOYMENT
                            ----------------------

3.1  NO DISCRIMINATION.  The Employer shall have sole responsibility for and
     -----------------
full freedom in the selection, employment, and discharge of persons employed or
to be employed in work covered by this Agreement, subject to the provisions of
this Agreement, provided that there shall be no discrimination because of
membership or non-membership in or participation or non-participation in the
activities of the Union. The Employer will not discharge or discriminate against
any Employee for upholding lawful Union principles such as serving as an officer
or other representative of the Union, soliciting membership in the Union,
wearing Union buttons, distributing Union literature, or attending Union
meetings provided that such activity does not interfere with his/her work. The
Employer will not discharge or discriminate against any Employee for falling or
refusing to purchase stock, bonds, securities, or any other interest in any
corporation, partnership or company.

                                       4
<PAGE>

3.2  HIRING CONSIDERATION.  In the hiring of new Employees, the Employer agrees
     --------------------
that it will give equal consideration to all applicants, including those
referred by the Union. The Employer and the Union will not discriminate against
any Employee with regard to compensation or terms and conditions of employment
because of such individual's race, color, religion, sex, disability, age (to the
extent provided by law), or national origin; nor will they limit, segregate, or
classify Employees in any way to deprive any individual Employee of employment
opportunities because of their race, color, religion, sex, disability, age (to
the extent provided by law), or national origin. Any reference to the male
gender in this Agreement shall be in the generic sense and it shall refer
equally to either sex without discrimination, as provided above.

3.3  UNION NOTIFICATION.  The Employer shall notify the Union within one (1)
     ------------------
week of employment, the name, address, social security, rate of pay, and
classification of every such person employed in work covered by this Agreement,
together with the date of such employment and the location of the place or
prospective place of employment. Whenever a person is rejected for or discharged
from such work, the Employer shall, upon request of the Union, notify the Union
of the reason or reasons therefore. The notification required by this Subsection
shall be made, in writing, within forty-eight (48) hours after such request. Any
Employee hired shall report to the Union within thirty-one (31) days after the
date of employment to comply with their membership requirements.

                             SECTION 4 - DISCHARGE
                             ---------------------

4.1  PROHIBITION AGAINST DISCHARGE.  No Employee covered by this Agreement shall
     -----------------------------
be suspended, demoted, or discharged without just and sufficient cause.
Discharge for failure to comply with Section 2 Union Security, Subsection 2.1 of
this Agreement shall be deemed a discharge for cause. Before an Employee is
suspended for more than three (3) days or discharged he/she shall receive
written warning of unsatisfactory conduct and a copy of such notice shall be
sent to the Union. Such written warning shall not be effective for suspension
actions for more than twelve (12) months. The Employee receiving such warning
shall be given reasonable opportunity to rectify or change such conduct. The
notice and warning required by this Subsection need not be given to Employees
disciplined for, but not limited to, any gross violation of reasonably
acceptable conduct. It is understood that effective the first date of this first
                                                        ----------         -----
Contract, all Employees' previous Warning Notices will not have any validity
--------
prospectively, except for the specific cases agreed upon during negotiations.

4.2  NOTICE FROM INSURANCE CARRIER.  When an insurance carrier notifies the
     -----------------------------
Employer that the firm's vehicle insurance is being cancelled because of a
driver's record of on-the-job driving on file with the California Department of
Motor Vehicles, that driver may be transferred to another job, if available,
where he/she shall have seniority as a new Employee or, if no job is available,
he/she may be laid off pending the result of the grievance procedure.

4.3  RIGHT OF APPEAL.  Any Employee claiming unjust dismissal, demotion, or
     ---------------
suspension shall make his/her claim therefor to the Union within ten (10)
working days of such dismissal, demotion, or suspension, and the Union will,
that day, notify the Employer by telephone and confirm in writing, otherwise no
action shall be taken by the Union. If after proper investigation by the Union
and the Employer, it has been found that an Employee has been disciplined
unjustly, he/she shall be reinstated with full rights and shall be paid his/her
wages for

                                       5
<PAGE>

the period he/she was suspended, demoted, or dismissed. Investigation of any
claims shall be made within ten (10) days of the making of such complaint by the
Employee. Any dispute arising out of such suspension, demotion, or discharge
shall be processed under Section 17, Grievance and Arbitration of this
Agreement.

4.4  NOTIFICATION OF DISCHARGE.  When an Employee is discharged, the Employer
     -------------------------
must give written notice to the Employee, stating the reasons for such
discharge, and the Union shall receive a copy of said notice. Where an Employee
is holding a second job, that Employee will notify the Employer, in writing, of
such job. A second job must not conflict with the Employee's performance at
Royal Angelus Macaroni Company.

                               SECTION 5 - HOURS
                               -----------------

5.1  HOURS OF OPERATION.  The hours of operation of the Employer's facility
     ------------------
shall be as hereunder provided and shall apply to all Employees of the Employer
covered herein. Hours worked in excess of eight (8) straight-time hours in a day
or in excess of forty (40) straight-time hours in any week shall be paid at one
and one-half(1-1/2) times the straight-time rate.

5.2  POSTING REQUIREMENT.  All regular Employees shall have their schedule
     -------------------
posted by Friday noon for the following workweek. It shall not be changed except
by reason of an act of God or other reason beyond the reasonable control of the
Employer. It is understood that the nature of the Employer's business has
unusual ebbs and flows, which may require flexibility with its production.
Because of the production demands, the Employer may require Employees to work
beyond their scheduled shift. Employees required to work beyond their scheduled
shift shall be notified no later than the end of their lunch period. The
schedule shall show the full name of the Employee, the starting times, the days
scheduled and the total hours for him/her during the following week, in ink or
typewritten

5.3  SCHEDULE OF SHIFT.  All first shift hours shall be regularly scheduled to
     -----------------
commence no earlier than 5:00 a.m., and no later than 10:00 a.m. The second
shift hours shall commence on or after 10:00 a.m., and no later than 5:00 p.m.
The third shift hours shall commence on or after 5:00 p.m. and before 5:00 a.m.
Night premiums will be paid in accordance with Section 10.1.

