Document:

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, made this 14 day of March,
2000 (the "Effective Date"), between DELHAIZE AMERICA, INC., a
North Carolina corporation with its principal place of business
in Salisbury, North Carolina (the "Company"), and Laura C.
Kendall, an individual residing at 18900 River Wind Lane,
Davidson, North Carolina  28036 ("Employee"),

                      W I T N E S S E T H:

     WHEREAS, Employee is currently employed by the Company at
the Company level as its Vice President and Chief Financial
Officer and in its Food Lion division as its Executive Vice
President of Finance and Chief Financial Officer;

     WHEREAS, the Board of Directors of the Company recognizes
that it is in the best interests of the Company and its
shareholders to retain capable and experienced executive officers
such as Employee;

     WHEREAS, the Board of Directors recognizes that Employee has
made substantial contributions to the growth and success of the
Company and desires to provide for the continuing employment of
Employee and to encourage the continued dedication and attention
of Employee to the Company;

     WHEREAS, the Company is in the process of converting into a
holding company and will transfer substantially all of the assets
of the Food Lion division to a newly-formed, wholly-owned
subsidiary (the "Subsidiary") (such transfer is referred to
herein as the "Holding Company Restructuring");

     WHEREAS, at the time of the Holding Company Restructuring,
Employee will continue in Employee's position as Vice President
of Finance and Chief Financial Officer at the Company level, and
Employee will continue in Employee's position as Executive Vice
President and Chief Financial Officer at the Subsidiary level;

     WHEREAS, Employee is willing to continue to serve the
Company and, from and after the Holding Company Restructuring,
the Subsidiary; and

     WHEREAS, the Company and Employee desire to enter into this
Employment Agreement.

     NOW, THEREFORE, in consideration of the premises, and the
mutual agreements herein contained, the Company and Employee
hereby agree as follows:

     1.   Continue to Employ.  The Company hereby agrees to
continue to employ Employee (i) as Vice President of Finance and
Chief Financial Officer at the Company level and (ii) prior to
the Holding Company Restructuring, as Executive Vice President
and Chief Financial Officer at the Food Lion division level and,
after the Holding Company Restructuring, at the Subsidiary level,
for the Term of Employment as herein set forth, and Employee
hereby agrees to continue to serve the Company in such positions
for such term.

     2.   Term of Employment.  The "Term of Employment," as used
herein, will commence on the date hereof and, unless sooner
terminated as hereinafter provided, shall terminate on the
third (3rd) anniversary of such date; provided, however, that the
Term of Employment shall automatically be extended for additional
periods of one (1) year each on the terms and conditions provided
herein unless either party shall give written notice to the other
party no less than ninety (90) days prior to the expiration of
the applicable Term of Employment.

     3.   Employment During the Term.  During the Term of
Employment, Employee shall devote Employee's full professional
time to the business of the Company, shall use Employee's best
efforts to promote the interests of the Company and shall serve
(i) as Vice President of Finance and Chief Financial Officer of
the Company and (ii) prior to the Holding Company Restructuring,
as Executive Vice President of Finance and Chief Financial
Officer of the Food Lion division and, from and after the Holding
Company Restructuring, of the Subsidiary, and in such other
senior executive capacities (at the Company or at subsidiaries of
the Company) as the Board of Directors of the Company shall
hereafter designate from time to time.

     4.   Vacation.  Employee shall be entitled to annual
vacations in accordance with the vacation policy and practices of
the Company.

     5.   Compensation.

          (a)  Base Salary.  As compensation for Employee's
services hereunder and for Employee's covenants set forth in
Sections 10, 11 and 12 below, the Company shall pay to Employee a
base salary which shall not be less than Three Hundred Thirty-Six
Thousand Two Hundred Six Dollars ($336,206) per annum; provided,
however, such amount may be reviewed for increase from time to
time by the Board of Directors of the Company.  In no event shall
such review result in any reduction in base salary provided in
this Employment Agreement.  Such compensation shall be payable in
accordance with the Company's payroll practices for executive
employees.

          (b)  Bonus Plans.  In addition, Employee shall be
eligible to participate in the Company's annual incentive bonus
plan, stock option plans and other compensation plans of the
Company, as they shall be administered by the Board of Directors
of the Company and the relevant committees thereof and in their
sole discretion.

     6.   Benefits.  Employee shall be entitled to participate in
all health, accident, disability, medical, life and other
insurance programs and other benefit and compensation plans
maintained by the Company for the benefit of Employee and/or
other executive employees of the Company in accordance with the
Company's policies.

     7.   Termination.  Termination of Employee's employment
under any of the following circumstances shall not constitute a
breach of this Employment Agreement:

          (a)  Death.  Termination upon the death of Employee.

          (b)  Cause.  Termination by the Company for "Cause" as
described in this Section 7(b).  For purposes of this Employment
Agreement, "Cause" shall mean (i) willful failure (other than by
reason of incapacity due to physical or mental illness) to
perform Employee's material duties hereunder and Employee's
inability or unwillingness to correct such failure within
thirty (30) days after receipt of written notice, (ii) conviction
of Employee of a felony or plea of guilty or no contest to a
felony, (iii) perpetration of a material dishonest act or fraud
against the Company or any affiliate thereof or (iv) a material
violation of any Company policy or any state, federal or other
governmental statute or regulation.  The definition of "Cause"
also includes the termination of Employee's employment by the
Company in connection with an assignment of this Employment
Agreement to a successor or subsidiary of the Company, including
but not limited to the Subsidiary, in accordance with Section 18
hereof.  The definition of "Cause" also includes the termination
of Employee's employment at either the Company or any direct or
indirect subsidiary so long as Employee is also then employed by
any direct or indirect subsidiary of the Company or a successor
to the Company.  The definition of "Cause" also includes
subsequent terminations of Employee's employment in connection
with subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company.  The definition of "Cause" expressly excludes any
mistake of fact or judgment made by Employee in good faith with
respect to the Company's business.

          (c)  Good Reason.  Termination by Employee for "Good
Reason" as described in this Section 7(c).  For purposes of this
Employment Agreement, "Good Reason" shall mean the occurrence of
any of the following circumstances without Employee's consent,
provided that Employee has provided notice to the Company of
Employee's intention to terminate his or her employment for Good
Reason within thirty (30) days after the occurrence of such event
and the Company has failed to cure such circumstance, if curable,
within thirty (30) days after receipt of notice thereof:  (i) a
material diminution of the professional responsibilities of
Employee as such responsibilities existed on the date of this
Agreement, (ii) assignment of duties to Employee which are
materially adverse to and inconsistent with Employee's position,
(iii) failure of the Company to provide compensation and benefits
obligations to Employee as set forth herein, (iv) transfer of
Employee more than 50 miles from Salisbury, North Carolina,
without good business reasons, as determined by the Company's
Board of Directors or (v) failure of the Company to require any
successor to the Company to assume and comply with this
Employment Agreement.  The definition of "Good Reason" expressly
excludes any assignment of this Employment Agreement to a
successor or subsidiary of the Company, including but not limited
to the Subsidiary, in accordance with Section 18 hereof and any
changes in responsibilities or duties resulting therefrom.  The
definition of "Good Reason" also expressly excludes subsequent
terminations of Employee's employment in connection with
subsequent assignments of this Employment Agreement to the
Company or its successors or direct or indirect subsidiaries of
the Company.  In addition, the definition of "Good Reason"
expressly excludes the termination of Employee's employment at
either the Company or any direct or indirect subsidiary so long
as Employee is also then employed by any direct or indirect
subsidiary of the Company or a successor to the Company.

      An election by Employee to terminate his or her employment
under this Section 7(c) shall not be deemed a voluntary
termination of employment by Employee for the purpose of this
Employment Agreement or any plan, arrangement or program of the
Company.