5.4  GUARANTEED WORKWEEK.  Regular Employees shall be guaranteed payment for
     -------------------
and expected to work eight (8) hours each day, thirty-two (32) hours for each
week, subject to the addition of all premium and overtime provisions, unless
such work ceases to be available by reason of an act of God or other reason
beyond the control of the Employer. All hours worked in the work week shall be
used in computing the minimum guarantee. Employees who work the minimum
guarantee of thirty-two (32) hours per week, four (4) eight (8) hour days, may
be required to work additional shifts of not less than four (4) hours, upon a
twelve (12) hour notice by their Supervisor.

5.5  EXTRA EMPLOYEES WORKWEEK.  Extra Employees may be scheduled to work
     ------------------------
less than thirty-two (32) hours per week. Extra Employees scheduled to work less
than thirty-two (32) hours shall be scheduled, as work is available.

                                       6
<PAGE>

5.6  REGULAR WORKWEEK.  The regular workweek shall be Sunday through Saturday.
     ----------------

5.7  ADDITIONAL SHIFTS.  Employees called to work will be provided with a
     -----------------
minimum of four (4) hours work or pay in lieu of work, such pay to start from
the hour the Employee is required to report for work, except in case of matters
beyond the control of the Employer. Employee's doing security inspection or
quality control shall be guaranteed a minimum of two (2) hours of work or pay in
lieu thereof.

5.8  JOB AND SHIFT BIDDING.  If a position becomes available, Employees shall
     ---------------------
have the right to bid on job and shift assignments in the order of their
seniority and provided that they have the skills and ability. Selection for such
Bid will be at the Employer's discretion. An Employee, who is promoted to a
higher classification, may perform work in that higher classification at their
current rate of pay for up to two (2) weeks.

5.9  CALL BACK.  An Employee called back to work within ten (10) hours from the
     ---------
end of his/her shift shall be paid at one and one-half (1-1/2) times his/her
applicable rate for the hours worked prior to the expiration of such hours. This
provision shall not apply when the Employee requests to work shifts with less
than ten (10) hours in between their last shift worked.

5.10 MEAL PERIODS.  All Employees shall receive one-half (1/2) hour
     ------------
uninterrupted, unpaid meal period, which will be scheduled approximately in the
middle of the workday, but in no event shall an Employee work more than six (6)
hours before any meal period.

5.11 REST PERIODS.  All Employees shall receive two (2), fifteen (15) minute
     ------------
rest periods in an eight (8) hour day. Employees working beyond ten (10) hours
in a day shall receive an additional ten (10) minute rest period. Employees
shall not leave their workstation prior to the "Break Signal" and shall be back
at their workstation by the sound of the "Break Signal".

                             SECTION 6 - OVERTIME
                             --------------------

6.1  OVERTIME PAY.
     ------------

     6.1.1  All work in excess of eight (8) hours in one (1) day and all work in
excess of forty (40) hours in one (1) week shall be paid for at the overtime
rate, which shall be one and one-half (1-1/2) times the Employees regular
straight-time hourly rate of pay.

     6.1.2  Employees shall be paid at one and one-half (1-1/2) times the
Employee's regular straight-time rate of pay for all work performed on the sixth
(6/th/) day of the Employee's workweek.

     6.1.3  Where a full-time regular Employee scheduled to work more than six
(6) consecutive days in any combination of workweeks, said Employee shall
receive payment of one and one-half (1 & 1/2) their regular rate of pay for the
first eight (8) hours worked, on the seventh (7/th/) day. All time worked in
excess of eight (8) hours on said seventh (7/th/) day shall be paid at double
time, until such time as his/her consecutive days of work have been interrupted
by a pre-scheduled day off.

                                       7
<PAGE>

     6.1.4  All work performed in excess of twelve (12) hours in any one (1) day
shall be paid for at the overtime rate of two (2) times the Employee's regular
straight-time rate of pay.

     6.1.5  There shall be no pyramiding of overtime under this Agreement.

     6.1.6  Extra Employees will be given the preference, whenever possible to
avert overtime.

6.2  DAILY OVERTIME.  Preference for overtime work shall be given to Employees
     --------------
performing the work prior to the expiration of the shift. Regular Employees will
receive preference for overtime work over Extra Employees. If additional
Employees are required, such overtime work shall be offered to Employees by
classification seniority within the department, then plant-wide, for those
Employees who possess the skills and ability to perform the work. The Employer
may require Employees to work overtime and will give notice to the Employees of
such requirement prior to the end of their meal period.

                             SECTION 7 - HOLIDAYS

7.1  HOLIDAYS PAID.  The following holidays shall be recognized and observed
     -------------
annually under this Agreement and eligible Employees, set forth in Subsection
7.2 below, shall receive eight (8) hours pay for said holidays, as if worked.
Employees working on these holidays shall be paid one and one-half(1 & 1/2)
times their hourly rate of pay, in addition to the eight (8) hours Holiday pay.

               1.    New Year's Day
               2.    President's Day
               3.    Memorial Day
               4.    Fourth of July
               5.    Labor Day
               6.    Thanksgiving Day
               7.    Day After Thanksgiving
               8.    Christmas Day

7.2  HOLIDAY PAY ELIGIBILITY.  Non-probationary Employees working their
     -----------------------
scheduled workday before and their scheduled workday after the holiday shall
receive pay for the holiday, except that any Employee, who is absent due to
illness or injury for a period not in excess of thirty (30) days, or death in
the immediate family and is, therefore, unable to work the scheduled workday
before and the scheduled workday after the holiday shall receive pay for the
holiday. Any regular Employee on temporary layoff, who worked any portion of the
week preceding, the week of, or the week following the holiday week, shall be
paid for the holiday, if temporary layoff has not and does not exceed three (3)
weeks.

7.3  HOLIDAYS FALLING ON SATURDAY/SUNDAY.  When one of the above-enumerated
     -----------------------------------
holidays falls on Sunday, then Monday shall be considered as the holiday. When
one of the above-enumerated holidays falls on Saturday, then Friday shall be
considered as the holiday.

                                       8
<PAGE>

                             SECTION 8 - VACATIONS

8.1  VACATION BENEFITS.  All Regular Employees, who have been in the employ of
     -----------------
the Employer for at least one (1) year shall be entitled to receive vacation
benefits as specified below. Employees going on vacation shall receive pay for
said vacation period prior to leaving on vacation.

     8.1.1  First Year of Service:  One (1) week-----Five (5) Days Vacation with
            Pay.

     8.1.2  Third Year of Service:  Two (2) weeks----Ten (10) Days Vacation with
            Pay.

     8.1.3  Fifth Year of Service:  Three (3) weeks---Fifteen (15) Days Vacation
            with Pay.

     8.1.4  Sixteenth Year of Service: Four (4) weeks--Twenty (20) Days Vacation
            with Pay.

8.2  MULTIPLE WEEK VACATION SCHEDULES.  Where an Employee is entitled to
     --------------------------------
three (3) or more weeks of vacation, the Employee and the Employer may, if they
mutually agree, provide that two (2) weeks be taken at one time and the balance
taken at one other time during the year.

8.3  SENIORITY APPLIES IN SELECTION OF VACATION. The principal of seniority
     ------------------------------------------
shall be observed in the choice of vacation periods. The Employer shall issue
vacation selection forms to Employees by October 1/st/. Employees will complete
their vacation selection form by November 1/st/, and the Employer will post the
vacation schedules no later than December 1/st/. Employees who fail to select
their vacations by November 1st will be subject to assigned vacations by the
Employer. When the Employer assigns vacations to any Employee, said Employee
will receive at least two (2) weeks notice of such vacation assignment. Vacation
selection may be changed by mutual Agreement. Vacations may not be taken during
the Thanksgiving and Christmas holiday weeks. Vacation selection during other
holiday weeks throughout the year will be approved at the Employer's sole
discretion.

     8.3.1  Not Cumulative.  Vacations may not be cumulative from one year to
another.

8.4  PRORATED VACATION PAY UPON SEPARATION FROM EMPLOYMENT. Upon termination of
     -----------------------------------------------------
employment or change of ownership of a plant, Employees shall receive prora ted
vacation pay based on each full month worked since the Employee's last
anniversary date of employment; provided, however, vacation pay shall not be
paid during the first year of employment in cases of discharge for cause or
voluntary quit, except that on voluntary quits, where one (1) week's notice has
been given to the Employer, the Employee shall receive prorated vacation pay.

     Employment Period                                Rate of Accrual
     ---------------------------------------------------------------------

     8.4.1  First Six (6) Months                      None

     8.4.2  After Six (6) Months                      1/6 Week Per Month

                                       9
<PAGE>

     8.4.3  After One (1) Year               1/12 Week Per Month

     8.4.4  After Two (2) Years              1/6 Week Per Month

     8.4.5  After Four (4) Years             1/4 Week Per Month

     8.4.6  After Fifteen (15) Years         1/3 Week Per Month

8.5  PRORATED VACATION FORMULA FOR EMPLOYEES WORKING LESS THAN A FULL YEAR. An
     ---------------------------------------------------------------------
Employee shall receive full vacation pay at his/her regular weekly rate of pay,
if he/she works forty-two (42) weeks or more during his/her anniversary year. If
an Employee is ab sent for more than ten (10) weeks during his/her anniversary
year, he/she shall receive prorated vacation pay. Such prorated vacation pay
shall be computed by taking his/her gross earnings during his/her anniversary
year, divided by fifty-two (52), and multiplied by the number of weeks of
vacation to which the Employee is entitled, according to his/her length of
service. Calculation of vacation under this Subsection is permitted only on an
Employee's anniversary and is not to be used for incomplete years.

8.6  HOLIDAY DURING VACATION.  When a holiday falls within the Employee's
     -----------------------
vacation period, the Employee will receive pay in lieu of the holiday.

                         SECTION 9 - LEAVES OF ABSENCE

9.1  APPROVED LEAVE OF ABSENCE.  The Employer may grant leaves of absence to
     -------------------------
Employees based on the merit of the leave. Request and permission must be in
writing. An Employee, who fails to report for work at the end of a leave of
absence, shall terminate employment rights, except where the Employer has agreed
to extend the leave of absence. A fourteen (14) day leave of absence, without
pay, shall be allowed, where necessary, in order to care for necessary details
resulting from the death of a member of the Employee's immediate family, as
defined below. All leaves of absence granted in this Agreement shall be
considered as part of the continuous service with the Employer, subject to the
limitations outlined in Section 16 Seniority, Subsection 16.3 hereof. When a
personal leave of absence is granted to an Employee by the Employer, a written
notice shall be given to evidence such an arrangement. Employees shall use all
vacation time and personal holidays prior to the start of any leave of absence.

9.2  UNION BUSINESS.  An Employee chosen by the Union to attend Union business
     --------------
outside the plant shall, with permission of the Employer, shall be granted a
leave of absence without pay, not exceeding thirty (30) days. A request for such
leave of absence shall be made at least seven (7) working days prior to the
first (1st) day of absence, except that such notice need not be provided for
absences to attend Collective Bargaining negotiations.

9.3  NON-PAID FUNERAL LEAVE.  In the event of a death of a person, other than
     ----------------------
those identified in this Section, the Employee shall be given one (1) day off
upon request, without pay, for the purpose of attending the funeral, unless the
number of requests for attendance at the funeral would unduly hamper the
operation of the Employer's business during the time of the funeral, in which
case, attendance at the funeral shall be granted on the basis of the order in
which the requests were made.

                                       10
<PAGE>

9.4  FUNERAL LEAVE. When a Regular Employee on the active payroll is absent from
     -------------
work for the purpose of arranging or attending the funeral of a member of
his/her immediate family, as defined below, the Employer shall pay him/her for
eight (8) hours at his/her regular rate of pay for each day of such absence up
to a maximum of two (2) days provided:

          9.4.1  Notification to Employer. The Employee notifies the Employer of
     the purpose of his/her absence on the first day of such absence.

          9.4.2  Absence Occurs. The absence occurs on the day during, which the
     Employee would have worked.

          9.4.3  Day of Absence. The day of absence is not later than the day of
     such funeral, except where substantial travel time is required.