          (d)  Disability.  Termination by the Company or
Employee upon Disability of Employee.  For the termination by the
Company to be valid, (i) the Company must first give forty-
five (45) days' written Notice of Termination, as defined below
(which may occur before or after the end of the 180-day period
specified in the definition of Disability below), and (ii)
Employee shall not have returned to the performance of Employee's
duties hereunder on a full-time basis during such 180-day period.
For purposes of this Employment Agreement, "Disability" shall
mean Employee's absence from continuous full-time employment with
the Company for a period of at least 180 consecutive days by
reason of a mental or physical illness.  The Company shall have
the right to have Employee examined at such reasonable times by
such physicians satisfactory to Employee as the Company may
designate, and Employee will make himself available for and
submit to such examination as and when requested.  Except as
otherwise provided in this Section 7(d), the inability of
Employee to perform Employee's duties hereunder, whether by
reason of injury, illness (physical or mental), or otherwise
shall not result in the termination of Employee's employment
hereunder, and Employee shall be entitled to continue to receive
Employee's base salary and other benefits as provided herein.

          (e)  Without Cause.  Termination by the Company without
               Cause.

          (f)  Date and Notice of Termination.  Any termination
of Employee's employment by the Company or by Employee (other
than termination pursuant to Section 7(a) above) shall be
communicated by written Notice of Termination to the other party
hereto.  For purposes of this Employment Agreement, a "Notice of
Termination" shall mean a notice which shall indicate the
specific termination provision in this Employment Agreement
relied upon and shall set forth in reasonable detail the facts
and circumstances claimed to provide a basis for termination of
Employee's employment under the provision so indicated.

     "Date of Termination" shall mean (i) if Employee's
employment is terminated by Employee's death, the date of
Employee's death, and (ii) if Employee's employment is terminated
pursuant to a Notice of Termination, the date specified in the
Notice of Termination; provided that, if within thirty (30) days
after any Notice of Termination is given the party receiving such
Notice of Termination notifies the other party that a dispute
exists concerning the termination, the Date of Termination shall
be the date which is finally determined to be the Date of
Termination, either by mutual written agreement of the parties,
by a binding and final arbitration award or by a final judgment,
order or decree of a court of competent jurisdiction (the time
for appeal therefrom having expired and no appeal having been
perfected).

     8.   Effect of Termination.  In the event of termination of
employment as described in Section 7 hereof, and provided that
Employee (or Employee's beneficiary in the event of death) has
signed and agreed to be bound by a general release of claims
against the Company in form reasonably satisfactory to the
Company, the Company shall compensate Employee as follows:

          (a)  Death.  If Employee's employment is terminated as
a result of Employee's death, as specified in Section 7(a), the
Company shall pay Employee's beneficiary the benefit called for
under the Salary Continuation Agreement, if any, between Employee
and the Company.  Employee's beneficiary shall accept the payment
provided for in this Section 8(a) in full discharge and release
of the Company of and from any further obligations under this
Employment Agreement, except for any other benefits due under any
applicable plan or policy of the Company (including life
insurance policies and pension or similar plans), as determined
under the provisions of such plans or policies.

          (b)  Disability.  If Employee's employment is
terminated by the Company or Employee as a result of Employee's
disability as specified in Section 7(d), then the Company shall
pay Employee his or her full compensation until the Date of
Termination.  Within thirty (30) days after the termination of
Employee's employment, the Company shall pay Employee a lump sum
payment equal to fifty percent (50%) of the present value of the
future base salary payable to Employee during the remainder of
the Term of Employment under this Employment Agreement or for a
period of one (1) year, whichever is longer.  Such lump sum
amount shall be calculated by using a discount rate equal to the
applicable Federal rate that is in effect on the date of payment
as determined under Section 1274(d) of the Internal Revenue Code
of 1986 (the "Code") and the regulations thereunder, and by
assuming that Employee's annual salary in effect on the Date of
Termination would continue for the remainder of the Term of
Employment, or for a period of one (1) year, whichever is longer.
This payment shall be in addition to any payments Employee shall
be entitled to receive under any applicable disability insurance
policies maintained by the Company for Employee.

          (c)  Cause.  If Employee's employment is terminated for
any reason specified in Section 7(b) hereof, the Company shall no
longer be obligated to make any payments to Employee pursuant to
this Employment Agreement, except for the full amount of
Employee's base salary and all compensation earned prior to the
Date of Termination and payments pursuant to plans, programs or
arrangements, as determined under the provisions of such plans or
policies.

          (d)  Good Reason or Without Cause.

          (i)      If Employee's employment is terminated by
Employee for Good Reason as specified in Section 7(c) hereof, or
if Employee's employment is terminated by the Company without
Cause as specified in Section 7(e):  (A) the Company shall pay
Employee the full amount of Employee's base salary and other
compensation earned prior to the Date of Termination; and (B) the
Company shall pay Employee an amount (the "Termination Payment")
equal to the product of the Employee's current monthly base
salary multiplied by the greater of (x) twelve (12) months or (y)
the number of full months remaining in the Term of this
Agreement.  The Company may elect to pay the Termination Payment
(i) in monthly installments, beginning thirty (30) days after the
Date of Termination and payable thereafter on the date of the
last regularly scheduled payroll for each month, or (ii) in one
lump sum payment, due and payable thirty (30) days after the Date
of Termination, in an amount equal to the present value of all
such monthly payments calculated by using a discount rate equal
to the applicable Federal rate that is in effect on the date of
payment as determined under Section 1274(d) of the Code and the
regulations thereunder.

          (ii)     If prior to a Change in Control of the Company
(as defined below) (and if Section 8(d)(iii) hereof does not
apply), Employee's employment is terminated by Employee for Good
Reason or by the Company without Cause, the Company shall
maintain in full force and effect for the continued benefit of
Employee and Employee's eligible dependents for one (1) year
after the Date of Termination (or for the number of years
remaining in the Term of this Agreement, whichever is greater),
the employee fringe benefit plans and programs relating to
medical, dental, health and life insurance in which Employee was
entitled to participate immediately prior to the Date of
Termination, if Employee's continued participation is permitted
under the general terms and provisions of such plans and programs
and applicable law, but not including the Annual Incentive Bonus
Plan, the Wellness Bonus Plan, the Profit Sharing Plan and the
Profit Sharing Restoration Plan and any other bonus, retirement
or similar compensation plan.

          (iii)    If (A) Employee's employment is terminated by
the Company without Cause in contemplation of a Change in Control
of the Company within six (6) months prior to such Change in
Control or (B) Employee's employment is terminated by the Company
without Cause or by Employee with Good Reason within one (1) year
following a Change in Control of the Company, the Company shall
pay Employee the compensation and benefits set forth in clauses
(i) and (ii) above, and in addition, for one (1) year following
the Date of Termination (or for the number of years remaining in
the Term of this Agreement, whichever is greater), Employee shall
be paid an annual amount equal to the amounts, if any, which
would have been payable to Employee under the Annual Incentive
Bonus Plan, the Wellness Bonus Plan, the Profit Sharing Plan and
the Profit Sharing Restoration Plan (or such other plans in which
Employee was entitled to participate as of the Date of
Termination) assuming Employee had remained employed for such one
(1) year (or greater) period and received an annual salary at the
rate in effect on Employee's Date of Termination.

          (iv) For purposes of this Employment Agreement, "a
Change in Control of the Company" shall mean a change in control
of a nature that would be required to be reported in response to
Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act");
provided that, without limitation, a Change in Control of the
Company shall be deemed to have occurred if:

          (A)  an acquisition (other than directly from the
     Company) by a Person (as defined below) (excluding the
     Company or an employee benefit plan of the Company or an
     entity controlled by the Company's shareholders) results in
     the aggregate number of shares of the Company's voting
     securities beneficially owned by any other Person to exceed
     the number of shares of the Company's voting securities
     beneficially owned, in the aggregate, by Etablissements
     Delhaize Freres et Cie "Le Lion" S.A. ("Delhaize") and
     Delhaize The Lion America, Inc.; or

          (B)  at any time during the term of this Employment
     Agreement there is a change in the composition of the Board
     of Directors of the Company resulting in a majority of the
     directors of the Company who are in office on the date
     hereof ("Incumbent Company Directors") no longer
     constituting a majority of the directors of the Company;
     provided that, in making such determination, persons who are
     elected to serve as directors of the Company and who are
     approved by at least 70% of the Incumbent Company Directors
     in office on the date of such election (other than in
     connection with an actual or threatened proxy contest) shall
     be treated as Incumbent Company Directors; or

          (C)  consummation of a complete liquidation or
     dissolution of the Company or a merger, consolidation or
     sale of all or substantially all of the Company's assets
     (collectively, a "Business Combination") other than a
     Business Combination in which all or substantially all of
     the beneficial holders of voting securities of the Company
     receive or retain fifty percent (50%) or more of the voting
     securities of the company or entity resulting from the
     Business Combination ("Resulting Company"), at least a
     majority of the board of directors of the resulting
     corporation were Incumbent Company Directors, and after
     which no person or entity beneficially owns twenty percent
     (20%) or more of the voting securities ("Beneficial
     Ownership Threshold") of the Resulting Company, who did not
     beneficially own such stock immediately before the Business
     Combination; or

          (D)  occurrence of any of the events described in
     Section 8(d)(iv)(B) or (C) to Delhaize or the acquisition by
     any Person of more than thirty percent (30%) of the stock of
     Delhaize.  Notwithstanding any other provision of this
     paragraph, for purposes of the definition of "Change in
     Control of the Company," a change in control of Delhaize
     shall not constitute a Change in Control of the Company
     unless it involves an event contemplated by this Section
     8(d)(iv)(D).  With respect to Section 8(d)(iv)(C) as it
     applies to Delhaize under Section 8(d)(iv)(D), the
     Beneficial Ownership Threshold shall be thirty percent
     (30%).

For the purpose of this paragraph, the term "beneficially owned"
shall have the meaning set forth in Rule 13d-3 promulgated under
the Exchange Act, the term "Person" shall have the meaning set
forth in Sections 3(a)(2) and 13(d)(3) of the Exchange Act and
the term "voting securities" shall have the meaning set forth in
Rule 12b-2 under the Exchange Act.

     9.   Business Expenses.  The Company agrees that during the
Term of Employment, the Company will reimburse Employee for
actual travel and other out-of-pocket expenses reasonably
incurred by Employee in connection with the performance of
Employee's duties hereunder and accounted for in accordance with
the policies and procedures currently established by the Company.

     10.  No Competing Employment.

          (a)  Employee agrees that, during the Term of Employment and for
a period of two (2) years after the date specified in the Notice
of Termination or, if applicable, the date of Employee's
resignation ("Restricted Period"), Employee will not, without the
written consent of the Board of Directors, own, operate, control
or be employed as an officer, director, manager or consultant, or
as an employee with management or executive level duties or
responsibilities, in any case, for or by any business engaged in
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends; provided, however, that this restriction
contained in this Section 10(a) shall not apply if Employee
works, consults or accepts employment with a business that does
not directly compete with the Company or any subsidiary thereof.

          (b)  Employee agrees that, during the Restricted Period, Employee
will not, without the written consent of the Board of Directors,
own, operate, control or be employed as an officer, director,
manager or consultant, or as an employee with management or
executive level duties or responsibilities, in any case, for or
by any entity whose business, or whose direct or indirect parent
entity's or direct or indirect subsidiary entity's business is
any retail or wholesale grocery or supermarket business within
ten (10) miles of any store operated by the Company or any
subsidiary thereof on the date on which Employee's employment
with the Company ends.

          (c)   Employee understands and agrees that a portion of the
amounts payable to Employee under Section 5(a) and Section 8, if
applicable, is in consideration for Employee's covenants set
forth in Sections 10, 11 and 12.

     11.  No Solicitation.  Employee agrees that, during the
Restricted Period, Employee will not, without the prior written
consent of the Board of Directors, directly or indirectly solicit
or recruit any employee or independent contractor of the Company
for the purpose of being employed by Employee, directly or
indirectly, or any other person or entity on behalf of which
Employee is acting as an agent, representative or employee.
Notwithstanding the above, if Employee's employment is terminated
for any reason specified in Section 7 hereof prior to the first
anniversary of the date on which a Change in Control (as defined
above) occurred, the covenants of Sections 10 and 11 shall not be
applicable.

     12.  Confidentiality.  Employee agrees that, during the Term
of Employment and thereafter, Employee will not, without the
prior written consent of the Company, disclose to anyone not
entitled thereto, any confidential information relating to the
business, sales, financial condition or products of the Company
or any affiliate thereof.  Employee also recognizes and
acknowledges that Employee has a common law and statutory law
obligation not to disclose trade secrets and other proprietary
information of the Company.  Employee further agrees that, should
Employee leave the active service of the Company, Employee will
not take or retain, without the written authorization of the
Board of Directors, any papers, files or other documents or
copies thereof or other confidential information of any kind
belonging to the Company pertaining to its business, sales,
financial condition or products.  Employee understands and agrees
that the rights and obligations set forth in this Section 12 are
perpetual and, in any case, shall extend beyond the Restricted
Period.

     13.  Failure to Comply.  All payments to Employee hereunder,
including without limitation all such payments made pursuant to
Section 8 of this Agreement, are conditional upon Employee's full
compliance with the provisions of this Agreement, including
specifically Sections 10, 11 and 12 hereof, which provisions are
hereby expressly incorporated by reference as conditions to all
such payment.  The provisions of sections 10, 11 and 12 will
remain incorporated as conditions to payments under this
Agreement, regardless of any judicial declaration of their
invalidity or unenforceability as affirmative covenants.  In the
event that the Employee shall fail to comply with any provision
of Sections 10, 11 and 12, (a) all rights hereunder of the
Employee and any person claiming under or through him shall
thereupon terminate and no person shall be entitled to receive
any payments or benefits under this Agreement and (b) the
Employee agrees to immediately pay to the Company any and all
amounts previously paid to the Employee by the Company pursuant
to Section 8 of this Agreement.  In addition to the foregoing and
without limiting any other remedies available to the Company,
Employee acknowledges that a breach of the covenants contained in
Sections 10, 11 and 12 herein may result in material irreparable
injury to the Company for which there is no adequate remedy at
law, that it will not be possible to measure damages for such
injuries precisely and that, in the event of such a breach or
threat thereof, the Company shall be entitled to obtain a
temporary restraining order or a preliminary injunction
restraining Employee from engaging in activities prohibited by
Sections 10, 11 and 12 or such other relief as may be required to
specifically enforce any of the covenants in such Sections.

     14.  Indemnification.  The Company shall indemnify and hold
harmless Employee to the fullest extent permitted under North
Carolina law, including, without limitation, the provisions of
Article 8, Part 5 (or any successor provision) of the North
Carolina Business Corporation Act, from and against all losses,
claims, damages, liabilities, costs and expenses (including,
without limitation, attorneys' fees), which may, at any time, be
suffered by Employee as a result of the fact that Employee is or
was an officer of the Company, or is or was serving at the
request of the Company as an officer, employee or agent of an
affiliate of the Company.  The expenses incurred by Employee in
any proceeding shall be paid promptly by the Company in advance
of the final disposition of any proceeding at the written request
of Employee to the fullest extent permitted under North Carolina
law.  The indemnification provision of this Section 14 shall
survive the termination or expiration of this Employment
Agreement.