          9.4.4  Proof of Relationship. The Employee, when requested, shall
     furnish proof satisfactory to the Employer of the death, his/her
     relationship to the deceased, the date of the funeral, the Employee's
     actual attendance at such funeral.

          9.4.5  Immediate Family. For the purpose of this Agreement, a member
     of the immediate family means the Employee's spouse, child, mother, father,
     sister, brother, mother-in-law, father-in-law, grandparents, grandchildren,
     step-parents, and step-children.

                              SECTION 10. - WAGES

10.1 NIGHT PREMIUMS. All Employees shall receive a ($.35) premium on top of
     --------------
     their regular rate of pay for all hours worked after 6 p.m. and before 6
     a.m.

10.2 LEAD PERSON. A Lead Person shall be paid a thirty ($.30) cent per hour
     -----------
     premium.

10.3 MINIMUM WAGE INCREASE. As it relates to the wage schedule in Article 10 of
     ---------------------
this Agreement, if the California "Minimum Wage" is increased, the Employer and
the Union will meet to discuss this change with the understanding that "starting
rates" will be maintained at fifteen ($.15) cents per hour above the new
California minimum wage. If this were to occur, it is also understood that the
difference in wages between the next higher job classification would not be more
than fifteen ($.15) cents per hour from the "new start rate".

10.4 RECORDS. The Employer agrees to keep records of time worked by all
     -------
Employees in such a manner as is prescribed by the applicable provisions of the
Fair Labor Standards Act, whether or not that Act actually applies to the
Employer. The Employer shall maintain a timekeeping system for the purpose of
keeping accurate records of the hours worked by each Employee. Upon request, the
Employer shall permit the Union to examine the payroll records of the Employees
in the bargaining unit at reasonable times during the regularly scheduled
working hours.

10.5 WAGE INCREASES. All Employees will receive wage increases as follows:
     --------------

     .    30 cents per hour effective 10/2/00
     .    20 cents per hour effective 10/1/01
     .    20 cents per hour effective 4/1/02

                                       11
<PAGE>

10.6 JOB CLASSIFICATION STARTING RATES. Job Classification starting rates are as
     ---------------------------------
     follows:
     1. Packer                                       $6.10 Per Hour
     2. Machine Operator/Flour Mixer/Sanitation      $6.35 Per Hour
     3. Press Operator                               $6.60 Per Hour
     4. Quality Control                              $6.85 Per Hour
     5. Shipping/Receiving                           $7.50 Per Hour
     6. Maintenance Helper                           $7.50 Per Hour

10.7 PROMOTION - WAGE INCREASES. When an Employee is promoted, he/she will
     --------------------------
receive a twenty-five ($.25) cents per hour increase for each Job Classification
elevation.

                       SECTION 11. - HEALTH AND WELFARE

11.1 HEALTH AND WELFARE. Health and Welfare benefits for Employees are as
     ------------------
     follows:

          11.1.1  Contribution Amount/Qualifying Hours. For coverage effective
     November 1, 2000, the Employer shall make monthly health and welfare
     contribution payments to the UFCW Allied Trades Trust Fund in the amount of
     $299.24 for each Regular Employee covered by this Agreement. For purposes
     of determining eligibility hours worked for a month shall be used to
     determine eligibility status two (2) months after the work month. For
     example, hours worked in November (work month) will provide eligibility in
     January (coverage month). A minimum of eighty (80) hours must be worked in
     a work month to provide coverage in the coverage month.

          11.1.2  Maintenance of Benefits. Effective on and after July 1, 2001,
     it is understood and agreed that if the healthcare plan benefits cannot be
     maintained at a cost of $299.24 per month, the Trustees shall be authorized
     to increase the monthly payment up to a maximum often percent (10%) or
     $29.92 per month, effective on or after July 1, 2002, the trustees shall be
     authorized to increase the monthly payment up to a maximum of ten percent
     (10%).

          11.1.3  Monthly Contribution Payment Date. The monthly health and
     welfare contribution payments shall be mailed to the Trust Fund on or
     before the twentieth (2O/th/) day of each month following the work month.

          11.1.4  Vacation, Holiday and Sick Leave Pay Counted. It is understood
     that vacation and holiday pay and sick leave pay received in the month
     shall be counted as hours worked for the purpose of determining whether a
     contribution on behalf of an Employee is applicable under the eighty (80)
     hours worked set forth in Subsection 11.1.1 above.

          11.1.5  Loss of Eligibility Self-Payments. Federal Law mandates that
     group plans provide individuals with the option of continuing their
     medical, dental and vision coverage through self-payment of premiums, when
     their coverage terminates under a Plan (COBRA).

                                      12
<PAGE>

          11.1.6  Death Benefit. The Trust Fund will provide a death benefit for
     each eligible Employee in the following amount:

          .       Term Life Insurance                            $10,000

     The premium for this benefit will be $4.00 per month for each eligible
Employee and paid by the Employer.

11.2 DENTAL PLAN. Dental benefits for Employees are as follows:
     -----------

          11.2.1  Contribution Amount/Qualifying Hours. For coverage effective
     November 1, 2000, the Employer shall make monthly dental contribution
     payments to the UFCW Allied Trades Trust Fund in the amount of $33.00 for
     each Regular Employee covered by this Agreement. For purposes of
     determining eligibility hours worked for a month shall be used to determine
     eligibility status two (2) months after the work month. For example, hours
     worked in November (work month) will provide eligibility in January
     (coverage month). A minimum of eighty (80) hours must be worked in a work
     month to provide coverage in the coverage month.

          11.2.2  Maintenance of Benefits. Effective on and after February 1,
     2001, it is understood and agreed that if the Trustees of the Fund
     determine that the dental plan benefits (Delta) cannot be maintained at a
     cost of $33.00 per month, the Trustees shall be authorized to increase the
     monthly payment up to a maximum of five percent (5%) or $1.65 per month.
     Effective on and after July 1, 2002, the Trustees shall be authorized to
     increase the monthly payment up to a maximum of five percent (5%).

          11.2.3  Monthly Contribution Payment Date. The monthly payments shall
     be mailed to the Trust Fund on or before the twentieth (20/th/) day of each
     month following the work month. Such monthly payment shall provide an
     eligible Employee and his/her eligible dependents with group dental
     benefits under the Allied Trades Dental Plan (Delta) options.