     15.  Gross-Up Payment.  In the event that any payments to
which Employee becomes entitled under this Employment Agreement
(the "Agreement Payments") will be subject to the tax (the
"Excise Tax") imposed by Section 4999 of the Code (or any similar
tax that may hereafter be imposed), the Company shall pay to
Employee at the time specified below, an additional amount (the
"Gross-Up Payment") such that the net amount retained by Employee
(taking into account the Total Payments (as hereinafter defined)
and the Gross-Up Payment), after deduction of any Excise Tax on
the Total Payments and any federal, state and local income tax
and Excise Tax upon the Gross-Up Payment provided for by this
Section 15, but before deduction for any federal, state or local
income tax on the Total Payments, shall be equal to the "Total
Payments," as defined below.   Except as otherwise provided
below, the Gross-Up Payment or portion thereof provided for in
this Section 15 shall be paid not later than the thirtieth (30th)
day following payment of any amounts under the Employment
Agreement that will be subject to the Excise Tax; provided,
however, that if the amount of such Gross-Up Payment or portion
thereof cannot be finally determined on or before such day, the
Company shall pay on such day an estimate, as determined in good
faith by the Company, of the minimum amount of such payments and
shall pay the remainder of such payments (together with interest
at the rate provided in Section 1274(b)(2)(B) of the Code) as
soon as the amount thereof can be determined, but in no event
later than the forty-fifth (45th) day after payment of any
amounts under the Employment Agreement that will be subject to
the Excise Tax.  In the event that the amount of the estimated
payments exceeds the amount subsequently determined to have been
due, such excess shall constitute a loan by the Company to
Employee, payable on the fifth (5th) day after demand by the
Company (together with interest at the rate provided in Section
1274(b)(2)(B) of the Code).

     For purposes of determining whether any of the Agreement
Payments will be subject to the Excise Tax and the amount of such
Excise Tax, (i) any other payments, accruals, vestings or other
compensatory benefits received or to be received by Employee in
connection with a Change in Control of the Company or the
termination of Employee's employment (whether pursuant to the
terms of this Agreement or any other plan, arrangement or
agreement with the Company), any person whose actions result in a
Change in Control of the Company or any person affiliated with
the Company or such person (which, together with the Agreement
Payments, shall constitute the "Total Payments") shall be treated
as "parachute payments" within the meaning of Section 280G(b)(2)
of the Code, and all "excess parachute payments" within the
meaning of Section 280G(b)(1) of the Code shall be treated as
subject to the Excise Tax, unless, in the opinion of tax counsel
selected by the Company's independent auditors, such other
payments or benefits (in whole or in part) represent reasonable
compensation for services actually rendered within the meaning of
Section 280G(b)(4) of the Code in excess of the base amount
within the meaning of Section 280G(b)(3) of the Code or are
otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments which shall be treated as subject to the Excise
Tax shall be equal to the lesser of (a) the total amount of the
Total Payments, and (b) the amount of excess parachute payments
within the meaning of Section 280G(b)(1) of the Code (after
applying clause (i) above) and (iii) the value of any non-cash
benefits or any deferred payment or benefit shall be determined
by the Company's independent auditors in accordance with the
principles of Sections 280G(d)(3) and (4) of the Code.

     For purposes of determining the amount of the Gross-Up
Payment, Employee shall be deemed to pay federal income taxes at
the highest marginal rate of federal income taxation for the
calendar year in which the Gross-Up Payment is to be made and the
applicable state and local income taxes at the highest marginal
rate of taxation for the calendar year in which the Gross-Up
Payment is to be made, net of the maximum reduction in federal
income taxes which could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder at the time the Gross-Up Payment is made, Employee
shall repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the
Gross-Up Payment attributable to such reduction (plus the portion
of the Gross-Up Payment attributable to the Excise Tax and
federal, state and local income tax imposed on the portion of the
Gross-Up Payment being repaid) if such repayment results in a
reduction in Excise Tax and/or a federal, state and local income
tax deduction, plus interest on the amount of such repayment at
the rate provided in Section 1274(b)(2)(B) of the Code.  In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder at the time the Gross-Up Payment is
made (including, by reason of any payment, the existence or
amount of which cannot be determined at the time of the Gross-Up
Payment), the Company shall make an additional gross-up payment
in respect of such excess (plus any interest payable with respect
to such excess) at the time that the amount of such excess is
finally determined.

     16.  Vesting.  Upon a Change in Control of the Company or if
Employee's employment is terminated for reasons specified in
Sections 7(a), 7(c), 7(d) or 7(e) hereof, all of the rights
granted to Employee by the Company to own or acquire stock of the
Company (including, without limitation, stock options and
restricted stock granted under the Company's Stock Option Plan)
shall automatically vest upon the date of such Change in Control
or Date of Termination, respectively, without the need for
further action or consent by the Company; provided, however, that
(assuming no occurrence of a Change in Control) such rights shall
not vest if Employee's employment is terminated for Employee's
failure to adequately perform Employee's duties hereunder as
determined by an affirmative vote of at least seventy percent
(70%) of the Board of Directors of the Company.  For purposes of
the preceding sentence, "Change in Control of the Company" shall
have the meaning set forth in Section 8(d)(iv) hereof except for
the portion thereof describing a Change in Control at Delhaize as
set forth in subsection 8(d)(iv)(D).

     17.  Mitigation.  The Company recognizes that Employee has
no duty to mitigate the amounts due to Employee upon termination
of this Employment Agreement, and the obligations of the Company
will not be diminished in the event Employee is employed by
another employer after the termination of Employee's employment
with the Company.

     18.  Successors.  This Employment Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns and upon Employee and his or her legal
representatives.  The Company shall require any successor
(whether direct or indirect, by purchase, merger, consolidation
or otherwise) to all or substantially all of the business or
assets of the Company to expressly assume and agree to perform
this Employment Agreement in the same manner and to the same
extent that the Company would be required to perform it if no
such succession had taken place.  For purposes of this Section
18, the Subsidiary shall be deemed a successor to which this
Employment Agreement may be assigned.  In addition, this
Employment Agreement may be assigned to an existing or future
direct or indirect subsidiary of the Company.  Furthermore, from
and after the Holding Company Restructuring and after an
assignment of this Employment Agreement to the Subsidiary or any
other existing or future direct or indirect subsidiary of the
Company, this Employment Agreement may be reassigned to the
Company.

     19.  Amendments.  This Employment Agreement contains the
entire contractual understanding between the parties and
supersedes all prior agreements and understandings, both written
and oral, between the parties hereto with respect to the subject
matter hereof (except for the Salary Continuation Agreement, if
any, between Employee and the Company).  This Employment
Agreement may not be changed orally but only by a written
instrument signed by the parties hereto.

     20.  Governing Law.  This Employment Agreement shall be
governed by and construed in accordance with the laws of the
State of North Carolina without regard to the conflicts of law
principles thereof.

     21.  Waiver.  The waiver of breach of any term or condition
of this Employment Agreement shall not be deemed to constitute
the waiver of any other breach of the same or any other term or
condition.

     22.  Arbitration.  Except as otherwise necessary to secure
the remedy specified in Section 13 of this Employment Agreement
(which remedy may be secured in a court of competent
jurisdiction), any dispute arising between the Company and
Employee with respect to the performance or interpretation of
this Employment Agreement shall be submitted to arbitration in
Salisbury, North Carolina for resolution in accordance with the
commercial arbitration rules of the American Arbitration
Association, modified to provide that the decision by the
arbitrators shall be binding on the parties, shall be furnished
in writing, separately and specifically stating the findings of
fact and conclusions of law on which the decision is based and
shall be rendered within ninety (90) days following impanelment
of the arbitrators.  The cost of arbitration shall initially be
borne by the party requesting arbitration.  Following a decision
by the arbitrators, the costs of arbitration shall be divided as
directed by the arbitrators.  Pursuant to North Carolina General
Statutes section 1-567.2, the provisions of Chapter 1, Subchapter
XV, Article 45A of the North Carolina General Statutes shall
apply to this Employment Agreement.

     23.  Severability.  In the event that any provision or
portion of this Employment Agreement shall be determined to be
invalid or unenforceable for any reason, the remaining provisions
and portions of this Employment Agreement shall be unaffected
thereby and shall remain in full force and effect to the fullest
extent provided by law.

     24.  Notices.  Any notices or other communications required
or permitted hereunder shall be deemed sufficiently given if sent
by registered mail, postage prepaid, as follows:

                    (a)  If to Employee:

                          Laura C. Kendall
                          18900 River Wind Lane
                          Davidson, North Carolina  28036

                    (b)  If to the Company:

                          Delhaize America, Inc.
                          Post Office Box 1330
                          2110 Executive Drive
                          Salisbury, North Carolina 28145-1330
                          Attention: Secretary

                         with a copy to:

                         Akin, Gump, Strauss, Hauer & Feld, L.L.P.
                         1700 Pacific Avenue
                         Suite 4100
                         Dallas, TX 75201-4675
                         Attention: Michael E. Dillard, P.C.

or to such other address as shall have been specified in writing
by either party to the other.  Any such notice or communication
shall be deemed to have been given on the second day (excluding
any days U.S. Post Offices are not open) after the date so
mailed.

              [The next page is the signature page]

     IN WITNESS WHEREOF, the Company has caused this Employment
Agreement to be executed by its duly authorized representative,
and Employee has hereunto set Employee's hand as of the date
first above written.

                                   DELHAIZE AMERICA, INC.
Attest:
/s/Darrell Johnson                BY: /s/R. William McCanless
                                         R. William McCanless
                                         Chief Executive Officer

                                   EMPLOYEE:
Attest:
/s/ Darrell Johnson                /s/ Laura C. Kendall
                                   Name:  Laura C. Kendall[McMoRan Oil & Gas Letterhead]

                               September 8, 1999

Petro-Guard Company, Inc.          Fairfield Resources Corp.
5858 Westheimer                    14100 Southwest Freeway
Suite 400                          Suite 340
Houston, TX  77057                 Sugarland, TX 77478
Attn:  Mr. Dewey Stringer          Attn:  Mr. Barry Rava

Solvation, Inc.                    Fortune Natural Resources Corporation
5858 Westheimer                    515 W. Greens Road
Suite 400                          Suite 720
Houston, TX  77057                 Houston, TX 77067
Attn:  Mr. Arthur Pasmas           Attn:  Mr. Tyrone J. Fairbanks

Energy Management Corporation      Lamar Oil & Gas, Inc.
5858 Westheimer                    P. O. Box 2197
Suite 400                          Rockport, TX 78381
Houston, TX 77057                  Attn:  Mr. David R. Pilgrim
Attn:  Mr. Arthur Pasmas

OGA 1, L.P.
5858 Westheimer
Suite 400
Houston, TX  77057
Attn:  Mr. Arthur Pasmas

Re:  Farmout Agreement
     Grass Island Deep Prospect
     Calhoun County, Texas

Gentlemen:

This Farmout Agreement ("Agreement") shall evidence the agreement of each of
Fairfield Resources Corp., Petro-Guard Company, Inc., Solvation, Inc., OGA
1, L.P., Lamar Oil & Gas, Inc. and Fortune Natural Resources Corporation
(hereinafter collectively referred to as "Farmor" or "Farmors") to farmout their
leasehold interests in and to that area designated as the Farmout Area on the
attached plat marked Exhibit "A" ("Farmout Area") to McMoRan Oil & Gas LLC
("Farmee") under the terms and conditions as set forth herein. Farmors
individually farmout their respective interests, and all options and elections
provided for in this Agreement will be exercised by each Farmor independently of
the other Farmors.

<PAGE>

Farmout Agreement
September 8, 1999
Page 2

                              I. INITIAL TEST WELL

On or before November 1, 1999, Farmee will commence the actual drilling of an
Initial Test Well, subject to rig availability and obtaining the requisite
permits, at a location on the Farmout Area mutually agreed to by Farmor, Farmee,
and third parties owning a working interest in the Farmout Area (the "Other
Parties"). Farmee will prosecute the drilling of such well with due diligence
and in a workmanlike manner to the lesser of (a) a depth of 13,500' TVD, (b) a
depth sufficient to encounter a time equivalent point of 3.287 seconds, which
point is described by velocity survey in the Getty #1 San Antonio Bay State
Tract 82 as being equal to a subsea depth of 13,482' TVD, which point in the
prestack time migration/Fairfield display data set of Espiritu Santo Bay 3D
seismic survey is 37 milliseconds below the positive amplitude event that occurs
between 3.200 seconds and 3.250 seconds at the intersection of Line 889 and
cross line 315, or (c) a depth of no less than 12,500' at which conditions are
encountered which would require a reasonably prudent operator to utilize a mud
weight of at least 17.5 pounds per gallon ("Contract Depth"). Farmee will assume
all cost and risk attributable to the interest of Farmor associated with the
drilling, completing and installation of flowlines, pipelines, shore facilities,
platforms, and other production facilities necessary for the production of such
Initial Test Well or any substitute therefor at the maximum prudent production
rate for such well, in the event the well is completed as a producer, or the
plugging and abandoning of the well if same is a dry hole.

In the event the Initial Test Well fails to reach Contract Depth due to its
encountering impenetrable substances, salt, saltwater flow, heaving shale,
cavity, excessive pressure, mechanical difficulties, or if other conditions are
encountered which in the opinion of a reasonable prudent operator would render
further drilling of such well hazardous or impractical ("Gulf Coast
Conditions"), but such well is completed as a well capable of commercial
production at a lesser depth, Farmee shall comply and earn an assignment in
accordance with the terms of Article III hereof, which assignment will be
limited to depths from the depth of 6,500' below the surface to 100 feet below
the stratigraphic equivalent of total depth drilled in the well, subject to
Farmee's right to earn additional depths by drilling a Substitute Well to
Contract Depth. Farmee may drill the Initial Test Well to any depth below
Contract Depth it deems appropriate.

If Farmee is unable to timely spud the Initial Test Well or any substitute
therefor due to rig availability, permitting problems, or force majeure, Farmor
agrees to grant a reasonable extension of time to allow Farmee to spud the well.

                               II. SUBSTITUTE WELL

If the Initial Test Well, or any substitute therefor, encounters Gulf Coast
Conditions, as defined above, prior to reaching Contract Depth, Farmee shall
have

<PAGE>

Farmout Agreement
September 8, 1999
Page 3

the option to commence operations for the drilling of a Substitute Well
("Substitute Well"). If Farmee elects to drill a Substitute Well, it shall be
drilled having a bottomhole location of Farmee's choice in the Farmout Area, and
such Substitute Well will be committed to in writing by Farmee within 30 days
and commenced within 120 days of rig release from the well for which it is
substituted. The Substitute Well shall be drilled pursuant to the terms and
conditions of this Agreement and will be considered for all purposes as if it
were the well for which it is a substitute, including allocation of costs for
purposes of Payout.

                          III. RIGHT TO TAKE OVER WELL

In the event Farmee does not elect to complete the Initial Test Well, any
substitute therefor or subsequently drilled well on the Farmout Area, it will
give notice to Farmor of its election to plug and abandon such well. Subject to
the rights of the Other Parties, Farmor shall have forty-eight (48) hours from
receipt of such notice inclusive of weekends and holidays in which it may elect
to take over the well for the purposes of completing same. If Farmor elects to
take over such well, Farmee, at Farmors election, will set a plug in the
intermediate casing at a mutually acceptable depth or take such steps as are
necessary to secure the rig prior to releasing the well to Farmor, at the
expense of Farmee. Farmee will thereafter have no further interest in the well
bore. Farmor will assume operatorship of the well and will execute all
appropriate forms necessary to be recognized as Operator under the laws and
regulations of the State of Texas. Farmor will assume all cost and risk
associated with the well including all standby charges for rig, vessels and
other associated equipment incurred by Farmee from the time Farmor receives
notice of Farmees' election to plug and abandon the well until Farmor notifies
Farmee of its election whether or not to take over the well. If Farmor elects to
take over the well, Farmor shall then also be responsible for any subsequent
standby costs incurred. Farmor shall also assume the obligation to plug and
abandon the well and restore the surface premises in accordance with all state
and federal regulations. As between each Farmor, proposals to take over the well
will be considered in order from the deepest interval in which any Farmor
proposes to complete the well to the shallowest interval. Such proposals will be
made pursuant to the applicable Operating Agreement. If notice of an election to
takeover the well is not furnished to Farmee within such 48 hour period, Farmee
will plug and abandon the well according to the terms of this Agreement. As to
any interval(s) below 6,500', Farmor shall have no right to take over a well and
attempt a completion if Farmee intends to commence a subsequent well to test
such interval(s). Additionally, if Farmor takes over said well as hereinabove
provided, such action shall not in any way impair the right of Farmee to earn
rights in the Farmout Leases by the drilling of a Substitute Well in the manner
provided in this Agreement.