          11.2.4  Vacation, Holiday and Sick Leave Pay Counted. It is understood
     that vacation and holiday pay and sick leave pay received in the month
     shall be counted as hours worked for the purpose of determining whether a
     contribution on behalf of an Employee is applicable under the eighty (80)
     hours worked rule set forth in Subsection 11.2.1 above.

          11.2.5  Loss of Eligibility Self-Payments. Federal Law mandates that
     group plans provide individuals with the option of continuing their
     medical, dental and vision coverage through self-payment of premiums, when
     their coverage terminates under a Plan (COBRA).

11.3 VISION PLAN. Vision benefits for Employees are as follows:
     -----------

                                       13
<PAGE>

          11.3.1  Contribution Amount/Qualifying Hours. For coverage effective
     November 1, 2000, the Employer shall make monthly vision contribution
     payments to the UFCW Allied Trades Trust Fund in the amount of $8.51 for
     each Regular Employee covered by this Agreement. For purposes of
     determining eligibility hours worked for a month shall be used to determine
     eligibility status two (2) months after the work month. For example, hours
     worked in November (work month) will provide eligibility in January
     (coverage month). A minimum of eighty (80) hours must be worked in a work
     month to provide coverage in the coverage month.

          11.3.2  Maintenance of Benefits. Effective on and after July 1, 2001,
     it is understood and agreed that if the Trustees of the Fund determine that
     the vision plan benefits cannot be maintained at a cost of $8.51 per month,
     the Trustees shall be authorized to increase the monthly payment up to a
     maximum of five percent (5%) or $.43 per month. Effective on and after July
     1, 2002, the Trustees shall be authorized to increase the monthly payment
     up to a maximum of five percent (5%).

          11.3.3  Monthly Contribution Payment Date. The monthly health and
     welfare contribution payments shall be mailed to the Trust Fund on or
     before the twentieth (20/th/) day of each month following the work month.

          11.3.4  Vacation, Holiday and Sick Leave Pay Counted. It is understood
     that vacation and holiday pay and sick leave pay received in the month
     shall be counted as hours worked for the purpose of determining whether a
     contribution on behalf of an Employee is applicable under the eighty (80)
     hours worked set forth in Subsection 11.3.1 above.

          11.3.5  Loss of Eligibility Self-Payments. Federal Law mandates that
     group plans provide individuals with the option of continuing their
     medical, dental and vision coverage through self-payment of premiums, when
     their coverage terminates under a Plan (COBRA).

                           SECTION 12. - SICK LEAVE

12.1 ELIGIBILITY. All Regular Employees, employed with the Employer for one (1)
     -----------
year, shall be entitled to six (6) days/eight (8) hours per day sick leave with
pay. On each anniversary date of employment thereafter, he/she shall be entitled
to six (6) days of sick leave with pay. However, such sick leave benefits shall
not accumulate from year to year. Sick leave shall be payable at one-hundred
percent (100%) beginning with the second (2/nd/) working day of absence unless
hospitalized.

12.2 UNUSED SICK LEAVE PAY. For the Employee's second (2/nd/) and succeeding
     ---------------------
anniversary dates of employment, any unused sick leave to which an Employee may
be entitled shall be paid on the Employee's anniversary date of employment. The
pro rata payment of accumulated sick leave, since his last anniversary date,
shall not be paid to an Employee who quits or is discharged.

                                       14
<PAGE>

12.3 INTEGRATION WITH WORKER'S COMPENSATION OR UNEMPLOYMENT DISABILITY
     -----------------------------------------------------------------
INSURANCE. An Employee who is collecting unemployment compensation disability
---------
benefits or worker's compensation temporary disability benefits, or both, shall
not receive sick and accident benefits as provided herein; provided, however, if
such unemployment compensation disability benefits or worker's compensation
temporary disability benefits, or both, are less than the amount of sick and
accident benefits provided herein for such period, such Employee shall receive
sick and accident benefits in addition to such unemployment compensation
disability benefits, or worker's compensation temporary disability benefits, or
both, in an amount sufficient to equal the amount of sick and accident benefits
he/she would have otherwise received as provided herein. All sickness and
accident benefit payments due under this Subsection shall be payable on the
Employee's regular pay period.

12.4 PROOF OF ILLNESS. The Employer shall reserve the right to request the
     ----------------
Employee to produce a medical doctor's certificate verifying the fact of such
illness. An Employee may be excused from the requirement to provide medical
verification of illness provided the following criteria are met:

     12.4.1  The absence does not exceed two (2) days including any holiday,
which is the day before or after the day of absence.

     12.4.2  The Employee calls his/her Supervisor no later than one (1) hour
before their starting time on the day of each absence stating the reasons for
the absence.

12.5 JOB INJURY. An Employee, who is injured on the job and does not complete
     ----------
that day's work, or is otherwise not permitted to return to work, shall receive
pay for the entire workday and such pay shall not be charged against sick leave
or accident leave, provided, the Employee is sent home or is otherwise not
permitted to work by a medical doctor, chiropractor, or osteopath, on the
approved list of the insurance carrier of the Employer.

12.6 MEDICAL APPOINTMENTS. Visits to the doctor or dentist shall not qualify the
     --------------------
Employee for sick leave pay. Whenever possible, appointments by reason of
illness or non-compensable injury shall be made outside of working hours. Where
such appointments must be made during working hours, the Employee shall apply to
the Employer, in writing, at least two (2) working days prior to his/her
appointment date for unpaid time off to keep such an appointment. Time not
worked by an Employee because of visits to a doctor for an industrial injury
shall be paid by the Employer at the Employee's applicable rate of pay.
Emergency appointments shall not be subject to the two (2) day rule.

                   SECTION 13 - PENSIONS/RETIREMENT BENEFITS

13.1 CONTRIBUTIONS. Effective OCT. 2- (S.Z.) (J.B.) 2000, the Employer will
     -------------
contribute the sum of one dollar and twenty-five cents ($1.25) per hour worked
or paid for, exclusive of overtime hours, for each individual employed under
this Agreement to an I.R.A. (Simplified Employee Pension). Contributions will be
made at year-end. The parties agree that the contributions to the I.R.A. shall
be made no later than January 31/st/ of the year following the earned credit.