<PAGE>

Farmout Agreement
September 8, 1999
Page 4

                             IV. RIGHTS TO BE EARNED

In the event that, within the time and in the manner provided for in this
Agreement, Farmee drills the Initial Test Well, or any substitute therefor, to
the Contract Depth ("Earning Well"), and Farmee furnishes to Farmors, together
with the information required by Article IX, below, if not previously furnished,
notice that an Earning Well has been drilled to Contract Depth, Farmors shall
provide to Farmee an assignment, within a reasonable period of time, not to
exceed 45 days, following the receipt of such notice, which assignment shall be
effective as of the date of receipt of such notice, of the following:

    An undivided fifty percent (50%) of each of Farmors' right, title and
    interest in the leases which are described on Exhibit "IV.A" attached hereto
    to the extent such leases cover lands included in the Farmout Area (the
    "Farmout Leases"), reserving unto each Farmor, its successors and assigns, a
    pro rata share of an overriding royalty of the difference, if any, between
    lessors' royalties and any existing burdens thereon and twenty-five percent
    (25%), proportionately reduced to the interest being assigned to Farmee, of
    any and all of the oil and gas and other liquid or gaseous hydrocarbon
    substances produced, saved and marketed from, or attributable to the
    assigned interests under the terms and conditions of the leases. Said
    overriding royalty interest shall be computed and paid at the same time and
    in the same manner as royalties are computed and paid to the lessor under
    the terms of the leases. Such overriding royalty shall be free and clear of
    all costs of exploring, operating, developing, producing and maintaining
    said lease in force and effect, except the proportionate share of severance,
    production, excise and other like taxes applicable to such overriding
    royalty interest, and a pro rata share of transportation charges borne by
    Farmee . Said reserved overriding royalty shall not be reducible at Payout
    except that Farmors' 50% working interest shall, at Payout, be subject to
    50% of such reserved overriding royalty interest. It is the intention of
    Farmor to deliver a 75% Net Revenue Interest in the Farmout Leases. The
    assignment will also reserve all rights from the surface of the earth to
    6,500' and shall further reserve all title and interest owned by Petro-Guard
    Company, Inc., Solvation, Inc. and OGA 1, L.P. in and to all wells,
    production platforms, facilities, pipelines and structures and appurtenances
    of any kind on the Farmout Area. The assignment will provide the Farmee
    shall additionally be entitled to all production from the Initial Test Well
    attributable to 100% of the working interest of Farmor under this Agreement
    until Payout, as defined herein.

                             V. OPERATING AGREEMENT

Except as otherwise provided in this Agreement, all operations conducted on the
Farmout Area will be conducted in accordance with the provisions of the
Operating Agreement which is attached hereto as Exhibit "V.A". The Operating
Agreement

<PAGE>
Farmout Agreement
September 8, 1999
Page 5

will apply to the Farmout Area which shall be the same as the Contract
Area described in Exhibit "A" to the Operating Agreement. The AMI provisions of
the Operating Agreement shall be applicable as of the date hereof. In the event
of a conflict between the Operating Agreement and this Agreement, the terms of
this Agreement shall prevail.

               VI. RISKS, COSTS, EXPENSES AND INDEMNITY

The Initial Test Well, and any substitute therefor, drilled under the provisions
of this Agreement shall be drilled free of any cost and/or liabilities of any
kind or character to Farmor, and all risks, liability, costs or expenses
incurred in connection with drilling, testing, completing and equipping said
well or wells, or plugging and abandoning said well or wells, shall be borne
solely by Farmee to the extent of the farmed out interest, except as otherwise
specifically provided for in this Agreement. Farmee also assumes and agrees to
indemnify and defend Farmor against any and all claims, demands or causes of
action of any kind or nature, including spills or other environmental damage,
that may be asserted against Farmor by suit or otherwise, for injury to or death
of any person or persons and/or the loss of or damage to property arising from
or in any manner growing out of or connected with the above described operations
conducted in or on said well or wells or facilities by Farmee, except for any
such claims, losses, demands or causes of action caused by the actions or
omissions of Farmor.

Farmee does not assume any cost, risk or liability in connection with or arising
from any existing wells or structures located on the Farmout Area or any wells
drilled or operations previously conducted by Farmor or others on any portion of
the Farmout Lease, except as to any liabilities arising out of the operations
and actions of Farmee. Any such wells or structures shall be retained by those
Farmors owning such wells or structures and Farmors will be responsible for any
liabilities arising therefrom. Farmor shall also assume full responsibility and
liabilities for any additional wells as may be drilled or structures as may
hereafter be installed in connection with those stratigraphic depths of the
Farmout Leases not made subject to this Agreement. Additionally, Farmee agrees
that it shall have no access to or rights in any such structures or platforms as
a result of the execution of this agreement.

                                VII. SEISMIC DATA

Upon execution of this Agreement, and approval of the Other Parties, Farmee will
receive a Seismic License Agreement covering the 1997 3-D seismic data insofar
as designated on Exhibit "VII.A" hereof and will receive the data covered
thereby to work in Farmee's offices under the terms of such Seismic License
Agreement. Each Farmor and Farmee further agree that for a period of two years
from the date hereof it will give the other the right to review any prospects
which Farmee or such Farmor elects to farmout in the 3-D Seismic Area, as such
area is set forth on that plat attached hereto as Exhibit "VII. B". The parties
will execute appropriate

<PAGE>

Farmout Agreement
September 8, 1999
Page 6

confidentiality agreements prior to reviewing such prospects. The 3-D License
Agreement is attached hereto as Exhibit "VII.C".

                                VIII. OPTION AREA

Farmors hereby grant to Farmee an option, exercisable during a thirty-day period
beginning on the date on which the Initial Test Well or any substitute therefor
is drilled to Contract Depth, in which Farmee may elect to purchase fifty
percent (50%) of the interest owned by Farmors in and to the leases covering
lands outside the Farmout Area but within the Option Area as set forth on
Exhibit "A" hereof, as to rights below the depth of 6,500' below the surface. If
Farmee elects to acquire such interest, Farmee shall make payment to Farmors of
50% of Farmors' costs of acquisition and annual rentals paid on such leases.
Farmors shall promptly assign to Farmee its share of each such lease, reserving
unto Farmors the overriding royalty provided for in Article IV, above.

In the event Farmors, or any of them, on the one hand, or Farmee, on the other
hand, desire to bid on any unleased acreage within the Option Area, the parties
desiring to bid shall notify all other parties and shall convene a meeting to
attempt to agree on the acreage to be bid upon and the bid price. The parties
will act in good faith to attempt to agree on these matters. Farmee and Farmors,
prior to proposing the acquisition of any lease and/or the proposing any well in
the Option Area (initial or otherwise), will to the extent allowable under the
applicable agreements, make available their geological and geophysical
interpretations of said prospect and well. All assignments of leases acquired by
either Farmor or Farmee within the 3-D Seismic Data Area and assigned to the
other, subject to the above or under the terms of the AMI provision of the
Operating Agreement, will provide that Farmors will be entitled to all rights
from the surface of the earth to a depth of 6,500' and Farmors shall be entitled
to an overriding royalty of the difference between the lease royalty burden and
25%, if any.

                 IX. INTERPRETATIONS, WELL INFORMATION, AND DATA

In the course of drilling the Initial Test Well, or substitute therefor, Farmee
agrees to do such evaluation and to have made or conducted such operations as,
in Farmee's sole opinion, a prudent operator would do, or have made or
conducted, under the same or similar circumstances. To the extent that such
tests or evaluations are conducted by Farmee, Farmee shall comply with each of
the requirements set forth on Exhibit "IX.A" hereto (the "Geologic and Technical
Requirements"). Farmors shall be entitled to all notices and information
required to be sent to a participating working interest owner in a paid up
status. Except as otherwise provided in this Agreement, during the drilling,
completion, and production of any well drilled hereunder on the Farmout Area and
Option Area, the Farmors' authorized agents and representatives shall be
entitled to receive copies of all geological, geophysical and engineering
information obtained from the drilling of said well or wells and shall

<PAGE>
Farmout Agreement
September 8, 1999
Page 7

be entitled to all rights and privileges of a working interest owner, including,
but not limited to, daily detailed rig drilling reports, logging while drilling
logs, mud logs and reports, mud engineer reports, flow tests, paper and digital
copies of all logs, regulatory filings, emergency notifications, and any other
information related to daily rig and drilling activity. Farmors shall have
access to the rig floor, at the sole risk of Farmor, its authorized agents or
representatives, to observe all operations conducted in or on said well or
wells. Prior to conducting any logging operations in said well or wells, Farmee
will give Farmor, in accordance with the provisions of the Geologic and
Technical Requirements, twenty-four (24) hours notice in advance of such logging
operations or, in the event that well conditions do not permit such twenty-four
(24) hour notice, Farmee will give as much advance notice of intended operations
as time will allow.

If requested by Farmor, Farmee will provide transportation for Farmor, its
agents and representatives, subject to space availability, to and from said well
or wells on regularly scheduled trips, at the sole risk of Farmor, its agents
and representatives. Farmor may otherwise provide its own transportation to the
rig upon notice to Farmee. Farmor assumes and agrees to indemnify Farmee against
any and all claims, demands and causes of action of any kind or nature that may
be asserted against Farmee, by suit or otherwise, arising out of or in any
manner growing out of or connected with the authorized agents and
representatives of Farmor having access to, or being upon, the rig floor or the
providing by Farmee of transportation to and from the well or wells for the
authorized agents and representatives of Farmor, except as to any damages or
loss caused by the negligence or willful misconduct of Farmee or its agents or
representatives.

                                   X. PAYOUT

The term "Payout" as used herein shall mean that point in time at which the
Farmee has recovered out of the net proceeds from the sale of production from
the Initial Test Well or a substitute therefor, after first deducting all
royalties and overriding royalties applicable to such production together with
all severance, production, or excise taxes and marketing and gathering costs
applicable to such production to the extent attributable to the interests of
Farmors, plus any reimbursements or credits of others including insurance
reimbursements and claims, all of Farmee's share of the cost of drilling,
completing, equipping for production including the installation of flowlines,
pipelines, shore and production facilities and operating said well and/or a
substitute therefor attributable to the farmed-in interests (all such charges
shall be made in accordance with the provisions of the Operating Agreement to
the extent such charges are covered by the Operating Agreement). That portion of
Payout to be recouped by Farmee as to drilling costs shall be limited to 115% of
the amount of such costs as set out on Farmee's AFE for the Initial Test Well,
or the actual drilling costs incurred by Farmee to Casing Point, whichever is
the lesser. The cost of equipping the well(s) for production shall include the
cost of installing a platform and facilities. However, in the event a subsequent
well is drilled and

<PAGE>

Farmout Agreement
September 8, 1999
Page 8

completed prior to Payout, the subsequent well participants will not bear any of
the capital costs of the production facilities other than the costs necessary to
tie-in the subsequent well into the facilities for the Initial Test Well (if
such production facilities capacities are available and the subsequent well is
tied into same). The subsequent well participants will, however, bear their
share of operating costs including their share of rentals on any leased
equipment or facilities. In the event Farmee receives any Credits and
Reimbursements after payout occurs that are attributable to the period prior to
Payout, Farmee shall credit all such amounts to the joint account of Farmor to
the same effect as if such amounts had been received prior to payout.

Farmee shall furnish Farmor monthly operating statements as if Farmor was an
active working interest participant. Payout statements shall be furnished once
each quarter within thirty (30) days after the calendar quarter for which the
computations are made, showing the proceeds of production from the applicable
well(s) and providing an itemized account of the well costs and authorized
deductions from production for the previous quarter. Such payout statements
shall be provided monthly during the calendar month immediately following the
month to which they apply once the well for which such statements are provided
is within 20% of payout. Such statements shall also show the cumulative proceeds
of production (and the gross volume) from such well and provide an itemized
account of the cumulative well costs and cumulative authorized deductions from
production revenues so that the then current payout status can be readily
determined from the statement. Farmee shall keep an accurate record of all
charges and credits connected with the applicable well(s), and such records
shall be available at all reasonable times for audit by Farmor. Farmee agrees to
provide Farmor with the above information within the periods provided herein.
Beginning with the date hereof and continuing until two years following Farmee's
notification to Farmor of payout, Farmor shall have the right to audit Farmee's
books and records pertaining to this project as to all revenues and expenses
beginning with the first charges incurred. Upon reaching payout, Farmee shall
begin disbursing revenues, if applicable, to Farmor within thirty days.

                               XI. CONFIDENTIALITY

The parties hereto agree that all geological, engineering, technical, production
test or other data obtained from all wells drilled under this Agreement shall be
considered to be "tight" and shall be the property of Farmee and Farmor and
shall be maintained as confidential information for a period of two (2) years
from the date hereof, or until such information is made public by any
governmental agency acquiring jurisdiction, unless all parties hereto agree in
writing to a lesser period of time. It is further agreed that the ownership of
proprietary geophysical data belonging either to Farmee or Farmor remains
respectively vested in each such owner to do with as it so desires; however, any
such geophysical data furnished hereunder to a non-owner shall be protected as
confidential information. It is understood that any filings of reports or press
releases by Farmee or Farmor which are required by governmental agencies or

<PAGE>

Farmout Agreement
September 8, 1999
Page 9

stock exchanges or which are made to satisfy public disclosure requirements
shall not constitute a breach hereof. Except as provided in the preceding
sentence any party hereto desiring to make a press release shall furnish a copy
thereof to the other party hereto prior to release for the purpose of advising
the parties and obtaining comments thereon.

                         XII. PERMITS, DATA AND FILINGS

It is understood that Farmee shall assume all duties, responsibilities and
liabilities in connection with all permits for operations hereunder and that
Farmee shall make any and all filings and reports necessary in connection with
the drilling, completing, and the plugging and abandoning of any well or wells
drilled under the terms of this Agreement. It is also understood that Farmor
shall aid and assist Farmee in its attempt to secure the final approval on any
such required permit by furnishing on a timely basis such necessary information
as Farmor has available.

                              XIII. GAS COMMITMENTS

Farmor represents that the interests farmed out herein are not subject to any
existing gas contract or oil and/or gas call on production except for that Gas
Purchase Agreement dated April 1, 1986 between Seneca Resources Corporation et.
al. and Dow Chemical Company, as amended, and that Crude Oil Purchase Agreement
dated December 11, 1998 with GulfMark Energy, Inc., and will not enter into any
such contracts or commitments affecting the interests which may be earned by
Farmee hereunder. Farmor will further attempt to obtain a release of said Gas
Purchase Agreement and said Crude Oil Purchase Agreement as to the interests
subject to this Agreement prior to the commencement of the Initial Test Well.
Resolution of the release of such agreements will be resolved to the
satisfaction of Farmee prior to spudding the Initial Test Well.

                 XIV. LIMITED WARRANTY/STIPULATION OF INTERESTS

Any assignment from Farmor to Farmee shall be without warranty except for a
special warranty as to parties claiming by, through or under Farmor, and shall
include an express representation and warranty by Farmor that the interest
assigned to Farmee is not subject to any obligations or burdens, except as set
out in the Operating Agreement, other than a proportionate share of the lessor's
royalty and a proportionate share of the overriding royalty interests to be
retained by Farmor pursuant to the terms and provisions of this Agreement.
Further, any assignment from Farmor to Farmee shall warrant that the interest
assigned to Farmee is assigned free from any mortgage, lien, production payment,
advanced payments or any other burden or encumbrance (other than the Lessor's
royalty and the overriding royalty interests referenced above) and Farmor agrees
to indemnify Farmee against any loss or damages incurred by Farmee resulting
from the breach of such warranty.