                                      15
<PAGE>

13.2  TERMINATION PRIOR TO YEAR-END. The Employer agrees that in the event an
      -----------------------------
Employee terminates anytime prior to year-end, he/she shall be eligible for
pension contributions earned and payable at year-end as per Subsection 13.1
above. For the purpose of this Subsection, each hour, other than overtime hours,
for which payment is made to an Employee, shall be deemed to be an hour worked.

13.3  WAITING PERIOD. Effective September 24, 2000, Pensions/Retirement benefits
      --------------
contributions shall commence after ninety (90) days of employment. For the
purpose of the Subsection, each hour, other than overtime hours, for which
payment is made to an Employee, shall be deemed to be an hour worked.

13.4  PREVIOUS PLAN. Employees, who were on the payroll prior to the effective
      -------------
date of this Collective Bargaining Agreement, and who were eligible to receive a
paid pension benefit (profit share) under the previous plan, will still receive
those monies they were entitled for all time prior to the commencement of the
$1.25 per hour I.R.A. contribution now in effect.

                            SECTION 14 - JURY DUTY

14.1  JURY DUTY. An Employee that is summoned for jury duty service will notify
      ---------
the Employer, by providing a copy of the summons, who will then assist that
Employee by scheduling him/her for time off for jury duty service. The Employer
will provide written confirmation that the Employee will not be compensated for
attending jury duty, which would cause that Employee a financial hardship, and
the absence of the Employee would also cause the Employer a production hardship
due to the nature of the business. The purpose for such letter is to attempt to
have the Employee excused from jury duty service.

                         SECTION 15 - GENERAL BENEFITS

15.1  HEALTH/SAFETY EQUIPMENT & APPAREL. Any health and safety equipment and
      ---------------------------------
apparel required by the Employer or by Good Manufacturing Practices (GMP) shall
be furnished free of cost to all Employees, who use them in the performance of
their work. The Employer shall be responsible for all costs associated with the
maintenance of all required equipment and apparel so long as they are treated
with care and not abuse.

15.2  COMPUTING OVERTIME. Paid absences from work, such as vacations, holidays,
      ------------------
and sick leave, shall be considered as time worked for the purpose of this
Agreement, but shall not be deemed as time worked for the purpose of computing
overtime.

15.3  COMPANY MEETINGS. Time spent in mandatory Company meetings called by the
      ----------------
Employer, before or after the day's work, shall be considered as time worked and
shall be paid for in accordance with the provisions of this Agreement.

15.4  NO REDUCTION. No Employee receiving wages above the minimum herein shall
      ------------
suffer any reduction in wages by reason of signing of this Agreement. The
Employer agrees that no Employee shall be compelled or allowed to enter into any
individual Contract or Agreement with his/her Employer concerning wages, hours
of work, and/or working conditions that provide benefits less than the terms and
provisions of this Agreement.

                                       16
<PAGE>

                            SECTION 16 - SENIORITY

16.1  POSTING. Where a higher-rated position becomes open, the Employer agrees
      -------
to post notice of such job opening and further agrees to consider (up to three
(3) qualifying) Employees who apply for such opening, based upon their
seniority, attendance, attitude, and work performance. However, in order for an
Employee to be eligible for the job, application must be made, in writing,
within three (3) days following posting of the notice. Jobs will be posted
according to job title and as commonly known. Employees will be given a fair
trial for all jobs open in the unit. The Employer may promote Employees to Lead
Persons without jeopardizing their formal rating. The final selection would be
at the Employer's sole discretion.

16.2  ACQUISITION OF SENIORITY. There shall be a probationary period for an new
      ------------------------
Employees, during which time they may be discharged for any reason. Following
completion of such period, the Employee shall become a regular Employee for all
purposes under this Agreement; and his/her seniority shall date from the first
(1st) day of employment as a regular Employee. Seniority shall be applicable
among probationary Regular Employees as a group when an issue of seniority
arises between two (2) or more probationary Employees.

16.3  TERMINATION OF SENIORITY. Subject to the provisions of this Agreement,
      ------------------------
seniority shall be based upon continuous service with the Employer but no
Employee shall suffer loss of seniority unless he/she:

     16.3.1  Quit.

     16.3.2  Discharged.
     16.3.3  Layoff is for a period of time equivalent to the Employee's
seniority, but in no event to exceed six (6) months.

     16.3.4  Fails to return to work in accordance with the terms of a leave of
absence or when recalled after a layoff.

16.4  APPLICATION OF SENIORITY. Seniority shall be by classification throughout
      ------------------------
the Employer's plant, unless the Employer and the Union agree that seniority is
by classification within designated departments of the Employer's plant.

16.5  LAYOFF/RECALL. In the reduction of the number of Employees due to lack of
      -------------
work, the last Employee hired in the classification shall be the first to be
laid off and, in recalling, the last Employee laid off in that classification
shall be the first recalled until the list of Employees previously laid off has
been exhausted. The Employer shall give written notice of layoff to the Employee
and the Employee shall provide the Employer with his/her current address and
telephone number at the time of layoff, and the Employee is to keep the Employer
advised of any change in address. The Employer agrees that the regular Employees
laid off and not terminated for cause, as defined in Section 4 - Discharge,
shall have seniority rights on layoffs and rehiring for extra and/or steady jobs
subsequently available with the Employer prior to the hiring of any new
Employees.

                                       17
<PAGE>

16.6  NOTIFICATION OF RECALL. When an Employee is recalled to return to work
      ----------------------
after layoff and he/she cannot be reached by telephone, the Employer shall
notify the Employee of such recall either by telegram or certified letter
addressed to his/her last known address appearing in the Employer's records and
a copy of such communication shall be sent to the Union.

16.7  REPORTING AFTER RECALL. When an Employee is recalled after layoff, he/she
      ----------------------
shall have three (3) business days to report after receipt of such recall. If
after three (3) days, such, telegram or certified letter is returned to the
Employer unclaimed or undeliverable, such Employee's seniority shall be
considered broken and all rights forfeited three (3) business days after the
date such telegram or certified letter would have been received.