<PAGE>

Farmout Agreement
September 8, 1999
Page 10

The Farmors agree that as between themselves the working interest ownership in
the Leases are correctly reflected on Exhibit "A" to the Operating Agreement
hereof and that it is the intention of each Farmor to farmout under the terms of
this Agreement its entire interest in the Farmout Area to Farmee.

                            XV. LAWS AND REGULATIONS

Farmee agrees to comply with all laws and lawful regulations applicable to any
activities carried out by Farmee under the provisions of this Agreement and/or
any amendments thereto. The laws of the State of Texas shall apply.

                            XVI. ACCEPTANCE OF TITLE

Farmee's obligations under this Agreement are subject to the acceptance by
Farmee of Farmor's title in and to the Leases included in the Farmout Area.
Farmee will advise Farmor of any title deficiencies within thirty (30) days of
the date hereof.

                           XVII. FORFEITURE OF RIGHTS

Farmee shall not be liable in damages or otherwise for failure to commence,
drill, test or complete the Initial Test Well, or any substitute therefor, in
the manner or within the time set forth herein, but such failure shall result
only in the forfeiture by Farmee of its rights and privileges under the
provisions of this Agreement not earned and all further obligations and
liabilities of Farmee hereunder shall cease.

            XVIII. RELATIONSHIP OF PARTIES, TAX PARTNERSHIP

Farmor and Farmee hereby agree that the respective obligations and liabilities
of the parties under this Agreement shall be several, not joint or collective,
and each shall be responsible for its own obligations. It is not the purpose or
the intention of this Agreement to create, and the same shall never be construed
as creating, a joint venture, agency, mining partnership or other relationship
whereby any of the parties shall be liable for acts, either of commission or
omission, of any party hereto.

                         XIX. LEASE MAINTENANCE PAYMENTS

Prior to Farmee earning the interest as to Farmout Leases, Petro-Guard Company,
Inc. shall pay, all delay rentals accruing after the date of the Agreement under
the Farmout Leases and shall notify Farmee of each payment. Within thirty (30)
days after receipt of such notice, Farmee shall reimburse Petro-Guard for the
full amount of such payment. Petro-Guard shall not be liable for failure to make
a proper payment, but agrees to use the same degree of care used in making such
payments under its other leases. Farmee shall be responsible for making all
rental payments on leases within the Farmout Area after Farmee has earned the
assignment referred to in Article IV, above. All parties will reimburse Farmee
their proportionate share thereof.

<PAGE>

Farmout Agreement
September 8, 1999
Page 11

                          XX. EFFECT AND ASSIGNABILITY

It is expressly understood that the terms and provisions of this Agreement shall
extend to, be binding upon and inure to the benefit of the successors and
assigns of the parties hereto.

This Agreement shall not be assigned by any party hereto without first securing
the written consent to such assignment by the other parties hereto, which
consent shall not be unreasonably withheld. Any assignment of interests in the
Farmout Leases during the term or effectiveness of this Agreement shall be
subject to this Agreement.

Farmor specifically agrees that Farmee shall be authorized to make an assignment
of interests in acreage which has been earned hereunder to the participants in
its Exploration Program and may disclose confidential data to such participants,
namely, Phosphate Resource Partners Limited Partnership and Gerald J. Ford and
that Farmee may disclose information acquired hereunder to such participants,
subject to the confidentiality provisions hereof.

                                  XXI. NOTICES

All notices, reports and information to be given to Farmee pursuant to the
provisions of this Agreement shall be given to Farmee as follows:

                McMoRan Oil & Gas LLC
                Attention:  Glenn A. Kleinert, Senior Vice President
                1615 Poydras Street
                New Orleans, Louisiana 70112
                Post Office Box 60004
                New Orleans, Louisiana 70160
                Telephone Number:(504) 582-4610
                Telecopy Number: (504) 582-4155

or to such other representative as Farmee designates in writing.
Farmors notice shall be given to the following:

                Petro-Guard Company, Inc.
                Attention:  Mr. Dewey Stringer
                5858 Westheimer, Suite 400
                Houston, TX  77057
                Telephone:  713/974-5550, ext. 14
                Fax:  713/974-6818

<PAGE>

Farmout Agreement
September 8, 1999
Page 12

                Solvation, Inc.
                Attn:  Mr. Arthur Pasmas
                5858 Westheimer, Suite 400
                Houston, TX  77057
                Telephone:  713/782-5212
                Fax:  713/782-0916

                Energy Management Corporation
                5858 Westheimer
                Suite 400
                Houston, TX 77057
                Attn:  Mr. Arthur Pasmas

                OGA 1, L.P.
                Attn:  Mr. Arthur Pasmas
                5858 Westheimer, Suite 400
                Houston, TX  77057
                Telephone:  713/782-5212
                Fax:  713/782-0916

                Fairfield Resources Corp.
                Attn:  Mr. Barry Rava
                14100 Southwest Freeway, Suite 340
                Sugarland, Texas  77478
                Telephone:  281/275-7738
                Fax:  281/275-7770

                Fortune Natural Resources Corporation
                Attn:  Mr. Tyrone J. Fairbanks
                515 W. Greens Road, Suite 720
                Houston, TX 77067
                Telephone:  281/872-1170
                Fax:  281/872-1213

                Lamar Oil & Gas, Inc.
                Attn:  Mr. David R. Pilgrim
                P.O. Box 2197
                Rockport, TX  78381
                Telephone:  512/790-9678
                Fax:  512/ 790-5519

All notices shall be effective upon receipt.

<PAGE>

Farmout Agreement
September 8, 1999
Page 13

If the above and foregoing, together with the Exhibits attached hereto,
correctly set forth and evidence the agreement and understanding between the
parties, please sign and date the enclosed copy of this Agreement at the spaces
indicated below and return the executed copy of same to the undersigned within
fifteen (15) days from the date hereof or this Agreement may be terminated at
the option of Farmee.

This Agreement has been prepared for counterpart execution and, will be binding
as to each Party upon its execution, whether or not the other parties listed
below execute same.

                               McMoRan Oil & Gas LLC

                               By:  /s/ Glenn A. Kleinert
                                   ----------------------------------
                                   Glenn A. Kleinert
                                   Senior Vice President

Agreed to and accepted on this 7th day of September, 1999.

Petro-Guard Company, Inc.

By: /s/ Dewey A. Stringer, III
   ---------------------------------
   Dewey A. Stringer, III

Agreed to and accepted on this 9th day of September, 1999.

Solvation, Inc.

By: /s/ Arthur J. Pasmas
   ---------------------------------
   Arthur J. Pasmas

Agreed to and accepted on this 9th day of September, 1999.

Energy Management Corporation

By: /s/ Arthur J. Pasmas
   ---------------------------------
   Arthur J. Pasmas

<PAGE>

Farmout Agreement
September 8, 1999
Page 14

Agreed to and accepted on this 9th day of September, 1999.

OGA 1, L.P.

By: /s/ Arthur J. Pasmas
   ---------------------------------
   Arthur J. Pasmas

Agreed to and accepted on this 7th day of September, 1999.

Fairfield Resources Corp.

By: /s/ M. J. Fontenot
   ---------------------------------
    M. J. Fontenot

Agreed to and accepted on this 9th day of September, 1999.

Fortune Natural Resources Corporation

By: /s/ Tyrone J. Fairbanks
   ---------------------------------
   Tyrone J. Fairbanks

Agreed to and accepted on this 9th day of September, 1999.

Lamar Oil & Gas, Inc.

By: /s/ David Pilgrim
   ---------------------------------
    David Pilgrim

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