16.8  SENIORITY LIST. A seniority list of all Employees in the bargaining unit
      --------------
will be posted in the plant and a copy will be given to the Union. Such
seniority list shall be revised and brought up to date every six (6) months and
a revised copy shall be furnished to the Union.

16.9  EFFECT OF LEAVE ON SENIORITY. An Employee who accepts employment elsewhere
      ----------------------------
while on personal leave of absence from his/her Employer shall forfeit his/her
seniority rights and he/she shall be considered as a voluntary quit. When a
personal leave of absence is granted to an Employee by the Employer, written
notice shall be given to evidence such an arrangement. The Employer will abide
by the provisions of the Selective Service Act as amended and interpreted or
other applicable legislation governing reinstatement rights of Employees
entering service under such legislation.

                    SECTION 17 - GRIEVANCE AND ARBITRATION

17.1  GRIEVANCES. A grievance shall be defined as a matter of dispute, which
      ----------
arises over the interpretation, and application of any of the Sections of this
Agreement.

17.2  GRIEVANCE PROCEDURE. All grievance matters shall be handled promptly but
      -------------------
without interference with production operations. To facilitate efficiency and
orderliness in this regard, the parties hereto have adopted the following
procedures. The Parties agree that their designated representatives at any stage
of this grievance and arbitration procedure shall have full authority to settle,
compromise, or withdraw any grievance.

      Step 1:  A grievance matter shall first be discussed between the Employee
      ------
and the Supervisor involved. The Employee, if he desires, may request the
assistance of a Union Steward. If the matter is not resolved at this Step, then:

      Step 2:  The grievance matter shall be reduced to writing and referred to
      ------
an authorized representative of the Union who shall discuss the matter with the
Supervisor involved and the designated Company Representative. To avoid
unnecessary delays in resolving disputes, a written grievance must be presented
to the Employer within seven (7) working days of the alleged violation or such
grievance shall be deemed untimely and invalid. If the grievance matter cannot
be resolved at Step 2, then:

      Step 3:  A conference shall be arranged within seven (7) calendar days
      ------
involving the designated Company Representative and authorized representatives
of the Union. If a settlement

                                       18
<PAGE>

does not result from such conference, the grievance may, at the request of
either party, be referred to final and binding arbitration. If the grievance is
to be referred to arbitration, written notice of such intent shall be served on
the other party within twenty-one (21) calendar days of the Third Step meeting.
Prior to requesting a list of arbitrators, either party may request a meeting
for the purpose of reviewing facts and determining whether there exists a
compromise solution to the dispute.

      17.2.1  No grievance shall be subject to arbitration unless it has been
processed through all the steps of the grievance procedure.

17.3  TIME LIMITS. All grievances and requests for arbitration not filed with
      -----------
the Employer within the time limits specified in this Section, or as mutually
extended or waived, shall be barred for all purposes. The arbitrator shall not
have the authority to ignore or excuse any failure to comply with time limits
set forth in the Section no matter what reason is advanced for any such failure,
and any untimely grievance shall not be eligible for further consideration.

17.4  ARBITRATION. If the Employer and the Union are unable to agree upon an
      -----------
impartial arbitrator, the parties will request a list of seven (7) arbitrators
from the American Arbitration Association, or from the Federal Mediation and
Conciliation Service. The parties shall then select an impartial arbitrator by
agreement or by alternate striking of names from the list.

17.5  ARBITRATOR'S LIMITATIONS. The jurisdiction and authority of the arbitrator
      ------------------------
and his opinion and award shall be confined exclusively to the interpretation
and application of the explicit provision or provisions of this Agreement at
issue between the Employer and the Union. The parties agree that the arbitrator
shall have no jurisdiction or authority to add to, subtract from, or alter in
any way the provisions of the Agreement; he shall have no jurisdiction or
authority to impose upon the Employer a limitation or obligation not explicitly
provided for in this Agreement; and he shall have no jurisdiction or authority
to infer any limitation upon the Employer from any provisions of this Agreement.
The arbitrator shall confine himself strictly to facts submitted in the hearing,
the evidence before him, and the express terms and specific provisions of this
Agreement.

17.6  EXPENSES. Only the fee of the arbitrator, court reporter, transcripts, and
      --------
costs of a hearing room shall be borne equally by the parties. All other
expenses, such as expert witness fees, and other expenses not agreed to by both
parties, shall be borne by the party requesting same. Any expenses incurred at
the request of the arbitrator shall be borne equally by both parties.
Cancellation of a scheduled case which results in a cancellation fee from the
arbitrator will be the responsibility of the canceling party.

17.7  STATUS QUO. During the period of adjustments or arbitration as provided in
      ----------
this Section, the conditions in effect at the time of receipt of written notice
as specified above shall continue in effect pending final decision.

17.8  FINAL AND BINDING. The arbitrator's award shall be final and binding upon
      -----------------
all parties.

                                       19
<PAGE>

17.9  WAGE CLAIM LIMITS. Wage claims shall be limited for a maximum of a six (6)
      -----------------
month period.

                          SECTION 18 - UNION AFFAIRS

18.1  UNION VISITATION. The authorized representative of the Union will be
      ----------------
permitted to enter and be accompanied by a Company Representative into the
Employer's facility during regular working hours, provided clearance is received
from upper management or their designated Representative. Such clearance shall
not be unreasonably denied. Whenever possible, the Union will give advance
notice of plant visits to the Employer. Such Union Representative will neither
collect dues nor interfere with any Employee at work. Upon request by the Union,
the Employer will arrange for the Employee and the Union Representative to meet
in private to discuss grievances or related matters.

18.2  UNION ACTIVITY. No Employee shall be discriminated against for membership
      --------------
in or legal activity on behalf of the Union.

18.3  STEWARDS. Stewards may be designated by the Union. The Employer recognizes
      --------
the right of the Union to appoint one (1) steward per shift within the plant,
and the Union will notify the Employer of those stewards. Upon two (2) weeks'
notice to the Employer, said steward shall be scheduled one (1) day off to
attend an annual steward's educational conference. The responsibilities of the
Union stewards shall be designated by the Union and will be focused on Contract
enforcement and grievance procedures. The stewards will carry out their duties
with the least interference of the plant operation. The Union will select Union
Stewards, who will be able to communicate efficiently with the Union members,
management and the Union.

18.4  BULLETIN BOARDS. The Union shall provide a Bulletin Board in an area
      ---------------
frequented by the Employee's for the purpose of posting notices of official
Union business and other information.

                  SECTION 19 - WORKING CONDITIONS AND SAFETY

19.1  FIRST AID EQUIPMENT. The Employer shall be responsible for the
      -------------------
installation and maintenance of first aid equipment, which shall readily and
conveniently be accessible to the Employees.

19.2  GOVERNMENTAL REGULATIONS. All sanitary and safety regulations of Federal,
      ------------------------
State and Local Governments shall prevail in all departments. Failure to follow
such regulations shall be considered insubordination subject to disciplinary
action.

19.3  INJURIOUS WORKING CONDITIONS. Working conditions which are injurious to
      ----------------------------
the health and safety of the Employees shall be directed to the attention of the
Employer at which time the Employer shall immediately investigate the alleged
condition and take the necessary steps and measures to correct such condition if
found to be injurious. Any problems or concerns regarding health and safety
conditions will be reported to the Employer by the Employee or the Union
Representative, in writing.

                                       20
<PAGE>

                           SECTION 20 - JOB SECURITY

20.1  NEW METHODS OF OPERATION. The parties to this Agreement have discussed new
      ------------------------
methods of operation and agree that both parties shall discuss the effects of
additional new methods of operation on job security of the Employees and will
work to that end. When a new method of operation becomes necessary or desirable,
the Employer will notify the Union. The Union shall discuss the effects on the
job security of the Employees and the parties will meet for that purpose. The
Employer agrees to delay layoffs caused by new methods of operation until at
least twenty-one (21) days subsequent to its notice to the Union of its
intention so that the parties have ample time to suggest methods of solving
layoff problems. The Employer shall furnish the Union facts and suggestions with
regard to jobs available in the Employer's plant and methods of solving layoffs.

                           SECTION 21 - SEPARABILITY

21.1  PROVISIONS OF AGREEMENT. The provisions of this Agreement are deemed to be
      -----------------------
separable to the extent that if and when a court of last resort adjudges any
provision of this Agreement in its application between the Union and the
undersigned Employer to be in conflict with any law, such decision shall not
affect the validity of the remaining provisions of this Agreement, but such
remaining provisions shall continue in full force and effect, provided further,
that in the event any provision or provisions are so declared to be in conflict
with law, both parties shall meet within thirty (30) days for the purpose of
renegotiation and agreement on the provision or provisions so invalidated.

                      SECTION 22 - TRANSFER OF OWNERSHIP

22.1  SALE OR TRANSFER. In the event of sale or transfer of ownership of the
      ----------------
business of the Employer during the term of this Agreement, the Employer shall
give notice to the Union of the sale or other transfer. The Employer shall
further inform the new owner or transferee of the existence of the Agreement and
the provisions hereof.

22.2  CHANGE OF OWNERSHIP. In the event of change of ownership, the Employer
      -------------------
shall immediately pay off all obligations, including accumulated wages, pro rata
of earned vacations, and accident contributions, which were accumulated prior to
the date of the change of ownership. In the event of a plant closing or sale
during the term of this Agreement, the parties agree to negotiate over the
effects, as they pertain to the Employees, of such closing or sale.

                          SECTION 23 - SAVINGS CLAUSE

23.1  SAVINGS CLAUSE. If any Contract provision may not be put into effect
      --------------
because of applicable legislation, executive order, or regulations dealing with
wage or price stabilization, then such provision, or any part thereof, shall
become effective at such time, in such amounts, and for such periods as will be
permitted by law at any time during the life of this Agreement and any extension
thereof with prospective effect.

                                       21
<PAGE>

                       SECTION 24 - NO STRIKE OR LOCKOUT

24.1  NO STRIKE OR LOCKOUT. During the term of this Agreement, there shall be no
      --------------------
strike, sympathy strikes, picketing or lockouts pending or following any
decision by an arbitrator, nor shall there be a stoppage of work in violation of
any other provision of this Agreement. Nothing herein shall preclude the Union
or its members from honoring lawful picket lines or strikes during the term of
this Agreement.

24.2  72-HOUR NOTICE. The Union will give the Employer not less than seventy-two
      --------------
(72) hour's notice in advance of any strike, stoppage, slowdown, or suspension
of work by the Union or its members. This provision shall be applicable in the
event an Employee or Employees refuse to cross a lawful picket line sanctioned
by the Food and Drug Council, UFCW, AFL-CIO-CLC.

                       SECTION 25 - EXTENSION AND SCOPE

25.1  EXTENSION AND SCOPE. This Agreement shall be binding upon the Heirs,
      -------------------
Executors, Administrators, and Assigns of the parties hereto. This Agreement
shall remain in full force and effect from the October 2, 2000, to and including
September 29, 2002, and shall be automatically renewed from year to year
thereafter, unless either party, at least sixty (60) days prior to September 29,
2002, or at least sixty (60) days prior to September 29th of any succeeding
term, shall notify the other party, in writing, of its intention and desire to
change, modify, or terminate this Agreement.

25.2  CONTRACT REOPENED. In the event this Agreement is reopened pursuant to the
      -----------------
provisions hereof and no agreement is reached within sixty (60) days of such
reopening, then nothing herein contained shall be construed to prevent the Union
from taking strike action or other economic action desired by it, or the
Employer the right to lockout.

FOR THE EMPLOYER:                                     FOR THE UNION:
----------------                                      -------------
ROYAL ANGELUS MACARONI COMPANY                        UFCW LOCAL 1428
(PROVENA FOODS, INC.)

By:  /s/ Santo Zito                                   By:  /s/ Joe Barragan
   ---------------------------------                     ----------------------
    Director, Vice-President & General Manager            President
Date: 9-27-00                                         Date  9-27-00
   ---------------------------------                     ----------------------

                                       22

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